Title: NII Task Force Working Group on Intellectual Property Author: U.S. Patent and Trademark Office Document-date: Sep 22 1993 Posting-date: Sep 22 1993 Content-Type: text/ascii charset=US ASCII Length: 315011 UNITED STATES DEPARTMENT OF COMMERCE U. S. PATENT & TRADEMARK OFFICE NATIONAL INFORMATION INFRASTRUCTURE TASK FORCE WORKING GROUP ON INTELLECTUAL PROPERTY - - - - - - - - - - - - - - - - - -x : In the matter of: : : PUBLIC HEARING ON : : INTELLECTUAL PROPERTY ISSUES : INVOLVED IN THE NATIONAL : INFORMATION INFRASTRUCTURE : INITIATIVE : : - - - - - - - - - - - - - - - - - -x Thursday, November 18, 1993 Marriott Crystal Forum Marriott Hotel, Crystal City 1999 Jefferson Davis Highway Arlington, Virginia The PUBLIC HEARING ON INTELLECTUAL PROPERTY ISSUES INVOLVED IN THE NATIONAL INFORMATION INFRASTRUCTURE INITIATIVE was convened, pursuant to notice, at 9:12 a.m. APPEARANCES: Members of the Working Group on the Panel: BRUCE A. LEHMAN, Chairman Assistant Secretary of Commerce and Commissioner for Patents and Trademarks TERRI SOUTHWICK Office of Legislation and International Affairs, U.S. Patent & Trademark Office HOWARD LANGE Office of Intellectual Property Department of State APPEARANCES (Cont.) ALDEN ABBOTT Chief Counsel, National Telecommunications and Information Administration MICHAEL HOFFMAN Office of General Counsel U.S. Department of Energy WALTER McDERMID Information Resources Management Service General Services Administration JACK SAUNDERS Chief, Motion Picture Sound and Video Branch National Archives and Records Administration MAYA BERNSTEIN Office of Information and Regulatory Affairs Office of Management and Budget DAVID JORDAN Assistant Chief, Professions and Intellectual Property Section, Antitrust Division, U.S. Department of Justice JERRY LINN Associate Director, Computer Systems Laboratory, National Institute of Standards and Technology JOHN RAUBITSCHEK Technology Administration U.S. Department of Commerce DAVID LYTEL Office of Science and Technology Policy White House Additional Members of the Working Group in the audience: KEITH KUPFERSCHMID Office of Legislation and International Affairs, U.S. Patent and Trademark Office MIKE KEPLINGER U.S. Patent and Trademark Office APPEARANCES (Cont.) PHYLLIS HARTSOCK National Telecommunications and Information Administration Testimony by: STEVEN J. METALITZ, ESQ. Vice President and General Counsel Information Industry Association MARIA PALLANTE, ESQ. Executive Director National Writers Union STEPHEN L. HAYNES Manager - WESTLAW Research & Development West Publishing Company LISA FREEMAN Director and Chair, Association of American University Presses' Electronic Caucus University of Minnesota Press TIMOTHY B. KING Vice President, Planning and Development John Wiley & Sons, Inc. ROBERT L. OAKLEY Director of Law Library Georgetown University Law Center (On behalf of numerous library and education associations JOSEPH M. COSGROVE, ESQ. Department of Political Science King's College DENNIS L. BYBEE, Ph.D. Associate Executive Office, International Society for Technology in Education DAVID H. ROTHMAN DAVID PIERCE President, American Association of Community Colleges APPEARANCES (Cont.) FRITZ E. ATTAWAY, ESQ. Senior Vice President and General Counsel, Motion Picture Association of America, Inc. and BERNARD SORKIN Vice President and Senior Counsel Time Warner HILARY B. ROSEN Executive Vice President and EMIL TORICK Engineering Consultant Recording Industry Association of America LAWRENCE KENSWIL Vice President for Business & Legal Affairs MCA Music Entertainment Group RICHARD DUCEY, Ph.D. Senior Vice President NAB Research and Information Group and BENJAMIN F.P. IVINS, ESQ. Assistant General Counsel National Association of Broadcasters JOHN MASTEN Executive Vice-President The New York Public Library GARY N. GRISWOLD President, InfoLogic Software, Inc. ROBERT E. KAHN, Ph.D. President, Corporation for National Research Initiatives BRAD J. COX, Ph.D. Center for Electronic Markets RONALD S. LAURIE, ESQ. Weil, Gotshal & Manges HENRY H. PERRITT, JR. Professor of Law, Villanova University APPEARANCES (Cont.) RONALD J. PALENSKI, ESQ. Senior Vice President and General Counsel Information Technology Association of America MARK TRAPHAGEN, ESQ. Intellectual Property Counsel and IRENE ROSENTHAL, ESQ. General Counsel Software Publishers Association THOMAS M. LEMBERG, ESQ. Vice President and General Counsel Lotus Development Corporation (On behalf of Business Software Alliance and Alliance to Promote Software Innovation) BRIAN KAHIN, ESQ. General Counsel and Director, Interactive Property Project and PHILIP V.W. DODDS Executive Director Interactive Multimedia Association GARY J. SHAPIRO Group Vice President Consumer Electronics Group Electronic Industries Association DOUGLAS K. BROTZ, Ph.D. Principal Scientist Adobe Systems Incorporated FRANK W. CONNOLLY, Ph.D. Associate Professor, Department of Computer Science Information Systems The American University C O N T E N T S PAGE OPENING REMARKS, Bruce A. Lehman7 TESTIMONY BY: STEVEN J. METALITZ, ESQ.14 MARIA PALLANTE, ESQ.23 STEPHEN L. HAYNES31 LISA FREEMAN40 TIMOTHY B. KING50 ROBERT L. OAKLEY58 JOSEPH M. COSGROVE, ESQ.67 DENNIS L. BYBEE, Ph.D.75 DAVID H. ROTHMAN85 DAVID PIERCE92 FRITZ E. ATTAWAY, ESQ.99 HILARY B. ROSEN107 LAWRENCE KENSWIL121 RICHARD DUCEY, Ph.D., AND130 BENJAMIN F.P. IVINS, ESQ. JOHN MASTEN141 GARY N. GRISWOLD149 ROBERT E. KAHN, Ph.D.155 BRAD J. COX, Ph.D.171 RONALD S. LAURIE, ESQ.175 HENRY H. PERRITT, JR.181 RONALD J. PALENSKI, ESQ.193 MARK TRAPHAGEN, ESQ.201 THOMAS M. LEMBERG, ESQ.211 BRIAN KAHIN, ESQ.220 GARY J. SHAPIRO231 DOUGLAS K. BROTZ, Ph.D.241 FRANK W. CONNOLLY, Ph.D.250 CLOSING REMARKS, Bruce A. Lehman257 P R O C E E D I N G S (9:12 a.m.) OPENING REMARKS CHAIRMAN LEHMAN: May I have your attention, please. I think we'll get underway. My name is Bruce Lehman, and I'm Assistant Secretary of Commerce and Commissioner of Patent and Trademarks. I would welcome you here to the Patent and Trademark Office today. I'm also the Chair of the Working Group on Intellectual Property of the Information Committee of the National Information Infrastructure Task Force. Welcome to our pubic hearing today. The National Information Infrastructure is a system of high-speed telecommunication networks, databases, and advanced computer systems that will make the electronic information and entertainment products more widely available and accessible to the public than ever before. Hopefully that's an understatement. This increased availability and accessibility will dramatically affect the way information and entertainment products are created, marketed, distributed and received throughout the world. On February 22nd of this year, President Clinton announced his plan to create a White House Information Infrastructure Task Force to work with the Congress and the private sector to develop comprehensive telecommunications and information policies aimed at articulating and implementing the administration's vision for the NII. And I should say that as we all know, this is not going to be a federal public works project. It's really an attempt to turn the dials of public policy in such a way that an activity which is already underway, the development of this infrastructure, will really be all that it can be and that its potential will be maximized rather than limited. The Working Group on Intellectual Property which is a part of the Information Policy Committee, as I mentioned, was established to resolve issues of concern in the intellectual property area regarding the digital distribution of works of authorship. The commercial viability of digital networks hinges on implementing policies that not only assure that the owners of information and entertainment products retain sufficient control over these products to prevent unauthorized use, but also that assure the interest of users of that information and those products are adequately considered. Changes to intellectual property laws may be needed to prevent the proliferation of piracy and to protect the integrity of intellectual property while assuring broad public access to information. As noted in the October 19th Federal Register notice of this hearing, we have requested that all written commits be submitted by December 10th. We will encourage anyone with views on intellectual property implications of the NII to make those views known to the Working Group. Members of our Working Group, who are all from various agencies in the Federal Government, are here on the panel with me this morning. Because there are a quiet a few of them, not everybody may be able to have a seat right here at the panel, so the latecomers from our Working Group will be seated in the front row of the auditorium. At this time for the benefit of those who are here for the hearing and members of the public, I'd like to have the members of the Working Group that are here with us this morning to introduce themselves. Why don't we start down at that end of the table with Howard Lange. MR. LANGE: I'm Howard Lange. I'm with the Office of Intellectual Property at the Department of State. MR. ABBOTT: I'm Alden Abbott, Chief Counsel of the National Telecommunications and Information Administration, NTIA, in the Department of Commerce. MR. HOFFMAN: Michael Hoffman. I'm an Intellectual Property Attorney in the Office of General Counsel at the Department of Energy. MR. McDERMID: I'm Walt McDermid. I'm a policy analyst in the General Services Administration, Information Resources Management Service. MS. SOUTHWICK: I'm Terri Southwick, an attorney advisor in the Office of Legislation and International Affairs at the Patent and Trademark Office. MR. SAUNDERS: I'm Jack Saunders. I'm Chief of the Motion Picture Sound and Video Branch at the National Archives. MS. BERNSTEIN: I'm Maya Bernstein. I'm with the Office of Information and Regulatory Affairs at the Office of Management and Budget. MR. JORDAN: I'm David Jordan. I'm Assistant Chief of the Professions and Intellectual Property Section of the Antitrust Division at the Department of Justice. MR. LINN: Jerry Linn, Associate Director of Computer Systems Laboratory, National Institute of Standards and Technology. MR. RAUBITSCHEK: I'm John Raubitschek with the Technology Administration in the Department of Commerce. MR. LYTEL: David Lytel, Office of Science and Technology Policy in the White House. CHAIRMAN LEHMAN: I think we have some more of our people in the front row. MR. KUPFERSCHMID: Keith Kupferschmid with the Office of Legislation and International Affairs at the Patent and Trademark Office. MR. KEPLINGER: Mike Keplinger with the Patent and Trademark Office. MR. CZYINSKI: Jack Czyinski, Patent and Trademark Office, Office of the Commissioner. MS. HARTSOCK: Phyllis Hartsock, National Telecommunications and Information Administration. CHAIRMAN LEHMAN: Well, that's a good share of our Working Group. As you can see, it represents a broad range of Federal Government agencies that have an interest in this subject matter. We also have, I'd like to note, a court reporter here today, and the entire transcript of this hearing will be taken down and will be available from us here at the Patent and Trademark Office after December 3rd for $30.00. You can contact the Office of Legislation and International Affairs, and particularly Terri Southwick here to my right about that. Copies of written statements which have been submitted up to this date are available for inspection in room 902 of Crystal Park II, across the street at 2121 Crystal Drive. Because of the number of persons testifying today, we are going to have to limited each speaker's presentation to a maximum of 10 minutes in order to ensure that all the people who have requested to testify get the opportunity to do so. If time permits, members of the Working Group, the panel, may ask questions. And I must say, to the extent that you're interested in having us have a dialogue with you, you might want to reserve part of your 10 minutes for the questions. Otherwise it's going to be hard to do that. But we will try to be pretty firm about that 10 minutes per person. I wish we could have a longer dialogue with everybody, but I think for obvious reasons we understand that won't work. Therefore, we hope that you will be able, since I think it is important to be able to follow-up and have dialogue, that you will be willing to respond; those who are offering testimony today will be willing to respond to written questions that the Working Group may have following the hearing. The help the speakers stay within the time limit, we have a computer set up here that has a screen which the people sitting at the witness table will be able to see, and that will display a green panel for the first eight minutes of the speaker's presentation. And the yellow screen will appear when two minutes remain, and then finally when the time is up, a red screen will appear. And we have another alternate screen up here so we can sort of bang the gavel if necessary. Hopefully that won't be necessary, and people will wrap up their presentation by the time the red screen appears. A list of all of the speakers today has been prepared and is available in the lobby. I image many of you have already picked it up. This list only gives the approximate times that people have been scheduled to appear. For those of you who may be thinking of leaving the room for a while, you should note that people should be prepared to come forward within a half hour of their scheduled time. This is the second one of these hearing that we've had in the Patent and Trademark Office. And the one we had about a month ago on patent harmonization we found that actually we ran a little bit ahead of schedule and some people who thought that they might have had 10 minutes more, lost their opportunity. So please make certain that you're here in advance so that if we're moving right along, that we can hear from you. Once again we are happy to welcome all the members of the public here today. We'll hope you'll listen carefully to what is being said, that you'll supply us with further written comments if you have any. I think now we can get underway with what we came here for, which is to hear from the first of our witness, Steven Metalitz, Vice President and General Counsel of the Information Industry Association. Welcome, Steve. TESTIMONY BY STEVEN J. METALITZ, ESQ. MR. METALITZ: Thank you very much, Commissioner Lehman, and members of the Working Group. I appreciate this opportunity to present our perspectives. I want to start by commending, first the administration for identifying intellectual property issues as crucial to the success of the National Information Infrastructure, and second commend this Working Group. I think you're asking the right questions and we will do our best to try to provide you with our perspectives on the answers. If I may, Commissioner, exercise the prerogative of the first witness and state something very obvious so the other witnesses don't have to spend their time stating it. And that is that we in the United States already have a National Information Infrastructure, and it works. We, as a people, generate an enormous volume of information, products and services of all kinds. We have distribution networks that deliver this information efficiently and ubiquitously, and they met the needs of an information hungry public. Obviously, the advanced National Information Infrastructure is going to deliver even more information, more economically in a wider variety of media and formats to even more American homes and business and into the schools. But we need to remember why our information infrastructure works so well today. One key element of this infrastructure and the one that sometimes is overlooked in discussions of the NII is the information itself, the information content. And what is so important about the work of this Working Group are the incentives that are in place to stimulate the generation and the distribution of that information content. No more powerful incentive for the investment that's needed in order to accomplish that has yet been discovered in the system of legal protection for intellectual property. The challenge that is before this group and the administration as a whole and, indeed, our whole society, is that the capabilities that give advanced information infrastructure its great potential also invite an epidemic of abuse of intellectual property rights. If we don't prevent that epidemic, then our hopes for what the NII can deliver will never be fully realized. Copyright issues are sometimes described as a problem that is plaguing the development of the NII. And I think that trivializes what's really at stake here. If we aren't able to protect copyright in the new information environment, then the information that will be available, the useful information, the supply of that will be drastically be curtailed. Or just as troubling, it will be limited to the information that the government chooses to create or some other powerful institution chooses to create. So the information content issues really lie at the heart of the NII project and you're grappling with some of the key issues here. I think your questions recognize that it will take a combination of efforts; legal, technological, and perhaps most importantly, educational, to surmount this challenge. Let me turn to the questions briefly that you have posed in your Notice. First, is existing copyright law adequate. In our view, copyright law has proven to be a flexible and a powerful instrument in providing the incentives for authorship in a wide variety of media. And it has done that in an environment of rapid technological change. Copyright isn't a Gutenberg era law. It's also a Daguerre era law, and Edison era law, a Marconi era law, a Norse era law. It's a law that has proved very successful in the post-Gutenberg environment. Accordingly, we don't believe that any fundamental changes are needed in order for existing copyright law to continue to achieve its major objective. And that is to stimulate the create and distribution of original works of authorship. Now that being said, there may be areas where the application of these existing copyright concepts to new technology developments can usefully be clarified. And we've suggested a couple of areas in our written testimony. We're certainly ready to work with the administration, with other interested parties, in identifying areas where it might be useful to draft clarifying legislation and craft the language that's needed to accomplish this. In considering any changes to copyright law the administration must pay particularly close attention to the global copyright law regime. There are two initiatives underway now, as you know, at the World Intellectual Property Organization. And in both of them, both the protocol to the Bern Convention and a possible new instrument, there is a lot of discussion about recognizing and defining exclusive rights in digital transmissions. And that debate is still at an early stage, but it may be quite helpful to the United States in deciding whether or not any changes are needed to its law to clarify the application to digital networks. We've very pleased to see that this administration is expanding the U.S. leadership role in the WIPO and other international fora, because virtually any changes in copyright law will have to take this global environment into account. The second question: Are the existing fair use provisions adequate? Fair use is an integral part of our copyright law. And like the copyright law as a whole, it's proven very adaptable to technological changes, including those involved in the NII. One of the exciting things about the technological developments is that it reinforces a growing trend toward defining permissible uses of copyrighted material by contract. We sometimes overlook the fact that our copyright law works hand-in-hand with contract law to map out the terrain of exclusive rights and the rights of users of copyrighted material. Some of these technological developments could enable more widespread and more flexible use of contracts to define permissible uses of copyrighted material. That material could be accompanied by headers or surrounded by envelopes that offer a range of terms and conditions for varied uses of the materials. Intelligent agents and other software tools could be used to facilitate an automated contracting process between proprietors and users. And that would reduce the transaction costs. So one thing the Federal Government could usefully do is encourage further research and development of the technologies that facilitate electronic contracting and licensing of intellectual property. The statutory fair use provisions, of course, are very important in the extra contractual areas. The third question: Should there be labeling or encoding standards? As I've noted already, there's a lot of work going on now toward developing practical techniques for identifying the ownership of copyrighted material on the networks, and specifying the terms and conditions of authorized use. We're summarizing some of that in a research paper that's underway now which we'll be glad to share with the Working Group when it is completed. Government can play some important roles in this development. It can be a catalyst to support further research and development. It can provide a forum for information sharing, and it can also create an environment that encourages the adoption of voluntary standards. However, we think Government should refrain from setting mandatory standards in this area. There's a very rich creative soup brewing out there and this is really not the time for Government to put it's thumb into it. We think that the users of these networks will ultimately benefit greatly from the technological developments in the labeling and encoding. And by the way, that benefit will not just be in the copyright area, but also in the area of privacy. There's a very clear overlap between the copyright management techniques and the privacy and security techniques. And I know one of our sibling working groups deals with that privacy area, and there's probably a lot of room for interaction. Fourth: Should interoperability or inter-communication standards be adopted? Here again, we think government should serve as a catalyst, but not as a mandator of standards. Market forces are going to lead us to greater interoperability and interconnection, and they should be given a chance to do that. Fifth: Licensing systems. Again, let's think about our existing information infrastructure. We have a wide range of licensing systems: individualized contracts, collective administration on a voluntary basis, and in a few narrow specified instances, compulsory licenses. Under the advanced NII as well, there's not going to be a one size fits all approach. And some of these technological trends that I've already mentioned are going to make it more feasible for individualized licensing to take place and for voluntary collective licensing to be handled quite efficiently with an economy of scale. The goal here really ought to be to facilitate transactions in copyrighted materials. That's the key to getting more and better information dissemination. And these technologies are going to be able to do that much more effectively than a single compulsory licensing system, or even a single voluntary licensing system. There's a lot of room for diversity here. Sixth: Technical means for preventing unauthorized uses. We think that it would be premature at this point to set standards for these kinds of copy protection mechanisms for the reasons we've already discussed. There is one aspect of the 1992 digital audio legislation that is worth looking at, and that is the possibility of providing legal sanctions against devices or techniques whose primary use is to defeat or circumvent intellectual property management technology. It may not be time for that yet, but that's something in the future. And finally, the question of education. You listed it last, but it's certainly not least. It's one of the most important questions. These are not just legal or technical problems, there are also cultural issues here. And unless these cultural factors are addressed, the NII environment will never be fully hospitable to creators and other copyright proprietors. Government has a role here, and so very definitely does industry and other elements of the private sector. We really need to do more to step up to this problem and to find out the best ways to communicate these rules to the millions of Americans who in effect hold the future of this National Information Infrastructure in their hands. Thank you very much. CHAIRMAN LEHMAN: Thanks a lot, Mr. Metalitz. Sorry we're not going to be able to have oral questions if we're going to stick with our schedule here. But hopefully you'll be available for written questions. Next we'll here from Maria Pallante. Welcome, Ms. Pallante. Please go ahead. TESTIMONY BY MARIA PALLANTE, ESQ. MS. PALLANTE: Thank you, Mr. Chairman. My name is Maria Pallante. I'm a lawyer specializing in literary property, and Executive Director of the National Writers Union. I presently also serve as a member of ACCORD, the Advisory Committee on Copyright Registration and Deposit, appointed by the Library of Congress. The National Writers Union is a nationwide trade organization of 4,000 authors. We have 11 chapters from coast to coast and an award-winning members that includes journalists, poets, novelists, biographers, historians, children's book authors and other authors. The livelihoods of our members will undoubtedly be affected by the opportunities presented here today and we're both excited and a little concerned about that. Thank you for giving this opportunity to testify. Intellectual property is a major United States trade assets representing an enormous contribution to the international balance of payments. Not only is the United States the largest market for information in intellectual property, it is the worlds largest producer and exporter of written works, movies and music. We have individual American authors and artists to thank for this. Just as it's a small business and individual entrepreneurs who are creating most of the new jobs, products and services in the U.S. economy today, it is individual authors who create most intellectual property. It is thus vital to U.S. trade advantage that individual copyrights and individual production and distribution, be produced and encouraged, not just those of our corporation who buy their works. Indeed, the policy of granting incentives to individual authors as a means to public creative wealth is a constitutionally-based incentive that does not discriminate between commercial or noncommercial, published or unpublished, good or bad. We believe this policy is important because it serves the nation's diverse interests. The beauty of the NII is that it has the power to increase distribution of minority writers and reach black, Spanish-speaking and Asian markets that have typically been ignored by the mainstream commercial publishers. Small presses, political journals, minority papers and other diverse voices that make up the culture of our country will be able to contribute and compete. We agree with the first speaker that clarification of copyright law may be necessary as we progress. First, it does not definitively distinguish forms of electronic-based rights into categories of performance rights, display rights, distribution rights, reproduction rights, or the right to make electric derivative works. Thus, it does confuse creators and users as to both the scope of existing licenses and the fair market price of those rights that are the subject of negotiation today. Second, it does not statutorily prohibit publishers and other users from claiming by contract with the creator those rights, usually electronic-based rights, that do not yet exist and/or those rights that at the time of negotiation lack measurable economic value, as did CD-ROM rights a few years ago and other optical-based disk rights today. Since the turn of the century, courts have ruled that language granting rights to media is not yet invented may be upheld despite the fact that such rights did not exist at the time of a contract, and despite the fact that they did not achieve measurable value at the time of negotiation and whether or not additional compensation was paid for those rights. Whether the unknown technologies where movies, television or books on tape, the courts have operated from the premise that authors negotiate knowingly and on equal footing. But lack of bargaining power for writers today, the result of a decade of the largest incident of media conglomeration ever, has deteriorated contracts of authors badly. Many are told to sign restrictive language or lose the writing assignment. As new mediums have taken over old mediums, authors have lost fundamental leverage year by year. But the purpose of copyright law which stems directly from the U.S. Constitution is to induce a public stockpile of creative wealth by securing to authors for a limited time the exclusive rights to their works. It is not a present balance between authors and users, rather the law is a meas to an end. Control and compensation are meant to be incentives that inspire individuals to create. But what happens to an author's incentive to create if she cannot negotiate a fair share of the proceeds, and what happens then to her ability to create or to make a living by continuing to create, what happens to the diversity and quality of the creative materials available in our society, if the only creative that is bought and sold is that which drives our major corporate entities? Third, present copyright law does not set forth whether electronic rights in their various manifestations should be calculated on a traditional per use royalty scale, such as compulsory licenses, or if their income shares based on time rental or time access. Fourth, it does not encourage voluntary notice of copyright or variations of notice as clarifying measures that authorize certain uses for academic or other noncommercial use. That is, permission without payment but conditional on proper attribution. We have a working paper out on the Internet with what we call the reverse notice. It says you can use this provided you give us credit. And people have written back and just thanked us in relief that they knew that they could use it. Fifth, it does not adequately address moral rights per the Berne Convention. We think this will become more and more important. Internationally authors works are protected from mutilation and other measures that destroy the integrity of their works. In this country we protect moral rights for visual art, but more and more multimedia products will incorporate visual art as well. Sixth, the work for hire exception may need to be limited further. Audiovisual works are one of the exceptions authorized under the work for hire exception in the statue, but much of the text authors will be writing in the future will be for audiovisual products that are not the traditional motion pictures. If these mediums become the primary publications, authorship could be at risk unless the work for hire doctrine is interpreted narrowly. In terms of fair use, we believe the copyright law must settle the question of whether works available on the NII are published or unpublished or whether this is an artificial distinction. Whether a work is published can have severe repercussions as to the application of the Fair Use Doctrine, application of international law, availability of attorney's fees and statutory damages, and the relative commercial value. It should be noted that authors of unpublished works do not consider their work to be without value and should not be penalized by copyright regulations that protect the mass commercial distribution that is also important. Much of the great reflective works of civilization are discovered by historians looking back, while many of the best sellers of the day are later lost to mediocrity. New technology will allow works to stay in print longer, perhaps forever. But copyright protection must continue to apply to the commercially successful and commercially obscure works alike, whether works are distributed by major international houses or by an individual author, as Walt Whitman printed and distributed "Leaves of Grass" himself in 1855. In terms of labeling and encoding of works, we support the use of technology to develop tracking devices and depositories. Publicly accessible facilities would preserve the contents, including text and author's name in non-erasable media in the order they were submitted. Invisible electronic signatures can be developed to prevent plagiarism. It is also technically feasible to attach authenticated check sums to documents that would reveal whether the document has in any way been altered. Finally, authors and owners of intellectual property should have the right to encrypt their works to ensure that copyrights are not violated. We believe there should be a multiplicity of private licensing systems competing, the transactions of which should be regulated by a government body that takes into account legitimate needs for exemptions from antitrust. Such licensing systems should allow networks and data carriers to automatically transfer payment to the copyright holder each time a book, article, art work or a file is accessed. They must also provide a mechanism for tracking the use of information and providing timely, accurate and understandable royalty reports to copyright holders. Database compilations of intellectual properties should always include permissions information, as will the Library of Congress if the Copyright Reform Act of 1993 passes; names of various rights holders, contract information for permission request, and other relevant data. To the extent that transaction-by-transaction systems require a direct nexus between the user and the copyright holder, we would oppose such a system because authors cannot be easily found and should not have to grant all rights to a corporate entity in order to exploit them. Clearly, education about general copy written law must be available to educators, librarians, researchers, students and private users. The National Writers Union very much wants to assist in this process. Without copyright law, creators lose the economic incentive to create. Without such an incentive, the drive for creativity fails, and progress towards the ultimate goal of increasing the public stockpile of creative wealth falters. Protection of the work of small copyright holders is basic to the public interest. Such protection can only be achieved through partnership with the public, general education on every level, in all academic settings and all public arenas. We hope the Working Group will keep in mind the Constitutional purpose of copyright law and the protection of authors. And we thank you for your time this morning. CHAIRMAN LEHMAN: Thank you very much for that excellent statement. We don't have time to follow-up right now, but I'd like to follow up more. Maybe we could have a written dialogue by what you mean by a government agency to regulate the administration of these rights. Our next witness is Mr. Stephen Haynes, Manager, WESTLAW Research and Development of West Publishing Company in St. Paul, Minnesota. Welcome. TESTIMONY BY STEPHEN L. HAYNES MR. HAYNES: Mr. Chairman, members of the Working Group, good morning. My name is Stephen Haynes and I'm an Executive at West Publishing Company in Minnesota. West is a leading publisher of materials used by lawyers, including Case Law Reporters of the National Reporter System and annotated statues of 22 states, plus the United States Code Annotated. In addition, West proves the WESTLAW computerized legal research service for which I'm manager of research and development. Thus, and perhaps uniquely among the companies whose witnesses will testify before you today, West is both a leading print publisher and a provider of one of the most sophisticated on-line information retrieval services available in the world today. West Publishing has been part of the National Information Infrastructure since 1876. In modern times, since 1975, WESTLAW has been a major provider of on-line research services for attorneys. Over 4,000 databases offer ever conceivable type of textual and abstracted material of interest to attorneys. Virtually the entire National Report system and statues of all 50 states, plus the Federal Government are on-line. In addition, we have gone to considerable lengths to convert or in some cases keyboard from printed sources public domain materials, such as the Federal Register, the Congressional Record and decisions or other publications of numerous federal and state agencies. The sum total of all these databases will exceed one terra byte in size. Now I personally have been long and intensively involved in many aspects of West intellectual property concerns. Several of these concerns relate to the Internet and to the proposed National Information Infrastructure. Among the seven questions posed by the Working Group I will concentrate my remarks today on three: fair use, licensing, and technological solutions for protection of intellectual property. Let me begin, however, that West does not anticipate that existing copyright law prove inadequate for protection of its or other publisher's rights in the NII. West has been diligent in protecting its intellectual property and we will continue to be diligent in the future. However, our greatest concern is not the wholesale copying and offering for sale of West materials. These instances can be detected and the offenders pursued. Rather, we are more concerned with the casual copying and redistribution of our materials in manners that exceed standards of fair use. We believe that use casual copyright infringement is a proper subject of education, and we applaud and support the announced effort to educate the public in appropriate behavior under the copyright law. Now as to fair use, for decades our position has been abundantly clear, if perhaps seldom explicitly stated. West not only accepts appropriate exercise of fair use of our copyrighted material, but in fact has accepted very generous use under certain circumstances. In a former life I was a litigator with a major New York law firm. I know from personal experience the piles, literally piles of West Reporters that daily accumulated in that firm's copying center for reproduction of individual case reports. West accepts this type of copying as a normal consequence of the successful practice of law. As I will shortly discuss, we essentially ratify this position in our WESTLAW license. The AAP preliminarily comments, and perhaps other witnesses will identify high-speed downloading as a concern for publishers. Clearly such downloading may exceed the bounds of fair use. West agrees that this is a concern, but we also feel that detecting such downloading is more properly a function of individual services available over the NII. It will eventually be possible to incorporate technological means to detect downloading of copyright information. But we question whether this is an appropriate investment for the NII as a whole, given the overhead burdens that will be imposed on the infrastructure itself, as well as on individual providers who must take their information to permit detection. Moreover, it is less the high-speed downloading that will concern us as high volume. Whatever mechanistic technologies are proposed to track transmission of copyrighted materials, they will ultimately be ineffective since short of truly Draconian measures, the dedicated infringer can easily modify copyright information so that it cannot be detected. In West's view, striking the appropriate balance between the restriction and fair use of the online environment is best accomplished by traditional written licenses executed between the online service provider and its subscribers. West has used this approach. While West's own WESTLAW subscriber agreement is phrased in legal language, let me try to summarize regarding use of our materials. West explicitly permits WESTLAW subscribers in the regular course of their legal work to download and temporarily store insubstantial portions of information found in WESTLAW databases. The subscriber must retain control over the downloaded material at all times and except in limited circumstances not redistribute it. The subscriber may display the downloaded material internally or quote from it in memoranda, briefs, or other work product provided appropriate citation and credit is given for such use. The subscriber may also create printouts of material contained in the WESTLAW database for internal use and for unpaid distribution to third parties, if such third parties agree not to further distribute those materials. You will note that this latter permission is a relaxation of traditional fair use and is consistent with West's attitude toward copying of its case reports by law firms. As this discussion of the WESTLAW subscriber agreement illustrates, West feels that licenses are a highly appropriate way in dealing with issues raised in the online electronic environment, and we feel that licenses will continue to play a pivotal role in the NII as it evolves. West commends this approach as a non-statutory means to balance the needs of an NII information provider's customers with the provider's own needs for protection. West also generally supports the efforts of some creators and providers to grant copyright licenses to cooperative licensing and royalty collection groups such as ASCAP, BMI and NCC. We do not believe that such licensing is or should be the province of the Federal Government. Finally, let me remark briefly on the role of technological solutions in protecting intellectual property within the NII environment. These comments also relate to the Working Group's questions regarding labeling or encoding of works and the establishment of standards or intercommunication or exchange of information. West agrees with the AAP that it is premature to establish standards for encoding or labeling of copyrighted works. In fact, such steps may prove never to be feasible or practicable. In any event, if such labeling or encoding is eventually deemed desirable we, like the AAP, feel that the marketplace is the appropriate place for competing standards and technologies to be developed and proven. Various forms of encryption, software envelopes, privacy enhanced mail, and hardware solutions, have already been proposed and in some instances debated. Some of them may in time take root. However, many will prove in the end to be not practicable from the standpoint of open market and information. For example, some have suggested that a hardware solution might be imposed analogous to that imposed recently by Audio Home Recording Act for serial copy management in the digital audio tape or DAT environment. Now I remind the Working Group, however, that the serial copy management technology was imposed well before proliferation in this country of DAT units. We are faced now with a plethora of scanners, digital copiers, fax boards and computers, modems and optical character recognition software, all without any restrictive circuitry. This is the proverbial case of barring the gate after the horse has escape. DAT-like solutions are just not feasible at this late date. Moreover, I again emphasize that the best solution for these problems will not be technological but educational. We have the stick: lawsuits; and we have the carrot: pricing of information consistent with its value. Along with pricing will come technological protections selected by individual publishers and on-line providers of information. If an individual publisher's information is of high value and much in demand, that publisher will more likely impose technologies of encryption or software envelopes as a condition of access. If, on the other hand, the information comes from the public domain in unenhanced form, the market will assure an abundance of lower priced unencrypted sources for the information. If current experience on the Internet proves nothing else, for public domain information, a thousand flowers will bloom. Imposition of technology impediments to accessing information will dampen supply and will likely depress the vibrant market for information that is one this country's unique strengths. In summary, we feel that for the most part the NII is moving forward in positive manner. The proper role of government is to foster experimentation, underwriting where appropriate research and development efforts that lie at the cutting edge, but leaving to the private sector development of practical and for-profit solutions to the nation's information needs. Thank you again for this opportunity to present West's views. CHAIRMAN LEHMAN: Thank you very much. Does anyone have any questions that they'd like to ask? (No audible response.) CHAIRMAN LEHMAN: Thank you very much. Next I'd like to ask Timothy King to come forward. He is Vice President, Planning and Development for John Wiley and Sons. Is he not here? I'm sorry, Lisa Freeman is our next witness. I apologize for that. She is the Director and Chair of the Association of American University Presses' Electronic Caucus, and she's from the University of Minnesota Press in Minneapolis. Welcome. TESTIMONY BY LISA FREEMAN MS. FREEMAN: Thank you. I am speaking today on behalf of the Association of American University Presses or AAUP. And I feel compelled to mention that I'm speaking as a publisher and not a lawyer. Before I respond to the specific questions posed by the Working Group, I'd like to provide some brief background about our members and about the importance of copyright to our activities. The AAUP comprises 114 university and other nonprofit scholarly publishers. In this latter group are such diverse publishers as the Modern Language Association, the American Mathematical Society, and the Smithsonian Institution Press. Of the approximately 47,000 books published in the United States last year, roughly 9,000 or, 17 percent, appeared under the imprints of our members. Additionally, the AAUP publishes over 700 scholarly journals. Although our presses produced nearly a fifth of all books and journals sold in the United States last year, the $400 million in income received from those sales represents only 2 percent of total industry-wide revenue during the same period. This gap between the volume of publication and the amount of revenue generated by sales of our products reflects the unique mission of not-for-profit scholarly publishers. University presses primarily serve the interests of the research and education community, making available works of scholarship that would in many cases never be published by for-profit commercial publishers. The contribution of a university press to the wider distribution of scholarly work is even more critical within the disciplines of the humanities and the social sciences, as in many cases university presses are the only outlets for scholars working in these areas. Peer review is perhaps the most important and least well understood aspect of university press publishing. This is the process by which the work of potential authors is reviewed by other scholars prior to its being accepted for publication. Peer review ensures the scholarly quality, integrity and contribution of an individual's work. Its importance is widely recognized by the academic community, most vividly expressed by the value of accorded of university press publication by promotion and tenure. Indeed, there are many institutions of higher education in this country where it is impossible to get tenure or be promoted without a university press publication. My point here is simply to underscore the central role of university presses in the wider systems of scholarly communication, a role that underpins the larger social and cultural enterprise of education more broadly understood. Turning now to the specific question of copyright, I'd like to point out that although copyright is the primary mechanism by which our authors and publishers receive financial remuneration for their efforts, copyright in the scholarly environment also serves another equally important function. When a university press copyrights the scholar's works, the press is also affixing its imprint to that work. And in so doing signals to the purchaser that this the peer reviewed version. In the scholarly world, multiple versions of documents often circulate prior to formal publication via working papers, conference presentations and the like, a practice that has already increased dramatically as a result of the Internet. In this environment the copyright serves to distinguish the authentic version; that is, the version that has been peer reviewed and which the author herself has chosen to disseminate as the authoritative version from earlier drafts. Copyright thus serves to protect not only the financial interests of authors and publishers, but also the intellectual interests of authors and that the larger -- CHAIRMAN LEHMAN: Can I interrupt you just a second. The early version would be copyrighted as well. The unpublished works are copyrighted. MS. FREEMAN: Indeed, but the version that carries the copyright -- for example, the Regents of the University of Minnesota Press -- is the version that has been through the peer review process. CHAIRMAN LEHMAN: And the copyright would be in the University of Minnesota Press or in the author? MS. FREEMAN: In most cases it's in the name of the press; in some cases it's in the author's name. It obviously bears the name of the press on the title page as well. Turning now to the questions posed by the Working Group. The AAUP believes that the present law does adequately protect the rights of creators and consumers of scholarly work whether in print or electronic form. Given the potential for unauthorized copying and transmission on the NII, we are concerned that adequate technical solutions be found to ensure the application and enforcements of the law. We do not believe that any fundamental changes in the law itself are necessary, however, and would resist any changes that would further limit the rights of authors or publishers or which would act in any way, however unintentionally, to undermine the system of scholarly communication outlined above. On the question of the adequacy of current provisions regarding fair use, the AAUP believes that the present fair use provisions of the copyright law are sufficient to protect the interests of both the producers and consumers of works transmitted via the networks. In the educational setting in particular, their use is critical to enabling scholars and researcher to do their work. An appropriate use of copyrighted works supports the larger missions of the institutions of which we university presses are a part. Obviously, determining what constitutes fair use in the electronic environment will be difficult given the technical capabilities that the networks offer. We're concerned that too liberal an interpretation of fair use could undermine the scholarly legitimation function of university presses. Even in the print environment, scholars are continually confronted with the possibilities of their work being cited out of context, or being reproduced in other works without their permission. Scholars care deeply about these issues, as any university press copyright manager can tell you. The possibilities for the abuse of fair use in the electronic environment are obviously much greater. Conversely however, a more strict interpretation of fair use that limits scholars' access to the materials that form the basic of their research would not be in the community's best interest. The present guidelines regarding the citation and inclusion of copyrighted materials under fair use contribute to the wider dissemination of scholarly research and often to additional sales as well. We do not believe that the elimination of fair use on the networks would be in anyone's best interest. On the question of labeling or encoding copyrighted works, the AAUP believes that it would be premature to legislate requirements or impose standards given the rapid pace of technological change. We do support the general principle that some system or systems of identification of copyrighted works needs to be developed. But we are equally concerned that the protection of copyright not impede access to copyrighted materials or compromise First Amendment rights. High quality research is dependent upon the assurance of academic freedom and the free exchange of ideas. Any system of labeling or encoding copyrighted materials should balance these concerns with those of the copyright holders themselves. For similar reasons we also support the general goals of open architecture, interoperability and universal access expressed in the NII's agenda for action. Likewise, we are interested in seeing an NII that enables the largest possible number of users to gain access to our materials. The need to protect copyrighted materials is no justification for inhibiting interoperability, but the goals of interoperability should not be used to justify the weakening of copyright enforcement either. With regard to licenses, the AAUP believes that licensing structures for the use of copyrighted materials may in many cases be appropriate, but the decisions about what such arrangement should look like should be left up to individual copyright holders. Given the complexity of existing contractual arrangements, the differing needs of various end users and producers, and the vast array of copyrighted works that may ultimately be made available, it would be impossible and in our opinion unwise to create any one centralized licensing systems. Although technical means to prevent unauthorized copying may exist or be developed, the AAUP does not believe that these should be mandated or required. As with licensing initiatives, we believe that choices with regard to technical solutions to copyright protection should be left up to individual copyright holders. Finally, we too believe that educational programs to increase public awareness of issues pertaining to copyright are critical. In the context of research and higher education, we are in particular trying to work to inform scholars about the fundamentals importance of copyright to the larger system of scholarly communication. In our experience authors are not well-informed about these matters, and we would urge the Federal Government to take a strong role in educating people about copyright. In closing, I'd like to thank the members of the task force for their time today, and to urge you to ensure that the concerns of the research and education communities continue to be taken into account when considering intellectual property issues in the electronic environment. We will all be much the poorer if the potential of the NII to further research and education is compromised by the desire for excessive or overly-centralized control over the free flow of information and ideas. Thank you. CHAIRMAN LEHMAN: Thank you. I wanted to ask a question about the fair use. You've indicated that you thought that in an electronic environment it was important to retain fair use. You indicated that the guidelines that accompany the existing copyright law -- I assume you're referring to the guidelines in the legislative history -- have been valuable in facilitating that and what fair use means. In an electronic environment is fair use as necessary as it was in an non-electronic environment? In other words, with photocopying, which is the primary concern of the guidelines accompanying the 1976 Copyright Act, there's really no way to kind of give permission very easily for photocopying. On the other hand, in an electronic environment, at least in theory, one can give permission at very low cost, presumably, for use of the work; for any downloading, for any access to it. So it strikes me that from a purely practical point of view fair use is not as necessary to permit the kind of access that you're talking about. MS. FREEMAN: I think there are couple of issues. You mentioned reasonably low cost. In the nonprofit research sector even low cost is cost, and the provisions that I'm referring to are those which allow scholars to cite one another's works or to cite indeed other copyrighted materials for the purposes of criticism and scholarship. Now, the present arrangements allow for one to do that with proper citation, and we certainly think that proper citation should continue to occur. I think that's a separate question from whether someone has to then go ask permission and pay a fee and go through all of those steps when we're talking about a small piece of information as part of someone's scholarly or research work. We're not talking about using copyrighted materials as a substitute for the purchase of the copyrighted work. CHAIRMAN LEHMAN: I think that's important to understand. Clearly, the issue of common citation -- you know, using an excerpt -- that is classical fair use going way back, and is pretty much recognized universally around the world. The question of being able to copy whole articles, significant portions of articles using reprographic technology, of course, is something that has crept into the law relatively recently and is part of our fair use law. And I'm just suggesting it may be that the electronic environment would permit us, if we wished, to move back a little bit to the more traditional fair use which is what you just described. MS. FREEMAN: Yes. I think the present fair use are fair and appropriate as regards one time copies for personal use. I think there are serious technical questions that have to be answered as to how you ensure that the guidelines are followed. But we feel the guidelines are adequate once the technical solutions are found. CHAIRMAN LEHMAN: Thank you very much, we appreciate it. MS. FREEMAN: Thank you. CHAIRMAN LEHMAN: Next we'd like to call -- I apologize for the mixup before -- Mr. Timothy King, Vice President, Planning and Development of John Wiley and Sons. He comes to us from New York City. TESTIMONY BY TIMOTHY B. KING MR. KING: Mr. Commissioner, my name is Tim King. I'm Vice President of Planning and Development for John Wiley and Sons, the New York based publishing firm. I'm here today as a representative of a leading but mid-sized publisher of scientific technical, professional and educational works. We enthusiastically support the development of the National Information Infrastructure, and in particular the development of a free market network which will be open to all, even-handed and equipped to protect copyright and support a full range of intellectual property transactions. We see an important role for government in providing incentives and supporting experimentation for the creation of such a network. The value of this network will depend of the quality of the information available over it. To ensure the publication of the widest range of works on the network, the continued effective implementation of copyright law is essential. We share the opinion of the Association of American Publishers, of which Wiley is a member, that existing copyright law fundamentally seems to protect the rights of those who will make their works available via the NII. But it is possible that supplementary provisions may be needed to ensure that the copyright law can be adequately implemented. We do, however, have some concerns that involve fair use. An author's right to take advantage of fair use in a creative of transformational sense to build upon existing materials in crafting a new work should in principle be the same in the electronic medium as it is in the print medium. However, we fear that there will be a higher incident of plagiarism, whether intentional or due to the mere -- to paraphrase a famous judge -- facile use of the electronic scissors. Consequently, rather than users needing more protection, copyright holders will have to be more vigilant in detecting unfair use. Another type of fair use involves the occasional copying of small parts of works for limited educational purposes under certain conditions. Fair use has always been conditioned on such use not having a detrimental commercial impact on the copyright holder. This privilege was never intended to force rights holders to subsidize educational institutions or other users. In the network environment, a significant component of the commercial use of a work will be the access, transmission and copying of elements of the work. Fair use criteria need to be applied in a manner which reflects this difference from the paper world, and protects the authors and publishers interests in the emerging electronic market. Some technologies that enable and attract such use already exist. And additional technologies are in development and include encryption and reader-identifier systems. In order for the copyright laws to be implemented efficiently, standards for the labeling of copyrighted works with identifiers and the conditioners for their use will be a necessity. Some standards already exist, such as the ISBN and ISSN systems; others are in development. Standards facilitating the exchange of information among different systems will also be necessary if the network is to be widely accessible in the United States and open to all, whether publishers or users. Some such standards as the TCPIP already exist. They need to be augmented with transaction recording protocols. The role of government may well be to support experimental projects and provide incentives for the development of effective standards. There will be a wide range of licensing arrangements in the network environment. No single system could cover all authors, types of work, users, or all forms of use. We do not believe government should mandate a particular system or systems, including collective licensing. Marketplace solutions should be allowed to evolve. For the network to be successful, users must have full confidence that the material they access is authentic and identical to the original. There are technologies in development that could be employed to ensure this, such as digital signatures and hash values. Their use will not have to be mandated as both users and publishers have a strong incentive to employ them. Authors and publishers desire the widest distribution of their works consistent with a reasonable financial return. Neither is interested in creating artificial restraints on the distribution of their works unless it becomes apparent that customers are redistributing or using all or part of their works without permission or payment of fees. In such cases, technical means for preventing unauthorized access or reproduction are required. There are already some technologies that could be used, such as public key encryption. Rather than government mandating such technical means, we believe that government should facilitate their further development and support their availability. Each year in the United States over 35,000 new titles are published: works of research, scholarship and reference, as well as fiction. In order to enable the continued publication of use works in the network environment and permit the creators of intellectual property to benefit from their creations -- and here I wish to emphasize that I'm speaking not for the AAP, but as a mid-sized scientific, technical, professional and college publisher -- it is imperative that there be an orderly network for electronic publishing that is, firstly, capable of ensuring the authenticity and security of all intellectual property offered on the network. Secondly, that it is capable of providing transaction information where the network providers, network access points, or some other entities record for each intellectual property transaction the details necessary to enable payment for such transactions. Thirdly, that is open and even-handed to all, all who wish to publish and all who wish to access published works, where the terms and conditions of use are dependant only on the nature of the service provided, and not on the size or nature of the publisher or user, whether commercial, not-for-profit or public sector. And fourth, which is accessible to all, that is where the requirements for connecting to the system as a user and the requirements for publishing on the system are not burdensome. Existing commercial on-line database host and cable services do not provide such a network. Nor does the Internet, at least not yet. These points are set forth in greater detail in the statement for the record to be submitted by December 10, which is incorporated into my testimony by reference. In closing, we wish to reaffirm our enthusiasm for the development of an open, even-handed transaction-oriented network within the NII. It is our conviction that there are or will technological solutions and free market licensing systems which will facilitate the implementation of copyright protection in the electronic environment, and our belief that the proper role for government is to foster experimentation and provide incentives to industry for the realization of this new open publishing medium. Mr. Commissioner, thank you for the opportunity to testify. CHAIRMAN LEHMAN: Thank you very much. Do any of my colleagues have any questions? (No audible response.) CHAIRMAN LEHMAN: As long as we have just a moment to follow-up on the fair use question -- you indicated that that was a concern -- in the electronic environment, in effect where you can meter every use, is it as necessary to have a broader fair use exemption in your view? MR. KING: We believe that in the electronic environment the type of use made of many of your works, which are small print from scholarly professional works, will be the access of small portions. A work of let's say 400 pages available over the network will be looked at page by page, paragraph by paragraph. People won't buy the whole work. They will look at small bits. Those payment for those small parts will be the commercial aspect of publishing this work. If people could take those small parts without payment, calling it fair use, then in effect the financial return would be enormously reduced. And we would consider that to be unacceptable. It would prevent us from publishing. So we see that in an electric environment what fair use there is will be primarily that of what one might call creative fair use for creating new products, but duplicative, if you will -- duplicative use -- that should be charged on each transaction. CHAIRMAN LEHMAN: So there is a difference between the existing photocopying world and the electronic digitized world? MR. KING: I think the digitized world, the application of what we believe reasonable commercial use, will be clearer in the various cases that are currently before courts, like the Texaco decision. It's clear that we don't even believe that single copy use is necessarily fair, especially as is stated in the Texaco situation. CHAIRMAN LEHMAN: Thank you very much. Next we're going to call on Mr. Robert Oakley who has just come across the river -- he didn't have to come very far -- the Director of the Law Library at the Georgetown University Law Center on behalf of various library and education associations. I know that Mr. Oakley is a prominent member of many of them and he can perhaps describe that more for us. TESTIMONY BY ROBERT L. OAKLEY MR. OAKLEY: Thank you, Mr. Chair. Before I begin, I'd like to make a suggestion to the Working Group that you consider making the transcript of this hearing available over the Internet in addition to being available in paper for $30.00, and I'm sure we could find a host site if that was necessary. As you indicated, I'm the Director of the Law Library at the Georgetown University Law Center, but I'm here this morning on behalf of several different library and education associations; these include the American Association of Law Libraries, the Association of Research Libraries, the American Library Association, the Medical Library Association, the Association of Academic Health Science Library Directors, the Special Libraries Associations, the Association of American Universities, the National Association of State Universities and Land Grant Colleges, the Coalition for Network Information, EDUCOM, CAUSE, and the National Coordination Committee for the Promotion of History. I am not a member of all of them. A brief introduction to these organizations is appended to my full statement which has been submitted for the record. The library and education communities believe that is premature to propose specific legislative changes while the information infrastructure is still in its infancy. Nonetheless, we are concerned about the need to reaffirm that the rights granted to educators, libraries, and their users, apply in the electronic environment as they have in the paper environment. We also believe the law needs strengthening to allow libraries to use the newest technology to preserve the nation's heritage and to meet the needs of their users. We welcome this forum as really the beginning of a discussion that we hope will lead to these changes and allow us to achieve these goals. For this morning I which to emphasize three points. First, that the fundament purpose of copyright is for the public good. Second, that fair use and the library exemptions provided for in the Act should remain equally valid in the electronic environment, as they have in the paper-based environment. And third, that any licensing arrangements that are made should likewise take into account fair use and the existing limitations on the rights for copyright owners. First, the copyright exists for the public good. The Copyright Act balances the rights of creators and the rights of users. The constitutional purpose of copyright is to promote the progress of science and the useful arts. This means that the rights of copyright owners should be broad enough to ensure a fair return on their work, but limited in the public interest so as not to inhibit the use of existing works, especially for research, education and the creation of new knowledge. As Justice O'Connor wrote for the Supreme Court in the Fiest Case, "The primary objective of copyright is not to reward authors, but is to promote science and useful arts. To this end copyright assures authors the right to their original expression, but encourages others to build upon the ideas and information conveyed by a work. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art." Now to achieve the goal of promoting the public good, the second point is that the NII should preserve fair use in the library exemptions and allow for a variety of pricing structures. The policy framework for the NII should permit a variety of pricing structures. Any system, for example, must accommodate the distribution of some works at no cost to the individual user, or at least at not cost higher than what might be charged for basic access to the network. There is much that is already flowing over the Internet without a cost to the end user, and there is much that could be added without jeopardizing the rights of copyright owners. The materials that should be readily available include at least three categories of works; non-copyrightable works, such as works from the U.S. Government; works in the public domain because their term of copyright has expired; and works for which the author does not wish to exercise his or her copyright. Just as we believe that certain works should be available without a fee, so too we believe that certain uses should also be permitted without a fee. In particular, fair use should be available regardless of the medium, whether electronic or print. It is true that we cannot know now how the contours of fair use might evolve, but as an equitable rule of reason it should continue to be available. And indeed here I must say that I'm troubled by the last comments about metering. I find it difficult to understand or to think about how individual scholars and school children might have to pay a sum for the use of individual paragraphs out of particular works. Fair use is the means by which researchers learn and in turn write for the benefit of society. It is the fuel that drives the engine of progress envisioned in the Constitution and restated so well by Justice O'Connor. Similarly, the library exemptions in Section 108 must also continue in the electronic environment because they support educational and research endeavors of library users. Section 108 supports primarily preservation and limited interlibrary lending that is not a substitute for a purchase. These goals remain valid even though the methodology is shifting from print to electronic. In fact, with the exception of the preservation subsections, Section 108 is neutral on this point specifying copies not just photocopies. As a result, the intralibrary loan provisions strike a reasonable balance of allowing a library to request a copy of an article, even a copy delivered electronically from another library as long as the other provisions of the Copyright Act are respected. The preservations of the Act, however, need expansion to address the preservation needs of the nation, because they limit preservation coping to a single copy in facsimile form, meaning paper or microform. Because materials printed during the last 150 years are on paper that is becoming brittle with age, the need to preserve the nation's intellectual heritage is a major cultural crisis. Microfilm is still the medium of choose for preservation, but the technology is moving rapidly toward the time when preservation will be done electronically. The law should be amended to accommodate the newest preservation technology. Just as works printed on paper need to be preserved, digital works of enduring value will also need to be preserved. The life expectancy of works in most digital formats is only 15 to 20 years, shorter even than the life expectancy of paper. For such works, preservation takes the work of refreshing or copying the work on to a duplicate of the medium, or even moving it to the next technological generation. The current law does not accommodate this increasingly important need. Similarly, efforts to create digital libraries have run into significant barriers. These barriers must be resolved if we are to move forward anything like the Vice President's vision of making the Library of Congress and other library collections of national significance available electronically. For example, the Library of Congress tried to develop an American Memory Project to make historic collections of photographs, documents, the written word, and sound recordings, available electronically. As the project began, however, the Library found that many of the items, while relatively old, from the 1930s for example, might still be within their term of copyright. In most cases these were not works of famous authors, and it was difficult, if not impossible, to trace the owner. Multiplied by tens of thousands of documents, photographs, and recordings, this worthy effort become impossible, and the project was scaled back to include works clearly in the public domain or for which the Library has specific permission. As a result, the public has been deprived of a valuable learning device even though most of the creators of the works in question would probably have consented readily to the use of their work. Librarians and educators have no desire to deprive authors, publishers and other copyright owners of a reasonable economic benefit for their work. But the library and education communities believe that in cases like interlibrary lending and preservation in the electronic environment or the creation of digital libraries, copyrights should not be a barrier to education and learning. Finally, licensing proposals should also accommodate fair use and library use, as authorized in the act. Licenses might seem to be a means by which some of these goals could be achieved. However, the library and the education communities are concerned that many existing licenses fail to take into account fair use or the library exemptions. As an alternative approach as part of a project to digitize and archive both historic and current legal materials, the Columbia Law Library is working with publishers to develop a system that will preserve fair use and public access, while at the same time providing the necessary controls on user access to electronic information. Licensing should only be for uses that exceed fair use or the other exemptions in the Act. Licenses should not be used to contract around otherwise legitimate uses of proprietary material. Licenses for the acquisition of information create other challenges as well. Increasingly in libraries we are see the substitution of licensees or article-based delivery services to replace subscriptions. These programs satisfy current needs, but they will have a significant economic and structural impact on libraries since libraries will not be able to retain the information to meet futures requests. The NII should support licensing arrangement that provide for the archiving of electronic materials in a way that will recreate the collections and public spaces that have traditionally been presented by libraries. The library and educational communities welcome this forum as the first step of an ongoing process to examine the issues and determine what changes are needed to strengthen the basic goals of copyright. As indicated, we do see some problems that need to be resolved, but we have concluded that it is premature to make specific proposals at this time. We welcome the opportunity to continue the discussion with you and others in the context of developing the National Information Infrastructure. Thank you. CHAIRMAN LEHMAN: Thank you very much, Mr. Oakley, for those very useful comments. Next I'd like to call on Mr. Joseph Cosgrove of the Political Science Department at King's College, Wilkes-Barre, Pennsylvania. TESTIMONY BY JOSEPH M. COSGROVE, ESQ. MR. COSGROVE: Thank you, Mr. Chairman. My name is Joseph Cosgrove and I'm a lawyer and a teacher in the Department of Political Science at King's College in Wilkes-Barre, Pennsylvania, although my remarks are my own and not necessary those of King's College or any particular department. I appreciate the opportunity to address this Working Group given the serious and exciting prospects which development of the National Information Infrastructure will bring. In my capacity as both an instructor of constitutional law at King's College and as a private attorney with the practice largely devoted to the development and protection of basic civil rights and civil liberties, I have undertaken the examination of certain constitutional concerns which may arise with the development of this thriving information superhighway. While the Working Group has asked specific answers to specific questions associated with its mandate, it appears that these questions are premised on a concern for a superhighway that balances the rights of both the holders of copyrights as well as those of the users of this material. In our discussion of ways to protect the rights these holders once the NII goes online, we must keep in mind that there are certain constitutional parameters which mark our debate and certainly any legislation which will stem from it. Although it's sometimes hard to remember, we must be mindful that our national government is one of limited powers, and those powers are specifically enumerated in the Constitution itself, including the patent and copyright clause. Well, this modest civic lesson aside, I'm concerned that a certain fog may be developing our discussion of copyright protection in the NII. Contrary to the customary view, the patent and copyright power which the Constitution bestows upon Congress is concerned not primarily with the interest of the artist, author or creator, but instead protects a broader public right to receive information and ideas. In the world as it exists today, this right of access seems secure. Society has wide access to an almost endless variety of books of magazines and other printed material. The proliferation of television and VCR technology has caused a near explosion in the availability of video and film resources. Development of CD systems has completely revamped our music forms and other recording paradigms. But these all represent informational infants when compared to the possibilities which accompany the NII. What separates the NII from most existing systems is the extraordinary speed with which it will allow distribution of virtually all forms of information to those fortunate enough to be a part of it. But what about those not so fortunate? What of that portion of the public for which the expensive technology necessary to gain a spot on the NII is beyond their reach? Shall they be excised from this information revolution? Shall they relegated to a lower level of national dialogue and thus lose the opportunity to fully participate in the intellectual activity of our nation? I suggest to you that while this segment may lack possession of certain technological tools, it possess something far more important, and that is a constitutional entitlement to be a part of any informational feast which government may assist in creating. This right to access to information has been supported by the Supreme Court at least in the First Amendment context. More than a decade ago in the case Board of Education v. Pico, the plurality opinion of the Court found such a right as it related to a public school student's access to school library materials. Even the dissenting Justices recognized at least a limited version of this essential First Amendment liberty. Interestingly enough Chief Justice Burger voiced his concern that the plurality opinion would seem to, "support a constitutional right of the people to have public libraries as part of a new constitutional right to continuing adult education." It should be noted that the Chief Justice was not very fond of this idea, but he recognized that that certainly could be the import of what the plurality was stating. But the Chief Justice's fears have never really taken constitutional root, but the do, along with the plurality opinion itself, remain a vital part of our First Amendment jurisprudence. Defined, such a broad right to receive and have access to information is found even more easily in the copyright context than it is in the First Amendment analysis. As with any fundament right, a First Amendment right does not require any action of government for it to have a life of its own. It exists by itself, irrespective of governmental considerations. That is why the Court is simply reluctant to imply broad avenues of rights when they are not specifically enumerated in the Constitution. But the cousin of this First Amendment right to receive, which I suggest is contained in the Patent and Copyright Clause, comes into being only upon the affirmative legislative action of Congress in the granting of copyright protection to the artist, the inventor, or the writer. Once that congressional power is exercised, like it or not, the coextensive right to receive and have access to the protected material is immediately born. It is also likely that certain equal protection analysis will also be implicated in this context and supportive of this same right to access. I suggest to the Working Group that this constitutional interpretation will most certainly test the validity of any NII legislation which fails to include all segments of society in its attempt to develop the information superhighway. I suggest that civil libertarians like myself, cantankerous as we can sometimes be, and who rarely encounter our colleagues of the intellectual property bar will almost certainly meet these companions at the court house if the right to access to copyrighted material is not protected by the NII. How can such an unsavory encountered be avoided? It seems that a simple answer to this potential problem is an NII that fully employs the vast national resource that we call the library. NII outlets mandated as part of our national library system, whether the public library or the educational library, would ensure fulfillment of the constitutional requirement that all copyright legislation, "promote the progress of science and the useful arts." The same could also be accomplished through use of public school libraries opened generally after school hours. As an the aside, I once served on a local school board and strongly encouraged a rapidly growing educational philosophy that public schools should be seen simply not as educational institutions, but as vast resources for the general public. Use of school libraries as access points for the NII would serve a dual purpose of furthering this expansive education philosophy as well as protect the access rights previously discussed. Now, I recognize that this interpretation may cause shift in the balance of rights which the Patent and Copyright Clause should inherently maintain. But there are other remedies available to restore this balance. Since commercial interests are presumably at the heart of any copyright holder's concerns, NII legislation could easily expand commercial copyright protection. The First Amendment freedoms that are associated generally with access to information and other aspects of First Amendment freedoms are not as strong when they're taken in a commercial context. One method would be the adoption of the controversial presumption found in the Sony and the Harper and Row cases where the Supreme Court held that every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright. Congress is free to adopt this standard as its own and thereby grant even greater affirmative protection to the copyright holder in the commercial realm. Congress can do this, but what it cannot do is fail to grant general and public access to that material once it grants a monopoly protection. In the end, the NII, if it is indeed an information superhighway, must mimic our system of interstate highways to which it is analogized. These highways over the past 25 years have linked communities, rich and poor alike, and has placed access to all parts of our country within the reasonable grasp of the general public. It is in the best interest of this country that the NII do likewise. If it fails to do so, it shall also fail the Constitution from which it derives its very existence and the people which brought that Constitution into being. I offer many thanks for the opportunity to address this group and I offer an open invitation to discuss this further in writing or in oral form. CHAIRMAN LEHMAN: Thank you very much. MR. COSGROVE: Thank you, Mr. Chairman. CHAIRMAN LEHMAN: Do any of my colleges have any questions? MR. ABBOTT: I was wondering if you were suggesting that the copyright protection would be affected by your concern over the First Amendment rights. In other words it don't protect as much or were you not going that far? MR. COSGROVE: Well, we've heard so many discussions of fair use and how fair use will fit into the NII. Fair use has a genesis in the Constitution, aside from any legislative protection, and so we must keep that in mind. What I'm suggesting is that commercial restrictions can be placed within any copyright amendments and still be well within First Amendment parameters. Thank you very much. CHAIRMAN LEHMAN: Anything else? (No audible response.) CHAIRMAN LEHMAN: Thank you very much. Next I'd like call on Mr. Dennis Bybee, the Associate Executive Officer of the International Society for Technology in Education from Alexandria, Virginia. Welcome, Dr. Bybee. TESTIMONY BY DENNIS L. BYBEE, Ph.D. MR. DENNIS BYBEE: Thank you very much, Mr. Lehman and members of the committee Working Group. My name is Dennis Bybee and I'm Associate Executive Officer of the International Society for Technology in Education. We're a 45,000-member American-based professional education society whose members are directly involved in K-12 education. Our members are typically classroom teachers and computer-using educators and directors of technology in school districts and state departments and teacher preparation of people. We're very concerned about advanced technologies in the classroom and for administrative support purposes. I'm probably unique in the witnesses today. I'm not a lawyer. So I'm not here to argue the merits of what needs to be done in terms of law, but to represent the user community and as a representative of one major segment of the group; that is, the intended end users of the NII. I guess I would like to say at the outset that I would like to respectfully agree with much of what Mr. Oakley said and disagree with a lot of the other presumptions. I would like to suggest that this group not assume that the present information infrastructure management systems are adequate, efficient or desirable in a new NII environment. The rules that we have governing the current system seem to be creator-dominated, one-way delivery environment and should not be considered inherently adequate. They should be looked at carefully and maybe in fact unduly restrictive when apply to a new environment which is going to be user-dominated with interactive access as opposed to the rules that are currently in place which seem to be more directed at the single one-way delivery system. So I think with that caveat I would like say that first off we really are concerned about access and availability. Our members and our users in the education and training community, if we're going to have improvement in education, need to have access and availability, and it needs to be to the degree possible unrestricted. At the same time, we are very much in favor of all forms of creative endeavor being compensated. So we are not suggesting that the unrestricted access be at the expense of the creative process. That has been, in our view, the traditional role of the copyright environment, is to balance these interests; the availability of art in all forms or creativity, against the user community's interest in accessing. And so as you move into this new environment, there's a tremendous challenge that this group has to balance those interests, and I think that one should keep in mind the primary objective; to achieve a National Information Infrastructure, which is the free flow of information. We don't want restrictions and inhibitions to preclude the ultimate objective of this kind of a new technology. So as a non-lawyer let me respond to some of your questions. The intellectual property rights of creators: We want, for example, users to have unrestricted access to information. We want them to not be inhibited in any way by protection devices or by rules or other restrictions. Our primary concern is the free speech right of the use. There shouldn't be any restrictions on use, nor should there be any administrative burden placed on the user to limit uses. And I think it would be almost impossible in that environment to expect that millions of new users would exercise restriction. If they have access to information, one presumes that they should use that access. Therefore, that tells us that we should probably recommend that to achieve a freedom of information flow, it would be recommended that protections be universally and systemically provided for all creative works at the point of entry into the system, if you can figure out the methods and the methodologies for adopting a guiding principle that once in the system, universally available to all users. Encoded standards to us are -- we've had a lot of experience with encoded standards and they don't seem to work. There should be unrestricted access. To us, intellectual property rights seem to govern all forms of use and dissemination with the creator having controlling property rights that are selectively conveyed on a case-by-case or use-by-use basis. If such an electronic decision-making process were continued into the NII environment, it would impede the flow of information within the system and place an unacceptable burden on the NII system administration. Encoded standards are not the answer, and their use would probably inhibit information retrieval and creation in derived sources. Any attempt to restrict uses of intellectual property made available through the NII will be unacceptable to potential users and not result in the intended compensation to creators. Just as we found that copyright protection devices were ineffective in controlling intellectual property stored on magnetic media, we must expect that encoded standards would be ineffective in the NII environment. Neither creator nor the user would benefit from encoded standards to control access because user access would be restricted and the limited use of creative works would reduce the compensation to their creators if you would assume that compensation would be based on use. We recommend that you redefine intellectual property rights in the NII environment and restrict creative control to a simple one-time decision-making to either place works into the environment or not. In terms of interoperability, it seems very important to us that the information is held in a common format and in common set of NII information archival format standards may be appropriate. It is not as clear that a similar compelling need to establish full interoperability standards exist with respect to the hardware and the software systems. It is more likely that unregulated flexibility in accessing hardware and in software systems would stimulate continued development of products and services in that information resource marketplace. Our recommendation here is that there should be a common set of the NII information archival standards, but we don't see at this time similar standards for accessing hardware and software systems. In terms of your question about licensing systems, a universal licensing system should be developed and implemented to fully compensate owners of creative works made available on the NII. We would like to see a very simple and comprehensive licensing system providing one-time compensation for works at point of entry or agreed-upon licensing as they come into the system. And we would support some sort of system of compensation to creators based on instances of use. We're recommending a single universal licensing system be developed and implemented to fully compensate owners of creative works made available and used on the NII. In terms of unauthorized reproduction, this term probably has different meaning in the NII setting then it has in the common setting. Information must flow freely within the system without restriction. Since it is expected that the information resources will physically exist somewhere within NII and probably a best location would be a single location rather than multiple locations, and if simultaneous access is intended for a single location, then the concept of reproduction may be in fact irrelevant and access to users within the system should be authorized -- multiple access should be authorized. If in fact the system provides that materials are taken from the system and used in some uncompensated forms, then that might be dealt with as an issue here. But it might not be as lucrative as it currently is, if in fact the system is provided universally to all accesses. In terms of educational programs, it is expected that the new environment will result in new ways of interpreting intellectual property rights, and there probably should be a comprehensive effort to inform the public of how this is handled. We would encourage you, however, to begin with the creative community in terms of ensuring that there is long-term availability. And since there's a lead time in that, that it would take priority over educations of end users. In fact, if you can achieve the goal that we've suggested of having less restrictions on the end user community, it probably would require less education in training of those end users. So I appreciate the opportunity to be with you today. I present these rather unvarnished recommendations and hopefully over the next year or so, as the system is developed, we'll be able to work with this group to present and to represent the educational community in this important endeavor. We're very happy to have you working on this and to be able to present today. CHAIRMAN LEHMAN: Thank you very for sharing your thoughts with us today. Is there anybody who has a question? MR. LINN: A question of clarification. You expressed concern about the access of availability control as there was an existing single entity. What is that entity in your mind that you want to access to control and management of? Is it the Internet? Is that the analogy? Because some of the other speakers have talked about the publishing industry of being part of the NII and this is very different from the perspective and it seems a point of entry that was actually threaded through your comments. MR. BYBEE: The thing that we're hoping that will come out of this is that there will be an unrestricted flow of information. As a two-way environment, it seems impossible to negotiate case-by-case contracts or to preserve the current structure of creators setting the standards and users trying to receive that kind of thing. So whether you create a single entity to regulate that environment or you set up a system, and you've mentioned it a couple of times during the comments, Mr. Lehman, about the possibility of recognizing instances of use. And if recognition of instances of use could also imply some compensation, then I think that could be a solution. I'm not suggesting that we have a solution, but I'm suggesting to you that the solution not be to continue in this environment a quagmire of contractual agreements between end users and the providers. It would be preferable to have something similar to the music industry which I'm sure the creative community is compensated when we listen to music over the radio. And I'm sure there's an instance of use provision somewhere. Somebody has figured some of those ideas out that could apply to the NII. But we need unrestricted flow of information. MR. LINN: Second question. You talked about encoded standards. Does that imply encryption to you? Because it does not to me. Encoding is a scheme for representing information rather than encryption, which is to scramble the information. MR. BYBEE: Running through your statements there was a tenor that I was beginning to see in which we would create classes of information, categories of information, user restrictions. It might be multiple restrictions. There might be different user characteristics and things that you can do. If you in fact have a free flow of information, there should be a single category of information and encryption to the extent of encoding or encryption would inhibit or create classes of information. If you, for example, encoded it, is it going to be used in one environment for single uses and whatever at some cost -- MR. LINN: You are talking then in the since of coded and the law as opposed to a technical use of the term. Is that correct? MR. BYBEE: You said encoded standards. I took that to mean that you would have standards for encoding information and providing protection in individual works. If that was not correct, I can rethink that. MR. LINN: Thank you. CHAIRMAN LEHMAN: Thank you very much. Next we will call David Rothman from Alexandria, Virginia. TESTIMONY BY DAVID ROTHMAN MR. ROTHMAN: I'm probably the only professional writer here. It's rather amusing to here all this talk of creators in the abstract. This isn't just a hearing. In this case I'm the author of two forthcoming books on, among other things, some NII-related issues. Guess how much I'm getting for my electric rights in the case of these books which are both from really good publishers? All of 10 percent. And I believe that's net. And this is outrageous, given the distribution economies that are available. And these are really good publishers. I'm not begrudging the publishers at all. They're just reflecting the realities of the present system. Folks, it's not going to work. It's not working today, and it's not going to work in the future. I'm here with several interests in mind. Interest number one, as a citizen and a former poverty beat reporter, I fear that the new technology will aggravate rather than mitigate the savage inequalities of our schools and our society in general. I really agree with the speaker who preceded me with his concern about obstructions to the flow of information, and I'm saying this, mind you, as a creator. At the same time -- in fact this is along the same lines -- I cringe when I hear librarians talking about the use of local servers as their main way to distribute copyrighted material. Steve Sizzler of Apple Computer came up with some materials cost for public libraries in California. In 1988 the capita figure for Beverly Hills was something like -- well, to be exact, $87.46, and for Shasta County which is also in California, all of $2.51. So I would hope the librarians would keep an open mind in terms of the usefulness of a central national library online reflecting taste of many librarians. That's what I have in mind with the plan I call TeleRead about which I've written in the Washington Post, Computer World and the Baltimore Sun and also in Internet posting. This part of the hearing is already available on the Internet. Anyone here is perfectly free to reach at Rotman Etsign Netcom, NETCOM.COM and I can E-mail the stuff in a flash. I envision a combination of a central library and a server system. My vision is one of electronic federalism where we would have the main library picking up the best technology and content of the servers. Interest number two: As a writer, I fear for my property rights in this new age. You've just gotten one indication in terms of how much I'll actually be getting for my work. But there's another consideration, and that is piracy. I'm worried that if we base copyright laws on the copy protection schemes, I emphasize the pearl of schemes de jour. It will be like building a nuclear reactor and relying on advise from the administrators of Chernobil. Today's copyrights will go on for decades and decades after the dust of writers. We're really talking about widows and orphans here. As if the vagaries of technology aren't enough, human nature abhors protection schemes. Even strangers love to share online. Here's a disk recording some possible violations of copyright law. In one file a man named Jay pops up on the Internet and uses a Net address from the United Kingdom. He casually asks how he might find an electronic copy of a short book by the novelist William Gibson. Jay does not mention that Agripa is copyrighted and has sold reportedly in various editions for between $450 and $7,500. "Good luck, kid," an American named Robert, replies to Jay. The original E-text was designed to destroy itself after decrypting. "Good luck, Robert," a third man shots back. It's all over the Net. Net soon includes the alt E-text news group helping Jay out and other Internet post Mr. Gibson's work for the whole world to download in a flash. I have hunch that Mr. Gibson probably knew that piracy would be taking place here and that he was looking forward in fact to the publicity. When Agripa was released, his publisher told a magazine that a supercomputer could do the job, but a personal computer could not. But again we have to keep in mind that we're talking about decades or even centuries when we're talking about copyright law. Correct me if I'm wrong, but the existing law the copyrights last for my life plus half a century. So we really need to think in the long-term and even in if in the next few years the market system could come up with a copy protection scheme, I'm just somewhat skeptical as to whether it would last this length of time in terms of effectiveness. And I really think my way, from a legal viewpoint, is actually more conservation. That is, the idea of a central library reflecting the taste of many librarians with proper compensation for creators. So I'm making the point that the best way to preserve property rights and maintain the spirit of our existing copyright law is to alter the letter. Interest number three. As a small businessperson, like all profession writers, I hate bureaucracy. I believe that the same telereaders used to display books should also be used for electronic forums to streamline transactions with the government. According to the U.S. Chambers of Commerce, we spend several hundred billion dollars a year in time and money on paperwork for bureaucracies. And what if we could reduce this amount by just a fraction? It would more than cost-justify the TeleRead program, the central library, especially if the technology were used at all levels of government. Everything from city hall to agencies here. I'm suggesting that we could have smart electronic forums that would not just allow citizens to enter information, but which would also supply, if desired, detailed prompts both on the screen and in audio to guide citizens through the forums. The software would instantly alert the citizens if they entered incomplete or inconsistent data. IRS auditors and other hard-working civil servants would have to make fewer follow-up calls. And what's more, there are plenty of opportunities for the private sector. We could private software in place of government forums. It could give birth to a whole new industry. Simply put, TeleRead would dramatically speed up changes of the kind suggested in the National Performance Review Paper. I think the paper is an excellent start in the right direction, but we need to go further in that regard. For reasons of time I won't discuss many other potential uses of TeleRead. I won't tell how TeleRead could promote community networks or allow bookstores to sell paper copies of books from the national database, or how we could use a procurement program for schools and libraries to drive down the cost of sharp screen portable computers for all buyers not just the Federal Government. Nor will I tell how Silicon Valley and telephone and cable companies could sell TeleRead as a new product category. If nothing else, TeleRead would assure small and mid-sized publishers, say the Wileys of this world, or the publishers I'm doing my books for, a wide lane on the information highway in an era when many communication firms want to merge. But even the big database operators and the baby bells might keep open minds. If such corporations truly had value to offer, then as contractors they could earn more money than they would without TeleRead. I think there would be some magnificent opportunities for members of the IIA here. Right now consumers can spend only so much on information services, and TeleRead could vastly increase opportunities for companies of all sizes that truly serve the public. William F. Buckley, Jr., one of journalism's most vigorous defenders of free enterprise and property rights, endorsed this proposal last May in a column called, The TeleRead in your Future. I hope that many other Americans will want TeleRead to be part of their futures. Thank you, and again the full proposal is available to anyone if they'll E-mail me at Rothman Etsign NETCOM.COM. It's 160k. Thank you very much. CHAIRMAN LEHMAN: Thank you very much, Mr. Rothman. Are there any questions? (No audible response.) CHAIRMAN LEHMAN: Thank you. At this point we're going to take a 10-minute break. We'll be back in 10 minutes. (Recess.) CHAIRMAN LEHMAN: Next I'd like to call on Mr. David Pierce, the President of the American Association of Community Colleges. Welcome, Mr. Pierce. TESTIMONY BY DAVID PIERCE MR. PIERCE: Thank you, Mr. Chairman and members of the committee. I'd like to thank you very much for the opportunity to testify this morning. On behalf of the largest single segment of America's post-secondary educational system, the community colleges. My name is Dave Pierce, and I'm President of the American Association of Community Colleges which represents well over 1,100 of the nations associate degree-granting post-secondary institutions. Community colleges enroll approximately one-half of all of the students enrolled in higher education and they are community-based with close ties to their community. And all are very heavily involved in data and in transmission and in various forms of media use in serving their communities. We have more than 6 million students enrolled in credit programs, and an additional 5 million students in courses for personal enrichment and lifelong learning. We serve the majority of Americans first entering college, as well as the largest undergraduate populations of women, ethnic minorities, and the economically disadvantaged. In the emerging global economy where the skills necessary for personal and economic success are consistently changing, community colleges are in the forefront of developing continuing education and training for the nation's workforce, small and large business and health care providers. As pioneers of business education programs and multimedia instruction, we have the technical ability to reach a majority of citizens in the country. Community colleges promote an open door admissions philosophy. Our students come from all walks of life with varying academic credentials, and pursue many different goals. The curricula of community colleges are extraordinarily diverse. They include occupational, technical and life-long programs, in addition to university transfer programs. Community colleges also work in partnership with high schools and the civic and business communities to develop the world class workforce that is prerequisite to success in today's global economy. Community colleges will continue to lead the way in helping all elements of society in the utilization and training of information age technology, and must be an integral part of the development of the National Information Infrastructure. First, the NII must be developed in a partnership. Business, industry, labor, government and higher education must work together to develop the NII. Community colleges are a vital element in this partnership. We're the foremost practitioners of distance learning to bring education to Americans. Therefore, we're a natural vehicle to ensure access and equity to the NII for both urban and rural communities, and are well positioned to serve as the conduit for local communities in accessing, retrieving and communicating from the NII. Second, funding, standardization and interoperability must be integral components of NII. Many obstacles can inhibit the growth of the NII. Diverse protocols, the lack of interoperability, the high cost of equipment, connection and operation will frustrate access and could prevent many entities, including community colleges, from full participation in the information age. As the various aspects of this infrastructure are developed and implemented, funding must be made available to the public sector to ensure connection. Further, standardization and interoperability must be strongly encouraged. Educational institutions cannot afford to invest in equipment hoping that their choice will become the norm. Educators must be confident that their investment and technology will be useful over the long term. Finally, community colleges can provide education and training for this nation's infrastructure. Community colleges are logical links for communities to the NII and will be sought out for training and information on intellectual property and copyright issues. As the system is developed and as the issues of intellectual and copyright law are reviewed and updated, community colleges, leaders in the use of technology for the delivery of education and training, are eager to play an important role in increasing public awareness. Let me give you some examples of what our colleges are currently doing is this area. Community colleges deliver courseware using a variety of technologies, including telecourses, computer assisted instruction and interactive programs. For example, Dallas County Community College District produces telecourses which they deliver over local public television and cable channels to over 11,000 students annually. Kirkwood Community College in Iowa has an extensive live interactive video network that provides credit classes to almost 4,000 students annually at multiple locations. Students in the Mericopa Community College District in Phoenix, Arizona can sit at their PCs at home and have access to a wide array of instructional services communicated via computer network. In fact, at that particular institution, which is the Glendale Community College as a part of that district, students can actually achieve a full associate degree, a two-year program, either going to the college campus and participating at the PC laboratory which they have, or if they choose to do so, they could stay at home and achieve the entire associate degree from their home. The examples are endless. Just yesterday I talked with the President of Hudson Valley Community College in New York and he described a project they had with the local Hispanic Council of preparing programs for transmission into four prisons for Hispanic incarcerated prisoners. Thirty percent of all the prisoners in that state are Hispanic and they're working with the Hispanic leadership in an attempt to provide educational services. If that project is successful, it will be taken statewide. That's simply and example of the positive use of both a community college and technology. With an established information infrastructure educators can concentrate on the content of the programming and not have to worry about the nuts and bolts of the delivery method. Government and private industry will use the community college system as a vehicle for training and supplying information on the policy and procedures for utilizing the NII. A grant program to develop and deliver onsite training, electronic town meetings and local public hearings needs to be established. Community college partnerships with government and industry should be a priority to assure timely dissemination of new regulations as they are developed and implemented. As I've stated in testimony today, community colleges are and will be primary link between the NII and local communities throughout this next decade and beyond. It's critical that we are directly involved in all aspects of National Information Infrastructure development. Thank you for permitting me to appear before you. CHAIRMAN LEHMAN: Thank you very much. I have a question to ask. I notice in the written comments that were submitted you talked about the evolution of use of technology in community college programs, sunrise semester programs and television and so on. When you both have programs in a classroom and you have programs in broadcast, and then presumably if you have programs on some interactive service, I assume that there's some sort of fee that's presumably a modest fee, but some sort of fee that's charged for course materials and so on and so forth for the students. Is that correct? MR. PIERCE: Yes, sir. CHAIRMAN LEHMAN: That mechanism could be a mechanism, I assume, for in effect providing licensing for the copyrighted materials that would go through this system. MR. PIERCE: I think it probability could. CHAIRMAN LEHMAN: In other words, part of putting together the course could be of getting the licenses to use the work and then just building that right into your course fee. MR. PIERCE: Mechanically I believe that's possible. Yes, sir. CHAIRMAN LEHMAN: Thank you. Does anybody else have any questions? (No audible response.) CHAIRMAN LEHMAN: Thank you very much. MR. PIERCE: Thank you very much. CHAIRMAN LEHMAN: Next we're going to hear from Fritz Attaway who is Senior Vice President and General Counsel of the Motion Picture Association of American. Welcome, Mr. Attaway. TESTIMONY BY FRITZ E. ATTAWAY, ESQ. MR. ATTAWAY: Thank you, Secretary Lehman, members of the panel. I'm accompanied here today by Bernard Sorkin who is Vice President and Senior Counsel of Time Warner. CHAIRMAN LEHMAN: Would you like to have him come forward? MR. ATTAWAY: He has refused to come down here and sit with me, but if you have any hard questions, they should be directed to him. There he comes. Thank you, Bernie. Bernie is a real copyright lawyer. I would like to start by commending Vice President Gore and the Clinton Administration both for taking this initiative to develop a National Information Infrastructure, and also for recognizing the critical importance of intellectual property protection in this undertaking. Adequate and effective copyright protection is an essential element of the National Information Infrastructure. Without effective protection of the rights of those who create copyrighted works, the wondrous potential communications technology will be delayed or never developed. The value to society of a National Information Infrastructure will depend in large part on the availability of information. The communication superhighway is of little use to society if it does not have large quantities of information on which that superhighway can carry. Faithful adherence to basic principles of copyright protection, as well as the effective implementation of the work for hire doctrine, has helped this country become the largest creator, user and exporter of intellectual property in the world. The economic importance of America's copyright industries is illustrated by the following statistics just recently released by the International Intellectual Property Alliance. The core copyright industries accounted in 1991 for over $206 billion in revenues from their copyright related activities, or 3.6 percent of the U.S. GDP. In 1991, total copyright industries accounted for $325 billion in value-added or about 5.6 percent of GDP. The core copyright industries grew at close to 3 times the rate as the economy as a whole between 1977 and 1991; 4.2 percent versus 1.5 percent. Total copyright industry employment in 1991 stood at 4.8 percent of all employment, 5.5 million people. These industries employed new workers at a greater rate, 3 percent between 1977 and 1991, than any other comparably sized sector of the U.S. economy. And more than three times of the remainder of the U.S. economy as a whole, 3 percent versus .97 percent. These industries delivered over $36 billion in foreign sales to this country in 1991. Preliminary data for 1992 indicate growth of 9 percent to $39.5 billion, an achievement exceeded only by the aerospace and agriculture industries. The motion picture industry alone, as I'm sure all of you have heard numerous times from Jack Valenti and me and everyone else who represents the industry, contributes over $4 billion in positive balance of trade every year. Trade is essential to the production of copyrighted works in this country. Therefore, my first recommendation to you is that the task force participate in the ongoing GATT talks on intellectual property, the TRIPS negotiations. I know that the Patent and Trademark Office has been very much involved in this process. I would urge that this task force also take a role in this because trade is absolutely vital to the continued development of intellectual property in this country and to communications generally. Specifically, I would urge you to support the provision of full national treatment in a TRIPS agreement. This is an element this is lacking in the current text. It needs to be inserted. Domestically, the task force should seek to ensure that the exclusive rights provided Section 106 of the Copyright Act are broadly constructed to cover new uses of copyrighted material made possible by technological advances. One of the great features of our copyright law is that it lays down basic principles in simple language that can be adapted to changing circumstances. It should presumed that the National Information Infrastructure can function effectively under the current structures of the Copyright Act. In most cases the marketplace can and will adapt to ensure maximum availability of copyrighted works within the