Fair Use Preemption of Non-Negotiable Licenses

Congress should clarify that fair use rights apply to lawfully purchased media, regardless of whether that media is transmitted in analog or digital form. Similarly,

Congress should preserve fair use by ensuring that consumers are not stripped of fair use rights in a digital marketplace where media goods are increasingly sold in digital form, and can therefore be bound up by non-negotiable “click-wrap” end-user license agreements. A consumer should not, for example, be forced to contract away the right to critique or review a media product by a click-wrap license drawn up to favor an unscrupulous vendor. Accordingly, Congress should clarify that consumers' fair use rights trump contract restrictions unless the contract is truly negotiable.

Prohibit Unfair Terms in Digital Rights Management (DRM)

Some copyright holders seek to protect content by using “digital rights

management” (DRM) technology in order to control and restrict what consumers can do with the media they have purchased. CCIA believes that DRM should not be used

unfairly or irresponsibly.

Rights - including copyrights- imply responsibilities. Just as the fair use right must be exercised responsibly, the copy “right” comes with responsibilities as well. Copyright holders have a responsibility to treat users equitably, and to use self-help to protect copyrights judiciously. Congress should act to ensure fairness in electronic transactions involving digital rights management. The recent debacle over Sony's XCP digital rights management spyware exemplifies some copyright holders' failure to take their responsibility seriously. The revelation that Sony may have surreptitiously installed

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an application called XCP on the computers of millions of consumers who purchased certain copy-protected discs shocked the computing and Internet community.

Even more alarming was the revelation that the cloaking device Sony used to disguise its spyware from consumers is now being exploited by hackers to launch malicious computer attacks. This use of DRM has abused consumer trust and seriously compromised computer security. Even today, the full scope of the security breach created by Sony's XCP spyware has not been ascertained, and it remains unclear whether any critical infrastructure is threatened.

The XCP spyware demonstrates that digital rights management technology must be deployed in an honest and open way that does not threaten computer security. While H.R. 1201 would not have prohibited the deceptive practices evidenced by the XCP incident, it would have required that the spyware-carrying discs be labeled to reflect that fact. Thus, consumers might have been forewarned as to the risk that the product presented.

To adequately protect consumers from these practices, however, label warnings may prove insufficient. Therefore, Congress should act to ensure that digital rights management technology is not used inappropriately. It must be clear whose rights are being managed: DRM should protect copyright holders' rights, rather than "manage" the rights of users. DRM should not be a vehicle for taking away consumers' preexisting rights for the purpose of selling the same rights back to them.

By taking these steps, Congress will ensure that fair use and the innovation that it inspires will remain vibrant, providing lasting benefits to our information economy.

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About CCIA

CCIA is an international, nonprofit association of computer and communications industry firms, representing a broad cross section of the industry. CCIA is dedicated to preserving full, free and open competition throughout its industry. Our members employ more than 600,000 workers and generate annual revenues in excess of $200 billion.

About OSAIA

OSAIA, a project of the Computer & Communications Industry Association, represents the interests of open-source developers and users around the world. Members include many of the world's most prominent open-source companies and organizations, all of which support the right to use, develop, modify and share open source software.

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November 22, 2005

The Honorable CLIFF STEARNS

Chairman

Subcommittee on Commerce, Trade and Consumer Protection

Committee on Energy and Commerce

United States House of Representatives

Washington, D.C. 20515-6115

DEAR MR. CHAIRMAN: Thank you for giving me the opportunity to appear last week at the hearing on the effect of fair use on consumers and industry. În my prepared testimony, I promised to transmit the Documentary Filmmakers' Statement on Best Practices in Fair Use after it was released on November 18. Please find copies attached to this letter for the members of the Subcommittee. In addition, I have transmitted an electronic copy to Mr. Billy Harvard.

Owing to the acoustics in the room, I did not hear the name of the case when Representative Blackburn questioned me. Having reviewed the webcast and of course recognized the Supreme Court precedent about which she asked, I would like to take this opportunity to respond substantively to her.As you know from my testimony, I favor the preservation of copyright fair use through HR 1201, the Digital Media Consumers' Rights Act. But it does not follow that I also endorse the majority's position in Kelo v. City of New London, 125 S. Ct. 2655 (2005).

In my view, there is no simply reason to suppose that there should be a correlation between advocacy for American citizen's fair use rights and support for governmental takings of private land. The two legal disciplines, throughout history, have been unrelated, and real property jurisprudence has never been viewed as precedent for copyright (or vice versa). Thus, it is no surprise that experts in the copyright legal community have not given much consideration or credence to suggestions of any impact of Kelo on copyright.

In any event, organizations such as the American Conservative Union, which have been highly critical of Kelo as an invasion of property rights, also have endorsed the approach of HR 1201 as one well calculated to safeguard the person freedoms of American citizens.There is no contradiction here. This is because real property and "intellectual property" are entirely distinct in their origins, their goals, and their subject-matter. Contrary to the suggestions of Mr. DeLong of PFF at the hearing, tangible property and intellectual property are as fundamentally distinct not just as apples and oranges, but as potatoes and poetry.

Copyright is a newcomer to the field of property rights, invented by legislatures and courts over the last few centuries to serve the goal of encouraging creativity in society. By striking contrast, the ancient institutions of real property are grounded in the physical reality of scarcity and the ethical concept of stewardship. Because land is finite in amount and subject to overuse, Anglo-American law always has assigned rights in particular parcels to individuals (the King, a grantee or a purchaser of title) in order to assure that the resource is maintained. Intangible words, music and images are neither naturally scarce nor vulnerable to waste. In fact, the real value of information actually grows when it is shared. As Jefferson put it, mental productions are like a candle flame: "He who receives an idea from me, receives instruction himself without lessening mine; as he who lites his taper at mine, receives light without darkening me."

Thus, copyright assigns private property rights in only some intangible mental productions, and then only to the limited extent judged necessary to provide incentives for creators. This conservative approach is made manifest in the U.S. Constitution, which, by its terms authorizes Congress to provide intellectual protection only for a "limited term". (Rights in real property, by contrast, last forever.) Moreover, Congress is authorized to provide no more protection than is necessary to fulfill the goal of "promoting Science and the Useful Arts."

The bundle of rights that Congress has given copyright owners, as embodied in section 106 of the Copyright Act, is partial and incomplete when compared with the authority enjoyed by landowners. Moreover, even the finite rights that the Copyright Act gave content owners are further limited by the affirmative rights that following sections give to consumers and citizens. These include, of course, the right to make "fair use" of a copyrighted work that was the subject of last week's hearing. Section 106 of the Copyright Act begins by noting that all of the listed rights of a copyright owner are "Subject to sections 107 through 122," i.e., the explicit limitations and exceptions to those rights as enacted by Congress. Likewise, section 107, which codifies fair use, is characterized as imposing "Limitations on exclusive rights" of copyright owners. Thus, fair use is not a "taking" of rights of a copyright owner. Rather, Section 107 clarifies that a copyright owner does not have any right

to preclude, control, or license fair uses. To put it simply, if the right has not been granted to the copyright owner, then fair use remains the right of our citizens.

H.R. 1201 does not create a new fair use right and it doesn't put Congress in the position of deciding now what constitutes fair use. That has been and will remain a decision for judges to make. The bill only assures that American citizens will be able to continue to make the same kinds of educational, personal and artistic uses of existing material that have been permitted for at least the last 165 years. H.R. 1201 preserves the freedom of ordinary consumers to use technology and digital content they lawfully have acquired. It is only fair they enjoy this freedom, especially because its exercise in no way diminishes the commercial value of a Hollywood movie or an RIAA member's music on a CD.

Finally, contrary to Mr. Aitken's assertion at last week's hearing, the "public domain" is not a byproduct of copyright but the natural state of affairs that copyright has partially displaced. If anyone has standing to complain (metaphorically) about government "takings" of rights to art, literature, and music, it is members of the public, who have seen use rights such as "fair use" diminished by recent legislation (including the anti-circumvention provisions of the Digital Millennium Copyright Act). By introducing H.R. 1201, Representatives Boucher, Doolittle and Barton have taken an important step to restore these culturally vital public entitlements. Thank you again for providing me with the opportunity to participate in the hearing.

Sincerely yours,

PETER JASZI, Professor of Law and Director, Glushko-Samuelson Intellectual Property Law Clinic

cc: Ranking Member Schakowsky Representative Blackburn

PREPARED STATEMENT OF SUN MICROSYSTEMS, INC.

Thank you for the opportunity to submit our views for the record. Sun Microsystems is an industry leader in the development of highly scalable, highly reliable network systems and services. Our technologies power the world's most important markets. Sun's philosophy of sharing innovation and building communities is at the forefront of the next wave of computing: the Participation Age.

Central to Sun's success has been our commitment to fostering the Internet as a place of innovation, creation, and communication. It is our belief that industry and government should each do their best to keep it that way.

Twenty years ago the Court ruled in the Sony Betamax decision that devices capable of substantial non-infringing uses were legal, even if such devices could be used in copyright violations. As Justice Breyer wrote in a concurring opinion in the Grokster case, "There may be other now unforeseen non-infringing uses that develop for peer-to-peer software, just as the home-video rental industry (unmentioned in Sony) developed for the VCR." His point-stopping technologies when they are young and evolving could kill off great promise and benefits that lie down the road. That is why the Court specifically focused on bad behavior while leaving the old Sony standard alone. Exactly right-don't constrain the technology; constrain bad actors.

Innovation has flourished, and this country has reaped the rewards, because Internet technologies enable the rapid, widespread, and often anonymous flow of information. Combine that free flow with advances in digital media-photography, video, music—and you have an amazing opportunity for wide-scale experimentation and creative expression.

Just think: Two decades ago, home computers brought us a revolution called desktop publishing. Now home users have the tools to create professional-quality movies and music-and a way to share them with others. This has opened up new markets and new revenue streams for content owners and software developers among others. It has also helped us continue the march forward into new realms of expression— artistic, political, academic, and personal. Much of this progress owes its existence to fair use.

Lately, though, the Internet has become a place of conflict and contention. Why? Because people are worried about what happens to content that carries a copyright. If it is easy to copy and transmit, how can we make sure artists are compensated, as they should be, for their creative work?

Just as important, how can we do so without quashing experimentation and innovation?

Artists should be compensated. There is no question about that. But in our rush to defend their rights, we should not overrlook the second question. We believe public policy should encourage innovation and free-speech. It should, as always, seek