COPYRIGHT OFFICE/COPYRIGHT ROYALTY

TRIBUNAL

THURSDAY, MARCH 3, 1983

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES, AND THE

ADMINISTRATION OF JUSTICE

OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C.

The subcommittee met, pursuant to call, at 9:45 a.m., in room 2141, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Mazzoli, Synar, Schroeder, Glickman, Frank, Berman, and Sawyer.

Staff present: Michael J. Remington, chief counsel; Deborah Leavy, counsel; Thomas E. Mooney, associate counsel; and Audrey Marcus, clerk.

Mr. KASTENMEIER. The committee will come to order.

This morning, we are pleased to continue our oversight of various entities that fall under the jurisdiction of this subcommittee. Today's hearing will be on the Copyright Office of the Library of Congress and the Copyright Royalty Tribunal.

The Copyright Office is one of seven departments in the Library of Congress, all of which fall, of course, within the legislative branch of Government. The Copyright Office not only has diverse administrative duties, but also assists Congress in responding to important issues in the copyright area, and has in the past played a major role in copyright law revision.

The Copyright Royalty Tribunal, also within the legislative branch, was created by the Copyright Act of 1976. The Tribunal is composed of five Commissioners appointed by the President, with the advice and consent of the Senate. It has general authority to make determinations concerning copyright royalty rates in the area of cable television, phonograph records, jukeboxes, and noncommercial broadcasting, and to further distribute cable and jukebox royalties deposited with the Register of Copyrights.

First, we would like to call on the Honorable David Ladd, Register of Copyrights, and Assistant Librarian for Copyright Services. Mr. Ladd is certainly no stranger to the subcommittee; he first appeared before the subcommittee almost 20 years ago as U.S. Commissioner of Patents in the Kennedy administration.

From his post on the faculty of the law school of the University of Miami, Fla., Mr. Ladd was appointed Register of Copyrights in

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June 1980. Since that time, we have greatly benefited from his interest, knowledge, and academic and administrative skills.

The Register is accompanied this morning by Ms. Dorothy Schrader, the Associate Register of Copyrights for Legal Affairs and General Counsel, and Mr. Richard Glasgow, Assistant General Counsel. I would like to acknowledge their presence as well.

So, at this point, I greet Mr. Ladd. We have your statement, and if you would like to submit it for the record and summarize your remarks, we would be very pleased to hear from you.

TESTIMONY OF DAVID L. LADD, REGISTER OF COPYRIGHTS AND ASSISTANT LIBRARIAN OF CONGRESS FOR COPYRIGHT SERVICES, ACCOMPANIED BY DOROTHY SCHRADER, ASSOCIATE REGISTER OF COPYRIGHTS FOR LEGAL AFFAIRS, AND RICHARD E. GLASGOW, ASSISTANT GENERAL COUNSEL

Mr. LADD. Mr. Chairman, as you suggest, I will submit the prepared statement for the record and summarize it. In the summary, I will not try to cover all the points in the statement, but just select highlights from it.

Before I turn to that, however, I would like to extend greetings to the new members of this subcommittee and to the new staff personnel.

We have had the benefit of some discussions with Mr. Remington and Ms. Leavy looking to how the Copyright Office can continue to support the work of the subcommittee. I might repeat what I have said to them, which is that regardless of what the views of the Copyright Office may be on any particular issue, we are available as a resource for briefing and for technically assisting any Member of Congress to advance whatever views he has on the copyright issues before the Congress.

Unless the chairman or the subcommittee so wishes, I am not going to summarize the functions of the Copyright Office. I would simply say very briefly that our central function is to examine the applications for registration of claims to copyright, but there are other important functions as well. The Information and Reference Division is important because the Copyright Office, to a greater degree than most Government agencies, deals directly with the public, directly with authors, directly with consumers; to be effective that function has to be sophisticated. The Licensing Division, as you noted, does collect the royalties for the compulsory license under cable; it also administers the jukebox license and collects those royalties. In addition, as you mentioned in your opening statement, we prepare reports at the direction of Congress on various copyright issues, notably in the past year, on the manufacturing clause and its proposed expiration and on the library photocopying sections of the Copyright Act, Section 108.

I think it may be useful, as a foundation for any questions that the members may wish to ask, simply to refer to some of the developments in the copyright field and some of the issues which are presently before the Congress. In a couple of cases, I will have recommendations on what I think would be useful for the subcommittee to undertake.

First, let me turn to the issue of off-air taping. The Sony Corp v. Universal Studios case is so well known and the home off-air taping issue so well known that it does not need any extended discussion by me. It is, of course, the issue of whether or not home taping falls within the exclusive rights of copyright. The issue is before the Supreme Court in the Betamax case. The argument in the case was heard on January 18. No decision has been rendered. Mr. KASTENMEIER. May I interrupt?

Mr. LADD. Of course.

Mr. KASTENMEIER. Could you give us an offhand ball park judgment of when a decision on that might come down?

Mr. LADD. Well, I have made inquiries of people and have averaged out the estimates. Based on that, I would think in about 2 to 3 months.

Mr. KASTENMEIER. Thank you.

Mr. LADD. The basic issues in the case are whether home taping is, by the meaning and structure of the statute, included among the exclusive rights of copyright and, if the answer to that question is yes, whether the copying within one's home of copyrighted works from a transmission, using VCR's, is a fair use?

The trial court and the court of appeals opinions are summarized in our prepared statement, and I will not repeat them here.

Already bills relating to those issues have been introduced in this Congress, as they were in the last. There were hearings on bills in the last session of Congress which can be broadly divided into two kinds: One would create a blanket exemption for home taping, and concomitantly, reject any idea of contributory infringement, or inducement to infringe, on the part of people selling VCR's or tapes for the purpose of taping at home. The other class of bills can be described as imposing a license upon VCR's and tapes to be used in home taping, with the idea that those moneys collected be distributed to the copyright owners whose works are copied. Bills of both types have been reintroduced into this Congress and whatever the schedule of congressional action on them is, the issue will certainly be much debated.

There is another issue related to home video taping. It is the question of home audiotaping. The blanket exemption bills do not deal with audiotaping, but the licensing fee bills deal with both video taping and audiotaping.

The only reason I mention that here is to make the point that whatever decision is made in the Supreme Court in the Betamax case, that decision will not be controlling on the question of audio recording, and I think that there are some initiatives among Members of Congress and among the lobbyists to separate the video taping and audiotaping issues.

In connection with that, I would observe-

Mr. KASTENMEIER. On that point, I would like to ask a question. Mr. LADD. Yes.

Mr. KASTENMEIER. Are you aware of litigation that may have been brought by audio interests separately, or is it your feeling that audio interests are relying entirely on legislative resolution of this question? Alternatively, are they awaiting the Supreme Court to tender a Sony v. Universal decision to see what their course of action might be in terms of further litigation or legislation?

Mr. LADD. Mr. Chairman, I do not know of any legal action which has been commenced to test the audio question at all.

Mr. KASTENMEIER. All right.

Mr. LADD. And I also have no information, private or public, as to what the strategy of the copyright interests relating to sound recordings is.

Now, there is another issue that was before the Congress last session, and will be again in this session. That is whether or not there should be a modification to the first-sale doctrine embodied in section 109 of the statute. Bills are pending that, in effect, would give copyright owners control over the commercial rental market for audio works and audiovisual works. I underline and emphasize the word "commercial." I do that because there is no doubt that the proposal represents a significant change in the law. The first-sale doctrine has been established in our law for many years. It is, I think, an example of the issues which arise when new technologies affect established markets. The question which will be before the Congress is, since the theater is moving into the home, should the box office also move into the home so that copyright owners can be compensated for the use of their works?

I now turn to the issue of cable television, not because I am aware of any impetus in the Congress to rehash the issues which were so thoroughly considered in the last session. On the other hand, I am aware that bills have been introduced addressing some of the issues which were involved in the cable copyright discussions in the Congress last session, and I do know of the interest of the Congress in cable developments-perhaps I should wait for questions, Mr. Chairman, or wait for the testimony of the CRT, because there has been much discussion of the effect of the recent rate adjustment by the Copyright Royalty Tribunal. I know of the discussion because we have received requests from the affected interests for interpretation of the effect of the legislation adopted by Congress in the closing days of the last session. Provisions within an appropriations bill, in effect, extended the effective date of the new rates to March 15.

I will be glad to talk about those but perhaps it would be better if I were to remain here until after the CRT makes its presentation if you have questions of me.

The final substantive matter which I want to mention is the filing with Congress, in January of this year, of the report of the Register on section 108 of the copyright statute, that is to say, the library photocopying section.

Section 108(i) of the act mandates the Register of Copyrights to file, at 5-year intervals, reports assessing the balance which has been struck between authors on the one hand, and users on the other, and that, of course, means copyright proprietors as well as authors.

I can mention very briefly the process by which the report was prepared. It was some 5 years in preparation. It involved hearings in various parts of the country. There was a sizable contract study to collect empirical data and to measure photocopying practices in libraries; there were extensive written submissions by interests of all kinds; and there were, parallel to this process, discussions by private sector representatives under the aegis of the Copyright

Office, in which an effort was made to achieve a resolution of some of the outstanding issues on photocopying among the various interests, not, as I point out both in the report and in the written statement here, very successfully.

The central finding of the Copyright Office in that study is that the structure, which was provided in section 108 of the statute, does provide a workable framework for the governing of photocopying in libraries, but that in practice it is not working well, either because the meaning of the law is not well understood by people whose behavior lies within its ambit, or for other reasons.

We make very few recommendations for statutory changes. We do make the observation that if, as in other instances, including off-air taping, the CONTU guidelines, and the like, the various parties interested in these issues are able to resolve them voluntarily in guidelines, little legislation would be required.

I have said repeatedly, and I make of record here my declaration that the Copyright Office is far more concerned in presenting the issues in such a clear fashion that the parties will now voluntarily address them and resolve them than we are interested in the acceptance of our particular conclusions and recommendations.

It is our perception, Mr. Chairman, that in the past the Congress in general and this subcommittee in particular have expressed their preference and desire for the interested parties in the various copyright issues voluntarily to resolve them among themselves. I hope that will be the position of the subcommittee on these photocopying issues as well. Our recommendation in the report is that the committee clearly and affirmatively express its wish and expectation that this be done.

We will be sending you shortly several minor matters which perhaps can be characterized as housekeeping in nature. They are in preparation now, relating to the modification of the statutory requirement of the seal, of accommodating the new Hague Convention, which has come into force and to which the United States is a party, to the legalization of documents under the Copyright Act and so forth. My belief is that those recommendations will be noncontroversial in nature and that the committee will be able to handle them in the same way it was able to handle the fee matter embodied in H.R. 4441 in the last session of Congress.

There are some other things that we are looking to, but our consideration is not mature enough to make recommendations; an example is whether any changes in the statute will be necessary to facilitate and extend our use of the telephone in examining claims and thus to avoid the inefficiencies of correspondence. I also have some question in my mind as to whether we might not relax the requirements of section 409 about the elements which are required to be deposited with the application for registration of every copyright and work of every class. When those recommendations are ready, I will be in touch with you, Mr. Chairman, and with the staff.

[The statement of Mr. Ladd follows:]