Statement of Marybeth Peters
The Register of Copyrights
Subcommittee on Courts, the Internet, and Intellectual Property
Committee on the Judiciary
United States House of Representatives
107th Congress, 1st Session
May 2, 2001
Report on the Copyright Office's Work
I am pleased to have the opportunity to provide the Subcommittee
with a report on the Copyright Office's work to assure that our Nation maintains
a strong and effective copyright system - one that serves both owners and users
of copyrighted works. In this endeavor, issues of new technology and the ways
in which technology affects users and copyright owners have been, and will continue
to be, front and center on our agenda.
During the last fiscal year, the Copyright Office received 588,498 claims to
copyright covering more than 800,000 works, and registered 515,612. The Office
recorded 18,894 documents covering hundreds of thousands of titles, and the
online public record grew with the cataloging of an additional 542,397 registrations.
The Office forwarded 751,944 copies of works, with a net worth of $32,308,047
to the Library of Congress for its collections and exchange programs, including
217,829 pieces valued at $6,049,682 that were received from publishers under
the mandatory deposit provisions of the copyright law.
The Office responded to 383,513 requests from the public for copyright information,
including more than 11,900 electronic mail requests; processed 18,087 filings
from cable operators, satellite carriers, and manufacturers or importers of
digital audio recording devices and media, and processed claims to the various
royalty pools. The Licensing Division collected a total of $183 million in royalty
fees (almost 88 percent received via electronic funds transfers) and distributed
royalties totaling $367,824,476.
We continued the work Congress assigned to us in the Digital Millennium Copyright
Act, including our first rulemaking on the Section 1201 anticircumvention provisions
and the Section 104 report we will soon submit to Congress. I will address these
and other policy and legal issues in my statement.
I. Public Service and Operational Improvement Initiatives
I first would like to provide the subcommittee with an overview
of two very important, closely-aligned, initiatives the Office now has underway.
Both initiatives - information technology planning and business process reengineering
- will shape the Copyright Office's future and its service to the American people.
Just as the copyright law has had to adjust to technological changes, our daily
business operations and processes are challenged in similar ways.
1. Information Technology
We have begun a major reassessment and planning effort regarding
our information technology (IT) systems. The Copyright Office relies
on the collection, processing, storage and presentation of information to fulfill
its duties under the U.S. Copyright Act. Information processing and products
are critical in the registration of claims to copyright, the recordation of
documents pertaining to copyrighted works, statutory licenses, and the Office's
responsibilities as an agency of public record. Access to information is also
the basis for the substantive policy and regulatory work the Office performs
for the U.S. Congress and the executive branch.
Currently, the Copyright Office has more than 20 separate information systems.
For the most part, they have been developed separately and do not support full
information sharing and integration. Some rely on hardware that is aging and
becoming increasingly vulnerable to failure.
Two principal factors will shape Copyright Office IT planning in the next few
years. First, to serve our customers fully, the Office needs to have its current
public services available online to the greatest extent possible. Second, we
have just made a decision on the business process reengineering (BPR) option
we will pursue to improve Copyright Office processes for registration, recordation,
information dissemination and acquisitions of copies of works for the Library's
collections. We will complete a BPR implementation plan this summer. This effort
will result in significant changes and improvements to our current processes,
organization, and facilities. In addition, the changes will rely heavily on
the use of new technology, all of which will result in more effective and timely
service to our customers.
Our original direction on reengineering was to work within the confines of
our existing IT structure. The results of our reengineering work have shown
us that we need to accelerate the Office's use of new technology, not only for
the processes affected by reengineering, but for the entire Office. We need
to undertake a fundamental transformation in our public services: from paper
and hard-copy based processing to primarily electronic processing. Our processes
must change from traditional manual capabilities to IT-enabled functions.
This year, through our Copyright Office Electronic Registration, Recordation
and Deposit System (CORDS), we will electronically receive about 30,000 digital
works for registration. This is about 5 percent of our total registrations.
Now we must broaden our IT approach so that electronic receipt and processing
become the primary way we register works. In the future, we will encourage
that works submitted for registration be submitted online. Once they are submitted,
we will use technology to a much greater extent than we have to process them
quickly and ensure a timely public record.
This not only helps the Copyright Office provide better public services, but
is also a key component of the Library's digital strategy which will allow more
digital works to be acquired for the Library's collections through copyright
registration and through the mandatory deposit provisions of Section 407 of
the copyright law.
A newly-formed Copyright Office Information Systems Working Group has just
begun its work. So that this critical initial planning can be completed and
specific resource requirements identified, I have requested a modification in
our Fiscal Year 2002 budget request and want to inform the Subcommittee of this
Until we revise our overall IT strategy to respond to our new business processes,
I believe we should not proceed with funding for the CORDS Full Large-Scale
Production System, as requested in our original submission. We do need to maintain
the CORDS system so that we can continue to provide an electronic registration
option for those now using it and others who wish to. Yet, we do not want to
accelerate development of a large-scale CORDS production system until we establish
an overall strategy for the electronic delivery of services.
Mr. Chairman, this morning the Library testified before the Senate Appropriations
Subcommittee on Legislative Branch. In my testimony submitted to the subcommittee,
I modified the Copyright Office's initial budget request to enable us to proceed
with the IT initiative I have just outlined. I requested that we proceed as
Permanently reprogram $620,000 savings from our Marking
and Tagging security initiative in Fiscal 2001 to IT Planning and Development.
In the current fiscal year, these funds would be used to conduct a requirements
analysis which will provide us with an IT strategy that: supports reengineering,
redevelops our aging systems and expands the electronic delivery of our
public services. (Our Marking and Tagging requirements will continue to
be met and security of materials will be one of the principal objectives
in the IT requirements analysis.)
Based on the completed requirements analysis, in Fiscal
Year 2002 begin systems analysis, design and development work. A multiple-award
contract will be developed to rebuild and integrate our information systems
to meet our new requirements. We plan to have this contract awarded by July
- In Fiscal Year 2002, use the reprogrammed IT funds ($620,000) for IT contract
management and CORDS user support to provide hands-on technical advisory assistance
to our current and anticipated CORDS users.
I am hopeful, Mr. Chairman, that the Appropriations Committees will approve
this reallocation of funding. It is critical to our ability to meet our statutory
obligations and fully serve the American people in an increasingly digital environment.
I will keep this Subcommittee informed of developments in this area.
2. Business Process Reengineering: Initial Implementation
The second initiative involves our initial steps to carry
out our Business Processing Reengineering Implementation Plan. Last week, I
gave approval to basic redesign options developed after an eight-month effort
by a team of Copyright Office staff, facilitated by experts from PriceWaterhouseCoopers.
We will now begin the process of developing an implementation plan. The plan
will be implemented in phases beginning in fiscal 2002. The Copyright Office
No-Year Account will fund the three-year implementation, except for furniture
We began our reengineering effort with the following objectives:
Improve operations and service that will achieve better
processing times and create timely public records;
Enhance operational efficiency through the use of new
or alternative technologies;
Contain the costs of registration, recordation and other
Strengthen security within the Copyright Office; and
Use staff and space more efficiently.
In our Fiscal 2002 budget request, we are asking for authority
to spend $380,000 from our No-Year account for the first steps in reengineering
I am very optimistic as we begin our IT and reengineering work. These are clearly
multi-year efforts and I look forward to continued discussions with the Subcommittee
as they progress.
II. Review of FY 2000 Operational Activities and Ongoing Work
Registration, Recordation, and Cataloging Operations
As I reported at the beginning of my statement, in fiscal
2000 the Office processed 588,498 claims, representing more than 800,000 works,
and registered 515,612 of these claims. Throughput time was
and continues to be a concern. A large backlog of copyright claims continues
to exist and processing time for the issuance of registration certificates remains
at approximately six to seven months.
To address this backlog, the Examining Division continued to hire examiner
staff to replace those lost through retirement and resignation. We have also
begun an extensive backlog reduction effort, which is already resulting in a
substantial decrease in the number of claims awaiting examination. This is an
Office-wide imperative, and we are committed to continued progress this year.
In fiscal 2000, the Cataloging Division recorded 18,894 documents covering
hundreds of thousands of titles. The Division implemented a number of new initiatives
to reduce the length of throughput time for cataloging registrations and recording
documents, including a successful Backlog Reduction Project which significantly
reduced the number of multiple titles in documents awaiting entry into the online
The Documents Section received 384,826 titles this year, an increase of 97%
over last year's receipts. The Section recorded 399,088 titles, an increase
of 198% over last year's title clearances.
On October 28, 1999, the largest distribution of copyright
royalties to date was made totaling $321,665,999.86.
Satellite carrier royalty fees totaling $3,937,871.64 were distributed on January
13, 2000. This was a full distribution of funds covering the 1992, 1993, 1994,
and 1995 funds. Soon after, another distribution of $792,975.53 occurred on
January 27, 2000. This distribution was a partial distribution of the 1995,
1996, 1997, and 1998 DART royalty funds less a reserve held for Copyright Arbitration
Royalty Panel (CARP) costs and amounts in controversy.
A full distribution of the 1993, 1994, 1995, and 1996 cable television royalties
and a $35 million dollar partial distribution for 1997 was made on May 25, 2000
totaling $39,185,398.32. Also, a full distribution of the Sound Recording Fund
for 1999 DART royalties in the amount of $2,242,230.81 was made on June 15,
Outstanding royalty investments and interest totaled more than $614 million
during the year, earning $32 million in interest. Deposits totaled approximately
$183 million with 3,820 remittances (checks and electronic funds transfer) covering
21,243 statements of account. Electronic Fund Transfers (EFT) now account for
87.9% of royalty fee deposits.
The Office examined 16,293 cable statements of account and 251 amendments to
these statements, 50 DART statements, 15 Satellite Carrier statements, and 1,729
Section 114 Notices. A total of $459,992.71 in additional royalties was recovered
for copyright owners that would have otherwise been lost. In addition, staff
responded to 1,048 licensing information requests.
Copyright Arbitration Royalty Panels (CARP) Proceedings
Recent CARP activities include the following:
The Librarian's order announcing the allocation of the
royalty fees in the 1995, 1996, 1997, and 1998 Musical Works Funds was issued.
These fees are paid to the Copyright Office by importers and manufacturers
of Digital Audio Recording Devices and Media (DART) who distribute these
products in the United States.
Written direct cases were submitted in April in the CARP
proceeding to determine rates and terms for the Section 114 statutory license
for public performance of sound recordings by eligible non-subscription
services (webcasters) and the Section 112 statutory license to make ephemeral
recordings of sound recordings for the purpose of making permitted public
performances (such as webcasting). The CARP will convene on July 30.
The six-month negotiation period was announced for the
adjustment of royalty rates and terms for the public performance of copyrighted
sound recordings by preexisting subscription services and preexisting satellite
digital audio radio services. The negotiation period began on January 9,
The six-month voluntary negotiation period was initiated
for determining reasonable rates and terms for the public performance of
sound recordings by new subscription services. The voluntary negotiation
period began on February 12, 2001.
A notice of inquiry was published on the interpretation
and application of the mechanical and digital phonorecord compulsory license
(17 U.S.C. 115) to certain digital music services, namely what constitutes
an incidental digital phonorecord delivery for purposes of the compulsory
license. Initial comments were submitted on April 23, 2001.
A CARP proceeding was conducted to determine the distribution
of the 1997 cable royalties among the copyright owners of movies, syndicated
shows, and non-sports network programming. The arbitrators' report was submitted
April 16, 2001 and is currently being reviewed by the Office.
Public Information and Copyright Education
The provision of information on copyright law and its application
is a principal function of the Copyright Office. The demand for information
on copyright is increasing, as the growth in the use of digital technology exposes
more Americans to copyright issues in the course of their daily lives.
Last year, the Copyright Office responded to almost 400,000
public inquiries. The Copyright Office web site continued to play a key role
in disseminating information to the copyright community and the general public,
logging 9.4 million hits during the year, a 67 percent increase over the prior
year. Numerous additions and enhancements were made to the web site throughout
the year. The updated version of the copyright law with the latest amendments
was made available in paperback book format and on the web site in both text
and PDF formats, giving the public alternate ways to access the copyright law
online. The public can also obtain copies of all the copyright registration
forms which have been converted to fill-in versions so a copyright owner can
complete the form on his or her personal computer for submission.
For the first time, the Copyright Office made it possible for the public to
submit comments via the Internet in response to a rulemaking procedure dealing
with the impact of Section 1201 of the Digital Millennium Copyright Act. All
235 initial comments and 129 reply comments received by the Office were posted
on the web site for public review. As a part of the rulemaking on Section 1201,
public hearings were held in Washington, D.C. and in Palo Alto, CA. Audio and
written transcripts of these hearings were made available on the web site so
that a much wider audience could benefit from the debate.
The total number of Office searches of our records to provide information (on
copyright ownership, for example) increased. The number of titles searched was
63,250, an increase of 6.6% from the previous year while the number of search
reports prepared, 7,413, declined 6.6%.
The Copyright Office successfully completed several fiscal
2000 action items in the Library's Security Plan. Among the items accomplished
were: laser-engraved ownership marking of compact disc and video cassette materials;
secure transport of high-risk materials; and item bar code labeling and security
tagging of book materials. This year we are continuing to focus on improvements
in physical security, inventory, and preservation controls.
Copyright Office security initiatives planned for fiscal 2002 include incorporating
Item Level Tracking and Inventory Control as part of the Copyright Office reengineering
plan, creating in-process records at the point-of-entry, installing electronic
access control to work areas, and installing a closed-circuit video system in
the Mail Center.
III. Legislative and Policy Assistance
The Copyright Office continues to provide expert assistance
in the legislative work of members of Congress and their staff, and to Executive
Branch agencies in national and international copyright matters. I have attached
an appendix to this statement which provides an update on the status of tasks
the Copyright Office was delegated in the Digital Millennium Copyright Act (DMCA)
and the Sonny Bono Copyright Term Extension Act.
Section 104 Study
We are about to provide Congress our report required under
Section 104 of the (DMCA). The report evaluates the effects of the DMCA and
the development of electronic commerce on the operation of Sections 109 and
117 of the copyright law, as well as the relationship between existing and emerging
technology and the operation of those sections. Section 109 permits the owner
of a particular copy to sell or otherwise dispose of that copy without the authority
of the copyright owner. Commonly known as the "first sale doctrine," it is this
section that permits lending of books by libraries as well as the sale of used
books. Section 117 permits the owner of a copy of a computer program to make
a copy or adaption of the program for archival purposes or as an essential step
in utilizing the program. Specifically, we are reviewing whether Section 109
of the Copyright Act should be modified to make the first sale privilege apply
expressly to digital transmissions of copyrighted works, whether an exemption
is necessary for temporary incidental copies and whether the scope of the archival
exemption under Section 117 should be expanded.
A public hearing on the issues related to the Section104 report was held in
Washington, D.C. on November 29, 2000.
In May 1999, the Office concluded an intensive study on digital
distance education through public hearings, comments and consultations with
experts in various fields. The report made legislative recommendations on the
promotion of distance education through digital technologies. Since issuance
of this report, I have testified twice in the Senate, once before this Subcommittee,
and last year before the Web-based Education Commission. At the request of the
Senate Judiciary Committee, the Office has recently met with interested parties
on distance education issues to identify issues of concern and potential areas
of agreement in connection with legislation that has been introduced in the
Senate and was the subject of a hearing in the Senate Judiciary Committee in
State Sovereign Immunity
At the end of its 1999 term, the U.S. Supreme Court issued
opinions in Alden v. Maine, College Savings v. Florida Prepaid, and Florida
Prepaid v. College Savings. Taken together, these opinions reshaped the scope
of state sovereign immunity and Congress' authority to abrogate that immunity.
Under the new regime, by invoking their immunity, States can escape the imposition
of monetary damages for copyright infringement. Ever since those decisions,
Congress has been struggling with how to reinstate full enforceability of the
copyright law. The Copyright Office has worked closely with Congressional staff,
the Patent and Trademark Office, and industry representatives in analyzing this
problem and searching for a solution. Last year, this subcommittee held a hearing
on this issue at which I testified. We continue to be involved in discussions
relating to legislation on this issue that seems likely to be introduced this
Sound Recordings as Works Made for Hire
In the Intellectual Property and Communications Omnibus Reform
Act of 1999, Congress added sound recordings to the categories of commissioned
works which are eligible to be works made for hire. Subsequent to that enactment,
a significant controversy arose concerning both the procedural history of the
provision as well as its effect. On May 25, 2000, this subcommittee held a hearing
on the issue at which I testified, and following that hearing H.R. 5107, the
Work Made For Hire and Copyright Corrections Act of 2000, was enacted. (Public
Representatives of recording artists and the record industry acknowledged that
this legislation was only the first step in resolving the issue of sound recordings
as works made for hire, and that further discussions should take place in an
attempt to find a satisfactory resolution of the issue. If so, I would be pleased
to assist in those discussions in any way that you see fit.
Copyright Technical Corrections and Housekeeping Amendments
The Office has also suggested a number of technical corrections
and housekeeping amendments to title 17. Some of those amendments were included
in the Work Made For Hire and Copyright Corrections Act of 2000. Others have
been introduced as part of the Intellectual Property and High Technology Technical
Amendments Act of 2001, S. 320, which has passed both the House and the Senate
this year. Although the copyright amendments in both the House and Senate versions
of the bill are identical, there are some differences in the provisions of the
bill pertaining to patent law. We look forward to the resolution of those differences
and the enactment of this legislation.
The Copyright Office continues to work cooperatively with
the Executive Branch on international matters -- most often with the United
States Trade Representative (USTR), the Patent and Trademark Office, and the
Since the Subcommittee's May 2000 oversight hearing, the primary activity on
the multilateral front was an effort to conclude a treaty to protect audiovisual
performers, principally television and screen actors. A diplomatic conference
held in Geneva, Switzerland in December 2000 failed primarily because of the
inability of the U.S. and the European Union to resolve their differences on
allocation of rights and the determination of choice of law. A decision will
be made in September on whether to continue work on this.
Also last year, the Copyright Office assisted USTR before the World Trade Organization
(WTO), in its defense of Section 110(5) of the Copyright Act against a challenge
by the European Union (EU) that this exception for the public performance of
copyrighted works in small businesses violated U.S. treaty obligations -- the
Berne Convention and the TRIPS Agreement (Trade Related Aspects of Intellectual
Property Agreement of the WTO). The WTO panel found that Section 110(5)(a) complied
with U.S. treaty obligations but that the new subsection(b) violates those obligations.
The U.S. has been given until July 7, 2001 to change its law or face sanctions.
The Copyright Office is one of the agencies involved in negotiating the Hague
Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters.
On May 15, we are hosting a roundtable discussion for representatives of copyright
industries, copyright users, consumer organizations, and those involved in electronic
commerce, to identify and discuss more fully the issues and problems associated
with the draft convention. This roundtable will also be used to propose solutions
that will aid the U.S. delegation to the first part of the Diplomatic Conference
which is scheduled for June.
We continue to participate, as part of the U.S. delegation, in the ongoing
work of WIPO and the WTO Council on TRIPS. This includes WIPO meetings on the
protection of folklore, databases, and broadcasters, as well as the continuing
effort to review the intellectual property laws of developing country members
for compliance with TRIPS obligations.
Policy staff are members of the U.S. delegation to the Intellectual Property
Negotiating Group of the Free Trade Area of the Americas. The goal of the negotiating
group is to prepare and finalize an IP chapter for a Free Trade Area of the
Americas Agreement. The overall agreement is due to be completed by 2005, a
goal that was recently reaffirmed at the Summit of the Americas in Quebec. In
addition, PIA staff were instrumental in the drafting of U.S. treaty proposals.
PIA staff were also instrumental in the drafting and negotiation of intellectual
property provisions in a bilateral Free Trade Agreement with the Kingdom of
Jordan. This successful negotiations established a pattern for ongoing FTA negotiations
with Chile and Singapore.
The Copyright Office is on the inter-agency Special 301 Committee which considers
and evaluates the adequacy and effectiveness of intellectual property protection
and enforcement throughout the world. This annual process, which is established
under U.S. trade law, is one of the tools used by the U.S. Government to improve
protection for creators, inventors, and other holders of intellectual property
Copyright Office staff also actively participate in bilateral negotiations
and consultations. Last year, these included those held with Mexico, Paraguay,
the People's Republic of China, South Korea, Bulgaria, the Bahamas, Malaysia,
Taiwan, and Japan. We meet almost weekly with foreign officials and visitors
interested in learning about the U.S. copyright system and exchanging information
about topics of mutual concern.
Last December, the Office amended its regulatory definition
of a "Service" for purposes of the statutory license governing the public performance
of sound recordings by means of digital audio transmissions in order to clarify
that transmissions of a broadcast signal over a digital communications network,
such as the Internet, are not exempt from copyright liability under Section
114(d)(1)(A) of the Copyright Act. The broadcasters are challenging the ruling
in federal court.
Under Section 1201(a)(1) of the DMCA, the Librarian of Congress
is required to determine whether any particular classes of works are to be exempted
from the anticircumvention prohibition on circumvention of technological measures
that control access to works protected by copyright. Such technological measures
include passwords, scrambling and encryption. This determination is made upon
my recommendation after a rulemaking proceeding.
In response to the Office's public inquiry, we received nearly 400 comments
and heard from representatives of more than 50 organizations at five days of
hearings held in Washington, D.C. (May 1-3, 2000) and in Palo Alto, California
(May 18-19, 2000).
The primary responsibility of the Register and the Librarian is to determine
whether the implementation of technological protection measures has diminished
the ability of individuals to use copyrighted works in ways that are otherwise
Last October, the Copyright Office published the determination for the triennial
period covered by this first rulemaking. Exemption to Prohibition on Circumvention
of Copyright Protection Systems for Access Control Technologies; Final Rule,
65 Fed.Reg. 64556 (Oct. 27, 2000). I recommended to the Librarian that two classes
of work be exempted from the prohibition against circumvention: (1) compilations
consisting of lists of web sites blocked by filtering software applications;
and (2) literary works including computer programs and databases, protected
by access control measures that fail to permit access because of malfunction,
damage or obsolescence. The Librarian accepted my recommendations and exempted
those two classes of works. The exemptions set forth in the rule will be in
effect until October 28, 2003, during which time we will conduct another inquiry
into adverse impact on noninfringing use of copyrighted works protected by technological
In the course of the rulemaking, I concluded that there are some issues that
may require further attention by Congress. In my recommendation issued last
October, I recommended that Congress consider amending Section 1201 to provide
a statutory exemption for all works, regardless of what class of work is involved,
that are protected by access control mechanisms that fail to permit access because
of malfunction, damage or obsoleteness. I strongly urge that Congress consider
such an amendment. Although I concluded that it was appropriate in the rulemaking
to exempt literary works that are protected by such access control measures,
I believe it would be more appropriate to address this problem through legislative
action. As I stated in my recommendation to the Librarian:
Although this exemption fits within the parameters of the term "class of works'"
as described by Congress, it probably reaches the limits of those parameters.
The definition of the class does start with a Section 102 category of works
-- literary works. It then narrows that definition by reference to attributes
of access controls that sometimes protect those works -- i.e., the failure of
those access controls to function as intended. But in reality, this exemption
addresses a problem that could be experienced by users in accessing all classes
of copyrighted works. This subject matter is probably more suitable for a legislative
exemption, and the Register recommends that Congress consider amending Section
1201 to provide a statutory exemption for all works, regardless of what class
of work is involved, that are protected by access control mechanisms that fail
to permit access because of malfunction, damage or obsoleteness. Meanwhile,
because genuine harm has been demonstrated in this rulemaking proceeding and
because it is possible to define a class of works that fits within the framework
of Section 1201(a)(1)(B), (C) and (D), the Register recommends that the Librarian
exempt this class of works during the first three years in which Section 1201(a)(1)
is in effect. But the fact that sufficient harm has been found to justify this
exemption for this three-year period will not automatically justify a similar
exemption in the next triennial rulemaking. In fact, if there were a showing
in the next rulemaking proceeding that faulty access controls create adverse
impacts on noninfringing uses of all categories of works, such a showing could,
paradoxically, result in the conclusion that the problem is not one that can
be resolved pursuant to Section 1201(a)(1)(C) and (D), which anticipates exemptions
only for "a particular class of works." A legislative resolution of this problem
is preferable to a repetition of the somewhat ill-fitting regulatory approach
adopted herein. 65 Fed.Reg. at 64565.
I also recommended that Congress consider what should be the appropriate approach
to take with respect to technological measures that control both access to works
and copying and other uses of works. I noted:
The merger of technological measures that protect access and copying does not
appear to have been anticipated by Congress. Congress did create a distinction
between the conduct of circumvention of access controls and the conduct of circumvention
of use controls by prohibiting the former while permitting the latter, but neither
the language of Section 1201 nor the legislative history addresses the possibility
of access controls that also restrict use. It is unclear how a court might address
this issue. It would be helpful if Congress were to clarify its intent, since
the implementation of merged technological measures arguably would undermine
Congress's decision to offer disparate treatment for access controls and use
controls in Section 1201.
At present, on the current record, it would be imprudent to venture too far
on this issue in the absence of congressional guidance. The issue of merged
access and use measures may become a significant problem. The Copyright Office
intends to monitor this issue during the next three years and hopes to have
the benefit of a clearer record and guidance from Congress at the time of the
next rulemaking proceeding. 65 Fed.Reg. at 64568.
Finally, I observed that although a number of parties submitting comments and
testifying in the rulemaking had urged that we define a "particular class of
works" by reference to the users of particular works or the uses made of particular
works, it does not appears that Section 1201 anticipates that a "class" can
be defined in such a way. Rather, a class of works must be determined based
upon attributes of the works themselves, and not by reference to some external
criteria such as the intended use or users of the works. However, I acknowledged
that the statutory language is arguably ambiguous, but concluded that in the
absence of clarification by Congress, I could not accept the more expansive
view of what a "particular class of works" could be. 65 Fed.Reg. at 64559-64561,
64562. I am not requesting clarification on this issue, because I believe that
I correctly understood the statutory mandate. But I understand that others may
disagree with this conclusion, and if you believe that my conclusion was incorrect,
you may wish to consider legislation that would clarify what a "class" is.
The Copyright Office assisted the Judiciary, as it is directed
to do in 17 U.S.C. §701(b)(2), in several cases involving copyright issues.
The Office gets involved in litigation in four different contexts: (1) when
it is asked to assist the Department of Justice in defending a lawsuit in which
the constitutionality of a federal copyright statute is challenged (as in Eldred
v. Reno, discussed below), (2) on the rare occasions when the Office is
sued (e.g., the challenge by broadcasters to the Office's ruling that
transmissions of a broadcast signal over a digital communications network, such
as the Internet, are not exempt from copyright liability under Section 114(d)(1)(A)
of the Copyright Act), (3) when the office files suit pursuant to 17 U.S.C.
§407 to compel the deposit with the Library of Congress of a work published
in the United States, and (4) when the Office works with the Department of Justice
in connection with an amicus curiae brief in litigation involving important
issues of copyright law and policy. Some of the more significant cases in which
the Office has been involved in the past year are discussed below.
Eldred v. Ashcroft (formerly Eldred v. Reno)
The Copyright Office continues to assist the Department of
Justice in a lawsuit challenging the constitutionality of the Sonny Bono Copyright
Term Extension Act of 1998, which extended the duration of most copyrights by
20 years. Plaintiffs assert that the Act violates both the First Amendment and
the clause in the Constitution which authorizes Congress to enact laws giving
authors exclusive rights for "limited times." The district court entered judgment
on the pleadings upholding the constitutionality of the law, and plaintiffs
appealed. The U.S. Court of Appeals for the District of Columbia Circuit affirmed
(with one judge dissenting in part), finding that neither the First Amendment
nor the Copyright Clause of the Constitution constrains Congress from extending
for a period of years the duration of both existing and future copyrights. Eldred
v. Reno, 239 F.3d 372 (D.C. Cir. 2001), aff'g. 74 F.Supp.2d 1 (D.D.C
1999) Plaintiffs have now petitioned for a rehearing and asked that such reconsideration
be en banc. The government has been directed to respond to the petition and
we are assisting the Justice Department in preparing that response.
Universal City Studios, Inc. v. Corley (formerly Universal City
Studios v. Reimerdes)
The United States has intervened in the appeal of this judgment
that the defendants violated 17 U.S.C. §1201, the anticircumvention provision
added by the Digital Millennium Copyright Act, when they posted on the Internet
a code that permits the circumvention of the Content Scrambling System (CSS)
used to protect the content on digital versatile disks (DVDs) of motion pictures.
The United States is intervening in the United States Court of Appeals for the
Second Circuit to defend the constitutionality of Section 1201 and is urging
affirmance of the district court's judgment. The Copyright Office has assisted
the Department of Justice in this effort.
A&M Records v. Napster
The Copyright Office was instrumental in the preparation and
filing of an amicus brief for the government with the Ninth Circuit Court of
Appeals in the Napster case. The defendant operates a file-trading service that
provides a means for users of the service to exchange digital files of sound
recordings. A number of record companies and music publishers sued, claiming
that their copyrighted sound recordings had been copied and distributed through
the defendant's system and that the defendant is vicariously liable and a contributory
infringer of its copyrights. The defendant argued, inter alia, that Section
1008 of the Audio Home Recording Act (AHRA) insulated it from liability in this
case. The government's brief was filed solely to address that issue and argued
that AHRA does not cover the activities of Napster's users. In upholding the
district court's decision to issue a preliminary injunction against Napster
(although instructing the district court to modify that injunction), the Ninth
Circuit agreed that the AHRA does not cover the activities of Napster's users
and offers no safe harbor for Napster.
Raquel v. Education Management Corporation
The Office proposed to the Solicitor General that an amicus curiae brief be
submitted to the Supreme Court in support of a petition for a writ of certiorari
in Raquel v. Education Management Corporation, 196 F.3d 171
(3d Cir. 1999), cert granted, vacated and remanded, 121 S.Ct. 376 (2000).
The U.S. Court of Appeals for the Third Circuit had dismissed Raquel's copyright
infringement suit based on its conclusion that Raquel had made misrepresentations
of material facts in its application for copyright registration. The Office
concluded that the court had misunderstood the Copyright Office's registration
practices. To clarify what those practices are, it published a Statement of
Policy in the Federal Register on July 5, 2000, clarifying how the Office addresses
the issues that the Third Circuit had misunderstood in its decision. The Office
worked with the Department of Justice to prepare an amicus curiae brief in support
of Raquel's petition for certiorari, and we urged that the Supreme Court grant
certiorari, but immediately vacate the decision below and remand the case to
the Third Circuit, rather than hear argument on the merits. The Court followed
The Copyright Office also participated in discussions with
the Department of Justice relating to other amicus briefs and proposed amicus
briefs in cases involving copyright issues, and worked with the Department of
Justice in a successful lawsuit to compel a publisher to deposit a serial with
the Library of Congress.
VI. Copyright Office Budget
Fiscal 2002 Budget Request
As I mentioned, we are facing particularly important budget
decisions for fiscal 2002 that will determine whether we are able to provide
the public services copyright owners and the users of copyrighted works require.
Because of the importance of our fiscal 2002 budget request to the Office, I
would like to review the overall request with the subcommittee.
First, to enable us to serve Congress and the American people fully, it is
critical that the Office's net appropriation be increased from $9.2 million
to $12.8 million -- $1 million less than the fiscal 1999 net appropriation of
$13,771,000. We have growing policy support requirements to Congress and the
Executive Branch, as well as a growing regulatory workload from passage of the
DMCA, that require adequate resources. We have had reductions in our appropriations
in each of the last two years - with a reduction of more than $2 million last
The Office is requesting $12,836,815 in net appropriations and $21,880,000
in offsetting collections authority. This represents a $3,668,843 million net
appropriation increase over the fiscal 2001 net appropriation of $9,167,972.
The increase is needed to preserve the No-Year account from a further reduction
and to fund $1,668,843 for mandatories and price level changes. The Copyright
Office request for its Offsetting Collections Authority represents a decrease
of $1,620,000 from $23,500,000 to $21,880,000. The decrease is based on projected
annual revenue receipts of $21,500,000 and expending $380,000 from the No-Year
Copyright No-Year Account and Fee Projection for Fiscal Year 2002
The No-Year account was established by the Technical Amendments
Act, P. L.105-80 and holds fees which have been paid by those who use Copyright
Office services. We want to use the funds in the No-Year account to improve
our public services to those who pay these fees. Our principal use of the No-Year
account will be for development of our information technology systems and Business
Process Reengineering implementation. We need to insure that adequate funds
remain in the account for these critical public service improvements.
The No-Year account balance at the end of the last fiscal year was $4,289,902.
The Copyright Office does not expect to add any funds to this account this year.
The Office might need to use up to $2 million from its No-Year account funds
to make up the shortfall caused by the fiscal 2001 net appropriation reduction.
Status of Future Fee Adjustments
Approximately two-thirds of the Copyright Office budget is
funded by fee receipts, primarily fees paid for registering copyrighted works
in the Office. The 1997 Technical Amendments Act gives the Register the authority
to recommend copyright fees based on certain criteria, with Congress retaining
the authority to disapprove a fee increase. In setting fees, the law directs
the Register to conduct a study of costs for the service provided. Based on
the study, and subject to congressional review, the Register is authorized to
fix fees at a level not more than necessary to recover reasonable costs incurred
for services plus a reasonable adjustment for inflation. Congress specifically
mandated that the fees should also be "fair and equitable and give due consideration
to the objectives of the copyright system." These objectives include creating
a comprehensive public record of copyright ownership and obtaining works for
the use of the Library of Congress for its collections or its exchange programs.
The Copyright Office went through an elaborate and extensive process in establishing
the present fees, which became effective on July 1, 1999. This process included
hiring two contractors to conduct a cost study and to provide expertise in the
new "Federal Managerial Cost Accounting Standards." Since raising fees each
year would be costly and disruptive, we indicated that the current fees have
a minimum duration of three years. This decision was widely publicized.
In July 1999, we implemented a new fee schedule which included raising our
basic registration fee by 50%, from $20 to $30. This fee increase has resulted
in fewer copyright registrations, which negatively affects our copyright registration
system, our public record of copyright ownership, and the Library of Congress
The Office is now in the process of assessing the current fee schedule to determine
if fee adjustments are warranted for fiscal 2002. Even if the Office were to
implement a fee increase on July 1, 2002, it would not affect the fiscal 2002
fee receipt projection since the new fees would be in place for just the last
quarter of the fiscal year. Past experience has shown that we would see a high
incidence of "short" fees submitted in that quarter. Based on this historical
evidence, the fiscal 2002 fee receipt forecast is the same as fiscal 2001. Given
receipts received in the first half of this year, the Office may see a higher
level of receipts for Fiscal Year 2001 than originally forecasted.
Mr. Chairman, I remain most grateful for the support the Subcommittee
continues to give the Copyright Office. This support enables us to continue
to fulfill our important mission of fostering American creativity through an
effective and strong copyright system that benefits both copyright owners and
those who use copyrighted works.
1. Corrected since original submission.