Statement of the Honorable Howard L. Berman

for the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property Hearing on

"Piracy of Intellectual Property on Peer-to-Peer Networks"

September 26, 2002

• Mr. Chairman, I want to take a moment to reflect on your tenure as Chairman. For those who are unaware, Chairman Coble's tenure as Chairman of this Subcommittee ends with the 107^th Congress.



• I have tremendously enjoyed and deeply valued our relationship as Chairman and Ranking Member. You have ably led this Subcommittee through innumerable legislative and political challenges, and done so with characteristic charm, willpower, and an always easygoing demeanor.



• Your record of legislative accomplishments as Chairman is great. The Digital Millennium Copyright Act. The American Inventors Protection Act. The Sonny Bono Copyright Term Extension Act. The No Electronic Theft Act. The Satellite Home Viewer Improvement Act. The Anti-Cybersquatting Consumer Protection Act. The Work Made for Hire and Copyright Correction Act. The Madrid Protocol Implementation Act. And innumerable other, less heralded bills.



• The American public owes you a debt of thanks for your dedicated service over the past six years. I owe you a personal debt of thanks for including me as a partner in the leadership of this Subcommittee.



• Mr. Chairman, thank you for calling this oversight hearing on P2P piracy. There have been some truly outrageous attacks on the P2P Piracy Prevention Act, and I welcome this opportunity to set the record straight.



• When we first introduced the P2P piracy bill, I never expected that anyone would challenge the basic premise of the bill: namely, that copyright owners should be able to use reasonable, limited self-help measures to thwart rampant P2P piracy.



• Incredibly, some folks actually challenge that premise. The head of a big trade association claims it's legal to make unauthorized distributions of copyrighted works to 100 million P2P users. P2P software companies claim that, even if illegal, P2P piracy causes no harm. Representatives of the computer industry say that only record companies suffer harm, and they deserve it for charging too much. Others vaguely theorize that copyright owner self-help will threaten security or privacy. And still other piracy profiteers attempt to thwart any solution to P2P piracy, then throw their hands up and say it is an insoluble problem.



• Let's start with a basic fact. Unauthorized distribution or downloading of copyrighted works on public P2P networks is illegal. To paraphrase the 9^th Circuit in the Napster case: public P2P users " who upload file names to the search index for others to copy violate a copyright holder's distribution rights. P2P users who download files containing copyrighted music violate a copyright holder's reproduction rights." Any attempt to say otherwise is a bald-faced attempt to rewrite well-settled law.



• Let's move to another indisputable fact. Massive theft of copyrighted works is the predominant use for public P2P networks today. There are now approximately 3 billion files P2P downloads a month. The vast majority of these downloads contain copies of copyrighted works for which the copyright owners receive no compensation.



• Now another fact. P2P piracy doesn't just affect the bogeymen - record companies and movie studios. P2P piracy destroys the livelihoods of everyday people.



• What do piracy profiteers have to say to Linn Skinner, a Los Angeles needlework designer whose livelihood has been destroyed by Internet piracy? Or about Steve Boone, a Charlotte small businessman who has watched P2P piracy decimate his karaoke tape company? How do they response to Mike Wood, a struggling Canadian recording artist who believes P2P piracy will derail his recording career before it gets off the ground? What do piracy profiteers say to the vast majority of songwriters who make less than $20,000 per year, and have yet to make one thin dime from the massive P2P piracy of their works?



• Songwriters can actually quantify their P2P piracy losses. By statute, a songwriter is both entitled and limited to collecting 8 cents for every "digital phonorecord delivery" of sound recordings containing her songs. Each illegal P2P download of a song robs the songwriter of that 8 cents.



• Those eight cents may not seem like much, but multiply 8 cents by the reported 3 billion monthly P2P downloads. It calculates out to $240,000,000 dollars...a month. Even 1/10th of that amount represents real money to the 5,000 U.S. songwriters.



• Now another fact. If piracy profiteers were truly concerned about security and privacy threats to P2P users, they would address the security and privacy threats posed by the P2P networks themselves. A recent white paper by the University of Tulsa Center for Information Security details how KaZaA, Gnutella, and other popular P2P networks expose P2P users to spyware, trojan horses, system exploits, denial of service attacks, worms, and viruses. A joint paper by HP Labs and the University of Minnesota details how the vast majority of P2P users are exposing personal information, such as credit card numbers, to every other P2P user. In fact, the U.S. Courts, the House, and the Senate all block the use of public P2P networks because of the security concerns they pose.



• Do the piracy profiteers talk about these real security and privacy concerns? No. And you know why? Because it is the piracy profiteers who put the spyware on the computers of P2P users so they can surreptitiously collect their personal information and sell it to third parties.



• Another fact. P2P companies could design their software to stop piracy, but they don't. Grokster has designed its P2P software to filter out pornography, but has it ever tried to filter out copyright infringements? Napster claimed it couldn't stop piracy, but after the court ordered it to do so, it suddenly found a way to stop most, if not all, piracy on its networks.



• Rather than looking for solutions to piracy, P2P companies are designing their systems to be better piracy tools. Both Morpheus and KaZaA have upgraded their software specifically to impair the ability of copyright owners to proliferate decoy files through the networks.



• Based on all these facts, what can an objective person conclude other than that many companies plan to profit from piracy, and have no intent or desire to stop it?



• I look at these facts and figures, at the faces of copyright owners, and I see a problem in desperate need of a solution. P2P piracy must be cleaned up, and cleaned up now. The question is, How?



• My P2P Piracy bill is an important part of the solution. The Peer to Peer Piracy Prevention Act is quite simple in concept. It says that copyright owners should not be liable for thwarting the piracy of their works on P2P networks IF they can do so without causing harm.



• You might reasonably wonder why we need to pass legislation giving property owners the right to protect their property against theft. After all, the U.S. Supreme Court has held that "[A]n owner of property, who seeks to take it from one who is unlawfully in possession, has long been recognized to have greater leeway than he would have but for his right to possession. The claim of ownership will even justify a trespass and warrant steps otherwise unlawful."



• The problem is that a variety of state and federal statutes may create liability for copyright owners engaging in otherwise justifiable self-help.



• This is not fair. Copyright owners should have the same right as other property owners to stop the brazen theft of their property. The P2P Piracy bill simply ensures that the law will no longer discriminate against copyright owners.



• Obviously, it is critical that a liability safe harbor be appropriately limited. In drafting the P2P Piracy bill, I tried to ensure that only reasonable self-help technologies would be immunized, that the public would be protected from harm, and that over-reaching or abuses by copyright owners would be severely punished.



• The most important limitation in the bill is the narrow breadth of the safe harbor itself. The bill says copyright owners get immunity from liability under any theory, but ONLY for impairing the "unauthorized distribution, display, performance, or reproduction" of their own works on public P2P networks. If the copyright owner's impairing activity has some other effect, like knocking a corporate network offline, the copyright owner remains liable under whatever previous theory was available.



• Some claim that the bill is not limited in this way. Their claim appears to be that the bill gives a copyright owner immunity for anything she does, as long as it has the effect of stopping piracy on a P2P network. By their logic, the bill allows a copyright owner to burn down a P2P pirate's house if the arson stops the pirate's illegal file trading. Clearly, the bill says nothing of the sort, and no judge or disinterested party could read it that way.



• The bill specifically states that a copyright owner cannot delete or alter ANY file or data on the computer of a file trader. Thus, a copyright owner can't send a virus to a P2P pirate, it can't remove any files on the pirate's computer, and it can't even remove files that include the pirated works.



• The safe harbor does not protect a copyright owner whose anti-piracy actions impair the availability of other files or data within the P2P network, except in certain necessary circumstances. Some folks have raised concerns about this provision, and I am thinking about alternative language that could resolve their concerns.



• The bill denies protection to a copyright owner if her anti-piracy action causes any economic loss to any person other than the P2P pirate.



• The safe harbor is also lost if the anti-piracy action causes more than de minimis loss to the property of the P2P pirate.



• Finally, the safe harbor is lost if the copyright owner fails to notify the Attorney General of the anti-piracy technologies she plans to use, or if she fails to identify herself to an inquiring file-trader.



• Obviously, these limitations would be meaningless if copyright owners did not have adequate incentive to obey them. The P2P piracy bill provides such incentives by subjecting transgressing copyright owners to MORE liability than they have under current law.



• This is a critical point: If a copyright owner falls outside the safe harbor, an aggrieved party could sue the copyright owner for any remedy available under current law, AND for an ADDITIONAL civil remedy created by the P2P piracy bill. The bill also gives the U.S. Attorney General new power to seek an injunction against transgressing copyright owners.



• The potential for liability under this wide variety of remedies provides copyright owners with strong incentives to operate within the strict limits of the safe harbor.



• I think the P2P piracy bill provides a strong starting point for legislation enabling copyright owners to use reasonable self-help to thwart P2P piracy. However, I don't claim to have drafted a perfect bill, and I welcome suggestions for improvements. I note, however, that while I will listen carefully to those who wish to solve the P2P piracy problem, I will not be so solicitous of those who wish to profit from it.



• Thank you, Mr. Chairman.