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Hearing of the Courts, the Internet and Intellectual Property Subcommittee of the House Judiciary Committee - Intellectual Property Act of 2007

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Location: Washington, DC

REP. BERMAN: I'd bang the gavel but I can't find the gavel. The hearing of the Subcommittee on Courts, the Internet and Intellectual Property will come to order, and I'd like to begin by welcoming everyone to this hearing, H.R. 4279, The Prioritizing Resources and Intellectual Property Act of 2007, known as PRO IP Act.

At this point I would like to recognize the chief sponsor of this legislation, the chairman of the full Judiciary Committee and our great friend and champion on these issues, Chairman Conyers.

BREAK IN TRANSCRIPT

REP. BERMAN: Thank you, Mr. Smith.

And I'll recognize myself for an opening statement at this point.

From Chairman Conyers, Howard Coble and Lamar Smith we've had a good picture of the devastating impact of counterfeiting and piracy on our economy and our health and on our safety. I share the desire to prioritize and better coordinate U.S. efforts of enforcing our intellectual property rights here and abroad.

We will be hearing from the witnesses shortly to get their thoughts about this legislation and speak to any problems they see with it.

I'd like to note a couple of issues for the outset rather than focus on that which has already been said.

There were many suggestions proposed, such as allowing wiretapping for intellectual property crimes or criminalizing attempted copyright infringement, both of which were purposefully not included in this bill. And I fought very hard to make sure that the death penalty would not appear either. (Laughter.)

The chairman and the ranking member of the committees and their staffs worked very hard at trying to vet through many proposals to find an appropriate balance. Therefore, in addition to what was excluded from the bill there were a number of provisions which underwent significant revisions to accommodate additional concerns. Furthermore, we've met with the Department of Justice about some of their apprehensions, and our door remains open to try and constructively resolve our mutual concerns.

My ranking member, Mr. Coble, has raised a good point about examining the possible effect of the change in statutory damages language in Section 104 of the bill. In the course of the discussion over the provision it became clear that there are a number of questions about the state of current law and the scope of this change as it relates to compilations and derivative works. But in this age of -- in this age where technology makes it possible and appealing to offer and purchase copyrighted materials either in compilations or in disaggregated formats or both it would be irresponsible to ignore the policy implications of a provision that limits damages for compilations, which in reality contain any number of valuable works. As such, I've asked -- as Mr. Coble has mentioned, I've asked the Copyright Office to convene a series of meetings about this issue with the various parties.

An additional point -- while the bill represents a good compromise on a number of issues, I believe we shouldn't overlook many of the main issues facing owners and users today. As we approach the 10th anniversary of the Digital Millennium Copyright Act we should be analyzing some of the protections we gave to intermediary services such as ISPs, some exemptions provided to educational institutions and the effectiveness of the takedown notice and procedure. We should also examine whether filtering technologies have advanced enough today that they -- there should be some obligation to adopt them where appropriate.

And Mr. Boucher and I have even talked about this, but if -- and if he and others on the committee feel that the review by the librarian of Congress every three years on the ability to make fair use of copyright works protected by digital rights management is inadequate we should look at the review process and discuss H.R. 1201 at that time as well.

In other words, there are a number of issues this bill isn't addressing that come down on both sides of the debate that goes on about copyright in this new digital age, and we don't want this bill to keep from having a discussion about those issues, but I think there is a logic to dealing with those issues in a separate framework.

A number of user-generated content sites recently -- we saw recently a number of user-generated content sites and copyright owners sit down and negotiate an agreement which acknowledged the need for filtering and the importance of fair use. It would be nice if more companies could strive for the gold standard in terms of corporate copyright policy. With IP being one of America's top exports and the source of numerous jobs, employing a huge sector of the economy, I don't see how we can afford not to prioritize intellectual property enforcement.

Now I think, contrary to the usual practice in the committee, we may have some other members who want to make opening statements, so is -- Mr. Boucher, might you be one of them?

I recognize -- (laughs) -- I recognize Congressman Boucher.

BREAK IN TRANSCRIPT

REP. BERMAN: Thank you, Mr. Cotton.

In your comments about the revenue impacts of dollars spent on enforcement, I'm wondering if we couldn't calculate the benefits of this bill in dealing with our appropriations process in these last days -- you know, creative scoring that frequently has been --

MR. COTTON: Well, we would ask that Dr. Tyson's study be included in the record, and it might help in that respect, Mr. Chairman.

REP. BERMAN: Yes, very good. Good, we'll do that.

I'll recognize myself for five minutes.

Ms. Sohn --

MS. SOHN: I'm ready. (Laughter.)

REP. BERMAN: You made a number of interesting suggestions and helped set the framework for some of the discussion. I want to focus on the registration issue first.

I agree we have to turn to orphan works, and this committee plans to do this early next year. But I'm curious about two aspects of your testimony dealing with your opposition to the position -- the provision in this bill on registration.

You talk about orphan works -- the orphan works problem and that it is crucial to require registration before criminal enforcement because you can minimize the orphan works problem that way. If that's the case, and I see your point, would a -- would you support a carve- out for registered works from being considered orphaned?

MS. SOHN: Would I consider a carve-out for registered works?

REP. BERMAN: In other words, one of -- you're concerned about us removing the registration requirement in -- to allow enforcement --

MS. SOHN: Right.

REP. BERMAN: -- creates a potential for many more orphan works, and so then I say, is the flip side true, once it's registered, then it really isn't orphaned?

MS. SOHN: Yeah, that's an interesting idea, but here's the problem, and as you well know, photographers who I know have spoken to you and who have the most objection to orphan works -- fixing the orphan works problem -- because the copyright office only has a text- based registry, it's almost impossible, even if you do a good-faith search, to find that work.

So if I'm a photographer and I've got a picture of the Statue of Liberty, the way I register it is a picture of the Statue of Liberty in text. So part of the problem is is that the current copyright registry doesn't make it easy to find certain works that are already registered. So in my mind, it would unfair to punish somebody who wanted to use it, say, for history books -- a picture of the Statue of Liberty -- did a good-faith search but could not find the owner because the description -- there's no way to actually right now find a picture. I think there's technology that will allow you to actually scan that picture, but we don't have that --

REP. BERMAN: What if you narrowed the carve-out -- well --

MS. SOHN: I'd have to see the details.

REP. BERMAN: I take your point. I think there -- but there are a lot of works that the act of registration means you know where the owner is. And as -- and you don't have the problem that you just raised in those areas that I'm --

MS. SOHN: That's correct, and at that point, a reasonable search -- you know, under the last bill we had on orphan works; I'm using the language from that -- a reasonable search would come up with that. That shouldn't be a problem. The problem is that there are certain instances, particularly visual arts, as you well know, where it's not that easy to find it on the copyright registry.

REP. BERMAN: One more issue on registration: You talk about the disincentive to register because of the ability to proceed in criminal enforcement case without a registration. Yet on statutory damages where a registration is required in order to receive statutory damages or attorneys' fees, you talk of the possibility of damages being so draconian that it forces excessive damages or settlement and is enough to stifle innovation.

Wouldn't the possibility of statutory damages and attorney fees be motivation enough for a copyright owner to register their work? Isn't the ability to get those statutory damages and attorney fees far going to exceed the incentive to not register? And wouldn't this change about the requirement of registration to bring a criminal case not have the repercussions? One of your -- given the balance of incentives --

MS. SOHN: I agree with you. I mean, I don't -- and that's why I don't understand why this provision is in this bill.

MR. BERMAN: No, but -- but I guess my point -- there are some good reasons, and I'm going to let -- I think rather than go to my next question -- I'll let Mr. Cotton develop the reason. It's a narrow but very important situation why the provision's in the bill.

My only point was I don't -- I just -- I can't buy the notion that it is such a huge disincentive for people who would otherwise register their works not to register them, given that they lose the chance for statutory damages and attorneys' fees if a registered work is infringed, and they don't have that opportunity if it's not registered.

But, Mr. Cotton, why don't you just -- you want to --

MS. SOHN: You know -- as you know, you can always register after infringement happens, okay. This eliminates the need to -- so if you're not registered and somebody infringes on your work, you have time to basically fix that and then register.

MR. BERMAN: I think if the infringement -- I'm not sure I know what you think I know because I'm not sure that if the infringement comes before the registration, I'm not sure for that infringement you can collect attorneys' fees and statutory damages, but we'll find that out.

MS. SOHN: (You need your counsel ?).

MR. BERMAN: Mr. Cotton, and then --

MR. COTTON: Well, Mr. Chairman, what I -- I make two points. There are, as from a public policy point of view, there is simply no reason to tie the hands of a prosecutor from taking action when there has been a clear action of copyright infringement simply because -- whether or not there has been a registration. The question is whether there has been an infringement.

And in many cases, certainly in the industry that I come from where there can be a pre-release theft of a very valuable piece of work when in fact the registration cannot have taken place, and there may be very urgent need for the prosecutor and investigators to move quickly, there is -- there's no reason to tie their hands.

And secondly, from the point of view of incentive, I would just have to say that I can't conceive that anyone would, who was interested in preserving and protecting their IP, which would -- and which would allow them access to statutory damages, would make the decision not to register based on the highly uncertain question as to whether a prosecutor might or might not take up a criminal case to protect their particular work.

So that I would say, A, from a public policy point of view, there's no reason not to allow prosecution in serious cases, and secondly, the notion that there is an incentive which would cause a copyright owner not to register because they would be relying on the highly unpredictable notion of whether or not there would be a criminal prosecution is not -- just not in the real world.

REP. BERMAN: My time has more than expired.

Mr. Coble.

BREAK IN TRANSCRIPT

REP. MELVIN WATT (D-NC): Thank you, Mr. Chairman.

Mr. Chairman, I find myself in much the same position with respect to this bill as I did at the outset of our discussion about the patents reform bill. My sense is that there is a substantial amount of need to reform and do something to address the problems that exist, yet the technicalities of what needs to be done -- there is substantial disagreement about -- and so I'm here really to try to learn more about what those technicalities should be, what the concerns are and try to assess -- try to get enough basic knowledge before I really start going through the details of the bill to try to figure out where some of those inquiries and concerns might be addressed.

So with that, I think I will yield my time to the chair, who can ask some of those technical questions. He had a long list. I knew he had a long list and needed more time to explore it. So I think I'll yield him the balance of my time and I'll sit and listen like I intended to when I came in.

REP. BERMAN: Well, that's very nice of you and I accept. But I would say the one difference between this and the patent bill is that here I would say 90 percent of the bill is not particularly controversial. And I wish I could have said that about the patent bill. (Laughter.)

REP. WATT: Well, that's what you told me at the outset of the -- (laughter) -- but --

REP. BERMAN: It's my line before -- "This one isn't as controversial." (Laughter.

)

REP. WATT: The more I looked at it and the more I talked to people, the less I believed you.

MS. SOHN: (Laughs.)

REP. BERMAN: And the less I believed myself.

I want to take a little time here on 504. You were kind enough not in your public testimony to argue that which you argued in your written testimony, that my approach on damages in copyright is somehow inconsistent with my approach to damages in the patent bill. Other than the hobgoblin argument, I actually don't think they're that inconsistent.

It seems to me Section 504 now, for the -- that phrase, "For the purposes of this subsection, all parts of a compilation or derivative work constitutes one work," it has -- I think that one -- that language has a bias in favor of the infringer rather than the owner. I understand in a very different time, when technology was very different, why it was done. You didn't want somebody -- somebody was infringing the sixth edition of a book, you didn't want to give them six because there were five other editions earlier in circulation. You shouldn't be charged with infringing all six versions of the book.

But what is the policy reason to distinguish between infringer A, who takes 20 photos from one site and infringer B, who takes 20 photos, one each from 20 websites, where under current law, infringer A would be liable for a single statutory damage award as determined by the court, not mandated by this bill, and infringer B was subject to 20 separate statutory damage awards determined by the court?

There may be objections to the overall level of statutory damages, but accepting for the moment that we're going to have some statutory damages, how is that disparity justified?

MS. SOHN: Well, I think the disparity comes from what kind of threats one copyright holder can make to, you know, to a legitimate user or somebody at least who thought they were being -- using copyrighted works legitimately, or an innovator.

I mean, you talk a lot about the judicial discretion, but the fact of the matter is that most of these cases don't ever go to court. The threat is held over the innovator's head or the user's head and it never goes anywhere. There's a settlement. The person no longer uses the copyrighted work.

So to me, the judicial discretion doesn't really solve the problem. And it is the same problem in the patent context, is that -- is that the threat is enough to stop people from innovating and the threat is enough to get people to settle even thought they might have a good case in court. It won't test the bounds of the law.

REP. BERMAN: We'll continue this discussion. But in the patent, you never argued -- and you were a great supporter of that legislation --

MS. SOHN: And I continue to be.

REP. BERMAN: You never argued that we should -- on a product that that -- a counterfeit product that infringed on 50 different patents -- because it was all in one product it should be considered as one patent violation. And our goal in the patent bill was simply to give the court the discretion that the courts here have to decide on how to calculate the damages. But I think I've used Mr. Watt's time.

And now, Mr. Goodlatte.

BREAK IN TRANSCRIPT

REP. BERMAN: The time of the gentleman is expired.

I have one short question for Sigal Mandelker.

You testified that the department implemented all 31 recommendations from the IP Task Force report. One of the recommendations was that the FBI should increase the number of agents dedicated to IP investigations. Can you tell me how many FBI agents are dedicated to IP investigations, meaning that's their full-time job?

MS. MANDELKER: I can't give you a specific number since I'm from the Criminal Division, but I'm happy to make that inquiry and report back to the committee. I can tell you that they've increased the number of arrests and indictments, and I'm also happy to provide those statistics.

REP. BERMAN: I just -- that's important and that's good and that's useful, but I'd like just the name and phone number of one FBI agent who has been said, "full-time, this is your job." If you could find that out, that would be great for me.

And there are a lot of comments I could make, but I think we have a vote coming up. This has been a very -- I think very useful panel, very interesting, a lot of issues raised, not all of them resolved.

And I appreciate all of you coming, and with that, unless anybody says something different, I'm going to adjourn the hearing.


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