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Mr. SMITH. Mr. Chairman, at this point, we feel that the balance of rights and responsibilities in your bill and in the administration's bill are adequate, backed up by the OLC's opinion. And I think that if they are wrong, if all these people are wrong, I still think that the remedy in that very, very rare case, assuming there were to be a work that were to come along that would fit this, where a court would hold there was a taking, which I don't think it would, the remedy would be to extend the period to recoup investment.

Mr. HUGHES. Jay, you make a very compelling case about the need to protect U.S. sound recordings overseas. You also state that if we fail to extend retroactivity, U.S. sound recordings may not be protected by the year 2000. But isn't that true anyway since developing companies have a grace period until that day, including the obligation to comply with article 14.6 of TRIPs?

Mr. JASON BERMAN. It is true that the other countries will not have to meet their substantive obligations. On the other hand, it is still true that under U.S. trade law, the United States can determine that a country does not meet the test of adequate and effective protection simply by virtue of GATT. So there is no sense in tying our hands even further.

I think we tied our hands somewhat as a result of the net effect of Geneva. I think we have to find a way to redeem some of those tools that are made available to us, and I want to take that, what you just said, and go back to something that Irwin Karp said earlier.

I don't know how many negotiations he has been involved in with foreign countries recently in regard to issues involving copyright protection, but I do think this is-this is a question of leverage, but it is even a question that goes beyond leverage.

For example, in the discussions between the United States and Russia over the applicability of protection to United States works, the Russians simply said to the United States negotiators, and I might point out that the United States negotiators included the Copyright Office, that they will interpret their obligations on retroactivity in exactly the same manner that the United States interprets its obligations. So what we are doing here, I believe, is establishing by virtue of what we do the ground rule for retroactivity. It goes beyond the question of trying to give our trade negotiators some leverage.

Mr. HUGHES. I don't have any doubt about that. I don't think there is there shouldn't be much debate about that being used as the criteria, not just the former Russia and other countries in that part of the world, but probably throughout the world, they will use that as a benchmark.

You also mention bootlegging.

Mr. JASON BERMAN. Yes, sir.

Mr. HUGHES. And I am very sympathetic to putting in a provision on bootlegging. But I am told on the issue of whether consent may be given by any performer or only be a feature performer, if it is any performer, as in the administration's draft, protection can be easily lost if a minor performer grants permission to tape. So that is problematic.

On the other hand, if you limit consent to feature performers, you probably need to provide a definition of feature performer.

Mr. JASON BERMAN. Mr. Chairman, to my knowledge, the term of art "featured performer" made its debut appearance in the DART legislation. Quite frankly, I can't recall if it was actually defined in DART, but I think it is something we would be willing to explore.

Mr. HUGHES. Well, that was a drafting paradox. In any event, you do agree that we need to look at that question?

Mr. JASON BERMAN. Yes, I do.

Mr. HUGHES. All right.

Mr. Urbanski, I appreciate why you favor the 1-year filing requirement found in NAFTA, section 104(a), but the TRIPS section 104(a), 2-year filing with the Copyright Office, is not that much more given the vastly large amount of material recaptured and regarding the availability to file action of notice on a reliance party any time during the term of the restored copyright.

Why doesn't this adequately protect you? After all, you are free to exploit the public domain files until you get a notice and then for 1 year thereafter. Why isn't that adequate?

Mr. URBANSKI. What we find inadequate is the automatic restoration at the beginning. In other words, instead of working like NAFTA where at the end of a particular period and whatever was not claimed remains in the public domain of the United States, the bill states that when GATT goes-is implemented, the registration-it is all of the works are automatically copyrighted. They are sort of waiting for a claimant to claim them.

The stock footage industry, archives material, keeps film on the shelf and waits for someone who can use this footage within a work. If there is that open-ended situation where they were automatically restored, which is initially what this legislation does, we would either have to indemnify, which I could not afford to do, or the filmmaker, for fear of having someone contact him and remove it from the film, would not use the footage. I mean, this is his work, he really does not want any legal problems later up the road. Mr. HUGHES. Matt, I only have one question.

Do you disagree with Mr. Berman's concern which he expressed about the featured artists that we need to define?

Mr. GERSON. No. We refer to that as the "mirror problem." I think Ira Shapiro quoted Eric on that, and that is our position as well.

Mr. HUGHES. Thank you very much.

This panel has been very helpful. Your full statements, like the previous panels, were very, very good. We appreciate your assistance in what is a very, very important subject to this country, and we thank you. We look forward to working with you.

We are going to recess for another 10 minutes. That is a vote in progress. It is my intent to finish up this before we recess because I know some have travel plans. I know there is a 4 o'clock flight by one of the witnesses. We will take them next and get them back to California, or wherever and we are going to finish.

I ask the final panel, prepare to summarize your statements, like I have requested throughout these proceedings. The subcommittee stands in recess.

[Recess.]

Mr. HUGHES. The subcommittee will come to order.

I apologize for the delays and the interruptions, but most of you know that is unfortunately a part of the routine around here.

Our final panel consists of Gerry Mossinghoff, who is the current president of the Pharmaceutical Research and Manufacturers of America, formerly the Pharmaceutical Manufacturers Association, which represents over 100 research-based pharmaceutical companies. He has appeared before this committee on many, many occasions. He is a former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks and also served as the U.S. Ambassador to the Diplomat Conference on the Revision of the Paris Convention and chairman of the General Assembly on the United Nations World Intellectual Property Organization. The public career of Mr. Mossinghoff also includes service as a Deputy General Counsel and Director of the Congressional Liaison Office for NASA. He is testifying today on behalf of the Pharmaceutical Research and Manufacturers of America.

Our second panelist is Lita Nelsen who is the director of the Technology Licensing Office of the Massachusetts Institute of Technology and has held that position, I believe, since 1986. In 1964, Ms. Nelsen graduated with a bachelor of science degree in chemical engineering, and in 1966 earned her master of science in chemical engineering, both from MIT.

In 1979, she earned a masters of science degree in management from MIT. Ms. Nelsen has extensive experience in industry, primarily in the fields of biotechnology, medical devices, and memory separation. She served on the panels dealing with biotechnology commercialization and university technology with the Office of Technology Assessment, National Academy of Sciences. In 1992 she served as the president of the Association of University Technology Managers.

Our next panelist is Kenneth Addison, Jr., who is an independent inventor who is appearing on behalf of the United Inventors Association of the United States. The association represents independent inventors all over this country.

Mr. Addison has an extensive engineering career living and working all over the world. He has worked for the U.S. Corps of Engineers, U.S. Department of Defense, in addition to private industry, and as an independent businessman.

He is the owner of several patents and has developed inventive solutions for highway safety problems and assisted systems for the physically disadvantaged. Mr. Addison is the president of the Oklahoma Inventors Congress and the editor of the Inventors Monthly Newsletter.

Our final panelist is Robert Muir, who is a former chairman of the Intellectual Property Subcommittee of the National Association of Manufacturers, and is appearing today on the association's behalf. NAM represents more than 12,000 companies with over 8,000 having less than 500 employees. Mr. Muir has recently been appointed the general patent counsel for Caterpillar Corp., and has worked with the company as a patent attorney since 1974. Prior to that, he worked for a private firm.

All of our panelists have distinguished credentials. We are just delighted to have you with us. As you have heard me say on numerous occasions previously, we have read your statements and they will all be made a part of the record in full, and we hope you can summarize.

Let's begin with you, Gerry, welcome. Nice to see you again.

STATEMENT OF GERALD J. MOSSINGHOFF, PRESIDENT, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMER

ICA

Mr. MOSSINGHOFF. Thank you, Mr. Chairman. I am very pleased to be here before this joint hearing. I will be very brief.

As you well know, the patent system is absolutely indispensable to our industry. It costs almost $400 million to bring a new drug to market, takes 10 to 12 years, and yet that drug can be copied by an infringer or by the generic industry at a small fraction of that cost.

We are very pleased with the substance of the TRIPS provisions. We are less pleased with the long transition period, the 10 years for developing countries, but we believe the administration is committed to, during that time, pursue bilateral, multilateral efforts to take care of the lack of patent protection during the 10-year transition period.

As I point out in my statement, we would be-we do support the 20-years-from-filing provision that is recommended by the administration, but we believe very strongly that it ought to also include a recompense for time lost because of successful appeals that might have to be filed on the theory that, after all, if a person appeals and wins, obviously that person was not unduly delaying. It was the fault of the examiner below or the court below because of that appeal.

We also believe, as I point out in my statement, there are important procedural safeguards that should be watched by the Patent Office, including a sufficient number of skilled examiners watching to make sure that appeals and interferences do not begin to eat into the time. But with those assurances from the administration, which we think they are willing to give us, we do support the 20year time of filing.

Mr. Chairman, that concludes the summary of my prepared statement in the interest of time. You missed it, Mr. Chairman. I summarized my prepared statement, and I would be pleased to answer any questions.

Mr. HUGHES. Gerry, I read your statement last night. It is an excellent statement, and I understand the importance of GATT moving forward, and I appreciate it.

Thank you very much.

[The prepared statement of Mr. Mossinghoff follows:]

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SUBCOMMITTEE ON INTELLECTUAL PROPERTY AND JUDICIAL ADMINISTRATION COMMITTEE ON THE JUDICIARY

U.S. HOUSE OF REPRESENTATIVES

AND

SUBCOMMITTEE ON PATENTS, COPYRIGHTS AND TRADEMARKS
COMMITTEE ON THE JUDICIARY

U.S. SENATE

AUGUST 12, 1994

Mr. Chairmen and Members of the Subcommittees:

I am Gerald J. Mossinghoff, President of the Pharmaceutical Research and Manufacturers of America. PhRMA represents more than 100 research-based companies including more than 40 of the country's leading biotechnology companies - that research, develop and produce most of the prescription medicines used in the United States and a substantial portion of those used abroad. I appreciate the opportunity to appear today at this important hearing on the intellectual property applicability of GATT Uruguay Round trade agreements and Congressional implementing legislation.

Our companies have worked closely with the U.S. Government negotiators and the Congress over the past seven years since the Uruguay Round began in 1986. During that period, we identified two key areas in which the research-based pharmaceutical industry has a particular and strong interest. These are the enhanced standards for intellectual property protection - including pharmaceutical patents in TRIPs, and the elimination of import duties on pharmaceuticals in the so-called "zero-for-zero" tariff agreement.

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Pharmaceutical Research and Manufacturers of America
1100 Fifteenth Street, N.W., Washington, D.C. 20005 (202) 835-3400

85-525

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