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collection of materials in microfilm if a “mother” library could freely copy individual pieces of the collection for its users or the users of its subsidiary libraries?

How would special report information companies which create specialized studies for 75 to 100 customers or less stay in business if some or all of these customers could go to a library and obtain individual copies free of copyright?

How does the information company which authors a machine readable data base market its product when libraries would be able to market access to the same data base free of copyright? A search of such a data base provides a printout of single articles within the proposed library photocopying language, yet that is in most cases the only way a product of the data base will be generated and used inside or out of a library.

Based on our experience we urge that the library exemption contained in Section 108 be limited to archival copying only. Any additional exemption directly undermines the integrity of the copyright concept and denies the basic principle behind copyright that science and the useful arts will be benefited by providing the author a limited monopoly by which to market the product of his creativity. The library amendment, honoring only the copyright claims of the producers of motion pictures, subjects to the single copy exemption all other categories of information products, whether they be sound recordings, machine readable files or microfilm, in addition to inkprint products such as books and journals. One might just as easily abolish copyright altogether.

Copyright has been the mechanism by which libraries and their suppliers have established working relations. Before you decide to abolish this element in the relationship between libraries and their suppliers, and that is what you would do if you enacted the language sought by libraries, we recommend you defer this language to the Title II National Commission on New Technological Uses of Copyrighted Works.

The library single copy exemption does impact directly on new technological uses of copyrighted works, and adopting the amendment would deprive the Commission of the benefit of continued efforts to develop sound funding mechanisms through the day-to-day interaction in the real world of suppliers and libraries. To the information industry, libraries are established distribution nodes in a national information distribution network serving users. This network has been established working within the framework of copyright and, until it can be shown a better way exists, the basis for that working relationship should be maintained.

We respectfully urge that you defer action on the amendment pending the results of the study of the National Commission to be established by Title II of this bill.

PROPOSED EDUCATION EXEMPTION
We oppose this amendment on economic and technical grounds.

We have a high regard for the educational community as well as the library community. We do, however, have to object to the proposal since it would not only adversely effect the industry but it would have a pervasive effect on many others and on the development of the information service structure of the United States as a whole. Economically, it would

(a) Exempt input from copyright protection.

(b) Raise pressures to stretch the Fair Use exemption to cover "small" output.

(c) Put no limit on what could be put into an education computer.
(d) Create unintended and unfair competition for information industry.
(e) Ignore and undermine the business practice of licensing use.

(f) Restructure information services so as to eliminate stimulas and creative force of risk capital and competition. (a) By implication this amendment acknowledges that to input copyrighted materials into a computer system is an infringement.

The amendment, by exempting input, would strip the author of control over his documented ideas. Without input infringement protection not only can his ideas be used, but they can be re-documented and distorted as to source, meaning and context.

A search of a data base may produce the fact that there is nothing in the file to print out. That, of itself, is often of great value. That is one of the purposes of investing in the creation of a comprehensive data base. Information that no one has done what you want to do has value. The amendment denies this and would destroy the economic value of that aspect of the author's work.

To search a data base is to "use” the whole file, not just the answer you find. This search capability is a value the amendment denies as well.

(b) The small printouts resulting from most computer searches would by their size alone it will be argued constitute "fair use" of the information. Having inserted in the computer The Encyclopedia Britannica, brief extracts could be printed out. Notwithstanding the fact that that is the only way to use encyclopedia information, many would seek to treat it as fair use. Since there is no provision for any payment system in the proposal, this apparently is the intended result.

(c) Under the language of the proposal "entire works” of any kind could be reproduced for machine processing.

The Reader's Guide to Periodical Literature, for example, could be keypunched and installed in a computer system. Encyclopedias and all the other products of the information and publishing industry would be equally exposed to such treatment. Without anything but "fair use" limits on copying and use (how do you apply fair use to the use of a whole file in making a computer search?) and with complete freedom to put entire works into a computer the protection offered by copyright would be minimal.

(d) The result would be the creation of unfair competition for the information industry. Does the educational activity have an iron-willed discipline and a policing procedure by which to assure that its computer information service serves only bonafide students? Many universities now engage in the marketing of information, not only in their city and state, but across the nation. They do so from a tax exempt haven and often without fully allocating to each user the costs of creating and delivering the information. This amendment would create great pressure to market machine readable versions in competition with inkprint and other privately published media. An Association of Scientific Information Dissemination Centers has been created to facilitate the growth of these activities.

(e) In practice few, if any, data bases are marketed exclusively through the author's computer facility. Copyright at input merely provides the author a basis for a licensing agreement by which the users of other computer facilities gain access to his documented ideas. The user is protected in that the integrity of the information and its documentation are subject to continuing contractual relations. This licensing process facilitates the widest possible sharing in the cost of creating these services. The amendment would not only free a large segment of users from paying its fair share of these costs, but it would also encourage education to engage in the economic replication of already existing and privately funded capabilities.

(f) Competition in the information marketplace in an age of information abundance is essential to competition in the marketplace of ideas. The stress on exemptions would have the effect of eliminating competition in many areas because the basis for private creation and investment, a minimal proprietory position, would be eliminated for many. The result would be a diminished, rather than enhanced, competitive climate in the marketplace of ideas. The information service structure of the U.S. would have to rely primarily on education and government capital resources for its development. The elimination of risk capital in this effort would seriously retard development in this area in the U.S. On technical grounds the amendment would

(a) expand its intended objectives by virtue of the proliferation of nonprofit uses today.

(b) conflict with the intended purposes of Section 117.

(c) provide only for a method of recording “retrieval" and no for requiring its use, nor for recording "use" itself as distinguished from "retrieval".

(d) make rules otherwise applicable, presumably including "fair use" and the library single copy exemption.

(e) preempt much of the work of the National Commission on New Technological Uses of Copyrighted Works. (a) The proliferation of non-profit uses, particularly in information, today are legend. Government funding of research in information systems work, for example, is essentially limited to grants to non-profit organizations. This has led to the development of a whole generation of organizations performing this research on a non-profit basis. Separate non-profit groups have grown up to do similar research in education. Public Interest law firms are incorporated in many cases on a nonprofit basis. We raise these questions not to challenge the purposes of these groups but to suggest that the amendment is unduly broad as drafted and would serve, if enacted, to stimulate even further the development of subsidy-based activities.

(b) The amendment conflicts with the purpose of Section 117 to maintain the status quo in the law vis a vis copyright at input. The significance of such a development can be seen clearly through a reading of a paper by former Register of Copyrights, George O. Cary, presented at the 1972 meeting of the American Society for Information Science. It appears at pages 169-174 in The Proceedings of the ASIS Annual Meeting, Vol. 9, 1972, ASIS, Washington, D.C. We commend it to the attention of the Committee and the Congress.

(c) A method of recording retrieval, as provided for in the amendment, does not require that it be used any more than the seat belt statutes do. Furthermore, retrieval, as noted above, is not a complete measure of the uses made of a copyrighted work in computer form.

(d) The reference to other rules applicable under law apparently refers to "fair use" rules. How reasonable that is for modern information products where the ultimate users should each pay their fair share of the costs is a matter that has not been fully developed and one on which this industry has not yet formulated a position. It is a matter which should be referred to the National Commission

Furthermore, when it is contemplated that this proposal would be coupled with the library single-copy exemption, there appears to be no copyright protection left.

(e) The proposal if adopted would preempt not only much of the work of the National Commission, but it would also deprive it of the benefit of day-to-day experience developed as suppliers and users seek to work out within existing copyright concepts workable relations for the dissemination of information through these technologies.

This exemption is, in effect, based on the assumption that enough is known today about the effect of the technologies on copyright and the dissemination of copyrighted materials. It may very well be true that this committee could, if it assigned this matter top priority, come to an appropriate determination based on what is known today. That record has not been established here today or in previous hearings. As in other copyright areas, legislation can be based on an extended record of practices developed between conflicting interests. What you are asked to do by this amendment is to enact into law the position of one of the parties and to ignore the practices and positions of the others. We feel it is premature to decide now upon such a major innovation in American Copyright law and that the amendments, both the Library Single-Copy amendment and the Education Exemption should be referred to the Title II National Commission.

As we have argued with the Library exemption, the education exemption in the clearest language is subject matter clearly within the jurisdiction of the National Commission. We respectfully urge that the Commission be established and assigned the fact-gathering function essential to sound legislation. As we have earlier stated, we are ready and willing to be of assistance in working with the Commission in this major undertaking.

CONCLUSION We wish to draw the Committees attention to the significance of these two amendments in an international sense. What protection U.S. Law provides information will have an effect on how the information products of our technology. based system are treated abroad. Some of our members derive as much as 50% of their revenues from foreign sales, from foreign users seeking to acquire information about the many aspects of the operations of our technologies, etc. The USSR, only recently having joined the Universal Copyright Convention, has also adopted a provision of its copyright law to provide for copyright-free reproduction of printed works for “non-profit scientific, dadactic and educational purposes." Information companies will have little to debate in seeking to receive fair compensation from foreign users for their services if U.S. Law embodies similar provisions.

The domestic effect of the amendments we have described obviously have far-reaching implications internationally, particularly since the U.S. is not only a major producer of copyrighted materials, but it is also a world leader in the development of information technology applications to their distribution. The U.S. must carefully consider major innovations in applying copyright rules to these new media.

We thank you for this opportunity to share our views with you.

CORPORATE MEMBERS

ABC/CLIO, Inc., Santa Barbara, Calif., Richard Abel and Co., Portland, Oreg. ; Academic Press, Inc., New York, N.Y.; Aspen Systems Corp., Rockville, Md.; Auerbach Publications Inc., Philadelphia, Pa., Bell & Howell, Wooster, Ohio; Chase Manhattan Corp., New York, N.Y.; Cordura, Los Angeles, Calif. ; Congressional Information Service, Washington, D.C.; Data Courier, Inc., Louisville, Ky.; Data Flow Systems, Inc., Bethesda, Md.; Data Search Co., Des Plains, Ill. ; Dun & Bradstreet, New York, N.Y.; Encyclopedia Britannica Education Corp., Washington, D.C.; Environment Information Center, Inc., and Frost & Sullivan, New York, N.Y.;

Greenwood Press, a Division of Williamhouse-Regency, Inc., Westport, Conn.; Herner & Co., Washington, D.C. ; Information Clearing House, New York, N.Y.; Information Design, Inc., Menlo Park, Calif.; Information Handling Services, Englewood, Colo.; International Data Corp., Newtonville, Mass.; International Development Center, Kensington, Md.; Institute for Scientific Information, Philadelphia, Pa.; Leasco Information Co., Silver Spring, Md.; Leasco Systems & Research Co., Bethesda, Md.; Lockheed Missiles & Space Co., Palo Alto, Calif.; McGraw Hill, Inc., and Macmillan Information Corp., New York, N.Y.; Microforms Intern'l Marketing Corp., Elmsford, N.Y.; Monitor, Inc./Congressional Monitor, and National Congressional Analysis Corp., Washington, D.C.

Jeffrey Norton Publishers, Inc., and New York Times, New York, N.Y.; Pharmaco-Medical Documentation, Inc., Chatham, N.J.; Plenum Publishing Corp., New York, N.Y.; Predicasts, Inc., Cleveland, Ohio; Readex Microprint Corp., New York, N.Y.; Reesarch Publications, Inc., New Haven, Conn. ; Time, Inc., New York, N.Y.; U.S. Historical Documents Inst., Inc., Washington, D.C.; John Wiley & Sons, Inc., and Garwood R. Wolff & Co., New York, N.Y.; World Meeting Information Center, Inc., Chestnut Hill, Mass. ; and Xerox Corporation, Stanford, Conn.

FOREIGN ASSOCIATE MEMBERS (NON-VOTING) Almqvist & Wiksell, Uppsala, Sweden; Arrow International, and Fuji Corporation, Tokyo, Japan; Information Retrieval, Ltd., London, England; Opidan Sciences, Inc., Toronto, Canada; Orba Information, Ltd., Montreal Canada; Overseas Data Service, Tokyo, Japan; Thomson Data, Ltd., London, England, and U.S. Asiatic Company, Ltd., Tokyo, Japan.

ASSOCIATE MEMBERS (NON-VOTING) Composition Technology, Inc., Canıbridge, Mass.; Inforonics, Inc., Maynard, Mass. ; IBM, Armonk, N.Y.; Multiprint, Inc., New York, N.Y.; Publicate, Inc., Washington, D.C.; Publishers Development Corp., New York, N.Y.; and Rocappi, Inc., Pennsauken, N.J.

Senator BURDICK. Thank you. We are recessed until 10 tomorrow.

[Whereupon, at 4:30 p.m., the subcommittee recessed to reconvene at 10 o'clock a.m. Wednesday, August 1, 1973.]

COPYRIGHT LAW REVISION

WEDNESDAY, AUGUST 1, 1973

U.S. SENATE,
SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS
OF THE COMMITTEE ON THE JUDICIARY

Washington, D.C. The committee met, pursuant to recess, at 10 a.m., in room 1114, Dirksen Senate Office Building, Senator John L. McClellan, presiding:

Present: Senators McClellan (presiding], Burdick, and Fong.
Also present: Thomas C. Brennan, chief counsel.

Senator McCLELLAN. The committee will resume hearings this morning under the same general guidelines and procedures that we observed yesterday. I think everyone is familiar with them.

Who is our first witness this morning?

Mr. BRENNAN. Mr. Chairman, the committee this morning will consider the cable television royalty schedule, and the first witnesses appear on behalf of the Motion Picture Association.

Mr. Valenti, will you identify yourself and your associates for the record ?

Mr. VALENTI. Mr. Chairman, I am Jack Valenti. I am president of the Motion Picture Association, and with me is Mr. Gerald Meyer of the Nizer law firm of New York who is counsel for the committee; to my left is Herbert Stern, of MCA, vice president, who is a member of our committee; Mr. Gerald Meyer, counsel and to my far left is Mr. Chester Migdin, who will speak briefly later.

I also have members of our committee in the rear, including Mr. Arthur Schiner, who is associate to Mr. Hadl, attorneys here in Washington, as well as member of our committee and Dr. Robert Crandall, associate professor of economics at MIT and Mr. Lionel Fray, our consultant of the economic consultants, Temple, Barker & Sloane, Inc.

Senator McCLELLAN. Very well, Jack. Do you have a prepared stateinent?

Mr. VALENTI. Mr. Chairman, we have a statement; I have some notes that I'm going to speak from.

Senator McCLELLAN. Do you wish to have this printed in the record ?
Mr. VALENTI. Yes, sir.
Senator McCLELLAN. All of it printed in the record ?
Mr. VALENTI. Yes, sir.

Senator McCLELLAN. Very well, it will be received and it may be printed in the record in full. You may proceed.

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