chased products, and the rights of the content industry to restrain the reproduction and distribution of their copyright protected material. Thank you Mr. Chairman. I yield back the balance of my time. PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS I'd like to thank the Chairman and Ranking Member for holding this hearing today. This is an important and complicated issue. I'm glad we'll be adding to the knowledge we gained from the hearings we held last year through the members on the panel we'll hear from today. This bill does strike to the heart of one of the most significant debates for the future of the digital economy-the regulation of intellectual property. With all of its promise, the digital age has also brought a tremendous amount of intellectual property piracy-the software industry reports losing $11 billion a year to software piracy, the motion picture industry another $3-4 billion, and the recording industry $4.2 billion. What is scary to people who make software, movies, and music is that those are the figures only the ones they can calculate. Even more losses from online piracy exist, but are very difficult to calculate. Numerous studies support the theory that many producers have been severely hurt by online piracy. And this is one of the few industries that has a positive balance of trade, reducing our trade deficit. The question before us today is: how can rampant piracy crimes be stopped or contained while society's beneficial fair use rights are preserved? All the witnesses on the panel we're going to hear from today were watching the Supreme Court closely when they ruled in MGM V. Grokster. In this particular ruling, the Court emphasized that the intent with which Grokster created and marketed Peer to Peer file sharing software was what made them liable for copyright infringement. Not the technology itself. This committee does not have the luxury of such specific examples of the creation, use and intent of using such technology in front of us. Should we pass legislation on this issue, it will have a broad impact on these industries regardless of what the circumstances may be. I supported the Digital Millennium Copyright Act when Congress approved it, so I do get concerned when I hear reports of the DMCA being used to eliminate aftermarkets for a variety of replacement parts. What is the point of having digital rights management at all, if someone can create software to hack it, post his hacking software on the Internet, and software pirates in China download it and start cranking out bootleg copies of the latest feature films all in one day? Consumers may be right to complain that they cannot fast forward through previews on their DVDs. But if the software that allows them to fast forward could also allow piracy, I do not think that is the proper balance. As a final note, I would like to mention one section of HR 1201 which falls directly under our jurisdiction-FTC labels for copy-protected compact discs. I think the recording industry knows that sufficiently informing the public of any changes to the CD format is the right thing to do in the first place. The recording industry certainly has a right to copy-protect their products, but Americans have been buying CDs for well over a decade now and have come to expect their CDs will work in all CD drives and players. If new copy-protected compact discs do not work in consumers' CD players, the consumer reaction is likely to be very negative. I hope the parties involved can work together to avoid such situations. Mr. Chairman, thank you for holding this important hearing on the future of digital intellectual property protection. PREPARED STATEMENT OF HON. C.L. “BUTCH" OTTER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO Thank you for holding this hearing today, Mr. Chairman. In one respect, the issues of fair use and copyright protection are always changing, adapting to an everrapidly transforming technology market. Yet they always remain at the heart of the laws of this land. Less than a month ago, we met here to express our concern, frustration, and fear following the Supreme Court's decision in Kelo vs. City of New London. Our outrage was universal and our alarm widespread at the implications of the Court's ruling. And just two weeks ago we spoke loudly in favor of protecting private property, will ing to fight tooth and nail if necessary, on the floor of the House when we passed the Private Property Rights Protection Act. To me this debate is no different, Mr. Chairman. And yet here we sit, no longer united in defense of the Fifth Amendment but in many ways trying to find a convenient exception to our laws which are laid so firmly on a foundation of private property rights. "Fair use" is often craftily disguised as a right and an entitlement, and we discuss it as though we are obligated to protect it. But deep down "fair use" is just another argument for taking someone else's property to use for our own convenience. This argument and the one we found so repulsive in Kelo are one and the same. Some are tempted to separate "intellectual property" from our general idea of private property, but intellectual property is no different than the dirt on my ranch in Idaho. Our entire concept of democracy is based on our right to own, to innovate, and to benefit from our work. Without protecting those rights and making it worthwhile to turn an idea into something more tangible, we would not be the nation we are today. As a believer in the free market system, this debate about "fair use" concerns me on another level. About twenty years ago, we had a similar debate when a new technology called the VCR hit the market. The implications of this new technology seemed devastating for the industry. But a marvelous thing happened: rather than allow government regulation to harm both industry and consumer, the industry responded to consumers' desire to see films at home and became innovative, building an economic empire in the video rental and retail industry as a result. Everybody won. While there are certainly differences in today's debate over fair use, I believe one principle is the same: Consumer demand, not government regulation should lead industry response. It seems to me that the entertainment industries again have an opportunity to work with the software and device manufacturers to develop and sell products that meet consumer demand. Protecting intellectual property investments is the key element in achieving cooperation. Without these protections, all of these industries will ultimately suffer. I believe consumers have a voice and should be heard. That does not, however, obligate the government to mandate the industry response, especially since we are discussing a luxury product-not a right or a basic necessity to life, but a luxury. In closing, I do not believe Congress should promote policies that stifle investment, nor do I believe that this debate on "fair use" should be allowed to carve out an industry in which the rights of property holders do not apply. We are obligated to protect private property, discourage theft, and encourage investment into intellectual properties, not the other way around. I look forward to the witnesses' testimony and thank the Chairman again for the opportunity to discuss this issue. PREPARED STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN I thank Mr. Chairman for holding this hearing today on Fair Use and its effects on consumers and the industry. Rapid advances in technology have increased tensions between the content community and consumers. At the heart of the issue is the tension between attempts by content owners to protect and control the use of their works by means of technology and the consumer's use of technology to make use of content under fair use. Private property and intellectual property rights have been an important part of this country's existence since the inception of the Constitution. Protecting the intellectual property of our artists, writers and inventors from illegal reproduction and distribution should important to all of us, because without protection of these works, we may not be blessed books, music, movies, and art that is made available to us year after year. I am interested to hear from our witnesses today on their views of fair use and whether they believe there is a technological solution instead of a legislative one? Thank you again Mr. Chairman for holding this hearing. In closing I would like to say that I'm sorry that the Recording Industry, Motion Picture Association and the National Association of Broadcasters could not be here to discuss their views on this matter with us. Mr. STEARNS. If not, we will move to our witness and I want to welcome all of them this morning. We have Mr. Professor Peter Jaszi from the University, excuse me, Washington College of Law, So I wish to welcome all of you and we'll start out with you, Professor, your opening statement. Just turn the mike on and move the mike a little closer to you if you would be so kind. STATEMENTS OF PETER JASZI, WASHINGTON COLLEGE OF Mr. JASZI. Thank you. Mr. Chairman, Ranking Member So I am going to start by invoking academic privilege in trying to give a description of the fair use doctrine even more succinct than the chairman's elegant summary of a few moments ago. In essence, the doctrine provides that when the cultural or economic benefits that will flow to the public from an unauthorized use of copyrighted material outweigh the costs it will impose on the copyright owner, that use should be permitted. Fair use is not piracy. Fair uses are non-infringing uses, not merely tolerated infringements. The law does not just accept fair use but actively encourages it. Although fair use is sometimes described technically in terms of legal procedure as a mere affirmative defense, it functions in the real world analogue and digital as an important entitlement for students, artists, teachers, librarians, writers, entrepreneurs, musicians, programmers, and ordinary consumers. As Mr. Ross noted, fair use was first codified as part of the general revision of the Copyright Act in 1976 but it has been a part of U.S. copyright laws since the decision of Folsom against March in 1841. Thus for more than 150 years, the success, the unparalleled success of our copyright system has stemmed from the fact that strong protection for owners consistently has been balanced by use rights that to paraphrase the Supreme Court, encourage others to build freely upon preexisting works and make their own contributions to cultural progress. Moreover, as the court recently reaffirmed in Eldred against Ashcroft, the fair use doctrine is a mechanism, a crucial mechanism by which copyright law recognizes and implements the free speech values of the First Amendment. Major industries such as motion pictures, poplar music, and computer software have prospered in part because innovators have been free to copy important elements of their predecessor's work. Moreover it is because of fair use that we all can make many personal uses of the information products we purchase. Students can copy text or image from published sources to enhance a term paper or homework assignment. Music fans can combine selections from their record collections to make mixes for a family member's birthday. And it is the freedom to read, view, and listen to information products assured by fair use that enables many consumers to move from absorbing the words, images, and notes of others to making their own creations. The reach of copyright law is constantly expanding to provide longer terms of stronger protection against more kinds of unauthorized uses than at any point in history. More than ever than fair use matters now. In the courts, the doctrine is being creatively and robustly applied to guarantee fundamental fairness and balance and providing useful guiding precedence. In other quarters, however, fair use is threatened. Some academics complain that fair use is too vague or uncertain to be of real value to users. It would, however, be a serious mistake for Congress to codify the doctrine in greater detail, precisely because the enduring strength of fair use lies in its dynamism and adaptability to change circumstances. Instead, I believe the best answer to this objection is for various user communities to articulate clearly their own shared vision of best practices in fair use, a process that I am happy to say is beginning to get under way. Self help cannot address other threats to fair use such as those posed by anti-circumvention laws. Thus for example, a teacher who copies short film segments to show in class. This is a classic core example of fair use can still be liable under Section 1201 of the Digital Millennium Copyright Act if he or she bypassed the so called CSS Code with which commercial DVD's are sold. Such anomalies cry out for legislative regress. I would note that H.R. 1201, the Digital Media Consumer Rights Act of 2005 introduced by Representatives Boucher, Doolittle, and Barton illustrates the kind of legislation that would be well calculated to provide that regress. Thank you for your attention. I look forward to trying to answer whatever questions you may have about this vital aspect of American copyright. [The prepared statement of Peter Jaszi follows:] PREPARED STATEMENT OF PETER JASZI, WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY My name is Peter Jaszi. For the last 25 years, I have taught copyright at the Washington College of Law of American University, here in the District of Columbia. In recent years, I also have represented the Digital Future Coalition on various copyright policy issues. Today, however, I am testifying in my personal capacity about the critical importance of the "fair use" doctrine in American copyright law. Summary In the two centuries following the enactment of the first Copyright Act in 1790, the United States enjoyed an unequaled and unbroken record of progress that gave us, on the one hand, educational institutions and research facilities that are preeminent in the modern world, and on the other, entertainment and information industries that dominate the global marketplace. Schools, libraries and archives benefited from the operation of our copyright system, and the public reaped the reward; likewise, expanding American publishing, motion picture, music and software businesses generated not only wealth but also less tangible forms of public good. And this was as it should be. From its inception, the copyright system has operated both as a strong force for cultural development and as a powerful engine of economic growth. The success of traditional U.S. copyright law was not due only to the unprecedentedly high levels of protection it has afforded to works falling within its coverage. That success also stemmed from the fact that strong protection consistently has been balanced against use privileges operating in favor of teachers, students, consumers, creators and innovators who need access to copyrighted material in order to make or prepare to make their own contributions to cultural and economic progress. To put the point more simply, the various limitations and exceptions on rights that traditionally have been a part of the fabric of copyright are not results of legislative or judicial inattention; rather, these apparent "gaps" in protection actually are essential features of the overall design. As the Supreme Court observed more than a decade ago, in its Feist decision, the limiting doctrines of copyright law are not "unforeseen byproduct[s] of a statutory scheme...;" in fulfilling its constitutional objective, copyright "assures authors the right to their original expression but encourages others to build freely upon" preexisting works. And, as the Court recently has reaffirmed in Eldred v. Ashcroft, these limiting doctrines are the mechanism by which copyright law recognizes and implements the values of free expression codified in the First Amendment. Today, more than ever, fair use matters. In the courts, the doctrine is being creatively applied to guarantee fundamental fairness and balance. In other quarters, however, fair use is under threat. But the doctrine (like the vision of balanced copyright law that it represents) deserves to be defended and supported. Some of that support can come from the Congress of the United States, but much of it must derive from the various user communities that depend on the doctrine for the opportunity to make their cultural and economic contributions to our society. Some issues of terminology The term "fair use" can be used in two different ways-one loose and one more precise. Often, it is employed as shorthand to reference all the vital limitations and exceptions on the rights of copyright owners that are built into our system and have done so much to help fulfill the Constitutional objective of intellectual property: promoting the "progress" in "Science and useful Arts." Over the years, U.S. copyright law has built up a catalogue of limitations and exceptions to copyright protection, including: • The "idea/expression" distinction, which assures (among other things) that copyright protection does not attach to the factual contents of protected works; • The "first sale" principle, codified in 17 U.S.C. Sec. 109(a), which assures that (as a general matter) purchasers of information products from books to musical recordings can sell or lend their copies to others; • A variety of specific exemptions for educational, charitable and other positive public uses; and, most importantly, • The doctrine codified in Sec. 107 of the Copyright Act, which provides-in essence that some other unauthorized uses of copyrighted works, not specifically covered by any of the other limitations just summarized, should be permitted rather than punished because their general cultural and economic benefits outweigh the costs they might impose on copyright owners. The DFC is a coalition of more than 30 trade associations, non-governmental organizations and learned societies representing a broad cross-section of the educational, high-tech, consumer and creative communities in the United States; it was organized during the run-up to the Digital Millennium Copyright Act of 1998, and has continued to be active on current copyright policy questions. |