2004] ON PROTECTING CHILDREN FROM SPEECH 53 violence (aside from violence itself). As children grow older and their capacities increase, they are entitled to broader speech rights, but they still require some protections. Thus, protections of children (and, to a lesser extent, of teenagers) are best set in ways that separate the various limitations by age, and that "spillover" as little as possible onto the access of adults. However, if protecting children requires some limitation on adults, especially their commercial speech, then these measures are justified when the harm is substantial and well documented. We see this more clearly once we recognize that the First Amendment does not trump all other considerations, and begin to value children more than we may have in the recent past. Mr. SMITH. Thank you, Dr. Etzioni. Mr. Valenti? STATEMENT OF JACK VALENTI, PRESIDENT AND CHIEF EXECUTIVE OFFICER, MOTION PICTURE ASSOCIATION OF AMERICA Mr. VALENTI. Thank you, Mr. Chairman. First I really want to thank you. I was deeply moved by what you said, and I'm grateful to you and Congresswoman Lofgren as well. These are trying times for me right now. But this Committee has been the great protector of intellectual property, which I need not point out to this Committee, is America's greatest trade export, producing great surplus balances of payment while we're bleeding from trade deficits. I want to thank you, Mr. Chairman, the Ranking Member, Mr. Berman, for 4077, H.R. 4077, which is I think one of the best measures that's come out of this Committee, and I hope it becomes law. Thank you for that. And finally, Mr. Chairman, before I begin my pathetically ineloquent comments, I come before you with great reluctance. You've been a great champion and a great friend, and I find myself quite hesitant in trying to take issue with you on anything, so I hope you'll allow me to do this, because I really believe in what I'm about to say, but I do regret very much that we're on different sides on this. Please forgive me. What I want to say here is simple and straightforward, and it's this, that it rests on two very impressive premises. And one of them is that the right to make derivative works, whether fixed or nonfixed, from a copyrighted work, is under law, under copyright law, a fundamental right that is exclusively the right of the copyright owner. And to change it, to diminish it, to shrink it, I think is not in the long-range interest of this country. And the second is, my second premise is, it is the marketplace, not the Congress, that ought to deal with these commercial disputes, and that's what they are. And before I finish here, I will tell you I think we're on our way to having it done in the proper way. Now, what this law tells us, I think with great clarity is, as I've said, that only the copyright owner has the right to determine who changes, produces a derivative work from his copyrighted work. Now, this movie filtering bill, I think would so seriously erode that, that allows somebody making money off of skipping scenes or dialogue, which disfigures the original vision of the creator who spent a year or two working on this movie, and it cost $100 million to make, and somebody somewhere in a back room-we don't know who they are really makes these kind of cuts. And Ms. Peters, in her comments, points out that even that is awkwardly done, and it doesn't even get the job done. So there's some kind of a misfigurement going on. It's not what the creator had in mind. I fought for 38 years to both defend the first amendment and to make sure that artistic integrity could be preserved in this country. I think it is valuable, and I think in any way to dishonor it, is not good for this country. Now, let me go on to what I think is important. I don't have any objection, nor do I think the creative people have, in people's homes to do what they choose to do with the technology, fast forwarding and all the stuff that they do, nothing wrong with that. But somebody, for profit, to come in and make these judgments, and then to display it and deploy it to the known western world is not right, it is just not right. One objection is this, our objection is, I think for the Congress to give political and legal cover to companies who do this, by offering a disfigured version of a movie without regard to the creative vision of the director and approval of the studio just doesn't make any sense. That brings me to my second issue, my second premise. I would hope that this Committee would allow the parties to negotiate. Now, you know this has been going on for some time, Mr. Chairman, and you rightly said it's a long time. But I am not part of these negotiations because antitrust law prevents the MPAA from getting involved. So I can only tell you what I have been told and do in part believe. And that is that these negotiations are complex, multi-faceted, multi-tiered, and that these are negotiations that take both sides to agree. Now, what has happened is, that I've been told that the prospect of having victory handed to them, without having to go through these negotiations, is causing on the other side a diminishing incentive to negotiate. I don't blame ClearPlay. Frankly, if I was in their shoes, I'd be doing exactly what they're doing, talk, talk, talk, but don't make a deal. Let Congress do it for you. You get everything free. Why negotiate? And I think that's pretty smart tactics on their part. And therefore, Mr. Chairman, I think you should know that the studios, I am told, also are negotiating with another company providing the same services, called Trilogy. And Trilogy has sent a letter to this Committee saying, "We believe the marketplace ought to decide this, as it has to do." This is a business agreement that Congress has no expertise in. Now, I want to finish by saying-before that red light is going on, and dismays me considerably, I might add [Laughter.] But I want to finish as I began, Mr. Chairman. I endorse your objectives, and that is to have more family friendly movies in choices for America, and we're doing that. All you have to do is go down and look at the top grossing pictures every week, and you will see increasingly at the top of the list the G and the PG rated films. Now, the reason why they're there is because they're a complete narrative. Other pictures are not a complete narrative, because if ClearPlay has its way, you will see something in there that will not only dismay you, it will puzzle you, because the conversation, the dialogue, the scenes that have been taken out, which rips apart the journey of the dramatic narrative. So I think with great passion, Mr. Chairman, I believe if you could go back and say, "Negotiate now, it's going to be business negotiations, not a congressional law to do this," it will get done. Thank you. [The prepared statement of Mr. Valenti follows:] PREPARED STATEMENT OF JACK VALENTI Chairman Smith, Mr. Berman, distinguished Members of the Subcommittee: This Committee stands in the vanguard of the protectors of copyright and intellectual property in this country. You, Chairman Smith and you, Ranking Member Ber man, both introduced H.R. 4077, which can be justly hailed as a valuable and important measure that protects copyrighted works. All those who work and create in the intellectual property community-America's greatest trade export-have deep gratitude for your championing of copyright. Which is why it is with deeply profound reluctance that I must testify in opposition to the movie filtering bill called the "Family Movie Act." My brief here is simple and straightforward. It rests on two impressive premises. The first is that the right to make "derivative works" from a copyrighted work is, under copyright law, a fundamental property right belonging exclusively to the copyright owner, and should be preserved else copyright begins to decay. The second is that the marketplace, not Congress, is the best place to resolve the type of commercial dispute that gives rise to this legislation. The law tells us, with great clarity, that the owner of a copyrighted work—and only that owner has the authority to decide if someone else may produce a product derived from that copyrighted work. The title deed of this valuable principle has solid congressional roots. It is enshrined in Section 106 of the Copyright Act. It means that no one may usurp your right to prepare and sell, for example, an abridged version of your book, song, or movie because they think that some members of the public might pay for a version that eliminates certain parts of that creation. The movie filtering bill would seriously erode that core right by legalizing businesses that sell technology, for a profit, which can "skip and mute" scenes or dialogue to create an abridged version of a movie, as long as no "fixed copy" of the altered version is created. Of course, we understand that the purpose of the bill is to come to the aid of commercial services that, without permission of the owners of the copyright, use this technology to create so-called "family friendly" versions of movies. These versions delete scenes or mute dialogue that the service's employees deem too violent, too coarse, too suggestive, or otherwise may be objectionable to some members of the American public. But the legislation is in no way cabined to permit only such services to flourish, and, consistent with the First Amendment, probably could not. Anyone could use this statute to go into business to sell abridged versions of movies for any purpose: to skip every part of the movie except the violent scenes; to remove any reference to, say, interracial dating; or simply to offer a one-hour version of a classic movie like "Saving Private Ryan," eliminating all the parts somebody thought were nonessential. And while this legislation is confined to movies, is there any principled difference between businesses that make their money offering edited versions of someone else's movies and those that would offer edited music or books distributed in digital form? The inroads into copyright law allowed by this bill could have other unhappy consequences. Failure to adequately protect the exclusive right of copyright owners to authorize the making of derivative works and the rights of authors would violate U.S. obligations under the Berne Copyright Convention. Moreover, a breach of the obligation relating to derivative works would be actionable under the WTO TRIPS provisions. The future of our creative industry, and its spectacular nourishment of the U.S. economy, depends on the ability of U.S. trade negotiators to persuade other nations to respect our copyrights by strictly complying with their international obligations under the Berne Convention and the WIPO Copyright Treaty. I ask you to consider this indisputable truth: if the Congress enacts a law that is inconsistent with our international obligations, our ability to insist that our trading partners comply with their obligations to us is severely undermined. It is obviously in our companies' interests to produce movies that appeal to a large number of people of all ages, call them 'family friendly or however you describe them. And we do not, of course, object to people in their homes for our own personal tastes fast forwarding through scenes they might not want to watch, or might not want their children to watch. Our objection is simply to Congress providing legal cover to companies that want to make a profit by offering an edited, abridged version of a movie without regard for the wishes of the director who created the movie or the studio that owns the copyright to the movie. That brings me to my second point: I ask you to allow the parties and the market to sort this out without any legislation. Is that not a sensible, reasonable suggestion? As you know, Mr. Chairman, there is pending litigation in the court that will decide the dispute between the parties. This litigation includes the commercial concerns that sell a variety of kinds of "movie filters," the movie studios that own the copyrights, and the directors who created the movies being abridged. More importantly, there are also ongoing productive negotiations between individual studios and the editing services to try to resolve this dispute through licensing agreements acceptable to all sides. The essence of this solution would involve the studios, in consultation with the directors, creating "airplane-like" versions of popular movies. The commercial editing services would use these versions as templates from which to prepare their alternative versions. These negotiations are complex, multi-issued, and multi-sided. These are not negotiations that the antitrust laws permit to be carried out by the MPAA, operating as an association. Instead, each studio must discuss the terms and conditions of any licensing agreements individually with each of the film filtering firms. I am, therefore, not privy to the exact details of the negotiations between the individual studios and the filtering companies. I do understand that substantial progress has been made, and there is hope for a light at the end of the tunnel. However, I am also hearing that the prospect of having victory handed to them by legislation may have dampened the enthusiasm of one side to come to fair terms. It is self-evident that if a party believes that it will obtain everything that it wants for free, there is less incentive to bargain in good faith. I hold out great hope that agreements can be hammered out that would result in acceptable commercial and artistic choices for everyone. Any settlement agreed to among the parties is far more likely to accommodate all the interests concerned than any legislative solution imposed upon them. This is a decision that needs to be developed in the marketplace between commercial firms, and is unsuitable to being judged and decided by legislation. I know that this has taken time. But give us the chance we need to attempt to work this out. We all know that the threat of potential legislation will continue to hang in the air. We just ask that a clear message be sent to all sides: "Work this out as business groups do every day, by negotiation, not by legislative threat." Mr. Chairman, I have no quarrel with your objective: to increase choices for families who want to watch our movies. We want the same. But, with much passion, we believe that goal has to be achieved through business agreements that make sense in the marketplace. Pushing this legislation through now will not, I fear, be seen in the fullness of time as a boost for America's parents, but as a unnecessary blow to the first principles of copyright. Thank you, Mr. Chairman, and your colleagues on the Committee. Mr. SMITH. Thank you, Mr. Valenti. Ms. Nance. STATEMENT OF PENNY YOUNG NANCE, PRESIDENT, Ms. NANCE. Thank you, Mr. Chairman and Members of the Committee, and it it's not fair that I have to go after the charming and eloquent Mr. Valenti, but I'll try my best. My name is Penny Young Nance, and I'm the President of the Kids First Coalition. We're a nonprofit educational and advocacy group that I founded with the goal of protecting children and advancing pro-family legislation. I sit before you not only as a profamily advocate, but also as a very concerned mother of two young children. Today I'm here to represent members of my organization, mostly moms who downgraded professional careers to stay home full time, or like I do, part time with their children, as well as countless parents across the country that seek to protect their children from graphic sexual images and violence which unmistakably damage our children. The Kaiser Family Foundation reports that 95 percent of children, ages 0 to 6, live in a home where there's a VCR or a DVD player. They say that on average these kids watch just the VCR or DVD player-this is not totaling in television time 40 minutes a day. And of course, we all know that not everything viewed by these children is age appropriate. Recent studies by the American Psychological Association and the American Academy of Child and |