AUDIO AND VIDEO FIRST SALE DOCTRINE TUESDAY, DECEMBER 13, 1983 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES, AND THE ADMINISTRATION Of Justice, COMMITTEE ON THE JUDICIARY, The subcommittee met, pursuant to call, at 2 p.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding. Present: Representatives Kastenmeier, Schroeder, and DeWine. Staff present: Michael Remington, chief counsel; Deborah Leavy, counsel; Thomas E. Mooney, associate counsel; Joseph V. Wolfe, associate counsel; and Audrey K. Marcus, clerk. Mr. KASTENMEIER. The meeting will come to order. This afternoon, the subcommittee continues its consideration of two bills that would amend the first sale doctrine with respect to copyright law. H.R. 1027 would prohibit the lending of copyrighted audio works for direct or indirect commercial advantage without the permission of the copyright holder. H.R. 1029 would institute the same policy for video works. Both of these legislative proposals ask Congress to respond to technological advances that have facilitated the copying of copyrighted material. These bills should be, therefore, judged not only on their individual merits, but in the light of broader questions regarding the role of Congress and of the copyright law in the face of technological change. The subcommittee has previously heard testimony on these two related bills in separate hearings, the one on H.R. 1027 on October 6, and the one on H.R. 1029 on October 27. Today's hearing should conclude the series with respect to audio, H.R. 1027, but an additional day for the video bill, H.R. 1029, will be scheduled when the second session of Congress begins early next year. Today, we are very pleased to have four very knowledgeable witnesses coming from different perspectives. The first is Prof. David Lange. Professor Lange has previously testified more generally on the question of the copyright law and technological change. We are asking him a little more specifically today to comment on the bills before us in that context. So, again, we greet Professor Lange of Duke University Law School. You are, again, most welcome, and we look forward to hearing what you have to say. TESTIMONY OF DAVID LANGE, DUKE UNIVERSITY SCHOOL OF LAW Mr. LANGE. Thank you, Mr. Chairman. Thank you very much. I appreciate your invitation today to comment on these two bills. I have prepared testimony and if I may ask your indulgence, I would, for the most part, suggest that the testimony be received as read and I will offer a summary of it in order to save time. There is one part of the testimony which I would like to make clear. On page 10, I mean to endorse the amendments suggested in S. 32, but I do not, contrary to what may appear there, misunderstand the meaning of that amendment. I actually would favor a somewhat broader compulsory license. In the process, frankly, of preparing this testimony in some haste, a section of that testimony on page 10 was shortened and I think the meaning is not as clear as it should be. I will try to make that clearer, but otherwise, I would like to suggest that the statement be received as read, and I will now, if I may, offer a summary of my conclusions and something of my reasoning and then would welcome questions on any part of it. Mr. KASTENMEIER. Without objection, then, your 11-page statement will be received and made part of the record, subject to the comments that you just stated with respect to it, and you may proceed as you wish. Mr. LANGE. Thank you. I have actually looked at these bills over some time now, and I have had the benefit of reading many of the statements that have been prepared and introduced, which I think are illuminating, and I have come, in consequence of my own thinking and reading, to four conclusions about these bills. First, it seems to me that in no important sense do these bills respond to any urgent need. The second conclusion that I have come to is that as the bills were originally drafted, and introduced, they are overly broad. They do not, I think, present a sufficient balance to take into account other interests which can be seen from a perspective broader than those of the proponents of the bills and so, as a second conclusion on the bills as originally introduced, I would not, myself, think them deserving of passage. A third conclusion is that it seems to me, with some amendments involving the compulsory license and some other changes, the audio first sale bill at least could quite properly be passed, and indeed would seem to me then to be an acceptable compromise among quite a number of competing partisan interests and quite consistent with interests that are broader as well. And finally, in the case of the video first sale bill, I would conclude that that bill, too, if amended to provide something in the nature of a compulsory license for some titles, would have some appeal. Indeed, I might even think that a compulsory license in that kind of setting would be a desirable experiment, but I would point out that since, at that point, the bill would so closely resemble some other pending legislation involving home taping that I think it would be probably wiser to defer passage of that bill until the home taping problem can be addressed more directly. Let me try to explain again, briefly, the nature of my thinking on these bills. To begin with, it seems to me there isn't any urgent need in the case of these bills. The audio bills are urgent in a sense. They present, I think, an urgent problem in the context of the home taping, but the bill itself doesn't really address home taping directly, nor do I think it will provide very effectively for home taping as such. So, the audio first sale change that is proposed doesn't seem to me to be responding to something directly enough to justify it as urgent legislation. Meanwhile, the rental industry for sound recordings, for records, is itself so new and I think so uncertain of ultimate economic survival that again, on that bill alone, 1027, or S. 32, it does not seem to me to be addressing particularly urgent problems. As far as the video rentals are concerned, there, I think, the rental industry is quite clearly well established and likely to flourish. On the other hand, allowing it to go on unaddressed by these changes in the copyright law would give us some chance to see how that industry and the copyright industry as well would respond to an unregulated environment-better than I think we have had a chance yet to see, and meanwhile, I don't see any real indication that the motion picture industry is in any dire straits. In fact, a recent report suggests that the motion picture industry is heading for one of the best years it has had very nearly in the last quarter century. In fact, despite the appearance at first of dangers in the home video revolution, there is evidence to think that that revolution may well be increasing, not decreasing, the appetite for theatrical motion picture releases and I think we could safely go on leaving things as they are in that field, just for the sake of conducting a continuing experiment, watching it closely to be sure, but not acting on that just yet. All I mean at this point is that the problems are not urgent. I do not mean that they are not problems or that they may not become urgent or that they don't deserve a legislative response. I simply don't see them now as urgent problems. Meanwhile, the bills themselves, though they have had an essentially partisan appraisal from most witnesses here, raise some other concerns that I think do deserve to be considered, and which, when I look at these bills as they were originally introduced, do not seem to me to be adequately contemplated or provided for. Specifically, I have four things in mind that in the broad view seem to deserve attention. One is the internal structure of the Copyright Act itself. I don't intend to dwell on this, but it is not merely an academic preoccupation to be concerned with the conceptual structure of the copyright law. The main danger I see in changing the first sale doctrine here is that we may incidentally change some of our presumptions about copyright law I have suggested, for example, in one part of my testimony a passage from a statement offered some months ago, actually by Professor Ladd in another forum in which he suggested that the presumption in this setting might be against the rental people rather than the copyright proprietors who seek an extension of the law. I think that that is not so. I think the presumption is to the contrary. And while, as I do make clear in my testimony and mean again to say very clearly here, I have great respect for Professor Ladd-I admire him and think well of his opinions-the fact that there can be some serious disagreement about the presumption in copyright law and in extending copyright law in the context of a change in first sale makes me uneasy about changing first sale without treating it as a very serious undertaking. That is the first thing. I don't think these bills as introduced evidence that kind of concern. Second, I think the bills are not as appreciative of the functioning of the public domain as they might be. The public domain here seems to me to be working. Copyright interests are not, I think, immediately or seriously threatened. Meanwhile, people relying on the public domain are extending the reach and the scope of the expression in these works and that means, I think, that the system in general just right now has been working much as the framers contemplated it would work. Third, it seems to me, a problem with these bills is that they really don't take adequate account of the adverse impact there may be on the technology itself, and I think that is a legitimate concern. I don't for a moment mean to say that passing these bills, either or both of them, today or in 6 months or next year, would bring the technology to its knees. The truth is, in my opinion, this technology in a sense cannot be stopped. It is so rapidly becoming imbedded in, I hate the phrase, but if you will pardon me, the lifestyle of the American people—the appetite, the appreciation, the use of the video recorder-that I don't think that it can any more be put down than gin. But I do think that the direction of the appetite can be adversely affected by legislation, and bills of this kind trouble me when they don't seem clearly to contemplate that. Here, it seems to me, what Congress faces is a dilemma in these bills: in promoting what the framers called the progress of science-by which they meant knowledge, the knowledge that goes with copyrightable expression-Congress runs some risk of jeopardizing the interests or the progress, if you will, of the useful arts-of technology. And as I have suggested-tongue-in-cheek, let me make it clearin my testimony, if you look at who has contributed the most in terms of commitment and inventive contributions to the marketplaces that are in question in these bills, I would say that there is as much reason to let the patent licensees of the video recording machines and the audio recording machines control record and motion picture rentals as there is the contrary. Of course, I do not mean to be understood as offering that suggestion seriously, but I do mean to say that there is a compromise that I think ought to be reflected in these bills, and which I haven't seen reflected there. I think these bills would, if necessary, thwart the development of the technology in the service of the copyright. |