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






                 INNOVATION IN AMERICA (PART I AND II)

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

                                HEARINGS

                               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

                               __________

                       JULY 25 AND AUGUST 1, 2013

                               __________

                           Serial No. 113-47

                               __________

         Printed for the use of the Committee on the Judiciary







[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

82-157 PDF                WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001






                       COMMITTEE ON THE JUDICIARY

                   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
JASON T. SMITH, Missouri

           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
JASON T. SMITH, Missouri             SHEILA JACKSON LEE, Texas

                       Joe Keeley, Chief Counsel

                   Stephanie Moore, Minority Counsel

















                            C O N T E N T S

                              ----------                              

                             JULY 25, 2013

                                                                   Page

                                HEARINGS

Thursday, July 25, 2013first date deg.
  Innovation in America (Part I): The Role of Copyrights.........     1

Thursday, August 1, 2013second date deg.
  Innovation in America (Part II): The Role of Technology........   137

                           OPENING STATEMENTS

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

                               WITNESSES

Sandra Aistars, Executive Director, Copyright Alliance
  Oral Testimony.................................................     5
  Prepared Statement.............................................     8

Eugene H. Mopsik, Executive Director, American Society of Media 
  Photographers
  Oral Testimony.................................................    30
  Prepared Statement.............................................    32

Tor Hansen, Co-President/Co-Founder, YepRoc Records/Redeye 
  Distribution
  Oral Testimony.................................................    42
  Prepared Statement.............................................    44

John Lapham, Senior Vice President and General Counsel, Getty 
  Images, Inc.
  Oral Testimony.................................................    50
  Prepared Statement.............................................    51

William Sherak, President, Stereo D, LLC
  Oral Testimony.................................................    53
  Prepared Statement.............................................    54

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, Ranking 
  Member, Committee on the Judiciary, and Member, Subcommittee on 
  Courts, Intellectual Property, and the Internet................    56

Material submitted by the Honorable Judy Chu, a Representative in 
  Congress from the State of California, and Member, Subcommittee 
  on Courts, Intellectual Property, and the Internet.............    63

                       SUBMISSIONS FOR THE RECORD

Prepared Statement of Stephen Schwartz, President, Dramatists 
  Guild of America, the Dramatists Guild of America..............    75

Prepared Statement of the Computer & Communications Industry 
  Association....................................................    78

Prepared Statement of Brad Holland and Cynthia Turner, Co-Chairs, 
  American Society of Illustrators Partnership (ASIP)............    93

Prepared Statement of the Library Copyright Alliance.............   111

Prepared Statement of the National Press Photographers 
  Association (NPPA).............................................   125

Prepared Statement of the National Writers Union, UAW Local 1981.   133

Letter from David P. Trust, Chief Executive Officer, the 
  Professional Photographers of America..........................   135


 
                    INNOVATION IN AMERICA (PART I): 
                         THE ROLE OF COPYRIGHTS

                              ----------                              


                        THURSDAY, JULY 25, 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 9:35 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Bob 
Goodlatte presiding.
    Present: Representatives Marino, Goodlatte, Poe, Chaffetz, 
Farenthold, Holding, Collins, DeSantis, Smith of Missouri, 
Watt, Conyers, Chu, Deutch, Bass, Richmond, DelBene, Jeffries, 
Nadler, Lofgren, and Jackson Lee.
    Staff Present: (Majority) Joe Keeley, Chief Counsel; Olivia 
Lee, Clerk; and (Minority) Stephanie Moore, Minority Counsel.
    Mr. Goodlatte. Good morning. The Subcommittee on Courts, 
Intellectual Property, and the Internet will come to order.
    And, without objection, the Chair is authorized to declare 
recesses of the Subcommittee at any time.
    And we welcome all of our witnesses today.
    I will say a word about our Subcommittee Chairman, my dear 
friend, Howard Coble, who had a hernia operation earlier this 
week. And so we have him in our prayers and expect to see him 
back here very soon.
    I will start with my opening statement and then turn to the 
Ranking Member of the Subcommittee, Mr. Watt, for his opening 
statement.
    This morning, the Subcommittee will hear from several 
individuals involved in the creation of copyrighted works. Next 
week, the Subcommittee will hear from those involved in the 
technology sector. These two important components of our 
economy have a unique symbiotic relationship and are 
responsible for significant innovation in America. Today, we 
focus on the role of copyrights in U.S. innovation.
    To be sure, according to the Framers of our Nation, the 
very purpose of granting copyrights was to promote innovation. 
Article 1, Section 8, Clause 8 of the United States 
Constitution contains the foundation of our Nation's copyright 
laws. It allows Congress to provide to creators for limited 
times the right to exclusively use their writings and 
inventions.
    The copyright clause was not a controversial provision. In 
Federalist No. 43, James Madison declared that ``the utility of 
this power will scarcely be questioned.'' Indeed, this 
provision was one of the few that were unanimously adopted by 
the Constitutional Convention. The Framers firmly believed that 
granting authors exclusive rights would establish the incentive 
for them to innovate. They believed that this financial 
incentive was necessary to promote the progress of science and 
useful arts. And they were right.
    Today, America is the most innovative and creative Nation 
in the world, thanks in no small part to the Framers' 
foresight. U.S. copyright owners have created millions of high-
skilled, high-paying U.S. jobs, have contributed billions to 
our economy, and have led to a better quality of life with rich 
entertainment and cultural experiences for citizens.
    However, from time to time, it is important to stop and 
listen to what our Nation's creators have to say about whether 
the incentives are still working to encourage innovation. This 
Committee's review of U.S. copyright laws provides the perfect 
opportunity to do just that. During today's hearing, we will 
take testimony from copyright owners who continue to produce 
the fruit of innovation that was envisioned when the Framers 
planted the first seed.
    I thank the witnesses for coming today and look forward to 
hearing their testimonies.
    And I am now pleased to recognize the Ranking Member, the 
gentleman from North Carolina, Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman.
    And I also want to thank you for launching this 
comprehensive review of the U.S. copyright law and the 
challenges of the digital age. I believe that this is a very 
important undertaking and that we have a unique opportunity to 
not only advance the debate in this area but to guide it in the 
right direction.
    In my mind, a comprehensive review starts with a 
fundamental appreciation of the constitutional framework of 
copyright law and policy. By reexamining the first principles 
that gave life to copyright protection, we can better develop 
policy that ensures that those principles are honored.
    Today's panel represents individual authors and creators 
from diverse segments of America that rely on copyright. It is 
not only helpful but important that we hear directly from 
creators on how copyright law and policy is working for them.
    There can be little doubt that creativity and innovation 
are at an apex in the 21st century and that many economic 
interests are intertwined with the interests and livelihoods of 
creators. But copyright law and policy should not be about 
preserving existing business models, nor should it be about 
accommodating emerging business models. Ensuring that the 
intellectual labor of our creative communities is appropriately 
stimulated and compensated will guarantee that the public will 
continue to benefit from the enrichment the creators provide.
    Recognizing that policy should develop around the creator 
is sometimes easier said than done. We would be naive to not 
acknowledge that there are entrenched interests that cannot be 
disregarded in this review. But a careful examination of the 
constitutional and historical underpinnings of U.S. copyright 
law is a start.
    My vision of this comprehensive review also includes an 
assessment of the international copyright framework. 
Appreciating that framework in this global digital environment 
will equip us with a better understanding of how best to 
reinforce our constitutional objectives. It also provides 
perspective on how and why our policies have developed 
historically and where and why those policies may have gone 
astray.
    One area where copyright law has strayed from both our 
constitutional foundations and international norms concerns the 
recognition of a performance right in sound recordings. I and 
other members of this panel have long advocated for, and have 
the scars to show for it, a historical correction of this 
anomaly.
    That is why today I am announcing my intention to introduce 
and circulate to my colleagues and ask them to join me as 
original co-sponsors of a bill that simply recognizes a 
performance right in sound recordings. And I plan to do this 
before the August recess.
    We have been talking about this for a while, and I think it 
is time for us to act on it. I believe that doing so will 
highlight how the law can take the wrong turn if policymakers 
fail to embrace the principles embodied in the constitutional 
protection of intellectual property.
    The story of performance rights, although related to the 
field of music, is instructive in other areas of copyright, as 
well. As we continue our comprehensive review of copyright, I 
think that that story is a compelling one, one that reflects a 
departure from centering policy development on the intellectual 
labors of artists and responding instead to market forces that, 
while relevant, should not be in a position to completely 
extinguish rights recognized and honored internationally.
    On my travel day, I usually pick up my iPod and move it 
from Washington back to North Carolina, from North Carolina 
back to Washington. And I was reminded this morning when I 
picked it up to put it in my pocket, I love this iPod, but it 
is just a piece of metal unless it has some content on it. It 
is critical, it is important, but without the creative content 
to put on it, it is worthless.
    So we need to get on with recognizing the performance 
right, and I think it will have some real impact for American 
musical artists. And it won't be extreme; it will be just a 
fair thing to do.
    This lack of recognition denies artists access to 
performance rights royalties already earned offshore. These 
funds sit unclaimed due to our inability to simply afford these 
artists what they deserve: legal recognition of a performance 
right.
    I think, as we continue our review, we will see that in 
other areas, as well. When we have robust protections for the 
rights of the creators, this will incentivize the parties to 
negotiate in good faith, enter into compensation agreements 
domestically, and heighten the public's access and enjoyment of 
the products of the creative community.
    I look forward to this discussion and the coming 
discussions that we will be having with other aspects of tech 
and content. And I thank the Chair again for convening the 
hearing.
    I yield back.
    Mr. Goodlatte. I thank the gentleman for his opening 
statement and for his substantial interest in this issue and 
the contributions that he has made.
    We have a very distinguished panel today, and I will begin 
by swearing in our witnesses, as is the custom of this 
Committee.
    So if you would all please rise.
    [Witnesses sworn.]
    Mr. Goodlatte. Let the record reflect that the witnesses 
answered in the affirmative.
    They may be seated.
    Each witness' written statement will be entered into the 
record in its entirety, and I ask that each witness summarize 
their testimony in 5 minutes or less.
    To help you stay within that time, there is a timing light 
on your table. When the light switches from green to yellow, 
you will have 1 minute to conclude your testimony. When the 
light turns red, it signals the witness' 5 minutes have 
expired.
    Our first witness today is Ms. Sandra Aistars, Executive 
Director of the Copyright Alliance, a nonprofit, nonpartisan 
organization established in 2006. Prior to joining the Alliance 
in January of 2011, Ms. Aistars served as Vice President and 
Associate General Counsel at Time Warner for 7 years, where she 
coordinated the company's intellectual property strategies. 
Before her time at Time Warner, she spent 12 years as an 
attorney working on intellectual property and technology issues 
at Weil, Gotshal & Manges. Ms. Aistars received her J.D. from 
the University of Baltimore School of Law and her bachelors 
degree in political science, history, and philosophy from Bard 
College.
    Our second witness is Mr. Gene Mopsik, Executive Director 
of the American Society of Media Photographers, where he 
oversees the Society's membership, financial, and legislative 
matters. He represents ASMP at events throughout the country 
and internationally and works closely with the Society's board 
of directors. Mr. Mopsik received his bachelors degree in 
economics from Wharton School at the University of 
Pennsylvania.
    Our third witness is Mr. Tor Hansen, co-owner and co-
founder of Redeye Distribution and Yep Roc Records. Redeye 
Distribution was founded in 1996 and has grown to be one of the 
largest independently owned music distribution companies in the 
United States. Yep Roc Records was founded a year later in 
1997. Prior to starting his own company, Mr. Hansen worked as 
Director of Merchandising at Rounder Records Distribution, Hear 
Music, and Planet Music/Borders Group. Mr. Hansen received his 
bachelors degree from West Chester University in West Chester, 
Pennsylvania.
    Our fourth witness today is Mr. John Lapham, Senior Vice 
President and General Counsel of Getty Images, Incorporated, 
where he manages the global team and counsels the company on 
issues regarding disputes, transactions, and intellectual 
property. Mr. Lapham previously served as Vice President of 
Business and Legal Affairs at Getty Images, where he managed 
the company's licensing and intellectual property matters. He 
received his J.D. from the University of Washington School of 
Law and his bachelor's degree in political science from 
Southern Illinois University.
    Our fifth and final witness is Mr. William Sherak, 
President of Stereo D, a 2D-to-3D movie conversion company. The 
company was recently named as one of the world's most 
innovative companies in March 2013. Mr. Sherak co-founded 
Stereo D in 2009 and, in less than 3 years, grew the company 
from only 15 employees to an international staff of more than 
1,000. Prior to starting his own company, Mr. Sherak worked at 
Blue Star Entertainment and received his education from the 
University of Denver.
    Welcome to you all. Apologize to any of you whose names I 
mispronounced.
    And, Ms. Aistars, do I have your name right or----
    Ms. Aistars. You have my name right.
    Mr. Goodlatte. Correct. Wonderful. We will start with you.
    Ms. Aistars. Thanks very much.
    Mr. Goodlatte. You want to hit that button on the 
microphone.

  TESTIMONY OF SANDRA AISTARS, EXECUTIVE DIRECTOR, COPYRIGHT 
                            ALLIANCE

    Ms. Aistars. Thanks very much. I thank Chairman Goodlatte, 
Subcommittee Chairman Coble, Ranking Member Watt for this 
opportunity to testify. And we send our wishes for a speedy 
recovery to the Subcommittee Chairman.
    Our members commend the Committee for undertaking this 
review. And, as Chairman Goodlatte mentioned, today you are 
hearing about the creative community's contributions to 
innovation, and next week you will hear about technology's 
contributions.
    And while I believe it is important to hear separately from 
all the stakeholders, I want to say at the outset that the 
creative community does not view copyright and technology as 
warring concepts in need of balancing. To the contrary, we are 
partners and collaborators with the technology community. And, 
in many instances, we are both authors of creative works and 
technology innovators ourselves.
    A robust and up-to-date Copyright Act is important to all 
of us. And we must not lose sight of the fact that the ultimate 
beneficiary of such an act is the public at large. Semantic 
arguments aside, society cannot benefit from cultural works if 
the primary investors in these works, the authors themselves, 
are not served and protected.
    Copyright, in this regard, is a unique form of property 
because it comes from an individual's own creativity, their 
hard work, and their talents. It is not something that you 
inherit through the happenstance of birth or good fortune. And, 
in many ways, it therefore embodies the American dream.
    And I can speak to this personally because I am a first-
generation American, and my parents were refugees to the United 
States. My father is a visual artist and an author, and he 
supported our family in a middle-class household through his 
work as a visual artist.
    Most copyright owners in the United States are people just 
like my father. They are neither famous nor wealthy. They are 
just normal people trying to make a living or supplement a 
basic living by using their talents. And they make our 
communities, our Nation, and the whole world a much richer 
place to live.
    But, unfortunately, the experiences of these people are the 
ones that are least often heard. Eric Hart, who is one of our 
grassroots members, is a prop maker from Burlington, North 
Carolina. And he invested several years of research and 
photographed over 500 images to publish his first book, 
entitled, ``The Prop Building Guidebook: For Theatre, Film, and 
TV.'' He made much of the information available on his Web site 
for free, and, unfortunately, but not surprisingly, as soon as 
the book was released, it began to be pirated and distributed 
on sites for free download, with advertising dollars coming 
from the most famous brands in America supporting those sites.
    I don't know any way to define Eric's experience other than 
``exploitative.'' We need to maintain a framework of laws that 
makes it worthwhile for people like Eric to invest the time, 
labor, and talent to share his knowledge with others.
    And I personally have chosen to defend copyright because, 
in my mind, it is the body of law that turbocharges the First 
Amendment. Justice Sandra Day O'Connor put it a little bit more 
eloquently, calling it the ``engine of free expression.'' But 
by granting the individual author the rights to his work, you 
lay the groundwork for new voices to thrive without having to 
rely on outside subsidies or outside influences in their 
writing and creating.
    I think there is little argument that copyright and the 
First Amendment together have produced extraordinary works of 
cultural and economic value. And that was the goal of the 
Founders. The Supreme Court has repeatedly said that, by first 
focusing on the author, the copyright law ultimately benefits 
all of society.
    And to benefit society, copyright law needs to do two 
things. First, it needs to encourage the creation of works, 
and, second, it needs to promote the distribution of works. 
This requires respecting both the author's economic interests 
in being compensated, but, also, it requires understanding that 
many creators will not broadly disseminate their works unless 
they feel safe doing so on other noneconomic grounds.
    So take, for example, the outrage that was spawned last 
year when Instagram changed its terms of service. Ordinary 
people across the country were rightly concerned that their 
personal photos would be used by others in unexpected ways and 
without their permission. Many professional creators have these 
same concerns.
    And I have had the experience of talking to civil-rights-
era photographer Matt Herron, who once explained to me that the 
reason copyright is so important to him is not for the economic 
reasons that you might expect but because it gives him the 
right to keep his collection of photographs of the Selma to 
Montgomery March together as one, intact, single body of work. 
And that ensures that the piece of history that he captured 
will be passed down to future generations as a coherent story 
and in the proper context.
    My written testimony catalogs a number of examples of how 
the creative industries are a major source of innovative ideas 
and new product developments and new services. We are using new 
technologies in new ways. We are spurring the development of 
new technologies through our own creative work, and we are 
creating new technologies ourselves. This ultimately benefits 
amateur creators, as well, with the diffusion of affordable 
software and hardware.
    Let me conclude by saying that a focus on and a respect for 
creators' rights reflects the values our country was built on, 
and it benefits all of us. I hope you will keep this in mind as 
you examine the Copyright Act during the review process. And I 
thank you for your attention.
    Mr. Goodlatte. Thank you very much.
    [The prepared statement of Ms. Aistars follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________

    Mr. Goodlatte. And, Mr. Mopsik, do I have your name 
correct?

  TESTIMONY OF EUGENE H. MOPSIK, EXECUTIVE DIRECTOR, AMERICAN 
                 SOCIETY OF MEDIA PHOTOGRAPHERS

    Mr. Mopsik. Thank you. ASMP wishes to thank Committee 
Chairman Goodlatte, Subcommittee Chairman Coble, and 
distinguished Members of the Committee, along with Ranking 
Member Mr. Watt, for this opportunity to testify on this 
important issue.
    Founded in 1944, the American Society of Media 
Photographers' mission is to protect and promote the interests 
of professional photographers who make photographs primarily 
for publication. ASMP is the oldest and largest trade 
association of its kind in the world. ASMP members are 
primarily freelance imaging professionals, creating images, 
both still and moving, for publication in advertising, 
editorial, fine art, and other commercial markets.
    Simply put, ASMP members and professional photographers 
like them create many and probably most of the images that the 
American public sees every day. They create this country's 
visual heritage. In fact, we have one of our members right 
here, John Harrington, taking photographs this morning.
    These images communicate the horrors of war and genocide, 
the thrill of victory and the agony of defeat, the events of 
everyday life, and the joy of discovery and travel. They create 
emotion, document history, and expand our knowledge.
    Much of the incentive to create, innovate, and the ability 
to control the sale and license of these works would be lost 
without copyright. Imagine National Geographic, the Sunday New 
York times and its magazine, Rolling Stone, Travel and Leisure, 
Food and Wine, Saveur, Sports Illustrated, all without 
photographs. And not just any photographs, but photographs 
created by professionals to fulfill the needs of their clients, 
created under various conditions, on schedule, processed and 
prepared for reproduction--stunning images that consistently 
stretch the bounds of creativity and innovation.
    Each assignment is a challenge to create something new 
never seen before--communicate light, emotion, the facets of a 
commercial product, the history and location of an event. 
Professional photography enriches and opens our eyes to new 
worlds, making us better informed and more sensitive to the 
issues and conflicts occurring around us.
    Again, in order for professionals to be able to sustain a 
livelihood, they need to be able to control the sale and 
license of their works so that they may receive fair 
compensation for their use. Copyright is the cornerstone of 
this equation.
    I can't emphasize the fair compensation issue enough. It is 
ultimately not about copyright; it is about fair compensation. 
And copyright is the means to that end.
    For 32 years, prior to my becoming the executive director 
of ASMP, I worked as a professional photographer, creating 
images and solving problems for companies such as Mack Trucks, 
Hyster Company, Ingersoll Rand, and Citicorp. It was the 
ability to license my works that allowed me to buy a home, put 
my children through school, and create a better life for my 
family.
    Creativity and innovation are essential to the success of 
an imaging professional. There is a saying in the trade that 
you are only as good as your last job. Competition is fierce, 
even amongst friends. Client loyalty only goes so far.
    The ability to profit in an ongoing manner from my images 
was a key stimulus for my work. In addition to my corporate 
industrial photography, I created and licensed a number of 
sunset skyline views of Philadelphia and its significant 
architectural environments, including the Ben Franklin Parkway, 
Logan Circle, and the waterfront. These images were repeatedly 
licensed by companies for business development literature and 
by other companies needing to highlight Philadelphia 
attractions.
    These images were created early morning and in the 
evenings, before and having worked on assignments for the day, 
in the cold and in the heat, on rooftops, on docks, with no 
promise of financial gain other than the knowledge that the 
images would be unique, of great quality, and that I would own 
the copyright and be able to make licenses. I was driven to 
create and innovate. I needed to provide for my family and my 
future, and copyright gave me the path.
    The digital revolution was supposed to be better, faster, 
and cheaper. Well, not all of that promise has come true. It 
may be better in many ways than film, it may be faster to 
capture the image, you can have immediate confirmation of 
success or failure, but in regard to cheaper, it never 
happened. Professionals now need $5,000 to $7,000 cameras that 
will become obsolete in 18 months, lenses extra. In addition, 
there is a need for expensive computer and storage devices to 
process and manage the thousands of files.
    Photographers tend to be equipment junkies, appreciating 
good design and function. The marketplace has responded over 
the years with numerous innovations. Photographers have bought 
in, become thought leaders for the pro-amateur and amateur 
markets, encouraging further innovation and consumption.
    Copyright is key to a free and open expression of opinion 
and point of view. If the independent professionals were no 
longer able to sustain a living from their works, the 
dissemination of images would be more concentrated in the hands 
of a few corporate giants who may have their own business 
interests and agendas. Embarrassing and controversial images 
might never see the light of day.
    In conclusion, the equation is simple: without copyright 
protection, the public record, our visual heritage, and the 
stimulus to innovate would be drastically reduced in both 
quantity and quality.
    And just quickly, to echo what Mr. Watt said earlier about 
world solutions and solutions that work outside of the United 
States, I would urge the Committee in their review of the 
copyright law to seek solutions that do, in fact, work in a 
world market, because that is the world we live in.
    Thank you.
    Mr. Goodlatte. Thank you.
    [The prepared statement of Mr. Mopsik follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Goodlatte. Mr. Hansen, welcome.

   TESTIMONY OF TOR HANSEN, CO-PRESIDENT/CO-FOUNDER, YepRoc 
                  RECORDS/REDEYE DISTRIBUTION

    Mr. Hansen. Chairman Goodlatte, Ranking Member Watt, and 
Members of this Subcommittee, thank you for inviting me to 
testify today on behalf of my company, Yep Roc Records and 
Redeye Distribution, headquartered in Haw River, North 
Carolina, and also on behalf of the small and medium-sized 
independently owned businesses that make up the American 
Association of Independent Music, A2IM--businesses that, via 
the creation of musical intellectual property, are improving 
commerce here and abroad and, via exports, improving America's 
balance of trade, and thus creating jobs in America.
    My name is Tor Hansen, and my partner and I own a music 
label, a music distributor, located in Haw River, North 
Carolina, which we started in the basement in 1996 and which 
now employs over 60 employees and distributes music 
internationally.
    I am also a board member of the American Association of 
Independent Music, A2IM, board of directors, a not-for-profit 
trade organization that represents a broad coalition of over 
300 independently owned U.S. music labels of all sizes located 
across the United States, from Hawaii to Florida, a sector 
which, per Billboard magazine, comprises 34.5 percent of 
recorded music sales in the first half of 2013.
    For independent music labels and our artists, the Internet 
and related technology and business models have been a great 
equalizer for us and our ability to create, market, promote, 
monetize, and introduce new music and cultivate new fans for 
our label's artists. We honestly feel there is no other 
industry that has embraced new forms of economic and delivery 
models as completely as the music industry.
    That said, small and medium-sized businesses that support 
the creation of musical intellectual property need to be 
compensated for the creation and promotion of the music to be 
able to continue to invest and create jobs.
    We support the ability of non-on-demand music services like 
Pandora and Sirius/XM to be able to operate under statutory 
licenses with rates set by the Copyright Royalty Board. We also 
support on-demand music services that negotiate direct license 
on an arm's-length basis. But our music label community needs 
to be able to decide which non-statutory services should have 
our music and at what fair price, and be able to ensure that we 
have viable business models and when it is appropriate to give 
away our music to super-serve our fans.
    One true strength of a strong regime supporting copyright 
ownership is to support the international commerce by U.S. 
businesses in all new mediums. In 2005, the U.S. share of the 
international music market was 34 percent. For 2012, the latest 
available data, the IFPI reported a U.S. share of worldwide 
wholesale recorded music revenues of only 27 percent. It is 
clear that now we must expand and need to look abroad to have 
viable business plans by generating export revenues.
    We thank the U.S. Government, specifically U.S. Commerce 
Department ITA and the Small Business Administration, for their 
support of SME music creator international trade initiatives, 
for which my own business has been a beneficiary on a very 
successful Brazil trade mission.
    We need to couple this with finally getting enacted an 
over-the-air radio performance royalty so that royalties of our 
artists which sit overseas do not remain captive, as, without 
legal reciprocity rights, those royalties are not available to 
U.S.-based independent creators.
    The bottom line is that independent music label sectors and 
our artists have aligned ourselves with new consumer models 
based upon music consumption using many different new 
technologies. We embrace the responsiveness to new ideas but 
request government's continued support of copyright 
monetization protection to ensure that music creation process 
and the resulting commerce and job creation continue.
    I thank you for your time.
    Mr. Goodlatte. Thank you, Mr. Hansen.
    [The prepared statement of Mr. Hansen follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Goodlatte. Mr. Lapham, welcome.

  TESTIMONY OF JOHN LAPHAM, SENIOR VICE PRESIDENT AND GENERAL 
                  COUNSEL, GETTY IMAGES, INC.

    Mr. Lapham. Thank you for the opportunity to testify today. 
I am John Lapham, Senior Vice President and General Counsel for 
Getty Images, the leading provider of news, sports, 
entertainment, archival, and creative imagery in the United 
States and the technology company with a global distribution 
platform.
    You see our imagery every day in the world's most 
influential newspapers, magazines, Web sites, books, 
television, and movies. Founded in 1995 by Mark Getty and 
Jonathan Klein, Getty Images has U.S. offices in Chicago, L.A., 
McLean, Madison, New York, Seattle, and Washington, D.C., 
supporting 2,000 employees and more than 150,000 photographers. 
Getty Images has offices in 18 countries, content from over 
180, and business customers in more than 200.
    We were the first company to license a picture on the 
Internet, and today nearly 100 percent of our business is 
conducted online. We license 200,000 images daily. And our 
collection consists of 70 million pictures online, 70 million 
in archive, and 40,000 new pictures uploaded daily, together 
with over 1.3 million creative and editorial video clips. We 
also represent original music tracks from over 10,000 
independent musicians.
    Getty Images' editorial team includes two Pulitzer 
finalists and a White House News Photographer of the Year. Our 
24/7 coverage provides images and video of current events to 
thousands of news media organizations and media publishers, 
ensuring that the troubled events in parts of the world are 
brought to light. Our photographers have been placed in dozens 
of military embeds.
    We have a significant impact on the digital and copyright 
economy. While copyright ownership varies across our library, 
copyright and its accompanying rights and permissions are the 
foundation for our business. Consequently, strong and effective 
copyright laws that protect the right to license and not just 
use creative works are critical for our growth and that of the 
many thousands of contributors that we represent.
    Today, we serve more than a million customers, many small 
and medium-sized businesses that depend on powerful imagery to 
entice and engage their customers. We facilitate an essential 
copyright marketplace, where photographers of every genre and 
skill level know they can be compensated for contributing to 
our creative ecosystem.
    We do have challenges with copyright infringement and 
expanded perceptions of fair use. To counter this, in part, we 
invest in leading technology to pursue and be paid for pirated 
content. This is not a total solution. Without laws protecting 
creative works from prolific free use online, this $7.5 million 
to $8 billion market for visual content and the hundreds of 
millions of dollars we pay in royalties to photographers would 
collapse.
    We believe copyright laws can and should protect and 
encourage creative content as well as it protects the 
technology companies that assist in search and distribution.
    Getty Images' distribution of creative content is made 
possible by our investment in a global technology platform that 
enables the rapid search and licensing of intellectual property 
for creators and media consumers, which allows them, in turn, 
to create and to innovate.
    We are able to post new editorial images online within 
minutes or less of photographer transmission. In the last 
Presidential inauguration, our editor noted the sun coming up 
over the Capitol dome, an iconic shot on Inauguration Day. Our 
editor relayed the request, our photographer shot his images 
traveled through cable to the trailer, an editor selected the 
image, posted it online, and by the time the sun crested over 
the Capitol dome, the Washington Postwas using that image 
online on the homepage of its Web site.
    The demand for content will only continue to grow, and the 
vast market for licensed creative works can be enhanced with 
laws that protect creations, even in an overwhelmingly digital 
era. The continued growth in the use of the Internet as a forum 
to develop small and medium-sized businesses is projected to 
increase markedly in the years ahead, as today just over one-
half of small business have Web sites.
    With proper copyright protection and continued 
technological innovation, we can assist this growth and 
continue to invest and employ as we do so. The Committee's 
continued vigilance to advance, protect, and enforce copyright 
laws is critically important to Getty Images' ability to 
innovate, create jobs, and ensure that the United States 
maintains a strong competitive edge in the global digital 
marketplace.
    I would like to thank the Committee for the opportunity to 
testify today. Our goal in reviewing licensure laws should be 
to protect creativity and still allow for an active and 
intelligent marketplace for searching and licensing creative 
works. When we do so, we all benefit from content that moves, 
inspires, provokes, educates, and encourages. Getty Images 
welcomes any future opportunities to assist in this dialogue.
    Thank you.
    Mr. Goodlatte. Thank you very much, Mr. Lapham.
    [The prepared statement of Mr. Lapham follows:]
       Prepared Statement of John Lapham, Senior Vice President, 
                    General Counsel of Getty Images
    Thank you for the opportunity to testify today. I am John Lapham, 
the Senior Vice President and General Counsel of Getty Images, the 
leading provider of news, sports, entertainment, archival and creative 
imagery in the United States. You see Getty Images' award winning 
imagery every day in the world's most influential websites, magazines, 
advertising campaigns, newspapers, films, television programs, and 
books. Founded in 1995 by Chief Executive Officer Jonathan Klein and 
Chairman Mark Getty and headquartered in New York and Seattle, Getty 
Images has been publicly traded on both the NASDAQ and NYSE. With U.S. 
offices in Chicago, Los Angeles, Mclean, VA, Madison, WI, New York, 
Seattle, and Washington, D.C., Getty Images supports 2,000 employees 
and more than 150,000 photographers. Getty Images has offices in 18 
countries, sources content from more than 180, and serves business 
customers in more than 200.
    Getty Images pioneered the solution to aggregate and distribute 
visual content and was the first company to license a picture on the 
Internet. Today, nearly 100% of our business is conducted online. We 
license 200,000 images to customers every day, and our collection 
consists of more than 71 million images online; 70 million in archive; 
and 40,000 new pictures uploaded daily, as well as 1.3 million creative 
and editorial video clips. The images cover a diverse set of subjects 
designed to address all types of customers' needs, and are licensed 
primarily through the industry's leading websites including 
gettyimages.com, istockphoto.com, and thinkstock.com.
    Getty Images is the primary distribution channel for many content 
creators and has a significant impact on the digital and copyright 
economy. Getty Images' content comes from a number of sources including 
the more than 150,000 photographers and videographers, illustrators and 
musicians for whom we manage rights, all of whom are their own 
proprietors and entrepreneurs. The photographers range from global 
award winners to semi-professional or hobbyists. Content also comes 
from Getty Images' partners, as we are the distributor for more than 
300 iconic brands including National Geographic, Disney and Discovery. 
While copyright ownership varies across our library of content, 
copyright, and its accompanying rights and permissions, are the 
foundation for our business and that of the creative professionals and 
image libraries that we represent. Consequently, strong and effective 
copyright laws that protect the right to license, and not just use 
creative works in today's digital economy, are absolutely critical for 
our growth and that of the many thousands of contributors and 
businesses we represent.
    Getty Images' editorial team includes two Pulitzer finalists and a 
White House News Photographer of the Year. Our 24/7 coverage provides 
images and video of current events to thousands of news organizations 
and other media publishers, ensuring that the events in troubled parts 
of the world are brought to light. Our photographers have been placed 
in dozens of military embeds. We also enjoy relationships with most 
major sports entities globally including the NBA, MLB, and NHL, with 
coverage for more than 75,000 events annually. Getty Images also 
licenses more than 100,000 original music tracks from over 10,000 
independent musicians.
    Today, we serve more than 1,000,000 customers through our wide 
range of licensing models and price points. Many of these customers are 
small and medium-sized businesses that depend on powerful imagery to 
entice and engage customers. Through a team of more than 450 technology 
and 550 sales employees, we facilitate an essential marketplace where 
photographers of nearly every genre and skill level know they can be 
properly compensated for contributing to the creative ecosystem. We do 
have challenges with copyright infringement, and expanded perceptions 
of fair use. To counter this in part, we invested in leading technology 
to pursue and be paid for pirated content not just for Getty Images but 
our competitors as well. This effort is not a total solution, as 
legislation can provide important tools to protect creators by 
preventing the abuse of copyrighted works. Without laws protecting 
creative works from prolific free use online, the $7.5-8.0 billion 
market for visual content and the hundreds of millions in royalties 
paid to creators of copyrighted works would collapse. We believe 
copyright laws can and should protect and encourage creative content as 
well as it protects the technology and technology companies that assist 
in search and distribution, as inspiration for creation suffers if 
people are not properly compensated.
    Getty Images' distribution of creative content is made possible by 
our investment of more than $450 million in a global technology 
platform. Our technology permits the rapid search and licensing of 
intellectual property for a multitude of creators and media consumers, 
permitting customers to, in turn, create and innovate. We are able to 
post new editorial images online within minutes (or less) of 
photographer transmission from news, sports and entertainment events. 
For instance, in the last presidential inauguration, an editor noticed 
the sun coming up over the Capitol dome, an iconic shot on inauguration 
days. Our editor relayed the request for the shot on the radio from our 
trailer on the south-west lawn of the Capitol to our photographer John 
Moore on the grandstand. He turned and shot, and his images travelled 
through cable to the trailer. An editor selected a photo, attached 
metadata and posted to our site for licensing. By the time the sun 
crested over the dome the Washington Post was using the image on the 
online home-page of its website.
    The demand for content will only continue to grow, and the vast 
market for properly licensed creative works can be enhanced with laws 
protecting creations even in an overwhelmingly digital era. People 
today have more ways to communicate and more devices with which to 
consume information than ever before. The continued expansion of 
websites and devices with spectacular visual displays increase the 
opportunities for content creators, as a greater number of businesses 
require rich digital content for their marketing and educational uses. 
The continued growth in use of the Internet as a forum to develop small 
and medium sized businesses is projected to increase markedly in the 
years ahead, as today just over one-half of small businesses have 
websites. With proper copyright protection and continued technological 
innovation, we can assist this growth, and continue to invest and 
employ as we do so. The Committee's continued vigilance to advance, 
protect, and enforce copyright laws is critically important to Getty 
Images' ability to innovate, create jobs, and ensure that the United 
States maintain its competitive edge in the global digital marketplace.
    I would like to thank the Committee for the opportunity to testify. 
Our goal in reviewing licensure laws should be to protect creativity 
and still allow for an active and intelligent marketplace for searching 
and licensing creative works. When we do so we can all benefit from 
content that moves, inspires, provokes, educates and encourages. Getty 
Images welcomes any future opportunity to assist in this dialogue.
                               __________

    Mr. Goodlatte. Mr. Sherak, welcome.

     TESTIMONY OF WILLIAM SHERAK, PRESIDENT, STEREO D, LLC

    Mr. Sherak. Chairman Goodlatte, Ranking Member Watt, and 
Members of the Subcommittee, I want to thank the Committee for 
the opportunity to testify this morning. My name is William 
Sherak, and I am the President and Founder of Stereo D, the 
leader in high-quality 2D-to-3D conversions of theatrical 
content for major motion picture studios.
    I started Stereo D in 2009 as a company of 15 in southern 
California. Following the explosion of popularity of 3D films 
after the release of Avatar, we have grown to nearly 100 times 
our original size in the last 3 years. As of today, we have 
converted over 20 full-length feature films, including 
``Captain America,'' ``Titanic 3D,'' ``The Avengers,'' 
``Jurassic Park 3D,'' ``Iron Man 3,'' ``Start Trek: Into 
Darkness,'' and, most recently, ``Pacific Rim'' and the 
upcoming ``Wolverine.''
    Many think the conversion process is like the flip of a 
switch. As you will soon see, nothing could be further from the 
truth. It is a highly technical, labor-intensive process. To 
give you an idea, ``Star Trek: Into the Darkness'' required the 
conversion of roughly 200,000 individual and unique frames and 
took over 7 months and over 300,000 man-hours of work.
    This process starts with isolating images through 
rotoscoping, the outlining of every image in every frame. From 
there, a depth map is created for each frame. This entails 
using various shades of gray to indicate the depth for each and 
every object in that frame.
    Creating that depth creates missing information in the 2D 
image. This brings us to the last step, which requires artists 
to hand-paint the missing information created by the 3D image 
and to do so in a way that mimics what you see in real life.
    If everyone would please put on their 3D glasses in front 
of you, we are going to take a look.
    Mr. Watt. The Chairman was responsible for the popcorn.
    Mr. Sherak. So this is the 2D image. This is what we 
annotate to send to our rotoartists so they can see what 
objects they need to roto in how much detail.
    Rotoscoping, as you can see, we have actually taken away 
about 50 percent of roto images just so you could look at it.
    This is the depth map that creates the depth, white being 
the closest thing to you and black being the furthest thing 
away from you.
    This is the depth pass. This is where our proprietary 
software comes into play. And as you see the missing imagery, 
that is what needs to be hand-painted, and that is the final 
stereo image.
    To make all this happen, we recruit the best artists and 
stereographers in the industry from leading U.S. graphic design 
and computer technology trade schools. Thanks to 3D, these 
talented artists now have a new career option in our industry.
    We are certainly not the sole beneficiary of this dynamic 
3D industry. The growth of popularity of these films has led to 
the creation of a number of companies that either didn't exist 
at all or grew as a result of expanding their existing 
businesses into 3D. They are the manufacturers of screens 
required for 3D movies, 3D products like 3D glasses, and the 3D 
projectors, just to name a few.
    And yet none of what I describe today would be possible 
without strong copyright protections. While many believe that 
copyright protections only benefit the holders, the impact is 
actually much broader and deeper. A copyright system that 
preserves and protects the rights of creators will foster an 
environment of certainty under which technologies like ours 
will continue to be developed, leading to the advancement of 
the entire film industry.
    Using Stereo D as a case study, our very existence and 
growth from the start has been dependent on the ability of our 
customers to make an investment in our services. Simply put, if 
copyright holders are poised to succeed and thrive, so will we.
    Moreover, it is the economic viability of copyright holders 
that drives innovation. As with any business, major film 
studios make investment decisions based on the expectation of 
profits. If an environment exists that does not provide 
adequate copyright protection, and blockbuster films become 
unaffordable and unprofitable due to the threat of piracy, this 
new and thriving 3D industry will be significantly hampered and 
severely impacted, the reason being that 3D conversions are 
normally undertaken on major blockbuster films, the very films 
that are often the greatest targets of piracy.
    Finally, copyright protections can not only lead to the 
development of cutting-edge technologies, it will improve the 
entertainment experience for the general public. They will also 
foster the development of new and emerging companies that are 
part of the complex, labor-intensive process that goes into 
making a film and will ultimately enable the entire industry to 
be successful.
    Thank you for giving me the opportunity to testify this 
morning. I look forward to all of your questions.
    Mr. Goodlatte. Thank you very much, Mr. Sherak, for a very 
interesting demonstration and for the opportunity you afforded 
many in the audience to photograph the entire Subcommittee 
wearing black-framed glasses, which I am sure we will see 
shortly on Facebook and Twitter and a few other places.
    [The prepared statement of Mr. Sherak follows:]
      Prepared Statement of William Sherak, President, Stereo D, 
                 (Deluxe Entertainment Services Group)
    Chairman Coble, Ranking Member Watt and members of the 
subcommittee, I want to thank the Committee for the opportunity to 
testify this morning. My name is William Sherak and I am the President 
and founder of Stereo D, the leader in high-quality conversions of 2D 
theatrical content into stereoscopic 3D imagery. We are part of a 
larger company, Deluxe Entertainment Services Group; with more than 
4000 employees across the US, Deluxe is a leading provider of a broad 
range of services and technologies for the global digital media and 
entertainment industry.
    I want to take a few minutes to share some background into how I 
started Stereo D and how the economic viability of copyright holders--
in this case the film industry -created the opportunity for a company 
like Stereo D to exist and grow.
    In 2009, I was introduced to a scientist who had developed a code 
to convert still images from 2D to stereoscopic 3D--where two-
dimensional images are combined to give the perception of 3D depth. He 
literally took a picture of me, put it on his laptop, and converted it 
into a 3D image whose depth made it the most dynamic and lifelike I had 
seen on a screen. Given that movies are a series of still photos, at 
that moment, it became clear to me that this conversion technology 
would transform the movie experience, both for film makers during the 
production process and audiences whose movie-going experience would be 
significantly enhanced with a stereoscopic 3D film.
    We began as 15 employees who worked with James Cameron to convert 
several frames during the post-production process on Avatar, the film 
that forever changed the idea of a 3D film. Overnight, the 3D 
experience was changed from one that was hokey and underrated to one 
that immersed the movie-goer in high-quality stereo images, bringing 
the film to life through more realistic depth perceptions. For the 
first time, viewers felt as though they were actually in the scene of 
the movie, instead of watching it on a flat screen. From there, the 3D 
industry took off and Stereo D was tested and ready to meet the coming 
demand of high quality 3D conversion.
    Since that time--in just over three years--we have grown to over 
1000 employees globally, 400 of which are in Burbank, CA--where we work 
side by side with major motion picture studios and the industry's best 
and most well-known directors, cinematographers, and visual effects 
supervisors to bring their vision of 3D storytelling for major 
blockbuster films to life. We have converted ``Thor,'' ``Captain 
America,'' ``Titanic 3D,'' ``The Avengers,'' ``Jurassic Park 3D,'' 
``Star Trek: Into Darkness,'' and most recently ``Pacific Rim,'' and 
the upcoming ``The Wolverine,'' among others. In fact, I am proud to 
say that Stereo D was recently named one of the World's Most Innovative 
Companies by Fast Company magazine.
    There is no question that an investment made to convert a film shot 
in 2D into 3D pays off. When you look at last year's box office report 
and compare the top grossing film as compared to number two, The 
Avengers grossed over $623 million and The Dark Knight Rises finished 
with $448 million, a difference of $175 million. The major 
differentiator: The Avengers was released in 3D and The Dark Knight 
Rises was not.
    Many think that the conversion process is like the flip of a 
switch; nothing could be further from the truth. It is a highly 
technical, highly laborious process that starts with isolating images 
through rotoscoping, the outlining of every image in every frame. From 
there, a ``depth map'' is created for each frame--this entails using 
various shades of gray to indicate the depth for every object in the 
frame. Now that you have created depth in places that did not exist 
before in 2D, the last step requires artists to literally reconstruct 
or add in new areas created by the 3D image and to do so in a way that 
it mimics what you see in real life.
    To distinguish ourselves in the conversion marketplace, Stereo D 
employs the best artists and stereographers in the industry. We do much 
of our recruitment from leading US graphic design and computer 
technology trade schools, including the DAVE School in Orlando, Florida 
and Full Sail University in Winter Park, Florida. In fact, the 
curricula at these schools have been tailored for the conversion of 
stereoscopic 3D imagery to meet market demands. This has led to a new 
employment opportunity for this pool of tremendously talented 
individuals.
    It is important to note that we are not the only beneficiary of the 
dynamic growth of the 3D industry. There are a number of companies that 
either didn't exist at all or grew as a result of expanding their 
existing businesses into 3D, such as manufacturers of screens required 
for 3D movies to be projected onto, the manufacturers and suppliers of 
3D products like the 3D glasses, the manufacturers of the 3D 
projectors, the consumer electronics companies, companies that develop 
and provide the hardware and software needed in post-production/editing 
of digitally-produced 3D and even the makers of 3D blu-ray discs.
    None of this would be possible without strong copyright 
protections. While many believe that copyright protections only benefit 
the holders, the impact is actually much broader and deeper. A 
copyright system that preserves and protects the rights of creators 
will foster an environment of certainty under which technologies like 
ours will continue to be developed, leading to the advancement of the 
entire film industry. Using Stereo D as a case study, our very 
existence and growth from the start has been dependent on the ability 
of our customers to make an investment in our services. Simply put, if 
copyright holders are poised to succeed and thrive, so will we.
    Moreover, it is the economic viability of copyright holders that 
drives innovation. As with any business, major film studios make 
investment decisions based on the expectation of profits. If an 
environment exists that does not provide adequate copyright protection 
and blockbuster films become unaffordable and unprofitable due to the 
threat of piracy, this new and thriving 3D industry will be 
significantly hampered and severely impacted. The reason being that 3D 
conversions are normally undertaken on major blockbuster films--the 
very films that are often the greatest targets of piracy.
    Finally, copyright protections can lead to the development of 
cutting edge technologies in the film industry that will improve the 
entertainment experience for the general public; foster the development 
of new and emerging companies that are part of the complex, labor-
intensive process that goes into making a film; and will ultimately 
enable the entire film industry to be successful.
                               __________

    Mr. Goodlatte. We are now joined by the Ranking Member of 
the full Committee. And before we turn to questioning, I want 
to turn to him so that he can give his opening statement.
    I now recognize the gentleman from Michigan, Mr. Conyers.
    Mr. Conyers. Thank you, Mr. Chairman.
    I am going to put my statement in the record.
    I want to join in welcoming all of the witnesses, from 
Copyright Alliance, from the records and distribution company, 
Getty Images, Stereo.
    Let me say that, in putting my statement in the record, in 
summary, I agree with the assertion that copyright law plays a 
critical role in job creation and also in promoting the 
national economy. And we should review how copyright law can be 
strengthened to protect both artists and creators alike, and 
that the copyright law must ensure that creators have a fair 
chance to be compensated for their creative efforts. And, 
finally, our Committee--and I think all of us are in agreement 
here--should continue to study ways to prevent piracy and to 
fight other violations of copyright law.
    And I thank the Chairman for allowing me to insert my full 
statement into the record.
    Mr. Goodlatte. I thank the gentleman.
    [The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative 
 in Congress from the State of Michigan, Ranking Member, Committee on 
    the Judiciary, and Member, Subcommittee on Courts, Intellectual 
                       Property, and the Internet
    Copyright law plays a critical role in job creation and in 
promoting the health of our Nation's economy.
    For example, IP-intensive industries generated nearly 35% of our 
gross domestic product and was responsible for 27.1 million jobs, 
according to the Commerce Department.
    A key element to the success of copyright law, however, is that it 
must work for both the owners of content as well as the users.
    Today we will focus on copyright and the creative community's 
contribution to innovation. And next week we will shift our focus to 
the contributions that technology makes next week.
    Content is available in many more ways than it was in 1976 when a 
major portion of the current copyright statute was enacted.
    As we consider these issues over the next two hearings, there are 
several principles that I recommend we keep in mind.
    To begin with, we should review how copyright law can be 
strengthened to protect artists and creators.
    Earlier this year, we heard from Maria Pallante, Register of 
Copyrights, about specific recommendations we should consider for 
legislative review.
    For instance, Maria Pallante, identified the following matters that 
should be addressed:

          providing a public performance right for sound 
        recordings;

          developing a system to facilitate the use of orphaned 
        works; and

          strengthening enforcement of copyright protections by 
        making the unauthorized streaming of copyrighted content a 
        criminal felony.

    Each of these suggestions would improve copyright law and help 
protect creators. Accordingly, I would like the witnesses to give their 
thoughts on these proposals.
    In addition, copyright law must ensure that creators have a fair 
chance to be compensated for their creative efforts.
    Adequately compensating artists and creators for their work 
promotes creativity. This creativity can also benefit many of the new 
technologies like the ones we see on the Internet.
    In his testimony, Tor Hansen, Co-Owner and Co-Founder of YepRoc 
Records, describes the fact that we still do not have a performance 
right and the reason why that needs to change.
    Performers whose songs are played on the radio provide their 
services without compensation, and this sets our Nation apart from 
every other country, except China, North Korea and Iran.
    This exemption from paying a performance royalty to artists no 
longer makes any sense and unfairly deprives artists of the 
compensation they deserve for their work.
    Finally, the Judiciary Committee should continue to study ways that 
we can prevent piracy and fight violations of copyright law.
    An important aspect of this process will be continuing to educate 
the public about piracy and copyright law. Today the Consumer Institute 
Center for Citizen Research released a report about consumer opinions 
on IP and counterfeit/pirated goods. The report notes that 86 percent 
of U.S. citizens believe that protecting IP is a good way to encourage 
innovation and creativity. Another finding from the report is that 89 
percent of U.S. citizens view the sale of counterfeit and pirated goods 
as negatively affecting American jobs. I look forward to reviewing this 
report and believe that it will be helpful in our evaluation of this 
issue.
    We must continue to work to fight piracy. A study by the Institute 
for Policy and Innovation found that the U.S. economy lost $12.5 
billion dollars and more than 70,000 lost jobs annually by American 
workers due to piracy of sound recordings.
    We must also monitor how other countries are enforcing intellectual 
property laws. Chinese piracy and counterfeiting of intellectual 
property cost American businesses approximately $48 billion in 2009, 
according to a report by the United States International Trade 
Commission.
    As we examine the copyright system to ensure that it meet the needs 
of creators and the public, I believe that copyright law should be 
guided by technology-neutral principles.
    I will continue to work to ensure that creators receive adequate 
protections and look forward to hearing from our witnesses today.
                               __________

    Mr. Goodlatte. And we will now turn to questions by the 
Members of the Committee.
    Ms. Aistars, your testimony discussed the constitutional 
framework for copyright. How do you think the Framers would 
view the current copyright system and how American society 
values creators and their works?
    Ms. Aistars. Thank you for the question.
    I think the Founders would be pleased to see that 
copyright, at its core, is working fairly well. I believe the 
sorts of debates that we are having today are debates that we 
have had historically over time: how to ensure innovation, 
ensure that creators feel empowered both to create and 
disseminate their works, and how best to balance the laws that 
we have to encourage that activity as technology changes over 
time.
    So I think the Founders would be pleased that you are 
taking a look at the Copyright Act and how it is currently 
serving the purpose of motivating creators and protecting 
creators' works and also encouraging the dissemination of those 
works.
    Mr. Goodlatte. Thank you very much.
    Mr. Sherak, some might incorrectly view moviemaking as not 
being an advanced technology business. Yet you were named, your 
company was named one of the world's most innovative companies 
by Fast Company Magazine.
    I would like you to talk more about innovation and your 
investments to create it.
    Mr. Sherak. I think that the film industry has historically 
driven the entertainment medium forward, if you look at 
colorization, you look at sound. 3D is the new way to enhance 
the moviegoing experience. And, you know, film, more than 
anything, is just an amazing social medium for people to go 
with a group of people and experience something, and we 
continue to drive that forward.
    Stereoscopic film is the newest way to do that, and we will 
continue to drive that forward as you look to the future. We 
hope the next thing is 3D without glasses, making it an even 
more passive experience and not having to put glasses on. And 
we will continue to try and drive those technological 
advancements.
    Mr. Goodlatte. Thank you.
    I was fortunate in the last Congress to get legislation 
passed by the Members of this Committee in a very bipartisan 
way and then sent on to the Senate and then ultimately signed 
into law by President Obama making it possible for people 
viewing movies to share that on Netflix and other companies, so 
they can do it on Facebook and Twitter and other media, the 
opportunity to enhance that socialization that you referenced.
    Let me ask all the witnesses one more question, and then I 
will recognize the Ranking Member.
    As the Committee undertakes the review of copyright laws, 
what are the overarching issues that we should keep in mind as 
they relate to the copyright world as a whole in addition to 
your specific part of it? And since there are five of you, hit 
the highest point or two, not--don't take too much time.
    We will start with you, Ms. Aistars.
    Ms. Aistars. Thank you, Chairman.
    As I referenced in my testimony, I think the main 
principles to keep in mind when looking at copyright law are 
the ones that the Founders put before us--that is, that 
copyright law should encourage both the creation and the 
dissemination of works, and that when you are looking at what 
that requires, you look at it from the perspective of all 
creators who are involved in that process. And you evaluate the 
reasons why creators put works out publicly and what empowers 
them to put works out publicly.
    I think that you should keep in mind experiences like Eric 
Hart's, which I referenced in my testimony, as well as 
experiences like Matt Herron's, and be motivated by those types 
of creators as you look to the future, as well.
    Mr. Goodlatte. Mr. Mopsik?
    Mr. Mopsik. I believe, Mr. Chairman, in recent years, 
everyone has figured how to make money from photographs except 
for photographers. And I would encourage, going forward, I 
guess the big issues for us are ultimately fair compensation, 
and I am also concerned about the expansion of fair use, at 
this point. But those would be the big issues for us.
    Mr. Goodlatte. Mr. Hansen?
    Mr. Hansen. Well, with music, you are dealing with a lot 
smaller file sizes than some of these larger, more complex 
movies and what have you. But I would say the ease of file-
sharing and the way that search has allowed the trading of the 
non-legitimate sources for music, meaning the ones that are 
getting paid, is an issue that needs to be looked at and to 
figure out how that can be sorted to not allow those sort of 
things to be so easily done.
    And then, clearly, the fair compensation for the 
copyrights.
    Mr. Goodlatte. Mr. Lapham?
    Mr. Lapham. Thank you.
    For us, it's fair use. We think there has to be a balance 
between having enriching content to find and then also having 
that content available in order to have something to search 
for. And as a creative and technology company, we see the value 
involved in striking that balance.
    Mr. Goodlatte. Thank you.
    Mr. Sherak?
    Mr. Sherak. Thank you.
    I think, for me, it is keeping in mind all of the other 
people that are affected by copyright law and how many jobs are 
created, not just by the creators of the holders of the 
copyright, but my company wouldn't exist if studios didn't make 
big films. And the amount of employees we have, that is a very 
important thing to consider.
    Mr. Goodlatte. Thank you.
    The Chair recognizes the gentleman from North Carolina, Mr. 
Watt, for his questions.
    Mr. Watt. Thank you, Mr. Chairman.
    As has become my policy, I am going to defer and go last in 
the queue. So I will defer to Mr. Conyers.
    Mr. Conyers. Thank you.
    I welcome all the witnesses.
    Let me start with Director Aistars. Do you believe that we 
should take a measured approach when reviewing copyright law?
    Ms. Aistars. I do, Mr. Conyers. I believe the copyright 
laws, at its core, are working and are serving both creators 
and innovators well. I do believe there are areas which are 
ripe for improvements and that the Committee is doing the right 
thing by looking at the laws and how they could be updated to 
meet our current needs.
    Mr. Conyers. Thank you.
    To any one of the other witnesses, who can name steps that 
we might as a Committee take that would be helpful in our 
analysis of copyright law?
    Mr. Lapham. I can take a crack at that.
    I think some of the steps would include what you are doing 
right now, and that is hearing from content creators, from 
people that benefit from having the protections of copyrighted 
works, also hearing from technology companies and having the 
importance of the ability to find the content. Because creative 
content that is made and you are not able to locate it is of 
little value.
    And so I think that hearing from both constituents is 
great, and then also looking at the economic impacts on both 
sides.
    Mr. Conyers. Thanks for your suggestions.
    Mr. Hansen, have you embraced yet the new business models 
to distribute your music?
    Mr. Hansen. Sure, yeah. We are looking for where we can 
find customers with--you know, seeing our content and paying 
for our content wherever they are. We recognize that these 
customers have a value to add to us as long as they can value 
what we bring to them.
    Mr. Conyers. Uh-huh.
    Does anyone have any other recommendations about steps this 
Committee might want to take in terms of our analysis of 
copyright law?
    Ms. Aistars. If I could comment----
    Mr. Conyers. Please.
    Ms. Aistars [continuing]. Briefly, Mr. Conyers.
    I think there are important steps that you can take that 
don't require revising Title 17, as well. And here I refer to 
your oversight authority and your ability to encourage 
stakeholders to take responsible steps together to try and 
solve the problems that we are facing in the marketplace.
    Mr. Conyers. Uh-huh. Thank you.
    And, finally, what about, Mr. Hansen, over-the-air radio 
performance royalties? Do you have a view on that?
    Mr. Hansen. I had mentioned that in my testimony, and we 
see--and, I guess as I mentioned, over-the-air is something 
that the United States does not pay out as a royalty, and every 
other country in the world is holding royalties for our 
copyrights because we do not pay these things out.
    And we see that as something--and appreciate Mr. Watt's 
comments earlier--that this is something that really needs to 
be looked at. And we are continuing to look and to talk about 
how we can make that happen.
    Mr. Conyers. Very good.
    Any other recommendations you would like to make?
    Yes, sir?
    Mr. Mopsik. Yes, Representative Conyers.
    I think there are some simple changes that could be made to 
the actual statute that would make it easier for, in 
particular, for photographers, who I believe have more 
registrations than any other group of rights-holders, but that 
would make it easier for them to register. And, in particular, 
eliminating the differential between published and unpublished, 
which is a cause for concern and debate, I believe, by everyone 
from the Copyright Office to the rights-holders.
    And I guess, also, I am not clear about the need for 
deposit copies; and, also, the institution of a small claims 
process for infringements.
    Mr. Conyers. Well, thank you very much.
    And I would yield back any time left remaining.
    Mr. Marino. [Presiding.] Thank you.
    The Chair recognizes Congressman Chaffetz from Utah.
    Mr. Chaffetz. Thank you.
    And thank you all for being here. This is an important 
topic, and I appreciate all the expertise that is here in this 
room and at this table.
    And, Mr. Hansen, my question is first for you. And 
congratulations on your success. I mean, you are a great 
American success story, starting from your garage, 60 employees 
now. And that is what we like to see. And you are the type of 
business that we want to see growing and expanding.
    And so let's talk about how you drive new fans, new 
audience. I mean, it is a very competitive atmosphere out 
there. How do you do that? How do you do that? Where do you go 
to find new fans?
    Mr. Hansen. Well, we have a staff of people that we employ, 
as well as artists that we also compensate, as well as they 
have their jobs of being career musicians. And it is--we try, 
at this point, to identify the methods and the customers and 
the partners out there that can best reach that audience. It is 
across the board.
    Mr. Chaffetz. No doubt you have an array of people that 
help you do that. Where do you go to actually find them, to 
find the customers? Where are they?
    Mr. Hansen. They are listening to music everywhere and 
anywhere. It is online, it is on the radio, it is in the clubs, 
it is all over the place.
    Mr. Chaffetz. So you have a group that is touring, and they 
have a hot song, and they are going from club to club, how do 
you promote that? Where do you go to promote that?
    Mr. Hansen. We are promoting it across the board. We are 
crossing--again, from the ground up and from the top down.
    Mr. Chaffetz. Do you put an ad in the Yellow Pages?
    Mr. Hansen. No.
    Mr. Chaffetz. Okay. Do you put it----
    Mr. Hansen. We go on--we go onto their--we recognize their 
fans through Facebook. We recognize their fans on YouTube. We 
recognize that we need to go to college radio, we need to go to 
commercial radio, we need to go across the board----
    Mr. Chaffetz. There is a value----
    Mr. Hansen [continuing]. Where music lovers are listening.
    Mr. Chaffetz. It would be fair to say there is a value for 
being on the radio.
    Mr. Hansen. Sure, just like there is a value to being on 
Facebook or YouTube or being in a club.
    Mr. Chaffetz. And Internet radio is something I have been 
keenly involved with and engaged with. Certainly, you are 
finding fans on the Internet radio. Tell me how you use the 
Internet radio.
    Mr. Hansen. Well, the larger--we send our music to 
programmers, and they program our music on Internet radio. In 
some cases, they are performing on Internet radio, so live. You 
know, they will go into the studio and they will perhaps get 
interviewed and that sort of thing.
    Mr. Chaffetz. I guess the point I am trying to make, Mr. 
Chairman, is there is great value, there is compensation in 
driving audiences and driving people to clubs and creating 
awareness. That is where the generation that is listening to 
music today. We have got to find the proper balance, I 
understand that, but I also think there ought to be more 
competition and more outlets for you on Internet radio. I don't 
think it is working right now for most people. We have got a 
big dominant player who is having great success, but they still 
lose money every month and it doesn't work.
    We want artists to be fairly compensated. And there is 
value to being on the radio. And, again, you are not going to 
go to the Yellow Pages; YouTube and Facebook are but two 
outlets, but where we are going to be 5 and 10 years from now 
is going to be a key to our future and it is something we need 
to continue to explore.
    Going back to Mr. Mopsik, tell me a little bit more about 
your experience with the Copyright Office, and maybe anybody 
else who wants to join here, what are the positives, but what 
are the challenges, what works well and what doesn't work well 
at the Copyright Office?
    Mr. Mopsik. I mean, for photographers, the creation of the 
ECO system was a big step forward to be able to register 
online. Our challenge is that a photographer may go out 
routinely, create over 1,000 images in a day. I mean, you hear 
the number of clicks going on here with the photographers 
covering this event. It is easily in the hundreds of images. 
Then they have to go home and process those and decide what 
they are going to register or how that is going to happen.
    And right now one of the things that we have been trying to 
promote to the Copyright Office and been in discussions with 
them about for a while, and they seem quite agreeable to it, it 
is just a matter of making it happen, is to create a link from 
within a photographer's workflow so that when they bring a job 
in, they can actually register images from their regular 
workflow and not have to go outside to go to the Copyright 
Office to make that registration. And we believe that would, I 
guess, fulfill one of the goals of the office, to encourage 
registrations.
    I mean, some of the other, I guess, frustrations we have is 
that if, in fact, you haven't registered prior to infringement, 
you are locked out of statutory damages and court costs, at 
which point, very few photographers can afford to pursue an 
infringement matter in the absence of a small claims option. So 
they are effectively denied due process, because they have to 
go into Federal court to file a case, and no litigator is going 
to take that case without the promise of a statutory damage. So 
unless the photographer happens to be independently wealthy and 
willing to chase windmills, he is locked out. Those are, I 
think, some of the key issues.
    Mr. Chaffetz. Thanks, Mr. Chairman. Yield back.
    Mr. Marino. Thank you. The Chair recognizes Congresswoman 
Chu from California.
    Ms. Chu. Thank you, Mr. Chair. And first I would like to 
submit two items for the record. One is an op-ed in The Hills 
Congressional Blog by Eric Hart, who is Congress Member Coble's 
constituent, and I am submitting it because he couldn't be here 
today.
    The other is a letter I received from East Bay Ray, who is 
guitarist of the Dead Kennedys, John McCrea, who is a 
songwriter and founding member of the band Cake, and 12 other 
musicians, songwriters and composers who wanted to remind us 
all that their careers exist because of copyright laws, and 
they wanted to make sure that individual creators are invited 
to testify in future hearings.
    [The information referred to follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Marino. That is it?
    Ms. Chu. No.
    Mr. Marino. Oh, I am sorry. Without objection.
    Ms. Chu. Well, I thought I would actually like to ask 
questions about copyright infringement and how we are dealing 
with it right now. And so first let me ask Sandra Aistars and 
Tor Hansen about the voluntary agreements that we have. We have 
seen two voluntary agreements to address this issue of online 
theft, and the first is the best practices guideline for ad 
networks. And this was started by Google along with leading ad 
networks such as Microsoft, Yahoo and AOL, that announced best 
practices that would block sites dedicated to online piracy 
from using their ad services.
    And then there is also the copyright alert system that ISPs 
such as AT&T, Verizon, Comcast and Time Warner are working--are 
doing, along with content providers, to issue warning notices 
to users when they have used rogue sites that have infringed 
upon copyrights.
    How would you evaluate some of these solutions that have 
emerged, and what can we do in Congress to monitor and assess 
the impacts of these efforts?
    Ms. Aistars. Thank you for the question, Congresswoman Chu. 
I am encouraged that other stakeholders in the marketplace are 
taking positive steps and recognizing their role in addressing 
infringements. I think they are doing so because they see this 
as something they need to do for their clients, for the brands 
which they place ads for, as well as for their own reasons.
    The efforts, in my mind, work best when creators are fully 
consulted in coming up with these best practices and when the 
requirements, for instance, for alerting an ad network to an 
infringing site, placing ads on that infringing site are ones 
that are actually geared toward something that an artist could 
actually do themselves.
    I was a little disappointed to see that this latest best 
practices document for ad networks required artists to be fully 
conversant in data tracing and figuring out exactly which ad 
network a particular ad had been generated by, and I think that 
is probably beyond the abilities of most artists who are on the 
road performing and working and trying to make a living.
    With regard to the copyright alert system, I am encouraged 
that that is taking place. Again, I think it is great that it 
applies to movies, music and TV programs. I would love to see 
it expanded to address other types of creative works, such as 
photography and books and perhaps even lyric sites, because 
none of those are currently covered. So I am both encouraged, 
but I think there is still work to be done.
    Ms. Chu. Mr. Hansen?
    Mr. Hansen. We are also encouraged by the--that these 
things are now moving into place and we are starting to get the 
messaging out there. I think it is going to take a two-prong 
effect or many prongs, really, that the messaging continues to 
go out there to the consumers that this is not the right way, 
the right behavior to be taking product, and as well as 
removing it and eliminating the access at some point somehow.
    Ms. Chu. And Ms. Aistars, I asked what could we do in 
Congress to monitor the impact of these efforts.
    Ms. Aistars. Well, I think with your oversight role in this 
area, it would be fully appropriate for you to invite 
stakeholders who have begun to take these--these measures in to 
share with you how those are working, what--what seems to be 
the response--are they having the effect that was intended. I 
think also in particular when stakeholders announce they are 
taking measures themselves, it would be very interesting to 
understand how those play out over time.
    For instance, Google announced last year that it was 
changing its algorithm to limit the types of infringing sites 
that might otherwise rise to the top of search results, and I 
would be interested in hearing how that is working and whether 
that is truly having the effect that they intended.
    Ms. Chu. Thank you. I yield back.
    Mr. Marino. The Chair now recognizes Congressman Smith from 
Missouri.
    Mr. Smith. Wow. Thank you, Mr. Chairman. It is nice to be 
the newest Member on the Subcommittee and actually not go last. 
So getting here earlier pays off.
    This Committee hearing has been quite informative and very 
helpful, being new and learning a lot of the issues facing 
copyright. And my question is for all of you, in fact, with the 
changes in technology, with everything, with the Internet and 
all the different areas, what do you all see or anticipate as 
being the biggest struggles facing copyright, I mean, the 
absolute biggest struggles, or the best opportunities that you 
have with changing technology?
    Ms. Aistars. I can start, if that is appropriate. I think, 
as I said in my testimony, we see ourselves as partners and 
collaborators with the technology community. And some of the 
issues that have come up through questioning already are some 
of the challenges that I think all of us need to struggle with. 
One, for instance, is ad-supported sites that are infringing 
sites. That is something that I think is in the best interests 
of all legitimate businesses to try and address.
    Similarly, credit card and other payment systems. I know 
that numerous of the credit card processors are taking very 
positive steps themselves to prevent their payment processing 
systems from being used on infringing sites. I think these 
types of activities, which cut off the dollars flowing to what 
are most often foreign rogue sites are very important, and are 
things that we need to maintain and to expand to other areas as 
well.
    Most people find the content, the movies, the music, the 
books that they are looking for online through a result of 
using a search engine, and so I would be very interested also 
in seeing efforts expand into that area as well.
    Mr. Mopsik. Representative Smith, I would like to add, from 
a photographer perspective, a few issues. One would be funding 
or additional funding or more funding for the Copyright Office 
to allow them to advance the work that they have engaged in.
    Beyond that, I think a key issue for photographers is one 
of persistent attribution, which goes to, in effect, how rights 
holders are identified. It is a huge technology issue, but one 
that I think people have been trying to solve for a while, but 
we don't have an absolute answer to that yet, but with--if 
there were--I mean, right now it is too easy for all of the 
identifying information to be stripped from a photograph as it 
moves through the digital space, and so the image can be used, 
reused in multiple sources without ever being able to find the 
actual rights holder. There are some ways to search that out, 
but not particularly great.
    Mr. Hansen. I think a lot of the ideas, the big ones, have 
been spoken about, but, just to reinforce that the search and 
the advertising and that the sort of--those things that raise 
to the top that are not the legitimate and real partners that 
are valuing our copyrights find a way to move down the list. 
And it is a challenge, but it is one that really needs to be 
looked at.
    Mr. Lapham. For us, Mr. Smith, I think it is finding the 
balance between locating content and ensuring content creators 
are compensated. And then I also think it is finding a sensible 
alternative for dispute resolution. And we are big fans of the 
Copyright Office's efforts to put out a small claims process 
for copyright.
    Mr. Marino. Okay. The gentleman's time has expired, but Mr. 
Sherak, you want to quickly respond, please?
    Mr. Sherak. I will quickly. Yeah. Thank you. I think for 
us, it is protecting our customers' copyrights and then 
attacking piracy and making sure that we go after and take care 
of people that are pirating the films that we work on, because 
if they don't get made, we can't convert them to 3D.
    Mr. Smith. Thank you.
    Mr. Marino. The Chair recognizes Congressman Deutch from 
Florida. I think we have time to get through that.
    Mr. Deutch. Thanks, Mr. Chairman. And I am glad we are 
having this hearing today on the role of copyrights in America. 
And I would start by noting that I think too often we only 
associate big celebrities and big companies with copyrights, 
and forget about the millions of lesser known creators whose 
work we might recognize, but whose work likely will never 
appear in the entertainment news or in the gossip magazines. 
And it is in that vein that I am honored to chair the 
songwriters caucus with Marsha Blackburn and pay tribute to 
those great American creators whose work provides such an 
important part of the soundtrack to our lives, but whose names 
we often don't know.
    I want to thank you, Ms. Aistars, for highlighting your own 
family's story, along with those of other creators in your 
testimony, and I wanted to ask you as a follow-up something 
that you raised. I agree with you that our copyright law has to 
remain--has to remain rooted in tech neutral premises. I wanted 
your thoughts on how to ensure that the laws can grow with 
ever-changing technologies so that we are not picking 
favorites, we are not stifling potentially game-changing 
innovations, and at the same time, we are not opening creative 
works to new avenues for theft.
    Ms. Aistars. That is a big question. I think, first, what 
you are doing here today in examining the contributions both of 
the copyright community and of the technology community to our 
health and well-being as a Nation is the exact right place to 
start. I think through--going through this process in a 
measured way and understanding what types of innovation each of 
our communities is engaged in will help you pinpoint the areas 
where some adjustments might be needed.
    I think the challenge that I hear most frequently from my 
grassroots members is the challenge in quickly and efficiently 
responding to infringements online. That is just another 
iteration of the same sorts of challenges that people have been 
facing with their works for decades and decades. And I think we 
will keep seeing these same sorts of challenges moving forward, 
but we have been talking about certain--certain adjustments 
that might be necessary or appropriate to look at, and looking 
at the DMCA may be one of those places, in making sure it works 
for independent creators.
    Mr. Deutch. And realizing how big a question that is, I 
look forward to continuing this conversation off-line, just so 
I can get in a couple more points.
    I wanted just to go back to the fundamentals, which we 
often don't do that Article 1, Section 8 of the Constitution 
demands the Congress promote the progress of science and the 
useful arts, and it does that with meaningful copyright 
protections. It certainly helped that many of our Founding 
Fathers were creators themselves, they were inventors, but I 
think it reflects an even greater recognition that the long-
term success of our country depends on the work of inventors as 
well as artists and creators in moving our country forward, in 
improving all of our lives with new medicines and technologies, 
but also in shaping our culture.
    It is often pointed out in this Subcommittee, and I might 
add not said enough in other contexts, that our strongest 
export is our intellectual property. It is the only area where 
America enjoys a trade surplus and it provides a great source 
of goodwill for America overseas. The total estimated impact of 
copyright on the U.S. economy is over $1.5 trillion. The film 
industry alone supports 2 million jobs and contributes over $14 
billion in exports. Sales in the music industry exceeded $7 
billion, and American authors and photographers and artists 
help promote our culture in every corner of the world. All of 
that progress and innovation is threatened when copyrights 
aren't protected.
    The music industry was very publicly on the front lines of 
the problems when the digital age made theft ubiquitous, and 
they have worked painfully through these new challenges to 
embrace a whole host of new platforms that make digital sales 
and streams a source of incredible growth. And I think--I think 
that what we have seen there and the fact that--the potential 
to bring the music industry back to where it was even pre-
Napster through all this new technology shows the point that 
you made, Ms. Aistars, that content and technology are not 
locked in some perpetual struggle looking for Congress to 
balance competing interests. To the contrary, having access to 
movies and music and books gives people a reason to adopt the 
latest technology and innovative platforms, help creators reach 
audiences that they would never otherwise touch.
    So it seems like our goal as a Nation is to grow the pie 
for everyone fairly instead of fighting about how we slice up 
what we already see today.
    In that vein, Mr. Hansen, your testimony explains that--in 
your testimony, you said that the compulsory license ensures 
that all sound recordings are treated and compensated equally. 
That should be the goal. Now, some critics claim that under the 
compulsory license, not all music services are treated equally, 
and I am confused by that. I will ask this question, you can 
respond--you can respond in writing.
    Under the license, you can't withhold music from any 
service or force them to pay different rates than the--than the 
CRB has set. Can you, and I would like you just to respond to 
those claims in writing since I don't think we have time now. 
And I thank the Chairman.
    Mr. Marino. Thank you.
    Ladies and gentlemen, to our panel, I apologize. We are 
called to votes. We are going to be voting on the House floor 
for at least an hour. And after consulting with my Ranking 
Member, I have made the decision that we will not return; 
however, each Member does have the opportunity to submit 
questions in writing to you. And I apologize to you very 
deeply, but the votes came earlier than we anticipated.
    So this concludes today's hearing. Thanks to all of our 
witnesses for attending and the people in the gallery. 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 is adjourned.
    [Whereupon, at 10:54 a.m., the Subcommittee was adjourned.]
                     S U B M I S S I O N S  F O R  
                           T H E  R E C O R D

          Prepared Statement of Stephen Schwartz, President, 
      Dramatists Guild of America, the Dramatists Guild of America
    Thank you to the House Judiciary Subcommittee for inviting me to 
participate in this critical discussion about the future of copyright 
in America. Although I was unable to testify before you, I am grateful 
for the opportunity to submit this statement to you for the 
congressional record.
    I am Stephen Schwartz, a composer and lyricist who has written 
songs for the theatre since 1969. My Broadway shows include GODSPELL, 
PIPPIN, THE MAGIC SHOW, WORKING and WICKED, and my regional work has 
included CHILDREN OF EDEN, THE BAKER'S WIFE, and the opera SEANCE ON A 
WET AFTERNOON. I've been honored with three Academy Awards and four 
Grammy Awards and have been inducted into the Theatre Hall of Fame and 
the Songwriters Hall of Fame.
    I write to you now not only as a songwriter, but also as President 
of the Dramatists Guild of America, in order to speak on behalf of 
America's dramatic writers. The Dramatists Guild was established one 
hundred years ago and is the only professional association in America 
which advises and advances the interests of playwrights, composers, 
lyricists and librettists writing for the theatre. With almost 7000 
members nationwide and around the world, ranging from students and 
beginning writers to the most prominent Broadway authors, the Guild 
aids dramatists in protecting both the artistic and economic integrity 
of their work. Our past presidents have included Richard Rodgers, Oscar 
Hammerstein, Moss Hart, Alan Jay Lerner, Robert Sherwood, Robert 
Anderson, Frank Gilroy, Stephen Sondheim, Peter Stone and John Weidman. 
Among past and current Guild members are the greatest writers of the 
American theatre, such as Edward Albee, Eugene O'Neill, Arthur Miller, 
Lillian Hellman and Tennessee Williams.
    The Dramatists Guild believes that a vibrant, vital and provocative 
theatre is an essential element of the ongoing cultural debate which 
informs the citizens of a free society. If such a theatre is to 
survive, the unique, idiosyncratic voices of the men and women who 
write for it must be protected. And the one way we have managed to 
maintain that protection is through our copyrights.
    The copyright laws have made it possible for generations of theatre 
writers to prohibit changes in our words and music and to have approval 
over the choice of the artistic personnel hired to interpret, stage, 
and design our shows. Copyright has then allowed us to license our 
works throughout the United States and the rest of the world, creating 
an ongoing revenue stream that can buy us the time to continue writing 
for the theatre.
    But as you all well know, the basic principles of copyright are 
under siege in this new digital age. One can go on YouTube right at 
this moment and see parts of illegally recorded productions performed 
on Broadway and around the country, and there are even off-shore 
websites which have made a business trafficking in full recordings of 
these shows. We currently have no effective means to stop anyone 
dealing in this contraband. One can also go to Facebook and find sites 
that specifically deal in the sale and barter of illegally distributed 
sheet music, musical recordings, plays (published and unpublished) and 
monologues. Many younger theatre fans, having grown up in this digital 
environment, believe that ``all information wants to be free'' and that 
intellectual property is itself an illegitimate limitation on speech, 
even as they wax rhapsodic over their favorite songwriters and 
playwrights. The websites that cater to them profit through ads, 
subscriptions and sales, none of which go to the creators and owners of 
the work. This is particularly true of digital mega-companies that 
download entire libraries of work, including plays and musicals, 
without the authors' permission, and then find ways to parse it out in 
digital bits and bytes, monetizing as they go. They claim they are 
making a ``fair use'' of authors' work, but in truth their use could 
not be less fair.
    As copyright owners, we would encourage Congress, in any revision 
of the current Copyright Act, to strengthen the ability to stop such 
infringements and allow authors to defend the copyrights which they 
have struggled so long to maintain.
    To do this, we would advocate that some way be found to shift the 
burden of policing infringement occurring on social media sites from 
individual authors (who have neither the means nor the expertise) to 
the sites themselves, which are profiting from these infringements and 
which have the means and expertise to keep such illegal material from 
being exploited on their sites in the first place, much as they do with 
pornography.
    Furthermore, we would ask that some way be found to stretch the 
long arm of American justice around those off-shore websites flagrantly 
violating not just our laws, but international copyright law as well, 
and profiting from transactions on our soil, abetted by our own credit 
card companies.
    We would also ask that you consider some kind of ``small claims 
court'' process for the efficient adjudication of smaller scale 
infringements, so that these cases can be pursued by authors rather 
than abandoned out of economic necessity.
    But it's important to understand that we theatre writers are not 
just copyright owners; we are copyright users too. This is because most 
musicals, and a growing number of plays as well, are based on some pre-
existing underlying material, be it a book, movie, magazine article, or 
catalogue of songs. It may be under copyright or in the public domain, 
and our use of the material may require a license or it may constitute 
a fair use. But this reliance on underlying work has made us sensitive 
to the cultural imperative for a rich and thriving ``public domain'' of 
materials for all of us to use, and for the limits on copyright posed 
by the Constitution.
    The Constitution established copyright law through Article I, 
Section 8, but it did so not as an end in and of itself, but as a means 
to an end, that being the advancement of the public interest. Copyright 
is a mechanism to accomplish a larger goal. So it is essential to 
remember, as you go forward in your deliberations, that the framers did 
not establish a new perpetual property interest with this clause; they 
were, instead, carving out an exception from general First Amendment 
principles, to grant an exclusive monopoly over a particular piece of 
original expression to its author for a ``limited period,'' and they 
did this in order to incentivize the creation of new works that would 
eventually enrich the public domain and be available to all. Given this 
perspective, we would advocate positions on a few issues that may come 
before you.
    First, endlessly extending the duration of copyright renders 
meaningless the constitutional mandate that copyright be for a limited 
period; it frustrates the purpose of the act to enrich the public 
domain and instead impoverishes it. Granting additional value 
retroactively to pre-existing works does not create an incentive, since 
the work already exists. Instead, it just creates a windfall. We feel 
that ``life + 70 years'', consistent with international standards, is 
all the incentive an individual author needs to create work; after 
that, it becomes about indefinitely extending the profitability of 
corporate assets at the expense of the public interest.
    Secondly, there is a cache of material that could be available for 
transformative uses by playwrights and musical theater writers, but no 
one knows who or where the copyright owners are. These ``orphan works'' 
sit fallow, unused by their owners or by other artists, and often 
ignored by the public too. We recommend that a system be devised that 
allows for the use of these materials by authors in order to create new 
work, yet preserves the rights of the original authors should they ever 
appear and make a claim.
    Finally, ``fair use'' needs to be at the heart of any new 
copyright. ``Fair Use'' is the First Amendment safety valve that keeps 
the limited monopoly granted by a copyright from running afoul of the 
very purpose of copyright law, which is to enrich the public interest. 
If a celebrity can use his or her ``publicity rights'' to stifle an 
unflattering play, or a wealthy media company can intimidate writers 
who attempt to create a parody or a historical work based on the public 
record, then new work is deterred. Furthermore, an expansion of the 
definition of copyrightable subject matter to include such work as 
stage direction (for example), thus granting an ownership interest in a 
director's idea of how a play should be interpreted and staged, would 
have disastrous results for all copyright owners and the public too. 
For instance, even the works of Shakespeare, should there be 
established a new layer of copyright ownership in their staging, would 
be forced out of the public domain.
    We urge you to resist all attempts to limit fair use, or to expand 
categories of copyright that would serve to inhibit the public's use of 
our work.
    On behalf of the Dramatists Guild, its membership, and theatre 
writers across the country, I thank you for considering our views on 
these significant matters and look forward to cooperating with you as 
you proceed on the course of a reconsideration of the Copyright Act.





                                

                       Prepared Statement of the 
             Computer & Communications Industry Association


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                

   Prepared Statement of Brad Holland and Cynthia Turner, Co-Chairs, 
          American Society of Illustrators Partnership (ASIP)


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                                

          Prepared Statement of the Library Copyright Alliance


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                

  Prepared Statement of the National Press Photographers Association 
                                 (NPPA)


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                

    Prepared Statement of the National Writers Union, UAW Local 1981


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                                

         Letter from David P. Trust, Chief Executive Officer, 
               the Professional Photographers of America



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                
                   INNOVATION IN AMERICA (PART II): 
                         THE ROLE OF TECHNOLOGY


                            C O N T E N T S

                              ----------                              

                             AUGUST 1, 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........................   141

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.............   142

The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary   142

                               WITNESSES

Danae Ringelmann, Founder and Chief Customer Officer, Indiegogo
  Oral Testimony.................................................   144
  Prepared Statement.............................................   147

Jim Fruchterman, CEO/Founder, Benetech
  Oral Testimony.................................................   154
  Prepared Statement.............................................   156

Nathan Seidle, President and Chief Executive Officer, SparkFun 
  Electronics
  Oral Testimony.................................................   160
  Prepared Statement.............................................   163

Rakesh Agrawal, Founder and CEO, SnapStream Media, Inc.
  Oral Testimony.................................................   169
  Prepared Statement.............................................   171

Van Lindberg, Vice President of Intellectual Property and 
  Associate General Counsel, Rackspace, the Open Cloud Company
  Oral Testimony.................................................   176
  Prepared Statement.............................................   179

                       SUBMISSIONS FOR THE RECORD

Prepared Statement of the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Member, 
  Subcommittee on Courts, Intellectual Property, and the Internet   203

Prepared Statement of the Computer & Communications Industry 
  Association....................................................   205

Prepared Statement of Dorian Daley, General Counsel, Oracle 
  Corporation....................................................   210


                   INNOVATION IN AMERICA (PART II): 
                         THE ROLE OF TECHNOLOGY

                              ----------                              


                        THURSDAY, AUGUST 1, 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 9:40 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Howard 
Coble (Chairman of the Subcommittee) presiding.
    Present: Representatives Coble, Goodlatte, Marino, Smith of 
Texas, Chabot, Issa, Chaffetz, DeSantis, Smith of Missouri, 
Watt, 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 morning, ladies and gentlemen. Welcome to 
the hearing this morning. Today's hearing is another step down 
the long path of conducting a comprehensive review of our 
copyright system. We will be hearing from the stakeholders of 
the technology industry to better understand how they envision 
innovation and the role that it plays among other intellectual 
property intensive industries.
    When we drafted the Digital Millennium Copyright Act, known 
as DMCA, it was impossible to comprehend how the law would 
adapt to ever changing technologies or predict whether those 
technologies would grow in popularity. Most Internet 
connections were dial-up. There were no smartphones, no 
supercomputers, and most users had limited capabilities to 
utilize this new digital platform.
    Hindsight is 20/20, and in just over 10 years, I think it's 
safe to say that technology has forever changed the world in 
which we live. Today, technology is found everywhere. Virtually 
every industry has embraced some type, some form of technology 
to promote efficiency, improve quality, and ensure safety for 
workers and consumers.
    While not all technological innovations are solely within 
the digital platform, they depend on the robust intellectual 
property system just as innovations do in other industries.
    Government should not stand in the way of innovation. It 
should create an environment that will foster and incentivize 
it. Minus a handful of technical fixes on balance, I think the 
DMCA has gone a long way to promote creativity and innovation 
within the digital platform. That being said, I am old-
fashioned and I always have maintained that our laws, in 
particular our copyright laws, should be generously laced with 
common sense.
    This hearing is unlike many other hearings we conduct 
because it is not focused on any specific issue, and for me, 
today's discussion is more about the future than it is about 
the past. In particular, I am interested in learning our 
witnesses' thoughts about what we can expect in the way of 
innovation over the next decade.
    Our economy has undergone a technological revolution, but 
consumers still clamor for more technology and they want it 
faster. I am interested to know what you need from our 
government to meet your demand.
    We welcome our witnesses and appreciate your efforts in 
participating in today's hearing.
    With that said, I reserve the balance of my time and 
recognize the gentleman from North Carolina, the Ranking 
Member, for his opening statement, Mr. Mel Watt.
    Mr. Watt. Thank you, Mr. Chairman, and I will be equally 
brief. Today's hearing focuses on the role of technology as it 
relates to copyright policy in the digital age. Last week we 
heard from segments of the content industry about the 
intersection between content and technology in this rapidly 
changing environment. At last week's hearing, as it was 
illustrated at last week's hearing, the reality that technology 
and content industries are completely separate and distinct 
with no overlapping goals and interest presents a false 
dichotomy. To the contrary, marriage between technology and 
content, unlike probably at any other time in our past, is 
unmistakable and largely due to the advent of the Internet 
irreversible. And whether that marriage is forced or one of 
convenience, we all have a stake in making it work.I21So I look 
forward to hearing from the witnesses about how copyright law 
and policy intersects with their particular technological 
innovations, and I yield back and I'll submit the rest of my 
statement at some later point, Mr. Chairman.*
---------------------------------------------------------------------------
    *The information referred to was not available at the time this 
hearing record was printed.
---------------------------------------------------------------------------
    Mr. Coble. I thank the gentleman. I see the lady and 
gentlemen on the panel. We have a distinguished panel today, 
and I will begin by swearing in our witnesses prior to 
introducing them. If you would please all rise.
    [Witnesses sworn.]
    Mr. Coble. Let the record reflect that all the witnesses 
responded in the affirmative.
    Each of the witnesses' written statement will be made a 
part of the record, and we will ask you all--I stand corrected. 
I have just been told the Chairman of the full Committee has 
arrived, and I would be remiss not to recognize him. So I am 
pleased to recognize the distinguished gentleman from Virginia, 
Mr. Goodlatte, for his opening statement.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    This morning the Subcommittee will hear from several 
companies from the technology sector and their role in 
innovation in America. Their innovation touches numerous areas 
of our society, from how the blind access the printed word, how 
businesses connect with customers, and even how American 
students learn about science and technology in school.
    Last week, the Subcommittee heard from those involved in 
the copyright sector. The copyright and technology sectors are 
two very important components of our economy that have a unique 
symbiotic relationship. They are both also responsible for 
significant amounts of American innovation that is the envy of 
the world.
    Thanks to the Internet, innovation can come from many 
places and be distributed with equal ease. Sometimes innovation 
comes from an artist holding a digital brush and sometimes it 
now comes from a collective effort of interested Internet users 
who choose to fund a new product, a new business or a new 
social cause. As the Committee conducts its review of U.S. 
copyright laws, it is important to hear from the technology 
sector about the varying methods of innovation in America.
    I thank the witnesses for coming today and look forward to 
hearing their testimony.
    Mr. Coble. I thank the gentleman. All statements from other 
members of the panel will be made a part of the record.
    Our first witness today is Ms. Danae Ringelmann, Founder 
and Chief Customer Officer of Indiegogo. In her role, Ms. 
Ringelmann leads the company's Customer Happiness Division and 
Employer/Employee Culture and Value Initiative. She was listed 
as Fast Company's ``Top 50 Women Innovators in Technology'' in 
2011. Prior to cofounding Indiegogo in 2007, Ms. Ringelmann was 
a securities analyst at Cowen & Company. She received her MBA 
from the Haas School of Business at University of California in 
Berkeley and her BA in humanities from the University of North 
Carolina, Chapel Hill.
    Ms. Ringelmann, Mr. Watt and I will award you high marks 
for having made that last choice, and that will set you apart 
from your fellow panelists.
    Our second witness is Mr. Jim Fruchterman, President and 
CEO of Benetech, a nonprofit tech company based in Palo Alto, 
California. He is a former rocket scientist, having created 
technological social enterprises to target underserved 
communities. Mr. Fruchterman, also cofounder of Calera 
Recognition Systems and RAFT, RAF Technology. Mr. Fruchterman 
received his MS in applied physics and BS and engineering from 
the California Technical Institute.
    Our third witness is Mr. Nathan Seidle, Founder and CEO of 
SparkFun Electronics. In his position, he oversees the day-to-
day operations at SparkFun that brings new technologies to the 
market. Mr. Seidle founded the company in 2003 while studying 
electrical engineering as an undergraduate at the University of 
Colorado at Boulder. SparkFun received many awards, including 
the ``2nd Fastest Growing Company in Boulder'' in 2008 and 
``Colorado Companies to Watch'' in 2010.
    Our fourth witness today is Mr. Rakesh Agrawal--I think I 
butchered the pronunciation of some of these names. I apologize 
for that--Founder and CEO SnapStream Media. SnapStream creates 
software that enables organizations like the Daily Show with 
Jon Stewart to record and search inside of TV shows. Mr. Rakesh 
is also an executive at a specialty manufacturing company, 
Piping Technology & Products. He received his mechanical 
engineering and computer science degrees from Rice University.
    Our fifth and final witness is Mr. Van Lindberg, Vice 
President of Intellectual Property at Rackspace, the Open Cloud 
Company. In his position, Mr. Lindberg oversees all aspects of 
the company's intellectual property and brand management 
portfolio. Prior to Rackspace, Mr. Lindberg served as General 
Counsel at Python Software Foundation and as Counsel for 
Intellectual Property of Haynes and Boone, LLP. He received his 
law degree and bachelor's degree from Brigham Young University.
    Welcome to you-all. And Ms. Ringelmann, we will begin with 
you. And folks, we are delighted to have you with us today. We 
try to comply ourselves as well as you-all within the 5-minute 
rule. If you can sum up in on or about 5 minutes, we would be 
appreciative to that, and there will be a panel on the board 
where the red light changes to amber. The ice on which you are 
skating is getting thin. You will have 1 minute to wrap up 
prior to the red light being shown.
    Ms. Ringelmann, if you will start off. Good to have you 
with us.

          TESTIMONY OF DANAE RINGELMANN, FOUNDER AND 
               CHIEF CUSTOMER OFFICER, INDIEGOGO

    Ms. Ringelmann. Thank you, Congressman, and thank you 
Congresswoman----
    Mr. Coble. I think your mic's off.
    Ms. Ringelmann. My mic's off. Hello, everybody.
    Good morning. Thank you for having me. Hi, my name is Danae 
Ringelmann. I am one of the founders of Indiegogo. We have the 
largest global crowdfunding platform in the world. I am excited 
to be here today because I speak as an entrepreneur whose 
technology-based platform is both more of an innovative solve 
in the world of finance. We are fixing finance by using 
technology, but it is also a way to unleash further innovation. 
So I will be speaking today about how technology is not just a 
result, often a result of innovation but also a means to 
further innovation as well.
    Indiegogo is an example of both, and let me start by 
explaining what Indiegogo is, the problem we are solving, how 
we using technology to solve it, and why are open approaches 
particularly innovative.
    So Indiegogo, as I mentioned, is the largest global 
crowdfunding platform in the world. We have over 100,000 
campaigns that have launched on our platform since 2008. We are 
in every country of the world and in every industry. At any 
given time, we have 7,000 campaigns that are running and we are 
distributing millions of dollars every single week to 
entrepreneurs, artists, activists, community champions all 
across the world trying to bring their ideas to life.
    The problem that we are solving can be explained by how my 
cofounders and I came together. Back in 2006, we came together 
out of a deep mutual frustration for how unfair, difficult, and 
inefficient fundraising was. Myself, I had grown up a child of 
two small business owners who had struggled for 30 years to 
grow their business because not once could they ever get an 
outside loan. I then went into finance to understand how 
finance worked and realized that I was failing for the exact 
same reason that my parents were.
    I started working with independent artists on the side 
trying to help them raise money, and I failed because I didn't 
know the right people. In a parallel life, my cofounders had 
also been struggling to raise money. Eric Schell, my first 
cofounder for theater companies in Chicago, and Slava Rubin, my 
other cofounder, his father had died when he was a young boy 
and he never really dealt with it. So, in his 20's, he decided 
to deal with it, and to do that, he was going to raise money 
for cancer research.
    So we came together out of this frustration, and the 
culminating moment for me was when I was producing an Arthur 
Miller play about racial profiling, which was right after 
September 11th, and I had a challenge to stage a one-night 
event where I would bring an entire audience, get actors to 
donate their time, and get investors there. So at the end of 
the one-night event, the investors would be able to witness the 
entire experience and write a check to turn the production into 
a full blown production. Everything went perfect except that 
very last bit where they said that that was an incredible 
performance, we are not investing, sorry, good luck. And it was 
in that moment that I realized that people who wanted to bring 
the idea to life, which were the actors and the audience, 
didn't actually have the power to make it happen.
    At the same time, when I was meeting with my cofounders, we 
realized that as things like eBay and YouTube, what they were 
doing with the Internet in leveraging the Internet in terms of 
democratizing their industries, was incredible. What we saw 
with eBay was that it was providing a way for people to buy and 
sell anything from anybody to anybody. We saw with YouTube, 
there was an ability for people to share their videos and watch 
whatever videos they wanted.
    So, if you could buy or watch or share whatever you wanted, 
why couldn't you fund whatever you wanted. And so that was the 
impetus that brought us together and that is why we created 
Indiegogo. Indiegogo is the first online funding platform that 
is empowering people to fund what matters to them, whatever 
that might be.
    Great examples of how it is working better as a solve for 
finance is two stories. One, Emmy's Organics. It is a bakery 
that got its start, they make gluten-free macaroons, and it had 
a huge opportunity to grow their business into a local--expand 
their business by distributing their products in a local 
grocery store. In order to do that, they needed $15,000 to redo 
their packaging. They had just taken out a new small business 
loan just a year prior to that, and so when they went back to 
the bank to take out another loan to do it, they got rejected.
    So rather than wait and hold tight, they said, they took 
the matters into their own hands and they ran an Indiegogo 
campaign and within 3 weeks raised the $15,000 by offering 
macaroons to their customers and they got their product into 
the grocery store chain, and within a year they were selling in 
40 States across America.
    Another example is a product designer who had invented a 
light called the Gravity Light where 30 seconds of lifting 
creates 30 minutes of energy. He wanted to create a new 
solution to kerosene in the developing world which kills 
people, and it is very dangerous and expensive. So what he did 
is he shopped at venture capitalists, and not one venture 
capitalist would call him back. All of them were too worried 
about the risk. Inherent in that, there wasn't a market for it. 
So what he did, rather than give up, he went on Indiegogo and 
he raised $400,000 by offering light in exchange for 
contributions from people across the world. And guess who kept 
calling by the time his campaign was over? Those venture 
capitalists that originally wouldn't call him back. Clearly 
their minds had been changed because their Indiegogo campaign 
had showed that there was a market.
    So, clearly Indiegogo is using technology as a way to solve 
a problem, which is the inefficiency of finance, and it is also 
a way to unleash further innovation as the Gravity Light and 
Emmy's Organics are great examples of that.
    But the secret ingredient about Indiegogo's technology-
based approach to finance and crowdfunding is not just the fact 
that it is technology based. It is actually inherent in the 
fact that we are open. And what I mean by that is we don't 
judge and we don't vet and this is actually something that 
makes us very unique. But the importance of this is the reason 
we are doing that is if we did vet and we did judge, we would 
just become another gatekeeper, we would just become another 
third-party friction in the process of raising money, which 
means we would be basically watering the roots of the problem 
we are trying to solve.
    An example of the power of this open approach is that a 
couple in Florida really wanted to have a baby, but they 
couldn't conceive naturally. And because they couldn't afford 
IVF, they weren't going to be able to have a baby. Instead of 
giving up, they turned to Indiegogo, after they had been 
rejected by another funding platform, and on Indiegogo, within 
weeks, they raised the money and just last year the baby was 
born happy and healthy.
    So, our open approach is actually what is far more 
revolutionary than just the use of technology because it was 
because we were open that this baby now exists.
    I will close in saying that--it is time to close?
    Mr. Coble. Time to close.
    Ms. Ringelmann. All right. I will just close in saying that 
it is worth noting that technology doesn't have to be open, but 
if you want to create an open approach that is truly 
democratizing industries, it has to be technology based. And if 
you want to be--the reason for that is when you are open, you 
are open to people who potentially are using your platform in a 
way that it wasn't intended, and so through technology, you can 
build infrastructure like the trust and safety algorithms on 
the back end that we use in order to protect our platform and 
ensure that people are using it for the way that it was 
intended.
    Happy to answer any more questions. Thank you.
    Mr. Coble. Thank you.
    [The prepared statement of Ms. Ringelmann follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Coble. Mr. Fruchterman.

      TESTIMONY OF JIM FRUCHTERMAN, CEO/FOUNDER, BENETECH

    Mr. Fruchterman. Okay. Chairmen Goodlatte, Coble, Ranking 
Member Watt, Members of the Subcommittee, thank you for the 
opportunity today to talk about a subject that I am very 
passionate about, which is technology serving humanity.
    I am Jim Fruchterman, President and CEO of Benetech, 
Silicon Valley's leading nonprofit tech company. Our goal is to 
see that technology gets used to social needs where the 
standard off-the-shelf technologies don't fit and where a 
narrow solution targeting a social need isn't likely to make 
enough money to attract a for-profit company.
    Let me tell you a couple of examples of how we use 
technology for social good. We have been one of the leading 
providers of software for human rights groups. We make the 
Martus open source software for collecting and analyzing 
information about human rights abuses. Martus has strong 
security built in so that governments that repress their people 
have a harder time spying on the activitists that are 
documenting violations.
    At the beginning of this year, Benetech wrote the report on 
Syria with the first accurate numbers of how many people are 
being killed in that civil conflict. We have also worked with 
truth commissions and genocide trials. We are actually not a 
human rights group. We are the geeks that help human rights 
groups do their job better, more effectively, and more safely. 
We write software for environmental organizations, helping them 
manage their projects more efficiently, and we have Benetech 
Labs where we are always looking at new ideas. And right now we 
are looking at helping America's dairy farmers run their 
businesses more sustainably or helping local government deliver 
clean water more effectively.
    Bookshare is our largest single project. It is the world's 
largest online library for people with print disabilities like 
blindness, dyslexia, and physical impairments that interfere 
with reading print. We had two breakthrough ideas when creating 
Bookshare. First, we reinvented the traditional library for the 
blind by using ebooks delivered digitally rather than human 
narration delivered through the Postal Service. Second, we 
crowd-sourced the content. Actually, our members with 
disabilities scan the books as volunteers and then put them in 
Bookshare so they could be made available legally to the rest 
of the community. These scanned text files, which are much like 
Word processor files or web pages, can be delivered 
electronically for almost no cost and be automatically turned 
into a form the reader can actually use. That includes high 
quality voice synthesis where the computer, the device reads 
the book aloud to the disabled person or creating large format 
print files or Braille, which can be delivered digitally or 
through a Braille embosser.
    We relied on two copyright exceptions to make this 
innovative new nonprofit enterprise possible. The first, 
Section 121, known as the Chafee Amendment, and also Section 
107, Fair Use. Section 121 lets nonprofits like Bookshare 
provide the books to people with qualified disabilities without 
asking permission or getting to have to pay royalty, and fair 
use has been important since the creation of Bookshare and 
continues to be crucial as we look to the future, especially as 
we try to make to make STEM materials for accessible to 
students with disabilities.
    The result, we've revolutionized the field of providing 
accessible material to disabled people. Today we serve more 
than a quarter million American students with funding from the 
U.S. Department of Education, Office of Special Education 
Programs. We deliver an accessible book to one of our users for 
one-fifteenth the cost of the traditional method of making 
these books. We are able to solve most of the problem for 
getting the people the books they need at a funding level that 
was half of what the Federal Government traditionally provided.
    We currently have more than 200,000 books. A major driver 
of this is 200 publishers who give us their digital files at 
the same time they give them to Amazon and Apple, and this 
really makes our library grow fast.
    As you make policy, please keep in mind the impacts on the 
communities that I care about, that we all should care about. 
Two specific issues I would like you to keep in mind. First, 
the majority of the students that we serve under Chafee are not 
blind. They are either dyslexic or have physical disabilities 
like the brain injuries that many of our returning veterans 
have suffered. We don't want to enlarge Chafee beyond serving 
the 1 or 2 percent most disabled, but please keep these people 
who aren't blind in mind if you revisit that.
    Second, one of the ironic reasons that Bookshare exists is 
because technical protection measures keep our users from using 
commercial ebooks, so we would like you guys to keep that in 
mind, but there are many legal and socially beneficial 
applications that these BRM materials get in the way of.
    So, our dream at Bookshare is to gradually move away from 
being the primary source of accessible materials for our 
disabled users. We are actively working with publishers and the 
content industry with our Born Accessible campaign. We are 
hoping to see that all content that they create and deliver 
digitally is accessible to everybody, not just people who don't 
have disabilities.
    In conclusion, intellectual property laws at their best can 
encourage technological advances, reward creativity, and bring 
benefits to society. To make this possible, we must keep the 
balance in copyright. We need to defend fair use as a 
laboratory for creativity, we need safety net provisions like 
copyright exceptions to ensure that people with disabilities 
don't suffer unduly because their accessibility needs get 
overlooked once again.
    We have a great track record as a tech industry with new 
technology of figuring out how to make money for stakeholders 
while helping consumers and society, and we can continue this 
trend. With the leverage of technology and the foundation 
provided by well thought out intellectual property laws and a 
lot of common sense, we can inspire economic growth and social 
good.
    Thank you.
    Mr. Coble. Thank you, Mr. Fruchterman.
    [The prepared statement of Mr. Fruchterman follows:]
      Prepared Statement of Jim Fruchterman, CEO/Founder, Benetech
                              introduction
    Committee Chairman Goodlatte, Subcommittee Chairman Coble and 
Ranking Member Watt, and members of the subcommittee, thank you for the 
opportunity to speak to you today.
    I am Jim Fruchterman, CEO and Founder of Benetech, one of Silicon 
Valley's leading technology nonprofits. We operate just like a regular 
for-profit software company, with software developers, product managers 
and user support professionals, but our focus is on addressing 
important social problems where the market today is failing. As someone 
who was involved in the founding of seven for-profit high tech 
companies in Silicon Valley (and only five of them failed!), I 
understand well how much financial return there needs to be in order 
for a new enterprise to garner venture capital investment. In the 
social sector, there are so many opportunities to apply technology for 
good that the private sector traditionally hasn't, or won't, pursue--
usually because they aren't quite profitable enough. But, we at 
Benetech believe that technology and innovation for good should still 
be pursued. So much of the nonprofit sector is about handling 
information, and information technology excels at improving the 
handling of information and reducing costs. Society desperately needs 
technology applied to these issues, even if they only break even 
financially.
    Benetech is not a single-issue organization: our goal is to see 
that the best technology gets applied to social needs where the 
standard off-the-shelf technologies aren't good enough. We don't need a 
word processor designed for human rights groups, or a spreadsheet made 
for schools. However, there is usually a software need in every field 
of endeavor that's unique to that field. That's the market failure gap 
we explore.
    We don't want to deliver the same solution in perpetuity. When we 
start a new project, we always devise at least three successful exits 
within five to ten years. If somebody else solves the problem well, 
there's no need for us to duplicate their work, even if we might be 
slightly better.
    Let me give you some examples of how we use innovative technology 
for social good. Benetech has been one of the leading providers of 
software for the human rights movement. We make the Martus open source 
software for collecting and analyzing information about human rights 
abuses. Martus has strong security built in, making it difficult for 
repressive governments to spy on activists documenting violations. 
We've just received major funding from the Department of State to scale 
up the mobile version of Martus to offer the same kind of security on 
smartphones.
    We also work with scientists to get the numbers right in large-
scale human rights conflicts. At the beginning of this year, the first 
accurate numbers started coming out on how many people were dying in 
the Syrian civil conflict: that was a report written by Benetech. 
Benetech also worked with truth commissions on getting their numbers 
right, and helped develop key testimony in the genocide trial of 
General Rios Montt in Guatemala. We're not a human rights group, we're 
the geeks that help human rights groups do their work better and more 
securely.
    We also developed the Miradi project management software for 
conservation projects. Imagine business project management 101 wrapped 
in terms that a field biologist is comfortable with, designed with the 
best practices of the field in mind.
    We have a Benetech Labs, where we engage in conversations with 
potential partners to develop new tech solutions. This month, we're 
actively exploring writing software to help American dairy farmers 
manage their sustainability commitments to their customers, the big 
food companies. We're also in Latin America talking about helping the 
people who run community water systems about how to get clean water to 
more people more effectively. Many of these Labs ideas won't turn into 
full scale projects, but many of them will. We get asked to get 
involved in easily a hundred new projects a year. I strongly believe 
that the need is there for more Benetechs, in order to ensure that more 
of society benefits from the incredibly effective engine of technology 
creation we have in Silicon Valley and around the United States in 
countless communities.
    The Benetech team comes out of the high tech industry. Many of our 
senior staff members have been entrepreneurs and founders of regular 
for-profit high tech companies. We build our work on strong foundations 
laid down by other people and companies, whether it's the open source 
ecosystem of the Internet, or proprietary software or content. We don't 
create solutions from scratch: our innovation is adapting existing raw 
technology to meet the needs of the users in the social sector. We call 
this building the last ``social mile.'' We depend on an intellectual 
property system that works and is friendly to innovation. Concepts like 
fair use, open source and open content make our work much easier, since 
they reduce the transaction costs for less lucrative uses of 
intellectual property. And, we frequently depend on the good will of 
companies and rights holders to provide us with free or inexpensive 
access to the assets that they control.
    We need balanced intellectual property regimes that allow for 
socially beneficial applications, while allowing industry to make 
money. Silicon Valley has gotten very good at figuring out ways to make 
money while giving away the core product: these approaches have 
exciting analogs in the social sector.
                               bookshare
    Our Bookshare initiative, which is the world's largest online 
library for people with disabilities like blindness and dyslexia that 
interfere with reading print, is a great example of this innovation 
ecosystem in action. About ten years ago, we had an idea for blowing up 
the traditional library for the blind, and recreating it using the 
then-emerging technology of ebooks and crowd-sourcing. We began with 
our members scanning books for each other, and many of our books still 
come from our volunteers. We also used digital text files (much like a 
web page) that we can deliver electronically and that can use high 
quality voice synthesis, large format print, or digital Braille, 
depending on the needs of the reader.
    The legal underpinning of our work is of course the purview of this 
committee. We relied on two copyright exceptions to make this new 
nonprofit enterprise feasible: Section 121, also known as the Chafee 
Amendment in honor of then-Senator Chafee, who introduced this 
exception in 1996, and Section 107, fair use. Section 121 allows 
authorized nonprofit entities, such as Bookshare, whose primary mission 
is to serve people with disabilities, to create accessible versions of 
copyrighted books without the need to request permission from 
publishers and then distribute them exclusively to people with 
qualifying disabilities. Section 107, the fair use exception, has been 
important since the founding of Bookshare, and has continued relevance 
as we look to the future of our work.
    Rather than springing this idea on the publishers and authors as a 
surprise when we launched Bookshare, we reached out to them first. A 
year in advance of our launch, I addressed the Copyright Committee of 
the Association of American Publishers. We made commitments to 
upholding the social bargain implicit in the Chafee Amendment: help 
people with disabilities, but don't interfere with the normal 
commercial process of selling books. We committed to not enlarging the 
franchise of who qualified for Bookshare, by using the same criteria 
used by Learning Ally (then Recording for the Blind & Dyslexic) to 
ensure that we provided accessible books only to people with bona fide 
disabilities that truly interfered with reading.
    We next brought the Science Fiction and Fantasy Writers of America 
on board by committing to be against illegal copying of books and to 
authors' ability to review the quality of their works on Bookshare. By 
smoothing the way with publishers and authors, we had the space to 
launch a completely new approach to solving an important social issue: 
ensuring that people with disabilities have access to the books they 
need for education, employment and full inclusion in society.
    The result? Bookshare revolutionized the field of accessible 
educational materials as we rapidly became the nation's (and the 
world's) largest online library dedicated to helping people with print 
disabilities. Today, we serve more than a quarter million American 
student members through funding from the U.S. Department of Education, 
Office of Special Education Programs. American students get this access 
to educational material for free, thanks to this funding. And, it's 
far, far cheaper to scan a given book once, proofread it, and then have 
it be accessible to all Americans with qualifying disabilities. This is 
in stark contrast to the status quo before Bookshare, where only a tiny 
fraction of the needed books were available in accessible form, and 
often the same book was painstakingly recreated over and over again by 
different educators at different schools, by parents and by students 
themselves.
    Schools are legally required under Section 504 of the 
Rehabilitation Act and the Individuals with Disabilities Education Act 
(IDEA) to provide these students with accessible educational materials. 
These students are almost always receiving special education services 
of some kind. While tens of thousands of our members are blind or 
visually impaired, the majority of our members are dyslexic. We also 
serve people who are unable to interact effectively with printed books 
because of a physical disability, such as cerebral palsy, a spinal cord 
injury or traumatic brain injury. Returning veterans with disabilities 
that diminish their capacity to read print is a key population that we 
are actively working to support. We want to make sure they still have 
the opportunity to pursue higher educational opportunities.
    We currently have more than 200,000 books in the ever-increasing 
Bookshare library. A major driver behind this accomplishment and our 
ability to deliver a book at \1/15\ of the cost of the traditional 
method of creating accessible books was the development of an eco-
system of socially responsible publishers who have given us direct 
digital versions of their books. Over half of the books in our 
collection have been provided directly to Bookshare by publishers 
voluntarily in high quality digital formats. It's an outstanding act of 
corporate social responsibility. The Chafee Amendment terms provided a 
floor set of provisions that made these negotiations feasible: it is an 
indispensable safety net for accessibility.
    Having the most in-demand books and textbooks solves only half the 
challenge. We also have an entire array of assistive technology tools 
for turning our ebooks into something our members can effectively 
perceive. We want students to have equal access to this content, in 
their preferred mode for reading. There are probably over fifty 
different products that serve our students, thanks to an open interface 
we provide to any maker of assistive software or hardware. Bookshare 
itself provides free software on PCs and Macs, as well as an open 
source reader for Android phones and tablets. One of our users who is 
logged into our website can start reading any book immediately through 
their web browser. There are a couple of best-selling applications for 
Apple's iPhones and iPads: one we created and one that an individual 
programmer developed that's terrific. For students whose families can't 
afford a PC or smartphone, it's possible to download our books as MP3 
audio files, since just about every teenager has an inexpensive MP3 
player. Plus, we support dozens of other products like Braille 
displays, low vision devices and dedicated players for people who are 
blind or dyslexic.
                        copyright and bookshare
    The Section 121 exception has been crucial for us. It made 
Bookshare possible and continues to guide our work. It was written 
broadly enough that we could innovate and help solve the social problem 
we set out to solve. That flexibility allowed for creativity, which 
wouldn't have been there if the legislation had specified the four-
track audio tape technology that was in use at the time of Chafee 
Amendment in 1996 (and is only now being phased out).
    We also extensively leverage fair use, Section 107. It allowed for 
the creation of the scanned copies that were originally used to create 
Bookshare. We had a member who is blind who contributed 3,000 scanned 
books to us at the start. It wasn't legal for him to distribute those 
books to other people who are blind, but he was able to have his own 
library created by his personal efforts and those of his family, and 
that is a textbook case of fair use.
    We are also creating new solutions to new problems. The great thing 
about ebooks is that the text at the core is increasingly accessible. 
However, more and more important content in these books are now 
delivered as images and graphics, not text. We've been operating an R&D 
center, called the DIAGRAM (Digital Image and Graphic Resources for 
Accessible Materials) Center, which brings the accessibility, special 
education and textbook publishing industry together around the 
challenge of making images accessible. We want to lower the cost of 
making an image accessible by at least a factor of ten. This is 
especially critical for science and math books, for STEM textbooks. In 
a current digital math book, all of the equations are delivered as 
images of formulas, not as text. We have to turn these inaccessible 
images into machine-readable information to ensure that students have 
equal access to the careers of the future. And, it's almost certain 
that these efforts to make image accessibility far less costly will be 
based on the provisions of fair use.
                      challenges and opportunities
    I am extremely optimistic about the opportunity to solve problems 
like accessibility through innovative applications of technology. 
However, I don't want to understate the challenges we face. We have a 
major textbook publisher that has regularly threatened us, our peer 
libraries and the assistive technology industry to keep students with 
dyslexia from being served under the Chafee Amendment. These threats 
have a chilling effect on accessibility, as some states make 
restrictive policies in reaction, denying many thousands of severely 
dyslexic students access to the books they need.
    We have the ironic effects of digital rights management locking out 
the most likely customers who most need ebooks, people with 
disabilities. We're more than a decade into ebooks, and technological 
protection measures (TPMs) still stop people who are blind from using 
ebooks they purchase. The TPMs are too rigid to know the difference 
between a person wanting to make an illegal copy of an ebook, or a 
person wanting to access that book via text-to-speech or Braille. When 
the Kindle was released with a rudimentary ability to read books aloud, 
questions of rights led to many titles being soundproofed, where the 
speech was silenced. The transition of ebooks is also a giant challenge 
to libraries, with some publishers declining to provide electronic 
versions of their books to libraries. The traditional role of libraries 
as a resource for the person too poor to purchase books, or who wishes 
to look briefly at ten books necessary for research purposes is 
increasingly under threat.
    And, the accessibility of new content and technology is an 
afterthought at best. While the past few years have seen the explosion 
of online courseware and new educational technologies, the 
opportunities for the inclusion of people with disabilities inherent in 
these innovations has been ignored. Even with laws mandating the 
accessibility of content and technology in the field of education and 
more broadly, we continually experience those ``oops'' moments. Oh, we 
forgot about students with disabilities in our product aimed at K-12 
schools or students. Oops, we just released the Kindle Fire and forgot 
about accessibility again. These new digital books and products are 
going to be far more valuable than print books, with their ability to 
allow for interactivity with the content and with other users--people 
with disabilities must not be left behind once again.
    This casual attitude towards accessibility is a real problem, 
because the true solution to the problem of accessibility is universal 
design. Most of the features in digital books that are absolute 
requirements for people with disabilities are amazingly valuable to 
everybody else. We believe that as content is born digital, it should 
simultaneously be born accessible. Because we've done such a good job 
under the exception of making books available to our users as a 
specialized library, the big fight now is for people with disabilities 
to be able to buy accessible books online. They should be the same 
books that everybody else buys electronically. Bookshare's long term 
goal is to go from being the primary source of ebooks for our users 
with disabilities, to being like a regular library, so that our users 
enjoy the same privileges as their non-disabled peers. Most users would 
rather simply buy the same books through the same channels as everybody 
else and have them work for everybody. As part of our Born Accessible 
campaign, we've begun the process of creating new tools and processes 
to allow publishers and others in the authoring stream to include 
accessibility from the inception point of their content. We're getting 
great responses from publishers, especially when they realize we truly 
want them to succeed in selling more books to disadvantaged 
communities.
    However, we need safety net provisions like fair use and the Chafee 
Amendment to ensure that people with disabilities don't suffer unduly 
because their needs get overlooked yet again.
                          the marrakesh treaty
    The United States often leads the way in so many technology and 
policy areas. One great example was the Marrakesh Treaty to Facilitate 
Access to Published Works for Persons who are Blind, Visually Impaired, 
or otherwise Print Disabled that just concluded in June. It makes 
domestic copyright exceptions modeled after the Chafee Amendment a 
global norm for signatory countries. Plus, it eases import and export 
of accessible copies by organizations such as Bookshare. The Treaty 
should help Americans with disabilities access far more diverse content 
in English and other languages, reduce the amount of duplicative work 
being done in separate countries, and, most dramatically, greatly 
improve access for people with disabilities in developing countries 
that have not had a legal structure to deliver accessible materials 
until now.
    I want to acknowledge the favorable role played by the United 
States delegation, thanks to reflecting the balance between rights 
holders and consumers. We were glad to be able to work with our 
partners in industry in striking a balanced treaty that upholds that 
same social bargain we honored in setting up Bookshare: helping people 
with disabilities without making a significant impact on the commercial 
markets for books.
                     specific legislative proposals
The Chafee Amendment
    We think that Chafee works very well. Its main defects are its 
reliance on the 1931 Act for a definition of disability, and its 
approach to people with severe dyslexia, which is incredibly out of 
date. Even though Learning Ally (formerly Recording for the Blind and 
Dyslexic) was at the table when Chafee was negotiated, the antiquated 
``organic dysfunction'' language around reading disabilities is a 
concept that appears nowhere else and needs to be updated. The Treaty 
uses a more modern approach to disability, which is the functional 
approach pioneered in the Americans with Disability Act. Because 
balance is important, we don't think the copyright exception should be 
enlarged in terms of serving more people. We think it just needs to be 
clarified to reflect the status quo of Chafee as it is operated by the 
two largest libraries serving the educational needs of students with 
disabilities. The 2011 Report of the Advisory Commission on Accessible 
Instructional Materials in Postsecondary Education for Students with 
Disabilities recommended that Chafee should remain narrow, effectively 
serving 1-2% of all students (note: I served on this Commission).
The Digital Millennium Copyright Act
    I touched on the irony of digital rights management locking out the 
most likely customers for ebooks. As an authorized entity, Benetech has 
closely followed the Section 1201 proceedings under the Digital 
Millennium Copyright Act. The most recent determination by the 
Librarian of Congress allows an authorized entity to ``unlock'' ebooks 
for the benefit of people with disabilities. While we're likely to 
conduct a pilot on a limited number of books, but this is not the way 
to solve this problem. We need to get of rid of dumb TPMs that lock out 
customers with disabilities.
    But, it highlights how much activity that has traditionally been 
legal is hard to do in a world of Digital Rights Management, 
Technological Protection Measures and licenses that forbid you from 
doing things that would otherwise be allowed in a printed book world. 
Of course, the recent cellphone unlocking controversy is just another 
one of these issues. We hope that Congress would make circumvention of 
DRM for legitimate purposes, not related to the making of illegal 
copies, more clearly legal.
                              conclusions
    Intellectual property laws, at their best, can encourage 
technological advances, reward creativity and bring benefits to 
society. Practical and creative innovators, like Benetech, need space 
to operate to ensure those benefits reach those people who are often 
most in need of new solutions, but are often least able to afford them. 
And new technology and new operational models are needed to do far more 
good with the same or fewer resources.
    To make this possible, we must keep the balance in copyright. We 
need to defend fair use as a laboratory for creativity. And we can't 
use moral panics and wild claims of economic damages to constrain 
innovation in advance. We have a good track record of figuring out how 
to make money for stakeholders while helping consumers and society, and 
we can continue this trend. With the leverage of technology, and the 
foundation provided by well though out intellectual property laws--and 
a lot of common sense--we can inspire economic growth AND social good.
                               __________

    Mr. Coble. Mr. Seidle.

           TESTIMONY OF NATHAN SEIDLE, PRESIDENT AND 
         CHIEF EXECUTIVE OFFICER, SPARKFUN ELECTRONICS

    Mr. Seidle. Chairman Goodlatte, Chairman Coble and Ranking 
Member Watt, and the Members of the Subcommittee, thank you for 
inviting me to speak on the role of innovation and technology 
today. I am the Founder and CEO of SparkFun Electronics, an e-
commerce company that sells educational kits and building 
blocks to the people that invent and prototype new electronic 
products. I started SparkFun 10 years ago in college, and today 
SparkFun employs 145 people with revenues of $28 million. We 
build 70,000 electronic components a month at our facility in 
Boulder, Colorado. Our customers range from the R&D labs of 
Fortune 500 companies to the hundreds of thousands of do-it-
yourselfers, makers, and crafters. They are responsible for 
many innovative new businesses and products. I'm also on the 
board of the Open Source Hardware Association, whose purpose is 
to educate the general public about Open Source hardware.
    I am here to demonstrate that innovation is not dependent 
on intellectual property. We manufacture over 450 products all 
freely available to copy, remix, and sell. Rather than spend 
millions of dollars to secure and enforce a patent, we decided 
to invest that money back into new products. We have released 
over 700 unique products over the past decade without patents 
or intellectual property. We have found that we have about 12 
weeks before our competitors copy and sell our products on the 
Internet.
    Today, we survive by constantly innovating. We are too busy 
to wait for the U.S. Patent and Trade Office to approve patent 
applications. The pace of the patent system makes obtaining a 
patent irrelevant in our technological company where the 
product is measured in weeks, not years.
    I don't need a patent to make a profit, and in fact, the 
creation of a patent and the enforcement of a patent are merely 
distractions to innovation. Thanks to this focus, we have 
posted record profits for the past 10 years. Attempting to stop 
pirates is a waste of time. Show me an anti-piracy law or 
technology and I will show you a dozen 15-year-old girls and 
boys who can crack it. Provide better support and better 
quality at the best price, that is how you sell a product. That 
is not a new business model. This is how business has been done 
for thousands of years. There is no need for us to waste time, 
energy, and money suing infringers or pirates. Our time is 
better spent innovating.
    Through the power of the Internet, half of SparkFun's 
revenues come from international sources. Now, imagine what it 
is like to enforce intellectual property protection in 100-plus 
countries. It is laughable for a company my size. Instead of 
enforcement, we concentrate on competing. I brought today an 
example. We have released a product called the Fio. This is a 
small little electronic device that we sell all over the world. 
We released the design file so that anyone could take our 
design, learn from it, and produce their own version.
    A few months after we released this product, we discovered 
a company in China producing a very similar copy. In fact, they 
improved our design, making it easier to use and cheaper to 
produce. Rather than crying foul, we leveraged all of their 
improvements and released our own new version that incorporated 
all their improvements. Today the company in China no longer 
produces the Fio. Their price was competitive, but customers 
came to SparkFun because of our shorter shipping times, better 
features, and technical support. In the Internet age, 
innovation moves faster than the shield of intellectual 
property.
    The open source hardware model also has huge benefits on 
the classroom and STEM initiatives. It allows more students to 
have access to low cost, widely available educational products. 
With these tools we can teach engineering students in every 
corner of this country. As manufacturing continues to move to 
other countries, we need the educational backbone to produce 
engineers here in America.
    The most direct route to fixing the gap is to collaborate 
through open sharing. It will be the absence of IP that will 
make these initiatives successful.
    As a business owner, the worst thing Congress can do is to 
allow monopolies and protectionism to interfere with market 
forces. Intellectual property and copyright are important 
features to the economy, to the fabric of the economy, but they 
are not the only option. In the future, more companies and 
innovators will considering open source hardware and how it 
benefits their business. To enhance innovation, I encourage 
Congress to consider providing the following options.
    First, protect small companies like mine from being bullied 
through litigation. There are too many truly innovative 
companies that are shying away from doing amazing work because 
they fear doing so would put their personal assets at risk. And 
second, alter the number of years that protection--alter the 
number of years of protection that patents grant to a timeline 
that better reflects the pace at which technology is produced 
today. Rather than the protection of a monopoly of 20 years, 
shorten it to 5 years so that further innovation can be done 
once the technology is reaching the end of its lifespan. These 
two changes will greatly increase the incentive to innovate 
within the U.S. borders.
    Thank you for your time.
    Mr. Coble. Thank you, Mr. Seidle. You beat the red light.
    Mr. Seidle. Thank you very much.
    Mr. Coble. A little bit after you concluded. Thank you, 
sir.
    [The prepared statement of Mr. Seidle follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               __________
    Mr. Coble. Mr. Agrawal, good to have you with us, sir.

TESTIMONY OF RAKESH AGRAWAL, FOUNDER AND CEO, SNAPSTREAM MEDIA, 
                              INC.

    Mr. Agrawal. Thank you. Thank you for having me here today. 
My name is Rakesh Agrawal, and I am the Founder and CEO of 
SnapStream. At SnapStream, we make television search software. 
We make it so organizations like the Daily Show can record lots 
of television and then search inside those TV shows.
    As some background, I am a Texan. I have lived in Houston 
all my life, except for two short stints, one here in D.C., one 
in New Delhi, India, and I founded SnapStream with a friend of 
mine after I graduated from Rice University. We employ 27 
talented individuals, 25 at our headquarters in Houston and one 
in Austin and one in Ohio.
    Let me start by explaining what SnapStream is and how it 
works. We are a cross between a DVR and a search engine. The 
SnapStream TV search appliance is a physical box that our 
customers buy and they install at their premises. And they use 
it to record television, up to 10 TV shows at a time on a 
single SnapStream TV search appliance, and then we index all 
those recordings and make them searchable in realtime. Search 
results are a lot of like what you would see from a web search 
engine, except they are TV search results. Each result is a TV 
show, the name of the show, the air date of the show, and the 
exact time where the mention occurred, and then there is an 
excerpt of the transcript with the matching words highlighted, 
and once you have found what you are looking for, you can 
create a clip and share that clip as a link, as an attachment, 
you can download the clip into a video editor, et cetera. It is 
not unlike how we are able to copy and paste text from news 
articles online or share a link to a news article online with 
someone. SnapStream simply lets you do those things with 
traditional television.
    Our customers not only save time but they are able to 
accomplish creative feats that weren't possible before. I want 
to play a short TV clip for you-all now from one of our 
customers, The Soup on E! Entertainment.
    Looks like it is playing in slow motion. Should we abort? 
It is nothing like seeing the clip itself, but I will describe 
it to you. It is a clip from a TV show called The Soup where 
they summarize what's been happening on television, and in this 
particular week, Twitter had experienced one of its big growth 
spurts. Oprah had joined Twitter, so there were a surge of 
mentions of Twitter, and what they were able to do with 
SnapStream was pull out every place where the word ``Twitter'' 
or ``Tweet'' was mentioned on TV and put that together in a 1-
minute montage of probably 20 or 30 mentions of Twitter and the 
word Tweet to get across the point that everyone in the media 
was talking about Twitter that week. It was a fun clip, and it 
shows the kind of creative things that people can do with our 
TV search technology.
    Our search technology is used pretty broadly. We have 
customers like the Daily Show and the Colbert Report. Another 
creative use of our technology is local TV stations use us for 
competitive intelligence. They will track the words ``breaking 
news'' on their competitors' stations, and then they are 
notified immediately by email when those mentions show up on 
television. We are also used quite a bit here in Washington, 
D.C., possibly by some of you-all's offices. Our customers here 
include the White House, the Senate, the RNC, DNC, and 
different media watchdog organizations. State, county, and city 
governments use SnapStream like Mayor Bloomberg's office in New 
York and Mayor Annise Parker's office in Houston.
    From the standpoint of copyright, SnapStream is no 
different than a VCR or a DVR. Our customers make recordings at 
their premises on hardware that they purchase from us. Being 
able to make recordings of television and fair use are both 
vital to our business and to our customers. Without fair use 
and the ability to make recordings, it would not be possible 
for governmental agencies to monitor television and quickly and 
efficiently respond to TV coverage, and without fair use and 
the ability to make recordings, the comedy programs like the 
Daily Show and in many cases the public awareness that they 
create would not be possible.
    SnapStream's TV search technology brings the power of 
search and sharing, things that are a standard part of ``new 
media to the old media'' of broadcast television, and that is 
really the root of our product's innovation and the reason 
customers buy our product.
    Consumer media consumption behavior has changed. SnapStream 
allows organizations to use the power of searching, clipping, 
and sharing with traditional television. Thank you.
    Mr. Coble. Thank you, sir.
    Mr. Keeley. They may be able to do it?
    Mr. Coble. Pardon?
    Mr. Keeley. They may be able to do it now. I don't know.
    Mr. Coble. You still working with the----
    Video Technician. On now.
    Mr. Coble. Okay.
    Mr. Keeley. Go ahead and watch it. We will watch it. You 
can go ahead and ask him--you can ask him to run it.
    Mr. Agrawal. We going to play the clip?
    [Video clip played.]
    Mr. Coble. Thank you.
    [The prepared statement of Mr. Agrawal follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    


                               __________
    Mr. Coble. Mr. Lindberg, you are the cleanup man.

   TESTIMONY OF VAN LINDBERG, VICE PRESIDENT OF INTELLECTUAL 
  PROPERTY AND ASSOCIATE GENERAL COUNSEL, RACKSPACE, THE OPEN 
                         CLOUD COMPANY

    Mr. Lindberg. Thank you. Thank you. Chairman Goodlatte, 
Chairman Coble, Ranking Member Watt, Members of the 
Subcommittee, thank you for extending me this invitation to 
testify today.
    Last week you heard from witnesses in the content 
industries about their views on copyright. This week we are 
talking about technology.
    In truth, we are not so far apart. Technology companies and 
in particular Internet companies are also content creators. 
Copyrightable content is not only works of art and literature, 
movies, and music, it also includes all the software code 
written by professional computer programmers. Internet 
companies also empower individual citizens to create content. 
This includes cutting edge economics and political analysis. 
This includes people who write on blogs about subjects they 
love, and yes, it even includes videos about cats.
    We can't exclude the interest of Internet companies and 
ordinary citizens from this important discussion about 
copyright. It is a new world. If we only focus on the 
traditional content creators, we miss out on the Internet, the 
greatest engine of content creation that the world has ever 
seen.
    Because there are so many new content creators, there are 
many new business models for using copyrighted content to 
achieve success. We have heard today from a number--about a 
number of these business models. Some of these business models 
rely on exclusive control of their content. Some business 
models rely on fair use. Others depend on openness and the 
widespread sharing and dissemination of their work. We need to 
make sure that the conversation doesn't focus just on one 
business model to the detriment of all the others.
    To illustrate, let me tell you a success story about 
innovation in America. This success story comes from sharing 
copyrighted content as widely as possible. Almost exactly 3 
years ago, Rackspace was looking for a new technology 
foundation to build our next generation cloud computing system. 
At that time, there were very few choices, and they were all 
locked down and proprietary. Even Rackspace's own legacy 
technology was proprietary. But we had seen the success of the 
open source movement. Open source is a model by which 
copyrighted code is shared and traded for the benefit of 
everyone. This open source code runs most of the Internet. We 
have decided to make an open source cloud computing system.
    Some farsighted technologists at NASA also had this vision 
and joined us. We created OpenStack. When we created OpenStack, 
Rackspace became not just a technology company but also a 
content provider. We wrote thousands of lines of code, reams of 
documentation, and even a couple of books, millions of dollars 
worth of intellectual property. Rather than assume exclusive 
control, we made it available for everyone to use. The results 
have been astounding. OpenStack is not only used by NASA but by 
operations throughout the Federal Government. It is an engine 
of growth backed by hundreds of companies worldwide, including 
technology giants such as Cisco, Dell, HP, IBM and Red Hat.
    In terms of people, OpenStack has over a thousand 
individual authors. These authors have collectively written 
enough code and documentation that if it were all printed out, 
it would reach to the Moon. Because Rackspace gave away this 
code, we can incorporate contributions from other companies 
that benefit us in turn. Customers become more familiar with 
our products, making them more attractive to buy. OpenStack is 
driving breadth in our products and growth in our service and 
support business. OpenStack is making us money.
    Across the industry, this one project, OpenStack, is 
directly responsible for tens of thousands of new American jobs 
and has driven billions of dollars of new growth and 
investment. This innovation and economic growth is the direct 
result of the deliberate spreading and dissemination of the 
copyrighted content provided by Rackspace, NASA, and these 
other contributors.
    If changes to copyright law make sharing more difficult, it 
will discourage or prevent successes like OpenStack. That 
brings me back to the subject of this hearing. There is more 
than one way to engage with copyright. There is more than one 
business model, even among traditional media companies. For 
example, Radiohead and Nine Inch Nails are two music groups 
making money with a business model predicated on widespread 
sharing and distribution of their content.
    At Rackspace we are on the frontlines of the battle against 
copyright infringers and other online criminals. We employ 
dedicated teams to take enforcement actions every day under the 
Digital Millennium Copyright Act and our own even stricter 
Acceptable Use policy.
    One recurring suggestion that we received is that we should 
alter our technology, build in mechanisms to prevent copyright 
infringement. From our experience on the frontlines, we are 
wary of regulations that would substitute technological 
measures for human decision making. There are many things that 
computers do well, but one thing that they don't do well is 
understand the relationships between people.
    Computers may be able to learn how to spot a movie or 
recognize a song, but they don't understand when someone has 
granted access for another person to use that copyrighted 
material. A software program is a lousy substitute for a 
conversation between humans.
    For example, among the many companies that we at Rackspace 
host as customers include a movie studio and a jewelry vendor. 
I can't tell you how many times that we have actually received 
takedown notices from the movie studio to take down their own 
website. Just last week, we got a mistaken request from the 
jewelry vendor to take down the site of one of their authorized 
resellers. We have gotten takedown requests to take down the 
sites of famous museums who were displaying pictures of their 
own works in their own collections.
    The reason we get these complaints is because they usually 
don't come from humans. They usually come from computers. The 
automated software that generates these notices doesn't 
understand that these are authorized uses. If there is any 
change to copyright at all, it needs to be a strengthening of 
the safe harbors that allow shared expression.
    We get other requests to take down material because it is 
unpopular or unflattering to some business or some individual. 
For example, a highly critical review of a restaurant. These 
requests are most frequently couched as requests under the 
Digital Millennium Copyright Act. These requests are not really 
meant to stop copyright infringement. They are attempts to 
restrict free speech that someone doesn't like.
    Distinguished Members of the Committee, I ask you to 
remember two things as you consider these important issues. 
First, remember that there are many new content creators and 
many new business models. We need to respect them all.
    Second, remember that computers and software algorithms can 
never replace human judgment. Let's make sure that we empower 
all of America's industries and citizens to innovate. Thank 
you.
    Mr. Coble. Thank you, Mr. Lindberg.
    [The prepared statement of Mr. Lindberg follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                               __________
    Mr. Coble. Thank you-all for your testimony. We appreciate 
your presence here today. We try to apply the 5-minute rule to 
us as well, so we'll move along.
    Let me start with you, Ms. Ringelmann. Has innovation in 
America become more centralized, and what impact does that have 
on the speed of innovation in America?
    Ms. Ringelmann. As innovation has become more----
    Mr. Coble. Centralized--decentralized.
    Ms. Ringelmann. Decentralized. Can you repeat the second 
half?
    Mr. Coble. What impact does that have on the speed of 
innovation in America?
    Ms. Ringelmann. As innovation becomes more decentralized, I 
think it will increase the speed of innovation. What is amazing 
about Indiegogo is that we don't judge, as I was saying. We 
don't decide who has the right to raise money and who doesn't. 
We don't decide which product designers get to design their 
product. We are open, and we leave it up to them to connect 
with their world and connect with their audiences. And because 
of that, what ends up happening is the folks that connect most 
directly with an audience of people who want that idea to come 
to life are the quickest to raise the money and the quickest to 
actually move forward with their project.
    So, the huge barrier that we are attacking right now is the 
friction of finance. People have ideas every day. People have 
the willingness to work hard every day. Until Indiegogo came 
along, the one thing standing in their way was access to 
capital, and because we removed that friction, now the only 
thing that is in their way of bringing their idea to life is 
themselves and their willingness to work hard, and I think that 
is pretty American, so I would see it increasing.
    Mr. Coble. Anyone want to weigh in further? Any other 
comments?
    Mr. Fruchterman. Well, I think the idea of the Internet 
enabling the community to actually contribute to things, 
whether it is contributing finance. I mean, it was blind people 
who built our library. That is what made it the biggest library 
is because the technology did it and they could do it fast. 
Instead of taking a year to record a book that hit the New York 
Times' bestseller list, our volunteers scanned it in a couple 
of days so the New York Times' bestseller list was always, 
within a week, up to date and on our site.
    So, I think those are just examples of how when the 
technology empowers the community, that is so much more 
powerful than any one company can possibly be and that 
contributes to innovation and building these gigantic assets 
whether they are commercial or social.
    Mr. Coble. Thank you.
    Ms. Ringelmann. We actually have a campaign on our site 
right now called the Ubuntu Edge. It might be the largest 
crowdfunding campaign in crowdfunding's history. It is a 
campaign to raise $32 million in 30 days to create a phone 
based on open source technology. So the creators and the 
guiders of this open source technology have gone on, reached 
out to the community that have contributed software and code to 
the actual software base, and through this community they are 
actually funding it, too. So they are not just creating a phone 
together, they are actually funding it and making it happen, 
and not once was a gatekeeper, a third-party decision maker 
involved in that process.
    Mr. Coble. As American students prepare for the workplace, 
what challenges do you see in ensuring that they are prepared 
to work in technology?
    Start with Mr. Seidle.
    Mr. Seidle. I can try to field that one. The speed at which 
technology changes is astounding, and we have had a customer of 
ours who learned how to solder. We teach classes on how to 
assemble electronics, and this student kind of learned how to 
solder and then took it upon himself to continue to learn how 
to program via the Internet. There is community forums, and so 
he learned how to program and he sort of moved on and then 
began building projects. Designed the ornament on a Christmas 
tree that changes lights and does different things.
    Quinn is going to turn 13 this year, and he has his own 
website. That wasn't enough. He now has his own website selling 
products.
    So our students, the students today need every tool and 
every possibility to learn more and to compete in this global 
world. I believe the Internet and open source are sort of keys 
to enabling students today to stay as competitive as possible.
    Mr. Coble. Mr. Lindberg.
    Mr. Lindberg. We have a direct example of that. I work with 
the Python Software Foundation. Every year we have a 
conference. This year we invited school kids to participate in 
2 days of free tutorials where they would learn how to program.
    We had one of the people who attended was 9-year-old 
Havana, I don't remember her last name, from Denver, Colorado. 
But what was more is that the people who wrote those tutorials 
allowed us to use them and disseminate them freely, and so in 
the past 4 months since that original tutorial, we have had 
over a dozen other tutorials reaching out to hundreds of other 
school kids teaching them how to program, teaching them how to 
innovate.
    Mr. Coble. Yes, sir. Any other comment? My red light is 
about to illuminate, so I will recognize--who do you want to go 
with now?
    Mr. Watt. Mr. Chairman, I am, as usual, going to defer and 
go last, so I will defer to Ms. Chu.
    Mr. Coble. The gentlelady from California, Ms. Chu. Good to 
see you here.
    Ms. Chu. Thank you, Mr. Chair.
    Mr. Coble. You are recognized for 5 minutes.
    Ms. Chu. I would like to address these questions to Mr. 
Lindberg. One person on the panel stated that attempting to 
stop pirates is a waste of time and that any anti-piracy law or 
technology can be cracked by 15-year-olds and that resources 
spent stopping pirates come at the expense of innovation, and 
yet we know that thousands of individual creators from 
songwriters, musician, visual artists, authors, and indeed 
those in the software industry rely on the protection of their 
intellectual property rights and copyrights so they can 
innovate.
    And in fact, you described some striking examples of 
massive ways of innovation and job creation enabled by 
technology in two specific stories about innovation in America, 
but it is under the current system. So, what do you believe the 
current copyright act has played in terms of enabling that 
technology and innovation? In other words, has our current 
copyright system, the protections it includes, has it impeded 
or not impeded technological growth and innovation?
    Mr. Lindberg. I think that that is an important question. 
In some ways, it is a little bit difficult. I go back to my 
earlier point about there are many different business models 
for innovation that rely on using copyrighted content in 
different ways. There are some models, such as those of 
songwriters, that really do rely on exclusive control, but then 
there are models such as that of Pandora, which rely on the 
ability to license and use that and to disseminate it as widely 
as possible. Both of these are important business models that 
we want to make sure that we encourage because innovation 
doesn't just come from control. It also can come from places 
and from people that you don't expect.
    To the extent that we have seen the intersection of 
copyright leading up to innovation, it has frequently been 
about the further dissemination of that content, and we don't 
want--and we want to make sure that the laws that we pass don't 
stop that dissemination from occurring.
    Ms. Chu. Well, in fact, you describe two instances where 
copyright owners chose to share their content as widely as 
possible and it created a greater good, but isn't a key aspect 
to each story the fact that the owners voluntarily made that 
choice; whereas piracy on the other hand strips owners of the 
choice of when and where and how to share their creations. So 
isn't it important to maintain a system where content owners 
such as yourself have the right to decide, even on the 
Internet, where, when, and how to share the creations, and 
doesn't the current system fully support an author's ability to 
decide to share his or her work for free?
    Mr. Lindberg. We do support the ability of copyright owners 
to make decisions about their content. That is both fair and 
right. We also need to recognize that there are times when 
there needs to be a wider dissemination. For example, this has 
been recognized in law in the mechanical royalties and other 
statutory licensing regimes. It has been recognized in the 
ability to use certain works under the principles of fair use.
    So, yes, we fully support the ability of content creators 
to make choices about their content, but we also need to 
support the boundaries of copyright that allow fair use, fair 
use and dissemination of that content even in other situations.
    Ms. Chu. Let me ask also about takedown notices, and you 
express concern about these erroneous takedown notices 
generated by computers rather than humans and this is no doubt 
very frustrating to receive. But what advice can you offer to 
small content owners, photographers or song writers, for 
example, whose works are infringed, hundreds of thousands of 
time on the Internet but who lack the resources to monitor 
those infringements, let alone prepare and send DMCA takedown 
notices to address them?
    Mr. Lindberg. Generally those--I think that we really need 
to approach this from sort of a business-to-business 
perspective. One of the things that we do at Rackspace is we 
work with content owners to make sure that infringing content 
is not posted or transmitted through our network. We are--and I 
think we are not alone in this--open to people saying, you know 
what, this is not right and it needs to be taken down and we 
are very responsive to that. I think that obviously we can't 
police the entire Internet, we can only police our little 
corner of it, but I think that companies, Internet companies as 
a whole will be responsive to small businesses, independent 
song writers and those who really have legitimate interest.
    Ms. Chu. Thank you. I yield back.
    Ms. Ringelmann. Can I jump in?
    Mr. Coble. The gentlelady's time has expired.
    Ms. Chu. Well, actually my time expired.
    Mr. Coble. Ms. Ringelmann.
    Ms. Ringelmann. I will try to keep it short. Just to the 
point of the question about business model and business model 
innovation. What I recommend everybody do is actually Google 
the article that Kevin Kelly wrote back in 2006 called the Six 
Generatives of Free, and there he painted a picture of in a 
world where things become copyable things will just 
automatically get distributed. You can't fight it. So rather 
than trying to fight it, because it is like water rolling down 
a hill, try to embrace it. And think about given the fact that 
this is happening what other models could evolve around that 
where you could still make money? And he actually he lays out 
six themes, of which patronage is one of them. So when I think 
about copyright I think about all the artists on Indiegogo who 
are trying to get their start, they have been trying to crack 
into the music industry for years, and maybe they are making it 
or maybe they are not, they are in coffee shops at night, they 
are traveling, they are working hard to pursue their dream at 
night.
    If they do get lucky enough to get a label, then it becomes 
the challenge of getting paid by the label and does the label 
promote. And we actually had an example of as a musician a punk 
band out of Canada actually who had ``made it'' because they 
had broken into the label system and was able to get picked up 
by a label, but financially they weren't making it because the 
current business model wasn't supporting them. And further the 
label was actually constraining them creatively, so they 
weren't actually making the music that they wanted to make. So 
rather than just keep fighting in that system they just 
embraced the fact there is a whole new world out there and 
instead of trying to sell their music that already existed, 
they turned to their fans and monetized their abilities by 
getting their fans to fund future music. So the fact that 
rather than fight and try to get paid for music that already 
existed, instead they are focusing their efforts on using 
Indiegogo to get paid for music that will exist and at the same 
time they are empowering their fans. So if you think about it 
it is just another way to get paid and it is a much more 
innovative way to get paid and it's actually a more sustainable 
and empowering way to get paid. And it allows them to keep 
creative control. And what I will see actually as a result is 
we are going to see a rising class of musicians bubble up, as 
well as a rising middle class of artists in other ways as well. 
So it might be actually a great time to be artists. Before you 
either had to be mainstream and Britney Spears or starving in 
the coffee shop. Now you actually can potentially make a living 
by going direct to your fans simply because of embracing a new 
innovative model such as crowdfunding to make money for your 
music.
    Mr. Coble. The gentlelady's time has expired. The gentleman 
from Pennsylvania, Mr. Marino. I thank you for having covered 
for me last week and I am pleased to recognize you now for 5 
minutes.
    Mr. Marino. Good morning, panel. I apologize for being 
late. I had to be in three places at one time this morning.
    My children, who are 14 and 18, practically take my 
computer apart and put it together so it is more powerful so I 
can did things quicker. And if I have problems I go to them. So 
there is no question about that generation being lightyears 
ahead of us. But Mr. Seidle, am I pronouncing that right?
    Mr. Seidle. Seidle.
    Mr. Marino. I am not quite sure, I didn't grasp what you 
meant as far as not having patents or not licensing them and 
other people using them. Do you believe that the inventor 
should make that decision as to whether to share that invention 
or do you think there should be some mechanism that makes that 
inventor share that invention so anyone can produce it?
    Mr. Seidle. I believe the patent system and intellectual 
property system has its place, it is necessary. However, I 
believe there should be the capability to show that through 
prior art or through innovation that we can create new things, 
that we can stand on the shoulders of the people before us. It 
is the patent trolls and the defensive patents, the patent 
thickets that I believe are really hurting innovation in this 
country.
    Mr. Marino. How about the individual that--let's go to the 
extreme here. My son, daughter and I, we're Trekkie fans, Star 
Trek, so what if an 18-year-old working since he or she was 10 
years old comes up with a method by which to transport a person 
or a thing just like Scotty does, okay, from Pennsylvania to 
California, just like that. Given the fact that there are 
emergency situations where that would be such a benefit, but 
also in industry and in the market it is a benefit as well. 
Should that individual be forced to open that 10 years of 
research and study to anyone else who wants to copy their 
device without being paid?
    Mr. Seidle. It is very much their choice whether or not 
they wish to patent that technology. However, I would argue 
that if they choose to patent that technology, they will have a 
false sense of security. That technology will be copied 
regardless, it will be innovated upon, it will be made better. 
There will be another company producing a better teleporter 
within weeks.
    Mr. Marino. In some particular time, correct?
    Mr. Seidle. Within weeks, that is the speed at which 
technology moves.
    Mr. Marino. But that second company that will develop or 
improve within weeks stole that idea from that 18-year-old and 
wouldn't be developing this transporter if it were not for the 
18-year-old. So were you saying that the 18-year-old should 
not, if he or she chooses, financially benefit from the second 
company who would not have created a better transporter had it 
not been for the 18-year-old?
    Mr. Seidle. I apologize, I am not an attorney, I am just a 
business person. I don't know patent law. But I believe that 
there are significant improvements that company two could make 
that is just going to happen.
    Mr. Marino. Okay, I understand that, you are quite clear, 
you are quite clear on that, but one does not have to be an 
attorney or a patent attorney. It is just a basic fairness.
    How about the pharmaceutical company who after 20 years of 
research, hundreds of millions of dollars, maybe billions of 
dollars comes up with a cure to prevent the common cold and it 
prevents it, it cures it within a week. Do you think the 
company, the second company who takes that prescription, takes 
that drug and does research on it now can cure that cold within 
an hour, do you think that they are entitled to do that without 
compensating the company who has spent years and years and 
hundreds of millions of dollars?
    Mr. Seidle. Humanity has been sharing for thousands of 
years. The way that we learn is by learning from each other.
    Mr. Marino. Okay, I understand that. And I would love to 
get into a philosophical debate, okay, but this isn't the time 
nor the venue. We have to talk about economics and the economy. 
What is that going to do to businesses?
    Now I commend you on what you are doing.
    Mr. Seidle. Thank you.
    Mr. Marino. Cost I think has a factor. I am not even going 
to ask you to get into your cost, that's proprietary and that's 
your business. But I can see there's a big difference if it 
costs me $0.25 to manufacture something that I came up with 
that idea in a couple of weeks compared to a billion dollars 
over 20 years.
    Mr. Seidle. Let me give you an example. I'm here today 
merely to point out that innovation is not linked to 
intellectual property.
    Mr. Marino. I agree with you 100 percent.
    Mr. Seidle. Kodak got a patent on digital photography in 
1978, that was a 30-year headstart on a multi-billion dollar 
industry.
    Mr. Marino. Look what is built from that point on.
    Mr. Seidle. Kodak is now bankrupt. So it is not 
intellectual property that guarantees benefit.
    Mr. Marino. No, it is the ability to take advantage of the 
technology that's available or that is going to be available in 
the near future. If a company decides not to do the R&D and 
stick just singly on making a flash cube and does nothing else, 
the market will determine that.
    If Mr. Lindberg, could you respond to my question 
concerning the protection of someone's investment?
    Mr. Coble. Mr. Marino, wrap up as quickly as you can.
    Mr. Lindberg. Absolutely. Mr. Marino, you are talking about 
real fundamental inventions. The real problem is that there are 
so many of these patents out there that really aren't on 
fundamental things. And in fact many of them should never have 
been granted at all, they were granted in error. So I can agree 
with you completely about the value and the importance of 
protection and of financial returns to those fundamental 
inventions. But when someone says, you know what, I patented 
using a rounded rectangle and they attempt to enforce that on 
other people without understanding that these sorts of things 
existed before, then that is a real drain on invention.
    Mr. Marino. My time has run out, and I thank the Chairman 
for letting me go on here a little bit. But I will close with 
saying that don't you think that's better left up to the system 
and to the courts than to individuals?
    Mr. Lindberg. I think there is reform needed throughout the 
system.
    Mr. Marino. I don't dispute that at all. I'll yield back.
    Ms. Ringelmann. Can I just make a quick note? When we 
started Indiegogo we thought the idea was so obvious somebody 
was going to copy us and do it. And lo and behold, somebody 
did. In fact, rather than get mad about that what that did is 
it forced us to continue to innovate, and actually made us 
better and made us stronger. So I know this is a little tongue 
and cheek, but there is actually a Star Trek product on 
Indiegogo right now, it is called a Tricorder, it is a doctor 
in your pocket. So you scan yourself and you read your vitals 
and that literally came out of Star Trek.
    Mr. Coble. The gentlemen's time has expired.
    Ms. Ringelmann. Okay. Well, anyways, the quicker--if they 
were to come out with a 1-week cold remedy, and then somebody 
would come out with a 1-hour cold remedy, well that would help 
the guy who created the 1-week cold remedy come up with a 1-
minute cold remedy. So you iterate and the whole world 
benefits. Sorry.
    Mr. Coble. Thank you. I thank the panelist. The gentlelady 
from California is recognized for 5 minutes.
    Ms. Bass. Yeah, I think I want to hear more about that 
invention you were talking about, scan and get your vitals. But 
I just had two quick questions, first for Mr. Lindberg. I 
believe in your written testimony you expressed concerns about 
takedown notices erroneously generated by computers rather than 
humans.
    Mr. Lindberg. Yes.
    Ms. Bass. But I wanted to know what advice can you offer to 
small content owners, photographers or song writers for 
example, whose work are infringed hundreds of thousands of 
times.
    Mr. Lindberg. I think that it is important to work human to 
human, business to business with the various responsible 
companies who are doing things like Rackspace. We have an 
entire team dedicated to dealing with these issues. We are very 
responsive to a small songwriter, a small content owner because 
we don't want and we don't support copyright infringement on 
our network. There are things that we can't--we can't do things 
about other parts of the Internet but we can do things with 
ours. I believe we are not unique in that respect. Other 
network providers, other people who are responsible for 
different parts of the Internet will generally be responsive. I 
think that frequently when you are talking about the massive 
infringements you are really talking about things that are 
outside the United States, frequently outside of our 
jurisdiction.
    Ms. Bass. You were mentioning that you do work with some of 
the artists. Could you describe, provide a couple of examples 
of that?
    Mr. Lindberg. I probably would like to answer that on the 
record so I can get you more specifics.
    Ms. Bass. Okay. Do you want it on the record?
    Mr. Lindberg. In writing, yes.
    Ms. Bass. Okay. You can be on the record right now.
    Mr. Lindberg. Sorry.
    Ms. Bass. That's okay.
    Mr. Seidle, did I get it right? You might want to respond 
to that also but I did have another question for you.
    Mr. Seidle. I would encourage--the question was, let me see 
if I got this correctly, the photographers and the folks who 
generate images that are--please repeat the question.
    Ms. Bass. No, no, go ahead. I was saying no to something 
else.
    Mr. Seidle. I would recommend the folks that are challenged 
by duplication to find technological platforms that allow them 
to license their content as easily as possible. When I have the 
choice to view content on my TV, I can either download that 
illegally or I can pay the $1.99 on Amazon and get it right 
then and there. It is so easy that I choose to buy it, to go 
the legal route. So to these photographers I would encourage 
them to use, I believe Getty Images was here last week, it is a 
fantastic platform for them to license their image regardless 
of the laws in place. If you make it easy for folks to license 
legally, that is the best means to get recuperation for the 
imagery sold.
    Ms. Bass. Thank you. And following up on that, I believe 
you stated in your written testimony that innovation moves 
faster than the shield of IP protection. So I wanted to know 
what you might be suggesting in terms of updating IP laws to 
address technological advancement? Should we leave them alone?
    Mr. Seidle. It is--I gave two or three recommendations in 
my written testimony about how we could update intellectual 
property law. The truth of the matter is I just don't want to 
see small businesses, barriers placed on small business that 
doesn't allow them to move as quickly as possible. So it is the 
types of content that is being generated today that we need to 
continue to allow. So businesses like myself we are not going 
to use the Patent and Trademark Office. We are going to go the 
open source route because we find that it generates more profit 
and better product because it forces us to innovate. It is 
those types of products.
    Ms. Bass. Do you wind up getting into trouble then with 
patent trolls, people coming after you?
    Mr. Seidle. So far in 10 years of business, no, we have 
been very, very lucky.
    Ms. Bass. Thank you.
    Mr. Lindberg. If I could jump in there. Patent trolls are a 
massive, massive problem for our industry and for the computer 
and technology industry and for ours in particular. Just to 
address that point in particular, in the past 3 years we have 
had a 500 percent increase in the amount of legal spin that we 
need to do all because of baseless patent troll claims. These 
are things that don't even apply to our business. They are 
taking assertions and they are not even looking at our open 
source code that is available on the Internet where they could 
say--they could verify for themselves that we don't do the 
things that they say. They don't even bother it because they 
use the cost of litigation as a club to extort settlements out 
of companies that actually do things. If there's something that 
you could do to really encourage innovation in America, it is 
to stop the patent troll problem and to really help us with 
this litigation abuse.
    Ms. Bass. Well, let me just say in closing I know that my 
colleagues on the panel--on the dais here agree with you, we 
had hearings on that. I was in a meeting yesterday with the 
Internet Association hearing from a variety of companies about 
this problem and we do have several Members who have introduced 
legislation.
    Thank you. I yield back the balance of my time.
    Mr. Coble. I thank the gentlelady. As evidenced by the 
response, folks, this issue has prompted many, many questions 
indicating the significance of the issue at hand. Again we 
thank you all for your contribution.
    The gentleman from Missouri, Mr. Smith, recognized for 5 
minutes.
    Mr. Smith of Missouri. Thank you, Mr. Chairman. Mr. Seidle, 
I kind of wanted to know a little more information. You said 
that your company has manufactured more than or invented more 
than 700 products.
    Mr. Seidle. Correct.
    Mr. Smith of Missouri. And you have never done a patent on 
any of those 700 products.
    Mr. Seidle. Correct.
    Mr. Smith of Missouri. What is the longevity of like say 
you invent a product of how long you manufacture it to continue 
to sell it?
    Mr. Seidle. Good question. This product in particular has 
been sold for I believe 3 to 4 years. So it has gone through 
probably 15 to 20 revisions, 15 to 20 improvements.
    Mr. Smith of Missouri. Has it ever been a concern of yours 
that maybe one of your inventions someone takes notice of, say 
the Chinese company that expanded on it, they then patent it 
and then it would be illegal for to you produce it?
    Mr. Seidle. That is a common concern. And again not an 
attorney, but I believe and I hope that prior art would 
invalidate any patent placed on an item that was released open 
source.
    Mr. Smith of Missouri. It may, I don't know.
    Mr. Seidle. That is the nature of the license. It is a 
viral license that causes it to always be open once opened.
    Mr. Smith of Missouri. So then it would probably go back to 
your statement where you were talking about being bullied 
through litigation. And it would basically be decided in 
litigation with a lot of expense from your company of defending 
it that it was prior art, instead of whether it was an 
invention or not.
    Mr. Seidle. That scenario has not happened before so I am 
not exactly sure it would play out.
    Mr. Smith of Missouri. It sounds like it to me that that 
would be a prime legal case if somebody was coming after you. 
Just--I understand your argument of the innovation sometimes. 
How long does it take to go through the patent process on--you 
haven't done it, but maybe Mr. Lindberg.
    Mr. Lindberg. Yes, the patent process typically case 2 to 4 
years, most often 3, costs anywhere from 25 to $50,000 to 
actually get through it and get a patent. I would note that 
this is a pretty substantial economic hit for a small business.
    What is more when were you asking about the circumstance 
where somebody takes one of these products and they make a 
trivial improvement and then they would patent it. You know 
what? The patent isn't on the base chip, it is on that little 
improvement. The problem is that some of these patents are on 
these trivial improvements that would be easy for anybody who 
was in the industry to make. It just so happens that they were 
the ones who won the race to the courthouse and were willing to 
invest 25 or $50,000 in getting a patent. And because they have 
got this it is really obvious to anybody that would be doing it 
they would then take this as a license to go and extort money 
from companies.
    Mr. Smith of Missouri. So let me--you said most of the 
patents are just a little minor changes.
    Mr. Lindberg. Almost all of them.
    Mr. Smith of Missouri. Since the gentleman from Colorado, 
he never did a patent on his, why could that company not have 
patented the whole thing? Do you see what I am saying? It 
wouldn't have been a minor change, they may not have changed it 
a little bit from his invention but there was no proof that 
that was his invention.
    Mr. Lindberg. One of the things that he would need to do is 
he would say, here is my board, my chip that is the same except 
for all these things, and that would be the prior art and he 
would say the leap from my product to this tiny improvement is 
very small and that would be under section 103 about 
obviousness. So he could use that as a piece of prior art. The 
problem is not that he couldn't prove that, the problem is that 
patent litigation costs from 2 to $5 million. Even if you are 
right, getting there is so expensive that it can kill your 
business.
    Mr. Smith of Missouri. Do you have any suggestions of how 
to streamline the patent process?
    Mr. Lindberg. A number of those and I will give some now 
and I would like to also supplement this in my written 
testimony.
    Mr. Smith of Missouri. Actually to shorten the time period 
to 2 to 4 years.
    Mr. Lindberg. I think for some areas shortening the time 
period would work. I think an important one is making sure that 
we have--that these patent trolls are forced to put--to make 
their allegations clear up front. A big part of this is that 
they hide the ball for years trying to ride out the time, 
spread out the cost to get these settlements.
    Another thing is making people, making the money people 
behind these shell companies really pay the price. So many 
times these patent trolls are small, no name entities that 
actually have a financial backer, either a group of investors, 
another company, but they try and shield themselves away from--
they shield themselves away by putting it in the shell company. 
Illuminating those relationships would be huge.
    Mr. Smith of Missouri. Just a quick question, you were 
talking about one of the problems that some of the patents are 
not fundamental in nature. Could you give me maybe three 
patents that are not fundamental in nature?
    Mr. Coble. Mr. Lindberg, as briefly as you can. Sorry to 
hold a stopwatch on you, but----
    Mr. Lindberg. It is hard to bring up three specific 
examples from my mind. I will do that in the written testimony. 
But I can say in my experience I have personally looked at 
thousands and thousands of patents. I have personally gone to 
the Patent Office with evidence invalidating hundreds of them. 
I have yet to find a patent that was asserted against me or one 
of my clients in prior work that was not invalid over prior 
art.
    Mr. Smith of Missouri. I would just love to see three.
    Mr. Lindberg. Yes.
    Mr. Coble. And Mr. Lindberg, feel free to follow up in 
writing as you pointed out.
    Mr. Lindberg. I would love to do that, thank you.
    Mr. Coble. The gentleman from Florida is recognized.
    Mr. Deutch. Thank you, Mr. Chairman. Thank you for holding 
this hearing. The witnesses here today are great examples of 
American entrepreneurial spirit. And even beyond my overall 
interest in the purpose of this hearing to examine the role of 
copyright law, I was actually really interested to hear from 
the panelists and read your testimony about your innovative 
companies, so thanks for being here.
    Mr. Lindberg, I found your testimony related to your 
company's development fascinating. As a Floridian, I am very 
familiar with the great innovations that have happened because 
of NASA's work, either products that NASA has developed itself 
or they were created as a result of work that NASA has done. I 
don't think enough people appreciate the full extent to which 
NASA impacts our daily lives. In the example that you cited it 
was interesting to hear about your collaboration with NASA in 
search of a solution to a common problem. You said that you 
worked with them because they shared your vision about your 
project's potential. Can you elaborate on that a little bit?
    Mr. Lindberg. Yes. NASA had been struggling with their sort 
of the management of their computing resources for some time. 
There was a group--Chris Kemp, who at that time was I believe 
the CTO or CIO of NASA, he had said you know what, we need to 
create something that works better. And so they actually 
created something and they released it just in the open saying 
we have got the start on something that we think could be 
great. When our managers, when the executives at Rackspace saw 
that and we saw that it dovetailed exactly with what we were 
doing there was an initial email that said we see that we are 
trying to solve the same problem, let's cooperate.
    It is that cooperation, the trading and the sharing of 
intellectual property that enabled the success.
    Mr. Deutch. I appreciate that. Mr. Seidle, it is great that 
you found a way for patentless innovation model to work for 
you, that you have chosen not to pursue patents, it has been 
successful for you. But fundamentally it is a choice and it is 
a choice that you have made, and it is one that doesn't work 
for a whole host of other companies. I have met with a lot of 
entrepreneurs who work primarily or exclusively in the open 
source side of things, and they compete like Mr. Lindberg's 
Rackspace by having apparently fanatical customer support. 
That's something that all of you I think can relate to. That 
kind of service base model is great, but I don't see how the 
success of one business model means that we should necessarily 
give preference to a proprietary model or why the government 
should set itself in the business of picking winners and losers 
on either side. So just as you have been clear about the down 
sides of the patent system, can you acknowledge though that 
your approaches and the approach that works for everyone there 
is a fundamentally important role that the copyright and the 
patents play for others.
    Mr. Seidle. I agree that intellectual property and 
copyright is part of the fabric of our economy. What I don't 
want to see is the situation where companies cannot be open, 
cannot innovate. So the types of patent trolls and types of 
litigation that are coming into play are in fact causing 
problems for small business. So the fact that SparkFun has not 
experienced any kind of patent infringement litigation doesn't 
mean it doesn't keep me up at night.
    Mr. Deutch. So as an author of one of the various pieces of 
legislation that so many Members on this Committee have 
introduced to try to address the issue of patent trolls, I am 
very sensitive to that. On the other hand, there is the issue 
in this hearing about copyright, too, there is the issue that 
ultimately there are copyright holders, forget patent holders, 
but there are copyright holders whose work is sustained by that 
copyright that they hold. Obviously that doesn't become open 
source simply because it would be beneficial in the creation of 
a new company, right?
    Mr. Seidle. True. I don't believe people should be forced 
to be open. I don't believe open source is the only way or 
should be the only way. I believe it is a balance system. I 
just worry that people believe that copyright is the salve that 
will fix their problems, it is not.
    Mr. Fruchterman. And----
    Mr. Deutch. I am sorry, Mr. Fruchterman, I am running out 
of time. I just wanted to go back to something my colleague 
from North Carolina, Mr. Watt, mentioned last week in a 
hearing, his intention to pursue legislation to correct a 
loophole in our copyright law that has long bothered me as 
well, and I just want to commend him on taking on that task. 
That includes the bipartisan agreement that everyone deserves 
to be compensated for their work and specifically that includes 
all those involved in the creation of music from song writers, 
to musicians, recording artists, records labels, all the others 
who come together to produce the music that captivates fans 
throughout the world. I appreciate what you are doing. Chairman 
Coble and full Committee Chairman Goodlatte have given us a 
wonderful opportunity this hearing and the last to reflect on 
both the importance of our copyright law in areas we might want 
to make changes. I look forward to the continuation of hearings 
like these and hope that my colleague Congressman Watts' 
efforts to ensure true parity and fair market rates for music 
will be included in those discussions.
    Thank you, Mr. Chairman. I yield back.
    Mr. Marino [presiding]. Thank you. The Chair recognizes 
Congressman DeSantis from Florida.
    Mr. DeSantis. Thank you, Mr. Chairman. Thank you to the 
witnesses, really appreciate you coming here and speaking with 
us.
    Mr. Lindberg, in your testimony you said you didn't think 
there was that much of a divide between kind of the traditional 
content folks and the more tech side of things. With that said, 
could you articulate the one or two issues that you do think 
there is a significant difference between the two groups?
    Mr. Lindberg. On the copyright side I think that the 
primary difference is that number one we do have different 
business models around copyrighted content. We need to make 
sure that all these different business models are understood 
and accepted and promoted because they are all about innovation 
in different aspects.
    Number two, more specifically, there has for a long time 
been the thought that the answer to the machine is the machine. 
I think that that was a fairly common thing that when some of 
these--like the Digital Millennium Copyright Act was created, 
they thought you know what, we can simply mandate that 
technology companies make sure that copyright infringement 
doesn't occur. As a practical matter, that has resulted in 
fragile products, it has resulted in massive amounts of 
difficulty and costs which are being born by technology 
companies, not by the content creators.
    Now we don't support, we certainly don't support the 
copyright infringement, but when we have an issue with 
copyright infringement--if our infringement of some of our IP 
rights, we take care of it ourselves, we don't ask others to do 
it for us. As a matter--I have talked about it all the time and 
the effort that we spend enforcing copyright. This is because 
it actually ends up being a dedicated team of people who work 
every day, all day answering these complaints. It really--in 
spite of the fact that there are all these technological 
measures that people attempted to put in place, it really has 
come down to the expense of us employing people to monitor, 
monitoring these things. I don't think that--I think that the 
thought in the traditional content industry that you can use 
computers to do their job for them is just false.
    Mr. DeSantis. Mr. Seidle, I think you in your testimony you 
had talked about embracing a more free market approach and you 
decried which you considered protectionist policies. I just 
wanted to flesh that out. Are you saying that traditional 
copyright and patent protections are a form of protectionism 
that undercut free market?
    Mr. Seidle. We have seen a few instances of technologies 
being disallowed from being imported into the U.S. because of 
IP infringement. So yes, I believe this is bordering on 
protectionism because we are strangling innovation within the 
U.S. because these technologies aren't allowed here.
    Mr. DeSantis. And what is an example? Can you articulate a 
specific----
    Mr. Seidle. I can, it is rather odd. There are these black 
chips, they are sensors, they are sensors that are in our cell 
phones all around us that allow us to detect acceleration, 
orientation and space. There is two competing companies. One 
company is not producing a very good sensor. There's another 
company that's producing a vastly better, improved sensor. This 
is manufactured outside the U.S. and is not allowed to be 
imported into the U.S. because of IP law.
    Mr. DeSantis. Understood. I think--and I take that point, 
but I also think you go back to Adam Smith, you can go back to 
the Founding Fathers. They believed that this was a form of 
property rights that was kind of underlying a free market 
system. And so I am happy to look at some of those issues, but 
I don't think that having patent copyright writ large is akin 
to protectionism. I mean I think that that's part of where we 
are.
    And I look at something like that the drug industry, it's 
very expensive. And I agree with my Chairman--my colleague from 
Florida about different industries. I see where you guys are 
coming from, but I look at like the drug industry where that 
intellectual property right is huge because they are spending 
billions of dollars to develop these drugs. So if you water 
that down they have less of an incentive to innovate. I think 
in that sense it fosters more innovation.
    Mr. Fruchterman, you stalked about Silicon Valley basically 
making money by giving away content. And I understand that and 
I understand how folks certainly in the tech community have 
done well with that. But for some people in say the music 
industry or whatever, that core product is really what they 
have. So when that's given away, I think a lot of them will 
say, well, wait a minute, I am not being compensated for my 
work.
    My time has expired, but can you do 15 seconds responding 
to people maybe outside the Silicon Valley community who may 
have concerns about that model?
    Mr. Fruchterman. I think I was referring to people choosing 
to give away their core product and making money through 
advertising or services and the like. And I think we have some 
great example here. People are making plenty of money giving 
aware their core product and competing on price and quality and 
services. And so I don't think that IP owners necessarily 
should be expected to give away their content. But I think the 
weight of most intellectual property is obscurity and lack of 
any economic power. I think the power of this kind of model is 
actually giving away your music could actually make you more 
money other than the very richest acts that we are talking 
about. The enemy of the average artist is obscurity and not 
making a living. Giving away their music actually might make 
them a better living through better concerts and other 
subsidiary products, which is how a lot of Silicon Valley 
companies make their money.
    Mr. Marino. Thank you. The Chair now recognizes Congressman 
Jeffries from New York.
    Mr. Jeffries. Thank you. Let me thank the Chair and the 
Ranking Member and all of the panelists for your participation 
here today.
    It seems as if the challenge that we have as Members during 
this copyright review and the overall intellectual property 
evaluation that we must undertake is to ensure that we continue 
to make sure that our intellectual property laws promote the 
progress of science and useful arts. That in fact is a 
constitutional charge that we have inherited Article I, Section 
8, but to do it in the context of the technology revolution 
that we have been experiencing that of course will greatly 
benefit society as we move forward. But it does seem that this 
balance between content protection and technology and 
innovation is one where if we pit them against each other at 
the end of the day it is not a useful approach when the reality 
is coexistence I think would be most mutually beneficial. As 
evidenced by the groups that are on the panel, I guess Benetech 
benefits from the creation of literary content. SnapStream 
benefits from the creation of television content, both of which 
are made possible by strong copyright laws, intellectual 
protection.
    Let me start with Mr. Lindberg. As it relates to open 
source software, it is my understanding that there is sort of a 
spectrum. There's free software available in this context, 
there's software available simply by attribution.
    Mr. Lindberg. Uh-huh.
    Mr. Jeffries. There is software available by what 
colloquialists call a beer license.
    Mr. Lindberg. A what license?
    Mr. Jeffries. A beer license.
    Mr. Lindberg. Oh, yes.
    Mr. Jeffries. I am going to resist the temptation to 
inquire any further, and you can elaborate. And then 
substantial fee. So that is the sort of the spectrum. I am 
interested when someone is making a decision to put their 
software forward, how were these nuances made in terms of the 
decision to make it available free on one of the end spectrum 
or perhaps just by attribution or at the other end of spectrum 
a substantial fee?
    Mr. Lindberg. You know, that's a fascinating question. It 
really gets down--we talked earlier about Adam Smith and 
capitalism. You know back when Adam Smith was writing he was 
really fighting against an economic system called mercantilism 
where they said, you know what, take all this wealth and ship 
it back and so that we own it all. And he said you know what, 
everybody can be richer, everybody can be better off when you 
trade, when you share.
    Open source is really about enabling trade in intellectual 
property. Most of our current system is really a mercantilist 
system when they say, you know what, all the copyrights, all 
these patents, all these types of intellectual property I am 
going to try and own it and hold it as close as possible as I 
can. And they think that that is what will make them rich.
    Mr. Jeffries. You have indicated in your testimony that you 
have an even stricter Acceptable Use policy than the DMCA.
    Mr. Lindberg. Yes, that is correct.
    Mr. Jeffries. So how would you define the confines or how 
do you define the confines of what is acceptable use as it 
relates to your company?
    Mr. Lindberg. One of the things that, for instance, that is 
not explicitly dealt with in the DMCA but we don't allow in our 
typical use policy is we don't allow the knowing transmission 
of infringing content across our network. That is something 
that is not explicitly dealt with and is not actually any sort 
of violation by us. But, we still to the extent we become aware 
of it, we stop it.
    Mr. Jeffries. Mr. Fruchterman, you stated in your testimony 
that there needs to be balanced intellectual property regimes 
that allow for socially beneficial applications while allowing 
industry to make money.
    Could you comment on not just sort of striking a balance 
that allows industry to make money, but what is the appropriate 
balance that actually allows artists in the broadest possible 
way, creators, innovators to make money separate and apart from 
how you might describe industry?
    Mr. Fruchterman. Well, I think the idea is that the 
Internet actually makes so many other business models possible. 
And so I think what we want to do is don't bake certain 
business models into law, don't bake certain ways of solving 
social problems or technical problems into law. Basically set 
the objectives. The objective of copyright law and patent law 
is to encourage people to invest in creation and to actually 
allow them to be compensated. There are a lot of different 
business models that make that possible. And a lot of the 
complaints that you are hearing today are about sort of 
asymmetric costs of some of our existing things, automated DMCA 
notices.
    I'm an inventor. I hold two patents but they are mainly 
because my lawyer said ``be defensive.'' I think software 
patents are a terrible idea. I just don't think there are very 
many software patents that are actually the kind of patents 
that you talking about when you talk about inventing something 
really core. And so I think this is where you guys have to look 
at what is the end goal? It is economic development while 
taking care of society's interest, whether that is fair use, 
for educational reasons and helping disabled people. So as long 
as we keep that balance in mind, we can do well. Because as you 
point out in the beginning, we have the dualing moral high 
grounds, the right to innovation, the rights of property owners 
and authors. We can actually meet the needs of both those 
people, but don't just enact laws that just take big companies 
that are big content holders and implement their interest 
solely. We don't want to leave out society's interests.
    Mr. Jeffries. I see my time has expired. I just wanted to 
note in closing as the gentlelady from California indicated I 
think there is near uniform agreement on this Committee and 
perhaps beyond to deal with the problem of abusive patent 
litigation.
    Mr. Marino. The Chair now recognizes Congresswoman Jackson 
Lee from Texas.
    Ms. Jackson Lee. I, too, thank this Committee for holding 
the hearing. And I particularly want to welcome my fellow Texan 
here and as well to greet your father for me, give him my 
regards. It is very good to see you.
    Coming at the end of this hearing and listening and using 
extrasensory perception that even though I was not in this 
chair listening to all that occurred, see if you'll believe 
that, but I have a sense because of the sort of tracking of our 
hearings have been to try to get our hands around the best 
direction to take for a variety of industries and whether or 
not we confront the one-size-fits-all directly. So I am going 
to ask a broad question as I understand one of the themes of 
this hearing of course is to determine copyright in the 
technology arena. I'd ask this question of each of you, whether 
or not we need to scrap the traditional framework of copyright 
when it comes to technology because it is fast moving, it is 
investors make their own determination as to whether or not 
this is what I want to invest in, and whether there should be 
some sort of registration, filing online if you will, that we 
design through either legislation or through the Patent Office 
that keeps pace with the idea of the fastness of your 
technology.
    And I am just going to start, you may come at it from 
different perspectives, but do we need to step away from the 
traditional copyright which has the lengthy process, the 
ultimate litigation sometimes?
    Ms. Ringelmann? And I have other questions if you could 
just--this really needs to be sort of a yes or no with a 
sentence and I will come afterward.
    Ms. Ringelmann. I think so. In listening to the testimony 
today, as an entrepreneur I am constantly thinking what is the 
new innovative way to address this issue. Then I was thinking, 
and here I am going to give it away, somebody steals it and 
somebody iterates on it. Why don't we have a Wikipedia for 
patent registration, why don't we have a crowd-sourcing 
solution just like Mr. Fruchterman has a crowd-sourcing 
solution to take books and turn them into books for blind 
people in a far more efficient way. Why don't we have a system 
that can do that. I would encourage you to crowd source that 
and put it open source and see what happens because the world 
out here of innovators might actually come up with a much 
better solve than anybody in closed doors that doesn't have 
experience innovating could ever.
    Mr. Fruchterman. I support registration for the very few 
copyrighted works that actually have economic value that should 
be maintained and letting almost all the rest of this 
incredible amount of content we are creating just free to 
benefits of society because it is never going to be economic.
    Ms. Jackson Lee. Mr. Seidle.
    Mr. Seidle. I echo Ms. Ringelmann's comment about crowd 
sourcing. The option I believe the vast majority of small 
businesses out there don't have a loud enough voice to 
communicate what they need. Crowd sourcing it may solve that 
absolve.
    Ms. Jackson Lee. Mr. Agrawal.
    Mr. Agrawal. Very nice to see you, too, Congresswoman 
Jackson Lee.
    Ms. Jackson Lee. Thank you.
    Mr. Agrawal. This is happening crowd sourcing of 
invalidating patents for example is happening. There was a site 
that I learned about a week or two ago from a giant in the 
software industry named Joel Spolsky called askpatents.com. It 
is worth looking at. I understand they work with the Patent 
Office. And as an expert in some area of software I am able to 
go online and look at patents and provide examples of prior art 
that would invalidate those patents. And it's working well, 
they have developed a very streamlined system for doing this 
kind of crowd sourcing.
    Ms. Jackson Lee. Thank you.
    Mr. Lindberg. I think that some sort of registration system 
would help a lot with the problem of orphan works, works that 
are no longer in circulation, that there's no known--it is not 
economic or there's no known copyright holder. These are the 
vast majority of works and it is not promoting the progress of 
science and useful arts to have these things locked up and 
inaccessible. A registration system that would help these 
noneconomic works move into public domain would certainty boost 
innovation.
    Ms. Jackson Lee. Thank you. And Mr. Agrawal, just would 
follow up on your citation of a cite. Europe's SnapStream is 
unique. And the question is with your experience in patents, do 
you manage the patent troll issue? And are you concerned--
again, this is the broad base, are we concerned with this kind 
of technology and the inventiveness that comes with places like 
China and other places taking the inventiveness, taking the 
technology as their own?
    Mr. Agrawal. We don't have a lot of experience at my 
company with patents. We haven't--we don't have patent 
protection on the technology that we have developed. That's a 
choice that we have made as a company.
    Ms. Jackson Lee. And so you don't see the impact of others 
building on it, growing on it, impacting your economic bottom 
line?
    Mr. Agrawal. We--there have been--there are a number of 
things that we license in our product that we pay royalties for 
that we have to pay for because those companies have patent 
protection. In some cases they have built up such a strong 
portfolio we don't have a choice but to pay those patents. 
Gemstar, which has a patent on program guides, is one example 
of that, and we do pay--we have a licensing deal with Gemstar. 
So that does affect our bottom line. We were able to manage it 
to something--we were able to make it something manageable, but 
that's--it's a challenge for a lot of companies, that 
particular patent, anybody who wants to do a program guide.
    Mr. Marino. The gentlewoman's time has expired.
    Ms. Jackson Lee. Mr. Chairman, if I might just conclude by 
just saying to the Committee and Ranking and Chairman to thank 
them again. And from these witnesses know we have to go another 
route to be able to increase your inventiveness in technology 
and we thank you very much for your testimony today. Thank you.
    Mr. Marino. Thank you. The Chair recognizes Ranking Member, 
Congressman Watt, from North Carolina.
    Mr. Watt. Thank you, Mr. Chairman. It has been very 
interesting and thought provoking hearing and I want to thank 
all the witnesses for being here and helping enlighten us.
    I want to try to make sure I understand each of the 
business models a little bit more. I think I understand Mr. 
Fruchterman. He is nonprofit so he is not trying to make a 
profit. I think I understand Mr. Seidle. He is open source, no 
patents. He has made a lot of money and been very successful at 
it or making an increasing amount of money and being successful 
at it. When I see the sales of the magnitude, it is small, yet 
it is large to some people. Mr. Agrawal, I think you may have 
been just in your response to Ms. Jackson Lee's question 
clarified your business model. You don't own any patents, but 
you use the patented products of other people who do have 
patents or copyrights, protected materials. So you are kind of 
one foot in the free source and one foot in the protected 
source; is that right?
    Mr. Agrawal. We don't--our product isn't open sourced, it's 
a proprietary product. So we don't publish the source code for 
the software that we have written but we don't have patent 
protection for it either or copyright protection--we have 
copyright protection for it, not patent protection for it.
    Mr. Watt. Got you. And you have managed to use that system 
to build a business model that has a monetized return I guess.
    Mr. Agrawal. Yeah, absolutely, yeah.
    Mr. Watt. Mr. Lindberg, let me be clear on you. You started 
out with Rackspace. Does that own any patents?
    Mr. Lindberg. Rackspace does have some patents.
    Mr. Watt. Okay. And then you evolved to the joint venture 
you did with NASA and that's open source; is that correct?
    Mr. Lindberg. Yes, that is correct.
    Mr. Watt. And you--what you--am I okay to conclude that you 
made money on the patents and you made money on the open 
source. So you have been kind of successful on both sides or--
--
    Mr. Lindberg. That's actually incorrect. The only reason 
that we have patents is because we are concerned about patent 
assertion from other entities. It is a purely defensive 
portfolio. In fact we freely license our patents out to those 
who are----
    Mr. Watt. You license them, that means you charge somebody 
when you license.
    Mr. Lindberg. No, we license them freely without royalty.
    Mr. Watt. You give them away.
    Mr. Lindberg. Exactly. For those who are willing to 
basically reciprocally do the same thing to us.
    Mr. Watt. All right. And that's on the Rackspace side and 
on the NASA side that you do that?
    Mr. Lindberg. Yes, I can't really comment for NASA, but for 
things that we have it is purely for defensive purposes only.
    Mr. Watt. But you have taken advantage of the ability to 
defend them if you need to defend them.
    Mr. Lindberg. You know we really see that the ability to 
defend is about cross licensing for those who are going to be 
more assertive and choose to fight in the courtroom instead of 
in the market.
    Mr. Watt. Okay, I got you.
    Now that brings me to Ms. Ringelmann, whose business model 
I don't understand. Tell me, you create a platform for other 
people to attract money. Are they attracting it through sales, 
are they attracting it through investors? And how in the 
process of doing that do you--does your company make a profit?
    Ms. Ringelmann. Sure. So Indiegogo is an open funding 
platform where anybody can fund what matters to them. So if you 
are someone who wants to start a business, say it is a food 
truck or you want to invent the Scanadu, which is the doctor in 
your pocket Tricorder, you use Indiegogo to create a campaign 
that you share with your network and friends and customers via 
social media, Internet technology, et cetera and then----
    Mr. Watt. Are my customers investors or are they 
purchasers?
    Ms. Ringelmann. They are neither, they are neither. What 
they are are people who fund you, they give you money in 
exchange for perks and you as the campaign owner decide what 
perks you want to offer, it can range anything from intangible 
items like a Twitter shout out or thank you note or the ability 
for their name to show up on your Web site to a product, the 
actual product.
    Mr. Watt. How does your company get paid?
    Ms. Ringelmann. Indiegogo makes money by taking 4 percent 
of the funds raised on our site. What is interesting to note 
though is that we don't have any patents.
    Mr. Watt. I didn't think you had any patents. I was just 
trying to figure out what each of your personal business 
models, each of which seemingly has been successful and 
therefore justifiable that you would be defending that process 
because you have been successful at doing it, but it is always 
very important to understand for us exactly how your system 
works. I would just like to get that into the record. I am not 
trying to embarrass anybody.
    Ms. Ringelmann. Yeah.
    Mr. Watt. All of this we found or at least most of it--even 
for a nonprofit works itself back to somebody making a profit 
or getting a return of some kind. So there's, as we say, 
there's generally no free lunch.
    So I thank all of you and I commend all of you for the 
success you have had in this and we do keep trying to do our 
responsibility which is, Mr. Seidle, constitutional. We didn't 
write this, the Founding Fathers wrote it when they said we 
have the responsibility 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. We have some--a lot of discretion in how we do 
that, but we don't have any discretion not to do it because--
unless we amend the Constitution. So all we are trying to do is 
to figure out the time limits to put on it, which is a good 
debate to have, and what our constraints we put around it. We 
are just trying to get information we need in these hearings to 
be better informed about how best to do that, and we thank all 
of you for sharing your expertise.
    Mr. Chairman, before I yield back let me ask unanimous 
consent to submit for the record, open source, a writing from 
the National Writers Union expressing their views on the 
subject of today.
    Mr. Marino. Without objection.*
---------------------------------------------------------------------------
    *The information referred to can be found on page 133.
---------------------------------------------------------------------------
    Mr. Watt. I yield back.
    Mr. Marino. Thank you. Ladies and gentlemen, this concludes 
today's hearing. I want to thank all the witnesses. It is 
enlightening as usual, and this is very informative. So we all 
appreciate it. I speak on behalf of all my colleagues up here. 
Listening to your insights, we take these thoughts and share 
them, talk to our colleagues about them and you help us try to 
improve the quality of life for all Americans. I want to thank 
our guests who came to visit us, sitting back there listening 
to us.
    And with that, without objection all Members will have 5 
legislative days to submit additional written questions for the 
witnesses or additional materials for the record, and this 
hearing is adjourned. Thank you.
    [Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
                     S U B M I S S I O N S  F O R  
                           T H E  R E C O R D

       Prepared Statement of the Honorable Sheila Jackson Lee, a 
    Representative in Congress from the State of Texas, and Member, 
    Subcommittee on Courts, Intellectual Property, and the Internet
    First, I would like to thank Chairman Coble and Ranking Member Watt 
for holding today's hearing in which we will take a look at the role of 
copyright in American innovation. Americans from Houston, Texas, 
Chicago, New York, the Bay Area, and all across this great nation 
benefit from new technologies many of which depend on our copyright 
system which consists of the laws which undergird the system, buffeted 
by the policy and practices by which tech innovators, artists, writers, 
musicians, and other creators of all stripes benefit. The system stands 
on principles of balance and fairness which allow for continued 
innovation while not infringing on the property rights of others.
    The roots of these laws go back many centuries, from the ancient 
Egyptians and people of the African Gold Coast, whose leader, Mansa 
Musa of ancient Ghana, traded books for gold, to the likes of political 
philosopher John Locke of Great Britain, who further wrote and 
expounded on the ideas and theory of property rights.
    The purpose of today's meeting is to examine the role of technology 
which is quite similar, I might add, to last week's hearing which 
examined intersection between copyright law and policy, and the impact, 
whatever that might be, on innovation in America. I would note that 
this hearing is a good follow-up from that hearing that this 
Subcommittee held last week.
    I am honored to have two Texans on this morning's panel, Van 
Linberg of Rackspace Hosting based in San Antonio, and our very own 
Rakesh Agrawal of Snapstream Media, which is in the heart of the 18th 
Congressional District. It is my hope that the economy of Texas, and 
Houston continue to flourish so that entrepreneurs continue to make our 
state and city their business and professional destination of choice.
    This dichotomy between laws and new technology is the challenge 
that has faced patents, trademarks, and of course, copyright, in the 
age of technology. It is a good problem to have because it means 
innovation is taking place, new products are coming to market, and the 
wheels of entrepreneurship are turning--hence today's hearing.
    The memorandum for today's hearing pointed out that technology is 
regulated by the Commerce Clause of the U.S. Constitution but I would 
go further and add that federal policies affect scientific and 
technological advancement on several levels.
    The federal government directly funds research and development 
activities to achieve national goals or support national priorities 
such as funding basic life science research through the National 
Institutes of Health or new weapons of mass destruction detectors 
through the Department of Homeland Security. The federal government 
establishes and maintains the legal and regulatory framework that 
affects science and technology activities in the private sector. Tax, 
intellectual property, and education policies can have tremendous 
effects on private sector activity. The federal government also 
directly regulates certain aspects of science and technology such as 
limiting who is allowed to perform research with certain dangerous 
biological pathogens through the select agent program or who is allowed 
to use portions of the radio frequency spectrum for commercial 
purposes. The balance between innovation and societal protection is 
apparent in this space.
    Today, because of technological advances, the average citizen in 
Houston rarely buys CDs, and the mention of a ``piano roll'' will draw 
blank stares from all but a handful of people; but piano rolls were all 
the rage in the first decade of the last century. Today, the typical 
music fan surfs the web to download music--legally and illegally--and 
has access to thousands of songs. Music service providers wishing to 
offer a song must search physical card files and incomplete databases 
to identify and locate the copyright owner. I find this to be utterly 
fascinating.
    Mr. Chairman, I am interested in hearing from our witnesses and 
their perspectives on these issues. I am particularly interested in 
their views regarding the efficacy and feasibility of developing 
products which can help facilitate technology access to those on the 
lower end of the economic scale and not just the ultra-sophisticated 
high-end users who read ten blogs a day and can easily snap-up the 
latest and greatest in innovative products without batting an eyelash.
    Thank you again for convening this hearing, Mr. Chairman. I yield 
back the remainder of my time.




                                

                       Prepared Statement of the 
             Computer & Communications Industry Association


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                

Prepared Statement of Dorian Daley, General Counsel, Oracle Corporation


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                 
