Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 177

Declaration of MICHAEL ZELLER IN SUPPORT OF #176 MOTION TO EXCLUDE ORDINARY OBSERVER OPINIONS OF APPLE EXPERT COOPER WOODRING filed bySamsung Electronics America, Inc., Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC. (Attachments: #1 Exhibit 1, #2 Exhibit 2, #3 Exhibit 3, #4 Exhibit 4, #5 Exhibit 5, #6 Exhibit 6, #7 Exhibit 7, #8 Exhibit 8)(Johnson, Kevin) (Filed on 8/23/2011) Modified on 8/29/2011 linking entry to document #176 (dhm, COURT STAFF).

EXHIBIT
7

DESIGN INNOVATION AND TECHNOLOGY
ACT OF 1991

HEARING
BEFORE THE

SUBCOMMITTEE ON INTELLECTUAL PROPERTY
AND JUDICIAL ADMINISTRATION
OF THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SECOND CONGRESS
SECOND SESSION
ON

H.R.. 1790
DESIGN INNOVATION AND TECHNOLOGY ACT OF 1991

JANUARY 29, 1992

Serial No. 102

Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
64-184 CC

WASHINGTON : 43

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-040719-2

COMMITTEE ON THE JUDICIARY
JACK BROOKS, Texas, Chairman
DON EDWARDS, California
HAMILTON FISH, JR., New York
JOHN CONYERS, JR., Michigan
CARLOS J. MOORHEAD, California
ROMANO L. MAZZOLI, Kentucky
HENRY J. HYDE, Illinois
WILLIAM J. HUGHES, New Jersey
F. JAMES SENSENBRENNER, JR.,
MIKE SYNAR, Oklahoma
Wisconsin
PATRICIA SCHROEDER, Colorado
BILL McCOLLUM, Florida
DAN GLICAMAN, Kanaas
GEORGE W. GEKAS, Pennsylvania
BARNEY ',TANK, Maaaachusetts
HOWARD COBLE, North Carolina
CHARLES E. SCHUMER, New York
LAMAR S. SMITH, Texas
EDWARD F. FEIGHAN, Ohio
CRAIG T. JAMES, Florida
HOWARD L. BERMAN, CaliAirnia
TOM CAMPBELL, California
RICK BOUCHEP, Virginia
STEVEN SCHIFF, New Mexico
HARLEY 0. STAGGERS, JR., West Virginia JIM RAMSTAD, Minnesota
JOHN BRYANT, Texas GEORGE ALLEN, Virginia
MEL LEVINE, California
GEORGE E. SANGMEISTER, Illinois
CRAIG A. WASHINGTON, Texas
PETER HOAGLAND, Nebraska
MICHAEL J. KOPETSKI, Oregon
JACK REED, Rhode Island
JONATHAN R. VAROwSKY, General Counse 1
Mawr H. BRINE, Deputy General Counsel
ALAN F. Comm JR., Minority Chief Counsel

SUBCOMMITTEE ON INTELLECTUAL PROPERTY AND JUDICIAL ADMINISTRATION
WILLIAM J. HUGHES, New Jersey, Chairman
CARLOS J. MOORHEAD, California
JOHN CONYERS, JR., Michigan
HOWARD COBLE, North Carolina
MIKE SYNAR, Oklahoma
HAMILTON FISH, JR., New York
PATRICIA SCHROEDER, Colorado
F. JAMES SENSENBRENNER, JR.,
DAN GLICKMAN, Kansas
Wisconsin
BARNEY FRANK, Massachusetts
CRAIG T. JAMES, Florida
CHARLES E. SCHUMER, New York
TOM CAMPBELL, California
RICK BOUCHER, Virginia
MEL LEVINE, California
GEORGE E. SANGMEISTER, IIliucü
HAYDEN W. GREGORY, Counsel
ELIZABETH FINE, Assistant Counsel
EDwARD O'CONNEm, Assistant Counsel
LINDA C. HALL, Editor
PHYLLIS HENDERSON, Staff Assistant
VERONICA L EI1GAN, Staff Assistant
THOMAB E. MooNEY, Minority Counsel
JosRpH V. WocrE, Minority Counsel

PiaIII

1

January 29, 1992
TEXT OF BILL

2

H.R. 1790
OPENING STATEMENT
Hueies, Hon. William J., a Representative in Congress from the State of
New Jersey, and chairman, Subcommittee on Intellectual Property and
Judicial Administration

1

WITNESSES
Baroody, Michael, senior vice president, policy and communications, National
Association of Manufacturers
Castle, Rita L, chairwoman, the Design Coalition, accompanied by Bruce
Lehman, attorney, Swidler & Berlin
Cunningham, William J., legislative representative, Department of Legislation, American Federation of Labor and Congress of Industrial
Organizations
Jackson, Les, director of technical services, National Institute of
Governmental Purchasing, Inc.
Kailjorski, Hon. Paul E., a Representative in Congreas from the State of
Pennsylvania
Parish, Rhonda J., assistant general counsel, Wal-Mart Stores, Inc., on behalf
of the International Mass Retail Association
Sharofr, Brian, president, Private Label Manufacturers Association,
accompanied by Arthur M. Handler, counsel
Silbergreld, Mark, director, Washington office, Consumers Union, on behalf
of Unisumers Union and Consumer Federation of America
Woodring, Cooper C. chair, Task Force on Design Legislation, Industrial
Designers Society of America, on behalf of Better Mousetraps, Inc.

69
50
62
159
44
136
168
112
79

LEITERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Baroody, Michael, senior vice president, policy and communications, National
71
Asscciation of Manufacturers: Prepared statement
53
Castle, Rita L, chairwoman, the Design Coalition: Prepared statement
Cunningham, William J., legislative representative, Department of Legislation, American Federation of Labor and Congress of Industrial Organiza64
tions: Prepared statement
Gephardt, Hon. Richard A., a Representative in Congress from the State
37
of Missouri: Prepared statement
Jackson, Les, director of technical services, National Institute of
161
Governmental Purchasing, Inc.: Prepared statement
Kagjorski Hon. Paul E., a Representative in Congress hem the State of
47
Pennstania: Prepared statement
Michel, on. Robert H., a Representative in Congress from the State of
36
Illinois: Prepared statement
Parish, Rhonda J., assistant general counsel, Wal-Mart Stores, Inc., on behalf
139
of the International Mass Retail Association: Prepared statement

IV
Par

Sharon', Brian, president, Private Label Manufacturers Association: Prepared
statement
Silbergeld, Mark, director, Washington office, Consumers Union, on behalf
of Consumers Union and Consumer Federation of America:
Advertisement by Nissan, "Our New Pricing Polity is a Better Way
to Make Enda Meet,' Fuel Line magazine, January 1992, at 20
Letter from John C. Datt, executive dirwtor, Washington office, American
Farm Bureau Federation (with ettachment), to Chairman William J
Hughes, January 23, 1992
Prepared statement
PRNewsWire article re announcement of price reduction on General
Motors collision parts, January 17, 1992
Synaresen tative-hr Congreas from the-State of-Oklahomal
Prepared statement
Woodring, Cooper C., chair, Task Force on Design Legislation, Industrial
Designers Society of America, on behalf of Better Mousetraps, Inc.:
Analysis of how design protection has enhanced innovation in foreign
countries
Prepared statement

168

116
116
118
114

-

42

94
81

APPENDIXES
Appendix 1.—Statement of Hon. Hamilton Fish, Jr., a Representative in
193
Congress from the State of New York
195
Appendix 2.--Statement of Bethlehem Steel Corp
Appendix 3.—Statement of J.D. Stryker, manser, product development
196
power teol, Material Handling Division, Ingersoll-Rand Co
Appendix 4.—Press release issued by the Design Coalition, January 29,
199
1992
Appendix 6.—Letter from Peter M.C. Choy, chairman, American Committee
for Interoperable Systems (ACIS), to Chairman William J. Hughes,
Subcommittee on Intellectual Property and Judicial Administration, June
26,
1992
201
Appendix 6.—Summary and position on design protection, Coalition for Auto
204
pair Equality (CARE)
Appendix 7.—Article by fain C. Baillie, Ladas & Parry, London, "A
208
Frustration of Good Design,* Opinion: (19911 9 EIPR at 315
Appendix 8.—Data base reports from the Insurance Information Institute,
212
Islovember 1991

DESIGN INNOVATION AND TECHNOLOGY
ACT OF 1991
WEDNESDAY, JANUARY 29, 1992
HOUSE OF REPRESENTATIVES,
SUBCOMMI1 tE ON INTELLECTUAL PROPERTY AND
JUDICIAL ADMINISTRATION,
COMMrrTEE ON THE JUDICIARY,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room
2237, Rayburn House Office Building, Hon. William J. Hughes
(chairman of the subcommittee) presiding.
Present: Representatives William J. Hughes, John Conyers, Jr.,
Mike Synar, Patricia Schroeder, Dan Glickman, George E.
Sangmeister, Carlos J. Moorhead, Howard Coble, and F. James
Sensenbrennwar.
Also present: Representative Michael J. Kopetski.
Staff present: Hayden Gregory, counsel; Elizabeth Fine, assistant
counsel; Veronica Eligan, staff assistant; and Thomas E. Mooney,
minority counsel.
OPENING STATEMENT OF CHAIRMAN HUGHES

Mr. HUGHES. The Subcommittee on Intellectual Property and Judicial Administration will come to order. Good morning.
The Chair has received a request to cover this hearing, in whole
or in part, by television broadcast, radio broadcast, or still photography, or by other similar methods. In accordance with committee
rule 5(a), permission will be granted unless there is objection. Is
there objection?
Hearing none, permission is granted.
This morning, this subcommittee will begin consideration of an
important and complex issue, protection for industrial designs.
KR,. 1790, the Design Innovation and Technology, Act, was introduced last year by the distinguished majority leader, Mr. Gephardt
of Missoun; and the ranking minority member of our subcommittee, Mr. Moorhead of California; and the minority leader, Mr.
Michel, Cosponsors also include a number of members of this subcommittee. 'The bill would create freestanding intellectual property
protections for industrial designs.
[The bill, H.R. 1790, followsl

(1)

-

75
The only winners in this situation are the copiers.
Even if awarded a design patent, design protection is far from assured if subjected to
litigation: approximately two-thirds of challenged design patents are invalidated by the courts.
In addition, the long pendency period of design patent applications (currently 32 months) can
render such protection meaningless in an era of increasingly short product life cycles.

International Comparisons
Most of our international trade competitors clearly recoitniz.; the value of design and protect
them much more effectively than does the United States. The copyright-like systems employed
elsewhere work well: they protect innovative designs, they stimulate design compedtion and they
do so with a minimum of disruption or litigation.
Although not directly addressed by H.R. 1790, there is another international
consideration to U.S. design protection. The lack of clear and effective protection in the United
States weakens our bargaining position in pushing for higher international standards of
intellectual property protection in the GATT and other negotiations. That is, how can the United
States credibly press for better standards of protection for intellectual property rights when it
neglects to do so itself? While we need not be driven by these external factors, we should be
aware of their impact.
The United States is virtually alone in the industrialized world in applying patent-type
protectio to designs rather than easier to obtain copyright-type protection. Needless to say, this
puts U.S. designers and manufacturers at a serious disadvantage compared with their foreign
coun terparts.

5

The Design Innontion and Technology Act
NAM believes that H.R. 1790 would greatly improve our design protection system and will

close a significant gsp in our intellectual property prce.ection regime, thereby contributing to
overall U.S. competifiveness.
While I will not present a detailed review H.R. 1790, I would like to offer some
comments on two specific issues. The first deals with the confusion surrounding what is and
is not protectable. The language in ¢1001 of the bill clearly stipulates a detio must be
"original," must be embodied in a useful article and must make the article "attractive or
distinctive in appearance to the purchasing a: using public." These criteria greatly limit the
eligibility of a design for protection under the proposed new Chapter 10. Further, *1032 makes
it clear this protection is prospective only and has no impact on extant designs.
NAM believes the purpose of intellectual property protection is to stimulate and reward
itutovation and creativity, nor to restrict that which is already in the public domain. Thus, in
listing those designs not protectable, §1002 correctly excludes designs that are not original, are
staple or commcoplace, or am dictated solely by a utilitarian function of the article that
embodies it.
In addition, protection would not be available for the design of "that portion of the article
shape dictated by the mechanic-A interface, perimeter, or envelope restrictions necessary to
permit the physical and functional substitution" of the article. In other words, replacement paits
would be perfectly legal so Wog as they did not slavishly copy the original, distinctive and
discretonary design portion of the original article.
The second specific issue I should like to comment on concerns §1029, the relation of
6

77
this new Chapter 10 to existing design gateau law. This section stipulates that issuance of a
design patent (or copyright registration) shall terminate any protection of the original design
under the new chapter. NAM strongly opposes this section of the bill. In fact, NAM's
Intellectual Property Task Force voted last July to condition our support of H.R. 1790 on this
section's removal. We regard this language as unnecessary and too narrowing, particularly in
light of the high rate of design patent invalidation. For example, a design owner would have
to give up the design protection under proposed Chapter 10 if the recipient of a design patent.
If that design patent were subsequently invalidated, the design owner would then be left without
any protection whatsoever. We urge the subcommittee to remove this needless language from
the bill.

Opposition to Effective Design Protection
Opponents of this and other forms of intellectual property protection often attempt to characterize
thcir positions as "pro-ccosumer" Or "anti-monopolist." The National Association of
Manufacturers strongly rejects these characterizations. The substitution of pirated copies and
imitations for true choices is not in consumere—or anyone's—long-term interests. Further,
NAM believes that unauthorized appropriation of intellectual property should be treated the same
way as unauthorized appropriation of material property: as theft.
We recognize that certain industry sectors have expressed concern over some of H.R.
1790's specific language. NAM and other members of the Design Coalition have always
expressed our willingness to work with these parties to arrive at an equitable solution. We
remain ready to do so.

7

„AI

''•

•

". ‘
.

••

78

•

Conclusion
•#'

The list of cosponsors of H.R. 1790 is indicative of the wide-ranging support this issue enjoys,
as is the vay composition of this panel of witnesses. Design protection is an issue that is
important to manufacturers, important to creativity and innovation, and important tc U.S.
competitiveneu and jobs. It is also a issue of basic fairness. The National Association of
Manufacturers urges you to enact this much needed improvement in U.S. intellectual property
law.
Again, thank you for this opportunity to express our concerns on this issue. I will be
glad to answer any questions you might have.

8

79
Mr. CONYERS. Our final witness on panel one is a person I have
always wanted to meet in my years in Congress, somebody that
would come here on behalf of Better Mousetraps, Inc.
This is a high point in my career, sir, and I have waited a long
time to meet you, and you are here at last before us. Let's hear
from you.
STATEMENT OF COOPER C. WOODRING, CHAIR, TASK FORCE ON
DESIGN LEGISLATION, INDUSTRIAL DESIGNERS SOCIETY OF
AMERICA, ON BEHALF OF BETTER MOUSETRAPS, INC.

Mr. WoODRING. Good morning, and thank you. Thank you for inviting a designer to testify on behalf of the Inidustrial Designers Society of America.
Business Week states the designer is the one who conceives what
form the product should take. Without designers, neither engineers
nor marketers can do their magic. It is the designer whose creations define a corporation to those who buy its product. Meeting
consumers' needs is the prime criterion of industrial design. The
design process begins by anticipating consumers' needs and wants
and proceeds to researching the consumers' physical and behavioral
patterns. This knowledge assures us that the design will be safe
and easy to operate.
The designer also investigates manufacturing processes and materials capabilities to improve quality and cost efficiencies. The goal
is to achieve a design of original form that is distinctive, attractive,
and communicates the product's function. Quality, performance,
and manufacturing processes are all predicated by the product's design process.
In contrast, when we view current patent laws as they are written, an engineer determined the product's function and an artisan
decorated the results. Neither existing utility nor design patent
laws protect today's industrial designs where the form and the
function are inseparable. H.R. 1790 responds to today's reality.
Every mikior industrialized nation in the world today, except the
United States, acknowledges industrial design's contribution with
laws to protect this national resource.
A society speaks most clearly through its laws. The United
States is speaking clearly. Our message: It's OK to steal our designs. In fact, it is not even stealing; we have no laws to the contrary. This message must change if we want American business to
invest in design research and development such that we can compete in Europe and the Pacific Rim.
What is worth stealing is worth protecting. We have laws to protect the theft of our films, our music, and our chips. We must include the design of American's manufactured goods if we wish to
slow the importing of $150 billion a year worth of manufactured
goods. These are the products of design, many preferred -because of
superior design and many created by world-class American designers. The brain drain goes on.
I represent thousands of professional designers who create original, distinctive designs. Their products, in and of themselv3s,
would not be protected. What would be protected is limited to the
appearance, but only if the design is discretionary, original, and

80
distinctive. Exempt tram production are appearances that are commonplace.
Mr. Chairman, many have asked the question, what is an original design, and what is commonplace? I would like to answer them
by submitting the design of two squeegees. The exempt design
came from the local hardware store. The Cleret—this version [indicating squeegee]---exquisitely designed and manufactured in the
United States, received our Industrial Design Excellence Award.
The Cleret's design is clearly discretionary, original, and distinctive. It makes obvious that there is more than one way to design
a squeegee. Most importantly, this example demonstrates that the
retailers and consumers' choices will be expanded by design and at
lower price points than the generic version.
Your consideration of H.R. 1790 should not be limited to the positive impact on our balance of trade where each $1 billion of trade
deficit equates to approximately 20,000 more American jobs but
should include the question of why this one society has singled out
this one profession to be exempt from the kinds of incentives that
are offered to all others and by all others.
Industrial designers may be exceptional, but we don't deserve to
be made an exception. Allow me one personal example. My father
served as FDR's Secretary of War. When he came into office, his
department designed all war materiel itself. Competitive bidding
meant low price and low quality. He changed the process to require
the bidder to design to department specifications. Now the bidder
had strong incentive not only to meet but to beat the specifications.
The first contract awarded under his new process was for a general
.purpose vehicle, code named GP, nicknamed Jeep. Another was for
the B--17, for which he coined the term "Flying Fortress." This one
small change in the process caused rather ordinary people to make
extraordinary contributions.
You now have a similar opportunity to redesign the process that
you control to stimulate design innovation and techndlogy in the
United States, and at a time when we can certainly use it. I hope
you will realize the need for change, for it is your process that
predicates our results.
Thank you.
Mr. HUGHES [presiding]. Thank you very much, Mr. Woodring.
[The prepareMtatement of Mr. Woodring follows:]

81
PREPARED STATEMENT OF COOPER C. WOODRING, CHAIR, TASK FORCE
ON DESIGN LEGISLATION, INDUSTRIAL DESIGNERS SOCIETY OF
AMERICA, ON BEHAI2 OF BErnat MOUSTRAPS,
Thank you for allowing an industrial designer to testify on this important
legislation. I'm proud to represent the Industrial Designers Society of America
(IDSA) at thls hearing.

Business Week In it's special issue on innovation, stated, 'The' designer is the
one who conceives what form the original product should take, the one who
renews an aging product line. Without designers, neither engineers nor
marketers can do their magic. So in the end, it is the . . . designer whose
creations define what a corporation is—what image it will have among the
people who buy its products.

Today, industrial designers, manufacturers and ever more discerning
consumers are joined together in a global economic network. Design has
become an international language, linking together the ideals and aspirations
of people the world over.

Successful products in today's consumer-driven market are designed to satisfy
the consumers needs and wants. In fact, concern for benefiting the consumer is
a prime criterion of industrial design.

Anticipation of the consumers needs and wants is where the product design
process begins. Careful research spans the consumers physical abilities and
requirements for comfort as well as the consumers thinking processes and
behavioral patterns. This information helps to ensure that the design will be safe
and easy to operate. it is this concern for the consumer that explains why good
design has become a prime purchasing criterion.

1

'The design process goes on to Investigate manufacturing processes and
materials capabilities, seeking to Identify opportunities for improved quality end
cost efficiencies. Industrial designers have been known to break long-standing
quality and safety gddiocks through design innovation that makes the most of
new manufacturing technologies.

The design process also entails an exploration of possible configurations that
embody the Information produced by the research, an exploration that begins
with sketches, Is refined through three-dimensional models and ends in the
detailed perfections for manufacture achieved through prototypes. The goal
here is to achieve an appealing, appropriate, comfortable, easy to use and safe
form, an original form that distinctively and attractively expresses the function.

As you can see, the design process, is no . mere styling exercise, but athorough
investigation into both opportunities and limitations. Investments in industrial
design are significant. Their returns can be remarkable. The Ford Taurus
comes to mind as a well-documented case study.

As the internal mechanisms and electronics of products have shrunk In bulk,
these . bomponents have come to play a less significant role in determining a
product's shape. Today, It Is Industrial designers—with their concern for the
consumer's needs and wants—who play the determining role in a product's
form and how that form supports the function. Quality, performance,
manufacturing processes and materials are all predicated by the product's
design process.

2

When one examines IOSA's annual awards for excellence in design, one sees
this integration of function and appearance. Tliet product's insides and outsides
have been Inseparabty monied such that the resultant Integration Could have
been created only by an industrial designer.—or, as we are more commonly
Caned, a Pr°duct designer. We create what consumers in other nations refer to
as everyday art—art that infuses usefut objects with practicality, safety,
convenience, comfort and affordability in addition to a cfstinctive appearance
attractive to the purchasing or using public..

Industrial design Is the art form that rro ,"" than any other embodies the spirit of
the twentieth century. We articulate info 0.1e homogeneous whole what were
once separate functions, conceived by separate Individuals, and protected by
separate laws.

Allow me to contrast this description of today's industrial designer with an
example of how products evotved in the era when our current taiGty and design
patent laws were written.

In 1851, Isaac Singer, a skilled mechanical engineer, invented an improved
mechCNsm for a sewing machine. After building a working model and applying
for utility patent protection, Mr. Singer collaborated with an artisan to have his
machine decorated with ornamental art. A design patent was issued to the
artisan for the climbing roses on the cast iron trellis and other ornamental
aspects of the machine's decoration.

The point of this illustration is that the creation of the machine's mechanism and
the creation of the machine's appearance required different skills, executed
3

separately by cfrierent individuals—the engineer and the artist. That era's
artifacts reflect thie separatism of form and function. in contrast, the outward
appearance of our era's products reveal the object's inner spirit.

Existing utility and design patent laws were conceived to protect each
individual's contributions. Neither, however, will protect today's industrial
designs where the form and the function are so integrated. HR 1790 will
responds to today's reality, as It protects neither function nor decoration, but
recognizes that it Is ths product's shape that communicates it's heart and sr.

Every major Industrialized nation in the world today, except the United States,
acknowledges Industrial design's contribution to their global competitiveness
with laws to protect this national resource, laws that prohibit others from stealing
their designers' original creations.

A society speaks most cloarty through it's laws.

The United States Is speaking clearly and has done so for decades. Our
message? tt's okay to steal the original designs of our useful objects—that is,
our industrial designs. In fact, ifs not even stealing, because we have no laws to
the contrary. Anyone who wishes to plagiarize that which we have invested In
so heavily to create, may do so without penalty and with clear conscience.

This message must change and change now if we want our American business
sector to Invest in design research and development. On that Investment may
rest our ability to compete economically in the Padfic Rim and in Europe, Only
with the incentive prcvided by HR1790 can we hope to improve American
4

quality and style In everything from furniture to telephones, appliances to
. eye:pawl!, c!nd frtats to computers. We need your support to bring HR 1790
to a tbet14..,;

Where worth steam; is worth protecting.

America's law is that you can not copy the creative and original efforts of
America's authors, artists, musicians, engineers, horticutturists, chip designers
or software developers. Irs time to include the designers of America's
manufactured goods to slow the importing of 150 billion dollars a year worth of
manufactured goods, many prefered because of their superior design.

Ironically, those Imports' superior design are often the result of the best efforts of
America's most talented designers, *Virtually all US industrial design firms do
work for foreign companies, work that Is then imported Into the US. Our
competitors know the need to invest In industrial design and have an assured
return on that investment through their nations' more up-to-date systems for
protecting intellectual property.

AmeriCa's leadership position In the family of nations was, at one time,
attributed to its patent protection. In 1900, a Japanese Commissioner said, 'We
have looked about us to see what nations are the greatest, so that we can be
like them. What is it that makes the United States such a great nation 9 We
investigated and found that it was their patent systern—thelr society's basic
practice of giving incentives to those who create. "

5

American hidustriai designers we not atidng for Incentives. We are asking for
the elimination of disincentives. Give us lie right, as the bumper stickeis say, to
think globally and ad locally.

More than a decade ago, Harvard Business School criticized US business for
no longer being Innovative. Harvard taid, 'The key to long-term success, even
survival, In business Is the same as it hes always been: to Invest, to lead .and to
create yak* where none before existed.' We will lead and create the value
where none before existed, if you will Invest In Industrial designs equal ability to
compete with other nations.

represent thousands of profeselonal industrial designers who daily create
original, distinctive and desirable designs for business and industrial products,
consumer products, products for ;he disabled and elderly, furniture, medical and
scientific products and transportation products. These products would not be
protected by this proposed legislation In and of themselves . What would be
protected Is limited to the shape, the appearance, of these products, but only if
the design Is discretionary, original and distinctive, and only for ten years.
Exempt from protection are forms that are commonplace and staple, that lack

new design content.

Mr. Chairman, a lot of peOple have questions about what is original design and
whal Is commonplace. I would Ike to answer them by calling your attention to
these two products—both squeegees intended to clean glass. I bought one at
the local hardware store. It has the traditional handle perpendicular to a black
rubber blade. The other—the Hanoi) Cleret, designed and manufactured in the
USA—received our industrial Design Excellence Award, the pinnacle of
6

ackloveerient for US product design. (See the illustration appended to the end
of this testimony.)

I believe you can see why. The round tubular handle Is large enough to fit
comfortably In either hand, the left or the right. There are two parallel rubber
blades Inserted into the length of that handle and extending beyond its length.
Those blades have a unique S-shaped curve made possible by the designer's
knowledge of materials, in this case dual durometer plastic extrusions that are
hard at the handle but soft where they need to flex in order to perform their
cleaning function.

The Claret's design is clearly distinctive, not commonplace. tt Is discretionary.
Compared to the more traditional squeegee, the Claret's design demonstrates
that there Is more than one way to configure a squeegee : And, as I deduce
from their Invedible sales success around the world, it Is certainty attractive. It
is all these things and extremely functional as well, with a design that is
cOmfortable to hold and use effectively.

Not only are the consumer's choices expanded by the Claret, but the consumer
Is Oared a choice at a lower price than the traditional model!

Mark Twain , who invented suspenders in 1871, said a year earlier, "A country
without good patent laws, is like a crab - they can't travel forward—only
sideways tInd backways.* America has an internationally inconsistent void in
our patent laws and we seem to be moving every way but forward.

7

Your consideration of HR 1790 shouid not be limited to the positive effect of this
legislation on America's balance of trade, where each one billion dollars of
trade deficit equates to approximately 20,000 American jobs; nor to the
Increased choices of original designs that would become available to retailers
and consumers by the ilmiting of copycat designs. It should Include the question
of why this one society has singled out this one profession to be exempt from
the Incentive to innovate thal Is offered to ail others, by all others. It works for
them. ft will work for us.

Industrial designers may be exceptional, but we don't deserve to be made an
exception.

As our well-earned international reputation attests, we have the education, the
ability and the sr nse, of urgency to successfully compete with our foreign
counterparts, by', only you have the ability to turn us loose. Or as Elusiness
Week says, "Got set, America, for a journey that will shatter your preconceived
notions: The designers of the '90s are poised and ready to let loose.'

Allow me to end with a personal example. My father, a Kansas farmer who
couldn't afford to finish high school, served as Secretary of War during FDR's
second and third terms . When he came into office, the standard military
procurement process was for the War Department to design all war materiel
itself. Competitive bidding meant lowest price—usualty accompanied by lowest
quality.

Recognizing that the process predicated the resulls, he changed the process to
require the competitive bidder to be responsibis for the design as well as the
8

89
price. Now the military could simpty issue performance specifications for Its

needs, wants and even wishes or dreams. The bidder now had strong incentive
not only to meet, but to exceed the specifications, with a price commensurate
with the performance.

The first contract awarded under his new process was to little known first-time
bidder WIliys-Overtand Company for its innovative design of a General Purpose
Vehicle. Code named GP, it was quickly nicknamed 'Jeep. Another early
beneficiary of his revolutionary bidding process was the Boeing Company for
their B-17, for which he coined the name Flying Fortress.

rrn proud that he recognized how a small modification In the way a process
works can cause rather ordinary people to make extraordinary contributionsand at a time when America needed it molt

You now have a similar opportunity to tedesign the process you control to
benefit design Innovation and technology In America—and at a time when we
can certainty use it.

I hope you will recognize the need for change in America's design protection
process. Because the process predicates the results.

Thank you,

Cooper C. Woodring, FIDSA

9

Generic Design

Cleret Design

"",

91
Mr. HUGHES. I think you have given us a good sample of what
would be covered and what would not be covered by the squeegee
example. I wonder if you can carry that a little further and tell us
some other things that would be covered by the present legislation
and what would not be covered. Give us some other examples.
Mr. WOODR1NG. Well, industrial designers like myself design capital goods and equipment, and sporting goods, and electronics, furniture, automobiles, transportation products, and the bill is conth
strued at if the design is original and discretionary it would be
covered, and that is the same kind of incentive to stimulate the creative sector that is the time-honored method that we have used for
all other creative sectors and that other parts of the world provida
to their industrial designers. So if a product meets that criterion,
it would be covered by this legislation. Those that currently exist
or those that are commonplace or generic or of such simple form
as to not constitute a noteworthy design would, of course, be exempt.
Mr. HUGHES. I appreciate that.
Do anY other members of the panel have other examples such as
the squeegee they would like to bring to our attention?
Ms. CASTLE. Mr. Chairman, let me hold up a pair of Oakley sunglasses. For those of you who are not familiar with Oakley, they
are from Irvine, CA. 'rhey are a very high-tech manufacturer of
sunglasses. This pair [indicating one pair], retails for over $100.
This is the knock-off of the product [indicating second pair], which
is virtually an identical copy.
Mr. HUGHES. What does that sell for?
Ms. CASTLE. I don't know what that sells for. I will find out and
submit this information to you, Mr. Chairman.
[The information follows:]
The knock-off pair of sunglasses was manufactured in Taiwan and sells for $10
to $15 per pair.

Ms. CASTLE. $4 million is the annual research and development
budget for Oakley to produce a line of sunglasses, of which this is
just an example.
I want to clarify something that Mr. Woodring said a moment
ago. Let's iriake sure that when we talk about the legislation we
don't talk aut products that are coKered but that we talk about
the design of the product that is coveiTT. In this legislation, we are
talking about discretionary designs. If a product, such as a pair of
sunglasses or a coffeemaker or whatever, can be designed more
than one way, this legislation not only doesn't preclude that from
happening but indeed it encourages it. Today designers have very
little financial encouragement to develop new designs of products,
because the moment they do, very often they are ripped off in the
marketplace within 6 months.
That squeegee that you have has been on the marketplace just
a few months, and the manufacturers expect to see knock-offs within 6 to 8 months ef its introduction.
If you look over here to Ingersoll-Rand's pz'oducts [indicating exhibits], on the right-hand side you see the Ingersoll-Rand air
wrench. This is a product that takes the lug nuts off your wheel
when you have your tire changed, and to the right of that is the
knock-off. You will notice that the product has been copied in every

92
sense, both the exterior and the interior parts. The only difference
we can find in that entire display is that the logos representing the
knock-off and the original are there, but everything else has been
copied.
Mr. HUGHES. Where is the knock-off manufactured, the Astro?
Ms. CAsrix. I believe it is Taiwan.
Mr. HUGHES. Taiwan.
We have design patent laws in this country. I'm sympathetic to
the need to take a close look at the inadequacies of our intellectual
property laws to try to protect the creators of property of all kinds.
Assuming corrective action is necessary to provide adequate protection for designs, why not work to improve the design patent laws
instead of creating a whole new body of laws that will require years
of implementation and, I might add, litigation before you will know
if it serves its intended. purpose?
Why don't we start with you, Ms. Castle.
Ms. CASTLE, Mr. Chairman, we have struggled with that question both within the coalition and with some of our corporate patent counsels who operate worldwide in the intellectual property
arena. We would not be merse to taking a closer look at our design
patent system and trying to correct it in certain areas—one,
ornamentality; two, nonobviousness—which are clearly major hurdles when trying to protect the design of a product as opposed to
the way it functions.
However, this legislation more nearly replicates the type of protection for desig-ns which we see generally in non-U.S. countries,
and that type of protection is more typically a copyright type of
protection than a patent system, because we are talking about the
expression of an article as opposed to the way it functions.
Mr. HUGHES. It doesn't fit neatly into either, does it, really?
Ms. CAI'LE. It does not, and that is why we do not actually
amend the copyright statute but rather form a separate, sui generis, form of protection.
Mr. HUGHES. And I recognize that there are some obvious advantages working through the copyright law, but it seems to me that
we ought to at least take a look at what can be done to try to fix,
if it is broken in some respects, where it needs review, the design
patent law that is supposed to perform that function,
Ms. CASTLE. Mr. Chairman, I wouldn't disagree with you. I think
if we go back and look at the original Willis bill that was introduced m the fifties, that approach was generated no by the private
sector but by thc) American Bar Association and other practitioners.
I believe the Copyright Office had a hand in it's drafting. They
were the first ones to propose a sui generis form of copyright protection.
Mr. HUGHES. Mr. Cunningham, or Mr. Baroody, why does the
legislation propose a 10-year term for design protection instead of
five or perhaps 15?
Mr. CUNNINGHAM. I'll let Mike answer—I'm not sure.
Mr. HUGHES. Whoever would like to respond.
Bruce.
Mr. LEHMAN. Mr. Chairman, I am Bruce Lehman, I'm counsel to
the coalition, and I have the answer to some of these technical
questions.

93
The world standard generally is 15 years, and the original design
legislation that Ms. Castle referred to, the Willis bill s which wits
the predecessor to this—this is about 40 years old, this particular
piece of legislation, was drafted by a committee of the ABA some
40 years aga—I believe originally it had a 15-year term of protection, which would be like what you have in Germany and the Benelux countries and other countries.
But during the course of processing this legislation over the last
several years, as a part of the good-faith attempt on the part of the
proponents of the bill to suggest that they were not trying to seek
any kind of overly extensive protection, the term was simply reduced to 10 years.
Mr. HUGHES. I see. So it was just basically a compromise position.
Mr. LEHMAN. But the world standard is generally at least 15
years. Some countries give you much longer protection.
Mr. HUGHES. All right.
For any member of the panel: How would the proposed legislation foster new innovation? Do foreign countries have a higher level
of design protection than we have in this country and also have a
hi her level of design innovation?
r. WOODRING. I certainly think they do. I think our statistics
in the Industrial Designer Society of America would show that a
great number, if not a majority of our clients, are foreign. A great
number of America's top industrial designers are heads of design
for major foreign corporations, whether this be in the Pacific Rim
or in Europe. The reason, I am assuming, is because there is a
greater return on the design investment because of the protection
offered to them which is not offered to us.
Mr. HUGHES. I wonder if you could submit for the record—and
the record would remain open for that purpose—some analysis of
basically the innovation in foreign countries, how design protection
has enhanced innovation in those countries. If you have some data,
that would be very helpful—an analysis cf perhaps what we find
in some of the other countries, what they have done to protect designs of all kinds and the impact it might have, if you have any.
Mr. WOODRING. Certainly to what extent we have data available,
we would be happy to make that a matter of record.
Mr. HUGHES. That would be helpful, and the record will remain
open for—is 14 days enough time?
Mr. WOODRING. Thank you.
[The information follows:]

94

1142-E 'Ham: %ad. (Ina Fags, %Tins Z2066
703.7.3.01O0.
FAX: [phone]

The inroads into US markets accomplished by our foreign competitGrs in the
1980s were achieved by products that benefit from the competitive edge conveyed
by industrial design innovation. These products henefitted from industrial design
innovation for two reasons: their countries and companies understood the market
value of investing in it; and their companies were able to take advantage of
effective design protection at home in order to ensure a return on their
investment.
The first of these two reasons—a national and corporate grasp of industrial
desiga's value--is an issue that the Industrial Designers Society of America is
addressing through its relationship with Business Week and its various public
relations programs. The second can only be addressed by the US CongreK,
through the passage of HR 1790, "The Design Innovation and Technology Act of
1991."
We do not have figures on the effect of well-designed imports, but the current
trade deficit is clear proof of their impact. There is other proof that demonstrates
the critical role of more effective foreign design protection on those countries'
international competition and level of perceived innovation.
• US industrial designers enjoy an excellent reputation on the international scene.
Not only do US industrial designers head the key design function in many foreign
companies, fully 30 percent of the consulting wnrk done by US industrial design
firms js done for foreign clients! This figure was arrived at through a survey of
small, inedium and large US industrial design firms conducted by 1DSA in
February, 1992. Moreover, most of the firms reported that their work for
foreign clients was incteasing. This trend indicates that US industrial design
innovation is sought after by foreign companies. One can, therefore, conclude
that the higher level of innovation of foreign products is not a function of beliei
talent, but of better investment and better intellectual property protection.
• That intellectual property protection for industrial design is more effective and
accessible in other industrialized countries is borne out by the different in the
number of patents issued. As Congressman Moorhead points out, in 1989 the US
granted only 6,000 design patents while Japan granted 32,000 and Germany more
than 85,000.

96

Inekesirisl Dagigrows Society f America
t1424 Walks( Flood, Omit Falb, Virginia 22066
701751.0100
FAX: [phone]

• The International Trade Commission repotted in 1988 that about $2 billion of
were lost in the United States because of US imports of infringing goods;
about $6 billion of US exports were lost because of inadequate intellectual
property protection; and about $3 billion in royalties and fees were lost. The
biggest sales losses were reported by the scientific and photographic instruments,
computer and electronics industries-411 indvstries whose products have a
significant industrial design component. (See Table below,)
sales

Table:
US Firms' Estimates of Worldwide Sales Losses Due to Weak
Intellectual Property Rights Protection, 1986

Aggregate Estimated
Loss by Responding
rims
Aerospace

Building materials
Chemicals
Computers and software

Electronics
Entertainment
Food and beverages
Forest products
Industrial and farm equipment Metals And metal products
Motor vehicles and parts
Petroleum refining
Pharmaceuticals
Fubliahlo4 aad printing
Rubber products
Scientific and photographic
ins ,,ruments
Textiles and apparel
Other
Total

Source:

120

739
1,334
4,130
2,288
2,060
86
665
622
292
2,194
1,295
1,909
120
511

Number of Responding Firms
Reporting:
Total
Loss
No L033
2
II
3
6
6
8
2

o

1
1
0
3

7
9
6

6
21
31
17
12
10
7
10
7

4

'4

6
10

6
18
25
11
12

e

e

11

1

4

9
10
11
5

5,090
251
151

1
0
5

6
11

7
11

23,845

26

167

International Trade Commission (1988).

C

8

193

96
Mr. HUGHES. The gentleman from California.
Mr. MOORHEAD. Th ank yor,, Mr. Chairman. I thank also the
members of the panel for coming here this morning and testifying
before us.
H.R. 1790 clearly states that desig-ns that aren't original or commonplace or ordinary or any design dictated by function or designs
dictated by "must fit" dimensions are excluded from protection. In
addition, the majority leader and I, in a letter to our chairman, recommended further language to even more clearly exempt aftermarket repair parts for passenger cars and pickup trucks. The
after-market repair parts trade association was told over a yrar ago
that H.R. 1790 was never intended to apply to that industry and
would be so clarified at the subcommittee markup. Their response,
under the acronym of CARE, was to mount a massive misinformation campaign against the bill on some members of this subcommittee. Are you aware of any member of the Design Coalition opposed
to exempting the after-market repair parts industry? What is behind this unusual opposition?
Rita Castle.
Ms. CASTLE. Mr. Chairman, no, I am not. The Design Coalition
fully supports the amendment excluding the internal repair parts
for automobiles and light-duty trucks. As to why the opposition
continues, I think that the rhetoric is partly due to a misunderstanding as to what that amendment does. There is a lot of
disinformation and misinformation about the existence of the
amendment in the first instance; and about its breadth and scope.
I believe this concern is playing to a certain constituency that
wants to perpetuate their opposition to the legislation, They are
simply ignoring the facts.
Mr. MOORHEAD. Mr. Baroody, do you have a response to that?
Mr. BAROODY. It wouldn't differ substantially from what you
have just heard.
We think that the exclusion is obviously quite acceptable and,
further, that it only makes explicit what many correctly thought
was implicit in the bill prior to the addition of the amendment.
Mr. MOORHEAD. A question for Bill Cunningham: Do you have
any idea how many jobs are at stake across the board in the struggle?
Mr. CUNNINGHAM. Mr. Moorhead, when we testified last time I
went back and asked the HAW and the IBEW to do that kind of
analysis, and the kind of list that I got was what had closed, and
they couldn't attribute it to after-parts. I mean most of these plants
are producing parts for ongoing new cars, skins, and not for the
after-market.
The only thing they did tell me was that the auto industry traditionally, when they are having tough times—and, unfortunately,
they have had tough times for the last 4 years—use the after-parts
market as a profit center to maintain employment. Unfortunately,
the nonsale of U.S.-made autos in the last 3 years has come a cropper on that one, and we now get the announcement of significant
down-sizing by GM.
I think it is important that Mr. Hughes know, and other members of this committee, that we do really believe that the bill
should he looked at and amended to only provide this protection if

97
the products are manufactured in the United States. M I tried to
point out before, it does w.l.r members little good and your constituents that overseas production of these parts for design protection
would basically not help. I mean we are not in this business to help
GM move to Mexico, and we are not in this business to see our
members' jobs move overseas. Last time I sat with Mike Baroody
was to argue against Fast Track for Mexico for that very same reason.
So-the corite-th—
we-havahare--is-that_this_legislation is paralleling
what our trading partners do, which is important, becau...,. our
trading partners basically are working in a world trading system
in which they have some comparative advantages both in their
statutes and the way they trade, but they should also be looked at,
and the Congress should look at things, in terms of impact and job
creation in the United States, I am very concerned that this legislation is silent on this issue, and I wanted to bring it directly to your
attention.
Mr. HUGHES. Would the gentleman yield to me?
Mr. MOORHEAD. Surely.
Mr. HUGHES. I would have some concern, however, about the argument of discrimination. We are endeavoring in GATT to negotiate an accommodation with other countries.
Mr. CUNNINGHAM. Mr. Chairman, when you were not here I
mentioned that our review of the Dunkel 'draft, looking at the
TRIPS section, which is the intellectual copyright section, b s asically
exempts the less developed countries, which, under the Dunkel
draft, they can self-certify themselves as LDC's to get out from
under the TRIPS regimen.
So I think this committee should look at the international trade
negotiations to find out how much protection in terms of intellectual design or patent is going to be provided by that, because the
Dunkel draft predicates moving the decisionmaking locus for a lot
of these congressionally mandated decisions to an MTO, which is
a supernational trade organization.
I know many members who have said, "We want to move to a
world trading system with rules and intellectual property rights
protections and all the rest on an international level, are saying
this is a good way to go. The problem is, the agreements that are
coming down leave our trading partners in a position within their
countries to use regulation, such as design protection, and we are
busically focusing on a GATT agreement that leaves those statutes
in place.
There is a problem here, I am not denying there is a problem in
this issue, but you have to understand that in these agreements,
although the words are mentioned, the relief for American produced products is probably not going to be there. If the Dunkel
draft goes through we will be looking for relief as a country to an
international organization that basically keeps in place design protections for every other countries, and the LDC's don't have to
abide by it, which is where most of our exports are going.
Mr. HUGHES. Thank you.
I thank the gentleman from California.
Mr. MOORHEAD. To some extent, all patents and all copyrights
create a monopoly. Of course, in an area where you could have al-

98
ternate products slightly different or somewhat different, that monopoly isn't really effective. The opponents to this legislation, many
of them,- would say that this legislation would create monopolies,
as all patents would, and that that would raise the price of products to the consumer. We have to have a response to them. Wliat
is your response?—any member of the panel.
Ms. CASTLE. Mr. Chairman, I would go back again to making the
distinction between a patent which is protecting the product and
the way it functions and this legislation which is simply protecting
the shape or the expression of the function; i.e., the design. This
legislation gives protection only to discretionary designs. If, for example, an article has to look a certain way in order to perform a
function, the design is not subject to protection.
So, again, the cries of monopoly and tying: up the chain of commerce are just rhetoric. Frankly, I must call this hyperbole. They
simply do not relate to the actual words on the page, as you well
know, in H,R. 1790. We are not talking about tying up products,
we are talking about protecting discretionary designs.
Mr. MOOM1EAD. I know to some extent this question has been responded to in your testimony, but the major opposition to this bill
has come from the insurance companies, who want to use copycat
fenders and doors and grills in the case of accidents, and they say
that it is going to dramatically raise the cost of insurance across
the country, and of course, with insurance having gone up so much,
that is 6 red flag for many people, and it is an emotional issue.
How do we respond to that?
Mr. CUNNINGHAM. I would suggest, Mr. Moorhead, that this committee is looking at Mr. Brooks' McCarran-Ferguson repeal legislation, but you may want to look at how States set their rates for
property casualty and the auto business to find out what role auto
part replacements play in that ratemaking. It is my impression
that that is an insignificant amount in the underlying rate structure.
The way that insurance companies are taxed—I happen to be the
tax guy also—the way insurance companies are taxed, with reserves not being taxed is probably the most complicated in the Internal Revenue Code and in local State codes. It is my intuition
that repair parts are an insignificant part of the rate structure and
that this committee should be able to get information from State
insurance commissioners to find out how parts are put in that
structure. I think it is an insignificant amount. I think it is essentiRlly a redherring, although, like most redherrings, it stinks and
makes people upset.
Mr. MOORHEAD. This is a time when the United States is trying
to encourage the nations of the world to bring their patent laws,
their copyright laws, and trademark laws into line with each other.
It has been something we have preached around the world.We
have joined the Berne Convention to enforce uniform copyright
laws. We have been working with the people in the Orient, our
trading partners, which is so imporiant to us, the trade with them,
and many of them have come into line with their laws in that respect. Most of the industrialized nations protect design patents.
What is a good argument, if any, to keep America behind the other
countries of the world in this respect?

99
Mr, CUNNINGHAM. Let me point out one fact that happened within the last 3 weeks. We have opposed MFN for China, but the
USTR has negotiated a 301 case with the Chinese to basically
honor intellectual property rights. If we are left to have just the administration enforce those intellectual property rights' operation
and the President determines, based on national security as opposed to trade reasons, they haven't done anything in this area or
they have honored the agreement, what redress is there for an
American corporation. Can they go in and say, "They are stealing
my stuff still, and I have no redress," if USTR is told for national
security reasons not to do it.
The other issue is that if you look—and I would suggest you do,
and I don't foist myself off as a GATT expert and the GATT agreement is changing—but if you look at the GATT agreement, what
it usually does is keep in place whatever design laws are in place
in those developed countries, and for the LDC's, which are the bulk
of our trading partners, they would be exempt from these design
protection laws; they can basically do knock-offs and rip-offs if they
are defined as LDC's, based on the Dunkel draft.
So I think this committee has to look very carefully at the assertion. I know that has been our Government's position, and that is
what we wanted, but the real world is totally different in terms of
---- -behavior, and-I think-that is-something we have to be careful of.
Mr. MOORHEAD. Any other response?
Mr. BAROODY. If I could just kind of comment briefly, in answer
to your question again, I can't think of a reason, an argument, for
not bringing intellectual property rights protection of the United
States on a par with most of the rest of the world. That was your
question, and no reason suggests itself to me for that.
In addition, though, if there weren't in the rest of the industrialized world such a high threshold of protection, that by itself
would not be an argument against this bill either, because the bill,
as I understand it, is fairly one dimensional. It is not designed to
do everything, it is designed primarily to do one thing, which is to
protect the rights essentially of design R&D to be used by those
who produce it and to do so in the confidence that no one can knock
it off, no one can steal, the fruits of that labor. That seems to me
to be a good thing to do, no matter the international picture, and
it is a better thing to do given the international picture.
Mr. MOORHEAD. I want to thank my chairman for his courtesy.
My time has long since passed.
Thank you.
Mr. HUGHES. The gentleman from Kansas.
Mr. GLICKMAN. Thank you, Mr. Chairman.
As I said before, I was an original sponsor of this bill, and I
pulled my name off. It doesn't mean I am against it, it means that
I thought there were some concerns raised. I think you have one
of these classic conflicts here, apart from the issue that—and I
think it is a compelling issue—that we may be the only country in
the world that doesn't provide the relief. But I personally don't
think there is any way to dispute the fact that parts will cost more
with this protection. But maybe the issue is, is that fair, being able
to recoup the design investment? That probably is fair, to recoup

100

the design investment. But I think it is difficult to argue that parts
won't cost more.
There is no question that knock-offs help keep the basic original
parts, the OEM part prices, down. I have gone to my auto dealers
at home. They say, "Yes, they will keep the prices down."
We do a lot of things to protect people's original works of art, investments, and therefore that keeps prices up, and that may be
fair, but I guess my original concern is, could we not expect a doubling or tripling of OEM prices if the design protection were granted?
Now let's just be practical. Again, go to your auto dealers; talk
to the people who are selling the parts, the people who are GM
dealers, Ford dealers, Chrysler dealers, the service departments,
and they will tell you that there is no question that some of these
knock-offs do act as a kind of competitive pricing mechanism. It
may not be right intellectually, but that may be a practical effect
of this, and I think that is what has some folks concerned, and that
may be what has the consumer groups concerned, you know, and
the insurance people. Now this may be disinformation, too, but I
suspect there is probably a little bit of truth in it.
Yes?
Mr. WOODRING. Since we are both Jayhawks, let me try to answer that one.
Mr, GLICKMAN. Let's see. Was your father the Governor, Harry
Woodring?
Mr. WOODRING. Yes, sir. But let me try to answer your question.
Mr. GLICKMAN. OK. He was a very great man, also a Democrat.
We in Kansas have to connect on that kind of stuff.
Mr. WOODR1NG. There is good reason to believe that Mr.
Goodwrench's fender costs as much as it, does because they don't
enjoy the after-market success with it they should because of the
theft of their intellectual property, were this a law.
Mr. GLICKMAN. So they don't sell as many because of that?
Mr. WOODRING. That is right, of course.
Now they have already paid for their tooling, they have already
allocated the cost of the part, and they are producing very few of
them in the after-market. Doesn't it stand to reason—and, grant
you, I am a designer, not an economist—but doesn't it stand to reason that if they had the entire after-market and were simply producing more parts off the same tooling that has already been allocated that the cost of that part should come down?
Mr. GLICKMAN. No. That is a little bit like the argument that,
my home town has seven MRI machines, the most of any place in
the world per capita, and you would think, with seven 7.vIRI machines, that the time to go in and have your brain x rayed would
cost less because there are more of them and they are used more.
It costs more, not less. It doesn't work that way in some cases.
You may be right, but if you have a monopoly over the product,
then you don't have genuine price competition. That is the issue.
Just the fact that you are producing more—you will get the product
down if, in fact, there is genuine price competition, if there is somebody else making another product that gets it down.
I understand your point, but I'm not sure I buy the argument
that just quantity will produce a reduction in prices.