[Congressional Record: July 12, 1999 (Senate)]
[Page S8252-S8254]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr12jy99-122]


                      INTELLECTUAL PROPERTY BILLS

  Mr. LEAHY. Mr. President, on July 1, 1999, just before last week's
recess, the Senate passed four bills which Senator Hatch and I had
joined in introducing and which the Judiciary Committee had unanimously
reported on the same day as Senate passage. These four bills would
reauthorize the Patent and Trademark Office, update the statutory
damages available under the Copyright Act, make technical corrections
to two new copyright laws enacted last year, and prevent trademark
dilution. Each of these bills makes important improvements to our
intellectual property laws, and I congratulate Senator Hatch for his
leadership in moving these bills promptly through the Committee and the
Senate.
  Passage of these four bills is a good start, but we must not lose
sight of the other copyright and patent issues requiring our attention
before the end of this Congress. The Senate Judiciary Committee has a
full slate of intellectual property matters to consider and I am
pleased to work on a bipartisan basis with the chairman on an agenda to
provide the creators and inventors of copyrighted and patented works
with the protection they may need in our global economy, while at the
same time providing libraries, educational institutions and other users
with the clarity they need as to what constitutes a fair use of such
works.
  Among the other important intellectual property matters for us to
consider are the following:
  Distance education. The Senate Judiciary Committee held a hearing in
May on the Copyright Office's thorough and balanced report on copyright
and digital distance education. We need to address the legislative
recommendations outlined in that report to ensure that our laws permit
the appropriate use of copyrighted works in valid distance learning
activities.
  Patent reform. A critical matter on the intellectual property agenda,
important to the nation's economic future, is reform of our patent
laws. I worked on a bipartisan basis in the last Congress to get the
Omnibus Patent Act, S. 507, reported by the Judiciary Committee to the
Senate by a vote of 17 to one, and then tried to have this bill
considered and passed by the Senate. Unfortunately, the bill became
stalled due to resistance by some in the majority. We should consider
and pass this important legislation.
  Madrid Protocol Implementation Act. I introduced this legislation, S.
671, to help American businesses, and especially small and medium-sized
companies, protect their trademarks as they expand into international
markets by conforming American trademark application procedures to the
terms of the Protocol in anticipation of the U.S.'s eventual
ratification of the treaty. Ratification by the United States of this
treaty would help create a ``one stop'' international trademark
registration process, which would be an enormous benefit for American
businesses.
  Database protection. I noted upon passage of the Digital Millennium
Copyright Act last year that there was not enough time before the end
of that Congress to give due consideration to the issue of database
protection, and that I hoped the Senate Judiciary Committee would hold
hearings and consider database protection legislation in this Congress,
with a commitment to make more progress. I support legal protection
against commercial misappropriation of collections of information, but
am sensitive to the concerns raised by the Administration, the
libraries, certain educational institutions, and the scientific
community. This is a complex and important matter that I look forward
to considering in this Congress.
  Tampering with product identification codes. Product identification
codes provide a means for manufacturers to track their goods, which can
be important to protect consumers in cases of defective, tainted or
harmful products and to implement product recalls. Defacing, removing
or tampering with product identification codes can thwart these
tracking efforts, with potential safety consequences for American
consumers. We should examine the scope of, and legislative solutions to
remedy, this problem.
  Online trademark protection or ``cybersquatting.'' I have long been
concerned with protection online of registered trademarks. Indeed, when
the Congress passed the Federal Trademark Dilution Act of 1995, I noted
that:

       [A]lthough no one else has yet considered this application,
     it is my hope that this

[[Page S8253]]

     antidilution statute can help stem the use of deceptive
     Internet addresses taken by those who are choosing marks that
     are associated with the products and reputations of others.
     (Congressional Record, December 29, 1995, page S19312).

  Last year, my amendment authorizing a study by the National Research
Council of the National Academy of Sciences of the effects on trademark
holders of adding new top-level domain names and requesting
recommendations on related dispute resolution procedures, was enacted
as part of the Next Generation Internet Research Act. We have not yet
seen the results of that study, and I understand that the Internet
Corporation for Assigned Names and Numbers (I-CANN) and World
Intellectual Property Organization (WIPO) are considering mechanisms
for resolving trademark and other disputes over assignments of domain
names in an expeditious and inexpensive manner.
  This is an important issue both for trademark holders and for the
future of the global Internet. While I share the concerns of trademark
holders over what WIPO has characterized as ``predatory and parasitical
practices by a minority of domain registrants acting in bad faith'' to
register famous or well-known marks of others--which can lead to
consumer confusion or downright fraud--the Congress should tread
carefully to ensure that any remedies do not impede or stifle the free
flow of information on the Internet. I know that the Chairman shares my
concerns and that working together we can find legislative solutions
which make sense.

  As detailed below, the four intellectual property bills by the Senate
will help foster the growth of America's creative industries.

s. 1257, the digital theft deterrence and copyright damages improvement
                              act of 1999

  I have long been concerned about reducing the levels of software
piracy in this country and around the world. The theft of digital
copyrighted works and, in particular, of software results in lost jobs
to American workers, lost taxes to Federal and State governments, and
lost revenue to American companies. A recent report released by the
Business Software Alliance estimates that worldwide theft of
copyrighted software in 1998 amounted to nearly $11 billion. According
to the report, if this ``pirated software had instead been legally
purchased, the industry would have been able to employ 32,700 more
people. In 2008, if software piracy remains at its current rate, 52,700
jobs will be lost in the core software industry.'' This theft also
reflects losses of $991 million in tax revenue in the United States.
  These statistics about the harm done to our economy by theft of
copyrighted software alone, prompted me to introduce the ``Criminal
Copyright Improvement Act'' in both the 104th and 105th Congresses, and
work over those two Congresses for passage of this legislation, which
was finally enacted as the ``No Electronic Theft Act.'' The current
rates of software piracy show that we need to do better to combat this
theft, both with enforcement of our current copyright laws and with
strengthened copyright laws to deter potential infringes.
  The Hatch-Leahy-Schumer ``Digital Theft Deterrence and Copyright
Damages Improvement Act'' would help provide additional deterrence by
amending the Copyright Act, 17 U.S.C. Sec. 504(c), to increase the
amounts of statutory damages recoverable for copyright infringements.
These amounts were last increased in 1988 when the United States
acceded to the Berne Convention. Specifically, the bill would increase
the cap on statutory damages by 50 percent, raising the minimum from
$500 to $750 and raising the maximum from $20,000 to $30,000. In
addition, the bill would raise from $100,000 to $150,000 the amount of
statutory damages for willful infringements.
  Courts determining the amount of statutory damages in any given case
would have discretion to impose damages within these statutory ranges
at just and appropriate levels, depending on the harm caused, ill-
gotten profits obtained and the gravity of the offense. The bill
preserves provisions of the current law allowing the court to reduce
the award of statutory damages to as little as $200 in cases of
innocent infringement and requiring the court to remit damages in
certain cases involving nonprofit educational institutions, libraries,
archives, or public broadcasting entities.
  In addition, the bill would create a new tier of statutory damages
allowing a court to award damages in the amount of $250,000 per
infringed work where the infringement is part of a willful and repeated
pattern or practice of infringement. I note that the House version of
this legislation, H.R. 1761, omits any scienter requirement for the new
proposed enhanced penalty for infringers who engage in a repeated
pattern of infringement. I share the concerns raised by the Copyright
Office that this provision, absent a willfulness scienter requirement,
would permit imposition of the enhanced penalty even against a person
who negligently, albeit repeatedly, engaged in acts of infringement.
The Hatch-Leahy-Schumer bill avoids casting such a wide net, which
could chill legitimate fair uses of copyrighted works.

s. 1258, the patent fee integrity and innovation protection act of 1999

  The Patent Fee Integrity and Innovation Protection Act would
reauthorize the Patent and Trademark Office for fiscal year 2000, on
terms that ensure the fees collected from users will be used to operate
the Patent and Trademark Office and not diverted to other uses.
  The PTO is fully funded and operated through the payment of
application and user fees. Indeed, taxpayer support for the operations
of the PTO was eliminated in the Omnibus Budget Reconciliation Act of
1990, which imposed a large fee increase (referred to as a
``surcharge'') on those who use the PTO, namely businesses and
inventors applying for or seeking to protect patents on trademarks.
  The fees accumulated from the surcharge were held in a surcharge
account, for use by the PTO to support the patent and trademark
systems. Unfortunately, however, the funds in the surcharge account
were also diverted to fund other, unrelated government programs. By
fiscal year 1997, almost $54 million from the surcharge account was
diverted from PTO operations.
  Last year, Congress responded to this diversion of PTO fees by
enacting H.R. 3723/S. 507, which the chairman and I had introduced on
March 20, 1997. That legislation authorized a schedule of fees to fund
the PTO, but no other government program, and resulted in the first
decrease in patent application fees in at least 50 years.
  This PTO reauthorization bill would make $116,000,000 available to
the Patent and Trademark Office, a self-sustaining agency, to pay for
salaries and necessary expenses in FY 2000. This money reflects the
amount in carryover funds from FY99 that PTO expects to receive from
fees collected, pursuant to the Patent Act and the Trademark Act. By
authorizing the money to go to PTO, the bill would avoid diversion of
these fees to other government agencies and programs. Inventors and the
business community who rely on the patent and trademark systems do not
want the fees they pay to be diverted but would rather see this money
spent on PTO upgraded equipment, additional examiners and expert
personnel or other items to make the systems more efficient. This bill
would ensure those fees are not diverted from important PTO operations.

            s. 1260, copyright act technical corrections act

  In the last Congress, Senator Hatch and I worked together for passage
of the Digital Millennium Copyright Act (DMCA) and the Sonny Bono
Copyright Term Extension Act. This significant legislation is intended
to encourage copyright owners to make their works available online
by updating the copyright laws with additional protections for digital
works, and conforming copyright terms available to American authors to
those available overseas. The Hatch-Leahy substitute amendment to this
bill adopted by the Judiciary Committee and passed by the Senate, makes
only technical and conforming changes to those new laws and the
Copyright Act.

               S. 1259, The Trade Amendments Act of 1999

  The Hatch-Leahy Trademark Amendments Act is significant legislation
to enhance protection for trademark owners and consumers by making it
possible to prevent trademark dilution before it occurs, by clarifying
the remedies available under the Federal trademark dilution statute
when it does occur, by providing recourse

[[Page S8254]]

against the Federal Government for its infringement of others'
trademarks, and by creating greater certainty and uniformity in the
area of trade dress protection.
  Current law provides for injunctive relief after an identical or
similar mark has been in use and has caused actual dilution of a famous
mark, but provides no means to oppose an application for a mark or to
cancel a registered mark that will result in dilution of the holder's
famous mark. In Babson Bros. Co. v. Surge Power Corp., 39 USPQ 2d. 1953
(TTAB 1996), the Trademark Trial and Appeals Board (TTAB) held that it
was not authorized by the ``Federal Trademark Dilution Act'' to
consider dilution as grounds for opposition or cancellation of a
registration. The bill remedies this situation by authorizing the TTAB
to consider dilution as grounds for refusal to register a mark or for
cancellation of a registered mark. This would permit the trademark
owner to oppose registration or to petition for cancellation of a
diluting mark, and thereby prevent needless harm to the good will and
distinctiveness of many trademarks and make enforcing the Federal
dilution statute less costly and time consuming for all involved.
  Second, the bill clarifies the trademark remedies available in
dilution cases, including injunctive relief, defendant's profits,
damages, costs, and, in exceptional cases, reasonably attorney fees,
and the destruction of articles containing the diluting mark.
  Third, the bill amends the Lanham Act to allow for private citizens
and corporate entities to sue the Federal Government for trademark
infringement and dilution. Currently, the Federal Government may not be
sued for trademark infringement, even though the Federal Government
competes in some areas with private business and may sue others for
infringement. This bill would level the playing field, and make the
Federal Government subject to suit for trademark infringement and
dilution. I note that the Lanham Act also subjects the States to suit,
but that provision has now been held unconstitutional. Last week, the
Supreme Court held in College Savings Bank versus Florida Prepaid
Postsecondary Education Expense Board that federal courts were without
authority to entertain these suits for false and misleading
advertising, absent the State's waiver of sovereign immunity. This case
(as well as the other two Supreme Court cases decided the same day),
raise a number of important copyright, federalism and other issues, but
do not effect the provision in the bill that waives Federal government
immunity from suit.
  Fouirth, the bill provides a limited amendment to the Lanham Act to
provide that in an action for trade dress infringement, where the
matter sought to be protected is not registered with the PTO, the
plaintiff has the burden of proving that the trade dress is not
functional. This will help promote fair competition and provide an
incentive for registration.
  Finally, this bill makes a number of technical ``clean-up''
amendments relating to the ``Trademark Law Treaty Implementation Act,''
which was enacted at the end of the last Congress.
  These bills represent a good start on the work before the Senate
Judiciary Committee to update American intellectual property law to
ensure that it serves to advance and protect American interests both
here and abroad. I began, however, with the list of copyright, patent
and trademark issues that we should also address. We have a lot more
work to do.

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