<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:26767.wais]
REMEDIES FOR SMALL COPYRIGHT CLAIMS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MARCH 29, 2006
__________
Serial No. 109-92
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
______
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COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah MAXINE WATERS, California
SPENCER BACHUS, Alabama MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida
MARK GREEN, Wisconsin ANTHONY D. WEINER, New York
RIC KELLER, Florida ADAM B. SCHIFF, California
DARRELL ISSA, California LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
Philip G. Kiko, General Counsel-Chief of Staff
Perry H. Apelbaum, Minority Chief Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
ELTON GALLEGLY, California JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
SPENCER BACHUS, Alabama MAXINE WATERS, California
BOB INGLIS, South Carolina MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida ROBERT WEXLER, Florida
DARRELL ISSA, California ANTHONY D. WEINER, New York
CHRIS CANNON, Utah ADAM B. SCHIFF, California
MIKE PENCE, Indiana LINDA T. SANCHEZ, California
J. RANDY FORBES, Virginia
Blaine Merritt, Chief Counsel
David Whitney, Counsel
Joe Keeley, Counsel
Ryan Visco, Counsel
Shanna Winters, Minority Counsel
C O N T E N T S
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MARCH 29, 2006
OPENING STATEMENT
Page
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Chairman, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 1
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 2
WITNESSES
Mr. Paul Aiken, Executive Director, Authors Guild
Oral Testimony................................................. 4
Prepared Statement............................................. 6
Ms. Jenny Toomey, Executive Director, Future of Music Coalition
Oral Testimony................................................. 21
Prepared Statement............................................. 23
Mr. Brad Holland, founding Board Member, Illustrators'
Partnership of America
Oral Testimony................................................. 28
Prepared Statement............................................. 31
Mr. Victor S. Perlman, General Counsel and Managing Director,
American Society of Media Photographers, Inc.
Oral Testimony................................................. 34
Prepared Statement............................................. 35
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Howard L. Berman, a
Representative in Congress from the State of California, and
Ranking Member, Subcommittee on Courts, the Internet, and
Intellectual Property.......................................... 45
Prepared Statement of the United States Copyright Office......... 45
REMEDIES FOR SMALL COPYRIGHT CLAIMS
----------
WEDNESDAY, MARCH 29, 2006
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:07 p.m., in
Room 2141, Rayburn House Office Building, the Honorable Lamar
Smith (Chairman of the Subcommittee) presiding.
Mr. Smith. The Subcommittee on Courts, the Internet, and
Intellectual Property will come to order, and I will recognize
myself for an opening statement, then the Ranking Member, and
then the gentleman from California for an opening statement if
he has one, as well. We appreciate the attendance of the
gentleman from California because there's so much going on this
afternoon. I know it's hard for Committee Members to get here.
Before I make my introductory remarks, let me say to the
panelists that this is, to my knowledge, the first time we have
had a hearing on this particular subject. It is an important
subject. It is almost a unique subject. But it also puts you in
a good position because, as I mentioned to one of you a minute
ago, you're not only expert witnesses, but you're also
absolutely indispensable to the process. We probably will not
have another hearing on this subject, so this is an important
one and what you say will be considered by us as we move
forward.
The possibility of copyright infringement is an issue for
all copyright owners. Title 17 of the U.S. Code provides for
remedies for copyright infringement that vary, depending on the
registration status of the work, the willfulness of the
activity, and the particular standing of the infringer. There
are also a number of defenses to actions that would reduce or
eliminate damages, such as fair use or innocent infringement.
However, the Copyright Act does not take into account an
important issue for all copyright owners, the practicality of
pursuing an infringement case when the infringer refuses to pay
damages and the damage amount is likely low. In certain cases,
the infringer refuses to pay any amount to compensate the owner
for the infringement. In other cases, the infringer is willing
to pay the proper amount of damages, but the two parties cannot
agree on what is a reasonable amount. In either case, the cost
of hiring an attorney and filing suit will easily exceed $5,000
and, of course, can be a lot higher.
When an infringer has stopped infringing use, what
effective relief does the copyright have if the damages caused
by the infringement is only, say, $500? While it would
certainly be possible to hire an attorney to pursue the $500 in
damages, it is simply not economically feasible for the
copyright owner to pay $5,000 or more to recover only $500.
Absent an effective remedy, many copyright owners with low-
value infringement claims view this disparity as a, quote,
``get out of jail free'' card.
This issue appears most often in the context of a certain
category of users where the amount of damages is often low.
These categories of work include photographs, illustrations,
graphic arts, short stories, and articles. Works in other
categories of uses, such as movies and music, may also face
this dynamic, but they are more likely to have larger value
infringement claims, which makes hiring lawyers more
economically feasible.
Some copyright owners with small value claims may simply
want to be paid proper damages and have no interest in pursuing
an effort to prove willful infringement or statutory damages.
Why would someone not want to pursue statutory damages? The
simple answer is that sometimes, it is better to turn a one-
time infringer into a regular customer than to obtain a one-
time payment and not have an ongoing customer.
Possible options to create alternatives to exclusive
Federal court jurisdiction to copyright infringement claims
include use of State courts, small claims or otherwise;
creation of a Federal version of State small claims court; use
of the Copyright Royalty Board; use of dedicated administrative
law judges; and the collection of numerous small copyright
claims into larger filing brought by trade associations or
other groups' representatives.
Related to these five options are, one, whether any
alternatives created are voluntary and/or mandatory for both
the copyright owner and the infringer, and two, whether the
defenses and possible infringement penalties, such as statutory
damages, should apply to such alternatives.
I look forward to hearing about the issue of small value
infringement cases generally and if any alternative to the
existing Federal court system is a viable option.
I have been a longtime strong supporter of copyright owner
rights. Payment for using the work of the copyright owner is
crucial to promoting the continued development of new content
for society's benefit.
That concludes my opening statement and the gentleman from
California, Mr. Berman, is recognized for his.
Mr. Berman. Thank you very much, Mr. Chairman. I want to
commend you for holding this hearing. I think the timing is
especially good given our recently concluded hearing on the
issue of orphan works.
Alternative dispute resolution was raised by some in the
orphan works context as a way to begin addressing some of the
inequities that could result from a statutory change. However,
there are multiple instances in the copyright context, as well,
in which parties could benefit from forums other than Federal
court to resolve copyright infringement claims. Today will
provide an opportunity to discuss the advantages of offering
alternative methods of resolving small copyright claims, even
outside the scope of the orphan works provision.
As the cost of litigation rises, I was wondering where you
could do it for $5,000. Oftentimes, a copyright owner has to
make a calculation that is entirely independent from whether
the owner will prevail on the merits of the case. The owner
must ask, is it worth it to pursue full-scale litigation when
the damages or remedies wouldn't even cover the cost of the
proceeding, much less provide any relief from infringing
conduct?
A number of proposals for resolving this dilemma have been
suggested, ranging from the establishment of a small claims
court to expanding the jurisdiction of the copyright royalty
judges to determine copyright claims in an administrative
dispute resolution proceeding. I caution that the goal here
should not be to create an opportunity for forum shopping as a
result of substance, but merely to create more simplified
procedures that will resolve disputes at a lower cost.
I look forward to hearing the witnesses describe
circumstances in which they may forego a remedy because of the
cost of bringing suit and whether they have any suggestion for
reform. I doubt this will be the last we hear on this issue.
I'd also like to work with the Chairman in pursuing a
Copyright Office study on this issue. It's encouraging that in
its written testimony, the office offers to study both how and
to what extent copyright owners are injured from seeking relief
due to the cost of litigation, and secondly, what changes in
the law might be advisable to remedy the problem.
Thank you, Mr. Chairman, and I yield back.
Mr. Smith. Thank you, Mr. Berman.
Does the gentleman from California wish to make an opening
statement?
Mr. Issa. No, Mr. Chairman. I just wish to thank you for
holding this important hearing. I yield back.
Mr. Smith. Thank you, Mr. Issa.
The gentleman from South Carolina, Mr. Inglis?
Mr. Inglis. No thank you, Mr. Chairman, but thank you for
holding the hearing.
Mr. Smith. You know, maybe I'll recognize you all regularly
just to be able to hear that. [Laughter.]
That sounds pretty good. I appreciate both of you all being
here.
Before I introduce our witnesses, would you please stand
and be sworn in. Would you raise your right hand, and do you
swear that the testimony you are about to give is the truth,
the whole truth, and nothing but the truth, so help you, God?
Mr. Aiken. I do.
Ms. Toomey. I do.
Mr. Holland. I do.
Mr. Perlman. I do.
Mr. Smith. Thank you, and be seated.
Our first witness is Paul Aiken, the Executive Director of
the Authors Guild since 1996. The Authors Guild is the nation's
oldest and largest professional society of published authors,
representing more than 8,000 writers. Mr. Aiken is a 1985
graduate of Cornell Law School.
Our next witness is Jenny Toomey, the Executive Director of
the Future of Music Coalition. The Future of Music Coalition is
a not-for-profit collaboration between members of the music
technology, public policy, and intellectual property law
communities. Ms. Toomey graduated from Georgetown University
with an interdisciplinary major in philosophy, English, and
women's studies. I have never heard of that combination before.
It sounds good.
Our third witness is Brad Holland, a self-taught artist and
writer. Mr. Holland is a board member of the Illustrators'
Partnership of America, a nonprofit organization dedicated to
helping its illustrator members protect their intellectual
property. Mr. Holland's work has appeared in Time, Vanity Fair,
the New Yorker, the New York Times, the Wall Street Journal,
and the Weekly Standard. He has painted CD covers for Ray
Charles, Stevie Ray Vaughn, and Billy Joel. Mr. Holland has
also been elected both the Society of Illustrators' Hall of
Fame and the Alliance Graphic International. He is currently a
visiting scholar at Virginia Commonwealth University.
Our final witness is Victor Perlman, the General Counsel to
the American Society of Media Photographers since 1995. In
1996, he formally joined ASMP staff as Managing Director and
the Society's first in-house General Counsel. Mr. Perlman
received his Bachelor's degree in English from Franklin and
Marshall College in 1967 and his law degree from the University
of Pennsylvania in 1972.
We welcome you all, and Mr. Aiken, we will hear your
testimony first.
TESTIMONY OF PAUL AIKEN, EXECUTIVE DIRECTOR, AUTHORS GUILD
Mr. Aiken. Thank you, Mr. Chairman, and thank you for the
opportunity to testify today on a matter of vital importance to
American writers. The Authors Guild has had a 90-year history
of contributing to debates before Congress on copyright law. It
is an honor and a privilege to be here today for the Guild to
continue to serve that role before this Subcommittee.
I am here to make the case that a small claims court for
copyright infringement, if properly done, is a good idea. The
Guild has long had strong anecdotal evidence that writers had
inadequate access to the courts to protect their property
rights. We decided to try to quantify that evidence in
preparation for today's hearing, so we conducted two surveys, a
two-part survey of our membership, all of whom are published
writers. We had a huge response. More than 1,200 completed each
part of the survey.
The results of the survey are appended to my written
remarks, but here is the key result. Fifty-five percent of all
respondents believe that creating a small claims court for
copyright is a good idea. Seventeen percent opposed it. Twenty-
eight percent were neutral.
The reasons authors support creating such a court are
important and enlightening. They, as you might expect, cited
reduced costs, convenience, and the ability to proceed without
an attorney. Many also cited the deterrent effect of such a
court and that it would increase respect for copyright.
The reasons cited by those 17 percent of writers who did
not think it was such a good idea are also enlightening. Sixty
percent of these respondents said that such a procedure, a
small claims procedure, would not be simple, effective, or
inexpensive. That was their fear. Fifty-two percent also feared
that it would increase their risk of being sued when they made
fair use of someone else's work. Others cited the fear of
frivolous and harassing suits, and many said the jurisdictional
limit--we had proposed $2,000 to $3,000--was too low to be
meaningful, and many also feared the competence of a small
claims court to address copyright issues.
We believe all these concerns can be addressed effectively.
First and most importantly, we can avoid harassment suits by
requiring a prima facie showing of copyright infringement
before the defendant is obliged to appear. Most frivolous and
harassing claims would certainly be caught by compelling the
plaintiff to make a prima facie documentary showing of
infringement. Failing such a showing, the court should be
obliged to dismiss the suit with no requirement that the
defendant appear or respond.
Second, as a further jurisdictional prerequisite, there
should be no substantial fair use defense apparent in the
documents supporting plaintiff's prima facie case. Let's keep
it simple. The small claims procedure should focus on clear
copyright violations.
Third, we should minimize complexity and cost by using mail
and telephone procedures to the greatest extent permissible
within the bounds of due process. This is hugely important to
our members. The travel costs to a special court could swamp
any remedy they might receive.
Fourth, we should avoid delegating these procedures to
inexperienced State courts. Instead, assure the competence of
the court by affiliating it with the Copyright Office in some
manner.
Fifth, we should assure the effectiveness of the court by
giving it access to the full panoply of remedies available,
including statutory damages and by permitting it to issue
injunctions in limited cases. If a plaintiff demonstrates that
a defendant has repeatedly infringed the plaintiff's copyright
with no colorable defense of fair use, then the court should be
empowered to enjoin the defendant against further infringement
of the plaintiff's registered work. Such an injunction,
enforceable in an appropriate Federal district court, would
serve as a powerful deterrent to future infringement.
And finally, we believe that this should be the plaintiff's
option to bring this sort of claim in small claims court. The
defendant should not be able to opt out of it. That would
render the court toothless. The defendant would tend to always
run to the more expensive, burdensome procedure in order to
avoid liability.
If created with care, a small claims court for copyright
infringement would allow individual authors much greater access
to the courts to protect their property rights, appreciably
enhancing market incentive to create the very works that the
public values.
I would like to thank this Subcommittee for holding this
hearing and inviting us to participate. Thank you.
Mr. Smith. Thank you, Mr. Aiken.
[The prepared statement of Mr. Aiken follows:]
Prepared Statement of Paul Aiken
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Mr. Smith. Ms. Toomey?
TESTIMONY OF JENNY TOOMEY, EXECUTIVE DIRECTOR, FUTURE OF MUSIC
COALITION
Ms. Toomey. Thanks. Good afternoon. My name is Jennifer
Toomey. I am a musician, entrepreneur, and activist. I speak to
you today as a working artist, a copyright owner, and the
Executive Director of the Future of Music Coalition. On behalf
of the Future of Music, it is my honor to testify today on our
perspective.
FMC has not taken a firm position on this issue. We will,
however, consider the question in the broader context of issues
that are impacting the music community.
In the past 6 years, we have learned that the legal,
technical, and legislative music environment is a delicate
ecosystem. Remedies that serve musicians' allies and music
business institutions may sometimes undermine the position of
individual musicians. Solutions that serve one class of
musician may underserve another class of musician. We have
therefore learned we must always proceed with caution when
advocating new structures that impact upon the livelihoods of
creators.
Furthermore, musicians do not always have uniform views
about the emerging digital marketplace and the opportunities
and challenges therein. To illustrate this point, in the spring
of 2004, Future of Music and the Pew Center for the Internet in
American Life conducted an online survey to gauge musicians'
opinions about copyright, file sharing, and music on the
Internet. The results indicated that musicians are sharply
divided about the impact of file sharing. Thirty-five percent
of this sample agreed with the statement that file sharing
services are not bad for artists because they help promote an
artist's work. Twenty-three percent agreed with the statement
that file sharing services are bad for artists because they
allow people to copy an artist's work without permission or
payment. Thirty-five percent of those surveyed agreed with both
statements.
Considering these conflicting views, it is difficult to
give a definitive answer regarding what musicians think about
the possibility of a small claims arbitration court for
copyright infringement. In preparation for the hearing, I read
Mark Lemley and Anthony Reese's proposal regarding these
copyright disputes as well as the testimony of all the
panelists and it seems that people are offering very measured
and reasonable solutions. Speaking specifically to Mark Lemley
and Anthony Reese's proposal, I am a little hesitant to
speculate that this specific model would benefit all copyright
owners, especially creators.
First, the article addresses only one specific action, the
filing of a suit against peer-to-peer file uploaders, a scope
that is much narrower than even the positions of the
individuals on this panel today. Since Lemley and Reese confine
the argument to one context, we wouldn't want to speculate
whether this legal procedure might also be practical in other
contexts until we knew more.
Second, the authors of the article do not appear to
contemplate individual artists using this procedure to file
copyright claims. The potential benefit from this proposal for
musicians would be uncertain and possibly indirect, not
necessarily bad, but still uncertain. Furthermore, the authors
have not undertaken to analyze any of the potential harms to
individual musicians from adopting this proposal or any
variation to it.
My comments here do not diminish the problem of copyright
infringement to the music community nor do I mean to dismiss
this proposal as presented, but I can say that in the 6 years
the Future of Music has existed, I have never been contacted by
a musician about this specific issue. I have been contacted
about hundreds of other issues, but not this one.
Therefore, a more important question for the hearing may be
where the issue of copyright remedy falls within the hierarchy
of current political issues facing musicians. Despite the
diversity of views expressed by artists across the disciplines,
there are some issues with very broad support and agreement.
For example, the peer-to-peer haters and the peer-to-peer
lovers would both likely be advocates for national health
insurance for musicians and increased media diversity in low-
power radio. This is why FMC has worked on those issues.
We have also worked on public performance rights, copyright
reversion, payola, media ownership, and net neutrality, and
these are all issues we are contacted about regularly. Also,
orphan works, the database authentication and licensing
solutions, and to these last three issues, FMC truly believes
that centralized authentication structures must be created to
give artists the ability to easily claim ownership of works in
up-to-date, transparent, and publicly available databases and
registries.
Databases help independent and amateur artists gain
recognition within the established music industry. For one
example, Sound Exchange, which is the performance rights
organization that administers the distribution of royalties for
the public performance of sound recordings on most digital
services, recently compared its database of sound recording
artists with unclaimed royalties with another database, that of
a company called CD Baby that distributes the music for about
120,000 independent artists. When they compared their lists,
they immediately identified 15,000 CD Baby artists with
royalties to claim at Sound Exchange. This is just one example
of the value of comparing two privately administered databases
in the context of a clear licensing structure. Expanded public
databases could greatly increase the identification of works
and thus diminish the occurrence of orphan works.
In conclusion, experience has shown us that when copyright
works are authenticated and transparent publicly accessible
databases, it makes it easier for users to obtain licenses. The
easier the licensing process, the more money flows to artists.
Legal remedy is a valued tool that copyright owners have in
defending their intellectual property. FMC is unwilling to
publicly advocate for any changes to copyright law that would
impact this right until we were absolutely sure that the
changes would be positive for musicians.
Furthermore, it is unclear to FMC whether litigious or
penalty-focused solutions would be more effective at
compensating artists than solutions focused on this
authentication and inexpensive licensing structures.
Thank you again for inviting us to be part of this hearing
today. I look forward to your questions.
Mr. Smith. Thank you, Ms. Toomey.
[The prepared statement of Ms. Toomey follows:]
Prepared Statement of Jenny Toomey
Good afternoon. On behalf of the Future of Music Coalition, it is
my honor to testify before the Subcommittee on Courts, the Internet,
and Intellectual Property, and to add our perspective to this oversight
hearing on ``Remedies for Small Copyright Claims.''
This subject is complex, and it is not an issue on which FMC has
taken a firm position. In the recent past we have made some prudent
suggestions regarding the related question of orphan works at the US
Copyright Office. We believe there is some value in restating some of
these here today. We will also consider the question of ``remedies for
small copyright claims'' in the broader context of issues that are
impacting the music community. Finally, we hope to articulate what we
have learned from organizing disparate music communities around key
policy issues.
To begin, I will provide a brief background about myself, and the
Future of Music Coalition. My name is Jenny Toomey. I am a musician,
entrepreneur and activist. I have released seven albums and toured
extensively across the United States and Europe. For eight years, I co-
ran an independent record label called Simple Machines. For the past
six years I have run the Future of Music Coalition. I speak to you
today both as a working artist and as Executive Director of that
organization.
FMC is a national nonprofit education, research and advocacy
organization that identifies, examines and translates the challenging
issues at the intersection of music, law, technology and policy. Recent
history has shown that technology has vastly increased opportunities
for both artists and consumers, and facilitated the creation of
efficient methods for promoting, distributing and selling music. FMC
was founded in the midst of this technological paradigm shift, based on
the strong belief that, in order to avoid replicating inefficient or
unequal structures of the past, artists and artist advocates must be at
the policymaking table to balance the traditional major label,
technology and commercial radio players. This is our organizational
mission and we are, therefore, quite honored to have our views included
in today's discussion.
ORGANIZING ARTISTIC COMMUNITIES AROUND KEY POLICY ISSUES
In the past six years we have recognized that the legal, technical
and legislative environment surrounding musicians is a delicate
ecosystem. Remedies that serve musicians' allies and music business
institutions may serve to undermine the position of individual
musicians. Even less obvious, solutions that serve one class of
musician may undermine or under serve another class of musician. We
have, therefore, learned that there are very few black and white
answers to the broad grey space we inhabit, and despite our deep desire
for remedy and clarity, we must proceed with caution when establishing
new structures that impact the livelihood of creators.
Let me give you an example of the range of differences within the
music community. FMC has had the opportunity to speak all over this
country and the world. Generally, we are included in panel discussions
with experts from other artistic and academic disciplines as the
musicians' voice and are often asked, ``What do musicians think
about...x?'' This question is simultaneously impossible and simple to
answer. Impossible, as it would take years to document the variety of
perspectives held by musicians on any issue. Simple, as the concept of
complexity is easy to convey.
For example, in response to the question, ``What do musicians think
about the new digital marketplace?'' I can say:
``At this very moment there is one musician in an online chat
room collaborating with another musician on the other side of
the globe. That musician is recording synthetic sounds created
exclusively on her computer. These sounds are digitally
recorded and sent across the internet, and the completed
compositions are fixed in a flexible copyright with a Creative
Commons license and made available exclusively as free digital
tracks distributed through peer to peer networks.
``At the same time, there is another musician recording his
spinet on a turn-of-the-century Edison cone recording machine
that he purchased at a thrift store. He will fix these
compositions using an analog tape machine and the release the
album as a vinyl record with formally registered copyrights,
for sale only in brick and mortar record stores. When
interviewed, this artist will decry the technological
innovation that allows music fans to listen to his compositions
digitally in any order other than the one he established on the
record.''
However disparate and extreme, these examples are an attempt to
convey the range of valid perspectives held by individual members of
the music community that we represent. They are also a means of
implying the increased complexities that arise when legal or
legislative solutions are proposed to serve the needs of more than one
artistic discipline. Copyright law lives not only at the complex
intersection of commerce and art, commerce and speech, commerce and
ideas--but also at the complex intersection of art and art. Laws that
protect illustrators must also serve composers and choreographers. We
urge the committee to recognize this complexity as you proceed and
include as many stakeholders as possible in the process.
SMALL COPYRIGHT CLAIMS AND MUSICIANS
Second is the question of where the issue of small copyrights
claims falls in the spectrum of complex policy issues musicians face.
In preparation for this hearing I have read ``A Quick and Inexpensive
System for Resolving Peer to Peer Copyright Disputes,'' by Mark Lemley
and Anthony Reese. It seems to me a measured and reasonable proposal;
however, I am hesitant to speculate that this model for small claims
copyright disputes would benefit all copyright owners, especially
creators. First, the article addresses one specific action--filing suit
against P2P file uploaders--a scope that is much narrower than even the
individuals represented on this panel. Since Lemley and Reese confine
their argument to one context, we would not want to speculate whether
this legal procedure might also be practical in the context of orphan
works.
Second, the authors of this article do not appear to contemplate
individual artists using this procedure to file copyright claims. The
potential benefits from this proposal for musicians would be uncertain
and possibly indirect. Furthermore, the authors have not undertaken to
analyze any potential harm to individual musicians from adopting this
proposal or a variation of it.
My comments do not mean to diminish the importance of the issue of
illegal file trading or copyright infringement to the music community,
nor do I mean to dismiss the proposal as presented. But I can say that
in the six years that FMC has existed as an organization, hosting
national policy summits and speaking about these issues, I have never
once been contacted by an artist or an artist advocate about the
problem of legal fees associated with copyright infringement cases. As
such, we are unwilling to speculate on the benefits for our
constituency. This proposal may serve as the platform for such future
discussion and, if such an action is necessary, FMC would recommend the
full public participation of the arts community before any such
solutions be applied.
ISSUES THAT UNITE THE ARTISTIC COMMUNITY
Despite the diversity of views expressed by artists across
disciplines it is also quite possible to find areas of common interest
and platforms for collaborative change. There are many issues with
broad support across disparate communities. For example, our digital
musician and our musical Luddite from the previous example would both
likely be advocates for national health insurance, increased media
diversity, and low power radio. This is why FMC has worked on issues
such as:
Support for Public Performance Right for Sound Recordings.
Royalties are generated when a song is performed publicly;
whether on a radio station, at a sports event, on a jukebox, or
in a movie. In the US, these royalties are collected by ASCAP,
BMI and SESAC and distributed to the member songwriters,
publishers and/or composers. As an indication of the
significance of this revenue stream for musicians and the
industries that they support, ASCAP reported distributing over
$645 million to its members in 2005.\1\
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\1\ ``ASCAP Revenues up $50M in 2005'' Billboard, March 13, 2006
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While PRO royalties are distributed to songwriters and
composers for public performances for terrestrial radio play,
this right does not extend to the performers, recording artists
or the sound recording copyright owner.\2\ For example, when
you hear Patsy Cline singing ``Crazy'' on the radio, the
songwriter Willie Nelson is compensated through BMI, but the
estate of Patsy Cline is not compensated for that performance,
nor are the studio musicians and backing vocalists, nor the
record label, that brought that song to life.
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\2\ There are two copyrights assigned to a musical work: the
underlying musical composition and sound recording. The composition
(lyrics and music) has a public performance right, which is the right
administered by the performance rights organizations ASCAP, BMI and
SESAC. The sound recording (ie the performance of the musical work)
does not have a performance right for non-digital performances in the
US.
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This arrangement is the result of a long standing argument
made by terrestrial broadcasters that performers benefit from
the free promotion that they get by having their music played
on the radio, which broadcasters contend increases sales. As a
result, broadcasters have avoided paying a public performance
royalty to performers for decades.
Contrast this with a performance on a digital platform. Just
as in traditional media, broadcasters of digital performances--
webcasters, satellite radio, cable subscriber channels--must
obtain licenses from ASCAP, BMI, SESAC which compensate the
songwriters and publishers of the music they play. But because
of the Digital Performance in Sound Recording Act of 1995, they
also pay royalties to the performers. SoundExchange--the
performance rights organization established by the DPRA--issues
licenses to cable and satellite subscription services, non-
interactive webcasters, and satellite radio stations, then
distributes the royalty payments directly to artists (45%) and
to the copyright owner (45%).
As US broadcasters migrate to digital radio, harmonizing the
licensing rules that apply to various platforms offering
analogous products is more important than ever. As radio
switches from broadcasting in analog to digital signals,
industry engineers predict that incumbent radio station
licensees will be able to program an additional two to four
side-channels on their slices of spectrum, thus at least
tripling their opportunity to generate revenue. Despite the
digital nature of HD radio, the DPRA does not apply.\3\
Therefore, all musical performances on these new HD radio
stations will not have a public performance right for sound
recordings. Unless Congress acts, incumbent broadcasters will
continue to exploit their exempt status that sets them apart
from other media providers.
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\3\ DRPA does not apply unless the terrestrial broadcaster chooses
to use a side-channel to create a subscription service or an
interactive service. In those cases, the radio station will pay the
digital performance right to SoundExchange.
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FMC calls on Congress to modify the US Copyright Act to
establish a broad public performance right for sound
recordings, but it in a way that will not diminish existing
royalty structures that compensate composers, songwriters and
publishers. This modification would benefit creators,
compensate performers, establish licensing parity among media
providers and bring the United States' copyright standards in
line with other developed nations.
Supporting Copyright Reversion and the Right to Reacquire:
Copyright reversion is a negotiable clause in contracts that
states the date when the copyrights revert to the creator.
Section 304(c) of the 1976 Copyright Act made US copyrights
revert to artists 35 years after creation despite contract
length. This law was passed to protect the rights of artists
who had made disadvantageous deals. In some European countries,
copyrights revert if a label fails to keep a record in print.
An estimated 75 percent of the back catalog copyrights owned
by major record labels are currently out of print. This
practice reduces artists' ability to make a living by
functionally removing their essential right to make their work
available for sale. Artists who have signed away their
copyrights have no legal recourse. Signing away copyrights is a
basic condition of most record contracts.
A 2005 report by the Council on Library and Information
Resources expressed the magnitude of this problem when it found
that significant numbers of historic recordings are not easily
accessible to scholars, students, and the general public for
noncommercial purposes. While some recordings are limited
because they only play on out-of-date technologies (cylinder
players, wire machines), copyright law also adds to this
problem since it allows only rights holders to make these
recordings accessible using current technologies (CD re-issues,
digital files), yet the rights holders appear to have few real-
world commercial incentives to reissue many of their most
significant recordings.\4\
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\4\ ``Survey of Reissues of U.S. Recordings'', Tim Brooks, Council
on Library and Information Resources and Library of Congress, August
2005. http://www.clir.org/pubs/reports/pub133/contents.html
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While there are many barriers to copyright reversion in major
label contracts, there are a number of musicians, archivists,
and public domain advocates that have asked for more efficient
laws that would allow authors and creators to assert their
ownership rights when copyright owners fail to meet their
contracted obligations. In 2005, recording artist groups,
including FMC, called for reasonable legislation that would
give recording artists the right to reacquire their copyrighted
works if their record label had stopped making their records
commercially available.
Updating Radio Payola Regulations: While various laws and
hearings from the 1960s-1970s muted the prominence of payola,
payola-like practices resurfaced in recent decades, but in a
more indirect form. Standardized business practices employed by
many broadcasters and independent radio promoters resulted in
what many consider a de facto form of payola.
Under more recent payola-like practices, radio station group
owners established exclusive arrangements with ``independent
promoters,'' who acted as middle agents between the stations
and the record labels. On the station side, the indie promoter
guaranteed a fixed annual or monthly sum of money to the radio
station group or individual station. In exchange for this
payment, the radio station group agreed to give the independent
promoter first notice of new songs added to its playlists each
week. On the label side, the labels hired the indie promoters
to promote their records to certain stations and groups, since
they were aware that stations in the group also tended to play
mostly records that had been suggested by the independent
promoter. As a result of the standardization of this practice,
record companies and artists generally had to hire and pay
these independent promoters if they wanted to be considered for
airplay on those stations.
The primary problem with payola for musicians is its
distorting effect on what gets played on the radio. Instead of
being judged on the merits of the performance and recording,
various forms of paid consideration and business relationships
determine what gets played on the air. In addition, payola
serves as a barrier to access to the public airwaves; the only
musicians that can benefit from radio airplay are those that
can afford to participate in this label/indie promoter/radio
station relationship.
NY Attorney General Eliot Spitzer has been the most
aggressive at combating payola. Using the subpoena power of his
office to acquire evidence, his 2004-2006 investigation
uncovered quid pro quo relationships that were suspected to be
blatant violations of payola laws, including bribery in the
form of lavish gifts and trips given by labels to radio
stations and their employees in return for airplay of the
labels' songs. As a result of his investigation, two of the
four major labels have settled out of court, paying a total of
$15 million. Spitzer's investigation will continue in 2006.
Senator Feingold has also attempted to address the problem.
In 2003, he introduced S. 221, the Competition in Radio and
Concert Industries Act. The bill addressed the anti-competitive
practices of some radio corporations that allegedly leveraged
their market power to shake down the music industry in exchange
for playing their songs. While this bill did not make it out of
committee, it delivered a message to the radio and concert
industry that any business practices that leveraged one
corporate arm against another at the expense of artists would
not be tolerated. FMC believes that Feingold's bill forced the
industry to move away from the independent promoter structure,
and create more firewalls between concert and radio divisions.
FMC believes that payments made or consideration provided to
radio stations to influence playlists--other than legitimate
and reasonable promotional expenses--must be prohibited, unless
such payments are announced over the air. This includes
payments made through independent radio promoters and
considerations like free concerts or other services provided to
radio stations.
FMC urges Congress to support the passage of S. 2058, the
Radio and Concert Disclosure and Competition Act, introduced by
Senator Feingold in November 2005. The bill extends definition
of payola to include pay for play practices and forces breakage
of links between concert promoters, venues and airplay. We also
urge the FCC to hold radio stations found accepting payola
accountable and apply appropriate penalties or fines.
Media Ownership and Net Neutrality: One of the most
significant aspects of the transformation to a digital music
economy is rooted in the ``common carrier'' underpinnings of
the Internet. Because the Internet is essentially open, the
creator/artist has the right and the ability to make their work
available to potential consumers, and consumers. These
consumers, in turn, are able to access that work via a number
of legitimate, licensed platforms and services.
This fundamental shift has revolutionized the music economy,
as artists are no longer forced to enter into negotiations with
record labels or participate in illegal payola-like practices
in order to access the marketplace. Similarly, music fans now
have a wide range of opportunities to access music, information
and content. This dynamic is one of the core reasons that music
released by independent labels has grown to an estimated 28
percent market share.
The music community has very legitimate reasons to be
concerned both with the ownership rules that govern traditional
media and the new framework being developed by Congress to
govern broadband and other ``post-media'' technologies.
Technology ensures that the traditional bottlenecks
separating artists from consumers can be overcome; now Congress
must ensure that innovation will continue, a competitive
marketplace for high speed services will develop and the basic
ability of the artist to access the Internet as a way of
reaching potential consumers will be written into law. FMC
urges Congress to: hold the line on radio consolidation; expand
and protect noncommercial media; ensure the transition to HD
radio benefits musicians and citizens and; understand the value
of network neutrality to copyright owners and music fans.
ORPHAN WORKS AND DATABASE AUTHENTICATION
Finally, on orphan works. While there may be unmeasured enthusiasm
in the music community for remedies for small copyright claims such as
the ones suggested by Lemley and Reese, it may be premature to address
this issue before we solve the Copyright Office's larger question
regarding orphan works. This is particularly important to FMC as orphan
works is an issue that many of our constituents have raised and
discussed in the recent years. In March 2005, FMC, AFTRA and AFM filed
joint comments in the Orphan Works proceeding at the US Copyright
Office.\5\ Our comments recommended that the US consider adopting a
modified version of the Canadian Unlocatable Copyright Statute to allow
creators and the public to use copyrighted works that are unavailable
because the copyright owner is either unidentifiable or unlocatable. In
addition, we asked the Copyright Office to issue a notice of inquiry
examining the status of out-of-print sound recordings, something that
is particularly important for musicians whose prior albums may not be
available for sale.
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\5\ http://www.futureofmusic.org/news/orphanworks.cfm
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FMC also believes that much more must be done to increase
authentication structures to give artists the ability to publicly and
easily claim ownership of works in up-to-date, transparent, and
publicly available databases and registries. Databases have recently
helped identify independent and amateur artists who traditionally would
have slipped through the cracks of recognition of the terrestrial music
industry. For example, SoundExchange, which is the performance rights
organization that administers the collection and distribution of
royalties for the public performance of sound recordings on most
digital services, compared its database of sound recording artists with
unclaimed royalties with the database of a company called CD Baby that
distributes the music of over 120,000 independent artists. When they
compared their lists, they identified 15,000 CD Baby artists with
royalties to claim. CD Baby then urged its members to sign up with
SoundExchange to collect their royalties. This is just an example of
the effectiveness of comparing two privately administered databases.
Databases with similar qualities could greatly benefit with the
identification of various works, thus diminishing the occurrence of
orphaned works, and allowing for the continued circulation and use of
existing copyrighted material.
CONCLUSION
Experience has shown us that when ownership of copyrighted works is
documented in transparent, publicly-accessible databases, it makes it
easier for users to obtain licenses. The easier the licensing process,
the more money that flows to artists. FMC continues to support systems
that both respect copyright owners right to control their works while
also incentivizing the maximum circulation of copyrighted works.
Legal remedy is a valued tool that copyright owners have in
defending their intellectual property. FMC is unwilling to publicly
advocate for changes that would impact this right until we were sure
that the impact would be positive for musicians. That said, it is
unclear to FMC whether litigious, penalty-focused solutions would be
more effective at compensating artists than solutions focusing on
authentication and inexpensive licensing structures.
Thank you again for inviting us to be part of today's hearing and I
look forward to your questions.
Mr. Smith. Mr. Holland?
TESTIMONY OF BRAD HOLLAND, FOUNDING BOARD MEMBER, ILLUSTRATORS'
PARTNERSHIP OF AMERICA
Mr. Holland. Thank you, Mr. Chairman. Chairman Smith,
Ranking Member Berman, and Members of the Committee, last year,
the Illustrators' Partnership filed a submission to the
Copyright Office about the orphan works study. This was
endorsed by 42 international arts organizations which
represented a broad spectrum of popular artists, fine artists,
medical and architectural illustrators, cartoonists, and
educators who work both in the United States and overseas, so I
am pleased to have an opportunity to say a few words about the
subject of remedies for small copyright infringement.
Wherever possible, artists have attempted to work on a
traditional business model. Our work is commissioned by clients
to whom we license initial rights for one-time usage for an
agreed-upon price. Most artists retain their secondary rights,
which with the advent of the digital era have been recognized
as a potential stream of income and, therefore, a contested
prize for any party that can obtain access to them.
Now comes a proposal that risks transferring a vast body of
these rights into an orphan works limbo by legalizing the
infringement of any work whose creator is said to be hard to
find. This would harm artists and photographers
disproportionately because images are often published without
identifying information, signatures may be illegible, and
information can be removed by others.
We have been told that this Committee plans to move ahead
to create a small claims court--I'm missing part of my
statement here. I'll move ahead to where--I've been told the
Committee plans to consider the creation of a small claims
court or arbitration mechanism to try to litigate the
infringement cases that will follow.
We strongly oppose the creation of such courts. The orphan
works report states that a good faith, reasonably diligent
search for a copyright holder will be, ``a very general
standard,'' defined solely by the users themselves, many of
whom may well have an interest in an unsuccessful search for
the copyright holder. Absent a settlement by negotiation after
the infringement has taken place, the copyright owner's sole
recourse would be to bring an action before one of these
courts.
Copyright law is a Federal law, and as we understand it,
there are only 11 Federal circuits in the country with 97
United States district circuits. Would copyright holders have
to travel to one of them every time we need to file a small-
dollar infringement claim? If so, we wouldn't be able to add
travel and lodging expenses, and under the proposed limitation
on remedies, the copyright owner would not even be able to
obtain court costs or attorneys' fees, not even if the work had
been preregistered. The orphan works amendment virtually
guarantees that the cost of suing an infringer would exceed
whatever sum the copyright owner would recover in a successful
small claims action.
By limiting remedies, the orphan works amendment will
create a no-fault license to infringe, so let us look at a
hypothetical small claims action that I might be obliged to
bring in the future. In the 1990's, I licensed a series of
pictures for one-time use for a corporate annual report.
Copyright notice and credit are almost always omitted by art
directors for annual reports and almost always for
advertisements, in spite of the wishes of the artist to
preserve his credit. Now, let's say I registered my copyright
in the work as part of a group registration, the title of which
was based on the annual report. I subsequently licensed some of
these pictures for exclusive use in various ads in the United
States and I make it a practice never to license my work for
inexpensive or distasteful products.
But let's say an infringer finds the annual report. He
likes the pictures, sees no credit, and does a good faith
search that fails to identify me as the owner of the copyright.
He begins selling cheap t-shirts bearing my art. Under current
copyright law, my remedies would include statutory damages,
attorneys' fees, impoundment, and injunction for this flagrant
infringement because it's damaged my exclusive right to license
my work in high-end markets.
But in small claims court, my remedy would be what?
Reasonable compensation for use of my work on cheap t-shirts,
and even this would be limited by whatever maximum the small
claims court might set, and it would be constructed not to
deprive the infringer of the profits he made in reliance on a
so-called failure to locate me.
Without the deterrent of statutory damages and attorneys'
fees, and without a permanent injunction against repeat
offenses by the same t-shirt seller, this experience would now
act as an incentive for the infringer to exploit other
uncredited, and therefore effectively orphaned, images by other
artists. In effect, he has discovered that infringing artists
is a rational business decision, and this, in turn, could
inspire still more infringers.
This clearly violates the three-step test of the Berne
Convention, which states that exceptions to an author's
exclusive rights should apply only to certain special cases,
should not conflict with the author's normal exploitation of
the work, and should not prejudice the author's legitimate
interests. As legal scholars Jane Ginsburg and Paul Goldstein
noted in their submission to the orphan works study,
``Compliance with Berne/TRIPs is required by more than
punctilio. These rules embody an international consensus of
national norms that in turn rest on long experience with
balancing the rights of authors and their various beneficiaries
and the public. Thus, in urging compliance with these
technical-appearing rules, we are also urging compliance with
longstanding practices that have passed the test of time.''
Creating a new form of legalized infringement without
statutory remedies, even for registered copyrights, and then
offering a small claims court as a solution to the wave of
infringements that will result is not a workable approach. It
will only serve to legitimize the taking of our copyrights. For
these and other reasons, we would respectfully ask that this
Committee consider the negative effects that orphan works
legislation would have on free market transactions. The attempt
to limit the damage by adding a burden of small claims court to
our overworked Federal judiciary is simply not a viable
approach.
Now, after I submitted the written testimony, I got an e-
mail from Mr. Keely asking me to consider the issue simply as
an abstract issue and not in the context of orphan works. We
did consider it in the----
Mr. Smith. Actually, he was also asking you to change your
position on the small claims court, as well. [Laughter.]
Mr. Holland. To be--let me explain for 1 second. We
considered the issue of small claims court in the light of
orphan works legislation because this Committee has already
indicated its intent to move orphan works legislation quickly,
and it seemed simply a rational thing to consider the
possibility of the two in conjunction. Considered in the
abstract, we'd have more questions, I think, than answers about
how a small claims court would work for infringement cases.
One question, for example, is it possible to fund and
operate an entirely new Federal court system just to administer
infringement cases?
Two, if cases were scarce, would competent administration
be affordable?
Three, if cases were common, wouldn't it be settling in
court issues that should be settled in the marketplace?
Four, without discovery, how could a plaintiff be sure that
the scope of an infringement was limited to a small-dollar
issue?
Five, how many authors would favor a small claims
infringement court because they mistakenly think it would speed
the resolution of small-dollar contractual claims, which as I
understand it can already be handled in ordinary courts?
And six, how many small claims cases would break down in
meaningless resolution simply because of disputed or
inconclusive testimony by the participants?
We believe that copyrights as a form of private property
should be protected as exclusive rights. Unlike, say, dry
cleaning disputes or unpaid babysitter bills, copyright cases
require special knowledge of Federal law and international
treaties and they involve market decisions that no single
judge, let alone many judges, would be qualified to decide, nor
justified to resolve except in ordinary--when market solutions
fail. In a burgeoning world of online libraries, databases,
subscription services, and the like, the just resolution of
even simple-seeming cases may require more than splitting the
difference between contending parties.
We are afraid that the creation of a small claims court
would only lead down a slippery slope to a system where the
seller is increasingly forced to deal with the user after the
fact and creators would have to go to court more and more often
just to get paid for the routine use of their work, which in
some cases would simply mean the routine theft of their work.
That is all I have to say, and I thank the Committee for
your indulgence and the opportunity to express our opinion.
Mr. Smith. Thank you, Mr. Holland. I was about to send you
an e-mail asking you to conclude and you did, so thank you.
[The prepared statement of Mr. Holland follows:]
Prepared Statement of Brad Holland
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Mr. Smith. Mr. Perlman?
TESTIMONY OF VICTOR S. PERLMAN, GENERAL COUNSEL AND MANAGING
DIRECTOR, AMERICAN SOCIETY OF MEDIA PHOTOGRAPHERS, INC.
Mr. Perlman. Mr. Chairman, Ranking Member Berman,
distinguished Members of the Subcommittee, good afternoon. I
thank you and your hard-working staff for the opportunity to
present the views of professional photographers on this vital
subject.
I'm speaking today not only for the American Society of
Media Photographers, but with the backing of virtually every
major trade organization representing professional
photographers in this country as well as the Graphic Artist
Guild, which represents commercial illustrators and graphic
artists. Anecdotally, I should mention that today marks the
first time I can ever remember that my good friend and
colleague, Brad Holland, and I have been on opposite sides of
any issue affecting photographers and illustrators.
Mr. Chairman, you described the problem perfectly in your
introductory remarks. The facts here are really simple.
Photographers and commercial artists produce huge numbers of
copyrighted works. Infringements are constant, but suits are
rare. Why? Because there is either not enough money at stake
and/or the costs of litigating are too high.
The Copyright Office has long recognized how
disenfranchised photographers are under our copyright system.
In my job, every year, I get hundreds, perhaps thousands of
telephone calls and e-mails from photographers and members. The
scenario is almost always the same. They discovered an
infringement, they have made a demand, the infringer basically
says, ``Sue me.'' The question is, ``What can I do?'' As a
practical matter, my answer is usually ``nothing.'' Why not?
Because the photographer can't get into court.
Usually there is not enough money in controversy. The fees
for licensing photographs and graphic images are typically in
the hundreds perhaps to the thousands of dollars, depending on
the level of usage required. All you have to do is go online to
the websites of Corbis or Getty Images, register as a potential
use customer, pick a picture, pick a use that you want to make
for it, and click on the right boxes and you will get a license
fee, and you'll find that those numbers are astonishingly low.
That means that lawyers won't take the case on a contingent fee
basis.
It also means that the photographers and illustrators
cannot afford to pay the hourly rates of copyright litigators.
The numbers that I've heard so far today strike me as
astonishingly low. The numbers that I see are typically in the
mid- to high-five-figure and low-six-figure range to take a
copyright infringement case through to completion.
Even if they could get the lawyer to take the case on a
contingent fee basis, most photographers can't afford to pay
the out-of-pocket costs, including witness fees, expert witness
fees, discovery, depositions, travel, et cetera, and many
States have ethical rules that would prohibit the attorney from
advancing those.
Even if you got all the way past all of those hurdles, you
still have the basic problem that you are going to have a huge
investment of time, effort, and money and get back a small
amount, and that's assuming that you have a solvent defendant.
Eligibility for attorneys' fees is illusory. The promise of
a refund somewhere down the line a couple of years later after
you get on the train isn't worth anything if you can't afford a
ticket to get on that train in the first place.
Those are the hard costs. There are substantial soft costs.
Photographers are basically sole proprietors. They have the
choice of spending their time working or litigating. They can't
do both. They don't have any back-office support to be able to
do the work that is lost while they are dealing with the
litigation matters.
A classic example of that in the copyright context was the
case of Rock and Roll Hall of Fame v. Chuck Gentile, which is a
landmark case involving--a suit by the Rock and Roll Hall of
Fame against Gentile because of a poster he took showing the
building. He eventually won in the Sixth Circuit. Because of
insurance and his assistance from ASMP, he didn't have to pay
any money out of pocket. But the process of going through that
litigation over a couple of years cost him his marriage, cost
him his business, and drove him out of the photography business
entirely.
For lawyers and professionals, litigation is just
litigation. It is another day at the office. For photographers
and illustrators, copyright infringement cases are intensely
personal.
There are lots of potential solutions here. They have been
described and put forth in the Copyright Office report. I think
it's premature to try to deal with the details, but we would
absolutely urge you to do what the Copyright Office report
suggested and commission a study for the further investigation
of this problem. This is probably the greatest legal challenge
facing photographers today.
Thank you for your time and consideration.
Mr. Smith. Thank you, Mr. Perlman.
[The prepared statement of Mr. Perlman follows:]
Prepared Statement of Victor S. Perlman
Mr. Chairman, Ranking Member Berman, and distinguished members of
the Committee, I thank you for this opportunity to testify regarding
the desperate need of professional photographers for some sort of
structure that will give them the access to enforce their copyrights
that they do not possess under the current system. I cannot think of
any other issue that is of potentially greater importance to or impact
on professional photographers.
The American Society of Media Photographers' mission is to protect
and promote the interests of professional photographers who make
photographs primarily for publication. ASMP is the oldest and largest
trade association of its kind in the world. However, it is important to
note that my testimony today is made on behalf, not of just itself and
its members, but of virtually every major trade association in the
United States that represents the interests of freelance photographers.
Freelance photographers create vastly larger numbers of copyrighted
works than any other class of creators, yet they are the group that is
the least able to access the protections theoretically afforded by the
Copyright Act. The primary reasons for that sad fact are the extremely
high cost of federal court litigation; the typically low amounts in
controversy, when compared to the costs of litigation; the fact that
most freelance professional photographers earn comparatively modest
incomes; and the fact that many infringers are aware of this situation
and use it to their advantage.
Freelance professional photographers are small businesspeople who
are typically sole proprietors. Their training and education often
extend beyond college, and with the constant and meteoric changes
occasioned by developments in technology, their costs of and need for
continuing training are a demanding fact of life.
Those same changes in technology also make the investment necessary
to become and remain a professional photographer a staggering and
constant burden. Where once a few camera bodies, lenses and strobes
might be enough to get started, now multiple computers, monitors,
scanners, and storage devices are absolute requirements, in addition to
cameras, lenses and lights. Further, while a professional camera body
used to cost a thousand dollars or so, new professional quality,
digital camera bodies now cost many thousands of dollars, even after
adjusting for inflation. For all of these reasons, professional
photographers typically have limited financial resources at their
disposal. The movie image of professional photographers based on David
Hemmings driving a Rolls-Royce in Blow-Up is just that: a movie image.
It is as close to reality as the bar scene in the first Star Wars.
Every year, I receive hundreds of telephone calls and e-mails from
our members and other professional photographers reciting similar
stories: They have discovered an unauthorized use of a photograph. The
image was registered before the infringement. The photographer has
contacted the infringer and issued a demand. The infringer has refused
to pay a licensing fee and/or cease the infringement. In essence, the
infringer has said, ``So, sue me.'' The photographer wants to know what
to do.
In most cases, the practical answer is, sadly, ``nothing'' for the
following reasons. First, and most importantly, the amount in
controversy is likely to be only a few hundred to several thousand
dollars. One need only go to the websites of major stock image houses
like Getty Images or Corbis, (located respectively at http://
creative.gettyimages.com/source/home/home.aspx and http://
www.corbis.com for confirmation: Simply register as a potential
customer and go through the process of selecting an image and asking
for the price for a hypothetical use.
The relatively small size of the claim makes it next to impossible,
as a practical matter, to find an attorney who will take the case.
Although the Copyright Act provides for the possibility of an award of
counsel fees against the defendant if and when the photographer wins,
there is simply not enough money at stake for a decent copyright
attorney to be interested in pursuing the case:
1. He or she does not want to antagonize a judge by taking up
the court's time with a case that would be in a municipal small
claims court if it were not for the fact of exclusive federal
jurisdiction over the subject matter.
2. There is no guarantee that the defendant will actually be
able to pay any award of attorney's fees.
3. The eligibility for statutory damages is of illusory value:
The court will always try to match the statutory damage award
to its best guess of the actual damages. And no matter whether
actual or statutory damages are at stake, proving them may cost
more in expert and consultant fees than the amount at issue.
4. There is always the risk of not winning. That is always a
consideration for attorneys trying to decide whether to take a
particular case, especially where a contingent fee arrangement
is being considered; however, in this situation there is
nowhere nearly enough potential reward to counterbalance any
risk of loss.
5. The client/photographer cannot afford to pay the attorney's
fees up-front, and the amount in controversy means that
contingent fee arrangements are not available.
6. The client/photographer cannot afford to pay the costs of
litigation, separate from and in addition to attorney's fees,
such as expert witness fees, depositions, travel, etc. In many
states, even if the photographer is lucky enough to find a
lawyer who will take the case on a contingent fee basis, the
ethical rules prohibit the attorney from advancing the out-of-
pocket costs.
7. Even if none of the above factors were true, the disruption
to the photographer's business and the emotional drain of years
of litigation are simply more than most sole proprietors can
afford. Attorneys are in the business of dealing with
litigation, and we are used to living with it--it is our job,
no more, no less. We often lose sight of the soft costs of
litigation. However, to individual creators who are parties to
litigation, the experience is intensely personal and emotional,
and it stays at the front of their minds every minute from the
beginning of the case to the end, and even long after. In
addition, the time spent working on the case is time that
cannot be spent on making or marketing photographs.
As an example of the last point, you may recall the landmark case
of Rock and Roll Hall of Fame v. Chuck Gentile. The case involved
trademark and related claims asserted by the Rock and Roll Hall of fame
based on the photographer's poster showing a photo of the Hall of Fame
building. The photographer won in the 6th Circuit. Between the
photographer's insurance and help from some fund-raising by ASMP, the
photographer did not have to pay any costs of defense, himself. Despite
that, when the case was over, the time and emotional demands of the
litigation had destroyed his marriage, ruined his business, and forced
him out of the photography profession entirely. The costs of federal
litigation for an independent contractor are not limited to money--
years of investing time and energy in a single case are crippling to
people whose sole source of income is their ability to create and
market their work.
Obviously, the time that it takes to litigate a case in the federal
court system, from start to finish is, by itself, a major source of
both hard and soft costs to photographers. The sheer passage of long
periods of time forces the parties and their lawyers repeat many tasks.
This requires the photographer to pay additional legal fees that would
not be incurred if the case were disposed of quickly. It also forces
the photographer to spend time unnecessarily repeating various tasks
and meetings, time that would otherwise be spent making and/or
marketing photographs.
Another major source of both high legal fees and lost time is the
vast amount of discovery that is available under our current system.
That, combined with the interstices of procedure, allow a defendant
with a deep pocket to put a sole proprietor plaintiff in the poor house
through endless discovery requests, depositions and motions. The
wealthy and/or corporate defendant is in a position to drive up the
plaintiff's legal fees while forcing the plaintiff to choose between
searching for and copying documents, on one hand, or working for a
living, on the other.
The Copyright Office has long recognized the particular needs of
individual creators of copyrighted works and acknowledged the general
unavailability of the protections of copyright to those people, as a
practical matter. What ASMP would like to see, to correct that
situation, is a revision to the system of copyright enforcement that
would accomplish the following goal: Create a system of enforcement
that would be efficient and affordable enough to allow the practical
redress of claims involving a few thousand dollars or less.
There are many possible ways to accomplish this and variations on
how such a system could be structured. ASMP would support virtually any
arrangement that would accomplish the desired goal. However, as a
starting point for your consideration, we offer the following. In our
view, to make the system truly efficient and affordable, it should be
structured to require the parties to proceed pro se; lawyers should not
be permitted to represent either side. Once attorneys enter the
picture, the potential complexities and resultant costs escalate. This
would essentially be ``People's Court'' for smaller copyright claims.
The system should also permit only limited pre-trial discovery, if
any. All relevant documents should be submitted by the parties to the
court and each other before the hearing date. Discovery makes
litigation more extended, complex and expensive.
There should be a (comparatively) short time frame from complaint
to answer to hearing to disposition.
Hearings would be tightly controlled and of short duration. Where
the parties are in distant locations from each other, hearings might
even be conducted over video-conferencing systems rather than in
person.
Appeals should require the appellant to post a bond sufficient to
cover the appellee's estimated attorney's fees for the appeal, in the
event that the appellant lost the appeal.
We are open to all possible ways of structuring a small copyright
claims court system. However, our wish list would cap jurisdiction at
$10,000., which is the limit for many large-city small claims courts.
Our preference would also be that the judge be (or become) a
copyright specialist by virtue of his or her assignment to a copyright-
specific small claims court or to an administrative law judge position
affiliated in some fashion with the Copyright Office, perhaps along the
lines of the Copyright Royalty Judge system. One of the big problems
facing small copyright owners is the fact that many judges do not have
much familiarity with copyright, and they are particularly unfamiliar
with the customs and practices of pricing usage of commercial
photographs and other commercial works of art. Presumably, having an
adjudicator who deals with these areas of the law repeatedly would help
to eliminate that problem.
An alternative, although less desirable in our view, approach would
be to change the jurisdictional provisions of the Copyright Act to
allow state courts to hear copyright cases involving less than some
specified figure, such as $10,000. That would solve some of the
problems. However, if such cases were to be heard in state courts of
general jurisdiction, much of the delay, expense and complexity of
federal court litigation would remain. In addition, that approach would
not address, and indeed would exacerbate, the problems of insufficient
judicial copyright experience and expertise mentioned above. In
addition, it would raise issues of obtaining jurisdiction over
defendants outside the state.
As I said at the beginning of this statement, virtually everyone in
the copyright world has long recognized that photographers are uniquely
disenfranchised from access to the copyright protections to which they
are legally entitled. Anything that this Committee can do to help
correct that situation would be of great benefit to photographers and
greatly appreciated by them. Perhaps more importantly, this is one of
those all too rare situations where Congress can really do ``the right
thing,'' help the little guy, and make our legal system move a bit
closer to a system of justice, not just of laws.
Thank you for your time and consideration.
Mr. Smith. Mr. Aiken, let me address a couple of questions
to you, but before doing so say that I thought that the survey
that you conducted of the 1,200 authors was particularly
useful. I know it took a lot of time and probably cost some
money, but I thought that was very informative in a lot of ways
and appreciate you all doing so.
You answered my first question, which is did you think that
small claims court should be voluntary for both the copyright
owner and the accused infringer and you said, no, you thought
it ought to be mandatory. Otherwise people can abuse the
system.
My second question, though, is do you think there ought to
be a cap on damages or not in a small claims court?
Mr. Aiken. I think there should be a cap on damages. When
we presented to our members in the survey, we suggested $2,000
or $3,000 might be the cap. The comments several made on that
was that, while a small claims court is a good idea, that's too
small to be useful, and they suggested something like $10,000
might be a more appropriate limit.
The first part of the survey, which was not appended to my
remarks because a lot of it was not that useful, but there was
some useful information and of those members who had wanted to
file suit but hadn't, they valued their claims--59 percent
valued their claims at $10,000 or less.
Mr. Smith. It gives you an idea of where it might be.
Mr. Aiken. Exactly.
Mr. Smith. What would you do, if attorneys were involved,
what would you do about attorneys' fees? Would you have them as
part of the----
Mr. Aiken. That should be available as a remedy in the
small claims court, just as it is in Federal district court.
Mr. Smith. Okay. Thank you, Mr. Aiken.
Ms. Toomey, I know you feel that we should cast our net
wider than just this one remedy, but let me focus on the small
claims court for the time being. Do you feel, and actually some
similar questions, do you feel that it should be voluntary or
mandatory if we did have the small claims court as a remedy?
Ms. Toomey. I think Mr. Aiken made a good case for that,
for the idea that it would have to be mandatory if you were
going to do it.
Mr. Smith. And would you agree generally with the cap, as
well?
Ms. Toomey. It's very, very hard to say. Again, the music
is used in a very different way than written works are and
images are and illustrators are and so I'm not sure that I
would say that----
Mr. Smith. It may be that one size doesn't fit all in that
regard.
Mr. Holland, I know you opposed the idea of the small
claims court for some, I think, tenable reasons, but what I was
going to do was ask you to respond to the poll that Mr. Aiken
took where the vast majority, for instance, of authors agreed
that creating a small claims court was a good idea. They can't
all be wrong, can they?
Mr. Holland. If I remember Mr. Aiken's statistics, 55
percent of them favored a small claims court.
Mr. Smith. And 17 percent opposed----
Mr. Holland. Seventeen percent disfavored it, and there was
28 percent that was neutral, am I correct?
Mr. Smith. That's pretty good memory. That's exactly right.
Mr. Holland. Okay. I would think that some of them who are
neutral on the subject probably just don't know what to think.
I would also wonder--I know, first of all, there's a difference
between, say, illustrators and writers. If someone is
infringing Doris Kearns Goodwin, they will be infringing her
probably in the same area that she writes in. They're not going
to take Doris Kearns Goodwin's work and put it on an annual
report cover. Illustrators have a totally different situation.
Our infringement is more likely to be taken into the commercial
market.
Mr. Smith. My guess, though, is if you had a small claims
court for authors and others, that illustrators might well want
to jump on the bandwagon.
Mr. Holland. May I respond?
Mr. Smith. Sure.
Mr. Holland. Because I think Vic Perlman did an excellent
job of explaining what most of us feel about this. I have no
question that if you were to go to most illustrators, they
would probably--first of all, a lot of illustrators would
confuse infringement cases with contractual disputes. Most of
the artists that I know aren't so much infringed as they have
problems getting paid by some cheapskate client, and a lot of
them think that they would have to go to court--I mean, they
think an infringement court might do them benefit in that area.
Mr. Smith. Okay, thank you. Good answers.
Mr. Perlman, after what you said about attorneys' fees, I
now know why you recommended what you did, and you're probably
right. You talked about five or possibly six figures. I used a
four-figure example. I think that was wishful thinking, because
I think attorneys' fees charge a lot and oftentimes too much.
But your suggestion for the small claims court excludes any
role for attorneys, and like I say, I think I know why. Don't
you think there are going to be some instances where that
should--if the party wants legal advice, should be able to get
legal advice?
Mr. Perlman. Conceptually, yes. The problem is as soon as
we start bringing attorneys in, the complexity increases, the
costs increase. And what I was looking at was basically
People's Copyright Court. However, we would absolutely support
virtually any relief that we could get in this area, except
perhaps changing the jurisdictional laws so as to allow State
courts to handle copyright claims. We simply don't believe they
have the expertise for that.
Mr. Smith. Thank you, Mr. Perlman.
I am going to squeeze in one last question to Mr. Holland.
Mr. Holland, is there anything we could do to a small claims
court concept that would make you more comfortable with it or
not?
Mr. Holland. Well, my comfort or discomfort wouldn't speak
on behalf of thousands and tens of thousands of illustrators,
designers, medical illustrators, popular artists, sign artists.
I wouldn't presume to even comment on something that would
affect the careers of so many different people without first
finding out how they would respond to it and explaining it to
them in rational ways. It's one thing to go to people and say,
yes, you're having trouble getting paid by clients. Would a
small claims court benefit you? Yes. Everyone will say, sure,
of course because some might take advantage of it.
I think your surveys, Mr. Aiken, indicated that, what was
it, 33 percent of those said they would actually use the court
if it existed?
Mr. Smith. I think it was, yes, it was about a third said
they would use it.
Mr. Holland. Yes, something like that.
Mr. Smith. My time is up. The figure that I liked the best,
of course, was that over three times as many supported it as
opposed it. That's, I think, somewhat interesting.
The gentleman from California, Mr. Berman, is recognized
for his questions.
Mr. Berman. It's so tough, because on the one hand, the
attorneys charge too much, but when they decide to charge based
on a percentage of the recovery, they try to outlaw it.
[Laughter.]
There's an interesting juxtaposition between the
illustrators and the photographers as represented here. The
illustrators, Mr. Holland doesn't like the small claims
procedure because he sees it primarily as tied to an orphan
works proposal that he really can't stand. The photographers
have some concerns about the orphan works proposals, but
they're so unsatisfied with their access to the copyright law
that they're looking for a way apart from the orphan works
issue to be able to get a recovery. So even though you both
have some real concern about orphan works, you come down
differently on this issue. Anyway----
I guess I have one question, but it's a long one. Ms.
Toomey, on page 11 of your testimony, you note that it's
premature to address remedies for small copyright claims before
we solve the Copyright Office's larger question regarding
orphan works, and many of your members have raised the orphan
works issue. So I am wondering, do your members envision that
they will be a resurfacing owner in the orphan works context?
Is that what they're concerned about, or are they comfortable
with pursuing any resulting dispute from such resurfacing in
Federal court?
Along the same lines for Mr. Perlman, we've heard members
of your association say that a small claims court or ADR
proceeding must be developed in conjunction with any orphan
works proposal. So I guess for the whole panel, what's the time
line for this Committee? Is there a time line to address a
legislative solution for remedies for small copyright claims in
the context of orphan works?
Mr. Aiken. First, I'd like to say that we have major
problems with the orphan works proposal, as well. We see this
as a separate issue and we think it should move on a completely
separate track from the orphan works proposal. We would agree
with a lot of the criticisms we've heard of orphan works as
proposed, but we think that this is a completely separate
issue.
Ms. Toomey. I agree. I agree with that. I also think that,
for us, orphan works have a number of different issues. One of
the ways that orphan works tends to come up at, say, the Future
of Music Conference or when we're--in our testimony with AFTRA
and the AF of M earlier this year is the way that orphan works
has made uncertainty in the marketplace about using certain
types of copyrights and also recognition of some copyrights.
That's why I talked a lot about the authentication database.
The fact of the matter is that it's not simply whether you
can find the owners of licensed orphan works, but also who
actually has the right to execute them. There are works that
are orphaned simply because the owner of the copyright doesn't
make them available. So we have actually--we had a very long
list of issues with regards to the orphan works proceeding.
Mr. Berman. Well, that shouldn't be within the definition
of orphan works, that the creator decides not to make it
available.
Ms. Toomey. It's not the creator, it's the copyright owner.
So if an artist licenses their record to a label and the label
allows it to go out of print and the artist wants to put it
back in print and the public would like to get it but----
Mr. Berman. I hear a work for hire issue underlying all of
this.
Mr. Holland. Yes. My question would be whether we would be
considering this issue at all if it weren't for the concurrent
orphan works legislation. Our main concern is that----
Mr. Berman. The photographers would say we should be.
Mr. Holland. I would agree, but it hasn't come up
previously. I mean, as the Chairman indicated, this is the
first time this has been brought up, and to me, it doesn't seem
like it can be an accident that it came up at the same time as
orphan works, because our problem with orphan works is that
it's not exclusively limited----
Mr. Berman. No, no, I think there's no doubt that--I think
in large part because of the photographers, this issue of
resolving disputes in a way that's effective for certain kinds
of copyright owners in the orphan works context led to a
discussion of this, but that doesn't mean it's automatically
and necessarily linked to it. I mean, that's what I'm
wondering. Should it be?
Mr. Holland. I think it's inevitable that it will be,
because if this Committee proceeds as indicated to move this
legislation along, then I think we have to consider the small
claims court in light of the potential passage of orphan works
legislation. To consider it as a totally isolated incident--a
totally isolated circumstance, we would have to know whether
we're applying existing copyright law or the copyright law as
it will be once orphan works legislation is passed, because the
orphan works legislation is somewhat misnamed. A true orphan
works amendment would apply only to old work whose authors were
hard to find. This will literally apply to any work, any
artist's work that can't be identified or where names have been
removed.
This will mean artists who do work next year, who are doing
work right now, it will be retroactive and apply to all the
people who did work ever since 1978, when they were promised by
the Copyright Office that their work would receive protection
whether they marked it and identified it and registered it or
not. I mean, we were guaranteed basic protections for the last
30 years.
In a sense, this becomes a ``never mind'' provision, saying
that everything that we've said for the last 30 years is off
the books now and your work can be exposed if someone can't
find you. So it's not exactly an orphan works legislation.
In the Netherlands, for example, I think the Auteursvid
[sic.--Autersrecht], if I remember correctly, it's article 19.1
or something, makes a specific provision for the copyrights
dealing with family photos, for example. So that particular
issue of copyright infringement is simply taken off the table
by a precise carve-out for that. I don't see why that couldn't
be done for orphan works without exposing the work of everybody
who's working right now.
Mr. Perlman. I'm trying not to use the ``O'' word.
[Laughter.]
I believe that the two need to work in parallel. Unless
there were a guarantee that there would be an overall solution
of the small claims court/ADR problem for copyrights generally,
I think there also needs to be the pursuit of the same issue in
connection with the orphan works discussions that we have
ongoing right now. I would imagine that if there were, in fact,
solutions provided in both, that the orphan works having
started first would probably have its provisions overridden by
a repeal of the ADR/small claims court provision of whatever
orphan works legislation might become enacted, that it would be
repealed by the enacting legislation for an overall copyright
ADR/small claims court.
Mr. Smith. Thank you, Mr. Perlman.
The gentleman from California, Mr. Issa, is recognized for
his questions.
Mr. Issa. Thank you, Mr. Chairman.
Well, it's very clear that although the Chairman has
announced that this may be the only hearing on small claims,
we're clearly going to have another hearing at some point on
orphan works, and perhaps we did today. [Laughter.]
The level of concern is duly noted, though, and I share the
fact that orphan works and how to fix the problem is complex,
to say the least.
But going back to the small claims part of it, and this is
a broad question because I don't know that it was answered, if
in a perfect world you had an administrative agency rather than
a small claims court, one that would be similar to, for
example, International Claims, where you have patents who make
something outside the United States, you have in additional the
ITC, an additional court you can go to to get an injunctive
relief, and it's strictly administrative, would this be of
value?
And I'm not suggesting another piece of legislation, but
I'm hearing your concerns, particularly Ms. Toomey, your
concerns that you have some people that like it, but they're
just as afraid they'll be sued under it as the other direction.
Is it, in fact, the administrative details that bothers you and
if hypothetically it was an administrative remedy, would that
suit your purposes just as well?
Ms. Toomey. For me?
Mr. Issa. I'll start with you, please.
Ms. Toomey. I think the danger here is that copyright
exists at a very complicated intersection, not simply of art
and culture, or art and speech, or art and a million other
things. It also rests at the very complicated area of art and
art, and creating a law that's going to solve this for
illustrators, photographers, musicians, and authors, I think is
going to be very difficult and I think it would be premature to
suggest anything until we knew a lot more about it, and I think
almost everyone on the panel has said something to that effect.
I would say specifically as an example, within music,
within the exact same band, depending on the different laws,
copyright laws as well as the administration structures that
pay artists for different aspects of their work, a law that
helps a songwriter might hurt a side man. A law that helps an
orchestra might hurt an individual artist. And these kinds of--
--
Mr. Issa. Right, but if I can interrupt you----
Ms. Toomey. Oh, I'm sorry.
Mr. Issa [continuing]. We're not talking about changing the
law here. We're simply talking about bringing small claims to a
small claims court or to an administrative law judge
specifically designed to bypass the normal Federal court if it
is below a certain amount. We cannot fix the questions of
orphan works here. We cannot fix the contractual problems that
exist within your industry. I've never met a songwriter who
didn't hate the people he took his royalties from. [Laughter.]
I once had dinner with Francis Ford Coppola, and trust me,
he hated the people that brought Godfather I, II, and III to
the market and said so in very, very specific ways of how they
had tried to destroy his art. We're not going to solve those
here today.
The question really is, when you have what to someone is de
minimis in damages but to an artist is significant--let's call
it $500 to $50,000--we are looking at whether or not there's a
way to give relief that would not involve $35,000 in attorneys
for a $2,500 claim. My question, very narrowly, is if not the
small claims court, then how do you feel about an
administrative, paper-only type of procedure if the dollars are
below a certain amount?
Mr. Aiken? Thank you for your head-shaking. It allowed me
to call on you. [Laughter.]
That sounds precisely like what we need here, that a paper-
only approach makes a lot of sense. It would be accessible to
authors across the country by mail. It could make decisions
based on whether or not there's a prima facie showing, pretty
much what we had laid out in our testimony could be handled
very effectively and efficiently, we believe, by an
administrative proceeding like that.
Mr. Issa. Now, since I got a head-shake there, I'll do the
follow-up question, which is, as we all know, when you have an
administrative procedure, the losing party, particularly the
defendant, has a right to remove it in an appeal or some other
process to the next level. I would assume that your follow-up
would be that there would have to be a safeguard that if you
choose that remedy, you pay for that remedy as the person not
taking the administrative remedy and that that also would meet
your concerns, that if they take it to the next level and it
does cost $35,000, it'll be borne by the losing party. Let me
rephrase that. The person who removed it.
Mr. Aiken. Precisely. You've made my argument well. Thank
you.
Mr. Issa. Okay. If the Chairman will indulge, if anyone
else wanted to answer to that, otherwise, I will yield back my
non-remaining time. [Laughter.]
Mr. Perlman. I would like to comment. I'm sort of like the
kid in the candy shop here because we've been so desperate for
so long to get some kind of access to the legal system that
there is a wide panoply of relief, all of which would be
wonderful for us, and certainly the administrative law
proceeding is something that we put forth in our prepared
statement as one of the alternatives. Absolutely, we would love
that.
Mr. Issa. Okay. Thank you, Mr. Chairman. Once again, thank
you for holding this hearing.
Mr. Smith. Thank you, Mr. Issa.
Mr. Holland, let me just revisit one subject real quickly.
I don't want to leave a wrong impression. You read something
into our having a hearing on orphan works in close time to
having this hearing today. That was not intentional. It may
have been subconscious, but it wasn't necessarily intentional,
so don't read too much into that.
In any case, we thank you all for your testimony today.
It's very helpful on a subject, like I say, which is a first
impression for us, but nevertheless an important one. Thank you
again.
We stand adjourned.
[Whereupon, at 3:02 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Howard L. Berman, a Representative
in Congress from the State of California, and Ranking Member,
Subcommittee on Courts, the Internet, and Intellectual Property
Mr. Chairman,
It is especially good timing to have this hearing on alternative
dispute resolution mechanisms immediately after the orphan works
hearing. ADR was raised by some in the orphan works context as a way to
begin addressing some of the inequities that could result from a
statutory change. However, there are multiple instances in the
copyright context as well in which parties could benefit from forums
other than federal court to resolve copyright infringement claims.
Today will provide an opportunity to discuss the advantages of offering
alternative methods of resolving small copyright claims even outside
the scope of the orphan works provision.
As the cost of litigation rises, oftentimes a copyright owner has
to make a calculation that is entirely independent from whether the
owner will prevail on the merits of the case. The owner must ask: Is it
worth it to pursue full scale litigation when the damages or remedies
wouldn't even cover the cost of the proceeding, much less provide any
relief from infringing conduct?
A number proposals for resolving this dilemma have been suggested,
ranging from the establishment of a small claims court to expanding the
jurisdiction of Copyright Royalty Judges to determine copyright claims
in an administrative dispute resolution proceeding. I would caution
that the goal here should not be to create an opportunity for forum-
shopping as a result of substance, but merely a to create more
simplified procedures that will resolve disputes at a lower cost. I
look forward to hearing the witnesses describe circumstances in which
they may forgo a remedy because of the cost of bringing suit, and
whether they have any suggestions for reform. I doubt this is the last
we will hear on this issue.
I also would like to work with the Chairman in pursuing a Copyright
Office study on this issue. It is encouraging that in its written
testimony, the Office offers to study both 1) how and to what extent
copyright owners are hindered from seeking relief due to the cost of
litigation, and 2) what changes in the law might be advisable to remedy
the problem.
__________
Prepared Statement of the United States Copyright Office
The Copyright Office is pleased to present the Subcommittee with
its observations on the issue of remedies for small copyright claims.
In preparing the Report on Orphan Works which the Office released
two months ago, the Office was told by a representative of
photographers that a new mechanism is needed to adjudicate small
copyright infringement claims because the cost of litigating in federal
courts is prohibitively expensive in many cases.\1\ While the Office
did not believe that this issue relates directly to the problem of
orphan works or to the Office's proposed solution to that problem, the
Office observed in its Report on Orphan Works that:
---------------------------------------------------------------------------
\1\ See Comment of Professional Photographers of America, March 25,
2005, pp. 11-13, submitted in Copyright Office Study on Orphan Works
[available on the Copyright Office website at http://www.copyright.gov/
orphan/comments/OW0642-PPA.pdf] [hereinafter ``PPA Comment''].
We are sympathetic to the concerns of individual authors about
the high cost of litigation and how, in many cases, the
individual creator may have little practical recourse in
obtaining relief through the court system, particularly against
infringements involving small amounts of actual damages. This
problem, however, has existed for some time and goes beyond the
orphan works situation, extending to all types of infringement
of the works of individual authors. While there are some
mechanisms in place to help address the problem, such as
enforcement by collective organizations or timely registration
to secure the availability of statutory damages and attorneys
fees, we believe that consideration of new procedures, such as
establishment of a ``small claims'' or other inexpensive
dispute resolution procedure, would be an important issue for
further study by Congress. It is not, however, within the
province of this study on orphan works.\2\
---------------------------------------------------------------------------
\2\ United States Copyright Office, Report on Orphan Works 114
(Jan. 2006)
In subsequent discussions over proposed legislation to address the
orphan works problem, photographers have repeated their assertion that
a new procedure and forum for adjudicating small copyright claims is
necessary. While the Office does not believe that it is necessary or
even advisable to address this issue in the context of orphan works
legislation, the Office continues to believe that the issue deserves
the attention of Congress. If the Subcommittee believes it would be
helpful, the Office would be pleased to study the issue in a way
similar to the way in which the Office studied the orphan works problem
itself, and to report to Congress its findings as to (1) whether, how,
and to what extent authors and copyright owners are hindered or even
prevented from seeking relief for infringements of their copyrights due
to the cost of litigation under the current system, and (2) if the
current system does not provide adequate procedures and remedies for
the adjudication of small copyright claims, what changes in the law
would be advisable to ensure that authors and copyright owners are
able, as a practical matter, to seek remedies for infringements of
their works.
Anyone who has litigated a case--whether as a party or as counsel--
in the federal courts knows that the costs of litigation are beyond the
means of many Americans. Attorneys typically charge hundreds of dollars
per hour for their services, and it is our understanding that
contingency fee arrangements in copyright cases are relatively rare. In
a typical civil case, after pleadings, discovery, motion practice and
trial (as well as possible appeals), attorney's fees can run to tens of
thousands of dollars or more, and other costs can run to thousands of
dollars or more.\3\ If, as the Professional Photographers of America
have told us, photographers generally earn about $30,000 a year,\4\
then assertions that they are unable to take advantage of the remedies
offered by the federal courts may well be credible.\5\ It is legitimate
to ask whether the federal courts are hospitable to most small claims.
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\3\ If expert witnesses are used, as is not uncommon in copyright
cases, additional thousands of dollars or more in expenses can be
incurred.
\4\ PPA Comment 10.
\5\ It may be worth noting that in diversity actions, the minimum
amount in controversy required to invoke the jurisdiction of the
federal courts is $75,000. 28 U.S.C. Sec. 1332(a).
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Of course, there are provisions built into the copyright law that
are designed in part to provide even the copyright owner of modest
means with a reasonable prospect of recovering not only compensation
for infringement but also the expenses of litigation in a successful
infringement suit. Unlike most areas of the law, copyright law permits
a court to award a reasonable attorney's fee to a successful plaintiff
(or defendant).\6\ Moreover, a copyright owner may elect to receive an
award of statutory damages of up to $30,000 per infringed work--and up
to $150,000 per work in cases of willful infringement--in lieu of
actual damages and profits.\7\
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\6\ 17 U.S.C. Sec. 505.
\7\ 17 U.S.C. Sec. 504(c). Attorney's fees and statutory damages
are available to plaintiffs only in cases where the copyright in the
work was registered prior to the commencement of the infringement or
within three months after first publication of the work. 17 U.S.C.
Sec. 412.
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It is reasonable to ask whether these provisions offer sufficient
incentive and sufficient assurance that the copyright owner will be
able to afford the cost of litigation. In the past couple of weeks we
have asked representatives of authors and ``small'' copyright owners
about their experience in litigating infringement claims. We have heard
assertions that in many cases it simply is not worthwhile to bear the
expense of federal litigation no matter how meritorious the claim may
be. We are not in a position at this time to evaluate the accuracy of
those assertions, but it is not difficult to imagine that in many cases
an author or copyright owner engaging in a rational analysis of the
costs and benefits of litigation will conclude that in light of the
modest value of his or her infringement claim and the relatively high
cost of litigation, it makes no sense to pursue that claim.
Although the copyright law offers the advantages described above to
copyright owners who pursue claims of infringement, another provision
of the law arguably provides a disincentive to pursue small claims.
Section 1338 of Title 28 of the United States Code confers upon the
federal district courts exclusive jurisdiction over claims of copyright
infringement. As a general proposition, the longstanding exclusive
jurisdiction of the federal courts in this area is an important and
positive feature of our system. Copyright law is federal law, and
confining copyright cases to the federal courts is more likely to
ensure consistency of decision-making. It is probably also fair to say
that, as a general proposition, the quality of decision-making in the
federal courts exceeds that found in many state courts.
But, as noted above, federal litigation tends to be expensive.
While pro se litigation is possible in the federal courts, as a
practical matter in most cases it requires the assistance of an
attorney to navigate the civil procedure and substantive law. Although
state court systems offer small claims courts, which handle claims of
up to a few thousand dollars and are more congenial to pro se
litigation, the federal courts offer no such alternative. As a result,
because authors and copyright owners, unlike most other litigants, have
no choice but to pursue their claims in federal court, the costs of
federal litigation may weigh more heavily on them than on most others.
The Copyright Office expresses no definitive views on the extent to
which the current system hinders the ability of authors and copyright
owners to pursue small infringement claims, but from the foregoing
discussion it is clear that there are serious questions about the
effectiveness of the current system that merit further study.
Some have also asserted that the existing system for adjudication
of copyright infringement claims can in some cases be too burdensome
for defendants who are accused of infringement. While it is not
difficult to imagine that a wealthy plaintiff in a copyright
infringement suit could make the litigation very costly for a defendant
of modest means, the Office is not aware whether this has in fact been
a significant problem.
If it is the desire of the Subcommittee, the Office would be
pleased to conduct a study--in a way similar to the way in which it
conducted its study on orphan works--that would seek and evaluate
information on the nature and scope of the problem and, if the problem
appears to require further Congressional attention, would recommend
possible solutions. Among the information that such a study might seek
would be:
<bullet> Statistical (if it exists) and anecdotal evidence as
to the extent to which authors and copyright owners have
foregone asserting claims of infringement due to the cost of
litigation or other factors relating to the currently available
fora and remedies.
<bullet> Information about the range of amounts in controversy
in suits for copyright infringement filed in the federal
courts.
<bullet> Information relating to the range of costs that
authors and copyright owners have borne in pursuing claims of
infringement, especially in cases involving relatively modest
amounts in controversy.
<bullet> Information about the practice of the courts in
awarding attorney's fees in copyright suits, especially in
cases involving relatively modest amounts in controversy,
including the frequency with which attorney's fees are awarded,
the extent to which the awards are equal to the actual
attorney's fees expended by the prevailing party and the extent
to which such awards are collected.
<bullet> Information about existing use of alternative dispute
resolution mechanisms in addressing copyright infringement
claims.
<bullet> The extent to which collective administration and
licensing resolves problems related to enforcement of copyright
in cases involving relatively small amounts in controversy, and
where such activity has been successful in ameliorating the
high costs of litigation in federal court.
<bullet> The extent to which trade associations, guilds,
professional associations and other groups of copyright owners
have been able to provide legal services or otherwise assist
members in resolving copryight disputes involving relatively
small claims.
To the extent that such a study might find problems that need to be
addressed, the study would consider possible legislative or other
action. Possible alternatives might include:
<bullet> Amending the statute that confers exclusive
jurisdiction over copyright matters on the federal courts, in
order to permit state courts (e.g., small claims courts) to
hear copyright infringement claims where the amount in
controversy is small.
<bullet> Providing for an administrative proceeding, perhaps
in the Copyright Office, for determination of small copyright
infringement claims.
<bullet> Establishing streamlined procedures for adjudication
of small copyright infringement claims in the federal courts.
<bullet> Measures to facilitate the use of alternative dispute
resolution, such as arbitration and mediation.
The fact that the Copyright Office has identified such possible
solutions does not mean that the Office would necessarily endorse any
of them following a careful study. Indeed, even without the benefit of
further study it is apparent that there are benefits as well as
disadvantages to each of these approaches.
As always, the Copyright Office stands ready and eager to assist
the Subcommittee on this and other copyright matters.
<all>