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COPYRIGHT REMEDIES 

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 

JULY 24, 2014 

Serial No. 113–107 

Printed for the use of the Committee on the Judiciary 

( 

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

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

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., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

TED POE, Texas 

JASON CHAFFETZ, Utah 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JERROLD NADLER, New York 

JOHN CONYERS, JR., Michigan 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

JOE KEELEY, Chief Counsel 

HEATHER SAWYER, Minority Counsel 
(III) 

C O N T E N T S 

JULY 24, 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 Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 2 

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 .. 4 

WITNESSES 

David Bitkower, Acting Deputy Assistant Attorney General, Criminal Division, U.S. Department of Justice 

Oral Testimony ..................................................................................................... 15 

Prepared Statement ............................................................................................. 17 

Steven Tepp, President and CEO, Sentinel Worldwide 

Oral Testimony ..................................................................................................... 28 

Prepared Statement ............................................................................................. 30 

Matt Schruers, Vice President for Law and Policy, Computer & Communications Industry Association 

Oral Testimony ..................................................................................................... 51 

Prepared Statement ............................................................................................. 53 

Sherwin Siy, Vice President, Legal Affairs, Public Knowledge 

Oral Testimony ..................................................................................................... 65 

Prepared Statement ............................................................................................. 67 

Nancy E. Wolff, Partner, Cowan Debaets Abrahams & Sheppard 

Oral Testimony ..................................................................................................... 75 

Prepared Statement ............................................................................................. 76 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr. a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 6 

Material submitted by the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, 

Intellectual Property, and the Internet .............................................................. 89 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Association of American Publishers (AAP) .............. 108 

Prepared Statement of Sandra Aistars, Chief Executive Officers, Copyright 

Alliance (CA) ......................................................................................................... 116 

Prepared Statement of the Library Copyright Alliance ....................................... 125 

Letter from Pat O’Conner, President and Chief Operating Officer, Minor 

League Baseball ................................................................................................... 128 

(1) 

COPYRIGHT REMEDIES 

THURSDAY, JULY 24, 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 1:31 p.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble, 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Marino, Chabot, Farenthold, 

Holding, Collins, DeSantis, Nadler, Conyers, Chu, Deutch, DelBene, Jeffries, Cicilline, and Lofgren. 

Staff Present: (Majority) Joe Keeley, Chief Counsel; Olivia Lee, 

Clerk; (Minoity) Jason Everett, Counsel; and Norberto Salinas, 

Counsel. 

Mr. COBLE. Good afternoon, ladies and gentlemen. The Subcommittee on Courts, Intellectual Property, and the Internet will 

come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Subcommittee at any time. 

We welcome all the witnesses and those in the audience as well. 

Folks, we are going to have a battle on our hands with votes on 

the floor. We are going to have votes that will interrupt us imminently. I am thinking maybe within 30 minutes. We will do the 

best we can. 

Mr. Nadler, how are you? 

Mr. NADLER. All right. 

Mr. COBLE. By traditional, we always administer the oath, so if 

you all would please stand and let me administer the oath to you. 

[Witnesses sworn.] 

Mr. COBLE. Let the record show that all responded in the affirmative. 

I welcome you again, and I apologize in advance because of the 

interruption. But the interruption is going to be inevitable, I can 

promise you that. But we will do the best we can. 

As the cochair of the Creative Rights Caucus, I am well aware 

of having rights without the ability to enforce them is the same as 

having no rights at all. 
2 

Remedies for copyright infringement may include seizure of infringing goods, injunctive relief, awards of damages and profits, attorneys’ fees and costs, or statutory damages. 

Our witness from the Department of Justice can speak to the effort that they have taken to fight criminal piracy in the United 

States and abroad. I am pleased to see their efforts, but I am the 

first to recognize that as one pirate site is taken down, another will 

inevitably pop up. 

Since the Department of Justice can go after only the worst pirates, civil enforcement allows copyright owners to help protect 

their own property from theft by creating strong financial disincentives to stealing. 

However, just like erecting fences around your cattle takes time 

and money, so does your intellectual property, and most of us 

would declare that lawyers cost more than fences. And I would 

probably sign up on that side of the argument. 

If you are a large copyright owner, you can work within the civil 

system to file lawsuits, and many of them do that. However, it does 

seem to be an endless effort. 

As much as larger copyright owners find the civil litigation system expensive, smaller copyright owners find it not worth their 

time or money. Having to choose to go out and earn income by 

working or staying home to consider contracting an attorney to file 

a lawsuit on their behalf that they cannot afford in the first place 

is not much of a choice at all. 

Several years ago, the Copyright Office agreed that smaller copyright owners were at a significant disadvantage when it came to 

protecting their rights and recommended the creation of a small 

claims system. This system would allow plaintiff and defendants a 

potentially quicker, cheaper, less expensive way of resolving disputes. 

I look forward to learning more about these issues, and thanks 

to all of our witnesses again for making time to be with us today. 

I am now pleased to recognize the distinguished gentleman from 

New York, the Ranking Member of the Subcommittee, Mr. Jerry 

Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

Today, we consider ways in which our copyright laws are enforced, and the relief available to copyright holders should someone 

infringe upon their copyrighted material. 

Along with all of my colleagues on the Subcommittee, I recognize 

the importance of ensuring that copyright owners have sufficient 

remedies when their works are infringed. We know that infringements not only damage the financial interests of copyright owners, 

but our Nation’s economy as well. And as the legal maxim goes, 

there is no right without a remedy. 

I welcome this opportunity to hear from our witnesses about 

whether our current copyright infringement remedies are effective, 

and whether or not any changes may be necessary and appropriate 

at this time. 

As we know, copyright infringement occurs when someone does 

not obtain authorization or does not have a license to lawfully use 

copyrighted material and violates one of the exclusive rights given 

to a copyright owner. 
3 

There are two basic principles that should guide our consideration of copyright infringement remedies. First, the remedy should 

serve to deter potential infringers and, when warranted, to penalize criminal infringement efforts. Second, they should compensate 

the copyright owner for losses resulting from infringement. 

Federal law, which governs copyright infringement claims, requires such claims to be brought in Federal court. To prevail on an 

infringement claim, a copyright owner must prove actual ownership 

over the alleged infringed material and that at least one exclusive 

right granted to a copyright holder has been violated. 

Current copyright law provides various criminal and civil remedies for copyright infringement, including preliminary and permanent injunctions as well as statutory damages. The Copyright Act, 

for example, authorizes statutory damages of $750 to $30,000 per 

infringed work. Willful infringement, however, may authorize the 

award of damages as high as $150,000 per work. Innocent infringement, on the other hand, may result in the award of damages as 

low as $200. 

The issue of damages also includes the possible award of attorney’s fees and expenses to the prevailing party, when the court 

finds such awards to be appropriate. In addition, the copyright 

owner may ask the court to enjoin further infringement, either 

temporarily or permanently. 

If a copyright owner elects to pursue statutory damages, the 

copyrighted work must have been registered with the Copyright Office before the violation started, or, if it is a published work, within 

3 months of publication. 

As we examine these issues, we should study whether the penalties for copyright infringement are sufficient. We should consider 

today whether there is a need to clarify that felony infringement 

includes infringement by streaming. Felony penalties for copyright 

infringement are currently only available for reproduction or distribution of copyrighted material. 

About 3 years ago, the Office of U.S. Intellectual Property Office 

Enforcement Coordinator issued a report making several recommendations to Congress that would increase intellectual property protection. Included among these recommendations was a suggestion that the criminal law should be clarified to make infringement by streaming a felony. 

For example, downloading a copy of the movie Captain America 

illegally is a felony. But if you were to simply stream the same 

movie illegally, it would only be a misdemeanor. Does this distinction make sense? 

Accordingly, I look forward to hearing the witnesses discuss their 

thoughts about whether we should amend the law to make it clear 

that streaming is a distribution of copyrighted works and, thereby, 

a felony. 

In addition, I understand that some of the witnesses today will 

argue that the Copyright Act’s statutory damage provisions adequately reflect the two basic principles of deterrence and just compensation. 

Yet other witnesses will likely say that statutory damages have 

grown to an unreasonably high level in copyright cases and have 

a chilling effect on innovation. 
4 

Another factor involved in the pursuit of statutory damages is 

the oftentimes prohibitive costs of asserting a claim for copyright 

infringement, which can entail extensive litigation. We must ascertain whether the cost to access justice is just too high. 

Individual copyright owners such as authors, photographers, 

graphic artists, and illustrators complain that even when their 

works are clearly and repeatedly infringed, they simply lack the financial means to fund such litigation. 

These concerns may warrant consideration of whether there 

should be a streamlined judicial or administrative process to determine infringement claims below certain dollar thresholds. I look 

forward to hearing from the witnesses about how this process 

might work. 

Additionally, some have argued that the registration requirement 

needed to assert statutory damages places individuals and smaller 

entities at a disadvantage, because it is difficult and burdensome 

for them to meet the statutory requirement for timely registration. 

Again, I would like to hear from the witnesses about changes we 

should consider regarding the registration requirement. 

Whether or not we decide to make changes to statutory damages, 

to increase the penalties for streaming, or to set up new administrative processes to handle small copyright infringement claims depends in part on what we hear from our witnesses today. 

We have excellent panel before us, and I look forward to their 

testimony. 

I thank you, and I yield back the balance of my time. 

Mr. COBLE. I thank the gentleman from New York. 

The Chair now recognizes the distinguished gentleman from 

Michigan, Mr. Conyers, the Ranking Member of the full Committee. 

Mr. CONYERS. Thank you, Mr. Chairman. I am happy to join you 

and our distinguished witnesses today. 

The question that comes to mind is how we improve the system 

for resolving modest-sized copyright infringement claims, especially 

for individual creators with limited resources. Attorney Nancy 

Wolff has done a lot on that, but I want to hear from the other four 

of you as well. 

We often hear about large damage awards or settlements. Yet, 

many claims for copyright infringement seek much smaller damages. Any discussion on available remedies must include how the 

current system impacts small copyright holders. 

The estimated median cost for a party to litigate a copyright infringement lawsuit with less than $1 million at stake through appeal can normally average out to $350,000. Such costs are obviously much more than what many individuals can afford to invest 

in a lawsuit that may or may not be successful. 

In fact, the costs may well exceed any potential recovery that any 

individual copyright holder could obtain in a relatively modest infringement case. 

These factors may deter small owners from pursuing legitimate 

infringement claims. 

In September of last year, the Copyright Office released a report 

focusing on this issue, observing that most infringements will never 

be prosecuted because they are economically infeasible. The report 
5 

also noted that because the potential for recovery of damages is 

limited, small copyright holders have difficulty finding counsel willing to take the case on. 

So the Copyright Office has recommended the option of addressing small claims by streamlined adjudication processes, in which 

the parties can participate by consent. I hope that helps. 

And then we come to the whole issue of examining whether current law regarding remedies for copyright infringement is sufficient 

or effective. I know that we are here meeting on a moving target. 

Every 6 months, something new comes out. But we would like to 

get your views on how efficient these remedies for infringement 

are, in fact, and how we can make them as effective as possible. 

And so, statutory and actual damages, injunctions and impoundments, court costs and attorneys fees, all add up. 

And some contend that these remedies, especially the threat of 

high statutory damages, have chilled the creation of innovative 

services. I would like to see where you stand on that. 

Mr. Chairman, I will submit the rest of my statement for the 

record. Thank you for this opportunity. 

Mr. COBLE. Without objection. 

[The prepared statement of Mr. Conyers follows:] 
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Mr. COBLE. And without objection, the statements from other 

Members will also be made a part of the record. 

Our first witness today is Mr. David Bitkower, Acting Deputy Assistant Attorney General in the Criminal Division of the United 

States Department of Justice. Mr. Bitkower supervises the division’s investigations and prosecutions involving computer crime 

and intellectual property. Mr. Bitkower received his J.D. from Harvard Law School and his B.S. from Yale University. 

Mr. Bitkower, good to have you with us. 

Our second witness is Mr. Stephen Tepp, President and Chief 

Executive Officer for Sentinel Worldwide, where he counsels clients 

on protecting intellectual property. Prior to forming Sentinel 

Worldwide, Mr. Tepp was Chief Intellectual Property Counsel for 

the Global Intellectual Property Center of the United States Chamber of Commerce. He received his J.D. from American University 

Washington College of Law, and his undergraduate degree from 

Colgate University. 

Mr. Tepp, good to have you with us. 

Our third witness is Mr. Matt Schruers, Vice President for Law 

and Policy for the Computer & Communications Industry Association. Mr. Schruers also served as Adjunct Professor teaching intellectual property courses at Georgetown University Law Center. He 

received his J.D. from the University of Virginia School of Law and 

his B.A. from Duke University. 

Mr. Schruers, I studied law 9 miles from your school, and the 

spirited rivalry is still alive. I am sure you know that. Good to have 

you with us as well. 

The fourth witness is Mr. Sherwood Siy, Vice President of Legal 

Affairs at Public Knowledge. Before joining Public Knowledge, he 

served as Staff Counsel for the Electronic Policy Information Center, working on consumer and communications issues. He received 

his J.D. from the University of California-Berkeley Boalt Hall 

School of Law and his B.A. from Stanford University. 

Good to have you with us, Mr. Siy, as well. 

Our final witness is Ms. Nancy Wolff, Partner in Cowan, 

DeBaets, Abrahams & Sheppard LLP. In her position, Ms. Wolff 

advises traditional and new media clients in copyright, trademark, 

and digital media law. She received her J.D. from Rutgers School 

of Law and her B.S. in business management from the University 

of Maryland. 

Good to have you with us as well, Ms. Wolff. 

Mr. Bitkower, we will let you be the leadoff today. 

Folks, we try to comply with the 5-minute rule. When the light 

goes from green to amber, that is your notice that you have 1 

minute remaining. You won’t be severely punished if you violate 

that, but if you can wrap it up on or about 5 minutes, we would 

appreciate that. 

I have also been advised that the vote that was initially scheduled for 2 o’clock probably will come later than that, so maybe the 

gods are shining on us. 

Mr. Bitkower, you are recognized for 5 minutes. 
15 

TESTIMONY OF DAVID BITKOWER, ACTING DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE 

Mr. BITKOWER. Thank you. Good afternoon, Chairman Coble, 

Ranking Member Nadler, Ranking Member Conyers. Thank you for 

the opportunity to discuss criminal copyright enforcement with you 

here today. 

Criminal enforcement of copyright law plays an essential role in 

preserving the rights of American authors, artists, and creators. 

Protecting those rights adds to our Nation’s artistic, literary, and 

musical culture, and our scientific and technical knowledge. It also 

protects a vital segment of our Nation’s economy, given the increasing prominence of copyrighted works, ranging from books and 

music, to movies and computer software. 

Although copyright protection predates our country’s founding 

and is rooted in the Constitution, Congress has repeatedly updated 

our laws to keep pace with new technology and new methods of intellectual property theft. For example, a century ago, Congress responded to a Supreme Court decision involving player pianos by 

passing the Copyright Act of 1909, which created the first compulsory license scheme for mechanical reproduction of music. 

Decades later, as commercial radio and sound recording technology gained popularity, Congress again updated laws to protect 

popular music recordings from unlawful duplication with the Copyright Act of 1976. 

And, more recently, as Internet usage became widespread, the 

copying and distribution of digital content made large-scale Internet piracy far cheaper than physically manufacturing pirated discs. 

To combat the emergence of Internet piracy, Congress enacted the 

No Electronic Theft Act of 1987, which broadened criminal penalties to encompass certain cases of piracy not conducted for financial gain. 

The Department of Justice, through its Computer Crime and Intellectual Property Section, or CCIPS, U.S. Attorneys Offices 

around the country, and the Federal Bureau of Investigation, and 

in partnership with other agencies, most prominently, Immigration 

and Customs Enforcement’s Homeland Security Investigations, has 

successfully used the tools and resources already provided by Congress to develop a focused but robust criminal enforcement program. 

To highlight just one example, in January 2012, the department 

unsealed charges against members of a worldwide criminal organization, the Mega Conspiracy, who are alleged to have engaged in 

criminal copyright infringement with estimated criminal proceeds 

of more than $175 million and harm to rights-holders in excess of 

half a billion dollars. 

We are currently seeking to extradite these defendants to the 

Eastern District of Virginia to face the charges against them. 

The indictment alleges that Megaupload.com reproduced and distributed unauthorized copies of copyrighted content on a massive 

scale, including the latest movies, music, video games, and other 

computer software, and boasted more than 1 billion page visits. 

The case against the Mega Conspiracy highlights our commitment to combating large-scale international copyright infringe-
16 

ment. The case also highlights two trends in copyright infringement that have created challenges for criminal enforcement. 

First, we have seen Internet streaming emerge as the preferred 

means of disseminating many types of copyrighted content online. 

Reports indicate that the amount of bandwidth devoted to infringing video streaming grew by more than 470 percent between 2010 

and 2012. Nevertheless, under our current laws, infringing streaming, even where conducted for financial gain, is not clearly punishable as a felony. 

To deter pirate streaming Web sites from illegally profiting from 

copyrighted works of others, we recommend that Congress amend 

the law to create a felony penalty for unauthorized Internet 

streaming. We would welcome the opportunity to address this issue 

with Congress. 

A second fundamental development is the globalization of the intellectual property market. The same commercial and technological 

changes that have broadened the legitimate market for creative 

works have also facilitated the globalization of intellectual property 

crime. The department works to disrupt foreign-based infringement 

through American prosecutions and forfeitures, where appropriate, 

but also through diplomatic and trade-based pressure, training and 

support for foreign partners to promote enforcement in other countries, and increasing public awareness about the harms of copyright piracy. 

Our Intellectual Property Law Enforcement Coordinator program, essential to these efforts, has allowed us to put specialized 

prosecutors on the ground in Bangkok, Thailand, and in Eastern 

Europe. We know that this program gets results. 

To further these efforts, the department proposes the creation of 

additional positions to broaden our reach abroad. The program 

would permit the department to address legal and operational hurdles to effective international intellectual property enforcement. 

Thank you for the opportunity to discuss the department’s work 

in this area, and I look forward to answering any questions that 

you might have. 

[The prepared statement of Mr. Bitkower follows:] 
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Mr. COBLE. Thank you, Mr. Bitkower. You ought to be commended. You beat the illuminating red light. 

I failed to tell you, ladies and gentlemen, that timers on your 

desk keep you advised when that illumination occurs. 

Thank you, Mr. Bitkower. 

Mr. BITKOWER. Thank you. 

Mr. COBLE. Mr. Tepp? 

TESTIMONY OF STEVEN TEPP, PRESIDENT AND CEO, 

SENTINEL WORLDWIDE 

Mr. TEPP. Thank you, Chairman Coble, Ranking Member Nadler, 

Ranking Member Conyers, Members of the Subcommittee. Thank 

you for the opportunity to appear before you today to discuss copyright remedies as part of your ongoing review of the American 

copyright system. 

My name is Steven Tepp. I am President and CEO of Sentinel 

Worldwide. Previously, I enjoyed a career of 15 years of government service to your counterpart in the Senate and to the U.S. 

Copyright Office. I now provide intellectual property counsel to 

companies and associations with interests in protecting and enforcing intellectual property rights, including the Global Intellectual 

Property Center of the U.S. Chamber of Commerce. 

I am also a professorial lecturer in law at the George Washington 

University Law School. Previously, I also taught at George Mason 

University Law School and the Georgetown University Law Center. 

Today, however, I am here before you in my personal capacity as 

an expert in copyright. The views expressed are my own and not 

necessarily reflective of the views of any client or employer. 

Copyright is a property right. Those who apply their talents to 

produce creative, tangible expression earn their copyright. Infringement of that right is a distortion of the marketplace incentives to 

create and distribute copyrightable works that must be addressed 

if our copyright system to be maintained as an engine of economic 

growth, job creation, innovation, and creative expression. 

It is axiomatic that property rights that exist only on paper and 

cannot be effectively enforced are no rights at all. 

The copyright review hearings this Subcommittee has conducted 

thus far have presented nuanced issues of the scope and duration 

of exclusive rights, and the scope and application of exceptions and 

limitations. 

Today’s hearing is different. Most remedies are available only 

after a court has resolved all the nuances of copyright law and 

found the defendant to have infringed. 

The subject of today’s hearing is the appropriate redress for violations of the law. 

Effective enforcement of copyright entails three fundamental 

goals: compensation to the injured right holder; deterrence against 

future infringement; and in the most egregious cases, punitive 

measures against the infringer. 

The Copyright Act is designed to achieve these through the availability of a variety of civil remedies and criminal penalties. My 

written testimony offers a brief overview of the history of the various remedies available for copyright infringement, including injunctions, seizure and destruction of infringing copies, monetary 
29 

damages, awards of costs and attorney’s fees, as well as criminal 

enforcement and enforcement at the border. 

For the remainder of my time, I would like to focus on statutory 

damages for copyright infringement as they have been critiqued in 

some of my fellow panelists’ testimony. 

Statutory damages for civil copyright infringement are among 

the most venerable aspects of American copyright law. Even prior 

to the ratification of the Constitution, several State copyright statutes provided for statutory damages, and they have been part of 

the Federal Copyright Act since the first Congress enacted the 

Copyright Act of 1790. 

They are a needed aspect of a complete remedy system, because 

so often, actual copyright damages are difficult or even impossible 

to prove. That is truer than ever in today’s digital network environment. 

Over the decades, and, indeed, centuries, Congress has repeatedly and carefully reassessed and revised our statutory damages 

system to ensure it meets its goal of compensation and deterrence 

while avoiding excessive awards. It does so by trusting courts with 

a wide range of discretion to do what is just in a given case. 

The level of statutory damages today is lower than it has been 

in at least a century, comparing it to the initial levels of the 1909 

act and the 1976 act, adjusted for inflation. 

Again, today’s statutory damages are lower than they have been 

in a century, compared to the initial levels of 1909 and 1976, adjusted for inflation rate. 

If the potential for large statutory damages awards is great today 

than in the past, it says more about the scope and volume of infringements today than it does about the statute. 

The undeniable reality is that copyright infringement is a massive problem. Efforts to address that must surely be multifaceted, 

but it is equally certain that effective legal remedies must be 

among those facets. If anything, this Subcommittee should be looking for ways to improve the effectiveness of copyright remedies in 

terms of compensation, and especially deterrence. The very last 

thing that you should consider is weakening them. 

Thank you for the opportunity to present my views and participate in this historic copyright review process. It is my hope that 

it demonstrates to you the longstanding and thoughtful place that 

remedies have in making the Copyright Act the success it has been 

to date. 

It would be my pleasure to assist the Committee in any other 

way that I am able. 

In closing, Mr. Chairman, I would like to add it has been a privilege to work with you and your staff over the many years that I 

have been working on copyright, and to observe the gentlemanly 

and capable way in which you have run this Subcommittee. The 

field of intellectual property law and policy is much better for your 

efforts, and you will be missed after your retirement. Thank you. 

[The prepared statement of Mr. Tepp follows:] 
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Mr. COBLE. I thank you for that, Mr. Tepp. 

I will give you 5 additional minutes. [Laughter.] 

Mr. TEPP. I will reserve those for later, sir. 

Mr. COBLE. But I appreciate that. 

Ms. Schruers, you are recognized. 

TESTIMONY OF MATT SCHRUERS, VICE PRESIDENT FOR LAW 

AND POLICY, COMPUTER & COMMUNICATIONS INDUSTRY 

ASSOCIATION 

Mr. SCHRUERS. Thank you, Mr. Chairman, Ranking Member, 

Members of the Committee. My name is Matt Schruers. I am VP 

for Law and Policy at CCIA. I appreciate the opportunity to speak 

with you today. 

Your initial remarks adequately identified many of the remedies 

available in copyright—injunctions, actual damages, defendants’ 

profits, attorneys’ fees, criminal penalties. 

I would like to focus today on statutory damages, which, as was mentioned, can range between $750 and $30,000 per work infringed, requiring no proof of injury or harm, and in cases of willfulness, up $150,000 per work infringed. 

Unfortunately, these high statutory awards disconnected from 

any requirement to prove injury or harm caused two problems. 

They incentivize copyright trolls, and they discourage investment. 

So first, let me focus on trolls. 

We are seeing predatory copyright litigation as a business model 

in which shell entities indiscriminately sue many individuals at 

once demanding settlements. These shotgun-style suits now comprise the majority of copyright cases in over 20 percent of Federal 

trial courts. 

So many involve adult content plaintiffs that over a third of the 

entire Federal copyright caseload now involves pornography. 

But not all trolling is about adult content. In fact, an entity 

known as Righthaven pioneered the model using news, harassing 

blogs or Web sites who copied or quoted news, in some cases, as 

few as five sentences. Its victims included a U.S. Senate candidate, 

who was posting news about herself to our her campaign Web site; 

a former assistant U.S. attorney, whose Web site collected information on unsolved murders; and a decorated veteran, who posted a 

column while participating in Internet debate about public employee pensions. 

But Righthaven is not unique. Several Federal judges have sanctioned and even asked for criminal action against trolls who were 

‘‘seeking to outmaneuver the legal system.’’ 

So the second issue: deterring investment. Today’s civil copyright 

disputes involving digital technologies often implicate thousands of 

works. Thousands of users with large, lawfully acquired media libraries using services to store content in the cloud, to devices to 

time and place shift in the home, thousands of users multiplied by 

thousands of works, even at the smallest statutory damage, can 

still reach astronomical levels. And these risks deter investment. 

Consider the case of Veoh, a promising startup that offered usergenerated content alongside licensed content from major media 

companies. They were sued. Three years of litigation grounded 

Veoh into bankruptcy. 
52 

This did not end the case. The plaintiffs renewed their claim 

against Veoh’s investors, seeking to hold the investors responsible 

for what the company’s customers had allegedly done. 

Now, ultimately, Veoh and its investors were exonerated, but not 

before Veoh went broke. These lawsuits against investors, founders, officers in their personal capacity are not uncommon, and they 

are extraordinarily chilling. 

I know of no other place in Federal law where plaintiffs receive 

an aggregating statutory award on a strict liability basis, requiring 

no proof of injury or harm, against investors in companies where 

the companies themselves were only indirectly liable for the actions 

at issue. 

So given that, what might we do? My written testimony is a lot 

more specific, but some ideas could include reassessing the minimum, the $750 minimum, or the maximum amounts, and whether 

to allow those amounts to aggregate indefinitely. 

Just like in tort, these jackpot judgments that we hear about tax 

the perceived legitimacy of the IP system, which all rights holders 

depend on since the IP laws largely require voluntary compliance 

to succeed. 

We could also provide courts with guidance, ensure some predictability in secondary liability cases. We could cap awards or we 

could limit them to only intentional cases. 

Now, if in any case there is a limit, and the plaintiff’s injury exceeds that limit, they should always have the opportunity to pursue 

actual damages and the defendant’s profits. 

So in conclusion, copyright is an essential tool in the innovation 

toolbox. I am a copyright lawyer. I love it. I think it is great. I also 

think you can have too much of a good thing, and it might be time 

to recalibrate the system. 

Thanks for your time, and I look for to your questions. 

[The prepared statement of Mr. Schruers follows:] 
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Mr. COBLE. Thank you, Mr. Schruers. 

Mr. Siy? 

TESTIMONY OF SHERWIN SIY, VICE PRESIDENT, 

LEGAL AFFAIRS, PUBLIC KNOWLEDGE 

Mr. SIY. Thank you, Chairman Coble, Ranking Member Nadler, 

Members of the Subcommittee, Ranking Member Conyers. Thank 

you for inviting me to discuss copyright remedies today. 

Today, I would like to address the issue of statutory damages 

and preliminary injunctions. My written testimony briefly touches 

upon certain issues raised by seizures and forfeitures. 

Whenever I introduce copyright law to a new audience, two 

things tend to shock them: the length of copyright terms and the 

magnitude of statutory damages. 

Statutory damages for copyright infringement are extraordinarily 

high. Damage awards can quickly reach millions of dollars in cases 

where the retail value of the infringing copy is less than the cost 

of a couple of hamburgers. Furthermore, there is no requirement 

that statutory damages awarded bear any resemblance to the actual harm caused. 

Also, the wide range of values available also increase uncertainty 

and makes the mere risk of litigation a much bigger threat than 

it should be. 

This not only affects large technology companies, it affects individuals going about their daily lives. Uploading a home video to 

YouTube could expose a user to $150,000 in damages or potentially 

just $750 at a basic minimum. 

A mash-up that used 10 different tracks could thus lead to $1.5 

million in exposure, all for creating a new work that is likely but 

still debatably a fair use. 

Such high awards suggest that statutory damages are exceeding 

their intended purpose. Large damages beyond a certain size don’t 

increase deterrence. An amount I can’t afford is still an amount I 

can’t afford, whether it is in the thousands of dollars or millions. 

Furthermore, even a low risk of such a large award can chill free 

speech, the legitimate creation of fair use works, and contribute to 

the problem of orphan works. 

The threat of large-damage awards can also be abused by copyright trolls, who will threaten litigation backed by large awards in 

order to extract smaller settlement payments from defendants, 

even those who might have legitimate defenses. Those smaller payments, though, can range from $2,000 to $10,000 apiece. 

So reform is necessary in this area, and there are a number of 

different forms that might take. 

First, there are existing reductions in damages available in the 

statute for certain good faith attempts at fair use. These could be 

expanded to include other types of users. 

Secondly, similar limitations on damages could be applied to noncommercial uses. 

Third, Congress could re-examine the criteria used to calculate 

statutory damages and perhaps place caps in certain instances 

where the number of works and the number of copies fit particular 

criteria. 
66 

Fourth, some basic evidence of harm could be asked of plaintiffs 

when they bring suit, with maximum damages being scaled on the 

statutory side to some multiplier of actual harm. 

And finally, Congress could simply add guidelines to the statute 

for the application of this wide range of values, reducing uncertainty for the parties, but also for judges and juries who are asked 

to apply them. 

One area where I believe the law is headed in the right direction, 

though, is that of preliminary injunctions. In 2006, the Supreme 

Court held that courts dealing with intellectual property cases 

should, as they do with other types of cases, engage in a true balancing of four critical factors before issuing a preliminary injunction. Whereas in the past, a number of courts had basically assumed that preliminary injunctions should issue automatically in 

copyright case—the 2006 decision of eBay v. MercExchange corrected that longstanding error. 

Three critical features of eBay and the decisions that followed it 

produced this shift. First was the recognition that instead of requiring an injunction, many plaintiffs can be made whole through 

the payment of damages, especially for ordinary commercial uses of 

commercial works. 

Second was the recognition that in balancing the potential harms 

of issuing or not issuing an injunction, a court must not presume 

that the defendant’s actions are infringing. In other words, the 

court must balance the potential harms of getting a decision wrong 

in either direction, balancing the risk of ongoing infringement 

against the risk of limiting First Amendment legitimate speech. 

Third, the public interest in a copyright case is not merely in enforcing copyright law for meritorious plaintiffs, but also meritorious 

defendants. Even more than that, though, is the important recognition of the public interest in a court case stretches beyond the parties in suit and can affect the public at large by allowing or restricting speech, or affecting the interests of a defendant’s good 

faith clients and consumers. 

Some district courts will occasionally site pre-eBay derived precedent in issuing automatic injunctions, but the number of these 

cases appears to be diminishing. The rebalancing of the preliminary injunction standard highlights just how important due process 

can be in the application of remedies. 

Remedies may seem to belong to the time after a trial, but they 

affect litigation from its very beginning, or even before that litigation begins. 

So I ask you to consider that as you continue your review. Thank 

you for your time, and I look forward to your questions. 

[The prepared statement of Mr. Siy follows:] 
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Mr. COBLE. Thank you, Mr. Siy. Good to have you with us. 

Ms. Wolff? 

TESTIMONY OF NANCY E. WOLFF, PARTNER, 

COWAN DEBAETS ABRAHAMS & SHEPPARD 

Ms. WOLFF. Good afternoon, Chairman Coble, Ranking Member 

Nadler, Chairman Goodlatte, Ranking Member Conyers, Members 

of the Subcommittee. I appreciate this opportunity to come here to 

speak to you today about remedies in your ongoing review of the 

American copyright system. 

I have had over 30 years’ experience now representing individual 

creators, whether they are visual artists, illustrators, graphic designers, trade associations representing the interests of professional creators, as well as organizations such as PLUS that is trying to help both users and creators license images more efficiently 

and effectively. 

I am here today on behalf of five separate organizations, collectively among them they represent the professional imagery that 

you see every day, whether you are reading your Washington Post, 

looking at your smart phone, or reading something on a tablet. 

These creators and their licensing entities rely on a copyright 

system where copyright is encouraged and that there is a true ability to enforce rights when rights are not licensed properly. 

These are small businesses, whether they are individuals or companies that are involved with aggregating and licensing images, 

and the lifeblood is copyright and the ability to license. 

It is ironic that now that so much is displayed online, that images and visual imagery are used more and more, because everyone 

wants to have text enhanced with images. It is very boring just to 

read words. 

On the other hand, it seems like less and less of the content is 

actually licensed from these professionals. It is so easy to rightclick, which I call a right-click license, where work is not licensed 

but, rather, infringed. And the inability to have an affordable and 

efficient way to actually enforce license fees, which have a relatively low value compared to many of the large cases that are battled out between the big corporations, just makes enforcing copyright in Federal court impractical and impossible. Almost on a 

daily basis, someone comes to me with a legitimate case of infringement. 

Maybe I will take one moment and talk about the word ‘‘troll.’’ 

I think, unfortunately, the word ‘‘troll’’ is often used when someone 

is legitimately trying to enforce a copyright claim, and I think it 

should not be used in that context. When you look at the cost of 

even an index number, which is $400, and that many images can 

be licensed for online use for blogging and other things for as low 

as $250 or less, in some instances, you can see how impossible it 

is to enforce a copyright when it costs more to have the key to the 

courthouse than you would ever get in recovery. 

There has been a lot of mention of statutory damages at this 

table. Statutory damages are critically important. In many instances, however, the visual artists don’t even have the benefit of 

statutory damages, because they, as a group of creators, create 

such a volume of work compared to others, such as a musician, a 
76 

film writer, a writer, that often the burden and expense of registration is too large of a hurdle. 

So most of these creators are faced with only actual damages, because they have not had the benefit of registration before infringement. And when your actual damages can be in hundreds to a few 

thousand dollars, you really need an alternate system. 

Federal court is wonderful. It has very robust rules and a great 

discovery system. But for these type of cases, it is like giving an 

artist a sledgehammer when all you really need is a flyswatter. 

There really does need to be a way to encourage licensing rather 

than infringement. It is so easy to make a judgment call when you 

are a user and assume that you can just use an image because if 

you are caught, what are the consequences? If someone contacts 

you, you can just ignore them, which I find is often the case, because it just costs too much to go to court. 

These references to extraordinary damages in my years of experience I just have not seen them. Everyone comes to me all excited 

that they could get up to $150,000 for willful infringement, but the 

courts don’t do that. It is so rare. 

What happens when you have statutory damages is it gets you 

a phone call from the other side. It allows you to come to a reasonable resolution that affords the creator some type of license fee because they realize they can go to court. So it actually encourages 

settlement. 

There are so few cases that end up going to trial because it is 

so expensive. 

So all the organizations I am here speaking for have been responding to inquiries from the Copyright Office, and we really do 

support the study on small copyright claims that the Copyright Office published in September 2013. 

As you rightly said, if you have a right without a remedy, you 

have no right. And it really does cause a great economic harm to 

these businesses and individuals who make a living out of legitimately creating works and attempting to earn license fees. 

I am very pleased to be here today and answer any further questions you have. 

[The prepared statement of Ms. Wolff follows:] 

Prepared Statement of Nancy E. Wolff, Partner, 

Cowan DeBaets Abrahams & Sheppard 

Chairman Coble, Ranking Member Nadler, Chairman Goodlatte, Ranking Member 

Conyers, and Members of the Subcommittee, thank you for the opportunity to appear before you today to discuss copyright remedies as a part of your ongoing review 

of the American copyright system. 

I. INTRODUCTION AND BACKGROUND

My name is Nancy Wolff and I am a Partner at Cowan DeBaets Abrahams and 

Sheppard, LLP. In my practice, I represent numerous visual artists, content licensing companies and counsel trade associations, such as PACA/Digital Media Licensing Association and PLUS, an organization aimed to create standardization amongst 

licensing to make it easier for both creators and users to license images. Clients 

come to me with potentially infringing matters on almost a daily basis. 

These comments are submitted on behalf of myself, as well as a number of visual 

arts trade associations, including PACA, Digital Media Licensing Association 

(‘‘PACA’’), American Society of Media Photographers (‘‘ASMP’’), National Press Photographers Association (‘‘NPPA’’), Graphic Artists Guild (‘‘GAG’’), North American 

Nature Photography Association (‘‘NANPA’’) and Professional Photographers of 
77 

America (‘‘PPA’’) (collectively the ‘‘Organizations’’). Collectively these organizations 

represent the creators of most of the visual content that enrich your life every day, 

as well as the licensing entities that aggregate, distribute and make the content of 

these professional artists available to the media and others for licensing. This includes illustrators, graphic designers, videographers, photojournalists, press photographers, advertising photographers, portraiture, wedding and event photographers 

and nature photographers. When you read the Washington Post, your favorite blog 

on an iPad or other tablet, or keep up with news and events on a smart phone, the 

content is enhanced with illustrations, photographs and videos created by members 

of these organizations. Visual images document history, illuminate our world, and 

give us insights into our world that cannot be adequately expressed by the written 

word. 

These professionals are small business owners throughout America. Their livelihood depends on the ability to license content and receive fair compensation for the 

works they create. The underpinning of their business is a robust copyright system, 

including the ability to enforce their rights in the event users choose to use their 

works without obtaining a license. To have a right, without a remedy is an empty 

right. In my experience, federal court litigation, the exclusive venue for copyright 

infringement claims, is simply too expensive given the relatively lower monetary 

value of many image claims. Online infringement claims, in particular, do not justify the high cost of litigation that can exceed a $100,000. As a consequence, many 

online uses that should be licensed with payments going to the creator and/or their 

licensing representatives are used without payment or license, based on the calculated risk that there will be no consequence. While their exists many options for 

legitimately licensing images for reasonable license fees, too many users simply 

forgo the license and assume that anything on the internet is available for free. 

While infringement of content made available for licensing has always been 

present, even before digital photography when we lived in a predominantly print 

world, the frequency and ease with which images now can be redistributed and used 

without obtaining any license or paying a license fee is causing measurable economic harm to the individual creators and their licensing organizations. 

The reality for more than a decade now is that most images displayed on websites 

are not authorized or licensed. A few years ago, PicScout, a company known for its 

image recognition technology and ability to search the Internet for the use of images 

and compile reports, did a study of a sampling of commercial websites to determine 

whether the images displayed were licensed or not. The study results confirm that 

approximately 90% of the images on the commercial websites sampled were not 

properly licensed. The knowledge that most infringements will not be enforced by 

the copyright owner contributes to such a high rate of infringing uses. 

II. CHALLENGES IN THE CURRENT LEGAL SYSTEM

A. Registration 

The ability for visual artists to use the federal court system to redress the harm 

is limited for several reasons, including: the difficulty of effectively registering large 

volumes of images, the relative smaller value of the claims and the resources and 

effort involved in bringing a claim in federal court. The first challenge to effective 

copyright enforcement is copyright registration. Photographers and other visual content creators are among the most prolific of creators, and in sheer numbers create 

more copyrightable works than musicians, writers, filmmakers and most other authors whose works are protected by copyright. The burden on resources, both financial and human, in registering large collections of works discourages these creators 

from taking advantage of the voluntary copyright registration system, when faced 

with the day to day challenges of making a living, and the understanding that 

under the current Copyright Act a work is protected from the moment of creation. 

While this is accurate, a U.S. author cannot commence an action unless the work 

is registered, and if the work is not registered before the infringement or within 

three months of publication, statutory damages and the ability to seek attorneys’ 

fees are unavailable, leaving the visual artist only with the opportunity to seek actual damages, often a relatively nominal amount. See 17 U.S.C. §§ 411,412. Consequently, the great majority of visual content creators do not hold the keys to the 

courthouse, even if they discover clearly infringing uses. The cost of an expedited 

copyright registration may often far exceed the value of the licensee fee that could 

be obtained. While the Copyright Office has worked with the photography community over the years in developing group registration solutions that take into consideration the large number of images that can be uploaded on a daily basis, the process still provides hurdles to most visual artists with the practical result that many 

works of visual arts are not registered. Reviewing ways in which visual artists can 
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more effectively register their works and working with the Copyright Office in creating the 21st century registration system that can accommodate the submission of 

digital files as part of a photographer’s daily workflow will certainly improve this 

challenge. 

B. Alternate Tribunal for Smaller Claims 

In order to continue to obtain license fees for the use of images on behalf of the 

copyright owners, there needs to be an efficient, effective and viable means for 

image creators and licensors to enforce their rights. Otherwise, there is no incentive 

to license images and visual artists will always be competing against the use of images obtained by infringement for free. The Organizations’ members take seriously 

the responsibilities of enforcing copyright in the imagery they represent and many 

licensing companies have departments dedicated to copyright compliance in order to 

resolve infringements and secure licensing fees on behalf of copyright holders. Indeed, visual artists’ economic livelihood depends on a robust copyright system. As 

such, many artists, as well as the Organizations, have had to enter into the business of tracking down infringers to enforce their copyright. While the first step is 

to resolve claims without resorting to litigation, some claims cannot be resolved, either because the infringer refuses to respond, believes that simply removing the infringing content is sufficient, or refuses to pay adequate licensing fees. 

Statutory damages remain an important remedy to visual artists and their representatives. Without statutory damages, it is often difficult to establish actual damages. Frequently however, because many works are not registered for the infringing 

use, visual artists are only able to seek actual damages as a remedy, often limited 

to the amount of the license fee. Moreover, they cannot seek attorneys’ fees, which 

can have the effect of encouraging claims to settle early, often without resorting to 

litigation. If the claim cannot be resolved informally, a decision must be made as 

to whether an infringement action is warranted. The current system fails when the 

relief sought is actual damages because standard license fees for many noncommercial uses on the Internet are relatively low, in the hundreds of dollars, and even 

commercial uses may only be in the thousands of dollars. Using federal court to try 

to enforce copyright infringement on many of the online abuses is like using a 

sledgehammer, when a flyswatter is all that is needed. The high cost of filing and 

prosecuting a copyright claim in federal court often forces copyright owners to greatly increase their demands to cover the cost of litigation and to cover the cost of attorneys’ fees. This places undue pressure on all sides of the matter, including the 

judicial system, causing more funds and energy to be expended than necessary. In 

most instances, it does not make commercial sense to pursue an action unless there 

are numerous registered images infringed by a single infringer. As a result, individual artists and smaller companies are at a disadvantage because they do not 

have the same capabilities and resources that larger corporations possess to prevent 

their works from being taken advantage of. Unfortunately, the inability to enforce 

copyrights only encourages infringement and disrespect for copyright in general and, 

absent a practical remedy, deprives visual artists of their rights. 

In addition to the obvious financial deterrents in bringing an action, including attorneys’ fees and other costs, such as obtaining a court filing index number (a fee 

that may itself exceed the license value of an image use), expert fees, document production and deposition costs, it is often difficult to finding attorneys throughout the 

country who are willing to handle these type of actions, where the economic value, 

even with the of availability of statutory damages and/or attorneys’ fees, may be relatively low. Even if a copyright owner has the benefit of an in-house lawyer or a 

local lawyer that is willing to work with them, strict jurisdictional requirements 

may prevent the company from being able to bring a claim in its local federal district. This is an additional deterrent to pursuing claims against a defendant who 

resides at a distance to the copyright owner, adding additional costs and inconvenience, particularly in the case of the individual who may not be able to afford the 

costs of, or to take the time off to, travel. In some cases, the inconvenience of litigation is enough to prevent an individual copyright owner from bringing a lawsuit, 

as it detracts too greatly from the artists’ ability to work and create. Further, there 

is a risk that the copyright owner could lose based on defenses such as fair use, 

an area of the law for which it is very difficult to predict outcomes. The small copyright owner often cannot take the risk that the defendant might prevail and be 

faced with the possibility of paying the defendant’s attorney’s fees. 

On almost a daily basis, we counsel clients as to the risk of bringing a copyright 

action and, in most instances, the client is deterred based on the cost of litigation 

and the risk of fees. 
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III. SUPPORT OF THE COPYRIGHT OFFICE REPORT ON SMALL CLAIMS RECOMMENDATIONS

The Organizations collectively favor a system that would enable rights holders to 

elect to bring a copyright infringement claim using a form of alternate dispute resolution and support the Copyright Office Study on Remedies for Copyright Small 

Claims. Each of the organizations have provided comments to the United States 

Copyright Office in connection with their study on remedies for copyright small 

claims and support the United States Copyright Office Report On Copyright Small 

Claims published in September 2013. While each of the Organizations submitted individual responses, the issue of effective remedies for copyright infringement is a 

priority, and the Organizations have met over the years to collectively discuss and 

respond to questions posed by the Copyright Office. Specifically, the Organizations 

support an alternate dispute resolution system that would provide: 

• The ability to bring a small claim without the need of legal representation; 

• A forum and procedures that are cost effective and do not require expensive 

travel, costs or expert fees; 

• The ability to have a claim adjudicated timely by a tribunal that is knowledgeable about copyright; 

• A resolution that offers finality and ease of enforcement of any judgment; and 

• Incentives to avoid having the defendant’s rejecting the forum and demanding 

that the claim be brought in a federal court of general jurisdiction. 

The submissions of the various Organizations to the Copyright Office in response 

to three separate notices of inquiry regarding copyright small claims and remedies 

provide greater detail as to the complex issues that arise when considering an alternate system than federal court. Some highlights of submission on behalf of PACA/ 

the Digital Media Licensing Association may be helpful in framing the issues. 

Nature of the Process 

We envision the process of submitting a claim under a small copyright claims system as an alternative dispute process with guidance and oversight from the Copyright Office. The adjudicators should have copyright law experience and some training in dispute resolution. The process should be virtual, meaning that claims should 

be submitted electronically without the need for any party to travel to any location 

in order to testify or to provide other evidence. The award should be timely, and, 

absent abuse, should not be entitled to an appeal. 

Voluntary Versus Mandatory 

We acknowledge that any alternative tribunal to federal court will most likely be 

voluntary. In order for the system to be successful, participants should be offered 

a cost effective and streamlined dispute resolution process. There should be incentives to encourage the use of the system, to discourage more well-healed infringers 

from refusing to participate in the hopes that the claimant would not have the financial means to bring any claim, thereby avoiding any risk of paying damages for 

infringing activity. Possible incentives could include an increase in the prevailing 

plaintiff’s damages if the defendant rejects the plaintiff’s election to proceed in the 

small copyright claim forum and the plaintiff prevails in the general federal system. 

In this event, the plaintiff should be entitled to costs and attorneys’ fees, regardless 

of whether attorneys’ fees would be available under Section 412 of the Copyright 

Act. 

Permissible Claim Amount 

We support the Copyright Office recommendation that the jurisdictional limit for 

a small copyright claims system be up to $30,000. This amount is consistent with 

the statutory limit of damages for non-willful infringement under the Copyright Act. 

In addition, this amount would cover many cases that are not brought because the 

recovery is too low, such that claimants are not able to find representation and are 

not able to navigate the federal system without an attorney. The American Bar Association Section of Intellectual Property Law conducted a poll of its members in 

connection the with the Copyright Office Notice Of Inquiry on Remedies for Small 

Claims Copyright Claims and only one third of the attorneys polled stated they 

would accept an uncomplicated case with a likely recovery of less than $30,000. 

Representation 

In the spirit of an affordable, less formal process, the parties should not be required to retain an attorney. Whether one is entitled to retain an attorney should 

be at the election of the party, but not prohibited, whether the party is either an 
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individual or an entity. Rules regarding whether a corporation or business entity 

may appear without legal counsel should be relaxed for small copyright claims, similar to arbitration proceedings in which a corporate officer or employee may appear 

and represent the corporation. 

Discovery 

In order to have a less expensive, streamlined and quicker resolution, discovery 

and other procedures will necessarily be limited. 

Damages 

Apart from establishing a jurisdictional limit, the Organizations do not recommend altering existing law and policy on recoverable damages. Both actual damages if proven and statutory damages and attorneys’ fee should be allowed, subject 

to the jurisdictional cap. 

Effect of Adjudication 

Similar to an arbitration award, the award of the adjudicator in a small copyright 

claim forum should be final and enforceable. Decisions should not be published or 

carry any precedential weight and should be limited to the specific activities in 

question. 

Enforceability of Judgment 

Congress may want to consider the model for enforcing arbitration awards with 

respect to awards rendered in a small copyright claim tribunal. If a party is awarded damages, that party should have 30 days to pay. If the party does not pay, the 

award may be converted into a judgment and any applicable court with jurisdiction 

will enforce any award if payment has not been made. 

Limitations on Relief Offered 

Whether damages other than monetary damages should be part of the small copyright claims system should be considered carefully. An injunction to prevent the continued infringement or to enforce the removal of content online may be appropriate 

if a work is not so incorporated within another creative work that it would cause 

disproportionate economic harm to the new work. If, however, the infringing work 

is merely displayed on a website, in addition to damages, it would be appropriate 

in order to enjoin continued use of the infringing work by the defendant, to avoid 

multiple claims for the same use by a plaintiff against the same party. This would 

address a problem that is rampant with notice and takedown under Section 512 of 

the Copyright Act, where works may be taken down after notice to the service provider, but are then immediately reposted by users, requiring copyright owners to repeatedly send notice and takedown letters for the same infringing content. 

IV. CONCLUSION

The Organizations support the efforts of the Copyright Office in its study of a 

Copyright Small Claims Court. They actively participated in the Office’s study by 

responding to inquiries on this issue. More details regarding the Organizations’ recommendations can be found on the Copyright Office’s website at: http:// 

www.copyright.gov/docs/smallclaims. We encourage Congress to implement the recommendations summarized here and described in the comments filed by the Organizations. These proposed solutions will create a vastly more suitable venue for small 

claims for both statutory and actual damages and will benefit users, copyright owners, licensing agencies, and visual artists (especially those who earn a substantial 

portion of their livelihood from licensing fees) alike. Without an effective remedy, 

visual artists do not have a right, and infringement will continue in an unconstrained manner. 

Thank you for inviting me to testify today. We look forward to assisting the Subcommittee as it continues to consider this issue and the overall process of copyright 

review. 

Mr. COBLE. Good to have you with us, Ms. Wolff. 

The entire Subcommittee Members thank you all for being here 

and for not abusing the 5-minute rule. 

We try to comply with the 5-minute rule as well, so, if you will 

respond tersely, we will appreciate that. 

Mr. Bitkower, does the lack of a provision providing for felony infringement of a right of public performances deter law enforcement 
81 

from bringing actions for illegal streaming? And who needs this 

provision to protect their works? 

Mr. BITKOWER. Thank you, Chairman Coble. The short answer to 

your question is yes. We have seen over the preceding years a 

trend toward streaming and away from simple downloads as the 

preferred method of infringing many types of online content. And 

it has already been said, by both you and Ranking Member Nadler, 

the streaming of digital content, because it most clearly implicates 

the public performance right, is currently clearly prosecuted only 

as a misdemeanor. 

Misdemeanor penalties are real, but when you look at the massive profits that infringing Web sites can make from streaming 

media, misdemeanor penalties are simply not sufficient to deter 

those large-scale infringers. So we do think it would be very helpful 

to have a felony penalty for streaming. 

Mr. COBLE. Thank you, sir. 

Mr. Tepp, in contrast to the early days of the Internet, in your 

opinion, how many Americans today believe that anything they 

find on the Internet is available to use for free and that they 

should not be held accountable for situations in which fair use does 

not apply? 

Mr. TEPP. Sir, I fear that too many don’t give copyright the respect that it deserves. 

Mr. COBLE. I would concur with that. 

Mr. TEPP. And I fear that too many think that they either won’t 

get caught, or if they do get caught, the remedies will be too small. 

That is, I might add, the precise rationale that this Committee 

applied when it passed the NET Act, the No Electronic Theft Act, 

in 1997. I think the remedies have improved with that enactment, 

but we still have a significant challenge in front of us, in terms of 

piracy in the modern age. 

Mr. COBLE. I thank you, sir. 

I would like to hear from each one of you, and I will start with 

you, Mr. Tepp. What are your views on the Copyright Office recommendation for a small copyright claims system? 

Mr. Tepp, if you will start us off? 

Mr. TEPP. Sure. I think the Copyright Office did a very nice job 

analyzing those issues. I think it is important to have a small 

claims process for precisely the reasons that Ms. Wolff has mentioned. It really is financially difficult for individual creators to proceed. 

There are two things that I think are important to have in that 

process. One, it should be entirely voluntary for both parties to participate. And two, it should be based on the size of the claim, not 

on the size of the claimant. 

Mr. COBLE. Thank you, Mr. Tepp. 

Mr. Schruers? 

Mr. SCHRUERS. So a few observations on the small claims issue. 

I think, first, it shows that current statutory damages aren’t working. The motivation for statutory damages, the $750 up to 

$150,000, was precisely intended to empower individual artists to 

bring cases and, as well, to provide a deterrent. But the idea that 

providing a floor would ensure that people could come to court was 

something that, certainly, motivates the statutory minimum. And 
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notwithstanding the fact that we are also hearing that the system 

doesn’t work. So I think we can learn from that. 

Additionally, with respect to that approach, there are also small 

defendants. While I don’t represent them, I do see that many individuals are the subject of these troll actions. And I find myself 

wondering why smaller plaintiffs should be entitled to recourse in 

a lower-cost system that smaller defendants should not. 

So I think the structure of a small claims system is something 

worthy to consider. It is likely to have a lot of cascading implications across the act, and so I think its ultimate efficacy would depend a lot on how it is designed. 

Mr. COBLE. Thank you, sir. 

Mr. Siy? 

Mr. SIY. Thank you, Mr. Chairman. I think that a small claims 

court can be an excellent idea. I think as many people have pointed 

out, litigation is expensive, both for the plaintiff and for the defendant. I think a careful balancing needs to occur in terms of providing a more efficient, more streamlined process versus making 

sure that the rights of all the parties involved are protected. 

Mr. COBLE. Thank you, Mr. Siy. 

Ms. Wolff? 

Ms. WOLFF. Yes, I am very grateful for the Copyright Office for 

putting such a detailed report together. I think it addresses a lot 

of the concerns that the smaller copyright owners have. I think it 

would benefit defendants as well as plaintiffs, because there would 

be a forum that would cost less for both sides, and there would be 

a cap on the amount of damages, which would solve a lot of the 

problems that were presented at this table. 

But there are many legitimate claims that just can never reach 

the system the way it is designed now. I think for it to work, 

though, being voluntary, there would have to be teeth, that if a defendant simply refused to participate, thinking that it would cost 

more to try to enforce any type of smaller claim amount, that there 

would have to be some kind of incentive and additional damages 

that could be awarded to a plaintiff, if they are forced to have the 

expense of going the Federal copyright route. 

Mr. COBLE. Thank you, ma’am. 

Mr. Bitkower? 

Mr. BITKOWER. Thank you, sir. The department does not have a 

formal position on small claims court for civil enforcement. 

Mr. COBLE. I see my time has expired. Thank you all again. 

The gentleman from New York? 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Tepp, could you please explain why statutory damages for 

civil copyright infringement are structured the way they are, and 

also explain the per infringed work framework applicable to all 

copyrightable works? 

Mr. TEPP. Certainly, sir. 

Congress has very carefully and repeatedly over time reviewed 

and considered whether statutory damages need to be recalibrated 

or adjusted. 

In 1790, as you alluded, the statutory damages were per infringing copy, so if you make 20 infringing copies, you pay 20 times the 

statutory amount. Back then, it was $.50, half of which went to the 
83 

copyright owner, half of which was available to the government. So 

even then, there was both a compensation and deterrence element. 

Those numbers were adjusted over time for inflation. Additional 

numbers were put in for different types of works, reflecting the different value for different works. 

There was also eventually an added minimum and maximum cap 

for statutory damages. I believe it was in 1897. 

In 1976, in the general revision of the Copyright Act, it was 

changed to a per infringed work standard. So you make one infringing copy of a work, make 100 infringing copies of a work, you 

still pay one time the statutory damages range. 

Of course, in so doing, Congress provided a wide range, so that 

it could accommodate different types of facts. One infringing copy 

is less likely to generate a large number within the range, and vice 

versa. Large numbers of infringements, more harmful infringements, willful infringements, are likely to bring a court to award 

a higher number within the statutory range. 

Mr. NADLER. Now, your written testimony illustrates that after 

adjustments for inflation, statutory damages are actually lower 

now than at any point in the last century, and also that Congress 

saw the need to increase statutory damages in 1999 in response to 

the increased threat of digital piracy. 

So even though we increased damages in 1999, they are still at 

their lowest level they have been at in a century. 

Mr. TEPP. That is correct, sir. 

Mr. NADLER. Do you think they are at a proper level, or should 

we raise it at this point? 

Mr. TEPP. I am not asking for this Subcommittee to consider 

raising it at this point. I think the system is working reasonably 

well. 

We can always imagine scenarios where it would be hardpressed—for example, the infringement of a pre-release high-profile, large-budget, copyrightable work. That is a single work infringement. The maximum statutory damages would be $150,000. 

That work might have generated millions, but for that infringement. 

So in spite of that, though, I think the current range of damages 

is basically getting the job done. 

Mr. NADLER. Now, I understand that the current copyright structure has led to numerous tech innovations and, we have all seen 

this, legitimate services, whereby consumers can access movies and 

music on multiple legal sites, whether it be iTunes, Pandora, 

Netflix, HBO GO, or whatever. Now if it were not for the statutory 

damages and enforcement by the Department of Justice, is it possible that these services might be more threatened by illegal 

downloading and streaming sites like Napster and illegal movie 

sites? 

Mr. TEPP. Thank you very much for that question. I think the 

argument about chilling effects really misses the point: At the 

macro level, innovation and copyright protection are complementary. They produce and develop works and markets that they each 

benefit from. 

And the online services that are licensed and legitimate have the 

most to lose from online services that are undercutting them, be-
84 

cause they are getting their copyrighted works that attract so 

many people without paying for them. 

Mr. NADLER. Thank you. 

Mr. Bitkower, you recommend the creation of legislation to establish a felony charge for infringement for unauthorized public performances conducted for commercial advantage or private financial 

gain. Did you not recommend that? 

Mr. BITKOWER. We do recommend the creation of felony penalties. We have not endorsed particular text at this point, but that 

is, certainly, one option. 

Mr. NADLER. Okay. Now, why is it the case that in most cases 

infringing streaming can be prosecuted only as a misdemeanor, 

even when sites are willfully streaming pirated content to a large 

number of users and turning huge profits through advertising revenue and subscriptions? That is a situation where you are recommending a felony. Why is the law only a misdemeanor now? 

Mr. BITKOWER. Thank you, Ranking Member. The reason that 

the current law only clearly provides for misdemeanor penalties is 

because the way courts and treatises and experts have approached 

the streaming question—— 

Mr. NADLER. Say that again? I just didn’t catch it. Say that 

again? 

Mr. BITKOWER. The reason that the current law only is read to 

provide most clearly misdemeanor penalties is because the way the 

courts and treatises have approached the streaming problem is 

more as one of public performance than of reproduction or distribution. 

Because it does not invoke those rights that have felony penalties 

attached to them, the only current way to approach those through 

criminal law most clearly is as a misdemeanor. 

There are ways that we could address that in different fashions, 

in terms of creating a felony penalty. One might be to address more 

narrowly streaming. One might more broadly address public performances in general. 

Mr. NADLER. Thank you. 

Ms. Wolff, the last question, how does the current remedies regime impact individual creators? And do you think that a small 

claims system with a reduced range of statutory damages would 

benefit individual creators? 

Ms. WOLFF. I think it would benefit them very much because 

many of these individual creators haven’t taken advantage of registration because it is very expensive for them to do that. And even 

when they do, to have one work infringed, it is a range from $750 

to $30,000, and courts generally don’t hand out large awards. So 

it is very difficult to go to court and have to pay attorney’s fees. 

But I think having effective enforcement actually encourages licensing and will encourage the legitimate online licensing offerings 

that frankly offer very reasonable license fees to use images in 

many of the situations where they are being used without permission. 

So I think having an enforcement scheme will benefit the individual authors and also increase licensing of these images rather 

than encourage right-click and stealing. 

Mr. NADLER. And could we make it cheaper to register? 
85 

Ms. WOLFF. I think that would be helpful and also easier if it 

was done within the flow and process of creation. 

Mr. NADLER. Thank you very much. 

My time is expired, so I yield back. 

Mr. COBLE. I thank the gentleman. 

The gentleman from Pennsylvania? 

Mr. MARINO. Thank you, Chairman. 

Mr. Bitkower, could you please tell me what, if any, prosecutions 

are taking place with China, with Russia, that doesn’t involve China’s or Russia’s intellectual property, more so what involves our intellectual property, because I have the feeling—we were just talking about this a moment ago—that the Olympics, as long as it 

wasn’t a Chinese infringement, then nothing was done about it. 

Mr. BITKOWER. Thank you, sir. 

And the question very accurately gets to the point that we have 

a very serious concern with intellectual property infringement from 

China, and that is across-the-board, not just in copyright but also 

in counterfeit goods—intellectual property, trade secret theft, et 

cetera. 

And in fact, I think the number is over 90 percent of seizures by 

Customs and Border Protection for counterfeit goods are goods 

coming from China. So we do have a multipronged approach to that 

problem. We are not going to prosecute our way out of it, certainly. 

So we rely on public and private pressure. 

We also rely on bilateral cooperation with China. That cooperation has varying levels of success, depending on the type of intellectual property you are talking about. We have had better success in 

areas that involve health and safety products like counterfeit airbags, for example, than we have with copyrighted goods. 

But we do take a variety of approaches, and that includes prosecution. And I do highlight in my testimony one example where we 

did prosecute an individual who was pirating millions of dollars, 

$100 million worth of software, from China, who was arrested and 

prosecuted after coming to the United States to make an undercover sale. 

Mr. MARINO. So that was done here in the United States. He was 

apprehended here in the U.S. 

Mr. BITKOWER. That is correct. He was based in China, but he 

did step foot here to engage in a sale and was arrested upon making that sale. 

Mr. MARINO. Did China have any response or any comment on 

that? 

Mr. BITKOWER. I am not aware of any official response China has 

had, sir. 

Mr. MARINO. Okay. 

Ms. Wolff, you have represented artists and individuals across 

the board. Can you tell me on how many occasions, roughly, what 

percentage of your cases do end up in trial? And I am sure you petition the court for attorney’s fees. What is the success rate there? 

Ms. WOLFF. I would say, in a copyright infringement case, I have 

had no case go to trial. When you are in Federal court, the first 

thing the judge will try to do is try to get the case off the docket, 

and when you are in Federal court with RICO, tax invaders and 

everything else, and you are complaining someone has been using 
86 

my photograph and not paying for it, you are going to be put in 

a room with a magistrate, and you are going to try to get to some 

resolution. Or they will try to get summary judgment to at least 

narrow the issue, so a case can resolve more effectively. 

So the issue of petitioning for attorney’s fees doesn’t occur because you don’t usually get to do that until you go all the way 

through trial. 

Mr. MARINO. Thank you. 

Mr. Bitkower, again, I like the department’s position on increasing the penalty from a misdemeanor to a felony. What impact, if 

any, do you think that is going to have on pirating? 

Mr. BITKOWER. I think it will have an impact, sir. I think it will 

have an impact today, because there are streaming sites that are 

not, I think, being adequately deterred by the available penalties 

now. And I think when you look at the trends that we are seeing 

in online infringement, there will be an even greater shift toward 

streaming and away from downloading. 

And in that case, it will be more important in the future than 

it is even today. 

Mr. MARINO. Anyone on the panel, particularly the three gentlemen that I have not asked a question, give me your comments on 

when a case gets to trial, there is an award, if it is a jury, there 

is an award by jury, tell me your pros and cons on the amount of 

awards. Do you think that courts are just allowing juries to award 

unbelievable amounts for injury or not enough? 

Mr. Tepp? 

Mr. TEPP. The statute is designed to give the courts wide discretion. We trust the courts to get it right. I think, by and large, they 

do. 

There are a couple cases that people like to cite because they 

seem like big numbers. Complaints about a particular jury verdict 

within the wide discretion don’t prove there is anything wrong with 

the system. They prove that people don’t like that particular jury 

verdict. 

For the two cases you hear most often, when you actually look 

under the hood, those defendants were found to have willfully infringed by four separate juries of their peers. In fact, one of them 

even destroyed evidence and lied about it on the stand, so they 

weren’t particularly sympathetic. 

Mr. MARINO. Thank you. 

I see my time has expired. I yield back. 

Mr. COBLE. I thank the gentleman. 

The gentleman from Michigan? 

Mr. CONYERS. Thank you, sir. 

Mr. Assistant Attorney General, what else can we do besides addressing the felony streaming issue? It seems to me like there is 

an under-prosecution. Normally, I come to the Committee complaining about overcriminalization. And now I find myself in the 

awkward position of saying let’s make a felony of some of these 

misdemeanors. 

Can you give me some comfort in some way? 

Mr. BITKOWER. Thank you, Ranking Member Conyers. 

I certainly would prefer to be on a Committee where you are recommending increases than the contrary. 
87 

I think I can give you comfort, because I think there are a number of ways that we can craft a felony penalty for streaming that 

is narrowly tailored to address the problem that we are seeing 

without sweeping too broadly into activities that should not be 

criminally prosecuted, and are best addressed in other ways. 

One of those ways might be to craft a penalty that does not criminalize any new conduct that is not already currently criminal, and 

merely makes felony penalties for conduct that is already illegal 

and can be criminally prosecuted as a misdemeanor. 

In other words, we would simply be increasing the maximum 

penalty that a judge could impose after hearing all of the facts 

upon conviction. 

So that is one way we can certainly keep it narrow, and there 

are other ways that we could do that as well. 

Mr. CONYERS. Now that I found out where you stand on overcriminalization, are there other things that we might be thinking 

about? Do all of you here think that we are making this a little too 

easy for plaintiffs to jump on the litigation bandwagon, and that 

we have to find some ways to make it more difficult? 

Ms. WOLFF. I don’t think anything is easy for plaintiffs to jump 

on the litigation bandwagon. I think statutory damages are very 

critical to the individual creators, because it empowers them to actually enforce the copyright and go to court. But what that empowers them also to do is to make a reasonable settlement. 

But I think that for the individual, there are way too many hurdles, and it isn’t simple enough. 

Mr. CONYERS. We need to give the plaintiffs more assurance, 

small claims plaintiffs. 

Ms. WOLFF. For the claims of relatively smaller value, there 

needs to be a more streamlined, efficient, less cost consuming way 

to go to court. You can’t spend up to $1 million, if you go to trial, 

or hundreds of thousands of dollars just getting through discovery 

and summary judgment, when you are trying to collect $10,000, 

$20,000, or even $5,000. 

And attorney’s fees aren’t automatic, either, so there is never a 

guarantee you will get that. 

Mr. SIY. Mr. Ranking Member? 

Mr. CONYERS. Mr. Siy? 

Mr. SIY. I think when we talk about what is or isn’t easy for 

plaintiffs, it is a mistake to lump all plaintiffs into the same boat, 

just as it is a mistake to lump all defendants into the same boat. 

There are plaintiffs for whom the current system makes the incentive to litigation a little too tempting to advance nonmeritorious 

claims. 

I don’t think that we are advocating eliminating statutory damages, but simply that the system adopts a one-size-fits-all approach 

to all sorts of different types of plaintiffs and defendants. 

Mr. CONYERS. Mr. Bitkower, how do you think the Department 

of Justice is doing in keeping pace with these various technological 

advances and the international scale of copyright infringement? 

Most of it is international. 

Mr. BITKOWER. That is absolutely correct, sir. And that is a result both of changes to the way we do business on the legitimate 
88 

side, as well as the increasing Internet basis of copyright piracy. 

We are doing the best we can, certainly. 

There are narrow areas where we would like to see some additional tools. And as I have also highlighted in the testimony, there 

are areas where additional resources could help us make better use 

of the tools we already have. I am referring there particularly to 

the value of placing additional prosecutors overseas in high-impact 

areas. 

Mr. CONYERS. Thank you, Chairman Coble. 

Mr. COBLE. I thank the gentleman from Michigan. 

We have a vote on, but the gentlelady from California has a 

unanimous consent request, and is recognized therefore. 

Ms. LOFGREN. I appreciate that Mr. Chairman. I would like to 

ask unanimous consent to place in the record a statement on this 

topic from the Electronic Frontier Foundation. 

Mr. COBLE. Without objection. 

[The information referred to follows:] 
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Mr. COBLE. Folks, we have a vote. If you all will stand easy, I 

hope to be back within approximately 45 minutes to 1 hour. 

[Recess.] 

Mr. COBLE. Pardon the delay, folks. We had a vote, as I told you 

earlier. Hopefully, we will finish before additional interruptions. 

The Chair recognizes the gentlelady from California, Ms. Chu. 

Ms. CHU. Thank you, Mr. Chairman. 

As the cochair of the Creative Rights Caucus, I am very supportive of creating a small claims court, as a way for smaller and 

independent artists to have access to a real and affordable copyright enforcement remedy for when their works are stolen online, 

which often happens repeatedly, like a death by a thousand cuts. 

This would especially help creators like photographers and songwriters, who are often the smallest of business owners. 

The most important thing to keep in mind is that although we 

use the term ‘‘small claims,’’ often, really, these claims are not 

small to the individual creator whose livelihood is being threatened 

by the theft of their work and property. That is why creating such 

a remedy is so important and necessary. And I look forward to 

working with Ranking Member Nadler on this. 

Let me start off with a question to Mr. Bitkower. In your testimony, you state that DOJ works in close coordination with enforcement partners and especially with Intellectual Property Enforcement Coordinator, IPEC, in the Office of the President to develop 

policy and legislative proposals that preserve your ability to enforce 

IP rights through criminal law. 

So not only does this position play an intricate role in overseeing 

volunteer agreements amongst stakeholders in the digital ecosystem, it also plays an important role in ensuring copyright enforcement is actually effective. 

As of next month, the position will have been vacant for an entire year. What kind of accomplishments have you seen this office 

make? And how important is it to DOJ that this position get filled 

as quickly as possible? Has your enforcement coordination with 

IPEC been impacted by this vacancy? 

Mr. BITKOWER. Thank you, Congresswoman. 

Our coordination with the IP Enforcement Coordinator has been 

a very good one, since the position was created by statute. And as 

you have remarked, we do coordinate closely on issues of policy and 

legislation. 

There has, of course, been an acting coordinator since Ms. 

Espinel left the position. So we have continued to work closely with 

them. 

But certainly, the attention that it has brought to copyright 

issues, and, in particular, the 2011 white paper with legislative recommendations have been helpful to us. 

Ms. CHU. Okay, thank you for that. 

I would like to ask a question to both Mr. Schruers and Mr. 

Tepp. It is pertaining to the idea that statutory damages chill innovation. 

Mr. Schruers, you state that under existing law, there is no situation in which a copyright holder can be undercompensated, and 

that the threat of high statutory damages chill the creation of innovative services. 
99 

Under our current copyright regime, however, we do see new innovative models like Netflix, which has been very successful in 

their businesses. And also under the current copyright regime, venture capital invested in media and entertainment sectors grew by 

over 50 percent. Investment in online music companies alone 

topped over $1 billion in 2011 and 2012. 

Also, by the time that statutory damages are considered in the 

legal process, the court would have determined that infringement 

did occur. So if you are a business that plays by the rules and did 

not infringe on someone’s property, you wouldn’t have to worry 

about the calculation of statutory damages. 

So what evidence do you have in making the argument that statutory damages chill innovation? 

First Mr. Schruers, and then Mr. Tepp. 

Mr. SCHRUERS. Sure. So, it is always difficult when your lawyer 

tells you if you are not doing anything wrong, you don’t have anything to worry about. In an environment where we have very vague 

boundaries, abstractions inherent in the copyright system create a 

lot of uncertainties both around existing safe harbors in the statue, 

limitations and exceptions. We see cases litigated for a very long 

time, such as Veoh, which I mentioned earlier, where ultimately 

the parties were exonerated, but not before bankruptcy. 

So there are a number of other examples in my testimony that 

identify cases, interviews with investors and entrepreneurs, who 

very clearly indicate that there is a lack of willingness to either invest or pursue projects that touch content because of the exposure. 

It is true that we have innovation occurring today, that there are 

new and interesting services out there. The fact that they exist 

does not mean that we would not have more if these concerns did 

not prevail in the industry. 

Ms. CHU. Mr. Tepp? 

Mr. TEPP. Thank you very much. Empirically, we, certainly, do 

have no obvious shortage of new and innovative services. I think 

it is interesting to hear that the issue raised is about the substantive aspects of copyright law, and there are parts that are not 

100 percent clear and fair use is one of them. I know that is something that some of the people at this table think is a very important part of fair use, probably all of the people at this table do. 

But that is not what statutory damages is. So I would suggest 

that the answer to questions of substantive copyright law ought not 

dictate a lowering of the remedies for when copyright has been 

found to infringe. 

Ms. CHU. And on the question of chilling innovation? 

Mr. TEPP. On that question, from a practical standpoint, I think 

it is a question of who bears the risk. If a service starts up making 

use of copyrighted works without a license, maybe with a touch and 

go fair use claim, and maybe they do or don’t get the safe harbor 

protection under Section 512, if they win, the copyright owner gets 

nothing. That is the way the law works. 

If they lose, and they didn’t have a license and it is not fair use 

and they are not protected by the safe harbors, then it doesn’t seem 

to me it is fair to shave the copyright owner’s compensation because of that. 

Ms. CHU. Thank you. I yield back. 
100 

Mr. COBLE. I thank the gentlelady. 

The gentleman from Texas, Mr. Farenthold. 

Mr. FARENTHOLD. Thank you very much. I kind of want to follow 

up on that same line of questioning. 

Historically, to infringe on a copyright, it has taken expensive 

equipment. You had to have a Betamax or you had to invent a 

Betamax, or you had to have a printing press or a copier, which 

back when a lot of these laws were written, it made copyright infringement on any large scale by an individual user virtually impossible. So we set high damages to deter people with resources 

from infringing. 

Today, pretty much every home in the United States has a computer capable of making a perfect copy of a digital image. And we 

are seeing cases now with statutory damages, as we are seeing 

some of the cases from the RIAA work their way up, a $1.5 million 

damage award for 24 songs on Kazaa. 

I mean, at the time, there were all these excesses, I think, where 

grandmothers were getting sued for what school-age children were 

doing on the computer without their knowledge. 

So I guess my question is, if we were to go to some form of lower 

statutory damages with a small claims court, if you will, for copyright, don’t you think that tens of thousands of dollars or hundreds 

of thousands of dollars in damage is more appropriate than millions of dollars in damages against a noncorporate or individual infringer? And I will just open that up to anybody on the panel. 

Mr. SCHRUERS. If I may, I think that is very true, that the extraordinarily large judgments we see often appear inappropriate. 

And as I said, I think that undermines the perceived legitimacy of 

the IP rights system. 

A way where the damages seemed more proportional to the injury that is being caused would help not only ensure the perceived 

legitimacy of copyright, but remove the potential due process concerns that are sometimes associated with this. 

It is true that as technology is widely available and the statutory 

damages in the colonies were initially set, the only people who 

were likely to violate those were printers who owned printing 

presses. Now that technology is accessible to all of us. 

It is necessary to tune our system appropriately. 

Mr. SIY. One of the things that I thought was really interesting 

about the history of statutory damages is the movement from a per 

copy penalty to a per work penalty. Apparently, that was at the request of broadcasters in the film industry because as technology 

changed, it became easier for them to be found liable for these sorts 

of multiplying statutory damages, even if it was an inadvertent infringement. The idea being that you wouldn’t have that sort of unjust multiplication, as technology had changed in the intervening 

years. 

I think that points us in a direction that we do want to take into 

account the fact that whereas before it was much easier to have 

multiple copies of a single work being made, these days, it is actually incredibly easy for individuals to have single copies of multiple 

works, inadvertently or in good faith. 

Mr. FARENTHOLD. Ms. Wolff? 
101 

Ms. WOLFF. I think we are almost in a way conflating two things, 

the need for small claims court and the amount of statutory damages now. I think statutory damages are still very relevant, and 

the ability to seek statutory damages for individual creators is important because there are oftentimes when it is very difficult to establish actual damages. 

Mr. FARENTHOLD. Let me get to Mr. Tepp, and maybe I will have 

time for one more question. 

Mr. TEPP. I agree with what Ms. Wolff just said. Certainly, small 

claims court is an appropriate avenue for qualifying claims. Some 

claims are larger and deserve the full availability of the range of 

statutory damages. 

The cases you cited, we had four juries that determined, the two 

cases combined, that the defendants had infringed willfully. In fact, 

one of them lied on the stand about destroying evidence. 

To the extent that anyone thinks those individual jury verdicts 

were not appropriate, they could have been lower under statute. 

They could have been higher under the statute. I think what is important for this Committee to keep in mind is that the range in the 

statute is not the issue, if the complaint is about where the jury 

fell in that range. 

Mr. FARENTHOLD. I see you have successfully exhausted my time. 

Thank you very much. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from New York, Mr. Jeffries, is recognized. 

Mr. JEFFRIES. Thank you, Mr. Chair. 

And let me thank the witnesses for your presence and for your 

testimony here today. 

Let me start with Mr. Bitkower. I wanted to re-explore the issue 

of streaming and the applicable penalty in some greater detail. I 

know it has been covered to some degree in the hearing today. 

Now, under current law, unlawful reproduction and distribution 

we know to be a felony. And is that punishable between 3 and 10 

years imprisonment? 

Mr. BITKOWER. That is correct, sir. 

Mr. JEFFRIES. Okay. Now, streaming, of course, under copyright—— 

Mr. BITKOWER. I am sorry. I didn’t mean to interrupt, but it is 

between zero and 10 years, depending on various other factors. 

Mr. JEFFRIES. Zero and 10 years. 

Mr. BITKOWER. Yes. 

Mr. JEFFRIES. Okay. In your experience, what is the average penalty to the extent those prosecutions took place or are continuing 

to take place? 

Mr. BITKOWER. Sir, it is very hard to estimate an average penalty over, obviously, a broad array of cases. Certainly, within the 

zero- to 5-year range is the vast bulk of them. There could certainly 

be cases that fall above that where there is large-scale harm. 

Mr. JEFFRIES. But there are instances where individuals who are 

found guilty, or plead guilty, are subject to a term of imprisonment 

and actually serve time in prison? 

Mr. BITKOWER. Yes, sir. 

Mr. JEFFRIES. Okay. 
102 

Now, streaming under copyright law constitutes a public performance. You pointed that out earlier, correct? 

Mr. BITKOWER. Yes, probably. 

Mr. JEFFRIES. At least it has been interpreted in that way, by 

courts and treatises, as you have indicated. 

Mr. BITKOWER. Yes, and, of course, depending on the facts of any 

given case. 

Mr. JEFFRIES. Okay. Under Section 506(a)(1) of the Copyright 

Act, DOJ has jurisdiction to pursue unlawful public performances 

that occur, correct? 

Mr. BITKOWER. That is correct. 

Mr. JEFFRIES. Now, if someone is convicted of illegal streaming 

and unlawful public performance, they are subjected to no greater 

than a misdemeanor penalty. That is right? 

Mr. BITKOWER. That is correct. 

Mr. JEFFRIES. Okay. And what is the maximum time punishable 

under law connected to illegal streaming? 

Mr. BITKOWER. The maximum penalty of imprisonment for the 

misdemeanor offense under 506 is 1 year in prison. 

Mr. JEFFRIES. Okay. And have there been instances where DOJ 

has pursued prosecution for illegal streaming, notwithstanding the 

fact that the maximum penalty is only a misdemeanor? 

Mr. BITKOWER. There have been a few cases where we have 

brought charges related to illegal streaming. One of them was resolved as a misdemeanor offense. 

Mr. JEFFRIES. And what was the outcome, in terms of either a 

fine or a term of imprisonment connected to that particular case 

you reference? 

Mr. BITKOWER. I don’t remember particularly what the sentence 

in that case was. 

Mr. JEFFRIES. Okay. Now, does the Justice Department have any 

recommendations as it relates to the penalty range, to the extent 

that Congress determines, as I support, that illegal streaming 

should be punishable as a felony? Does the Justice Department 

have any recommendation as to what the sentencing range should 

be in order to ensure maximum deterrence? 

Mr. BITKOWER. At this time, we don’t have a particular text with 

particular numbers in it. We would be happy to work with the Subcommittee on that question. And I certainly think it is something 

that would be commensurate with the other penalties that we have 

in the statute. 

Mr. JEFFRIES. Because it seems to me that the objective, to the 

extent that you would make that determination that this type of 

unlawful conduct should be subjected to the higher felony category, 

which I believe is in fact the case, that obviously the punishment 

that is on the books should be designed to deter the conduct from 

occurring, and then appropriately punish the actor thereafter. 

Mr. BITKOWER. I think that is exactly right. I think the key point 

of our proposal is that streaming or infringement by streaming can 

be just as serious and, in fact, potentially even more serious than 

an equivalent case involving infringement by downloading, and the 

penalty should reflect that. 

Mr. JEFFRIES. Where do things stand with the Mega Conspiracy 

prosecution at this point? 
103 

Mr. BITKOWER. Currently, the defendants have been indicted, as 

you know. Four of them are pending extradition from New Zealand. 

Mr. JEFFRIES. Okay. What should this Committee consider in the 

context of the growing international nature of content piracy that 

is taking place? We have the technological challenge, that it is not 

as frequent as illegal reproduction and distribution. It is streaming. 

But we also have sort of the geographic challenge, that it is increasingly international in nature. 

What should we be considering to deal with that second aspect 

of what we face as piracy challenges in the present day? 

Mr. BITKOWER. I really appreciate the question, Congressman. 

I think when it comes to the international challenge, as distinguished from the technological challenge, and, of course, those two 

are wrapped up together, but one of the most effective things we 

have found in that context is putting boots on the ground. Putting 

prosecutors in the high-impact regions to work with their local 

counterparts, either to bring local prosecutions where we can’t act, 

to help us with our own cases, or simply to create a local capacity 

to deal with copyright and other intellectual property violations in 

those countries. I think that has been our greatest point of leverage, and we would like to see that expanded. 

Mr. MARINO [presiding]. The gentleman’s time has expired. 

Mr. JEFFRIES. Thank you. 

Mr. MARINO. The Chair now recognizes Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

Before I ask the question, I have been listening and, Mr. 

Schruers, one of the things you just said a moment ago, it was in 

the midst of damages, and the amount of damages and awards. 

You made a comment, and I would like to get a little clarification, 

because I do believe that strong copyright protection is not a hindrance to innovation, but actually an encouragement to innovation. 

You made a statement that really, I want to make sure that we are 

perceiving this right. 

You said it affects the perceived legitimacy of copyright. There is 

no ‘‘perceived legitimacy.’’ Copyright is legitimate. And I don’t 

think that a damage award should take away—or putting it in 

those terms, that seems to go away from the very fact that copyright exists. There is no ‘‘perceived.’’ There is no ‘‘legitimacy.’’ Copyright exists. 

So I want to make sure that when we use these terms, we are 

not taking remedy or damage to try to sort of backdoor imply that 

copyright is any less powerful or needed simply because there may 

have been judgments that seem to be out of place. 

Is that a fair statement of what you are meaning to say or what 

came out? 

Mr. SCHRUERS. Forgive me for not entirely understanding the restatement of what I had said. If I could repeat what I said perhaps 

more clearly, my comment was that the perception among the public of how legitimate IP rights are will be affected by whether or 

not the individual judgments that issue under the system seems 

subjectively just. 

Mr. COLLINS. We are not going to have enough time in the 5 minutes, but to actually make the public agree that there is a copyright is part of the very problem we are in right now. 
104 

And I think to say, well, because there are bad judgments, that 

is about like saying all tort law is bad because you have juries in 

Arkansas or anywhere else that give outrageous tort judgments. 

I am going to leave it there for just a moment, because I do want 

to go back to something that has been talked about a lot, and that 

is the small claims process, and more specifically, a voluntary test 

program. I understand that probably the Department of Justice 

won’t have an issue here, but the copyright, especially with a small 

claims issue, would be supporting a move—I would support a move 

forward potentially starting out with a pilot program for this and 

looking at it before fully implementing a small claims process. I do 

believe there are two separate issues here, the remedy and small 

claims. 

In order for such a pilot to work, it seems the proper structure 

and incentives would need to be in place. I want you to give me 

your thoughts on specific elements that would need to be addressed. 

First, do you think a voluntary pilot program is a good idea? 

Good idea, bad idea, sort of quickly, because I want to move to 

some other questions as well. 

Ms. Wolff? 

Ms. WOLFF. I agree it is good idea. And some of our associations 

recommended that we do try this. I know the U.K. has already implemented a copyright small claims, and I believe it has been successful, so I do agree. 

Mr. COLLINS. Mr. Siy? 

Mr. SIY. Yes, I think a voluntary pilot program would be a good 

idea. 

Mr. SCHRUERS. I don’t think CCIA has a position on it. 

Mr. COLLINS. Okay. 

Mr. TEPP. As long as the funding is there to stand it up, absolutely. 

Mr. COLLINS. I would agree. 

What about limiting the pilot program to, say, a subset of copyright infringement claims, sort of narrowing it a little bit, say to 

music? If we limited in that way to music, what about something 

like that? So again, we can get at least a look at it from maybe 

a subset instead of saying to everything at one time? 

I will start at this end this time. 

I know DOJ says, thank goodness I don’t have to answer. 

Mr. TEPP. There are, I think, a wide range of creators who might 

make use of a claims system, visual arts, photography. 

Mr. COLLINS. But from a pilot program perspective, because we 

may or may not be able to get the whole thing, so I am wondering, 

would it be beneficial that we could see things in maybe a smaller 

form and then ramp up to a larger kind of process? 

Mr. TEPP. Ideally, it would be nice to have copyright owners 

across the spectrum be able to use it and see if there is a difference 

in different categories of works in terms of its use. 

Mr. COLLINS. Okay. 

Mr. SCHRUERS. Acknowledging that there is no position on this, 

that we have no position, I would just say, when you say music, 

that does open a lot of questions, such as are we talking about compositions or sound recordings, and so on. 
105 

Mr. COLLINS. And that could be narrowed as the focus goes. 

Thank you. 

Mr. SIY. Limiting it could help in sort of framing it as an experiment. On the other hand, I would want to ensure that characteristics that are specific to one particular type of copyrights aren’t assumed to be overgeneralizable to the entire spectrum. 

Ms. WOLFF. Well, I know the visual arts community is desperately seeking a way to try to enforce rights, if you would want 

to include them in a pilot. 

But again, the sampling may be different. If it could be open to 

all individual copyright authors, I think that would be helpful, 

whether they are authors, musicians, visual artists. 

Mr. COLLINS. Just in closing, and I think going back to where I 

originally started this, is one of the things that we have to, whether it is legitimacy or illegitimacy, whatever, is that when we get 

back to understand the copyright, no matter the art form, visual 

art, movie, music, whatever, when we get back to actually seeing 

that as thought streams and ideas, and we stop putting it in these 

categories of sort of music stream, download, then we can have an 

honest discussion that there is value to the copyright. And that is 

something we need. 

Mr. Chairman, I yield back. 

Mr. MARINO. Thank you. 

Seeing no other Congressmen or Congresswomen here on the 

panel to ask questions, this concludes today’s hearing. 

Thanks to all of our witnesses for attending. Thanks to the public for being here. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

material for the record. 

Mr. MARINO. This hearing is adjourned. 

[Whereupon, at 4:20 p.m., the Subcommittee was adjourned.] 

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