S. Rept. 112-259 - 112th Congress (2011-2012)
December 20, 2012, As Reported by the Judiciary Committee

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Senate Report 112-259 - INNOVATIVE DESIGN PROTECTION ACT OF 2012




[Senate Report 112-259]
[From the U.S. Government Printing Office]


                                                      Calendar No. 573
112th Congress  }                                           }   Report
                                 SENATE
 2d Session     }                                          }   112-259

======================================================================

 
                INNOVATIVE DESIGN PROTECTION ACT OF 2012

                                _______
                                

               December 20, 2012.--Ordered to be printed

                                _______
                                

            Mr. Leahy, from the Committee on the Judiciary, 
                        submitted the following


                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 3523]


      [Including cost estimate of the Congressional Budget Office]


    The Committee on the Judiciary, to which was referred S. 
3523, a bill to amend title 17, United States Code, to extend 
protection to fashion design, and for other purposes, having 
considered the same, reports favorably thereon, without 
amendment, and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Background and Purpose of the Innovative Design Protection Act of 
     2012.............................................................1
 II. History of the Bill and Committee Consideration..................4
III. Section-by-Section Summary of the Bill...........................4
 IV. Congressional Budget Office Cost Estimate........................6
  V. Regulatory Impact Evaluation.....................................8
 VI. Conclusion.......................................................8
VII. Minority Views of Senators Coburn, Cornyn, Lee, and Sessions.....9
VIII.Changes to Existing Law Made by the Bill, as Reported...........12


 I. Background and Purpose of the Innovative Design Protection Act of 
                                  2012

    The United States fashion industry provides jobs for more 
than four million American workers and accounts for $350 
billion in annual retail sales. The industry is not only an 
engine for economic growth but one of the most important, 
common, and accessible sources for artistic expression in the 
nation. In terms of the protections available to designers, 
however, the United States remains at a disadvantage compared 
to the European Union, with which we compete to be the global 
center of the fashion industry. In Europe today, with thriving 
fashion capitals like Paris, London, and Milan, designers are 
afforded significant protection (ranging from three to twenty-
five years) for their creative endeavors.\1\
---------------------------------------------------------------------------
    \1\Prior to 1998, there were varying degrees of protection for 
design, including fashion design, in different European Union member 
countries. In 1998, the European Parliament and Council of Europe 
passed a directive to harmonize the design laws of the member states. 
Council Directive 98/71, 1998 O.J. (L 289) 28 (EC). Further 
codification was added by the European Council in 2002 with a 
regulation that explicitly set forth a two-tiered scheme of protection, 
providing a three-year term of protection to unregistered designs and 
up to twenty-five years of protection for registered designs. Council 
Regulation 6/2002, 2002 O.J. (L 3) 1 (EC).
---------------------------------------------------------------------------
    By contrast, fashion design in the United States, for the 
most part, has not enjoyed substantial intellectual property 
rights protection. Although the core economic strength of the 
U.S. fashion industry has shifted away from manufacturing and 
toward design over the course of half a century, the law has 
not kept up with the times by extending protection to 
inventive, groundbreaking fashion. The Innovative Design 
Protection Act (``the Act'') represents a well-balanced attempt 
to protect truly original and innovative fashion design without 
stifling creativity, spurring frivolous lawsuits, or hindering 
the industry's ability to do business. Drafted in consultation 
with the full range of interested parties, from designers to 
manufacturers to retailers, the Act will ensure that American 
fashion designers can receive a return on their investments and 
that the U.S. fashion industry can maintain its position as a 
global leader.
    The Act is narrowly tailored to afford the minimum 
intellectual property protections necessary to protect the 
innovative fashion designs that help drive the vibrancy of the 
fashion industry. It applies only to fashion designs that are 
unique and have never before been seen. The Act does not extend 
protection to components of designs--such as sleeves, 
shoulders, or pockets--but rather, only to the article as a 
whole. In addition, the myriad designs that are in the public 
domain (such as, for example, cargo shorts, denim jeans, and 
pencil skirts) would not be entitled to protection.
    The Act also has more safeguards against unnecessary 
litigation than other intellectual property laws. First, the 
Act requires that a plaintiff provide written notice to an 
alleged infringer. A lawsuit cannot be filed, and damages 
cannot accrue, until 21 days after such notice is provided and 
no cure has been achieved.\2\
---------------------------------------------------------------------------
    \2\It is the intention of the Act that an alleged infringer should 
not be able to claim that he has cured a violation merely by selling or 
transferring the items to another business entity.
---------------------------------------------------------------------------
    Second, the Act provides for a heightened pleading 
standard. A plaintiff must be able to state in his complaint 
that he has a protected design, that the defendant's design 
infringes, and that the design was available in a way such that 
one can infer that the defendant saw or had knowledge of the 
design. This last element specifically requires that ``the 
protected design or an image thereof was available in such 
location or locations, in such a manner, and for such duration 
that it can be reasonably inferred from the totality of the 
surrounding facts and circumstances that the defendant saw or 
otherwise had knowledge of the protected design.'' In other 
words, the particular facts of an individual pleading should 
give rise to the reasonable inference that the defendant knew 
of the design. For example, the plaintiff can offer facts that 
show consumers' knowledge of the first design and the latter 
design, the date of a public runway show, or the date that 
retail establishments first offered both designs. The pleading 
standard does not require the plaintiff to plead facts about 
the defendant's actions or to show the defendant's subjective 
knowledge, since the plaintiff could not be aware of such 
circumstances before discovery.\3\
---------------------------------------------------------------------------
    \3\This requirement, however, should not be interpreted to 
eliminate the independent creation defense (see infra).
---------------------------------------------------------------------------
    Third, there are severe penalties for misrepresentation by 
a plaintiff.
    Fourth, the term of protection is only three years, the 
shortest extant term of intellectual property protection.\4\
---------------------------------------------------------------------------
    \4\In Europe, by contrast, designs can be afforded up to twenty-
five years of protection. See Council Directive, supra note 1, art. 10.
---------------------------------------------------------------------------
    Fifth, an infringing design must be ``substantially 
identical'' to the protected design, in other words, a copy 
that is ``so similar in appearance as to be likely to be 
mistaken for the protected design, and contains only those 
differences in construction or design which are merely 
trivial.'' Such trivial differences are intended to include, 
for example, a small difference in design that is the result of 
a cheaper manufacturing process, such as the substitution of 
less expensive materials or processes--or literally cutting 
corners to reduce the amount of fabric or trim. As in other 
tests for similarity under the Copyright Act, the question 
whether an allegedly infringing copy is substantially identical 
to a protected original is determined by reference to the 
ordinary observer and does not require reference to time-
consuming and costly consumer surveys or other methods used to 
establish likelihood of confusion in trademark.
    Under the Act, there is no liability for consumers who 
purchase an infringing design, or for home sewers who design 
and make items for personal use. As defenses, a defendant may 
argue that his design is an independent creation, or that the 
protected design is not, in fact, new, but is, instead, part of 
the existing public domain of fashion designs.
    The bill also clarifies the standards for showing that a 
second or third-party actor committed an act of infringement. 
Chapter 13 currently protects sellers and distributors by 
providing a higher threshold for these actors to be found 
liable for infringement. The bill states explicitly that 
secondary and tertiary actors, such as retailers and importers, 
should benefit from the heightened standards set forth in 
Section 1309. The Act thus limits liability for secondary and 
tertiary actors to those who collude with infringers or those 
who decline to reveal the source of their merchandise and 
subsequently order or reorder the infringing article.
    Finally, the Act makes clear that merely providing Internet 
sales facilities is not an act of infringement.
    The Innovative Design Protection Act has the support of the 
Council of Fashion Designers of America, a trade association 
consisting of creative designers, and the American Apparel & 
Footwear Association, the largest U.S. fashion industry trade 
association.

          II. History of the Bill and Committee Consideration


                      A. INTRODUCTION OF THE BILL

    Senator Schumer introduced the Innovative Design Protection 
Act of 2012 on September 10, 2012. Senators Blumenthal, Boxer, 
Cardin, Gillibrand, Graham, Hatch, Kohl, Snowe, and Whitehouse 
were original cosponsors. On September 19, 2012, Senator 
Klobuchar was added as cosponsor.
    The legislation derives from the Design Piracy Prohibition 
Act of 2007, S. 1957, which Senator Schumer introduced on 
August 2, 2007. That legislation was substantially revised 
after consultation with industry representatives, and 
reintroduced on August 5, 2010, as the Innovative Design 
Protection and Piracy Prevention Act, S. 3728. The Judiciary 
Committee favorably reported that bill on December 6, 2010. 
Further constructive compromise changes were made before the 
legislation was introduced this Congress as S. 3523.

                       B. COMMITTEE CONSIDERATION

    The bill was placed on the Judiciary Committee's agenda on 
September 10, 2012.
    The Committee considered the legislation on September 24, 
2012. Senator Lee offered an amendment, joined by Senator 
Cornyn and Senator Coburn, that would award reasonable 
attorneys' fees to the prevailing party. The amendment was 
rejected by a voice vote.
    The Committee then voted to report the Innovative Design 
Protection Act of 2012, S. 3523, without amendment, favorably 
to the Senate by voice vote. Senators Kyl, Cornyn, Lee and 
Coburn were recorded as voting against the bill.

              III. Section-by-Section Summary of the Bill


Section 1--Short title

    This section provides that the legislation may be cited as 
the ``Innovative Design Protection Act of 2012.''

Section 2--Amendments to Title 17, United States Code

    Subsection (a): This subsection extends the protection of, 
and adds the necessary definitions to, the ``definition'' 
paragraph of 17 U.S.C. 1301 in order to protect unique fashion 
designs. The terms defined are ``fashion design,'' ``apparel,'' 
and, in the case of a fashion design, ``substantially 
identical.''
    ``Substantially identical'' means only those designs that 
could be mistaken for the protected original, with ``only those 
differences in construction or design which are merely 
trivial.'' The term ``substantially identical'' is intended to 
create a heightened standard for infringement of protected 
fashion designs as compared with the ``substantially similar'' 
standard used in copyright law. It is not, however, to be 
confused with the term ``substantially identical'' as used 
elsewhere in intellectual property law. For fashion designs, 
substantial identicality shall be determined by the trier of 
fact viewing the protected design and the copy sequentially and 
from the perspective of an ordinary observer. An allegedly 
infringing article shall be determined to have been copied from 
a protected design if the differences between the protected 
design and the copy are merely trivial in the eye of the 
ordinary observer viewing the protected design and the copy 
sequentially.
    A ``fashion design'' under this Act is limited to the 
``appearance as a whole'' of an article of apparel; a single 
element--for example, a sleeve--is not entitled to protection. 
Furthermore, a design that garners the protection of this Act 
must include design elements, including both original designs 
and non-original elements with original placement, that are 
``the result of a designer's own creative endeavor'' and 
``provide a unique, distinguishable, non-trivial and non-
utilitarian variation over prior designs for similar types of 
articles.''
    ``Non-trivial'' means the same thing for the purposes of 
determining whether a design is protected, and whether a 
defendant's design is substantially identical to the protected 
design.
    Subsection (b): This subsection defines designs that are 
not subject to protection. This section accepts the definition 
of designs that are not subject to protection under existing 
law, and in the case of fashion design, adds an exception for 
designs that are embodied in a useful article that was made 
public by the designer before the date of enactment, or more 
than three years before the date upon which the protection of 
the design is asserted. (This comports with the Act's limiting 
protection to a period of three years.)
    Subsection (c): Subsection (c) addresses revisions, 
adaptations, and rearrangements that are specific to a fashion 
design. The Act would limit design protection by providing that 
the presence or absence of a particular color, or of a picture 
or graphic that is imprinted on fabric, is not part of 
considering whether a fashion design gets protection, or 
whether infringement has occurred. For example, the switching 
of colors or prints on a design would not be enough of a 
difference to entitle the revised design to protection, nor 
would it subject the revised design to liability for infringing 
the original, unswitched design.
    Subsection (d): This subsection sets forth the term of 
protection for fashion designs. While designs of vessels and 
hulls receive 10 years of protection under current law, fashion 
designs receive three years of protection.
    Subsection (e): Under this subsection, the owner of a 
design would be required to provide an alleged infringer with a 
detailed written notice of his or her belief that a protected 
design has been infringed. The owner would not be able to file 
suit until 21 days after the date on which written notice was 
provided to the alleged infringer. In addition, this subsection 
provides that an award under this Act would only be available 
for damages and profits that accrue after the filing date of 
the action for infringement.
    Subsection (f): Subsection (f) clarifies the standards for 
showing that a second- or third-party actor committed an act of 
infringement. Section 1309 currently provides for a heightened 
threshold of liability for sellers and distributors; subsection 
(f) explicitly extends this standard to importers as well, and 
clarifies that retailers are covered by this section. This will 
ensure that the same standard of liability applies to all 
secondary and tertiary actors, rather than, under current law, 
potentially putting importers in the same ``bucket'' as 
manufacturing infringers. This section would also include 
``offering for sale'' as an act that cannot constitute 
infringement without knowledge. (Under existing law, making, 
importing, selling, or distributing cannot constitute 
infringement without knowledge.) ``Knowledge,'' under this 
section, would be modified by the language, ``either actual or 
reasonably inferred from the totality of the circumstances.''
    In addition, this subsection would make clear that it is 
not an act of infringement to provide a telecommunications 
service, or to transmit or store a communication (or handle a 
communication in a way that does not modify it).
    This subsection also defines an ``infringing article'' with 
respect to fashion designs. While an infringing article for 
vessel hull designs, under current law, requires that an 
infringing article be ``substantially similar'' to the 
original, a fashion design is only an infringing article if it 
is ``substantially identical'' to the original design with 
regard to appearance and elements, or is not the result of 
independent creation.
    This subsection also creates a ``home sewing exception'' 
that allows protected designs to be copied for personal use.
    Subsection (g): This subsection would amend 17 U.S.C. 
1310(a) to exempt fashion designs from the registration process 
requirement.
    Subsection (h): This subsection creates a heightened 
pleading standard for fashion designs. A claimant must plead 
with particularity facts that establish that the design is a 
fashion design within the meaning of the Act; that the design 
of the defendant infringes upon the protected design; and that 
the protected design or an image of it was available in a way 
that would make it reasonably inferable that the defendant had 
seen or known of the protected design.
    Subsection (i): Subsection (i) would increase the penalties 
for making false representations in order to obtain recovery 
for a claim of infringement under Chapter 13, from a $500 
minimum to a $5,000 minimum, and from a $1,000 maximum to a 
$10,000 maximum.
    Subsection (j): This subsection would exempt fashion design 
from Treasury and Postal Service importation regulations.
    Subsection (k): This subsection would clarify that certain 
intellectual property protections already available for limited 
aspects of fashion designs, such as copyright protection for 
original fabric prints or trademark protection, would still 
exist and would be unaffected by this legislation.

Section 3--Effective date

    This section establishes the effective date of the Act as 
the date of enactment.

             IV. Congressional Budget Office Cost Estimate

    The Committee sets forth, with respect to the bill, S. 
3523, the following estimate and comparison prepared by the 
Director of the Congressional Budget Office under section 402 
of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 5, 2012.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3523, the Innovative 
Design Protection Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 3523--Innovative Design Protection Act of 2012

    CBO estimates that implementing S. 3523 would have no 
significant cost to the federal government. Enacting the bill 
would not affect direct spending but could affect revenues; 
therefore, pay-as-you-go procedures apply. However, CBO 
estimates that any effects would be insignificant for each 
year.
    S. 3523 would provide protection similar to a copyright, 
lasting for three years, for original fashion designs. Those 
protections would allow the owner of a protected design to make 
(or import) and sell any useful article embodying the design. 
The bill would require the owner to provide written notice to a 
person thought to be violating those protections and to wait 21 
days after providing such notice before instituting an action 
for infringement. S. 3523 also would increase the amount of 
penalties that could be levied for falsely representing 
information when registering a design or obtaining recovery on 
a claim of infringement.
    Based on information from the Library of Congress, CBO does 
not expect that implementing S. 3523 would significantly change 
the workload or expenditures of the Copyright Office because 
the bill does not require fashion designs to be registered in 
order for the protections to take effect. Because S. 3523 would 
raise the amount of penalties that could be collected for 
making false representations in certain instances, the federal 
government might collect additional civil fines if the bill is 
enacted. Such fines are recorded as revenues; CBO expects that 
any additional collections would not be significant because of 
the relatively small number of cases likely to be affected.
    S. 3523 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    S. 3523 would impose a private-sector mandate as defined in 
UMRA. By providing protection for original fashion designs, the 
bill would prohibit any person from manufacturing, selling, or 
distributing an article of apparel that copies a protected 
fashion design. To use a protected fashion design, a person 
must obtain the consent of the owner of the protected design. 
The cost of complying with the mandate would be the cost of 
obtaining consent or the cost of changing designs and any 
revenue forgone from removing designs from the market. The cost 
of the mandate is uncertain, however, because it would depend 
in part on future court actions. Therefore, CBO cannot 
determine whether the aggregate cost of the mandate would 
exceed the annual threshold for private-sector mandates ($146 
million in 2012, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Paige Piper/Bach (for the private-
sector impact). The estimate was approved by Theresa Gullo, 
Deputy Assistant Director for Budget Analysis.

                    V. Regulatory Impact Evaluation

    In compliance with rule XXVI of the Standing Rules of the 
Senate, the Committee finds that no significant regulatory 
impact will result from the enactment of S. 3523.

                             VI. Conclusion

    The Innovative Design Protection Act, S. 3523, addresses 
the lack of protection in intellectual property laws for truly 
innovative and unique fashion designs. Granting innovative 
American fashion designers some of the same intellectual 
property protections recognized in other countries so that 
their businesses can continue to grow and thrive, the Act 
creates a limited, three-year protection for certain fashion 
designs and provides a legal remedy for the owners of these 
protected articles when they are copied.


                          VII. Minority Views

                              ----------                              


     MINORITY VIEWS FROM SENATORS COBURN, CORNYN, LEE, AND SESSIONS

    We write to explain our opposition to S. 3523, the 
Innovative Design Protection Act of 2012 (the ``Act''), and our 
support for an amendment that would provide for the award of 
reasonable attorneys' fees to the prevailing party in a lawsuit 
under the Act.
    The United States fashion industry is an important engine 
for economic growth, contributing billions of dollars to our 
economy each year. It is also an important means for artistic 
expression. American designers are among the most creative in 
the world, and their designs have long formed the basis of many 
of the world's fashion trends.
    The fashion industry is financially successful and, for 
more than half a century, has experienced consistent and 
continuous growth.\1\ Robust competition within the industry 
has led to innovation and consumer choice. The fashion industry 
is thus a model for how a free market benefits everyone: 
artists, designers, manufacturers, laborers and consumers.
---------------------------------------------------------------------------
    \1\See Innovative Design Protection and Piracy Prevention Act: 
Hearing Before the Subcomm. on Intellectual Property, Competition and 
the Internet of the H. Committee on the Judiciary, 112th Cong. 74-76, 
75 (2011) (testimony of Christopher Sprigman, Professor of Law, 
University of Virginia School of Law).
---------------------------------------------------------------------------
    The Constitution authorizes Congress ``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.'' By creating limited 
monopolies in the form of copyright and patent protection, 
Congress on many occasions has exercised that authority to 
encourage innovation.
    This Act seeks to extend copyright protection to fashion 
design for the first time in our nation's history. It addresses 
concerns expressed by incumbent designers that their original 
designs are copied and sold by competitors to the detriment of 
those incumbents.
    We understand that concern and the negative impact that 
copying can have on certain fashion designers. But any time the 
federal government enacts legislation, we must proceed 
cautiously. We have learned from experience that legislation 
has many consequences, some of which can be unintended, 
unforeseen, and negative. That same experience reveals a 
legislative propensity towards expanding rights once created. 
By contrast, Congress has been much less successful paring down 
statutory rights, even where evidence demonstrates that such 
rights have become overly-broad. Accordingly, before creating a 
new monopoly right, as this Act would, we must be certain that 
it addresses systematic and permanent threats to industry and 
consumers, and that the statutory remedy is narrowly tailored 
so as to apply only to conduct that is harmful.
    We have three reasons to be especially cautious here. 
First, we must take special care not to upset a well-
functioning market. This is particularly true where, as is the 
case with the fashion market, the market is characterized by 
innovation and low barriers to entry. Statutory monopolies by 
their nature increase prices for consumers. Any benefit inuring 
to incumbent designers as a result of the Act would be offset 
by these increased costs, which could be borne by middle-income 
consumers.
    Second, while copying within the fashion industry no doubt 
presents a threat to certain designers, some scholars have 
suggested that it is also a significant driver of 
innovation.\2\ Copying may generate rapid demand for new 
designs as older, copied designs lose some of their appeal. 
This issue is the subject of lively debate. But absent a 
stronger showing that a practice is systematic and harmful to 
the market as a whole, the threat of encroachment on liberty 
represented by any congressional enactment tips the balance 
against government intervention in the private market.
---------------------------------------------------------------------------
    \2\See id.
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    Third, we remain concerned about the effect of creating a 
new private right of action. Litigation is an essential 
enforcement mechanism for many rights, but it also creates 
inefficiencies and costs for innocent parties as well as the 
guilty. The Act would force non-incumbent fashion designers--
many of whom are small businesses with limited litigation 
budgets--to internalize substantial liability risks. It would 
also potentially chill innovation and raise prices for 
consumers.
    Since our Committee considered the 2010 version of the Act, 
the Act's sponsors have made several changes intended to 
prevent frivolous litigation. The Act now requires that a 
design owner provide notice of infringement, that a design 
owner provide an alleged infringer a 21-day period to cure any 
violation, and that a plaintiff plead a case of alleged 
infringement with particularity.
    We commend these efforts, but we feel that they do not go 
far enough. Under the Act, large incumbent designers and their 
legal teams would have an understandable incentive to seek to 
expand the boundaries of the law through litigation. These 
efforts, coupled with potentially uneven judicial application, 
are another consequence of the law we must consider. Our staffs 
have spoken with many businesses that may be affected 
negatively by the proposed new right to sue. They remain 
concerned about the continued potential for frivolous 
litigation.
    To mitigate these concerns, we support an amendment that 
Senators Cornyn, Lee, and Coburn introduced during our 
Committee's consideration of the Act. The amendment would 
establish a so-called ``loser pays'' system, pursuant to which 
the court would award reasonable attorneys' fees to the 
prevailing party in a lawsuit under the Act. Such a rule would 
reward good claims and discourage bad ones. It would reduce the 
ability of litigious parties to bring weak cases solely to 
threaten their opponents economically. It would shift the costs 
of over-pleading, lengthy litigation, excessive discovery, and 
unnecessary motion practice, to plaintiffs who would seek to 
use the legal system to bully competitors.
    We believe this amendment provides the fairest and most 
effective means to deter unnecessary and frivolous litigation, 
and thus mitigates the threat a new copyright and right to sue 
would pose to a competitive industry. By reducing liability 
risk, the amendment would secure greater freedom for fashion 
designers and help preserve an industry in which consumers have 
broad access to fashion designs.
                                   Tom Coburn.
                                   John Cornyn.
                                   Mike Lee.
                                   Jeff Sessions.


      VIII. Changes to Existing Law Made by the Bill, as Reported


    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 3523, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                           UNITED STATES CODE

TITLE 17. COPYRIGHTS

           *       *       *       *       *       *       *


CHAPTER 13--PROTECTION OF ORIGINAL DESIGNS

           *       *       *       *       *       *       *



Sec. 1301. Designs Protected

           *       *       *       *       *       *       *


    (a) Designs Protected.--
          (1) In general.--The designer or other owner of an 
        original design of a useful article which makes the 
        article attractive or distinctive in appearance to the 
        purchasing or using public may secure the protection 
        provided by this chapter upon complying with and 
        subject to this chapter.
          (2) Vessel features.--The design of a vessel hull, 
        deck, or combination of a hull and deck, including a 
        plug or mold, is subject to protection under this 
        chapter, notwithstanding section 1302(4).
          (3) Exceptions.--Department of Defense rights in a 
        registered design under this chapter, including the 
        right to build to such registered design, shall be 
        determined solely by operation of section 2320 of title 
        10 or by the instrument under which the design was 
        developed for the United States Government.
          (4) Fashion design.--A fashion design is subject to 
        protection under this chapter. 
    (b) Definitions.--For the purpose of this chapter, the 
following terms have the following meanings:
          (1) A design is ``original'' if it is the result of 
        the designer's creative endeavor that provides a 
        distinguishable variation over prior work pertaining to 
        similar articles which is more than merely trivial and 
        has not been copied from another source.
          (2) A ``useful article'' is a vessel hull or deck, 
        including a plug or mold, or an article of apparel, 
        which in normal use has an intrinsic utilitarian 
        function that is not merely to portray the appearance 
        of the article or to convey information. An article 
        which normally is part of a useful article shall be 
        deemed to be a useful article.
          (3) A ``vessel'' is a craft--
                  (A) that is designed and capable of 
                independently steering a course on or through 
                water through its own means of propulsion; and
                  (B) that is designed and capable of carrying 
                and transporting one or more passengers.
          (4) A ``hull'' is the exterior frame or body of a 
        vessel, exclusive of the deck, superstructure, masts, 
        sails, yards, rigging, hardware, fixtures, and other 
        attachments.
          (5) A ``plug'' means a device or model used to make a 
        mold for the purpose of exact duplication, regardless 
        of whether the device or model has an intrinsic 
        utilitarian function that is not only to portray the 
        appearance of the product or to convey information.
          (6) A ``mold'' means a matrix or form in which a 
        substance for material is used, regardless of whether 
        the matrix or form has an intrinsic utilitarian 
        function that is not only to portray the appearance of 
        the product or to convey information.
          (7) A ``deck'' is the horizontal surface of a vessel 
        that covers the hull, including exterior cabin and 
        cockpit surfaces, and exclusive of masts, sails, yards, 
        rigging, hardware, fixtures, and other attachments.
          (8) A ``fashion design''--
                  (A) is the appearance as a whole of an 
                article of apparel, including its 
                ornamentation; and
                  (B) includes original elements of the article 
                of apparel or the original arrangement or 
                placement of original or non-original as 
                incorporated in the overall appearance of the 
                article of apparel that--
                          (i) are the result of a designer's 
                        own creative endeavor; and
                          (ii) provide a unique, 
                        distinguishable, non-trivial and non-
                        utilitarian variation over prior 
                        designs for similar types of articles.
          (9) The term ``design'' includes fashion design, 
        except to extent expressly limited to the design of a 
        vessel.
          (10) The term ``apparel'' means--
                  (A) an article of men's, women's, or 
                children's clothing, including undergarments, 
                outerwear, gloves, footwear, and headgear;
                  (B) handbags, purses, wallets, tote bags, and 
                belts; and
                  (C) eyeglass frames.
          (11) In the case of a fashion design, the term 
        ``substantially identical'' means an article of apparel 
        which is so similar in appearance as to be likely to be 
        mistaken for the protected design, and contains only 
        those differences in construction or design which are 
        merely trivial.
    (c) Rule of Construction.--In the case of a fashion design 
under this chapter, those differences or variations which are 
considered non-trivial for the purposes of establishing that a 
design is subject to protection under subsection (b)(8) shall 
be considered non-trivial for the purposes of establishing that 
a defendant's design is not substantially identical under 
subsection (b)(11) and section 1309(e).

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Sec. 1302(5). Designs not subject to protection

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          [(5)] (5)(A) in the case of a design of a vessel 
        hull, embodied in a useful article that was made public 
        by the designer or owner in the United States or a 
        foreign country more than 2 years before the date of 
        the application for registration under this chapter.
          (B) in the case of a fashion design, embodied in a 
        useful article that was made public by the designer or 
        owner in the United States or a foreign country before 
        the date of enactment of this chapter or more than 3 
        years before the date upon which protection of the 
        design is asserted under this chapter.

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Sec. 1303. Revisions, adaptations, and rearrangements

           *       *       *       *       *       *       *


    Protection for a design under this chapter shall be 
available notwithstanding the employment in the design of 
subject matter excluded from protection under section 1302 if 
the design is a substantial revision, adaptation, or 
rearrangement of such subject matter. Such protection shall be 
independent of any subsisting protection in subject matter 
employed in the design, and shall not be construed as securing 
any right to subject matter excluded from protection under this 
chapter or as extending any subsisting protection under this 
chapter. The presence or absence of a particular color or 
colors or of a pictorial or graphic work imprinted on fabric 
shall not be considered in determining the protection of a 
fashion design under section 1301 or 1302 or in determining 
infringement under section 1309.

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Sec. 1305(a). Term of protection

           *       *       *       *       *       *       *


    [(a) In General.--Subject to subsection (b), the protection 
provided under this chapter for a design shall continue for a 
term of 10 years beginning on the date of the commencement of 
protection under section 1304.]
    (a) In General.--Subject to subsection (b), the protection 
provided under this chapter--
          (1) for a design of a vessel hull, shall continue for 
        a term of 10 years beginning on the date of the 
        commencement of protection under section 1304;
          (2) for a fashion design, shall continue for a term 3 
        years beginning on the date of the commencement of 
        protection under section 1304.

           *       *       *       *       *       *       *


Sec. 1306(d). Design notice

           *       *       *       *       *       *       *


    (d) Fashion Design.--
          (1) In general.--In the case of a fashion design, the 
        owner of the design shall provide written notice of the 
        design protection to any person the design owner has 
        reason to believe has violated or will violate this 
        chapter.
          (2) Contents.--The written notice required under 
        paragraph (1) shall contain, at a minimum--
                  (A) the date on which protection for the 
                design commenced;
                  (B) a description of the protected design 
                which specifies how the protected design falls 
                within the meaning of section 1301(b)(8);
                  (C) a description of the allegedly infringing 
                design which specifies how the allegedly 
                infringing design infringed upon the protected 
                design as described under section 1309(e); and
                  (D) the date on which the protected design or 
                an image thereof was available such that it 
                could be reasonably inferred from the totality 
                of the surrounding facts and circumstances that 
                the owner of the allegedly infringing design 
                saw or otherwise had knowledge of the protected 
                design.
          (3) Commencement of action.--An action for 
        infringement of a fashion design under this chapter 
        shall not commence until the date that is 21 days after 
        the date on which written notice required under this 
        subsection was provided to the defendant.
          (4) Limitation on damages.--A person alleged to be 
        undertaking action leading to infringement under this 
        chapter shall be held liable only for damages and 
        profits accrued after the date on which the action for 
        infringement is commenced against such person under 
        paragraph (3).

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Sec. 1309. Design notice

           *       *       *       *       *       *       *


    (a) Acts of Infringement.--Except as provided in subsection 
(b), it shall be infringement of the exclusive rights in a 
design protected under this chapter for any person, without the 
consent of the owner of the design, within the United States 
and during the term of such protection, to--
          (1) make, have made, or import, for sale or for use 
        in trade, any infringing article as defined in 
        subsection (e); or
          (2) sell or distribute for sale or for use in trade 
        any such infringing article.
    (b) Acts of Sellers, Importers, and Distributors.--A 
retailer, seller, importer or distributor of an infringing 
article who did not make [or import] the article shall be 
deemed to have infringed on a design protected under this 
chapter only if that person--
          (1) induced or acted in collusion with a manufacturer 
        to make[, or an importer to import] such article, 
        except that merely purchasing or giving an order to 
        purchase such article in the ordinary course of 
        business shall not of itself constitute such inducement 
        or collusion; or
          (2) refused or failed, upon the request of the owner 
        of the design, to make a prompt and full disclosure of 
        that person's source of such article, and that person 
        orders or reorders such article after receiving notice 
        by registered or certified mail of the protection 
        subsisting in the design.
    (c) Acts Without Knowledge.--It shall not be infringement 
under this section to make, have made, import, sell, offer for 
sale or distribute, any article embodying a design which was 
created without knowledge either actual or reasonably inferred 
from the totality of the circumstances that a design was 
protected under this chapter and was copied from such protected 
design.
    (d) Acts in Ordinary Course of Business.--A person who 
incorporates into that person's product of manufacture an 
infringing article acquired from others in the ordinary course 
of business, or who, without knowledge of the protected design 
embodied in an infringing article, makes or processes the 
infringing article for the account of another person in the 
ordinary course of business, shall not be deemed to have 
infringed the rights in that design under this chapter except 
under a condition contained in paragraph (1) or (2) of 
subsection (b). Accepting an order or reorder from the source 
of the infringing article shall be deemed ordering or 
reordering within the meaning of subsection (b)(2).
    (e) Acts of Third Parties.--Acts that do not constitute 
acts of infringement under subsections (a) or (b) do not 
otherwise constitute acts of infringement under this chapter. 
It shall be infringement under this section to be engaged in
          (1) the provision of a telecommunications service, or 
        of an Internet access service or Internet information 
        location tool (as those terms are defined in section 
        231 the Communications Act of 1934 (47 U.S.C. 231)); or
          (2) the transmission, storage, retrieval, hosting, 
        formatting, or translation (or any combination thereof) 
        of a communication, without selection or alteration of 
        the content of the communication, except that deletion 
        of a particular communication or material made by 
        another person in a manner consistent with section 
        230(c) of the Communications Act of 1934 (47 U.S.C. 
        230(c)).
    [(e) Infringing Article Defined.--As used in this section, 
an ``infringing article'' is any article the design of which 
has been copied from a design protected under this chapter, 
without the consent of the owner of the protected design. An 
infringing article is not an illustration or picture of a 
protected design in an advertisement, book, periodical, 
newspaper, photograph, broadcast, motion picture, or similar 
medium. A design shall not be deemed to have been copied from a 
protected design if it is original and not substantially 
similar in appearance to a protected design.]
    (f) Infringing Article Defined.--
          (1) In general.--As used in this section, an 
        'infringing article' is any article the design of which 
        has been copied from a design protected under this 
        chapter, or from an image thereof, without the consent 
        of the owner of the protected design. An infringing 
        article is not an illustration or picture of a 
        protected design in an advertisement, book, periodical, 
        newspaper, photograph, broadcast, motion, picture, or 
        similar medium.
          (2) Vessel hull design.--In the case of a design of a 
        vessel hull, a design shall not be deemed to have been 
        copied from a protected design if it is original and 
        not substantially similar in appearance to a protected 
        design.
          (3) Fashion design.--In the case of a fashion design, 
        a design shall not be deemed to have been copied from a 
        protected design if that design--
                  (A) is not substantially identical in overall 
                visual appearance to and as to the original 
                elements of a protected design; or
                  (B) is the result of independent creation.
    ([f]g) Establishing Originality.--The party to any action 
or proceeding under this chapter who alleges rights under this 
chapter in a design shall have the burden of establishing the 
design's originality whenever the opposing party introduces an 
earlier work which is identical to such design, or so similar 
as to make prima facie showing that such design was copied from 
such work.
    ([g]h) Reproduction for Teaching or Analysis.--It is not an 
infringement of the exclusive rights of a design owner for a 
person to reproduce the design in a useful article or in any 
other form solely for the purpose of teaching, analyzing, or 
evaluating the appearance, concepts, or techniques embodied in 
the design, or the function of the useful article embodying the 
design.
    (i) Home Sewing Exception.--
          (1) In general.--It is not an infringement of the 
        exclusive rights of a design owner for a person to 
        produce a single copy of a protected design for 
        personal use or for the use of an immediate family 
        member, if that copy is not offered for sale or use in 
        trade during the period of construction.
          (2) Rule of construction.--Nothing in this subsection 
        shall be construed to permit the publication or 
        distribution of instructions or patterns for the 
        copying of a protected design.

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Sec. 1310(a). Application for registration

           *       *       *       *       *       *       *


    (a) Time Limit for Application for Registration.--
[Protection under this chapter] In the case of a design of a 
vessel hull, protection under this chapter shall be lost if 
application for registration of the design is not made within 2 
years after the date on which the design is first made public. 
Registration shall not apply to fashion design.

           *       *       *       *       *       *       *


1321. Remedy for infringement

           *       *       *       *       *       *       *


    [(a) In General.--The owner of a design is entitled, after 
issuance of a certificate of registration of the design under 
this chapter, to institute an action for any infringement of 
the design.]
    (a) In General.--
          (1) Vessel hull.--In the case of a vessel hull, the 
        owner of a design is entitled, after issuance of a 
        certificate of registration of the design under this 
        chapter, to institute an action for any infringement of 
        the design.
          (2) Fashion design.--In the case of a fashion design, 
        the owner of a design is entitled to institute an 
        action for any infringement of the design after--
                  (A) the design is made public under the terms 
                of section 1310(b) of this chapter; and
                  (B) the 21-day period described in section 
                1306(d).
    (b) Review of Refusal To Register.--
          (1) Subject to paragraph (2), the owner of a design 
        may seek judicial review of a final refusal of the 
        Administrator to register the design under this chapter 
        by bringing a civil action, and may in the same action, 
        if the court adjudges the design subject to protection 
        under this chapter, enforce the rights in that design 
        under this chapter.
          (2) The owner of a design may seek judicial review 
        under this section if--
                  (A) the owner has previously duly filed and 
                prosecuted to final refusal an application in 
                proper form for registration of the design;
                  (B) the owner causes a copy of the complaint 
                in the action to be delivered to the 
                Administrator within 10 days after the 
                commencement of the action; and
                  (C) the defendant has committed acts in 
                respect to the design which would constitute 
                infringement with respect to a design protected 
                under this chapter.
    (c) Administrator as Party to Action.--The Administrator 
may, at the Administrator's option, become a party to the 
action with respect to the issue of registrability of the 
design claim by entering an appearance within 60 days after 
being served with the complaint, but the failure of the 
Administrator to become a party shall not deprive the court of 
jurisdiction to determine that issue.
    (d) Use of Arbitration To Resolve Dispute.--The parties to 
an infringement dispute under this chapter within such time as 
may be specified by the Administrator by regulation, may 
determine the dispute, or any aspect of the dispute, by 
arbitration. Arbitration shall be governed by title 9. The 
parties shall give notice of any arbitration award to the 
Administrator, and such award shall, as between the parties to 
the arbitration, be dispositive of the issues to which it 
relates. The arbitration award shall be unenforceable until 
such notice is given. Nothing in this subsection shall preclude 
the Administrator from determining whether a design is subject 
to registration in a cancellation proceeding under section 
1313(c).
    (e) Pleading Requirement for Fashion Designs.--
          (1) In general.--In the case of a fashion design, a 
        claimant in an action for infringement shall plead with 
        particularity facts establishing that--
                  (A) the design of the claimant is a fashion 
                design within the meaning of section 9 
                1301(b)(8) of this title and thus entitled to 
                protection under this chapter;
                  (B) the design of the defendant infringes 
                upon the protected design as described under 
                section 1309(e); and
                  (C) the protected design or an image thereof 
                was available in such location or locations, in 
                such a manner, and for such duration that it 
                can be reasonably inferred from the totality of 
                the surrounding facts and circumstances that 
                the defendant saw or otherwise had knowledge of 
                the protected design.
          (2) Considerations.--In considering whether a claim 
        for infringement has been adequately pleaded, the court 
        shall consider the totality of the circumstances.

           *       *       *       *       *       *       *


Sec. 1327. Penalty for false representation

           *       *       *       *       *       *       *


    Whoever knowingly makes a false representation materially 
affecting the rights obtainable under this chapter for the 
purpose of obtaining registration of a design or for purposes 
of obtaining recovery based on a claim of infringement under 
this chapter shall pay a penalty of not less than [$500] $5,000 
and not more than [$1,000] $10,000, and any rights or 
privileges that individual may have in the design under this 
chapter shall be forfeited.

           *       *       *       *       *       *       *


Sec. 1328. Enforcement by Treasury and Postal Service

           *       *       *       *       *       *       *


    (a) Regulations.--[The Secretary] In the case of designs of 
vessel hulls protected under this chapter, the Secretary of the 
Treasury and the United States Postal Service shall separately 
or jointly issue regulations for the enforcement of the rights 
set forth in section 1308 with respect to importation. Such 
regulations may require, as a condition for the exclusion of 
articles from the United States, that the person seeking 
exclusion take any one or more of the following actions:
          (1) Obtain a court order enjoining, or an order of 
        the International Trade Commission under section 337 of 
        the Tariff Act of 1930 excluding, importation of the 
        articles.
          (2) Furnish proof that the design involved is 
        protected under this chapter and that the importation 
        of the articles would infringe the rights in the design 
        under this chapter.
          (3) Post a surety bond for any injury that may result 
        if the detention or exclusion of the articles proves to 
        be unjustified.
    (b) Seizure and Forfeiture.--[Articles] In the case of 
designs of vessel hulls protected under this chapter, articles 
imported in violation of the rights set forth in section 1308 
are subject to seizure and forfeiture in the same manner as 
property imported in violation of the customs laws. Any such 
forfeited articles shall be destroyed as directed by the 
Secretary of the Treasury or the court, as the case may be, 
except that the articles may be returned to the country of 
export whenever it is shown to the satisfaction of the 
Secretary of the Treasury that the importer had no reasonable 
grounds for believing that his or her acts constituted a 
violation of the law.
    (c) Nonapplicability.--This section shall not apply to 
fashion designs protected under this chapter.

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Sec. 1330. Common law and other rights unaffected

           *       *       *       *       *       *       *


    Nothing in this chapter shall annul or limit--
          (1) common law or other rights or remedies, if any, 
        available to or held by any person with respect to a 
        design which has not been registered under this 
        chapter; [or]
          (2) any right under the trademark laws or any right 
        protected against unfair competition[.], or
          (3) any rights that may exist under provisions of 
        this title other than this chapter.