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COPYRIGHT PROTECTION FOR SEMI

CONDUCTOR CHIPS

THURSDAY, DECEMBER 1, 1983

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES

AND THE ADMINISTRATION OF JUSTICE,
COMMITTEE ON THE JUDICIARY,
Washington, D.C.

The subcommittee met, pursuant to call, at 10:15 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Schroeder, Glickman, Berman, and Sawyer.

Staff present: Michael J. Remington, chief counsel; Deborah Leavy, counsel; Joseph V. Wolfe, associate counsel; and Audrey Marcus, clerk.

Mr. KASTENMEIER. The subcommittee will come to order.

This morning, without objection, the hearings may be covered in part or in whole by photography or other electronic media. There being no objection, this hearing will be televised by C-Span, and other cameras will be allowed also.

Since this is a concluding hearing on the subject of protection for semiconductor chips, I thought I might suggest again how small this object really is. I have in my hand a semiconductor chip. It is smaller than most stamps. I could blow it away more easily than I could extinguish birthday candles. It is less durable than many insects or plants.

Yet, it is this item that has introduced us to a new age: the information age. At its simplest, the microchip is electronic circuitry. At its most complex, it can hold 1 million electronic components. The chip not only can store information, but it possesses the ability— much like the human mind-to embody memory and logic.

Stated simply, the hearing this morning is on this chip-the creative work that goes into it, and the legal protection that should be accorded it.

Without question, the semiconductor chip is at the center of the information society. The chip has placed us at the threshold of an unprecedented communications revolution. It is estimated that scientific and technical information increases 13 percent every year; this means that the resource of information doubles every 5 or 6 years. The United States is close to having an economy based on a key resource that is not only renewable but self-generating.

The computer age deals with conceptual space connected by electronics, rather than physical space connected by the automobile. The maps of today may truly be the microscopic grids found embedded in a semiconductor chip.

This morning the subcommittee is holding a concluding day of hearings on copyright protection for semiconductor chips. The bill before us, H.R. 1028, adds "mask works" to the list of works that can be copyrighted.

Partially as a result of the first day of hearings and partially as a result of written statements submitted to the subcommittee, at least two major issues have surfaced. The first issue relates to whether the protection for mask works should be pegged to the principles of traditional copyright law or whether a hybrid protection should be tailored. The second issue relates to the constitutional and policy implications of retroactivity.

The record should reflect that these issues, in my opinion, are serious enough for me to have written letters to a number of respected scholars and lawyers around the country soliciting comments on the issues. Responses will be reprinted in the hearing record under the heading "Additional Statements." I ask unanimous consent to insert a copy of the text of my letter in the hearing record. [The Kastenmeier letter follows:]

U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE OF THE JUDICIARY, Washington, D.C., October 24, 1983.

Prof. JOHN A. KIDWELL,
School of Law,

University of Wisconsin, Madison, Wis.

DEAR PROFESSOR KIDWELL: You are most probably aware that the House of Representatives is giving serious consideration to enactment of a bill (H.R. 1028, introduced by Mr. Edwards and Mr. Mineta; copy enclosed) to extend copyright protection to "mask works" embodied in semiconductor chip products.

I am writing to you and several other professors of copyright law to elicit the views of disinterested copyright experts on whether you favor some form of statutory protection for mask works and semiconductor chip products; whether the basic approach of H.R. 1028 is sound; and whether protection should be applied retroactively. The Subcommittee on Courts, Civil Liberties, and the Administration of Justice would welcome any written comments you would care to submit for inclusion in the hearing record. (A hearing was held on August 3, 1983, and another will be held in the near future.)

H.R. 1028 now provides that the act would take effect ninety days after enactment, but would not apply to chip products or masks manufactured in the United Stated or imported into the United States before the effective date. However, arguably the bill would protect mask works created and distributed before the effective date, with respect to their embodiment in particular chip products or masks after the effective date. In addition, the subcommittee is aware of a draft proposal in the Senate that makes more explicit the retroactive nature of mask work protection. The Senate draft proposal distinguishes between acts of infringement and subject matter protection. There would be no liability for otherwise in infringing acts, if the acts occurred before the effective date. However, mask works embodied in chip products commercially distributed in the United States on or after January 1, 1980 would be "grandfathered" into the Act in terms of subject matter protection. Liability would arise for acts of infringement occurring after the effective date.

The Subcommittee would welcome comments about the appropriateness, if any, of retroactive protection for mask works, and about the need, if any, for clauses to safeguard persons detrimentally affected by the change in the Copyright Act. You may want to address the question from both a constitutional and policy perspective. Secondly, the general approach of H.R. 1028 is to fit protection for mask works within the principles of traditional copyright law (Chapters 1 through 8 of Title 17 of the U.S. Code), with adjustments for the scope and term of protection, special pro

vision for innocent infringers, and a compulsory license. At the August 3, 1983 hearing (and also in Senate hearings), technical objections were made regarding the proposed "use right," the impact of the bill on the term "copies" and on fair use, the scope of permissible reverse engineering, and the clarity of the distinction between the "mask work" copyright and copyright in other works embodied in chip products (e.g., literary works and computer programs).

A specifically tailored design law has been advanced as an alternative approach to protect designs of semiconductor chips. It has been suggested that the long-pending design bill (see, e.g., H.R. 2985, also enclosed) could be modified to apply solely to design of semiconductor chip products. The basic features of a design approach could be similar to H.R. 1208, especially with respect to term, exclusive rights (eliminating the “use right”), and innocent infringers. The design law could be added as a separate, stand-alone Chapter 9 to Title 17 of the U.S. Code.

Your comments about the advantages and disadvantages of a copyright law or design approach, about retroactivity, and any other points you care to address would be most helpful to the subcommittee in finding the most appropriate statutory mechanism to afford protection for the semiconductor chip industry against piracy. Your comments should be received by December 1, 1983, to assure full consideration.

Sincerely yours,

ROBERT W. KASTENMEIER,

Chairman, Subcommittee on Courts, Civil Liberties and the Administration of Justice.

Enclosures: H.R. 1028, H.R. 2985.

Mr. KASTENMEIER. I am pleased to note that the witnesses who will appear this morning have, at least in part, addressed these issues. We are fortunate to have three extremely well informed witnesses, a professor from Emory University Law School and two individuals who have testified before us in the past, the Commissioner of Patents and also a senior official in the Copyright Office. First, I would like to call as a witness, Prof. Ray Patterson, Emory University Law School. Professor Patterson has previously served as dean of the Emory Law School. He has studied copyright law for well over two decades, perhaps 25 years, and indeed has authored a book entitled "Copyright in Historical Perspective." We are pleased, Professor Patterson, to hear your perspective, historical or otherwise, on the important issues confronting this committee this morning.

You may proceed.

TESTIMONY OF L. RAY PATTERSON, PROFESSOR OF LAW,

EMORY UNIVERSITY SCHOOL OF LAW

Mr. PATTERSON. Thank you, Mr. Chairman.

Mr. Chairman, members of the subcommittee, my name is Ray Patterson. I am a professor of law at Emory University School of Law. Having been a student of copyright law and its historical development for some 25 years, I very much appreciate the opportunity to appear before the subcommittee and to express some ideas resulting from my studies.

Mr. Chairman, with your permission, I would like to submit my written remarks for the record and merely summarize them at the present time.

Mr. KASTENMEIER. Without objection, your statement will be received for the record and you may proceed as you wish.

Mr. PATTERSON. Thank you, sir.

I wish to view the problem of copyright protection for semiconductor chips in the context of copyright and new technology and view the problem from a conceptual standpoint. There are two rea

sons for examining the concept of copyright in the light of new problems that technology poses.

First of all, copyright law as it presently exists does not have a sound conceptual basis.

Second, unless there is an agreement on a sound conceptual basis, the problem of copyright and new technology will continue to be resolved on an ad hoc basis in all probability with consequences that Congress neither contemplated nor intended.

The conclusions that I have come to are these:

First, it would be unwise for Congress to provide copyright protection for semiconductor chips by amendment to the present statute. The basis for this conclusion is that the present copyright statute purports to provide for an author's copyright.

Second, the appropriate solution to the problem of protection for semiconductor chips is the creation of what I call an industrial copyright separate and distinct from the author's copyright. The basis for this conclusion is that the copyright protection for semiconductor chips under the present statute would be to create another fiction for copyright and contribute to the conceptual confusion that has plagued copyrights for over two and one-half centuries.

Anglo-American copyright, of course, was the product of technology. But the interesting point here is that copyright existed for some 300 years before it was applied to any product of any new technology, and Congress traditionally has provided copyright protection for the products of new technology with considerable reluc

tance.

The relevant question is this: Why has Congress been reluctant to grant copyright protection to new technology?

The answer to this question, in my opinion, is the lack of a sound conceptual base for copyright law. If the fundamental principles are agreed upon, there is common ground for agreeing on what to do and no way of predicting what rules will emerge by way of judicial interpretation of ambiguous legislation.

Now, the fault here has not been that of Congress, but history, which has resulted in a copyright that can be characterized as a schizophrenic legal concept.

The copyright clause empowers Congress to secure to authors the exclusive right to their writings for limited times. One would assume from this language that copyright is intended to benefit authors, but the Supreme Court says this is not so. Copyright is intended primarily to benefit the public. And yet, the copyright statute functions primarily to benefit the publishers or the entrepre

neur.

The contradiction in constitutional language, court decisions, and congressional actions has an explanation in the tortuous history of copyright development as a result of which we have a major conceptual weakness in copyright law. That weakness is a dicotomy between form and function. In form, copyright is an author's right. In function, it is a publisher's right.

The point here is simply that the concept of copyright does not have a sound theoretical basis because it encompasses two contradictory and antithetical ideas. That is, that it is a statutory monopoly of one's own creations. Despite its label as an author's right,

copyright is functionally a concept of statutorily unfair competition based on the misappropriation rationale. It serves the entrepreneur better than the author.

The point is demonstrated by the work made for-hire doctrine and the fact that the current statute confers benefits on the copyright owner rather than the author. Indeed, there is only one provision in the 1976 Copyright Act that is of unique benefit to the author, and that, of course, is the termination right.

To provide copyright protection for semiconductor chips by amending the present statute will be to widen the gap between the form and the function of copyright. More important, perhaps, Congress is not here dealing only with semiconductor chips, it is dealing with the problem of copyright for the products of new technology of which the semiconductor chip is only the beginning.

The semiconductor chip bill is the pilot project and it is important to understand the essential difference between copyright protection for a book and a semiconductor chip. A book is a product and end in itself. A semiconductor chip is both a product and a process, a means to an end. Copyright protection for the semiconductor chip in traditional terms can be analogized to a copyright for books that protect the printing press as well as the book.

My objection is not legal protection for semiconductor chips. My objection is protection for them in terms of author's copyright, and what I suggest is the creation of an industrial copyright designed for and directed to the problems that need to be resolved. The essential problem to which the industrial copyright would be directed is industrial piracy. One of its major advantages is that it would provide an opportunity to create new remedies which are not necessarily appropriate for the author's copyright.

Moreover, I think such a statute would provide an opportunity for considering the public interest, since the fair use doctrine, the major protection for the public interest in the present statute, has little meaning when applied to semiconductor chips.

My argument for an industrial copyright is twofold. First, it would provide more effective protection for industry because it would be based on an unadulterated predicate. Statutory unfair competition based upon the misappropriation rationale. A sound and generally accepted predicate would be protection against judicial misinterpretation resulting in a free choice of competing principles, a particular decision that the confused concept of copyright presently provides.

Second, such a statute would be a major step toward establishing a sound conceptual basis for the traditional author's copyright. It would provide a basis for cleansing the copyright law of provisions dealing with problems of no consequence to the creative author, but which serve to dilute his protection.

I have always thought, for example, that the failure to give recognition to the moral right of the author is one of the major deficiencies of our copyright law, and the failure to provide better protection for the author I attribute to the confused concept of copyright. The conceptual basis for an author's copyright should be protection for the reputation as well as the profit of the author, predicated on the fact that creative works are an expression of the author's perpetuity.

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