Smackdown, which

is

Worldwide

Wrestling Federation Smackdown. It was the violent images were affecting their behavior directly the next day.

That's not shocking. Moms know that. And my own child, you know, we don't even have cable in our house. That's how careful I am. My child was watching a show on Saturday morning, and I noticed you know, she's only 7, but she was using very sort of teenager slang to me and being slightly disrespectful. And I suddenly put two and two together. She was imitating what she was hearing these older kids say.

What they watch affects them deeply.

Mr. SMITH. Thank you, Ms. Nance.

Without objection, I'm going to recognize myself for an additional 30 seconds, and that's to ask Mr. Valenti a question. Mr. Valenti, your testimony expressed some concern about the commercialization of these movies that might have been filtered. I am hoping to reassure you, in our legislation we explicitly say that it is for private home viewing, we use one phrase, and private use as well. We do not endorse nor contemplate the sale or commercialization of movies that have been filtered. We're talking about private home, individual parent and child-parent relationship. Is that reassuring to you that we're keeping it within those confines?

Mr. VALENTI. I wish I could say yes, but the answer is no, because ClearPlay is a commercial company. It's selling this, and I guess it hopes to increase its sales exponentially over the years. So

Mr. SMITH. But, actually, the sales of movies might increase as well if families were reassured by the content not being offensive. Mr. VALENTI. I'm not going to quarrel with that because the family must purchase, so it's not a question of loss of revenue. But I think of something just as valuable. It's the loss of creative integrity; it's the loss of dramatic narrative. It's somebody, as I said earlier, that works a year, 2, 3 years on a project, a movie, and then have it disfigured in a way that is contrary and despoiling of the creative vision of not only the director and his creative team but the copyright owner as well.

Mr. SMITH. Okay. As you said, this is one of the few times where we disagree, but I thank you for your comment.

Mr. VALENTI. Thank you.

Mr. SMITH. My time has expired, and the gentleman from California is recognized.

Mr. BERMAN. Thank you very much, Mr. Chairman.

First, I want to differentiate I want to just not take exception, but your conclusion about my position, the notion that I would have an informed opinion about whether ClearPlay's technology violates copyright law gives me a level of credit for knowledge that I do not deserve. I have no idea-I mean, I'm interested in the different arguments. I think we have a court that's going to make that decision. I am interested in the Register's opinion of the issue, and I'd like to ask Ms. Peters just a couple of questions.

The bill essentially says copyright law isn't violated in the making of limited portions of audio or video content of a motion picture impresentable-imperceptible by or for the owner of an authorized copy of that motion picture. So that would be Ms. Nance in her

home, the owner of an authorized copy, showing it in her home using this filtering technology to make the scenes that she wants to help keep her child from seeing imperceptible.

If the maker of the film in selling the DVD or the videocassette or the digital transmission makes as a matter of contract law a limitation that says you are not authorized to filter out frames that you don't like, under this bill as written now would the owner of this copy be allowed to use this filtering technology?

Ms. PETERS. My understanding, at least at present, is that where there are exceptions in copyright law, they do not trump contractual provisions.

Mr. BERMAN. That's right.

Ms. PETERS. And, therefore, the issue is whether or not it's a contract of adhesion that would not be basically upheld. So-but my guess is that the answer would be that the contract, if it wasn't a contract of adhesion, would have to be honored.

There's a separate issue with regard to enforcement, because the truth of the matter is that would only apply to the purchaser of the DVD, not to ClearPlay.

Mr. BERMAN. So the irony is that if it is not a contract of adhesion, if it's clear and done in a way to make sure that it avoids that particular problem, your view of existing law would give the parent freer reign under the present system than this bill, if enacted as it's presently written, would provide for the case where a contract would trump.

Ms. PETERS. Maybe yes.1

Mr. BERMAN. All right. Dr. Etzioni talks about-and, I mean, I think this is a very important issue, this question of-I don't know the answer to it. I hear his study of the three Canadian villages. I also am told that no place in the world is the level of violence in videos greater than in Japan, a country with a substantially lower rate of violent crimes than the United States. I mean-I mean, people agree or disagree, and I truly, just like I can't—I wouldn't pretend to know just how copyright law should be interpreted. I wouldn't pretend to fundamentally know what the answer to this question is, but I think it's certainly a legitimate area. But I would like to ask Dr. Etzioni how-what he thinks of somebody who developed a filtering technology that took any of his many articles or 24 books and, without his consent, eliminated a variety of different positions in those books, and then through that filtering technology allowed people to read something very different than he

wrote or consented to.

Mr. ETZIONI. On the first point, Congressman Berman, without going into Japan and Indonesia and all the other variationsMr. BERMAN. Canada is okay but Japan is not?

Mr. ETZIONI. No, I am happy to go country by country, but I want to suggest a shortcut. If you're willing to rest the case on any panel of social science-the National Academy of Science, the American Association of Psychiatry-you choose the panel who reviewed these data, and you're willing to abide not by my or somebody else's summary but by the six panels of experts, this bill will

1 See letter dated July 6, 2004, in the Appendix, p. 89, from the Honorable Marybeth Peters, for clarification of answer to question posed by Subcommittee Member.

be welcomed by all of them because there have been endless reviews of the literature. And you're right, there's a study here that shows that when they're all put together, they leave no doubt.

Mr. BERMAN. All right. Well, I think there's a case to be made, and that's why we have ratings, and Mr. Valenti is responsible for that rating system. That's why we generally agree that parents should keep their kids from seeing certain things, certain movies, reading certain video games, certain books at a particular point in life.

What about my second question?

Mr. ETZIONI. Right. Anytime you find in any of my books anything which would be offensive or hurtful or harmful to children, please tear out that page. And I'll provide the scissors. There is no question that we're not talking about disfiguring anything. That movie is the same. It is not changed one iota after children be protected from its scenes.

There is no parent alive who will think that everything we allow adults to view should be also exposed to minor children.

Mr. BERMAN. But the bill

Mr. SMITH. The gentleman is recognized for an additional minute.

Mr. BERMAN. Thank you. The bill you are embracing, I mean, you made a comment and I congratulate you, Mr. Chairman, for not just including allowing filtering out of pornographic scenes but of violent scenes. This bill doesn't talk about pornography and violence. It talks about filtering anything that the designer of the software wants to provide a filter for and then the parent chooses, including some of the scenes that you resent that I referenced. That's your right. But the bill is totally neutral on the issue of what things ClearPlay can design filters for, not pornography and violence but anything. You can design it to enhance the level of violence by eliminating the non-violent scenes and the non-pornographic scenes. You can distort this any way you want as you improve this technology.

Mr. ETZIONI. Your distortion is my protection of my children. But I'm delighted to hear that it can be used for other purposes. If I'm a devout religious person and there's a movie which my children are asked to view for school next week, and I believe that most of it is of great merit but there is some scene that offends my religion, I'd very much like to have a technology to protect them from it up to a certain age, say up to age 12, we can argue. And so the fact that it allows additional filtering is extremely welcome.

Mr. SMITH. Thank you, Mr. Berman.

The gentleman from California, Mr. Keller, is recognized for his questions.

Mr. KELLER. Thank you, Mr. Chairman. From Florida, but I appreciate that.

Mr. SMITH. What did I say?

Mr. KELLER. You said California.

Mr. SMITH. I'm sorry. I know better. The gentleman from Florida. One of those States on the ocean, right.

Mr. KELLER. A lot of people confuse me for Arnold Schwarzenegger with our physiques. It happens all the time. [Laughter.]

Listening to this-and I swear on my life that I'm objective here and in the middle-it seems to me that there may have been a major strategic error in the directors adding ClearPlay to the suit. That's just what it seems like to me, and I'll tell you why, and I certainly think there's some merit to the suit and I can understand why it was filed. There are companies out there who break encryption codes, and they change words and they blur nudity and they reproduce edited versions of a DVD on another DVD. That seems to me a crystal-clear violation of copyright law, and I can understand why that suit was brought.

But adding ClearPlay, which doesn't do any of that-and they merely sell the consumer a filter which the consumer chooses to buy or not buy, and then goes to Blockbuster and puts that in and skips over certain objectionable words or scenes, and then sends back to Blockbuster the movie in the exact same condition—is all that ClearPlay does here.

And when I hear that, well, we shouldn't act and just let the parties negotiate, I can certainly understand that, you know, you have the Register of Copyright Office saying ClearPlay is not doing anything wrong and that's all they're doing, yet this company has been in a suit for 2 years, had to spend over $1 million. Summary judgment has been pending for 6 months, and we know after that that at the end of it, whoever loses is going to go up on appeal, and there's going to be millions and millions of more dollars. And that's a lot to ask a small company who most folks think are not doing much wrong.

Again, I'm not trashing the suit. There's a good reason for the suit with these other folks. But I'm wondering-let me start with Mr. Valenti—if that's essentially the case, is there any hurt at all to the financial bottom line of the movie companies based on the technology filters that ClearPlay is selling?

Mr. VALENTI. I don't know about what financial losses or gains are there because this is a new technology. I don't think it—it's had only a minuscule entry into the marketplace to this hour.

Mr. KELLER. Okay, because from what I hear, there are different objections raised by your side, and I say "your side," the studios and directors collectively. The financial one doesn't seem to have much merit to me at this point. The one that seems to carry weight is, hey, I'm Steven Spielberg, and I directed this "Jaws" movie, and I don't want you taking out this scene with Jaws coming onboard, and that's a critical part of the movie. That makes some sense to me, and I'm sympathetic to that. But the financial side, I haven't seen the testimony in two hearings to support that.

Ms. Peters, did I characterize your testimony about accurately there?

Ms. PETERS. Yes, you did.

Mr. KELLER. Okay. And you're the one who said what you said, but yet you still feel we should wait because what they're not doing is not illegal in your view. Can you understand in light of the resources of this little company being depleted, which it looks like, at least in some people's mind, like they're not doing anything wrong but they may not have years and years to go, you know, paying over $1 million a pop to defend this litigation.

Ms. PETERS. I understand, I do understand that concern. But that's true for all small companies and start-up businesses. So the question is: You as policymakers, at what point do you step in to put an end to the problem? For me, it's very difficult here because the court has not even ruled on-at this moment, I understand that there may be a cloud and there may be the appeal hanging. But there is no injunction out there stopping them from doing this. I think the law-that it will come out that it will deny summary judgment because they have not embodied any of the audiovisual content of the motion picture. It's software that operates to bring about a certain result. But it doesn't violate the derivative work right as it exists today. And as I said, my big fear about legislation is unintended consequences. I have no problem with this particular scenario. I do have problems with a lot of the scenarios that Mr. Berman suggested. And I do very strongly believe in the integrity of the final product that is the result of the creators being totally distorted. And I'm worried as a-working in a library, about what is history. So I have real reluctance to go jumping in with legislation now.

Now, maybe you can craft a bill that is narrow enough. I do think that technology is going to cause huge issues for the future, and I think one of them is going to be on whether or not you need fixation in order to have a violation of the derivative work right. And I would like the Copyright Office to look into that.

Mr. KELLER. Okay. Thank you.

Mr. Chairman, I yield back.

Mr. SMITH. Thank you, Mr. Keller.

The gentlewoman from California, Ms. Waters, is recognized for questions.

Ms. WATERS. Thank you very much, Mr. Chairman.

I'd like to thank our panelists for being here today, and I would like to just reiterate probably what has been said over and over again, that we're all very much concerned about our children and what they have access to and the impact that movies have on our children. And no matter what our approaches are, we all share that same very basic concern.

Mr. Chairman and Members, I'm very concerned at this point about whether or not the hearings that we're holding are timely or whether or not this hearing or the possibility of legislation like this bill can be used as a club to influence settlement negotiations between the movie studios and ClearPlay in the Federal court litigation pending.

Mr. Valenti, you referred to this, you alluded to this, I think, in your statement. Could you expand on this a bit and help me to understand whether or not what we're doing at this particular time makes good sense in light of what is going on right now with the litigation?

Mr. VALENTI. Congresswoman Waters, the negotiations have been going on for some time. It's very difficult to negotiate when one side believes, as I said in my testimony, that legislation is going to favor them and if they just hold on and not make any final negotiations, they will get everything they want because of legislation.