DEPARTMENT OF LABOR

Employment and Training Administration

TA-W-54,708

NOVELLUS SYSTEM, INC.
SAN JOSE, CALIFORNIA

Notice of Negative Determination
on Reconsideration

On July 19, 2004, the Department issued an Affirmative
Determination Regarding Application for Reconsideration for the
workers and former workers of the subject firm. The notice was
published in the Federal Register on August 4, 2004 (69 FR
47183).
The petition for the workers of Novellus System, Inc., San
Jose, California engaged in writing and testing software was
denied because the petitioning workers did not produce an article
within the meaning of Section 222 of the Act.
The petitioner contends that the Department erred in its
interpretation of work performed at the subject facility as a
service and further conveys that software should be considered a
product and workers performing software quality assurance should
be considered workers engaged in production.
A company official was contacted for clarification in regard
to the nature of the work performed at the subject facility. The
official stated that petitioning group of workers at the subject
firm is engaged in designing and testing of the operational
software. The official further clarified that the software is
not recorded on any media device for further duplication and
distribution to customers, but is rather used in semiconductor
equipment manufactured by the subject firm.
The sophistication of the work involved is not an issue in
ascertaining whether the petitioning workers are eligible for
trade adjustment assistance, but rather only whether they
produced an article within the meaning of section 222 of the
Trade Act of 1974.
Writing, editing and testing software are not considered
production of an article within the meaning of Section 222 of the
Trade Act. Petitioning workers do not produce an “article” within
the meaning of the Trade Act of 1974. Information electronic
databases, software and codes, which are not printed or recorded
on media devices (such as CD-ROMs) for further mass production
and distribution, are not tangible commodities, and they are not
listed on the Harmonized Tariff Schedule of the United States
(HTS), as classified by the United States International Trade
Commission (USITC), Office of Tariff Affairs and Trade
Agreements, which describes articles imported to the United
States.
To be listed in the HTS, an article would be subject to a
duty on the tariff schedule and have a value that makes it
marketable, fungible and interchangeable for commercial purposes.
Although a wide variety of tangible products are described as
articles and characterized as dutiable in the HTS, informational
products that could historically be sent in letter form and that
can currently be electronically transmitted are not listed in the
HTS. Such products are not the type of products that customs
officials inspect and that the TAA program was generally designed
to address.
The investigation on reconsideration supported the findings
of the primary investigation that the petitioning group of
workers does not produce an article. However, it was revealed
that production of the semiconductor equipment occurs at the
subject facility and that the software designed and tested by the
workers is further integrated into this equipment. Thus, it was
determined that the petitioning group of service workers support
production of the semiconductor equipment at the subject
facility.
The Department conducted an additional investigation to
determine whether workers can be considered eligible for TAA as
workers in support of production of the semiconductor equipment.
The investigation in connection with the semiconductor equipment
revealed that criteria (I.B) and (II.B) were not met. According to
the information provided by the company official, sales and
production of the semiconductor equipment increased at the subject
firm during the relevant time period. Moreover, the subject firm
did not shift production abroad, nor did it increase company
imports, during the relevant period.
The petitioner further alleges that because workers lost
their jobs due to a transfer of job functions, such as software
quality assurance engineering to India, petitioning workers
should be considered import impacted.
The company official stated that some software is
electronically sent for testing in India, after which all the
documents and codes are returned to Novellus System, Inc. in San
Jose, California facility via electronic copies using e-mail.
Informational material that is electronically transmitted is
not considered production within the context of TAA eligibility
requirements, so there are no imports of products in this
instance. Further, as the edited material does not become a
product until it is recorded on media device, there was no shift
in production of an “article” within the meaning of the Trade Act
of 1974.
Conclusion
After reconsideration, I affirm the original notice of
negative determination of eligibility to apply for worker
adjustment assistance for workers and former workers of Novellus
System, Inc., San Jose, California.
Signed at Washington, D.C. this 10th day of August, 2004.

/s/ Linda G. Poole


LINDA G. POOLE
Certifying Officer, Division of
Trade Adjustment Assistance
Assistance