PROPOSED ACTION AGAINST JAPANESE SEMICONDUCTORS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R002303840013-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 22, 2016
• Document Release Date: December 7, 2009
• Sequence Number: 13
• Publication Date: November 8, 1985
• Content Type: MEMO

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8 November 1935 ILLEGIB
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EXECUTIVE SECRETARIAT _
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Elyecutive Secretary
4 NOV 85
Date
3637 (1081)
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 THE WHITE HOUSE
WASHINGTON
CABINET AFFAIRS STAFFING MEMORANDUM
Date: 11/1/85 Number: 317 , 017
Subject: Economic Policy Council Meeting
Action FYI
ALL CABINET MEMBERS ^ ^
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Vice President
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REMARKS:
The Economic Policy Council will meet Tuesday,
November 5, at 1:00 P.M. in the Roosevelt Room.
[jJ/Alfied H. Kingon ^ Don Clarey
Cabinet Secretary ^ Rick Davis
456-2823 ^ Ed Stucky
(Ground Floor, West Wing)
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FROM: EUGENE J. McALLISTER
F/U
The agenda and papers for the November 5 meeting of the
Economic Policy Council are attached. The meeting is scheduled
for 1:00 p.m. in the Roosevelt Room.
The Council will consider a report from the Trade Strike
Force. The Strike Force has prepared the attached. papers
addressing two issues: semiconductors and intellectual property.
The issue of semiconductors concerns alleged unfair Japanese
trade practices regarding predatory pricing and market access.
The paper presents recommendations addressing each of those
allegations.
The issue of intellectual property concerns how the
Administration could strengthen intellectual property protection,
both at home and abroad. The paper outlines a proposed
comprehensive strategy addressing, for example, bilateral and
multilateral negotiations, a legislative initiative, and a policy
statement.
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ECONOMIC POLICY COUNCIL
November 5, 1985
1:00 p.m.
Roosevelt Room.
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OVERVIEW PAPER -- SEMICONDUCTORS
The Product
T Fe electrical characteristics of semiconductors fall between those of insulators
and conductors. This allows them selectively to store, generate, or process
electricity as signals--that is, to handle information.
Silicon,- is the main semiconductor material. It is formed into thin, circular
wafers, each divided into roughly 100 rectangular "chips". On each chip is etched.
a tiny pattern of circuitry that determines function and performance. Once
complete, the wafer is tested and sliced into individual chips. The chips are
then packaged in plastic and bonded to metal wires that plug the semiconductor
into a. larger electronic system (see "Applications" below).
Its Manufacture
The lines of circuitry printed on each chip are as small as one micron (1/1000 of
a millimeter) wide; An individual chip, roughly 10 millimeters on a side, can
contain 100,000 "gates" or circuit functions.
The manufacture of such precise structures requires technology ranging from an
ultra-clean environment (since the smallest dust particle can incapacitate a
circuit) to the highest-resolution optical equipment (to transmit complex designs
from the "drawing board" onto the chip, error-free). A modern semiconductor
fabrication plant can cost $200milliou.
Semiconductor Applications
Semicon uctors arm in a variety of electronic equipment important to both
service and manufacturing industries. They made possible the computer; they are
the heart of telccomaunieations hardware and consumer electronic items
(calculators, VCRs). They are the solid-state, microelectronics revolution that
has so improved the performance of these products, miniaturized them, and reduced
their cost.
Semiconductors ,now pervade our entire economy. In heavy industry, they enable
robots to weld automobiles which rely on semiconductors for engine control,
braking, passenger comfort. They precisely control oxygen flows uid temperature
conditions for steel plants. They provide the high-speed data handling and
analysis on which our banking and insurance industries depend.
Semiconductor Types
The simplest semiconductors are called "discretes" because each chip has only a
single electrical junction and can perform only one function. For example, a
light-emitting diode--a discrete device used in electronic displays--can only be
on or off, and its "choice" is determined by the incoming electrical signal.
Another type of discrete semiconductor is the transistor, which in 1943 launched
the electronics age. Eleven years later, engineers placed several transistors
onto a single chip--the first integrated circuit (IC)--to perform more complex
tasks. Today, ICs dominate the semiconductor world. Progress in microelectronics
now depends upon packing more and more transistors onto a single chip without
sacrificing speed or consuming more electricity. The result is the
iaiiiaturization that we eventually see in more compact and powerful electronic
products.
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There are two basic roles for an integrated circuit--memory or logic. Memory
devices store information and return it oa demand. Their primary features are
their capacity and their response time. The 256K DRAM is a memory, device that can
:store some 256,000 "bits" of data; most of these chips require less than 250
billionths of a,. second to access a stored cell. Although difficult, to produce,
they are standard, high-volume products, and the lessons learned from their
manufacture are critical for production across-a much broader range of devices.
Logic chips, on the other hand, process data. These include the "brains" of
electronic systems, the microprocessor. The performance of logic chips is
measured in terms of their speed per step and the amount of information (e.g.,
15-bit) that they can handle at once. Their layout can be far more complex, and
they are consumed in much smaller volumes than memories.
The US Semiconductor Industry
Historically, the US semiconductor industry has been the world's leader. Only
five years ago, US manufacturers supplied some 65 percent of the world
semiconductor market. Since then, they have lost roughly 10 points of market
share to their Japanese competitors.
And 1985 has now brought the worst market conditions in over a decade--Japanese
dumping, restricted access to their market, and a slump in computer demand will
combine to drive US output down this year by 18-20 percent. This squeeze has hit
independent American firms hardest because of the longer-term need to continue
devoting tremendous resources to R&D and plant modernization. Despite the grim
semiconductor business environment, chip-makers will spend over 10% of sales on
Ry0 and another 25% of sales on plant and equipment in 1985.
Ke 'darker Features
T e long-term trend for se;.aicoaductor prices is down: This results from rapid
technological progress in the lab and on the production line. Product lifetimes
can be as short as 3 1/2 years. Over the last decade, the average cost per
functio:i bopped 17% annually. But in 1985, the final figure will fall between 3S
and 40 percent.
This year's unusually steep decline was striven by some striking developments at
the product level. The largest single market segment, random access memories
(RAMs), was valued in 1984 at nearly $6 billion. In 1985, another explosive
increase in Japanese production capacity, stimulated by industrial targeti:rg
efforts, helped to drive prices of leading edge 64K and 2S6K dynamic RAMs down by
over 80 percent.
But a presence in the memory market is critical for the US industry despite
difficult competitive circumstances. 3ecause companies manufacture here in
greatest volume, this is .where they can best advance their production and
engineering skills. These capabilities are then transferred to other product
segments. For this reason, memories are.considered "technology drivers",
fiuidamental to one's overall competitiveness in semiconductors.
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Nevertheless, the collapse of memory prices has induced most American companies to
withdraw.from the mainstream RAM market. Four firms. dropped out with the previous
(64K) generation. Only Texas Instruments, Micron Technology, and Motorola are
likely to produce standard 256K DRAMs. AT&T manufactures primarily for internal
use and has had difficulty marketing its device in the open market. IBM is
strictly an in-house supplier, and even then it sources some 40% of its .
requirements from outside suppliers. Most US firms will now try to hold their
ground in the other large memory field, electrically programmable read-only
memories (EPROMs).
International Competition
For the US in ustry, semiconductor r_o,npetition can be summed up in one
word--Japan. The European market is significant, but features no domestic
manufacturers of consequence. Japanese fir;ns now supply 60 percent of world
demand for the 64K DRAM and control 90% of the market For the latest device in
this targeted product area. If current Japanese overinvestment and dumping
practices continue, they will also dominate the coming 1-Megabit market.
As 'toted above, US exclusion from this. market has serious implications for
American companies' ability to compete in other areas. At the same time, the
Japanese have begun to branch out from this base in commodity memory to attack
more specialized memory products as well the logic field, two remaining areas of
US leadership. Recent Hitachi dumping of EPROt4s indicates that they will use this
practice in their drive for. market share in other segments as well.
The Japanese Strategy
T e Japanese c allenge in semiconductors was shaped by a concerted program of
industrial targeting, aimed at a dominant world market position and similar to
that used in shipbuilding and steel. This policy stricture, and the
economic/financial environment it fostered, encouraged the six major electronics
firms in Japan to pursue semiconductor development aggressively. At the same
time, it protected them from both domestic and international competition. Their
initial concentration on core products and technologies is now spreading to a
broader range of devices.
The Unfair Trade Practices--A History
The Japanese semiconductor program began in 1953 dith passage of legislation that
directed MITI to develop and implement a comprehensive promotion scheme. This .
included plans for creating an industry, providing financial support, suspending
antitrust regulations, and coordinating R&D activity. For the next fifteen years,
the Japanese market was formally protected by prohibitive quotas, tariffs, :ird
foreign investment controls. Only Texas Instruments, in settlement of a Japanese
violation of its semiconductor patents, was able to establish production in Japan,
and even this occurred subject to MITI monitoring that limited its market share to
10 percent.
In 1974, the first market-opening measures were immediately neutralize,ll,y a
"counter-liberalization" program, which included "buy-Japanese" provisions along
with the continuation of subsidized research and inter-fine cooperation. By, the
late 1970s, more formal barriers had been lifted, but the legislation enabling
government promotion was renewed and a landmark industry-wide R&D effort (th(- VLSI
project) was launched with guidance and financing from MITI. This commercial
project centered on dynamic-RAMS, now the competitive stronghold of the Japanese
semiconductor industry. Typically, this product-specific focus, supported by the
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safety-net of protective legislation for depressed sectors, has encouraged
overinvestment, overcapacity, and ultimately, dumping. (e.g., textiles, .JS)
Meanwhile, despite the ostensible openness of the Japanese market, US chips
retained only a 10-15% share, frustrated by the vertically integrated and
horizontally coordinated Japanese electronics establishment. In addition,'only
one-half of these semiconductor sales were actual imports; the rest came from
US-owned production in Japan.
In 1932, negotiations began, aimed at improving US participation in the Japanese
chip market, the world's second largest. The inability of US firms to compete
with emerging Japanese rivals on the latter's home turf clearly weakened their
overall strategic position, and by depriving US sales, raised total US production
costs. Cabinet-level agreements, reached by the US-Japan High Technology Ulorkiag
Group, to pry open opportunities in Japan and refrain from illegal pricing
practices were not implemented.
The Japanese pushed to export in greater volumes, and dumping became integral to
their drive for market share in targeted product lines. As they gained production
experience, the Japanese also focused more on upgrading their technological base,
NTT continued to circulate its advances selectively to Japanese manufacturers.
MITI organized new commercial research programs for semiconductor
advancement--opto electronics, new materials, and microelectronics work for its
Sth generation and supercomputer projects. And unauthorized Japanese duplication
.of semiconductor designs and processes, a problem early on for the inventors of
the integrated circuit (Texas Instruments), arose again for American developers of
the microprocessor as the Japanese industry sought to diversify into new product
areas. -
The Current Situation
Today, semiconductor trade frictions continue in both new and traditional forms.
Negotiations continue (MOSS talks), yet the US share of the Japanese semiconductor
market has fallen again to 10%, giving no indication that foreign access has
improved. The Semiconductor Industry Association filed a 301 case directed at
this problem; USTR plans a recommendation to the President in December. US firms
have filed two dumping cases, both against Japanese memory producers. The Justice
'lepartment also began its own predatory pricing investigation of a Japanese
se',iiconductor firm; a separate, private case was filed shortly thereafter.
The Implications for the United States
T e fate o to
US semiconductor in ustry will have far-reachi_ig ranifications.
It will directly determine our coaper,;.tiveness across most high-tech industries,
since semiconductors are their foundation. It will profoundly affect the
capabilities of traditional manufacturers that have relied on electronics and
automation to modernize facilities and maintain their business position. It will
influence the cost effectiveness of our information-based service sector, from
financial institutions to retailing. In addition, the entrepreneurship that has
always characterized a healthy semiconductor industry attracts and cultivates a
wealth of technical talent here in the TLiire,l States, ensuring our position as a
global technological leader.
Semiconductor-based electronics contribute directly to our economic efficiency and
productivity as a nation. The growth, profitability, and employment that ensue
are critical to our long-term economic well-being.
 MEMORANDUM FOR: The Economic Policy Council
FROM: The Trade Strike Force
SUBJECT: Strengthening Protection for Intellectual
Property
The violation of U.S. intellectual property rights--patents,
trademarks and copyrights--is a serious impediment to U.S.
international trade or competitiveness. An absence of laws in many
countries, or the inadequate enforcement of existing laws, presents
a barrier to American companies selling their products, and to.
establisning plants. What Administration steps would strengthen
U.S. intellectual property owners' rights and secure more adequate
foreign protection of U.S. intellectual property?
SUMMARY OF RECOMMENDATIONS
The Administration should pursue a comprenensive strategy that
combines a legislative initiative with intensified ongoing efforts
to combat foreign violations of intellectual property rights. The
program would include:
(1) an accelerated program of bilateral consultations on
intellectual property and, wnere appropriate, consideration
of additional Section 301 unfair trade cases.
(2) continued efforts to improve multilateral disciplines on
intellectual property through the new trade round, the
OECD, and existing conventions on. intellectual property
(WIPO/UNESCO).
(3) issuance of a policy statement on intellectual property
that reflects the items above.
(4) an Administration legislative initiative to close gaps in
U.S. protection of intellectual property and to strengthen
U.S. intellectual property owners' rights against
infringers.
(5) identification of.ways in which existing treaties and U.S.
laws can ne used to secure adequate foreign intellectual
property protection, including prompt notice to GSP
countries of the progress they must make in protecting
intellectual property in order to retain GSP benefits
following the January 1987 GSP review
(6) creation of an advisory committee on intellectual' property
rights, co-chaired by USTR and Commerce, to provide a
formal cnannel for private sector advice.
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BACKGROUND
Inadequate Foreign Protection
Theft of intellectual property rights is on the increase worldwide
and causes an estimated lost U.S. sales of $8-20 billion annually.
Additional substantial losses result from restrictions on access to
foreign markets by U.S. innovations. International violations of
intellectual property rights nave become rampant as communications
and markets are now international and intellectual property has
become key to nigh-tecn trade.
Inadequate intellectual property protection access is particularly
acute in, although not confined to, the NICs. It includes:
o the absence of national patent, trademark, and copyright laws,
(e.g.,.Indonesia).
o patent laws that inadequately protect chemicals and
pharmaceuticals (Taiwan, Korea, Brazil, Mexico and Canada).
o copyright laws that provide uncertain or inadequate protection to
U.S. works or wnicn exclude or provide overly short-term
protection for computer software (Korea, France).
o inadequate implementation and enforcement (many countries).
These practices affect a wide spectrum of American industries
including chemicals, pharmaceuticals, motion pictures, publications,
semiconductors, computer software, apparel and other consumer goods,
and new industries sucn as biotechnology.
o RECOMMENDATION #1: That the United States pursue an aggressive,
effective bilateral strategy to accelerate discussions with key
countries. This has already been undertaken in accordance with a
Presidential directive. we should also examine appropriate
additional cases for Section 301 action.
Background: Piracy and counterfeiting nave grown
dramatically especially in the newly industrialized
countries of the Pacific Basin and Latin America. Effective
protection of intellectual property rights in most of these
countries lays far oenind that provided in nearly all
developed countries.
For example, Korea's copyright laws do not protect foreign
works or computer software and Singapore's do so only in
limited circumstances. Indonesia has no patent law. Patent
law in Korea and Taiwan does not cover chemicals and
pharmaceuticals. -
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Tne U.S. has had a series of bilateral consultations with
Latin American and Asian nations to remedy the problem.
These consultations should be accelerated. Contacts snould
include: Korea, Taiwan, Brazil, Argentina, Yugoslavia,
India, the Philippines, Mexico, Indonesia, Malaysia,
Singapore and Thailand. Further consultations also should
be neld with Canada on its practices witn respect to
pharmaceutical patents, and France on its recently enacted
overly snort term protection for computer software.
If consultations fail to produce sound progress in a timely
fashion, the Strike Force will consider whether the filing
of additional 301 actions is warranted. We have already
initiated a 301 case involving Korea.
Pro: o Bilateral consultations would build on previous discussions
which nave resulted in some positive changes in foreign
countries. This allows countries to address the problem and
change practices before any action is taken.
o We have the precedent of initiating a 3U1 case on Korea.
Further consultations with other offender countries snould
be undertaken before any additional action is taken.
con: o Bilateral packages would nave to be consistent with current
and proposed multilateral agreements, possibly diluting them
because of inadequate minimum standards at the multilateral
level.
o Some Section 301 cases might oe challenged through the GATT.
o Countries will probably react negatively to section 301
actions.
o Excessive use of 301 by the Strike Force could overload USG
circuits and diminisn our ability to bring these cases to a
successful conclusion.
0 RECOMMENDATION #2: That the Administration increase efforts
aimed at securing multilateral protection of intellectual
property rights through: including the topic as a priority in a
new round of trade negotiations; vigorously pursuing ongoing
efforts to improve existing conventions; and expanding OECD work
on the issue.
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 Background: Tne GATT, while addressing intellectual
property in four areas, does so on an exception basis.
Existing multilateral discipline comes through a number of
other international agreements, including the Paris and
Berne Conventions, administered by the World Intellectual
Property Organization (WIPO), and the universal Copyright
Convention, administered by UNESCO. These agreements center
generally on ensuring national treatment and establishing
some minimum standards for the nolders of intellectual
property rights, but they lack a proven mechanism for
resolving disputes. Despite the existence of international
conventions, violations of intellectual property rights have
become rampant. Ongoing efforts to improve existing
conventions should be pursued vigorously, e.g. WIPO's work
on semiconductor chip protection and biotechnology.
Efforts have been underway in the GATT since the end of the
Tokyo Round to conclude an Anticounterfeiting Code, which
nave intensified since the November 1984 Contracting Parties
meeting. These efforts need to be expanded in the new round
context. As a first step, the U.S. should take the lead in
seeking to form a 'Friends of Intellectual Property' group
in the GATT to advance consideration of the issue in the New
Round.
Multilateral efforts should continue in other arenas as
well-, such as investigating efforts to include intellectual
property in the coverage of the Invisibles Code in the OECD.
Pro: o Would signal multilateral commitment to the issue and would
supplement bilateral initiatives.
o Would. bring intellectual property disputes in the trade area
into the clear purview of the institution charged with
addressing trade disputes, the GATT.
o Would build on over 100 years of effort internationally, for
instance the Paris Convention was adopted in 1883.
Con: o Multilateral solutions are by their nature slow and
deliberate. They do not snow immediate results as do
bilateral initiatives. Thus they would not be responsive to
the snort-term concerns of the business community or
Congress. Multilateral efforts need to be supplemented by
bilateral and unilateral actions aimed at snort-term
remedies.
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o? RECOMMENDATION #3: Tnat the Administration issue a policy
statement on intellectual property.
Background: Such an action is supported by industry and
labor. T -policy statement would provide a focal point and a
toucnstone for the implementation of the programs described
in this document, similar to the previous Administration
trade and investment policy statements.
There is, however, an issue of timing relating to the issuance of
a policy statement wnicn the EPC snould address.
Option 1: The Strike Force should be directed to produce a
policy statement witnin a week's time for issuance by the
Administration. Such a statement would incorporate the
initiatives included in. this paper and private sector advice
received to date.
Pro: o would show our determination to move quickly on this
issue and put other countries on notice as to the
priority the Administration attaches to it.
o Would provide a useful venicle for organizing the
various elements of our initiative into a comprehensive
program.
Con: o Moving on this fast timetable would preclude our
systematically seeking private sector advice, a process
wnicn proved useful in the development of past policy
statements, e.g. tne.1963 investment policy statement.
Option 2: As indicated in the attached Action Plan, the strike
Force would oe directed to produce a policy statement within 4-6
weeks time.
Pro: o Would allow for extensive consultation with industry
and on an interagency oasis, thus producing a statement
which reflects a broad consensus of views.
Con: o May give the appearance of delaying action on the
intellectual property issue.
o RECOMMENDATION #4:
o (A) That the Administration introduce an Administration bill
amending domestic law to strengthen intellectual property
protection for U.S. producers. Alternatively, the Administration
could announce active support for intellectual property
legislation introduced on the Hill.
Pro: o Would put us out in front on the issue and make clear that
tnis is an Administration priority.
o Would gain faster action on proposals we have supported for
some time.
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con: o Would introduce the risk that the bill could be put into
legislation the Administration does not support, creating
proolems for Presidential action.
o (B) The legislation would contain the following provisions:
-- Amend Section 337 of Tariff Act of 1930 to delete
injury test and necessity to show that the domestic
industry is economically run.
Extend patent protection to cover products of patented
processes.
Extend life of agricultural chemical patents to
compensate for time lost due to regulatory processes.
(This was done for pharmaceuticals in the 98th
congress.)
Subject aspects of patent licensing arrangements to
'rule of reason' in antitrust cases instead of 'per se'
rule.
Increase procedural safeguards to prevent inappropriate
release of privately-owned proprietary information held
Background: These provisions have already been approved in
the legislative package.
Pro: o Would remove burdensome administrative requirements that
hamper the effectiveness of existing statutes (particularly
in the case of Section 337).
o Would close loopholes now benefitting foreign producers at
the expense of U.S. property rights holders (particularly in
the case of current process patent law)
o Would'make U.S. law consistent in recognizing the need to
compensate patent holders for the patent life lost due to
pre-marketing regulatory clearance proceedings.
0 RECOMMENDATION #5: That the U.S. Government use existing laws
and agreements more aggressively to ensure greater protection for
U.S. nolders of intellectual property rights worldwide. This
could include prompt notice to GSP countries of the progress they.
must make in protecting intellectual property in order to retain
GSP benefits following the January 1987 GSP review.
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Background: We should examine existing bilateral treaties
such as FCNS and BITS to determine whether any of the.rignts
and obligations tney create can be used to enforce the
rignts of U.S. owners of intellectual property rignts. A
failure to enact laws wnicn enable a nation to live up to
its-treaty obligations, or using liberal definitions of such
terms as 'property' in existing treaties to include
intellectual property, might be grounds for trade action.
In addition we should examine the applicability of
anti-expropriation provisions of various U.S. statutes in
cases where foreigners impose compulsory licensing on
American patent and copyright owners without prompt,
adequate and effective compensation.
Perhaps the strongest incentive for positive change in
developing and newly industrialized nations is the amendment
of GSP in the 1984 Trade and Tariff Act giving the President
increased authority to act to protect U.S. intellectual
property rights under this program. New GSP
provisions require consideration of.a nation's treatment of
intellectual property rignts in the general review of
continued eligibility for tariff concessions.
Pro: o. Would be a strong indication to our trading partners and the
U.S. business community that we are serious about pushing
for increased protection in this area.
o Notice to GSP countries that adequate intellectual property
rignts will be a significant review criterion could push
infringer countries into making earlier and more fundamental
changes.
0 RECOMMENDATION #6: That the USG pursue formal lines of
communication with the private sector through the Advisory
Committee on Trade NegotiationsseACTN) working group on
intellectual property rights and establish a private sector
advisory committee on intellectual property rights co-chaired by
USTR and Commerce.
Background: The business community and labor groups are
strongly committed to improving intellectual property
protection. The Presidentially appointed Advisory Committee
on Trade Negotiations has formed a task force on
intellectual property. This task force has split its work
into two stages: first it will make recommendations to the
full ACTN on multilateral approaches to trade. policy, and,
then it will work to identify major bilateral initiatives
and approaches. Their objectives are 1) higher norms,
transparency and removal of current practices such as
compulsory licensing; 2) adequate enforcement mechanisms;
and 3) dispute settlement procedures.
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Pro: o During the past year the Administration has informally
worked with the private sector through individual companies,
the ISACS and umbrella organizations established by U.S.
industry on intellectual property rights. Work by the ACTN
task force and a private sector advisory committee would
complement these efforts.
con: o once communication is formalized, the business community may
have false expectations on how quickly the USG can, make
changes.
Attachments: A. Timetable for Action Plan Initiatives
B. Summary of current U.S. Law and International Rules
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Action Plan Dates
a. Intellectual Property Policy Statement
Staff draft with private sector comments reflected:
December 1, 1985
b. Action on Legislation Related to Strengthening Domestic
Practices of Intellectual Property: Fall 1985
c. Acceleration of Bilateral Negotiations
Target plan for Brazil Mexico and other countries with IPR
problems: December 1, 1985
d. Review Obligations of Our Tradin Partners Existing in Current
Bilateral Agreements: December 1, 1985
e. Review of Korea 301 Case and Consideration of Other Possible
Immediate Intellectual Property-related 301 Actions:
January 1, 1986
f. Completion of Full ACTN Report on Priority Countries and Issues
for Consultation and 301 and GSP Action Programs:.
February 28, 1986
g. Review of Private Sector Report for Possible Section 301
Actions: March 1, 1986
h. Initiation of GSP-related Review Based on Intellectual Property
Criteria of Trade Act: Summer 9986
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Current U.S. Law
The Administration has favored certain improvements relating to
intellectual property, e.g., process patents, firmware, chemicals,
and patent misuse rules, and remedies against infringement,
U.S. intellectual property owners have two remedies against
infringement:
o Seeking damages and injunctions against infringers in federal
courts. Because the courts must have jurisdiction over the
infringer, this remedy applies chiefly to violations in the U.S.
o Filing an unfair practice case under Section 337 of the Tariff
Act of 1930. Under Section 337, the ITC may issue an exclusion
order barring imports of items that infringe U.S. patents,
trademarks and copyrights. To obtain relief, the petitioner
must demonstrate that the import or sale of the infringing
product substantially injures an industry that is efficiently
and economically operated in the U.S.
International Rules
The GATT covers intellectual property only on an exception basis.
The effectiveness of existing international intellectual property
conventions is in some cases limited due to lack of signatory
countries, lack of minimum standards, lack of coverage, and lack of
enforcement.
The Paris Convention on patents and trademarks provides for national
treatment and priority for filing dates, but generally does not set
minimum levels of protection.
For copyrights, the Berne Convention provides for national treatment
and generally a minimum copyright term of the author's life plus 50
years. (The U.S. is not a signatory, but the Administration has
supported joining.) The Universal Copyright Convention (UCC), to
which the U.S. is signatory, provides for national treatment and a
term of the author's life plus 25 years. Botn the Berne and UCC
contain substantial minimum standards. Significant countries (e.g.,
Korea, Indonesia) are signatory to neither copyright convention.