[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                  THE REGISTER'S CALL FOR UPDATES TO 
                           U.S. COPYRIGHT LAW

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                     COURTS, INTELLECTUAL PROPERTY,
                            AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 20, 2013

                               __________

                           Serial No. 113-20

                               __________

         Printed for the use of the Committee on the Judiciary


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



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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT, 
LAMAR SMITH, Texas                       Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
SPENCER BACHUS, Alabama              ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     JUDY CHU, California
TED POE, Texas                       TED DEUTCH, Florida
JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
TOM MARINO, Pennsylvania             KAREN BASS, California
TREY GOWDY, South Carolina           CEDRIC RICHMOND, Louisiana
MARK AMODEI, Nevada                  SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
KEITH ROTHFUS, Pennsylvania

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

    Subcommittee on Courts, Intellectual Property, and the Internet

                 HOWARD COBLE, North Carolina, Chairman

                TOM MARINO, Pennsylvania, Vice-Chairman

F. JAMES SENSENBRENNER, Jr.,         MELVIN L. WATT, North Carolina
Wisconsin                            JOHN CONYERS, Jr., Michigan
LAMAR SMITH, Texas                   HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE CHABOT, Ohio                     Georgia
DARRELL E. ISSA, California          JUDY CHU, California
TED POE, Texas                       TED DEUTCH, Florida
JASON CHAFFETZ, Utah                 KAREN BASS, California
MARK AMODEI, Nevada                  CEDRIC RICHMOND, Louisiana
BLAKE FARENTHOLD, Texas              SUZAN DelBENE, Washington
GEORGE HOLDING, North Carolina       HAKEEM JEFFRIES, New York
DOUG COLLINS, Georgia                JERROLD NADLER, New York
RON DeSANTIS, Florida                ZOE LOFGREN, California
KEITH ROTHFUS, Pennsylvania          SHEILA JACKSON LEE, Texas

                       Joe Keeley, Chief Counsel

                   Stephanie Moore, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             MARCH 20, 2013

                                                                   Page

                           OPENING STATEMENTS

The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Courts, 
  Intellectual Property, and the Internet........................     1
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Courts, Intellectual Property, and the Internet.............     2

                                WITNESS

The Honorable Maria A. Pallante, Register of Copyrights, United 
  States Copyright Office
  Oral Testimony.................................................     4
  Prepared Statement.............................................     6

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Bob Goodlatte, a 
  Representative in Congress from the State of Virginia, and 
  Chairman, Committee on the Judiciary...........................    44

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Chairman, Subcommittee on Courts, Intellectual Property, 
  and the Internet...............................................    65
Prepared Statement of the Honorable Melvin L. Watt, a 
  Representative in Congress from the State of North Carolina, 
  and Ranking Member, Subcommittee on Courts, Intellectual 
  Property, and the Internet.....................................    68
Response to Questions for the Record from the Honorable Maria A. 
  Pallante, Register of Copyrights, United States Copyright 
  Office.........................................................    74


                  THE REGISTER'S CALL FOR UPDATES TO 
                           U.S. COPYRIGHT LAW

                              ----------                              


                       WEDNESDAY, MARCH 20, 2013

                        House of Representatives

            Subcommittee on Courts, Intellectual Property, 
                            and the Internet

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 3:30 p.m., in 
room 2141, Rayburn House Office Building, the Honorable Howard 
Coble (Chairman of the Subcommittee) presiding.
    Present: Representatives Coble, Goodlatte, Marino, Smith, 
Chabot, Poe, Chaffetz, Holding, Collins, DeSantis, Rothfus, 
Watt, Conyers, Johnson, Chu, Deutch, Bass, DelBene, Jeffries, 
Lofgren, and Jackson Lee.
    Staff Present: (Majority) Joe Keeley, Chief Counsel; Olivia 
Lee, Clerk; and (Minority) Stephanie Moore, Minority Counsel.
    Mr. Coble. Good afternoon, ladies and gentlemen. The 
Subcommittee on Courts, Intellectual Property, and the Internet 
will come to order.
    Without objection, the Chair is authorized to declare 
recesses of the Committee at any time. We welcome all of our 
witnesses today.
    The bad news is we are going to have two different series 
of votes imminently. One will start in about 15 or 20 minutes. 
But I would like to get the opening statements out of the way 
early if we could, and I will start with mine.
    Today's oversight hearing on the United States Register of 
Copyrights' call for updates to our copyright law will come to 
order. Oftentimes friends back home tell me that intellectual 
property induces sleep, when they read about it, they fall 
asleep. It is only for rich people they say.
    Well, both are wrong. The falling asleep might be right, 
because sometimes the law does get a little heavy. But we are 
here for a very important hearing today, and I appreciate you 
all being here.
    It is my pleasure to welcome Madam Register Pallante. 
Throughout my career and my tenure in Congress on this 
Subcommittee, the Copyright Office has served as a wellspring 
of sound advice and counsel. Ironically, most of that advice 
and counsel came from Ms. Pallante before she ascended to her 
current position.
    Approximately 2 weeks ago, Register Pallante participated 
in the Horace S. Manges Lecture at the Columbia School of Law 
in New York. Her remarks, which are posted on the Committee's 
website, cover a wide range of issues challenging our copyright 
laws, as she proposes what could be a blueprint for the next 
generation of our next Copyright Act. Her prepared testimony 
today also aptly notes that Congress must ultimately consider 
what does and does not belong under a copyright owner's control 
in this digital age.
    Much of my career has been dedicated to developing our 
intellectual property laws. Issues relating to the digital 
platform have been the most difficult to resolve. And I welcome 
the Register's thoughts on how we can best address today's 
conflicts so that our copyright laws will benefit generations 
to come.
    I have no doubt that the digital revolution has taken hold, 
and in order to continue to foster creativity and growth, our 
intellectual property laws should facilitate an environment for 
creativity and innovation. Register Pallante, what you suggest 
will take some time, and there is no guarantee this 
Subcommittee will agree to undertake such a big step. But if we 
do, I assure you that you will be a key part of the effort.
    One aspect of your testimony that I found most interesting 
are your thoughts on the role of authors and their interests 
with respect to the public's interests. I hope you have the 
opportunity today to explain how these two interests can be 
mutually inclusive in the digital age. I also hope you have an 
opportunity to clarify to whom you are referring when you 
mention authors and the public, and how other copyright 
stakeholders fit into this puzzle. These clarifications are 
critical if we truly intend to move this discussion forward.
    Register Pallante, thank you again for your work to enhance 
intellectual property rights in America. I appreciate your 
effort to participate in today's hearing, and look forward to 
your testimony, and reserve the balance of my time. And I am 
now pleased to recognize the distinguished gentleman from North 
Carolina, the Ranking Member of this Subcommittee, Mr. Mel 
Watt.
    Mr. Watt. Thank you, Mr. Chairman.
    And thank you for convening this hearing.
    I want to begin by thanking our witness, Maria Pallante, 
for her service to date. She and her staff have been invaluable 
resources to the Subcommittee and are to be commended for their 
expertise, professionalism, and impartiality.
    The world is changing. Remarkable developments in 
technology and the Internet have enabled society to change at 
an unprecedented pace. But these efficiencies have called into 
question the effectiveness of our laws, both in protecting 
cherished values and in promoting continued innovation.
    As a Nation, we are reevaluating laws in a number of areas. 
For example, we are reevaluating laws to ensure that top, 
current, and former U.S. officials, including the Vice 
President, First Lady, Secretary Clinton, and, most recently, 
former President George W. Bush, do not have their private 
information obtained and disseminated without authorization.
    We are reevaluating laws to prevent foreign hackers from 
infiltrating our news rooms, and to balance law enforcement 
needs with the sanctity of stored communications, and to 
determine whether computer fraud laws are unacceptably vague.
    And we are reevaluating to shore up the security of our 
critical infrastructure against cyber attacks.
    Each of these reevaluations is compelled by innovations 
which, when misused, can lead to unintended, even devastating 
consequences. Copyright law and policy is no different. The 
digital era has introduced some unique challenges for copyright 
owners and users, and exacerbated some preexisting ones.
    Even the rulemaking process, designed to balance the 
intersecting interests of copyright law with technological 
advances and public access, have come under attack. Most 
recently, Chairman Goodlatte and Ranking Member Conyers 
introduced the Unlocking Consumer Choice and Wireless 
Competition Act, which I was pleased to co-sponsor. In the 
aftermath, calls for an upheaval of copyright law began 
appearing in the press and in the blogosphere. Although those 
calls for widespread copyright reform coincided with the call 
to action by the Register of Copyright, they should not be 
driving us to action because I do not believe that policies 
should be dictated by polls and petitions.
    Although valuable and important to help create a climate 
for political action, polls and petitions should not determine 
the substance of the changes we make but should be considered 
along with a multitude of other factors and voices and accorded 
appropriate weight.
    While I agree with Ms. Pallante's central premise that it 
is time to deliberatively update our copyright regime to meet 
the challenges of the 21st century, I also strongly believe 
that there are some things that both Congress and the relevant 
industries can and should do sooner to address some of the 
imbalances that have developed in the digital environment.
    First, I think we must redouble our effort to ensure, 
whether through legislation, public education, or stakeholder 
negotiations, that the core purpose of copyright, which is to 
promote the public interest by ensuring creators have the 
incentive to create, is reinforced by enabling all artists, 
whether photographers, musicians, composers, performers, 
lyricists, actors, or other segments of the creative community, 
to be able to forge a livelihood from the new distribution 
channels through which consumers increasingly enjoy their 
creations. Copyright law should not stifle innovation, but it 
must stimulate the creativity upon which innovation depends.
    It is no accident that new modernized platforms and 
technologies seek to exploit artistic work. At root, a Kindle 
is useless without the literary works of authors. The iPod 
would be worthless, and Pandora would not exist without the 
musical works they deliver. And Netflix would not continue to 
thrive without the catalogue of films in its reservoir. In 
short, consumers crave content, and to continue providing 
quality content, the creative community must enjoy the just 
rewards contemplated by our Constitution.
    Second, I think it is time, and the time is long overdue, 
for Congress to recognize a performance right in sound 
recordings. To do so requires no further study. To not do so 
just prolongs this longstanding inequity and keeps us out of 
pace with the international community.
    Similarly, I think we have a sufficient body of evidence on 
which to craft a legislative solution to the orphan works 
problem. Addressing this problem will give users comfort that 
they will not face infringement claims from unknown, 
unidentified rights holders, despite diligent efforts to locate 
them.
    Mr. Chairman, there may be some other specific areas in 
which Congress can or should take more immediate action because 
either the record is sufficiently complete or the stakes are 
too high to do nothing, or to delay needlessly. But I will stop 
here so that we can hear our Register express her views and 
recommendations on the content and process for the next great 
Copyright Act.
    And so, with that, Mr. Chairman, I yield back.
    Mr. Coble. I thank the gentleman.
    Without objection, other Members' opening statements will 
be made a part of the record.
    We have a very distinguished guest and witness today.
    I will begin by swearing in our witness before introducing 
her.
    [Witness sworn.]
    Mr. Coble. Let the record reflect that the witness answered 
in the affirmative. And you may be seated. Most of you know our 
witness today.
    But for the benefit of the uninformed, I will bring you up 
to speed. Maria Pallante has served as the Register of 
Copyright since June 2011. Prior to her appointment as 
Register, Ms. Pallante served in the Copyright Office in a 
variety of roles for a total of 7 years. Ms. Pallante has also 
worked in a leading position for the Guggenheim Museum in New 
York City, the National Writers Union, and the Authors Guild.
    Register Pallante is a 1990 graduate of the George 
Washington University School of Law, and she earned her 
bachelor's degree in history from the Misericordia University.
    Madam Register, we are delighted to have you with us today. 
And if you could limit your comments to on or about 5 minutes 
in view of our hectic schedule that is forthcoming, we would be 
appreciative. If you violate the 5-minute rule you won't be 
keelhauled, but we will be patient with you. So we are glad to 
have you with us.

   TESTIMONY OF THE HONORABLE MARIA A. PALLANTE, REGISTER OF 
           COPYRIGHTS, UNITED STATES COPYRIGHT OFFICE

    Ms. Pallante. Thank you so much, Mr. Coble, Ranking Member 
Watt.
    Welcome, to the Members of the Subcommittee.
    And thank you so much for the invitation to appear before 
you today. And on behalf of the staff of the Copyright Office, 
thank you for focusing on copyright. We greatly appreciate it. 
And although we do work with you on many discrete issues, and 
have for 100 years, more than 100 years, it is a great 
privilege today--to be here today--to think about the big 
picture of copyright and how we might begin a conversation 
about a forward-thinking framework for the next several 
decades. At least that is what I would like to talk about.
    As the Chairman mentioned, the U.S. Copyright Office 
administers many important provisions of the law. We also have 
a statutory role to advise Congress on domestic and 
international copyright issues. We also have a statutory role 
to work with and assist executive branch agencies in their 
discrete statutory roles, whether that be trade or treaty 
making, for example.
    Congress has before enacted general revisions of the law, 
with varying degrees of pain, and sometimes over many, many 
years. The last time you did that was in 1976. The process 
started in the 1950's. It took over 20 years. It is widely 
regarded as the most balanced copyright act in the world, lots 
of compromise, lots of consensus building. If it has a fault, 
it is that because it took so long, it was nearly outdated by 
the time it was implemented, meaning that you were legislating 
behind the blade of technology, not doing anything too 
dramatic, but certainly bringing the United States up to par 
with the rest of the world. Even those who worked very closely 
and were very invested in the process, like former Register of 
Copyrights Barbara Ringer, when it was all over, said that is a 
good 1950 law. So we may not even be dealing with the 1970's at 
this point is really my point. We may be going back further in 
time than we realize.
    And then, of course, there was the DMCA, which implemented 
two Internet treaties in the late 1990's. And that was more 
comprehensive, but it was not the entire statute. And so we 
have a mix of provisions that were designed to target Internet 
activity, and we are now 15 years later in that process. And I 
think it is fair to say that 15 years in terms of Internet time 
is a long time.
    So we have these two statutes, so to speak, before us 
today. And my goal is to figure out how to work with all of 
you, so many of whom have come to us and said this is a concern 
for me, or this is a concern for me. And the way we see it from 
the Copyright Office is that they all belong on the table at 
the same time because so many of them are interrelated. And 
ultimately, it is not a discussion about profits for one sector 
or another, but as the Chairman noted, it is about the 
constitutional purpose of copyright, how we can make sure we 
prioritize authors, who, as James Madison said, their interests 
coincide with the interests of the public, how do we get back 
to that kind of equation. Also providing a blueprint for new 
companies, especially in the online world, good faith companies 
to know what they are allowed to do with content and what they 
are not.
    Finally, I would just say that the public is very confused. 
Many of you have told me that your constituents have no idea 
what to do with copyright, whether they are teachers, private 
citizens in their homes, higher education institutions. And I 
can tell you that we have a public office across the street 
that takes phone calls all day every day, and it is very 
difficult to advise people as to the state of the law when 
essentially you are relegated to telling them, well, in the 
Ninth Circuit here is the view, and in the Second Circuit, here 
is the view. And the Supreme Court is looking at this issue 
now, but maybe not opining on the whole picture.
    So I think that there are a lot of people who like to say 
that copyright is broken. What I would say is that good faith 
people really want know what the rules of the road are. And so 
my office is prepared to help you in any way we can. We always 
have been in that role. We take great pride in it. And with 
that, I am happy to answer any questions that you have.
    [The prepared statement of Ms. Pallante follows:]

    
    
    
    
    
    
                               ATTACHMENT





























































                               __________
    Mr. Coble. Madam Register, you will be rewarded. You beat 
the illuminating red light. Thank you for that.
    Folks, there is a vote on now. And we are going to depart 
to vote. We will stand in recess upon our return.
    [Recess.]
    Mr. Coble. I will begin my questioning with the Register. 
And we will try to limit our questions to 5 minutes as well 
because of the schedule on the floor. There will be another 
imminent vote I am told.
    Thank you again, Madam Register, for your testimony. What 
do you mean, Madam Register, when you say that copyright law 
must serve the public interest? And how does one measure 
whether it does so?
    Ms. Pallante. I really appreciate that question, Mr. Coble. 
Copyright is ultimately about the public interest. And as I 
said in my opening remarks, James Madison said, the authors' 
interests coincide with the interests of the public. In the 
office where I work, where everybody loves copyright more than 
anything else in the world, we sometimes get a little dismayed 
because we see the interests of authors being set up as a 
counterweight to the public interest and sometimes as an 
obstacle to the dissemination of knowledge.
    But the Constitution is very clear on this, that authors 
are part of the public interest equation and a means to 
creating, incentivizing, and disseminating knowledge. Trying to 
evaluate the public interest is a big challenge for us, and I 
am sure for you, because so many would like to speak for it. 
And so we like to go back to basics in our office and try to 
remember that although many of the media wars are about the 
profits or special interests of one intermediary or another, 
whether it is the tech sector or the content industry, 
ultimately if the law does not serve authors, it is not working 
and it also doesn't deserve the respect of the public.
    Mr. Coble. I thank you for that.
    You mentioned earlier that our copyright law is probably 
the best in the world, and I am glad to hear you say that. Our 
copyright law contains enforcement protections that are 
balanced with important exceptions and limitations. How does 
the American copyright system compare to others around the 
world in striking a balance?
    Ms. Pallante. Well, I think in terms of the balance to 
date, it is a model. Many look to it. But like other countries, 
our law is showing its age. And it won't surprise you to know 
that many countries are therefore looking at revision, either 
because they are becoming global citizens and entering 
treaties, treaties that we are already members of, for example, 
or because like us, they are trying to apply digital age fact 
patterns to an aging statute. So I think, you know, if we are 
to be true to our leadership role, as we have always been in 
the copyright space, we should proceed in terms of what is good 
for this country. And I think, you know, we have always done a 
very good job, Congress has always done an exceptional job of 
balancing what the global situation requires and what are the 
unique American principles that need to be intertwined.
    One very easy example of that is fair use. Fair use for us 
is one of the safety valves for free expression. The Supreme 
Court has confirmed that. Fair use is not a doctrine that you 
will see elsewhere in the world.
    Mr. Coble. I thank you for that.
    I still have some time, but in the interest of time I want 
to recognize the gentleman from North Carolina.
    Mr. Watt. And Mr. Chairman, as has been my practice, 
especially since we are having a series of votes, some of my 
colleagues may not be able to come back after the votes, so I 
am going to defer to Ms. Chu to ask questions first.
    Mr. Coble. Very well. Without objection.
    Ms. Chu. Thank you so much.
    Well, first let me ask about how the Copyright Act affects 
the music industry. I know that every time I hear music, I am 
hearing a performance of two copyrighted works, the musical 
composition written by songwriter and the sound recording made 
by reporting artists. Without both copyrighted works, 
composition and sound recording, the music just wouldn't exist. 
So it seems to me when establishing royalty rates for the 
performances of musical compositions by web casters, the 
royalty rates paid for the performance of sound recordings 
would be directly relevant. However, I understand that the 
Copyright Act specifically prohibits the rate court that 
establishes performance royalties for songwriters from 
considering the rates paid to recording artists for the exact 
same Web casting performance.
    Ms. Pallante, what are your thoughts on having the rate 
court consider all relevant evidence, including royalties Web 
casters pay for sound recordings, when establishing royalty 
rates for performances of musical compositions?
    Ms. Pallante. That is a fantastic question, a very 
difficult question. And my first answer would be it is exactly 
the kind of question that compels me to think we need to put 
all those issues on the table and figure out what we need to 
make music work within the copyright framework. So, you know, 
on the one hand, we do not have a full public performance rate 
for sound recordings. We are quite alone in the world in that 
regard. And from a copyright policy perspective, it is 
indefensible. It is really indefensible.
    When you look at Internet radio, where royalties are paid, 
and the players that you want to encourage to come into that 
space, equity becomes a driving force. But from where we sit, 
we would like to figure out first what are the exclusive rights 
that artists, authors, and labels should have. And then, from 
there, figure out what part of that should be legislated, what 
part should be administrative, and what the guideposts should 
be to keep it flexible and nimble.
    Ms. Chu. Well, thank you for that. And I would like to also 
ask about the film industry, and the fact that it has found 
creative ways to protect copyrights while expanding access in 
this new digital age. These are the digital rights management 
tools that incentivize businesses to develop new and innovative 
models to distribute high-quality content across multiple 
forms, such as UltraViolet, which allows ownerships to be 
portable. So thanks to copyright protections, companies are 
encouraged to invest in these new online platforms and allow 
users to access content legitimately. And ultimately, they are 
also able to protect creative rights.
    So Ms. Pallante, what are your thoughts about digital 
rights management tools and their role in fostering innovation 
for distributing high quality content across many platforms?
    Ms. Pallante. Uh-huh. Thank you for the question, 
Congresswoman.
    I think it is ultimately a balance, but there is no 
question that DRM, as you reference, is critical to the 
equation. It is a way of combining law and technology to 
protect the content that others have invested in. And the high 
level question is, who should have the right to reap the 
benefit of the investment, those who created it and invested in 
it, or others who have perhaps an interest in aggregating it 
and distributing it? And ultimately, exclusive rights cannot be 
absolute, but they have to be meaningful. And I think the job 
that is so difficult in this copyright policy world right now 
is trying to get that equation right. So how do you incentivize 
the market to continue to offer innovative products like you 
described? Because consumers want them and because we want 
content industries to adapt and evolve. On the other hand, if 
they are too slow, or if others can step into the space, what 
part of the law should just stop that and what part should 
strike a balance?
    Ms. Chu. And finally, let me ask about enforcement. A 2011 
study found that almost 25 percent of all Internet traffic had 
copyright infringement, and yet only a small number of these 
infringements have ever faced any consequences. With this 
massive ecosystem of obvious infringement on the Internet, it 
is obvious that we have to do a better job of enforcement. How 
can we improve the current law to better provide enforcement 
tools for copyright protection?
    Ms. Pallante. Well, thank you for raising enforcement. I 
don't think we can have a conversation about a 21st century 
copyright law without talking about enforcement, although I 
think there are some that would prefer that that be left off 
the table. So again, exclusive rights just will not be 
meaningful if there is no way to enforce them. So that could be 
updating illegal streaming so that one can go after it with not 
just a misdemeanor but criminal penalties, just like the law 
says for reproduction and distribution. For smaller artists, it 
may be a small claims process of some sort where if the harm is 
worth $2,500, yes, Federal court is an option, but it is not 
really an option at an economic level. It just doesn't really 
make sense. But for that artist, it might be everything to them 
to control that kind of use.
    So enforcement is critical. I think it has to be on the 
table going forward. It can be a mix of legislative and private 
sector voluntary, regulatory packages. I think that is probably 
the innovative thing to do to keep it flexible and nimble. But 
I appreciate your raising it.
    Ms. Chu. Thank you.
    I yield back.
    Mr. Coble. Thank the gentlelady.
    The Chair recognizes the distinguished gentleman from 
Pennsylvania for 5 minutes, Mr. Marino.
    Mr. Marino. Thank you, Chairman.
    Good afternoon. How are you?
    Ms. Pallante. Hello.
    Mr. Marino. You mentioned in your opening statement that 
there were quite a few issues that are ripe to be reviewed. Can 
you narrow that down to let's say the three most important ones 
to you?
    Ms. Pallante. You want me to pick my top three favorite?
    Mr. Marino. Top three.
    Ms. Pallante. I think the public performance right for 
sound recordings is ripe. You have been deliberating on that 
for more than a decade.
    Mr. Marino. Yeah.
    Ms. Pallante. We have done many, you know, pieces of 
research for you on it.
    I think orphan works is ripe. I think that the public is so 
frustrated by the long copyright term, that it is not really 
the term itself but what to do when the rights holder goes 
missing. And again, we have studied that, and there have been 
multiple hearings. And we are actually yet in the middle 
another public inquiry at the request of Congress on that.
    And I think, as I mentioned, illegal streaming is ripe. I 
think for me it is a parity issue. And if you have that for the 
reproduction right and the distribution right, but you don't 
have it for the public performance right, and yet we know that 
streaming is the way of the future for delivering content, it 
just makes sense.
    Mr. Marino. I had the opportunity recently to visit China, 
and Russia before that, and I brought these issues up. I may 
have set diplomatic ties back a decade or so, but I was rather 
insistent about it. But both countries blew it off; both the 
ministers and deputies just blew it off as it being 
nonexistent. And we all know how much money that is costing us 
in the U.S. and other countries doing business legitimately, 
but how much money is being made in Russia and in China. And my 
question then, what are other countries doing to bring up to 
date that term, if I may use it, their copyright laws?
    Ms. Pallante. Well, it depends on the country. And I would 
say that we interact with foreign countries in the copyright 
space in a number of different ways, at international meetings 
like at the World Intellectual Property Organization, where 
there is a rather slow process I would say rather slow where 
many different countries at very many different economic levels 
talk about IP. And that is where treaty making often happens.
    Then there are bilateral trade agreements. And the U.S., 
through USTR and others in the Administration, do a very good 
job of trying to make sure that those who are interested in 
trading with us have sufficient levels of protection. But at a 
very specific level, you will find that some countries are 
behind us and some are ahead of us. So for example, there are 
countries that are doing Web blocking as a last resort. And as 
you well know, that was the discussion for quite a while in 
this Congress. But it really depends on the situation.
    Mr. Marino. I was a prosecutor, so I prosecuted these 
cases, both at the State and the Federal level. But an 
overwhelming number of these cases start outside the country. 
And it has been very difficult on dealing with countries like 
Russia and China. Any suggestions?
    Ms. Pallante. Well, I think everybody knows here that I 
testified three times on enforcement in 2011. And the approach 
that I thought was a very innovative approach, and which I was 
happy to support, was a follow-the-money approach. And I still 
think that that is something that, you know, whether slowly, 
deliberatively, differently, innovatively, you should continue 
to look at. Because there is just a loophole there. But I think 
what you are raising is the fact pattern that we are very well 
aware of in the Copyright Office, which is if one leaves the 
country but then directs a website of infringing content back 
to our citizens, how does one get at them under U.S. law?
    Mr. Marino. I will leave you with this thought. My daughter 
and son and I, we download music all the time. We pay for it. 
And I said to my daughter not too long ago, I found this real 
neat website where we can download. And she says, Dad, you are 
on Judiciary, you are on Intellectual Property, that is a bad 
site, I would stay away from it if I were you. So I followed 
her advice. And thank you, I yield back.
    Ms. Pallante. Thank you.
    Mr. Coble. Thank the gentleman.
    The Chair recognizes the distinguished gentleman from 
Michigan, Mr. Conyers, for 5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    I join us in welcoming our guest, the Register. And I would 
like to talk about whether you feel that performance and sound 
people should have a right provided in a comprehensive overhaul 
of the Copyright Act. How can we get it passed?
    Ms. Pallante. Thank you, sir. I do. The Copyright Office 
has been on record on that issue for a very long time. And I 
think now, because of the promise of Internet radio, the 
disparity has become even greater.
    Mr. Conyers. That is great. Do you agree that more should 
be done in the area of privacy to protect the intellectual 
property that is being frequently the object of illegal 
activity, namely theft?
    Ms. Pallante. I do. I regrettably am not an expert in 
privacy law. But I can tell you we worry about it even in the 
Copyright Office, because we are an office of public record, 
and we put up people's applications, and sometimes that 
includes private data. And we have to, like everybody else, 
figure out what the right balance is.
    Mr. Conyers. Now, in the area of copyright piracy, we, I 
think, all know that the economy loses about $58 billion 
annually, and maybe over 300,000 jobs. Are there some ideas you 
would like to leave this Committee with in terms of how we deal 
with this hugely important sector of our economy?
    Ms. Pallante. Well, the easy answer is there is no easy 
answer. So enforcement provisions are critical. You can't have 
a 21st century copyright act that has 19th century, or 20th 
century for that matter, enforcement provisions. But I think 
there is also just a general cultural issue that we can play a 
role in and you can play a role in fostering respect for 
intellectual property. Piracy should not mean a teenager 
downloading music--not in your home but in my home--it really 
should be about trying to make sure the law can respond to the 
great pirates out there who are, with abandon, reproducing, 
distributing, and making otherwise making available copyrighted 
works.
    Mr. Conyers. Well, I thank you very much.
    And I would like the gentleman from Pennsylvania to know 
that we are happy to work with him in the performance rights 
area.
    And Mr. Chairman, I yield back the balance of my time.
    Mr. Coble. I thank the gentleman.
    The gentleman from Utah is recognized for--I stand 
corrected. The gentleman from Virginia is recognized for 5 
minutes, the Chairman of the full Committee.
    Mr. Goodlatte. Well, thank you, Mr. Chairman. And thank you 
for holding this hearing. And I would ask unanimous consent 
that my opening statement be made a part of the record.
    [The prepared statement of Mr. Goodlatte follows:]

Prepared Statement of the Honorable Bob Goodlatte, a Representative in 
  Congress from the State of Virginia, and Chairman, Committee on the 
                               Judiciary

    Statement of Judiciary Committee Chairman Bob Goodlatte 
Subcommittee on Courts, Intellectual Property and the Internet Hearing 
on ``The Register's Call for Updates to U.S. Copyright Law'' March 20, 
2013 Statement Submitted for the Record
    This afternoon, we hear from the Register of Copyrights about her 
ideas for updating U.S. Copyright law.
    Based upon Article One, Section Eight of the U.S. Constitution, our 
nation's intellectual property laws strive to balance the rights of 
creators to protect their works with promoting the progress of science 
and the useful arts. Given the importance of intellectual property to 
our nation's economy, it is critical that our copyright laws reflect 
the modern economy. The software developer in Silicon Valley, the 
songwriter in Nashville, and the documentary film maker in Los Angeles 
all rely upon such laws as do those who use copyrighted works for 
personal, scholarly, or educational use.
    Few would doubt that keeping U.S. copyright law current is 
complicated by rapidly changing technology. The last major revision to 
the Copyright Act occurred in 1976 when the more advanced 8-track tape 
was pushing aside the less advanced reel-to-reel tapes in the audio 
marketplace. The mid-1970's were also the time that cutting edge VHS 
and Betamax videotapes were introduced. Good luck finding any of those 
videotapes today. Since the 1976 Act was in fact developed over a 
number of years in the 1960's and 1970's, it was truly a copyright law 
written for the analog era.
    The world has obviously changed a great deal since 1976. Consumers 
now routinely acquire intellectual property only in digital formats. 
They purchase apps and music files on their phones, and watch streamed 
videos on their laptops and tablets. The notion of acquiring content on 
a physical item like a disk is rapidly becoming as outdated as an 8-
track tape.
    Just over two weeks ago, the Register of Copyrights gave a lengthy 
lecture at Columbia Law School entitled ``The Next Great Copyright 
Act.'' In her lecture, she called upon Congress to consider making a 
large number of changes to U.S. copyright law as part of a wholesale 
revision of the 1976 Act.
    I have been personally involved in several updates to copyright law 
since 1976 and understand the importance of keeping our copyright laws 
current.
    Clearly, the Register's call to revise, rather than update, the 
Copyright Act is one that is certain to hearten some and, quite 
frankly, scare others. However, my views on the merits, or lack 
thereof, of a major overhaul depend not upon the scale of the effort 
required, but upon the merits of doing so. I welcome the Register's 
thoughts into which she has clearly put a great deal of effort. I also 
welcome the thoughts of other Members of this Committee, as well as the 
thoughts of the copyright world--many of whom I do not expect to be shy 
with their views.
    Ultimately, however, the Committee will look to the words of the 
Constitution to weigh any proposed changes to our nation's copyright 
laws--``Congress shall have the power to promote the Progress of 
Science and useful Arts, by securing for limited Times to Authors and 
Inventors the exclusive Right to their respective Writings and 
Discoveries.
                               __________

    Mr. Goodlatte. And I would welcome, Ms. Pallante, and thank 
her for her initiative here, which we heard about. And we are 
enthusiastic about having you come here and share it with the 
Committee. And I thank you for doing that.
    You know, we have been through a lot of copyright debates 
and attempts to do things here in this Committee in recent 
years. And the tone of recent copyright debates has often been 
one that pits one or more stakeholder groups against others, as 
opposed to trying to find areas of compromise or consensus. Why 
do you think that the tone of copyrights and debates in our 
society has become so polarized and hostile? And how do recent 
debates differ from the past, if you know?
    Ms. Pallante. Right. I wasn't there for the 1976 revision. 
But I was a younger lawyer during the DMCA. And so those are my 
guideposts.
    Mr. Goodlatte. Me, too.
    Ms. Pallante. You know, we hate, in the Copyright Office, 
that copyright has gotten a bad name. We suspect it is because 
of money. And we suspect that--well, we know from the many 
authors, who call us on a daily basis, whether they call the 
lawyers or the help line, that they are feeling like they are 
on the edge of a precipice. But yet the public, I think if you 
were to poll them randomly, would think copyright is really 
about a bunch of giant corporations with one perspective or 
another.
    So I think there is a lot of leadership opportunity in that 
debate. And we would really like, and I think one of my goals, 
if you were to consider a broad conversation about copyright, 
would be to be able to get the respect of the public back into 
the equation by having a law that actually is a little more 
intuitive than it is now.
    Mr. Goodlatte. Well, thank you. And that was really our 
objective in inviting you here today. What do you see as your 
role, the role of the Copyright Office, in any effort to update 
the Copyright Act over the next few years?
    Ms. Pallante. Well, Mr. Chairman, we would take our cue 
from you and the Subcommittee here. But historically, the 
office has had a very close and supportive role with Congress, 
particularly with the Subcommittees that govern intellectual 
property. And we are at your disposal, whether that is for 
roundtables, advisory committees, red lines of the statute, 
revisions, studies, whatever it is that you might need. But we 
are poised and ready to help.
    Mr. Goodlatte. And how about looking forward for the office 
itself? In 2011, you published a list of priorities and special 
projects for the office that were designed to ensure that our 
copyright system is updated in the digital area. In your view, 
what specific improvements or authorities does the office need 
in order to make itself into a 21st century agency?
    Ms. Pallante. Thank you so much for that question. I will 
separate it into operations and policy, although my staff will 
tell you that I am constantly saying you cannot separate those 
two things. But on the operations side at a high level, we need 
better technology. We have both a user community and a 
copyright owner community frustrated by the interface that they 
interact with when they come to our office. So whether they are 
trying to register, say they are uploading a film, they don't 
expect the system to crash as they are trying to deposit their 
film. Our own staff is frustrated by the kind of inadequacies 
of the technology. We don't have enough staff. But we, I think 
more importantly, are looking at how to retrain and redirect 
the staff we do have.
    So I am, for example, trying to do a reorganization of the 
entire place because I have found that the departments that I 
oversee are dated themselves. They date back, frankly, to the 
1970's and 1980's. So there is much that we can do coloring 
within the lines. But I think, at some point, we just need more 
support, and we need to know what Congress wants the office to 
be.
    On the policy side, the question I think, again, for 
Congress is do you want us to help fill in the blanks where the 
statute ends by having perhaps more rulemaking authority? And I 
would add to that maybe a little more control over our budget 
in terms of the fees that come in that we would like to turn 
back into the system of technology, or resources generally, but 
are often offset against our appropriations. In other words, we 
are a business. And I don't think ever in the history of the 
office, we have really operated like a business. And we would 
like to do that. The staff I have now is very business-
oriented.
    Mr. Goodlatte. Well, thank you.
    Thank you, Mr. Chairman.
    Mr. Coble. Thank you, Mr. Chairman.
    The Chair recognizes the gentlelady from Washington, Ms. 
DelBene, for 5 minutes.
    Ms. DelBene. Thank you, Mr. Chair.
    And thank you for being here and for spending the time with 
us. I really appreciate it.
    I am an old tech person, and so you talked about how our 
law from 1976 wasn't even really about 1976 by the time we got 
it implemented. And clearly, we could be at risk of doing that 
all over again. And, you know, I am a new Member of Congress, 
but you talked a lot about how we have had hearings and 
hearings on many of these issues before. So how do we--or what 
are your recommendations on how we--get ahead, or stay ahead so 
that we aren't guilty of doing the same thing all over again 
and implementing a law that is 10 years old and are starting 
out behind?
    Ms. Pallante. That is such a great question. Thank you. I 
will say two things just right off the bat. One is I have no 
interest in sticking around for 21 years to talk about the law 
what we should have in 2013. So we, again, will take our cues 
from you, but we think, you know, a few years of very solid 
drafting and revision is probably what you are looking at if 
you really want to do something broader. And then the other 
thing that I would say is something that I just referenced 
briefly, which is how much of the law--how much detail do you 
want to be in the law? And how much do you want to put into 
regs, into rulemakings, practices, reward voluntary behavior? 
How much of it has to actually be in the code? And I would say 
particularly for economic issues and technology issues.
    Ms. DelBene. And so do you feel like you have more 
flexibility to keep it up to date if the statute is more broad 
is basically what you are saying?
    Ms. Pallante. That is what I am saying.
    Ms. DelBene. Okay. Then you also talked about your 
technology being out-of-date and kind of struggling to keep up 
with folks who are trying to get you information, et cetera. 
Are you talking about something that would be a very 
significant change in what you have right now or----
    Ms. Pallante. I don't know. I think, you know, I have only 
been the Register for 22 months. And I know that when the paper 
system was updated to electronic, it was in 2007. There was an 
enormous backlog that occurred right after that. There was a 
lot of support from the Library to try to get the backlog down. 
When I first became Register, I got nothing but backlog 
questions. And I was saying, but that is not the right 
question. The question is how is my technology, and how many 
staff do I have. And I realized it had become kind of an 
institutional question. But from where I sit, of course we 
should not have a backlog. But if we are only registering a 
small amount of things with a small staff and we are not doing 
it that well, we have bigger issues to figure out.
    Ms. DelBene. So how long is the backlog?
    Ms. Pallante. We, thanks to the great dedication of the 
registration staff, we don't really have a backlog. We have a 
2- to 4-month wait for electronic applications, which is quite 
reasonable. I talk to copyright stakeholders all over the 
country all the time, and they tell me that that is a 
reasonable amount of time to wait for a certificate. You know, 
the obvious question is, do you want it overnight? Is that the 
expectation in a world of technology? And I think you will find 
that they are reasonable when dealing with government actors. 
And of course, we would like to get it to be as good as 
possible. But that is really not my primary concern right now. 
It is not the thing that wakes me up at 3 in the morning, 
because the backlog is relatively stable.
    Ms. DelBene. So what does wake you up at 3 in the morning?
    Ms. Pallante. The technology wakes me up, and just, you 
know, this is a blessing and a curse. So many people want the 
office to be so many things. You know, could you give me the 
answer? Is this fair use or not? Can you help me with curricula 
for my schools? Can you not just tell me what the courts are 
saying but tell us, you know, whether we can do this or not? 
Those kinds of things. And could you connect your database to 
my database? And could you do more public-private partnerships? 
And some of that is a security issue, because our offices are 
on Capitol Hill, and there is only so much connecting to 
private databases that I think we will be permitted to do. But 
we haven't--we are just now exploring those things. We have had 
hundreds of meetings in the last year and a half with 
stakeholders. My staff would tell you that we had some rules 
that we will talk to lawyers, but when we are talking about 
technology, we really want to talk to technology people. So 
not, you know, what are the legal rights that you are 
administering, but how does your database work? How do you sort 
the financial data? How do you present it?
    We have databases that are online in the office, but they 
are very siloed and very dated. They have been the same four 
fields for 30 years. And copyright is now life-plus 70. So one 
example might be should we have the database of death 
certificates for authors? Who knows when copyright expires? 
Where are they going to get that information? That is just a 
small example.
    Ms. DelBene. Thank you very much. I appreciate it.
    Thank you, Mr. Chair.
    Mr. Coble. I thank the lady.
    The gentleman from Utah, Mr. Chaffetz, is recognized for 5 
minutes.
    Mr. Chaffetz. Thank the Chairman.
    And thank you for being here and the good work that you do. 
I appreciate it. There have been three different Web casting 
rate setting proceedings under the so-called willing buyer-
willing seller standard, and yet there has never been a time 
when any significant percentage of the Internet radio royalties 
paid to SoundExchange have been paid pursuant to the rates 
established by one of the proceedings. Congress has had to 
repeatedly intervene, and three different laws have had to be 
passed to allow fixes to the rates established by these 
proceedings.
    So my question is twofold. Why has the process for setting 
Internet radio rates have been so ineffective? And would you 
consider changes to the current CRB proceedings and rate 
structure that could better incentivize growth in Web casting 
and allow it to succeed?
    Ms. Pallante. Thank you, sir.
    I think what I would say at a high level is music licensing 
is so complicated and so broken that if we can get that right, 
I will be very optimistic about getting the entire statute 
right. And of course, we are more than willing to look at that 
very specific issue that you just raised. I think that is the 
kind of issue that we should fold into the next great copyright 
act. How do we get that right? Because if licensing isn't 
working, then copyright is not working.
    Mr. Chaffetz. The recent cell phone unlocking controversy 
has revealed a deeper problem. Right now, it is impossible to 
add permanent exceptions to section 1201 because doing so 
violates obligations of the Korean Free Trade Agreement, among 
others. And similar problems arise at the Berne Convention, 
when people propose shortening length of copyright protection 
or reintroducing some of the formalities. Does it make sense 
for Congress' hands to be tied in such a way? And how can we 
enact necessary reforms without waiting for multiple 
renegotiations with disparate trading partners? What do we do 
there?
    Ms. Pallante. That is the circle of life question, right? 
So we in the U.S. enact certain provisions. We then ask trading 
partners to do the same. And then they say, okay, but don't 
change your law, and we say, okay. Then we are all stuck. 
Right? But I think, obviously, trade is important. Obviously, 
we are a global citizen. We could just do whatever you want to 
do. You could decide that copyright should be 25 years.
    What will happen if you do that, though, is that our own 
authors and corporations who invest in copyright, and for whom, 
you know, the economy has rewarded us and them, would be 
disadvantaged just by virtue of the operation of the treaties. 
I know you know all this, but those are the kinds of issues.
    But I think the Congress should lead on these issues and do 
what it has done in the past. Because in the past it has often 
said, we are a global citizen, and we are going to do what we 
think is best, but we also have our own unique history. So, for 
example, you didn't do away completely with formalities when we 
entered the Berne Convention. You have residues of formalities 
in the law. You have to register before you get into court to 
see if it is in fact copyrightable. There are small things that 
you can do to leave the American imprint I think. I don't know 
how to help you with the bigger question.
    Mr. Chaffetz. And Mr. Chairman, I guess part of what I 
highlight in this question is the need to address these as we 
do free trade agreements. I have one more question as I 
conclude here. You had recently brought up the issue of digital 
first-sale and seemed to express some concern about living in a 
world where more and more we no longer actually own things in 
the traditional sense of the word, but where we rather just 
license things, thing after thing. Can you go a little deeper 
on that? And what are some of the potentially negative 
consequences of living in a world where we merely license 
things as opposed to own things?
    Ms. Pallante. Well, I think it needs more deliberation. But 
thank you for raising it, because I think it is one of the 
significant issues that will have to be resolved. I think, on 
the one hand, the first-sale doctrine comes out of real 
property. If you own something, you should be able to dispose 
of it, that particular tangible property. But if, in fact, the 
world of copyright isn't really about disposing of copies but 
endless consumer licenses, the question is does Congress want 
to do some version not really of first-sale doctrine, because 
again you are not dealing with a tangible copy, but do you want 
to mirror some policy point like that in the law?
    In my lecture at Columbia, I gave an example where Congress 
had migrated a concept and applied it in a completely new 
context. So, in the old law, the very old law, the 1909 law, 
there was a renewal of copyright necessary as a condition of 
continued protection. And in the new law, the 1976 law, which 
is not so new, you went to automatic protection. But authors 
they, or at least ostensibly had had, a trigger for 
renegotiating their bad contracts at that renewal juncture with 
the people that they had, you know, licensed their song or 
their book. And so what Congress said is, we like that, that is 
a good policy point. We are going to create a termination 
provision where authors can renegotiate at some point later in 
the future. So it is just that kind of issue I think. Do you 
want to create something in the digital world so that the world 
of copyright is not just about licenses? And I don't actually 
have a solid view on this. I am going to keep looking at it. I 
think it is not really a digital first sale, it is something 
like that.
    Mr. Chaffetz. A big issue.
    Thank you, Mr. Chairman. Yield back.
    And I would note for the record, by the way, I was 9 years 
old in 1976.
    Mr. Coble. Quit bragging.
    I thank the gentleman from Utah.
    The distinguished gentleman from Florida, Mr. Deutch, is 
recognized for 5 minutes.
    Mr. Deutch. Thank you, Mr. Chairman.
    Ms. Pallante, I am sure you agree, almost every aspect of 
American society has benefited from our robust copyright 
protection. We should all be proud that America entertains, 
America educates, America informs the world, and in doing so, 
five percent of the workforce is employed as the world's 
largest exporter of creative works. It should be self-evident, 
therefore, that we have got to ensure that our creators are 
protected and fairly compensated. Now, I applaud you for your 
recognition that while we have to continue to strengthen 
protections for artists, innovators, and entrepreneurs, we are 
truly living in a new world thanks to new technologies that 
have moved the arcane subject of copyright law to a 
breathtakingly large new group of engaged stakeholders on the 
Internet social media platforms. When my teenage daughters are 
talking to their classmates about copyright law, when the world 
is tweeting about copyright law, something that many of my 
colleagues on this Committee learned a great deal about, we 
have truly crossed into a new era.
    And I agree that we have to take a serious look at the 
Copyright Act, we have to examine what is working and what is 
not for creators and for all of the stakeholders, whether they 
are victims of piracy or whether they are victims of antiquated 
laws that made sense at a moment in time. This Subcommittee has 
to ensure that our laws work in the digital age. But the 
enormous obstacle that I think we face is how to open up that 
dialogue to the new universe of people who care about copyright 
law in a way that inspires them to actually care about 
copyright. That is not necessarily obvious that that connection 
exists.
    The basic premise of our copyright law is that we are all 
enriched when creators create, and that creators must be able 
to earn a fair return on their ingenuity. But for a generation 
growing up on the Internet, the perception too often is that 
anything that comes on your computer is free, and copyright 
simply means all the things that keep you from doing what you 
think you should be able to do at any time, at no cost. So what 
I would like you to speak to are some of the concrete steps 
that this comprehensive review that you proposed can do to make 
copyright relevant and inclusive in a way that doesn't water 
down the reasons that we have it in the first place.
    Ms. Pallante. Thank you for that question. So we think 
about this all the time, 24-7, across the street in the 
Copyright Office. And I said earlier, we all love copyright so 
much; it is our chosen field of expertise. We see the beauty of 
the law. We see the innovation of the law. And nobody is more 
pained than us to see the disrespect for the law, especially 
among young people. And nobody is more unhappy to live in the 
home of a copyright lawyer than my children. So I know where 
you are coming from. I would say that----
    Mr. Deutch. Our kids should talk, I think.
    Ms. Pallante. Yeah. I think even getting to the universe of 
issues is going to require a strategy. So if you were to go 
down this road of broadly looking at the new framework, I have 
laid out quite a lot of issues in my Manges Lecture at 
Columbia, but that is not the whole universe. There are more. 
And you would have to prioritize them. I think you have to 
figure out what the exclusive rights of authors are first. What 
should they be in the 21st century? For example, obviously the 
public performance right is becoming increasingly important 
because works are now being streamed, not necessarily 
reproduced and distributed. So we have to get that right.
    At the same time, there are incidental copies. And we 
should probably exempt certain incidental copies just because 
not doing so is going to just ruin the perception and the 
workability of copyright law. We have made recommendations 
along those lines before. Not every reproduction is a 
reproduction with a capital R is what I would say.
    I think although we love the trade associations that visit 
us on a daily basis, getting around them sometimes and getting 
to other kinds of creators, other kinds of users, people who 
are struggling in schools and higher ed and other places, would 
really be instructional. So I would also probably recommend 
that we, if we were to have roundtables, get out of Washington 
a little bit. Go somewhere like Nashville, where people make a 
living from writing songs at their kitchen table, or New 
Orleans. Go to, you know, schools, that kind of thing.
    Mr. Deutch. I think that is a fantastic idea. I just would 
have one other quick question, if I may. Consumers today can 
access copyrighted content and TV programming, films, music, 
books, magazines, on a whole array of devices. Interactive TVs, 
Blu-ray, Roku, Xboxes, Netflix, iTunes, Hulu, C.R.A.C.K., I 
mean, we can go on and on and on. And clearly, and it is a 
rhetorical question I think, this whole array of legitimate 
services that exists, these platforms, could they have 
flourished without strong U.S. copyright protection in place?
    Ms. Pallante. Have they flourished?
    Mr. Deutch. Would they exist at all?
    Ms. Pallante. No. I see. Could they exist without the 
copyright framework? No. Copyright is the lifeblood of those 
kinds of companies. And they take the creative work that we all 
love so much and that people spend a lifetime creating, in some 
instances, and give it to us, and make it possible, and make it 
lasting. And I think, you know, consumers, obviously, when they 
are purchasing a copy of something may think they are 
purchasing the entire work forever. But they are purchasing a 
copy. And I think what you are seeing is the market is trying 
to adjust and struggling to figure out price points. If people 
think they are buying a copy forever, should we be selling the 
Blu-ray for $2,500? Or should we continue to sell it for $30, 
knowing that they are going to come back and think that they 
bought it forever? Those are market questions.
    Mr. Deutch. I appreciate the discussion. Thank you.
    Thank you, Mr. Chairman.
    Mr. Coble. The distinguished gentleman from North Carolina, 
Mr. Holding, is recognized for 5 minutes.
    Mr. Holding. Good afternoon.
    Ms. Pallante. Hello.
    Mr. Holding. Sticking with the trade issue for a minute, 
writing in dissent in yesterday's Supreme Court case on the 
first-sale doctrine and the importation right, Justices 
Ginsburg, Scalia, and Kennedy expressed grave concerns that the 
majority opinion in that case places our law squarely at odds 
with the stance the United States has taken in international 
trade negotiations. And they note that, quote, ``Our government 
reached the conclusion that widespread adoption of the 
international exhaustion framework would be inconsistent with 
the long term economic interests of the United States.'' And 
that has consistently been advocated against such a policy in 
international trade negotiations. But they note that this is 
exactly the framework adopted by the Supreme Court in 
yesterday's opinion.
    You know, is this a significant issue? Is this an issue of 
significance that the Supreme Court Justices are suggesting? It 
appears to be both a matter of substantive law as well as a 
matter of U.S. credibility on the international trade 
negotiation front. If you could run through that a bit and give 
us your comments.
    Ms. Pallante. Right. Well, and we could talk for days 
probably about that issue.
    Mr. Holding. Just 4 minutes.
    Ms. Pallante. Just 4 minutes. I understand the reasoning of 
the Supreme Court in reaching the decision that they did. They 
were looking at competing provisions in an aging statute, 
right, which is my theme. The statute is getting harder and 
harder for courts to apply. But what they were looking at was, 
does the first-sale doctrine limit the distribution right? And 
they decided, yes, it does. That doesn't mean that the 
importation right isn't important now or shouldn't be more 
important in the future.
    The question for Congress on this, just to keep it short, 
as you suggested, is, again, what are the rights that authors 
and creators need in the 21st century? Are geographical 
considerations among them? Not just because they now and always 
have actually under copyright segmented markets and controlled 
their business strategies in that way--I am going to market X 
at X price point in the U.S., and Y in the EU at a different 
price point, and then Thailand altogether different strategy--
so do you want them to be able to continue to do that because 
that has served the U.S. economy extraordinarily well, provided 
incentives to the creators? But also as a copyright lawyer, I 
would say it gets more basic than that.
    It goes back to the divisibility of copyright. So 
divisibility on one level can be I can carve up my pie of 
copyright in terms of distribution right, reproduction right, 
public performance right. I am going to write a book. It is 
going to be made into a film. Then there is going to be a 
Kindle adaptation.
    I think----
    Mr. Holding. And don't forget the video game.
    Ms. Pallante. Don't forget the video game and then the 
theme park like in Harry Potter World, my favorite park. I 
think they also go a level deeper than that and unless you are 
in copyright transactions, unless you are familiar with them, 
that is not necessarily as evident, that it is not just the 
reproduction right, but it is the reproduction right in 
different parts of the world for different purposes, for 
different durations sometimes.
    Mr. Holding. Justice Kagan writing with Alito in 
concurrence suggests that a way to give effect to the intent--
Congress' intent--in providing a meaningful importation right 
without the unintended consequences raised in a briefing before 
the Court would be overturning the 1998 Quality King case and 
held the importation right to be properly limited by the first-
sale doctrine. What is your review on that proposed solution?
    Ms. Pallante. Well, I think you can make the importation 
right meaningful if you want to do so, which is another way of 
saying if you believe that market segmentation is important in 
copyright, whether because you believe in divisibility of 
copyrights and that has worked well for us or you just believe 
in the economy, they are intertwined, there is no reason that 
you can't look at the importation right. Again, I think it goes 
to what are the rights of authors in the 21st century.
    Mr. Holding. Thank you.
    Mr. Chairman, I yield back.
    Mr. Coble. I thank the gentleman from North Carolina.
    The distinguished gentleman from Georgia, Mr. Johnson, is 
recognized for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman.
    I want to focus on one issue, Ms. Pallante, that has caused 
considerable distress to institutions of higher learning 
located near my district in Georgia, and this is a problem that 
has affected universities across the world--excuse me, across 
the Nation. In a recent example of the uncertain copyright 
challenges facing educators, staff members at Georgia State 
University were named as defendants in a lawsuit brought by 
Cambridge University Press and other publishers. And the key 
issue in that case was whether the faculty's use of e-reserves 
was fair. Are you familiar with that case, Cambridge Press v. 
Patton.
    Ms. Pallante. Yes, sir, I am.
    Mr. Johnson. Can you comment on what role fair use and 
licensing should play in higher education?
    Ms. Pallante. Yes, and the short answer is they both have 
to play a role, which I think is probably what you are getting 
at in your question. So fair use is a critical part of U.S. 
copyright law. It is what makes our law American. It is tied up 
in freedom of expression. But it also has been applied to 
certain kinds of uses and certain kinds of contexts, for 
example, in education. However, higher ed has also been very 
well served by the market. So you don't want publishers of all 
kinds, serial publishers, textbook publishers, publishers of 
novels, literary works, coming out of that market because, in 
my opinion, it will affect the quality of the curricula 
materials that are available.
    So what I would want to see in an ecosystem like higher ed 
is a robust mix of all of those things coming together. So you 
want micro-licensing. You want it to be easy. You almost want 
it to be invisible. For example, we talk a lot about collective 
licensing in the copyright office. The reason that that is 
attractive, whether it is voluntary or legislative--you can 
have both kinds--is that it can be done almost at the top of 
the institution, the students could pay a fee, bingo, their 
academic materials are paid for through a license, it doesn't 
have to be a lot.
    At the same time, not everything should be licensed, and 
that's I think where you are seeing tension in higher ed. I 
would say, at a more basic level, higher ed people who have to 
apply copyright are confused and rightly so.
    Mr. Johnson. Well, that's something that we definitely need 
to clear up. Professors across the country utilize e-reserves 
to make limited copies of articles for students. Although 
Georgia State faculty prevailed on most of the infringement 
claims, the case is still troubling because--can you imagine 
the difficulty of educators when quoting a text, or showing 
images, or distributing handouts, surely these should be non-
infringing uses? Is there anything that you can give us some 
guidance about on that issue?
    Ms. Pallante. I can.
    So, in 1976, Congress looked at an outright education 
exemption and decided no, we are not going to do an outright 
exemption for education. I think in part if you look at the 
legislative history, because it is so complex, some stuff is 
fair use, some stuff is not fair use. It depends on the work. 
It depends on context. It depends if it is commercially 
available. It depends if higher ed is the point of the market. 
Lots of factors.
    Later, after a report from the copyright office at 
Congress' direction, Congress enacted a distance ed exemption 
that was negotiated so much, so well negotiated that it is 
almost useless. And it is part of the stress I think--of 
dealing I think--with education in the digital world. So I am 
not advocating for an exemption for higher ed, but I am quite 
sympathetic to the fact that ordinary lay people who are not 
copyright experts cannot navigate the copyright law. And so if 
we can put together a forward-thinking--with appropriate 
guidance from expert agencies like mine and room for 
regulations and best practices, some of which is happening in 
the private sector--then that would be great for those who want 
to get on with teaching.
    Mr. Johnson. Great. With respect to K through 12 education 
the increasing costs of textbooks in the face of decreasing 
budgets, are there ways that educators can use technology to 
deliver text to students without infringing works or being 
hauled into court?
    Mr. Coble. Madam Register, the time has expired, be very 
brief in your answer.
    Ms. Pallante. Yes, there's a way to help teachers 
understand the law and navigate the law. And I think the price 
of textbooks is again a market issue. And I am not a market 
expert, but I think the markets are evolving, maybe not fast 
enough.
    Mr. Johnson. Thank you.
    Mr. Coble. I thank the gentlemen.
    Thank you, Madam. I am going to recognize one more witness, 
and we will go vote, and then we will return because some 
witnesses have not yet been heard.
    The gentleman from Florida, Mr. DeSantis, is recognized for 
5 minutes.
    Mr. DeSantis. Thank you, Mr. Chairman.
    Thank you for coming, and I read your paper and your 
testimony, and I really appreciate you making an issue that 
this stuff needs to be more accessible and readable for the 
average person.
    When I was running, I made an issue of saying, I am going 
to read every law before I vote on it; I am not going to pass 
the bill to find out what is in it. Although people appreciated 
that, but then I got up here and I started actually reading the 
bills and, you know, it is not always all that helpful. I need 
to do a lot more than that. So you have to read the bill, then 
you have to read other statutes and this and this and whatever.
    I think it really undermines the rule of law if this is not 
in any way accessible to the average person, and this is 
something that the Founding Fathers talked about. I mean James 
Madison said in the Federalist Papers, that if the law is too 
voluminous to be understood or voluminous to be read or too 
incomprehensible to be understood, you are really poisoning the 
blessings of liberty. So thank you for that. I think that that 
applies across the board with the things that we are doing here 
but certainly for this.
    Just a couple quick questions. The good thing about 
copyright is it is actually envisioned by the Constitution, it 
is something that is in there. I think, as I read the Founding 
Fathers, that they really believe that the public good 
coincided with giving inventors and writers a property right in 
what they were doing. I think that they thought that that was 
just right anyway, but they also thought that that would 
incentivize, you know, more of that and more inventiveness in 
the future. So they viewed them as kind of going hand in hand. 
Do you agree with that, or do you, because I notice in part of 
your testimony, you had talked about how we have to kind of 
define the public interest? And I wasn't sure if you were maybe 
saying that in this day and age, that that kind of harmony 
isn't quite the same as it was back then. I just wanted to give 
you a chance to respond.
    Ms. Pallante. Thank you. I absolutely think that the 
constitutional clause is our guiding force on copyright law. I 
think it served the Nation extraordinarily well for two 
centuries. I think the problem we have today in terms of the 
imbalance that we might feel in the copyright statute is that 
we have gotten away from that equation that puts the authors as 
the primary beneficiaries, followed by the public good. There 
is a lot of ``we would like immediate access'' and ``we would 
like broader fair use.'' We believe in all of those principles, 
access and fair use, but it is not supposed to be at the 
expense of the creators. The law is pretty clear on that, and 
the Supreme Court has upheld that many times.
    Mr. DeSantis. I noticed with kind of the streaming--stuff 
that's illegally streamed on the Internet--that the White House 
I guess has asked for clarification, because--does the statute 
have a loophole to where it is either copies or, I guess, it is 
envisioning like a physical document? So is that something in 
the law that you think should be addressed?
    Ms. Pallante. I think that's one of the first things that I 
would advise if you wanted me to pick. That would be one of the 
top things on the list, because what you are alluding to is 
that there are criminal penalties--and this is in the criminal 
context, not civil--egregious criminal infringement, piracy at 
the worst purposeful levels, right? So law enforcement can go 
after the reproduction or the distribution, and they can go 
after that in a meaningful way because those are felonies, not 
misdemeanors.
    The public performance right, which is another enumerated 
right, which is implicated by streaming, performing the work, 
not necessarily downloading and distributing a copy, streaming, 
whether it is a football game or music, is a misdemeanor.
    Mr. DeSantis. In your testimony, you talked about updating 
enforcement provisions I guess more generally than this 
particular instance. Can you give me some other examples of 
areas that you think may need updating?
    Ms. Pallante. Sure. We are doing a study for actually this 
Subcommittee on small claims mechanisms, just because of the 
sheer expense of Federal court for some of the smaller actors 
in the space. And it goes to your earlier theme of remembering 
that authors are kind of the point, the primary--first 
beneficiaries of copyright law, and so do they need some kind 
of quick and dirty way to get quick results without--because 
otherwise, they don't have any enforcement at all. So we are 
looking at it. It is constitutionally very complex; it is 
complex in general.
    There are other issues that this Committee has looked at in 
the past when it comes to offshore websites run by pirates, out 
of our jurisdiction but directing infringing activity at our 
people, what do we do with that? I think over time, you will 
have to look at that; the whole world is looking at that issue.
    Mr. DeSantis. Great. Time is about to expire, we will go 
vote.
    Thank you, Mr. Chairman and I yield back the balance of my 
time.
    Mr. Coble. I thank the gentleman, we will stand in recess, 
and we will return imminently.
    [Recess.]
    Mr. Marino [presiding]. We're going to call the hearing to 
order.
    And I believe the next Congressman to ask questions is Mr. 
Jeffries from New York.
    Thank you.
    Mr. Jeffries. Thank you, Mr. Chair.
    I thank you and the Ranking Member.
    And I thank you, Ms. Pallante, for your testimony and for 
your service.
    You referenced earlier the view that copyright law exists 
or should exist to serve the public interest, which I think is 
an assessment that all of us on this Committee share within the 
Congress; certainly it is a Constitutional prerogative that we 
have been charged with in that regard.
    Is it fair to say that in the context of promoting the 
public interest through the vehicle of copyright law, that one 
of the greatest threats--or something that should be 
evaluated--is the ability for the creative community to have 
its work respected and protected?
    Ms. Pallante. Yes, thank you so much for that question, 
Congressman.
    In other words, the other side of that eloquent statement 
is that people do not have a right to have whatever they want 
when they want it for free if it is the intellectual property 
of someone else. There was a beautiful quote last year in the 
New York Times by some book authors and journalists, who said 
that the reality is that it takes sometimes a lifetime of 
perfecting one's craft to create that great work that others 
come to cherish and find meaning from. And so we have to have a 
long view of culture, and that's one of the great things about 
copyright law, is it has a long view of incentivizing authors, 
letting them benefit from their works, letting others invest in 
those, and so that ultimately, we're all better off.
    Mr. Jeffries. Now, in the past, piracy, or Internet piracy, 
or piracy as it relates to the work of the creative community, 
has been centered on unauthorized, illegal, unlawful 
reproduction and distribution; is that correct?
    Ms. Pallante. Yes, that's correct.
    Mr. Jeffries. Now, in recent times, that shifted as it 
relates to Internet piracy to illegal streaming; is that 
correct?
    Ms. Pallante. Yes, that is correct.
    Mr. Jeffries. In your view, did the current copyright laws 
and the criminal penalties that are attendant to those laws, 
are they sufficient to deal with the shift in piracy that has 
taken place from reproduction and distribution to unlawful 
streaming? And if they are not, what suggestions would you have 
for this Subcommittee and for the Congress as to what we should 
be thinking about moving forward to address that shift?
    Ms. Pallante. Thank you so much for the question. So there 
is a gap in the current law, there are many gaps all over the 
law on different issues. But on enforcement, it is clear that 
the public performance right has come into its own as a primary 
way to disseminate copyrighted work. So whether you are 
streaming the Super Bowl, whether you are streaming music or a 
movie the point is, you don't always need to have a copy and 
the consumer may not want a copy. Sometimes you may want to 
download your favorite movie and watch it 30 times, but with 
all due respect to the motion picture industry, sometimes you 
just want to stream it once and watch it. And so, in that case, 
if there is a legal streaming happening, especially in an 
egregious willful, profit-driven kind of way how do you get at 
that activity if the best you can do is go after them for a 
misdemeanor?
    Mr. Jeffries. Now, another vehicle to deal with sort of the 
illegal highjacking of creative content is the notice and take-
down process. What is your take on how successful that process 
is as of this moment and what are some of the things that we 
should be thinking about moving forward to make sure that we 
have the proper mechanisms in place moving forward to deal with 
this issue?
    Ms. Pallante. Well, that is a huge question. I would say 
that if you go down the road of looking at the next great 
copyright act and revising the statute in a more comprehensive 
way, you should look at the DMCA, you should look at the 
efficacy of the DMCA. And 15 years, that is a very long time in 
Internet years. How is it working? What have the courts done 
with it? Who is it affecting in what way? So there are many, 
many players in the ecosystem on the Internet, and I think you 
will hear gripes from both sides.
    You will hear from copyright owners, particularly small 
ones, that there's no way they can keep up with the 
infringement happening on the Web by sending notice after 
notice after notice, sometimes only to find that they pop up 
again. They are supposed to be creating, how could they 
possibly deal in that kind of environment? Did we have any 
concept 15 years ago that there would be this many notices and 
this kind of burden?
    However, on the other side, the DMCA was meant to be 
flexible and to provided rules of road so that the Internet 
could flourish. And I think you will find that Internet actors 
will say there are abuses in both directions. They don't know 
how to deal with the notices that may not be correct.
    Mr. Jeffries. Thank you for your testimony.
    Thank you, Mr. Chair.
    Mr. Coble [presiding]. The gentleman's time has expired.
    The distinguished gentleman from Georgia, Mr. Collins, 
recognized for 5 minutes.
    Mr. Collins. Thank you, Mr. Chairman, I appreciate it.
    It has been a long day this afternoon. Yesterday's decision 
by the Supreme Court regarding first-sale doctrine raises some 
concerns. And while the first-sale doctrine is important to 
copyright law, especially for businesses that resell products, 
such as Goodwill--majority. The majority's opinion to me raises 
some questions and issues of concern that I believe have 
implications beyond the scope of the first-sale doctrine. It is 
my hope that we are going to move deliberately, as you have 
said, to make this readable, something the average person can 
understand.
    I think there are two things that the average person away 
from the Beltway does not understand: one, why it takes us so 
long to do anything, and number two, why we can't read it once 
we're done. And this is something that I'm focused on here, and 
when you look at the breakdown of the Justices here, this is a 
different ideological breakdown. And I think even the Court 
sort of made light of itself when it said, having once written 
tomato is a vegetable, are we bound to always call it a fruit--
not be able to call it a fruit after that?
    This is where I'm getting; this is an important topic. It 
is an important topic when we deal with what protections are 
involved. I want to ask this first question, and then I have 
got one on licensing in just a minute that I want to get your 
comment on. The majority wrote in this, the Court decision 
yesterday was regarding first sale, and the majority in--as 
Justice Breyer seemed to be very focused on a list of problems 
that would ensue if the Court adopted the nongeographic 
interpretation offered by Wiley.
    Do you believe that there is sufficient statutory 
protection in current law such as exists in 602(a)(3)(C) that 
provides ample protection against the supposed consequences 
that came up by the Court, because if potential consequences 
are posed are real or done, this would be very troubling. What 
is your take on that?
    Ms. Pallante. It goes to the question of how important do 
you want the importation and exportation provisions to be in 
the next great copyright act. So they have never been part of 
the bundle of exclusive rights in section 106, which is the 
primary list of rights of creators, and they have now been 
interpreted in the way that they interact with the first-sale 
doctrine, the case you just described. That doesn't mean that 
Congress can't decide that segmentation of markets is 
important.
    It would probably also, if it went down that road, decide 
that there should be some exceptions. There is an exception in 
current law, for example, for libraries to import certain kinds 
of works and for people to bring in their suitcase from their 
vacation certain numbers of works. Those provisions are now 
meaningless in the wake of Kirtsaeng decision, so do you want 
to recalibrate that? Do you want market segmentation?
    I could read you a very important quote. It will just take 
a second. There is a long list of cases that we track where the 
courts say very politely, you know, it would really be great if 
Congress looked at this. Here is one from yesterday: Whether 
copyright owners should, or should not, have more than ordinary 
commercial power to divide international markets is a matter 
for Congress to decide.
    Mr. Collins. And I think that throws it back, there is also 
something else in the majority opinion, and I think this is 
something we look at, where they did spend time on the 
Constitution promoting progress of science and arts--and useful 
arts, and they talked about being able to disseminate these 
creative works. To me--and that's a laudable end. The other 
problem, though, is there seems to be an issue here, and was 
sort of silent on, is that they seem to be more silent on 
promoting the protection of the creative works that went into 
those issues. So my question here, and it is a short one 
because I do want to get to the licensing part, taking, if you 
go from a purely geographical interpretation, does that present 
problems in doing what we're talking about, especially when it 
gets to the bundle of sticks, so to speak, of the property 
rights and taking into the dissemination issue as well?
    Ms. Pallante. Well, you have two competing equally 
important issues. You have one, consumers have expectations, 
and there are companies that have been built around that. So if 
something has been sold in China, I have a way to deliver that 
to you in the U.S. Why isn't that the way the market works? 
Then you have copyright owners saying, but we have the right to 
divide our copyrights; that is basic to copyright law. And we 
do that in different kinds of ways.
    Mr. Collins. And this goes back to a statement that was 
made earlier in a line of questioning, in licensing, isn't 
there also an underlying determination if there is ownership 
somewhere?
    Ms. Pallante. Yes.
    Mr. Collins. We can't just have a licensed world. Licensing 
in and of itself assumes ownership. Is that something, in this 
next, quote, as you say, ``great copyright act,'' we've got to 
deal with the fact there is an ownership issue, and then we 
have licensing as well, and this is something I would hope all 
sides could come together on and look at? I would like your 
thoughts on that.
    Ms. Pallante. I think you're right. I think that's how the 
first-sale doctrine would apply in a world of licensing, 
particularly online, is a complicated question, but ultimately, 
Congress should make a decision about it. Do you want a world 
of licensing only? Will the Kirtsaeng decision drive copyright 
owners to do more licensing online and less physical copies?
    Mr. Collins. Well, but I think the other issue here, 
though, is driving toward licensing is fine. However, at a 
certain point in time, you have a right, or a start, that is 
there to begin with.
    Thank you, ma'am, I yield back.
    Mr. Coble. I thank the gentleman from Georgia.
    The gentlelady from California, Ms. Bass, is recognized for 
5 minutes.
    Ms. Bass. Thank you very much, Mr. Chair.
    And excuse me if these questions have come up before, it is 
kind of a crazy day, as I know you know. But I wanted to ask 
questions to really understand part of the debate. And I know 
there is a lot of debate around First Amendment and whether 
copyright helps or inhibits the First Amendment. And I wanted 
to ask you if you could give me your opinions on that. Does it 
promote expression and free speech? Does it inhibit it?
    Ms. Pallante. My personal opinion is it absolutely does, 
but you don't have to take that for an answer, the Supreme 
Court has confirmed it more than once in Harper & Row v. The 
Nation, Sandra Day O'Connor said, in fact, it is the engine of 
creativity. And I think, more recently, the Supreme Court has 
said that fair use is in fact a safety valve in the construct 
of copyright, but they are both equally important.
    Ms. Bass. Well, maybe you could explain in your opinion how 
you think it does help.
    Ms. Pallante. How do I think the----
    Ms. Bass. The copyright helps.
    Ms. Pallante. I'll take Sandra Day O'Connor's quote, but it 
is the engine of free expression. It is an incentive for people 
to create. We don't decide what people can and can't express. 
But if they are going to do it in a meaningful way and make a 
living from it, then copyright becomes the means by which they 
can do that.
    Ms. Bass. And I certainly understand the individual 
interests that it protects, the individual artists create or 
whatever, but I don't know how that helps, and maybe you can 
elaborate on your own opinion about how that helps the public 
interest.
    Ms. Pallante. Well, I think the constitutional equation is 
so elegant because it has a two-step process that authors are 
incentivized to create because they get a copyright that they 
can then license. And then we are richer as a Nation, maybe not 
immediately but over time because of the great, rich, robust 
mix of works that we get out of copyrights. So the reason that 
copyright lawyers love copyrights so much is because they were 
English majors or poets or film students or something at some 
point in time that the content is just so important.
    And there's a place for free content. There's a place for 
content where people don't want to sell it, but they just want 
credit. But there's also a place for content where people think 
that their copyright should be meaningful.
    Ms. Bass. Well, there is content, and then there is 
technology, so part of the debate is over the technological 
aspect of it, right?
    Ms. Pallante. That's right.
    Ms. Bass. And some people believe that copyright inhibits 
innovation and all the different devices that have been 
created. I would like to know your thoughts on that.
    Ms. Pallante. I have never thought that copyright inhibits 
innovation. I have always seen it and I have learned it in this 
way, but I think it has been true in my 23 years as a copyright 
lawyer, it is an innovative law. It, itself, has adapted to all 
kinds of technology over time, from maps to iPads, so that the 
format is not so important, it's the ability of the law to 
continue to protect, and that's why we are, I think, having the 
conversation today. How do I get that right for the next great 
copyright act? That's the right equation, I agree.
    Ms. Bass. Thank you.
    I yield back.
    Mr. Coble. I thank the lady.
    The Chair recognizes the gentlelady from Texas, Ms. Sheila 
Jackson Lee, for 5 minutes.
    Ms. Jackson Lee. You may be seeing the rainbow at the end 
of the tunnel here.
    Let me thank the Chairman and the Ranking Member for this.
    Mr. Watt. Actually, the Ranking Member is the rainbow 
because I deferred to everybody.
    Ms. Jackson Lee. Oh, you haven't done your questions? The 
rainbow is yet to come.
    Mr. Coble. Hopefully within 5 minutes.
    Ms. Jackson Lee. The Chairman has spoken, but he is also 
very gracious.
    First, I'm glad that we are creating a record for something 
that I believe is enormously important. And that is to protect 
our greatest asset: creativity and the genius of the American 
People. And I know that you have done this well. Thank you for 
your service.
    I'm going to try and have some rapid-fire questions, and I 
thank you for bearing with me. On the sequester, can you give 
any quick, quick answer as to whether or not, and in what, you 
will be facing will impact your work?
    Ms. Pallante. So we're worried about creating a backlog, 
where we have now cleaned that out. But more importantly, I 
think we are hitting the sequestration at a time when we are 
actually under pressure to do more things, and those are the 
not things that necessarily will be fundable from our fee 
schedule. In other words, if you want us to fund everything 
that we do, including databases for the public, and we have to 
put that on the backs of songwriters and poets, copyright 
registration is going to go from $30 to $50 to hundreds and 
hundreds of dollars. And it is a voluntary system. So we're 
trying to work in the mix----
    Ms. Jackson Lee. So there will be an impact, and 
particularly as it relates to backlog for those who least might 
be able to.
    Ms. Pallante. And the ability of the office to modernize.
    Ms. Jackson Lee. Let me then now proceed with a series of 
questions. You have recommended to move from a 50-plus to a--
50-plus from its current term life of 70 years that relates to 
copyright as relates to authors. Can you just quickly comment 
on that?
    Ms. Pallante. Why would I do that? So it is life plus 70 
now, and what I am suggesting is that the burden is always on 
the user to find the copyright owner and get permission, but in 
a life plus 70 scenario, which is becoming the global standard, 
what ends up happening is that copyright owners go missing, and 
the objectives of the copyright system get a little bit weaker, 
or they are a little out of focus. In a life plus 70 scenario, 
you're not talking about the creator anymore; you're talking 
about an heir or a successor downstream. Because the Berne 
Convention standard is life plus 50, and we are Berne-plus, as 
many countries are, we have the ability to say, we're going to 
give you that extra 20 years, but you have to assert your 
interest at some point.
    Ms. Jackson Lee. So you want to keep the vitality in the 
privilege.
    Ms. Pallante. I think that the burden could shift to the 
user at the very end.
    Ms. Jackson Lee. And my only concern----
    Ms. Pallante. I'm sorry, to the owner.
    Ms. Jackson Lee. And my only concern is I want to make sure 
to protect--writers may not be the most prosperous--we always 
view them as being prosperous, so make sure that person is 
disconnected, is not biased----
    Ms. Pallante. Right.
    Ms. Jackson Lee [continuing]. In this process. But let me, 
because I have a short period of time. I will think about your 
answer and I understand the answer.
    Can you tell me--you asked us to look at the big picture, 
in the course of looking at that--and I tend to agree with 
that. It is a big picture and big work. Where, in your 
perspective, report, or thinking do you help the little guys, 
who I think, again, are a vital part of our economy?
    Ms. Pallante. Thank you so much for that question. They are 
my entire impetus for my recommendation to this Subcommittee. 
They have been lost in the conversation. We hear from them all 
the time. We need them to make a living out of creativity. So 
they should be the focus.
    Ms. Jackson Lee. Okay. And may I build on that by saying 
you mention orphan works? And where do you think Congress needs 
to go on that issue?
    Ms. Pallante. I think that needs a legislative solution. 
And this Committee has been very active on that issue, and that 
is one of the things I think is more ripe than others.
    Ms. Jackson Lee. Would you give us a hook on specifically 
what you think is one of the issues that we need to be looking 
at in that overall issue?
    Ms. Pallante. In orphan works?
    Ms. Jackson Lee. Yes.
    Ms. Pallante. Well, again, it doesn't serve the objectives 
of the copyright system if a good-faith user has come forward 
trying to do everything possible to use the work but cannot 
find the copyright owner because they don't exist anymore, or 
they just have disappeared, often because they are not the 
actual creator, but they are an heir or a successor to a 
company. So you need to alleviate some of the pressure that has 
built up in the copyright system, the gridlock in the 
marketplace, and provide a solution that will let people move 
forward narrowly, while protecting, for example, the situation 
where the creator suddenly does show up. And maybe they showed 
up because somebody has now used their work; how do you make 
sure they are paid?
    Ms. Jackson Lee. Let me thank you for your work and your 
responses, thank you.
    Ms. Pallante. My pleasure.
    Mr. Coble. I thank the gentlelady.
    We save the best for last, the Ranking Member, the 
gentleman from North Carolina, is recognized.
    Mr. Watt. Thank you, thank you, and I thank all my 
colleagues for all the wonderful questions that they have 
already asked, and I'll try to wrap it up quickly because I 
know you've been here for a long time, given all the breaks and 
all of the Members who had to ask questions.
    I was wondering whether there is anybody who is tracking 
the money that is offshore as a result of the United States not 
having a performance right. Do we know how much money is still 
offshore that U.S. artists are not able to import?
    Ms. Pallante. Actually, thank you so much, because we have 
not talked about that enough. Our performers get hit twice. 
They don't get the full public performance right here, and then 
they don't get to collect the money that other countries 
collect who do have a public performance rate that is more full 
than ours, because they say, we don't have to distribute it, 
because we don't have to recognize you because your country 
doesn't have reciprocity on this issue. I don't know the dollar 
amount. I'm sure that the industry tracks it.
    Mr. Watt. You think the industry is tracking it, okay.
    In your testimony, you mentioned certain preconditions, 
such as registration, that limit remedies available to 
aggrieved creators and how this potentially places an undue 
burden on the individuals in most need who are least likely to 
be aware of those preconditions, especially authors and 
photographers. Can you just expand on how you would address 
that?
    Ms. Pallante. Well, I would like to have a conversation 
about it with this Committee because it's a very nuanced issue. 
Essentially what the law requires, in order to have statutory--
in order to be able to elect statutory damages, you must 
register in a timely way. Those who don't know about the 
provision do not do so; therefore, they are limited to actual 
damages, which is another way of saying that the very people 
who need statutory damages the most probably don't have access 
to them. And is that equation meaningful? How do we fix--do we 
recalibrate that?
    Mr. Watt. So, I mean, are you advocating doing away with 
the registration requirement? How can you address that?
    Ms. Pallante. I didn't go that far, but it has been studied 
before, and I think the other side of that issue is that by 
requiring registration as a condition of statutory damages, you 
essentially have put in place a filter limiting the number of 
lawsuits that will come forward. What has happened over time is 
that the corporations who know to register can use that 
statutory damage provision as a club to get the kinds of 
settlements that they want, but again, what do we do about the 
authors who need help the most? If they need statutory damages, 
why do we have a condition?
    Mr. Watt. So that relates to another issue: individual 
artists, authors, small folks really not that active in these 
debates. What do you see as their main concerns? And is there 
some way to bring those smaller people to the debate, or do we 
have enough horses to make it too complicated already?
    Ms. Pallante. Well, I think, in a way, what you're asking 
me is do the associations who visit us here in Washington speak 
for everybody? They speak for a lot of people, but I know, for 
example, when I travel and I go to smaller cities, like 
Nashville or New Orleans, I meet creators, the entire town is 
based around spending your life creating. And they just see us 
as a proxy for everything that's wrong with copyright, so could 
you do this? Could you do that? Could you wave a magic wand? 
But they just want to be able to make a living, and I think the 
public interest part of that is we want them to do that. So if 
people aren't making a living from their creativity, we're 
going to suffer as a country. That's the beauty of copyright 
law, that it allows that kind of culture.
    Mr. Watt. That's probably a good statement to end this 
hearing on, Mr. Chairman. I know I've got a little bit more 
time, but I don't think anybody could say it more eloquently 
than she just said it, so I'm going to yield back.
    Mr. Coble. Thank you.
    I want to express my thanks to two entities: number one, 
the Register, for your very vital testimony, and number two, I 
want to thank those in the audience, who spent most of the 
afternoon with us.
    Your presence indicates to us that you have more than a 
casual interest in this very significant issue.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    This hearing stands adjourned.
    [Whereupon, at 5:50 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

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               Material Submitted for the Hearing Record









                                















                                

   Response to Questions for the Record from the Honorable Maria A. 
    Pallante, Register of Copyrights, United States Copyright Office








                                 
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