FAIR USE AND SEARCH ENGINES

Internet companies rely on fair use in their daily operations. This reliance is most apparent with search engines, the basic tool that allows users to find information on the Internet. A search engine firm sends out software "spiders" that crawl publicly accessible websites and copy vast quantities of data into the search engine's database. As a practical matter, each of the major search engine companies copies a large (and increasing) percentage of the entire World Wide Web every few weeks to keep the database current and comprehensive. When a user issues a query, the search engine searches the websites stored in its database for relevant information. The response provided to the user typically contains links both to the original site as well as to the "cache" copy of the website stored in the search engine's database. Significantly, the search engines conduct this vast amount of copying without the authority of the website operators. Although the search engines will respect an exclusion header, a software "Do Not Enter Sign" posted by a website operator, the search engines does not ask for permission before they enter websites and copy their contents. Rather, the search engine firms believe that the fair use doctrine permits their activities. In other words, the billions of dollars of market capital represented by the search engine companies are based primarily on the fair use doctrine.

KELLY V. ARRIBA SOFT

The application of fair use to search engines has been considered in one caseKelly v. Arriba Soft, 336 F.3d 811 (9th Cir. 2003). There, the Ninth Circuit concluded that the fair use doctrine permitted the copying performed by search engines. Arriba Soft operated a search engine for Internet images. Arriba compiled a database of images by copying pictures from websites, without the express authorization of the website operators. Arriba reduced the full size images into thumbnails, which it stored in its database. In response to a user query, the Arriba search engine displayed responsive thumbnails. If a user clicked on one of the thumbnails, she was linked to the full size image on the original website from which the image had been copied. Kelly, a photographer, discovered that some of the photographs from his website were in the Arriba search database, and he sued for copyright infringement. The lower court found that Arriba's reproduction of the photographs was a fair use, and the Ninth Circuit affirmed.

With respect to the first of the four fair use factors, "the purpose and character of the use, including whether such use is of a commercial nature," 17 U.S.C. § 107(1), the Ninth Circuit acknowledged that Arriba operated its site for commercial purposes. However, Arriba's use of Kelly's images

was more incidental and less exploitative in nature than more traditional types of commercial use. Arriba was neither using Kelly's images to directly promote its web site nor trying to profit by selling Kelly's images. Instead, Kelly's images were among thousands of images in Arriba's search engine database. Because the use of Kelly's images was not highly exploitative, the commercial nature of the use weighs only slightly against a finding of fair use.

Kelly at 818.

The court then considered the transformative nature of the use-whether Arriba's use merely superseded the object of the originals or instead added a further purpose or different character. The court concluded that "the thumbnails were much smaller, lover resolution images that served an entirely different function than Kelly's original images.” Id. While Kelly's “images are artistic works intended to inform and engage the viewer in an aesthetic experience," Arriba's search engine "functions as a tool to help index and improve access to images on the internet..." Id. Further, users were unlikely to enlarge the thumbnails to use them for aesthetic purposes because they were of lower resolution and thus could not be enlarged without significant loss of clarity. In distinguishing other judicial decisions, the Ninth Circuit stressed that "[t]his case involves more than merely a transmission of Kelly's images in a different medium. Arriba's use of the images serves a different function than Kelly's use-improving access to information on the internet versus artistic expression." Id. at 819. The court closed its discussion of the first fair use factor by concluding that Arriba's “use of Kelly's images promotes the goals of the Copyright Act and the fair use exception" because the thumbnails "do not supplant the need for the originals" and they "benefit the public by enhancing information gathering techniques on the internet." Id. at 820.

With respect to the second fair use factor, the nature of the copyrighted work, the Ninth Circuit observed that "[w]orks that are creative in nature are closer to the core of intended copyright protection than are more fact-based works." Kelly at 820. Moreover, "[plublished works are more likely to qualify as fair use because the first appearance of the artist's expression has already occurred." Id. Kelly's works were

creative, but published. Accordingly, the Ninth Circuit concluded that the second factor weighed only slightly in favor of Kelly.

The third fair use factor is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). The Ninth Circuit recognized that "copying an entire work militates against a finding of fair use." Kelly at 820. Nonetheless, the court states that "the extent of permissible copying varies with the purpose and character of the use." Id. Thus, "if the secondary user only copies as much as is necessary for his or her intended use, then this factor will not weigh against him or her." Id. at 820-21. In Kelly, this factor weighed in favor of neither party:

although Arriba did copy each of Kelly's images as a whole, it was reasonable to do so in light of Arriba's use of the images. It was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the originating web site. If Arriba copied only part of the image, it would be more difficult to identify it, thereby reducing the usefulness and effectiveness of the visual search engine. Kelly at 821.

The Ninth Circuit decided that the fourth factor, "the effect of the use upon the potential market for or value of the copyrighted work,” 17 U.S.C. § 107(4), weighed in favor of Arriba. The court found that the Arriba "search engine would guide users to Kelly's web site rather than away from it." Kelly at 821. Additionally, the thumbnail images would not harm Kelly's ability to sell or license full size images because the low resolution of the thumbnails effectively prevented their enlargement.

Are other circuits likely to reach the same conclusion as the Ninth Circuit when reviewing the copying performed by search engines? They are, because the Ninth Circuit's fair use analysis relied heavily on the Supreme Court's most recent fair use decision, Campbell v. Acuff-Rose, Music, Inc., 510 U.S. 569 (1994). Thus, Kelly correctly noted that Campbell held that "[t]he more transformative the new work, the less important the other factors, including commercialism, become." Kelly at 818, citing Campbell at 579. Likewise, Kelly cited Campbell for the proposition that "the extent of permissible copying varies with the purpose and character of the use." Kelly at 820, citing Campbell at 586-87. And Kelly followed Campbell's conclusion that "[a] transformative work is less likely to have an adverse impact on the market for the original than a work that merely supersedes the copyrighted work." Kelly at 821, citing Campbell at 591. Perhaps most importantly, Kelly repeated the Supreme Court's articulation in Campbell and Stewart v. Abend, 495 U.S. 207, 236 (1990), of the objective of the fair use doctrine: "This exception '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."" Kelly at 817.

FAIR USE AND SOFTWARE DEVELOPMENT

Fair use is also critical to the inner workings of the Internet. A user's computer can access information stored on a distant server only because the software on the user's computer, on the server, and on all the computers in between, can communicate with one another. This interoperability often can be achieved only if the software developer can reverse engineer the products with which it seek to communicate. And because of the nature of software, this reverse engineering, this studying of the operation of an existing product, can require the making of temporary copies or translations of the existing program. Several courts have concluded that fair use permits the copying that occurs during the course of software reverse engineering. See Sega v. Accolade, 977 F.2d 1510 (9th Cir. 1992); Atari v. Nintendo, 975 F.2d 832 (Fed. Cir. 1992); Sony v. Connectix, 203 F.3d 596 (9th Cir. 2000).

FAIR USE AND CREATIVITY ON THE INTERNET

The Supreme Court has observed that the Internet is “a unique and wholly new medium of worldwide communication." Reno v. ACLU, 521 U.S. 844 (1997). It "constitutes a vast platform from which to address and hear from a worldwide audience of millions of readers, viewers, researchers and buyers." Id. at 853. The Court marveled at the "vast democratic fora of the Internet,” id. at 868, including thousands of newsgroups, "each serving to foster an exchange of information or opinion on a particular topic running the gamut from, say, the music of Wagner to Balkan politics to AIDS prevention to the Chicago Bulls." Id. at 851. Much of the commentary on newgroups and blogs involves quotations from articles or other commentators. Or it may consist of parodies of speeches or songs. Fair use makes this vital form of political and artistic speech lawful. And hyperlinking technology allows the commentator to link back to the original work. In this manner, the transformative fair

use provides wider distribution to the original work. NetCoalition members encourage and benefit from-this robust creative activity.

THREATS TO FAIR USE

Entertainment companies understandably seek to prevent infringement of their works through the use of digital rights management systems. But such DRMs typically preclude fair uses as well as unlawful ones. As DRMs become more pervasive, Congress may need to consider mechanisms for preserving fair use. Additionally, Congress should exercise great care before mandating DRMs. Such technological mandates will not only limit fair use; they will also impede innovation. These activities permitted by the fair use doctrine must be distinguished from the unauthorized widespread distribution of entertainment content such as sound recordings and motion pictures.

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. The Supreme Court in a related context cautioned that "the interest in encouraging freedom of expression in a democratic society outweighs any theoretical but unproven benefit of censorship." Id.

Mr. STEARNS. Ms. Sohn?

STATEMENT OF GIGI B. SOHN

MS SOHN. Chairman Stearns, Ranking Member Schakowsky, and members of the subcommittee, thank you for inviting me to participate in this very important hearing.

For those of you who are unfamiliar with Public Knowledge, we are a non-profit organization that is dedicated among other things to ensuring that copyright laws are balanced. And balanced is the hallmark of our copyright system and fair use is a key component of that balance. The ability to access and use copyrighted works for certain limited uses has been a driver of creativity, technological innovation, and the broad dissemination of knowledge. For consumers, fair use has resulted in a greater choice of movies, music, videogames, and computer software, a wider variety of useful and inexpensive gadgets on which to play that content, and the ability to quickly and cheaply create their own contents which is happening more and more these days.

But fair use is in great peril. For the past decade, the fair use rights of consumers, your constituents have been chipped away little by little. While technology has advanced and consumers have come to expect that they can enjoy the content they buy when and where they want where at the same time seeing a dedicated and forceful campaign to restrict what consumers can lawfully do with that content.

The content industries have employed a variety of strategies in the campaign against fair use. First, their successfully championed Digital Millennium Copyright Act which prohibits the circumvention of technological protection measures even for lawful uses. Second, many content owners employ restrictive and user license agreements which limit fair use. Third, the industries are seeking Government mandated technological protection measures like the broadcast flag and digital radio content protection which would restrict a variety of fair uses of digital, TV, and radio and would make once interoperable devices incompatible. Finally the content industries have promoted permissions culture in which even the most incidental use of a copyrighted work requires a high licensing fee or leads to a lawsuit.

What has the shrinking of fair use meant for consumers? Here are just some of the lawful personal uses that prohibited under the current regime, ripping songs from a copy protected CD, their personal computers, or an mp3 player; making a digital copy of a DVD for playback on a video iPod, cell phone, or other portable device; making a backup copy of a copy protected CD or DVD; playing legally download music on a competing mp3 player or computer; and removing from a computer malicious digital rights management tools like the now infamous Sony-BMG rootkit DRM. And let me just say a word about the DRM because I think there is a lesson here. My organization does not oppose digital rights management as long as it is marketplace driven as opposed to Government drivThe lesson to be learned there is that consumers did not like the restrictions and the spyware in that DRM and they were outraged and it caused Sony to pull that DRM from the shelf. This is in contrast to the iTunes fair play DRM which people have accepted for limits in that DRM. If you have a Government mandated digital rights management scheme like the broadcast flag for radio content protection, consumers cannot protect themselves in the marketplace or express themselves in the marketplace.

en.

So I urge you to reject all efforts in Government mandated technological protection measures. This committee has a great responsibility to make sure that innovation will not be stifled and that consumers will have the broadest legal use of their digital media and technology as is possible. I urge you to reject the premise that your constituents are pirates and thieves and that they will not buy digital content if it were provided to them at a reasonable price and with the flexibility they have come to expect. Indeed, they already do purchase such content. For example, DVD sales and rentals last year totaled $25 billion and in just a matter of weeks of its launch, iTunes sold $1 million TV programs for use on the video iPod. An RIA chief, Mitch Bainwol recently predicted that legitimate online song purchases could surpass CD retail markets by 2007.

In my written testimony, I have supplied four suggestions for actions you can take to reinvigorate fair use in the digital age. The most important of these is to reform the DMCA so that it permits circumvention solely for lawful purposes. Congress can address this in two ways. It can pass legislation like H.R. 1201 which specifically permits such legal activity and it can clarify and strengthen the DMCA's triennial review process. Congress intended, expressly intended that this process be the fail safe mechanism that protected lawful uses from the unintended consequences of the DMCA, some of which we have heard about today. Instead, it has become a futile exercise for merely everyone seeking an exemption no matter how worthy.

I urge the subcommittee to hold hearings on the triennial review process and a copyright office's standard for granting exemption. Thank you again for the opportunity to testify today. I look forward to your questions.

[The prepared statement of Gigi B. Sohn follows:]

PREPARED STATEMENT OF GIGI B. SOHN, PRESIDENT, PUBLIC KNOWLEDGE Chairman Stearns, Ranking Member Schakowsky and other members of the Subcommittee, my name is Gigi B. Sohn. I am the President of Public Knowledge, a nonprofit public interest organization that addresses the public's stake in the convergence of communications policy and intellectual property law. I want to thank the Subcommittee for inviting me to testify on the vitally important issue of fair use and its impact on consumers and industry.

SUMMARY

The hallmark of our copyright system is balance-creators and publishers receive a limited monopoly in their works in exchange for providing the public rights of access to those works. Fair use is a key component of that balance permitting individuals to make limited, but important uses of copyrighted works without having to ask permission of the copyright holder.

For over two hundred years, this balance, aided by fair use, has served creators, educators, libraries, consumers and the content and technology industries very well. It has resulted in greater creativity, greater innovation and greater consumer choice, and has invigorated the U.S. economy both for creative goods and technology. Over the past decade, however, a number of legal, technological and marketplace efforts by the content industry have put fair use in great peril. These efforts include laws like the Digital Millennium Copyright Act, which prohibits circumvention of technological protection measures even for lawful uses; end user license agreements (EULAS), that restrict fair use; government-imposed technology mandates like the broadcast flag, which put agencies like the Federal Communications Commission in charge of determining what technologies consumers can use to receive digital television and which also restrict fair uses of digital TV; and the rise of business practices that shrink fair use by requiring expensive licensing fees or denying permission for even the most incidental uses of copyrighted works.

Congress can, and must, revitalize fair use for the digital age. While my list is not comprehensive, I suggest four places where Congress can start: 1) ensure that the DMCA protects fair use, whether it be through legislation such as H.R. 1201 or by instructing the Copyright Office to follow the express intent of Congress that the triennial review be a "fail-safe" mechanism the purpose of which is to protect non-infringing uses; 2) reject any and all efforts to impose government-mandated copy protection; 3) pass legislation that protects individuals who make a good faith effort to locate copyright holders who cannot be found and 4) monitor the Google Print litigation and other related matters to ensure that search engines can continue to do what they do best-provide consumers with a comprehensive "card catalogue" of all the world's information-whether the information is online or offline. CONSUMERS, CREATORS AND INDUSTRY ALL BENEFIT FROM A STRONG AND VITAL FAIR

USE DOCTRINE.

Ever since the framers of the Constitution gave Congress the ability "to promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries..." the hallmark of our copyright system has been balance. That balance ensures both strong protection for copyrighted works and unauthorized access to those works for certain limited uses. As the Supreme Court has stated "[t]his protection has never accorded the copyright owner complete control over all possible uses of his work.” 1 The idea behind this balance was simple the framers understood that giving individuals the ability to access protected works would lead to even greater creativity and innovation.

One of the key guardians of this balance is fair use. Fair use is a doctrine developed in common law and codified at 17 USC § 107 that permits individuals to make certain limited uses of copyrighted works without seeking permission from the copyright holder. The idea behind fair use is that creativity, knowledge-building, public criticism and innovation would be severely hampered, if not completely stifled, if artists, librarians, scholars, inventors and consumers had to seek permission from rights holders even for the most mundane use of a work.

For most of the last two hundred years, this balance worked well for consumers, creators and both the content and technology industries. Because of fair use and the other limitations on copyright, the United States has been the unquestioned leader in the creation of artistic works from artists big and small, and our educational and research institutions are the envy of the world. Moreover, and particularly since the

1 Sony v. Universal City Studios, 464 US 417, 463 (1984).