I am pleased to inform you that the National Board of Directors of the Graphic Artists Guild has approved the Guild's participation in "The Coalition for Copyright Entrepreneurs." We agree H.R. 671, which would require the awarding of attorney's fee when copyright infringement is proved by individuals and small businesses. If enacted, this proposed legislation will deter infringements on creative works, a direct benefit to our members. As you inform us of the bill's progress, we will apprise our members.

In the event hearings on this issue are scheduled, we would like the opportunity to submit either oral or written testimony to the Subcommittee. We believe the graphic artist's perspective on this issue will help convince the subcommittee members of the need for this legislation.

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As Counsel for the Picture Agency Council of America (PACA) an association of stock photography agencies, I would like to express their support for Congressman Bermen's Bill H.R. 671 which mandates the award of attorneys fees where the prevailing plaintiff in a copyright infringement case is either an individual author or a small business.

The passage of this bill would tremendously benefit this relatively small industry because it may be the only affective and economical way for the agencies to protect photographer's rights against infringers.

In the event that you are not familiar with stock photography agencies, they are in most cases small businesses that represent various photographers' works by licensing reproduction right to users for a fee. In essence, they are equivalent to a library of images. Many users of photographs, i..., text book publishers, magazines, and ad agencies, rather than hiring a photographer for an expensive shoot when they only need generic type photographs, will contact a stock photography agency and request various images of the subject needed. For example, one might request images of the statue of Liberty, skyline of Washington, a sunset on the - beach. The user will select the image that is most suitable and pay a license fee to the agency for the right to reproduce the photograph.

The fee is split between the agency and the photographer depending on the arrangement. The fee depends on the usage required. The larger the scope of distribution, the greater the fee. For example, a small 1/4 page reproduction in a local or regional publication will have a small fee while a national ad might earn a license fee in the thousands. The photograph used is then returned to the stock agency to be restored to the files where it is available to other users.

Copyright infringement poses a great threat to the viability of a stock agency. As agent for a photographer, stock agencies have a duty to protect the copyrights to the photographer's work. Being a small business, much is based on trust in dealing with clients. Photographs are sent to users, simply for review. If none are used, they are returned to the agency and normally only a small research fee is charged. Some agencies spend large sums producing catalogues to send to prospective users each year to show examples of the types of photographs that are maintained in their library.

The problem arises when a user reproduces the photograph without authority of the agency or uses a photograph for a different purpose than stated. Unauthorized uses of the images from the catalogue's are fairly common as well as prospective clients who return solicited photographs and claim they are not suitable and use them anyway without paying a fee.

Not only are these unauthorized uses difficult to catch, once found the economics of bringing a lawsuit makes enforcement almost impossible. If the copyright damages are merely the license fee one would have to pay if the use was authorized, the costs of bringing the suit including the attorneys fees would far exceed the recovery. This is obvious to those who choose to use a photograph without permission. If the recovery is limited to a few hundred or a few thousand dollars, who can afford to litigate? In theory there is copyright protection but in reality there is none.

Senator Berman's Bill will put teeth back into the Copyright Act when it comes to individuals or small users who can not afford to protect their rights. We encourage the passage of this Act.

Very truly yours,

Nancy Helff

Mr. BERMAN. In your prepared testimony and, to some extent, in your oral testimony as well, Mr. Oman, you make what I think is an excellent case for H.R. 671. But then you end up saying we don't need it. I'm perplexed, given my earlier impression that the Copyright Office thought this was a good idea, and it was part of my consideration in deciding to proceed with it. But I think the legislation stands on its own merits and I intend to go ahead and pursue it.

But given what Ms. Schrader said in her letter from the Copyright Office to me, which was that smaller firms, with smaller markets, confronting individual but cumulatively significant infringements, cannot rely on criminal enforcement. There is simply no doubt that expensive litigation in the United States is a practical deterrent to resort to the courts by small plaintiffs, that this legislation is a limited response to that reality, a statement which clearly underlined by thinking in introducing this legislation.

I would like to understand why you have come out with what seems to me a very different conclusion of what my sense of the opposite view was at the time.

Mr. OMAN. Well, Mr. Berman, I think what I'm saying in my testimony is that the advocates of the legislation haven't exhausted their remedies yet. I would agree that they can't, under current conditions, rely on criminal enforcement as a sufficient deterrent against illegal activity. But if they go to the Justice Department and try to get them to bring a criminal case, that would change the equation. I think they should probably make that attempt before deciding that that's not a worthwhile avenue to pursue.

Mr. BERMAN. The thing that strikes me about that is, if I was in the Justice Department, I would put the question the other way. You're calling on the Justice Department, the Department engaged in a number of critically important pursuits, to put its resources into pursuing criminal prosecution of these infringers. Why aren't you trying to effectively exhaust your civil remedies and provide the economic deterrent through the civil remedies that could dissuade this? In other words, why would we want to flip around this issue and all of a sudden make the criminal alternative the precondition to providing a more effective way to pursue the civil restitution?

Mr. OMAN. I think the advocates could point to cases they've brought. I think they would convince the Justice Department that they've gone as far as they can in pursuing their civil remedies, but they will continue to pursue their civil remedies. But that copyright enforcement really is a two-pronged approach. You need both the civil remedies and the criminal penalties to effectively enforce the laws. The Justice Department really isn't doing its share to help out the small people.

Mr. BERMAN. Well, that may be a reasonable argument to go to the Justice Department. I don't understand why it's an argument against mandatory attorneys' fees for prevailing plaintiffs who are individuals or small businesses.

You raise another argument which, if it's true, might argue the bill isn't bad but it's unnecessary, and that is that the courts routinely award attorneys' fees. I heard you start to get into that

issue the chairman started to explore that with you. What is the basis for that conclusion?

Mr. OMAN. It is based on a survey of copyright cases over the past 10 years in the second and ninth circuit. Again, we're making judgments based on our understanding of the size of the parties and nature of the offense, whether there was bad faith and sharp practice on one side or the other. It is not a scientific survey, but I think it would be borne out by the evidence.

Mr. BERMAN. I accept your review of second and ninth circuit cases, that in those cases where small plaintiffs are pursuing these practices at that level, attorneys' fees are being awarded. That doesn't cover district courts; it doesn't cover unrecorded decisions in district courts.

By and large, the people who came to me with the problem are not people who are so in love with the legislative process that they want to invest a great deal of time in pursuing an alternative there. Their feeling is very much to the contrary. They have no reasonable expectation of getting attorneys' fees for the demonstrably proven infringement of, say, a very expensive, infrequently utilized training film, where two or three copies or eight copies may have been sent to branches of that company rather than the purchase of them. They don't feel they're getting this and they think the litigation alternative is just unsatisfactory. Also, it doesn't speak to the size of the attorneys' fees being awarded, even in the cases where they do award it.

Do you have any conclusion about that?

Mr. OMAN. I haven't given much thought to that aspect of it. Of course, the courts would continue to exercise some discretion. What you're talking about is the value of the mandatory award of attorneys' fees as a deterrent to the illegal activity. I suppose this would be one of the factors that the business executives would take into their calculations when they decide to send 10 copies of the film they've bought to all their branch offices. But I'm not sure that that answers your question.

Let me ask Ms. Schrader to comment on that.

Ms. SCHRADER. As you know, your bill wouldn't change the discretion of the court in terms of the reasonableness of the fee. I mean, the court still would have to make a determination as to what would be a reasonable fee, even though it would have no discretion as to whether to award any fee.

In terms of the whole problem before you, I think it is very much a judgment question, as to whether you conclude that, under existing law, in most courts the prevailing plaintiff will, in fact, receive attorneys' fees. If you reach that conclusion, then you are left to wonder if there is any need for this legislation.

Obviously, the proponents of the bill argue the other way and maintain very strongly that they don't initiate litigation because they are concerned that they will not get attorneys' fees. So it's very much a judgment question as to whether they should be put to the proof to some extent, of at least trying a few cases to see whether they will get attorneys fees, especially since statutory damages were doubled last year.

As you well know, your former bill in the last Congress would