[Senate Hearing 107-221]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-221

PROMOTING TECHNOLOGY AND EDUCATION: TURBO-CHARGING THE SCHOOL BUSES ON 
                        THE INFORMATION HIGHWAY

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 13, 2001

                               __________

                           Serial No. J-107-5

                               __________

         Printed for the use of the Committee on the Judiciary

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
76-914                     WASHINGTON : 2002

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                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
STROM THURMOND, South Carolina       PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania          JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona                     HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio                    DIANNE FEINSTEIN, California
JEFF SESSIONS, Alabama               RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas                CHARLES E. SCHUMER, New York
MITCH McCONNELL, Kentucky            RICHARD J. DURBIN, Illinois
                                     MARIA CANTWELL, Washington
                      Sharon Prost, Chief Counsel
                     Makan Delrahim, Staff Director
         Bruce Cohen, Minority Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Cantwell, Hon. Maria, a U.S. Senator from the State of Washington    63
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     1
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     3
Kennedy, Hon. Edward M., a U.S. Senator from the State of 
  Massachusetts..................................................    16

                               WITNESSES

Adler, Allan R., Vice President for Legal and Governmental 
  Affairs, Association of American Publishers, Washington, DC....    21
Carpentier, Gary, Adjunct Professor of Law, Washington College of 
  Law, American University, Washington, DC.......................    35
Heeger, Gerald A., President, University of Maryland University 
  College, College Park, MD......................................    17
LeBlanc, Paul, President, Marlboro College, Marlboro, VT.........    32
Peters, Marybeth, Register of Copyrights, Washington, DC.........     9
Siddoway, Richard M., Principal, Utah Electronic High School, 
  Salt Lake City, Utah...........................................    30

                         QUESTIONS AND ANSWERS

Responses of Allan Robert Adler to questions submitted by Senator 
  Leahy..........................................................    43
Response of Allan Robert Adler to a question from Senator Blanche 
  L. Lincoln submitted on her behalf by Senator Leahy............    50
Responses of Gary Carpentier to questions submitted by Senator 
  Leahy..........................................................    51
Responses of Gerald A. Heeger to questions submitted by Senator 
  Leahy..........................................................    53
Responses of Richard M. Siddoway to questions submitted by 
  Senator Leahy..................................................    56
Responses of Marybeth Peters to questions submitted by Senator 
  Leahy..........................................................    58
Responses of Gerald A. Heeger to questions submitted by Senator 
  Thurmond.......................................................    60
Responses of Marybeth Peters to questions submitted by Senator 
  Thurmond.......................................................    61

 
PROMOTING TECHNOLOGY AND EDUCATION: TURBO-CHARGING THE SCHOOL BUSES ON 
                        THE INFORMATION HIGHWAY

                              ----------                              


                        TUESDAY, MARCH 13, 2001

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SD-226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, 
Chairman of the Committee, presiding.
    Present: Senators Hatch and Leahy.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
                       THE STATE OF UTAH

    Chairman Hatch. I am pleased to welcome you all to this 
hearing this morning on S. 487, the Technology Education and 
Copyright Harmonization Act, or simply the TEACH Act, which I 
introduced with my distinguished colleague, Senator Leahy.
    This legislation updates the education and distance 
learning provisions of the copyright law for the 21 
st century, allowing students and teachers to 
benefit from the deployment of advanced digital transmission 
technologies like the Internet in education.
    Let me thank Marybeth Peters, the Register of Copyrights, 
and her staff in the Copyright Office for their hard work in 
developing this legislation, as well as the report upon which 
it is based.
    I have a longer statement that I will have inserted in the 
record, but in the interest of time I will just make a few 
short comments.
    Distance education and the use of high-technology tools 
such as the Internet in education hold great promise for 
students, especially in States like Utah and Vermont where 
distances can be great between students and learning 
opportunities. I think it is similarly important for any State 
that has students who seek broader learning opportunities than 
they can reach or obtain in their own local area.
    Any education reforms moved in the Congress this year 
should include provisions that help deploy high-technology 
tools, including the Internet, to give our students the very 
best educational experience we can offer. By using these tools, 
students in remote areas of my home State of Utah are becoming 
able to link up to resources previously available only to those 
in cities or at prestigious educational institutions.
    Limited access to language instructors in remote areas or 
particle accelerators in most high schools limit access to 
educational opportunity. These limits can be overcome to a 
revolutionary degree by online offerings which can combine 
sound, video, and interactivity in exciting new ways. And new 
experiences that transcend what is possible in the classroom, 
such as hyper-texts linked directly to secondary sources, are 
possible only in the online world.
    I am particularly pleased that we will hear from Mr. 
Richard Siddoway, the Principal of the Electronic High School 
of Utah, which links high school students all over Utah to the 
best educational opportunities the State can currently provide.
    Promoting the use of advanced technology like the Internet 
can wholly transform the educational experience for many 
students and create broad access to learning opportunities that 
have been out of reach for many until now. S. 487, the TEACH 
Act, through modest updating of the Copyright Act, can help 
bring these opportunities closer to every student in our States 
and our Nation.
    With that, I will put the rest of my statement in the 
record and we will turn to Senator Leahy.
    [The opening statement of Chairman Hatch follows:]

Opening Statement of Hon. Orrin Hatch, a U.S. Senator from the State of 
                                  Utah

    I am pleased to welcome you all to this hearing this morning on S. 
487, the ``Technology Education And Copyright Harmonization Act'' or 
simply the ``TEACH Act,'' which I introduced with my distinguished 
colleague, Senator Leahy. This legislation updates the education and 
distance learning provisions of the copyright law for the 21'' century, 
allowing students and teachers to benefit from deployment of advanced 
digital transmission technologies like the Internet in education. Let 
me thank Marybeth Peters, the Register of Copyrights, and her staff in 
the Copyright Office, for their hard work in developing this 
legislation, as well as the report upon which it is based. They have 
done admirable work in moving forward the deployment of the Internet 
and digital transmission systems in education while maintaining 
safeguards for the protection of the copyrighted works used to enhance 
the educational experience.
    Distance education, and the use of high technology tools such as 
the Internet in education, hold great promise for students in states 
like Utah. Any education reforms moved in the Congress this year should 
include provisions that help deploy high technology tools, including 
the Internet, to give our students the very best educational experience 
we can offer. By using these tools, students in remote areas of my home 
state of Utah are now able to link up to resources previously only 
available to those in cities or at prestigious educational 
institutions. For many Utahns, this means having access to courses or 
being able to see virtual demonstrations of principles that until now 
they have now only read about. Some language students in remote areas 
may not have access to a French or Russian or Japanese teacher, and 
high school physics students do not usually have access to particle 
accelerators. Other students may not be able to leave their homes for 
health, disability, or other reasons. Using digital transmission 
technology, including the Internet, these students can participate in 
school and have access to these learning opportunities in a way that 
was previously impossible for them. And the promise of distance 
education extends far beyond the traditional student, making expanded 
opportunities available for working parents, senior citizens, and 
anyone else with a desire to learn.
    True to its heritage, Utah is a pioneer among states in blazing the 
trail to the next century, making tomorrow's virtual classrooms a 
reality today. Fittingly, since it is home to one of the original six 
universities that pioneered the Internet, the State of Utah and the 
Utah System of
    Higher Education, as well as a number of individual universities in 
the state have consistently been recognized as technology and web-
education innovators. Such national recognition reflects, in part, 
Utah's high-tech industrial base, its learning-oriented population, and 
the fact that Utah was the first state with a centrally coordinated 
statewide system for distance learning. As the Copyright Office was 
preparing the report that resulted in this legislation, I was pleased 
to host the Register of Copyrights, who is here today, at a distance 
education exposition and copyright round table that took place at the 
nerve center of that system--the Utah Education Network--where we saw 
many exciting technologies being developed and implemented in Utah, by 
Utahns, to make distance education a reality. At the event in Salt Lake 
City, Ms. Peters and I dropped in on a live on-line art history class 
hosted in Orem, that included high school and college students 
scattered from Alpine in the north to Lake Powell in the south, nearly 
the entire length of the state. We will hear more about these efforts 
today, especially what Utah is doing in distance learning for secondary 
school students, from the principal of the Electronic High School of 
Utah, Mr. Richard Siddoway. We are happy to have him here today to 
represent Utah.
    The legislation discussed today, through updates to the copyright 
law, will make it easier for the teacher who connects with her students 
online to enhance the learning process by illustrating music 
appreciation principles with appropriately limited sound recordings or 
illustrate visual design or story-telling principles with appropriate 
movie clips. Or she might create wholly new experiences such as making 
a hypertext poem that links significant words or formal elements to 
commentary, similar uses in other contexts, or other sources for deeper 
understanding, all accessible at the click of a mouse. These wholly new 
interactive educational experiences, or more traditional ones now made 
available around the students' schedule, will be made more easily and 
more inexpensively by this legislation. It does this by making clear a 
``safe harbor'' for educational uses of copyrighted works for which 
there need not be negotiations or licensing arrangements. Beyond the 
legislative safe harbor provided by this legislation, opportunities for 
students and lifetime learners of all kinds, in all kinds of locations, 
is limited only by the human imagination and the cooperative creativity 
of the creators and users of copyrighted works. I hope that creative 
licensing arrangements will be spurred to make even more exciting 
opportunities available to students and lifelong learners, and that 
incentives to create those experiences will continue to encourage 
innovation in education, art and entertainment online. The 
possibilities for everyone in the wired world are thrilling to 
contemplate.

  STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Senator Leahy. Thank you, Mr. Chairman, and I am very happy 
to be here with you as a cosponsor of the TEACH Act.
    Later this morning, as I do once a week, I will be doing an 
online chat with a school in Vermont. Usually, it is at a grade 
school level. It has done two things. One, I have improved my 
ability to type. I type a lot faster with many fewer mistakes 
because if I make the mistakes, they quickly point them out.
    But I become more and more encouraged when I hear some of 
the questions being asked by the youngsters in Vermont. I 
encourage the national media to just look at some of those 
transcripts and see some of the really good questions the kids 
ask and the answers they give when I ask them questions. It is 
encouraging. Paul LeBlanc is here, and knows first-hand about 
Vermont students. I have talked before about the advantage of 
these online chats.
    When you think, Senator Hatch, of the kinds of things we 
have done to upgrade our copyright, patent and trademark laws, 
at the same time protecting the important interests of users of 
the creative work, so much of that has helped the vibrant 
economy of this Nation.
    We know that education is a critical component of this 
information age, and if we don't have adequate information, we 
are not going to be able to harness the technological tools 
that we have. I think how wonderful it is going to a little 
school in what we call Grand Isle County at home. This is an 
archipelago of little islands in the middle of Lake Champlain, 
one of the most beautiful spots on Earth.
    I recall being in one of the schools wearing a mike with a 
camera on me. All these schools are held together by a screen 
on the wall and as you move around the class, the camera would 
automatically follow the mike. After a few minutes of it, you 
actually think you are talking back and forth with a student in 
the class, but they are separated by a bridge or a ferry boat 
ride away from where you are.
    As part of the Digital Millennium Copyright Act, DMCA, 
Senator Hatch and I had asked the Copyright Office to study the 
complex copyright issues involved in distance education. We are 
fortunate that Marybeth Peters, who sometimes probably feels 
she lives in this Committee room because we are always calling 
on her for help, is here. She is the Register of Copyrights and 
she met with many interested people, including Vermonters, to 
hear their concerns on this issue. Vermonters are concerned, 
which is one of the reasons why Paul LeBlanc, the President of 
Marlboro College, is here.
    In the copyright office report, which was released in May 
1999--and I would urge people to read it--valuable suggestions 
were made on how we could make some modest changes in our 
copyright law and go a long way to foster the appropriate use 
of copyrighted works in valid distance learning activities. 
What Senator Hatch and I have introduced incorporates those 
recommendations so that you can extend face-to-face classroom 
instruction over the Internet.
    In rural areas, it is so important. If we are going to do 
away with the digital divide, we have got to have these rural 
areas connected. I graduated in a high school class of 29. I 
did have an uncle of mine who told me that, coming from a small 
town and a small class like that, I would never amount to 
anything.
    Chairman Hatch. Was that in 1929?
    Senator Leahy. Yes, it was, long before you were born, Mr. 
Chairman.
    [Laughter.]
    Senator Leahy. The chairman, although he has more hair, is 
actually older than I am.
    I did ask my uncle recently what he thought now. It speaks 
to his politics. He says nothing has changed his mind and he 
still feels I haven't amounted to anything
    The Vermont Telecommunications Plan identified distance 
learning as being critical to Vermont's development, but that 
same plan could have been written in rural Utah or rural 
California or Texas. It is crucial for these States to be 
competitive. We use the Vermont Interactive Television Network, 
a two-way videoconferencing system in communities, schools, and 
businesses. I use it all the time up there, and I am proud that 
I helped start the system by getting funding. The people who 
understand it a lot better than I ever will are the ones who 
make it work.
    The Copyright Office said that the computer is the most 
versatile of distance education instruments, both for the 
material it can display and the flexibility of it. These are 
things that we have to look at. The Web-Based Education 
Commission, headed by former Senator Bob Kerrey, said ``Current 
copyright law governing distance education . . . was based on 
broadcast models of telecourses for distance education. That 
law was not established with the virtual classroom in mind.'' 
It said the copyright laws were inappropriately restrictive.
    Now, with the Copyright Office's own conclusions and what 
Senator Hatch and I are trying to do, I think we can change 
that. We made efforts in the bill to address the valid concerns 
of both the copyright owners and the education and library 
community, and I think we can work together and have something 
better.
    In the end, we can all benefit by this. We should ask 
ourselves, if we don't use all these tools in every single part 
of our country, because none of us know where the geniuses of 
tomorrow are--if we don't use all these tools, what kind of an 
economic world will our children and our grandchildren have? If 
we do use them all, look at the unbelievable things that are 
available, things that even a generation ago nobody could have 
imagined.
    So thank you, Mr. Chairman, and I will put my whole 
statement in the record.
    [The opening statement of Senator Leahy follows:]

  Opening Statement Of Hon. Patrick J. Leahy, a U.S. Senator from the 
                            State of Vermont

    An important responsibility of the Senate Judiciary Committee is 
fulfilling the mandate set forth in Article 1, section 8 of the 
Constitution, ``to promote the progress of science and useful arts by 
securing for limited times to authors and inventors the exclusive right 
to their respective writings and discoveries.'' Chairman Hatch and I, 
and other colleagues on the Judiciary Committee, have worked together 
successfully over the years to update and make necessary adjustments to 
our copyright, patent and trademark laws to carry out this 
responsibility. We have strived to do so in a manner that advances the 
rights of intellectual property owners while protecting the important 
interests of users of the creative works that make our culture a 
vibrant force in this global economy.
    Several years ago, as part of the Digital Millennium Copyright Act 
(DMCA), we asked the Copyright Office to perform a study of the complex 
copyright issues involved in distance education and to make 
recommendations to us for any legislative changes. In conducting that 
study, Marybeth Peters, the Registrar of Copyrights met informally with 
interested Vermonters in Burlington, Vermont, to hear their concerns on 
this issue. Today, I welcome Paul LeBlanc, the President of Marlboro 
College in Vermont, and the other witnesses, who can tell us about the 
needs of educators using distance education in innovative ways.
    The Copyright Office released its report in May, 1999, at a hearing 
held in this Committee, and made valuable suggestions on how modest 
changes in our copyright law could go a long way to foster the 
appropriate use of copyrighted works in valid distance learning 
activities. Senator Hatch and I have introduced the TEACH Act, S. 487, 
that incorporates the legislative recommendations of that report. This 
legislation will help clarify the law and allow educators to use the 
same rich material in distance learning over the Internet that they are 
able to use in face-to-face classroom instruction.
    The growth of distance learning is exploding, in part because it is 
responsive to the needs of older, non-traditional students. According 
to the Copyright Office report, the typical average distance learning 
student is 34 years old, employed full-time and has previous college 
credit. More than half are women. These are the people with busy 
schedules who need the flexibility that on-line programs offer: virtual 
classrooms accessible when the student is ready--and free to log-on. 
Moreover, in rural areas, distance education provides an opportunity 
for schools to offer courses that their students might otherwise not be 
able enjoy. In increasing numbers, students in other countries are 
benefitting from educational opportunities here through U.S. distance 
education programs.
    In Vermont and many other rural states, distance learning is a 
critical component of any quality educational and economic development 
system. In fact, the most recent Vermont Telecommunications Plan, which 
was published in 1999 and is updated at regular intervals, identifies 
distance learning as being critical to Vermont's development. It also 
recommends that Vermont consider ``using its purchasing power to 
accelerate the introduction of new [distance learning] services in 
Vermont.'' Technology has empowered individuals in the most remote 
communities to have access to the knowledge and skills necessary to 
improve their education and ensure they are competitive for jobs in the 
21st Century.
    Several years ago, I was proud to work with our state in 
establishing the Vermont Interactive Television network. This constant 
two-way video-conferencing system can reach communities, schools and 
businesses in every corner of the state. Since we first successfully 
secured funds to build the backbone of the system, Vermont has 
constructed fourteen sites. The VIT system is currently running at full 
capacity and has demonstrated that in Vermont, we value technology 
highways just as we value our transportation highways.
    No one single technology should be the platform for distance 
learning. In Vermont, creative uses of available resources have put in 
place a distance learning system that employs T-1 lines in some areas 
and traditional internet modem hook-ups in others. Several years ago, 
the Grand Isle Supervisory Union received a grant from the U.S. 
Department of Agriculture to link all the schools within the district 
with fiber optic cable. There are not a lot of students in this 
Supervisory Union but there is a lot of land separating one school from 
another. The bandwidth created by the fiber optic cables has not only 
improved the educational opportunities in the four Grand Isle towns, 
but it has also provided a vital economic boost to the area's 
businesses.
    While there are wonderful examples of the use of distance learning 
inside Vermont, the opportunities provided by these technologies are 
not limited to the borders of one state, or even one country. Champlain 
College, a small school in Burlington, Vermont, has shown this is true 
when it adopted a strategic plan to provide distance learning for 
students throughout the world and now has more students enrolled than 
any other college in Vermont. The campus in Vermont has not been 
overwhelmed with the increase. Instead, Champlain now teaches a large 
number of students overseas through its on-line curriculum. Similarly, 
Marlboro College in Marlboro, Vermont, offers innovative graduate 
programs designed for working professionals with classes that meet not 
only in person but also online.
    The Internet, with its interactive, multi-media capabilities, has 
been a significant development for distance learning. By contrast to 
the traditional, passive approach of distance learning where a student 
located remotely from a classroom was able to watch a lecture being 
broadcast at a fixed time over the air, distance learners today can 
participate in real-time class discussions, or in simultaneous 
multimedia projects. The Copyright Office report confirms what I have 
assumed for some time--that ``the computer is the most versatile of 
distance education instruments,'' not just in terms of flexible 
schedules, but also in terms of the material available.
    More than 20 years ago, the Congress recognized the potential of 
broadcast and cable technology to supplement classroom teaching, and to 
bring the classroom to those who, because of their disabilities or 
other special circumstances, are unable to attend classes. At the same 
time, Congress also recognized the potential for unauthorized 
transmissions of works to harm the markets for educational uses of 
copyrighted materials. The present Copyright Act strikes a careful 
balance and includes two narrowly crafted exemptions for distance 
learning, in addition to the general fair use exemption.
    Under current law, the performance or display of any work in the 
course of face-to-face instruction in a classroom is exempt from the 
exclusive rights of a copyright owner. In addition, the copyright law 
allows transmissions of certain performances or displays of copyrighted 
works to be sent to a classroom or a similar place which is normally 
devoted to instruction, to persons whose disabilities or other special 
circumstances prevent classroom attendance, or to government employees. 
While this exemption is technology neutral and does not limit 
authorized ``transmissions'' to distance learning broadcasts, the 
exemption does not authorize the reproduction or distribution of 
copyrighted works--a limitation that has enormous implications for 
transmissions over computer networks. Digital transmissions over 
computer networks involve multiple acts of reproduction as a data 
packet is moved from one computer to another.
    The need to update our copyright law to address new developments in 
online distance learning was highlighted in the December, 2000, report 
of the Web-Based Education Commission, headed by former Senator Bob 
Kerrey. This Commission noted that:
Current copyright law governing distance education . . . was based on 
            broadcast models of telecourses for distance education. 
            That law was not established with the virtual classroom in 
            mind, nor does it resolve emerging issues of multimedia 
            online, or provide a framework for permitting digital 
            transmissions.'' (p. 95).
    This report further observed that ``This current state of affairs 
is confusing and frustrating for educators. . . . Concern about 
inadvertent copyright infringement appears, in many school districts, 
to limit the effective use of the Internet as an educational tool.'' 
(pp. 95-96). In conclusion, the report concluded that our copyright 
laws were ``inappropriately restrictive.'' (p. 97).
    The TEACH Act makes three significant expansions in the distance 
learning exemption in our copyright law, while minimizing the 
additional risks to copyright owners that are inherent in exploiting 
works in a digital format. First, the bill eliminates the current 
eligibility requirements for the distance learning exemption that the 
instruction occur in a physical classroom or that special circumstances 
prevent the attendance of students in the classroom.
    Second, the bill clarifies that the distance learning exemption 
covers the temporary copies necessarily made in networked servers in 
the course of transmitting material over the Internet.
    Third, the current distance learning exemption only permits the 
transmission of the performance of ``non-dramatic literary or musical 
works,'' but does not allow the transmission of movies or videotapes, 
or the performance of plays. The Kerrey Commission report cited this 
limitation as an obstacle to distance learning in current copyright law 
and noted the following examples: A music instructor may play songs and 
other pieces of music in a classroom, but must seek permission from 
copyright holders in order to incorporate these works into an online 
version of the same class. A children's literature instructor may 
routinely display illustrations from childrens' books in the classroom, 
but must get licenses for each one for on online version of the course.
    To alleviate this disparity, the TEACH Act would amend current law 
to allow educators to show limited portions of dramatic literary and 
musical works, audiovisual works, and sound recordings, in addition to 
the complete versions of nondramatic literary and musical works which 
are currently exempted.
    This legislation is a balanced proposal that expands the 
educational use exemption in the copyright law for distance learning, 
but it also contains a number of safeguards for copyright owners. In 
particular, the bill excludes from the exemption those works that are 
produced primarily for instructional use, because for such works, 
unlike entertainment products or materials of a general educational 
nature, the exemption could significantly cut into primary markets, 
impairing incentives to create. Indeed, the Web-Based Education 
Commission urged the development of ``high quality online educational 
content that meets the highest standards of educational excellence.'' 
Copyright protection can help provide the incentive for the development 
of such content.
    In addition, the bill requires the use by distance educators of 
technological safeguards to ensure that the dissemination of material 
covered under the exemption is limited only to the students who are 
intended to receive it.
    Finally, the TEACH Act directs the Copyright Office to conduct a 
study on the status of licensing for private and public school digital 
distance education programs and the use of copyrighted works in such 
programs, and to convene a conference to develop guidelines for the use 
of copyrighted works for digital distance education under the fair use 
doctrine and the educational use exemptions in the copyright law. Both 
the Copyright Office report and the Kerrey Commission noted 
dissatisfaction with the licensing process for digital copyrighted 
works. According to the Copyright Office, many educational institutions 
``describe having experienced recurrent problems [that] . . . can be 
broken down into three categories: difficulty locating the copyright 
owner; inability to obtain a timely response; and unreasonable prices 
or other terms.'' Similarly, the Kerrey Commission report echoed the 
same concern. A study focusing on these licensing issues will hopefully 
prove fruitful and constructive for both publishers and educational 
institutions.
    The Kerrey Commission report observed that ``[c]oncern about 
inadvertent copyright infringement appears, in many school districts, 
to limit the effective use of the Internet as an educational tool.'' 
For this reason, the Kerrey Commission report endorsed ``the U.S. 
Copyright Office proposal to convene education representatives and 
publisher stakeholders in order to build greater consensus and 
understanding of the `fair use' doctrine and its application in web-
based education. The goal should be agreement on guidelines for the 
appropriate digital use of information and consensus on the licensing 
of content not covered by the fair use doctrine.'' The TEACH Act will 
provide the impetus for this process to begin.
    I appreciate that, generally speaking; copyright owners believe 
that current copyright laws are adequate to enable and foster 
legitimate distance learning activities. As the Copyright Office report 
noted, copyright owners are concerned that ``broadening the exemption 
would result in the loss of opportunities to license works for use in 
digital distance education'' and would increase the ``risk of 
unauthorized downstream uses of their works posed by digital 
technology.'' Based upon its review of distance learning, however, the 
Copyright Office concluded that updating section 110(2) in the manner 
proposed in the TEACH Act is ``advisable.'' I agree. At the same time 
we have made efforts to address the valid concerns of both the 
copyright owners and the educational and library community, and I look 
forward to working with all interested stakeholders as this legislation 
is considered by the Judiciary Committee and the Congress.
    Distance education is an important issue to both the Chairman and 
to me, and to the people of our States. I look forward to hearing the 
testimony of all the witnesses.

    Chairman Hatch. Well, thank you, Senator Leahy.
    We have a distinguished panel today to discuss distance 
learning on the Internet and our copyright reforms to encourage 
its further deployment.
    First, we will hear from Ms. Marybeth Peters, the Register 
of Copyrights. She and her Copyright Office staff have done 
yeoman's service on this issue, writing a comprehensive report 
on the issue and making a major contribution in the drafting of 
this legislation.
    It is fair to say that no one knows more about the 
copyright issues surrounding digital distance learning than Ms. 
Peters, and we thank her for her expertise and support. 
Normally, we would have her on her own panel, but because of 
scheduling difficulties that pressed us on time in this 
hearing, she has graciously agreed to join in a large panel to 
expedite the process this morning. So we want to thank you 
again for your consideration, Madam Register.
    Next, we will hear from Gerald A. Heeger, President of the 
University of Maryland University College. In addition to his 
academic and administrative experience, Mr. Heeger has been 
involved in developing distance education offerings for a 
number of years.
    While at New York University, he created NYU Online, and 
has worked at the University of Maryland to broaden educational 
opportunities across the State and throughout the world through 
expanded online offerings. Then we will hear from Allan Adler, 
the Vice President for Legal and Governmental Affairs for the 
Association of American Publishers. Mr. Adler has long been 
involved in copyright policy debates here in Washington, and we 
certainly welcome your perspective here today.
    Following Mr. Adler, we will be pleased to hear from 
Richard M. Siddoway. Mr. Siddoway is the Principal of the 
Electronic High School in Utah, which connects high school 
students throughout Utah to educational opportunities that they 
may not have had before. He has been a professional educator 
for nearly 40 years and he is a New York Times bestselling 
author with his book The Christmas Wish, so he brings insights 
from various vantage points to this discussion. He has long 
worked on public policy issues involving technology and 
education, and we are certainly honored to have you here today, 
Mr. Siddoway, to inform our process.
    Next, we will hear from Paul LeBlanc, who is the President 
of Marlboro College, in Marlboro, Vermont. Having founded an e-
commerce program and a teaching with Internet technologies 
Master's Degree, Mr. LeBlanc has long sought to connect 
education and new technology as a tool for improving 
communication and knowledge-sharing in both the classroom and 
board room. So we are very pleased to have you with us here 
today.
    Finally, we will hear from Gary Carpentier, who teaches in 
the LL.M. program in international legal studies at the 
Washington College of Law at American University, and is 
creating an Internet-based law course on NAFTA together with 
three other universities in Canada, three in Mexico, and two 
other universities in the United States, to be transmitted to 
students in each of those countries.
    So we both look forward to hearing the statements of each 
of our distinguished witnesses. We will turn first to you, Ms. 
Peters.

     STATEMENT OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, 
                        WASHINGTON, D.C.

    Ms. Peters. Thank you. Mr. Chairman, Mr. Leahy, I am 
pleased to be here today to testify on S. 487, the Technology 
Education and Copyright Harmonization Act of 2001.
    Mr. Chairman, I congratulate you and Senator Leahy for 
introducing this important bill which will update sections 
110(2) and 112 of the Copyright Act to cover certain 
instructional activities taking place through the use of 
digital technologies.
    Digital distance education is a rapidly growing field, but 
one that is still in its infancy. Part of our challenge in 
making recommendations to you was to remove technologically 
obsolete legal provisions which are an impediment to the policy 
balance struck by Congress in 1976 without destroying a growing 
and important market for copyright owners. Licensing of 
copyrighted works in this market is extremely important. 
However, fair use and other exemptions also play a role.
    S. 487 incorporates our recommendations, modified in 
certain instances to accommodate concerns expressed by 
representatives of the affected communities. You, Senator 
Hatch, in your floor statement invited suggestions to improve 
the bill, and during the past 2 weeks we met with 
representatives of the education and content communities to 
hear some of their concerns. We have addressed a number of 
these concerns in our testimony.
    In my oral testimony, I will only focus on a few issues. 
First, the TEACH Act removes the requirement of a physical 
classroom by permitting transmissions to be made to students 
officially enrolled in a course wherever they may be. However, 
the bill retains the current limitation that the performance or 
display be directly related and of material assistance to the 
teaching content of the transmission.
    Thus, the critical elements are that the performance or 
display still must be carried out by a non-profit educational 
institution. Two, it still must be part of the institution's 
systematic instructional activity. And, three, with the 
amendment, the transmission must be by or at the direction of 
an instructor as an integral part of the class session. The 
result is that you have expanded section 110(2) narrowly in 
order to avoid changing the central character of that section.
    As it currently stands, section 110 focuses on performances 
and displays. It should not become an exemption that focuses on 
the delivery of copies to substitute for the purchase by 
students of materials that are being performed or displayed. So 
let me emphasize the exemption is limited to what is called by 
some mediated instruction. The intent is to ensure that the 
performance or display is analogous to the type of performance 
or display that would take place in a live classroom. This 
means that the display of an entire textbook would not be 
exempted.
    Another important element is the safeguards imposed as 
conditions on the applicability of the exemption. These include 
permitting the retention of transient copies only to the extent 
necessary to accomplish the transmission, requiring the 
adoption by the educational institution of copyright policies, 
the provision to faculty and to students and to affected staff 
of informational materials to describe and promote compliance 
with copyright laws, and, most important, the requirement to 
use technological measures to reasonably protect both 
unauthorized access and unauthorized dissemination of 
copyrighted works.
    With respect to who is eligible for this exemption, the 
bill continues the limit to non-profit educational 
institutions. Clearly, this comports with what is in the 
current copyright law today in both sections 110(2) and 110(1). 
However, during our study, we noted that there was much support 
for either a different criterion or an additional one; for 
example, accreditation of the institution. This issue deserves 
further attention, given the nature of the Internet. The 
exemption should apply only to bona fide systematic 
instructional activities.
    Perhaps the most controversial part of the legislation is 
expanding the categories of works that may be performed. This 
is a change in the policy balance that was truck in 1976. For 
pedagogical reasons, we support the addition of dramatic works, 
audio-visual works, and sound recordings. Clearly, these works 
are primarily intended to be performed and inclusion of them 
could affect their markets. Therefore, it is appropriate to 
limit their use to limited and reasonable portions.
    Thank you. I would be pleased to answer any questions you 
have, and I look forward to working with you and members of 
your staffs in any way that would be useful to you as you move 
forward in this process.
    Thank you.
    [The prepared statement of Ms. Peters follows:]

     Prepared Statement of Marybeth Peters, Register of Copyrights

    The Copyright Office is pleased to present its views on S. 487, the 
Technology, Education and Copyright Harmonization (``TEACH '') Act. 
This important legislation updates sections 110(2) and 112 of the 
Copyright Act to allow the same activities to take place using digital 
delivery mechanisms that were permitted under the policy balance that 
was struck by Congress when the law was enacted in 1976, while 
introducing safeguards to minimize the additional risks to copyright 
owners that are inherent in exploiting works in a digital format.

                               Background

    Section 403 of the DMCA directed the Copyright Office to consult 
with affected parties and, within six months of the date of enactment, 
make recommendations to Congress on how to promote distance education 
through digital technologies. The Office was specifically directed to 
consider the following issues: the need for a new exemption, the 
categories of works to be included in any exemption, appropriate 
quantitative limitations on the portions of works that may be used 
under any exemption, which parties should be eligible for any 
exemption, which parties should be eligible recipients of distance 
education material under any exemption, the extent to which use of 
technological protection measures should be mandated as a condition of 
eligibility for any exemption, the extent to which the availability of 
licenses should be considered in assessing eligibility for any 
exemption and other issues as appropriate.
    At the conclusion of an intensive process of identifying 
stakeholders, holding public hearings, soliciting comments, conducting 
research, and consulting with experts in various fields, the Office 
issued a Report on Copyright and Digital Distance Education in May, 
1999 recommending changes to the existing exemption for distance 
education, section 110(2). More recently, the Copyright Office has 
consulted informally with representatives of the educator and content 
communities to hear their respective concerns regarding the Office's 
legislative recommendations.
    In preparing our Report we found that digital distance education 
was a field that was undergoing rapid--even explosive--growth, but one 
that was still in its infancy. Technological change had made it 
possible for educators to reach a vastly broader student population 
with a richer variety of course materials than was ever possible before 
the advent of the Internet. At the same time, the same technological 
changes created a huge potential market for creators and publishers to 
license their works for use in distance education.
    Part of the challenge for this Office in formulating 
recommendations addressing digital distance education was to remove 
technologically obsolete legal provisions as an impediment to carrying 
forward the distance education activities sanctioned by Congress in 
1976 into the twenty-first century, without killing a nascent and 
potentially important market for right holders. We concluded that this 
could best be accomplished by using the policy line drawn by Congress 
in 1976 as the point of reference for a technological updating of 
section 110(2) that would take account of the nature and capabilities 
of digital networks.
    At the same time, the Copyright Office was mindful of the risks 
that are inherent in the exploitation of copyrighted works in digital 
form. We concluded that additional safeguards were necessary to 
minimize the risk to right holders that legitimate use of works under 
an expanded and updated distance education exemption could result in 
copyright piracy.
    S. 487 incorporates many of the recommendations that we made in our 
1999 Report, modified in certain instances to accommodate concerns 
expressed by representatives of the affected communities. The remainder 
of this testimony focuses on how the bill would change current law in 
implementing the recommendations from our Report. Where appropriate, we 
indicate potential concerns with the language of the bill that may 
require further consideration.

                              Existing Law

    Three exemptions together largely define the scope of permitted 
uses for instructional activities: two specific instructional 
exemptions in section 110, and the fair use doctrine of section 107. 
Sections 110(1) and (2) together were intended to cover all of the 
methods by which performances or displays in the course of systematic 
instruction take place. Section 110(1) exempts the performance or 
display of any work in the course of face-to-face teaching activities. 
Section 110(2) covers the forms of distance education existing when the 
statute was enacted in 1976, exempting certain performances or displays 
in the course of a transmission--i.e., an instructional television or 
radio broadcast. Both subsections contain a number of limitations and 
restrictions. In particular, the section 110(2) exemption from the 
performance right (as distinguished from the exemption from the display 
right) applies only to nondramatic literary and musical works. Section 
110(2) also contains limitations on the nature and content of the 
transmission, and the identity and location of the recipients. The 
performance or display must be made as a regular part of systematic 
instructional activity by a nonprofit educational institution or 
governmental body; it must be directly related and of material 
assistance to the teaching content; and it must be made primarily for 
reception in classrooms or places of instruction, or to persons whose 
disabilities or other special circumstances prevent their attendance in 
classrooms, or to government employees.
    In addition, although the term ``transmission'' as used in section 
110(2) is not limited to analog technology, and would therefore include 
digital transmissions, the provision would only permit digital 
transmissions to the extent that they do not implicate exclusive rights 
other than the public performance and public display rights. Since the 
reality of digital technology is that most digital transmissions entail 
reproduction and distribution (as those terms are defined in the 
copyright law and interpreted by the courts), the practical outcome is 
that most digital transmissions are not exempted under section 110(2).

                          Analysis of the Bill

     Section 2. Exemption of Certain Performances and Displays for 
                            Educational Uses

                         SCOPE OF THE EXEMPTION

    Section 2 of the bill amends the chapeau paragraph of 17 U.S.C. 
110(2), altering the scope of the exemption by expanding both the 
rights and the categories of works that are covered.
    Unlike the analog transmissions contemplated in the current law, 
digital transmissions implicate the reproduction and distribution 
rights in addition to the public performance and public display rights. 
The making of temporary reproductions is an integral part of the 
technology of transmitting digital data from one point to another. It 
is settled case law in the U.S. that such temporary reproductions 
implicate the reproduction right. Similarly, courts have held that such 
activity can be deemed a distribution as well. In order to address 
these technological realities, the bill amends section 110(2) to cover 
the rights to reproduce a work ``in transient copies or phonorecords 
created as a part of the automatic technical process of a digital 
transmission'' permitted under section 110(2), and to distribute ``such 
copies or phonorecords'' in the course of a digital transmission 
authorized by section 110(2), ``to the extent technologically necessary 
to transmit the performance or display.''
    The expansion of the 110(2) exemption to cover these two additional 
rights is phrased very narrowly in order to avoid changing the central 
character of section 110 from an ``exemption of certain performances 
and displays'' to an exemption permitting the delivery of copies or 
phonorecords that substitute for the purchase by the student of the 
materials performed or displayed. As amended, section 110(2) would 
permit reproduction and distribution only to the extent technologically 
required in order to transmit the performance or display permitted by 
the exemption.
    In our informal consultations with the educator community, concern 
was expressed that the exemptions from the reproduction and 
distribution rights were too limited for an institution to be able to 
carry out a permitted transmission without potential liability. As the 
originator of the transmission, an institution could potentially be 
liable for any reproduction that occurs along the transmission path 
from the institution's server to the student's personal computer. 
Although many of the copies would fall within the scope of the proposed 
exemption, it is inevitable that some copies, such as cache copies in 
an Internet service-provider's proxy cache or a user's browser cache, 
would be made, but would not be considered ``transient,'' would not be 
``technologically necessary to transmit the performance or display'' 
and would not, as required in proposed section 110(2)(D), be ``retained 
for no longer than reasonably necessary to complete the transmission.'' 
Apart from initiating the transmission, the institution has no role in 
the making and retention of such copies, and is powerless to prevent 
them. The copies are simply a byproduct of how the technology works 
today. But they do not fall within the scope of the exemption provided 
in the bill, and they could result in potential liability for the 
institution.
    These concerns appear to be valid, and merit further consideration. 
We would be pleased to continue to work with the Committee and the 
affected parties to craft language to address these concerns.
    Content owners have expressed concern about the existing exemption 
from the public display right as applied to digital distance education. 
Specifically, they are concerned that permitting the display of entire 
literary works in the context of digital distance education has a much 
greater impact on copyright holders than permitting the display of 
entire works for purposes of instructional broadcasting. ``Display'' of 
a book using the technology of distance education in 1976 meant showing 
it--holding it up for the camera to see. Display of a book using 
today's technology means making the entire work available digitally. 
The technology of 1976 did not make it possible for the display of a 
textbook to substitute for its purchase, but the technology of 2001 
does.
    The exemption from the copyright owner's exclusive right to display 
the work publicly would permit both activities. The Copyright Act 
defines ``display'' of a work as showing a copy of a work either 
directly or by means of ``any other device or process.'' To display a 
work ``publicly'' is to display ``to the public, by means of any device 
or process, whether the members of the public capable of receiving the 
performance or display receive it in the same place or in separate 
places and at the same time or at different times.'' Holding a book up 
to a camera or using an e-book through an online delivery system both 
fall comfortably within these definitions.
    Nevertheless, in the view of the content community, Congress, in 
exempting entire works from the display right in 1976, did not intend 
to permit uses that were more extensive than those that were possible 
under the technology of the time. Congress certainly did not intend 
that an exempted display of a textbook under section 110(2) be capable 
of substituting for the purchase of that book, as today's technology 
makes possible.
    We believe that these observations of the content community are 
essentially correct, but it is our view that their concerns are 
addressed by the limitation of permitted displays in amended section 
110(2)(A) to those made ``as an integral part of a class session.'' 
Even though ``class session'' arguably has less strictly defined 
parameters in a digital network environment than it does in other 
contexts, the Copyright Office does not view the concept as being 
entirely devoid of meaning. For example, the display of an entire 
textbook could not take place in the course of a class session and 
would not be exempted conduct under the scope of an updated section 
110(2). The technology of 1976 made it impossible for the display of a 
textbook to substitute for its purchase. Although today's digital 
technology would make it possible to display an entire book, the 
limitation that was once inherent in the technology is carried forward 
through the concept of a class session.
    The other expansion of the scope of the exemption accomplished by 
the bill is to allow performances of categories of copyrighted works 
other than the nondramatic literary and musical works that already may 
be performed under current law. This provision implements a 
recommendation in our Report that recognized that educators preparing 
course material do not differentiate in the selection of subject matter 
based upon the categories of works in section 102 of the Copyright Act, 
and that current technology permits educators to recreate through 
distance education the same rich pedagogical experience enjoyed face-
to-face with students in a classroom setting. Section 110(1) of the Act 
permits the use of any work in a face-to-face classroom setting.
    However, as our Report also recognized, the potential impact on 
secondary markets for the principal categories of works that are 
affected by this expansion--audiovisual works, sound recordings, and 
dramatic literary and musical works--could be substantial. Transmission 
of entertainment products like motion pictures and sound recordings 
could well substitute for students paying to enjoy them elsewhere. The 
bill addresses this concern by limiting performance of the newly-added 
categories of works to ``reasonable and limited portions.''
    It should be noted that when the current 110(2) exemption was 
enacted in 1976, there was no public performance right that covered 
sound recordings (a limited public performance right for sound 
recordings which covers only certain digital transmissions was enacted 
in 1995). Consequently, there was no need to address the appropriate 
treatment of sound recordings in the discussions leading to the 
enactment of the current section 110(2) exemption. The Copyright 
Office, however, regards sound recordings to be as vulnerable to the 
risks of downstream digital distribution as audiovisual works, which 
militates against permitting anything but ``reasonable and limited'' 
portions of those works to be used under the exemption.
    Works that are produced primarily for instructional use may be 
neither performed nor displayed under the exemption, because for such 
works, unlike entertainment products or materials of a general 
educational nature, an exemption would cut significantly into primary 
markets, impairing incentives to create. Including such works within 
the exemption would interfere with the efficient functioning of the 
marketplace for licenses. As we stated in our Report, we believe that 
under current conditions, works created primarily for instructional 
uses will be licensed efficiently in the educational market.
    As an additional safeguard, this provision requires that the 
exempted performance or display be made from a copy both lawfully made 
and lawfully acquired.

                        CRITERIA FOR ELIGIBILITY

    Section 110(2) currently contains several criteria which must be 
met for a performance or display to qualify for the exemption. These 
criteria relate to the identity of the transmitting institution and the 
nature of the activities of which the performance or display is a part; 
the nature of the performance or display; and the identity and location 
of the recipients of the transmission. Section 2 of the bill amends the 
existing criteria to update them and make them relevant to distance 
education as it is carried out on digital networks. The bill also adds 
additional criteria as additional safeguards against digital piracy.
    Except in fairly limited circumstances, transmissions under the 
current provision must be made to students in a physical classroom. The 
bill eliminates the requirement of a physical classroom by permitting 
transmissions to be made to students officially enrolled in the course 
and to government employees, regardless of their physical location. The 
bill retains the current limitation in section 110(2)(B) that the 
performance or display be ``directly related and of material assistance 
to the teaching content of the transmission'' and, in lieu of limiting 
transmissions to a physical classroom, adds two additional safeguards.
    First, section 110(2)(A), as amended by the bill, emphasizes the 
concept of mediated instruction by mandating that the exempted 
performance or display be analogous to the type of performance or 
display that would take place in a live classroom setting. The 
performance or display must still be carried out by a government body 
or nonprofit educational institution, and must still be a regular part 
of the institution's systematic instructional activities. In addition, 
the bill requires that the transmission be made ``by or at the 
direction of an instructor as an integral part of a class session.'' In 
sum, the work must be used as an integral part of a classroom 
experience (albeit a virtual one), controlled by the instructor, rather 
than as supplemental or background information to be experienced 
independently.
    Content owners have expressed to the Copyright Office their concern 
that ``nonprofit educational institution'' may not be the appropriate 
dividing line between institutions that may and may not use the 
exemption, since institutions that are not bona fide educational 
institutions may enjoy nonprofit status. They have proposed that the 
word ``accredited'' be added as an additional qualification. The Office 
views this as a valid concern. We are uncertain, however, whether lack 
of accreditation is necessarily an appropriate basis for denying an 
institution the benefit of the exemption, or, conversely, whether 
accreditation is an appropriate basis for granting an institution the 
benefit of the exemption. This is especially true given the lack of 
uniform national standards for accreditation, and the resulting 
geographic inequity of such a condition. However, the Committee should 
consider whether another criterion, in addition to an institution's 
nonprofit status, could be used to limit the benefit of the exemption 
to bona fide educational institutions.
    The second safeguard introduced in lieu of limiting transmissions 
to a physical classroom is found in section 110(2)(C), as amended by 
the bill. This provision adds the requirement that the transmission 
must be made solely for, and, to the extent technologically feasible 
the reception of the transmission must be limited to, two defined 
classes of eligible recipients: students officially enrolled in the 
course for which the transmission is made; and officers or employees of 
governmental bodies as part of their official duties of employment. 
When we prepared our Report there was widespread agreement, in the 
testimony and comments submitted to the Office, that the exemption 
should benefit only students officially enrolled in the particular 
course for which the transmission is made. The bill requires, to the 
extent technologically feasible, that technical measures be employed to 
ensure this.
    Section 2 of the bill also adds new safeguards to counteract the 
new risks posed by the transmission of works to students in digital 
form. A new paragraph (D) requires that transient copies permitted 
under the exemption be retained no longer than reasonably necessary to 
complete the transmission. As discussed above in reference to the 
chapeau paragraph of section 110(2), concerns have been expressed to 
the Office regarding the possible retention of copies that are created 
automatically in the course of the transmission and are outside the 
control of the transmitting institution ``for longer than reasonably 
necessary to complete the transmission.'' Further consideration should 
be given to this criterion to ensure that copies made and retained as 
an automatic by-product of the transmission process do not render a 
transmission ineligible for the exemption.
    Paragraph (E)(i) requires that beneficiaries of the exemption 
institute policies regarding copyright; provide information materials 
to faculty, students, and relevant staff members that accurately 
describe and promote compliance with copyright law; and provide notice 
to students that materials may be subject to copyright protection. 
These requirements would promote an environment of compliance with the 
law, ensure that participants in the instructional process were aware 
of their responsibilities in using copyrighted material, and prevent 
unintentional and uninformed acts of infringement.
    Paragraph (E)(ii) requires that the transmitting institution apply 
measures ``that reasonably prevent unauthorized access to and 
dissemination of the work,'' and that the institution ``not 
intentionally interfere with technological measures used by the 
copyright owner to protect the work.'' These requirements reflect the 
central role that the use of technological measures plays in the 
balance that has been struck in this bill.
    A number of concerns have been expressed to the Copyright Office 
regarding this provision. The educator community has pointed out that 
requiring institutions to apply measures that reasonably prevent access 
to a work essentially repeats the requirement that the transmission be 
``made solely for, and to the extent technologically feasible, the 
reception of such transmission [be] limited to'' the intended 
recipients. This may be a valid concern that should be given further 
consideration.
    Content owners, for their part, have expressed concern about the 
use of the word ``intentionally'' in the context of interfering with 
technological measures used by the copyright owner. Subjective intent 
is difficult to prove, and could render the requirement of 
noninterference meaningless. This appears to be a valid concern that 
merits further consideration. Specifically, the Committee may wish to 
consider substituting an objective standard for the current subjective 
one--e.g., ``does not engage in conduct that could reasonably be 
foreseen to interfere with technological measures.''
    It has also been suggested that language derived from 17 U.S.C. 
512(i) be added to this paragraph (or as a new paragraph) to require 
both noninterference with and accommodation of ``standard technical 
measures'' in order to be eligible for the exemption. While the 
requirement in the bill of noninterference with a copyright owner's 
technological protection measures coupled with existing prohibitions on 
circumvention of access control measures in 17 U.S.C. 1201 should 
provide a substantial level of protection for right holders, it is 
possible that the case could be made for inclusion of the stricter 
obligation in section 512(i).

                    Section 3. Ephemeral Recordings

    Section 3 of the bill amends 17 U.S.C. 112 by adding a new 
subsection which permits an educator to upload copies of a copyrighted 
work onto a server solely to facilitate transmissions permitted under 
section 110(2). Limitations have been imposed upon the exemption 
similar to those set out in other subsections of section 112. Paragraph 
112(f)(1) specifies that any such copy be retained and used solely by 
the entity that made it and that no further copies be reproduced from 
it except the transient copies permitted under section 110(2). 
Paragraph 112(f)(2) requires that the copy be used solely for 
transmissions authorized under section 110(2). Paragraph 112(f)(3) 
prohibits a body or institution from intentionally interfering with 
technological protection measures used by the copyright owner to 
protect the work.
    The exemption only applies to ``a work that is in digital form.'' 
Consequently, it is not possible under the proposed subsection to scan 
a literary work, or otherwise convert a work to digital form. Use of 
works in digital form on the Internet bears well-documented risks for 
right 13 holders. Some right holders may choose not to expose 
themselves to that risk by refraining from ``going digital.'' This 
exemption is not intended to force those right holders to ``go 
digital'' against their will.
    In our Report, we recommended that section 112 be amended to allow 
a single ephemeral recording to carry out a transmission permitted 
under section 110(2). However, the technology of digital streaming 
requires that more than one ephemeral copy be maintained on a server. 
Consequently, we support the bill's expansion of the ephemeral 
recording exemption to include multiple copies. It is the view of the 
Copyright Office that the safeguards built into the proposed 
subsection, including the extremely limited purposes for which 
ephemeral recordings may be used, provide adequate assurance that the 
additional copies authorized by the subsection will not have any 
measurable impact on content owners.

             Section 4. Implementation by Copyright Office

    Subsection (a) states that not later than two years after the date 
of enactment of this Act, the Copyright Office shall conduct a study 
and submit a report to Congress on the status of licensing by private 
and public educational institutions of copyrighted works for digital 
distance education programs, including live interactive distance 
learning classes, faculty instruction recorded without students present 
for later transmission, and asynchronous delivery of distance learning 
over computer networks, and also on the use of copyrighted works in 
such programs. We caution that much of this information is considered 
proprietary and will be difficult to obtain. Although such a report 
could be very valuable to the Committee to the extent that empirical 
evidence can be obtained, this may not be possible in many instances.
    Subsection (b) requires the Copyright Office, not later than two 
years after the date of enactment, to convene a conference of 
interested parties, including representatives of copyright owners, 
nonprofit educational institutions and nonprofit libraries and archives 
to develop guidelines for the use of copyrighted works for digital 
distance education under the fair use doctrine and sections 110(1) and 
(2). The conference would initiate a process that has as its goal the 
promulgation by the Copyright Office of guidelines for the fair use of 
copyrighted works in digital distance education.
    The Copyright Office believes that fair-use guidelines for 
particular areas of activity have proved useful in the past, and 
digital distance education is an area where development of new 
guidelines certainly would be appropriate. We support such a 
Congressionally-mandated process to establish fair-use guidelines for 
digital distance education. Since guidelines do not have the force of 
law, their success in practice depends largely on the degree to which 
interested parties endorse them. A strong message from the Congress to 
the affected parties that guidelines are desirable, as evidenced by 
subsection (b), could play a pivotal role in the eventual success of 
such an effort.
    The Copyright Office is concerned, however, about the inclusion of 
sections 110(1) and (2) as subjects for the guidelines, as they are 
specific exemptions with delineated parameters. The Office would 
propose that these sections be removed from the scope of the conference 
and addressed through informational materials of the type regularly 
issued by the Copyright Office.

                               Conclusion

    The Copyright Office supports this legislation to carry out the 
recommendations made in its 1999 Report. We look forward to continuing 
to work with the Committee in this important endeavor.

    Chairman Hatch. Thank you very much.
    Senator Leahy. Mr. Chairman, could I just ask unanimous 
consent that a statement by Senator Kennedy be included in the 
opening statements?
    Chairman Hatch. Without objection, we will place that in 
the appropriate place in the record.
    [The prepared statement of Senator Kennedy follows:]

 Prepared Statement of Hon. Edward M. Kennedy, a U.S. Senator from the 
                         State of Massachusetts

    I would like to thank Chairman Hatch for convening this hearing to 
address the issue of digital distance learning. Both he and Senator 
Leahy have demonstrated impressive leadership in this area and I am 
confident that, as a result of these efforts, our copyright laws will 
be clarified to permit the expanded use of digital technology in the 
American education experience.
    For over two decades, distance learning has been a critical 
component of our nation's education policy. Technological advances 
ensure that distance learning will become an even greater part of the 
educational experience in the years ahead. It is essential that we 
create clear guidelines for schools, libraries and other education 
providers as the concept of the classroom and the profile of the 
traditional student become broader.
    Digital technology expands access to curriculum materials for 
students in non-traditional educational settings and creates 
opportunities for new interactive learning experiences. For older and 
returning students as well as those whose work or home obligations 
preclude them from attending classes in a traditional campus setting, 
distance learning can open the doors to higher education. In the 
earlier grades, distance learning improves opportunities for children 
in remote areas or underfunded school systems, by allowing them to take 
advantage of material that otherwise would be unavailable to them.
    Digital formatting changes the delivery system for copyrighted 
material and challenges us to develop appropriate safeguards to prevent 
abuse. This legislation represents an excellent beginning for the 
development of those safeguards.
    The bill appropriately expands the educational exemption that 
requires instruction to take place in a classroom setting. The scope of 
material that may be used in a transmission is broadened to include new 
categories of copyrighted material such as audiovisual works and sound 
recordings. The use of transient copies is limited to ensure that they 
are retained only for a reasonable amount of time. Additional 
protections are established to limit the subsequent use of materials 
that are distributed under the new exemption.
    I commend Register of Copyrights Marybeth Peters for her diligence 
and guidance in this matter. The Copyright Office report on digital 
distance learning is a valuable blueprint to guide us in the effort to 
affirm the fundamental principles of fair use in an educational context 
at a time when evolving technology re-defines classrooms.
    I look forward to receiving the expert testimony today. I am 
especially pleased that, with these new guidelines, the extraordinary 
capability of new technology will be more fully integrated into the 
educational experiences of every student and that those experiences 
will be enriched by the books, manuscripts, sound recordings and films 
that comprise the American creative legacy.
    I look forward to working with my colleagues on the Judiciary 
Committee toward passage of this important legislation.

    Chairman Hatch. Mr. Heeger?

    STATEMENT OF GERALD A. HEEGER, PRESIDENT, UNIVERSITY OF 
      MARYLAND UNIVERSITY COLLEGE, COLLEGE PARK, MARYLAND

    Mr. Heeger. Thank you, Mr. Chairman, Mr. Leahy. Thank you 
for the opportunity to testify on S. 487. You have my written 
testimony. I simply want to make several points of emphasis.
    My institution, UMUC, as it is known, is probably known to 
you as one of the largest providers of distance education in 
the world. It has for 54 years provided distance education to 
U.S. military forces overseas in classrooms with faculty 
present around the world, and even today at 120 bases 
worldwide. At the same time, it has one of the largest online 
enrollments in the world, including military students, students 
from all over the United States, and increasingly the world. We 
have at UMUC 28 full degree programs online, and this year we 
will register more than 70,000 enrollments online.
    I mention our size to you because it merely means that we 
are confronting many issues in this area first, but we will not 
be the last. I am here to speak not only on behalf of my 
institution, but also on behalf of the many associations listed 
in my written testimony. All of these associations and the 
institutions which participate in them strongly support S. 487 
because it would move to bring copyright law into accord with 
the educational realities of today, where digital distance 
education portends dramatic change in educational access and 
quality.
    We have all recognized the critical importance of education 
to America's future. We confront the need to compete globally, 
the need to expand capacity of our educational institutions, 
and the need to recognize that all citizens in all places need 
access to education lifelong.
    More than anything else, distance online education offers 
new solutions to such challenges. There are myriad examples we 
are all familiar with, but current copyright law imposes 
significant barriers to digital distance education. The 1976 
Copyright Act was not written with the Internet or online 
education in mind. Its provisions governing distance education 
present two basic problems for us today.
    First, a limitation on the types of works that may be 
utilized in remote transmission drives an untenable wedge 
between content in the classroom and content in distance 
education. That wedge threatens to undermine the very viability 
of quality in online education.
    Second, the current law does not fully accommodate some of 
the technical aspects of delivery and instructional content 
over computer networks. Again, the absence of such rules of the 
road, as I would call them, jeopardizes the whole enterprise.
    I could offer numerous examples. I will cite only two, one 
from a major university renowned for its cinema program, 
frustrated in its effort to create a dynamic new distance 
education film course, despite being willing to commit more 
than $600,000 to the production of the course, yet unable to 
bring about a course that relied on short film clips that drew 
on segments as short as 30 seconds. Some people never 
responded. Others demanded a great deal of money. Others just 
simply denied participation. In the end, the failure to secure 
rights to film clips less than a minute long shut down what was 
going to be an exciting educational program.
    My university, the second example, the University of 
Maryland University College, at the request of State 
authorities, has worked hard to create an innovative teacher 
education program. Teacher education requires an innovative use 
of instructional materials. Again, such materials remain out of 
reach in terms of distance education.
    Let me just take this to the broadest level of policy. We 
need to realize that to fully realize the potential of distance 
education, we need to establish parity between the virtual 
class and the physical class. Not to do so undermines academic 
quality, makes sound management practices impossible and, most 
importantly, potentially makes distance education students 
second-class citizens by denying them access to the rich 
materials essential for a quality education.
    Thank you.
    [The prepared statement of Mr. Heeger follows:]

   Prepared Statement of Gerald A. Heeger, President, University of 
                      Maryland University College

                      Distance Education Testimony

    Mr. Chairman and Members of the Judiciary Committee, I am Gerald 
Heeger, President of the University of Maryland University College. I 
am pleased to have this opportunity to testify on S. 487, the 
Technology, Education, and Copyright Harmonization Act of 2001. I am 
testifying on behalf of the Association of American Universities, the 
American Council on Education, the National Association of State 
Universities and Land-Grant Colleges, and the Association of Research 
Libraries. The colleges, universities, and libraries which are members 
of these associations strongly support S. 487 because it would bring 
copyright law into accord with the education realities of today, 
enabling a fuller realization of the enormous potential of digital 
distance education to expand teaching and learning in time, place, and 
richness of content.
    The University of Maryland University College, or UMUC, is one of 
eleven degree-granting institutions within the University of Maryland 
System. Founded in 1947, its programs focus on the adult learner and it 
specializes in distance education. In the past few years, it has become 
the leading online university in the country, with over 43,000 online 
enrollments in the last academic year, and an estimated 70,000 
enrollments this year. UMUC offers 14 undergraduate degrees and 14 
graduate degrees, including the MBA, fully online. Last year, the 
University was the first recipient of the E-Learning Award. It was 
recognized recently by Forbes magazine for its excellence in Web-based 
instruction. Additionally, its librarian received a commendation from 
Maryland's Governor for creating the Maryland Digital Library, a 
resource for colleges and universities in the state that provides 
access to over 400 electronic books and nearly 3,000 electronic 
journals.
    Education is the means by which we develop our nation's human 
resources. As we move into an international information age, where both 
cooperation and competition will be carried out world-wide, the ability 
of the United States to meet its domestic and international challenges 
and responsibilities will be directly dependent on the quality and 
capacity of its educational programs. That quality and capacity in turn 
will be determined by the content of those programs and their reach 
throughout our citizenry. For our nation to maintain its competitive 
edge, it will need to extend education beyond children and young adults 
to lifelong learning for working adults, and that education must reach 
all students of all income levels, in cities and rural settings, in 
schools and on campuses, in the workplace, at home, and at times 
selected by students to meet their needs.
    Digital distance education makes this possible, and we are 
witnessing a steady growth in online education, both as distance 
education in the traditional sense, where instructor and student are 
separated in place and perhaps time, and in new hybrids of traditional, 
residential classroom education combined with online components. 
Increasingly, college students can register for courses online, submit 
class assignments by email, and participate in discussions that connect 
students in a classroom with students beyond the classroom, sometimes 
beyond the nation's boarders. Similarly, K-12 students can learn about 
the customs and cultures of other countries through real-time 
audiovisualconversations with pen pals from those countries; they can 
learn science in new ways by having scientific demonstrations and actual 
experiments conducted at distant locations brought to them in real time 
via the Internet. The National Science Foundation, the National Academy 
of Sciences, and other scientific societies and educational 
organizations are working hard to improve our nation's science and 
mathematics education; other groups are developing new ways to bring 
humanities and the arts to students and the broader public. Many of 
these new educational efforts draw on advances in information 
technology and digital networks.
    Digital distance education also has special value to two groups 
with which UMUC is very familiar. One is the servicemen and women in 
the United States military, who benefit greatly from the ability to 
obtain instruction in remote locations. Additionally, the University's 
online course offerings are very attractive to disabled Americans. This 
past fall, we had nearly 400 disabled students, including around 200 
disabled veterans enrolled in courses at the University.
    Such efforts have or will soon come up against barriers set by 
current copyright law. In 1976, Congress wisely recognized the 
pedagogical value of allowing teachers to enrich the classroom learning 
of their students by permitting the performance or display of lawfully 
made copyrighted material without having to get clearance from the 
copyright owner. Thus, a teacher could show a movie or the performance 
of a drama, or could display a painting as part of the course of 
instruction. Recognizing the potential of distance education-which in 
1976 was essentially remote instruction by television Congress also 
authorized the display of any copyrighted material and the performance 
of non-dramatic literary or musical works at remote classroom settings.
    The 1976 law was not written with the Internet and online education 
in mind, and its provisions governing distance education present two 
basic problems today. First, the limitation on the types of works that 
may be performed by remote transmission to non-dramatic literary and 
musical works drives an increasingly untenable wedge between content in 
the classroom and that at a remote location. Second, current law does 
not fully accommodate some of the technical aspects of delivering 
instructional content over computer networks.
    Let me give just one example of how current law impedes the 
development of digital distance education. At a major university, the 
highly ranked cinema program recently tried to develop a distance 
education film course. The institution was committed to invest $600,000 
in the effort. Part of the course involved the use of film clips 
ranging from 5 to 30 seconds. Negotiations for rights went on 
interminably. Permissions had to be gotten from, and payments had to be 
made to, copyright owners and actors. Some people never responded, 
others demand a great deal of money, some simply said no. In the end, 
after losing a substantial amount of money, the failure to secure the 
rights to film clips less than a minute long shut down a promising 
program.
    This example illustrates two stark realities confronting digital 
distance education. First, it is very expensive. The university above 
was prepared to invest $600,000 in a single program; how many 
institutions can contemplate such an investment? Elementary and 
secondary schools, colleges and universities will have to find 
substantial new resources to invest in the computers, networks, and 
applications necessary to support digital educational activities, as 
well as in faculty development, teacher training, and the development 
of courseware and other course materials. Although digital distance 
education may in the future produce genuine economies, in the short run 
the start-up and delivery costs are very expensive, so that all 
institutions are limited by cost in what they can do, and some 
institutions are simply kept out of significant digital education 
activities because of its steep costs.
    The second reality confronted by digital distance education is 
that, even if we find the resources to build the necessary 
infrastructure, digital education will be threatened with second-class 
status unless and until local and remote educational content are 
brought into closer accord. The inescapable fact is that for digital 
distance education to achieve its full potential, instructors must be 
able to conduct remotely all educational activities permitted in a 
physical classroom. Yet consider the university's effort to establish a 
distance education film course. This ultimately abandoned effort 
highlights four key points: (1) the copyright barriers are real, (2) no 
aspect of the proposed program would have possibly threatened anyone's 
market, (3) yet an opportunity to expand a first-class educational 
program beyond its residential boundaries was lost, and (4) if 
legislation such as that which we are considering today had been in 
place, a new distance education film course would be reaching new 
students.
    Licensing is not the solution to copyright barriers. Licensing the 
use of content is slow, costly, and does not permit the instructor 
freedom in the selection of materials for transmission in the digital 
classroom. Further, there is a misperception that an online course is 
developed in advance, so getting permissions is reasonable and 
possible. However, in reality, that is not the case. Faculty members 
frequently supplement the ``core'' course materials ``on the fly'' and 
need flexibility to do so. Requiring licenses will limit the freedom 
for distance education faculty to use materials essential to the 
learning process. Provided that there are proper safeguards, the online 
environment should not be more restricted than the face-to-face 
teaching environment.
    It is these copyright barriers that the Copyright Office addressed 
in its thoughtful 1999 report on distance education. The 
recommendations of the Copyright Office for statutory changes to 
current copyright law would go far toward accomplishing the objective 
stated above of enabling remotely all educational activities permitted 
locally, in a physical classroom. We strongly support the Copyright 
Office report and its recommendations for statutory changes to the 
current copyright law.
    Our reading of S. 487 is that, in the main, it would effectively 
implement the statutory changes recommended by the Copyright Office, 
carefully balancing expansions of the distance education exemption with 
prudent safeguards.
    The following provisions of the bill are particularly important:
     exempting digital transmissions from Section 106 rights to 
the extent necessary to permit such transmissions in the ordinary 
operation of the Internet,
     eliminating the physical classroom requirement for remote 
reception of educational material,
     enabling the asynchronous use of material by permitting 
material to be stored on a server for subsequent use by students,
     expanding the categories of work exempted from the 
performance right to include reasonable and limited portions of 
audiovisual and dramatic literary and musical works, as well as sound 
recordings of the musical works that already are within the scope of 
the exemption.
    We understand the difficulty of achieving full parity between local 
and remote educational activities due to the risks of unauthorized 
reproduction and redistribution of digital content. The Copyright 
Office report addresses these concerns in a forthright and informed 
analysis. In its translation of this analysis into legislative 
provisions, S. 487 would enact a number of safeguards, including:
     limiting transmission of material to students officially 
enrolled in the class,
     limiting the retention of temporary copies,
    limiting the use of materials to circumstances that involve 
mediated instruction in order to assure that materials are used 
remotely as they would be in a classroom,
     requiring the use of technological measures that 
reasonably prevent downstream redistribution, and
     limiting performances of audiovisual works, dramatic works 
and sound recordings to reasonable and limited portions.
    S. 487 translates the Copyright Office recommendations for 
statutory modifications into a carefully bounded but extremely 
important set of legislative provisions that will permit the fuller 
development of digital distance education.
    One major reservation we have with the legislation is its failure 
to include reasonable and limited portions of instructional material 
works in the expanded categories of works exempted from the performance 
right. We understand the concern that such an exemption could threaten 
the primary market for instructional material. However, excluding 
instructional material from the performance exemption will impose a 
serious constraint on the development of distance education. 
Instructional material often will be essential to effectively 
harmonizing the content of local and remote instruction. Moreover, the 
exemption provided by the proposed bill would provide important 
guideposts in license negotiations and would help ensure that all 
educational markets, not merely the one for which a particular 
licensing regime had been developed, will have access to the work.
    One particularly cogent example from my university is teacher 
education. We are newly engaged in the training of teachers online to 
alleviate a significant teacher shortage in the State of Maryland. 
Whether it's training new teachers who are changing careers or training 
current teachers to educate their students in an online environment, 
our effort to provide proper instruction online would suffer from the 
inability to show instructional videos. Especially at a time when the 
need for teachers nationally is so great, it would be advantageous to 
have this bill allow the use of instructional materials in the training 
of teachers.
    We believe that the limitations contained in the bill will provide 
substantial protection for the copyright owner. Accordingly, we urge 
you to consider including instructional audiovisual materials within 
the scope of the exemption.
    We are developing several other suggestions for changes in the 
legislation that would, we believe, make a valuable bill even better, 
and we would appreciate the opportunity to forward such suggestions to 
you in the near future once we have refined those suggestions.
    We also would like to comment on Sec. 4 of the bill. This section 
calls on the Copyright Office to issue a report on licensing of 
copyrighted works in digital distance education programs and the use of 
copyrighted works in such programs, and to convene a conference to 
develop guidelines for use of copyrighted works in digital distance 
education under the fair use doctrine and section 110(1) and (2) of the 
copyright code. A report on licensing and use of copyrighted works in 
distance education that stems from the same thorough, open and balanced 
process that the Office used to produce its excellent report on 
distance education would undoubtedly be useful for Congress and 
external parties, and we support this proposal.
    The legislation calls for the Office to convene a conference in 
order to develop guidelines on the use of copyrighted works in distance 
education, and for the Office, if it deems it appropriate, to submit 
those guidelines to the Senate and House Committees on the Judiciary. 
We are concerned with the presumption that appears to be inherent in 
this process that the conference will develop guidelines. Efforts to 
develop guidelines have proved difficult and controversial. The fair 
use doctrine is inherently-and, in our judgment, wisely-imprecise, 
calling for a judgment on four factors to determine if a use is fair. 
Thus, we would prefer that, if S. 487 is to call on the Copyright 
Office to convene a conference, the conference bring together 
interested parties to discuss the use of copyrighted material in 
distance education, and only if the Office and the conference 
participants deem it feasible, would the conference develop guidelines. 
We note that the section-by-section analysis of the bill describes 
something closer to this preferred process: that the Office would 
convene a conference ``on the subject of the use of copyrighted works 
in education and, to the extent the Office deems appropriate, develop 
guidelines . . . for submission to Congress . . .'' and urge that the 
same approach be included in the text of the bill.
    In closing, I would like to reiterate the importance for the future 
of distance education of allowing the same educational content remotely 
that occurs locally in a physical classroom. Anything short of that 
will doom distance education to second-class status and cripple its 
enormous potential to expand dramatically the educational capacity of 
our nation and its ability to compete in the new world economy. As both 
local and remote educational content increasingly involves new 
multimedia material, the disparity in treatment under current law will 
place a growing burden on digital distance education. Thus, enactment 
of legislation such as S. 487 is imperative to the development of 
distance education and its capacity to expand the boundaries of 
teaching and learning in time, place, content, and category of student.
    We commend you for this bill, and we look forward to working with 
you to add refinements to it and enact it into law.
    Thank you for this opportunity to testify on this important 
legislative and educational initiative.

    Chairman Hatch. Thank you, Mr. Heeger.
    Mr. Adler?

   STATEMENT OF ALLAN R. ADLER, VICE PRESIDENT FOR LEGAL AND 
   GOVERNMENTAL AFFAIRS, ASSOCIATION OF AMERICAN PUBLISHERS, 
                        WASHINGTON, D.C.

    Mr. Adler. Thank you, Mr. Chairman. We appreciate the 
opportunity to appear here today to present the views of 
America's book publishing industry.
    Mr. Chairman, since both you and Senator Leahy, I know, had 
distinguished careers as lawyers prior to coming to the Senate, 
I think you will appreciate our approach in pleading in the 
alternative with respect to this bill. So the first argument we 
will make, knowing that you have already introduced the bill, 
and hearing your enthusiasm for pursuing it, is nevertheless to 
ask you to reconsider whether this is the appropriate time, 
given the condition in the marketplace, for legislation to 
change copyright law.
    We have testified twice, in July 1999 before the House 
Judiciary Subcommittee and again in July 2000 before the Web-
based Education Commission, explaining our views that the 
record and landscape documented in the Register's report did 
not justify a change in copyright law as proposed by the 
Register.
    We believe that the developments in the area of distance 
education since then reaffirm our conclusions with regard to 
that report. First, let me just briefly summarize the reasons 
why we believe this is true.
    Given the fact that the marketplace for distance education, 
as documented in the Register's report, continues to grow at an 
exponential rate and is extremely vibrant and bustling with 
competition and innovation, we don't believe that the Copyright 
Act is really holding back in any serious way the production of 
high-quality digital content and the ability to have that 
content available for use in distance education.
    One has to ask, given the level of investment and 
entrepreneurial activity in this area both by non-profit and 
for-profit entities, including those in the education field, 
how have they been able to be successful in growing this field 
if the Copyright Act was indeed such an obstacle.
    The reason is very simple. These people are able to create 
their own digital content. They are able to digitize 
preexisting public domain materials. They are able to make fair 
use of preexisting third-party works, and they are able to 
obtain licenses for using preexisting third-party works to 
create multimedia and other kinds of works for use in online 
distance education.
    No doubt, there is anecdotal evidence of licensing 
problems, and we are not here to defend those instances where 
license requests have been made and the responses have been 
either unreasonable or what some people in the user community 
might even characterize as abusive. But those problems, too, 
are being addressed, and I would point out to you that in our 
written submission we give examples of the things that many 
publishers are doing to go online with their permissions 
process to make it more convenient for users who want to be 
able to use materials to which they hold copyright.
    Secondly, we believe that the proposed legislation is 
unjustifiable, again, because of the level of activity in the 
marketplace. It is quite clear that distance education is 
growing by leaps and bounds. And again, if that were something 
that would be held back by the restrictions of copyright, I 
think we would have seen more manifestations of that than have 
been documented in the Register's report.
    Third, the proposed legislation unworkable. It is 
unworkable basically for two reasons. One is because the 
Register recognizes that in order to maintain a proper balance 
between the concerns of copyright owners and the user 
community, it is important that any exemption be based upon the 
application of technological safeguards to ensure that after 
legitimate access to work through distance education programs 
occurs, there is no unauthorized further reproduction or 
distribution or other use of those materials.
    The Register's report documented in May 1999 that such 
sophisticated technologies may become widely available in the 
near future, but they are not there yet in a convenient and 
affordable manner that can protect all varieties of works and 
market uncertainties remain. That situation is still true 
today.
    I would also point out to you that in the interim period 
since the report, we have seen other reasons to be somewhat 
dubious about the ability to ensure that proper treatment of 
copyright owners' concerns will be afforded if such an 
exemption is enacted into law.
    For example, in the situation of the Napster phenomenon 
which two Federal courts enjoined as fostering ongoing 
instances of blatant copyright infringement on an unprecedented 
mass scale, it should be noted that this phenomenon was chiefly 
pursued by students using campus-based Internet access and 
computer networks.
    We also are concerned about the aversion and distrust 
directed toward legal prohibitions enacted in the DMCA by the 
education community, as evidenced in their testimony at 
hearings conducted last year by the U.S. Copyright Office on 
the circumvention issue.
    Finally, we are concerned that recent rulings by the U.S. 
Supreme Court and other Federal courts of appeals which have 
barred lawsuits for damages against State entities for 
violations of Federal statutory rights may have eliminated the 
primary incentive for public educational institutions to comply 
with legal standards that protect the rights of copyright 
owners.
    Our other concern in this area is the fact that the 
exemption maintains the 25-year-old application specifically to 
non-profit educational institutions, despite the fact that the 
Register documented 2 years ago, and the market has continued 
to proceed in a way that completely blurs and obliterates the 
distinction between the involvement of non-profit and for-
profit entities.
    Again, as I said at the outset, we are pleading in the 
alternative. Our other argument would be that if you believe 
that it is still, despite these reasons, justified to go 
forward with legislation, we have set forward a number of 
concerns in our testimony that we hope will allow you to revise 
this legislation in a way that will properly balance the 
concerns of copyright owners and the user community so that the 
clever acronym that you have come up with for this legislation, 
TEACH, does not devolve into something that really would stand 
more for the Technology, Education and Copyright Heist Act, in 
the way it would be performed in application.
    We have divided those comments into areas that would affect 
the scope of the legislation, particularly the scope of the 
exemption, who is eligible for applying the exemption, and the 
safeguards that are involved in them. We would be happy to 
answer any questions both today and in writing with respect to 
those particular suggestions.
    [The prepared statement of Mr. Adler follows:]

  Prepared Statement of Allan R. Adler, Vice President for Legal and 
        Governmental Affairs, Association of American Publishers

    Mr. Chairman and Members of the Committee:
    Thank you for inviting me to appear here today on behalf of the 
Association of American Publishers (``AAP'') to discuss S. 487, the 
proposed ``Technology, Education And Copyright Harmonization Act of 
2001'' (or the ``TEACH Act'').
    As the principal national trade association of the U.S. book 
publishing industry, AAP represents some 300 member companies and 
organizations that include most of the major commercial book publishers 
in the United States, as well as many small and non-profit publishers, 
university presses and scholarly societies.
    AAP members publish hardcover and paperback books in every field of 
human interest. Among these members are the nation's leading trade 
publishers, who produce a wide array of fictional and non-fictional 
literary works that include the ``best sellers'' enjoyed by millions of 
readers of all ages and backgrounds. Also among them are the nation's 
leading educational publishers, who produce textbooks and other 
instructional and testing materials covering the entire range of 
elementary, secondary, postsecondary and professional educational 
needs.
    While continuing to serve market demands for paper-based books and 
journals, many AAP members now operate Internet websites and produce 
computer programs, databases, multimedia products, and other electronic 
software for use online and in other digital formats. Many are also 
making substantial investments in the nascent ``e-book'' market, where 
the reader's use and enjoyment of all kinds of literary works may be 
greatly enhanced through the added functionality that books in digital 
formats can offer when read on computer screens or through hand-held 
personal digital appliances.
    Many AAP members are vigorously responding to the popular embrace 
of the Internet as an exciting new commercial and educational medium. 
They understand the medium's unprecedented capabilities for flawless 
and instantaneous reproduction, distribution, performance and display 
of text, images and sounds on a global basis. Like other media 
industries, book publishers are rethinking and revising their business 
models to adjust to the opportunities and risks created by these 
capabilities in a marketplace of increasing competition and evolving 
consumer preferences. Confidence in their ability to exploit and 
enforce copyright interests in the digital online environment is a key 
factor in shaping these new business models.
 Original AAP Objections to the Register's Recommendation: Still Valid 
                                 Today
    The proposed legislation before the Committee today is based on the 
legislative recommendations contained in the Register of Copyright's 
May 1999 ``Report on Copyright and Digital Distance Education.'' That 
report critically evaluated the educational community's assertions that 
``outdated'' provisions of copyright law, as well as extant copyright 
licensing practices and the deployment of technological protection 
measures by copyright owners, would hold back the development of 
Internet-based ``distance education'' unless Congress took action to 
mitigate their impact.
    In July 1999 before the House Judiciary Subcommittee on Courts and 
Intellectual Property, and again in July 2000 before the 
Congressionally-mandated Web-Based Education Commission, AAP reviewed 
the state of Internet-based ``distance education'' as documented in the 
Register's Report and concluded that the Register's recommendations to 
amend current copyright law were (1) unnecessary to ensure the 
availability of diverse, high-quality online educational programs; (2) 
unjustifiable in the face of the bustling marketplace for the 
production of digital content; (3) unworkable insofar as they were 
contingent upon the deployment of technological safeguards not yet 
widely-available in the marketplace; and (4) unfair insofar as they 
ignored the exploding competition, collaboration and consolidation 
among for-profit and not-for-profit providers of online education 
programs.
    Moreover, since no one has been advocating that Congress should 
enact legislation eliminating the need to pay for computers, software, 
Internet access, faculty salaries, costs of administrative personnel, 
and tuition in connection with online education programs, the AAP 
questioned why the costs of course content and, therefore, the 
copyright owners who create and produce them--should stand alone among 
the necessary elements of online educational programs as exempt from 
payment of fair market prices for the value they provide in the 
competitive ``distance education'' marketplace.
    Today, faced with Congressional consideration of proposed 
legislation embodying the Register's legislative recommendations, AAP 
maintains that the objections it raised and the question it asked in 
response to previous consideration of the Register's recommendations 
remain valid.
    The proposed legislation is unnecessary--Although the ``distance 
education'' provision in Section 110(2) of the Copyright Act was 
written for instructional broadcast television, and does not really 
apply to Internet-based online education, current copyright law 
nevertheless provides adequate bases for the creation and acquisition 
of online digital content. In fact, the admittedly limited scope of the 
existing statutory exemption for ``distance education'' has been 
largely irrelevant to the growth of the marketplace because, in most 
instances (as documented in the Register's Report), providers of online 
educational programs are able to:
     create their own digital content;
     digitize preexisting ``public domain'' materials;
     make ``fair use'' of preexisting third-party works; or,
     obtain licenses to use preexisting third-party works.
    While the Register's Report noted anecdotal evidence of licensing 
problems ``primarily involving difficulty in locating owners, inability 
to obtain a timely response, and unacceptable terms,'' it rejected any 
need for a legislative solution; concluded that many of these problems 
``should diminish with time and experience;'' and recommended ``giving 
the market for licensing of nonexempt uses leeway to evolve and 
mature.'' (p.164-167).
    Although some licensing problems are still encountered in today's 
marketplace, substantial progress toward making the licensing process 
more convenient and comprehensible for both parties has occurred since 
the Register's Report was issued. Recent actions reported by AAP 
members bear out the Register's prediction that such problems will 
continue to be addressed as the marketplace evolves and matures. For 
example:
     Houghton Mifflin's College Division has upgraded its 
Permissions Department's website so customers can submit permission 
requests by using online ``fill-in-the-blank'' forms or downloading PDF 
templates to fill out and submit by fax. At the same time, the College 
Division is conducting a pilot program with Copyright Direct, a 
permissions tool of Yankee Rights Management that permits users to 
obtain real-time permissions online. The College Division is also 
working with Reciprocal, a ``secure system'' provider for granting and 
holding permissions, which also provides ``secure containers'' that 
permit rights and permissions information to be carried online with the 
content to which its relates.
     Pearson Education's Prentice Hall subsidiary has 
established a ``Companion Website Gallery'' which provides descriptions 
and links for an array of textbook-supporting websites that correlate 
additional learning activities with specific college textbooks. In 
addition, like several other AAP members, it has contracted with 
NetLibrary, an online provider of e-books, to make some of its college 
texts available for online access with full-text search capabilities. 
Computer Curriculum Corporation, a separate division of Pearson 
Education, also offers CCC Destinations Internet, a comprehensive 
online learning program that permits remote delivery of customized, 
essential skills education for adolescent and adult learners in 
community colleges, correctional education programs, and public housing 
education programs.
     Elsevier Science has established ScienceDirect, an online 
current awareness service with a ``click-through'' license that allows 
institutional subscribers to their print journals to have free remote 
online access to the most recent twelve months of journal issues on a 
rolling basis. If the subscriber allows all or selected members of the 
public to access its collections, the license allows such persons to 
access the journals online from workstations in the institutional 
facility.
     Thomson Learning's Global Rights Group has established a 
website for online evaluation and disposition of permission requests 
for all Thomson Learning Higher Education and Lifelong Learning 
companies. The website cannot be used to order and purchase materials, 
but provides for the use of online permission request forms and a 
``Lookup'' status check button for all materials produced by Thomson 
Learning's ten higher education companies.
     Harcourt College Publishers, one of Harcourt General's 
higher education companies, has established an Online Learning Center 
that utilizes the WebCT platform to deliver courses customized by 
instructors to accompany many of its main textbooks. Its Custom 
Publishing operation allows instructors to request modifications to the 
company's own products, including removal of excess chapters, addition 
of instructor materials, institutional personalization, and the 
combination of several products into one. Archipelago Productions, 
another Harcourt higher education company, which develops multimedia 
courseware for distance and distributed learning, has announced 
alliances with WebCT and Blackboard, Inc., both well-known providers of 
online education platforms, to deliver Archipelago's Online Courses in 
a hybrid ``netCD'' environment that leverages CD-ROM and Internet 
technologies to feature the presentation benefits of CD-ROMs and the 
interactivity of Web browsers embedded into the disks.
     Wiley InterScience is an online journals service through 
which John Wiley & Sons, a leading scientific publisher, allows all 
users to browse and search Tables of Contents of all of its journals 
online, and obtain online access to abstracts for all of its titles. 
Depending on the type of subscriber, the service can also offer online 
access to the full text of all subscribed journals.
    The proposed legislation is unjustifiable--Proof that current 
copyright law has not produced what the Register would have called a 
``dysfunctional market'' for the provision of online educational 
content was affirmed by the Register's own characterizations of that 
marketplace, including the following:
    Distance education in the U.S. is ``a vibrant and burgeoning 
field'' which the advent of digital and other new technologies for 
delivery has made ``the focus of great creativity and investment.'' 
(p.1)
    ``[T]he expanded audiences for these programs represent a 
potentially lucrative market, which the varied participants in the 
process, including both corporations and educational institutions, are 
seeking to tap.'' (Id.)
    ``[D]igital technologies have fostered a rapid expansion in recent 
years, as well as a change in profile [in which] many more distance 
education courses are being offered than ever before, and the number is 
growing exponentially.'' (p.9)
    ``Today's distance education courses use digital technology 
extensively for varied purposes and in varied ways. The addition of 
digital technologies to the distance education palette has produced new 
models of learning, resulting in a richer and more interactive class 
environment.'' (p.13)
    The continuing vigor of the Internet-based ``distance education'' 
marketplace was reaffirmed more than a year after the issuance of the 
Register's Report when the Web-Based Education Commission, in December 
of last year, reported that many private-sector providers are now 
shifting from producing content to aggregating instructional 
information and acting as ``portals'' for other content-based 
resources. Paradoxically, it also noted that, unless state and local 
educational agencies ``create significant demand for innovative online 
learning materials, it may not be economically feasible for many online 
education content providers to stay in business.'' (The Commission, 
which received testimony from the Register of Copyrights and other 
proponents of ``updating'' the copyright laws to facilitate Internet-
based education, noted the anecdotal record of asserted problems, but 
did not urge legislative action to amend the copyright laws.)
    The proposed legislation is unworkable--While the Register 
recognized that an ``updated'' exemption must be conditioned on the 
application of effective technological safeguards in order to ensure 
that the balance of interests between copyright owners and users of 
works would be ``comparable'' to what Congress had carefully crafted 
into the existing exemption, this key element of the Register's 
recommendation was effectively undercut by the Register's observation 
that:
     ``Sophisticated technologies capable of protecting content against 
unauthorized post-access use are just now in development or coming to 
market, and may become widely available in the near future. But they 
are not there yet in a convenient and affordable form that can protect 
all varieties of works, and market uncertainties remain.'' (p.141)
    This situation has not substantially changed since the Register's 
Report was issued in May 1999. At present, no one really knows the 
costs or other burdens involved in implementing the technological 
measures requirement in the proposed legislation. But, even if the 
necessary technological safeguards were widelyavailable in ``a 
convenient and affordable form'' in today's market, copyright owners 
have, in the period since the issuance of the Register's Report, 
acquired some legitimate reasons to entertain doubts about the 
willingness of many ``non-profit educational institutions'' to take on 
the full costs and responsibility of good-faith compliance in their 
implementation. Some of these reasons are based on the extent to which 
the Napster phenomenon, which two federal courts have enjoined as 
fostering ongoing instances of blatant copyright infringement on an 
unprecedented mass scale, has been chiefly pursued by students using 
campusbased Internet access and computer networks. Others may be based 
on the evident aversion and distrust directed toward legal prohibitions 
against circumventing such technological safeguards by representatives 
of the higher education community in hearings conducted last year by 
the U.S. Copyright Office. Still others may be based on the fear that 
recent rulings by the U.S. Supreme Court, which have barred lawsuits 
for damages against State entities for violations of federal statutory 
rights, have eliminated the primary incentive for public educational 
institutions to comply with legal standards that protect the rights of 
copyright owners.
    The proposed legislation is unfair--The Register's proposed 
retention of the existing exemption's application to ``nonprofit 
educational institutions'' cannot be squared with the realities of the 
online education marketplace where, based on the following unequivocal 
finding by the Register, it would create unfair and unjustifiable 
inequities among providers of distance education programs:
    ``While mainstream education in 1976 was the province of nonprofit 
institutions, today the lines have blurred. Profit-making institutions 
are offering distance education; nonprofits are seeking to make a 
profit from their distance education programs; commercial entities are 
forming partnerships with nonprofits; and nonprofits and commercial 
ventures are increasingly offering competitive products.'' (p.152-153)
    In order to appreciate the continuing validity of this finding, 
consider the explosion of entrepreneurial activity involving the higher 
education community's own efforts to create and market online education 
courses. For example, the following developments occurred after the 
issuance of the Register's Report, as reported in weekly editions of 
the Chronicle of Higher Education last year:
     A for-profit company, Final-Exam.com, announced plans to 
sell Webbased study guides for survey-level college courses, using 
textbook authors and other scholars to edit and market them with the 
option of customization by professors from their own syllabi. (January 
14, 2000)
     Following the examples of New York University, Columbia 
University and the University of Maryland University College, Cornell 
University announced creation of a for-profit subsidiary, ``eCornell,'' 
to market its online courses and materials online. (March 24, 2000)
     Together with five other leading educational and culture 
institutions, Columbia University announced the creation of a for-
profit subsidiary, ``Fathom,'' to operate a website for marketing their 
respective ``authenticated'' original scholarly resources online. 
(April 14, 2000)
     Following the lead of Stanford University's NextEd portal, 
Class.com, a for-profit subsidiary of the University of Nebraska at 
Lincoln, will be selling its online course content for high-school 
programs internationally, with eventual conversion of the content ``to 
account for cultural differences.'' (May 5, 2000).
     Rupert Murdoch's News Corporation has entered a joint 
venture with Universitas 21, a network of 18 universities, to market 
custom-designed academic programs online to working college students. 
(June 2, 2000)
     Cognitive Arts, a for-profit entity, is working with 
Harvard Business School Publishing, a nonprofit subsidiary of the 
business school, to market online courses to entering students and to 
other business schools and corporations. (June 9, 2000)
    For all of these reasons, AAP concludes that, regardless of the 
good intentions underlying the Register's legislative recommendations, 
they were clearly at odds with the accompanying findings and 
observations based on the evidentiary record compiled by the Register. 
And, on the specific points discussed above, developments in the 
marketplace since the Register's Report was submitted to Congress in 
May 1999 continue to undercut the recommendations, inasmuch as the 
requisite post-access technological protection measures are still not 
yet generally available for deployment in a convenient and affordable 
manner, and the ``for-profit'' v. ``non-profit'' distinctions among 
providers have--for all practical purposes--been all but obliterated in 
the marketplace.
    Issues Regarding Specific Provisions in the Proposed Legislation
    However, in the event that this Committee rejects the arguments 
presented by AAP and decides to seek enactment of legislation embodying 
the Register's proposed amendments to the Copyright Act, AAP would urge 
Congress to revise S.487 so that, in practical application, the helpful 
``TEACH Act'' acronym does not come to represent the ``Technology, 
Education And Copyright Heist Act.''
    To this end, we request that the following considerations should be 
clarified or otherwise explicitly embodied in the legislation:
    1. The complete exclusion of works ``produced primarily for 
instructional use'' (p.2, lines 7-8) from the scope of Section 110(2), 
as it would be amended, is absolutely essential to ensure, as the 
Register's Report noted, that the exemption does not ``significantly 
cut into primary markets [of educational publishers], impairing 
incentives to create.'' The exemption should not cover such works, and 
this exclusion should not be limited, conditioned or qualified in any 
way.
    2. The exemption, as it would be amended, should be applicable only 
to an accredited ``nonprofit educational institution'' pursuant to 
established standards for accreditation in the relevant educational 
field. In keeping with the Register's emphasis on tying the exemption 
to the concept of ``mediated instruction'' (i.e., described in the 
Register's Report as ``the type of performance or display that would 
take place in a live classroom setting... a use of the work as an 
integral part of the class experience, controlled by the instructor, 
rather than as supplemental or background information to be experienced 
independently ''), the exemption should not apply to libraries, 
archives, scholarly societies, or ``think tanks'' because the 
activities of these entities generally do not constitute ``mediated 
instruction.''
    3. The ``display of a work'' (p.2, line 16) should be qualified, as 
is the performance of ``any other work'' (p.2, line 15), by the phrase 
``reasonable and limited portions'' (or, better still, ``reasonably 
limited portions '') so that it is clear the exemption does not permit 
such works to be displayed online in their entiret . In a recent 
submission to the U.S. Court of Appeals for the Second Circuit in its 
consideration of New York Times v. Tasini, the Register of Copyright 
explained that, even in the preInternet world of 1976, Congress 
anticipated that the newly-established ``display'' right could displace 
traditional means of reproduction and delivery of copies in the context 
of information networks, and understood that the ``display'' of a work 
online ``could eventually provide libraries and individuals throughout 
the world with access to a single copy of a work by transmission of 
electronic images.'' Although this realization had little significance 
in 1976, when Congress was creating an ``instructional broadcast 
television'' exemption from the display right, the expansion of that 
exemption to cover that right in the context of interactive digital 
networks could have extraordinary repercussions for the display of 
works which are--not excluded from the exemption as works ``produced 
primarily for instructional use.'' For example, trade books in 
electronic formats would be vulnerable to the broadest claims of 
exemption, so that online courses in contemporary fiction or classic 
20t'' century literature could allow readers to consume entire ``best 
sellers'' or a publisher's most valuable backlist properties in the 
guise of ``distance education''--cutting directly into the primary 
markets for ``e-books.'' Congress must recognize the new implications 
of ``displaying'' a textual work or database online, and limit them 
accordingly, consistent with the limited purpose in amending the 
exemption. In essence, this would permit a ``fair use'' display of the 
work online, consistent with the reasonable expectations of both the 
copyright and user communities. The failure of Congress to recognize 
the importance of this issue could have dire consequences for the 
nascent ``ebook'' market and for such diverse new related services as 
those provided by netLibrary (www.netlibrary.com), Ebrary 
(www.ebrary.com), Questia Media (www.guestia.com/guestia.html) and 
others. If, as in the case of a photograph, painting or even a short 
poem, Congress believes it is appropriate and not a danger to the 
copyright owner's rights to permit the online display of the entire 
work, these considerations should be explicitly delineated in the 
exemption (e.g., perhaps through reference to codified terms such as 
``graphic, pictorial or sculptural works''). (See further discussion 
below regarding the ``class session'' language on p.3, line 2).
    4. The statutory language should make clear that the exemption, as 
it would be amended, applies only to copies of a work that are already 
in digital form, and does not authorize the digitization, for example, 
of a print book through scanning (which would involve the exercise of 
the ``adaptation'' right). We understand this is the Register's 
intention as embodied in the explicit, limited authority under Section 
112 of the Copyright Act, as it would be amended, to make copies 
``embodying the performance or display to be used for the purpose of 
making transmissions authorized under Section 110(2).'' However, the 
lack of authorization to digitize should be made explicit in the 
statutory language.
    5. In addition to the requirements that the ``transient copies'' 
authorized under Section 110(2), as it would be amended, must be 
``created as part of the automatic technical process of a digital 
transmission'' (p.2, lines 18-19) and ``retained for no longer than 
reasonably necessary to complete the transmission'' (p.3, lines 15-17), 
the exemption should explicitly require that such copies must be non-
accessible and secure against interception or reproduction. This will 
make the treatment of ``transient copies'' under this section more 
consistent with the treatment of such copies under Section 512 of the 
Copyright Act.
    6. It is our understanding that, consistent with the previous 
discussion of the ``mediated instruction'' concept in point 2 above, 
the language on p.3, line 2 referring to ``an integral part of a class 
session'' is intended to ensure that the online display of a work 
pursuant to the exemption, as it would be revised, is limited to 
reasonable portions of such work as would be used in a typical, off-
line live class setting, rather than the entire work. This should be 
clarified by amending the cited phrase to refer to something like ``an 
integral part of a class session, and in no larger portion than might 
reasonably be expected to be used in a single such session. . .'' Once 
again, the point is to generally bar the online display of a work in 
its entirety.
    7. With respect to the requirements in paragraph (E) concerning the 
``policies regarding copyright'' which must be instituted by the 
transmitting body or institution, a requirement should be added for 
adoption of a policy and procedure regarding termination of those who 
abuse this exemption to engage in repeated copyright infringements, and 
to require that those who rely on this exemption must affirmatively 
respond to ``standard technical measures'' of the kind used to protect 
copyright and referred to in Section 512(i) of the Copyright Act. 
Congress should also compare the requirement to ``provide informational 
materials to faculty, students, and relevant staff members that 
accurately describe, and promote compliance with, the laws of the 
United States relating to copyright'' to a similar requirement for 
universities seeking to limit their liability for copyright 
infringement under Section 512(e)(1)(C) of the Copyright Act, and 
assess compliance with the latter requirement.
    8. With respect to the requirement to apply ``technological 
measures'' on p.4, line 5, the legislation should clarify what is 
intended by the phrase ``reasonably prevent'' and should provide some 
objective criteria for evaluating compliance. In addition to 
``unauthorized access to and dissemination of the work,'' the provision 
should require that such measures must also ``reasonably prevent'' 
unauthorized downloading, printing or otherwise copying of the work as 
well. In its current form, the proposed legislation provides no 
mechanism or standard for enforcing the requirements relating to 
technological measures, or any other requirements of the exemption, as 
it would be amended. The requirements are meaningless without a 
meaningful capability to enforce them.
    9. The requirement at p.4, lines 8-10, to ensure that the 
transmitting body or institution ``does not intentionally interfere 
with technological measures used by the copyright owner to protect the 
work'' sets an impossibly high evidentiary standard for proving 
violations. The word ``intentionally'' should be deleted from the cited 
phrase to establish an affirmative obligation to not interfere; if this 
is unacceptable to Congress, then, at a minimum, the requirement should 
be amended to require that the body or entity ``do nothing that 
reasonably could be expected to interfere'' with such measures. This 
would at least provide an objective standard by which to assess 
compliance.
    10. In addition to the requirements already in the proposed 
legislation, State entities that assert the exemption, as it would be 
amended, should be considered with respect to such transmissions to 
have waived their Eleventh Amendment sovereign immunity for purposes of 
any related copyright infringement lawsuit concerning the transmitted 
performance or display of a copyrighted work. Without such a 
requirement, such entities may feel little obligation to comply with 
the ``technological measures'' or other limiting requirements of the 
exemption, given their current immunity from damage suits for copyright 
infringement under recent Supreme Court rulings.
    11. With respect to the U.S. Copyright Office's implementation of 
requirements for a report and conference under Section 4 of the 
proposed legislation, it would be appropriate to add such matters as 
the treatment of technological measures in digital distance education 
programs and other matters of concern to copyright owners with respect 
to such programs, so that implementation is based on a balanced 
examination of the concerns of owners and users of copyrighted works in 
digital formats.

                               CONCLUSION

    As documented in the Register's Report and through subsequent 
developments during the past year, the marketplace for producing high-
quality content for Internet-based higher education programs is a 
diverse, dynamic and expanding world of evolving experimentation, 
collaboration and innovation. Rapid technological change is producing 
revolutionary rethinking of business and academic models, related 
institutions, and the whole educational enterprise.
    While providers may occasionally have problems with copyright and 
related licensing issues, these instances are the by-product of 
marketplace ``growing pains,'' rather than the result of inadequate 
copyright law, and have in no way denied Internet providers of higher 
education the opportunity to produce exciting new educational 
experiences for a broad range of students through digital technologies.
    If Congress is looking for ways to ensure the availability of high-
quality digital content for Internet-based ``distance education,'' AAP 
believes that it should express its largesse through the provision of 
funding, tax credits and other financial means of support to various 
public and private entities for the production and acquisition online 
educational content. Otherwise, there is ample time and reason to let 
the flexibility of the marketplace, with the inherent checks and 
balances of competition, work out continuing copyright and content 
quality issues without the intrusion of government mandates. As long as 
legal copyright protections are adequate to meet the needs of such new 
applications, AAP believes that policy-makers can look to the 
marketplace to solve most other problems.
    If, however, Congress determines to go forward with legislation 
based on the Register of Copyright's recommendations regarding the 
revision of Sections 110(2) and 112 of the Copyright Act, AAP urges 
Congress to make the clarifications discussed above and to call upon 
the AAP for assistance in ensuring that the resulting legislation 
properly balances the interests of owners of copyrighted works with 
those of the users of such works.

    Chairman Hatch. Thank you so much.
    Mr. Siddoway, we will turn to you.

 STATEMENT OF RICHARD M. SIDDOWAY, PRINCIPAL, UTAH ELECTRONIC 
               HIGH SCHOOL, SALT LAKE CITY, UTAH

    Mr. Siddoway. Thank you, Senator Hatch, Senator Leahy.
    Utah's Electronic High School began as a brain child of 
Governor Michael Leavitt about 8 years ago, and during the last 
6 years we have brought it into partial fruition. We serve four 
major groups of students: those who have failed a class and 
want to make up credit, those who wish to take classes they are 
unable to take at their local high schools, those who wish to 
take extra credit and graduate early, and those who are home-
schooling.
    We deliver in three basic ways: broadcast television to PBS 
channels that public education owns time on; on a two-way voice 
video data system called EDNET--there are about 200 EDNET 
studios at 165 locations across the State; all of the public 
universities, colleges, applied technology centers, and most 
high schools have them--and then on the Internet. The classes 
that are delivered on both broadcast television and the EDNET 
system are synchronous in nature with definite beginning and 
ending dates. The Internet courses are not for the most part. 
It has grown significantly in the 6 years.
    In concert with that--and I have more of that in the 
written testimony, but in concert with that we have also begun 
delivering college and university courses across the State, and 
that has grown, as Mr. Adler suggested, fairly exponentially in 
the last few years. Last year, some 8,000-plus students across 
the State had their courses delivered to them through distance 
learning.
    Now, we are in perfect congruence with what Ms. Peters said 
concerning the regulations that should be in place. We believe, 
just as we have in face-to-face instruction, we should have any 
of this material an integral part of the curriculum. The only 
thing we would like to do is to be able to distribute it in a 
distant learning situation.
    All of our classes are controlled to access. There are 
password controls on the Internet. Obviously, in an EDNET 
situation you have to be in a place where there is an EDNET 
studio. Even the broadcast television courses--in order to 
obtain credit, you have to have registered through a university 
and through a high school, most of them being concurrent 
enrollment.
    So we encourage the adoption of the TEACH Act. It would 
free us to enhance the courses that we are offering across the 
State of Utah. In 11 months, Utah will welcome the world with 
the 2002 Olympics. With the Electronic High School, we have 
begun welcoming the world already. Our most distant student is 
in Ulan Bator, Mongolia.
    We appreciate the work that you are doing.
    [The prepared statement of Mr. Siddoway follows:]

    Prepared Statement of Richard M. Siddoway, Principal of Utah's 
                         Electronic High School

    Utah has a unique demography. Of the two and one quarter million 
residents, nearly 85% reside in an area called the "Wasatch Front," 
which is a narrow strip of land between the west slope of the Wasatch 
Mountains and the shores of the Great Salt Lake and Utah Lake. Salt 
Lake City, Ogden, Provo, and the cities and towns between comprise this 
area of the state. Conversely, the other fifteen percent of the state's 
population are distributed over 90% of the state's area. The original 
mission of distance learning in Utah was to serve that widely dispersed 
rural population.
    With that population in mind, Governor Michael Leavitt proposed 
that Utah develop an electronic high school that would deliver all of 
the secondary curriculum throughout the state. The nine state operated 
colleges and universities were likewise charged to deliver courses to 
rural Utah. However, it quickly became obvious that Wasatch Front 
students were also able to benefit from electronic delivery.
    The Electronic High School serves four major groups of students: 
those who have failed a class and need to make up credit, those who 
wish to take a class not offered at their school, those who wish to 
take additional classes to accelerate graduation, and those who home 
school. We deliver our courses using three different media: broadcast 
television, a two-way voice/video/data system (EDNET), and over the--
Internet,
    The broadcast television courses are generally concurrent 
enrollment courses where students earn both high school and college 
credit concurrently, They are taught by college or university 
personnel. These classes are synchronous--that is, they have a definite 
starting date and stopping date.
    The EDNET courses are delivered either by microwave, T-1 line, or 
fiber optic line to about 200 studios in 165 high schools, applied 
technology centers, colleges, universities, and a few scattered 
additional sites. A typical studio has two or more television sets, two 
or more cameras, a computes, and a tax machine. The teacher is located 
in one studio and students are located in two or more other EDNET 
locations. These classes are also synchronous.
    The internet classes are typically asynchronous. Students may begin 
on any given day and work at their own pace. There are a few 
exceptions, such as our English courses that begin each eight weeks in 
order to keep a cadre of students together for interaction. By 
September of this year we will have all thirty secondary core courses 
available with twenty additional courses under development.
    All of these services travel through the Utah Education Network 
(UEN) facilities housed at the Eccles Broadcast Center on the 
University of Utah campus. UEN also handles High Education's electronic 
traffic.
    Higher education's delivery of classes differs froze the Electronic 
High School in. a significant way. They are delivering distance-
learning courses for original credit only. With only nine state-
supported colleges and universities, the distance-learning network 
reaches into remote areas of Utah with great success. Utah State 
University has an extensive network of distance-learning satellite 
reception sites that have been positively augmented with EDNET studies. 
Bait Lake Community College, Utah Valley State College (Provo/Orem), 
and Southern Utah University (Cedar City) have begun aggressively 
producing Internet delivered classes





The numbers of students served during the
 past academic year include:
The Electronic High School................  37 broadcast television
                                             classes
                                            168 EDNET classes
                                            12 Internet classes

Total enrollment--32,000 credits
 (equivalent to a 4,600 student high
 school)
Higher Education..........................  35 broadcast television
                                             classes
                                            233 EDNET classes
                                            181 Internet

Total enrollment..........................  8,134 students



    Each of the courses taught, whether in public or higher education, 
is comprised of a finite number of students with access to the class 
controlled by password or student enrollment--Students who take classes 
delivered by broadcast television must enroll with a college or 
university in order to have credit recorded. Similarly, they must have 
received permission from a high school counselor in order to receive 
high school credit.
    Students who enroll in EDNET courses must have access to an EDNET 
studio. The numbers of students enrolled are similar to those in a 
face-to-face teaching situation.
    Students who enroll in internet courses go through a password-
protected portal to enter the class. The numbers are controlled and 
access to materials limited by the teacher.
    The benefits of distance learning are many and varied. Perhaps the 
most significant benefit is the availability of courses to students who 
live in remote areas of the state. An example would be West Desert High 
School in Trout Creek, which has a total 7th through 12th grade 
population of 29. Although this school does not have a level-4 licensed 
math teacher, every senior was able to take calculus last year through 
distance-learning.
    The Electronic High School is developing foreign language courses 
in Spanish, French, German, Japanese, Russian, and Arabic. Each of 
these courses draws on native speakers who can be accessed over the 
internet, The Navajo Nation is also developing courses in the Navajo 
language that well be accessible electronically.
    Distance education levels the playing field for students across the 
state. It does not matter whether they are in a densely populated urban 
area or a sparsely populated rural. setting, every class is available 
to them
    The flexibility we .rseod i.s to be a.ble to treat each distance 
learning class as if it is, in fact, face-tofare anstmction with the 
earns fair use guidelines we enforce in traditional classrooms. We are 
fully in support of S. 487.

    Chairman Hatch. Well, thank you, Mr. Siddoway. We 
appreciate you.
    Mr. LeBlanc?

    STATEMENT OF PAUL LEBLANC, PRESIDENT, MARLBORO COLLEGE, 
                       MARLBORO, VERMONT

    Mr. LeBlanc. Mr. Chairman, Mr. Leahy, thank you for the 
opportunity to offer testimony on the TEACH Act.
    I would like to just offer a little bit of brief background 
on Marlboro College. We have used distance education to reach 
beyond our relative remoteness, our geographical remoteness, to 
create and extend programs in ways unimaginable to us just 10 
to 15 years ago.
    We offered the country's first e-commerce degree program 3 
years ago, and have since expanded to work with engineers and 
educators. We offer a combination of wholly online programs and 
hybrid programs, programs that ask students to work online with 
their instructors for 2 weeks at a time and then travel to 
Vermont. We just returned from Europe, where we are about to 
pilot a new program that will simultaneously serve learners in 
Europe, the Middle East, Africa, and India at the same time.
    Our distance learning programs and activities have also 
become the core of a number of other important initiatives in 
southern Vermont, including a new technology incubator and work 
in open source courseware. One of the great strides really in 
the last 10 years in distance learning has been the creation of 
extremely powerful online learning environments, and one of the 
things that makes those learning environments as powerful as 
they are is the ability, in combination with broader bandwidth, 
to offer rich media to students at a distance.
    Turning to the specifics of the TEACH Act, we applaud the 
elimination of current eligibility requirements having to do 
with physical classrooms. The essential and core benefit of 
distance education is to free learners from traditional 
constraints of time and space.
    Our students come to Marlboro every other weekend, and in 
the intervening 2 weeks they are widely and geographically 
distributed. They go online at a variety of times. They do it 
from a variety of places, including their offices and often at 
home, at night, when the kids are tucked in, the dishes are 
picked up, and they finally can turn to their learning 
experience.
    To the extent that distance education can help us control 
the cost of higher education, an ongoing issue, insisting on 
the provision of physical classrooms for online delivery is 
simply out of step with how it happens and it is simply out of 
step with any attempt to try to control those costs.
    The second proposal of the TEACH Act that we would like to 
address has to do with transmission. The proposal seems to us a 
common-sensical response to some basic tenets or facets of 
network topography. Our students at any given time are working 
from home, as I mentioned before, and for them to download 
material, that material literally hits in some cases thousands 
of servers, passing their way through the network until they 
arrive at the student's own computer and cache.
    We see no basic threat to copyright in this basic condition 
of how networks operate. Caches are routinely flushed. As many 
of you know, servers are often maintained and flushed on a 2-
hour basis. In combination with the use of portions of rich 
media materials, which is pointed out later, and also the fact 
that most of our providers have access passwords--we are 
protecting our markets in some ways, and the combination of 
those aspects, we think, serve to address the concerns of 
copyright owners in this matter.
    The exemption regarding the use of various media is also 
extremely important to us. We certainly respect the anxiety 
that copyright owners feel over control of their properties, 
but we see no legitimate threat in the regular use of portions 
of those materials for the purposes of instruction.
    We have had any number of examples in our own work where we 
have come up against what we think are too rigid restrictions 
on use. For example, a few years ago, in teaching a Shakespeare 
class we had students creating multimedia presentations on a 
number of plays. In one case, a student wanted to use 15 
seconds from Kenneth Branaugh's ``Henry V.'' It took us almost 
2 weeks to track down the right person with whom to speak, and 
when we finally had that conversation they reported back to us 
that it would cost the student $2,000 for a one-time use of 
that video.
    More recently, we have a student in our graduate class who 
has done a wonderful presentation for a marketing online 
course, but could not share that with his students in a study 
group because, again, he had to wait until they arrived on 
campus 2 weeks later. I would like to show it to you very 
quickly, and I will show you the piece that was in question.
    [Video shown.]
    Mr. LeBlanc. The approximately 8 seconds of audio you heard 
was the audio in question. We could not use it in the 
instructional setting. We think that no reasonable even 
practiced Napster user would be interested in such a short clip 
from a popular piece of music.
    At the K-12 level, I think the issue is even more pressing. 
We have students working in a master of arts in teaching 
program, and in one case a teacher of a graduate student who 
wanted to use a small portion of the Magic School Bus program 
tried to track down licensing, in this case had to turn to the 
MPLC, and in this case the fees were between $2 and $8,000, 
depending on the length of the clip.
    By the way, again, the interaction took more than 2 weeks 
and really mitigates against any timely and responsive 
instruction for classroom teachers. We think this is a 
tremendous issue, actually, in K-12, a more pressing issue.
    Lastly, we would like to turn to and applaud the 
reiteration of the Kerrey Commission's call for agreed-upon 
guidelines for fair use of digital materials.
    Senator Leahy [presiding]. Mr. LeBlanc, I don't want to 
interrupt, but we are going to have votes scheduled. I don't 
want to cut into Mr. Carpentier's time.
    Mr. LeBlanc. The last piece, only that we do see a need for 
clarification on this. We do believe there are many good 
resources available. We use them in training our own teachers. 
They exist at the college level. They don't exist in K-12.
    Thank you.
    [The prepared statement of Mr. LeBlanc follows:]

 Prepared Statement of Dr. Paul LeBlanc, President, Marlboro College, 
                              Marlboro, VT

    Thank you Mr. Chairman, Senator Leahy.
    I'd like to begin with some background on the Graduate Center of 
Marlboro College, an innovative branch of our institution that provides 
internet-based curriculum to working professionals.
    Three years ago, we introduced the first e-commerce degree in the 
nation, followed quickly by two additional graduate programs for 
engineers and educators. In addition, we're preparing to launch a 
wholly online Internet Teaching Certificate program that will target K-
12 teachers specifically. Given our programming, the proposed TEACH 
legislation is of great interest to us and we applaud your extensive 
work with the Office of Copyrights to enact these minor changes that 
will so greatly expand what our students are able to accomplish in 
their studies.
    Other activities of The Graduate Center have included innovative 
partnerships and software development to foster a richly-interactive, 
comprehensive virtual learning environment.
    The software environment that our designers have created is capable 
of supporting rich media; however, it is currently underutilized due to 
the prohibitive expense and paperwork involved in licensing and 
distributing copyrighted materials for use in distance instruction.
    I'd like to pause for a moment to address the technological aspects 
of transient copies. As many of you know, a network server must send 
digital packets to literally hundreds of servers before it reaches the 
intended recipients through the world wide web. However, servers that 
receive intermediate copies routinely have their memory cache flushed, 
the remnants of those data are often incomplete, and if the proposed 
amendments are approved, at best, ``hackers'' would obtain unauthorized 
access to small excerpts of rich media, which, out of the context of 
instruction, are essentially so devoid of value as to be an 
insignificant threat to primary markets for the source materials.
    Although this transmission technology is also safeguarded by the 
provisions of secure servers, encryption, and user passwords, we are 
still experiencing the frustration of not being able to serve our 
distant students as fully as we are currently able to serve their 
residential counterparts who can attend in a ``traditional'' classroom.
    One example that comes to mind from my personal experience was the 
request to use a small excerpt from the Branagh version of a 
Shakespeare play, which would have taken months of paperwork and 
thousands of dollars to accomplish. Unfortunately for our students, I 
abandoned a sound pedagogical plan because of the obstacles.
    An example taken from our graduate courses demonstrates clearly as 
well, the ongoing struggle between valid instructional use of 
copyrighted materials and the restrictions against using sound 
recordings in our online courses.
    As this marketing student's campaign illustrates, the inclusion of 
just 8 seconds from the licensed popular song ``Everybody Dance Now'' 
has now rendered an otherwise excellent model of instructional 
excellence in developing an effective campaign inaccessible to our 
distant students.
    We see this disadvantage even more dramatically at the K-12 level, 
where one of our education students was interested in obtaining a 
segment of the popular ``Magic School Bus'' science series, the 
production of which is co-sponsored by the NSF. The teacher found that 
the process and expense of obtaining license from the MPLC were both 
prohibitive and prevented the delivery of timely instruction in an 
innovative delivery system.
    Finally, in closing we'd like to applaud the Senators' provisions 
of copyright education resources to all students and faculty members 
who engage in distance learning environments. At Marlboro College, we 
are grateful to the Library of Congress for its excellent website, 
filled with educational resources to which we regularly refer our 
teachers and students in their coursework. In addition, we refer our 
faculty specifically to the ``Crash Course in Copyright'' website 
hosted at the University of Texas, in Austin.
    Thank you for your attention, Mr. Chairman, Senator Leahy.

    Senator Leahy. Thank you very much. As you know, I have 
visited up there and I am very impressed with what you are 
doing.
    Professor Carpentier? We would say in Vermont Carpentier. 
How do you pronounce it?
    Mr. Carpentier. Both.
    Senator Leahy. Both, OK. Go ahead.

    STATEMENT OF GARY CARPENTIER, ADJUNCT PROFESSOR OF LAW, 
  WASHINGTON COLLEGE OF LAW, AMERICAN UNIVERSITY, WASHINGTON, 
                              D.C.

    Mr. Carpentier. It is a great privilege to speak to you 
today about the Technology, Education, and Copyright 
Harmonization Act of 2001. I am Gary Carpentier, Adjunct 
Professor of Law at the LL.M. Program in International Legal 
Studies at the Washington College of Law. My views here today 
are my own and not the views of the College of Law.
    Together with my colleague, Professor James Holbein, the 
Washington College of Law is creating an Internet-based law 
course on the North American Free Trade Agreement. The 
Washington College of Law has created a consortium of nine 
different schools on the North American continent--Case Western 
Reserve University School of Law and University of New Mexico 
School of Law in the United States, three schools in Mexico, 
and three schools in Canada.
    This legislation comes at an important juncture in the 
evolution of distance education. Traditional teaching 
techniques have been outpaced by the opportunities in an online 
world. The Act strikes a balance between the creators and the 
holders of the copyright and those seeking to use such works in 
education and research. It broadens the existing definitions of 
reproduction and distribution rights, and it modifies our 
reality and our concept of permitted transmissions under 
existing exemptions and the fair use doctrine.
    The debate continues between copyright-holders and users, 
and how technological advances work for both groups and satisfy 
their needs. Content owners can be secure in knowing that there 
are limitations in place to assure that their works will not be 
otherwise commercially exploited. Educators will employ this 
legislation as a guideline to permissible activities within 
such limited and reasonable uses of expanded categories without 
the chilling effect of negotiating a license for every type of 
transmission.
    The bill preserves many of the underlying policy objectives 
and the intent of traditional systematic education or classroom 
experience. Even though transmissions are not limited to the 
physical classroom, the bill includes safeguards of restricting 
the classes of eligible recipients to those students and 
employees enrolled in courses in which such transmissions are 
made.
    In the design of our online NAFTA course, we have to 
consider the evolution of the current copyright regime. This 
legislation will make our job easier to allow us to stay on the 
cutting edge of technology, and thereby providing the best 
education for our students in all nine law schools in the 
consortium.
    It was also useful to examine the relationship of this 
proposed legislation on our international trade agreements. It 
is my opinion that S. 487 should not violate our obligations 
under international intellectual property agreements.
    The Berne Convention provides for the copying of the 
portions of work that have already been made available to the 
public if it is within the guidelines of the fair use doctrine 
and does not exceed the justified purpose. In addition, it is a 
matter of domestic law to determine the use of works protected 
by copyrights for teaching purposes.
    The WTO Agreement on Trade-Related Aspects of Intellectual 
Property Rights, generally known as TRIPS, provides that 
exceptions to the copyrights must be limited to special cases 
that do not conflict with the normal exploitation of the work 
and do not unreasonably prejudice legitimate interests of the 
rights-holders. In establishing the right to use limited 
portions of copyright works for teaching purposes, this 
legislation falls within the parameters of these international 
obligations.
    In the interests of time, I would like to conclude that the 
Act has embodied recommendations suggested by the U.S. 
Copyright Office Report on Copyright Law and Digital Distance 
Education. It promotes digital distance learning by permitting 
certain limited instructional activities to take place without 
the risk of copyright infringement, and encourages the 
transmitters of such information to inform its users about the 
proper use of copyright laws.
    This legislation will greatly enhance the use of cutting-
edge technologies such as public and private key encryption 
techniques to restrict the retransmission of documents, books, 
streaming music, and streaming video clips, digital 
certificates that authenticate the identity of users, as well 
as digital watermarks that help track location and use by 
unauthorized users.
    I look forward to working with the Committee to help enact 
this legislation into law. It is critical that we respond with 
solutions that enable our citizenry. I am in particular support 
of Chairman Hatch's suggestions and reforms that allow students 
to take a lighter class load than is now required to benefit 
from financial aid. Imagine the opportunities and the impact 
that non-traditional students such as working mothers and 
lifelong learners will be able to take advantage of such online 
offerings.
    We must enable smaller institutions to out-source Web 
service to enable them to join the online educational 
community. They must be able to overcome the barriers to entry 
to this market. They must be able to access infrastructure, 
capital, and human resources. Altogether, this makes for a 
formidable package of reforms to promote the use of the 
Internet in educational offerings to all American students, no 
matter what age or locale--access to the best education 
anytime, anywhere.
    I want to thank Chairman Hatch and Senator Leahy for this 
opportunity to testify before you today.
    [The prepared statement of Mr. Carpentier follows:]

 Prepared Statement of Professor Gary Carpentier, Adjunct Professor of 
  Law, LL.M., Program in International Legal Studies, The Washington 
        College of Law, The American University, Washington, DC

    Thank you Chairman Hatch, Senator Leahy, distinguished Senators and 
colleagues, it is a great privilege to speak with you today about the 
``The Technology, Education and Copyright Harmonization Act of 2001''. 
lam Gary Carpentier, Adjunct Professor of Law in the LL.M. Program of 
International Legal Studies at The Washington College of Law at the 
American University here in Washington, DC. The views that I am 
presenting here today are my own and not those of The Washington 
College of Law.
    Together with my colleague, Professor James Holbein, the Washington 
College of Law is creating an Internet based law course on the North 
American Free Trade Agreement. The Washington College of Law has 
created a consortium of nine law schools on the North American 
continent that will present this course. Case Western Reserve 
University Law School and the University of New Mexico School of Law in 
the United States, three university law schools in Canada and three in 
Mexico.
    This legislation comes at an important junction in the evolution of 
digital distance education. It embraces the need to adapt to new 
technological advancements in information delivery and educational 
synthesis. Traditional teaching techniques have been outpaced by the 
opportunities in an online world.
    The Technology, Education and Copyright Harmonization Act of 2001 
strikes a balance between the rights of the creators and holders of the 
copyright and those seeking to use such works for education and 
research.
    S. 487 broadens existing definitions of reproduction and 
distribution rights. It modifies the reality of our concept of 
permitted transmissions under existing exemptions and the fair use 
doctrine.
    The debate continues between copyright holders and users about how 
can technological advances work for both groups and satisfy their 
needs. Content owners can be secure in knowing that there are 
limitations in place to assure that their works will not be otherwise 
commercially exploited. Educators will employ this legislation as a 
guideline to permissible activities within such ``limited and 
reasonable'' uses of expanded categories without the chilling effect of 
negotiating a license for every type of transmission.
    The bill preserves many of the underlying policy objectives and 
intent of the traditional systematic educational or classroom 
experience. Even though transmissions are not limited to a physical 
classroom, the bill includes the safeguard of restricting the classes 
of eligible recipients to those students and employees enrolled in 
courses in which such transmissions are made.
    I feel that the Committee should seek more meaningful and 
contemporary criteria for eligibility requirements of institutions 
seeking any exemption under the contemplated legislation. Bona fide 
educational institutions are no longer limited to ``non-profits''. 
While accreditation status advances the analysis, it still leaves many 
questions unanswered. Until standards become more uniform, this is our 
most rational starting point. We can no longer theorize how a system 
``should'' work. We must put theory into action.
    In the design of our online NAFTA course, we had to consider the 
evolution of the current copyright regime. This legislation will make 
our job easier and allow us to stay on the cutting edge of technology 
and thereby providing the best possible education for students in all 
nine law schools in the consortium. They are: The Washington College of 
Law; Case Western Reserve University Law School; The University of New 
Mexico School of Law; University of Ottawa; Universite de Montreal; 
University of Western Ontario; Universidad Nacional Autonoma de Mexico 
(UNAM) in Mexico City; Universidad de Guanajuato in Guanajuato; and 
Universidad de Baja California (UABC): Tijuana.
    It is also useful to examine the relationship that this proposed 
legislation has on our international trade agreements. It is my opinion 
that S. 487 should not violate our obligations under international 
intellectual property agreements. The Berne Convention provides for the 
copying of portions of a work that has already made available to the 
public, if it is within the guidelines of the fair use doctrine and 
does not exceed that justified purpose. In addition, it is a matter of 
domestic law to determine the use of works protected by copyright for 
teaching purposes. The World Trade Organization (WTO) Agreement on 
Trade-Related Aspects of Intellectual Property Rights, generally know 
as the TRIPS Agreement, provides that exceptions to copyrights must be 
limited to special cases which do not conflict with a normal 
exploitation of the work and do not unreasonably prejudice the 
legitimate interests of the rights-holder. In establishing the right to 
use limited portions of copyrighted works for teaching purposes, this 
legislation falls within the parameters of these international 
obligations.
    This legislation is consistent with the Berne Convention and the 
TRIPS Agreement. It is confined to the non-commercial use of some 
aspects of copyrighted works, for teaching and research purposes only. 
This is a very different situation than the disputes that have arisen 
under the TRIPS Agreement. For example, Canada permitted one of its 
cable television channels to receive and re-broadcast country music 
without paying the appropriate license fees to U.S. rights holders. A 
resolution to that dispute was reached under the NAFTA Chapter 20 
consultation process. This situation is different from the limited, 
non-commercial, educational uses of protected works already covered by 
Sections 107 and 110 of the Copyright Act.
    Under U.S. law the doctrine of ``fair use'' in Section 107 covers 
the activities envisioned in the legislation. Section 110, which is 
being amended, already permits the use of these types materials for 
teaching purposes. Typically, educators are reasonably careful to 
obtain copyright permission when using portions of protected works for 
classroom presentation, handouts, textbooks, etc. That practice is not 
discouraged by this legislation. Rather, this Act will help to ensure 
the free exchange of ideas within the contemplated in the U.S. 
Constitution in article I, section 8. where it states, ``Congress shall 
have the power to promote the progress of science and useful arts. . . 
.'' In order to stay competitive in a global economy, we must foster 
``anytime, anywhere learning'' to fit the needs of young people and 
lifetime learners.
    I look forward to working with the Committee to help enact this 
legislation into a law. It is critical that we respond with solutions 
that enable our citizenry. I am in particular support of Chairman 
Hatch's suggested reforms that allow students who take a lighter class 
load than is now required benefit from financial aid. Imagine the 
opportunities and impact that would have on non-traditional students, 
such as working mothers and lifelong learners to be able to take 
advantage of online offerings. We must enable smaller institutions to 
outsource web services to enable them to join the online educational 
community. They must be able to overcome the barriers to entry to the 
market. They must be able to access infrastructure, capital and human 
resources. All together, this makes a formidable package of reforms to 
promote the use of the Internet in educational offerings for all 
American students, no matter what age or locale. Access the best 
education, anytime, anywhere.
    I want to thank Chairman Hatch and the Committee for this 
opportunity to testify before you today.

    Senator Leahy. Thank you.
    We will hold for just a moment.
    Senator Hatch is back.
    Chairman Hatch. I apologize for having to leave for a 
minute. Let me just ask a few questions.
    Mr. Siddoway, you mentioned how the Electronic High School 
serves students with special needs in Utah, including those who 
cannot get to class because they either have a disability that 
keeps them from school or they live far enough away from the 
school that offers that particular class.
    Could you tell us how important making these classes 
available online is to those students and tell us how you think 
audio-visual or sound recording components to a language class 
or a science class offered on the Internet would enhance the 
learning opportunities of those students in Utah and elsewhere?
    Mr. Siddoway. Thank you for that question. As you may be 
aware--I know Senator Hatch is--Utah is a fairly rural State. 
We have 2.25 million people. Of those 2.25 million people, 85 
percent of them live on a 75-mile strip, on what we call the 
Wasatch Front, the west slope of the Wasatch Mountains. The 
rest of the State is fairly rural, and 90 percent of the 
geography of the state houses that 15 percent.
    We are delivering courses to such diverse places as Trout 
Creek, West Desert High School, with a total 7-12 population of 
29; to Navajo Mountain that you cannot reach from Utah. You go 
into Arizona to get back to Navajo Mountain. All of those 
classes are enhanced.
    We are video streaming and we are audio streaming now. For 
example, we have a Navajo language class beginning in Blanding, 
Utah. Of course, Navajo was the one code that the Japanese did 
not break during the Second World War. It is a difficult 
language, and if we are not able to audio stream it--and, of 
course, we are doing it with Native speakers, so that is 
available. A number of these courses could benefit greatly if 
we could use commercially prepared material and have the rights 
to use portions of it over the Internet.
    Chairman Hatch. I see.
    Mr. Carpentier, as a lecturer and course designer, do you 
think our legislative efforts that we are offering here will 
significantly help promote the use of high-technology tools 
like the Internet in education?
    Mr. Carpentier. It gives the ability of a teacher to create 
compelling courses, hyperlinks that can access resources, music 
clips, video clips. The copyright laws as they are framed 
within your legislation helps the less savvy copyright user to 
create new and interesting course work. It is really important 
that they can use this as a guideline and can take advantage of 
this opportunity.
    In addition to giving this copyright a safe harbor, I think 
it is important to highlight the reforms that you mentioned in 
your opening statement, and that is to give access to 
institutions and students within the system. Smaller 
institutions need access to infrastructure, capital, human 
resources.
    Non-traditional learners such as working mothers, people in 
rural settings, also need access to the system. This 
legislation gives those folks that ability to learn anytime, 
anywhere, and I think it is really important that we all work 
together to come up with a solution immediately to stay 
competitive.
    Chairman Hatch. Well, thank you.
    In addition to chairing this Committee, I chair the Trade 
Subcommittee of the Finance Committee, as well, and I have long 
been concerned about effective copyright protection abroad.
    Ms. Peters, I am a strong supporter of the TRIPS agreement. 
Would an expanded section 110(2) exemption be consistent with 
our obligations under the Berne Convention and the WTO TRIPS 
agreement?
    Ms. Peters. Professor Carpentier basically said that he 
thought that it would not violate our international agreements, 
and I clearly think it does not. The way that the TRIPS 
agreement is worded, you can have exceptions or limitations if 
there are certain special cases and if they don't conflict with 
the normal exploitation of the work and don't unreasonably 
prejudice the legitimate interests of the rights-holder.
    Clearly, systematic instructional activities is a very 
limited, special case. I think the safeguards that are put in 
here with regard to who can get the work and the reasonable and 
limited portions for audio-visual works on sound recordings, as 
well as the requirement for technological protection measures, 
clearly make this an exception that would pass muster.
    Chairman Hatch. Mr. Heeger--and the other representatives 
of educational institutions can also address this if they 
wish--do you now employ in your Internet offerings access and 
copy controls, and do you believe most educational institutions 
could comply with the requirements of this bill to implement 
such controls?
    Mr. Heeger. Mr. Chairman, quality distance education 
carries the obligation on the part of the provider to provide 
extraordinary and deep services to the students, and to provide 
controls as well on the copyrighted material. At my university, 
we have put a great deal of effort in terms of copyright 
management programs. We have an extensive licensing program and 
we have an extensive program of access control.
    Nonetheless, I think managing those issues is onerous, and 
institutions have to learn a great deal in order to do it. We 
are committed to complying with all the regulations. I have 
found in my work across the country all of the institutions 
that I am working with are equally committed to complying with 
all of the regulations, and I have no doubt as copy control 
techniques become more and more available, those too will be 
eagerly embraced. Institutions need clear rules of the road so 
that they can function effectively in developing distance 
education.
    Chairman Hatch. Thank you, Mr. Heeger.
    My time is up.
    Senator Leahy?
    Senator Leahy. Thank you, Mr. Chairman. I notice in Mr. 
Adler's testimony he speaks of our legislation as being 
unworkable, and if it continues as it is that apparently 
Senator Hatch and I are involved in a theft. He would call it 
the Heist Act. At another time, I used to prosecute thieves. I 
have never been accused of being one.
    I have a great deal of respect for both Mr. Adler and the 
publishers, but I think that this may be protesting a bit much. 
I totally disagree with him, but he may draw that conclusion.
    Ms. Peters, do you think this legislation is unworkable?
    Ms. Peters. No. Obviously, we wouldn't have proposed it if 
we thought it was unworkable. I think it is carefully crafted. 
I think that the concerns that Mr. Adler spoke of--his concern 
about having full text available, his concern that it 
interfered with licensing markets--are concerns, but I do think 
that the way that this is crafted, those markets are preserved 
and the technological protection measures will take care of a 
lot of the concerns that he has.
    Senator Leahy. Thank you.
    Yesterday, 18 leading high-tech CEOs sent a letter to the 
President and also to the Congressional leadership, and they 
said that improving the Nation's education system must be a 
national priority. Teachers and students have to have a high-
quality curriculum; they have to have sustained professional 
development, particularly in math, science and technology 
skills.
    I happen to totally agree with that, and I think that if we 
are going to compete with the rest of the world, we have got to 
do much, much better than we are currently doing. I know this 
is not news to Mr. LeBlanc, as President of Marlboro College. 
As his testimony shows, they have begun offering a graduate 
program for teachers on how to use the Internet for 
instruction.
    A lot of the focus of the distance learning debate has been 
on college and adult-level education, and computers and the 
promise of distance learning, the opportunity of students at 
any age. I am concerned with small schools, and I am thinking 
of one.
    Paul, I don't know if you know it, but in Granville, 
Vermont, there is one of the very few one-room schoolhouses 
still existing. It is one of the schools I go online with all 
the time because the kids ask such great questions. Some of 
them go on to become Merit Scholars. Many of them have gotten 
scholarships to some of the most prestigious universities in 
our country.
    But I worry that they are not near a college; they are not 
near a university. They are down in a small forestry product 
community, and I wonder if they could end up either misusing 
digital information or not taking full advantage, out of fear 
that they may overstep their bounds. They are not going to have 
lawyers on staff to tell them what they can or cannot do.
    One of the things that Senator Hatch and I thought about in 
the TEACH Act is we want a conference that will try to provide 
easy to understand guidelines for schools in the use of 
copyrighted works, so somebody can just go out and say, yes, 
no, can I do this, can I not do this. Would this be helpful in 
small schools, elementary schools, I mean the kinds of things 
that you and I are familiar with in our own State of Vermont?
    Mr. LeBlanc. It would be extremely helpful. Teachers often 
in those rural, more isolated schools don't have access, as you 
have pointed out, to these sorts of guidelines. We could do a 
better job of creating guidelines that fit more precisely the 
K-12 context, and then I would argue those guidelines should be 
available in the training which gets teachers to use them and 
understand how to use them and where they are. And they can be 
made simple. We think there are ample models out there now, by 
the way, as I said at the end of my testimony. We think it is 
important piece.
    Right now, what we are seeing is that access and cost of 
technology is outstripping the ability to deliver rich content 
to kids; that is, schools are being wired, the cost of boxes or 
computers are coming down. Yet, it is very difficult for our 
teachers, the teachers we are training, to easily get access to 
content and to do it in an affordable manner.
    Senator Leahy. Let me ask a question of Ms. Peters, and 
anybody else can feel free to jump in on it. The TEACH Act 
expands the distance education exemption in current law. It 
permits the reproduction and distribution of copyrighted works 
to the extent technically necessary to transmit work otherwise 
covered by the exemption. But the copies are not to be retained 
any longer than necessary to complete the transmission. If they 
are, the exemption doesn't apply any longer.
    Some institutions have raised the question of caching or 
automatic storage in the Internet service browser. Do we need 
additional language in here to make clear that automatic 
caching would be covered by the expanded exemption?
    Ms. Peters. In our testimony, we mentioned that we probably 
were too restrictive and that institutions don't have control 
over what happens down the line, and that we would be willing 
to work out language that is appropriate.
    Senator Leahy. I am concerned about some potential 
liability for the schools, when it wasn't something they tried 
to do.
    Does anybody else care to speak to that?
    Mr. Adler. Senator, if I may comment, let me say that 
neither I nor the publishers I represent would ever have any 
reason to suspect either you or the Chairman of untoward 
motivations in introducing this legislation.
    Senator Leahy. I don't want to leave the suggestion that 
you do. As I said, I have a great deal of respect both for you 
and your organization.
    Mr. Adler. We are simply concerned that in your beneficence 
you may inadvertently provide the tools for some people to do 
that.
    On the issue of automatic caching, we understand the 
problem, and the comments we have made in the testimony with 
respect to transient copies basically would apply there as well 
so long as the cached copies cannot themselves be accessed to 
be used independently for reproducing and redistributing these 
materials. We understand the role that caching plays in the 
process and we will work with you and the Register to 
accomplish that.
    Senator Leahy. You know, what might be a good idea, Mr. 
Chairman, is at some point--and it might be good not as a 
regular hearing, but it might be good for the other members of 
the Committee just to get some of the technical people in and 
do a demonstration, and have Ms. Peters and Mr. Adler and 
others here to say, OK, that we like, that we don't like. I 
think it could be something even the Internet Caucus could put 
together. It is so easy to speak on the dry aspects of it, but 
to see what really does work and what would be allowed under 
the law and what would not be allowed under the law might be 
something worth trying.
    Chairman Hatch. Sure.
    Well, this has been an interesting panel to me. We are 
trying to do what is right here, and we have paid particular 
attention to you, Mr. Adler, and your concerns. But each one of 
you has been very helpful to the Committee here today. We are 
going to try and do what is right.
    Blame Ms. Peters.
    [Laughter.]
    Mr. Adler. Mr. Chairman, we would like just to ask you, in 
particular, to pay particular attention to how the issue of 
displaying a work is treated because display in the context of 
interactive digital networks like the Internet now means 
something very different than it did in the context of analog 
broadcast television. It is essentially the basis of the 
nascent e-book to display a work, but to do so in digital 
formats that allow it to be fully usable, searchable, capable 
of being notated.
    Chairman Hatch. And downloaded, and so forth. We 
understand.
    Senator Leahy. Yes. In fact, we are dealing with a whole 
change in your business, in publishing, of course. I am very 
conscious of the fact that we are not going to have any works 
to display unless people can be paid for the product of their 
work. Now, that may be a lot different in the future in the way 
they are going to distribute it. The type of payment and all 
may change.
    The good part is that authors and scholars who create these 
works should be paid for what they are doing, and the people 
who publish them, and so on. But, also, you don't want the 
situation we have. We have schools in this country, and some in 
some fairly affluent areas, where if you go to the government 
text Jimmy Carter is still President. You can imagine what it 
is like when you go to either world history or world geography 
kinds of things and you have got globes and maps with countries 
that no longer exist and a whole lot of countries that have 
come into being.
    My eldest son was at the house the other day and we were 
cleaning out a closet and there was a globe he had in high 
school, which was the most modern, up-to-date at the time. This 
was 15 years ago, and I remember when we gave it to him it was 
the most up-to-date globe you could get. And it was remarkable. 
I mean, you go to the former Yugoslavia, you go to the former 
Soviet Union and you see all these changes.
    But with constant electronic updating, children can keep up 
with that, and so we have got to get that balance. Children 
should not have totally out-of-date texts. They should not have 
to study that way, but we need to get the balance right.
    Chairman Hatch. Well, we look forward to working with 
everybody who happens to be interested in updating and 
improving the educational opportunities of our students around 
the country. By using technology like the Internet and by 
assisting our educators in offering compelling content, we 
think that we can upgradethe quality of education for our kids 
all over America.
    So we want to particularly thank you again, Ms. Peters, for 
the work that you have done in helping us. You have heard some 
of the suggestions here today. We would like to have your best 
advice on this bill. We don't want to do anything that isn't 
right, but we do think that this is something that has to be 
done. So we want to thank all of you for being here.
    With that, we are grateful for this hearing and we are 
grateful to have your testimony. We will adjourn until further 
notice.
    [Whereupon, at 11:04 a.m., the Committee was adjourned.]
    [Questions and answers and a submission for the record 
follow:]

                         QUESTIONS AND ANSWERS

Responses of Allan Robert Adler to questions submitted by Senator Leahy

    Question 1: The TEACH Act does not change the limitation in current 
law applying the distance education exemption in section 110(2) only to 
``non-profit'' educational institutions. For-profit educational 
institutions have never qualified for the exemption. The Copyright 
Office and content owners have raised a legitimate question about 
whether ``non-profit'' is an appropriate qualifier since some ``non-
profit'' institutions may not be bona fide educational institutions. 
Should the requirement that the educational institution be 
``accredited'' before it is able to qualify for the exemption be added?
    Answer: 1: The proposed revised exemption will confer a substantial 
economic benefit on eligible institutional users of copyrighted works 
at the expense of the lawful property interests of authors, publishers 
and other copyright owners. To justify such a government mandate and 
prevent abuses of the privilege it bestows, institutions seeking to use 
such works pursuant to the exemption should at least be required to 
demonstrate that they reasonably can be expected to do so in compliance 
with both (1) the terms of the exemption and (2) the intent of Congress 
that the exemption should serve to facilitate the provision of high-
quality online educational experiences. One way in which this can 
objectively be accomplished is through ``accreditation'' requirements 
for eligibility to claim the exemption. [NOTE: AAP understands this 
question to ask whether ``accredited'' should be ``added'' to the 
current ``non-profit'' qualifier, rather than substituted for it. If, 
however, this understanding is incorrect, and the intent of the 
question is to inquire whether ``accredited'' educational institutions 
should qualify for the exemption, regardless of their non-profit or 
for-profit status, the responses to Questions 1 & 2 should be read 
together.]
    For institutions of higher education, ``accreditation'' is a well-
established prerequisite of eligibility to participate in the federal 
Title IV student financial assistance programs. The Secretary of 
Education, pursuant to Congressional directives, has already 
promulgated standards and criteria that accrediting agencies must meet 
in order to be ``recognized'' by the Secretary as qualified to accredit 
both for-profit and non-profit institutions of higher education for the 
purpose of making such institutions eligible to participate in Title IV 
funding programs. See 20 U.S.C. 1099b; 34 CFR 602.1-602.50. These 
include detailed specifications regarding various aspects of an 
institution's programs, performance and resources that must be assessed 
in order to make an accreditation decision.
    At present, distance education programs offered by such 
institutions are restricted from full Title IV eligibility, pending 
Congressional review of the Secretary's report evaluating 
``demonstration programs'' that were authorized by Congress to permit 
participating institutions to offer such programs without meeting 
certain requirements that generally restrict their Title IV 
eligibility. See 20 U.S.C. 1093. Among the recommendations of the Web-
Based Education Commission is a full review and, if necessary, a 
revision of the 12-hour rule, 50 percent rule and other specific 
requirements that currently restrict full eligibility of distance 
education programs for Title IV funding.
    A review by the Department of Education and Congress of the 
appropriate distance education accreditation standards and requirements 
with respect to Title IV student financial assistance eligibility for 
offering institutions of higher education could, in turn, help to 
determine appropriate accreditation standards and requirements to 
qualify distance education programs of non-profit institutions of 
higher education with respect to eligibility for coverage by the 
revised distance education copyright exemption proposed in S. 487. 
Assuming that this exercise would appropriately address the 
institutional issues that are relevant to eligibility for the exemption 
but are not currently assessed under existing accreditation criteria 
(such as the institution's compliance with the exemption's requirements 
to apply ``technological measures'' that reasonably prevent 
unauthorized access to and dissemination of copyrighted works used in 
the exempt transmissions), such accreditation standards and 
requirements could also be adapted for purposes of qualifying the 
eligibility of non-profit elementary and secondary education 
institutions for coverage by the exemption. Unlike institutions of 
higher education, institutions that provide elementary and secondary 
education are not currently subject to general accreditation standards 
and requirements with respect to their eligibility for participation in 
federal education funding programs, but instead must qualify for 
eligibility under the particular standards and requirements of each of 
the many different funding programs according to the purpose of each 
program.

    Question 2:  Many sponsors of distance education programs are not 
purely ``non-profit.'' Some non-profit schools have begun to engage in 
distance education for profit, some commercial entities are forming 
partnerships with non-profit institutions to offer distance education, 
and some commercial textbook publishers, like Harcourt General, want to 
provide full-service distance education programs for accredited college 
degrees directly. Competition between the non-profit and for-profit 
distance learning programs is good for the country. Do you think that 
retaining the non-profit requirement in current law helps non-profit 
educational institutions compete?
    Answer: 2: It seems logical to assume that retaining the ``non-
profit'' requirement in the revised exemption would help non-profit 
educational institutions to compete with for-profit educational 
institutions in the provision of distance learning programs because, in 
many instances, it would effectively allow the former to avoid certain 
costs that may have to be borne by the latter for their identical uses 
of the same copyrighted works in offering online distance education 
programs. Absent a credible ``fair use'' claim, these costs consist of 
expenditures in time, effort and money necessary to obtain the 
permission of the copyright owner for that use. Assuming that other 
costs to produce and deliver similar programs are the same, the 
avoidance of these costs result in lower costs for the non-profit's 
production of the online education program, and would presumably allow 
the non-profit institution to offer the program for a lower fee or 
tuition, which would (other things being equal) make its program more 
attractive in the marketplace than the same program offered by the for-
profit institution. Moreover, avoidance of these costs could allow the 
non-profit institution to use more or better-quality copyrighted works 
that might be unaffordable for the for-profit institution, again making 
the non-profit's program more attractive in the marketplace.
    Of course, asking whether retention of the ``non-profit'' 
requirement helps such institutions to compete is much different than 
asking either whether retention of the requirement is needed in order 
for non-profit educational institutions to compete, or whether it helps 
them to compete unfairly. non-profit educational institutions, it must 
be remembered, comprise a class that includes numerous major public and 
private higher education entities that are supported by various 
combinations of substantial taxpayer funding, alumni donations, tuition 
payments, and corporate or foundation grants, as well as income from 
patent and other property rights. For many, if not most, of these 
institutions, retention of the ``non-profit'' requirement in the 
revised exemption is not needed to permit them to compete with for-
profit institutions of higher education or other for-profit providers 
of online education programs. It may, in fact, simply provide them with 
an unfair competitive advantage over such competitors.
    Similarly, with respect to non-profit elementary and secondary 
education institutions, it is not clear why they would ``need'' the 
exemption to compete, since this class consists predominantly of 
public, tax-supported schools which are not currently facing any 
substantial competition from for-profit entities. If, however, the 
advent of charter schools, tuition voucher policies, and the like were 
to produce such competition from for-profit entities, retention of the 
``non-profit'' requirement for the revised copyright exemption might 
nevertheless be viewed as giving the non-profit institutions an unfair 
competitive advantage with respect to the use of copyrighted works in 
the provision of online education programs.
    Hence, the quandary in limiting eligibility for the revised 
exemption to ``non-profit educational institutions''--while it is 
difficult to justify a government mandate that would allow for-profit 
educational institutions to freely ride on the investments of copyright 
owners (including other for-profit providers), it is clear that 
establishing the revised exemption for the benefit of ``non-profit'' 
educational institutions is, for many such entities, an unnecessary and 
unfair advantage in a competitive marketplace that has made the 
distinction between ``non-profit'' and ``for-profit'' providers largely 
irrelevant.

    Question 3: The bill contains safeguards to minimize the risk to 
copyright holders that the use of works under the expanded exemption 
could result in copyright piracy. Among those safeguards is a provision 
requiring the school to use ``technological measures that reasonably'' 
prevent unauthorized access and dissemination. Could you describe the 
technological measures that copyright owners are using todgy to 
minimize the risk of unauthorized downstream use of copyrighted works 
in distance learning programs?
    Answer: 3: Less than two years have passed since the Register of 
Copyrights issued the ``Report on Copyright and Digital Distance 
Education,'' including the legislative recommendations on which S. 
487's proposed revision of Section 110(2) of the Copyright Act is 
based. Although the DMCA debates and the compression of events in 
``Internet time'' might have led many people to expect extraordinary 
developments from copyright owners in the design and deployment of 
``technological measures'' during this period, the description of 
``Technologies To Protect Content'' in the Register's Report (p.57-67) 
remains largely accurate and current--at least with respect to the 
publishing industry--in its survey of extant uses of technologies to 
control unauthorized downstream use of copyrighted works in online 
education programs.
    Secure digital containers and proprietary viewers, encryption, 
streaming formats, and digital watermarking continue to be the leading 
options available to copyright owners, with new variations on these 
themes emerging as part of the development of commercially-viable ``e-
book'' presentation and delivery mechanisms. Much of what is occurring 
in these areas, however, is considered proprietary and confidential. As 
a result, there is little detail on the public record to document or 
explain current developments.

    Question 4: Some copyright owners have argued that distance 
learning is flourishing and that expanding the scope of the exemption 
provided in section 110(2) may interfere with the primary market of 
educational publishers, if distance educators can get this material for 
free under the exemption. The bill expressly removes from the coverage 
of the exemption ``work produced primarily for instructional use'' 
since we want educational publishers to have the incentive to invest in 
and publish innovative educational materials that copyright protection 
can provide. Do you see any risk to publishers of educational materials 
from expansion of the distance education exemption in the limited 
fashion posed in the TEACH Act?
    Answer: 4: For AAP, one of the most important provisions in S. 487 
as introduced was the bill's exclusion of works ``produced primarily 
for instructional use'' from the scope of the proposed revised Section 
110(2) exemption. Commercial educational publishers in particular were 
relieved to see that the cosponsors of the legislation understood and 
agreed with the concern expressed by the Register of Copyrights that 
application of the exemption to such works ``could significantly cut 
into primary markets, impairing incentives to create.''
    AAP believes that this exclusion is not only necessary to the 
continued viability of primary educational publishing markets in the 
U.S., but also necessary to ensure that the revised exemption does not 
run afoul of U.S. obligations under international copyright agreements 
that protect the interests of educational publishers in markets abroad. 
For example, Article 13 of the TRIPS Agreement, which incorporates and 
extends the substantive obligations of the Berne Convention, states 
that ``Members shall confine limitations or exceptions to exclusive 
rights to certain special cases which do not conflict with a normal 
exploitation of the work and do not unreasonably prejudice the 
legitimate interests of the right holder.'' This obligation is also 
endorsed in the WIPO Copyright Treaty, which updates and supplements 
Beme and TRIPS with respect to their application in the digital 
environment. Without the exclusion, AAP believes the proposed revised 
exemption would violate these international agreements.
    For these reasons, AAP also believes that the exclusion from the 
exemption of works ``produced primarily for instructional use'' should 
not be limited, conditioned or qualified in any way, including by 
carve-outs which would make use of certain instructional works or 
limited portions of such works explicitly subject to the exemption. In 
this vein, we note our concern regarding the hearing testimony of 
Gerald A. Heeger on behalf of the Association of American Universities, 
the American Council on Education, the National Association of State 
Universities and Land-Grant Colleges, and the Association of Research 
Libraries. Mr. Heeger specifically urged that ``instructional 
audiovisual materials'' should fall within the scope of the exemption, 
but he argued more generally that ``[i]nstructional materials often 
will be essential to effectively harmonizing the content of local and 
remote instruction.'' In that context, Mr. Heeger's request regarding 
audiovisual materials is likely to become the proverbial ``camel's nose 
under the tent,'' and there will be no logical place to draw the line 
on further carve-outs if this one is accepted. Following this path 
could broaden the exemption to the point where it becomes the basis for 
creating ``electronic coursepacks'' or so-called ``e-reserve'' 
collections, neither of which could be justified by the Register's 
statements in support of a limited revised exemption.

    Question 5: To encourage the use of the Internet in distance 
learning, the TEACH Act would expand the distance education exemption 
in current law to permit the reproduction and distribution of 
copyrighted works to the extent technically necessary to transmit the 
work otherwise covered by the exemption. These copies are not to be 
retained any longer than necessary to complete the transmission and, if 
they are, the exemption will no longer apply. Educational institutions 
have raised a concern over caching, which is an automatic storage of a 
copy in an Internet Service Provider's server or a user's browser to 
make the Internet run more quickly. The school doing the transmitting 
of a copyrighted work under the exemption may have no knowledge of or 
control over the caching of copies of the work, even though such 
caching might result in potential liability for the school. T3Should 
additional language be added to the bill to make clear that such 
automatic caching would be covered by the expanded exemption and, if 
so, what language would you suggest?
    Answer: 5: It would appear to AAP that the described concern 
regarding potential liability of transmitting educational institutions 
for cache copies in an ISP's server or a user's browser does not arise 
at all to the extent that, in the circumstances of a particular online 
education program, the institution is acting as an ISP and qualifies 
for the liability limitations contained in Section 512 of the Copyright 
Act, as amended by the DMCA. Given the myriad variations in the ways in 
which such programs may be produced and delivered to or accessed by 
students, we recognize that sometimes this situation will exist and 
sometimes it will not. However, this leads us to inquire why, in cases 
where the institution is not acting as an ISP as defined in Section 
512, or is acting as an ISP which does not qualify for the liability 
limitations under Section 512, the institution should be entitled to 
special treatment under the law regarding its potential liability.
    Assuming without certainty that the examples of cached copies 
offered to illustrate the indicated concern have been validly 
characterized in technological terms, it would appear to AAP that there 
is no valid reason to prescribe special treatment for such 
institutions.
    In the case where the transmitting institution is not acting as an 
ISP, it would appear to have no potential liability arising from such 
copies because, as stipulated in the testimony of the Register of 
Copyrights and in the related question framed above, apart from 
initiating the transmission, the transmitting institution would have 
had no role in the making and retention of such copies, no actual 
knowledge or reason to believe that such copies were being made, and no 
ability to prevent them from being made. Under such circumstances, it 
is difficult to understand under what theory of copyright liability the 
transmitting institution would be potentially liable.
    But in the case where the transmitting is acting as an ISP but 
either acts or fails to act in a manner that disqualifies it from 
eligibility for the liability limitations provided in Section 512, it 
is clear that certain theories of liability may apply, yet it is 
unclear to AAP why the transmitting institution should categorically be 
immunized from any theory of legal responsibility for such copies 
simply because it is engaged in the provision of online educational 
programs. It may, perhaps, be reasonable to provide some special 
conditional limitation on the institution's potential liability for 
direct infringement in such cases, provided that the conditions to be 
satisfied are parallel to those prescribed in the appropriately 
analogous provisions of Section 512 (depending on the circumstances in 
which the copies were made). However, given the very real potential for 
further unauthorized uses of the transmission and its included 
copyrighted work to occur as the result of the creation of these 
copies, it is difficult to conceive why the usual criteria for 
secondary liability under theories of contributory infringement or 
vicarious liability should not be applicable to the transmitting 
institution if such unauthorized uses in fact occur.

    Question 6: Both the Copyright Office report and the report of the 
Web-Based Education Commission headed by Senator Bob Kerrey noted that 
educational institutions have difficulty with licensing for digital 
distance education. Even after schools determine who the copyright 
owner is, they often face delays in locating the owner, obtaining 
permission and then may incur substantial costs. The TEACH Act proposes 
a study by the Copyright Office on the licensing problems encountered 
by schools. Are there any steps being taken by schools or copybright 
owners to make the licensing process easier to understand and to 
pursue?
    Answer: 6: The written testimony submitted by AAP for the 
Committee's hearing on 5.487 contained examples of recent actions that 
show how publishers are attempting to make the licensing process easier 
to understand and to pursue. These examples, excerpted for your 
convenience below, bear out the Register's prediction that such 
problems will continue to be addressed as the marketplace evolves and 
matures. For example:
     Houghton Mifflin's College Division has upgraded its 
Permissions Department's website so customers can submit permission 
requests by using online ``fill-in-the-blank'' forms or downloading PDF 
templates to fill out and submit by fax. At the same time, the College 
Division is conducting a pilot program with Copyright Direct, a 
permissions tool of Yankee Rights Management that permits users to 
obtain real-time permissions online. The College Division is also 
working with Reciprocal, a ``secure system'' provider for granting and 
holding permissions, which also provides ``secure containers'' that 
permit rights and permissions information to be carried online with the 
content to which its relates.
     Pearson Education's Prentice Hall subsidiary has 
established a ``Companion Website Gallery'' which provides descriptions 
and links for an array of textbook-supporting websites that correlate 
additional learning activities with specific college textbooks. In 
addition, like several other AAP members, it has contracted with 
NetLibrary, an online provider of e-books, to make some of its college 
texts available for online access with full-text search capabilities. 
Computer Curriculum Corporation, a separate division of Pearson 
Education, also offers CCC Destinations Internet, a comprehensive 
online learning program that permits remote delivery of customized, 
essential skills education for adolescent and adult learners in 
community colleges, correctional education programs, and public housing 
education programs.
     Elsevier Science has established ScienceDirect, an online 
current awareness service with a ``click-through'' license that allows 
institutional subscribers to their print journals to have free remote 
online access to the most recent twelve months of journal issues on a 
rolling basis. If the subscriber allows all or selected members of the 
public to access its collections, the license allows such persons to 
access the journals online from workstations in the institutional 
facility.
     Thomson Learning's Global Rights Group has established a 
website for online evaluation and disposition of permission requests 
for all Thomson Learning Higher Education and Lifelong Learning 
companies. The website cannot be used to order and purchase materials, 
but provides for the use of online permission request forms and a 
``Lookup'' status check button for all materials produced by Thomson 
Learning's ten higher education companies.
     Harcourt College Publishers, one of Harcourt General's 
higher education companies, has established an Online Learning Center 
that utilizes the WebCT platform to deliver courses customized by 
instructors to accompany many of its main textbooks. Its Custom 
Publishing operation allows instructors to request modifications to the 
company's own products, including removal of excess chapters, addition 
of instructor materials, institutional personalization, and the 
combination of several products into one. Archipelago Productions, 
another Harcourt higher education company, which develops multimedia 
courseware for distance and distributed learning, has announced 
alliances with WebCT and Blackboard, Inc., both well-known providers of 
online education platforms, to deliver Archipelago's Online Courses in 
a hybrid ``netCD'' environment that leverages CD-ROM and Internet 
technologies to feature the presentation benefits of CD-ROMs and the 
interactivity of Web browsers embedded into the disks.
     Wiley InterScience is an online journals service through 
which John Wiley & Sons, a leading scientific publisher, allows all 
users to browse and search Tables of Contents of all of its journals 
online, and obtain online access to abstracts for all of its titles. 
Depending on the type of subscriber, the service can also offer online 
access to the full text of all subscribed journals.
    In a recent follow-up with Houghton Mifflin, we learned that last 
year the College Division processed 122 requests to post HM materials 
to intranets and passwordprotected Internet pages, and to digitize 
audio or video ancillary materials. Most of these were academic 
requests (i.e., from instructors, campus language labs, and libraries), 
which were all granted. Comparing this with 76 such requests received 
in 1999 and 56 such requests received in 1998, it seems clear that the 
publisher's efforts to improve the handling of such requests has thus 
far kept pace with the increase in the number of such requests. 
Overall, the Division's Permissions Web Page has become the pipeline 
for all sorts of permissions requests, involving both print and non-
print uses. Customers continue to use e-mail forms to make their 
requests (up 75% from the previous year), as well as downloadable pdf 
forms to make their requests by fax.
    It is also AAP's understanding that the website of the National 
Association of College Stores (``NACS '') has recently added ``digital 
distribution'' to their downloadable sample permissions request form, 
facilitating more rapid submissions of complete and accurate 
permissions requests.
    Of course, many educational publishers continue to make an 
increasingly diverse array of digital content available on line for 
customized use by instructors. For example, Pearson's Higher Education 
Division has partnered with a leading ``e-learning'' infrastructure 
company to create and release ``CourseCompass''--a nationally-hosted 
Web-based e-learning platform which enables educators to easily 
customize extensive content offerings from Pearson and integrate them 
with their own materials. Pearson Education has undertaken a similar 
venture with another technology partner to deliver an online teaching 
and professional development platform to teachers for elementary and 
secondary schools.

    Question 7: The bill requires the educational institution to limit 
reception of an exempted transmission to enrolled students or 
government employees ``to the extent technologically feasible.'' In 
addition, the bill requires the educational institution to apply 
technological measures ``that reasonably prevent unauthorized access'' 
to the work.
    (a) Would the fact that these requirements are not identical to 
each other pose a problem for educational institutions to comply or are 
the requirements complementary?
    Answer: 7(a): The requirements of the two provisions are somewhat 
overlapping due to the fact that ``reception'' of the transmission in 
this context would presumably provide ``access'' to the copyrighted 
work performed or displayed therein, even if decryption was required to 
facilitate such reception. (A different view might apply if the 
performance or display were somehow separately encrypted within the 
otherwise unencrypted transmission and thus required a separate step 
apart from ``reception'' of the transmission to actually provide 
``access'' to the performance or display of the work.). However, the 
requirements may be distinguished by virtue of the fact that the latter 
requirement is an obligation explicitly imposed on ``the transmitting 
body or institution'' while the former requirement characterizes the 
transmission itself, rather than any explicit duty of ``the 
transmitting body or institution.'' Moreover, since the latter 
provision addresses unauthorized postaccess uses of the work, as well 
as unauthorized access to the work, the two provisions could be viewed 
as intended to address distinct concerns. AAP believes it is 
appropriate to separately treat the need to limit reception of the 
transmission and access to the copyrighted works embodied therein, on 
the one hand, and the need to prevent unauthorized post-access uses of 
such works, on the other, but urges that the standards be harmonized as 
explicit obligations of the ``transmitting body or institution.''
    Moreover, in harmonizing the provisions, AAP believes it would be 
appropriate and advisable to apply the same ``technologically 
feasible'' standard to both categories of concern. Requiring that 
unauthorized access and dissemination must be achieved ``to the extent 
technologically feasible'' is, in our view, a higher and more objective 
standard than requiring that such conduct must be ``reasonably 
prevent[ed]'' because, unless ``reasonably'' in the latter context is 
explicitly understood to mean ``to the extent technologically 
feasible,'' the standard would permit the requirement to be met through 
use of technological measures that are known to be less effective than 
available alternatives, since all that would be required is that they 
``reasonably'' prevent such occurrences, rather than prevent them 
altogether. While we understand that no technological measure can be 
absolutely guaranteed to withstand circumvention efforts and be 
effective in all instances, there is no reason why the ``transmitting 
body or institution'' should not be required to use the most effective 
technological measures available, rather than permitted to use 
alternatives that are merely ``reasonably'' effective.
    (b) Do you believe these requirements would impose any obligation 
on educational institutions to use technology to prevent students from 
freely downloading the materials transmitted?
    Answer: 7(b): Absolutely, and we believe they should be obligated 
to do so in order to maintain the balance of user and copyright owner 
interests that Congress built into the existing exemption. Nothing in 
the current language of Section 110(2) authorizes students to make 
copies of the instructional broadcasts authorized under this exemption; 
to the extent that any copies of such transmissions are authorized to 
be made under the current language of Section 112(b), it is the 
governmental body or non-profit educational institution entitled to 
transmit the performance or display under Section 110(2) that is 
authorized to make the copies, not the recipients of the transmission. 
Similarly, nothing in the proposed revised exemption should permit the 
students or government employees who can receive or access the 
transmission embodying the exempt performance or display to freely 
download the materials in question and open them up to further 
unauthorized reproduction, distribution or other use. To clarify this 
matter, AAP believes that the term ``dissemination'' should be replaced 
by the phrase ``reproduction, distribution or other use.''
    (c) What degree of protection would be ``reasonable''?
    Answer: 7(c): As noted above, if the qualifying term ``reasonably'' 
is to be retained as part of the provision describing the obligation of 
the transmitting body or institution to apply technological measures, 
it should be explicitly defined to mean ``to the extent technologically 
feasible.'' Moreover, however the phrase ``technologically feasible'' 
is ultimately used in either or both of the above-referenced 
provisions, it should clearly be understood to refer to ``feasibility'' 
in terms of the state-of-the-art technological capabilities available 
in the marketplace, not in terms of the capabilities of the technology 
already used by the transmitting body or institution. In other words, 
the limits of technological feasibility should be based on what is 
available in the market, not merely on what will work with the 
equipment or facilities used by the transmitting body or institution. 
There is no justification for making the copyright owner assume the 
risk of inadequate technological measures simply because the 
transmitting body or institution has failed to keep up with the state-
of-the art in the technology used to make the transmission.

    Question 8: It has been almost two years since the Copyright Office 
issued its report on distance learning and made its legislative 
recommendations. Are there any new developments, new concerns or 
significant advances in technology that would affect any part of the 
analysis in that report?
    Answer: 8:
    With respect to developments in technology, see our response to Q3 
above.
    With respect to other new developments and concerns since the 
issuance of the Register's Report, AAP reiterates and urges the 
Committee to carefully consider the issues raised in our written 
submission for the Committee's hearing: At present, no one really knows 
the costs or other burdens involved in implementing the ``technological 
measures'' requirement in the proposed revised exemption. But, even if 
the necessary technological safeguards were widely-available in ``a 
convenient and affordable form'' in today's market, copyright owners 
have, in the period since the issuance of the Register's Report, 
acquired some legitimate reasons to entertain doubts about the 
willingness of public institutions of higher education--the most 
significant class of ``non-profit educational institutions'' offering 
online distance education programs--to take on the full costs and 
responsibility of good-faith compliance in their implementation.
    Some of these reasons are based on the fact that the Napster 
phenomenon, which two federal courts have enjoined as fostering ongoing 
instances of blatant copyright infringement on an unprecedented mass 
scale, has been chiefly pursued by students using campus-based Internet 
access and computer networks. Although universities and colleges were 
not themselves perpetrators of the infringing music-swapping activity, 
their failure to act in some cases to block student access to Napster's 
server contributed substantially to the magnitude of the problem. Many 
of these institutions continue to express ambivalence regarding their 
obligations or abilities to deal with ``the technical, legal, and moral 
issues raised by Napster and other file-sharing, bandwidth clogging, 
copyrightchallenging programs.'' See, e.g., Carlson, Scott, ``Get Ready 
for an Encore of the Napster Controversy, `` The Chronicle of Higher 
Education, September 8, 2000, p.A51.
    Others reasons may be based on the evident antagonism that 
representatives of the higher education community demonstrated toward 
legal prohibitions against circumventing certain kinds of technological 
measures in hearings held by the Copyright Office last year for the so-
called ``Section 1201 anticircumvention rulemaking'' conducted by the 
Librarian of Congress. Although their request to legalize circumvention 
of access controls with respect to maps, newspapers, databases, 
textbooks, scholarly journals, academic monographs and treatises, law 
reports and educational audio/visual works was rejected by the 
Librarian, at the recommendation of the Copyright Office, it is notable 
for the disturbingly narrow view it represents regarding the legitimate 
right of copyright owners to use technological measures to control 
access to copyrighted works. See Library of Congress, Final Rule: 
Exemption to Prohibition on Circumvention of Copyright Protection 
Systems for Access Control Technologies, 65 Fed. Reg. 64555 (daily ed. 
October 27, 2000.)
    Still other reasons may be found on the fear that recent rulings by 
the U.S. Supreme Court and the Fifth Circuit U.S. Court of Appeals, 
which have barred lawsuits for damages against State entities for 
violations of federal statutory rights, have eliminated the primary 
incentive for public educational institutions to comply with legal 
standards that protect the rights of copyright owners. See, e.g., 
Department of Commerce Patent and Trademark Office, Notice of 
Conference on State Sovereign Immunity and Intellectual Property 
Rights, 65 Fed. Reg. 11987 (daily ed. March 7, 2000).
    These developments, separately and in combination, should be 
evaluated by the Committee to realistically assess the likelihood of 
full good-faith compliance by non-profit educational institutions with 
``technological measures'' requirements imposed by the legislation at 
issue.

    Question 9: The Copyright Office report noted that access control 
measures to copyrighted works, such as passwords, were already in 
widespread use, but technologies that control post-access uses for all 
types of works were not widely available. Are technical measures now 
more readily available to control post-access distribution of works 
and, if so, please describe those that are available?
    Answer: 9: See response to Q3 above.

                                

 Response of Allan Robert Adler to a question from Senator Blanche L. 
            Lincoln submitted on her behalf by Senator Leahy

    Question: I believe visually impaired students should have access 
to the same educational opportunities that are available to sighted 
students. Unfortunately, many blind students are denied equal access to 
instructional materials today because the process of converting 
textbooks for use by the blind can be costly and time consuming. 
According to constituents I've met with regarding this issue, some non-
sighted students must wait up to 6 months to receive required classroom 
materials that are made available to sighted students on the first day 
of class.
    Mr. Adler, can you describe what steers publishers have taken or 
plan to take to make textbooks and other instructional materials 
available to non-sighted students in a timely manner? Also, does the 
Association of American Publishers recommend any federal legislative 
changes that would facilitate the availability of required classroom 
materials for the blind?
    Answer: In recent years, under the direction of our President and 
CEO Pat Schroeder, AAP has worked closely with the leading blind 
advocacy groups to address problems encountered by blind and other 
persons with disabilities in gaining access to books and other printed 
materials in specialized formats for their use. Perhaps the best-known 
example of our successful collaboration with these groups is a 
provision in the Copyright Act that allows previously-published 
nondramatic literary works to be reproduced and distributed in 
specialized formats for blind and other persons with disabilities 
without the need to obtain permission from the copyright holder. 
Popularly known as the Chafee Amendment, this 1996 addition to 
copyright law has eliminated a substantial practical hurdle to ensuring 
that instructional materials and many other print works can be made 
available to blind and other persons with disabilities in the 
specialized formats they require.
    During the past year, we have been working with the blind advocacy 
groups to draft federal legislation which would replace a patchwork 
quilt of State legislation addressing various issues regarding how 
textbooks and other instructional materials are provided by publishers 
to local educational agencies in electronic file formats suitable for 
efficient conversion into specialized formats for blind and other 
persons with disabilities. The purpose of the federal legislation would 
be to prescribe uniform national standards and procedures for the 
provision of such electronic files for conversion into specialized 
formats in order to achieve the goal of ensuring that blind and other 
children with disabilities in elementary and secondary schools will 
have their assigned textbooks and other instructional materials 
available to them in specialized formats at the same time as the 
regular printed versions of these materials are provided to their 
classmates.
    The effort has been complicated by the number and nature of issues 
to be addressed, but all parties have continued to work closely with 
good faith efforts. The issues include (1) defining the kind of 
instructional materials that will be subject to the legislation; (2) 
calculating a quick but workable timeframe for the publisher's 
provision of the electronic files to the responsible state officials 
after receiving notice of their request for such files in connection 
with specific materials required for students in particular classes; 
(3) establishing plans for a national repository to which such files 
can be sent to remain on deposit for use by educational officials in 
different states as required; (4) devising a technical standard-setting 
proceeding to combine the publishing industry's evolving practices with 
the practical needs of the persons who convert works into Braille and 
other specialized formats in order to establish a national standard 
format for these electronic files; and, (5) addressing the needs of 
conversion personnel for funding and training to be able to take 
advantage of the national standard format (likely to be XML-based) when 
the transition period for its adoption has run.
    As you know, crafting federal legislation to preempt existing State 
laws is always a very delicate task, and the effort to reach consensus 
before moving the issue to the Hill has been a conscious and deliberate 
plan of all parties involved. Each of the issues highlighted above 
presents its own problems for resolving current differences among the 
States, half of which have specific requirements on these matters and 
half of which do not.
    AAP would be delighted to further brief you and your staff on the 
status of these current efforts at your convenience.

                                

  Responses of Gary Carpentier to questions submitted by Senator Leahy

    Question 1: The TEACH Act does not change the limitation in current 
law applying the distance education exemption in section 110(2) only to 
``non-Profit'' educational institutions. For-profit educational 
institutions have never qualified for the exemption. The Copyright 
Office and content owners have raised a legitimate question about 
whether ``non-profit'' is an appropriate qualifier since some ``non-
profit'' institutions may not be bona fide educational institutions. 
Should the requirement that the educational institution be 
``accredited'' before it is able to qualify for the exemption be added?
    Answer: The concept of accreditation, seems to me, to be a more 
valid and appropriate qualifier to allow a learning institution, 
whether ``non-profit'' or ``bona fide for-profit,'' to be granted an 
exemption. Accreditation is an easier, more useful criterion that can 
be implemented to make this legislation work. It is my opinion that the 
term ``accredited, bona fide educational institution'' should replace 
``non-profit educational institution'' in the current law and any 
future legislation.

    Question 2: Many sponsors of distance education programs are not 
purely ``non-profit.'' Some non-profit schools have begun to engage in 
distance education for profit, some commercial entities are forming 
partnerships with non-profit institutions to offer distance education, 
and some commercial textbook publishers, like Harcourt General, want to 
provide full-service distance education programs for accredited college 
degrees directly. Competition between non-profit and for-profit 
distance learning programs is good for the country. Do you think that 
retaining the non-profit requirement in current law helps non-profit 
educational institutions compete?
    Answer: I think that the ``non-profit'' requirement in current law 
does not help non-profit educational institutions compete. At this 
time, these educational institutions have an advantage to be part of 
the system merely because they represent or might provide a large group 
potential end-users of distance education. By retaining the ``non-
profit requirement'' in current law, innovation is stymied. For 
educational institutions to truly become participants in the distance 
education market, all barriers to entry must be removed and the playing 
field leveled. The market will determine winners and losers.

    Question 3: The bill contains safeguards to minimize the risk to 
copyright holders that the use those safeguards is a provision 
requiring the school, to use ``technological measures that reasonably 
[sic]'' to prevent unauthorized access and dissemination. Could you 
describe the technological measures that copyright owners are using 
today to minimize the risk of unauthorized downstream use of 
copyrighted works in distance learning programs?
    Answer: There are dozens of ``Digital Rights Management'' (``DRM 
'') solutions available to fight copyright piracy. A survey of DRM 
solutions show that:
    The core element of the DRM architecture operates on PCs and 
servers. DRM processing acts as a secure `virtual system' that can 
manage each parties' digital rights remotely. Each local, secure 
database stores the user's rights, identities, transactions, budgets, 
and keys.
    Protected information in the system is encrypted and stored in a 
secured file. Once in a secured file, the information can flow across 
unsecured networks, and only a user satisfying the required rules can 
access and process the information. Information in a secured file 
remains protected even after a user has accessed it, providing 
persistent protection of the information and continuing control over 
its use, regardless of where the information travels.
    Content usage is managed by rules, including price, payment offer, 
play, view, print, copy, save, super-distribution, and others. Many 
``solutions'' provide a variety of tools for allowing providers to 
create and change rules, and associate them with digital information. 
Rules are protected in the same way content is protected. As with 
content, rules are stored in secured files for distribution. Rules can 
travel with the information, or separately, allowing copyright holders 
the flexibility to change any rule, including rights or price, after 
content has been delivered. An architectural system such as this 
ensures that applicable rules are followed every time an information 
usage `event' is requested.

    Question 4: Some copyright owners have argued that distance 
learning is flourishing and that expanding the scope of the exemption 
provided in section 110(2) may interfere with the primary market of 
educational publishers, if distance educators can get this material for 
free under the exemption. The bill expressly removes from the coverage 
of the exemption ``work produced primarily for instructional use'' 
since we want educational publishers to have the incentive to invest in 
and publish innovative educational materials that copyright protection 
can provide. Do you see any risk to publishers of educational materials 
from expansion of the distance education exemption in the limited 
fashion proposed in the TEACH Act?
    Answer: No, the reward to educational publishers far outweighs the 
risk mentioned. Despite copyright owner arguments that ``distance 
learning is flourishing,'' quite the opposite is true. Distance 
education business models reflect enormous frontend capital 
requirements to create and maintain operations in the early stages of 
initial trial and adoption. Without the content available to educators 
and endusers, distance education providers will be further ham-strung. 
A more reasonable approach to consider might be to limit the amount of 
content from ``work produced primarily for instructional use'' that may 
be covered under the exemption. That may satisfy all concerned parties.

    Question 5: To encourage the use of the Internet in distance 
learning, the TEACH Act would expand the distance education exemption 
in current law to permit the reproduction and distribution of 
copyrighted works to the extent technically necessary to transmit the 
otherwise covered by the exemption. These copies are not to be retained 
any longer than necessary to complete the transmission and, if they 
are, the exemption will no longer apply. Educational institutions have 
raised a concern over caching, which is an automatic storage of a copy 
in an Internet Service Provider's server or a user's browser to make 
the Internet run more quickly. The school doing the transmitting of a 
copyrighted work under the exemption may have no knowledge of or 
control over the caching of copies of the work, even though such 
caching might result in potential liability for the school. Should 
additional language be added to the bill to make clear that such 
automatic caching would be covered by the expanded exemption and, if 
so, what language would you suggest?
    Answer: If appropriate Digital Rights Management protections are 
put in place on the content transmitted, the notion of protection of 
cached content residing on remote servers will be moot.

    Question 6: Both the Copyright Office report and the report of the 
Web-Based Education Commission headed by Senator Bob Kerrey noted that 
educational institutions have difficulty with licensing for digital 
distance education. Even after schools determine who the copyright 
owner is, they often face delays in locating the owner, obtaining 
permission and then may incur substantial costs. The TEACH Act proposes 
a study by the Copyright Office on the licensing problems encountered 
by schools. Are there any steps being taken by schools or copyright 
owners to make the licensing process easier to understand and pursue?
    Answer: Not that I am aware of. Currently, the educational 
institution requires the Professor or instructor to personally obtain 
any and all copyright permission for content incorporated in his or her 
course. Some institutions pursue the purchase of an ``educational use 
license'' from publishers or copyright holders and others pursue the 
option of purchasing a ``blanket license'' from copyright management 
organizations.

    Question 7: The bill requires the educational institution to limit 
reception of an exempted transmission to enrolled students or 
government employees ``to the extent technologically feasible.'' In 
addition, the bill requires the educational institution to apply 
technological measures ``that reasonably prevent unauthorized access'' 
to the work.
    Question (a): Would the fact that these requirements are not 
identical to each other pose a problem for educational institutions to 
comply or are the requirements complementary?
    Answer: These requirements are complementary. As mentioned above, 
there are dozens of Digital Rights Management solutions available to 
copyright holders that will solve this problem for them as well as the 
educational institutions.
    Question (b): Do you believe these requirements would impose any 
obligation on educational institutions to use technology to prevent 
students from freely downloading the materials transmitted?
    Answer: Possibly. The proposed legislation requires that end-users 
of the content transmitted be authorized users and enrolled in a course 
at the institution. So naturally, there is an interface between the 
originator of the content, the Professor or instructor who desires to 
use the content in a course, the educational or governmental 
institution which provides the names of the enrolled end-users and the 
actual Internet Service Provider which transmits the content to the 
end-user. It is the obligation of the institution to manage the set of 
end-users authorized to receive the content. This includes authorizing 
students/employees as well as denying access. There are many existing 
technologies that can ``reasonably prevent unauthorized access'' to 
content transmitted over the Internet.
    Question (c): What degree of protection would be ``reasonable''?
    Answer: Complete protection is ``reasonably'' and entirely 
obtainable.

                                

   Responses of Gerald Heeger to questions submitted by Senator Leahy

    Questions 1 and 2: Raise related issues, question 1 asking whether 
accreditation should be added to non-profit status as a qualifying 
condition for the exemption, question 2 asking whether retaining the 
non-profit requirement aids nonprofit institutions in competition with 
for-profit institutions. We would like to address the questions raised 
in these two issues as follows:
    The principal objective of the distance education exemption should 
be to enhance the breadth and quality of distance education content. To 
the extent that accreditation can effectively identify institutions or 
programs that deliver quality educational content, it is reasonable to 
argue that any accredited institution, whether non-profit or for-
profit, should be eligible for the distance education exemption. The 
U.S. accreditation system includes regional and national accreditation 
agencies recognized by the Council on Higher Education Accreditation 
and the U.S. Department of Education.\1\ Accreditation by these 
recognized accrediting agencies would provide reasonable assurance that 
the distance education exemption is used by legitimate educational 
institutions and programs for the purposes intended in law. 
Accreditation of an institution cannot guarantee that an institution 
will use distance education materials appropriately but would provide 
additional assurance of appropriate use that would be a useful addition 
to the other safeguards already included in S. 487. Since the U.S. 
accreditation system accredits both non-profit and for-profit 
institutions, there does not seem to be a compelling reason to limit 
the distance education exemption to non-profit institutions.
---------------------------------------------------------------------------
    \1\ The CHEA-USDA recognition system is critical. A number of non-
recognized accreditation agencies exist to ``accredit'' diploma mills; 
neither these agencies nor the institutions they accredit should be 
included in a distance education exemption.

    Questions 3: The question asks what technological protections 
copyright owners are employing to protect against unauthorized 
downstream redistribution of copyrighted works. Although a great deal 
of work is underway to develop such technology, we are not aware of 
widely available, effective technologies to control downstream 
redistribution. Colleges and universities are using a number of 
technological protections such as PIN numbers and passwords to control 
online access to copyrighted material and will certainly use 
technological protections that are reasonably available and affordable 
to control downstream uses of copyrighted works once such protections 
are developed.
    However, technological protections that control downstream uses of 
copyrighted works are only one category of protection of copyrighted 
works in S. 487. Access controls, which, as noted above, colleges and 
universities already employ, as well as portion limitations, mediated 
instruction, and limiting the retention of temporary copies provide 
substantial protection against the misuse of copyrighted material.
    Therefore, we suggest that the language of S. 487 concerning the 
use of technological protection measures that reasonably protect 
against unauthorized downstream redistribution be qualified to obligate 
institutions to employ such protections that are ``technologically 
feasible and economically reasonable.'' Currently, such protections are 
not available, and we do not believe that unavailability should freeze 
the deployment of online distance education. When such technologies do 
become available, they must be available on terms that allow 
institutions to implement them effectively: one could imagine the 
development of a technology that provided protection against downstream 
uses but was so prohibitively expensive that it was effectively out of 
reach of all institutions.

    Question 4: This question asks whether S. 487, with its several 
safeguards, poses a threat to publishers of educational materials. 
Since S. 487 would require the use of lawfully made and acquired 
material,\2\ we believe that there is no credible threat to the market 
for publishers of educational materials. Indeed, we believe that the 
educational materials market will expand if S. 487 is enacted into law, 
because such a law will enable more institutions to expand their online 
offerings, thereby expanding the educational market. Moreover, because 
of the inclusion in S. 487 of requirements for using only lawfully made 
and acquired materials, in addition to the inclusions of the other 
safeguards such as portion limitations noted above, we believe that the 
exemption should include, rather than exclude, instructional works. 
Given the requirements and safeguards included in the bill, the risks 
to educational publishers are minimal, but the educational consequences 
of exclusions of instructional materials would be substantial. A risk-
benefit analysis would therefore strongly favor inclusion of 
instructional works in the exemption provided in S. 487.
---------------------------------------------------------------------------
    \2\ Section 110(1) currently requires only that material used for 
classroom performance or display be lawfully made. The addition in S. 
487 of ``lawfully acquired'' therefore constitutes an added requirement 
but is one that we would find acceptable.

    Question 5: This question asks whether additional language needs to 
be added to deal with automatic caching. The educational community is 
concerned with several aspects of the limitations on the reproduction 
right, and believe that several changes in S. 487 are warranted to 
conform with the technical realities of the Internet and to ensure that 
institutions do not lose the benefit of the exemption as a result of 
activity beyond their reasonable control.
    First, we believe that the reference to ``transient'' copies should 
be changed to refer to ``temporary copies'' in order to conform to the 
way in which those terms were used in the DMCA. In section 512 of the 
Copyright Act, enacted as part of the DMCA, Congress differentiated 
between ``transient'' and ``temporary'' copies. The term ``transient'' 
was used to describe router copies or other ``conduit'' copies. See 
Sec. 512(a). The term ``temporary'' was used to describe server 
caching, among other copies of somewhat longer duration. See 
Sec. 512(b). Cached copies, as well as copies made by the receiving 
students' browser software, are typically beyond the control of the 
originating institution. An institution should not lose the exemption 
if such copies are made.
    Further, the bill would limit such copies ``to the extent 
technologically necessary to transmit the performance or display.'' It 
has been argued that caching, though important for Internet efficiency, 
is not strictly ``necessary'' for the completion of a transmission. The 
bill should not impose this limitation, which could be read to preclude 
cached copies.
    Finally, subparagraph (D) would require that ``any transient copies 
are retained for no longer than reasonably necessary to complete the 
transmission.'' This language raises three issues. First, it uses the 
term ``transient'' rather than ``temporary.'' Second, it again 
interposes a requirement of ``necessity,'' which may or may not be 
strictly satisfied by caching. Third, it subjects an institution to 
potential liability for retention of material often beyond its 
reasonable control.
    We suggest that the following be substituted for subparagraph (D): 
``the transmitting entity does not cause a temporary copy made as part 
of the automatic technical process of the digital transmission to be 
retained beyond a period that is reasonable in light of the purpose of 
the transmission for which a copy is created.''

    Question 6: This question asks what steps are being taken to make 
the licensing process easier to understand and pursue. Both the higher 
education community and copyright owners have taken a number of steps 
to try to improve the licensing process. Numerous meetings and 
conferences have been held to discuss the problems of licensing, within 
the higher education community and between the higher education and 
content communities. The Copyright Clearance Center attempts to provide 
a ``one-stop shopping'' service for facilitated licensing transactions. 
Universities have formed consortia to pursue multi-institutional site 
licenses. Although all these efforts have yielded benefits of varying 
degrees, licensing remains a problem and will for the foreseeable 
future, a point which simply underscores the importance of the 
harmonization of the distance education exemption to the digital world 
as proposed in S. 487.

    Question 7: asks about several aspects of S. 487 language 
concerning the use of technological protection measures. The 
educational community is concerned about the potential inconsistency of 
the requirements of subparagraph (C) and the access requirement of 
subparagraph (E)(ii). For example, it is not clear how the provisions 
would be construed if access limitations that were technologically 
feasible were deemed not to provide a reasonable limitation of access. 
Moreover, even if the provisions were fully consistent, we would be 
concerned about their apparent redundancy. Courts often start with the 
premise that Congress would not have included unnecessary language in 
legislation, so that apparently redundant provisions may be 
misconstrued in an effort to supply some meaning. Thus, we do not 
believe that subparagraph (C) and the access provision of subparagraph 
(E)(ii) should both remain in the bill. We believe the requirement is 
best expressed in subparagraph (C), requiring a limitation of access to 
the extent ``technologically feasible.'' It makes no sense to require 
unfeasible technological protection measures.
    Further, we believe that a provision limiting the obligation to 
restrict access to that which is economically reasonable also is 
warranted, and could easily be included by adding the words ``and 
economically reasonable'' after the words ``technologically feasible.'' 
There should not be an obligation to apply access limitations that are 
not reasonably available to non-profit educational institutions.
    We are not clear on part (b) of question 7 relating to ``freely 
downloading'' course materials. Enrolled students must be able to 
download the materials used in the course. Downloading is the normal 
process by which the materials can be viewed and used. Others will not 
have access to the material, as discussed in the preceding paragraph. 
Nor do we believe the access control obligations are intended to 
prevent downloading. The act that should be prevented, to the extent 
reasonable and technologically feasible, is the further dissemination 
of downloaded material to others. That obligation is contained in 
subparagraph (E)(ii). Our position with respect to such measures is 
discussed in response to question 3, above.
    We believe access control through the use of password protection, a 
widely used method of access control for distance education, is 
reasonable.

                                

  Responses of Richard M. Siddoway to questions submitted by Senator 
                                 Leahy

    Question 1: The TEACH Act does not change the limitation in current 
law applying the distance education exemption in section 110(2) only to 
``non-profit'' educational institutions. For-profit educational 
institutions have never qualified for the exemption. The Copyright 
Office and content owners have raised a legitimate question about 
whether ``non-profit'' is an appropriate qualifier since some ``non-
profit'' institutions may not be bona fide educational institutions. 
Should the requirement that the educational institution be 
``accredited'' before it is able to qualify for the exemption be added?
    Answer: It seems appropriate to me that the institution should be 
accredited. I would go further to suggest the accreditation be done by 
the appropriate Association of Schools and Colleges. In our geographic 
location that is the Northwest Association, but this varies by 
geographic location. There are any number of ``accreditations'' that 
could be claimed by various institutions, which may not bring any more 
validity to the process than status quo.

    Question 2: Many sponsors of distance education programs are not 
purely ``non-profit.'' Some nonprofit schools have begun to engage in 
distance education for profit, some commercial entities am forming 
partnerships with nonprofit institutions to offer distance education, 
and some commercial textbook publishers, like Harcourt General, want to 
provide full-service distance education programs for accredited college 
degrees directly. Competition between the non-profit and for-profit 
distance learning programs is good for the country. Do you think that 
retaining the nonprofit requirement in current law helps non-profit 
educational institutions compete?
    Answer: Realize that I am speaking for the public K-12 school 
community. It appears to me that one reason the fair use provisions 
have existed for public schools is because of their free public 
education status. Private non-profit schools have enjoyed that same 
freedom because of their non-profit status. Both public and private 
non-profit schools are working with fixed, limited financial resources. 
Unlike public schools whose budgets are controlled by state 
legislatures and local board decisions, private schools have the 
ability to alter their budgets through increased tuition and fees. 
Consequently, I believe the non-profit requirement is an appropriate 
restriction.

    Question 3: The bill contains safeguards to minimize the risk to 
copyright holders that the use of works under the expanded exemption 
could result in copyright piracy, Among those safeguards is a provision 
requiring the school, to use ``technological measures that reasonably'' 
prevent unauthorized access and dissemination. Could you describe the 
technological measures that copyright owners are using today to 
minimize the risk of unauthorized downstream use of copyrighted works 
in distance learning programs?
    Answer: Again speaking for our particular Electronic High School, 
we have three different delivery methods that each has its own 
safeguards. Our broadcast television courses (largely concurrent 
enrollment, where students earn both college and high school credit) 
purchase the copyright releases on any materials that are broadcast. 
Printed materials are sent only to registered students as are e-mailed 
materials.
    Our EDNET courses axe deliverer) over a closed system. The teacher 
is in one location and students are in distant locations but located in 
an EDNET studio, which gives them access to voice/video/and data 
communication. Each distance learning site has a site facilitator who 
controls the class and distributes printed materials that have been 
transmitted through mail or by e-mail. Only registered students are 
allowed in the classes.
    Our internet class members enter the classes through password 
protection. Only registered members of the class are able to 
participate and receive information.

    Question 4: Some copyright owners have argued that distance 
learning is flourishing and that expanding the scope of the exemption 
provided in section 110(2) may interfere with the primary market of 
educational publishers, if distance educators can get this material for 
free under the exemption. The bill expressly removes from the coverage 
of the exemption ``work produced primarily for instructional use'' 
since we want educational publishers to have the incentive to invest in 
and publish innovative educational materials that copyright protection 
can provide. Do you see any risk to publishers of educational materials 
from expansion of the distance education exemption in the limited 
fashion proposed in the TEACH Act?
    Answer. No. I don't see a problem. At the present time all of our 
internet teachers are avoiding using textbooks and other educationally 
published materials because of the copyright restrictions. Instead, 
they are looking for web sites that provide similar material and ``hot-
linking'' to them In other words, they are staying away from published 
materials because of the currently understood restrictions. If they do 
use a textbook in their class, they are having the students acquire 
those textbooks either by borrowing from their local school or 
purchase.

    Question 5: To encourage the use of the Internet in distance 
learning, the TEACH Act would expand the distance education exemption 
in current law to permit the reproduction and distribution of 
copyrighted works to the extent technically necessary to transmit the 
work otherwise covered by the exemption,. These copies are not to be 
retained any longer than necessary to complete the transmission and, if 
they are, the exemption will no longer apply. Educational institutions 
have raised a concern over caching, which is an automatic storage of a 
copy in an Internet Service Provider's server or a user's browser to 
make the Internet run more quickly. The school doing the transmitting 
of a copyrighted work under the exemption may have no knowledge of or 
control over the caching of copies of the work, even though such 
caching might result in potential liability for the school, Should 
additional language be added to the bill to make clear that such 
automatic caching would be covered by the expanded exemption and, if 
so, what language would you suggest?
    Answer. At the risk or injecting any even thornier conundrum, let 
me suggest that there is a larger problem. The assumption that the 
transmission of the material will occur in a restricted bane frame 
makes the assumption that the class is synchronous. That is, the 
students are all taking the class at the same moment. In the case of 
the Electronic High School, we have open entry, open exit of students. 
Consequently, we have students distributed through any and all of the 
waits in a course at any given moment. In order for a teacher to have 
the materials available for students he/she must be able to maintain 
the material for an extended period of time sufficient to allow all 
students who are registered, at the time the materials are made 
available, to complete the unit for which the materials are intended. 
However, if the appropriate password protections, or other 
technological limitations are placed on students who are taking a 
class, this does not seem to be an onerous task.

    Question 6: Both the Copyright Office report and the report of the 
Web-Based Education Commission headed by Senator Bob Kerrey noted that 
educational institutions have difficulty with licensing for digital 
distance education. Even after schools determine who the copyright 
owner is, they often face delays in locating the owner, obtaining 
permission and then may incur substantial costs. The TEACH Act proposes 
a study by the Copyright Office on the licensing problems encountered 
by schools. Are there any steps being taken by schools or copyright 
owners to make the licensing process easier to understand and to 
pursue.
    Answer. There are data bases that list copyright owners of various 
kinds of media. The larger problem often is that there are multiple 
copyright owners of motion media materials, (script, music, 
choreography, for example). It would be very handy to have a single 
clearinghouse of materials.

    Question 7: The bill requires the educational institution to limit 
reception of an exempted transmission to enrolled students or 
government employees ``to the extent technologically feasible.'' in 
addition, the bill requires the educational institution to apply 
technological measures ``that reasonably prevent unauthorized access'' 
to the work.
    Question (a): Would the fact that these requirements are not 
identical to each other pose a problem for educational institutions to 
comply or are the requirements complementary?
    Answer. They seem to be complementary requirements.
    Question (b): Do you believe these requirements would impose any 
obligation on educational institutions to use technology to prevent 
students from freely downloading the materials.Is transmitted?
    Answer. The restriction seems to be on the transmission end, not 
the reception end of the process. If the institution has taken 
appropriate measures to ensure that only enrolled students are able to 
receive the materials, it appears they have met the test of the law.
    Question (c): What degree of protection would be ``reasonable'' ?
    Answer. If students are able to gain access to the class and its 
associated materials through password access, that would seem to be 
reasonable. Encoding is becoming more and more affordable, but seems 
unnecessary if password protection is in place.
    Thank you for the opportunity to testify before the sub-committee. 
We appreciate so much the work that Senator Hatch and Senator Leahy are 
doing to help us provide high quality educational opportunities through 
distance learning.

                                                Richard M. Siddoway

                                

  Responses of Marybeth Peters to questions submitted by Senator Leahy

    Question 1: The TEACH Act does not change the limitation in current 
law applying the distance education exemption in section 110(2) only to 
``non-profit'' educational institutions. For-profit educational 
institutions have never qualified for the exemption. The Copyright 
Office and content owners have raised a legitimate question about 
whether ``non-profit'' is an appropriate qualifier since some ``non-
profit'' institutions may not be bona fide educational institutions. 
Should the requirement that the educational institution be 
``accredited'' before it is able to qualify for the exemption be added?
    Answer: We recognize that a ``non-profit'' qualifier is not 
sufficient. However, we also have some concern about the use of 
accreditation as a criterion, notwithstanding the support it enjoyed at 
the time we prepared our Report. One of our concerns is that mandating 
accreditation would rule out some institutions that are presently 
eligible for the exemption in section 110(2), even for the 
instructional broadcasting activities that are covered by the existing 
exemption. Another is the multiplicity of accrediting bodies and lack 
of uniform national standards for accreditation.
    One way around this latter concern could be to establish uniform 
national standards for eligibility in lieu of accreditation. These 
standards could be developed by the Department of Education and 
incorporated into the bill or into regulations under Title 17.

    Question 2: Many sponsors of distance education programs are not 
purely ``non-profit.'' Some non-profit schools have begun to engage in 
distance education for profit, some commercial entities are forming 
partnerships with non-profit institutions to offer distance education, 
and some commercial textbook publishers, like Harcourt General, want to 
provide full service distance education programs for accredited college 
degrees directly. Competition between the non-profit and for-profit 
distance learning programs is good for the country. Do you think that 
retaining the non-profit requirement in current law helps non-profit 
educational institutions compete?
    Answer: The Copyright Office analysis on the qualifier issue was 
based on basic copyright principles. We did not undertake an analysis 
based on competitive effects. In our 1999 Report, the Copyright Office 
recommended maintaining existing standards of eligibility for the 
exemption. At the same time, we acknowledged that the lines between for 
profit and non-profit institutions were becoming blurred and that there 
was widespread support for requiring accreditation as a condition for 
eligibility.
    Now, nearly two years later, the lines have blurred even further. 
Nonetheless, we still view the non-profit criterion as an appropriate 
dividing line, perhaps in conjunction with one or more additional 
criteria. (See response to Question 1.)

    Question 3: The bill contains safeguards to minimize the risk to 
copyright holders that the use of works under the expanded exemption 
could result in copyright piracy. Among those safeguards is a provision 
requiring the school to use ``technological measures that reasonably'' 
prevent unauthorized access and dissemination. Could you describe the 
technological measures that copyright owners are using today to 
minimize the risk of unauthorized downstream use of copyrighted works 
in distance learning programs?
    Answer: When we prepared our report in 1999, we noted that 
technologies to prevent unauthorized downstream copying were under 
development, but not yet in widespread use. We are aware of no 
significant change in the intervening two years.Q02
    Question 4: Some copyright owners have argued that distance 
learning is flourishing and that expanding the scope of the exemption 
provided in section 110(2) may interfere with the primary market of 
educational publishers, if distance educators can get this material for 
free under the exemption. The bill expressly removes from the coverage 
of the exemption ``work produced primarily for instructional use'' 
since we want educational publishers to have the incentive to invest in 
and publish innovative educational materials that copyright protection 
can provide. Do you see any risk to publishers of educational materials 
from expansion of the distance education exemption in the limited 
fashion proposed in the TEACH Act?
    Answer: The Copyright Office believes that the recommendations in 
our 1999 Report, as implemented in the bill, represent a balanced 
approach that minimizes the risks to educational publishers. The bill, 
with one important exception, preserves the same balance struck in the 
present copyright law, updating it to account for digital technology.
    The principal difference from the balance struck in 1976 is the 
addition of categories of works other than nondramatic literary and 
musical works. In preparing our recommendations we were persuaded that 
expanding the exemption to include other categories of works was 
appropriate and necessary to permit distance educators to make the best 
pedagogical use of the technology of digital distance education. Rather 
than being merely a direct substitute for instructional broadcasting, 
digital technology enables a more compelling teaching experience which 
often requires the use of multimedia and other materials. However, the 
expansion to additional categories of works is balanced by confining 
the exemption to performance of ``reasonable and limited portions'' of 
such works, and requiring that they be used in the course of an 
instructor-mediated class session.
    We are aware that some content owners have expressed concern about 
the application of the existing exemption from the public display right 
to literary works in the context of digital distance education. 
Specifically, they are concerned that permitting the display of entire 
literary works in the context of digital distance education has a much 
greater impact on copyright holders that permitting the display of 
entire works for purposes of instructional broadcasting. Congress, in 
exempting entire works from the display right in 1976, did not intend 
to permit uses that were more extensive that those that were possible 
under the technology of the time (e.g., holding up a book for the 
camera to see). We believe that the concern of the copyright owners is 
addressed through the limitation of permitted displays in amended 
section 110(2) (A) to those made ``as an integral part of a class 
session.'' Further, it is the view of the Copyright Office that by 
specifying that the copy of the work from which the performance or 
display is transmitted must already be in digital form, Congress 
ensures that the exemption does not itself authorize digitizing works. 
Such authorization would need to be obtained from the copyright owner, 
or found in another provision of the law such as fair use. 
Technological protection measures provide publishers of educational 
literary works with yet another safeguard against use by persons other 
than those enrolled in the class and against unauthorized retention or 
downstream use.

    Question 5: To encourage the use of the Internet in distance 
learning, the TEACH Act would expand the distance education exemption 
in current law to permit the reproduction and distribution of 
copyrighted works to the extent technically necessary to transmit the 
work otherwise covered by the exemption. These copies are not to be 
retained any longer than necessary to complete the transmission and, if 
they are, the exemption will no longer apply. Educational institutions 
have raised a concern over caching, which is an automatic storage of a 
copy in an Internet Service Provider's server or a user's browser to 
make the Internet run more quickly. The school doing the transmitting 
of a copyrighted work under the exemption may have no knowledge of or 
control over the caching of copies of the work, even though such 
caching might result in potential liability for the school. Should 
additional language be added to the bill to make clear that such 
automatic caching would be covered by the expanded exemption and, if 
so, what language would you suggest?
    Answer: Yes, language should be added or substituted to address 
concerns about institutional liability for caching. Pages 4-6 of my 
testimony discuss the caching issue in detail. The Copyright Office is 
presently working with the affected parties to craft appropriate 
language to propose to the Committee.

    Question 6: Both the Copyright Office report and the report of the 
Web-Based Education Commission headed by Senator Bob Kerrey noted that 
educational institutions have difficulty with licensing for digital 
distance education. Even after schools determine who the copyright 
owner is, they often face delays in locating the owner, obtaining 
permission and then may incur substantial licensing costs. The TEACH 
Act proposes a study by the Copyright Office on the licensing problems 
encountered by schools. Are there any steps being taken by schools or 
copyright owners to make the licensing process easier to understand and 
to pursue?
    Answer: The Copyright Office lacks sufficient information to answer 
this question at this time.

    Question 7: The bill requires the educational institution to limit 
reception of an exempted transmission to enrolled students or 
government employees ``to the extent technologically feasible.'' In 
addition, the bill requires the educational institution to apply 
technological measures ``that reasonably prevent unauthorized access'' 
to the work.
    Question (a): Would the fact that these requirements are not 
identical to each other pose a problem for educational institutions to 
comply or are the requirements complementary?
    Answer: After further review of the language of the bill, we have 
concluded that the requirements are complementary, and refer to two 
different technological controls. The condition in subparagraph (C), 
appearing at lines 5-7 on page 3 of the bill, relates to controls over 
access to the transmission--e.g., who can access the material from the 
university server. The condition in subparagraph (E)(ii), appearing at 
lines 5-7 on page 4 of the bill, relates to access control measures 
that are to be applied to the work itself--e.g., persistent file-level 
access control technologies--so that the work cannot be accessed if it 
is somehow further distributed
    Question (b): Do you believe these requirements would impose any 
obligation on educational institutions to use technology to prevent 
students from freely downloading the materials transmitted?
    Answer: The bill requires educational institutions to prevent 
students from freely downloading the materials transmitted by requiring 
(a) that the transmission be limited to enrolled students ``to the 
extent technologically feasible''; (b) that the institution use 
technological measures to reasonably prevent unauthorized access to or 
dissemination of the work; and (c) that technological protection 
measures used by the copyright owner not be interfered with. Each of 
these conditions require the use of technology.
    Question (c): What degree of protection would be ``reasonable? ''
    Answer: Reasonableness would vary depending on such circumstances 
as the effectiveness of the protection, the types of protection 
available in the marketplace, and the degree of risk that particular 
content will be subject to unauthorized use.

             Questions for Marybeth Peters and Allan Adler:

    Question 1: It has been almost two years since the Copyright Office 
issued its report on distance learning and made its legislative 
recommendations. Are there any new developments, new concerns or 
significant advances in technology that would affect any part of the 
analysis in that report?
    Answer: The Copyright Office has received no information in the 
interim that would lead us to change the conclusions that we drew in 
the Report.

    Question 2: The Copyright Office report noted that access control 
measures to copyrighted works, such as passwords, were already in 
widespread use, but technologies that control post access uses for all 
types of works were not widely available. Are technical measures now 
more readily available to control post-access distribution of works 
and, if so, please describe those that are available?
    Answer: While the Copyright Office has not completed any study of 
this issue, we have received anecdotal evidence that such technologies 
are not yet available.

                                

    Responses of Gerald A. Heeger to questions submitted by Senator 
                                Thurmond

    Question 1: Mr. Heeger, Subsection 1 of Section 2 of the proposed 
legislation would broaden the Section 110(2) exemption to allow 
educational institutions and government entities to utilize the 
performance of audiovisual works under limited circumstances. Should we 
refrain from legislative activity due to the rapid development of 
technology and licensing systems? Would it be advisable to take a 
``wait and see'' attitude, allowing the market to handle our concerns 
first? It appears that copyright owners are concerned about broadening 
the exemptions because of the possibilities of unauthorized downstream 
use of copy righted material. If we delay the enactment of legislation 
in this area, will technology develop to the point of allaying the 
fears of copyright owners?
    Answer 1: The primary need in this area of copyright and exemptions 
is for parity. Whatever is possible and allowed in the classroom should 
also be possible and allowed in the online environment. To delay this 
will frustrate the emergence of distance learning in accredited 
institutions. The current situation puts an unnecessary burden on 
institutions that is difficult for them to handle. S. 487 contains a 
number of safeguards in addition to technological protections, such as 
portion limitations, that address concerns of the copyright owners. The 
sooner that we can move in the direction of the proposed legislation, 
the sooner that it can be demonstrated that these safeguards are 
effective, and the sooner we can move to greater cooperation in 
licensing.

    Question 2: Mr. Heeger, the proposed legislation would require 
educational institutions to utilize measures designed to protect 
copyright owners in exchange for the broadening of Section 110 (2)'s 
exemptions. What will be the costs incurred by educational institutions 
and government entities in complying with these protective measures, 
i.e., instituting policies, providing information to facility and 
students, and purchasing appropriate software.
    Answer 2: It is clear from experience that universities have 
implemented strong policies for following appropriate copyright laws 
with their faculties and students. I am unable to estimate the cost of 
compliance, but those costs could pose a problem if, for example, S. 
487 were to obligate universities to employ technological protections 
that were prohibitively expensive. It is important that S. 487 
stipulate that universities employ technological measures that are 
``technologically feasible and economically reasonable.'' Parity with 
what happens in a face-to-face classroom is what is necessary. The 
enforcement objectives should be the same in either case, and online 
requirements need to be reasonable.

    Question 3: Mr. Heeger, some educational institutions are 
considering the establishment of for-profit subsidiaries in order to 
provide distance education. This bill would apply to non-profit 
educational institutions. Will for-profit subsidiaries of educational 
institutions be the wave of the future, thereby frustrating our current 
reform attempts.?
    Answer 3: There needs to be a distinction between for-profit 
teaching institutions and more limited for-profit Subsidiaries. For the 
most part, for-profit subsidiaries of non-profit institutions have been 
organized for specific functions separate from the instructional 
functions of the university, for marketing of developing course 
materials, for example. All non-profit universities, regardless of how 
innovative, intend to continue operating as non-profit teaching and 
research institutions. The creation of new for-profit subsidiaries 
shouldn't frustrate progress in the area of copyright agreements.

                                

Responses of Marybeth Peters to questions submitted by Senator Thurmond

    Question 1: Ms. Peters, the Copyright Act is reflective of the 
teaching environment in the 1970s when there was a great proliferation 
of distance education utilizing analog technology. Wouldn't a 
broadening of Section 110 (2)'s exemption rights to include limited 
rights of reproduction and distribution maintain current policy 
objectives, only reformatting the statute to conform with technologies 
inherent in digital systems? Specifically, do you foresee any 
unexpected harm to copyright owners as a result of this seemingly 
innocuous change (assuming technology is implemented to protect 
unauthorized downstream use of copyrighted material)?
    The broadening of the section 110(2) exemption to cover the rights 
of reproduction and distribution to a limited extent is intended to 
preserve, in the face of technological changes, the policy objectives 
embodies in the current provision. The additional rights are covered 
only to the extent necessary to permit institutions to carry out 
permitted transmissions over a digital network. In addition, 
institutions are required to use technological measures to assure that 
only the students for whom a transmission is intended can use the 
copyrighted material in the transmission. The Copyright Office does not 
foresee any unreasonable harm to copyright owners as a result of this 
change, although copyright owners have raised concerns with regard to 
the display right (which is discussed below in my response to Question 
3).

    Question 2: Ms. Peters, Subsection 1 of Section 2 of the proposed 
legislation would broaden the Section 110(2) exemption to allow 
educational institutions and government entities to utilize the 
performance of audiovisual works under limited circumstances. Should we 
refrain from legislative activity due to the rapid development of 
technology and licensing systems? Would it be advisable to take a 
``wait and see'' attitude, allowing the market to handle our concerns 
first? It appears that copyright owners are concerned about Broadening 
the exemptions because of the possibilities of unauthorized downstream 
use of copyrighted material If we delay the enactment of legislation in 
this area, will technology develop to the point of allaying the fears 
of copyright owners?
    I recommended expanding the exemption to include audiovisual works 
because of educators' concerns. They indicated that there was a strong 
pedagogical value in using this important and popular category of work 
for teaching purposes and noted the difficulty of obtaining digital 
licenses from owners of audiovisual works. Additionally, digital 
distance education is using more and more multimedia works, which 
incorporate audiovisual works and may be considered audiovisual works 
themselves. Instructional audiovisual works are excluded from the 
exemption (as are all instructional works) and the use of audiovisual 
works is confined to limited and reasonable portions (e.g., a film 
clip, not a substantial part of a film). I believe that the proposed 
expansion safeguards copyright owners, especially since the proposed 
exemption is contingent on the use of technological measures that 
control downstream uses of copyrighted works.

    Question 3: Ms. Peters, you stated in your testimony that 
Subsection 2 of Section 2 of the proposed legislation would prohibit 
the display of copyrighted materials in their entirety because entire 
works could not possibly be ``an integral part of a class session,'' as 
required by the bill. Wouldn't this language allow instructors of 
courses to provide substantial portions of copyrighted materials such 
as books, justifying the substantial portions as being integral to a 
students preliminary understanding during the class session? Why not 
amend the bill to treat displays the same as performances and treated 
in Subsection 1 of Section 2 of the bill, which requires reasonable and 
limited portions of the performance of a work?
    The Copyright Office believes that a fair interpretation of the 
limitation that requires displays exempted under section 110(2(A) to be 
made `` as an integral part of a class session'' would not permit the 
consumption of substantial portions works such as textbooks, 
notwithstanding the fact that the exemption for the display of works is 
not subject to quantitative limitations. A ``class session,'' even in 
the online world, must be limited in scope and duration. Even if an 
instructor has the legal right to display an entire text, the ``class 
session'' limitation would not permit the student to consume it in its 
entirety. There are problems inherent in limiting the display right. 
For example, it would be impractical and unreasonable no to permit and 
instructor to display an entire painting, photograph, or short textual 
work such as a poem. Moreover, since the current exemption permits the 
display of entire works, such a limitation would bar activities using 
analog technology that are currently permitted.

    Question 4: Mr. Peters, the fair use doctrine incorporated into 
Section 107 of the Copyright Act is supposed to be technology-neutral. 
In you opinion, does digital technology add new ambiguities to the fair 
use doctrine?
    Note really. As you have stated, the fair use exception, section 
107 of the Copyright Act is technology-neutral. Courts have been 
applying the fair use doctrine to numerous cases occasioned by changing 
technologies in the past decades without the exemption itself growing 
any more ambiguous. Courts are today applying section 107 to works in 
digital from with no greater conceptual difficulty than in fair use 
cases generally.
    There is much confusion and misunderstanding about the fair use 
doctrine, especially in a digital environment. I did suggest some 
clarification through report language that explicitly addresses certain 
fair use principles and confirms that the doctrine applies to 
activities in the digital environment, as well as inclusion of some 
examples of digital uses that might qualify as fair use. The law, 
however, should not be amended.

    Question 5: Ms. Peters, would it be advisable to legislate some 
minimum levels of fair use in lieu of amending the language of Sections 
110 (1) and (2)? It appears that educational institutions are wary of 
using fair use as a safe harbor because of the lack of certainty 
associated with it. Do you think we could accomplish the same policy 
objectives by attempting to legislate some minimum uses of copyrighted 
works that would qualify as ``fair use''?
    Although there is a the lack of certainty inherent in the use of 
the doctrine of fair use as an affirmative defense to copyright 
infringement, it would nonetheless not be desirable to legislate 
minimum levels of fair use in lieu of amending the language of section 
110(2). Fair use is intended to be a balancing test of factors that 
operates independently from the other specific exemptions and 
limitations in sections 108 through 122. Specific exemptions already 
exist in section 110(1) and 110(2) to provide educators with strictly 
delineated parameters for their use of copyrighted works. Indeed, 
section 110(1), which addresses face-to-face teaching activities, 
appears to be functioning appropriately, and I am not aware of any 
calls for legislative change.

    Question 6: Ms.. Peters, the proposed legislation would require 
educational institutions to utilize measures designed to protect 
copyright owners in exchange for a broadening of Section 110(2)'s 
exemptions. What will be the costs incurred by educational institutions 
and government entities in complying with these protective measures, 
i.e., instituting policies, providing information to faculty and 
students, and purchasing appropriate software.
    Educational institutions already take some responsibility for the 
security of materials they disseminate; use of passwords and other 
access controls is widespread. Moreover, many also require compliance 
with copyright policies and inform students and faculty about the law. 
The only issue seems to be technologies to prevent unauthorized 
downstream copying of copyright works. At present, these technologies 
are not widely available in the marketplace; thus the actual cost is 
not known at this point in time. Nonetheless, we believe that the use 
of such technological safeguards is an important part of the policy 
balance should the section 110(2) exemption be extended to the digital 
realm.

    Question 7: Ms. Peters, Subsection 4 of the Section 2 of the bill 
would make the protection of the exemptions contingent upon the use of 
``technological measures that reasonable prevent unauthorized access to 
and dissemination of the work. . . .'' What does ``reasonable'' mean in 
this context? Will educational institutions be pulled into litigation 
over whether their technological measures are reasonable?
    I do not believe that educational institutions will be forced into 
excessive litigation over whether their technological measures are 
reasonable, because in all likelihood, most educational institutions 
will make good faith efforts to institute effective technological 
measures to prevent unauthorized access and dissemination. However, 
courts have always established standards for what is ``reasonable'' 
under the law. Reasonableness would vary depending on such 
circumstances as the effectiveness of the protection, the types of 
protection available in the marketplace, and the degree of risk that 
particular content will be subject to unauthorized use. What is clear, 
however, is that the technical measure does not necessarily need to be 
100% effective-indeed, no technology can be 100% effective.

    Question 8: Ms. Peters, some educational institutions are 
considering the establishment of for-profit subsidiaries in order to 
provide distance education. This bill would apply to nonprofit 
education institutions. Will for-profit subsidiaries of educational 
institutions be the wave of this future, thereby frustrating our 
current reform attempts?
    The Copyright Office analysis on the qualifier issue was based on 
basic copyright principles. In the 1999 Copyright Office Report on 
Digital Distance Education, I recommended maintaining existing 
standards of eligibility for the exemption. At the same time, the 
Report acknowledged that the lines between for-profit institutions were 
becoming blurred and that there was widespread support for requiring 
accreditation as a condition for eligibility. Now, nearly two years 
later, the lines have blurred even further. Nonetheless, I still view 
the non-profit criterion as an appropriate dividing line, perhaps in 
conjunction with one or more additional criteria. The Copyright Office 
doesn't believe that limiting the exemption to nonprofit institutions 
will frustrate the reform efforts. A basic principle of copyright is 
the for-profit entities engaged in for-profit activities should license 
or purchase copyrighted materials.

    Question 9: Ms. Peters, when digital technology is used to transmit 
abroad, what are some of the options we have to address choice of law 
problems? Can these types of problems be solved in the context of 
current statutes and treaty provisions?
    When educational institutions in the United States use digital 
technology to transmit courses abroad, a number of legal questions 
relating to choice of law are raised. Unfortunately, under current 
legal doctrines, answers to these questions are still unclear. In the 
traditional analog world, the generally accepted view is that questions 
of authorship and ownership are governed by the law of the work;s 
country of origin, while questions of rights and remedies are governed 
by the law of the country where the infringing act takes place. In the 
digital realm, however, the situs of the relevant act is not always 
clear. Resolution of these difficult issues has been a focus of 
attention among law professors and others in recent years. However, at 
this point we cannot say whether or not these issues can be solved 
within the current framework of treaty provisions and domestic law.

                       SUBMISSION FOR THE RECORD

  Statement of Hon. Maria Cantwell, a U.S. Senator from the State of 
                               Washington

    Chairman Hatch and Senator Leahy, thank you for calling this 
hearing. Distance learning programs are critical to meeting the goal of 
bringing quality education to all Americans.
    From my perspective, distance education offers two great 
opportunities: first, providing a better education for those in our 
rural communities, and second, providing job training and retraining to 
America's workforce to meet the needs of the New Economy. Distance 
learning is a critical component in our strategy to build a better 
educated, more fully employed--and employable--America.
    But as we consider changes to copyright law, I want to sound a word 
of caution. Intellectual property has been a cornerstone of our 
prosperity. When we consider changes to intellectual property law, we 
should be sure that the technology is working in our favor. I 
understand that some here today are concerned that the exemption that 
we are considering is inappropriate for two principle reasons. First, 
they argue it is premature since the marketplace hasn't had adequate 
time to develop. Second, that technological protections for 
intellectual property are not widely in use in distance education 
programs, and therefore, the bill is based on a false premise. As to 
the first point, I disagree, but as to the importance of technological 
protections, I share the concern to some extent.
                 Let me expand on each of these points:
    One of the greatest promises of distance education is the ability 
to make a high quality education affordable and accessible to those in 
hard to reach rural areas throughout the U.S. I have made it a priority 
to enhance federal funding for rural distance education--and distance 
medical care programs. This is an area where technology has proven to 
be extremely valuable. As we enhance federal funding, Congress must 
also examine federal law to see where the law might impair the 
deployment of new and innovative programs.
    To maintain our edge in the global economy we must ensure that 
every American has the opportunity to learn the necessary skills. 
Distance learning programs are important to retraining our existing 
workforce and bringing into the economy those communities with 
historically high unemployment rates. Very simply put, the growth of 
distance education will improve our ability to fully employ our 
domestic workforce.
    That said, we must act with the awareness that intellectual 
property is the underpinning of the traditional hightech industries, 
those directly involved in developing hardware and software, and other 
industries equally critical to the growth of our domestic economy: 
publishing, entertainment and the media. And I have heard concerns that 
this bill may not adequately protect the intellectual property produced 
by these industries.
    Specifically, I have heard two concerns I want to focus on: First, 
that the distance education marketplace is nascent and rapidly 
changing, and that the education and copyright communities haven't had 
a chance to work through copyright issues. To this I respond that 
distance education is likely to be forever evolving, with infinite 
variations and innovations in technological and teaching models. We 
need to consider these circumstances as we look at revising the law, 
but we need not wait for the industries to ``settle down'' to 
identified business models or routine practices.
    The second concern that I have heard is that as we consider 
amending copyright law to make it easier for teachers to use 
copyrighted materials in their online classrooms, we make sure 
copyright owners have adequate assurance that their works will be 
protected from unauthorized use or distribution. I share this concern 
since adequate technological protections for intellectual property are 
not yet widely available to online educators. So I am interested in 
hearing more about how educators are currently addressing the need to 
protect copyrighted materials, and how in the future they will provide 
adequate assurances to copyright owners that their materials will not 
be distributed beyond their bona fide students.
    I would be interested in working with the Chairman, Senator Leahy, 
educators and the copyright community to encourage wider use of 
appropriately protective technologies and I look forward to doing what 
I can to help move this bill forward expeditiously.
    I look forward to hearing from our witnesses today and thank you 
all for coming.

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