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licenses (and translation licenses for non-broadcast use of audio-visual text) are limited to use in connection with “systematic instructional activities". In some cases, such limitations serve also to describe the class of works subject to compulsory licensing—thus, only audio-visual works “prepared and published for the sole purpose of being used in connection with systematic instructional activities“ are subject to such licenses. In a similar vein, both broadcasts utilizing compulsory licensed translations and the permitted export of such translations under certain conditions are to be devoid of commercial purpose.

For authors and publishers of educational materials, since it is addressed to eliminate their entire market, such limitations obviously provide no comfort, and their significance is a negative one. They only serve to underscore a basic point of these comments that a particular segment of American enterprise is being asked (required might be a better word) to devote the product of its private initiative to the subsidization of the development of foreign countries in a manner thoroughly inconsistent with our traditional concepts of property and of individual vs. governmental responsibility.

Assuming that some American authors and publishers do find initial comfort in the educational limitations on compulsory licensing under the Paris text, either as a device for inexulating them from the effect of such licensing or as a theoretically satisfactory justification for the need for such reservation, they would do well to consider how little actual limitation these standards impose. The Report of the General Rapporteur for the Paris U.C.C. Conference notes the "understanding" that "scholarship” encompasses not only instruction at grade and high schools, colleges and universities, but also a "wide range of organized educational activities intended for participation at any age level and deroted to the study of any subject" and that “systematic instructional activities" include “not only activities connected with the formal and informal curriculum of an educational institution, but also systematic out-of-school education." The Report also notes that the possibility of the general public sale of copies produced under compulsory licensing was "envisaged" at the Conference. The only palliative offered for this possibility is that the licensing authority of the State would be “under a duty to determine that the License would fulfil the need of specified ‘systematic instructional activities' [and the license) would necessarily be refused if such activities were in fact incidental to the actual purpose of the reproduction.” Observers at the Paris Conference were left with but little doubt that, as we have indicated above, the countries seeking the benefit of these reservations have a rather fluid and wide-ranging conception of “scholarship", "education", and the other "limitative" criteria. D. Reproduction under Compulsory Licenses outside the Developing countries

The Paris revisions provide that compulsory licenses are "valid only for publication" in the territory of the licensing State, but the discussion at the Paris conference made abundantly clear, as confirmed by governing interpretations in the Report of the General Rapporteurs, that works may be printed outside a developing country pursuant to its compulsory license, and joint translation facilities may be employed by several countries under their compulsory licenses. This interpretation imposes only the following restrictions of substance on foreign reproduction of compulsory licensed works:

1. The reproduction facilities in the developing country are "incapable for economic or practical reasons” of reproducing the copies (a standard to be interpreted by the developing country itself);

2. The country of reproduction is a Berne or U.C.C. member;

3. All copies reproduced abroad are delivered to the licensee in bulk for distribution only in the developing country;

4. The reproduction facility is not "specially created" for reproduction under compulsory licenses. The interpretation also provides that compulsory licensees may employ translators and editorial personnel in other countries, and that several compulsory licensees from different countries may use the same translation; and

5. The reproducing facility guarantees that the work of reproduction is law. ful in its own country.

To illustrate the result-half a dozen or more developing countries may utilize the same editorial, translation and printing facilities, located in any Berne or U.C.C. country, to translate and/or reproduce a work to be used pursuant to the

compulsory license provisions of each country. These joint printing facilities need not even be in a developing country. Given the additional right of a joint translation, this in fact results in a publishing enterprise servicing a group of developing countries.

There is furthermore no requirement that these foreign translation, editorial, and printing operations must not be conducted for profit. In other words these may well be profit-making publishing enterprises. The compulsory licenses will save them most of the initial costs and royalty expenses, which are among the heaviest expenses of any publishing enterprise. The net result will be to sanction profit-making publishing operations which will preempt markets from the authors and publishers for copyrighted materials.

The foregoing is a brief summary of the provisions of most interest to educa. tional authors and publishers. Attached as Annex A is a chart that summarizes in parallel columns the major substantive provisions dealing with translation, reproduction and other rights under the existing Berne Convention and the Stockholm Protocol and the Paris revision of that Convention.

Since the concessions to developing countries under the Paris revisions of the Universal and Berne Conventions are substantially the same, a general summary of the concessions made by the Paris revision of the Universal Convention is reflected in the columnar presentation of the Paris revisions to the Berne Conventions. Such significant differences as exist are set forth in footnotes to the chart.

The view has been expressed that the Paris revision of the Berne Convention is a substantial improvement over the Stockholm Protocol to that Convention. The Stockholm Protocol, which only five years ago created such a furor, has not been adopted by the developed countries, because of its broad preemption of the rights of authors and publishers. For authors and publishers of educational materials, however, broad or narrow that category may be, examination of the chart attached an Annex A will show that the Paris revision can hardly be deemed a meaningful improvement for them over the Stockholm Protocol. The changes in the compulsory license scheme have been largely procedural, and promise no substantive relief of any importance. Regardless of the more cir. cuitous formalities, required, the result for educational authors and publishers would be the same expropriation.

2. THE PROPRIETY OF AND PRECEDENT FOR GOVERNMENTAL COMPENSATION IF THE

PARIS REVISION IS RATIFIED

For the reasons above, we urge that the Paris Revision of the Universal Copy. right Convention should not be ratified. However, if the Senate deems that the underlying national interests of the United States require such ratification, notwithstanding the injury to some of its citizens, we suggest that provision be made for governmental compensation to those authors and publishers whose interests would be sacrificed.

United States economic assistance to developing countries has always heretofore been a governmental responsibility, discharged by money payments or loans to developing countries or by governmental purchases of needed materials which were then supplied directly to the foreign countries. If in this case the United States Government feels it cannot take that course with respect to intellectual property, and that economic assistance with respect to such property must become an individual responsibility of a class of American citizens, then governmental action to compensate American authors and publishers for this burden is appropriate. The Senate, and the United States Government in general, has a history of carefully guarding the rights of United States citizens where the national interest requires that some private interests of some citizens be sacrificed in order to make concessions to foreign countries. The outstanding example is the adjustment assistance provisions of the Trade Expansion Act of 1962.

The Trade Expansion Act liberalized United States tariff provisions so as to make possible what later became known as the Kennedy Round of tariff reductions. When the Act was proposed and enacted, it was recognized by all concerned that some firms and workers would be seriously injured by the increase in imports which the contemplated tariff reductions would allow. Accordingly, the Act included provisions under which injured firms could receive assistance consisting of technical assistance, government loan guarantees, and tax assistance, and affected workers could receive assistance consisting of a form of unemployment compensation, training for other jobs, and relocation allowances. These forms of assistance are paid by the Federal Government and at levels which are uniform throughout the nation.

The legislative history of the Act makes clear that these provisions embody a broad general principle. The initial form of the Act was drafted by the Kennedy Administration and introduced in the House as H.R. 9900 of the 87th Congress. The President's message, dated January 25, 1962, accompanying the bill stated in part:

“When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the Federal Government.

"Just as the Federal Government has assisted in personal readjustments made necessary by military service, just as the Federal Government met its obligation to assist industry in adjusting to war production and again to return to peacetime production, so there is an obligation to render assistance to those who suffer as a result of national trade policy."

(H. Doc. #314, 87th Cong. 2d Sess., reprinted in H.R. Ways and Means Comm., 90th Cong., 1st Sess., “Legislative History of H.R. 11970, 87th Cong., Trade Expansion Act of 1962” (1967), at pp. 90-91 (hereinafter cited as "Leg. Hist."))

Secretary of Commerce Luther Hodges made the principal presentation before the House Ways and Means Committee. Discussing relief for firms and workers injured by increased imports, he said:

"The Federal Government has a special responsibility to such firms and workers. For their hardship can be directly traced to a specific action undertaken by the Government for the good of all—the lowering of trade restrictions in order to open up new markets for our goods abroad. As the President has said, no industry or work force should be made a sacrificial victim for the benefit of the national welfare. No small group of firms and workers should be made to bear the full burden of the costs of a program whose great benefits enrich the Nation as a whole.” (H.R. Ways and Means Committee, 87th Cong. 2d Sess., Hearings on H.R. 9900, p. 90; Leg. Hist. p. 172)

The Ways and Means Committee revised the administration's bill and reported out the revision as H.R. 11970. In its report, the Committee justified the adjustment assistance provisions in the following language:

**The furnishing of this assistance is fully consistent with our traditional practice of protecting American commerce and labor from serious injury resulting from imports. It will enable those firms and workers injured by increased imports to receive prompt help that is suited to their individual needs." (H. Rept. No. 1818, 87th Cong., 2d Sess., pp. 13–14; Leg. Hist., pp. 1077–78)

Representative Hale Boggs was the floor manager of the bill in the House. In his speech introducing the bill, he supported the adjustment assistance provision as follows:

"[I]t is based on a very sound fundamental principle: That in the pursuit of a national objective, we shall give assistance to the businessman who is hurt and give assistance to the workingman who is hurt. There is nothing new or radical about this. When we call a lad and say: You must go to serve your country in the Army or the Navy or the Air Force, we also say to him: Son, when you come back home, your job will be waiting for you. We assure him of reemployment rights. If he is hurt, we put him in a veterans' hospital.

"Throughout the entire history of the United States, we have consistently recognized the fact that in the pursuit of an overall national policy, we have made adjustments for those who are injured thereby-whether it be injury to firms or to workers. That is all this bill does--nothing else. In most instances, it will use existing machinery which has already been established by law." (Cong. Rec. 6/27/62, pp. 11,086–87 ; Leg. Hist. p. 1189)

Representative Keogh, another member of the Ways and Means Committee, subsequently remarked about these provisions :

“Having set up the fences which we now propose to lower or remove, we have the obligation-in equity and good conscience to assist these affected firms and workers in meeting the new situation which the Government will permit to come about." (Cong. Rec. 6/27/62, p. 11,111, Leg. Hist. p. 1233)

Both in the House and in the Senate, objections were raised to the payment of a uniform amount to workers, rather than the amounts payable under state unemployment compensation systems, which in most cases were much less. In the House, Representative Conte of Massachusetts argued that this was discriminatory and offered as a particular example unemployment in his home district caused by cancellation of a government contract. Representative Mills, then as now Chairman of the Ways and Means Committee, answered that in Conte's example the government was acting like any other contractor, and continued :

“Assistance in the case of removal of tariffs can be justified, because this condition arises through Government sovereign action, taken in the public interest, to lower tariffs and thereby take a job away from this man. The sovereign has seen fit to remove a tariff which it placed on an article to protect the job. In all equity and good conscience it must take steps to make the affected worker's adjustment to the new competitive conditions created by its own acts as easy as possible under the circumstances." (Cong. Rec. 6/27/72, p. 11,117; Leg. Hist. pp. 1243–44)

In the Senate, two amendments were offered with respect to the adjustment assistance provisions. The first sought to eliminate the provisions entirely. The asserted grounds were that the provisions discriminated against those unemployed for other reasons, that some of those others might have become unemployed because they had been providing goods and services to the industries forced out of business by imports, and that there was no essential difference between unemployment caused by imports and unemployment due to changes in government purchasing. (Remarks of Senator Curtis, Cong. Rec. 9/17/72, p. 18,688; Leg. Hist. pp. 1702–03) (Of course, the motive for the amendment was to eliminate labor support of the Act as a whole and thereby defeat the Act.)

Senator Williams of New Jersey opposed the amendment and defended the provisions in the bill as follows:

“I strongly support the President's trade program. I think it is vital to our Nation's continued growth and prosperity. But I see no reason why the few communities, industries or workers who may possibly suffer some adverse effect from the reduction of trade barriers must bear the entire burden. If the interests of the Nation and the interests of our national trade policy cause some injury, the Nation, and therefore the Federal Government have a clear and unmistakable obligation to alleviate that injury and facilitate adjustment to new economic activities." (Cong. Rec. 9/17/72, p. 18,691 ; Leg. Hist. p. 1706)

The first amendment was defeated, 58–23.

The second amendment was offered by Senator Byrd of Virginia. It would have set the level of payments at the rate prevailing under state unemployment compensation programs, rather than at the uniform national level set by the bill. The arguments in support of the amendment were similar to those for the previous amendment. In opposition to the amendment and in support of the pending bill were the following remarks:

Senator SMATHERS. “I, too, believe in States rights. I believe that if an injury done to a worker results from action taken by a State, the State, rather than the Federal Government, should provide the proper compensation.

But when this bill goes into effect, the injury will result from Federal action, from the action of the Federal Government in removing the tariff, thereby allowing the entrance of imports which will result in damage to an industry and in the loss of the jobs of the workers in that industry. In view of the fact that the action would be Federal action, those of us on the committee took the position that the Federal Government should have the responsibility for making the compensation payments due to the worker because he lost his job as a result of action taken by the Federal Government.

I believe that in this instance the Federal Government, acting in what I regard as the overall interest of the Nation—and I recognize that some workers will be injured thereby, but there will be overall benefit to American industry and to the general economy-has the responsibility, under the original concept, to provide funds for proper and necessary compensation.” (Cong. Rec. 9/17/72, p. 18,694; Leg. Hist. p. 1712)

Senator Long: "Mr. President, it is a fair proposal that Federal standards be used in paying for Federal injury, we provide private relief bills to compensate Federal injury all the time. If one examines the calendar, he will find more

private relief bills than any other kind. This is a relief bill for those the Federal, Government chooses to injure in the pursuance of a program in the overall national interest. On the whole, we anticipate an increase in national income as a result of the bill. We anticipate an increase in employment overall. We do not want to do that at the expense of a few and the suffering of an unfairness to a few Americans who will be injured.” (Cong. Rec. 9/17/72, p. 18,695 ; Leg. Hist. p. 1714)

Senator MANSFIELD : “These import-affected workers would not be casualties. of supply and demand or any other impersonal economic force. Instead, their unemployment would be directly attributable to a decision of the Federal Government taken in the national interest. Certainly, the Federal Government would owe a special obligation to those injured by such actions."

The amendment was defeated, 51–31. The principle was thereby affirmed that if the Federal Government causes injury to some industry in order to achieve some broad goal of foreign policy, it should compensate those who have been injured, at least in part.

Accordingly, it is urged that the precedent of the Trade Expansion Act be followed and that an appropriate enactment be promulgated to vitiate the economic damage upon authors and publishers if Congress should determine that it is in the national best interest to ratify the Paris text of the Universal Copyright Convention. If, as supporters of the Paris revisions have asserted, the compulsory licensing provisions will be little used by the developing countries, then the Senate will have affirmed, at little cost, the sound principle that a small class of citizens is not to be required to bear the burden of furthering the national interests without compensation. If, as we fear, compulsory licensing will become widespread among developing countries, then the injury to authors and publishers will be substantial in terms of the normal dimensions of the publishing industry, and there will be a serious need for compensation. Measured against the sums which the Congress usually appropriates in connection with foreign aid, however, the amount of compensation would in any event be negligible.

We suggest that provisions for such compensation would be simpler than those of the Trade Expansion Act because :

1. The Paris texts of both the U.C.C. and the Berne Union include procedures for notifications to the copyright owners or proprietors when a developing country grants a compulsory license on copyrights owned by United States citizens (as well as all other countries).

2. Under the Adjustment Assistance program of the Trade Expansion Act, one recurring problem wbich requires extensive investigations by the Tariff Commission is to determine whether injuries to particular American industries are caused by current tariff reductions or other factors, such as general business conditions, increasing American costs, prior tariff reductions, etc. Such problems are entirely absent here, where the loss of income to authors and publishers is demonstrated from the use of their literary property by a developing country (with little compensation or none) under compulsory licenses.

3. The uses made of educational materials in the developing countries can be measured. Royalties under compulsory licenses, regardless of their rates, will normally be measured by such uses, i.e., number of books, records, tapes, etc. sold, and such numbers should in the ordinary course be reported together with the royalty payments, or be obtained by inquiry from the licensees.

4. The measure of compensation that could be set forth in the statute would be a predetermined percentage of those royalties which publishers and authors charge in the normal course of export licenses.

Accordingly it is urged that the Paris Revision of the Universal Copyright Convention not be ratified. However, in the event that despite the unwarranted and unfair distinction made between tangible property and intellectual property Congress decides that it is in the national interest to ratify the treaty. then it is urged that an enactment paralleling the Adjusment Assistance provisions of the Trade Expansion Act be passed to preserve the rights of authors and publishers in conformity with the traditions of the United States.

B. L. LINDEN.

20-34473-18

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