[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
U.S. COPYRIGHT OFFICE
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HEARING
BEFORE THE
SUBCOMMITTEE ON
COURTS, INTELLECTUAL PROPERTY,
AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 18, 2014
__________
Serial No. 113-116
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Printed for the use of the Committee on the Judiciary
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Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
LAMAR SMITH, Texas Virginia
STEVE CHABOT, Ohio ZOE LOFGREN, California
SPENCER BACHUS, Alabama SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUUL LABRADOR, Idaho JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
JASON T. SMITH, Missouri
[Vacant]
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
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Subcommittee on Courts, Intellectual Property, and the Internet
HOWARD COBLE, North Carolina, Chairman
TOM MARINO, Pennsylvania, Vice-Chairman
F. JAMES SENSENBRENNER, Jr., JERROLD NADLER, New York
Wisconsin JOHN CONYERS, Jr., Michigan
LAMAR SMITH, Texas JUDY CHU, California
STEVE CHABOT, Ohio TED DEUTCH, Florida
DARRELL E. ISSA, California KAREN BASS, California
TED POE, Texas CEDRIC RICHMOND, Louisiana
JASON CHAFFETZ, Utah SUZAN DelBENE, Washington
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia ZOE LOFGREN, California
RON DeSANTIS, Florida SHEILA JACKSON LEE, Texas
JASON T. SMITH, Missouri STEVE COHEN, Tennessee
[Vacant]
Joe Keeley, Chief Counsel
Heather Sawyer, Minority Counsel
C O N T E N T S
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SEPTEMBER 18, 2014
Page
OPENING STATEMENTS
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Chairman, Subcommittee on Courts,
Intellectual Property, and the Internet........................ 1
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Ranking Member, Committee on the
Judiciary, and Member, Subcommittee on Courts, Intellectual
Property, and the Internet..................................... 25
The Honorable Jerrold Nadler, a Representative in Congress from
the State of New York, and Ranking Member, Subcommittee on
Courts, Intellectual Property, and the Internet................ 26
WITNESS
The Honorable Maria A. Pallante, Register of Copyrights and
Director U.S. Copyright Office
Oral Testimony................................................. 28
Prepared Statement............................................. 30
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by the Honorable Howard Coble, a
Representative in Congress from the State of North Carolina,
and Chairman, Subcommittee on Courts, Intellectual Property,
and the Internet............................................... 4
APPENDIX
Material Submitted for the Hearing Record
Material submitted by the Honorable Howard Coble, a
Representative in Congress from the State of North Carolina,
and Chairman, Subcommittee on Courts, Intellectual Property,
and the Internet............................................... 60
Prepared Statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Committee on the Judiciary........................... 85
Prepared Statement of Mary Rasenberger, Executive Director, The
Authors Guild, Inc............................................. 88
Prepared Statement of Sandra Aistars, Chief Executive Officer,
Copyright Alliance............................................. 97
Prepared Statement of Keith M. Kupferschmid, General Counsel and
Senior Vice President, Intellectual Property, Software &
Information Industry Association (SIIA)........................ 102
Letter from the Intellectual Property Owners Association (IPO)... 109
Prepared Statement of Rick Carnes, President, Songwriters Guild
of America..................................................... 116
Prepared Statement of the Motion Picture Association of America,
Inc. (MPAA).................................................... 120
U.S. COPYRIGHT OFFICE
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THURSDAY, SEPTEMBER 18, 2014
House of Representatives
Subcommittee on Courts, Intellectual Property,
and the Internet
Committee on the Judiciary
Washington, DC.
The Subcommittee met, pursuant to call, at 2:14 p.m., in
room 2141, Rayburn Office Building, the Honorable Howard Coble,
(Chairman of the Subcommittee) presiding.
Present: Representatives Coble, Marino, Chabot, Issa,
Holding, Collins, DeSantis, Nadler, Conyers, Chu, DelBene,
Jeffries, and Lofgren.
Staff Present: (Majority) David Whitney, Counsel; Olivia
Lee, Clerk; (Minority), Norberto Salinas, Counsel; and Jason
Everett, Counsel.
Mr. Coble. The Subcommittee on Courts, Intellectual
Property, and the Internet will come to order.
Without objection, the Chair is authorized to declare
recesses of the Subcommittee at any time.
We welcome our witness today, and we will introduce her at
a subsequent time, imminently.
With that in mind, let me give my opening statement.
Within Congress, the Judiciary Committee is responsible--
strike that.
I want to apologize to all of you for our belated
commencement time. We had votes on the floor. That is why we
are running about 10 minutes late.
Within Congress, the Judiciary Committee is responsible for
overseeing and legislating on matters that derive from or are
substantially affected by the Constitution's grant of authority
under Article 1, Section 8, Intellectual Property Clause. In
the context of today's hearing, there are two points I want to
make regarding this authority.
First, the Constitution's drafters didn't merely give
Congress the authority to grant exclusive rights to authors and
inventors; they gave the Congress the responsibility to execute
it by literally prescribing the means of securing these
exclusive rights.
Secondly, since the 19th century, the Congress has sought
to administer and secure these rights through a design that has
largely been left unchanged, a statutorily created Copyright
Office housed in the Library of Congress.
Today's hearing will focus on the operations of the U.S.
Copyright Office. In doing so, we will not merely gaze
backwards to assess how the Office has constructed its business
in recent years. We will look forward and begin to examine the
more difficult and substantial questions of whether we are
equipping the Office to succeed and ask what steps we need to
take to position it to promote the interests of authors and the
public and perform its statutory responsibilities in the 21st
century.
From time to time, we need to step back and see not only if
we should make changes to substantive law but also whether we
should continue to do things as we have done them for years. On
the substantive side, the Committee is engaged in an ongoing
and historic comprehensive review of copyright law. On the
process and operations side, we need to begin a complementary
effort to ensure that we are considering how to administer the
law and whether we are furthering its constitutional and
statutory objectives on a substantial basis.
Over the years, I think the location of the Office in the
Library of Congress served largely to serve the objectives and
interests of both organizations and the American people as
well, but we live in a dynamic and increasingly digital
environment and it is clear that the Office's structure was
designed for an analog era or an analog age. Today, the Office
serves as a repository for vital information that helps to
promote and advance the interest of free expression and has an
epicenter of commercial activity that educates and entertains
not only Americans but citizens throughout the world. This will
only increase tomorrow.
Congress has looked to alternatives in the past. In the
mid-1990's, we contemplated reorganizing the PTO as a
government corporation and one of the proposals reviewed would
have been to combine the Copyright Office with the PTO. We
subsequently adopted reforms to the PTO organization but put
aside the question of whether the Copyright Office and, more
importantly, the principles we seek to advance through the
institution of the Office would be of benefit therefore.
The Subcommittee has been concerned about the Office's
ability to perform its functions and duties for some time. It
is an open question whether the Office has the support it needs
from the Library, and I don't mean to be in any way critical of
the Library. But nonetheless, I think that is the case. Its
operations and function are 24/7 as a marketplace requires and
the American people deserve.
This discussion needs to be a public one, and it needs to
be approached with an open mind, with the clear objective of
building a 21st century digital Copyright Office.
We look forward to receiving the testimony of Ms. Pallante,
the United States Register of Copyrights. But before she begins
I want you to know that she recently delivered an important
address entitled ``The Next Generation of Copyright Office:
What It Means and Why It Matters.'' In those remarks, she
reported on the progress the Office has made in modernizing its
operations under existing authorities and made recommendations
for needed improvement. Without objection, I ask that we
include a copy of that speech in the record.
[The information referred to follows:]
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Mr. Coble. I am now pleased to recognize--Mr. Nadler is not
here--Mr. Conyers. I will recognize the gentleman, the
distinguished gentleman from Michigan, former Chairman of the
full Committee, Mr. Conyers, for his opening statement.
Mr. Conyers. Thank you, Chairman Coble. I am delighted to
join you in welcoming the Register of Copyrights. I would like
to merely observe that this Office plays a critical role in
promoting and protecting the integrity and vitality of our
Nation's copyright system. And to that end, today's hearing
should focus on several factors.
As a fundamental matter, the Copyright Office must be on
the forefront of our fight against piracy. As I have stated
many times, copyright is critical to job development and the
overall health of our Nation's economy. An intellectual
property system that protects copyrights, incentivizes their
owners to continue to innovate--that, of course, creates jobs
and strengthens the Nation's economy.
Unfortunately, piracy is devastating to our economy and
harms our creators and innovators. It is directly responsible
for the loss of billions of dollars and millions of jobs. The
Copyright Office helps to combat piracy by educating the public
and Congress on the seriousness of piracy and how to prevent
it, and it works with other agencies to strengthen copyright
enforcement.
In addition, the Office, through its International
Copyright Institute, helps deter piracy of copyrighted works by
encouraging the development of effective intellectual property
laws and enforcement abroad. Accordingly, we should encourage
the Office to further explore ways to strengthen its efforts to
maintain a robust copyright system and combat piracy.
A factor integral to the success of the copyright system is
for the Copyright Office to upgrade to the digital age and
become more user-friendly, and accordingly we must support the
Office's efforts to modernize. For example, the Office's
recordation system continues to be a cumbersome and costly
process that requires manual examination and data entry. The
functionality of the Office's databases and the usability of
the Office's website frankly need improvements. The security of
deposited digital works should be enhanced. The copyright
community needs a system which provides a more usable public
record of copyrighted material.
The Copyright Office is aware of the need to modernize, and
we must help it do so. And most importantly, a strong copyright
system requires that we fully fund the Copyright Office, and in
that regard the Chairman of this Committee, Bob Goodlatte,
joins me in supporting that idea.
The Office performs several significant roles in our
copyright system, including examining and registering copyright
claims, recording copyright documents, and administering
statutory licenses. Yet, since 2010, Congress has cut the
Copyright Office's budget 7.2 percent while continuing to ask
the Office to do even more. And as a result, the Office has had
to rely on its small reserve fund of customer fees to barely
meet operating expenses. This reduces any operating cushion the
Office could otherwise use for long-term planning.
Further, the recent sequester further compounded the
resource problems at the Copyright Office. It limited the
Office's ability to hire staff to fulfill its many duties. In
fact, just considering the registration program, it currently
has 48 vacancies out of 180 staff slots, according to our
research.
Unless Congress can't agree on a Federal appropriations
plan next year, the Office will face another mandatory
sequester in Fiscal Year 2016. Fully funding the Copyright
Office will help it carry out the increasing volume and complex
work that we expect it to perform. This, in turn, will make our
copyright system become more effective and efficient.
And so I thank Chairman Coble for holding today's hearing,
and I look forward to hearing from the Register of Copyrights
herself. Thank you, Mr. Chairman.
Mr. Coble. I thank the gentleman from Michigan.
The Chair now recognizes the distinguished gentleman from
New York, the Ranking Member of the Subcommittee, Mr. Nadler,
for his opening statement.
Mr. Nadler. Thank you, Mr. Chairman, for holding this
oversight hearing with respect to the U.S. Copyright Office.
I would like to thank the Register of Copyrights, Maria
Pallante, for appearing again before the Subcommittee, and
thank you and your staff for serving as a resource during the
Committee's comprehensive copyright review. I look forward to
hearing how the Copyright Office can continue to provide
valuable services for both copyright owners and users, which is
particularly important as intellectual property and copyright
matters constitute an increasingly significant segment of our
economy and culture.
Many people might be surprised to learn just how many
functions the Copyright Office performs. The Copyright Office
registers copyright claims, records documents, administers
several statutory licenses, performs regulatory
responsibilities, and provides information to the public. In
addition to these administrative functions, the Copyright
Office provides expert advice to Congress, conducts studies,
and makes policy recommendations.
Over the years, the Copyright Office has given Congress a
number of studies on a variety of topics, including orphan
works, library exceptions, statutory licensing reform,
Federalization of pre-'72 sound recordings, and master
digitalization of books.
The recent and ongoing reports and studies have been
extremely helpful to Members of Congress and their staffs. I am
particularly thankful for the updated report examining the
issue surrounding visual artists and resale royalties in the
United States that was released in December of last year, and I
look forward to reviewing the music licensing report that will
be released in the near future.
The future success of the Copyright Office will largely
depend on how technology at the Copyright Office is connected
and managed through the Library's technology enterprises. For
that reason, I am interested in hearing about how and if the
Copyright Office's technical capacities are fully able to
accommodate the long-term goals of the Office.
Electronic submission standards for copyright documents
will also continue to grow in importance. The Copyright Office
should continue to make recordation inexpensive and workable
for copyright transactions.
The Copyright Office has been able to perform their
numerous responsibilities with very limited funding. In Fiscal
Year 2014, the Office had an overall budget of just $45
million, with about $28 million of that coming from fees paid
by copyright owners for registration, recordation and other
public services, and $17 million from appropriated funds.
The Copyright Office continues to face staffing shortages,
budget reductions and workloads, and as the distinguished
Ranking Member of the Committee mentioned, the sequester. With
these challenges, the Copyright Office may need to consider
creating new positions to support the complexity of statutory
technology and regulatory responsibilities.
Copyright owners depend now, more than ever, on
searchability, reliability, and security of Copyright Office
records. Copyright owners want to know that their digital files
will remain secure as digital works become used more often. The
Copyright Office and the Library need to maintain secure
repositories so that users can continue to have confidence in
participation in the copyright system.
I know this is a goal that is shared by Ms. Pallante and
her leadership team, who have taken steps to improve the core
services and technical capacity at the Copyright Office. I look
forward to hearing from Ms. Pallante today about how we can
continue to improve the Copyright Office and ensure that it
provides state-of-the-art services in the years to come.
I thank you, and I yield back the balance of my time.
Mr. Coble. I thank the gentleman.
We have been joined by the gentle lady from California, the
gentle lady from Washington, I think, Washington or California,
the Evergreen State, and the distinguished gentlemen from
Pennsylvania, North Carolina, and Georgia.
As I said earlier, we are honored to have the United States
Register of Copyrights as our witness today. Maria A. Pallante
is the 12th appointed Register of Copyrights and Director of
the United States Copyright Office. In her position, Ms.
Pallante directs the legal policy and business activities of
the Office. The position of the Register of Copyrights is a
unique, historic, and vitally important one, and Ms. Pallante
assumed control of the Office at an especially challenging and
momentous time. Among other key duties, the Register serves as
the principal adviser to Congress on matters of copyright law
and policy.
Ms. Pallante had to spend much of her career in the Office
where she previously served as the Associate Register for
Policy and International Affairs, Deputy General Counsel, and
Policy Advisor. She also served as a senior advisor to the
Librarian, Dr. James Billington, immediately prior to being
appointed Register. She spent nearly a decade as Intellectual
Property Counsel and Director of Licenses for the Guggenheim
Museums in New York. She earned her J.D. degree from the George
Washington University School of Law and her Bachelor's degree
from Misericordia University.
Madam Register, it is good to have you with us.
We try to comply with the 5-minute rule, if possible. When
you see the green light turn to amber, the ice on which you are
skating is becoming thin, but you won't be penalized if you
violate it. But try to stay within the 5 minutes, if you can.
We are pleased to have you with us today.
TESTIMONY OF THE HONORABLE MARIA A. PALLANTE, REGISTER OF
COPYRIGHTS AND DIRECTOR U.S. COPYRIGHT OFFICE
Ms. Pallante. Chairman Coble, Ranking Member Nadler,
Members of the Subcommittee, I would like to thank you as well
as Chairman Goodlatte and Ranking Member Conyers of the full
Committee for inviting me to testify today.
The Copyright Office is a significant Federal institution.
We interact with and provide services to businesses of all
sizes, from small proprietors to multinational corporations,
many of which are in a state of constant growth and innovation.
Never has the delivery of creative content been faster, more
interactive, or more global than it is now.
In turn, it has become clear to me that the Copyright
Office must also become more forward-thinking than it is; that
is, more flexible and more interoperable with the marketplace
that we serve.
In the past couple of years, I have focused the Office on
two primary goals: first, carrying out the day-to-day workload
of administering the law; and second, engaging in discussions
with the public about future strategies and direction for the
Office. Mr. Chairman, we have been very transparent about this
work. We have published numerous public inquiries, we have
solicited written comments, we have conducted numerous
roundtables, and we have participated in dozens of meetings at
bar associations, conferences and seminars.
In 2011, we published and have since followed a multi-year
work plan. This included a series of special projects designed
to inform the priorities and future path of the Office.
Notably, this occurred alongside budget cuts, further
challenging us to not only think big but to think creatively
about our operations. Here are some of the highlights of what
we have accomplished.
We analyzed and wrote the first revision in decades of the
Compendium of U.S. Copyright Office Practices, which we
released in draft form to the public last month. At 1,200
pages, the Compendium is replete with our core administrative
practices and helpful examples for authors, artists, and other
customers. It is the instruction manual for our staff in the
examination process, and it is a key legal source for the
courts. We have received tremendously positive feedback
regarding both the authoritative text and the clear
presentation of the material.
I would like to underscore some of the groundwork that we
have done in the area of technical upgrades, which was really a
form of self-evaluation for the Office. Essentially, we
conducted a public review of our relative strengths and
weaknesses in providing services, with a focus on the user
interface of our electronic systems; the quality of our public
records; security issues; the usability of our website;
industry standards, for example with respect to metadata, copy
controls and private registries; and the overall customer
experience of interacting with the Office.
We spent considerable time evaluating our recordation
service, which Ranking Member Conyers has pointed out is still
a paper-based process. Recordation is separate from
registration. This is the process by which licensing
information, security interests and other copyright documents
are recorded with the Office on an ongoing basis. We need to
transform it from a paper process to an interoperable digital
platform.
We are grateful to everyone who has participated in this
work, including book publishers, public interest groups,
technologists, the music and movie industries, photographers,
authors' groups, and others.
Turning to my final point, I want to discuss our budget,
which in turn affects staffing and technology. As mentioned, we
have a $45 million budget; about $28 million of that comes from
fees. In May 2014, we implemented a new fee schedule following
a 2-year public process, raising the general fee for
registration from $35 to $55. We did retain a lower fee for
certain small actors. This was the first time we have ever
differentiated our fees, but there has been strong public
support for the concept, and I think we probably have to do
more of it in the future.
To be very clear, and notwithstanding the direction of our
statutory mandate on fees, I should note that the Copyright
Office fees do not recover the full cost of our services. This
is because we share IT infrastructure with the Library of
Congress and receive our IT support services from a central
Library department.
If we want the public record to be better, we will need
better resources. And if we want the resources to come
primarily from fees, then we should expect that copyright
owners will, in turn, want better systems and services than
they have now. Moreover, under the current statutory language,
we are limited to charging for the cost we incur for providing
services. That is, our fee authority does not permit the Office
to collect for capital improvements or other forms of
investment above actual cost after the IT infrastructure that
is subsidized by the Library. This equation may be something
that Congress wants to visit.
In terms of staffing, I will just say the Copyright Office
is smaller than it should be to carry out the volume and
complexity of the work that we are charged with. Unfortunately,
as the staff has been reduced, the work of the Office and the
complexity of the copyright system have increased dramatically.
Chairman Coble, that concludes my statement, but I wonder
if I might have a minute on a different point.
[The prepared statement of Ms. Pallante follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
__________
Mr. Coble. Without objection.
Ms. Pallante. Chairman Coble, I am aware that you have
presided over copyright issues on this and former Committees
for close to 3 decades, including as Chairman. As you prepare
to retire, I am moved to say that today may well be the last
time that a Register of Copyrights will appear before you.
Therefore, on behalf of myself, my predecessors, and the entire
staff of the U.S. Copyright Office, I wish to personally thank
you for your dedication to our Nation's copyright system and
for your service to us. We will miss you tremendously, as will
the rest of the copyright community. Thank you. [Applause.]
Mr. Coble. Thank you. I appreciate that. [Applause.]
Thank you. You all know how to make an old man feel good. I
thank you very much for that, for your generous words, Madam
Register. I appreciate that. I appreciate the response from the
audience as well. It is good to have all of you with us today.
I think you beat the timeframe too, Madam Pallante. I think
you beat the illumination of the red light.
Understanding there are many different views on substantive
copyright law issues, do you think, Ms. Pallante, there is a
general agreement on the importance of ensuring that the Office
itself is properly resourced and modernized for the digital
age?
Ms. Pallante. Well, Mr. Chairman, I haven't heard anybody
say stop looking into modernizing your operations and don't
bother going into the 21st century. So in answer to your
question, I think copyright owners have legitimate concerns
about our services, many of which were designed in the analog
age, and I think the tech sector would like to see our database
be more interoperable and authoritative so that they can also
rely on it for their work in the chain of commerce.
Mr. Coble. I thank you. Old habits die hard is why I put
the question to you.
Do you have any business plans or credible estimates of
what it would take to build a substantial 21st century digital
Copyright Office?
Ms. Pallante. I am afraid I don't, in part because I think
we have the same fee structure we have always had, which
doesn't--I would need to work with you and work with the
Committee to figure out what portion of that should be fees and
what portion of it should be appropriated dollars, because
there are things that we can do that are reasonable, and there
are things that we can do that are really incredible, and we
may have to figure out what the goals are together.
I will say that when the electronic system was implemented
in 2008, before my time, it was I think reasonably intertwined
with the Library's existing enterprise. I think that subsidy
has made it difficult to figure out what our actual costs are.
So, in other words, we share that with the entire Library as a
cultural institution, and trying to figure out what portion of
their budget is attributable to us is not something that has
really been done. That kind of cross-accounting has not been
done.
Mr. Coble. I thank you for that.
Yesterday, Madam Register, it was reported that
Representative Greg Walden criticized the FCC for having spent
$352 million on IT over the last 5 years. How much have we
spent on the Copyright Office during the past 5 years, and how
much do you think we have dedicated to the Office's IT for
consumers?
Ms. Pallante. We have a very, very miniscule budget for IT
because our IT department has 23 people in it, plus a number of
contractors. It really is a liaison office to the Library. The
Library's IT budget is somewhere in the neighborhood of $60 to
$100 million. You would have to ask the Library how that breaks
down completely.
So again, we don't have a mature, independent IT structure
in the Copyright Office. We have people who help to develop
software modifications to existing programs.
Mr. Coble. I thank you again, Madam Register, for your
generous words. I appreciate that very much. In fact, for the
record, I think our Subcommittee has enjoyed a very excellent
rapport with not only you but your immediate predecessor.
Remember me to her, if you will, when you see her.
I am now pleased to recognize the gentleman from New York,
Mr. Nadler.
Mr. Nadler. Thank you very much, Mr. Chairman.
Madam Register, can you outline some of the steps that have
been taken to improve the copyright registration system in
light of the fact that many businesses offer works by streaming
or displaying them with an array of technologies?
Ms. Pallante. Yes. This is one of the issues I think that
keeps the leadership of the Copyright Office up at night. We
are dealing with multiple problems. We have an electronic
interface for registration, but that is based on the paper-
based system. In other words, the paper system was transposed
into an electronic interface. We have yet to go to the next
generation of really having the real advantages of a 21st
century digital system.
We also have a statute that was written in--well, enacted
in 1976, written for 20 years prior to that, and it envisions a
system of analog works. So it envisions a process whereby you
send us works, we examine them, they are available for the
Library's collection.
Mr. Nadler. Does that statute need to be revised to account
for digital?
Ms. Pallante. I'm sorry?
Mr. Nadler. Does that statute--did you just imply that you
are mandated to do things in analog and that we should revise
that to allow for digital?
Ms. Pallante. I didn't quite say that. What I said is that
the statute did not anticipate the tensions that we have now
that works are digital.
Mr. Nadler. Okay. I think you may have just answered part
of the next question, which is what are some of the
improvements that may be needed at the Copyright Office in the
future?
Ms. Pallante. Yes. I think we really need to figure out,
first and foremost, what we want the registration system to be.
So we may not need the best possible quality of a work for
purposes of examining it and keeping it safe for litigation
purposes. That ``best copy'' concept was designed for the
Library of Congress so that it could preserve and have access
to the best work available in the marketplace.
The Library has separate provisions, like every national
library in the world does, where it has the right to acquire
copies of published works for the national collection. That is
different than registration copies.
What we have done in our copyright system, and it was done
to protect copyright owners, or at least to relieve them of the
burden of having to comply with dual systems, was say that if
you register, we will use those copies for purposes of the
provisions regarding the national collection.
I think where we are in the Copyright Office is do we now
need to kind of step back and maybe segregate those provisions?
So the registration system works for copyright owners and the
public record, and the Library has very clear regulations and
statutory instruction about what it can and cannot acquire. And
if it does acquire digital works--and I wanted to say for a
moment that the Library of Congress is an incredible cultural
institution, and it has actually preserved works that copyright
owners have failed to preserve over the years.
But assuming you want it to have access to digital works in
the future, we do need to have safeguards because we are
talking about copyrighted works.
Mr. Nadler. That was my next question. How will the
Copyright Office be able to meet the challenge of enhancing the
security of deposited digital works?
Ms. Pallante. We really need to apply our all-hands-on-deck
on this question. Operationally, we share servers with the
Library, and I don't think we--well, I know----
Mr. Nadler. Is that a danger to the security?
Ms. Pallante. I think so. Nothing insidious and terrible
has happened, but it is certainly a risk. Again, it goes back
to----
Mr. Nadler. Should we consider severing your sharing that
with the Library, and would that be very costly?
Ms. Pallante. I think optimally we should have separate
servers for the registration system than the Library has for
its other business, yes.
Mr. Nadler. And do you have any--are we talking millions,
billions, thousands?
Ms. Pallante. Well, here is the question that I grapple
with. What is the reasonable cost of a registration system if
the copyright owner and the public are getting the kind of
return that they want? And if we are not charging $55 but we
are charging----
Mr. Nadler. I'm sorry, you misunderstood my question. I am
not asking about the value. What is the magnitude--what would
it cost to give the Office a separate service from the Library?
Ms. Pallante. What would it cost as opposed to how to fund
it you mean?
Mr. Nadler. Right.
Ms. Pallante. I don't know.
Mr. Nadler. What magnitude are we talking about? Millions
or a billion? Do we have any idea?
Ms. Pallante. At a very high level in terms of modernizing
the Office, I think it is an investment of somewhere in the
neighborhood of $150 million.
Mr. Nadler. Over a time period.
Ms. Pallante. Of that, you could say half of that must come
from fees, do some public-private partnerships, be creative.
Mr. Nadler. And my last question, since I have the orange
light, how has the registration program been hurt by budget
cuts and early retirement packages?
Ms. Pallante. It has really been cut to the bone. We have
huge vacancies, and we have the kind of staff that requires
several years of training to get them to the point where they
are applying the law and the regulations and the Compendium
accurately so that courts and others can rely on it.
So they are really exhausted, and then they are dealing
with an electronic system that sometimes crashes, doesn't work
all the time, and isn't anywhere near the generation of
services that copyright owners want.
Mr. Nadler. So we are talking about both operating and
capital costs there.
Ms. Pallante. Correct.
Mr. Nadler. Thank you very much.
Ms. Pallante. Thank you.
Mr. Nadler. My time has expired, Mr. Chairman.
Mr. Coble. I thank the gentleman.
The distinguished gentleman from Pennsylvania.
Mr. Marino. Thank you, Chairman.
Good afternoon.
The U.S. Copyright Office was created in 1897, I believe.
Then, music was written on paper, and recorded music was
listened to on a phonograph, starting with wax records, so to
speak.
Music creators and listeners use computers and mobile
devices to create, distribute, purchase, and listen to music.
So could you please tell me, would moving your Office into the
21st century cut down on unnecessary litigation, and how?
Ms. Pallante. Yes, sure. Our role, I think, in the 21st
century is to have the most authoritative, accurate information
about copyright ownership and licensing terms available
anywhere, globally. And if people can find that kind of
information by clicking on a record and getting the licensing
terms and being sent to a private registry, you begin to see
how our role can really facilitate the licensing marketplace.
Mr. Marino. The Copyright Office is not an agency or even a
sub-agency, and you do not report to the President; correct?
Ms. Pallante. Correct. I report to the Librarian of
Congress.
Mr. Marino. Okay. How would your Office in the United
States be seen internationally if your Office were independent,
its own entity?
Ms. Pallante. Well, I will say two things. In deference to
all of the Registers who have come before me and all of the
talents that they had, the Register position is recognized
internationally. But we have this system with our own
interagency process where we have people from PTO and elsewhere
in the Administration really leading the international
discussions on copyright law because of our unique situation in
terms of where we are seated. So presumably we would have more
authority and recognition if the position were different.
Mr. Marino. Could you give me an example, could you give us
an example of, if you need to do something in your Office,
whether it is equipment-wise, whether it is rearranging more
space, anything at all, what is the process you must go
through?
Ms. Pallante. Well, again, we are a department of the
Library of Congress like every other department in the Library
of Congress. So for all of those kinds of infrastructure
questions, they go through central Library practices and
processes.
Mr. Marino. With all due respect to my colleagues at the
Library of Congress, which are fantastic because every time I
need something they are on it just like this, but you are a
copyright lawyer?
Ms. Pallante. Yes.
Mr. Marino. An intellectual property lawyer?
Ms. Pallante. Yes.
Mr. Marino. You are--I am making an assumption here--and I
think it is rather accurate. You are the expert over there, but
yet you have to go through an unorthodox chain to even make
your office operate back in the 19th century standards;
correct?
Ms. Pallante. Yes. Another way to look at that--I think
about this a lot, as you might imagine--there is no position in
the government like the Librarian of Congress. It would be a
little bit like having the head of the Patent Office also run
the Smithsonian Institution. Constitutionally, that is the
situation that you have. And I would say for almost 120 years,
it served the Nation fairly well.
What we are experiencing now is an explosion of the
prominence of the copyright system. So I understand this to be
about what is best going forward.
Mr. Marino. Well, no matter where we go today, no matter
where we go today, my kids, my mother, who is 82 years old,
carries one of these and does all kinds of things on it, and
you are still in a position where you are looking at documents.
So I am speaking on, I think, behalf of a lot of my
colleagues. You need to be brought into the 21st century. You
need to be an independent entity. You are part of the executive
branch, and I think your job is so important and you have done
such a fantastic job, as your predecessors have done, I think
you should report to the President. With your ability and your
foresight, I am sure you could take that Office into the 22nd
century for us.
So, thank you, and I yield back.
Ms. Pallante. Thank you, Mr. Marino.
Mr. Coble. I thank the gentleman.
The distinguished gentleman from Michigan, Mr. Conyers.
Mr. Conyers. Thank you, Chairman Coble.
We have appreciated you coming before us and explaining
your circumstances.
Ms. Pallante, in your written testimony, you mention a 7
percent decrease in the Office's budget since 2010. What effect
has that had on the ability of the Office to fulfill its
duties, and are there other financial constraints that you
believe are limiting the Office from running more effectively?
Ms. Pallante. Thank you, Ranking Member Conyers. We
immediately--one of the first things I experienced as Register
right after my appointment was to do an early-out buy-out to
move people into retirement, for people who were willing to do
that, to reduce the staff.
I will say, that is not necessarily a terrible thing to go
through because we have lot of people who worked for decades in
the Library of Congress and in the Copyright Office, and it
creates the opportunity after those good years of service to
rethink positions, digital positions instead of, say,
cataloguers.
The problem is we can't replace them because we don't have
the budget to fund them, and we are really, really small. I
think we are smaller than we have ever been in modern times.
The irony for us is that we are busier than we have ever been.
Mr. Conyers. So creating a more aggravated problem. Well,
since 2008, the Copyright Office has moved into an electronic
registration system. How has that worked out, and what needed
improvements might there be required?
Ms. Pallante. Yes, that was a big moment for the Copyright
Office. It wasn't on my watch. I was still in New York in the
private sector. But I think our issue is that we haven't moved
past it. That was a good foundational first-generation system.
We haven't gotten to recordation. That is still paper-based.
And we haven't made the registration system truly
interoperable, meaning that we can't necessarily have people
send us deposits of their works because we can't accept them
because our system won't handle them. We don't connect through
metadata to ASCAP or BMI or SoundExchange or other registries.
Mr. Conyers. So what do they have to do?
Ms. Pallante. We need to rethink the whole thing, drawing
on the tremendous expertise of the copyright community from
here to California and back.
Mr. Conyers. What has the Office done to rectify current
issues with recordation, and what are the major concerns
thereto?
Ms. Pallante. Okay. So we have done everything we can do
without money. We ran numerous public processes, asking people
what the system should look like in the future. We had dozens
and dozens of meetings. We had three public hearings, one in
New York, one in L.A., and one in Silicon Valley. We assigned
to the first Abraham Kaminstein Scholar in Residence--which is
a program we started based on one of the Registers who presided
over the '76 work leading up to that Act--the task of really
thinking it through as a scholar, and he is finalizing his
report. And now we have options, and the question is how to get
to a strategic plan given budget cuts, but also the
infrastructure that we have, and do you want to invest in it
the way it stands currently.
Mr. Conyers. Well, we know that you need help fast. What do
you see is going to happen if you don't get the funding that
you need?
Ms. Pallante. Well, there is already a significant gap
between our services and the way the copyright marketplace
actually operates, so obviously that gap will grow. I will also
say, though, as kind of the head of the staff of the Office--
this sounds like a weird term--we cannibalize our staff, right?
The same people do everything. They register, but then they are
writing a compendium that is 1,200 pages long. They are running
trade negotiations with USTR, helping Congress, writing
significant regulations, and we just aren't big enough and we
don't have the depth of experience that we need.
Mr. Conyers. Thank you very much for your candor.
Ms. Pallante. Thank you, sir.
Mr. Conyers. Thank you, Mr. Chairman. I yield back.
Mr. Coble. I thank you, Mr. Conyers.
The gentleman from California, the distinguished gentleman,
Mr. Issa.
Mr. Issa. Thank you, Mr. Chairman.
Boy, I'll tell you, hearings like this let us know how long
it takes to do anything here on Capitol Hill.
Let me run through a couple of quick questions. I think the
public and all of us want to sort of make sure it is in the
record.
Currently, if I write a book, I can send two copies of the
book to you on paper, and you will take them, and then I have a
copyright; right?
Ms. Pallante. Correct. You have enhanced protection, in
fact.
Mr. Issa. Yes, or I can do nothing and I have a copyright.
Is that right?
Ms. Pallante. Correct.
Mr. Issa. What do you do with those two books?
Ms. Pallante. We have a repository by regulation, or the
Library has the ability to inspect and acquire those deposits
and then use them under applicable law.
Mr. Issa. Okay, which means----
Ms. Pallante. That is statutory.
Mr. Issa. Which means I can check out one of those two
books because it is my library, after all.
Ms. Pallante. Yes.
Mr. Issa. Or all of our library.
Ms. Pallante. The Library of Congress has arrangements with
other libraries and is the----
Mr. Issa. So for a little over 100-and-some years, this has
been kind of how it works. You send your two books in, and
Congress can get smarter, and you have the capability. There
was a time when you had to send them in to have a copyright.
Works that were not sent in simply enjoyed no copyright
protection. When did that change?
Ms. Pallante. Yep, they went into the public domain. We
moved to that system for international compliance purposes, or
to become more internationally harmonized, with the '76 Act.
That was a sea change for the United States.
Mr. Issa. So basically we took those things which people
wanted to protect and turned it into everything is protected.
Ms. Pallante. That is one way to look at it, for sure.
Mr. Issa. And this is interesting because we did it in
harmony with the rest of the world that normally doesn't
respect these things very well. So, always interesting.
And you already stated that we haven't come into the
digital age particularly well because if I want to make sure
that you have copies of everything digitally, every day, every
newspaper, et cetera, et cetera, you are not prepared to accept
those.
Ms. Pallante. It is difficult.
Mr. Issa. Well, ``it is difficult'' is an interesting
thing. We say that a lot in Washington. If the Wall Street
Journal and 400 other newspapers tried to send you, either on
paper or digitally, one copy digitally, two copies on paper
every day, you couldn't handle them, could you?
Ms. Pallante. Well, we don't handle them well. We accept
them. We register them. But here is where we are going with
our----
Mr. Issa. Look, I saw Indiana Jones and the Raiders of the
Lost Ark. They accepted the Ark, too, in that movie, and they
have their best people working on it. [Laughter.]
Ms. Pallante. That's right.
Mr. Issa. We are here today because you represent the most
arcane part of government in many ways.
Ms. Pallante. Thank you.
Mr. Issa. We budget one part. We have you report to
somebody who, in fact, doesn't really have the same mandate,
while over at the Department of Commerce we have the primary
oversight that we do, which is the Patent and Trademark Office.
Now, I am not going to put you on the spot, but
hypothetically, if we harmonized the functions of the PTO and
harmonized your functions in some acceptable way, wouldn't that
enhance the efficiency of dealing with digital and non-digital
media, dealing with copyright, trademark, patent and, if you
will, the potpourri if evolving intellectual property?
Ms. Pallante. I think so, yes.
Mr. Issa. Wouldn't it also harmonize or improve, assuming
that they all worked together, what happens when there is an
alleged copyright violation and people want to get to justice?
You don't have administrative law judges, do you?
Ms. Pallante. No.
Mr. Issa. They do, don't they?
Ms. Pallante. We don't have enforcement authority of any
kind.
Mr. Issa. So we are dealing with 1897 thinking even after a
1976 enhancement which, by the way, there was an Internet then,
it just wasn't available to anybody in the public.
So just to wrap up, budget is always a problem, but you are
not even beginning to be positioned to handle well the
absorption, the cataloging, the referencing and the searching
of the media being produced in the United States, let alone the
rest of the world.
Ms. Pallante. I am afraid that is accurate.
Mr. Issa. And in a digital age, if we are going to protect
copyright and we are going to make, if you will, works
available to the public, both of those have to change.
Ms. Pallante. Yes.
Mr. Issa. Now, let me close with just one question because
everyone is talking about, well, maybe we ought to just move
you to PTO. But let's ask one question, because I think it is
more complex than that.
Isn't it true that the function of the Library of Congress
to enhance and make available for education and informational
purposes to the United States and ultimately the world, that is
a mandate that the Librarian has?
Ms. Pallante. Yes.
Mr. Issa. And yours is, of course, the protection. Don't we
have to modernize both of them, the availability that the
Librarian has and the systems for protection, including
metadata that allows for searches? Aren't those both things
that have to be done on this Congress' watch?
Ms. Pallante. Yes, I think that is an excellent way to
state it and a very fair way to state it for the Library. They
need to be a 21st century institution as well. They are a
leader among cultural institutions.
Mr. Issa. Thank you, Mr. Chairman. I think we have outlined
some of the problem.
Mr. Coble. I thank the gentleman from California.
The distinguished gentle lady from California, Ms. Chu.
Ms. Chu. Thank you, Mr. Chair.
I think most people are surprised and perplexed when they
learn that our Nation's Copyright Office is housed under the
Library of Congress because your missions are very different.
The Library is focused on preservation, while the Copyright
Office is focused on recording and registering works and, most
importantly, instituting legal and economic rights protections,
and your technical needs are so different because the Library
is that of preservation, whereas your Office functions like a
24-hour business that intersects with the global marketplace.
And I have been astounded to learn of the implications of this.
First, you, the Register, are authorized to establish
regulations, but such regulations are subject to approval by
the Librarian, whose specialty is not copyright.
Secondly, you are able to collect fees, but you have no
control over what happens with those fees. In fact, they are
managed by the Library staff.
Thirdly, on security, the Copyright Office should be
ensuring the security of works, including digital works, but
the mission of the Library is to share works with the public.
And finally, there is the issue of the appointment and
authority that you have. Similar positions such as yours, the
Intellectual Property Enforcement Coordinator and the Executive
Director of the Patent and Trademark Office, this is a
presidential appointment and you report to the President. They
report to the President. But instead, your position is
appointed by the Librarian and you report to the Librarian.
So can you talk about these specific challenges and how
they impede your desire to make the Copyright Office thrive in
a digital economy and support a modern copyright system?
Ms. Pallante. Yes. Thank you for those questions.
I will say this. Everything that you set forth is true and
was relatively without incident for a long time, decades,
didn't cause any harm. I think, again, we are now seeing kind
of growing pains and natural tensions between the Library as a
library and the Copyright Office as the copyright system of the
United States.
So I do feel like we are at a point where there either have
to be safeguards put in place within the current institution or
you really need to think on this Committee about new paradigms,
maybe some of the things that you were discussing earlier.
Interestingly, the IPEC was created recently, right? In
2008. And the Under Secretary in the mid-'90's. Those positions
intersect with the Register's authority by statute, but you are
correct that they are much higher elevated than the Register
position is.
I think what you are really asking me is who is the head of
the copyright system, and the truth is the Librarian of
Congress is the head of the copyright system for purposes of
the Constitution. The Register works under the general
direction and supervision of the Librarian. So there are many
duties in the Copyright Act that say ``the Register shall,''
but at the end of the day it is really your Librarian, all of
your Librarians back to 1897, who have had responsibility for
the system.
Ms. Chu. And so to be specific, I brought up the example of
regulations that are written.
Ms. Pallante. Yes.
Ms. Chu. These, and security of works. Could you----
Ms. Pallante. I don't know if this is so different from
agencies outside of the IP space, but basically the expert in
the agency and, in turn, my experts on my staff conduct
rulemakings, prepare regulations. We work under the APA, by
statute. The Library doesn't. But I send them to the Librarian
for signature, and he has to approve them. So it really isn't
just a rubber stamp, and that is how it works.
There could potentially be a conflict in the future. We
haven't had that, really, to date. So I think, again, if we are
talking about the future, that might be a better way to think
about these issues.
For example, if the Register were to say I don't think we
should be accepting digital deposits without copy controls in
the registration system because it is a conflict for the
statute and for the people registering, technically the
Librarian has a right to say ``that is what I want.''
Ms. Chu. In fact, can you guarantee the security of digital
works right now?
Ms. Pallante. No, because we don't have--well, I can't. I
don't have control of the IT system. My avenue for that is to
make the case internally. And in defense of the Library of
Congress IT department, they are doing a lot of different
things. We are not their only client or customer.
Ms. Chu. And what are the implications of not having
control over your own fees?
Ms. Pallante. It is a legal question. People are paying us
for services, and that money is routed through centralized IT
systems. So on the one hand, you have synergies. On the other
hand, you don't have control of the product that you are
delivering for those fees. So what stakeholders have said to me
is that they--I mean, we are talking about some stakeholders
who invest tens of millions of dollars in their copyrighted
works. So a $55 fee is not a big deal for them, and I think if
they were getting the kind of service that they want, and the
security and confidence that they want, they would pay more,
and I think our fees are too low for those kinds of copyright
owners.
Ms. Chu. Thank you.
I yield back.
Mr. Coble. I thank the gentle lady from California.
The distinguished gentleman from North Carolina, Mr.
Holding.
Mr. Holding. Thank you, Mr. Chairman.
Ms. Pallante, thank you for being here. I think either in
your testimony or in response to a question, we were talking
about the Office functioning as the principal advisor to
Congress on copyright law and policy, both domestically and
internationally. And you also have a duty as the Copyright
Office to provide information assistance to other Federal
departments and agencies and the Judiciary on copyright law.
So with all of the happening issues in copyright law, I was
wondering how many lawyers do you have assigned to these
discrete tasks and what percentage of your work is this duty
that you have to provide advice to us and others?
Ms. Pallante. It is a huge percentage of the work right now
because you have had 16 policy hearings in the last couple of
years. We have 18 lawyers in the legal departments. A couple of
people are actually lawyers and the heads of other departments.
But the people doing the legal and policy work number about 18.
That is not enough, and we have a particularly acute need for
very experienced copyright lawyers who can run the kinds of
significant public rulemakings and discussions and policy
studies that we are responsible for.
We do everything. Regulations alone could keep that number
of lawyers constantly engaged, and that doesn't count getting
on a plane and going to Vietnam to help the USTR negotiate a
Pacific Rim trade agreement. It doesn't include meetings at
WIPO, where we are required to be. It doesn't include thinking
through the legal implications of the things you are asking me
about, fee structures and technology. So, we don't have enough
people.
Mr. Holding. Right. Are you able to supplement that at all?
Ms. Pallante. Again, we are really good at trying to do
things with no money. We have gotten really good at it in the
last couple of years.
We created a couple of programs to supplement our staff
with short-term costs, as opposed to long-term staffing costs.
One is the Kaminstein Scholar in Residence that brought a
scholar to us for a year. We will now try to get another
scholar to come. That helps immensely because they are
extremely capable and talented and quick and can do all the
kinds of deep thinking that we need.
We created the Barbara Ringer Honors Program. We got
hundreds of applications. We just a couple of weeks ago started
our first two Ringer Fellows, one from New York and one from
Chicago.
We created a Copyright Matters program to kind of bring
people into the Office to help us think about marketplace
issues. Chairman Goodlatte has spoken at that. We have had
artists. We have had presentations on fair use.
And finally, we created a research partnership with law
schools, and our first success with that was Stanford Law
School, where two classes in a row under the tutelage of
Professor Paul Goldstein, who is a giant in the field, worked
on some of our recordation challenges.
So we are trying every which way to bring in talent and
support to supplement.
Mr. Holding. Right. Mr. Marino brought up the issue of
precisely where the Copyright Office sits in the structure of
government and who it answers to ultimately. I was wondering,
with the very important role that you play as an advisor to
Congress and the other agencies on copyright law, is the
stature of the Copyright Office within the structure of the
government sufficient? Does it impact your leadership role as
you are trying to foster our American copyright system?
Ms. Pallante. Well, that is a big question. Again, I think
over the decades, prior to this recent period that we are in,
the Register was given a lot of deference. But you created two
positions that now are intersecting in copyright policy in the
past 20 years. One is the IPEC, and one is the Under Secretary
for Commerce, which is the head of PTO. It is a complicated
structure because the PTO's statute says the head of the Patent
Office must confer with the Register on copyright policy
issues.
But I think what you are asking me is, is the head of the
Copyright Office at the upper echelons of the Federal
Government in the Administration like these other positions?
Mr. Holding. Yes.
Ms. Pallante. The answer is clearly no.
Mr. Holding. Do you have a seat at every table that you
want to sit at to influence policy?
Ms. Pallante. And many stakeholders have said that to us,
and we don't take it personally, but the answer, of course, is
we are not.
Mr. Holding. And how does that inhibit you carrying out the
responsibilities that you think Congress has vested you with?
Ms. Pallante. I think we are not in the room all the time,
right? We are not leading the delegations as the substantive
agency. We are not necessarily in all of the discussions of the
Administration. We are a little bit confused about which branch
of government we are in following this IBS-CRB case that came
down and said all of our functions are executive branch.
So I think it is a complicated structure, and to be fair to
my staff, I think people make it work at the staff level across
this interagency process, but nobody really understands it.
Mr. Holding. And if, indeed, which I think you are part of
the congressional branch, the legislative branch, whether or
not there is a fiduciary responsibility or not, we have that.
But perhaps we in the legislative branch are not being
adequately represented because of your exclusion from some of
these tables where policy is being made.
Ms. Pallante. It is a fair point.
Mr. Holding. Thank you.
Thank you, Mr. Chairman.
Mr. Coble. I thank the gentleman from North Carolina.
The distinguished gentleman from New York, Mr. Jeffries, is
recognized for 5 minutes.
Mr. Jeffries. Thank you, Mr. Chairman.
And thank you, Ms. Pallante, for your presence here today,
as well as for your leadership.
I think I want to pick up where my colleague left off and
ask you about the recent IBS v. Copyright Royalty Board case. I
believe you are familiar with the case. You referenced it in
your written testimony; correct?
Ms. Pallante. Correct.
Mr. Jeffries. And the case involved a decision by the D.C.
Circuit, I believe, that held that in promulgating copyright
regulations, setting rates and terms, the Library of Congress
is undoubtedly a component of the executive branch. Is that
correct?
Ms. Pallante. That is what the case says.
Mr. Jeffries. Now, it was already a complicated mix related
to your structure, as discussed during this hearing. How does
this decision impact what was already a complicated situation?
How do you interpret the decision, and what guidance can you
provide to us as to how we should interpret the decision and
what it means in terms of how we move forward?
Ms. Pallante. Thank you. I think it is a fairly significant
decision. On the one hand, it confirms that the Library of
Congress is like no other agency in the Federal Government in
that it is clearly a hybrid agency. You have the copyright
functions, clearly in the court's opinion, being executive
branch in nature; and then you have, for example, the
Congressional Research Service, which can only be legislative,
in the same agency. As I said earlier, I think you have this
position where the Librarian of Congress has really kind of an
incredibly Herculean job where you are running Library
functions, legislative functions, and then also executive
branch copyright functions.
You are right that these issues are not new. One of the
things that is very interesting to me is that from 1802 to
1897, the Librarian of Congress was not a Senate-confirmed
position. It was when Congress in 1897 formalized the copyright
system within the Library that Congress--and it is very
interesting to go back and read this, speaking about
constitutional issues that have now popped up again--said these
issues must be constitutionally correct. They must flow
constitutionally so that the Librarian of Congress must be
Senate confirmed. The copyright system affects the legal
rights, economic interest of those who rely on it.
Mr. Jeffries. Right. Well, the copyright system, in fact,
or Congress' power to legislate copyright and intellectual
property indeed stems from Article 1, Section 8, Clause 8, the
United States Constitution, which is, I gather, why the
Judiciary Committee has jurisdiction over this very important
area of law.
Now, you mentioned in your testimony that the agency finds
itself in a situation where copyright issues have become
increasingly complex, and at the same time our resources have
become increasingly strained, a very difficult situation to be
in. Could you clarify what has increased the complexity of the
copyright landscape?
Ms. Pallante. Well, the digital revolution has made it more
complex. And so where people used to, in the chain of commerce,
work with analog physical items, CDs and books and DVDs, they
are now getting their content on mobile devices and digital
platforms. So copies may not be involved.
It may or may not be a generational thing as well. I happen
to have teenagers. They don't want to own anything. They just
want access to it. So it is this real focus on display and
access and streaming, making the public performance right
arguably more important in the future than the reproduction
rights and distribution rights have ever been. So we have all
of that coming into the mix.
Then that requires us in our registration system to also
make those shifts. How do we examine a work that is really only
made available to the public through streaming?
Mr. Jeffries. Given the increased complexity as you have
laid out, and I think in a manner that is shared by a
significant number of people in this institution, clearly in my
view that suggests that we have got to look at providing the
agency with the resources needed to deal with an increasingly
complex landscape.
But does the complexity also suggest, in your view, that it
is reasonable for us to take a hard look at what an appropriate
structure would be in the 21st century?
Ms. Pallante. I think you have to, and I appreciate the
question. I will say it this way. A 21st century legal
framework requires a 21st century agency, and the structure,
the budget, the IT, the principal duties, the stature, all of
those come into play as you look at the question, I think.
Mr. Jeffries. Thank you very much.
I yield back.
Ms. Pallante. Thank you.
Mr. Marino [presiding]. Thank you.
The Chair now recognizes the congresswoman from California,
Ms. Lofgren.
Ms. Lofgren. Thank you, Mr. Chairman.
And thank you, Madam Register. It is good to see you.
Ms. Pallante. Thank you.
Ms. Lofgren. As we are enmeshed in this sixth tri-annual
review, it just reminds me of Congress' obligation to reform
Section 1201 to prohibit not only infringing action and to not
tie up innocent use. I think in a way we have had an
opportunity to do--``experiment'' isn't the right word, but to
see what happens when legitimate content is offered and pirated
content is available. The public goes to the lawful content. I
mean, there are always some outliers, but in overwhelming
numbers that is what the public wants to do, and I think that
is something we didn't know for sure, but I think it is a very
welcome discovery.
I think we have also seen that when we don't too tightly
tighten up the circumvention, we promote innovation. You take a
look at the app market, for example. It has just exploded in
terms of creativity when we have not tamped down, as you could
have using section 1201.
So I think it is certainly not your responsibility. It is
our responsibility to make sure we go after infringement, but
that we do not squash technological innovation that has nothing
to do with infringement.
It is like a broken record. I have been saying that for
more than a decade. But it is time for us really to do that,
and I think the facts and the developments prove that we don't
have to be afraid of doing that.
Just a couple of quick questions. In the Notice of Inquiry
that your office released yesterday, I was surprised honestly
to see the intent to require separate petitions for each type
of wireless
device--tablets versus readers versus hotspots versus smart
watches--and even a distinction between different kinds of
wireless and connected e-readers and tablets. It strikes me
that this is wrong.
Now, by dividing or subdividing wireless devices into
different categories, it seems the government would be
protecting not copyrighted work but business models, and that
is not our job. Our job is to provide protection to material
that is protected under copyright. It is not to pick winners
and losers among business models. So I have a deep concern
about that. There was a huge uproar, as we know, about the
ruling last year on not unlocking cell phones. The Committee
has even addressed that, although not as successfully I think
as we had hoped. I think we are getting potentially into a much
bigger uproar if we go into distinctions between different
kinds of readers and the like.
Then the second question--and you can answer them both
together--the timeline given in yesterday's notice I think
needs review. You mentioned the role of law schools and law
clinics, and I think it is a good sign, actually, and Stanford
is not in my district but it is 10 minutes out, and it is a
great group of young students.
The timeline as published in the notice has everything due
at Christmas, and the law clinics that are heavily supported by
students are going to be adversely impacted by that timeframe,
and I am wondering if we couldn't revisit that because the
students, either they are not going to have a break or they
won't be around or it is going to be an insane type of workload
that we are putting on them. It is 45 days after the notice of
rulemaking. I think we need to revisit that, and I would
welcome your comments on both of those questions.
Ms. Pallante. Yes, sure. Thank you. I would just say on the
last question, we frequently extend deadlines once we publish
them, usually when a few stakeholders call and say what you
just said. The timeline was orchestrated working backwards from
when it is due.
Ms. Lofgren. I understand. But if I could, on that point--
--
Ms. Pallante. Sure.
Ms. Lofgren [continuing]. From the students' point of view,
knowing there is an extension later isn't going to help them.
Ms. Pallante. Yes. No, I understand.
Ms. Lofgren. They need to go to the max doing all-nighters
while their exams are due, unless they know it is going to be
extended.
Ms. Pallante. And we obviously want fresh, young, talented
students participating. I hear your point. So I will talk to my
General Counsel's Office and we will look at the timeline.
On the first point, it is interesting. We spent a lot of
time talking to everybody who has participated in this
proceeding over the past decade, and consulted with the
Administration about how to do it better than it has been done
before, and a number of changes were made with that in mind.
The subdividing of the different categories was intended to
create a better record because the lack of a good record was
our problem in the last round, and we were trying to get people
to focus on what the evidentiary standards would have to be. So
it doesn't necessarily preclude us from finding that there are
multiple devices and categories that will have like treatment
in the end. But the intent was to do something to improve the
situation, not to make it harder.
Ms. Lofgren. I guess I don't understand that, and perhaps
you can fill in later with me. But if you take a look on page
55689, it talks about petition proposing a general exemption
for all wireless devices or all tablets. It is difficult to
support, in contrast with tablet computers, e-book readers. It
just seems to me that from a Silicon Valley point of view, that
doesn't make any sense at all to me.
Ms. Pallante. I could see how it wouldn't make sense from a
technology perspective. We have this factor in the statute that
requires us to look at actual markets, not giant markets but
particular markets. So to your more general point, the 1201
rulemaking is from 1998, and we are trying to fit it into----
Ms. Lofgren. I understand that. I love Bob Kastenmeier when
he wrote the Act in '76, he didn't have to deal with some of
these issues. But the fact is, in terms of markets, whether I
have my Kindle, whether I have my iPad with my Kindle app,
whether I have my Kindle app on my phone or my Galaxy phone, it
really doesn't matter.
Mr. Coble [presiding]. The gentle lady's time has expired.
Ms. Lofgren. Thank you, Mr. Chairman. I would like--I would
hope that we could follow up with this because we are likely
going to have the same ugly explosion and public outcry that we
had last year on phone unlocking. It would be nice to avoid
that.
Mr. Coble. I thank the gentle lady.
This concludes today's hearing.
I want to thank the Register again for having served as our
only witness today. We appreciate it very much.
I want to thank those of you in the audience. Your presence
indicates that you have more than a casual interest in this
matter, and I thank you all for having attended as well.
Without objection, all Members will have 5 legislative days
to submit additional written questions for the witnesses or
additional materials for the record.
This hearing stands adjourned.
[Whereupon, at 3:27 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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