Statement of Marybeth Peters
The Register of Copyrights
before the
Subcommittee on Legislative Branch,
Committee on Appropriations

United States Senate
March 1, 2006


Committee on Appropriations

United States House of Representatives
March 10, 2006

109th Congress, 2nd Session

Fiscal Year 2007 Budget Request

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to present the Copyright Office's Fiscal Year 2007 budget request.

The Copyright Office is requesting the Committee's approval of four program changes for the Copyright BASIC appropriation. There are three offsetting collections authority changes and one in net appropriations. In offsetting collections, we are requesting a $1,590,901 million decrease in the Reengineering Program funding due to fewer funds in the no year account, an $850,000 decrease due to a decrease in renewal receipts, and a $600,000 increase due to an overall increase in receipts from other service fees. In new net appropriation authority, the Office requests $1 million to digitally image the pre-1978 public records to mitigate the risk of loss and to make them available online.

I will discuss these requests in more detail, after I provide an overview of the Office's work and accomplishments.

Review of Copyright Office Work and Accomplishments

The Copyright Office's mission is to promote creativity by sustaining an effective national copyright system. We do this by administering the copyright law; providing policy and legal assistance to the Congress, the administration, and the judiciary; and by informing and educating the public about our nation's copyright system. The demands in these areas are growing and becoming more complex with the evolution and increased use of digital technology.

I will briefly highlight some of the Office's current and past work and our plans for FY 2006.

Policy and Legal Work

We have continued to work closely with the Senate Committee on the Judiciary, its Subcommittee on Intellectual Property, and its House counterpart. In May, I testified before the Senate subcommittee on international piracy of intellectual property, highlighting the fact that piracy is one of the most enduring copyright problems throughout the world and the Office's efforts, together with other Federal agencies, to reduce piracy to the lowest levels possible.

I also testified twice last year on ways to modernize music licensing in a digital world. In June, I testified before the House Subcommittee and in July, I testified before the Senate Subcommittee. During the first hearing, I focused on the possibility of permitting “music rights organizations” to license on a consolidated basis both the public performance right of a musical work as well as its reproduction and distribution rights. In the second hearing, I considered alternative solutions to the music licensing dilemma, including a blanket statutory license for digital phonorecord deliveries. These hearings and meetings with representatives of the affected industries produced a consensus that Section 115 of the copyright law should be modernized to reflect the needs and realities of the online world. However, there was no agreement as to how such modernization should be structured and implemented. Further work is needed in this area and I will continue to work with the interested parties and Congress on legislative solutions to the music licensing problem in this and the next fiscal year.

I testified before the Senate Committee on the Judiciary in September to examine legal and policy issues in the wake of the Supreme Court's June 27, 2005, decision in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. which clarified the doctrine of secondary liability as it would apply to those who offer products and services in a way that induces others to engage in copyright infringement. I testified that the Court's ruling seemed to strike an appropriate balance between the rights of copyright holders and the flexibility necessary to enable and encourage technologists to continue to develop new products and, thus, there was no immediate need for new legislation. I used the word “seemed” because, at the time of the hearing, only three months had passed since the ruling and it was simply too early to tell whether Grokster would provide sufficient guidance for the years and circumstances to come.

The Office implemented a new preregistration system, as required by the Family Entertainment and Copyright Act of 2005, Pub. L. No. 109-9, within the statutory six-month time frame. Preregistration of an unpublished work being prepared for commercial distribution allows a copyright owner to bring an infringement action before the authorized publication of the work and full registration, making it possible, upon full registration, to recover statutory damages and attorney fees. The electronic preregistration filing system became operational on November 15, 2005.

The Office also conducted two studies in 2005. First, Senators Orrin Hatch and Patrick Leahy requested that we examine the issue of “orphan works,” copyrighted works whose owners are difficult or impossible to locate, to determine whether there are compelling concerns that merit a legislative, regulatory or other solution; and if so, what type of solution could effectively address these concerns without conflicting with the legitimate interests of authors and right holders. As part of our efforts to produce this study, the Office collected over 850 written comments from the public and held roundtable meetings with dozens of interested parties in the summer of 2005 in both Washington, D.C. and Berkeley, CA. The Report on Orphan Works was delivered to Congress in January 2006. Second, at the request of Congress, we have also conducted a study to examine the harm to copyright owners whose programming is retransmitted by satellite carriers under a statutory license in Section 119. This report was also delivered to Congress in January 2006.

In addition, the Office has initiated its triennial rulemaking on exceptions from section 1201 prohibition on circumvention of technological measures that control access to copyrighted works and has received public comments. In addition, we will conduct hearings in Washington, D.C. and Palo Alto, CA. to elicit further information from the public. The study will be concluded in FY 2007, at which time, I will make my recommendations to the Librarian of Congress on classes of works that should be exempted from the section 1201 prohibition on circumvention.

We have also been actively involved in the implementation of the Copyright Royalty and Distribution Reform Act of 2004 (CRDRA), Pub. L. No. 108-419, which became effective on May 31, 2005. This Act phases out the Copyright Arbitration Royalty Panels (CARPs), a program administered by the Copyright Office, and replaces them with a new Library program which is independent of the Copyright Office and employs three full-time Copyright Royalty Judges (CRJs) and three staff. This organization is known as the Copyright Royalty Board. At the outset of the program, I worked diligently with my colleagues to identify and recruit the three highly qualified individuals who the Librarian appointed to the Board in January 2006.

The primary responsibilities of the CRJs, as with the CARPs which preceded them, are to set rates and terms for the various statutory licenses contained in the Copyright Act and to determine the distribution of royalty fees collected by the Copyright Office pursuant to certain of these licenses. The CRJs have the additional responsibility to promulgate notice and recordkeeping regulations to administer some of the statutory licenses. In accordance with the rate setting schedule set forth in the law, the Board has initiated three rate setting proceedings and it will conduct hearings in FY 2007 to set rates for the transmission of sound recordings over the internet.

We have worked closely with the Board to insure a smooth transition from the old system to the new and we have taken steps to conclude open and pending distribution and rate setting proceedings that were commenced under the Copyright Arbitration Royalty Panel (CARP) program. The conclusion of these proceedings, however, does not end my involvement in the determination of statutory rates and distributions of royalty fees. Under the Reform Act, the Board must seek a legal opinion from me on any novel question of copyright law and may seek a written determination on other material questions of substantive law. Such determinations shall be binding as precedent upon the Copyright Royalty Judges in subsequent proceedings.

During FY 2007, we will continue to take an active role in a number of important copyright cases, many of which challenge the constitutionality of various provisions of the Copyright Act, and continue to provide ongoing advice to executive branch agencies on international matters, particularly, the United States Trade Representative, the Department of Commerce, and the Department of State; and participate in numerous multinational, regional and bilateral negotiations.

Registration and Recordation

Registration of claims to copyright, including renewals, and recordation of documents, such as assignments, security interests, and mergers, are critical parts of the U.S. copyright system. Timely registration secures to owners certain benefits and provides a public record of copyright ownership. The Office has significantly improved its delivery times for these services since 2001.

During FY 2005, the Copyright Office received 600,535 claims to copyright covering more than a million works and registered 531,720 claims. The Office maintained an average of 80-90 days to issue a registration certificate, a significant improvement over processing times at the beginning of the decade. We also reduced the average processing time for the creation and posting of online copyright records by 50 percent.

The Copyright Office records documents relating to copyrighted works, mask works, and vessel hull designs and creates records of those documents. These documents frequently concern popular and economically significant works. The Office recorded 11,874 documents covering more than 350,000 titles of works in FY 2005. The average time to record a document was 50-60 days.

These achievements took place during a period marked by a significant investment of staff resources to reengineer Copyright Office processes and to move online copyright records from legacy systems to a database in Endeavor System's Voyager.

We expect a significant decrease in renewal registrations in 2007, due to the expiration of the renewal provision in the law. Renewal registrations only apply to works that were copyrighted before January 1, 1978, the effective date of the current copyright law. Before 1978, if a work was published with the required notice of copyright or an unpublished work was registered in the Copyright Office, it received an initial term of copyright protection of 28 years, and a renewal term that initially was 28 years and today is 67 years. To receive the renewal term, a renewal registration had to be made in the last year of the initial term, i.e., the 28th year. The last date for 28th year renewals was December 31, 2005.

The law was changed in 1992 to make renewal registration voluntary. This law applies to works copyrighted between January 1, 1964, and December 31, 1977. There were certain benefits gained by renewing in the 28th year, but if no renewal claim was registered in the 28th year of the term, renewal was automatically secured on the last day of that year. However, even if renewal is automatically secured, i.e., no renewal application was submitted in the 28th year of the initial term of copyright, a renewal claim may be submitted after the 28th year and some benefits flow from such a registration. A number of such registrations are made each year and we expect to receive two to three thousand renewals in this category compared to the 16 to 18 thousand renewals we have been receiving per year.

The President signed the Family Entertainment and Copyright Act (FECA), Pub. L. No. 109-9, on April 27, 2005. As mentioned earlier, this legislation amended the copyright law by the addition of a new provision, § 408(f), establishing preregistration. Preregistration, as distinct from registration, is available only for unpublished copyrighted works in categories that the Register of Copyrights finds to have had a history of infringement prior to commercial distribution. Unlike registration, preregistration requires only an application which includes a description of the work and a fee. Preregistration is an online service only; it is part of the new information technology system called eCO (Electronic Copyright Office). From April 2005 through the end of the fiscal year, the Office completed intensive work to prepare the electronic preregistration application form and help text, and to do the related IT development, process analysis, and training required to implement on November 15, 2005. Much of the development work that was done for the preregistration system will be applied directly to the electronic registration system that will be piloted in April 2006.

Public Information and Education

The Copyright Office responded to 362,263 requests for direct reference services and electronically published thirty-nine issues of its electronic newsletter NewsNet — a source that alerts over 5,000 subscribers to Congressional hearings, new and proposed regulations, deadlines for comments, new publications, other copyright-related subjects, and news about the Copyright Office.

The Office website continued to play a key role in disseminating information to the copyright community and the general public. The Office logged close to 30 million external hits to key web pages in FY 2005, representing a 49 percent increase over the previous year. The website received several enhancements, including introduction of RSS (Really Simple Syndication) feeds by which members of the public can receive instant notification of updates and revisions on pages that change frequently. There is a new history page that includes biographies of former Registers of Copyright, annual reports dating back to 1870, and previous copyright acts. The website is also part of LCNet, a new gateway for members of Congress and their staff.

Licensing Activities

The Copyright Office administers certain provisions of the copyright law's statutory licenses.

The Licensing Division collects royalty fees from cable operators for retransmitting television and radio broadcasts, from satellite carriers for retransmitting “superstation” and network signals, and from importers and manufacturers of digital audio recording products for later distribution to copyright owners. In calendar year 2005, the Office collected $212.6 million in royalty funds and distributed $150.7 million to copyright owners.

Reengineering Program

The Copyright Office's seven-year Reengineering Program initiative is to redesign delivery of its public services. This program is customer driven to prepare our Office for the future growth in electronic submissions. The Office had planned for the reengineering implementation to be completed in the first half of FY 2007, to include moving staff offsite so that its space in the Madison Building could be renovated in one phase. However, due to infrastructure and offsite lease requirements, the program cannot be completed until the third quarter of FY 2007. The program has four major components—process, information technology, facilities, and organization—that will be fully implemented in FY 2007.


Accomplishments in the process component closely tracked IT development. Pilot projects began in FY 2005 to test both the new processes and the new IT system, eCO. In the Registration Pilot, several thousand actual copyright registrations for motion pictures were made using most of the new processes—incoming paper forms were scanned, hard copy deposits were bar-coded and tracked, and all internal processing and correspondence was done in the eCO system.

Other pilots included the Deposit Selection Pilot, during which examiners successfully made selection decisions for certain routine monographs and musical works for the Library of Congress. In an Electronic Deposit Pilot, selected publishers submitted electronic versions of works via the internet, in preparation for electronic registration and possible future deposit of electronic formats for the Library's collections. As I mentioned earlier, the new preregistration service was implemented in eCO with an online-only application and completely paperless process. This service successfully uses Treasury's Pay.Gov for fee payments.

Information Technology (IT)

During FY 2005, the Copyright Technology Office (CTO) continued to work closely with the system development contractor SRA International, on the analysis, design, and building of the new Copyright IT systems infrastructure that will support the reengineered business processes. The CTO also made further significant progress on the conversion of the historical files of copyright registrations and recordations to MARC format and the preparation for access to the records through the Voyager system.

To ensure compliance with the Library's new system security regulation and newly issued security directives, the Office established a Security Review Board (SRB), made up of Copyright staff and consultants. During the 10 weeks preceding the implementation of the Registration Pilot, the SRB created a System Security Plan defining the security requirements, conducted a risk assessment, carried out a security compliance test and evaluation, and made recommendations to Copyright Office management about the security status of the software for this pilot. As a result, the Office received an interim authorization to operate and the system moved to production.

In FY 2006, the Office plans to expand its implementation of an on-line web portal—eCO Service—to allow the public to apply for copyright services online and pay with a credit card or bank account through Pay.Gov. Claims processing through the web portal will initially be a pilot to allow for full testing of the system before making it available to all the public in 2007. Additionally, we will use eCO to search a Voyager database of copyright records dating back to January 1, 1978.

In FY 2007 the Office plans to complete the IT component by transforming eCO Service from a pilot to full operational capability for processing copyright claims and issuing registration certificates, processing statements of account for statutory licenses, processing acquisition demands under section 407, and recording transfers, assignments, and other documents.


In November 2004, the Library appointed a project manager funded by the Copyright Office to oversee the Madison Building renovation project and coordinate attendant swing space moves within Capitol Hill and offsite. The Copyright Office hired a move management company to oversee the moves offsite and back to the Madison Building. In late September 2005, after an extensive search for temporary offsite lease space, the Library signed occupancy agreements with Government Services Administration (GSA) for space within two buildings in Crystal City, Va. In December 2005, an RFP was issued for construction of the offsite rental space. A contract was awarded in February 2006 and construction began in late February. Most of the Office's staff will move offsite in early July 2006. The remaining operations and staff will be located in the Adams and Madison buildings. We expect all staff to return to the Madison renovated space in July 2007.


The Office completed new and revised position descriptions to support the new processes for most of the divisions in the new organizational structure. Preliminary work was done to prepare for the “cross-walk” of staff from current to new positions and from the current divisions and sub-units to the new ones. The Office began drafting documents required for the reorganization package as specified in Library of Congress regulations. In FY 2007, the new organization and positions will be implemented, coinciding with the return of the staff to the Madison Building and the implementation of new processes.

FY 2007 Budget Request


No new funding is needed for reengineering for FY 2007. Rather, the Office is reducing its offsetting collections base by $1,590,911 as a result of fewer funds remaining in the no-year account.

Renewal Receipts

With respect to renewal registrations, the Office is reducing its offsetting collections authority by $850,000 and five staff due to the fact that the number of renewal registrations will decrease significantly in FY 2007.

When renewal registration was required, the Office registered approximately 52,000 claims. Since the enactment of the automatic renewal provision in 1992, the number of renewal claims have decreased each year. In FY 2005, the Office received approximately 15,893 renewal claims bringing in fees of approximately $1.2 million. In FY 2006, we believe that amount will drop to about $500,000 and in FY 2007 to about $150,000. Our records show that approximately 5,500 renewal claims were received in October, November, and December 2004. This has decreased to 4,839 for the same period in 2005 and is expected to decline throughout the rest of FY 2006.

Overall Fees Increased

Over the past two years, the overall fees collected for the Basic Fund have gradually increased and are projected in FY 2007 to exceed the normal receipts level of approximately $23 million by $600,000. This is based on more dollars being received across all the fee products, not from a change in the fee schedule. Based on this trend, the Office requests a permanent $600,000 increase in offsetting collections authority.

Copyright Records Preservation

The Office requests funding to digitize the pre-1978 copyright records. The key objectives of this record digitization project are (1) disaster preparedness preservation of pre-1978 public records and (2) provision of online access to those public records. Copyright records are vital to the mission of the Library of Congress and the Copyright Office and they are important to the public and the copyright industries that are a significant part of the global economy. The pre-1978 records document the ownership and copyright status of millions of creative works. Loss of these sole-copy public records due to a site disaster would trigger a complex and expensive intellectual property ownership dilemma. Additionally, the unavailability of pre-1978 records online has been raised as a major issue in the study on the problem of “orphan works.”

During FY 2005, the Copyright Office, with the Library's Office of Strategic Initiatives, completed the Copyright Records Project study of the feasibility of digitizing millions of these paper records and developing technical approaches for integrating the resulting digital records with post-1977 digital records. The project team completed testing of vendor capabilities to digitize and index sample records. A comprehensive report of the project provided implementation strategies, cost estimates, and a recommendation for how the conversion could be handled in two stages.

The first stage would cost approximately $6,000,000 over a six-year period and would achieve the preservation goal and very basic online access. The second stage would add item level indexing, enhanced searching and retrieval, costing between $5,000,000 and $65,000,000 depending on the extent of fields indexed. The Copyright Office is requesting for FY 2007 the initial $1 million to begin the first stage.

Future Fee Increase

On November 13, 1997, Congress enacted the Technical Amendments Act, some provisions of which are now codified in 17 U.S.C. §708. The law requires the Register of Copyrights, whenever appropriate, to conduct a study of costs incurred by the Office for the registration of claims, the recordation of documents and other special services. On the basis of the study and public policy considerations and subject to congressional review, the Register is authorized to increase statutory and related fees to recover reasonable costs adjusted for inflation. Furthermore, the new fees should be fair and equitable and give due consideration to the objectives of the copyright system.

The last time the Copyright Office raised fees was July 2002. The basic filing fee was set in 1999 and has not increased since that time. Historically, a change in the charge for services usually causes a drop in customer demand in the fiscal year following the increase and then a gradual rise in demand over the next two years. The possibility for raising fees was considered in 2001-2002. Because the Office had just begun its reengineering project to implement electronic registrations, and that project was to have been completed in 2006, the fee increase was postponed to coincide with the implementation of the new electronic system. However, since the implementation date for the new system is now summer 2007, we believe that we should move forward with a change to fees now.

I have received fee recommendations based on a cost study developed by a task group. We will complete the required economic analysis and propose a schedule of fees to Congress in March 2006 to be effective July 1, 2006. The Office will publish a notice in the Federal Register to announce a proposed fee schedule. Based on a year's experience under the revised fee schedule and the new business processes, the Office expects to adjust the mix of net appropriation and offsetting collections authority in its FY 2008 BASIC budget submission to Congress.


Mr. Chairman, I ask you to support the FY 2007 Copyright Basic budget request for a permanent net decrease in offsetting collections for the BASIC appropriation and a one time $1 million increase in net appropriations for the Digital Imaging project.

Our FY 2007 budget will allow us to implement the final steps of our Reengineering Program. Once implemented, the Office plans to further reduce both its net appropriations and offsetting collections authority in the FY 2008 budget request as well as adjust the net appropriations and offsetting collections based on the implementation of new fees. We appreciate your continued support for the Reengineering Project that will transform the way we do business and meet the public's demand for electronic services.

I thank the Committee for its past support of the Copyright Office requests and for your consideration of this request in this challenging time of transition and progress.