Chairman Moorhead and Members of the Subcommittee:
I am Chairman of the Home Recording Rights Coalition (HRRC) and President of the Consumer Electronics Manufacturers Association (CEMA). Thank you for inviting me today to present the views of the HRRC on H.R. 2441.
CEMA is a sector of the Electronic Industries Association (EIA). EIA includes in its membership the leading manufacturers of electronics origination, transmission, interface, and display devices. CEMA represents manufacturers of television and stereo receivers, video and audio recorders and players, personal computers, multimedia devices, and hundreds of other consumer electronics products. Our members represent about 250,000 U.S. manufacturing jobs and about $64 billion in annual sales. As the trade association for the consumer electronics industry, CEMA is critically interested in the potential consequences of this legislation for manufacturers, sellers, and users of these products.
The HRRC was formed in 1981, after the U.S. Court of Appeals for the Ninth Circuit issued a ruling in the Sony Betamax litigation -- later reversed by the Supreme Court -- that would have restricted consumers' fair use rights to record at home and could have prohibited the sales of VCRs to consumers. HRRC includes consumer electronics manufacturers and retailers, consumer organizations, service associations, and others interested in the personal, non-profit use of consumer electronics recording equipment.
HRRC, since its inception, has expressed concern over any legislation that would restrict the rights of consumers to make recordings at home for private, noncommercial purposes. We have evaluated such legislation by asking three simple questions: does it advance technology and consumer access to new technologies? Will it clarify or muddy legal interpretations of consumers' rights? And, most important, does it consider the customary and reasonable recording, viewing and listening practices of law-abiding citizens and their families?
Because H.R. 2441 does not come close to passing these tests, we oppose it in its present form. We generally join in the criticisms that have been expressed by other witnesses over this bill's implications for restricting consumers' ability to make lawful fair use of copyrighted materials. From our specific perspective of caring about technical progress, legal clarity, and fairness to consumers with respect to home recording, however, I want to concentrate on the implications of Section 1201 -- the so-called "circumvention" provision.
First, I want to emphasize that HRRC does not automatically oppose legislation just because it limits consumer home recording in some way. In the 102nd Congress, HRRC supported the enactment of the Audio Home Recording Act of 1992 (AHRA), which restricted the use of digital audio recorders, but in a balanced fashion also provided an exemption from copyright suit for certain recorders and consumer recording practices. In the same Congress we also opposed the so-called "Motion Picture Anti-Piracy Act," on which Section 1201 of H.R. 2441 seems very closely modeled. We argued that this legislation was unduly broad, lacked any recognition of fair use, and would create technical and legal uncertainty, rather than certainty. We were pleased that it never got past the hearing stage.
Unfortunately, we have the same criticisms of Section 1201. We are fundamentally concerned over any legal restriction on "circumvention devices" that lacks any definition of, or even any reference to, a specific technical standard as to what anti-copy technology must be adhered to as a matter of law.
Section 1201 would prevent the sale of any device or product or component incorporated into a device or product whose "primary purpose or effect" is to avoid or bypass any anticopy technology. It is potentially radical because it would effectively reverse the Supreme Court's 1984 holdings in the Betamax case that consumers have a right to private, noncommercial home recording, and that it is legal for consumers to buy a recording product so long as it has any commercially significant non-infringing purpose. This holding is the magna carta that has secured the right of consumers to buy VCRs. It created a market that has been beneficial for everyone.
The Administration's proposal cannot be easily fixed; its problem is generic -- it purports to outlaw "circumvention" while not attempting to define that which is protected. This broad, non-specific approach makes it simply impossible to protect the rights of consumers to continue to make legal, fair use recordings at home for private, noncommercial purposes.
HRRC supported the Audio Home Recording Act because it protected customary fair use rights by defining and limiting the circumstances in which encoding that restricted recording could be applied. It contained an express exemption from suit for conforming products, and it defined what a product had to do, or not do, to conform, through a technical standard against which compliance could be measured.
Before adopting the Audio Home Recording Act, this Subcommittee and the Congress made sure that the technical encoding systems to which digital recording devices would be required to respond would operate without degrading the quality of either transmissions or lawful copies. You assured yourselves that the design demands would be reasonable, and the manufacturing expense for compliance would be minimal. And, you inquired into the licensing status of the anticopy technology, so that those obliged to conform would not be at the mercy of those who control technology with which conformance is mandated. The Audio Home Recording Act assured compatibility with existing and future technologies, and compatibility among technologies that could be used to limit recording.
H.R. 2441 contains none of these attributes that promote legal certainty, technical progress, and fairness to consumers. The Administration proposes neither any specific and tested technology nor any limitation, to protect consumers, on its use. Instead, Section 1201 contains a one-sided and fundamentally ambiguous proscription: it simply bans any product or service whose "primary purpose or effect ... is to avoid, bypass, remove, deactivate, or otherwise circumvent ... any process, treatment, mechanism or system which prevents or inhibits the violation of any of the exclusive rights of a copyright owner ...." As Soupy Sales used to say, "What do we mean by this?"
Does this apply only -- as the White Paper suggests -- to "black boxes" clearly designed to defeat particular copy protection signals? If so, it fails to define either what a "copy protection system" is or what a "black box" is, or when the use of such a device may be lawful and appropriate. So a "box" or even a circuit designed to enable fair use recording, clear up a noisy picture, or work with one type of copy protection could be banned if it fails to respond to all types of copy protection. If a consumer needs such a device to make fair use recordings, as defined by the Supreme Court, how can he or she lawfully obtain one?
Moreover, Mr. Chairman, how can one distinguish between a circuit design in a "black box" and the identical circuit -- or lack of a circuit -- in a VCR or a computer? If the circuit in question is included in a consumer model VCR or computer, or if the VCR or computer lacks a circuity necessary to comply with a particular anticopy encoding, is the whole VCR or computer now considered illegal? Mr. Chairman, as a lawyer I suppose I ought to relish this sort of legislation, but as a trade association executive who believes in avoiding unnecessary litigation, I cannot. And having been part of the home recording debate since 1981, I see no reason to take away consumers' fair use rights now, when consumer interest in home recording and VCRs has been shown so clearly to have been of such enormous obvious benefit in spurring the production of motion pictures.
The basic problem with H.R. 2441 is that it would outlaw the "circumvention" of something without defining what is to be protected. The result is a potential Catch-22 that would haunt any recording device, the retailers who would sell them, and the consumers who would buy them. We called this problem to the attention to the Administration, and it did respond, on page 232 of the White Paper, with the assurance that "[t]he proposed amendment would impose no requirement on manufacturers to accommodate any protection systems, such as those required in [the AHRA]." This apparently was included to provide some comfort, but two problems remain: First, this limitation -- to the extent it would immunize certain manufacturers from suit for violation of this provision -- does not appear in the legislation that is before this Subcommittee. Second, even within the terms of the Administration White Paper, "manufacturer" is nowhere defined. No effort is made to draw the line between a maker of a "black box," which indeed must be manufactured, and the sort of computer accessory, VCR accessory, or VCR "manufacturer" to whom, presumably, the Administration was trying to give reassurance.
Mr. Chairman, with due respect to the Administration, which has tried very hard to address the concerns we have raised, the HRRC believes there is only one workable approach to governing devices as to consumer recording practices:
þ Define the copy protection technology you wish to protect against circumvention, and assure that products implementing this technology, and the consumers who use it, will not face suit under the Copyright Act;
þ Make sure that the implementation of such technology is economical and does not harm program content, and that rights to it are available on reasonable terms to both device manufacturers and copyright proprietors;
þ Most importantly, define when and how copyright proprietors can and cannot use anticopy encoding, to protect the customary and reasonable fair use rights of consumers; and
þ Then, and only then, prohibit the circumvention of the copy prevention technology that passes these tests.
In the White Paper, the Administration recognized in note 568 that the approach I have outlined is the right approach for audiovisual recording devices. It encouraged the consumer electronics and motion picture industries to pursue it. This we have been doing, at the request of congressional leaders, with mutual good faith and determination. I hope we can come forward with a proposal very soon.
In the meantime, Mr. Chairman, with all respect I must say that H.R. 2441 is not the right approach, at least for consumer electronics devices that consumers use to record entertainment programming for private, noncommercial purposes. These devices have been a boon to consumers and have created, for the motion picture industry, the largest market it has ever known. To forget about protecting consumer rights, and to introduce uncertainty, ambiguity, and unintended consequences to this market through the application of this overly broad and unclear provision would be a mistake.
I want to assure you, Mr. Chairman, of the HRRC's willingness to work with this Subcommittee and with the Administration. We believe the White Paper is a good faith effort on an important subject and there is much in it worthy of discussion. We are glad to participate in this series of hearings, and again thank you for inviting us to testify.