[Congressional Record Volume 140, Number 146 (Saturday, October 8, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                    THE URUGUAY ROUND AGREEMENTS ACT

                                 ______


                         HON. WILLIAM J. HUGHES

                             of new jersey

                    in the house of representatives

                       Thursday, October 6, 1994

  Mr. HUGHES. Mr. Speaker, I rise in support of the rule on H.R. 5110, 
the Uruguay Round Agreements Act, a bill to approve and implement the 
Uruguay round of the General Agreement on Tariffs and Trade [GATT]. The 
Subcommittee on Intellectual Property and Judicial Administration, 
which I chair, held hearings in August of this year, on the 
intellectual property component of GATT.
  While I was disappointed that our negotiators were not able to 
eliminate some of the more blatantly discriminatory practices of 
European trading partners, especially those directed toward United 
States motion pictures, we should not overlook the significant gains 
made in the GATT/TRIP's text. The 123 signatories of GATT are now 
obligated to grant a high level of protection to intellectual property, 
an obligation that should assist U.S. patent and copyright owners in 
their worldwide fight for protection.
  Piracy costs U.S. copyright owners hundreds of millions of dollars a 
year in revenue, revenue that would otherwise be spent in creating new 
works and new jobs in the United States, revenue which would reduce our 
foreign balance of payments.
  H.R. 5110 contains a number of changes to U.S. copyright and patent 
laws, which I would like to explain.


                               copyright

  Computer software rental--H.R. 5110 repeals the sunset in the 
Computer Software Rental Amendments Act of 1990, scheduled to expire in 
October 1997. The repeal does not make any substantive changes in 
section 109 of the Copyright Act.
  Bootlegging of live musical performances--H.R. 5110 also contains 
Federal antibootlegging provisions in order to comply with article 
14(1) of the GATT agreement. In new chapter 11 of title 17, United 
States Code, a civil cause of action is provided to performers to 
prohibit the unauthorized fixation of their live musical performances. 
The remedies available are those under chapter 5 of title 17. The right 
is granted to ``the performer or performers.'' This means that where 
there are multiple performers, permission to fix the live musical 
performance must be obtained from each and every performer.
  Of course, normal agency principles apply, so that if the performers 
have authorized an agent to grant permission, that agent may do so. 
This no doubt will be important in large ensembles, such as orchestras, 
since the work-for-hire provisions of chapter 2 of title 17 do not 
apply.
  The basic right granted is to prohibit the unauthorized fixation of 
``the sounds or sounds and images'' of a live musical performance. This 
right covers individuals who use audio equipment or video cameras. The 
basic right to prohibit unauthorized fixations is supplemented by the 
right to prevent unauthorized reproduction of copies or phonorecords of 
live musical performances made from an unauthorized fixation, the right 
to prevent unauthorized transmissions or other communications to the 
public of the sounds or sounds and images of a live musical 
performance, as well as distributions, offers to distribute, sale or 
offers to sell, or trafficking in any copy of phonorecord of a live 
musical performance fixed without the authorization of the performer or 
performers involved.

  The rights granted in new chapter 11 of title 17, United States Code 
do not preempt any civil State laws.
  At the same time, title 18, United States Code, is amended by adding 
a new section 2319a, which makes it a felony to knowingly or for 
purposes of commercial advantage or private financial gain to engage in 
the same acts specified in new chapter 11 of title 17, United States 
Code.


                             retroactivity

  Article 18 of the Berne Convention obligates members, when they join 
the Berne Union, to provide protection to works of already adhering 
members. The only exceptions to this obligation are when the work is in 
the public domain in the country of origin or in the country where 
protection is claimed through expiration of the term of protection. 
Because of the United States unique history of depriving authors of 
their copyrights for failure to comply with formalities, there are 
works of foreign Berne origin that are in the public domain in the 
United States for reasons other than expiration of term.
  Section 514 of the Uruguay Round Agreements Act addresses the issue 
of retroactivity by granting, automatically, protection to works whose 
source country is a Berne or World Trade Organization country other 
than the United States, for the term of protection the work would have 
otherwise enjoyed in the United States but for the failure to comply 
with a formality, lack of national eligibility, or in the case of sound 
recordings, sound recordings published before February 15, 1972, the 
date Federal protection was first granted.

  Protection vests initially in the author or right holder of the work. 
The term ``rightholder'' was inserted due to the treatment in most 
countries of sound recordings under neighboring rights regimes. The 
term does not refer to a transferee of a work. Where the author has 
transferred rights in a work that is restored under section 104A, it is 
an issue of contract law to determine the extent to which, if any, the 
transferee receives rights for the restored term of protection.
  Unlike the retroactive protection provided in the North American 
Free-Trade Agreement Implementation Act, which was dependent upon 
filing a notice with the copyright office within a 1-year period, 
restored copyright under the Uruguay Round Agreements Act is automatic. 
However, in order to take into account the legitimate interests of 
individuals who had relied on the public domain status of a work, 
called reliance parties, section 104A establishes a number of 
safeguards.
  Reliance parties are defined in section 104A(h)(4) as any person who:
  First, before the restoration of protection, engaged in acts which 
would have constituted infringement if the work had been subject to 
copyright and who continued to engaged in such acts after the date of 
restoration. A key to the reliance party status under this provision is 
the requirement that the person have continued to engage in the 
described conduct. This requirement incorporates the continuing 
infringement doctrine and is also relevant to section 104A(4) 
concerning statutory damages and attorney's fees. Under this doctrine 
and section 104A, the defendant must have engaged in an ongoing series 
of acts. Cessation of that activity for an appreciable period of time 
will deprive one of reliance party status.
  Second, before restoration of protection, made or acquired one or 
more copies or phonorecords of the work which was restored.
  Also included within the definition of reliance party are certain 
assignees, successors, or licensees of reliance parties. Persons who 
acquire significant assets, a term that encompasses, for example, a 
book publishers' entire division and not merely a number of titles 
published by that division, of a reliance party or who acquire from a 
reliance party a derivative work based on a restored work, succeed to 
the reliance parties' selloff period. Such successors, assignees, or 
licensees, of course, acquire only the right to sell off copies or 
phonorecords for the duration of the period of the reliance party. 
Thus, where a reliance party sells off copies of a restored work 6 
months into the selloff period, the successor, assignee, or licensee 
may sell off the copies only for the remaining 6 months of the selloff 
period.

  The term ``derivative work,'' as used in section 104A (d)(3) and 
(h)(4), has the same meaning as defined in section 101 of title 17. 
Thus, there must be a recasting, adaption, or transformation of a 
preexisting work in order to qualify as a derivative work. Uses such as 
reproduction of a photograph or poem in a textbook, or any use that 
does not involve a recasting, adaption, or transformation of the 
preexisting work itself, as opposed to inclusion of the preexisting 
work in a new work, will not result in reliance party status.
  If a person is a reliance party, notwithstanding the fact that the 
copyright has been restored automatically, the reliance party may 
continue to exploit the restored work without liability until the 
restored copyright owner either serves actual notice on the reliance 
party under section 104A(e)(2), or the copyright office publishes in 
the Federal Register a notice of intent the restored copyright office 
filed pursuant to section 104A(e)(1). Once either of those events 
occurs, the reliance party has 1 year to sell off his or her stock. 
During that year, the reliance party may not make further copies of 
phonorecords of the work. If the reliance party continues to engage in 
acts that violate the restored copyright owner's rights, the reliance 
party is subject to the full remedies provided under the Copyright Act, 
although only for those acts that occur after the selloff period.
  Section 104A(3) provides a special exception for existing derivative 
works. Where a reliance party, before the date of enactment of the 
Uruguay Round Agreements Act, created a derivative work based on a 
restored work, the derivative work owner may continue to exploit the 
derivative work for the duration of the restored copyright provided the 
reliance party pays to the owner of the restored copyright reasonable 
compensation for conduct which would be subject to a remedy for 
infringement but for the exception. Where the parties cannot privately 
agreed on the amount of compensation, either party may bring an action 
for declaratory relief in U.S. District Court. In determining the 
amount of reasonable compensation due, the court shall take into 
account the relative contributions of the author of the restored work 
and of the author of the derivative work.

  The rationale for the exception is that persons who have contributed 
their own creativity to a restored work, as for example, where a motion 
picture is based on a short story, should be permitted to exploit their 
own contributions. At the same time, Congress recognizes that such 
continued exploitation is still an exploitation of the restored 
copyright for which payment should be made. Because of the wide variety 
in derivative and original works, it is impossible to establish a rule 
of thumb that can be applied to all cases. By directing the courts to 
weigh the relative contributions of both authors, a fair accommodation 
can be reached.
  The courts are also directed to issue an award that reflects any harm 
to the actual or potential market for or value of the restored work 
from the reliance party's continued exploitation of the work. There may 
be cases, as where a compilation of greatest hits of a singer is 
slapped together as a single sound recording sold inexpensively, that 
the sale of that compilation will cause harm well beyond the price of 
the compilation, such as for one or more full-priced phonorecords of 
the restored sound recording copyright owner. In such a case, the court 
has authority to set compensation that takes into account the harm to 
the full-priced phonorecords.

  To qualify for the derivative works exception, there must, of course, 
be a derivative work and a reliance party, the meanings of which were 
discussed above.
  Section 104A will, when effective, replace current section 104A, 
which extended retroactive protection to motion pictures and works 
first fixed in motion pictures whose country of origin is Canada or 
Mexico and that fell into the public domain for failure to comply with 
the notice provisions of the 1976 Copyright Act.


                                patents

  The Uruguay Round Agreements Act, H.R. 5110, changes patent law in a 
way that will benefit American inventors and the public. The most 
significant change to U.S. patent law is a change in the term of a 
patent from the present 17 years measured from date of grant to a 20-
year term measured from the date of filing of the patent application. 
The GATT agreement required that patent protection be at least 20 years 
measured from date of filing. This decision to change to a 20-year term 
of protection measured from the application filing date is the best 
patent policy. This change alone will benefit the vast majority of 
patent owners by providing a longer term of protection instead of a 
shorter term as claimed by opponents.

  The Patent and Trademark Office [PTO], on the average, processes 
patent applications in less than 20 months. Under the new system, most 
patents would receive a term over 1\1/2\ years longer than the 17 years 
presently received.
  Even for the more complex and difficult patent applications, such as 
biotechnology applications, the PTO is able to complete patent 
applications in less than 3 years. A General Accounting Office report 
on biotechnology patent pendency issued in September 1990, factored in 
the original application date to calculate pendency at the PTO from 
that date. The factor added approximately 9 months to the PTO pendency 
time which would mean that average pendency for biotechnology 
applications would be about 29.5 months. This means that even for 
biotechnology patents the term of protection will be longer.
  The present system encourages applicants to deliberately delay the 
processing of patent applications by permitting the filing of unlimited 
continuations and changes to an original application. Such permissive 
delays under the present system frustrate the goal of bringing 
innovation to the American public on a timely basis.
  The proposed changes in H.R. 5110 recognize that there will be delays 
beyond the control of the patent applicant as well as a need to develop 
the application. The legislation compensates for these potential delays 
in several different ways.

  First, a provisional application is provided for the first time. The 
legislation allows for the filing of an application up to 1 full year 
before a complete application is filed. It will be a simple, low cost 
application. The year will not be counted against the 20-year patent 
term. Additional development and research can occur during this year as 
well as the search for investment capital.
  Second, extensions of the patent term, for eligible patent holders, 
are included in the legislation. Delays caused by interference 
proceedings, secrecy orders, and appellate review by the board of 
patent appeals and interferences of Federal court may permit an 
extension of the patent term for up to 5 years.
  Third, limited reexamination of pending applications is required. 
Applicants with patent applications that have been pending for a 
certain period of time will be guaranteed the right to submit 
additional information for review instead of a new application after 
final rejection, as required under present practice, to ensure that the 
PTO has considered all relevant materials in making its decision.
  H.R. 5110 and the implementation of GATT will provide benefits to 
American patent owners and provide much greater protection abroad than 
that presently enjoyed by American inventors and industry. H.R. 5110 is 
in the public interest and provides better patent policy for the 
country.

                          ____________________