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On behalf of my organization, I would like to say we support I.R. 2.3 as it has been introduced, especially section 107, which writes into statutory law the main principles of fair use as that doctrine has been interpreted by the courts over the years. We would hope that fair use dere's not become free use.

We feel the language, especially in 107, represents an equitable compromise between the creators and users of copyrighted educational material, a compromise that has been painstakingly negotiated over the last several years. The technology which permits the easy duplication of audiovisual materials has been introduced only very recently-I am thinking here of motion pictures, sound filmstrips, and audio tapes-after hearings that your committee held in the sixties. It is a very significant development for our industry, one which has already hall a great impact on the educational media industry, which merits careful consideration by your committee.

Is a point of fact, our industry is very pleased with the progress in technology. It is not our intent to stop that march of progress of technology. It promises to make ideas and information more accessible to scholars, teachers, and learners. These developments promise also to expand the role and contribution of educational media producers to the educational process, which we consider an integral part.

In order to maintain increasing incentives for the creation and production of quality materials, we must not diminsh the statutory production for intellectual products to which any author, creator, or artist is entitled. We are therefore opposed to any amendment which would provide for an educational exemption. We solely distribute, as I mentionell, to the educational market, not to the consumer or the entertainment field.

In amendment which increases the amount of duplication permitted under fair use could significantly decrease potential sales, and therefore the production of instructional materials. Companies in this limited market are faced with two major factors.

First: The vast majority of audiovisual materials are not used in a one-to-one situation. They are used with large and small groups. Therefore, the number of copies made is quite limited--one or two copies of a 16 millineter film may serve an entire school system of moderate size. A single copy of a filmstrip or a sound recording will serve an entire school.

Second: A typical audiovisual product will customarily sell relatively few copies over a period of 5 to 10 years. This is in comparison to textbooks or to journals which may sell thousands of copies. Sixteen-millimeter films may sell only 500 copies over 5 years. If we lose 50 or 60 of those copies in unauthorized duplication, we are immeasurably hurt.

Thus, the recapture of initial investment in research, development, editorial, and production work, which costs as much for one copy as for many, is spread over the sale of a relatively limited number of copies. In aildition to the substantial initial investment required for these materials, there must be added operating expenses for the period of time over which sales are made.

The combination of these factors limited market, small volume and sales over an extended period-means a specific broadening of the fair-use criteria could damage beyond repair the quality and diversity

of the material available for our students and teachers. We are particularly pleased to note that the principal professional organization of media educators, the Association for Educational Communication and! Technology, is also supporting the language of 107, as it now standa.

For our part, we recognize the industry's responsibility to helped cators utilize new technology as effectively as possible to improre tien instructional process. We have made studies and developed a series of licensing arrangements over the past 2 years in cooperation wiil: individual school systems. These accommodations allow schools for time first time to duplicate copies of purchased materials under agreedupon formulas of compensation and provide access to needed materials.

We also have made a very strong and successful effort to establish and maintain dialogs with the users of educational media. This has taken several forms, with dozens of discussions with users of these ma. terials, approximately a dozen articles in educational journals, reprints which have been made available free to educators, and individual efforts of members of our copyright committee to assist school systems to adopt viable copyright policies.

We are always ready to discuss with educational organizations guidelines to aid in determining parameters of fair use. The bill, as introduced, is good and workable, in our opinion, the product of many days of deliberation by the respective congressional committees and concerned parties. It is universally recognized that revision of the 1999 statute is imperative. The sooner this is accomplished, the better it will be for all concerned.

We appreciate this opportunity to appear before you.

I would like to close by summarizing our small industry. The gross dollar revenue per member company is small. Our unit sales are small. Anything that would take away from these sales would, in fact, hurt our industry and member companies. We do not want to stop terhnology. We want to accommodate technology and educators. We feel we have gone as far as we can go. That is why we support H.R. 2.2:), particularly section 107 as it stands.

Mr. KASTENMEIER. Thank you, Mr. Meell. We will now hear from Mr. Zurkowski.

[The prepared statements of Paul Zurkowski follow:]

STATEMENT OF Paul G. ZURKOWSKI, PRESIDENT, INFORMATION INDUSTRY

ASSOCIATION Mr. Chairman, I am Paul G. Zurkowski, President of the Information Industry Association, 4720 Montgomery Lane, Bethesda, Md. 20014. As you know, the information industry has grown up in the years since 1967. The Association was formal in 1968. As an attorney with some publishing experience, I have serred since February 1969 as its first principal paid employee. Prior to that time, of course, I served as legislative assistant in your office for approximately five years.

The Association presented testimony to the Senate Committee on these same issues in 1973. I refer you to that testimony for a detailed explanation of the industry. It begins at p. 266 in the July 31. Aug. 1, 1973 Hearings on S1361.

In her testimony last week the Register of Copyrights expressed grave roncern about information technologies, She said that because of today's technologies once an author's idea is “out of the cage", he has no way to recapture it. lle cannot receive compensation; he cannot control the context, in fact, he has lost his idea. She said that many authors are trying to determine if it is possible not to let their ideas ont preferring to keep them to themselves.

In the absence of effective copyright rules for modern information technologies it is possible to devise methods to limit distribution and to limit access to au

thor's ideas and concepts to the elite who can afford it and who will agree to protect it.

The objective of copyright is just the opposite, to encourage the author to fwrmit the wide dissemination of his ideas in return for an exclusive right in the form in which they are expressed.

This is the objective of the information industry as well-to obtain the widest possible dissemination of information, fully utilizing all available information Iribanlogies while protecting the rights of authors. This is the industry's central function.

The business of information is a competitive and self-disciplining business. l'edple in the business of information recognize that the materials in which they derai embody human creativity. They recognize that they must deal with it ethifully. In addition, from a business standpoint they do not seek for themselves rizlits in the property of others which they would not be willing to grant to others Tu their property.

In anticipation of these Hearings, the information industry two years ago, undertonk a study of the Revision Bill and the practices that have grown up in industry in dealing with the problems of new technologies.

is in traditional publishing areas the trade practices of the industry are built on the rights granted authors by the Constitution. Wide-spread industry practiers were analyzed and recommendations were developed by which the practiets that have grown up could be incorporated in the Copyright Revision Bill. Spremitic language changes were prepared which we submit to you. We choose today

nopsize them so that you will have the benefit of the industry's thinking while yoll eraluate the major change proposed by the educators.

We urge the Committee to add the issues relating to new technologies to the list of issues prepared by Ms. Ringer and to hold hearings on these issues. Ms. Rnxer cited "present need for a revised law that will anticipate the 21st Centurt". Much of what relates to new technologies can be dealt with in the context of the present Revision Bill. The work of the National Commission on New Technological l'ses of Copyrighted Works can be greatly aided by this Committep's kerious analysis of the issues to determine what can be resolved now and what needs to be deferred for further study by that Commission.

Before addressing the education amendment the following amendments have been developed by our committee and are offered as detailed suggestions for

*** ing coprright protection to works of authorship in the new information technologies.

Proposed amendments to $ 101. Definitions:
Add the following:

A data base" is a literary work which is a compilation expressed in a form intrinsically intended for use in conjunction with a computer

A "search" of a data base is the examination or analysis of a data base by a computer for particular information relevant to an inquiry, whether or not the examination or analysis results in any display, copy or performance of all or part of the data base, and whether or not the inquirer received it in the same place or in separate places or at the same or at different times.

A "computer program" is a literary work consisting of a series of instructions of statements which are in a form acceptable to a computer and which are prepared in order to achieve a certain result, regardless of the nature of the material objects, such as documents, punched cards, magnetic tapes or discs, or computer storage elements, in which the works are embodied. A computer program may be a derivative work of a flow chart and either may be a derivative work of a literary work.

A "computer" is any automatic system capable of storing, processing, retriering or transferring information, or any similar device, machine or process,

A "microform composition" is a literary work that results from the fixa. tion of a series of images regardless of the nature of the material objects, such as fiche, film, opaque or otherwise in which they are embodied.

"Direct or indirect commercial advantage" includes, but is not limited to sale of products or services regardless of the tax status or organizational nature of the vendor, or method of payment be it on a per unit, membership

fee or otherwise. An amendment in the nature of a technical amendment is also offered with regard to the definition for "a work is fixed." To wit:

A work is "fixed" in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is nonevanescent and sufficiently permanent or stable to permit it repeatedly to top perceived, reproduced, or otherwise communicated. A work consisting of sounds, images, or both, that are being transmitted, is "fixed" for purt of this title if a fixation of the work is being made simultaneously with its transmission,

EXPLANATORY LANGUAGE Because there has been some comment in the literature that the copying of a copyrighted work into the main storage element of a computer might not be ao infringement, and because the recorded state of a copyrighted program in man memory (and some other computer storage elements) might only obtain for a few microseconds, it is thought desirable to amend the definition for "a work is fixed". As presently written it is believed that the definition intends, among other things, for an immediately self-decaying embodiment not to be a fixation. S oraze in main memory is not self decaying in a whole element sense though the room cordings in the components of some computer storage elements are automatically refreshed internally. Storage in main memory is normally erased or replaced on specific instruction only. Such recordation in main memory is, thus, inevanescent and sufficiently permanent or stable to permit it repeatedly to the perceived, reproduced or otherwise communicated. Thus, the detinition for "a work is fixed" would be more suitable and accurate if amended. It is bejeta! such amendment does not change the basic intent of the definition while making clear that recordation in the main storage element of a computer would be the making of a copy.

Proposed amendments to $ 102. Subject matter of copyright: In general,
Add the following as separate categories of works of authorship:
(8) Data bases.
“(9) Computer Programs.
"(10) Microform compositions."

EXPLANATORY LANGUAGE Consistent with the first complete paragraph on page 107 of Senate Report No. 93-983, it is noted in connection with the inclusion of "data bases" and "microform composition" that they may, though not always, involve “autbor. ship" both on the part of those whose ideas and concepts are captured and on the part of the data base and microform composition producers responsible for conceptualizing the data base or microform composition, capturing and prin essing the data or images, and compiling and editing them to make the final product. There may be cases where the producer's contribution is so minimal that the ideas and concepts embodied in the data base or microform composition are the only copyrightable element in the work and there may be cases (for example, public domain materials) where only the data base or microform composition producer's contribution is copyrightable.

With regard to data bases and microform composition, it is not the intention of this amendment to preclude others from reconstituting the original source materials and ideas into their own independent work, but rather to assure that society has the choice of choosing from amongst a variety of data bases and microform compositions already in being and available readily in the marketplace by virtue of the operation and application of copyright concepts to these intellectual properties.

It is proposed that 102 (b) also be amended, by adding the following:

"However, copyright protection may exist in a collection of ideas or abstrie tions arbitrarily selected from a plurality of alternative ideas or abstractions or in a discretionary pattern of events or processes."

EXPLANATORY LANGUAGE

This amendment is directed at the copyrightability of computer software. Computer programming is a very flexible art. Given a single problem and a basic plan for its solution, two independent programmers could, and likely would, write two different computer programs.

Thus the proposed amendment would ensure that the computer program developer will have copyright protection in the discretionary elements of his sequence of operations and particular processes. Typically, the sequence of operations and particular processes are set forth on a flow chart. A program, as a derivative work of a flow chart, would be protected in that aspect of the developer's creativity effort, too,

Considerable effort is spent in working out the sequence of events or steps (operations) that a program will follow and in selecting the processes to carry out the various individual steps. It is believed that this effort involves the elements of assembly, selecting, arranging, editing, and literary expression, and thus is the work of an author. Section 102(b) appears to be included in the bill to ensure that the copyrighting of programs does not result in the equivalent of patenting its system concepts. As written, Section 102(b) goes further than neces

ry. Even the Supreme Court in the case of Baker v. Selden, 101 U.S. 99, 26 Lawyers Ed 811 (1879) did not go that far. Thus, that decision reads:

"And where the art it teaches cannot be used without employing the methods and diagrams used to illustrate the book, or such as are similar to them, such methods and diagrams are to be considered as necessary incidents to the art, and given therewith the public; not given for purposes of publication in other works explanatory of the art, but for the purpose of practical application."

Therefore, the holding in Baker v. Selden is limited to situations where alterDative processes and sequences are not available. Where such are available, it would seem that the Copyright Law should apply and the program developer protected against copying of the discretionary elements of his particular development. Others would still be free to use the methods of operation dictated by the results to be accomplished and to flesh out their own versions of how to achieve those results.

It is proposed that 8 106, Exclusive Rights in Copyrighted Works be amended as follows:

"(5) in the case of literary, musical, dramatic and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, data bases and computer programs, to display the copyrighted work publicly." and add the following:

*(6) to read, to store or to reproduce for storage in a computer ;
** (7) to search or use a data base in conjunction with a computer."

It is also proposed that Section 117: scope of exclusive rights: Use in conjunction with computers and similar information systems, be deleted.

A concomitant proposed amendment to the amendments to Section 106 is the deletion of Section 117. By specifically addressing the reading into, storage or reproduction for storage in a computer as an exclusive right of the owner of copyright under this title, this language would explicitly resolve a major question left open by the language of Section 117 in favor of the producer of the copyrighted work. Provision of the sea rch and use rights assures the proprietor of a data base copyright with his basic rights and completes resolution of the main question concerning use of copyrighted works in computers. The word search is included among the proposed amendments to the definitions section of the bill. The output of a search of a data base would be protectible as a derivative work.

A new Section is proposed: $ 11-. Scope of exclusive rights in computer programs:

NEW section 11.-Scope of exclusive rights : Computer Programs,

"In the case of computer programs, notwithstanding the provisions of sub. sections (a) and (b) of Section 109, it is an infringement of copy right for the possfesor of a computer program to make a copy thereof by reproducing it in a computer unless authorized by the copyright owner.

"The copyright status of the result of the execution of a program will be that of a derivative work of the information (which may be a program) processed or modified by the executing program and its ancillary programs."

Explanatory language:

This amendment is necessary if the marketing of programs is to be facilitated by sale and not limited to lease/license arrangements. The amendment would ensure that the repurchaser, or the like, of a machine-rendable media copy of a program is not automatically entitled to reproduce the program in his computer. It may be that the first purchaser of a program would have an implied right to reproduce it in his computer. However, if this is an inalienable right of a succeeding holder of a machine-readable media embodying a program, then it may be that the market for the program author is exceedingly limited. This wonld come about because the first purchaser of a program could read it into his computer. and once having entered it into permanent storage therein, could pass the machine-readable media on to a second computer owner. In this way, the theoretical market for a program might basically be reduced to one. This would not facilitate cost recovery on the part of the author and would undoubtedly stille development activity. This amendment would also make clear that it is a

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