Mr. DANIELSON. Without objection, we will receive your referred

to comments.

Mr. KARP. Much of this library-copying activity is devoted to articles from essential, copyrighted scientific and technical journals. Copies produced of these on demand of individual readers are given to them in lieu of the journal itself, which is published to serve this very audience. In Williams & Wilkins the chief judge in the Court of Claims pointed this out in his three-man dissenting opinion, supporting the opinion of the trial judge. Actually, if you add up the figures you have a complete Mexican standoff, you have four Court of Claims judges going one way, and four the other.

Mr. DANIELSON. That's what we call a congressional standoff, and when you have that, nothing passes.

Mr. KARP. He pointed out the argument that damage was not proven was utterly without basis in the record because the majority hadn't disproved the damages, they simply ignored the trial judge's findings.

The chief judge also pointed out in his opinion that the National Institutes of Health at the present time purchased only two subscriptions to the plaintiff's journals, and if nothing else, it certainly needs more than the two copies to meet the requests of the large in-house staff. And that the whole purpose of what everybody really concedes was wholesale systematic reprinting, was to do away with the necessity of paying for any more subscription copies of these journals. The literature of the library community is full of predictions of the state of the future which may resolve itself into a few libraries that in some instances, for certain types of publications, serve, as what Mr. McKenna quite accurately referred to as "reprinters" and "repub

lishers."

I should point out that librarians' semantics have been a problem with us throughout this discussion. They like to talk about "interlibrary loans." When they make a copy of something like this (indicating an article) they don't lend it to anybody. At the Government's, or the local community's considerable expense-the figures sometimes estimated at $5 to $12 a copy to do this-do all the work involved. They produce a copy which is delivered to a patron of their own, or another library, and it's his, not a loan.

I should at this time clarify-on the top of page 3 I should not overlook one distinction. I pointed out when University Microfilms reproduces a copy of copyrighted work it pays a royalty. When the librarians reproduce it, they do not pay a royalty, and that's the crux of the issue, reasonable compensation for systematic library reproduction.

Most of the examples that Professor Low gave you are examples of "fair use" and that's not what we are quarreling about. Fair use is not paid for, it is not charged for; that is preserved very clearly in the revision bill.

As my colleagues will demonstrate, section 108 of this bill also gives the libraries broad copying privileges that we don't think they had under the present law. Moreover, authors and publishers do not seek to halt systematic library reproduction. We simply say that reasonable payment should be made when copying goes to this extent, and that workable systems can be established.

The discussions which have been described to you, on the one hand, have a wonderful Rashomon flavor. I can't believe I was there, when I hear Professor Low and his colleagues describing what transpired. To say that we, any of us, have a position that the mere existence of a union list of serials in a library system establishes "systematic copying" is simply not the case. In fact, asked twice, I twice answered that, "No, we were not saying that." We were merely pointing out the various characteristics of certain library systems in whose operations one of the functions was to eliminate what they euphemistically called duplication of periodicals. That means, why should all six or seven libraries subscribe to a journal when one can subscribe and make copies for the others!

The uncompensated reproduction, uncompensated reproduction of copyrighted work is bound to have a damaging effect on American publishers and authors.

I would just like to talk briefly about the purposes of copyright. The economic purpose of copyright is, in the Supreme Court's quotation-on top of my page 5-"to give valuable, enforceable rights to authors and publishers, to afford greater encouragement to the production of literary works of lasting benefit to the world."

And the economic philosophy underlying the copyright clause, as the Supreme Court explains it "is the conviction that the encouragement of individual efforts by personal gain is the best way to advance public welfare through the talents of authors."

Thus, the instrument chosen by the Constitution to serve the public interest-that interest is the securing of literary and scientific works of lasting value is an independent, entrepreneurial property-rights system of writing and publishing. The Copyright Act establishes the rights which prevent others from depriving authors and publishers of the fruits of their labor. But, it guarantees no reward at all. The reward must come, as in any private, profit-motivated operation, from the income that the author and publisher can derive from the uses of their books and journals. They have to take the risk that every entrepreneur does, that the books and journals may fail financially, although they make a valuable intellectual contribution-and journals have failed

Mr. DANIELSON. Let me interrupt just briefly. I don't like to interrupt you, I have practiced law for a long time myself, but you've got to share time here with three more of you gentlemen. If they want you to speak for them, I'm delighted, but otherwise I am going to have to let No. 2 go ahead.

Mr. KARP. I'm at the end of my statement.

Mr. DANIELSON. With the permission of Mr. Pattison we will hear from all the witnesses, and then commence with the questioning; thereby we will enhance the opportunity to hear you.

Mr. KARP. I simply want to conclude with the statement, Mr. Danielson, that we urge Congress not to disrupt the delicate balance of this system. Many compromises have been made by us already in order to accommodate librarians. We don't think any more are possible without inflicting very serious damage on those who create those journals. I have also included in my statement responses to Professor Low's almost ritualistic attack on copyright. It is not a monopoly, not a special privilege: it doesn't restrict the dissemination of informa

tion. I submit to you the only provision in the U.S. Constitution which implements the freedoms of the first amendment is the copyright law because that is the only provision that establishes a legal, economic foundation under which people can actually go about exercising those rights, by setting up publishing enterprises, or engaging in writing. Destroy the copyright clause-and the librarians are asking for partial destruction-and you are also threatening seriously that private enterprise system of exercising freedom of expression.

Thank you.

[The prepared statement of Irwin Karp follows:]

STATEMENT OF IRWIN KARP, COUNSEL, THE AUTHORS LEAGUE OF AMERICA Mr. Chairman, my name is Irwin Karp. I am counsel for The Authors League of America, the national society of professional writers and dramatists. I would like to introduce Dr. Robert W. Cairns, Executive Director of The American Chemical Society; and Mr. Townsend Hoopes and Mr. Charles Lieb, President and Copyright Counsel of the Association of American Publishers. They will discuss sections 107 and 108 of the Copyright Revision Bill and the issue of "library photocopying".

The Xerox and other reprographic machines have established a new method of reprint publishing sometimes called "on-demand publishing," "one-at-a-time reprinting", or "single-copying" (the blander phrase favored by library spokesmen). However labelled, the process disseminates articles, chapters from books or entire works to individual users-by reproducing a single reprint to fill each order, as it is received. Each copy, made by Xerox or other machine, is an exact reprint of the original-letter by letter, line by line as initially set in type. One-at-a-time reprinting is well established. It has been used for several years by reprint publishers such as University Microfilms to supply books, journals, articles and doctoral theses to individual customers, "on demand". Here, for example, is a copy of a 429 page book, entitled Teaching Primary Reading, produced on a Xerox Copy-flo machine by University Microfilms. The label reads "Published on demand from University Microfilms."-—i.e., when an order is received, one copy is reproduced separately on the Xerox machine to fill it.

The process of one-at-a-time reproduction is employed by several libraries to make copies of journal articles or portions of books; some of these institutions serve as reprint centers for patrons of other libraries as well as their own users. Much of this activity is devoted to articles from essential, copyrighted scientific and technical journals, many of which have modest circulations and are published by nonprofit learned societies. Copies of these articles, produced on demand of individual readers, are given to them in lieu of lending the journal, which is published to serve this very audience. My colleagues will explain the serious injury to publishers from this uncompensated, systematic reproduction; and from its increasing use by groups and networks of libraries, in which one institution reproduces copies of articles from journals it subscribes to, for patrons of other libraries which do not subscribe to them.

With one-at-a-time reproduction ("single-copying", in library parlance), a library could make many copies of the same article or work. It produces a "single" copy for each order; but it produces as many copies of the article as there are orders for it. Under the exemption previously sought by library organizations in the Senate, any library could thus make many copies of the same article, so long as it produced one copy per order. (In the peculiar semantics of library organizations, copies produced for patrons of other libraries are called "interlibrary loans." Actually, no "loan" is made. The copy is delivered to the patron and becomes his property.

There is one significant difference I should not overlook. When University Microfilms reproduces a single copy of a copyrighted work, it pays the owner a royalty-having previously obtained a license. However, libraries claim, and demand Congress give them, the privilege of systematically reproducing copyrighted journal articles and other works without payment of compensation. [As this Committee and the Copyright Office have stressed, the copyright owner's right to reproduce copies of his work is not subject to a "non-profit" exemption]. Reasonable compensation for systematic library reproduction is the real

Issue. Library photocopying which is "fair use" (Sec. 107) does not require payment. And as my colleagues will explain, Secs. 108 (d) and (e) give libraries broad copying privileges, without charge. Moreover, authors and publishers do not seek to halt systematic library reproduction, i.e. that which exceeds these sections. They are willing to authorize such uses. But they believe that when libraries systematically reproduce copyrighted articles or other works, reasonable compensation should be paid, as Sec. 108(g) contemplates. They also believe that "workable clearance and licensing conditions" can be developed mutually by librarians and copyright owners, the solution prescribed by this Committee. My colleagues will relate the continuing efforts to accomplish that result. It is a result that must be achieved. For uncompensated systematic reproduction of copyrighted works by libraries will inflict heavy damage on publishers of scientific and technical journals, authors (see App. I) and other publishers; on the copyright system; and on the public interest it was designed to serve.

THE PURPOSES OF COPYRIGHT

The library photocopying issue should be considered in the appropriate context-in the context of copyright's constitutional purposes and the manner in which it was designed to serve the public interest. I will address that subject before Mr. Lieb, Dr. Cairns and Mr. Hoopes speak to the specific photocopying issues.

As the Supreme Court has explained, the Copyright Clause of the Constitution was intended to establish independent, entrepreneurial, self-sustaining authorship and publishing as the means of serving the public interest in securing the production of valuable literary and scientific works. In so doing, the Copyright Clause serves a second purpose it implements the First Amendment's freedoms to express and publish ideas, information, opinions and all manner of literary, scientific and artistic works. The First Amendment protects against restraints on these freedoms. But the Copyright Clause is the only constitutional provision which establishes a legal-economic foundation for exercising them. The Copy right Clause thus frees authors from the need for subsidization by the state or other powerful, institutional "patrons", and from the restraints such support often imposes. And it was intended to sustain the existence of a diversity of independent publishers, who would give a wide range of viewpoints access to the market place of ideas.

THE "ECONOMIC PHILOSOPHY" OF THE COPYRIGHT CLAUSE

The Supreme Court has emphasized that the Copyright Clause of the Constitution

"was intended to grant valuable, enforceable rights to authors, publishers, etc. without burdensome requirements; 'to afford greater encouragement to the production of literary [or artistic] works of lasting benefit to the world.'”

The Court said that the "economic philosophy" underlying the Copyright Clause "is the conviction that the encouragement of individual efforts by personal gain is the best way to advance public welfare through the talents of authors..." (Mazer v. Stein, 347 U.S. 201, 219)

Thus, the instrument chosen by the Constitution to serve the public interest→ Le., the securing of literary and scientific works of lasting value-is an independent, entrepreneurial property-rights system of writing and publishing. The Copyright Act establishes the rights which prevent others from depriving authors and publishers of the fruits of their labor. But it does not guarantee a fair reward, or any reward. For authors and publishers, both commercial and nonprofit, must depend on income derived from uses of their books and journals to compensate for the talent, labor and money expended in creating them, and provide working capital for further publications. And as entrepreneurs, they must assume the ever-present risk that books and journals produced by substantial labor and cash outlays will fail financially although they make valuable intellectual contributions to the public interest.

We urge that Congress should not disrupt the delicate balance of this essential system. Carving exemptions out of the "enforceable rights" of authors and publishers does not serve the public interest. For although the resulting uncompensated uses may further the convenience or ambitious plans of some “user” group,

they diminish or destroy the ability of authors and publishers to serve the ultimate public interest-to continue producing new works of lasting benefit. The publication of scientific and technical journals, for example, richly serves the public interest-but it is at best a marginal economic operation. Learned societies and others who publish them do not grow fat on their profits. Squeezed by everincreasing costs and static circulations, publishers will be forced to close down some journals or not start new ones if they are denied reasonable compensation for uses of their articles in the new medium of systematic, library one-at-a-time reproduction. Periodicals and journals are neither immortal nor immune from the laws of economics. The process of attrition may not be apparent to library spokesmen, but it is nonetheless inevitable. Yet, while they are willing to make substantial payments to the Xerox Corporation, suppliers and library employees to provide users with hundreds of thousands of copies of copyrighted articles, they demand of Congress the privilege of denying the journal's publishers any compensation. [Ironically, libraries pay the Xerox Corporation a per-page fee-a royalty, if you will-for each page of each article they reproduce].

THE ANTI-COPYRIGHT ARGUMENTS

It has become ritual for library organization and Ad Hoc Committee spokesmen to accompany their demands for new exemptions with a series of attacks on copyright, calculated to suggest that the author has no legitimate claim to reasonable protection for the work he creates.

THE "ANTITRUST ARGUMENT"

Library and Ad Hoc Committee spokesmen charge that a copyright is a “monopoly", suggesting it offends the Sherman Act. This is not so. The copyright in a book is not a "monopoly" in the antitrust sense. It does not give the author control over the market in books, or the business of publishing them. His book must compete in the market place with the 40,000 other titles published that year and the hundreds of thousands still in print from prior years, including many that deal with the same subject. His copyright only gives him certain rights to use the book he created. The owner of a copyright only has a "monopoly" in the innocuous sense that all property owners do each owns a collection of rights, granted by law, to use that which he has created, purchased or inherited.

THE "RESTRAINT OF INFORMATION" ARGUMENT

Library and Ad Hoc Committee spokesmen charge that a copyright places a restraint on information. This is not so. A patent prevents others from using the ideas it protects. A copyright does not impose such restraints, Anyone is free to use the ideas, facts or information presented in a copyrighted book or article. The copyright only protects the author's expression, not the ideas, facts or information. Other writers can draw on them. Other writers are free to independently create similar (indeed closely similar) works; the copyright only prevents substantial copying of the author's expression.

In Progress and Poverty, Henry George made this trenchant observation about copyright:

"Copyright ... does not prevent any one from using for himself the facts, the knowledge, the laws or combinations for a similar production, but only from using the identical form of the particular book or other production-the actual labor which has in short been expended in producing it. It rests therefore upon the natural, moral right of each one to enjoy the products of his own exertion, and involves no interference with the similar right of any one else to do likewise..." The Copyright is therefore in accordance with the moral law- (p. 411)

THE "MERE PRIVILEGE" ARGUMENT

To Library and Ad Hoc Committee spokesmen, it smacks of immorality to sug gest that the author has a moral claim to copyright protection in a work that he created, that would not have existed but for his talent, labor and creative efforts. They charge that copyright is not "property" because the rights are created by statute, and that Congress is not required to pass copyright laws since Art. I, Sec. 8 "merely" says that it "shall have the power" to do so. But the phrase "Congress shall have the power" does not precede the copyright clause of Sec. 8-it prefaces the enumeration of all powers granted to Congress, including the powers to collect