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In other words, in one you have a situation in which the copyrighted material is being used to make a buck; and in the other, you are not giving that kind of purposeful use. That is precisely why the tax law distinguishes—the tax law and the Congress. The Congress makes certain benefits available to nonprofit institutions of education which it does not make available to profitmaking institutions.

Mr. PATTISON. Are we not talking about the dissemination of information, and how it is disseminated; we do not really care, do we?

Mr. ROSENFIELD. Yes, we do.

We are saying for the purpose of this special exemption, just as Congress has said we are going to support nonprofit higher education or lower educational institutions and nonprofitmaking ones, we are saying that the Congress, in its wisdom, ought to make special rules for the nonprofit, noncommercial utilization of this copyright material and let the commercial one go on its own.

What we are trying to point out in a sense is that the ad hoc committee refuse membership to profitmaking schools that are excellent schools for this very reason. It is not that we are thinking of it as an afterthought. This was a fundamental distinction between the profit and the nonprofit in the character of the use involved.

As a matter of fact, Mr. Congressman, 107 itself speaks of the purpose and character of the use. The purpose of the use in a profitmaking institution is to make a buck. Sure you make a buck by disseminating education to the students. The purpose is to make a buck.

Mr. PATTISON. Maybe. I can form a number of corporations, notfor-profit corporations, with a small group of people involved, a notfor-profit corporation, and charge tuition, and not make a profit at all, because we just adjust our salary dependent upon what we make. There is no profit at all. It comes out to zero at the end of the year

You can do the same thing with a for-profit corporation.

You are not going to tell me if a for-profit corporation incurs a loss, in the time that they incur the loss, you are not going to let them off the hook.

I think the distinction is based upon the use, not upon the nature of the institution. That is all.

Mr. ROSENFIELD. We thought we were asking for less than you were pushing us to.

Mr. KASTEN MEIER. We thank those representing educators here this morning, and educational uses, and the copyright bill. We thank you for your very helpful testimony.

The Chair would now like to call those who represent publishers Bella Linden, Paul Zurkowski, Ernest Farmer, Irwin Karp, and Edward Meell—to come forward.

The Chair would like to express regrets that it is so late in the morning in reaching you. There has been, evidently, a very profound interest in the subject from the questioning of those who preceded yon.

Nonetheless, your testimony is equally valuable to us and sought after. I only regret that it is late. Perhaps hereafter we can make other adjustments.

Ms. Linden? [The prepared statement of Ms. Bella Linden follows:]

STATEMENT OF BELLA L. LINDEN, ATTORNEY, New York, N.Y. Vr. (Chairman, I am Bella L. Linden, partner in the law firm of Linden and Inutarh, New York City. I was counsel for many years for the American Textpuwerk Publishers Institute (until its merger with the American Book Publishers (ouncil into the association known as Association of American Publishers), a member of the Panel of Experts appointed by the Register of Copyrights to insider revision of the Copyright Law, and a member of the Committee on Science and Technical Information (COSATI) of the Federal Council for Srience and Technology and Chairman of the (YOSATI sub-panel on rights of itexs to computerized information systems. My firm represents Harcourt Prace Jovanovich, Inc. and Macmillan, Inc., two of the five largest American elurational publishers. However, I appear here today not on behalf of Macmillian or Harcourt alone, nor solely on behalf of educational publishers. Rather, I am here in the interests of our system of educational authorship and publishing. representing the sum total of the combined creative efforts and investments of the authors and publishers of this country's educational materials.

This statement is respectfully submitted in opposition to the proposal for a general educational exemption to the rights of authors and publishers established in H.R. 223. Eight years ago, in your Committee's analysis of the doctrine of fair use as established in the Revision Bill and, in particular, its application to educational and classroom use, your Committee concluded that “a specific exemption freeing certain reproductions of copyrighted works for educational and scholarly porposes from copy right control is not justified.” (H.R. Rep. No. 83, p. 31) At last week's hearings the Register of Copyrights stated that your report *still remains the basic legislative explanation of the content of the Bill, and the basis from which] the reports succeeding it in both Houses have all been drawn

During the intervening years, the only relevant fact to have changed is the further proliferation of devices for unauthorized, inexpensive and rapid duplication, use and transmission of copyrighted works.

Yet, we find ourselves still debating the request for the so-called “educational exemption."

At bottom, of course, this dispute is based on economic interests. Authors, poblishers, educators, librarians, all must live on a budget. I will certainly concede that anything which may be acquired free of charge imposes no burden on a budget, so it is not totally unnatural for users of copyrighted materials to desire unpaid-for duplication privileges. Textbook budgets are extremely low, amounting, on a national average, to between two and three percent of a school's annnal budget. Photocopying equipment and other reproduction, storage anit retrieval devices are not part of a school's textbook budget, but come under the broad umbrella of "supplies.” Thus, the natural and landable tendency for good teachers is to seek supplementary material via the Xerox and tape machines. Less laudable however, is the insistence of some that authors and publishers should not be paid for such uses of their works.

Throughout the revision program the authors and publishers of educational materials have agreed with the principle of full and prompt access to copyrighted material for educational use. This is the very reason for their creative efforts and pristenre. Clearly, there is a significant difference between access to educational materials, which we wholeheartedly support, and unpaid-for duplication of these materials.

We have continually offered to work with the proponents of the educational exemption, as urged by your Committee in 1967, "to work out means by which permissions for uses beyond fair use can be obtained easily and quickly and at reasonable fres." (H.R. Rep. No. 83, p. 33) In fact, in my first appearance before Four Committee in 1965, I offered a specific proposal for a clearing house system. However, for almost ten years---during which time many educators have loudly and justifiably voiced their demands for adequate compensation for their own services--the proponents of the educational exemption have sought a statutory basis for the replication of copyrighted educational materials without payment. Rather than accept our invitation, those in favor of the educational exemption offor a provision for sweeping appropriation of copyrighted works. They commonly illustrate their so-called plight by referring to the individual school child who wishes to copy an article from a newspaper for a homework assignment. We are, in effect, told that because the patient has a headache, the cure is to chop off his head.

Authorship of an educational work usually entails many thonsands of hours over a period of several years doing library and other research, field testing and

consulting. The authors of educational works are not highly publicized personalities who write best sellers and appear on television talk shows. Many are prae"ticing teachers. Few become rich as a result of their writings. To the extent that it is possible to describe a typical textbook author, he or she is a member of thir faculty of a highly regarded college or university, enjoys an excellent reputation in his or her field, but is little known outside of it and counts on copyright royalties to pay for braces for the children's teeth, a second car for the family or a vacation or study year abroad or some similar expense. More often than not, royalties un educational works are split between several authors.

By and large, it is the publisher who discerns educational needs, searches out and selects the author (or, more commonly, group of authors) to create the books and materials to satisfy the requirements of schools and universities, and direris and supervises the planning, design and creation of the works. The publisting venture generally encompasses continuing review and evaluation by numerus teachers and curriculum specialists, supervisors and consultants and field testing throughout the country. The role of the American educational publisher combines and coordinates various functions of writing, artistic design and technical skills in applied research, packaging, consulting and training as well as manufacturing marketing and distribution.

Educational materials today are commonly produced in sets or programu integrating various forms and media such as texts, teachers' manuals or editions, tilmstrips, slides, sound recordings, cards, charts, puzzles, instructional games, duplicating masters, transparencies, testing materials and the like; similarly, these programs frequently represent the entire range of literary authorship includ. ing fiction, non-fiction, prose, poetry, music and drama. It is not at all uncommon for an educational publisher to invest more than one million dollars in predevelopment costs alone for the creation of a program which will take five or ten years to reach the market and another three to five years to gain acceptanır and even begin to pay off the investment. In the case of one elementary and junior high school science program with which I am familiar, a total of fourtın years elapsed between the time the program was conceived and the first textbooks were published. The program virtually revolutionized the format and content of elementary school science books. The efforts and investments of authors and educational publishers do not stop upon publication, as subsequent editions are cuntinually revised in light of feed-back from the field and changes in publishing techniques.

Commonly, major portions of the expenses of educational publishing are attributable to payments made to other publishers and authors for the use and integration of portions of prior works in new programs. In the case of one recent elementary reading program, permissions fees paid by the publisher exceeded $100,000 and, it is estimated, comprised more than 30,000 permissions granted. The administrative "burden" of clearing the permissions did not impair the development of the program.

We cannot emphasize often enough that many of the products of educational publishing, such as treatises, texts, workbooks, tests, tile cards, anthologies, encyclopedias and other reference works, are designed for use in piecemeal fashion rather than cover-to-cover reading. To permit unauthorized photoduplication of copyrighted works for the purposes of teaching, education and research is a request, in unalloyed English, to permit the educational coinmunity to engage in on-demand reprinting, on a daily basis, of those portions of copyrighted educational, scientific and technical works which they wish to use and to circumvent payment to authors and publishers whose entire market for such works is that same educational community.

In many respects educational publishing exists apart from other businesses. The authors and publishers of such works are in a very real and essential sense engaged in public service. For education itself to progress, educational authors and publishers must anticipate and effectively serve a broad range of instructional and scholarly needs. To continue to serve this function in today's society, they must be adequately remunerated for the duplication of their work product.

Although on a short term basis an "educational exemption" may appear desirable to some as aiding the budgetary ills of the educational community, it is clear that the longer term consequence would be to discourage authors and publishers from investing in the creation and distribution of educational materials. The only alternative which comes to mind is the nationalization of educational publishing. Among the ways our society bas avoided suppression

of intellectual work-product are the system of economic incentive to writers provided by copyright and the free-enterprise publishing system which encompasses multiple outlets for distribution. Thus, authors are encouraged to publish their thoughts, and the views of an author which may be antithetical to one publisher (or be considered by him to be unpublishable for economic, competitive or other reasons) may still receive exposure through publication by another.

If applied to the free storage (input) of copyrighted materials in computerized Inforination systems the proposed exemption would be in complete deropution of the judgment of both Houses of Congress as expressed in the revent passage of a law establishing a National Commission on New Technological Uses of Copyrighted Works. One of the stated purposes of that Commission is to study, compile data on, and make recommendations to Congress concerning “the reproduction and use of copyrighted works of authorship . in conjunction with automatic systems capable of storing, processing, retrieving, and transferring information

Proponents of the educational exemption have repeatedly emphasized their "educational" purpose and its relation to the public welfare. Of course education is in the public interest-but under our system this interest is served luy a private and commercial enterprise which requires a profit to survive. The iniury to this country's educational system, educators, scholars, and school children will be material under the erosion of copyright which will result from the proposed exeinption. This was fully recognized by your Committee in 1907 when, after considering arguments for a specific educational exemption extending beyond fair use, it stated :

"The fullest possible use of the multitude of technical devices now available to education should be encouraged. But, bearing in mind that the basic constitutional purpose of granting copyright protection is the advancement of learning, the committee also recognizes that the potential destruction of incentives to authoriship presents a serious danger." (H.R. Rep. No. 83, at p. 31) TESTIMONY OF BELLA L. LINDEN, REPRESENTING EDUCATIONAL

PUBLISHERS

Ms. LINDEX. Thank you, Mr. Chairman.

I shall not read my statement at all, but submit it for the record, the reason being that everything that I am saying in my statement, and I dare say everything that the educators have said this morning, we have all been saying for the past 10 years, at least.

Consequently, in order to save time, all I would like to do is point out specifically five or six-actually it adds up to seven--statements that I would particularly like to draw to your attention.

One is that the position of the educational community, as represkunted by the people who testified here this morning, and by the librarians who testified yesterday, 10 years ago was that photocopying is done in a very limited way. Ten years ago they said that copying cost 30 cents a page; therefore it is cheaper to buy a book than to photocopy a book; therefore it is cheaper to buy a journal article or reprint, or buy the journal instead of doing the photocopying.

Nothing, with all dne respect, has changed in the course of the 10 years with respect to the philosophy of the purpose of copyright. All that has changed is the rapid proliferation of technological devices for replication-tape. Xerox equipment, so on and so forth, and in formation stora ge and retrieval systems.

The proliferation of all this has met in the eves of the educators it would seein that because there is a more rapid technique of achieving the dissemination of information, the payment should be limited to the technology.

57-7864–76– pt. 1

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No one here has ever spoken to the Congress that they should insist that the Xerox equipment or tape equipment should be given to the nonprofit institutions gratis. What they have all insisted upon is that the intellectual material, without which the technological dissemination hardware would be relatively useless, should be given gratis.

Again, I say with great sadness, we see awe and respect for tangible property, and we see less than respect for intellectual creativity, which in my view, may I suggest--and I am sure it is shared by all hereis the cultural and most valued part of the heritage.

I would also like to point out tliat what you are doing is not evaluating a Williams & Wilkins case of past transgressions where the issue is limited to one publisher and certain specific issues. You are being asked to legislate exemptions with respect to all future creativity. You are being asked to suggest a system of modifying the creation and packaging of intellectual information for the educational and research community. You are being asked—there will be no cataclysmie disappearance of future creativity overnight. If you do pass these educational exemptions, what you will have created is the gradual but inexorable erosion of the competitive entrepreneurial production of intellectual material for the education and research community of this country at the very least.

One or two of you noted very aptly that the educational materialI will hand out some—that consist of 150 items in a children's reading program of all kinds of nonfiction, small portions included. That is the entire market for the educational producers and the duties of material. I will not dwell on that point.

I would merely like to add that yes, as the educators have said this morning, it is a question of budget. What they have reference to is the intellectual property budget, which is 2 or 3 percent, at the most, of the entire school budget. They are not talking about the teachers' salaries or carpeting or Xerox equipment. All they are talking about is the minuscule proportion of the budget that goes for intellectual property.

With respect to the problems of fair use, may I suggest, with all due respect intended, fair use, as I sat and listened to the great difficulties of defining fair use, it occurred to me--and I mean no disrespect to this committee or to anyone in this room--if the good Lord had promulgated the statement, love thy neighbor before this committee at the time of Genesis, you would still have people here defining what love is, seeking guidelines with respect to which neighbors are intended to come under the stricture to love thy neighbor, and there would be a rising clamor for exemption of certain neighborhoods from the statement of the good Lord, because it was in the public interest to exempt those neighborhoods.

May I suggest in all seriousness, there is no precise language in any statute of any kind that has ever been promulgated that is not subject to different interpretations. That is why, thank the Lord, there is a

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