GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT): INTELLECTUAL PROPERTY PROVISIONS FRIDAY, AUGUST 12, 1994 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INTEL- Washington, DC. The subcommittees met, pursuant to notice, at 10 a.m., in room 2237, Rayburn House Office Building, Hon. William J. Hughes (chairman of the Subcommittee on Intellectual Property and Judicial Administration) presiding. House Members present: Representatives William J. Hughes, Don Edwards, Howard L. Berman, Jack Reed, Xavier Becerra, Carlos J. Moorhead, and Howard Coble. House staff present: Hayden Gregory, counsel; Jarilyn Dupont, assistant counsel; William Patry, assistant counsel; Phyllis Henderson, secretary; Thomas Mooney, minority counsel; and Joseph Wolfe, minority counsel. Senate staff present: Karen Robb, chief counsel; Janis Long, counsel; and Darrell Panethiere, minority counsel. OPENING STATEMENT OF CHAIRMAN HUGHES Mr. HUGHES. The House Subcommittee on Intellectual Property and Judicial Administration and the Senate Subcommittee on Patents, Copyrights and Trademarks will come to order. Good morning. The Chair has received a request to cover this hearing by cameras and still photography. In accordance with the committee rules, permission will be granted, unless there is objection. Is there objection? Hearing none, the permission is granted. It is indeed a pleasure to hold a joint hearing with Senator DeConcini's Subcommittee on Patents, Copyrights and Trademarks. The subject of today's hearing, the possible intellectual property components of the General Agreement on Tariffs and Trade, is of obvious importance to authors and inventors and to those who distribute their works. As U.S. authors and inventors increasingly rely on foreign markets, the need for adequate foreign protection also increases. By virtue of the inclusion of the substantive provisions of the Berne Convention in GATT, along with strong enforcement requirements (1) and dispute settlement, the U.S. authors will enjoy a high level of protection in over 120 countries. While I share the disappointment of many that the Uruguay round did not achieve more, particularly in the area of national treatment, we should not overlook the real gains the TRIPS agreement achieves. In examining the TRIPS text as signed in April of this year, the USTR identified a number of areas that require changes in the United States domestic law. In the area of patents, three changes were identified: One, treatment of inventive activity occurring in a WTO member country for purposes of establishing the date of invention; two, including offer to sell and importation within the grant of patent rights; and three, providing for a 20-year term of protection measured from the date of filing. I recognize that there are many concerns expressed about various aspects of the patent law changes. And I think I have heard from a lot of people. Next to the people I heard from about guns back home, I suppose that runs second. Most of these concerns are over the proposed 20-year term measured from date of application. Witnesses will argue that the term of patent protection will be shortened by this provision. The administration has made changes in its proposal to address these particular concerns, changes which I believe are very positive and which should go a long way toward alleviating their fear of a shortened term. The creativity of our inventors must be encouraged and rewarded, and I believe that is what will ultimately result from these hearings and this process. The U.S. Trade Representative only identified one mandatory copyright change, repeal the October 1997 sunset on computer program rental. At the same time, the USTR identified two areas in copyright where changes are not mandatory, but in USTR's opinion, desirable and compelling. These are providing retroactive protection to works of Berne and WTO members that have fallen into the public domain in the United States for failure to comply with our formality requirements, because of lack of national eligibility, or in the case of sound recordings, because before February 15, 1972, there was no Federal protection. I am sympathetic, very sympathetic, to those two proposals. I fully appreciate the substantial benefits that U.S. authors will receive overseas. At the same time, I want to express clearly two concerns: First, any discretionary amendments-and both of these are discretionary-may be included in fast track only if there is unanimous agreement of the subcommittees here in the Congress. Precisely because of the nonamendable nature of fast track, Congress and the executive branch have a gentlemen's agreement that discretionary items will be included only on those particular terms. The merits of any discretionary proposal cannot outweigh this agreement. If a proposal has sufficient merit, it will pass under the regular order. I am confident that both retroactivity and bootlegging have sufficient merit to pass by the regular process. I have, frankly, been disappointed with the USTR's unwillingness to abide by our gentlemen's agreement in the case of these two issues. I have been left with the distinct impression that USTR intended to put into the fast-track legislation provisions on retroactivity and bootlegging regardless of my objections and possibly those of Senator DeConcini. In the last few days, there may have been a change in this attitude. I hope so, because there are very few substantive disagreements between us, and I am confident those disagreements can be resolved. My second concern is with the constitutionality of particular retroactive proposals. Notwithstanding the importance of retroactivity, we must be careful to properly balance the legitimate interests of authors and reliance partners-those who are lawfully using works that are presently in the public domain. This balancing is not only good policy, it is a constitutional requirement. If we overreach, we will run the risk of violating the takings clause, the result of which may be subjecting the U.S. Treasury to compensation to reliance parties. I would, therefore, urge my colleagues to look past the apple pie and American flag aspects of this hearing and to take seriously some of the reservations about both Senator DeConcini's and my bill that you will hear from witnesses today. If we don't get it right, it may be difficult and expensive to undo the damage. And that is precisely what we have to do. We have to get it right the first time. It looks to be a very interesting hearing, a lot of excellent wit nesses. The written testimony is great. It is voluminous. And the Chair intends to insist upon the 5-minute rule so we can get to the questions. We have read the statements, and we understand what the parties have said. We would truly like to keep the comments to 5 minutes. [The bills, H.R. 4894, S. 2368, and discussion draft (2) follow:] I 103D CONGRESS 2D SESSION H. R. 4894 To prohibit unauthorized fixation of sound recordings and music videos of live musical performances and provide copyright protection in restored works, and for certain other purposes. IN THE HOUSE OF REPRESENTATIVES Mr. HUGHES introduced the following bill; which was referred to the A BILL To prohibit unauthorized fixation of sound recordings and music videos of live musical performances and provide copyright protection in restored works, and for certain other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE. 4 This Act may be cited as the "General Agreement 5 on Tariffs and Trade Copyright Act of 1994". 6 SEC. 2. RENTAL RIGHTS IN COMPUTER PROGRAMS. 7 Section 804(c) of Public Law 101-650, 104 Stat. 8 5136, is amended by striking the first sentence. 1 2 2 TITLE I—FEDERAL ANTI BOOTLEG PROVISIONS 3 SEC. 101. SHORT TITLE. 4 This title may be cited as the "Federal Anti-Bootleg 5 Act of 1994". 6 SEC. 102. UNAUTHORIZED FIXATION OF AND TRAFFICKING 7 8 9 IN SOUND RECORDINGS AND MUSIC VIDEOS OF LIVE MUSICAL PERFORMANCES. Title 18, United States Code, is amended by adding 10 the following: 11 "§2319A. Unauthorized fixation of and trafficking in 12 13 14 sound recordings and music videos of live musical performances "(a) Whoever, without the consent of a featured per 15 former, knowingly and for purposes of commercial advan "(1) fixes the sounds or sounds and images of a live musical performance in a copy or phonorecord, or reproduces phonorecords or copies of such a performance from an unauthorized fixation; "(2) transmits or otherwise communicates to the public the sounds or sounds and images of a live musical performance; or "(3) distributes or offers to distribute, sells or offers to sell, rents or offers to rent, or traffics any |