Statement of Marybeth Peters
The Register of Copyrights
before the
Committee on Appropriations

United States House of Representatives
111th Congress 2nd Session

April 21, 2010

Fiscal Year 2011 Budget Request


Madam Chair, Mr. Aderholt, and other Members of the Subcommittee:

Thank you for the opportunity to present the Copyright Office's fiscal 2011 budget request. Today I will discuss my fiscal 2011 budget request for additional funds and FTEs to support the electronic Copyright Office system and for offsetting authority and FTEs to complete and maintain the Licensing Division Reengineering effort. I will also highlight some of the Office's accomplishments and challenges of fiscal 2009 and 2010.

Support of the United States Copyright System

The Copyright Office administers the U.S. copyright law, under which owners of creative works register claims to protect their copyrights, cable and satellite companies and other users of statutory licenses pay royalties related to their statutory licenses, and publishers and other distributors of works published in the United States deposit copies of copyrightable works for possible addition to the Library's collections. Congress enacted the first copyright law in May 1790; in 1870, it centralized the administration of the federal copyright law in the Library of Congress. The Copyright Office typically handles more than 500,000 copyright claims each year, representing well over one million works, and transfers copies of selected copyrighted works to the Library's collections. In fiscal 2009, the Office received 532,370 claims to copyright and registered 382,086 claims. It transferred to the Library over 739,000 copies, valued at over $32.2 million. The Office as a whole answered almost 360,000 non-fee information and reference inquiries and served a substantial number of visitors to the Public Information Office and the Copyright Public Records Reading Room.

The Licensing Division of the Copyright Office receives royalty fee payments related to licenses that deal with secondary transmissions of radio and television programs by cable television systems; secondary transmissions of superstations and network stations by satellite carriers; and the importation, manufacture, and distribution of digital audio recording devices and media In fiscal 2009, the Licensing Division collected more than $262 million in royalties from cable and satellite companies subject to statutory licenses, accrued more than $10.5 million in interest on royalties for the copyright owners, and distributed close to $273 million to copyright owners. The Office moved forward with reengineering the Licensing Division and building an electronic filing system.

Highlights of Copyright Office Accomplishments and Challenges

Addressing the Copyright Office Backlog

As discussed in its December 31, 2009, report to you, the Copyright Office has been focusing on reducing the outstanding backlog of applications for copyright registrations. As highlighted in the report, the Copyright Office's backlog reduction efforts are in three key areas: additional staff; improved technology; and increased eService usage. We added over thirty Registration Specialists: seventeen in spring 2009 and sixteen in January 2010. Those hired in 2009 are now fully productive; the class of 2010 is in training and currently productive in several categories of works. We improved the technology, supporting the processing of serial publications in the fall of 2009, through a combination of new hardware installation and new software. Finally, eService, the online copyright claims submission system, is now the predominant new claims filing method, accounting for over 70% of our weekly filings.

In addition, between January and March 2010, the Librarian of Congress provided short term resources to assist in reducing our claims backlog. Fifty-one Library technicians were assigned to this effort, focusing on clearing over 43,000 serials (approximately 10% of our processable claims backlog); many television programs and audio books and more than 10,000 pre-screened performing arts/ sound recording claims. This allowed the registration specialists to focus on the substantive issues involved in examining copyright claims. Through the combined efforts of the Copyright Office and Library detailed staff, and despite weather-related closings, we achieved our goal of reducing the backlog by 100,000 claims. The Copyright Office is grateful to the Librarian and the Library as a whole in supporting our efforts to resolve the backlog issues.

Operations Activities

The Copyright Office implemented its business process reengineering project at the end of fiscal 2007 and released eService, the electronic Copyright Office (eCO) online registration system, in July 2008. eService filings quickly displaced the use of paper applications, constituting 54 percent of all claims received for fiscal 2009 and 72 percent for the first quarter of fiscal 2010.

In addition to the backlog reduction work previously discussion, the Copyright Office focused on: long-term strategic improvements to the eCO system; modified its fee schedule; completed preparations for the Copyright Records Digitization Project; and as part of our succession planning effort, established a new leadership training program.

In the Summer of 2009, the Office awarded a the contract for major eCO software upgrade that will improve eService user processing, improve Copyright Office throughput time, and in a later version, provide automated statistics to support internal management.

Processes

Through a continuous improvement initiative, the Copyright Office further refined its reengineered processes. For instance, Registration Specialists proposed two changes adopted by the Copyright Office: one resulted in decreasing the time required for the copyright deposit dispatch process; the other led to improved inter-divisional communications, resulting in faster problem resolution. We also examined our mail operation and throughput times in our Receipt, Analysis and Control Division which resulted in improvements in data entry and processing of correspondence. We expect to continue our improvement efforts by identifying additional areas where efficiencies can be achieved.

In August 2009, the Copyright Office adjusted its fee schedule to reflect postreengineering operational changes. Fees associated with filing copyright claims were adjusted to reflect processing costs, with eService filings remaining at $35, and paper claims increasing to $65: a reflection of the increase in the cost of processing paper claims. eService claims are less costly: they do not require data entry and they require fewer quality controls. Other fee services, such as research or certified copies of deposits, were also adjusted to more closely reflect the actual costs of the service.

Organization

As previously mentioned, during fiscal 2009, the Office hired 17 registration specialists. The new hires were immersed in an accelerated training program combining classroom instruction with actual claims processing in the production environment. As of this month, 16 registration specialists achieved independence in claims processing. A second class of 16 registration specialists was hired in January 2010 and is currently engaged in an accelerated training program. The addition of 32 new registration specialists will significantly increase our production capacity. Recruitment for both groups was extensive, with a special effort made to attract underrepresented populations into our workforce. The interest level was overwhelming, allowing us to select a high caliber of new Registration Specialists.

In mid-2008, the Copyright Office realized the need for a good succession planning program and a corresponding need to implement a leadership training program. In the spring 2009, we launched the Aspiring Leaders Program with an inaugural class of twelve participants. This is a competitive program in which candidates from the across the Copyright Office were selected to participate in a series of education programs focusing on leadership, communications, decision making, and strategic thinking. Participants also had detail opportunities to other federal agencies including the National Archives, Smithsonian Institution, and offices throughout the Library of Congress. Our goal is to offer this program to other Copyright Office staff on an annual or bi-annual basis.

Information Technology

In fiscal 2009, the Copyright Office continued to make significant improvements to the eCO system through periodic software development releases and hardware installations. The cumulative effects of these actions are better system performance, stability and enhanced functionality for both Office staff and online filers. This included expanding the eService capacity to accommodate up to 500 concurrent users and ensuring its stability through an automatic backup system that will operate if the primary system fails. Also, in November 2009 the Library of Congress Information Technology Service installed a new computer hardware suite that resolved recurring system throughput issues, improving the accessibility of eCO information by the Copyright Office staff.

System improvements are continuing through fiscal 2010 as the Office is engaged in a major eCO upgrade designed to improve eService customer experience, improve Copyright Office throughput time, and in future versions, the automated capability to provide automated statistical software. The project includes an upgrade to the newest version of the software application that drives eCO and the installation of new network hardware. The initial implementation, scheduled for June 2010, will be followed by subsequent releases introducing new system functionality based on feedback elicited from internal and external users. Expected improvements in eCO system performance and functionality will ultimately result in increased production and decreased registration processing times.

For fiscal 2011, the Office seeks approval to hire three new highly skilled IT specialists to provide expertise in the areas of project management, business analysis, requirements definition, and system testing. Providing for more in-house IT support will result in direct and indirect cost savings by reducing reliance on contractors for ongoing maintenance and operations, enhancing our ability to undertake critical projects, improving project and resource management, and improving testing methods.

Copyright Records Digitization Project

We made significant progress on our Copyright Records Digitization Process during fiscal 2009 and early 2010. Based on an extensive analysis of our existing records, we determined that, since 1870, the year the registration function was moved to the Library thereby consolidating the copyright functions in the Library of Congress, 34 distinct processes have been employed to capture and preserve copyright data. Each process, from the large books signed by A.R. Spofford, the Librarian of Congress in 1870, through the handwritten and typed card catalogue, and even a citizenship certification signed on a playing card, required testing to ensure the best possible image could be captured and stored for preservation and public use.

Based on the analysis, the Copyright Office will undertake the following steps to complete the digitization task and allow full public access to the country's copyright records:

  • Complete imaging the Catalog of Copyright Entries (660 volumes).
  • This is a six month process and should be completed by the fall 2010;
  • Complete imaging of 2.5 million assignment cards by fall 2010;
  • Begin imaging the 49 million card catalogue by catalog series, beginning with the most recent (1977) data and working backward;
  • Begin metadata creation for imaged records to ensure public searchability. This is a manual process and must be done for each image; and,
  • Begin the cross referencing between and integration of imaged records.

I look forward to sharing our progress on this project at future hearings.

Licensing Division Reengineering

In fiscal 2009, the Licensing Division resumed its reengineering efforts, reviewing its current administrative practices and underlying technology, performing a needs analysis for future operations, and beginning to design its re-engineered systems. This included developing an operational baseline, consulting with external stakeholders and preparing the organization for the change process inherent in reengineering. The goals of this reengineering effort are to: decrease processing times for statements of account by 30 percent or more; implement an online filing process; and to improve public access to Office records. In fiscal 2010 the Congress authorized the Licensing Division to use $1.1 million from the royalty pools to cover the reengineering costs and associated supporting software. Earlier this month the Office released a Request for Proposal to support this effort. As part of our fiscal 2011 budget request, we requested an additional one time authorization of $500,000 to cover any unforeseen reengineering expenses. As always, any funds not expended will be returned to the royalty pools. We are also asking for authorization of 2 FTEs and $285,000 to cover ongoing system costs and maintenance for the new information technology system.

Legal and Policy Activities (Domestic and International)

The Office worked closely with House and Senate Judiciary and Commerce Committee staffs as well as stakeholders on the reauthorization of Section 119 of the Copyright Act, a statutory license available to satellite services for the carriage of certainover-the-air television signals, which was to expire on December 31, 2009. In 2008 the Office submitted its report to Congress on updating this license as well as two other statutory licenses; this report served as the beginning point of this past year's legislative activities. On February 25, 2009, I testified before the House Judiciary Committee on the issue of the continuing viability of the cable and satellite statutory licensing structures and their relevancy in today's ever-evolving digital marketplace. During the year much discussion ensued, and bills H.R. 3570 and S. 1670, were introduced. However, work on this legislation was not completed, and at the end of last year Congress reauthorized the section 119 statutory license until February 28, 2010, and subsequently reauthorized another extension until March 28, 2010.

The Office spent significant time during the year evaluating the legal and business implications of the ongoing Google Book Settlement litigation. I testified on September 10, 2009, at the House Judiciary Committee's hearing on “Competition and Commerce in Digital Books: The Proposed Google Book Settlement.” Specifically I addressed the impact of the Google Book Settlement on copyright law and expressed my concern that the settlement would: create a private compulsory license through the judiciary rather than as an act of Congress; compromise the legal rights of authors, publishers and other persons who own out-of–print books; and subject the United States to diplomatic stress because of the effect the settlement would have on the exclusive rights of foreign authors and their governments' digitization projects. The Office assisted the Justice Department in preparing its Statement of Interest filed September 18, 2009 for the October fairness hearing. That hearing was postponed when the parties announced that they were amending the settlement agreement to address concerns that had been raised by a wide range of parties. An amended settlement agreement was filed with the court in early November and the fairness hearing was rescheduled for February 18, 2010. The Office once again assisted the Department of Justice with its second Statement of Interest, filed February 4, 2010. Both statements expressed concerns about the effect of the settlement on copyright law and policy and on competition.

As in previous years, the Office assisted the Justice Department in a number of court cases, including the preparation of amicus briefs filed with the Supreme Court concerning the interpretation of various provisions of the Copyright Act and filings in other cases involving constitutional challenges to the copyright law.

Additionally, the Omnibus Appropriations Act of 2009 mandated that the Copyright Office prepare a report for Congress on the copyright treatment of pre-1972 sound recordings; this report is due in March 2011. Specifically, the Office has been directed to study the desirability of, and means for, bringing sound recordings fixed before February 15, 1972 under federal jurisdiction. Sound recordings fixed before February 15, 1972 are governed by state law which in many cases is not well defined. The federal copyright law allows states to protect these pre-1972 sound recordings until February 15, 2067. Work on this complicated issue is underway, and we expect to meet our deadline.

On the policy front, office attorneys spent considerable time in 2009 examining the ways in which the United States provides copyrighted works in accessible formats to the blind, visually impaired and print-disabled. The Office led an extensive consultation process regarding the operation of the U.S. exception, 17 U.S.C. §121, generally referred to as the "Chafee Amendment." The Copyright Office website contains the record of this public process. The Office also conducted a day-long public meeting to explore the topics raised in the comments it received. These included: the operation of the Chafee Amendment for the general reading public as well as for students at the K-12 and college levels; the cross-border movement of accessible works for the blind and visually impaired; the role of technology; the role of trusted intermediaries; and existing systems for providing accessible versions of copyrighted works to the blind. The Office has worked diligently with other U.S. Government agencies in preparing for and attending meetings of the World Intellectual Property Organization's (WIPO) Standing Committee on Copyright, which has this issue on its agenda. The Office is currently working with the Library's National Library Service for the Blind, as well as with advocates for the blind and other stakeholders to explore ways to improve standards, resources and responsible cross border movement of works in accessible formats. Finally, during the week of March 8th, the Office and the WIPO sponsored an international training program at the Library of Congress. The program focused on exceptions for the blind in the U.S. and other countries and consideration of a series of timely questions about resources, technical standards and market solutions designed to improve accessibility in the digital world, an area in which the United States has long been a leader. Attending were representatives of developing countries and countries in transition as well as experts from various parts of the world. Speakers included government and private sector experts from the U.S. and other countries. Staff from the Judiciary Committees of the House and Senate spoke on “Copyright Policy on Capitol Hill.”

Additionally, the Copyright Office assisted federal government agencies with many multilateral, regional and bilateral negotiations and served on many U.S. delegations, including negotiations regarding a proposed Anti-Counterfeiting Trade Agreement and negotiations and meetings relating to the implementation of intellectual property provisions of existing Free Trade Agreements and Trade Promotion Agreements. The Copyright Office also participated as part of the U.S. delegation at various meetings of the WIPO.

Conclusion

Madam Chair, I ask you to support the Office's fiscal 2011 budget request for two FTEs and additional offsetting authority to complete and maintain the Licensing Division Reengineering efforts and additional FTEs to provide long-term support for eCO, our information technology system.

I also want to thank you for your past support of the Copyright Office reengineering efforts and its budget requests.