STATEMENT OF THE HONORABLE HOWARD COBLE

CHAIRMAN

SUBCOMMITTEE ON COURTS, THE INTERNET,

AND INTELLECTUAL PROPERTY,

REGARDING

THE OVERSIGHT HEARING ON “PIRACY OF

INTELLECTUAL PROPERTY ON PEER-TO-PEER NETWORKS”

September 26, 2002

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            Good Morning. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order. Today we are conducting an oversight hearing on piracy of intellectual property on peer-to-peer or “P-2-P” networks.

            As Chairman of this Subcommittee, it is my responsibility to promote efforts to reduce infringement or “piracy” of intellectual property. To that end, this hearing is intended to explore the problem of piracy on P-2-P networks and possible remedies.

            Recent technological advances have created a digital environment that is almost solely devoted to the unauthorized use of copyrighted works. In other words, P-2-P network customers are primarily using the program to obtain music, movies, software, photographs and other works without paying for the product. Folks, let me be clear at the outset that I am not opposed to P-2-P networks. In fact, I believe that P-2-P networks have beneficial uses and will play an increasingly important role in how business is done in the future. I am, however, opposed to the rampant stealing that is occurring on these networks. While not every download is an infringement, statistics show that a vast majority of them are illegal. Between 12 and 18 million movies files and 2.6 billion music files downloaded for free on P-2-P networks each month. And the U.S. Customs Service reports that the online “warez” community is responsible for at least $1 billion annually in lost sales of computer games, business software, music and movies. This translates into huge economic losses for not just large media companies but also individual songwriters, photographers, graphic artists, and software developers all over the country.

            The question, then, is how do we stop the massive piracy on P-2-P networks? Today we will hear from the panel about potential answers to the P-2-P piracy problem and their implications.

            The gentleman from California, the Ranking Member, Mr. Berman, introduced H.R. 5211, which is intended to clarify that copyright owners may utilize new technologies to protect their property as it is distributed on peer-to-peer networks. No doubt the panel will also comment on the merits of the proposed legislation.

            I am also reminded of ongoing private negotiations between the content industry and the technology providers to find a technological solution to digital piracy. It is my understanding that the process nearly reached a consensus on a watermark technology for use on DVDs that could also have had important implications for preventing P-2-P piracy. I strongly support efforts by industry to get together and resolve these issues through private agreements. I encourage both sides to return to the table and attempt to work out their differences. Should this process fail to reach an agreement, I believe this Committee should look into the reasons for its failure. The ramifications for both parties is too great to miss the opportunity to resolve this problem.

            I anticipate that this hearing will provide lively debate on a complex and controversial issue. I look forward to learning more about the status of the P-2-P piracy problem and the potential solutions to the problem of digital theft.

            I now turn to the Ranking Member, Mr. Berman, for an opening statement.