[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
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Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
LAMAR SMITH, Texas Virginia
STEVE CHABOT, Ohio 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
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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
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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.*
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*The information referred to can be found on page 133.
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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]