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V. EROSION OF THE MANUFACTURING CLAUSE As we mentioned at the outset, a manufacturing clause has been contained in our ('opyright Law since 1891. The original language of this clause has been repatedly liberalized and weakened over the years, with the latest revision Oxy'urring in 1954. The current language of Section 16 of Title 17 of the United States ('ode was the result of the 1954 liberalization.

During the course of various Congressional deliberations on the general revision of our Copyright Law subsequent to 1954, the issue of repealing or wakening the manufacturing clause was considered. During this period spanning approximately 10 years, the publisher groups, major authors' group, and a number of indirectly interested fringe groups sought to have the manufacturing clause repealed. These proposals were repeatedly rejected and a compromise Version of the manufacturing clause was adopted by a series of Congressional ('ommittees with the agreement of the affected groups. This compromise version is now before this distinguished Committee embodied in Section 601 of H.R.

23.

The major erosion of the manufacturing clause represented by Section 601 is the exemption for American nationals domiciled abroad for at least one year and the removal of the absolute loss of copyright protection upon noncompliance with the manufacturing clause. Other liberalizations are present including the increase to 2,000 in the number of books which may be imported under the eremption from the clause with an elimination of the special "ad interim" time limits and registration requirements of the present law, and an increase in the number of exemptions from the clause for specified types of use. Under subsection (c) of Section 601, importation of reproduction proofs would be permitted, as well as computer tapes from which plates can be prepared, representing a major liberalization of the manufacturing clause.

It is therefore clearly agreed by the groups affected by the manufacturing clause that Section 601 represents a further erosion of its effectiveness. However, the compromise achieved in support of Section 601 is recognized by our industry, and in the spirit of mutual cooperation among the differing interests affected by this issue, and for purposes of legislative compromise, we strongly submit that section 601 should be favorably considered by this distinguished Committee.

CONCLUSION Based on the above facts, we submit that a repeal or a further weakening of the manufacturing clause will have a disastrous effect upon our industry at a time when there is a necessity for an increased volume of printed material, increased production and investment demands and a skilled labor force to meet these demands. However, in the spirit of reform and recognizing the long and arduous history of compromise of differing economic interests concerning this issue, the book manufacturing industry herewith states its support for the present Section 601 as proposed in H.R. 2223, subject to a technical amendment and clarification in the Committee Report to be proposed hereafter.

TECHNICAL AMENDMENT AND CLARIFICATION TO SECTION 601

1. WORK FOR HIRE. FOREIGN SUBSIDIARY OF DOMESTIC EMPLOYER For the purpose of preventing possible abuses in the "work for hire" exemption of Section 601(b) (1), we respectfully request that the following language be added to the last clause of Section 601(b) (1) so it reads as follows:

**. *; in the case of work made for hire, the exemption provided by this clause does not apply unless a substantial part of the work was prepared for an employer or other person who is not a national or domiciliary of the United States or a domestic corporation or enterprise or a foreign subsidiary or affiliate thereof." (New language italic.)

II. LITERARY MATERIAL The interpretation of the term "literary material" may be capable of conflicting interpretations by administrators charged with enforcing the manufacturing clause. Indeed, under present law, the interpretation as to what types of work

• Section 601 of H.R. 2223 is identical to Section 601 of S. 1361 reported by the Senate Cominittee on the Judiciary, July 3, 1974, 93rd Cong.. 2nd Session and is very similar to Section 601 of H.R. 4347 and S. 597 considered by the 89th and 90th Congresses.

were covered under the clause has been inconsistent and at times conflicting. Thus, for the purpose of accurately reflecting the legislative intent concerning the definition of the term "literary material" as used in Section 601 of the bill, we respectfully request that the Report of the House Subcommittee on Courts, Civil Liberties and the Administration of Justice to accompany H.R. 2223 include language applicable to the definition of "literary work (material]" contained in the last sentence of the third full paragraph appearing on page 17 of the House of Representatives Report No. 83, 90th Congress, 1st Session, March 8, 1967, with revisions so it reads as follows:

“The term 'literary material' does not connote any criterion of literary merit or qualitative value; it includes catalogs, directories and similar material."

III. PREPONDERANTLY OF NONDRAMATIC LITERARY MATERIAL Finally, we also request that the House Committee Report include language to aid in the definition of "preponderantly" as it relates to nondramatic literary material in Section 601 (a) of the bill. Since the language in Section 601 of the companion bill, S. 22, is similar, it might be helpful to use similar language to that contained in the Senate Committee Report (Sen. Report No. 983, 93rd Congress, 2d Session, July 3, 1974, p. 197).

We would respectfully request that the following three paragraphs be included in the House Committee Report to aid in later application of the Section :

"The scope of the manufacturing requirement, as set out in subsections (a) and (b) of section 601, is considerably more limited than that of present law. The requirements apply to 'a work consisting preponderantly of nondramatic literary material that is in the English language and is protected under this title,' and would thus not extend to: dramatic, musical, pictorial, or graphic works; foreign-language material; or works consisting preponderantly of material that is not subject to the manufacturing requirement.

"A work containing ‘nondramatic literary material that is in the English language and is protected under this title,' and also containing dramatic, musical, pictorial, graphic, foreign-language, public domain, or other material that is not subject to the manufacturing requirement, or any combination of these, is not considered to consist 'preponderantly' of the copyright-protected nondramatic English-language literary material unless such material exceeds the exempted material in importance. Thus, where the literary material in a work consists merely of a foreword or preface, and captions, headings, or brief descriptions or explanations of pictorial, graphic or other non-literary material clearly exceeds the literary material in importance, and the entire work is free of the manufacturing requirement.

"On the other hand, work which contains both non-dramatic literary material and pictorial, graphic or other non-literary material is subject to the manufacturing requirement if the non-dramatic literary material is necessary to convey the ideas or information being presented, regardless of the relative amount of space occupied by each kind of material. In such a case, the existence of a narrative or exposition means that the non-dramatic literary material plainly exceeds the non-literary material in weight, or importance, in the work and the work is therefore subject to the manufacturing requirement even though it has a high pictorial or graphic content."

[The subcommittee received the following statements letters for the record :]

STATEMENT BY TOWNSEND HOOPES, PRESIDENT ASSOCIATION OF

AMERICAN PUBLISHERS Mr. Chairman, my name is Townsend Hoopes. I am President of the Association of American Publishers, a trade association comprising the great majority of publishers of general books, textbooks and educational materials. Its more than 260 members, including many university presses and religious book publishers, produce in the aggregate more than 80% of all general, educational and religious books and materials published in the United States.

We are grateful for the opportunity to express our views on yet another section of the Copyright Revision Bill, Section 601, the Manufacturing Clause.

The Association is on record before this committee in support of the bill as it is now written. We extend this support to the manufacturing clause, although with certain minor reservations. In principle we are opposed to any type of trade restrictions which impede the free flow of educational and cultural mate

rials. At the same time we recognize the political realities of the present situation, and accordingly accept and support the present language of Section 101 in the interests of facilitating passage of the bill as a whole. We do express the hope that this section can be eventually eliminated from the statute, as it constitutes 1 continuing temptation to developing countries to impose a variety of protectionist measures that work generally to restrict the international flow of information and educational materials.

U.S. COUNCIL FOR AN OPEX WORLD ECONOMY, INC.,

Washington, D.O., September 4, 1975.

REPEAL THE "MANUFACTURING CLAUSE” OF THE COPYRIGHT LAW

(By David J. Steinberg, President, U.S. Council for an Open World Economy)

The copyright law's "manufacturing clause," first enacted in 1891 and liberalized several times over the past 84 years, basically requires (with certain exceptions) that a person desiring full U.S. copyright protection for a book in the English language must have that book manufactured in the United States. Referred to by its supporters as a justifiable condition to the granting of a monopoly, the "clause" is in fact a trade barrier with Buy American features. It does not belong in the copyright law at all, whether or not justifiable as economic policy. To the extent that it has had any economic justification, it should be only a marginal, transitional part of a coherent policy of government assistance to an industry whose problems and needs have been carefully diagnosed. This has never been U.S. practice regarding this or any other trade barrier.

Repeal of the "manufacturing clause" is a long overdue reform that belongs in the copyright law revision now being considered by Congress. The slight modifidations of the clause" in the current bill, whatever their merits, are not enough. The best course would be total repeal of the "clause," or at least the programing of repal--scheduling it to take effect perhaps a year or two from the date of enactment of the new legislation (though not precluding interim enforcement of what. ever improvements now in the bill are adopted).

The decision to repeal, worthy for its own sake, could be helpful in inducing other countries to discontinue certain practices impeding U.S. exports, but should not be made conditional on such concessions. It could (and should) set in motion a coherent government assessment of the strengths and weaknesses of the printing industry and the most constructive form of government assistance, if assistance is Deeded at all.

Retaining the "manufacturing clause" in one form or another is not only a barrier to commerce. It is also (by seeming to respond to the problems of the printing industry) a barrier to direct, constructive attention to the real needs of the industry for whose benefit this aged protectionism has been kept on the books. It is also a barrier to Ainerican authors unable to find publishers in the United States, and a barrier to American publishers eager for greater flexibility with which to achieve greater efficiency and greater market opportunities.

It is long past time to free the copyright law, the book writers and the publishing industry from this encumbrance. It is time for enlightened attention to the best interests of all the people whose lives and livelihoods are affected by this issue the needs of the printing industry no less than those of anyone else.

(This statement presents the writer's personal views and does not necessarily, in every detail, reflect the views of the U.S. Council for an Open World Economy or the Council's trustees. The Council is a nonprofit organization engaged in research and public education on the merits and problems of achieving an open international economic system.)

COUNIAN, CASEY & LOOMIS,

Washington, D.C., October 21, 1975. Re: H.R. 2223, Copyright Bill. HERB Fuchs, Esq.. ('ounsel, House Judiciary Subcommittee on Courtx, Civil Liberties and the

Administration of Justice, Rayburn Building, Washington, D.C. DEAR HERB: We understand that you will probably only have one more day of hearings on H.R. 2223 (Ms. Barbara Ringer will testify as Register of Copyrights on October 30, 1975) and then the Subcommitte will go to mark-up.

Mr. Horner and I appreciated rery much the opportunity to meet witb Friente September 12, 1973 to discuss some of the technical aspects of the manufacture clause issne which we did not have adequate time to present in our oral tesor mony before the Subcommittee on September 18, 1975.

I thought this might be a good time to re-express our interest in three techna issues involring the manufacturing clause in Section 601 of the bill. At page 1 to 14 of our statement enclosed), note the three technical issues inrui. (1) "work for hire, foreign subsidiary of domestic employer", (2) defin.110 term "literary material", and (3) definition of the term "preponderantly as relates to nondramatic literary material.

We would respectfully request that these three clarifications he made in the Committee Report or possibly in the form of technical amendments to the lo. itself if you feel that is more appropriate.

Should you have any questions on this, we would be glad to answer them.
With best regards.
Sincerely,

STEPHIEX F. Owrx, Jr.
General Counsel, Book Janufacturers Institute

STATEMENT REGARDING THE CANADIAX EXEMPTIOX, SUGGESTED FOR INCI ISTU 11

THE COMMITTEE REPORT Canada is specifically erempted from the provisions of Section 601, the called "manufacturing clause" of the bill. This exemption is includ-d as t of an agreement reached in Toronto in 19S among representatives of Ameti 11 and Canadian publishers, printing trade unions and book manufacturers in addition of the Canadian exemption in American legixlation, that agreemet contemplates ('anadian adoption of the Florence Agreement, prompt retur! A the punitive ('anadian tariffs on printed matter and the removal of other (399 dian restraints on printing and publishing trade between the two untries 7" Canadian exemption is included in Section 101 in the expectation that there changes will be made. If for any reason ('anada does not more promptly to carry out its obligations under the Toronto Agreement, we would expet (ongties te remove the Canadian exemption.

Mr. KASTEN VEIER. I would again remind the witnesses that them are time limitations. I don't like to break into your presentations, but if you are unaware of your time limitation, Jr. Fuchs, our counsel, will be happy to inform you. I say this because it is our hope to cover four subject areas this morning, and we cannot do so if people exceed the time allotted to them.

I would now like to call Jr. Irwin Karp, counsel, Authors Leagle of Imerica, Inc.

TESTIMONY OF IRWIN KARP, COUNSEL, AUTHORS LEAGUE OF

AMERICA, INC.

Nr. KANP. Jr. (hairman, I ask that our complete statement le in. cluded in the riordi, and I will try to summarize in the time allotted to me the points made by the Authors League on the manufaturing

The restrictions and penalties of the manufacturing clause apply to two claw of work; namely, books and triolical contributions and only to the authorized by iis citizens and Domiciliares

The rigt9 of the authors are clay hontales to come! puls 1:-hers to mmfature 1'.s. Hitions of books by American author in this frilantry. Forfeiture of the author's rights here is the penalty for noneofy liandien

Your committer, in 1!Unluste that there is no initiat on on prinsiple for the manufacturing (lause and nt omm snied its ulti*

mate repeal. The Authors League agrees. It urges the clause be phased out of the Copyright Act no later than the end of 1982.

The league reluctantly accepts the new version of the clause in sertion 601 as a compromise. It eliminates some injustices, and properly allows manufacture in Canada. But it still inflicts harsh restraints and injury on American authors of books who publish abroad.

We recommend two changes in the clause, which will eliminate some of those damages to these authors; injuries which do not even Serve the purpose of the clause.

Our statement also discloses the reasons why the clause is unconstitutional, probably, because its arbitrary and discriminatory classifications violate the fifth and first amendments. Time being short, I will not summarize those.

I do wish to call your attention to the two changes we recommend in section 601, on page 5 of our statement. The first would exempt from the manufacturing clause copies of an American author's book which were produced abroad by a foreign publisher to actually publish the work outside the United States and was not a citizen or domiciliary of the United States. Jore than 2,000 copies, under these circumstances, could be imported without forfeiting protection of the author's C.S. publishing rights.

The purpose of the manufacturing clause is to compel publishers to manufacture C.S. editions. Primarily, the purpose, as a previous speaker pointed out, is to prevent U.S. publishers from sending works abroad for printing and other manufacturing activities. But American authors do not have books published abroad by foreign publishers in order to deprive U.S. printers of work. American authors publish abroad because they reside there, or because they cannot find an American publisher.

The manufacturing clause cannot wring blood from this stone. It is therefore pointless to prohibit C.S. authors, whose works are published abroad, from having more than 2,000 copies of these works from being distributed to American readers.

The restriction in this area simply denies them the right to reach the American public, or compels them to forfeit protection for their C.S. publishing rights in order to get those books into the country. It must be emphasized that while the new clause would not destroy C.S. author's copyrights completely as the present clause does, it still deprives American authors protection for their publishing rights if more than 2,000 copies are imported.

Most American authors derive all of their income solely from their publishing rights. So this modification, while laudatory, is probably useless to 80 or 90 percent of the American authors.

I thank you for the opportunity of presenting this brief statement. [The prepared statement of Irwin Karp follows:]

STATEMENT OF IRWIN KARP, COUNSEL, THE AUTHORS LEAGUE OF AMERICA

SEC. 601-"THE MANUFACTURING CLAUSE" Mr. Chairman, my name is Irwin Karp. I am counsel for the Authors League of America, the national society of professional writers. The Authors League appreciates this opportunity to state its views on the "manufacturing clanse" Ser. 16 of the present law, and Sec. 001 of the Copyright Revision Bill. a majority of the League's members write books, and poems, stories, articles and

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