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






                         U.S. COPYRIGHT OFFICE

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                     COURTS, INTELLECTUAL PROPERTY,
                            AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 18, 2014

                               __________

                           Serial No. 113-116

                               __________

         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                   ZOE LOFGREN, California
SPENCER BACHUS, Alabama              SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUUL LABRADOR, Idaho                JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina       DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
JASON T. SMITH, Missouri
[Vacant]

           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.,         JERROLD NADLER, New York
Wisconsin                            JOHN CONYERS, Jr., Michigan
LAMAR SMITH, Texas                   JUDY CHU, California
STEVE CHABOT, Ohio                   TED DEUTCH, Florida
DARRELL E. ISSA, California          KAREN BASS, California
TED POE, Texas                       CEDRIC RICHMOND, Louisiana
JASON CHAFFETZ, Utah                 SUZAN DelBENE, Washington
BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina       DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                ZOE LOFGREN, California
RON DeSANTIS, Florida                SHEILA JACKSON LEE, Texas
JASON T. SMITH, Missouri             STEVE COHEN, Tennessee
[Vacant]

                       Joe Keeley, Chief Counsel

                    Heather Sawyer, Minority Counsel














                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 18, 2014

                                                                   Page

                           OPENING STATEMENTS

The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Courts, 
  Intellectual Property, and the Internet........................     1
The Honorable 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.....................................    25
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Ranking Member, Subcommittee on 
  Courts, Intellectual Property, and the Internet................    26

                                WITNESS

The Honorable Maria A. Pallante, Register of Copyrights and 
  Director U.S. Copyright Office
  Oral Testimony.................................................    28
  Prepared Statement.............................................    30

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Chairman, Subcommittee on Courts, Intellectual Property, 
  and the Internet...............................................     4

                                APPENDIX
               Material Submitted for the Hearing Record

Material submitted by the Honorable Howard Coble, a 
  Representative in Congress from the State of North Carolina, 
  and Chairman, Subcommittee on Courts, Intellectual Property, 
  and the Internet...............................................    60
Prepared Statement of the Honorable Bob Goodlatte, a 
  Representative in Congress from the State of Virginia, and 
  Chairman, Committee on the Judiciary...........................    85
Prepared Statement of Mary Rasenberger, Executive Director, The 
  Authors Guild, Inc.............................................    88
Prepared Statement of Sandra Aistars, Chief Executive Officer, 
  Copyright Alliance.............................................    97
Prepared Statement of Keith M. Kupferschmid, General Counsel and 
  Senior Vice President, Intellectual Property, Software & 
  Information Industry Association (SIIA)........................   102
Letter from the Intellectual Property Owners Association (IPO)...   109
Prepared Statement of Rick Carnes, President, Songwriters Guild 
  of America.....................................................   116
Prepared Statement of the Motion Picture Association of America, 
  Inc. (MPAA)....................................................   120

 
                         U.S. COPYRIGHT OFFICE

                              ----------                              


                      THURSDAY, SEPTEMBER 18, 2014

                        House of Representatives

            Subcommittee on Courts, Intellectual Property, 
                            and the Internet

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 2:14 p.m., in 
room 2141, Rayburn Office Building, the Honorable Howard Coble, 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Coble, Marino, Chabot, Issa, 
Holding, Collins, DeSantis, Nadler, Conyers, Chu, DelBene, 
Jeffries, and Lofgren.
    Staff Present: (Majority) David Whitney, Counsel; Olivia 
Lee, Clerk; (Minority), Norberto Salinas, Counsel; and Jason 
Everett, Counsel.
    Mr. Coble. The Subcommittee on Courts, Intellectual 
Property, and the Internet will come to order.
    Without objection, the Chair is authorized to declare 
recesses of the Subcommittee at any time.
    We welcome our witness today, and we will introduce her at 
a subsequent time, imminently.
    With that in mind, let me give my opening statement.
    Within Congress, the Judiciary Committee is responsible--
strike that.
    I want to apologize to all of you for our belated 
commencement time. We had votes on the floor. That is why we 
are running about 10 minutes late.
    Within Congress, the Judiciary Committee is responsible for 
overseeing and legislating on matters that derive from or are 
substantially affected by the Constitution's grant of authority 
under Article 1, Section 8, Intellectual Property Clause. In 
the context of today's hearing, there are two points I want to 
make regarding this authority.
    First, the Constitution's drafters didn't merely give 
Congress the authority to grant exclusive rights to authors and 
inventors; they gave the Congress the responsibility to execute 
it by literally prescribing the means of securing these 
exclusive rights.
    Secondly, since the 19th century, the Congress has sought 
to administer and secure these rights through a design that has 
largely been left unchanged, a statutorily created Copyright 
Office housed in the Library of Congress.
    Today's hearing will focus on the operations of the U.S. 
Copyright Office. In doing so, we will not merely gaze 
backwards to assess how the Office has constructed its business 
in recent years. We will look forward and begin to examine the 
more difficult and substantial questions of whether we are 
equipping the Office to succeed and ask what steps we need to 
take to position it to promote the interests of authors and the 
public and perform its statutory responsibilities in the 21st 
century.
    From time to time, we need to step back and see not only if 
we should make changes to substantive law but also whether we 
should continue to do things as we have done them for years. On 
the substantive side, the Committee is engaged in an ongoing 
and historic comprehensive review of copyright law. On the 
process and operations side, we need to begin a complementary 
effort to ensure that we are considering how to administer the 
law and whether we are furthering its constitutional and 
statutory objectives on a substantial basis.
    Over the years, I think the location of the Office in the 
Library of Congress served largely to serve the objectives and 
interests of both organizations and the American people as 
well, but we live in a dynamic and increasingly digital 
environment and it is clear that the Office's structure was 
designed for an analog era or an analog age. Today, the Office 
serves as a repository for vital information that helps to 
promote and advance the interest of free expression and has an 
epicenter of commercial activity that educates and entertains 
not only Americans but citizens throughout the world. This will 
only increase tomorrow.
    Congress has looked to alternatives in the past. In the 
mid-1990's, we contemplated reorganizing the PTO as a 
government corporation and one of the proposals reviewed would 
have been to combine the Copyright Office with the PTO. We 
subsequently adopted reforms to the PTO organization but put 
aside the question of whether the Copyright Office and, more 
importantly, the principles we seek to advance through the 
institution of the Office would be of benefit therefore.
    The Subcommittee has been concerned about the Office's 
ability to perform its functions and duties for some time. It 
is an open question whether the Office has the support it needs 
from the Library, and I don't mean to be in any way critical of 
the Library. But nonetheless, I think that is the case. Its 
operations and function are 24/7 as a marketplace requires and 
the American people deserve.
    This discussion needs to be a public one, and it needs to 
be approached with an open mind, with the clear objective of 
building a 21st century digital Copyright Office.
    We look forward to receiving the testimony of Ms. Pallante, 
the United States Register of Copyrights. But before she begins 
I want you to know that she recently delivered an important 
address entitled ``The Next Generation of Copyright Office: 
What It Means and Why It Matters.'' In those remarks, she 
reported on the progress the Office has made in modernizing its 
operations under existing authorities and made recommendations 
for needed improvement. Without objection, I ask that we 
include a copy of that speech in the record.
    [The information referred to follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                             __________
    Mr. Coble. I am now pleased to recognize--Mr. Nadler is not 
here--Mr. Conyers. I will recognize the gentleman, the 
distinguished gentleman from Michigan, former Chairman of the 
full Committee, Mr. Conyers, for his opening statement.
    Mr. Conyers. Thank you, Chairman Coble. I am delighted to 
join you in welcoming the Register of Copyrights. I would like 
to merely observe that this Office plays a critical role in 
promoting and protecting the integrity and vitality of our 
Nation's copyright system. And to that end, today's hearing 
should focus on several factors.
    As a fundamental matter, the Copyright Office must be on 
the forefront of our fight against piracy. As I have stated 
many times, copyright is critical to job development and the 
overall health of our Nation's economy. An intellectual 
property system that protects copyrights, incentivizes their 
owners to continue to innovate--that, of course, creates jobs 
and strengthens the Nation's economy.
    Unfortunately, piracy is devastating to our economy and 
harms our creators and innovators. It is directly responsible 
for the loss of billions of dollars and millions of jobs. The 
Copyright Office helps to combat piracy by educating the public 
and Congress on the seriousness of piracy and how to prevent 
it, and it works with other agencies to strengthen copyright 
enforcement.
    In addition, the Office, through its International 
Copyright Institute, helps deter piracy of copyrighted works by 
encouraging the development of effective intellectual property 
laws and enforcement abroad. Accordingly, we should encourage 
the Office to further explore ways to strengthen its efforts to 
maintain a robust copyright system and combat piracy.
    A factor integral to the success of the copyright system is 
for the Copyright Office to upgrade to the digital age and 
become more user-friendly, and accordingly we must support the 
Office's efforts to modernize. For example, the Office's 
recordation system continues to be a cumbersome and costly 
process that requires manual examination and data entry. The 
functionality of the Office's databases and the usability of 
the Office's website frankly need improvements. The security of 
deposited digital works should be enhanced. The copyright 
community needs a system which provides a more usable public 
record of copyrighted material.
    The Copyright Office is aware of the need to modernize, and 
we must help it do so. And most importantly, a strong copyright 
system requires that we fully fund the Copyright Office, and in 
that regard the Chairman of this Committee, Bob Goodlatte, 
joins me in supporting that idea.
    The Office performs several significant roles in our 
copyright system, including examining and registering copyright 
claims, recording copyright documents, and administering 
statutory licenses. Yet, since 2010, Congress has cut the 
Copyright Office's budget 7.2 percent while continuing to ask 
the Office to do even more. And as a result, the Office has had 
to rely on its small reserve fund of customer fees to barely 
meet operating expenses. This reduces any operating cushion the 
Office could otherwise use for long-term planning.
    Further, the recent sequester further compounded the 
resource problems at the Copyright Office. It limited the 
Office's ability to hire staff to fulfill its many duties. In 
fact, just considering the registration program, it currently 
has 48 vacancies out of 180 staff slots, according to our 
research.
    Unless Congress can't agree on a Federal appropriations 
plan next year, the Office will face another mandatory 
sequester in Fiscal Year 2016. Fully funding the Copyright 
Office will help it carry out the increasing volume and complex 
work that we expect it to perform. This, in turn, will make our 
copyright system become more effective and efficient.
    And so I thank Chairman Coble for holding today's hearing, 
and I look forward to hearing from the Register of Copyrights 
herself. Thank you, Mr. Chairman.
    Mr. Coble. I thank the gentleman from Michigan.
    The Chair now recognizes the distinguished gentleman from 
New York, the Ranking Member of the Subcommittee, Mr. Nadler, 
for his opening statement.
    Mr. Nadler. Thank you, Mr. Chairman, for holding this 
oversight hearing with respect to the U.S. Copyright Office.
    I would like to thank the Register of Copyrights, Maria 
Pallante, for appearing again before the Subcommittee, and 
thank you and your staff for serving as a resource during the 
Committee's comprehensive copyright review. I look forward to 
hearing how the Copyright Office can continue to provide 
valuable services for both copyright owners and users, which is 
particularly important as intellectual property and copyright 
matters constitute an increasingly significant segment of our 
economy and culture.
    Many people might be surprised to learn just how many 
functions the Copyright Office performs. The Copyright Office 
registers copyright claims, records documents, administers 
several statutory licenses, performs regulatory 
responsibilities, and provides information to the public. In 
addition to these administrative functions, the Copyright 
Office provides expert advice to Congress, conducts studies, 
and makes policy recommendations.
    Over the years, the Copyright Office has given Congress a 
number of studies on a variety of topics, including orphan 
works, library exceptions, statutory licensing reform, 
Federalization of pre-'72 sound recordings, and master 
digitalization of books.
    The recent and ongoing reports and studies have been 
extremely helpful to Members of Congress and their staffs. I am 
particularly thankful for the updated report examining the 
issue surrounding visual artists and resale royalties in the 
United States that was released in December of last year, and I 
look forward to reviewing the music licensing report that will 
be released in the near future.
    The future success of the Copyright Office will largely 
depend on how technology at the Copyright Office is connected 
and managed through the Library's technology enterprises. For 
that reason, I am interested in hearing about how and if the 
Copyright Office's technical capacities are fully able to 
accommodate the long-term goals of the Office.
    Electronic submission standards for copyright documents 
will also continue to grow in importance. The Copyright Office 
should continue to make recordation inexpensive and workable 
for copyright transactions.
    The Copyright Office has been able to perform their 
numerous responsibilities with very limited funding. In Fiscal 
Year 2014, the Office had an overall budget of just $45 
million, with about $28 million of that coming from fees paid 
by copyright owners for registration, recordation and other 
public services, and $17 million from appropriated funds.
    The Copyright Office continues to face staffing shortages, 
budget reductions and workloads, and as the distinguished 
Ranking Member of the Committee mentioned, the sequester. With 
these challenges, the Copyright Office may need to consider 
creating new positions to support the complexity of statutory 
technology and regulatory responsibilities.
    Copyright owners depend now, more than ever, on 
searchability, reliability, and security of Copyright Office 
records. Copyright owners want to know that their digital files 
will remain secure as digital works become used more often. The 
Copyright Office and the Library need to maintain secure 
repositories so that users can continue to have confidence in 
participation in the copyright system.
    I know this is a goal that is shared by Ms. Pallante and 
her leadership team, who have taken steps to improve the core 
services and technical capacity at the Copyright Office. I look 
forward to hearing from Ms. Pallante today about how we can 
continue to improve the Copyright Office and ensure that it 
provides state-of-the-art services in the years to come.
    I thank you, and I yield back the balance of my time.
    Mr. Coble. I thank the gentleman.
    We have been joined by the gentle lady from California, the 
gentle lady from Washington, I think, Washington or California, 
the Evergreen State, and the distinguished gentlemen from 
Pennsylvania, North Carolina, and Georgia.
    As I said earlier, we are honored to have the United States 
Register of Copyrights as our witness today. Maria A. Pallante 
is the 12th appointed Register of Copyrights and Director of 
the United States Copyright Office. In her position, Ms. 
Pallante directs the legal policy and business activities of 
the Office. The position of the Register of Copyrights is a 
unique, historic, and vitally important one, and Ms. Pallante 
assumed control of the Office at an especially challenging and 
momentous time. Among other key duties, the Register serves as 
the principal adviser to Congress on matters of copyright law 
and policy.
    Ms. Pallante had to spend much of her career in the Office 
where she previously served as the Associate Register for 
Policy and International Affairs, Deputy General Counsel, and 
Policy Advisor. She also served as a senior advisor to the 
Librarian, Dr. James Billington, immediately prior to being 
appointed Register. She spent nearly a decade as Intellectual 
Property Counsel and Director of Licenses for the Guggenheim 
Museums in New York. She earned her J.D. degree from the George 
Washington University School of Law and her Bachelor's degree 
from Misericordia University.
    Madam Register, it is good to have you with us.
    We try to comply with the 5-minute rule, if possible. When 
you see the green light turn to amber, the ice on which you are 
skating is becoming thin, but you won't be penalized if you 
violate it. But try to stay within the 5 minutes, if you can.
    We are pleased to have you with us today.

   TESTIMONY OF THE HONORABLE MARIA A. PALLANTE, REGISTER OF 
         COPYRIGHTS AND DIRECTOR U.S. COPYRIGHT OFFICE

    Ms. Pallante. Chairman Coble, Ranking Member Nadler, 
Members of the Subcommittee, I would like to thank you as well 
as Chairman Goodlatte and Ranking Member Conyers of the full 
Committee for inviting me to testify today.
    The Copyright Office is a significant Federal institution. 
We interact with and provide services to businesses of all 
sizes, from small proprietors to multinational corporations, 
many of which are in a state of constant growth and innovation. 
Never has the delivery of creative content been faster, more 
interactive, or more global than it is now.
    In turn, it has become clear to me that the Copyright 
Office must also become more forward-thinking than it is; that 
is, more flexible and more interoperable with the marketplace 
that we serve.
    In the past couple of years, I have focused the Office on 
two primary goals: first, carrying out the day-to-day workload 
of administering the law; and second, engaging in discussions 
with the public about future strategies and direction for the 
Office. Mr. Chairman, we have been very transparent about this 
work. We have published numerous public inquiries, we have 
solicited written comments, we have conducted numerous 
roundtables, and we have participated in dozens of meetings at 
bar associations, conferences and seminars.
    In 2011, we published and have since followed a multi-year 
work plan. This included a series of special projects designed 
to inform the priorities and future path of the Office. 
Notably, this occurred alongside budget cuts, further 
challenging us to not only think big but to think creatively 
about our operations. Here are some of the highlights of what 
we have accomplished.
    We analyzed and wrote the first revision in decades of the 
Compendium of U.S. Copyright Office Practices, which we 
released in draft form to the public last month. At 1,200 
pages, the Compendium is replete with our core administrative 
practices and helpful examples for authors, artists, and other 
customers. It is the instruction manual for our staff in the 
examination process, and it is a key legal source for the 
courts. We have received tremendously positive feedback 
regarding both the authoritative text and the clear 
presentation of the material.
    I would like to underscore some of the groundwork that we 
have done in the area of technical upgrades, which was really a 
form of self-evaluation for the Office. Essentially, we 
conducted a public review of our relative strengths and 
weaknesses in providing services, with a focus on the user 
interface of our electronic systems; the quality of our public 
records; security issues; the usability of our website; 
industry standards, for example with respect to metadata, copy 
controls and private registries; and the overall customer 
experience of interacting with the Office.
    We spent considerable time evaluating our recordation 
service, which Ranking Member Conyers has pointed out is still 
a paper-based process. Recordation is separate from 
registration. This is the process by which licensing 
information, security interests and other copyright documents 
are recorded with the Office on an ongoing basis. We need to 
transform it from a paper process to an interoperable digital 
platform.
    We are grateful to everyone who has participated in this 
work, including book publishers, public interest groups, 
technologists, the music and movie industries, photographers, 
authors' groups, and others.
    Turning to my final point, I want to discuss our budget, 
which in turn affects staffing and technology. As mentioned, we 
have a $45 million budget; about $28 million of that comes from 
fees. In May 2014, we implemented a new fee schedule following 
a 2-year public process, raising the general fee for 
registration from $35 to $55. We did retain a lower fee for 
certain small actors. This was the first time we have ever 
differentiated our fees, but there has been strong public 
support for the concept, and I think we probably have to do 
more of it in the future.
    To be very clear, and notwithstanding the direction of our 
statutory mandate on fees, I should note that the Copyright 
Office fees do not recover the full cost of our services. This 
is because we share IT infrastructure with the Library of 
Congress and receive our IT support services from a central 
Library department.
    If we want the public record to be better, we will need 
better resources. And if we want the resources to come 
primarily from fees, then we should expect that copyright 
owners will, in turn, want better systems and services than 
they have now. Moreover, under the current statutory language, 
we are limited to charging for the cost we incur for providing 
services. That is, our fee authority does not permit the Office 
to collect for capital improvements or other forms of 
investment above actual cost after the IT infrastructure that 
is subsidized by the Library. This equation may be something 
that Congress wants to visit.
    In terms of staffing, I will just say the Copyright Office 
is smaller than it should be to carry out the volume and 
complexity of the work that we are charged with. Unfortunately, 
as the staff has been reduced, the work of the Office and the 
complexity of the copyright system have increased dramatically.
    Chairman Coble, that concludes my statement, but I wonder 
if I might have a minute on a different point.
    [The prepared statement of Ms. Pallante follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
      
                               __________
    Mr. Coble. Without objection.
    Ms. Pallante. Chairman Coble, I am aware that you have 
presided over copyright issues on this and former Committees 
for close to 3 decades, including as Chairman. As you prepare 
to retire, I am moved to say that today may well be the last 
time that a Register of Copyrights will appear before you. 
Therefore, on behalf of myself, my predecessors, and the entire 
staff of the U.S. Copyright Office, I wish to personally thank 
you for your dedication to our Nation's copyright system and 
for your service to us. We will miss you tremendously, as will 
the rest of the copyright community. Thank you. [Applause.]
    Mr. Coble. Thank you. I appreciate that. [Applause.]
    Thank you. You all know how to make an old man feel good. I 
thank you very much for that, for your generous words, Madam 
Register. I appreciate that. I appreciate the response from the 
audience as well. It is good to have all of you with us today.
    I think you beat the timeframe too, Madam Pallante. I think 
you beat the illumination of the red light.
    Understanding there are many different views on substantive 
copyright law issues, do you think, Ms. Pallante, there is a 
general agreement on the importance of ensuring that the Office 
itself is properly resourced and modernized for the digital 
age?
    Ms. Pallante. Well, Mr. Chairman, I haven't heard anybody 
say stop looking into modernizing your operations and don't 
bother going into the 21st century. So in answer to your 
question, I think copyright owners have legitimate concerns 
about our services, many of which were designed in the analog 
age, and I think the tech sector would like to see our database 
be more interoperable and authoritative so that they can also 
rely on it for their work in the chain of commerce.
    Mr. Coble. I thank you. Old habits die hard is why I put 
the question to you.
    Do you have any business plans or credible estimates of 
what it would take to build a substantial 21st century digital 
Copyright Office?
    Ms. Pallante. I am afraid I don't, in part because I think 
we have the same fee structure we have always had, which 
doesn't--I would need to work with you and work with the 
Committee to figure out what portion of that should be fees and 
what portion of it should be appropriated dollars, because 
there are things that we can do that are reasonable, and there 
are things that we can do that are really incredible, and we 
may have to figure out what the goals are together.
    I will say that when the electronic system was implemented 
in 2008, before my time, it was I think reasonably intertwined 
with the Library's existing enterprise. I think that subsidy 
has made it difficult to figure out what our actual costs are. 
So, in other words, we share that with the entire Library as a 
cultural institution, and trying to figure out what portion of 
their budget is attributable to us is not something that has 
really been done. That kind of cross-accounting has not been 
done.
    Mr. Coble. I thank you for that.
    Yesterday, Madam Register, it was reported that 
Representative Greg Walden criticized the FCC for having spent 
$352 million on IT over the last 5 years. How much have we 
spent on the Copyright Office during the past 5 years, and how 
much do you think we have dedicated to the Office's IT for 
consumers?
    Ms. Pallante. We have a very, very miniscule budget for IT 
because our IT department has 23 people in it, plus a number of 
contractors. It really is a liaison office to the Library. The 
Library's IT budget is somewhere in the neighborhood of $60 to 
$100 million. You would have to ask the Library how that breaks 
down completely.
    So again, we don't have a mature, independent IT structure 
in the Copyright Office. We have people who help to develop 
software modifications to existing programs.
    Mr. Coble. I thank you again, Madam Register, for your 
generous words. I appreciate that very much. In fact, for the 
record, I think our Subcommittee has enjoyed a very excellent 
rapport with not only you but your immediate predecessor. 
Remember me to her, if you will, when you see her.
    I am now pleased to recognize the gentleman from New York, 
Mr. Nadler.
    Mr. Nadler. Thank you very much, Mr. Chairman.
    Madam Register, can you outline some of the steps that have 
been taken to improve the copyright registration system in 
light of the fact that many businesses offer works by streaming 
or displaying them with an array of technologies?
    Ms. Pallante. Yes. This is one of the issues I think that 
keeps the leadership of the Copyright Office up at night. We 
are dealing with multiple problems. We have an electronic 
interface for registration, but that is based on the paper-
based system. In other words, the paper system was transposed 
into an electronic interface. We have yet to go to the next 
generation of really having the real advantages of a 21st 
century digital system.
    We also have a statute that was written in--well, enacted 
in 1976, written for 20 years prior to that, and it envisions a 
system of analog works. So it envisions a process whereby you 
send us works, we examine them, they are available for the 
Library's collection.
    Mr. Nadler. Does that statute need to be revised to account 
for digital?
    Ms. Pallante. I'm sorry?
    Mr. Nadler. Does that statute--did you just imply that you 
are mandated to do things in analog and that we should revise 
that to allow for digital?
    Ms. Pallante. I didn't quite say that. What I said is that 
the statute did not anticipate the tensions that we have now 
that works are digital.
    Mr. Nadler. Okay. I think you may have just answered part 
of the next question, which is what are some of the 
improvements that may be needed at the Copyright Office in the 
future?
    Ms. Pallante. Yes. I think we really need to figure out, 
first and foremost, what we want the registration system to be. 
So we may not need the best possible quality of a work for 
purposes of examining it and keeping it safe for litigation 
purposes. That ``best copy'' concept was designed for the 
Library of Congress so that it could preserve and have access 
to the best work available in the marketplace.
    The Library has separate provisions, like every national 
library in the world does, where it has the right to acquire 
copies of published works for the national collection. That is 
different than registration copies.
    What we have done in our copyright system, and it was done 
to protect copyright owners, or at least to relieve them of the 
burden of having to comply with dual systems, was say that if 
you register, we will use those copies for purposes of the 
provisions regarding the national collection.
    I think where we are in the Copyright Office is do we now 
need to kind of step back and maybe segregate those provisions? 
So the registration system works for copyright owners and the 
public record, and the Library has very clear regulations and 
statutory instruction about what it can and cannot acquire. And 
if it does acquire digital works--and I wanted to say for a 
moment that the Library of Congress is an incredible cultural 
institution, and it has actually preserved works that copyright 
owners have failed to preserve over the years.
    But assuming you want it to have access to digital works in 
the future, we do need to have safeguards because we are 
talking about copyrighted works.
    Mr. Nadler. That was my next question. How will the 
Copyright Office be able to meet the challenge of enhancing the 
security of deposited digital works?
    Ms. Pallante. We really need to apply our all-hands-on-deck 
on this question. Operationally, we share servers with the 
Library, and I don't think we--well, I know----
    Mr. Nadler. Is that a danger to the security?
    Ms. Pallante. I think so. Nothing insidious and terrible 
has happened, but it is certainly a risk. Again, it goes back 
to----
    Mr. Nadler. Should we consider severing your sharing that 
with the Library, and would that be very costly?
    Ms. Pallante. I think optimally we should have separate 
servers for the registration system than the Library has for 
its other business, yes.
    Mr. Nadler. And do you have any--are we talking millions, 
billions, thousands?
    Ms. Pallante. Well, here is the question that I grapple 
with. What is the reasonable cost of a registration system if 
the copyright owner and the public are getting the kind of 
return that they want? And if we are not charging $55 but we 
are charging----
    Mr. Nadler. I'm sorry, you misunderstood my question. I am 
not asking about the value. What is the magnitude--what would 
it cost to give the Office a separate service from the Library?
    Ms. Pallante. What would it cost as opposed to how to fund 
it you mean?
    Mr. Nadler. Right.
    Ms. Pallante. I don't know.
    Mr. Nadler. What magnitude are we talking about? Millions 
or a billion? Do we have any idea?
    Ms. Pallante. At a very high level in terms of modernizing 
the Office, I think it is an investment of somewhere in the 
neighborhood of $150 million.
    Mr. Nadler. Over a time period.
    Ms. Pallante. Of that, you could say half of that must come 
from fees, do some public-private partnerships, be creative.
    Mr. Nadler. And my last question, since I have the orange 
light, how has the registration program been hurt by budget 
cuts and early retirement packages?
    Ms. Pallante. It has really been cut to the bone. We have 
huge vacancies, and we have the kind of staff that requires 
several years of training to get them to the point where they 
are applying the law and the regulations and the Compendium 
accurately so that courts and others can rely on it.
    So they are really exhausted, and then they are dealing 
with an electronic system that sometimes crashes, doesn't work 
all the time, and isn't anywhere near the generation of 
services that copyright owners want.
    Mr. Nadler. So we are talking about both operating and 
capital costs there.
    Ms. Pallante. Correct.
    Mr. Nadler. Thank you very much.
    Ms. Pallante. Thank you.
    Mr. Nadler. My time has expired, Mr. Chairman.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from Pennsylvania.
    Mr. Marino. Thank you, Chairman.
    Good afternoon.
    The U.S. Copyright Office was created in 1897, I believe. 
Then, music was written on paper, and recorded music was 
listened to on a phonograph, starting with wax records, so to 
speak.
    Music creators and listeners use computers and mobile 
devices to create, distribute, purchase, and listen to music. 
So could you please tell me, would moving your Office into the 
21st century cut down on unnecessary litigation, and how?
    Ms. Pallante. Yes, sure. Our role, I think, in the 21st 
century is to have the most authoritative, accurate information 
about copyright ownership and licensing terms available 
anywhere, globally. And if people can find that kind of 
information by clicking on a record and getting the licensing 
terms and being sent to a private registry, you begin to see 
how our role can really facilitate the licensing marketplace.
    Mr. Marino. The Copyright Office is not an agency or even a 
sub-agency, and you do not report to the President; correct?
    Ms. Pallante. Correct. I report to the Librarian of 
Congress.
    Mr. Marino. Okay. How would your Office in the United 
States be seen internationally if your Office were independent, 
its own entity?
    Ms. Pallante. Well, I will say two things. In deference to 
all of the Registers who have come before me and all of the 
talents that they had, the Register position is recognized 
internationally. But we have this system with our own 
interagency process where we have people from PTO and elsewhere 
in the Administration really leading the international 
discussions on copyright law because of our unique situation in 
terms of where we are seated. So presumably we would have more 
authority and recognition if the position were different.
    Mr. Marino. Could you give me an example, could you give us 
an example of, if you need to do something in your Office, 
whether it is equipment-wise, whether it is rearranging more 
space, anything at all, what is the process you must go 
through?
    Ms. Pallante. Well, again, we are a department of the 
Library of Congress like every other department in the Library 
of Congress. So for all of those kinds of infrastructure 
questions, they go through central Library practices and 
processes.
    Mr. Marino. With all due respect to my colleagues at the 
Library of Congress, which are fantastic because every time I 
need something they are on it just like this, but you are a 
copyright lawyer?
    Ms. Pallante. Yes.
    Mr. Marino. An intellectual property lawyer?
    Ms. Pallante. Yes.
    Mr. Marino. You are--I am making an assumption here--and I 
think it is rather accurate. You are the expert over there, but 
yet you have to go through an unorthodox chain to even make 
your office operate back in the 19th century standards; 
correct?
    Ms. Pallante. Yes. Another way to look at that--I think 
about this a lot, as you might imagine--there is no position in 
the government like the Librarian of Congress. It would be a 
little bit like having the head of the Patent Office also run 
the Smithsonian Institution. Constitutionally, that is the 
situation that you have. And I would say for almost 120 years, 
it served the Nation fairly well.
    What we are experiencing now is an explosion of the 
prominence of the copyright system. So I understand this to be 
about what is best going forward.
    Mr. Marino. Well, no matter where we go today, no matter 
where we go today, my kids, my mother, who is 82 years old, 
carries one of these and does all kinds of things on it, and 
you are still in a position where you are looking at documents.
    So I am speaking on, I think, behalf of a lot of my 
colleagues. You need to be brought into the 21st century. You 
need to be an independent entity. You are part of the executive 
branch, and I think your job is so important and you have done 
such a fantastic job, as your predecessors have done, I think 
you should report to the President. With your ability and your 
foresight, I am sure you could take that Office into the 22nd 
century for us.
    So, thank you, and I yield back.
    Ms. Pallante. Thank you, Mr. Marino.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from Michigan, Mr. Conyers.
    Mr. Conyers. Thank you, Chairman Coble.
    We have appreciated you coming before us and explaining 
your circumstances.
    Ms. Pallante, in your written testimony, you mention a 7 
percent decrease in the Office's budget since 2010. What effect 
has that had on the ability of the Office to fulfill its 
duties, and are there other financial constraints that you 
believe are limiting the Office from running more effectively?
    Ms. Pallante. Thank you, Ranking Member Conyers. We 
immediately--one of the first things I experienced as Register 
right after my appointment was to do an early-out buy-out to 
move people into retirement, for people who were willing to do 
that, to reduce the staff.
    I will say, that is not necessarily a terrible thing to go 
through because we have lot of people who worked for decades in 
the Library of Congress and in the Copyright Office, and it 
creates the opportunity after those good years of service to 
rethink positions, digital positions instead of, say, 
cataloguers.
    The problem is we can't replace them because we don't have 
the budget to fund them, and we are really, really small. I 
think we are smaller than we have ever been in modern times. 
The irony for us is that we are busier than we have ever been.
    Mr. Conyers. So creating a more aggravated problem. Well, 
since 2008, the Copyright Office has moved into an electronic 
registration system. How has that worked out, and what needed 
improvements might there be required?
    Ms. Pallante. Yes, that was a big moment for the Copyright 
Office. It wasn't on my watch. I was still in New York in the 
private sector. But I think our issue is that we haven't moved 
past it. That was a good foundational first-generation system. 
We haven't gotten to recordation. That is still paper-based. 
And we haven't made the registration system truly 
interoperable, meaning that we can't necessarily have people 
send us deposits of their works because we can't accept them 
because our system won't handle them. We don't connect through 
metadata to ASCAP or BMI or SoundExchange or other registries.
    Mr. Conyers. So what do they have to do?
    Ms. Pallante. We need to rethink the whole thing, drawing 
on the tremendous expertise of the copyright community from 
here to California and back.
    Mr. Conyers. What has the Office done to rectify current 
issues with recordation, and what are the major concerns 
thereto?
    Ms. Pallante. Okay. So we have done everything we can do 
without money. We ran numerous public processes, asking people 
what the system should look like in the future. We had dozens 
and dozens of meetings. We had three public hearings, one in 
New York, one in L.A., and one in Silicon Valley. We assigned 
to the first Abraham Kaminstein Scholar in Residence--which is 
a program we started based on one of the Registers who presided 
over the '76 work leading up to that Act--the task of really 
thinking it through as a scholar, and he is finalizing his 
report. And now we have options, and the question is how to get 
to a strategic plan given budget cuts, but also the 
infrastructure that we have, and do you want to invest in it 
the way it stands currently.
    Mr. Conyers. Well, we know that you need help fast. What do 
you see is going to happen if you don't get the funding that 
you need?
    Ms. Pallante. Well, there is already a significant gap 
between our services and the way the copyright marketplace 
actually operates, so obviously that gap will grow. I will also 
say, though, as kind of the head of the staff of the Office--
this sounds like a weird term--we cannibalize our staff, right? 
The same people do everything. They register, but then they are 
writing a compendium that is 1,200 pages long. They are running 
trade negotiations with USTR, helping Congress, writing 
significant regulations, and we just aren't big enough and we 
don't have the depth of experience that we need.
    Mr. Conyers. Thank you very much for your candor.
    Ms. Pallante. Thank you, sir.
    Mr. Conyers. Thank you, Mr. Chairman. I yield back.
    Mr. Coble. I thank you, Mr. Conyers.
    The gentleman from California, the distinguished gentleman, 
Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Boy, I'll tell you, hearings like this let us know how long 
it takes to do anything here on Capitol Hill.
    Let me run through a couple of quick questions. I think the 
public and all of us want to sort of make sure it is in the 
record.
    Currently, if I write a book, I can send two copies of the 
book to you on paper, and you will take them, and then I have a 
copyright; right?
    Ms. Pallante. Correct. You have enhanced protection, in 
fact.
    Mr. Issa. Yes, or I can do nothing and I have a copyright. 
Is that right?
    Ms. Pallante. Correct.
    Mr. Issa. What do you do with those two books?
    Ms. Pallante. We have a repository by regulation, or the 
Library has the ability to inspect and acquire those deposits 
and then use them under applicable law.
    Mr. Issa. Okay, which means----
    Ms. Pallante. That is statutory.
    Mr. Issa. Which means I can check out one of those two 
books because it is my library, after all.
    Ms. Pallante. Yes.
    Mr. Issa. Or all of our library.
    Ms. Pallante. The Library of Congress has arrangements with 
other libraries and is the----
    Mr. Issa. So for a little over 100-and-some years, this has 
been kind of how it works. You send your two books in, and 
Congress can get smarter, and you have the capability. There 
was a time when you had to send them in to have a copyright. 
Works that were not sent in simply enjoyed no copyright 
protection. When did that change?
    Ms. Pallante. Yep, they went into the public domain. We 
moved to that system for international compliance purposes, or 
to become more internationally harmonized, with the '76 Act. 
That was a sea change for the United States.
    Mr. Issa. So basically we took those things which people 
wanted to protect and turned it into everything is protected.
    Ms. Pallante. That is one way to look at it, for sure.
    Mr. Issa. And this is interesting because we did it in 
harmony with the rest of the world that normally doesn't 
respect these things very well. So, always interesting.
    And you already stated that we haven't come into the 
digital age particularly well because if I want to make sure 
that you have copies of everything digitally, every day, every 
newspaper, et cetera, et cetera, you are not prepared to accept 
those.
    Ms. Pallante. It is difficult.
    Mr. Issa. Well, ``it is difficult'' is an interesting 
thing. We say that a lot in Washington. If the Wall Street 
Journal and 400 other newspapers tried to send you, either on 
paper or digitally, one copy digitally, two copies on paper 
every day, you couldn't handle them, could you?
    Ms. Pallante. Well, we don't handle them well. We accept 
them. We register them. But here is where we are going with 
our----
    Mr. Issa. Look, I saw Indiana Jones and the Raiders of the 
Lost Ark. They accepted the Ark, too, in that movie, and they 
have their best people working on it. [Laughter.]
    Ms. Pallante. That's right.
    Mr. Issa. We are here today because you represent the most 
arcane part of government in many ways.
    Ms. Pallante. Thank you.
    Mr. Issa. We budget one part. We have you report to 
somebody who, in fact, doesn't really have the same mandate, 
while over at the Department of Commerce we have the primary 
oversight that we do, which is the Patent and Trademark Office.
    Now, I am not going to put you on the spot, but 
hypothetically, if we harmonized the functions of the PTO and 
harmonized your functions in some acceptable way, wouldn't that 
enhance the efficiency of dealing with digital and non-digital 
media, dealing with copyright, trademark, patent and, if you 
will, the potpourri if evolving intellectual property?
    Ms. Pallante. I think so, yes.
    Mr. Issa. Wouldn't it also harmonize or improve, assuming 
that they all worked together, what happens when there is an 
alleged copyright violation and people want to get to justice? 
You don't have administrative law judges, do you?
    Ms. Pallante. No.
    Mr. Issa. They do, don't they?
    Ms. Pallante. We don't have enforcement authority of any 
kind.
    Mr. Issa. So we are dealing with 1897 thinking even after a 
1976 enhancement which, by the way, there was an Internet then, 
it just wasn't available to anybody in the public.
    So just to wrap up, budget is always a problem, but you are 
not even beginning to be positioned to handle well the 
absorption, the cataloging, the referencing and the searching 
of the media being produced in the United States, let alone the 
rest of the world.
    Ms. Pallante. I am afraid that is accurate.
    Mr. Issa. And in a digital age, if we are going to protect 
copyright and we are going to make, if you will, works 
available to the public, both of those have to change.
    Ms. Pallante. Yes.
    Mr. Issa. Now, let me close with just one question because 
everyone is talking about, well, maybe we ought to just move 
you to PTO. But let's ask one question, because I think it is 
more complex than that.
    Isn't it true that the function of the Library of Congress 
to enhance and make available for education and informational 
purposes to the United States and ultimately the world, that is 
a mandate that the Librarian has?
    Ms. Pallante. Yes.
    Mr. Issa. And yours is, of course, the protection. Don't we 
have to modernize both of them, the availability that the 
Librarian has and the systems for protection, including 
metadata that allows for searches? Aren't those both things 
that have to be done on this Congress' watch?
    Ms. Pallante. Yes, I think that is an excellent way to 
state it and a very fair way to state it for the Library. They 
need to be a 21st century institution as well. They are a 
leader among cultural institutions.
    Mr. Issa. Thank you, Mr. Chairman. I think we have outlined 
some of the problem.
    Mr. Coble. I thank the gentleman from California.
    The distinguished gentle lady from California, Ms. Chu.
    Ms. Chu. Thank you, Mr. Chair.
    I think most people are surprised and perplexed when they 
learn that our Nation's Copyright Office is housed under the 
Library of Congress because your missions are very different. 
The Library is focused on preservation, while the Copyright 
Office is focused on recording and registering works and, most 
importantly, instituting legal and economic rights protections, 
and your technical needs are so different because the Library 
is that of preservation, whereas your Office functions like a 
24-hour business that intersects with the global marketplace. 
And I have been astounded to learn of the implications of this.
    First, you, the Register, are authorized to establish 
regulations, but such regulations are subject to approval by 
the Librarian, whose specialty is not copyright.
    Secondly, you are able to collect fees, but you have no 
control over what happens with those fees. In fact, they are 
managed by the Library staff.
    Thirdly, on security, the Copyright Office should be 
ensuring the security of works, including digital works, but 
the mission of the Library is to share works with the public.
    And finally, there is the issue of the appointment and 
authority that you have. Similar positions such as yours, the 
Intellectual Property Enforcement Coordinator and the Executive 
Director of the Patent and Trademark Office, this is a 
presidential appointment and you report to the President. They 
report to the President. But instead, your position is 
appointed by the Librarian and you report to the Librarian.
    So can you talk about these specific challenges and how 
they impede your desire to make the Copyright Office thrive in 
a digital economy and support a modern copyright system?
    Ms. Pallante. Yes. Thank you for those questions.
    I will say this. Everything that you set forth is true and 
was relatively without incident for a long time, decades, 
didn't cause any harm. I think, again, we are now seeing kind 
of growing pains and natural tensions between the Library as a 
library and the Copyright Office as the copyright system of the 
United States.
    So I do feel like we are at a point where there either have 
to be safeguards put in place within the current institution or 
you really need to think on this Committee about new paradigms, 
maybe some of the things that you were discussing earlier.
    Interestingly, the IPEC was created recently, right? In 
2008. And the Under Secretary in the mid-'90's. Those positions 
intersect with the Register's authority by statute, but you are 
correct that they are much higher elevated than the Register 
position is.
    I think what you are really asking me is who is the head of 
the copyright system, and the truth is the Librarian of 
Congress is the head of the copyright system for purposes of 
the Constitution. The Register works under the general 
direction and supervision of the Librarian. So there are many 
duties in the Copyright Act that say ``the Register shall,'' 
but at the end of the day it is really your Librarian, all of 
your Librarians back to 1897, who have had responsibility for 
the system.
    Ms. Chu. And so to be specific, I brought up the example of 
regulations that are written.
    Ms. Pallante. Yes.
    Ms. Chu. These, and security of works. Could you----
    Ms. Pallante. I don't know if this is so different from 
agencies outside of the IP space, but basically the expert in 
the agency and, in turn, my experts on my staff conduct 
rulemakings, prepare regulations. We work under the APA, by 
statute. The Library doesn't. But I send them to the Librarian 
for signature, and he has to approve them. So it really isn't 
just a rubber stamp, and that is how it works.
    There could potentially be a conflict in the future. We 
haven't had that, really, to date. So I think, again, if we are 
talking about the future, that might be a better way to think 
about these issues.
    For example, if the Register were to say I don't think we 
should be accepting digital deposits without copy controls in 
the registration system because it is a conflict for the 
statute and for the people registering, technically the 
Librarian has a right to say ``that is what I want.''
    Ms. Chu. In fact, can you guarantee the security of digital 
works right now?
    Ms. Pallante. No, because we don't have--well, I can't. I 
don't have control of the IT system. My avenue for that is to 
make the case internally. And in defense of the Library of 
Congress IT department, they are doing a lot of different 
things. We are not their only client or customer.
    Ms. Chu. And what are the implications of not having 
control over your own fees?
    Ms. Pallante. It is a legal question. People are paying us 
for services, and that money is routed through centralized IT 
systems. So on the one hand, you have synergies. On the other 
hand, you don't have control of the product that you are 
delivering for those fees. So what stakeholders have said to me 
is that they--I mean, we are talking about some stakeholders 
who invest tens of millions of dollars in their copyrighted 
works. So a $55 fee is not a big deal for them, and I think if 
they were getting the kind of service that they want, and the 
security and confidence that they want, they would pay more, 
and I think our fees are too low for those kinds of copyright 
owners.
    Ms. Chu. Thank you.
    I yield back.
    Mr. Coble. I thank the gentle lady from California.
    The distinguished gentleman from North Carolina, Mr. 
Holding.
    Mr. Holding. Thank you, Mr. Chairman.
    Ms. Pallante, thank you for being here. I think either in 
your testimony or in response to a question, we were talking 
about the Office functioning as the principal advisor to 
Congress on copyright law and policy, both domestically and 
internationally. And you also have a duty as the Copyright 
Office to provide information assistance to other Federal 
departments and agencies and the Judiciary on copyright law.
    So with all of the happening issues in copyright law, I was 
wondering how many lawyers do you have assigned to these 
discrete tasks and what percentage of your work is this duty 
that you have to provide advice to us and others?
    Ms. Pallante. It is a huge percentage of the work right now 
because you have had 16 policy hearings in the last couple of 
years. We have 18 lawyers in the legal departments. A couple of 
people are actually lawyers and the heads of other departments. 
But the people doing the legal and policy work number about 18. 
That is not enough, and we have a particularly acute need for 
very experienced copyright lawyers who can run the kinds of 
significant public rulemakings and discussions and policy 
studies that we are responsible for.
    We do everything. Regulations alone could keep that number 
of lawyers constantly engaged, and that doesn't count getting 
on a plane and going to Vietnam to help the USTR negotiate a 
Pacific Rim trade agreement. It doesn't include meetings at 
WIPO, where we are required to be. It doesn't include thinking 
through the legal implications of the things you are asking me 
about, fee structures and technology. So, we don't have enough 
people.
    Mr. Holding. Right. Are you able to supplement that at all?
    Ms. Pallante. Again, we are really good at trying to do 
things with no money. We have gotten really good at it in the 
last couple of years.
    We created a couple of programs to supplement our staff 
with short-term costs, as opposed to long-term staffing costs. 
One is the Kaminstein Scholar in Residence that brought a 
scholar to us for a year. We will now try to get another 
scholar to come. That helps immensely because they are 
extremely capable and talented and quick and can do all the 
kinds of deep thinking that we need.
    We created the Barbara Ringer Honors Program. We got 
hundreds of applications. We just a couple of weeks ago started 
our first two Ringer Fellows, one from New York and one from 
Chicago.
    We created a Copyright Matters program to kind of bring 
people into the Office to help us think about marketplace 
issues. Chairman Goodlatte has spoken at that. We have had 
artists. We have had presentations on fair use.
    And finally, we created a research partnership with law 
schools, and our first success with that was Stanford Law 
School, where two classes in a row under the tutelage of 
Professor Paul Goldstein, who is a giant in the field, worked 
on some of our recordation challenges.
    So we are trying every which way to bring in talent and 
support to supplement.
    Mr. Holding. Right. Mr. Marino brought up the issue of 
precisely where the Copyright Office sits in the structure of 
government and who it answers to ultimately. I was wondering, 
with the very important role that you play as an advisor to 
Congress and the other agencies on copyright law, is the 
stature of the Copyright Office within the structure of the 
government sufficient? Does it impact your leadership role as 
you are trying to foster our American copyright system?
    Ms. Pallante. Well, that is a big question. Again, I think 
over the decades, prior to this recent period that we are in, 
the Register was given a lot of deference. But you created two 
positions that now are intersecting in copyright policy in the 
past 20 years. One is the IPEC, and one is the Under Secretary 
for Commerce, which is the head of PTO. It is a complicated 
structure because the PTO's statute says the head of the Patent 
Office must confer with the Register on copyright policy 
issues.
    But I think what you are asking me is, is the head of the 
Copyright Office at the upper echelons of the Federal 
Government in the Administration like these other positions?
    Mr. Holding. Yes.
    Ms. Pallante. The answer is clearly no.
    Mr. Holding. Do you have a seat at every table that you 
want to sit at to influence policy?
    Ms. Pallante. And many stakeholders have said that to us, 
and we don't take it personally, but the answer, of course, is 
we are not.
    Mr. Holding. And how does that inhibit you carrying out the 
responsibilities that you think Congress has vested you with?
    Ms. Pallante. I think we are not in the room all the time, 
right? We are not leading the delegations as the substantive 
agency. We are not necessarily in all of the discussions of the 
Administration. We are a little bit confused about which branch 
of government we are in following this IBS-CRB case that came 
down and said all of our functions are executive branch.
    So I think it is a complicated structure, and to be fair to 
my staff, I think people make it work at the staff level across 
this interagency process, but nobody really understands it.
    Mr. Holding. And if, indeed, which I think you are part of 
the congressional branch, the legislative branch, whether or 
not there is a fiduciary responsibility or not, we have that. 
But perhaps we in the legislative branch are not being 
adequately represented because of your exclusion from some of 
these tables where policy is being made.
    Ms. Pallante. It is a fair point.
    Mr. Holding. Thank you.
    Thank you, Mr. Chairman.
    Mr. Coble. I thank the gentleman from North Carolina.
    The distinguished gentleman from New York, Mr. Jeffries, is 
recognized for 5 minutes.
    Mr. Jeffries. Thank you, Mr. Chairman.
    And thank you, Ms. Pallante, for your presence here today, 
as well as for your leadership.
    I think I want to pick up where my colleague left off and 
ask you about the recent IBS v. Copyright Royalty Board case. I 
believe you are familiar with the case. You referenced it in 
your written testimony; correct?
    Ms. Pallante. Correct.
    Mr. Jeffries. And the case involved a decision by the D.C. 
Circuit, I believe, that held that in promulgating copyright 
regulations, setting rates and terms, the Library of Congress 
is undoubtedly a component of the executive branch. Is that 
correct?
    Ms. Pallante. That is what the case says.
    Mr. Jeffries. Now, it was already a complicated mix related 
to your structure, as discussed during this hearing. How does 
this decision impact what was already a complicated situation? 
How do you interpret the decision, and what guidance can you 
provide to us as to how we should interpret the decision and 
what it means in terms of how we move forward?
    Ms. Pallante. Thank you. I think it is a fairly significant 
decision. On the one hand, it confirms that the Library of 
Congress is like no other agency in the Federal Government in 
that it is clearly a hybrid agency. You have the copyright 
functions, clearly in the court's opinion, being executive 
branch in nature; and then you have, for example, the 
Congressional Research Service, which can only be legislative, 
in the same agency. As I said earlier, I think you have this 
position where the Librarian of Congress has really kind of an 
incredibly Herculean job where you are running Library 
functions, legislative functions, and then also executive 
branch copyright functions.
    You are right that these issues are not new. One of the 
things that is very interesting to me is that from 1802 to 
1897, the Librarian of Congress was not a Senate-confirmed 
position. It was when Congress in 1897 formalized the copyright 
system within the Library that Congress--and it is very 
interesting to go back and read this, speaking about 
constitutional issues that have now popped up again--said these 
issues must be constitutionally correct. They must flow 
constitutionally so that the Librarian of Congress must be 
Senate confirmed. The copyright system affects the legal 
rights, economic interest of those who rely on it.
    Mr. Jeffries. Right. Well, the copyright system, in fact, 
or Congress' power to legislate copyright and intellectual 
property indeed stems from Article 1, Section 8, Clause 8, the 
United States Constitution, which is, I gather, why the 
Judiciary Committee has jurisdiction over this very important 
area of law.
    Now, you mentioned in your testimony that the agency finds 
itself in a situation where copyright issues have become 
increasingly complex, and at the same time our resources have 
become increasingly strained, a very difficult situation to be 
in. Could you clarify what has increased the complexity of the 
copyright landscape?
    Ms. Pallante. Well, the digital revolution has made it more 
complex. And so where people used to, in the chain of commerce, 
work with analog physical items, CDs and books and DVDs, they 
are now getting their content on mobile devices and digital 
platforms. So copies may not be involved.
    It may or may not be a generational thing as well. I happen 
to have teenagers. They don't want to own anything. They just 
want access to it. So it is this real focus on display and 
access and streaming, making the public performance right 
arguably more important in the future than the reproduction 
rights and distribution rights have ever been. So we have all 
of that coming into the mix.
    Then that requires us in our registration system to also 
make those shifts. How do we examine a work that is really only 
made available to the public through streaming?
    Mr. Jeffries. Given the increased complexity as you have 
laid out, and I think in a manner that is shared by a 
significant number of people in this institution, clearly in my 
view that suggests that we have got to look at providing the 
agency with the resources needed to deal with an increasingly 
complex landscape.
    But does the complexity also suggest, in your view, that it 
is reasonable for us to take a hard look at what an appropriate 
structure would be in the 21st century?
    Ms. Pallante. I think you have to, and I appreciate the 
question. I will say it this way. A 21st century legal 
framework requires a 21st century agency, and the structure, 
the budget, the IT, the principal duties, the stature, all of 
those come into play as you look at the question, I think.
    Mr. Jeffries. Thank you very much.
    I yield back.
    Ms. Pallante. Thank you.
    Mr. Marino [presiding]. Thank you.
    The Chair now recognizes the congresswoman from California, 
Ms. Lofgren.
    Ms. Lofgren. Thank you, Mr. Chairman.
    And thank you, Madam Register. It is good to see you.
    Ms. Pallante. Thank you.
    Ms. Lofgren. As we are enmeshed in this sixth tri-annual 
review, it just reminds me of Congress' obligation to reform 
Section 1201 to prohibit not only infringing action and to not 
tie up innocent use. I think in a way we have had an 
opportunity to do--``experiment'' isn't the right word, but to 
see what happens when legitimate content is offered and pirated 
content is available. The public goes to the lawful content. I 
mean, there are always some outliers, but in overwhelming 
numbers that is what the public wants to do, and I think that 
is something we didn't know for sure, but I think it is a very 
welcome discovery.
    I think we have also seen that when we don't too tightly 
tighten up the circumvention, we promote innovation. You take a 
look at the app market, for example. It has just exploded in 
terms of creativity when we have not tamped down, as you could 
have using section 1201.
    So I think it is certainly not your responsibility. It is 
our responsibility to make sure we go after infringement, but 
that we do not squash technological innovation that has nothing 
to do with infringement.
    It is like a broken record. I have been saying that for 
more than a decade. But it is time for us really to do that, 
and I think the facts and the developments prove that we don't 
have to be afraid of doing that.
    Just a couple of quick questions. In the Notice of Inquiry 
that your office released yesterday, I was surprised honestly 
to see the intent to require separate petitions for each type 
of wireless 
device--tablets versus readers versus hotspots versus smart 
watches--and even a distinction between different kinds of 
wireless and connected e-readers and tablets. It strikes me 
that this is wrong.
    Now, by dividing or subdividing wireless devices into 
different categories, it seems the government would be 
protecting not copyrighted work but business models, and that 
is not our job. Our job is to provide protection to material 
that is protected under copyright. It is not to pick winners 
and losers among business models. So I have a deep concern 
about that. There was a huge uproar, as we know, about the 
ruling last year on not unlocking cell phones. The Committee 
has even addressed that, although not as successfully I think 
as we had hoped. I think we are getting potentially into a much 
bigger uproar if we go into distinctions between different 
kinds of readers and the like.
    Then the second question--and you can answer them both 
together--the timeline given in yesterday's notice I think 
needs review. You mentioned the role of law schools and law 
clinics, and I think it is a good sign, actually, and Stanford 
is not in my district but it is 10 minutes out, and it is a 
great group of young students.
    The timeline as published in the notice has everything due 
at Christmas, and the law clinics that are heavily supported by 
students are going to be adversely impacted by that timeframe, 
and I am wondering if we couldn't revisit that because the 
students, either they are not going to have a break or they 
won't be around or it is going to be an insane type of workload 
that we are putting on them. It is 45 days after the notice of 
rulemaking. I think we need to revisit that, and I would 
welcome your comments on both of those questions.
    Ms. Pallante. Yes, sure. Thank you. I would just say on the 
last question, we frequently extend deadlines once we publish 
them, usually when a few stakeholders call and say what you 
just said. The timeline was orchestrated working backwards from 
when it is due.
    Ms. Lofgren. I understand. But if I could, on that point--
--
    Ms. Pallante. Sure.
    Ms. Lofgren [continuing]. From the students' point of view, 
knowing there is an extension later isn't going to help them.
    Ms. Pallante. Yes. No, I understand.
    Ms. Lofgren. They need to go to the max doing all-nighters 
while their exams are due, unless they know it is going to be 
extended.
    Ms. Pallante. And we obviously want fresh, young, talented 
students participating. I hear your point. So I will talk to my 
General Counsel's Office and we will look at the timeline.
    On the first point, it is interesting. We spent a lot of 
time talking to everybody who has participated in this 
proceeding over the past decade, and consulted with the 
Administration about how to do it better than it has been done 
before, and a number of changes were made with that in mind.
    The subdividing of the different categories was intended to 
create a better record because the lack of a good record was 
our problem in the last round, and we were trying to get people 
to focus on what the evidentiary standards would have to be. So 
it doesn't necessarily preclude us from finding that there are 
multiple devices and categories that will have like treatment 
in the end. But the intent was to do something to improve the 
situation, not to make it harder.
    Ms. Lofgren. I guess I don't understand that, and perhaps 
you can fill in later with me. But if you take a look on page 
55689, it talks about petition proposing a general exemption 
for all wireless devices or all tablets. It is difficult to 
support, in contrast with tablet computers, e-book readers. It 
just seems to me that from a Silicon Valley point of view, that 
doesn't make any sense at all to me.
    Ms. Pallante. I could see how it wouldn't make sense from a 
technology perspective. We have this factor in the statute that 
requires us to look at actual markets, not giant markets but 
particular markets. So to your more general point, the 1201 
rulemaking is from 1998, and we are trying to fit it into----
    Ms. Lofgren. I understand that. I love Bob Kastenmeier when 
he wrote the Act in '76, he didn't have to deal with some of 
these issues. But the fact is, in terms of markets, whether I 
have my Kindle, whether I have my iPad with my Kindle app, 
whether I have my Kindle app on my phone or my Galaxy phone, it 
really doesn't matter.
    Mr. Coble [presiding]. The gentle lady's time has expired.
    Ms. Lofgren. Thank you, Mr. Chairman. I would like--I would 
hope that we could follow up with this because we are likely 
going to have the same ugly explosion and public outcry that we 
had last year on phone unlocking. It would be nice to avoid 
that.
    Mr. Coble. I thank the gentle lady.
    This concludes today's hearing.
    I want to thank the Register again for having served as our 
only witness today. We appreciate it very much.
    I want to thank those of you in the audience. Your presence 
indicates that you have more than a casual interest in this 
matter, and I thank you all for having attended as well.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    This hearing stands adjourned.
    [Whereupon, at 3:27 p.m., the Subcommittee was adjourned.]
    
    
    
    
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