That the Congress not conflate instances of mass, indiscriminate and anonymous redistribution of works over the Internet with the right of individuals and family groups to enjoy content in a modern and flexible home or family network that may embrace households in different regions.

• That the Congress should not allow the technical tools to create and maintain such home networks to fall under the exclusive control of those who sell or distribute content, solely by virtue of their effective or concerted copyright monopolies.

This Committee has played a key role in preventing or limiting such abuses. By holding today's hearing on the fair use doctrine, your Committee and this Subcommittee continue their leadership in protecting the American public, American innovation, and American culture. On behalf of CEA and the Home Recording Rights Coalition, I again thank you for holding this hearing, and pledge our continued cooperation with you and your staffs.

Mr. STEARNS. Ms. Adler?

STATEMENT OF PRUDENCE S. ADLER

Ms. ADLER. Mr. Chairman, Ranking Member Schakowsky, and members of the subcommittee, I am Prudence Adler and I am speaking today on behalf of the Library Copyright Alliance or LCA. The LCA consists of five major library associations that represent over 139,000 libraries employing 350,000 librarians and other personnel throughout the United States. Our Nation's libraries spend over $2 billion each year on all forms of information, thus we seek to ensure that our patrons have effective and long term access to these information resources.

Thank you for including libraries in this hearing today on fair use. Fair use is central to our ability to achieve many facets of our library missions. Each day teachers, students learn, researchers advance knowledge, and consumers access copyrighted information due to exceptions in the Copyright Act such as fair use. For libraries and for consumers the fair use doctrine is the most important limitation on the rights of the copyright owners. It is the safety valve if you will of the U.S. Copyright Law for consumers.

Fair use balances the rights of authors, publishers, and copyright owners with society's need for the free exchange of ideas. Fair use provides the basis for our most important day to day activities in scholarship and education and safeguards our collective interest in the flow of information. Fair use has served us well because there is no fair use checklist. Importantly there is no bright line for fair use. Fair use is accessible, fair use is dynamic, it is inherently ambiguous and not easily defined but critically important in ensuring legitimate access to copyrighted work.

In addition to fair use by library patrons on a daily basis, libraries also reply upon fair use to support a number of our activities such as print and electronic reserve and increasingly and more recently the digitization of copyrighted work.

Publishers more recently have relied upon the licensing of copyrighted work in lieu of the acquisition of those works. Licensing provides publishers with greater control in the use of their work. How they are used, by whom, and at what cost. Under license agreements, a library is bound by the terms of that agreement and these agreements do not always reflect the exception and privileges of the copyright act such as fair use.

As a result, we are witnessing an erosion of fair use and related library exceptions as licensing and technological controls built into

licensed data bases can restrict the fair use rights of library users and of libraries. For example, technological controls can limit the numbers of copies of an article or the amount of text reproduced. It is important to note that once technological controls are built into a data base with copyrighted materials, it is very difficult if not impossible for libraries to negotiate exceptions in our license agreement.

Moreover, if a license does not permit the preservation of copyrighted work and a library cannot exercise fair use through the license terms copyrighted works will be lost to future generations. Publishers had not undertaken preservation of copyrighted work. Instead it is libraries that preserve these works for future users. That is why the library community is a strong supporter of legislation to address these concerns, H.R. 1201.

In closing, fair use reflects copyrights laws first amendment based principles of free speech and provides the basis for our most important day-to-day activities. Fair use safeguards our collected interest, our Nation's interest in the flow of information which is in turn a source of cultural, historical, and economically valuable

matters.

Thank you.

[The prepared statement of Prudence S. Adler follows:]

PREPARED STATEMENT OF PRUDENCE S. ADLER, ASSOCIATION OF RESEARCH
LIBRARIES ON BEHALF OF THE LIBRARY COPYRIGHT ALLIANCE

My name is Prudence Adler and I am speaking today on behalf of the Library Copyright Alliance or LCA. The LCA consists of five major library associations-the American Association of Law Libraries, the American Library Association, the Association of Research Libraries, the Medical Library Association, and the Special Libraries Association. These five associations collectively represent over 139,000 libraries employing over 350,000 librarians and other personnel throughout the United States. These five associations cooperate in the LCA to address_copyright issues that affect libraries and their patrons. Our Nation's libraries spend over two billion dollars each year on all forms of information; thus we seek to ensure that our patrons have effective and long-term access to these information resources.

Thank you for including libraries in this hearing today on fair use. Fair use is central to our ability to achieve many facets of our missions. Libraries are essential to the communities that they serve and to our Nation. Libraries preserve and provide access to our cultural, historical and scientific heritage; support and encourage research, education and lifelong learning; and provide a venue for community engagement on a host of issues.

Libraries, like many other sectors, are undergoing significant transformation in this rapidly evolving digital environment. Today, researchers, students and members of the public can engage in sophisticated searching and manipulation of information including ready access to data, sound and image files, and more. Increasingly, the data and information available is both current and historical as many libraries, and others such as Google, Yahoo, Microsoft, and the Internet Archive, digitize special collections that richly reflect the cultural and political history of our Nation.

In this time of transformation, intellectual property policies have been and will continue to be central to the library community. Historically, the library community has relied on copyright law as the policy framework for balancing the competing interests of creators, publishers, and users of copyrighted works. Copyright law balances the rights of authors, publishers and copyright owners with society's need for the free exchange of ideas. Provisions in the Copyright Act including fair use and related exemptions for libraries and educational institutions allow libraries to achieve our mission of providing effective public access to and the preservation of information in all formats.

Each day teachers teach, students learn, researchers advance knowledge, and consumers access copyrighted information due to exemptions in the Copyright Act such as fair use. Fair use permits the use of copyrighted material without permission from the copyright holder under certain circumstances. For libraries and indeed for

consumers, the Fair Use Doctrine is the most important limitation on the rights of the copyright owner-the "safety valve" of U.S. copyright law for consumers.

Fair use or Section 107 of the Copyright Act allows reproduction and other uses of copyrighted works for purposes such as criticism, comment, news reporting, teaching, scholarship and research. The statute sets forth four factors to be considered in determining whether a use is fair; including the character of the use, the nature of the work, the amount used in proportion to the whole, and the impact on the market for the work. Fair use has served us well because there is no fair use checklist. The four factors provide libraries and users alike with needed flexibility. And there is no need to import from other sections of the law the detailed list of conditions, prohibitions, and exclusions such as those found in the TEACH Act concerning distance education. Importantly, there is no bright line for fair use. Thus, fair use is dynamic, inherently ambiguous and not easily defined but critically important in ensuring legitimate access to copyrighted works.

Library patrons routinely rely on fair use. A teacher, for example, might photocopy a few pages of a history text found in a library to hand out to her class. A student may include in a term paper a quotation from a novel checked out of a library while a researcher might give a copy of a journal article describing a laboratory technique to a technician who works for her. A small business owner may print out accounting tips from a website he accesses from a library computer. These are fair uses of copyrighted works.

In addition to fair uses by library patrons, libraries rely upon fair use in support of a number of library activities. While U.S. copyright law does contain explicit exceptions for libraries and archives in Section 108, these exceptions do not cover every circumstance under which a library might need to use a work. Section 108 specifically provides that "[n]othing in this section...in any way affects the right of fair use as provided by section 107..." For example, library practices for both print and electronic reserves are based on fair use.

For decades, libraries have provided access to materials selected by faculty as required or recommended course readings in a designated area of the library, with materials available to students for a short loan period and perhaps with additional restrictions to ensure that all students have access to the material. These materials are important to the course but do not warrant the purchase of an entire text by the student. Libraries have based these reserve reading room operations on the fair use provisions of the Copyright Act.

More recently, as with other services, many libraries have introduced electronic reserves (e-reserves) systems that permit material to be stored in electronic form and accessed in the library or remotely by the student enrolled in the course. Ereserves systems are a more effective means to provide student access to needed copyrighted materials. E-reserves are an excellent example of the flexibility of fair use and demonstrate that it is technologically neutral in its application.

Within the past decade, there has been a notable shift by publishers to license their works to libraries in lieu of the purchase of these works by libraries. Licensing provides publishers with greater control in the use of their works-how they are used, by whom and at what cost. Licensing access to copyrighted works versus the acquisition of the copyrighted work by libraries presents new challenges to both libraries and their patrons. Under license agreements, a library is bound by the terms of the agreement. These agreements do not necessarily reflect the privileges and exceptions of the Copyright Act such as fair use, preservation and interlibrary loan. For example, if libraries are unable through negotiation to include in the license terms the ability to perform preservation on copyrighted works, libraries can no longer exercise the rights that are otherwise available through the Copyright Act. Licensing and technological controls built into a licensed database can restrict the fair use rights of library users in a number of ways. Technological controls can limit the number of copies of an article copied or the amount of text reproduced. These amounts are controlled by the printing and downloading commands of the licensed database. Once technological controls are built into a database with copyrighted materials, it becomes difficult if not impossible for libraries to negotiate exceptions. Although libraries may preserve copyrighted works under Section 108 of the Copyright Act, there may be times that libraries choose to preserve copyrighted works under Section 107, Fair Use. If a license does not permit the preservation of copyrighted works and a library cannot exercise fair use due to the license terms and/or technological controls, copyrighted works will be lost to future generations. Publishers have not undertaken preservation of copyrighted works. Instead, it is libraries that preserve these works for future users.

In closing, fair use serves a critically important role in the library and educational arena and in all sectors, both public and private. Fair use, in addition to reflecting in copyright law First Amendment-based principles of free speech, provides the

basis for our most important day-to-day activities in scholarship and education. Fair use safeguards our collective interest in the flow of information-which is, in turn, a source of culturally and economically valuable knowledge.

Mr. STEARNS. Mr. Band?

STATEMENT OF JONATHAN BAND

Mr. BAND. Chairman Stearns, Ranking Member Schakowsky, and members of the subcommittee, NetCoalition appreciates this opportunity to testify on the importance of fair use through the internet.

NetCoalition members believe in strong intellectual property protection. They own copyrights, patents, and trademarks and enforce them vigorously. Indeed, their most valuable assets are intellectual property. At the same time, NetCoalition members believe that overprotection of intellectual property is as harmful as under protection. Congress and the courts have carefully structured the copyright law to maintain the balance between the interest of authors and the control of their writings and supplied its competing interests in the free flow of ideas, information, and commerce.

Fair use is an important means by which the copyright law maintains this balance. Fair use is particularly important in the digital environment where even the most basic functions require computers to make copies. Almost every activity on the internet involves copying, viewing a website, printing out a new article, responding to an email including an image from a website in a book report. I will provide three instances where fair use plays a critical role for internet companies, search engines, software development, and on line creativity. I then will discuss on threat to fair use.

Search engines depend on fair use in their daily operations. A search engine firm sends out a software spider that crawls to websites and copies vast quantities of data into the search engine's data base. As a practical matter, each major search engine copies a large percentage of the entire worldwide web every few weeks to keep the data base current. Significantly, the search engines conduct all this copying without the permission of the website operators. The search engines believe that fair use permits this copying. In other words, the billions of dollars of market capital represented by the search engine companies are based primarily on fair use.

The fair use status of search engines has been considered in one case, Kelly v. Arriba Soft. There the Ninth Circuit concluded that fair use allowed the copying performed by a search engine. We will be hearing from the Authors Guild about the Google print library project. At this point, I would like to just say that Google will only be displaying short snippets of copyright books to users. Also any copyright owner can opt out of the project simply by asking Google not to scan his book into its data base. Because of the snippets and the opt out Google print will not harm any authors and should be considered a fair use by the court.

Fair use is also critical to the inner workings of the internet. The interoperability between the many components that make up the internet can often be achieved only if developers through reverse engine the different software components. Software reverse engineering typically requires the making of temporary copies. Several courts have found that fair use permits this copying. Fair use facili

tates political and artistic discourse on the internet. Bloggers for example frequently quote from articles or other bloggers. The internet is also full of parody. NetCoalition members encourage and benefit from this robust creative activity.

Entertainment companies understandably seek to prevent infringement of their works through the use of Digital Right Management Systems. But such DRM's typically preclude both fair and unfair uses. As DRM's become more pervasive, Congress may need to consider mechanisms for preserving fair use. Additionally, Congress should exercise great care before mandating DRM's. Such technological mandates will not only limit fair use, they will also impede innovation.

In sum, as Congress fashions policies to protect the entertainment industry from large scale infringement over digital networks it must take care not to prevent lawful uses that enrich our lives. Thank you for your attention.

[The prepared statement of Jonathan Band follows:]

PREPARED STATEMENT OF JONATHAN BAND ON BEHALF OF NETCOALITION NetCoalition appreciates this opportunity to testify before the subcommittee on the importance of fair use to the Internet. NetCoalition represents some of the Internet's most innovative companies, including Bloomberg, CNET Networks, Google, Interactive Corp., and Yahoo!. NetCoalition members believe in strong intellectual property protection. They own copyrights, patents, and trademarks, and enforce them vigorously. Indeed, their most valuable assets are intellectual property. At the same time, NetCoalition members agree with Judge Alex Kozinski that overprotection of intellectual property is as harmful as underprotection. See White v. Samsung Electronics, 989 F.2d 1512 (9th Cir.)(Kozinski, J., dissenting), cert. denied, 113 S.Ct. 2443 (1993). The Supreme Court explains that the intellectual property system requires a “balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other." Sony Corp. v. Universal City Studio, Inc., 464 U.S. 417, 429 (1984).

Congress and the courts have carefully structured the copyright law to maintain this balance. Thus, while "copyright protection subsists...in original works of authorship fixed in any tangible medium of expression,” copyright does not “extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery..." 17 U.S.C. 102. Similarly, the Supreme Court in Feist v. Rural Telephone, 499 U.S. 340 (1991), stated that "the most fundamental axiom of copyright law” is "that no one may copyright facts..." Id. at 353. Accordingly, "raw facts may be copied at will." Id. at 349.

The fair use doctrine is another means by which the copyright law balances “the competing concerns of providing incentive to authors to create and of fostering competition in such creativity." Kern River Gas Transmission Co. v. Coastal Corp., 899 F,2d 1458, 1463 (5th Cir.), cert. denied, 498 U.S. 952 (1990). The Supreme Court has described fair use as an "equitable rule of reason which permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster." Stewart v. Abend, 495 U.S. 207, 237 (1990). Just two years ago, Justice Ginsburg termed fair use as one of copyright law's "built-in First Amendment accommodations...” Eldred v. Ashcroft, 123 S.Ct. 769, 788 (2003).

Fair use is particularly important in the digital environment, where even the most basic functions require computers to make copies. For example, for a user to view a website, the user's computer must make a temporary copy of the website in its random access memory. Almost every other activity on the Internet also involves the making of a copy: printing out an interesting article; responding to an email; including an image downloaded from a website in an elementary school book report. The balance of my testimony will address three instances where fair use plays a critical role for Internet companies: search engines, software development, and online creativity. My testimony then will discuss some of the threats to fair use.