Thank you for your two letters regarding my testimony on the Berne Convention before your Subcommittee on February 18, 1988, containing supplemental questions for inclusion in the record of that hearing. Responses to the supplemental questions are enclosed. They include the response of the Departments of Commerce and State. Please do not hesitate to contact me if you or any members of your Subcommittee have further questions regarding the important issue of U.S. adherence to the Berne Convention. Sincerely, Chelliani Verity Secretary of Commerce Enclosures Senator DeConcini QUESTIONS FOR SECRETARY VERITY Q1. Protection for U.S. innovation depends on the patent system. Delays in providing this protection are jeopardizing the U.S. leadership position in biotechnology. What steps is the Patent Office taking to accelerate issuance of enforceable patents (product and process claims) so that offshore infringers can be prevented from exporting into the U.S.? Al. Biotechnology is one of the fastest-growing areas of research in the world. It has a voracious appetite for new researchers, and it turns out a veritable flood of innovations. Consequently, patent applications are being filed at an everincreasing rate. This is putting a strain on the examining unit responsible for processing the applications. Moreover, to function in such a complex field a patent examiner must be as highly-trained as a researcher in industry. The problem we face is that it is difficult to recruit such people. We simply cannot offer skilled professionals the levels of salary and benefits they can get in private industry. The Patent and Trademark Office is working hard to cope with this growing workload, however, and we expect that the changes we are making will speed up the issuance of both product and process patents in this area. We are reorganizing and expanding the Examining Group responsible for processing biotechnology applications. All biotechnology examining responsibility will be consolidated in the new group. We are seeking to hire as many new examiners as can be trained, on an accelerated basis. Overtime will be increased to the maximum level sustainable. Examiners in other groups who can be retrained will be transferred to examine biotechnology applications. Procedures are already in place to provide for accelerated examination to meet the needs of the applicant. These procedures are available to biotechnology applications. In addition, the Administration has proposed legislation to make the importation of products made abroad through the unauthorized use of a U.S. process patent an act of infringement. Our bill will give U.S. holders of process patents an effective alternative to an unfair trade practice proceeding, and one that will allow them to recover monetary damages. Senator Heflin QUESTIONS FOR SECRETARY VERITY Q1. In your testimony, you state that piracy is a problem and that in 1984, it cost U.S. industries more than $1.3 billion in only ten countries. Do you recall which ten countries were involved? Are they members of Berne? It would seem to me that if they were not, we would not make much of a dent in recouping our losses due to piracy? Assuming that they are members of the Berne convention, what would stop the pirates from closing up shop and establishing their business in another country that is not a member of Berne? Do you have any figures on how the $1.3 billion broke down by category such as books, movies, records, computer programs, etc? How does this loss compare to the loss in Berne member countries such as England? A1. The ten jurisdictions covered by the study were Singapore, Taiwan, the Republic of Korea, the Philippines, Malaysia, Thailand, Brazil, Egypt and Nigeria. Of these the Philippines, Thailand, Brazil and Egypt are Berne members. At the time the study was done in 1984, we had copyright relations with Taiwan, the Philippines, Thailand, Brazil and Nigeria. With the exception of Thailand the problems were not with eligibility for protection, but with inadequacies in the law or in its enforcement. For many The case of Thailand deserves special mention. years Thailand was the shining example in southeast Asia of a country that showed respect for international copyright. Thailand has been a member of the Berne Convention since 1921, and has had copyright relations with the United States through a series of bilateral agreements. However, in 1984 the situation changed. A Thai court ruled that U.S. works were not protected in Thailand through the latest bilateral agreement because it had never been proclaimed properly under Thai law. The court also ruled that the relevant article of the Thai copyright law did not recognize a bilateral agreement as a basis for protecting foreign works in Thailand. The court ruled that U.S. works would be protected in Thailand only if such works were simultaneously published in a Berne country. The plaintiff ultimately prevailed in that case, but only after the U.S. copyright owner incurred the great expense of sending several witnesses to Thailand to testify on the issue of simultaneous publication. However, in another case, a Thai court refused to accept proof of simultaneous publication in Canada, a Berne country, because the copyright owner had failed to comply with the voluntary copyright registration procedure in Canada. We are presently trying to rectify this situation through bilateral efforts. An amendment to the relevant article of the Thai copyright law is before the Thai parliament. Its passage is uncertain, however, and we have been repeatedly asked by the Thai negotiators why we do not join Berne and solve the problem. In 1984 losses to piracy of U.S. copyrighted works in Thailand amounted to $34 million. The recently-released International Trade Commission study, Foreign Protection of Intellectual Property Rights and the Effect on U.S. Industry and Trade, estimates losses in 1986 to be $38.7 million. Berne membership would give us protection immediately in Egypt, another important trouble spot. Firms responding to the ITC study estimate their losses to be $95 million for 1986 in the record and tape and publishing industries alone. Nothing will stop a pirate from relocating its business from a country with which we have copyright relations to one with which we do not. What Berne membership will do is eliminate 26 of the present safe havens where the pirates can relocate with impunity. The 1984 losses in the ten markets break down as follows: We do not have comparative figures on losses in other Berne member countries. It has been reported, however, that U.K. publishers have successfully enforced their copyrights in Egypt through raids on pirates conducted by Egyptian police. U.S. firms have not enjoyed this success because the police are unwilling to act where the claim to protection is based on simultaneous publication under the Berne Convention. The recording industry similarly reports that the Thai police regularly raid establishments selling counterfeit video and audio tapes from Berne member countries, but they will not conduct similar raids to protect U.S. works because of the uncertain copyright relations between the two countries. Q2. In your testimony, you mention that bilateral discussions with Indonesia, Malaysia, Singapore and Taiwan have led to improvements. How do you define improvements? Have pirating operations been closed down to a significant degree? Have U.S. industries brought suit and been successful in their effort? A2. I define improvements as the increased likelihood of effective protection of U.S. copyrighted works in foreign markets. Improvements have occurred on several levels. First, we have encouraged foreign countries to improve their local laws. Second, we have entered into copyright relations with those countries to make U.S. works eligible for protection. Third, we have continued to monitor progress to ensure that the laws are being enforced. A few examples are illustrative. Taiwan. In 1984 our copyright relations with Taiwan were strained because the pre-1985 copyright law denied effective protection to foreign works. For example, works were protected only if the copyright owner complied with burdensome and expensive registration procedures. Once protection was obtained, moreover, enforcement was ineffective because of inadequate penalties. Following extensive consultations with Taiwanese authorities, a new copyright law was enacted in 1985 that extended the term of protection, broadened the scope of coverage to include new works such as computer programs, and reduced reliance on formalities. Following further negotiation, the authorities on Taiwan agreed to give U.S. works full national treatment under the new law. This means that U.S. works are protected in Taiwan without the need to register. Just as in the United States, registration is merely a precondition to bringing a suit. The Association of American Publishers reports that in the year after the new law was enacted, sales of legitimate copies in Taiwan increased 300%, even though no lawsuits were commenced. This is not to say that all problems have been eliminated. U.S. copyright owners still do not enjoy the protection of a translation right in Taiwan. Problems also exist concerning the protection of some pre-1985 works, and enterprising pirates continue to meet local demand with unauthorized copies. However, the new law has provided U.S. copyright owners with the means to combat this piracy. accounts, they are achieving success. By all Singapore. The United States did not have copyright relations with Singapore, which at one time was regarded as the world capital of copyright piracy. Following extensive consultations beginning in 1984, Singapore decided to clean up its act, moving quickly to enact a modern copyright law that protects both traditional and new works. After the new law came into effect, Singapore entered into bilateral relations with the United States. Once the government announced its intention to enact a new copyright law, the local market fell from virtually 100% pirated product to only 30% pirate product, according to estimates by the International Federation of Phonogram and Video Producers. All reports received since relations were established indicate that enforcement of the law has continued to contain piracy. Indonesia and Malaysia. In both Indonesia and Malaysia the copyright laws have been improved significantly. In October 1987 Indonesia amended its copyright law to extend the term of protection from life-of-the-author plus 25 years to a term of generally life plus 50 years. The new law broadened the subject matter of protection to include computer programs and sound recordings, and provided a basis for the protection for foreign works. In December 1987, the new Malaysian copyright law came into force. The term of protection was 85-836 0 - 88 - 5 |