[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
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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.
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