Mr. GEHRKE. Mr. Chairman, small business and individual copyright owners make a special contribution to the U.S. economy by helping to meet the domestic and global demand for products of the American mind. Training media companies produce educational training tapes in such areas as health, safety, management, customer relations, industrial skills and the like. Our products contribute to the improved productivity and a much safer workplace

Most training media companies are small businesses. The median TMA member company has gross annual sales of approximately $1.6 million and has about 15 full-time employees.

Our training tapes are very expensive to produce and they carry a very high risk. We have a highly specialized market. Therefore, a copy of one of our tapes may have a retail price of, say, $300 to $500 and maybe more. But each copy that we license in turn may be used to train dozens, even thousands of employees, very cost effectively.

Unfortunately, we face rampant infringement problems. A study we have submitted to you shows that corporate and government users are making thousands upon thousands of copies of our copyrighted materials without our permission. By our calculation, this translates into a loss of one-third of the total revenue for this entire industry.

Disregard for copyright is pervasive and it's growing. We are doing everything possible to attack the menace of infringement. Our association has one of the most aggressive public education and incentive programs in the industry, but our efforts have barely made a dent. That is why we believe the law must be strengthened to provide an additional deterrent, particularly where the victim of the infringement is the little guy from which the typical infringer normally is a much larger organization, who believes he really has nothing to fear. H.R. 671 would provide a deterrent against infringement and assurance that the plaintiffs with meritorious claims can effectively protect their rights.

Now, Mr. Chairman, I would like to present John Evans to complete our presentation.

Mr. KASTENMEIER. Mr. Evans, you may proceed.

STATEMENT OF JOHN M. EVANS, PRESIDENT, INDUSTRIAL TRAINING SYSTEMS CORP., ON BEHALF OF THE TRAINING MEDIA ASSOCIATION

Mr. EVANS. Thank you, Mr. Chairman.

Mr. Chairman, as someone who is engaged in the training media business on a day-to-day basis, every day, I can tell you unequivocally that costs and risks of litigation strongly reduce our inclination and ability to protect our rights.

Copyright litigation is expensive, requiring access to specialized members of the bar. In today's environment, in the era of the VCR, we frequently receive evidence that an infringement has taken place, often in the form of a posted note attached to a cassette that is returned to us saying, "Suzy, please make five copies of this and then return it to the ITS Corporation." Investigations and bringing suits are very costly, often prohibitively so.

While some instances of infringement are very large, most involve only a modest loss of revenues, say $500 to a few thousand dollars. But to companies the size of ours, infringements of this magnitude repeated hundreds of times a year represent very significant losses.

We are one of the larger companies in the TMA, and in my company alone, we estimate infringement losses each year costing our company in the amount of $1.2 million.

Recently TMA asked its members about their individual experiences. Eighty-two percent of them said that, within the past 5 years, they had reason to file an infringement lawsuit, but only 21 percent actually did so. Forty-six percent said they had settled an infringement claim for less than actual damages because they feared they would be unable to recover their attorneys' fees.

Importantly, Mr. Chairman, 96 percent said that if they could be certain of receiving attorneys' fees if they prevailed, they would in all likelihood take legal action to defend their copyrights. Ultimately, Mr. Chairman, we wish to avoid litigation and feel that the certainty of paying attorneys' fees would deter would-be copyright infringers.

H.R. 671 is an essential relief for small copyright owners and would be a strong guarantor of action for small copyright owners to protect their rights. We believe this bill will strongly promote creativity and is fully consistent with established copyright policy.

Creativity from all sources, whatever their size, should be protected and encouraged. Mr. Chairman, please give us individual entrepreneurs and small businesses the tools we need to protect our rights. In so doing, you will expand public access to copyrighted works and enhance the quality and diversity of products from America's copyright entrepreneurs. We urge this subcommittee to act soon, and favorably, on H.R. 671.

Thank you.

Mr. KASTENMEIER. Thank you, Mr. Evans.

[The prepared statement of the Training Media Association, with

STATEMENT OF THE TRAINING MEDIA ASSOCIATION

ON H.R. 671

EXECUTIVE SUMMARY

The Training Media Association (TMA) strongly supports H.R. 671, a bill to mandate that courts grant reasonable attorney's fees to small business and individual copyright owners who prevail in infringement suits.

TMA is joined in support of H.R. 671 by the members of the Coalition for Copyright Entrepreneurs, an ad hoc group of organizations representing small business and individual businesspeople in a wide range of copyright-based industries.

Hundreds of thousands of small copyright entrepreneurs help keep our nation in the forefront of copyright industries, America's industries of the future. Effective copyright protection is essential to preserve the ability and incentive to create.

Copyright litigation is risky and expensive. Small business and individual copyright owners must often pursue cases over great distances, and must have access to qualified copyright counsel. Frequently, such copyright owners are chilled in their ability to vindicate their rights by the costs of litigation and the lack of assurance that these costs can be recouped, even if the copyright owner prevails.

H.R. 671 would alleviate this chill. It would act as both a deterrent (causing infringers to think twice about the ramifications of their actions) and an incentive (permitting those who suffer infringements to protect their property).

H.R. 671 does not unduly constrain judicial discretion in that it allows courts to determine what levels of attorney's fees are reasonable. The bill in no way changes the burden of proof.

We

The bill contains a limited exclusion from mandatory fees awards for certain infringements by nonprofit educational institutions, libraries, archives, and public broadcasters. do not oppose this exclusion provided courts retain discretion to award damages in such cases and the exclusion is not broadened.

We urge the Congress to state in the strongest possible terms that this legislation is not intended to interfere with judicial discretion to award attorney's fees in any case in which the court, applying established statutory and common law criteria, finds that they are warranted regardless of the size or nature of the plaintiff or the infringer.

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Mr. Chairman, Members of the Subcommittee:

The Training Media Association strongly supports H.R. 671, a bill introduced by Subcommittee Member Howard Berman, and currently co-sponsored by Rep. Moorhead (also a member of this Subcommittee) and Rep. Benjamin Gilman of New York.

We believe passage of H.R. 671 would be the most important step Congress could take this year to promote investment and innovation by America's small businesses and individuals engaged in the creation of copyrighted works.

We are joined in support of H.R. 671 by the members of the Coalition for Copyright Entrepreneurs, an ad hoc group of over a dozen organizations representing small business and individual businesspeople in an extraordinarily wide range of copyrightbased industries. A complete list of supporting organizations appears as Attachment A to this Statement.

Mr. Chairman, America excels in the creation of copyrighted works, and small business and individual copyright owners make a special contribution. Hundreds of thousands of small copyright entrepreneurs help keep our nation in the forefront of these industries of the future, meeting domestic and global demand for products of the American mind.

Effective copyright protection is essential to preserve the ability and incentive to create. Many of our copyright-based businesses are part of large corporate entities and have the ability and the wherewithal to protect their rights. it is in the national interest to ensure that smaller, entrepreneurial copyright owners have that same ability.

We believe

As your invited witness today, we will focus with particularity on the needs of our own industry, our efforts to further our copyright interests, and our own views on why H.R. 671 is needed. But every member of the Coalition for Copyright Entrepreneurs has its own distinct perspective on the need for H.R. 671, and we believe each of them will wish to contribute to the record on which you will deliberate.

About the Training Media Industry

The Training Media Association represents over 60 companies engaged in the production, marketing and distribution of training and educational materials, primarily on videotape.