Statement of

                         Bruce A. Lehman
               Assistant Secretary of Commerce and
             Commissioner of Patents and Trademarks

                               on
                      S. 1284 and H.R. 2441

                           before the
        Subcommittee on Courts and Intellectual Property
                   Committee on the Judiciary
             United States House of Representatives
                             and the
                   Committee on the Judiciary
                      United States Senate

                        November 15, 1995


     Chairman Hatch, Chairman Moorhead, and Members of the

Committee and Subcommittee:

     I am pleased to appear before you today to testify on two

bills that will adapt the copyright law to the digital, networked

environment of the National Information Infrastructure.

           Background on the Administration's Position

     In February 1993, President Clinton formed the Information

Infrastructure Task Force (IITF) to articulate and implement the

Administration's vision for the National Information

Infrastructure (NII).  The Working Group on Intellectual Property

Rights, which I chair, was established within the IITF to examine

the intellectual property implications of the NII and make

recommendations on any appropriate changes to U.S. intellectual

property law and policy.  Over the last two years, the Working

Group examined and analyzed each of the major areas of

intellectual property law, focusing primarily on copyright law

and its application and effectiveness in the context of the NII.

     The Working Group held its first public hearing in November

1993, at which 30 witnesses testified.  The Working Group also

solicited written comments and received some 70 statements during

a public comment period which closed on December 10, 1993.

Following its review of the public comments and analysis of the

issues, the Working Group released a preliminary draft of its

report ("Green Paper") on July 7, 1994.  The Working Group issued

the report in preliminary draft form to ensure broad

dissemination and ample opportunity for public comment prior to

making final recommendations.  Thousands of copies of the Green

Paper were distributed in paper form as well as electronically

via the IITF Bulletin Board.

     Following the release of the Green Paper, the Working Group

heard testimony from the public in four days of hearings in

Chicago, Los Angeles and Washington, D.C., in September 1994.  In

addition, more than 1,500 pages of written comments on the Green

Paper and reply comments were filed, in paper form and through

the Internet, by more than 150 individuals and organizations --

representing more than 425,000 members of the public -- during

the comment period, which extended over four months.

     The comment process afforded interested parties numerous

opportunities to submit their views on the intellectual property

implications of the development and use of the NII and on the

Working Group's Green Paper, including its preliminary findings

and recommendations.  We were pleased that the open process

instituted by the Working Group resulted in a well-developed,

voluminous record indicating the views of a wide variety of

interested parties, including various electronic industries,

service providers, the academic, research, library and legal

communities, and individual creators, copyright owners and users,

as well as the computer software, motion picture, music,

broadcasting, publishing and other information and entertainment

industries.

     The result was the White Paper, released on September 5,

1995, of which more than 5,000 "paper" copies have already been

distributed (in addition to its electronic availability on the

IITF bulletin board and the Patent and Trademark Office's World

Wide Web site).  The White Paper, officially entitled

Intellectual Property and the National Information

Infrastructure:  The Report of the Working Group on Intellectual

Property Rights discusses and addresses the special

intellectual property concerns and issues raised by the

development and use of the NII.

     The White Paper does not provide all of the answers.  It may

not even present all of the questions, and there is a simple

reason for this.  There is much that we do not -- and cannot --

now know about how the NII will develop.  Technology is advancing

at such an incredible pace that issues will certainly continue to

arise in the future, perhaps demanding more comprehensive

legislation.  At the same time, there is also much that we do

know, and the fact that future developments will raise additional

issues not currently ripe should not deter us from addressing

those that are.  We are therefore extremely pleased that Chairman

Hatch and Senator Leahy have introduced S. 1284 in the Senate and

that Chairman Moorhead and Representatives Schroeder and Coble

have introduced H.R. 2441 in the House, bills which are the same,

in all substantive respects, as the Working Group's

recommendations in the White Paper.

     Intellectual property is a subtle and esoteric area of the

law that evolves in response to technological change.  Advances

in technology particularly affect the operation and effectiveness

of copyright law.  Changes in technology generate new industries

and new methods for reproduction and dissemination of works of

authorship, which may present new opportunities for authors, but

also create additional challenges.  Copyright law has had to

respond to those challenges, from Gutenberg's moveable type

printing press to digital audio recorders and everything in

between -- photocopiers, radio, television, videocassette

recorders, cable television and satellites.

     Uses of computer technology -- such as digitization -- and

communications technology -- such as fiber optic cable -- have

had an enormous impact on the creation, reproduction and

dissemination of copyrighted works.  The merger of computer and

communications technology into an integrated information

technology has made possible the development of the NII which

will generate both unprecedented challenges and important

opportunities for the copyright marketplace.

     The NII affords the promise of:

*    a   greater   amount   and  variety   of   information   and

     entertainment resources, delivered quickly and economically from

     and to virtually anywhere in the world in the blink of an eye;

*    access   to  rich  cultural  resources  around  the   world,

     transforming and expanding the scope and reach of the arts and

     humanities  and broadening our cultural experiences  through

     diversity of content;

*    support for our education and library systems;

*    enhanced competitiveness for U.S. business and the promotion

     of job creation, economic growth, and well-being for Americans;

*    new   job   opportunities   in  the  creation,   processing,

     organizing, packaging and dissemination of information, education

     and entertainment products;

*    technology, trade and business opportunities for new

     products and new markets for U.S. industries; and

*    a  wider variety and greater number of choices for consumers

     of books, movies, music, computer programs and other copyrighted

     works; increased competition and reduced prices.

     The availability of these benefits is by no means assured,

however.  Creators, publishers and distributors of works will be

wary of the electronic marketplace unless the law provides them

the tools to protect their property against unauthorized use.

Thus, the full potential of the NII will not be realized if the

education, information and entertainment products protected by

intellectual property laws are not protected effectively when

disseminated via the NII.  Creators and other owners of

intellectual property rights will not be willing to put their

interests at risk if appropriate systems -- both in the U.S. and

internationally -- are not in place to permit them to set and

enforce the terms and conditions under which their works are made

available in the NII environment.  Likewise, the public will not

use the services available on the NII and generate the market

necessary for its success unless a wide variety of works are

available under equitable and reasonable terms and conditions,

and the integrity of those works is assured.  All the computers,

telephones, fax machines, scanners, cameras, keyboards,

televisions, monitors, printers, switches, routers, wires,

cables, networks and satellites in the world will not create a

successful NII, if there is no content.  What will drive the NII

is the content moving through it.

     Ensuring consumer access to and enjoyment of both

copyrighted works and new technologies is an attainable goal, and

recent experience has confirmed this. For example, the

introduction of digital audio tape recorders recently posed

significant problems for copyright owners.  Congress responded to

the increased threat of rampant unauthorized use with legislation

that incorporated both technological and legal measures to

protect the interests of both consumers and copyright owners.

Congress responded more recently to the impact of digital

subscription services on the recording industry by passing

performance rights legislation, which was signed by the President

this month.

     Advances in digital technology and the rapid development of

electronic networks and other communications technologies raise

the stakes considerably.  Any two-dimensional work can readily be

"digitized" --- i.e., translated into a digital code (usually a

series of zeros and ones).  The work can then be stored and used

in that digital form.  This dramatically increases:  the ease and

speed with which a work can be reproduced; the quality of the

copies (both the first and the hundredth "generation" are

virtually identical); the ability to manipulate and change the

work; and the speed with which copies (authorized and

unauthorized) can be "delivered" to the public.  Works also can

be combined easily with other works into a single medium, such as

a CD-ROM, which contributes to a blurring of the lines that

typically divide types of works and the rights and limitations

applicable thereto.

     The establishment of high-speed, high-capacity electronic

information systems makes it possible for one individual, with a

few key strokes, to deliver perfect copies of digitized works to

scores of other individuals -- or to upload a copy to a bulletin

board or other service where thousands of individuals can

download it or print unlimited "hard" copies.  The emergence of

integrated information technology is dramatically changing, and

will continue to change, how people and businesses deal in and

with information and entertainment products and services, and how

works are created, reproduced, distributed, adapted, displayed,

performed, owned, licensed, managed, presented, organized, sold,

accessed, used and stored.  This leads, understandably, to a call

for adaptation of -- or change in -- the law.

     An effective intellectual property regime must (1) ensure

that users have access to the broadest feasible variety of works

by (2) recognizing the legitimate rights and commercial

expectations of persons and entities whose works are used in the

NII environment.

     It is difficult for intellectual property laws to keep pace

with technology.  When technological advances cause ambiguity in

the law, courts look to the law's underlying purposes to resolve

that ambiguity.  However, when technology gets too far ahead of

the law, and it becomes difficult and awkward to adapt the

specific statutory provisions to comport with the law's

principles, it is time for reevaluation and change.  As the House

of Representatives noted in 1990 in its report accompanying

legislation granting copyright owners of computer software an

exclusive rental right, "[e]ven though the 1976 Copyright Act was

carefully drafted to be flexible enough to be applied to future

innovations, technology has a habit of outstripping even the most

flexible statutes."

     We are once again faced with significant changes in

technology that require reevaluation and change in the law.

Technology has altered the balance of the Copyright Act -- in

some instances, in favor of copyright owners and in others, in

favor of users.  The law should be adapted to accommodate and

adapt the law to technological change so that the intended

balance is maintained and the Constitutional purpose is served.

The Administration believes that, with the amendments proposed in

H.R. 2441 and S. 1284, the Copyright Act will provide the

necessary balance of protection of rights -- and limitations on

those rights -- to promote the progress of science and the useful

arts.  Existing copyright law needs the fine-tuning that

technological advances necessitate and that those bills provide,

in order to maintain the balance of the law.

            Discussion of the Provisions of the Bills

1.   The Transmission of Copies and Phonorecords

     A.   Distribution

     The Copyright Act gives a copyright owner the exclusive

right "to distribute copies or phonorecords of the copyrighted

work" to the public.  It is not clear under the current law that

a transmission can constitute a distribution of copies or

phonorecords of a work.  Yet, in the world of high-speed,

communications systems, it is possible to transmit a copy of a

work from one location to another.  This may be the case, for

instance, when a computer program is transmitted from one

computer to ten other computers.  When the transmission is

complete, the original copy typically remains in the transmitting

computer and a copy resides in the memory of, or in storage

devices associated with, each of the other computers.  The

transmission results essentially in the distribution of ten

copies of the work.  However, the extent of the distribution

right under the present law may be somewhat uncertain and subject

to challenge.  Therefore, the Administration supports the

amendment in S. 1284 and H.R. 2441 which would expressly

recognize that copies or phonorecords of works can be distributed

to the public by transmission, and that such transmissions fall

within the exclusive distribution right of the copyright owner.

     The proposed amendment does not create a new right.  It is

an express recognition that, as a result of technological

developments, the distribution right can be exercised by means of

transmission -- just as the reproduction, public performance and

public display rights may be.

     It is argued by some that the existing right of distribution

encompasses transmissions of copies and that no amendment is

necessary.  Indeed, the distribution right, as set forth in

Section 106(3) of the Copyright Act, can be interpreted -- and,

in at least one case has been held -- to include transmissions

that distribute copies of works to, for example, the memories of

computers.  Transmission, it is argued, is logically and legally

a means of distribution.  The Administration has no argument with

such an interpretation; it properly conforms to the intent of the

distribution right and is correct from both a practical and legal

standpoint.

     Some, however, are of the view that the current language of

the Act does not encompass distribution by transmission.  They

argue that the proposed amendment expands the copyright owner's

rights without a concomitant expansion of the limitations on

those rights.  However, since transmissions of copies already

clearly implicate the reproduction right, it is misleading to

suggest that the proposed amendment of the distribution right

would expand the copyright owner's rights into an arena

previously unprotected.  Even if the premise is correct (that the

amendment expands the distribution right), the conclusion that

the limitations of that right are not similarly expanded is

invalid.  The limitations on the right -- which place certain

distributions to the public outside the scope of the copyright

owner's right -- would necessarily expand to also place similar

distributions by means of transmission outside the scope of the

right.

     There is no reason to treat works that are distributed in

copies to the public by means of transmission differently than

works distributed in copies to the public by other, more

conventional means.  Copies distributed via transmission are as

tangible as any distributed over the counter or through the mail.

Through each method of distribution, the consumer receives a

tangible copy of the work.

     When the public performance right was initially granted, it

was thought to encompass only "live," in-person performances.

When it became clear that copyrighted works could be  publicly

performed by other means -- i.e., broadcast and, later, cable

transmissions -- the law was clarified.  The same is true today

with respect to the distribution right.  Transmission is a means

of distribution of copies, just as it can be a means of

performance.  However, the differences of opinion summarized

above underscore the need for clarification and legal certainty.

The costs and risks of litigation to define more clearly the

right -- and the time achieving such clarity would take -- would

discourage and delay use of the NII and serve neither creators

not users of copyrighted works.

     B.   Related Definitional Amendments

          To "Transmit"

     Under current technology, a copy of a work may be

transmitted.  However, the Copyright Act defines only what it is

to transmit a performance or display of a work.  Therefore, the

Administration supports the amendment in S. 1284 and H.R. 2441 to

include in the definition of "transmit" in Section 101 of the

Copyright Act a definition of what it means to transmit a

reproduction of a work.

         "Publication"

     The legislative history to the Copyright Act makes clear

that "any form of dissemination in which a material object does

not change hands . . . is not a publication no matter how many

people are exposed to the work."  Thus, a work that is only

displayed or performed via the NII would not be considered

published, no matter how many people have access to the display

or performance, because a material object -- a copy of the work -

- does not change hands.  However, in the case of transmissions

of reproductions, the recipients of the transmissions receive

copies of the work (i.e., copies of the work have been

distributed) -- although they may not have "changed hands" in the

literal sense.

     Whether the transmission of copies of works is clearly

within the scope of the distribution right is also a problem with

respect to the act of publication by the transmission of copies.

Indeed, the definition of "publication" incorporates the language

used to describe the distribution right, which S. 1284 and H.R.

2441 would amend.  Publication largely turns on whether the work

has been distributed to the public.  Thus, if copies of a work

may be distributed to the public by transmission, then a work may

be published by the transmission of copies to the public.

Therefore, consistent with the proposed amendment of the

distribution right, the Administration supports the amendment to

the definition of "publication" in Section 101 of the Copyright

Act that would recognize that a work may be published through the

distribution of copies of the work to the public by transmission.

    C.   Importation

     The Administrations also supports the amendments to the

importation provisions of the Copyright Act to reflect the fact

that, just as copies of copyrighted works can be distributed by

transmission in the United States, they can also be imported into

the United States by transmission.  If an infringing literary

work, for instance, were physically shipped into the U.S. in the

form of a paper copy, a CD-ROM disk or even stored on a memory

chip, then it would be an infringing importation if the statutory

conditions existed.

     Cross-border transmission of copies of copyrighted works

should be subject to the same restrictions as shipping them by

airmail.  Just as the distribution of copies of a copyrighted

work is no less a distribution than the distribution of copies by

mail, the international transmission of copies of copyrighted

works is no less an importation than the importation by airmail.

2.   Library Exemptions

     The copyright law carefully balances the rights of copyright

owners with the legitimate needs of users.  Nowhere is this

balancing more apparent than in the exemptions that are intended

to permit libraries reasonable use of copyrighted works to serve

the legitimate demands of their patrons.

     Libraries and those who use them, of course, may make fair

use of any copyrighted works pursuant to the provisions of

Section 107.  Section 108, however, provides additional

exemptions specifically for libraries and archives.   The

Administration supports the amendments in the bills that would

expand the exemptions in Section 108 so digital copying by

libraries and archives is permitted under certain circumstances.

3.   Reproduction for the Visually Impaired

     The NII offers real opportunities to many visually impaired

people to participate in learning, communication and discourse to

a greater extent than when only conventional modes of

communication are available.  With the aid of software and

computer equipment that is widely available, people now have the

capacity to view text on CD-ROM on screen in a "large-type"

format even if the publisher did not include such a feature, but

the publication and distribution of large-type editions remains

very important.  To ensure fair access to all manner of printed

materials, it is necessary to amend the copyright law, and the

Administration supports the amendment for the visually impaired

in the bills.  The amendment would provide an exemption for non-

profit organizations to reproduce and distribute to the visually

impaired -- at cost -- Braille, large type, audio or other

editions of previously published literary works in forms intended

to be perceived by the visually impaired, provided that the owner

of the exclusive right to distribute the work in the United

States has not entered the market for such editions during the

first year following first publication of the work.

4.   Technological Protection

     The ease of infringement and the difficulty of detection and

enforcement will cause copyright owners to look to technology, as

well as the law, for protection of their works.  However, it is

clear that technology can be used to defeat any protection that

technology may provide.  Legal protection alone will not be

adequate to provide incentive to authors to create and to

disseminate works to the public.  Similarly, technological

protection likely will not be effective unless the law also

provides some protection for the technological processes and

systems used to prevent or restrict unauthorized uses of

copyrighted works.

     The Administration supports the proposed new Chapter 12,

which would include a provision to prohibit the importation,

manufacture or distribution of any device, product or component

incorporated into a device or product, or the provision of any

service, the primary purpose or effect of which is to avoid,

bypass, remove, deactivate, or otherwise circumvent, without

authority of the copyright owner or the law, any process,

treatment, mechanism or system which prevents or inhibits the

violation of any of the exclusive rights under Section 106.  The

provision will not eliminate the risk that protection systems

will be defeated, but it will reduce it.

     The proposed prohibition is intended to assist copyright

owners in the protection of their works.  It is recognized,

however, that copyright owners may wish to use such systems to

prevent the unauthorized reproduction, for instance, of their

works, but may also wish to allow some users to deactivate the

systems.  Furthermore, certain uses of copyrighted works are not

unlawful under the Copyright Act.  Therefore, the proposed

legislation prohibits only those devices or products, the primary

purpose or effect of which is to circumvent such systems without

authority.  That authority may be granted by the copyright owner

or by limitations on the copyright owner's rights under the

Copyright Act.

     Legislation of this type is not unprecedented.  The

Copyright Act already protects sound recordings and musical works

by prohibiting the circumvention of any program or circuit that

implements a serial copy management system or similar system

included in digital audio recording devices and digital audio

interface devices.  Section 1002 provides:

     No person shall import, manufacture, or distribute any

     device, or offer or perform any service, the primary purpose

     or effect of which is to avoid, bypass, remove, deactivate,

     or otherwise circumvent any program or circuit which

     implements, in whole or in part, a [serial copy management

     system or similar system].

The Communications Act includes a similar provision:

     Any person who manufactures, assembles, modifies, imports,

     exports, sells, or distributes any electronic, mechanical,

     or other device or equipment, knowing or having reason to

     know that the device or equipment is primarily of assistance

     in the unauthorized decryption of satellite cable

     programming, or is intended for any other activity

     prohibited by [Section 605(a)] shall be fined not more than

     $500,000 for each violation, or imprisoned for not more than

     5 years for each violation, or both.  For purposes of all

     penalties and remedies established for violations of this

     paragraph, the prohibited activity established herein as it

     applies to each such device shall be deemed a separate

     violation.

     Precedent for this type of legislation is also found in the

international arena.  The NAFTA requires each party to make it a

criminal offense to "manufacture, import, sell, lease or

otherwise make available a device or system that is primarily of

assistance in decoding an encrypted program-carrying satellite

signal without the authorization of the lawful distributor of

such signal . . . ."  In 1988, the United Kingdom enacted

legislation prohibiting the manufacture, distribution or sale of

a device designed or adapted to circumvent copy-protection

systems.

5.   Copyright Management Information

     In the future, the copyright management information

associated with a work -- such as the name of the copyright owner

and the terms and conditions for uses of the work -- may be

critical to the efficient operation and success of the NII.

Copyright management information will serve as a kind of license

plate for a work on the information superhighway, from which a

user may obtain important information about the work.  The

accuracy of such information will be crucial to the ability of

consumers to find and make authorized uses of copyrighted works

on the NII.  Reliable information will also facilitate efficient

licensing and reduce transaction costs for licensable uses of

copyrighted works (both fee-based and royalty-free).

     The public should be protected from false information about

who created the work, who owns rights in it, and what uses may be

authorized by the copyright owner.  Therefore, the Administration

supports the amendment to prohibit the provision, distribution or

importation for distribution of copyright management information

known to be false and the unauthorized removal or alteration of

copyright management information.  Under the proposed amendment,

copyright management information is defined as the name and other

identifying information of the author of a work, the name and

other identifying information of the copyright owner, terms and

conditions for uses of the work, and such other information as

the Register of Copyrights may prescribe by regulation -- to

provide adequate flexibility in the future.

     The amendment prohibits the falsification, alteration or

removal of any copyright management information -- not just that

which is included in or digitally linked to the copyrighted work.

Many users will obtain such information from public registers,

where the integrity of such information will be no less

important.  The amendment also contains a knowledge requirement;

therefore, inadvertent falsification, alteration or removal would

not be a violation.

                        Conclusion

I am pleased to offer the Administration's support for these

bills, and I thank, once again, Chairman Hatch, Chairman

Moorhead, Senator Leahy and Representatives Schroeder and Coble

for introducing these bills, and the Committee and Subcommittee

for allowing me to appear today to urge enactment of them.