Statement of Marybeth Peters
Register of Copyrights
Subcommittee on Courts, the Internet, and Intellectual Property
Committee on the Judiciary
United States House of Representatives
108th Congress, 1st Session
March 6, 2003
Piracy Prevention and the Broadcast Flag
Mr. Chairman, Congressman Berman, Members of the Subcommittee,
thank you for inviting me to appear before the Subcommittee today to discuss
the copyright issues raised by measures for the protection of digital broadcast
television signals, commonly referred to as the “broadcast flag”
proposal. Let me offer my congratulations to you, Mr. Chairman. I look forward
to working with you on this and many other copyright-related issues. You are
off to a strong start and it is very encouraging to those of us in the copyright
As you know, in August 2002 the Federal Communications Commission
issued a Notice of Proposed Rulemaking soliciting comments from interested parties
on whether it was desirable to adopt a regulatory protection regime as part
of the transition to digital broadcast television, and if so, how such a regime
should be put into place. (1) While the
subject matter of the broadcast flag proposal is technological, many of the
comments submitted to the FCC arguing both for and against its adoption are
rooted in copyright law. (2) As Congress has
recognized, the Copyright Office has a long history of providing expert advice
and assistance on these types of issues.(3)
The purpose of my testimony is twofold. First, I want to explain the relationship
between the broadcast flag proposal and important principles of copyright law,
such as the reproduction right, the distribution right and the doctrines of
“fair use” and “first sale.” I believe that as consideration
of the broadcast flag proposal moves forward, a clear understanding of copyright
law is necessary so that important copyright principles and policy are not undermined
by the establishment of any regulatory scheme. Second, to this end, I hope to
provide some clarity on the “fair use” and “first sale”
doctrines and their role in the broadcast flag discussions.
While I have no position on the broadcast flag proposal at this time, I believe
that producers of television programming have ample ground to fear that in the
transition to digital broadcasting and with the advent of new consumer electronic
devices that permit recipients of broadcasts to reproduce television programs
and retransmit them on the Internet, they may encounter massive piracy in much
the same way that record companies, recording artists, composers and musicians
have suffered from phenomena such as Napster and its progeny. They have good
reason to insist that something must be done to prevent such infringement. It
may well be that the broadcast flag proposal is the best available solution.
I do not have sufficient mastery of the technical details to venture an opinion
at this time.
I also do not take a position with regard to what uses ought to be allowed
by a broadcast flag, should that proposal be adopted. It is my understanding
that many of the commenters in the FCC proceeding have insisted that implementation
of the broadcast flag be done in a way that permits consumers to engage in acts
of fair use. It is also my understanding that some proponents of the broadcast
flag have taken the position that any technological measures that are adopted
as part of the broadcast flag proposal should or at least could permit a number
of practices that consumers desire to engage in even though they are beyond
the scope of fair use. Copyright owners of broadcast programming may simply
be willing to forego having technological measures prohibit those uses, while
retaining their right to assert that some or all of those uses are infringing.
If there is consensus among copyright owners of broadcast programming that
implementation of the broadcast flag should permit conduct by consumers that
goes beyond fair use, I see no reason why such conduct should not be permitted.
In other words, the conduct permitted by the broadcast flag need not necessarily
be coextensive with fair use. If, on the other hand, the ultimate determination
is to permit acts beyond those permitted by fair use and beyond those for which
there is a consensus among the pertinent copyright owners, then there will be
serious copyright implications which this Subcommittee will want to examine.
In any event, the fact remains that the FCC has been presented with a number
of arguments asserting that the broadcast flag proposal must accommodate fair
use and the first sale doctrine, and that the people making those arguments
have asserted that certain kinds of conduct must be accommodated because it
falls within those doctrines. If these arguments are to be made and considered,
it is important that they be done so with an accurate understanding of the fair
use and first sale doctrines.
The Broadcast Flag Debate Raises Important Issues Related to Copyright
As the first paragraph of the FCC's notice indicates, digital
broadcast copy protection has been offered as a way to address the concern that
“[i]n the absence of a copy protection scheme for digital broadcast television,
content providers have asserted that they will not permit high quality programming
to be broadcast digitally.” (4) The reason
for this reticence is concern about infringing downstream uses of digital broadcasts.
This Subcommittee has become quite familiar with the characteristics of digital
technology and the Internet. While those technologies provide enhanced quality
of content and expanded opportunities for marketing, they also dramatically
increase the ease and reach of copyright piracy.(5)
As we understand it, the "broadcast flag" is one solution for placing
certain limits on how digital broadcasts can be redistributed after receipt
by a consumer, so as to prevent harm to the economic value of that programming.
In many ways, this dilemma is simply a specific example of the problem addressed
by copyright law generally—how much protection is necessary to provide
an incentive for authors to create and disseminate works to public for their
use and enjoyment. Not surprisingly, therefore, many of the comments submitted
to the FCC focus on questions of copyright law, such as to what extent personal
copying and distribution of broadcast programming are governed by the fair use
or first sale doctrines in copyright law, and how the Supreme Court's 1984 decision
in Sony Corp. v. Universal City Studios, Inc. should be applied
in creating a regulatory regime like the broadcast flag.
In addition, implementation of the broadcast flag may provide some precedent
for how other activity involving digital technology and copyrighted works will
be addressed under fair use and other provisions of the Copyright Act. As a
result, the broadcast flag proposal cannot be considered in a vacuum, without
regard to important aspects of copyright law and the use of copyrighted works.
Moreover, the issues involved in the broadcast flag debate may have ramifications
in the international copyright system.
Fair Use and the Sony Betamax Decision
In the next part of my testimony I hope to provide background
on the fair use doctrine, the Sony decision and the first sale doctrine,
and how they might relate to the broadcast flag. As I noted, many of the comments
submitted on the broadcast flag proposal raised important questions of copyright
law, such as the doctrine of “fair use.” (6)
A correct and complete understanding of fair use will assist in an evaluation
of those comments . My testimony today is intended in part to provide a concise
explanation of the fair use doctrine, and its application by the Supreme Court
in the Sony case (often referred to as the Betamax decision) (7)
the central case around which much of this debate revolves.
Fair use is often described as an “equitable rule of reason,” for
which “no generally applicable definition is possible, and each case raising
the question must be decided on its own facts.” (8)
It was a common law doctrine until 1976, when Congress first codified it in
Section 107 of the Copyright Act as part of the general revision to copyright
law it enacted that year. (9) The statutory
text does not define fair use—rather, it provides guidelines for such
a determination in the form of a list of four nonexclusive factors that must
be applied to the entire circumstances of a particular case. In addition, the
preamble to the section sets forth examples of uses that traditionally have
been found to be fair uses, such as criticism, comment, news reporting and teaching.
While this list is not determinative of the fair use issue, it was intended
to provide additional guidance to courts as to the types of uses that had been
ruled fair prior to the 1976 Act. (10)
There is no question that fair use is a fundamental component of U.S. copyright
law, as it provides an essential safeguard to ensure that copyright does not
stifle uses of works that enrich the public, such as “criticism, comment,
news reporting, teaching ., scholarship, or research.” (11)
Along with other doctrines like the first sale doctrine (which I discuss below)
and the idea/expression dichotomy, fair use provides necessary “breathing
room” in copyright and helps achieve the proper balance between protection
of copyrighted works and their use and enjoyment. As the Supreme Court recently
explained in the Eldred case, fair use is also one of copyright law's
important First Amendment accommodations. (12)
Many of the comments in the FCC proceeding, however, misstate the nature of
fair use and its role in our copyright system. Much of this confusion stems
from a misreading of the Supreme Court's opinion in Sony Corp. v. Universal
City Studios,(13) the first opinion in
which the Supreme Court addressed fair use. (14)
In Sony, motion picture copyright owners brought a copyright infringement
action against the manufacturer of the Betamax VCR. The claim was asserted under
a theory of secondary liability, based on the consumers' use of the VCR to record
television programs broadcast free over the air. The Court's 5-4 opinion addressed
two issues: first, borrowing from the “staple article of commerce”
doctrine in patent law, it ruled that secondary copyright liability could not
be imposed based solely on the manufacture of copying equipment like the VCR
where the device at issue “is capable of substantial noninfringing uses.”
(15) Second, it found that the VCR had “substantial
non-infringing uses,” including making reproductions of broadcast television
programs for purposes of “time-shifting,” that is, watching a show
at a time later than when it is broadcast. (16)
The Court's finding that “time-shifting” of broadcast television
programs was fair use was based predominantly on its analysis of the first and
fourth factors in Section 107—namely, whether time-shifting adversely
affects the market for or value of the copyrighted works at issue. The court
concluded that “time-shifting merely enables a viewer to see such a work
which he had been invited to see free of charge” and that therefore it
was a “non-commercial” use. (17)
It also found that the copyright owners had not provided sufficient evidence
“that time-shifting would cause any likelihood of nonminimal harm to the
potential market for, or the value of, their copyrighted works.” (18)
Having found that “time-shifting” was a “substantial
non-infringing use” of the VCR, the Court did not consider whether other
activity related to home taping of broadcasts—such as creating a library
of recorded shows, making further copies from the initial recording or distributing
recorded shows to friends or others—would qualify as fair use. Nor did
the Court rule, as one commenter suggests, that recognizing “time-shifting”
as fair use was based on First Amendment concerns. (19)
Thus, the suggestion that the Sony decision established a fair use
“right” for individuals to engage in a wide variety of reproduction
and distribution activities is simply incorrect.(20)
Moreover, because fair use is a case-by-case, fact-specific determination,
one must consider the circumstances of the Sony case when attempting
to apply it to today's environment. In the early 1980s, there was very little
the typical consumer could do with the analog tape recording of a television
show made with a VCR—further reproduction and distribution were subject
to substantial physical constraints. The 1980s consumer did not have access
to personal computers with hard drives, recordable DVD players, wireless home
networks, websites, peer-to-peer software applications and high-speed Internet
connections, all of which make acquisition, reproduction and distribution of
recorded broadcasts (in high-quality digital form) easy and inexpensive.
In today's digital world, the “private” and “non-commercial”
use of works can quickly and easily become public distribution of copies that
has a substantial harmful effect on the commercial value of copyrighted works.
As my predecessor as Register of Copyrights observed nearly 40 years ago, “a
particular use which may seem to have little or no economic impact on the author's
rights today can assume tremendous importance in times to come.” (21)
We have all watched over the past few years as Napster and other peer-to-peer
software applications transformed private hard drives and individual, person-to-person
exchanges of digital files into a major distribution network of unauthorized
copies of works. Indeed, this Subcommittee held a hearing on precisely that
topic last week. That activity has undercut the ability of legitimate, revenue-generating
distribution services on the Internet to develop and flourish. Indeed, the Ninth
Circuit Court of Appeals recognized this situation in the Napster case
when it distinguished Sony in analyzing the potential market harm caused
by individuals' distribution of copyrighted music files over the Napster service.
Other commenters suggest that the Sony decision requires that
fair use must vindicate “consumer expectations” as to the functionality
of their home electronics devices. This claim, too, misstates the nature of
fair use. Consumer expectations are typically asserted and vindicated in the
marketplace, not through fair use. Recent history shows that to the extent copyright
owners offer a product in a format that consumers find unattractive and limiting,
it will be rejected. (23) The Sony
decision is not based on whether time-shifting met “consumer expectations”
about what they could do with their VCRs, but rather whether it met the criteria
for fair use in Section 107, including principally whether the activity harmed
the market for copyrighted works. (24)
The proper fair use inquiry would include an assessment of whether the
consumer's activity, if permitted on a widespread basis, will provide benefits
to the public without undermining the incentive for the creation and distribution
of works—that is, the ability of authors to receive compensation for the
dissemination of their works. Consumer expectations in and of themselves are
not particularly relevant to this question. Indeed, users of peer-to-peer services
like Napster are becoming accustomed to the notion that creative works should
be provided free without any restrictions on further copying and distribution.
Such “consumer expectations” are not only inconsistent with traditional
fair use jurisprudence, they are destructive to copyright's principles and purpose.
To be clear, we do not disagree that legitimate consumer expectations should
play an important role in consideration of the broadcast flag proposal. It appears
that consumer expectations have been a driving force behind the proposal, as
the proposed regime would permit unlimited copies for personal use, largely
unrestricted use in the home network environment, and the potential for use
outside a home network environment. Many broadcasters and copyright owners apparently
recognize that even a mandated solution like the broadcast flag must meet the
needs and desires of consumers or they will not embrace digital television.
(25) Our concern is that the important
policy goals of copyright should not be undermined in the course of adopting
any regulatory framework that purports to be protecting fair use, when in reality
it permits far more than fair use.
The First Sale Doctrine and Digital Content
Some have also suggested that the “first sale”
doctrine of copyright law requires that the broadcast flag proposal permit certain
activity with respect to copies of digital broadcasts. (26)
As this Subcommittee knows, the Copyright Office, pursuant to Section 104 of
the Digital Millennium Copyright Act (“DMCA”) of 1998, recently
engaged in a comprehensive study of the relationship between the first sale
doctrine and existing and emergent technology. (27)
The Copyright Office issued its report in August 2001 and I testified before
this Subcommittee at the end of that year about our findings and recommendations
in that report.
The “first sale” issues raised with respect to the broadcast flag
appear very similar to those raised in the DMCA Section 104 Report: whether
the first sale doctrine as it currently exists would permit certain activities
related to digital transmission of copyrighted works. Some have suggested that
the first sale doctrine requires that individuals be permitted to transmit digital
copies of broadcasts to a circle of family or friends and inside and outside
the home. As with the fair use issue, the Copyright Office believes that consideration
of the broadcast flag should not be made based upon an incorrect or incomplete
understanding of the first sale doctrine. I would like to provide a brief description
of that doctrine and our conclusions from the DMCA study, which remain unchanged
The common-law roots of the first sale doctrine allowed the legitimate owner
of a particular copy of a work to dispose of that copy. This judicial doctrine
was grounded in the common-law principle that restraints on the alienation of
tangible property are to be avoided in the absence of clear congressional intent
to abrogate this principle. This doctrine was first codified as section 27 of
the Copyright Act of 1909 and now appears in section 109 of the Copyright Act
of 1976. Section 109(a) specifies that notwithstanding a copyright owner's exclusive
distribution right under section 106, the owner of a particular copy or phonorecord
that was lawfully made under Title 17 is entitled to sell or further dispose
of the possession of that copy or phonorecord.
The first sale doctrine is a limitation on the copyright owner's exclusive
right of distribution. It does not limit the exclusive right of reproduction.
While the sale or other disposition of a purchased VHS tape or book would only
implicate the distribution right, the transmission of an electronic copy of
the same work from one device to another would typically result in the making
of a reproduction. This activity therefore entails an exercise of an exclusive
right that is not covered by section 109. In other words, there is nothing in
the first sale doctrine as it currently exists which would authorize the type
of activity that some have proposed that the broadcast flag should permit.
In the deliberations leading up to the DMCA Section 104 Report, several participants
argued that first sale principles should apply to digital transmissions, notwithstanding
that such transmissions typically involve the reproduction right.
(28) It appears that a similar suggestion is being made in
the broadcast flag proceeding. We concluded then, and continue to believe, that
there are fundamental differences between digital copies transmitted in a networked
environment and the physical copies covered by the existing first sale doctrine,
and that those differences argue against recognizing a new form of first sale
for digital copies.
In closing, Mr. Chairman, the Copyright Office has only begun
its analysis of the broadcast flag proposal, and therefore at this time is taking
no position on whether the broadcast flag proposal should be adopted or whether
it should be changed in any way to reflect any aspect of existing copyright
law, such as the fair use or the first sale doctrines. Let me be clear though, the
appropriate balance between copyright owners, broadcasters, equipment manufacturers
and consumers is fundamental to our support of any effort to devise a regulatory
scheme governing digital broadcasts. Such a compromise, and the debate
leading to it, should not be based on an incorrect understanding of copyright
law and policy.
I want to thank the Subcommittee again for giving me the opportunity to testify
today. The Copyright Office would be pleased to assist the Subcommittee in its
consideration of these important issues and I am happy to answer any questions
you may have.
1 67 Fed. Reg. 53,903 (Aug. 20, 2002).
2 See generally Initial
Joint Comments of Motion Picture Association of America (MPAA), et
al.; Initial Comments of Consumer Electronics Association (CEA); Initial
Comments of Computer & Communications Industry Association (CCIA); Initial
Comments of Home Recording Rights Coalition (HRRC).
3 See 17 U.S.C. § 701(b).
4 67 Fed. Reg. 53,904.
5 For a more in-depth discussion of some of the
differences between analog and digital technology, see Copyright
Office, Copyright Office DMCA Section 104 Report (2001), at 82-85. The results
of this study were reported to Congress on August 29, 2001 and are available
6 See note 2.
7 Sony Corp. v. Universal
City Studios, Inc., 464 U.S. 417 (1984).
8 H.R. Rep. 94-1476, 94th Cong., 2d Sess., at
9 17 U.S.C. § 107. The text of the section provides:
Notwithstanding the provisions of sections 106 and 106A, the fair use of a
copyrighted work, including such use by reproduction in copies or phonorecords
or by any other means specified by that section, for purposes such as criticism,
comment, news reporting, teaching (including multiple copies for classroom use),
scholarship, or research, is not an infringement of copyright. In determining
whether the use made of a work in any particular case is a fair use the factors
to be considered shall include-
(1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for
or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair
use if such finding is made upon consideration of all the above factors.
10 See H.R. Rep. 94-1476, at
66. The Judiciary Committee made clear that pre-1976 fair use precedent remained
in effect, as Section 107 was to “restate the present judicial doctrine
of fair use, not to change, narrow, or enlarge it in any way.”
11 17 U.S.C. § 107.
12 Eldred v. Ashcroft,
123 S. Ct. 769 (2003).
13 464 U.S. 417 (1984).
14 Sony was the first case in
which the Supreme Court interpreted the 1976 Copyright Act and its codification
of fair use in Section 107. Before the 1976 Act, the Supreme Court heard two
cases that raised fair use issues, but did not issue an opinion in either of
them. See Sony, 464 U.S. at 476 (dissenting opinion) (citing
Williams & Wilkins Co. v. United States, 487 F.2d 1345
(1978), aff'd by an equally divided court, 420 U.S. 376 (1975)
& Benny v. Loew's Inc., 239 F.2d 532 (9th Cir.
1956), aff'd by an equally divided court sub nom. Columbia
Broadcasting System, Inc. v. Loew's Inc., 356 U.S. 43 (1958)).
15 464 U.S. 442.
16 Id. at 442-456.
17 Id. at 449.
18 Id. at 451.
19 See Initial Comments
of CCIA, at 17.
20 The phrase “fair use rights”
is a misnomer. It is not true, as some commenters have argued, that consumers
have a vested, enforceable right to make uses of a copyrighted work that may
be deemed “fair” under the fair use doctrine. Rather, if such a
use is made, fair use protects the otherwise infringer from liability. The structure
and language of Section 107 make clear that fair use is not a right, but merely
an affirmative defense to potential copyright infringement. Compare
17 U.S.C. § 106 (enumerating specific rights granted by copyright) with
17 U.S.C. § 107 (beginning “Notwithstanding the provisions of Sections
106 and 106A, the fair use of a copyrighted work . . . is not an infringement
of copyright.”) Courts have recognized this technical but important distinction
in limiting the ability of commercial services to rely on the purported "fair
use rights" of their customers to excuse reproduction and distribution of copyrighted
works. See William F. Patry, The Fair Use Privilege
in Copyright Law (2d ed.1995) at 432-33; see, e.g., Pacific
& Southern Co. v. Duncan, 744. F.2d 1490 (11 th
Cir. 1984). cert. denied, 741 U.S. 1004 (1985), on
remand, 618 F. Supp. 469 (N.D. Ga. 1985), aff'd 792 F.2d
1013 (11th Cir. 1986); Basic Books, Inc. v.
Kinko's Graphic Corp., 785 F.Supp. 1522 (S.D.N.Y. 1991) (copy shop found
not to be acting as agent of colleges where professors provided materials for
copying); RCA/Ariola Int'l, Inc. v. Thomas Grayston Co.,
845 F.2d 773, 782 (8th Cir. 1988) (fair use claim by manufacturer
of machines permitting customers of retail stores to duplicate tapes rejected);
cf. Princeton University Press v. Michigan Document Services,
74 F.3d 1512 (6th Cir. 1996).
21 Copyright law revision,
89th Cong., 1st Sess.,
supplementary report of the register of copyrights on the general revision of
the u.s. copyright law, part 6, at 14 (Comm. Print 1965). See
also S. Rep. 94-473, 94th Cong., 1st Sess., at 65 (1975) (“Isolated
instances of minor infringements become in the aggregate a major inroad on copyright
that must be prevented.”).
22 A&M Records, Inc. v.
Napster, Inc., 239 F.3d 1004, 1016-17 & 1019 (9th Cir. 2001).
23 See e.g., Michael Liedtke,
H&R Block Jabs at TurboTax Software, Assoc. Press, March 4, 2003;
Stephanie Stoughton, Circuit City's Slipped Disc; Firm Concedes Defeat;
Abandons Divx Technology, Wash. Post, June 17, 1999; Associated Press,
Circuit City, Partner Let Divx Expire Lack of Industry Support Cited,
Daily Press, June 17, 1999.
24 That is not to say that in determining whether
to implement a broadcast flag proposal, legitimate consumer expectations should
not be taken into account. But if they are, it should not be because they purportedly
are equivalent to fair use.
25 See Initial Comments of National
Broadcasting Company, Inc. (NBC), at 4.
26 See Initial Comments of CEA,
27 Copyright Office DMCA Section 104 Report
28 See Copyright Office DMCA
Section 104 Report (2001), at 44-48, 80-105 for a summary and analysis of the
proposals for a digital first sale doctrine based on a “forward and delete”