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BOSTON PUBLIC UBRARY

3 9999 06317 385 8

OFFICE OF NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW

DESIGN PIRACY — THE PROBLEM
AND ITS
TREATMENT UNDER NRA COrES

By
A. C. Johnston
Florence A. Fitch

WORK MATERIALS NO. 52

TRADE PRACTICE STUDIES SECTION
March, 1936

OFFICE OF NATIONAL RECOVERY ADMINISTRATION
DIVISION OF REVIEW

DESIGN PIPACY — THE PROBLEM

AND ITS

TREATMENT UNDER NRA CODES

By
A. C. Johnston
Florence A. Fitch

TRADE PRACTICE STUDIES ASECTION
March, 1936

FOREWORD

This study of "Design Piracy - The Problem and Its treatment under
¥. R. A. fGjasxtes'"was prepared by Mr. A. C. Johnston and Miss Florence Fiteh
of the Trade Practice Studies Section, Mr. Corwin D. Edwards in charge.

The study describes the growth of the design piracy problem in cer-
tain industries, particularly the apparel industries, as a corollary of
the growth of modern merchandising techiniques. It indicates that neither
the common law, the law against unfair competition, the copyright law, nor
the patent law is a convenient means of preventing the copying of designs
under modern conditions, It gives an account of the effort to protect de-
signs under the NPA codes and of the character of similar efforts privately
undertaken through design registration bureaus. It analyzes the character
of proposed Federal legislation to provide new design protection. It ends
with a presentation of the issues, economic, legal, and administrative,
which are involved in proposals for further protection.

Apart from the legal materials, the study has centered in a sample of
eleven industries which were selected as representative both of the design
piracy problem and of the effort to outlaw design piracy in the codes.
Material for the study has been drawn from JJRA files, from a Questionnaire
to members of these industries, and from interviews with trade association
officials, former code authority officials, and business men who were
known to have taken an active r>art for or against design protection during
the code period.

A summary of the report is presented immediately after the table of
contents. An appendix describes in greater detail the method of study.

At the back of the report will be found a brief statement of the
studies undertaken by the Division of Review.

L. C. Marshall

Director, Division of Review
March 6, 1936

9746 -i-

TABLE OF CONTENTS
Summary of Findings ix-xvi

CHAPTER I
INTRODUCTION

I. Historical Background of the Problems of Copying of Designs 1

A. Major Legislative Steps 1

B. Efforts Toward Industry Self-Regulation 2

C. NRA Codes 4

II. Trades and Industries in TThich the Appearance of Products Is

Important 6

A. NFA Codes Containing Design Piracy Provisions 6

B. Subjects of Design Patents 7

C. Trade Practice Conferences Embodying Rules of Piracy 9

D. Groups Collaborating with the American Arbitration

Association 9

III. Definitions of Particular Terms 10

A. Definitions 11

1 . Style 11

2. Fashion 11

3. Design 11

4. Originality 12

B . Design and Trade Marl: Piracy 12

CHAPTER II

DESIGN PIRACY IN REPRESENTATIVE INDUSTRIES 13

I. Nature of Industries 15

II. Industry Organization as it Influences Piracy 16

III. Significant Industry Relationships 18

IV. Nature of Designs 19

V. Fashion Changes 20

VI. Designing 22

VII. Copyists and Their Methods 27

3746 -IV

VIII. Extent of Copying 31

A. Examples of Piracy 32

1 . Toy and Playthings 32

2. Lace Manufacturing 33

3. Millinery, Dress and Ladies' Handbag Industries 34

4. Nottingham Lace Curtain 34

IX. Significance of Copying 34

CHAPTER III

PROBLEMS INCIDENT TO THE CONTROL OF DESIGN PIRACY 37

I. The Dispute Over Control 38

A. The Case as Presented "by Those Eavoring Design Piracy 38

1. The Question of Ethics 38

2. The Manufacturer' s Interest 38

3. The Distributor' s Interest 42

4. The Consumer' s Interest 42

5. The Designer' s Interest 44

6. The Interests of Labor 44

7. The Inadequacy of Existing Law 46

8. The Practicability of Protection 46

B. The Case as Presented "by Those Opposing Design Protection .... 47

1 . The Question of Ethics 47

2. The Manufacturer 1 s Interest 47

3. The Distributor's Interest 49

4. The Consumer' s Interest 49

5. The Interests of Designers and Labor 50

6 . Existing Law 50

7. The Practibility of Protection 50

C. Viewpoints in Particular Industries 53

1 . Carpet and Rug 53

2. Medium and Low Priced Jewelry 53

3 . Lace 53

4. Ladies ' Handbag 54

5. Millinery 54

6. Silk Textile 55

7. Shoe 56

8. Toy 56

9. Upholstery and Drapery Textile 57

10 . Wall Paper 57

II. Points of Agreement, Issues 57

A. Points of Agreement

1 . The Ethics of Design Piracy 57

2. Adverse Economic Effects on Those TTho Create Designs 58

3. Fashion Changes 58

4. Ineffectiveness of Design Patents 58

5. Certain Effects of Protection 58

(a) On Designers 58

(b) On Fashion and Design Changes 58

6 . The Scope of Control 58

9746 -iii-

B. Issues 58

1. The Effect of Design Protection on Industrial Activity ... 58

2. The Effect on Relative Competitive Positions 59

3. Distributors' Interests 59

4. The Interest of Labor 60

5. Consumer Interests 60

(a) Prices 60

(b) Quality d 60

6. The Influence of Design Protection on Designing 61

7. The Cost of protection vs. Uastes Due to Copying 61

8. Administrative Issues 61

C. Additional Problems 62

1. Issues Relating to the- Scope of Control 62

(a) The Basis of Protection 62

(b) TTho Should Be Entitled to Protection 63

( c) TJhat Should Be Protected 63

(d) Nature of Protection 63

(1) Scope _of Exclusive Rights 63

(2) The Basis for Determining Infringement 63

(3) Industries to be Included 63

(4) The Term of Protection 64

2 . Legal I s sue s 64

CHAPTER IV

THE STATUS OF DESIGNS UNDER EXISTING LAW 65

I. Protection Afforded by Existing Law in the United States,

and Background 65

A. Non-Statutory Rights and Remedies 65

1 . Under Common Law 65

2. Unfair Competition 66

3 . Summary 71

B. Federal Trade Commission Act 72

1 . Unfair Competition 72

2. Tra.de Practice Conferences 74

C. Design Patent Laws 76

1. The Statutes 76

2. Patent Office Rules and Procedure 77

3. The Examination, Statutory Requirements for Patents 78

( a) Novelty 78

(b) Invention „ 79

4. Appeals and Inferences 81

5. Expenses in Connection uith Patents 82

6. Rights and Remedies of the Patentee 83

(a) Injunctions - Presumptions 84

7. Effectiveness of the Design Patent System 86

Criticisms 86

Table I, Summary of Estimated Number of Designs Introduced,
Designs patented, Average Patent Costs and Selling and

Protection Policies 86

8 . Apprai sal 92

9746 -iv-

D. Copyright Laws 93

1. Statutory Provisions 93

2. Procedure 93

3. Remedies 94

4. Leading Copyright Cases 95

(a) Design Protection Negligible 96

(b) "Originality" and Valid Copyright Distinguished

from "Novelty" of Patent 97

(d) Rights granted by Copyright 98

(e) Remedies 101

( f ) Summary 101

E. National Industrial Recovery Act 101

P. Legal Status of privately Operated Systems for the

Prevention of Design Piracy 104

II. Constitutional Limitations on Federal Design Legislation 106

A. Legislation Under the Patent and Copyright Clause

of the Constitution 106

1. "To Promote the Progress of Science and the Useful Arts" 109

2. "Exclusive Right" 112

3. "Authors ** Por Their * Uritings" 113

4. "Inventors, The Exclusive Right to Their * *

Discoveries" , 117

B. Legislation Under the Commerce Clause 120

III. Major Features of Certain Foreign Lairs 122

A. Brazil 122

B. France 124

C . Germany 124

D. Great Britain 124

E. Japan 127

F. Summary 128

1. The Basis of Protection 128

2. Uhat Persons Entitled to Protection . 128

3. Uhat protected 128

4. Nature of Protection 128

(a) TTha.t Constitutes Infringements 128

(b) Industries Included 129

CHAPTER V

LEGISLATIVE CONTROL, BOTH AS OPERATIVE UNDER NBA AND ALSO PROPOSED 130

I. Regulation of Design Piracy Under NBA Codes 130

A. Scope of File Survey 130

B. Ince-otion of Code Provisions 131

9746 -v-

C. Steps Leading to the Approval or Disapproval of Code

Provisions 131

1 . Sponsoring Groups 131

2. Recorded Sentiments of Persons or Classes Liable to

"be Affected 132

D. Analysis of Code Provisions on Design Piracy, and Plans

for their Administration 138

1. Substantive Enactments of Operative Provisions 138

2. Administration of Operative Provisions 141

(a) G-eneral Plan 142

(b) Particular Flans 142

1 . Leather 142

2. Furniture 142

3. Medium and Lou Priced Jewelry 143

4. Toy and Playthings 144

5. Velvet 144

6 . Comment 145

E. Operation of Code Plans 146

1. Number of Designs Registered 146

2. Complaints of Violators 147

3. Effects of Code Plans and Methods of Their Administration. 143

II. Legal Problems Incident to Code Registration of Piracy 151

III. Voluntary Agreements Under the National Industrial Recovery Act,

as amended 153

IV. Proposed Legislation 153

A. " The Nye Bill 154

B. Vestal, Sirovich, Eebert, O'llalley and Duffy Bills 155

1. Vestal Bills 155

2. Sirovich and Hehert Eills 161

3. o'Malley Bills 163

4. Duffy Bill 163

CHAPTER VI

PRIVATELY CONDUCTED CONTROLS 166

I . Trade Association Activities 166

A. Industries Employing Private Systems of Controls 166

B. Types of Systems 166

C. Relative Periods of Establishment 166

D. The Plans 167

1. The Swiss Plan, as Operative in the Schiffli and

Hand Machine Embroidery Industry 167

2. Open Registration as Operative in the Silk Textile

and Rayon and Silk Dyeing and Printing Industries .... 168

9746

-vi-

(a) Basic Principles of the Plan 168

(b) Kind and Volume of Designs Registered 170

(d) Results of Operation of the Bureau 171

(e) Expansion of Activities 171

3. Protection Through Manufacturer-Retailer Cooperative

Agreement 172

(a) The Plan 172

(1) The Millinery Quality Guild 173

(2) The Shoe Fashion Guild 174

(3) The Fashion Originators' Guild 175

(a) Retail Guilds 175

(b) Effectiveness of the plan 176

(1) Manufacturers' Interest 176

(2) Retail Interests 178

(3) Results of Operation 180

4. Protection Through Voluntary Industry Agreement as

Operative in the Lace Industries 180

E. Significant Aspects of the Plans 181

CHAPTER VII

ISSUES ON PROTECTION OF DESIGNS 182

I. Comparison and Analysis of Features of Various Activities 182

A. Scone and Effectiveness 182

1. Purely Voluntary Activities 182

2. Governmental Cooperation with Voluntary Activities 182

3. Legislative Proposals 183

B. Effects 184

II. A Review of the Design Situation Today 186

III. Critical Treatment of Issues 189

A. Design protection as a Stimulant to Designing 189

B. The Effect of Design Protection or Industrial Activity 193

C. The Effect or Relative Competitive Positions 195

D. Distributor Interests 196

E. The Interest of Labor 198

F. Consumer Interests 198

1. Price 198

2. Quality 199

3. Distinctiveness 200

G. The Cost of Protection vs. Waste Due to Copying 201

H. Administrative Issues 201

1. Features to be Considered 201

2. Problems with Reference to the Coverage of Industries .... 202

3. The Basis of Protection 203

(a) Originality 203

(b) Novelty 204

3746 -vn«

Summary

208

APPENDIX I
SCOPE OP THIS STUDY

I. Sources Investigated ....

A. Secondary Materials .

B. NRA Sources

C. Field Sources

1. Pi eld Interviews

2. Questionnaires ..

209

209
209
210
210
210
211

APPENDIX II

QUESTIONNAIRE

:i2

9746

-Vlll-

SUMMARY OF FINDINGS (*)

The copying of designs is not a new practice. Some leading coun-
tries have had legislation for the purpose of protecting designs for
over a century; the United States, since 1842. In this country, however,
few complaints of widespread pirac;' were heard prior to 1920. Since about
that time there have been continuous complaints and continuous efforts
toward the establishment of some effective method of control.

The growth of piracy seems to have paralled a noticeable trend to-
ward the establishment of style-consciousness as a more important element
of merchandising practice. It occurred principally in the apparel indus-
tries, Dress, Millinery, Silk Textile, Ladies' Handbag, Schiffli, Lace,
and Shoe. The Jewelry and Toy industries, one closely related to apparel
and the other of a "novelty" nature, have noticed a growth of copying
which, if less extensive than in the apparel industries, was so only in
degree. The Furniture industry also has been affected.

Today these same industries appear to be among those in which de-
sign piracy is most prevalent, except that devices for preventing copy-
ing have been operating in the Silk Textile and Lace industries in such
manner as to reduce greatly the number of actual cases. But the spe-
cific mention of a few industries is in no way intended to suggest that
others are not also concerned. The number of products in which design is
important is legion; wherever that condition exists there is a potential
copying problem. The number of industries in which the practice is pre-
valent, it has been found, may depend upon several factors. How keen is
the competition? How well established are concerns, and how well are
standards of "trade ethics" maintained? How quickly do fashions change?
Are the articles of lasting nature, or are they of the types whose value
is fleeting? Do designs change rapidly? Is design the important sell-
ing feature? Any combination of these variables may be responsible for
different conditions found to exist.

The frequency of the practice is partially shown by records of com-
plaints received by design protection agencies. During the operative
period of design protection provisions of the NBA Codes for the Medium
and Low-Priced Jewelry and Toy industries, about one year in each case,
the number of copyingxcomplaints totalled only a few hundreds. In the
Dress industry within three recent months, by contrast, the Fashion
Originators' Guild, representing only a part of the industry, has enter-
tained an average of approximately 513 complaints per month of which an
averagecj 1 285 per month were sustained. " - ■ ' : i^s

{'*) T.ii.:. stv.dy of design piracy has been limited by conditions which pre-
vented full investigation of important aspects of the problem. The
materials found available often have not constituted proof but rather
illustration of the matters to which they relate. The problem of
setting forth findings, therefore, is a difficult one. The tr.sk is
undertaken, with full realization of the possibilities of mistakes,
because it is believed that the value of recording impressions
gathered from several months of study outweighs the danger of er-
roneous conclusion. It is not undertaken in the belief that all
"findings" are proven.

At the other extreme are industries like Silverware, Leather, Carpet and
Rug, etc., in which, it appears, there are occasional instances of copy-
ing, but the practice appears to be only sporadic. Almost all of these
industries obtain some of their designs by copying foreign designs. On
the other hand, the Toy and Lace industries appear to be concerned over
the importation of copies of their merchandise, particularly from Japan
amd^ Scotland respectively.

A. Significance of Design Piracy .

In the industries where design piracy is prevalent, it seems
to have the most disturbing effect upon the "creative" manufacturers -
those whose policy it is to sponsor novelty lines, to lead in fashion move-
ments. This class, in general, is the class which produces higher priced
goods, both because cf better quality and workmanship and because of style
leadership; but there appear to be numerous though scattered instances in
which distinctive designs are sponsored by volume producers of low priced
articles. Copies of designs, sold in competition with the originals, almost
invariably bear a lower price. This may be due to several circumstances;
lack of expense of design development, lack of losses due to unsuccessful
designs (those copied usually have proved their popularity), or the ever-
present ability, until the absolute minimum has been reached, of lowering
quality, labor, or other costs in order to lower price. Most important
is the fact that a copy must bear a lower price in order to sell. In
industries like the Dress Industry, the existence of many small contracting
firms enables copyists to take advantage of manufacturing prices set under
conditions of intensive competition among bidding contractors.

Articles bearing copied designs and on sale at lower prices
than the originals quickly destroy the distinctive character of the
originals. Quality or other differentials are not always evident to
consumers. The original manufacturer, as a consequence, oho^tly finds his
articles unsalable and must turn to something else. His profits or losses
on the design depend largely upon the number of items he was able to dispose
of before the copy appeared and the price he was able to get, these being
affected by the reluctance of distributors to place substantial orders
under copying conditions, by markdowns or losses on stocks on hand, and by
returns from dealers.

The problem, typically, is a. price problem. Only where the
copy appears in the same price range, indeed an infrequent case, does the
price aspect become less important than the "property" aspect, i. e., the
feeling that a design developed at the expense of one should be his property
and not open to appropriation by another at will.

The copying manufacturers of course, have a stake in the situation.
They rightly point out that many of the so-called original designs of the
creative concerns are old (although the designers do not freely admit the
contention). They copy in order to share in the demand for popular items,
which is likely to swing sharply from one design to another, leaving for
oblivion many of perhaps equal merit but less popularity. And they point out
that their copying is of great benefit to consuming classes to which they
cater.

9746 ~ x -

So it may be. The evidence tends to show that fashion changes are
accelerated by copying, an influence which may or may not be disadvantageous
to consumers, but it also appears that the copying practice does make it
possible for the designs us edcn high-priced articles to be produced in
cheaper goods for low— income consumers while the fashion still prevails.
On the other hand, there is a tendency to divorce good quality from new
design articles, for he who expends unnecessary amounts to maintain quality
standards thereby makes it easier for a competitor to copy and undersell.
And the high inccme or "discriminating" consumer, under' copying conditions^" 1 .
is unable to buy distinctiveness of design with any assurance that it will
not be destroyed immediately.

To the designer, burdens of creative manufacturers mean less
productive markets for designs. Copying, of course, tends to increase
the demand of concerns committed to design leadership in terms of numbers
of designs per year; for as one is "killed" it must be replaced. It
greatly lowers the potential number of designs on the market at any one
time, however, and it keeps down designing needs which otherwise would be
felt by concerns which today keep abreast of changes and produce novelty
goods through copying.

To specialty shops and "exclusive" department stores piracy is
a burden just as it is to the manufacturers whose goods they handle. The
department store which carries diversified stocks, including perhaps both
original designs and copies,, has divided interests. Chain stores and dealers
in copies appear to obtain volume sales partly by making "fashionable
designs" available to their customers; hence their interests are definitely
on the side of the existing practice.

The labor interests are difficult to ascertain. As in the case of
quality, the producer of novelty goods is likely to find that lower priced
copies app2 ar more easily if he maintains expensive labor standards. In ad-
dition, it appears that the earnings of piece-work employees may be adversely
affected by rapidly changing lines occasioned partly by piracy, partly by
deliberate "style promotion",

B. Existing Legal Controls .

The legal controls in foreign countries seem to be of wider
scope than those of the United States. Common law and equitable principles
here enforced are of substantially no assistance to him who would proceed
against a copyist. The Federal Trade Commission has afforded no effective
regulation on this subject; a few of its Trade Practice Conferences have
included secondary rules respecting design piracy, but they are both
unenforceable and not sufficiently precise in meaning. Coypright laws
do not now protect designs for ordinary commercial articles; only "works
of art", construed by the courts to exclude industrial designs, are
within their purview. This leaves the Design Patent Laws, which are the
only substantial legislative means of protection today.

Design patents, it has been found, are used by only a small
number of the concerns which develop original designs, and by most of that
group only to a very limited oxtent. Administrative and enforcement diffi-
culties a.re strongly condemned by the majority of those whose viewpoints
have been learned.
9746 -xi-

Designers apparently use them hardly at all; only manufacturers who have
purchased designs, processed them, and found them commercially worthwhile
appear to take advantage of design patent protection. The chief object-
ions to design patents seem to be: (l) The procedure for getting patents
is too slow; designs are obsolete before patents are issued. (2) Patent
protection is too costly, except for items that have proven successful.
(3) Patents are too often invalid and unenforceable. The Patent Office
does not possess sufficient records to make possible a reliable determi-
nation of the novelty of many kinds of designs, particularly those not
generally patented. There seem tc be some additional objections to the
substantive requirements of "novelty" and "invention" imposed by the de-
sign patent laws, grounded upon the failure of these requirements to cor-
respond to the commercial importance of a design; but these objections are
far overshadowed by administrative and enforcement difficulties gener-
ally considered to bar effective utilization of the protection which other-
wise would be available.

C. The Movement For More Extensive Protection .

1. Trade Association Activities.

The first concrete efforts toward protection through a voluntary
cooperation apparently were made in connection with Trade Practice Con-
ferences. There is nothing to show that these efforts achieved any measurable
degree of success. In 1928, however, the Silk Textile industry established a
registration bureau for the protection of print designs, and after a few
years of limited effectiveness the plan was adopted by all of the converters
and printers of such designs. The plan employed is unique in that it bases
protection upon trade use, not "originality", and works substantially automat-
ically by virtue of a rule requiring registration of a design before it
may be processed. The objective of preventing confusing similarity of
designs marketed a.t the same time ha.s been achieved. The success of the plan
is attributable to a number of factors, including an extended educational
campaign before it was out into effect, a closely knit trade association,
the functional division in the industry whereby printers and roller engrav-
ers serve gs effective enforcement agencies, intelligent leadership, and
the very nature of print designs, which may be varied to obtain an almost
infinite number of different designs, all, however, following the same
general styles.

In 1932 the Schiffli industry tried a plan involving the filing of
sealed envelopes containing original designs with the trade association in
order that such filing might constitute evidence of priority in case an
alleged copy should appear. This plan was found unsuccessful and was dis-
carded.

Prom 1932 through the KRA period until today there have been grow-
ing movements toward design control in several additional industries. Of
this group the Fashion Originators' Guild in the Dress Industry is the
largest, and apparently the most successful. It operates through retailer
cooperation, involving refusals to handle dresses embodying designs which
are copies of designs registered by Guild members. It has expanded con-
tinually in spite of obstacles, although today it is receiving strong
opposition from the National Retail Dry Goods Association. The Millinery
and Boot and Shoe industries have similar guilds, operated in both cases by
a small minority of creative manufacturers with the cooperation of retailers
whom they supply.

9746 -xii-

These guild plans are weaker structurally than the silk textile plan.
They lack an easy method, of enforcement. Their operation depends upon
the willingness of all participants to comply with the decisions of
whoever must determine whether designs are "original" or copies-decisions
which, under the plan followed, can be made only after investments have
been made and which necessarily have important economic impacts upon
those concerned.

In addition to the devices mentioned there appear to be effective
understandings in a number of industries, Lace and Nottingham Lace Curtain
in particular, whereby competitors refuse to copy designs used by others.
Snr.ll numbers of "manufacturers and close cooperative relations probably -
have a great deal to do with the success of such understandings in the
industries just mentioned. It is likely that there are many other in-
dustries in which ai.iilar conditions exist, those wherein the trade stigma
against copying operates effectively to prevent most cases of appropriation
of designs claimed exclusively by competitors.

A feature of all these trade association activities deemed worthy of
note is that none endeavors to protect the designer 1 s interest in a design.

2. N. R. A. Code Activities.

With the passage of the National Industrial Recovery Act it was soon
realized that codes of fair competition might afford a means of striking
at design piracy. The American Arbitration Association adopted a program
for encouraging the proposal of design protection provisions in codes sub-
mitted for approval. The code- sponsoring groups ef a great number of in-
dustries either had already decided upon such a course or did so sub-
sequently.

The provisions proposed were of almost as many kinds as the number
of industries sponsoring them. Many were modified, for reasons not appear-
ing in the records, before approval. Most of them were approved. In
connection with most, little evidence was presented at Code hearings to
explain the provisions or show the need for protection, nor were comments
of NRA officials and advisory Boards, either pro or con, recorded.

There were notable exceptions to the foregoing statement. Effec-
tive provisions at the outset were denied several of the apparel in-
dustries in order that a specific provision and the need for it might be
studied carefully in each case. Subsequent efforts of the Code Authori-
ties for the Dress and Schiffli industries to secure approval of the pro-
visions worked out were balked by the opposition of the Consumers' Advisory
Board and the Legal Division of the NRA. Several of the apparel industries
never reached a sufficient state of agreement to warrant the proposal of
an operative provision. In general, there was opposition within the NRA
to the approval of provisions which met with the disfavor of any substan-
tial group within the industries concerned; there was no NRA. policy with
respect to the kind of provision which might be acceptable, and widely
divergent kinds were approved.

Through NRA Codes the Silk Textile industry procured supposed legal
sanctions in support of its bureau and expanded the functions of the
bureau.

9746

-xiii-

In substantially the order named, the Medium and Low Priced Jewelry,
Toy and Playthings, Furniture, Leather and Velvet Codes were also active
in using their provisions. All of these utilized a design registration
bureau; the plans of operation varied.

Administration of the design piracy Provisions for the majority of
codes which included them, however, was almost completely inactive. If
copying persisted, no effort was made to enforce the provision. Other
more engrossing matters occupied the attention of these industries, with
a few outstanding exceptions.

Information relating to the Jewelry and Toy industries indicates
that design protection was one of the most important features of those
codes. Enforcement was made possible through united condemnation of
copying, backed ~oy the possibilities of Blue Eagle removal and legal
prosecution. Decisions of enforcement committees, etc., even if lacking
in legal perfection, were generally given currency. Design protection in
these two industries appears to have caused an increase in the demand
for designers, an increase in the variety of novelty items on sale
at any one time, and the adoption of creative work by a number of concerns
which formerly had copied. There are no adequate data to support an
estimate of economic effects.

3. Legislative Proposals.

The first Congressional Bill providing for more extensive design
protection was introduced in 1916. Later, in 1924, began a series of bills
which has continued up to date, the latest being the Duffy Copyright Bill,
vtfiich, as amended and passed by the Senate in August, 1935, would set up
a copyright system for the protection of designs.

The failure of proposed legislation within the last ten years has
played a large role in the establishment of private controls. Design
protection seems to be a matter which will be accomplished to some extent
whether or not there is legislation to provide it. Where design changes are
relatively infreauent all but the occasional cases of copying and piracies
by a small minority of concerns may be eliminated through "gentlemen's
agreements". The growth of privately operated registration and protection
agencies is cogent evidence of the lengths to which creative groups in
certain industries will go in order to protect their designs.

D. The Problem of More Extensive Protection .

The importance of the legal, economic and administrative issues
raised by any program for grea.ter design protection by law is somewhat
reduced by the facts that design piracy is generally considered unethical
and unfair and that cooperative efforts in a number of industries tend to
keep occurrences to a minimum. The questions, therefore, appear with full
force in only a few industries, notably Dress, Millinery, Ladies' Handbag,
Schiffli, etc., wherein copying is a fixed practice and one difficult to
eliminate through cooperative efforts because of the size and strength of
the copying and related groups.

9746 -xiv-

1. Legal Issues.

Whether the various plans now being followed in order to protect
designs are legal or illegal restraints of trade under existing law is an
inroortant question which has not been investigated due to limitation of
time. If illegal, copying is likely to he more persistent in the future
and the pressure for additional legislation correspondingly stranger.

Concerning proposed legislation, it is believed to be within the
Constitutional power of Congress to enact laws such as the Vestal Bill,
the Duffy Bill, etc. There is one important limitation - protection thus
granted must tend to advance the arts by predicating the grant of exclusive
rights unon the existence of a creative conception. To protect trade use
alone, or the resurrection of an old design for commercial use, would not
be constitutional under existing decisions.

Any legislation which might be proposed for the purpose of author-
izing an industry to protect its designs and providing legal sanctions in
support of rules and decisions adopted probably would be invalid as an
unconstitutional delegation of legislative and judicial powers.

2. Economic Issues.

Analysis of economic issues has led to findings with respect to
some, uncertainty with respect to others. It appears that the protection
of design creation probably would encourage designing, increase the employ-
ment of designers, snd cause a greater diversity of designs. It probably
would tend to lengthen fashion trends. It would place the manufacturers
who develop designs in a more advantageous position; also the distibutors
who handle their goods. On the other hand, the present day copyists and
distributors of copies would be forced to undertake design development,
withdraw from competition in novelty goods, or limit themselves to
old and staple designs while awaiting the expiration of whatever term
of protection might be made available to protectable designs.

Whether design protection would result in merchandising nolicies
which, in turn, would lower the business volume of an industry is un-
certain. Likewise it is uncertain whether wastes incident to procuring
protection, enforcing exclusive rights, additional designing activities,
and, possibly, increased "promotion" of exclusive designs, would be
greater than those resulting today from the rapid "killing" of designs.

It is not clear that design protection would improve labor condi-
tions, nor that it would necessarily result in better quality standards.
A particular design would not be available to consumers during the term of
protection at as low a price as if it were copied, but it is not evident
that price levels in general would be affected, nor that the purchaser of
protected articles would receive any less value for his money. Low income
consumers would be unpble to gratify such desires as they may have for cheap
copies of designs embodied originally in higher priced articles, but possi-
bly they would be able to obtain other designs within the same fashion
trend; the consumers desiring exclusive and distinctive designs, on the
other hand, might be assured that articles purchased would maintain such
qualities during the term of protection.

974fi -xv-

3. Administrative Issues.

Perhaps the most difficult questions of all relateto the possibility
of administering and enforcing a comprehensive plan for protecting in-
dustrial designs. Designs are but embodiments of artistic ideas. To
define their scope is difficult. To distinguish the old from the new, the
original from the copy, the obvious from the unobvious, is far more diffi-
cult. These problems are multiplied in industries, like the Dress industry,
which place many thousands of difficult designs in production every year,
all of which must conform to fashion requirements of varying sccoe.

Legal definitions are fraught with uncertainty when the attempt is
made to apply them to particular cases. The questions involved are sus-
ceptible of widely divergent viewpoints and conclusions. With speedy and
reliable decisions essential and low costs a recuisite of any plan which
would be available to all, it is apparent that the possibilities are
limited.

It is conceivable that a carefully prepared plan for extensive pro-
tection, if desired, could be made operable after full education and
with the cooperation of those concerned. A further possibility is that
administrative and enforcement features of the present design patent laws
might be modified in order to expand the field of usefulness of these laws.

9746 -xvi-

-1-

CHAPTER I '

■ INTRODUCTION

I. HISTORICAL BACKGROUND OF THE PROBLEM OF COPYING OF DESIGN

The appropriation of another's idea as expressed in a particular •
pattern or design for gainful purposes is a problem of long standing.
Commonly, .the practice is termed design piracy, and includes the copy-
ing and using of designs which have "been originated or introduced "by
others without the consent of the originator or introducer. The curb-
ing or possible control of the practice has been a subject of exten-
sive study for years.

A. Major Legislative Steps

Long before the matter became a problem cf any concern in the
United States, its effects had been felt in other countries,, and leg-
islation attempting to create property rights in designs and to cur-
tail copying had been enacted. Among the earliest legislation was
the British Act cf 1787, which endeavored to curb wholesale piracy of
designs then prevalent in the cotton trade. It was limited to the
protection of linens, calicos, cottons and muslins. From the date of
its enactment up to the present time some sort of copyright, protection
for designs has been continued under British law, and the scope of .
protection has been broadened with the passing of time.* In France,
special proclamations issued during the reign of Louis XVI prescribed
severe penalties for the copying of designs. As in the case of Great
Britain, the French law has been expanded to increase protection and
cover a greater variety of situations as conditions changed. Despite
these efforts toward control, however, it appears that even in France .
there have been periods when copying was rife.**

The First American Design Patent law was enacted in 1842, at a
time when, according to available evidence, there were few complaints
of design piracy. One of the earliest manifestations of concern over
the problem is contained in the Constitution of the Silk Association

(*) For details see Chapter IV, Section II.

(**) "The protection of the industries against copying, or style piracy
as it is known, is perhaps the most difficult and at the same time
the most engrossing problem before the Haute Couture of Paris

"The leaders of the style field have' tried, by systems of legal
•ontrol to prevent style piracy. There is a French law protect-
ing designs. Several of the leading houses pursue copyists
systematically and ruthlessly with all the means that the law pro-
vides. There are, almost continuously, law suits and prosecutions
for infringements of designs ...The French law, while technically
affording protection, as we have already indicated, does not stop
the clever imitator from carrying on his profession in the ind-
ustry." Nystrom, Faul H., Economics of Fashions, (1928), pages
130-191.

9746

-3-i

of America, Inc., -which, as framed in 1672, asserted that one of the
purposes of the organization was the protection of industrial art.*
During subsequent years there were occasional complaints by silk manu-
facturers, but it was not until the twentieth century that force seek-
ing the control of piracy became vigorous in their activities. In
1916 a Design League, consisting of designers, manufacturers, and
others, was 'ormed for the purpose of advocating special legislation
by Congress. The first bill directed to this end had been introduced
in 1914, and it was followed by an almost continuous series of leg-
islative proposals. It has been said that the vigorous pressure for
legislation from 1924 on, coincided substantially with a trend in
which "the fever for something new in design, color, and in name,
seized the rank and file. A very epidemic of colors, fabrics and names
swept the market."**

There is nothing to indicate that the several States have ever
attempted to control the copying of designs.

B . Efforts Toward Industry Self-Regulation

Upon the failure of the silk industry successfully to promote
legislation, it was decided in 1928 that the" industry itself would
undertake to protect designs through private controls. Thus the De-
sign Registration Bureau of the Silk Association of America was estab-
lished on August 1, 1928, as the forerunner of other similar establish-
ments.***

With respect to the Dress Industry it has been said, "in the early
1920' s it was not the habit to copy, and the makers of high priced mer-
chandise, who paid high wages, thrived."**** At that time there app-
arently was a small group of manufacturers who copied frequently, but
the practice of copying was not widespread. To the success of the copy-
ing group has been attributed the fact that others later discarded de-
sign creation in favor of the less costly practice of copying.*****
Aroused by svich copying, a small group of dress manufacturers, also
after the !'■■ "ure of legislative proposals, formed the Dress Creators

(*) Blunt, Irene L., "Fighting the Design Pirate" , 15 Journal of the
Fatent Office Society, 29, (1932).

(**) Creange, Henry, The Guilds of America, (1934), Chapter V.

(***) See Blunt, loc . cit . , note p. 2 supra, at p. 30. For detailed
information concerning privately controlled systems, see Chap-
tor VI.

(****) Maurice Rentner, Transcript of Hearing , Dress Manufacturing
Industry, November 15, 1934, Page 101.

(*****) Interview by F. A. Fitch with Bertram Heinitz, New York,
November 7, 1935.

9746

-3~

League of America for the purpose of controlling designs.* Thereafter,
in 1931, the Fashion Originators Guild of America was established for a
similar purpose.** And even later the.'e was established an organiza-
tion known as the National Association of Style Creators.***

In respect of the Ladies Handbag Industry, it has been said that
the design problem is one of long standing, but that no specific effort
had been made to combat it prior to the N.H.A.****

The Lace Manufacturing Industry has controlled piracy "for years"
by means of a voluntary "gentlemen's agreement" .*****

An unpublished report of the Code Authority for the Millinery
Industry ****** described the design piracy problem in that industry
as one which has grown within the last ten years to the point of be-
coming the dominant influence affecting manufacturers ' operations.
When women's hats embodies many trimmings and ornaments, it is said,
copying 1 was too difficult for the problem to be of significance. Sim-
plification of designs and customers' demands for low-priced merchan-
dise have been declared reasons for the growth of design piracy. As
a result, sometime in 1933 before the enactment of the National In-
dustrial Recovery Act, a Millinery Quality Guild was established by a
small group of manufacturers in order ta combat copying.*******

The first manifestation of difficulties in the Schiffli Embroidery
Industry was the formation of a designer's organisation in 1903. In
1933 design piracy was declared the cause of a "tremendous amount of
suffering" during the "last ten years" .******** The first steps taken

{*) Statement of Zahn, Chairman, Dress Creators League, Trans -

cript of Hearing on November 15, 1934, page 41.

**) Rentner, loc • cit . note p. 3 supra, at pp- 102-103

***) Letter dated December 6, 1934, from Schalleck, Code Counsel,
to Representative Sol Bloom (in N.R.A. files, Dress Manu-
facturing Code, Deputy's folder),

****) Interview by F.A. Fitch with Berkowitz and Mittenthal of the

National Authority, Ladies Handbag Industry, December 12,1935.

*****) Interview by F. A. Fitch with Hugo Schloss, President of Am-
ican Lace Manufacturers Association, November 8, 1935, and
Louis Nimkoff, Acme Textile Company, December 10, 1935.

******) Appendix VII , original draft of Code History for the Millinery
Industry.

*******) Minutes of meetings . January 21, 1934, report of Style Piracy
Committee (N.R.A. files on Millinery Code, Deputy's folders).

********) Adolphus Dreyfus, transcript of Meeting for the Schiffli,

Hand Machine Embroidery Industry, September 11, 1933, page 72.

9746

-4-

by the industry to curtail piracy involved the establishment of a
Design Registration Bureau in the offices of the Embroidery Manufact-
urers Frotective Association.*

Evidence concerning the development of design piracy in industries
primarily concerned with the problem is indeed meagre. It appears,
however, that widespread copying, at least, is of recent development,
even though copying may have been known since the establishment of the
industries concerned. Recent steps involving the concentration of
efforts on procuring additional design legislation, the formation of
privately conducted design registration bureaus and "gentlemen's agree-
ments" not to copy, and the inclusion of design provisions in NRA Codes
constitute significant indications of the trend.

C. NRA Codes

Frivate activity in some of the industries just mentioned constitu-
ted a fitting antecedent to the inclusion of design piracy provisions
in Codes of Fair Competition after June, 1933. Code regulation was
made available in some cases, denied in others.** Usually in cases where
made available it embodied the type of control advocated by the industry ■
concerned, although in a few instances the effdrt was made merely to
provide legal sanctions for the carrying out of private controls already
existent .

The period following the invalidation of Codes has witnessed some
extension of plans set up by the Codes into the field of private reg-
ulation, but in general they were dropped, returning the industries
affected to the consideration of other devices for the accomplishing
of the same ends.***

D. Proposed Legislation

Of proposed legislation there has been but a brief comment. The
first bill, introduced in 1914, was succeeded by one in 1916, and there-
after there was a lapse of several years before Congressional action
was sought again. In 1924, however, the late Congressman Albert Vestal,
Chairman of the House Representatives Committee on. Patents, undertook
to push actively bills which would set up a system of copyright protec-
tion for industrial designs. He was aided in 'his efforts by Henry D.
Williams, onetime Chairman of the Patent Bar Association of the City of
New York, and by special groups representing a wide variety of indus-
tries. Efforts in this direction, however,' met -with failure until the
enactment of the National Industrial Recovery Act, which resulted in the
temporary discontinuance of vigorous legislative proposals. Nevertheless,
bills were continually placed before Congressional committees for

(*) ibid , page 189.

(**) See Chapter V for material relating to NRA Code Activity

(***) See Chapter VI " '

9746

■D-

consideration. After the dissolution of NRA Codes, the Senate con-
sidered and passed the Duffy Copyright Bill which, as amended by
Senator Vandenburg, provides for copyright protection of designs in
a manner similar to the original Vestal Bill. The entire list of
legislative proposals is as follows:

63rd Congress, 2d Session (1914)
64th Congress, 1st Session (1916)
68th Congress, 1st Session (1924)
68th Congress, 2d Session (1924-

arings in January, 1925)
68th Congress, 2d Session (1925-

nstituting an Amendment of H.H. 10351)
69th Congress, 1st Session (1925-

arings in February and May, 1926-

stal Bill)
69th Congress, 1st Session (1926-
Revision of H.H. 62-19)
70th Congress, 1st Session (1928-
Hearing in March, 1928 - Vestal Bill)
70th Congress, 1st Session (1928-
Revision of H.R. 9358)
71st Congress, 2d Session, (1929)-
Hearing in February, 1930 - Favorably
reported by House Committee on Patents
on May 2, 1930 (House Report No. 1372,
71st Congress, 2d Session) and passed
by House on July 2, 1930)
71st Congress, 3d Session (1930 -
replacing H.R. 7243. Senate Hearings in
December, 1930 and January, 1931.
72d Congress, 1st Session (1931)
72d Congress, 1st Session (1932)
72d Congress, 2d Session (1932)
72d Congress, 1st Session (1932)
72d Congress, 2d Session ( 1933c-
Sirovich Bill)

73d Congress, 1st Session (1933-
Hebert Bill, similar to Sirovich Bill)
73d Congress, 1st Session (1933 -
Sirovich Eill)

73d Congress, 2d Session (1934 -
Nye Bill)

1st Session (1935 -

H.R.

11321,

H.R.

17290,

H.R.

7539,

H.R.

10351,

H.R.

12306,

H.R.

6249,

H.R.

13117,

H.R.

9358,

H.R.

13453,

H.R.

7243,

H.R. 11852,

H.R.

138,

2678,

5075,

H.R.

12528,

H.R.

14727,

S .

241,

H.R.

4115,

3166,

H.R.

8099,

3047,

74th Congress,
O'Malley Bill)
74th Congress,
Duffy Bill, as

1st Session (1935 -
amended by Senator

Vandenburg to include design protection

and passed by the Senate).*

(*) The details of these bills are treated in Chap.
Section III , infra.

V, Section I , and

9746

-6-

I I . TRADES- AND INDUSTRIES IN WHICH THE APPEARANCE OF PRODUCTS IS
IMPORTANT

It is self-evident that the industries which have taken some steps
to safeguard their designs from copying represent some part of the total
in which the design of products is important. Tangible evidence of the
size of this group is available from several sources: Patent Office
records, Trade Practice Conferences before the Federal Trade Commission,
and others. An estimate of the extent of the design problem in these
industries can be undertaken only in the light of information to be set
forth in succeeding chapters.

A . N.R.A. Codes Containing Design Piracy Provisions .

On May 28, 1935, the list of N.R.A. Codes which contained trade
practice provisions relating to design piracy included the following:*

Advertising Specialties

American Glassware

Animal Glue

Architectural, Ornamental, etc

Iron, etc.
Art Needlework
Artificial Flower & Feather
Artistic Lighting Equipment
Beverage Dispensing Equipment
Bias Tape
Blouse and Skirt
Book Publishing
Brass Forging Mfg.
Candlewick Bedspread
Canvas Goods
Carburetor Mfg.
Carpet and Rug
Cement

Chinaware & Porcelain
Coat & Suit
Coin-Operated Machine
Commercial Fixtures
Corset & Brassiere
Cotton Cloth Glove
Cotton Converting
Drapery & Carpet Hardware
Dress Mfg.
Dry Color
Millinery

Millinery & Dress Trimming
Nottingham Lace Curtain

Electric & Neon Sign

Fireplace Furnishings Mfg.

Floor & Wall Clay Tile

Floor Machinery

Funeral Supply

Fur Mfg.

Furniture Mfg.

Glass Container

Graphic Arts

Graphic Arts Industry in the Territory

of Hawaii
Grass' & Fibre Rug
, Hair Cloth Mfg.
Handkerchief
Hand Bag Frame Mfg.
Horseshoe Ac Allied Products
Hydraulic Machinery
Industrial Oil Burning Equipment
Iron and Steel
Knitting Braid
Lace Mfg.
Ladies Handbag
Leather ■ .

Leather & Woolen Knit Glove
Luggage & Fancy Leather Goods
Marking Devices
Medium & Low-Priced Jewelry
Metal Hospital Furniture
Scientific Apparatus
Set-Up Paper Box
Shoe Pattern Mfg.

(*) These provisions varies greatly, and a number of them were never
operative. See Chapter V, infra. For reprints of the provisions
themselves attention is directed to N.R.A. Research and Flanning
Division Bulletin Nos. 52-A (July 18, 1934) and 52-B (January 28,
1935), "Piracy of Design Provisions in Approved Codes."

9746

Ufa

Oil Burner

Ornamental Molding, etc.

Petroleum Equipment

Photograph Mount

Pleating, Stitching, etc.

Precious Jewelry Producing

Frinting Equipment

Pyrotechnic Mfs;.

Rayon & Silk Dyeing & Printing

Retail Monument

Rubber Mfg., Rainwear Division

Schiffli, Hand Embroidery

Silk Textile

Silverware Mfg.

Special Tool, Die and Machine Shop

Surgical Equipment

Toy & Playthings

Upholstery & Decorative Fabrics

Upholstery & Drapery

Vegetable Ivory Button Mfg.

Velvet

Wall Paper

Watch Case Mfg.

Wood Cased Lead Pencil

Perhaps the most that may be said of the entire list is that it
includes most of the industries which considered design protection a
problem of sufficient importance to be mentioned in the Codes. From
it has been selected the group of codes studied in detail and reported
on in a later chapter .*

B. Sub.iects of Design Patents

In order to illustrate the types of designs to which there are,
today, claims of exclusive rights, the lists of design patents issued
by the U.S. Patent Office in several different weeks were examined.
The issue for a typical week, including all design patents dated Sept-
ember 3, 1935, follows:**

PATENT
NUMBER

96,717
96,718
96,719
96,720
96,721
96,722
96,723
96,724
96,725
96 , 726
96,727
96,728
96,729
96,730
96,731
96,732
96, 733
96,734

DATE
FILED

12/28/34
10/ 18/34
4/10/35
6/13/35
7/19/35
3/ 4/35
6/10/35
7/10/35
7/18/35
1/12/35
5/24/35
5/13/35
5/15/35
2/ 2/35
7/ 3/35
6/10/35
7/29/35
7/29/35

SUBJECT

Fanel Mat

Wreath

Snoe

Knife

Shoe Sole

Cup

Hinge

Tablecloth

Handbag

Refreshment Stand

Dress

Bottle

Envelope Holder

Tumbler

Emblem for Apparel

Shoe

I*) Chapter V

(**) Taken from the Official Gazette, United States Patent Office,
September 3, 1935.

9746

73.

96,

736

737

96,

738

96,

739

96,

740

96,

741

96,

742

96,

743

96,

744

06,

745

96,

746

96,

747

96,

748

749

750

96,

751

752

753

754

755

756

757

758

759

760

761

762

763

7b i

765

766

767

768

769

770

771

772

773

774

775

776

777

778

,779

,780

,781

,782

,783

,784

,785

,786

,787

,788

6/22/35
3/19/35
7/ 3/35
8/ 9/35
8/ 9/35
7/ 1/35
8/ 7/35
6/ 3/35
6/ 3/35
7/11/35
6/19/35
3/30/35
4/ 9/35
6/20/35
7/ 3/35
5/17/35
7/29/35
1/14/35

10/11/35
2/27/35
5/13/35
7/ 1/35
6/-14./35
6/14'/ 35

. 6/14/35
1/18/35
6/22/35
6/22/35
7/12/35
5/21/35
8/ 5/35
6/26/35
2/14/35
7/27/35
6/14/35
1/ 2/35
7/13/35
6/12/35
7/25/35

10/25/34
7/ 5/35
6/ 4/35
1/ 9/35
6/26/35
7/12/35
6/ 8/35
1/ 7/35
5/28/35
5/17/35
7/26/35
1/25/35
3/18/35
7/23/35
1/24/35

Finger Ring

Shoe

Tumbler

Curtain Fabric

Mint & Nut Dish

Blouse

Picture Frame

Hair Dryer

Necktie Rack

Gas Range

Range Base

Ice Cream Mold

Dental Plate

Radio Cabinet

Shoe

Sadiron Casing

Wheel

Snow Suit

Carpet Sweeper

Chair

Physician' s Table

Battery Case

Piano Case

Lamp

Toaster

Blouse ,.,

Container Top

Handbag'

Purse

Doll

Full Cord Tassel

Dental Cabinet

Bicycle

Shoe

Ash Tray

Dental Unit

Corn Fopper

Box

Tire

Bottle

Child's Garment

Box

Fot Holder

Shoe

Kitchen Cabinet

Wheel

Shoe

Washing Machine

9746

-9-

96.789 1/24/35 Washing Machine

96.790 1/24/35 Washing Machine

96.791 1/24/35 Washing Machine

96.792 7/12/35 Comb

96.793 6/22/34 Can Opener

96.794 6/14/34 Clock

C. Trade Fractice Conferences Embodying Rules on Design Pirac y

A few industries have sought to avail themselves of the assistance
afforded by the Federal Trade Commission through Trade Practice Con-
ferences.* Those which have procured the approval of rules respecting
design piracy are:

Baby and Doll Carriage All-Cotton Wash Goods

Clothing Cotton Converters Embroidery

Greeting Card Household Furniture & Furnish-
ings

Knitted Outerwear Milk & lee Cream Can

Public Seating School Supply Distributors

Shirting Fabrics Upholstery Textile

D. Groups Collaborating with The American Arbitration Association

On December 7, 1333, the American Arbitration Association sent a
questionnaire to many types of concerns and individuals in an effort
to discover their interest in design proctection and to obtain a list
of those desiring to attend a luncheon meeting in Hew York City on the
subject of "A national collective effort to control piracy under codes".**
The file of responses of interested parties was examined and found t»
include expressions of interest by the following:

Advertising Typographers of America

Attorneys fnr shoe manufacturers

American Chicle Co. (trade marks, names and packages)

Associated Handbag Industries of America, Inc.

American Lace Mfgers. Ass'n.

Bigelrw Sanford Carpet Co.

Beach and Wallis Co. (textiles)

Calkins and Holden Company

Cambria Carpet Company

Carter's Ink Co. (labels and containers)

Corset and Brassiere • Ass'n of American

Charles Blocm, Inc.

Guilford Fabrics, Inc.

Handkerchief Industry

(*) For further details with respect to the activities of the Fed-
eral Trade Commission, see Chapter IV of this paper.

(**) Interview by A.C. Johnston with Miss Van Schaick, offices of
American Arbitration Association, New York, December 17, 1935.

9746

H. B. Cheney, Cheny Bros. (Silk textiles)
Handbag manufacturers ;
International Frinting Ink Corp.
Julius Kayser & Co.
Knox Hat Co .

Lace and' Embroidery Manufacturers
Lace and Embroidery Association
• •.': Machinery and Allied Products Institute . •
McG-raw Hill Publishing Co.

National Upholstery and Drapery Textile Association
Philadelphia Carpet Co. . ■■

Rhode Island Textile Co.

Runket 3ros., Inc. . .

Servel, Inc.
Sanquoit Silk Mfg Co.

Stunzi Sons Silk Co. •;,

Susquehanna Silk Mills
The Columbia Ribbon Co.

Textile Dyeing and Frinting Co. of America, Inc.
Van P.aalte Co., Inc. (silk textiles) • ..
Wire Machine Builders Association
White Metal Costers Association

In addition, a number of designer's and architects' organizations,
etc., expressed ' definite interests in piracy control:

Alfred Bobbins Organization . .

American Institute of Decorators
American Textile Designing Co.
• Art in Industry (furniture designs)
Bianchini Ferier
Designs Engineers, Inc.
Edythe Spar age Studies

H. L. Alpen, Architect (store front designs)
Industrial Designs, Inc.

National Alliance of Art and Industry , t ,
Russel Wright Studios
Van Doren and Hideout

A few respondents, however, declined to attend the meeting on the
ground that design piracy to them was not a problem of importance."

Hunt-Rankin Leather Co. ., . . ■

Russell Harrington Cutlery Co.
Interlining Manufacturers Ass'n, Inc.

A casual scanning of the foregoing lists of industries and pro-
ducts is sufficient to reveal that almost any article which comes
within the view of people in their day-by-day affairs and is sus-
ceptible of "dressing-up" may be the subject of a claim of design
protection.

Ill . DEFINITIONS OF FARTICULaR TERMS

9745)

-11-

A . Definiti ons .

Before continuing with a study of the design piracy problem
as it appears in certain of these industries, brief definitions of
several terms, as they will be used repeatedly, seem pertinent.
Dictionary definitions are inadequate because alternative. Trado usages
vary, and connotations vary with different individuals. Thus the
word "style" to one may connote distinction or superior quality, to
another, a kind, sort, or species. For the sake of uniformity, the
definitions sought to be followed herein are those employed by Dr.
Paul H. Nystorm,* a well-known authority on marketing.

1. Style

" A style is a characteristic or distinctive, artistie
expression or presentation. A style is a fact of art.

2. Fashion

" A fashion on the other hand, is a style accepted and used
by people . A fashion is always based on some particular
idea. But not every style is a fashion. A fashion is a
fact of social psychology. A style is a creation of an
artist as a designer. A fashion is a result of social
emulation and esthetic imitation. A style may be new or
old. It may be beautiful or ugly. A style is still a
style even if it never receives the slightest acceptance
or even approval. A style does not become a fashion until
it gives some popular use, and it remains a fashion only
so long as it is so accepted."

3. Design

"A desipOi is a particular or individual interpretation or
version of a style . A style may be expressed in a great
many designs, all different, but all relating because they
are in the same style."

It is recognized that these definitions are difficult to follow
and difficult to apply to various situations which will arise in the
course of this paper. In general, however, when we speak of the de-
sign of an article it is the entire appearance of that article which
is contemplated. The same article, however, may be the particular
embodiment of a style and, being currently accepted, it may also
represent a fashion. A bracelet, for example, may have an appearance
to the eye, capable of reproduction, which we would designate its
design. The carvings on such a bracelet may be of modernistic style,
and that style of carving may at any given time be fashionable.

(*) Nystrom, Faul H., Fashion Merchandising , page 33.

9746

-12-

In the dress manufacturing and millinery industries, it is the
custom to speak of all designs as styles. In otner industries, how-
ever, the distinctions herein pointed out are followed more closely.

4. Originality

To most people originality means novelty. As used herein, how-
ever, a design will be considered original if it is the product of
someone's mind. If one creates something which, to him, is new, "by
the exercise of his creative faculties, it will be considered or-
iginal. If, however, he derives the idea for making that thing from
another, if he copies it from something else, no matter how new it
may seem to the public or to the trade, it is not original.* Three
concepts are nerein involved:

( 1) Novelty, meaning the quality of being ab-
solutely new as compared to all pre-existing things.

(2) Originality, meaning the quality of being
new and creative as far as concerns him who thought
of it and,

(3) "Trade novelty", which would include those
items that, although not new in an absolute sense
and not necessarily original are unknown to the trade
and therefore have aspects of novelty.

These three concepts are mentioned specifically in order to show
the types of situations encountered and to bring to mind the fact
that design piracy as above defined may involve any or all of the
three .

B. Design and Trade Mark Firacy.

As far as concerns the act itself, trade-mark "piracy" does not
differ from design piracy in any substantial respect. Both involve
an appropriation of the appearance of something. In the former that
something is merely a mark or emblem intended to indicate the source
of a commodity and having on inherent intrinsic value. The mark
may be artistic and attractive, just as a design, but as such, it
possesses no salable qualities. Designs, on the other hand, as em-
bodied in products, represent tremendous commercial values. A trade
mark is entirely independent of the commodity with which it is used.
A design entirely modifies the appearance of the commodity in which it
is embodied, and thus may render highly valuable something which other-
wise would be of but ordinary appeal.

(*) This definition of originality is adopted in order to conform to
definitions followed by the courts in interpreting the copyright
laws. See Emerson v. Davis , Fed. Case /f4,436, .3 Story 786 (C.C.D.
Mass., 1845); Ferd Fisher v. Dillingham , 298 Fed. 145 (D.C.S.D. N.Y. ,
1924) . In the latter, Judge L. Hand said: "For the purposes of
this case it must be deemed to be original, if by original one
means that it was the spontaneous, unsuggested result of the
author's imagination."

9746

-13-

. . -" CHAPTER II ■

DESIGN PIRACY I IT REPRESENTATIVE INDUSTRIES '

Eleven industries which apnear to "be subject to this prac-
tice of design 7ira.cy.have been selected for study (*), the
object being to set forth what is known about ' several of the most
important, even though problems encountered therein might be
similar, and also to include matter relating to other' industries
wherever.it appears that special circumstances exist," regardless
of the importance of the design problem. In no case has there been
a sufficient survey of an industry to disclose a conclusive, over-
all picture. The present report is illustrative only, embody-
ing fragmentary evidence derived principally from questionnaires
mailed, to certain industry representatives (**) and from personal
interviews.

(*) Sec, Appendix I, infra.

(**) See Appendix I, Infra.

(***)Those interviewed:

Lace Manufacturing : Hugo Schloss, American Lace Manufactur-
ers Association, November 8, 1935, Clement J. Driscoll,
. , American Lace Manufacturers Association and former Code
: • -Authority Executive of the' Lace and Schiffli Industries,
Molitor. of North American Lace Conroany, Giebel of Thomas
Wilson and Company,- Nimkoff of Acme Textile Company,
December 9 to 21, inc., 1935, by ?. A. Fitch.

Nottingham Lace Curtain : W. J. Parker, and Digginson,
Executive officers of the National Association of Lace
Manufacturers, December 1?, 1935, by A. C. Johnston.

., Jewelry : W. H. Blake, Associate Secretary, New England Man-
ufacturing Jewelers' and Silversmiths' Association, Mr.
Rollings, of the Rhode Island School of Design, Mr. Edward
Otis, Inc., Mr. E. E. Weller, E. E. Weller Co., Mr. Gold-
stein, Goldstein-Poland Co., Mr. R. J. White, J. J. White
Co., Mr. King, C. G. King Co., Mr. C. Sorrentine, .Uneas Mfg.,
Co., Mr. F. A. Ballou, Sr. ,3. A. Ballou & Co.,' Inc., Mr.
Archibald Silverman, Silverman Pros., Mr. Carl Rosehberger,
Cohn & Rosenberger, Inc.;, and Mr. Krussman, Trifari, Krussman
and Fisher,, by A. C. Johnston,. December 17 to .20, inc., 1935.

Wall Paper: W. L. Carver, Secretary of the' Wall Paper In-
stitute, and R. H. Neilson, Fresident, Straham Co., New
York, December 13 and 16, 1935, respectively, ~by A." C. John-
ston.

Ladies Handbag; Messrs. Borkowitz and Mittenthal of National
Authority of Handbag Manufacturers, J. Moss of Enterprise

(Continued on next page)
9746

-14N

(***) Cont'd.

Accessories, Inc.,- Goldsmith of Goldsmith Bros.-, Inc., Lewis
of Nat Lewis Parses, Inc., by F. A. Fitch, December 9 to 21,
inc. , 1935.

Silk Textiles: Irene L. Blunt, Secretary, National Federation
of Textiles, Inc. ,- and Director of the Industrial Design
Registration Bureau, E. Irving Handson, H»- Mallinson & Co.,
W. Wilhelm Co., Mr. Horowitz, Horowitz & Brandenburg, H. E<
Stehli, Stehli Silks Corp., A. E. Wullschleger, Bernard
Weller, Lenora Silk Corp., and Mr. Cohn, Yale Fabrics Corp.,
by F. A. Fitch and A. C. Johnston, December 9 to 21, inc. ,
1935,

Toy and Playthings; J. L. Fri, Managing Director, Toy Man-
ufacturers of the U.S.A., Messrs. Wolf and White, Woolnough
Co., Messrsc Tannenbaum and Reiner, Zoo Novelty Co., Mr.
Swedlin, Gund Manufacturing Co. , Mr. Bauman, Alexander Doll
Co., Mr. Edgar Rosenthal, Rosenthal Co., Mr. Stein, Eff and
Bee Tcy Co., and Mr. Lehman, E. Goldberger. & Co. Of this
grouri, three manufacturers stuffed toys, three dolls, and
one manufactures marbles. New York, December 9 to 21, inc. ,
1935, by A. C. Johnston*

Millinery : Max Meyer, and Joseph Lipshie, former Code Author-
ity Executive Officers. Josexih Heifer of Eastern Women's Head-
wear Group, Inc<, , (popular-ur'iced group), J. A. Stein of
Fisher Millinery, Karo of L. & B. Karo , Stern of Croyden Hats,
Hyland, (Millinery Quality Guild), Maxwell of Knox Hat Co.,
Guiffrida of Jay Gee Hat Co* , all millinery manufacturers;
and Buckman of the Block-making group, by F. A. Fitch, New
York, December 9 to 21, inc., 1935.

Dress Manufacturing: John Keating, former Councel for the
Dress Code Authority,' Alfred Post, Executive Director of the
Fashion Originators Guild, Bertram Reinitz, publicity man for
all factions of the Dress Industry, Mr. Feldblura, Impartial
Chairman of the Dress Industry, Morris Kolchin, President of
the Affiliated Dress Manufacturing Association, Dr. Tepper,
'of the. Research Bureau of the International Ladies Garment
Workers Union, Mr^ Zahn, Chairman of the Dress Creators League
of America, Mr. Oxhorn of the United Dress Manufacturers As-
sociation (contractors), Barney Hirsch of Melba Dress Co.,
($4,75- group), Herbert Bergdall, of the Associated Merchandis-
ing Corp. (higher-priced), Irving Daum, of Felix Lillienthal,
Inc., Merchandisers, (medium and low-priced), and Controller
of Mangel, Inc., Merchandisers > (low and chain store), week
of November 4 to 9, inc., 1935, and with Mr. Goodman of
Bergd-,rf Goodman, Mr. Sheffield of B-. Alt man Co., December
17 and 21, 1935, by F. A. Fitch.

9746

-15-

Transcripts of hearings held in connection with "NBA Codes, and
other NBA file materials supplement the above sources of informa-
tion.

Certain similar features apoear in the eleven industries
chosen, insofar as they are affected by design and the copying of
design. Groupings may be made with respect to both similarity of
design problems and industrial structure. In the industries
studied there is no auantitative evidence of the exact scope of the
copying practiced, or of its final significance. In this study,
from the material available, inferences only may be drawn, which
though not conclusive, are indicative of the types of problems in-
volved, possible effects, and direction in which future study would
be valuable.

I. NATURE OF INDUSTRIES

Nine of the industries studied are composed of various
divisions, differentiated by types of -orocesses engaged in, tyoes
of products made, or price. In the Toy and Playthings Industry
separate groups are engaged in the manufacture' of specific kinds'
of toys, such as "dolls" , "soft stuffed toys", "mechanical toys",
or "scientific toys", (*) each division, normally confining its
activities to fairly definite lines of products.

In the Medium and Low Priced Jewelry Industry, groups are
also defined by classes of products made, such as chains, metal
findings, school and college jewelry, ornaments for women's ap-
parel, buckles, clasps, etc., religious goods, imitation pearls
and stones, costume jewelry, men's jewelry, fraternal and emb-
lematic jewelry, collar outtons, compacts, vanities, etc. In ad-
dition, there are 'several divisions of special groups such as im-
porters of chatons, marcasites, imitation precious and' semi-pre-
cious stones, and manufacturers and jobbers for -syndicates. (**)

In the Furniture Manufacturing Industry, divisional groups
are based uoon tyoes of Droduc.ts, such as living room or bed room
suites,' upholstered furniture,, chairs, and others. Divisions are
also based upon' price, certain groups engaging in the making of
"low-priced", "medium" or "high-priced" furniture, although prac-
tically all types of articles are made in each of the latter class-
ifications. (***)

(*) Twenty-two independent industry grouos were granted representa-
tion on the Code Author i-ty for the Toy and Playthings Industry.
See Article VI, Section ? .of the Code for that industry, Codes of
Fair Competition, Volume II., -cage 353-.

(**) Bulletin from' Council of Jewelry and Allied Industries, Provi-
dence, R. I., to manufacturers, August 17, 1953. (in NBA Files)

(***) Transcript of "Hearing of October 9, 1933, pages- 6, 7, 42, 43,
44, and 300. (in NBA files, Transcript Library)

9746

-16-

In the Silk Textile industry, manufacturers , converters, com-
mission weavers and other distinct grouos appear. (*)

The Schiffli and Hand Machine Embroidery and Embroidery Thread
and Scallop Cutting industry, referred to as the Schiffli industry
herein, is comorised of five distinct classes of members, each de-
termined by type of product and method of production. (**)

The Dress, Millinery and Ladies' Handbag industries are char-
acterised by crystallised price brackets and their respective members
seldom oroduce merchandise other than within definite price range. (■***•)
For example, in the Dress industry, some groups engage in the man-
ufacture of party frocks or evening wear only, while others may
produce tailored garments. Women's garments and misses' &r Junior
misses' dresses are also generally made by separate groups of con-
cerns. (****)

The Lace Manufacturing industry is comprised of three classes
of concerns, based upon types of machinery used. These are the Levers,
Bobbinet and Mechlin groups. (*****)

The Wall Paper industry and the .Nottingham Lace Curtain industry
appear to be less diversified, though certain classifications may be
evident within the industry itself.

II. INDUSTRY ORGANIZATION, AS ■ IT INFLUENCES PIRACY

In the words of one manufacturer interviewed, (******) "they' 11
always copy in the industries where there .are lots of small concerns."
Recorded experiences (*******) f those attemoting to curb copying

(*) " The Silk Textile Industry "by W. C. Henderson, (in NRA files,
Preliminary Draft of Evidence Study No. 37, NRA Division of
Review, Seotember, 1935) .

(**) See Article II, Section (a) and (b) of the Code for the Schiffli
Industry, Codes of Fair Comoetiti on, Volume Vl.nage 133.

(***) Dress - Price levels vary from $2.12-1/2 each, wholesale,uo-
ward to $2. 87-1/2. $3.75, $4. 75, : $6.75, $8.75, $1C.75, '$12.50,
$16.50, $18.50, $22.5"), $29.00, $39.00, $49.00 and up. (in NRA
•files, Evidence Studies No. 9, pages 2 and 14).
Millinery - General knowledge of the industry, supported by data
contained in First Annual Report of the Code Authority, page
2. (in NRA files, Deputy's files, Folder: Statistics)
Lad i e s ' Handb ag - Memorandum in re: Prices (in NRA files,
Deputy's files, Folder: Memoranda).

(****) General knowledge of the industry. See Women's Wear Daily,
Fairchild Publications, New York.

(*****) ' Epitome of Facts (in NRA files, Deputy's files, Folder: Trade
Practice Complaints Committee). .' .

(******) , Interview , Toy and Playthings industry member, loc . cit . note

p.' 14 supra,
(*******) See CnaiDter vlf i n f ra .

9746

-17-

indicatb that control,' by private, means at least, is comparative-
ly unsuccessful without full industrial cooperation. The relative
importance of individual concerns and the degree to which the in-
dustry members have a common interest and purpose appear to re-
flect the degree to which copying is practiced.

In the Schiffli, Millinery and Ladies Handbag industries units
are small and highly competitive. (**) In the Dress industry, the
relative size of establishments is not perceptible from the material
submitted, though the impression has been given that many are small
and that competition is extremely severe, particularly among con-
tractors. (***) in the Toy and Pla2^things industry statements made
relative to statistical data, indicate the existence of small unit
production. (****) in the Schiffli, Millinery and Tress industries,
there is aDuarent a lack of firm central organization and of uni-
formity of opinion.

(*) See Chapter VI, infra.

(**) Sc hiffl i- Of the 500 industry units, 68fo are. one, two .and three
machine units. Conroetition between them is extremely severe.
( Transcrj-ot cf Hearing , February 11, 1935,. in NBA files, Trans-
cript Library, and interview, loc. cit. note p. 13 supra.
Millinery - T ranscript .of Hearing , June 4, 1934, pages 7-8. 'in
NBA files, Transcrint Library)

Ladies Handbag - Based on study of NBA files, -oarticularly
statements in re: migration of industry to out 1 "ing districts;
address by Chairman of Code Authority (in NBA files, Deputy's
files,. Folder: Amendments., February 28, Hearing.) and Memoran-
dum, dated January 21, 1935, frcm Coonley to Harriman (in NBA
files, deputy' s files, Folder: Memoranda).

(***) Dress'- Interviews, loc . cit . note p. 14 infra.

(****) Toy and Pl ay things -"No figure can remain accurate for any

length of time, due to the existence of small concerns which
go in and out of business and failure of small concerns to
re-corf ! - Statements of J. L. Fri, of the Association, to Major
Paddock. (in NBA files, Volume "A", Central Record files).

(*****) Schiffl i - General stvidy of NBA files.

Milliner y - 16 separate groups and interests Bought represen-
tation on the Code Authority - See Article VI, Section 2, Amend-
ments No. 2 of the Code for the Millinery Industry; the provis-
ion therein never became operative due to lack of unanimity of
opinion (See Letter of Transmittal, pages 11-15 of said Amend-
ments No. 2).

Dress - 6 associations were represented on the Code Authority,
representing several different interests, both geographic and
structural. Beoently a group of lower priced dress manufactur-
ers formed the Popular Priced Tress Manufacturers Association,
to 0"Ql)oso certain policies of other groups, principally the
Fashion Originator's Guild, a separate organization' formed for
style protective "Durt)oses. (gee Chapter VI, infra).

9746

-18-

In the Lace, and Nottingham Lace Curtain industries, membership is
small in numbers and well organized. (*) The Silk Textile industry,
though composed of numerous groups, appears to "be well organized
at least with respect to its sband on design protection in the
printed silk branch. (**) The Wall Paper industry is small in unit
numbers, (***)and together with the Jewelry and Furniture industries,
appears to be organized to a lesser degree. (****)

III. SIGNIFICANT INDUSTRY RELATIONSHIPS

Certain of the industries are dependent upon separate or aux-
iliary groups for major processes of production. The Silk Textile
industry, with respect to the printed silk branch, is supplemented by
the printers and engravers, who print the fabrics for the converters
and manufacturers. (*****) The Millinery industry is dependent upon
the blockmakers, who supply the blocks needed to produce the basic
line of the hat. (******)

(*) 41 and 11 members respectively, Interview , loc. cit . note
p. 13 supra.

(**) See Chapter VI, infra.

(***) 32 manufacturers, interview , loc . cit . note p. 14 supra.

(****) Wall Taper - 25 of the 32 are members of the Wall Paper In-
stitute and are located throughout the east and middle
west. The Institute itself has but recently been formed
(1935). Interview, loc . cit . note p. 14 supra.
Jewelry - Each division organized in some manner, and joint-
ly organized in 1935 under the Council of Jewelry and
Allied Industries. Interview , W. H. Blake, loc . cit . note
p. 13 supra. Diversity of products and interests, how-
ever, results in a lesser degree of unanimity of opinion.
Furniture - Diversity of classifications of producers noted
previously, indicates a diversity of interests.

(*****) Printers are purely a service group and are concerned only
with printing unfinished fabrics turned over to them by the
converters or others. In general they own none of the mat-
erial processed and sell no goods. See W. H. Dillingham's,
" The Textile Industry" , pp. 569-570. (Preliminary Draft,
Industries Studies Section, Division of Review, NRA, Dec-
ember 26, 1935).

(******) Interview , 5 members of the Millinery industry, 1 member of
the Blockmaking industry, loc . cit . note p 14 supra. Block-
makers are a separate and distinct group, servicing the
Millinery industry, who make blocks to order from sketches,
model hats, or specifications, and who can if required to
do so, offer deliveries within 24 hours of receipt of order.

9746

-19-

In the Dress Manufacturing industry the volume of production is done
by the contractors who finish the garments for the manufacturers or
jobbers from materials and trimmings furnished them by such whole-
salers. (*) In the Ladies' Handbag industry "small contractors"
are said to be appearing, who perform similar operations. (**)

In certain industries which require small investment for en-
try, a degree of "fly-by-night" operation apnears-notably in the
Millinery (***) and Dress (****) industries.

To some extent "fly-by-night" operators appear in the Jewelry
industry (*****) and the Toy and Playthings industry. (******)

IV. NATURE OF DESIGNS

Designs in five of the industries named, the Lace, Nottingham
Lace Curtain, Schiffli, Wall Paper and Silk Textile, have two main
characteristics. In the Wall Paper and Silk Textile groups, design
is primarily a matter of pattern and color, while in the Lace and
Schiffli groups, the element of fabric construction enters., In the
first group the design is imposed or imprinted upon the surface of
the fabric or paper by means of rollers, a separate roller being
used for each color. (*******) _

(*) Industry re-port , dated August 2, 1935, from Administration
Member Thomson to Director of Regional Office (in ERA file).
Contractors are mainly employed by those in the lower pric-
ed brackets of the industry in which the volume of produc-
tion occurs-. Interview , loc . cit . note p. 13 supra.

(**) Interviews , loc . cit . note p. 13 infra.

(***) Millinery - Transcript of Hearing of June 4, 1934, pages 7, 8,
"Conditions in Millinery Industry." (in NBA file, Transcript
Library) also Appendix IX, Preliminary Draft of Code History,
June, 1935).

(****) Dress - Transcript of Hearing, November 15, 1934, pages 66,67.
(in ERA files, Transcript Library), also interviews , loc. cit.
Note p.14 supra.

(*****) Respondents to Questionnaires (in NRA files, Design Piracy
Unit files, Folder: Medium and Low Priced Jewelry).

(******) Interviews , loc . cit . note p. 13 supra.

(*******) Interviews, loc. cit. note p. 13 infra. (See respective
industries).'

9746

-20-

In the latter group the design is, in a sense, a part of the fabric.
The. pattern of lace is ■ woven as the design is produced, and to-
gether with the fabric construction is an integral part of the
design. Of the two elements, some believe that the "effect" achieved
through fabric construction is of greater sales value than the
actual "pattern 11 * (*) The pattern of Schiffli embroidery is im-
posed upon the fabric by mechanical operation, but it is a definite
part of the finished fabric, affecting its general appearance with
respect to texture, weight,, etc. (■**)

Designs for Toys, Jewelry, Furniture, Ladies Handbag, Millinery
and Dresses are three dimensional, involving varying processes of
production, and a wider range of raw materials used. (***) The
products of all of these industries are highly diversified, includ-
ing toys of all descriptions, embroidered fabrics, laces, printed
rayons and silks, wall papers, jewelry of popular and medium price,
ladies handbags and nurses, furniture and wearing apparel. (****)
I n dividual variations and interpretations of designs in each of
these classifications offer a wide field for inventive and creative
talent.

V. FASHION Ii'JFLUENCES

Fashion trends, and attendant productive activities, in re-
lated groups, are inter-dependent. In the apparel and textile in-
dustries, harmony must be maintained. Dress, hat, handbag and

(*) Interview, loc. cit. note p. 13 supra; also see Proposed amend-
ment in re: Definition of "Fabric". (in IffiA files, Deputy's
files).

(**) In terview , Driscoll, loc . cit. note p. 13 supra.

(***) Toys - At least two distinct .types of toy novelties are worthy
of. special mention. One, the replicas of prominent persons,
fanciful characters, animals and articles of .lanufacture , such
as the "Shirley Temple" and "Dionne Quintuplet" dolls, "Lackey
'"ouse", toys that resemble animals, such as elephants, cats and
dogs, and trains, automobiles, houses, etc., which are duplica-
tions in miniatre of the real articles. In the second type ore
those of a mechanical nature, miniature sewing machines, boats,
automobile and trains with built-in motors, designed to appeal
to the adult as well a the child (for it -is recognized that
the adult purchases the toy) and toys which are manipulated by
strings to produce motion. Interviews , loc. c_it. note p. 14
supra.

Jewelry - The elements of design are apparent from a study of
the many articles produced. The same is true of the Dre ss ,
M illinery and Furnitu re industries. In all cases the design is
an embodiment of carefully chosen basic materials, and some or
all of such f ctors as carefully selected surface treatments,
inherent or imposed ornamentation, color, proportion, line,
weight, texture method of production, and many other elements,
both as related to each other and to the whole.
(****) See ncxt pase

9746

-21-

jewelry trends aim at a completed fashion ensemble. (*) Laces, printed
silks and embroideries must supplement or embellish the emsemble. In
all of these industries, fashions are seasonal, dependent basically
upon consumers needs and superficially upon whims and fancies dictated
by external influences, as expressed in popular tastes.

In the Lace and Schiffli industries, types of production are
limited by types of machinery employed. The acceptance of the products
of these industries is therefore largely dependent upon fashion trends
in consuming industries. (**)

In the Furniture, Wall Paper and certain branches of the Lace in-
dustries , (***) fashions are somewhat determined by trends in architect-
ure and interior decoration. In the latter group, though new designs
are introduced at seasonal intervals, fashions are more lasting and less
susceptible to change than in the more highly styled industries. (****J

(** *) Continued - See Articles I of the Codes of Fair Competition

for the respective industries for more complete enumeration of
the products covered.

(*) '.Vitness the Rennaisaance influence in dresses, hats, jewelry, etc.,
of the fall end "inter season", 1935, growing from the Italian
Rennaissance Exposition of the previous year; expressed in "stained
glass" colors, Rennaissance lines' and jewelled ornaments, all ex-
pressions of tint -eriod adapted to modern usage.

(**) The machines used, the Barmen, ' Lerers or Lever-Go-Through, Mech-
lin and Nottingham machines in the' 'Lace industries, and the
Schiffli machines in the industry of that name, are imported.
Slight mechanical development has ta':en. place in years with res-
pect to them ( interview , loc . cit . note p. 'supra') and though
innumerable "designs" may be produced, the product of each is
essentially distinctive, resulting in a Lerprs-type lace, a
Schiff li-type embroidery or otner, easily recognized by those
familiar with the trades. A decrease in the demand of a par-
ticular tyae of product naturally causes a" decrease in the in-
dustry's activity, regardless of the- fineness of a particular
"design".

(***) The Nottingham Lace Curtain industry, and the coarser products
of the Levers and Barmen lace groups, sometimes used for up-
holstery purposes and edgings of fabric curtains, etc. (Epitome
of Facts, in 1'RA files, Deputy's Files, Polder: Trade Practice
Complaints Committee).

(****) Furniture - Items of furniture andof interior decoration re-
present greater investments, and are of more lasting nature
than items of apparel, and their fashion cycles are more ex-
tended. Two respondents to questionnaires stated that designs,
reflecting fashions, retain their particular commercial value
for as l^ang as from 2 to 20 yeafcs. (l n itRA files, Design
Piracy Unit file, Folder; Furniture).

Wall Paper - It has been stated that individual designs may
remain popular for from 2 to 15 pears. ( interview , loc . cit .
note p. 13 supra.)

Lace - Obviously those laces usee" for upholstery and interior
decorative purposes would follow similarly lengthened trend.

9746

The Toy and Playthings industry 'stands alone, its fashions in-
fluenced by dominant personalities, popular caricatures and mechanical
inventions. (*)

In all, the appearance as r'etermined by the "esign is of sales
importance, varying in de, ree with the er.tent of styling in the in-
dustry. In the apparel industries it is said to be the chief sales
factor (**) while in others — the Toy, for example — the appeal of
mechanical operation and notion is apparently a factor of equal
weight (***)

VI.. DESIGNING

It appears to be genera-lly agreed that most present-day domestic
designs, with the possible exception of those used in the Toy Industry,
are based on preexisting development, the designs of foreign countries,
particularly Trance, (****) period art, or designs previously used
domestically, and that little actual origination exists today other

(*) Dominant ideals and events are r f Toe lid, but generally fashion
influences are remote. Attractive items are -ourchased purely
because they are attractive. I nterview , loc. cit. note p. 13 Supra,

(*■*) Dres s - interviews , loc. Cit. note p. 14 supra; also Transcript
of Hearing, ITovember 15, 1934, pages 22, 34, 51, 123. (in HRA
files, Transcript Library),

Millinery - .interview s . loc . cit. note p. 14 supra; also see
Unpublished Report of the Code Authority. (in HRA files, Appen-
dix IX, Preliminary .raft of Code History, June 1935.)
Ladies Kandh ^y;- - "A manufacturer may suffer a severe loss if his
line is poorly styled whether with respect to color, design, or
material, regardless 'of the intrinsic value of the bag". (Memo-
randum, in re: prices, in "IRA files, Deputy's Piles, Folder:
Memoranda) .

Jewelry - " . . . . Creating ne ,r designs . . is the life blood of
our industry, as it is imperative that we follow the style trends
in every particular. 11 (Respondent to questionnaires, in HRA
files, Design Piracy Unit files, Polder: Jewelry).

(***) Int erview s , l'oc . cit. note p. 13 supra.

(****) Medium an d Low Priced Jewelry - Formerly most designs were based
upon or copied from designs of precious jewelry articles or from
designs produced in foreign countries, particularly France.
Recent economic conditions have caused something of a cessation
of activity in the precious jewelry field, resulting in a tend-
ency to develop individual designs and decreased reliance on
foreign trends. I nterview loc. cit. note p. 13 supra.
Ladies Handbag - Most designs are copies or adaptions of imported
Parisian bags. Interviews , loc. cit. note p. supra.
Dre ss and Millinery - Many concerns send designers abrvl period-
ically to view showings of the Haute Couture, and to purchase
models therefrom for inspiration. Other souces of design, par-
ticularly in the Dress industry are foreign and domestic fashion
publications and sketch services, art exhibits, museums, etc.,

(Continued)

9746

-23-

than that derived from new variations of old designs. It is largely
to that "new variation" that manufacturers refer when claiming "origin-
ality", as expressed in their designs. (*)

A varying degree of designing is exercised in the particular in-
dustries studied. In the apparel industries which tire unprotected or
ineffectively irotected by private controls, "creative" designing is
generally attributed to a relatively small group in each industry,
principally to -those larger establishments and leading manufacturers
engaged in the r -.anui'ac ture of higher priced products. In others the
price chassifications of firms enga.ged in designing is less easily
determined. (**) however,' there appear to be groups of smaller concerns

(****) Continued - and in these industries, interesting weaves, de-
signs and textures developed in associated industries s^ch as
the textile and lace groups, and fresh effects achieved by the
trimming industries, may serve as inspiration in that they may
particularly lend themselves to or suggest, certain manipula-
tions and treatments having new appeal. (General knowledge of
the i ndus tries).

Lace - most designs used in the Lace industry are adaptions or
copies of foreign designs. Intervie w, loc. cit. note p. supra.
Silk Textile - designs developed in France have a strong in-
fluence over those used in America, and some are used directly
by American concerns. (i nterviews , loc. cit. note p. supra.)
A tremendous advance in American designing since 1922 is in-
dicated, however, in contrast to the tendency in previous days
of looking almost entirely to European designs for leadership
as described by Richards . C. R. , Art in Industry , page 50.
(hew York; McMillan Co. 1936).

Furniture - Architectural and interior decoration trends, often
drawn from historic periods appeal; to be the chief influences.

(*) Interviews , loc. cit. note p. 13 supra; also see "originality"
as interprctated by the various industries, and Registration
Bureaus engaged in protective efforts, Chapters V and VI, infra.

(**) Dress - Designing principally carried on by those engaged in
producing garments wholesaling at $10.75 each or above. (See
Fashion Originators Guild, Chapter VI, infra).
Millinery - Those engaged in designing are variously described
as 50 in unit nvmbers, 10$ of the industry, and 40$ of the in-
dustry, by industry members interviewed, loc . cit. note p. 14
supra. Those not engaged in "creative" designing are believed
(by representatives interviewed) to be operating principally in
the $24.00 per dozen or less brackets, in which levels approx-
imately 88$ of all millinery is produced. First Annual Report
of the Code Authority, page 21. (in 1TRA files, Deputy's files,
Folder; -Statistics )

L adies ha n dbag - Those engaged in designing are described fey
individuals interviewed, (loc. cit. note p. 13 supra.) as "few",
and "probably not more than 5$" , engaged in the production nf
higher priced merchandise-.

Jewelry - The proportion of the industry engaged in creative

(Continued)

9746

— ?4—
... •" <c±—

concerns and manufacturers in certain industries who are developing
their oym designs successfully. (*) The number of designs introduced
in any given season in each of the industries studied is inde terminable
from the material available, though registration totals of operative
protective Bureaus in some may be representative of the number con-
sidered worthy of protection. In the Dress Manufacturing Industry,
a total of 7,939 designs wore accepted for registration by the Fashion
Originators Guild during the months of September, October and November,
1935, (**) In the Silk Textile industry 15,190 designs, including new
designs, renewals and "treated staples" were registered during 1935 as
of December >-■.(***) In the Jewelry industry, "over 3,100" designs v/ere
registered (****) in the Nottingham Lace Curtain. Industry 40 "claimed

(**) (Continued) designing or the price classification of such concerns
is indeterminable from the evidence submitted.. It is stated
by one that not more "than 6 or 3" manufacturers in the Provid-
ence region (the industrial center) are "creative 1 ' designers,
and that in all only about 50^ of the members of the Council
did sufficient designing to seek protection through the Bureau
established under 1IEA Code. The others engaged in the manu-
facture of copied designs or designs of standardized appearance.
The relative percentage engaged in the manufacture of each is
not known. Interview loc . cit . note p. 13 supra. The price
classification of these firms was not indicated.
Wall Paper - percentage of those designing is again indetermin-
' able from -the evidence submitted. It has been said., however,
that only five or six concerns "do a lot of origination", and
also that a. "few" concerns originate, a "few" obtain designs
only.,through copying, and the 'majority both copy and originate.
Inte'r'view loc . cit. note p. 13 , supra.

Toy and Playthings - No date lias been submitted showing the
relative percenta, e of firms engaged in creative work, or the
price classification in which designing is most generally
practiced.

Silk Textile and Lac e industries - Creative work carried on
one rally; See Chapter VI, infra.
" Schiff li - About 10 designers employed, by the industry; interview.
loc. cit. note p. 13 supra.

Furniture - Evidence submitted is insufficient to determine price
classification or. percenta e of firms "designing".

(*) Notably, the Dr ess industr y. See Chapter VI, in -re: "Protective
Affiliate" members of the Fashion Originators Guild, who origin-
ate i arments to wholesale at $6.75, $7.75 and $8.75. In addition,
a small group, makers of $4.75 garments, are said to be creating
their own designs. Women's Wear Daily , October 50, November 7
and 3, 1935.

(**) Women's Wear Daily , December 11, 1935.

(***) Taken from records of the Registration Bureau, interview loc.
cit. note p. 13 supra,

(****) Interview, Rollings, cit . loc . note p. 13 supra..

9746

-25-

new designs" were registered with the Association in 1935, (*) yet,
in reply to a questionnaire one member of the industry stated that he
had introduced 350 new designs to the trade during 1934 (**)

In other industries, statements (***) of the number of designs
introduced by individual manufacturers are of some significance and
are as follows:

Industry Eot&l Ho. res-
ponding to in-
quiry

Lace

Furniture
Toy & Play-
things
Wall Paper

2
1

Millinery 8
Ladies Handbag 5

.So ti-

illoi of

Uo. per year

Percentage

ne w

designs

introduced ^oy

of total

per

year

respective

sales re-

respondents

presented,
by respect-
ive res-
pondents.

380

(Approx)

120 during
"past" year;
average of

30
10

2 per day

10 20

10$ 80$
50$

to 100

25,50 to 75

30$, '50 to 75

15,00;

(10,000

designs

carried

over from

yr. to yr.

" Inrni arable"
Ho records i:ept
Ha records kept;
C Oil t i nua 1 1 y r e-
plenishing lines.

(*) Interview , loc. cit. note p. 13 supra.

(**) Respondent to questionnaire. (in iIRA files, Design Piracy
Unit files, Nottingham Lace Curtain).

(***} In IIRA files, Design Piracy Unit files, "olders; for respective

industries

9746

-26-

The designs used are obtained in severn.l ways; by the employment
of designers and stylists, by the purchasing of designs from studies,
by free lance artists, from aoroad, by the purchase of Parisian and
domestic models, and through other channels. (*) Evidence submitted
is too meagre and too diversified to permit an estimate of tne pro-
portionate cost of designing to the total cost of production. Generally
it is said to involve comparatively large outlays for experimentation,
development and procuring of designs. (**)

(*) Principally obtained by:

Dress - Designers, stylists, sketch services, purclia.se of models,
domestic and imported

Millinery - Designers, stylists, purchase of models, imported

Silk Textile - Designers, free lance artists, design studios,
imported

Lac e - Designers, "draftsmen", imported

l adies Handbag - Designers, "pattern makers" imported

Jewelry - Designers

Furniture - Designers

Wall P aper - Designers

Toy and Pla ythings - Designers, "girl in the plant", "executive
staff" "salesmen on the road", "rights to reproduce per-
sonalities and copyrighted and patented articles are
purchased"

Schiifli - Designers

(Based on expressed opinions recorded in 1TRA files , Design Piracy

Unit files, Polders for the respective industries)

(**) Opinions and data submitted with respect to the cost of design
development in certain industries are as follows?,
Dress - about 5tfo of the toal cost. ( interview , Post, loc . pit.

note p. 13supra.
Nottingham Lace Curtain - 350 designs cost $53,228,07; one

respondent to questionnaires.
Silk Textil e - Designs purchased from studios, or on free lance

basis cost from $35 to $70 each, exclusive of the cost

of development. Five respondents to interview and

questionnaires.
J ewelry - 2,978 designs cost $131,680. Six respondents to

quentionnaires .

Furniture - 30 designs cost $40,600; two respondents to questionnaires
Toy and Play thi ngs - 10 designs 'cost $2,450; one respndent to question-
naire. (Opinions recorded in NBA files. Design Piracy Unit Files.
Folders for respective industries).

-27-

VII. COPYISTS AFD THEIR METHODS.

In contrast to those engaged in creative manufacture are the
copyists who do little if any creative work. This group is conposed
principal^ of those engaged in the production of lower and popular
priced merchandise. In the aooarel industries copying appears to he
done largely ty the groups producing the greatest volume, (*) covering
as high as 88)0 (**) of the total production of the Millinery industry,
and from 70fo to 80fo of the total production of the dress industry, (***)

The classification of groups or concerns responsible for copying
in other industries is more difficult, though indications are that
here also the greatest degree of copying is carried on "by the pro-
ducers of lower priced merchandise. (****)

(*) Interviews , loc. cit . note pp. 13 „ 14 supra.

(**) Based on data contained in First Annual Report of the Code

Authority (In 1TPA files, Deputy files, Folder: Statistics).

(***) Interviews , Keating, Zahn, Daum, Reinitz and Hirsch, loc . cit .
note p, 13 supra.

(****) Copyists specifically mentioned:

Ladies' Handbag - "Small contractors," interview , loc . cit .

note p. 13 supra.

Schiffli - "Fewer small scale operators, " Transcript of Hearing
Sept. 11, 1933, page 73. (in FRA files, Transcript
Library/ - ).

Jewelry - "Small concerns," "fly-by-night" operators,

"hole-in-wall" shops, suppliers of chain stores - 11

respondents to inquiry;

"one or two" large concerns copy, - 1 respondent.

Toy and Playthings - Importers of Japanese-made copies,
chief annoyance. Report of Administration member
Bateman to Decker, dated Dec. 7, 1934. (In FRA files,
Deputy's files, Folder #1)

Also 2 respondents to questionnaires, - "small concerns;"
one respondent "all classes of concerns copy. "

Furniture - "All kinds" - one respondent to questionnaire.

wall Paper - "Both large and small concerns." One respondent
to questionnaire.

Fottingham Lace - Foreign made copies, particularly imported

from Scotland, France and Germany, chief cause of concern.
Interview , loc . cit . note p. 13 supra, also one re-
spondent to questionnaire,

(Opinions recorded in FRA files, Design Piracy Unit file,
Folders for the respective industries)

9746

-28-

Small manuf acturers , "fly-b^-night" operators and snail con-
tractors, appear to lead in direct copying. rims in these
classifications cite:: p-orcliase desirable designs at retail upon
early showings ard procure orders Tor reproductions thereof. They
thereupon engage in volume production, - invariably, it is said
at low ccst — with no designing expense except the amount paid
for the retail purchase, {*)

Often even the latter expense is saved. The aot copyist may
merely glance at the item displayed in stores or windows, pictured
in advertisements, worn at fashion shows or glimpsed in a competitor's
pie:.:, and make close reproductions thereof. (**) In the Millinery
industry it is said (***) that the -copyist often merely clips the
advertisement from the paper and inscribes such notations as "our
price $5.00," and nails it to his clients, whereas the original
advertised model may have been priced at 512.50 or -18.00.

Pressure is sometimes put upon-the less- firmly established
concerns b~ r customers of the high style houses. It is asserted that
the buyers of retail establishments and representatives of syndicates
often induce the copying of ' sample designs purchased from style
houses for the filling of volume orders at lower cost. (****)

(*) Industries in which this method was specifically mentioned:

I r ess - Interviews - one instance cited in which a producer of
.. "c dresses paid $76,000 for designs, which he

purchased at retail for copying purposes, (Period

covered not indicated)
till liner;/ - Inter view - it was stated that one leading New Von:

De art lent store purchases 6 dozen extra models of each

hat advertised, to 'care for the demand of manufacturers

who surreptitiously send representatives to purchase

them for copying purposes.
Jewel:-: " Interview , generally stated.
( All interviews - see loc . cit . note pp. 13, 14 supra, for

respective industries)

(**) Interviews , loc , cit , note p. 13 supra.

(***] Interview , Hyland, loc . cit . note p. 13 supra.

(****) Industries in'which these practices have been specifically

indicated:

Iress - Iranscrimt Of Hearing , Eov, 15, 1934, pps. 35— 3G,

supported by interviews. Particular emphasis is laid upon
the fact that the' contractor is employed to reproduce the
volume orders, as well as the manufacturer in the lower-
priced brackets.

1'illinery - See Unpublished Renorts of the Code Authorit" . (in
11BA files, Preliminary Draft of Code History, Appendices
IX, XIII, XIV, June 1935) in which s:mdicates distrib-
uting at least 43l> of all millinery sold at retail, are
said to be chiefly engaged in the practice. Also Uomen's
(Footnote continued on follow ge)

-29-

The 'Dress, Millinery or other industry copyist may exert
pressure upon smaller firms supplying basic materials to produce
copies of the materials used in the original designs. (*)

Other less open practices are said to "be the "bribing of com-
petitors' employees to describe design activities in their plants or
in sor.ie cases even to show a new design development in some su-
reptitious manner; or the placing of "spies" in a competitor's fac-
tory for the purpose of observing and copying the most salable items. (**)

In all of the industries studied, it was invariably stated
that the "copy" appeared at retail at a lower price. (***)

(****) Wear Daily of Dae. 24, 1935, "Chance for Department Stores to
Cont'd Feature Fine Millinery, " by I '.. D. C. Crawford, based upon inter-
view with L. G. Heyerson, in part: "... First and foremost
of these difficulties arc' "the concealed syndicates "who "Tent
departments in department stores and sell their merchandise
without any control or guidance from the stores under whose
names this selling is conducted. . . A few hats are purchased
with the names of New York wholesale-retailer houses and used
for window dressing. But the bulk of the merchandise is mass
prodvetion; copies from other designs and made up by organiza-
tions who do not create but who only copy . . . ."
Ladies Handba g - Interviews . Loc. cit . note p. 15 supra.
Schiffli - Transcript of Hearing , September 11, 'JT933, pages

196-197 (In HEA files, Transcript Library)
Jewelry - Interviews - the case of the chain tie holder was

•cited by one manufacturer. When the item was first placed
on the market it was said it met with such popular ap-
proval that purchasers declined to buy airy other design.
Buyers and jobbers immediately offered orders to their
usual manufacturers and demanded that they be filled;
the economic pressure was such that manufacturers did
fill the orders over the protests of the concern which
had originally introduced the item by copying or closely
simulating the original design.

(*) Dress - see letter from Elmer Trnatinger, St. Petersburg, Fla.
to Women's Wear Daily , N w York, and quoted by the latter
in the issue of December 26, 1935. "Duplication of
Materials Called Offset to Protection of Styles by
Manufacturers. "

(**) Interviews , loc. cit. note pp. 13,14 supra.

(***) Interviews with respective industry representatives, loc . cit .
note pp. 113,141 supra, also Furniture , Report on Hearing, by
Whitney of HRA Industrial Board, dated Oct. 12, 1933. (In ITRA
files, Industrial Advisory Board files) and Schiffli. Trans cr rot
of Hearing of February 11, 1935 pages 102-104, 108.
(In HEA files, Transcript Library).

9746

-30-r.

Certain industries offer regular advantages to the copyists. In
the Toy and Playthings industry, the Toy Fair is held annually to
inform "buyers of the lines available. This affords a ready means to
the copyists to observe consumer acceptance of particular designs. (*)
In the Furniture industry, both major and minor showings are held
semi-annually to determine "buyers' acceptances, which also provide
the copyists with opportunity to select the most salable designs
for copying. (•**) Many manufacturers, it is said, do not begin to
make cuttings until they have learned how acceptable to the trade
are the patterns and designs shown. (***)

In the Millinery industry, manufacturers are dependent upon
blocknakers who service the entire trade and from whom copyists may
procure blocks of any desirable design. (****)

In the Dress industry, the contractors, of whom it has been
said, (*****) there are far too many in the field, are available to
engage in volume production on short notice, enabling the copyist to
introduce replicas within 24 hours after the introduction of the
original garment,, (******) Furthermore the contractor upon securing
an order for an attractive design from one manufacturer, may solicit
orders on that design from other manufacturers, thus causing almost
simultaneous production of the same item by numerous concerns. (*******)

(*) Volume "A", (in HRA files, Central Record files), supported
by interviews , loc. cit. note p. 13 supra.

(**) Report on Hearing, by Whitney, HRA Industrial Advisory

Board , dated October 12, 1933. (In HRA files, Industrial
Advisory Board files).

(***) id.

(****) See page 14 supra,

(****#) Code History , pages 6-7. (In HRA files') suoported by

interviews loc . Git, note p. IS supra.

(******) interviews, loc . cit. note p. 13 supra.

[ Sp If! Sp SjS -T" ■'p ^1* ] Tfi

9746

-31-

VIII. EXT12TT OF COPYI1IC-.

Beyond general indications that copyists far outweigh creators
"both in unit numbers and volume of production in the industries
studied, with the exception of those protected "by private controls,
there appears to "be no definite evidence as to the actual scope of
copying. Statements have been made with respect to certain indus-
tries that the practice is "widespread, " this applying particularly
to the Millinery, Ladies' Handbag and Schiffli industries. (*)

In the Dress industry, it is said that practically all of the
garuents wholesaling below $6.75 are "copies," while in the brackets
above that figure the practice has been almost entirely eliminated, (**)

In the Furniture industry, respondents to the questionnaire on
Design Protection expressed widely divergent views. (***)

In the Silk Textile and Lace industries mutual agreements
between industry members in related groups have rendered the prac-
tice almost non-existent, (****) though isolated cases of piracy have
been related. (*****)

In the Toy and Playthings industry, copies reproduced in Japan
and imported are the chief cause of concern, (******) though some
copying is indulged in by those dealing entirely in domestic
merchandise. (*******)

(*) Millinery - Transcript of Hearing , June 4, 1934, pages 7-3.

(In ERA files, Transcript Library). Also un-
published report of Code Authority. (In ERA
files, Appendix VII, Preliminary Draft of Code
History, June, 1935).
Ladies ' Handbag - Interviews , . loc . cit_. note p., 13 supra.
Schiffli - Transcript of Hearing , February 11, 1935, page 19.
(in EPA files, Transcript Library).

(**) Interviews, loc . cit . note p. 13supra, also see Chapter VI,
infra.

(***) Two respondents to questionnaire; one stated that piracy
was prevalent in the industry, the other that it was not.
(in ERA files, Design Piracy .files, Folder: Furniture).

(****) . See Chapter VI infra.

(***** ) Interviews , loc . cit . note pp. 13, 14 supra.

(******) Report of Administration Member Bateman to W. P. Decker,

dated Dec. 9, 1934, (in ERA files, Deputy's files, Folder #l),
supported by interviews loc . cit . note p. 13 supra.

(*******) Q ne re p resen tative stated: All "legitimate" concerns are
bothered by copying; two others believed copying was not
very prevalent because of the stigma attached, and one of
them stated that copying caused trouble only in local markets
because practiced by small concerns. Interview , loc . cit .

9746 note p. 13 supra.

-32-

In the Wall Paper industry divergent views have "been expressed
regarding the extent of copying. (*) Such special circumstances,
however, as more lasting styles, the number of so-called "bread-and-
butter" patterns carried "by all, and the mutual exchange of rollers
resulting in a seemingly unobjectionable degree of similarity of
design appear to render the problem of less' importance than in indus-
tries experiencing a more continual denand for novelty. (**)

In the Jewelry industry copying is held in general disrepute,
although the extent to which it is indulged in is undeterminable,
again because of the divergent views expressed. (***)

A. Examples of Piracy .

There follows a selection of specific examples of design piracy
in various industries.

1. Toy and Playthings.

(a) A set of circus animals, introduced to the trade in
the Spring of 1934, was copied and sold by a Japanese concern in the
Pall of the same year. Ho proceedings were instituted against the
alleged copyist. (****)

(*) Two respondents to questionnaire: one stated that piracy is
prevalent in the industry, and that 3 or 4 of his designs had
been copied in 1934; the other that there was "very little"
piracy carried on. One representative interviewed stated that
the practice was indulged in. (Opinions recorded in NRA
files, Design Piracy Unit files, Folder: Wall Paper)

(**) Interviews , loc . cit . note p. 13 supra.

(***) Of respondents to inquiry, both personal and through question-
naire, 9 stated that piracy was prevalent, 2 that "there was
not a whole lot" of copying today, and one that it was not a
matter of concern: "we have little trouble with copying . . .
we cover our trade thoroughly, and our customers frown upon . ,
exact copying of our merchandise. The style trend of wearing
apparel for both men and women is subject to frequent change,
especially in this country. All manufacturers . . . must be
allowed to follow this trend if the industry is to survive."
Opinions recorded. (in ERA files, Design Piracy Unit files,
Polder: Jewelry).

(****) Interview , loc . cit . note p. 13 supra.

9746

-33-

("b) A manufacturer of marbles had developed an all-trans-
parent composition container for mar Dies, which, he said, had brought
to him practically all of the chain-store "business for marbles one
year. He complained that a competitor had made up a marble container
of the same material, which differed from his only in that it had a
removable painted metal cap. (*)

(c) The manufacturer of the "Shirley Temple" doll, selling
at $2.C8 up, filed a complaint against a concern that produced a
doll having a face which resembled Shirley Temple. The latter doll
was abov_t the same size as the original, it was dressed similarly,
and it had a button inscribed with the trade name "Little Miss Movie, "(**)

2. Lace Manufacturing.

A specific illustration of copying was related (***), by one
manufacturer in the Lace industry, which appears to be typical of the
practice and its results. The case was an item of veiling which met
with popular approval and which was advertised and sold by two leading-
New York department stores at 87^ each. Resident buyers were sending
the seme design to stores throughout the country, purchased at the
same price, in expectation that it would be sold at the same price of
87(* each. The design was copied almost immediately and advertised
by a third big New York department store at 22^ each. All orders for
the original item were immediately cancelled. Production was stopped.
Thousands of pieces of the veiling already in production had to be
sold, at an approximate loss of $30,000. Department stores, retailing
the item at the higher price, also had to take markdowns to clear
their stocks. The theory behind the immediate cancellation of orders,
stoppage of production, and disposal of stocks was stated to be that
the consumer of "better" merchandise had little objection to having
an item shown in various stores if it were uniformly priced, but lost
all interest in an item which was on the market in quantity at a re-
duced price.

(*) id.

(**) Recorded Case, (In NBA files, Design Piracy Unit files, Folder:
Toy and Playthings).

(***) Interview , loc . cit , note p. 13 supra.

9746

3. Millinery, Dress and Ladies' Handbag Industries.

numerous cases, similar to that illustrative of the Lace
industry, were cited "by representatives of the apparel trades,
though the specific d.etails of each were not given. The apoearance
of the cop3'- at lower price in each instrnce, as in the Lace case,
was said to result in an immediate cessation of production and
retail sale of the item "by those handling it. (*)

4. Nottingham Lace Curtain Industry.

In this industry such difficulties as exist arise from foreign
competition. One respondent to a questionnaire (**) stated that his
item, a patented dinner cloth design, had been copied closely and
brought into the United States in "considerable quantity;" also that
two curtain designs, copied exactly in every detail, had appeared
on the market, and were being sold under his own pattern number.
One of the copies had been produced in England, and the other in
Scotland.

IX. SIGNIFICANCE OF COPYING.

Efforts to obtain a clear and impartial understanding of the
specific effects of piracy in the industries studied, through inter-
views with representatives of varying interests, were somewhat un-
successful in that those thought to be engaged in copying showed a
marked reluctance to discuss its resultant significance. Material
gleaned from such interviews therefore is limited in its import, but
points to certain broad factors which are said to be general in scope:
(a) a material shortening of the sales life and commercial value
of the design both to the producer and distributor, causing a need
of its replacement; (***) (b) an invariable appearance of the copy

(*) Interviews with representatives of the particular industries,
loc . cit . note p. 13 supra.

(**) (In 3 IRA. files, Design Piracy Unit files, Folder: Lace)

(***) Present day sales life of copied designs in certain industries:
Dress - It is said that a design, when copied, loses its sales
value to all concerned, within from 3 to 5 weeks of its
original introduction. Interviews .

i.iillinery - Designs said to be "killed" and rendered worthless
to individual producers within 24 hours, to the industry within
3 weeks. Uomen's hats and classic sports type hats are less
seriously affected than "high style" models. Interviews .
Ladies' Handbag - Sales life of designs said to be about 30
days to the industry as a whole, and of shorter duration to
the particular producer. Interview .

Jewelry - Designs copied "immediately, " and "within three
weeks, " killing sales of originals. Interview .

(Footnote continued on following page)

9746

-35-

in cheaper materials and poorer workmanship, (*) resulting in consumer
dissatisfaction with the design, and in some cases, even with the
industry product; (**) (c) A shift in the "basis of competition in
copied designs from the style element to the price element, (***)
with prices dictated by the lowest price group; (****) (&) an under-
mining of the stability and price structure of the industry in pro-
portion to the prevalence of piracy; (*****) and (e) a loss of the
incentive to create and invest in mechanical and other developments
in the interest of designing, said (******) to be largely resulting
in an almost complete dependence of some industries upon foreign
sources for designs. (*******)

(***) Wallpaper - 2 respondents to questionnaire stated that it
Cont'd was approximately a year before designs were copied.

Lace - Sales life of designs is estimated by one respondent

to questionnaire to be 6 months and by another to be

dependent upon the sales life of designs in which it is

embodied in its consuming industries.

Nottingham Lace Curtain - One respondent to questionnaire

stated that designs normally of value for one year, appeared

in copied form in about 26 weeks.

Toy and Playthings - One respondent to questionnaire stated

that designs, normally of sales value for from 6 months to

2 years, are copied and killed within 9 months.

Furniture - One respondent stated that designs normally of

value for from 4 weeks to 24 months, appeared on the market

in copied form within from 4 to 6 weeks.

Note: Fnile it appears to be generally agreed that copying
shortens the sales life of a given design, an exact estimate
of that shortening is impossible due to the inability of
estimating the possible consumer acceptance of the design if
it had not been copied, or of comparing that acceptance to
the acceptance of an uncopied design of approximate appeal.

(All interviews; loc. cit . note ppj.3 supra).
Questio nnaires, (in NBA files, Design Piracy Unit
files, Folders for the respective industries).

(*) Interviews , loc . cit . note pp. 13,14 Supra.

(**) Notably the Schiffli industry, of which it is said that the

industry's market has narrowed from a coverage of all branches
of the women's apparel trade, to the coverage of but two of
these branches. ( Transcripts of Hearings of Nov. 17, 1S53,
pages 84-86, and Feb. 11, 1P35, page 21, in NPA files,
Transcript Library).

(***) Interviews with representatives of industries studied, loc .
cit . note pp. 13,14 supra.

(****) id.

(*******) 7d7 Notably Ladies' Handbag industry.

9746

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In the Silk Textile and Lace industries, privately protected
fron the effects of piracy, the feeling appears to prevail that the
industries could not have attained their respective degrees of
growth and stability had that protection "been less effective. (*)

On the other hand, with respect to the copyists, the economic
position of the less firmly established concerns may render the
reproduction of popular designs necessary for the retention of those
customers upon whom they must depend for existence. This may be
true particularly in the case of those firms which supply the large
chain stores, syndicates and other retailers of medium and low priced
merchandise.

Farther, rapid style turnover undoubtedly causes increased
activity in the industry in which it occurs, and the continual need
of new designs does to some extent arouse inventive and creative
effort.

The economic desirability or undesirability of these aspects
is controversial, and from the evidence submitted no accurate
estimate of their significance may be ventured. Broadly, the issues
arising appear to be common to all the industries studied, A de-
tailed analysis of these issues, and of the many others ensuing, as
more fully p 'esented by the Dress Manufacturing industry during the
period of HRA regulation, is presented in the following chapter.

{*) id.

9746

-37-
CHAFTER III

PROBLEMS I1TCIDEITI TO THE CO/TROL OF BIS I Oil PIRACY

Important steps in the historical development cf design piracy as
well as aspects of the practice in several industies today have already
been described. Before undertaking a discussion of legal crntrols
now effective and others proposed or actually placed in operation
it is deemed important to indicate the lands of problems encountered —
the issues that are necessarily incident to any effort to curb the
copying of designs.

This task, however, if done exhaustively, would be almost endless.
The numerous Congressional hearings, hearings held in connection with
1IRA Codes and Federal Trade Commission Trade Practice Conferences,
published writings relating to the copying of designs, and bits of
evidence accumulated during the present study, properly collocated,
would disclose a great number of problems concerning which various
groups in interest are not agreed. But there are several factors,
aside from the limitations of time, which make such , an/ all-inclusive
treatment impractical: (1) . £o a large extent the content of hearings
and publications is repetitious.; Certain major issues are dwelt on
time and again, while other mcrd 1 illusory problems ©scape attention.
(2) The -nature of the evidence presented, usually piece-meal and
argumentative , is such that material from different hearings, for
example, cannot be combined to advantage. In no case, moreover, is
there sufficient conclusive evidence to forestall conjecture on
questions discussed. (3) The extensive hearing held by the NRA with
reference to the proposed design piracy clause for the Dress Code was
characterized by carefully planned presentations of the cases for and
against control and was attended by repre sentatives of numerous inter-
ests. The transcript of that hearing is the latest .comprehensive body
of material on design piracy.

Accordingly, this chanter employs the transcript of the hearing-
referred to as the source of most of the points mentioned. The design
protective provision-. there presented was sponsored by the Code Authtr-
ity for the Dress Manufacturing Industry, and varying interests and
groups were represented. Those favoring protection were fcr the most
part manufacturers of dresses wholesaling at 510.75 ea.ch and above,
and were supported by officials of the Dress Creators League of Amer-
ica and the Fashion Originators Guild of Americ , ..both of the latter be-
ing design protection organizations, concentrating their efforts in the
Dress industry in the $10.75 and up brackets. Officials of other estab-
lished protective agencies, the Industrial Design Registration Bureau of
the Silk Textile Industry, and the Bureau fcr Design Registration in the .
Jewelry industry, were also oresent. On the opposing side were repre-
sentatives of the Popular Priced Dress Manufacturers Associations, and
many manufacturers of medium and low-priced dresses.

Retail interests, representative of various types of distributive
outlets, and favoring both factions, were also witnesses.

Because of the nature of the 'attendance at the hearing it is to be
expected that the presentation of cases dealt primarily with the industry's

9746

-38-

point of view. Labor and consumer interests were urged not by repre-
sentatives of those interests but by industry groups who sought thus
to support their positions.

The order of presentation in the succeeding portions of this
chapter includes, first, a statment of the cases for and against design
protection, second, viewpoints expressed in particular industries, and
third, a statement of points of agreement and of the issues raised by
proposals for protection. (*)

I. THE DISPUTE OVER CONTROL

A . THE CASE AS PRESEN TED ET T LSSH EAVORING EESIGN PROTECTION .

Underlying the position of those who advocate the protection
of designs from copying are the vigorous assertions that design piracy is
an unethical practice, that it harms designers, manufacturers, dis-
tributors and consumers and the public at large, that existing legal
controls are inadequate, and that additional controls are workable and
would inure to the benefit of all interested groups. Merely to state
these propositions, however, is not sufficient.

1. The Question of Ethics.

The designer who develops a design and the concern which
puts it on the market, say those 'favoring protection, have made an in-
vestment, have made a market, and they should be accorded a property
right in their creation". They have created values and those values
should be protected. The law makes it a crime to steal a dress, it is
said, yet the appropriation of a design is just as reprehensible a theft, (**)
giving to those who cop-." an unfair and unpaid-for advantage. (***) • The
prevention of copying is only a matter of fair play. (****) It would
"present the majority fro:; riding on the tail of the minority" .(*****)

2 . The Manuf'E cturer's Interest

Aside from the purely ethical aspects of copying, it is
pointed out, the practice results in great economic losses and dis-

(*) Footnote references not otherwise designated are taken from the
transcript of the Dress Code hearing.

(**) Transcript of Hearing, Proposed Amendment, to the Code of Fair

Competition for the Dress Manufacturing Industry, Nov. 15, 1934 —
Zahn, Chairman, Dress Creators League, pp.31, 33 Rentner,
Chairman, Fashion Originators Guild, pp.116, 117, Keating

p. 74.

(***) Zahn, p. 32

(****) Farnum, Rpyal Bailey, Director, Rhode Island School of Design p. 298

(*****) Farnum, p. 296

9746

-39-

ac. vantages to manuf acturers . Those who develop original designs devote
a great deal of time, effort and money to the maintenance of designing
staffs or the purcha.se of designs. (*) Without protection against copy-
ing, these designs, if successful, are reproduced "by others in cheaper
goods immediately after their success becomes known, or anticipated(**)
If not, successful, they are a loss to the manufacturer anyhow.

The domestic copy of the successful design is invariably sold
at a lower price (***) - this because of several, reasons: (l) The
copyist has;jio costs of designing and fashion research to be considered
in determining price, and these costs, although relatively small when
apportioned over a volume of articles, are large items of overhead
expense to the manufacturer who originates his own designs (****). (2)
The copyist dees not have to take losses on unsuccessful designs and
make a price that will cover them, for he copies only successful designs
(*****). (3)' The, copyist usually employs cheap laoor, (******) underpaid
where not unionized, speeded-up if unionized, and produces articles made of
inferior materials (*******). .. i n the Dress Industry, he may bargain- with
contractors to procure the lowest production cost . (********) (4) The
copyist knows that he cannot get sales unless his '.rice is lower than
that of the manufacturer who introduced the article to the trade.

prom the sale cf a copy at a lower price there flow a number of
damaging consequences. The original articles are no longer salablc(*********)
because their design was the most important selling factor, and that is
available at a lower cost - also because consumers'- who patronize distint-
ive merchandise will not tolerate items which have been copied in cheaper
materials. (**********•) s'

(*) Keating, pp. 52, 73, Zahn, p. 31

(**) Zahn, p. 47

(***) Keating, p. 71, Blunt, p. 77

(****) Keating, pp. 52 7.0, Zahn, p. 52

(**+**) Zahn, p. 32.

(******) Keating, p. 26.

(********) K eating, pp. 58, 59.
(*********) Zsim, p. 37, Keating p. 25.
(**********) Zolm, p. 56, Ackerman,'p.'339

9746,

-40-

Unsalability means failure to realise a return on the investment in
the item (*) . Retailers return articles that have been copied. (**)

3ut the killing of the design, it is claimed, does not affect
onlv the first manufacturer. Others copy the copy, and the design
traverses the entire gamut of price ranges, from the top .to the
bottom, in a very short while. (***) It is even asserted by some
that none of those who produce it is able to earn a prof it . (****)

And the effect is not limited to the losses on the particular
article copied. Other designs must be created to t r l;e its placef*****)
which causes excessive expense for designing, changing lines, etc.

"They are knocked off so quickly and killed so quickly
we have to change every week." (******)

Experiences with copied merchandise lead distributors to take
only small ?jiiounts of new articles on first order , (*******) which
causes inability to adjust production and consumption and resultant
instability. (********)

Competition is placed purely on a price basis. (*******%*) Con-
cerns desir .._ to maintain quality standards and high labor standards
are forced out of business. (**********) All are hurt except the few
copyists who manage to profit by their practices . (***********) The
tendency, it is claimed, is for concerns accustomed to creative
work to discard that in favor of copying, as a simole matter of self
preservation. )************)

(*) Keating, p. 10, Zahn, p. 37.

(**) Pleating, pp. 10, 27, Zahn, p. 56

(***) Field Interview with J. Keating, B. Reinitz, and M. Kolchin New
York, Nov. 4-9, 1935.

(*****) bating, p. 25, Zahn, p. 37.
(******) Zahn, p. 42.
(*******) ZAHN, p. 42

(********) B i un t, p . 76, Ted Samuels, pp. 222, 223.
(*********) Keating, pp. 10, CO, 61, Rentner, p. 114.
(**********) Blunt, p . 76, Ted Samuels, pp.222, 323
(***********) Keating, p. 25, Rentner, pp. 115, 116.
(************) Kadetsky, ^. 279, 230, Samuels, p. 219.

9746

-41-

With protection, say the proponents of control, the situation would
be entirely different. The expenditures of money and effort involved
in creating -designs might be recovered, (*) and the real values in
appearance would be recognized. (**) A manufacturer could rely on the
merits of his products (***), anticipate requirements of the market
and maintain stabilized operations. (****) Ke would manufacture a given
artic. c far more extensively and actually reduce its price, for the
losses due to rapid killing of designs would be eliminated and the
cost of designing per article lessened. (*****.)

The protection of designs, it is said, would eliminate rapid design
changes, which in turn would lengthen the seasons of operations and
avoid wastes now resulting from changes (****** ,. yet designing of low-
priced merchandise would be encouraged and there would be many more
attractive articles on the market at the same time. (*******) This
would stimulate consumer demand, benefit industry as a whole, and avert
insolvencies (********) f yet at the seine time protect the "high style
house". (*********)

In reply to objections th t concerns accustomed to copying would
be forced out of business, the proponents of control answer that such
concerns can well afford designing departments or the purchase of designs
(**********) an ^ j moreover, it is even argued that the expenditures now
made for copying purposes arc sufficient to support creative work (***********
The copyists, it is stated, have the "brains" to undertake creative work
if they will. (***********) That it would be to their Lv .tape is said
to be shewn by examples of concerns which discarded conving in favor of
design creation and' found that the latter "paid" . (*************)

(*) Keating, p. 22, Rentner , pp. 116, 117/

(**) Keating, p. 73.

(***) Keating, pp. SO, SI.

(****) Zahn, o. 42.

(*****) K eating, p. 65.

(******) Zahn, p. 42, Samuels, p. 232.

(*******) zahn, pp. 47, 48,Keating, -^. 28, 73, Blunt, p. 83 Samuels, p. 225

(********) 2ahn j p . 30.

(*********) Blunt, ?• 81

(**********) Keating, p. 73.

(***********) Zahn, pp. 32, 50

(************) Meyers, p. 236.

(*************) Blunt, pp. Ik., 38, Eentner, pp. 116, 117.

9 746

-42-

3. The Distributor's Interest.

According to those who propose the prohibition of design piracy,
copying is a heavy "burden on distributors of merchandise. They are
constantly bothered by returns, mark-downs and losses due to the
obsolescence of merchandise that has been copied and sold of inferior
materials . (*)

Goods so copied, it is alleged, cannot be sold at a price sufficient
to cover th« >.r original cost. The retailer must either return them
to the marrcu..' cturer or mark down the price and sell them as distressed
merchandise, Moreover, he is inconvenienced by freouent returns of
articles to him by customers who have purchased an item believing it to
be distinctive and later found that the same design is on sale in
cheaper quality materials by other establishments^**)

Customer dissatisfaction is further stimulated by the lack of
variety of designs occasioned by copying. "The results in the nature of
things is that the goose that lays the golden e-zz is being killed", (***)
and the constant fear that new items will be copied immediately causes
a frantic race to put them on sale before a copy can appear, all resulting
in waste and disturbance for the retailer. (****)

On the other hand, if designs were protected a distributor would be
able to anticipate his requirements for articles embodying new designs.
Customer dissatisfaction because of appearance of copies would be elimi-
nated, and the distributer .would be able to realize a reasonable profit.
(*****) These results would be felt even in the low price field. A wider
distribution of products would be possible. Retailers desiring to main-
tain exclusive lines would have the power of obtaining exclusive agencies
for local sale in particular communities. (******) There would be an
ample quantity of new products for asxisting small and large shops .(******* )

4. The Consumer's Interest.

All of the wastes which result from the losses of manufacturers and
distri outers, due to copying, the frequent turnover of designs and
abnormal fashion changes resulting from design piracy, it is argued,
are reflected in high prices and poor quality and therefore are of tre-
mendous ec: -;mic disadvantage to consumers. (********)

*) Keating, p. 27; Zahn.p. 56; Meyers, pps. 235-236; Blunt, p. 76
**) Meyers, p. 237.

***) Keating, p. 21

****) Meyers, p. 237.

*****) Zalmj p>33 . Kea ti ngj p , 45. Blunt, p. 31
******) Meyers, p. 250
*******) Meyers p. 252.
********) Keating, p. 45.
9746.

-43-

Uot only ..nist the merchandise of creative manufacturers bear
the overhead costs resulting from design piracy, but the consumer
who purchases copies usually receives merchandise of poorer quality
than" the original, often buying it because of the appearance and
novelty of the desi n without knowing the quality and workmanship
are not comparable to those of the creative manufacturer^*)

Aside from the purely economic results, copying leads to uni-
formity of design. There is an insufficient variety of items on the
market to satisfy consumers. (**) There is a tendency to became a
nation of "uniform wearers" (***), and those who purchase new items
in the hope of obtaining distinctiveness, in the apparel field, are
constantly faced with the problem of "meeting one's self on the street"
in the products of inferior quality. (****). The results are dissatis-
faction, returned merchandise, and a reluctance to- purchase distinctive
articles. (*****)

Protection, it is asserted, would eliminate this practice of selling-
articles of inferior material at high prices merely because they embody
copies of popular designs. (******) Quality standards could be greatly
improved; in support of this the proponents of control point out that
the editors of leading magazines such as Good Housekeeping and the
Ladies Home Journal favor design protection as an aid to quality . (*******)

Not only would the consumer receive greater quality and better
prices from those who copy today, but the articles of manufacturers who
create designs would be iroduced in greater volume and .at lower prices
because of the elimination of the probability that a copy would kill their
sale and of the wastes which result from copying and mast be reflected
in price. (********) Furthermore, season would be lengthened, and the
usefulness of quality articles purchased would be increased. (*********)
Designing would be stimulated, thus making available a far greater variety
of attractive items even in the low price lines . (**********)

(*) Keating, p. 2:, 71; Blunt, p. 77; Ache man, p. 339.

(**) Keating, ... 23; Samuels, p. 219.

(***) Ackerman.p. 34-2

(****) Keating, p. 4-5; Zahn, p. 46

(*****) Zahn, p. 56; Acherman.p .339; Meyers, p. 235.

(******) Keating, p. 71; Blunt, pps. 77-98.

(*******) Letters, p. 255.

(********) Keating, pps. 45 and 72; Meyers, p. 245.

(*********) Bi-unt, p. 97.

(**********) Zahn, pps. 53, 33, 4-7; Keating, p 28; Blunt, p. 95; Meyers, p .24

9746

-44-

The manufacturers of low-priced products, it is said, would not need
to raise prices if they undertook to create their own designs
because, although the cost of designing is an important element
of a manufacturer's costs, when distributee! over the entire production
of articles embodying a design it has a negligible effect on the price
of each article. (*)

In addition, all of the dissatisfaction and embarrassments result-
ing from the production of copied merchandise and poor materials would
be eliminated. Consumers who desired distinctive articles could safely
rely upon the exclusiveness of protected items. (**)

5. The Designer's Interest

Those who originate attractive designs, say the proponents of con-
trol, are the ones who create markets, and to them is due the reward
reaped by copyists. (***) But under existing circumstances new designs
are unprofitable to the manufacturer; hence the value of designs and
designing to him who must support them is destroyed. (****)

The worst effects are that the products of a relatively few de-
signers are used by an entire industry, and competent designers cannot
find profitable work. (*****)

Although protection would lower the mortality of designs and the
number of designs required by concerns which support origination the
net results would be a great increase in the number of designs available
at any time - this because designing would assume its real value and
all concerns would employ designers or buy designs. (******) With the
true value of designs recognized, good workmanship would be encouraged.

In support of these assertions those favoring" control say that the
protection of designs in the Silk Textile Industry "paralleled the rise
of the American designer". (*#******)■

G. The Interests of Labor.

It is alleged that labor, as well as designers, manufacturers, dis-
tributors and consumers, suffers from the design piracy so prevalent

(*) Ke citing, pps. 52 and 70; Zahn,p. 31

(**) Meyers, p. 247

(***) Keating, p. 64.

(****) Samuels, p. 219.

(*****) Meyers, p. 239

(******) 2ahn jPi 17 . Blunt, p. 95; Rentner, pps. 116-117.

(*******) Blunt, F. 83.

(********) Blunt] p . 82.

9746

-45-

in some industries. Copying places competition on a price-cutting and
mass-production basis. Price-cutting requires cuts in labor and mat-
erial costs and, because there is a limit to which the quality of goods
may be cut without destroying salability, labor suffers the more.(*)
Mass-production, in turn, limits labor per garment and gives employment
to far less workers than would be employed if the same articles involved
original designs and were made with large amounts of hand labor. (**)
The manufacturers who have been accustomed to paying high wages, it is
said, have gone bankrupt as a result .of the price competition attributed
to copying.

The constant changes of designs and seasons result in highly un-
stable operations of manufacturing plants. This causes seasonal un-
employment. Moreover, in the industries where work is done on a piece-
work basis, notably the Dress Industry, constant changes in design
occasioned by copying prevent workers from becoming accustomed to the
maiding of a given item and tend to limit their incomes to the minimum
wages prescribed. (***)

It is asserted that the protection of designs would result in
longer periods of employment for labor and better pay than is now received.
Concerns which are forward looking and desire to maintain high labor
standards would be able to adhere to merchandising policies to attain
that end. (****)

(*) Keating, p. 26

(**) Zahn, p. 33; Ackerman.p. 338.

(***) Interview with Mr. Oxhorn, United Dress Manufacturers Association
and Mr. TeVp'er, International Ladies Garment Union, November 4-9,
1935.

(****) Centner, p. 116.

9746

. . -46-

7. The Inadequacy of Existing Law.

In answer to the claim of opponents that existing law affords ade-
quate, protection to designs the proponents of f\irther control state
that the. only protection now available must he derived from design
parents and that these are subject to fatal defects. The cost of ob-
taining patents is far too great for manufacturers in highly styled
industries to protect new items by that means, and the time required
to obtain patents is so long that protection is not available 'until the
market for the item is lost.*

Furthermore, the litigation of a patent is an extended and very
expensive process, and litigation usually is necessary because copyists,
encouraged by frequent cases in which patents have been held invalid,
refuse to pay them the respect to which they should be entitled.**

8. The Practicability of Protection.

The arguments of those favoring protection, on this subject, are
purely defensive but nevertheless vigorous in the assertion that de-
signs can ba protected by a workable plan and that those who state
the contrary are employing dilatory tactics*** It is claimed that the
experiences of industry, such as Toy, Silk Textile, Jewelry and Leather,
have shown that a practicable and enforceable plan may be devised.****
The problems are asserted to be fundamentally the same for all indust-
ries.*****

Concerning the fact that there would be frequent duplication of
designs it is stated that there may be a myriad of particular designs
all of wMch conform to a given style without probability of conflict.
Ho two real creators, it is said, would produce the same design.**" 4 ***

The determination of "origination 11 is held to be no more difficult
than determining "invention" under the present patent laws. Moreover,
the pirate in virtually every case is said to have "guilty knowledge"
of the fact that he is copying, ******* and such misunderstandings as
arise flow not from honest conviction but selfish motives.********

(*) Zahn, pps. 41 and 56.

(**) Zahn, p. 57.

(***) Meyers, p. 243; Rentner, p. 113.

(***«0 Blunt, pps. 78-84; .Rentner, p. 111.

(*****"! Blunt, p. 83.

(******") Z ahn, pps. 34, 35, 40, 41 and 55; Rentner, pps. 105, 112.

(*******^ .Rentner, p. 109.

(********) Rentner, p. 113.

9746

-47-

Ectwithstanding the assertion of unwarranted defenses "by copyists, the
matter of enforcebility would be simple because copies may be detected
easily upon mere comparison of the original article and the supposed
copy, both by individuals who are familiar with the trades and "by others
who have an opportunity to inspect both articles.*

A few informed persons maintain that a complete program of design
protection is unworkable, since it would be impossible either to pro-
tect all contributions or to prevent all copying. However, these per-
sons recommend that a modified plan which recognizes practical limita-
tions, can and should be followed.** Arguments relating to the ad-
visable scope of control will be presented in a later part of this
chapter.***

Attention now will be directed to the replies given by those who
oppose the position just outlined.

B. The Case as Presented by Those Opposing Design Protection .

1. The Question of Ethics.

The opposition to design protection does not directly deny that
there is an ethical factor in favor of the proponents, but it asserts
that whether or not piracy may seem wrong in the individual case, the
net result is beneficial to the industry.**** The question of ethics
is not relevant, they say. Economic problems far over-shadow that
phase of the question and turn the tables conclusively against con-
trol.***** Any cure would be far worse than the evil itself .******
Actually, it is assorted, those who propose protection of designs have
only their own enrichment at heart.*******

2. The Manufacturer's Interest.

The interests of industry at large are described by those opposing
protection as requiring the maintenance of the present practice of co-
oying. They point to the fact that the growth of the fashion indus-
tries, particularly the Dress Industry, has been due to the ability
supply fashionable merchandise at low prices and to the frequent changes
of fashions, which cause the obsolescence of articles before their'

(*) Zahn, pps. 33, 34 and 37; Keating p. 42; Farnum, p. 294.

(** N Blunt, pps. 75-76.

(***) Section II. C, p. 97.

(****) Senator Sheridan, p. 144.

(*****) Sheridan, p. 124.

(******) Brief. ..filed by the National Dry Goods Association,
p. 131; Sheridan, pps. 170-171.

(*******) Sheridan, p. 173.
9746

-48-

actual utility has been exhausted.* Copying, they say, establishes
fashions and thus benefits the industry as a whole. And the frequent
turnover of designs, caused by copying, results in the very changes
which account for the volume of business done by the fashion industries
today.**

The assertion that the evil of returns is caused by design piracy
is answered by the statement that it is rather poor workmanship and
other factors which cause returns.***

If designs were protected, those concerns not trained in creative
work would be unable to compete with the manufacturers who now support
design origination. They could not get designers who would be creative,
for most designers now employed, it is said, are copyists and adaptors
and unable to produce genuinely original designs.**** Not only would
the manufacturer of low priced goods be unable to design successfully,
but he would have no right to copy fashionable items, such as dresses
seen in moving pictures and worn by prominent persons, and therefore
would be deprived of a great portion of his sales.***** And there
would be other difficulties, it is said. The manufacturer planning to
produce a line of new designs would be troubled constantly with ques-
tions of registration, infringement, etc. He could have no assurance
that a design he used did not infringe a design registered by someone
else.

The delays necessary to determine such questions would completely
disrupt business operations.****** In addition, wealthy manufacturers
might hire highly skilled designers, register all of the desirable de-
signs, and thus preempt the field.******* The quantity producer of new
designs would be damaged and quantity sales eliminated, with the pos-
sible result that consumers in the dress industry, in rebellion against
high 'orices would revert to the practice of home dressmaking with con-
sequent damaging effects en the industry.********

Finally, say the opponents of control, the manufacturers who ori-
ginate designs have admitted that creo.tion results in excellent returns,
and to grant them exclusive control over designs developed would be

(*) Goldstein, M. H., p. 192.

(**) Sheridan, pps. 127, 139 and 143.

(***) Sachar, Interstate Department Stores, pps. 149-150.

(****) Silverman, William II., Wholesale Garment Association of

Boston, p. 155; Fox, National Retail Dry Goods Association,
p. 319.

(*****) Goldstein, J., p. 206.

(****** ) Silverman, p. 157; Sheridan, pps. 138-139.

(*******) Silverman, pps. 156-166.

(********) Sheridan, pps. 139, 141.
9746

-49-

to enrich them further at the expense of other producers.*

3. The Distributor's Interest.

As the curtailment of fashion changes and quantity sales would
affect manufacturers, so also would it harm distributors of low-priced
merchandise.** popular --nriced stores would necessarily he closed down***

The distributor's interest, however, extends farther than this.
The retailer would be unable to handle items embodying simulations of
protected designs and thus would lose customers. He would be unable
to know whether articles offered to him for sale were copies of protec-
ted designs. He would be constantly harassed by the "riolicing" of
those seeking to determine whether their designs had been copied. If
retailer liability for handling infringing articles were provided for,
the retailer would be the "goat" in the efforts of manufacturers and
those controlling designs to prevent copying. Some of these results,
it is said, would flow from any of the plans for design protection
that have been proposed.****

4. The Consumer's Interest.

It is in connection with consumer interests that the op-conents of
design protection assert some of their most vigorous arguments. It has
been said that consumers have a legitimate interest in obtaining copied
garments, whereas the manufacturers' interests on both sides of the
question are based on selfish motives.***** The claim of the proponents
that protection would stimulate designing and increase the number of
available designs is flatly contradicted, protection is not considered
necessary for the stimulation of design development. "It has been ad-
mitted here that the incentive to inventiveness, to originality and
adaptation, is actually stimulated by this highly decried piracy that
we have been hearing about. "******

They point to the fact that 8(K of the population, regardless
of the apoearance of the design, cannot afford to buy articles at high-
er than pormlar -orices. ******* Purchasers within this majority

(*) Goldstein, p. 191.

(**) Sheridan, p. 139; Sachar, p. 148.

(***) Sachar, pps. 150, 151.

(*****) See Hearing before Senate Committee on Patents, on H.3. 1185;
December 16, 1930, and January 8, 1931.

(*****) Sheridan, p. 142.

(******) Goldstein, M. W. p. 190. '"

(*******) Sachar, p. 150.

9746

-50-

group, it is said, have a right to enjoy current fashions just as much
as the patrons of higher priced merchandise.* The low income -ourchasers
want "to keep up with Mrs. Jones, Mrs. Smith, and Mrs. Brown." They do
not want to wear out dresses. **

If copying were prohibited class distinctions in connection with
merchandise would be made more evident, because low income -purchasers
would be unable to enjoy current fashions until after their sales to
more wealthy classes had been exhausted.***

5. The Interests of Designers and Labor.

At the Dress Code Hearing the opponents of the design piracy pro-
vision made no effort to show that copying does not adversely affect
designers or that protection of designs would not aid them. Concerning
the question of the effect on labor, however, the claims of the propo-
nents were . Erectly contradicted. Labor, it is said by some, has no
interest whatsoever in the disnute over design piracy. It certainly
is not harmed by piracy; wage chiseling arises from other oauses.****
Others of opponents assert that the consequences of protection already
mentioned, i.e., shortening of fashion changes and decrease in volume
of , sales, would have a definite effect upon employment, and that the
protection of designs would "put thousands of people out of work. »»*****

6. Existing Law.

The present design patent laws, according to those opposing pro-
tection, are the only sound basis upon which designs should be protect-
ed. They admit that real inventiveness should be encouraged, but say
that the granting of patents for new and inventive advances over exist-
ing designs is the only equitable and practicable method of achieving
that end.******

7. The Practicability of Protection.

The matter of enforceability of plans for design protection affords
a most fertile field for condemnation by the opponents. It is stated
that the administration of a comprehensive plan would be so burdensome
as to be wholly impracticable; that the difficulties in connection with
granting protection would be insuperable; and that the enforcement of

(*) Sachar, p. 148.

(**) Sachar, p. 149.

(***) Sheridan, p. 139; Sachar, p. 148; Goldstein, J., p. 2)6.
(****) Sheridan, p. 135; " Golds to in, J., p. 208.
(*****) s ac har, p-os. 148, 150 and 151.

(******) Silverman, p. 155.

-51-

rights that might be granted would he well-nigh impossible. The expe-
riences of industries such as Silk Textile, Toy, Jevelry and Leather,
pointed to by the proponents as illustrating the practicability of
protection, are seized upon by the opponents to show that conditions
in those industries are so different from the Dress Industry, for exam-
ple, that a plan which would apply to all would be impossible.* In
the Dress Industry alone, it is said, there might be over one million
designs to be registered each year.**

The staff required to administer a bureau for the registration of
all these designs would be tremendous.*** The cost of tge bureau would
he prohibitive; and the volume of designs handled would preclude the
possibilitv of obtaining rapid service.**** Not only would the handling
of all these designs be impossible but determination of originality and
the comparison of registered designs with those offered for registration
as originals could not be accomplished to any degree of satisfaction.
There is no perceptible difference betwean a copy, an adaptation end.
an original design.*****

Even the advocates of protection, it is said, employ exhibits which,
instead of showing the difference between original designs and copies,
only raise ouestions in the minds of those who inspect them.******
In short, originality or invention cannot be determined in connection
with complicated products like dresses, which usuadly involve merely
an assembly of old features of designs without the creation of anything
new. *******

The dress industry, it is said, deliberately makes sketches and
models available to all manufacturers in order to establish fash-
ions -******** it is natural that all should follow the ideas suggest-
ed by those sketcnes and models. Moreover, the majority of designers
are copyists an I ndaptists while only a very few produce genuinely
creative work.********* Under these circumstances, it is alleged, the

(*) Fox, Irving G. , PP s. 517, 518.

(**) Sheridan, p. 125; Silverman, pps. 156-157.

(***) Sheridan, pps. 161-165.

(**** v , Goldstein, II. II., p. 202; Sheridan, pps. 125, 140 and 161;
Silverman, pps. 156-157.

(*****,) Sheridan, pps. 15-1-155, 161, 163.

(******"> Sachar, p. 150.

(*******' Silverman, pps. 153-154; Sheridan, pps. 161-163.

(********) Silverman, p. 154.

(*********) Silverman, p. 155;. Sheridan, p. 169.

9746

-52-

claim of the proponents that originality can be determined by inspection
of designs is absurd.*

Equally serious obstacles are said to be jresent with res-oect to
the enforcement of rights that might be granted by a registration bu~
reau. Infringements, it is said, would he innumerable; some perhaps
deliberate, Taut others entirely innocent "because of simultaneous ori-
gination of the same designs "by different individuals. The prosecution
of cases of infringement would require as long a tiie as under the pre-
sent design patent laws,** and it would be impossible to secure judg-
ments.***

In reply to the claims that manufacturers would register only their
most important designs, it is stated that they would register all in
order to protect themselves against possible claims of infringement****
Hot only that, but certain manufacturers might hire the best designers
and work twenty-four hours a day in order to develop the most desirable
designs, and these would be registered whether or not there was any
intention to manufacture then.*****

The claim that the laws of foreign countries such as France and
England have successfully prevented design piracy is net bv the state-
ment that copying in those countries still prevails.******

Finally according to the opponents of design protection, the solu-
tion to the problem of copying is something that cannot be achieved by
law but requires a long period of education to place the industry at
large in such a position that the effects of protection would not be
damaging.*******

The process, it is said, should be an evolutionary one, not an
abrupt change imposed upon the majority of an industry by a minority
group having only its own interest at heart.********

These, then, are the arguments for and against the provision of
further protection for industrial designs. Before undertaking an t

(*
(**

( ****

( ** ***

t ******

(*******

(********

Silverman, p. 166.

Silverman, p. 167.

Goldstein, M. H., p. 202.

Sheridan, p. 165.

Silverman, p. 166.

Sheridan, p. 129.

Sheridan, p. 175; Hartnan, Samuel I., p. 181.

Hart man, p. 185.

9746

-5.3-

analysis of them it is deemed advisable to indicate the viewpoints that
have been expressed "by individuals in particular industries.

C . V iewpoints in Particular Industries .

1. Carpet and Rug.

The three manufacturers of carpets and rugs who responded to the
questionnaire on design protection were unanimous in the belief that
designing in their industry is so much a matter of slight modifications
cf old designs and copying from imported oriental rugs that there is
little "basis for claims of originality or a change in the degree of pro-
tection now available.

2. Medium and Low-Priced Jewelry.

Of the 16 concerns in this industry whose opinions are recorded,
either through field interview or questionnaire, 12 assert that design
protection would be of benefit to the entire industry and that the
large majority of concerns is in favor of it. One stated that he would
not participate in any plan that might be operated through industrial
cooperation. Another complained of copying, but stated that design
patents are neither too expensive nor too time-consuming and recorded
opposition to any change in the control now available.

Still andrther objected to the possibility of the industry handling
disputes of copving because the tendency is to maize "moral" issues of
them. He stated that he favors design patents because one can go into
court and fight before being ordered to discontinue the use of the copy.
This opinion was shared by another who asserted that there has been
little trouble due to copying and that a registration bureau would work
to the advantage of only a few, to the disadvantage of many. But the
majority of those who reported an opinion as to the type of protection
desired, seven in all, appeared to be definitely in favor of an indust-
ry-operated registration bureau supported by law, which would be able
to pass upon industry disputes and conduct an educational program be-
fore such disputes should be settled by legal compulsion.

Designs, it is said, are the "life" of the industry, and design
piracy a form of cut-throat competition which should be eliminated.
"Better firms and largest employers want protection. The majority of
smaller plants want to copy."*

3. Lace.

A few lace manufacturers whose opinions are available seen to feel
that design protection through voluntary agreement has been of substan-
tial benefit to the industry, resulting in the elimination, to some
extent, of price cutting without curtailing production or the develop-
ment of designs. **

(*) Taken from questionnaire return.

(**) Interview with Giebel, Schloss and Molitor, loc . cit . note p. 1§

supra.

9746.

•54-

Prevailing sentiment seems to be opposed to the protection of de-
signs by legislation, on the ground that the determination of what con-
stitutes an original design and a cony - design of lace being peculiar-
ly related to fabric constrction - should be left with a group of im-
partial industry men. Only such a group, it is stated, is familiar with
the intracacies of lace design and construction and could hope to reach
correct conclusions in the majority of c^ses.*

One manufacturer attributes the alleged lack of research work in
connection with the development of new fabrics to the failure to obtain
protection that would justify large expenditures necessary for such
work.

4. Ladies' Handbag.

Ladies' handbag representatives expressed the view that cooperative
effort is lacking and legislation is necessary if the industry is to
flourish; that no privately conducted system would receivec the re-
quired support from manufacturers as a whole.** Six months protection
has been estimated to be sufficient.***

The protection of designs, it is asserted by one, would result
in greater designing costs, but the wider selection of designs thus
made available and the better quality of merchandise would offset any
possible damage to the consumer.**** To the manufacturer, he stated,
it would mean the possibility of supporting creative work and of main-'
taining a reasonable price structure.*****

The single respondent to the Questionnaire on design protection
reported his interest in increased protection for designs in order to
prevent "obvious but not exact copies."

5. Millinery.

The viewpoints expressed by millinery manufacturers are equally
as varied as those noted in connection with the Ladies' Handbag Indust-
ry. A number of individuals expressed the view that protection of de-
signs would be imminently desirable, but impossible. ****** Without go-
vernment backing it would be unenforceable.*******

f 5l< ¥ >!* ^ *!* ^ ^

ibid , Nimkoff and Molitor.

Interview, with Berkowitz, Mittenthal, Moss and Lewis, loc .
cit., note p. 13 supra. .

Ibid , Goldsmith.

Ibid , Moss.

Ibid , Moss and Lewis.

Interviews, loc . cit . note p. lo supra.

Ibid, Maxwell.

—55—

Among other alleged obstacles are the following: Complications
due to the copying of imported models would he difficult to be solved.*
An?/ cooperative plan would require the full participation of all manu-
facturers and retailers, which would be impossible of attainment.** The
interest of the block makers would have to be considered.***

Further complications would arise, it is asserted, because of the
multiplicity of designs and the extremely short sales life ;of any one
item.****

Further, it is stated that protection would perhaps put 80$ of
the industry out of business, as they are not the tyoe who would or
ceuld create,***** and manufrctur jrs would be forced tc rely upon their
designers, who might copy without their knowledge. ****** Still further
obstacles reside in the opposition of syndicate buyers, whose purcha-
sing power is of tremendous influence, to the ease with which concerns
iaay enter into business, and to the unethical standards of manufacturers
in the industry. *******

On the other hand, a few individuals assert that protection of mil-
linery designs would not materially increase the cost of hats to the con-
sumer.******** and that there would be plenty of ccnraetent designers
available for all manufacturers to do their own creative work.*********

6. Silk Textile.

Field interviews with seven manufacturers in the Silk Textile In-
dustry disclosed a prevailing belief that design protection through the
medium of the Design Registration Bureau has been the "salvation" of
the industry and that the collapse of that bureau would lead to disas-
trous results.**********

(*) ibid , Lipshie.

(**) ibid , Maxwell.

(***) ibid, Maxwell, Guiffrida and Stern.

(****) ibid , Buckman, (block-maker)

(*****) ibid , Manufacturer who wished thct his name be kept con-
fidential

(******) ibid , Heifer.

(*******} ibid , three manufacturers who wished that their names be
kept confidential.
(*.*******) ibid , Harwell.

.(*********") ibid , Hyland.

(**********') Field interviews, loc . cit . note p. i9 supra.

9746

-56-

The desire for some sort of legal orotectien to give sanction to the
operation of the bureau was exoressed by all Dersons interviewed.

Jour out of five respondents to questionnaires report similar
viewpoints . One, however, asserted that the operation of the bureau is
entirely satisfactory and that no change in the law is needed. Only the
"worst" concerns were said to oppose design protection. Most concerns
seem to favor a very short term of protection, six months being the
term most often suggested.

7. Shoe.

Among three responses to questionnaires is the statement by one con-
cern that "the design situation is in a mess, but it is our earnest con-
viction that it results from the improvident granting of design patents."

The other two advocated the handling of dipoutes of copying by the
trade, one suggesting a period of approximately four months, without
patents, and the establishment of a "Design Board, " occupying a position
like that of Judge Landis in baseball - - - attempting to protect de-
signs of outstanding originality only. "

Aii observer interviewed in New York exoressed the view that the sen-
timent of the industry is decidedly passive on the question of design
protection, a small group vigorously favoring control, another group of
about equal size otto o sing, and the large majority of manufacturers hav-
ing no ,'reat interest in the subject. The difficulty of determining
novelty or originrlity in connection with shoes was pointed out by this
observer and by a manufacturer who voluntarily submitted his opinion on
the subject.

Interviews with two representatives of "style" concerns disclosed
an entirely different viewpoint, both urging that protection of designs
is essential in the interest of creative work and as an aid to the main-
tenance cf prices on valuable shoes. One of these stated that protect-
ion is absolutely necessary, and argued that it would enable the further
development by American manufacturers of markets for American shoes which
have opened up within the last two years in England.

8. Toy.

Most toy manufacturers, it is claimed, are in favor of design pro-
tection; those who op-oose do not voice their opposition.* Field inter-
views with representatives of seven manufacturers displosed a similar
viewpoint. Only one of the groun asserted that he had no interest in
the subject. The others had varying suggestions. One urged that pro-
tection should prevent slight changes from avoiding infringement but
wondered where the line was to bo drawn. The term of protection advo-
cated ranged from one ye^.r to an unlimited time. Two admitted that

(*) Letter from J. L. Fri, Director, Toy Manufacturers of the U.S.A. to
Design Piracy Unit, dated October 3, 1955. (in N.H.A. files, Design
piracy Unit files, Folder: Toy and Flay things V

974-6

-57-

prices would be increased if competition from co-oies were eliminated.
Concerning the effect of protection upon these who make a practice
of copying, one stated that "they aren't successful anyhow", hut that
protection would not cut them out of business.

The one questionnaire respondent reported that 80^ of the toy in-
dustry is in favor of a government board to decide cases of design pi-
racy quickly, fairly and inexpensively.

9. Uoholstery and Drapery Textile.

Two questionnaire returns relating to this industry were received,
and both reported that copying is only an occasional matter. One was
not in favor of increased design protection; the ether advocated a low
cost registration bureau, or tiie filing of data on new designs in order
to establish evidence of priority for use in case of a lawsuit. These
devices, it was said, would stop any design piracy that might cro-o up.

10. Wall Paper.

An observer of this industry expressed the view that manufacturers
as a whole are ar.xious to have design protection, particular ly to avoid
price and quality cutting. The single m':nufacturer interviewed stated
that any design produced by original thought, regardless of whether ab-
solutely new, should be protected for an unlimited term. The consumer's intei-
est.hesaidis unimportant, but such protection would aid consumers in
that quality standards would not be destroyed by price cutting.

A respondent to one questionnaire expressed the desire for a "simple
fora of protective registration" to protect against "competitive orice-
cutting." The other asserted, that protection is not desired except by
"concerns owned or operated by rich men's sons."

The general dispute over the advisaility of increased design oro-
tection and the views expressed by individualists in particular indust-
ries, as set forth above, include a veritable maze of contradictions.
In the succeeding section the effort is made to point out the few in-
stances in which opposing factions appear to be in agreement and the
major problems over which they have expressed disagreement.

II. POINTS OF AGHEEMEMT. ISSUES.

After a careful reading of the cases for and against more extensive
design orotection and the viewpoints expressed by individuals in parti-
cular industries, it perhaps is not anticipated that points on which
both sides are in agreement could be found. Nevertheless, there are a
few instances in which tacit, if not expressed, agreement may be disco-
vered.

A. Points of Agreement .

1. The Ethics of Design Piracy.

The opponents of control apparently do not maintain that copying

9746

-DO-

of designs, in the individual case, is an ethical practice. Rather, they
seem tc feel that the practice has unethical aspects, but that it is
justified on other grounds.

2. Adverse Economic Effects on Those Who Create Designs.

That the copying of designs, in the individual case, does have an
adverse economic effect on the concern which first introduced the de-
sign, in respect of that particular transaction, is not denied. Simi-
larly, there is no denial of the existence of inconvenience and econo-
mic disadvantages Affecting distributors who handle products that are
later copied.

3. Fashion Changes.

Both those favoring control and those opposed assert that design
piracy accelerates fashion changes. The claim of the former that this
causes unjustified waste is met by the argument that it accounts for
the prosperity of the industries which must depend upon fashions for
volume business.

4. Ineffectiveness of Design Patents .

The case of the opponents of control is based not upon the claim
that design patents protect the bulk of original designs, but that the
protection of all those designs would be harmful and that patents are
available to the few who deserve protection.

5. Certain Effects of Protection.

(a) On Designers.

It appears to be agreed that the protection of designs would in-
crease the demand for designers and benefit them as a class.

(b) On Fashion and Design Changes.

It is admitted that design protection would lengthen seasons and
reduce the number of designs required to be carried by those who create
designs.

6. The Scope of Control.

On this subject both sides of the controversy are agreed that any
proposed control of design piracy must allow all concerns to follow
style trends.

The points of agreement, although important, are far overshadowed
by the many questions on which there is an unyielding dispute.

B. Issues .

1. The Effect of Design Protection on Industrial Activity.

According to those advocating protection, the copving of designs

9746

•59-

"kills 11 the salability of articles, causes waste which is translated
into Trice and poor quality, resiilts in customer dissatisfaction,
and prevents the stimulation of demand which would bo caused by a
diversity of designs.

They state that der.ign -liracy, if allowed to continue and
increase unabated, ultimately will force those concerns which now
create designs to discard the practice, with resultant disastrous effects
upon the demand for goods which sell because of their distinctive ap-
pearance.

Protection, they say, would cause a great increase in designing
and available designs and thus would stimulate purchases and increase ;
industrial prosperity.

The opponents of control, however, assert that design piracy
establishes fashions, the life blood of industry; it enables volume
sales at popular prices; and it accelerates fashion changes, result-
ing in increased demand for products. Protection of designs, they
assert, would shut out volume sales at low prices and *rkih*the in-
dustries which rely upon them.

2-. The Effect on Relative Competitive Positions.

On the one side, it is argued that design piracy places
competition purely on a price basis and definitely harms the concerns
which endeavor to maintain quality lines embodying a high degree of
distinctive appearance. In order to 'oay for artistic creation and
quality materials, it is said, tnere must be some opportunity to set
prices which will enable a fair return on expenditures thus incurred.
Many manufacturers of such articles are not equip >cd for mass production -
in fact cannot produce such articles on a mass production basis - hence
the price competition resultin_ from copying designs materially harms
them. Protection, it is alleged, would remedy these conditions with-
out harming the manufacturers of lowsppriced merchandise, who would
be able to folio?: fashion trends withou.t conying, and whose business
would be stimulated by the design origination which would result from
protection.

The opposition, however, adheres to the view that design protec-
tion would ruin the low-nriced manufacturers, since they would be un-
able to create designs and still compete for sales. Purchasers de-
mand simulations of goods sponsored by fashion leaders, • it is asserted.
Moreover, these concerns would be unable to obtain creative designers
at a cost which would enable them to do their ovm creative work.

3. Distributors Interests.

Distributors, under existing circumstances, according
to those favoring protection, are burdened by returns, mark-downs,
losses, and customer dissatisfaction resulting from copying. In
addition, the constantly changing lines, the frantic race necessary in
order to dispose of articles before they are copied, and price cutting

9746

-60-

cause them further discomfort.

The opponents of protection assert that design protection would
"be worse than the evils resulting from copying, for it would cause a
tremendous loss of sales and inconveniences to distributors because
of disputes arising out of claims to designs.

4. The Interest of Labor.

The argument for protection is based partly on the
theory that "cut-throat" competition on a price basis prohibits the
development of quality work and prevents all manufacturers from pay-
ing good wages. In addition, it asserts that copyists pay far less
labor costs per article produced because of one or more of several
factors: (l) Their wage rates are lower, (2) they speed up the work
at the expense of quality workmanship and earnings, or (5) they em-
ploy machinery and far less man-hours per article. Furthermore,
where piece-work rates prevail, constantly changing lines prevent
workers from achieving a reasonable rate of production.

The opposing argument rests on the assumption that industrial
activity in general and the low-priced concerns in particular would
be harmed by design protection, with resulting damage to labor rates
and employment. The adverse conditions claimed to exist today, it
is said, are in no way related to design piracy, but are fostered
by other circumstances.

5. Consumer Interests.

(a) Prices.

Protection would enable more extensive production
and distribution by creators of designs and these would lower the
prices charged, according to Borne of those favoring control. Popular-
priced concerns which have employed original designs have prospered;
others of the same class also could create designs without increas-
ing prices; for the cost of design development, spread over the
colume production of low-priced concerns, would have a negligible
influence on prices.

All of this is disputed by the opponents of protection. Ex-
clusive rights to designs, it is said, would result in monopoly
prices.

(b) Quality.

The consumer, according to the advocates of protection,
s harmed by cuts in quality caused by price competition on original
designs and by poor quality goods sold at unwarranted prices by
copyists - goods that would be -unsalable at comparable prices were
it not for the attractiveness of the pirated designs.

In opposition it is said that the consumer obtains the quality
and merchandise that he desires and that design protection has nothing

9746

-61-

to do with quality standards.

Those urging the protection of designs claim
that the consumer is prevented from buying distinctiveness or indivdu-
ality in articles because of the lack of control over copying. In
connection with apparel, purchasers are constantly discomforted by
the problem of "meeting one's self on the street". Protection, it
is asserted, would give appearance the value to which it is entitled,
give consumers a choice between many designs, and stimulate consumer
interest.

The opposing side of the issue asserts that
consumers want to be able to purchase articles which are as new and
as distinctive as those enjoyed by higher income classes. In the
ap'iarel field, consumers demand the freedom of participating in
fashion movements. Protection, it is stated, would draw class lines
and make attractive designs available to low income groups only
after the term of protection had expired.

6. The Influence of Design Protection on Designing.

Copying, according to those advocating control, causes
toe majority to live off the creative efforts of the minority, and
if losses of creators continue, .it ultimately will result in the
abandonment of designing activities. Protection, they state, would
encourage all to design, giving relief to those v.'ho must constantly
change lines and make far more attractive items available to the
public.

The opposition, lie- ever, just, as vigorously asserts
that copying stimulates desi^nin : through design obsolescense, and
that those who have made a policy of design creation have profited
by it and are not likely to abandon it.

7. The Cost of Protection vs. Waste Due to Copying.

On behalf of proposals for the control of design piracy
it is claimed that the "killing" of designs, constantly changing
lines, and accelerated fashion movements promote unjustifiable
waste that would be eliminated by protection.

From the other side it is pointed out that the cost and
burden of any system of protection that might be devised, the in-
conveniences necessary to determine whether a design might be pro-
cessed with safety, costs of excessive designing and of litigation,
would create more extensive waste than exist under present con-
ditions.

8. Administrative Issues.

The feasibility of any plan for administering design
9746

-62-

protection is a matter of basic disagreement. The proponents of
control urge that some practicable scheme can "be evolved. The
opponents state that neither an industry-operated system nor one
predicated upon control by government is either practicable or
enforceable.

The details of both sides of this issue have been
set forth in an earlier portion of this chapter. (*)

C. Additional Problems .

1. Issues Relating to the Scope of Control.

The problems which must be faced in connection with
determining the scope of any new design protection plan which might
be adopted are numerous. Concerning some there are few expressions
of opinion; concerning others, none. Their importance, however,
i s indi sputab 1 c .

A few of these problems arc suggested here, not with
£he intention of treating all of them fully in this paper but in
order that their existence may be realized.

(a) The Basis for Protection.

Seldom is anyone heard to say that there should
be no protection whatever for industrial designs. But the matter
of determining the scope of protection involves the selection of
a basis for the granting of exclusive rights to designs. Shall they
be based upon the existence of novelty and "invention", or is novelty
and originality sufficient? VJould mere originality be a desirable
and practicable basis? Or should protection be given to all designs
which possess "trade novelty", regardless of the absence of novelty
or originality?

Another factor which might bo considered is
"timeliness". Upon the particular basis selected depends, to a large
extent, the volume of designs which would be subject to claims of
exclusive rights. The volume covered by the first two bases would
be sustantially the same, although a requirement of novelty and
originality instead of novelty and invention would tend to include
a great number of designs which are not granted protection under
the existing design patent laws. Trade novelty would include all
designs not before made available to the particular trade concerned
and hence would be still broader. Originality, basically, would in-
clude an even larger volume of designs - all those which are products
of the minds of authors, regardless of novelty.

Timeliness would be even broader than trade
novelty in that designs previously known to the trade but no longer
used might be reintroduced at a timely moment and thus be entitled
to protection.

9746 ^ Section 1*

—63—

In connection with the determination of the
basis of protection as well as other problems hereinafter mentioned,
it is apparent that the significance of the determination of any
one issue may bo modified by other features of whatever plan for
control may bo adopted.

(b) 'tfho Should Be Entitled to Protection.

Should design protection in the United
Stated be extended only to citizens of this country or should it
also afford rights to citizens of other countries in the same
basis? Regardless of the answer to that question, should it give
the right to designers or creators only, or to the proprietors
of designs - those who embody them or place them in the process of
production - or to both?

Should design protection be made avail-
able for elements of design,, or only for the design of an entire
article as used in commerce? Is there any reason why other novel
selling features, such as novel construction or functional features,
should not '.lso be protected on the same basis?

(d) llature of Protection.

(1) Scope of Exclusive Bights.

It is also necessary to determine
what should be the nature of the right given to design creators.
Should they have the exclusive right to make, use and vend articles
embodying the design, or only a co yright, or only the right to
govern the quality of articles upAg in simulation of the design,
or only the right to prevent the simultaneous use of the design by
another in competition with the creators?

(2) The Basis for Determining Infringe-
ments.

This problem depends to a great
extent on the decision as to what should be protected. If the de-
sign of an entire article only is protected, the basis for infringe-
ment should be governed by the appearance of the alleged infringing
article. If elements of design are nrotected anything which embodies
such an element would be an infringement. Should these concepts
be followed or should the principle be followed that any appropria-
tion of ideas embodied in a design constitutes an infringment?

(3) Industries To 3e Included,

The descriptions of conditions in
representative industries contained in an earlier portion of this
paper illustrate the importance of a decision as to whether the designs

9746

-64-

for all articles, and hence for all industries, should be entitled
to protection, or whether only such industries as exhibit a peculiar
need for protection should he considered. If the policy is follow-
ed to provide remedies for particular industries, special oroblems
relating to the relationship "between protected industries and un-
protected dependent industries would arise.

(4) The Term of P r otection.

Two important problems exist in connec-
tion with prescribing the term , of protection. One relates to
the length of the term; the other to the commencement »f the
term. It may well be that the length should vary with different
types of designs. In determining the commencement of the term
there are several alternatives: Should it begin upon formal grant-
ing of right by a governmental or other agency? : Should it be-
gin upon the date of application for "orotection? Or upon the date
of origination? Or upon the date of introduction to the trade? Or
upon publication of the design?

2. Legal Issues.

Hccossarily requiring consideration if a plan fcr
more extensive design protection be adopted are certain fundamental
legal problems. Proposals for privately conducted bureaus and the
■like raise the important question of wehther such bureaus are legal
under existing laws. Proposals for legislation, either in aid of
private systems or for the purpose of establishing governmental con-
trol, involve questions of constitutionality.

The objective at this stage of the paper is merely
to suggest the problems v/hich must be encountered in order that
their existence may be recognized as actual experiences with ef-
forts to control design piracy as described. From this point atten-
tion is turned to the details of such controls,

-65-
CHAPTER IV

THE STATUS OF DESIGNS UMSR EXISTING LAW

The foregoing portions of this draft are devoted to considerations
of the problems inherent in the present practice of design piracy and the
issues raised by further proposals to deal with it«

This chapter will relate the legal basis for our present system,
including details of its operation, the considerations which render cer-
tain apparently applicable branches of conn; on and statutory law useless
under the cir ^instances s the theories behind and operation of the copy-
right laws, which again and again have been suggested as a pattern for
design legislation, the details of other methods of control employed in
America and abroad, and the limitations imposed upon legislation by Con-
gress under the existing Constitution? The importance of these matters
to a thorough understanding of existing problems and possibilities of
remedial action is obvious.*

I. PROTECTION AFF0RD3D 3Y EXISTING LAU III THE UNITED STATES, AND BACK-
GROUND.

A. NON-STATUTORY RIGHTS AND REIGDIES .

1. UNDER COMMON LAT7.

The common law system has never recognized the existence of any
property rights in idep.s as such 9 ** Under the old law of England there
existed a form of common law copyright, which gave to the authors of
literary products the right to exciule others from the use of such pro-
ducts until they had been published ?nd to cue in case of unauthorized
use after publication. Each such siiit, however 5 could be brought on the
basis of only one unauthorized cony* hence in crses where copies had
been multiplied to any grea/fc extent, the rciedy clearly was inadequate.***

Common law principles now enforced in the United States recognize
the existence of a limited common law copyright in the creations of one's
mind, such as manuscripts, paintings and designs. An author or designer
may keep his invention or his writing or creation to himself, and no
disclosure to the public can be required.**** He may disclose it to

* A thorough treatment of the principal legal aspects of design piracy,
along with suggestions of economic problems, is contained in (Note)
31 Col. L. Rev. 477-494 (1931).

** See Ealem Co. v. Harper Bros ., 222 U.S. 55, -32 Sup- Ct. 20, -56 L.

ed. 92 (1911); Afpwara Woollen Co. v. Jordan . 7 Wall. 583, 19 L. ed.
177 (1869); Klivitsky, Protection of -Unpatentable Ideas, -Journal of
the Patent Office. Society, Vol. 17., pp. 854-876 (Nov., 1935).

*** See Fenning, Copyright before the Constitution, 17 Journal of the
Patent Office Society 379 (1935). . • •"'

**** American Tobacco Co. v. fferkmeister . 207 U. S. 284, 28 Sup. Ct. 72,
52 L. ed. 208 (1907).

9746

others under an unders trending that it be kept secret, and if those to
whom it has "been disclosed seek to violate that understanding, he may
secure relief in equity against such violation and enjoin any publication
by others to whom it may have been communicated.* But if a designer or
author publishes, his creation, or disclose it to others under circum-
stances which involve no pledge of confidence, he thereby loses his right
of exclusive control and can assert it no longer. The same result occurs
where protection is sought under the copyright statutes, if proper steps
to secure a valid copyright are not taken u ** The extent of action re-
quired to constitute a publication varies with the type of subject matter
involved. In the case of a play, it ho.s been held that public perform-
ance thereof does not destroy the common lav; copyright unless there has
been an unauthorized printing and publication of the same.*** In the
case of an article embodying an ornamental design, the sale of such
article results in the loss of any property rights which the owner may
have had in either the article or the design embodied therein.****

There have been numerous efforts, even in recent years, to secure
further protection of one's creations in the equity coiirts. These will,
be alluded to later. The policy of the courts, however, has been stated
by Mr. Justice Stone, in Reichelderfer v. Quinn .***** as follows:

"Beyond the traditional boundaries of the common law only some
imperative justification in policy will lead the courts 'to recognize
in old values new property rights. Compare International Hews Ser-
vice v. Associated Press . 248 U.S. 215, with Cheney Brothers v.
Doris Silk Corporation , 35 F. 2d. 279."

2. UNFAIR COMPETITION.

Most of the efforts thrt have been made, anart from by statute, to
increase the exclusive rights of trrders in the instrumentalities of
commerce have found success onl]'" in so far as they have resulted in the
granting of relief upon the basis of unfair competition. There are
several early cases decided by United States courts in which injunctive

* See Pcmeroy Ink Co., v. Poneroy . 77 H.J. Bo. 295. 78 Arl. 698 ■
(1910); Wireless Speci"lt" r Co. V. Mica Condenser Co. . 239 Mass.
158, 131 U.S. 307 (1921).

** Societe des Films Menthen v. Vito^raijh Co . ? 251 Fed. 258 (CCA.

2nd, 1918); Reiss v. National Quotation Bureau . 276 Fed. 717 (D.C
S.D.1I.1I., 1921).

*** Ferris^ v. Frohman . 223 U.S. 424 (1912). ' '

****• Cheney Bros, v. Boris Silk Corp . . 35 F. (2d) 279 (CCA. 2nd,

1929), (Certiorari denied, 281 U.S. 728, 50 Sup. Ct. 245, 74 L.
ed. ); Fair ,& Carnival Shovel Co. v. Shapiro . 257 Fed. 558 (1919).

***** 287 U.S. 319 (1932).

9746

. -67-

relief was granted to prevent the use of an article embodying a design
copied from another in competition with the person who introduced the de-
sign.* Later cases have made it clear, however, that any relief based on
the existence of unfair competition can be granted only in cases where
the complainant con show that the design of his products has become so
associated in the minds of the public as to possess a "secondary meaning"
and that the use of such design 'o-j the defendant is unnecessary to
achieve the full functions of the product and would result in 'such con-
fusion in the minds of the purchasers that defendant's product would be
purchased in the belief that it was the oroduct of the complainant.**
Even relief of this nature i.w not be obtained where the form or design
of the product has been protected by design patent and thus formally
dedicated to the public after the expiration of the term of the patent.***
And if the copyist can place marks on his products so as to avoid the
possibility of public confusion, no further relief will be granted..****

* Enterprise Manufacturing Cc. v. S ande rs, Frary and Clark , 131 Fed.
240 (C.C.Ao 2nd, 1904); Defendant made and sold coffee mills that
were " Chinese copies" of tncse sold by Plaintiff , iff "being shown
that Defendant had used part of Plaintiff's mills a's patterns when
constructing his machinery. The Court stated: "It is elementary
law that, when the simulation of well-known and distinctive features
is so close, the Court will assume that Defendants intended the re-
sult they have accomplished, and will find an intent to appropriate
the trade of their competitor * *"• The decree enjoined the sale
of "any grinding mills having the characteristic shape, design,
color, and ornamentation of the grinding mills sold by Complainant";
Yale and To^ne Manufacturing Co v, Alier . 154 Fed. 37 (CCA. 2nd,
1907 J: (Manufacturer of padlocks enjoined from selling copies of
higher priced locks, even though t le rts of the lock separately
may have been open to his ap >ropriation and although dealers may
not have been misled).

** Rushmore v. Manhattan Screw and Sta:ninr-; Works , 153 Fed. 939 (CC.
A. 2nd, 1908) ; Rush norr- v - fwer Iras^ Man ufacturing Co . ; 198 Fed.
579 (CCA. 2nd, 1912); Wp.jc h r. Coc v f . Jilliar.i S . Merrill Chemical
Co., 269 Fed. 209 {C.C.A. 6th,' 1920); Ciescent Too l Co. v. Kilborn
and Bishop Co .. 247 Fed, 299 (CCA, 2nd, 191?); A. C 'Gilbert Co .
v. Shemitz . 45 F. (2d) 98 (CCA. 2nd, 1930) (Rev'g 36 F. (2d) 410
(D.C.D. Conn. 1929). Cf Heide v. Wallace, 135 Fed. 346 ( C.C.A. 3rd,
1905) ).

*** Shredded Wheat Co; v. Humphrey Cornell Co .. 250 Fed. 980 (CCA.
.2nd, 1918): " The # plaintiff !l s formal dedication of the design (by
a patent) is conclusive reason against any injunctions based upon
the exclusive right to that .form, however necessary the plaintiff
may find it for its protection."'

**** Id. ; Crescent Tool Co. v'. Kilborn' and* Bishop Co .." supra note 5; C.H. ,
Hudson Motor Specialties Co. v. Apco Lav;. Co. . 283 Fed. 371 (D.C.D.
R.I., 1923).

9746

-68-

In a few instances courts have departed from the requirement that the
design sought to "be protected in a suit "based upon unfair competition "be
for " no n- functional" features of the article,*

There are several cases in which property interests seem to have
"been established by the courts even after public;, tion of the subjects in
question. In the case of national Telegraph Hews Co* v. ITestern Union
Telegraph Co . ,** the Court enjoined the defendant from copying stock
quotations and the like from ticker tape "ay which the complainant ser-
viced its customers with immediate news concerning market conditions.
The decision neither declared that the complainant retained a -property
interest in the tape after printing nor that the practice amounted
strictly to unfair competition, but was based on a combination of these
two concepts, as evidenced by the following quotation:

"The ticker, with its printed tape, is an implement or means
only to this commercial end, which the -patron or the patron's patron
may utilize to the end intended, but may not appropriate to some
end not intended, especially if such appropriation results in in-
jury to, or total destruction of, the service,"

The Court frankly admitted a lack of precedent for its holding and
chose to render a decision upon what it considered to be the balance of
interests and the equities of the situation.

In Fontopia Limited v. Bradley, * an injunction was sought to restrain
defendant from making cheap copies of phonograph records produced by the
complainant and from selling them under representations that their quality
could not be distinguished from tha.t of the originals. The Court treated
the question as one requiring the protection of incorporeal -property
rights and cited the ticker tape case above referred to as a precedent
for granting relief. The essence of the decision is contained in the
following quotation:

* See McGill Manufacturing Co. v. Leviton i.ifc. Co .. 43 F. (2d) 607
(D.C.E.D. II. Y. , 1950) : ¥here plaintiff's switch device had ob-
tained a secondarj meaning and the strengthening ribs and links
thereon had been copied by a competitor, the Court granted an in-
junction notwithstanding that such strengthening ribs and links
possessed functional, utility, declaring: "There were other forms
of ribs which could have been designed. * * It can not be seriously
argued that links having distinctive ap-pearances can not function
as well." (Affirmed 44 F. (2d) 1015 (C.C.A. 2nd, 1930) ).

** 119 Fed. 294 (C.C.A. 7th, 1902).

*** 171 ?ed. 951 (C.C.L.D.il.Y. 1909).

9746

-69- - -

"It can not now 'be determined how far such appropriation of
ideas could "be prevented; but it would seen that where a product
is placed upon the market, under advertisement end statement that
the substitute or imitating product is a duplicate of the original,
and where the commercial value of the"' imitation lies in the fact
that it takes advantage 1 of and appro jrlates to itself the commercial
qualities, reputation, a»d salable properties of the original,
equity should grant relief*" '■

The case of H ontegut v» Hicks o n, T.n c^* involved facts which approxi-
mate the typical case of design piraoy The defendant employed a girl •
to purchase a newly designed gown from the plaintiff's shop, and there-
after removed the label from the gown, exhibited it to his customers as
one of his own creations, and made copies thereof for sale. By a three-
to-two decision the Court held for the plaintiff, saying that "the
deception employed is the very heart of the matter". It was agreed by
the Court that the- defendant had a legal right to copy the gowns de-
signed by the plaintiff, provided an inspection of the gowns be procured
by fair means, but the methods used to secure the information enabling
the copy to be made were held to be a. sufficient basis for an injunction.
Perhaps more in keeping with strict legal principle is the dissenting
opinion written by Judge Davis, which contained the following statement:

"When once sold. the plaintiff retained no right to control the
use to be made of them. If the purchaser chooses to represent him-
self as the creator of the models. and sell cooies of' them to the
public, it is an act which a curt of equity will not restrain.
While the defendant's act of appropriating the ideas and work of the
plaintiff's may be unreservedly condemned in its moral aspect, it
is not an act which the courts have ohus far regarded as unfair
competition, llor dc I think that the deception by means of which
•the defendant obtained possession of plaintiff's models- affects the
question."

The most important of this group of ca.ses is International lifew.g .
Service v. Associated Prrss.*^ The Associated Press maintained an in-
ternational system for collecting news and communicating it to its member
papers. It had become a practice, in Eastern cities, to publish news
items in papers and upon public bulletin boards several hours before the
same news was published in Western cities, this practice being occasioned
by the differences in time that prevailed. The International News Ser-
vice systematically took. news items from the Eastern publications and •
printed them in papers which competed. with members of the Associated
Press in the West, without expending time and money in obtaining the
news. The majority of the Supreme Court held for the Associated Pres*
in an opinion which constituted a departure from existing decisions and
the scope of which has baffled the legal profession since it was pro-
nounced.*** Through Mr. Justice Pitney, the majority of the Court held

* 178 App. Div. 94; 165 II. Y. Supp. 358 (1917).. . . ~~. ~

** 248 U. S. 215; 63 L. ed. 211 (1918). ,. ....

*** See (Note)- 32 Harv. L. Rev. 566 (1919); (Note) 13 111. L. Rev. 708
(1918). .... ....

9746

-70-

that news is not a subject of copyright protection; that the essential
question was one of unfair competition; that the question of the rights
of the public to the news was not involved, "but only an adjudication of
the rights of the two parties before the Court; that there was no
abandonment of the news after its first publication in the East; and
that, although the news resulting from plaintiff's efforts did not
constitute property in a common-law controversy, "it has all the
attributes of property necessary for determining that a misappropriation
of it by a competitor is unfair competition because unfair to good con-
science". An extremely broad principle was laid dorm in the following
words:

"The parties are competitors in the field; and, on fundamental
principles, applicable here as elsewhere, when the rights or
privileges of the one are liable to conflict with those of the other,
each party is under a duty so to conduct its own business as not
unnecessarily or unfairly to injure that of the other."

The decree restrained any taking or gainful using of the com-
plainant's news" until its commercial value as news to the complainant
and all of its members has passed away". Mr. Justice Holmes and Mr,
Justice McKenna stated that, in their view, the extent of the Court's
action under the circumstances should be to require that defendant
acknowledge the source of the news taken by it, Mr, Justice JJrandeis
dissented strongly, pointing out that there was no precedent for the
decision of the Court and stating that, although new circumstances had
given rise to the facts at issue, they involved implications and possible
economic effects with which only the legislature should deal.

The Associated Press case led to conflicting interpretations in
subsequent adjudications involving similar principles* In Harvey
Hubbell, Inc., v. , General Electr i c Comoany , * where it was sought to en-
join the sale of electrical plugs and receptacles similar in form to
those of the plaintiff, the Court, in denying relief, stated that the
Supreme Court in the Associated Press case had recognized a property
right in news and had restrained the defendant "from bribing the em-
ployees of the complainant to release the news to the defendant". In
Associated Press v. K.V.O.S.. Inc, , ** the District Judge denied that
the Supreme Court had established a property right in news; stated that
the relief granted had been 'based upon existence of unfair competition;
and held that radio stations do not compete with news agencies. On
appeal, however, according to a recent news dispatch,**' 1 ' the Circuit
Court ordered that the injunction issue. The report stated:

"The circuit court declared that- the taking of such news and
the broadcasting of it in advertising programs was unfair com-
petition",

* 262 Fed, 153 (d.'C.S.D.H.Y. 1919).- •

** 9 P. Supp. 279 (D.C.W.IMTash,, 1934)-: ,.

*** "Court Bars Pirating of Hews Over Radios public Interest Cited in
Protecting Press", Hew York Times , December 17, 1935, p. 2.

9746

-71-

and quoted the following significant portion of the opinion:

"The public. . . .has an interest in -protecting the "business of
news gathering pud disseminating agencies against the impairment
of their efficiency 07 the inevitable reduction 01 their "business
income through the misappropri : ting of news prior to the expiration
of the tine during which the Supreme Court has held there exists
in it a 'quasi property 1 interesto"

In the field of desig?i protection the Associated Press case was
limited strictly to its facts in the leading case of Che ney Brothers v.
Doris Silk Co rporat ion ** The plaintiff in that case sought to enjoin the
copying of new patterns for silk fabrics and the production thereof "by
the defendant in competition with him* Deliberate copying was admitted.
Judge L. Hand recognized the -problem "by stating:

"It is in practice impossible, and it would "be very onerous if
it were not, to secure design patents upon all of these. It would
also he impossible to know in advance which would sell well, and
patent only these,"

Nevertheless, he denied relief, pointing to the obstacles of judicial
action, in the absence of legislation, by the following language:

"A nan whose designs come to harvest in two years, or in five,
has prima fac ie as good right to protection as one who deals only
in animals. Nor could we consistently stop at designs; processes,
machines and secrets have an equal claim. The upshot must be that,
wherever anyone has contrived any one of these, others nay be for-
bidden to copy it. That is not the law. In the absence of some
recognized right at cor. 1 , or under the statutes — and the
plaintiff claims neither — r rr/s property is limited to the
chattels which embody his invehtion a Others may imitate those at
their pleasure. * * To exclude others from the enjoyment of a
chattel is one thing; to prevent any imitation of it, to set up a
monopoly in the plan of its structure, gives the author a power over
his fellows vastly greater, a power which the Constitution allows
only Congress to create."

3. SUMMARY.

Thus it is now clear that, notwithstanding evidences of more liberal
thought such as the Associa.ted Press case, the courts have declined to
extend existing common law principles to the point required to protect
designs from piracy. Relief may be expected only in unusual cases where
the copyist may have employed deceptive methods in procuring copies of
another's original designs. Of course, there is ample legal recourse to
prevent the appropriation of unpublished designs. But once a design has
hecome embodied in products for sale and placed on sale, there is no legal
principle which recognizes the right of the creater to maintain any
further control over it or to prevent anyone who desires from copying and
producing the same in competition with him.

* Supra note 8; See (Note) 16 Va. L. Rev. 517 (19S0)

9746

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B. FEDERAL TRADE COMMISSION ACT .

1. UNFAIR METHODS OF COMPETITION.

The limitations inherent in the Federal Trade Commission
as an agency for the prevention of design piracy, under the existing
Acts which prescribe its powers, may be partially understood when it is
explained that the Federal Trade Commission is but an administrative
body charged with the function of enforcing rules of law similar to
those which have been developed under the common law concepts of unfair
competition. There are other limitations of equal or greater importance
which will be alluded to later.

The charter of the Federal Trade Commission is contained
in Section 5, of the Federal Trade Commission Act,('**' which provides as
follows:

"Sect. 5. That unfair methods of competition in
commerce are hereby declared unlawful.

"The Commission is hereby empowered and directed

to prevent persons * * subject to the Acts to regulate

commerce, from using unfair methods of competition in

commerce.

"Whenever the Commission shall have reason to
believe that any such person, partnership, or corpor-
ation has been or is using any unfair method of
competition in commerce, and if it shall appear to
the Commission that a proceeding by it in respect
thereof would be to the interest of the public, it
shall issue and serve upon such person, partnership,
or corporation a complaint stating its charges in
that respect, and containing a notice of a hearing
upon a day and at a place therein fixed * * .
The person * * shall have the right to appear * *
and show cause why an order should not be entered
* * requiring such person * * to cease and desist
from the violation of the law so charged in said
complaint. * * * "

It is plainly evident from the quoted portions of the
statute that any practice subject to regulation by the Commission must
be a method of competition, (**) it must be unfair (**"D and it must be

(.* ) Pub. No. 203, 53d Congress, Ch. 311, 38 Stat, at L. 717.

(**) In Federal Trade Commission v. Raladam Comyany , 283 U.S. 643 (l93l),
an order of the Commission requiring respondent to cease and desist
from certain misleading advertising was vacated on the ground that
there was no evidence that the advertisement injured competitors.

(**^ Sears Roebuck & Co. v. Federal Trade Commission, 258 Fed. 307 (C.C.A.

7th, 1919): Federal Trade Commission v. Sinclair Refining Co., 261

U.S. 463 (1923).
9746

-73-

in the public interest that proceedings be taken to stamp it out. (*■)
The Act being based upon the power of Congress to regulate commerce
among the several states, there is an inherent additional limitation
that any practice complained of must, be carried out in interstate
commerce. (**)

When we look at the problem of design protection in the light
of these limitations, it seems obvious that few cases of piracy would
involve a p ublic interest as distinguished from the interests of the
parties to the immediate transaction. Iw rthermore, the typical case may
be one wherein a local competitor makes c practice of copying designs
from others located in the same city or locality and wherein the products
never flow in the channels of interstate commerce. A still further ob-
stacle to effective acticn by the Federal Trade Commission lies in the
fact that those practices which may be declared unfair by the Commission,
for the most part, are the same practices which were unfair at common
law, notwithstanding the recent statement of the Supreme Court, in
U nited States v. A.L.A. Schechter Fuultry Corp. : fc*f)

"The Federal Trade Commission Act. * * introduced the
expression 'unfair methods of competition', which were
declared to be unlawful. That was an expression new in the
law. "Debate apparently convinced the sponsors of the legis-
lation that the words 'unfair competition", in the light of
their meaning at common law, were too narrow. We have said
that the substituted phrase has a broader meaning, that it
does not admit of precise definition, its scope being left to
judicial determination as controversies arise."

( *.) New Jersey Asb e stos Co. " ~ ■■ "do C a miss ion, 264 Fed. 503

(CCA. 2nd, 1920) (jLnt&r'-aini it : of eap : Ioy-p # e.s of customers to induce
trade held not a matter of public interest); Flyn n & Fmerich Co. v .
Federal Trade Commission , !. - F, (2d) fcTJS (CCA. 4 : :.h, 1931) (Order
to cease threats of patent litigation held not in public interest);

John Bene and Sons , Inc. . v ^ec^ral T icd s Commission , 299 Fed. 468

(CCA. '2nd, 1924) (Enjoinment of true statements in advertisements
held not in public interest) ; Federal Trade Commission v. Flesner ,
280 U.S. 19 (1929) (Local controversy in District of Columbia not a
matter of public interest) .

(**) Utah-Idaho Sugar Co. v. 'Federal Trade Commission , 22 F. (2d) 122

(C.C.A. 8th, 192?) (Raising of sugar beets and manufacture of sugar
not interstate' commerce: order of Commission vacated); Ward Baking
Conroany v. Federal Trade Commission , 256 Fed. 330 ( C.C.A. 2nd, 1320)
(Order to cease giving free loaf of broad with each one purchased
reversed for lack of interstate commerce) .

(**& 55 Sup.'Ct. 837 (May 27, 1935).

'746

-74-

Nevertheless., the Commission has no broad powers of classi-
fying, .practices as unfair and ordering their discontinuance on the "basis
of its own findings. In each cpse, review b; the courts is necessary
before the order of the Commission may be enforced, and ' the courts
strictly limit the Commission's powers to the suppression of those
practices which are judicially recognizable as unfair. Design piracy
cannot easily be placed in this category, as has been explained above
in j the discussion of the common law cases on the subject.

... Even should the Commission be given broader authority to deal
with the problem at hand, little effective action could be hoped for as
long as the present administrative procedure is followed in the handling
of cases. The steps between the filing of a complaint by an injured
party and the approval of an order of tne Commission by the court, such
as, will enable that order to be enforced, are manifold. Any complaint
must be considered, an investigation made, a complaint issued by the
Commission, a hearing held, findings of fact based upon the hearing must
be made, and after these minimum steps have beon completed, the Commission
may issue an order to cease and desist from the practice complained of.
The order, however, may not be enforced forthwith. A respondent, if he
so desires, may obtain review of an order by a United States Circuit
Court of Appeals before he is obliged to comply with it. If the re-
spondent does not seek such review, before the Commission can enforce
its order it must apply to one of the Circuit Courts of Appeal for an
injunction. All these proceedings occupy a tremendous amount of time,
in some cases years. Hence it is clear that except in a few cases where
an habitual offender might be halted in his practices, the Commission
would have no effective power to prevent such damage as may result from
the copying of designs, even if there were proper statutory authorizations.

There have been a few cases in which the Federal Trade Com-
mission has ordered respondents to desist from simulating the appearance
of competitor's products. ( *) In all of these cases, however, the
original product had been on the market for a substantial length of
time and a secondary meaning had been established, sufficient that the
simulation tended to mislead the public as to the source of the product.
They represent no contribution to the common law rights already avail-
able under similar circumstances.

2. TRADE PRACTICE CONFERENCES.

In addition to the normal statutory procedure above described,
the Commission has maintained a practice of calling conferences in in-
dustries where there have been a great number of trade practice complaints
and in such conferences, encouraging the formulation of rules of fair
competition which represent the sentiment of the industry at large

( *) 2 F.T.C.D. 381 (1920) (Publication made to simulate financial journal)
3 F.T.C.D. 345 (1921) (Simulating competitor's books to mislead public
8 F.T.C.D. 187 (1924) (Simulating design of competitor's fountain pen
which has been extensively advertised and good will established.)

9746

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concerning important prevailing trade practices. ( *) These conferences
constitute -formal hearings, presided over "by a member of the Commission,
which all are at liberty to attend and which give an opportunity for
free expressions of opinion concerning the merits of or objections to
existing practices. At the conclusion of the conference the Commission
generally summarizes in a written report the action t alien by the meeting,
and publishes the same for circulation among interested parties.

It is constantly emphasized that the rules growing out of these
trade practices conferences are advisory only, and that they have no
binding effect either upon members cf the industry or upon the Commission.
They do have weight, however, as evidence of the sentiment of the in-
dustry in respect to any trade practice concerning which a rule has been
formulated, and they often take the form of a "code of ethics" for the
guidance of the entire industry in its competitive relations. Many of
the approved conferences provide for the appointment of committees, con-
sisting of representatives . of the industries concerned, to formulate
methods of endorcing the rules agreed upon and approved by the Commission.
The Commission renders its assistance to such activities.

The report on a conference usually is divided into two groups
of trade practice rules. The first, Group I rules, includes those trade
practices which are recognized as unfair by existing law. Group II rules
include those trade practices which are not illegal per se_, but which
are c ondemned by the industry as undesirable and harmful.

An examination of a publication of the Commission on this
subject ( *t) reveals that, as of June 30 : ,,1933, a number of industries
had proposed Group II rules 'dealing with design piracy. The standard
foim followed by those rules is as follow:

"The practice of usurping designs, styles, or patterns
originated by a competitor and appropriating them for

one's own use within years after such origination

is condemned by the industry."

In the following industries a rule such as that quoted has been
included with a provision for one year of exclusive use of a design:

Fublic Seating Baby and Doll Carriage

Milk and Ice Cream Can Embroidery

Greeting Card Clothing Cotton Converters

Shifting Fabrics linitted Outerwear
■ " Household Furniture & Furnishings

(.* ) For a description by the Commission, see Federal Trade Commission,
Trade Practice Submittals, 1919 to 1923,. pp. 21-22; see also
Henderson, The Federal Trade Commission (1925), pp. 78-82.

(*T) Trade Practice Conferences (June 30, 1933)

9746

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The School Supply Distributors Industry Conference includes a rule
recommending five year protection. The Upnolstery Textile and All-Cotton
Wflsh G-oods Conferences include a similar rule providing for two year pro-
tection.

The approval given by the Commission to rules of the type above
quoted is persuasive evidence that that body has had no objection to the
proposals of many industries for further protection against the copying
of designs; in fact, such approval indicates positive favor of further
protection in so far as the Commission is able to lend its moral assist-
ance toward securing it.

C. DESIGN PATENT LAWS.

1. The Statutes.

The statutory protection avnilable for industrial designs in
this country is based upon a patent system, in contrast to the practices
prevailing in most foreign countries, where some sort of copyright
registration system usually is employed. ( *) Section 4929 of the
Revised Statutes, Title LX, (**) provides:

"Sec. 4929. Any person who has invented any new,
original, or ornamental design for an article of
manufacture, not known or used by others in this
country before his invention thereof, and not patented
or described in any printed publication in this or any
foreign country before his invention thereof, or more
than two years prior to his application, and not in
public use or on sale in this country for more than
two years prior to his application, unless the same
is proved to have been abandoned, may, upon payment
of the fees required by law and other due proceedings
had, the same as in cases of inventions or discoveries
covered by section forty-eight hundred and «ighty-six,
obtain a patent therefor" .

Section 4931 provides that patents for designs may be granted

for the terms of 2>h, 7 or 14 years, as the applicant may elect. (***)

The fees for design patents vary, the total fees being $10, $15 and $30
respectively for the terms of protection indicated. (?***)

(*) See Industrial Froperty Bulletin, P.5.M'. 58, Circ. No. 475 (Nov. 7,
1934), published by U.S. Bureau of Foreign and Domestic Commerce,
for a digest of design protection laws of Great Britain,
Czechoslovakia, Japan, France and Germany.

(**-) Act May 9, 1902, ch . 783, 32 Stat. L. 193, 35 U.S.C. Sec. 73

(**"} R.S. Sec. 4931, 35 U.S.C. Sec. 77.

(****)See 35 U.S.C. Sec. 78, as amended June 30, 1932, C. 314, Sec. 309,
47 Stat. 410.

9746

-77-

2. Patent Office Rules and Procedure. .

All the regulations and statutory provisions which apply to
patents for other inventions and are not inconsistent with the statutes
relating specifically to designs apply to patents for designs. (*)'
A formal specification must "be filed, including a petition, a specifi-
cation and claim, an oath, and a drawing, and it must "be accompanied
by the statuory fee when filed. ('**) The drawing must comply with
rigorous Patent Office requirements as to form, nature, quality and
size. (***) 7,'hen a complete and formal application has been filed it is
routed from the Application Division of the Patent Office to the Design
Division, where the examination takes place. This first step alone
occupies six days, under the present schedule of operations. (****)
In the Design Division the case is classified according to subject
matter and assigned to an Examiner '-ho is a specialist skilled in the
art to which the case relates. If the case relates to "fashion" articles,
such as apparel, an examination and decisions as to whether the article
is patentable and the case in proper form are made usually in not more
than six days. Cases dealing with more standardized articles are given
less speedy attention and are examined in tne order of filing. If all
requirements of the statutes and rules -are fulfilled, the case is then
"passed to issue". -But this does not end the proceedings. It must be
printed, semed with the seal of the United States Government, and
delivered. The printing and matters incident thereto occupy from
thirteen to nineteen days, depending upon the day of the week when the
case was "passed to issue". The least possible time required to obtain
a design patent, therefore, counted from the day of filing an application,
is about nineteen days. (*****)

(*)'. U.S. Sec. 4933, 35 U.S.C. Sec. 73.

(**) "Rules of Fractice, U.S.Fatent Office (Revised May 1, 1935), Rules
30 to 61 t< inclusive.

(***) ibid , Rules 49 to 55. Photographic illustrations of "fashion"
articles now are .permitted.

(****)This and other information concerning the, present procedure for hand-
ling design applications was obtained through an interview with Mr.
H. H. Kalupy, Acting Examiner, Design Division, U.S.Fatent Office,
on September 18, 1935.

(***** )This potential minimum is seldom realised in practice. All of the
patents granted on June 4, June 11, Sept. 3 and Sept. 10, 1935, a
total of 274 patents, were examined to determine the length of pend-
ency of each case. Of this group, one case issued within 19 days,
four required between 20 and 30 days, nine required between 30 and 40
days, while all the rest stayed in tne Fatent Office more than 40 days.
The average for the whole group was 119 days; whereas, discarding
those which were pending more than a year, the average was approxi-
mately 108 days. Considering the 172 cases whi»h issued within 100
days from the filing date, the length of pendency averaged 63 days.

3746

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3. The Examination. Statutory •■Requirements for Patents.

Of what does the examination consist? The case first must be
scrutinized to determine whether all the formal requirements of the rules
and statutes have been met. A search then is made through files contain-
ing all .reasonably available drawings or' representations of published
designs for similar articles, including copies of patents, trade journals,
catalogues, newspaper advertisements, etc.. Any design that is discovered,
no matter .when published or whether ever used, which closely resembles
the design disclosed by the application, is computed with the latter by
the Examiner in his action "on the merits" of the case.

The statutory requirements are that the applicant must have
"invented" a "new, original, and ornamental design for an article of
manufacture" . The concept of originality so important in the copyright
laws — viz., that the thing must be a creation of the author's or ,
inventor's own mind, is of little importance in the patent field in view
of the more stringent requirements of invention and novelty.

(a) Novelty

To be novel a design must possess an appearance which gives an
impression upon the eye of the ordinary observer different from that of
any preceding published or patented design. ( **) The amount of the
novelty has been said to be immaterial. ("**.') If it was published in a
printed publication, or in public use, or on sale to the public more
than two years prior to the date of application for patent thereon, no
valid patent can be granted. (.****)

(•*) See Emerson v. Davies, Fed. Case #=4,436, 3 Story 768 (C. CD. Mass.

1834); Ferd Fisher, Inc. v. Dillingham , 298 Fed. 145 (D.C .S.D.N. Y. ,
1924) where Judge L. Hand stated: "For the purposes of this case it
must be deemed to be original, if by original one means that it was
spontaneous, unsuggested result of the author's imagination."

( **) Redway v. Ohio Stove Co., 38 Fed. 382 (C.C. Ohio, 1889); In Re

Schraubstadter , 26 App. D.C. 331 (1905); Goudy v. Hansen . 247 Fed.
782 (CCA. 1st, 1917) Cort. den'd., 246 U.S. 667, 38 Sup. Ct . 336,
62 L. ed. 930 (1918); Britton v. White Mfg. Co ., 61 Fed. 93
(C.C. Conn., 1894).

(***) Redway v. Ohio Stove Co. , supra; Kraus v. Fitzpatrick Co. , 34 Fed.
39 (C.C.N. Y. , 1888)".

(****) In re Tournier , 17 App. D. C 481 (1901); Anderson v. Siler , 50 Fed.
7-5 (CCA., 1892); " Young v. c lipper Mfg. Co. , 130 Fed. 150
(CCA. 2nd, 1904) .

9746

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(b) Invention

The test of invention as pronounced by the courts is not only
whether the design was created by the mind of him who applies for patent,
"but also whether, from an objective point of view, the originator has
produced something which differs from existing designs in a manner that
would not be obvious (*) to the ordinary skilled designer who, theoret-
ically, is familiar with all existing designs for similar articles. (**}
In other words, "inventive genius", an abstraction which is interpreted
differently by different courts, is required; (**-*) The lack of it is
sufficient reason to invalidate a patent regardless of novelty. (****)

To meet the statutory requirement of ornamentality, a design
must be pleasing to the eye, decorative. (****)There need be no utility
in the sense that the artice is capable of performing some function —
mere ornamentality is sufficient. (******)

(*) "To entitle a. party to the benefit, of the Act, * * there must be
originality and the exercise of the inventive faculty. * * Mere

(**) mechanical skill is insufficient. There must be something akin
to genious — an effort of -the brain as well as the hand. The
adaption of old devices or old forms to new purposes, however con-
venient, useful or beautiful they may be in their new role, is not
invention." Smith v. Whitman Saddle Co., 146 U.S. 674, 13 Sup.
Ct. 768 (1893); Steffens v. Steiner , 332 Fed. 862 (C.C.A. 2nd, 1916)

(**^ In Strause Gas Iron Co. v. William l\. Crane Co. , 235 Fed. 126
(C.C.A. 2nd, 1916), Judge L. Hand stated: " * * The test for
invention is to be considered the same for designs as for mechani-
cal patents; i.e., was the new combination within the range of the
ordinary routine designer? We believe that anyone starting to
design sad irons with the art before him, and governed only by
considerations of proportions and plan, would have had no diffi-
culty in making the plaintiff's iron."

(****) A. C. Gilbert Co. v. Shemitz, 45 F. (2d) 98 (C.C.A. 2nd, 1930),
"The subject of design patents is difficult, for there are no
standards. Yet we are obliged to determine, as best we may,
whether the design in question is original and aesthetic and in-
voked a step beyond the prior art requiring what is termed
'inventive genius'. * * The absence of any ornamentation, though
pleasing, seems dominatly utilitarian, even though it results in
an attractive configuration. But, whatever may be thought of the
appeal to the aesthetic taste, we are satisfied that there was no
inventive skill in the slight modification of prior models involved
in working out the design of the patent in suit."

(*****) Smith v. Whitman Saddle Co. , supra note 45; A. C. Gilbert v.

Shemitz, supra .
f**' ;: **) A. C. Gilbert v. Shemitz, supra note 47; Gorham Mfg. Co. v. White

81 U.S. 511, 20 L. ed. 731 (1872)

Gorham N'fg. Co. v. White , supra; Ashley v. Weeks-Numan Co . , 220

Fed. 899 (C.C.A. 2nd, 1915)

-80-

As an outgrowth of this requirement, it is held that the designs of
articles which have only a mechanical utility and are not used in such
manner as to be seen are of no interest to anyone — no contribution to
the decorative arts — and hence unpatentable. (*) But if it meets the
requirements of the design patent law, it is immaterial that the article
may perform a mechanical function, ( **0 although the design patent can
grant no monopoly on such function. (***)

Finally, designs for articles of manufacture, under the patent
statutes, may consist of shape or configuration, ( ****)new ornamentation
of old shapes ,(***** jbr a combination of both configuration and ornamen-
tation .(****** )Where the design is merely a pattern or a print applied to
the surface of an article, such as a placard or fabric, it would seem
that either patent or copyright protection might be obtained £******.*•) although

(*) Faris v. Patsy Frok and Romper Co ., 273 Fed. 900 (CCA. 9th, 1921);
North British Rubbe r Co . v. Racine Rubber Tire Co. of New York, 271
Fed. 936 (CCA. 2nd, 1921); In re Eifel , 35 F . (2d) 70 (C.C.F.A. , 1929)

(**,) R. E. Dietz Co . v . Burr & Starkw e ather Co. , 243 Fed. 392 (CCA. 2nd,
(1917); Chandler Adjustable Chair and Desk Co. v. Heywood Bros. &
Wakefield Co ., 91 Fed. 163 (C.C.Vass., 1898).

(***) Weisgerber V. Clovner , 131 Fed. 477 (C. C.H.J.., 1904).

£**'*) Theodore W. Foster & Bros. Co. v. Tilden-Thurber Co., 20ri Fed. 54
(CCA. 1st, 1912).

(*****) King Ventilating Co. v. St. James Ventilating Co. , 26 F. (2d) 357
(CCA. 8th, 1928).

(****** )Ln_re_ScJanell, 46 F. (2d) 203 (C.C.F.A. , 1931). This case contains
a thorough discussion of what is a design for an article of manu-
facture under the patent law.

(*******)Sec. 4929, R.S., prior to tne amendment of May 9, 1902, which in-
cluded all patentable designs under tne words "design for an article
of manufacture" , provided specifically for the grant of patents on
"any new and original design for the printing of woolen, silk, cotton,
or other fabrics; any new and original impression, ornament, pattern,
print, or picture to be printed, painted, cast, or otherwise place on
or worked into any article of manufacture;" etc.

In De Jonge & Co. v. 3reuker , 182 Fed. 150 (CC, 191l) copyright on
a wrapping paper containing many impressions of a painting was in-
validated on the ground that notice of copyright was required for
each impression. The Circuit Court declared that the paper might
have been patented. On appeal both the Circuit Court of Appeals
and the Supreme Court affirmed the holding on the copyright phase
but declined to state whether the paper might have been patented.
But Cf., Kemp & Beatley, Inc. v. Kirsch , 34 F. (2d) 291 (D.CE.D.N.Y.
1929) (holding pattern to be stamped on dress goods not copyrightable).

9746

-81-

it has been held that a designer may not obtain both.(.*) In the one
the emphasis is placed upon the relation of the designer to the article,
(•**) in the other the print or pattern is protected as such, regardless
of its use.

In the Patent Office the Examiner must determine that each case
meets all the statutory requirements above discussed before it may be
passed to issue. If the subject of a case is deemed old, or lacking in
invention or ornamentality, or if objections to the form of the case
should be made, the Examiner "rejects" it, giving his reasons, (***)and
awaits further action by the applicant. Action on the merits of a de-
sign application, however, ordinarily consists merely of a judicious
comparison of the applicant's drawing with reproductions of pre-exist-
ing designs. With knowledge of the statutory requirements for patent-
ability, it becomes little more than a matter of impression to decide
whether the requirements are met — a matter, however, concerning which
opinions may vary greatly. To prove that an applicant was the originator
of the design for which patent is sought, the Examiner has, and can re-
quire, only the applicant's oath. (*•***)

4. Appeals and Interferences

If the Examiner's decision is adverse to the applicant, the latter
may appeal to an administrative Board of Appeal s,(*****)and from the Board

(*) In re Blood , 23 F. (2d) 772 (App. D.C., 1927) (Copyright protection
on a hosiery label held a bar to the grant of a design patent) .

(** ) In re Schnell , supra Note 56, the Court said: "We think that Assis-
tant Commissioner' Clay was right in saying that the design must be
shown not to be the mere invention of a picture, irrespective of
its manner of use * * ."

(***) Rules of Fractice, U.S. Patent Office (Kay 1, 1935), Rule 66.

(****) Ibid , Rule 68. • .,,

****) R'.S. Sec. 4909,' 35 U.S. C. A. Sec. 5.7, us amended Mar. 2, 1927, c.
273, Sec. 5, 44 Stat. 1-336.

9 746

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to the Court of Customs and Fatent Appeals, (*) or to the Supreme Court
of the District of Columbia by bill in equity. (**)

There is one serious pitfall in which a case may be caught while
in the Fatent Office. If it is patentable and conflicts with another'
pending application, an "interference" will be declared, which is a
complicated administrative procedure designed to determine which of the
two applicants is entitled to the patent. (***) Interference proceedings
may be both extremely lengthy and expensive. It has been charged that
they provide a weapon whereby the unscrupulous may force a prior inventor
to abandon his case for lack of resources. (****)

5. Expenses in Connection with Fatents

The mere statement of the statutory requirement suggests what is a
fact in practice, that an application for a design patent cannot be handled
intelligently by the layman and that over ninety percent of the cases
filed are prepared and prosecuted by patent attorneys. The expense thus
involved gives rise to another item of expense, the preliminary search.
If cases could be filed and prosecuted at little cost, the statutory fees
would not be too high a charge to pay for learning whether the design
sought to be patented is novel and patentable. Actually, the owner of a
design ordinarily must pay for a preliminary search and an opinion on the
question of patentability before it is feasible to incur the expense of

(*) H.S. Sec. 4911, 35 U.S.C.A. Sec 59a, 44 Stat. 1336, 45 Stat. 1476.

(**) R.S.Sec. 4915, 35 U.S.C.A. Sec. 63, a s amended Mar. 2, 1927 and Mar.
3, 1929. Jurisdiction over such a bill in equity is limited to the
Supreme Court of the District of Columbia only because of statutory
requirements of service. Where the Commissioner of Fatents consents
to jurisdiction, the suit may be brought elsewhere. See Butterworth
v. Kill . 114 U.S. 128, 5 Sup. Ct. 796," 29 L. ed. 119 (1885);
Barrett Co. v. Ewing . 242 Fed, 506, (C.C.A. 2nd, 1917) (Cert.den'd.
244 U.S. 661, 37 Sup. Ct. 746, 61 L. ed., 1376 (1917); Hammer v .
Robertson . 6 F. (2d) 480 (C.C.A. 2nd, 1925).

( ***) R.S.Sec. 4904, 35 U.S.C.A. Sec. 52, as amended Mar. 2, 1927, c. 273,
Sec. 4, 44 Stat. 1336; Rules of Fractice, U.S. Fatent Office, Rules
93-132.

(****) Nikonow, "Fatent Protection for New Designs of Dresses" (1935), 17
Journal of the Fatent Office Society 253.

9746

filing and prosecuting an application. The practice of making prelimin-
ary searches, however, probably is the primary reason why over two-thirds
of the applications for design patents filed since Jan. 1, 1932, have
matured into patents. (*).

6. Rights and Remedies of the Fatentee

Take the case of a designer, who has obtained a design patent.
He is thereby given, prima facie, an exclusive right to make, use, and
vend the patented invention (**) She right, more accurately, is a right
to exclude others from naki'ng, using and vending the invention except
with the consent of the patentee. (***) It is an absolute right to control
(****)the design disclosed in the patent, for the term of years elected,,
by the applicant, not a mere right to prevent copying or piracy. (*****)

The test of infringement has been stated by the Supreme Court in
the following language: (******)

"We hold ** that if, in the eye of an ordinary observer,
giving such attention as a purchaser usually gives, two
designs are substantially the same, if the resemblance is
such as to deceive such an observer, inducing him to pur-
chase me supposing it to be the other, the first one pat-
ented is infringed by the other."

(*) The figures are as follows: Design Patents Fer Cent of Filed

Year Cases Filed Issued Cases Issued

1932 4347 2940 67.6$

1933 3600 2411 67.0$

1934 4398 2921 66.4$
1935(To Sept.) 3763 2538 . 67.5$

TOTAL 16108 10810 67.1$

(**) R.S.Sec. 4884, as amended May .23, 1930, . c. 312, Sec. 1, 46 Stat.
376.

(***) Bauer v. O'Donnell ,229 U.S. 1, 33 Sup.Ct, 616, 57 L. ed. 1041

(1913); Ideal. Wrapping Mach. Co. v. George Close Co ., 29 F.(2d)
533 (CCA. 1st, (1928); Waterbury B u ckle Co. v . G-.E.Frentice Mfg .
Co.., 286 Fed.. 358. 1 here is no right to use which enables a use
in violation of police regulations of a state. Patterson v .
Kentucky . 97 U.S. 501, 24 L. ed. 1115' (1879).

(****) The right granted by patent is popularly referred to as a monopoly,
though many scholars declare that the word is used improperly be-
cause the public is deprived of nothing to which it is entitled..
See Swenarton, "Fatents, Trade Secrets and Trade Names as' Factors
in Industrial Development", 19 Yale L. J . 115-120 (1909)

(***** ? ) Ford Fisher v. Dillingham , supra note 41.

(******) Go r ham Mfg. Co. v» White , supra note 49.

9746

-Si-
Servile imitation is not required. (*) 3ut in determining infringement
the patented design must be regarded as a whole, not by parts. (**) Thus
it is evident that the patent laws give protection only to specific em-
bodiments of designs, and not to general ideas or trends such as are
usually characterized as "styles".

The remedies available in case of infringement of a patent are
several. An action at law may be brought, with recovery of actual damages,
or at the court's discretion, triple damages, in the event of success. (***)
Or a bill in equity for an injunction, profits, and damages as in the
case of an action at law, may be brought. (****) Resign patentees alone
have an additional remedy — where there is an infringement consisting in
the application of the patented design to articles for purpose of sale or
the selling of such articles, a fixed sum of $250 may be recovered, or
the entire profits if they exceed $250. (*****)

But if articles embodying the patented design are made or sold

with the consent of the patentee they must be marked "Patent No. "

before a suit against an alleged infringer may be brought, unless it be
proved that such infringer had actual notice of the patent. (******)

(a) Injunctions. F re sumptions.

To secure immediate relief preliminary injunctions may be obtained
according to the principles which generally prevail in equity suits . (*******)
When the court doubts the validity of the patent or the existence of an
infringement a preliminary injunction is denied. (********) ^hus lack of pre-
vious adjudication of a patent, or of public acquiescence in its monopoly,
or of a showing that defendant could not respond in damages for his
alleged infringement, may be deemed sufficient ground for denying

(*) American Fabrics Co. v. Richmond Lace Works , 24 F,(2d) 365
(CCA. 2nd, 1928) .
(**) North British Rubber Co. v. Racine Rubber Tire Co., of New York ,
Supra note 51; "biting Mfg. C. v t Alvin Silver Co ., 283 Fed. 75
(CCA. 2nd, 19?2) (Cert, den'd., 260 U.S. 731, 43 Sup.Ct. 93,
67 L. ed. 486 (1922).
(***) R. S. sec. 4919, 35 U.S.CA. Sec. 67. :

(****) R# s> Sec< 4921> 35 u.S.C.A. Sec. 70, as amended Mar. 3', -1897, and

Feb. 18, 1922.
(*****) 35 U.S.CA. Sec. 74, Act. Feb. 4, 1887, c . 105 , Sec. 1, 24 Stat. 387.
(******) R.S.Sec. 4900, 35 U.S.C.A. Sec. 49, as amended Feb. 7, 1927, c. 67,
44 Stat. 1058; Li chtenstein v. Fhiyrs , 161 Fed, 578 (C.C.N.Y. ,1908)
(Rev'd on other grounds, 168 Fed. 61 (c.CA. 2nd, 1909).
(*******) Crescent Specialty Co. v. National Fireworks Distributing Co . , 219

Fed. 130 (CCA. 6th, 1915).
(********) Simon Bros, v. Blanoard & Co . . 22 F.' (2d) 498 (CCA. 2nd, 1927);
Eskimo Fie Corp. v. National I nee Cream Co. , 20 F.(2d) 1003 (D.C
Ky., 1927); George Ertel Co. v.Stahl . 65 Fed. .519 (CCA. 7th,
1895)

9746

-85-

immediate relief. (*) The issuance of a patent by the Fatent Office,
however,, carries with it a presumption of validity which may he availed
of to secure preliminary relief where validity and infringement are not
effectively denied. ( **) This presumption is strengthened, according to
one court, where the patent has been granted after an appeal to the Court
of Customs and Fatent, Appeals in an interference proceeding. (***) And
it may be relied on to place the burden of proof of invalidity of a
patent upon a defendant who cannot deny infringement. (****) But the basis
for the presumption is the fact that the Patent Office has passed upon
the question involved according to the requirements of the law, and if it
be shown that relevant publications were not found or considered by the
Examiner , (*=f***) or if the question of origination, (******) or any other
question concerning which the Examiner can make no investigation and must
accept ex parte evidence, (*******) is brought into dispute, the presumption
is of little weight. In connection with this matter Vaughan has stated:^*****)

"To-day, as a rule, a court will grant a preliminary
injunction against an alleged infringer only if the
validity of the patent has been established, or if it
has gone unchallenged for several years. Furthermore,
the prevalence of invalid patents is indicated by the
fact that many private corporations and trade associations
examine relevant patents to test their validity."

(*.) Williams v. Breitling Metal-Ware Mfg. -Co ., 77 Fed. 285 (CCA. 7th,
1896); Newhall v. McCabe Hanger Mfg . Co. ,. 125-Fed, 919 (CCA. 2nd,
1903); Hi ldreth v. Norton , 159 Fed. 428 (C.C.A. 2nd, 1908); Smith
v. Meriden Britannia C . , 97 Fed. 987 (C.C.A. 2nd 1899).

(*.*) See H. J. Heiz Co. v. Cohn , 207 Fed. 347 (C.C.A. 9th, 1913); Rail -
r oad'' Supply Cp. y. Hart Steel Co ., 222 Fed. 261 (C.C.A. 7th, 1915)
(Rev'd on other grounds, 244 U.S. 294 (1917).

(***) Scott v. Laas . 150 Fed. 764 (C.C.A. 7th, 1907).

(****) J. D. Wallace & Co. v. Fortable Fower Tool Corp. , 51 F. (2d) 488
CCA. 7th, 1931); Doughnut Mach. Corp. v. Demco , Inc. , 51 F.(2d)
364 (D.C.Md., 1931) (Rev'd on other grounds, 62 F.(2d) 23 (C.C.A.
4th, 1932); Cf . Radio Corp. of America v. Radio Engineering
Laboratories , 54 Sup. Ct. 752, 78 L. (1934), Boyd v. Janesville
Hay-Tool Co., 158 U.S. 260, 15 Sup. Ct. 837, 39 L. ed . 973 (1895).

(*****) R. H oe & Co. y. Goss Frinting Fress Co. , 30 F. (2d) 271 (C.C.A. 2nd,
(1929); American Can Co, v. Goldee fcfg. Co .. 290 Fed. 523 (D.CIT.Y.
1923)

(*****) Johnson v. Root , Fed. C a se No. 7, 410 (C. C M a ss., 1861).

(******■*) National Maeh. Corp. v. Benthall I'.ach. Co. , 241 Fed. 72 ( C.C.A. :

4th, 1916) .
*******) Vaughan. Economics of our Fa te nt System ( 1925) , • pp. 184, - 185.

9746

-SB-
Such are the l a ws and procedure which govern the existing national
scheme for the protection of industrial designs in the United States.
The prevalence of design piracy in several industries raises questions
of whether the present scheme is adequate and, if not, whether it should
be abandoned in its entirety or modified to overcome dispensable technic-
alities and objectionable features. Evidence procured from those whom
it is intended to service may be relevant at this point.

7. Effectiveness of the Design Fatent System. Criticisms.

An indication of the extent to whi'-sh manufacturing concerns take
advantage of the opportunities to secure design patents, the average
cost of such patents, including of course costs of preliminary searches,
attorney's fees, Patent Office fees, etc., and the price and production
policies which manufacturers say that they follow in connection with
patented items, may be gathered from Table I. It includes a tabulation
of the responses received by questionnaire in answer to questions con-
cerning design patents.

The summary of estimated figures indicates the existence of several
important conditions, at least as respects those who responded to question-
naires: (l) The majority of concerns does not take out design patents at
all. (2) The number taken out by those who do use Fatent Office facili-
ties is generally very small in comparison with the total number of new
designs introduced. (3) The average cost of obtaining patents varies
widely in the experience of particular concerns. (4) Most concerns,
assert that articles embodying patented designs are no higher priced than
others and that the production of those articles is greater.

Perhaps of more significance than the summary of figures are the
comments of various respondents in reply to a question asking their
reasons for not taking out design patents. For convenience these comments
are listed below by industries.

Carpet and Pug

1. "Slight changes are easily made and still give same effect."

Furniture

1. "Considered such action useless."

2. "States that patents protect really new designs, which should

be sufficient."

Handkerchief

1. "Cannot be patented."
Medium and Low Priced Jawelry

1. "Too costly. Tfikes too long. i J o protection in itself, just a

basis on which to enter into expensive law suits."

2. "Life of most items shorter than time necessary to get pro-

tection,"

0746

»*87-

TABLE I.

SUMMARY OF ESTIMATED NUMBER OF DESIGNS INTRODUCED,
DESIGNS PATENTED, AVERAGE PATENT COST AND SELLING AND
PRODUCTION FOLICIES a/

ssigns

Designs

Average

tented

Designs

Industry I]

ntroduced
1934

Patented
1934 1935

Cost of
Patents

Friced

Produce'

Hig]

ner

same

Higher Si

^me

(Concerns

Indicating

; that

Design Firacy I s

a P^reva

lent P

ractice.)

Funeral

Supply

Furniture

Lace

350

$25

(No Answer)

Ladies

154

$30

Handbag

Leather

$50

Leather

(Applied For)

Goods

Handkerchie:

f 150

(Sta

tes D<

=signs

Not Patentable)

Jewelry

$30

1500

$80

200

$125

600

700

Lighting

300

$75

Equipt .

Shoe

$75

150

$50

Silverware

$100

Toy

Wall Paper

(Concerns Indicating that Design Piracy is not a Prevalent Practice)

Chair 10

Silk Textile 300

" 150

Upholstery,

Drapery Tex. 10

" 60

Wall Paper 40

$75

a/ Source: 27 Questionnaire Returns
h/ These columns indicate respondents' prices and volume of production of
articles embodying patented designs as compared to others unpatented.

9746

-88-

3. "Delay in patent office allows competitors to floor market."

4. "Excessive costs and length of time."

5. "Too' expensive and novelties do not last long."

6. "On those designs that we believe have real merit, which are

only a few, we have registered with the United States Patent
Office in Washington, and this service has always proven to
be very satisfactory."

7. "Found them not worth anything — small changes could be made on

copies."

Lace

1. "We think a more extensive design patent could be had by a

simplification of the present patent law, such as a form of
registration with a clear photograph for identification,
merchandise to be marked with a ticket "Design Reg. U.S. Fat.
Office" , the same ticket to be used on all merchandise which
has a registered design and not requiring to have the design
registration number on each ticket as required by the present
law to obtain full protection."

T /I ,

2"« Not necessary. "
Ladies Handbag

1. "Believe such styles too easily modified or else of only
seasonal duration."

Leather

1. "Have registered with the Design Registration Bureau of the
Leather Trades and no patents in 1933, 1934, and 1935."

Leather Goods '•' '.

1. Don't, mean anything,"

Shoe

1. "' it is 'extremely rare that a design presenting an invented

idea is introduced.
"The present design patent law gives adequate protection to
such rare exceptions. It will afford the monopoly when the
monopoly is justified."

2. "Delay in issuing - diff icultie-s of enforcing."

Silk Textile

1. "Because we have the Design Bureau and patent procedure is

too complicated and costly."

2. "Does not give protection."

Silverware

1. "Few design patents for new designs are taken out because of the

worthlecsness of design patents under present laws."
9746

•89-

Toz

1. "Cpnnot tell at first whether sales will warrant the expense."

9746

-90-

Upholstery and Drapery Textile

1. "Too expensive."
Wall Paper

1. "Cost prohibitive."

The indictment generally placed against design patents seems to be
grounded on at least three counts: (1) Design patents are too expensive,
(2) Delays incident to procuring them are burdensome and tend to render
protection valueless, and (3) Patents are merely "invitations" to law
suits and are difficult to uphold in the courts.

The degree to which these counts coincide with viewpoints express-
ed by individuals interviewed in the field is worthy of notice, A
representative of popular-priced dress manufacturers, opposed to design
control, stated that Patents are available to all who deserve them. Rep-
resentatives of the higher-priced concerns, however, stated that design
patents are used by a very fetr, because the needs of the industry are
not met. Four lace manufacturers, all of those interviewed, expressed
the view that design patents are not practical. Two objected to the
time and cost elements, (although one of the two patents designs of out-
standing worth) and attribute delays to patent attorneys. The third
stated that he has never obtained more than three patents, one of these
secured on a copied design in order to prove to a competitor that the
design patent division was unable to determine originality. The fourth
claimed that patents are worthless because of the difficulties of en-
forcement. Of four manufacturers of ladies handbags interviewed, all
believed design patents too costly and time-consuming. It was further
charged that the industry does not respect design patents, and that in
many cases the alleged copyist is out of business before relief by
patent can be obtained.

Observers of the Millinery Industry stated that patents are not
used by manufacturers because they are ineffective and too costly.
None of the four manufacturers interviewed had ever used them — one was
not aware that patents for designs are available. Again, ineffective-
ness, time, and cost ^eve cited as reasons, although one stated that
patents curb copying to some extent by enabling threats of court action.

Of nine jewelry manufacturers interviewed, six never use design
patents. One stated that he took out 200 patents during a short period
of time, brought a number of suits, and obtained an injunction in only
one. Now he uses them "occasionally" and does not find them too ex-
pensive or too much delayed. Another stated that he prefers patents to
any other form of design control because he can fight in court. The
ninth does a "great deal" of patenting, but objects to expense, narrow
protection, and the burden of defending against unjustified claims of
patent rights.

Manufacturers in the Silk Textile Industry state that patents are
seldom used. Five of seven interviewed do no patenting today. The
other two patent a few of their designs; one of these indicated that he
had had successful experiences with patents, the other that patents on

9746

-91-

textile designs are not useful because Patent Office records are not
adequate to enable a reliable determination of novelty.

Six of seven toy manufacturers never use design patents; the
other does occasionally. Two wall paper manufacturers indicated that
there are not "much more than a half dozen" design patents in the
industry.

If there is any difference in the viewpoints of those interviewed
and those who responded to Questionnaires, it lies on the side of the
adverse critics of the design patent system. The case against the ex-
isting system is summed up in the following language of a representa-
tive of the Dress Industry:

"The manufacturers have been relunctant to seek protection
for their designs through facilities of the Patent Office
for the reason that the procedure of obtaining design patents
is too expensive and too slow, considering that a very
large number of such designs must be patented every season,
and these designs are valuable during that particular season
only." (*)

And in the same vein is the comment of Henry D. Williams, a
member of the Patent Bar of the City of New York, with respect to a pro-
posal for the repeal of the design patent laws in favor of design
copyright legislation: (**)

1, To this, I personally have no objection, as these laws are
unquestionably a misfit and a failure. They have failed to
provide satisfactory protection to ornamental and decorative
work as applied to articles of manufacture, and have failed
to encourage the useful arts by stimulating the work of
designers in the industrial field. The delays and expense
imposed in the operation of these laws have been in many
instances prohibitive, and the protection afforded by these
laws has been altogether insufficient."

A note in favor of the design patent system, however, is voiced
by Oscar A. Geier, a representative of silk textile manufacturers, who,
after citing improvements in procedure due to reductions in the time
required to obtain design patents and to the elimination of rigid
requirements of pen and ink drawings for "fashion" designs, stated: (***)

"The one drawback remaining with the Patent Office procedure

(*) John P. Nikonow, Journal of the Patent Office Society , Vol.
17, p. 254' (March, 1935)/"

(**) Ioid , Vol. 7, p. 540 (July, 1925).

(***) Ibid , Vol. 16, p. 225 (itarch, 1934)

9746

is the time between the allowance of an application and the
final dating, and publication of the -oatent. According to
the existing rule, a patent cannot be dated and loublished
in the ; Official Gazette until about three and one-half weeks
after the allowance of the at>-plication. (*) "Unfortunately
a patent cannot be sued upon until the final document has
issued ....

,". "In three and one-half weeks the pirate can do all the

damage, and the legitimate manufacturer has to stand with

. his hands tied and 'take it on the chin 1 . Let us therefore
_: make a concerted effort uDOn the authorities to amend this
obnoxious rule, so that design patents can be finally-
issued within about a week. This would even exceed the
expectations of the Design Copyright Bill."

8, Appraisal

When the facts are considered, that the number of design patents
granted during the last four years has averaged approximately 2700 per
year, (**) while during the same period the lowest number registered for
any one year by the Silk Textile Industry alone was 11,289, with a high
of 19,947 for 1934, (***) it becomes apparent that the coverage of
design patents is really inf initessimal. Also of importance in this
connection is the fact that over 95;S of all design patents granted,
according to the Primary Examiner of the Design Division of the Patent
Office, (****) represent cases that are filed after the articles are on
sale, indicating that articles must prove their salability before the
expenditures for design patents are deemed warranted. These circumstances,
coupled with the voiced opposition of manufacturers to the present system
of control, leave little room for doubt as to the effectiveness of design
patents as monopoly-giving instrumentalities available to all who create
new designs. Although there is some evidence that the possibility of ob-
taining patents for outstandingly successful designs is looked forward
to by some manufacturers, the noticeable lack of any consideration of
design patents by what, from field interviews and questionnaires, seems
to be the majority of concerns, is of great significance. (*****)

(*) The time required for nrinting has,, now beoh reduced frorf 13 to 19
days.

(**) See note 67 supra.

(***) See Chapter VI, infra.

(****) Mr# Kalupy, interviewed by A. C, Johnston. See note 39 supra.

(*****; At least two recently-formed organizations in New York City seem
to be "promoting" design patents: The "Design Copyright and
Patent Service Bureau" and the "American Design Registration
Institute". (Representatives interviewed by A. C. Johnston in
New York, December 14, 1935.)

9746

-95-

D. Co-oyri^ht Laws .

The copjrright lars of the United States are an outgrowth of hundreds
of years of change and development in the intellectual arts and in the
attitudes of governments toward the protection of intellectual property.
The important steps in the growth of this branch of the law will he in-
dicated in a subsequent section of this paper. (*) The present inquiry
is confined to an investigation of the legal protection afforded designs
under the copyright laws as they exist today and an indication of such
general features of those laws as have a bearing upon proposed legis-
lation.

1. Statutory provisions

The heart of the. copyright law is contained in several sections of
the Act as amended March 4, 19G9. (**) Section 8 provides, in part,
that "the author or proprietor of any work made the subject of copyright
by this Title, or his executors, adnin.istra.tors, or assigns, shall have
copyright for such nor!: under the conditions and for the terms specified
in this Title". The works made the subject of copyright, generally, are
"all the writings of an author" (***) although Section 5 classifies
specifically thos-e works for which protection is intended to be given.
This classification includes (a) books, including composite and cyclopedic
works, directories, gazeteers, and other compilations; (b) periodicals,
including newspapers; (c) lectures, sermons, addresses (prepared for oral
delivery); (d) dramatic or dramatico-musical compositions; (a,* musical
compositions; (f) maps; (g) works of art; models or designs for works of
art; -(h) reproductions of a work of art; (i) drawings or plastic works
of a scientific or technical character; (j) photographs; (k) prints and
pictorial illustrations; (1) motion picture photoplays; (r.) motion pic-
tures other than- photoplay. The statute, however, provides that those
specifications shall not be held to limit the subject matter of copyright
to the items named. (****)

2, Procedure, Rights Grantee 1 .

If a. work is a subject of -protection under the statute, copyright
may be secured by those entitled thereto b; r publication of the work with
the prescribed notice of copyright, (*****) Thereafter, upon filing an
application for registration and depositing copies of the work with the
Register of Copyrights, the claim to copyright may be registered and a
certificate issued. (******) if a work is not to be reproduced for sale,
a special procedure is set up for securing copyright thereon. (*******)

(*) See Section III, infra.,

(**) Act March 4, 1909, c. 320, Sec. 1-64, 55 Stat. 1075-1088,
17 U.S.C.A.

(***) Ibid , Section 4.

^****) Ibid, Section 5. See Reiss v. rational Quotation bureau .

276 Fed. 717 (D. C.S.I). IT. Y. , 1921).
(*****) ibid . Section 9
(******) ibid , Sections 10, 55.
(*******) Ibid, Section 11

Q7AR

-94-

In general, a copyright owner is given the exclusive right "to
print, reprint, publish, copy, and vend the copyrighted work." (*)
For special types of works additional specific rights are given, in the
case of a model or design for a, work of art the author being given the
exclusive right "to complete, execute, and finish it".

The cop3 r right thus defined, under the existing law, lasts for 28
years, with the privilege of renewal for 28 additional years upon the
performance or certain conditions. (**) Fees of not over $2 in each in-
stance are prescribed for the issuance of certificates of registration
and for other services performed by the Copyright Office. (***)

3. Remedies

The possibility of abuse existing in the copyright system is anti-
cipated by the enactment of several criminal sections. Penalties are
prescribed for failing to deposit copies after publication with notice
of copyright; (****) for malting false affidavits as to having complies
with the conditions upon which copyright is granted; (*****) for fraud-
ulentljr using a notice of copyright, or removing or altering the notice
on any copyrighted article; (******) f r importing piratical cooies of
copyrighted works; (*******) an d a criminal penalty is even provided
where a copyright has been willfully infringed for profit. (********)

(*) Ibid . Sec. 1

(**) Ibid , Sec. 23

(***) Act, Hay 23, 1923, c. 704, Sec. 1. 45 Stat. 714, 17 U.S.
C.A. Sec. 61.

(****) Act, Liar. 4, 1909, c. 320, Sec. 13, 33 Stat. 1078, 17 U.S.
C.A. Sec. 13.

(*****) Ibid . Sec. 17

(******) ibid , Sec. 29

(*******) Bee, 31

(********) ibid, Sec. 28

5746

-95-

As in the case of suits on patents, the United States District
Courts and the District Courts of the territories are given original
jurisdiction over all actions or proceeding brought under the copyright
laws, (*) with right of review "by appeal or writ of error to higher
courts. (**) Also like the patent statutes, provision is nade for the
granting of injunctions to prevent and restrain the violation of any
right secured by the copyright laws "according to the course and prin-
ciples of courts of equity, upon such terms as said court or judge nay
deem reasonable." (***) Differing from the patent laws, however, is a
provision which authorizes the court, in its discretion, to award to
the complainant $1 for each infringing copy of a model or design for a
work of art made or sold or possessed 'by the infringer, and if such
sum be greater, directs the assessment of minimum damages of $250 for
each infringement, regardless of whether actual damages are shown.
(****) And costs, as well as a reasonable attorney's fee, may be
awarded to the prevailing party. (*****)

4. Leading Copyright Cases.

(a) Works Copyrightable. .

What the law as above described actually means -can be understood
only by reference to the cases that have arisen under it. The sum total
of works declared subjects of copyright has been gradually increased
since the early days of copyright protection. In Clayton v. Stone
(1829) (******) it was held that a newspaper could not be considered a
writing of an author within the provision of the Constitution which
authorizes copyright legislation, the object of such provision being de-
clared to be "the promotion of science". Later cases reflected general
confusion among the courts on the question of what works were entitled
to protection, (*******) which was not dispelled until the Supreme Court

(*) Ibid , Sec. 34

(**) Ibid , Sec. 38

(***) Ibid , Sec. 36 .

(****) Ibid, Sec. 25. The construction of the statute stated was
adopted by the Supreme Court in L.A. "Jester-maim y. Dispatch
Printing Co. . 249 U.S.10O (1919).

(*****) Ibid, Sec. 40

(******) Fed. Case #2,872 2 Paine 382 (C'.C. S.D. IT. Y". ) .

(*******) Charts for cutting ladies dresses were held proper subjects
of copyright in Drury v. Swing, 'Fed. Case ITo. 4,095
(CCS. D.Ohio, 1862), but in Rosenbach v. Dreyfus s , 2 Fed.
217(D.C.S.D.N.Y. 1680) in a suit by an informer to collect
penalties, prints of balloons 'and hanging baskets, adapted
to be cut and joined together, were declared uncopy right able.
Brightlev v. Littleton . 37 Fed. 103(CCD.E.D.p a . , 1888), up-
holding copyright in legal forms, was followed by Carlisle v .
Colusa County , 57 Fed. 979(CCIf.D.Cal. 1893), in which an
opposite conclusion was reached.

P7Afi

-96-

spoke in Bleistein v. Donaldson Lithographing Co . (1903) (*) The
attitude of the courts previous to 1903 is illustrated by J. L. liott
Iron Tforks v. Clow , (**) wherein a. catalogue or directory containing
illustrations of articles was held not a subject of copyright since
it possessed "no value as a composition" except as a "mere advertise-
ment". The Bleistein case involved cromolithographic advertisements
.for a circus, the copyright being upheld in an opinion written "by Mr.
Justice Holmes, who said;

"Certainly works are not the less connected r ith the
fine arts "because their pictorial quality attracts the crowd
and gives them a real use — if use means to increase trade
and to help to make money.

"It would he a dangerous undertaking for persons train-
ed only to the law to constitute themselves final judges of
the worth of pictorial illustrations, outside of the narrow-
est and most obvious limits. * * * if they command the in-
terest of any public , they have a commercial value — it
would be bold to say that they have not an aesthetic and ed-
ucational value — and the taste of any public is not to be
treated with contempt."

That the J. L. i'ott case was overruled by the Bleistein case was
recognized in Jewelers 1 Circular Pub. Co. v. Keystone Pub. Co ., (***)
where Judge Hand upheld the copyright in a directory containing cuts
or illustrations of trade marks used by jewelers. But these cases do
aot mean that all writings are copyright. The "ticker tape" case (****)
is one where the Court denied that copyright could subsist in "mere
annals". (*****) And that case was later cited with approval by the
Supreme Court in International Hews Service v. Associated Press .
(******) where news, as such, was declared uncopyrightable.

(a) Design protection negligible

Pe^ disputes appear to have arisen over copyright in works of
art and designs for works of art. The protection afforded designs for
industrial articles, however, is very meagre. The registration of
designs to be stamped on dress goods has in one case been held to con-
fer no copyright at all, such a design considered not a "work of art",

(*) 113 U.S. 239, 23 Sup. Ct. 398, 47 L. ed. 460

(**) 82 Fed. 316 (CCA.7th 1897).

(***) 274 Peel. 932 (D.CS.D.K.-Y. , 1921).

(****) Uational Telegraph Tews Co. v. Western Union Tel. Co ..
. ' 119 Ped. 294 (CCA. 7th 1902).

(*****) j^_ " " I -fc would be difficult to define, comprehensively,
what character of writing is copyrightable, and what
is not.' 'But, for the purposes of this case, we may
fix the confines at .the point where authorship proper
end, and mere annals begin."

(******) Supra note 18.

-S7-

"model", or "design for a v;ork of art ;i within the classification pro-
vided "by the statute. (*) 11 though that case may be subject to serious
question, (**) particularly in view of He Jonge v. Breuker (***) and the
dictum of the Supreme Court in the Bleistein cane, it appears to be
accepted that registration of the picture of or design for an article
of manufacture, under the present law, gives, at the most, copyright
protection for the two-dimensional picture of the design, and none for
the article itself. (****)

(b) "Originality" of Valid Copyright Distinguished
from
"Novelty" of Patent.

These being the works for which copyright may be secured, our next
inquiry concerns the conditions which must be fulfilled in order to comply
with the statute as construed by the courts. Originality , and not novelty ,
is the essential requisite. Judge Story, in Emrson v. Davies (1843) (*****)
upheld the copyright in a mathematics book, nothwithstanding a defense
that it contained nothing new, on the ground that an original composition
of old projects matter is a proper subject of copyright. The requirement
of originality results from the requirement of authorship — "Generally
speaking, authorship implies that there has been put into the production
something meritorious from the author's own mind." (******) In Ford pisher
v. Dillingham . (*******) judge L. Hand said:

"For the purposes of this case it must be deemed to be
original, if by original one means that it was spontaneous,
unsuggested result of the author's imagination."

In respect of this concept of originality, or authorship, lies a
great deal of the general misconception of the difference between patents
and copyrights. Nor has this misconception been voiced only by the
layman. (********) rp obtain a design patent, for example, the work must
be absolutely new and an advance over prior works such as may be deemed
an "invention". To obtain copyright on a design for a work of art, the
work need only be an unsuggested product of the author's mind, regard-
less of whether new or old. Moreover, copyright protection may be ob-
tained for any change in or re-working of an old work of another. (*********)

* Kemp & Beatley, Inc. v. Hirsch , 34 F. (2d)29l(D.C.E.D.N.Y. , 1929)

** The court relied on Rosenback v. Dreyfuss , supra note 116. Too
much emphasis seems to have been placed on the classification
of the statute. Of Beiss v. national Quotation Bureau, supra note
96.

*** Supra note 57.

**** Jack Ad^lraan, Inc. v. Sonners Gordon , Inc. 21 U, S. Patent Quarter-
ly' 218, <D.C.S-.D.K.Y., Mar. 26, 1934) Women's Wear, March 27, 1934;
See Cheney Bros, v. Doris Silk Corp . supra note 8.

***** F ed. Case #4,436, 3 Story. 768 (C.C.D.Mass. ) .

****** National Telegraph News Co. v. Western Union Tel. Co. supra note
120.0.
******* See 298 Fed. 145 (D.C.S.D.N.Y. , 1924).

******** See Harold Lloyd Corp. v. Witmer , 65 F. (2d) 1 (C.C.A, 9th, 1933) .
(Cert, den'd., 64 Su. Ct. 94, 78 L. Ed. (1933).

********* Henderson v. Thom-okins , 60 Fed. 758 (D.C.D.Mass. , 1894).
9746

-93- ' ...

Another requisite to a valid copyright is that the wo.rk be un-
published, except with notice of cqnyright.* • Thus the common law
rule that exclusive 'control over the work is terminated u^on -oublica-
tion is ^reserved, unless the mblicat ion be strictly in accordance
with the requirements of the copyright statutes.**

Finally, the work must be '">ossessed of some value, so that it ca.n
be deemed within the objectives of the Constitution, — "To promote the
progress of science and the useful arts". ***

■ .'Procedural difficulties in conne&tion with obtaining copyright
protection are few, although the statutory requirement of notice works
a hardship where it is sought to ->rot'ect a orint'or pattern that is ." '•'•■
reproduced many times on a. single item, such as a piece of fabric or
wall pa^er. It ha-s been held that copyright is .lost , \i such an item •
includes only one notice of copyright .**** There must be a notice .fen' ■
each reproduction of the print or pattern' copyrighted. • As £ ar as,
concerns delay and ex-iense there ar.e no difficulties comparable to
those inherent in the latent system. Mere -oublication with notice of
conyri b ht is sufficient td obtain an inchoate right, one that is per-
fected ur>on registration and payment of the small fees involved within
a reasonable time after publication****'* And the depositing 'of copies .
according to the requirements of the statute is a sufficient publica-
tion to obtain 'nrotectioiv^'^^ISirice novelty .-is, essential to. pro-
tection, there is no examination .of the work on. which protection "is
desired to determine whether it is' new or old**.** : * i * , The determination
of originality, just -as in the case of patents, must be left to the
courts, the Co lyright Office like the Patent Office, having only the
sworn statement of the applicant as evidence.

( d) Rights Granted by Copyright.

The relativel _r simple conditions imposed upon the granting of copy-
right result, in correspondingly limited protection". Co~>yri hts do not
b ive absolute "monopolies of the subjects matter covered, but only the
right to prevent others from' £opyin. . and printing, publishing, or

-*■ — . — J __ ^_= . .. . : . —

. * American To bacco Co. v. Y/orkmclster. 207 U. S. 384, 38 Suio. Ct.
72. 52 L. ed. 208 (1907).

** Spciete des Films Honthen v. ■Vito,q-a")h Co . , supra note 6; Ferris
v. Frohman. 223 U. S. 424" (1913). ,

. ***' U. S. Constitution, Art. I, Sec'. 8,. CI. 8. In jjartinetti v . '
Macguire , 1 Deedy 216 (fi.S;D,Cal: , 1867), copyright in a play was
invalidated on tho groud that the ^lay was i;nmoral and hence not
within' the purview 'of the Constitution.

**** De Jon^e & Co. v. Breuker. .335 IT. S. 33 (1914).
***** Act-. Mar. '4, 1909*, c. 320, Sec- 13, 35 St.'t. 1078,17 U.S. C. A. Sec. 12.

»♦*♦»* gardinal Fj _ lm Gnr^ .v. Tiarflr, .^AS Fed.' 3.8 (tfCS'.D.'K.Y. 1918)
******* Eggers v. Sun Sales Com., 363 Fed. 373 (C.C.a. 2nd, 1920).
9746

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vendin fa the copyrighted vror :.- .* "■ The copyin^ of any substantial part
of a work constitute an infringement.**- But the appropriation of
mere ideas from a wor::, without copyi:.,. any substantial part of the era-
bodiment of those ideas, is not actionable.*** Also, sir.ee copyright
may subsist in any original treatment of old works, protection is
limited strictly to such parts of the ner work as are original with the
author claimin copyright .****

Copyright protection for a book or the like ^ives no exclusive
ri & ht to the art, sciencd, or truth disclosed in the book, these matters
being solely within the province of letters patent. In this connection
the Supreme Court has stated, in Baker v. Selden: (*****)

"A treatise on the composition and use of medicines, be
they old or new; on the construction and use of plou hs, or
watches, or churns; or on the mixture and application of
colors for painting or dyeing, or en the mode of drawing lines
to produce the effect of 'respective — would be the subject of

In White-Smith "usic Pub. C:.. v. A->ollo Co ., 309 U. S. 1, 28 Sup.
Ct. 319, 53 L. ed. 655 (1903) a perforated roll of paper adapted to
cooperate with a player piano to reproduce plaintiff's musical com-
position was held not a copy, on the groud that it was trie tangible
intelligible written notation of the music which Congress intended
to protect. Cf. Holmes v. Hurst , 174 T7 .S. 83, 86 (1399). In
Harold Lloyd Corp. v^ Witmer , 65 F. (3d) 1 (C.C.A.9th, 1933) Cert.
den'd., 54 Sup. Ct. 94 (1933) ), the court stated ***resemblance
or identity is material only as a showing whether there has been
unlawful copying. * * One nay infringe a patent by the innocent
roporduction of the machine patented, but the law imposes no
prohibition upon those who, without copying, independently arrive
at the precise combination of words or notes which have been copy-
righted." Ford,, Fisher,, I nc . v. Jillin .ham , 398 Fed. 145 (D.C.S.D.
1T.Y.', 1934).

Drury v. gyving , supra note 116; liecanne v. 1 : ,"a. i .ner , 354 Fed. 362
(D.C.S.D. Ohio, 1916).

*** . American M uto scope & Bioerap h Co. v. Edison Mfg. , 137 Fed. 262
(C.C.D.lk J. , 1906) (injunction against D's motion picture film,
which contained ideas taken from P's film, denied until actual
copying could be shown) ; Fleis her St udio s v. R. A. Freindlich, Inc.
5 F. Supp. 808 (D.C.S.D.F.Y.1934); Dymow y. Bolton, 11 F. (3d) 690
(CCA. 2nd, 1936) ("* *that copying which is infringement must be
something 'which ordinary observation would cause to be recognized
as having been taken from' the work of another",); ITichols v .
Universal Pictures Corp., 45 P. (3d) 119 (CCA. 3nd, 1930).

****

Harold Lloyd Corp. v. V.'jtmer , supra note 139,

***** Baker v. Selden. 101 U. S. 99 (1879) The Court denied the •

existence of any exclusive right to a system of bookkeeping des-
cribed inra copyrighted book.

9746

-100-

copyright; bat no one would contend that the copyright of the
treatise would give the exclusive right to the art or manufac-
ture described therein. The copyright of the booh, if not
pirated from other works, would be valid without regard to
the novelty, or want of nevelty, of its subject matter. The
novelty of the art or thin;, described or explained has nothing
to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described
therein, when no examination of its noevelty has ever been
officially made, would be a surprise and a fraud upon the
public. That is the -province of letters patent, not of
copyright. "

There have been several cases in which co->yri L _ht on a design for
a doll or the like has been held to ive protection against the re-
production of the work as a three-dimensional article for sale In
Wilson v. Huber 3ros . * cor>-rri .-ht on a design for' a "Kewpie" doll,
registered as a design for a work of -elastic art, was upheld and an
injunction granted, the conrt, however, refusing to consider the
validity of the copyright beca ise of r-_g->revious consent decree. In
Kin^ Features Syndicate v. Fleischer.* ** copyright ' in a book of -cartoons
picturing "Barney Google and Spar?: Plu ", or "Sparky" , was held
infringed by a doll named "Sparky" and made in exoci; imitation of the
character in the cartoons. The Court said:

"The Copyri ,ht Act protects the conception of humor
which r cartoonist may produce, as well as the conce .tion of
genius which an artist or sculptor may use.*,*We think it
cannot be copied, by manufacturing a toy or doll, as the
appellees did, \;'ithout takin^ the copyri. hta.ble form of that
conceit, and without at the same time takin^ che commercial
value — the fruits of the cartoonist's to enius which consisted
in his capacity to entertain ana. amuse."

Recently, in Fleischer Stuuios v. :-■. *.. Freindlich .Tnc*.** a copy-
right in an animated cartoon known as "Betty Boop" was held infringed
by a doll resembling the cartoon. The Court said:

"The embodiment of the artist's concept is what is pro-
tected by copyright.* * The teaching of the Spark Plug Case,
so-called,* * * is that there may be a three-dimensional
infringement of a two-dimensional copyrighted drawing."

The foregoing cases should be considered in the light of further
statements of the Supreme Court in Baker v. S el den;

"Of course, these observations are not intended to apply
to ornamental designs, or >idtorial illustrations addressed
to the taste. Of these it may be said, thate their form is
their essence, and their object, the production of pleasure
in their contemplation. This is their final end. They are

. - . a s much th e P roduct of genius and the result of compo s ition,

*•■ 275 Fed. £46 (CCA. 2nd, 1921)

** 299 Fed. 533 (CCA. >nd, 1924).
*** Supra note 141.
9746

-Id-
as are the lines of the poet or the historian's periods."

(e) Remedies

To enforce his ri, hts a copyright owner, as already indicated,
ma,/ obtain an injunction "according to the course and principles of
courts of equity". "The granting of preliminary injunctions is within
the course and principles of courts of equity, and such injunctions
will be ranted where the complainant has made out a clear case. *
Their purpose is to maintain the status quo until the rights of the
parties may be adjudicated; the granting of them depends very largely
upon the discretion of the trial court.** - Thus, although the burden
of proving a valid copyright in himself and copying by the defendant
is upon the complainant, *** if he makes out a prima facie case cov-
ering both, by a complaint that is valid on its face, a preliminary
injunction generally will be issued.**** Preliminary relief has been
denied, however, where the complaint raised several debatable ques-
tions, supported onl'' by scanty affidavits***** and where a requirement
that defendant post bond and give access to his books better protected
the balance of interests . ******

( f ) Summary

To sum up, the existing copyright laws afford little protection to
designers. Designs for works of art, and those designs or patterns
which may be registered as artistic prints, paintings, or the like, are
protected to some extent. The protection given the latter, however,
is of little commercial value due to the requirement that each re-
production of the pattern be accompanied by the statutory notice of
copyright — it rendering the article unsalable to employ a notice for
every reproduction of the print used on a piece of fabric or wall
paper. Designs for products of industry which may not be termed
works of art are given no orotecjfcion.

The procedure for securing copyright is simple and inexpensive, and
it involves practically no delay. The rights given are commensurate
with the contribution of the author, but no monopoly of the subject
matter is granted. T&e author is protected only against copying.
Other originators of similar works may copyright their works and re-
produce them without fear of infringement.

The actual determination and enforcement of rights arc functions
of the courts only, and the courts exercise discretion in granting
preliminary injunctions or other special forms of relief.

S. National Industrial Recovery Act.

J. — — — r —

* American Code Co. v. 3ensin,;;e r. 28? Fed. 829 (C.C.A.2nd, 1922).

** Id.

*** Public ledger v. Post Print in, ; ?:id Publishing Co . 294 Fed. 430

( CCA. 8, 1923).

**"*'* American Code Co. v. Bensin ,er, supra note 147. See Drone on Copy^

rights, p, 516. .

***** Horseman and .aetna Doll Co .v. Kaufman , 236 Fed. 372 (CCA. 2nd, 1922 J

****** International Film Service v. Assoc. Producers , 273 Fed. 585

(D.C.S.D.N.T. 1921)
9746

-103-

The National Recover" Act,* as amended and extended by Senate
Joint Resolution Ho. 113,** approved June 14, 1935, provides that:

"Sec. 2. All the -provisions of Title I of such
Act delegating power to the President to approve or
prescribe codes of fair competition and providing for
the enforcement of such codes are hereby repealed:
Provided , That the exemption irovided in section 5 of
such title shell extend only to agreements and action
thereunder (l) nutting into effect the requirements of
section 7(a), including minimum wages, maximum hours,
and -rohibition of child labor; and (.'?.) prohibiting
unfair competitive practices which offend against exist-
ing law, including the antitrust lavs, or which constitute
unfair methods of competition under the Federal Trade
Commission Act, as amended."

The Resolution leaves intact, until .april 1, 193"., Sec. 4(a) of
the N. I. R. A., which provides as follows:

"The President is authorized to enter into agree-
ments with, and to ap >rove voluntary agreements between
and among, persons engaged in a trade or industry, labor
organizations, and trade or industrial organizations,
associations, or groups, relatin to any trade or
industry, if in his judgment such agreements will aid
in effectuating the policy of this title with respect
to transactions in or affecting interstate or foreign
commerce, and will be consistent with the requirements of cl£
clause (?) of subsection (a.) of section 3 for a code
of fair competition." (i.e., ar? not "designed to
promote monopolies or to eliminate or oppress small
enterprises and v/ill not operate to discriminate against
them, and will tend to effectuate the policy of this
title".)

But air/ agreement so entered into is not exempt from the anti-trust
laws unless it complies strictly with the requirements expressly laid
down by Congress in the Joint Resolution. Hence only such trade
practice agreements as prohibit practices which offend against
exi s t i ng law ar e c x errro t .'

Now, it has already been pointed out that design piracy does not
offend against existing law unless there be a patent covering the
design in question. Agreements under Sec. 4(a) Outlawing design
piracy in an industry therefore would not be exempt from the anti-
trust laws unless limited to piracy of patented designs. Hone of the
private agreements heretofore*' employed has "b e'en so limited. The

* Public ITo. 57, 73d Cong,, Approved June 16, 1933.
** Public Resolution "do. 26, 74th Congress.

9746

-103-

question whether design piracy agreements could be considered viola-
tions of the anti-trust laws is being treated in subsection F of this
section. Assuming a conclusion in the negative for the present pur-
pose, there is an added question as to whether an agreement to out-
la" the covin ; of designs could be considered "designed to -jromote
mono-oolies" .

Take r'a ^n example the Grouo II Trrde Practice Rules on design
piracy, heretofore referred to, approved 07 the Federal Trade Commis-
sion in Trade Practice Conferences. They "condemn" the practice of
"usurping designs* * .* originated "by s competitor and appropriating
them for one's own use" within one or more years "after such origination 1
Thus they our )ort to give exclusive rights to original designs for the
period stated. Agreements to do the sane thing clearl^ are agreements
which establish exclusive rights — rights not dependent uoon compliance
with the conditions imposed by the Patent Laws. Are they not monopolies?
And are not the &g\-eoments, in this respect, "designed to promote mono-
polies", and hence not subject to a valid approval under the 1T.I.R.A. ,
as amended? (*)

There is no authority to support answers to any of these questions.
A proposed voluntary agreement for the Ladies' Handbag Industry, which
includes a provision against design piracy, has not yet been acted upon
b _ r the Federal Trade Commission. (**)

Even if the Federal Trade Commission continues the nolicy evidenced
b r the Trade Practice Conferences and approves agreenents against design
piracy under the IT.I.R.A. , as amended, there are no statutory sanctions
to enable their enforcement. Limitations inherent in the Federal Trade
Commission Act would apply to any enforcement moves taken by the Trade
Commission. As agreements, ho-ever, they might be enforced by the parties
on the same b^sis a.s similar agreements m-"de independently of the amended
II. I. II. A. (***) And in industries where all menbers are willing to parti-
cipate they might have a. tremendous moral, if little legal effect.

(*) The theory that the grant of an exclusive right to use something
which the public had not had a.ccess to before is not a monopoly
becomes important in this connection, at least in respect of newly-
created designs.

(**) See Executive Order ITo. 7192, Sept. 26, 1935, and the announcement
from the ¥hite House dated Sept. 30, 1935, for the procedure for
approval of voluntary agreements under Sec. 4 (a) of the IT.I.R.A*

(***) The possibility of legal enforcement of such agreements seems re-
mote, although liquidated damage clauses, if carefully framed,
might be upheld. Limitations of time have prevented an inquiry
into this subject.

9746

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7. t, .- -Q. St-tu/ :v Priv to 1 ./ i.°rt-'. 3 r st^:.s kr Ti- Prevention
"f Design Piracy

Within the last ten years there nave been established several
systems, by industries troubled greatly with design piracy, for the
purpose of preventing copying through voluntary agreements. There are
at least thrs* types of such systems: First, those which are based
upon agreements not to copy designs of competitors, which designs may
or may not be registered with a bureau; Second, those by which all
members of an industry agree to register all of their designs and not
to process any design rejected by the registration bureau; Third,
those in which retailer cooperation is sougnt to prevent the purchase
of articles embodying distinctive designs from any one other than the
original owners of the designs. (*)

Those systems have such a brief legal history that comment
upon their legal status must be highly conjectural. However, the
third type was involved in a law suit in the New York State courts
early in 1935, but the question directly in issue was whether the re-
fusal of the dress manuf acturers' guild to deal witn a retailer who
operated on non-commercial premises, pursuant to an agreement with a
retailers' organization whereby the latter, among other things, agreed
not to sell dresses embodying copies of the designs of guild members,
was illegal.(*7The lower court had enjoined the build, as an unlawful
boycott. The Appellate Division dismissed the complaint on the ground
that the action of the gaild constituted a legitimate effort to cur-
tail harmful trade practices — also because the complainant was violating
zoning laws by engaging in business in the particular neighborhood
involved. The position of the Appellate Court was that, if a restraint
of trade was imposed by the guild-retailer agreements, it was not an
unreasonable restraint. Whether the same viev/ would be held by other
courts, in a case directly concerned with such a plan for protecting
designs, is uncertain.

Two principal problems appear to be encountered in connection
with the third type of private system; only one of the two is relevant
to the other types. This query applies to all: Where a group which
controls a market attempts to secure to its individual members the
exclusive right to designs used by them, for a limited period of tirpe,
is this a combination in restraint of trade? If so, is the restraint
reasonable and lawful, or unreasonable and unlawful? (***) Is the con-

(*) See Chapter VI, infra, for descriptions of these systems.

(**) See ,",'olfenstein v. Fashion Originators' Guild of Anerica, N.Y.
Supp. (App. Div. , -May 31, 1,635).

(***) In the English "Case of Monopolies", D' Arcy v. .411 ein , Queen
Elizabeth's grant of a monopoly on the manufacture and sale
of playing cards was held invalid as a restraint of trade.
See Sec. II, A of this Chapter.

9746

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elusion modified, wnere the effort toward protection extends only to new
designs, sucn as might he subjects of valid design patents? Does the
size and -oower of the group affect the question?

The ot.:. 3r problem relates to the methods employed. Assuming
that it may be lawful for a group to protect its own interests by hav-
ing each member agree not to copy the designs of other members and by
exerting its influence against non-members who copy, is it lawful to
persuade retailers, who do not necessarily have the same interests, to
assist in the plan by declining to handle goods that embody copied
designs? And would the answer to sue" 1 , a question be altered if it
were shown that retailer cooperation was obtained through threats
that, without it, the supply of products from members of the group
would be cut off?

All these questions are important, net only because of their sig-
nificance to the permanency of private design controls now in operation,
but also due to the fact that if private controls are legal the
pressure for additional legislation might be- lessened; if illegal, the
weight of all the interests favoring design protection probably would
be thrown in favor of some revision of existing law.

At the present writing there has been no opportunity to study
and report on the problems here mentioned.

9746

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II. COFSTITJTIGHAL LIMITATIONS ON FEDERAL DESIGN LEOILSATIGN.

A careful study of the United States Constitution and the decissions
of the Supreme Court interpreting it reveals that power to deal with de-
signs, patents, copyrights, and the like, can he based only upon two
sections of the Constitution. Article I, Section 8, of the Constitution
empowers Congress "to regulate commerce among the several states'(*) and
"to promote the progress of science and useful arts, by securing, for
United times, to authors and inventors, the exclusive right to their
respective writings and discoveries".!**) These two grants of power and
decisions of the courts interpreting them will he scrutinized carefully
below to determine the limitations that must apply to any effort by
Congress to change the present law relating to designs.

A. Leg isl ation Under The Patent Aid Copyright Clause Of The
Constitut ion.

No analysis of the provision of the Constitution relating to patents
and copyright can be complete without an understanding of the historical
background of that provision and of patent and copyright protection prior
to the American Revolution.

From the earliest times it ?/as a part of the common law preregative
that the Crown might grant monopolies of new trades or manufactures,
provided that he to whom the monopoly was granted had done something that
merited a reward. (***) The Tudor sovereigns abused this prerogative and
granted monopolies to Court favorites without any pretense of merit,
until the decision in the "Case of Monopolies", decided in the first year
of the reign of James I. Queen Elizabeth had granted to the Plaintiff a
monopoly of the right of making and trading in playing cards, and he sued
the defendant for infringement. The Court of Kings Bench decided that
the grant sued on was restrictive of trade and industry and therefore void.

In 1510 King James I issued his "Book of Bounty", which forbade any
suitor to request the grant of monopolies, but specifically provided that
the Crown might be petitioned for grants, based upon merit, for "projects
of new invention so that they be not contrary to the law, nor mischievous
to the State, by raising prices of commodities at home, or hurt of trade,
or otherwise inconvenient 11 . The language of the King was followed in the
Statute of Monopolies/****) enacted in 1623 which recited the royal declara-
tion, declared all monopolies and dispensations void, enacted that the
validity of all monopolies and grants should be tried according to the

(*) United States Constitution, Article I, Section 8, Clause 3.

(**) Ibid , Section 8, Clause 8

(***) Information concerning the background of patent legislation has

been taken from Terrell and Corsellis, The Law and Practice Relat-
ing to Letters P atent and Inventions (7th ed. 1927). See also,
Vaughan, Economies of Our Patent System (19 25) Chapter I.

(****) 21 Jac. I, Chapter 5.

9746

-107-

common lair and, after excepting any letters patent and grants of privilege
theretofore granted to the first and true inventor of the manufactures
protected, "by Section 5 laid down the foundation of British patent law
as follows:

"Provided also (and "be it declared and enacted) that
any declaration "before mentioned ! shall not extend to any
letters -oatent and grants of privilege for the tern of 14
years or under, hereafter to "be made, of the sole working
or making of any wanner of new manufactures within' this
realm,, to the true and first inventor and inventors of such
manufactures, which others at the tine of making such letters
patent and grants ; shall not use, so as also they "be not con-
trary to the law nor mischievous to the state, "by raising
prices of commodities at home, or hurt of trade, or generally
inconvenient."

The Statute of Monopolies created oh statutory rights; "but merely
saved the common law rights of the Crown.

It war. substantially in accordance with the law as thus laid down,
that the American Colonies granted patent rights prior to the Revolution
and under the Articles of Confederation, and the 3ritish law served as
the pattern for the plan which was later introduced for the handling of
patents in the United States. (*)

In the field of copyright, also, enactments in the United States
have had as a background many years of experience in England, (**) Copy-
right existed before the year 1518 under the common law in England, giving
the author a. perpetual exclusive right to publish his works. The right,
however, was not effective because no penalty could be exacted for an
infringement which consisted of copying and publishing. A provision for
sucn penalty, enacted in 1649, was repealed in 1694. Thereafter the only
relief the owner of copyright could secure was by a separate and individual
action for each infringing copy made or sold. This obviously was ineffec-
tive. Consequently, after repeated petitions by authors, a. statute was
passed in 1710, known as the Statute of Anne. It provided that a. penalty
could be exacted only if the book or. writing '-'ere registered in Stationer's
Hall, and limited the right to recover the penalty to a period of 14 years
from the date of original publication* The law also provided that if the
authorized edition of a copyrighted book were offered to the public at
an unreasonably high price, any government officer, after investigation,
might order the price lowered so that the book could be procured by mem-
bers of the public at a reasonable price. This price limitation clause
of the statute was repealed in 17S9 and has not been restored in the law
of England.

(*) See Vaugiian, Economies of Our Patent -System (1925) Chapter I .

(**) Information concerning the background of copyright protection
in the United States ha.s been taken from Penning, "Copyright
before the Constitution", Jou rnal of the Patent Office Society .
Vol. 17, P. 433 (August 1929)

974c

•- -103-

ijfter the Aierican Revolution the states had no copyright laws for
a while, but the Congress which operated under the Articles of Confedera-
tion recommended that all of the states follow the lead of .Connecticut,
which ho.d^ passed a law relating to copyright in 1733. By 1786 all hut
Delaware had complied with the recommendation of Congress. Many of the
laws enacted contained a provision, similar to that in the Statute of
Anne, against the sale of authorized editions of protected works at
unreasonable prices.

Such was the "background upon which the members of the convention
which framed the Constitution of the United States had to build. The
records show that proposals for the inclusion of patent and copyright
powers in the Constitution were made on August 18, 1787, some by Messrs.
Madison and Pinckney, and others from an unknown source, as follows: (* )

(a) "to secure to literary authors their copyrights for a limited time";

(b) "to grant patents for useful inventions; to secure to authors ex-
clusive rights for a certain time"; (c) "to secure to literary authors
their copyrights for a limited time. To encourage by proper premiums
and provisions the advancement of useful knowledge and discoveries";
(d) "to secure to literary authors their copyrights for a limited time
and to secure to inventors of useful machines and implements, the benefits
therefore, for a limited time"; (e) "to secure to literary authors their
copyrights for a limited time. To encourage by premiums and provisions
the advancement of useful knowledge and discoveries"; (f) " to grant
patents for useful inventions; to secure to authors exclusive rights for
certain times".

On September 5, 1787 the Committee of Eleven made a report contain-
ing the clause as it now stands, and it was approved by the Committee on
the same day. It was then referred to the Committee of "Stile and Arrange-
ment", which, on September 12, 1787, reported to the Convention the Consti-
tution containing this clause without change, and it was so adopted and
signed on September -17, 1787.

There was no debate in the Convention with reference to the provision,
and no minutes of the Committee concerning it. The Federalist-
contains the following item-, by Mr. Madison:

^**^

"The utility of this power will scarcely be questioned.
The copyright of authors has been solemnly adjudged in Great
Britain to be a rignt at common law. The rights to useful
inventions seem with equal reason to belong to the inventors.
The public good fully coincides in both cases with the claims
of individuals. The states cannot separately make effectual
provision for each of the cases, and most of them have anti-
cipated the decision of this point by laws passed at the
instance of Congress. "

(*•) Penning, "The Origin of the Patent & Copyright Clause of the
Constitution, " Journal of the Patent Office Society, Vol. 11 ,
p. 438 (Aug. 1929)

(**) XLIII (Lodge's Edition 1888) 267
9746

-109-

It remains now to determine the judicial interpretation of the patent
and copyright clause. That the period of protection must he limited in
obvious from the express terms of the provision and in keeping with the
laws of- England then enforced. "To promote the progress of science and
the usefui'afts'", "exclusive rights" may. "be. granted to "authors" for their
"writings" and to "inventors" for their "discoveries".

■■'•'• 1. "To Promote The Progress Of Science And The Useful Arts."

Such was the object of the frame rs of the Constitution when they
approved the clause which authorizes patent and copyright legislation.
Chief Justice Marshall, in Grant v. Raymond . (*) discussed this part
of the clause in the following language:

"To promote the progress of useful arts, is the interest
and policy of every enlightened government. It entered into
the views of the framers of our Constitution, and the power
'to promote the progress of science and useful arts, : by securing
for limited times to authors and inventors, the exclusive right
to their respective writings and discoveries', is among those
expressly given to Congress. This subject was among the first
which followed the organization of our gov/ernm^nt. It was
taken up by the first Congress, at its second session, and an
Act was passed, authorizing a patent to be issued to the inventor
of any useful art, etc., on his petition. 1 * * *'. The amenda-
tory Act of 1793 contains the same language, and it cannot be
doubtod that the settled purpose of the United States has ever been,
and continues to be, to confer on the authors of -useful inven-
tions an exclusive right to their inventions, for the lime men-
tioned in their patent. It is the reward stipulated for the
advantages derived by the public for the exertions of the invidi-
dual , and is intended as a stimulus to those exertions. The laws
which are passed to give effect to this purpose ought, we think,
to be construed in the spirit in which they have been made; and
to execute the contract fairly on the part of the United States,
where the full benefit has been actually received; if this can
be done, without transcending the intention of the statute, or
countenancing acts which are fraudulent, or may prove mischievous.
The public yields nothing which it has not agreed to yield, it
receives all which it has contracted to receive. The full benefit
-of the discovery, after its enjoyment by the discoverer for four-
teen years, is preserved; and for his exclusive enjoyment of it,
during that time, the public faith is pledged, * * *"

He clearly recognizes that the laws enacted under the clause should
be liberally construed, unless "countenancing acts which are fraudulent,
or may prove mischievous". And a policy of liberal construction, after
an intermediate period of uncertainty, clearly is followed today, -as far
as concerns the subjects of patent or copyright protection. In Clayton
v. Stone {1829 (**) copyright protection, for a newspaper, was held- not to

(*) 6 Pet. 218, 240 (11 U. S.) (1832) ...

(**)p-ed. Case #2,872,. 2 Paine 382 (C. C. S.D.H. Y. , .1829).
9746

-110-

of feet the "promotion of science". Later, in Martinetti v. Maguj re , ( * )
H.i^ins v, Ke-jf el ,(»"') and J. L. Mott Iron Works v. Clow , (***) an immoral
play, a label which merely designated the article to which it was attached,
and a catalogue containing illustrations of articles, respectively, were
declared "by the courts to he outside the objectives of the Constitution.
In the. second-named case the point was made that:

"To be entitled to a copyright the article must have
, . by itself some value as a composition, at least to the

extent of serving some purpose- other than a mere advertise-
ment or designation of the subject to which it is attached",

while in the J. L. Mott case, the Court, after indicating disfavor of
the practice of using copyright laws to protect advertisements or trade
devices, said:

"So far as the decisions of the Supreme Court have
gone, we think they hold to the proposition that mere
advertisements, whether by letterpress or by a picture,
are not within the protection of the copyright law. * *
It is enough for the present purpose to say that, in our
judgment, Congress has not seen fit to enact a law which
can reasonably be given so broad a construction. "

The Martinetti and Higgins cases undoubtedly would be followed to-
day, Concerning the ideas of the court in the J. L. Mott case, however,
a different trend was evidenced in Henderson v. Tompkins(****) by these
words;

"But a. multitude of books rest safely under copyright,
which show only ordinary skill and diligence in their pre-
paration. Compilations are noticeable examples of this
fact. With reference to this subject, the courts have not
undertaken to assume the functions of critics, or to measure
carefully the degree of originality, or literary skill or
training involved. "

And that trend was . crystalized into law by the case of Bleistein v .
Donaldson Lithographing C o. (1903) (*****) involving copyright on a
chromolithographic advertisement for a circus, in which Mr. Justice
Holmes interpreted the Constitution as follows:

(*) i Deedy 216 (C.C.C.Cal. 1867.)

(**) 140 .U. S. 428, 11 Sup, Ct. 731, 35 L. ed. 470 (1891).

(***) 82 Fed. 316 (CCA. 7th 1897).

(****) 60 Fed. 758 (C. CD. Mass. 1894).

(*****) 183 U, ' s. 239, 23 Sup. Ct. 298, 47 L. ed. 460 (1903),

9746

-111-

"The Constitution does not limit the useful to that
which satisfied immediate bodily needs; * * But even if
they have been drawn from the life, that fact would not
deprive then of protection. * * Others are free to copy •
the original. They are not free to copy the copy. * *
The copy is the personal reaction of an individual upon
nature; * * The least pretentious picture has more
originality in it than directories and the like, which
may be copyrighted; * * The Act, however, construed, does
not mean that ordinary posters are not good enough to be
considered within its scope. * * Certainly works are not
the less connected with the fine arts because their
pictorial quality attracts the crowd and therefore gives
them a real use - if use means to increase trade and to
help to make money.

"It would be a dangerous undertaking for persons
trained only to the law to constitute themselves final
judges of the worth of pictorial illustrations, outside
of the narrowest and most obvious limits. ■* * if they
command the interest of any public, they have a commercial
value - it would be bold to say that they have not an
aesthetic and educational value - and the taste of any
public is not to be treated with contempt."

That designs for articles of manufacture are deserving of protection
as promotive of the "decorative arts" was settled in Gorham Co. v. White
(1872) :(*)

"The Acts of Congress which authorize the grant of
patents for designs were plainly intended to give encourage-
ment to the decorative arts. * * And the thing invented or
produced, for which a patent is given, is that which gives
a peculiar or distinctive appearance to the manufacture, or
article to which it may be applied, or to which it gives
form. The law manifestly contemplates that giving certain
new and original appearances to a manufactured article may
enhance its salable value, may enlarge the demand for it,
and may be a meritorious service to the public. "

Not only are new designs deemed worthy of protection as promoting the
useful arts, but also there is precedent for saying that creations that
are old, if not in use by the public, might be protected if re-introduced
so that the public might 'benefit from them. (**)

(*) 81 U. S. (14 Wall.) 511, 20 L. ed 731 (1872).

(**) G-ayler v. Wilder , 10 Howard 477, 13 L. ed. 504(1850) (holding
that prior knowledge abroad, or secret knowledge in U. S. ,
does not invalidate a patent.)

9746

-112-
2. ".Exclusive : Right".

It is now settled that the 'exclusive right which may he granted is
not a right which m;y he exercised freely by the grantee, hut is merely
a. right to exclude others from the use of the writing or discovery pro-
tected. (*) lhus the exclusive right to an; invention does not authorize
the patentee to use the invention if.it is in violation of some law
which has been enacted for the 1 ' public welfare. (**) It has "been stated
by respectable authorities that Congress can grant exclusive rights
only, and that any law which requires a patentee or a copyright holder
to license others for the use of the work protected would deprive him
of an exclusive right and give him only a limited right, and hence would
be unconstitutional. (***) Fortunately, a decision on this question is
not important to a thorough treatment of the design problem. There has
been no case in which the Supreme Court has passed on the question, but
it would seem possible that Congress may be held empowered to impose
conditions upon the grant. The fact that many of the States at the time
of the adoption of the Constitution imposed conditions, asserted by
students as a ground, for the belief that the Constitutional Convention
intended to do away with such practice and grant only exclusive rights,
in the absence of any statement on the subject by contemporary writers,
seems capable of leading to an opposite conclusion; namely, that Congress
was not denied the power to take similar steps to safeguard the public
interest in the granting of patent and copyright protection. The Con-
stitution does not attempt to define the nature or scope of the. nature
or scope of the right. Furthermore, the existing copyright law provides
for compulsory licenses to enable the mechanical reporduction of musical
compositions upon the payment of a fixed sum, (****) and the courts now
consistently hold that Congress has broad powers of laying down limita-
tions in patent and copyright legislation. (*****)

(*) Section II, sipra, note 69.
(**) Id*

(***) Penning, "xh<~ Origin of the Patent and Copyright Clause of
the Constitution", loc . cit , supra note 7.

(****) Act, March 4, 1900, Chapter 320, Sec. 2, 35 Stat. 1075.
17 U. S. C.A. S. 1.

(*****) Q wen v. Eeinan n, 12 F. (2d) 173 (App. D, C. 192S) In

P a,;e v. Holme s, Burglar Alarm Telegraph Co., l Fed., 304,
327 (C.C. S.D.' T .Y. 1388), a statute which .authorized the
grant of a patent bit excluded from its scope devices
covered thereby but already in use by others was upheld.

9746

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3. — "Authors * * For Their * * Writings"^

The -ore sent copyright law assums to exercise completely the power of
securing to authors the exclusive right to their writings. (*) There is
a tendency, however, to limit its scope to those worke named in the
statutory classification, as in the J. L. Mott case and in Kemp & Beat ley
v. Hirsch ,(**) and thus to avoid a holding as to what works may he pro-
tected under the Constitution. But regardless of this tendency, import-
ant cases recognize the existence of broad constitutional powers result-
ing from the quoted words.

One of the leading cases in the Supreme Court is Borrow-Giles Litho-
graohi c Co. v. Sarong ,(***) in which it was stated:

"These statutes (early Acts of Congress) certainly
answer the objection that books only, or writing in the
limited sense of a book and its author, are within the
constitutional provision. But these words are suscep-
tible of a more enlarged definition than this. An
author in that sense is 'he to whom anything owes its
origin; originator; maker; one Wxio completes a work of
science or literature'. Worcester. So, r^lso, no one
would now claim that the word writing in this clause of
the Constitution, though the only word used as to sxibjects
in regard to which authors are to be secured, is limited to
the actual script of an author, and excludes books and all
other printed matter. By writings in that clause is meant
the literary productions of tnose authors, and Congress very
properly has declared these to include all forms of writing,
printing, engraving, etching, etc., by which the ideas in the
mind of the author are given visible expression. * *

"We entertain no doubt that the Constitution is broad
enough to cover an Act authorizing copyright of photographs,
so far as they are representatives of original intellectual
conceptions of the author. "

The Burrow-G-iles case followed by but a few years the Trade-Mark
cases, (****) wherein it had been held that Congress could not protect
all trade marks under the patent and copyright clause of the constitu-
tion, because:

(*) Act, Liar. 4, 1909, c. 320 S4, 17 U.S.C.A. S4

(**) 34 F. (2d) 291 (D. C.£.D.IT. Y. ) .

(***) 111 U. S. 53, 4 Sup. Ct. 279, 28 L. ed. 349 (1884).

(****) inn u. S. (in (jtto) 82, 25 L. ed. 550 (1884).

9746

-114-..

"It (a trademark) is often the result of accident
rather than design, 'and" when under the Act of Congress it is
sought to establish it by registration, neither originally,
invention, discovery, science nor art is in any way essential
to the right conferred by that Act. If we should endeavor to
classify it under the head of writing of authors, the ob-
jections are equally strong. In this, as in regard to in-
ventions, originality is required. And while the word
writing s may be liberally construed, as it has been, to in-
clude designs for engravings, prints, etc., it is only such
as are original , and are founded in the creative powers of the
mind. The writings which are to be protected are the fruits
of intellectual labor , embodied in the form of books, prints,
engravings, and the like. The trade-mark may 'be, and generally
is, the adoption of something already in. existence as the
distinctive symbol of the party using it. At common law the
exclusive right to it grows '.out of its use, and not its mere
adoption. By the ^ct of Congress this exclusive right
attaches' "upon registration. But in neither case does it de-
pend upon novelty, intention, discovery, or any work of the
brain. It requires no fancy of imagination, no genius, no
laborious thought. ' It is simply founded on priority of
appropriation. ■tfe''lo6k in vain in the statute for any other
qualification or condition, If the symbol, however plain,
simple, old, or well known, has been first appropriated by
the claimant as his distinctive trademark, he may by
registration secure the right to its exclusive use. While
such legislation may be a judicious aid to the common law
on the subject of trade-mark, and may be within the
competency of legislatures whose general powers embrace
that class of subjects, we arc unable to see any such power
in the constitutional provision concerning authors and
inventors, and their writing and discoveries."

Thus the Trade-Mark cases laid down the limitation that a work
to be protected must be an original' work of an author, not merely one
that has been appropriated, and it must be such a writing as may be
deemed a result ci intellectual labor — a typical trade-mark being
neither. A similar principle, that a work of authorship under the
Constitution muse evidence some effort of the brain or intellect which
originated the same, was approved in Nati onal Telegraph News Co. v.
Western Union Te legraph Cp_^, f *" where the Court held "ticker tape"
not subject to protection and fully discussed the scope of copyright
as follows :

"It would be difficult to -define, comprehensively,
what character of writing is copyrightable, and what is not.
But, for the purpose of this case, "ffe may fix the confines
at the point where authorship proper ends, and mere annals
begin. Nor is this line easily drawn, Generally speaking,
authorship implies that there has been put into production
something meritorious from the author's own mind; that the
product embodies the thought of the author, as well as the
thought of others; and would not have found existence in the
form presented, but for the distinctive individuality of the

. • 119 Fed. 294 (CCA. 7th 1902)
9746

-115-

mind from which it sprang. 'A 'mere annal, on the contrary, is
the reduction to copy of an event that others, in a like
situation, would have observed; and its statement in the
substantial form that people generally would have adopted.
A' catalogue, or a table of statistics, or business publications
generally, may thus belong to either one or the other of these
classes. If, in their makeup, there is evidenced some pe-
culiar mental endowmont-tho grasp of nind, say in a table of
statistics, that, can gather in all that is needful, the dis-
crimination that adjusts their proportions - there may be
authorship Within the meaning of the copyright grant as in-
tcrpretated by the courts, but if, on the contrary, such
writings are a mere notation of the figures at which stocks
or cerals have sold, or of the result of a horse race, or
base-ball game, they cannot be said to bear the impress of
individuality, and fail, therefore, to rise to the plane of
authorship. In authorship the product has some likeness to
the mind underneath it; in a work of mere notation, the mind
is guide only .to the fingers that make the notation. Ono
is the product of originality; the other the product of
opjjortunity.*

The Burrow-Giles case, clearly holding that "writings" under the
Constitution are not limited to the script of an author, was followed'
by cases hoxding that motion picture films * and cable code books **
are works which nay be protected as "writings". In the latter case it
was expressly recognized that "patterns or designs'* may also be deemed
"writings" the Court saying:

"Works of plastic art need not be pictorial.
They may be merely patterns, or .designs, and yet they
are within the statute. A pattern or an ornamental
design depicts nothing; it merely pleases the eye. If
such models, or paintings arc .'writings 1 , I can see no
reason why words should not be such because they
communicate nothing. They may have their uses for all
that, aesthetic or practical, and they may be the pro-
duction of high ingenuity, or even genius. Therefore,
on principle, there appears to be no reason to limit
the Constitution in any such way as the defendant re-
quires. **** And if our Constitution embalms inflexibly
the habits of 1789 there may be something to the point,
but it d->cs not; its §rant of powers to Congress com-
prise, not only what, has been known, but what the in-
genuity of men should devise thereafter. Of course,
the new subject matter must have been relation to. the
grant, but we interpret it by the general practices <*f
civilized people in similar fields, for it is not a
strait-jacket, but a charter for a living people."

* A merican Mutoscope & Biograph Co. v Edison Mfg. Co. 137 Fed. 262
(C. CD. IT. J., 1305) . . " ■ • ■•' ■

Reiss v. national Quotation bureau,' 276 Fed. 717 (D.C.S.D.1T. Y. , 1921.
9746

-ilia."

The courts have placed no rigid constitutional limitations upon
the types Of intellectual contributions which are sufficient to
warrant copyright protection, aside from those indicated above. In
Henderson v. Tompkins, * it was stated that:

"There is a very broad distinction between what
is implied by the word 'author 1 , found in the Con-
stitution, and the word 'inventor'. **** a multituds
of books rest safely under copyright, which show only
ordinary skill and diligence in their preparation.
Complications are noticeable examples of this fact.
With reference to this subject," the courts have not
undertaken to assume the functions of critics, or to
measure carefully the degree of originality, or
literary skill or training involved."

Furthermore, broad latitude in creating rights to protect
"writings" lias been given to Congress. Thus the clause, in the copy-
right law which gives authors of books "the exclusive right to dram-
atize them was upheld in Kalem Co. v. Harper ** where, Mr. Justice Holmes
said:

"It is argued that the law construed as we have
construed it goes beyond the power conferred upon
Congress by the Constitution, to secure to authors
for a limited time the exclusive right to their
writings.***** It is suggested that to extend the
cojDyright to a case like this is to extend it to
the ideas as distinguished from the words in which
those ideas are clothed. But there is no attempt
to make a monopoly of the ideas expressed. The law
confines itself to a particular, cognate and well
known form of reproduction. If to that extent a
grant of monopoly is thought a proper way to secure
the right to the writings this court cannot say that
Congress was wrong."

And copyrights on a cartoon and the picture of a doll have been held to
entitle the authors to restrain the sale of three-dimensional figures
emboyding the characters depicted by such cartoon and doll.-***

Exclusive rights to works of literature, etc. as "writings",
however, do not include the right to exclude others from republishing
er using freely the arts, truths or manufactures described in such
works. In Baker v. Seldon '**** the Supreme Court stated at length the
reason for this rule, and at the same time explained that it has ne
application to ornamental designs, in the following language! .

***

+ ***
9746

60 Ted. 758 (C. CD. Mass 1894)

222 U. S. 55, 32 Sup. Ct. 20, '56 L.ed. *92 (l91l) '

Wi lson v. Ha bcr Br os.. 275 Fed. 346 ( CCA. 2nd, 1921 ) King Features
Syndicate v._ Fleischer^, 299 'Fed. 533(CCA.2nd, 1924) ; F leis cher
Studios v., R.A.Freindlieh, Tnc.5 F.Pupp. 808 (D.CS.D.N.Y. , 1934)
101 U. S. 96 (1879)

-1.17-

H ***** The very object of publishing a book on
science or the useful arts is to communicate to the
world the useful knowledge which it contains. But
this object would be frustrated if the knowledge
could not be used without incurring the guilt of
piracy of the book. And where the art it teaches
cannot be used without employing the methods and
diagrams used to illustrate the book, or such as are
similar to them, such methods and diagrams are to be
eonsidered as necessary incidents to the art, and
given therewith to the public; not for the purpose
of publication in other works explanatory of the
art, but for the purpose of practical application.

"Of course, these observations are not intended
to apply to ornamental designs, or pictorial illus-
trations addressed to the taste. Of these it may be •
said, that their form is their essence, and their
object, the production of pleasure in their contempla-
tion. This is their final end. They are as much the
product of genius and the result of composition, as
are the lines of the post or the historian's periods.
On the other hand, the teachings of science and the
rules and methods of useful art have their final and
in application and use; and this application and use are
what the public derive from the publication of a book
which teaches them. But as embodied and taught in a
literary composition or book, their essence consists
only in their statement. This alone is what is se-
cured by the copyright. The use by another of the
same methods of statement, whether in words or
illustrations, in a book published for teaching the
art, would undoubtedly be an infringement of the
copyright. "

The result of all the principal cases which interpret those words
of the Constitution which authorize copyright legislation seems to be
that original ornamental designs for articles of manufacture are
"writings" of "authors"; that a statute protecting them would be a
proper measure for the promotion of "useful arts"; and that Congress
mi fe ht enact a law which protected designs as "writings" and gave the
author of a design the exclusive right to embody such design in an
article of manufacture.

4. — "Inventors, The Exclusive Right to Their*****
Discoveries. "

These words furnish the basis for patent legislation in the
United States. To "invent", according to the dictionaries, is to
"devise, originate, (method, instrument, etc.); fabricate (story)"

* Oxford Diction;!xy

9746

-118-

to "find out by original study or contrivance* devise or contrive;
originate". * Hence there seems to be no distinction between an
"author" and an "inventor", as far as the pure meanings of the. words
are concerned. **

The word "discoveries", in its broadest sense, includes the
finding out of things, usually things that have already existed but
were not known to the finder. A scientist who have uncovered a
principle of nature, ^ or ( an explorer who has found a new island, has
made a discovery. 'IJBjuen, as far as the etymological significance of the
constitutional provision is concerned, the discoveries of inventors
might be any of the truths found out by those who originate, contrive,
devise.

The patent laws, however,, do n'6't go nearly so far; and the
courts, in construing them, , have laid down limitations which seemingly
would apply to any ef i'or;ts, to- ena6t patent legislation, although it
is usually not clear whether the limitations result from the statutes
or the Constitution, erd if from the 'latter, what specific word or
words impose the limitations. Thus a principle of nature, *** or an
idea, **** as su*h, is, not patentable. That which is patentable is a
principle or idea ap_-o]_vid so as to accomplish some useful, or, in the
case of designs, r orham_ental result. In Smith v. Nichols , ***** this
concept was expressed in words:

"A patentable invention 'is a mental result.
It must be 1 new and shown to be of practical utility.
Everything within the domain of' the conception
belongs to him who conco'jved it. The machine, pro-
cess, or product is but its material reflex and
embodiment. A new idea may be ingrafted upon an
old invention-, be distinct from the conc-eption which
preceded it, and be an improvement. In su;:h case it is
patentable. The prior patentee cannot use i-t v/ithout
the consent of the improver, and the latter cannot use
the original invention without the consent of the
former. But r> mere carrying forward or new or more
extended a- plication of the original thought, a
change only in form, proportions or degree, the sub-
stitution of equivalents, doing substantially the
same thing in the same way by substantially the same
means with better results, is not such invention as
will sustain a oatent. ir

Collier's Dictionary (1925)

Chief Justice Marshall spoke of the "authors of useful in-
ventions" in Grant v. Raymond , supra note 9.

*** Leroy v. Tatham, 14 Howard 156, 177, 14 L. cd. 367 (1852)

**** Rubber Tip Pencil Co. v. Howard, 20 Wall. 498,507,22 L.cd.410 (1874)

***** 21 Wall. 112, 22 L. cd. 566 (1875)

9746

?119-

The rigid requirements of "Invention" as the sine qua non of a
valid patent probably owes its existence to the fact that our patent
system is an outgrowth of the English system, in which a similar re-
quirement prevails. It cannot be traced either to the words of the
patent statute or to those of the Constitution, but it unquestionably
is considered by the courts to be an essential feature of a patentable
discovery of an inventor. * In Union Paper Collar Co. v. Van Deusen,* *
the Court declared that:

"Nothing less than invention or discovery will
support a patent *******. n

And in Stimpson v. Woodman, *** a patent was invalidated for the
following reason:

(i ******* the substitution of the old figured
roller for the purpose, required no invention; the
change with the existing knowledge in the art in-
volved simply mechanical skill, which is not
patentable. "

A discovery of an inventor, however, by definition and by
judicial decision, need not be new in an absolute sense. **** Therefore,
we may discount those cases which contain lengthy statements relative
to novelty as an essential to a patent, recognizing that the courts had
the patent statutes, and not the Constitution in mind.

It has already been pointed out that patents for designs are
subject to almost the same statutory conditions as other patents,
Design patent laws have been held constitutional in Gorman v. White,"'****
Hence that ornamental designs may be "discoveries" of "inventors" may
be accepted. Also, however, as explained above, they may be deemed
"writings" of "authors", if decided cases such as Baker v. Selden be
followed. In that ornamentality instead of practical utility is the
objective of designs, they resemble copyrightable matter more than
patentable inventions. Under patent laws, the abstract quantity, "in-
vention", is required; under copyright laws only "originality", which
is included in but less than invention, need be present.

* See Fotchl-iss v. Greenwood, 11 How. 248, 13 L. cd. 683 (1850;
Phillips v . Pa^.e,?.4 How. 164, 16 L. ed. 639 (l86l); Packing
Company. Cases, 105 U.S. 566, 572, 26 L. ed. 1172 (1882)

** 23 Wall. 530, 23 L. ed. 128 (1375)

*** 10 Wall. (77 U.S.) 117, 19 L. ed. 866', 868 (1870 )

**** Gayler v. Wilder, supra note 17. In Pernio ck v. Dialogue, 2 Pet,
(27 U.S.) 1, 7 L. ed. 327 (1829), Mr. Justice Story said:
"...if known or Used, before his supposed discovery, he is not
the first, although he may be a true inventor."

***** Supra note 16

9746

-120-

It is probable that the courts will impose requirements of
"invention" upon designs as long : as the statutes limit protection to
inventors. Nevertheless, there seems to be ample constitutional
authority for Congress to protect those designs which are original
works of authors only, or to. require originality and novelty, but not'
invention, or, of course, to continue the present laws, which require
all three elements..

3. Legislation Under the Commerce Clause .

The extent of the »pownr to regulate, for the protection of de-
signs under the Commerce ClSu.se of the Constitution may be explained
by reference to but two cases, an early case and a recent, one which
indicates the present trends followed by the Supreme Court. The
former is the Trade Mark Case s. * the latter, United States v. A.L.A.
Schechter Poultry Corp. **

In the Trade Mark Act of August 14, 1876, Congress had declared
that it was a criminal offense, subject to fine and imprisonment, for
anyone fraudulently to use, sell, or counterfeit any ■Registered
trade mark. Upon compliance with the statutory conditions, all trade
marks, whether used in intra- or inter-state commerce were subject to
registration. The .Trade Mark Cases squarely raised the issue of con-
stitutionality. Those supporting the Act contended that either the
Commerce Clause or the patent and copyright clause of the Constitution
afforded ample basis .therefor. The Court, however, after disposing of
the second clause, stated with respect to the Commerce Clause:

"When . . , Congress undertakes to enact a law,
which can only be valid as a regulation of commerce, it
is reasonable to expect to find on the face of the law,
or from its essential nature, that it. is a regulation
of commerce with foreign nations, or among' the several : '
States, or with the Indian tribes. If not so limited,
it is in excess of the power of Congress. If its main
purpose be to establish a regulation applicable to all
trade, to commerce at all points, especially if it be
apparent .that it is designed to govern the commerce
wholly betwpen_citizens of the same State, it is ob-
viously the exerci.se of a power, not confided to Congress.

"We find no recognition of thi.s principle in
the chapter on trade-marks in the Revised Statutes...."

Subsequent to this decision the present valid Trade-Mark
Act, *** which limits registration .to marks that have, been used in
inter-state commerce was enacted.

* 100 U. S. (10 "otto")" 82, 25 L. ed. 550 (1879)
** 55 Sup. Ct. 837 (May 27, 1935)

***

Act Feb. 20, 1905, c. 592, 33 Stat. 725, as amended Mar. 2, 1907
Feb. 18, 1911, Jan. 8, 1913, Mar. 19, 1920, and June 7, 1924, 15 U.S.
C.A. as 81-85. This Act was held valid in United Dru g C o. v.,
Theodore Rcctamus Co. 248 U. S. 90, 39 Sup. Ct. 48, 63 L. cd.T41 (l916)

9746

-121-

The analogy between trade-marks and designs for articles of
manufacture in this connection- is apparent. Both are values created,
purchased or appropriated by traders,, and both arc used with articles
of manufacture to attract customers thereto. Differences are that
the former usually is but a removable attachment accompanying the
article and indicating the source of the article, the latter is embodied
in the article and usually increases its attractiveness but indicates
nothing concerning its origin. From a regulatory point of view, however,
the two seemingly do not differ in any substantial respect.

The courts have given no indication that the holding in the Trade-
Mark Cases would not be followed today. Indeed, there appears to be no
reason for any other holding under the Constitution as it. now exists*
That business concentration, nation-wide depression of industrial
activity, etc., are not sufficient to increase the power of Congress
under the Commerce Clause is settled by the Schechter Case. •

Under the Commerce Clause, therefore, Congress might provide for
the registration of designs to be used in interstate- commerce and
create rights in such designs which would not be dependent in any way.
upon authorship or invention, just as the law now deals with trade-
marks. Such a statute could not cover purely intrastate "design
piracies". It therefore could have no uniform amplication to the
entire field-of the design problem.

t t

9746

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III. MAJOR FEATURES OF CERTAIN FOREIGN LAWS.

The study of foreign design legislation has progressed no farther
than the preliminary stage; yet it is believed that a short description
of the legislative devices employed in several leading countries is of
definite value. Most of the information presented has "been taken from a
bulletin of the Bureau of Foreign and Domestic Commerce, U. S. Depart-
ment of Commerce - published fcr the use of American designers seeking
protection in foreign countries. (*) Materials relating to the British
and Brazilian laws are derived from other sources. (.**)

A. Brazil .

The Brazilian Act of 1934 effects a general revision of laws relat-
ing to designs, commercial names and titles, and unfair competition.
Title I, dealing with industrial designs and models, sets up a system of
patents for designs and models which largely resembles the German petty
patent, or "Gebrauch-musterschutz. " The original patent right runs to
the author of any n ew and original design or model, which may be mani-
fested in external configuration, structure or ornamentation. By includ-
ing both structure and ornamentation within its terms, the statute
recognizee the similarity in the needs with respect to functional- device
of novelty nature, such as toys, and purely ornamental novelty.

Art. 1, Sec. 2 provides:

"By new are to be understood designs or models which, up to the
date of the application, have not, within this country, been used
or described in any publication or do not imitate another design
or model accessible to the public in such a way as to offer a
possibility of confusion and also those which may not have been
used, published, sold or patented abroad up to six months preced-
ing the date of the application in Brazil. 11

From this section it is evident that only new designs are protected,
but that the requirements over and above novelty are not rigid. In-
stead of imposing a requirement of "invention," the test is confusion of
the public.

Art. 2 limits the application of the law to those designs and models
which are not proper subject matter for patents of invention, or utility
models, or utility models, or are not of a "purely artistic nature" or
"simple accessories of industrial products," besides prescribing other
limitations. The objective, therefore, is to protect appearance and
novelty of structure, not functional utility; the last named being within
the purview of the so-called utility model or patents of invention and
hence subject to more rigid requirements.

(*) Protection of American Designs in Foreign Countries, by James L.

Brown, Industrial Property Bulletin, P.T.Ivi. 58, Cl-475 (Nov. 7,1934)

(**) Swan, Kenneth, R. , Patents, Designs raid Trade. Marks (New York:
D. Van Nostrand Co., 1906). A translation of the latest legis-
lation of Brazil was obtained by the writer through the courtesy
of Mr. Wm. H. Davis, Patent Attorney, N. Y.

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It is further provided that the proprietor of a design or model may
vary colors or dimensions without filing a new application. The term of
■protection is three years from the date of issuance of th«> '--ificatej
with the privilege of renewing for successive three-year ,o, up to a
total of fifteen years. The fees, however, increase with each renewal,
the ratio of the fees lor the five respective terms of the maximum period
teing 1: 4: 6: 0: 10.

The application for patent must include a petition, a description
of the design or model and of the novelty claimed, two illustrations in
India ink on tracing cloth or two samples of a design mottnted on card-
board, and a document proving the assignment of the rights of the author
when the applicant is not the author. The applicant must designate which
of twenty classes of products relates to the application* He must mark
articles protected "by patent, except that

"In case the objects are of very small dimensions or when the ap-
plication of the wording which constitutes the marking treated
in this article may be unesthetic in the opinion of the Director-
Generr.l of the National Department of Industrial Property, this will
not be required."

Chapters III end: IV of Title I of the Act specify situations which
render patent void or subject to forfeiture. Among the latter is a
working "provision, as follows:

"The patent for an industrial design or model shall also be for-
feited if any interested partj r prove before the National Depart-
ment of Industrial Property that the grantee or assignee of the
patent has not made effective use of the design or model, or
that this use has been interrupted during a continuous period of
more than one year."

Inf ringenents, peculiarly, are proceeded against by the state,
and lines are assessed in favor of the state. Anyone who commits any
of the following offenses is subject to a fine of from ten to a hundred
times as much as the fee for the first three years of patent protection
(from Es. 500 ^ 000 to Rs, 5:000 /£ 000):

(1) reproduces by any means, wholly or in part, without permission
from the proprietor or his lawful representative, a patented design or
model;

(2) sells, exhibits for sale or introduces in the country, in bad faith,
objects which may be a copy or an imitation of pa/tented models;

(3) exploits, without due authorization, a patented design or model
belonging to another;

(4) reproduces, wholly or in part, the characteristics claimed for a
patented design or model for the purpose of turning it over to a third
party for exploitation.

In addition, similar penalties may be incurred by anyone who:

(1) uses unduly on his models or designs the word - Deposito - or
the abbreviation -Dep.' -;

(2) mentions in commercial papers and advertisements as applied for
or patented designs or models which have not been.-

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The features of the Brazilian law which have been nentioned are
significant. It is net known, however, whether the national Departnent
of Industrial Property conducts an examination before issuing patents
for designs and models, or whether the system contemplates mere regis-
tration;' nor is there any available information concerning the effec-
tiveness of the plan.

B. France .

The Trench law' of July 14, 1903, as amended, provides for the
registration of every new design or plastic form and every industrial
object which is different from similar objects either by distinct and
noticeable configurations, or by exterior effects, which impart to the
object a distinctive or novel appearance. Again, models are included
on the same basis as designs.

Registration may be obtained by the author or proprietor of a de-
sign. He who registers first is deemed the author until the contrary
is proved and is given the exclusive right to exrj-loit and sell the de-
sign or model registered:, ■

The application must be accom-panied by two specimens, drawings or
photographs of the design. There is no examination, although registra-
tion constitutes prima, facie evidence of ownership and- entitles the ap-
plicant to protection for successive terras of five, 20 and 25 years,
running from the date of registration. The fees for renewal terms,
naturally, are greatly increased. But there is no requirement that a
registered design be' placed into production in order to retain the ex-
clusive' right thereto.

There also is no requirement of narking, although it has been said
that protected articles should be marked "Depose." Registered designs
are kept secret except in case of a law suit, "hen they are opened for
inspection by the court and- the ' defending party.

C. Germany

The law of Jan, 11,»1876, as amended, gives exclusive rights to
the authors of new and original designs, models or' patterns, or any
part thereof, for a period of from one to three years, as the applicant
•may elect. Upon payment of fees and compliance '-ith statutory require--
ments this period may be extended so as not to exceed fifteen years.

In order to obtain the nrotcction of the law designs must be
recorded and deposited before publication. They are registered without
examination into their novelty or into the right of the registrant to
their exclusive control. Unless sealed in envelopes, they are open
to public inspection. If sealed, they are not opened until the end of
the tern of protection,' excent for examination by a court.

As under the f^rench lav;, the registrant is ''presumed to be the
originator in the absence of proof to the contrary,

D. Great Britain .

One of the first known legislative enactments respecting designs
9746

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was the British Act passed in 1787 to remedy a pressing need for control
of piracy in the Cotton Trade. As first enacted it granted a monopoly
for two months on patterns to be printed on linens, calicoes, cottons and
muslins; in 1794, the term was extended to three months.

Between the 1790' s and 1907 there were many supplemental statutes
which developed the law up to the point where, in 1907, it was completed,
re-enacted and revised to assume its present-day form. Briefly, the
steps were as follows:

(1) 1839 - Extension of protection to designs for fabrics of wool, silk
and hair. Acts revised to apply to Ireland.

(2) Later in 1839 - Protection for 12 months, and in some cases up to

3 years, provided for proprietor of any new and original design applicable
to prescribed -purposes. Penalties for infringement were set at from £ 5
to h 30 for each offense.

(3) 1842 - Registration extended to all ornamental designs. Classifica-
tion system adopted.

(4) 1843 - Registration extended to embrace useful as well as ornamental
designs.

.(5) 1850 - Publication of designs without loss of right allowed; sale
or offer for sale of article embodying a design, before registration, de-
clared a destruction of the rights thereto. (This provision was dis-
carded later).

(6) 1858 - County Courts given jurisdiction over infringement suits.

(7) 1865 - Provisional protection given for designs shown at industrial
exhibitions.

(8) 1883- All old laws repealed and reformulated. Five-year protection
was established; the distinction between useful and ornamental designs
was. discarded,

(9) 1907 - The Act which is enforced today, as modified in minor respects
by amendments of 1919 and 1932, was enacted.

The Act of 1907 provided generally that:

"Every new and original design, not hitherto published in the
United Kingdom, is capable for registration.

"Design" means any design (not being a design for a sculpture or
other thing within the protection of the Sculpture Copyright Act,
1814) applicable to any article, whether the design is applicable
for the pattern, or for the shape or configuration, or for the
ornament thereof, or for any two or more of such purposes, and
by whatever means it is applicable, whether by printing, painting,
embroidering, weaving, sewing, modelling, casting, embossing,
staining, or any other means whatever, manual, mechanical, or
chemical, separate or combined."

Registration gives protection for 5 years, with the privilege of
renewal for two additional terms of 5 years each. Application for
registration is filed with the Patent Office, and an examination for
novelty or originality is made. The application must be accompanied
by three identical drawings of the design and a statement of the ar-
ticles and class applicable, -and it may contain a brief statement of
the novelty claimed for the design. Publication of the design, or sale
or exhibition for sale of articles bearing it, is fatal to subsequent

9746

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registration. But if the application is denied registration as antici-
pated, a hearing may he had; and appeal lies to the Board .of Trade within
a month after the decision of the Comptroller of the Patent Office, '

After registration the articles must be marked before delivery on
sale in order that an action for damages may be brought in cases of in-
fringement. If the design is not used on articles for, sale in the
United Kingdom to such an extent as may be deemed reasonable under the
circumstances, the registrant may be compelled by the Comptroller to
grant a license to any one interested.

Infringement undare* the British .Act is defined as follows:

"Daring the existence of copyright in any design it shall not be
lawful for any person — (a) For the purpose of sale, to apply or
cause to be applied to any article, in any class of goods in which
the design is registered, the design or any fraudulent or obvious
imitation thereof, except with the license or written consent of
the registered proprietor, or to do anything with a view to enable
the design to be so applied; or (b) Knowing that the design of any
fraudulent or obvious imitation thereof ha.s been applied to any
article without the consent of the registered proprietor, to
publish or expose or cause to be published or exposed for sale
such article c "

Concerning infringement ,by manufa.cturers, Swan (*) has written:

"Experience has shown that, in nine cases out of ten, infringe-
ment of this kind is deliberate. Hence the law declines to ac-
cept the plea of ignorance, A prudent manufacturer, who is in
doubt whether a design, which he desires to adopt, does not
too closely resemble a design already registered, will apply to
the Patent Office, submitting a specimen of the design proposed
to be used, and obtain the opinion of the Comptroller on the
question,"

Sellers of articles embodying registered designs, however, are not sub-
ject to penalty unless they have sold with actual Iniowledge that they
were infringing, A purchaser or user is never liable. The requirement
of proof of copying imposed by the Copyright laws of the United States
apparently has no counterpart in the British Designs Act,

For a full understanding of the British law it may be worthwhile
briefly to review a few of the holdings of the courts,.

Emphasis is placed entirely upefn the outward and visible appear-
ance of the article. Whether purely ornamental or utilitarian is
immaterial, (**) A novel design for an airplane body might be registered

(*) Patents, Designs and Trade iiarks (1T.Y. : D. Van No strand Co., (1908)

(**) Necla Foundry Co. v. Walker & Co . 6 R.P.C, 554 (1889)

9746

-127-

as a design or patented- as a useful invention, "but in such cases, '.There
utility predominates, patent protection would he far more comprehensive.

According to an unsubstantiated statement by Swan, a design need
not be both new and original in order to be entitled to registration.
The novelty contemplated by the act is not novelty of the abstract de-
sign, but novelty in its application to the manufactured product. (*)
Swan asserted that:

"To demand originality of design in the abstract sense of the word
would be to seriously curtail the designer's freedom of choice and
place too heavy a tax on his creative ingenuity. As it is, he is
at liberty to select from the multitude of objects that surround
him any that strikes him as affording a good design for commercial
lication."

But there must be some substantial change in design to support a
valid registration. In lekay v Welch , (**) Lord Justice Bower said;

"It is not every mere difference of cut, every change of outline,
every change of breadth or configuration is a simple and most
familiar article of dress like this, which constitutes novelty of
design. To hold that would be to paralyze industry and make the
Act a trap to catch honest traders. There must be not merely
novelty of outline, but a substantial novelty in design, having
regard to the nature of the article."

An obvious change of use, (***) or a variation of the material upon
which the design is impressed, (****) does not meet the requirements
of the statute.

E. Japan

The laws of Japan respecting designs embody some features that
are similar to the design patent laws of the United States.

The author of any new design, whether consisting of form, pattern
or coloring, or combinations of these, may secure exclusive rights to
his design, by registration, for a period of 10 years running from the
date of registration. An application for registration must include
four copies or illustrations of the design, or models thereof, a des-
cription of the design, and indications of the novelty believed to re-
side in the design and the class of goods to which it appertains.
There ore 24 established classes.

An examination of the design is conducted by the Patent Office.

(*) Sa-unders v. Will , 10 R.P.G. 29 (1892) (Design for a spoon handle
consisting of a miniature of Westminister Abbey upheld.)

(**) L. R. 28, Ch. D. 24 (1884)

(***) Clarke's Design, 13 R.P.C. 351 (1896)

(****) Bach's Design, 6 R.P.C. 376 (1889)

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If old, that is, if it is similar to any design published or described
in a printed publication prior to the application, or publicly known or
used in Japan prior to the application, registration is denied.

Products embodying registered designs must he marked before
a successful suit may be maintained*

P. ' Summary.

The materials collected with reference to foreign design laws, and
therefore the description of those laws, are obviously inadequate to
sup-oort significant conclusions. Concerning the many economic and ad-
ministrative problems which exist, there is no helpful record of foreign
experiences; but foreign laws do give an indication of the type of con-
trols adopted and maintained by other countries.

1. The Basis for Protection.

The laws of Brazil, Germany and Great Britain provide protection
for new and original designs . .Those of Prance and Japan require novelty,
although it is probable that the Japanese requirements are more stringent.
In Prance designs which impart distinctive or novel appearance are re-
gisterable.

In no foreign country is there a requirement of invention similar
to that imposed by United States law, but the determination of novelty
by British courts seems to follow principles that are similar to those
applied in interpreting United States law. Originality alone is not suf-
ficient in my of the countries mentioned.

2. What Persons Entitled to Protection.

It appears that the proprietors as well as the authors of designs
are entitled to protection under all of the laws observed. In Brazil,
as in the United States, the application must be in the name of the de-
signer, although protection may run to the proprietor if there be proof
of ownership. There seems to be reciprocity between practically all of
the countries named.

3. What Protected.

It is "o'rthy of notice that Brazil, Prance and Germany all protect
designs and novelty features of construction on a similar basis. This
does not appear to be true of Great Britain and Japan.

4. Nature of Protection. ■

(a) What Constitute Infringements.

The several laws, so far as known, differ to some extent with
reference to this subject. In Brazil, the registrant apparently obtains
no private rights, but must rely on the state to protect his rights.
Reproduction without the consent of the registrant is an offense; selling,
offering for sale, or importing,- in bad faith , is also subject to penal-
ties. In Prance the registrant has the exclusive right to exploit and

9746

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sell. In Great Britain, infringements are similar to those made illegal
under the Brazilian law. The treatment of this matter by Germany and
Japan is not known. •' ■■"

(b) Industries Included.

Although, in Great Britain at least, design protection started with
a few industries, today it applies to designs for all industries in -the
five countries studied.

The variety of terms is indicated "by 'a list of provisions:

Term. Begin s First Term Maximum Term

Brazil - Upon issue of right 3 yrs. 15 yrs,

France - UpQn registration 5 yrs, 50 yrs.

Germany - Upon registration 1 to '3 yrs. 15 yrs.
Great Britain - Upon issue of

right 5 yrs. 15 yrs.

Japan - Upon issue of right 10 yrs. 10 yrs,

France and Germany do not examine registered designs; hence the date
of registration naturally begins the term. In Japan and Great Britain,
rights are not granted until registration is approved, after examina-
tion.

Conflicting claims to similar designs apparently are settled in
all of these countries ~by reference to filing dates - there is nothing
equivalent to the "interference" proceedings of the United States patent
laws. There is no information at hand to indicate that protected de-
signs must he processed, although, in Great Britain at least, registra-
tion may he cancelled if there has "been a continuous period of one year
of unreasonable non-user.

Differences between the United States Patent Laws and practice
and the aforementioned foreign laws are obvious. The significance of
those differences, unfortunately, cannot be estimated in view of the
paucity of information at hand.

9746

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CHAPTER V

LEGISLATIVE CONTROL. BOTH AS OPERATIVE UN DER N.R.A. AND AS PROPOSED

I. REC-ULATIOIT OF DESIGN PIRACY UNDER II. R. A. CODES

A. Scope of File Survey .

The list of industries which embodied design piracy provisions
of some sort in their Codes has previously "been given. (*) From this
group a smaller group was selected for detailed study. (**) Surveys of
N.R.A. files relating to twenty-five Codes have teen completed. In some
instances design piracy provisions were very active, in others unimportant,
The files of a few Codes revealed the existence of an important design
problem but code provisions were never approved. Roughly the cases sur-
veyed may he classified into four groups, as follows:

Group A - Code studies which revealed active design pro-
visions:

Silk Textile Medium and Lot; Priced Jewelry
Furniture Toy and Plaything

Group B - Codes wherein design provisions were relatively
inactive:

Artistic Lighting Silverware

Far Upholstery &. Drapery Textile

Lace Velvet

Set-Up Paper Box

Group C - Code studies which indicated activity, hut no
operative 6_esign piracy Code provision:
Dress - I'illinery
Ladies Handbag Schiffli
Handkerchief

Group D - Code studies which disclosed no instructive

materials:
Carpet and Bag
Funeral Supply
Glass Container
Leather

Luggage

Rayon and Silk Dyeing and

Printing

Wall Paper

(*) Chapter I.

(**) See Appendix "A" infra.

9746

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3oot and Shoe (* )

Wood Cased Lead Pencil

Surveys of the files of the Code?: in Group D produced nothing of
value except fragmentary dats concerning the steps leading to the adop-
tion of the design piracy provision and the irovisions themselves. (**)

B. Inception of the Code Provisions.

Such material evidence as the surveys produced on the nature and
relative importance of designs and fashions, competitive situations and
extent of the piracy problem in particular and representative industries
has been previously discussed. (***) The 1T.R.A. files of industries not
included contain a surprisingly meagre store of data on the situation
which led to the proposal or approval of provisions against design piracy.
Studios of the following disclosed nothing on this subject:

Artistic Lighting
Boot and Shoe
Carpet and Rug
Funeral Supply
Glass Container
Leather

Luggage and

Fancy Leather Goods

Upholstery & Drapery Textile

Wood Cased Lead Pencil

Velvet

Silverware

The extent of the design piracy problem in other industries was in-
dicated generally, but inadequately, in NRA files by statements of rep-
resentative interested groups. (****)

C. Steps Leading To The Approval or Disa-v.roval of Code Provisions.

1. Sponsoring Groups.

In all instances of approved Codes, the groups which sponsored the
Codes were required to submit evidence showing that they were "truly

(*) Although the industry is concerned with the problem, majority action
prevented the inclusion of a design Piracy provision in the Code sub-
mitted. "At the time our Code was prepared, it was decided by a very
large majority that there -should be no design style piracy clauses in
our Code. . ."Letter, dated October 1, 1935, from J. 0. Ball, Ex. Vice-
Pros., rational Boot and Shoe Manufacturers Association to Design Pir-
acy Unit. (In 1IRA files, Design Piracy Unit files, Polder: Boot and
Shoe)

(

(**) See page 203 infra.

(***)See Chapter II, Design Piracy
supra .

in Representative Industries, page 18

(****) Code files for the Pur Manufacturing Industry suggested the exist-
ence of a practice whereby "resident commission salesmen" imitated
the designs of sample fur articles entrusted to them by procuring
orders on the samples and having the orders made up by other concerns.
Transcript of Hearing . December 39, 1933, pages 147-14S(ln NPA files,
Transcript Library) In the Handkerchief industry the problem appears
to be largely the concern of a relatively small group of manufactur-
ers en aged in the production of hand made handkerchiefs.

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representative" of the industries concerned. A preponderant part of the
total value of production of each industry was represented in all cases;
in most cases only a small portion of the industries was unrepresented. ^'
This, then, is of itself evidence of the desire of a lar^e part of the
industries concerned for design -orotcction, and all but one of the codes
studied (**) included some sort of provision dealing with design piracy.

2. Recorded Sentiments of Persons or Classes Liable to be
Affected oy the Proposed Provisions.

The public hearings held on -oronosed I T RA codes which were studied
for design piracy materials', lacked any L reat amount of recorded
sentiment on the subject of design protection. In most instances more
pressin problems of universal interest occupied the entire attention of
attendants at the hearings, trade nractice provisions often being ac-
cented as obviously desirable. (***) There was no mention of design
piracy, except occasional general statements of code sponsors at the
hearings on the following codes:

Artistic Lighting Equipment Rayon and Silk Dyeing and
Boot and Shoe Printing

Funeral Supply Set-Up Paper Box

Pur Silverware

Glass Container Toy and Playthings

Luggage and Fancy Leather Joods -Hpholstery and Drapery
Medium and Low Priced Jewelry. Textile

Wall Paper
Uood Cased Lead Pencil

At the hearing on the pro iosed code for the Car-net and Rug Industry,
one manufacturer offered a broad provision designed to strike more
directly at design piracy than the provision included in the draft sub-
mitted by the code sponsors. (****) There was no further comment.

At the Lace Code hearing, Oct. 18, 1933, one industry member
asserted that existing laws provided adequate design protection and that
he would not approve the granting of power to a Committee to determine
whether he had imitated an original design, after possibly large outlays
of capital on his part. (*****) Later, by letter, the Princeton Lace
Wqrkg, claimed that the construction of lace is more important than
(*) Standard KRA policy. For specific representation of the various
groups see Volumes "A" of the Code files for the respective in-
dustries, fin 1JRS. files, Control Record files) or Printed Codes
for the respective industries; Letters of transmittal.

(**) See page 2Q1 supra (Footnote).

(***) Based on study of the Transcripts of Hearings held. (}IRA files,
Transcript Library)

(****) Brief submitted by John Bromley £ Sons, Inc., dated October 6,
1933. (in ITRA files)

(*****) Transcript of Hearing, October 18, 1933, \ages 93, 97. (in FRA
file, Transcript Library)

9746

■413®*

pattern, that the determination of originality is impossible, and that
about BOfo of lace designs are copied from foreign samples. (*)

Hearings involving the design piracy provision for the Ladies'
Handbag, Industry brought forth no comment by individual members of the
industry in opposition to the proposals. (**) However, the National
Retail Dry Goods Association objected, saying that existing laws gave
adequate protection and that even under the carefully framed patent laws
a. type of racketeering had grown up, involving fraudulent claims of
exclusive rights based u-->on the mere filing of applications for patents.

The only protests against the design clause of ■ the Leather Code
were made by manufacturers of embossing plates. (****) Two of these
manufacturers wrote that the code would restrict the sale of a plate to
a single concern, leaving no chance for a return on the high cost of
production thereof except by raising the price charged the exclusive
purchasing concern, and that this could not be done if foreign plate
manufacturers also were given code protection, since the latter could
distribute their cost of production over items sold both abroad and in
America.

The Retail Dry 'Goods Association, at the -hearing on the code for
the Silk Textile Industry, declared that it favored design protection
but opposed allowing retailers to be held responsible in cases of copying.
(***** )At the same hearing, manufacturers of tinsel fabrics objected
to their exclusion from the scope of the design clause, which, appar-
ently, had been done on the theory that all designs for tinsel fabrics
were copies of foreign-made originals. (******)

(*) Letter from Princeton Lace Works to the Association (in NRA files
Central Record files: Folder; Amendments and Modifications

(**) Transcript of Hearing of December 8, 1933, pages 253-261 (In NRA
files. Transcript Library.

(*** )

ia.

(****) Letter from Rochlen En raving tforlcs to 1IRA. (in NRA files, Vol-
ume -D, Central Record files).

Letter from Standard Embossin... Plate Mfg. Co., to General Johnson,
(in UFA files, Central Record files; Folder: 254, Protests S-Z)
3oth letters stated there were three American Embossing Plate
manufacturers in the industry.

(***** )Transcript of Hearing, September 12, 1935, pages 99-100 (in NRA
files, Transcript Library)

(******) id.

9746

-134-

There remain four of the codes studied; Dress, Furnitu-e Millinery
and Schiffli and Hand Machine Embroidery. An extensive special hearing was
held on a proposed design piracy clause for the Dress Code on November
15, 1934, under circumstances which enabled the attention of the entire in-
dustry and of ot.ier interested groups to be focused on the problem.
The arguments advanced and the issues raised at that hearing are considered
representative of all industries concerned with the problem and have been
previously set forth. (*)

3. Attitudes and Action of N.R.A. Officials.

The records of recommendations by the N.R.A. Labor, Consumer and
Industrial Advisory Boards and the Legal Division concerning proposed de-
sign piracy provisions indicate a changing attitude toward design protection
by the code method. Early in the cc de-making phases many of such provisions
were approved without comment. Thus, of the 25 codes studied, design clause
of the following were approved forthwith;

Carpet and Rug Rayon and °ilk Dyeing & Printing

Funeral Supply Set-Up Paper Box

Furniture Silk Textile

Glass Container Silverware

Leather Toy and Playthings

Luggage Upholstery

Medium & Low-Priced Jewelry Velvet

Ladies Handbag (**) Wall Paper

V/ood Cased Lead Pencil

One of the earliest objection: was that the Consumers' Advisory Board,

following a Hearing of October 18, 1933, to the design clause proposed

in Amendment No. 1 of the Lace Code, the grounds being that the existing

patent and copyright laws sufficed, and that a committee of industry

members should not be empowered to determine ^ro^erty rights in designs (***'
ine Amendment was 1 approved, however, over these objections. Later, a

second amendment governing protection of "Fabric" from copying was
attacked by the Legal Division and the Consumers' Advisor?/ Board, con-
sidered by the Advisory Council, and approval was conditioned upon an
a^roved definition of the term "fabric". (****)

(*) See Chapter III, page 52 supra. For detailed information relative to
the Millinery Industry , see Transcripts of Hearings, August 1, 1933,
page 233, and June 5, 1934, pages 297-306; Furniture Industry , see
Transcript of Hearing, Oct. 9, 1933, pages 9, 10, 57, 58 and 131 to
136 incl.; 'Schiffli and Hand Machine Embroidery Industry, see Trans-
cripts of Hearings, September 11, 1935, pages 18, 41, 72-99 and 187-
198, November 17, 1933, pages 34-86, and" February 11, 1935.

(**) The provision, like others hereinafter referred to, merely provided
for investigation and recommendation by the Code Authority.

(***) Memorandum from Consumers' Advisory Board, (in NRA files, Central
Record Files, Folder: B-B- Amendments and Modifications)

(****) p-u^iic Hearing, -arch 19, 1934. See Transcript pages 49-52. (in
NRA files, Transcript Library;. Revised and re-submitted June 16,
1934, Volume II, Order No. 5-17. (in NRA files, Central Record
files). Board Reports - (in NRA files, Legal Division files,
-^merson to Houston - folder 244/01), Volume II, Order No. 6-17
(ibid). Advisory Council report and recommendation - (in NRA Files
Dep\ity's files, Folder: Amendments and Modifications. Approved
Provision - Amendment No. 3, Code No. 6, Codes of Fair Competition
Volume XX page 125.

9746

-135-

A definition for the term was never approved. (*)

Several groups in the Dress Industry proposed a design clause in
the original code, but agreed, after insistence by the Deputy Administra-
tor, to accept instead a provision v:hich authorized an investigation
of the design problem and recommendations for subsequent action. (**)

A year later the industry recommended an amendment which would
have given broad protection for designs, but, after the hearing (***)
thereon, the Advisory Boards recommended disapproval on the ground of
unenforceability and extension of scope of existing law. (****)

Similar action was taken in connection with Codes for the Millinery,
Pur, and Ladies' Handbag industries. The former was approved December 13,

1933, with a provision authorizing investigation and recommendation by
the Code Authority; (*****) the Fur Code v/as approved May 19, 1934, with
a like provision (******) to which the Research and Planning Division
objected on the ground that the Patent Laws afford ample protection;
(*******) and the Ladies' Handbag Code was approved March 14, 1934, con-
taining the same type of provision (********). Upon submission in June,

1934, of a proposed amendm-nt of the Millinery Code, providing for the
establishment of a design registration bureau, Deputy Administrator
Howard a- ain suggested that approval be withheld until a more carefully
drawn provision could be formed, (*********) and a provisions like that
originally approved was retained. (**********) The Code Authority for
the Fur Industry never forwarded recommendations. The Code Authority
for the Ladies' Handbag Industry proposed a number of differently worded
amendments which were never ariroved by the Administration. (***********)

(*) NBA files - Deputy's files, Folder: Definition of "Fabric". Con-
sumers' Advisory Board files, Folder "A". Legal Division files,
Folder 244/01 Industrial Advisory Board files, Folder II-O, Sept.,
1934.

(**) Transcript of Hearing, August 33, 1933, p. 93; See Code. No. G4, Re-
print Article VI , Sec. (K); Sec. (J) by Amendment Ho. 5.

(***) November 15, 1934. For' amendment see HRA Release No. 8816. (in
ITRA files, Deputy's files, Folder: Piracy Amendment.)

(****) Board Reports, ibid.

(*****) See Article VI, Section 7 (f) of Code for the Millinery Industry,
Codes of Fair Competition, Volume IjVV neuce /l

(******) See Article vi, Section (5 (l), Code for the Fur Manufacturing
Industry, Codes of Fair Competition Volume X page 265

(*******) Vq1 ^ II ( In , HRA files> central Record files)

(********) See Article VI, Sec 7 (i) Code for the Ladies' Handbag Industry,
Codes of Fair Competition, Volume VI I I p age 27

(*********)Transcript of Hearing, June 5, 1934, pages 397-306 (in NBA
files, Transcript Library)

(**********) 3 ee Article Will, Sec. 16, Amendment Ho. 3.

(*********'*) Hearings held January 9, 1935. The Legal Division, Research
and Planning Division and Consumers' Advisory Board all objected,
pages 69-98. (Also see Deputy's files, Folder : Meetings, Reports

9746 and Amendments. )

-136-

With respect to these fou#' "apparel industries, reluctance to ap-
prove an operative provision was based on the belief that the lack of
complete industry acceptance, ""'the difficulty of determining "originality"
and the multiplicity of •designs which would probably require registration
rendered such provisions, unenforceable. (*) Respecting two other Codes
for apparel industries, the Hand kerchief and the Schiffli Codes, pro-
visions authorizing the establishment by the Code Authority of a means
of design protection subject to approval oi' the Administration were
approved, October 31, 1934, and"' February 2, 1934, respectively. (**)
The regulations submitted : oy these 'industries, however, never were ap-
proved, and the provisions were' therefore inoperative.

The Code for the Upholstery and Drapeiy Textile industry contained
a provision of similar type, which evidently was in effect operative,
though no formal approval of the Administration is recorded in H.R.A.
files. (***)

The design provision for the Artistic Lighting Equipment industry
(****) was questioned by the Legal Division as possibly "cutting across
present existing law under 'trade mark and patent design", (*****) but
was approved over that objection.'

Operative design piracy provisions of 14 of the Codes studied
were approved in 1933. The latest 'operative provision of Codes studied
was approved June 38, 1934, over objection on the grounds of "catting
across" existing law. (Code for the Artistic Lighting Equipment Manu-
facturing Industry).

(*) Board Reports: '

Dress - (in HRA files, Deputy's files, Folder: Piracy amendments,

Also Transcript of Hearing of November 15, 1934.)
Millinery - (in HRA files, Transcript of Hearing of August 1, 1933,

page 383, Transcript Library)
Fur - (In HRA files, Volume II, -Central Record Files)
Ladies' Ha ndbag- (the Code, as submitted contained the then stand-
ard clause; See Transcript of Hearing of December 8, 1933, pages
258-261.)

(**) See Article VII, Sec. 28, Code for the Handkerchief Industry, and

Article _V_ , Sec. 8(n,) Code for the Schiffli industry, Codes of

Fair Competition, Volume I , page 629 , and Volume VI , page

-Jj3JL.> respectively.

(***) See A r ticle IX, Sec. S, Code for the Upholstery and Draper Textile
industry, Codes of Fair ■Competition, Volume III, , page 259 •

(****)Sce Articl. VIII, Rule XVI,' Code for the Artistic* Lighting Equip-
ment Manufacturing Industry, Codes of Fair Competition, Volume _XJI>

page

SIP. I

(*****) Memorandum, Legal Adviser to Deouty Administrator (in NRA files,
Central Record files, Folder: Code Approval)

9746

-137—

There appears to have "been little consistency of policy with. -pes ect
to design piracy provisions. The Consumers' Advisor - / Board was the most
insistent oojector, usually, however, on the ground? that it r Ts unwise
to extend the scope of existing patent and copyright laws. (*) The ob-
jections of the Legal Division were for the most part based on the diffi-
culties of enforcing such provisions, particularly with respect to the
apparel industries. (**) Several members of the Administration, represen-
tatives of the Legal Division and Research and Planning Division en-
deavored tovrork out a satisfactory model code provision to deal with the
subject, but failed to arrive at any unanimity of recommendation. (***)
The National Retail Dry Goods Association was an insistent external ob-
jector, usually on the grounds that existing laws afforded ample protec-
tion. (****) Approval of the intent of such provisions was expressed in
some cases, however, providing that the burden of proof of originality
be on the manufacturers.

(*) For typical comments see:

Dress - Transcript of Hearing, 1 ov. 15, 1934. (in ERA files Trans-
cript Library) .

Lace - Report (in NRA files, Central Record files, Folder: B-D,

Amendments & Modifications, Deputy's files, Folder: Defini-
tion of "Fabric", Consumers' Advisor"- Joard files, Folder:
"A")

Ladies' Hand or? r - Transcript of Hearing, pages 68-98. (In 1JRA

files, Transcript Library); Also memoranda from Hulilein to
Ore - Consumers' Advisory Board files, Folder "A").

Han dice rcnie f - Volume II, Amendment Ho. 2, (1TA files, Central Re-
cord files, also Deputy' s files, Folder: Design Piracy) .
(**) For tyoical comments see:

Artistic Light in;; - iiemo from Legal Adviser to Deputy Administrator.
(in LIRA files, Central Record files, Folder: Code Approval).

Dress - Transcript of Hearing, November 15, 1934, also memo Blau to
Vincent, December 21, 1934. (in HRA files, Deput3'-'s files,
Folder: Piracy Amendment) .

Ladies' Han do.:.. " - Transcript of Hearing, pages 63-98. (in ERA files,
Transcript Library) .

Set-Uo Paoer Bos - Uerao dated August 17, 1934, from Legal Checking
Section to Robinson of Legal Division, (in NRA files, Cen-
tral Record files, Folder: 406/03).
(***) See: Letter, ; "ittenthal to Newman, dated February 15, 1935. (in
FRA files, Legal Division files, Folder: 236/l/0l); Minutes
of meeting of Code Authority for Ladies' Handbag Industry,
(In FRA files, Deputy's file, Folder: Meetings) Letter, Le-
gal Division to Ladies' Handbag Code Authority, date March
15, 1935, also Research and Planning Division to Col. Han-
gar,, (in IRA files, Deputy's files, Folder: Trade Practices)
Report, submitted by Ladies' Handbag Code Authoity (undated)
(Ir. NRA files, Deputy's files, Reports).
(****) For typical comments see:

Fur i-.s.nuf acturing - Transcript of Hearing, December 29, 1933, pages
147-148. (In FRA files, Transcript Library).

(Continued on next oa./e)
9746

-138-

D. Analysis of Code Provisions On Design Piracy, And Plans For Their

Administration .

Included in the list of codes studied are one which embodied no
clause on design piracy, several which contained clauses authorizing the
Code Authorities to investigate the subject and recommend action to be
taken, three which gave the Code Authority power of regulation subject to
approval of II. R. A., and many which had fully operative provisions. The
code of the first class is 3oot and Shoe. The second class includes
Dress, Hillinery, La.dies' Handbag, and Fur. The clauses in the Upholstery
and Drapery Textile, Schiffli and Handkerchief Codes required that addi-
tional plans be approved by the Administrator. Since never approved, the
latter were never officially operative.

1. Substantive Enactments of Operative Provisions.

Artistic Lighting Equipment —

"ITo member of the Industry shall imitate, simulate, or appropriate
• ithin three (3) years from the date of its registration, any original
or unique design or style originated by any member of the. industry or
his employee**." (Article Viii, Rule XVI, approved June 28, 1934.

Carpet and Rug —

"Ho member of the industry shall produce in an inferior grade a copy
of a running line pattern of any other manufacturer." (Article VII,
Sec. 9 approved. Jan. 12, 1934.)

Funeral Supply —

"Design piracy end imitation of a competitor's design" prohibited.
(Article IX, Sec. 1 ( r) approved l"ov. 4, 1935).

Furniture —

"The copying and/or reproducing of an exclusive design or pattern,
original in design or treatment, owned by another furniture manu-
facturer, within t 1 o years of its introduction, " prohibited. (Arti-
cle VIII, Sec. 4, approved Dec. 7, 1933)

Glass Container —

"The imitation of a competitor's*** exclusive and established design
of product or package intended to identify the make-" or vendor of
the product" prohibited. (Schedule 3, 3, approved Oct. 3, 1933.)

(****) Fur Manufacturing continued.

Ladies It- nc b; .- - Transcript of Hearing, December 8, 1933, iages
258-261, also Legal. Division files, Folder
236/1/01 - A. (In 1CRA files)

Silk Textile - Transcript of Hearing, September 12, 1933, pages
99, 100. (In I'M files, Transcript Library)

9746

-139-

Lace —

"*** to make a colorable imitation of an original design of any
other such r-erson", declared unfair and prohibited. (Article XIII ,
Sec. 6, Amendment "No. 1, approved Dec. 28, 1933).

Leather —

"No member of the industry shall imitate or simulate within one year
from date of registration, any new embossed or decorative design or
pattern originated by any other member** and registered**". (Article
XIII, approved Sept. 7, 1933.

Luggage and Fancy Leather Goods —

"Misappropriation of a competitor's business by**ciracy of styles or
designs**is unfair competition." (Article VI, Sec. 5, amoroved Octo-
ber 3, 1933).

Medium and Low Priced Jewelry —

"To imitate or simulate an-'- original design without the permission
of the originator", declared unfair. (Article VIII, Paragraph "0"
approved Dec. 23, 1933) .

Rayon and Silk Dyeing and Printing —

"No concern shall copy the print or embossed design or pattern of
another; the issuance to and possession by anyone of a United States
Patent or a registered certificate bv the office or bureau approved
by the 3oard of Trustees for the registration of designs**shall be
presumptive evidence of iris ownership or such design or pattern."

"No concern engaged in the printing of an"'' fabrics in this industry
shall prepare, engrave, or print, or submit to an engraver or printer
for engraving or printing, any pattern or design which shall not
previously have been regi stereo in the Unitsc States Patent Office
or in any other office or bureau apnroved by the Board of Trustees."
(Articles X and XV, Sec. 15, approved Dec. 21, 1933).

Set-Up Paper Box —

"No member shall produce or cop"/ without the written consent of the
originator, an original package or design, which shall have been filed
with the Executive Secretary of the Code Authority**. Protection of
such origination shall be limited to two ^ r ears from date of filing."
(article VIII, Sec. 5, approved Dec. 13, 1933.)

Silk Textile —

"No employer shall take orders for, or print, or jacouard weave an-? -
design not registered with tiie**" r !urear***, or do any work on an^ re-
gistered design except ,; it!i the written consent of the person making
the registration." (Article VIII, Sec. 5, approved Oct. 7, 1933.)

9745

-140-
Silverware —

"No member of the Industry shall imitate or cop T ^ any original design,
mark or brand exclusively owned by another member of the Industry***."
(Article VIII, Sec. 5, approved Dec. 23, 1933.)

Toy and Plaything —

"The copying of lines or items by competitors for their own use prior
to the end of the year following that in which they were originated...]
prohibited. (Article VII, Sec. 6, approved %v. 4, 1933.)

Velvet —

"I\fo original design woven or printed, created in the United States,
may be copied or reproduced in a form which is sufficiently like the
original design to be mistaken for it .. .provided such original de-
sign shall have been previously registered in the United States Pa-
tent Office of any other office or bureau approved by the Code Author-
ity and the Administrator." (Article VII, Sec. 9, approved Dec. 30,

1933.)

Wall Paper —

"copying of designs and/or patterns", declared an unfair method of
competition. (Article VII, Sec. (a) approved Sept. 7, 1933).

T .7ood Cased Lead Pencil —

"ITo member of the industry shall imitate, simulate, or otherwise en-
deavor to appropriate to his own advantage, **the design, marking,
color or other distinguishing feature of his sleeve, band, bo::,
package or carton." (Article VII, Sec. 13, approved Feb. 17, 1934).

The diversity of these provisions is obvious from a. reading thereof,
"lost of them are substantially alike in that they seek to protect "designs",
"patterns", and "styles". In some instances, "packages" or "distinctive
features" are included.

Some contained an outright prohibition of "design piracy" as an un-
fair trade practice, for example that for the "'all Paper Manufacturing
Industry. Some, as the Code for the Glass Container Industry confined
the prohibition of piracy to such cooying of designs as tended to mislead
purchasers, thereby striking at misrepresentation and appropriation of
good ill, rather than appropriation of designs. Some gave exclusive
rights in designs to the inventors or originators thereof for a specified
length of time, examples of which are the Codes for the Toy and Playthings
and Furniture Industries. Some conditioned the grant of ■orotection upon
registration v, ith the Code Authority or other agency, an example of which
is the Code for the Leather Industry. The Code for the -Silk Textile In-
dustry prohibited the use of my designs not re "istered. The Code for the
Carpet and Rug Industry sought to orevent the slae of copied designs in
materials of a grade inferior to that used by the original.

The oeriod of protection varied from a. season of a few months to

9746

-141-

several years, and in many instances no. limit at all was placed upon the
duration of the 'monopoly. For example a term of protection of one year
was prescribed by the Leather and Toy Codes; two .years, by the Furniture
and Set-Up Paper Sox Codes; three years, by the Artistic Lighting Code;
while the term in the others was not limited. The term, however, ran in
the Furniture Code from the date of introduction of the design, in the
Leather and Toy Codes, from the date of origination , and in the others
specifically named, from the date of registration. Of those having an un-
limited term, several purported to give absolute protection against copy-
ing by competitors, and their administration disclosed no departure from
this purpose: Funeral Sunplv, Lace, Luggage, Silver-are, Wall Paper and
Wood Cased Lead Pencil. Administrative rules prescribed under the provi-
sion for the Medium and Low Priced Jewelry Industry, however, set up de-
tailed requirements for originality and prescribed a term of one year
subject to renewal for five consecutive years. Administrative rules
adopted by the Velvet Industry prescribed a term of three years. The
Carpet and Rug Code, however, gave no absolute protection, only .protec-
tion against the production "in an inferior grade" of a copy. The Glass
Container Code included a rather vague limitation of protection to "ex-
clusive and established" designs "intended to identify the maker or ven-
dor of the product", evidently with the intention of covering cases of
misrepresentation only. The Silk Textile and Rayon and Silk Dyeing and
Printing Codes, closely related to each other, contained no express limi-
tation of the term of protection, but in operation they merely suoplied
code sanctions for the Design Registration Bureau of the Silk Association
of America, which already had established definite limitations and work-
ing rules. (*)

A further observation is important. Many of the provisions, in
terms, based protection upon originality of design: Artistic Lighting,
Lace, Leather, Medium and Low Priced Jewelry, Set-Up Paper Bos, Silver-
ware, and Toy and Playthings a.nd Velvet. Others applied their terms to
all designs, whether original, novel, or old. The Silk codes, as before
mentioned, followed the plan of the Design Registration Bureau, which en-
deavors to protect all original designs but interprets originality in
its own way — substantially as anything departing from currently regis-
tered designs — and not in its meaning as used in connection with National
copyright laws. This tendency to give varying interpretations to the word
original is found in connection with almost all of the code provisions
which gave -orotection only to original designs.

2. Administration of Operative Provisions.

The administration of almost all of the operative code provisions
dealing with design piracy involved the use of an agency or bureau for the
registration of designs. The Silk Textile and Rayon & Silk Dyeing and
Printing Industries continued with their Design Registration Bureau. The
Leather, Toy and Playthings and Velvet industries adopted the same bureau,
under rules, however, promulgated by the Code Authorities of the respective
industries. The Medium and. Low Priced Jewelry Industry employed the Rhode
Island School of Design. She Code Authority itself handled the registra-
tion of designs in the Artistic Lighting Souipemtn, Furniture and Set-Up

T*) See Chapter VI, page 262 infra.
9746

-142-

Paper Box industries. No registration agency appears to have been em-
ployed by any of the following:

Carpet and Rug
Funeral Supply
Glass Container
Lace

Luggage

Silverware

Wall Paper

TJood Cased Lead Pencil

(a) General Plan

In the industries which did not register designs the provision opera-
ted merely as a trade rule, enforceable through the usual channels es-
tablished for the enforcement of code provisions. Complaints of violations
were submitted to the Code Authority, or to a special trade practice or de-
sign committee of the Code Authority, for determination of whether there
was actually a violation. Upon failure of the respondent to conroly with
the decision of this tribunal, the complaint might be turned over to N.R.A.
officials for the imposition of sanctions.

(b) Particular Plans.

The plans for administration in those industries which used regis-
tration systems varied widely.

1. Leather
The Leather Industry endeavored to follow closely the S&lk Textile
plan, issuing instructions to all members to register all designs, which
might be classified as staples, novelties, etc., upon penalty of possible
loss of the right to produce a design unless it were registered.

"The basis of .originality will be that if two or more owners
submit the seme design, that design will be considered a
staple. It might happen that should you neglect to send in
a design you own, that someone else might submit the same, have
it registered, and you would then be barred from using it for

a year.

(*)

A later notice to the members of the Leather Industry indicated that
originality of a design submitted;wculdbe determined by deciding whether
it conflicted with a registered design in such manner as to confuse the
average purchaser. Any registration was held subject to cancellation if
the design were not processed wi thing three months. (**)

2. Furniture.

The plan for the Furniture Industry, which wps placed in operation
but never formally approved by the K.R.A., involved the establishment of
a tribunal of three members, "qualified by their knowledge of furniture
design", to handle complaints of alleged copying of registered original

(*) Notice of Tanners Council to the Trade, Dec. 1, 1933. (in NRA files,

Deputy files) .
(**) ibid. Plan for Tanners Design Registration Bureau.

9746

-143-

designs. Fees for registering designs and filing complaints and defenses,
and payment of costs of complaint or defense by the losing party to a
dispiite '-'ere provided for. The test of infringement was the same as in
the Leather Industry. Originality of designs was to be determined by com-
uarison with current -oubli cat ions and by the general knowledge of the mem-
bers of the tribunal. ( *)

3. Medium and Lot/ Priced Jewelry.

In the Medium and Low Priced Jewelry Industry a jury consisting of
three experts on design from the Rhode Island School of Design was es-
tablished, to operate the registration bureau and pass on all questions
relative to design piracy. Cases of Questionable originality were to be
considered by the jury before a registration certificate would be issued.
Only an "original" design might be registered — "it cannot have been on
the market before". (**) Designs might be registered belonging to any
of the following types: "(A) Individual Design. . . (S) Design Style. . .
(C) Combination of Material. . . (D) Functional Forms"(***) The following
excerpts from the bulletin indicate further features of the plan.

"III. Thus it will be seen that designs may not only be
registered as individual ideas, in many cases perhaps not
of sufficient value to warrant many such in the medium
and low priced field, but as an individual style covering
many lines, as basic ideas involving uses of materials in
new ways, and involving functional arrangements which are
original. ***

"V. Protection is based upon visual effect and designs
are registered to cover the originality of intent and
idea rather than exclusively upon a particular method by
which the result is obtained.

"VI. Registration is based uxion design in production,
i.e. it must be offeree for general .sale within six months
of date of registration.

(*) Code Authorit- 3ulletin #1, December 18, 1933, (in F.R.A. Central
Record files)

(**) Plan of Operation of the Design Registration Bureau, Medium and Low
Priced Jewelry Manufacturing Industry, effective May 1, 1934. (in
N.R.A. files, De-out^'s files, Design Piracy Folder.)

(***) id.

974£

-144-

"VII. A manufacturer may re-register annually for a period of
five consecutive years.***"

4. Toy ano. Playthings.

The Toy and Playthings industry, through the National Council on
Design Protection of the American Arbitration Association, ( *) designated
the Industrial Design Registration Bureau as its official registration
agency to function in cooperation with the Design Protective Committee
of the Toy Industry. The registerabili ty of all designs was determined
on the basis of "originality" by the Bureau. In cases of dissatisfaction
with the decision rendered, the applicant had the right of appeal to the
Protective Committee, or the matter could. have been referred to arbitra-
tion at an approximate cost of $25.00.. The Protective Committee also
.arranged for adjustment of cases of alleged infringement under the rules
of the American Arbitration Association. (**)

5. Velvet

Under the rules and regulations adopted (***) by the Velvet Industry,
protection was granted for a term of three years and conditional regis-
tration of all fabrics excepting those adjudged to be "staples" by the
Industrial Design Registration Bureau was provided. The controlling con-

(*) The National Council on Design Protection was established in November
of 1933, by the American Arbitration Association, as the result of a
survey undertaken at the reauest of a number of industries interested
in design protection. The purpose of the Council was to afford a
neutral medium through which trade associations could work out design
piracy problems under Codes. Finding the Industrial Design Registra-
tion Bureau already in operation, the Council established cooperative
relations and recommended the Bureau as a central registration agency.
Provisional Rules of Procedure were adopted and suggestions as to in-
dustry procedure were drafted, which together with a statement of the
methods of the Bureau's operations, were made available to all inter-
ested industries. At a meeting of the Association held January 11,
1934, twenty-seven industries were represented. The number of indus-
tries, other than the Toy and Playthings industry, which actually
ma.de use of the assistance and cooperation of the Council is not
known at this writing. (American Arbitration Association materials
are in LIRA files, Design Piracy Unit files, Folder: American Arbitra-
tion Association.)

(**) All material relative to the protective plan of the Toy and Playthings
industry is taken from "Plan for Toy Design Registration Bureau", (in
NBA files, Design Piracy Unit files, Polder: Toy and Playthings) .

(***) Approved by Administrative Order No. 138-4, dated March 3, 1934.
(Docket) .

9746

-145-

1 — ditions adopted (*) for the first year of operation were:

"a. The Bureau will register any fabric submitted
which in the opinion of the Velvet Code Authority has not been sold in
this market during the past five years, and which is not among the
STAPLES. . . provided, however, that any person on proof satisfactory to
the Code Authority that he manufactured any registered design at any
time prior to the five years shall be licensed by the Code Authority
with the same force and effect as if licensed by the Registrant of such
design.

"b. If any person shall submit proof satisfactory to
the Code Authority that lie has made a prior sale of any registered fab-
ric within the last preceding five years, and that he has used due dili-
gence in calling this fact to the attention of the Code Authority, the
registration shall be cancelled by the Code Authority, and a registration
granted to the prior user, upon condition that a license be issued by
him to the person whose registration has been cancelled."

No royalty was charged for the use of the designs by the licensee. ( **)

5. Comment

These plans of administration illustrate forcibly the difficulty of
obtaining uniformity of action where non-judicial interpretations are in-
volved. An original design, to the Leather Industry, was any design that
differed substantially fi-om the designs already registered. To the Fur-
niture Industry it was any design differing substantially from those re-
cently used or known by the members of the tribunal. To the Medium and
LowPriced Jewelry Industry it was a design not on the market before. In
the Velvet Industry it was a design not known to have been sold in the mar-
ket during the ^receding five years. None of these even approached the
legal meaning of the " T ord as used in the copyright laws — i.e., an original
work is the product of the mind of an author, or designer. Moreover, none
of them purported to safeguard the designers' interests.

The plans illustrate more, however; that the details of actual ad-
ministration went far beyond anything prescribed by the substantive enact-
ments of the code provisions involved and were adapted to the wishes of
each particular industry concerned. The entire matter of determining what
silk textile designs should be protected, how long, a.nd by what procedure,
was left to the Registration Bureau, and these details were changed from
time to time merelv bv issuing notices to the trade. The Leather group
framed its own definition of originality and decreed that a registered de-
sign must be processed within three months from date of registration in
order to retain its protection. The Furniture group prescribed its own
fees, "court" costs, and rules of evidence. The Medium and Low Priced
Jewelry group prescribed the kinds of designs to be protected, the vary-
ing scope of protection available, the term and number of renewals, and it
ruled that only designs in production were eligible. The Toy and Play-

(*) ibid "Registration of Velvet Fabrics".
(**) id.

9746

-146- ■

things industry worked in cooperation with the .American Arbitration
Association. The Velvet industry, through the Registration Bureau
prescribed the type of de c igns . to be .protected and drafted its own
agreement between licensor and licensee.

Briefly in most industries the originator of a design could waive
protection, although the Silk Textile Code required that each design
be protected by registration; to produce it if not registered was a
violation of the Code. In some industries the Codo Authority Was given
power by the Code to promulgate rules for the registration of designs, to
define the rights to be granted, to decide upon violation of rights, and
otherwise to direct the operation of the entire system. In almost no code
was it made clear what constituted an original design, or who should be
considered the originator. Nor were the interests of designers safe-
guarded by express provisions.

E . Operation of Code Flans .

File surveys disclose but little information concerning the actual
operation of , the Code plans. Cf obvious interest are: the number of designs
registered, the number of complaints of alleged violations, the nature and
disposition of these complaints, and most important, the effects of the
plans. They are fragmentary references to the first three subjects in
connection with a few codes; almost none to the subject of effects in NBA
files. Information obtained through interviews with representative ob-
servers has added somewhat, however, to that available.

1. Ilumber of Designs Registered

The largest volume of designs registered in any one industry
was registered with the Industrial Design Registration Bureau, by the .
Silk Textile Industry. A total of 52,338 designs were registered or re-
newed daring 1933, 1934 and 1935. (*) So far as is known, the Leather and
Medium and low Priced Jewelry industries registered the next largest
volumes. As of January 3, 1935, it was stated that 125 designs and
4,400 staples hod bpen registered for the Leather Industry . (**) Registration
of "over 3100" designs with the Bureau for the Medium and Low Priced Jew-
elry Industry were reported. (***) Beyond this- no information relative to
the' extent of the use of the registration bureaus established under ERA
is available at this writing.

(*) Registration figures taken from records of the Bureau with the per-
mission of Miss Blunt, December 17, 1935. Registration figures for the
exact Code period are, not separable from this total.

(**) Affidavit of I. L. Blunt, Director, Industrial Design Registration
Bureau, dated January 3, 1935, (in NRA files, Industrial Advisory
Board files .)

(***) Interview, Rollings, loc. cit. note p 10 supra.

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2. Complaints of Violation.

In the files of several Codes are general references to complaints
handled by Code Authorities. On some the details are available, on
others none of the facts are known.*

(*) Artistic Lighting Equipment Manufacturing Industr y - two complaints
recorded involving several defendants. Details not known. (Letters,
dated April 23," 1935 from Stevens to Ferguson, March 14, 1935 from
Code Authority to Stevens, March 19, 1935, from Stevens to Williams;
in NRA files, Central Record files, Folders: Administration Mem-
bers, Reports and Trade Practices) .

Furniture Manufacturing Industry - three complaints filed with NRA.
Others referred to. Details not known. (Letter, dated October 2,
1934, from Deputy Administrator to Mayer & Danziger, in re: Complaint
against A. Schon & Co., Philadelphia, Deputy's file, Folder /f8;
Letter dated March 22, 1934, in re: Tennessee Red Cedar and Novelty
Company vs. South Junior College, Central Record files, Folder if 202;
and Minutes of Code Authority Meeting of December 14, 1934, in re:
Detroit Cabinet Co., Deputy's files, Folder: Minutes; all in NRA
Files.)

Lace Manufacturing Industr y - one complaint involving copying by a
member of another industry. Details not known. (Minutes of Meet-
ing of December 27, 1933, New England Lace Mills vs. Patchogue Ply-
mouth Mills; in NRA files, Central record files, Folder: 429 Code
Documents) .

Leather Industry - existence of several indicated. No details.
(Transcripts of Hearing on Complaint of Verza Tanning Company vs.
Washington Tanning Company, Royal Tanning Company, Filgrim Leather
Company, Kerstein Leather Company, and Turlow Bros., Embossing Com-
pany, held in Boston by NRA ^e-;ional Director, January 4, 1935).

Medium and Low Priced Jewelry Industry - about 150 complaints of which
75 were reported "amicably" adjusted as of November 15, 1934. Three
cases reached the courts. One was settled by consent, one was dis-
missed after the Schechter decision and one was decided in favor of
the complainant. (Minutes of Trade Fractice Committee hearings, and
records of hearings before the Compliance Division. Design Firacy
Unit files, Folder: Medium and Low Priced Jewelry, NRA files).

Silk Textile Indus try - no data in complaints. References to two
court cases recorded, one resulting in permanent injunction against
the copyist, the other dismissed. (NRA Release No. 6401, dated
July 12, 1934) .

Silverware Industry - 13 complaints reported in some detail. Exist-
ence of others indicated. (In NRA files, Minutes of Code Authority
meeting of June 6, 1934. Deputy's files, Folders. Minutes, and #19).

Toy a nd Flaythings Industry - 53 complaints reported as decided.
Others handled informally. Details of 14 cases were made available
through interview; 15 cases of imported copies, largely Japanese
(Foot-note cont'd on following page.)
9746

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In every industry, the number of complaints which were brought to
the attention of NRA, either formally or informally, is small in com-
parison with the number of registrations known to have been granted in
some industries, and probably granted in all. The comparison, however,
is recognized as not being representative of the relative proportion of
complaints filed, as the designated administrative agencies in most
cases adjusted complaints without reference to NRA.

The following table shows the number of cases referred to the NBA
State offices, the disposition thereof, and comparison with the total
. number of complaints of violation of trade practice provisions filed:
(Report of Statistical Section of Field Division of NRa) .

Industry Number of Disposition Total number of Trade

Cases Filed Practice Cases Filed

Adjusted-No Dropped
Violation

Furniture 5 3 2 137

Leather 5 5 42

Medium and Low

Friced Jewelry 7 5 1 1 77

Silk Textile 3 12 113

Toy and

Playthings 2 2 221

3. Effects of Code Plans and Methods of Their Administration.

Lack of evidence renders it impossible definitely to estimate the
effects of the design provisions, or the success of their respective
metho&a of a administration. With respect to several industries, cer-
tain divergent views have been expressed, by representatives of trade
associations, industry members interviewed, and respondents to ques-
tionnaires. These opinions, however, are not sufficiently representa-
tive to indicate majority sentiment, except in respect to the Silk
Textile Industry, concerning which all submitted opinions were favor-
able. ^) The opinions submitted by Trade Association officials - which

(Foot-note cont'd)

were also reported; loc . cit. p. ^ supra. (In NRA files, Design Firacy
Unit files, Folder: Toy and Flaythings) .

Upholstery and Drapery Textile Industry - 1 case recorded. Decision in
favor of respondent (In NRA files, Minuteg of Meeting of February 19,
1935, Deputy files, Folder: Meetings).

(*) Silk Textile - favorable, see Chapter VI, for operation of Bureau

results .
Artistic Lighting Equipment - one favorable.
Toy and Playthings - three favorable, one unfavorable.
Medium and Low~Friced Jewelry - 16 favorable, 7 unfavorable.

(Foot-note cont'd on following page.)
9746

-149-

in a sense may be considered of a more impartial nature than expressions
of individual manufacturers, were favorable and are as follows:

Toy and Flaythings Industry -

"It is a fair statement that copying and piracy during the short
period of our code was largely eliminated from this industry by a
very simple, practical and fair administration of the provision
which declared piracy of design to be an unfair trade practice.

"Curing the second year of the Code there were more ideas intro-
duced than in the previous three or four years. Manufacturers
began to have confidence that tneir new ideas and original
designs would be protected." *

Medium r,nd Low Friced Jewelry -

"The provision in the Code . . . making it an unfair trade
practice to simulate or copy designs . . . was considered by
a very large majority of the members of the industry as the
most helpful provision in the entire code." **

Other opinions of signifinance with respect to the protection afford-
ed in the Jewelry industry were the belief that increased employment of
designers and assembly-makers, and a grater variety of designs introduced
had resulted therefrom.*** Among the unfavorable opinions was one to
the general effect that the Bureau was not sufficiently liberal in its

(foot-note cont'd)

Furniture - ? favorable, 2 unfavorable.

Leather - 5 favorable; though one commented that there was no

control over the imitation leather industry. A feel-
ing that the provision was not clear and enforceable was
indicated at a meeting held to discuss possible revision,
April 8, 1935, (transcript of testimony at joint Code
Authority and Administration Hearing held in New York;
NRA files, Deputy's files).

Upholstery and Drapery Textile - one favorable.

(All comments referred to above are in NlA files, Design Firacy Unit

files, Folders for the respective industries).

(*) Letter, dated October 3, 1935, from J. L. Fri , Managing Director
of Toy Manufacturers of the U.S.A. Inc., to A.C. Johnson (N?A
Files, Design Firacy Unit file, Folder: Toy and Flaythings).

(**) Letter, dated October 2, 1935, from W.H. Blake, Asst. Secretary,

New England Manufacturing Jewelers' and Silversmiths' Association,
to A.C. Johnson. (in NRA files, Design Firacy Unit files,
Folder: Medium and Low Priced Jewelry).

•

(***) Interview , Rollings, loc . cit . note p. 18, supra-

9746

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determination of registerabilityj that registration of "similar"
designs was 'not permitted, and the possibilities of following
following fashion trends were therefore limited. A. second charge was
that registration was sometimes granted designs not acutaily "original"
in the trade. (*)

•i. Post-Code Attitudes Concerning the Plans.

With respect to further' efforts toward control, it has been indi-
cated (**) that the tanners Council of America for the Leather Industry
is working toward that end but the details of its plans are not now
available. The same is true of the Medium and Low priced Jewelry
industry. (***) The Silk Textile and Lace industries are known to be
continuing their respective :>lans. (****) There is no evidence of
efforts to continue protective measures on the part of the industries
previously operating under NSA code provisions.

(*) ibid, two manufacturers.

(**) Respondent to questionnaire, (in NBA files, Design Piracy Unit files,
Polder: Leather).

(***) ibid. Medium and Low Priced Jewelry.
(****) See chapter VI - infra.

97-L-G

-l si-
ll. LEGAL PROBLEMS INCIDENT TO CODE REGULATION OF DESIGN PIRACY.

Section 3 of the National Industrial Recovery Act, (*) under which
codes containing design piracy provisions were approved, authorized the
President,

"upon the application **by one or more trade or
industrial associations or groups", to "approve a code or
codes of fair competition for the trade or industry or sub-
division thereof, represented by the applicant or applicants,
if the President finds (l) that such associations or groups
impose no inequitable restrictions or admission to member-
ship therein and are truly representative of the trades or
industries or subdivisions thereof, and (2) that such code
or codes are not designed to promote monopolies or to
eliminate or oppress small enterprises and will not operate
to discriminate against them, and will tend to effectuate
the policy of this title: Provided , that such code or codes
shall not permit monopolies or monopolistic practices:
Provided further . That where such code or codes affect the
services and welfare of persons engaged in other steps of the
economic process, nothing in this section shall deprive such
person of the right to be heard prior to approval by the
President of such code or codes. * * "

Actually, nothing in the N.I.R.A. expressly authorized the approval
of codes containing design piracy provisions. The sole basis for the
approval of such provisions was the portions of the statute above quoted.
It is now common knowledge that the Supreme Court, in the Schechter case,
held Section 3 to be an invalid delegation of the legislative power of
Congress and an exercise of power by Congress not authorized by the
Commerce Clause or any other clause of the Constitution. It was never
decided by any authoritative case, however, and now is of but academic
interest, whether the proviso — "That such code or codes shall not permit
monopolies or monopolistic practices" — operated to prevent a valid approv-
al of provisions in codes which endeavored to give to the manufacturer
who introduced or registered a design the exclusive right to that design
for a fixed period of time. Simply, the section was unconstitutional.
Code provisions which were approved and put into operation under it are
of interest, however, as occasions for experiences with the operation of
widely divergent types of control.

A confusion in objective, and a lack of uniformity of policy and
procedure with respect to their scope and administration is apparent from
a study of the various provisions. (**) From a legal viewpoint it is
evident that those code provisions involved sweeping delegations of power;
that some of them gave protection for designs for unlimited periods of

(*) Pub. No. 67, 73d Cong., June 16, 1935. Sec. 3 was repealed by Senate
Joint Res. No. 113, Pub. Res. No. 26, 74th Cong., approved June 14,
1935, after having been declared unconstitutional on May 27, 1935, in
United States v. A.L.A. Schechter Poultry Corp., 55 Sup. Ct. 637.

(**) See page supra.
9746

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time and without inquiring into' their origin and hence went far beyond
what Congress might do under the patent and copyright clause of the
Constitution; and that they reached into the local affairs of an industry
and purported to establish property rights in matters which might be of
purely local concern, without in any way complying with the limitations
upon the power of Congress under the Commerce Clause of the Constitution.
Only in cases where the prohibition applied to "passing off" by close
simulation of design does it appear that there was any judicial precedent
for the provisions. These statements may be made without questioning the
value of the provisions. (*) Details concerning their inception and
operation have been treated in earlier parts of this chapter.

(*) See Report of the Committee on Copyright and Designs, New York
Patent Law Association in Journal of the Patent Office Society,
Vol. 16. pp. 363-366 (May 1934). The Chairman, H. D. Williams concluded:
"Your Chairman is pleased with the outlook of the protection of indus-
trial designs by codes under the NRA which although now under a two-year
limitation may become permanent. He has labored with Congress on this
subject for the past ten years. There is no present hope of direct
Congressional action."

9746

— lOO—

III. VOLUNTARY AC-E3EMMTS UIJDER THE iiATIONAL INDUSTRIAL RECOVERY ACT,
AS AMENDED.

The nature of the amended N.I.R.A. , and the possibilities for effec-
tive cooperative action under its provisions have "been discussed in
Chapter IV. it does constitute a possible field for design protection
activity by industries rhich formerly operated under codes, and it is
understood that steps have been taken ~oy certail industries towards using
such agreements (*). At the date of this writing, however, none has been
approved by the Federal Trade Commission. In fact, it is not yet known
whether the Commission will consider that agreements attempting to outlaw
design piracy are within the purview of the Amended Act. There appears to
be ample room for dispute on that question. (**)

IV. PROPOSED LEGISLATION.

It has been mentioned that the efforts of those seeking more
extensive protection for designs were first directed toward the enactment
of legislation which would supersede or supplement the present design
patent laws and establish, in their place, a copyright system for indus-
trial designs. (***) The movement for copyright registration of designs,
initiated seriously in 1924 under the leadership of Chairman Vestal of
the House of Representatives Committee on Patents, continued for several
years unabated and, in fact, was only interrupted by the passage of the
National Industrial Recovery Act and the formulation of codes containing
design piracy provisions.

After the death of Mr-. Vestal, the support of such bills was taken
up "oy his successor, Chairman Sirovich of the same committee, and the
latter, like Vestal, received the backing of the New York Patent Bar Asso-
ciation and special Industrial groups. The Sirovich and companion bills
(****) differed substantially from the original Vestal Bills only in that
the former would have required an examination of designs submitted for
registration by the Copyright Office, while the latter provided for mere
r3gistration and the settlement of all disputes in the courts without pre-
ceding administrative determinations.

(*) The Ladies' Handbag industry has submitted a Code of Voluntary Agree-
ment containing a provision for protection against design piracy,
which, is now before the Federal Trade Commission waiting final de-
cision. Letter dated October 8, 1935, from A. Hittenthal of the
National Authority for the Ladies' Handbag industry to Design piracy
Unit (In NRA files, Design Piracy Unit files, Polder: Ladies' Handbag)

The Lace Man ufacturi ng industry is also said to be drafting a Code
of Voluntary Agreement containing a piracy clause substantially the*
same as that contained in it 3 Code of Fair Competition, which has not
yet been submitted for approval. Ir.t ?rview . loc. cit. notp, p. supra,

(**) See Chapter IV, Section I, E.

(***) See Chapter I.

(****) See H.R. 14727,. 72nd Congress, 2d Session, introduced Feb. 20, 1933.

9746

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Almost needless to say, none of the bills introduced was approved
by Congress. On July 2, 1930, the House passed H.R. 7243. (*) "The
Senate, however, never received the bill until the 3rd Session of the
71st Congress. Hearings vere held on its successor, H. R. 11852, in
Decenber 1930, and January 1031, but the Senate did not anprove it.
Other similar bills, prior to the H.I. P.. A., apparently met with even
less favor. Hence the pro-code movement for legislative assistance to
prevent design piracy proved unsuccessful in all instances.

One effect of the codes ras to cause a break in the pressure for
additional legislation respecting designs, but bills were introduced into
Congress nevertheless.- One bill clearly was supplemental to the codes.
Others introduced before and after the Schechter decision closely resem-
bled the Vestal design copyrignt bills.

A. The live Bill .

Introduced apparently in order to provide specific statutory
authorization for design piracy provisions of NTA codes, the Nye Bill (**)
provided as follows:

"Design piracy is hereby declared to be an unfair method of
competition. Design piracy shall, subject to the provision of
this act, be defined in each industry by a special committee
of the trade association in such industry. The committee shall
cause to be established in each industry a bureau for the reg-
istration of designs and the interpretation to the members of
the industry of its definition of design piracy. The definitions
of the words 'design' and its technical meaning in that industry;
'timeliness' when an authorized design is revised; and 'knowingly
copy 1 as hereinafter used; shall be considered to mean interpreta-
tions arrived at ^y the cor.imittee in each industry. It shall be
unfair competition to make use of any design registered with the
design registration bureau of the trade association except with
the written consent of the person making the registration:
Provided, that no distributor shall be deemed guilty of unfair
competition unless, after the committee shall have determined
that the alleged infringing design does in fact infringe such
registered design and after such distributor shall have knowledge
of such determination, such distributor shall knowingly copy, or
buy from any source, such design which shall have been determined
by the committee to constitute an infringement of such registered
design, that is, design piracy. The provisions of the Act entitled
'An Act: to amend, the laws relating to patents, trade marks, and
copyright 1 , approved February 4, 1887 (U.S.C. Title 35, Sees. 74
and 75) , including the penalties and remedies prescribed therein
are hereby made applicable to this paragraph, in so far as such
provisions are not inconsistent with this paragraph."

(*) 71st Congress, 2d Session (1929). Fearing in February 1930.

Favorably reported to House on L'ay 2, 1930 (House Report No. 1372,
'71st Congress, 2nd Session).

(**) S. 31G6, 73d Congress, 2d. Session (March 20, 1934)

9746

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The only comment that need be made concerning the Nye Bill 'is that
it undoubtedly would be held unconstitutional as an invalid delegation of
legislative power and as going beyond the power of Congress to regulate
interstate commerce. The power to set up standards and rules for opera-
tion of the registration bureaus contemplated by the bill is delegated to
a private association, the trade association for the industry desiring
such a bureau. There is no limitation to desi^s used in interstate
commerce, nor to designs which are the products af the minds of authors
or inventors. Under the doctrines of the Schechter Case and the Trade
Mark Cases this clearly would be held invalid.

B. Vestal, Sirovich, Hebert. Q'Malley and Daffy Bills .

All of these bills are closely related, and all are related to the
original Vestal Bill. Only the last two were introduced into Congress
during the code and post-code periods, but it is believed that their
meaning can best be portrayed by treating the entire series together.

1 . Vestal Bills

Entitled, "A Bill for Copyright Registration of Designs",
H.R. 6249 (*) provided in Section 1:

"That any person * * who is the author of any design * * or the
legal representative or assignee of such author, may secure
copyright therein upon the registration of such design in the
copyright office of the United States; provided, however . That
the said design shall not have been in public use or on sale
in this country by or with the consent of the author or pro-
prietor for more than four months prior to the filing of the
application for such registration."

Section 2 defined "design" as meaning

"...any conception in relation to a manufactured product, either
as to pattern, shape or form which is original in its application
to or embodiment in such manufactured "oroduct and is for the
purpose of ornamentation, or surface or other decoration; or any
such conception in dies, molds, or devices for adapting a manu-
factured product for use in producing an artistic or ornamental
effect; but shall not extend to any shape of form which has merely
a functional or mechanical purpose."

Section 3 related to prior registration in foreign countries.

Section 4 gave to those who should have complied with the
provisions of the bill:

"...the exclusive right to reporduce the said copyrighted design
and sell and use reproductions thereof embodied in or applied to
the manufactured product described in the application registered or
products of similar character substantially as specified in the
certificate of registration."

(*) 69th Congress, 1st Session. Hearings by House Committee on Patents,
February and May, 1926.

9746

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It provided, however, that the making, using or sale of repair parts
should not be affected by the "bill, and that the bill should not be
construed:

"to deprive any person of any otherwise lawful right to illus-
trate designs by pictorial reproductions, or to make or sell
patterns for dressmaking."

Section 5 related to assignments of copyrights secured by
the bill.

Section 6 declared that, during the term of protection granted,
it should br unlawful for

"any person other than the owner of the copyright, without license
from such owner, to copy the registered design or any charact eristic
original feature thereof, or to make any obvious or fraudulent imi-
tation of said design or of any characteristic original f eature
thereof in the class of manufactured product named in the certificate
or any product of similar character for purpose of sale or public
distribution or to sell or expose, for sale or publicly distribute."

the same, without the license of the owner. Notice or knowledge of the
registration of the design was required before a sale or public distribu-
tion by anyone other than the manufacturer of the products could be
deemed unlawful.

An initial term of protection of two years was provided by
Section 7, with privilege of renewal for eighteen additional years, all
upon payment of fees, etc. By section 11 the fee for registration was
set at $2, for renewal at $20.

Section 9 provided for the issuance of certificates of regis-
tration, "which shall be admitted in any court as prima facie evidence
of the facts stated therein".

Other sections dealt with the listing of registered designs
in the catalogue of copyright entries, the use of authenticated copies
of papers relating to registered designs as evidence by any person
applying therefor and paying the prescribed fees, the marking of articles
embodying registered designs, or, in lieu thereof, a requirement of proof
that a defc "ant had continued to infringe after actual notice of the
registration, and matters of jurisdiction and procedure for enforcement
of copyright claims.

The courts to be given jurisdiction of suits were the same as
those prescribed by the existing copyright law. Injunctions and awards
of damages and profits were authorized - treble damages at the discretion
of the court. Furthermore, if damages and profits should not exceed
$100, the court was authorized to award not less than $100 nor more than
$250 as statutory damages. And by Section 10 the destruction of in-
fringing articles was provided for.

Section 20 prescribed criminal penalties, payable to the
defendant, for fraudulent registration of .claims to copyright or for
suits based upon such registration.

9746

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Section 22 provided;

"In an action or suit for infringement of copyright in a design
registered under this act there shall he a presumption of origin-
ality in the registered design and of validity in the registration
thereof and a presumption of copying may arise from substantial
resemblance to the registered design in defendant's design."

And, finally as concerns the important provisions, the
design patent laws were to he repealed by Section 25.

From a critical point of view, the Vestal Bill constituted a depar*
ture in many respects from the prevailing design law in this country.
Mere authorship of a design was sufficient to entitle it to registration.
Novelty had nothing to do with the matter. No pbulication or use, nor
the filing of copies or reproductions, was required as a condition to
registration. Whereas the patent laws protect only the design as a whole,
the bill would, have given protection also to "any characteristic original
feature thereof". No examination or formalities were required; hence no
time would be consumed in obtaining protection. The fee for registration
was almost negligible, $2. For renewal the fee of $20 would give protection
for eighteen additional years, as compared with the present fee of . $30
for fourteen years of protection under a design patent.

As a. recognition of vested special interests, makers of repair parts
and publishers' of patterns or designs were to be exempted from the appli-
cation of the bill, and distributors of products — all except manufactur-
ers. — could be held liable only for infringing acts performed after actual
notice or knowledge of the claim of a copyright owner. (*)

The rights to be granted by registration to some extent were limited
commensurate with the scope of the subjects entitled to protection. Only
copyists were infringers, as under the present copyright law. Any other
author of a similar design night also obtain protection, and the registra-
tion by one theoretically would not interfere with that of the other.
But a certificate of registration not only was to be admitted "as prima
facie evidence of the facts stated therein", but also, in any suit for
infringement, there was to be ''a presumption of originality in the regis-
tered design and of validity in the registration thereof". And it was
provided that "a presumption of copying may arise from substantial resent
blance to the registered design in defendant's design".

These last-quoted provisions might well have placed a premium upon
perjury. He who sued on a registered design, merely because of his sworn
statement that he was the author, or originator, thereof, would be en-
titled to a presumption of originality. In practice that particular
provision would not differ substantially from the practice in connection
with existing patents and copyrights, originality of which normally will
be presumed unless evidence to the contrary appears. But the provision
for a presumption of copying would enable any plaintiff, without

(*) Hearing before House Committee on Patents on H.R. 6249, 69th

Congress, 1st Session, February. 18 and 19, 1926, pp. 15-16, 22-38,
38-44, 105-106.

9746

-158i

introducing evidence, to succeed against a defendant who had not put up
a. substantial defense to show either that he had not copied the plaintiff's
design or that the latter' s design was not an original one — this merely
"because of substantial resemblance between the plaintiff's and defendant's
designs; whereas the plaintiff's design might be an old one and the de-
fendant might have procured his design by copying the old unprotected one,
by originating it himself, or "oy copying the plaintiff's. The purpose
of such provision was to enable a court to grant immediate relief against
pirates, than to avoid damage to an original design resulting from sale of
copies. That purpose night be accomplished, it would seem, by providing
as a corolla":;- that . :! i ditial resemblance of the plaintiff's design to
any prior design "...v. raise both a presumption of lack of originality in
the former and '• presumption bhat the defendant had not copied the
plaintiff's design.

Concerning the Vestal Bill substantially as outlined above, there
was a great deal- of comment by members of the legal profession and others
who would have been affected by it. The various hearings which were held
abound, with expressions of opinion and statements of problems inherent in
such attempts to control design piracy, which cannot be treated at this
point. (*) Other statements on a few points, however, may be briefly
noted.

Henry D. Williams, one of the major proponents of copyright protec-
tion for designs, published a comment on the bill in 1925. (**) He
declared that the application of general patent laws and ruD.es to designs
has resulted in needless technicalities; that a requirement of originality
is much more appropriate for designs than the present requirements; that
such a requirement, along with a. limitation of relief to cases where there
has been copying, has proved satisfactory by experiences with the copy-
right laws; and he concluded that the bill

"will carry out the -purpose of the Constitution, the encourage-
ment of industrial design, and will be a grea.t boon to the in-
dustries wherein art is embodied in manufactures and copying is
the rule ra-ther than the exception. The Bill has for its pirpose
to remedy a situation which cells for relief and it seems to me
to provide the necessary remedj^. !l

• A different point of view has been expressed by other critics of the
bill. J. B. Myers ( (***) stated that it will undoubtedly breed much
trouble". He asserted that the limitation of protection to the prevention
of copving would be a serious curtailment of the present exclusive rights
of an originator of a design, especially since the utilitarian nature of
the articles designed would make independent origination by different
designers a frequent occurrence; that later registrations for minor

(*) See Chapter III of this report.

(**) Williams, "Copyright Registration of Industrial Besigns", Journal
of the Patent Office Society . Vol. 7, p. 540 (July, 1925).

(***) Myers, "Shall Industrial Besigns Go 'Out of the Frying Pan into
the Fire?'", ibid . Vol. 8, p. 425 (May, 1926).

9746

-159-

alterations of an original registered design, "particularly if brought
to the attention of the proprietor of the first copyright, might hamper
him in later making ordinary and obvious changes in the article pro-
duced under his design"; and he objected generally in the following
language: , ..

"Freed from examination and weeding out of design applications
under the patent laws, and with no examination whatever in con-
nection with the relaxed requirements under the liberal provisions
of the copyright laws, monopolies would, spring up over night on
all sides for designs not now entitled to protection at all, and
would surely hinder rather than promote progress. * * The Bill
would place a premium on ignorance, and the less a designer knew
of the progress and development in the particular art in which' he
was working, the better off he would be. * * * *

"Under the Bill, the way of the pirates is not only made easier
so far as infringement is concerned, but the door. is left open
for the unscrupulous readily to cloak themselves with copyright
registration. "

In 1928, F. W. Dann (*) criticized a later modification of the
early Vestal bills, H. R. 9358 (**) According to him it makes little
difference whether a patent or copyright system be enrol oved to protect
designs, if defects can be eliminated. Elimination of the safeguards
of examination, relaxation of the requirements for protection, alleged
difficulties in establishing legitimate defenses in suits, failure to
specify statutory defenses, and the requirement that the articles pro-
tected be put on sale (.***) were declared objectionable features of
the bill. He purported to.. show that designs- are. -more closely akin to
patentable inventions than to copyrightable matter. In conclusion, he
suggested that the design patent laws be changed in either of two ways.
The first involved three points.

(a) The term of patent should run from the date of filing
application;

(b) Pending applications should be basis for a preliminary
injunction, providing applicant gave notice and provided
access to his application; and

(c) No permanent injunction should issue until the patent
had been granted. Preliminary injunction could be denied
if defendant showed that he had a prior application, .or
that plaintiff's application had been finally rejected, or
that plaintiff had pirated the design from defendant.

(*) Dahn, "Designs — Patents or Copyrights", ibid , Vol. 10, p. 297
(Kay, 1928).' '

(**) 69th Congress, 1st Session (Hearings in March, 1928)

(**:*) This requirement was introduced into the bill after the hearing on

H.R. 6249.
9746

•160-

The other suggested plan was that design patents be issued, upon
request, without examination and without a presumption of validity.

Finally for' the present purposes, a further modification of
the Vestal Bill, H.R. 11852 (.*) was criticized in 1931 by the writer
of a Legislative Note in the Columbia Law Review. (**)

The hill at that time embodied several changes as compared with
the earlier bills. An author was defined as "one who originates a
design and in so doing contributes intellectual or artistic effort
to the composition thereof". Several specific prerequisites to pro-
tection had been laid down: the author or proprietor of the design

"must (l) actually cause the design to be applied to or embodied
in the manuf actured product; (2) mark such product in the manner
specified in section 5 of this act; (3) introduce such product to
the public in territory under the jurisdiction and control of the
United States, by selling it or offering it for sale; and (4)
within six months from the time when such manufactured product
was first actually so introduced to the public, file an appli-
cation in the copyright office * * ",

such application containing a sworn statement of authorship' and photo-
graphs or other representations of the design. The fee for registra-
tion was changed to $3, and the statutory damages for infringement
were modified in several respects.

The writer of the Note, after explaining legal aspects of the
design problem and the nature of the Vestal Bill,, discussed the
possible effects of the bill upon designers, manufacturers and con-
sumers and pointed to enforcement difficulties. The object of the "
bill, he said was to protect designers, and encourage artistic endeavor
in industry. But he questioned whether European leadership in indus-
trial 'art is not due to superiority in public taste and use, and
whether the granting of reciprocal rights to foreigners might not
make the foreign influence and predominance more noticeable. Moreover
the requirement that designs be embodied in products before protection
starts might subject designers to the piracy of manufacturers, and the
regularly employed designer, in any event, would be unable to bargain
for the value of his designs.

From the point of view of the manufacturer, he said, a return
might be obtained on the high cost of designing such as to encourage
design promotion. But the manufacturers allege that all designs would
have to be copyrighted; multiple copyrights on a single design would
result in accusations of piracy and harmful litigation. And the

(*) 71st Congress, 3d Session, (Senate hearings in Dec, 1930 and
Jan., 1931).

(**) (Legislative Note) 31 Col. L. Rev. 477-494 (1931)

9746

-161-

statutory presumptions and the right to a preliminary injunction might
result in oppressive suits.

The objection of retailers to the bill, that there would be no
way to determine when. their purchases involved infringements of regis-
tered designs, might be overcome, he said, by selecting dealers and
requiring a bond from the dealer making the sales.

To the consuming public such a bill might bring some advantages,
he stated. The depletion of values by copying cheap materials might
be avoided and protection might enable good designs to be applied to
lower priced articles through large scale production. On the other
hand, however, the manufacturer normally desires to maintain exclusiveness
at least until the seasonal value of his designs has passed, and the
average consumer woold not be able to gratify his desires for attractive
and fashionable articles. Fashion goods, he asserted, lose their
distinctiveness when produced on a large scale, and if so produced,
the saving might not be passed on to consumers in view of the monopoly
of the producer. Furthermore, the cost of litigation and copyright
protection would be passed on to the consumer.

Enforcement difficulties mentioned by the writer include the
alleged necessity of proving the source of a defendant's copies and
copying by him before an injunction might be obtained and the difficulties
in enforcing criminal penalties for fraudulent use of the provisions of
the proposed bill in view of the necessity of proving scienter in such
cases.

An analysis of the many issues raised by the proposed bills, above
mentioned, will be undertaken in the next chapter. Any of the bills
mentioned probably would be a, constitutional exercise of Congressional
power, (*)

2. Sirovich and Hebert Bills.

H.R. 14727, known as the Sirovich Bill, (**) carries forwa.rd
many of the ideas contained in the Vestal Bill, but also embodies sub-
stantial differences on many points. Its counterpart in the Senate
"as known as the Hebert Bill, (***)

The purpose of the bill was to provide protection to the

"original author of a design to be applied to textiles, laces,
and/or embroidery of any kind, whether such design is to.be
woven into or applied to the surface of or incorporated into
the surface or fibre of the fabric".

(*) See Chapter IV, Section II.

(**) 72nd Congress, 2nd Session, introduced February 20, 1933.

(***) S. 241, 73rd Congress, 1st Session, (1933)
9746

-162-

The application requires was substantially the same as that required by
the latest Vestal Bill, except that a fee of $5 was prescribed. Section
3 of the bill, however, embodied a substantial change in procedure;

"upon receipt of such application the Register of Copyrights shall
cause a search to be made, and if he finds the design to be original
and novel, and the application to be in proper form, he shall,
within 7 days or less of the date of application, issue a cer-
tificate of registration under seal to the applicant."

Such certificate was to be presumptive evidence of originality
and novelty in the registered design and of validity in the registration
thereof, and a provision for the establishment of a presumption of
copying, in the discretion of the court, from substantial resemblance
between the plaintiff's and defendant's design also was included. The
bill required that the courts issue preliminary injunctions in the
absence of proof by the defendant.

Protection would be limited to 5 years. Retailers were exempted
from liability under certain conditions. The penalties for infringe-
ment were much greater than those provided Ijy the Vestal Bill. And
to avoid the registration of-de^igns in order only to prevent their
use by others, it was provided that failure of the registrant or his
agent to apply the design to fabrics, laces, or embroidery within 6
months of the date of the certificate of registration should terminate
any exclusive right in the design unless copied thereafter by one with
whom negotiations for manufacture or purchase had begun during said
6 months.

The Sirovich Bill was of limited application, but it represented
an effort to meet many of the objections which had been raised against
the Vestal Bill by limiting registration to designs which were original
and novel. The bill would eliminate a tremendous number of registra-
tions, as well as endeavor more directly to promote the development of
new contributions.

Concerning the reasons why bills such as the Sirovich Bill were.
not passed by Congress, no data is now available, (*) Similar bills
were introduced in both the House of Representatives (**) and the
Senate (***) in the 73rd Congress, but, again, no favorable action was
taken.

(*) See criticism in "Report of the Committee on Protection of

Designs, Patent, Trade Mark and Copyright Law Section of the

American Bar Association", Journal of the Patent Office Society ,
Vol. 15, pp. 807-812 (October, 1933).

(**) H.R. 4115, 73rd Congress, 1st Session.

(***) S. 241, 73rd Congress, 1st Session.

9746

-163-

3. O'Malley Bill,

The O'Malley Bill, (*) is almost exactly like the Sirovich Bill
above referred to. Its principal interest lies in the fact that it
pro-cosed to give protection to the original author of aiy design

"(1) which is applied to the surface of any textile fabric; (2)
which is the result of the original weave of any textile fabric;
or (3) which comprises the shape or form of a manufactured product,
not in and of itself a work of art, in the following industries:
Furniture, Toys, Novelties, Leather Goods, Containers and Cartons,
and all types of Land, Water and Air Vehicles and combinations
thereof. "

Instead of repealing the design patent laws, the O'Malley Bill
merely proposed to prohibit the issuance of design patents for designs
attempted to be registered under the provisions of the bill.

4. Duffy Bill.

The most recently proposed act dealing with designs, and one
which passed the Senate during the last session of Congress and is now
up for consideration by the House, is the so-called Duffy copyright
Bill. (**) As reported out of the Senate Committee on Patents by
Senator McAdoo, this' bill contained no provisions respecting the pro-
tection of industrial designs. On the floor of the Senate, however,
Senator Vandenburg, on May 13, 1935, proposed an amendment which, if
passed, would make fundamental changes in the laws now existing on
the subject of design protection.

The amendment provides:

"that the author of any artistic model or design intended to be
applied to or embodied in my manufactured product, except products
intended to be applied to or embodied in motors, motor cars, motor
car accessories, and products employed in the design and manufacture
of motors, motor cars, and motor car accessories, may obtain copy-
right for such model or design under the provisions of the copyright
act approved March 4, 1909 * * * and shall, in addition thereto, * * *
'secure- the exclusive right to apply to or embody in any manufactured
product, excluding the products hereinbefore excepted, the said
copyrighted model or design: Provided, that when the said author * *
shall have caused the said model or design to be applied to or em-
bodied in a manufactured product which shall have been sold or offered
for sale, the author * * * shall have the right to exclude others

(*) H.R. 8099, 74th Congress, 1st Session (May 16, 1935)

(**) S. 3047, 74th Congress, 1st Session (referred to House Committee
on Patents, August 12, 1935).

9746

-164-

from selling or distributing such manufactured products which embody
or contain copies of the said copyrighted model or design, or imita-
tions thereof, or the imitation of arty characteristic original
feature thereof. "

A new classification of Section 4 of the copyright act, including
''artistic models or designs intended to he applied to or embodied in
manufactured products", is proposed.

To secure copyright of unpublished designs 5 copies of a photo-
graph or other identifying representation thereof ire required to" be
deposited with the Register of Copyrights, To protect articles
produced for sale it is provided that 5 similar copies of representations
together with an application for registration be filed "promptly after"
the product has been manufactured. The application must contain "a
statement of the date uoon which the said manufactured product was sold
or offered for sale", and a 20 year term of protection is provided, such
term commencing on the date so mentioned in the application. The
general term of 56 years apparently applies to unpublished designs.

Simply, the Duffy Bill makes designs for articles of manufacture
subjects of copyright in substantially the same way as other ,TT orks which
are now included under the copyright laws,' Instead of oublication, as .
for existing copyrightable works, a design to be sold must be embodied
in a manufactured product and sold or placed on sale. Every conceivable
type of design, except those for automobile parts, is within the purview
of the bill.. It provides for the establishment of reciprocity with ,
foreign nations and would enable foreign designers to proceed against
American copyists.

The bill differs from the vestal Bill and the Sirovich Bill in
that it more closely parallels the existing copyright law without intro-
ducing innovations such as were contained in those bills. Thus it does
not endeavor to establish statutory presumptions to be followed by the
courts, but leaves the courts to act just as they have acted in connection
with suits on coprygithed works, Ilor is examination by the Copyright
Office provided for. The initial term of protection is longer than has
been proposed heretofore, but fixed statutory damages for infringement
^ould be. eliminated altogether, and a plaintiff would be required to prove
actual damages, or rely on the power given to the court to award

"such damages, not exceeding y20,000 for all infringements * * ns
shall in the opinion of the court be sufficient to prevent their
operation as a license to infringe * * ".

Excluded from liability under the bill is

"the reproduction, manufacture, distribution and sale of designs or
patterns for wearing apparel or pictorial or other representations or
illustrations of such designs, patterns and wearing rpparel,"

9746

-165-

No special exemptions are. provid-d for manufacturers of repair parts or
for distributors of infringing products.

The Duffy Bill contains no proposal to repeal the design patent
laws. In fact, it makes no mention of the overlapping protection which
would be created by its enactment. Presumably, an author of a design
might elect either to patent or to copyright it, if it satisfied the
requirements of both laws. There is authority to supnort the proposition
that he could not do both. (*)

(*) In re Blo od, 23 F. (2d) 772 (App. D.C. 1927) ) Copyright protection
on a hosiery label held a bar to the grant of a design patent.

9746

-166-

CHAPTER VI.
PRIVATELY CONDUCTED CONTROLS.
I. TRADE ASSOCIATION ACTIVITIES.

A . Industries Employing Private Systems of Control

The prevalence of design piracy in several industries, and
the importance of these practices to the manufacturers concerned led to
efforts to control or curb it through independent action. Evidence
available(*) shows that, with the exception of those having approved
Trade Conference Rules, (**) the industries which are known to ho,ve
participated in movements for private control are the Silk Textile
and Rayon and Silk Dyeing and Printing Industries, the Dress Man-
ufacturing, Millinery, Luce Manufacturing, Nottingham Lace Curtain
Boot and Shoe and the Schiffli and Hand Machine Embroidery Industries.

B. Types of Systems.

The systems of design protection adopted (***) by these
industries depend u ion voluntary cooperation of manufacturers concerned
and appear to follow at least four general types: (l) expressed or tacit
agreements between manufacturers not to copy designs introduced by others;
(2) the utilization of registration bureaus and the enlisting of retail
cooperation to prevent the purchase of articles embodying designs which
are copies of registered designs; (3) open registration of all designs
to be processed, made effective by inter-industry group agreements for-
bidding the processing of any unregistered design except with consent
of the registrant; and (4) a variation of (3) the Swiss system, providing
blind registration with a Bureau, also supported by inter-industry
agreements not to process designs: not registered.

C. Relative Periods of Establishment .

The industries employing these systems fall into three general
groups (****) with respect to the relative dates of establishment of their
respective plans:

Group A. Group B. Group C

Those establishing Those establishing privn.te Those continuing
private means of control means of conttol during their efforts since
prior to L'RA period t he II. R. A. -period invalidation of IIRA

Codes

(*) NRA file materials, supported by interviews with. representative observers

(**) See Chapter IV, p 65 supra.

(***) NRA file materials, supported by interviews with representatives
observers .

974-6

-167-

Group A.

Silk Textile

Rayon and Silk Dyeing

and Printing

Dress Manufacturing

Lace Manuf ac faring

Nottingham Lace Curtain

Millinery

Schiffli and Hand Machine
Embroidery

Group B

Bo.ot and shoe

Group C

Silk Textile
Rayon £ Silk
Dyeing & Print-
ing-
Dress Manufact-
uring

Lace Manufact-
uring

Nottingham Lace
Curtain
Millinery
Boot and Shoe

D. The Plans.

1. The Swiss Plan, as Operative in the Schiffli and Hand Machine
Embroidery Industry.

From the above listing it is seen that the Schiffli and Hand
Machine Embroidery Industry is the only one which has discontinued its
definite attempt to curb copying b: private means. A brief analysis of
the system used will suffice to explain its discontinuance. The Plan
adopted by the industry is known as the Swiss System (*) , established
under the auspices of Embroidery Manufacturers Protective Association
in October of 1932. (**) Its principal feature required that regis-
tration be made blindly through scaled envelopes with a Design Regis-
tration Bureau, supported by agreements with the stitchers (***) not
to make up unregistered designs (****) Regarding registerability,. it
was understood that a design should be considered a copy, and therefore
not registerable, if it were not at least 50$ diversified from the I
original, (*****) Registration of all'designs to be stitched -was rendered
virtually compulsory by the supporting agreements with the stitchers, ' .
but in actual practice, because of the inherent weakness of the plan and
the lack of complete cooperation of industry membership, the agreements
became almost entirely ineffective. (******) Under the system of blind

(*) Interview with Clement J. Driscoll, By p. A. Pitch, December 3, 1935.

(**) Transcript of Hearing, February 11, 1935, pare 15. (in NRA files^

(***) Those performing the stitching processes of production

(****) Interview, loc. cit. note p. 13 supra

(*****) Transcript, pages 53-54, loc. cit. note p supra

(******) ibid, page 13.

9746

-168- ;

registration those desiring to copy a registered design, estimated to be

at least 25,. of the industry (*) could also register the design "blindly,

obtain a registration number therefor anc" have the design stitched.

Priority of rights was not determined until the copy appeared on the

market or until its existence became known to the originator and a

complaint was filed. (**) Under this system, it has been said, (***)

a design was often obsolete before the cow could be traced to its

it
source, the "damage v.'as done and no legal recourse was available.

The system was tried for approximately one year only. (****)

2. Open Registration as Operative in the Silk Textile
. . and Rayon and Silk Dyeing and printing Industries.

In contrast to the system of blind registration, as tried in
the Schiffli and Hand Machine Embroidery Industry, is the system of open
registration practiced b - the Silk Textile Industry in cooperation with
the Rayon and Silk Dyeing and Printing Industry, through the Indus-
trial Design Registration Bureau ef the National Federation of Textiles,
Inc., (=*;****) So far as is known, this Bureau is the first to have 'been
established, (******)and is the only example of this particular type
of protective s stem being employed.

(a) Basic Principals of the Flan.

Salient features of the system are (*******) (l) the regis-
tration of designs, on the basis of "corapetition|^/(********)or "usage"
rather than on the basis of "originality", subject to cancellation if
the designs are not processed within a definite period of time (*********)
(2) two distinct types of classifications under which designs . "-.

(*) id.'

(**) Interview, loc . cit. note p» 13 supra

(***) id.

(****) Transcript, page IS, loc. cit. note p. 13 supra

(****t) Formerly the Silk Association of America

(******) Established in 1928, by the Silk Association of America. For
details see Blunt, " Fighting the Design Pirate ," Journal of
the Patent Office Society, Vol. 15, page 29 '!(19S8)and "Design
R egistration in '-.--6 hours " (1929), a >ampblet copyrighted by
the Silk Association of America.

(*******) Interview with Miss Blunt, Director of Bureau of A. C. Johnston
F. A- Fitch, December 17, 1955,

(********) id. "Competition is emphasized. Innumerable old motifs may
ear in new versions and adaptations, but protection
is given to him who first thinks of them at the time."

(*********) i "o t i c e to I n dus t ry , dat e d September 35, 1955, announced a change
in the time limit for proce: sing from the original 10 day period to 6 months
A subsequent change to 60 days was noticed to the industry, November 2 ,
1934(ln IIRA files, Industrial Advisory board files, Correspondence from I.L.
Blunt to A. Gr> Son) .

-169-

are re; istered, namely, "novelties", covering all new, original or dis-
tinctive arrangements of motifs other than such staples as dots, checks,
stripes, etc., and "treated stapl'es n covering all new, distinctive
or individual arrangements of those staple motifs (*);(3) registration
granted for a limited period (**) of time subject to renewal (***) if
desired; and (4) decision as to the registerability of a design is en-
trusted to the .Bureau.

The basis used permits registration of similar designs, pro-
vided that the similarity is not' such as would confuse the consumer or
typical buyer. Decision as to the degree of similarity of designs also
rests with the Bureau. (****) in all cases registerability is determined
within 43 hours of receipt of amplication. (*****) Registration of de-
sigh's is open to converters and manufacturers only. Designers, as such,
are not permitted to register their designs. (******) A nominal fee
(*******) is charged to cover cost of search.

Registration is rendered virtually compulsory by reason of
an agreement (********) between the printers and engravers not to process
unregistered designs(*********) . Compliance (**********) with the Bureau's
regulations is dependent upon the strength cf those agreement s . At the

(*) Staples and open roller designs used b T / printers prior to estab-
lishment of bureau are not registerable. Distinetiors became effect-
ive November 25, 1934; Notice to Industry of that date Ibid .

(**) Si:: months; Interview- loc. ' cit. note. p. 13 supra

j-t— r-

(***) Ibid ; ' no case'lmown : 'ih which renewal for more than two periods
desired.

(****) Interview , Blunt, loc. cit . note p. 13 sxipra

(*******) notice. Nov. 36, 1934 lcc. cit, note p supra as follows:
Novelties, S5.00; treated Staples 3.00; Rejections, $3.00
S t apl c s , v l • 00; Renewal s , .}2 . 00 .

(********) Effective November 10, 1932, Business Week, November 25,1932
pages 8 and 9 "Pirac " . Rayon printers joined agreement
early in 1934; Interview, Blunt, loc. cit. note p. supra.
For compulsory period of registrati :n under II. R. A. see
Chapter V.

(*********) Ibid, Blunt; all contracts and agreements prohibiting pro-
cessing of a competitor's design are between converters
and printers. The Bureau merely affords the mechanical
means of making those agreements effective.

(**********) cases of alleged infringment are settled "amicably" by

arbitration, Ibid For compliance under iIRA Code see Chap/v.
9746

present time the cooperation of "both groups is "believed to "be 100$. (*)

(b) Kind and 701111.16 of Designs Registered.

Any desi gn intended for printing, embossing, or soda, printing on
silk or rayon is eligible (**) for registration, subject always to the
regulations of the Bureau, as outlined above. "The the r the design is of
foreign or domestic origin is immaterial, if the goods embodying the
design are to \e marketed in the United States. (***)

A continued increase in the number of designs registered by the
Bureau from the date of its inception to December, 1335s is apparent,
and. indicates acceptance of the plan. The number increased from 2,730
registered during the five months of operation in 1325, to 15,190
registered in 1935 ?-% of December 6, including new registrations, re-
newals and "treated staples". (****)

(*) Interview , Blunt, loc. cit. note p. V± supra, Hiss Blunt also
stated that in its initial stages, there "ere but five industry
members availing themselves of the Bureau's facilities, four of
whom were converters, and one a printer.

(**) Registration of jacquard weaves was added under code and subsequent-
ly dropped. Expected to be resumed as of January 1, 1936. Tinsel
fabrics and woven novelties were also registerable, date unknown,
and subsequently dropped, Registration of woven novelties expected
to be resumed as of January 1, 1936. More recent information not
presently available. Interview , Blunt, loc. cit. note p. 1_3_ supra.
Also Hot ice of "dove 'her 26, 193^, loc. cit. note p. 263 supra.

(***) Interview , Blunt, ibid.

(****) Interview , taken from records of Bureau, with permission of Miss
Blunt, December 17, 1335. Complete table is as follows:

Year Designs . Designs Staples Designs ' . Renewals Designs Treated
Received Rejected Registered Wi thdrawn Staples

20 2690

192s

2730

( 5mo-)

1929

31US

1930

2717

1931

9S91

279

1932

1208U

7S6

1933

I9U2U

90S

193^

21106

959

1935

16521

769

(As of

Dec. 6)

30U5

2672

219

9393

11255

229

17720

363

550

171U3

1G96

U10

11002

1U10

13s

200 35S
76 2S5U

97H6

-171-

Generally the system is "believed to "be effective in this
industry though there are some who believe that the registration of sim-
ilar designs permits the processing of too many variations of a given
design so that insufficient protection is given to certain designs which
might be considered "original". (*)

Because the Bureau makes no attempt to determine origi-
nality nr to meet such objections, it is characterized by its represent-
ative to be but 7% perfect. (**)

(d) Results of Operation of the Bureau.

Specific and factual data relative to the effects of the
Bureau's operation are not available at this writing. Certain views
have been submitted, however, to the effect that employment of designers
has increased, although in some individual cases it is claimed that in-
comes have decreased.; (***) that the commercial life of the design has
been lengthened(****) and that a greater variety of designs are being
introduced. (*****)

(e) Expansion of Activities.

The facilities of the Industrial Design Registration
Bureau are available to all industries desiring to establish similar
protective measures. (******) Through a recent establishment of coop-
erative relations with Fashion Originators Guild of the Dress Manufac-
turing Industry, the services of the Bureau were extended to include

(*) Interview Blunt, loc, cit. note P. 13_ supra. Opinions expressed
by industry members, interviewed, ( loc . cit . note p. 13. supra)
and received in reply to questionnaires on design piracy, sub-
stantially support this belief, (in NBA files, Design Piracy Unit
files).

(**) ibid, Blunt.

(***) ibid, Blunt.

(****) id. ...

■

(*****) id. Opinions (loc. cit. note p. 1_? supra) such as "I would

discontinue my print line should the agreements break down", and
"protection has saved the industry" indicate general industrial
benefit. Conclusive data has not been submitted.

(******) ibid , Blunt. For industries utilizing the Bureau under HRA
Code provisions see Chapter V; Toy and Playthings, Velvet and
Leather industries-, pages 223, 22U, 221, respectively.

97>+6

' -172-

the registration of metals, jacquards, laces and embroideries as of
January 1, 1936(*). A supporting voluntary agreement to the effect that
manufacturing members of the Fashion Originators Guild would not pur-
chase such materials unless the designs thereof were registered(**) is
intended to effect compliance and render registration compulsory. Un-
foreseen difficulties in arrangement of mechanical details and a divi-
sion of opinion in the embroidery industry as to the feasibility of the
plan(***) resulted in a postponement of full enforcement of the pledges
for an indefinite period of time. (****)

3. Protection Through Manufacturer-Retailer Cooperative
Agree- lent.

Two of the industries which established protective systems
prior to the IffiA Code period, namely, the Dress Manufacturing and the
Millinery industries, and one which established its plan during the MA
period, 'thee 3oot and Shoe Industry, are continuing their efforts to
date, and are employing the manufacturer-retailer cooperative type of
system.

(a) The Plan.

The system used embodies(*****) registration of designs
on the basis of "originality"(******) with the Guilds established by

(*) Women' s TJear Pail:.' , December 23, 1935 (Fair child Publications,

New York.) An extension of the effective date to January 15, 193&*
is indicated in the issue of January 6, 1336, of the same publi-
cation.

(**) ibid , January 6, and l6,,l'936. As of the latter date 200 dress
houses and 52 fabric firms, constituting the Textile Division of
the Fashion Originators Guild, had entered into the voluntary
pledge.

(***) ibid, January 3, 133 6. As of that date, 10 embroidery firms had

joined the Textile Division of the Guild, but the membership of the
Embroidery Institute of America was said to be divided in opinion
on the new method of protection.

(****) ibid, January l6, 1336. "... the entire plan will be in full
swing within a few days." More recent information is not available
at the time of this writing.

(*****) j^ materials, supplemented by interviews with representative
observers.

(******) "Originality" determined by the Bureau; Interviews . Post of
Fashion Originators Guild, Nov. 5, 1335; Hyland of Millinery
Quality Guild, and Miller of Shoe Fashion Guild, Dec. 9 and 12,
1335, by F. A. Fitch.

97^6

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the respective industries. Hetailer cooperation is enlisted, and by
agreement, Guild members sell only to collaborating retailers and the
retailers pledge themselves not to "buy "copies" of garments registered
with the Guilds. (*) . The basic feature of the plan is a stamp placed
upon all orders of uerchaiidise hy the collaborating retailers which is,
in the three instances, with insignif icant variations. in« detail, as
follows:

"This order is placed upon the seller's warranty that the
above (articles of merchandise) are not copies of styles

originated by the members of the Guild, or

any firm affiliated' with them. The purchaser reserves the
right to return any nerchandise which is not as warranted". (**)

In Cases of alleged infringement the original garment
and the alleged copy are submitted to an impartial board of Retailers
which determines originality on the basis of whether the alleged copy
would harm the sale of the original. (***) Little difficulty is said to
be experienced in deciding such cases. (****) The plan has met with
varying degrees of siiccess in the three industries.

1. The Millinery Quality Guild.

In the Millinery industry the system is employed by
a comparatively small(***'**) group of industry members through the
Millinery Quality Guild, and apparently has not :.\et with any material
degree of success. (******)

(*) ibid , Interviews .

(**) Dress Manufacturing Industry ; Somen's Wear Daily, October 23, 1935;
"Popular Price Group Hakes Pablic Declaration".

M i 1 1 i ne ry In Jr. s t ry ; Letter dated October 29, 1935> from Guild to
A. H. Barenboin. (in IIRA files, Industries Studies Section Files).
Boot and Shoe Industry ; Letter dated October 1, 1935 from Ball of
the National Boot and Shoe Manufacturers Association to A. C.
Johnston. (In MBA files, Design Piracy Unit files; Polder; Boot
and Shoe) .

(***') Interview , Post of Fashion Originators Guild, IJov. 5, 1935. by
F. A. Fitch.

(****) id.

(*****) Membership as of December, 1935; Manufacturers ~ lk, engaged in
the making of hats wholesaling at from $4.50 to $12.00 each; Re-
tailers - 1700; Interview , Hyland, loc. cit. note P. 173 supra.

(******) Registration for 1935 totaled only 115 ( ibid , Hyland) covering
but a very small fraction of the industry's many designs. Other
data submitted (id) shows proportionate inactivity. During the
same period 10 cases of alleged infringement were filed. All were
settled "amicably" by agreements between manufacturers and retailers,

9746

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Basic causes of the slow development of the plan in this industry are
believed to he lack of cooperative effort 'within the industry proper, (*)
and a lack of retailer cooperation, the retail outlets for millinery
being largely operated by syndicates(**) of such ."buying power that they
are in the stronger "bargaining position and have -no 'need to sign the
agreements(***) . The United success attained is said to "be encourag-
ing, however, from a moral standpoint. (****)

2. The Shoo Fashion Guild.

In the 3oot and Shoe industry, the plan as operative
through the Shoe Fashion C-uild( *****) has met with a similar lack of
material development, due apparently to two major factors: lack of un-
iformity of opinion with respect to its desirability(******) , and lack
of ability to attain widespread retailer cooperation. (*******) The
degree of success attained in this industry also is largely of a

(*) The Guild has k objectives other than design protection. Among

which is a prohibition of submitting samples for group purchasing.
A disinclination to comply with that provision has kept many from
joining the Guild. Further, but a limited group is interested in
protection: Interview. Hyland, loc. cit. note p. 172 supra.

(*") Interview , loc . cit. note p. 13 supra.

(***) id.

(****) Letter, loc. cit. note p. 172 supra:

"... we have been able not only to maintain the principles
for which thisj organization was created, but it has been a
great stimulant and guide for the manufacturer of lower grade
goods to maintain a degree of ethics."

(*****) Established "about two years ago". Interview ; Killer of the
Shoe Fashion Guild, loc . cit . note p. 17g supra,

(******) Membership as of December, 1935: Manufacturers - 30, embrac-
ing practically all of the makers of quality shoes; Eetailers-
between 150 and 175; ibid . Miller. Additional membership antici-
pated before Kay of I336-IO; Women's Wear Daily . January 2k, 1936.

(*******) Many large producers of shoes maintain their own retail out-
lets, and are unaffected by the Guild procedure. The Guild has no
power under its system to prevent distribution of copies by these
producer-distributors: Interview . Miller, ibid .

S7H6

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moral® character, though it has been stated that some piracy has been
eliminated, that additional designers, stylists and model makers are
offering new ideas on a freelance basis, and that employment of design-
ers generally has increased,'(**)

3. The Fashion Originators* Guild.

In the Dress Manufacturing industry the plan has
developed further and has had a greater degree of success. The Fashion
Originators' Guild was established in 193l(***) t>3 r a snail group of
manufacturers in the upper price braclcets(****) and is the first known
to have employed the manufacturer-retailer cooperative agreement type
of system.

(a) Retail Guilds

Local Retail Guilds, principally embracing
"style" houses, have been formed in various important centers through-
out the United States, to assist in malting the plan eff ective(*****) .
A small group of shopper s( ******) is employed by the Guild to "police"
the collaborating retailers, and any retailer found to be selling
copies of Guild registered dresses is blacklisted(*******) by the

(*) ibid , Miller, also respondents to questionnaire, (in ERA files,
Design Piracy Unit files, Boot and Shoe)

(**) Interview , Fine of Eupire Shoe Co. by F. A. Fitch, Dec. 20, 1935*

(***) Transcript of Hearing , llov. 15, I93U, p. 102; Rentner - Other

groups in the Dress Industry* which were formed for design protec-
tive purposes pre the Dress Creators League, now affiliated with
the Fashion Originators' Guild; Zahn, p. 1+1, also interview; and
the National Association of Style Creators, Inc., formed to adjust
complaints of piracy; Letter dated Dec. 6, 193^ from Counsel,
Shalleck to Rep. Blooa (in NRA files, Deputy's file: Folder Piracy)
Farther details are not known.

(****) Somen's Hear Daily , October 29, 1935, "Announcement by Fashion
Originators' Guild of Auerica.""

(*****) interview , loc. cit . note p. 13 supra.

(**.****) Women'-s Wear Daily , October 11, 1935- It is stated that 25
shoppers are employed, and that, though such "policing" is
difficult its psychological effect is not without value.

(*******) id. Later issues, January 11 and February 1U, 193 6 cite 6
firms "redcarded" (blacklisted) for refusal to divulge names of
manufacturers of alleged copies found in stock, and for refusal to
submit alleged copies found to arbitration. In connection with
"red-carding" the issue of February ik, published the following:
"... No member of the Guild or an affiliate is allowed to show,
(Cont'd, on next page)

97U6

-176-

manufacturing members of the Guild.

Tlie plan as operative in this industry affords a
wider scope for study of its relative merits.

(o) Effectiveness of the Plan.

It is claimed(*) that practically all of the
producers and retailers of higher priced merchandise are cooperating and
that the plan is a success in so far as it affects those dealing in such
merchandise.

In the Dress Industry, however, definitely cry-
stallized price bracket c(**) and the policy of the Guild to restrict mem-
bership to manufacturers operating within definite price levels(***)
has led to some dissatisfaction among both producers and retailers.

(l) Manufacturers Interest.

Briefly, the manufacturer in the $10.75
bracket and above, practically all of whom are embraced by the Guild(****)
are apparently satisfied. The dissatisfaction has crystallized in the
lower price groups. Those in the $6,75 to $8.75 brackets, among whom

(*******) ship or sell merchandise to a "red-carded" store . . . Any

Guild member' resigning' within the next 60 days cannot be reinstated
within six months. He can be admitted only upon approval by two
thirds of the membership' and may be subject to a penalty not to ex-
ceed $5000.... Violations of the red-card regulation will be punish-
able by an impost not to exceed $5000..." (ZPOGA Adds Pour Stores
to Red- Card List)

(*) Interview , loc. cit . note p. 13 supra.

(**) See page supra;

(***) Guild membership is divided into 2 classes: Manufacturers pro-
ducing garments wholesaling at $10.75 ° r "hove are admitted to
regular membership. Those producing garments in the $6.75. .
$7.75 and $8.75 brackets are admitted to membership as "Protective
Affiliates". Membership as of January 13, 1936, estimated from
membership totals published in Uomen' s Hear Daily , Nov. 1, Dec. 12,
17, 1935, <and Jan. 13* 1^36: Regular-151, Protective Af filiate s-
96.

(****) Interview , loc . cit . note p. ITS supra.

37^6

-177-

membership in the Guild is voluntary, (*) are divided into two classes:
Guild members and non-Guild members. Soth groups are competing in
the same price markets largely for the "business of chain stores which
have not signed the Guild pledge (**) and many of which, it is claimed,
prefer "copies" of higher priced dresses. (***) This situation
places the Guild members in an unfavorable competitive position with
respect to that market. (****)

The manufacturers in the lower priced brackets, under $6.75, who
are not admitted to the Guild (*****) and who for the most part
engage frankly in copying (******) are faced with the necessity of
accepting a large volume of returns (*******) from retailer Guild sig-
natories and it appears that they must either begin to originate
their designs and seek Guild protection or cater to chain stores and

(*) Membership was opened to firms in these price levels in
October, of 1935. Women's Wear Daily , October 29, 1935.
"Announcement of Fashion Originators' Guild of America."
As of that date 29 members were admitted.

(**) Women's Wear Daily Oct. 18, and November 26> 1935.

(***) id.

(****) ibid , October 18, 1935 and January 24, 1936. A notice of
resignation of 5 "Protective affiliate" members was pub-
lished in the issue of Jan, 13, 1926 with the statement
that they might sell their nerchandise to unsigned chain
stores as well as Guild signatories."

(*****) ibid October 4, Id, 11, 21, 23, 29, November 1, 3, 7, 15, 21,
27, and December 22, 1935. A fairly complete outline of the
position of the manufacturers in the lower price brackets is
contained in these issues.

(******) ibid, October 4, 1935. Also interviews , loc . cit . note
p. 13 supra.

(*******) Caused by growth in number of retailers collaborating with

the Guild, ibid, Oct. 10 and 11, 1935. Approximately 10,000
retailers had signed with the Guild as of October 1935;
ibid , October 29, 1935. Published statements, ibid ,
December 11, 1935, are in effect that 20,000 dresses '"ere
returned to copyists during previous three months. Charges
of unjustifiable returns being forced upon them made by
members of the lower price group are repudiated by the
Guild, with the statement that inquiry may be made at
Guild offices as to whether returned garments have actually
been adjudged copies; ibid , October 9, 1935.

9746

-*178«

sinilar outlets which are not Guild signatories. (*) Should the
group decide to originate they, too, are faced with the problem of
retaining accounts of those chain stores which, it is said (**) have
made it known that they prefer "copies" of higher priced dresses.

In an effort to cope with the situation, a group of 75 firms
in the s o4.75 market have organized as the "Porralar Priced Dress Manu-
facturers Association" to protect their interests. (***) The group
has charged the Guild with engaging in practices which would bring
about "such unfair competition as monopoly, boycott, and price-fixing; "
and lias considered testing the validity of the Guild practices. (****)

2. ketailer Interests.

The retailers are also variously affected by the Guild
program. (*****) Those Guild signatories dealing only with manufac-
turers in the $10.75~and-uo price brackets, are apparently satisfied
with the plan. (******) Those carrying dresses in all price ranges,

(*) ' ibid, Oct. 4, 1935.

(**) ibid . Oct. 26, 1935.

(***) ibid, Oct. 21, Nov. 8, 12, 13, 15, 1935.

i_oid, Oct. 21, 23, 1935. Charges are contained in published
"Declaration of Policy." So far as is known legal action has
not been taken to date..

(*****) ibid. See issues of Oct. 11, 13, 21, Nov; 26, Dec. 12, 16, 17,
20, 22, 24, 27, 30, 31, 1935, and Jan. 7, 24, Feb. 10, 14, 17,
1936 for more complete coverage of the retailers' positions.
Those of Jan. 24 and Feb. 10 indicate retailer dissatisfaction
with having to permit inspection of their stocks by Guild
representatives and with the delays caused by submitting
possible "copies" found to arbitration. The latter editions
also indicate that the issue may -be brought to a climax in
the near future. Subsequent editions will undoubtedly cover
the matter completely.

(******) Interview, loc . cit. note p. 13 supra.

9746

-179-

from the basement values to the better dress shop values, prin-
cipally the large department stores, are faced with having to sign
the Guild pledge to procure "style" merchandise and with having to
obtain garments for their lower priced departments largely from non-
Guild members, and being obliged to return all those which are found
to be copies. (*)

Competitively, such stores are unfavorably placed with respect
to chain stores, which, although dealing in the same class of mer-
chandise, are not subject to such restrictions. (**)

The chain stores have not signed with the Guild (***). Since
the^ r are dealing primarily with a copyist market, such procedure
would be impracticable because of the large volume of merchandise
which would probably have to be returned to the producers thereof. (****)

In addition some, as it has been noted previously, frankly
prefer copies of higher priced dresses, (*****)

The opinion of some retailers appears to be that many of the
chain stores would be willing to sign with the Guild if "originations"
were reasonably assured to them. (******) bvt if present policies are
continued a distinct line between the department stores and specialty
shops on the one hand, and the low-priced and chain stores on the other,

(*) Women's Wear Daily. Oct. 13, 1935, Jan. 24, 1936.

(**) id . Also issues of Dec. 12, 20, 1935. Dissatisfaction has

been expressed in an attack on the Guild Plan by the National
Retail Dry Goods Association. Questionnaires have been sent
to all members of that Association, in an effort to ascertain
majority opinion. As of Dec. 27, 1935, "thousands" of
replies had been received; ibid . Dec. 27, 1935, and
Jan. 7, 1936. More recent data is not presently available.
In reply to the attack, the Guild has stated that its program
of expansion was undertaken with the full knowledge and
approval of retail members, the Retail Guilds, and the
Associated Buying Offices of the NRDGA: ibid , Oct. 21, and
Dec. 20, 1935. For detailed expression of the ERDGA position
see issue of Jan. 24, 1936. Conferences between the groups
are being held looking toward adjustment. ibid , Feb. 5, 10,1956,

(***) Women's Wear Daily , Oct. 13 and Uov. 26, 1935.

(****) Interview , Mangel Bros. loc . cit . note p. 13 supra.

(*****) TJomen's Wear Daily , Nov. 26, 1935.

(******) Interview , Mangel Bros. loc . cit . note p. 13 supra.

9746

-ISO-
will inevitably result. (*)

3. Results of Operation.

Favorable comment has also been expressed and published with
respect to the Guild program. Its results have been claimed. (**) to
show increased stability in the industry, growth of retailer con-
fidence, -orolongation of the retail season, growth of consumer
style-consciousness as against price-consciousness, better style,
prolonged style life, greater margins of profit and increased con-
sider satisfaction. A more specific benefit is said to be the
elimination of approximately 95';$ of the design piracy previously
practiced in the brackets now protected. (***)

Because of difficulties encountered in overcoming price level
distinctions, the plan as operative in this industry, appears to be
effective onl- in so far as it a'fects the producers and retailers
of higher triced goods. As extended to include the manufacturers
and merchandisers of lower priced garments it appears to be in need
of further study and development,

4. Protection Through Voluntary Industry Agreement as Operative
in the Lace Industries.

It is maintained that (****) the Lace Manufacturing industry
and the Nottingham Lace Curtain industry bave effectively curbed
design "oiracy by means of "gentlemen's agreements" not to copy one
another's designs, which have been operative "for years" (*****) in
the respective industries. Both are continuing their efforts in the
same manner.

(*) TTomen's TJear Daily October 11, 193t).

(**) ibid , Oct. 25, l T ov. 19, 27, Dec. 18, 23, 26, 1935, and Jan. 2,
7, 8, 1936, supported by interviews , loc . cit. note p. 19
supra. The issue of November 27, 1955 published the views
of the Managing Director of Vivian Porter & Co. Ltd., of

London, in oar t, "whatever action is undertaken-in Britain

is likely to be patterned after American practices."
issue of Nov. 19", 1935, published opinions representative of
' various geographic markets in respect to extension of the
program to the" "Protective Affiliate" group. Other opinions
are from diversified sources.

(***) Interview , ' loc . cit' . note p. 19 supra, supported by recent Guild
registration figures, particularly for the month of November,
(Women's Near Daily, Dec. 11, 1935), as follows:

Date Number of Number of Complaints Number of

1935 Registrations of alleged Copying Complaints Sustained

Accepted

Sc-it. " 2,287 471 254

Oct. 2,260 691 408

Tov. 3,392 377 194

(****) interview, Schloss, Loc. cit. note p_B » Supra.

Interview, Parker and Digginson, loc. cit. note p.^asupra.

-l si-

ii. Significant Aspects of the Plans.

All of the plans employed are dependent for compliance upon
independent industry cooperation and private industry action. Hone
have legal support or recourse to the courts to insu.re enforcement,
in cases of violation. Automatic protection of design is attempted
under the principles of the plans adopted by the Design Registration
Bureau, of the Sill; Textile Industry, and "by the Schiffli industry
during the period of its protective efforts, by having all who would
process a design register that design, and by prohibiting the use of
any design that is not registered. Protecting designs under the
manufactrtrer-retr iler cooperative agreement system is attempted by
having all who would market a design register that design, and by
prohibiting the retail sale, through the collaborating retail signa-
tories, of all copies of that design. Protection of design under the
"gentlemen's agreement" system rests entirel:/ upon the standards of
ethics obtaining among the individual industry members.

All of the systems appear to be effective only to the extent that
full cooperation of all groups is accorded. In the Silk Textile, Lace
and hottingham Lace Curtain Industries, in which cooperation is prac-
tically perfect, the systems in use a-opear to have attained a. marked
degree of success. In the Dress kanufacturing industry the system
appears to be effective in so far as the producers and retailers of
merchandise in the higher priced brackets are concerned, where the co-
operation of both grouos is evident. In the lower priced levels, a
lack of uniformity of opinion and interests appear to have caused
certain difficulties impairing the effectiveness of the program. In the
Millinery and Soot and Shoe industries, the same system is less ef-
fective because of a lack of unanimity of purpose both within the
industries and among the distributors. In the Schiffli industry, the
discarding of the plan is evidence of its ineffectiveness.

Hone of the systems employed protect the interests of the designer
who is not engaged in manufacturing processes. This is particularlzy
true of those working on a free-lance basis, whose designs nay be
appropriated by the unscrupulous producer without compensation to the
designer, registered without the designer's knowledge and thus
rendered unsalable to other producers.

9746

CHAPTER VII

ISSUES III PROTECTION OF DESIGNS.

I. COi.iPARISOl: AND ANALYSIS OF FEATURES OF VARIOUS ACTIVITIES.

The entire movement for more extensive design protection, disregard-
ing existing patent and copyright laws, divides naturally into three
types of effort: (l) Purely voluntary efforts through trade associa-
tions, (2) similar efforts supplemented "by governmental approval, and
(3) proposals for additional legislation.

A. Scp-oe of Effectiveness.

l s Purely Voluntary Activities.

The activities of the first type have been of varying
scope, depending of course on the viewpoints of the manufacturers par-
ticipating. With IOC- coverage of printed sill: manufacturers and a
policy whereby all novel zj prints are protected, the Textile Design
Registration Bureau is at once "both the most comprehensive and the most
significant plan in operation, particularly in view of the complex
nature of the industry which it services. The Lace and Lace Curtain
Industries perhaps are just as well insured against copying, but for
other reason:- - due to their compact group of manufacturers the trade
stigma against copying seems to be effective without the aid of any _
elaborate registration system. In the Dress, Millinery and Shoe industries
the Guild plans appear to be operating with some degree of success in so
far as the affiliates of such organizations are concerned; but the re-
turn problem, the constant need for active retailer cooperation, and the
difficulties inherent in any system which depends upon lay determinations
of originality and lay decisions on alleged infringements make for less
stability than might be expected in connection with the Silk Textile plan.
The latter, it is true, requires similar decisions respecting questions
of registration and copying, but those decisions are made before property
interests have become vested nnd orooVction starred, , and therefore the
chances for serioas contest over decisions are greatly diminished because
of their lesser economic significance,

2, Governmental Cooperation with Voluntary Activities,

Non-NRA activities of the second type have been of rela-
tively less importance. Voluntary agreements under the National Indus-
trial Recovery Act have been approved. Existing Trade Practice Conference
Rules, in the first place, are far outdated by more recent events, par-
ticularly NFiA Codes, the invalidation of Codes, and the subsequent efforts
toward establishing the Code provisions on a coluntary basis. In the
second place, those rules are totaly unenforceable and their meaning is
rather indefinite. They .'ay be violated at will, and they probably
are violated in the cases where there is any real anticipated benefit
in copying. The one substantial aspect of such rules, however, is that
they tend to make it appear that the copying of unpatented designs is
frowned on by the government. That, plus the ever-present trade stigma
against copying, may be an important force. The tendency of such forces
is' to create conditions, like those in the Lace Industries, whereby

9746

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competitors, "by tacit agreement, decline to copy each other's designs.
Actually, however, conference rules on design piracy have "been obtained
by only a few industries, and these apparently are not of such nature that
a major problem of copying would be expected to exist.

Activities under the national Recovery Administration were the most
comprehensive ever undertaken, yet they failed to cover a sub r tantial field
in which design piracy is a prevalent practice. For diverse reasons, as
has been shown, operative piracy code provisions iiT ere not approved for the
Dress, Millinery, Ladies' Handbag and Schiffli industries. There was not
even a recorded effort to obtain MIA assistance in the control of piracy in
the Boot and Shoe industry. The Toy, Jewelry, Silk Textile, Furniture and
Leather Industries, on the other hand, with governmental assistance, en-
deavored to operate comprehensive provisions which covered most of the
novel tv items introduced during the respective code periods. Of less
importance than these, but nevertheless representing efforts to strike at
the problem, were the provisions in a large number of additional codes. In
the experience of scarcely any of these 'was there sufficient activity, how-
ever, to throw any light on issues relating to design protection, except
perhaps the negative inference that design piracy in most industries is a
practice of infrequent occurrence. Were this fact otherwise the present

report might be in a better position to compare the significance of the many
types of controls employed.

Concerning the effectiveness of. plans which experienced significant
activit 1 / only a fev; comments are justified by evidence at hand.

Despite the generally successful handling of cases of copying in the
Silk Textile, Toy and perhaps the Jewelry industries, interviews with
manufacturers disclosed varying types of viewpoints. The Textile 'Bureau
was accused of being too lax. The Jewelry Bureau was regarded favorably
by many but accused of granting too wide protection for registered designs
and registering too many designs that embodied no real novelty or originality.
On the whole, however, the sentiment among manufacturers whose opinions have
been received seems to be that all these operative code provisions were
successful and that there were no fundamental defects in the plans followed.

3. Legislative Proposals.

The passage of proposed legislation, for example, the Duffy
Bill in its present form, would result in design protection of a scope not
before realized. Almost all items of "novelty" merchandise would be within
its terms. Whereas, voluntary agreements not to copy might be continued,
the great volume of exclusive rights obtained from the government would
reouire a modification of the plan ■ of operation of systems like the Textile
Bureau in order that those rights might be fully respected. Whether the
Duffy Bill would be an effective device for curbing the copying of designs
is a metter of conjecture. The apparent effectiveness of copyright pro-
tection for books, musical compositions, etc., might be pointed to as an
indication of the possibilities for similar protection of designs. Un-
doubtedly the bill would permit, a far greater coverage of designs than is
available under the patent system. The costs would be Ion and the procedure
so simple that designs and manufacturers might avail themselves of regis-
tration as a matter of course. Preliminary searches and the .services of
attorneys would be unnecessary. There would need be no delays. Upon the
uses to which such a law were put and the success experienced in enforcing

9746

-185-

The guilds operating within the Dress, Millinery and Shoe industies
apoear to have encountered more obstacles than the Textile Bureau.
Reliance upon retailer cooperation in the form of refusals to sell
copies of designs re istored by Guild members secmir.pl,' has led to com-
plaint , but manufacturers who do not belong to the Guilds, of excessive
returns. The existence of a valid excuse for returning merchandise
seems to lead to returns of goods which for other reasons are no longer
desired. In so far as that practice prevails the import upon non-
participafcing manufacturers may be considered undersirable . The effect
on retailers also appears to include undesirable aspects, for the retail
store must become the "battle ground" for the settlement of disputes
over copying. Strong evidence of retailer objections is found in the
recent attack of the National Retail Dry Goods Association against the
Guild plans. Again, there is nothing to show whether prices or quality
standards have been affected by Guild operations, or whether designers
have been benefited, harmed or affected not at all. Protected designs,
of course, are sola in higher-priced goods than if copied and applied
to lower-priced lines. But there is no reason to believe that the
original nianufacttireris irice is any higher because of protection than
without it, for most of them maintain prices within fixed ranges; nor
to believe that goods embodying fashionable and attractive designs are
made inaccessible to low-income purchasers.

Flans of a less systematic nature involving voluntary cooperation
may have definite econouic effects, but the tracing of them is well-nigh
impossible. One obvious but important social effect is that copying
as a >romoter of ill-will is avoided. This, of course, might be said
of any effective activity which tended to prevent copying, and it is
probably true that where good will among competitors exists there are
few cases of design jiracy; where it does not exist, such oiracy is more
evident. Thus there must be respect for the interests of competitors
before copying can be prevented through voluntary cooperation, and
where that respect is not found cases of copying probably serve only to
innede the establishment of smooth competitor relationships.

Another effect of cooperative efforts, which also is characteristic
of all plans, is that the original producer of a design possesses a
monopoly on the design but not on article s of the type to which the
design applies. To the extent that sale of the article depends upc-n
the particular design employed his monopoly is effective, giving him
a competitive advantage if his design is popular, a disadvantage if
others' designs are more popular; to the extent that a multiplicity of
comparable resigns may be developed by others equal competitive rela-
tions are restored. But instead of the usual competition ba.sed on
orice and -uality there is a third element, design, of equal or greater
importance, depending upon the particular article in question. The
foregoing "equation", however, is modified by the influence of fashion,
which, from time to time, makes one and then another type of design more
popular.. The forces which promote fashion changes, particularly the
desire to be different, tend to prevent design control from being
monopolistic and thus, in a different way, to modify the "equations".

The IJRA influence on the Silk Bureau did not alter any of the
effects already discussed. With reference to other industries few
additional comments may be made. Manufacturers of toys who create

9746

their own designs characterized design protection as perhaps the most
beneficial feature of the Code, and it was said of the Toy industry
that iin unusual variety of new items appeared on the market during the
code period. Many jewelry manufacturers shared the same view. Ob-
servers of the Jewelry industry who were in a. position to know stated
tliat the call for designers was increased and that a substantial number
of concerns formerly accustomed to copying had taken up designing work
and were enthusiastic over the results. That this occurred was con-
firmed by several such concerns.

The subject • of the possible effects of proposed legislation like
the Duffy Bill is, in a sense, the subject of this paper. The issues
are those already mentioned. (*) Discussion of them is reserved for
the next and final chapter.

II. A REVIEW OF TIE DESIGN SITUATION TODAY.

Brief ly r ecalling to mind the conditions existing today, it is
found that in at least a few industries, notably the Dress, Millinery,
Ladies' Handbag, Tou, Schifflie, Shoe, Medium and Low-Priced Jewelry,
Silverware and Wall Paper industries, design piracy is a frequent
practice. By no means all manufacturers object to it, however, It
might be said that, typically, a majority of concerns objects to the
practice, and that the minority wishes the freedom of copying or "adap-
ting^ from time to time, or objects to efforts toward control for other
reasons. That this generalization applies to the Silverware, Leather,
Lighting Equipment, Jewelry, Funeral Supply, Furniture, Toy, Wall Paper
and Schiffli indi^.stries ■ seems to be supported by available evidence,
including the fact that all of these industries proposed by majority
action and were granted design piracy provisions for their respective
ERA Codes. It seems doubtful that the same statement would apply to
the Shoe, Dress, Ladies' Handjjag and Millinery industries, which
apparently are characterized by majority opposition to efforts of the
minority toward design protection. In the Silk Textile, Lace, and Lace
Curtain industries, on the other hand, there seems to be no articulate
opposition whatever to the protection of designs, as such.

A great number of industries, excluding those specifically
mentioned, produce articles the designs of which, from time' to time,
may be changed. Patent protection on new creations is obtained, and,
norwithstanding the prep oal and approval of design piracy -orovisions
in UFA Codes, few complaints of such piracy are recorded. Design
piracy provisions in the Codes for such industries generally were,
totally inactive, which is further evidence of the lack of an important
design problem.

Concerning existing devices for the prevention of design oiracy;
Design patents, although seemingly providing adequate protection for
manufacturers in industries wherein design changes are infrequent, are
of little use to the .industries specifically mentioned above . The fact
that over 95 per cent oi issued design patents cover products that were
on sale when the patents were applied for indicate that only manufacturers
enjoy latent rights; designers seldom, if ever, procure protection
before assigning their rights. Reason for the ineffectiveness of design

patents are the lenyth o f time required, the prohibitive r.nxt,. of

(*) Chapter III
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patenting all the designs in the lire of .manufacturer of highly
styled goods, aiiu the failure of patents ~o provide protection.
Frequent cases of invalidation of patents in the courts have leu to
disrespect for patent claims; instances of the granting of patents oil
designs known tc be old o" manufacturers in the inaustries concerned
have accentuated this result. Furthermore, the technical requirements
of "investion" .._I:e patents of uncertain validity and tend to present
the granting of patents on many designs which, to the trades, are of as
much merit as tryly novel creations.

Other brandies of general and statutory law are of ne. ;li ible
significance. The courts, without statutory direction, will not enjoin
the co iyin of desi, as already or: sale nor award damages to the original
producer. The copyright laws do not apply to desi ns for industrial
products except in a very limited and unimportant respect. The Federal
Trade Commission has no power to impftse sactions uoon those who copy,
and its approval of Trade Practice Conference Pules on design piracy
is of little si'.nificance.

Industry-operated plans for the control of design piracy appear to
be operating with success in the Silk Textile, Lace, and Nottingham
Lace Curtain industries. In the first named, the plan itself is the
cause of success; in the other three, and 'probably many other industries,
success is die merely to the general feeling that copying should not
be sanctioned - with a relatively small volume of desi ns and only a few
concerns in each industry that sentiment is sufficient because new
creations and their origins nay be known to all. Specialization of
functions and cooperation between organizations have a large influence
on the success of the Silk Bureau.

The degree of success achieved by desi n- protection guilds in the
Dress, Millinery, and Shoe industries is difficult to estimate. They
are still in aplastic stage. The Fashion Originators" Guild, in the
Dress Industry, appears to have achieved success as far as concerns
tl - interests of a relatively small _,rcuo of manufacturers and retailers.
Whether its present expansion will continue remains to be seen.

There is a strung pressure for additional le .islation which would
provide more extensive design protection. Tire industries exerting this
pressure, however, are not agreed as to the type of protection desired,
and important opposition meets every proposal thus far made. Producers
of silk prints desire legal sup ort for their plan. Lace anu lace
curtain manufacturers wish to be free of legislation in order that they
may proceed with self-re relation. Within ether industries special
problems requiring considerations are encountered: Millinery, Wall Paper
and Leather nave the interests, respectively, of blockmakers, roller
engravers and plate makers to contend with - Dress, Shoe, Millinery end
Ladies' Handbag are concerned over the sales policies of manufacturers
of ornaments and r.iaterials used for their articles, for example, silk
prints or other fabrics, laces and ornaments for dresses, buckles end
jeweled ornaments for shoes, ornaments for hats, and frames, initials,
etc., for handbags. Influencing the entire problems are the opposition
of copying roups to any proposal which would destroy the privileges they
now enjoy, the fear of other groups that systems for the control of
pire.cy would entail undue technicalities, expenses and inequities, and

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retailers 1 objections to

convenience unon tliem.

proposals which would imoose liability or in—

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III. CMTICAI TUEAHJEITT 0? ISSUES

In an earlier chapter of this paper points on which those opposing
and those favoring additional design protection seem to be in agreement
and natters disputed by these factions were mentioned. (*) It is not
denied that design piracy has unethical aspects, nor that, in the indi-
vidual case, it may harm the original producer of a copied design, nor
that it tends to accelerate fashion changes. The ineffectiveness of
design patents as devices for protecting the bull: of original designs
is admitted, as veil as that more extensive protection would probably
benefit designers and. lengthen fashion movements and the sales life of
a given design. On almost all other questions, however, there is dis-
agreement.

A. De sign Protection as a Stimulant to Designing .

Design creation is described ^r llystrom as "distinctly an artis-
tic process." (**) It is obvious, however, that designing is not'
carried on at the present day rate merely to gratify the desire of de-
signers to create something new. The prospect of economic gain in a
capitalistic society, furnishes the motive for designing, as for other
forms of generally useful effort; and it is as enabling such a prospect
that legislation for the protection of inventions and ideas has been
justified:

"To sum up: the direction in which the contriver turns his
bent is immensely affected by the prospect of gain for himself.
low, gain and profit come from supplying people r 'ith what they
want; and the influence of individual interest on the direction
of inventors' activity turns it toward the promotion of the
general "elf are,** The defenders of patent legislation often
descend on the public's benefit from inventions as if there
were a special moral desert on the part of the projectors and
patentees. They put their case badly. What deserves emphasis
is the influence of calculated profit in directing the inventor's
activity, spontaneous though it be, into channels of general
usefulness.***

"Inventors, poets, painters, business men — all are alike
in the folds of a system which compels them to exercise their
powers for their own advantage,*** The most that can be laid
down, as the outcome of the present discussion, is that in-
ventors on the whole need the spur of profit as much as the
others whose creative and guilding activity is indispensable
for human progress,*** So far as concerns inventors and con-
trivers, our conclusion is simply that, the social and economic
structure being what it is now, and men being now under its in-
fluence, they are not likely to exert their powers for the

(*) Chapter III, Section II,

(**) llystrom, Paul H. , Economies of Fashion , pp. 168,208 (1928) Also
see Taussig, Inventors and honey-Makers (1930); Veblun, Instinct
o f "o rlu.-i.rua ship , p. 33; Heid, " The Influence of Patent Laws
upon Industry ," 35 Journrl of the Chemical Society , 804 (1916)
1 Vaughan, Economies of Cur Patent System , pp, 1 & 2 (1925).

9746

general good unless guided, stimulated and re-yarded in much

the same way as leaders in other i'onis of creative activity. " (*)

"*** the desire for economic reward appears as one of the
most frequent causes of invention. Patents furnish the
means- by rhich the expectation of pecuniary gain may he ful-
filled, and to this extent promote the progress of the indus-
trial arts and the economic, welfare of society." (**)

Eras, theoretically, may the influence of design protection on
designs be explained, but it is only through manufacturers that design-
ers are enabled to receive economic gain, and manufacturers also must
foresee a sain before they will -undertake the support of designing
staffs, the purchase of designs, or the introduction of new' items to
the market, all of which activities involve additional expenses.. This
aspect has ^oeen recognized by Vaughn as an important factor justifying
patents:

■One interpretation of patents is that they foster the
development and introduction of inventions by manufactur-
ers. The mere conception of an invention is not suffi-
cient to bring forth new ways of satisfying human wants.
Inventions progress according to the three stages of con-
ception, development, and production. The embodiment of
the idea in a concrete product and the education of pros-
pective purchasers vith respect to its merits require the
expenditure of considerable capital and labor and the
assumption of appreciable risk. A special stimulus, as
patent protection, is needed, therefore, t*> justify the
manufacturer in attempting to develop and market the in- •
vent ion. * * *

"It will be seen, then that the irurpose 'of patents is some-
what similar to that of a prospective tarriff." (***)

Similarly, Hadley (****■) has written that the patent system:

"has established itself, not primarily as a stimulus for
invention or for disclosure, but for utilization ' and
development of new methods requiring the investment of
capitol and the guarantees which shall make such invest-
ment lossible."

(*) Tausig, loc. cit . note p. infra

(**) Vaughn, loc. cit. note p. 344 infra, at pp.32, 33

(***) Ibid, -op . 29-31

(****) Hadley Economics, p. 134

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The protection of designs, by patents or any other device, clear-
ly is unnecessary to design creation if the prospects of gain other-
wise are sufficient to stimulate activity. In. a country committed to
the policy "to promote the progress of science and the useful arts"(*)
the question "becomes that of vrhether existing conditions tend adequate-
ly- to foster designing or whether additional protection is needed.

It is probable that there has been more designing within the past
ten years than at any other period of history. Probably also designing
by American designers has been most active, and concerns have turned
more and more to the practice of "dressing up" their products in order
to improve sales. Has this been due to patents? Generally it would
seem that it has not. The "dressing" up ; process is done to obtain
sales. Design changes are made in order to retain consumer interest.
Fashion changes, involving wholesale changes of design, are fostered in
order that articles still useful will be discarded in favor of others
of a more fashionable appearance, with resulting increased sales. (**)
The motive has been gain for the manufacturer. The comparatively
infinitesimal number of design patents granted each year, these being
over 66 per cent of all applied for, in itself shows that patents have
not induced concerns to introduce the volume of designs actually brought
out. The fact that 95 per cent of design patent applications are for
designs already on sale is evidence of two conditions, -(l) that the
patent has nothing to do with the introduction of the item, under pre-
sent circumstances, and is sought merely to insure further gainful
production without competition from copies, and (2) that the actual de-
signing was not fostered by the possibility of obtaining a patent, for
designs ordinarily are not processed until the designers' rights have
been assigned to manufacturers.

If not from patents, whence come the present inducements to
develop designs? In the first place, leaders in creative effort and
fashion movements naturally build good will and find demands for their
products because of those very activities. Second!, by no means all
designs are copied by competitors, even where there are no patents and
no other efforts to establish exclusive control. The prevailing trade
stigma against copying is of great significance. Third, the natural
time advantage of the first producers also is important, for the pro-
duction of a copy normally requires some time and effort as well as an
element of risl: which may not be disregarded by the intelligent copyist
unless the particular design is of definite value to him. Fourth, in
some of the industries where copyists were most active private controls
for the orotection of designs have been established. These are the
existing inducements. They all run directly to the manufacturer; but
the designer shares in the gain insofar as he is able to bargain with
the manufacturer. Hot all manufacturers, however, are affected by all
of these influences. The first three apply in varying degrees to all
industries — the fourth to only a few.

(*) U. S. Constitution, Art. I, Sec. 8, CL. 8.

(**) See Chase, The Tradegy of Waste , and Chase and Schlink, Your
honey' s Worth, oc. cit . note p. , infra, The Consumer
December 15, 1955.

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In tLe Jewelry and Toy industries, for example,! there are no
operative private controls since the invalidation of K.R.A. codes, and
design patents apparently are used by only a snail minority of concerns.
Although design piracy is said to be "prevalent" in both of these in-
dustries, it is not yet clear whether it is of sufficient inport to
discourage designing and creative effort. Concerning "both of these
industries, however, it has "been stated that the protection of designs
by ~_:.R.A. codes resulted in nore employment for deaigners and the in-
troduction of more new items than in years immediately preceding. (*)

In the Lace and Lace Curtain industries the second influence
operates successfully to prevent copying and thus to enable a prospect
of gain from design creation. In the Silk Textile industry this same
result is achieved by an elaborate system for private control. In the
L'illinery, Shoe and Dress industries, all of which are characterized
by frequent copying, some concerns are endeavoring to protect their
creative efforts by xindred although different devices.

whether the composite effect of all four influences, plus whatever
inducements may resr.lt from the design patent system, is to stimulate
sufficient designing depends on the standard of sufficiency applied.
Existing conditions doubtless do and would continue to foster designing
activities, for the maintenance of sales in the "fashion" industries
depends on constantly changing appearance and natural influences tend
no'- to permit some gain from design leadership. If, however, compe-
tition were perfect and the stigma against copying were broken down,
it might result that designing generally would be unprofitable. Claims
that the sj^stematic copying of dress designs led to the in-olvency of
leading dress houses in the 1920s, although unsubstantiated, are of
interest in this connection as ere the (**) statements of representa-
tives of a few concerns at the Dress Code hearing that, unless some
sort of protection were provided, the-.- would be forced to discontinue
desi gn development .

The copying of designs, insofar as it renders current designs
obsolete within a short time but does not completely remove possibili-
ties of gain, probably tends to promote designing activities by
creative concerns. Evidence that this tendency exists is found in the
form of complaints by such concerns against the costs and inconven-
iences due to constantly changing lines, -these, in turn being made
necessary ^r copying.

The protection of designs from copying naturally would eliminate
the risks created by the copyists and thus tend to encourage designing.

(*) See Chapter V, supra.

(**) See Transcript of Hearing, Proposed Amendment to the Code
for the Dress Industry, ITovemoer 15, 1934.

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Experiences under IT. 3. A. codes and privately conducted systems indicate
that more concerns would undertake design development. Since it is
admitted that the present creators would not need to introduce as many
designs, it becomes a question as to rhich influence would predominate.
The most plausible answer is tha.t protection would cause a greater
variety or designs at any one tine, while copying accelerates changes
and might possibly cause the introduction of more designs during any
given period of time, but by fewer concerns.

3. The Effect of Design Protection and Industrial Activity .

The case of those favoring additional protection with reference to
this issue is based on the assertion that copying tends to destroy
creative effort, leading to an insufficient diversity of designs, and
to customer dissatisfaction. Both of these, it is said, destroy sales
possibilities and lower fchel bactivity of industry as a whole; whereas
the opponents of protection argue that copying acts both to establish
fashions and promote fashion changes and promote volume of sales, all
of which account for the prosperity of "fashion" industries.

At the outset it should be mentioned that there is no definite way,
except by experience, of determining the effect comprehensive design
protection would have on the activity of any particular industry. Ty
'comprehensive protection 1 is meant the coverage of at least a majority
of designs newly introduced to the trades. Designs have been too in-
significant as a factor to serve with value as an example. The Silk
Textile Bureau has experienced several years of comprehensive protection,
but it is difficult to isolate the causes ao as to discover any import-
ant efiects. Certainly there has been no complaint of a decreased
volume of sales, either in units or dollars, attributable to design
protection; but other influences, such as general industrial activity,
the place occupied by prints as a type of fabric in current fashion
movement, etc., .night well conceal any possible effect of protection.
Thus, general increases in business activity immediately prior to and
during the Code period cannot be attributed to design protection,
even in industries wherein design is all-important.

That copying accelerates fashion changes has been admitted. The
operation of the Textile Bureau, according to I.'iss 31unt, has lengthened
the sales life of particular designs, and lengthened production seasons.
Protection, of course, will prevent the designs of higher priced con-
cerns iron being reproduced on a volume basis for simultaneous sales
at low prices. It has already been shown, also, that protection would
probably cause a greater diversity of designs and a correspondingly
less rapid change of fashion. What then is the significance of these
effects?

Diversification of designs, especially when caused by a greater
number of concerns, would naturally result in more designs that would
be attractive to a particular customer. If, as has been alleged, there
are customers who refuse to buy because they cannot now find a pleasing
variety of designs, the effect of stimulating their interest would be
beneficial to industry. It does not seer, probable, however, that such
a class could be large or important to the entire volume of an industry.

9746

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There probably exists a larger class of purchasers who ^ould buy itens
if the;- could "be assured that cheaper copies would not be sold gener-
ally; but again a quantitative estimate is impossible. 3y far the
largest group of buyers, however, probably buys to satisfy needs,
either actual or imagined. Fashion, of course, plays a large part in
the creation of such needs, and anything which destroyed the fashion
influence unquestionably would destroy a large volume of business
activity. There is no denying that the copying oy many concerns of one
design, and common sale and use of articles of the same appearance,
leads to boredom. This is pointed out by those favoring control as a
reason why their sales are "hilled" after a design has been extensive-
ly copied. The same result has been experienced by the music publish-
ing industry since the advent of radio and the frequent broadcasting
of popular songs which leads to their early "death". (*) It is be-
lieved to be true that, insofar as the general use of a given design
resulting solely from copying accelerates fashion changes, the tendency
of protection, excluding other factors, would be to decrease the volume
of business attributable to such influence. The degree to which even
this would occur, however, would depend upon the type of protection -
and the degree to which the articles of most concerns could be made to
resemble the protected article. And it is by no means established that
the volume of business resulting from frequent style changes is any
greater than that which T r 0u ld result with a greater variety of designs
but slightly less frequent changes.

Another motivating cause of fashion, the desire to imitate, would
be somewhat restricted by design -protection, the degree of restriction
again depending on the type of protection. But it is unthinkable that
all designs should be controlled exclusively, especially staple and
proven lines, or that all designs should be limited to a small produc-
tion; here it would seem that there could be little interference with
existing opportunities to buy or sell similar goods. Also there is
the probability that the term of -nrotection would be limited. Designs
not within immediate reach of the general public ultimately would
become available. Fashion^., after all, are largely dependent on what is
made accessible by economic and other circumstances.

There is another factor which might tend to offset any adverse ef-
fect on trade. Fashion influences the demand for variety as well as
the demand for conformity. Commercial promotion is a factor of great
importance, and the profit to be gained from promotion of "exclusive"
designs night be greatly increased if copying were prohibited.

Comments on so intricate a topic without the aid of actual re-
corded experience are necessarily theoretical. The drawing of conclu-
sions without extensive records is impossible.

(*) Fortune , January 1933, pages 27, 33, 84, 86, Vol. 7, "5,000,000

Songs"; also ITew York Times magazi ne, January 5, 1936, page 8, 21,
"Tin Pan Alley Stirred to Civic Song."

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3 . T he Effect on illative Competitive Positions .

Acvocates of design protection protest that they are being damaged
by copying and that those who contribute nothing to the welfare of
industry are the only ones v.ho profit by the practice. Opponents clain
that protection would put out of business the r.any low-priced con-
cerns no-' engaged in copying.

It has been slio'-r that copying usually tahed place only after a
design has achieved, or is believed to be capable of achieving, some
decree of popularity. Although the copy usually is sold at a lower
price than the original, it is not established that "low-priced" con-
cerns arj the onlyi ones which copy. In the Dress industry, largely
because ox the policy of design protection followed by Guild members,
this is trae. In the ^edium and Lot Priced Jewelry industry, no par-
ticular class of concerns is charged with design piracy. The cop-
plaint in made that manufacturers of chain store jewelry frequently
indulge in the practice, but it also apnears that some of that class
of concerns actually create their own designs and object to copying.
There is at least one leading advocate of domestic design protection
whose firm regularly conies European designs. No particular class of
toy manufacturer seems to be involved.

Without repeating the design piracy conditions in particular in-
dustries, it is said that design creators may be found in all classes
of manufacturing concerns; that, in general, all classes do some copy-
ing; but that the existing tendency is for creative rork to be carried
on by higher-priced concerns, copying by those dealing in low-priced
merchandise. The issue, however, essentially concerns the creator and
the copyist, whatever their merchandising policies.

In the industries concerned with design piracy, which are those
wherein -products are sold largely because of the design factor, it is
patent that co\>yists could not thrive if limited to old or staple
designs. Commercial promotion of the design factor sways purchasers
toward promoted designs, fashion trends sometimes swing to limited
types of articles. Volume sales follow these influences. The fruits
of such movements, under copying conditions, can be shared ("sometimes
taken bodily) by copyists.

In the absence of a liberal plan, copyists could be required eith-
er -to u.h.ei'ca.'je ■•> distinctive designing and promote their own designs,
in competition with others, or to discontinue the production of novelty
goods. The demand for low-priced novelty goods, in the latter event,
woulo need to be filled by established design creators.

Looking at recorded experiences, it is found that the Textile
Bureau .-'_,f able to secure conplete support of its plan for limited pro-
tection of designs only after several years of growth and education
of the industry. The point that all concerns night crea.te their own
designs and, under the plan followed, be free to follow style trends,
was constantly impressed upon dissenters. The industry on the whole
was equipped for individual creative work - if not for the maintenance
of designing departments by each concern, at least with ample sources

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of designs available. The converter : nter-roller-engraver specializa-
tion of functions and established relationships between these groups
made it necessary only for former copyists to procure the design itself
fro:; an exekasive source instead of to copy it. With former copyists
agreeing to do this and left free to follow style trends, the opera-
tion of the Bureau, so far as is known, had no noticeable effect on
their relative competitive rjositions.

Under code role most operative nlans attempted to protect the
originality imparted to a design ^oy the claimant. In the medium and
Lot? Priced Jerelry industry obstacles rere encountered. Changes in
jewelry items, in contrast with silk prints, are generally more radical
and involve modif ications of form, materials, use, etc. Popular de-
mands are likely to swing more sharply to a iiarticular item. The
charge was naole that the Bureau for this industry gave too ^ide protec-
tion,' that it enc.ea.vo red to mrevent the following of style trends and
unduly favored the registrant. Thus, in the case of the chain tie
holde/', a general demand for the item was quickly established, jobbers
and boyers demanded siraula.tions from their accustomed suppliers, yet
the efforts that were made to produce an item similar in appearance
but not identical to the original were held violations by the Bureau,
in accordance with its regulations. The pressure for the time was
such, however, that simulations were made regardless of Bureau rulings.
One manufacturer justified sucn action "oi" stating that, otherwise, he
would have lost the good will of his usual distributors and huge
possibilities for sales, all of which would have been concentrated
with the originator of the item

The Toy industry gives evidence of similar tendencies of protec-
tion to change established relations. A manufacturer of marbles as-
serted that, because of his exclusive right to the use of a novel con-
tainer registered under the code, and also patented, he had obtained
almost 100 per cent of the chain store business in a certain year.
He objected to later action of the Bureau whereby a similar but differ-
ent container of a competitor had been registered, enabling the com-
petitor also to make sales to the same outlets.

In short, it appears that extensive design protection might have
a very definite effect on relative competitive positions. The charge
that low-priced concerns as such would be put out of business does not
seem to be established. The issue, rather, lies between design crea-
tors and copyists, and, it is time, most of the copyists in some in-
dustries are low-priced concerns. The present copyists, however,
woulv.- be unable to compete as at present without major changes of
practice. Designing or the purchase of designs would have to be adopt-
ed if sales of novelty goods were to be maintained or if the copyists
were to share in the market for popular fashion merchandise.

D. Distributor In t erests .

Upon analysis it appears that the dispute between opponents and
proponents of more extensive design protection with respect to distri-
butors' interests resolves itself into statenents of the positions of
different hinds of distributors. Let us look at the dress retailers

'J 7 46

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as an example. There pre specialty shops which endeavor to handle distinc-
tive and exclusive dresses, department stores which handle a variety of
styles at various price ranges and cater to various types of purchasers,
and other stores of diversenature which deal in lower-piced goods embody-
ing plain designs, samples, copies, etc. In the Millinery industry there
are the retail syndicates operating principally in department stores.
Chain stores purchase low-priced goods from all of the industries con-
cerned.

Cooperating with design protection guilds in the Dress, Millinery
and Shoe industries (in the last named manufacturer-operated retail
outlets are prevalent) are specialty shops and department stores which
handle the goods of design creators. Their interests definitely tend
toward the protection of the exclusiveness and design values in goods
handled. Copies at lower prices destroy the element of exclusiveness
in their merchandise, crea,te dissatisfaction among purchasers who have
bought for distinctiveness at higher prices, and require -mark-downs
and losses on stocks on hand.

On the other hand, to the department stores which handle less
"exclusive" lines, to the syndicate retailers and the chain stores,
volume sales are more important than exclusiveness. Such sales being
dependent on design, these stores eve interested in obtaining attractive
designs from any source. Since they compete for volume, price is of
great significance. With access to all designs under copying condi-
tions, the risks of obtaining successful designs are reduced. Their
customers are such that individuality of design is not expected, indeed,
often is not desired.

Aside from the economic factors, the difficulties resulting from
enforcement trouble most retailers, with the possible: exception of those
whose custom it is to buy from producers of highly distinctive lines.
They fear that the sale of merchandise on hand might be halted by in-
fringement adjudications, or that before buying they might be required
to ascertain whether 'merchandise offered to them embodied copied designs.
They also anticipate disturbances occasioned by efforts of design claim-
ants to find out the source of copies.

The distributors' interests, therefore, are diverse. Those who
handle merchandise embodying original designs have an interest in pro-
tecting those designs from competitive sales made on the. basis of price
and customer satisfaction, and they sometimes wish to prevent all com-
petitive selling of designs when it stands in the way of successful
promotion of exclusive lines. Those who handle general lines, including
cooies, have interests opposed to'protection because all designs would
not be available to them and the design factor would become a more im-
portant element of competition, requiring cis&nges in prevailing prac-
tices. All, to some extent it seems, have interests opposed to the en-
forcement burdens that might be placed on retailers.

Evidencing these interests in design protection proposals are the
op-oosition of chain stores, syndicates and the national Retail Dry Goods
Association and the support of specialty shops and large groups of dis-
tinctive department stores.

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E. The Interest of Labor .

Lest discussion of the issue be misleading, it is emphasized that
the present study has presented no information tending to show that labor
has suffered from design piracy or that design protection improves the
status of labor. Arguments there are, and the discussion is undertaken
only in an effort to throw light on some of the arguments.

The assertion -that copyists generally pay less wages and employ
less man-hours per garment, because of the use of machinery, poorer
workman-ship and the "speeding up" practice, may be true in so far as
copying is done more by concerns producing in volume at low prices. It
ignores the fact that copying is also done by concerns with high labor
and quality standards. It assumes that industry might produce and sell
the same quantity of new design merchandise at labor costs comparable
to those of the latter group; moreover, it assumes that the present day
producers of original designs could take over the business and the work-
ers who are employed by copyists while still maintaining their present
labor standards. Palpably, neither of these assumptions is supportable.
Indeed, the same interests frequently argue that copyists' prices are
lower part I37 because of lower labor costs per article, and that they
destroy the sale of originals because of their lower prices. Further-
more, it is not established that design protection would eliminate trie
volume producer of design merchandise.

The argument of those opposing protection is essentially that
business activity in their industries and the position of lower-priced
concerns in particular would be harmed; that unemployment and poor labor
conditions would result. These are issues discussed under preceding
topics.

To the writer it seems that neither faction has established
any. direct relation between copying or design protection and labor
interests. The points raised resolve themselves into statements of other
issues, with one exception: The claim that design piracy in the Dress
industry causes such rapid changes of lines that workers on piece-work
rates cannot earn satisfactory wages is convincing. Rapid changes do
occur. The extent to which labor is affected is indeterminable from
the data presently available.

F. . Consumer Interests .

1. Price.

Low prices are cited by opponents of design control as a justi-
fication for copying; protection, they say, would cause increases. The
other side strongly denies the charge.

That the consumer ordinarily pays a lower price for the copy than
for an original design is clear. That price levels generally would rise
with design protection is less obvious. It is well known that N.R.A.
control was accompanied by general price rises that are not attributable
to any one influence. The experience of the Textile Bureau is not par-
alleled by records of prices capable of analysis to throw light on this
i s sue .

9746

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There is scant data at hard to show the relation between trices of
articles bearing patented designs and other articles of similar quality
that are not patented. Cut of eleven r< s~>onses to a questionnaire on
this subject, nine industry members reported that the prices are the same,
two chat the patented designs are higher priced. (*)

Advocates of protection report that they would be enabled to anti-
cipate requirements, produce in greater volume and more efficiently, and
sell their products at somewhat lower trices. The -ore sent copyists, it
is urged, should be able to design or purchase designs without increasing
their nrices, because they could save expenditures now devoted to copying
- e. (_., retail purchases of original items, participation in copying
services, etc., - and because the cost of designing, distributed over a.
substantial production, v. mid have a negligible effect on prices.

All these arguments ropy be -accepted without resolvin,. the issue. The
cost of designing probably nlays but a small part in determining the
prices of higher-priced creators. Fashion research, design failures, and
aromotion to establish designs are perhaps of greater significance. These
factors plus quality, workmanshi i and merchandising policies, govern prices.
tilth copying permissible, such activities tend to make the design a work
for copyists, and there is always a way of producing at a lower price
until the lowest standards have been reached. The consumer desiring a
copy of a particular item receives the benefit of copyists' prices at the
level which appeals to him. Without copying, the policies of the original
manufacturer would govern the cost of a design to the consumer. Thus,
instead of open price competition for the business which a particular
design will command, there would be substituted competition between
different designs in different qualities at whatever price level the
manufacturer chose to impose, ^rice maintenance would be possible;
. nopoly urices would be possible in so far as the particular design re-
ceived consumer preference over other articles of comparable quality and
usefulness but different design.

It is inconceivable that the low-priced market would be ignored even
were designs protected. It is conceivable, however,' that, with style
promotion earn iaigns and extensive advertising, demands might be stimulat-
ed for .articular designs which then could be sold at higher rices than
under circumstances which allow copying. In short, prices on popular
items might be higher, but there is nothing to show that price levels
in D eneral would be higher. The low income consumer might not have
access to no >ular designs until the term of protection had expired. The
degree to which this would affect the consumer would depend, quite
naturally, on the closeness with which protected designs might be
simuli ted.

2. Quality

The quality aspects of the design problem furnish another instance
in which it is possible only to generalize. Advocates of control usually
assert that merchandise embodying copied designs is of no or quality and
that the consumer is led into buying it only because of ohe design and '
low prices; also that the price obtained for it is not always justified
by the quality.

(*) See Chanter IV
9746

-2on~

A few advocates have teen heard to state that cop3>"ing has nothing to do
with quality.

Assuming that in an industry in which design piracy is prevalent
it is the design of articles that is the most significant sales factor
and that a copy, to "be salable in competition witn an original must
carry a. lower price, at least two probabilities l>'ecoaa p e»idon-t-i: There is
opportunity for articles, either originals or copies, to he x lj skimped in
quality and (2) sold on the merit of the design. Poorer quality or less
detailed workmanship should usually be expected in the copy.

A third probability relates to some industries, notably those
wherein the "novelty" of the item and not its usefulness is most impor-
tant. Examples are the Toy industry and the Medium and Low Priced Jewelry-
industry. With the novelty element so predominant, the consumer may have
little interest in quality. Manufacturers, recognizing this, may gener-
ally give little consideration to quality standards. Several manufactur-
ers of low-priced jewelry, advocates of design protection, expressed the
opinion that the copyist may emit some steps in the manufacturing process,
or substitute machine operations for hand work performed by the original
producer, but that often the consumer- can perceive no difference in the
final product.

On the other hand, copying may have an effect on the ability to
maintain high quality standards. This same emphasis on design, in con-
nection with articles of more useful nature, like wearing apparel, makes
it difficult for consumers to distinguish the good from the bad. Examples
are recorded cf cases wherein purchasers of higher priced, better quality
merchandise have accused their dealers of profiteering after seeing, in
another store, apparently identical articles at much lower prices. As
copying increases there can be but a few courses to follow, one being to
cut costs of production, including quality, so as to be able to meet the
copyists' price when it is published. This course, however, could hardly
be completely successful until the lowest acceptable quality level had
been reached. The higher the quality standard, the easier it is for a
copyist to under-sell.

The protection of designs, it is believed, probably would have
no direct effect on quality standards. It might, however, remove some
of the pressure now felt by concerns desiring to keep up the quality of
new design articles. In shifting the basis of competition from price consid-
erations to the merits of different styles of an article there might also be
a tendency for quality shortcomings to be more evident, and for superior* ^
features to be more generally appreciated.

3. Distinctiveness.

There are consumers who refuse to buy articles previouslv seen, who
insist upon exclusive designs for items such as -■..'earing apparel. On the
other hand there are large groups of consumers whose desires are fully
gratified only by the possession of articles simulating those possessed or
worn by prominent personalities. In between these two extremes there
probably exist many types of viewpoints. Some consumers no doubt prefer
to be in the fashion swing but still desire to possess articles of dis-
tinctive appearance.

9746

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Of no little importance is the element of price — the desire to have -
possessions which reflect the highest possible stage of financial inde-
pendence. T-o the wealthy this requires distinctiveness of design; to the
low-income consumer it may require the possession of articles similar to
those owned by higher income groups. The determination of what policy
should be followed in connection with these diversified consumer interests
is a matter requiring the weighing of factors which extend beyond the scope
of this study.

To a degree d-e^ending upon the freedom with which protected designs
might be simulated, protection would render the designs of higher priced
producers — those desiring to maintain distinctive lines — inaccessible
to the low-income consumer for at least as long as the term of protection.
That segment of the consuming public which desires distinctiveness would
be able to purchase and retain it for a while at least. The consumers
who demand copies wouW be thwarted by an effective plan.

G. The Cos t of P rotection vs. ITaste Due to Copying .

It is claimed that the "killing" of designs and constantly changing
lines resulting therefrom are sources of great waste; and alternatively,
that the costs of additional designing, design registration, litigation and
the confusion and delays said to be occasioned by protection would be far
more wasteful.

There seems to be merit to the assertions that all these things
involve economic waste. Furthermore, it is possible tha.t protection
would encourage excessive advertising and design promotion campaigns, ishese
for the purpose of establishing demands for protected designs. To evaluate
and balance the factors on each side, with available materials, is im-
possible.

H. Administrative Issues .

1. Features to be considered.

The statement of some, that there would be over a million "original"
designs in the Dress industry each year, may be an exaggeration; but
it is true that with the majority of the industry engaging in creative
work, as would probably be the case were copying prohibited, there
would be many thousands of "original" designs in that industry alone.
The Millinery industry is comparable. The Handbag and Shoe industries
probably have fewer designs, but still, thousands. It has been shown
that the Textile Bureau has averaged over 15,000 per year since 1932;
that the Jewelry Bureau registered 3100 from May, 1934 to May 1935; and
that the Leather industry registered a few thousand designs during the
code period. These are but eight - eight of the most active from the
design viewpoint, it is true, but there are scores of other industries
which do designing work and would participate in any plan adopted. (*)
The total volume of designs to which there might be claims of exclusive
rights, obvious!^, is very large.

(*) See Chapter I.

9746

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In a number of these industries fashions change rapidly. There
are several seasons, each year, and the designs used for" a given season one
year generally are- useless the following year. Accordingly the value of
these designs is fleeting. Their development and the entire period of use
may occupy only a few months, sometimes only a few weeks. : Can any plan he
devised to enable the effective protection of values so short-lived?

Furthermore, there is the difficult matter of identifying variations
of desing - of arriving at principles which would meet the needs of various
interests yet at the same time preset De standards by which jrotectable
designs and infringements might be known with a reasonable degree of cer-
tainty. In many of the industries surveyed during the course of this
study the opportunities for developing real novelty of design are severely
limited; in all, original creations generally constitute M re~hashes""of old
designs or new combinations of old elements of design, which result in
varying degrees of departure from the appearance of articles previously
known.

The resulting administrative and enforcement difficulties would de-
pend upon the type of control attempted. It is therefore appropriate to
discuss features of types suggested or placed in operation."

2. Problems with Reference to the Coverage of Industries.

The design laws of all leading countries today, without exception,
apply generally to all designs for articles of manufacture. Yet, "in this
country it has often been proposed that additional design legislation be
enacted to supply the needs of particular industries. (*) Do these
proposals haveany significance with reference to administrative problems?

The control of design piracy is not a matter of minute definition,
for the consideration to be given to elements of design in protected
articles and copies can be governed only by principles. In a sense it is
no doubt true that the same principles appl>r to all industries and all
articles. Differences are observed, however, in connection with the
articles themselves. In textile orints and wall paper, variations are
possible only in patterns and colors. Woven fabrics involve an addi-
tional element, - that of fabric construction. Jewelr-'-, furniture, toys,
shoes, dresses, milliner--, handbags, etc., involve materials, forrn^
pattern, color, trimmings - perhaps others. A given degree of departure
from pre-existing designs may be ...important to one industry, unimportant
to another. Do these factors call for individual industry treatment? -Not
necessarily. Under patent laws the same problems are met. Examiners
skilled in their respective arts are assigned to particular industries.
Such errors in the application of principles as occur probably are no
more frequent than would occur if a separate plan aoplied to every indus-
try. ;

Differences in the adaptability cf industries to extensive design
protection are of greater significance. The degree of knowledge of pro-
blems varies greatly, as do the extent of education required to enable
efficient use of a plan for design control, the need for control, the

(*) Creange, The Guilds of America . (1934), Chap. V; see the Nye Bill
and the Sirovich Bill, discussed in Chapter IV of this paper.

9746

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length of the period within which protection is desired, the extent of
creative designing and cowing now prevalent, the availability of designers
or designs - these plus a host of other factors. To allow for them all,
however, would probably require a plan similar to the FRA plan, whereby each
industry might formulate its own rules, make its own initial decisions and
allow for its own peculiar problems. Suoh a course, however, desirable or
undesirable, is not within the scope of immediate possibilities. It
presupposes a rule by individuals, not by laws. It would reoui're legal
sanctions to support the dedisions of individuals. Under existing con-
stitutional limitations it would not be sustained in the Courts.

3. The Basis of Protection.

It is uoon the basis of protection that the scope of a plan and
the problems encountered depend. Some experience has been had with a
variety of devices. Copyright laws base protection on originality :
patent laws on novelty and invention ; nost foreign laws on novelty and
originality ; the Silk Textile Bureau on trade us e; and the tendency
under active FRA code plans was to employ tests which were comparable
to trade novelty .

(a) Originality.

The mental concept of the designer, whereb^r he creates something
different, at least to him, is the important thing where originality
is the basis of protection. It is the creative act which is emphasized
by courts construing copyright laws, not the usefulness of that created.
Under such basis practically the entire volume of designs newly intro-
duced, prima facie at least, would be entitled to protection, for they
are products of creative talent even though individual elements of
design or ideas may have been taken from existing sources. Two inde-
pendent originators of similar designs would each have equal claims.
No matter how many anticipations existed, the unsuggested creation of
the mind would be protectable.

Such a basiswmld have advantageous features. Registration it-
self would be simple, for an examination to determine originality would
be impossible. The purpose of registration would be merely to provide
evidence of claims and a record of designs claimed. Only the rights to
designs in dispute would need be determined, and then by a court having
authority to settle a rea.1 controversy; inconclusive administrative
examinations would be dispensed with. The effort would be to protect that
which designer hed put into a design.

But there are many possible disadvantages, some of considerable im-
portance. Although these claims of originality might be asserted with no
difficulty, probably there would be no more of such claims than in con-
nection with design patent laws, especially if criminal penalties were
prescribed for siich conduct. Another possibilitjr is that individual con-
cerns might develop and register all designs which could be created by them,
in an effort to preempt the field, but this is also improbable. Such r
practice would involve large expenditures with little assurance of suc-
cessful designs; it might be discouraged by appropriate provisions requir-
ing that original designs, unprocessed, be protected from copyists, but
that the registration of processed designs, if not copied from others,
should be paramount.

-204-.

Perhaps the strongest ground for critic! sin- plans which would base
protection on originality relates to the uadertataty of rights. The
thousands of designs for some articles naturally would include closely
similar ones. In the Textile Bureau, the Jewelry Bureau and the Patent
Office several claims to the same design are frenuently made. All claim-
ants might register. All might have valid registrations, unless it be
shown that some had copied. Proff that one had cooled, either from old
designs or from the design of another claimant, would be extremelv diffi-
cult. Moreover, complications would arise from a possible situation
where an old design had been registered in good faith as an "original".
Would others thereby be barred from using the old design? What tests
could be applied in determining infringements and rights in over-lap* •
ping registrations?

The experience with copyright for musical coimosti tions, books etc.
might be cited to demonstrate that there would not be as much confusion
as might be expected. Yet the mark of originality in connection with
such works is much more evident than in connection with most designs.
Possibilities for variations are greater. Designs are confined to defi-
nite limits by the functional structures of the articles for which they
are intended. Nevertheless, it is a fact that cop-rights for plays and
for sculpture are not dissimilar; also, that coo-right laws in operation
tend to rely upom a .basis of novelty; the lack of novelty in a plot for
a story, for example, being a basis for refusal to upiiold cony-right in
that story. (*)

.This leads to a second possible basis of protection,
(b) Novelty

Novelty alone, would require some type of admini strative examina-
tion. Otherwise, who would determine it? The claimant certainly is not
disposed to look diligently for anticipations before asserting a claim
to a supposed novelty. Others who might want to use the design, if novel-
ty be a prerequisite to protection, shoxild not have the burden of inves-
tigating to determine whether claims are supportable; such an arrangement
would make the right to protection depend somewhat upon the efficiency of
the search conducted by such persons. The courts are not equipped to
examine noveltjr of designs.

Administrative examinations require time, though a Bureau set up for
the express purpose would function without the delays found under present
patent laws. The Textile Bureau manages to give 48-hour service, but the
examination is not for novelty; only the designs in use for the current
year are considered. Collections of all old published or used designs for
all industries concerned would include hundreds of thousands - nerhaps
millions of designs. To enable an examination of those relevant to a
particular application, elaborate classifications by articles and types
of designs would be essential. Existing facilities of the Patent Office,
however, might constitute a basis upon which to expand classifications
and records of old designs and, with additional personnel, to handle a
greatly increased volume of cases. This, it may be maintained, is with-
in the realm of possibility.

(*) See Chapter IV. Sec. I, D, for cases.
9746

-205-

In fact, such complete records and classifications should be characteristic
of the design division of the Patent Office under present law. In so far
as they are not, the chances of issuing invalid patents are increased.

There are other problems in connection with novelty as a sole basis.
I7hat is novelty? Almost everything embodies some differences from any
one pre-existing thing. Should any difference, no matter how unimportant,
be protected? Such a rule would seriously hamper the freedom of modifying
articles currently in use. The real contributions would be lost in a maze
of details. Inevitably some additional principles would be necessary -
some requirement akin to the present reauirement of invention, or the re-
quirement of "originality" - creative thought as imposed under the British
laws. The necessity for such a principal is considered sufficient to render
inapplicable protection based on mere novelty.

Requirements of novelty and originality involve the same need for
a complicated examination system. Something over and above mere novelty
would be needed - an exercise cf creative facilities. How would this
differ from existing design patent laws, which require novelty and inven-
tion? Possibly the difference would be only one of degree. Any evidence
of an artistic contribution to existing designs would be entitled to pro-
tection; whereas, in theory at least, the present requirement cf inven-
tion involves a decision, after the fact, as to whether the contribution
would have been obvious or not to the ordinary skilled designer.

The volume of designs eligible for protection might nevertheless
be great. If it were found that old unused publications unduly barred
the protection of currently valuable developments, an arbitrary provision
might be adopted, limiting effective anticipations to those designs which
had been in use or published within a definite period immediately prior
to the date of application. The reason for the small volume of design
patent applications todayis not so much the substantive requirements for
valid patents as the expenses and delays in obtaining protection and the
difficulties encountered in enforcing rights granted. As long as these
factors exist, broadening of the basis of protection would have little
effect on the volume of designs submitted; if removed, the volume
would increase greatly regardless of the basis.

That, then, are the reasons for these factors, expenses, delays
and enforcement difficulties? Expenses and delays in connection with
design patents have been explained as due to the need for preliminary
searches, the services of attorneys, the technical requirements for
applications and drawings, and more expeditious procedure in the Patent
Office where cases are delayed in their movement to the proper division
by the printing of formal patents, and by arguments on the part of the
applicant or his attorne3 r and the examiner regarding questions of
patentability, form, conflicts with other cases, etc. (*)

(*) See Chapter IV, Sec. I, C.

9746

-206-

Formal requirements might "be simplified so that applicants might file
their own cases. The examination, with expenses of attorneys, etc.,
eliminated, might be sought without undertaking preliminary searches;
for with a large volume of designs the fees per case would not necess-
arily be high. Procedure might be simplified to eliminate delays of
transmission to division and of printing, leaving ac the only substan-
tial time factor that necessary to conduct the search and to make de-
cisions respecting; applications. Conflicting claims to protection might
be settled by reference to filing dates, giving those damaged by wrongful
conduct of others an opportunity to secure a binding determination of
the right to protection by court action. It is even possible that the
filing date of an application might be made its effective date as against
infringers with notice, subject of course to delayed operation until pro-
tection had actually been granted and to proper provisions safeguarding
the interests of alleged infringers.

Enforcement problems are even more difficult. Largely, however,
they are dependent upon the thoroughness of the administrative exami-
nation and the accuracy of administrative decisions. If it were poss-
ible to give binding effect to such decisions without affecting vested
interests adversely, enforcement problems would be greatly minimized.
They might be lessened if cases of alleged infringement could be taken
immediately to an easily accessible court having final jurisdiction
over such matters. The nature of decisions respecting novelty, origi-
nality, invention and infringement is such that differences of opinion
are to be expected. Where avenues of appeal are available in con-
nection with such questions it is difficult to obtain final disposi-
tion of disputes.

With all these factors to be considered, the bases here dis-
cussed seem to afford better opportunities for effective control than mere
originality. The volume of designs to be included would no doubt be less
but rights would be determined more easily because basedi on a more solid
foundation - novelty plus a creative factor -, a foundation which would
not always require excursion into elusive problems relating to the meth-
ods by which the claimant had arrived at the design in question. As in
connection with any plan which predicated protection upon the nature of
the design itself, there would be no necessary relation between the eco-
nomic need. for protection and its availability. And there would still
be difficulties where overlapping claims existed - matters incapable of
solution except by adherence to fixed rules. Should a new design be pro-
tected as a whole, or only in so far as it propoeed v mDvel featurec?
Of the latter, should one who copied those novel features but used them
with other elements, new or old, to produce a different appearance t\e
held an infringer? If a basically new design were protected, should im-
provements thereon also be protected? Or should protection be denied to
improvements until the term of the basic design had expired? The design
patent laws pro ctedtpd enly designs as a whole - not elements of design, a
policy which emphasizes the trade value of the design rather than the
abstract elements of the contribution. They do not, however, deny pro-
tection to improvements which infringe protected designs; hence a patent
i s no indication of the right to produce.

For the manufacturer, trade use as the standard for protection is
perhaps the most desirable.

9746

-207-

This object is to introduce something different to the trade - something
which will appeal to consumers. '/aether that something is old, or in-
volves invention, or originality is immaterial - if he puts an invest-
ment into it, he wants the investment protected against copyists.
There are certain things, elements of design well known tc the trade,
which he would agree should tie open to all; out the others, if they
nave any present day aspects of novelty, should be protected for at
least long enough for him to realize a return on them.

This, essentially, is the plan of the Silk Textile Bureau, ex-
cept that it goes further and provides not only that all designs newly
used snail be protected but also, in order to insure that this be done
automatically, that concerns shall submit designs for registration and
have them approved before they can be used. Some consequences of the
plan have been mentioned in other parts of this Chapter.

Administratively, it requires the protection of all newly-intro-
duced items. It requires decisions as to wuat constitute usable
variations from designs in use, these in turn requiring a standard to
be followed - that of the Textile Bureau being consumer confusion of
the registered with the proposed design. It means that originality,
novelty, invention cannot be considered. A protectable interest in a
design does not arise until it is used; hence designs not for produc-
tion need not be considered. The plan, furthermore, reouires
immediate decisions, without which production plans would be delayed.
Essentially, it is a method of determining infringements prior to
their occurrence and it requires files of all designs in use. Lacking
that it would have to revert to the determination of rights in particu-
lar designs, and this upon some basis similar to those herein discussed.

It is evident taat such a plan possesses features which could not
be made to operate on a national scale for all industries. Time is
of the essence. Compulsory registration would be difficult of enforce-
ment. In many industries, moreover, there is not the general
similarity of designs enabling countless variations of detail, such as
is found in textile prints. The protection of designs in use might
be a "windfall" to some concerns, leaving only undesirable items to
ctners; if not taat, it might force a degree of diversification of de-
sign to which the industry and its consuming public is not accustomed.

The plans followed by the Toy, Jewelry and furniture industries
under i T 3A Codes differed from the Textile Bureau. The Toy industry
used the Textile Bureau as a registration agency but sought to protect
designs which industry committees deemed "original", or new to the
trade. Substantially the same standards were followed by the Jewelry
an:', purniture industries.

In such plants the tendency seemed to be to register only such
designs as the manufacturers considered unusual. Thorough "ecords were
not canvassed by registration agencies in order to determine the merits
of designs submitted. Protection, in general, depended on the impres-
sion of a design upon those who made decisions. Infringements were
determined in similar manner. Without the personal element to encourage
compliance and the backing of supposed legal sanctions and threats of
Blue Eagle removal it is doubtful that those plans could have achieved

-^208-

the success they enjoyed. Tie sina .qua non of a successful plan based
on "trade novelty" is the existence of a tribunal having thorough
knowledge of the products of the trade and the power to make decisions
acceptable by parties concerned or capable of backing by legal sanction.
In general, such a plan is adaptable only to voluntary efforts toward
design control. It is wholly unadaptable to a permanent legal control.

4. Summary

It appears to be true that no plan for more extensive control

of design piracy could operate without encountering administrative and
enforcement difficulties. Existing plans are not free of them; to

expect fewer difficulties as a result of change is not warranted. The

essential question, however, is whether proposals for change would meet

un surmountable problems of this nature* Is it possible to attempt the

control of many thousands of designs for many types of articles on a
national scale? If so, by what means?

Copyright protection undoubtedly possesses attractive features.
It would involve no administrative problems, no delays, negligible ex-
penses. Only disputed cases woull need any substantial attention. On
the other hand, it is doubtful whether copyright registration alone
would permit a commercially necessary degree of certainty as to rights
or whether it coiild be effectively enforced. Limited more definitely
to the protection of novel contributions, these possible defects might
be lessened, but it is believed that they could not be materially re-
duced without the use of a system of examination which would eliminate
un sup portable claims to protection.

'.Vould examination on a wholesale basis be practicable? A basis
akin to novelty plus a creative factor would necessarily be applied in
the granting of rights. Elaborate classifications of complete files
would be needed. Searchers skilled in tie significant aspects of de-
signs for particular articles would have to be provided. The volume
of designs, would depend upon the particular basis employed, but with
liberal procedural requirements and fees the volume would be great -
not nearly so great, however, as the total number of designs intro-
duced to the trades each year. The practicability of such a plan, it
seems, would depend largely upon the efficiency of its operation.

Aside from the foregoing, other types of plans have been tried
and operate I with varying degrees of success through voluntary coopera-
tion. They are unadaptable, however, to a system of legal control.

9746

-209-

APPENDIX I

SCOPE OF THIS STUDY

I. SOURCES INVESTIGATED

El undertaking this study of design piracy, it has been kept fore-
most in mind that the part played by the National Recovery Aomini strati on
in endeavoring to control design piracy was of primary concern. From the
commencement of the study in August 1935, honey er, it was evident that no
adequate treatment of the problem could be undertaken without reaching
into other than N.R.A. sources of information. A comprehensive study
outline was prepared at the outset, which called for far more investiga-
tion than the Design Piracy Unit, with its limited time and personnel,
could hope to complete. Nevertheless, between August, 1935, and January
10, 1936, a great amount of material was studied, and information was un-
covered which would throw light upon the majority of the points originally
outlined for treatment.

The principal sources of information included the following:

A. Secondary Materials .,

1. Articles in newspapers, periodicals and trade publications

2. Law reports and legal periodicals

3. Articles in the Journal of the Patent Office Society

4. Bulletins and Reports of Governmental Agencies

5. Congressional Hearings

6. Books, including principally the following:

Creange, Henry, The Guilds of America ,
(Hew York: George Grady Press, 1934)

Taussig, F. W. , Inventors and Money-Makers
(1930)

White and Raven sc raft, Patents Throughout the TTorld ,
(Second Edition, 1928)

Swan, Kenneth R. , Patents, Designs and Trade-Marks ,
(Hew York: D. Van Ebstrand Company, 1908)

Terrell and Corsellis, The Law and Practice Relating
To Letters Patent for Inventions , (London, 7th
Edition, 1927)

Richards, C. R., Art in Industry ,
(Hew York: MacMillan Company, 1922)

Chase, Stuart, The Tragedy of TJaste ,
(Hew York: MacMillan Company, 1929)

9746

-210-

Vdughan, Economies of Our Patent System , (1925)

Chase and Schlink, Your i-'Q ney 1 s Worth ,
(New York: MacMillan Company, 19 2'/)

Nystrora, Paul, Economics of Farhion (1928)

Nystrom, Pau3., Fashi on i.iorchandi sin,-; (1932)
(New York: Ronald Pres)

F.R.A. Sources:

1. Special industry studies and code histories now "being pre-
pared by the Division of Review.

2. Files relating to Codes of Fair Competition, including
transcripts of hearings held with reference to such codes.

Codes were selected for study without definite knowledge
of the importance of design piracy to the industries concerned or the
amount of information available in 1T.R.A. files. A few were known to
have included active provisions. Others were selected as involving products
largely dependent upon a-ppearance and therfore probably involving a de-
sign problem. Still others were chosen primarily because of the special
types of code provisions sought by industry. The list includes:

Artictic Lighting Equipment

Boot and Shoe

Carpet and Rug

Dress

Funeral Supply

Fur

Furni ture

Glass Container

Handkerchief

Lace

Ladi e s ' Handbag

Leather

Luggage and Fancy Leather Goods

Medium and Low-Priced Jewelry

Millinery

Nottingham Lace Curtain

Rayon and Silk Dyeing & Printing

Schiffli, Hand Machine Embroidery

Sct-Up Paper Box

Silk Textile

Silverware

Toy and Playthings

Upholstery and Drapery Textile

Telvet

Wall Pat)er

Field Sources:

1. Field interviews, by Florence A. Fitch and A. C. Johnston,
with trade association officials, industry representatives and others in
New York City and Providence, Rhode Island, November 4 to 9, and December
9 to 21, both inclusive, 1935. Interviews concerned the following indus-
tries:

Boot and Shoe

Dress

Lace

Ladies Handbag

Medium and Low-Priced Jewelry

Millinery

Nottingham Lace Curtain

Silk Textile

Silk Printing

Toy and Playthings

Wall Paper

9746

-211-

2. Questionnaires:

A total of 243 questionnaires, entitled "Special Questionnaire on
Design Protection", (*) was sent to a selected list of manufacturers in
the following industries:

Artistic Lighting 1,'edium and Low-Friced Jewelry

Boot and Shoe Nottingham Lace Curtain

Carpet and Rug Silk Textile

Furniture Si lve invar e

Han dice rchief Toy and Playthings

Lace Upholstery and Drapery Textile

Leather Wall Paper

Luggage and Fancy Leather Goods Watch Case

A staff of three assistants devoted over two months to the
"combing" of 1T.R.A. files in an effort to segregate all materials relating
to design piracy in the industries listed. In the meantime the writer
devoted his attention to the study of books, periodicals, trade journals
and law reports. The mailing list for the Questionnaire on Design Pro-
tection was obtained by writing to trade association officials for lists
of manufacturers in the industries concerned who were actively interested
in design protection, and whose views would be representative of the various
viewpoints expressed by groups within each industry. Questionnaires were
sent to these individuals in December, 1955. At this writing there have been
thirty- three complete returns.

The plan followed in conducting field interviews involved, first,
an interview with an official of the leading Trade Association for each
industry interviewed, in order to ascertain general facts concerning the
situation in that industry, and, second, interviews with a few manufactur-
ers who were believed to represent different types of operations and diff-
erent viewpoints with reference to the design problem.

( *) See Sample. Appendix II

9746

DR-13 Confidential Government Report File No

Return to NATIONAL RECOVERY ADMINISTRATION

Division of Review,
Washington, D.C.
********

SPECIAL QUESTIONNAIRE ON DESIGN PROTECTION

The following information is requested in connection with a case study of the problems
'Involved in design protection as explained in the attached letter.

Please fill out the questionnaire and return it within ten days in the enclosed envelope
which requires no postage. The additional copy is for your files.

Name of firm_
Address

(Street) (City) (State)
Name of respondent Title Date

*********
"NEW DESIGNS" for the purpose of this questionnaire include all designs that are
new to the trade, regardless of whether individual elements thereof are old. If
a design as a whole was not known to the trade at the time of its introduction,
it is to be considered a new design.

IN QUIRY I - GENERAL QUSSTIO S

Indicate (v) the type or types of business operations in which you are engaged?
Q Manufacturing rj Jobbing
[J Retailing □ Others (specify)

2. Give the name of the code (or codes) under which you formerly operated

Indicate kinds of products handled (shoes, furniture, lace, etc.) underlining the prod-
ucts for which you create NEW DESIGNS.

Indicate (/) the total volume of your sales for entire establishment in 1934:

□ Under $50,000 fj $250,000 under $500,000

□ $50,000 under $100,000 (J $500,000 under $750,000

□ $100,000 under $250,000 [J Over $750,000

Estimate the proportion of your total sales during 1934 according to the following:

a. "New design" products 7 ,

■ b. "Staple design" products (continuous demand)

c. "Proven design" products (previously used and still marketable)

d. Other merchandise, not embodying designs

Total sales . 100 %

6. Did you DEVELOP any of your NEW DESIGNS during 1934? Q Yes; fj No.

IF YES, PLEASE A.JSWER THE FOLLOWING FOUR QUESTIONS INSERTING "0". IF NONE.
a. How many designers were engaged in DEVELOPING new designs during your busy

season new design period of 1934: Part-time ; Full-time

b. Estimate the number of new designs DEVELOPED during 1934 (developed but

not necessarily introduced in the trade)

c. Estimate the total cost of DEVELOPING new designs during 1934 (designer's

salaries, cost of samples, etc. but excluding cost of patents) _

d. Number of new designs which were actually introduced to the trade _

*********

7. Please state the approximate number of new designs which were introduced during

1934, according to the methods by which they were obtained:

a. Number of new designs INTRODUCED which were developed by your designers

(same as question 6d) . _

b. Number of new designs which you purchased or licensed

c. Number OBTAINED by other methods, specify method: ,.,

Total new designs INTRODUCED by you during 1934

8. Indicate the SEASONAL ASPECT of new designs which you introduced.

Item

Estimate per cent of total number
of new designs INTRODUCED in in- j
dicated months - 1934 I 100%

Total | J.» | F.| M.| A. | M. | J.| J.| A. | S.| Q.| N. | D,

9746

* Abbreviation for month.

213

9. A. Is DESIGN PIRACY a prevalent practice in this industry? □ Yes ; □ No.

B. If yes, do you think, that your concern is at a DECIDED DISADVANTAGE because of de-

sign piracy? □ Yes ; r] No. Explain briefly, indicating extent to which designs
developed by you during 1934 were copied.

C. What particular class or classes of concerns are engaged in copying or pirating

designs developed by others? (Large, small, "fly-by-night operators", manufac-
turers for chain stores, etc.)

D. How long is it, on the average, before the articles embodying NEW DESIGNS which you

develop and place in production, ARE PRODUCED BY OTHERS? weeks.

10. If you develop (or purchase) NEW DESIGNS, indicate the number of weeks that your aver-
age new design retains its PARTICULAR VALUE for profitable production:

11. If there have occurred any recent cases in which DESIGNS controlled by you and deemed
worthy of protection have been COPIED by your competitors, give following details for
two representative cases.

Item

Case A

Case B

Nature of design (new pattern, color, etc.)

Steps taken to PROTECT design (patent, etc.)

Date new design INTRODUCED to trade

Date first copied or pirated

Number of competitors copying design

Type of concern which first copied (small, large, etc.)

Did you take any steps to prosecute copying firms?

INQUIRY II - DESIGN PATENTS

12. Approximately how many DESIGN PATENTS did your concern obtain in the following years?

(Write "0", if none) 1932 ; 1933 ; 1934 ; 1935 (to date) .

13. If you do not obtain DESIGN PATENTS for your new designs, what are the reasons?

(NOTE: REPLY TO QUESTIONS 14, 15, 16, and 17 ONLY IF YOU TAKE OUT DESIGN PATENTS)

14.

If you obtain DESIGN PATENTS, estimate the AVERAGE COST of patenting a design (pre-
liminary search, preparing application, attorney's fees, etc.) S

15. Are products of your concern which embody patented designs usually sold at HIGHER,
LOWER or the SAME price as SIMILAR products which are not patented?

16. Do you usually PRODUCE articles protected by a PATENT in LARGER VOLUME than non-patented v

articles?

17. Has delay in obtaining a patent ever facilitated copying of your designs and thus re-

sulted in damage to you? £] Yes; □ No. If yes, who was responsible for the delay?
(e.g. patent office, designer, attorney, etc.)

INQUIRY III - ATTITUDE TOWARD INCREASED DESIGN PROTECTION

18. A. Do you desire MORE EXTENSIVE NEW DESIGN PROTECTION than is at present available

through the patent laws? □ Yes ; Q No.
B. Explain briefly your reasons.

19. If you are in favor of more extensive design protection, what is the nature of the

PROTECTION desired?

9746

20. In your opinion what do the majority of the firms in this industry desire?

□ Increased design protection n No change in present laws

□ No design protection Q Other (specify)

21. What class of concerns in this industry desire MORE EXTENSIVE DESIGN PROTECTION than is
at present available? (Large, small, etc.)

214

INQUIRY IV - DESIGN PROTECTION PRIOR TO THE CODES

22. A. Has there ever been a privately operated system within your industry, such as a
registration bureau for giving further protection against copying of designs?
□ Yes ; Q No.

(NOTE: IF YES, ANSWER QUESTIONS 23, 24, 25, and 26)

B. Indicate years it operated

23. Did you participate in it? □ Yes ; □ No.

24. If so, what is your opinion as to the success of the system in controlling the "pirat-

ing" of designs?

25. A. Were you ever a party to a case, either as a copyist or controller of a COPIED DE-

SIGN, in which the rules of the system were VIOLATED? [] Yes ; □ No .

B. If yes, give result and details of case?

26. In your opinion what was the effect of the operation of this system with regard to your

business (i.e. prices, production, style, turnover, etc.)?

INQUIRY V - DESIGN PROTECTION UNDER THE CODE

27. Was a new design registration bureau established under the code? QJ Yes ; □ No .
If so, state approximate number of designs you registered under code.

28. Did you favor the DESIGN PIRACY PROVISION at the inception of the code? □ Yes; fj No.
Please state reasons.

29. Did you change your opinion as to the design piracy provision during the operation of

the code? Q Yes ; □ No . Please state reasons (indicating success of provision or
registration bureau).

30. Was the period for protection of designs:

□ satisfactory: □ too long; □ too short.

31. In your opinion what was the EFFECT of the design piracy code provision on your business

(i.e. prices, employment, production, style, turnover, etc.)

32. Did you continue to obtain PATENT PROTECTION during the code period? □ Yes ; □ No.

33. Indicate generally your ideas as to what extent registered designs were actually embodied

in articles for sale, or merely registered to keep others from using them.

34. What is your opinion concerning the effectiveness of the method set up by the code for
administering the design piracy provision and the impartiality of those who adminis-
tered the provision?

35. Were you ever a party to any cases in which there was an alleged violation of the design

piracy provision of the code? □ Yes ; Q No. If so explain identity of other party,
nature of case, and action taken by code authority or N.R.A.

36. Since the lapse of the N.R.A. Code of Fair Competition, has there been any attempt to

continue the operation of the design protection provision of the code for the industry?

37. Are the design patent laws the only means of protection now available? □ Yes; □ No.

(NOTE: ANY COMMENTS WHICH YOU DESIRE TO MAKE AS TO THE PROBLEMS INVOLVED IN DESIGN PIRACY
9746 # REGULATION OR PROTECTION WILL BE APPRECIATED) .

OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION
THE DIVISION OF REVIEW

THE WORK OF THE DIVISION OF REVIEW

Executive Order No. 7075, dated June 15, 1935, established the Division of Review of he
National Recovery Administration. The pertinent part of the Executive Order reads thus:

The Division of Review shall assemble, analyze, and report upon the statistical
information and records of experience of the operations of the various trades and
industries heretofore subject to codes of fair competition, shall study the ef-
fects of such codes upon trade, industrial and labor conditions in general, and
ot.ier related matters, sha'l make available for the protection and promotion of
the public interest an adequate review of the effects of the Administration of
Title I of the National Ino .strial Recovery Act, and ti j principles and policies
put into effect thereunder, and shall otherwise aid the °resident in carrying out
nis functions under the said Title.

The study sections set up in the Division of Review covered these areas: industry
studies, foreign trade studies, labor studies, trade practice studies, statistical studies,
legal studies, administration studies, miscellaneous studies, and the writing of code his-
tories. The materials which were produced by these secti.ns are indicated below.

Except for the Code Histories, all items mentioned below are scheduled to be in mimeo-
graphed form by April 1, 1936.

THE CODE HISTORIES

The Code Histories are documented accounts of the formation and administration of the
codes. They contain the definition of the industry and the principal products thereof: the
classes of members in the industry; the history of code formation including an account of the
sp ;ns ring organizations, the conferences, negotiations and hearings which were .ield, and
the activities in connection with obtaining approval of the code; the history of the ad-
ministration of the code, covering the organization and operation of the code authority,
the difficulties encountered in administration, the extent of compliance or non-compliance,
and the general success or lack of success of the code; and an analysis of the operation of
code provisions dealing with wages, hours, trade practices, and other provisions. These
and other matters are canvassed not only in terms of the materials to be found in the files,
but also in terms of the experiences of the deputies and others concerned with code formation
and administration.

The Code Histories, (including histories of certain NRA units or agencies) are not
mimeographed. They are to be turned over to the Department of Commerce in typewritten form.
All told, approximately eight hundred and fifty (830) histories will be completed. This
number includes all of the approved codes and seme of the unapproved codes. (In Work Mate-
rials No 18 . C onten ts of Code Histories, will be found the outline which governed the
preparation of Code Histories.)

(In the case of all approved codes and also in the case of some codes net carried to
final approval, there are in NRA files further materials on industries. Particularly worthy
of mention are the Volumes I, II and III which c nstitute the material officially submitted
to the President in support of the recommendation for approval of each code. These volumes
9675—1 .

- ii -

set forth the origination of the code, the sponsoring group, the evidence advanced to sup-
port the proposal, the report of the Division of Research and Planning on the industry, the
recommendations of the various Advisory Boards, certain types of official correspondence,
the transcript of the formal hearing, and other pertinent matter. There is also much offi-
cial information relating to amendments, interpretations, exemptions, and other rulings. The
materials mentioned in this paragraph were of course not a part of the work of the Division
of Review. )

TKE "ORK MATERIALS SERIES

In the work of the Division of Review a considerable numl er of studies and compilation j
of data (other than those notgd below in the Evidence Studies Series and the Statistical
Materials Series) have been made. These are listed below, grouped according to the char-
acter of the material. (In Work M aterials No 17, Tentative O utlin es and Summaries of
S tudi es in P rocess , these materials are fully described).

Indus try Studies

Automobile Industry, An Economic Survey of

Bituminous Coal Industry under Free Competition and Code Regulation, Economic Survey of

Construction Industry and NRA Construction Codes, the

Electrical Manufacturing Industry, The

Fertilizer Industry, The

Fishery Industry and the Fishery Codes

Fishermen and Fishing Craft, Earnings of

Foreign Trade under the National Industrial Recovery Act

Part A - Competitive Position of the United States in International Trade 1927-29 through
1934.

Part B - Section 3 (e) of NIRA and its administration.

Part C - Imports and Importing under NRA Codes.

Part D - Exports and Exporting under NRA Codes.
Forest Products Industries, Foreign Trade Study of the
Iron and Steel Industry, The
Knitting Industries, The
Leather and Shoe Industries, The

Lumber and Timber Products Industry, Economic Problems of the
Men's Clothing Industry, The
Millinery Industry, The
Motion Picture Industry, The

Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State,
1926 to 1934

National Income, A study of.
Paper Industry, The

Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans-
portation, January 1923, to date
Retail Trades Study, The
Rubber Industry Study, The
Statistical Background of NRA

Textile Industry in the United Kingdom, France, Germany, Italy, and Japan
Textile Yarns and Fabrics
Tobacco Industry, The
Wholesale Trades Study, The
9675.

Women's Apparel Industry, Some Aspects of the

Trade P ractic e Stu dies

Commodities, Information Concerning: A Study of NRA and Related Experiences in Control
Distribution, Manufacturers' Control of: A Study of Trade Practice Provisions in Selected

NRA Codes
Design Piracy: The Problem and Its Treatment Under NRA Codes
Electrical Mfg. Industry: Price Filing Study
Fertilizer Industry: Price Filing Study

Geographical Price Relations Under Codes of Fair Competition, Control of
Minimum Price Regulation Under Codes of Fair Competition
Multiple Basing Point System in the Lime Industry: Operation of the
Price Control in the Ccffee Industry
Price Filing Under NRA Codes

Production Control Under NRA Codes, Some Aspects of.
Resale Price Maintenance Legislation in the United States

Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry.
Trade Practice Rules of The Federal Trade Commission (1934-1936): A classification for

comparison with Trade Practice Provisions of NRA Codes.

Labor Studies

Employment, Payrolls, Hours, and Wa^es in 115 Selected Code Industries 1933-1935

Hours and Wages in American Industry

Labor Program Under the National Industrial Recovery Act, The

Part A. Introduction

Part B. Control of Hours and Reemployment

Part C Control of Wages

Part D. Control of Other Conditions of Employment

Part E. Section 7(a) of the Recovery Act
PRA Census of Employment, June, October, 1933
Puerto Rico Needlework, Homeworkers Survey

Administrativ e S tudie s

Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con-
ditional Orders of Approval

Administrative Interpretations of NRA Codes

Administrative Law and Procedure under the NIRA

Agreements Under Sections 4(a) and 7(b) of the NIRA

Approved Codes in Industry Groups, Classification of

Basic Code, the — (Administrative Order X-61)

Code Authorities and Their Part in the Administration of the NIRA
Part A. Introduction

Part B. Nature, Composition and Organization of Code Authorities
Part C. Activities of the Code Authorities

Part D. Code Authority Finances ,

Part C. Summary and Evaluation

9675.

- iv -

Code Compliance Activities of the NRA

Code Making Program of the NRA in the Territories, The

Code Provi ions and Related Subjects, Policy Statements Concerning

Content of NlRA Administrative Legislation

Part A. Executive and Administrative Orders

Part B. Labor Provisions in the Codes

Part C. Trade Practice Provisions in the Codes

Part D. Administrative Provisions in the Codes

Part E. Agreements under Sections 4(a) and 7(b)

Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of

Model Code and Model Provisions for Codes, Development of
National Recovery Administration, The: A Review and Evaluation of its Organization and

Activities
NRA Insignia

President's Reemployment Agreement, The

President's Reemployment Agreement, Substitutions in Connection with the
Prison Labor Problem under NRA and the Prison Compact, The
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades,

Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship :f NRA to Government Contracts and Contracts Involving the Use of Government

Funds
Relationship of NRA with other Federal Agencies
Relationship of NRA with States and Muncipalities
Sheltered Workshops Under NRA
Uncodified Industries: A Study of Factors Limiting the Code Making Program

Legal Studies

Anti-Trust Laws and Unfair Competiti n

Collective Bargaining Agreements, the Right of Individual Employees to Enforce Provisions of

ommerce Clause, Possible Federal Regulation of the Employe r-Emplo yee Relationship Under the

Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial
Regulatory Legislation

Enforcement, Extra-Judicial Methods of

Federal Regulation through the Joint Employment of the Power of Taxation aid the Spending
Power

Government Contract Provisions as a Means of Establishing Proper Econ mic Standards, Legal
Memorandum on Possibility of

Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com-
merce Clause, Cases on

Legislative Possibilities of the State Constitutions

Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula-
tion?

State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis

Tariff Pates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in

irade Practices and the Anti-Trust Laws

Treaty Making Power of the United States

War Power, Can it be Used as a Means of Federal Regulation of Child Labor?

9675.

- iy -

Code Compliance Activities of the NRA

Code Making Program of the NRA in the Territories, The

Code Provi ions and Related Subjects, Policy Statements Concerning

Content of N1RA Administrative Legislation

Part A. Executive and Administrative Orders

Part B. Labor Provisions in the Codes

Part C. Trade Practice Provisions in the Codes

Part D. Administrative Provisions in the Codes

Part E. Agreements under Sections 4(a) and 7(b)

Part F. A Type Case: The Cotton Textile Code
Labels Under NRA, A Study of

Mod-el Code and Model Provisions for Codes, Development of
National Recovery Administration, The: A Review and Evaluation of its Organization and

Activities
NRA Insignia

President's Reemployment Agreement, Tha

Multiple Code Coverage, Classifying Individual Members of Industries and Trades
Relationship .>f NRA to Government Contracts and Contracts Involving the Use of Government

Legal Studies

Anti-Trust Laws and Unfair Competiti n

Collective Bargaining Agreements, the Right of Individual Employees to Enforce Provisions of

ommerce Clause, Possible Federal Regulation of the Employe r-Emplo yee Relationship Under the

Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial
Regulatory Legislation

Enforcement, Extra-Judicial Methods of

Federal Regulation through the Joint Employment of the Power of Taxation and the Spending
Power

Government Contract Provisions as a Means of Establishing Proper Econ mic Standards, Legal
Memorandum on Possibility of

Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com-
merce Clause, Cases on

Legislative Possibilities of the State Constitutions

Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula-
tion?

State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis

Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in

irade Practices and the Anti-Trust Laws

Treaty Making Power of the United States

War Power, Can it be Used as a Means of Federal Regulation of Child Labor?

9675.

THE EV IDEN CE STUDIES SERIES

The Evidence Studies were originally undertaken to gat..er material for pending court
cases. After the Schechter decision the project was continued in order to assemble data for
use in connection with the studies of the Division of Review. The data are particularly
concerned with the nature, size and operations of the industry; and with the relation of the
industry to interstate commerce. The industries covered by the Evidence Studies account for
more than one-half of the total number of workers under codes. The list of these studies
follows:

Automobile Manufacturing Industry

Automotive Parts and Equipment Industry

Baking Industry

Boot and Shoe Manufacturing Industry

Bottled Soft Drink Industry

Builders' Supplies Industry

Canning Industry

Chemical Manufacturing Industry

Cigar Manufacturing Industry

Coat and Suit Industry

Construction Industry

Cotton Garment Industry

Dress Manufacturing Industry

Electrical Contracting Industry

Electrical Manufacturing Industry

Fabricated Metal Products Mfg. Industry and

Metal Finishing and Metal Coating Industry

Fishery Industry

Furniture Man lfacturing Industry

General Contractors Industry

Graphic Arts Industry

Gray Iron Foundry Industry

Hosiery Industry

Infant's and Children's Wear Industry

Iron and Steel Industry

Leather Industry

Lumber and Timber Products Industry
Mason Contractors Industry
Men's Clothing Industry
Motion Picture Industry
Motor Vehicle Retailing Trade
Needlework Industry of Puerto Rico
Painting and Paperhanging Industry
Photo Engraving Industry
Plumbing Contracting Industry
Retail Lumber Industry
Retail Trade Industry

Retail Tire and Battery Trade Industry
Rubber Manufacturing Industry
Rubber Tire Manufacturing Industry
Shipbuilding Industry
Silk Textile Industry
Structural Clay Products Industry
Throwing Industry
Trucking Industry
Waste Materials Industry
Wholesale and Retail Feud Industry
Waste Materials Industry
Wholesale and Retail Food Industry
Wholesale Fresh Fruit and Vegetable Indus-
try
Wool Textile Industry

THE STATISTICAL MATERIALS SERIES

This series is supplementary to the Evidence Studies Series. The reports include data
on establishments, firms, employment, payrolls, wages, hours, production capacities, ship-
_;onts, sales, consumption, stocks, prices, material costs, failures, exports and imports.
The./ also include notes on the principal qualifications that should be observed in using the
data, the technical methods employed, and the applicability of the material to the study of
the industries concerned. The following numbers appear in the series:
9675.

- VI

Asphalt Shingle and Roofing Industry

Business Furniture

Candy Manufacturing Industry

Carpet and Rug Industry

Cement Industry

Cleaning and Dyeing Trade

Coffee Industry

Copper and Brass Mill Products Industry

Cotton Textile Industry

Electrical Manufacturing Industry

9675.

Fertilizer Industry

Funeral Supply Industry

Glass Container Industry

Ice Manufacturing Industry

Knitted Outerwear Industry

Paint, Varnish, and Lacquer, Mfg. Industry

Plumbing Fixtures Industry

Rayon and Synthetic Yarn Producing Industry

Salt Producing Industry

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