Mr. MARMADUKE. Well, thanks to Wilshire Boulevard, the support became unanimous quickly. I don't know what could have done a better job for making everyone see the potential problem.

Mr. RAILSBACK. I think, Mr. Chairman, I just want to thank the witnesses. It is very important for us to be able to hear from people that have had their own personal experience and it, maybe better than anything else, kind of brings home to us exactly what some of the problems are. So, I think your testimony has been very valuable.

Mr. KASTENMEIER. The gentlewoman from Colorado.

Mrs. SCHROEDER. I want to thank all of them. I think it has been wonderful that Mr. Drake showed us that song composers aren't people who wear tails in the morning to breakfast, whip out a little tune and then go for lunch. I think he got into a little better portrayal of what life is really like. I am delighted to hear about the Go-Go's. It brings home-my daughter thinks they hang the Moon, but I must admit, you knock on her door and she screams, "Mother, don't you know I am taping." So, I understand how this all fits together.

Mr. Jones, you were absolutely delightful and I think the retailers being concerned about the product, too, was very interesting. So, I want to thank all of you, too, and thank you very, very much for being here.

Mr. KASTENMEIER. Well, as Chair I would like to thank this panel. I am also very pleased that the testimony was so much to the point, so concise and we were able to, I think, comprehend it that much better.

So, in conclusion, let me thank not only the four witnesses before us, Mr. Moss, Mr. Drake, Mr. Jones, Mr. Marmaduke, but all the witnesses in the 3 days here before us for the purpose of expressing the point, so concise and we were able to comprehend it that much better.

I would like to thank UCLA Law School for giving us a home and really all the people here who are interested in this subject and who have come here, who either are from the Los Angeles area or have come a long distance. You have all been very friendly and hospitable and made our stay also very pleasant, as well as informative.

This, then, concludes these initial hearings in Los Angeles on home tape recording and until we resume at some point in Washington, D.C., with governmental witnesses, these hearings will stand adjourned until that time.

[Whereupon, at 12:09 p.m., the hearing of the subcommittee was adjourned.]

HOME RECORDING OF COPYRIGHTED WORKS

THURSDAY, JUNE 24, 1982

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 10:30 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Schroeder, Frank, Railsback, Sawyer, and Butler.

Staff present: Bruce A. Lehman, counsel; Timothy A. Boggs, professional staff member; Thomas E. Mooney, associate counsel; and Audrey K. Marcus, clerk.

Mr. KASTENMEIER. The committee will come to order.

This is the fourth hearing, the first Washington hearing, on the subject of off-air recording on a number of bills which take differing points of view on the question.

This morning we are pleased to greet members of the administration, the Hon. Bernard Wunder, who is Assistant Secretary for Communications and Information for the U.S. Department of Commerce; Hon. Jonathan Rose, Assistant Attorney General, Office of Legal Policy, U.S. Department of Justice, and the Hon. Frank Hodsoll, who is chairman of the National Endowment for the Arts.

We understand that Mr. Rose may have to leave before the panel has completed its testimony and completed responding to questions. In any event, is it your wish that Mr. Rose proceed first? We will be pleased to hear from you.

TESTIMONY OF HON. JONATHAN ROSE, ASSISTANT ATTORNEY GENERAL, OFFICE OF LEGAL POLICY, U.S. DEPARTMENT OF JUSTICE; HON. BERNARD WUNDER, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, U.S. DEPARTMENT OF COMMERCE; AND HON. FRANK HODSOLL, CHAIRMAN, NATIONAL ENDOWMENT FOR THE ARTS

Mr. ROSE. Thank you very much, Mr. Chairman, I will certainly try to stay as long as possible to respond to any questions the committee may have.

I appreciate the opportunity to testify today on legislation relating to the important topic of compensation to copyright owners for noncommercial home taping of audio and video works. This subject is one of considerable importance to the audiovisual entertainment industry and to the consumers of its products. For the sake of orga

nizational convenience, I will focus my remarks primarily on one bill currently pending before this subcommittee, H.R. 5705.

I should say at the outset that the administration has concluded to take no position in favor or opposed to this legislation at the present time. Thus, my comments which follow are intended only to point out some of the considerations the Department believes should be taken into account as the committee considers this difficult and important subject.

H.R. 5705 is one of a number of bills that have been introduced to reverse legislatively the decision of the Court of Appeals for the Ninth Circuit in Universal City Studios, Inc. v. Sony Corporation of America. In that case, in which the Supreme Court has recently granted certiorari, the ninth circuit held that home taping of video programs broadcast over television constitutes copyright infringement for which some tapers are liable as direct infringers, and retailers and manufacturers are liable as contributory infringers.

All of the bills would partially overrule the decision of the ninth circuit either by declaring that home taping does not constitute copyright infringement or by absolving the home taper from direct liability for copyright infringement.

H.R. 5705 would absolve home tapers from liability for copyright infringement. However, the bill would compensate copyright owners for audio and video home taping. It would do so by making importers and manufacturers who distribute audio and video home recorders and blank tapes in the United States directly liable for copyright infringement.

The bill would create a system under which a fee would be imposed on tapes and audio and video recorders. Such fees would be held in a fund from which royalties could be paid to copyright holders. The amount of the royalties and their method of distribution to copyright holders would be within the jurisdiction of the Copyright Royalty Tribunal.

In addition, the bill would modify the so-called first sale doctrine of copyright law, codified in 17 U.S.C. 109, so as to permit copyright owners to use the copyright laws to prevent unauthorized rental of copies of their copyrighted audio and video works.

Throughout American history the law has encouraged literary and artistic creativity by giving authors and artists an intellectual property right in the fruits of their labor. The Founding Fathers recognized the importance of this right in framing the copyright clause of the Constitution, article I, section 8, which authorizes Congress "[t]o promote the Progress of *** useful Arts, by securing for limited Times to Authors*** the exclusive Right to their respective Writings * This constitutional grant of power formed the basis for congressional adoption of the copyright laws. Supreme Court precedents clearly indicate that the copyright clause references to authors and writings are to be liberally construed. Congress has also adopted an expansive view of the copyright principle by modifying the copyright laws over the years to embrace new forms of artistic creation which were undreamed of in the 18th century. Thus, Congress extended copyright protection to motion pictures in passing the Copyright Act of 1909 and to sound recordings through the sound recording amendment of 1971.

Most recently, in enacting section 102(a)(6) of the Copyright Act of 1976, the Congress specifically included audiovisual works in general within the ambit of copyright laws.

In summary, both judicial and legislative developments have favored the broad extension of the copyright mantle to protect what the ingenuity of men should devise.

This broad extension of copyright protection is based upon a recognition that inadequate financial incentive to create artistic works would exist if the artist's work could be freely copied. The Supreme Court has noted that underlying the copyright grant "is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors." What justifies the copyright monopoly is the general benefits derived by the public from the labor of authors. These general benefits are threatened when a copyright is infringed upon through the act of unauthorized copying.

The Congress and the courts have recognized the importance of vindicating copyright holders' interests. At the same time, however, they have not been unmindful of the public interest in reasonable limitations on the scope of copyright privileges. Accordingly, legislators and judges have attempted to weigh the copyright interest in spurring creative efforts against the public's interest in the widespread distribution of reproductions of artistic works. As the Supreme Court has stated:

The limited scope of a copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest. Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts.

It follows that copyright legislation ideally should provide incentive for artistic creation in order to promote the widespread dissemination of copyright work without imposing unnecessary cost to the general public.

In summary, the central thrust of the copyright law has been to encourage creativity for the public good by treating that unauthorized copying of copyrighted works as infringement. By this logic, both audio and visual taping have the potential to diminish copyright values, much like other forms of copying.

H.R. 5705 and the other bills before this committee would exempt from copyright liability an individual who makes an audio or video home recording for the private use of members of the individual's immediate household. The collection of royalties directly from home tapers simply is not a viable method for compensating copyright owners.

Because taping is done in the privacy of the home, it would be impractical, if not Orwellian, to attempt to detect which individuals tape at home and which works they tape. Moreover, even if such taping could be detected, it would be highly inefficient for copyright holders to negotiate with the millions of individuals who tape at home and to bring suit for injunctions or damages against those that refuse to pay an appropriate royalty. Therein lies our current problem.

We have arrived at this point because technology has outrun the relevant legal concepts. The original concept of copyright was de