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tially comparable to those of the United States. We think immediately of Canada; there may be others, and if in the future other countries approach our standards they too should be exempted. Our whole concern is that competition should be on a fair basis, and not to see which country can starve its printing trades workers the quickest. Where equal, or approximately equal, conditions prevail we are confident that American manufacturers and their employees can meet such competition. But we do not believe that foreign nationals should have the right to take advantage of the most exploited group of workers to be found, and also be granted a monopoly of the American market. One or the other, but not both.

Second, we are troubled by the proposed increase in the number of permissible copies to be imported from 1,500 to 3,500. This is a jump of over 100 percent. The only explanation of this proposal we have seen is to be found at page 145 of part 6 that "this figure was suggested as the point, in the present book market. beyond which it is generally more costly for a publisher to import copies than to manufacture an edition here." We are not told by whom this was suggested, or the data on which it is based. The criterion used seems to us a departure from previous approaches to this problem, which were based on giving foreign manufacturers an opportunity to test the market, and not on preserving the competitive position of domestic manufacturers.

What the Register's statement appears to mean is that it is not, in general, profitable to produce an edition of less than 3,500 copies, and that we will therefore concede full copyright protection to the foreign enterprise on the unprofitable less-than-3,500 business. We feel this to be a wrong approach. The testing of the market is still the proper criterion. We recognize that the market is larger than it was in 1949, and that perhaps some greater opportunity to test should now be accorded. We would not oppose some modest increase in present figures, perhaps to 2,000, but the market has not increased over 100 percent and we surmise that the figure of 3,500 is either an arbitrary guess or is based on an improper standard.

The third, and by far our most important problem, relates to what I shall call reproduction proofs, though actually the problem is much broader and includes a host of new and substitute processes which have come to replace traditional methods of typesetting. In one way or another, as already suggested, these new processes make it possible to set type outside the United States but, by reproducing it on film, paper, tape or in another form, avoid the shipment of the actual type into this country.

That this practice is a clear violation of existing law appears to us to admit of no reasonable doubt. Section 601(c) of the present act provides that the requirements of the manufacturing clause are met if books have been printed from "type set in the United States” or from "plates made in the United States from type set therein" or, if it is by a lithographic or photoengraving process, then "hy a process performed wholly in the United States." If any other process is used then "every step in their reproductive manufacture" must hare been performed in the United States. We do not see how the statute can be read otherwise. This is not the appropriate forum in which to file a brief on this problem, but it is a well-settled canon of statutory interpretation that one looks to the evil which Congress intended to eliminate to discover the meaning of language. The mere fact that the Congress did not in the statute passed in 1909 mention reproduction proofs or computers, both then quite unknown, is no adequate ground for permitting that this patent evasion of the congressional intent that works should be manufactured in the United States

That this is a correct reading is buttressed, we feel, by the bill, introduced by the chairman of this committee in the 2d session of the 88th Congress at the request of the Register of Copyrights, H.R. 11947, which in section 43(c) proposed to clarify the language of the statute by providing that "a copy has not been wholly manufactured in the United States if any step in the process of its reproductive manufacture, including but not limited to the composition of type ♥____♥♥♥♥♥♥♥♥kkkkkkkkk???,,,,,,,,,,,,,,,,,,,kkkkkkkkes, other devices for the reproduction of copies by any process, took place outside the United States."

The report of the Register already cited, at page 146, states that the "present law is unclear on this point" (whether reproduction proofs are included). He recommends that the Congress "maintain the status quo on the issue of foreign composition" by preserving the "ambiguous and awkward language of the 1909 statute." This obviously means that the matter is to be left to subsequent

judicial determination as to the scope of the clause, and we are sufficiently confident of our interpretation to be content to leave it there. Our difficulty in this connection has been that this question can only be decided in an infringement suit, in which the defendent sets up the manufacturing clause as a defense. We are not publishers, and we have not been and are not likely to be sued for infringement. And while we have a lively and important interest in the matter, our legal interests are so indirect that we have no standing to bring suit; the penalty for a violation-loss of copyright-cannot be addressed to us or to any member. While we share the Register's dissatisfaction with the present uncertainties (which we feel are entirely fictional), we have therefore not been able to take affirmative steps to solve it judicially. Book publishers are understandably content to wink at these violations, and some book manufacturers have profited from them. Hence the matter has dragged on, but we are confident that it will be properly resolved in an appropriate case in the future.

While the Register has not said so, we feel that the change of position between the 1964 draft and the present bill is to be found at page 146 of his report. He there notes that "if the book publishers' construction of the disputed language in the present copyright statute is correct, it could be argued that a more restrictive provision in the revised law would violate the treaty obligations of the United States under the * * * GATT." We disagree, and feel that if the Congress in 1965 wishes to clarify a statute adopted in 1909, it violates no international undertaking; the law remains what it has been all along. But be that as it may, the important word in the quoted language is "if.” If our construction of the clause is correct, it can hardly be argued that a statute adopted in 1909, some 40 years before the GATT had been drafted, violates any obligation of the United States under it. Nor do we feel that it can be seriously contended that the GATT has deprived the Federal courts of the power to interpret domestic legislation, whenever enacted.

We are, of course, opposed to any effort to legalize this practice, either in the form of a forthright amendment of the statute, or under the guise of interpreting existing law. We have stated our reasons-historical, economic, and moral—for believing that the manufacturing clause was and is wise legislation. To carve out this gaping exception cannot be justified; there is even less merit in the repeal of the entire clause.

There appears to be some feeling that the United States is alone in imposing conditions on the grant of a monopoly of its domestic market. Nothing could be further from the truth. Practically every country in the world including the United Kingdom has a so-called working requirement in the patent field, other than the United States; that is, manufacture in the country is a condition of maintaining patent rights (see Haddon: A Compendium of Patents and Designs, Law and Practice, 1931). Over the years there have been a host of other restrictions. In Mexico, for example, it is provided that the right to translate a work into Spanish is lost if not exercised within 3 years. Some countries, such as France, have simply forbidden importation of many classes of books altogether. Some impose prohibitive duties on works in their language. Others such as Brazil and Portugal have required licenses as a condition of importation which are rarely granted to works in Portuguese. Currency restrictions have been imposed. In brief, the grant of copyright has never been thought to carry with it the unconditioned right to make a profit from the copyright, and many countries. while granting copyright, have imposed a variety of conditions which make it meaningless. In short, it is totally inaccurate to view the United States as a dog in the manger, while other countries permit book importation without restrictions. We have not yet heard of any activity on the part of American citizens to remove the "working requirement” from British patent law as an unreasonable restriction, and we would regard such efforts as a highly questionable interference in a matter of domestic British law.

Whatever our differences with the various publishers' associations, we do share their concern with some of the proposed "fair use" amendments now being proposed. We think the more extreme of these proposals, which would allow substantially unlimited copying for some or all purposes and by some or many groups, amount to the substantial repeal of all copyright legislation. Manifestly, an author can look only to a publisher for the royalties which are his incentives to write. In many fields of publishing, the very lively possibility now exists that with computerized retrieval systems and unlimited copying rights, a single copy of a work could supply the national demand. What author can live on, or what

publisher can afford to publish for, the income from a single copy of a work? If adopted, these proposals would have a highly adverse effect on scholarship in many fields in which, even under present conditions, the market is so highly specialized as to make publication hazardous or impossible.

It is our view that the constitutional provision with respect to copyright lays on the Congress an affirmative duty to see to it that the rights of authors and publishers in their works be protected. We recognize that there can be, and has been, a lively debate as to just what those rights should be. But we think there cannot and should not be any debate as to whether they should be eliminated by granting the right to unlimited copying to any group, however beneficient its purposes.

If the Congress accepts the recommendation of the Register and adopts section 107 of the proposed bill, we think it should be made entirely clear that the adoption of this provision is not intended to broaden the limited right of fair use as heretofore interpreted by the courts. There is all the difference in the world between a library photocopying an occasional page of a work for the use of a scholar, and the making of multiple copies of entire works by any of the photographic processes which may now substitute for printing, presswork and binding. We have no desire to inconvenience scholars or librarians, but their convenience ought not to become a pretext for the repeal of the copyright law. It will be sufficiently difficult to police copyrights as photocopying and other processes become less costly, more versatile, and more widely disseminated, without a statutory diminution of the legal rights of the holders of copyrights.

In conclusion, then, it is our position that the Congress ought to encourage higher wage rates abroad by exempting from the manufacturing clause products coming from countries with working conditions comparable to those in the United States; that it ought to reject the 3,500 proposals on importation in favor of a far more modest increase; that it should adopt the Register's position on the issue of reproduction proofs and similar new and substitute processes; and that it ought to reject any proposals to broaden the concept of fair use as heretofore developed by the courts. We suggest that all of these proposals are clearly in the national interest.


SEPTEMBER 18, 1975 I turn now to that part of Section 601 which grants a specific exemption for Canada. We are in favor of this provision and urge that it be retained.

In taking this position, we are gladly carrying out a commitment which we made, along with others, in the so-called Agreement of Toronto. This Agreement was the outgrowth of a meeting in Toronto on February 16, 1968, of representatives of the U.S. and Canadian business and labor organizations concerned with printing and publishing. The purpose of this meeting was to discuss three interrelated issues of mutual interest, namely, an exemption for Canada from the U.S. manufacturing clause, Canadian acceptance of the Florence Agreement, and effective resistance to weakening of international copyright protection. After a thorough discussion of all aspects of these interrelated issues, unanimous agreement was reached on four courses of action. A brief memorandum summarizing the points of agreement was carefully drafted and then approved by all members of the Canadian group and the U.S. group in March, 1968.

You may recall, Mr. Chairman, that Robert W. Frase, then Director of the Joint Washington Office of the American Book Publishers Council and the American Educational Publishers Institute, who signed on behalf of the U.S. group, wrote to you on April 1, 1968, about the Toronto Agreement and enclosed a copy of it. For the record, I would like to submit a copy of Mr. Frase's letter to you, together with a copy of the Toronto Agreement which was enclosed with that letter.

In negotiating the Toronto Agreement, the U.S. group sought assistance in achieving three major objectives: (1) assistance of the Canadian Government in opposing the Stockholm Protocol or similar actions weakening international copyright; (2) Canadian adherence to the Florence Agreement; and (3) removal of any remaining barriers to trade between Canada and the United States affecting the printing and publishing industries. The main objective of the Ca. nadian group was to secure the elimination of Canada from the effects of the manufacturing clause as part of the General Revision of the Copyright Law. Both groups were extremely pleased at the Agreement and felt that real progress could be made to achieve all of the objectives of both groups.

The sequence of actions by each of the two groups was thoroughly considered and was incorporated in the memorandum.

The Canadian group promptly took the specific action to which it had committed itself at Toronto. It informed the Canadian Government of the Toronto Agreement and specifically urged (1) that, when exemption of Canada from the manufacturing clause became law, Canada accept the Florence Agreement, thus removing the present Canadian ad valorem duty of 10 percent on a large volume of U.S. book exports to Canada, and (2) that the Canadian Government oppose adherence to the Stockholm Protocol or similar actions weakening international copyright. Since that time, the Canadian group has continued to keep its Government informed and has continued to support these positions. It was always clearly understood by all concerned that Canada's acceptance of the Florence Agreement, which can be accomplished very simply and quickly, would follow the granting of Canadian exemption from the manufacturing clause. As far as the Stockholm Protocol is concerned, the Canadian Government cooperated closely with the United States and both countries achieved their joint objective.

On the U.S. side, the U.S. group promptly conveyed notice of the Agreement of Toronto to the Executive Branch of the Government and also the appropriate subcommittees of the Senate and House Judiciary Committees. During the entire period that the Copyright Revision Bill was pending in the Senate, following passage of the House bill in 1967, the U.S. group urged that an exemption for Canada be included in Section 601. This position was accepted, successively, by the Senate Subcommittee on Patents, Trademarks and Copyrights; the Senate Judiciary Committee; and the Senate itself. The report of the Senate Judiciary Committee states as follows on page 198:

“The committee has adopted the proposal put forward by various segments of both the U.S. and the Canadian printing industries, recommending an exemption for copies manufactured in Canada. Since wage standards in Canada are substantially comparable to those in the United States, the arguments for equal treatment under the manufacturing clause are persuasiye.'

We were pleased that H.R. 2223, as introduced, contained the Canadian exemption in the same manner as it had passed the Senate last year and in the same manner as is provided in Senator McClellan's companion bill, S. 22. We have every reason to believe that, if this provision is retained in the bill as it is finally approved, Canadian acceptance of the Florence Agreement will follow shortly thereafter. In the unexpected event that it would not, we would surely then urge the Congress to withdraw the exemption.

In urging this exception for Canada, we do not mean to gloss over the existing irritants between Canada and the United States in the field of publishing and printing. However, we earnestly believe that the best chance of removing some or all of these irritants lies in improving the relationship between the two countries in the areas of printing and publishing. This can best be done, in our view, by carrying out the remaining objectives of the Toronto Agreement in the sequence there intended, i.e., by Canadian exemption from the manufacturing clause, fol. lowed promptly by Canadian acceptance of the Florence Agreement. The atmos. phere would then be propitious to carry out the final objective of the Toronto Agreement—the removal of any remaining barriers to trade between the two countries affecting the printing and publishing industries.

To our knowledge, the only objection that has been made before this Subcommittee to Canadian exemption has been by the Departments of State and Commerce on the ground that such exemption would be a violation of an executive agreement known as the GATT (General Agreement on Tariffs and Trade) and of certain unspecified bilateral treaties.

We believe that it is significant that the Senate Subcommittee, the Senate Judiciary Committee and the Senate as a body disregarded even broader and more basic objections by the Department of State registered in 1967. At that time, the State Department took the position that an exception for Canada "would create a conflict with the spirit of the most-favored-nation requirement in Article I [of the GATT], and in all likelihood with the words of Article I calling for most-favored-nation treatment 'with respect to all rules and formalities in connection with importation and exportation' (the Protocol does not except legislation inconsistent with Article I); and would also create a new conflict with the nondiscrimination requirement in Article XIII, paragraph


The State Department also stated that the Canadian exemption "would be contrary to the requirements for most-favored-nation treatment contained in

bilateral commercial treaties with many of our trading partners (citing treaties with Germany and Japan, both of which contain most-favored-nation provisions similar to Articles I and XIII of the GATT)."

We are pleased to note that, in its statement to this Subcommittee on May 8, 1975, the State Department representative abandoned any reference to violation either of the letter or the spirit of most-favored-nation principles in Article I of the GATT. In this important respect at least, the State Department accedes to the technical position which we took before the Senate Subcommittee in 1967. We do not regard the reference to "parious bilateral treaties” as of any independent significance. As we pointed out in our technical memorandum in 1967, the various bilateral commercial treaties are not a separate reason for opposing a Canadian exemption, because they each contain provisions authorizing any action which is regarded or permitted by the GATT. Thus, we are still left only with the question whether an exception would be precluded by the GATT.

The only basis upon which the Department of State now claims that obligations under the GATT would be violated by a Canadian exception is Article XIII of the GATT. This section of the executory agreement requires nondiscriminatory administration of quantitative restrictions. We believe that the State Department is taking an invalid and simplistic position in attempting to apply Article XIII to an exemption for Canada from the U.S. manufacturing requirements. The history and context of paragraph 1 of Article XIII make it clear that this provision refers only to nondiscriminatory administration of quotas or other restrictions which come within one of the three exceptions authorized by the GATT-Article XI, paragraph 2; Article XII; and Article XIII, section b. It is not a blanket prohibition against all types of restrictions which do not apply equally to all countries. It applies only to the restrictions which come within any of the three above enumerated exceptions.

As we pointed out in our technical memorandum in 1967, the State Department itself, in various publications interpreting Article XIII, has related the nondiscriminatory requirement to quantitative restrictions on imports under one of the three enumerated exceptions. Since the manufacturing clause is not a restriction authorized by any of the three exceptions, Article XIII does not apply to it. Indeed, the whole context of Article XIII, which refers to allocation of quotas among supplying countries, makes it clear that the situation dealt with has no relationship at all to administration of the manufacturing clause of the copyright laws. Rather, the manufacturing clause is sui generis. It is an extension of the benefits and protection conferred by the copyright monopoly.

We are used to the idea and practice that U.S. copyright is enforceable by an author's publisher to protect the copies manufactured by the one selected producer against the independent manufacturer of copies by any other book manufacturer, including all American book manufacturers. Normally, only a single manufacturer is chosen to produce all of the copies for the national market. The Canadian exception in Section 601 merely extends to a Canadian book manufacturer the eligibility to be selected as the single manufacturer, or perhaps as one auxiliary manufacturer. Hence, to discuss the manufacturing clause or copyright law as a restriction on international free trade is anomalous and inappropriate

At this point, Mr. Chairman, I ask permission to submit for the record copies of the following:

1. Excerpts from the BMI testimony before the Senate Subcommittee on Patents, Trademarks and Copyrights, April 6, 1967, pages 676-677.

2. Letter dated September 19, 1967, from the Department of State to the Chairman of the Senate Subcommittee on Patents, Trademarks and Copyrights.

3. Letter dated October 11, 1967, to the Senate Subcommittee on Patents, Trademarks and Copyrights from counsel of BMI, including "Technical Memorandum on Effect of Existing U.S. International Agreements on Proposed Exception of Canada from the Manufacturing Clause of the Copyright Law."

One further point. The State Department representative referred in his testimony on May 8, 1975, to a protest by the United Kingdom against the exception for Canada. We understand that, when the United Kingdom made this protest, it was unaware of the long-standing, and recently reaffirmed, position of the British Publishers Association expressing its lack of objection to an exemption for Canada from the U.S. manufacturing clause. With your permission. Mr. Chairman, I offer for the record copies of letters dated January 3, 1968, and May 6, 1975, to Robert W. Frase from Mr. Ron Barker, Secretary of the British Publishers Association.

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