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HomepageINTRODUCTION: BSA supports the approach of H.R. 2441, the þNII Protection Act of 1995, as it addresses the challenge at hand in a measured and sensible way. That challenge is to ensure that the economic rewards of network-based distribution of copyrighted works accrue to all persons -- both the authors creating such works, as well as the intended audiences.
DISPELLING MYTHS: We have heard stories that copyright is an outdated form of protection for intangible property. This argument assumes that in a networking environment, property has no place. Thus, at best this legislation allegedly is an outdated irrelevance. This is simply absurd. Others have argued that if this legislation is enacted, the NII will be strangled in its infancy. It will allegedly suffer this fate because users will be precluded from reaping its benefits as property rights are asserted in the very content which these users seek to enjoy. Businesses depend on customers. To say that businesses will actively work to drive away their customers is simply in accurate.
THE FACTS: Today, the copyright law does face challenges. This is not a new phenomenon. Our copyright system has evolved over time. The copyright system is characterized by principles designed to foster innovation and promote competition; it is well-suited to computer software, and well suited to the NII.
APPLICABLE PRINCIPLES: We believe Congress should apply the following seven principles when judging the merits of H.R. 2441 and proposed amendments:
þ Overall, copyright protection should be maintained at least at present levels;
þ Changes to the copyright law should not be undertaken hastily, and then only to plug gaps found to exist in the current scheme of protection;
þ The author or other right holder of a digital work should have the exclusive right to distribute, reproduce and modify the work;
þ The author should have the exclusive right to upload, transmit, access, and download the work electronically;
þ Right holders should retain the ultimate decision to determine whether to license their works and enforce their rights collectively or individually;
þ Unauthorized access to information databases and content through the information infrastructure should be a crime; and
þ Compulsory licensing of any intellectual property right should be avoided.
H.R. 2441: The attached statement provides detailed comments and suggestions regarding H.R. 2441. In brief, BSA believes it is appropriate to amend the copyright law to specifically state that þtransmissionsþ are covered acts. Regarding copyright protection systems and copyright management information, a key judgment underlying H.R. 2441 is that electronic dissemination of works in digital form will make them more vulnerable to unauthorized copying. We agree fully with this assessment. Specifically, H.R. 2441 proposes to make it unlawful to defeat or circumvent both copyright management information and copyright protection systems. This is a sound provision.
BSAþs written submission also addresses ongoing discussions regarding liability of on line service providers, the critical need for security on the GII, and our concerns about proposed modifications to Section 107.
INTERNATIONAL IMPLICATIONS: Decisions by United States Congress in formulating copyright policy in this area will have a major impact internationally. We would urge Members of Congress to keep in mind the precedents being set both domestically and internationally as Congress considers this legislation.
CONCLUSION: The copyright law is strong and well- established, and has proved flexible enough to deal with new developments as they have arisen. We support the approach of H.R. 2441 because it clearly and firmly establishes the principle that copyright law is alive and well, and fully applicable in digital and electronic networking environments.
Introduction
Mr. Chairman, thank you for the opportunity to appear before the Subcommittee today. My name is Robert Holleyman. I am the President of Business Software Alliance (BSA). On behalf of the leading US software publishers, BSA conducts public policy, education and enforcement programs in more than 60 countries. BSAþs Policy Council includes: Adobe Systems, Inc., Apple Computers, Inc., Autodesk, Inc., Bentley Systems, Inc., Computer Associates International, Inc., Digital Equipment Corporation, Intel Corporation, International Business Machines Corporation, Lotus Development Corporation, Microsoft Corporation, Novell, Inc., The Santa Cruz Operation, Inc. Sybase, Inc. and Symantec Corporation.
I appear before you today in support of congressional action to ensure that our copyright law continues to provide the needed incentives to authors and other creative Americans to take into account todayþs rapidly changing technological advances.
I commend Chairman Moorhead, and Representatives Schroeder and Coble, for introducing H.R. 2441, the þNII Protection Act of 1995.þ This important piece of legislation approaches the challenge at hand in a measured and sensible way. That challenge, simply put, is to ensure that the economic rewards of network-based distribution of copyrighted works accrue to all persons -- both the authors creating such works, as well as their intended audiences and customers.
Before presenting the views of the American software industry, I would like to dispel some myths. Since the introduction of this legislation, it has been subject to unsupported and undue attacks. We have heard stories that copyright is an outdated form of protection for intangible property, and that it has outlived its usefulness. This argument assumes that in a networking environment, property has no place. Thus, at best, this legislation is an outdated irrelevance. This is simply absurd.
Others have argued that this legislation constitutes an unabashed grab for property rights in the now evolving world of cyberspace. If this legislation is enacted, it is argue, the power, purpose and promise of the NII will be strangled in its infancy, never to fulfill its potential. It will allegedly suffer this fate because customers and users will be precluded from reaping its benefits as property rights are asserted in the very content which these users seek to enjoy. This too is absurd. Businesses depend on customers. If no one purchases our products, there is no business. To say that businesses will actively work to drive away their customers is irrational and detached from reality.
Now for some facts. Today, worldwide, over forty million people use the Internet and other similar systems in the course of their daily lives. We use local networks in the office, and wide area networks at home and in schools. Because of advances in modem technology, we can now communicate more than ten times faster than just five years ago. Because of improvements in screen resolution, we now see better and sharper graphics. And, advances in software technologies now enable us to work collaboratively with colleagues across the hall as easily as across oceans. Also, these networks are being used to transact an increasingly varied universe of activity: from banking to home shopping, from researching a school project to corresponding with friends and family.
All of this has happened under the current copyright law, which, far from an impediment, is in fact an incentive for new investment and product development.
But the law also faces challenges.
This is not a new phenomenon for copyright law. Our copyright system has evolved over time through legislative and judicial action. It has progressively embraced and nurtured new forms of creative expression. The copyright system is characterized by principles designed to foster innovation and promote competition; it is well-suited to computer software, and well suited to the NII.
The vibrant, working copyright law embraces not only novels, plays, poetry, paintings, sculpture and music, but also has long been the principal source of legal protection for a wide range of works, whether expressed in words, numbers, symbols, images, or electro-magnetic polarities and pulses. The very first Copyright Act, enacted in 1790, protected þmaps, charts and booksþ (charts were nautical maps), thus emphasizing the First Congressþ recognition of the importance of copyright as an incentive to the production of highly practical, usefully employed intellectual effort.
Congress and the courts have regularly and consistently confirmed copyright as the vehicle to promote experimentation and creation in new media, as they did through the 19th and 20th centuries in extending protection, for example, to photographs, motion pictures and sound recordings. They recognize that þ given the opportunity, talent and protective legal environment þ risk-taking and consumer preferences will do the rest. In 1976, when Congress made clear its intention to embrace computer programs within the protection of the Copyright Act, it simply carried on a long and productive tradition of confirming the reach of copyright to new forms of creative expression.
It is within this context that we believe H.R. 2441 should be weighed and considered. Todayþs challenges posed by technology to authors and other innovators is this: consumers are increasingly demanding and using works and information disseminated in digital form by electronic means. This trend is certain to accelerate in the future. But works in digital form are far more vulnerable to copying than works distributed in traditional printed or other forms. This is not a new development for the software industry: we have always sold our products in digital form. Piracy has been a constant by-product. We estimate that worldwide losses to pirates to exceed $15 billion every year. The only tool we have to fight against this theft is to assert our copyright-based property rights. Over time, our losses will inevitably mount, unless the copyright law remains available to fight these pirates.
H.R. 2441-- In Context
In general, our industry measures any proposed change to copyright law by certain rules of thumb. Applying these in the NII context, we believe that the principles Congress should weigh in judging the merits of H.R. 2441, and amendments proposed to it, are:
o Copyright protection should be maintained at least at present levels.
þ Changes to the copyright law should not be undertaken hastily, and then only to plug gaps found to exist in the current scheme of protection.
þ The author or other right holder of a digital work should have the exclusive right to distribute, reproduce and modify the work.
þ The author should have the exclusive right to upload, transmit, access, and download the work electronically.
þ Right holders should retain the ultimate decision to determine whether to license their works and enforce their rights collectively or individually.
þ Unauthorized access to information databases and content through the information infrastructure should be a crime.
And,
þ Compulsory licensing of any intellectual property right should be avoided.
Specific Provisions of H.R. 2441
Transmission Rights
The BSA believes it is appropriate to amend the copyright law to specifically state that þtransmissionsþ are covered acts for two reasons. First, electronic distribution poses a heightened threat of further unauthorized copying and distribution of the work. Second, while it is quite likely that courts would interpret Section 106 distribution rights to also cover transmissions, stating this matter explicitly would remove doubt. Such an amendment would reaffirm that copyright law is fully applicable in the context of electronic delivery of works, and that the basic rights guaranteed by the law apply undiminished.
The BSA also supports the conforming changes to Section 101 þ clarifying the definitions of þtransmitþ and þpublicationþ þ and Section 602 þ clarifying the application of the importation right. In general, we support these changes because they again reaffirm the principle that copyright law is fully applicable to distribution systems which utilize electronic networks to deliver works in digital form.
We would like to make certain observations in respect to each proposed change.
The legal act of þpublicationþ has implications for the deposit and registration requirements of the law. The software industry has a long history of registering and depositing works in compliance with these requirements. We believe Congress should make it clear that it does not intend these changes in law to impose a different burden on authors of software than those implemented under current Copyright Office practice. Further, we do not believe that the H.R. 2441 and proposed amendments should cause any change to this practice.
The conforming amendment to the definition of þtransmitþ in Section 101 is necessary to ensure consistency among the various provisions of the law. Under current law, generally only performances and displays are covered by the term þtransmit.þ Technological developments have now made it possible to transmit works that are not just performed or displayed. We believe that this change would make it clear that the mere choice of the means by which the work is made available to the consumer does not determine the implicated rights: that is, that the reproduction right may be implicated as well as the public performance and display rights. Moreover, given these technological developments, several of the authorþs economic rights in the work are affected by electronic transactions whereby the work is made available, regardless of the specific means utilized. Thus, it is beneficial for the law to explicitly recognize that just because the transaction has not taken place face-to-face over a counter in a shop, that mere fact does not in anyway alter or diminish the authors interests in the reproduction right. Thus, we support clarifying that the law covers transactions even where a tangible fixation is not immediately and easily identifiable.
Finally, the right of importation is critically important to the software industry. We believe that the ability to determine the terms and conditions on which a work is made available in a particular market should be a matter of business strategy. The U.S. copyright law has long recognized this principle. Historically, works have been traded and transported across borders in tangible form. Technology is now making it possible to conduct international commerce in software across borders by the use of electronic communications systems. This change in technology, while it has important commercial implications, does not alter the authors economic interests in the work, nor does it alter the calculus which prompted Congress to make the right of importation part of the authors bundle of rights.
Overall, we believe these proposed changes are appropriate and sound: to state clearly in the law that the distribution right applies fully to works made available via transmissions, including when such works are imported. Consistent with these changes, we would support including in the legislative history of the bill an affirmation that copyright law granted rights may be implicated in a transaction whether the work is transferred in tangible or intangible form; and that the mere choice among alternative means of making the work available þ retail sales, rental or by electronic transmissions þ shall not be dispositive in determining the grant of the rights enumerated in subsections (1) to (5).
Library Exception
H. R. 2441 would amend the þlibrary exceptionþ contained in Section 108 in two ways: by inserting the term þdigital;þ and, by permitting libraries to make up to three digital copies of a work for purposes of preservation and replacement. Originally, Section 108 was intended to cover only microfilm of electrostatic copies of works. The House Report on the 1976 amendments to the Act made it clear that the exemption does not apply to works in machine-readable form. The H.R. 2441 proposed amendment would change this situation.
Recognizing the important public purpose served by libraries, we support ensuring they can continue to perform their important service. We have certain reservations. We fear that unless uses of such digital copies are appropriately limited, copies of works may be made available by libraries to the general public in ways which could undermine actual or developing markets. Thus, we would support further clarification of the proposed changes to state explicitly the ways in which libraries may use copies made pursuant to Section 108. In addition, we understand that the proposed change to permit the making of three copies of the work (only one copy is now permitted), is a function of the current methods libraries use to preserve works. If this change were adopted, we would urge you to permit this increased number of copies only in respect of preservation activities contemplated under Section 108.
Visually Impaired
The American software industry strongly supports the development of special products and services to meet the needs of persons with disabilities of any kind, including the visually impaired. Software generally, and word processing products with scalable fonts in particular, can make textbooks, magazines and other similar products instantly available to visually impaired persons in forms which are more accessible to them. We have certain reservations with the specific drafting of this provision. The bill proposes to permit the reproduction of literary works generally in forms accessible to the visually impaired one year after the work has been first marketed, if the publisher has not issued such a special edition. It is our understanding that certain textbooks and other similar published materials are the principal works at issue. Yet the language is written broadly, to effectively grant a limited purpose non-voluntary license in respect to all classes of works. We understand that representatives of persons with disabilities and content providers are now working on developing a more specifically articulated objective for this provision. We support these efforts, and encourage you to facilitate them.
Copyright Protection Systems and Copyright Management Information
A key judgment underlying H.R. 2441 is that electronic dissemination of works in digital form will make them more vulnerable to unauthorized copying. We agree fully with this assessment. To address this increased threat, the bill correctly surmises that authors will make increased use of both anti-copying technologies, as well as þidentifiersþ -- such as þelectronic envelopesþ containing the name of the copyright owner and the terms and conditions for licensing the work.
Specifically, H.R. 2441 proposes to make it unlawful to defeat or circumvent both copyright management information and copyright protection systems. This is a sound provision which recognizes that if authors seek to protect themselves against theft by applying technological measures, the unscrupulous will seek ways around such measures.
1. Copyright Protection Systems
H.R. 2441 would establish a þprimary purposeþ test for determining whether a particular device falls within the scope of those prohibited by the bill. This provisionþs soundness has been questioned because it is conceivable that a device may have a number of alternative uses þ both legitimate and unlawful. We recognize this fact, but it appears to us that US courts will understand that this provision, or a broader based one, is to be used to enforce the copyright law and fight against piracy.
BSA has a long history of conducting anti-piracy work both domestically and internationally. In litigating against pirates, we have often heard them rationalize their piracy by arguing that while they may have copied the software at issue, their real reason for doing it was for some other þlegitimateþ purpose excused by the law. This is the type of activity the provision attempts to address.
Our anti-piracy litigation experience does suggest a modification to H.R. 2441. The bill now prohibits certain acts, namely þimportation, manufacture or distributionþ of any anti-circumvention device. We believe that the law would be a more effective tool against pirates if it were to also prohibit the þuseþ of such devices. In our litigation, we have learned that establishing liability can be hard unless persons are legally liable for using such devices for illicit purposes.
Some persons have raised concerns that these provisions may be used to prevent the making of copies of works for legitimate purposes. This was addressed in the White Paper: þIt has been suggested that the prohibition is incompatible with fair use. First, the fair use doctrine does not require a copyright owner to allow or to facilitate unauthorized access or use of a work....Second, if the circumvention device is primarily intended and used for legal purposes, such as fair use, the device would not violate the provision because a device with such purposes and effects would fall under the þauthorized by lawþ exemption.þ (Intellectual Property and the National Information Infrastructure, The Report of the Working Group on Intellectual Property Rights, 231.)
As we understand it, H.R. 2441 establishes no obligation on the part of Right holders to install anti-copying and copyright management systems. We agree fully, and believe that whether or not to use systems should be a matter of voluntary choice by the right holder. The software industry has used copy-guard systems for sometime. Our decisions to implement such systems have varied over product lines and over time. These decisions have been based on a combination of factors: the devicesþ relative effectiveness; consumer acceptance; and cost factors. We believe that in the future we should remain free to make these choices on a case-by-case basis. Thus, we believe the legislative history of the bill should make it clear that implementation of these measures within a particular copy of a work is a matter of choice for the right holder.
2. Copyright Management Information
We support the provisions of H.R. 2441 on copyright management information. This information can take many forms, and generally would include the name of the copyright owner and the terms and conditions for obtaining licenses to the work. We believe that wide use of such identifiers will promote dissemination of works, as well as reduce transaction costs.
We also support the approach of the bill in that it does not require copyright owners to implement copyright management information, rather it makes it illegal to remove, alter or falsify such information when it is included.
Finally, with respect to both copyright protection systems and copyright management systems, we support the billþs approach in that it does not establish standard technologies and formats which these measures must take. Technology in these areas is developing rapidly. To establish a specific standard or format at this time would fossilize existing systems, and cause us to lose the benefit of future innovation. Thus we fully support the approach which would leave the marketplace to develop the particular systems used.
3. Other Issues
Although not specifically addressed in H.R. 2441, I would like to comment briefly on four additional important issues and considerations. First, the fair use provision codified in Section 107 of the copyright law is a well established doctrine, which has proven to be flexible and adaptable to a variety of types of works in a multiplicity of circumstances. We believe that the doctrine and the balancing of interests it safeguards, can be applied as currently written and interpreted to digital environments. For these reasons we do not believe it to be necessary to modify the Section 107.
Second, the issue of copyright liability of on-line service providers has been in the news in recent months as a consequence of a number of court decisions. BSA is participating actively in on-going discussions among a broad ranging group of interested parties to find a viable solution to this issue.
Third, mentioned in the White Paper but not specifically addressed by H.R. 2441, is the fact that security is a critical component to the success of the GII. The White Paper recognizes that þ[t]he NII has the potential to be a robust and widely used medium for the creation, dissemination and use of information-based products and services. To realize this goal, the technological and security needs of users, service providers, carriers and content providers must be addressed.þ (Intellectual Property and the National Information Infrastructure, The Report of the Working Group on Intellectual Property Rights, 177.) Currently, U.S. export laws prohibit U.S. software companies from offering strong security features worldwide. This places the U.S. industry at a competitive disadvantage. This situation must be addressed immediately in order to ensure the success of the GII.
Finally, a brief word about international implications. Our industry is a major exporter. Over 50 percent of our total sales occur outside the United States. This trend is certain to continue. Moreover, political national boundaries diminish substantially in their importance in the context of network-based distribution of works. Decisions by the United States Congress in formulating copyright policy in this area has a major impact on the international scene given our role as the major producer of both the technology and the content which will constitute global information networks. For these reasons, we applaud the efforts of the United States to modernize the Berne Convention, and to place squarely on the agenda of those negotiations the very issues addressed by H.R. 2441. As you proceed with your consideration of this bill, we would urge you to keep in mind the precedents you will be setting both domestically and internationally.
CONCLUSION
The copyright law is strong and well-established, and has proved flexible enough to deal with new developments as they have arisen. Software developers and other content providers take comfort in the fact that their works are protected under these clear, established rules, and therefore continue to invest in development of new and innovative works which will benefit the information infrastructure. We support the approach of H.R. 2441 because it clearly and firmly establishes the principle that copyright law is alive and well, and fully applicable in digital and electronic networking environments.
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