Thank you.

Mr. STEARNS. Ms. Blackburn?

Ms. BLACKBURN. Thank you, Mr. Chairman.

I had read through some of the testimony and just want to make just a couple of comments even though I basically have no voice today. It does not seem to shut me up much.

I want to welcome our guests and thank you all for being with us and we are looking forward to hearing from you. I want to thank the chairman for the hearing today. I think it is a very important hearing. I think this is a critical, critical issue for our country.

As I read your testimony, I find it is like when you say you cannot be a little bit pregnant so how do you go snip just a little bit of what somebody has created and where do you draw that line? It is like when my children were little, I would say, they would say something and it would be just a little white lie but little white lies lead to great big lies. And I think we have to begin to look at this issue not as just piracy, not as just snippets but we have to look at it as theft.

And there is an underlying reason I think we have to do that. It is because you may call it fair use. One of my country music constituents in Tennessee looks at what you want to do and says this is fair use for technology to steal my work. And many in our creative community do that, look at it that way. I think that is dangerous. I think we have to be very careful in codifying something that would allow theft and it concerns me tremendously. It concerns me for the economic renaissance that I would love to see happen in this great Nation. And I see some of you laughing and shaking your head and that concerns me that you would make light of what is of great concern. The greatest asset this Nation has had is our constitution. The greatest asset this economy has ever had, ever had is the fact that private property ownership has been revered and has literally been held sacred.

So I thank the chairman for holding the hearing. I thank each of you for being here. I look forward to talking with you, to questioning you, and to visiting you about this issue.

Brother, I yield back.

Mr. STEARNS. I thank the gentlelady.

Mr. Gonzalez?

Mr. GONZALEZ. Waive opening.

Mr. STEARNS. The gentleman waives opening.

Mr. Ferguson?

Mr. FERGUSON. Thank you, Mr. Chairman. Thank you for holding this hearing. It is one that I hope will clarify what constitutes fair use in the consumer marketplace.

This issue of fair use is commonly misunderstood, it is often misinterpreted, and most disturbingly from my point of view, it is easily distorted. As someone who represents a district of industries that are leaders in research and development whether that is in healthcare or telecommunications or communications or high tech, I am acutely aware of the importance of an intellectual property protection and the responsibility that we have to protect intellectual property rights ensuring productivity and innovation and the

deployment of the most advanced technologies and medical solutions for people all around this country and around the world.

My wife and I have four young children and we frequently find ourselves as the role of the judge among them in deciding what is fair and what is not fair. Needless to say, our interpretation ends up being a bit different from our four young kids' interpretation of what is fair. That being said, the notion of what is indeed fair can take on a life of its own, particularly in a court of public opinion. And as one of our witnesses today, Mr. DeLong wrote a few years back "A party who successfully grabs the label of fairness is on the way to victory."

Unfortunately when debating the issue of fair use, the fairness label has been used inaccurately to the advantage of those who perpetuate piracy and to the detriment of the copyright owners and ultimately the American consumer. As Members of Congress, we have to discard the labels and the easy to digest talking points and focus on what is actually permissible under the law. First and foremost, what is the fair use principle mean and what is it intended to cover? Some have contended that each and every person who buys a copy of a copyrighted work, a DVD or a CD for instance has full license under the fair use doctrine to make as many copies as they want without regard to the nature of the copying or the ultimate exploitation of the work. This is simply untrue.

The determination of fair use is always, always based on an examination of facts "any particular case" including consideration of the four factors in Section 107 of the Copyright Act. Even a fair use determination in the Sony Betamax case which many here claim is the touchstone of fair use was based on a careful balancing of the four factors and limited in its outcome to one specific act, time shifting.

Another argument we will hear is that under the principle of fair use, the public should have the ability to circumvent copy protection measures on DVD's and CD's so long as it is for a "non-copyright infringing use." This subjective narrow view, frankly an optimistic view not only makes a substantial leap of faith that those who are using hacking tools are doing do for personal use without intention to steal, but worse, it undercuts the goal of the DMCA which was to promote experimentation and development of technologies, a goal more important now than ever in the digital age which is in full bloom. Intellectual property is our country's greatest economic contributor. We should not devalue it by statutorily instituting a buy one get as many as you like free rule.

At the end of the day, this hearing represents the beginning of what I hope will be a robust and healthy debate on the principle of fair use and intellectual property rights grounded in facts and not grounded in distortions.

Thank you, Mr. Chairman, I yield back.

Mr. STEARNS. I thank the gentleman.

Mr. Ross?

Mr. Ross. Thank you, Mr. Chairman and Ranking Member Schakowsky for having this hearing here today.

As a relatively new member of this committee, this is my first hearing on fair use and I am looking forward to the testimony of the witnesses and the dialog that follows.

The copyright clause of the constitution authorized Congress to "promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their writings and discoveries." The copyright law is ultimately commercial law. It protects the creator's right to financially exercise his or her intellectual property. The fair use doctrine was codified in the Copyright Act of 1976 where four criteria were established to determine whether unauthorized use of a work is fair use or whether it is an infringing use. The history of copyright law is a history of law adjusting to new technology. Often these laws cannot keep up with the state of technological advances. As we know, the internet and digital technology have created new possibilities for methods of distribution, of popular entertainment such as music and film in addition to enhancing academic studies.

Determining how fair use is applied in this digital environment in the concept of appropriate fair use is something we as policymakers must carefully consider as we contemplate new laws to protect the interest of creators while maintaining access for consumers. In the past, traditional methods of copyright enforcement often involve the holder against a middleman. Illegal replication and distribution were more centralized in the activities of a bootlegger or an innocent infringer. Today, digital technology has cut out the middleman which makes copyright enforcement more challenging. In addition, as the public's consumption of digital products grows, the law and technology increasingly focus on digital means to protect copyright interest because of the great risk of piracy inherent in digital media exchanged over the internet. Thomas Freedman in his book, The World is Flat, talks in great depth about this very issue and the pros and cons involved in what the technology today is allowing us to do.

Today, the House is scheduled to consider H. Con. Resolution 230, the resolution expressing the sense of Congress that Russia provide adequate and effective protection of intellectual property rights. The U.S. Trade Representative estimates that U.S. businesses lost $1.7 billion in copyright and other intellectual property theft in the Russian Federation in 2004, $1.7 billion lost in Russia alone in 2004, that's money that cannot be spent to further develop and enhance products and new innovation.

The bill expresses concern about the failure of Russia to uphold international standards in the protection of intellectual property rights, a core American asset. This asset is not limited to the compensation received by those who create or publish material but also impacts the numerous jobs created throughout this country and the economic revenue communities depend on for further growth.

Copyright itself is an engine of free expression because it supplies the economic incentive to create and disseminate ideas. I believe it is imperative that as more information and products become available in this digital environment, we do not weaken our laws which could result in making piracy easier and more prevalent.

Again, thank you for having this hearing today and I look forward to hearing from those who have joined us.

And with that, Mr. Chairman, I yield back my remaining 45 seconds.

[The prepared statement of Hon. Mike Ross follows:]

PREPARED STATEMENT OF HON. MIKE ROSS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARKANSAS

Thank you Chairman Stearns and Ranking Member Schakowsky for having this hearing today.

As a relatively new member of this Committee, this is my first hearing on Fair Use and I am looking forward to the testimony of the witnesses and the dialogue that follows.

The Copyright Clause of the Constitution authorized Congress "To promote the Progress of Science and the useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their Writings and Discoveries."

Copyright law is ultimately commercial law; it protects the creator's right to financially exercise his or her intellectual property.

The fair use doctrine was codified in the Copyright Act of 1976 where four criteria were established to determine whether unauthorized use of a work is "fair" use, or whether it is an infringing use.

The history of copyright law is the history of law adjusting to new technology. Often, these laws cannot keep up with the speed of technological advances.

As we know, the Internet and digital technology have created new possibilities for methods of distribution of popular entertainment such as music and film in addition to enhancing academic studies.

Determining how fair use is applied in this digital environment and the concept of appropriate fair use is something we, as policy makers, must carefully consider as we contemplate new laws to protect the interest of creators while maintaining access for consumers.

In the past, traditional methods of copyright enforcement often involved the holder against a “middleman." Illegal replication and distribution were more centralized in the activities of a "bootlegger" or an innocent infringer.

Today, digital technology has cut out the middleman, which makes copyright enforcement more challenging.

In addition, as the public's consumption of digital products grows, the law and technology increasingly focus on digital means to protect copyright interests because of the great risk of piracy inherent in digital media_exchanged over the Internet. Today, the House is scheduled to consider H. Con. Res. 230, a resolution expressing the Sense of Congress that Russia provides adequate and effective protection of intellectual property rights.

The U.S. Trade Representative estimates that U.S. businesses lost $1.7 billion in copyright and other intellectual property theft in the Russian Federation in 2004. The bill expresses concern about the failure of Russia to uphold international standards in the protection of intellectual property rights, a core American asset. This "asset" is not limited to the compensation received by those who create or publish material, but also impacts the numerous jobs created throughout this country and the economic revenue communities depend upon for growth.

Copyright itself is “an engine of free expression" because it supplies the economic incentive to create and disseminate ideas.

It is imperative that as more information and products become available in this digital environment, we do not weaken our laws which could result in making piracy easier and more prevalent.

Again, thank you for having this hearing today, and I look forward to hearing from those who have joined us.

Mr. STEARNS. I thank the gentleman.

The chairman of the full committee, the distinguished gentleman from Texas, Mr. Barton.

Chairman BARTON. Thank you, Chairman Stearns for holding the hearing today.

The doctrine of fair use has a long history in our country. I am glad that we have such a distinguished panel today to talk about it. It is extremely important to protect people's intellectual property and our copyright protections stem directly from our Nation's founding document, the Constitution. If you think back at the time the formers and framers of the Constitution were meeting, piracy involved sailors with cutlasses and cannons and a taste for gold.

Their only worry with the law was that if it caught them they would hang them. With some notable exceptions, today's pirates are more likely to come armed with computers and pocket protectors. They still do not have much concern for legalities, however, and they still retain a taste for unarmed wealth. The framers did not anticipate the digital age but they did anticipate theft. It seems to me that they would have no problem identifying the modern pirates who steal other people's creative ideas and sell it.

As this subcommittee has explored with hearings in the past, international and domestic intellectual property infringement is a real problem and we must vigorously prosecute those who break the laws that deal with those types of situations. I think, however, that the people who wrote the Constitution would recognize the difference between a pirate and a consumer. Copyright owners for example do not have eternal and complete control over their works. Over the years and with the Constitution as their guides, the courts have determined and Congress had codified certain restrictions including the fair use doctrine. Simply put, consumers are allowed to use copyrighted works without permission of the owner under certain limited circumstances. These limited circumstances have been a strength of our system, not a weakness. They allow consumers who pay for works appropriate access to and use of and I want to accentuate appropriate copyrighted works. At the same time, ownership rights have been secured in order to encourage creativity and innovation. America is a Nation that values ideas and the freedom of Americans to innovate and to invent is another of our great strengths and fair use is a fundamental part of that. I am concerned that some attempts to protect content may overstep reasonable boundaries and limit the consumer's legal options particularly in light of the emerging technologies that we are beginning to see in the marketplace. It boils down to this. I believe that when I buy a music album or a movie DVD, it should be mine once I leave the store. Who does not believe that? Does that mean that I have unlimited rights to use that DVD or that album? No, of course not, but the law should not restrict my fair use right to use my own property. Current law provides that I am liable for anything I do that amounts to infringement but current law also prevents me from making legal use of the content that is technologically locked even if I have the key. That just does not make sense to me. In defending this conflict, some say that fair use leads to piracy. Some even say that fair use is piracy. I do not believe that. I do not think it is. By definition, fair use is the use that does not infringe upon the owner's rights.

I am very interested in the state of content technology, content protection technology. Is it effective? Has it limited consumer's fair use rights? How might these developments hurt consumers in the future? How is the consumer electronics industry been affected? How would it affect the research and scientific community? I look forward to finding some of the answers to these questions from our distinguished panelists today. I also look forward to a comprehensive discussion about the doctrine of fair use, its historic origins, its future, and the real world effects in the marketplace of today. Finally, I want to thank Mr. Boucher for his work on this issue and for helping to prepare us today in providing or at least rec