It might not be an employee, or it might be.

Mr. MENDELSOHN. I thought the question that was originally directed to me was to the fact that some people have testified that, even in Government employee work, you should on occasion have copyrights: that is, even on works produced by employees of the United States, the Government might sometimes wish to have a copyright. The Department takes a rather open position on that. If this committee should decide that that is advisable, we would have no objection, and if your committee decided and if Congress decided that that is inadvisable we would likewise have no objection to it.

That is with respect, particularly, to a work of Government employees. Now on the entire subject of contractors, I would hesitate myself to get into it.

Mr. HUTCHINSON. Well, I thank you for your further explanation on it. I conclude that you don't have a strong view one way or the other on it and I am not presently impressed with the importance of the Government having a copyright under any circumstances, but then, I have not closed my mind on the question, either.

The other question I wanted to ask, Mr. Chairman, is this: can the Deputy Assistant Secretary suggest any other example than the cases of developing countries for permitting the President to have this new power to modify the reciprocity system in copyright?

Now you suggested the emerging nations situation. Is there any other situation that occurs to you?

Mr. TREZISE. That, Mr. Hutchinson, is the only one that has occurred to us as a practical matter where we think the President would find it advisable or in the national interest to use this flexibility in applying the reciprocity requirement.

Mr. HUTCHINSON. Well, then, in that case, suppose the language of the bill were restricted to that type of situation, instead of granting the President a broad national interest power?

Mr. TREZISE. I think, Mr. Hutchinson, one immediate difficulty is to define the emerging or developing country. We have encountered this in other contexts, and it raises some really difficult issues of definition. In principle, I suppose I should answer that we would prefer to have as broad a measure of flexibility as possible, the future in this respect being as uncertain as futures always are.

I would like to repeat again: I don't quite see in practice where this kind of flexibility would be relevant, except in respect of new countries where, as a practical matter, copyright arrangements are not yet, and are not likely to be for some time, instituted.

Mr. HUTCHINSON. Thank you. That is all, Mr. Chairman.

Mr. KASTEN MEIER. We thank you, Secretary Trezise and your colleagues, for your appearance here this morning.

Mr. TREZISE. Thank you, Mr. Chairman.

Mr. POFF. Mr. Chairman, I believe I am going to ask the witness to remain for just a moment.

Mr. KASTEN MEIER. Mr. Trezise, would you return for another question from Mr. Poff?

Mr. PoFF. My colleague, Mr. Hutchinson, has raised a question which had not previously come into focus in my mind. I think it is important.

Section 104(b) (4) reads as follows: "the work comes within the scope of a Presidential proclamation."

Now by what method would the proclamation be made? Would it be an Executive order published in the Federal Register?

Mr. WINTER. Yes, Mr. Poff; it would be quite similar to an Executive order. Such a proclamation would be considered within the State Department and with all other interested agencies. There is a particular form for the proclamation-I believe it is actually entitled that-and it is published in the Federal Register.

This has happened, in fact, prior to the coming into force of the Universal Copyright Convention and our adherence to it. The usual form for the establishment of copyright relations with foreign governments was on the basis of a Presidential proclamation.

Mr. POFF. That is all. That is all I need to know.

Thank you.

Mr. KASTENMEIER. Thank you, gentlemen.

Now the committee will call Mr. Robert E. Giles, General Counsel of and representing the Department of Commerce. Mr. Giles?

STATEMENT OF ROBERT E. GILES, GENERAL COUNSEL, DEPARTMENT OF COMMERCE; ACCOMPANIED BY GERALD STEPHENSON

Mr. GILES. Mr. Chairman, may I introduce, also, Mr. Gerald Stephenson, who is a member of our legal staff in the Commerce Department, who is here on my right.

I do have a fairly brief statement which I would like to present to the committee. I will either read the statement, Mr. Chairman, or summarize it, whichever you prefer.

Mr. KASTENMEIER. It is brief. I would prefer that you read it, because it is brief, and we want to hear what is in the statement.

Mr. GILES. All right. Mr. Chairman and members of the committee, thank you for the opportunity to appear before your committee to present the views of the Department of Commerce on H.R. 4347. We believe that our present copyright law should be revised.

Subject to a few changes which we will suggest, we recommend your approval of H.R. 4347. Our present copyright law, the 1909 act, was, of course, at the time of its enactment tailored to the technology that then existed, almost 60 years ago. What was up to date and adequate then is now, in our judgment, clearly inadequate for present and anticipated needs in the area of copyright law.

We believe that the proposed revision of the copyright law which is now before you for consideration properly takes into account the experience we have had over the years under existing laws, takes into account the present state of technology affecting the printing of books and documents, and we believe the proposed legislation anticipates, as far as possible, the changes and improvements in the foreseeable future. We think that H.R. 4347 is responsive to present and anticipated needs in the area of copyright law.

Copyrights are of direct concern to specific groups in our Nation. Authors, composers, artists, publishers, and producers all have a vital interest in the kind of law that governs copyrights. But I would like to emphasize that, in addition, there is a broad public interest to be served by an adequate and up-to-date copyright law.

Copyrights are important in the scientific, academic, and business areas, important not only to those who author and produce or publish

materials subject to copyright, but to those who use copyrighted materials the consumers, if you please.

Because of the broad concern of countless groups and of the public generally in the kind of copyright law we will have, there is, of course, some diversity of views when consideration is given to the type of legislation embodied in H.R. 4347. Therefore, it cannot be expected that there will be unanimity of opinion on all aspects and all details of a basic revision in our copyright law. But the Department of Commerce is impressed with the broad spectrum of support on behalf of basic revision of our copyright law, and we believe that the Register of Copyrights and his staff are to be commended for the thorough and excellent job they have done in studying and reporting on a revision of the copyright law.

As already indicated, we have a few suggested changes for the consideration of the committee. For example, section 109 (4) of H.R. 4347 authorizes noncommercial performance of a nondramatic literary or musical work by unpaid performers, without permission from the copyright holder.

The proposed language provides that permission from the copyright holder is not required not only in those cases where there is not an admission charge for the performance, but also in those cases where an admission fee is charged providing that the net proceeds are applied exclusively for religious, educational, or charitable purposes. In our view, this exemption from the copyright protection should not apply to any performance where an admission is charged even if the net proceeds are to be applied for educational, religious, or charitable purposes.

It is our view that if there is an admission charge, the copyright owner should have the right to decide whether this work is to be performed, or whether a royalty is to be required. Otherwise, the copyright holder is, in a sense, being compelled to make a donation to a charitable, religious, or educational cause.

Of course, in given cases, the copyright owner may very well decide that if the net proceeds of a performance are applied exclusively to a charitable, religious, or educational cause, then no royalties will have to be paid to the copyright holder.

But the point is, the copyright law should not be written so as to compel, in effect, the copyright owner to make a contribution in all cases to a charitable, religious, or educational cause.

Therefore we recommend the language of section 109 (4) be changed so that the copyright protection will apply to any performance for which an admission fee is charged.

Section 111 of H.R. 4347 deals with the scope of exclusive rights in pictorial, graphic, and sculptural works. It is desirable to avoid any possible confusion and overlap between this section and chapter 16 of title 35 of the United States Code, which provides patent protection for new, original, and ornamental designs for articles of manufacture. To make clear that copyright in a pictorial, graphic, and sculptural work portraying a useful article as such does not extend to the manufacture of the article itself, we recommend that section 111 be amended to include the following language:

Copyright in a work that portrays a useful article as such, such as a drawing, model, or photograph of the article, shall not include any right to prevent the making, distribution, or exhibition of useful articles of the design so portrayed.

The next section, Mr. Chairman, on which we would suggest consideration of some change, or rather, which we would comment on, is section 601 of H.R. 4347. This section would significantly reduce the scope of the so-called manufacturing clause, which is contained in the present law.

Under that clause U.S. copyright protection for English-language works of U.S. authors is conditioned on the printing, that is, manufacture, of such works in this country, except that a limited number of copies printed abroad-1,500-may be imported without losing U.S. copyright protection.

The bill would increase to 3,500 the number of permitted imports and would provide that the consequence of exceeding his limit would no longer be total forfeiture of U.S. copyright protection as at present, but merely loss of the right to control the making and distribution of visual copies in this country.

The so-called subsidiary rights of the author, often of commercial value and importance, such as dramatization rights, recording rights and performance rights, would thus be removed from risk of forfeiture under the manufacturing clause.

We are opposed in principle to the inclusion in a general copyright statute of collateral trade protection features such as the "manufacturing clause." Further, we question the need for continued protection of this sort for the printing industry under current conditions.

The difference between foreign and domestic labor costs in the printing industry is diminishing since highly automated U.S. plants have an advantage in the printing of large editions despite higher wage

rates.

In addition, U.S. plants have the advantage of proximity to their customers. They also benefit from the fact that the differing operating practices of foreign printers lead to misunderstandings which tend to discourage the placement of printing orders abroad.

While outright repeal of the "manufacturing clause" could result in some printing being done overseas that is now done in the United States, we don't think this would be significant. However, if Congress concludes after consideration of all factors before it, that the revised manufacturing clause as proposed in section 601 of the bill should be retained, we would not offer further objection, since it represents a significant improvement over the present manufacturing clause.

In conclusion, Mr. Chairman, I would like to say that our experience in the Department of Commerce with the administration of the patent system has convinced us of the vital contribution to our economy made by the results of creative genius channeled by fair profit incentives into commercial use.

We believe that the similar dynamic role under our copyright system, based on profit incentives, will be strengthened by the enactment of

H.R. 4347.

Thank you, sir.

Mr. KASTEN MEIER. Thank you, Mr. Giles.

First, before getting back to your statement, do you have any comment about section 105, copyright in the U.S. Government?

Mr. GILES. The Department supports, sir, the language in the proposed bill. We have no suggested improvement of that. We think that the language in the proposed bill is satisfactory. We recognize

the difference of view on that, but on balance, we feel that the language in the bill is suitable and proper.

Mr. KASTENMEIER. What is the present law with respect to section 109 (4) and the change in the bill that you cited?

Is the performance of copyrighted nondramatic and musical works for which an admission fee is charged, but for an educational, charitable, or religious purpose, presently exempted?

Mr. GILES. Well, sir, I think the language in the present law is different from what is proposed in the bill, and I think the lawyers might have some difference of opinion as to whether the present law would permit the paid performance, even though the net proceeds are applied to a charitable or educational, or religious cause. I think you can make a very good argument that the present law does permit that. I am not prepared, though, to say that that is exactly so.

Mr. KASTEN MEIER. In other words, the present law is that performance must be for profit, and the question is, are such proceeds profit? Mr. GILES. That is right. And if you had a situation where in one sense it was for profit, but the profits were turned over to a charitable or educational cause, is that exempt from copyright protection?

Mr. KASTENMEIER. I think the interesting feature is that you take this position, and yet the author-composer-publisher groups did not pursue the matter significantly at any rate.

I think they may have made a concession, for reasons best known to themselves, perhaps because they felt it was present law, but you do state a very forceful, logical position for changing the bill.

May I inquire on the manufacturing clause? Apparently, unlike the Department of State, you feel that we do not need more hearings. You are willing to state a position, and you feel that we have enough evidence for your department to take a position.

Mr. GILES. Well, I would say, Mr. Chairman, that after the rest of the hearings which you have already scheduled, I believe that the committee will have had a good bit of hearings, and the subject has been pretty thoroughly discussed, and while I believe the Department of State and Commerce Department are basically in complete agreement concerning the manufacturing clause, without expressing dissent from any view of the State Department as to the need for further hearings, I would say that we would hope the Congress would be able to act on this proposed bill, without undue delay.

Mr. KASTEN MEIER. Let me pose this hypothetical to you. Suppose the committee eliminated the manufacturing clause, and the protection provided to printers and others, and suppose that in 5 years the printing trades and manufacturers would come back and say, “We are badly hurt by virtue of this."

As a representative of the Commerce Department, what could you suggest Congress do to remedy the harm?

Reinstate the manufacturing clause, institute some type of tariff or duty, or some type of domestic subsidy, or something else?

Mr. GILES. Well, I would say, sir, that if that did happen, and we had that experience, then I believe the Government should give very careful consideration to reenactment of a similar clause that we are now talking about, or taking appropriate action.

We feel the best argument on the manufacturing clause, the one that appeals to us, to the Department of Commerce, is not just one of principle; that is not so say, "let's have complete trade, let's don't have