[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                  PIRACY OF LIVE SPORTS BROADCASTING 
                           OVER THE INTERNET

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


                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 16, 2009

                               __________

                           Serial No. 111-94

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
54-075                    WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
JUDY CHU, California                 TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel


                            C O N T E N T S

                              ----------                              

                           DECEMBER 16, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     1
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Member, Committee on 
  the Judiciary..................................................     2

                               WITNESSES

Mr. Michael J. Mellis, Senior Vice President and General Counsel, 
  MLB Advanced Media, L.P.
  Oral Testimony.................................................     3
  Prepared Statement.............................................     6
Mr. Lorenzo J. Fertitta, Chief Executive Officer, Ultimate 
  Fighting Championship
  Oral Testimony.................................................    12
  Prepared Statement.............................................    14
Mr. Michael Seibel, Chief Executive Officer, Justin.tv Inc.
  Oral Testimony.................................................    25
  Prepared Statement.............................................    27
Mr. Ed Durso, Executive Vice President, Administration, ESPN, 
  Inc.
  Oral Testimony.................................................    35
  Prepared Statement.............................................    37
Mr. Christopher S. Yoo, Professor of Law and Communication, 
  University of Pennsylvania Law School
  Oral Testimony.................................................    42
  Prepared Statement.............................................    44

                                APPENDIX

Material Submitted for the Hearing Record........................    75


          PIRACY OF LIVE SPORTS BROADCASTING OVER THE INTERNET

                              ----------                              


                      WEDNESDAY, DECEMBER 16, 2009

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 11:13 a.m., in 
room 2141, Rayburn House Office Building, the Honorable John 
Conyers, Jr. (Chairman of the Committee) presiding.
    Present: Representatives Conyers, Jackson Lee, Waters, 
Delahunt, Johnson, Quigley, Smith, Coble, Goodlatte, Issa, and 
Rooney.
    Staff Present: (Majority) Jason Everett, Counsel; Kirsten 
Zewers, Counsel; Brandon Johns, Clerk; and (Minority) David 
Whitney, Counsel.
    Mr. Conyers. The Committee will come to order.
    Good morning everyone, particularly our witnesses. This is 
a hearing on Piracy of Live Sports Broadcasting Over the 
Internet. The purpose of the hearing is to examine how the 
piracy of live sporting events over the Internet impacts sports 
leagues, consumers, broadcasters, and the unique challenges 
copyright owners face in attempting to enforce their rights on 
the Web page. More and more of other media, the music, the TV 
shows, and the sports, is moving to the Internet. Piracy has 
increasingly injured artists and intellectual property owners 
as individual consumers have access to faster, more powerful 
Internet connections.
    The Judiciary Committee has convened today's hearings to 
discuss an emerging form of piracy, that of live broadcast in 
real-time, especially with regard to sporting events. This is 
supposed to allow us to examine how new technologies that allow 
for the streaming in real-time of sporting events also may 
allow individuals to evade intellectual property laws. And so I 
look forward to learning from our witnesses about the frequency 
of Internet piracy of live sporting events, how this type of 
piracy could negatively affect consumers and what we may want 
to do about it.
    I am pleased now to recognize my friend from Texas, Lamar 
Smith, the Ranking Member.
    Mr. Smith. Thank you, Mr. Chairman. This oversight hearing 
focuses on an emerging and disturbing new aspect of Internet 
piracy, the unauthorized streaming of live television 
programming. Today the Committee will consider the impact of 
this piracy on sports leagues. The programming produced by 
professional and college sports associations, such as the Major 
League Baseball, the National Basketball Association, the 
Ultimate Fighting Championship, and the National Collegiate 
Athletic Association, is among the most popular and 
unfortunately the most pirated programming in the world.
    Sports leagues are investing significant amounts to monitor 
the piracy of their property and provide notices to Internet 
service providers and web site operators to take down illegally 
posted content. The cost of these efforts are then passed on to 
sports fans and consumers when they purchase tickets or 
subscribe to sports networks. Leagues spend billions of dollars 
annually to build and market their brands. Half or more of 
their revenue is generally derived from exclusive television 
deals, Pay Per View sales, and licensed Internet distribution.
    The unauthorized distribution of all forms, live and 
preproduced video programming, is widely and readily available 
via the Web. An example of this is when pirated movies become 
available on the Internet before they are released in movie 
theaters. There is an old expression that applies here, why buy 
the cow if you can get the milk for free? Why pay the sporting 
event when you can watch it on line for free?
    The wider adoption of broadband technologies, the 
widespread availability of inexpensive devices to upload 
television signals to the Web and the global nature of the 
Internet together pose enormous challenges to rights holdings.
    The Organization for Economic Cooperation and Development 
has declared the use of P-to-P networks for live piracy has 
become ``a significant threat for the sportscasting industry.'' 
The United States Trade Representative has noticed that China, 
which today has more Internet users than any other nation, is a 
nation of particular concern when it comes to Internet piracy.
    Internet piracy, particularly the theft of live 
programming, has increased dramatically in recent years. It is 
clear we need to assess the state of the law and technology and 
to begin consideration of the steps that ought to be taken 
domestically and internationally to respond to this new and 
damaging form of piracy.
    Mr. Chairman, thank you for holding the hearing, and I 
yield back my time.
    Mr. Conyers. Thank you very much. Did any other Member want 
to bring greetings? I notice Magistrate Hank Johnson, Chairman 
of a Subcommittee himself has, indicated in the affirmative and 
the gentleman is recognized.
    Mr. Johnson. Thank you, Mr. Chairman, for holding this very 
important--thank you for holding this important hearing on a 
very important development in the annals of history of 
communication.
    Piracy comes in many forms and no content provider is 
immune. Today we will examine the impact that streaming piracy 
has on live sporting events and the unique challenges copyright 
owners face in enforcing their rights. Specifically, we will 
hear about how streams are distributed over the Internet and 
the confines of the Digital Millennium Copyright Act, which is 
intended to protect copyrighted works in the digital 
environment.
    The effects of piracy are widespread and felt across the 
Nation. Unfortunately, illegal streaming of sports events is on 
the rise and negatively impacts our economy. It also hurts 
consumers. When individuals illegally stream sports events, 
companies lose revenue. Consequently companies pass down the 
cost to consumers who seek to lawfully view live sporting 
broadcasts on line.
    Furthermore, pirating sports events has a negative impact 
on the sport. If fewer funds are received by rights holders 
from the sale of the broadcasting rights, then fewer funds will 
be available to invest back into the sport. It is imperative 
that Congress act to send the message loud and clear that 
illegal streaming copyrighted content is unacceptable and will 
not be tolerated.
    I thank the Chairman for holding this hearing, and I look 
forward to hearing from our witnesses today, all of whom I 
thank for being here. And I yield back.
    Mr. Conyers. Thank you, Chairman Johnson. We welcome our 
panelists, a very distinguished group of men and women, 
Professor Christopher Yoo, not to be confused with John Yoo, no 
relation.
    Mr. Yoo. No relation, Mr. Chairman.
    Mr. Conyers. Mr. Ed Durso. Mr. Michael Seibel, Mr. Lorenzo 
Fertitta, and of course Michael Mellis, who will start us off.
    I just want to say this about him, I rarely stay up later 
than my bedtime to read law review articles, but yours, which 
exceeded 100 pages, was very fascinating, and I want to 
compliment you for it.
    As Senior Vice President, General Counsel of Major League 
Baseball Advanced Media, an interactive company of Major League 
Baseball founded in 2006, the Coalition Against on Line Video 
Piracy. Prior to that he was Deputy General Counsel for News 
Media at Mayor League Baseball. He clerked for a Federal court 
judge and, without diminishing any of his reputation, he 
graduated with honors from Harvard Law School.
    And so we include all of your statements in the record, and 
we welcome you, Mr. Mellis, to these proceedings.

   TESTIMONY OF MICHAEL J. MELLIS, SENIOR VICE PRESIDENT AND 
           GENERAL COUNSEL, MLB ADVANCED MEDIA, L.P.

    Mr. Mellis. Thank you very much, Mr. Chairman. I very much 
appreciate the kind words.
    Chairman Conyers----
    Mr. Conyers. You have to turn the mike on.
    Mr. Mellis. Chairman Conyers--oh, first, thank you very 
much, Mr. Chairman. I appreciate the kind words that you just 
said.
    Good morning, everyone, Chairman Conyers, Ranking Member 
Smith and distinguished Members of the Committee. On behalf of 
Major League Baseball I would like to thank you for the 
privilege of addressing you this morning. My name is Mike 
Mellis and I am Senior Vice President and General Counsel of 
MLB Advanced Media, which is MLB's Internet and interactive 
media company.
    Under the leadership of Commissioner Allan H. Selig, MLB 
has developed highly successful, diverse and innovative sports 
media businesses. On television our game telecasts are 
distributed nationally through DirecTV, ESPN, FOX, inDemand, 
the MLB network, TBS, and Verizon; locally through broadcast 
television stations and regional sports networks; and 
internationally, to over 200 countries and territories and the 
U.S. Armed Forces overseas.
    On the Internet MLB has been a pioneer in distributing live 
sports. MLB's first live game webcast occurred in 2002, an 
innovation to better serve our fans in the pioneering tradition 
of the first radio broadcast of one of our games in 1921 and 
the first television broadcast of one in 1939.
    Today MLB.TV is the world's most successful and 
comprehensive and live video service on the Internet, 
distributing thousands of games live each season to a global 
audience of baseball fans using personal computers and iPhones.
    Clearly then rights owners like MLB can be adversely 
impacted by telecast piracy. And right now there is an emerging 
type: Unauthorised streaming over the Internet of live 
television programming of all types, including live sports 
telecasts and related programming.
    The number of sites and services involved in this 
phenomenon is significant and has grown rapidly. They are 
believed to be located in many nations, including the People's 
Republic of China and the United States. Many are open doors, 
permitting any type of television programming to be streamed 
live, persistently and globally without authorization from 
copyright owners.
    This poses a threat to the global televised media sector. 
Although there is much that remains unknown about this problem, 
particularly with respect to its offshore aspects, it is clear 
that on an annual basis tens of thousands of hours of live 
television programming from networks around the world are being 
pirated. Included is significant piracy of live sports.
    In our rights enforcement efforts throughout the past 
several years, during which we have catalogued thousands of 
piracy incidents, the dominant pattern we have seen is piracy 
occurring through streaming over peer-to-peer services based 
China. Late last year we observed a newer pattern involving 
livestreaming user generated content sites, sometimes called 
lifecasting sites, most of which are located in the United 
States.
    We have also seen that when operators of sites and services 
decide to take affirmative steps to prevent or block 
unauthorized streaming the piracy can be substantially 
mitigated.
    Our copyright law is clear, this piracy is copyright 
infringement. However, domestic copyright infringement--excuse 
me, domestic copyright litigation is a remedial tool available 
only in limited circumstances. This is because the piracy is 
global, often involving sites and services that operate 
entirely offshore, outside the effective reach of our courts. 
Approximately 75 percent of the pirated retransmissions of our 
game telecasts have occurred through offshore sites and 
services, and approximately 50 percent of the total through 
Chinese sites and services. Under these circumstances the 
remedial steps available to the private sector are limited.
    We therefore believe that international cooperation about 
this problem must be improved. Most nations are both exporters 
and importers of television programming. So we see common 
ground, both in terms of shared economic interest and legal 
obligations for the U.S. and its trading partners to work 
cooperatively to curtail this problem.
    We therefore recommend that Congress and the Administration 
give this matter priority in our Nation's ongoing efforts to 
improve intellectual property rights protection and enforcement 
on a worldwide basis.
    In conclusion, this emerging breed of piracy is 
international in scope and has demonstrated growth 
characteristics. The threat it poses to the U.S. televised 
media sector must be taken seriously. We believe it is prudent 
to move proactively against this threat now, and we commend 
this Committee for shining a spotlight on it today through this 
hearing.
    As we develop more experience in this area, we look forward 
to the opportunity to make additional recommendations to you.
    Once again, thank you very much for your interest in the 
matter and for the privilege of addressing you this morning.
    [The prepared statement of Mr. Mellis follows:]
                Prepared Statement of Michael J. Mellis














                               __________

    Mr. Conyers. Thanks, Mr. Mellis.
    Ultimate Fighting Championship has been the main activity 
of Mr. Lorenzo Fertitta, our next witness. He has also been a 
casino executive, a sports promoter, and he has got degrees 
from San Diego University and the Stern School of Business at 
NYU.
    Welcome to our hearing, sir.

  TESTIMONY OF LORENZO J. FERTITTA, CHIEF EXECUTIVE OFFICER, 
                 ULTIMATE FIGHTING CHAMPIONSHIP

    Mr. Fertitta. Thank you, Mr. Chairman. Thank you, Chairman 
Conyers. Thank you, Ranking Member Smith, and distinguished 
Members of the Committee. I would like to thank you for 
inviting me to appear today to discuss the on-line streaming of 
stolen copyrighted works, including pirated live sporting 
events. It is a true honor for me to be here, and I am pleased 
to explain how unlawful live streaming of our Pay Per View 
events adversely impacts our business.
    The piracy of live sporting events is illegal, it kills 
jobs and threatens the expansion of U.S.-based companies.
    In 2001, my brother and I along with our friend Dana White, 
purchased the nearly bankrupt UFC. We saw great potential in 
the UFC when many thought we were crazy. We took a great risk, 
but today the UFC is a phenomenal success, creating and 
impacting thousands of jobs for our athletes, licensees, 
partners, and affiliates. That success is threatened by the 
theft in retransmission of our live Pay Per View events, which 
account for nearly half of our revenues.
    Our copyright protected works are critical to our survival, 
yet they are infringing--yet there are infringing web sites 
where you will find almost any type of content which is all 
likely pirated. These include live UFC events, NFL, NBA and MLB 
games, they Olympics and virtually every TV show and movie.
    If copyrighted works are allowed to be pirated with 
impunity, the potential effects on U.S. producers of 
entertainment programming, including the thousands of jobs that 
they create, will be disastrous.
    The UFC is potentially losing tens of millions of dollars a 
year from piracy. Here is how the theft occurs. With a simple 
adapter purchased from any retail electronic store like the one 
I hold in my hand, someone with access to one of our live 
events reproduces the program and retransmits it over the 
Internet with the aid of these new web sites. The site then 
allows any user to view the programming without authorization 
or payment. These unauthorized viewers watch the live event 
just like those who lawfully purchased the content through Pay 
Per View.
    Just last month the broadcast of UFC 106 had over 271 
unauthorized streams with over 140,000 views, and those were 
just the streams that our piracy team was able to locate.
    We do our best at considerable expense to have our 
copyrighted content removed from these web sites. We have a 
team of in-house technicians scanning the web sites and 
chatrooms to find our pirated content. We also have hired 
several private vendors to assist us in this effort.
    However, even if our--even after our request the streaming 
web site takes down our pirated content, it is often too late 
because the value of our content is extremely perishable. A 
match can be over in seconds. So even if the web site takes the 
infringed content down within 15 minutes, the damage is done.
    I would like to emphasize that as a business entrepreneur I 
applaud the development of technologies that help consumers 
access entertainment in more robust and creative ways. Indeed, 
the UFC constantly employs new technologies to provide our fans 
with the content they love and the format they desire, and we 
in no way want to discourage the development and use of 
legitimate methods of distribution. However, the use of 
technology to circumvent intellectual property laws and aid the 
piracy of content is something that we cannot and should not 
tolerate.
    Based on our observation, many of these new websites are 
making fortunes by aiding in the theft of our content and 
making it available through their web sites. While these sites 
purport to be a from for users who share their own original 
user generated video content, they cannot deny that watching a 
live Pee Wee football game will not generate much, if any, 
viewer interest. Certainly it would not drive enough traffic to 
rate a viable business based on an advertising revenue model. 
The truth is that most of the content that is generating any 
real traffic consists of infringing streams of copyrighted 
works.
    To make matters, worse the web sites often actively promote 
or induce infringement by instructing users on how to upload 
live content from their television computer or other device. I 
submit that they have deliberately chosen not to take 
reasonable precautions to deter rampant infringement on their 
sites because they profit from the availability of infringing 
streams on those sites.
    As the Committee examines this important issue we believe 
that there are steps that could be taken to help alleviate 
these problems. web site operators are in the best position to 
stop the retransmission of stolen live streaming content. For 
example, they should not permit streaming content unless they 
receive confirmation that the person uploading the stream is 
authorized to do so. They should take steps to disable 
instantly the ability from pirates from uploading content, 
including blocking any uploads from their IP addresses. They 
should also institute strict limits on the number of viewers 
that can see a particular stream.
    These sites should preserve identifying information about 
their users, and they should require such information as a 
condition of providing users access to their streaming 
technology web sites.
    Finally, they should incorporate the latest technologies, 
perhaps electronic fingerprinting, to prevent the piracy that 
they are currently aiding.
    Mr. Chairman, we are at a critical moment in the evolution 
of digital content delivery. It is critical that our courts and 
our policymakers send an unambiguous signal that users and 
companies who engage in these activities should not be allowed 
to operate beyond the reach of the law and to examine our laws 
to see if any updates may be needed. If the rampant piracy via 
these new sites is allowed to continue, it threatens the 
financial viability of the UFC and many other businesses that 
rely upon these live broadcasts.
    I want to thank the Committee again for giving me the 
opportunity to testify today. We at the UFC would be pleased to 
assist the Committee in any way and answer any questions. Thank 
you.
    [The prepared statement of Mr. Fertitta follows:]
               Prepared Statement of Lorenzo J. Fertitta
























                               __________
    Mr. Conyers. Thanks, Mr. Fertitta.
    Our next witness is Michael Seibel, an amazing young man, 
cofounder and CEO of the web site Justin.tv, which has been the 
largest live video site on the Web with more than 30 million 
visitors each month. And before that he was campaign director 
for our former colleague Kweisi Mfume, and we recognize his 
talent because he is a political science graduate of Yale 
University.
    Welcome to the hearing.

                 TESTIMONY OF MICHAEL SEIBEL, 
            CHIEF EXECUTIVE OFFICER, JUSTIN.TV INC.

    Mr. Seibel. Chairman Conyers and Ranking Member Smith and 
Members of the Committee----
    Mr. Conyers. Push the button.
    Mr. Seibel. Thank you for allowing me to testify today.
    Justin.tv is a privately owned technology start-up, formed 
in 2006, and based in San Francisco, with 32 employees. We have 
raised capital from some of the investors and engineers behind 
TiVO, Google, Twitter, Skype, Hotmail, and many other well-
known technology companies. We provide a platform that empowers 
people to create and share live video online. Our site is the 
modern equivalent of the town square, but instead of standing 
on a soap box to be heard a user can broadcast his or her 
message to the world.
    Our vision is to make live video part of the every day 
Internet experience in the same way that other companies have 
brought online images, news and video clips into the 
mainstream. In a time of traditional media consolidation, 
Justin.tv is providing an important alternative platform for 
the distribution of live video content.
    In addition to providing everyday people with access to 
large audience, we have worked with a wide variety of content 
owners, advertisers, and entertainers to help them increase 
awareness of their content and services. In 2009 alone Comcast 
and G4tv utilized Justin.tv for live coverage of E3, the 
largest video game conference in America. MicroSoft produced a 
10 episode live show on the site, attracting over 2 million 
potential new customers. And the Jonas Brothers broadcast live 
on Justin.tv promoting their Disney movie, which went on to 
gross almost $40 million worldwide.
    We aim to meet the needs of everyone, from individuals to 
large corporations. Because we provide thousands of channels of 
content 24 hours a day, 7 days a week, it is impossible for 
Justin.tv to manually monitor its user broadcasts. The DMCA 
recognizes this impossibility, providing online service 
providers like Justin.tv with a safe harbor from copyright 
infringement liability. We comply with the DMCA by, among other 
things, responding to take down notices and terminating the 
accounts of repeat infringers expeditiously.
    Like Justin.tv, all four major sports leagues host user 
generated content on their web sites and rely upon the DMCA to 
protect themselves from liability for the content uploaded by 
their users. We work with copyright holders to go above and 
beyond the DMCA in our effort to ensure that unauthorized 
content does not appear on the site.
    One example of this effort is our copyright protection 
system, an online tool that enables copyright owners to 
instantly remove their content from the site. Another is our 
recent partnership with Vobile to implement live filtering 
through which a copyright owner's content is compared to 
content streaming on Justin.tv in real time and when there is a 
match the infringing content is removed. This system was 
deployed on November 15th and immediately began removing FOX's 
static content from the site.
    On Sunday we tested the system with NBC and the NFL for 
their Sunday night football game. The live filter was 
successful in removing the majority of infringing channels 
automatically. At this point the path to full full deployment 
is clear.
    Among the hundreds of organization that take advantage of 
one or more of the solutions referenced above are the NFL, the 
NBA, the MLB, UFC, ESPN, NBC, FOX, CBS, ABC and Comcast. Our 
providing solutions that go above and beyond the requirements 
of the DMCA has not yet become standard in the live video 
industry. We believe strongly in the value of providing 
copyright owners with the resources to protect their rights, 
having invested time and money into developing such resources. 
We are sensitive to the concerns of the professional sports 
industry and have entered memoranda of understanding with FOX 
and a major American sports league that clearly lays out how we 
can work together to combat these issues. We are actively 
negotiating similar agreements with NFL, MLB, NBC and Sony, 
with the goal of finalizing those agreements before the new 
year.
    Our goal is to democratize the power of live video, and the 
misuse of our technologies slows our progress toward that goal. 
We trust that this Committee and Congress will recognize and 
protect the legitimate interest of technology companies that 
provide citizens with the tools to share their voices with the 
world while also considering the concerns of copyright owners.
    We are available to assist the Committee as it explores 
these issues and are happy to answer your questions.
    [The prepared statement of Mr. Seibel follows:]
                  Prepared Statement of Michael Seibel
















                               __________

    Mr. Conyers. Thank you, Mr Seibel.
    Ed Durso heads ESPN and developed the magazine as well. 
Previously he served in a number of leadership roles in the 
office of the Commissioner of Major League Baseball, and he is 
a graduate with honors of Harvard University, I note duly. Glad 
to have you here.

       TESTIMONY OF ED DURSO, EXECUTIVE VICE PRESIDENT, 
                   ADMINISTRATION, ESPN, INC.

    Mr. Durso. Thank you, Mr. Chairman. Mr. Chairman, Ranking 
Member Smith, other Members of Committee, I would like to begin 
by commending you for holding this hearing and in particular 
for your focus on emerging forms of Internet piracy.
    In today's economy we cannot afford to let the threat of 
U.S. intellectual property undermine the vitality of what 
should be among our most promising, creative and economic 
assets. Each year ESPN invests billions of dollars to produce 
tens and thousands of hours of high quality sports programming 
for distribution by television and a growing array of new media 
platforms.
    We are here today because sports is not immune from piracy. 
We see this on an increasing number of Internet sites that are 
the focus of today's hearing. These sites enable the real-time 
theft of live sports programming uploaded either directly by 
the site operators or by the users of these sites.
    In the interest of time, let me highlight just a few points 
from my written testimony. First, it is important to recognize 
that this is not a problem limited to live sports or even 
sports in general. These same sites also make available real-
time streaming of many other types of television and new media 
programs. This is an issue that effects the entire global media 
sector.
    Second, this problem even though it is fairly nascent and 
heavily international in scope and impact, in many cases these 
streaming sites set up overseas, particularly in Asia, where 
these sites can take advantage of massive broadband capacity, 
legal uncertainty, and in many instances lax enforcement.
    Third to give you a sense of ESPN's experience with this, 
we regularly see ESPN's linear cable networks, including ESPN, 
ESPN2, and ESPN Deportes made available for streaming in real-
time without authorization.
    In addition, the programming we make available through our 
new media offerings is also regularly retransmitted on these 
sites.
    ESPN has been a pioneer in expanding legitimate access to 
live sporting events through broadband services. ESPN360.com is 
ours signature broadband sports network, providing access to 
more than 3,500 live domestic and international sporting events 
each year.
    Through our investment in technology and this programming 
these events are now available via ESPN360.com to over 50 
million households and through 110 affiliated and Internet 
service providers. We also provide this programming to U.S. 
college students and all U.S. based military personnel via 
campus and military broadband networks.
    These efforts have yielded tremendous benefits for 
consumers. Many of the households served by ESPN360.com would 
not have legitimate access to these events but for our 
investment. Yet many of these same events appear routinely 
without authorization on Internet streaming sites. It is not 
hard to see how the widespread unauthorized and uncompensated 
availability of the content that we pay to produce and 
distribute would undermine our incentive to invest in and 
provide this high quality content, whether through innovative 
broadband offerings or through more traditional linear 
networks.
    Fourth and finally, while the challenges we see here are 
new and the process of devising solutions is still ongoing, we 
can learn something from what we experienced when user-
generated content sites first came online. There, like here, we 
saw new media online distribution platforms with interesting 
possibilities to promote legitimate user generated activities, 
but we also saw those possibilities come completely overrun by 
piracy.
    As described in my written testimony, ESPN's parent, the 
Walt Disney Company, was one of several that led the way to 
develop a set of principles for user-generated content 
services. Under these principles participating services and 
content providers agreed on a set of objectives that included 
the elimination of infringement on UGC services and the 
encouragement of uploads of wholly original and authorized 
user-generated content.
    While we consider whether the measures embodied in these 
principles would be effective or sufficient to address piracy 
on live streaming sites, as a starting point those sites that 
claim their commitment to promoting legitimate user driven 
environment should embrace the objective of eliminating 
infringement on their sites. As has been done by the leading 
UGC sites, that objective should proceed by implementing those 
mechanisms that are reasonable and effective to that end.
    That commitment is important not only to protect the rights 
of creators and legitimate distributors of creative content, 
but is also key to driving the development of a robust, 
trusted, and content rich legitimate streaming environment.
    Mr. Chairman, I want to thank you again for your attention 
to this important issues and for the opportunity to appear 
before you. I look forward to your questions.
    [The prepared statement of Mr. Durso follows:]
                     Prepared Statement of Ed Durso










                               __________

    Mr. Conyers. Thank you, sir. We now conclude with 
Christopher Yoo, University of Pennsylvania Professor of Law. 
Numbers of books and articles have flowed from his pen. He has 
clerked for Justice Anthony Kennedy and Appellate Judge Arthur 
Raymond Randolph and started Vanderbilt University Law School, 
and as usual he is a Harvard University law graduate.
    We welcome you today, sir.

     TESTIMONY OF CHRISTOPHER S. YOO, PROFESSOR OF LAW AND 
      COMMUNICATION, UNIVERSITY OF PENNSYLVANIA LAW SCHOOL

    Mr. Yoo. Thank you, Chairman Conyers, Ranking Member Smith, 
Members of the Committee. I am grateful for the opportunity to 
testify today on the subject of piracy of live sports 
broadcasting. To date, most of the attention has been focused 
on unauthorized copying of prerecorded television. Today's 
hearing provides welcome attention on the unique problems and 
challenges posed by piracy of live television.
    A wide range of companies offer devices that take advantage 
of what is known as the analog hole to enable end users to copy 
high definition television programming directly to personal 
computers. These devices typically connect to the component 
video ports on cable and television set top boxes, which are 
the trio of red, green and blue jacks that appear on the back 
of a wide range of devices. Because these ports convey data in 
an analog format, they lack the more sophisticated copy 
protection built into ports employing digital formats.
    Once live television programming has been captured and 
stored on a computer, the person wishing to share the 
unauthorized copy must find a way to distribute it. One means 
of doing so is streaming video, in which the copier establishes 
an Internet connection with interested viewers and delivers the 
programming through a continuous flow of data.
    Those making unauthorized copies of live television 
programming have increasingly used peer-to-peer systems to 
distribute them. In a peer-to-peer system, the content is saved 
in a file that is sent to and stored by multiple end users 
throughout the network. Those wishing to view the program then 
can connect to any of the locations where the file has been 
saved.
    Because peer-to-peer systems require that programs be 
recorded, then stored, then accessed, they have historically 
imposed delays that would render them unsuitable for 
distributing live television programming. More recently, peer-
to-peer systems have begun saving live programming in short 
segments of approximately 10 seconds. This has enabled those 
making unauthorized copies to distribute the content without 
having to wait until the end of the program. It has also 
enabled viewers to view these programs on a near live basis, 
simply by accessing a series of small files instead of one 
large one.
    Preventing the dissemination of unauthorized copies of 
video content poses more difficult challenges for live 
television than for prerecorded television. One of the most 
effective means of deterring piracy is fingerprinting, which 
takes advantage of the fact that every segment of a television 
program exhibits a characteristic pattern. If these patterns 
are stored in a database, web site owners and network providers 
can analyze the programs they carry to determine whether they 
consist of copyrighted content. The problem is that 
ascertaining and disseminating these fingerprints require a 
certain amount of time. The delay inherent in fingerprint-based 
solutions limits their effectiveness when live video 
programming is involved.
    Moreover, those seeking to distribute pirated video content 
are employing a variety of strategies to evade detection, which 
has in turn prompted content owners to respond with a number of 
counter strategies. The result is an endless cat and mouse game 
in which both sides spend significant resources in an attempt 
to stay one jump ahead of the other.
    Technical measures to prevent piracy can be supplemented 
and reinforced with legal measures. The distributed nature of 
the Internet makes it difficult and costly to target private 
individuals, the ones who are actually making the copies. 
Consequently, legal responses generally focus on commercial 
actors that facilitate illegal piracy, such as those firms that 
manufacture the devices that make the actual copies and the web 
sites that host unauthorized copies or provide information 
about where to find such content.
    For example, manufacturers of devices that evade copy 
protection may be subject to liability under the Digital 
Millennium Copyright Act. In addition, web sites that serve as 
focal points for information about where to find unauthorized 
copies may be subject to vicarious liability or copyright 
infringement for their role in facilitating piracy.
    Recently, France and the U.K. have adopted three strikes 
policies that mandate that network providers cut off 
subscribers who repeatedly violate the copyright laws.
    Lastly, declines in the costs of filtering technologies 
have led some jurisdictions to consider requiring web sites and 
network providers to filter the content they carry to determine 
whether it infringes the copyright law.
    The problem of piracy of live sports programming is 
complicated by the fact that any solution will inevitably 
involve a wide variety of stakeholders, including content 
owners, device manufacturers, network providers, web sites, and 
software firms. The problem is that those who would benefit 
from implementing solutions to curb piracy are often different 
from those who would bear the cost.
    The multi-faceted nature of the problem makes it hard for 
the industry to find common ground. If so, Congress may be able 
to play a constructive role in helping to craft a solution. 
This hearing represents an important first step in addressing 
the significant problems posed by the piracy of live sports 
broadcasting.
    I appreciate the opportunity to assist the Committee in its 
exploration of these issues and will be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Yoo follows:]
                Prepared Statement of Christopher S. Yoo














                               __________

    Mr. Conyers. Thank you, Professor. We welcome Adam Schiff, 
Howard Coble, Maxine Waters, and Bill Delahunt, who came 
through but he didn't stay. He will come back out.
    Now, I thank all of you. The two questions that occur, what 
are some possible legal remedies and how good are these 
techniques that we've heard from both Seibel and you about 
fingerprinting and cutting off offending repeat subscribers as 
they do in Britain and France? But nobody suggested any legal 
remedies and that is why we may have to hold other hearings. 
And so I am just jumping to--I am fast forwarding to what we 
are going to do after this great hearing today. Everybody is 
alerted, and they know a little something about it. But where 
do we go from here? Mr. Mellis?
    Mr. Mellis. Well, Chairman Conyers, you have asked the most 
important question right off the bat. We don't believe there is 
a silver bullet to stop this problem. We would agree with 
professor Yoo that it is a very complicated one. We do believe 
that international cooperation needs to be improved, that 
practices and standards in other countries where we have seen 
the weight of the gravity of the problem occurring needs to be 
brought up to ours.
    We know this piracy in the United States is copyright 
infringement, but in other countries, particularly in China, 
where for reasons Mr. Durso explained, the situation is unclear 
and enforcement is lax. So one essential part of an enduring 
solution is we think going to need to include improved 
cooperation with our trading partners and otherwise.
    And of course the government and the agencies in the United 
States Government are involved in intellectual property rights 
protection and enforcement internationally in many ways. I 
think it would be important to prioritize this issue among all 
of the important and hard work that they are doing.
    And then second I would say, if we can bring the U.S. sites 
and services up to best practices, then we have a model that we 
can show, let's say, the Chinese Government or other 
governments and say, this is how it can work, this is how on 
the one hand these sites and services can do the legitimate 
things that they offer and at the same time protect copyrighted 
works.
    Mr. Conyers. Well, thank you very much. After watching our 
President, global solutions seem pretty hard to come by these 
days. But does the U.N. have a role in this? I mean we have 
very creative lawyers in back of me here that have all these 
kinds of ideas.
    Mr. Mellis. Well, I think there is a role in the realm of 
international copyright and related treaties in general, and 
there are a number of them that establish minimum standards in 
foreign countries and national treatment, and the World 
Intellectual Property Organization of the United Nations is an 
important player in all of that. And so that is an area that I 
agree should be pursued, but it will need also the follow-
through of having our signatories to those treaties, and the 
treaties are already clear in our view that this type of piracy 
is--it violates them, that they need to enforce their legal 
obligations.
    Mr. Conyers. Wait until Ambassador Susan Rice hears about 
this at the U.N.
    Mr. Fertitta.
    Mr. Fertitta. Yes, Mr. Chairman.
    Mr. Conyers. What do you think?
    Mr. Fertitta. I think that--you know, I look at this, I am 
not an expert in technology, I am not an expert in law, I am an 
entrepreneur that started a business that--that bought a 
business that was nearly bankrupt, invested a tremendous amount 
of money and have grown--has grown it into what is now an 
international media company where we distribute our product to 
over 170 countries around the globe and to over 4 to 500 
million homes worldwide.
    Mr. Conyers. Well, I am part of you, but that is not why we 
brought you here today.
    Mr. Fertitta. I understand. What I am looking at from our 
perspective is that the current--I know that the DMCA was put 
in place, but I am not sure that that contemplated live 
streaming events. Certainly with somebody puts up a song that 
is created and there is this issue of notice and take down and 
what is the amount of time that it should take to take that 
down, the amount of damage if it is within 24 or 48 hours is 
significantly different than it is to one of our events which 
is a live Pay Per View, and the value of our product goes down 
significantly. It is very perishable every minute that goes by.
    Mr. Conyers. Okay. What did you want to add to your 
contribution, Mr Seibel? You first brought up fingerprinting.
    Mr. Seibel. Yes, I don't think I am qualified to discuss 
the international remedies for these solutions.
    Mr. Johnson. Is your mike on?
    Mr. Conyers. Turn your mike on.
    Mr. Seibel. There we go. We are all good. I don't believe I 
am qualified to discuss the international solutions or the 
legal solution. I do agree with Mr. Mellis that we are very 
interested in creating a standard in the United States for how 
sites that allow individuals to create and share live video can 
also work with copyright holders to protect their rights. And 
so we believe that through our copyright protection system and 
also through the new filtering, live filtering system that we 
have been able to build with Vobile, those are two affirmative 
steps that we believe can certainly address this concern in the 
United States.
    In terms of internationally or legal based solutions, 
unfortunately I don't have much to contribute on that front.
    Mr. Conyers. Have you ever considered law school? No, you 
have been very helpful. You have introduced the whole topic of 
fingerprinting.
    Mr. Durso.
    Mr. Durso. Yes, Mr. Chairman, thank you. I do want to echo 
a bit of what has been said before and point out we are 
entrepreneurs also and we really need perhaps the power of 
persuasion and pressure of this Committee and like Committees 
to keep the pressure on individuals like Mr Seibel, to my 
right, to kind of do the right thing here. If you just look on 
what is happening there, you can't traverse down their index 
page and see stream after stream after stream of professionally 
produced, high quality ESPN and other products and not say 
there is something wrong here and it ought to be addressed.
    We are doing what we can, but Professor Yoo aptly described 
how difficult a process that is. And a real world example, you 
know we made a decision 8 years ago to launch I said our 
broadband service, ESPN360.com. It is a tremendous service, a 
great application to support the growth and development of 
broadband. Today it has 3,500 events on it a year, it is a 
terrific product. We had a business model in which the ISP paid 
us a fee, they distributed it and today it is, as I said more, 
in more than 50 million homes and providing a lot more product 
to a lot more people.
    Now if it were today and I were contemplating launching 
that service, I might look around and say this is crazy, this 
is not in environment in which this can take hold. We started 7 
years ago and invested tens of millions of dollars to try and 
produce something at a time when the service like Justin.tv 
wasn't even thought about by anybody. But today it exists, and 
it is neatly packaged, well produced, and it provides certainly 
a significant part of the now landscape of what people like us 
want to do in terms of deciding to invest.
    Mr. Conyers. Tell me how ESPN that you mentioned operates 
and is unique from other web sites and why you chose not to 
offer it as a subscription product to broadband connected 
consumers.
    Mr. Durso. Certainly. We have addressed any new platform 
distribution opportunity that has come along in our 30 years of 
existence. We are platform agnostic and we look to try and 
figure out ways to put the ESPN brand and ESPN product in any 
stream of commerce where we think there can be a return. 
Broadband is no different. So we have looked at that in a 
number of different ways. ESPN360.com is one such application, 
as I said.
    We think it works very well in the broadband environment. 
We decided that among a number of approaches we would approach 
Internet service providers directly and say if we can produce a 
product with the ESPN brand on it, would that be helpful to you 
in terms of your selling your product out to the consumers. The 
answer we got was yes. So we were happy to participate in both 
the development of new businesses on their part and at the same 
time the enhanced distribution of broadband throughout our 
country.
    Now an analogy might be back in the early 90's, ESPN was 
among the very first to embrace and distribute a significant 
quantity of HD programming at a time when HD programming was 
very nascent. We think we did a lot to support the growth of HD 
and to support ultimately the whole digital transition as HD 
led up to that.
    So that is a similar circumstance here. We look to build 
successful products that can work in an environment. We are 
making investments and we are working with our distributors to 
provide something to them that we think benefits consumers. The 
fact it is available to 50 million homes today, 70 percent of 
the broadband universe, we think is a significant indicator 
that that has been a successful effort.
    Mr. Conyers. So you didn't think it was an economically 
wise investment?
    Mr. Durso. No, we looked at the development----
    Mr. Conyers. Why you didn't offer it as a subscription 
product, you didn't think it was viable?
    Mr. Durso. We saw an opportunity, Mr. Chairman, to get on 
board a train we thought was leaving and would do very well, 
which was called broadband. That was not the business we are 
in, we are not a broadband--we are not a platform, we are a 
content company. We said how can we participate in this in a 
meaningful way to offer something to broadband distributors 
that would help their business.
    We have other products available in our areas, so we are 
not just putting all of our eggs in this one basket. ESPN.com 
is available on the open Internet, it has a tremendous amount 
of free product on it in terms of video and clips. We offer a 
product there, for example, called the ESPN Insider, which is a 
subscription-based adjunct to ESPN.com and, along with the Walt 
Disney Company, are participating in a number of different 
approaches here, Mr. Chairman. We thought this was a good 
opportunity and sort of the proof is in the pudding; it seems 
to work well.
    Mr. Conyers. Okay. Professor, you have already made a 
couple of good suggestions. What about the legal basis? These 
are technical. How do we sue these guys?
    Mr. Yoo. I have a number of----
    Mr. Conyers. How do we prosecute these guys? Everybody 
agrees what we are complaining about is illegal, right? So 
there ought to be a law. What is it you think we do here?
    Mr. Yoo. I have some concrete suggestions of ways the laws 
might be changed and what that--changes in the law that might 
contribute to curbing illegal piracy.
    The Digital Millennium Copyright Act was really 
envisioned--envisioned content owners sending a web site 
address to a web site and forcing them to take it down and that 
has created part of the cat and mouse game. What they do is 
take it down and it will immediately get re-posted. 
Fingerprinting we can change the notion of what notice and 
takedown means. One example might be you give the web site a 
fingerprint instead of a specific web site address and ask them 
to screen for everything that contains a fingerprint, and that 
represents a notice.
    A more basic problem is the DMCA operates after the fact, 
after the content has been posted and the request to be taken 
down. The DMCA notice requirement could be changed particularly 
for live programming where you know at what time it would be 
broadcast. Give them advance notice of when this programming 
will be provided, and ask them to take appropriate measures in 
the absence of a specific Web address by broadening our notion 
of what notice means. Not just a Web address, but a general 
notice about when live content is likely to come out, and make 
that a basis for potential liability for anyone facilitating 
that content under the DMCA.
    Another ambiguity is contributory infringement, which is 
addressed by the Supreme Court in the Grokster case really 
instead of addressing substantial questions about how 
substantial does the infringement have to be before it triggers 
contributory infringement, the Supreme Court left that issue 
unresolved. And the Grokster case decided it on different 
grounds. Interestingly the two concurrences split right down 
the middle about how substantial the noninfringing uses has to 
be before it constitutes contributory infringement. The perfect 
area where there is an ambiguity in the law where Congress can 
step in and provide much needed clarity about ways--in ways 
that would make it easier to curb the kind of piracy we are 
talking about here today.
    Lastly, as Mr. Durso pointed out, industry got together for 
use generated content and found solutions for prerecorded 
content in ways that didn't involve so much direct legal 
enforcement and suggested a different role that Congress might 
play, which is holding hearings like the one we are having 
today to encourage players to come to the table to find common 
ground. Because everyone has to recognize nobody wins unless 
the content is provided in ways that are protected in ways that 
people can generate revenue. Everyone has to--that has to be 
aligned. No one can make money unless the programs are provided 
and provided in a way that generate revenue for people who are 
willing to pay for it, and I think hearings like the one we are 
having today can be an important part of that process.
    Mr. Conyers. I thank all of you. You have been very helpful 
in getting us started. Remember, this is only the first 
hearing. So we have got a ways to go.
    I am pleased to recognize Bob Goodlatte, a senior Member of 
this Committee, from Virginia.
    Mr. Goodlatte. Mr. Chairman, thank you very much, and thank 
you for holding this hearing. This is the first hearing that 
has been held on the DMCA I think in quite some time. I can 
remember very well, going back I think more than 10 years ago 
when we wrote that legislation, I was asked by Chairman Hyde to 
sit in rooms with representatives of the content industry, the 
Internet service provider industry, the universities, and other 
users of Internet content and try to manage a negotiation of 
this notice and takedown issue, and we came up with something 
that we thought was very good at the time. In fact, it was well 
received by folks on every side of this issue, but it requires 
that ISPs expeditiously remove materials. And I suppose the 
meaning of the word ``expeditiously'' has got to change or the 
DMCA has got to change. And I don't know how many people here 
agree with Professor Yoo that we may have to reopen the DMCA to 
enact some of the suggestions that he has made, which are 
certainly worthy suggestions.
    But I would like to ask Mr. Seibel, since his product is 
the focus. And, as I understand it, you are sort of like the 
YouTube of live streaming online, and I know that you have a 
lot of experience with this notice and takedown issue. What is 
the typical amount of time that an Internet service provider 
takes to remove infringing content once a notice of 
infringement is received? How fast is it possible to take down 
infringing materials once the notice is received?
    Mr. Seibel. Sir, Justin.tv's system for implementing DMCA 
takedown, we refer to that as the copyright protection system, 
and essentially it transfers the typical takedown e-mail 
notice, which is usually in the form of a letter, into an 
online form. As a result our ability to remove content once we 
have been notified is extremely fast. Because we have been able 
to push this from the kind of letter and e-mail world into an 
online form, as soon as we are notified through the copyright 
protection system our system can then go about removing that 
content.
    Mr. Goodlatte. I would guess that Mr. Mellis and Mr. 
Fertitta and Mr. Durso would say that in the environment of 
live streaming, particularly where it is broken down into 10-
second increments, if they are going to protect their 
copyrighted material, they have got to get a notice to somebody 
really fast and they have got to respond virtually immediately, 
which is very different than what I think we sat around and 
talked about 10 years ago.
    Is that a feasible environment to operate in? I mean, can 
they--I guess they can see coming the fact that they are going 
to have these programs on the air and they can then be on the 
lookout, but I don't know if they can be on the lookout for 
thousands of different people who might take the opportunity to 
stream and to use your service to stream. You may have the 
capability of very quickly taking them all down, but what has 
been your experience with this thus far?
    Mr. Seibel. So the reason why we have developed both the 
copyright protection system and the live filtering system is to 
address the specific issue that you bring up. Essentially, what 
we want to provide is both a system whereby people can look at 
the site, identify their content, and have it removed 
immediately, but also a system by which people can provide us 
with a fingerprint. And we will use our live fingerprinting 
partner to automatically search out and remove this content 
from the site.
    So in our efforts to work with copyright holders, we are 
really trying to encompass both issues, both how can we make 
sure that once contentis identified it is removed extremely 
quickly, and also how can we confront the issue of identifying 
the content in a more automated fashion.
    Mr. Goodlatte. Now, there is another side of this issue, 
and that is the user of your service or other Internet sites or 
the people who may have a web site on which they are placing 
some material that may or may not be copyrighted, and I have 
received complaints from individuals who have complained that 
their content has been taken down inappropriately.
    Are you able to judge quickly enough and accurately enough 
that the content you are taking down is indeed copyright 
material that is entitled to the protection under the DMCA?
    Mr. Seibel. Well, our understanding is that once we receive 
a takedown notice, regardless of its validity, we are required 
to act upon that takedown notice. And, in addition, we are 
required to offer to the user whose contents have been taken 
down the ability to counter that takedown. In our experience, 
however, copyright owners have been extremely good on Justin.tv 
in identifying their content as opposed to----
    Mr. Goodlatte. Not a lot of mistakes, in other words?
    Mr. Seibel. Exactly.
    Mr. Goodlatte. Well, in a recent submission to the New 
Zealand Government regarding a new copyright there, Google 
alleged that 57 percent of the takedown notices it has received 
under the DMCA in the United States were sent by businesses 
targeting competitors, which certainly is a legitimate thing to 
do, but they also allege that 37 percent of the notices were 
not valid copyright claims.
    You have indicated that you have not experienced those kind 
of abuses, but I want to direct to some of the content owners, 
Mr. Durso, Mr. Fertitta, Mr. Mellis, if you want to join in, if 
these numbers are true, does the fact that 37 percent of the 
notices are in error alarm you, considering the fact that the 
content must be expeditiously removed and will not be available 
online for at least 10 to 15 days after it is taken down? That 
is the complaint that we are getting from some consumers and 
some users of various Internet web sites that have been subject 
to a notice and takedown and then have a hard time getting back 
up.
    Any of you. Mr. Durso, do you want to respond to that?
    Mr. Durso. I am not personally aware of a way I could 
validate any of those statistics relative to percentage of 
inappropriate or appropriate takedown notices. I can share with 
you that--and I think others in the panel have seen the 
frustration and difficulty of operating within the current 
system, especially in a live sports environment.
    Mr. Goodlatte. It is very fast, isn't it?
    Mr. Durso. It is very quick.
    Mr. Goodlatte. The decisions have to be made 
extraordinarily quick?
    Mr. Durso. But it is also frustrating in this regard. I 
don't think anybody who goes on Justin.tv or a similar service 
and looks through their index page where they can go click on 
whatever it is they wish to see will be at all confused about 
whether or not Sports Center, which I was watching this 
morning, is the Sports Center from ESPN. It is. And it is 
frustrating for us to have to sort of play the cat and mouse 
game of trying to take that down. And despite whatever 
technological advances may be on the horizon here, it has been 
a difficult--it is a difficult time for us in this respect. And 
what we are really looking for are companies like Justin.tv and 
others to really make a firm commitment to say this is wrong 
and we will work tirelessly to fix this for you. Because 
someoneis indexing those pages. Somebody is looking. And the 
notion that there is so much out there that we can't figure out 
what is on, you know, sort of belies the notion that it is 
nicely arranged and available and subject mattered and indexed 
and available. Here is how we will help you find what you are 
looking for. Someonehas got to be doing that.
    Mr. Goodlatte. Absolutely. And I agree. And that is 
certainly a major onus that Mr. Seibel and others in the same 
business face or there is going to be some kind of a major 
change in the law that will make this wonderful availability 
more difficult.
    Mr. Fertitta, Mr. Mellis, any comments?
    Mr. Fertitta. Yes, I do. Thank you. Relative to what you 
were talking about with New Zealand, I don't know if that was--
--
    Mr. Goodlatte. This was something they presented to New 
Zealand, but they were talking about the United States.
    Mr. Fertitta. Right. And I guess the question would be was 
that archived or live content?
    Mr. Goodlatte. I don't know the answer to that. That is a 
very good question.
    Mr. Fertitta. It is very difficult, as we mentioned before, 
because it is live streaming. And while a lot of these web 
sites say that they are doing things to try to prevent this, 
one of the things that bothers us is that right on their own 
web sites they provide exact detail on how to upload content 
from your television. And content coming from the television, 
my guess would be that 99 percent of it would be copyrighted 
material. So not only are they facilitating this; they are in 
some ways encouraging it. And that is part of the problem that 
we have, and that is why when our Pay Per View starts, you have 
271 streams.
    Mr. Goodlatte. Mr. Fertitta, would you put that document in 
the record, make it available to the Committee for that 
purpose? And I would ask unanimous consent that it be made part 
of the record.*
---------------------------------------------------------------------------
    *The information referred to was not available at the time of the 
printing of this hearing record.
---------------------------------------------------------------------------
    Mr. Conyers. Without objection.
    Mr. Goodlatte. Mr. Chairman, if I might have forbearance to 
ask--I know my time has expired, but to ask Professor Yoo one 
more question. And that is, you have heard this question about 
notice and takedown. What can be done to make sure that content 
owners are doing their due diligence to make sure the claims 
they allege are valid?
    We have heard from you some other ideas which I think have 
merit in terms of making their ability to protect their content 
stronger and more immediate, which is effectively the 
environment they are operating in with this type. What can we 
do to make sure that people don't use this in an abusive way?
    I can understand why a competitor would have many reasons 
to ask another competitor to take something down that may be 
copyrighted material, but they also might have an incentive to 
try to disrupt the availability of something on the Internet 
that they shouldn't be asking to be taken down. They don't seem 
to face any consequence for that right now. What can we do to 
change that?
    Mr. Yoo. Clearly, the Congress could impose some 
consequences. They, unlike producers of--people who are 
pirating live content, large content providers are easy to 
identify, easy to find, they are easy to bring to this 
Committee and testify. So I would not want to put on content 
owners the burden of being perfectly correct all the time.
    On the other hand, what you are talking about is repeat 
offender status, abuse of processes on a repetitive basis. And 
I could see Congress enacting a law that if any content owner 
on a persistent basis pursued a course of action really 
designed to pull down content that they didn't own, or try to 
use that in an anti-competitive manner, you could make that a 
basis for liability for the content owner under the DMCA. You 
could make them swear under penalty of perjury that in fact 
they hold a valid copyright in the content they are asking to 
be taken down.
    There are a number of steps this Congress could do to make 
that--to give that some more teeth, because any system is 
subject to abuse on any side. And what we are likely to see is 
this is a new area. It is unsurprising that after 10 years and 
something is changing as fast technologically as the Internet, 
that the Congress is having to consider revising the laws, and 
it should come as no surprise this will not be the last time 
this Committee will have to consider issues like this.
    Mr. Goodlatte. Thank you. Thank you, Mr. Chairman.
    Mr. Conyers. Maxine Waters, Chair of the Subcommittee on 
Financial Services, senior Member of the Judiciary Committee.
    Ms. Waters. Thank you very much, Mr. Chairman. I have been 
listening with great interest since I entered the room. But I 
must share with you that my initial motivation for coming here 
was not so much to learn about the piracy, but to find out 
whether or not I could have another way of looking at the NFL 
and its antitrust exemption. As you know, I am focused on some 
efforts that we all have been putting forth to deal with some 
of the problems of some of the older players of the NFL. But I 
must admit, since I have been here I have listened and I am 
curious now about some of what I am hearing.
    Let me address a question to Mr. Mellis. Could you show us 
exactly how people are stealing these live major league 
baseball broadcasts, Mr. Mellis?
    Mr. Mellis. Congresswoman, I would be glad to try to 
explain that. This is one way that we think it is happening. 
There are probably other ways. The way that I am going to 
describe involves coaxial cable in your house, this would be 
incoming in from outside the house and this would be--excuse 
me. This would be from your set top box to your television set. 
What you would do is you would unscrew the end from your 
television set, and then you would screw this TV stick into 
that end here. And on the other end of this stick is a USB 
connector, universal serial bus, which can be inserted into the 
front part of your computer where there is a receiving 
connector for that, the same place that you would stick in a 
flash memory stick. And then with drivers that would come with 
this device--the one we bought cost $70--you can more or less 
manipulate your personal computer as if it were your 
television, and you could watch your TV programming, change 
channels on your computer.
    The next step is using a peer-to-peer service download, 
let's say from one of the services in China that has plagued 
us, or through the instructions that a service like Justin 
provides, you can then take those signals which have already 
been converted and are being read by the TV--by the computer, 
through this device, and wrap them, upload them to the public 
Internet for worldwide viewing.
    Ms. Waters. Mr. Mellis, the device that you just showed us 
that you could put on the cable and connect to your computer is 
a device that is legally sold in some retail outlet somewhere?
    Mr. Mellis. Yes. I believe these devices are widely 
available. And it is not the only device that could be used to 
do this. There is a card that you could stick into the back of 
your personal computer which would receive the coaxial cable 
into the back and have this nub on it, and the technology of 
the card achieves the same function and the same purposes of 
it.
    Ms. Waters. What other use would these devices have other 
than the piracy actions that you just described?
    Mr. Mellis. I don't know much about these devices except 
about how they are used with respect to the piracy of our game 
telecasts, unfortunately.
    Ms. Waters. Where are they sold?
    Mr. Mellis. They are widely available. This can be bought 
online at Amazon. We bought this one at a Staples store.
    Ms. Waters. So you don't know whether or not these devices 
could be used for a legitimate use?
    Mr. Mellis. I think that they could be. What I mean to say 
is I am not familiar with how they are in fact used by people, 
but they could be used to watch television programming on your 
personal computer. Then there is the next step where, by 
downloading the peer-to-peer service client from a Chinese 
service, let's say, or following the instructions from a 
service like Justin, that you would then take that converted 
signal and--someone could--upload it to the public Internet for 
worldwide viewing.
    Ms. Waters. I see. Well, Mr. Chairman, if I may, it sounds 
as if we have a complicated issue before us that must be given 
an awful lot of thought, and I know that you will lead this 
Committee in trying to make sure that we correct the problems 
with piracy. But as we do that, I am also wanting to keep you 
focused on the NFL and the fact that it has the power to 
negotiate with all of these entities and avoid the antitrust 
laws of this country and see if when we solve the piracy 
problem we can also take away that exemption.
    Mr. Conyers. I want you to rest assured that Hank Johnson's 
Committee is going to hold hearings, I think in January, on 
this antitrust exemption and the problem. Will that make you 
more comfortable?
    Ms. Waters. As long as we stay focused on that antitrust 
exemption, I am happy.
    Mr. Conyers. Okay. That is an easy assignment. Thank you 
very much, Maxine Waters.
    We turn now to Howard Coble, a distinguished senior Member 
of the Judiciary Committee from North Carolina, and invite him 
to question our witnesses.
    Mr. Coble. Thank you, Mr. Chairman. And welcome to the 
panelists who appeared before us today. Gentlemen, I believe 
that streaming broadcasts is a global problem, and I think that 
robust and effective American copyright laws are essential to 
content owners who work to protect their works from being 
infringed by individuals and other countries, and I think 
probably we all concur with that. Do we not? I am glad to hear 
that.
    Mr. Durso, I was going to ask you about the decision not to 
offer as a subscription product to broadband connecting 
consumers, but I think you and the Chairman pretty well covered 
that. Let me ask you this, Mr. Durso. Some have criticized the 
ESPN360.com mode as having the potential to drive up broadband 
subscription prices. Is this criticism fairly leveled?
    Mr. Durso. Well, thank you. I don't believe that it is, 
Congressman. We have heard that complaint before. Two things to 
point out on that, if I may.
    One, we watch the marketplace pretty carefully to see the 
impact of our business in it and the retail world. We have not 
seen any instance that we can identify where there was any kind 
of direct correlation between our sale of this product and the 
wholesale marketplace and an impact on the retail pricing of 
the ISPs. That is their decision to make. We don't have 
anything to say about that. Our only requirement is that if you 
do the deal with us, you must provide the service to everybody 
on your system. So we think that we are helping consumers in 
that regard.
    Secondly, we looked at it from an economic standpoint. We 
have got noted Washington, D.C. economist Jeb Heisenak to take 
a look at this issue to see how one would analyze it from an 
economic standpoint. He put together a very short paper, which 
I am happy to introduce in the record. His conclusion was this:
    It is very expensive to build a broadband platform, and the 
cost of getting that first subscriber is very high. But if you 
can make your service popular, as you add more and more people 
to the service the average cost of providing the service to 
each subscriber comes down.
    Mr. Coble. I got you.
    Mr. Durso. And in that circumstance, you are actually 
putting downward pressure on retail pricing. So I would be 
happy to submit that for your review.*
---------------------------------------------------------------------------
    *The information referred to was not available at the time of the 
printing of this hearing record.
---------------------------------------------------------------------------
    Mr. Coble. Thank you, sir.
    Professor Yoo, in your testimony you referred to several 
technologies that may be employed to prevent infringement 
through rebroadcasting. Which of these technologies, in your 
opinion, is the most realistic option for entities such as UFC 
or professional sports leagues?
    Mr. Yoo. When you see how piracy and other security 
problems have been addressed on the Internet in other contexts, 
it is very rare to see there be one single strategy that is the 
solution to everything. You generally see a layer of 
strategies. In this case, you can see the use of fingerprinting 
to screen out content in advance. Perhaps asking the content 
provider, instead of sending it out on a live basis, do it on a 
near live basis delayed by a few seconds to allow that 
technology to work. You may see some form of, in addition to 
automated screening, some sort of manual screening obligation 
on the part of the web sites. And you may see after the fact, 
old-fashioned lawsuits, which cannot prevent it up front but it 
will have a role in deterring repeat offenses and identifying 
those people and giving them some deterrence.
    But my guess is most security people say if you rely on one 
solution, the minute that one is cracked you have nothing, and 
that you are in fact much better instead of having an 
eggshell--you are much better having a series of layers of 
protection which are more robust and can respond to different 
numbers and types of threat.
    Mr. Coble. Thank you all for being with us. I yield back, 
Mr. Chairman.
    Mr. Conyers. Thank you. Hank Johnson, Subcommittee Chair, 
former magistrate, is recognized.
    Mr. Johnson. Thank you, Mr. Chairman. And for some reason 
this microphone goes limp all the time. Maybe we can get it 
to--maybe with some Viagra or something, we can get it to stay 
up.
    Mr. Conyers. I hope nobody chooses to take your words down, 
Mr. Johnson.
    Mr. Johnson. Yes. What I would like to ask Mr. Seibel--and, 
by the way, I am happy to know that your firm supports getting 
a handle on this kind of copyright infringement. But I have got 
to ask you, do you think it is morally right for your firm to 
continue to engage in the use of copyrighted material without 
the owner's consent from a moral standpoint? I would like for 
you to answer that. Is it right? Is it fair?
    Mr. Seibel. I think when we look at this issue, our 
understanding and kind of as we look at our entire business, it 
is not the point nor is it the goal of Justin.tv to distribute 
content. When you look at where Justin.tv began, we started 
with the idea of broadcasting one person's life on line. That 
was our cofounder Justin Kan. And the viewers of that original 
broadcast were so excited by the potential of live video online 
that they too wanted to create their own live content. They 
didn't want to broadcast their entire lives, but they wanted to 
share live video of interesting events.
    Mr. Johnson. Well, now that is different from--there is no 
need for consent and payment for the use of that material that 
is voluntarily put on the Web. But I am speaking of this 
precise issue. And if you could speak to that, because I don't 
have a lot of time.
    Mr. Seibel. Certainly. So when designing a site for anyone 
to create and share live video, unfortunately, as in any user 
generated sites, some group of people are going to do that in a 
way that distributes unauthorized content. And so I want to be 
clear that the goal of Justin.tv is not to support that. I also 
want to be clear that the business model of Justin.tv is not 
based around supporting that. Continued broadcast of 
unauthorized content is not a good base in which to start a 
business or to run a business in the long term. And so when you 
look at where we have invested our time and energy on this 
front, it took a significant amount of time and energy to build 
out the copyright protection system and the live fingerprinting 
system. And the goals of those systems are to completely remove 
copywritten content from the site.
    Mr. Johnson. You are kind of going far afield of my 
question. But I will ask also, how does Justin-dash-tv or 
Justin.tv make its money?
    Mr. Seibel. So Justin.tv, when we look at our business 
model, it is really threefold. The first aspect is an 
advertising supported model. The second aspect is going to 
partners who want to distribute live content on our platform 
and charging in a metered format. And the third aspect is going 
to partners who have premium content that they believe they can 
charge a pay per viewer subscription fee for and to support 
that transaction and generate revenue from that transaction.
    When you look at our business model, Justin.tv is a 
significantly more robust and viable company as it is able to 
work with copyright holders as opposed to the opposite. That is 
why we have invested all of this time and energy in these 
potential solutions, because in the long run----
    Mr. Johnson. Okay. You could keep going for--you could 
filibuster for the remaining 1 minute or so of my time. And I 
am just having fun with you. No disrespect.
    What is the difference between this case and, say, Napster, 
which was kind of forced to change its--it was forced to change 
its methods of distribution of copyrighted music without--that 
they were doing it without the consent or payment of royalties 
or anything like that. How does--can somebody shed light on the 
Napster case and how it would apply to this case?
    Mr. Seibel. So I am not a legal expert in terms of the 
legal part of the Napster case. But from a product perspective, 
Napster was designed and built to distribute music content on 
the Web. Essentially, part and parcel of their product was the 
distribution of copywritten unauthorized content. In addition, 
Napster avoided working with content owners to help reduce or 
eliminate the copywritten content that was distributed by that 
company.
    Justin.tv is different in two ways. First, the system was 
never designed or conceived of to be distributing unauthorized 
content. And, second, we actively work with over 150 copyright 
owners in the world and give them tools to remove their content 
in real-time from our site.
    Mr. Johnson. Anyone else?
    Mr. Yoo. Napster intentionally pursued copyright 
infringement as its business strategy, and the Supreme Court in 
the Grokster case made very clear that is a sole sufficient 
basis for liability by itself. What the Supreme Court left open 
is if you have an innocent web site that did not intentionally 
seek out copyright infringement as its business model but is 
nonetheless used for substantial infringement, at some point it 
can become liable as a contributory infringer. The Supreme 
Court did not clarify exactly where that line is. It is 
ambiguous. And the Sony case from 1984, the Grokster case, had 
a chance to address it. The Supreme Court chose not to. And in 
fact, of the five Justices who opined on the proper standard, 
they split more or less right down the middle. So we are--the 
business community is left with a great deal of legal ambiguity 
about the precise extent to which providers like Justin.tv, who 
are not actively fomenting infringement, may nonetheless be 
subject to liability.
    Mr. Johnson. Anyone else?
    Mr. Fertitta. Yes. I have a comment. Certainly I am not an 
expert on the Napster or Grokster case, but I think one of the 
differences may be that in those early days the music industry 
wasn't necessarily embracing technology to what the consumer 
wanted to do. At the time, the consumer wanted to be able to 
download music on the Internet. There wasn't a system really 
put in place.
    I think the difference here is we all sit up here on this 
panel, we are embracing technology. We want to be able to give 
consumers our product on any format that they want, whether 
they want to watch it on satellite, cable, broadband, on their 
telephone. We offer those products all the way down the line. 
And I think that may be part of the difference as far as how 
that evolved. And we are in a situation now where we offer it 
on all these various ways to watch it, yet it can be uploaded 
on to the Internet and watched by literally hundreds of 
thousands of people for free without having to pay for the 
copyrighted content.
    Mr. Johnson. Anyone else?
    Thank you, Mr. Chairman, for allowing me some additional 
time for the answers to the questions. Thank you.
    Mr. Conyers. You are more than welcome. The Ranking Member 
from Florida, Tom Rooney.
    Mr. Rooney. Thank you, Mr. Chairman. As a freshman, that 
sounds pretty good. Mr. Johnson asked most of the questions I 
wanted to ask, and that is usually what happens when you are 
low man on the totem pole.
    Mr. Conyers. Was that including the Viagra issue also?
    Mr. Rooney. Yes, sir.
    Mr. Conyers. I warned you about that, Johnson.
    Mr. Rooney. That is my sign to talk quickly here. Mr. Yoo, 
I really appreciate your testimony. I think that it is 
incumbent upon us, especially my predisposition is to protect 
the U.S. tradition of the value of property rights. And 
certainly I understand what you are saying about the courts 
leaving it open to Congress to fill in the gaps here. And 
obviously, Mr. Chairman, I think that that is our duty moving 
forward, is to make sure that it is our obligations to finish 
the work that has been started years ago as technology and 
things evolve, that we--the court has punted it to us, and now 
it is our opportunity to address that situation as outlined in 
the Grokster case.
    My questions--I apologize for sounding elementary in what I 
ask. Specifically, Mr. Seibel, I am trying to get my arms 
around exactly what Justin.tv is. And from the testimony here 
today, it sounds like you have taken steps to try to work with 
the other entities, but at the same time I can't get out of the 
back of my head this sort of notion that we have opportunities 
and obligations in the law to act. You know, if you act or you 
fail to act, sometimes you can be just as culpable or liable. 
It sounds to me like Justin.tv has content on their web site 
that is not permissible. And failing to act before that until 
one of the content-based companies comes and says please take 
it down, it is kind of like going into a jewelry store and 
robbing it but not making a mess when you are in there. I mean, 
I don't know if that is a fair assessment. But just because you 
aren't actively seeking out content-based material, but not 
doing anything about it until one of these guys comes and says, 
hey, you need to take it down, in matters of law and fairness 
it just doesn't to me seem right.
    What would you say in response to that?
    Mr. Seibel. So I think the new technology of the 
fingerprinting solution is a comprehensive solution to this 
issue. I think really what you are addressing here is, isn't 
there a manual solution that we can be implementing. And I 
think what is most important to understand is that on Justin.tv 
there are 1.9 million broadcasts a month. And we believe that 
any attempt to manually monitor the site would create an unfair 
expectation among copyright holders that we were going to be 
100 percent or 90 percent or some reasonable percent effective.
    When we think about the solutions that we want to provide, 
we have been focusing on systematic and automated solutions, 
and that is why the live filter is so valuable, because we can 
ensure to a copyright holder that that solution is going to 
work.
    Mr. Rooney. Okay. On that point, you said earlier in your 
testimony that as soon as one of these guys calls you and says 
take down whatever, and that that can happen quickly, what if 
you don't take it down? What happens to you? Or what could 
happen to you? Do you know, legally?
    Mr. Seibel. Unfortunately, I am not an expert.
    Mr. Rooney. Does anybody?
    Mr. Yoo. Justin.tv would lose its immunity under the 
Digital Millennium Copyright Act. To the extent to which they 
have made a copy, they would be subject to copyright liability, 
subject to statutory damages, and any damages that could be 
proven. There is an open question about whether a soft copy--
that is, one that is only in the computer--is a copyright 
violation. There are cases on both sides of the question, and 
it is another area that this Congress is----
    Mr. Rooney. Mr. Seibel, I am running out of time already. 
When you say that you are entering into agreements with some of 
these guys in the future, you mentioned the NFL. Do you have 
the NFL games on your web site now every week?
    Mr. Seibel. So in the context of the NFL, the NFL and NBC 
were looking for an automated solution to remove NBC's NFL game 
from the site, and then eventually any NFL game that might 
appear on Justin.tv. So when we ran a test just this past 
Sunday, we were actually able to automatically identify and 
remove the majority of NFL games that had appeared on the site 
during that time period.
    Mr. Rooney. But you don't have an agreement with the NFL to 
put these games on your web site. They are just on there, and 
then if they say take them down, they take them down?
    Mr. Seibel. As in all user content sites, it is really the 
same issue. When a user is putting someone else's content on 
your site and using your site to distribute someone else's 
content, how do you work with copyright holders to address that 
and to remove that content and to remove that user from the 
site? And so we approach it like every other UGC site.
    Mr. Rooney. Madam Chair, I know my time--could I ask one 
more question, please? Very quickly. Thank you, Madam Chair.
    Mr. Yoo, you mentioned with regard to maybe precluding 
these things even getting on a site before, and you talked 
about what we can do as a Congress to actively do that rather 
than just reacting, how can we be proactive. And I think that 
you mentioned that we need to make consequences for repeat 
offenders. I believe that you said that one of the ways to do 
that is to swear under penalty that these rights aren't theirs 
and that they can get in trouble for doing that.
    Is that specifically what you are talking about with regard 
to us making a law that would provide consequences for repeat 
offenders, or is there some more specific solution you have 
with that?
    Mr. Yoo. I think a repeat offender law, as they are doing 
in France and the U.K. for end users who are pirating illegal 
content and posting it, is a potential solution. The other--the 
question that was asked specifically is what about erroneous 
takedown notices, that people are using it anti-competitively 
to say take down this content even though it doesn't belong to 
them. Any aspect of the system could be abused, and it is 
relatively easy with corporations who are repeat offenders to 
identify them and remediate them. The real problem is in the 
end users, who are extremely hard to find, extremely hard to 
track down, and extremely hard to enforce rights against. And I 
think what they are doing in France and the U.K. is a very 
interesting solution, assuming that it is done appropriately. 
It is three strikes. You get two warnings to make sure you know 
it is illegal, and then if the end users persists it is a 
remedy that they say the ISP has some obligation to either 
limit their service or to disconnect them altogether. And that 
is an option that the Congress could consider.
    Mr. Rooney. Thank you, Madam Chair.
    Ms. Jackson Lee. [Presiding.] Thank you. I am going to 
yield myself 5 minutes, my 5 minutes, and then we will make 
further determinations about the questioning. Let me welcome 
the witnesses and thank you very much for your presence here 
today. I am sorry that we are interrupted by votes. I just have 
a nonlegal question.
    Mr. Fertitta, do you have any relatives in Texas?
    Mr. Fertitta. I certainly do.
    Ms. Jackson Lee. Oh, my goodness.
    Mr. Fertitta. Galveston.
    Ms. Jackson Lee. All right. Well, I have obviously run into 
them on several occasions. It won't bias my questions, and I 
will recuse myself. But in any event, I hope you have the 
opportunity to visit. It is a great State.
    I first of all want to thank Mr. Seibel for his genius and 
creativity. And I hope that our questions don't disregard the 
uniqueness of your efforts, but I am going to try to be pointed 
in my questions and particularly cite language that deals with 
the Grokster case.
    As I understand it, that case establishes liability for 
peer-to-peer copyright infringement that pertains to the 
unauthorized distribution and availability of music files on 
the Web. So it is a narrow decision. And if I can profess, I 
will just--yes or no, is it a narrowly drawn decision?
    Mr. Yoo. Yes. But it has implications beyond music.
    Ms. Jackson Lee. But it is a narrowly drawn decision. I 
mean, if we look at it, it pertains to music. Of course, it can 
be used and cited in someone's brief, but it will be up to the 
courts to interpret it more broadly. Is that my understanding?
    Mr. Yoo. The copyright law does not distinguish between 
music and other forms of protected acts. So the implication is 
there, but no, it does not decide anything.
    Ms. Jackson Lee. And so there is the possibility that we 
would legislatively act, or this would have to be an ongoing 
court proceedings or actions that individuals who felt that 
they were aggrieved would take in to court. Is that correct?
    Mr. Yoo. Yes.
    Ms. Jackson Lee. Then let me indicate that though we don't 
often cite our work, I think the Judiciary Committee has been a 
champion on job creation, and it has done so because we have 
taken to task this whole question of copyright infringement. As 
I understand it, when you have a product content you also have 
jobs. You have the institution that depends on content. And I 
just want to cite for the record some deals that have been put 
forward.
    ESPN has in recent years signed several high-priced deals 
with sports leagues for broadcasting rights, including an $8.8 
billion deal with the NFL, a $2.4 billion with Major League 
Baseball, and a $2.1 billion deal with NASCAR. That is a lot of 
money. And I assume the intent behind that is that those games 
generate dollars, and that means that people are employed in 
that particular industry, not necessarily--and it may mean that 
football teams can stay open as well, because I understand part 
of their revenue stream is the dollars that they get.
    So when we talk about copyright protection, I would like it 
to be beyond the nuances of those of us who enjoy that kind of 
debate, intellectual property. It really has to be a mainstay 
of the survival of the genius of America, and this Committee 
has been in the forefront of trying to protect the genius of 
America. We have done so on a number of occasions. And to our 
chagrin, we have not been the most popular Committee here. We 
have talked about performers, we talked about others. We just 
have not been popular.
    So my quick question is--and I think I am under 5 minutes. 
Is there where I am right now--5 minutes on the floor? Just to 
ask each of you very quickly how this present structure of the 
potential piracy would impact your bottom line and jobs. Mr. 
Mellis, am I asking the right--you are in Major League 
Baseball?
    Mr. Mellis. Yes.
    Ms. Jackson Lee. Very quickly.
    Mr. Mellis. Right now, with respect to the piracy, as we 
have been experiencing and observing it for several years, it 
is very difficult to quantify the impact because most of it is 
occurring offshore through rogue sites and services where we 
don't know much. We don't know how many piracy incidents there 
are.
    Ms. Jackson Lee. But you do know that if piracy continues 
and your product depletes in value, the potential that you may 
lose jobs. Is that? Can you answer yes or no?
    Mr. Mellis. Yes.
    Ms. Jackson Lee. Thank you.
    Mr. Fertitta.
    Mr. Fertitta. Yes. I can tell you that I am sure this is an 
important issue for the other members of the panel; I can you 
that this is the most important issue for our company. We have 
created thousands of jobs, we have built a company with our 
content, and Pay Per View represents over half of our revenues. 
It is over half of our total revenue. So when people can choose 
just to log on to the Internet on to Justin.tv and get it for 
free, it certainly impacts our ability to run our----
    Ms. Jackson Lee. Thank you.
    Mr. Durso.
    Mr. Durso. We have 6,000 people worldwide supporting the 
work of ESPN, and obviously our incentive to keep growing that 
asset would be significantly impacted.
    Ms. Jackson Lee. How many employees worldwide?
    Mr. Durso. 6,000.
    Ms. Jackson Lee. And does that impact on your bottom line 
and the potential of losing jobs?
    Mr. Durso. Unquestionably.
    Ms. Jackson Lee. Professor Yoo, do you see this as an 
economic issue?
    Mr. Yoo. I see it as an economic issue. Jobs are at stake. 
I used to teach in Nashville. The music industry was behind the 
curve on this, and they have been losing jobs like crazy. The 
industry is struggling. The television industry wants to get 
out in front of it, and this Committee has been a tremendous 
help in that regard.
    Ms. Jackson Lee. Mr. Seibel, do you want to work with us? 
Your business obviously provides income. Do you see the value 
of trying to get a good roadmap so that you can exist but that 
we can prevent piracy on the Internet?
    Mr. Seibel. Definitely.
    Ms. Jackson Lee. Let me thank you. We are going to adjourn 
this hearing and--all right. We are going to adjourn this 
hearing. So this hearing now stands in adjournment. Recess, 
excuse me. Let me pull that back. We are going to recess this 
hearing, and we ask that the witnesses remain available. It 
should be about 10 minutes, maybe a little longer. But we need 
you to stand by.
    Thank you very much. This hearing is in recess. Thank you.
    [Recess.]
    Mr. Delahunt. [Presiding.] Okay. The hearing will come to 
order. And let me recognize my colleague from California, Mr. 
Issa, for as much time as he may consume.
    Mr. Issa. Thank you, Mr. Chairman. This has been a very 
interesting hearing because I think it has gone beyond perhaps 
the issue just that your organizations are dealing with. And 
let me go to a couple of questions.
    First of all, Mr. Mellis, would you concur that over-the-
air broadcast becomes the right of anyone who can receive it, 
to have it, to time shift it, and to watch it wherever they 
want to watch it?
    Mr. Mellis. Beyond the television set in the home?
    Mr. Issa. Beyond the Supreme Court decision. In other 
words, the Supreme Court has held that we have in the Sony 
Betamax, we have an absolutely right on a broadcast to store, 
and because it was a removable device in the case to store it 
forward. I mean, I can take my VHS tape out and I can take it 
to grandma's house and watch it there. That was all codified in 
Sony Betamax. Would you agree?
    Mr. Mellis. I do.
    Mr. Issa. So the question for you is, recognizing that that 
is not a commercial use, that is not a dissemination or a 
performance or a broadcast to others--and you say it very 
well--at the start and end of baseball, football, all the major 
leagues, that rebroadcast is prohibited. So we are not having 
that discussion here, and that may be today's subject. But let 
me just go through a scenario.
    I am in San Diego. The San Diego Chargers are playing 
there. Let's just say that it is not being--I don't have it 
available where I am. Would you say that, as an owner of seven 
TVs in Oceanside, in San Diego, California, Vista, California, 
that I could watch it there and I could record it on an 
equivalent today of the Betamax?
    Mr. Mellis. Yes.
    Mr. Issa. And if I have the ability to do that and have the 
ability to forward it to myself, I am well within my rights?
    Mr. Mellis. Well, I think, from a strictly legal context, 
that question hasn't been decided by a court, although there is 
a technology available to do that.
    Mr. Issa. The Slingbox and other similar devices?
    Mr. Mellis. Correct. But what we are talking about here is 
the uploading of that game telecast for worldwide viewing.
    Mr. Issa. And one of the reasons I am pursuing this line of 
questioning is I don't get you all in front of me very often. I 
happen to believe strongly that your right to go to the 
audience that you originally broadcasted to, wherever they 
might be, including the store and forward I mentioned, is 
really what we should be talking about today. But I ask this to 
lead you down a road of a question that is today.
    If in fact I were to pay a service to capture in my home, 
whether it is a Slingbox I own or a commercial equivalent, I 
pay so that I may watch that on my BlackBerry because in fact I 
am away from my house right now; I am downtown, I want to watch 
it. As long as I am a broadcast recipient, would you say that I 
have the reasonable right to have that delivered to me?
    Mr. Mellis. On your BlackBerry?
    Mr. Issa. Let's just say on my BlackBerry.
    Mr. Mellis. And it is a service that you subscribe from 
your BlackBerry, or are you saying from your television to your 
BlackBerry?
    Mr. Issa. Well, let's go back to the Slingbox because that 
may be a better one. My ability to have delivered to my 
Washington home from my San Diego home a San Diego Charger game 
or a Padre game, would you say that that was reasonably 
consistent with existing law and your interpretation of it?
    Mr. Mellis. My view under the Copyright Act is that there 
are two copyright rights that are implicated. There is the 
platform shifting--using not copyright terms, but platform 
shifting and the place shifting. And those----
    Mr. Issa. Time and space.
    Mr. Mellis. Right. Those are the issues. So the question is 
whether or not doing that in the context you described for your 
own personal use, having paid for it already, whether that is a 
fair use. And that hasn't been decided by any court that I know 
of.
    Mr. Issa. And I am going to go down the aisle quickly 
because I happen to be of an opinion--thank goodness, I am not 
a judge. But I am of the opinion that simply broadly saying I 
am going to capture everybody's football games, baseball games, 
boxing matches, and then make it available on a service is way 
outside of the intent of existing law or copyright 
interpretations. But as to the description I made that whether 
it is through a service that is literally in my home or a 
service I contract, how many would you believe that with 
existing law we should feel comfortable that the owner of a San 
Diego home who wants to receive something from San Diego in 
their home in Washington, D.C. or on their BlackBerry should be 
able to? Let's just assume it is a Slingbox for now so that the 
technology is pretty understood.
    Mr. Fertitta. Once again, I don't have a legal background, 
I am not a legal expert relative to that issue. But my opinion 
is if you pay for my product and you are paying for your own 
personal use, as long as you paid for it, then that is fine.
    Mr. Issa. Mr. Seibel.
    Mr. Seibel. Well, I think this calls for a legal 
interpretation I am not qualified to provide. I mean, as a 
consumer, that sounds reasonable.
    Mr. Issa. Mr. Durso.
    Mr. Durso. Yeah. Once upon a time I used to be a practicing 
lawyer but not anymore.
    Mr. Issa. You were probably practicing when Sony Beta was 
designed.
    Mr. Durso. Yeah. A long time ago. But as someone who 
produces and distributes content, I think it is a--as Mike 
said, I think it is an unanswered question. I don't think 
that--the courts haven't really addressed it, and how that 
plays out I don't know. There are legitimate concerns about the 
scope of geography and rights that we buy, for example, in 
baseball in terms of protecting markets and the like. So it is 
a complicated issue.
    Mr. Issa. Sure. But back to the original premise. If I can 
record on a Sony Betamax set, assuming I find one, and I can 
remove that cartridge and move it here to California and play 
it at my home here, and that is codified in law, then wouldn't 
you agree that the equivalent would reasonably be anticipated 
by the Supreme Court decision?
    Mr. Durso. I don't know that it would be, honestly.
    Mr. Issa. Okay. So this is something where you don't 
consider it settled law when we go digital, we go over the 
Internet, we go to something other than a Sony version?
    Mr. Durso. I think additional questions come into play.
    Mr. Issa. Professor, you get to end on this. Because for us 
on the dais, at least for many of us, that is the question. I 
happen to come from a consumer electronics manufacturer 
background. I come from that industry that thought it was 
settled law that the noncommercial rebroadcast by the owner of 
something for purposes of time shifting or place shifting or 
even product shifting, in other words, recorded on this 
machine, played on another one with a different TV, were all 
pretty much settled law. How would you view that, Professor?
    Mr. Yoo. I don't believe it is settled law. I think that, 
for example, we have--for broadcast, retransmission of 
broadcast signals over cable had to--required a separate 
statute for retransmission consent. Rebroadcast of radio 
signals over the Internet required a separate statute. If it 
were simply true that if you could receive a radio signal----
    Mr. Issa. But that is rebroadcast, but not the owner 
recipient who has stored pursuant to a very hard-fought battle 
in the Sony Betamax case or the Motion Picture Association v. 
Sony Betamax.
    Mr. Yoo. But what is interesting is the Sony Betamax case 
left a lot of questions unanswered. For example, time shifting 
is clearly within the pale. What is clearly suggested by other 
decisions building on Sony Betamax, building a library is 
probably outside the pale if you are going to build it on a 
durable basis. Space and device shifting is much harder to do. 
A couple of examples. People buy territorial exclusivity for 
programming internationally and in States, and in fact there 
are State blackout laws. If for some reason your beloved 
Chargers did not sell out their stadium, you would be banned 
from--you would be blacked out in San Diego. Theoretically, a 
person could be in Washington, D.C., where they are getting the 
feed and retransmit it back in ways that would potentially 
violate the law.
    Mr. Issa. I am going to close with a small statement which 
I am taking from the Chairman partially. Our problem on the 
dais is we pass laws or observe interpretations by the courts 
as part of promoting commerce, protecting intellectual 
property, and recognizing that laws are only effective if they 
are, one, supported by the masses and, two, enforceable.
    What I am hearing here today is that potentially we would 
reinterpret a law. My question to all of you in the abstract 
here, hypothetical, is how would we enforce: You can do this, 
but you can't library it? Well, the Sony product was a durable 
product and it was portable and it met a whole bunch of 
requirements. So from this side, or from the men and women in 
robes across the street, how in the world would we, one, 
enforce it and, two, why would it be the burden of the Federal 
Government to bring about that very expensive enforcement of 
finding out whether someone is storing something in their home, 
whether they are forwarding it, whether it is durable? Because 
we have been asked over the years to buy into--you might 
remember the Digital Millennium Copyright Act--buy into schemes 
that were going to empower others to primarily do it. And each 
time when it failed, you have come back to us.
    So I am going to leave that as a rhetorical question, 
because it is beyond the scope just of this hearing. But I 
think, with the Chairman, we are very interested in figuring 
out whether or not what is being brought to us is in fact 
something that if we dealt with it we could be effective.
    I thank the Chairman, and I yield back.
    Mr. Delahunt. Thank you, Mr. Issa. You know, obviously I 
think the sentiment here on this side is to ensure that the 
creative community is protected and continues to operate and 
function in a way that produces the kind of products that the 
United States has a lead, has an advantage on, if you will. So 
I believe that to be unanimous.
    I think the enforcement and the compliance issues are the 
real ones here, as suggested by my friend from California. And 
I am always struck, being a former State's attorney, by the 
imposition of very long prison sentences, and often cases 
mandatory ones, on some juvenile or, maybe for legal purposes, 
an adult, but maybe 19 years old that goes in and robs a 
convenience store and comes out with around $30 in cash and 
ends up doing 8 to 10 in a maximum security prison, and yet 
here we are today listening to the concerns that are obviously 
legitimate where I am confident that in the aggregate the 
losses are substantial.
    If there is anyone on the panel who can describe or 
estimate what the losses are, I would be interested in hearing 
from any panelist. Mr. Fertitta.
    Mr. Fertitta. Certainly, Mr. Congressman. I can give you an 
idea just based on our experience. We operate the Ultimate 
Fighting Championship, which is the largest Pay Per View 
provider of sports in the world. And one of our recent events, 
which was just held back in November, just our team of people 
that were trying to find pirated streams found over 271 
broadcasts in over 160,000 views in just that one night. And as 
I had mentioned in previous testimony, it is important for us, 
because it is a live sporting event, that we charge money for. 
It is extremely perishable. Once it is over, it is not worth 
what it was once it started, once somebody knows the outcome of 
what happened in that.
    Revenues that are generated through there represent over 
half of our revenues of our overall company, and just that 
number of streams represents probably in the neighborhood of 40 
percent of the total amount of business that we----
    Mr. Delahunt. Give me a number.
    Mr. Fertitta. Well, Pay Per View we charge $44.99. And if 
there was 160,000 people watching that night, that is 
potentially 160,000 people that weren't paying $44.99.
    Mr. Delahunt. What is that?
    Mr. Yoo. $8 million.
    Mr. Fertitta. That is just what we found.
    Mr. Delahunt. Less delivery costs. I mean, compare that. 
What is it in terms of the order of magnitude as far as the 
balance of payments issues is concerned? What is it in terms of 
the loss to the economy? And what is--does anyone know here, 
what is the longest prison term that has been served by a 
pirate? Professor?
    Mr. Yoo. I don't know.
    Mr. Delahunt. Mr. Seibel?
    Mr. Seibel. I don't know, sir.
    Mr. Delahunt. So no one knows.
    Mr. Yoo. There is a famous case of someone violating the 
DMCA, a person by the name of Sklyarov, who recently went to 
jail. He was one of the first people to go to jail for creating 
a technology that allows this form of piracy. I don't know 
that--it is in the number of well over--it is in the years, I 
think--I am trying to remember, in the 10-year range, but 
sentences are along that order. But it is rare.
    Mr. Delahunt. Well, I guess what I am saying, until there 
are severe sanctions--because we can have these very erudite 
and arcane discussions about dealing with the concerns that you 
are expressing. But until we have enforcement and appropriate 
sanctions by courts, many of my friends on the other side 
support the concept of mandatory sentences. I happen to 
disagree. But once that happens--this is theft. This is grand 
larceny. And until we get serious about enforcement and 
prosecution, we are going to continue to have--we are going to 
continue to have interesting hearings such as this, and I dare 
say we are not going to make a lot of progress.
    Now, Professor, I am sure that you could provide us 
guidance and counsel in terms of how the law needs to be 
changed. I am sure our own staffs can do that. I am sure there 
are technologies that are out there and we should have, as Bob 
Goodlatte indicated earlier, continue to have meetings, et 
cetera.
    But somebody has got to get serious about enforcement. And 
at one point in time, I know that we implored the Department of 
Justice to create a task force to do this. I don't know whether 
it still exists. Maybe we need some sort of an oversight 
hearing. But if someone is going to steal $8 million from one 
particular outlet and there is no consequence--there is a 
difference between a young male 18 or 19 years old who robs a 
convenience store and does 8 to 10. Deterrence really doesn't 
exist in the majority of those cases because that young male 
doesn't have in his back pocket the United States Criminal 
Code, and he hasn't done an analysis of what the potential 
sanction may be. Believe me, that is the case, based on my own 
experience. So the concept of deterrences really doesn't play. 
But whoever is doing the $8 million hit to the company and to 
our overall economy, I am sure he has a battery of lawyers that 
are either going to raise all of the issues that I heard being 
discussed here today, contributory infringement and all these 
concepts that are freedom of free speech and in the marketplace 
and et cetera. But until there is a serious consequence--and I 
think it is incumbent upon people who are in the industry 
working with the Congress, working with the executive branch to 
say if you are a thief you go to jail. If you are stealing and 
you can establish it beyond a reasonable doubt, then let's 
impose harsh, severe sanctions, because it is not just the 
individual sport, it is not just the individual company that is 
being victimized here, but it is all of us. I mean, this is an 
important aspect of the American economy and a global economy 
today.
    Any comments?
    Mr. Durso. I couldn't agree with you more.
    Mr. Delahunt. Well, I have been given some questions to ask 
you. All right. Mr. Seibel, could you comment and respond to 
the document that Mr. Fertitta introduced into the record?
    Mr. Seibel. Yes. Thank you for the opportunity to do that. 
For a second, I want you to excuse the title of this document 
and consider the text. What is clear is that this is a guide 
for broadcasting video from a video game console to Justin.tv, 
which is an extremely popular practice. If you consider the 
second sentence. This is a popular request among broadcasters 
who see channels like four-player podcasts where they broadcast 
or stream capture the video game. You can look at the second 
instruction. A way to send a video from your console to your 
television. The third instruction, most plug their console into 
their TV using composite cables and use another set of cables 
to send audio.
    If you were to follow this guide on Justin.tv, you would 
not see television showing up on your channel, you would see a 
video game from Xbox or a PlayStation 3. I just wanted to make 
that clear.
    And I do apologize for the header and the title text, 
because I do believe that that is slightly misleading. That is 
something that we will certainly correct.
    Mr. Conyers. Thank you. I want to thank all of the 
witnesses for their testimony, and without objection, Members 
will have 5 legislative days to submit any written questions to 
you, which we will forward and ask that you answer as promptly 
as you can to be made part of the record. The record will 
remain open for 5 legislative days for the submission of any 
additional materials.
    Thank you again, and the hearing is adjourned.
    [Whereupon, at 1:45 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record
















                                
























































                                




















































































                                















                                 
