large, well-organized collection societies, the jukebox license, in fact, is an antimonopoly provision. This position was adopted by British copyright expert William Wallace in his report to the Director General of the World Intellectual Property Organization (WIPO) on the United States Copyright Law and the Berne Convention. Even though this argument gained general acceptance in a meeting of a group of consultants to WIPO held in Geneva from June 5-7, 1978, final resolution of this question is far from certain. The approach most compatible with the requirements of the Berne Convention would be to allow the parties to negotiate agreements in the marketplace without a compulsory license. A more compatible alternative would be to resort to compulsory licensing only in the event that the parties were to fail to reach an agreement. But any approach adopted should, at a minimum, provide for a continuing royalty for continuing use. The present negotiated settlement of the jukebox controversy may well strengthen the validity of a position that the section 116 license is compatible with the Berne Convention and its recognition in Article 17 that countries have an inherent right to permit, control or prohibit by legislation or regulation the presentation of any work. That settlement reflects a bargain, achieved by the parties, establishing a way for jukebox operators and copyright owners to address issues of mutual concern in a spirit of negotiation. The bargain assures the continuing payment to copyright owners of fees at a level approximating an estimated free market value, and it also includes features for rebates to encourage compliance. In effect, the compulsory license itself is acting as "a sort of arbitrator between the author's collecting societies and users of the works they control, and this avoids any question of abuse of the monopoly position the societies enjoy." Guide to the Berne Convention, WIPO, Geneva, at page 99. Q. What rights, if any, will United States copyright owners lose under the Uniform Copyright Convention as a result of our nation's withdrawal from UNESCO? A. The simple answer to this question is that no rights will be lost. Our membership in the Universal Copyright Convention is independent of any membership status in UNESCO. However, there will be a real and immediate loss of influence over the way in which UNESCO directs the work of its Copyright Division, which is responsible for providing technical support to the programs carried out under the auspices of the Intergovernmental Copyright Committee (IGCC), the governing body of the UCC. Since our withdrawal from UNESCO at the end of 1984, we no longer participate in the UNESCO General Conference review and approval of the UCC program and budget. We participate fully in the work of the IGCC. Q. What compulsory licenses granted by Congress under our copyright laws would be affected by U.S. adherence to the Berne Convention? How would they be affected? A. - - Compulsory licenses are generally not permitted by the Berne Convention. In instances where compulsory licenses are permissible, they are dealt with specifically. In the areas of the compulsory license for the reproduction of music in sound recordings the so called mechanical license our $115 license is regarded as compatible with Article 13(1) of Berne. As well, the $111 compulsory license for cable retransmission and the compulsory license in $118 for public broadcasting uses of certain works are compatible with Article 11bis (2) of Berne. No changes in our law in these areas appears to be needed. However, as previously discussed, it is not certain that the $116 jukebox compulsory license is completely compatible with Berne, but solid arguments in its favor can be made. There is also some question as to the compatibility of the reproduction rights granted to public broadcasting entities in $118. At present, it is our understanding that the compulsory license in this area has not been used, since the parties have been able to conclude voluntary licensing agreements. Thus, as a practical matter, there may not be a problem. This, therefore, is an area where repeal of the compulsory license might be appropriate. Q. Please cite the pertinent provisions of Berne that might prohibit the compulsory license for coin-operated phonorecord players and discuss any variations that might apply in other countries adhering to Berne. A. Article 11 of the Berne Convention deals with the public performance of protected works. It provides that: "(1) Authors of dramatic, dramatic-musical and musical works shall enjoy the exclusive right of authorizing: (i) the public performance of their works, Article 11 does not provide for a compulsory license. To our knowledge, no Berne member states have provisions analogous to the $116 jukebox license. In those countries, the public performance of music on jukeboxes is authorized by the copyright owner, or more typically by collecting societies on the owner's behalf, and jukebox operators pay fees as set by their negotiated agreements. Possible justifications for the $116 compulsory license have been discussed earlier. Q. What mechanisms might be used to grant the coin-operated phonorecord player industry equal or better protection than Congress mandated for it in 1976 that would meet the provisions of the Berne Convention? A. far as The 1976 compulsory license is probably near to the outer limit of justifiable deviations from the general Berne prohibition of compulsory licensing. Short of revision of the Convention to sanction such licensing, the present provision is about as we can go. We have already discussed, how, as a practical matter, the present agreed upon settlement of the jukebox controversy may allay some concerns about this compulsory license. Perhaps, as a matter of policy, we should not seek to go further. Congress can, of course, choose to expand or restrict the present compulsory license and we can seek to justify those actions within the scope of the Berne Convention. However, one of the presumed benefits of Berne membership is the ability to resist The unwarranted erosions of authors' rights around the world. imposition of compulsory licensing systems is a serious erosion of those rights and as a matter of policy the Administration has opposed such systems in other countries. If we justify our compulsory license in a manner that leaves open the door for others to do the same, our adherence to Berne may damage both international copyright and our own trading position in other countries. For this reason, I urge caution in dealing with the delicate question of compulsory licensing. Q. Is it possible for the U.S. to adhere to Berne and maintain Section 116 of the Copyright Act by reservation or in some other manner? A. The United States could adhere to Berne and maintain the Section 116 compulsory license, but not by reservation. Article 30 of the Berne Convention limits reservations to only four instances: 1. Continuation of reservations permitted under an earlier text of the Convention to which the country exercising the reservation had adhered. 2. Acceptance of the administrative provisions of the Paris Act only. 3. Reservations concerning the dispute resolution provisions of Article 33. 4. The Appendix which contains special rules for developing countries. Apart from these, no reservations are allowed. The $116 license would have to be justified on some other basis. One possibility would be to treat it as a monopoly regulation provision since all countries retain the inherent authority to regulate monopolies as recognized in Article 17 of Berne. A justification for this approach is presented in the answer to the first question. Senator MATHIAS. Our last witness this morning is Mr. C. Michael Hathaway, deputy general counsel of the Office of the U.S. Trade Representative. Mr. Hathaway, we are happy to have you with us. STATEMENT OF C. MICHAEL HATHAWAY, ESQ., DEPUTY GENERAL COUNSEL, U.S. TRADE REPRESENTATIVE, WASHINGTON, DC, ACCOMPANIED BY ALICE ZALIK, ASSISTANT GENERAL COUN SEL Mr. HATHAWAY. Thank you, Mr. Chairman. I would like to introduce Alice Zalik, who is assistant general counsel in our office and who chairs the interagency body that deals with trade and intellectual property. I have a very short statement and I will make it even shorter. The Trade Representative is concerned when policy decisions involving copyright and other intellectual property matters impact our international trade relations. We are enhancing our efforts to increase worldwide protection provided to intellectual property. In the Trade and Tariff Act of 1984 there were several provisions expressly linking protection afforded intellectual property by foreign countries and certain of our U.S. trade laws. I have attached a summary of those five different areas in the trade law that now link intellectual property protection and international trade. We have a responsibility under that legislation to coordinate a review of all trade barriers affecting U.S. commerce, including those affecting intellectual property: patents, trademarks, and copyrights. We are working through an interagency committee, which Alice Zalik chairs, to analyze acts, policies, and practices of foreign governments that constitute significant barriers to or distortions of trade affecting exports of U.S. goods and services that are protected by trademarks, patents, and copyrights. As part of that exercise we must provide an estimate of the impact those barriers have on U.S. commerce. That work is under way now and it is something that is of significant importance to the administration. The report which will result from that is of central importance to the Trade and Tariff Act provisions. In the process of preparing that report it has become necessary for our office through the interagency group to coordinate the development of criteria for evaluating whether trade laws or other laws and practices of other countries provide adequate and effective protection of patents, trademarks, and copyrights. As part of that report we are also required to indicate the actions that have been taken to achieve adequate and effective protection of those intellectual property rights, including consultations and negotiations, or including the possible imposition of trade restrictions by the United States in response to inadequacies in protection of intellectual property. These consultations and negotiations with foreign governments include in many instances countries that adhere to the Berne Convention. These governments have grounds for questioning the sincerity of the U.S. interest in adequate and effective protection of copyrighted works when we ourselves have not chosen to adhere to the Berne Convention. |