lectual property related provisions of the Trade and Tariff Act of 1984. They have an interest in seeing that we negotiate from the strongest position possible.

Question. Can you think of any creative approaches to the manufacturing clause that would meet the standards required under the Berne Convention but that would fall short of total elimination?

Answer. Once again, we defer to the Office of the Register of Copyrights regarding the obligations of the Berne Convention in relation to the "manufacturing clause." We would like to point out, however, that the Berne Convention is not the only international agreement which must be considered in relation to the "manufacturing clause." Following the extension of the clause in 1982, the European Communities requested the General Agreement on Tariffs and Trade to establish a panel to determine whether the extension of the clause was consistent with U.S. obligations under GATT. The panel determined that our extension of the clause beyond the expiration date inserted in the copyright law by the 1976 amendment was inconsistent with our obligations. That report, which included a recommendation that the United States bring its practice into conformance with its obligations "within a reasonable time," was adopted in May of 1984. Were the clause to be extended once more, it could serve as the basis of a request for compensation by the E.C. and any other GATT signatory affected adversely.

Question. You mention in your testimony the recent effort by the Congress to tie trade benefits to “adequate and effective" protection of intellectual property-specifically GSP benefits under the Trade and Tariff Act of 1984, and trade concessions under the Caribbean Basin Initiative. We eagerly await your report. Can you give us any initial clues as to what you are finding?

Answer. There actually are three new reports required by the Trade and Tariff Act which include intellectual property in the larger trade context. The first is the trade barriers report which is due by the end of October of this year to the House Ways and Means Committee and the Senate Finance Committee. In it, we must identify barriers to US trade and investment, including those involving the protection of intellectual property, estimate the effect on U.S. commerce, and describe the efforts the U.S. government has made to eliminate the barrier. The report must be updated annually.

Two other reports are required under the Generalized System of Preferences, the first on products, the second on beneficiaries. Each requires that the President reconsider all of the discretionary criteria which he considers in determining to designate a country as a beneficiary.

We are compiling information now supplied to us by the private sector both in writing and at public hearings. We have identified the following four trade barriers related to copyright:

Lack of copyright protection for foreign works.

Burdensome registration requirements.

Lack of means to prevent unauthorized retransmission of broadcast signals.

Lack of protection for three dimensional representations of two dimensional works.

The following three trade barriers affect enforcement of copyrights as well as other forms of intellectual property rights:

Lack of access to the courts.

Lack of discovery or some equivalent means for obtaining information when the burden of proof in an infringement suit is on the intellectual property owner. Penalties for infringement which are inadequate to discourage the practice. Using the information submitted by the private sector, we are preparing information on the practices of individual countries that fall within these identified trade barriers.

Question. Have the provisions led to any measurable improvement in protection of intellectual property in the beneficiary_countries? Can you point to any specific changes in the domestic laws of the beneficiary countries?

Answer. The Trade and Tariff Act was enacted on October 30 of last year so it would be inappropriate to attribute improvements in intellectual property protection abroad to its provisions. The discussions of the proposals related to intellectual property protection that went into the Act, however, did bring the issue, and the importance we place upon it, to the attention of many foreign government officials. The U.S. Government had held bilateral consultations with foreign government officials on intellectual property protection as a trade issue as early as 1981 and had been working to develop an international agreement for the control of commercial counterfeiting in international trade since 1978. Implementation of the provisions of the Caribbean Basin Economic Recovery Act required, among other things, obtaining commitments from countries where problems existed to change their practices.

These activities focused attention on intellectual property protection as a trade issue.

As mentioned above, the beneficiary countries under the CBI program gave commitments to change or eliminate practices related to intellectual property that failed to provide "adequate and effective" protection for the rights of foreign nationals. The trademark and copyright laws of Taiwan have been amended to provide greater protection and to increase penalties for infringement. Singapore has taken some steps to prosecute pirates of audio recordings. Several developing countries are drafting legislation to improve their patent, trademark, or copyright laws. We will have more information about these changes in the trade barriers report, along with information about all other issues of market access.

Question. When can we expect to get the report?
Answer. By the end of October at the latest.

Senator MATHIAS. Thank you very much for being here.

We appreciate the attendance of all of the witnesses and particularly the honor of having the Director General with us today and having him testify and stay for these proceedings.

The committee stands in recess subject to the call of the Chair. [Whereupon, at 12:05 p.m., the subcommittee adjourned, subject to the call of the Chair.]

U.S. ADHERENCE TO THE BERNE CONVENTION

TUESDAY, APRIL 15, 1986

U.S. SENATE,

SUBCOMMITTEE ON PATENTS,

COPYRIGHTS AND TRADEMARKS,
COMMITTEE ON THE JUDICIARY,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:33 a.m., in room SR-485, Russell Senate Office Building, Hon. Charles McC. Mathias, Jr. (chairman of the subcommittee) presiding.

Also present: Senator Specter.

Staff present: Steven J. Metalitz, chief counsel and staff director; Randy Collins, professional staff member; Isabelle Rodriguez, legal intern; Pam Batstone, chief clerk; Beverly McKittrick, counsel to Senator Laxalt; John Podesta, minority chief counsel; Carl Hampe, counsel to Senator Simpson; and Debbie McIlroy, counsel to Senator Specter.

OPENING STATEMENT OF HON. CHARLES MCC. MATHIAS, JR., A U.S. SENATOR FROM THE STATE OF MARYLAND; CHAIRMAN, SUBCOMMITTEE ON PATENTS, COPYRIGHTS AND TRADEMARKS Senator MATHIAS. The subcommittee will come to order.

Today, we continue our examination of U.S. adherence to the world's premier international copyright agreement, the International Union for the Protection of Literary and Artistic Works, which is better known as the Berne Union.

The question of whether or not this country should join the Berne Union, of course, is not a new question. It has been considered in the past at great length. But the circumstances under which we make this examination charge the issue with a new sense of urgency.

Changes in technology, the global demand for the products of American culture, and the increasing importance of intellectual property to our national prosperity are landmarks of the whole terrain of copyright.

Increasingly, the vexing problems in copyright must be cast against an international background. We need innovative solutions as we seek to maintain the rights of authors, to combat piracy, and to meet the needs of the developing countries.

The Berne Union and the century of experience in international copyright that it embodies is a resource that we can ignore at our own risk.

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At the last hearing on this subject, witnesses representing the administration advocated adherence to Berne as a necessary step in furthering U.S. copyright interests abroad.

We are today meeting to place on the record the views of the private sector, and I think the subcommittee will be particularly interested in two issues. First, do the private sector participants in the copyright system agree that the United States should adhere to the Berne Union?

Second, what changes in our own copyright law would have to be made in order to meet the requirements of the Berne Union, and how would these changes affect the rights of those who create, disseminate, and use copyrighted works? These are complex questions, but fortunately we have some expert witnesses to assist us in finding the answers. At the request of the Department of State, an ad hoc working group of copyright practitioners was convened to examine the changes necessary in U.S. law. This morning we will hear from the working group's chairman and several of its members.

In addition, at the request of the subcommittee, the staff of the Copyright Office has prepared a document suggesting options for implementing legislation. I think these resources should help us in a practical way to gain some appreciation of the consequences of U.S. adherence to Berne.

The witness list today is a cross-section of participants in the implementation of the copyright system. It includes copyright proprietors, users of copyrighted materials, and the creators themselves. It is, of course, impossible to have live testimony from all of the interested parties, but we will solicit comments from other organizations, including the larger business and consumer community. We will begin the hearing with a panel designed to address really what are the overarching legal issues raised by adherence to Berne. Because time is a critical factor-the Senate is now in session and we are possibly going to be interrupted by rollcalls or other demands from the Senate floor-I am going to have to impose a 4-minute rule on witnesses. In other words, I ask each witness to limit his or her oral presentation to 4 minutes.

All written statements, however, will be entered in full in the record. I will now so direct, in order that you may all be assured that without any further action on the part of the Chair, all written statements will appear in the record as if read.

We will begin with a panel: Mr. Irwin Karp, chairman of the ad hoc working group; Prof. Don Wallace, of the Georgetown University Law Center; and Prof. John Kernochan, of the Columbia University School of Law.

Gentlemen, do you have any preference as to your order of speaking?

Let me say for the benefit not only of the first panel but of all panels: we operate on the traffic light system. Most of you are veteran witnesses and already know that system. As long as you have the green light, go ahead, but when the red comes on, do not try to run the red.

Mr. KARP. Shall I begin?

Senator MATHIAS. That will be fine.

STATEMENT OF A PANEL CONSISTING OF: IRWIN KARP, CHAIRMAN, AD HOC WORKING GROUP ON U.S. ADHERENCE TO THE BERNE CONVENTION, NEW YORK, NY; JOHN M. KERNOCHAN, NASH PROFESSOR OF LAW, COLUMBIA UNIVERSITY SCHOOL OF LAW, NEW YORK, NY; AND DON WALLACE, JR., PROFESSOR OF LAW, GEORGETOWN UNIVERSITY LAW CENTER, WASHINGTON, DC

Mr. KARP. Mr. Chairman, I thank you very much for this opportunity to address the basic legal questions involved in adherence of the United States to the Berne Convention. My statement contains a summary of the reasons, which I think are very compelling, for the United States to join Berne, but I will not reiterate them in my oral presentation.

Suffice it to say that we have had a free ride on the Berne Convention for many, many years, basically because of our adherence to the Universal Copyright Convention, and that there is a grave risk that the ride is about over.

Indeed, the Berne Convention, as my statement points out, has provisions under which its member countries can retaliate against nonmembers, such as the United States, which do not give adequate protection to the authors of that Berne country.

The ad hoc working group has prepared a report which you have referred to, and it is in the process of receiving comments from interested individuals and organizations. The group will submit a final report to the subcommittee and other Government agencies, including comments, where appropriate, on the Copyright Office discussion of implementing legislation, which brings me to the first and probably threshold question; namely, what sort of legislation is required of Congress in order for the United States to enter the Convention.

The ad hoc group has concluded in its report that the Berne Convention is not self-executing, and that means simply that the Congress must amend the Copyright Act to change those provisions which are incompatible with Berne.

It is our view that by adhering to Berne, we do not automatically write the provisions of the treaty into U.S. law, and that view is shared by the Copyright Office in an internal report that I cite. It is also shared by other copyright experts.

Any lingering doubts about Berne's non-self-executing status could be assuaged by a reservation in the Senate resolution indicating the Senate's view that the treaty was non-self-executing.

Last, it is important to note that even if Berne were self-executing, it would not be so with respect to works of U.S. origin, since they are beyond the reach of the Convention.

In considering changes in U.S. law to achieve compatibility, there is one basic factor that has to be recognized; namely, that the Convention itself does not require the United States to give Bernelevel protection to works of which it is the country of origin, such as works first published in the United States.

Article 5(3) of the Convention deals with that subject, and I have quoted from the guide of the World Intellectual Property Organization which discusses the impact of 5(3). It would be sufficient,