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INNOVATION IN AMERICA (PART I AND II) 

HEARINGS 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 25 AND AUGUST 1, 2013 

Serial No. 113–47 

Printed for the use of the Committee on the Judiciary 

( 

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 

MARK AMODEI, Nevada 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

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 

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 

MARK AMODEI, Nevada 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

JOE KEELEY, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 
(III) 

C O N T E N T S 

JULY 25, 2013 

Page 

HEARINGS 

Thursday, July 25, 2013 

Innovation in America (Part I): The Role of Copyrights ................................... 1 

Thursday, August 1, 2013 

Innovation in America (Part II): The Role of Technology ................................. 137 

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 1 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................... 2 

WITNESSES 

Sandra Aistars, Executive Director, Copyright Alliance 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 8 

Eugene H. Mopsik, Executive Director, American Society of Media Photographers 

Oral Testimony ..................................................................................................... 30 

Prepared Statement ............................................................................................. 32 

Tor Hansen, Co-President/Co-Founder, YepRoc Records/Redeye Distribution 

Oral Testimony ..................................................................................................... 42 

Prepared Statement ............................................................................................. 44 

John Lapham, Senior Vice President and General Counsel, Getty Images, 

Inc. 

Oral Testimony ..................................................................................................... 50 

Prepared Statement ............................................................................................. 51 

William Sherak, President, Stereo D, LLC 

Oral Testimony ..................................................................................................... 53 

Prepared Statement ............................................................................................. 54 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

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

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

on the Judiciary, and Member, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................................... 56 

Material submitted by the Honorable Judy Chu, a Representative in Congress 

from the State of California, and Member, Subcommittee on Courts, Intellectual Property, and the Internet ...................................................................... 63 

SUBMISSIONS FOR THE RECORD 

Prepared Statement of Stephen Schwartz, President, Dramatists Guild of 

America, the Dramatists Guild of America ........................................................ 75 
Page

IV 

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

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

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

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

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

Letter from David P. Trust, Chief Executive Officer, the Professional Photographers of America ............................................................................................... 135 
(1) 

INNOVATION IN AMERICA (PART I): 

THE ROLE OF COPYRIGHTS 

THURSDAY, JULY 25, 2013 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 9:35 a.m., in room 

2141, Rayburn House Office Building, the Honorable Bob Goodlatte 

presiding. 

Present: Representatives Marino, Goodlatte, Poe, Chaffetz, 

Farenthold, Holding, Collins, DeSantis, Smith of Missouri, Watt, 

Conyers, Chu, Deutch, Bass, Richmond, DelBene, Jeffries, Nadler, 

Lofgren, and Jackson Lee. 

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

Clerk; and (Minority) Stephanie Moore, Minority Counsel. 

Mr. GOODLATTE. Good morning. The Subcommittee on Courts, Intellectual Property, and the Internet will come to order. 

And, without objection, the Chair is authorized to declare recesses of the Subcommittee at any time. 

And we welcome all of our witnesses today. 

I will say a word about our Subcommittee Chairman, my dear 

friend, Howard Coble, who had a hernia operation earlier this 

week. And so we have him in our prayers and expect to see him 

back here very soon. 

I will start with my opening statement and then turn to the 

Ranking Member of the Subcommittee, Mr. Watt, for his opening 

statement. 

This morning, the Subcommittee will hear from several individuals involved in the creation of copyrighted works. Next week, the 

Subcommittee will hear from those involved in the technology sector. These two important components of our economy have a unique 

symbiotic relationship and are responsible for significant innovation in America. Today, we focus on the role of copyrights in U.S. 

innovation. 

To be sure, according to the Framers of our Nation, the very purpose of granting copyrights was to promote innovation. Article 1, 

Section 8, Clause 8 of the United States Constitution contains the 

foundation of our Nation’s copyright laws. It allows Congress to 
2 

provide to creators for limited times the right to exclusively use 

their writings and inventions. 

The copyright clause was not a controversial provision. In Federalist No. 43, James Madison declared that ‘‘the utility of this 

power will scarcely be questioned.’’ Indeed, this provision was one 

of the few that were unanimously adopted by the Constitutional 

Convention. The Framers firmly believed that granting authors exclusive rights would establish the incentive for them to innovate. 

They believed that this financial incentive was necessary to promote the progress of science and useful arts. And they were right. 

Today, America is the most innovative and creative Nation in the 

world, thanks in no small part to the Framers’ foresight. U.S. copyright owners have created millions of high-skilled, high-paying U.S. 

jobs, have contributed billions to our economy, and have led to a 

better quality of life with rich entertainment and cultural experiences for citizens. 

However, from time to time, it is important to stop and listen to 

what our Nation’s creators have to say about whether the incentives are still working to encourage innovation. This Committee’s 

review of U.S. copyright laws provides the perfect opportunity to do 

just that. During today’s hearing, we will take testimony from 

copyright owners who continue to produce the fruit of innovation 

that was envisioned when the Framers planted the first seed. 

I thank the witnesses for coming today and look forward to hearing their testimonies. 

And I am now pleased to recognize the Ranking Member, the 

gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. 

And I also want to thank you for launching this comprehensive 

review of the U.S. copyright law and the challenges of the digital 

age. I believe that this is a very important undertaking and that 

we have a unique opportunity to not only advance the debate in 

this area but to guide it in the right direction. 

In my mind, a comprehensive review starts with a fundamental 

appreciation of the constitutional framework of copyright law and 

policy. By reexamining the first principles that gave life to copyright protection, we can better develop policy that ensures that 

those principles are honored. 

Today’s panel represents individual authors and creators from diverse segments of America that rely on copyright. It is not only 

helpful but important that we hear directly from creators on how 

copyright law and policy is working for them. 

There can be little doubt that creativity and innovation are at an 

apex in the 21st century and that many economic interests are 

intertwined with the interests and livelihoods of creators. But copyright law and policy should not be about preserving existing business models, nor should it be about accommodating emerging business models. Ensuring that the intellectual labor of our creative 

communities is appropriately stimulated and compensated will 

guarantee that the public will continue to benefit from the enrichment the creators provide. 

Recognizing that policy should develop around the creator is 

sometimes easier said than done. We would be naive to not acknowledge that there are entrenched interests that cannot be dis-
3 

regarded in this review. But a careful examination of the constitutional and historical underpinnings of U.S. copyright law is a start. 

My vision of this comprehensive review also includes an assessment of the international copyright framework. Appreciating that 

framework in this global digital environment will equip us with a 

better understanding of how best to reinforce our constitutional objectives. It also provides perspective on how and why our policies 

have developed historically and where and why those policies may 

have gone astray. 

One area where copyright law has strayed from both our constitutional foundations and international norms concerns the recognition of a performance right in sound recordings. I and other 

members of this panel have long advocated for, and have the scars 

to show for it, a historical correction of this anomaly. 

That is why today I am announcing my intention to introduce 

and circulate to my colleagues and ask them to join me as original 

co-sponsors of a bill that simply recognizes a performance right in 

sound recordings. And I plan to do this before the August recess. 

We have been talking about this for a while, and I think it is 

time for us to act on it. I believe that doing so will highlight how 

the law can take the wrong turn if policymakers fail to embrace the 

principles embodied in the constitutional protection of intellectual 

property. 

The story of performance rights, although related to the field of 

music, is instructive in other areas of copyright, as well. As we continue our comprehensive review of copyright, I think that that 

story is a compelling one, one that reflects a departure from centering policy development on the intellectual labors of artists and 

responding instead to market forces that, while relevant, should 

not be in a position to completely extinguish rights recognized and 

honored internationally. 

On my travel day, I usually pick up my iPod and move it from 

Washington back to North Carolina, from North Carolina back to 

Washington. And I was reminded this morning when I picked it up 

to put it in my pocket, I love this iPod, but it is just a piece of 

metal unless it has some content on it. It is critical, it is important, 

but without the creative content to put on it, it is worthless. 

So we need to get on with recognizing the performance right, and 

I think it will have some real impact for American musical artists. 

And it won’t be extreme; it will be just a fair thing to do. 

This lack of recognition denies artists access to performance 

rights royalties already earned offshore. These funds sit unclaimed 

due to our inability to simply afford these artists what they deserve: legal recognition of a performance right. 

I think, as we continue our review, we will see that in other 

areas, as well. When we have robust protections for the rights of 

the creators, this will incentivize the parties to negotiate in good 

faith, enter into compensation agreements domestically, and 

heighten the public’s access and enjoyment of the products of the 

creative community. 

I look forward to this discussion and the coming discussions that 

we will be having with other aspects of tech and content. And I 

thank the Chair again for convening the hearing. 

I yield back. 
4 

Mr. GOODLATTE. I thank the gentleman for his opening statement and for his substantial interest in this issue and the contributions that he has made. 

We have a very distinguished panel today, and I will begin by 

swearing in our witnesses, as is the custom of this Committee. 

So if you would all please rise. 

[Witnesses sworn.] 

Mr. GOODLATTE. Let the record reflect that the witnesses answered in the affirmative. 

They may be seated. 

Each witness’ written statement will be entered into the record 

in its entirety, and I ask that each witness summarize their testimony in 5 minutes or less. 

To help you stay within that time, there is a timing light on your 

table. When the light switches from green to yellow, you will have 

1 minute to conclude your testimony. When the light turns red, it 

signals the witness’ 5 minutes have expired. 

Our first witness today is Ms. Sandra Aistars, Executive Director 

of the Copyright Alliance, a nonprofit, nonpartisan organization established in 2006. Prior to joining the Alliance in January of 2011, 

Ms. Aistars served as Vice President and Associate General Counsel at Time Warner for 7 years, where she coordinated the company’s intellectual property strategies. Before her time at Time 

Warner, she spent 12 years as an attorney working on intellectual 

property and technology issues at Weil, Gotshal & Manges. Ms. 

Aistars received her J.D. from the University of Baltimore School 

of Law and her bachelors degree in political science, history, and 

philosophy from Bard College. 

Our second witness is Mr. Gene Mopsik, Executive Director of 

the American Society of Media Photographers, where he oversees 

the Society’s membership, financial, and legislative matters. He 

represents ASMP at events throughout the country and internationally and works closely with the Society’s board of directors. 

Mr. Mopsik received his bachelors degree in economics from Wharton School at the University of Pennsylvania. 

Our third witness is Mr. Tor Hansen, co-owner and co-founder of 

Redeye Distribution and Yep Roc Records. Redeye Distribution was 

founded in 1996 and has grown to be one of the largest independently owned music distribution companies in the United States. 

Yep Roc Records was founded a year later in 1997. Prior to starting 

his own company, Mr. Hansen worked as Director of Merchandising at Rounder Records Distribution, Hear Music, and Planet 

Music/Borders Group. Mr. Hansen received his bachelors degree 

from West Chester University in West Chester, Pennsylvania. 

Our fourth witness today is Mr. John Lapham, Senior Vice President and General Counsel of Getty Images, Incorporated, where he 

manages the global team and counsels the company on issues regarding disputes, transactions, and intellectual property. Mr. 

Lapham previously served as Vice President of Business and Legal 

Affairs at Getty Images, where he managed the company’s licensing and intellectual property matters. He received his J.D. from the 

University of Washington School of Law and his bachelor’s degree 

in political science from Southern Illinois University. 
5 

Our fifth and final witness is Mr. William Sherak, President of 

Stereo D, a 2D-to-3D movie conversion company. The company was 

recently named as one of the world’s most innovative companies in 

March 2013. Mr. Sherak co-founded Stereo D in 2009 and, in less 

than 3 years, grew the company from only 15 employees to an 

international staff of more than 1,000. Prior to starting his own 

company, Mr. Sherak worked at Blue Star Entertainment and received his education from the University of Denver. 

Welcome to you all. Apologize to any of you whose names I mispronounced. 

And, Ms. Aistars, do I have your name right or—— 

Ms. AISTARS. You have my name right. 

Mr. GOODLATTE. Correct. Wonderful. We will start with you. 

Ms. AISTARS. Thanks very much. 

Mr. GOODLATTE. You want to hit that button on the microphone. 

TESTIMONY OF SANDRA AISTARS, EXECUTIVE DIRECTOR, 

COPYRIGHT ALLIANCE 

Ms. AISTARS. Thanks very much. I thank Chairman Goodlatte, 

Subcommittee Chairman Coble, Ranking Member Watt for this opportunity to testify. And we send our wishes for a speedy recovery 

to the Subcommittee Chairman. 

Our members commend the Committee for undertaking this review. And, as Chairman Goodlatte mentioned, today you are hearing about the creative community’s contributions to innovation, and 

next week you will hear about technology’s contributions. 

And while I believe it is important to hear separately from all 

the stakeholders, I want to say at the outset that the creative community does not view copyright and technology as warring concepts 

in need of balancing. To the contrary, we are partners and collaborators with the technology community. And, in many instances, we 

are both authors of creative works and technology innovators ourselves. 

A robust and up-to-date Copyright Act is important to all of us. 

And we must not lose sight of the fact that the ultimate beneficiary 

of such an act is the public at large. Semantic arguments aside, society cannot benefit from cultural works if the primary investors in 

these works, the authors themselves, are not served and protected. 

Copyright, in this regard, is a unique form of property because 

it comes from an individual’s own creativity, their hard work, and 

their talents. It is not something that you inherit through the happenstance of birth or good fortune. And, in many ways, it therefore 

embodies the American dream. 

And I can speak to this personally because I am a first-generation American, and my parents were refugees to the United States. 

My father is a visual artist and an author, and he supported our 

family in a middle-class household through his work as a visual 

artist. 

Most copyright owners in the United States are people just like 

my father. They are neither famous nor wealthy. They are just normal people trying to make a living or supplement a basic living by 

using their talents. And they make our communities, our Nation, 

and the whole world a much richer place to live. 
6 

But, unfortunately, the experiences of these people are the ones 

that are least often heard. Eric Hart, who is one of our grassroots 

members, is a prop maker from Burlington, North Carolina. And 

he invested several years of research and photographed over 500 

images to publish his first book, entitled, ‘‘The Prop Building 

Guidebook: For Theatre, Film, and TV.’’ He made much of the information available on his Web site for free, and, unfortunately, 

but not surprisingly, as soon as the book was released, it began to 

be pirated and distributed on sites for free download, with advertising dollars coming from the most famous brands in America supporting those sites. 

I don’t know any way to define Eric’s experience other than ‘‘exploitative.’’ We need to maintain a framework of laws that makes 

it worthwhile for people like Eric to invest the time, labor, and talent to share his knowledge with others. 

And I personally have chosen to defend copyright because, in my 

mind, it is the body of law that turbocharges the First Amendment. 

Justice Sandra Day O’Connor put it a little bit more eloquently, 

calling it the ‘‘engine of free expression.’’ But by granting the individual author the rights to his work, you lay the groundwork for 

new voices to thrive without having to rely on outside subsidies or 

outside influences in their writing and creating. 

I think there is little argument that copyright and the First 

Amendment together have produced extraordinary works of cultural and economic value. And that was the goal of the Founders. 

The Supreme Court has repeatedly said that, by first focusing on 

the author, the copyright law ultimately benefits all of society. 

And to benefit society, copyright law needs to do two things. 

First, it needs to encourage the creation of works, and, second, it 

needs to promote the distribution of works. This requires respecting both the author’s economic interests in being compensated, but, 

also, it requires understanding that many creators will not broadly 

disseminate their works unless they feel safe doing so on other 

noneconomic grounds. 

So take, for example, the outrage that was spawned last year 

when Instagram changed its terms of service. Ordinary people 

across the country were rightly concerned that their personal 

photos would be used by others in unexpected ways and without 

their permission. Many professional creators have these same concerns. 

And I have had the experience of talking to civil-rights-era photographer Matt Herron, who once explained to me that the reason 

copyright is so important to him is not for the economic reasons 

that you might expect but because it gives him the right to keep 

his collection of photographs of the Selma to Montgomery March together as one, intact, single body of work. And that ensures that 

the piece of history that he captured will be passed down to future 

generations as a coherent story and in the proper context. 

My written testimony catalogs a number of examples of how the 

creative industries are a major source of innovative ideas and new 

product developments and new services. We are using new technologies in new ways. We are spurring the development of new 

technologies through our own creative work, and we are creating 

new technologies ourselves. This ultimately benefits amateur cre-
7 

ators, as well, with the diffusion of affordable software and hardware. 

Let me conclude by saying that a focus on and a respect for creators’ rights reflects the values our country was built on, and it 

benefits all of us. I hope you will keep this in mind as you examine 

the Copyright Act during the review process. And I thank you for 

your attention. 

Mr. GOODLATTE. Thank you very much. 

[The prepared statement of Ms. Aistars follows:] 
8 

copyright alliance Co ___ .I'1_ ........ _, 

Testimony of Sandra Aistars, Executive Director, Copyright Alliance 

Committee on the Judiciary 

Subcommittee on Courts, Intellectual Property and the Internet 

u.s. House of Representatives 

"Innovation in America : The Role of Copyrights" 

July 25, 2013 
9 

Testimony by Sandra Aistars, Executive Director, Copyright Alliance 

Innovation in America: The Role 0/ Copyrights 

Before the Judiciary Committee's Subcommittee on Courts, Intellectual 

Property and the Internet 

July 25,2013 

The Copyright Alliance is a non-profit, public interest and educational 

organization made up of artists, creators, and innovators of all types. Our 

members include artist membership organizations and associations, unions, 

companies and guilds, representing millions of creative individuals. We also 

collaborate with and speak for thousands of independent artists and 

creators and small businesses who are part of our one voi©e activists 

network. On core issues of copyright policy there is more that unites 

creators and innovators than there is that divides us, which is why I can 

represent such a diverse cross section of creative people and businesses in 

one organization. 

I am grateful for the Subcommittee's invitation to testify, and our members 

commend the Committee for undertaking this review. It is fitting that in an 

age of rapid technological advances we review our laws to make sure they 

are up to the task of encouraging creativity and dissemination of works, for 

the benefit not only ofthe creators, but also the general public. As the 

Committee approaches this challenge, however, we urge you to take a 

measured approach. The copyright laws, on the whole, are working and 

have helped to make this country the leading producer and exporter of 

creative and innovative goods in the world. Care must be taken to ensure 

the balanced intellectual property protections we currently enjoy not be 

sacrificed in the hope that weakening protections will spur technological 

innovation. 

This hearing focuses on copyright and the creative community's 

contribution to innovation; next week's hearing will be on technology's 

contributions. And while it is important to hear separately from various 

stakeholders, I want to underscore that the creative community does not 

view copyright and technology as warring concepts, whose interests must 

be balanced to further the public good. Rather our members view 

1 
10 

ourselves as partners and collaborators with the technology community. 

Indeed, in many instances individual creators and companies alike are 

playing dual roles both as authors of creative works and as technology 

innovators who themselves develop new technologies or who adopt and 

drive demand for technologies necessary to the creation and distribution of 

their works. Increasingly technology companies also play dual roles, often 

straddling both the creative and tech communities. Numerous members of 

the Copyright Alliance, such as the Business Software Alliance, the 

Entertainment Software Association and the Software and Information 

Industry Association are comprised of technology companies with 

significant copyright interests. 

When people hear that Congress is reviewing the copyright laws, the 

tendency is to think that the focus will be on revising Title 17. But some of 

the most important work this Committee can do has nothing at all to do 

with rewriting law. Rather, the Committee can use its oversight role to 

encourage law enforcement to take seriously criminal violations of the 

copyright law, and it can encourage all stakeholders in the Internet 

ecosystem to proactively take commercially reasonable, technologically 

feasible measures to reduce the theft of intellectual property. 1 

Principles For the Copyright Review Process 

A robust, well-functioning and up-to-date Copyright Act is important to all 

stakeholders, especially the general public, which is the ultimate 

beneficiary of a well-functioning system. As a practicing copyright lawyer 

for close to twenty years, I share the Chairman's and the Register of 

Copyrights' interest in examining the system to ensure it meets today's 

1 Law enforcement has stepped up in recent years to address IP crime. The creation of the IPR Center, the 

success of Operation In Our Sites, and the Megaupload indictment are just three ofthe many law 

enforcement initiatives that have educated the public - and the criminals - that the US does not consider 

IP theft to be mere nuisance crimes. This Committee can play an important role as both authorizers and 

in its oversight of DOJ to ensure that these efforts continue in an appropriate fashion. 

Likewise, private initiatives between rights holders and online intermediaries have started to have an 

impact in this arena, and this Committee should be actively encouraging such efforts. To cite but a few 

examples, there are the "UGe Principles" (covering video-sharing sites); agreements between 

rightsholders and payment processors, rightsholders and ISPs, and ad networks. Ideally future private 

efforts will involve the participation of all affected rights holders and address the needs of creators such 

as photographers, graphic artists, authors and songwriters, who thus far have not been participants in 

these privately led initiatives. 

2 
11 

needs in specific areas of its application. If we proceed in a spirit of 

cooperation with addressing some clearly defined ways in which copyright 

law may be failing to live up to its goals, then the creators I represent, and 

the public at large will be well served. If, however, we proceed on the 

premise that copyright law is somehow obsolete simply because we now 

live in a different technological age, we risk a future that will no longer add 

to and build upon over two centuries of cultural works and the liberty and 

prosperity fostered by their diffusion. 

Copyright law should remain rooted in technology-neutral principles. The 

fundamental premise of copyright law is that ensuring appropriate rights to 

authors will drive innovation and benefit the society as a whole. This 

should not change because of new technologies that come and go in the 

marketplace. No one knows for sure what innovation looks like in advance. 

To undermine copyright protections on the theory that this will spur 

additional innovation in certain subsectors of our economy is simply 

guessing and therefore gambling with this nation's overall economic health 

and cultural heritage. 2 

Copyright is a unique form of property grounded in an artist's own 

creativity, hard work, and talent. In many ways it epitomizes the American 

Dream. This is something I know first-hand. I am a first generation 

American. My parents were refugees to the United States. My father 

supported our family in a middle-class household through his work as a 

visual artist and author, and most copyright owners in the U.S. are 

individuals just like my father. They are neither famous nor wealthy. 

They are individual graphic artists, photographers, songwriters, filmmakers 

and authors who make or supplement a middle class living from their 

creative work. They are small businesses in nearly every community in the 

country. 

Based on these demographics of rights holders and the nature of copyright, 

some Constitutional scholars have argued that creative works should be 

even more worthy of protection than physical property: 

2 Of course when considering copyright it is important to value the entire body of law, including, for 

instance exceptions and limitations such as fair use. Copyright owners are users of copyrighted works as 

well as authors, and thus rely on these provisions as much, if not more, than other users. 

3 
12 

[T]he field of creative works is infinite, and one person's expression 

of an idea does not meaningfully deplete the opportunities available 

to others; indeed it expands the size of the "pie" by providing 

inspiration to others. Moreover, while tangible property such as land 

and chattel is often pre-existing and acquired through mere 

happenstance of birth, intellectual property flows directly from its 

creator and is essentially the "propertization of talent" that is, "a 

reward, an empowering instrument, for the talented upstarts in 

society." 3 

Creative upstarts are a source of innovative ideas, solutions and new 

economic potential, and they are also first-adopters of new technologies 

that transform the means of producing creative works.4 For instance, 

documentarian Trisha liff, uses social media tools to collaborate with and 

remotely direct three taxi drivers in Kerala who are filming parts of her 

current documentary project. Capturing footage in Ramallah, Morocco, 

Kerala and Mumbai, liff is documenting stories of how cinema is keeping 

small emigree communities connected to their home cultures. Creators like 

lift and many others drive innovation in technology by using tools in new 

ways, thus providing impetus to technology producers to create new 

products and services to meet their needs. 

At the same time, creative upstarts are perhaps most harshly affected by 

gaps in the copyright law, and their experiences and challenges are often 

least heard by policymakers. 5 

3 PAUL CLEMENT, VIET DINH & JEFFREY HARRIS, CENTER FOR INDIVIDUAL FREEDOM, THE CONSTITUTIONAL AND HISTORICAL 

FOUNDATIONS OF COPYRIGHT PROTECTION, 2 (2012) (emphasis and quotations in original) (citing Justin Hughes, 

The Philosophy a/Intellectual Property, 77 Geo. L.J. 287, 291 (1988)). 

4 See, Johannes Truby, Christian Rammer, & Kathrin Muller, The Role a/Creative Industries in Industrial 

Innovation, at Non Technical Executive Summary (Econstor Working Paper, ZEW Discussion Papers 08-

109) available athtrp:l/hdl.handle.net!10419/27592 (last accessed July 19, 2013). 

5 For instance, authors of all types require a well-funded Copyright Office that is up to the tasks required 

of it in the 21st century. We appreciate and support the efforts of the Office to discover current 

inefficiencies, and to outline modernization needs. These sorts of modernization efforts must also take 

place with the full participation of a variety of authors in order to ensure a workable system emerges. As 

an example, photographers have long complained that the current registration system does not 

adequately take into account their work flows and requirements as potential registrants of large volumes 

of works, each of which individually may havea limited (or unknown) value. 

4 
13 

Eric Hart, a maker of theatrical props and author from Burlington, North 

Carolina, recently shared his challenges with us. Earlier this year, after 

several years of researching, writing and assembling all the necessary 

technical information, including setting up and shooting more than 500 

illustrative photographs, Eric's first book The Prop Building Guidebook: For 

Theatre, Film, and TVwas published by Focal Press. The book is a unique, 

comprehensive reference for prop makers that provides innovative 

approaches to solving problems. Special attention was paid to the details 

of its design and layout to ensure that it can easily be used in a workshop. 

Unfortunately, but not surprisingly, it was pirated almost immediately upon 

its release, and many of the sites on which it appears are supported by 

advertising by major brands. Eric wrote to us: 

I wanted this information to spread regardless of whether people can 

afford it. I filmed a number of videos to complement the book, and 

those are available for free on the book's website. I also had a few 

chapters which couldn't fit in the book, so those can be downloaded 

for free from the book's website as well (in a DRM-free format). The 

book's website has a link where you can find the closest library to 

read my book, as well as a link for teachers to request a free copy to 

review for their classes. Finally, my blog continues to be a source of 

free information on a regular basis. 

While it is not unexpected for me to find out the book is being 

pirated, it is odd. I've found a lot of the pirate sites with links to my 

book are really just auto-generated websites using the name of my 

book to draw traffic, but the actual link leads you to download some 

malware or adware. But then there are sites like Mobilism.org, where 

real people are requesting a pirated copy of my book. It's happening 

in full view of anyone surfing the web. It's like I'm standing right here, 

and someone is saying, "Yeah, you spent years creating something 

unique and valuable that will benefit the community. I appreciate 

that, and I'm going to take advantage of it, but I'm not going to pay 

like everyone else." 6 

Encouraging the creation and broad dissemination of works like Eric's will 

6 See Eric Hart's full statement at Appendix A. 

5 
14 

require maintaining a framework of laws that makes it worthwhile for 

creative individuals to invest the labor and talent to share their skills with 

others. Copyright protection must not become illusory. And for creative 

businesses to survive and grow, the value to principals and investors in such 

works needs to be clear. 

As you delve into this copyright review I would urge you to think about 

copyright and innovation from an author's perspective in the following way. 

First, copyright is about empowerment. A copyright belongs to the author 

from the time a work is created and recorded in some tangible form, 

regardless of whether the author has registered it or taken any formal 

action. A copyright may be the only asset the author has in a negotiation 

with a distributor, label, or other corporation. It opens the door for an 

economic negotiation. If you weaken copyright or make it harder for the 

author to obtain or maintain its protections, you weaken the author's 

negotiating position, as well as the value proposition for the distributor. 

Second, copyright is about choice. Because copyright exists in a work and 

belongs to the author from the time the work is recorded, it enables the 

author to choose what he or she wishes to do with it. She can use a work in 

mUltiple ways simultaneously. She can license the use of the work 

commercially to support herself and continue investing in new projects, 

while also making the work available for free to other non-commercial 

users to support a cause she believes in. These choices allow for a broader 

variety of business models to develop, which increases healthy competition 

among innovators and benefits consumers. 

The author can also choose not to license his or her work in certain 

circumstances. Sometimes the non-economic choices an author makes by 

enforcing a copyright are the most important ones. Matt Herron, a civil 

rights era photographer who we work with explained to me once that the 

reason copyright matters to him so much is that it enables him to keep his 

collection of photographs of the Selma to Montgomery march together, 

and it ensures that the history of that period will be passed down to future 

generations as a coherent whole -- without images missing because they 

are controlled by someone else, and without images having been devalued 

6 
15 

because they were licensed for commercial purposes. 

Finally, copyright is about freedom. It is core to protecting our First 

Amendment rights of freedom of expression. It also gives authors the 

freedom to create and to thrive, and the freedom to create free from 

outside influence. "As the founders of this country were wise enough to 

see, the most important elements of any civilization include its 

independent creators - its authors, composers, and artists - who create as 

a matter of personal initiative and spontaneous expression rather than as a 

result of patronage or subsidy.,,7 

These guideposts I have suggested for your deliberations are fully 

consistent with the Founders' vision for copyright. 

The Founders Recognized that Copyright Protection Would Spur Creativity 

and Innovation 

Article I, Section 8 of the Constitution grants Congress the authority "[t]o 

Promote the Progress of Science and [the] useful Arts, by securing for 

limited Times to Authors and Inventors the exclusive Right to their 

respective Writings and Discoveries."s As one of the few constitutionally 

enumerated powers of the Federal government, this grant of authority 

reflects the Founders' belief that copyright protection is a significant 

governmental interest, and that ensuring appropriate rights to authors 

drives innovation and benefits society. 

In Federalist Paper 43 Madison declared "The utility of this power will 

scarcely be questioned.,,9 And he asserted that "[t]he public good fully 

coincides in both cases with the claims of individuals."lo Early Supreme 

Court cases reinforce the belief that"[t]o promote the progress of the 

useful arts is the interest and policy of every enlightened government." 11 

Because, in Madison's words, "[t]he public good fully coincides with the 

7 Copyright Law Revision: Hearings on S. 1006 Before the Subcomm. On Patents, Trademarks, and 

Copyrights of the Comm. on the Judiciary, 89th Cong., 1st Sess. 65 (1965) (testimony of Register of 

Copyrights Abraham Kaminstein). 

8 U.S. Canst. art. I, § 8, d. 8. 

'THE FEDERALIST No. 43 (James Madison). 

lOld. 

11 Grant v. Raymond, 31 U.S. 218, 224 (1832). 

7 
16 

claims of individuals,,,12 in ensuring authors' rights would be protected, the 

focus of copyright law has properly been first on the author, but the 

ultimate effect is a benefit to society at large. 

"The economic philosophy behind the clause empowering Congress 

to grant patents and copyrights is the conviction that encouragement 

of individual effort by personal gain is the best way to advance public 

welfare through the talents of authors and inventors in 'Science and 

the useful Arts.' Sacrificial days devoted to such creative activities 

deserve rewards commensurate with the services rendered.,,13 

In Twentieth Century Music Corp. v Aiken, the Supreme Court reiterated this 

goal: "The immediate effect of our copyright law is to secure a fair return 

for an 'author's' creative labor. But the ultimate aim is, by this incentive, to 

stimulate artistic creativity for the general public goOd.,,14 It is axiomatic 

that to benefit society, copyright law must have a dual purpose: to create a 

framework that encourages creation and dissemination/commercialization 

of works. As the Court explained in Golan v. Holder. 

"[n]othing in the text of the Copyright Clause confines the 'Progress 

of Science' exclusively to 'incentives for creation.' Evidence from the 

founding, moreover, suggests that inducing dissemination-as 

opposed to creation-was viewed as an appropriate means to 

promote science. Until 1976, in fact, Congress made 'federal 

copyright contingent on publication L] [thereby] providing incentives 

not primarily for creation: but for dissemination. Our decisions 

correspondingly recognize that 'copyright supplies the economic 

incentive to create and disseminate ideas.'" 15 

As Justice Sandra Day O'Connor eloquently wrote "In our haste to 

disseminate news, it should not be forgotten that the Framers intended 

copyright itself to be the engine of free expression. By establishing a 

marketable right to the use of one's expression, copyright supplies the 

economic incentive to create and disseminate ideas.,,16 

" Madison, supra note 8. 

13 Mazer v. Stein, 347 U.S. 201,219 (1954). 

14 Twentieth Century Music Corp. v. Aiken, 95 S. Ct. 2040, 2044. 

15 Golan v Holder, 132 S. Ct. 873,888-89 (2012) (emphasis in the original) (citations omitted). 

16 Harper & Row Publishers, Inc. v. Nation Enter., 471 U.S. 539, 558 (1985). 

8 
17 

Since the dissemination of works properly requires the consent of the 

author, the history and development of copyright law reflects both 

economic and other societal goals. A creator's control over the use of his 

or her work - the Uright to say no" - can often serve as a proxy to address 

non-economic interests. In fact, international law elevates this right to a 

human right. 17 

In reviewing the Copyright Act, Congress should therefore keep in mind 

both the economic contributions and motivations of creators, and the noneconomic goals the Copyright Act serves and make any adjustments to the 

law in ways that will encourage both the creation and 

dissemination/commercialization of works. For many creators, works will 

not be broadly disseminated unless the creator feels "safe" doing so on 

non-economic grounds. 

Last year's controversy over Instagram's change to its Terms of Service 

demonstrates that users of the popular photo sharing site have similar 

concerns to professional creators in this regard. Instagram lost nearly half 

of its daily active user base last year when the site changed its Terms of 

Service in ways which users perceived would allow the service to sell users' 

personal photographs for commercial advertising. 1s Consumer concerns 

about misuse of their personal photographs are well-founded. In a case in 

the Northern District of Texas in 2009, a family sued Virgin Australia based 

17 See, Universal Declaration of Human Rights, G.A. Res. 217 (III) A, U.N. Doc. AlRES/217(111), art. 27 (Dec. 

10,1948): 

(1) Everyone has the right freely to participate in the cultural life ofthe community, to enjoy the arts and 

to share in scientific advancement and its benefits. 

(2) Everyone has the right to the protection of the moral and material interests resulting from any 

scientific, literary or artistic production of which he is the author. 

Several jurisdictions confirm that copyrights are human rights. For example, the European Court of 

Human Rights recently upheld criminal charges against various operators of the infamous Pirate Bay site. 

The Court stated that copyright is protected as property under Article 1 of Protocol No.1 of the European 

Convention on Human Rights. Governments do not merely have a duty of noninterference with the 

enjoyment of property rights but "may require positive measures of protection." The Court denied the 

challenge that the criminal charges interfered with defendants' exercise of their free expression rights as 

"manifestly ill-founded," holding that in this case, such interference was "necessary in a democratic 

society" to vindicate copyright owners' human rights. NEIJ v. Sweden, 2013-V Eur. Ct. H.R. available at 

http}/hudoc.echr.coe.int/s; tes/engfpages/search.aspx ?i=OOl-1l7513#l"itemid": ["001 117513"1l. 

18 http://www.nypost.com/p/news/business/bad instil karma 4ZENrwZVX2byVMQxK045rN 

9 
18 

on its use of photos of their daughter taken at church camp, and posted to 

Flickr. Virgin Australia had used the photos in an embarrassing ad 

campaign urging viewers to dump their pen pals. 19 

The Creative Industries Drive Innovation and Provide Major Economic 

Inputs to Our Economy 

Ensuring that authors continue to enjoy appropriate rights in their works, 

and that the Copyright Act continues to motivate the creation and 

dissemination of works by taking into account authors' economic and noneconomic motivations is crucial to our innovation economy. This is so 

because 

First, Creative Industries are a major source of innovative ideas and 

thus contribute to an economy's innovative potential and the 

generation of new products and services. Secondly, they offer 

services which may be inputs to innovative activities of other 

enterprises and organizations within and outside the creative 

industries. Thirdly, Creative Industries are intensive users of 

technology and often demand adaptations and new developments of 

technology, providing innovation impulses to technology 

producers. 2o 

The experiences of our members are consistent with these findings. As 

storytellers, our members use technology to enhance their storytelling. 

Directors Guild member James Cameron spent years developing the 

technologies required to bring his vision for Avatar to the screen. His work 

required a number of ground breaking, state-of-the-art technologies such as 

new cameras; leaps forward in 3-D; and advances in performance-capture 

technology that are continuing to benefit professional filmmakers as well as 

other businesses. These advances also benefit amateur creators - many of 

19 Chang v. Virgin Mobile USA, LLC, Civil Action No. 3:07-CV-1767-D, 

b~cholar.g()ogle.col1'!/scholar case?case=lB2961556800Q!"2!ili§Q. The case was dismissed for 

failure of personal jurisdiction, and it is possible that had the merits been reached defendants would 

nevertheless have prevailed, because the photos were taken by her camp counselor and posted subject to 

a Creative Commons Attribution 2.0 license that provides for broad use privileges, including commercial 

use without payment. The case is significant nonetheless to illustrate that the copyright owner's decision 

to license or not based on the exclusive rights granted to a copyright owner have important noneconomic ramifications as well. 

20 Johannes Truby, Christian Rammer, & Kathrin Mulier, The Role a/Creative Industries in Industrial 

Innovation, at Non Technical Executive Summary (Econstor Working Paper, ZEW Discussion Papers 08-

109) available at http://hdLhandlc.net/l0419/27592 (last accessed July 19, 2013). 

10 
19 

the techniques and technologies now used by amateur filmmakers and 

musicians on sites like YouTube were originally motivated, created for and 

tested and perfected by professional filmmakers and musicians. 

Likewise, the motion picture studios aggressively pursue new technology 

opportunities for distribution of their works in digital media, not only as 

customers of technology companies, but as developers of platforms 

themselves. Some of the most popular consumer electronics formats in 

history, including DVD and Blu-ray were developed through collaborative 

cross-industry efforts. Both in private practice, and in my former role as an 

officer of Time Warner, I served on or chaired working groups of Consumer 

Electronics, Information Technology and Entertainment companies to 

develop technical specifications and license agreements for some of the 

underlying technologies for these and other formats. Studios are patent 

holders in these technologies alongside IT and CE companies. Similarly 

Ultraviolet, a cross industry initiative to distribute films through a cloudbased system, was heavily driven by studio investments and participation. 

Entertainment companies also develop distribution platforms for their 

services entirely on their own. 

• "HBO GO," the TV Everywhere platform for HBO subscribers, was 

developed entirely in-house. 

• Studios--in particular Warner Bros. and Universal--drove Digital 

Cinema Distribution Coalition ("DCDC") with a group of major 

theatrical distribution companies to develop and standardize an 

open, transparent, cost-effective system for high speed digital 

delivery of movies and live event programming to all exhibitors from 

all content owners. This innovative technical project is quickly 

replacing the expensive and time-consuming process of distributing 

physical film prints to thousands of theaters domestically and 

(eventually) internationally. 

• Warner Bros. invented the Video Recombine Process to upgrade 

older television programming into high-definition format suitable for 

watching on today's HD large screen televisions and displays. This 

new, efficient, cost-effective process permits the upconversion of 

both popular and niche television shows shot on video from the 

1980s and 1990s. 

11 
20 

• Syndistro, a joint venture of Warner Bros., CBS and Deluxe, created 

the MagnuBox platform for syndication operations that permits 

multiple TV stations simultaneously to receive recorded material and 

live content for faster download speeds while dramatically reducing 

the need for costly and inefficient transcoding. 

These types of investments occur throughout the creative community and 

have been going on for years -largely unpublicized. For the creative 

industries this sort of innovation is simply part of their businesses. 

• The publishing Industry invests $100s of millions in R&D, 

infrastructure, skilled labor, and other resources to create, publish, 

distribute and maintain scholarly articles digitally and on the 

Internet. Scholarly publisher Reed Elsevier began development of its 

on line publishing platform, ScienceDirect in 1995, beta tested it in 

1997-1998, and finally rolled it out in 1999. The company invested 

$26 million in initial development costs and made an initial 

investment of $46 million to create digital archives. Since then it has 

spent $100s of millions shifting to digital production and publication 

of journals. This includes paying developers to code, scan, and beta 

test platforms, purchasing hardware and machinery, R&D and 

ongoing maintenance and enhancements. Currently, Reed Elsevier 

maintains over 90 terabytes of digital storage capacity from which an 

average of 10 million active users from 120 different countries 

download nearly 700 million articles per year. More than 1.5 million 

articles in science, technical and medical fields were published in 

2009 alone. 21 

• Creative people within such innovative businesses are developing 

new tools for their readers as well. The New England Journal of 

Medicine employs a full time staff of medical illustrators to redraw 

and recompose all images submitted by authors. A recent feature 

pioneered by the journal is a 3D video animation of all of the medical 

images that allows the images to be rotated on mUltiple axes for 

different perspectives. The benefits to medical and biochemical 

II Adam Mossoff, How Copyright Drives Innovation in Scholarly Publishing (forthcoming 2013) (manuscript 

at 18-20) available at http://papers.ssrn.com/soI3/papers.cim ?abstract_id=2243264. 

12 
21 

researchers for their own innovative work are obvious. 22 

Innovative approaches are also being developed to ensure artists are 

remunerated for their work: 

• As was recently emphasized by the World Creators Summit in 

Washington, DC, held by CISAC (the International Confederation of 

Societies of Authors and Composers), collective licensing 

organizations -like BMI and ASCAP in the United States and their 

counterparts in over 100 foreign countries - playa critical role in the 

protection and promotion of creators' rights in a global, digital 

economy. Performance rights organizations (PROs) ensure that 

copyright royalties flow to authors for the use of their works 

anywhere in the world. To promote the licensing of entire 

repertories of musical works on a non-exclusive basis, to remunerate 

songwriters, composers and publishers, and to provide information 

to the public, the PROs have invested significant resources in 

developing or acquiring the necessary computer software and 

hardware technologies. 

The assertion that the creative community is making major contributions 

to our innovation economy is not just based on anecdotal evidence and 

every day experience. Both the World Intellectual Property Organization 

and the US Patent and Trademark Office have issued reports establishing 

that the creative community drives innovation and makes major economic 

inputs to economies. 

The USPTO found that the entire US economy relies on some form of IP; 

because virtually every industry either produces or uses it. Having 

identified and studied 13 copyright intensive industries, USPTO concluded 

they provided 5.1 million jobs in the US, and that for every two jobs in the 

copyright intensive industries, they supported an additional one job 

elsewhere in the economy. Education levels, wage levels and the ability to 

lead economic recovery outpaced non-IP intensive industries. 23 

22 Id. 

23 ECON. AND STATISTICS ADMIN. AND u.s. P.T.O., INTELLECTUAL PROPERTY AND THE US ECONOMY: INDUSTRIES IN Focus 

(Mar. 2012) availableathttp://www.uspto.gov!news!publications!IP Report March 20V.pdf. 

13 
22 

Analyzing 30 national studies of the economic contributions of the 

copyright industries to GOP, the World Intellectual Property Organization 

has found a strong and positive relationship between contributions of 

copyright industries to GOP and (1) economic freedom (2) global 

competitiveness (3) global innovation and (4) research and development. 24 

Specifically, WIPO found: 

• Countries that have experienced rapid economic growth typically 

have above average share of GOP attributed to copyright industries; 

• Contribution of copyright industries to GOP exhibits a strong and 

positive relationship with the Index of Economic Freedom. (The 

Index of Economic Freedom ranks countries on a 1-100 scale 

evaluating economic openness, competitiveness and the rule of law, 

including business and trade freedom, fiscal freedom, property 

rights, and freedom from corruption. According to WIPO "[clountries 

that score well demonstrate a commitment to individual 

empowerment, non-discrimination, and the promotion of 

competition. Their economies tend to perform better, and their 

populations tend to enjoy more prosperity ... ,,25 

• There is a strong and positive relationship between the contribution 

of copyright industries to GOP and the Global Competitiveness Index. 

Countries with high scores have advanced knowledge, ideas and 

innovation;26 and 

• There is a positive and highly significant relation between 

performance of the copyright industries and the Global Innovation 

Index. This relationship implies that innovation and creativity are 

inherently and positively connected. 27 

USPTO's and WIPO's economic findings are consistent with consumer 

opinion as well. The American Consumer Institute Center for Citizen 

Research is releasing a report today on consumer opinions on IP and 

counterfeit/pirated goods. The study surveyed 1,000 adult US citizens age 

24 WORLD INTELLECTUAL PROPERTY ORGANIZATION (WI PO), WIPO STUDIES ON THE ECONOMIC CONTRIBUTION OF THE 

COPYRIGHT INDUSTRIES 8, 10-12 (2012) available at http://www. wi po. i nt!export!>ites!www!i pdevelopment/en/creative industry/pdf/economic contribution analysis 20l2.pdf. 

25 'd. at 8. 

26 'd. at 10. 

27 'd. at 10-11. 

14 
23 

18 or older, using a third party national survey research group. The survey 

results show that an overwhelming majority of consumers surveyed believe 

• Protecting IP is good way to encourage innovation and creativity 

(86%) 

• The sale of counterfeit and pirated goods negatively affects US jobs 

and economy (89%) and 

• 91% support strong enforcement of laws against sale/distribution of 

counterfeit/pirated goods. 

Conclusion 

A focus on and respect for creator's rights reflects the values our country 

was built on, rooted in our Constitution. The public benefits from the 

intellectual and cultural diversity that results, as well as from the promotion 

of a sustainable and innovative economy. As you examine the Copyright Act 

during this review process I urge you to 

• Keep in mind how the changes proposed will affect the vast and 

varied communities of creators and innovators across the country. 

• Strive for a well functioning copyright act that will unite the interests 

of all stakeholders to a common goal - don't proceed from the basis 

of any particular business model. 

• Continue to afford yourself the opportunity to hear from a wide array 

of participants in order to understand how any changes proposed will 

work for creative upstarts as well as for more established members 

of the creator and innovator community. 

• Remember the multiple goals the Founders had in mind for 

copyright. 

And with every argument for revision, demand specifics. After more than 

200 years we already know that the basic premises of copyright protection 

work. We should not risk its benefits on vague or overbroad theories 

predicated on supporting the business goals of any particular industry. The 

debates we hear today are no different than those that have occurred in 

the past. The times and the players may be different, but the premises are 

the same, and the basic principles underlying the Copyright Act have 

withstood the test of time. In this regard, the words of Barbara Ringer, the 

former Register of Copyrights are worth remembering. In an essay 

published nearly forty years ago, when the Act was last being reviewed she 

15 
24 

wrote: 

If the copyright law is to continue to function on the side of light 

against darkness, good against evil, truth against newspeak, it must 

broaden its base and its goals. Freedom of speech and freedom of 

the press are meaningless unless authors are able to create 

independently from control by anyone, and to find a way to put their 

works before the public. Economic advantage and the shibboleth of 

"convenience" distort the copyright law into a weapon against 

authors. Anyone who cares about freedom and authorship must 

insure that, in the process of improving the efficiency of our law, we 

do not throw it all the way back to its repressive origins in the Middle 

Ages. 28 

We urge you to keep true to the principles, which have served this 

country and its innovators and creators so well since the founding of our 

nation. 

28 Register of Copyrights Barbara Ringer, The Demonology of Copyright, R.R. Rowker Memorial Lecture 

New Series, 19 (Oct. 24, 1974) available at 

lill:~ww.copyright,gov/historv/demonologv of copvright,pdf 

16 
25 

Appendix A: 

Statement of Eric Hart 

Like many creative people who work in the arts for a living I don't spend a lot of 

time thinking about copyright law, but a recent experience brought to my 

attention how important its protections can be and how challenging it can be for 

an independent author and artist like myself to use it to protect my work. 

I began working in the theater at my undergraduate school in the late 1990s. I 

have done lighting, set design, painting and even audio. But I soon discovered my 

true passion: making props - and I have been a working prop maker for the past 

ten years. At a certain point, I became frustrated with the lack of current books 

available on the craft of prop making and began working on my own. It was partly 

because I wanted to collect all the information I needed to reference into a single 

volume, but I thought others might be interested in such a book as well. Earlier 

this year, The Prop Building Guidebook: For Theatre, Film, and TVwas published 

by Focal Press. 

I've always been open to sharing what I know and what I learn. Part of the reason 

I wanted to write the book in the first place was because it seemed the best way 

to get that kind of knowledge out to the most people possible. I could post if to 

the Internet, but the Internet is so fragmented and ephemeral. Most of what goes 

up there is soon forgotten about. The extra time and effort of making a book gives 

much more weight to the information inside. 

Even with running a blog for a while and writing a couple of magazine articles, 

nothing could prepare me for the amount of work it would take to craft a full 

book. I was given a year to complete the manuscript, and I worked nearly every 

day on it; even then, I still felt like I could have used more time. For much of the 

time, I had to carve out a few hours before and after work to write; for a brief 

period, I was unemployed and could spend entire days (and nights) writing. There 

was no such thing as "time off" for that year. 

But it actually took me longer than that year to write because I put a lot of work 

into it beforehand. I first started planning the book in 2008 and researching what I 

17 
26 

would need to do to get one published. I started my blog a month later in January 

2009 to practice my writing and start building an audience. My blog has always 

been free and I've been writing original content for it three times a week with 

only a few breaks for the past four years. It takes a lot to maintain that sort of 

writing habit; I began waking up a few hours before work every day, and any free 

time I would get I would spend writing. 

The text itself was a challenge. No one had ever written anything as 

comprehensive as I was attempting. I talked to various professionals in the field 

and poured through any book, magazine or website with reference material I 

needed. Besides trying to describe the "best practices" of my industry, I was 

checking and rechecking a lot of technical information to make sure everything I 

said was accurate. 

The photographs were another story. No other prop making book in the past had 

color photographs; mine had over 500. I was able to draw on the photographs I 

had taken throughout my career, but there were still dozens of photos that I had 

to set up and shoot specifically for the book. In some cases, I had to buy materials 

to demonstrate their use for those photographs. I invested a lot of time, effort 

and money into both the text and the photographs for this book, so it was an 

incredible value for anyone who would buy or read the book. I was literally 

creating something which had never been created before, and which would serve 

as a foundation of information for future prop makers to build off of. 

Of course, I wanted this information to spread regardless of whether people can 

afford it. I filmed a number of videos to complement the book, and those are 

available for free on the book's website. I also had a few chapters which couldn't 

fit in the book, so those can be downloaded for free from the book's website as 

well (in a DRM-free format). The book's website has a link where you can find the 

closest library to read my book, as well as a link for teachers to request a free 

copy to review for their classes. Finally, my blog continues to be a source of free 

information on a regular basis. 

While it is not unexpected for me to find out the book is being pirated, it is odd. 

I've found a lot of the pirate sites with links to my book are really just auto18 
27 

generated websites using the name of my book to draw traffic, but the actual link 

leads you to download some malware or adware. 

But then there are sites like Mobilism.org, where real people are requesting a 

pirated copy of my book. It's happening in full view of anyone surfing the web. It's 

like I'm standing right here, and someone is saying, "Yeah, you spent years 

creating something unique and valuable that will benefit the community. I 

appreciate that, and I'm going to take advantage of it, but I'm not going to pay like 

everyone else." 

The book is actually very cheap for what it is. Textbooks and reference books of 

the same size and scope can sell for $80-120, but my book is a mere $40. That's 

probably less than the cost of the raw materials to make the book if you didn't 

mass-produce it. The book itself is made for prop making; its large size and 

binding let it sit flat on a work table, open to any page you want so you can refer 

to it while building a prop. In that way, the pirated copy would be far inferior to 

the physical book itself. 

Forty dollars for access to my ten years of prop making experience? Forty dollars 

to see the results of years of research into materials, products, tools and 

companies, as well as interviews and discussions with numerous experts in the 

field? In full color, to boot? That's quite the bargain. 

You can pay at least $40 a month for your Internet, hundreds of dollars for your 

computer equipment, and maybe another couple hundred for an e-reader, but 

you can't bring yourself to spend another $40 for something unique and valuable 

to actually read on all that equipment? Something is off here. 

What really gets me are the ads on the site. Companies like Citibank and Chrysler 

are actually paying the site to provide a forum for people to ask for pirated copies 

of my book. Imagine if I funded a website that told people how to avoid paying 

their Citibank credit card bills; see how long that will last. 

The website even gives out "rewards" for people who provide pirated copies of 

the book! One pirate writes, 

19 
28 

I actually really need this, so can raise the award to 100 WRZ$ for a retail 

quality. 

You really need this? You're in luck! You can buy the book and have it shipped to 

you almost anywhere in the world! You can buy the e-book and read it instantly! 

You can go to the library and check it out for free! If the library doesn't have it, 

you can request an inter-library loan to get it. You and your friends can pool your 

money and buy one to share. 

But no. You do not want to reward the person who has spent years carefully 

creating the book that you "really need." You would rather reward the person 

who took two seconds to Google "how to remove DRM from e books". You 

reward a website who sells advertising to major companies and only draws traffic 

from pirates looking for new things to pirate. 

Most people who have emailed me with questions have found I answer them. I 

don't have my information and knowledge locked away. Alii ask is that you value 

my work and labor as much as I do. And it's obvious you do ("I actually really need 

this"). You have plenty of free alternatives to seek out on your own on the 

Internet. But you probably, like me, we're not satisfied with them, and wanted 

someone to devote the time and energy to create a more complete and definitive 

prop building guide. That's exactly how I felt and what I did. 

This book is not a commodity. It is not interchangeable with other books out 

there, nor did it appear magically one day. Its publication was not inevitable. I 

didn't have some old prop book in front of me that I could just transcribe and 

update. I had to work for every sentence in that book. Some tiny phrases and 

charts took hours just to put together, because the information was scattered all 

over the place. The prop making book which most people use was published 

almost thirty years ago. If I hadn't written this one, it might have been another 

thirty years before one appeared again. 

20 
29 

I've spoken with dozens of prop makers who gave said they wanted to write a 

book, or were writing a book, but because of the demands of the job, there is 

never enough time. It's a rare confluence of events for a prop maker to have the 

desire to write a book, have the ability to explain and teach the craft well, have 

the skills to write coherently, have the time and support to devote to the 

mammoth undertaking of writing a book, have the network of colleagues to assist 

in areas which are not his specialty, and then manage to find an editor that 

believes in the project and gives it more support than expected, and a publisher 

with high standards of quality to carry the whole project through. 

The publisher took the risk of thousands of dollars hiring editors, designers, 

marketers, proofreaders and indexers, as well as printing up thousands of copies 

of a book. I took the risk of spending a year working on a project with no 

guarantee of any return (as a side note, authors in these niche technical markets 

like mine don't get advances). Many people have taken great risks to get this book 

made; a book which has proven to be valuable and needed. It is clear this book 

would not have existed without those risks and that hard work. The million 

monkeys of the internet would not have inevitably created it on their million 

typewriters. The only risk the reader makes is less than $40--on something that 

already exists and has been reviewed and sampled. 

While we do have laws intended to protect creators like me, we seem to live in a 

culture that pretends piracy has no real victims (or even, as some pundits like to 

say, that piracy helps build your market). It is important to remind everyone the 

amount of work that goes into the creative works which are so useful and 

valuable to us. I only wrote a single book, but there are those who devote every 

day of their lives to writing and creating, and they will not be able to do that if we 

ignore websites which decide to give away those works for free without the 

creator's permission (or even knowledge). When we devalue the creative work, 

we are devaluing both the act of creation and the act of working, both of which 

are society needs. 

21 
30 

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

TESTIMONY OF EUGENE H. MOPSIK, EXECUTIVE DIRECTOR, 

AMERICAN SOCIETY OF MEDIA PHOTOGRAPHERS 

Mr. MOPSIK. Thank you. ASMP wishes to thank Committee 

Chairman Goodlatte, Subcommittee Chairman Coble, and distinguished Members of the Committee, along with Ranking Member 

Mr. Watt, for this opportunity to testify on this important issue. 

Founded in 1944, the American Society of Media Photographers’ 

mission is to protect and promote the interests of professional photographers who make photographs primarily for publication. ASMP 

is the oldest and largest trade association of its kind in the world. 

ASMP members are primarily freelance imaging professionals, creating images, both still and moving, for publication in advertising, 

editorial, fine art, and other commercial markets. 

Simply put, ASMP members and professional photographers like 

them create many and probably most of the images that the American public sees every day. They create this country’s visual heritage. In fact, we have one of our members right here, John Harrington, taking photographs this morning. 

These images communicate the horrors of war and genocide, the 

thrill of victory and the agony of defeat, the events of everyday life, 

and the joy of discovery and travel. They create emotion, document 

history, and expand our knowledge. 

Much of the incentive to create, innovate, and the ability to control the sale and license of these works would be lost without copyright. Imagine National Geographic, the Sunday New York times 

and its magazine, Rolling Stone, Travel and Leisure, Food and 

Wine, Saveur, Sports Illustrated, all without photographs. And not 

just any photographs, but photographs created by professionals to 

fulfill the needs of their clients, created under various conditions, 

on schedule, processed and prepared for reproduction—stunning 

images that consistently stretch the bounds of creativity and innovation. 

Each assignment is a challenge to create something new never 

seen before—communicate light, emotion, the facets of a commercial product, the history and location of an event. Professional photography enriches and opens our eyes to new worlds, making us 

better informed and more sensitive to the issues and conflicts occurring around us. 

Again, in order for professionals to be able to sustain a livelihood, they need to be able to control the sale and license of their 

works so that they may receive fair compensation for their use. 

Copyright is the cornerstone of this equation. 

I can’t emphasize the fair compensation issue enough. It is ultimately not about copyright; it is about fair compensation. And 

copyright is the means to that end. 

For 32 years, prior to my becoming the executive director of 

ASMP, I worked as a professional photographer, creating images 

and solving problems for companies such as Mack Trucks, Hyster 

Company, Ingersoll Rand, and Citicorp. It was the ability to license 

my works that allowed me to buy a home, put my children through 

school, and create a better life for my family. 
31 

Creativity and innovation are essential to the success of an imaging professional. There is a saying in the trade that you are only 

as good as your last job. Competition is fierce, even amongst 

friends. Client loyalty only goes so far. 

The ability to profit in an ongoing manner from my images was 

a key stimulus for my work. In addition to my corporate industrial 

photography, I created and licensed a number of sunset skyline 

views of Philadelphia and its significant architectural environments, including the Ben Franklin Parkway, Logan Circle, and the 

waterfront. These images were repeatedly licensed by companies 

for business development literature and by other companies needing to highlight Philadelphia attractions. 

These images were created early morning and in the evenings, 

before and having worked on assignments for the day, in the cold 

and in the heat, on rooftops, on docks, with no promise of financial 

gain other than the knowledge that the images would be unique, 

of great quality, and that I would own the copyright and be able 

to make licenses. I was driven to create and innovate. I needed to 

provide for my family and my future, and copyright gave me the 

path. 

The digital revolution was supposed to be better, faster, and 

cheaper. Well, not all of that promise has come true. It may be better in many ways than film, it may be faster to capture the image, 

you can have immediate confirmation of success or failure, but in 

regard to cheaper, it never happened. Professionals now need 

$5,000 to $7,000 cameras that will become obsolete in 18 months, 

lenses extra. In addition, there is a need for expensive computer 

and storage devices to process and manage the thousands of files. 

Photographers tend to be equipment junkies, appreciating good 

design and function. The marketplace has responded over the years 

with numerous innovations. Photographers have bought in, become 

thought leaders for the pro-amateur and amateur markets, encouraging further innovation and consumption. 

Copyright is key to a free and open expression of opinion and 

point of view. If the independent professionals were no longer able 

to sustain a living from their works, the dissemination of images 

would be more concentrated in the hands of a few corporate giants 

who may have their own business interests and agendas. Embarrassing and controversial images might never see the light of day. 

In conclusion, the equation is simple: without copyright protection, the public record, our visual heritage, and the stimulus to innovate would be drastically reduced in both quantity and quality. 

And just quickly, to echo what Mr. Watt said earlier about world 

solutions and solutions that work outside of the United States, I 

would urge the Committee in their review of the copyright law to 

seek solutions that do, in fact, work in a world market, because 

that is the world we live in. 

Thank you. 

Mr. GOODLATTE. Thank you. 

[The prepared statement of Mr. Mopsik follows:] 
32 

COMMITTEE ON THE JUDICIARY 

U.S. HOUSE OF REPRESENTATIVES 

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY 

HEARING ON INNOVATION IN AMERICA: 

THE ROLE OF COPYRIGHTS 

JULY 25, 2013 

EXECUTIVE SUMMARY AND PREPARED STATEMENT 

OF 

EUGENE H. MOPSIK 

EXECUTIVE DIRECTOR 

AMERICAN SOCIETY OF MEDIA PHOTOGRAPHERS 

AMERICAN SOCIETY OF MEDIA PHOTOGRAPHERS, INC. 

150 NORTH SECOND STREET 

PHILADELPHIA, PA 19106 

215-451-ASMP EXT. 201 

FAX: 215-451-0880 

MQPSJ1<@~SmQ.QI9 

http://www.asmp.org 
33 

PREPARED STATEMENT OF EUGENE H. MOPStK 

EXECUTIVE SUMMARY 

ASMP wishes to thank Committee Chairman GoodtaUe and Subcommittee 

Chairman Coble for the opportunity of testifying on this important issue. 

Founded in 1944, the American Society of Media Photographers' mission is to 

protect and promote the interests of professional photographers who make 

photographs primarily for publication. ASMP is the oldest and largest trade 

association of its kind in Ihe world. ASMP's members are primarily freelance 

imaging professionals. creating images - both still and moving -- for publication 

in advertisingr editorial, fine art and other commercial mali<ets. 

Simply put, ASMP's members and professional photographers like them create 

many and probably most of the images that the American public sees every day: 

they create this country's Visual heritage. These images communicate the 

horrors of war and genocide, "the thrill of victory and the agony of defeat", the 

events of every day life and the joy of discovery and travel. They create emotion, 

document history, and expand our knowledge. Much of the incentive 10 create, 

innovate and the ability to control the sale and license of these work;s would be 

lost without copyright. 

Imagine National Geographic, The Sunday New Vorl< Times and its Magazine, 

Rolling Stone, Travel and leisure, Food and Wine, Saveur, Sports Illustrated all 

without photographs I And not just any photographs, but photographs created by 

professionals 10 fulfill the needs of their clients, created under various conditions, 

on schedule, processed and prepared for reproduction, Stunning images that 

consistently stretch the bounds of creativity and innovation, Each assignment is 

a challenge to create something new, never seen before, Communicate light. 

emotion. the facets of a commercial product, the history and locaton of an event. 

Professional photography enriches and opens our eyes to new worlds making us 

belter informed and more sensitive to the issues Dnd CQ(lflicls occuring Dround 

u,. 

Again, in order for professionals to be able to sustain a IIvlihood, they need to be 

able to control the sale and license of their works so that they may receive fair 

compensation for their use. Copyright is the comerstone of this equation. 
34 

For thirty two years, prior to my becoming the Executive Director of ASMP, I 

worked as a professional photographer creating images and solving problems for 

companies such as Mack Truck, Hyster Company, Ingersoll-Rand and Citicorp. 

It was the ability to license my works that allowed me to buy a home, put my 

children through school and create a better life for my family. 

Creativity and innovation are essential to the success of an imaging professional. 

There is a saying in the trade that, "You are only as good as your last job." 

Competition is fierce even amongst friends. Client loyalty only goes so far. The 

ability to profit in an ongoing manner from my images was a key stimulous for my 

work. In addition to my corporate idustrial photography, I created and licensed a 

number of sunset skyline views of Philadelphia and its significant architectural 

environments including the Ben Franklin Parkway, Logal Circle, and the 

waterfront. These images were repeatedly licensed by companies for business 

development literature and by other companies needing to highlight Philadelphia 

attractions. These images were created early morning and in the evenings 

before and after having worked on assignments for the day. In the cold and in 

the heat, on roof tops and docks, with no promise of financial gain other than the 

knowledge that the images would be unique, of great quallity, and that I would 

own the copyright and be able make licenses. I was driven to create and 

innovate. I needed to provide for my family and my future and copyright gave me 

the path. 

The digital revolution was supposed to be better, faster, and cheaper. Well, not 

all of that promise has come true. It may be better in many ways than film, it may 

be faster to capture the image - you can have immediate confirmation of success 

or failure. In regard to cheaper, it never happened I Professionals now need 

$5000.00 to $7000.00 cameras that will become obsolete in approximately 18 

months. Lenses extra! In addition, there is a need for exensive computer and 

storage devices to process and manage the thousands of files. Photographers 

tend to be equipment junkies, appreciating good design and function. The 

marketplace has responded over the years with numerous innovations, the 

photographers have bought in and have become thought leaders for the proamateur and amateur markets encouraging further innovation and consumption. 

Copyright is key to a free and open expression of opinion and point of view. If 

independent professionals were no longer able to sustain a living from their 

works, the dissemination of images would be more concentrated in the hands of 

a few corporate giants who may have their own business interests and agendas. 

Embarassing or controversial images might never see the light day. 

In conclusion, the equation is simple: without copyright protection, the public 

record, our visual heritage and the stimulous to innovate would be drastically 

reduced in both quantity and quality. 

3 
35 

PREPARED STATEMENT OF EUGENE H. MOPSIK 

Chairman Goodlatte and Coble, and distinguished members of the Committee, I 

thank you for this opportunity to testify regarding the important contributions to 

our society and future generations made by professional photographers and the 

crucial role played by copyright in the continuing ability of imaging professionals 

to support themselves and continue to create the visual images that enrich the 

lives of everyone. Freelance professional photographers are both users and 

drivers of technological innovations in both the public and private sectors. 

Founded in 1944 by a handful of the leading photojournalists of that time, the 

American Society of Media Photographers' mission is to protect and promote the 

interests of professional photographers who make photographs primarily for 

publication. ASMP is the oldest and largest trade association of its kind in the 

world. ASMP's members are primarily freelance imaging professionals, creating 

both still and moving visual images for publication in advertising, editorial, fine art 

and other commercial markets. 

1. The Value of This Country's Visual History and Heritage 

The ultimate beneficiary of copyright was intended by the framers of the 

Constitution to be the American public. In possibly no other area has this intent 

been fulfilled than that of photographic imagery. Ever since its invention in the 

mid-1800's, the public's lives have been enriched and expanded by an everincreasing exposure to photographs. The world has been opened up for virtual 

exploration by people who would never have seen, for example, the Egyptian 

Pyramids, but for photographs of them. 

The public has been able to "experience" every war, beginning with the Civil War, 

through photographs created by independent, professional photographers like 

Matthew Brady. The course of human events has been greatly influenced by 

these haunting and disturbing images. Freelance photographers like Walker 

Evans, Dorothea Lange and Gordon Parks created an astonishing body of 

images that showed the realities of the Great Depression and that constituted an 

archive that continues to educate and inform new generations many decades 

later. 

Imagine what the world would be like without visual images that have been 

captured and stored. How much would the quality of your life, enjoyment and 

education be diminished if you turned on your television or computer and were 

exposed to nothing but text and sound? What if magazines and books, including 

4 
36 

their covers, had nothing but text? Think of Sports Illustrated, National 

Geographic, and CNN without their visual content. 

What would the financial impact be on the economy if consumers saw 

advertisements that had text or text and sound, only; how many people would be 

incentivized to buy products that they could not see without going to a store? 

What would Times Square look like if all of the signs and billboards showed only 

words; how many tourists would want to go there? 

Photographic images, both still and moving, are crucial to creating and 

maintaining a complete and accurate historical record for scholars and future 

generations of the public. During and even after World War II, many people who 

had not experienced or seen the horrors of the Holocaust denied its very 

existence --- until the world got to see the photogrphic images documenting the 

death camps and their millions of victims. Without such powerful proof of the 

truth, the public's view and understanding of the Nazi era might be very different 

from what it is today. 

The power of visual images cannot be underestimated. It is so strong that, in 

many cases, the images are so burned into our collective consciousness that 

they do not even need to be seen to be experienced, over and over again. For 

example, consider these few short descriptions and whether a specific 

photograph jumps into your mind: 

A zeppelin on fire and breaking apart while landing, 

A young Vietnamese girl running while napalm burns off her clothing, 

A young boy in a coat and shorts saluting as his father's coffin is carried 

past, 

A cowboy lighting a Marlboro cigarette, 

A British Prime Minister standing with one hand on his hip, glaring into the 

camera lens. 

The list could go on indefinitely. The point is that, as the old adage goes, a 

picture is worth a thousand words, and photographs are a crucial and integral 

part of our lives --- past, present and future. 

2. The Value of the Professional Photographer 

A. The Visual Heritage 

While the value of this nation's photographic archive might not be disuputable, 

there are those who have questioned the value and need for --- and even the 

current existence of --- professional photographers. The CEO of Yahoo!, 

Marissa Mayer, recently said, ".. today, with cameras as pervasive as they are, 

there is no such thing really as professional photographers ... " She quickly 

posted on Twitter and elsewhere to apologize, but the question clearly reflects 

5 
37 

the mindset of many people: Do we really need professional photographers and 

what value do they add? With vast numbers of amateur photographers and even 

non-photographers carrying cell phones with amazing picture-taking capabilities, 

and with the advent of the "citizen journalist," does the world truly need and 

benefit from professional photographers? 

It is a question that begs to be answered, and the answer is a resounding Yes. 

We get to that answer by considering the following. First, for many, perhaps 

even most members of the public, copyrights are associated with large media 

producers, media outlets and other corporations. The reality, however, is that no 

corporation ever created anything, let alone a copyrighted work. Think about 

that: no corporation ever created a copyrighted work. While movie studios, 

record labels, publishing houses, etc. may own the copyrights to works that are 

published or distributed bearing the corporate name as copyright owner, the fact 

is that the works and copyrightable creations comprising those works were all 

created by individuals. 

Who are those individual creators? In the world of photography, they are working 

pros: freelance independent contractors who support themselves through the 

sale and license of their works. They are small businesspeople, generally sole 

proprietors or small mom & pop shops, who earn, for the most part, modest 

livings. They generally receive no employee benefits. Even though they typically 

pay unemployment taxes, they are not eligible to collect unemployment 

payments if their work dries up or if they go out of business. There is no such 

thing as a paid vacation for a freelance photographer. There is no paid overtime 

or hazardous duty pay. If there turns out to be a problem with a photographic 

assignment, even one outside the photographer's control, there is likely to be no 

pay --- and often no future business from that client. 

At one time, some large corporations and other businesses maintained 

significant staffs of photographers on their payroll. These photographers were 

able to enjoy all of the normal benefits of being an employee. Sadly, recent 

years have seen drastic reductions in numbers of these positions and frequently 

the wholesale elimination of staff photographer departments. This past May, the 

Chicago Sun-Times eliminated its entire photography department and started 

training reporters to capture still and moving images on their iPhones. See 

http://www.adweek.com/news/press/ch icago-sun-tim es-el im inates-entirephotography-department-150009 for more details. 

This takes us back to the question of what is wrong with that --- what is the value 

that the professional photographer adds to the public record that the amateur and 

even accidental photographer does not? The answer, simply, is quality; it is the 

photographic eye and vision. Anyone with sufficient money can buy professional 

quality cameras and other equipment. Even with inexpensive cameras and even 

cell phones, current technology has made it difficult to make a technically "bad" 

6 
38 

picture. However, there is a world of difference between the images created by 

professional photographers and the vast majority of pictures taken by amateurs 

and cell-phone-toting people in the streets. 

To illustrate this, think about all of the photographs that you and/or your friends 

have ever taken of the Grand Canyon and our western national parks. Then look 

at, or even just picture in your mind, the images of the same subject matter 

created by professionals like Ansel Adams. Think about snapshots of everyday 

people that you and/or your friends may have taken over the years, then look at 

the images created by people like Walker Evans or that appear in books like 

Robert Frank's The Americans. There is a universe of difference, the difference 

between being forgettable and memorable; between just being a photograph and 

being evocative; between being filed away and being published again and again 

over a long period of time. 

Consider the photographs that most of us have taken of beautiful buildings and 

other architectural structures. Somehow, even at their best, they never quite 

capture the true look and feel of the actual structure. Then take a look at some 

of the photographs of master architectural photographers like Ezra Stoller or 

Charles Sheeler. Words cannot describe the differences, a fact that provides 

additional illustration of my point that a world without images, and especially 

professionally made images, would be a poor place, indeed. 

Aside from quality, a huge difference between pofessional photographs and nonprofessional photographs is the subject matter There are simply subjects that 

are difficult to look at or capture but that are vital for the public to see and to 

know about. Professional photographers make images of those subjects 

because that is their vocation and their avocation; most non-professionals do not. 

Many such subjects are inherently dangerous and require the photographer to 

knowingly put him- or herself in harm's way. Professional photographers are 

paid to do that, one way or another, and they do it. Very few non-professionals 

do. 

B. Innovation 

In terms of technological innovations, professional photographers have 

consistently been among the earliest adopters of change and among those 

driving improvements and suggesting and demanding upgrades, to the benefit of 

the economy and the marketplace. Men like Niepce, Daguerre and Talbot were 

driven by the need for truly accurate visual representations of what they saw, as 

opposed to the interpretive reproductions provided by illustrations. They 

invented various photographic processes and simultaneously became the world's 

first professional photographers. Their invention has enthralled the world's 

population to the point where, today, an overwhelming majority of the populace 

walks around with at least one camera in his or her pocket, whether it is a singlepurpose device or built into a mobile telephone. 

7 
39 

Throughout the history of photography, professional photographers have 

invented new devices and techniques that have benefited themselves, their 

colleagues, their peers and the general population. For example, Edweard 

Muybridge invented the first device to create moving images, to the eventual 

delight of untold millions of moviegoers --- and to the delight of movie studios and 

producers, as well as the economy in general and, I daresay, even the Internal 

Revenue Service. 

Professional photographers have, from the beginning, been the earliest adopters, 

beta testers and users of every hardware and software innovation, as well as a 

driving force in demanding constant upgrades, improvements and new 

inventions. They are compelled to do so by the pressures of the marketplace. 

They are in constant competition with each other and need to take advantage of 

every new creation in order to remain competitive. Each assignment is a 

challenge to be innovative, creative, and to render their subject in a new and 

compelling manner. Their clients expect and demand that they be in the 

forefront, on the penalty that, if they are not, these same clients will move on to 

another working pro. When digital cameras were invented, it was professional 

photographers who have consistently been the first adopters. The same has 

been true for each improvement and invention in the evolution of digital 

photographic imaging. Typically, it has been only after a significant number of 

working pros start using a particular camera or product that the mass market 

tends to follow suit, then generating significant revenues for every person and 

entity in the supply chain and the economy, as a whole. 

Freelance professional photographers kept asking for some way to track 

infringing uses of their images on the internet. This demand drove the invention 

of image recognition based search technology, which is used by huge numbers 

of professional photographers and other individuals and entities through vendors 

such as PicScout and TinEye. Freelance photographers continually pressed the 

Copyright Office to develop an online registration system, leading to the creation 

of eCO, a system in which professional photographers continue to work with the 

Copyright Office to upgrade and improve, for the benefit of the public. 

3. Copyright --- the Sine Qua Non for Professional Photographers 

Without copyright, there would be no professional photographers. It is that 

simple. Copyright is the engine that drives the professional photography 

machine and makes it sustainable as a living. Photographs are information ---

visual information. As with news reporting, it is the uniqueness and freshness of 

information that give it much of its value. Being the first source for information, 

and being able to control other sources for the same information, is the difference 

between getting paid for that information and not. Without copyright, once a 

photograph is published or distributed for the first time, the photographer or other 

copyright owner goes unpaid. And going unpaid spells the end of a class of 

8 
40 

businesspeople who rely on the revenue stream from copyright licenses for their 

livelihoods. The demise of freelance professional photographer would inevitably 

lead to a deplorable degrading of the quality of our visual heritage and public 

record. 

The need of copyright protection by the freelance photographic committee is, 

today, at an all-time high for another reason. The advent of the digital era has 

made it fast, easy and simple for images to be stolen or otherwise infringed. 

Without copyright protection, all possible recourse by the photographer would be 

eliminated, and we would be creating a culture in which digital theft is considered 

acceptable. 

Further, copyright protection is needed in order to preserve the integrity of our 

visual history. In a digital environment, images can be altered with little or no 

evidence of the alteration. Without copyright protection, the visual record ---

history, itself --- could be altered, and there would be nothing that the creator of 

the true record could do about it 

Further, copyright protection is necessary to allow the photographer to say No 

when he or she feels it to be appropriate. There are situations in which possible 

uses of images are contrary to what the photographer would and should allow. 

For example, in recent elections, there have been many instances in which 

photographs were illegally appropriated by candidates and used out of context to 

support candidates and issues that were diametrically opposed to the beliefs and 

intentions of the photographers involved. Without copyright, there would simply 

be no redress available. 

Finally, if the loss of copyright did, as I believe it WOUld, cause the end of the 

professional photographer, a handful of large business entities would become the 

primary source of visual information for the public. It appears likely that those 

business interests would not be concerned with a complete exercise of our First 

Amendment rights to freedom of speech. Rather, they would be interested in 

exercising those rights only when it was to their financial best interests to do so. 

Photographs that might cause embarrassment or problems for themselves or 

their allies would never see the light of day. 

In conclusion, the equation is simple: without copyright protection, the public 

record and our visual heritage would be drastically reduced in both quantity and 

quality. 

Thank you for your time and consideration. 

9 
41 

Respectfully submitted, 

Eugene H; Mopsik, 

Executive Director 

American Society of Media Photographers, Inc. 

150 North Second Street 

Philadelphia, PA 19106 

215-451-ASMP Ext. 201 

Fax: 215-451-0880 

E-mail: <mopsik@asmp_org> 

\0 
42 

Mr. GOODLATTE. Mr. Hansen, welcome. 

TESTIMONY OF TOR HANSEN, CO-PRESIDENT/CO-FOUNDER, 

YepRoc RECORDS/REDEYE DISTRIBUTION 

Mr. HANSEN. Chairman Goodlatte, Ranking Member Watt, and 

Members of this Subcommittee, thank you for inviting me to testify 

today on behalf of my company, Yep Roc Records and Redeye Distribution, headquartered in Haw River, North Carolina, and also 

on behalf of the small and medium-sized independently owned 

businesses that make up the American Association of Independent 

Music, A2IM—businesses that, via the creation of musical intellectual property, are improving commerce here and abroad and, via 

exports, improving America’s balance of trade, and thus creating 

jobs in America. 

My name is Tor Hansen, and my partner and I own a music 

label, a music distributor, located in Haw River, North Carolina, 

which we started in the basement in 1996 and which now employs 

over 60 employees and distributes music internationally. 

I am also a board member of the American Association of Independent Music, A2IM, board of directors, a not-for-profit trade organization that represents a broad coalition of over 300 independently owned U.S. music labels of all sizes located across the United 

States, from Hawaii to Florida, a sector which, per Billboard magazine, comprises 34.5 percent of recorded music sales in the first 

half of 2013. 

For independent music labels and our artists, the Internet and 

related technology and business models have been a great equalizer 

for us and our ability to create, market, promote, monetize, and introduce new music and cultivate new fans for our label’s artists. 

We honestly feel there is no other industry that has embraced new 

forms of economic and delivery models as completely as the music 

industry. 

That said, small and medium-sized businesses that support the 

creation of musical intellectual property need to be compensated for 

the creation and promotion of the music to be able to continue to 

invest and create jobs. 

We support the ability of non-on-demand music services like Pandora and Sirius/XM to be able to operate under statutory licenses 

with rates set by the Copyright Royalty Board. We also support ondemand music services that negotiate direct license on an arm’slength basis. But our music label community needs to be able to 

decide which non-statutory services should have our music and at 

what fair price, and be able to ensure that we have viable business 

models and when it is appropriate to give away our music to superserve our fans. 

One true strength of a strong regime supporting copyright ownership is to support the international commerce by U.S. businesses 

in all new mediums. In 2005, the U.S. share of the international 

music market was 34 percent. For 2012, the latest available data, 

the IFPI reported a U.S. share of worldwide wholesale recorded 

music revenues of only 27 percent. It is clear that now we must expand and need to look abroad to have viable business plans by generating export revenues. 
43 

We thank the U.S. Government, specifically U.S. Commerce Department ITA and the Small Business Administration, for their 

support of SME music creator international trade initiatives, for 

which my own business has been a beneficiary on a very successful 

Brazil trade mission. 

We need to couple this with finally getting enacted an over-theair radio performance royalty so that royalties of our artists which 

sit overseas do not remain captive, as, without legal reciprocity 

rights, those royalties are not available to U.S.-based independent 

creators. 

The bottom line is that independent music label sectors and our 

artists have aligned ourselves with new consumer models based 

upon music consumption using many different new technologies. 

We embrace the responsiveness to new ideas but request government’s continued support of copyright monetization protection to 

ensure that music creation process and the resulting commerce and 

job creation continue. 

I thank you for your time. 

Mr. GOODLATTE. Thank you, Mr. Hansen. 

[The prepared statement of Mr. Hansen follows:] 
44 

COl\1MITTEE ON THE JUDICIARY 

SUBCOl\1MITTEE ON COURTS, INTELLECTUAL PROPERTY AND THE INTERNET 

Testimony of Tor Hansen 

Co-President/Co-Founder Yep Roc Records/Redeye Distribution 

Haw River, North Carolina 

Board of Directors member of the American Association ofIndependent Music (" A2TM") 

before the 

United States of America House of Representatives 

House Judiciary Committee 

Subcommittee on Courts, Intellectual Property and the Internet 

B-352 Rayburn House Office Building 

Washington, D.C. 20515 

Hearing on: 

Innovation in America: The Role of Copyrights 

July 24,2013 
45 

Chairman Coble, Ranking Member Watt, and members of the sub-committee, thank you for inviting me 

to testify today on behalf of my company YepRocjRedeye, headquartered in Haw River, North Carolina, 

and on behalf of the small and medium sized businesses that make up the American Association of 

Independent Music ("A2IM"), businesses that, via the creation of musical intellectual property, are 

improving commerce here and abroad and via exports improving America's balance of trade and thus 

creating jobs in America! 

My name is Tor Hansen and I started working in the music business in the Boston area, working for 

Rounder Records Distribution (sales representative), Hear Music (Director of Merchandising) and Planet 

Music j Borders Group (Director of Merchandising). Yep Roc Records was founded in 1997 by my 

partner Glenn Dicker and myself and is exclusively distributed through our Redeye Distribution 

company. Yep Roc is home to hundreds of master recordings and includes Nick Lowe, Paul Weller, Josh 

Rouse, Josh Ritter, Fountains of Wayne, and many more. Redeye Distribution began in 1996 in my 

house and has grown into one of the largest Independently owned music distribution companies in the 

United States. Redeye has charted a course of steady, sustainable growth by developing a strong 

physical and digital distribution network both nationally and internationally, and providing a multitude 

of services to our partners. Distribution music label partners include Yep Roc, Warp, Daptone, Wichita, 

Kill Rock Stars, Ninja Tune, Thrill Jockey, Barsuk, Alive, and many more whose artists include u.s. Top 20 

charting artists like Josh Ritter, Nick Lowe, Gillian Welch, Sharon Jones & the Dap-Kings, Paul Weller, 

and Grizzly Bear. Redeye's 1O,000-plus title catalog is representative of a wide range of the best 

Independent music available. Regardless of genre, the unifying element of the catalog is an overall 

commitment to quality. Glenn and I started in a basement with no external funding 1S+ years ago and 

we now currently employ more than 60 employees- a knowledgeable, passionate and dedicated staff of 

music lovers who make themselves accessible to everyone from the music accounts to the artists & 

records labels with whom we work. 
46 

I am also an elected member of the American Association of Independent Music ("A2IM") board of 

directors so I can speak to our overall community's views. A21M is a 501(c)(6) not-for-profit trade 

organization representing a broad coalition of over 300 Independently owned U.S. music labels. 

Billboard Magazine, using Nielsen SoundScan data, identified the Independent music label sector as 

comprising 32.6% of the music industry's U.S. recorded music sales market in 2012 (and by our 

computation using the same methodology over 39 percent of digital album sales) and 34.5% for the first 

half of 2013. A2IM's music label community includes small and medium-sized music enterprises (SMEs) 

of all types across the United States, from Hawaii to Florida, representing musical genres as diverse as 

our membership. All of our label members have one thing in common; they are smaller business people 

with a love for music who are trying to make a living. A21M members also share the core conviction that 

the Independent music community plays a vital role in the continued advancement of cultural diversity 

and innovation in music both at home and abroad. But we need your help to remain economically viable 

as musical Intellectual Property, one of the core pillars of U.S. economic competitiveness in the world 

market, while it creates an economic multiplier effect as it is used in film, games, ads, television, etc. and 

is a vital export, has become difficult to protect in the digital age. 

Independent music labels are not luddites and the Internet has been the great equalizer for us and our 

ability to create, market, promote, monetize and introduce new music. The Internet has opened up 

countless opportunities for us and we would not do anything to jeopardize this improved access to 

music consumers. Additionally, our members have embraced new business models that allow for 

efficient distribution of music, such as the licensing of free-to-the user streaming services and 

webcasting, one-price-per-month subscription services, bundled mobile services, new devices, etc. We 

honestly feel there is no other industry that has embraced new forms of economic and delivery models 

as completely as the music industry. Many of our members also, on their own terms, give away free 

content to reward existing fans and cultivate new fans of their label's artists. 
47 

That said; our small and medium sized businesses that support the creation of musical Intellectual 

Property need to be compensated for the creation and promotion of the music to be able to continue to 

invest and create jobs. A21M members support the statutory compulsory license mechanism as well as 

license to services that are not covered by compulsory licenses. But our music label community needs to 

be able to decide which non-statutory services should have our music and at what fair price, and when it 

is appropriate to give away our music to super-serve our fans and to ensure that we have viable 

business models. 

One of the strengths of a good strong regime supporting copyright ownership support international 

commerce by U.s. businesses. In 2005 the U.s:s share of the international music market was 34%. For 

2012, the latest available data, the IFPI reported a u.s. share of worldwide wholesale recorded music 

revenues of only 27%. For our members, most sales traditionally have been in the U.S. market however 

it is now clear that we must expand our reach and we need to look abroad to survive which is what the 

National Export Initiative (NEil is all about, supporting SME's that can grow faster, like our music loving 

Indie creators who invest in the music they love and make little in profits as they reinvest, and who can 

create exports that can improve our balance of trade as they export American know-how and improve 

the U.S. balance of trade and create jobs thus becoming a major growth engine for the U.S. economy. 

Exports include physical recorded music, digital, mobile, touring, synchronization licenses, etc. with, 

again, music being that great economic multiplier that fuel areas like musical instrument purchases. 

We thank the u.s. government, specifically U.S. Commerce Department ITA and the Small Business 

Administration, for their support of SME music creator international trade initiatives, for which my own 

business has been a beneficiary on a very successful Brazil trade mission. 

As I noted earlier the Internet has transformed how consumers access music and as creators we have 

adapted to this change which has been a boon for Independents to reach an expanded and open 

4 
48 

audience eager to hear our music. In the monetization area the changes in consumer consumption have 

presented financial challenges. The value of a copyright must be maintained for the music creation 

process to continue. We as Independents support the compulsory statutory licensing of music to 

services such as Pandora, iHeart radio, Sirius/XM and others and the Copyright Royalty Board ("CRB") 

mechanism of rate setting. It ensures that all sound recording copyrights are created equally and should 

be paid equally. This issue cuts directly to the core of A2IM's mission: insuring a fair marketplace for 

Independents where the value of a song or performance must not be determined by which music label 

created or owns the song. If that is allowed to stand, Independent labels and artists will always be 

treated unfairly, as lesser, when there is ample proof that music fans want our music. CRB decisions 

and the resulting statutory rates ensure that the value of every creator's sound recording is equal, that 

our copyrights are worth as much as any other copyright! 

The missing element in this discussion of internet streaming royalties is over-the-air radio performance 

royalties. For the over-the-air traditional AM/FM dial Independents have made inroads in airplay, and 

we thank terrestrial radio for the increased access and airplay. But we still don't have a performance 

right that would ensure music creators get paid when their sound recordings are broadcast on over-theair radio, the only major country in the world without this right. That needs to change- AM/FM makes 

billions selling ads to folks who tune in for our music - while sound recording creators get nothing. 

That's just not right. In addition this impacts on our international business, our royalties sit overseas 

remain captive to the fact that, unlike other industrialized nations, we don't compensate performers for 

terrestrial airplay so without this legal reciprocity right those royalties are not available to u.s. based 

Independent creators. We don't make "content", a product, we make music! If we allow radio or 

internet services to force below market rates on us to subsidize Internet business models, we will have 

allowed the gift wrapping to take on greater importance than the treasure that is in the box. Our artist's 

music that fuels AM/FM radio and every other platform that features music must be compensated. 
49 

Finally, I would like to touch on the issue of Copyright protection. Unfortunately due to the evershrinking overall music market revenue base, A21M member music labels like mine as SME's simply do 

not have the financial means or resources to engage in widespread copyright monitoring on the 

Internet. The time and capital investment required for our community of like-minded, but proudly 

Independent small business people to monitor the web for usage and take subsequent legal action 

simply does not exist. A21M member music labels do not have the financial means or resources to 

house a stable of systems people and lawyers to monitor the Internet and bombard users with DMCA 

takedown notices for seemingly endless illegal links to our musical copyrights. Our members have 

limited budgets and whatever revenues and profits they can eke out are directed toward their primary 

goals, music creation by their music label's artists and then the marketing and promotion of this music 

to the American public so they are able to continue this creation process. For our members whose 

livelihoods depend on the ability to license copyrights in a free market, it is essential to have 

government partners helping advance a worldwide enforceable regime for the protection of intellectual 

property copyrights online that enhances accountability at all levels of the online distribution chain and 

that deals effectively with unauthorized usages. 

The bottom line is the Independent music label sector and our artists have aligned ourselves with new 

consumer models based upon music consumption using many different new technologies and devices. 

We embrace this responsiveness to new ideas and consumer adoption but request the governments 

continued support of copyright monetization and protection to ensure that the music creation process 

and the resulting commerce and job creation continue. 

I thank you for your time today and I welcome any questions. 
50 

Mr. GOODLATTE. Mr. Lapham, welcome. 

TESTIMONY OF JOHN LAPHAM, SENIOR VICE PRESIDENT AND 

GENERAL COUNSEL, GETTY IMAGES, INC. 

Mr. LAPHAM. Thank you for the opportunity to testify today. I am 

John Lapham, Senior Vice President and General Counsel for 

Getty Images, the leading provider of news, sports, entertainment, 

archival, and creative imagery in the United States and the technology company with a global distribution platform. 

You see our imagery every day in the world’s most influential 

newspapers, magazines, Web sites, books, television, and movies. 

Founded in 1995 by Mark Getty and Jonathan Klein, Getty Images 

has U.S. offices in Chicago, L.A., McLean, Madison, New York, Seattle, and Washington, D.C., supporting 2,000 employees and more 

than 150,000 photographers. Getty Images has offices in 18 countries, content from over 180, and business customers in more than 

200. 

We were the first company to license a picture on the Internet, 

and today nearly 100 percent of our business is conducted online. 

We license 200,000 images daily. And our collection consists of 70 

million pictures online, 70 million in archive, and 40,000 new pictures uploaded daily, together with over 1.3 million creative and 

editorial video clips. We also represent original music tracks from 

over 10,000 independent musicians. 

Getty Images’ editorial team includes two Pulitzer finalists and 

a White House News Photographer of the Year. Our 24/7 coverage 

provides images and video of current events to thousands of news 

media organizations and media publishers, ensuring that the troubled events in parts of the world are brought to light. Our photographers have been placed in dozens of military embeds. 

We have a significant impact on the digital and copyright economy. While copyright ownership varies across our library, copyright 

and its accompanying rights and permissions are the foundation for 

our business. Consequently, strong and effective copyright laws 

that protect the right to license and not just use creative works are 

critical for our growth and that of the many thousands of contributors that we represent. 

Today, we serve more than a million customers, many small and 

medium-sized businesses that depend on powerful imagery to entice and engage their customers. We facilitate an essential copyright marketplace, where photographers of every genre and skill 

level know they can be compensated for contributing to our creative 

ecosystem. 

We do have challenges with copyright infringement and expanded perceptions of fair use. To counter this, in part, we invest 

in leading technology to pursue and be paid for pirated content. 

This is not a total solution. Without laws protecting creative works 

from prolific free use online, this $7.5 million to $8 billion market 

for visual content and the hundreds of millions of dollars we pay 

in royalties to photographers would collapse. 

We believe copyright laws can and should protect and encourage 

creative content as well as it protects the technology companies 

that assist in search and distribution. 
51 

Getty Images’ distribution of creative content is made possible by 

our investment in a global technology platform that enables the 

rapid search and licensing of intellectual property for creators and 

media consumers, which allows them, in turn, to create and to innovate. 

We are able to post new editorial images online within minutes 

or less of photographer transmission. In the last Presidential inauguration, our editor noted the sun coming up over the Capitol 

dome, an iconic shot on Inauguration Day. Our editor relayed the 

request, our photographer shot his images traveled through cable 

to the trailer, an editor selected the image, posted it online, and by 

the time the sun crested over the Capitol dome, the Washington 

Postwas using that image online on the homepage of its Web site. 

The demand for content will only continue to grow, and the vast 

market for licensed creative works can be enhanced with laws that 

protect creations, even in an overwhelmingly digital era. The continued growth in the use of the Internet as a forum to develop 

small and medium-sized businesses is projected to increase markedly in the years ahead, as today just over one-half of small business have Web sites. 

With proper copyright protection and continued technological innovation, we can assist this growth and continue to invest and employ as we do so. The Committee’s continued vigilance to advance, 

protect, and enforce copyright laws is critically important to Getty 

Images’ ability to innovate, create jobs, and ensure that the United 

States maintains a strong competitive edge in the global digital 

marketplace. 

I would like to thank the Committee for the opportunity to testify today. Our goal in reviewing licensure laws should be to protect creativity and still allow for an active and intelligent marketplace for searching and licensing creative works. When we do so, 

we all benefit from content that moves, inspires, provokes, educates, and encourages. Getty Images welcomes any future opportunities to assist in this dialogue. 

Thank you. 

Mr. GOODLATTE. Thank you very much, Mr. Lapham. 

[The prepared statement of Mr. Lapham follows:] 

Prepared Statement of John Lapham, Senior Vice President, 

General Counsel of Getty Images 

Thank you for the opportunity to testify today. I am John Lapham, the Senior 

Vice President and General Counsel of Getty Images, the leading provider of news, 

sports, entertainment, archival and creative imagery in the United States. You see 

Getty Images’ award winning imagery every day in the world’s most influential 

websites, magazines, advertising campaigns, newspapers, films, television programs, 

and books. Founded in 1995 by Chief Executive Officer Jonathan Klein and Chairman Mark Getty and headquartered in New York and Seattle, Getty Images has 

been publicly traded on both the NASDAQ and NYSE. With U.S. offices in Chicago, 

Los Angeles, Mclean, VA, Madison, WI, New York, Seattle, and Washington, D.C., 

Getty Images supports 2,000 employees and more than 150,000 photographers. 

Getty Images has offices in 18 countries, sources content from more than 180, and 

serves business customers in more than 200. 

Getty Images pioneered the solution to aggregate and distribute visual content 

and was the first company to license a picture on the Internet. Today, nearly 100% 

of our business is conducted online. We license 200,000 images to customers every 

day, and our collection consists of more than 71 million images online; 70 million 

in archive; and 40,000 new pictures uploaded daily, as well as 1.3 million creative 

and editorial video clips. The images cover a diverse set of subjects designed to ad-
52 

dress all types of customers’ needs, and are licensed primarily through the industry’s leading websites including gettyimages.com, istockphoto.com, and 

thinkstock.com. 

Getty Images is the primary distribution channel for many content creators and 

has a significant impact on the digital and copyright economy. Getty Images’ content 

comes from a number of sources including the more than 150,000 photographers and 

videographers, illustrators and musicians for whom we manage rights, all of whom 

are their own proprietors and entrepreneurs. The photographers range from global 

award winners to semi-professional or hobbyists. Content also comes from Getty Images’ partners, as we are the distributor for more than 300 iconic brands including 

National Geographic, Disney and Discovery. While copyright ownership varies 

across our library of content, copyright, and its accompanying rights and permissions, are the foundation for our business and that of the creative professionals and 

image libraries that we represent. Consequently, strong and effective copyright laws 

that protect the right to license, and not just use creative works in today’s digital 

economy, are absolutely critical for our growth and that of the many thousands of 

contributors and businesses we represent. 

Getty Images’ editorial team includes two Pulitzer finalists and a White House 

News Photographer of the Year. Our 24/7 coverage provides images and video of 

current events to thousands of news organizations and other media publishers, ensuring that the events in troubled parts of the world are brought to light. Our photographers have been placed in dozens of military embeds. We also enjoy relationships with most major sports entities globally including the NBA, MLB, and NHL, 

with coverage for more than 75,000 events annually. Getty Images also licenses 

more than 100,000 original music tracks from over 10,000 independent musicians. 

Today, we serve more than 1,000,000 customers through our wide range of licensing models and price points. Many of these customers are small and medium-sized 

businesses that depend on powerful imagery to entice and engage customers. 

Through a team of more than 450 technology and 550 sales employees, we facilitate 

an essential marketplace where photographers of nearly every genre and skill level 

know they can be properly compensated for contributing to the creative ecosystem. 

We do have challenges with copyright infringement, and expanded perceptions of 

fair use. To counter this in part, we invested in leading technology to pursue and 

be paid for pirated content not just for Getty Images but our competitors as well. 

This effort is not a total solution, as legislation can provide important tools to protect creators by preventing the abuse of copyrighted works. Without laws protecting 

creative works from prolific free use online, the $7.5–8.0 billion market for visual 

content and the hundreds of millions in royalties paid to creators of copyrighted 

works would collapse. We believe copyright laws can and should protect and encourage creative content as well as it protects the technology and technology companies 

that assist in search and distribution, as inspiration for creation suffers if people 

are not properly compensated. 

Getty Images’ distribution of creative content is made possible by our investment 

of more than $450 million in a global technology platform. Our technology permits 

the rapid search and licensing of intellectual property for a multitude of creators 

and media consumers, permitting customers to, in turn, create and innovate. We are 

able to post new editorial images online within minutes (or less) of photographer 

transmission from news, sports and entertainment events. For instance, in the last 

presidential inauguration, an editor noticed the sun coming up over the Capitol 

dome, an iconic shot on inauguration days. Our editor relayed the request for the 

shot on the radio from our trailer on the south-west lawn of the Capitol to our photographer John Moore on the grandstand. He turned and shot, and his images travelled through cable to the trailer. An editor selected a photo, attached metadata and 

posted to our site for licensing. By the time the sun crested over the dome the 

Washington Post was using the image on the online home-page of its website. 

The demand for content will only continue to grow, and the vast market for properly licensed creative works can be enhanced with laws protecting creations even 

in an overwhelmingly digital era. People today have more ways to communicate and 

more devices with which to consume information than ever before. The continued 

expansion of websites and devices with spectacular visual displays increase the opportunities for content creators, as a greater number of businesses require rich digital content for their marketing and educational uses. The continued growth in use 

of the Internet as a forum to develop small and medium sized businesses is projected to increase markedly in the years ahead, as today just over one-half of small 

businesses have websites. With proper copyright protection and continued technological innovation, we can assist this growth, and continue to invest and employ as 

we do so. The Committee’s continued vigilance to advance, protect, and enforce copyright laws is critically important to Getty Images’ ability to innovate, create jobs, 
53 

and ensure that the United States maintain its competitive edge in the global digital marketplace. 

I would like to thank the Committee for the opportunity to testify. Our goal in 

reviewing licensure laws should be to protect creativity and still allow for an active 

and intelligent marketplace for searching and licensing creative works. When we do 

so we can all benefit from content that moves, inspires, provokes, educates and encourages. Getty Images welcomes any future opportunity to assist in this dialogue. 

Mr. GOODLATTE. Mr. Sherak, welcome. 

TESTIMONY OF WILLIAM SHERAK, PRESIDENT, STEREO D, LLC 

Mr. SHERAK. Chairman Goodlatte, Ranking Member Watt, and 

Members of the Subcommittee, I want to thank the Committee for 

the opportunity to testify this morning. My name is William 

Sherak, and I am the President and Founder of Stereo D, the leader in high-quality 2D-to-3D conversions of theatrical content for 

major motion picture studios. 

I started Stereo D in 2009 as a company of 15 in southern California. Following the explosion of popularity of 3D films after the 

release of Avatar, we have grown to nearly 100 times our original 

size in the last 3 years. As of today, we have converted over 20 fulllength feature films, including ‘‘Captain America,’’ ‘‘Titanic 3D,’’ 

‘‘The Avengers,’’ ‘‘Jurassic Park 3D,’’ ‘‘Iron Man 3,’’ ‘‘Start Trek: 

Into Darkness,’’ and, most recently, ‘‘Pacific Rim’’ and the upcoming 

‘‘Wolverine.’’ 

Many think the conversion process is like the flip of a switch. As 

you will soon see, nothing could be further from the truth. It is a 

highly technical, labor-intensive process. To give you an idea, ‘‘Star 

Trek: Into the Darkness’’ required the conversion of roughly 

200,000 individual and unique frames and took over 7 months and 

over 300,000 man-hours of work. 

This process starts with isolating images through rotoscoping, 

the outlining of every image in every frame. From there, a depth 

map is created for each frame. This entails using various shades 

of gray to indicate the depth for each and every object in that 

frame. 

Creating that depth creates missing information in the 2D 

image. This brings us to the last step, which requires artists to 

hand-paint the missing information created by the 3D image and 

to do so in a way that mimics what you see in real life. 

If everyone would please put on their 3D glasses in front of you, 

we are going to take a look. 

Mr. WATT. The Chairman was responsible for the popcorn. 

Mr. SHERAK. So this is the 2D image. This is what we annotate 

to send to our rotoartists so they can see what objects they need 

to roto in how much detail. 

Rotoscoping, as you can see, we have actually taken away about 

50 percent of roto images just so you could look at it. 

This is the depth map that creates the depth, white being the 

closest thing to you and black being the furthest thing away from 

you. 

This is the depth pass. This is where our proprietary software 

comes into play. And as you see the missing imagery, that is what 

needs to be hand-painted, and that is the final stereo image. 
54 

To make all this happen, we recruit the best artists and 

stereographers in the industry from leading U.S. graphic design 

and computer technology trade schools. Thanks to 3D, these talented artists now have a new career option in our industry. 

We are certainly not the sole beneficiary of this dynamic 3D industry. The growth of popularity of these films has led to the creation of a number of companies that either didn’t exist at all or 

grew as a result of expanding their existing businesses into 3D. 

They are the manufacturers of screens required for 3D movies, 3D 

products like 3D glasses, and the 3D projectors, just to name a few. 

And yet none of what I describe today would be possible without 

strong copyright protections. While many believe that copyright 

protections only benefit the holders, the impact is actually much 

broader and deeper. A copyright system that preserves and protects 

the rights of creators will foster an environment of certainty under 

which technologies like ours will continue to be developed, leading 

to the advancement of the entire film industry. 

Using Stereo D as a case study, our very existence and growth 

from the start has been dependent on the ability of our customers 

to make an investment in our services. Simply put, if copyright 

holders are poised to succeed and thrive, so will we. 

Moreover, it is the economic viability of copyright holders that 

drives innovation. As with any business, major film studios make 

investment decisions based on the expectation of profits. If an environment exists that does not provide adequate copyright protection, 

and blockbuster films become unaffordable and unprofitable due to 

the threat of piracy, this new and thriving 3D industry will be significantly hampered and severely impacted, the reason being that 

3D conversions are normally undertaken on major blockbuster 

films, the very films that are often the greatest targets of piracy. 

Finally, copyright protections can not only lead to the development of cutting-edge technologies, it will improve the entertainment experience for the general public. They will also foster the development of new and emerging companies that are part of the 

complex, labor-intensive process that goes into making a film and 

will ultimately enable the entire industry to be successful. 

Thank you for giving me the opportunity to testify this morning. 

I look forward to all of your questions. 

Mr. GOODLATTE. Thank you very much, Mr. Sherak, for a very 

interesting demonstration and for the opportunity you afforded 

many in the audience to photograph the entire Subcommittee wearing black-framed glasses, which I am sure we will see shortly on 

Facebook and Twitter and a few other places. 

[The prepared statement of Mr. Sherak follows:] 

Prepared Statement of William Sherak, President, Stereo D, 

(Deluxe Entertainment Services Group) 

Chairman Coble, Ranking Member Watt and members of the subcommittee, I 

want to thank the Committee for the opportunity to testify this morning. My name 

is William Sherak and I am the President and founder of Stereo D, the leader in 

high-quality conversions of 2D theatrical content into stereoscopic 3D imagery. We 

are part of a larger company, Deluxe Entertainment Services Group; with more 

than 4000 employees across the US, Deluxe is a leading provider of a broad range 

of services and technologies for the global digital media and entertainment industry. 
55 

I want to take a few minutes to share some background into how I started Stereo 

D and how the economic viability of copyright holders—in this case the film industry –created the opportunity for a company like Stereo D to exist and grow. 

In 2009, I was introduced to a scientist who had developed a code to convert still 

images from 2D to stereoscopic 3D—where two-dimensional images are combined to 

give the perception of 3D depth. He literally took a picture of me, put it on his 

laptop, and converted it into a 3D image whose depth made it the most dynamic 

and lifelike I had seen on a screen. Given that movies are a series of still photos, 

at that moment, it became clear to me that this conversion technology would transform the movie experience, both for film makers during the production process and 

audiences whose movie-going experience would be significantly enhanced with a 

stereoscopic 3D film. 

We began as 15 employees who worked with James Cameron to convert several 

frames during the post-production process on Avatar, the film that forever changed 

the idea of a 3D film. Overnight, the 3D experience was changed from one that was 

hokey and underrated to one that immersed the movie-goer in high-quality stereo 

images, bringing the film to life through more realistic depth perceptions. For the 

first time, viewers felt as though they were actually in the scene of the movie, instead of watching it on a flat screen. From there, the 3D industry took off and 

Stereo D was tested and ready to meet the coming demand of high quality 3D conversion. 

Since that time—in just over three years—we have grown to over 1000 employees 

globally, 400 of which are in Burbank, CA—where we work side by side with major 

motion picture studios and the industry’s best and most well-known directors, cinematographers, and visual effects supervisors to bring their vision of 3D storytelling 

for major blockbuster films to life. We have converted ‘‘Thor,’’ ‘‘Captain America,’’ 

‘‘Titanic 3D,’’ ‘‘The Avengers,’’ ‘‘Jurassic Park 3D,’’ ‘‘Star Trek: Into Darkness,’’ and 

most recently ‘‘Pacific Rim,’’ and the upcoming ‘‘The Wolverine,’’ among others. In 

fact, I am proud to say that Stereo D was recently named one of the World’s Most 

Innovative Companies by Fast Company magazine. 

There is no question that an investment made to convert a film shot in 2D into 

3D pays off. When you look at last year’s box office report and compare the top 

grossing film as compared to number two, The Avengers grossed over $623 million 

and The Dark Knight Rises finished with $448 million, a difference of $175 million. 

The major differentiator: The Avengers was released in 3D and The Dark Knight 

Rises was not. 

Many think that the conversion process is like the flip of a switch; nothing could 

be further from the truth. It is a highly technical, highly laborious process that 

starts with isolating images through rotoscoping, the outlining of every image in 

every frame. From there, a ‘‘depth map’’ is created for each frame—this entails 

using various shades of gray to indicate the depth for every object in the frame. Now 

that you have created depth in places that did not exist before in 2D, the last step 

requires artists to literally reconstruct or add in new areas created by the 3D image 

and to do so in a way that it mimics what you see in real life. 

To distinguish ourselves in the conversion marketplace, Stereo D employs the best 

artists and stereographers in the industry. We do much of our recruitment from 

leading US graphic design and computer technology trade schools, including the 

DAVE School in Orlando, Florida and Full Sail University in Winter Park, Florida. 

In fact, the curricula at these schools have been tailored for the conversion of stereoscopic 3D imagery to meet market demands. This has led to a new employment opportunity for this pool of tremendously talented individuals. 

It is important to note that we are not the only beneficiary of the dynamic growth 

of the 3D industry. There are a number of companies that either didn’t exist at all 

or grew as a result of expanding their existing businesses into 3D, such as manufacturers of screens required for 3D movies to be projected onto, the manufacturers and 

suppliers of 3D products like the 3D glasses, the manufacturers of the 3D projectors, 

the consumer electronics companies, companies that develop and provide the hardware and software needed in post-production/editing of digitally-produced 3D and 

even the makers of 3D blu-ray discs. 

None of this would be possible without strong copyright protections. While many 

believe that copyright protections only benefit the holders, the impact is actually 

much broader and deeper. A copyright system that preserves and protects the rights 

of creators will foster an environment of certainty under which technologies like 

ours will continue to be developed, leading to the advancement of the entire film 

industry. Using Stereo D as a case study, our very existence and growth from the 

start has been dependent on the ability of our customers to make an investment 

in our services. Simply put, if copyright holders are poised to succeed and thrive, 

so will we. 
56 

Moreover, it is the economic viability of copyright holders that drives innovation. 

As with any business, major film studios make investment decisions based on the 

expectation of profits. If an environment exists that does not provide adequate copyright protection and blockbuster films become unaffordable and unprofitable due to 

the threat of piracy, this new and thriving 3D industry will be significantly hampered and severely impacted. The reason being that 3D conversions are normally 

undertaken on major blockbuster films—the very films that are often the greatest 

targets of piracy. 

Finally, copyright protections can lead to the development of cutting edge technologies in the film industry that will improve the entertainment experience for the 

general public; foster the development of new and emerging companies that are part 

of the complex, labor-intensive process that goes into making a film; and will ultimately enable the entire film industry to be successful. 

Mr. GOODLATTE. We are now joined by the Ranking Member of 

the full Committee. And before we turn to questioning, I want to 

turn to him so that he can give his opening statement. 

I now recognize the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

I am going to put my statement in the record. 

I want to join in welcoming all of the witnesses, from Copyright 

Alliance, from the records and distribution company, Getty Images, 

Stereo. 

Let me say that, in putting my statement in the record, in summary, I agree with the assertion that copyright law plays a critical 

role in job creation and also in promoting the national economy. 

And we should review how copyright law can be strengthened to 

protect both artists and creators alike, and that the copyright law 

must ensure that creators have a fair chance to be compensated for 

their creative efforts. And, finally, our Committee—and I think all 

of us are in agreement here—should continue to study ways to prevent piracy and to fight other violations of copyright law. 

And I thank the Chairman for allowing me to insert my full 

statement into the record. 

Mr. GOODLATTE. I thank the gentleman. 

[The prepared statement of Mr. Conyers follows:] 

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

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

the Judiciary, and Member, Subcommittee on Courts, Intellectual Property, and the Internet 

Copyright law plays a critical role in job creation and in promoting the health of 

our Nation’s economy. 

For example, IP-intensive industries generated nearly 35% of our gross domestic 

product and was responsible for 27.1 million jobs, according to the Commerce Department. 

A key element to the success of copyright law, however, is that it must work for 

both the owners of content as well as the users. 

Today we will focus on copyright and the creative community’s contribution to innovation. And next week we will shift our focus to the contributions that technology 

makes next week. 

Content is available in many more ways than it was in 1976 when a major portion 

of the current copyright statute was enacted. 

As we consider these issues over the next two hearings, there are several principles that I recommend we keep in mind. 

To begin with, we should review how copyright law can be strengthened to protect artists and creators. 

Earlier this year, we heard from Maria Pallante, Register of Copyrights, about 

specific recommendations we should consider for legislative review. 
57 

For instance, Maria Pallante, identified the following matters that should be addressed: 

• providing a public performance right for sound recordings; 

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

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

Each of these suggestions would improve copyright law and help protect creators. 

Accordingly, I would like the witnesses to give their thoughts on these proposals. 

In addition, copyright law must ensure that creators have a fair chance to be 

compensated for their creative efforts. 

Adequately compensating artists and creators for their work promotes creativity. 

This creativity can also benefit many of the new technologies like the ones we see 

on the Internet. 

In his testimony, Tor Hansen, Co-Owner and Co-Founder of YepRoc Records, describes the fact that we still do not have a performance right and the reason why 

that needs to change. 

Performers whose songs are played on the radio provide their services without 

compensation, and this sets our Nation apart from every other country, except 

China, North Korea and Iran. 

This exemption from paying a performance royalty to artists no longer makes any 

sense and unfairly deprives artists of the compensation they deserve for their work. 

Finally, the Judiciary Committee should continue to study ways that we can prevent piracy and fight violations of copyright law. 

An important aspect of this process will be continuing to educate the public about 

piracy and copyright law. Today the Consumer Institute Center for Citizen Research 

released a report about consumer opinions on IP and counterfeit/pirated goods. The 

report notes that 86 percent of U.S. citizens believe that protecting IP is a good way 

to encourage innovation and creativity. Another finding from the report is that 89 

percent of U.S. citizens view the sale of counterfeit and pirated goods as negatively 

affecting American jobs. I look forward to reviewing this report and believe that it 

will be helpful in our evaluation of this issue. 

We must continue to work to fight piracy. A study by the Institute for Policy and 

Innovation found that the U.S. economy lost $12.5 billion dollars and more than 

70,000 lost jobs annually by American workers due to piracy of sound recordings. 

We must also monitor how other countries are enforcing intellectual property 

laws. Chinese piracy and counterfeiting of intellectual property cost American businesses approximately $48 billion in 2009, according to a report by the United States 

International Trade Commission. 

As we examine the copyright system to ensure that it meet the needs of creators 

and the public, I believe that copyright law should be guided by technology-neutral 

principles. 

I will continue to work to ensure that creators receive adequate protections and 

look forward to hearing from our witnesses today. 

Mr. GOODLATTE. And we will now turn to questions by the Members of the Committee. 

Ms. Aistars, your testimony discussed the constitutional framework for copyright. How do you think the Framers would view the 

current copyright system and how American society values creators 

and their works? 

Ms. AISTARS. Thank you for the question. 

I think the Founders would be pleased to see that copyright, at 

its core, is working fairly well. I believe the sorts of debates that 

we are having today are debates that we have had historically over 

time: how to ensure innovation, ensure that creators feel empowered both to create and disseminate their works, and how best to 

balance the laws that we have to encourage that activity as technology changes over time. 

So I think the Founders would be pleased that you are taking a 

look at the Copyright Act and how it is currently serving the pur-
58 

pose of motivating creators and protecting creators’ works and also 

encouraging the dissemination of those works. 

Mr. GOODLATTE. Thank you very much. 

Mr. Sherak, some might incorrectly view moviemaking as not 

being an advanced technology business. Yet you were named, your 

company was named one of the world’s most innovative companies 

by Fast Company Magazine. 

I would like you to talk more about innovation and your investments to create it. 

Mr. SHERAK. I think that the film industry has historically driven the entertainment medium forward, if you look at colorization, 

you look at sound. 3D is the new way to enhance the moviegoing 

experience. And, you know, film, more than anything, is just an 

amazing social medium for people to go with a group of people and 

experience something, and we continue to drive that forward. 

Stereoscopic film is the newest way to do that, and we will continue to drive that forward as you look to the future. We hope the 

next thing is 3D without glasses, making it an even more passive 

experience and not having to put glasses on. And we will continue 

to try and drive those technological advancements. 

Mr. GOODLATTE. Thank you. 

I was fortunate in the last Congress to get legislation passed by 

the Members of this Committee in a very bipartisan way and then 

sent on to the Senate and then ultimately signed into law by President Obama making it possible for people viewing movies to share 

that on Netflix and other companies, so they can do it on Facebook 

and Twitter and other media, the opportunity to enhance that socialization that you referenced. 

Let me ask all the witnesses one more question, and then I will 

recognize the Ranking Member. 

As the Committee undertakes the review of copyright laws, what 

are the overarching issues that we should keep in mind as they relate to the copyright world as a whole in addition to your specific 

part of it? And since there are five of you, hit the highest point or 

two, not—don’t take too much time. 

We will start with you, Ms. Aistars. 

Ms. AISTARS. Thank you, Chairman. 

As I referenced in my testimony, I think the main principles to 

keep in mind when looking at copyright law are the ones that the 

Founders put before us—that is, that copyright law should encourage both the creation and the dissemination of works, and that 

when you are looking at what that requires, you look at it from the 

perspective of all creators who are involved in that process. And 

you evaluate the reasons why creators put works out publicly and 

what empowers them to put works out publicly. 

I think that you should keep in mind experiences like Eric 

Hart’s, which I referenced in my testimony, as well as experiences 

like Matt Herron’s, and be motivated by those types of creators as 

you look to the future, as well. 

Mr. GOODLATTE. Mr. Mopsik? 

Mr. MOPSIK. I believe, Mr. Chairman, in recent years, everyone 

has figured how to make money from photographs except for photographers. And I would encourage, going forward, I guess the big 

issues for us are ultimately fair compensation, and I am also con-
59 

cerned about the expansion of fair use, at this point. But those 

would be the big issues for us. 

Mr. GOODLATTE. Mr. Hansen? 

Mr. HANSEN. Well, with music, you are dealing with a lot smaller 

file sizes than some of these larger, more complex movies and what 

have you. But I would say the ease of file-sharing and the way that 

search has allowed the trading of the non-legitimate sources for 

music, meaning the ones that are getting paid, is an issue that 

needs to be looked at and to figure out how that can be sorted to 

not allow those sort of things to be so easily done. 

And then, clearly, the fair compensation for the copyrights. 

Mr. GOODLATTE. Mr. Lapham? 

Mr. LAPHAM. Thank you. 

For us, it’s fair use. We think there has to be a balance between 

having enriching content to find and then also having that content 

available in order to have something to search for. And as a creative and technology company, we see the value involved in striking that balance. 

Mr. GOODLATTE. Thank you. 

Mr. Sherak? 

Mr. SHERAK. Thank you. 

I think, for me, it is keeping in mind all of the other people that 

are affected by copyright law and how many jobs are created, not 

just by the creators of the holders of the copyright, but my company wouldn’t exist if studios didn’t make big films. And the 

amount of employees we have, that is a very important thing to 

consider. 

Mr. GOODLATTE. Thank you. 

The Chair recognizes the gentleman from North Carolina, Mr. 

Watt, for his questions. 

Mr. WATT. Thank you, Mr. Chairman. 

As has become my policy, I am going to defer and go last in the 

queue. So I will defer to Mr. Conyers. 

Mr. CONYERS. Thank you. 

I welcome all the witnesses. 

Let me start with Director Aistars. Do you believe that we should 

take a measured approach when reviewing copyright law? 

Ms. AISTARS. I do, Mr. Conyers. I believe the copyright laws, at 

its core, are working and are serving both creators and innovators 

well. I do believe there are areas which are ripe for improvements 

and that the Committee is doing the right thing by looking at the 

laws and how they could be updated to meet our current needs. 

Mr. CONYERS. Thank you. 

To any one of the other witnesses, who can name steps that we 

might as a Committee take that would be helpful in our analysis 

of copyright law? 

Mr. LAPHAM. I can take a crack at that. 

I think some of the steps would include what you are doing right 

now, and that is hearing from content creators, from people that 

benefit from having the protections of copyrighted works, also hearing from technology companies and having the importance of the 

ability to find the content. Because creative content that is made 

and you are not able to locate it is of little value. 
60 

And so I think that hearing from both constituents is great, and 

then also looking at the economic impacts on both sides. 

Mr. CONYERS. Thanks for your suggestions. 

Mr. Hansen, have you embraced yet the new business models to 

distribute your music? 

Mr. HANSEN. Sure, yeah. We are looking for where we can find 

customers with—you know, seeing our content and paying for our 

content wherever they are. We recognize that these customers have 

a value to add to us as long as they can value what we bring to 

them. 

Mr. CONYERS. Uh-huh. 

Does anyone have any other recommendations about steps this 

Committee might want to take in terms of our analysis of copyright 

law? 

Ms. AISTARS. If I could comment—— 

Mr. CONYERS. Please. 

Ms. AISTARS [continuing]. Briefly, Mr. Conyers. 

I think there are important steps that you can take that don’t 

require revising Title 17, as well. And here I refer to your oversight 

authority and your ability to encourage stakeholders to take responsible steps together to try and solve the problems that we are 

facing in the marketplace. 

Mr. CONYERS. Uh-huh. Thank you. 

And, finally, what about, Mr. Hansen, over-the-air radio performance royalties? Do you have a view on that? 

Mr. HANSEN. I had mentioned that in my testimony, and we 

see—and, I guess as I mentioned, over-the-air is something that 

the United States does not pay out as a royalty, and every other 

country in the world is holding royalties for our copyrights because 

we do not pay these things out. 

And we see that as something—and appreciate Mr. Watt’s comments earlier—that this is something that really needs to be looked 

at. And we are continuing to look and to talk about how we can 

make that happen. 

Mr. CONYERS. Very good. 

Any other recommendations you would like to make? 

Yes, sir? 

Mr. MOPSIK. Yes, Representative Conyers. 

I think there are some simple changes that could be made to the 

actual statute that would make it easier for, in particular, for photographers, who I believe have more registrations than any other 

group of rights-holders, but that would make it easier for them to 

register. And, in particular, eliminating the differential between 

published and unpublished, which is a cause for concern and debate, I believe, by everyone from the Copyright Office to the rightsholders. 

And I guess, also, I am not clear about the need for deposit copies; and, also, the institution of a small claims process for infringements. 

Mr. CONYERS. Well, thank you very much. 

And I would yield back any time left remaining. 

Mr. MARINO. [Presiding.] Thank you. 

The Chair recognizes Congressman Chaffetz from Utah. 

Mr. CHAFFETZ. Thank you. 
61 

And thank you all for being here. This is an important topic, and 

I appreciate all the expertise that is here in this room and at this 

table. 

And, Mr. Hansen, my question is first for you. And congratulations on your success. I mean, you are a great American success 

story, starting from your garage, 60 employees now. And that is 

what we like to see. And you are the type of business that we want 

to see growing and expanding. 

And so let’s talk about how you drive new fans, new audience. 

I mean, it is a very competitive atmosphere out there. How do you 

do that? How do you do that? Where do you go to find new fans? 

Mr. HANSEN. Well, we have a staff of people that we employ, as 

well as artists that we also compensate, as well as they have their 

jobs of being career musicians. And it is—we try, at this point, to 

identify the methods and the customers and the partners out there 

that can best reach that audience. It is across the board. 

Mr. CHAFFETZ. No doubt you have an array of people that help 

you do that. Where do you go to actually find them, to find the customers? Where are they? 

Mr. HANSEN. They are listening to music everywhere and anywhere. It is online, it is on the radio, it is in the clubs, it is all over 

the place. 

Mr. CHAFFETZ. So you have a group that is touring, and they 

have a hot song, and they are going from club to club, how do you 

promote that? Where do you go to promote that? 

Mr. HANSEN. We are promoting it across the board. We are crossing—again, from the ground up and from the top down. 

Mr. CHAFFETZ. Do you put an ad in the Yellow Pages? 

Mr. HANSEN. No. 

Mr. CHAFFETZ. Okay. Do you put it—— 

Mr. HANSEN. We go on—we go onto their—we recognize their 

fans through Facebook. We recognize their fans on YouTube. We 

recognize that we need to go to college radio, we need to go to commercial radio, we need to go across the board—— 

Mr. CHAFFETZ. There is a value—— 

Mr. HANSEN [continuing]. Where music lovers are listening. 

Mr. CHAFFETZ. It would be fair to say there is a value for being 

on the radio. 

Mr. HANSEN. Sure, just like there is a value to being on Facebook 

or YouTube or being in a club. 

Mr. CHAFFETZ. And Internet radio is something I have been 

keenly involved with and engaged with. Certainly, you are finding 

fans on the Internet radio. Tell me how you use the Internet radio. 

Mr. HANSEN. Well, the larger—we send our music to programmers, and they program our music on Internet radio. In some 

cases, they are performing on Internet radio, so live. You know, 

they will go into the studio and they will perhaps get interviewed 

and that sort of thing. 

Mr. CHAFFETZ. I guess the point I am trying to make, Mr. Chairman, is there is great value, there is compensation in driving audiences and driving people to clubs and creating awareness. That is 

where the generation that is listening to music today. We have got 

to find the proper balance, I understand that, but I also think there 

ought to be more competition and more outlets for you on Internet 
62 

radio. I don’t think it is working right now for most people. We 

have got a big dominant player who is having great success, but 

they still lose money every month and it doesn’t work. 

We want artists to be fairly compensated. And there is value to 

being on the radio. And, again, you are not going to go to the Yellow Pages; YouTube and Facebook are but two outlets, but where 

we are going to be 5 and 10 years from now is going to be a key 

to our future and it is something we need to continue to explore. 

Going back to Mr. Mopsik, tell me a little bit more about your 

experience with the Copyright Office, and maybe anybody else who 

wants to join here, what are the positives, but what are the challenges, what works well and what doesn’t work well at the Copyright Office? 

Mr. MOPSIK. I mean, for photographers, the creation of the ECO 

system was a big step forward to be able to register online. Our 

challenge is that a photographer may go out routinely, create over 

1,000 images in a day. I mean, you hear the number of clicks going 

on here with the photographers covering this event. It is easily in 

the hundreds of images. Then they have to go home and process 

those and decide what they are going to register or how that is 

going to happen. 

And right now one of the things that we have been trying to promote to the Copyright Office and been in discussions with them 

about for a while, and they seem quite agreeable to it, it is just a 

matter of making it happen, is to create a link from within a photographer’s workflow so that when they bring a job in, they can actually register images from their regular workflow and not have to 

go outside to go to the Copyright Office to make that registration. 

And we believe that would, I guess, fulfill one of the goals of the 

office, to encourage registrations. 

I mean, some of the other, I guess, frustrations we have is that 

if, in fact, you haven’t registered prior to infringement, you are 

locked out of statutory damages and court costs, at which point, 

very few photographers can afford to pursue an infringement matter in the absence of a small claims option. So they are effectively 

denied due process, because they have to go into Federal court to 

file a case, and no litigator is going to take that case without the 

promise of a statutory damage. So unless the photographer happens to be independently wealthy and willing to chase windmills, 

he is locked out. Those are, I think, some of the key issues. 

Mr. CHAFFETZ. Thanks, Mr. Chairman. Yield back. 

Mr. MARINO. Thank you. The Chair recognizes Congresswoman 

Chu from California. 

Ms. CHU. Thank you, Mr. Chair. And first I would like to submit 

two items for the record. One is an op-ed in The Hills Congressional Blog by Eric Hart, who is Congress Member Coble’s constituent, and I am submitting it because he couldn’t be here today. 

The other is a letter I received from East Bay Ray, who is 

guitarist of the Dead Kennedys, John McCrea, who is a songwriter 

and founding member of the band Cake, and 12 other musicians, 

songwriters and composers who wanted to remind us all that their 

careers exist because of copyright laws, and they wanted to make 

sure that individual creators are invited to testify in future hearings. 
63 

[The information referred to follows:] 

Op/Ed, by Eric Hart 

In the world the tre, th~ """pie workIng acksL1g~ ~ometlm .. s don't get the credit they 

deserve for making sure the show !rUIIS mOOlhly, Th~ SlIme could hesald for !he cttative 

fieldS In generol. Forevery talented pro(~sslonal in the spotHght. therearescoresoftalenled 

professionals working behInd he~;cenes. and It Is paramo,,". th~l we mak .. sure their 

creativity and labur Is ~fforded tile protection Itdeserves. 

Like many creative people who work In the artS fot a living. I don't pf!nd a loto(tlme 

Ihlnklng3bout oopyrlghtlaw. llowever a recent ex)U!rlence broullhl 10 my attenUon how 

Imronanl ils prote<:tion~ can he for ~n Inrlependent allthor ami ;mlstllke Iny~el . 

I began working In the theater during cOllege and have done lighting. set deSign, painting and 

even ~udh Through this I diKovered my true pas.\lon: making props. I have been a working 

prop maker for the paSI ten years. At a cenaln pnlnt, I became frustra ted with the lack of 

rortent books ~vailJ.ble on thecrafi orprop making and Iwgan working on myown. 

Willie my book, titled The Pro" 8m.lding Guidel.>oo k' For Theuen!, Film. und TV, was published 

e,1rller this year, I first staned pl anning and teJ;earchlng It In ZOOS. I ~n a hlng a month 

later in January ZOO9, to prattle<' Illy wrltlllg and build an ~udi~l1ce. nU l nothing oould have 

I'tcPilred /Il~ for the amounl of wol:k It would t~kc to crJft ~ full book. I work!!d !>early every 

day fora year to complete the l1l llU~1'1 but still felt lik~ J could have used llIore tlrnl!. 

No OM hall ever written anythlngils ompre en~lve ~s I wa~ ~tten1l'ti g. 1 talked to 

I'rofessional5in Ihe fleJd and pored through every hook. magazine or w~bsHe with reference 

maleri al l needell ll eslde~ !tyIng tn describe the ·he~1 practlce~" of my Indunry, 1 was 

ch«klng and rt!dl~[klng t«hnkal lnformalion to make sur~ ('very!hlng I said wa~ acrurat~. I 

had to work lor every 5entence In that book. Some Iiny phrnselO and thart.s look hours lust to 

put together because the Information Wil5 J oscattered or mlr!'d In jargun. 

No other prop making book In the ~"ls t had coiorphotog"'phs; mine has Mer 500. 1 shot 

do~ensorpho os thai I ~e p ~l'ecific3l1y for the honk; lnsume cases, I bought l1l~ eri3 s to 

demonstrale their u~e fot thuse photol:r~p h$. I invested tfme, ~lfon and money ~o the book 

cuuld Serve as a fnundatlon oflnfonnatlOI1 for fu ture prop maker to buUd olfof. 

TIle book 15 not II commodity that'.l.lnlerchangeable wil h other Imoks out there - nor did it 

3l'pf!ar magically one day. Its publication wa.; not (nevi ~ble. 1 had to work \l} get 11 wrill"n. 

So Is It unreasonal>le 10 ask th~t my work Is prou.'cted and that prolectlon i~ re~pet: ed? 

I'm not being unreasonahle to mY<ludlence. While textbooks and reference books oftlle 

$i(me sl~eal1d sC()pe can Jell fot SeU·120, my book Is a mere 5'40. Forty doll~rs for ~cass to 

my ten years of I) rap making e!tperlenc.:, as well a~ Interviews and dls\'usslolls willi 

numerous experl~ In the field. In flJ,1I fIllor, to boot? Thnt seems likeqllile the bargain. 

And I'm not keeplng my Information anll knowledge locked away. I wanU!d the (nformatlon 

to spread reg.1fdleS5 of whether people can Jlford It; I made a number nfvldeos 10 

complemenl the book, asw~!l3 few chapli'rs which couldn't f!l ln the book available for free 

011 the book's web~ile. 
64 

Tht oook's webSltt has a link for te .. rhers to req uest a free copy to review fQr their classes, 

and my hlOI: wntlnul'S 10 be a SQurCf offree information. 

So whUe II Is not unexpected for me 10 nnd out tbe book Is being pirated, II i$ odd. I've found 

slits baroorlng fr~ copies of the honk In full view of anyont surfing the web. It's Ilk .. "m 

standing right lilere, while someon@'says, · Yeah, Yllu .~pent years creating sumethlnG unique 

and VlIhmble that will benefltlile community. I aplJTedate that, and I'm going to take 

advantageofil, but I' m not going tIIllay like everyone else." 

r can't hirea team of lawyers to So after these siti!S, and even If I could, there are too many to 

make a d!frer~l1c"l.'. 1 only <15k that if you wan! til be"ellt rrom my work "ud labor,yuu resp«t 

me and accru;s lile book legally. 

' hope Congress keeps lills ill ,nlnd as It reviews the COllyrlght Act. While we do havela"..'S 

Intended to protect creators like me, We so.em 10 live In a culture Ihatpretends piracy has no 

real vldlms. It'slmportant 10 remind everyone tbe amount.ofwork thal8(!t's Into Ule 

creative w(lrks lilat Me so useful and ,,~Iuable 10 liS. I (lnly wrote a sIngle book, hut there are 

those who devote /!v~ry day of their Ii",,~ IQ wrliing and ~reat!og. and Ih~y will 1101 be able 10 

do h~1 lf their work Is not protected from those who de£lde to give away those works f(lr 

rree without the creator's permbsion. When we devalue Ihecreatlve work, we .. re devaluing 

the act of creaUon and the.act orwo.rk!ng, bOlh of which are vital to 3 free and prosl!erou& 

culture, 

£ric Hwt Is COOlIfIfiY 8 fX~ maker, fXIlfl masftw; 800 'Wfiter ~ Notth ~ His~, TOO Prop BuI6ng 

GIiiOOtIooI!: Fer I"/lealTe, fitn, and ~ wa.s ~is/led by focal Pruss II! 2013; /I ~ avadaOle III Focal Press. 
65 

July22.2013 

The HonorableJudy Chu 

Houst Comminee on the Judiciary 

Suboomrnince on Courts, Intellecrual Propeny and the Internet 

1520 Longwonh House Office Building 

Washington, DC 205 15 

Dear Congresswoman Cltu: 

We, lhe under.oigncd, arc all working professional musicians. SOI1!!writers und composers. 

and while our cam:rpalhs are. as varied IS our musical styles, they hnve 11 11 b..-en made 

possible byropyright laws, laws Ihal require we arcjuslly compensated liJr our limeand 

labor whl..'11 we e,'presl< ourselves to the public. As Congress begins its review of CQPynghl 

law, we hope you focus on making sure Ihe law provides a fmmework lhal sUpPOl1:i Ihe work 

of musicians like LIll. 

We appreciate thel,lenlion given 10 the neW to have individual atli!lOlll lhe table during the 

copynghl review process. In an op-ed appearing in Politico on May 13.2013, one musician 

eltpre5liCd dismay thaI iudividual anists have historically been e~cllJded from di!;C~ions 

that impact their lives and livelihoods. ("Getting copyrighlJ righl~, available al 

bUD:llwww,poJitico.cgmlstocv120 13!Q5Ibui!djng.a.rea l :£9PYl1AA!-s:onKM!,l$' 9 123 1.blml.) 

This is a sentiment many of us shan:. We are glad thollhe Subctlmmiltcc has heard these 

concerns. and hope )'flu will invite a member of our groop 10 panicipale in futu re hearinlP 

when suitable. 

As you conlinue your review orthe OOj'Iyrightlaws we want you to know how Impot1ant 

these laws ue to working musicians like us. We want laws thai will emptJwt:r us to dt:al 

with otht r plaYl!rs in the rtlle mllrlidplace, protect Os from con. an l e)(ploitatlon by unethical 

businessmen, and provide a linn founciulion for II robust, dynamic culture: We wanl you 10 

remember thllt copyright promotes freedom of expll:SlIion and rencctN the autonomy Dnd 

dignity of individuals and us II!! ~atOfS. It is vilal thai copyrighl continues to support 

C!'Cation II!! well as the commercializalion and distribution ofindividua!s' works with their 

consent. Such an approach has and will continue 10 benefit both society lind creators. 

We are ready to help in the CommitttcS' review of copyright law, shOllJd you find thl 

uscful, and WIll be submitting testimony for the record in future hearings when 

ppropri~lII. 

Sincerely, 

East Bay Ray 

Guitarist. Co-Founder of Dead Ktnnedys 
66 

/J!L~ Marc Ribot 

Rl!OOrding al1iSI, Cubanos Poslizos and many solo ra;:ordinj;s. Side musician to: Tom 

Wail!:, Robert Plant and Alison Krauss, Diana Krall, Elvis Costello, Allen Toussaint and 

manyolhen; 

Carla Bozulich 

Professional musician 0(25 years, current work Evangelista and solo 

Matthew Montfort Bandlcadc:r 

of Ancient Future 

Jonah MRlnmga 

SingllT, songwriter. guitarist ,,\- /) I) 1'-/' 

Zoe Keating 

Cellist and composer 
67 

Grant-Lee Phillips 

Singer/songwritcrand fronl-man ufGranl Lee Bumlo 

Denise Siegel 

Multimedia artist, writer and mUllician 

John McCrea 

Sonbowritcr, founding mcmbeTofCAKE 

Vill(:cnt DiFiore 

Professional musician and recording artist 

Blake Morgan 

Recording artist, ProducCf, Founder ECR Music Group 
68 

-

Rupa Marya 

Singer, Songwriter (Rllpa & the April FishC!J) 

Rebetta Gales 

MllSiciln, Sound Artis! 

Sean Hayes 

SongwritcrlPerformer 

0;:; A~lia WailS 

Lindt Shim 

Counooy Hruska 
69 

Mr. MARINO. That is it? 

Ms. CHU. No. 

Mr. MARINO. Oh, I am sorry. Without objection. 

Ms. CHU. Well, I thought I would actually like to ask questions 

about copyright infringement and how we are dealing with it right 

now. And so first let me ask Sandra Aistars and Tor Hansen about 

the voluntary agreements that we have. We have seen two voluntary agreements to address this issue of online theft, and the 

first is the best practices guideline for ad networks. And this was 

started by Google along with leading ad networks such as Microsoft, Yahoo and AOL, that announced best practices that would 

block sites dedicated to online piracy from using their ad services. 

And then there is also the copyright alert system that ISPs such 

as AT&T, Verizon, Comcast and Time Warner are working—are 

doing, along with content providers, to issue warning notices to 

users when they have used rogue sites that have infringed upon 

copyrights. 

How would you evaluate some of these solutions that have 

emerged, and what can we do in Congress to monitor and assess 

the impacts of these efforts? 

Ms. AISTARS. Thank you for the question, Congresswoman Chu. 

I am encouraged that other stakeholders in the marketplace are 

taking positive steps and recognizing their role in addressing infringements. I think they are doing so because they see this as 

something they need to do for their clients, for the brands which 

they place ads for, as well as for their own reasons. 

The efforts, in my mind, work best when creators are fully consulted in coming up with these best practices and when the requirements, for instance, for alerting an ad network to an infringing site, placing ads on that infringing site are ones that are actually geared toward something that an artist could actually do 

themselves. 

I was a little disappointed to see that this latest best practices 

document for ad networks required artists to be fully conversant in 

data tracing and figuring out exactly which ad network a particular 

ad had been generated by, and I think that is probably beyond the 

abilities of most artists who are on the road performing and working and trying to make a living. 

With regard to the copyright alert system, I am encouraged that 

that is taking place. Again, I think it is great that it applies to 

movies, music and TV programs. I would love to see it expanded 

to address other types of creative works, such as photography and 

books and perhaps even lyric sites, because none of those are currently covered. So I am both encouraged, but I think there is still 

work to be done. 

Ms. CHU. Mr. Hansen? 

Mr. HANSEN. We are also encouraged by the—that these things 

are now moving into place and we are starting to get the messaging out there. I think it is going to take a two-prong effect or 

many prongs, really, that the messaging continues to go out there 

to the consumers that this is not the right way, the right behavior 

to be taking product, and as well as removing it and eliminating 

the access at some point somehow. 
70 

Ms. CHU. And Ms. Aistars, I asked what could we do in Congress 

to monitor the impact of these efforts. 

Ms. AISTARS. Well, I think with your oversight role in this area, 

it would be fully appropriate for you to invite stakeholders who 

have begun to take these—these measures in to share with you 

how those are working, what—what seems to be the response—are 

they having the effect that was intended. I think also in particular 

when stakeholders announce they are taking measures themselves, 

it would be very interesting to understand how those play out over 

time. 

For instance, Google announced last year that it was changing 

its algorithm to limit the types of infringing sites that might otherwise rise to the top of search results, and I would be interested in 

hearing how that is working and whether that is truly having the 

effect that they intended. 

Ms. CHU. Thank you. I yield back. 

Mr. MARINO. The Chair now recognizes Congressman Smith from 

Missouri. 

Mr. SMITH. Wow. Thank you, Mr. Chairman. It is nice to be the 

newest Member on the Subcommittee and actually not go last. So 

getting here earlier pays off. 

This Committee hearing has been quite informative and very 

helpful, being new and learning a lot of the issues facing copyright. 

And my question is for all of you, in fact, with the changes in technology, with everything, with the Internet and all the different 

areas, what do you all see or anticipate as being the biggest struggles facing copyright, I mean, the absolute biggest struggles, or the 

best opportunities that you have with changing technology? 

Ms. AISTARS. I can start, if that is appropriate. I think, as I said 

in my testimony, we see ourselves as partners and collaborators 

with the technology community. And some of the issues that have 

come up through questioning already are some of the challenges 

that I think all of us need to struggle with. One, for instance, is 

ad-supported sites that are infringing sites. That is something that 

I think is in the best interests of all legitimate businesses to try 

and address. 

Similarly, credit card and other payment systems. I know that 

numerous of the credit card processors are taking very positive 

steps themselves to prevent their payment processing systems from 

being used on infringing sites. I think these types of activities, 

which cut off the dollars flowing to what are most often foreign 

rogue sites are very important, and are things that we need to 

maintain and to expand to other areas as well. 

Most people find the content, the movies, the music, the books 

that they are looking for online through a result of using a search 

engine, and so I would be very interested also in seeing efforts expand into that area as well. 

Mr. MOPSIK. Representative Smith, I would like to add, from a 

photographer perspective, a few issues. One would be funding or 

additional funding or more funding for the Copyright Office to 

allow them to advance the work that they have engaged in. 

Beyond that, I think a key issue for photographers is one of persistent attribution, which goes to, in effect, how rights holders are 

identified. It is a huge technology issue, but one that I think people 
71 

have been trying to solve for a while, but we don’t have an absolute 

answer to that yet, but with—if there were—I mean, right now it 

is too easy for all of the identifying information to be stripped from 

a photograph as it moves through the digital space, and so the 

image can be used, reused in multiple sources without ever being 

able to find the actual rights holder. There are some ways to search 

that out, but not particularly great. 

Mr. HANSEN. I think a lot of the ideas, the big ones, have been 

spoken about, but, just to reinforce that the search and the advertising and that the sort of—those things that raise to the top that 

are not the legitimate and real partners that are valuing our copyrights find a way to move down the list. And it is a challenge, but 

it is one that really needs to be looked at. 

Mr. LAPHAM. For us, Mr. Smith, I think it is finding the balance 

between locating content and ensuring content creators are compensated. And then I also think it is finding a sensible alternative 

for dispute resolution. And we are big fans of the Copyright Office’s 

efforts to put out a small claims process for copyright. 

Mr. MARINO. Okay. The gentleman’s time has expired, but Mr. 

Sherak, you want to quickly respond, please? 

Mr. SHERAK. I will quickly. Yeah. Thank you. I think for us, it 

is protecting our customers’ copyrights and then attacking piracy 

and making sure that we go after and take care of people that are 

pirating the films that we work on, because if they don’t get made, 

we can’t convert them to 3D. 

Mr. SMITH. Thank you. 

Mr. MARINO. The Chair recognizes Congressman Deutch from 

Florida. I think we have time to get through that. 

Mr. DEUTCH. Thanks, Mr. Chairman. And I am glad we are having this hearing today on the role of copyrights in America. And I 

would start by noting that I think too often we only associate big 

celebrities and big companies with copyrights, and forget about the 

millions of lesser known creators whose work we might recognize, 

but whose work likely will never appear in the entertainment news 

or in the gossip magazines. And it is in that vein that I am honored 

to chair the songwriters caucus with Marsha Blackburn and pay 

tribute to those great American creators whose work provides such 

an important part of the soundtrack to our lives, but whose names 

we often don’t know. 

I want to thank you, Ms. Aistars, for highlighting your own family’s story, along with those of other creators in your testimony, and 

I wanted to ask you as a follow-up something that you raised. I 

agree with you that our copyright law has to remain—has to remain rooted in tech neutral premises. I wanted your thoughts on 

how to ensure that the laws can grow with ever-changing technologies so that we are not picking favorites, we are not stifling potentially game-changing innovations, and at the same time, we are 

not opening creative works to new avenues for theft. 

Ms. AISTARS. That is a big question. I think, first, what you are 

doing here today in examining the contributions both of the copyright community and of the technology community to our health 

and well-being as a Nation is the exact right place to start. I think 

through—going through this process in a measured way and understanding what types of innovation each of our communities is en-
72 

gaged in will help you pinpoint the areas where some adjustments 

might be needed. 

I think the challenge that I hear most frequently from my grassroots members is the challenge in quickly and efficiently responding to infringements online. That is just another iteration of the 

same sorts of challenges that people have been facing with their 

works for decades and decades. And I think we will keep seeing 

these same sorts of challenges moving forward, but we have been 

talking about certain—certain adjustments that might be necessary 

or appropriate to look at, and looking at the DMCA may be one of 

those places, in making sure it works for independent creators. 

Mr. DEUTCH. And realizing how big a question that is, I look forward to continuing this conversation off-line, just so I can get in 

a couple more points. 

I wanted just to go back to the fundamentals, which we often 

don’t do that Article 1, Section 8 of the Constitution demands the 

Congress promote the progress of science and the useful arts, and 

it does that with meaningful copyright protections. It certainly 

helped that many of our Founding Fathers were creators themselves, they were inventors, but I think it reflects an even greater 

recognition that the long-term success of our country depends on 

the work of inventors as well as artists and creators in moving our 

country forward, in improving all of our lives with new medicines 

and technologies, but also in shaping our culture. 

It is often pointed out in this Subcommittee, and I might add not 

said enough in other contexts, that our strongest export is our intellectual property. It is the only area where America enjoys a 

trade surplus and it provides a great source of goodwill for America 

overseas. The total estimated impact of copyright on the U.S. economy is over $1.5 trillion. The film industry alone supports 2 million 

jobs and contributes over $14 billion in exports. Sales in the music 

industry exceeded $7 billion, and American authors and photographers and artists help promote our culture in every corner of the 

world. All of that progress and innovation is threatened when copyrights aren’t protected. 

The music industry was very publicly on the front lines of the 

problems when the digital age made theft ubiquitous, and they 

have worked painfully through these new challenges to embrace a 

whole host of new platforms that make digital sales and streams 

a source of incredible growth. And I think—I think that what we 

have seen there and the fact that—the potential to bring the music 

industry back to where it was even pre-Napster through all this 

new technology shows the point that you made, Ms. Aistars, that 

content and technology are not locked in some perpetual struggle 

looking for Congress to balance competing interests. To the contrary, having access to movies and music and books gives people 

a reason to adopt the latest technology and innovative platforms, 

help creators reach audiences that they would never otherwise 

touch. 

So it seems like our goal as a Nation is to grow the pie for everyone fairly instead of fighting about how we slice up what we already see today. 

In that vein, Mr. Hansen, your testimony explains that—in your 

testimony, you said that the compulsory license ensures that all 
73 

sound recordings are treated and compensated equally. That should 

be the goal. Now, some critics claim that under the compulsory license, not all music services are treated equally, and I am confused 

by that. I will ask this question, you can respond—you can respond 

in writing. 

Under the license, you can’t withhold music from any service or 

force them to pay different rates than the—than the CRB has set. 

Can you, and I would like you just to respond to those claims in 

writing since I don’t think we have time now. And I thank the 

Chairman. 

Mr. MARINO. Thank you. 

Ladies and gentlemen, to our panel, I apologize. We are called 

to votes. We are going to be voting on the House floor for at least 

an hour. And after consulting with my Ranking Member, I have 

made the decision that we will not return; however, each Member 

does have the opportunity to submit questions in writing to you. 

And I apologize to you very deeply, but the votes came earlier than 

we anticipated. 

So this concludes today’s hearing. Thanks to all of our witnesses 

for attending and the people in the gallery. Without objection, all 

Members will have 5 legislative days to submit additional written 

questions for the witnesses or additional materials for the record. 

This hearing is adjourned. 

[Whereupon, at 10:54 a.m., the Subcommittee was adjourned.] 

(75) 

S U B M I S S I O N S F O R

T H E R E C O R D 

Prepared Statement of Stephen Schwartz, President, 

Dramatists Guild of America, the Dramatists Guild of America 

Thank you to the House Judiciary Subcommittee for inviting me to participate in 

this critical discussion about the future of copyright in America. Although I was unable to testify before you, I am grateful for the opportunity to submit this statement 

to you for the congressional record. 

I am Stephen Schwartz, a composer and lyricist who has written songs for the 

theatre since 1969. My Broadway shows include GODSPELL, PIPPIN, THE MAGIC 

SHOW, WORKING and WICKED, and my regional work has included CHILDREN 

OF EDEN, THE BAKER’S WIFE, and the opera SE ́ ANCE ON A WET AFTERNOON. I’ve been honored with three Academy Awards and four Grammy Awards 

and have been inducted into the Theatre Hall of Fame and the Songwriters Hall 

of Fame. 

I write to you now not only as a songwriter, but also as President of the Dramatists Guild of America, in order to speak on behalf of America’s dramatic writers. 

The Dramatists Guild was established one hundred years ago and is the only professional association in America which advises and advances the interests of playwrights, composers, lyricists and librettists writing for the theatre. With almost 

7000 members nationwide and around the world, ranging from students and beginning writers to the most prominent Broadway authors, the Guild aids dramatists 

in protecting both the artistic and economic integrity of their work. Our past presidents have included Richard Rodgers, Oscar Hammerstein, Moss Hart, Alan Jay 

Lerner, Robert Sherwood, Robert Anderson, Frank Gilroy, Stephen Sondheim, Peter 

Stone and John Weidman. Among past and current Guild members are the greatest 

writers of the American theatre, such as Edward Albee, Eugene O’Neill, Arthur Miller, Lillian Hellman and Tennessee Williams. 

The Dramatists Guild believes that a vibrant, vital and provocative theatre is an 

essential element of the ongoing cultural debate which informs the citizens of a free 

society. If such a theatre is to survive, the unique, idiosyncratic voices of the men 

and women who write for it must be protected. And the one way we have managed 

to maintain that protection is through our copyrights. 

The copyright laws have made it possible for generations of theatre writers to prohibit changes in our words and music and to have approval over the choice of the 

artistic personnel hired to interpret, stage, and design our shows. Copyright has 

then allowed us to license our works throughout the United States and the rest of 

the world, creating an ongoing revenue stream that can buy us the time to continue 

writing for the theatre. 

But as you all well know, the basic principles of copyright are under siege in this 

new digital age. One can go on YouTube right at this moment and see parts of illegally recorded productions performed on Broadway and around the country, and 

there are even off-shore websites which have made a business trafficking in full recordings of these shows. We currently have no effective means to stop anyone dealing in this contraband. One can also go to Facebook and find sites that specifically 

deal in the sale and barter of illegally distributed sheet music, musical recordings, 

plays (published and unpublished) and monologues. Many younger theatre fans, 

having grown up in this digital environment, believe that ‘‘all information wants to 

be free’’ and that intellectual property is itself an illegitimate limitation on speech, 

even as they wax rhapsodic over their favorite songwriters and playwrights. The 
76 

websites that cater to them profit through ads, subscriptions and sales, none of 

which go to the creators and owners of the work. This is particularly true of digital 

mega-companies that download entire libraries of work, including plays and musicals, without the authors’ permission, and then find ways to parse it out in digital 

bits and bytes, monetizing as they go. They claim they are making a ‘‘fair use’’ of 

authors’ work, but in truth their use could not be less fair. 

As copyright owners, we would encourage Congress, in any revision of the current 

Copyright Act, to strengthen the ability to stop such infringements and allow authors to defend the copyrights which they have struggled so long to maintain. 

To do this, we would advocate that some way be found to shift the burden of policing infringement occurring on social media sites from individual authors (who have 

neither the means nor the expertise) to the sites themselves, which are profiting 

from these infringements and which have the means and expertise to keep such illegal material from being exploited on their sites in the first place, much as they do 

with pornography. 

Furthermore, we would ask that some way be found to stretch the long arm of 

American justice around those off-shore websites flagrantly violating not just our 

laws, but international copyright law as well, and profiting from transactions on our 

soil, abetted by our own credit card companies. 

We would also ask that you consider some kind of ‘‘small claims court’’ process 

for the efficient adjudication of smaller scale infringements, so that these cases can 

be pursued by authors rather than abandoned out of economic necessity. 

But it’s important to understand that we theatre writers are not just copyright 

owners; we are copyright users too. This is because most musicals, and a growing 

number of plays as well, are based on some pre-existing underlying material, be it 

a book, movie, magazine article, or catalogue of songs. It may be under copyright 

or in the public domain, and our use of the material may require a license or it may 

constitute a fair use. But this reliance on underlying work has made us sensitive 

to the cultural imperative for a rich and thriving ‘‘public domain’’ of materials for 

all of us to use, and for the limits on copyright posed by the Constitution. 

The Constitution established copyright law through Article I, Section 8, but it did 

so not as an end in and of itself, but as a means to an end, that being the advancement of the public interest. Copyright is a mechanism to accomplish a larger goal. 

So it is essential to remember, as you go forward in your deliberations, that the 

framers did not establish a new perpetual property interest with this clause; they 

were, instead, carving out an exception from general First Amendment principles, 

to grant an exclusive monopoly over a particular piece of original expression to its 

author for a ‘‘limited period,’’ and they did this in order to incentivize the creation 

of new works that would eventually enrich the public domain and be available to 

all. Given this perspective, we would advocate positions on a few issues that may 

come before you. 

First, endlessly extending the duration of copyright renders meaningless the constitutional mandate that copyright be for a limited period; it frustrates the purpose 

of the act to enrich the public domain and instead impoverishes it. Granting additional value retroactively to pre-existing works does not create an incentive, since 

the work already exists. Instead, it just creates a windfall. We feel that ‘‘life + 70 

years’’, consistent with international standards, is all the incentive an individual author needs to create work; after that, it becomes about indefinitely extending the 

profitability of corporate assets at the expense of the public interest. 

Secondly, there is a cache of material that could be available for transformative 

uses by playwrights and musical theater writers, but no one knows who or where 

the copyright owners are. These ‘‘orphan works’’ sit fallow, unused by their owners 

or by other artists, and often ignored by the public too. We recommend that a system be devised that allows for the use of these materials by authors in order to create new work, yet preserves the rights of the original authors should they ever appear and make a claim. 

Finally, ‘‘fair use’’ needs to be at the heart of any new copyright. ‘‘Fair Use’’ is 

the First Amendment safety valve that keeps the limited monopoly granted by a 

copyright from running afoul of the very purpose of copyright law, which is to enrich 

the public interest. If a celebrity can use his or her ‘‘publicity rights’’ to stifle an 
77 

unflattering play, or a wealthy media company can intimidate writers who attempt 

to create a parody or a historical work based on the public record, then new work 

is deterred. Furthermore, an expansion of the definition of copyrightable subject 

matter to include such work as stage direction (for example), thus granting an ownership interest in a director’s idea of how a play should be interpreted and staged, 

would have disastrous results for all copyright owners and the public too. For instance, even the works of Shakespeare, should there be established a new layer of 

copyright ownership in their staging, would be forced out of the public domain. 

We urge you to resist all attempts to limit fair use, or to expand categories of 

copyright that would serve to inhibit the public’s use of our work. 

On behalf of the Dramatists Guild, its membership, and theatre writers across the 

country, I thank you for considering our views on these significant matters and look 

forward to cooperating with you as you proceed on the course of a reconsideration 

of the Copyright Act. 

f 
78 

Prepared Statement of the 

Computer & Communications Industry Association 

8'10,8 lire 

United States House of Rep~sentDth ~ Commince on the JUdlCllUY 

Subcommlllee on Couns. Imelleclual Propen) . Md Ihe IIl1emel 

RC~'lIrJltW 

" hUl l,lnhl,ln in America: The Role ofCopynll,luS" 

Jul)' 25, 2013 

SM~IOrllle 

Compul~r & CommuniC31;OI1S Indumy AssociatIon 

The Computer & Communiauiolls [lldust!)' Association (CCIA) represents arg~ 

medium..sized, and small com panics in tile higlltecllnology products and services sectors. 

including computer hardware and soFtware, electronic commerce. leleconlflHlnicarions and 

Imemel products and se rvices ~ companies that collectively generate more than S2S0 billion in 

all nual revenues I ('CIA requests thattllis SIHlenlCll1 be included in the rc<:ord of III IS hearing, 

I, Introduction 

The announcement oftl1 ese llearings indicated a focus on "the posilive roles Copyri,gIlB 

and technology play in innovalion in the US.," and also quoted Chainnan Qoodlane and 

Subcomminee Chaimlan Coble's stated inlention to focus on .. the imporuint role that both the 

copyri,ght and tecllnoiOID' industries play in our nation - Tile role of copyright in innovation and 

the role ofth~ industries in the ('cOtlomy are two very different issues, 1I 0\~ever, The lauer is a 

relatively stl1lightfOf\'ard question amenable to objc<:th'e analysis. Once the contours oflhc 

relevant industries a re idcmitied. government data concerning them can be gathered and studied 

Ahhough there may be some debatc concernin,!! what are the "copyright indu.tri es," an 

economist preparing II repOI1 on Ihi~ topi c would disclose the indu~tril'S she considers II) be 

oopyright indu~trie~ and Ihe information she presents concenting tllat:;('t ofindllslries (e,g, 

employment growth, contribution to GDP, etc.) woold be objeclive and verifiable 

In contmst, the role of copyright in promoti"g innovation i, extremely difficult 10 

quantify Ahhoogh encouraging the creal ion of works is the COnStirulional pUlJXlse of copyrigllt, 
79 

economists have few tools to determine how much innovative activity is attributable to copyright 

as opposed to other factors, such as competition and the desire for reputational benefit This 

inability to quantify the true impact of copyright on innovation makes it difficult for 

policymakers to make an infonned decision on the optimal levels of copyright protection. 

This statement offers observations on both questions: the role of the copyright industries 

in the U. S. economy and the role of copyright in innovation. It identifies difficulties in arriving 

at any causal conclusions about the specific role of copyright in innovation, and calls for more 

objective, peer-reviewed research on copyright-policy related issues. 

II. The Role of the Copyright Industries in the lJ .S. Economy 

Regardless of how they are defined, the copyright industries playa significant role in the 

U.S. economy. While the traditional "core" copyright industries - motion pictures, music, and 

publishing - are relatively small, the software industry is very large, and many other sectors of 

the information and computer technology industry may arguably be considered copyright 

industries. Indeed, for this reason, the structure of these hearings may inadvertently imply a false 

dichotomy between the copyright and tech industries, when in fact there is a degree of both 

overlap and symbiosis between the two. 

However defined, the U.S copyright industries are healthy. While some copyright 

industry representatives have claimed that the Internet poses an existential threat to the health of 

these industries, the evidence shows the opposite. According to the Department of Commerce 

study Intellectual Property and the u.s. Economy: Industries in Focus, employment in 

copyright-intensive industries increased by 46.3 percent between 1990 and 2011 2 A study 

commissioned by CCIA from analysts at Floor64 found that "[b]y any measure, it appears that 

we are living in a true Renaissance era for content. More money is being spent overall 

Households are spending more on entertainment. And a lot more works are being created,,3 

During the tirst decade of this century, the entertainment industry's global revenue increased 50 

percent. The value of the global music industry rose from $132 billion in 2005 to $168 billion in 

2010. The value of the global entertainment industry grew from $449 billion in 1998 to $745 

::: Hconomics <ind Slatislics AdminislT<ilion & U.S. Palent and Trademarl 011icL', U.S. Deparlment of Commerce, 

Intellectual Properly and the U.s. Economy: Industries in Focus (2012), at vii 

3 Mich<id M<isnicl & MichaL:! Ho, 1'11(> SI,}, is Rising (Floor64 2012), aVal/able at 

http://www.ccianet. org/CCIA/files/ccL ibrary I' ilesll' ilename/OOOOOOOOO 586/TheSky IsRising 7 -1 J 0 .pdf 

2 
80 

billion in 20104 A study issued in June 2013 found that firms in copyright-intensive industries 

were significantly more profitable than firm in other industries. Additionally, in the ten-year 

period between 2003 and 2012, the copyright-intensive industries' profit margins on average 

grew by 3.98%, while the other industries' profit margins on average decreased by 0.75%5 

Similarly, the Congressional Research Service (CRS) issued a report on December 9, 

2011, concerning the financial condition of the U.S. motion picture industry6 The report found 

the motion picture industry to be in good health, undercutting claims that online infringement is 

causing economic devastation. It noted that the motion picture and sound recording industry's 

value-added share ofGDP (0.4%) did not change between 1995 and 2009, suggesting that 

infringement has not substantially hanned these industries relative to the U.S. economy as a 

whole. The report also found that gross revenues for the motion picture and sound recording 

industries grew from $52.8 billion in 1995 to $104.4 billion in 2009, that box office revenues for 

the U.S and Canada rose trom $5.3 billion in 1995 to $10.6 billion in 2010, and box otlice 

receipts have been growing faster abroad, suggesting a limited impact of foreign infringement on 

ticket sales. It reported that, according to the Census Bureau, the industry's after-tax profit 

increased from $496 million for the second quarter of 20 I 0 to $891 million for the second 

quarter of 20 II. It also noted that CEO pay has increased significantly over the past 15 years: 

Walt Disney Company, $10 million in 1994 to $29.6 million in 2010; and Time Warner, $5 

million in 1994 to $26.3 million in 2010. Other industry CEOs also received generous 

compensation in 2010: News Corp., $33.3 million; Viacom, $84.5 million; and NBC Universal, 

$21.4 million. In sum, the CRS reported that the financial condition of the U.S. motion picture 

industry is very solid 7 

4 Derek Slater & Patricia Wruuck, We Are All ('ol/tent Creators Now, The Global Innovation Index 2012, 

availahle at hltp:l/wvv\-\. wipo.int/c'porl/si LLs!\vw\viLcOl1_ stat/cnlcconomics/gii/pJT/chaplL'T 11.pdr 

'i Jonathan Band & Jonathan Gerafi, Projiwbilify a/Copyright Intensive Induslri(;'s (201 J), available' at 

http://infoj u~ticc. org/archi \'cs/2 9916 

6 MemoranduIll from Sue Kirchhoff Congressional Research Sen.'ice. to Senator Ron \VydelL Dec. 19_ 2011, 

available at hltp://\\'\v\-\ .lcchuirt com/articks/20111212! 02244g17037/congressional-research-scnio:.;c-showsholly\vood-is-thrivlng shtml 

- Motion picture ticket sales have continued to surge since the release of the CRS report lntenlational motion 

picture tickets in 20 [ [ increased three percent over 20 [0 and 35 percent over 2006 Richard Ve1Tier, TnienwllOna/ 

movie ticket salrs rrach 1/01/ prak;/1 2011, L.A. D:\·lES, March 25, 2012, availablr at 

http://latimesblogs.larimes.com/entertainm entne\vsbuzz/20 l2/03/international-movie-ticket -sales.html. The Chinese 

box olIice I:-'TCW 3S% in 2011 and 36% in 2012. Motion Picture Association of America, Theatrical Jiovir SraNstics 

2011, availuble al http://www.mpaa.org/resources/5bec4ac9-a95e-443b-987b-bff6tb5455a9.pdf; Thealrical Movie 

S'ratisfics 2012 available at hltp:llw\\-·w.mpaa.org!rcsourecs/3037b7a4-Sga2-4l 09-g0l2-S~Uca3abdrl b.pdf. In 

March 2012. The Hunger Carnes 5et multiple sales records, including the strongest opening \veekend for a spring 
81 

Calls for more stringent copyright laws generally minimize these favorable trends. With 

respect to music, complaints may focus on declining CD sales, while failing to acknowledge 

successes in other parts of the music industry, such as the revenue from digital downloads" and 

live performances." When these revenues are included, the music industry as a whole remains 

highly profitable, even if intra-industry shifts create winners and losers. Moreover, although CD 

sales have declined since 2000, the number of albums created has increased significantly. In 

2000,35,516 albums were released; by 2007, this number had risen to 79,695 HJ According to 

Nielsen/Billboard, digital sales have driven total music purchases to record highs11 Perhaps the 

clearest indication of the record industry's health is Vivendi's rejection three months ago of an 

$8.5 billion otTer for Universal Music Group (UMG).12 Softbank, the Japanese 

telecommunications company, made an all-cash bid to purchase UMG from the French media 

conglomerate. In 2012, UMG had $6 billion in revenue and $694 million in pre-tax profits. 

Similarly, in regard to film, calls for greater ret\ulation may point to the volume of illegal 

downloads and flat DVD sales, while overlooking rising ticket sales to theatrical perfonnances,13 

Of the fact that the number of feature films released annually worldwide increased from 3,807 in 

2003 to 4,989 in 2007. (In the same period, the number offeature film releases in the U.S rose 

rckasc. Rrook~ Rarnes, 'TTunger Ci-ames' Tickt"t S'ales 5,'(>[ Record, N. Y. Tlr..1J.,S, March 25,20 [2, availahlt> at 

http://v'l',y\v.nytimes.com/20 12!03/2G/movies/hunger-games-breaks-box-office-records.html In May 2012, The 

/lvt"ngt'Ts hrokc the record for th(; higgcst 0p'-'ning weekend in NorLh America hy $30 111i111011. Brooks Hames, 

Av(;'ngers' JTcmquish Box-Office' Rivals, N.Y TIt-.H,S, May 6, 2012, uvailable Ul 

http://v,,,w\v.llytimcs.com/2012/05/07/movics!marvL:!s-lhL:-avcngL:rs-lop-box-olIicc-n::cord.hlml.Notwilhst,mding the 

market's response to percerved poor qualrt' in ceratin Holly\vood summer offerings this year, the summer box office 

is m;verthdess up 9.9%. Ronald GrO\'Gr & Lisa Richwine, 'RIPD' Continues l1o/~V ... vood's Summer o./llig iludget 

Bombs. REUTERS, July 22, 2013, available 01 http://www.reuters.com/articleI20l3/07122Ihollywood-bombsidUSL INOFFI VB20130722. Brooks Barnes, l/"eekel1d Box Of/lCi? Ref/ects a Seasoll ofB;g-Budgrf Stumbll?8, N. Y 

TIMES, July 21, 2013, available arhttp://www.nytimes.com/20l3/07/22/movies/turbo-and-ripd-open-todisappoin lin g -rcsLLi ls. h tml; 

:< Album ,)'ales rlunge, Digital Downloads Up, ASSOCIATEDPRLSS, Jan. 1,2009, available at 

h tip: II\v W \v.m sn hc.m sn .comlidl2X463 ()7 41 

9 felix Oberholzer-Gee & Koehnan Strumpf, FilC'-Sharing und Copyrighl (Harvard I3usiness School, \\Torking 

Paper No. 09-132. 20(9), <il 20, available at hllp:l/wv,,·w.hhs.edu/researdllpdll09-132.pdf 

10 ld. at 23 

II Nidsen Co.!Billboard, 2012 l\111Sic Industl}' Report Jan. 4. 2013, available at 

http'llv;r"\y\v husinesswire com/ne"\,,"s/home/20130 [04005 [49/enfNielsen-Company-nillhoard%E2%RO%99s-20 12-

Mu~ic-lndustlT -lZepOli 

12 nen Sisano, VivC'ndi nee lined S'(~fiRank 's rucrulive O/fer/or Universal, N. Y. TJ\fr.S, July [X, 2015, availahle 

at http://w\v\Y.nytimes.com/20 13/07/19/bu siness/media/vi vendi -declined -softbanlcs-lucrahve-offer-foruniversal.html 

13 Sec CRS MelllOr<il1dulll, Sl/pra. ThL' 1.1P AA tnunpcled record box 011'lce n:cL'ipl~ of $29.9 billion in 2009, 

marking three straight years of solid growth and a 30% increase over 2005. Rob Pegoraro, The AJP.4..4 &~'8 lhe 

.i.\lov;e llllsiness Is Great. Unless It's Lousv, WASH. Pus!'. M<irch 11,2010, available at 

http://voices.\vashingtonpost com/fastelfonvard!20 1 O/03/m paa _box _office _bra g ging.html 

4 
82 

from 459 to 590.)'4 Film studio statistics also often ignore ancillary income, such as the sale of 

$16 billion of entertainment merchandise. IS In this manner, policy makers are presented with a 

skewed, and often alarmist view of the health of certain content industries. In short, industry 

complaints about the economic harm caused by copyright infringement are frequently 

exaggerated. ](i 

ITI. The Role of Copyright in Innovation 

A. Incentives to Innovation 

Proponents of increased copyright regulation often advance a qualitative argument about 

the essentiality of protection, instead of quantitative proof. Intuitively, it makes sense that the 

absence of IP protection would preclude many types of creative activity. In the absence of 

copyright restrictions, film studios would likely struggle to recover the cost of production, and 

would therefore produce far fewer of them. 

11 ObcrholLcr-Cl-cc & Slrump[ supra note 9, at 24 

15 1d. at 20 

1(' Til comments suhmitted to the Tntellectual Property Enforcement Coordinator ill 2010, the Copyright Alliance 

cited statistics that cast douht on the need for an increased leyel of IP protection by demonstrating the vibrancy of 

the copyright indu~lrics: Expendilures on hooks, n:cordcd audio, and \'idco media gTC\V in CLLTTC11l dollars from $ [08 

billion in 1998 to $169 billion in 2007, a 44% growth rate. Copyright Alliance Comments at G The online music 

industry grew by 27% ill 2009. Id. at X. Core copyright sales in rorcib'll. markets increased hy X% from 200G to 

2007. ld. at 10. Between 2000 and 2005, creative industries achieved an arulUal grO\vth rate in intemational trade of 

X.7%. Jd. Thl.: number of U.S. ind(,-pendent artisl-(,11treprl.:neurs increased from 509,000 in 2000 lo 680,000 in 2007 

ld. The number of professionals belonging to arts unions in the U.S. increased by 26.4% benveen 2004 and 2008 

ld. at 12. There was a 33.6% increase in individual artisls in the u.s. from 2000 lo 2007. Jd. Roy allies for lhe 

peIiollnance of musical compositions increased 20% bet\veen 2003 and 2008. lei. This robust grO\vth indlcates that 

federal dollars m-e beUer spenl dsevvhere. Many sludies have demonslrated tIns conclusion. See Francis Bea, Sf/U{v 

Suggests e.s. Box Office SotAjjected bv BitTorrellt, DIGIT;,L TRENDS, Feb. 11,2012, available at 

hup:I!\vw\v.digitallrends.comlinternalional/study-suggests-u-s-hox-orriee-not-arrected-hy-hlttoTTent! (staling that a 

study by researchers from Wellesley College and the University of Missouri found that U.S. box office sales are not 

arreeted by HitToTTent pirating. The sludy also n:vealed lhat 1110vie sludios hold the power to eurh inrringem('11t by 

decreasing intemational box office release \vindows); Timothy D. Lee, Swiss Government: File ,,)'haring No Big 

Deal, Some Downloading Sti/l OK, ARS TECH:'-JICA, Dec. 5,2011, available athtlp !!arsleehniea.eom!leehpolicy!ne\vs/20 II! 12/swiss-govenunent -file-sharing-no-big-deal-some-downloading-still-ok.ars. This rep01i written 

by the S\viss Fed(''Tai Council, pursuanl to a requesl hy thl.: S\viss legislature, concluded lhat lile-shuring does not 

have a negative impact on Swiss culture necause consumers spend a constant share of their disposahle lllcome of 

enteliainment, money saved from buying CDs and DVDs are instead spent on concerts, movies, and merchandising, 

it concluded. More recent reports reaffinll that commercial availability is one of the most effective means for 

preventing infringement. See, e.g., Spotify. '·Adventures in the Netherlmlds," July 17,2013, available at 

http://press.spotlfY.com/uk/20 13!07 !l7/adventures-in-netherlandsl (noting marked decline in piracy in S\veden and 

Nelherlands following introduction or Spoli1\), see also Joe K<iraganis, cd., MEDIA PIRACY L\ E.\-1ERGlt-.G 

ECOK01HES (Social Science Research Council 2011), available at http://piracy.americanassembly.org/wpconlC1ltluploadd20 11/06/MPEE-PDF-l.0.4. pdt) 
83 

But the fact that certain works or inventions may need some protection to ensure their 

creation does not inform policy makers about the contours of the protection, such as the breadth 

of the right or the length of the tenn. Nor does evidence of the need for some protection inform 

policy makers of the appropriate./iJrm of protection. The software industry flourished for 

decades with just copyright protection for computer programs; courts broadly permitted the 

issuance of software patents only after the industry was established. Evidence as to whether 

providing software with patent protection in addition to copyright protection has promoted 

innovation is not encouragingn Too much IP protection prevents competition from follow-on 

innovation. I8 Balance between protection and competition is the salient feature of our IP 

system, and a major reason for our global leadership in the development ofinnovative 

technologies. 19 

Additionally, there are many industries where competition and consumer demand, rather 

than intellectual property, provide the incentive for innovation20 These include the furniture, 

c1othing,21 and financial services industries. To be sure, companies in these industries rely 

heavily on their trademarks to differentiate themselves from their competitors and to establish 

I~ S'ee JA\mS RESSE\" & MTCHAF.J . .T. MElTRER, PATE"ITF AIl,PRE ISS-J93 (2008). The E1J Database Directive 

demonstrates that more protection does not necessm-ily lead to more innovation. In 1996, the European Union 

auopll:u sl/i generis protection for the inveslment in lh(; assemhly or fads in datahases. The EO's ohjective was lo 

increase its global mm-ket share of this impOltant industry relative to the United States, which does not provide a 

similar ['oml ofproh:ction. In 200S. lh(; European Commission pL:rfonlll:u a SlLLUY on the (Jkctivcl1L:sS or lhe 

Directive. The study found that since the adoption of the Directive, the European share of the global database 

marb:l had actually d(;erea~ed. Th(; Conuni~sion concluded lhat the Directive Jid not have a positive impacl on 

database creation. ,)'C'e DO Intemal Market and Services \Vorking Paper, "['irst evaluation of Directive 96/9IEC on 

th(; kgal prolection of daluba~e~:' D(;c. 12,2005, available at 

http://W"iYW .europa.eu/ cOlllmJintemal_market/copyrightJdocs/databases/evaluation_rep011_ en. pdf. 

IS See Simon Waterfall, investigatioll: Apple vs !.Vokia vs CToog!e vs Hl'C vs RIJtl, Wllum.Co.UK (Muy 12,2010), 

available at http://wV{v •. "wired. co. uk!magazine! archive!20 1 O!OG!startlinvestigation -apple-vs-nokia -vs-goo gle-vs-htc-

\·s-rim, for a Jiseussion of hmv the "patcnl thickl.:t"' on smartphon(;s is eaLLsing litJgalion anJ impeding innovalion in 

the smartphone industry 

19 See, e.g.. Jonathan eland. The 801'/1-1'1'1' ,VexlIs, 2~ AM. lJ. INT·I.!.. REV. 31. 53-5~ (20ll) 

20 A May 11,2010 statement by the federal Trade COlIlmission, the Depmtlllent of Justice, and the Patent and 

Tr<1dem<1rk Olliee of <1 joml \""ork~hop ~aid: --In recenl ye<1rs, federal <1g(;neies <111d the eourt~ hav(; recogniLed that 

patents and competition share the overall purpose of promoting innovation and enhancing consumer \velfare 

Timely. high-quulit~, putent~ promol(; 111\'eSUl1I....11l in innovation. The compclili\·(; dri\·(; of a dynamic mart.dplucc 

fosters the introduction of ne\\' anJ improved products and processes Dy contrast, delay, uncertainty. and poor 

patent quality can create barriers to innovation. Additionally, where standards for violating antitnlst la\v are unclear. 

or where the threshold for antitmst violations is set too Imv or too high, innovation can he stifled. The workshop \vill 

address \\'ays in \vhich careful calibration and balancing of patent policy and competItion policy can best promote 

incentives to innovate" DOJ, DTe, USPTO Workshop on Promoting Innovation, May 10,2010, available at 

http://\VW\V .usplo. go\·!news!pr!20 1 011 0 _16.j sp 

21 See CIIRISTOPIILR JON SPRIGMAN & KAL RAUSnALA, TIlE KNOCKOff ECO:\OMY: How IMITAnON SPARKS 

lI\:\OVATlON (2012) (arguing thal fashion, among olhcr induslries. opL:rales within <1 low-lP (;quilibriu111 in \vhich 

copying does not deter innovation and lllay actually promote it) 

6 
84 

reputations for quality and reliability, and may also rely on trade secrecy. But product 

innovation has occurred notwithstanding the absence of copyright (or patent) protection22 

The focus on the incentive to innovate provided by intellectual property also undervalues 

the innovation driven by academic research, which often is government-funded. A recent 

analysis of the 300 most influential innovations in science, commerce, and technology revealed 

that collaborative academic environments generated more world-changing ideas than the 

competitive sphere of the marketplace." 

B. Excessive IP Protection Chills Innovation 

Arguments that ever stronger regulation incentivizes innovation also overlook the ways 

in which excessive protection can inhibit innovation. As Alex Kozinski, Chief Judge of the 

Ninth Circuit, noted, "[n]othing today, likely nothing since we tamed fire, is genuinely new 

Culture, like science and technology, grows by accretion, each creator building on the works of 

those who came before. Overprotection stifles the very creative force it's supposed to nurture.,,24 

For this reason, "[o]verprotecting intellectual property is as harmful as underprotecting it 

Creativity is impossible without a rich public dornain.,,25 Every year that a work is covered by a 

copyright is a year that subsequent users cannot build on that work. While incremental 

protection may provide additional reward to the author, society pays for this reward by being 

deprived offollow-on use, while the author and his or her heirs accumulate profits. For this 

reason, protection exceeding the amount necessary to incenti vize innovation represents a dead 

weight loss to the economy." 

2:: Indeed, open source sot't\vm"e demonstrates that even \vith copyrightable subject matter. the expectation of 

moneti/ing cn:alivL: crrort through copyright proLection may not he necessary: to provide all individual enlily \'\/iLh an 

incentive to itmovate. To the contrary, \vith open source software, copyright acts as the mechanism to prevent a 

single cntity rr0111 approprialing the value or the innovation Innovation nonetheless occurs through collahoraLive 

development enabled by the Intemet. And developers of open source sot'hvare derive significant revenue from 

selling their sCTviees, rather than their solhv<ire 

23 STEVI:\ JOHNSON, WIlERE GOOD IDEAS COMI fROM Tm NATURAL HISTORY Of IIDCOVATION (2010) 

:1 White v. Samsung H/ectl'Onics ojAme1'ica, inc" 989 F.2d 1512,1513 (91h Cir.) (Kozinski . .I., dissc~lting) cert 

denied, 113 S Ct 2443 (1993) 5,'(!(! also \Vn I I4t,{ M T.ANDFS & RIcnARD A POSNf,R, Tnf, ECONO\HC STRlTCTITRf. 

OF INTELLECTUAL PROl'l:.lfl \ Lnv 326-27 (2003) ("There is also evidence that the patenting of computer soft\vare 

actually retards innovation hecause mo~t sofhvare innovation hoth huilds on and complements existing soft'ivare 

Without the retardation introduced by patenting and the resulting need to negotiate licenses, sotl\\'are mmmfacturers 

would mnovate more rapidly and each "would benefit ii'om the others· itmovations, which, because of the sequential 

<illd eompkmcntaI}' n<iture of the imlovahons in this industry. \vould enhmlce the v<ilLLC of the existing products.") 

" ld. 

:6 See Mark A. Lemley. Property, intellectual Property, and F]'('e Riding, to ll:x. L. REV. 1031 (2005) 

7 
85 

An additional dead weight loss is imposed by defects in the IP litigation system. This 

committee is well aware of the problems caused by "patent assertion entities," i.e., patent trolls. 

Trolls, with the resulting chilling effect on creativity, exist in the copyright system as well. In 

Rrowflmark Films v. Comedy Par/llers, the court noted that Brownmark's broad discovery 

requests gave it "the appearance of a 'copyright troll, ",27 observing that "[t]he expense of 

discovery, which [defendants] stressed at oral arb'llment, looms over this suit [Defendants], and 

amicus, the Electronic Frontier Foundation, remind this court that infringement suits are often 

baseless shakedowns. Ruinous discovery heightens the incentive to settle rather than defend 

these frivolous suits."28 In May, a furious federal judge sanctioned attorneys for a prominent 

copyright "porn troll," accusing them of having "outmaneuvered the legal system" with 

unsubstantiated infringement allegations, having 

discovered the nexus of antiquated copyright laws, paralyzing social stigma, and 

unaffordable defense costs. And they exploit this anomaly by accusing individuals of 

illegally downloading a single pornographic video. Then they offer to settle-for a sum 

calculated to be just below the cost of a bare-bones defense. For these individuals, 

resistance is futile; most reluctantly pay rather than have their names associated with 

illegally downloading porn. So now, copyright laws originally designed to compensate 

starving artists, allow starving attorneys in this electronic-media era to plunder the 

citizenry 

JlIgel1l1ity 13 U.C v. [Joe, Order Issuing Sanctions (CD. Cal. May 6,2013).29 

Even independent of trolls, litigation costs can prove fatal. The user-generated content 

site Veoh recently declared bankruptcy due to litigation costs, for example, although it ultimately 

prevailed over of infringement c1aims30 

The feature of the copyright system that most incentivizes aggressive litigation postures, 

encourages trolls, and thereby chills innovation, is the availability of statutory damages in 

copyright infringement cases. Under 17 US.C ~ 504, a plaintiff can obtain up to $30,000 in 

damages for each work infringed, regardless of the actual injury it suffered. In cases involving 

:::~ 13rownmarA~ Films v. Comedy Parfnen"J, 6~Q F.3d 687, 691 (7th Cir. 2(12) 

:s Jd. Another (;.\.Hmplc of a copyright troll is Righthavcn. The Las Vegas Rcvic\\' JoumallransfcITcd the right [0 

enforce the copyrights in its articles to Righthaven, which in turn sued bloggers for reposting [IS little a~ five 

sentences rn)TI1 these articles Righthavcn \\'as hair O\vncd hy Lhe inkllcctLLal properly athlTI1cy suing the hloggcrs 

After numerous Imvsuits, a federal district coult 1ll Nevada found that Righthaven did not have standing to sue 

hLcau~e it wa~ nol thc lcgal or hcncricial owncr or lhc copyrighls ThL Ninth Circuit arrirrncd lhis ruling 

Righl/wven UC v. Hoehn (9th CiT. May 9, 201]) 

:9 ,lvailable a/ hltp:llbiLlyl18qllWLI 

10 WdG Recordings. Inc. v. Sheiler Copital Porlners LLC, 6671'.3d 1022 (9th CIL 2011). Similarly, Pert'eet 10's 

U1l8uccc8sfulliligation again8t Googlc'81magc Search la81cd five year8 and consumed va8t altOTI1ey and 8lalT 

resources 

8 
86 

willful infringement, the statutory damages can rise to $150,000 per work infringed. Because 

cases involving digital technologies often implicate hundreds, if not thousands, of works, 

providers of infonnation technology products and services face truly astronomic damages 

liability.31 The threat of enormous damages encourages rights-holders to assert aggressive 

theories in the hope of coercing quick settlements, and also causes technology companies to 

withhold new products and services from the market 32 Etfort to quantify the amount of 

innovation caused by IP must also account for the amount of innovation inhibited by remedies of 

this nature. 

C. Economic Contribution of Industries Relying on Balanced Copyright 

Just as few grocery stores ever contemplated being sued for patent infringement," the 

cost of overly expansive copyright could be visited upon unsuspecting sectors of the economy 

A broad sector of the economy is reh'lliated by the copyright laws, and a substantial number of 

diverse industry sectors depend upon the various limitations to copyright in their business. 

Research commissioned by CCIA in 2011 and recently cited by the National Research Council 

of the National Academies34 concluded that industries depending upon fair use and related 

limitations to copyright generated revenue averaging $4.6 trillion, contributed $2.4 trillion in 

value-add to the US economy (roughly one-sixth of total US current dollar GDP) and employ 

approximately 1 in 8 US workers. Exports of goods and services related to fair use industries 

increased by 64 percent between 2002 and 2009, from $179 billion to $266 billion. Exports of 

trade-related services, including Internet or online services, were the fastest growing segment, 

increasing nearly ten-fold from $578 million in 2002 to more than $5 billion annually in 2008-

2009." 

11 ,)'C'(! Pamela Samuelson, ,)'WfuI01Y Damages in COp,lTight L(n\.': A Remedy in NeC'd oIRe/orm, 51 \VIv!. & MARY 

L REV. 439 (2009) 

3~ The potential for large statutory damages can discourage authors from exploiting their O\Yll \yorks. A 1965 

book contract bdwccn an uUlhor and a publi::;hcr, for inslance, lll<ly not Hudn::::;::; whcthL:[ [h(; author or the pubhshL'T 

has the rights for digital dishihution The pnssihihty of large statutory damages prevents either the author or the 

publisher from taking the risk of distributing the book digitally 

_'3 Release, Food kfurkeiing TnSlilllle Announces 5,'lIpporllor SHTTIJJ) .qcJ, Mar [5, 20 [J, availahle ul 

httE :11\v\v\v. grocery headqmll~el~s. com/20 13/03/food -lll~rketlllg -insti.tu.te-announc~s-~uppo~ -for-shield -ac~1 

<-I Stephen A. Menlll & \Vllham 1. Raduchel, CopYrIght If/ thl! DlgIlal Era: Butldlllg EVIdence for rol{('~L 

N<Jlional Research Council (2013), at hllp:Jlw\vvv.1l<Jp.edu/c<Jtalog.php'?n::con.l_id=14686 (hcrcill<Jlkr "N<Jtional 

Research COlUlCil RepOlf") 

35 Thomas Rogcrs & Andrew SL<JlTIoss.L<.::gi, Fa;r Use ;1/ tht' L S. c·conomy al 26-27 (2011) avm/able at 

http://\Y""iv\Y.ccianet.org/fail1lsestudy 

9 
87 

IV. The Need For Objective Data 

The aforementioned report by the National Research Council of the National Academies 

observed that copyright policy debates have been "poorly informed by objective data and 

empirical research.,,36 For years, advocacy for stricter copyright has relied on rights-holder 

supplied data, some of which has been openly questioned by governments and intergovernmental organizations. 

A. Industry Data Lacks Objectivity 

Industry supplied data is often of the correlation-is-causation variety, such as a 2010 

Chamber of Commerce study which concluded that because IP intensive industries outperform 

non-IP intensive industries, therefore "the creation of intellectual property is the key factor in 

sustaining economic growth.,,37 

Media investigations into the source of such industry-driven statistics have found little or 

no basis for these numbers, dismissing them as "fiction."'" Objective analyses indicate that 

rights-holder-funded research has drastically overestimated counterfeiting and copyright 

infringement costs. A 2007 study by the Organization for Economic Co-operation and 

Development (OECD) demonstrated that industry estimates overstated reality by a factor of 

three:'9 A report by the Government Accountability Office (GAO) quoted a 2008 OECD study 

that found that "data have not been systematically collected or evaluated and, in many cases, 

assessments 'rely excessively on fragmentary and anecdotal information; where data are lacking, 

unsubstantiated opinions are often treated as facts. ",.0 The GAO added that "industry 

j6 ,Supra note 34, at ix 

3~ Nam Pha111, The Impact of Innovation and the Role of IP Rights 011 U.S. Productivity, ComjJt"titivt"ness, JOhR. 

Wages and Exports 52 (2010), at 52, available athttp://ndpgov.com/docsINDP_IP_Jobs_Study_IIi_Res.pdf 

38 S',-"c ])a\'ld Kravcls. rlctioll 01' Fiction: 750,O()() /lmerican ./o/Js !'ost to lP Piracy, V'/lln,I), Oct. 3, 200S, 

available at http://ww""'i\-."'ivired.com/threatlevel/2008/1O/fictlOll-or-fict/; seC' also Julian Sanchez, 750,000 losl jobs! 

1'11(> dodgy digits behind tilt> "It.-'ar on piracy. ARS 11,CHNICA, Oo:.;\. 7,2008, availab/r athtlp://af~l(;chnica.com/lcchpolicv/news/2008110/dodgy-digits-behind-the-war-on-piracy.ars; Nate Anderson, Oops: MPAA Adllliis College 

Pirac), Numbers Gross(F b~j7at('d, ARS TECH:-.JIC,\., J<111. 22, 200S, http://<1fst(;chnica.com/tcchpolicy Ineyvs/200RIO I/oops-mpaa-admits-college-piracy -numbers-grossly -inflated ars An industT)' -commissioned 

piracy" study, TERA Consultants, Building a Digital c'conomy: The importallce a/Savillg Jobs ;11 thr 

FJI's Creafive Industries (20 [0), was shmvll to rely on dubious assumrtion~ and lllcomriete data. See Mike 

Masnick, As Ex:pected, Ridiculolfs, H ·rang, Hxaggerating And AJislrading Report Claims 1 hat 'FIrm}" is Killlllg 

Techdirt, Mar 18,2010, available at http://www.techdirt.com/al1icles/2010031711617328605.shtml 

HlLgh Williamson, FOl'grl'Y Trade {ossn 'undrl' S200bn', 1-'1:\. 1l.'\1ES, May 7,2007, available at 

http://www.fi.com/cms/s/o/acbd064c-fcb9-11db-9971-000b5dfl0621.html 

10 U.S. C;'OVERN.\-1E:-.J"l" ACCOUI\TABlLlTY OFFK'KINTl.,LLl.,CTL AL PROPE.RTY: OBSLRVATlO:-.J ON HFFOR"l"S TO 

QUAKTIry TIlL ECONmnC EffECTS Of COUNTERfEIT A'iD PIRATED GOODS; TIlE IMPACT Of INNOVATIO:\ AND TIlE 

10 
88 

associations do not always disclose their proprietary data sources and methods, making it 

difficult to verify their estimates.,,4l 

At least as early as the mid-1990s, government officials reportedly acknowledged rightsholder-industries' "varying degree of commitment to accuracy.,,·2 Notwithstanding the dodgy 

pedigree of such data, however, they are proffered to regulatory agencies as a basis for action4 .l 

For example, federal otlicials have been repeatedly presented with the results of an undisclosed 

study whose inflated findings were revised downward under criticism,"" or with other studies that 

depended upon this discredited research"S 

The unsupportable numbers proved embarrassing in the context of the debate over the 

Stop Online Piracy Act (SOPA). House Judiciary Committee Chairman Lamar Smith declared 

in a January 20, 2012 opinion column on CNN.com that "[iJllegal counterfeiting and piracy costs 

the U.S. economy $100 billion and thousands of jobs every year" - a statement which Politi Fact 

subsequently ruled to be "false ,,46 Julian Sanchez, a fellow at the Cato Institute, likewise 

challenged the statistics upon which SOPA's sponsors justified the legislation 47 

ROJ.E OF IF R[U-H'l S ON U.S. P~()m ICTIVIT'f', COr.,.·IPE']'[TIV ENESS, TOHS, Vi/AcrES A"\I) EXPORTS. GAO-J 0-423 16 

(2010) Uleremafier "GAO Report"] II !d. 

"' PETLR DRAIIOS & JOlIN I3RAITIIWAlTE, INroR,lATIO'l fWDALISM 98 (2002) 

13 See '0/1LLLA..\t PATRY, MOR.4..L PANICS Al\D 'lHE COPYRIGHT V.lARS 30-36 (OxforJ 2(09) 

-+-1- ,)'C'(! .AJPAA revises study on movie piracy, Jan. 23, 2008, L.A. TnvILS, ovailable at 

http://artidcs.lutim<.:s.<.:omI200Wian/23Ibusincss/fi-Jmvnload23: see also Curri(; RussdL .. MPAA Admits Piracy Study 

Flal1.'ed, C'OPYRIGIIT ADYISORY NETWORK available at http://librarycopyright.net/\vordpress/?p=7S. The contents of 

the olTending study upparenlly hu\"e been \~ithheld from the public notwilhstanding a Congressionul request for the 

methodology and data. Compare The Analog Hole: Can C'ongress Protect C'oPJ:right and Promote Innovation? 

nefore the 5,'enate COnll11. on the JudiciaJ}'. 109th Congo 15- [6 (2006) with Gigi Sohn, Congress Should TJemand 

i\lPAA Data all the Cost of Pirtlc}), Jan. 23, 2008, available at http://\.V\v\v.publicknmvledge org/nodell363 

1.5 S'ee LECG, L1.C, Fconomic .'Ina~'y'sis of the ProposedC'ICP .'Inti-Counterfeiting and Piracy Initiative, at 10 

(2007) available at http://w\Yw.lexisnexis.com/docmnents/pdf/20080610072737 _large. pdf [hereinafier LECG 

Sludy I: Sl<.:phcn Siw(;k. The 1'1'1Ie Cost of Alation Pictllre Piracy to the U.S Hcanal1l}'. at 2, g, cn.14, 18 (2006) 

available at 

h(( p :llwww.ipi.orgIlPI/IPIPublicalions.nsIlPublica lionLookupF ull'l'cxlPD F/2 93C69 E 7 D5055FA 4862571}, 800 16845 

9/$file/CostOfpiracy pdf70penPlement [hereinafter TPT Study] (citing MPAA study prepared by LPK) 

16 See W. C:rardner Selby, Lamar Smith S(~Y's Online Firaq..i alldCo1flltel/eiting Costs the U·.S c'canomy SiOO 

Hillion a Year, POJ.ITIf A..CT, feb. 6, 2012, avuiluhle at 

http://\v\,,\v.politifact .com/texas/statel1lentsl20 12/feb/06!lalllar-~l1lith/lamar-sl1lith-says-online-piracy -andcounterfeiting-I 

I~ JLLli,:Hl San<.:hcL llow Copyrighf industries Can Congress, Cato lnst., .hill. 3,2012. rNailable at hltp:l/wvl"w.catoat-libeliy.org/hmv-copyright-industries-con-congress/; Julian Sanchez, SOPA, Internet Regulalion. and the 

Hconamics o.lPiracy. ARS l"l.,CHNICA, Jan. 18,2012. available at hltp:llarstcchnica.com/lcchpolicy Ine\vs/20 12/0 lIinternet -regulation-and -the-econollllcs-of-piracy ars 

11 
89 

B. GAO Criticism of the Methodologies of Industry Studies 

The GAO observed that in the absence of real data on infringement, methods for 

calculating estimates of economic losses involve assumptions that have a significant impact on 

the resulting estimate. Two key assumptions are the rate at which a consumer is willing to 

switch from an infringing good to a genuine product (substitution rate), and value of the 

infringing good. The GAO suggested that assuming a one-to-one substitution rate at the 

manufacturer's suggested retail price could lead to lead to a dramatic overstatement of economic 

loss. The GAO noted that some copyright industry studies made precisely this problematic 

assumption48 In other instances, the studies failed altogether to reveal their assumptions 49 The 

GAO stated that "[u]nless the assumptions about substitution rates and valuations of counterfeit 

goods are transparently explained, experts observed that it is difficult, if not impossible, to assess 

the reasonableness of the resulting estimate."'() 

The GAO also criticized rights-holder studies on the impact of infringement on the U.S 

economy. The GAO noted that to develop an estimate of the effect of infringement on the 

overall u.s. economy, rights-holders have applied RIMS II economic multipliers5

! to the 

estimates of economic loss for specific copyright industries. The GAO found that "using the 

RIMS II multipliers in this setting does not take into account the two fold effect: (l) in the case 

that the counterfeit good has similar quality to the original, consumers have extra disposable 

income from purchasing a less expensive good, and (2) the extra disposable income goes back to 

the U.S. economy, as consumers can spend it on other goods and services,,52 Similarly, the 

GAO report referred to an expert's view that the "effects of piracy within the United States are 

mainly redistributions within the economy for other purposes and that they should not be 

considered as a loss to the overall economy. He stated that 'the money does not just vanish; it is 

used for other purposes. ",53 The GAO concluded that "it is difIicult, if not impossible, to 

48 GAO Rep0l1,supra note 19_ at 21 (refening to a Business Soft\vare Alliance survey) 

19 Jd. (rcl<....TIing [0 a Motion Picture Associalion of America SUfVL:;) 

'Old at IS 

~l The Department of Commerce's Bureau of l::conomic Analysis make multipliers available through its Regional 

Tnput-Output Modeling System (RTMS TT). These multipliers allow the estimation of the impact of a specific change 

in one sector on the entire economy 

'i~ GAO Report supra note 19, at 23 (referring to ffil Institute ofrolic)" Innovation study) 

53 Jd. at 2K S'ee Anndics HLLygcn t>t a/., Ups and DOl-vns: l!.·conomic and Cultul'al l!.J/t>cts ofFi/t> Shol'(ng on 

l\fusic, Film and Game's (2009). ,)'ee also Joe Karagani5, PiJUC}' and Jobs in Europe': Wh.:v fhe' BASC.J.P TER/-J. 

.'lpp1'oach is IVrong (2010). available at hup:llpir<Jcy .amcricanassL:mbly .org/vlip-contcnt/uploads/120l0/l2/Piracyand-Jobs-in-Europe-a-note-on-the-DASCAP-TERA-study/pdf CVlithin any given country. piracy is a reallocation 

12 
90 

quantify the net effect of counterfeiting and piracy on the economy as a whole."'" The GAO 

further stated that the "net effect" of infringement on the economy "cannot be determined with 

any certainty."" 

The GAO was not alone in reaching such conclusions; similar analysis appeared in the 

independent Hargreaves Review in the UK., which surveyed UK. and international data 

concerning online copyright infringement and "[found] that very little of it is supported by 

transparent research criteria. Meanwhile sales and profitability levels in most creative business 

sectors appear to be holding up reasonably well. We conclude that many creative businesses are 

experiencing turbulence from digital copyright infringement, but that at the level of the whole 

economy, measurable impacts are not as stark as is sometimes suggested.,,56 

C. The Department of Commerce Study 

When the Department of Commerce released its study on infeffectllaf Property and the 

U.S. F:conomy: Jnduslries in Focus in 2012, the study's findings were promptly misstated and 

misused by government officials A Department blog proclaimed that the study "showed that 

intellectual property protections have a direct and significant impact on the US. economy ,,57 

The Patent and Trademark Office claimed that the study proved that "when Americans know that 

their ideas will be protected, they have greater incentive to pursue advances and technologies 

that help keep us competitive, and our businesses have the confidence they need to hire more 

workers. "," The PTO further indicated that the study demostrated that "this Administration's 

efforts to protect intellectual property ... are so crucial to a 21 st century economy that is built to 

last.,,59 

In fact, the study did not in any way substantiate these claims. The study itself explicitly 

stated that it "does not contain policy recommendations and is not intended to advance particular 

of income, not a loss. Money saved on CDs or DVDs \yill be spent on other things-housing, food, other 

L:nic-rlainmcnl, do:.; --) 

<, GAO Rep0l1. at 16 

55 Jd. at 2g 

5G Tan Hargreaves, TJigl1a/Opporlllni(v ,q ReVlew (?! Jnlell(!c1Ual Properly and Clrowth (2011), at 47, (IVai/ahle at 

http://\v\V\v.ipo.gov.uklipreview-finnlreporr.pdf The UK Ci-ovemment-s Response to the H ..eview agreed that '-'-too 

many past decisions on TP have been supported by poor evidence, or indeed poorly supported by evidence. This i~ 

tnle at an intemationallevel as well [IS domestically" fhe Ci-overnment Response to the Hargreaves RevieH.! of 

Intellectual Proper~v and Growth 3 (2011), available at http://ipo.gov.uklipresponse-full.pdf 

5; See hlt p:!!w \\-'w .commcrce. gov Jblog120 12!04l11Iinlcllc(; llLal-properly -inlcnsi vc-indlLslrics-conlributc-5 -lrillion40-million-iobs-us5::; See htlp:l!www.uspto.gov/nc\vs!prI2012/12-25.jsp 

<9 Id. 

13 
91 

policy issues.""" Moreover, the study "notes the importance of achieving a balanced system of 

IP rights that protects innovators and creators from unlawful use of their work while encouraging 

innovation, competition, and the markets for technology in which IP is transacted. Importantly, 

using lP rights to support innovation and creativity means recognizing the public domain and 

limits such as fair use which balance the public's right to use content legally with IP owners' 

interests.,·61 

The study did present impressive numbers for the contribution of"IP-intensive 

industries" to the U.S. economy in terms of employment and value added. But it nowhere 

asserted a causal connection between IP and the strength of those industries, because such a 

connection cannot be shown. Moreover, the study includes "trademark-intensive industries" 

within the definition of "IP-intensive industries," which include industries such as grocery stores, 

clothing stores, sporting goods and musical instrument stores, residential building construction, 

dairy product manufacturing, beverage manufacturing, footwear manufacturing, and gambling62 

Indeed, 83 percent of all reported IP-intensive jobs come from trademark intensive industries."3 

The study itself conceded that "employment in trademark intensive industries is almost six times 

as great as employment in patent-intensive industries.,,64 

The study further conceded that "overall employment in IP-intensive industries has 

lagged behind other industries in the last two decades. While employment in non-IP-intensive 

industries was 21.7 percent higher in 2011 than in 1990, overall IP-intensive industry 

employment grew over 2.3 percent over this same period,,65 IP-intensive industries' share of 

total employment dropped from 21.7 percent in 1990 to 18.8 percent in 2010."" Employment in 

patent-intensive industries fared even worse that other IP-intensive sectors, shrinking by 30 

percent during this period67 

Thus, not only did the Department of Commerce study not show that "intellectual 

property protections have a direct and significant impact on the U.S. economy," as the 

60 .t(;onomi.;.;s and Stulisilo:.;s Administration & U S. Palenl (Jud lrmkmark Ollie!';, u.s. Dcpurlmcnt of Comlllcn.;L:, 

Tntellectual Properly and the L S Economy: Tndusiries in Pocus (2012) at \,1 

1'>1 Jd. 

"2 Td. at 3f)-3S 

(" Knowledge Ecology InternntionaL 1 he USFTODOC 's liberal and misleading dejll1ition of IF-intellsive 

industries is designed to influeflce polie,v debates, available at http://v.'w\y.keionline.org/nodeIl432 

61 1P and fhe '---/.S c'conomv, wprG nole 60. al vi 

r;~ Id. at vii 

66 Jd.. a140 

" ld. 

14 
92 

f 

Department's own blog claimed, it actually suggested that IP-intensive industries are having a 

decreasing impact on the US. economy. Furthermore, the study obscured the extent of the 

decrease by including trademark-intensive industries such as grocery stores. 

More broadly, the fact that employment in "IP-intensive industries" has lagged behind 

other industries over the past twenty years certainly undermines the narrative of ever-increasing 

IP protection as a mechanism for job creation. While IP protection is undoubtedly important, the 

available data fails to support this conclusion. 

D. An Objective Research Agenda 

It is in this context that the National Research Council's report observes that "[tJhis 

debate is poorly informed by independent empirical research." After observing the dearth of 

empirical evidence, and recognizing that "[nJot all copyright policy questions are amendable to 

economic analysis,,,68 the Report stated that "a robust research enterprise, supported by public 

and private finders and using a variety of methods - case studies, international and sectoral 

comparisons, and experiments and surveys - can inform copyright policy by addressing a range 

of questions. The research we call for is especially critical in light of digital age developments 

that may, for example, change the incenliw calculus for various actors in the copyright system, 

impact the costs ofvoluntmy copyright transactions, pose new eliforcemenl challenges, and 

change the optimal balance between copyright protection and exceptions,,69 

CCIA supports such a robust research agenda. The Report provides a roadmap for this 

agenda, which involves an increased role for government agencies in creating and aggregating 

the necessary information While CCIA has commissioned research in this area,70 peer-reviewed 

research by disinterested scholars would be invaluable to the policymaking process. Such 

research should be considered an essential first step in this process of reviewing the Copyright 

Act. 

68 Nalional RcsL'arch Council Report at 1, 2 

mId (Emphasis in Oliginal) 

-0 St"C, t",g., Iho1l1a~ Rogc:rs and Andrew SnunossLcgJ, Fair Use ;1/ the L S', c'conomy: The }.·conom;c Contribution 

o(lnduslries Re(vlI1g on Fair Use (CCIA 201l) 

15 
93 

Prepared Statement of Brad Holland and Cynthia Turner, Co-Chairs, 

American Society of Illustrators Partnership (ASIP) 
94 

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Memb<:f). ('Olnmilll:';! \)filII\'. Judiciary 

S"hct!lIImi" "" on Coun$, Intelleclual I'ropeny and 'he lnlemd 

li S Ilou~of RCpI"t'SCn.ali.·c. 

We .. ppl.ud Ihe clTOIl by lhe Judicii')' Commillec 10 1III<kn.~( • 

........ ,"" of US wpyril\hl 1110' and ' .. , .ppreciate the Commin«' S SIlled 

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,hcComml1l« QS .5I<ed 10 bar from crealon rcprdinllO)p)',;l\hfl 

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this npportuni,y 10 ptOIIide lOme .1Ll" ...... 10 Ihr. Com,nillt'll' s 

qUellions.nd 10 inlroduce (lU 10 (lUr OflIIfliurioo . 

An ",, ~ .. · fIr . A n't riru Srn::;tly fIr IIIU>lnllo,.. I'»r,n,n hil' 

Tho Amcrican Soc ~,y o(lIIu",,,,,oo Pannership (1\$11') ill 

graS!'r()(JI' coaliliOll of twelv\'. .. isual anislS OI"lI<1ni~aljon, . fo;>.lndrd ."d 

fuPd-ed en,jrdy by " .... lin!! ani.ls A51P W'$ incorllOl"lllt"d in 2007. 

alloo.."" ~ of ...... member O<g:IniUhOl1S MI'edisl;nllWshed 

II;Slo';." <bli,~ bII,k OIOI\'.wn ~ eln 

TDgC":!lter Vot mil:\'. lip I brood $PCC:1nIm of cra,h e arriSlI, r .... 8I118 

from lhe <IOlion ', cdi,ori.1 aortoooilU 10 medical iUustntort.. 

lI d!il~.nd K,aI« iUU5lnIIDrS. ... ·iatiOll ."i1U. ..... !JW1\e. booI.:. 

record, film lind advenitilli il!WI",orl Combined. We CI"'Ulo! much cK 

the ~i5UI! mllm.1 in loday', "'orld and mm"lMn ofYo;>.IrConlmillt"e 

Mve $\'.fM our wOO"k III Ih~ coun~~ publklliOll$ 1M' mak\'.up 

Am~rica's popular cul'llI"\!" 

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theS-mi,hsoni,n', I\irand Spat\!" MU5I'I'm flI1d two m~mbers of."" 

llluW"lton Jlall Offamt. 1S ", .. II IS an,'" who havc I"\'CIeivrd the lop 

awards fOl""lIChie-,'emcn, in thekrcspecti .. e r.elds We M\'. alW 

fonUIII1I1!" 10Co;>.In, the lI0n0nble On,oa A Lehman.. former AiSlitMl 

Scq~"ary of Commm:eand Commissiooer or the U 5 Office 0( 

P.al","s and Tradmlllks anI""lI 0;>.1, d"",""l ad",,," 

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w~. and most orlhe thousands or.l1;sI5 .... e ,ep'tsCnl, are fr~'Cb"ce creaton. or smull 

bu,me" owners. All of~> 1Il1L: pUr livi"!IIliccn;;in!llh~ Wpyri!jh lod wor~ Wt ",eale We 

therefore b.>',. a <XIInpclling imerest in the cOtninued eff~li~t.'Tless of COP-yrillht law in lb~ 

f,eld of visual ."- We belie,-., we hal'" unique in.ight. and unplflLlleled el<fl'.-n"""" 

"'1!uding how an 1. cre<l1ed.lken~ 31111 managtd by the people who .ctually create fl. 

\'Ju lso hal"" insights l!atdinl! where policy may have gone ull'lIy.lx)lh frO''' ~ 

tOllwlUtioo.l frondari ..... 101<1 inlemalio"al norm,.. and "",, have specif'" wggeslioos 

~rdinl! how 10 reinforce conSlUulional objecti ves 10 in .... re lha, eopyrillhl remains 

effl.'Cti,'," in Ihe 21 ~ C",,"ury 

S" llpor1 fram UI., US Sn' alJ D"sintn Ad min iu ra lion 

In!OO(j and 200~ ooT lwelve organ ... l;"". formed Ihe nucleusofan ",'cn broader infmnal 

coali,i"" of 84 organiuotion •. r"'Pfl'S"ntin!! n;~ls. phQlllglllphers, wrilelS. soogwrilers. 

indepeod~1l 1 mu~;c labels and OIhcr small busincS$ 0" 111'1'lO io Ihe 1l1Ulli-billioo doll ar craft. 

IIlftl;o!! card Ind lit~ns inl! industries 

Allh~ in.iwion oft"" omc~ ;Jf Ad.,OCIIcy ar,,,,, US SmRIl Business AdmioiJll'lllion. we 

can, e together 00 AUSU'1 8. 2008 ror a ropyrilli'l roundlBble hosted by Ihe S8,\ . Ahhouglt 

Icj!.i,lstioo then <>fe Coogn,.. re<juired us 10 addr"". thc s"""iiic oubjeCl ;Jf "orphan 

w'Ori; s.~ we ch~ to plat(' Otrr rommen1J in Ihelarg,er COOI~xt ofcapyrighl - "'(0011 * We 

believe Ihis m.~es them ",levant 10 Ihe i.sues curremly before Ihi, Commiuee. 

Tht rou dlabl ~ "'Iow WililtoeOrphM or s Ilill Ecooomically Impact Small Entitie."" 

wU lne fir'll. 8nd la OUt ~no"'ledge. ooly rOnim e\"er COIlduclcd by a uS !!O'Iem~nl 

a!!~oC)' 10 u~u Il,e i" .. pact O'f prc,-ious orphan works legisl.tion 00 Cf~alOrs and Qlhe, 

Jrnall buslnes~. Tile 167.000 Itllen OIlreffOl t. !!omeralcd In Cooycs. from aniSls .round 

the tounlry ItSlify 10 Ihe ",i,uspread concern .."OIlg Crcators that copyrighl proIectioos [\01 

be ernascul.,,:,d, II is. ooncer:n We fear loo oflttl ~ unacknowledged in Congrt5s 

hecaUS<:.5 a collal!e induS/I)', aniSls cannOT an"ord 10 competewilh Ihe ubiquilOU' kbbyi~g 

cff1)l1s <lfpublishm lrl!~ Inlemo:'llnle=1S and ",hers 

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.'lIiluble Olliine al hllp 'f\.unf'O.co",[eha onf'l "'anomri.iWls. In addition. Ihe p.!il1cli$l$ wllO 

1Il1ended the Sm.1I Bu. iotS$ Jldmini,uali "" fOUndt.;lble - ... d"CUU" ()flho,c and whO) 

could OM allcJ\d _ submilled papers 10 Ihe SSA addressing Ihe iUbjed I 

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l.>o~lU>Idi"" (71 FII. 5SSli hnr' ~,,~ Wf" 1l ... "w,'t>r!'L ... '''' ..... ''''', .. \".,-''·!),''fIIMlIo''nh ..... 

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11>= ""'Y "~Ver hn'c b"'-... " prior lime in "'5I0I)l when v;SlJal ~"was C""'led in ",(II 

abundance ordisseminaled~, widely Yet t'\Ien as popular an coouibulcs 10 Ihe ".Iion's 

weallh. lhe economicrl!'lum for anis" has declint!<!. and ilIa dimalt- ofexploil~tion and 

piracy, upponuni!;ls thrivc wh.ile a growing numb« of cre~liw_ 8r1'SiS leave Ihe field 

M"", ofl he problem~ arUS!l; face .nim will ha,clO SQI,·c. BUi froo, Ihc Slandpoinl 0( 

CQI'IVes5 we have rOOf main ,Ileas of C()Il=-rl f<'!I&fdinllropy rijVI1law' 

The elTon by some 10 ",eform" cOJIyrighl by legislating broad """" riglus for 

U~" lit ~,c ("'pense ofcrealou. 

ll\e Success of third p;1t1il'S in creal;n!! 51fCam$ ofincome forlhemsclve5 by 

Ii""noi ng our wo.h ... ;111001 compensation. 

n,e rai lu ~ oflhe US !!Ojoi" 'Much uribe fI'SI o(lh~ world in odoplinJ!" resale 

royall)' right (Of ",orb oforiginal an. 

The cr""lion of. vi. unlaru ""UO::I1"g society (Of Anlcrican aniS!. 

Atlists, !h~ smallest of small bu";nes~ are vulnerable I() e:-:ploil3lion by il'Ubti!~crs and 

JIllI1Isi!ie Oppc!f1unisu; who mlike the mOS! of!heir disparity of~ize_ The failure ofpre\iou. 

COn81fiSC$ to ensure that ;ndi'l'iduaJ Ore;l!ors ~re n W(1I r(pr~$CIl!cd .nd pro"XI~ in 

copyright law ali theso: corpoc"e ;mcn,s" h"" f~lerc..J poiicies that have dnlnmically 

.rodc'(l!he ~dusi\'c "!11m of vfj.UaJ atli51lljUa!1UIl<>ed by the ConMilUtion 

We thin~ COI'gn:M can and .hould I<:t It> rectify th;. situ. tion 

Cop)righ. " lhform M and ti,. ef~ ul. Prinripl. of Copyright Law 

"Of creators. Ihe mOSI impollnnt issue r<'garding copyright is the retention ofil$ defaull 

position, as codilied in the U!; Con.nlUtion. ,>,nide l. Section 8. Clause 8' 

,11 pmmQle the rrogres:; o'-Science and u>tful Arts, by securing foc limited Times til 

Alifflor-, " ",I}",.'mrKSm.: crc/,m , .. II'g}u It> !hd, le"""",;ve Wri.ings and 

OiSCov.rid ·' (Italks added I 

Note thai Ihe COn5lilution dOl" no! mention thc " riyns" ofuse,. , Thi ' ;$ a key ; ... ue, 

b~ausr many of the o:urrcnl JChClOC5 (O"refotm"' copyright! ... inv()/". a ... ·idespr .. d 

lobby;o!!! effon by luge lmeTllel companies (and the foondationi ~nd law profc-ssorsallied 

with lhe-m) to reverse thi5 t;mN~$Ied dt1'aull position 

Wc sa ... an c~.mple (}f,h,s in tht 2008 Book S~.n::h S<!lliemenl reached by GoogIe, the 

AUlh!ll'S Guild .nd th~ ASfOOl.lion of Amcncan rubl;.h""" In a~ment ~~ by the 

US ~pM1",enl <J{ Ju sti"" and! ultimalely rtj~l("j by lhe ~ool'l- On September 10. 2009, 

Marybclh I'tters. Ihen Regist,,,- of the US Copyright Ofl;ce, lestif,ed befOl't COI\gI"essin 

"' , '~" ''I,r~''I'''''' '' ·~'''"' ' ,,,,I ,.,1 
97 

ASiP. -_._- . ~-........ ""'" .. I ..... . ~~ • ............... 

oppositioo 10 the senlcmel1t 

!TJh~ oot-of-prim dclrault rule; [all'o!ed to by Ihe liugiuu5 pan;es I." she !.lated. 

· would allow G""I!lc to oper.!le under r~l ... r.'r /H"'I<.',ples "f~VJl)"'ld t Imt' (Italics 

IdllOO): I 

This echoed "carly e.,.clly "",condem""lioo one year ~arl;c, ofCon!!,"s'" Z008 o."ha/1 

Warl:s Ac1. 

"[The Orphan WOf~' AeI) creal .. the pI.IbHc ~ righllO uSI: pn,-ale pn'>peny I~. 

""fillill Jl(lSilioo, .vAilable 10 . "YOI\e wheoc~fIf Ihe properly oWner fails 10 make 

himself :sufficienTly all'ailahle /IS IlIg;" ,toWs<'S N'I'yril(iI, k~".·· 

Theeffor1l" re,,~ Ih: prin,iple ofcopyrigtlllaw hu become the slim reW (lr' "hiell Ihe 

c.ampaiJ!ll 10 "refOrTIl" copyrigJn nOW rc~IS 1110 objcqivt is 10 overcome the e.,clll~ive 

RighI"' !!"arnnl~!o au!l\Ofli -in the CooSliunion by crealing new ·rillh l~· · for "users," an 

ab>lrllCl cl8SS of"OOI1!ilJnl('fS" Ihal SO''''I'S ai a cal'S paw for Ihe 111\11nci~1 inlC1O'!'IS oflhlrd 

pan,.,. To urldmlnnd (his i510 go 10 Iheheart 0r,he m~tter 

The Inlemel has mad<.- il poss.ble fOf C1"'CfI,encurs, publisher! and (liners II> creale 

iinlllti.1 emJ>ires by supplying Ihe public "ilh letes. ta the intell<:ctuII propeny afcreative 

artislS Theproblcnl 1he)' W''',10 ""cn:qrn~'s how 10 legally profit fron' lice~n!llhBI 

COOlc'!\lla <:(\I1so,me'f5 "'illIool paying artists 

By promoting legisl.uol\ on LOC back ofl'O"lrnorlem rh~ries abourthe origin of <rcali"il)' 

deriving from "The CO<I1mon'I." Ihe)' Irc trying 10 creare. n~w righl~ oflbe publlclo use 

rile private properly ofcreaton wlrenever !l1e user~ delem,in'" thai !lIe propeny OWner lias 

be<ln suf!idC'lllly hard 10 find Ilul !.ince ", .. ryl>ud)· ClIft W hard fOf ."'I!I"l>u<ly lu r,nd. Ihis 

would allow countless copyri:i!/l1,manlged " 'orb In falllhrough the erath and inlO ,h~ 

public domain, 5llbj~ClIO whm!)flt copyrighl "reformer" has approvi n)!.ly called D 

pt'~tual and inevOClIble ' d,:{auh liccn.le .• • If Ihey' re sucl.l6Sful, this would . lInw thcm 

: C""go..,..i<lnol T """ ....... . ,f O<)' I>.:'~ I'<'Icn.. S<rr""'''''' I" IXN ~~...,., 0rptI ~ W,,,,,,;oIIo! 'lie r,"'I!'" IJooI. _I"",""""." III Comp<il"'1~""''!I\ .. ''Tb< III~""" I'~r of A/I"" __ u.. ... ob<r I 2OCJ9 

M'p I',,,,,,,phan"~' ~Io~""" COII'I1< "I"""'1>!1"'W''''''_''IO>J.t<''''I!\o- ... ul.-,m''''1'''!..h''''1 

, I\I,J 

't'lln....,,,,,,, Srnll"'.... .r,.....:.~" "~ ) C'1~ ''(\h' '- s. • .,ro..J L. , II.,,\.,,,~,, V,". J7 .85 t;o, ..... tr.:. 2C~).1 

Comn_ 10 C"!')'n(llll om"" ~ WnrL" S'W>' "1'l'lhO< An,de 1"'''--' '):.~"",--~ rr,_.h~ '''"L-

.I,""",W' .. """,.,!!. ,·"tum,,!:!',"' "it r,",,~ m""' .. ~r ..... 'l:jlil'"-""" .... ~ _ ~ "'" ""'..l b.l'e ", .. m""".1 

,",". Non""""I'i, ...... " <th III< ..... "', I. 1""1 1;"""',b"". "'....J.I ""I»«l w,,,,.. LO • f""r"ouJ II/IJ ,,,,,"Otabi~ 

&fo,," 10<mJ0· .. W. ,,,",'oJ,,,,,..,.", . ,'= "'" a..""" !h ... <jr"'-'HI"'~J IIW\,"~ IITd.I ..... u..I'II<I'. ,.. ...... n 

lcn,pIu>! .. o.l.k>l) H 

II •••• ' ..... 11 r~ III".~\ '" .... " ,_, , ."'/ ,. 
98 

-_._- A.s.iP. ,,_._.-.. ... 10 I,n)fi! by p"m-idfn3 lh~r CUiU)m" ... with inlc lt ti:I,,~1 pmpeny they <ould n~, CI crule 

lIlemse!.'"" noroblain from ~"Ihors withOUt paym .... ! 

This is "hy cleal.,... in sllCb numbcfs ""post<! the Orphan W""'. Acts of2006 ""d 2008 

nOl b«aU:iC-lhe bills •• .. tlI'ld h""" lllQWt<llihraries and Inuseum~ til di~lizelru ' orph.!1<'d 

worts - in tl. we pt{l~ ~mcndon~nl s thai WIlUld have limittd lilt-scope oflhe 

legislatioo 10 thaI funcl;oo _ but because the legislali"" wu d!1lf!ed.'ill broodl)' ;' "" .. Id 

have ~rmitt<:d the widespread commerci al infringem~nl of millions of OJp),righHlrot«tcd 

" 'orb ()11 Ih~ cha~e lhal .>(>III .• /rI1j:/II M OI'phans 

We readily acknowledge IMlllle InlemC1 hnlransfllfmeti both the mcaM ofpmducin!j.and 

disuiburin!,; creative <ooten!. A.nd we understand that ~nylimesuch a !'lIdical new 

technol<lllY is introduced, Cfel,t"", wOO ",i.h rosurvi~e mus, ad",,1 new bu,;n"",, model •. 

UU1Il>l»c "'hn pO""y ll1;m 1$ Luddil~S resiSl3nll o ellan!;" lIC fCsor1ins to maw 

~!¥UnI.ms 

A.'I ~rtislS, we .... or~ in ~~ mArk~placc. 11 i. In QI.lr ~ lnl~rt'S\$ III ,ckMwl~g. cllanije. 

~ptfi",enl wilh new WIIys of doinll business alld adapl, y~ if$ nonnallhal ~\e.., should 

be a lag rim. between lh. ;nlroduClion of"'y new tedmol<JI!Y and the widespread 

impicmenlalion of successful new bu!oin.s. models. An;S!s everywhere .,e Ire.ld ~ If)'ing 

OUI new ways to marl"~llheir .... '011; BUI it ta~es lime to inoovale, and We ufl!.e COI1!(reSS 001 

to be ""rsuaded by fal.., "'lI\lm..,r~ Ihal th ..... e i','IOme """ of' cri.i. in Ille disrribll1ior, of 

vlwal an 1II11 r('quires I drnSlict'>lj)/losiM 'eTl ' righ~ " Therc is nOi 

A. for Ih •• h ... rnali,'C. hiOlOr)' na. shown th.1 il woold lit: foll y 1(1 allow lobbyisu. civil 

scrvants and legal scholars 10 design, legislale and im!lOSC' new .... ays of doing business: In 

WIllIMreial mar\.:etplaees Inc:>' ~oow OO1h "~ aboul Bu;:i!l<!SS models should be designed 

by peorle \\"0 know lIIr:il own husi""",, and ha"e a "k~ in Il,. sue<:enor failure ofwhal 

Ihey creal", The mOSI dlicienllaboollorirt 10. chanije ar~ in Ihe free market This too, is 

part oflhe j.ctnti, ecodi fi~ in Article " Secl;()O S, Clau~ 8 of the C~S1i1U1i~ 

l'ht Rt progTRJ1hif Roy.ll y !Right 

RCJ!fO!!rllphic rt»I hi~s are p.id when prinu,d malerial is phQlOCQjliN or digltllJly 

r<'f'\lbli.hN It has already hI>.., more Ihan" d"""de5in~ Ih~ coons '''''''IInized thedanlage 

10 a"lhorial ~eeoodlll)' rights RCPT081aphie roy ll~ income has. in flct. been 105110 'isual 

authlA for more rhan]O years 1'<'1, " I ,,' lI ~(,<YHkloryrtJ."Jlly.sIn'(JtIJ ,1"" ('fml'''Hr,' 10 

"l'wNi!ll Io<JIII "'/11" CliNi lna,",,~I ""'IF~ • 

• N.,,,,.,t ... 15. 2\.111 , 1".",.,., ~\J'~ l' ''''.r\\~hl CI __ C<I'''''' .....,.., R<~ (;""'"~ t· ........ "'" c"" ... [)"",i1Il< .. M"", fb.m SI1llM,llitM • • >\!'I!h<"""""""" ~'1'11 \!~ ... ~ SI J llon.~, II,... r"" 1'eM> 

\lI.!{I lI'n .. "'!Ilna)!t """"_"" .... ,Ver\llo.," ,"/tlI'''''\ ... '''-..... >I1,~.~d .. ,,~..l .. IIIroo-

.. ~~II· ,· !JI"nI 

," ,,".111, ,. ,"'" ,,,, ... ,, ._,~"~."'I ,.,1-
99 

A5.iP. 

---- (-.... ~ ........... ... ~Icnca" iltustralOfS have su:lTcred fro." ln~ lack or, roUea;,'c righls .dm'o;slI1l1ioo 

Millions !If doilafS ofroyallics !\<11Craled by the r~ptlblical;on ofour "'\1rt. •. both in ,he-US 

and abroad, have been aVer1ed from rightsholders Thi, ha.s cOIlltibuted to uubSlantial 

economic I"". to Am~'fican r""" aniSl', iliu,{nllo"" ph"IOgrapherJ and .... riu:.-.. The 

tOlltinllO'(i di .... l'Tlly has prC\.."u«l ptlblilhw ~isull .niSl' from Ihc full C1ljO)'menl and 

~~reiM' of theircopyrighlS. and is fully incons.i~lem w'lh Ihe j"lem of authorial o,bl! 

gr;Ini"d by US copyrightllw 

nrc increasing coolU,Htlic hard$hip 00 t.,mTCI'l poI"ary crcalors i. not a neW devdopmcnl. The 

Ion of the revenue .hare clmoo by vi.uol anist! be~n wiLh the uncompenS81ed 

r:lploillUioo of out s~oodary ri!!hIS 1hrou!!" publishCf~ ' rt'P~p!lic licensing Revenue 

from pholOcopy lkens.mg thll! begin wilh the enactment of the 1976 Copyright Act - and 

WM rollow~d by mUs digitiZ:lcion of pri"l arc~i, es ha. been "itloheld fro", independent 

~Ylbors whos~ contribullons a~ con tain .. <d hi toll~i~e "Dlks. 

This ;mpas..~ ,em""" un, .. ohed. in p"n because ofl"'bl;sh~rs· imnlllsigrncc 10 

.ckn(Jwled!!e Ihe cilPyrishu c.find""P""dent authl)rl; in th'" roIlrctive wOlk~. in pan 

b=\lscofthe i"abililY of;nd""P""denl CI'CAlors 10 bargain e<jually. and in part bt:e.u,,", of 

the m,ic rise of· a.dvoc"cy~ .ssocialions thai hale willinwy and a!!!!,cssivdy inlercepled 

" orphaned" copyri!!ht I'O)'lIIly streams belonging to e,eaton j (l'lea~e 1ft Appendi., I ) 

Publishen hegon mas. d;!jib •. ingand liccnsin!! the prinled woob ofaulhon nearly 20 yutS 

"gil The onl!OinllkC1)ndary re-Muc derived f,om the licensing ofindj,·idull ankle!; 

Indll)fim~ frum published colit:elive works can exceed rhe re~enuc elmed IlmlO.lgh fim 

publicalion II is old I,ews Ihal publish",. ""'"" raced m digili"" Ihei, prinl ",chi .. ~ to lIke 

advantllSC'- oflhis new Sttondll)' righl. sU"CIlnt S<.'f">ed by Iht Copy right Cltaf';lnte elmte'. 

l.e:'<is-l<eJlis. Pro-Quesl.llBSCO Ind OIh~"fS . 

Fonner RCglste,ofCopyri!!hts Mary Beth Pelers, in her COmmenlllryon Nr "lfm,'.< , .. 

/imm . n(lled Ih~ i~su e in 1!mm wu "whcth .... authors Ifll ~nritlrd 10 compensalion for 

dOl'o·n'l(t3m u~t< of their WOf"ks •. She !lb$<f\ rd Ihal .hhoogh 'he 1976 At! 

·'focuJred more on.saf •• gu!lJ"diJlg Ihe ri!lhl~ ofluth~, rr .~ u I Ulh on r 

".\ I",mnnd . igllifiu nl ,""o num;. ["" •• illn ;Ui ~"3 m~nl T"is;~ due nl~ only 10 

their unequal bargaini,,!! pOI'o"tr, but 11S1'1111 the digi!aI revolu!ion !hl! has !!Iv .... 

publi~h'~ opp<l!1.uniti., to uploi! auth=' worl<s in ways barely f~ in 1976 -

(F.n'pha5i~ added J' 

' nTVf'l>h1 I"".; lI . I ... ,. & "'11/(>11 ... 01 " /II C...,fIOO<o, No , 11W14Wl1lo Itl. N,·" Vi"<\. S,. .. Supron< 

0_ 

M .... H<IIII'< ..... ~"BI>, ... ' .. C"l .n~ ' u.s l lbn" "fC<>nI!"""', I.&<r u,C"" 1II J_I' 

MoO<n '"'" "'~ ... I~ r; .. ", '·P. ". r "'''''. C<lnt<"';.""'11I.<wnl.. t·<I>ru<ln' . ! OQ I." f"' ~ 1!IM2·1 

" .. ,...... • .... I~ 
100 

A.SiP. 

---- f_ .... · .......... 

In /'n.,.",I, Supreme ClllIn JUSlice Rlnh U~de.-G;nr.t",rgd' rni.Sotd RS unavailin!! the 

pul>lish~' waming Ihal I rul.ing 4dv«$oe" 1(> them w\!\Jld h3,'e ~dCv.O;!.lingH tonseqL>ffi<Ceo; 

for tile historical record" 

The p.ni~ may C01lNinlO an ~sr..,m<:1\1 a!iowinSC(lI1l1nued elCC1ronk 

",p!"(ldut1ion tlflhe AlIIJIl.r{ wl;)li(s. thoy. a nd ir "«"'IMf), I ht (ourU mild 

C""Il. n., may dr. ,,' nil "umtr .. ". mfHl.b fllr dis'rihulil1S copyrigl" . d work! 

u ti r. ",uneraling 1.011'11" for lI .. ir diuriblllion. ",ph~is ad~ )"' 

She funh~'f Slil..d thal,h..-e ",os "no b.,i~ for Ih is Coon ro shrink authorial riglus creaiCd 

by CClQyess ~ 

Th""e have t>ern hercic ~fforts 00 Ihe pan of authors to eoforet: oor copyrights Bnd to be 

paid our Ijccn~ins~"':nueeaJ"ncd Ihmu!jh d1l!i1a1 OIlline dalabl S<'s I nd clearance C('I1IC'S ' 

Some of these cases I,,, Slill in acti"" litillliioo ,n.r 17 y""rs I. IlIdeed.'" 'UI 

""f"""-""J,.·W .. 'll .fJflrI "''''I'''> ""''''''S ;".1t·1~· otI."lI "",!>or.v. iliustnm)fs n.-e Ofganized 

themM:I~~ ~1 01 rights SOCklY •• 

Near!y twodecadcs into this !;eism;c technological.hiff towa.d K new .... ""ondafY licen.ing 

marl;~. a markel bom from p:holocopying and now mnturil13 inlo rapidly and everehanging digital plalfOfms [hill ,.,IV. u5C15 .... itb dazzling . n.d granular specificily, the 

Cop)'n~h. CIHflInceC. mor {Ceq btm's of dislribut1"gSI billion doll".tonghtshold .. s 

in lhepa~t 9Cven )ears'; Yet none of thaI mooey ii paid to tho US (J< foreign visual.rtislJ 

whose work "PP<'U' In the publiCitions fot Which eec iosucslicenses eee is unlvmlUy 

feC"II"lzl..! as thelu$"SI "'pn;!!;",,,hie roIlecting sociI!!)' in th~ wood 

f or years we h."e l weal..:! tl) cee to "mer imo ICJ!II agltemenlS with vi!>Ul.i artists to set: 

thaI th051:! ""0 ere". th~ WOI1< are CQf11Jl'l!nsated for ilS use Bul for a d«ade w. have 

me,.,ly bCoeT1 sl<>new,lted and i8Jlored; and deSjlile rut best efforts, inciudinll a 

reatTmMalion of Ihe rc;m.IgrD.phie roylllly right in Ihe Sup ... ,me Coun. ,',rual Ilrtists Jff>I~jn 

m'COOlpetlSllled 

• RUlllllllJ ... G~ .,',," 1_7, .. " l'~ , r~,!OIl~I!J_ltlIlU) u s .~ JI2W 1:~ ~ JJ lbl llT"",..t 

1'1> 1'102 1. b"r ,"',.." I. " ", .. ...u ~~(J(l-~II.t-'~""1 

"So< \1T~. r"",,,.II ... , •• t .. ai, en: 

" 1 r" r"" .. "'...un ........ II,...! 1'.1 ...... ", 11",,/0,,1.'1, 1 .... til."", 11'0<'1.0 ,. 8<C1, I11~ VH.w.." 

f'uJ""ill.I.<III;'''_ 

,, "'""-"""'" ,;,,,,,,,)' ot lll",,,,,,,,,,"' 1' .... ~lIIrII\SIl' ) lUll'·""'''' ",~~..,.,.".(, 

" 10110 II,,," ~ ",,"1'111 J"'"lI]'n.., .• """'."", .......... .J,,:!2< '1 11(""1" '\l!Il,.c .. ..,., ..... ·t."lo.. ['lr 

"" '~"'''I\,"'"''''\'''~'''-' ' ."'/ 
101 

A5iP. 

,'-..~ ----............ , •• n, . _ • ...,...,.... 

l'h. Krulr RoyJ hy Righi 

The l<,,!!i~I'ljve implemcm,niQ<l ofll •• f~dcral resale royalty ha.; b.~n in abeyancr since 

198] when the US joined (he Berne COl\"~lioo on the f'n>1eclioo of l.ileRl)' a>ld Anisl;c 

Works B.".,e calls rOf Ihe re<:iprocal implemenl'lion oflhe resale III)'oity right by naliooM 

1~l!isl""OO The New York . n marker ranb runoll8 lh~ highest in Ihe world .nd Ihe lac~ of 

Ihe resal e royalty rig/ll /1m ",.,,,I'lU ill (I J«·'II!r(JI""'IJ/"' <J;Ii~ I'U)~' I",'$ IU\I 10 ItrliSI,'-III/i1 

1/",,, J~>I,., in (he US and .round the world 

'n 2001. the author andjoomalist Tom WoIfe.!!"ve an in,...".jew II) the IIluSlTa IIJfS' 

1'IH1nCfllhip in "hien he ren,.rked 

I feel "e1)' comfOlll<ble predicting Ihal an historians 5(1 years from now. 

assuming .. 'c',e in a "'Ofld kind enooHh 10 indulge sn hiSlOrians, will 

look back upon iIIusualor> IS Iheg''''', American arti~s ofthe.eoond 

hal r of Ihe 10th <enll'ry ~ 

Th~ ~im~ is righl forl~e Un,rc:d SIBIl'S to implen",n, \he .=Ie '0)'111), right fori!~ an'SIS 

T"~ sale of American 'lIustnl1io~ . pai~"ng5 IIlId dra ..... 'ngs is an emerg;nll marl<l1 auraCl'"1I 

sophisticated collecton ....... Id ..... i!k American illu>lralion" evocative of. unique Iyp'" of 

Amencan an,§try II is also a dass oflreasurro Americana 

(me "ueti"" koose alooe kn repon~-d more than 5.1() Million in wn of American 

illuSlnllion in Ihe la~1 tivt)elrs II AllClioo pricCJ are 00 an up ..... 1I!'d trend allhis u~ct 

eo;pand~ . Bringin!! Ihe US inlt) COtuplilntc "itk Anicle 141cr of the BemcCOIIveruion \\ill 

(,nally brin!'.e<juity to \J, • .., arti.tsji ... I/,,· m/"~ Ih .. ,r k,te"" ' /""" MIIW'" 10 the W; uri 

"""./t.., 1"/Juhr,,,J. Article I'lter reciprocity ..... oold allow American iIlust"'1ln 10 bcm'fit 

from the m..,-k<'l for American l(I in lillY mIke 46 countries Ihat ~"e iooplemcmlld the 

resale royally. including the "'Ij .... an martelS ofille Ur.: and iJle EU1'O\>ean Unioo, 

Likewise, oVc:rs<=as aniSls wOuld fil\llily begin 10 receive tnIIlc to}'llIie3 ... 'htn ,heir work, 

are resold in Ihe US 

IlIw;lnuofS uc at ...... ell·known di!'advantage'n Ini,ial Icvcrage for thecommiss1on or 

illustration treated for publicll1ion. and thl:)' are.t a distinct di$ld..antll$e for pricing the 

.... I~ orlh~ir originals III ,,'om,· .'u·.·.,. II"sIS lI<'a",,,,, 1M ol'IXil"""'1 WU'-'I<!'''' ,WJJd, 1,,,, ""'I"Y '~/""I<''' by l'"b# .• 'II<"$, '",,",(,IM,'rs ,11'" prilll/lig il<m.<u. " 

·' II",,"lI" ....... ""' o.,"""" r_ ".-.l<'11-lIlI1. 

1""1' II"",,,,,,, h. """""""' ... """"',"' .... r<lI ~r· t'H'l:'''' oI '''~ .. '''''N-''I' • ...u.lJl' ,..,.A~ l&"_'"T''''.­

a .... "' .. 

"A t '"-""""""'w 01100,", 'lLlr on;! 1''''.Ij .... r ho No,,, 1'00\ 'n""", M .. I~ 20!)9. 

,..,~ I"" ,," 11.':'''''''' ",outI."~'I*1 """~·.k"III"1 s..u h,,,,' 

"' , ,\"."'\r~"I""\" ""',_" .",/ 
102 

ASiP. 

'r_ ---- ....... · .......... ~, 

The r~sale royall)' riglll reilor~'$ . mea.me of ':(julU' by a1\n",;n!! Ihe anisllo shrue In the 

inc""ased val ue of his or h..- works. II also rec.lgnizes til.! ong<JIng IIde .... anisL h .. in the 

OCot'OIl';cvalue oflhe work Royalues recei"ed .... ithin an an,s,'. )ifot;n,. hdp s.u.~llIin I 

career l od Illows .he .niOllo corninue crearing new works. 

A Helim. sprot crealing" body or~ also m«nj the burd<."11 ofcrearinlllWd maintl ininJ!. 

an .rchi,'~ . This burden is ine"irably passed 00 to Ike anisl'. eslare. A n."Sal e royalty strc8m 

can help wppollihe COf\~id<'f1.bl .... "..10: Ihal hci •• contribute 10 Ihe crcalioo and 

mainlen.'\~. of an arI man.ct, induding preservation ~nd Clual<.l1luing. prumvtion .• "d 

I:S1Ablilhing pmvcnarn:e and ",u(hernial), 

finally. but nOl leasr o(all. a r<'5lll. royalty income produced by the ongoing and increasiJlg 

,..Jue ofdesirtd works i. , h. ~r jot . rightful K,>nomic I"",.,.. In hi $ anide, A HJ¥hl 

rkforr.'d: /1.",,,,1., R<1.I'd/IIt ... /"r 1';Jl<f!/ Af/I>I,~_ Charles Chen "rilcs [Tlhe r=le loyally is 

consiStenl with A.merican 1~lIltJ tmdiliOl\s bec.lu~e h also focuses 01, prolliOlinll trealj~ity · 

'the prtlgl"". ofSciellCe and the useful An.' .'i<-... US_ CONST m I §S, d S" \) Sh"3 

PMlmuttcr nOlI'(! in H,·~!I., R<,~I ''ItI~''for ArllJ'~" All AI~rl)'SI>' q/ liN' 1I'·KI.>I~r ufnip) n~ht ',< 

/l.ep')!'" 

~Copy rightlaw i. and folways hIlS been considerably more disad,'anlaIlNUs 10 visual 

ani5ls, Ani'ls Iheref."... havea good claim tQSQme form (lfremedy artists reel 

IIial even small.moun!!, paid ocCll'li()llaily life worthwhile OOIh p.ych(~"I!i,,"lIy .lId 

fm,melally,-' '. 

lienry T Hopkin., distinllui.hed nlU5<:um dir«lor and educalorwho played I le.dinll role 

in establishing Los Anselcs' un !!Celli:, was men direct "'hen he ICSlifred bi:f!':l«! ,lie Senale 

Subcommilt~ on Palents. Copyrighu andTrlIdemalh in o.:ccmber 1987 

"In>'cston ~oorinue \0 pnJfil dirr<:li y from the crealion oflhelm51 II i. unfair Iha' 

theanist be limited 10 proo::eed~ from Ihe oril!inallran~ction while <;OmcQnC eI~ 

rea~ r,n,,"cial ,ewllfds ('()01 the rrOOuct of an an;SI-! hand 01' in,o infj"iIY "" 

I" 201 I. attorney 8ruc:e Leh,nan d ... flcd l'e5ale royally legj.lalion knc"", as the /cqllilyj"" 

17""" ArI;,uA"I. It "'BlI C(}-sponwred by Congressman Jen1lId Nadl ... ""d s,..,'",01 Il ~rb 

"Cbon. CIIIorIoo, A RIp" I):, .. "" RO$Il~ ~~.\(""'h Vi .... ll\ru_ An_ 1"'/\<'001"""'01 

bu""",,,,,,,,,1 L.~ , Sun,,,, .. 2012, ,,<>I IV. I ...... "'" 1 

.. 1'<rI/!,,""", SIt.'. W ...... M", oJ"'''' 100- Ani~' lin ~,.., '" , .... MO(U ,~ ""C"I!' n ....... 11"1'1 .... C(lIII",I". · V1_II.t.IurfttJ .... 1 .. " 4 't"" M. Vol (>,>~S. 1\lV 1_19Q2 

"U I"Ill r,..;.,m.~olt:",,),,)!IoIJ ruNIIIN<o 115~ "IIS,O<» 10, l'lItlltllo:nnT 1"""" "" orL", 

..."",,1 .. , 1"1",,, the.,."..,., s..r.:.""'nln''' .... 1'''''''', C''i'l nt!bt>...J r ",l<ruorl., ,,, J.lr<>,1 ....... I ~71 

IU, ,~ ... nl\r~"I'" ""~"._" .n,1 '- ",., .. ""-,, •• , I~ 
103 

-_._- A.s.iP. 

.r-..~· ........... 

Kohl II" ill he re-inlrodun-d ;~ the Ill'" COI'Iife51 Our 00II1'1'00 of viSl,.1 ans 

lIrKani .... riOll$ $Uppon,,;1 

The Equity for Visual Artim Act indude. 8 prov; ion for-qualifying B vi",.' RIlScoilecring 

SQ<'<1y. The Act ~OIl(.in~. legllila,ive dlreC1iv~!O tilt RegJst""llfCQPyril!htsll eJop 

qualifying crireri~ and issue n~!lUlal;OOlS governing Ihed6lgnalion and \w"..lIight l;)/",·isual 

""ists roIledi"!! soc:ieli •• Thi. would .Iso be" fi<S1'I~p in resolving the curren! injuMi"" 

in Lhe field ofreprogr.phic royal!ies, We SI.lPIIOM thi. process. and urge thal;1 pl'lX«<l with 

the fuJi ,nl'lll ()friiPll5hold<'fS. An explanlli"" ofho,," a cllliecling society ww ld allow 

Inists 10' 01,,",-01 with the Copyright Clcsr1ulCe Center in 1iC<:ns.ing "n iS1S' ooIlcc i~c f"", 

was e><plalncd by O!!e ..,fthe P'loes<'nl authors (and Illustrated 'ia now ch.,,) in Iht2006 

An;t!e "First Th,ngs About Secondary Rights:' published in the Cof,,,,,b;,,J,,,,n,ui uj {.m.' 

,(! ,IIe Arl., " (Thc now chari i. al!lO allaci,ed to this ","per as Appendi ~ 2 I 

WccOilCUr wilh Ihe- opinion ofeh.rlcs Chen Ihal "The United Stales has J1'IlI off 

Implememing a .... ale ruyahy for years, _nd fedemlizing Ihe fCSaI~ royally woold help Ihe 

United Sl8I1"S tom ply w[lh Ih., Intcmallooalllo:<neConveniloo and conllnue dominaling Ihe 

inttma';onal art malk~ ~ Alltl we concur wilh Bn.ee l.ehman ,hal " In o!herc.ues Congress 

has aCled 10 "'$Urc Ihat Amel1:can erealon; woold be able 10 be",,/il from n,cipmcity wilh 

F.uropoean nalion~ when new t~nelilS were IPllnled by Ihe F.U 10 iu Own riShlS holden , 

fil] is now ume fonheCoogres.s to r«OI1sider Ihe Ullflni.tled bU$ine5.11 oflhe ViSUIIJ AnistS 

Righ,. ACI of 1990 ~,~ 

Wt ,,~" /1..: (.~JJnml/lr~ 111$111'11'''' ,It., .'.ffi>rIJ by I/rH<'f l .e/1lRU1I '" {KI'" III,s "'J;'~I"'iml IH, 

""'~'lr ·,s,,,,llJrl"'I!i. 

Pl ease also see oorCommcni tiled in response 10 til e ~Olice oflnquiry-, CopyrigJll Office. 

Ubrary ufCon!)l"ess. Rwde Ruyally Righi (77 FR 58(75) 

hUI1"wW¥> copyriiW ..govl dOo :sl n."Sa eroya lYlc() mnlt"n "'77 rr S8 7~IA SH· _ ~"$I r pdf 

ConduSIon 

Robml pro!cclino forlherillhls of the c,eal()f ,,;11 incenl;vize parties 10 negOfialc-in good 

fsilh. ~mninlO con'pen5lIlion a!)l"eemenls dorncslically and heighten Ih~ public's att~· .. ,O 

""juymenl .nd enrichm .. ", rlOrn creativ~ "'orb Paying for Ihe useof crealive won:s dOtS 

nOl halt innovation On Ihe ccmrary, it enSlort5 that I con!!nuing stream of fresh. original 

wori<s "ill be .voilable for di:llributioo in !hernany '"nov'l!i\'~ ~~atn. te<:hnolugy is 

" Ii .... H ,IIODJ .,'" lb,"9 Mua S-.....,.,·IIJWt,.; b<,{·.H~..,..,..~ ... "", '," "",~,"II~,t". 

bllr '1N1 ...... !I:!m ".!" .. ~11>l!!'PY' 1Io'!II>O""" ""I'fI\'U" I'M fI'''' ,hun" ,,.. '"'~. j] . 

" I"""" l-du ..... r""l. """''' q~ ,," ' .• ~'''''' U,'''l>od", t:'l.Hn' n. '1, ... 01 '"111''' Aot ,,(2011 ("VAAl S.lQl.\ ond I LR :IAA ~ !>..:em!",. ;1111 

"" ,\ ", ,,,,,~,.,.,,.,,,, ','._" ,1111 ... ". , .... !<~ ... 
104 

-_._- A5.iP. 

H ___ • ........... ~, 

clcating. It il. RfJerall, Iht lrkU!llh~ illdt lId t.!!!.. .!hor' thai are at the very mol of 

the nlllion'$ eopy,;!lht wealth 

We welcome tne opponunily 10"'''''11'" thesem.nen funher "jill tk C"",min ... , nd "e 

invite IheCommiucc In call uPQO u~ if We can ""pand an QIlI commrfltS Ofans" .... 

questions 

AA.rw rd, Thougbl)·l>n Or ph." Work, "d M~ .. I)igilil aliOll I...'gisl_"o" 

On OctOOcl2l. 2012. Ihc C0t'yritlht Olfoce pubJishro a ~OIite uf lJ\\luiry f\'tIu~i/lg 

.:o","",m. from imerested panie. n:garding "hat has ch.n~cd in the legal and btl.ines>! 

I:I'WironnlWlS during Ihc past fOOl 'yeo'S l'at might he teIL"'...,IIO a <MUlion oflhe 

[orphan ","Un;sl proolem and what additianallf!;islslive. regulatOfy, Of voh'"tary 501ulion~ 

desnvc delibeflnion 8' thistirn •. -

As ,,-e" "Il already noted. in the pas~ we opposed orpbln ",orb lel!islalion as drafted, 

beau", i, ",ould h.~e impos<:d I ntdiClllly new hu.ino:ss model on the licellsinil ofoo, 

eopyriS)ll~ WQrl;, II "'<)Illd h"~e f"","<i us ~ithcr 10 disitile 00' ~llIirelif~ s wwk at s"'al 

""'pense and entrusl il 10 pOW,lel)- owned commercial dalabases or see il e;posed 10 

wid""Prcad intnn!!"",,,"!. 

Thi' wlS a ooson·~ Chooice I.hal would ha,-", hanned 3rlisiS and CQllaltraJ 5mall 

bu<in~5eS II would h"oe 101 ~~ia,,' 1m"l!" bal\k~ ACcesS ourcommCld.1 inv"nlory and 

rnt1ild~I ' and l'111er 00' ccmmerti.1 markelS 11.'1 clcarinll hoost> to COmj)Cle with uS fo)four 

owndients, 

Database,; doo·t trealc an lodiliiduals cia, Yet whalever the 'ntcntloos oflhe bill', aulhon:, 

its pl'l)visioos had ~ draflod so broadly;1 woold hav~ orphaned lhe wOO< ofwooitinll 

anis~_ lIS consequences would have Men fat.'eIl<'hinll, lony lasting. pc'hap~ i",,"mible 

lind ",{O"ld h.,'., struck allhe hearl of." itself 

In 2008, we "''' ... joinl'(i by $4 other ""atOl'S· organi;(lliiooli in OVposiolllhal 1"l!'sl3liu". 

167.000 lell~rs were senllo members ofCoolifes~ from our Websil~ The ol1;slsbehind 

Ibme letters eam their livinll by licensin!! the w(lfk they u~ale. Therefore. '''i!atding the 

COIl)'ril!Jtt om",,'! question !how have Ihi"S' chansed that would .ITI'CI orphan Wt)l'~ 

legi,llIIion, we Ihink it's imvcoant 10 e;Ami ne whftt lhi~gs hlive lKiI ch""K,'d 

I. Thr lIigh Cost of CO lllllli.,.ce 

The greal e,'pen$'! lin both I;n,e and muney) of digitillng and C4111Q1!ing "'n. of 

thousandl of cQPyrig/1 tro work, in ortIrr \0 'egiWcr Ihent wilh c<:mrnf1'~ial "'l!iSlries 

would m~k~ ~plian~~ in'pu5$i~(e forall but the richest artiStS and ",wid 

Iherefore make their Kbility II> prolect Iheir rig/1IJ H funcI;oo of their ability 10 pay. 

"', ,~ ... "r\r~"I""'''·~''._', ."'/ " ,. 1\,,, ... ,,,,, ,"' .. !O~ ... 
105 

-_._- As.iP. 

" , ...... ........... . While (he e;aCI figurn IHlIlld "ory accQlding (0 an anis( ~ aile. product;"i!), Ind Ihe 

lIenre in whicll he or i hc WQfks - the preci".. figure$ ~uppli <'d by While 1I0u'l' 

pltuWlVapher Jolm Ha rringmn at the 2I.lOi Small Business A.dminislI'alion 

"",ndurol •• hoold sun'ict (0 m3ke Ihe poim 

"(l] n 2006. I r.:giswed 58.731 imaS"" {with (he C'opyriw.1 Office) . 

• nd in 2007. 7 1,9 111 image. If K [for'l"llfuj regisn)' charlie<! SO.SO 

Il<f Imllgt 10 ,,"bm" and process, I \liould have 10 y S29,J.6S.SO 10 

prole<.1 my 211(16 imaSH. and S3S,9~9.~ll lo tmJI~'(.i Il'Y 2007 images. 

for j ll" I hose y ........ H ,. 

FOf visual anisls. such high ~Jlralion OOSIS would simply be a flmctlon oflhe 

volume ofwork "isuan ani .... <reale, it is a $impl., maUer of math These ~ hB'''' 

OOIgooedllwn in Ille lasl roo, years. nor wiLilhey in the foreseeable fillure W~ 

,lrlllk"" Iml~"i,h1~ I., l>"aMrc$.\' ~ ""I~"'II/"-'~ '1,/ris/t",,,,,,, fJ.1Ik'SJi,. .. '!!.!~wJJ 

/Jw ylHIII,:ml "~lb"ilJ' !!I"'"'''' /" 'YH1lply M'ilh I"' .• *,,'" "J I,'gl,""""" ",lIM'rlg!",' 

~.l" '~'1y "ill'I!!.'~'lhf' l '1U~"""III~.fi.Jr iI>' @'i<I~ 

0.. this poinl Ih...-e is (",,,,,,helming agreement among creaUlfS and tho,econcerned 

abolll crealors' righls, Consider Ihe r~~nt COO1m~nlS WbOliucd b~ llruce Lehman, 

former ('ornmissiooer oflh" US Otlke Q/' Pat.nls . JId TllIdemarkl. 1111 inleJlectUiI 

pruperl)' ""I"'n wh".. role in cmf1ing .. ,d pusi"$ past US ""f')'''sht law is ",,,II 

known 

"To my knowledge this i. the Ii"'t lim" i" Americ"" hiSlory tha1lt.e 

abili1) 10 prilleCl ooe 's property righls has been subj«1 to Ihe 

IomitaLi"" Lhat only Ihe rich have riglns Lei legal redress" il is hard Lo 

undersUUld 1i>e UI'~<:y wilh which d'e Copyrighl Oftice apprQaeho:<! 

Ihis mauer in ,:008 "hen lhere wa~ no eYidencewhaleverlhat !h" 

fed~rli counJ had ~n fl<)()ded wi1/, infring<Tnemlawsui!s brought 

by I""I! lost authors or works "hOSl' provenanoe wai OOSCllTl' I 

S/mnWy uIge Ihe Copyril!hl Office 10 recomuu!fId thai Ihere is no 

ne.:d f(ll' It;psl,,li''e imervnnion on tile i!<5l1eofOrphan \V o,b " " 

~ ">lin Il.mrop"", "T""' ....... Cu,,,,,,,,, ... I,,,,, lhe ~ '>rrttn lI.'on. tlill ll ~:""'''''' '''''IlJ tmr«' 

f'I>.>I<'l!I'.I""'."'- IIS""pollll .......... /W'p"n_ .. I<O<IlIIlIoI;>k. ... "_ K.:MII! "'!~' !'on ;l, 

0..._ JIi M>OJ1' .... "" """",rI<,'''' o.~k<lo>l 'n .1\< ... ... """" ,>/'c .. _ ... E'· ..... N"~ .. 01 !'~""""w 

1"""" ....... ~"<>1 ... mp 1'Io..~>h<r-.1>f "m<n<a Silt. R'..,..r' ....... "_g"'" ~ ::WI< 1uI..u:n.IoI!I .""1,,,,,,,, .. ~..,.,. (h"" ~"r\;"p pIo....,..,.p..,...- "lifV'UIIJr 1.111', trTOf' TIIF.ORPIIA,v tfORI;~ IiILl O.\ 

rllmr)QUI'lIfll." ; l11E co:., 01' C!IMI'LIIINCI{" c."."""""n(.1>c III",""""", 1' .... ,"""'"~1>f "mmo. 

F..,J 1013 "~"""I"A p .. J,n, .... """",.14 

"'q' l{'<o. ," "'!I\'''i!!' '~:o"mrn'''''''UtlJ~~oj2ltlt'' .,..,...I'.,n ''''''''''' lImm''" ~If 

~ c, ... ,.,..,.,. "nln>re II l.il'In>O<l F"""", II .... "'" Socn.iM) of Com......., onol C""'ln''''''''''' ,,11_ k. 

"' , '~"."'\ '~ '!I.'n\ ',, ~"'_" ."'/ '_'11\, ,, .......... I< ... 
106 

-_._- As.iP. 

.. _."""' ............ , .... ,. -. ""!"'.,.., .... 

2. No Crt dibl. r .,id. "u () ~la rk ( f Ailu re" 

In ;1$20(15 ()rph<m W'''''''J S",,9'. dIe COpyright Offiu tailed for COmm.,.,\S "" U,f 

~peci ficsllbie<:1 of orphaned wOlt ."d =ejvcd 00 ~ than Zl~ ,,,Ievam 1~lers 

ThO)' did nO! inquire '''\0 Ihe ",,",iIlK" of commercial man.els and there i. no 

~mliblec"j<knce ofa markcl failurelojuSlify the e:<pan~vesc<lP" of o'nm~ial 

jn rinll~mcnllhal wwld have ~.." pe<mill(d by le!!j~aljoo drafted by the 1000h and 

Il<lI h Conwesses 

j . Ar.id e l ofth r IIr rnr Conw nlioOl for tht Peoterlioll of Liler.ry and j\rlislk 

Wor k im"""", specifIc con.traints "" Ih~ JIO!Oible limitations and exceptions. 

Membcr CO\Inuy rn lY ma~c In l>1 author's ~clusi"e(igJl1 of copyright 

Mt'",ber [countries) shall conf,ne limitation. and ~.ceptiOllli In exdu,;ve 

righu \0 . • ,J «(:<tai" special caseS: b) pro~ided Ilia! such fcp«)<JUI'tioo doc. 

001 coofliC1 wi Ih a nonnal espioitatiOl1 of (he ",or\(, and c,) does 11\11 

unrea""""bly prejudice Ihe (egilimale im=". uflhe w lhor ,,'l 

The orphan wor\(s bills previously drafted by ConllfeSS ..... ould have violated , II 

three SlCp' of thi. ,·thrre-Slep lesl." By redefining an orphaned ",Oft liS "'(I' "ork by 

""Y aulhor Ihal ""Y"O"')' finds >ul1iciemly hard 10 find. the bill.' woold 1/OIlIa\ c 

limiled e:<ctplioo~ 10 "cenain special cao;es: ~ and pormillil\lI ", d~,plnd 

commercial inrrinllcmenl uf on aUlhor'~ work " ""Id hav~ conl1iClcd wilh Ih~ 

Rumor', "normal e:<pl.oilalion ofllle work" and unreasonably Pfejudic~-d hi.m h ..... 

-Iel!irimalc imefe51s ~ 

4. " rli5lS' N"f1\II;,'e r ' l>tr;ellct " i.h nisling Comm or j~' l>R\shases 

The reluctance ufill;$IS 10 ",bmillheir work 10 unnamed for·profit databas..-s k lO ~ 

c~ated in ~'e private t~or" is nOl grounded in abstrlci fC8 rsorre5l'rllali()ll~ but i$ 

based 011 common sense, Ictual business practices and negative expeliencc with 

cs;.tinl! commerci,1 dllabases loUch IS Getl)' ."d Chrbil. ZJ 

r""",,"W (l'l')]'19'JIO, !t!!Il.Itl!l!" ",~n.I! g.ll~mt!!!le ... nlq!t~"rIo." IU;~"IHI-E,," .. ·0tl!<! poll 

'" B<tno too,on!"'" r .. "'" _,"'" or 1.I!<nII) .0.1 An ... ", WoXb M,d. Q (2) "I' ""011 be • "'''a for 1.."'''' ..... on !h., ..... ",c .. ofth. O,,"oo~, """"" a .. rc"J""l..:u,., (l.<Udo ",orb '" """'Il> """"I .,.,.,., 

J'f'I" .... ..t ,""'''''''' fI.'P"Iwc,,,,,, .JI),,,ftOO ,ootl1lc~ ~,," .......... 1 "",~.., ...... Ij(,,,~ ... ,,,,, ..,4""", ... 

""J\"~),,,,t>!)' r<"l..,j,ce ,II.: kpUI .. ,," .. , ...... ',,( "'" ,,,,til .. ' 

l»'r 11'<0." ""f'" ..,..:'''' .. '''''''''''tI''l><m<JIr1J<''''..J,.dll h'.U~1'1 ~""';"tt. .. , 

" ............ I", "" ... ' ""1""".'''<0'' >Ill ~"'_I.,.. ........ ~ uf <.,,"''''' ""'I,,"''', "k~""', 1'1 """. II( "''I')'ng\<' whn,,"m .. " ... ; I>reao[, of 0. •• ___ llio<tl ~~I.,..) ~, ... 1'blll[1,At-o ~"'l' 

WIII/tU." .."/'o>/H","'-' .Iao.,,.,Ii§L-- d'fJtr.. ,lm. v,.! ;l9, N.. J :!QO\i 

t.'V I'r-r-".""'" "'''''' .. ~Jfr.!r..'''''' 1\n~.l ... __ ".I\ltjol(]N 

"', ,\ ... "'\r~"I""\"'~",~" >Ill' 
107 

-_._- As.iP. ~ ........ " . . ''''''' ---''''1''''''''. 

We can Ihink of no OIher field in "hich small h"sjne~~ OWner> Un be p.-CSSIl~J 10 

~pply corpOrll!c tonll'd'!or. wilh Lhei,cOlllcnl. bu~n~S$ data and dirm ",,"UI<I 

infonn~lion. A$ Brendft P;nnj~~. llWner Ind presidem of Brenda >;nnic~ I)c'sIlIm •• 

Inc . ""Ole in J,..,.-c,,",mcm. for the 2008 SBA roundlable. 

"If \IlIr gO"e!n,.."enl ~pproach~d any other type of busincs~ and Ioid 

,bern they could"" lool!cr own WNII makes their bu~j,",,, ".Juable. 

Ih~llhfir inlelloctual propel1y including Klurcing infOl'll1alion. ~ 

5«ren, cl!ll~'CIod kllowl~dge ofthcir indu.!!} and SQ on was IIOW nu 

longerlheiJ'!l ({> 0"", ond LIse to pruspc:.- imagine th""utrage_~ ,. 

OrphRn Work] O."elolln>enlS in Ih. [ uro!M'_n Union 

00 (kIOOC.,. 25, 1012 ,.h. Europe,,,, f>",li.",em and the Council <>fmc European 

tJOiOll p.ssro OireCliv e 1012l21VEU " on ccr1, in fH'rmill~ uSc. III" orpltan "ork. 

This le!!isillion is laudable and ,lOtablc in "1~ru-' r6pt.'(:lS. one fQlUn.' ofw~ich is its 

rccogni!ioo Ihal vi .... al an prem1IS unique problems for any orphan ... orh reWme. 

~nd MS IherefQ{' e""'"rnp ~ s"'nd-a ()l1~ visu.1 rut unlil SUch timea! a jll;! IPIlS-Icrm 

soIulion can be formuHI!ed 

Conti uS ion 

A gOVtnlme1ll1hal "'QUid pass Ilaw il knows ils ciliz~s ean neve'" comply ... ;In. bUl would 

&lrip lhc!n of Iheir inldlecrual Jl"Of"'I1Y fQ{' f8iling 10 mmply, clnnll!. pI.usibly be said !<I br 

pr(ln1(11ing "Ihe Progr'ess nf Sdenct and useful An. .. In.2008 lhe-presidenl ofl'ublk 

).;nQ\'o-ledge r~I1e<:led on Ihe r"ilure of lha! y • .,-'s Orphan WoOO! Acts lQ pass, bu! wrOle 

thaI ",·,...".1 ani.ts now und""mrnd Ihal they nousl cha'!!:S Ih~r business mooels (emphasis 

added),~ .. 

W,Ill all due 'es{I\'<:l. il i5 nOl IIp 10 IQbbyiSl$l)f public <I!!VlInl$ ~ Ill1d certainly "0110 

infringen - 10 dc...:ree Ihal mil\ion~ of a"iSlS "muSI chanl!" lhelr businc"SS moods " Nor lite 

Illey Qualif,ed to decree how lho~ busintss modds sh(XJld "'or~. Th~ people who k~Q'W 

bnt how 10 .djUSI 10 thechlUlge ill 00' 'nark~ s ar.lhoSo! or". who WQ,k in IhoSl: m.r'.:ets 

"C"",,,,,,"1.o; "" "'" II ~ l· ....... -"t, ... ,>I" Arnen",", hI' 1. :lull. I'I-':D, ~ A 

loI'r)"''''' "'!It' !'1/!1 1t'~' 'g>l .. nll:.'"n1nalhl"'·Ulollln t!llIl....,..rlo ... ·~""1I<f"''''"~,Qo folf 

..... Smoll ll"""""" Ailmlll, .... u"" 1{towo.J,.lIlo ! Il>10' W~I "'" Orf>b .. W.,rl. mu Ilc.:b..nl<lll\,' "'J'k~ 

Srnalllinoo.,(/" wa, .:h.olrud '" T,,", :s • .ll .... 'II, tl!"' ,,~ "fllo. (J(f"", or Ad,"" ..... of the -;!\A II ... ... 

.. " . «1 ", Ill< IliUMI',," P .. lllo"'/"r, I"hr An ..... RlI!I''' So<""-l 0IIId u.. I\JVOf1I ~ MI<>I"f,< ............ , 

...",.""'" I. W"""'1CIu<1N I» thoSJM A"~". lIX lI!., u..S,Im"IHIDIh Cluh lD N<!w y<>rt ("~t ',.:"'"TI '.~ .. pedL"-' f"I'\le,l'"'o..l. "'"'" '''''<Il10:,, ... hm,,,N "nlk", "'I" '" flle-Il""'.'" l'c ,.",,,.,.j '" lIt'r '

l\"IIl<>,-<OIIlIct..m .. '".m .... ,,''''' 

::>t "~ ,,,,,,,,10, ....,.~,..."1l"""' .. ~".1 ... """" .so>"",,",,) I ~>lll~ ... i5 '~ll:bN rl}l. 

"(l,1I' n '<' '''0. ''!1!..Ooplo.., Wool>. 11,11 W .. , ·r ,II ,..." V .. ;Oc_'; "'~ II! I\o ," ", K",," IM ll" 

PlrIf'.II11 "·" ~' ,.Ja1il"I.'q IlMo/171O 

"" ~"''' l\ '" ''''' '' ''' ''' ''_' ' ",, ' •• ,,"' .......... 1< ." 
108 

ASiP. 

---- ,_."". -... W~ r~ lh~ one~ wilh the I!1clll,eS1 incent;v" I<> wpl. and it's a mre arnSl who isn't already 

t.~!)I."';nltnUI\l! wilh wa) s!O dju 1 

l1>echanl!es demonded ofc",aliv~ aniils in Ihe neW dilllt;ll environment are ",)I new, to 

thoscafu. who WQf't in Ihis lield. nor are " 'e unawareofthemisfortune weh change 

s~er:lles Most ofus have ."",ady 5ftfl scores oft.leone<! coIleal!"e5 drop by Ihe wayside 

Vel rather than rush to pass Icgis.l.,ion lh., would allow opponunists «) poonce lik~ 

5Ca"~n8m on Ih~ art Morphanod" by such casualties, om SO\ ~"menl shOilld ~k,o work 

with ,hose cr •• tors who have shown tht will, 1l.'so .. "cerUlne5S and lenadty 1<') OOO f1OO1 Ihal 

.hnlle, 

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Prepared Statement of the Library Copyright Alliance 

on'ORE nit.: HOUSE COi\lMrnEE ON TH.E JUDICiARY 

SUBCOMMITTEE ON COURTS, I.NELI-ECTUAL PROPERTY AND T UE 

INTERNET 

HKO\ RING ON INNOVATION IN AMERICA: TUE ROLE OF COPYRIGIITS 

STATEl\I~:NT OF THE LI8RARY COPYRIGHT A.LLIANCE 

The Library Copyright Ailiallce (LCA) consists of three major library 

associlltiolls- theAmerican Library Association, the Association of College and 

Research Libraries, and the Association of Research Libraries- that collectively 

represent over 100,000 libraries in the United States employing over 350,000 librarians 

and other personnel . LCA requests Ihat this statement be included in tbe record of this 

hearing_ 

The subject of this hearing is the role of copyright law in promoting innovation in 

the United States_ The starting point for understanding this relationship is the 

diffcrenlialion between the entC11ainment Judust!)' and other fields where copyrighted 

contenT is produced . Similarly, the creators of copyrighted conleut mUSt be dinerentiated 

from the distributors of the content. Unfnnunalely, in copyrigtll policy discussions. these 

distinctions often are ovcrlooked In this statement, LC A focuses on these distinctions. 

First, it discusses Ihe diminishing role of copyright in incentivi:ting activity iu one oflhe 

most imponant sources ofirmovalion in the U,S, economy scholarly communi!;Htions_ 

LeA Ihcll discusses the economic imponance of collaborative activities such as open 

source software and Wikipedia, which do nOt rely on the incentive provided by copyright. 
112 

Finally, with respect to sectors that do appear to rely on copyright, LCA points out that 

many of the leading firms in those sectors are foreign owned. This suggests that the 

importance of copyright to maintaining U.S. leadership in the global economy may be 

overstated. 

I. Open Access Models for Scholarly Communications 

One of the primary sources of innovation in the U.S. economy is scholarly 

communications: articles, monographs, and databases written by professors, graduate 

students, and other researchers in all fields of human endeavor. The ideas expressed in 

these writings stimulate new research, advance the scientific and technology enterprise, 

and encourage commercial development of marketable products and services. This 

conversion is by no means a trivial exercise. Companies often must invest heavily in 

research and development to convert basic research into useful products and services. But 

without the basic research and its dissemination through scholarly communications, many 

technologically sophisticated products and services would not exist. 

Significantly, academic authors do not engage in scholarly communications for 

the purpose of receiving copyright royalties on their writings. Indeed, they typically 

assign the copyright in their writings to a publisher without any sort of payment. Instead, 

the academic authors are compensated by promotion in their institution, enhancement of 

their reputations, and increased funding from grantors 1 

Judge Richard Posner of the Seventh Circuit, a prolific author on intellectual 

property matters, wrote a blog post arguing that scholarly works require little to no 

1 To be sure, in some fields a researcher might be motivated by the possibility of sharing 

patent license fees, but a patented invention that results from research is completely 

different from the copyrightable expression in an article describing the research. 

2 
113 

copyright protection from a policy perspective. Judge Posner acknowledged that "modern 

action movies often costing hundreds of millions of dollars to make, yet copiable almost 

instantaneously and able to be both copied and distributed almost costlessly," require 

strong copyright protection to ensure their creation. Judge Posner then observed that 

r alt the other extreme is academic books and articles (apart from 

textbooks t which are produced as a bvproduct of academic research that 

the author must conduct in order to preserve his professional reputation 

and that would continue to be produced even ifnot copvrightable at all. It 

is doubtful that there is anv social benefit to the copyrighting of academic 

work other than textbooks ... 2 

We are not suggesting that scholarly works should receive no copyright protection. But 

we do agree with Judge Posner that academic authors do not need the economic incentive 

afforded by copyright to motivate them to write scholarly works. 

While the "publish or perish" system of advancement in higher education 

provides academics with ample incentive to create scholarly works, the publishers of 

scholarly communications have relied more heavily on copyright. Historically, 

publishers of scholarly communications performed critical functions that bore a cost: 

coordination of the peer-review process, and the printing, marketing, and distribution of 

the copies of the journals or monographs] The publishers needed copyright protection to 

ensure that they would recover their investment in the production and distribution of the 

copies, even though they received the content itself at no cost from the academic authors. 

2 Richard Posner, Do patent and copyright law restrict competition and creativity 

excessively?, The Becker-Posner Blog (Sept. 30, 2012, 10:30 PM), http://www.beckerposner -blog. com/20 12/09/ do-patent -and -copyright -law-restrict -competition-andcreati vity -excessi vel y -posner. htm I. 

) Although publishers coordinate the peer -review process, they typically do not pay the 

peer reviewers. Members of the academic community donate their time to peer-review 

activities as part of their contribution to the scholarly enterprise. 

3 
114 

The Internet has dramatically changed the economics of the scholarly 

communications market Email and collaborative software tools have reduced the cost of 

coordinating the peer-review process; the Internet has cut printing and distribution costs. 

These reduced costs have enabled the emergence of open access business models, where 

readers can obtain online access to the writings for free. At the same time, the restrictive 

licensing terms and conditions and the skyrocketing cost of science, technology, and 

medical journals have encouraged researchers and scientists to promote new models of 

scholarly communication. Additionally, scientists are attracted to the functionality 

permitted by open access models, including the linking of databases and journal 

literature, and the mining and manipulation of these resources. 

An academic author typically grants the open access publisher a non-exclusive 

copyright license to distribute the writing to the public at no charge. The open access 

publisher covers its costs by charging the author a fee for publishing the article or by 

receiving funding from another source, such as a granting agency or the institution that 

hosts the publication4 

Over the past fifteen years, the number of open access publishers has increased 

dramatically, as has the number of materials they have published. Since 2000, the 

members of the Open Access Scholarly Publications Association (OASPA) have 

published over 250,000 articles under open licenses, including over 80,000 in 2012 

alone 5 Over 20% of all peer-reviewed articles are now published in the more than 4,700 

4 Many granting agencies now include extra funds in grant awards to cover publisher fees 

for publication in an open access format. 

S Claire Redhead, Growth ill the use a/the ('('-BY license, OASPA (Mar. 8,2013), 

http:// oaspa. orgl growth-in-use-of-the-cc-by-li cense-2/. 

4 
115 

open accessjournals 6 The Directory of Open Access Books, created in 2012, already 

lists 1,271 academic peer-reviewed books from 35 publishers7 The demand for open 

access publishing among academic authors and readers is so strong that even highly 

profitable publishers such as Oxford and SAGE (plaintiffs in the electronic reserves case 

against Georgia State University/ have open access publications and are members of 

OASPA9 

There are significant public benefits from open access publication: 

• Open access to published research results enable faculty and researchers to 

build upon the findings of this research, both cutting-edge and historical, in 

their own research efforts. Building upon prior studies results in more efficient 

research efforts. 

• Faculty, researchers, and students affiliated with research institutions 

collaborate on research and share their results in support of the scholarly and 

scientific enterprise. Providing greater access to these works through open 

access policies enhances this collaboration. 

• Roadblocks negatively affect research productivity. In a survey conducted by 

the American Association for the Advancement of Science, a quarter of the 

respondents reported negative effects on their work because of ditIiculty in 

accessing the scientific literature. The consequences ranged from brief delay to 

abandonment of the research project. 

• Open access accelerates the dissemination of basic research to entities that can 

make commercial applications. 10 While large technology companies often 

6 Milcael Laakso, et ai, Ine Development o.fOpen Access Journal Pubfishingfhm11993 

to 2009,6 PLoS ONE, no. 6, 2011, 

httpllwww.ncbi.nlm.nih.gov/pmclartic1es/PMC31138471. 

7 Directory of Open Access Books, http://\vW\v.doabooks.org/ (last visited July 24 2013). 

S Cambridge University Press v. Becker, 863 F. Supp. 2d 1190 (N.D. Ga. 2012), appeal 

docketed, Nos. 12-14676, 12-15147 (11th Cir. Sept. 12,2012) 

9 Members, OASPA, http//oaspa.org/membership/members/(lastvisitedJuly 24, 2013). 

10 According to the Battelle Technology Partnership Practice report, Economic Impact of 

the Human Genome Project "the $3.8 billion the U.S. government invested in the Human 

Genome Project (HGP) from 1988 to 2003 helped drive $796 billion in economic impact 

and the generation of $244 billion in total personal income .... In 2010 alone, the human 

genome sequencing projects and associated genomics research and industry activity 
116 

subscribe to peer-reviewedjoumals directly relevant to their research and 

development, because of budget constraints, they usually do not subscribe to all 

j oumals of potential interest in related fields. Engineers and scientists in these 

companies are forced to conduct research with partial blinders on, seeing only 

what is directly before them and missing the potential interdisciplinary 

connections and the broader context that full access can provide. 

• The Infonnation Revolution has democratized research to an unprecedented 

degree. An individual with a laptop and a broadband connection has the 

capability of developing software solutions to extremely complex problems, 

provided that he has access to data and know-how developed by others. These 

software solutions can lead to the birth of new companies, or can hasten the rate 

of product-development by existing companies. Access to the results of 

academic research adds dramatically to the set of building blocks for these 

independent developers. 

A specific example of the ditIerent incentives that exist in the scholarly 

communications sphere involves articles that result from federally funded research. In 

2008, pursuant to direction from Congress, the National Institutes of Health (NIH) 

adopted a mandatory public access policy. 11 Under the policy, all investigators funded by 

the NIH are required to submit an electronic version of their final, electronic peerreviewed manuscripts to the National Library of Medicine's PubMed Central, which then 

makes the manuscript publicly available within twelve months (or sooner, depending on 

directly and indirectly generated $67 billion in U.S. economic output and supported 

310,000 jobs that produced $20 billion in personal income. The genomics-enabled 

industry also provided $3.7 billion in federal taxes during 2010." Press Release, Battelle, 

$3.88 Investment in Human Genome Project Drove $7968 in Economic Impact Creating 

310,000 Jobs and Launching the Genomic Revolution (May 10,2011), ami/able at 

h1:mJ flwttel1e. orgbn (?Qialm:.e s s:rel easesi$.,L8i:J.:-1IlyeMIllC11t -i l1=hlllll<ll1.::g~n ~m~::R.r.Qj-"C1:: 

clrove-;:;796!J-in:ecQnoll1ic::.impa~1:creating-3 ]O:OQO-jQhs:and::.iaunching:lhe.:gel1omic: 

revolution. See Simon Tripp & Martin Grueber, Battelle Mem'l Inst., Economic Impact 

of the Human Genome Project: How a $3.8 billion investment drove $796 billion in 

economic impact, created 310,000 jobs and launched the genomic revolution (2011), 

cn'Ui lable at http://w~.battelle. org/ docs/default -documentlibrary/economic jmpact_ oCthe _human_genome _proj ect. pdf7sfvrsn=2. 

11 Department of Health and Human Services Appropriations Act of 2008, Pub. L. No. 

110-161, Div. G, Tit. II, § 218, 121 Stat. 2187 (2007). See also NIH Public Access Policy 

Details, National Institutes of Health Public Access, 

http://publicaccess.nih.gov/policv.htm (last visited July 24, 2013). 

6 
117 

the author's interest and the publisher's embargo period) of the official date of 

publication 

In February 2013, John P. Holdren, Director of the White House's Otlice of 

Science and Technology Policy, issued a memorandum directing federal research funding 

agencies with research and development budgets of $100 million or more to develop a 

plan within six months to support increased public access to the results of research 

funded by the federal government12 In essence, this expands the NIH policy to other 

federal agencies. The LCA strongly supports the Administration's objectives of 

enhancing the public's access to scholarly publications resulting from research funded by 

federal agencies and maximizing the return on federal investments in research and 

development. 

Because the federal government pays for the research described in these articles, 

as well as their dissemination through government repositories such as PubMedCentral, 

copyright is not necessary for these articles' creation. Nonetheless, public access polices 

do not harm traditional publishers. Due to the embargo period, academic libraries 

continue to subscribe to journals that rely on copyright protection. However, once the 

writing is made widely available through an open access repository, the public benefits 

increase. Scientists atliliated with companies and institutions that cannot afford 

expensive journal subscriptions can then access the scholarship. Additionally, the open 

access repositories allow researchers to conduct data mining and manipulation that 

12 Memorandum from John P. Holdren, Dir., Office of Sci. and Tech. Policy, Exec. 

Office of the President, on Increasing Access to the Results of Federally Funded 

Scientific Research (Feb. 22, 2013), 

http://www.whitehouse.gov/sites/defaultlfiles/microsites/ostp/ostp --'public_access _memo 

_20l3.pdf 

7 
118 

cannot be performed on the traditional publishers' platforms. 13 

II. Open Innovation 

Open access to scholarly communications is one example of the new models for 

creation and distribution enabled by the Internet. Open source software is another. It 

cannot credibly be argued that proprietary software is more innovative than open source 

software, or that traditional journals promote innovation more than open access journals. 

The embrace of open source software by successful companies such as IBM and Google 

demonstrates that in the Internet era, the use of copyright to restrict reproduction and 

distribution is more a matter of business strategy than a necessary mechanism to recoup 

investment. This can also be seen in the music industry, where more artists are promoting 

and distributing their sound recordings on platforms such as YouTube and receiving 

compensation through ad revenue and ticket sales for live performances. 

This evolution of copyright enforcement from an economic necessity to a 

business strategy requires the Congress to reevaluate the emphasis the federal 

government places on copyright enforcement and to explore other, perhaps more 

et1icient, means of promoting innovation. Steven Johnson, the author of the book Where 

Good Jdeas Come From: The NalUral History ofJllllovation, describes four quadrants of 

innovators: I) the classic solo entrepreneur, protecting innovations in order to benefit 

financially; 2) the amateur individual, exploring and inventing for the love of it; 3) 

11 Open Educational Resources is a related area where open distribution models can allow 

a greater return on public investment. Public school districts spend billions of dollars 

each year on the purchase of textbooks and other educational materials from commercial 

publishers. More recently, some jurisdictions have paid educators to develop content that 

then can be made available online for free. These materials are easy to update and 

customize for different educations settings. Similarly, colleges and universities are 

developing massive online open courses (MOOCs), which may revolutionize higher 

education by making it more widely available at lower cost. 

8 
119 

private corporations collaborating on ideas while competing with one another; and 4) the 

space of collaborative, nonproprietary innovation. Johnson observes: 

The conventional wisdom, of course, is that market forces drive 

innovation, with businesses propelled to new ideas by the promise of 

financial reward. And yet even in the heyday ofindustrial and consumer 

capitalism over the last two centuries, the fourth quadrant turns out to have 

generated more world-changing ideas than the competitive sphere of the 

marketplace. Batteries, bifocals, neonatal incubators, birth control pillsall originated either in amateur labs or in academic environments. 14 

Johnson stresses that the fourth quadrant "is not locked in a zero-sum conflict 

with markets." Rather, "this fourth space creates new platforms, which then support 

commercial ventures." He views the Internet as "the ultimate example of how fourthquadrant innovation actually supports market developments: a platform built by a loosely 

affiliated group of public-sector and university visionaries that has become one of the 

most powerful engines of wealth creation in modern times." 

Much of the software that underlies the internet is collaboratively developed open 

source software. Additionally, the world's most used reference website, Wikipedia, is a 

collaborative project of more than 77,000 active volunteer contributors. They work on 

over 22,000,000 articles in 285 languages. Wikipedia attracts more than 470 million 

unique visitors a month. English Wikipedia has 4,288,907 articles with 30,719,418 

pages. 15 As Wikipedia has matured, its accuracy has surpassed that of commercial 

encyclopedias, and it is far more current and has a far broader reach. Wikipedia is 

maintained by a non-profit foundation that relies on donations to pay its costs, such as 

14 Steven Johnson, Innovatioll: It ISI1 't a Matter of Left or Righi, N. Y. Times, Oct. 30, 

2010, at BU7, availahle al httP:/h·\fW~cllytimcs.c;om!20 10/1 ()/3l/bllsincs~/31c~cry.hllY1l. 

The academic environments typically are dependent on government funding. 

15 About, Wikipedia, httllj{t;n.wLkil'~ia.org/-",ikii\Yi.ki12..e.cli_a~AQQu1: (last visited July 24, 

2(13). 

9 
120 

Internet access fees. It is the starting point for research for many businesses, 

professionals, government officials, students, and consumers. Its ease of use, free 

accessibility, and broad coverage has led to its saving society billions of dollars in 

research costs. 16 

Steven Johnson argues that "the fourth quadrant has been so innovative, despite 

the lack of traditional economic rewards" because of "the increased connectivity that 

comes from these open environments. Ideas fiow from mind to mind, and to be refined 

and modified without complex business development deals or patent lawyers. The 

incentives for innovation are lower, but so are the barriers." 

Ill. Foreign Ownership of Firms in the Copyright Industries 

The Internet has enabled the development of new approaches for the 

creation and distribution of content that do not rely on the economic incentive 

provided by copyright. Nonetheless, copyright remains important for the business 

models of certain sectors, particularly the entertainment industry. Tn their advocacy 

for stronger copyright protection, the associations representing the large media 

companies make two assertions: 1) Americans are global leaders in the production 

of creative and innovative services and products; and 2) many of these services and 

products are dependent on copyright protection. 

There is a growing literature questioning the second assertion - the 

dependency of creative activity on strong copyright protection. The previous two 

sections of this statement addressed aspects of this issue. By contrast, the first 

16 Of course, as librarians, we stress that like any encyclopedia, Wikipedia should be the 

starting point of a research proj ect, and not its totality. 

10 
121 

assertion - American global leadership in the production of creative and innovative 

services and products - often goes unchallenged. 

Assessing the US. global standing in copyright industries is important 

because it helps to detennine the optimal level of domestic copyright protection, as 

well as what copyright standards the US. should be urging upon its trading 

partners. For decades, US. domestic and foreign copyright policy has been 

predicated on the assumption that U.S. firms dominated both domestic and foreign 

markets for copyrighted products. 17 Domination of foreign markets suggested that 

an increase in the level of copyright protection internationally would lead to 

increased exports, which would in turn lead to more jobs in the U. S. and more 

profits for US. firms. Likewise, domination of domestic markets meant that the 

higher prices to US. consumers resulting from the decreased competition caused by 

strong lP protection would be offset by U.S. job growth. 

A recent study revealed that for many copyright industries, however, this 

assumption of US. dominance is no longer true. IX This suggests that, at times, 

copyright policies adopted by Congress and the Executive Branch may have 

benefitted foreign corporations at the expense of U.S. consumers. While the U.S. 

employees and contractors of a foreign firm may receive some income from the 

finn, it is safe to assume that much of the value generated by these employees and 

contractors will be captured by the finn and repatriated to its domicile. 

The study found that: 

17 See, e.g., Michael Ryan, Knowledge Diplomacy Global Competition and the Politics 

ofIntellectual Property (1998). 

18 Jonathan Band & Jonathan Gerafi, Foreign Ownership afFirms hi IP-Intensive 

Illdusrries, Infolustice (Mar. 5,2013), hUp:llinfojustice.orgiarchives/28840. 

11 
122 

Four of the "Big Six" publishers, the largest English language trade 

publishers, are foreign-owned. More than 80 percent of the global revenue 

of the Big Six is generated by these foreign-owned companies. These 

foreign-owned companies published more than two thirds of the trade books 

in the US. 19 

Four of the five largest STM (science, technical and medical)lProfessional 

publishers are foreign-owned. More than 90 percent of the revenue of the 

five largest STMlProfessional publishers was generated by foreign-owned 

firms. 

Only seven of the world's 50 largest publishers of all categories are US.-

owned. 

The book publishing industry in Europe has approximately twice as many 

employees as in the United States. 

Of the top ten best-selling fiction authors in any language whose work is 

still in copyright, five are foreign. A British author wrote three of the top 

five best-selling books in the U.S. in 2012. 

Two of the three major record labels are foreign-owned. These two labels 

have a market share of 59 percent. 

Thirteen of the twenty best-selling recording artists are foreign. 

Of the 50 most popular motion pictures in the United States in 2012, half 

were filmed partly or entirely outside of the United States. 

in 2013, the Oscar winners in thirteen of24 categories were foreign. in 2012, the 

Oscar winners in eleven of24 categories were foreign. in 2011, the Oscar 

winners in eight of 24 categories were foreign. 

Seventy percent of the most recent generation of game consoles were 

manufactured by Japanese companies. Japanese companies have 

manufactured 92 percent of all game consoles ever sold. 

There is absolutely nothing sinister about foreign ownership of firms in the 

copyright industries, including foreign ownership of companies originally 

established in the United States. This is to be expected in a globalized economy 

with multinational corporations and complex cross-border supply chains. 

Moreover, many countries in Western Europe and East Asia are at the same level of 

technological and economic development as the United States. The critical point is 

19 The parent corporations of two of the Big Six, Penguin and Random House, recently 

merged the operations of these subsidiaries. Random House's parent, German-owned 

Bertelsmann, owns 53 percent of the j oint venture, and Penguin's parent, UK. -based 

Pearson, owns 47 percent. The joint venture, named Penguin Random House, controls 25 

percent of the U.S. trade market. Thus, the Big Six is now the Big Five. 

12 
123 

that in such a globalized economy, U.S policymakers should no longer assume 

without reflection that the beneficiaries of protectionist copyright policies are US. 

firms and, by extension, US. workers and shareholders. 

IV. Conclusion 

These hearings concerning the contributions of the copyright and technology 

industries reflect a statement by the Supreme Court in Metro-Goldwyn-Mayer St1ldios, 

fllc. P. Groksler, Ud. that copyright law maintains a "balance between the respective 

values of supporting creative pursuits through copyright protection and promoting 

innovation in new communication technologies by limiting the incidence of liability for 

copyright infringemenC20 The Court added that "the more artistic protection is favored, 

the more technological innovation may be discouraged; the administration of copyright 

law is an exercise in managing the trade-off. ,,21 The Supreme Court is correct that the 

copyright law balances the support of creative pursuits and the promotion of 

technological innovation. But copyright balances far more than art and technology. As 

the Court explained in Sony ('orp. of America v. Universal City Studios, Inc., copyright 

law "involves a difficult balance between the interests of authors ... in the control and 

exploitation of their writings ... on the one hand, and society's competing interest in the 

free flow of ideas, information, and commerce on the other."22 Copyright thus balances 

the interests of authors and society as a whole. 

Society's interest in the free flow of ideas, however, is not simply a matter of 

encouraging consumer access to information. Rather, as the Fifth Circuit recognized, in 

20 545 U.S. 913, 928 (2005). 

21Id. 

22464 US. 417, 429 (1984). 5,'ee also Golan v. Holder, 132 S. Ct 873,900 (2012) 

(Breyer, 1., dissenting). 

13 
124 

f 

the Copyright Act "Congress balanced the competing concerns of provi ding incentive to 

authors to create and of fostering competition in such creativity.,,21 In other words, 

copyright law also balances the interests of existing authors with the interests offuture 

authors. This is accomplished by essential features such as copyright term, the 

idea/expression dichotomy, and fair use. 

As Congress proceeds with this examination of copyright reform, it must bear in 

mind that it needs to balance not only the interests of the copyright industry and the 

technology industry, but also the interests of authors and the public as well as established 

authors and new authors. 

July 24, 2103 

23 Kern River Gas lI-ansmission Co. v. Coasral C0l1}., 899 F.2d 1458, 1463 (5th CiT. 

1990). See a/so Computer Assocs. Int'l, IIIC., v. Altai, Inc., 982 F.2d 693, 696 (2d Cir. 

1992)("[T]he copyright law seeks to establish a delicate equilibrium. On the one hand, it 

affords protection to authors as an incentive to create, and, on the other, it must 

appropriately limit the extent of that protection so as to avoid the effects of monopolistic 

stagnati on.") 

14 
125 

Prepared Statement of the National Press Photographers Association 

(NPPA) 
126 

• It is absurdly easy for a digital image to be stripped of its meta data, preventing 

law-abiding publishers from identifying the rights holder and being able to 

legally license the work. 

• Under increased competition some publishers use a photo without permission 

under the premise of "act first, apologize later." 

• As part of that cost/benefit analysis, publications weigh the probability of discovery 

and resulting litigation against the time and cost involved in obtaining prior 

permission and licensing. 

• That ever-increasing misappropriation of member-created content also 

threatens the country's public health and safety by undermining a profession 

America relies upon to provide the public with compelling images and stories. 

• Most photojournalists view our profession as a calling. 

• No one really expects to become wealthy in this line of work, but most do expect to 

earn a fair living, support themselves and their family, and contribute to society. 

• Copyright infringement reduces that economic incentive dramatically. 

• This in turn may abridge press freedoms by discouraging participation in this field. 

• It also devalues photography as both a news medium and art form, thereby 

eroding the quality of life and freedom of expression that are part of this great 

nation. 

Areas of Concern 

• For photojournalists, copyright infringement is a pernicious problem. 

• Not only has it reduced the profitability of our clients, resulting in layoffs and budget 

cuts for outside contractors, but has also created overly burdensome legal costs 

which act as an impediment to pursuing legal remedies in federal court. 

• Too often, rights holders find it difficult to justify enforcement and difficult to find an 

attorney willing to take their cases. 

• While there are other areas of concern to news photographers, being able to protect 

their intellectual property rights is of paramount importance if they are to remain in 

business. 

• There has always been tension between the exclusive rights granted by copyright 

law to an author of a creative work and those who believe they have a concomitant 

right to use such work under the "fair use" doctrine. 

• There is also much disagreement over whether fair use is a right, a limitation or 

exception to copyright law, or a defense that may be asserted by a defendant in a 

copyright infringement lawsuit. 

• Compounding this historically vexing issue is a concern over the use of copyrighted 

works where the author cannot be determined or found, otherwise known as "orphan 

works." 

2 
127 

• Nowhere are these conundrums more profound than in the use and misappropriation 

of photographs. 

• The exponential proliferation of visual images on the Internet has only exacerbated 

this confusing situation. 

• According to reports, 20 million photographs are viewed on the Internet every 

minute. 

• Compounding that mind boggling number is the very prevalent belief that the Web is 

the "public domain." 

• As others know the public domain is not a place but rather a legal term pertaining to 

a work that is no longer under copyright protection. 

• While works in the public domain may be used freely without the pemrission of the 

former copyright owner far too many users believe that if a photograph is posted on 

the Internet it is there for their use without permission, credit or compensation and 

any such use is "fair." 

• As stated by the US. Copyright Office (the Office), "the distinction between what is 

fair use and what is infringement in a particular case will not always be clear or 

easily defined. 

• There is no specific number of words, lines, or notes that may safely be taken 

without permission." 

• What makes photographs so unique are that rarely are they used except in 

their entirety. 

Orphan Works 

• The Office has also articulated the concerns of some in the copyright community 

regarding "the uncertainty surrounding the ownership status of orphan works" by 

stating such ambiguity "does not serve the objectives of the copyright system." 

• But there is a countervailing concern that in seeking to address the frustration of 

"good faith users" of Orphan Works in order to cure their potential liability and 

"gridlock in the digital marketplace," a far more serious problem comes into play for 

recently created visual works that, for whatever reason, appear to be orphaned 

when, in fact, they are not. 

• That is because within seconds of its creation an image may be downloaded and reposted becoming "viral" in short order. 

• Many applications and websites strip identifying infomration, known as metadata 

from digital images when they are uploaded, preventing good-faith users (one who 

had made a "reasonably diligent effort to find the owner") from identifying the rights 

holder or being able to legally license the work. 

3 
128 

• Such legislation, limiting existing recovery rights may create unintended harm to 

photographers that would far exceed any social benefit derived, particularly without 

any definitions or other requirements for satisfying a "reasonably diligent search." 

• This problem is illustrated best in the resulting furor by photographers over the 

recently passed Enterprise and Regulatory Reform Act 2013 

• For authors, copyright is not just about receiving compensation for use. 

• Copyright also protects them from having their work used in ways they do not 

approve and in ways that they never intended. 

• This is particularly true for photographers. 

• Subjects depicted in a photograph may have only consented to being photographed 

for certain purposes. 

• Unauthorized use of photographs, therefore, effects more than just photographers. 

• Another important consideration under copyright law and the First Amendment is the 

right to not publish or speak. 

• There are many situations in which a visual work was created solely for private use 

and was never intended for public consumption. 

• Due to the insidious nature of the Internet, many images so created have found their 

way there without any identifying information. 

Fair Use 

In a number of postings many organizations including libraries and documentary film 

makers who advocated vociferously for the Sean Bentley Orphan Works Act of 2008 

now take the position that Orphan Works legislation is no longer necessary. 

• Instead, they assert "fair use" offers the protection they seek. 

• They also state that any legislative remedies should be a minimal, "one sentence 

amendment to 17 USC. § 504(c)(2) that grants courts the discretion to reduce or 

remit statutory damages if the user conducted a reasonably diligent search prior to 

the use." 

• They justify these proposals by explaining that "these uses would significantly 

benefit the public without harming the copyright owner" 

• One online publication asserts that "transformativeness" should be used rather than 

rely on the four factors traditionally used by the courts in making a fair use 

determination (those factors being: the purpose and character of the use, including 

whether such use is of commercial nature or is for nonprofit educational purposes; 

the nature of the copyrighted work; the amount and substantiality of the portion used 

in relation to the copyrighted work as a whole; and the effect of the use upon the 

potential market for, or value of, the copyrighted work. 

• But no single factor is determinative. 

4 
129 

• "All are to be explored, and the results weighed together, in light of the purpose of 

copyright." 

• The American University School of Communications Center for Social Media defines 

that term in this way: 

• Did the unlicensed use "transform" the material taken from the copyrighted work by 

using it for a different purpose than that of the original, or did it just repeat the work 

for the same intent and value as the original? 

• Was the material taken appropriate in kind and amount, considering the nature of 

the copyrighted work and of the use? 

• They also go on to state that one way to mitigate a copyright claim under fair use is 

by a good faith showing in providing "credit or attribution, where possible, to the 

owners of the material being used." 

• Unfortunately such advise runs diametrically opposite of the statement by the Office 

that "acknowledging the source of the copyrighted material does not substitute for 

obtaining permission" 

Caselaw 

• Court rulings in some recent cases may support the transformative argument but 

once again it is crucial to remember that even slight changes in fact patterns may 

result in different outcomes. In Associated Press v Meltwater, the defendant 

asserted the affirmative defense of transformative fair use in their appropriation of 

copyright-protected material from the plaintiff for a new purpose. 

• Despite the court's assumption for purposes of its opinion that Internet search 

engines are a transformative use of copyrighted work, it still held that Meltwater 

engaged in copyright infringement and that its copying was "not protected by the fair 

use doctrine." 

• In rendering its opinion the court found that the purpose and character of the use 

was not transformative (no commentary or transformation of work in any meaningful 

way) and distinguished Meltwater News service from Google News as not so much a 

search engine, but an expensive subscription service marketed as a news clipping 

service. 

• The court also found that Meltwater copied too much of the AP articles both 

quantitatively and qualitatively. 

• The court found that Meltwater's use of the works detrimentally affected the 

potential market and value of AP's articles. 

In another recent case the U.S. District Court of Appeals for the 2nd Circuit reversed 

and vacated a lower court decision in part finding that the appropriation artist 

Richard Prince infringed on the copyright of Patrick Cariou's photographs when they 

were used in Prince's work. 

5 
130 

• Once again the question of the "transformative nature" of the new work came into 

play in deciding the fair use question. 

• The lower court had initially granted Cariou's motion for summary judgment, finding 

that the artwork had infringed upon his copyrighted photographs. 

• The lower court had also entered an injunction compelling "the defendants to deliver 

to Cariou all infringing works that had not yet been sold, for him to destroy, sell, or 

otherwise dispose of." 

• But the court of Appeals disagreed with the lower court analysis of the fair use 

factors and found that whereas "the district court imposed a requirement that, to 

qualify for a fair use defense, a secondary use must 'comment on, relate to the 

historical context of, or critically refer back to the original works,'" they believed the 

proper determination is "if 'the secondary use adds value to the original - if [the 

original work] is used as raw material, transformed in the creation of new 

information, new aesthetics, new insights and understandings" (Internal citation 

omitted). 

• They also found that "for a use to be fair, it 'must be productive and must employ the 

quoted matter in a different manner or for a different purpose from the original'" 

(Internal citation omitted). 

• With regard to the transformative nature of the work, the court thought it also critical 

to determine how the work in question may be reasonably perceived by the 

reasonable observer as compared with the original work. 

• To illustrate how difficult these types of decisions are, the case involved 30 

pieces of artwork, but the appeals court was only able to make a determination 

on 25 of them, remanding the remaining 5 pieces back to the lower court for 

application of "the proper standard" so as to "determine in the first instance 

whether any of them infringes on Cariou's copyrights or whether Prince is 

entitled to a fair use defense with regard to those artworks as well." 

In a 5 page dissent Judge John Clifford Wallace agreed that the lower court's finding 

was flawed, but believed that all of the works in question should be remanded for 

further reconsideration and factual determination under the legal standard just 

articulated by majority. 

• He also opined that "perhaps new evidence or expert opinions will be deemed 

necessary by the fact finder-after which a new decision can be made under the 

corrected legal analysis." 

• Judge Wallace also took the majority to task for employing its own "artistic 

judgment" when comparing the transformative nature between the two works. 

• He cautions against departing from aesthetic neutrality in that he would feel 

"extremely uncomfortable" for him do so in his "appellate capacity," let alone 

his "limited art experience." 

6 
131 

• Noting the court had appeared to move away from that foundational imperative in 

determining fair use he cited the admonition by Justice Oliver Wendell Holmes 

that "it would be a dangerous undertaking for persons trained only to the law 

to constitute themselves final judges of the worth of pictorial illustrations, 

outside of the narrowest and most obvious limits." 

• In another case involving fair use the courts have found that the scanning of books 

for the purposes of indexing meets the transformative requirement even when 

copying entire written works because it adds value and transforms the work from its 

original intent by providing full-text searching and access for print disabled 

individuals. 

• Another court has also held that at universities the use of copies from unlicensed 

electronic course reserves in place of traditional printed course packs was 

permissible under fair use. 

• The 350 page decision also weighed the four fair use factors, with the court finding 

that the unpaid use of small excerpts of the works in question to be acceptable given 

it would not discourage academic creativity in new works. 

• These cases can all be distinguished from the daily misappropriation of photographs 

and visual images in their entirety for no other purpose than that they are readily 

acceSSible, help illustrate a story or fill a space and serve to monetize page views or 

sell publications. 

• Such unauthorized and uncompensated misuse of the work of others should not be 

considered fair use. Rather they are exemplars of precisely the type of creative work 

that copyright laws were enacted to protect. 

Conclusion 

• As the legal system tries vainly to catCh-Up with technology and social policy as it 

relates to copyright protections for photographs and other visual images a few things 

are hopefully apparent. 

• Those who assert "Fair Use" as a prior rationale for the misappropriation of 

photographs and visual images, do so at their peril. 

• As the US Supreme Court noted, fair use is an "affirmative defense" that must be 

successfully proved by the named defendants once a copyright infringement lawsuit 

has been commenced. 

• "Defendants bear the burden of proving that each use was a fair use under the 

statute. The analysis of the fair use defense must be done on a case-by-case basis, 

and 'all [four factors] are to be explored, and the results weighed together, in light of 

the purposes of copyright.'" 

• There is a strong argument that an examination of the 4 fair use factors mitigates in 

favor of the photographer when the use is commercial or for-profit educational 

purposes. 

7 
132 

f 

• The qualitative and quantitative nature of a photograph is normally selfevident. 

• Given that almost all copyright infringements of photographs involve their entire use 

rather than just a small portion of the picture, the third factor in considering fair use 

should favor the photographer in cases where the photographs are used without any 

transformative changes being made to them. 

• The effect of the use upon the potential market for, or value of, the photograph 

may also be summed by Justice Holmes, when he wrote, "that these pictures 

had their worth and their success is sufficiently shown by the desire to 

reproduce them without regard to the plaintiffs' rights." 

• The fair use doctrine is meant to protect those wishing to stand on the 

shoulders of others when creating new works, not on the backs of others, 

such as photographers, whose works are infringed upon with impunity 

hundreds, if not thousands of, times a day both intentionally and 

inadvertently. 

• To paraphrase U.S. District Judge Denise L. Cote's ruling in Meltwater - A 

defendant misappropriates a photograph in its entirety in order to make 

money directly from the undiluted use of the copyrighted material; where this 

use is a central feature of its business model and not an incidental 

consequence of the use to which it puts the copyrighted material. 

• Photographing newsworthy events occurring around the globe is an expensive 

undertaking and enforcement of copyright laws permits the photographer to earn the 

revenue that underwrites that work. 

• Permitting a defendant to take the fruit of the photographer's labor for its own profit, 

without compensating the photographer, injures the photographer's ability to perform 

this essential function of democracy. 

• Rather than advising users about a potential fair use safe harbor, many 

suggest following the golden rule of "do unto others" by first seeking 

permission, offering to credit and expecting to pay when using photographs 

and visual images on the web. 

About the NPPA: 

Founded in 1946, the National Press Photographers Association (NPPA) is a 501(c)(6) 

non-profit professional organization dedicated to the advancement of visual journalism, 

its creation, editing and distribution in all news media. NPPA encourages visual 

journalists to reflect high standards of quality and ethics in their professional 

performance, in their business practices and in their comportment. NPPA vigorously 

promotes freedom of expression in all forms. Its more than 7,000 members include still 

and television photographers, editors, students, and representatives of businesses 

serving the visual journalism industry. 

8 
133 

Prepared Statement of the National Writers Union, UAW Local 1981 

NATIONAL WRITERS UNION. UAW LOCAL 1981 

'-'..,..,....,1 .. - "J1IIIIJ'I'!_'''''''''' ........................... ....... , ..... l"""'_ 

""'-

WII"""",r"v«_ """-',-.... ......... 

156Wrn 38~ Strttl 5uftt 703 . N~ .. Vork, NV 10018 . 21N:io!.Q219 " wWW.nwu.orc 

National Writers Union Priorities for Copyright Reform 

Re form of U.s.. [Opy'igM law 1510~g overdue, nO J\l~1 betaU<4' Df \""hnoIDgical change. but ~ to rectify 

longstanding inequities to wrllers and OI~, creators, 

Th e ~ey Issue forthe National Writers U~lon and OIner wrilers and creators;\ this, Wil l copyright relorm ~elp 

Our members and other ernt",e workers take adva~ta8e 01 new tecllnologies and busifll!SS mooe ls'hat 

benefit uo ar>d the reading publir? Or will keeping up with t""hnoJogy be a pretext lor changes In the law 

which re",lloca'e rights and (('venueS in wayS that unfairly f,yor publbhers, distrib utors. and Intermediaries 

oyer crutors? 

Whal We Want 

1. (Iimi"atlon 01 11 U.S. Coele!411 inel § 412, wtlkh rf!quire regiSTralionasa prerequisite lor liling a 

COpynghllniriogement laws .. " Or oblilO n'''iUatulory damages and allornevs' iees,'The<4' formalitieS are 

prohibited by 'he Berne Convention and deny crea'ors ,he effective redress required by the WIPO Copyright 

r ",aly, fle"".1 of 111<'<4' section. 01 the Copyright Act i. "'<4'ntial for lhe U.s. 10 fulflll its globallreaty 

obllgaHons. and ",iH e ncourage r cDunlrll!S to '''''iprocate by "sl""' l~g U.S. copyright! ~peal will make 

II easier ID' ,re2tor510 defend thelrcopyTlghts. 

1. CrUlIon 01 a Copyr!ghl Srn 1I CI~lrn s Court "an <ces lble, eHKtlve ",ay 10 defend <OIIyrlthU Without 

having to brlngrostly, time·COr)5 umi08 la .... suils in federal court. Fede~llawwiU are prol!iblliVi!1y 

e xpensive lor m051 eru,OfI. III a reulr. we na"" no meoningllli abiliTy 10enfDr«our ri ~a, Sincecr"a!o" 

increaSingly find their work has b4!en ~r.tw online by an unauthorized thl'" pan Vor\l1e" 

publlshe,,' haVi! I.",,!'d uniluthor\led digi!al edition< 01 their work, crealors need. Ie ... costly way to ..... n 

thei, rlghlS. terminate inlringeme nt!, and ""n {ojr compen!.1([oo. 

3. fleformol17 U.s. Code t 20] on the reve"ion of rights. ion l03 of th~ Copyright Act hal too many 

lirnilalJans and procedural ob.Utle. to tle u ... lulto most UUtor., and il cannol be invo ked if an oogin"1 

publisher orolMr Iken""" hn di.ap""are<l (an 'orphan publish",..), Re""rslon of righu,o a work's crUlor 

should tle automa,kalter a numtlerof yea" Ino mOfe than 20) w1tholll requiring maire, reglmalion, or other 

lormalitle •. Reve .. ion of rights held by . corpora,.,n, pannership, orotherentiTv other than a n",u",llI"=n 

should be dutoma'i<:and immed;"te on the di55olution of the corporallon, panne .. h,p, or enTiTy, u"I" .. notice 
134 

f 

of a successor is recorded with the Copyright Office beforehand. 

What We Don't Want 

1. No statutory license or exception to copyright for so-called orphan works. An orphan work is one whose 

rights holders have not been identified or located. All orphan works proposals to date would inevitably 

categorize as orphans many works that are being actively exploited by their creators and other rights 

holders because important ways that works are currently used and sold do not specify the rights holders. In 

effect, these orphan works' proposals would confiscate rights to these works and undermine their creators' 

livelihoods. They would also interfere with normal exploitation of the works and impose de facto formalities in 

violation of the Berne Convention. 

2. No statutory, default, or extended collective licensing for digital distribution. Digital distribution, 

including through mass digitization, should continue to require permission from each copyright holder on an 

opt-in, not opt-out basis. Opt-out schemes are promoted as a means to build libraries' digital collections, but 

they also function as statutory usurpation of copyright. We support expansion of digital libraries through 

increasing their acquisition budgets, not through expropriation of creators' rights. 

3. No increased formalities for rights holders. Mandatory registration already imposes an improper burden 

on the time and budgets of copyright holders, and it is a clear violation of the Berne Convention and other 

treaties. Under current procedures, it's nearly impossible to register many types of works in a timely, 

inexpensive way, especially works published online. Registration procedures necessarily embody technological 

and business-process assumptions that are slow to adapt to change and therefore serve as a barrier to new 

publishing and distribution models. Current registration requirements should be repealed and no additional 

formalities should be added. 

4. No privatization of copyright registration functions. Only a public body such as the Copyright Office can 

assure all rights holders of fair treatment and due process. In all likelihood, copyright registries would be 

dominated by and vulnerable to capture and control by large companies-mainly publishers and distributorsthat would favor publisher-centric business models and assumptions over new media and self-publishing 

models to the detriment of creators and the public alike. 
135 

Letter from David P. Trust, Chief Executive Officer, 

the Professional Photographers of America 

f 

Professional Photographc t's 

or America 

Julv 23. 2013 

Th~ fionor~bIe fioward Coble 

United Statl!:5 fious!! of ~l!pnoSl!nlalivt>s 

(h~lr, SUbcommittee on thl! [omU, Intellectual 

I>fop~rty . & the Int..met, 

Committee on the Judlctary 

8352 R;lyburn fiousl! Ofllcl! Buildln8 

Washlngt<l<l, DC 20515 

o,.ar Repno.entatives Coble and Watt. 

The fionorable MeMn Wall 

United State. House 01 ~epresent3t ivel 

~an~ln8 Member. SUbcommitt"e on tka [""n,. 

Intelleotu;ti Property, & th e Internet 

Committee on the judl<l~ry 

B352 Riyburn fiouse Office Bu ildinB 

W~hington, DC 20515 

We ire writins today behil! of Profl!:5sion.,1 PhotOl!,aphel"i 01 Ameri~, the Student Photogr~phir Sotietv, ~nd 

Our affiliated oraanl,atioM. T08ettler we rl'pre<.ent some 52,000 professional phot<lgraphen whose 

I;"elihood I. conling"nl upon .<;lrOOI copyrlShl protecllons, The lIa" majoflty 01 oormemben consider 

them.elv,", poI1rnil andlo,wedding photograph.". They a ... quite IIlerallylhe mpyrijht hold ........ d door, 

I;"e In t ve"" (Of\lI!eS~on;ll districl aero» the U,S. - In Cit;.,., suburbs, i nd ",ralarea •. 

We wrsh to thank you lor yoor mntlnu"d review of the copyriShl ,Iatute. We are ple~ed at yourselectl"" 01 

Sandra Ai$ta .... Elcecutll/t! Dlre<:tor of the [oJpyr,sht Alliance and our colleagu~ Eugene Mop~k. Elce<:ullve 

Dlre<:tor of th~ Amer,can Societyof Media PhotD«'aphe", (ASMP) a. witne,,~ •. We value and support Mi. 

Aista,,' teslimotoy aSa represenUHve of It,ecreative community. We are also delighted 10 lef\d our support 

to Mr. Mopslk and ASMP. hea(llIy endorsillg Ihelrcommentf it5 ,epre..entall-..e of profbslen.1 photography 

a. a whole. 

l'tIotographe ... Siv~ u,lastlng image' of I .... ~ people durest to us at ~ rT\O$t Importanllime. 01 0Uf I"'e', 

Tl>eirwotks ~re not lust enduring memorll'·. of .pedal occaolons. but ~ t·al1gible &Iimpo;e Into whO we are and 

where we rome from - (mage. of those who ~mt and wenl belOfe us. th aI we will one day share W~ h our 

children and arandchlidren to teach them ~heirm"'t I>"rumal heritage. 

f>tIotosrapl!e ... a.e tVplcal1y Ihe sma llest ol' ,mall bu~nl!:5se~, earn,ng an """rage of $35,000 per year. With 

the cost of doing bu,lrn!ss IncreaSing On a'" annual ba:s.ls It is more Imponant Ihan e~er thaI they be ;lble to 

protect their creation •. Wilhout copyright protectIons 10 inCeOl Ihem to InnOYale on a dallv ba~i. , 

profe .. lonal photograph.,..,. mliht find them,elves forced to close their doors. Thi, would represent a 1m. 

not only 10 the ((eat"'e community, but to thi! U.S. economy. and soclet'/ as whole . 

We are than~lul fertile Committee'. effort>. to examine the curr1!m .mtute nd d"termlne how ""_I 10 

~ccommoda e the everchaoging need. of Ille con lent and user communities. We wish to e~ tend our 

conllnuins ,upportl", your re'JIew efforts are happy to supply anv information or ."Inance the Committee 

may need In 80ing forward. 

S,"'erely. 

DaVid P. Trull 

[hlef E)lfcutive Officer 

(137) 

INNOVATION IN AMERICA (PART II): 

THE ROLE OF TECHNOLOGY 

(139) 

C O N T E N T S 

AUGUST 1, 2013 

Page 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 141 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................... 142 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 142 

WITNESSES 

Danae Ringelmann, Founder and Chief Customer Officer, Indiegogo 

Oral Testimony ..................................................................................................... 144 

Prepared Statement ............................................................................................. 147 

Jim Fruchterman, CEO/Founder, Benetech 

Oral Testimony ..................................................................................................... 154 

Prepared Statement ............................................................................................. 156 

Nathan Seidle, President and Chief Executive Officer, SparkFun Electronics 

Oral Testimony ..................................................................................................... 160 

Prepared Statement ............................................................................................. 163 

Rakesh Agrawal, Founder and CEO, SnapStream Media, Inc. 

Oral Testimony ..................................................................................................... 169 

Prepared Statement ............................................................................................. 171 

Van Lindberg, Vice President of Intellectual Property and Associate General 

Counsel, Rackspace, the Open Cloud Company 

Oral Testimony ..................................................................................................... 176 

Prepared Statement ............................................................................................. 179 

SUBMISSIONS FOR THE RECORD 

Prepared Statement of the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Courts, 

Intellectual Property, and the Internet .............................................................. 203 

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

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

(141) 

INNOVATION IN AMERICA (PART II): 

THE ROLE OF TECHNOLOGY 

THURSDAY, AUGUST 1, 2013 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 9:40 a.m., in room 

2141, Rayburn House Office Building, the Honorable Howard Coble 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Goodlatte, Marino, Smith of 

Texas, Chabot, Issa, Chaffetz, DeSantis, Smith of Missouri, Watt, 

Chu, Deutch, Bass, DelBene, Jeffries, Lofgren, and Jackson Lee. 

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

Clerk; and (Minority) Stephanie Moore, Minority Counsel. 

Mr. COBLE. Good morning, ladies and gentlemen. Welcome to the 

hearing this morning. Today’s hearing is another step down the 

long path of conducting a comprehensive review of our copyright 

system. We will be hearing from the stakeholders of the technology 

industry to better understand how they envision innovation and 

the role that it plays among other intellectual property intensive 

industries. 

When we drafted the Digital Millennium Copyright Act, known 

as DMCA, it was impossible to comprehend how the law would 

adapt to ever changing technologies or predict whether those technologies would grow in popularity. Most Internet connections were 

dial-up. There were no smartphones, no supercomputers, and most 

users had limited capabilities to utilize this new digital platform. 

Hindsight is 20/20, and in just over 10 years, I think it’s safe to 

say that technology has forever changed the world in which we 

live. Today, technology is found everywhere. Virtually every industry has embraced some type, some form of technology to promote 

efficiency, improve quality, and ensure safety for workers and consumers. 

While not all technological innovations are solely within the digital platform, they depend on the robust intellectual property system just as innovations do in other industries. 

Government should not stand in the way of innovation. It should 

create an environment that will foster and incentivize it. Minus a 

handful of technical fixes on balance, I think the DMCA has gone 
142 

*The information referred to was not available at the time this hearing record was printed. 

a long way to promote creativity and innovation within the digital 

platform. That being said, I am old-fashioned and I always have 

maintained that our laws, in particular our copyright laws, should 

be generously laced with common sense. 

This hearing is unlike many other hearings we conduct because 

it is not focused on any specific issue, and for me, today’s discussion is more about the future than it is about the past. In particular, I am interested in learning our witnesses’ thoughts about 

what we can expect in the way of innovation over the next decade. 

Our economy has undergone a technological revolution, but consumers still clamor for more technology and they want it faster. I 

am interested to know what you need from our government to meet 

your demand. 

We welcome our witnesses and appreciate your efforts in participating in today’s hearing. 

With that said, I reserve the balance of my time and recognize 

the gentleman from North Carolina, the Ranking Member, for his 

opening statement, Mr. Mel Watt. 

Mr. WATT. Thank you, Mr. Chairman, and I will be equally brief. 

Today’s hearing focuses on the role of technology as it relates to 

copyright policy in the digital age. Last week we heard from segments of the content industry about the intersection between content and technology in this rapidly changing environment. At last 

week’s hearing, as it was illustrated at last week’s hearing, the reality that technology and content industries are completely separate and distinct with no overlapping goals and interest presents 

a false dichotomy. To the contrary, marriage between technology 

and content, unlike probably at any other time in our past, is unmistakable and largely due to the advent of the Internet irreversible. And whether that marriage is forced or one of convenience, we 

all have a stake in making it work.I21So I look forward to hearing 

from the witnesses about how copyright law and policy intersects 

with their particular technological innovations, and I yield back 

and I’ll submit the rest of my statement at some later point, Mr. 

Chairman.* 

Mr. COBLE. I thank the gentleman. I see the lady and gentlemen 

on the panel. We have a distinguished panel today, and I will begin 

by swearing in our witnesses prior to introducing them. If you 

would please all rise. 

[Witnesses sworn.] 

Mr. COBLE. Let the record reflect that all the witnesses responded in the affirmative. 

Each of the witnesses’ written statement will be made a part of 

the record, and we will ask you all—I stand corrected. I have just 

been told the Chairman of the full Committee has arrived, and I 

would be remiss not to recognize him. So I am pleased to recognize 

the distinguished gentleman from Virginia, Mr. Goodlatte, for his 

opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

This morning the Subcommittee will hear from several companies from the technology sector and their role in innovation in 

America. Their innovation touches numerous areas of our society, 
143 

from how the blind access the printed word, how businesses connect with customers, and even how American students learn about 

science and technology in school. 

Last week, the Subcommittee heard from those involved in the 

copyright sector. The copyright and technology sectors are two very 

important components of our economy that have a unique symbiotic 

relationship. They are both also responsible for significant amounts 

of American innovation that is the envy of the world. 

Thanks to the Internet, innovation can come from many places 

and be distributed with equal ease. Sometimes innovation comes 

from an artist holding a digital brush and sometimes it now comes 

from a collective effort of interested Internet users who choose to 

fund a new product, a new business or a new social cause. As the 

Committee conducts its review of U.S. copyright laws, it is important to hear from the technology sector about the varying methods 

of innovation in America. 

I thank the witnesses for coming today and look forward to hearing their testimony. 

Mr. COBLE. I thank the gentleman. All statements from other 

members of the panel will be made a part of the record. 

Our first witness today is Ms. Danae Ringelmann, Founder and 

Chief Customer Officer of Indiegogo. In her role, Ms. Ringelmann 

leads the company’s Customer Happiness Division and Employer/ 

Employee Culture and Value Initiative. She was listed as Fast 

Company’s ‘‘Top 50 Women Innovators in Technology’’ in 2011. 

Prior to cofounding Indiegogo in 2007, Ms. Ringelmann was a securities analyst at Cowen & Company. She received her MBA from 

the Haas School of Business at University of California in Berkeley 

and her BA in humanities from the University of North Carolina, 

Chapel Hill. 

Ms. Ringelmann, Mr. Watt and I will award you high marks for 

having made that last choice, and that will set you apart from your 

fellow panelists. 

Our second witness is Mr. Jim Fruchterman, President and CEO 

of Benetech, a nonprofit tech company based in Palo Alto, California. He is a former rocket scientist, having created technological 

social enterprises to target underserved communities. Mr. 

Fruchterman, also cofounder of Calera Recognition Systems and 

RAFT, RAF Technology. Mr. Fruchterman received his MS in applied physics and BS and engineering from the California Technical 

Institute. 

Our third witness is Mr. Nathan Seidle, Founder and CEO of 

SparkFun Electronics. In his position, he oversees the day-to-day 

operations at SparkFun that brings new technologies to the market. Mr. Seidle founded the company in 2003 while studying electrical engineering as an undergraduate at the University of Colorado at Boulder. SparkFun received many awards, including the 

‘‘2nd Fastest Growing Company in Boulder’’ in 2008 and ‘‘Colorado 

Companies to Watch’’ in 2010. 

Our fourth witness today is Mr. Rakesh Agrawal—I think I 

butchered the pronunciation of some of these names. I apologize for 

that—Founder and CEO SnapStream Media. SnapStream creates 

software that enables organizations like the Daily Show with Jon 

Stewart to record and search inside of TV shows. Mr. Rakesh is 
144 

also an executive at a specialty manufacturing company, Piping 

Technology & Products. He received his mechanical engineering 

and computer science degrees from Rice University. 

Our fifth and final witness is Mr. Van Lindberg, Vice President 

of Intellectual Property at Rackspace, the Open Cloud Company. In 

his position, Mr. Lindberg oversees all aspects of the company’s intellectual property and brand management portfolio. Prior to 

Rackspace, Mr. Lindberg served as General Counsel at Python 

Software Foundation and as Counsel for Intellectual Property of 

Haynes and Boone, LLP. He received his law degree and bachelor’s 

degree from Brigham Young University. 

Welcome to you-all. And Ms. Ringelmann, we will begin with 

you. And folks, we are delighted to have you with us today. We try 

to comply ourselves as well as you-all within the 5-minute rule. If 

you can sum up in on or about 5 minutes, we would be appreciative 

to that, and there will be a panel on the board where the red light 

changes to amber. The ice on which you are skating is getting thin. 

You will have 1 minute to wrap up prior to the red light being 

shown. 

Ms. Ringelmann, if you will start off. Good to have you with us. 

TESTIMONY OF DANAE RINGELMANN, FOUNDER AND 

CHIEF CUSTOMER OFFICER, INDIEGOGO 

Ms. RINGELMANN. Thank you, Congressman, and thank you Congresswoman—— 

Mr. COBLE. I think your mic’s off. 

Ms. RINGELMANN. My mic’s off. Hello, everybody. 

Good morning. Thank you for having me. Hi, my name is Danae 

Ringelmann. I am one of the founders of Indiegogo. We have the 

largest global crowdfunding platform in the world. I am excited to 

be here today because I speak as an entrepreneur whose technology-based platform is both more of an innovative solve in the 

world of finance. We are fixing finance by using technology, but it 

is also a way to unleash further innovation. So I will be speaking 

today about how technology is not just a result, often a result of 

innovation but also a means to further innovation as well. 

Indiegogo is an example of both, and let me start by explaining 

what Indiegogo is, the problem we are solving, how we using technology to solve it, and why are open approaches particularly innovative. 

So Indiegogo, as I mentioned, is the largest global crowdfunding 

platform in the world. We have over 100,000 campaigns that have 

launched on our platform since 2008. We are in every country of 

the world and in every industry. At any given time, we have 7,000 

campaigns that are running and we are distributing millions of dollars every single week to entrepreneurs, artists, activists, community champions all across the world trying to bring their ideas to 

life. 

The problem that we are solving can be explained by how my cofounders and I came together. Back in 2006, we came together out 

of a deep mutual frustration for how unfair, difficult, and inefficient fundraising was. Myself, I had grown up a child of two small 

business owners who had struggled for 30 years to grow their business because not once could they ever get an outside loan. I then 
145 

went into finance to understand how finance worked and realized 

that I was failing for the exact same reason that my parents were. 

I started working with independent artists on the side trying to 

help them raise money, and I failed because I didn’t know the right 

people. In a parallel life, my cofounders had also been struggling 

to raise money. Eric Schell, my first cofounder for theater companies in Chicago, and Slava Rubin, my other cofounder, his father 

had died when he was a young boy and he never really dealt with 

it. So, in his 20’s, he decided to deal with it, and to do that, he was 

going to raise money for cancer research. 

So we came together out of this frustration, and the culminating 

moment for me was when I was producing an Arthur Miller play 

about racial profiling, which was right after September 11th, and 

I had a challenge to stage a one-night event where I would bring 

an entire audience, get actors to donate their time, and get investors there. So at the end of the one-night event, the investors would 

be able to witness the entire experience and write a check to turn 

the production into a full blown production. Everything went perfect except that very last bit where they said that that was an incredible performance, we are not investing, sorry, good luck. And 

it was in that moment that I realized that people who wanted to 

bring the idea to life, which were the actors and the audience, 

didn’t actually have the power to make it happen. 

At the same time, when I was meeting with my cofounders, we 

realized that as things like eBay and YouTube, what they were 

doing with the Internet in leveraging the Internet in terms of democratizing their industries, was incredible. What we saw with 

eBay was that it was providing a way for people to buy and sell 

anything from anybody to anybody. We saw with YouTube, there 

was an ability for people to share their videos and watch whatever 

videos they wanted. 

So, if you could buy or watch or share whatever you wanted, why 

couldn’t you fund whatever you wanted. And so that was the impetus that brought us together and that is why we created Indiegogo. 

Indiegogo is the first online funding platform that is empowering 

people to fund what matters to them, whatever that might be. 

Great examples of how it is working better as a solve for finance 

is two stories. One, Emmy’s Organics. It is a bakery that got its 

start, they make gluten-free macaroons, and it had a huge opportunity to grow their business into a local—expand their business by 

distributing their products in a local grocery store. In order to do 

that, they needed $15,000 to redo their packaging. They had just 

taken out a new small business loan just a year prior to that, and 

so when they went back to the bank to take out another loan to 

do it, they got rejected. 

So rather than wait and hold tight, they said, they took the matters into their own hands and they ran an Indiegogo campaign and 

within 3 weeks raised the $15,000 by offering macaroons to their 

customers and they got their product into the grocery store chain, 

and within a year they were selling in 40 States across America. 

Another example is a product designer who had invented a light 

called the Gravity Light where 30 seconds of lifting creates 30 minutes of energy. He wanted to create a new solution to kerosene in 

the developing world which kills people, and it is very dangerous 
146 

and expensive. So what he did is he shopped at venture capitalists, 

and not one venture capitalist would call him back. All of them 

were too worried about the risk. Inherent in that, there wasn’t a 

market for it. So what he did, rather than give up, he went on 

Indiegogo and he raised $400,000 by offering light in exchange for 

contributions from people across the world. And guess who kept 

calling by the time his campaign was over? Those venture capitalists that originally wouldn’t call him back. Clearly their minds had 

been changed because their Indiegogo campaign had showed that 

there was a market. 

So, clearly Indiegogo is using technology as a way to solve a 

problem, which is the inefficiency of finance, and it is also a way 

to unleash further innovation as the Gravity Light and Emmy’s 

Organics are great examples of that. 

But the secret ingredient about Indiegogo’s technology-based approach to finance and crowdfunding is not just the fact that it is 

technology based. It is actually inherent in the fact that we are 

open. And what I mean by that is we don’t judge and we don’t vet 

and this is actually something that makes us very unique. But the 

importance of this is the reason we are doing that is if we did vet 

and we did judge, we would just become another gatekeeper, we 

would just become another third-party friction in the process of 

raising money, which means we would be basically watering the 

roots of the problem we are trying to solve. 

An example of the power of this open approach is that a couple 

in Florida really wanted to have a baby, but they couldn’t conceive 

naturally. And because they couldn’t afford IVF, they weren’t going 

to be able to have a baby. Instead of giving up, they turned to 

Indiegogo, after they had been rejected by another funding platform, and on Indiegogo, within weeks, they raised the money and 

just last year the baby was born happy and healthy. 

So, our open approach is actually what is far more revolutionary 

than just the use of technology because it was because we were 

open that this baby now exists. 

I will close in saying that—it is time to close? 

Mr. COBLE. Time to close. 

Ms. RINGELMANN. All right. I will just close in saying that it is 

worth noting that technology doesn’t have to be open, but if you 

want to create an open approach that is truly democratizing industries, it has to be technology based. And if you want to be—the reason for that is when you are open, you are open to people who potentially are using your platform in a way that it wasn’t intended, 

and so through technology, you can build infrastructure like the 

trust and safety algorithms on the back end that we use in order 

to protect our platform and ensure that people are using it for the 

way that it was intended. 

Happy to answer any more questions. Thank you. 

Mr. COBLE. Thank you. 

[The prepared statement of Ms. Ringelmann follows:] 
147 

U.S. Congressional He aring: 

"In novation in Ameri ca: Role of Technology" 

Committee on the Judiciary's Subcommittee on Courts, 

Intellectual Property, and the Internet 

Statement of: 

Danae Rillgelmann, (FA 

Founder & ChJef Customer Officer, rndirgogo 

www.indirgogo.com 

@indiegogo 

@gugodanae 

.:C indiegogo 

Submitted on July 31, 20}3 
148 

Dear Congresswomen and Congressmen, 

My name is Danae Ringelmann, and I'm one of the founders of Indiegogo - the 

largest global crowdfunding platform in the world. Thank you for inviting lndiegogo 

to be a part of the hearing today. I'm excited to share lndiegogo's perspective on 

the role technology plays in innovation, which I would define as the discovery, 

identification, development and application of new and better solutions for old and 

new problems. 

As an entrepreneur who has dedicated the last 7 years of her life to utilizing 

technology to solve a problem faced by millions of other entrepreneurs across the 

world - inefficient access to financial capital - I hope my perspective will surface 

new thoughts for you on how: 

1) technology-based solutions are often the result of innovation, and 

2) technology-based systems are often the means for innovation as well. 

Since, Indiegogo is an example of a technology that is both an innovative solution 

itself as well as a catalyst for innovation, I will provide background on Indiegogo, the 

problem we're solving, how we're using technology to solve it, and finally howwe 

enable more innovative solutions to come to life across America and the world. I 

will close with some thoughts on a particular flavor of technology that I believe is 

the most robust driver of innovation, and leave you with a compliment and wish. 

What is Indiegogo? 

As mentioned above, Indiegogo is the largest global crowdfunding platform 

empowering people to raise money and fund what matters to them. We have hosted 

over 100,000 campaigns and distribute millions of dollars every week, globally. 

About 7,000 campaigns are active on Indiegogo at any given time. We are an 

international platform with campaign owners and contributors in nearly 190 

countries. We welcome a diversity of campaigns spanning creative, cause-related 

and entrepreneurial projects. This gives campaign owners and contributors the 

chance to fund what they care about most, without restrictions. 

What problem is Indiegogo solving? 

My co-founders and I came together back in 2006 out of mutual frustration for how 

difficult, inefficient and unfair the traditional fundraising process was for small 

businesses, artists, causes and every day people engaged in the world who were 

wanting to bring new ideas to life. I quit my job in the financial industry after failing 

to help independent artists raise money and returned to business school to start a 

company that would democratize funding. While in school, I met Eric Schell and 

Siava Rubin who immediately joined forces with me out of Similarly discouraging 

experiences - Siava for cancer research and Eric for theater. We realized that we all 

failed, not for lack of heart, hussle and interest from a community of fans, 
149 

supporters and future customers, but rather for lack of efficient access to third party 

investors with capital. 

We recognized that thousands - if not millions - of ideas were going unborn every 

year because the people who wanted ideas to come to life - the creators and their 

communities - didn't have the mechanism to fund them, efficiently. The fundraising 

process, instead, was reliant on the creators gaining access to specific third party 

investors whose interests and goals mayor may not have aligned and then 

convincing said investors that the creators' community of supporters, fans and 

customers was large and engaged. Such inefficiency in connecting with interested 

capital not only made fund raising difficult, but also quite unfair. 

Further we noticed innovative technology-based platforms like eBay, YouTube and 

Word press were democratizing ecommerce, video, and writing. So we asked 

ourselves: if anyone can sell or buy anything from anyone, and anyone can create or 

watch video made by anyone, or anyone can write or read a blog written by anyone, 

why couldn't anyone fimd a business, project or cause initiated by anyone? 

How we're using technology to solve the inefficiency of finance and spur 

further innovation? 

Based on our frustrating experiences and observations, my co-founders and I set out 

to launch an online platform that would put the funding power back into the hands 

of the creators and their communities, making finance efficient and fair once and for 

all. We launched I'nl\·w.!ndi~l;ogp.C()1l1 in January 2008 to empower people to fund 

what matters to them - whatever that might be. Rather than rely on third party 

investors - or gatekeepers - to determine which ideas are brought to life and which 

ones aren't, Indiegogo has created a way for the world - together - to decide which 

ideas are born. 

As on online funding platform, discovering ideas to fund and connecting with new 

funders, has never been more efficient. Neither geographic, social nor economic 

boundaries are barriers causing friction in the funding process any longer. Further, 

as an "open" online funding platform where there is no application process, nor 

waiting period associated with launching a campaign, individuals can start raising 

funds immediately, without delays or third party approvals. As a result, the quest to 

connect and align with a gatekeeper is no longer a needed step in the funding 

process. 

The only thing in between someone with an idea and that idea happening is the 

person, their work ethic and the responsiveness of that idea's community. There 

are no gatekeepers on Indiegogo, not even Indiegogo itself. 
150 

The Powe r of Technology in Driving Innovation 

Becaus!' of Indi!'gogo's technology platform, many entrepreneurs. artists and causes 

lmve been able to raise money efficiently and fairly after being locked out orthe 

traditional financial system; Le. when other financial solutions have failed them. 

· • -::r.. ... :==-

..... - .... 

.-

• 

---- _._-.. --_._- -.... -_.-

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Emmy's Organics was a young gluten-free macaroon business that 

needed $15,000 to updaTe their packaging in order to get 

distribution in a local grocery retailer. The bank rejected the 

company's loan application. Rather than give up and forego and 

amazing growth opportunity, Samantha - the owner of Emmy's 

Organics - turned to lndiegogo and raised over $15,000 in just a 

few weeks. The.campaign offered macaroons as perks, and 

customers who wanted this business to succeed not only funded 

the campaign but leveraged Indiegogo's sharing tools to turn their 

friends Into funders {and thus customers) too. Within a few 

months, Samantha's maCJroons were in stores across the region, 

and within the year, Emmy's Organics was selling its macaroons in 

40 states across America. 

Gravity Ught was an innovative early-stage device that generated 

Jlghtby lifting it up against gravity. The creator - Patrickenvisioned this product as a safer and cheaper solution to 

kerosrlle in the de.veloping world, Whell the product was at 

proto-type stage, he wanted to raise venture capital to bring his 

product to market. However, no VC wOuld call him back as the 

size of the light's potential market was uncertain. Rather than 

give up, Patrick turned to Indlegogo i1nd rilised $400,000. The 

campaign offered early samples of the lights as perks. Not 

surprisIngly, because of the funding tTaction by the end of the 

C3mpaign, v!'nture capitalists wouldn't stop call1ng Patrick. 

Clearly the Indiegogo campaign proved there was a market for the 

product_ 

Both examples show how Indiegogo's technolugy-based solution tu fundraising is a 

bener solve than the options available to both entrepreneurs before they discovered 

Indiegogo (banking loans and venture capital). Further, both show how lndiegogo's 

technology is enabling further Innovation. Without lndiegogo. Gravity Light 

would've never been able to bring its innovative lighting technology to life, nor 

would Emmy's Organics have been able to meet the growing demand of gluten-Cree 

macaroon eaters across the country. 

The Powe r of Ope n Technology in Driving Revolutionary Innovation 

On the surface, one might think technology alone - in our case the 1's and O's of our 

codebase - are the only necessary ingredients that both result in and enable further 
151 

innovation. True: withouta dynamic, automatic and systematized product that 

connect!> people across the world in :;-I:'conds, securely stores and organizes 

informatiun and data better than any human-system, and moves money with a rew 

clicks ofa button, funding is now more efficient and accessible than before. 

However, it's because lndiegogo's technology platform is fully 'open" that Indiegogo 

Is not just innuvating. but revolutionizing finance. If we had an applkatlun process 

layered on top of our technolugy platform or If Indlegogo empl oyees decided which 

projects could use our platform and which couldn't, our technology-based solution 

would only be marginally better at democratizing funding than the gatekeeper. 

based solutions mentioned above. How we're revolutionizing finance is by applying 

311 open model to funding; meaning we don't vet Ideas upfront. We don't decide 

who has the right to raise money and who doesn't. We don't judge. Irwe did, we'd 

simply be watering the very roots of the problem we're trying to solve. 

• --_ ... .---

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For example, a couple recently invented the world's firstTricorder 

calted the Scanadu. It's a Star Trek·like device known as a "doctor in 

yOur pocket" that was not allowed on certain funding platforms. 

They used lndiegogo because we didn't judge. As a result" they brokl' 

[ndiegogo's funding record at the time, raising over $1 .5 mll1ion ~ 

enough to do a first· run production of their innovative device that 

reads and tracks your body's Vitals. Had Indlegogo not existed, this 

couple would still be working to raise the funds to bring their 

trlcorderto lIfe. 

Another example of the revolutionary power of I ndiegugu's open 

approach to tl;'chno[ogy-based funding, is a story about a couple who 

wanted to have a baby, L"alddn'! conceive naturally, but couldn't 

afford IVF. Rejected by a different funding platform because their 

proJeet didn't adhere to the guidelines, this couple came to 

lndiegogo. Again, we didn't judge. 'nley gal their campaign 

launched right away. As a result the couple raised the SB,OOO they 

needed [n lusta few weeks to pay for IVF. As a result, a healthy and 

happy baby boy was born last year. Had Indiegogo not been upen, 

this human bei ng wouldn't exist today. 

Why Disruptive Open Models Need Technology 

These examples show that technology alone is not enough to innovate in 11 

meaningful way. To truly disrupt and revolutionize finance, we needed to eliminate 

all remnants of the old solutions causing the inefflcieneies & problems ~ gatekeepers 

and applicatIon processes. We needed to create an open funding system. However, 

the key ingredient of a robust open·system is in fact technology. 
152 

Said a different way, to create an open funding platform that operates efficiently and 

safely, that system has to be technology-based, Why? When a platform is open to 

everyone, it's open to people who want to use the platform in ways it is not 

intended, e,g, fraudsters or criminals, One solve is to build walls (like applications) 

to keep ill-intentioned people out, However, that approach is akin to gatekeeping, 

and thus nms the risk of excluding well-intentioned people accidentally (i.e. not 

very innovative). The approach assumes people are gUilty or not worthy until they 

prove otherwise, 

Another solve is to create a system where people are innocent until proven gUilty. 

Technology, once again, enables this approach and thus enables platforms like 

Indiegogo to mitigate potential bad activity without excluding good activity. For 

example, we've built Trust and Safety algorithms and protocols that keep ou r 

platform clean when ill-intentioned folks come knocking, Our technology-based 

system catches suspicious behavior faster than any human-powered system could. 

Further, regulation like DMCA has been instrumental in enabling open technologybased platforms like Indiegogo to remain open, as DMCA protocols also assume 

people are innocent until proven guilty, 

Going Meta 

So it's the combination of technology and "open" models that truly drive 

revolutionary innovation. If you think of other game-changing technology platforms 

- eBay, YouTube, Wordpress, Twitter, Mozilla, even Khan Academy - all are open, 

and all are democratizing an industry because of it. Said another way, imagine if 

YouTube required video-makers to apply to upload video. Would YouTube be the 

video engine for the world that it is today? Probably not, 

Stepping one meta level up, the technology enabling Indiegogo.com and these other 

online platforms to even exist and work is actually the internet, Interestingly, one 

key feature about the internet is that it's also open, Indiegogo didn't need to "apply" 

to use the internet to start its company. We just used it. The internet's open 

approach have us the equal opportunity to build an equal opportunity funding 

platform 

To Close 

When you think about the role technology in innovation, I hope you think about how 

it's both a product of innovation as well as a means for further innovation, I hope 

you also think specifically about "open models and applications of technology" like 

open-source, crowdsourcing and lndiegogo's open approach to funding are not just 

innovating, but democratizing and thus revolutionizing industries, 
153 

There's nothing better to sum up the power of open-based technologies than a 

history-making campaign live on Indiegogo now. The Ubunlu is an open-source 

software technology using Indiegogo's open funding model to create an open-source 

phone. The operating system was built "by the people,· and the phone will be 

funded by the people. The campaign is currently raising $32 million in 30 days. It's 

raised nearly $8 million in 9 days. Ifit reaches it goal, the Ubuntu team will develop 

and manufacture the phone. If it doesn·t reach it's goal, funds will be returned to 

funders and no phone will be made. In sum, the world - together - owns the fate of 

this phone. Whatever happens, this Ubuntu campaign is a testament to the idea that 

finance can actually be efficient, fair and powered by the people. Because of 

Indiegogo, it finally is. The world can now decide what matters to it and what 

doesn't. Let's see what the world decides about Ubuntu ... 

. .. indiegogo 1><""". t-.. «001. ~ 

Ubuntu Edge ..... """"" .... _ .... _ .. __ :_--"" ...... _--

-'-

$7,666,961 

c!r 21 d.y.,.,. 

COIfTIUtU"TE "OWl> 

-_ ... _- -... -... ~ - .. -" .... "-

" 

http://www.indiegogo.com/projects/ ubuntu-edge--39 
154 

Mr. COBLE. Mr. Fruchterman. 

TESTIMONY OF JIM FRUCHTERMAN, CEO/FOUNDER, 

BENETECH 

Mr. FRUCHTERMAN. Okay. Chairmen Goodlatte, Coble, Ranking 

Member Watt, Members of the Subcommittee, thank you for the 

opportunity today to talk about a subject that I am very passionate 

about, which is technology serving humanity. 

I am Jim Fruchterman, President and CEO of Benetech, Silicon 

Valley’s leading nonprofit tech company. Our goal is to see that 

technology gets used to social needs where the standard off-theshelf technologies don’t fit and where a narrow solution targeting 

a social need isn’t likely to make enough money to attract a forprofit company. 

Let me tell you a couple of examples of how we use technology 

for social good. We have been one of the leading providers of software for human rights groups. We make the Martus open source 

software for collecting and analyzing information about human 

rights abuses. Martus has strong security built in so that governments that repress their people have a harder time spying on the 

activitists that are documenting violations. 

At the beginning of this year, Benetech wrote the report on Syria 

with the first accurate numbers of how many people are being 

killed in that civil conflict. We have also worked with truth commissions and genocide trials. We are actually not a human rights 

group. We are the geeks that help human rights groups do their 

job better, more effectively, and more safely. We write software for 

environmental organizations, helping them manage their projects 

more efficiently, and we have Benetech Labs where we are always 

looking at new ideas. And right now we are looking at helping 

America’s dairy farmers run their businesses more sustainably or 

helping local government deliver clean water more effectively. 

Bookshare is our largest single project. It is the world’s largest 

online library for people with print disabilities like blindness, dyslexia, and physical impairments that interfere with reading print. 

We had two breakthrough ideas when creating Bookshare. First, 

we reinvented the traditional library for the blind by using ebooks 

delivered digitally rather than human narration delivered through 

the Postal Service. Second, we crowd-sourced the content. Actually, 

our members with disabilities scan the books as volunteers and 

then put them in Bookshare so they could be made available legally to the rest of the community. These scanned text files, which 

are much like Word processor files or web pages, can be delivered 

electronically for almost no cost and be automatically turned into 

a form the reader can actually use. That includes high quality voice 

synthesis where the computer, the device reads the book aloud to 

the disabled person or creating large format print files or Braille, 

which can be delivered digitally or through a Braille embosser. 

We relied on two copyright exceptions to make this innovative 

new nonprofit enterprise possible. The first, Section 121, known as 

the Chafee Amendment, and also Section 107, Fair Use. Section 

121 lets nonprofits like Bookshare provide the books to people with 

qualified disabilities without asking permission or getting to have 

to pay royalty, and fair use has been important since the creation 
155 

of Bookshare and continues to be crucial as we look to the future, 

especially as we try to make to make STEM materials for accessible to students with disabilities. 

The result, we’ve revolutionized the field of providing accessible 

material to disabled people. Today we serve more than a quarter 

million American students with funding from the U.S. Department 

of Education, Office of Special Education Programs. We deliver an 

accessible book to one of our users for one-fifteenth the cost of the 

traditional method of making these books. We are able to solve 

most of the problem for getting the people the books they need at 

a funding level that was half of what the Federal Government traditionally provided. 

We currently have more than 200,000 books. A major driver of 

this is 200 publishers who give us their digital files at the same 

time they give them to Amazon and Apple, and this really makes 

our library grow fast. 

As you make policy, please keep in mind the impacts on the communities that I care about, that we all should care about. Two specific issues I would like you to keep in mind. First, the majority of 

the students that we serve under Chafee are not blind. They are 

either dyslexic or have physical disabilities like the brain injuries 

that many of our returning veterans have suffered. We don’t want 

to enlarge Chafee beyond serving the 1 or 2 percent most disabled, 

but please keep these people who aren’t blind in mind if you revisit 

that. 

Second, one of the ironic reasons that Bookshare exists is because technical protection measures keep our users from using 

commercial ebooks, so we would like you guys to keep that in mind, 

but there are many legal and socially beneficial applications that 

these BRM materials get in the way of. 

So, our dream at Bookshare is to gradually move away from 

being the primary source of accessible materials for our disabled 

users. We are actively working with publishers and the content industry with our Born Accessible campaign. We are hoping to see 

that all content that they create and deliver digitally is accessible 

to everybody, not just people who don’t have disabilities. 

In conclusion, intellectual property laws at their best can encourage technological advances, reward creativity, and bring benefits to 

society. To make this possible, we must keep the balance in copyright. We need to defend fair use as a laboratory for creativity, we 

need safety net provisions like copyright exceptions to ensure that 

people with disabilities don’t suffer unduly because their accessibility needs get overlooked once again. 

We have a great track record as a tech industry with new technology of figuring out how to make money for stakeholders while 

helping consumers and society, and we can continue this trend. 

With the leverage of technology and the foundation provided by 

well thought out intellectual property laws and a lot of common 

sense, we can inspire economic growth and social good. 

Thank you. 

Mr. COBLE. Thank you, Mr. Fruchterman. 

[The prepared statement of Mr. Fruchterman follows:] 
156 

Prepared Statement of Jim Fruchterman, CEO/Founder, Benetech 

INTRODUCTION

Committee Chairman Goodlatte, Subcommittee Chairman Coble and Ranking 

Member Watt, and members of the subcommittee, thank you for the opportunity to 

speak to you today. 

I am Jim Fruchterman, CEO and Founder of Benetech, one of Silicon Valley’s 

leading technology nonprofits. We operate just like a regular for-profit software company, with software developers, product managers and user support professionals, 

but our focus is on addressing important social problems where the market today 

is failing. As someone who was involved in the founding of seven for-profit high tech 

companies in Silicon Valley (and only five of them failed!), I understand well how 

much financial return there needs to be in order for a new enterprise to garner venture capital investment. In the social sector, there are so many opportunities to 

apply technology for good that the private sector traditionally hasn’t, or won’t, pursue—usually because they aren’t quite profitable enough. But, we at Benetech believe that technology and innovation for good should still be pursued. So much of 

the nonprofit sector is about handling information, and information technology excels at improving the handling of information and reducing costs. Society desperately needs technology applied to these issues, even if they only break even financially. 

Benetech is not a single-issue organization: our goal is to see that the best technology gets applied to social needs where the standard off-the-shelf technologies 

aren’t good enough. We don’t need a word processor designed for human rights 

groups, or a spreadsheet made for schools. However, there is usually a software 

need in every field of endeavor that’s unique to that field. That’s the market failure 

gap we explore. 

We don’t want to deliver the same solution in perpetuity. When we start a new 

project, we always devise at least three successful exits within five to ten years. If 

somebody else solves the problem well, there’s no need for us to duplicate their 

work, even if we might be slightly better. 

Let me give you some examples of how we use innovative technology for social 

good. Benetech has been one of the leading providers of software for the human 

rights movement. We make the Martus open source software for collecting and analyzing information about human rights abuses. Martus has strong security built in, 

making it difficult for repressive governments to spy on activists documenting violations. We’ve just received major funding from the Department of State to scale up 

the mobile version of Martus to offer the same kind of security on smartphones. 

We also work with scientists to get the numbers right in large-scale human rights 

conflicts. At the beginning of this year, the first accurate numbers started coming 

out on how many people were dying in the Syrian civil conflict: that was a report 

written by Benetech. Benetech also worked with truth commissions on getting their 

numbers right, and helped develop key testimony in the genocide trial of General 

Rios Montt in Guatemala. We’re not a human rights group, we’re the geeks that 

help human rights groups do their work better and more securely. 

We also developed the Miradi project management software for conservation 

projects. Imagine business project management 101 wrapped in terms that a field 

biologist is comfortable with, designed with the best practices of the field in mind. 

We have a Benetech Labs, where we engage in conversations with potential partners to develop new tech solutions. This month, we’re actively exploring writing software to help American dairy farmers manage their sustainability commitments to 

their customers, the big food companies. We’re also in Latin America talking about 

helping the people who run community water systems about how to get clean water 

to more people more effectively. Many of these Labs ideas won’t turn into full scale 

projects, but many of them will. We get asked to get involved in easily a hundred 

new projects a year. I strongly believe that the need is there for more Benetechs, 

in order to ensure that more of society benefits from the incredibly effective engine 

of technology creation we have in Silicon Valley and around the United States in 

countless communities. 

The Benetech team comes out of the high tech industry. Many of our senior staff 

members have been entrepreneurs and founders of regular for-profit high tech companies. We build our work on strong foundations laid down by other people and 

companies, whether it’s the open source ecosystem of the Internet, or proprietary 

software or content. We don’t create solutions from scratch: our innovation is adapting existing raw technology to meet the needs of the users in the social sector. We 

call this building the last ‘‘social mile.’’ We depend on an intellectual property system that works and is friendly to innovation. Concepts like fair use, open source 
157 

and open content make our work much easier, since they reduce the transaction 

costs for less lucrative uses of intellectual property. And, we frequently depend on 

the good will of companies and rights holders to provide us with free or inexpensive 

access to the assets that they control. 

We need balanced intellectual property regimes that allow for socially beneficial 

applications, while allowing industry to make money. Silicon Valley has gotten very 

good at figuring out ways to make money while giving away the core product: these 

approaches have exciting analogs in the social sector. 

BOOKSHARE

Our Bookshare initiative, which is the world’s largest online library for people 

with disabilities like blindness and dyslexia that interfere with reading print, is a 

great example of this innovation ecosystem in action. About ten years ago, we had 

an idea for blowing up the traditional library for the blind, and recreating it using 

the then-emerging technology of ebooks and crowd-sourcing. We began with our 

members scanning books for each other, and many of our books still come from our 

volunteers. We also used digital text files (much like a web page) that we can deliver electronically and that can use high quality voice synthesis, large format print, 

or digital Braille, depending on the needs of the reader. 

The legal underpinning of our work is of course the purview of this committee. 

We relied on two copyright exceptions to make this new nonprofit enterprise feasible: Section 121, also known as the Chafee Amendment in honor of then-Senator 

Chafee, who introduced this exception in 1996, and Section 107, fair use. Section 

121 allows authorized nonprofit entities, such as Bookshare, whose primary mission 

is to serve people with disabilities, to create accessible versions of copyrighted books 

without the need to request permission from publishers and then distribute them 

exclusively to people with qualifying disabilities. Section 107, the fair use exception, 

has been important since the founding of Bookshare, and has continued relevance 

as we look to the future of our work. 

Rather than springing this idea on the publishers and authors as a surprise when 

we launched Bookshare, we reached out to them first. A year in advance of our 

launch, I addressed the Copyright Committee of the Association of American Publishers. We made commitments to upholding the social bargain implicit in the 

Chafee Amendment: help people with disabilities, but don’t interfere with the normal commercial process of selling books. We committed to not enlarging the franchise of who qualified for Bookshare, by using the same criteria used by Learning 

Ally (then Recording for the Blind & Dyslexic) to ensure that we provided accessible 

books only to people with bona fide disabilities that truly interfered with reading. 

We next brought the Science Fiction and Fantasy Writers of America on board 

by committing to be against illegal copying of books and to authors’ ability to review 

the quality of their works on Bookshare. By smoothing the way with publishers and 

authors, we had the space to launch a completely new approach to solving an important social issue: ensuring that people with disabilities have access to the books they 

need for education, employment and full inclusion in society. 

The result? Bookshare revolutionized the field of accessible educational materials 

as we rapidly became the nation’s (and the world’s) largest online library dedicated 

to helping people with print disabilities. Today, we serve more than a quarter million American student members through funding from the U.S. Department of Education, Office of Special Education Programs. American students get this access to 

educational material for free, thanks to this funding. And, it’s far, far cheaper to 

scan a given book once, proofread it, and then have it be accessible to all Americans 

with qualifying disabilities. This is in stark contrast to the status quo before 

Bookshare, where only a tiny fraction of the needed books were available in accessible form, and often the same book was painstakingly recreated over and over 

again by different educators at different schools, by parents and by students themselves. 

Schools are legally required under Section 504 of the Rehabilitation Act and the 

Individuals with Disabilities Education Act (IDEA) to provide these students with 

accessible educational materials. These students are almost always receiving special 

education services of some kind. While tens of thousands of our members are blind 

or visually impaired, the majority of our members are dyslexic. We also serve people 

who are unable to interact effectively with printed books because of a physical disability, such as cerebral palsy, a spinal cord injury or traumatic brain injury. Returning veterans with disabilities that diminish their capacity to read print is a key 

population that we are actively working to support. We want to make sure they still 

have the opportunity to pursue higher educational opportunities. 
158 

We currently have more than 200,000 books in the ever-increasing Bookshare library. A major driver behind this accomplishment and our ability to deliver a book 

at 1⁄15 of the cost of the traditional method of creating accessible books was the development of an eco-system of socially responsible publishers who have given us direct digital versions of their books. Over half of the books in our collection have been 

provided directly to Bookshare by publishers voluntarily in high quality digital formats. It’s an outstanding act of corporate social responsibility. The Chafee Amendment terms provided a floor set of provisions that made these negotiations feasible: 

it is an indispensable safety net for accessibility. 

Having the most in-demand books and textbooks solves only half the challenge. 

We also have an entire array of assistive technology tools for turning our ebooks 

into something our members can effectively perceive. We want students to have 

equal access to this content, in their preferred mode for reading. There are probably 

over fifty different products that serve our students, thanks to an open interface we 

provide to any maker of assistive software or hardware. Bookshare itself provides 

free software on PCs and Macs, as well as an open source reader for Android phones 

and tablets. One of our users who is logged into our website can start reading any 

book immediately through their web browser. There are a couple of best-selling applications for Apple’s iPhones and iPads: one we created and one that an individual 

programmer developed that’s terrific. For students whose families can’t afford a PC 

or smartphone, it’s possible to download our books as MP3 audio files, since just 

about every teenager has an inexpensive MP3 player. Plus, we support dozens of 

other products like Braille displays, low vision devices and dedicated players for 

people who are blind or dyslexic. 

COPYRIGHT AND BOOKSHARE

The Section 121 exception has been crucial for us. It made Bookshare possible and 

continues to guide our work. It was written broadly enough that we could innovate 

and help solve the social problem we set out to solve. That flexibility allowed for 

creativity, which wouldn’t have been there if the legislation had specified the fourtrack audio tape technology that was in use at the time of Chafee Amendment in 

1996 (and is only now being phased out). 

We also extensively leverage fair use, Section 107. It allowed for the creation of 

the scanned copies that were originally used to create Bookshare. We had a member 

who is blind who contributed 3,000 scanned books to us at the start. It wasn’t legal 

for him to distribute those books to other people who are blind, but he was able to 

have his own library created by his personal efforts and those of his family, and 

that is a textbook case of fair use. 

We are also creating new solutions to new problems. The great thing about ebooks 

is that the text at the core is increasingly accessible. However, more and more important content in these books are now delivered as images and graphics, not text. 

We’ve been operating an R&D center, called the DIAGRAM (Digital Image and 

Graphic Resources for Accessible Materials) Center, which brings the accessibility, 

special education and textbook publishing industry together around the challenge of 

making images accessible. We want to lower the cost of making an image accessible 

by at least a factor of ten. This is especially critical for science and math books, for 

STEM textbooks. In a current digital math book, all of the equations are delivered 

as images of formulas, not as text. We have to turn these inaccessible images into 

machine-readable information to ensure that students have equal access to the careers of the future. And, it’s almost certain that these efforts to make image accessibility far less costly will be based on the provisions of fair use. 

CHALLENGES AND OPPORTUNITIES

I am extremely optimistic about the opportunity to solve problems like accessibility through innovative applications of technology. However, I don’t want to understate the challenges we face. We have a major textbook publisher that has regularly 

threatened us, our peer libraries and the assistive technology industry to keep students with dyslexia from being served under the Chafee Amendment. These threats 

have a chilling effect on accessibility, as some states make restrictive policies in reaction, denying many thousands of severely dyslexic students access to the books 

they need. 

We have the ironic effects of digital rights management locking out the most likely customers who most need ebooks, people with disabilities. We’re more than a decade into ebooks, and technological protection measures (TPMs) still stop people who 

are blind from using ebooks they purchase. The TPMs are too rigid to know the difference between a person wanting to make an illegal copy of an ebook, or a person 

wanting to access that book via text-to-speech or Braille. When the Kindle was re-
159 

leased with a rudimentary ability to read books aloud, questions of rights led to 

many titles being soundproofed, where the speech was silenced. The transition of 

ebooks is also a giant challenge to libraries, with some publishers declining to provide electronic versions of their books to libraries. The traditional role of libraries 

as a resource for the person too poor to purchase books, or who wishes to look briefly at ten books necessary for research purposes is increasingly under threat. 

And, the accessibility of new content and technology is an afterthought at best. 

While the past few years have seen the explosion of online courseware and new educational technologies, the opportunities for the inclusion of people with disabilities 

inherent in these innovations has been ignored. Even with laws mandating the accessibility of content and technology in the field of education and more broadly, we 

continually experience those ‘‘oops’’ moments. Oh, we forgot about students with disabilities in our product aimed at K–12 schools or students. Oops, we just released 

the Kindle Fire and forgot about accessibility again. These new digital books and 

products are going to be far more valuable than print books, with their ability to 

allow for interactivity with the content and with other users—people with disabilities must not be left behind once again. 

This casual attitude towards accessibility is a real problem, because the true solution to the problem of accessibility is universal design. Most of the features in digital books that are absolute requirements for people with disabilities are amazingly 

valuable to everybody else. We believe that as content is born digital, it should simultaneously be born accessible. Because we’ve done such a good job under the exception of making books available to our users as a specialized library, the big fight 

now is for people with disabilities to be able to buy accessible books online. They 

should be the same books that everybody else buys electronically. Bookshare’s long 

term goal is to go from being the primary source of ebooks for our users with disabilities, to being like a regular library, so that our users enjoy the same privileges 

as their non-disabled peers. Most users would rather simply buy the same books 

through the same channels as everybody else and have them work for everybody. 

As part of our Born Accessible campaign, we’ve begun the process of creating new 

tools and processes to allow publishers and others in the authoring stream to include accessibility from the inception point of their content. We’re getting great responses from publishers, especially when they realize we truly want them to succeed 

in selling more books to disadvantaged communities. 

However, we need safety net provisions like fair use and the Chafee Amendment 

to ensure that people with disabilities don’t suffer unduly because their needs get 

overlooked yet again. 

THE MARRAKESH TREATY

The United States often leads the way in so many technology and policy areas. 

One great example was the Marrakesh Treaty to Facilitate Access to Published 

Works for Persons who are Blind, Visually Impaired, or otherwise Print Disabled 

that just concluded in June. It makes domestic copyright exceptions modeled after 

the Chafee Amendment a global norm for signatory countries. Plus, it eases import 

and export of accessible copies by organizations such as Bookshare. The Treaty 

should help Americans with disabilities access far more diverse content in English 

and other languages, reduce the amount of duplicative work being done in separate 

countries, and, most dramatically, greatly improve access for people with disabilities 

in developing countries that have not had a legal structure to deliver accessible materials until now. 

I want to acknowledge the favorable role played by the United States delegation, 

thanks to reflecting the balance between rights holders and consumers. We were 

glad to be able to work with our partners in industry in striking a balanced treaty 

that upholds that same social bargain we honored in setting up Bookshare: helping 

people with disabilities without making a significant impact on the commercial markets for books. 

SPECIFIC LEGISLATIVE PROPOSALS

The Chafee Amendment 

We think that Chafee works very well. Its main defects are its reliance on the 

1931 Act for a definition of disability, and its approach to people with severe dyslexia, which is incredibly out of date. Even though Learning Ally (formerly Recording for the Blind and Dyslexic) was at the table when Chafee was negotiated, the 

antiquated ‘‘organic dysfunction’’ language around reading disabilities is a concept 

that appears nowhere else and needs to be updated. The Treaty uses a more modern 

approach to disability, which is the functional approach pioneered in the Americans 

with Disability Act. Because balance is important, we don’t think the copyright ex-
160 

ception should be enlarged in terms of serving more people. We think it just needs 

to be clarified to reflect the status quo of Chafee as it is operated by the two largest 

libraries serving the educational needs of students with disabilities. The 2011 Report of the Advisory Commission on Accessible Instructional Materials in Postsecondary Education for Students with Disabilities recommended that Chafee should 

remain narrow, effectively serving 1–2% of all students (note: I served on this Commission). 

The Digital Millennium Copyright Act 

I touched on the irony of digital rights management locking out the most likely 

customers for ebooks. As an authorized entity, Benetech has closely followed the 

Section 1201 proceedings under the Digital Millennium Copyright Act. The most recent determination by the Librarian of Congress allows an authorized entity to 

‘‘unlock’’ ebooks for the benefit of people with disabilities. While we’re likely to conduct a pilot on a limited number of books, but this is not the way to solve this problem. We need to get of rid of dumb TPMs that lock out customers with disabilities. 

But, it highlights how much activity that has traditionally been legal is hard to 

do in a world of Digital Rights Management, Technological Protection Measures and 

licenses that forbid you from doing things that would otherwise be allowed in a 

printed book world. Of course, the recent cellphone unlocking controversy is just another one of these issues. We hope that Congress would make circumvention of 

DRM for legitimate purposes, not related to the making of illegal copies, more clearly legal. 

CONCLUSIONS

Intellectual property laws, at their best, can encourage technological advances, reward creativity and bring benefits to society. Practical and creative innovators, like 

Benetech, need space to operate to ensure those benefits reach those people who are 

often most in need of new solutions, but are often least able to afford them. And 

new technology and new operational models are needed to do far more good with 

the same or fewer resources. 

To make this possible, we must keep the balance in copyright. We need to defend 

fair use as a laboratory for creativity. And we can’t use moral panics and wild 

claims of economic damages to constrain innovation in advance. We have a good 

track record of figuring out how to make money for stakeholders while helping consumers and society, and we can continue this trend. With the leverage of technology, 

and the foundation provided by well though out intellectual property laws—and a 

lot of common sense—we can inspire economic growth AND social good. 

Mr. COBLE. Mr. Seidle. 

TESTIMONY OF NATHAN SEIDLE, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, SPARKFUN ELECTRONICS 

Mr. SEIDLE. Chairman Goodlatte, Chairman Coble and Ranking 

Member Watt, and the Members of the Subcommittee, thank you 

for inviting me to speak on the role of innovation and technology 

today. I am the Founder and CEO of SparkFun Electronics, an ecommerce company that sells educational kits and building blocks 

to the people that invent and prototype new electronic products. I 

started SparkFun 10 years ago in college, and today SparkFun employs 145 people with revenues of $28 million. We build 70,000 

electronic components a month at our facility in Boulder, Colorado. 

Our customers range from the R&D labs of Fortune 500 companies 

to the hundreds of thousands of do-it-yourselfers, makers, and 

crafters. They are responsible for many innovative new businesses 

and products. I’m also on the board of the Open Source Hardware 

Association, whose purpose is to educate the general public about 

Open Source hardware. 

I am here to demonstrate that innovation is not dependent on intellectual property. We manufacture over 450 products all freely 

available to copy, remix, and sell. Rather than spend millions of 
161 

dollars to secure and enforce a patent, we decided to invest that 

money back into new products. We have released over 700 unique 

products over the past decade without patents or intellectual property. We have found that we have about 12 weeks before our competitors copy and sell our products on the Internet. 

Today, we survive by constantly innovating. We are too busy to 

wait for the U.S. Patent and Trade Office to approve patent applications. The pace of the patent system makes obtaining a patent 

irrelevant in our technological company where the product is measured in weeks, not years. 

I don’t need a patent to make a profit, and in fact, the creation 

of a patent and the enforcement of a patent are merely distractions 

to innovation. Thanks to this focus, we have posted record profits 

for the past 10 years. Attempting to stop pirates is a waste of time. 

Show me an anti-piracy law or technology and I will show you a 

dozen 15-year-old girls and boys who can crack it. Provide better 

support and better quality at the best price, that is how you sell 

a product. That is not a new business model. This is how business 

has been done for thousands of years. There is no need for us to 

waste time, energy, and money suing infringers or pirates. Our 

time is better spent innovating. 

Through the power of the Internet, half of SparkFun’s revenues 

come from international sources. Now, imagine what it is like to 

enforce intellectual property protection in 100-plus countries. It is 

laughable for a company my size. Instead of enforcement, we concentrate on competing. I brought today an example. We have released a product called the Fio. This is a small little electronic device that we sell all over the world. We released the design file so 

that anyone could take our design, learn from it, and produce their 

own version. 

A few months after we released this product, we discovered a 

company in China producing a very similar copy. In fact, they improved our design, making it easier to use and cheaper to produce. 

Rather than crying foul, we leveraged all of their improvements 

and released our own new version that incorporated all their improvements. Today the company in China no longer produces the 

Fio. Their price was competitive, but customers came to SparkFun 

because of our shorter shipping times, better features, and technical support. In the Internet age, innovation moves faster than the 

shield of intellectual property. 

The open source hardware model also has huge benefits on the 

classroom and STEM initiatives. It allows more students to have 

access to low cost, widely available educational products. With 

these tools we can teach engineering students in every corner of 

this country. As manufacturing continues to move to other countries, we need the educational backbone to produce engineers here 

in America. 

The most direct route to fixing the gap is to collaborate through 

open sharing. It will be the absence of IP that will make these initiatives successful. 

As a business owner, the worst thing Congress can do is to allow 

monopolies and protectionism to interfere with market forces. Intellectual property and copyright are important features to the economy, to the fabric of the economy, but they are not the only option. 
162 

In the future, more companies and innovators will considering open 

source hardware and how it benefits their business. To enhance innovation, I encourage Congress to consider providing the following 

options. 

First, protect small companies like mine from being bullied 

through litigation. There are too many truly innovative companies 

that are shying away from doing amazing work because they fear 

doing so would put their personal assets at risk. And second, alter 

the number of years that protection—alter the number of years of 

protection that patents grant to a timeline that better reflects the 

pace at which technology is produced today. Rather than the protection of a monopoly of 20 years, shorten it to 5 years so that further innovation can be done once the technology is reaching the 

end of its lifespan. These two changes will greatly increase the incentive to innovate within the U.S. borders. 

Thank you for your time. 

Mr. COBLE. Thank you, Mr. Seidle. You beat the red light. 

Mr. SEIDLE. Thank you very much. 

Mr. COBLE. A little bit after you concluded. Thank you, sir. 

[The prepared statement of Mr. Seidle follows:] 
163 

Testimony of Nathan Seidle 

Founder and Chief Executive Officer, SparkFun Electronics 

Committee on the Judiciary 

Subcommittee on Courts, Intellectual Property and the Intemet 

U,S, House of Representatives 

' Innovation in America: The Role of Technology" 

AuguSI1 , 2013 
164 

Testimony by Nathan Seidle, SparkFun Electronics 

Innovation in America: The Role of Technology 

Subcommittee on Courts, Intellectual Property, and the Internet 

August 1, 2013 

Chairman Coble, Ranking Member Watt, and members of the Subcommittee, thank you for 

inviting me to speak on the role of technology and innovation. 

I am the founder and CEO of SparkFun Electronics. SparkFun is an e-commerce company 

that sells educational kits and building blocks that enable people to invent and prototype 

new electronic products. I started SparkFun ten years ago in college. Today SparkFun 

employs 145 people (has 41 dogs) and manufactures over 70,000 electronic components 

a month at our facility in Colorado. We are a privately held company that has not taken on 

venture capital. Last year we had revenues of $28 million. We write tutorials and provide 

example designs so that our customers can learn how to build complex devices 

themselves, often without any training in engineering. In 2013 alone SparkFun has taught 

over 500 science, technology, engineering and math (STEM) educators on modern design 

tools and curriculum. SparkFun devices can be found in the R&D labs of large corporations 

including brand names such as Intel, Google, Microsoft and Apple. Our products are in high 

demand because we evolve with technology as it's released. Our customers are 

responsible for many innovative new businesses and products that are often based on our 

designs. To serve the community further, I am a board member on the Open Source 

Hardware Association (OS HWA) whose purpose is to educate individuals and the general 

public about Open Source Hardware as well as organize the movement. I also sit on the 

engineering advisory council of the University of Colorado. 

I am here to demonstrate that innovation is not dependant on intellectual property (IP). 

We manufacture over 450 open source hardware products, all freely avai lable to copy, 

remix, and sell as long as the product remains open source. Products released with these 

2 
165 

rights are called Open Source Hardware'. Rather than spend thousands of dollars to 

secure a patent, or the hundreds of thousands of dollars to enforce a patent, we decided to 

invest that money back into new products. We have released over 700 unique products 

over the past decade without patents or IP. We have about 12 weeks before other 

companies (domestic and international) copy our product and post it for sale on Ebay, 

Amazon, and Taobao (the Chinese market that is bigger than Ebay and Amazon 

combined). Many companies would find this threatening and seek legal recourse. We do 

the opposite and use this pressure to focus our efforts on innovation. Because we know our 

products will be copied we focus on creating the next new feature, the next major release, 

the next big thing. We encourage people to copy or "pirate" our products because it leads 

to shockingly fast innovation. 

We are too busy innovating to wait for the USPTO to approve patent applications. The 

pace of the patent system makes obtaining a patent irrelevant in our technology company 

where the life of a product is measured in weeks, not years. The cost of filing a patent 

easily exceeds what a small business can afford. This system no longer helps my small 

business, it just gets in the way. I don't need a patent to make a profit and, in fact, the 

creation and enforcement of a patent actually detract us from focusing on innovating. 

Thankfully, the basics of capitalism are still in play; as long as we can deliver a better 

product, faster, with better support for the best price, we win. We have posted record 

profits for the past 10 years. 

Attempting to stop pirates is a waste of time. Show me an anti-piracy law or technology 

and I'll show you a dozen 15 year-old girls and boys who can crack it. The resources spent 

stopping pirates comes at the expense of innovation and improving the business practices 

that actually serve the customers and industry. The most efficient way to get reimbursed for 

creative work is to make it easy to purchase and consume that content. How do you get the 

market to buy your product or service? Provide better support, better quality, better price, 

1 Open Source Hardware Definition: hltp:!!vvww.oshwa.org/dennition/ 

3 
166 

and better avai labi lity. W you show the consumer that you are a better com pany with which 

to do business, they will shop with you. This is not a new business model. This is how 

business has been done for thousands of years. There is no need to waste time, energy, 

money and resources suing infringers or pirates; our time is better spent innovating. 

Through the power of the Internet, SparkFun has 220 distributors in over 100 countries. Half 

our revenue comes from international sales - this is what a small, modern global company 

looks like. However, trying to enforce IP protection in 100+ countries is laughable for a 

company my size. Here's an example of what we experience daily. We released a product 

called the Fio. This small board enables users to wirelessly connect sensors to the Internet. 

We released the design files so that anyone could take our design, learn from it, and 

produce their own version. After a few months we discovered a company in China 

producing a very similar copy of our design. In fact, they improved part of the circuit making 

the product easier to use and cheaper to produce. They uploaded their design files to the 

Internet in line with the viral nature of open source hardware. Rather than crying foul, we 

leveraged all the improvements they had made and released a new version of our own that 

incorporated their features and some additional features that made the product easier to 

use. Today the company in China no longer produces the Fio. Their price was competitive 

but customers came to SparkFun because of our shorter shipping times, better features, 

and technical support in US time zones. In the Internet age, businesses must become agile. 

Innovation moves faster than the shield of IP protection. 

We love sharing and teaching. STEM is a major pillar at SparkFun. SparkFun started our 

department of education in 201 0 in order to increase the role of electronics and technology 

in the classroom. We see our role in the STEM world not as leaders but as foundation 

builders. SparkFun creates as many examples, tutorials, videos, and curricula as possible. 

We release all of that content with a Creative Commons license2 that allows anyone to 

remix, share and even sell our materials. This openness and freedom is crucial; by offering 

2 Atlribution-ShareAlike 3.0 United States !Jttp:l!creali·vBcommon~.or(j/iicensesjbv-sal3.0!usi 

4 
167 

open source hardware and documentation, educators can take our curricula and materials 

and remix them to fit their particular needs. 

Education will always be challenged to find sufficient economic support. Open source 

hardware provides affordability and accessibility to the classroom. Bringing open 

hardware/software into the school system allows more students to have access to these 

tools. Scratch and the PicoBoard are good examples of tools that are quickly leveling the 

playing field. Scratch is a free, open source, educational programming language that 

visually teaches students using colorful blocks to control characters on the screen. 

Originally developed by the MrT Media Labs, Scratch has become a very popular tool used 

by over 1.3 million students3 worldwide and over 3 million projects4 shared between 

students. PicoBoard is an educational tool that attaches to a computer and extends 

Scratch to the physical world. Students plug switches and sensors into the PicoBoard and 

use them to control their Scratch programs. SparkFun collaborated with MrT to create a 

new, open source version of PicoBoard that is easier to use, easier to build and uses 

lower cost components. As the PicoBoard is open source hardware any student, teacher 

or manufacturer can build the board. With low cost educational products such as 

PicoBoard and the programming language Scratch we can teach students in every corner 

of this country about programming and engineering. STEM education and open source are 

all catalysts to a brighter technological future for the United States of America. As 

manufacturing continues to move to other countries, we need the educational backbone to 

produce engineers here in America. The most direct route to fixing the gap is to 

collaborate through open sharing. ~ will be the absence of IP that will make these STEM 

initiatives successful. 

As a business owner, the worst thing Congress can do is to allow monopolies and 

protectionism to interfere with market forces. For the economy to be healthy we need 

businesses innovating and competing. America is all about options. Businesses should 

3 l111p:llen.",ikipedia.orglwikiiScralch (Drogramming language) 

4 j)ttp:llscratch.mit.edu! 

5 
168 

have multiple options as well, including IP. Intellectual property and copyright are important 

to the fabric of the economy but they are not the only option. In the future more companies 

and innovators will consider open source hardware and how it benefits their business. To 

enhance innovation I encourage Congress to consider providing the following options to 

future generations: 

Recommendation #1: Provide an economic incentive for proprietors or shareholders of a 

company for each product that is proactively released open source. The benefit to all of 

society and the litigation burden that is removed from the economy wi II outweigh the cost. 

Recommendation #2: Protect small companies from being bullied through litigation There 

are too many small, innovative companies that are shying away from doing amazing work 

because they fear doing so will put their personal assets at risk. 

Recommendation #3: Alter the years of protection patents give to a timeline that better 

reflects the pace at which technology is produced today. Rather than the protection of a 

monopoly of 20 years, shorten it to 5 years so that further innovation can be done once the 

technology is reaching the end of its lifespan 

Thank you for your time. If you have any further questions please do not hesitate to contact 

me at nathan@sparkfuncom 

6 
169 

Mr. COBLE. Mr. Agrawal, good to have you with us, sir. 

TESTIMONY OF RAKESH AGRAWAL, FOUNDER AND CEO, 

SNAPSTREAM MEDIA, INC. 

Mr. AGRAWAL. Thank you. Thank you for having me here today. 

My name is Rakesh Agrawal, and I am the Founder and CEO of 

SnapStream. At SnapStream, we make television search software. 

We make it so organizations like the Daily Show can record lots 

of television and then search inside those TV shows. 

As some background, I am a Texan. I have lived in Houston all 

my life, except for two short stints, one here in D.C., one in New 

Delhi, India, and I founded SnapStream with a friend of mine after 

I graduated from Rice University. We employ 27 talented individuals, 25 at our headquarters in Houston and one in Austin and one 

in Ohio. 

Let me start by explaining what SnapStream is and how it 

works. We are a cross between a DVR and a search engine. The 

SnapStream TV search appliance is a physical box that our customers buy and they install at their premises. And they use it to 

record television, up to 10 TV shows at a time on a single 

SnapStream TV search appliance, and then we index all those recordings and make them searchable in realtime. Search results are 

a lot of like what you would see from a web search engine, except 

they are TV search results. Each result is a TV show, the name of 

the show, the air date of the show, and the exact time where the 

mention occurred, and then there is an excerpt of the transcript 

with the matching words highlighted, and once you have found 

what you are looking for, you can create a clip and share that clip 

as a link, as an attachment, you can download the clip into a video 

editor, et cetera. It is not unlike how we are able to copy and paste 

text from news articles online or share a link to a news article online with someone. SnapStream simply lets you do those things 

with traditional television. 

Our customers not only save time but they are able to accomplish 

creative feats that weren’t possible before. I want to play a short 

TV clip for you-all now from one of our customers, The Soup on E! 

Entertainment. 

Looks like it is playing in slow motion. Should we abort? It is 

nothing like seeing the clip itself, but I will describe it to you. It 

is a clip from a TV show called The Soup where they summarize 

what’s been happening on television, and in this particular week, 

Twitter had experienced one of its big growth spurts. Oprah had 

joined Twitter, so there were a surge of mentions of Twitter, and 

what they were able to do with SnapStream was pull out every 

place where the word ‘‘Twitter’’ or ‘‘Tweet’’ was mentioned on TV 

and put that together in a 1-minute montage of probably 20 or 30 

mentions of Twitter and the word Tweet to get across the point 

that everyone in the media was talking about Twitter that week. 

It was a fun clip, and it shows the kind of creative things that people can do with our TV search technology. 

Our search technology is used pretty broadly. We have customers 

like the Daily Show and the Colbert Report. Another creative use 

of our technology is local TV stations use us for competitive intelligence. They will track the words ‘‘breaking news’’ on their com-
170 

petitors’ stations, and then they are notified immediately by email 

when those mentions show up on television. We are also used quite 

a bit here in Washington, D.C., possibly by some of you-all’s offices. 

Our customers here include the White House, the Senate, the RNC, 

DNC, and different media watchdog organizations. State, county, 

and city governments use SnapStream like Mayor Bloomberg’s office in New York and Mayor Annise Parker’s office in Houston. 

From the standpoint of copyright, SnapStream is no different 

than a VCR or a DVR. Our customers make recordings at their 

premises on hardware that they purchase from us. Being able to 

make recordings of television and fair use are both vital to our 

business and to our customers. Without fair use and the ability to 

make recordings, it would not be possible for governmental agencies to monitor television and quickly and efficiently respond to TV 

coverage, and without fair use and the ability to make recordings, 

the comedy programs like the Daily Show and in many cases the 

public awareness that they create would not be possible. 

SnapStream’s TV search technology brings the power of search 

and sharing, things that are a standard part of ‘‘new media to the 

old media’’ of broadcast television, and that is really the root of our 

product’s innovation and the reason customers buy our product. 

Consumer media consumption behavior has changed. 

SnapStream allows organizations to use the power of searching, 

clipping, and sharing with traditional television. Thank you. 

Mr. COBLE. Thank you, sir. 

Mr. KEELEY. They may be able to do it? 

Mr. COBLE. Pardon? 

Mr. Keeley. They may be able to do it now. I don’t know. 

Mr. COBLE. You still working with the—— 

VIDEO TECHNICIAN. On now. 

Mr. COBLE. Okay. 

Mr. KEELEY. Go ahead and watch it. We will watch it. You can 

go ahead and ask him—you can ask him to run it. 

Mr. AGRAWAL. We going to play the clip? 

[Video clip played.] 

Mr. COBLE. Thank you. 

[The prepared statement of Mr. Agrawal follows:] 
171 

Committee on the Judiciary 

US House of Representatives 

Sub-committee on Courts, the Internet and Intellectual Property 

"Hearing on Innovation in America: The Role of Technology" 

August 1, 2013 

Prepared Statement Of 

Rakesh Agrawal 

Founder, CEO 

SnapStream Media, Inc, 

713-446-7725 (mobile) 

rakesh@snapstream,com 

Snap Stream Media, Inc. 

601 Sawyer, #700 

Houston, Texas 77007 

713-644-6240 
172 

My name is Rakesh Agrawal. I'm the founder and CEO of SnapStream. At SnapStream, 

we make television search software -- we enable organizations to record LOTS of 

television and then search inside those TV shows. As one example, SnapStream's TV 

search is how the Daily Show with Jon Stewart finds their TV clips. More on that in a 

moment. 

As some background, I'm a Texan -- I've lived in Houston all my life, except for short 

stints here in Washington DC and New Delhi, India. I founded SnapStream with a friend 

shortly after graduating from Rice University in Houston. We employ 27 people -- super 

talented software engineers, software testers, sales engineers, technical support staff 

and other "knowledge workers" -- 25 at our office in Houston, 1 in Austin, Texas and 1 in 

Ohio. 

Let me start by explaining what SnapStream is and how it works. We're a cross 

between a DVR and a search engine. The SnapStream TV search appliance is a 

physical box that our customers buy from us, install at their premises, and use to record 

television-- up to 10 TV shows at a time on a single SnapStream TV search appliance. 

Then we index all the recordings and make them searchable using the closed 

captioning and some metadata that we license about the TV shows. TV shows can be 

recorded in standard definition or high definition and they can be searched in real-time -

as they are being recorded - for any keyword. 

Search results are much like those you get from a web search engine except they are 

TV search results. Each search result is a TV show with an air date and the exact time 

of the mention found. And the excerpt shown is a transcript of the TV show with the 

matching keywords highlighted. Using SnapStream's TV search technology, our 

customers are able to pinpoint things being said on television -- to find a "needle in a 

haystack" on television. Once they've found what they are looking for, they can create a 

clip and then do a variety of things with that clip - import it into a video editor, share it 

via email, or share it via a private link online. 

? 
173 

We enable our customers to not only save time, but to accomplish creative feats that 

weren't possible with the old method of recording television. The old method was 

basically buying a bank of VCRs or DVRs, using them to manually record a bunch of 

television and then manually scanning through the recordings to find clips (often using 

interns!). One of our customers is The Soup on E! Entertainment. I want to playa TV 

clip for you all now to demonstrate the kind of creativity that SnapStream enables (my 

apologies for the poor quality of the clip I). 

This clip shows you an example of the kind of creativity that SnapStream enables by 

letting media commentators find a needle in a haystack on television. 

So, what are some of the other ways in which our TV search technology is used? 

We have customers like the Daily Show with Jon Stewart and the Colbert Report. So if 

you've ever wondered how The Daily Show finds all those great TV clips for their show, 

that's us. That's SnapStream. 

Another creative use of our search technology: many local TV stations use us for 

competitive intelligence -- because our TV search technology is "real-time", they can 

track the phrase "breaking news" on their competitor's channels so they're notified by 

email the moment their competition is beginning coverage of breaking news. 

SnapStream is also used quite a bit here in Washington DC, possibly by some of your 

offices. Organizations that are SnapStream customers include the White House, the 

Senate, a number of individual Congressional offices, and the Majority and Minority 

Whip offices. We're also used by the RNC and the DNC and various media watchdog 

organizations. 
174 

State, county and city governments use SnapStream -- like Mayor Bloomberg's office in 

New York and Mayor Annise Parker's office in Houston. 

SnapStream is used by journalism and media studies departments around the country 

so academics can study the ebb and flow of different terms on television and so 

academics can efficiently compare news coverage across TV channels. For example, 

they might use SnapStream to compare how Fox News' coverage of a story compared 

to that of CNN. 

Outside the US, SnapStream is used a great deal in Canada, where many government 

agencies have standardized on using SnapStream. We have also recently begun to sell 

our TV search technology in the United Kingdom and Australia. 

From the standpoint of copyright, SnapStream is no different than a VCR or a DVR. 

Our customers make recordings at their premises on hardware (running SnapStream 

software) they purchased from us. Being able to make recordings of television is vital to 

our business and to many other businesses in our industry. Fair use is also vital to how 

must our customers' use TV recordings and clips made with SnapStream. Without fair 

use and the ability to make recordings, it wouldn't be possible for government agencies 

to monitor television and quickly and efficiently respond to TV coverage and to hold TV 

content creators accountable. Without fair use and the ability to make recordings, the 

creative satire and comedy of programs like the Daily Show, and, in many cases, the 

public awareness and spirited public debates they create would not be possible. And 

these things are not only important to us, but to others in our industry which consists of 

approximately 50 to 100 clipping services that provide national or regional TV clipping 

as a service. These things are also important to non-profit public and private TV 

archives such as the Vanderbilt TV News Archive, the Internet Archive, and UCLA's 

recently launched NewsGate TV News Archive. 

To summarize, SnapStream's TV search technology brings the power of search and 

sharing, things that are a standard part of "new" media, to the "old" media of broadcast 

4 
175 

television. That's really at the root of our product's innovation and the reason we have 

hundreds of customers. Consumer viewing behaviors and paradigms have changed 

and we allow organizations to harness the power of those new paradigms to traditional 

TV. 
176 

Mr. COBLE. Mr. Lindberg, you are the cleanup man. 

TESTIMONY OF VAN LINDBERG, VICE PRESIDENT OF INTELLECTUAL PROPERTY AND ASSOCIATE GENERAL COUNSEL, 

RACKSPACE, THE OPEN CLOUD COMPANY 

Mr. LINDBERG. Thank you. Thank you. Chairman Goodlatte, 

Chairman Coble, Ranking Member Watt, Members of the Subcommittee, thank you for extending me this invitation to testify 

today. 

Last week you heard from witnesses in the content industries 

about their views on copyright. This week we are talking about 

technology. 

In truth, we are not so far apart. Technology companies and in 

particular Internet companies are also content creators. Copyrightable content is not only works of art and literature, movies, and 

music, it also includes all the software code written by professional 

computer programmers. Internet companies also empower individual citizens to create content. This includes cutting edge economics and political analysis. This includes people who write on 

blogs about subjects they love, and yes, it even includes videos 

about cats. 

We can’t exclude the interest of Internet companies and ordinary 

citizens from this important discussion about copyright. It is a new 

world. If we only focus on the traditional content creators, we miss 

out on the Internet, the greatest engine of content creation that the 

world has ever seen. 

Because there are so many new content creators, there are many 

new business models for using copyrighted content to achieve success. We have heard today from a number—about a number of 

these business models. Some of these business models rely on exclusive control of their content. Some business models rely on fair 

use. Others depend on openness and the widespread sharing and 

dissemination of their work. We need to make sure that the conversation doesn’t focus just on one business model to the detriment 

of all the others. 

To illustrate, let me tell you a success story about innovation in 

America. This success story comes from sharing copyrighted content as widely as possible. Almost exactly 3 years ago, Rackspace 

was looking for a new technology foundation to build our next generation cloud computing system. At that time, there were very few 

choices, and they were all locked down and proprietary. Even 

Rackspace’s own legacy technology was proprietary. But we had 

seen the success of the open source movement. Open source is a 

model by which copyrighted code is shared and traded for the benefit of everyone. This open source code runs most of the Internet. 

We have decided to make an open source cloud computing system. 

Some farsighted technologists at NASA also had this vision and 

joined us. We created OpenStack. When we created OpenStack, 

Rackspace became not just a technology company but also a content provider. We wrote thousands of lines of code, reams of documentation, and even a couple of books, millions of dollars worth of 

intellectual property. Rather than assume exclusive control, we 

made it available for everyone to use. The results have been astounding. OpenStack is not only used by NASA but by operations 
177 

throughout the Federal Government. It is an engine of growth 

backed by hundreds of companies worldwide, including technology 

giants such as Cisco, Dell, HP, IBM and Red Hat. 

In terms of people, OpenStack has over a thousand individual 

authors. These authors have collectively written enough code and 

documentation that if it were all printed out, it would reach to the 

Moon. Because Rackspace gave away this code, we can incorporate 

contributions from other companies that benefit us in turn. Customers become more familiar with our products, making them more 

attractive to buy. OpenStack is driving breadth in our products and 

growth in our service and support business. OpenStack is making 

us money. 

Across the industry, this one project, OpenStack, is directly responsible for tens of thousands of new American jobs and has driven billions of dollars of new growth and investment. This innovation and economic growth is the direct result of the deliberate 

spreading and dissemination of the copyrighted content provided by 

Rackspace, NASA, and these other contributors. 

If changes to copyright law make sharing more difficult, it will 

discourage or prevent successes like OpenStack. That brings me 

back to the subject of this hearing. There is more than one way to 

engage with copyright. There is more than one business model, 

even among traditional media companies. For example, Radiohead 

and Nine Inch Nails are two music groups making money with a 

business model predicated on widespread sharing and distribution 

of their content. 

At Rackspace we are on the frontlines of the battle against copyright infringers and other online criminals. We employ dedicated 

teams to take enforcement actions every day under the Digital Millennium Copyright Act and our own even stricter Acceptable Use 

policy. 

One recurring suggestion that we received is that we should alter 

our technology, build in mechanisms to prevent copyright infringement. From our experience on the frontlines, we are wary of regulations that would substitute technological measures for human decision making. There are many things that computers do well, but 

one thing that they don’t do well is understand the relationships 

between people. 

Computers may be able to learn how to spot a movie or recognize 

a song, but they don’t understand when someone has granted access for another person to use that copyrighted material. A software program is a lousy substitute for a conversation between humans. 

For example, among the many companies that we at Rackspace 

host as customers include a movie studio and a jewelry vendor. I 

can’t tell you how many times that we have actually received takedown notices from the movie studio to take down their own 

website. Just last week, we got a mistaken request from the jewelry vendor to take down the site of one of their authorized resellers. We have gotten takedown requests to take down the sites 

of famous museums who were displaying pictures of their own 

works in their own collections. 

The reason we get these complaints is because they usually don’t 

come from humans. They usually come from computers. The auto-
178 

mated software that generates these notices doesn’t understand 

that these are authorized uses. If there is any change to copyright 

at all, it needs to be a strengthening of the safe harbors that allow 

shared expression. 

We get other requests to take down material because it is unpopular or unflattering to some business or some individual. For 

example, a highly critical review of a restaurant. These requests 

are most frequently couched as requests under the Digital Millennium Copyright Act. These requests are not really meant to stop 

copyright infringement. They are attempts to restrict free speech 

that someone doesn’t like. 

Distinguished Members of the Committee, I ask you to remember 

two things as you consider these important issues. First, remember 

that there are many new content creators and many new business 

models. We need to respect them all. 

Second, remember that computers and software algorithms can 

never replace human judgment. Let’s make sure that we empower 

all of America’s industries and citizens to innovate. Thank you. 

Mr. COBLE. Thank you, Mr. Lindberg. 

[The prepared statement of Mr. Lindberg follows:] 
179 

Statement of Van Lindberg 

Vice President of Intellectual Property and Associa te Gene ral Counsel 

Rackspace, the Open Cloud Company 

United States House ofRepresenratives, 113th Congress 

August 1. 2013 

"Innovation In America: The Role of Technology" 

I would like to thank the committee for inviting me here today to talk about 

Innovation In America. I am Van Lindberg, Vice President of Intellectual Property 

and Associate General Counsel at Rackspace, the Open Cloud Company. r am also a 

software developer, author, and chairman of the board of the Python Software 

Foundation, a nonprofit dedicated to advancing Lile open source programming 

language Python. 

One of the things that struck me as J was preparing for this testimony was the 

implied dichotomy set up by the structure of these hearings. Last week you heard 

from witnesses representative of··content creators," about the role of copyright law 

in fostering innovation. This week we are ta lking about the role of technology in 

Innovation. This implied dichotomy Is interesting because it separates two groups 

that have more in common than they think. 

My message today is that. In today's world, all sorts of individuals and organizations 

are creating content, including technology companies, independent roundations, and 

millions of individual users. Technology has enabled a massive wave of innovation 

and job creation, driven by the spread of knowledge, content ilnd experience from 

one person to another. Copyrightable content today is not limited to only works of 

art and literature, movies and music. It also includes all of the software code written 

by developers who have brought us everythtng from powerful hand·held computers 

to digit<ll medical diagnostic tools. 

To illustrate, let me tell you two success storil:!s about innovation in America. 

Our first story stars Racksp3ce and NASA. Almost exactly three years 3go, Rilckspace 

was looking for scalable technology on which to base our publiC cloud, which hosts 

more than 200,000 businesses In 120 countries. At that time there were very few 

choices, and the choices thatexisted weren't going to meet our needs. All that the 

1 (3 rockspoce. lhIJ_c/oud~ 
180 

(narket offered were dosed. proprietary solutions that would cause customers to be 

locked into the. technology of specific vendors. Even R;lCkspace's own legacy 

technology was proprietary. 

But we had seen how successfullhe open source movement was, particularly 

software projects like Llnux, Apache. MO"tilla Firefox. and Android. We wanted to 

offer our customers open standards. rapid innovation, and choice. Some farsighted 

technologists at NASA had the same vision, so we. joined forces and created 

OpenSlack, an open source cloud computing system. Rackspace decided to become 

not just a technology company, but also a conte.nt provider. We wrote thousands of 

lines of code, reams of documelltation, and even a couple of books-millions of 

dollars worth of Intellectual property-and made it available for everyone to use. 

The results have been astounding. In the past three years, OpenStack has grown so 

rapidly that it's not only used by NASA bu t by other operations across the federal 

governmenL It is an engine of growth, backed by hundreds of companies worldwide, 

Including technology giants such as Cisco, Dell, HP, IBM, and Red Hat. This one 

project· OpenStack - is directly responsible for tens of thousands of new American 

jobs and has driven billions of dollars of growth and investmenL 

OpenStack is even more astounding in the human dimension. There aTe over a 

thousand individual contributors; who have collel.:tive!y written enough code and 

documentation that. if It were <Ill printed out, would reach to the moon. 

These companJes and these people 3fe both technologists and mntentcreators. This 

massive contrIbution to Innovation is the result not of exclusive and tight control 

ovef their copyrighted content, but of the deliberate spreading and dissemination of 

lheirefforts. 

The second success story stars a nonprofit, the Python Software Fou ndation. Each 

year, the foundation puts on a conrerence where thousands of software enthusiasts 

get together to learn. to teach, and to work togetber on projects and businesses. ThIs 

year we brought in schoolkids for two days of free tutorials that introduced them to 

the basIcs of programming. 

This was just the opponunlty that nlne-year-old Havana Wilson of Denver, Colo., 

needed. After Havana showed interest in building video games, her father Sruce 

looked around the web for other ways to get her involved. "11 was my lob to turn her 

desire into action," Bruce saId. Both father and daughter came to the conference to 

attend the tutorials. 

They had an amazing time. Havana left ellcited and energi7.ed to continue on her 

own. What they didn't expect was the effect of the experience on Bruce. -I was only 

going to [the conference] to help my daughter," he said. "but" t'anJe away from the 

experience seriously motivated to dIve into programming." 

2 (3 rockspoce. riI&_cloud~ 
181 

That is not the end of the story, though. The instructors who created the tutorials 

decided to make all of their teaching materials <1l1 ailable online for others to use at 

no COSL In the past four months, the Python Software Foundatlon has supported 

oller a dozen more tutorials using the same material, including presentations in 

Alaska, California, Colorado, Iowa, North Carolina, Ohio, Texas, Utah ~ and right 

here In Washington D.C. 

Hundreds of children halle had their eyes opened to technology - to innollation -

because a network of lIolunteers, and especially these tutorial authors, decided to 

share theIr content as widely as possible. 

That brIngs me back to the subject of this hearing. Copyright Is a difficult and 

importa nt subject Shared creatille expression plays an essential role in our socIety. 

Our culture is Just the product of our nl<lny personal expressIons mixed together. 

The Internet has made it possible for our ClJ!ture and our society to be enriched in a 

way unimagined by prellious generations. 

At Rackspace, we beHelle in the bargain of copyright. We are on the front lines of the 

battle against copyright infringers aod other online criminals. We' employ dedicated 

teams that take enforcement actions ellery day under the Digital Millennium 

Copyright Act as well as OUf own ellen stricter Acceptable Use Policy, 

From our experience on the fron t lines, we are wary of regulations that would 

substitute technological measures for hUlllan decision-making. There afe many 

things that cumputers do well, but the une thing they don't do well, at least for now, 

is to understand the relatlonshlps between people. Computers may be able to learn 

how to spot a mOllie, or a song. but they don't understand when someone has 

granted another person approllal to use that copyrighted material. A ~oflware 

program is a lousy substitute for a conllersatlon between humans. 

For example, among the companies that we at Ra ckspace host as customers are a 

mOllie studio and a jewelry vendor. I can't tell you how many times we have gotten a 

takedown notice from the movie studio asking us to take down their own website. 

just last week we got a mistaken request from the jewelry vendor to take down the 

site of one of its authorized resellers. We halle gotten cumplainUi asking us to take 

down the sttes of famous museums, displaying pictures of their own collections. 

The reason we get these complaints Is because they l.\sual\y don't come from 

humans - they cume from computers. The automated software that creates these 

notices doesn't understand that these are authorized uses. I f there is any change to 

copyright at all, it needs to be a strengthening of the safe harbors that allow shared 

expression. 

We get other requests to take down material because it is unpopular or unnauering 

to a particular business ora particular person, such as a highly critical relliew of a 

restaurant. These requests are most frequently couched as requests under the 

3 (3 rockspoce. rill! ope<) cloud ~ 
182 

Digital Millennium Copyright AcL These requests. are not really meant to stop 

copyright infringement. They are attempts to restrict free speech that someone 

doesn't like. 

As you deliberau.' on these important issues, I ask that you remember that we are 

almost all content crl'ators now. Postings on Facebook, open course materials, and 

shared rode all add to the wonder, culture, and innovation that is the mark of 

America throughout the world. 

Respectfully submitted. 

V.~f.t1LoVan LInd berg 

4 (3 rockspoce. fllll_cloud~ 
183 

Mr. COBLE. Thank you-all for your testimony. We appreciate 

your presence here today. We try to apply the 5-minute rule to us 

as well, so we’ll move along. 

Let me start with you, Ms. Ringelmann. Has innovation in America become more centralized, and what impact does that have on 

the speed of innovation in America? 

Ms. RINGELMANN. As innovation has become more—— 

Mr. COBLE. Centralized—decentralized. 

Ms. RINGELMANN. Decentralized. Can you repeat the second half? 

Mr. COBLE. What impact does that have on the speed of innovation in America? 

Ms. RINGELMANN. As innovation becomes more decentralized, I 

think it will increase the speed of innovation. What is amazing 

about Indiegogo is that we don’t judge, as I was saying. We don’t 

decide who has the right to raise money and who doesn’t. We don’t 

decide which product designers get to design their product. We are 

open, and we leave it up to them to connect with their world and 

connect with their audiences. And because of that, what ends up 

happening is the folks that connect most directly with an audience 

of people who want that idea to come to life are the quickest to 

raise the money and the quickest to actually move forward with 

their project. 

So, the huge barrier that we are attacking right now is the friction of finance. People have ideas every day. People have the willingness to work hard every day. Until Indiegogo came along, the 

one thing standing in their way was access to capital, and because 

we removed that friction, now the only thing that is in their way 

of bringing their idea to life is themselves and their willingness to 

work hard, and I think that is pretty American, so I would see it 

increasing. 

Mr. COBLE. Anyone want to weigh in further? Any other comments? 

Mr. FRUCHTERMAN. Well, I think the idea of the Internet enabling the community to actually contribute to things, whether it is 

contributing finance. I mean, it was blind people who built our library. That is what made it the biggest library is because the technology did it and they could do it fast. Instead of taking a year to 

record a book that hit the New York Times’ bestseller list, our volunteers scanned it in a couple of days so the New York Times’ bestseller list was always, within a week, up to date and on our site. 

So, I think those are just examples of how when the technology 

empowers the community, that is so much more powerful than any 

one company can possibly be and that contributes to innovation 

and building these gigantic assets whether they are commercial or 

social. 

Mr. COBLE. Thank you. 

Ms. RINGELMANN. We actually have a campaign on our site right 

now called the Ubuntu Edge. It might be the largest crowdfunding 

campaign in crowdfunding’s history. It is a campaign to raise $32 

million in 30 days to create a phone based on open source technology. So the creators and the guiders of this open source technology have gone on, reached out to the community that have contributed software and code to the actual software base, and 

through this community they are actually funding it, too. So they 
184 

are not just creating a phone together, they are actually funding 

it and making it happen, and not once was a gatekeeper, a thirdparty decision maker involved in that process. 

Mr. COBLE. As American students prepare for the workplace, 

what challenges do you see in ensuring that they are prepared to 

work in technology? 

Start with Mr. Seidle. 

Mr. SEIDLE. I can try to field that one. The speed at which technology changes is astounding, and we have had a customer of ours 

who learned how to solder. We teach classes on how to assemble 

electronics, and this student kind of learned how to solder and then 

took it upon himself to continue to learn how to program via the 

Internet. There is community forums, and so he learned how to 

program and he sort of moved on and then began building projects. 

Designed the ornament on a Christmas tree that changes lights 

and does different things. 

Quinn is going to turn 13 this year, and he has his own website. 

That wasn’t enough. He now has his own website selling products. 

So our students, the students today need every tool and every 

possibility to learn more and to compete in this global world. I believe the Internet and open source are sort of keys to enabling students today to stay as competitive as possible. 

Mr. COBLE. Mr. Lindberg. 

Mr. LINDBERG. We have a direct example of that. I work with the 

Python Software Foundation. Every year we have a conference. 

This year we invited school kids to participate in 2 days of free tutorials where they would learn how to program. 

We had one of the people who attended was 9-year-old Havana, 

I don’t remember her last name, from Denver, Colorado. But what 

was more is that the people who wrote those tutorials allowed us 

to use them and disseminate them freely, and so in the past 4 

months since that original tutorial, we have had over a dozen other 

tutorials reaching out to hundreds of other school kids teaching 

them how to program, teaching them how to innovate. 

Mr. COBLE. Yes, sir. Any other comment? My red light is about 

to illuminate, so I will recognize—who do you want to go with now? 

Mr. WATT. Mr. Chairman, I am, as usual, going to defer and go 

last, so I will defer to Ms. Chu. 

Mr. COBLE. The gentlelady from California, Ms. Chu. Good to see 

you here. 

Ms. CHU. Thank you, Mr. Chair. 

Mr. COBLE. You are recognized for 5 minutes. 

Ms. CHU. I would like to address these questions to Mr. 

Lindberg. One person on the panel stated that attempting to stop 

pirates is a waste of time and that any anti-piracy law or technology can be cracked by 15-year-olds and that resources spent 

stopping pirates come at the expense of innovation, and yet we 

know that thousands of individual creators from songwriters, musician, visual artists, authors, and indeed those in the software industry rely on the protection of their intellectual property rights 

and copyrights so they can innovate. 

And in fact, you described some striking examples of massive 

ways of innovation and job creation enabled by technology in two 

specific stories about innovation in America, but it is under the 
185 

current system. So, what do you believe the current copyright act 

has played in terms of enabling that technology and innovation? In 

other words, has our current copyright system, the protections it 

includes, has it impeded or not impeded technological growth and 

innovation? 

Mr. LINDBERG. I think that that is an important question. In 

some ways, it is a little bit difficult. I go back to my earlier point 

about there are many different business models for innovation that 

rely on using copyrighted content in different ways. There are some 

models, such as those of songwriters, that really do rely on exclusive control, but then there are models such as that of Pandora, 

which rely on the ability to license and use that and to disseminate 

it as widely as possible. Both of these are important business models that we want to make sure that we encourage because innovation doesn’t just come from control. It also can come from places 

and from people that you don’t expect. 

To the extent that we have seen the intersection of copyright 

leading up to innovation, it has frequently been about the further 

dissemination of that content, and we don’t want—and we want to 

make sure that the laws that we pass don’t stop that dissemination 

from occurring. 

Ms. CHU. Well, in fact, you describe two instances where copyright owners chose to share their content as widely as possible and 

it created a greater good, but isn’t a key aspect to each story the 

fact that the owners voluntarily made that choice; whereas piracy 

on the other hand strips owners of the choice of when and where 

and how to share their creations. So isn’t it important to maintain 

a system where content owners such as yourself have the right to 

decide, even on the Internet, where, when, and how to share the 

creations, and doesn’t the current system fully support an author’s 

ability to decide to share his or her work for free? 

Mr. LINDBERG. We do support the ability of copyright owners to 

make decisions about their content. That is both fair and right. We 

also need to recognize that there are times when there needs to be 

a wider dissemination. For example, this has been recognized in 

law in the mechanical royalties and other statutory licensing regimes. It has been recognized in the ability to use certain works 

under the principles of fair use. 

So, yes, we fully support the ability of content creators to make 

choices about their content, but we also need to support the boundaries of copyright that allow fair use, fair use and dissemination of 

that content even in other situations. 

Ms. CHU. Let me ask also about takedown notices, and you express concern about these erroneous takedown notices generated by 

computers rather than humans and this is no doubt very frustrating to receive. But what advice can you offer to small content 

owners, photographers or song writers, for example, whose works 

are infringed, hundreds of thousands of time on the Internet but 

who lack the resources to monitor those infringements, let alone 

prepare and send DMCA takedown notices to address them? 

Mr. LINDBERG. Generally those—I think that we really need to 

approach this from sort of a business-to-business perspective. One 

of the things that we do at Rackspace is we work with content owners to make sure that infringing content is not posted or trans-
186 

mitted through our network. We are—and I think we are not alone 

in this—open to people saying, you know what, this is not right 

and it needs to be taken down and we are very responsive to that. 

I think that obviously we can’t police the entire Internet, we can 

only police our little corner of it, but I think that companies, Internet companies as a whole will be responsive to small businesses, 

independent song writers and those who really have legitimate interest. 

Ms. CHU. Thank you. I yield back. 

Ms. RINGELMANN. Can I jump in? 

Mr. COBLE. The gentlelady’s time has expired. 

Ms. CHU. Well, actually my time expired. 

Mr. COBLE. Ms. Ringelmann. 

Ms. RINGELMANN. I will try to keep it short. Just to the point of 

the question about business model and business model innovation. 

What I recommend everybody do is actually Google the article that 

Kevin Kelly wrote back in 2006 called the Six Generatives of Free, 

and there he painted a picture of in a world where things become 

copyable things will just automatically get distributed. You can’t 

fight it. So rather than trying to fight it, because it is like water 

rolling down a hill, try to embrace it. And think about given the 

fact that this is happening what other models could evolve around 

that where you could still make money? And he actually he lays 

out six themes, of which patronage is one of them. So when I think 

about copyright I think about all the artists on Indiegogo who are 

trying to get their start, they have been trying to crack into the 

music industry for years, and maybe they are making it or maybe 

they are not, they are in coffee shops at night, they are traveling, 

they are working hard to pursue their dream at night. 

If they do get lucky enough to get a label, then it becomes the 

challenge of getting paid by the label and does the label promote. 

And we actually had an example of as a musician a punk band out 

of Canada actually who had ‘‘made it’’ because they had broken 

into the label system and was able to get picked up by a label, but 

financially they weren’t making it because the current business 

model wasn’t supporting them. And further the label was actually 

constraining them creatively, so they weren’t actually making the 

music that they wanted to make. So rather than just keep fighting 

in that system they just embraced the fact there is a whole new 

world out there and instead of trying to sell their music that already existed, they turned to their fans and monetized their abilities by getting their fans to fund future music. So the fact that 

rather than fight and try to get paid for music that already existed, 

instead they are focusing their efforts on using Indiegogo to get 

paid for music that will exist and at the same time they are empowering their fans. So if you think about it it is just another way 

to get paid and it is a much more innovative way to get paid and 

it’s actually a more sustainable and empowering way to get paid. 

And it allows them to keep creative control. And what I will see 

actually as a result is we are going to see a rising class of musicians bubble up, as well as a rising middle class of artists in other 

ways as well. So it might be actually a great time to be artists. Before you either had to be mainstream and Britney Spears or starving in the coffee shop. Now you actually can potentially make a liv-
187 

ing by going direct to your fans simply because of embracing a new 

innovative model such as crowdfunding to make money for your 

music. 

Mr. COBLE. The gentlelady’s time has expired. The gentleman 

from Pennsylvania, Mr. Marino. I thank you for having covered for 

me last week and I am pleased to recognize you now for 5 minutes. 

Mr. MARINO. Good morning, panel. I apologize for being late. I 

had to be in three places at one time this morning. 

My children, who are 14 and 18, practically take my computer 

apart and put it together so it is more powerful so I can did things 

quicker. And if I have problems I go to them. So there is no question about that generation being lightyears ahead of us. But Mr. 

Seidle, am I pronouncing that right? 

Mr. SEIDLE. Seidle. 

Mr. MARINO. I am not quite sure, I didn’t grasp what you meant 

as far as not having patents or not licensing them and other people 

using them. Do you believe that the inventor should make that decision as to whether to share that invention or do you think there 

should be some mechanism that makes that inventor share that invention so anyone can produce it? 

Mr. SEIDLE. I believe the patent system and intellectual property 

system has its place, it is necessary. However, I believe there 

should be the capability to show that through prior art or through 

innovation that we can create new things, that we can stand on the 

shoulders of the people before us. It is the patent trolls and the defensive patents, the patent thickets that I believe are really hurting 

innovation in this country. 

Mr. MARINO. How about the individual that—let’s go to the extreme here. My son, daughter and I, we’re Trekkie fans, Star Trek, 

so what if an 18-year-old working since he or she was 10 years old 

comes up with a method by which to transport a person or a thing 

just like Scotty does, okay, from Pennsylvania to California, just 

like that. Given the fact that there are emergency situations where 

that would be such a benefit, but also in industry and in the market it is a benefit as well. Should that individual be forced to open 

that 10 years of research and study to anyone else who wants to 

copy their device without being paid? 

Mr. SEIDLE. It is very much their choice whether or not they 

wish to patent that technology. However, I would argue that if they 

choose to patent that technology, they will have a false sense of security. That technology will be copied regardless, it will be innovated upon, it will be made better. There will be another company 

producing a better teleporter within weeks. 

Mr. MARINO. In some particular time, correct? 

Mr. SEIDLE. Within weeks, that is the speed at which technology 

moves. 

Mr. MARINO. But that second company that will develop or improve within weeks stole that idea from that 18-year-old and 

wouldn’t be developing this transporter if it were not for the 18- 

year-old. So were you saying that the 18-year-old should not, if he 

or she chooses, financially benefit from the second company who 

would not have created a better transporter had it not been for the 

18-year-old? 
188 

Mr. SEIDLE. I apologize, I am not an attorney, I am just a business person. I don’t know patent law. But I believe that there are 

significant improvements that company two could make that is just 

going to happen. 

Mr. MARINO. Okay, I understand that, you are quite clear, you 

are quite clear on that, but one does not have to be an attorney 

or a patent attorney. It is just a basic fairness. 

How about the pharmaceutical company who after 20 years of research, hundreds of millions of dollars, maybe billions of dollars 

comes up with a cure to prevent the common cold and it prevents 

it, it cures it within a week. Do you think the company, the second 

company who takes that prescription, takes that drug and does research on it now can cure that cold within an hour, do you think 

that they are entitled to do that without compensating the company who has spent years and years and hundreds of millions of 

dollars? 

Mr. SEIDLE. Humanity has been sharing for thousands of years. 

The way that we learn is by learning from each other. 

Mr. MARINO. Okay, I understand that. And I would love to get 

into a philosophical debate, okay, but this isn’t the time nor the 

venue. We have to talk about economics and the economy. What is 

that going to do to businesses? 

Now I commend you on what you are doing. 

Mr. SEIDLE. Thank you. 

Mr. MARINO. Cost I think has a factor. I am not even going to 

ask you to get into your cost, that’s proprietary and that’s your 

business. But I can see there’s a big difference if it costs me $0.25 

to manufacture something that I came up with that idea in a couple of weeks compared to a billion dollars over 20 years. 

Mr. SEIDLE. Let me give you an example. I’m here today merely 

to point out that innovation is not linked to intellectual property. 

Mr. MARINO. I agree with you 100 percent. 

Mr. SEIDLE. Kodak got a patent on digital photography in 1978, 

that was a 30-year headstart on a multi-billion dollar industry. 

Mr. MARINO. Look what is built from that point on. 

Mr. SEIDLE. Kodak is now bankrupt. So it is not intellectual 

property that guarantees benefit. 

Mr. MARINO. No, it is the ability to take advantage of the technology that’s available or that is going to be available in the near 

future. If a company decides not to do the R&D and stick just singly on making a flash cube and does nothing else, the market will 

determine that. 

If Mr. Lindberg, could you respond to my question concerning the 

protection of someone’s investment? 

Mr. COBLE. Mr. Marino, wrap up as quickly as you can. 

Mr. LINDBERG. Absolutely. Mr. Marino, you are talking about 

real fundamental inventions. The real problem is that there are so 

many of these patents out there that really aren’t on fundamental 

things. And in fact many of them should never have been granted 

at all, they were granted in error. So I can agree with you completely about the value and the importance of protection and of financial returns to those fundamental inventions. But when someone says, you know what, I patented using a rounded rectangle and 

they attempt to enforce that on other people without understanding 
189 

that these sorts of things existed before, then that is a real drain 

on invention. 

Mr. MARINO. My time has run out, and I thank the Chairman 

for letting me go on here a little bit. But I will close with saying 

that don’t you think that’s better left up to the system and to the 

courts than to individuals? 

Mr. LINDBERG. I think there is reform needed throughout the 

system. 

Mr. MARINO. I don’t dispute that at all. I’ll yield back. 

Ms. RINGELMANN. Can I just make a quick note? When we started Indiegogo we thought the idea was so obvious somebody was 

going to copy us and do it. And lo and behold, somebody did. In 

fact, rather than get mad about that what that did is it forced us 

to continue to innovate, and actually made us better and made us 

stronger. So I know this is a little tongue and cheek, but there is 

actually a Star Trek product on Indiegogo right now, it is called a 

Tricorder, it is a doctor in your pocket. So you scan yourself and 

you read your vitals and that literally came out of Star Trek. 

Mr. COBLE. The gentlemen’s time has expired. 

Ms. RINGELMANN. Okay. Well, anyways, the quicker—if they 

were to come out with a 1-week cold remedy, and then somebody 

would come out with a 1-hour cold remedy, well that would help 

the guy who created the 1-week cold remedy come up with a 1- 

minute cold remedy. So you iterate and the whole world benefits. 

Sorry. 

Mr. COBLE. Thank you. I thank the panelist. The gentlelady from 

California is recognized for 5 minutes. 

Ms. BASS. Yeah, I think I want to hear more about that invention you were talking about, scan and get your vitals. But I just 

had two quick questions, first for Mr. Lindberg. I believe in your 

written testimony you expressed concerns about takedown notices 

erroneously generated by computers rather than humans. 

Mr. LINDBERG. Yes. 

Ms. BASS. But I wanted to know what advice can you offer to 

small content owners, photographers or song writers for example, 

whose work are infringed hundreds of thousands of times. 

Mr. LINDBERG. I think that it is important to work human to 

human, business to business with the various responsible companies who are doing things like Rackspace. We have an entire team 

dedicated to dealing with these issues. We are very responsive to 

a small songwriter, a small content owner because we don’t want 

and we don’t support copyright infringement on our network. There 

are things that we can’t—we can’t do things about other parts of 

the Internet but we can do things with ours. I believe we are not 

unique in that respect. Other network providers, other people who 

are responsible for different parts of the Internet will generally be 

responsive. I think that frequently when you are talking about the 

massive infringements you are really talking about things that are 

outside the United States, frequently outside of our jurisdiction. 

Ms. BASS. You were mentioning that you do work with some of 

the artists. Could you describe, provide a couple of examples of 

that? 

Mr. LINDBERG. I probably would like to answer that on the 

record so I can get you more specifics. 
190 

Ms. BASS. Okay. Do you want it on the record? 

Mr. LINDBERG. In writing, yes. 

Ms. BASS. Okay. You can be on the record right now. 

Mr. LINDBERG. Sorry. 

Ms. BASS. That’s okay. 

Mr. Seidle, did I get it right? You might want to respond to that 

also but I did have another question for you. 

Mr. SEIDLE. I would encourage—the question was, let me see if 

I got this correctly, the photographers and the folks who generate 

images that are—please repeat the question. 

Ms. BASS. No, no, go ahead. I was saying no to something else. 

Mr. SEIDLE. I would recommend the folks that are challenged by 

duplication to find technological platforms that allow them to license their content as easily as possible. When I have the choice 

to view content on my TV, I can either download that illegally or 

I can pay the $1.99 on Amazon and get it right then and there. It 

is so easy that I choose to buy it, to go the legal route. So to these 

photographers I would encourage them to use, I believe Getty Images was here last week, it is a fantastic platform for them to license their image regardless of the laws in place. If you make it 

easy for folks to license legally, that is the best means to get recuperation for the imagery sold. 

Ms. BASS. Thank you. And following up on that, I believe you 

stated in your written testimony that innovation moves faster than 

the shield of IP protection. So I wanted to know what you might 

be suggesting in terms of updating IP laws to address technological 

advancement? Should we leave them alone? 

Mr. SEIDLE. It is—I gave two or three recommendations in my 

written testimony about how we could update intellectual property 

law. The truth of the matter is I just don’t want to see small businesses, barriers placed on small business that doesn’t allow them 

to move as quickly as possible. So it is the types of content that 

is being generated today that we need to continue to allow. So businesses like myself we are not going to use the Patent and Trademark Office. We are going to go the open source route because we 

find that it generates more profit and better product because it 

forces us to innovate. It is those types of products. 

Ms. BASS. Do you wind up getting into trouble then with patent 

trolls, people coming after you? 

Mr. SEIDLE. So far in 10 years of business, no, we have been 

very, very lucky. 

Ms. BASS. Thank you. 

Mr. LINDBERG. If I could jump in there. Patent trolls are a massive, massive problem for our industry and for the computer and 

technology industry and for ours in particular. Just to address that 

point in particular, in the past 3 years we have had a 500 percent 

increase in the amount of legal spin that we need to do all because 

of baseless patent troll claims. These are things that don’t even 

apply to our business. They are taking assertions and they are not 

even looking at our open source code that is available on the Internet where they could say—they could verify for themselves that we 

don’t do the things that they say. They don’t even bother it because 

they use the cost of litigation as a club to extort settlements out 

of companies that actually do things. If there’s something that you 
191 

could do to really encourage innovation in America, it is to stop the 

patent troll problem and to really help us with this litigation 

abuse. 

Ms. BASS. Well, let me just say in closing I know that my colleagues on the panel—on the dais here agree with you, we had 

hearings on that. I was in a meeting yesterday with the Internet 

Association hearing from a variety of companies about this problem 

and we do have several Members who have introduced legislation. 

Thank you. I yield back the balance of my time. 

Mr. COBLE. I thank the gentlelady. As evidenced by the response, 

folks, this issue has prompted many, many questions indicating the 

significance of the issue at hand. Again we thank you all for your 

contribution. 

The gentleman from Missouri, Mr. Smith, recognized for 5 minutes. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Mr. Seidle, 

I kind of wanted to know a little more information. You said that 

your company has manufactured more than or invented more than 

700 products. 

Mr. SEIDLE. Correct. 

Mr. SMITH OF MISSOURI. And you have never done a patent on 

any of those 700 products. 

Mr. SEIDLE. Correct. 

Mr. SMITH OF MISSOURI. What is the longevity of like say you invent a product of how long you manufacture it to continue to sell 

it? 

Mr. SEIDLE. Good question. This product in particular has been 

sold for I believe 3 to 4 years. So it has gone through probably 15 

to 20 revisions, 15 to 20 improvements. 

Mr. SMITH OF MISSOURI. Has it ever been a concern of yours that 

maybe one of your inventions someone takes notice of, say the Chinese company that expanded on it, they then patent it and then it 

would be illegal for to you produce it? 

Mr. SEIDLE. That is a common concern. And again not an attorney, but I believe and I hope that prior art would invalidate any 

patent placed on an item that was released open source. 

Mr. SMITH OF MISSOURI. It may, I don’t know. 

Mr. SEIDLE. That is the nature of the license. It is a viral license 

that causes it to always be open once opened. 

Mr. SMITH OF MISSOURI. So then it would probably go back to 

your statement where you were talking about being bullied through 

litigation. And it would basically be decided in litigation with a lot 

of expense from your company of defending it that it was prior art, 

instead of whether it was an invention or not. 

Mr. SEIDLE. That scenario has not happened before so I am not 

exactly sure it would play out. 

Mr. SMITH OF MISSOURI. It sounds like it to me that that would 

be a prime legal case if somebody was coming after you. Just—I 

understand your argument of the innovation sometimes. How long 

does it take to go through the patent process on—you haven’t done 

it, but maybe Mr. Lindberg. 

Mr. LINDBERG. Yes, the patent process typically case 2 to 4 years, 

most often 3, costs anywhere from 25 to $50,000 to actually get 
192 

through it and get a patent. I would note that this is a pretty substantial economic hit for a small business. 

What is more when were you asking about the circumstance 

where somebody takes one of these products and they make a trivial improvement and then they would patent it. You know what? 

The patent isn’t on the base chip, it is on that little improvement. 

The problem is that some of these patents are on these trivial improvements that would be easy for anybody who was in the industry to make. It just so happens that they were the ones who won 

the race to the courthouse and were willing to invest 25 or $50,000 

in getting a patent. And because they have got this it is really obvious to anybody that would be doing it they would then take this 

as a license to go and extort money from companies. 

Mr. SMITH OF MISSOURI. So let me—you said most of the patents 

are just a little minor changes. 

Mr. LINDBERG. Almost all of them. 

Mr. SMITH OF MISSOURI. Since the gentleman from Colorado, he 

never did a patent on his, why could that company not have patented the whole thing? Do you see what I am saying? It wouldn’t 

have been a minor change, they may not have changed it a little 

bit from his invention but there was no proof that that was his invention. 

Mr. LINDBERG. One of the things that he would need to do is he 

would say, here is my board, my chip that is the same except for 

all these things, and that would be the prior art and he would say 

the leap from my product to this tiny improvement is very small 

and that would be under section 103 about obviousness. So he 

could use that as a piece of prior art. The problem is not that he 

couldn’t prove that, the problem is that patent litigation costs from 

2 to $5 million. Even if you are right, getting there is so expensive 

that it can kill your business. 

Mr. SMITH OF MISSOURI. Do you have any suggestions of how to 

streamline the patent process? 

Mr. LINDBERG. A number of those and I will give some now and 

I would like to also supplement this in my written testimony. 

Mr. SMITH OF MISSOURI. Actually to shorten the time period to 

2 to 4 years. 

Mr. LINDBERG. I think for some areas shortening the time period 

would work. I think an important one is making sure that we 

have—that these patent trolls are forced to put—to make their allegations clear up front. A big part of this is that they hide the ball 

for years trying to ride out the time, spread out the cost to get 

these settlements. 

Another thing is making people, making the money people behind these shell companies really pay the price. So many times 

these patent trolls are small, no name entities that actually have 

a financial backer, either a group of investors, another company, 

but they try and shield themselves away from—they shield themselves away by putting it in the shell company. Illuminating those 

relationships would be huge. 

Mr. SMITH OF MISSOURI. Just a quick question, you were talking 

about one of the problems that some of the patents are not fundamental in nature. Could you give me maybe three patents that are 

not fundamental in nature? 
193 

Mr. COBLE. Mr. Lindberg, as briefly as you can. Sorry to hold a 

stopwatch on you, but—— 

Mr. LINDBERG. It is hard to bring up three specific examples 

from my mind. I will do that in the written testimony. But I can 

say in my experience I have personally looked at thousands and 

thousands of patents. I have personally gone to the Patent Office 

with evidence invalidating hundreds of them. I have yet to find a 

patent that was asserted against me or one of my clients in prior 

work that was not invalid over prior art. 

Mr. SMITH OF MISSOURI. I would just love to see three. 

Mr. LINDBERG. Yes. 

Mr. COBLE. And Mr. Lindberg, feel free to follow up in writing 

as you pointed out. 

Mr. LINDBERG. I would love to do that, thank you. 

Mr. COBLE. The gentleman from Florida is recognized. 

Mr. DEUTCH. Thank you, Mr. Chairman. Thank you for holding 

this hearing. The witnesses here today are great examples of American entrepreneurial spirit. And even beyond my overall interest in 

the purpose of this hearing to examine the role of copyright law, 

I was actually really interested to hear from the panelists and read 

your testimony about your innovative companies, so thanks for 

being here. 

Mr. Lindberg, I found your testimony related to your company’s 

development fascinating. As a Floridian, I am very familiar with 

the great innovations that have happened because of NASA’s work, 

either products that NASA has developed itself or they were created as a result of work that NASA has done. I don’t think enough 

people appreciate the full extent to which NASA impacts our daily 

lives. In the example that you cited it was interesting to hear about 

your collaboration with NASA in search of a solution to a common 

problem. You said that you worked with them because they shared 

your vision about your project’s potential. Can you elaborate on 

that a little bit? 

Mr. LINDBERG. Yes. NASA had been struggling with their sort of 

the management of their computing resources for some time. There 

was a group—Chris Kemp, who at that time was I believe the CTO 

or CIO of NASA, he had said you know what, we need to create 

something that works better. And so they actually created something and they released it just in the open saying we have got the 

start on something that we think could be great. When our managers, when the executives at Rackspace saw that and we saw that 

it dovetailed exactly with what we were doing there was an initial 

email that said we see that we are trying to solve the same problem, let’s cooperate. 

It is that cooperation, the trading and the sharing of intellectual 

property that enabled the success. 

Mr. DEUTCH. I appreciate that. Mr. Seidle, it is great that you 

found a way for patentless innovation model to work for you, that 

you have chosen not to pursue patents, it has been successful for 

you. But fundamentally it is a choice and it is a choice that you 

have made, and it is one that doesn’t work for a whole host of other 

companies. I have met with a lot of entrepreneurs who work primarily or exclusively in the open source side of things, and they 

compete like Mr. Lindberg’s Rackspace by having apparently fanat-
194 

ical customer support. That’s something that all of you I think can 

relate to. That kind of service base model is great, but I don’t see 

how the success of one business model means that we should necessarily give preference to a proprietary model or why the government should set itself in the business of picking winners and losers 

on either side. So just as you have been clear about the down sides 

of the patent system, can you acknowledge though that your approaches and the approach that works for everyone there is a fundamentally important role that the copyright and the patents play 

for others. 

Mr. SEIDLE. I agree that intellectual property and copyright is 

part of the fabric of our economy. What I don’t want to see is the 

situation where companies cannot be open, cannot innovate. So the 

types of patent trolls and types of litigation that are coming into 

play are in fact causing problems for small business. So the fact 

that SparkFun has not experienced any kind of patent infringement litigation doesn’t mean it doesn’t keep me up at night. 

Mr. DEUTCH. So as an author of one of the various pieces of legislation that so many Members on this Committee have introduced 

to try to address the issue of patent trolls, I am very sensitive to 

that. On the other hand, there is the issue in this hearing about 

copyright, too, there is the issue that ultimately there are copyright 

holders, forget patent holders, but there are copyright holders 

whose work is sustained by that copyright that they hold. Obviously that doesn’t become open source simply because it would be 

beneficial in the creation of a new company, right? 

Mr. SEIDLE. True. I don’t believe people should be forced to be 

open. I don’t believe open source is the only way or should be the 

only way. I believe it is a balance system. I just worry that people 

believe that copyright is the salve that will fix their problems, it 

is not. 

Mr. FRUCHTERMAN. And—— 

Mr. DEUTCH. I am sorry, Mr. Fruchterman, I am running out of 

time. I just wanted to go back to something my colleague from 

North Carolina, Mr. Watt, mentioned last week in a hearing, his 

intention to pursue legislation to correct a loophole in our copyright 

law that has long bothered me as well, and I just want to commend 

him on taking on that task. That includes the bipartisan agreement that everyone deserves to be compensated for their work and 

specifically that includes all those involved in the creation of music 

from song writers, to musicians, recording artists, records labels, 

all the others who come together to produce the music that captivates fans throughout the world. I appreciate what you are doing. 

Chairman Coble and full Committee Chairman Goodlatte have 

given us a wonderful opportunity this hearing and the last to reflect on both the importance of our copyright law in areas we might 

want to make changes. I look forward to the continuation of hearings like these and hope that my colleague Congressman Watts’ efforts to ensure true parity and fair market rates for music will be 

included in those discussions. 

Thank you, Mr. Chairman. I yield back. 

Mr. MARINO [presiding]. Thank you. The Chair recognizes Congressman DeSantis from Florida. 
195 

Mr. DESANTIS. Thank you, Mr. Chairman. Thank you to the witnesses, really appreciate you coming here and speaking with us. 

Mr. Lindberg, in your testimony you said you didn’t think there 

was that much of a divide between kind of the traditional content 

folks and the more tech side of things. With that said, could you 

articulate the one or two issues that you do think there is a significant difference between the two groups? 

Mr. LINDBERG. On the copyright side I think that the primary 

difference is that number one we do have different business models 

around copyrighted content. We need to make sure that all these 

different business models are understood and accepted and promoted because they are all about innovation in different aspects. 

Number two, more specifically, there has for a long time been the 

thought that the answer to the machine is the machine. I think 

that that was a fairly common thing that when some of these—like 

the Digital Millennium Copyright Act was created, they thought 

you know what, we can simply mandate that technology companies 

make sure that copyright infringement doesn’t occur. As a practical 

matter, that has resulted in fragile products, it has resulted in 

massive amounts of difficulty and costs which are being born by 

technology companies, not by the content creators. 

Now we don’t support, we certainly don’t support the copyright 

infringement, but when we have an issue with copyright infringement—if our infringement of some of our IP rights, we take care 

of it ourselves, we don’t ask others to do it for us. As a matter— 

I have talked about it all the time and the effort that we spend enforcing copyright. This is because it actually ends up being a dedicated team of people who work every day, all day answering these 

complaints. It really—in spite of the fact that there are all these 

technological measures that people attempted to put in place, it 

really has come down to the expense of us employing people to 

monitor, monitoring these things. I don’t think that—I think that 

the thought in the traditional content industry that you can use 

computers to do their job for them is just false. 

Mr. DESANTIS. Mr. Seidle, I think you in your testimony you had 

talked about embracing a more free market approach and you decried which you considered protectionist policies. I just wanted to 

flesh that out. Are you saying that traditional copyright and patent 

protections are a form of protectionism that undercut free market? 

Mr. SEIDLE. We have seen a few instances of technologies being 

disallowed from being imported into the U.S. because of IP infringement. So yes, I believe this is bordering on protectionism because we are strangling innovation within the U.S. because these 

technologies aren’t allowed here. 

Mr. DESANTIS. And what is an example? Can you articulate a 

specific—— 

Mr. SEIDLE. I can, it is rather odd. There are these black chips, 

they are sensors, they are sensors that are in our cell phones all 

around us that allow us to detect acceleration, orientation and 

space. There is two competing companies. One company is not producing a very good sensor. There’s another company that’s producing a vastly better, improved sensor. This is manufactured outside the U.S. and is not allowed to be imported into the U.S. because of IP law. 
196 

Mr. DESANTIS. Understood. I think—and I take that point, but 

I also think you go back to Adam Smith, you can go back to the 

Founding Fathers. They believed that this was a form of property 

rights that was kind of underlying a free market system. And so 

I am happy to look at some of those issues, but I don’t think that 

having patent copyright writ large is akin to protectionism. I mean 

I think that that’s part of where we are. 

And I look at something like that the drug industry, it’s very expensive. And I agree with my Chairman—my colleague from Florida about different industries. I see where you guys are coming 

from, but I look at like the drug industry where that intellectual 

property right is huge because they are spending billions of dollars 

to develop these drugs. So if you water that down they have less 

of an incentive to innovate. I think in that sense it fosters more innovation. 

Mr. Fruchterman, you stalked about Silicon Valley basically 

making money by giving away content. And I understand that and 

I understand how folks certainly in the tech community have done 

well with that. But for some people in say the music industry or 

whatever, that core product is really what they have. So when 

that’s given away, I think a lot of them will say, well, wait a 

minute, I am not being compensated for my work. 

My time has expired, but can you do 15 seconds responding to 

people maybe outside the Silicon Valley community who may have 

concerns about that model? 

Mr. FRUCHTERMAN. I think I was referring to people choosing to 

give away their core product and making money through advertising or services and the like. And I think we have some great example here. People are making plenty of money giving aware their 

core product and competing on price and quality and services. And 

so I don’t think that IP owners necessarily should be expected to 

give away their content. But I think the weight of most intellectual 

property is obscurity and lack of any economic power. I think the 

power of this kind of model is actually giving away your music 

could actually make you more money other than the very richest 

acts that we are talking about. The enemy of the average artist is 

obscurity and not making a living. Giving away their music actually might make them a better living through better concerts and 

other subsidiary products, which is how a lot of Silicon Valley companies make their money. 

Mr. MARINO. Thank you. The Chair now recognizes Congressman 

Jeffries from New York. 

Mr. JEFFRIES. Thank you. Let me thank the Chair and the Ranking Member and all of the panelists for your participation here 

today. 

It seems as if the challenge that we have as Members during this 

copyright review and the overall intellectual property evaluation 

that we must undertake is to ensure that we continue to make sure 

that our intellectual property laws promote the progress of science 

and useful arts. That in fact is a constitutional charge that we have 

inherited Article I, Section 8, but to do it in the context of the technology revolution that we have been experiencing that of course 

will greatly benefit society as we move forward. But it does seem 

that this balance between content protection and technology and 
197 

innovation is one where if we pit them against each other at the 

end of the day it is not a useful approach when the reality is coexistence I think would be most mutually beneficial. As evidenced by 

the groups that are on the panel, I guess Benetech benefits from 

the creation of literary content. SnapStream benefits from the creation of television content, both of which are made possible by 

strong copyright laws, intellectual protection. 

Let me start with Mr. Lindberg. As it relates to open source software, it is my understanding that there is sort of a spectrum. 

There’s free software available in this context, there’s software 

available simply by attribution. 

Mr. LINDBERG. Uh-huh. 

Mr. JEFFRIES. There is software available by what colloquialists 

call a beer license. 

Mr. LINDBERG. A what license? 

Mr. JEFFRIES. A beer license. 

Mr. LINDBERG. Oh, yes. 

Mr. JEFFRIES. I am going to resist the temptation to inquire any 

further, and you can elaborate. And then substantial fee. So that 

is the sort of the spectrum. I am interested when someone is making a decision to put their software forward, how were these nuances made in terms of the decision to make it available free on 

one of the end spectrum or perhaps just by attribution or at the 

other end of spectrum a substantial fee? 

Mr. LINDBERG. You know, that’s a fascinating question. It really 

gets down—we talked earlier about Adam Smith and capitalism. 

You know back when Adam Smith was writing he was really fighting against an economic system called mercantilism where they 

said, you know what, take all this wealth and ship it back and so 

that we own it all. And he said you know what, everybody can be 

richer, everybody can be better off when you trade, when you 

share. 

Open source is really about enabling trade in intellectual property. Most of our current system is really a mercantilist system 

when they say, you know what, all the copyrights, all these patents, all these types of intellectual property I am going to try and 

own it and hold it as close as possible as I can. And they think that 

that is what will make them rich. 

Mr. JEFFRIES. You have indicated in your testimony that you 

have an even stricter Acceptable Use policy than the DMCA. 

Mr. LINDBERG. Yes, that is correct. 

Mr. JEFFRIES. So how would you define the confines or how do 

you define the confines of what is acceptable use as it relates to 

your company? 

Mr. LINDBERG. One of the things that, for instance, that is not 

explicitly dealt with in the DMCA but we don’t allow in our typical 

use policy is we don’t allow the knowing transmission of infringing 

content across our network. That is something that is not explicitly 

dealt with and is not actually any sort of violation by us. But, we 

still to the extent we become aware of it, we stop it. 

Mr. JEFFRIES. Mr. Fruchterman, you stated in your testimony 

that there needs to be balanced intellectual property regimes that 

allow for socially beneficial applications while allowing industry to 

make money. 
198 

Could you comment on not just sort of striking a balance that allows industry to make money, but what is the appropriate balance 

that actually allows artists in the broadest possible way, creators, 

innovators to make money separate and apart from how you might 

describe industry? 

Mr. FRUCHTERMAN. Well, I think the idea is that the Internet actually makes so many other business models possible. And so I 

think what we want to do is don’t bake certain business models 

into law, don’t bake certain ways of solving social problems or technical problems into law. Basically set the objectives. The objective 

of copyright law and patent law is to encourage people to invest in 

creation and to actually allow them to be compensated. There are 

a lot of different business models that make that possible. And a 

lot of the complaints that you are hearing today are about sort of 

asymmetric costs of some of our existing things, automated DMCA 

notices. 

I’m an inventor. I hold two patents but they are mainly because 

my lawyer said ‘‘be defensive.’’ I think software patents are a terrible idea. I just don’t think there are very many software patents 

that are actually the kind of patents that you talking about when 

you talk about inventing something really core. And so I think this 

is where you guys have to look at what is the end goal? It is economic development while taking care of society’s interest, whether 

that is fair use, for educational reasons and helping disabled people. So as long as we keep that balance in mind, we can do well. 

Because as you point out in the beginning, we have the dualing 

moral high grounds, the right to innovation, the rights of property 

owners and authors. We can actually meet the needs of both those 

people, but don’t just enact laws that just take big companies that 

are big content holders and implement their interest solely. We 

don’t want to leave out society’s interests. 

Mr. JEFFRIES. I see my time has expired. I just wanted to note 

in closing as the gentlelady from California indicated I think there 

is near uniform agreement on this Committee and perhaps beyond 

to deal with the problem of abusive patent litigation. 

Mr. MARINO. The Chair now recognizes Congresswoman Jackson 

Lee from Texas. 

Ms. JACKSON LEE. I, too, thank this Committee for holding the 

hearing. And I particularly want to welcome my fellow Texan here 

and as well to greet your father for me, give him my regards. It 

is very good to see you. 

Coming at the end of this hearing and listening and using extrasensory perception that even though I was not in this chair listening to all that occurred, see if you’ll believe that, but I have a sense 

because of the sort of tracking of our hearings have been to try to 

get our hands around the best direction to take for a variety of industries and whether or not we confront the one-size-fits-all directly. So I am going to ask a broad question as I understand one 

of the themes of this hearing of course is to determine copyright 

in the technology arena. I’d ask this question of each of you, whether or not we need to scrap the traditional framework of copyright 

when it comes to technology because it is fast moving, it is investors make their own determination as to whether or not this is 

what I want to invest in, and whether there should be some sort 
199 

of registration, filing online if you will, that we design through either legislation or through the Patent Office that keeps pace with 

the idea of the fastness of your technology. 

And I am just going to start, you may come at it from different 

perspectives, but do we need to step away from the traditional 

copyright which has the lengthy process, the ultimate litigation 

sometimes? 

Ms. Ringelmann? And I have other questions if you could just— 

this really needs to be sort of a yes or no with a sentence and I 

will come afterward. 

Ms. RINGELMANN. I think so. In listening to the testimony today, 

as an entrepreneur I am constantly thinking what is the new innovative way to address this issue. Then I was thinking, and here I 

am going to give it away, somebody steals it and somebody iterates 

on it. Why don’t we have a Wikipedia for patent registration, why 

don’t we have a crowd-sourcing solution just like Mr. Fruchterman 

has a crowd-sourcing solution to take books and turn them into 

books for blind people in a far more efficient way. Why don’t we 

have a system that can do that. I would encourage you to crowd 

source that and put it open source and see what happens because 

the world out here of innovators might actually come up with a 

much better solve than anybody in closed doors that doesn’t have 

experience innovating could ever. 

Mr. FRUCHTERMAN. I support registration for the very few copyrighted works that actually have economic value that should be 

maintained and letting almost all the rest of this incredible amount 

of content we are creating just free to benefits of society because 

it is never going to be economic. 

Ms. JACKSON LEE. Mr. Seidle. 

Mr. SEIDLE. I echo Ms. Ringelmann’s comment about crowd 

sourcing. The option I believe the vast majority of small businesses 

out there don’t have a loud enough voice to communicate what they 

need. Crowd sourcing it may solve that absolve. 

Ms. JACKSON LEE. Mr. Agrawal. 

Mr. AGRAWAL. Very nice to see you, too, Congresswoman Jackson 

Lee. 

Ms. JACKSON LEE. Thank you. 

Mr. AGRAWAL. This is happening crowd sourcing of invalidating 

patents for example is happening. There was a site that I learned 

about a week or two ago from a giant in the software industry 

named Joel Spolsky called askpatents.com. It is worth looking at. 

I understand they work with the Patent Office. And as an expert 

in some area of software I am able to go online and look at patents 

and provide examples of prior art that would invalidate those patents. And it’s working well, they have developed a very streamlined 

system for doing this kind of crowd sourcing. 

Ms. JACKSON LEE. Thank you. 

Mr. LINDBERG. I think that some sort of registration system 

would help a lot with the problem of orphan works, works that are 

no longer in circulation, that there’s no known—it is not economic 

or there’s no known copyright holder. These are the vast majority 

of works and it is not promoting the progress of science and useful 

arts to have these things locked up and inaccessible. A registration 
200 

system that would help these noneconomic works move into public 

domain would certainty boost innovation. 

Ms. JACKSON LEE. Thank you. And Mr. Agrawal, just would follow up on your citation of a cite. Europe’s SnapStream is unique. 

And the question is with your experience in patents, do you manage the patent troll issue? And are you concerned—again, this is 

the broad base, are we concerned with this kind of technology and 

the inventiveness that comes with places like China and other 

places taking the inventiveness, taking the technology as their 

own? 

Mr. AGRAWAL. We don’t have a lot of experience at my company 

with patents. We haven’t—we don’t have patent protection on the 

technology that we have developed. That’s a choice that we have 

made as a company. 

Ms. JACKSON LEE. And so you don’t see the impact of others 

building on it, growing on it, impacting your economic bottom line? 

Mr. AGRAWAL. We—there have been—there are a number of 

things that we license in our product that we pay royalties for that 

we have to pay for because those companies have patent protection. 

In some cases they have built up such a strong portfolio we don’t 

have a choice but to pay those patents. Gemstar, which has a patent on program guides, is one example of that, and we do pay— 

we have a licensing deal with Gemstar. So that does affect our bottom line. We were able to manage it to something—we were able 

to make it something manageable, but that’s—it’s a challenge for 

a lot of companies, that particular patent, anybody who wants to 

do a program guide. 

Mr. MARINO. The gentlewoman’s time has expired. 

Ms. JACKSON LEE. Mr. Chairman, if I might just conclude by just 

saying to the Committee and Ranking and Chairman to thank 

them again. And from these witnesses know we have to go another 

route to be able to increase your inventiveness in technology and 

we thank you very much for your testimony today. Thank you. 

Mr. MARINO. Thank you. The Chair recognizes Ranking Member, 

Congressman Watt, from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. It has been very interesting and thought provoking hearing and I want to thank all the 

witnesses for being here and helping enlighten us. 

I want to try to make sure I understand each of the business 

models a little bit more. I think I understand Mr. Fruchterman. He 

is nonprofit so he is not trying to make a profit. I think I understand Mr. Seidle. He is open source, no patents. He has made a lot 

of money and been very successful at it or making an increasing 

amount of money and being successful at it. When I see the sales 

of the magnitude, it is small, yet it is large to some people. Mr. 

Agrawal, I think you may have been just in your response to Ms. 

Jackson Lee’s question clarified your business model. You don’t 

own any patents, but you use the patented products of other people 

who do have patents or copyrights, protected materials. So you are 

kind of one foot in the free source and one foot in the protected 

source; is that right? 

Mr. AGRAWAL. We don’t—our product isn’t open sourced, it’s a 

proprietary product. So we don’t publish the source code for the 

software that we have written but we don’t have patent protection 
201 

for it either or copyright protection—we have copyright protection 

for it, not patent protection for it. 

Mr. WATT. Got you. And you have managed to use that system 

to build a business model that has a monetized return I guess. 

Mr. AGRAWAL. Yeah, absolutely, yeah. 

Mr. WATT. Mr. Lindberg, let me be clear on you. You started out 

with Rackspace. Does that own any patents? 

Mr. LINDBERG. Rackspace does have some patents. 

Mr. WATT. Okay. And then you evolved to the joint venture you 

did with NASA and that’s open source; is that correct? 

Mr. LINDBERG. Yes, that is correct. 

Mr. WATT. And you—what you—am I okay to conclude that you 

made money on the patents and you made money on the open 

source. So you have been kind of successful on both sides or—— 

Mr. LINDBERG. That’s actually incorrect. The only reason that we 

have patents is because we are concerned about patent assertion 

from other entities. It is a purely defensive portfolio. In fact we 

freely license our patents out to those who are—— 

Mr. WATT. You license them, that means you charge somebody 

when you license. 

Mr. LINDBERG. No, we license them freely without royalty. 

Mr. WATT. You give them away. 

Mr. LINDBERG. Exactly. For those who are willing to basically reciprocally do the same thing to us. 

Mr. WATT. All right. And that’s on the Rackspace side and on the 

NASA side that you do that? 

Mr. LINDBERG. Yes, I can’t really comment for NASA, but for 

things that we have it is purely for defensive purposes only. 

Mr. WATT. But you have taken advantage of the ability to defend 

them if you need to defend them. 

Mr. LINDBERG. You know we really see that the ability to defend 

is about cross licensing for those who are going to be more assertive and choose to fight in the courtroom instead of in the market. 

Mr. WATT. Okay, I got you. 

Now that brings me to Ms. Ringelmann, whose business model 

I don’t understand. Tell me, you create a platform for other people 

to attract money. Are they attracting it through sales, are they attracting it through investors? And how in the process of doing that 

do you—does your company make a profit? 

Ms. RINGELMANN. Sure. So Indiegogo is an open funding platform 

where anybody can fund what matters to them. So if you are someone who wants to start a business, say it is a food truck or you 

want to invent the Scanadu, which is the doctor in your pocket 

Tricorder, you use Indiegogo to create a campaign that you share 

with your network and friends and customers via social media, 

Internet technology, et cetera and then—— 

Mr. WATT. Are my customers investors or are they purchasers? 

Ms. RINGELMANN. They are neither, they are neither. What they 

are are people who fund you, they give you money in exchange for 

perks and you as the campaign owner decide what perks you want 

to offer, it can range anything from intangible items like a Twitter 

shout out or thank you note or the ability for their name to show 

up on your Web site to a product, the actual product. 

Mr. WATT. How does your company get paid? 
202 

*The information referred to can be found on page 133. 

Ms. RINGELMANN. Indiegogo makes money by taking 4 percent of 

the funds raised on our site. What is interesting to note though is 

that we don’t have any patents. 

Mr. WATT. I didn’t think you had any patents. I was just trying 

to figure out what each of your personal business models, each of 

which seemingly has been successful and therefore justifiable that 

you would be defending that process because you have been successful at doing it, but it is always very important to understand 

for us exactly how your system works. I would just like to get that 

into the record. I am not trying to embarrass anybody. 

Ms. RINGELMANN. Yeah. 

Mr. WATT. All of this we found or at least most of it—even for 

a nonprofit works itself back to somebody making a profit or getting a return of some kind. So there’s, as we say, there’s generally 

no free lunch. 

So I thank all of you and I commend all of you for the success 

you have had in this and we do keep trying to do our responsibility 

which is, Mr. Seidle, constitutional. We didn’t write this, the 

Founding Fathers wrote it when they said we have the responsibility to promote the progress of science and useful arts by securing 

for limited times to authors and inventors the exclusive right to 

their respective writings and discoveries. We have some—a lot of 

discretion in how we do that, but we don’t have any discretion not 

to do it because—unless we amend the Constitution. So all we are 

trying to do is to figure out the time limits to put on it, which is 

a good debate to have, and what our constraints we put around it. 

We are just trying to get information we need in these hearings to 

be better informed about how best to do that, and we thank all of 

you for sharing your expertise. 

Mr. Chairman, before I yield back let me ask unanimous consent 

to submit for the record, open source, a writing from the National 

Writers Union expressing their views on the subject of today. 

Mr. MARINO. Without objection.* 

Mr. WATT. I yield back. 

Mr. MARINO. Thank you. Ladies and gentlemen, this concludes 

today’s hearing. I want to thank all the witnesses. It is enlightening as usual, and this is very informative. So we all appreciate 

it. I speak on behalf of all my colleagues up here. Listening to your 

insights, we take these thoughts and share them, talk to our colleagues about them and you help us try to improve the quality of 

life for all Americans. I want to thank our guests who came to visit 

us, sitting back there listening to us. 

And with that, without objection all Members will have 5 legislative days to submit additional written questions for the witnesses 

or additional materials for the record, and this hearing is adjourned. Thank you. 

[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.] 
(203) 

S U B M I S S I O N S F O R

T H E R E C O R D 

Prepared Statement of the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on 

Courts, Intellectual Property, and the Internet 

First, I would like to thank Chairman Coble and Ranking Member Watt for holding today’s hearing in which we will take a look at the role of copyright in American 

innovation. Americans from Houston, Texas, Chicago, New York, the Bay Area, and 

all across this great nation benefit from new technologies many of which depend on 

our copyright system which consists of the laws which undergird the system, buffeted by the policy and practices by which tech innovators, artists, writers, musicians, and other creators of all stripes benefit. The system stands on principles of 

balance and fairness which allow for continued innovation while not infringing on 

the property rights of others. 

The roots of these laws go back many centuries, from the ancient Egyptians and 

people of the African Gold Coast, whose leader, Mansa Musa of ancient Ghana, traded books for gold, to the likes of political philosopher John Locke of Great Britain, 

who further wrote and expounded on the ideas and theory of property rights. 

The purpose of today’s meeting is to examine the role of technology which is quite 

similar, I might add, to last week’s hearing which examined intersection between 

copyright law and policy, and the impact, whatever that might be, on innovation in 

America. I would note that this hearing is a good follow-up from that hearing that 

this Subcommittee held last week. 

I am honored to have two Texans on this morning’s panel, Van Linberg of 

Rackspace Hosting based in San Antonio, and our very own Rakesh Agrawal of 

Snapstream Media, which is in the heart of the 18th Congressional District. It is 

my hope that the economy of Texas, and Houston continue to flourish so that entrepreneurs continue to make our state and city their business and professional destination of choice. 

This dichotomy between laws and new technology is the challenge that has faced 

patents, trademarks, and of course, copyright, in the age of technology. It is a good 

problem to have because it means innovation is taking place, new products are coming to market, and the wheels of entrepreneurship are turning—hence today’s hearing. 

The memorandum for today’s hearing pointed out that technology is regulated by 

the Commerce Clause of the U.S. Constitution but I would go further and add that 

federal policies affect scientific and technological advancement on several levels. 

The federal government directly funds research and development activities to 

achieve national goals or support national priorities such as funding basic life 

science research through the National Institutes of Health or new weapons of mass 

destruction detectors through the Department of Homeland Security. The federal 

government establishes and maintains the legal and regulatory framework that affects science and technology activities in the private sector. Tax, intellectual property, and education policies can have tremendous effects on private sector activity. 

The federal government also directly regulates certain aspects of science and technology such as limiting who is allowed to perform research with certain dangerous 

biological pathogens through the select agent program or who is allowed to use portions of the radio frequency spectrum for commercial purposes. The balance between 

innovation and societal protection is apparent in this space. 
204 

Today, because of technological advances, the average citizen in Houston rarely 

buys CDs, and the mention of a ‘‘piano roll’’ will draw blank stares from all but a 

handful of people; but piano rolls were all the rage in the first decade of the last 

century. Today, the typical music fan surfs the web to download music—legally and 

illegally—and has access to thousands of songs. Music service providers wishing to 

offer a song must search physical card files and incomplete databases to identify 

and locate the copyright owner. I find this to be utterly fascinating. 

Mr. Chairman, I am interested in hearing from our witnesses and their perspectives on these issues. I am particularly interested in their views regarding the efficacy and feasibility of developing products which can help facilitate technology access to those on the lower end of the economic scale and not just the ultra-sophisticated high-end users who read ten blogs a day and can easily snap-up the latest 

and greatest in innovative products without batting an eyelash. 

Thank you again for convening this hearing, Mr. Chairman. I yield back the remainder of my time. 

f 
205 

Prepared Statement of the 

Computer & Communications Industry Association 

IN/ore Ih,< 

United Stales House of Representatives Commilteeon the Judiciary 

Subcommittee on COUn!l, Intellectual I'ropeny. and the Internet 

UlllIl",/ill}! 

·· Innovalion in America The Role of Technology" 

August 1. 2013 

Slateml.'l1t of the 

Computer & Communic3Iions Industry Association 

The Computer & Communications lmhlslry Association (CCIA) rcprcsenl~ large. 

medium-sized. and small companies in ihe high technology products and services !;ector!>;. 

including computer hardware and software. electronic commerce. tclecommliniClltions and 

lmernel produCls and services - companies Ihal collectively generale more than S250 billion in 

annual revenues. Ail with CCIA '$ submission regarding last week's hearing 011 the mle of 

copyright in U S innovation,' this !\Ubmission furnishes the commiuee with available ~mpirical 

data relevant \0 th subj~~1 of the Iwaring. CCIA r<:llue~ !i that this Slllle,n<.--nt be included iu the 

record nflhis hearing 

U, The E('onom;c Impad or Interoet-f,nllbled Technology Oil the Economy 

111e impact of technology. and mOle specitic.ally, InWme -enabk'!lI~'Chnology, has 

tran$formed the U.S. economy. and thi~ transformation will continue in the years ahead. The 

lotemet cOO\lnted for 21% of GOP growth in m~turc ccrntoll1ies in recent year.;. and. on 

average. 3.4% of GOP across Ihe lar!,le economies that make up 70 percent of global GOP ' If 

the Intemer were a nation. it would have surpassed Italy and Bra7JI in 2010,' and by 20 11 it 

, A>'#lk,ble ,,,,I,,,,, ", hnp:/flw" ." .. 'i '>I~ ~orwcC IMtI..,.J,:.: tblll>yF'~""' I,1).no,,~)(~1I)J{)j !QS14ICCtAruO 

5tn1"'2Ow lruw'·' li""·II."k.~tlo~2()(\'flYri~b pJf 

, J.,,,.,. MOIl},1o:>. &. {;!u,rl." R(),~bu'1!ll. 71,.. Jr'"'''' 'mrrljomr.!'" 1n.- ''''p<IC' <>1'M I" .. """,,,, <'<'<I,""'" K'""O'II, 

(N II''''''f*nly (Md(!n"'~ Globalln<l.l\!"c. O<:lob.:1" 2011~ ot I, 'M"I"hI. aI 

bll~ ./I"W" .m"i:itt>e)· «>rnIon»ghlSlbi~ b _l""h _ldo!«rm' _ ml<mr:t/tI", _ ~ l_lnl:n;fpNll<:r 

' !),,',J Ihn", '" .1'heCl)m~·c ,·d If",M: 1'10< U .21'rlll"", 01'1",11"",1)' - 1'11<' In"""" &mflll"Y ill/h. G-JQ 

(1lWI>:tI' ConsuJl1n~ Group :!(lIZ)' ot J. o"",/tK<I. "llllll'> i'l)lIItol'COITuI~hn.' ... [lRoo;\, ..... 'I'. 

oon nli"pI(>ad sI2Q12/03IhcL 4u,llioo ~ ""f>o,I>lu>I'tl .1'Jr 
206 

outranked Spain and Canada in tenns of GDP, and demonstrated a growth rate faster than the 

Brazilian economy. In fact, in numerous advanced economies, the Internet accounted for 10% of 

GDP growth over the past 15 years 4 So rapidly has the Internet grown that its contribution to 

the U.S. economy now exceeds that of the U.S. Federal Government, and by 2016 is estimated to 

reach $4.2 trillion across all G-20 economies 5 This growth is not localized within the 'tech 

sector;' research indicates that 75% of the positive impact of the Internet accrued to traditional 

industries through efficiency gains and expanded markets. Moreover, SMEs who heavily utilized 

the Internet exported twice as much as those that did not 6 Among selected G-20 countries in 

recent years, "high-Web" SMEs experienced revenue growth 22% higher than those with low or 

no Web usage 7 

It is difficult to overstate the impact of this sector. Search technology alone provided at 

least $780 billion in value worldwide in 2011, 8 and while the growth of "consumer-facing" sites 

like Facebook, YouTube, and Twitter, have revolutionized the economy, the sector also includes 

a largely overlooked consumer support layer, including advertising, that contributes substantially 

to growth and job creation." Additional potential for growth still exists: a recent publication of 

the World Economic Forum concluded that the Internet "can be a powerful tool to unlock SME 

export potential", and that removing barriers to Internet-enabled international trade could 

increase cross-border opportunities for small businesses by 60% to 80%-'" 

ITI. Impact of Technological Innovation on the Market for Content 

Although new technology has considerably changed how modem users access and 

experience content, and in many cases disintermediated old gatekeepers, this sea change has 

broadly benefited both artists and consumers. Research in 2012 observes that consumers have 

1 Matlhicu Pdissic du Rausas et aI., intol1et matters: l'hc Net's ,HiJceping impact on growth, jobs, and prosperity 

(McKinsey Global Imtitute, May 2011), at I, available at 

hllp:/;\-\ \V~,,/ mC"kinscy.com!insigl1tslhigh_tcch_lC]Ccollls_intcmcthnlcmd_lllallcrs~ we also Manyika & Roxhurgh. 

supra. 

:;. I Jean I!f af., supra, aL 3 

6 du Ruusas ct al .. supra. al 3 

- Dean et al., supra, at 14 

Ii Jacques Bughllll!f at.. The Impact a/ll/femef techl/ologles: Search (McKmsey Global Institute 2(11). at L 

available at hUp:!/w\\'w .mclinscy .comlinsights/marb:ling_ sales/measuring_thc _ valuc _ oC search 

Y John Deighton, }.·conOJIIIC Value (~lthe AdverttslI1g-Supported internet Hcosystem (Interactive Advertising 

BurealL 2012), available at http://v.,ww.iab.nel/mcdiaifileliab_Rc1Jorl_ Scpkmhcr-24-20l2 _ -klr _ \' l.pdf 

]10 World .l::conomic Fomm .. l!.·lIoblll1g Trade, Valtung Cirmv·th Opporfullftws (2013) at 19-20 

2 
207 

increased spending on content across the board in the last decade, as new technology has 

increased options for content consumption. Video, book publishing, music, and video games, 

have all grown over the decade since the Internet explosion. II These findings seem to be 

corroborated by independent academic research, which confirms that the advent of the Internet 

has increased the overall supply and reduced concentration in the market for recorded music. 12 

Insofar as a lack oflawful, affordable options contribute significantly to global media 

piracy,13 the availability of new outlets and platforms for content consumption help to diminish 

this etfect. Research just published by Spotify indicates that the introduction of the service into 

the Netherlands and Sweden substantially decreased unlawful music downloads in those 

countries, whereas it still remains quite prevalent in Italy, where Spotify only just launched. 14 A 

study just released by Norwegian firm Ipsos MMI found that the introduction of both Netflix and 

Spotify into that country were followed by a 50% reduction in video piracy and 80% reduction in 

music piracy15 

IV. Impact of Copyright Regulation on Technology Intermediaries 

Although most technology and Internet sectors businesses are themsel ves benetlciaries of 

the intellectual property system, the burdens imposed in the form of IP compliance must be 

weighed against these benetlts. Copyright regulations have as great an impact on early-stage 

investment, and consequently, innovation, as the economy.'" Interviews with hundreds of angel 

11 Michael Masnick & Michael Ho, The SAY is Risillg (1'Ioor64 2012), available at 

http://www ccianet. org/C CIA/filesl ceLi brary F ileslF ilenamel0000000OO5 8GITheSky IsRising 7 -130. pdf 

I: A revie\\' of 30 ye<lTs' data ofne\\' works ofreconled lTIL1Sic including (llbu1l1 sales, and lradilional Imd Inknlel 

radIO aIrplay, found that the total quantIty of ne\v aibullls released annually has lllcreased sharply SlIlce 2000, dnven 

by ind<"''PL:ndcnt labels and purdy digital produds, <llong \-\ith a (;oITcsponding d(;crcascJ (;ollo;.;cnlration of sah.:s in the 

top aibullls. The review also found increasing numbers of aibullls find commercial success \\'ithout substantial 

lradilional ail11lay: independLl1t label alhums account ror a grOWlllg sharc or commcrcially succcssrul albums. Set" 

Joel '0/ al(liogeL ~lnd the llands P!ayed On: Digita!Disinte17nediafion and the Quality afNew Rt"cardt"d .Music 

CUniv. Minnesota, NDER 2012 (prelim. drafl» available at 

hnp://papers.ssm.com/so13/papers.cfm?abstract_id=2ll7372 

13 Joe Karaganis, ed.,.Aledia Pirac}' in EmC'rging Economies (Social Science Research C'ounci120ll), available al 

hllp:llpiracy .americanasscmhly .org/\vp-contcnt/LLploads/2011106/MPEE-P])F-l.0.4.pdr 

11 Will Page, Spotify,Advelltures in tlie !.\iNlier!ands, July 17,2013, available at 

hllp:llprcss.spoti[~v .com/uk/2() 13/(l7/17 lad\·cnturcs-in-nclherlandsl 

15 Sophie Curlis, .)J)ot{fy and ?'k(flix Curh IHlISic and Film Piracy, The Td.:graph, July [8,2013, availahle at 

http://wwwtelegraph.co.uk/technology/news/10187400/Spotify-and-Netfli .. -curb-mu.ic-and-film-piracy .html 

Hi Matthe\v T ,e Merle e1 uj, The lmpacf qf US. lnlenWi Copyright Regulations on FarZv-S'tage Tnvestment .'1 

QuanliWlive ,')'fu(f)-· (Dooz & Company 2011), available al 

'''http://mvw.booz.com/media/fileffioozCo-Impact-US-Internet-Copyright-Regulations-Early Stagelnvestment.pdf 
208 

investors and venture capitalists found them to be overwhelmingly wary of new regulations and 

to seek an unambiguous copyright regime. In particular, increasing user or website liability 

would negatively atTect innovation by driving early investors into other areas. Polling conducted 

by Booz & Co. found that such risk could have the effect of reducing the pool of interested angel 

investors by 81 %, and that increased exposure for users would likely reduce the pool of 

interested angel investors by 48%-'" In general, 80% of investors polled reported being 

uncomfortable investing in business models in which the regulatory framework is ambiguous. 18 

Changes in copyright law and policy that provide more certainty for intermediaries, such 

as the Court of Appeals for the Second Circuit's decision in Cartooll Network, TP v. esc 

Holdings, inc. ("Cabfevisiof/"), positively impact venture capital investment in cloud computing. 

The ('ablevisioll decision led to additional incremental investment in U.S. cloud computing firms 

that ranged from $728 million to approximately $1.3 billion over the two-and-a-halfyears after 

the decision; the approximate equivalent of $2 to $5 billion in traditional R&D investment1 " 

After the Cablevision decision, the average quarterly investment in cloud computing in the 

United States increased by approximately 41 percent20 In contrast with the U.S. law, European 

courts took a different approach, reaching decisions that increased risk for the online 

intermediary platforms that account for 14% of the European GDp 21 Copyright decisions in 

France and Germany unfavorable to cloud computing led to an average reduction in VC 

investment in French and German cloud computing firms of $4.6 and $2.8 million per quarter, 

respectively, implying a total decrease in French and Gennan VC investment of $87 million 

from the time these decisions were handed down through the end of201022 

1; Id. o.t6 

1:< Id. 

10 Josh Lemer ei al.. The Impact o/Cop)Tighf PoliG)' Changes on ITenlUJ"(:' Capital Inveslment in Cloud Compuling 

Companies (Analysis (Troup 2(11), al L available at 

http://wwwanalysisgroup.com/uploadedfileslPublishingi ArticleslLemer] a1120 11_ Copyright]olicv _ VC _In\"estm 

ents.pdt' 

20 I d. at 9 

21 Copenhagen Economics, Online Intermediaries: Assessing the Economic Impact of the EU's Online Liability 

Regime (FDiMi\ 2(12), a124. amila"le at 

http://,,'W\\, europeandigiralmedia.org/uploadslPress/documents/Copenhagen%20EconomicsOnlinL:%201nlLTITIediariL:s-20 120 1.p(U' 

:::::: .ro~h Lerner et aI., The Impact a/Copyright Po/icy Changes in Vl'ance and Gennany on J ·entlll'e Capital 

Investment in Cloud Computillg Companies (Analysis Group 2012), at 1, available at 

http://,,,w\\,analysisgroup.com/uploadedFiles/News _and _ Events/Ne\ys/20 12_ bU _ CloudComputing_ Lerner.pdf 

4 
209 

f 

As CCIA has previously noted, much of this important industrial activity benefits from 

various limitations and exceptions to copyright2.l The balance inherent in US copyright law, 

including limitations such as fair use, has nurtured an environment of productive growth, and 

economic expansion. In 2008 and 2009, industries benefiting from limitations and exceptions to 

copyright accounted for an average of 4.6 trillion in revenues, and contributed an annual average 

of $2.4 trillion in "value added" to the U.S. economy, or approximately 17 percent of total U.S. 

current dollar GDP (roughly one-sixth ofthe economy.) This 'fair use economy' employs 17 

million people, about I in 8 US. workers, and in 2008-09 generated a payroll averaging $1.2 

trillion. Exports of goods and services related to fair use industries increased to $266 billion in 

2008-09. Notably, exports of trade-related services, including Internet or online services, were 

the fastest growing segment, increasing nearly ten-fold from $578 million in 2002 to more than 

$5 billion annually in 2008-200924 

V. Conclusion 

Scholars have furnished numerous proposals by which Congress can ensure that IP 

regulations promote continued growth in the 21st century business landscape,2' and these 

proposals may merit consideration at the appropriate time. As CCIA stated in response to the 

Committee's prior hearing, however, a broader copyright reform effort should begin with 

objective research, as called for by the National Academies' recent report, Copyright ill the 

Digital £ra26 Providing for such research will an essential tirst step in this process of reviewing 

the Copyright Act. 

:3 Ihoma8 Rog~:rs & Andrew SLamosszcgi, Fail' Use in the ,_ .S', c'conomy: lilt> Hconomic Contribution of 

Indu8lriC's RC'/ying [Ipon Fair Use (CCIA 20ll), available al 

hllp:ll" ww cciancl.org/CC IMCik,lccI .ihrary f'iic,/Fiicnamd()()()()()()()()()526/CC I A-F air! J,cilllhcl JSc:c()llomy20Il.pdf. 

24 lei. The U.S. is not alone in this experience. Research indicates that the introduction of fair use amenclment5 in 

Singapon..: substantially incn.;(Jscd the growlh of induslries rdaling to private copying lechnology, \\'hilc having a 

negligible impact on copyright industries. Roya Ghafe1e & Benjamin Gibert, The Economic Value afFair USC' in 

Copyhght Lm1'. COllntt>1:/actlfalimpact "'lna~ysis afFair Use Pohey On Privott> Copying l't>elm%gy and Copyright 

J1mkets in Singapore (Oxfirst Lid. 2(12), available at hllp://work.s.bepn.:::ss.com/roya_ghafdeI12. Reseurch in 

Europe also Illdlcates a substantIal rehance on copynght .. t1exlblhtIes··, although not as sub5tantlal as III the Umted 

Sl<itcs. St>t> P. Bcnll HugcnholLL & Martin R.F. Scnftlcbcn, Fail' Cst> in c'uropt>. in ,S't>areh afFle.ubilities 

(Universiteit van Amsterdam 2011), available at 

http://v.ww ivir.nUpublications/hugenholtzIF air%20U se%20Report%20PUB.pdf 

:5 St>e, t>.g., Michael Currier. inllovatioll for the 21st CentUl)': Hanlt>ssing the POI'v·er (?llnft>llt>ctlfal Proper~~v and 

1ntitJ'Ust I,QW ((hf'ord lJnlv. Prc~~ 2(09), availahle at httr:!/rapcrs.ssrn.c()m/~o13!papcrs.c1111?ahstractjd=136X931 

:6 Nalional Reseurch Council, Copyright ill flit> Digital c'ra: Building c'v;deflce for Policy (2013) al ix, available 

01 http://,,,,w.llap.edu!catalog.php'hecord _id~ 14686 
210 

Prepared Statement of Dorian Daley, General Counsel, Oracle Corporation 

Statement of Dorian Daley, General Counsel, Oracle Corporation 

House Judiciary Committee, Subcommittee on Courts, Intellectual Property and the 

Internet 

Hearing on "Innovation in America: The Role of Technology" 

August 1, 2013 

Oracle Corporation is the world's largest enterprise software company. With more than 

390,000 customers-including all of the Fortune 100-and with deployments across a vast array 

of industries in more than 145 countries, Oracle offers an optimized and fully integrated stack of 

business hardware and software systems. Oracle's human and financial capital is deeply 

committed to research and development-with more than 32,000 full time employees and $5 

billion a year dedicated to those efforts-and that commitment has resulted in products that 

range from servers and storage, to databases and middleware, to the world's leading business 

applications. Through the creativity of its software designers, the ingenuity of its engineers, and 

the acumen of its business people, Oracle delivers systems that provide unmatched performance, 

reliability, security, and tlexibility, thereby increasing its customers' productivity. 

Oracle's past and continued success depends significantly on the continued availability 

and consistent application of our copyright laws, so I am grateful that the Subcommittee has 

given me the opportunity to provide it with this written testimony. Our company also commends 

the Subcommittee on its undertaking of a review of these laws. It is particularly gratifying that, 

in a time of extremist positions and shrill voices in the various copyright debates, the 

Subcommittee has set a higher standard for discourse with a calm and neutral review of the law, 

rather than rushing to revise it. 
211 

Copyright Is Essential to Technology Companies 

Copyright law by its very nature is intended to promote progress. The constitutional 

mandate that required Congress to create exclusive rights in authors was directed toward "the 

progress of science and the useful arts," so that creators will be incentivized to create--and to 

disseminate-their work, confident that they will enjoy both the recognition of their creation and 

any financial rewards for a detined period of time. 1 Thus companies like Oracle rely on the 

robust protections provided by the existing copyright laws when they continue their innovation 

in software and pursue the research and development efforts that will bring that software to its 

most productive uses for consumers. Without such protections, competitors, both foreign and 

domestic, all too easily are able to copy the successful results of these labors without making 

similar investments. 

It is for this simple reason that the software industry has come to rely so heavily upon 

copyright law. Without its protections, the products of creativity are a common feast, and the 

incentive (and even the capacity) to innovate is correspondingly diminished. Thus, those who 

would frame the essential copyright debates as between the content community, on the one hand, 

and the technology community, on the other hand, are missing an essential point: technology 

companies rely on copyright law protections just as media and entertainment companies do. As 

this Subcommittee has correctly recognized during the last three copyright review hearings, 

US. CONST. art. I. § 8. cl. 8: Sony Corp. o/Am. v. Unl\wsal City StudIOS, Inc .. 46~ U.S. ~17. 432 (l98~) CThe 

llllllledlate effect of our copyright la\v is to secure a fair return for an 'author's' creative labor. But the ultimate 

aim is, by this incentive, [0 stimulate artistic creath'itl' for the general public good."); e'er' h?fo. 5,'ervs .. Inc. v 

Maclean Hunter Mkt. Reports, Inc .. 44 F.3d 61, 65 (2d Cif. 1994) nT]he objectives of the copyright law. 

which are, as dictated by the Constitution, to promote the advancement of knowledge and learning by giving 

authors economic incentives (in the form of cxdusi\·c righLs La their crcaLions) to labor on ere aLive, l.JlO\\lcdgcenriching works."); Pac. & S. Co., Inc. v. Duncan. 7H F.2d 1~90, 1~98-99 (11th Cif. 1984) (not111g that the 

copyright laws, consistent with the Constitution, are intended [0 bencri[ society as a whole by providing authors 

with an incentive to create) 

2 
212 

copyright law reflects a complicated balance among many different interests, and the technology 

sector, along with others, relies on both copyright law's protections as well as its limitations for 

its continued viability. 

This balance can only be maintained if the copyright laws are clear and consistent. We 

have long heard cries to change the copyright laws each time a significant new technology 

emerges, but doing so would upset the expectations of those making substantial contributions 

based upon existing understandings of the bounds of the law. In the face of new means of 

creating copyrightable works, or of sharing them, or of infringing them-as with the many 

pennutations of file-sharing technologies-the responsible public policy approach is to judge 

those new technologies' uses against the core principles of the existing law, not to alter the law 

to accommodate the new technologies. Thus, as this Subcommittee proceeds in its review, it is 

Oracle's hope that it will do so with an acknowledgement that, for the most part, the copyright 

laws continue to serve their intended purpose, and that creators and innovators in American 

industry, including the software industry, rely on them in making continued investments in our 

country's economic future. 

Software Relies Heavily on Clear and Consistent Copyright Protection 

Software is ubiquitous in American life. In a single generation, software has been created 

to enhance the development of many different industries, as well as the productivity and 

entertainment of people. Whether it is NASA scientists, financial analysts, or families at home, 

the powers of computers have been harnessed to assist individuals in every personal and 

professional endeavor. The functionality provided by software includes wired and wireless 

communications, security and encryption, management and analysis of the world's data, 
213 

graphical display and the reproduction of sound, and any number of additional and critical 

functions. With the proliferation of mobile devices, the majority of Americans now keep what at 

one time would have been considered a supercomputer in their pockets. 

Everyone of these devices-the cell phones, the GPS in cars, the trading software used 

on the New York Stock Exchange, the Copyright Office's electronic registration system, and this 

Subcommittee's website-operate using computer software. The creation of that software took a 

substantial investment of creativity, time, and money. Complicated code-the code that we rely 

on to land our planes, to maintain our phone calls, and to operate the Internet-requires years of 

intense consideration and design, and then years of reevaluation and amendments. Software 

engineers face countless choices in designing their software. Each choice can affect the 

structure, aesthetics, and pertormance of the software. Each choice also relies on the ones that 

have come before it and that will come after it It is not surprising that those who design these 

monoliths of computer code are referred to as architects. 

The code designers and systems architects of the United States lead the world in software 

innovation. Our industry creates and supports high-skill, high-wage jobs that drive our country's 

economic growth2 Those jobs and the success of the American economy, however, depend 

critically on the continued availability of robust copyright protection for software. In the digital 

age, it is far too easy to appropriate others' creative work; we know too well the effectiveness of 

Economics and Statistics Administration and U.S. Patent and Trademark Office. Intellectual Propertv and the 

rJ.,)'. Economy: Industries in Focus, March 2012. at 54 (",Exports of IP-llltensive service-providing industries 

lolalcd aboul $90 billion in 2007, accounting I'or approximalely 19 pcrcelli 01' lolal U.S. privale scnices cxporls, 

As shmvn in Figure 10. exports of soft\vare publishers. at $22.3 billion, 'ivere the largest group of services 

exports in 2007. .")~ see also id. at 41 (noting 2.-+ percent job grovvth in copyright-intensj"ve industries during 

Lhc 2010-2011 economic rcco\cry period. outpacing oLhcr IP-inlcnsivc indusLrics (paLcnl and Lradcmark) and 

non-IP-intensive industries), .+5 ('"While IF-intensive industries accounted for 18.8 percent of all jobs in the 

economy in 20 I 0, Iheir $5.06 Irillion in \'alue addcd in 2010 represenled 34.8 perecnl or lolal GDP."), availablc 

at http://www.uspto.gov/news/publieationsl]P_Report_ March _CO I 2.pdf. 

4 
214 

the new and emerging means of acquiring, copying, altering, and deconstructing copyrighted 

works. The widespread, popular use of unauthorized music and movie downloading-and the 

content industry's outcry against such thievery-has made most Americans quite familiar with 

digital media piracy, but software piracy deserves much more attention. One recent study found 

that a one percent increase in the use of properly licensed software, instead of pirated software, 

would lead to a $15.1 billion increase in economic value for the United States 3 

The copyright laws form a crucial defense against the unauthorized copying of computer 

software. In 1978, the National Commission on New Technological Uses of Copyrighted Works 

recognized that the "need for protecting the form of expression chosen by the author of a 

computer program hal d] grown proportionall y with two concurrent trends. Computers hal d] 

become less cumbersome and expensive ... [and] programs hard] become less and less 

frequently written to comply with the requirements imposed by a single-purpose machine"· 

Those trends only have intensified in the years since CONTU's final report There is no question 

that software-as an "original work of authorship fixed in a tangible medium of expression"-

merits copyright protection.' There should be no question that it continues to do so. 

BSA' The Software Alliance, COlllpetitive Advantage' The Economic Impact of Properly Licensed Software, 

May 21, 20U, at ~ 

National Commission on New Teclmologieal Uses of Copyrighted War!"s, Final Reporl, July 31, 1978. at 10 

17 U S.c. § 102(a); see also 17 U.S.c. § 101 CA 'computer program' is a set of statements or instructions to be 

llsed directly or indirectly in a computer in order to bring about a certain result."): Computer Associates 1m'l. 

Inc. v . . lIiai, Inc., 9S2 F.2d 693, 702 (2d Cir. 1992) Cit is now well sellled that the literal clements or computer 

prob'Tams. i.e,. their source and object codes. are the subject of copyright protection,") (citing Whelan Assocs., 

Inc. v. Jasloll' Dental Tahofator..V. lnc., 797 F.2d at 12JJ (source and object code); CArS S'(?fiware TJesign S:vs., 

Inc. v. Info LJesigns, Inc., 785 F.2d 1246, 1247 (5th Cir.1986) (source code); ,jpple Computer, Inc. v. Franklin 

Compuler Corp., 71~ F.2d 1240, 1249 (3d Cir.1983). cerr. dismissed, ~64 U.S. 1033. 104 S.Ct 690,79 L.Ed.2d 

ISS (1984) (source and object code); Williams necs., Inc. v .. Irlic Tnl'l, Tnc., 685 F.2d 870, 876-77 (3d 

Cir.1982) (object code». 
215 

Copyright law also forms the backbone for the wide variety of proprietary and open 

source distribution models available to modem software developers. Some developers sell their 

software under proprietary licenses. Some choose to distribute their software under one of the 

vast array of available open source licenses, each with its own set of requirements and 

limitations" And yet others choose to distribute their software without restrictions. No matter 

which model a software developer chooses, it is copyright law that serves as a backstop to the 

enforcement of those licenses. This is particularly true in the case of open source licenses, which 

typically do not contain separately enforceable contract provisions that could serve as the basis 

for a breach of contract claim. As the Federal Circuit noted, "Copyright holders who engage in 

open source licensing have the right to control the modification and distribution of copyrighted 

material.,,7 Simply because a software developer decides not to commercialize its product in 

exchange for monetary compensation does not mean that the developer does not extract value 

from its software and does not mean that it should be deprived of control over its work R 

Copyright law is not the enemy of the open source software movement; quite to the contrary, it 

provides an important mechanism for maintaining its long-term viability. Without enforceable 

copyright license terms, popular open source proj ects such as Linux, Apache HTTP Server and 

MySQL could fragment and splinter into oblivion 

Jacobsen "1'. Katzer. 535 F.3d 1373. 1378 (Fed. Cir. 2008) ("Public licenses. onen referred to as 'open source' 

licenses, are used by artists, authors, educators, software de'velopers, and scientists who wish to create 

collaborative projects and to dedicate certain "works to the public. Se'i'eral types of public licenses Imve been 

designed to provide creators of copyrighted materials a means to protect and control their copyrights.··). 

Id. at 1381 

Id. at 13S I-S2 CCopyright licenses are designed to support the right to exclude; money damages alone do not 

support or enforce that righl. The choice La exact consideration in the fonn of compliance with Lhc open source 

requirements of disclosure and explanation of changes_ rather than as a dollar-denominated fee, is entitled to no 

less lcgal recognition. Tndeed, because a calculation of damages is inherenlly speculative, these types of license 

restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.'·) 

6 
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Copyright Is, and Should Remain, Medium-Neutral and Technology-Indifferent 

As we all consider reviewing the copyright laws, some have suggested that the 

emergence of new technologies-and the new functionalities they otrer that directly implicate 

copyrighted works-justifies amending the copyright laws to accommodate them This proposal 

is worse than unwise-it is dangerous. 

The copyright laws generally are designed to be medium-neutral. The Copyright Act 

provides that "copyright protection subsists ... in original works of authorship tixed in.i!!!Y 

tangible medium of expression, now known or later developed, from which they can be 

perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine 

or device.,,9 Tn fact, though not separately enumerated, computer programs are protected under 

the Copyright Act as literary works. Congress contirmed as much when it enacted a statutory 

definition of the term "computer program" in Section 101. 10 Congress also declined to enact 

special rules that would apply only to computer programs, other than the narrow exceptions 

pennitting an owner of a copy to create a copy or adaptation "as an essential step in the 

utilization of the computer program in conjunction with a machine" and to make a backup 

copy.ll In all other respects, Congress clearly intended the copyright laws to apply to computer 

programs based upon the same principles that apply to other literary works. Similarly, musical 

works; dramatic works; pantomimes and choreographic works; pictorial, graphic, and sculptural 

17 USc. § I02(a) (emphasis added); see also Greenbergv. Nat'l Geographic Soc., 533 F.3d 1244. 1257 (11th 

Cif. 2008) ("[T]he principle of media neutrality is a staple of tile Copyright Act ") 

An Acllo amend lhe palent and lrademark laws. Pub. L No. 96-517 §1O(a), 94 Stat. 3015.3028 (1980) 

17 U.S.c. § 117 

7 
217 

works; motion pictures and other audiovisual works; sound recordings; and architectural works, 

all are defined as works of authorship under the statute's non-exclusive definition12 

The decision to keep the copyright laws neutral and to provide the opportunity that future 

works will be afforded the same protections as known works is important to continued 

innovation in society. By keeping the laws medium-neutral, those that develop new technologies 

and new works are guaranteed to receive the same protections as the developers of existing 

works. Similarly, companies that, as discussed above, heavily invest in existing technologies are 

able to rely upon the fact that copyright law will continue to protect their investments to the same 

extent as newer technologies 

The suggestion to revise the copyright laws each time a new technology is developed 

would threaten this careful balance. Instead, as crafted by the current legal regime, the courts are 

capable of applying the Copyright Act's general principles to new technologies. The U.S. 

judicial system is able to determine what a work of authorship is, what constitutes a reproduction 

or a distribution, and when a use should qualify as an exception to copyright infringement. It 

simply is not the case that new technologies need special protections in order to flourish. To the 

contrary, advances in digital technologies have made the unauthorized copying and widespread 

distribution of copyrighted works easier. Every year, software piracy becomes a greater threat to 

the United States' position as a leader in computer innovation. If anything, additional 

protections are needed to safeb'Uard the investments made by copyright holders against such acts. 

Such changes, like any other changes to the copyright laws, should only be made after careful 

reflection 

17 U.S.c. § I02(a). 
218 

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