Statement of Marybeth Peters
The Register of Copyrights
Subcommittee on Legislative Branch,
Committee on Appropriations
United States Senate
108th Congress, 1st Session
April 10, 2003
FY 2004 Budget Request
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity
to present the Copyright Office FY 2004 budget request. This budget provides
the resources for the Copyright Office to continue to play a leadership role
in addressing, with the Congress, the increasingly important and complex copyright
issues arising from the expanding use of digital technology and computer networks,
and to fulfill the statutory responsibilities given the Copyright Office in
our Nation’s copyright law.
In my testimony last year, I urged action on a $7.5
million supplemental appropriation request to offset a potential loss of receipts
due to the anthrax-related disruption of U.S. Postal Service mail delivery
on Capitol Hill. I begin my testimony this year by thanking the committee
for approving that request. This funding enabled us to maintain our basic
operations and ensured that we continued to meet public service requirements.
We are very grateful that the committee recognized the need for this funding
and acted so promptly to meet it.
The held mail began to arrive in late April and we
made a concerted effort to process it, and the fees it contained, as quickly
as possible. We met our goal of processing all of this held mail by September
30th. As a result, the Office only used $1,850,000 by the end of FY 2002,
and $5,650,000 of the supplemental funds remained available. The Office is
now, as directed by Congress, using the remaining supplemental funds for basic
operations in FY 2003. Our FY 2003 annual appropriation was reduced by the
same amount. A principal part of the FY 2004 request I put before you today
is to restore this $5,650,000 in base funding.
Our only program change request for FY 2004 is for
$2,100,000 in new net appropriations and spending authority to build integrated
information technology systems to support our reengineered Copyright Office
business processes. The Office is designing these IT systems to improve our
services to the public and to meet the demand for these services online. Copyright
Office online services can be a major source for the deposit of digital works
to the Library of Congress. The new net appropriation will be part of the
$4.61 million in FY 2004 spending for IT systems analysis, design, and development.
I will address our reengineering program in greater detail later in my testimony.
The Copyright Office Mission
The Office’s FY 2004 budget request supports
the Copyright Office’s mission to promote creativity by administering
and sustaining an effective national copyright system. The Office carries
out the following functions: (1) Administration of the United States
Copyright Law: It processes claims for copyright registration, documents
for recordation, and works deposited under the mandatory deposit provisions
of the law. It creates public records of these actions and provides copies
of deposited works for the Library’s collections. For more than 130
years, copyright deposits have been a primary source of works for the Library,
especially works by American authors. The Office also administers the law’s
compulsory licensing provisions, and convenes arbitration panels to determine
royalty rates, terms and conditions of licenses, and the disposition of royalties.
(2) Policy Assistance, Regulatory Activities, and Litigation:
The Office assists congressional committees in drafting and analyzing legislation
relating to intellectual property; carries out important regulatory activities
under the Digital Millennium Copyright Act; represents the U.S. Government
at international meetings and diplomatic copyright conferences; advises the
U.S. Trade Representative, the State Department, and the Commerce Department
on domestic and international copyright laws; and assists the Courts and the
Department of Justice in litigation involving copyright issues. (3) Public
Information and Education: The Copyright Office provides information
to the public about United States copyright and related laws and Copyright
Office practices and procedures, and conducts searches, which may be certified,
of the copyright records. The Office conducts outreach to inform the public
discussion of copyright issues.
Fiscal Year 2004 Budget Request Summary
For FY 2004, Offsetting Collections Authority remains
at the same level as FY 2003 — $23,321,000. This authority is based
on projected annual fee receipts of $21,500,000, and the use of $1,821,000
from the Copyright Office no-year account.
The Copyright Office no-year account balance totaled
$3,850,000 as of September 30, 2002. In the current fiscal year the Office
will use $1,821,000 from the no-year account to partially fund the ongoing
reengineering program. In FY 2004, the Office proposes to continue using no-year
account funds for the reengineering program: (1) $1,441,000 to partially fund
the IT improvements; and (2) $380,000 to implement other aspects of reengineering.
The use of the no-year funds will essentially deplete this account.
Review of Copyright Office Accomplishments and Future Plans
I would like to briefly highlight some of the Office’s current and
past work, and our plans for FY 2004.
Policy and Legal Responsibilities
The policy and regulatory work of the Copyright Office is largely dictated
by the Congress, through responsibilities it gives the Office directly in
the Copyright Act and through its setting of the legislative agenda in this
area. Digital technology brings both opportunities and problems to the use
of copyrighted works. Much is at stake in policy deliberations in this area
– both in economic terms and in advancing education and learning. As
such, our policy and regulatory work in this area is both increasingly technical
and often contentious. The proceeding we completed last year on setting rates
and terms for “webcasting” and the anticircumvention rulemaking
now underway are illustrative of this trend.
On the legislative front, we are pleased that the Technology, Education
and Copyright Harmonization (TEACH) Act was signed into law last year. The
TEACH Act promotes digital distance education by implementing the recommendations
made in my May 1999 report to Congress titled “Report on Copyright and
Digital Distance Education.” At the request of the Senate Judiciary
Committee, the Copyright Office played a key role in bringing about the compromise
reflected in the legislation by facilitating negotiations between the affected
We also worked closely with the Judiciary Committees of both houses on the
issues raised by two 1999 rulings in which the Supreme Court determined that
the doctrine of sovereign immunity prevents states from being held liable
for damages for violations of the federal intellectual property laws even
though states enjoy the full protection of those laws. Under current law,
copyright owners are unable to obtain monetary relief under the copyright
law against a state, state entity, or state employee unless the state waives
its immunity. I testified on February 27, 2002, in support of S.1611. At the
request of the Judiciary Committees, the Office moderated negotiations between
intellectual property owners and public universities over the proposed legislation,
convening a series of meetings over a period of several weeks. Through this
process, the affected parties were able to reach tentative agreement on some
In a similar manner, over the past year we have advised Members and staff
on important issues such as piracy in peer-to-peer networks and the protection
of authentication measures affixed to or embedded in certain copyrighted works.
Congress is also continuing to study options for reform of the copyright
arbitration royalty panel (CARP) system which the Office administers. CARPs
are temporary panels composed of hired arbitrators who set or adjust royalty
rates and terms of statutory licenses, and determine royalty distributions.
These panels have been operating under the auspices of the Copyright Office
and the Library of Congress since Congress eliminated the Copyright Royalty
Tribunal (CRT) in 1993.
I testified at a June 13 hearing before the House Subcommittee on Courts,
the Internet, and Intellectual Property to consider how effective the CARP
process has been thus far and ways in which it can be improved. In that testimony,
I reviewed the findings of a report on CARP reform that the Office had prepared
in 1998 at the request of the Subcommittee, and I commented on the need to
reform the CARP process. The Subcommittee held another hearing on this topic
this month, and I provided testimony then as well. I would note that changes
in the arbitration system could result in functions that are now funded from
royalty pools being funded from appropriations. If reform legislation is enacted
this session with new requirements, our FY 2004 request would need to be adjusted
As I mentioned, this past year we completed what was perhaps the most widely-noticed,
and one of the most controversial, CARP proceedings the Office has ever undertaken.
It involved setting rates and terms of payment for two statutory licenses
that allow for the public performance of a sound recording by means of digital
audio transmissions, “webcasting”, and the making of ephemeral
recordings in furtherance of these transmissions. Under CARP procedures, the
panel proposes rates and terms and I make a recommendation to the Librarian
on whether to accept these proposals, or to reject them if they are arbitrary
or contrary to law. The Librarian, in a June 20 order, accepted my recommendation
to halve the CARP-proposed rates applicable to Internet-only transmissions
made by webcasters and commercial broadcasters, while accepting the CARP-proposed
rates for Internet retransmissions of radio broadcasts made by these same
Later in the year, Congress passed into law the Small Webcaster Settlement
Act. This Act declares that all payments to be made by non-commercial webcasters
during the period of October 28, 1998 until May 31, 2003, which have not already
been paid, shall not be due until June 20, 2003. With respect to small webcasters,
SoundExchange was authorized to negotiate agreements with small webcasters;
such agreements would cover the period from October 28, 1998 through December
31, 2004. Once the terms of such agreements were published by the Copyright
Office in the Federal Register, they would be effective. The law required
that the royalty payments in these agreements be based on a percentage of
revenue or expenses, or both, and include a minimum fee. These terms would
apply in lieu of the decision by the Librarian. To encourage agreements, payments
of small webcasters would be delayed up to December 15, 2002, the date for
any agreements to be concluded. An agreement was concluded on December 13
and published by the Office in the Federal Register of December 24, 2002.
The section 1201 anticircumvention rulemaking we are currently conducting
is mandated by the Digital Millennium Copyright Act, which provides that the
Librarian may exempt certain classes of works from the prohibition against
circumvention of technological measures that control access to copyrighted
works. The purpose of this proceeding is to determine whether there are particular
classes of works as to which users are, or are likely to be, adversely affected
in their ability to make noninfringing uses due to the prohibition on circumvention
of access controls. The first anticircumvention rulemaking under the DMCA
was completed in October 2000. The current rulemaking will conclude this October.
The Copyright Office continues to provide ongoing assistance to executive
branch agencies on international matters, particularly the United States Trade
Representative (USTR), the Patent and Trademark Office (PTO), and the Departments
of State and Commerce. There is a full agenda of international intellectual
property issues in international fora, such as those presented in free trade
agreements, and bilateral negotiations.
Copyright Office staff were part of the U.S. delegation in the May 13-17,
2002, and November 4-8, 2002 meetings of the World Intellectual Property Organization
(WIPO) Standing Committee on Copyright and Related Rights, which is considering
among other things, a possible treaty on the protection of broadcasting organizations.
In cooperation with the PTO, staff prepared a proposed treaty text that became
the U.S. proposal and which differed in its scope from the proposals of others
because of its inclusion of certain activities of webcasters.
Staff served as part of the U.S. delegation in the World Trade Organization
(WTO) Council on TRIPS (trade-related aspects of intellectual property rights),
which met in November 2001 and March, June, and September 2002. The TRIPS
Council is responsible for monitoring the operation of the TRIPS Agreement,
and, in particular, how members comply with their obligations under it. The
Council reviews the intellectual property laws of member countries for compliance
with TRIPS obligations.
Copyright Office staff were members of the U.S. delegation to the November
2001 and September 2002 meetings of the Intellectual Property Negotiating
Group of the Free Trade Area of the Americas and were instrumental in preparations,
including the redrafting of U.S. treaty proposals. We also participated in
the drafting and negotiation of the intellectual property provisions of bilateral
Free Trade Agreements with Chile and Singapore, including the drafting of
proposed text, and have also taken part in preliminary discussions concerning
a possible bilateral agreement with Morocco and multilateral agreements with
groups of nations in Central America and southern Africa.
As part of its responsibility to provide information and assistance to federal
departments and agencies and the Judiciary on copyright matters, the Copyright
Office has assisted the Department of Justice in a number of cases, most notably
in defending the challenge to the Copyright Term Extension Act (CTEA), resulting
in the recent decision by the Supreme Court in Eldred v. Ashcroft upholding
Registration, Recordation and Cataloging Operations
The Copyright Office registered and cataloged more than one half million
claims for copyrighted works during FY 2002, despite the effects of anthrax
incidents on Capitol Hill mail and the subsequent postal disruption which
hampered the flow of claims into the Office. The Office received 526,138 claims
to copyright covering more than 800,000 works and registered 521,041 claims.
The Cataloging Division received 520,752 registrations in FY 2002 and created
cataloging records for 578,658. The Division reduced the amount of registrations
awaiting cataloging from 183,204 to 78,379, a decrease of 57 percent.
The Documents Recordation Section received 12,600 documents for recordation
and cleared 10,506, covering nearly 218,000 titles of works.
During the fiscal year, the Copyright Office transferred to the Library
of Congress for its collections 896,504 copies of registered and unregistered
works valued at $31,302,048.
During FY 2002, the Copyright Office administered eight CARP proceedings
that included five rate adjustment proceedings and three distribution proceedings.
Of the five rate adjustment proceedings, four involved setting rates and terms
for the section 114 digital performance right in sound recordings, and the
section 112 statutory license for the making of ephemeral recordings to facilitate
these transmissions. The fifth proceeding involved setting rates and terms
for the section 118 statutory license for the use of certain copyrighted works
in connection with noncommercial broadcasting.
The Copyright Office administers the compulsory licenses and a statutory
obligation under title 17. 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 FY 2002, the Office distributed
approximately $110 million to copyright owners. The Division deducts its full
operating costs from the royalty fees and invests the balance in interest-bearing
securities with the U. S. Treasury.
Copyright education is a particularly important aspect of our work, as more
and more people implicate copyright laws in their daily online activities.
The Copyright Office responds to public requests for information in person,
through its website, and via email, telephone, and correspondence. It also
engages in outreach programs to educate the public about copyright issues.
In FY 2002, the Office as a whole responded to 358,604 requests for direct
reference services, including 57,263 email inquiries, of which some 10,000
were on the issue of webcasting.
The Public Information Section assisted 25,005 members of the public in
person, taking in 17,644 registration applications and 2,884 documents for
recordation. The Section answered 123,106 telephone inquiries, 10,783 letter
requests, and 31,681email requests for information from the public, representing
an over 100 percent increase in the use of email communications. This increase
in electronic mail requests is partly a result of the public using an alternative
means of communication during the mail disruption and website modifications
that made it easier to contact the Office by email.
The Copyright Office website continued to play a key role in disseminating
information to the copyright community and the general public, with 13 million
hits on key pages during the year, an 8 percent increase over the prior year.
Over the past three years, we have been undergoing intensive planning and
design to improve each of the public services I have just described. The Office’s
Reengineering Program will reshape the delivery of our public services. We
are very grateful for the support this Committee has given this important
The program is progressing along four fronts: process, organization, facilities,
and information technology. All of these areas are linked to each other and
have to proceed together. We are making good progress and our request for
FY 2004 will allow us to maintain this momentum. Our goal is to complete implementation
of our new processes and IT systems in FY 2005.
This budget requests $2,100,000 to support the development of integrated
information technology systems for our reengineered public services. This
request will augment the $2,500,000 to be obtained from the Office’s
base budget. The entire reengineering program depends on the development and
implementation of new information technology systems. So many of the efficiencies
we will gain will be from using new and better technology, and having all
our systems integrated rather than working through numerous stand-alone systems
as we do now.
Our FY 2004 request, and our information technology work as a whole, is based
on careful planning that has been done over the past two years. We have completed
an extensive study and planning effort to design business processes which
improve the delivery of our public services and allow the public to secure
these services online to the maximum extent possible. Once we developed processes
that we believe will enable us to best serve the public, we completed an IT
requirements analysis, which identified logical systems components and potential
software packages. This year we plan to award a contract, through a government-wide
agency contract (GWAC), to begin the work of building integrated information
The $2.1 million in new net appropriations will be part of an overall $4.61
million budget for this IT systems development work.
We expect this will be a busy Congressional session addressing copyright
matters; we will continue our close collaboration with the committees and
individual Members on these often complex and wide-reaching issues. As we
continue to fulfill the responsibilities given us under the copyright law,
including making over one half million registrations each year, we are also
intent on maintaining the progress of our Reengineering Program to improve
these services. Our FY 2004 request permits us to meet these challenges.