Therefore, any legislation or regulation probably has to be fairly general and cannot accurately anticipate what is really going to happen.

Yes, in a nutshell, I would say anything you come up with today is probably going to be obsolete in 3 or 4 years. Anything that gets too specific and identifies specific technologies and tries to regulate the technologies as opposed to the principle of intellectual property is likely to come undone.

Mrs. SCHROEDER. I guess my only concern about that is how you continue then to regenerate the capital that you need to continue producing things in the area.

My main concern is in the area of textbooks, as you shift from textbooks to computer programs. One buys one and they all go home and copy a zillion copies.

How do you then get the money back to the group that is doing the original producing, in this or any other area? I think that is the big problem we have because competitively, internationally— we have to look at international competition-we somehow have to have the capital to be able to continue to produce the intellectual property that has kept us-

Mr. COMPAINE. I suspect that industry will probably find some ways. They might sell the first copy for some very high price and then allow the buyer, such as a school district, to reproduce the content. I think that probably the marketplace will provide some of the answers, although not necessarily all of them or all of the right ones, but you have got to give it a chance to work itself out. Mrs. SCHROEDER. It is interesting. Thank you.

Mr. KASTENMEIER. I would like to yield to the gentleman from Ohio who was the first one here today, I might add.

Mr. DEWINE. The first one here but I think all of the questions have been asked. I appreciate the testimony and I have no questions, Mr. Chairman.

Mr. KASTENMEIER. I will yield to you first next time.

I have a simplistic but fundamental question; that is, what is intellectual property? We talk about creativity, but is it really a euphemism or something that doesn't exist anymore in the sense that we protect the NFL football games as an intellectual creation where there is an author?

So, obviously, traditional concepts of the nature of the property we are protecting, even with reference to this identification with the individual creator, seem to be lost. I suspect that there is a question of what is intellectual property.

Second, let me just mention the fact that the semiconductor computer chip industry has been one of the most powerful industries in this country without patent or copyright protection for the chip and its design. It isn't that the industry couldn't use some sort of protection, but it doesn't have it. Nonetheless, it has gone forward as one of our most rapidly expanding industries.

Mr. COMPAINE. I think that is a very good point and that sort of gets me back to something that I said earlier, and that is there are other methods besides copyright that we can develop or will be developed to protect the intellectual property or the creativity, or whatever it is, whether it is contracts, trade secrets, some technology that really prevents copying of something on a disc or whatever.

So that I think we have to be creative in looking for solutions and not just presume that putting a royalty on everything is always the answer.

Mr. KASTENMEIER. On behalf of the committee, I thank you for opening this 2-day session on the future of copyright in this country. You have been very helpful to us, Professor Compaine, and we are indebted to you.

Mr. COMPAINE. Thank you, my pleasure.

Mr. KASTENMEIER. Our next witness is Joseph F. Coates, president of J. F. Coates, Inc., a policy research organization specializing in the future. Mr. Coates was formerly assistant to the director and head of exploratory research of the Congressional Office of Technology Assessment.

He is also president of two professional organizations with an eye on the future: The Association for Science and Technology and Innovation; and the International Association for Impact Assessment. He is, himself, the holder of 19 patents and the author of more than 100 articles and papers.

Mr. Coates, we are very pleased to have you here this morning and we are looking forward to your testimony.

TESTIMONY OF JOSEPH F. COATES, PRESIDENT, J.F. COATES, INC.

Mr. COATES. Mr. Chairman, members of the subcommittee: It is a pleasure and an honor for me to be here to talk with you. I am a futurist. My associates and I earn our living by looking at longrange trends and developments in America and globally. And we try to shape that work in a way that is useful to public and private decisionmaking today. We see the study of the future as a highly productive doable enterprise that can help shape your judgments about actions.

What I would like to do is hit some of the high points, or what I take to be high points, in my prepared testimony and leave as much time as possible for questions.

Mr. KASTENMEIER. Without objection, your formal statement will be received and be made part of the record.

Mr. COATES. Before turning to the trends which I see influencing and shaping your deliberations, I would like to point out four principal conclusions that I come to. Then returning to the trends we will see how we got there.

First, I think it would be a serious mistake to do anything incremental with regard to copyright. It is essentially such an obsolescent category, concept and policy framework, that what is needed is radical restruction.

Second, I think it is abolutely critical to take copyright out of the courts. The courts are fundamentally an antisocial institution in this regard, at the moment, because the courts are committed to looking backward to operations and procedures of the past. We are talking about technological and scientific developments affecting intellectual property, knowledge, and information, which are fundamentally an expanding new cornucopia of social developments. Anything which permits these developments to be forced into the categories of the past is intrinsically, not accidentally a step backward.

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Third, the committee, and people discussing this issue, definitely need some images of the future. What could we have; what do we want, 10, 20, 30 years from now? And with those images of the future in mind one can begin to shape general and specific legislation to deal with the future.

Finally, I think that there has to be some strong will, perhaps helped by an image of the future, to resist the screams that prevail among those who will inevitably be dislocated in this transition period. The screams come loud and clear and they often drown out the sense of what one may want for the future.

Let me turn now to some of the trends that lead to those conclusions.

First and most significant, the overarching conclusion is that America has moved into a so-called postindustrial society, a society characterized by basic dependency on knowledge and information; a society in which science and technology continually are moving to center stage as the fundamental instruments for producing knowledge. The centrality of the knowledge machine and knowledge in society is affecting every aspect of our world.

Very often this change is continuous but rapid; occasionally it is highly disruptive. An example is agriculture. The fact that 3 percent of the Nation produce our food is largely the result of application of new knowledge. It is not necessarily that the farmers are working harder. The knowledge machine shows them how to work better and more effectively.

The new and exciting industries outside computers and electronics, such as genetics, ceramics, materials, pharmaceuticals, and chemicals, are all driven by this knowledge machine. That is what is transforming our economy. It is altering the work force: 45 to 55 percent of workers, depending upon how you would make the count, are now in the business of generating, processing, storing, and handling information.

That is truly a radical transformation in the work force. New developments legislative with regard to information have to reflect this absolutely basic change in the structure of the economy.

As pointed out years ago by Prof. Daniel Bell at Harvard, as we move into this knowledge society, this postindustrial society, what is essential to the economy is shifting.

In a farm-based society of the Colonial era it was land. In the industrial society through the 1940's and 1950's it was the ownership of the means of production. Increasingly the central thing in our society is the ownership and control of the production of knowledge and information.

It is with that central concept as background that I think you should be deliberating.

One of the things that goes along with the information society is the rise of what I would call "the intellectual commons." Increasingly, Americans everywhere are expecting full, free and readyaccess to all kinds of information. You see it in congressional legislation, under the Environmental Policy Act in the environmental impact statements. You see it in the Freedom of Information Act. You also see it aided by technology, the video recorder, the audio recorder, the Xerox machine, all devices, for expanding the intellectual commons. Anything you do to constrain the intellectual

commons is effectively thwarting a major movement into the future.

The second major overarching trend I want to focus on is a family of technological developments which are blurring many traditional distinctions. The distinction between what is printed and not printed is obscured now by computers, by floppy discs, by Xerox. Anyone with a keyboard and a few thousand dollars' worth of modern equipment can become an independent publisher. Thousands of people are now doing that.

The new technology thwarts the fundamental basis for copyright which was the development of large-scale printing where there were, so to speak, node points or bottlenecks-points at which one could exercise control. That intrinsic capability to exercise control has disappeared as the new production technology becomes distributed and available to anyone.

Any legislation framed around bottlenecks, control points, is likely to be wrong-headed.

Right here on Capitol Hill you can issue a thousand personalized letters to a thousand constituents. Right now, it is practical to go far beyond that in personalized books, plays, video, audio.

The sense of the new products are not the industrial model of identical, high quality, and uniform. The new products are tailormade, diverse, fitted to the occasion, and shaped to the moment. And the law has to reflect that new protean capability that technology brings us.

The ability to define what is printed and not printed is becoming obscure because we can now increasingly easily, cheaply, economically, and practically go from voice to print, print to electronic, electronic to print, print to voice, voice to voice. All the relationships are now open, practical, and economic. The point here is that any new legislation based implicitly or explicitly on the print concept is running counter to the future.

Let me point out also, that there is a major gap that would be nice to have filled in terms of your deliberation. There is no economic theory of information. You could, between now and Sunday night, read every significant printed document on the economics of information. And one of the things the committee might very well be doing is pushing the Federal establishment and the academic community to probe that extremely important area. If you don't know what it costs, it is pretty hard to legislate.

Another point to keep in mind is the growing prominence in this postindustrial world of intellectual inventions. Intellectual inventions will be more important because they are the heart of the intellectual knowledge machine.

Intellectual inventions-let me illustrate two of them, to show that they are as much inventions as this wax-covered paper cup on the table in front of me. Beardsley Ruml, in 1940, invented pay-asyou-go income tax, a social invention that is at least as significant as wax paper cups. Yet, Ruml never got anything out of it except prestige and a pat on the back.

Let me give you a case of an intellectual invention which is an interesting mixed case in which, to the best of my knowledge, the inventors never received a nickel: the highway cloverleaf. The cloverleaf highway design has saved tens of thousands of lives, hun

dreds of millions of hours, and yet the inventor has not received any acknowledgement or recognition, much less a penny of return on it.

As these kinds of intellectual tools become more prominent in the future, we have to find ways of rewarding people, both financially and otherwise.

A trend in terms of illegal reproduction, is interesting because it tends to bring out the worst in our juridical system. There are some kinds of products which are ephemeral: tip sheets, newsletters, nonce reports of transient activities.

These, perhaps, need a new kind of highly effective, short-term protection which is then wiped out quickly.

The whole concern about reproduction of tapes, movies, and printed matter, is in some sense overblown.

Let me turn to the status of software. I think that is a critical and interesting question because software is rapidly expanding in importance as the physical technology, the hardware of the new world of information, telecommunications, and computers permeates society. This is the programing material, the electronic brain material that makes it all work.

I don't think there can be any question that ownership should be established over it since that is one condition for taxing it. But a second criterion for ownership is as a mechanism for building recognition and reward. There can't be any question that we need to protect software by some mechanism. But how it is done, I think is an open question.

If forced into the traditional copyright context, it would become a field day and a bonanza for the legal community to catch all parties in infinite litigation, court proceedings, and socially destructive rigamarole.

Software produces a capability. There are many variations on a particular software package for producing that capability. It seems to me the new challenge is how to safeguard the rights of someone who has demonstrated a capability that can be embodied in thousands of minor variations? How do you keep the predators from preying on that genius?

Other trends which I think are important are developments in technology which are creating unprecedented access and equity questions. By remote sensing we can create images, photographs of a variety of different sorts of terrain. That information can provide many people with access to knowledge of minerals or other assets. This in turn can lead to unfair exploitative development deals.

A new question is who has the rights to pictures and knowledge and information about your property? The new intellectual tools are creating new kinds of questions.

The residence and the location of information are creating questions of rights of access and ownership over intellectual property. Increasingly large amounts of the globe's knowledge are stockpiled in the United States. Canadian businessmen, I think, are acutely aware that this is a potential problem.

As I understand it, the street maps of Zurich, for example, are also stored in computers in the United States.

So the question of the international flow of data becomes a new question in terms of rights and access.