Statement of Marybeth Peters
The Register of Copyrights
Subcommittee on Legislative Branch,
Committee on Appropriations
United States House of Representatives
106th Congress, 1st Session
February 10, 1999
Fiscal 2000 Budget Request
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to present the budget request of the Copyright Office for
fiscal year 2000. For more than 100 years the role of the Office has been one of
leadership in the establishment of U.S. copyright policy and service to the nation. The
record has been one of solid achievement, and this year is no different.
During fiscal year 1998, the Copyright Office continued to advise the Congress on
national and international issues and provided valuable assistance to the United States
Trade Representative and other executive branch agencies.
It also continued to create and maintain the on-line catalog of copyright and mask work
registrations and recorded documents, to administer the various compulsory licenses and
statutory obligations, to further the effort to create a workable automated registration,
recordation and deposit system, and to offer technical, legal, and educational assistance
in the international arena. The Copyright Office's public services include, responding to
copyright information and reference requests in person, over the telephone, through
written correspondence, and electronically through the Web; producing and supplying
Copyright Office forms, circulars, studies, regulations, and other publications in paper
and digital format; maintaining a 24-hour forms hotline and fax delivery service;
providing up-to-date information digitally via the Copyright Office Website and through an
electronic mailing list.
In fiscal year 1998, the Office processed 644,639 claims,
representing over 800,000 works, registered 558,645 claims, representing more than 700,000
works, recorded 14,368 documents, that included more than 250,000 titles, and responded to
395,456 information requests. It transferred to the Library approximately 850,000 copies
of works at a value of $26,991,775. The Office collected $15,559,001 for registration,
recordation and related services and approximately $217,000,000 in royalty fees for
Fiscal Year 1999 Focus
In fiscal year 1999, the Copyright Office will focus on five
Maintaining and enhancing the policy role of the Copyright
Office in domestic and international copyright matters
Continuing the development, testing, and implementation
of the Copyright Electronic Registration, Recordation, and Deposit System
Improving the efficiency and timeliness in registration
processing and in providing copyright reference and information services
Enhancing the security of copyright deposits and records
through the application of anti-theft devices to the collections and the
adoption of other measures
- Implementing Copyright Office fee setting legislation.
The Digital Millennium Copyright Act (DMCA), enacted on October 28, 1998, supports and enhances the
policy role of the Copyright Office in domestic and international copyright matters. The
DMCA resulted in the most extensive changes to Copyright Law since the general revision in
1976. It was the result of nearly two years of intensive activity in the Congress, and the
Copyright Office was privileged to work extensively with committees in both the House and
Senate throughout the legislative process.
Not only did the Copyright Office play a significant role in advising the Congress on
matters relating to the DMCA, but the Act itself ensured that the Office will continue to
play a leading role in copyright policy in the future. Section 401 of the Act confirms the
authority of the Copyright Office to carry out the policy and international functions that
it has carried out under more general statutory language for many years.
On several of the substantive issues addressed in the DMCA the affected parties were
very far apart, requiring Congress to craft a number of delicate compromises. One of these
compromises establishes a new important and difficult activity for the Librarian of
Congress and the Register of Copyrights - - an ongoing administrative-rulemaking
proceeding to evaluate the impact of the law's new prohibition on circumventing
technologies that protect works from unauthorized access to determine whether users of
"particular class[es] of works" would be hindered in their ability to make
noninfringing uses of such works by virtue of the new anti-circumvention rules. If so, the
Librarian, upon recommendation of the Register of Copyrights, will exempt such persons
from the ban on acts of circumvention.
There were a number of issues that were not ripe for resolution in the DMCA. Several
matters under consideration -- from distance education to encryption research -- required
further study. All six of those studies will be carried out either under the auspices of
the Copyright Office or with the Office's participation within the next two years.
Copyright Electronic Registration, Recordation, and Deposit System (CORDS)
In fiscal year 1999 the Office will continue the development,
testing, and implementation of CORDS, which, when fully developed, will allow all
Internet users to submit electronically claims to copyright, copies of copyrighted works,
and documents such as assignments and licenses.
CORDS has no other prototypes available to build on; it is breaking totally new ground,
and is doing so in a rapidly changing technical environment. It involves the use of many
new technologies emerging with the growth of the Internet, including applying digital
signature technology that authenticates the source and integrity of communications with
far more depth of reliability and security built into it than basic FTP (file transfer
protocol) or Email communications-based systems.
In January 1999, the Library of Congress and the Copyright Office
signed a landmark cooperative agreement with UMI that enables electronic submission of
applications and deposits of doctoral dissertations and master's theses. This historic
agreement also makes UMI the first partner to submit large numbers of copyright claims
(20,000 annually, 400 per week) electronically through CORDS, which will be processed
In the fiscal year 2000 budget request, the Copyright Office
requests funding for 1) hiring one automation specialist (GS-13) and 2) increasing digital
storage capability for CORDS. This will permit the Office to receive and process an
increasing number of claims electronically at a substantial savings in staff time and
physical storage space.
The Copyright Office's goal is timely, quality service. Throughput
time is a major concern to the copyright community. Despite valiant efforts by supervisors
and staff, registration has gone from the norm of six to eight weeks in 1993 to six to
eight months today. This is clearly unacceptable. Annually, we process approximately
650,000 claims to copyright covering more than 800,000 works and more than 1,000,000
deposit copies per year, received with a fee in most cases, to be processed and routed
through many stations in a function-based operation. At the end of fiscal year 1993, the
Office had an inventory of 30,000 registration claims to be processed. Normal on-hand
ranges for claims to be examined have historically been 30,000 to 45,000.
Beginning in fall 1993, the examiner staff began to decline because
of retirements, buyouts, budgetary constraints, and resignations. Over the next three
years, the Examining division lost 26 FTEs, or 38 percent, of its examiner staff. Hiring
freezes caused by the Copyright Office budget constraints, and the development of the new
hiring system prevented the Office from replacing examiners until 1997. Today, there are
52 examiners on staff, only 80 percent of 1993 levels.
To compensate for reduced staff, the Examining Division has held
facilitative sessions with staff, offered overtime, cross-trained and utilized staff from
other divisions, initiated the use of email and fax correspondence with applicants,
streamlined correspondence with frequent applicants, networked correspondence preparation,
and initiated better use of technician staff to process uncomplicated claims.
Although these measures are effective in reducing more backsliding,
they are not sufficient to recoup the losses. Sixteen new examiners have been hired and
are becoming productive; however, the arrearage remains at 125,000 claims. While the
division may be able to hold the arrearage at the current level when the new hires are
fully trained, there are not enough examiners to reduce the backlog and achieve currency.
To build a cadre of copyright examiners sufficient to ensure the
issuance of timely copyright registration certificates will require the funding to hire
eight additional examiners (GS-7) which is requested in the fiscal year 2000 budget.
Restructuring the Registration Process in FY2000
To effectively serve the public and the copyright community in the
new Millennium, the Copyright Office must restructure and streamline the registration and
recordation processes. Funding for this effort is included in the fiscal year 2000 budget
request. Restructuring will improve public service, enhance operational efficiency and
security, contain costs, respond to the need to acquire and process works fixed in new
formats, and meet the demands of the copyright community for a reduction in the claims
arrearage and the speedier processing of claims.
This initiative entails:
hiring eight additional copyright examiners (GS-7) to
achieve and maintain currency in registration of copyright claims and one
automation specialist (GS-13) and increasing digital storage capability
for CORDS, as stated earlier;
hiring a project manager, (GS-15) NTE 5 years, who is
an expert in Copyright Office procedures, to oversee and coordinate the
restructuring project throughout the planning and implementation phases,
work with the contractors, head up a task force of Copyright Office staff,
communicate with and collect input from management, staff, unions, and customers,
and evaluate the statutory impact, if any, of restructuring; and
- conducting a process redesign study to develop and implement a restructuring
plan for the Office's major registration processing operations and associated
functions to enhance operational efficiency and reduce handling of materials.
There are numerous benefits to restructuring the registration process. The
value of our records is greatest when up-to-date information on new works is
expeditiously made available to the public. Increased staff and more efficient
operations will maximize the timeliness of additions to and public accessibility
of our records. Office restructuring and electronic filing via CORDS for a growing
percentage of applicants are needed to maintain reasonable operating costs in
future years and keep user fees, which are based on cost, from escalating to
levels unacceptable to the Congress and beyond the means of copyright owners,
particularly individual authors. Restructuring will permit better control over
material and result in fewer opportunities for misplacement and pilferage. Increasing
the use of electronic filing via CORDS will reduce the quantity of materials
that require physical handling and storage.
The Library of Congress has embarked on a major security effort with
regard to its collections. The Copyright Office with the Library of Congress has developed
a multi-year plan to improve security. In fiscal year 1998, the Copyright Office conducted
five Risk Assessments, that identified control weaknesses and developed plans of action to
reduce our vulnerability. In fiscal year 1999, the Copyright Office began implementing
these plans. Additionally, the Office received fiscal year 1999 funding to install card
readers, institute ownership markings and bar coding systems, and security devices for
print and non-print material.
On February 1, 1999, I submitted to Congress a proposed schedule of fees for filing
copyright claims, recording documents and providing related services. These fees would
replace the fees specified in section 708(a)(1)-(9) of the copyright law. Our goal is to
implement these and other new fees on July 1, 1999. Our proposal would increase the filing
fee for basic (as opposed to supplementary or renewal) registrations from $20 to $30.
Other statutory fees, such as those for recording a document, researching our records and
providing a report of our results, will increase to levels necessary to recover costs. The
new fee structure is expected to provide 70 percent cost recovery for registration,
recordation and related services. In fiscal year 2000, higher fees are expected to
increase the Office's receipts by $4.8 million, fund the budget initiatives and reduce the
Office's net appropriation by $2,336,000.
With respect to increasing our fees, I followed the provisions of
the Technical Amendments Act, effective November 13, 1997, which require the
Register of Copyrights to conduct a study of costs incurred by the Office for the
registration of claims, the recordation of documents, and for other related services. On
the basis of the study and public policy considerations, and subject to congressional
review, registration, recordation and related statutory fees may be raised to recover
reasonable costs, including an adjustment for inflation. However, the new fees must be
fair and equitable and support the objectives of the copyright system.
The Office worked with two consulting firms. One firm provided cost accounting
expertise that produced an in-depth analysis of copyright costs; the other provided
expertise in the new federal "Managerial Cost Accounting Standards." In order to
address the need for fees to be fair and equitable and to give due consideration to the
objectives of the copyright system, I sought information from authors, copyright owners,
the general public and from the Library of Congress.
The Office published a notice of proposed fee increases that contained two alternative
preliminary fee schedules, each of which would recover the costs for providing
registration and other statutory services, and requested written comments on the two fee
schedules and offered the public the opportunity to testify orally at a public hearing.
The Office received significant input from the intended beneficiaries of the copyright
system and users of Copyright Office services. Organizations representing authors and
small publishers urged the Office to set fees lower than the amounts required to fully
recover basic registration expenses, noting that registration is required for enforcement
of a copyright, and that registration before infringement takes place is generally
necessary to obtain the crucial remedies of statutory damages and attorneys' fees.
Many commenters mentioned the hardship higher fees would impose on individual authors,
noting that the Internet has decreased their ability to regionalize the sale of their
works--sales are now global. They urged that the fee be kept at its current level and
asserted that the lower fee for individual authors proposed in the second schedule was too
high and would result in decreased applications for copyright registration.
I evaluated all testimony and comments and took into account the possibility that a
large increase in fees could result in a concomitant decline in registrations which would
jeopardize the stability of the registration system and have a long-term effect on user
fee revenues. It would also erode the Office's receipt of valuable deposits, which form
the underpinning of the Library's Americana collections. The schedule of fees sent to
Congress proposes increasing the basic registration fee by 50%; however, some other fee
services would increase by as much as 225%.
Determining an exact figure for an appropriation reduction in fiscal year 2000 is an
extremely difficult task because of the uncertainties related both to the precise fees to
be assessed and the impact on demand for services. Further, a fee increase carries its own
costs, including handling claims arriving with insufficient fees, which, during the first
several months, may represent nearly half of all submissions. History demonstrates that
any fee increase negatively affects demand for services for at least the first year
following the increase. The Office's income projections are based on an expected 20%
decline in demand for registrations, the fee service which provides the largest amount of
Since income in fiscal year 2000 depends on an unpredictable decline in demand and the
possibility that our proposed fees might not meet with Congressional approval, and thus
might not be implemented at all, the Office believes it is essential to adopt a
conservative approach and request a moderate net appropriation reduction and a moderate
Offsetting Collections Authority increase for fiscal year 2000. If, as is hoped, income
exceeds expenditures, the Office can apply that income toward an appropriation reduction
for fiscal year 2001, a year where income projections can be calculated with more
certainty based on a half year's experience under the new fee structure.
In its fiscal year 2000 budget request, the Office is seeking
authority to fund new initiatives. They include the funding to hire eight examiners
(GS-7), one project manager for our restructuring efforts (GS-15) and one automation
specialist (GS-13), to increase our digital storage capacity ($70,000), and to restructure
our processes, which includes a process engineering study ($400,000) plus equipment and
software for the project manager ($16,000). We are also seeking authority to reimburse the
National Records Center for storage of Copyright Office records ($268,204).
Funding our operational improvements, including increasing our digital storage
space for claims that are submitted through CORDS, would support our efforts
to become more efficient, to improve public service, and to transition to the
global networked society of the 21st century. Approval of our request would
still allow you to reduce the Office's net appropriation by $2,336,000.