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I think a lot of the discussion of whether or not the chip is copyrightable centers around the old cases that had to do with whether a lamp could be copyrightable or not, and the answer is the artistic part of it can, but the utilitarian part of it cannot.

I don't like that analogy as well as the analogy to nautical charts or nautical maps or mathematical tables, where those are purely utilitarian things. They may have some beauty. Beauty is in the eye of the beholder. They may be beautiful to someone.

But most computer programs are not very beautiful or very artistic. Most nautical charts are not. They simply serve a utilitarian

purpose.

These mask works that are used to create it really, I think, are better analogized to those than books or statuary, even though in some ways it is a three-dimensional thing as opposed to a printing.

I would think that the mask and the actual chip itself embodying the mask would fall into the area of these other things I mentioned that are clearly copyrightable and people get valuable property rights on them.

Mr. GLICKMAN. Well, obviously this doesn't fit in with traditional copyright law. Even with your analogies of the maps and the mathematical formulas, you have an area that is evolving with such rapidity that it does not have any permanence. At least, it looks to me that it doesn't have the permanence of the kind of things that were copyrightable under the deviations that you mentioned before.

I guess what concerns me is that if change is happening so rapidly. After all, 10 years ago a chip was nothing to what it is today. Through the natural phenomenon, the chip has been allowed to change so dramatically. What will happen in the next 10 or 15 years unencumbered versus what will happen if we have a copyright on the situation is the question.

If we give somebody protection in the process, we may dramatically restrict progress and change in the process. Again, I guess that is a question for us to answer.

Mr. MOSSINGHOFF. I could comment, though, Mr. Glickman. I think we have an analogous situation in the counterfeiting area, where copying trademarks and trademark products is a major problem for the United States and, indeed, a worldwide problem as we have testified before in counterfeiting.

I think you could predict if we just leave the area alone what you are going to see is business executives deciding which is more profitable, do they spend the $10 million to develop a new chip to carry out a given function, or do they go out and buy one and spend one one-hundredth of that amount of money.

If that begins to happen, it might be that tomorrow and the next day and the next day the consumer can buy integrated circuit controls a little bit cheaper because you have competition, but it is inevitable in the long run you are going to dry up the creation of this new technology.

Mr. GLICKMAN. OK. But let's see if there are any other remedies under the law. You talk about trade secret protection in your statement.

You say that trade secret protection is available but only up to the time that the first disclosures or unrestricted sale in chips is

made. Is there any way that that aspect of the law could be modified without changing the copyright laws?

Mr. MOSSINGHOFF. Well, I suspect that you would end up modifying it so much that you would not want to call it trade secret law anymore. In other words, the whole essence of trade secret

Mr. GLICKMAN. That is what we are doing with the copyright laws now essentially. We are modifying them so they don't look like the copyright laws anymore.

Mr. MOSSINGHOFF. I think if you take trade secret law and try to amend it to prevent copying even after the thing wasn't secret anymore, you would come down with some sort of hybrid protection, much like the design bill.

There are a lot of ways to write it. But I don't think you would want to call it trade secret law anymore because the whole essence of that is when companies take special precautions not to let it get out. Indeed, one of the requirements in Hornbook Trade Secret Law is the thing be secret.

If it is sold and can be reverse engineered using standard technology, you have violated criteria one of the Trade Secret Hornbook Laws.

Mr. GLICKMAN. OK. I think that is a useful point. We may be ending up at the same point.

Mr. MOSSINGHOFF. I think there seems to be general agreement that the kind of protection should be copyright-like protection. It should be so if two people were to come up accidentally with exactly the same chip, using their own means to do so, one would not copy the other and one would not infringe the others.

In the patent sense, if two people come up with exactly the same invention, we give the patent to the first person and the first person can enjoin the second person. So I think there is almost unanimous agreement that the kind of protection should be registration-type, copyright-like protection rather than patent-like protection.

Mr. GLICKMAN. I think the legislation, or perhaps your statement talks about the exclusive right should exist for 10 years.

Mr. MOSSINGHOFF. We use that as an example. I don't think you can make a case for 91⁄2 or 101⁄2, but surely not the life plus 50 or 75 years, since it is a fast-moving technology.

We agree with the 10.

Mr. GLICKMAN. But it is the recognition that it ought to be a shorter period of time than with literary works.

Mr. MOSSINGHOFF. Very definitely.

Mr. GLICKMAN. Thank you, Mr. Chairman.

Mr. KASTENMEIER. The gentleman from California, Mr. Berman. Mr. BERMAN. I have no questions, Mr. Chairman.

Mr. KASTENMEIER. I have just one last question.

Do you agree with the preceding witness that in an ideal world what we are really talking about here is the need for statutory unfair competition standard based on a misappropriation rationale. Professor Patterson repeated that a couple of times.

Mr. MOSSINGHOFF. Yes; I heard that. I think the answer is yes. I think it is unfair competition for someone-or should be, it is not now-but I think it should be unfair competition for someone to be able to spend a fraction of what an originator spent.

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I think there is a public interest here that I would overlay above unfair competition. As I understand the unfair competition law, an element may be trade disparagement or something like that.

That is kind of an A versus B field of law. I think above that there is a constitutional purpose that is served by the current copyright system, by the current patent system, and that is to stimulate people to invest in things which the public has determined, through the public policymakers, to be good things.

And if the patent laws stimulate people to invest their time and effort, creativity, in bringing out new inventions as a matter of public interest, then we give them a limited period of exclusivity. So, whereas, unfair competition is kind of a view of business person A against business person B, I think here we are dealing in the area of what the Founding Fathers dealt in, a very good Federal function, stimulating the creation of wealth in the form of new writings and technology.

I guess I agree at one level. But I think there is a much higher level that needs to be served, and that is the level of public interest to stimulate business executives and entrepreneurs to invest in the creation of new techniques.

Mr. KASTENMEIER. Thank you, Mr. Mossinghoff, for your appearance this morning. We always benefit from your testimony and advice.

Mr. MOSSINGHOFF. Thank you, Mr. Chairman.

Mr. KASTENMEIER. Our last witness this morning is Ms. Dorothy Schrader, Associate Register of Copyrights for Legal Affairs and General Counsel with the Copyright Office, an important entity within the legislative branch.

She is a familiar face to us in this committee; she has served many years with the Copyright Office and is extremely prominent in the field.

Ms. Schrader, I notice you have a very long statement. Would you care to try to summarize it? I think you also have a summary statement, too. Also, would you introduce your colleagues?

TESTIMONY OF DOROTHY SCHRADER, ESQ., ASSOCIATE REGISTER OF COPYRIGHTS FOR LEGAL AFFAIRS, COPYRIGHT OFFICE, LIBRARY OF CONGRESS, ACCOMPANIED BY RICHARD GLASGOW, ASSISTANT GENERAL COUNSEL; PATRICE LYONS, SENIOR ATTORNEY; MICHAEL KEPLINGER, POLICY PLANNING ADVISER

Ms. SCHRADER. Yes, Mr. Chairman. I have done both. If you could agree, the full statement would appear in the record, and I will speak largely from the summary you have.

Mr. KASTENMEIER. Without objection, your longer statement, together with its appendixes, will be accepted for the record, and you may proceed as you wish.

Ms. SCHRADER. Mr. Chairman, members of the subcommittee, I am Dorothy Schrader, representing the Copyright Office today at this hearing on H.R. 1028. Let me please first introduce my colleagues who are here at the witness table.

On my right, the Assistant General Counsel of the Copyright Office, Richard Glasgow. On my far right, Patrice Lyons, a senior

attorney on my staff. On my left, Michael Keplinger, policy planning adviser for the Register.

The Copyright Office does support the principle of protection for original semiconductors and masks, which will generally be referred to as chips, recognizing that the bill would establish a new subject matter category denominated "mask works."

We fully agree some form of protection is just and necessary. We tend to believe it should be basically on copyright-type principles, for example, the principle of originality.

But we are not certain that the Copyright Act of 1976 is the best answer to this need for protection, and we do have major doubts about certain features of the proposed bill.

We think that in several respects the bill represents an improvement over the 1979 attempt which would have protected chips as artistic works. But we have questions that are described in our lengthy statement, and I will mention some of those briefly.

We think that the case is clear that there should be protection and the question is what is the best mode of protection to prevent chip piracy. Should it be traditional copyright, with a few modifications, or a specially tailored law, perhaps based on design copyright principles?

I would like briefly to review the present legal situation, because I think it is important to note that arguments in favor of protection for chips or chip designs under the current act must confront the barriers of at least four fundamental principles of our traditional copyright law.

First, copyright has not protected useful articles, per se. Second, copyright protects the design of a useful article presently only to the extent that artistic features can be identified separately from, and are capable of existing independently of, utilitarian aspects of the article.

Third, copyright in a technical drawing or other representation of a useful article does not protect against unauthorized duplication of the useful article itself, only against duplication of the drawing authorship.

And last, copyright protects only expression, not ideas, plans, or processes.

As it has been noted, technical drawings are subject to protection under the current act. But they do not provide the kind of protection that is believed necessary by the semiconductor industry, since you don't have protection for the finished chip product.

The Copyright Office has been presented with claims to register copyright in printed circuit boards and in semiconductor products, and we have refused to register those claims. We have to date considered that they are useful articles and have no separate artistic aspects.

Computer programs are copyrightable. The Congress amended the Copyright Act in 1980 specifically to add a definition of computer program and otherwise amend the act to provide that programs would be protected.

As it has been noted, programs may be fixed in chips and they may also be used as tools in the designing of chips. The semiconductor industry apparently believes, however, that copyright for a

computer program is insufficient to protect their designs, and we do agree with this conclusion in general.

This inadequacy of protection arises either because some chips may not embody programs at the time they are exposed to duplication, or the part of a chip containing the program may not be duplicated, or the owner of the program copyright may not own rights in the design of the chip.

There is some uncertainty also about the scope of protection for designs developed with the assistance of a computer program.

Turning then, briefly, to discuss the features of the present bill, this would create a new subject matter category of copyrightable work called "mask works."

This category is apparently intended to encompass the skills and creativity, if any, employed in the intermediate stages of producing semiconductor chip; that is, between the first technical drawing and the finished chip product.

But it seems clear, I think, to us and to other witnesses that the ultimate objective is to protect the finished chip against unauthorized duplication.

As you know, the major features of this bill are: Limited term of protection, for 10 years, in contrast to the longer term under copyright; new and modified exclusive rights, the traditional rights set out in the Copyright Act would not apply to this new subject matter category-most importantly, a new right to use the mask work; a compulsory license; and an innocent infringer provision.

The Copyright Office, after reviewing the problems with the pending bill, and considering some basic principles of copyright, as I have described them, tends to believe that a design approach to semiconductor protection is preferable to a copyright solution as a matter of intellectual property policy.

We are not saying it would be constitutionally required. We agree with Professor Patterson that, if Congress decides to protect mask works under the Copyright Act, the courts would likely uphold the law.

But as a matter of intellectual property policy, we tend to believe that a separate, specially tailored law would seem preferable. We also think that careful redrafting of the bill could resolve some and perhaps all of the technical problems that we now see.

But a design approach avoids the necessity of confronting them, because you have a separate law. We are also concerned that some of the problems are of a very fundamental character relating to the basic approach of the pending bill and may prove very difficult to resolve.

I will address some of those now. First, the problem of what is a copy. This is a very fundamental question of copyright law, since the reproduction and distribution of copies are the most common rights conferred by copyright statutes.

If there is any ambiguity or question relating to what is meant by the term "copy," you tend to get into very fundamental difficulties. This was seen, for example, when the Supreme Court decided in 1908 in the White-Smith v. Apollo case (209 U.S. 1) that piano rolls were not copies of the musical compositions contained in them, and then Congress did not overturn that decision in revising

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