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1
1 LIBRARY OF CONGRESS
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3 UNITED STATES COPYRIGHT OFFICE
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5 HEARING ON EXEMPTION TO PROHIBITION ON
6 CIRCUMVENTION OF COPYRIGHT PROTECTION SYSTEMS
7 FOR ACCESS CONTROL TECHNOLOGIES
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10
11 DOCKET NO. RM 9907
12
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14
15 FRIDAY,
16 MAY 19, 2000
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19
20 The hearing in the above-entitled matter was
21 held in Room 290, Stanford Law School, Crown
22 Quadrangle, Stanford, California, at 9:45 a.m.
23
24 BEFORE:
25
26 MARYBETH PETERS, Register of Copyrights
27
28 DAVID CARSON, ESQ., General Counsel
29
30 RACHEL GOSLINS, ESQ., Attorney Advisor
31
32 CHARLOTTE DOUGLASS, ESQ., Principal Legal Advisor
33
34 ROBERT KASUNIC, ESQ., Senior Attorney Advisor
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1 I-N-D-E-X
2
3 Panel I:
4
5 Paul Hughes 3
6 Business Software Alliance, Adobe Systems
7
8 Emery Simon 16
9 BSA
10
11 Fred Weingarten 29
12 American Library Association
13
14
15 Panel II:
16
17 Steve Metalitz 111
18
19
20 Panel III:
21
22 Robin Gross 192
23 Electronic Frontier Foundation
24
25 Dean Marks 178
26 Motion Picture Association of America
27
28 Riley Russell 197
29 Sony Computer Entertainment America
30
31 Jonathan Hangartner 212
32 Bleem, Inc.
33
34 Morton Goldberg 222
35 Cowan, Liebowitz & Latman, P.C.
36
PAGE 3
1 P-R-O-C-E-E-D-I-N-G-S
2 (9:45 a.m.)
3 MS. PETERS: Good morning. We're going
4 to start our second day of hearings here at Stanford
5 University Law School. Yesterday I made an opening
6 statement. I will not repeat it. It is outside for
7 those who are not aware of it.
8 This morning we have several witnesses
9 from the Business Software Alliance. We have Paul
10 Hughes of Adobe Systems, Incorporated, and then we
11 have Emery Simon representing DSA.
12 We were supposed to have Steve Metalitz
13 representing a wide range of copyright owners. He
14 is stuck in Chicago because of bad weather. He may
15 be getting on a plane and may be able to join us
16 this afternoon, but we're not sure about that. And
17 that may cause adjustment of the starting time this
18 afternoon. We'll know by the end of this morning
19 what we'll be doing. Also with us is Frederick
20 Weingarten, representing the American Library
21 Association.
22 So we will start with Business Software
23 Alliance, and between the two of you, you decide
24 who's going first. Paul? Okay.
25 MR. HUGHES: Good morning. My name is
26 Paul Hughes, and I'm Public Policy Advisor at Adobe
PAGE 4
1 Systems. On behalf of Adobe, I would like to
2 express my appreciation for the opportunity to
3 appear before you today at this important rulemaking
4 hearing required by the Digital Millennium Copyright
5 Act.
6 Before turning to certain specific
7 issues raised by this rulemaking proceeding, I would
8 like to talk about the critical importance of
9 Section 1201 of the DMCA and Section 1201(a)(1)(A),
10 specifically, to software companies like Adobe which
11 confront a serious and pervasive piracy problem.
12 The anticircumvention rules enacted by the Congress
13 in the DMCA are the results of a deliberate and
14 considered response by the Congress to two facts:
15 dissemination of works in digital form poses very
16 real piracy threats to copyright holders; and the
17 use of technological measures to thwart such piracy
18 is needed to ensure the availability of legitimate
19 copyrighted works.
20 Let me tell you a little bit about
21 Adobe. Our chairmen, John Warnock and Chuck
22 Geschke, founded the company in 1982 with a very
23 modest business plan. They envisioned employing
24 around 40 people in what was effectively a copy
25 shop, doing typesetting based on their Adobe
26 PostScript printer language.
PAGE 5
1 Unfortunately, they failed in that
2 business plan but instead launched Adobe PostScript
3 and PageMaker and went on to launch the desktop
4 publishing revolution. Today Adobe offers software
5 for web, print and multimedia publishing. It's
6 graphic design, imaging, dynamic media and other
7 software tools enable customers to create and
8 deliver visually-rich content across all media.
9 We are now the third largest personal
10 computer software company in the United States, with
11 annual revenues of a hair over a billion dollars.
12 And it's obviously no exaggeration to say we
13 wouldn't exist -- in our current form, at least --
14 were it not for the very strong intellectual
15 property laws in the United States that have
16 protected the creative work of all of us who work at
17 Adobe.
18 Software has the dubious distinction of
19 being both the copyrighted work distributed
20 exclusively in digital form to which technological
21 protection measures were applied and also being the
22 first type of copyrighted work to be exposed to
23 massive digital piracy.
24 The markets for software are changing
25 rapidly. With the establishment of the Internet as
26 a major avenue for distributing software products,
PAGE 6
1 we see both a major business opportunity and a major
2 potential threat.
3 First, I'd like to talk about the
4 opportunity presented by the Internet. It provides
5 tremendous prospects for all types of products and
6 services to be provided and distributed more
7 quickly, more efficiently and more cost-effectively
8 worldwide. Forrester Research estimates that annual
9 e-commerce sales just among businesses totaled $100
10 billion last year and will reach $1.33 trillion
11 worldwide by 2003.
12 Technology products and, obviously,
13 software in particular are leading the way in online
14 distribution and are obvious candidates for such
15 distribution. IDC, one of the major research firms
16 in the information technology sector, predicts that
17 the worldwide market for electronic commerce in
18 software reached $3.5 billion last year and will
19 grow to $32.9 billion by 2003, as more businesses
20 and consumers become familiar with shopping on the
21 Net. According to some estimates, as much as 70
22 percent of software will be sold online by 2005. So
23 that's the good news.
24 Now, the threat. Unfortunately, like
25 other criminals, Internet pirates are ingenious and
26 adaptive, constantly finding new ways to adapt for
PAGE 7
1 illicit purposes the very technology that has made
2 e-commerce possible.
3 To give you a sobering example, if you
4 search on the Internet today, you will find over 2
5 million web pages offering links to or otherwise
6 talking about "warez," the Internet slang word for
7 illegal copies of software.
8 This rough indicator of the problem has
9 increased substantially over the past three years,
10 from 100,000 web page hits two years ago to 900,000
11 last year, and to over 2 million today. Virtually
12 every software product now available on the market
13 can be located on one of these sites, including all
14 Adobe products.
15 Indeed, the Business Software Alliance
16 estimates that, of business software in use today
17 worldwide, fully 37 percent of it is pirated. And
18 that figure doesn't include consumer software,
19 games, things like that, for which the piracy rate
20 frankly, I believe, is probably far higher.
21 To protect ourselves against pirates,
22 the software industry has used a variety of
23 technological protection measures. Often, these
24 measures require a person loading a computer program
25 on their system to enter a passcode or serial number
26 as part of the installation process. If the wrong
PAGE 8
1 code is entered the software cannot be installed or
2 accessed.
3 More recently, the industry has used a
4 variety of encryption technologies. For example, to
5 access certain antivirus products purchased online
6 and downloaded, the recipient needs a decryption key
7 which is sent by separate e-mail.
8 As the marketplace for computer programs
9 has developed, it has also become the practice of
10 most developers of business software products to
11 license their works to their customers. This has
12 proved to be a most efficient means of making these
13 works available to both vendors and consumers.
14 A business or other user will often
15 receive a single copy of the work, and the license
16 will authorize the use of that product by a
17 specified number of persons. This practice, often
18 referred to as "site licensing," is now an industry
19 standard. And to ensure that only authorized
20 persons use the software, loading a specific copy of
21 the work in a computer often requires the
22 application of a serial number, password or access
23 code to ensure that the person is legally entitled
24 to access and use the software.
25 Of course, hackers have adapted. Today
26 hacker sites offer serial numbers, access codes and
PAGE 9
1 software program "patches" that bypass or circumvent
2 encryption or other technical protections that the
3 copyright owner may have employed. Using a popular
4 search engine again, and searching this time for the
5 word "crackz" -- always with that great "z" -- we
6 recently found over one million web pages which make
7 available such patches, many of which are
8 specifically designed to defeat technological
9 protection measures.
10 To give just one example, an
11 enterprising hacker has written a small utility
12 program called "The Adobe Serial Number Generator,"
13 that unfortunately does exactly what it's name
14 suggests. It will generate usable -- but illicit --
15 pirate serial numbers that enable access to our
16 products and updaters by those who do not have
17 legitimate licensed copies of our programs.
18 The making, distribution, and use of
19 this pirate serial number generator is analogous to
20 selling burglar tools or unauthorized satellite tv
21 descramblers. The latter two categories of devices
22 are illegal under state and federal laws and
23 Congress intended to do the same thing with
24 copyright circumvention devices -- make them
25 illegal.
PAGE 10
1 From our industry's perspective,
2 1201(a)(1)(A) is an indispensable legal tool needed
3 to prevent piracy and distribution of these illegal
4 access codes and patches designed to defeat
5 technological protection measures.
6 We believe that it is self-evident that
7 the Congress recognized the critical nature of this
8 cause of action. That is why it is part of the law,
9 and why this Administration pushed hard for the
10 anticircumvision provisions of the WIPO Copyright
11 Treaty that the DMCA implements. The fact that
12 Congress saw fit to establish this rulemaking cannot
13 be treated as an opportunity to overrule the will of
14 the Congress. The consequences for Adobe, and for
15 the software industry as a whole, would be
16 disastrous.
17 The vast majority of the comments
18 submitted suggest that the anticircumvention cause
19 of action as a whole should be suspended. We,
20 obviously, strongly disagree. In addition, such an
21 action is not within the scope of this rulemaking,
22 and I'll have more on that in just a moment.
23 A great many other submissions argue
24 that non-infringing uses of works, such as those
25 contemplated under the fair use provisions of the
26 Copyright Act, somehow trump the copyright holders
PAGE 11
1 right to license and enjoy their property interest.
2 Again, that issue is not the subject of
3 this rulemaking, but much has been made of the
4 supposed danger, such as the development of pay-per-
5 use business models which may develop if this cause
6 of action goes into effect.
7 The argument that possible non-
8 infringing uses of works deserve a higher level of
9 consideration than the copyright owners' interests
10 has been the subject of much attention recently,
11 including recent litigation. We believe these
12 arguments to be ill-founded.
13 For example, in the recent UMG
14 Recordings, Inc. v. MP3.Com, MP3.Com made this very
15 argument, and the judge had no trouble disposing of
16 the argument. He wrote:
17 "Finally, regarding Defendant's
18 purported reliance on other factors (analyzing the
19 four fair-use factors set out in Section 107), this
20 essentially reduces the claim that My.MP3.com
21 provides a useful service to consumers... Copyright,
22 however, is not designed to afford consumers'
23 protection, or convenience, but rather, to protect
24 the copyright holders' property interests.
25 Moreover, as a practical matter,
26 Plaintiffs have indicated no objection in principle
PAGE 12
1 to licensing their recordings to companies like
2 MP3.com; they simply want to make sure they get the
3 remuneration the law reserves for them as holders of
4 copyrights in creative works.
5 Stripped to its essence, Defendant's
6 "consumer protection" argument amounts to nothing
7 more than a bald claim that Defendant should be able
8 to misappropriate Plaintiff's property simply
9 because there is a consumer demand for it. This
10 hardly appeals to the conscience of equity."
11 As Judge Rakoff makes clear, the goal of
12 the Copyright Act is, in part, to enable copyright
13 owners to license their works for a fee. There is
14 nothing wrong or inappropriate about this. The fact
15 that access control technologies facilitate such
16 forms of commercialization of works is not only
17 consistent with the intent of the Copyright Act
18 generally, but the specific intent of Congress in
19 enacting Section 1201(a)(1)(A).
20 Turning to specifics, the goals of this
21 proceeding are clearly spelled out in the statute
22 and relevant legislative history. Those who assert
23 that the effective date of the Section 1201(a)(1)(A)
24 prohibition should be further delayed shoulder an
25 extraordinarily high burden of persuasion. They
26 must demonstrate -- and I'm quoting here -- "through
PAGE 13
1 highly specific, strong and persuasive" evidence --
2 and now I'm not quoting -- a likelihood that, over
3 the next three years, the net impact of outlawing
4 theft of passwords, unauthorized decryption or
5 descrambling, and similar acts of circumvention will
6 be to harm substantially the ability to make
7 licensed, permitted or other non-infringing uses of
8 specifically defined "classes" of copyrighted
9 materials.
10 The arguments present in the submissions
11 and the oral testimony make a number of arguments
12 why the cause of action should not go into effect.
13 We believe that each of these fails to make the case
14 required by law.
15 Many submissions argue that Section
16 1201(a)(1)(A) should not come into effect on October
17 28, 2000 for any class of work. We believe that
18 this would have the same effect as overturning the
19 law through rulemaking, which I submit would clearly
20 be wrong. Had Congress intended this as a
21 possibility, it would not have enacted the cause of
22 action at all.
23 The statute, by speaking about specific
24 classes of works, clearly directs the Librarian to
25 examine, on a case-by-case basis, the balance of
26 interests in each case. The case must be persuasive
PAGE 14
1 and compelling, and addressed to specific classes of
2 works, and not to broad types of works such as, for
3 example, software.
4 A number of submissions are devoted to
5 arguments specific to the software industry. These
6 submissions argue that 1201(a)(1)(A) would impede
7 reverse engineering of software. The interrelation
8 between anticircumvention rules and acts of reverse
9 engineering -- and by which I mean legitimate acts
10 of studying and analyzing the computer program --
11 were considered in detail by the Congress in the
12 course of its very long deliberations on the Digital
13 Millennium Copyright Act.
14 Section 1201(f), as you know, was added
15 by the Senate during its consideration of the Act.
16 That section is a specific exception to
17 1201(a)(1)(A) and thus reflects the deliberate
18 judgment of the Congress in respect of exceptions
19 determined to be appropriate. The legislative
20 history of the Senate bill makes clear that the
21 specific intent of the Senate in adding Section
22 1201(f) was "to ensure that the effect of current
23 case law interpreting the Copyright Act is not
24 changed by enactment of this legislation for certain
25 acts of identification and analysis done in respect
26 of computer programs."
PAGE 15
1 Section 1201(f) is obviously not the
2 subject of this rulemaking. Whether changes to
3 Section 1201(f) are appropriate -- and Adobe does
4 not think any are needed -- is a matter for the
5 Congress, and the Congress has not directed this
6 rulemaking to consider that issue.
7 If you will permit, I'd like to make one
8 final point. The vast majority of the submissions
9 argue that truly bad things will happen if
10 technological measures can be used to control access
11 to software and other works. But these arguments
12 fail to recognize the fact that the use of such
13 measures is not a new development.
14 As I mentioned already, software
15 developers have long relied on technological
16 protection measures. Passwords and serial code
17 controls have been in use for over a decade.
18 Encryption technologies have been used for more than
19 five years. Over the years, companies have made
20 many changes in how they use these technologies, in
21 part as a response to consumers' needs, and in part
22 to thwart pirates.
23 The submissions filed do not argue that
24 the use of these technologies has inhibited the
25 availability of works or harmed the legitimate user.
PAGE 16
1 Why do they not argue this? Because there is no
2 evidence to bear out such a claim.
3 The gist of the arguments made is that
4 creating this cause of action against hackers of
5 copy protection technologies would somehow change
6 everything. While the submissions raise a vast
7 array of hypothetical possibilities, I submit that
8 none present compelling evidence that the ongoing
9 practices have indeed created a problem.
10 There is substantial evidence, however,
11 that hackers are developing and posting patches and
12 other means aimed at defeating these technologies.
13 Section 1201(a)(1)(A) gives us a powerful message to
14 fight back, and this is what Congress intended.
15 Adobe and BSA respectfully submit that,
16 based on the submissions and testimony to date, the
17 record fails to demonstrate that any "particular
18 class of works" is likely to be subject, over the
19 next three years, to substantial adverse impact.
20 Therefore, we argue that Section 1201(a)(1)(A)
21 should take effect on October 28, 2000, as intended
22 by the Congress. 0
23 forward to taking your questions later.
24 MR. SIMON: Thank you. Rather than
25 reading another prepared statement, I thought I'd
26 kind of try to take on some of the issues that have
PAGE 17
1 been raised in the various testimony to date, some
2 in Washington, some here yesterday. And there are
3 about five or six of these that I'd like to kind of
4 quickly run through, and then I'd like to say a
5 couple more words about the reverse engineering
6 issue as well.
7 The goal of the copyright law is not to
8 promote use of works. It is in part to promote use
9 of works, but that's only one of its goals. The
10 goal of the copyright law is to promote creative
11 expression. And somehow to read into this
12 subsection of this rulemaking the notion that a
13 predominant goal should be to promote use is simply
14 wrong. That's not the intent of the act overall,
15 that was not the intent of the Congress in enacting
16 this.
17 What the Congress did is balance a
18 series of interests, and it balanced, really, two
19 sets of interests: the interests of those who
20 create works, who make creative expressions and fix
21 them; and those who enjoy the benefits of those
22 works, we, society as a whole.
23 And it balanced the harm posed
24 potentially by piracy to those who create, against
25 the harm posed potentially to users through the
PAGE 18
1 application of technological measures to prevent
2 that harm, to prevent that piracy.
3 In drafting 1201(a)(1) the Congress
4 determined the harm of piracy was greater. That's
5 why the way this statute operates is the cause of
6 action comes into effect. That's the fault
7 presumption. It fails to come into effect only if
8 there is some superseding compelling consideration.
9 And the question there is: Is there
10 enough evidence now that wasn't there two years ago
11 to justify that superseding consideration? And I
12 think the answer is no. I think you have not heard
13 any testimony of any particular instances beyond
14 situations of mistake (like the Lexis situation of a
15 mistake in distributing a CD-ROM that had a time-
16 sensitive fuse on it) which actually suggests that
17 there's harm, that there's a problem out there.
18 Is the mere presence of a technological
19 protection measure enough to raise a red flag? I
20 think the answer to that is clearly no. What the
21 Congress said in this act in Section 1201 overall is
22 that technological protection measures are
23 appropriate, necessary means that it approves of to
24 be used in the context of preventing people from
25 stealing works.
PAGE 19
1 The fact of the technological protection
2 measure is not particularly liked by some people
3 does not mean that it's a bad thing. But a lot of
4 the testimony you have heard suggests that the mere
5 fact that somebody has applied a technological
6 protection measure -- like The New York Times
7 applying an access control measure to its articles
8 creates a chilling effect and therefore creates a
9 potential problem -- the statute is not about
10 chilling effects.
11 The harm that has to be established here
12 to suspend this cause of action is harm, actual or
13 potential. And a chilling effect does not meet that
14 test. There's nothing either in the legislative
15 history, in the Congress debate of this, or in the
16 statute itself that suggests that. In fact, there's
17 a lot of discussion that's just the opposite.
18 Okay. Class of works versus category of
19 works. Category of works is a term of art. It's a
20 statutory concept which lists particular sets of
21 things that fall into categories. Had the Congress
22 intended for class to be read as broadly as that,
23 it would have said category. Had the Congress
24 intended for class to be read more broadly than
25 category, it would have said that.
PAGE 20
1 But in fact it said -- the legislative
2 history suggests just the opposite. The examples
3 that it gives is that class is somewhere between a
4 category and an individual work. This piece of
5 paper that I wrote this morning, somewhere between
6 this and I guess all literary works is where class
7 falls. And it probably falls a lot closer to the --
8 you have to specifically figure out what that
9 universe of works is, where the actual harm is.
10 Harm is not -- and the reason I believe
11 that the Congress did this is because it did not
12 want a consequence where if, for example, one could
13 establish that chemistry textbooks, because they're
14 subject to access controls, become much less
15 available for educational purposes and that it
16 causes harm in the sense of one of the five factors
17 that have to be weighed here by the Librarian. But
18 the fact that chemistry textbooks create that
19 problem and that therefore all literary works --
20 which is the category that the chemistry textbooks
21 fall into -- should now no longer be subject to this
22 rule of law, that's clearly not what the Congress
23 meant, couldn't have been what the Congress meant.
24 Because with that, what you end up doing
25 is sweeping an enormous universe of works out the
26 door because there may potentially be a problem in
PAGE 21
1 one subsegment of that universe. So that's category
2 versus class.
3 Class is clearly much smaller than
4 category, it's probably not as small as an
5 individual identifiable work. But it's somewhere
6 between that and probably closer to that end of the
7 spectrum than it is to the end where categories sit.
8 Factors to be weighed in your
9 determination. The statute actually lists that the
10 Librarian has to examine five variables. And an
11 enormous amount of attention has been paid to the
12 fourth variable. That fourth variable says "the
13 impact of prohibiting the circumvention of
14 technological measure applied to copyrighted works
15 has on criticism, comment and use, reporting,
16 teaching, scholarship and research."
17 I also point out that in that list of
18 five, it's a conjunctive, it's an "and." And you
19 have to weigh the impact in each of those areas in
20 order to make your determination, or for the
21 Librarian to make his determination.
22 And I simply point to two of the other
23 factors. The first factor talks about the
24 availability for use of copyrighted works. And you
25 have received a substantial amount of testimony from
26 Paul, just a moment ago, and from others that the
PAGE 22
1 availability of technological measures to protect
2 our works is one of the reasons why we make works
3 available in more convenient forms to users.
4 We talked yesterday about an example of
5 what would happen if that CD-ROM containing those
6 French cases had just not been available in digital
7 form. That somebody would have gone to dozens of
8 law journals in physical form and tracked them down,
9 creating an enormous disincentive to research. The
10 fact that those kinds of materials are available in
11 digital form creates an enormous incentive to
12 research, as well as other commercial markets.
13 So the availability of works has
14 substantially increased, I would pose to you,
15 because of the availability and the increased use of
16 technological measures. That factor weighs no less
17 and no more in the list of five than any other, and
18 it can't be dismissed. It has to be weighed.
19 The second factor I'll point you to is
20 the fourth one in the statute, the one that talks
21 about the effect of circumvention measures on the
22 market for, or value of copyrighted works. In
23 making a determination that there may be harm -- for
24 example, with respect to chemistry textbooks because
25 in the classroom environment those textbooks become
26 less available and it creates an impediment to
PAGE 23
1 teaching -- before you say that that is a
2 dispositive and final decision, you have to look at
3 the other factors. And one of the factors that you
4 have to look at is what does that decision portend
5 for the market for chemistry textbooks, the
6 commercial market for chemistry textbooks. That's
7 what the fourth factor talks about.
8 And again, it's a conjunctive between
9 those factors. None of these is dispositive, and in
10 making the determination you have to weigh all of
11 them and balance them. This is ultimately a
12 balancing exercise.
13 There's been a fair amount of discussion
14 of the evils of a metered world, of a pay-per-use
15 world. I find this baffling. A huge amount of
16 commercial activity in our economy, global economy,
17 is based on metered use. I rented a car at the
18 airport yesterday. I pay so many dollars for so
19 much time. If I want to keep it longer, I pay more.
20 There's nothing wrong with that concept.
21 Telephone service. I pick up the phone
22 to make a call, and I pay for the amount of time
23 that I use it. Airport fees, airport user fees. We
24 pay user fees. We pay a whole bunch of fees based
25 upon use, upon the notion of the benefit that I
26 derive from that activity determines the price that
PAGE 24
1 I pay for it. That's at the core of a whole
2 universe of economic activity.
3 The notion that that is now going to be
4 applied to copyrighted works being wrong is, to me,
5 baffling. Because if it's wrong to be applied to an
6 intangible property interest like a copyright, why
7 isn't it also wrong for it to be applied to any
8 other property interest?
9 Like the fact that Hertz owns the car
10 that I happen to be driving around. And gee, I
11 really like this car. It's got this wonderful
12 navigation device in it, so I never get lost. I'd
13 love to take it home with me.
14 So I have initial lawful access -- and
15 I'll get to that again in a second -- I have initial
16 lawful access to this Hertz car, and it's got this
17 wonderful navigation device in it. And actually,
18 the thing that makes the navigation device is a
19 combination of some hardware and some software.
20 The software's copyrightable. Does that mean if I
21 could figure out some way to just take that software
22 out of there, and would only use it for fair use
23 purposes -- I'd guarantee it, I swear -- does that
24 mean that I could somehow take this because I have
25 initial lawful access to this car? I don't know.
26 It just baffles me.
PAGE 25
1 The notion that property can be parsed
2 based upon the benefit that the user gets out of it,
3 and the fee charged can be assigned in a way that
4 corresponds to that benefit, that's a good thing for
5 consumers.
6 If every time I flew to San Francisco I
7 had to buy a new car, that would make no sense at
8 all. And one of the increasing trends in the
9 software industry is to make applications available
10 off web pages, off the Internet, which enables
11 people to use, for example, a tax-paying program so
12 they can do their quarterly taxes by renting, in
13 effect, the use of that software off the Internet
14 instead of having to buy the product. Much cheaper.
15 Plus, you're getting it constantly updated so you're
16 getting the latest tax laws.
17 Isn't that a good thing that instead of
18 my having to pay $100 for this software program, I
19 can pay $4 once a quarter? So the business models
20 are evolving in a way that creates fees based upon
21 the benefit that is being derived. Technological
22 protection measures are integral to making that
23 possible. That's a good thing.
24 Initial lawful use I think kind of has
25 been done to death. But let's kick this one one
26 more time. Initial lawful use was a concept that
PAGE 26
1 was much discussed within the legislative process
2 that led to the enactment of the DMCA. It was a
3 concept that was posited by many of the same parties
4 who are putting it forward to you in this rulemaking
5 proceeding.
6 The term does not appear in the statute
7 because the Congress rejected the concept. For you
8 to somehow read that concept into the statute where
9 the Congress specifically rejected it would do
10 violence to the role that's been assigned to the
11 Librarian. It would be substantially outside the
12 scope of his role and his authority.
13 It is not for the Librarian to make
14 laws; it's for the Librarian to make rules
15 implementing laws. It's not for those rules to
16 overturn what the role of the Congress is.
17 I also find the concept of initial
18 lawful use kind of baffling in the library context.
19 Let's do a library context. I went to Georgetown
20 Law School, and Georgetown Law School permits its
21 alumni and its students to use the library but does
22 not permit the general public to use the library.
23 So does that mean that if, for some
24 reason I, as an alumni, do have initial lawful
25 access to that library on a wonderful Friday
26 afternoon in May, does that mean that I can go into
PAGE 27
1 that library at four in the morning on Christmas Eve
2 as well? The fact that I got in once legally, does
3 that mean that I can get in again and again?
4 Obviously, it doesn't. It can't mean that.
5 Does the fact that I took a book off the
6 shelf and read it and used it for research mean that
7 I can now take that book with me? Obviously, it
8 doesn't. The notion of initial lawful access as the
9 test simply supposes that there's only such a thing
10 as one permission. I only have an on/off switch. I
11 can give you permission or not give you permission.
12 That simply is contrary to all the
13 business models that are evolving in a digital age,
14 particularly for a software industry but I think for
15 other industries as well. And if that is the rule
16 that you would adopt -- which I would argue to you
17 is simply not permitted because it's outside the
18 scope of rulemaking because it was specifically
19 rejected by the Congress -- but if that were to be
20 the rule that you would adopt, you would defeat the
21 entire purpose of this provision.
22 There's a problem that's common to all
23 the concepts that have been raised, of the
24 categories that have been suggested to you, whether
25 they're some variation on the initial lawful access
26 notion or thin copyrighted works or some other
PAGE 28
1 concept. And the problem with them is that no
2 matter how you try to parse them, they ultimately
3 end up swallowing the whole rule.
4 There's really no way to say this is an
5 initial lawful access, fair-use type, thin kind of
6 work; and that isn't. They're all either one or the
7 other. Fair use can be exercised with respect to
8 anything.
9 Okay, last point. You really have only
10 one determination to make, and that determination is
11 adverse effect. It's really a harm test. You have
12 to find harm. If you do not find harm, the inquiry
13 stops. And the burden of finding harm is pretty
14 high. The burden is for people to present to you
15 specific instances where it has occurred. No harm,
16 no action.
17 Resist the temptation to act. I
18 understand, having been a bureaucrat, that
19 bureaucrats don't like to do nothing. Bureaucrats
20 like to do stuff. And I understand that you've been
21 charged with rulemaking, and you have this enormous
22 temptation to do something. They're all fidgeting
23 and smiling at me. Don't do anything. It's cool.
24 You know, sometimes you avoid making mistakes when
25 you do nothing.
PAGE 29
1 Okay. One last word and that's about
2 reverse engineering, which is an issue that is
3 entirely outside the scope of this rulemaking. Let
4 me say that again. It's entirely outside the scope
5 of this rulemaking. It is a matter specifically,
6 thoroughly, comprehensively addressed in Section
7 1201(f), which creates a specific exception to
8 1201(a)(1)(A). The Congress thought about it long
9 and hard, fought about it, deliberated, and enacted
10 it. That's it.
11 It may be a lousy rule, but it's not for
12 you to say that. It's for the Congress to come back
13 and think again and say, "Hey, we messed up. We've
14 got to do it again." Or not. That is not the issue
15 posed to you in this rulemaking. Thank
16 you.
17 MS. PETERS: Thank you. Fred.
18 MR. WEINGARTEN: Thank you. Actually, I
19 haven't been a bureaucrat in 20 years myself. My
20 experience is that the typical bureaucrat doesn't
21 want to do anything. And so I'm here to urge you to
22 do something.
23 My name is Fred Weingarten, also known
24 as Rick or Frederick Weingarten. I direct the
25 Office for Information Technology Policy for the
26 American Library Association, OITP. We're a small
PAGE 30
1 research and analysis office for the Library
2 Association.
3 And for the last year I've had the
4 privilege of working for the five library
5 associations in Washington -- the Association of
6 Research Libraries, American Association of Law
7 Libraries, Medical Library Association and the
8 Special Library Association -- in addition to ALA in
9 trying to do some background digging on this issue
10 and support their efforts in this rulemaking. And
11 so I'm pleased today to speak for all of those.
12 I come before you, not as a lawyer, nor
13 even in fact as a librarian, as some of you may
14 know. I'm a policy analyst. I've worked off and on
15 on information policy, including intellectual
16 property issues for many years. I was originally
17 trained as a computer scientist, but my old
18 colleagues have warned me long ago never to apply
19 that word to myself these days.
20 But I was a computing research manager
21 for the National Science Foundation for many years.
22 In fact, I made some of the early grants that led to
23 the NSF.net and Internet, and, thus, may be the
24 cause of some of this heartburn and churning that
25 we're all going through these days.
PAGE 31
1 I've also worked at the Congressional
2 Office of Technology Assessment where, in fact, in
3 the '80s we did more than one study of the impact of
4 technology on intellectual property law. And, in
5 fact, the first study we did was for Senator
6 Matthias and Bob Kastenmeyer's committees. And I'm
7 sorry Steve Metalitz didn't make it because when he
8 was working for Senator Matthias, we worked with him
9 very closely on these issues.
10 In our first report, one of the
11 questions that the Congress had asked was whether
12 they couldn't resolve some of these technology
13 issues once and for all. Couldn't they pass a
14 copyright law that anticipated technological change
15 and struck the right balances so they didn't have to
16 constantly revisit? And one of our answers was not
17 very well welcomed because it was no. And I think
18 this rulemaking here right now is evidence that we
19 were right.
20 You've really got an incredibly
21 difficult task, I think. Partly because the law is
22 really a very confusing law, many of the terms are
23 vague, ambiguous. And in our view, in fact, the
24 law's Section 1201 contains a basic paradox. And
25 you're being asked to resolve that paradox in this
26 rulemaking without a heck of a lot of guidance.
PAGE 32
1 Although the description of the process
2 of the bill made it sound very rational and
3 deliberative and carefully thought out, that's not
4 my recollection of how that bill came to pass. It
5 was extremely contentious, right up to the end.
6 Lots of different views, two different committees of
7 jurisdiction in the House, all fighting over what it
8 meant and what it should cover.
9 And so, in some sense, recourse to
10 legislative history for guidance is not too useful,
11 either. But other people closer to that have
12 already testified for us on that. But we would say
13 that we think that itself is a debatable proposition
14 for this panel to think about.
15 And, finally, you're really dealing with
16 fundamental issues. I mean, copyright law is rooted
17 in the Constitution. Rental cars aren't. So the
18 basic conflict between the public interest and all
19 of those terms in the law that we sort of encompass
20 with the term fair use -- with small F, small U --
21 are deeply embedded public policy values, and one
22 can't dismiss them lightly.
23 So we've raised in our responses and in
24 our testimony, I realize, some broad issues, broad
25 concerns, maybe uncomfortably broad. But we think
26 it's very important for this panel to consider the
PAGE 33
1 fundamental public policy environment in which the
2 rulemaking is taking place. And we understand that,
3 at the end of the process, you have to go into a
4 room and really decide specific words and get into
5 details. And that is a tough problem for you. But
6 there is a context that I think we really need to
7 raise.
8 I mentioned that the law has a basic
9 paradox. And the basic question before this panel
10 is whether technological measures intended to
11 control access to digital works also prevent users
12 from exercising their rights under copyright law to
13 use the material in non-authorized but non-
14 infringing ways. And it seems patently obvious to
15 us that they do.
16 In the first place, circumvention is
17 defined by the law as bypassing a technological
18 measure without authorization. Fair use and other
19 limitations in the law are, by definition,
20 unauthorized uses. Therefore, unless the
21 technological measure itself is programmed to step
22 aside -- or in some sense, maybe pre-authorize
23 unauthorized use -- it must block a non-infringing
24 lawful use. And that's a basic paradox in the law.
25 Let me say that, as an aside, that it's
26 not clear to me from my long ago technical training,
PAGE 34
1 that the technology needs to be that rigid. That we
2 can't have fair-use soft or fair-use friendly
3 technological measures that achieve the objectives
4 of preventing piracy and yet are flexible enough to
5 allow public interest to be fully exercised.
6 But that's an area in which we, in fact,
7 in my office are trying to open a dialogue with
8 people in the industry with some of the newer
9 entrepreneurial e-book and e-library firms. We've
10 started talking with them and, in fact, would like
11 to work out some sort of convergence of library
12 service models and business models that doesn't end
13 up in a food fight in Washington, which doesn't help
14 anybody. Although it pays my salary.
15 It seems to me that there are four
16 questions that you have before you. One, does a
17 technological measure that controls use also control
18 access? The answer is yes. And I'll discuss that a
19 little later, but I think the record for the hearing
20 has clearly established that.
21 Second question. Are there now or are
22 there likely to be in the next three years
23 technological measures that persistently control
24 access or use after a user has lawfully acquired a
25 work? Again, we think the record unambiguously
26 establishes that the answer is yes. Such measures
PAGE 35
1 already exist, and these persistent controls are
2 really central to business models envisioned by the
3 content community.
4 What works will be or are protected by
5 such measures? Well, I think one could reverse the
6 question and say what won't be. Let me just read --
7 Steve isn't here, but let me just read the range of
8 industries he will be representing when he
9 testifies: Film Marketing Association; Society of
10 Composers, Authors and Publishers; Media
11 Photographers; Publishers; Association of American
12 University Presses; Authors Guild; Broadcast Music;
13 Business Software Alliance; Directors Guild;
14 Interactive Digital Software; McGraw-Hill Companies;
15 Motion Picture Association; Music Publishers'
16 Association; Professional Photographers; Recording
17 Industry.
18 These people are all interested in this
19 hearing. Why are they interested in it? Because
20 they all want to use technological measures to
21 protect and market their works. So how can we,
22 then, say "Well, it's just this work that is of
23 concern to us."
24 The other reason that we look for a
25 broad exemption, of course, is that libraries don't
26 like to play favorites. We serve an incredibly
PAGE 36
1 diverse community. Different libraries serve
2 different communities, and it is hard to imagine a
3 kind of work that is not in our concern that we be
4 able to provide our patrons with access to it.
5 So what's the harm? Well, we believe
6 that the record has established the existence of
7 harm in four ways. First, we argue that since fair
8 use is basic public policy rooted in copyright law,
9 a balance required by the Constitution, any
10 diminution of it through strict interpretation of
11 Section 1201 is de facto serious harm.
12 You're removing from the public a basic
13 right they have or a privilege -- however you might
14 use the term -- under copyright law. And we should
15 not have to go any further.
16 Those rights and privileges have been
17 established for 300 years. First in British common
18 law, and then in U.S. law. It's been upheld by the
19 Supreme Court for many years. It's basic public
20 policy. Why should we have to show and re-establish
21 and re-argue something that has been in the law for
22 300 years?
23 Secondly, current experience with
24 licensed products in which license terms are
25 protected by technological measures shows that harm
26 is already being experienced in areas such as
PAGE 37
1 archival rights and first sale. Libraries, the
2 Copyright Office and the Librarian have every
3 legitimate reason to presume that these limitations
4 are just the leading edge of a rapid technological
5 trend, and that such harm will undoubtedly increase
6 over the next three years. And I'll get back to
7 this issue of why I use term "licensing." I'll get
8 back to that in a minute.
9 Third, although the operative section of
10 the law has not yet come into force, it is
11 reasonable to presume that when it does, the threat
12 of criminal penalties on users, coupled with the
13 vague and broad nature of the anticircumvention
14 provisions, is going to result in a severely
15 chilling effect. 0
16 on some of the testimony or some of the responses,
17 that librarians just can't wait to get out there and
18 hack. And just can't wait to provide havens for
19 piracy for their users. In fact, what I've observed
20 in my years working for the Library Association is
21 that librarians tend to be a fairly conservative
22 lot.
23 They really have other things to do than
24 to try to figure out from day to day what the
25 copyright law is letting them do or not. And in
26 such an ambiguous environment, if there's threat of
PAGE 38
1 criminal penalties particularly or lawsuit, their
2 answer will be no, even if the result is harm to the
3 user or denying the user access that they might have
4 legal rights to.
5 Fourth, it's clear that these controls
6 are not only for the purpose of preventing piracy,
7 but they are to implement and enforce a new pay-per-
8 use model on all information users. Now, let me say
9 that we're not asking you to overturn a pay-per-use
10 business model. That's not the job of the Copyright
11 Office, not the job of copyright law.
12 But it is the job of copyright law to
13 retain a balanced social policy in that environment.
14 And, in fact, if we are moving towards that model of
15 information sale, the role that libraries and
16 schools play in providing safety-valve access to the
17 information works is even more important. And it's
18 even more important to protect that role.
19 Let me quote from just one publicity
20 announcement from a vendor. And I'm not going to
21 name the vendor in this. I really don't want to pick
22 out and embarrass a particular firm. It really
23 reflects, I think, the view of the industry.
24 "This firm has developed a way for
25 publishers --" and I'm quoting -- "to receive
26 revenue each time a student accesses even a single
PAGE 39
1 page of a title. This has never been possible
2 before. Thus, older titles and out of print books
3 that have been read and studied thousands of times
4 over the years in libraries (yet have not generated
5 new income) will now produce new revenues and become
6 more valuable assets to publishers."
7 Now, if that isn't a basic threat to the
8 fundamental role that libraries have served and
9 schools have served over the last couple hundred
10 years, I don't know what is. We're not speculating
11 here; we're not imagining problems. We're saying
12 that this move to a pay-per-use model threatens the
13 very basic foundations of what libraries and schools
14 are all about. And it is important, if that is
15 happening, for us to provide or protect the safety-
16 valves inherent in fair use.
17 Let me finish by addressing four
18 particular topics that I think have caused some
19 confusion in the past. And although my addressing
20 them will probably increase rather than decrease the
21 confusion, I've been wanting to do this after
22 watching all five days of hearings.
23 The first is the problem of access and
24 use. I think for the purposes of Section 1201,
25 there's simply no useful distinction between the
26 term "access" and "use." Section 1201 does not
PAGE 40
1 prevent circumvention for use. Every time one uses
2 a digital work one accesses it. All technological
3 controls control access.
4 So if one wants to extract from a work,
5 one wants to print a work, one wants to play a movie
6 on a DVD or play a song off of a CD, or view a
7 picture, what you're really doing is accessing even
8 though, from your terms, it's a use. So access is
9 inseparable from use.
10 And in my testimony I quote Judge Kaplan
11 on the Reimerdes case. That may be the only thing
12 that Judge Kaplan said that we might agree on, but
13 we think that he clearly views access as playing the
14 DVD on a computer.
15 Secondly, the problem of persistent
16 controls. We've called these measures that continue
17 to control access after the work is initially
18 acquired persistent controls. That can be as simple
19 as a database system that requires repeated use of a
20 password each time one logs on to use it. Or they
21 can be far more complex as technology evolves.
22 These persistent controls are not just
23 for the purpose of protecting against piracy, but to
24 develop and enforce new business models, many which
25 seek to charge for uses that in the past been free
26 once a work has been lawfully obtained.
PAGE 41
1 Once again, we're not against the
2 development of those new business models. But we
3 don't think copyright law needs to be invoked to
4 protect particular business strategies. Let me
5 quote from a report by an industry marketing firm
6 that serves the publishing industry:
7 "For the past several years, digital
8 rights management (DRM) has focused primarily on
9 protecting digital content from illegal or unwanted
10 uses." And you've heard a lot about that in the
11 five days of testimony.
12 "Lately, though, the scope and emphasis
13 has been evolving to include more than just
14 copyright protection ... the pressures and
15 opportunities in digital markets are forcing both
16 publishers and their vendors to take a broader view
17 of what a digital rights management platform
18 entails."
19 And yet Section 1201, under the guise of
20 copyright law, is expected to protect all of those
21 possible models, all of those possible ways of
22 distributing information.
23 I'd like to talk a bit about
24 circumvention. Many times I've heard the panel ask
25 presenters whether they have had any experience with
26 circumvention. And I've really wished that any one
PAGE 42
1 of them has fired back a question, what is a
2 circumvention? What do you mean?
3 Since the definition of technological
4 measure is so broad and all-encompassing that it can
5 even include passwords and library cards -- as we
6 established in our comments -- what does
7 circumvention mean? Does using a password to access
8 a database, to use it in a way that is not
9 authorized in terms of the license a circumvention?
10 I don't know. But I haven't heard anybody tell me
11 it isn't.
12 That makes it very difficult for a
13 librarian to say whether or not she has circumvented
14 or not. Will misuse of a library card now become a
15 federal crime because it is a circumvention to
16 access a database in a library?
17 Linda Crowe's library offers access to
18 an online database system that requires a password
19 and a library card as an identification and entry
20 measure. Suppose somebody in that district loans
21 their library card and password to a visiting
22 relative, who then goes to the library and uses it
23 to download some information for a school project.
24 Has that person now become a federal felon for
25 circumventing 1201? I'm not sure that they haven't.
26 Now, we might say, "Well, they would
PAGE 43
1 never prosecute such a person," and so on. But that
2 raises a problem that Bob Kastenmeyer used to worry
3 about all the time, whether we're creating in our
4 copyright law the essence of a prohibition that
5 essentially makes scofflaws and criminals of us all
6 by winking at minor offenses, and we'll decide what
7 a major offense is.
8 Finally, I'd like to talk a bit about
9 the relationship between licensing and controls
10 because that's come up several times. So let me
11 suggest some considerations, because they do wrap
12 together and are very difficult to pull apart.
13 But basically there's no direct
14 relationship between the technological issue and
15 licensing. Section 1201 is part of copyright law.
16 Licensing is a contract, a private contract. So we
17 have no objection to knowledgeable parties,
18 consenting adults, agreeing to anything they want to
19 agree to. Librarians do this all the time. What we
20 object is criminal measures under copyright law
21 being tangled up in that.
22 People can license away anything they
23 want. That has nothing to do with whether Section
24 1201 and fair use in Section 1201 should be
25 protected and interpreted.
PAGE 44
1 And I'd also like to point to Jim Neal's
2 testimony -- and Lolly mentioned this yesterday also
3 and I think Karen Coyle did -- that copyright law
4 does set some boundary in negotiating licenses, sets
5 some basic principles.
6 Second, technological measures can
7 really restrict negotiation. Because as they become
8 more and more embedded in the work itself, it
9 becomes non-negotiable. You can negotiate until
10 you're blue in the face, but if the technological
11 measure is part of the work itself, there's nothing
12 to negotiate.
13 Unbalanced enforcement. If the database
14 provider that Linda Crowe works with decides that
15 that misuse of the password and library card
16 violates the terms of the license, they can jolly
17 well go to court and sue for breach of contract.
18 And if Linda thinks they're being too rigid, she can
19 go to court and sue.
20 Disputes in contract law can be resolved
21 in court and are all the time. What Section 1201
22 does, if not equipped with an exemption, is bring
23 the weight of criminal law against one party in that
24 dispute, in addition to breach of contract. That's
25 an unfair balancing. That's an interference of
26 copyright law with licensing, not a support.
PAGE 45
1 And, finally, given the trend towards
2 UCITA and non-negotiated license, the idea that
3 there's some negotiation that goes on between
4 consumers of information products -- even libraries
5 and their providers -- I think is growing dim. But
6 that's another fight.
7 In conclusion, much of our testimony has
8 sounded alarming and negative, I think, over the
9 last five days. Deliberately so. We're engaged in
10 an advocacy proceeding here. But, in fact, most
11 libraries have embraced technological change.
12 We believe that to the information
13 society in this new century, libraries will be even
14 more important, serving the public, supporting
15 health research, care providers, the legal
16 community, underpinning vital research in
17 educational missions of our schools, colleges and
18 universities.
19 We also believe that content providers
20 should be exploring new ways to serve their public
21 and expanding markets for their work. That's
22 perfectly fine. That's good. We use their
23 products. And copyright is an important tool for
24 them to do so. We're not against copyright. We're
25 not trying to undo the DMCA.
PAGE 46
1 Of course, libraries are also exploring
2 new forms of service models using these new
3 technologies. There's no reason why both interests
4 can't be served, why this can't be a win-win
5 technological change for society and for the
6 creators and for the publishers. One goal need not
7 be achieved at the expense of the other.
8 Public services provided by libraries
9 and educational institutions does not threaten, but
10 if anything, enhances business opportunities.
11 Copyright law extends rights to creators, but in the
12 name of the public interest it also assigns
13 responsibilities to them in the form of limitations
14 and exceptions.
15 They're not new ideas; they date back to
16 the earliest days of copyright law. Nor are they
17 trivial. They've served our society well for 200
18 years. We see neither technological reasons nor
19 economic reasons to sweep them under the table now
20 in the guise of controlling access to protect
21 against piracy.
22 A broad use-based exemption would be a
23 strong statement that the public interest continues
24 to be served in the digital age. Thank you.
PAGE 47
1 MS. PETERS: Thank you. We'll have our
2 question and answer session begin with Charlotte
3 Douglass.
4 MS. DOUGLASS: Thank you. I found all
5 the testimony quite informative. I'd like to get
6 into just a little bit the question of reverse
7 engineering. I know you said it two times at least.
8 So it's reverse engineering, reverse engineering,
9 reverse engineering. It's supposed to take, like, I
10 divorce you, I divorce you, I divorce you.
11 But I'm going to raise it one more time.
12 And that has to do with -- suppose there is an
13 adverse effect? It seems to me that Section
14 1201(a)(1) is supposed to address adverse effects.
15 So that if the Librarian did find an adverse effect
16 as to which non-infringing could not be made, is the
17 Librarian prohibited from dealing with reverse
18 engineering at all or finding that there is an
19 adverse effect that could be remedied by reverse
20 engineering or a computer program, for example?
21 MR. SIMON: Is reverse engineering a
22 class of works?
23 MS. DOUGLASS: No.
24 MR. SIMON: Thank you. Your rulemaking
25 is limited to classes of works. You can have
26 reverse engineering of a whole universe of stuff,
PAGE 48
1 not just computer programs. So this notion somehow
2 that reverse engineering requires some specific
3 treatment within this rulemaking is really -- again,
4 it confuses me.
5 Because this rulemaking speaks to
6 specific classes of works where harm is established.
7 It does not speak about, necessarily, what the cause
8 of the harm is. The Congress addressed a potential
9 cause of harm in Section 1201(f).
10 MS. DOUGLASS: That referred to computer
11 programs, and I think I heard someone say that
12 computer programs was a category of works, but it
13 was not a class of works.
14 MR. SIMON: It is. Read 102, Charlotte.
15 It's not a category of works. It's a literary work.
16 MS. DOUGLASS: Absolutely, absolutely.
17 MR. SIMON: So it's not a category of
18 works.
19 MS. DOUGLASS: So, okay. So that could
20 be in a class of works?
21 MR. SIMON: It could, if you were to
22 interpret the statute as saying all computer
23 programs belong to a single class. The reality is
24 that there are hundreds of kinds of computer
25 programs. There are games, there are application
26 products, there are operating systems, there are
PAGE 49
1 business products, there are consumer-aimed
2 products.
3 So the question would arise, even if you
4 were to hypothetically entertain the question which
5 you asked me -- which I think is a fundamentally
6 wrong question -- the question is, is the harm with
7 respect to what kind of software? Is it with
8 respect to computer-aided design software?
9 And are you then going to create an
10 exception for the entire class of any computer
11 program as defined in the statute? Which these
12 days, frankly, includes music and movies. Because
13 if you look at the definition of what a computer
14 program is under the act, it's anything that has a
15 series of instructions that performs particular
16 function.
17 So now you've gone back to, well, what
18 are you excluding? You're excluding not just
19 categories -- not a category, but categories. So it
20 doesn't make any sense to me.
21 MS. DOUGLASS: Okay. Thank you.
22 MR. SIMON: You're welcome.
23 MS. DOUGLASS: Do you have any further
24 comment on that at all?
25 MR. HUGHES: Other than to say that I
26 agree with Emery, section 1201(f), I guess, was
PAGE 50
1 beamed in maybe midway through the long DMCA process
2 on Capitol Hill and was beamed in specifically
3 because there were people who were concerned about
4 the potential negative effect of Section 1201 on
5 reverse engineering for the purposes of
6 interoperability.
7 And they wanted a specific section --
8 the advocates of this concern wanted a specific
9 section of 1201 dealing with that. And they got it.
10 And indeed, you know, by analogy we have, as you
11 know, another section dealing with encryption
12 research and another section dealing with security
13 testing, firewalls, that sort of thing. So
14 certainly it would be my read that those would fall
15 outside the scope of 1201(a).
16 MR. SIMON: The rulemaking.
17 MR. HUGHES: The rulemaking. And
18 indeed, therefore this rulemaking.
19 MS. DOUGLASS: Okay. We had a comment
20 about Fontographer. And one commenter said that in
21 some situations there was a Fontographer program
22 where he was licensed to program, but there was a
23 glitch in the software. And for some reason that
24 the copyright owner didn't have in mind, he could
25 not access that program.
PAGE 51
1 Now, would he be prevented from fixing
2 that glitch by 1201(a)(1)(A) if it came into force
3 without an exemption, with respect to that?
4 MR. HUGHES: I'm afraid I'm not familiar
5 with the specific case. It's hard to answer.
6 Fontographer is probably a product developed by a
7 company called Altsys, that was then bought by
8 Macromedia. And I guess they haven't done any new
9 revision of this program in quite a long time.
10 But I'm not, frankly -- you know,
11 obviously there's a licensing issue, whether the
12 license would prohibit reverse engineering. But
13 actually, as far as I know, this program is an old
14 enough program that I'm not sure, in fact, it's
15 protected. This is pure speculation at this point
16 because I've never used the program.
17 But I'm not actually sure it's protected
18 by a technological protection. And that would then
19 be the issue. If it were, then I would say it would
20 be covered by the 1201(a)(1)(A) prohibition. Emery?
21 MR. SIMON: I don't know what the
22 problem is, Charlotte. There's a glitch in the
23 program?
24 MS. DOUGLASS: Yes.
25 MR. SIMON: This person's trying to
26 engage in what, error correction?
PAGE 52
1 MS. DOUGLASS: Yes.
2 MR. SIMON: And he can't do so because
3 what?
4 MS. DOUGLASS: Because the error
5 correction required that he override some kind of
6 technological control. And he's afraid to do that
7 because of 1201(a)(1). He would be afraid of doing
8 that.
9 MR. SIMON: Well, would be is -- I mean,
10 I can't answer that question. I don't know the
11 product, I have no idea what the technological
12 control is.
13 MR. HUGHES: Actually, maybe I could
14 just leap in with an analogy that I think is
15 somewhat on point. Firstly, this product is from a
16 company -- you know, it's still in business as far
17 as I know. It's still a supported product.
18 So I would say that his first course of action would
19 be to deal with the company.
20 But then kind of stepping back, I think
21 this is -- presumably in your example, the person
22 who wants to do this bug-fixing, for whatever
23 reason, either doesn't want to deal with the company
24 or doesn't -- I'm speculating doesn't want to follow
25 the steps that the company wants him or her to
PAGE 53
1 follow and so wants to take some alternate course of
2 action.
3 I think it would be a little bit like
4 one of the examples Emery cited. I mean, suppose I
5 dropped off my clothes at the drycleaner, and I
6 prepaid for them. Just follow me here. But it
7 wasn't convenient for me to come back and pick up my
8 clothes during the hours that the drycleaner was
9 open so I decided I wanted to come back at some
10 completely different time, break into the store and
11 get the clothes.
12 I mean, it seems to me if this computer
13 program were actually covered by technological
14 protection measures -- and I'm not sure it is --
15 your user is putting his convenience above the
16 rights of the company that published the program to
17 protect their property.
18 In other words, he's saying, "I don't
19 want to follow the steps that the company may have
20 provided for me to fix the program. I want to kind
21 of hack it myself." And I think Congress' intent
22 here is clearly that the company should have the
23 right to control it.
24 MS. DOUGLASS: Maybe he can't follow the
25 steps. Maybe he can't get a hold of the company.
26 Maybe the company folded or something like that.
PAGE 54
1 And, of course, some people might answer "Well,
2 what's the problem? Because the company folded, the
3 company's not around to sue you anyhow."
4 So I mean, I was just trying to get at,
5 you know, if it's an extremely minor glitch and the
6 person was trying to fix a bug to operate the work,
7 whether that should be something within the scope of
8 an exemption, and I get your clear answer so thank
9 you.
10 Bear with me for one second, please. I
11 thought I had a question for you, Mr. Weingarten,
12 but I think I don't right now. If I get it later,
13 maybe I can ask. Thank you.
14 MS. PETERS: Rob.
15 MR. KASUNIC: Good morning. I think I
16 want to start by returning to the issue of reverse
17 engineering for a minute. And just to clarify that,
18 going into the scope of what is a class of works and
19 how reverse engineering fits in.
20 First of all, reverse engineering would
21 be a form of circumvention; wouldn't that be true?
22 MR. SIMON: Not necessarily. Not
23 necessarily. If there is no technological
24 protection measure in place, there's no
25 circumvention.
PAGE 55
1 MR. KASUNIC: Okay. So if we're dealing
2 with a situation where there's a technological
3 protection measure, then in order to -- if there was
4 an exemption to circumvention, reverse engineering
5 would be a way to accomplish that?
6 MR. SIMON: If you were doing it for the
7 statutorily-permitted purpose.
8 MR. KASUNIC: Okay. And then in terms
9 of -- there was some discussion about class of
10 works, categories of works that talked about finding
11 computer -- that Charlotte had asked whether
12 computer programs could be seen as a class of works.
13 And you said, I think, Mr. Simon, that that could be
14 too broad as a category.
15 When you were citing the legislative
16 history before, in terms of narrowing, you were
17 citing references in the legislative history to
18 narrow it from categories. You were saying a
19 particular part that you mentioned -- for instance,
20 motion pictures were cited as something that could
21 be a category of works.
22 Isn't computer programs exactly related
23 in that way to -- it's something less than a
24 category, but you talked about things like
25 particular games, for instance. Wouldn't that be
PAGE 56
1 something that would be too narrow in that same
2 section of the legislative history?
3 MR. SIMON: No. The legislative history
4 speaks specifically to that issue as well. There
5 are examples in there about motion pictures; there
6 are examples in the legislative history about
7 software as well. And what it does is, it says it's
8 not all of software. It's some subdivision of
9 software.
10 MR. KASUNIC: And so could that
11 subdivision be something related to a particular
12 type of use then, as opposed to just a particular
13 genre of it, like games?
14 MR. SIMON: That's not what the statute
15 speaks to. It speaks to classes of works. It does
16 not speak to uses of classes of works. It talks
17 about users, but it does not -- I mean, there are
18 different people that use different works in
19 different ways. So to define a class of uses, I'm
20 not quite sure how you do that.
21 A word-processing application is used by
22 a huge universe of users. So the statute speaks
23 about the users. It doesn't speak about the uses
24 they put it to. If the definition had been
25 contingent upon function or purpose, then that's
26 what the statute would have said. It doesn't.
PAGE 57
1 MR. KASUNIC: Well, I'm not sure I
2 understand how you can say that the statute doesn't
3 speak to uses when there is quite an abundance of --
4 the focus being on adverse effect of non-infringing
5 uses.
6 MR. SIMON: No. The statute speaks to
7 users.
8 MR. KASUNIC: It says in Subsection D
9 that "non-infringing uses by persons who are users
10 of a copyrighted work are likely to be adversely
11 affected." So there is certainly a part of the
12 focus is on the particular use that that phrase is
13 used in there. Should we just completely ignore
14 that part?
15 MR. SIMON: Well, maybe I can help you
16 better if you were to explain to me the relevance to
17 the particular example that you're raising of that
18 concept.
19 MR. KASUNIC: Well, I'm just trying to
20 focus in how we -- with this class of works and the
21 narrowing, that there is a certain amount of --
22 there isn't anything specifically that says how this
23 can be defined or that necessarily limits within how
24 the Librarian can define a class of works. So that
25 there are certain considerations that are brought
PAGE 58
1 into this with non-infringing uses, users and that
2 can go into that consideration of class of works.
3 MR. SIMON: Do you think the fact that
4 this Congress has spoken specifically to the issue
5 of interoperability and reverse engineering for that
6 purpose is relevant to the determination of harm?
7 MR. KASUNIC: Well, I don't think I
8 should be testifying on that. But I would ask you
9 that question.
10 MR. SIMON: Well, I've answered that
11 question. I think it's dispositive on the issue.
12 MR. KASUNIC: But the fact that there is
13 this scope of non-infringing uses, and looking at
14 adverse effects, that that doesn't have -- even if
15 that was found in that particular area of computer
16 programs, that that would not -- because there is
17 some mention of reverse engineering, that that would
18 take this outside the scope of the Librarian's
19 authority?
20 MR. SIMON: The statute speaks to one
21 area where reverse engineering is permitted, and
22 that's for the purpose of interoperability. That
23 was the area where the Congress thought there was a
24 danger, and it spoke to that danger. If it had
25 thought there were other areas where there was a
PAGE 59
1 danger in this particular narrow area, it would have
2 spoken to those as well. It did not.
3 So for you to now somehow read the
4 congressional examination as incomplete or as
5 erroneous, and for you to find other areas of danger
6 than the ones that Congress found, I don't quite
7 know how you get there.
8 MR. KASUNIC: Well, isn't an essential
9 part of this whole 1201(a)(1) that it's continuing
10 in nature, that technology does not stay static?
11 And so we have a situation where this has to be
12 monitored over time, and that if changes had
13 occurred from the time when this was initially
14 enacted, there has been some time that has passed,
15 wouldn't that be relevant to our inquiry?
16 MR. SIMON: Sure. Show me the harm.
17 MR. KASUNIC: Okay. But it is relevant
18 that conditions can change and that the situation
19 that affected the reverse engineering at the time
20 could at some later time be relevant?
21 MR. SIMON: Hypothetically, anything's
22 possible. Show me the harm.
23 MR. KASUNIC: Let me switch to Mr.
24 Weingarten for a second. There was -- I give you an
25 opportunity, since Mr. Metalitz is not here to
26 respond to -- part of the argument that was made in
PAGE 60
1 his comments -- and see what your response would be
2 to the fact he said that Congress spoke to non-
3 infringing uses, but it was primarily speaking to
4 permitted or licensed uses, as opposed to fair use.
5 And the rationale being that fair use is
6 not always a non-infringing use, but that only
7 permitted or authorized uses are really always non-
8 infringing uses. How do you think that that fits
9 into it?
10 MR. WEINGARTEN: It's too torturous for
11 me to deal with. Actually, that's a question of
12 interpretation of law that -- I think you had
13 offered to send me written questions. I would like
14 you to send that question in writing to Arnie. That
15 might be more direct. I don't even understand the
16 question.
17 MR. KASUNIC: Okay. Well, you did talk
18 about fair use as a basic public policy. And how
19 would you explain, then, the absence of the
20 preservation of that basic public policy within the
21 statute itself? There was discussion that Congress
22 had the option of including a broad exemption for
23 fair use within 1201, but chose not to include that
24 as one of the specific exemptions. How would you
25 explain that?
PAGE 61
1 MR. WEINGARTEN: It's a very tough,
2 contentious debate. And that law was hotly debated
3 all the way to the end. In fact, these terms of
4 1201 were hotly debated to the end. If Congress
5 hadn't been troubled by it, this ruling wouldn't
6 have been called for.
7 And I think the idea that they
8 established the rulemaking, but established the bar
9 of proof so high that no exemption could be -- you
10 know, nobody could possibly meet that test is to
11 trivialize the decision to establish this.
12 I don't think Congress really was
13 comfortable -- I mean, we're talking about 535
14 people as if they're one person sitting there. But
15 I don't think that Congress as a body was fully
16 comfortable with that paradox that I referred to in
17 my testimony that basic public interest was going to
18 be fully served by the restrictions in 1201. And
19 this rulemaking was sort of the uncomfortable
20 compromise that came out of it.
21 So I don't think it would be fair to
22 say, "Well, they decided and didn't clearly exempt
23 non-infringing uses; therefore, they didn't intend
24 to." I think their discomfort is clear, and that
25 this is a meaningful rulemaking because of that.
PAGE 62
1 MR. KASUNIC: Well, on the same issue of
2 fair use and the other two DSA panel, Mr. Hughes, in
3 your testimony you mentioned that the goal of
4 copyright is to enable copyright owners to license
5 their works for a fee.
6 There is, however, other case law from
7 that which you cited where the Supreme Court has
8 clearly stated that that's not the primary goal of
9 copyright -- the reward to the owner -- but rather
10 was a secondary consideration, and the primary goal
11 would be the general public benefit.
12 How does -- isn't that something that
13 should be a factor in this balancing that is a part
14 of this process that you folks talked about?
15 MR. HUGHES: No, I think absolutely.
16 And we talked about, you know, the different
17 simultaneous goals of copyright law. And indeed, in
18 your rulemaking, I would argue that this five-part
19 test that Emery discussed some of is indeed a
20 balancing exercise.
21 But I think it might be worthwhile just
22 to kind of step back a little bit, and, you know,
23 just keep in perspective why 1201(a)(1)(A) -- too
24 many letters there -- is here in the first place.
25 And that is because Congress recognized, and indeed,
26 the Administration earlier when it was negotiating
PAGE 63
1 the WIPO copyright treaties as you all know,
2 recognized what a problem piracy was in the digital
3 age.
4 I mean, we probably don't have time for
5 it, but I could give you lots of examples of ways in
6 which our products have been ripped off and ways in
7 which this section of law will, in a way, help us
8 return as it were to the sort of status quo before
9 the Internet by protecting our products.
10 Because I think it's self-evident that
11 in the copyright world there have always been both
12 legal but also just kind of physical impediments to
13 piracy. I mean, you know, it's physically possible
14 to xerox a book, but it would cost money and it's a
15 pain in the tush. You know, who would want to do
16 it?
17 And what technological protection
18 measures on digital works let us do is basically the
19 same thing: reimpose some sort of difficulty, as it
20 were, in pirating works. In a way, it's a means of
21 self-help. But there's also a very positive thing.
22 1201(a)(1)(A) is not just about us an
23 industry playing defense. I think it's also
24 important to keep in perspective this is really an
25 enabling technology for consumers. I mean, it lets
26 us do all kinds of neat things, and offer all sorts
PAGE 64
1 of new technologies that we wouldn't have been able
2 to offer before.
3 I mean, a great example is "trialware,"
4 which you've probably seen if you surf the Internet
5 a fair amount. You know, in the past when you
6 wanted to buy software, you had to go into the
7 store, you'd have to buy the box. And if the
8 software didn't work out for you, you didn't like
9 its features, you'd have to return it. And, indeed,
10 certainly Adobe's license lets you do that, but it's
11 a real bother.
12 The neat thing about trialware is, from
13 our website for most of our products, you can
14 download a completely functional, full working
15 version of our products with complete documentation.
16 It just has a time-out on it.
17 So after 30 days or 90 days, whatever --
18 you know, we disclose right up front, your time's
19 up. And you as a consumer can then decide if you
20 want to buy it, in which case you get some sort of
21 activation device from us.
22 Now, without the protections of
23 1201(a)(1)(A) this would be a very dangerous
24 exercise to offer this kind of service. I mean,
25 another example is how Adobe some years ago used to
26 market an encrypted CD-ROM called "Type On Call."
PAGE 65
1 And we had the whole Adobe library of typefaces, you
2 know, more than $10,000 worth of retail value,
3 hundreds and hundreds of type fonts on an encrypted
4 CD-ROM.
5 And the idea was if you were a graphic
6 designer at two in the morning, you're finishing up
7 some project for your client, and "Oh, damn. I
8 don't have the font I need." It enabled, in an era
9 when CD-ROMs were really hot, it enabled you to call
10 an 800 number and get an unlock key for that
11 particular font that you wanted to buy.
12 Now, this is in an era before
13 1201(a)(1)(A). What happened was someone cracked
14 the encryption on the CD-ROM, and we basically
15 stopped selling it. And it's a little bit more
16 complicated than that. There were some other
17 reasons as to why we stopped marketing it, but
18 basically we realized that we were, if not naked,
19 wearing sort of fewer clothes than we would have
20 wanted legally, out there basically handing out our
21 products in encrypted form.
22 And our cause of action in going after
23 someone that could put a hack up on the matter of
24 distributed or otherwise, how to get around our
25 encryption -- I mean, there are a lot of dots to
26 connect under a contributory infringement theory to
PAGE 66
1 get at stopping that hack. And what 1201(a)(1)(A)
2 does, it lets us put technologies like that
3 encrypted CD-ROM back on the market.
4 So we're excited about the kind of
5 business models this enables -- and you know, we
6 think it will be very good for consumers. And,
7 frankly, we're obviously in business to make -- to
8 do things good for our customers. And if we, as
9 you've heard in testimony today, make things too
10 hard for our customers or we're too onerous in our
11 technological protection measures as to
12 inconvenience them, they'll go elsewhere. We're
13 very conscious of that.
14 MR. KASUNIC: Well, I'd say that Section
15 1201(a)(1) is an effective legal weapon against all
16 these forms of piracy and the use of passwords and
17 serial numbers. Assuming, though, that we found
18 sufficient evidence of adverse effect in some form
19 of non-infringing in some area of computer program.
20 How would we define the class of works that we were
21 going to exempt? Would we just -- would it be
22 computer programs in general, or would it be
23 computer programs related to a specific type of use
24 to -- that would avoid the problem that we -- the
25 specific problem that we have?
PAGE 67
1 MR. SIMON: I think that one would have
2 to figure out what the harm is to figure out what
3 the proper remedy is. And for us to ask the
4 question what the proper remedy is in the absence of
5 knowing what the harm is, I don't know. I don't
6 know how to answer that question.
7 MR. KASUNIC: All right. So it seems
8 like there could be, then, some relationship --
9 rather than have a general --
10 MR. SIMON: There is quite a tradition
11 in American jurisprudence of tailoring remedies to
12 harm, isn't there? So it would make sense in this
13 instance to show us the harm. If you can identify
14 the harm, you can tailor a response to it. The
15 notion that somehow, because there's a hypothetical
16 possibility of some harm, you're going to simply
17 take all categories of works outside the scope of
18 this cause of action doesn't make any sense. That
19 is not just a shotgun, that's a nuclear device in
20 response to a hypothetical possibility.
21 So the answer to the class question
22 depends on the harm question. And you first need to
23 cross the harm threshold before you can get to the
24 class threshold.
25 MR. KASUNIC: One last thing on the type
26 of protection measures used. You mentioned serial
PAGE 68
1 numbers, passwords and access codes. We've also had
2 testimony on one type of protection measure dealing
3 with hardware locks. And I understand that Adobe
4 has used those.
5 MR. SIMON: Actually, it's Autodesk that
6 has used those. You're talking about dongles?
7 MR. KASUNIC: Yes.
8 MR. HUGHES: We also use them, and have
9 used them in some of our products.
10 MR. KASUNIC: And what is the specific -
11 - just to get the other side of the perspective on
12 this. What is the purpose of those? Is that an
13 access control measure, or a use control measure, or
14 some combination of the two?
15 MR. HUGHES: As Adobe has used them, as
16 I understand them -- I'm not an engineer, but it's
17 an access control measure. On very high value
18 software that our analysis has shown has a very high
19 likelihood of being pirated, we have gone to the
20 trouble and expense of engineering a dongle.
21 Believe me, it's not something that we
22 do lightly, because it adds to support requirements.
23 The dongle is expensive. Dongles, just like
24 software, get cracked. You know, you can travel in
25 the Far East and you can find dongles for sale.
PAGE 69
1 People come up with software patches to go around
2 the dongles.
3 Our users very often tend not to like
4 them much. It certainly -- if you have a computer
5 program that your license may allow you to use on
6 more than one machine, but not simultaneously, if
7 you have a dongle -- obviously, you're going to have
8 to be moving that around from computer to computer.
9 So, you know, it's not something at
10 Adobe that we use lightly. And as far as I know
11 right now, the only major product we use it on is
12 Adobe After Effects, which is a very high-end
13 professional film compositing and special effects
14 program, which sells -- has a retail value of about
15 $1,000, but is very pirated.
16 The other reason we employ dongles is
17 because, on the access issue we have a real issue
18 with end-user piracy. You know, the term of art in
19 the piracy community. Where a company may buy a
20 couple copies of a given product or license a couple
21 copies, and then install it on more than one
22 machine. 0
23 effective way to enforce the fact that people
24 actually follow that license provision. But again,
25 we're conscious of inconveniencing our users, and so
26 definitively it's a balance.
PAGE 70
1 And I think we trust the market to make
2 this determination, and I would respectfully submit
3 that you should too. Because Adobe competes hard
4 with Microsoft, Macromedia, Apple, Corel, a whole
5 series of cinema-editing type programs. And
6 shareware and freeware.
7 I mean, one of the most capable
8 competitors to Photoshop out there is a program on
9 the Mac platform called "Graphic Converter," which
10 is a piece of freeware developed by this
11 enterprising programmer named Thorsten Lemke who
12 lives in Germany.
13 And so we want to keep Photoshop from
14 being pirated, definitively. But if we cross the
15 boundary in terms of user inconvenience, we're very
16 conscious our customers can go elsewhere.
17 MR. KASUNIC: Thank you. Rachel?
18 MS. GOSLINS: Thank you. Mr. Hughes,
19 are the trialwares you talked about available now on
20 the Acrobat, on the Adobe's website?
21 MR. HUGHES: Yes.
22 MS. GOSLINS: And how long have these
23 been around?
24 MR. HUGHES: I think we at Adobe have
25 made trialware available for about a year. One past
26 impediment to doing it is not only, I think, then
PAGE 71
1 the fact that we haven't had the imminent arrival,
2 we hope, of 1201(a)(1)(A). But also there's just
3 bandwidth considerations on the Internet that our
4 programs are -- you know, some of them are a
5 reasonably hefty size. And although, obviously,
6 perform very sveltely and with a 28.8 modem it's
7 just not practical for people to download big
8 programs.
9 MS. GOSLINS: Okay. I'm just confused
10 by your statement that without 1201(a)(1)(A) making
11 these kind of technologies available would not have
12 been possible, when the law hasn't even gone into
13 effect yet. And you don't know whether it will be
14 applicable to your products.
15 MR. HUGHES: Well, I'm not sure I said
16 would not have been possible. If I did I'd like to
17 amend that. I'd say it's a far more dangerous
18 enterprise. Because then someone who distributes a
19 crack that basically disables the expire on the
20 product and turns it into a fully functional
21 program, again, I suppose we'd have to use
22 contributory infringement theory to go after the
23 distributor of the crack. And also, obviously, we'd
24 have the license protection as well.
25 But what Congress was getting at with
26 doing 1201(a)(1)(A), I think was recognizing the
PAGE 72
1 pervasiveness of the problem of piracy on the
2 Internet, of trying to give us an additional cause
3 of action to protect our works.
4 MS. GOSLINS: Yes, but don't you have
5 that cause of action in 1201(b)? You have a cause
6 of action against anyone who designs, produces or
7 manufactures devices that are circumventing your
8 access control protections.
9 MR. SIMON: There are some specific
10 aspects of the software industry which is that, as
11 Paul was mentioning -- one of our problems is large
12 corporate end-user piracy. A company will buy a
13 single copy of a product, then load it on multiple
14 machines. In those circumstances we think that we
15 have a much more powerful cause of action based on
16 1201(a)(1)(A).
17 MS. GOSLINS: And you also, however,
18 have the license requirements, correct? The
19 contractual requirements that come along with the --
20 MR. SIMON: As any good attorney will
21 tell you, you want as many causes of action as you
22 can come up with.
23 MS. GOSLINS: I understand that. I'm
24 just struggling with the idea that any exemption to
25 1201 would be disastrous to the software industry.
PAGE 73
1 MR. SIMON: It would be. If you
2 characterize it as disastrous, I agree.
3 MS. GOSLINS: Actually, I don't. You
4 do.
5 MR. SIMON: I think it would be a
6 serious problem.
7 MR. HUGHES: And I would say we already
8 have a serious problem.
9 MR. SIMON: You know, the harm for us is
10 today. We lose billions of dollars to piracy. It's
11 not a hypothetical possibility, it's an actual harm.
12 What the Congress determined that this was a remedy
13 appropriate for that actual harm.
14 MS. GOSLINS: And Congress also
15 determined, did it not, that we should do this
16 rulemaking to see when and if exemptions are
17 possible or needed to that prohibition?
18 MR. SIMON: On the presumption the cause
19 of action would stand, unless there was a
20 superseding consideration. Which, frankly, I have
21 not heard any of the testimony coming even close to.
22 MR. HUGHES: And I would say
23 particularly in the area of software, where I think
24 the Congress has addressed -- as we've been
25 discussing with encryption research and reverse
26 engineering and firewall testing, at least to my
PAGE 74
1 mind, the conceivable kind of fair use reasons you
2 might need legitimately to circumvent the
3 technological protections on software.
4 I mean, people -- as Emery and I were
5 discussing this yesterday -- with a piece of
6 software I'm not aware of people commonly, or even
7 needing to excerpt sort of a page -- the way you can
8 a page of a book, and make fair use of it. I mean,
9 software's sort of not like that.
10 And technically, you know, it's an all
11 or nothing proposition with the access controls that
12 you're doing your rulemaking under.
13 MS. GOSLINS: Emery, you've given us a
14 lot of examples of what a class of works isn't. I'm
15 curious as to what you think a class of works is.
16 Can you give us an example?
17 MR. SIMON: Not independent of a harm.
18 I think it needs to be decided within the context of
19 the harm. And I think the notion I was answering to
20 another question before, which is -- you know, there
21 is a strong notion in the Copyright Act that
22 remedies should be commensurate with the harm, with
23 injuries. You're talking about a remedy, arguably.
24 You're talking about curing a potential harm, first
25 you've got to figure out what the harm is.
PAGE 75
1 MS. GOSLINS: I understand that. But
2 your point being that a class of works is something
3 smaller than a category, and something bigger than
4 an individual work. Is there an example of that
5 middle area that you think you could give us as a
6 description of a class of work?
7 MR. SIMON: Well, presumably everything
8 that is smaller than a category and larger than an
9 individual work is a class.
10 MS. GOSLINS: Okay. You made the
11 argument, Emery, that we shouldn't be taking into
12 account chilling effects as something that could be
13 construed as actual or potential harm. And I guess
14 I just want to know why.
15 If we assume for a moment, for purposes
16 of this question, that we have demonstrated to us
17 that if the presence or the threat of prosecution
18 under 1201(a)(1)(A) is deterring people from making
19 legitimate non-infringing uses, why wouldn't that be
20 a harm caused by the statute?
21 MR. SIMON: No, actually I was quite
22 precise on that point. Which is that I don't think
23 a chilling effect should be a dispositive
24 determination. Because, frankly, chilling effects
25 are really easy to find in virtually any context.
PAGE 76
1 So it's not -- I mean, a mere chilling
2 effect, a mere cause of my being adverse to doing
3 something is not what the statute requires.
4 MS. GOSLINS: Okay. So I just want to
5 make sure I understand your testimony. You can look
6 at chilling effects, it's just not determinative or
7 the end of the -- shouldn't be the end of the --
8 MR. SIMON: No, the statute speaks
9 specifically about the effect you have to look for,
10 right? It talks about adverse effect.
11 MS. GOSLINS: And is your testimony,
12 then, if we had proof that people were deterred from
13 making legitimate uses because of the presence of
14 1201, wouldn't that be an adverse effect, or would
15 that not be an adverse effect?
16 MR. SIMON: Making legitimate uses.
17 What's a legitimate use? You mean, non-infringing
18 uses? You mean deterred from licensing their
19 products? That's a non-infringing use.
20 So if it would prevent Adobe from
21 licensing its products, would that be a chilling
22 effect? Yes, it could be. If it would prevent the
23 North Carolina Law Library from buying, you know, a
24 product from Symantec. Would that be a chilling
25 effect? It could be. It's very hard --
PAGE 77
1 MS. GOSLINS: And is that something we
2 should take into account in our determination of
3 whether we've seen a demonstration of actual and
4 potential harm?
5 MR. SIMON: Sure. But that's the kind
6 of testimony you've been hearing. And I am simply
7 positing to you, find harm and find adverse effect.
8 That's what the statute asks you to look for. It
9 does not ask you -- and I apologize for coming back
10 to what I was raising before. Resist temptation.
11 The statute does not require you to
12 create exemptions. It requires you to find harm.
13 If you don't find a harm, the statute says don't do
14 anything. And until somebody actually shows real
15 harm, there's no basis for action here.
16 MS. GOSLINS: I understand that. But
17 what I'm asking is do you think a chilling effect,
18 assuming it was shown, should be included in our
19 determination of whether there's harm or not?
20 MR. SIMON: Give me a specific example.
21 I can't give you a hypothetical answer to that
22 question because anything can constitute a chilling
23 effect. It can be a de minimis chilling effect, or
24 it can be an enormous chilling effect on free
25 speech. It can be -- not that free speech chilling
26 effects are relevant to this, but it can be an
PAGE 78
1 enormous public interest chilling effect. And you
2 were quite right in pointing out before that it's
3 the public interest we're looking at here.
4 So I don't know, which chilling effect?
5 If chilling effect as a concept?
6 MS. GOSLINS: Looking at the statute for
7 a moment, as you read the statute, assuming for a
8 moment that we do find a class of works which we
9 recommend to be exempted from the anticircumvention
10 prohibition, then what happens? Is all uses of that
11 -- are all uses of that class of works then exempted
12 from the prohibition, or only non-infringing uses?
13 MR. SIMON: Well, it can't be all uses.
14 Because then we're authorizing infringement.
15 MR. CARSON: No, you're authorizing
16 circumvention at most. You're permitting
17 circumvention.
18 MS. GOSLINS: You can still prosecute
19 them for infringement, presumably. If they then
20 circumvent access control protection and infringed
21 your copyright.
22 MR. SIMON: Then I guess I don't
23 understand your question.
24 MS. GOSLINS: Okay. Let's assume we
25 find a class of works of that is exempted, and the
26 Librarian recommends it to Congress and that class
PAGE 79
1 of works is then listed under (a)(1)(A)(C). From
2 that point, under your reading of the statute, are
3 all uses of that class of works exempted, or only
4 non-infringing uses?
5 MS. PETERS: Or can you basically
6 circumvent the access control for all classes?
7 MR. CARSON: For all uses.
8 MS. PETERS: Yes. Can everybody
9 circumvent for all -- if I'm an individual, can I
10 just circumvent it, period? Because it's one of
11 those classes.
12 MR. SIMON: That can't make sense. That
13 can't be right.
14 MS. GOSLINS: Okay. So how does the
15 statute work? We find a class of works that is
16 unattached to any kind of use or users. And let us
17 just make up a class of works, whether or not --
18 computer games.
19 MR. SIMON: Let's do chemistry
20 textbooks.
21 MS. GOSLINS: Okay, chemistry textbooks.
22 And we identify that as a class of works. From that
23 point, is your reading of 1201 that anybody can then
24 circumvent access control protections on chemistry
25 textbooks? Or only people who are then going to
26 make non-infringing uses of them?
PAGE 80
1 MR. SIMON: It's got to be the latter.
2 MS. GOSLINS: Okay. And where do you
3 find the authority for that in the statute?
4 MR. SIMON: Well, that's what (d) days.
5 MS. GOSLINS: Great. Okay.
6 MR. CARSON: Can we just -- does anyone
7 have a different view on that?
8 MS. GOSLINS: Sorry, I just didn't ask -
9 - I didn't think you'd want to get into that.
10 (Laughter.)
11 MR. CARSON: No, I've just been enjoying
12 -- do you want to address that issue, Rick or Paul?
13 MR. WEINGARTEN: I've not been -- I have
14 nothing to add to that. We probably will in our
15 reply comments.
16 MS. GOSLINS: All right. I just have
17 one last question for Mr. Hughes, and then a couple
18 questions for you, Mr. Weingarten. Sorry, I know
19 we're getting close to our lunch hour.
20 Mr. Hughes, you made the argument that
21 we've heard from a number of content owners, that
22 basically a common sense argument that, "Look, we
23 have to serve our consumers. So we're not going to
24 do anything that would make our product less
25 competitive." But isn't that an argument for
26 accommodating, by law and in proceedings such as
PAGE 81
1 this one, sections of the user populace that are not
2 protected by the market?
3 Traditionally non-commercial users like
4 universities or libraries, who -- obviously, they
5 constitute their own market, academic markets. But
6 for a majority of the commercially produced products
7 aren't the same as the average consumer that you are
8 aiming your products to. And indeed, often need
9 different kinds of licenses and different kinds of
10 contracts to accommodate the different kinds of uses
11 that they put their products to, put your products
12 to.
13 MR. HUGHES: Ms. Goslins, well, firstly
14 I guess I should say I'm not an attorney. So if I
15 gave a sort of common sense approach to it, that's
16 what I fall back on. It's my years in the foreign
17 service.
18 But I almost think you answered the -- I
19 would almost submit that you answered your own
20 question at the very end. I mean, for us and for
21 software companies, educators, libraries, schools,
22 these are actually important commercial markets.
23 And thanks to our freedom to offer licenses, we're
24 in fact able to offer special educational products,
25 special educational prices, special educational
26 terms.
PAGE 82
1 In fact, we heard testimony yesterday
2 from one of the people on the library side just
3 sometimes how long these negotiations are that are
4 engaged in. Six months, nine months. But I would
5 say there's no contradiction here. That from
6 Adobe's perspective, we want to see as many people
7 as we can using our products in a way that, frankly,
8 maximizes our revenue and our return for our
9 shareholders.
10 And if there's an educational market to
11 be served, gosh darn it, we'll go after them and do
12 our best to reach a deal that serves both our
13 interests. I'm afraid that's as well as I can
14 answer your question.
15 MS. GOSLINS: Does anybody else have any
16 comments on that? Okay. Mr. Weingarten, I was
17 unclear at the end of the testimony what exactly you
18 would like us to do. Are there specific classes of
19 works you are suggesting that we examine? And if
20 so, what are they?
21 MR. WEINGARTEN: Well, I mean, I think
22 the libraries over the course of this hearing, and
23 in our comments, have expressed what we want to do.
24 I understand that there's a profound difference of
25 opinion about how class can be interpreted. We want
26 a broad exemption for non-infringing use for
PAGE 83
1 lawfully acquired works. We don't think that's a
2 troublesome thing to understand, or interpret, as
3 has been suggested by some people.
4 We think it's fairly clear. Whether it
5 is within the scope of this rulemaking is a matter
6 of legal debate. And you've heard from Arnie and
7 Julie and Peter, who've suggested it certainly is.
8 And you've heard from other people citing their
9 authority saying it isn't. And I really don't know
10 what I can add to that.
11 Libraries simply do not -- libraries
12 serve an incredible diversity of needs. And on top
13 of that, more and more works that we deal with,
14 digital works, are multimedia. I don't even know,
15 frankly, that categories is going to be much longer
16 within the law a very useful set of determinations.
17 Because things are sliding around, back and forth.
18 So to talk about classes now as a
19 subdivision of categories is -- it seems to me just
20 perpetrates an archaic view of the way the whole
21 information marketplace is evolving. And that is
22 changing rapidly in Internet time the last two years
23 since the bill was passed. It's been several years
24 of Internet time.
25 So, I mean, I think for all of these
26 reasons that you are empowered and ought to consider
PAGE 84
1 a broad exemption. And repeating that we are not
2 interested in a broad exemption that essentially
3 legitimizes widespread piracy. We're looking for
4 non-infringing uses.
5 And I think that that would be the
6 appropriate statement for the Librarian to make.
7 MS. GOSLINS: Okay. I just have one
8 last question. In your testimony you cite some
9 quotes from different publishers and content
10 producers about where they think their practice is
11 going. One of them was from a firm who had
12 developed a way for publishers to receive revenue
13 from individual titles. And it says, "Older titles
14 and out of print books that have been read and
15 studied thousands of times over the years in
16 libraries, and yet have not generated new income
17 will now produce new revenues."
18 I guess my question to you is why should
19 that bother us? If we assume that they are still
20 available in all of those libraries, and that what
21 you are getting is a new kind of access that you
22 would not have had prior to this, why shouldn't you
23 pay for that?
24 MR. WEINGARTEN: Well, in fact, it seems
25 to me it's not positing a new form of access. It's
PAGE 85
1 positing a new revenue stream for access that people
2 have had for many years.
3 MS. GOSLINS: But you still have that
4 access from the library books on the shelves that
5 you could use and study thousands of times without
6 any revenue, right? It's just you're getting an
7 increased access and convenience and speed by
8 getting it digitally.
9 MR. WEINGARTEN: There's a basic trend,
10 of course, to digitizing works. Libraries have
11 limited shelf space, and as we move into the future
12 we're going to be basically shelving, in some sense
13 -- whatever that word means -- digital works.
14 Yes, there is still this question which
15 has come up. You're sort of indirectly going to
16 that question, "Well, if there's print versions
17 what's the matter with this model for digital?"
18 There's a lot wrong with it, particularly in areas
19 of educational research.
20 Karen yesterday talked about whole new
21 modes of research that are based on digital access
22 to information. We as a nation are busily trying to
23 modernize our schools and our whole education system
24 to use digital products. We're moving towards
25 distance learning models in which students access
PAGE 86
1 information and scholars access information
2 remotely. They can't do it from the shelves.
3 So there is not an equivalent here
4 between the digital and the paper version. But the
5 other part of that quote, or the other reason I put
6 that quote in there is that it illustrates who we
7 are striking at the very heart of what libraries do.
8 I mean, libraries have always bought books. We
9 spend over $2 billion a year in the information
10 marketplace.
11 We don't steal this stuff. We don't
12 break into bookstores, we buy it. And then it's
13 there, it's there for people to use. And you know,
14 somehow the presumption of saying, "Well, now
15 publishers can go back in and start recapturing
16 funds for every time a student pulls that book off
17 the shelf."
18 MS. GOSLINS: But they're not making you
19 take the books off the shelf.
20 MR. WEINGARTEN: No, they're not making
21 us take the books off the shelf. These are -- this
22 is a vision for the future. But it is a -- it's a
23 vision that strikes at the very heart of what we do.
24 MS. PETERS: Can I ask one other
25 question that's very related to this? Which really
26 has to do with the -- in the Digital Millennium
PAGE 87
1 Copyright Act there was an updating of Section 108.
2 And with respect to a work, a published work that a
3 library owns that is deteriorating or damaged, a
4 library now does have the ability to basically make
5 a digital copy of that work.
6 MR. WEINGARTEN: Right.
7 MS. PETERS: Doesn't that in some way
8 answer your question?
9 MR. WEINGARTEN: Well, it may be. And
10 if so, then there's -- this group won't have any
11 market. But I don't think so. The new products --
12 MS. PETERS: Well, it will get to --
13 what it may get to is the new product may have
14 search and retrieval capabilities that are enhanced,
15 that value-added as opposed to what a library may
16 do. Which is more like a plain vanilla type
17 digitization effort.
18 And if that's true, you know, I would
19 say that the access to the information is still
20 there in the plain vanilla version.
21 MR. WEINGARTEN: It may be. And what I
22 said at the conclusion of my testimony is that we
23 want to be engaged in a discussion with these
24 entrepreneurs to see that, both what we do as
25 libraries and educators, and what they do in terms
PAGE 88
1 of their markets converge. There's no reason why it
2 can't converge.
3 But these visions of sort of, "Well, now
4 we can charge for every time a student turns a page,
5 or accesses an old out of print book," is -- I think
6 strikes at the heart of education. And yet it need
7 not. We can, I think, find some way out of it. But
8 I guarantee we're not going to find some way of out
9 it on the floor of Congress, or even within the
10 Beltway.
11 MS. PETERS: But we're looking at the
12 adverse effect today, and the adverse effect or
13 potential adverse effect in the next three years.
14 Based on what I'm hearing you say, we don't have
15 that now.
16 MR. WEINGARTEN: We don't have that now.
17 And that may be -- if I could address that point a
18 bit.
19 One, we believe that an exemption done
20 ahead of time serves as a message to the marketplace
21 to develop what I refer to as fair use friendlier,
22 fair use soft technology controls. Or at least pay
23 more attention.
24 I would agree, Adobe undoubtedly finds
25 the academic marketplace a very attractive one, an
PAGE 89
1 interesting one, and they always have. The kinds of
2 products they produce are tuned to that.
3 But I would refer back to the testimony
4 of the recording industry association -- and I'm
5 just paraphrasing it now, because I don't have it in
6 front of me -- when you asked, "Well, when are you
7 going to have a library friendly version of a DVD
8 music disk?" The answer was, "Oh, 10 or 20 years.
9 This is not a very important marketplace for us."
10 And I would submit that that -- it's
11 that kind of attitude that we need to -- that we
12 don't trust the marketplace independent of an
13 exemption to address. We're always willing to open
14 discussions with these people, and to possibly even
15 help them find new ways to market their goods.
16 MS. PETERS: I think fear and lack of
17 trust have a certain role in all of this. Anyway,
18 Rachel?
19 MS. GOSLINS: I'm done. Thank you.
20 MS. PETERS: David?
21 MR. CARSON: Emery, in your testimony
22 you discussed the assertion that there should be an
23 exemption for works with respect to which initial
24 lawful use has been permitted. Is that accurate?
25 MR. SIMON: Initial lawful access.
PAGE 90
1 MR. CARSON: Initial lawful access,
2 okay. And you said Congress specifically decided
3 not to do that. Can you sort of walk us through how
4 that decision came about, or what the manifestations
5 of that conscious decision by Congress?
6 MR. SIMON: There were a series of
7 amendments that were offered first in the House
8 Judiciary Committee, Subcommittee on Courts and
9 Intellectual Property, which considered the bill
10 first. As I recall, Mrs. Lofgren, whose district
11 we're actually in, proposed such an amendment, as
12 did Mr. Boucher of Virginia.
13 And the objective of those amendments --
14 and I forget the exact wording of them -- was very
15 much that. Which is that if you have acquired
16 lawful access to a work, thereafter you may make
17 fair use uses of that work without requiring further
18 permission. And you may circumvent to be able to
19 achieve those ends.
20 And the House Judiciary Committee,
21 Subcommittee in the first instance rejected that.
22 That amendment was a threat -- or a variant of that
23 amendment, but you probably remember this better
24 than I do. Was then considered in the Commerce
25 Committee as well.
PAGE 91
1 And I recall Mr. Boucher offering that
2 in the Commerce Committee, and I recall he actually
3 withdrew it before it came to a vote. There was a
4 discussion of it, and then he withdrew his
5 amendment. That's my best recollection. I
6 apologize for it being sketchy, but I'm getting old.
7 MR. CARSON: Anyone have any further
8 recollection to add to that? Emery and Paul, I
9 guess I'd like your reaction to an example I think
10 Rick gave. If I, on November 1st of this year, if I
11 gave Rachel my Lexis password and she accessed Lexis
12 using that password, would she be in violation of
13 1201(a)?
14 MR. SIMON: Yes.
15 MR. CARSON: Do you agree, Paul?
16 MR. HUGHES: Gosh, it's not Adobe's
17 business right now. But it's always my business to
18 agree with Emery.
19 MR. CARSON: I think I'm going to have
20 to revisit the question of reverse engineering with
21 you for a moment.
22 MR. SIMON: And you'll get a very
23 creative answers. Responsive answers.
24 MR. CARSON: I want to go back to your
25 last exchange with Rob, because I think you may have
PAGE 92
1 admitted something to him. But I'm not sure. I
2 just want to get clarification here.
3 At the end of that discussion did you
4 essentially admit to Rob that if we were to include
5 now, or in three years, or in six years perhaps that
6 anticircumvention measures are preventing users from
7 engaging in lawful reverse engineering, that does
8 not fall within Section 1201(f)? The Librarian
9 would have the power under 1201(a)(1)(A) to create
10 an exemption that would permit circumvention in
11 order to engage in such reverse engineering?
12 MR. SIMON: I think you have to go back
13 to what the statute permits you to do through
14 rulemaking. Which is your statutory authority under
15 rulemaking is not to make the rule conform to
16 whatever court decisions there may be. I think your
17 statutory authority under rulemaking is to find what
18 the statute tells you to find, adverse effect.
19 And that may be found if there are court
20 decisions that have come through time which then
21 cause you to think about those adverse effects. It
22 may not. It is not, as a matter of first instance,
23 your duty to say, "A court opinion and adverse
24 effect are synonymous."
25 MR. CARSON: Okay. I follow all that.
26 But the reason I'm asking this question is, I think
PAGE 93
1 in your testimony you were saying something that
2 came close to saying that Section 1201(f) more or
3 less preempts the field with respect to reverse
4 engineering. And that in the 1201(a)(1)(A) process,
5 the Librarian is powerless to do anything in the
6 field of reverse engineering.
7 Maybe you weren't really saying that.
8 Because I think what you've just said is
9 inconsistent with that.
10 MR. SIMON: Well, let me be quite
11 specific. I think whatever the latitude of the
12 Librarian may be in certain areas, the latitude of
13 the Librarian is substantially diminished in those
14 areas where specific issues have been addressed by
15 the Congress. And those are the exceptions that run
16 starting with additional violations.
17 I'm sorry, not with C but D. Where
18 exceptions for nonprofit libraries, archives and
19 educational institutions already speaks in some
20 respects to that. It speaks to law enforcement,
21 intelligence and other government activities. It
22 speaks to reverse engineering, it speaks to
23 encryption research, it speaks to exceptions
24 regarding minors.
25 There are a whole variety of areas where
26 there was a specific congressional examination.
PAGE 94
1 This is not a de novo review of these issues by the
2 Librarian. The Librarian was not asked to do that,
3 the Librarian was asked to look at areas where there
4 are problems.
5 And I think that in the areas where the
6 Congress has spoken specifically to what the
7 appropriate exceptions are, the latitude and the
8 discretion of the Librarian was substantially
9 diminished. Would I say to you that the Librarian
10 has zero latitude in those areas? I think that
11 would be a ridiculous statement.
12 But is it much less? I think the answer
13 has to be yes. Because otherwise these other
14 exceptions would be meaningless.
15 MR. CARSON: Okay. I follow what you're
16 saying. This may not be the right group of people
17 to ask the question to, but since we're talking
18 about reverse engineering maybe someone can clarify
19 for me. Are there circumstances where, in order to
20 reverse engineer -- and let's assume it's a
21 legitimate need to reverse engineer -- you really
22 would have to circumvent access control measures.
23 Why would that be a requirement in order to reverse
24 engineer?
25 MR. SIMON: I mean, I'm not an engineer
26 but I can tell you what the engineers tell me. What
PAGE 95
1 you are -- the permitted act or acts of reverse
2 engineering under the statute are done for the
3 purpose of achieving interoperability.
4 Interoperability is defined in the statute
5 essentially as an exchange of information between
6 either two software products, or software and a
7 hardware product.
8 The points where that information or
9 exchange occurs may be parts of subroutines, and
10 there may be second-level technological protection
11 measures that are applied with a computer program.
12 There may be a general access control that's applied
13 to the work as a whole, and any second-level
14 protection that's applied to particular --
15 MR. CARSON: All right. I see where
16 you're going. Okay.
17 MR. SIMON: That is, in fact, the reason
18 why Section 1201(f) is there.
19 MR. CARSON: All right.
20 MR. HUGHES: Mr. Carson?
21 MR. CARSON: Yes.
22 MR. HUGHES: If I could I wondered if I
23 could just return to the first question you asked on
24 the Lexis/Nexis passwords. I actually didn't want
25 to leave the impression I was lukewarm in my
26 endorsement of Emery's answer.
PAGE 96
1 (Laughter.)
2 MR. SIMON: Won't be the first time.
3 MR. HUGHES: And it's not just because
4 he'll kick me under the table, which you would see.
5 But in all seriousness, Adobe in fact is
6 increasingly in this business, and software
7 companies are. And it's not access to databases,
8 but it's what we call -- it's access to programs, as
9 Emery discussed earlier, that are hosted on the
10 Internet.
11 And in fact Adobe has a service right
12 now where you can basically lease access to a PDF
13 Creation tool on the web. You can basically go to a
14 website, you've got a Microsoft Word document.
15 Let's say you want to make it PDF. For $10 a month
16 you can get unlimited access to this ability to
17 upload a file. It will be crunched on our servers
18 into a PDF and you'll get it back.
19 Now, clearly, it seems to me, that the
20 dissemination of my password if I posted it on the
21 Internet to allow sort of everyone in the world
22 using my password to use this service -- and the
23 password is an access control measure, that's why we
24 have it there -- I, by posting the password with
25 that intent would be circumventing the access
26 control.
PAGE 97
1 So my answer to your question is yes,
2 and a very firm yes.
3 MR. CARSON: Okay. We heard Paul talk
4 about trialware. And I think he explained it pretty
5 clearly to me. Is it pretty clear to you what
6 trialware is?
7 MR. WEINGARTEN: Pardon?
8 MR. CARSON: Trialware?
9 MR. WEINGARTEN: Trialware, yes.
10 MR. CARSON: Okay. Let's take a case
11 where someone gets access to trialware under those
12 terms that are associated with it. And maybe have
13 access for 30 days, and on the 31st day you can no
14 longer use it. Would it be your position, in
15 connection with the notion that once you've lawfully
16 acquired possession or use of a work you should be
17 able to circumvent, would it be your position that
18 on that 31st day or the 31st month thereafter one
19 should be able to circumvent in order to gain access
20 to the computer program that you first obtained
21 access to as trialware?
22 MR. WEINGARTEN: No. And I think Lolly,
23 in fact, addressed this question yesterday. That if
24 you have access to a toolwork for a specific period
25 of time, and that's the agreement you entered into
26 when you got the work, on the 31st day you don't
PAGE 98
1 have lawful access to the work. And I think that's
2 perfectly fair.
3 We are not interested in a license to
4 hack or steal, or circumvent license terms.
5 MR. CARSON: And yet you do say that
6 your concerned, as a general proposition, about the
7 notion that a content provider can use access
8 control measures to enforce licensing terms. I
9 mean, this is a licensing term, isn't it?
10 MR. WEINGARTEN: Right.
11 MR. CARSON: So which licensing terms
12 are you concerned about, and which are you not
13 concerned about? And how does one draw the line?
14 MR. WEINGARTEN: I'm not concerned about
15 you addressing any specific licensing term, I'm
16 concerned about using 1201 in conjunction with
17 technological measures to add the force of federal
18 criminal law on users. On the user's side of a
19 license. That's what I'm objecting to.
20 MR. CARSON: All right. Let me see if I
21 understand what you're saying, then. Going back to
22 the trialware example, you would object to the use
23 of Section 1201 to create civil liability or
24 criminal liability with respect to a person who, on
25 that 31st day or the 31st month, circumvents in
PAGE 99
1 order to use the trialware, is that what you're
2 saying?
3 MR. WEINGARTEN: Probably not. Because
4 we established that the circumvention would not be a
5 non-infringing use.
6 MR. CARSON: We've established that?
7 MR. WEINGARTEN: Didn't we? Well, I
8 mean --
9 MR. CARSON: That wasn't part of my
10 hypothetical.
11 MR. WEINGARTEN: I mean, you asked me if
12 I would want the exemption to include that, and I
13 said no. Because the work was no longer lawfully
14 acquired.
15 MR. CARSON: Okay. But what I think I'm
16 hearing you say -- and maybe I'm not hearing it
17 clearly enough -- is that licensing terms, okay,
18 fine. Licensing terms are what they are, and people
19 perhaps should abide by them.
20 MR. WEINGARTEN: Right.
21 MR. CARSON: But as a general
22 proposition one shouldn't be able to use Section
23 1201 to create civil or criminal liability for
24 circumventing technological access control measures
25 designed to enforce the licensing terms.
26 MR. WEINGARTEN: Right.
PAGE 100
1 MR. CARSON: But then again, I think
2 you've just told me that there's one exception at
3 least, and that's the trialware exception. Where
4 it's okay to use Section 1201 to prevent someone
5 from accessing that trialware way down the road, or
6 are you not saying that?
7 MR. WEINGARTEN: If I'm no longer in
8 legal possession of it. I mean, I'm not in
9 violation of the license. If I still have that
10 stuff after the expiration of the license, I'm not
11 under license. So, you know, I'm having trouble --
12 let's posit that there's some way that, say the
13 trialware has limited capabilities. Some trialware
14 does operate that way.
15 I don't know, it's hard because programs
16 are not exactly what libraries exercise fair use.
17 So suppose it was a trial work, and it had limited
18 capabilities, and we circumvented to make a non-
19 infringing use of it during the period of time that
20 we legitimately had access to it as a trial work.
21 If we violate the contract, the license,
22 the publisher, content provider is perfectly right
23 to go after in a breach of contract or some such
24 cause. I do not want 1201 to make a felony out of
25 that.
PAGE 101
1 After the term of agreement is over, and
2 I no longer have legal access, I'm not under the
3 contract. We're not talking about a violation of
4 contract. I don't have lawful access, and it
5 doesn't fall under the exemption that we're seeking.
6 MR. CARSON: All right. Let's take a
7 different contractual term. Let's say we have a
8 contractual term that says only one person may gain
9 access to that particular work at a time. And you
10 decide, "This is silly. I've got three people in
11 the library who want to use it right now. Why
12 shouldn't they be able to use it? They're using it
13 for research, that's fair use. So I think I should
14 be able to circumvent," not withstanding the fact
15 that there's a contractual term limiting access to
16 one person.
17 Would it be your position that Section
18 1201 should not be operative, and you should be able
19 to circumvent to let three people use it at a time?
20 MR. WEINGARTEN: Those are two separate
21 things. One, yes, it's my position that 1201 should
22 not be operative, that it's breach of contract. I'm
23 not saying people should do it. I'm not saying
24 people should violate their contract terms, I'm
25 saying I don't want the weight of federal criminal
26 law sitting on the users, when if the content
PAGE 102
1 provider violates terms of the contract it's just
2 breach of contract and so sue me. I want an equal
3 playing field. And it licenses what I wanted
4 resolved under is contract law, not federal
5 copyright law.
6 MR. CARSON: Except when the contractual
7 term is a term -- it has to do with the period of
8 time in which you can use it. I gather you're
9 saying there's an exception. And if the contract
10 says you could only use it for a month --
11 MR. WEINGARTEN: No. It's not
12 exception. I'm not under the contract at the
13 expiration of the month.
14 MR. CARSON: But you are under the
15 contract when you're letting three people use it,
16 even though the contract permits only one person to
17 use it?
18 MR. WEINGARTEN: Yes, that's a violation
19 of contract.
20 MS. PETERS: But this is exactly the
21 end-user argument that I think you were making.
22 MR. SIMON: Well, I mean, this is a huge
23 issue for us. And it's a huge issue for us on two
24 different grounds. One is we do side licensing.
25 And we will side license to Stanford University a
26 copy of "Photoshop" for 100 users. And then you
PAGE 103
1 have 15,000 students using it. That's clearly a
2 breach of contract. No problem.
3 Now, the question becomes one -- but it
4 was educational, it was fair use. Is that a defense
5 of breach of contract? Well, I see Lolly shaking
6 her head. But I apologize, Lolly, the American
7 Library Association's been taking the position in
8 the course of enacting the UCITA that that should be
9 a defense to breach of contract. That's an
10 untenable position as well.
11 So Rachel was asking me before a
12 question about various causes of action. So now
13 we're back to a situation where we have these 15,000
14 infringers as well as circumventurists at Stanford
15 University. We need both causes of action because
16 while you say with certainty that, "Oh, this should
17 be done under contract theories," it's not clear
18 that we would win under those contract theories in
19 every instance.
20 We still have infringement, we still
21 have harm being done to us, we still have wrongs
22 being done. And what you're suggesting is -- I
23 think what you're ultimately coming down to is
24 you're afraid of the criminal liability.
25 MR. WEINGARTEN: If it's infringement,
26 if it's an infringement you have just as much cause
PAGE 104
1 of action under 1201. I'm looking for non-
2 infringing uses. I don't see any difference here.
3 MR. SIMON: I mean, I guess --
4 MR. WEINGARTEN: I'm not trying to argue
5 with a lawyer.
6 MS. PETERS: No, I know. But it's an
7 important point. Because the criminal is willful
8 for commercial purposes or private gain, and yet in
9 the context that you're using with your Stanford
10 case, there should have been a license for 15,000
11 students, correct?
12 MR. SIMON: Yes. Now, is that willful,
13 is that for commercial gain? Well, the way the
14 statute actually now reads, it's not direct
15 commercial gain, it's actually loss or revenue
16 counts as well.
17 So, yes, I think -- but, look.
18 Ultimately the reality is -- and I can't speak for
19 other industries, but from a software industry
20 perspective, we're really not interested in putting
21 Stanford University in jail. What we're interested
22 in doing is selling them 15,000 copies of
23 "Photoshop."
24 That's what we want to do, sell -- you
25 know, we want the criminal sanctions there because
26 we think they create an effective deterrent. But
PAGE 105
1 the reality is we want to sell product. That's what
2 we want to do. And suggesting somehow that a
3 contract-based cause of action alone, given the
4 realities we're confronting in the marketplace right
5 now is sufficient, is just not true.
6 Now, maybe libraries and educators are
7 nicer than most people. Well, they're certainly
8 better looking. And it may be easier to deal with
9 nice people, but the problem is there's no real way
10 to parse this law between nice users and bad users.
11 You guys kept on asking me, "Tell me who a user is."
12 Well, can you parse it by nice users and
13 un-nice users? You can't. You can't do these kinds
14 of things that easily. It's all context specific.
15 MR. CARSON: Well, when we're talking
16 about criminal liability, you can parse the law with
17 respect to certain kinds of users who simply -- you
18 can't have criminal liability with. 1204(d) exempts
19 libraries, nonprofit libraries and educational
20 institutions, for example.
21 MR. SIMON: Correct. But again, those
22 are not issues for this rulemaking, those are issues
23 of the operation of law.
24 MS. GOSLINS: Absolutely.
25 MR. CARSON: Rick, I think most of the
26 testimony we've heard from other representatives of
PAGE 106
1 libraries -- and I'm not sure, you said it seems to
2 be implicit, but let me clarify it first. The types
3 of technological measures, access control measures
4 you're concerned with so far seem to be access
5 control measures that are enforcing contractual or
6 licensing terms. Is that, as a general proposition,
7 the case?
8 When you run into those technological
9 measures, or when you run into those licensing
10 terms, that the licensee had the opportunity in
11 exchange for, perhaps, a payment of more money to
12 get licensing terms that would have permitted the
13 very act that you're trying to circumvent in order
14 to be able to do it.
15 MR. WEINGARTEN: There's probably no
16 single answer to that. I mean, I'm not a working
17 librarian and so I don't know. But you've heard
18 from Karen yesterday that there are times when she
19 has to negotiate for a year or more in order to get
20 terms she needs. And she has told me, so I guess
21 this is secondhand, she's told me that there's
22 simply been times when she has not been able to
23 mount products because she couldn't get the terms.
24 But there are two other issues. One is
25 that the technological controls become embedded in
26 the product itself, and are part of the product.
PAGE 107
1 You really can't -- it's no longer negotiable. And
2 we think that this is going to be, these licenses
3 are going to be less and less negotiable for these
4 sorts of terms.
5 There are, of course, products, an
6 increasing number of products that come with click-
7 on or shrink-wrap licenses where there's no
8 negotiation whatsoever, we mentioned UCITA which
9 covers those sorts of products. So I don't think
10 there's any single answer.
11 Yes, if it's a question of, "Well, we'd
12 like three students or three users instead of one
13 user to use it," I'm sure that the provider is
14 perfectly willing to say, "Well, okay. That will
15 cost you this much." Or, "We would like this much
16 stuff on it, or like the ability to print out of
17 it," or whatever. There are negotiable prices in
18 some cases. But certainly not in all.
19 MR. CARSON: Well, let's take a case
20 like that, where, in fact, the provider is perfectly
21 willing to license you to let three people use it
22 rather than one. But you decide you don't want to
23 pay that price. You'll just take the license for
24 one, and if we want three people to do it we'll
25 circumvent.
PAGE 108
1 If that case were to arise and that was
2 the choice you made, would it be your position that
3 even though you had the opportunity to negotiate a
4 deal that would give you the right for access for
5 three users, you should be able to circumvent with
6 impunity?
7 MR. WEINGARTEN: Certainly not.
8 MR. CARSON: Okay. 1201 should be able
9 to -- should be operative in that case, then?
10 MR. WEINGARTEN: No.
11 MR. CARSON: No?
12 MR. WEINGARTEN: No. That contract law
13 should be operative, not 1201.
14 MR. CARSON: And why not 1201?
15 MR. WEINGARTEN: Well, if a court were
16 to determine -- no, I'll take that back. I was too
17 quick on that. That if you violated the terms of
18 the -- one, if you violated the terms of the
19 contract, that's contract law. If somebody took
20 action under 1201 against you, or against the user,
21 and the court determined that it was not a fair use
22 under whatever theory of argument, then 1201 would
23 apply.
24 If the court said, "Well, you may have
25 violated the contract, but it was a fair use under
26 copyright law, 1201 does not apply, although you
PAGE 109
1 still may be in breach of contract." I mean, people
2 give up their fair use rights in contract all the
3 time. It's various kinds of rights for various
4 purposes, and that's their right, as I said, as
5 consenting adults, to do so. And we do not
6 recommend that they be scofflaws, or violate their
7 contract.
8 MS. PETERS: Well, I just want to take
9 over. If a library today buys a book, only one
10 person at a time can use that book, right?
11 MR. WEINGARTEN: For the most part, yes.
12 MS. PETERS: So if, when you now are
13 buying a package you have a choice with regard to
14 the simultaneous accesses that you're going to
15 provide, which really you're substituting for, in
16 essence, the number of books that you would have on
17 the shelves so you could serve so many people at a
18 time.
19 So I guess I have a hard time figuring
20 out why that rises to the level of a fair use.
21 MR. WEINGARTEN: I didn't say it. I
22 don't think I said it did. I think I said -- I just
23 said if a court decides it didn't. And the court,
24 you're right, the court may well decide that that's
25 not fair use.
PAGE 110
1 MS. PETERS: Okay. Do any of you have
2 anything else that you'd like to add at this point?
3 Does anyone else have any questions?
4 (No response.)
5 MS. PETERS: All right. What are we
6 going to do this afternoon? First of all, before I
7 get there, I want to thank the witnesses. They were
8 extremely helpful, and I really do appreciate your
9 testimony and appearing here.
10 Second, we don't know whether or not we
11 will have Mr. Metalitz this afternoon, but we do
12 know that we will have people who can appear earlier
13 than the two o'clock. Because of the time frame,
14 what we're going to suggest is that we start at
15 1:30. Not suggest, we are deciding and announcing
16 that we will be starting at 1:30.
17 Thank you.
18
19
20
21
22
23
24
25
PAGE 111
1 A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N
2 (1:35 p.m.)
3 MS. PETERS: Good afternoon. Welcome to
4 the last session of our last day of hearings. We're
5 fortunate that Steve Metalitz made it here after a
6 long and difficult trek. And what we've decided to
7 do is to let Steve present the testimony that he
8 would have presented this morning, and then we will
9 just ask questions of him. And then we'll take the
10 panel that we had intended, if it works out that
11 way.
12 So, it's all yours, Steve.
13 MR. METALITZ: Thank you very much. And
14 thank you, particularly, for accommodating the
15 vagaries of my travel schedule. I should have known
16 when I was about to step on Flight 301 from Chicago
17 to San Jose that it would be pre-empted. And indeed
18 it was, but I did get here eventually.
19 I'll try to be brief, because I am
20 infringing on your schedule here. I wanted just to
21 start by going back to the basics, which I'm sure
22 have been reviewed several times in the last few
23 days, as well as two weeks ago.
24 Congress established this rulemaking
25 proceeding to answer a single question: Should the
26 October 2000 effective date of the statutory cause
PAGE 112
1 of action against circumvention of access control
2 measures be delayed with respect to any particular
3 class of copyrighted works? That's the first basic.
4 And the second basic, as in any
5 proceeding, is who has the burden of persuasion.
6 And I think it's clear that those who believe that
7 the circumvention of access controls should remain
8 legal after October 28 bear that burden, including
9 the burden of defining what particular class of work
10 -- or as to what particular class of work the
11 prohibition should not go into effect.
12 On behalf of the 17 copyrighted owner
13 organizations that I represent, we feel that clearly
14 the answer to the question Congress has asked is
15 that no classes of work should be -- as to no
16 classes of works should the Section 1201(a)(1)
17 prohibition not come into effect.
18 And on the second question of the
19 burden, it follows we don't believe the burden has
20 been met to show that there's a need for any
21 exception in this area.
22 This is a substantial burden, and I
23 think everyone has recognized that. And some of the
24 testimony you heard in Washington called it an
25 illusory goal, or an unattainable dream. And that
PAGE 113
1 it was impossible for anyone ever to meet this
2 burden. I don't agree.
3 This burden could be met if the
4 proponents of an exception had specific, strong and
5 persuasive evidence of the likely effects of the
6 prohibition on the ability of users to make non-
7 infringing uses of particular classes of works.
8 That burden can be met, but it hasn't been met.
9 Because that type of evidence has not been presented
10 to you.
11 You've received a huge volume of
12 evidence, but most of that does not address the
13 question, the only question that Congress directed
14 you to answer. And what does address that question
15 doesn't come close to carrying that burden.
16 It seems as though some of the
17 participants in this proceeding want to treat it as
18 an open-ended discussion about the impact of
19 technology on the way copyrighted materials are
20 created and produced, marketed and distributed. And
21 on the effect of those technological changes on the
22 relationships among creators, intermediaries,
23 customers and other stakeholders.
24 If that's what we were about here, the
25 copyright industries and the copyright owner
26 organizations would have a lot to contribute to that
PAGE 114
1 discussion. We have a lot of concerns about those
2 issues. But that's not what this proceeding is
3 about. You're not here as moderators of a gripe
4 session, or of an open-ended discussion. You're
5 here as decision-makers or as recommenders of
6 decisions on whether an act of Congress should take
7 effect as scheduled.
8 You have a specific job to do, you have
9 specific ground rules under which that job should be
10 carried out, and I'd like to focus on those. The
11 question before you, and the quantity of the
12 evidence that's been presented to you. And whether
13 it matches up to the burden has Congress has set in
14 this proceeding.
15 Now, we've explained in our reply
16 comments, which were quite extensive, why we think
17 most of the evidence that's been submitted, at least
18 so far, is not really relevant to this proceeding.
19 It's aimed at answering other questions that
20 Congress actually not only didn't direct you to
21 answer, but Congress has already answered.
22 Questions such as whether copyright
23 owners should have the right to employ technological
24 measures to control or manage access to their works.
25 Questions such as what scope of exception should be
26 provided for reverse engineering. Questions such as
PAGE 115
1 what should the relationship be between the
2 anticircumvention prohibitions and the concept of
3 fair use.
4 Those questions have been asked and
5 answered, and to provide opinions on them in this
6 proceeding really is of no value to you. They don't
7 shed any light on the single question that Congress
8 asked you to answer.
9 Now, a few of the submissions that
10 you've received have sought to propose particular
11 classes of works as to which circumvention of access
12 control should remain legal after October 28th. In
13 our view, none of those proposals pass muster. Most
14 of them didn't really designate a class of works.
15 They really talked about an exemption
16 based on the status of the user of a work. That's
17 an approach that Congress considered during the
18 deliberations on the DMCA, but that Congress
19 ultimately rejected.
20 And when there has been an attempt in
21 this proceeding to identify a class of works -- and
22 I think upon close examination it proves to be an
23 extremely expansive class, and it's boundaries are
24 very difficult to define.
25 But I think the main flaw of all these
26 proposals is that they're not based on any specific
PAGE 116
1 evidence that the ability to make non-infringing
2 uses of works would be harmed if Section 1201(a)(1)
3 came into effect for all works, as Congress
4 provided.
5 There have been a limited number of
6 anecdotes that have been put forward as evidence of
7 an adverse effect, but they don't withstand
8 scrutiny. Even to the extent that any real threat
9 of harm has been demonstrated, you have to balance
10 that against the evidence that the use of access
11 control measures has increased, and not decreased
12 the availability of works for non-infringing uses
13 since Congress directed this proceeding to undertake
14 a net calculation.
15 Let me just say a word about the concept
16 of particular classes of works. I know this has
17 been a frustration to the members of the panel, to
18 try to solve this conundrum that Congress has given
19 it.
20 The question of what constitutes a
21 particular class of works can't be answered in the
22 abstract. And from our perspective, trying to
23 answer that at this point would be like asking us to
24 categorize or classify the specific angels that are
25 dancing on the head of a pin. We'd be glad to try,
26 but we just don't see any.
PAGE 117
1 And until we see some evidence of
2 specific adverse impacts, it's very difficult to
3 figure out whether you can design a particular class
4 of works that covers those adverse impacts.
5 If you agree with this, and if at the
6 end of the day as you assess the evidence, you don't
7 think that the adverse impact has been demonstrated,
8 you may want to take the approach of not addressing
9 the question of what would constitute a particular
10 class of works. You may want to leave flexibility
11 for yourselves and your successors three years from
12 now in the next triennial proceeding, when the
13 evidentiary record may be more complete.
14 At that time, if there is evidence of
15 specific adverse impacts, that would be a point at
16 which you'll need to decide whether that evidence
17 can be organized to define particular classes of
18 works.
19 Let me just turn to, really, three
20 issues that were quite prominent in the hearings in
21 Washington. And in fact they're implicit in all of
22 the testimony, but I think the Washington testimony
23 brought them to the fore. And as I understand it,
24 some of them have been revisited here.
25 The first is the question of initial
26 lawful access, the second is the focus of this
PAGE 118
1 proceeding on fair use, and third is the what I
2 would call the bugaboo of pay-per-use.
3 First, the notion that it should be
4 permissible to tamper with access controls as long
5 as they manage something other than initial access
6 to copyrighted materials. I call this the initial
7 lawful access approach, because that's what its
8 proponents called it two years ago when they sought
9 to persuade Congress that these second-level
10 controls, or persistent access controls ought to be
11 fair game for circumvention.
12 They weren't able to persuade Congress
13 then, and for that reason perhaps they don't use the
14 phrase as much now. But it's basically the same
15 approach.
16 This approach sees access controls as an
17 on/off switch, and nothing more. Where in fact it
18 was something less, because under this analysis once
19 access is switched on it can never be switched off.
20 In this view every license is a perpetual license,
21 or should be. Subscribers to copyrighted materials,
22 like diamonds, are forever.
23 That's the approach that underlies
24 Professor Jaszi's suggestion, for example, that
25 works embodied in copies which have been lawfully
26 acquired by users who subsequently seek to make non-
PAGE 119
1 infringing uses thereof, that those users ought to
2 be free to circumvent access controls in that
3 endeavor.
4 This rulemaking may originally, at one
5 point, have been intended to give a privileged
6 status to those who claim to have achieved initial
7 lawful access to a copy of a work. But Congress
8 thought better of this approach. It was dropped
9 like a stone when the bill reached the conference
10 committee.
11 And the reasons for Congress' change of
12 mind are, I think, not hard to understand. The
13 concept that people who deem initial lawful access
14 ought to be free to circumvent thereafter is
15 antithetical to promoting the availability of
16 copyrighted works. If the on switch can never be
17 turned off, there's little incentive ever to provide
18 initial access in the first place.
19 To contrast these second-level controls,
20 or persistent access controls as some have called
21 them, are being used to maximize access by the
22 greatest number of users in the most efficient
23 manner permitted by digital technology.
24 For example, time-limited access, which
25 is an example of this type of persistent access
26 control. It's not a new concept, it's not a radical
PAGE 120
1 concept. And certainly the library community is
2 familiar with it because the most familiar example
3 might be the public library, where borrowing a book
4 does not entitle you to keep it forever. The video
5 rental store operates on the same principle.
6 Technological measures have been used
7 for decades to enforce time-limited access to
8 copyrighted materials. Once your subscription to a
9 premium cable service expires, scrambling technology
10 denies you access to reruns of the programs to which
11 you once enjoyed initial lawful access. Black boxes
12 aimed at overcoming this access control mechanism
13 have been outlawed for many years.
14 Libraries and our research institutions
15 seemed to have survived this development. So it's a
16 little hard to understand the intensity of their
17 expressed concern that this model -- extending this
18 model to online and other digital media will be
19 fatal to their future.
20 Of course, they're more used to dealing
21 with the traditional environment in which purchase
22 of a physical copy entitled the purchaser to
23 perpetual access to the work it contained. But as
24 long ago as 1976 Congress made it clear that to
25 equate the copy with the work is a fallacy.
PAGE 121
1 You heard testimony earlier this month
2 from David Mirchin of Silver Platter that made it
3 clear that libraries have functioned successfully
4 for years in an environment which includes so-called
5 second-level access controls, such as a licensed
6 limit on the number of simultaneous users.
7 And I think it's significant that,
8 according to all the testimony I heard -- and
9 perhaps you heard something different in the last
10 day -- libraries haven't found it necessary to
11 circumvent the existing access control measure in
12 order to deliver to their users the enhanced and
13 expanded access to copyrighted materials that
14 digital technology enables.
15 It's really hard to conclude from this
16 evidence that cataclysmic changes will occur, or any
17 significant adverse effect, once the legal
18 prohibition against circumvention comes into force
19 on October 28th. Some witnesses have told you that
20 Congress really didn't have these persistent or
21 second-level access controls in mind when it enacted
22 Section 1201(a).
23 I think if you look at the legislative
24 history it's clear that this is exactly what
25 Congress had in mind when it talked about access
26 controls. The House Manager's Report gives the
PAGE 122
1 example of an access control that "would not
2 necessarily prevent access to the work altogether,
3 but could be designed to allow access during a
4 limited time period, such as during a period of
5 library borrowing."
6 The House Manager cited this as an
7 example of a technological measure that would
8 "support new ways of disseminating copyrighted
9 materials to users, and safeguard the availability
10 of legitimate uses of those materials by
11 individuals."
12 So in fact Congress not only was aware
13 of these technologies, it counted them on the
14 positive side of the ledger, and encouraged you to
15 count them on the positive side of the ledger in
16 trying to figure out the impact of access controls
17 on the availability of works for non-infringing
18 uses.
19 0
20 uses. Congress didn't ask about the impact of the
21 circumvention prohibition on fair use, it asked
22 about its impact on non-infringing use. And, of
23 course, that's a much broader category. It includes
24 fair use, but it also includes licensed or permitted
25 uses.
PAGE 123
1 I had the feeling from some of the
2 testimony and submissions that licensed uses really
3 don't count, because they depend upon the agreement
4 with the copyright owner. It's the same theory that
5 makes the apples that you filch from the orchard
6 taste a little sweeter than those that you buy at
7 the store. But from the standpoint of the end-user,
8 it's hard to see the relevance of this distinction.
9 I think Congress took the same view,
10 which is a practical view. So long as the public is
11 able to make use of these materials without
12 violating the copyright law, why is that
13 availability somehow tainted, if it takes place with
14 the consent of the copyright owner.
15 I think the mindset that reads non-
16 infringing use to mean only fair use helps explain
17 why the witnesses, again, were not able to come up
18 with any concrete instances in which circumvention
19 of technological measures is necessary to serve
20 library patrons, or students or researchers.
21 Time and again you were told that there
22 are potential problems, but that they so far have
23 been resolved in negotiations with the copyright
24 owner. This may be disappointing to some of the
25 intermediaries who are shouldering the burden of
26 persuading you that there should be exceptions to
PAGE 124
1 Section 1201(a)(1). But it's good news for the end-
2 user, and that's the party in whose benefit Congress
3 directed that this proceeding be carried out.
4 Finally, let me just say a word about
5 pay-per-use. This is a pricing strategy that we
6 find in some areas of the copyright market. And
7 some of your witnesses portrayed it as not only
8 fatal to the American scholarly enterprise, but
9 actually unconstitutional.
10 Pay-per-use, like time-limited access,
11 has a very distinguished pedigree. Look back to the
12 first concert or play for which admission was ever
13 charged, which was a pay-per-use of the performance
14 of copyrighted work. Up to the present day this is
15 widely used for the delivery of some types of
16 performances by cable, satellite, over the Internet.
17 Interestingly, the area where it's
18 probably made the least inroads is in the academic
19 and library markets. Pay-per-use -- or rather, I
20 should say, unmetered use is probably much more
21 prevalent today than it was 10 or 15 years ago, when
22 you had connect time charging, per-search pricing
23 and these other pricing strategies that are less
24 common today.
25 In fact, you could make the argument
26 that, under some circumstances, pay-per-use may be a
PAGE 125
1 cheaper and more efficient means for libraries and
2 educational institutions to serve their
3 constituencies than the unlimited use model which
4 currently prevails.
5 I think what we'll see, that we've seen
6 so far, is that where that argument has merit the
7 market develops in that fashion. Where pay-per-use
8 is disfavored for whatever reason, it will remain an
9 exception and not the norm. But for your purposes,
10 the purposes of this proceeding, I think the
11 opponents of pay-per-use have failed to make any
12 persuasive showing that the pay-per-use model will
13 become more prevalent unless the effective date of
14 Section 1201(a)(1)(A) is delayed for some particular
15 class of works.
16 And even if they were able to carry that
17 burden, they would still have to show that such an
18 outcome would be likely to lead unbalanced to the
19 adverse impact which Congress was concerned to
20 prevent, and which Congress directed your attention
21 to.
22 All this gets back to the evidence, how
23 it matches up with the burden that Congress imposed.
24 And I think on review of the evidence, I would
25 suggest to you that there's really not enough
26 concrete evidence on which the Librarian could
PAGE 126
1 rationally base a finding that an adverse impact is
2 likely to occur if Section 1201(a)(1)(A) goes into
3 effect on schedule.
4 You've heard from witnesses their
5 apprehensions about pay-per-use and persistent
6 access controls, but many of those same witnesses
7 said that so far they haven't encountered those
8 phenomena. They're worried about licensing terms
9 that will be inflexible or intrusive. Some of the
10 witnesses quite candidly asked you to use this
11 proceeding to improve their bargaining position.
12 So far these problems have not
13 materialized. They predict that it will be
14 necessary to circumvent access controls in the
15 future. And therefore they ask you to stop the
16 congressional prohibition on that behavior from
17 taking effect. But so far, even though it is not
18 currently a violation of law to circumvent these
19 measures in most cases, they can't point to a single
20 instance where they've needed to do so.
21 In short, in a proceeding which must be
22 based on facts, these witnesses have bought you
23 fears. And the evidentiary foundation they
24 presented is too flimsy to support a decision to
25 delay the effective date of Section 1201(a)(1)(A)
26 for any class of works.
PAGE 127
1 On behalf of the organizations
2 representing a broad spectrum of U.S. copyright
3 owners, I urge you to recommend to the Librarian
4 that the cause of action for circumvention of access
5 control measures take effect as scheduled, for all
6 works protected by copyright.
7 Thank you again for your indulgence in
8 my tardiness. And I'd be glad to answer any
9 questions.
10 MS. PETERS: Thank you for managing to
11 make it here. I want to start the questioning with
12 Rob.
13 MR. KASUNIC: Okay. Good afternoon.
14 Suppose I told you that yesterday we heard
15 compelling and highly specific testimony that there
16 was a demonstrable adverse effect from access
17 control measures utilized in a particular class of
18 works, namely motion pictures. And in addition,
19 these motion pictures were only available in digital
20 format. So, a sole source situation.
21 How would we define a coherent, well-
22 defined class of works? Would we exempt all motion
23 pictures as a class, so that anyone could circumvent
24 these technological protection measures, both
25 purchasers and pirates, or would we define the class
26 as motion pictures that were lawfully acquired?
PAGE 128
1 MR. METALITZ: Well, I can't really
2 answer a hypothetical question, based on the
3 evidence that I'm not familiar with. But I think,
4 in general, if you were convinced that there had
5 been this -- or that there was a likelihood of this
6 significant adverse impact, you would then need to
7 try to fashion a definition that would be neither
8 under-inclusive nor over-inclusive.
9 One that would capture the types of
10 works as to which that impact had been demonstrated,
11 and didn't go far afield into areas where that
12 adverse effect hadn't been demonstrated, or didn't
13 appear to be likely.
14 Congress obviously didn't give you a lot
15 of guidance on this, but they did suggest that it
16 ought to be a particularized determination. And
17 something that was simply based on one type of
18 protective technology was not appropriate, that a
19 definition based on one category or description of
20 users probably wasn't appropriate.
21 That the touchstone is what class of
22 works can you describe that -- as to which the --
23 again, not the use of the access controls, that's
24 not the issue. But the prohibition against
25 circumvention of the access controls would be likely
26 to achieve that adverse impact.
PAGE 129
1 So I doubt that it would be a category
2 as broad as all motion pictures. I doubt that it
3 would be a category as broad as all motion pictures
4 in a particular technological format. But, again,
5 that's the kind of question that I find it very
6 difficult to answer in the absence of evidence.
7 Because, for one thing, it may bind your
8 hands -- or those of your successors -- when they
9 actually have to deal with evidence that there has
10 been significant adverse impact. So I think caution
11 is probably advised in this area, except and unless
12 -- except to the extent that you are persuaded that
13 the proponents of an exception had met their burden.
14 MR. KASUNIC: In the legislative history
15 there was discussion from the House Judiciary Report
16 early on that "Paragraph 1(a)(1) does not apply to
17 subsequent actions of a person once he or she has
18 obtained authorized access to a copy of a work
19 protected under Title 17, even if such action
20 involves circumvention of additional forms of
21 technological protection measures."
22 Doesn't this passage support the
23 proposed exemption by some groups that classes of
24 works that are initially lawfully accessed should be
25 -- you should be able to circumvent?
PAGE 130
1 MR. METALITZ: Well, I think to the
2 extent that it does, you have to look at the whole
3 legislative history. That provision was in the
4 House Judiciary Report, which is at an early state.
5 It did refer to 1201(a)(1) which is now
6 1201(a)(1)(A), and I don't think there's been any
7 change in that language.
8 But I think if you look at the
9 legislative history underlying this proceeding, and
10 how you're supposed to answer that question, what
11 issues you're supposed to look at, it's clear that
12 Congress thought that access control mechanisms that
13 applied after "initial lawful access," could have a
14 use-facilitating or use-enhancing effect. And that
15 they were a positive element in the calculus for
16 what the impact of these technologies -- and even
17 more importantly -- of the prohibition would be on
18 the availability of works for non-infringing uses.
19 So I think you'd have to put that observation in
20 that context.
21 MR. KASUNIC: We had discussed earlier
22 this morning some of the statements in the comments
23 on reverse engineering. And in your comment, as
24 well, there was a discussion that Section 1201(f)
25 would prohibit the Librarian from making a
26 determination on this area of -- within the scope of
PAGE 131
1 1201(a)(1)(A). That because Congress had already
2 acted in that area, that there was no room.
3 Is that something that would be -- in
4 terms of changes in technology, if this was -- those
5 exemptions were done at a specific point in time, if
6 at some point in time adverse effects were shown in
7 relation to that, would that be something that would
8 be prevented from the Librarian to address?
9 MR. METALITZ: Well, it depends on what
10 they would be. 1201(a)(1), as you know, of course,
11 is not in effect. Is not now a violation to
12 circumvent access control measures for the purpose
13 of reverse engineering, whether or not that reverse
14 engineering would be infringing under the copyright
15 law or not.
16 On October 28th, it will be illegal to
17 do that. But only within the scope of what
18 1201(a)(1) provides, and Section 1201(f) provides an
19 exception to Section 1201(a)(1) in certain
20 circumstances. And to kind of oversimplify it,
21 perhaps a little bit, if the circumvention is
22 necessary in order to obtain information in a
23 reverse engineering context that would not
24 constitute an infringement, then there's an
25 exception at Section 1201(a)(1) as well.
PAGE 132
1 So that's an area where the scope of the
2 circumvention prohibition is linked with issues of
3 infringement to a great extent, it's not exactly the
4 full extent. So if in the future, you found that
5 people -- because they couldn't circumvent the
6 circumstances that didn't fall within the Section
7 1201(f) exception were thereby -- because those
8 circumventions remained illegal, that therefore
9 caused an adverse impact on the availability of
10 works for non-infringing uses, then you would be
11 kind of in the realm of the kind of things that the
12 triennial proceedings is supposed to look at.
13 But it doesn't look at Section
14 1201(a)(1) in a vacuum. Section 1201(a)(1), when it
15 goes into effect, will be subject to exceptions for
16 reverse engineering, for computer security, for
17 encryption research. I think those are the
18 principal ones, and there may be others as well.
19 So that's the prohibition whose impact
20 you're supposed to assess, either today its
21 anticipated impact, or three years from now its
22 actual impact, as well as anticipated over the
23 following three years. I don't know if that answers
24 your question.
25 MR. KASUNIC: Yes. We have also heard a
26 lot of evidence or a lot of testimony from the
PAGE 133
1 library community and educators that this would
2 cause the prohibition, and Section 1201(a)(1) would
3 cause a chilling effect. And to what extent is a
4 chilling effect an adverse effect, and something
5 that should be considered -- or the likelihood of a
6 chilling effect is something that should be
7 considered?
8 MR. METALITZ: I'm not sure what it
9 would be a chilling effect on. Usually, that term
10 is used in the First Amendment context. Is that
11 what --
12 MR. KASUNIC: A chilling effect on
13 making fair use determinations that if -- with some
14 of the criminal ramifications and civil penalties
15 involved here, that -- and the uncertainty within a
16 number of the terms that are involved in Section
17 1201(a)(1), there's been the claims that there is a
18 certain amount of vagueness to some of the terms.
19 That that uncertainty would really
20 prevent librarians who, it was stated, were by their
21 nature cautious from -- if there was that
22 uncertainty they would tend towards, maybe,
23 cautious. And that would prevent a use of certain
24 privileges that existed.
25 MR. METALITZ: I think it would help in
26 evaluating that claim if we knew what types of
PAGE 134
1 activities were being chilled. The whole chilling
2 concept is, you know, how close to the line of
3 legality do you encourage people to go. And the
4 evidence so far is that they're all the way across
5 the room from the line of legality.
6 When you asked the witnesses in
7 Washington whether they had ever had to circumvent
8 access controls in order to serve their patrons, the
9 answer was no. And when they raised fears about
10 some of the areas where this might happen, such as
11 with the image databases and so forth, you pressed
12 them.
13 It seemed to me that the evidence was
14 that they'd been able to resolve this in
15 negotiations with the copyright owners. So that
16 doesn't sound as though they've been chilled yet.
17 Because every time they felt cold, they've been able
18 to find some warmth somewhere.
19 So I think you'd have to know more about
20 what types of activities they claim they were
21 discouraged from undertaking before you could
22 evaluate whether a chilling effect was something
23 that amounted to a significant adverse impact, as
24 Congress directed you to assess.
25 MR. KASUNIC: Thanks. That's all I
26 have.
PAGE 135
1 MS. PETERS: Thank you. Rachel?
2 MS. GOSLINS: Mr. Metalitz, I think
3 we've asked this question of almost every content
4 owner representative in front of us. And I think
5 we've yet to get an answer we can take to the bank.
6 But I'm going to try again.
7 You have all provided us with numerous
8 examples of what is not a class of works. And I'm
9 curious as to whether you have an example of what
10 might a class of works.
11 MR. METALITZ: Well, I'm not sure you're
12 going to be able to bank any more on what I'm saying
13 than what the others have said. And I'd like to
14 explain the reason why. I've referred to this in my
15 testimony.
16 And that is, when you're dealing with a
17 null set, it is extremely difficult to categorize
18 it, or classify it. And the danger of doing that is
19 that you set up rules that, in the hypothetical
20 situation, that may not be the right ones when your
21 set is no longer null. And you actually have some
22 examples of adverse impact.
23 You know, I recall your dialogue about
24 this with Mr. Lutzker. Some things that he said I
25 wouldn't disagree with. For example, it doesn't
26 necessarily have to be a subset of the categories of
PAGE 136
1 works in the Act -- not an exhaustive list -- that's
2 laid out in the act of the cross-cutting. Or you
3 could say a class includes elements from more than
4 one of those categories.
5 But, again, it's very hard to answer
6 that when we think we're dealing with -- from our
7 perspective, we're dealing with nothing. We're
8 dealing with a null set. Let's see the examples,
9 let's find the clear cases of adverse impact. Then
10 it would be more realistic to try to say, "Well, can
11 we define a particular class of works that kind of
12 covers that waterfront?"
13 MS. GOSLINS: I had a similar discussion
14 with Mr. Simon this morning, and he similarly said
15 you have look at the harm. The problem, I think, in
16 that is that on one hand we have significant amount
17 of content owners telling us we shouldn't look at
18 uses or users in defining a class of works. On the
19 other hand, how can you look at harm without looking
20 at who is being harmed, and what they're doing in
21 which they're suffering the harm?
22 So it's hard to recommend -- do you have
23 any suggests on reconciling -- defining classes by
24 who is being harmed, and what they're doing, on one
25 hand. And not looking at uses or users on the
26 other.
PAGE 137
1 MR. METALITZ: I think when you're
2 looking at the evidence, you have to look at the
3 uses and the users. Because you're going to have
4 examples. The example will be User X is unable to
5 make this particular type of non-infringing use of
6 this particular work, because of the prohibition
7 against circumventing access controls on that work.
8 Then you no longer have a null set.
9 You'd have an example, you'd have at least a
10 species. And then you'd have to try to figure out -
11 - and maybe if you have two species or three
12 species, then you'd try to figure out what's the
13 generic class of works that covers those examples.
14 So I don't think it's irrelevant. I
15 mean, I think the examples that you would get
16 obviously have to have some explanation of who the
17 user is, and what use it is that they wish to make,
18 or are unable to make. But then at that point you
19 have to go to the next level of analysis and define
20 a particular class of works that covers that.
21 Again, we don't see that first step has been shown.
22 MS. GOSLINS: As I understood one of the
23 points in your argument, was that non-infringing
24 uses should cover -- what we should be looking at is
25 adverse impacts on other things, such as licensed
PAGE 138
1 uses or specifically-permitted uses under specific
2 exemptions.
3 And I think, in fact, we have heard some
4 examples of problems in those categories. In the
5 Washington hearings we had a gentleman who talked
6 extensively about dongles, and what happens when you
7 have a lost or damaged dongle. You still have an
8 operating license, but you're unable to replace it
9 because the company isn't willing, or it's out of
10 business.
11 0
12 -- but Lolly Gassaway representing the AAU and
13 several other organizations, talked about a CD that
14 she had in her library where the content expired,
15 even though there was no license term restricting
16 the content. Restricting the time or limiting the
17 time that the content should have been available.
18 So that was a mistake situation.
19 We also had testimony about libraries'
20 statutory rights to lend certain things like books
21 or software programs. And their inability to do so
22 if the material is encrypted, because they wouldn't
23 be able to lend the decryption key to the person to
24 whom they were lending the object.
25 So we do have examples of ways in which
26 people may be prohibited from making uses that would
PAGE 139
1 be permissible under their license or under the
2 statute. And I'm just curious as to how you would
3 respond to those.
4 MR. METALITZ: Well, let me take it in
5 reverse order. The decryption key issue, if I
6 understand it, is really a question of whether
7 there's a license agreement that is not -- you
8 referred, I think, to a statutory right to lend
9 something, and that certainly is a right that can be
10 modified by a license agreement.
11 So that when a library, let's say,
12 acquires a piece of software, they, I would think,
13 ordinarily do so subject to a license that states
14 the circumstances under which it can be lent. So I
15 think that's really --
16 MS. GOSLINS: But let's assume there's
17 not a license. If a library purchases a copy of
18 Steven King's e-book, "Riding A Bullet," I think
19 it's called. It can only be played on the computer
20 which downloads that for that content.
21 And even if there's no licensing term
22 restricting them from lending the book, checking it
23 out to the extent that they could do so
24 technologically, they're incapable of doing so
25 because of the access control protections.
PAGE 140
1 MR. METALITZ: Well, I think you're
2 going to hear more about that in the next panel.
3 Because that's a species of the general problem,
4 which is whether the acquisition of a copy -- to say
5 it that way -- necessarily brings with it the right
6 to play that copy, use that copy on a machine of
7 one's own choosing. Or, rather, on the one that the
8 copyright owner intended that it be used on.
9 I think that would be a pretty -- I
10 think that would be an expansion of what ordinarily
11 has been considered the privileges of the user.
12 It's kind of like saying if you bought a Betamax
13 tape, you have to be able to play it on a VHS
14 machine, and vice versa. Again, these are not
15 always problems that are as new as we sometimes
16 think they are.
17 MS. GOSLINS: But, historically, the
18 Copyright Act does go out of its way to ensure
19 libraries have the ability to do certain things that
20 a normal individual user wouldn't have. Like
21 archive, and like lend, and like preserve materials.
22 I mean, that is --
23 MR. METALITZ: Right. 108 gives them
24 those privileges. And I think that was -- if I
25 understood it, that was your second example that
PAGE 141
1 Lolly -- was that a preservation issue that she was
2 raising?
3 MS. GOSLINS: No. She had purchased --
4 my understanding is she had purchased a CD without
5 any time restriction on it, and the material
6 expired. And after a fair amount of time she was
7 able to get the manufacturer to replace it, because
8 it had been a mistake.
9 MR. METALITZ: And, you know, if her
10 library has bought defective books -- that the
11 bindings came apart and the pages fell apart
12 quickly, too. You know, this would happen. And I
13 don't know that it's a copyright infringement when
14 that occurs.
15 The preservation issue, as you
16 mentioned, there are privileges as far as the
17 ability to copy. And I think the issue you'd have
18 to look at there is what exactly is it that the
19 library or archive wants to do that they're unable
20 to do without circumventing access controls.
21 In some cases what they're concerned
22 about is a copy control. That they have it, they
23 have access to it, but they can't copy it to move it
24 from a fragile medium to a better medium, or from an
25 obsolete medium to a non-obsolete medium. And that's
26 a 108 issue. As to the copyright side, it's non-
PAGE 142
1 issue that 1201 affects, because as you know, it's
2 not a violation to circumvent a copy control.
3 Then you also have to look at -- so
4 those are instances in which they don't need to
5 violate 1201(a)(1) in order to achieve their
6 objective. Then you have some circumstances, I
7 would think, in which even if they could violate --
8 they did violate Section 1201(a)(1) once it comes
9 into effect, they still wouldn't achieve their
10 objective.
11 If you have something that is in a
12 medium where you don't have -- the hardware no
13 longer exists or isn't accessible for you to play
14 it, then the fact that you have a decryption key
15 that you can use once you get it on a piece of
16 compatible hardware doesn't really help you.
17 So whether or not they circumvent
18 Section 1201(a)(1) isn't going to have a direct
19 impact on the ability to make non-infringing uses.
20 But, again, I would come back to the
21 question of what's the status quo? What's happening
22 today? Today, aside from the cable area and a few
23 other areas, it's not illegal to circumvent access
24 controls. Where are the instances in which
25 libraries are forced to do this in order to gain
26 access to this material?
PAGE 143
1 Or are they able to gain it in other
2 ways, either by locating another library that has
3 the material in a usable format, and then using one
4 of the exceptions in the Copyright Act they're able
5 to gain access to it that way, or by dealing with
6 the copyright owners. I think you'd have to look at
7 the specifics.
8 MS. GOSLINS: But if we just look at a
9 narrow category in which the owner of -- or a user
10 of a product has a license or the legal entitled to
11 do something. And for some reason in this very
12 narrow category, other than arguably the intent of
13 the copyright owner, they are prohibited from doing
14 so by access control protections -- either because
15 it's malfunctioning or because they can't get a
16 replacement for their dongle, because the copyright
17 owner has gone out of business or isn't responding
18 to their calls.
19 In those situations do you think -- and
20 let's assume they want to make non-infringing use --
21 in those situations do you think it would be
22 appropriate to allow them to circumvent the access
23 control?
24 MR. METALITZ: I think, again, you'd
25 have to look at the specifics. The dongle,
26 situation, in some cases the copyright owner, as I
PAGE 144
1 recall the testimony, was out of business. And the
2 witness had built a thriving business on perhaps
3 violating Section 1201(a)(2).
4 I don't know whether that's the case or
5 not, or 1201(b)(1) -- because in many cases these
6 would be copy controls. But in any case he seemed
7 to be having the business unmolested of providing
8 these solutions to them.
9 But the other thing that he was unhappy
10 about was that -- and in the case of some of this
11 high-end software the copyright owner was saying,
12 "Well, if you buy it with the dongle, and you lose
13 the dongle, you have to buy another copy of the
14 software." It seems to me that's a market issue
15 more than a copyright issue. Unless you think
16 there's an entitlement to a particular license term
17 which is, if you lose the dongle you get a new one
18 free.
19 And I don't think that the copyright law
20 dictates that, nor do I think that that would be a
21 good reason to intervene and bring the -- or hold up
22 the applicability of Section 1201(a)(1). So, you'd
23 have to look at the specifics.
24 MS. GOSLINS: All right. One final
25 question, just sort of a statutory interpretation
26 question. So if you have a copy of the DMCA handy -
PAGE 145
1 - I don't know if you do. You might be able to just
2 answer this without looking at it.
3 In your understanding of the statute,
4 let's assume for a moment that we were to exempt a
5 particular class of works, assuming we could figure
6 out what one was. So we recommend to the Librarian,
7 who recommends to Congress that a certain class of
8 works be exempted, and that's accepted. Then what
9 happens?
10 Are all uses of that -- of anything in
11 that particular class of works then exempted from
12 the Section 1201(a)(1) prohibition, or only non-
13 infringing uses?
14 MR. METALITZ: Well, I don't think you
15 have the authority to decide whether infringing uses
16 are excused. That's a copyright law issue, not a
17 Section 1201 issue. What you have the authority to
18 -- actually, the Librarian has the authority to
19 decide without going back to Congress, is whether
20 the Section 1201(a)(1) prohibition will go into
21 effect for a particular class of works.
22 MS. GOSLINS: And that's what I'm
23 focusing on, what it means to go into effect. If we
24 recommend a class of works which is accepted, then
25 what is the effect of that exemption? Is it that
26 from that point on, anything -- let's use chemistry
PAGE 146
1 textbooks. We recommend chemistry textbooks as a --
2 I know the chemists are going to come after us. I
3 won't keep using that example.
4 We recommend chemistry textbooks as a
5 class of works that's exempted, and that's accepted.
6 Then can anyone circumvent access control
7 protections to a chemistry textbook, or only people
8 who intend to make non-infringing uses of it?
9 MR. METALITZ: It would depend on how
10 you define the particular class of works. Because
11 if you define a particular class of work as
12 chemistry textbooks, then I assume that if someone
13 brought a Section 1201(a)(1) action against someone
14 for infringing -- or for circumventing the access
15 control on the chemistry textbooks, that that would
16 not be a valid cause of action, at least until
17 October 28, 2003. At that point it would be a valid
18 cause of action, unless you made a new determination
19 that chemistry textbooks --
20 MS. GOSLINS: Okay. Can I ask you to
21 look at 1201(a)(1)(D). I apologize, it's a little
22 dense as far as provisions go, and I don't mean to
23 spring it on you now.
24 MR. METALITZ: No apologies are needed.
25 MS. GOSLINS: We've had some testimony
26 that once the Librarian publishes an exempted class
PAGE 147
1 of works, then -- as you'll see by the last sort of
2 two lines in it, "the prohibition contained in
3 Subparagraph A should not apply to such users,"
4 meaning non-infringing users.
5 MR. METALITZ: No, it doesn't mean that.
6 It means a user who circumvents. I remember this --
7 I know what you're driving at here, because this was
8 from the earlier testimony. In fact, when we go
9 back and look at 1201(1)(b), "prohibition shall not
10 apply to persons who are users of a copyrighted
11 work." And this is the point I think Arnie Lutzker
12 was making.
13 And the reason it says that is the only
14 person who can be guilty of a violation of Section
15 1201(a)(1) is a user of the work. That's the person
16 who circumvents an access control measure. You
17 don't bring that plan, that cause of action against,
18 for example, somebody who posts the decryption
19 algorithm on the Internet. That person may not be
20 circumventing, but they're trafficking in the tools
21 of circumvention. That's a 1201(a)(2) issue.
22 But Section 1201(a)(1), the defendant is
23 the user who circumvents an access control. And
24 what you have the power to recommend, or the
25 Librarian has the power to decide, is which users
PAGE 148
1 can do that without violating the law for that
2 three-year period.
3 MS. GOSLINS: Not really which users,
4 right? Which classes of works, that can be done,
5 too.
6 MR. METALITZ: That's correct. If the
7 user is circumventing the access control for a
8 particular class of work, and that happens to fall
9 within the particular class of work that you have
10 identified, then that person is immune from
11 liability under Section 1201(a)(1).
12 I mean, the reason is you can't -- you
13 have to say "user" because you don't sue the work.
14 You don't -- the defendant is not the work, the
15 defendant is not the particular class of work. It's
16 a user of a particular class of work who is
17 privileged -- if you so decide and if the Librarian
18 agrees -- to circumvent an access control measure
19 during a specified period of time.
20 MS. GOSLINS: But if you look at
21 Subsection D -- and I don't mean to argue with you
22 here, I'm just trying to understand myself as I go
23 through this statute. It says, "The Librarian shall
24 publish any class of copyrighted works for which the
25 Librarian has determined pursuant to the rulemaking
26 conducted under Subparagraph C, that non-infringing
PAGE 149
1 uses by persons who are users of a copyrighted work
2 are or are likely to be adversely affected. And the
3 prohibition contained in Subparagraph A shall not
4 apply to such users with respect to such class of
5 works."
6 So why would they say "such users"
7 unless they were referring to the users who were
8 making the non-infringing uses? The persons who
9 were making non-infringing uses?
10 MR. METALITZ: Well, the people who want
11 to make non-infringing uses are adversely affected
12 in their ability to do that. That's the threshold
13 that you have to cross in order to make that
14 determination. If you find that people aren't --
15 that there isn't an adverse impact on non-infringing
16 uses, then we're not going to designate that
17 particular class of work.
18 But once you designate that particular
19 class of work, it's not that 1201(a)(1)(A) doesn't
20 apply to those uses, it doesn't apply to those
21 users, such users. And I would think that that
22 refers back to persons who are users of a
23 copyrighted work, rather than the non-infringing
24 uses. That's a threshold question you have to
25 decide.
PAGE 150
1 MS. GOSLINS: But then wouldn't such be
2 totally redundant? And why wouldn't it just say the
3 prohibition contained in Subparagraph A shall not
4 apply to users with respect to such class of works.
5 Or the prohibition contained in Subparagraph A shall
6 not apply to such class of works.
7 MR. METALITZ: I think the reason it
8 doesn't say the latter is probably because the claim
9 is not brought against a class of works, it's
10 brought against a user.
11 So your question is inevitably -- in
12 other words, in your particular class of work only
13 applied to --
14 MS. GOSLINS: The prohibition, the
15 exemption would only apply to people who were
16 circumventing access control protections for that
17 particular class of works who were making non-
18 infringing uses thereof.
19 MR. METALITZ: Well, I think if you were
20 able to maintain a perfect fit between what the
21 evidence showed and what the scope of your
22 particular class was, that that would be the
23 outcome. Because you would be able to tailor the
24 particular class to only cover the evidence that you
25 were persuaded by, that showed this adverse impact.
PAGE 151
1 MR. CARSON: I just want to make sure.
2 I think I'm following you, but I just want to make
3 sure we're absolutely clear on this.
4 Let's assume that we determine that
5 motion pictures are one of those classes. I'm not
6 saying we're going to, but just for sake of the
7 example. Let's say Rachel is a professor of film
8 history at some university, and I'm someone who
9 manufactures illicit CDs or DVDs of motion pictures.
10 Now, motion pictures, maybe even motion
11 pictures on DVDs, have been exempted from this. Are
12 you saying that when Rachel wants to do this, in
13 order to excerpt -- to make excerpts from motion
14 pictures to show to her class in an instructional
15 context, she's able to take advantage of that
16 exemption to circumvent. That, I gather, would be
17 clear. Are you following me so far?
18 MR. METALITZ: Yes.
19 MR. CARSON: And because that class is
20 exempted, if I want to take advantage of the ability
21 to circumvent so that I can make all sorts of copies
22 and market them, I would also be exempt because
23 we've exempted that class. Is that what you're
24 saying?
25 MR. METALITZ: I think this follows from
26 the independence of the infringement action from the
PAGE 152
1 1201 liability. The fact that you were making an --
2 that you were setting out to infringe means you're
3 going to be guilty of copyright infringement.
4 MR. CARSON: Okay. A representative of
5 at least one of the people whom you represent right
6 now, this morning took exactly the opposite point of
7 view. So you might want to clarify just what your
8 view, or the views of all the people you're
9 representing, actually are on that. Not that it's
10 dispositive of the issue, but it would help us
11 perhaps to know whether you're speaking with one
12 voice, or what on that issue.
13 MR. METALITZ: Well, we're a very
14 diverse group, as you know.
15 (Laughter.)
16 MR. METALITZ: We've already had one
17 member of our group tell you that the whole idea of
18 creating a particular -- recognizing particular
19 classes of works is unconstitutional, which I don't
20 think is our unanimous view.
21 But I think this helps to illustrate
22 some of the difficulties you run into when you're
23 talking about this in hypothetical terms. And I
24 know you have to operate that way, but it becomes
25 difficult to answer these questions in the absence
PAGE 153
1 of concrete evidence of adverse impact. And
2 thankfully, I think Congress recognized that.
3 They wanted you to find -- they said you
4 shouldn't find any class, you shouldn't even delve
5 into these issues of what constitutes a particular
6 class, and whether it necessarily includes users who
7 are ultimately making infringing uses, or ultimately
8 making non-infringing uses, unless you have specific
9 strong and persuasive evidence that this is likely
10 to occur.
11 If you have that, then maybe it becomes
12 a little bit easier to answer these questions. And
13 part of them could be answered, to some degree,
14 definitionally. How clearly do you define a
15 particular class of works. But I'm not saying
16 that's a panacea in all these cases, but I think it
17 illustrates the wisdom of waiting until you have
18 concrete evidence before you try to answer that
19 question.
20 MS. DOUGLASS: I have just a couple of
21 quick, kind of broad questions. And I hope they
22 don't indicate that I have one view or another.
23 It's just that I'm trying to put some clothes on a
24 stick figure in my mind, as far as some of these
25 concepts are concerned. And thinking that it might
26 be helpful to laypeople as well.
PAGE 154
1 You said earlier that, I believe,
2 although some others were saying that the burden of
3 showing specific adverse effects could not be met,
4 it can be met. And I understand that this might be
5 a statement against self-interest or something, but
6 I'm going to ask the question anyway.
7 Could you tell me how the burden might
8 be -- how might one show adverse effects? Just for
9 purposes of understanding.
10 MR. METALITZ: Well, I can give one
11 example that may be helpful in that regard. If the
12 witnesses told you that there were a number of --
13 you know, the library witnesses told you that they
14 had to circumvent access controls in order to serve
15 their patrons, and that was the only alternative
16 that they had. And they were doing it on a daily
17 basis, and that there was a -- they linked it to the
18 particular non-infringing use that they would
19 otherwise be unable to do. Certainly that would be
20 stronger evidence than what they've come forward
21 with so far. And particularly at this juncture.
22 You know, in one sense the proponents of
23 the exception do have a tougher burden now. Because
24 prohibition hasn't gone into effect. So you can't
25 say that anyone has been adversely affected by it
26 yet, at least within the scope of that prohibition.
PAGE 155
1 But you could, in theory, have evidence
2 that shows the likelihood of an adverse impact,
3 which was that this was a necessity in order -- that
4 today this was a necessity, a central element of the
5 way that libraries did business. And that if they
6 had to stop doing it on October 28, 2000, XYZ
7 effects would occur.
8 I'm trying to -- I'm disagreeing with
9 the statements that you heard that said that
10 basically Congress has sent you on a fool's errand
11 here, and this burden could never be met. I don't
12 think Congress did send you on a fool's errand, I
13 think the burden could be met if the evidence were
14 there. But it should be brought forward. I don't
15 think it has been met, but I don't think it's
16 impossible.
17 MS. DOUGLASS: I'm trying to think of a
18 line between adverse effect and mere inconvenience.
19 And I'm trying to place, at least, something on one
20 side or the other. And I'm thinking of a situation
21 where a library can either use a digitally-encrypted
22 -- circumvent a digitally-encrypted work, or can go
23 to 12 different other sources and get that same
24 material. Would that be an adverse effect or would
25 that be an inconvenience? Or is it harder than
26 that?
PAGE 156
1 MR. METALITZ: Well, I think it is
2 difficult to draw the bright line. The examples
3 that have been given about people having to come in
4 late at night to get access because there is a
5 limitation on the number of simultaneous users. I'm
6 not sure that would be an adverse effect at all, but
7 if it is, it belongs in the mere inconvenience
8 category.
9 I think it's clear that, on the issue of
10 availability of alternatives, which is an important
11 issue -- and I think it's the one you've raised. It
12 doesn't have to be complete substitutability. I
13 think the fact that it is more inconvenient to
14 assemble the material from other sources, rather
15 than to decrypt it -- you know, that could be in the
16 category of mere inconvenience.
17 I guess the question I would ask in that
18 situation is why is licensed access unavailable? Or
19 did the library simply choose, for whatever reason -
20 - and it could be a very good reason -- not to
21 license access to that material, or to stop
22 licensing access to that material.
23 I mean, as a consequence of that it may
24 become more inconvenient for them to serve certain
25 users. But I think that's the result, certainly not
26 of Section 1201(a)(1) and not even of the use of
PAGE 157
1 access controls. It's really a consequence of a
2 decision the library has made, juggling its
3 priorities and deciding which users it will give
4 priority to, basically.
5 MS. DOUGLASS: Again, for purposes of
6 understanding. I'm wondering if it could be said
7 that anticircumvention amounts to a per se
8 imposition of liability for non-infringing use. And
9 if that's not correct, why not? And if it is
10 correct, why?
11 MR. METALITZ: Well, I think it's the
12 cause of action for infringement and the cause of
13 action for a violation of anticircumvention
14 prohibitions are two separate claims. Two separate
15 causes of action.
16 So, it's certainly true that someone
17 could be liable for a violation of Section 1201
18 without being liable for copyright infringement.
19 And we've already seen examples of that in the cases
20 that have come up under 1201(a)(2) and (b)(1). They
21 may or may not involve copyright infringement, but
22 it's an independent cause of action. I don't know
23 if that's responsive to your question.
24 MS. DOUGLASS: I think it is. Thank
25 you.
PAGE 158
1 MR. CARSON: Steve, I'd like to get your
2 reaction to one example that was brought up this
3 morning. Let's assume it's November 1st. I happen
4 to have a subscription otherwise Lexis, I have a
5 Lexis ID. Rachel doesn't. She wants to do some
6 legal research, so I give her my ID and she uses it.
7 Has she violated Section 1201(a)?
8 MR. METALITZ: Has she violated it by
9 using your, or have you violated it by giving it to
10 her?
11 MR. CARSON: Well, have either of us
12 violated it? Is that circumvention of a
13 technological measure that controls access?
14 MR. METALITZ: I mean, she's using your
15 password presumably with your permission.
16 MR. CARSON: But certainly not with
17 Lexis' permission, right?
18 MR. METALITZ: Right. And it certainly
19 -- let's assume. I don't know, but let's assume
20 it's a violation of the Lexis license agreement
21 which it was the day before October 28th. I think
22 that's probably how that issue would be resolved.
23 Is it a -- it's a question of whether
24 she is circumventing an access control measure, and
25 a password often has that rule.
PAGE 159
1 MR. CARSON: So I gather what you're
2 saying is that if an unauthorized person uses an
3 authorized password, that is a violation of the
4 anticircumvention provision?
5 MR. METALITZ: I don't know that it
6 would be. Because I think you'd have to see what
7 the authority of the person -- was there apparent
8 authority, was there -- you know, you get into those
9 agency questions. But if you're saying could it be
10 a violation, yes, I guess it could be.
11 MR. CARSON: Okay. Can you help me out
12 by letting me know what the purpose of having this
13 rulemaking is? I'm not saying what are we supposed
14 to be doing, but what is the purpose for having this
15 rulemaking?
16 MR. METALITZ: I think the purpose for
17 having the rulemaking is that while Congress had an
18 expectation of how things would evolve, they didn't
19 have complete certainty about how the digital -- you
20 know, the use of technologies and online digital
21 technologies would evolve. How the marketplace
22 would evolve.
23 And although they expected -- at least
24 the House Manager Report said they thought the
25 likeliest outcome would be that the use of
26 technological measures backed up by Section
PAGE 160
1 1201(a)(1) and the other 1201 prohibitions would
2 lead to greater availability, greater access to
3 material for non-infringing. That it was possible
4 that that would not happen.
5 So I think the purpose of it is Congress
6 built in a safety valve into this system, and your
7 job is to see whether there is, in fact, steam
8 passing through that safety valve. 0
9 it's got to be pretty hot before you can blow the
10 whistle. And I'm about to crash my metaphor here,
11 but I think the safety valve function is what
12 Congress asked you to perform. I'm not sure if that
13 answers your question.
14 MR. CARSON: Well, it's an answer and
15 it's a good answer. I'm not sure it totally answers
16 what I was trying to get at.
17 MR. METALITZ: Well, try again.
18 MR. CARSON: Well, if we were to
19 recommend that a particular class be exempt, what
20 would we be trying to accomplish, or who would we be
21 trying to help by doing that?
22 MR. METALITZ: I think you would be
23 trying to help the end-user who, if you found such a
24 class, would in the absence of your action be
25 substantially adversely impacted in their ability to
PAGE 161
1 make non-infringing uses for that particular class
2 of works.
3 So I think you have to look at the end-
4 user. As I said in my statement, I think that's on
5 whose behalf this undertaking is the -- you know,
6 that this rulemaking is proceeding. I think at the
7 same time you obviously have to take into account
8 what are the -- as I said, it's a net calculation.
9 And you have to take into account what
10 are the ways in which the use of technological
11 control measures, backed up by this legal provision
12 have increased availability, have increased access.
13 So you have to take into account those interests as
14 well.
15 But you're looking at the user is
16 substantially adversely impacted in his ability to
17 make non-infringing uses. That's kind of the litmus
18 test.
19 MR. CARSON: Okay. Now, I think you've
20 said in either your oral or your written testimony,
21 and maybe both, that in defining a class of works
22 for purposes of this rulemaking, we really can't
23 include in the definition the type of user who we're
24 thinking of. Is that accurate?
25 MR. METALITZ: Well, it certainly can't
26 be determined based on that. Such as the proposals
PAGE 162
1 that it should be any type of work that is marketed
2 to libraries, for example.
3 MR. CARSON: Okay, fair enough. But
4 let's go back to an example I gave you a little
5 while ago. Let's say motion pictures on DVDs.
6 Assuming the case were made that there were a
7 problem there, would it be a legitimate class to
8 say, "We're not going to exempt motion pictures on
9 DVDs as such as a class. But we are going to exempt
10 motion pictures on DVDs when used by film school
11 professors."
12 MR. METALITZ: I think that would be
13 very questionable under this scheme, because
14 Congress asked you to look at particular classes of
15 works. I would hesitate to say that you can't make
16 any reference to the type of -- you know, you have
17 to define a particular class of works. And Congress
18 did not exactly tell you how to do that. But it
19 certainly didn't tell you to define a particular
20 class of privileged users.
21 At one point it was going to do that.
22 Originally this rulemaking proceeding was to look at
23 whether 501(c)(3), (4) and (6) organizations and
24 people who had initial lawful access, and some other
25 specified categories of users were being adversely
26 impacted. That's not where this ended up.
PAGE 163
1 It ended up with a definition of a particular class
2 of works.
3 MR. CARSON: Well, then, where we seem
4 to end up with your interpretation, having rejected
5 the interpretation in Subparagraph D that Rachel was
6 discussing with you, is that we have a very blunt
7 instrument indeed to use to deal with problems
8 caused by the anticircumvention provision.
9 We can't tailor the class to the
10 problem. We simply have to find that if there are
11 some users, maybe a minority of users of a work who
12 have serious problems with this particular kind of
13 work, we've got to exempt that class for everyone.
14 Does that make any sense at all?
15 MR. METALITZ: Well, I don't know that
16 your tool is quite that blunt. Because, again, I
17 think you have some flexibility in how you define a
18 particular class of work. But I think by directing
19 you to make a net determination to take into account
20 the positive aspects of the use of access control
21 measures, Congress did intend that you -- you know,
22 there might be some adverse impacts that would be
23 counterbalanced by positive impacts.
24 And that even if there were some adverse
25 impacts that wouldn't by itself justify finding a
26 particular class of works, you have to do a net
PAGE 164
1 calculation -- I mean, I could go back and look at -
2 - I mean, it's in the House Manager's Report and
3 elsewhere. But it's a net calculation.
4 MR. CARSON: I don't think you addressed
5 it today, but certainly in your written comments you
6 spent some time talking about the DVD issue and so
7 on. This calls for a yes or no answer. Do you have
8 thoughts you might want to share with us on that
9 issue today?
10 MR. METALITZ: No, I think I'll leave
11 that to the experts that you're about to hear from.
12 MR. CARSON: All right. I was going to
13 ask, but I think you may have answered it. Whether
14 it makes sense to have you hang around for the Q and
15 A on the DVD issue. But am I hearing that you don't
16 think you can contribute anything beyond what --
17 MR. METALITZ: I'd be glad to. I'm at
18 your disposal.
19 MR. CARSON: Okay. That's all I have.
20 MS. PETERS: Okay. I don't have any
21 additional questions. Thank you very much, Mr.
22 Metalitz. And we'll now go to our last panel.
23 All right. As we go to our last panel
24 we're going to start with you, Ms. Gross. Thank
25 you.
PAGE 165
1 MS. GROSS: Thank you. The Electronic
2 Frontier Foundation appreciates this opportunity to
3 testify regarding the adverse effects on the
4 prohibition against circumvention of technological
5 protections enacted by the DMCA.
6 DVD technology causes an adverse effect
7 on people's ability to make non-infringing uses of
8 copyrighted works, and should therefore be ruled
9 exempt from the DMCA's circumvention ban. The
10 licensing terms imposed on DVD technology prevent
11 player manufacturers from offering people the
12 ability to bypass the region codes. The same terms
13 prevent players from making non-infringing copies on
14 traditional VHS tapes or computer hard drives for
15 personal or educational use.
16 People who have attempted to eliminate
17 these restrictions by making competing DVD players
18 from legitimate reverse engineering, rather than by
19 signing a license, have been sued and enjoined under
20 the DMCA by major movie studios. The content
21 scrambling system, CSS, is deliberately designed to
22 prevent legitimate purchasers from being able to
23 view their own purchased movies.
24 The region coding scheme used by DVDs
25 prevents individual U.S. residents who purchase DVD
26 movies from anywhere else in the world from simply
PAGE 166
1 viewing these movies on DVD players sold in the
2 United States. This diminishes the ability of these
3 individuals to use copyrighted works in ways that
4 are otherwise lawful.
5 In other words, the DMCA is being used
6 to prevent people from watching the movies they own
7 on the machines that they own.
8 The adverse effect impact on persons
9 outside the U.S. is even greater. A large fraction
10 of the world's movies are created by U.S. movie
11 studios in the U.S., and released first on DVD in
12 the U.S. At that time, persons anywhere in the
13 world are free to purchase these DVDs from U.S.
14 retailers or wholesalers.
15 However, when they arrive the CSS
16 technical protection measures prevent them from
17 playing. Months later, some of these movies are re-
18 released on DVDs coded for other regions. These re-
19 releases are sold at higher prices than the original
20 U.S. release, particularly in Europe. This delays
21 and diminishes the ability of the entire world's
22 population to use these copyrighted works in ways
23 that are otherwise lawful. 0
24 coding serve as a technological restraint on the
25 global trade in copyrighted movies. The leading UK
26 grocery chain, Tesco, started selling discount DVD
PAGE 167
1 machines in February of 2000. By mid-February they
2 were selling tens of thousands of players from 400
3 stores, "once Internet sites and electrical
4 magazines showed customers how to change the player
5 to recognize discs from around the world."
6 Tesco's press release mentions their
7 letter to Warner Home Video "Calling for an end to
8 the 'unnecessary practice' of zoning -- which uses
9 technology to prevent customers from buying DVD
10 discs from around the world to play on machines in
11 the UK. The letter goes on to say that Tesco
12 believes "This is against the spirit of free
13 competition and potentially a barrier to trade."
14 Their World Sourcing Director, Christine Cross,
15 said, "If we find a practice that we believe is
16 keeping prices high -- we'll fight to change it so
17 prices come down."
18 The licensing organization that controls
19 DVD technology, the DVD Copy Control Association,
20 has taken steps to exterminate this supply of
21 'region free' players. Its FAQ says, "In cases
22 where DVD-CCA learns of such products, immediate
23 action is taken through the manufacturer to have the
24 product corrected to conform with the CSS license."
25 Indeed, it enforced a contract term on
26 December 31, 1999 that eliminated its licensees'
PAGE 168
1 ability to sell computer DVD drives whose region
2 controls were implemented in software.
3 Millions of users of DVD technology have been
4 adversely affected in their ability to make non-
5 infringing uses of copyrighted works. The 'region
6 coding' scheme prevents virtually every commercial
7 DVD from being playable in most regions of the
8 world, raising the prices and reducing the
9 availability of works to legitimate buyers. This
10 has an adverse effect on the ability of buyers to
11 simply view a work which they have purchased -- the
12 most non-infringing use possible.
13 CSS, together with the web of laws and
14 contracts around it also eliminate the individual's
15 ability to make non-infringing copies of DVD images.
16 Fritz Attaway, MPAA's Washington General Counsel,
17 declared under oath, "Under the terms of the CSS
18 license, such players may not enable the user to
19 make a digital copy of a DVD movie." The
20 restriction is imposed by contracts, implemented by
21 technology and enforced by DMCA lawsuits.
22 There is no balance to it. It does not
23 follow the boundaries of the copyright law.
24 Professors are unable to make excerpts to show their
25 classes. Parents are unable to make VHS copies for
26 their kids' VCRs. Programmers and artists are
PAGE 169
1 unable to manipulate the images with their own
2 software. The CSS's blanket prohibition of copies
3 and excerpts throws the baby out with the bath
4 water. CSS prohibits all fair use copying, as well
5 as all illicit copying. It prohibits all copying.
6 Congress expressed its clear intent in
7 Section 1201(c)(1) of the DMCA by stating that
8 "Nothing in this section shall affect rights,
9 remedies, limitations or defenses to copyright
10 infringement, including fair use, under this title."
11 According to the DMCA's plain wording,
12 the traditional limitations to the copyright
13 holders' exclusive rights shall remain in the
14 digital realm. Congress' choice of the word "shall"
15 indicates in the intention is not permissive or
16 optional at the choice of the copyright holder. But
17 rather a mandatory requirement that balance and
18 longstanding traditional doctrines such as fair use
19 and the First Sale Rule continue to have meaning in
20 the digital paradigm.
21 There is no debate that Congress
22 intended balance in the DMCA and preservation of
23 traditional copyright principles in the digital
24 world. Congress recognized the inherent dangers in
25 enacting a circumvention ban and instructed this
26 body to anticipate adverse effects and rule
PAGE 170
1 additional classes exempt from the general ban as a
2 remedy.
3 As the U.S. Supreme Court has explained,
4 fair use serves as a First Amendment safety valve
5 within copyright law in Harper & Row, Publishers,
6 1985. Copyright law's fair use privilege fulfills
7 its constitutional purpose by allowing individuals
8 to copy works for socially important reasons without
9 the permission of the author.
10 Thus, granting perfect control to
11 copyright holders would be constitutionally
12 impermissible. This rulemaking is charged with
13 effectuating the DMCA in such a way that it does not
14 violate the spirit of the constitutional limitations
15 placed on copyright. To find otherwise would allow
16 the DMCA to swallow fair use in clear contradiction
17 to Congress' plain intent in Section 1201(c).
18 At a recent conference at Yale Law
19 School, the MPAA publicly stated that it was the
20 organization's position that an individual should be
21 required to obtain a license before making fair use
22 of a DVD. Clearly, this position cannot withstand
23 legal sanction.
24 It would be an abuse of intellectual
25 property law to allow the motion picture industry to
26 obtain all of the economic benefits of copyright
PAGE 171
1 protection with none of the accompanying social
2 responsibilities. Technological protection systems
3 such as CSS that prevent the public from exercising
4 their legitimate rights abuse the copyright bargain
5 and should be exempt from the general circumvention
6 ban.
7 EFF is not spending millions of dollars
8 in court merely to exonerate one or two individuals,
9 or to enable distribution of a poorly-written
10 software prototype. We are here to establish the
11 principle that the anticircumvention provisions
12 cannot be used to eliminate fair use broadly
13 throughout society.
14 Nor can it be used to eliminate
15 competitors who would offer legitimate access and
16 copying capabilities to a major consumer market.
17 Several lawmakers verified congressional intent by
18 insisting that the DMCA does not and is not intended
19 to overrule the Betamax Supreme Court case.
20 Two years ago, there could have been
21 some doubt about whether the ill effects of the CSS
22 system were caused by the existence of the
23 prohibition against circumvention. Certainly the
24 movie studios spent a lot of energy lobbying for
25 these DMCA provisions, but the evidence was
26 circumstantial.
PAGE 172
1 This year it is clear. The movie
2 studios have made a clear and obvious causal
3 connection in their own briefs, tying their
4 motivation in building the CSS system to the
5 technological measures that restrict access to fair
6 use. And then tying those to the DMCA
7 anticircumvention statute.
8 The top eight movie studios, they
9 themselves declared in their initial briefs, "Each
10 of the Plaintiffs relied on the security provided by
11 CSS in manufacturing, producing and distributing to
12 the public copyrighted motion pictures in DVD
13 format...CSS is a technological measure that (a)
14 effectively controls access to works protected by
15 the Copyright Act, and (b) effectively protects
16 rights of copyright owners to control whether an
17 end-user can reproduce, manufacture, adapt, publicly
18 perform and/or distribute unauthorized copies of
19 their copyrighted works or portions thereof..."
20 Thus, the DMCA encourages technological
21 solutions in general by enforcing private parties'
22 use of technological protection measures with legal
23 sanctions for circumvention and for producing and
24 distributing products that are aimed at
25 circumventing protection measures like CSS.
PAGE 173
1 To be sure, technology provides
2 opportunity for benefit and abuse on behalf of all
3 parties to the copyright bargain. Individuals
4 engaging in piracy for commercial gain abuse
5 intellectual property and harm society and creators.
6 Likewise, the imposition of technology such as CSS
7 onto the public that prevents creative works from
8 readily passing into the public domain and restricts
9 people from exercising their fair use rights is
10 similarly abusive.
11 The use of such abusive systems that do
12 not uphold their end of the copyright bargain cannot
13 be backed up by force of law if copyright is to
14 continue to serve as the engine of free expression.
15 Contrary to the fears expressed by the
16 publishing industry, it is possible to preserve
17 constitutional values without destroying the value
18 behind creative expression. In its justification
19 for greater control over creative expression, the
20 industry claims the new-found phenomena of digital
21 technology leaves copyright holders at the mercy of
22 massive unchecked piracy.
23 While the industry has loudly overstated
24 any potential harm it might face resulting from
25 digital technology, it quietly looks the other way
26 without mentioning the unprecedented power
PAGE 174
1 technology provides to copyright holders to control
2 access and use over creative expression.
3 The copyright industries' glaringly
4 self-interested suggestion that this committee
5 exempt nothing from the circumvention ban ignores
6 Congress' stated desire that DMCA not effect this
7 nation's core constitutional values.
8 It is crucial that this committee
9 consider the longer and societal view in deciding
10 these important issues. If you don't have the
11 ability to exercise your rights, then you don't have
12 rights.
13 There are greater issues at stake than
14 mere economic interests of a few corporations.
15 Unencumbered access to information is essential to
16 knowledge creation, innovation and the democratic
17 discourse of a free and healthy society. We must
18 diligently resist the content industry's push to
19 build a legal system that optimizes our children for
20 commercial consumption of creative expression at the
21 expense of their imagination, education and cultural
22 enrichment.
23 I'd like to address the unfounded fears
24 expressed by the content industry that any
25 additional exemptions would violate U.S.' WIPO
26 Treaty obligations. Article 11 of the WIPO
PAGE 175
1 Copyright Treaty provides that, "Contracting parties
2 shall provide adequate legal protection and
3 effective legal remedies against the circumvention
4 of effective technological measures that are used by
5 authors in connection with the exercise of their
6 rights under this Treaty or the Berne Convention and
7 that restrict acts, in respect of their works, which
8 are not authorized by the authors concerned or
9 permitted by law."
10 The DMCA went well beyond what was
11 agreed to among contracting parties to the Treaty by
12 granting an additional and completely separate
13 access right. Thus, any additional exemptions under
14 that right would have no effect on U.S. treaty
15 obligations under WIPO. Additionally, the plain
16 language of the Treaty permits circumvention for
17 fair use.
18 The Copyright Office should define an
19 exempted class as DVD movies. The movie studios
20 stated in court filings that over one million copies
21 of such works are sold every week. This is the
22 class of works currently showing adverse effects.
23 It would be disingenuous to designate a
24 class such as DVD movies protected by a region
25 coding system. Since consumers have flocked to
26 hardware and software devices whose region codes can
PAGE 176
1 be disabled, and manufacturers are starting to
2 rebel, the movie studios might decide to "throw
3 region coding overboard" in order to save the rest
4 of their restrictive scheme.
5 A designation that only applied to CSS
6 works with region coding would still enable them to
7 suppress competitors whose equipment provides fair
8 use copying.
9 Similarly, the industry could evade a
10 ruling against a class such as DVDs protected by CSS
11 by merely switching to a different but equally
12 restrictive protection system. An improved CSS-2
13 system already exists, and the industry is actively
14 designing stronger ones.
15 Therefore, the entire class of DVD
16 movies is threatened with adverse effects now, and
17 in the next three years, and should be exempted from
18 the anticircumvention provisions of the DMCA.
19 The movie studios stated in court
20 filings in January that about 4,000 movie titles
21 have been released in the U.S. on DVD, that over
22 five million DVD players have been sold, and that
23 over 1 million copies of such works are sold every
24 week. This is not an issue of "individual cases,"
25 but a broadly implemented system that impacts all
26 segments of society.
PAGE 177
1 A deliberately-designed inability to play the work
2 you purchased is no mere inconvenience.
3 In the comments and testimony provided
4 by the content industry before this proceeding, the
5 charge continues to surface that no one has supplied
6 any evidence of actual harm resulting from the use
7 of such dangerous protection systems we discuss
8 today. I need not remind the committee of the
9 hundreds of individuals who submitted comments
10 complaining about their inability to view or simply
11 make fair use of DVDs. 0
12 testimony before this committee, CCUM described a
13 teaching method using DVD that has become
14 unavailable to educators.
15 It is imperative that this proceeding
16 recognize that the public's sheer inability to
17 exercise its legal right with respect to certain
18 types of works because technological protections
19 have been applied, is by its mere existence, a
20 substantial harm perpetrated against the First
21 Amendment.
22 As the U.S. Supreme Court stated in
23 Elrod v. Burns, "The loss of First Amendment
24 freedoms, even for minimal periods of times
25 unquestionably constitutes irreparable injury." I
26 encourage the Librarian to weigh the constitutional
PAGE 178
1 considerations into its determination about the
2 societal harm.
3 Copyright's goal is to create a world
4 full of creators with a rich and thriving public
5 domain where creativity flourishes. In addition to
6 legal protection designed to enable a market for
7 works, creators vitally rely upon ready access to
8 information, including a vibrant public domain and
9 the ability to engage in a wide range of legitimate
10 uses including fair use. If copyright is to achieve
11 its objective, society's true creators must continue
12 to be allowed to build upon the works of their
13 ancestors.
14 Because of the demonstrated widespread
15 adverse impact on non-infringing use and fair use
16 imposed by their technological restrictions, DVD
17 movies should be exempt from Section 1201. Thank
18 you.
19 MS. PETERS: Thank you, Ms. Gross. Mr.
20 Marks?
21 MR. MARKS: Thank you. First I'd like
22 to thank you for the opportunity to testify at this
23 important hearing. My name is Dean Marks and I am
24 Senior Counsel, Intellectual Property, for Time
25 Warner. I appear here today on behalf of Time
26 Warner and the Motion Picture Association of
PAGE 179
1 America. I would like to make a few general
2 statements, and then discuss in a bit more detail
3 the issue of DVD and the CSS protection technology.
4 As a preliminary matter, much has been
5 written and said in the context of this inquiry that
6 seems to pit content owners against consumers over
7 the fair use issue. My company and fellow content
8 providers not only support the fair use doctrine,
9 but we rely on it every day.
10 In creating and publishing our movies or
11 music, we frequently rely on the protections that
12 fair use provides, for example, to comment or to
13 parody.
14 From what I have read and heard during
15 the course of this inquiry, no concrete evidence has
16 been adduced that any user has been prevented from
17 making non-infringing uses of a work due to the
18 presence of technological protection measures.
19 Discomfort has been expressed by some
20 librarians over the terms of certain content
21 licenses, but this is an issue separate and apart
22 from whether exceptions to the legal protection of
23 technical measures should be adopted.
24 Moreover, the potential harms that have
25 been described are hypothetical and speculative.
26 Contrast this with the very real evidence of threats
PAGE 180
1 to the rights of copyright owners that arise in
2 today's digital and Internet environments.
3 On May 10, the New York Times published
4 an article entitled "The Concept of Copyright Fights
5 for Internet Survival." The article describes
6 several new software programs, most notably Freenet,
7 that have been developed and are used to deprive
8 copyright owners of the ability to exercise their
9 rights in the distribution of their works.
10 As stated in the article, the developers
11 of such programs "express the hope that the clash
12 over copyright enforcement in cyberspace will
13 produce a world in which all information is freely
14 shared." It is that sort of threat that content
15 owners worry about when we speak about the copyright
16 balance today.
17 These very real threats to the rights of
18 copyright owners led not only the U.S. Congress, but
19 also the world community in the WIPO treaties to
20 determine that technical protection measures used by
21 copyright owners must be entitled to legal
22 protection against circumvention.
23 In considering the possibility of any
24 exception to the Section 1201(a) prohibition, the
25 Register of Copyrights and the Librarian of Congress
26 must weigh the lack of evidence of harm to non-
PAGE 181
1 infringing uses with the substantial evidence of
2 harm to copyright owners that will result from the
3 weakening of the legal protections afforded to
4 technical measures.
5 Furthermore, there's an underlying
6 assumption of many -- not all, but many of the
7 remarks made in the course of this inquiry is that
8 technological protection measures will be used to
9 "take" works away from users, or to deny access. I
10 strongly believe that this assumption is
11 fundamentally flawed.
12 Technological protection measures can actually
13 facilitate the making of works available to
14 consumers.
15 We've heard discussions of DVD. DVD is
16 a concrete example of this proposition. My company
17 would not have released its motion pictures on the
18 DVD format if DVD did not incorporate technological
19 protection measures. The risk of unauthorized
20 reproduction and distribution of our content in the
21 digital format without protection would simply be
22 too great. Without the content scramble system
23 there simply would not be DVDs in the market today.
24 The DVD format has permitted users to
25 view and own copies of motion pictures in a new and
26 desirable digital format. This is why DVD has
PAGE 182
1 become so popular. Why, in fact, a million DVDs are
2 sold each week. Because it's a popular and
3 consumer-friendly format.
4 Further, DVD has allowed users for the
5 first time to play high quality copies of motion
6 pictures on their personal computers. These new
7 uses of motion picture content have been made
8 economically possible due to the development and
9 implementation of technical measures, including
10 access controls.
11 To now argue that these technological
12 protection measures should be subject to
13 circumvention because DVDs may not be playable on
14 all personal computers misses the point that if the
15 integrity of technological protection measures are
16 not legally protected, content owners will be
17 reluctant to make their works available in these new
18 formats in the first place.
19 A clear real-life example is DVD-Audio.
20 Due to the recent compromise of CSS and the fact
21 that technological protection for DVD-Audio had been
22 developed and premised on CSS, music companies have
23 delayed indefinitely the launch of the DVD-Audio
24 format. The result is that consumers have been
25 deprived of a new music format.
PAGE 183
1 Thus, circumvention of technical
2 measures, whether sanctioned through this process or
3 accomplished in violation of law, can seriously
4 diminish the general public benefit.
5 I would like to turn and pick up on a
6 point made earlier today by Frederick Weingarten. I
7 agree with Mr. Weingarten that the development and
8 implementation of technological protection measures
9 can be a win/win situation for both content owners
10 and users.
11 For example, technological protection
12 measures are under development that would permit
13 users to make a copy of certain pay television
14 programs that are otherwise protected by encryption
15 and other technical measures. In the context of the
16 copy protection work underway in the Secure Digital
17 Music Initiative, all participating parties have
18 agreed that consumers who purchase music protected
19 by technical measures should be able to engage in
20 certain levels of copying for private use.
21 Thus, the development and implementation
22 of technical measures that inhibit massive
23 unauthorized copying and distribution, but permit
24 limited consumer copying opportunities, will
25 actually facilitate the making available of works to
PAGE 184
1 more consumers in more formats, and their ability to
2 make non-infringing uses.
3 These technologies may also make it
4 easier for content owners to make their works
5 available to libraries in digital format, and, in
6 turn, for libraries to make these works available to
7 their users without undue risk of economic harm to
8 the owners due to unauthorized reproduction,
9 transmission and re-distribution.
10 The development and implementation of
11 technical measures is in its infancy in the digital
12 world, particularly with respect to the Internet.
13 We should give some breathing room for the measures
14 to be developed and implemented before we seek to
15 undercut their legal protection.
16 It has been mentioned by prior
17 witnesses, including Paul Hughes from Adobe this
18 morning, and Bernard Sorkin from Time Warner at the
19 Washington hearing, that content providers must be
20 mindful of the desires of consumers. We are in the
21 business of selling our content to the public, and
22 we cannot survive as an industry if we do not widely
23 distribute our works to consumers.
24 Because of this imperative, it is highly
25 unlikely that we will employ technical measures that
26 will be seriously detrimental to the ability of our
PAGE 185
1 consumers to make non-infringing uses. But this is
2 only part of the answer, and you don't need to
3 simply trust us.
4 As a practical matter, content owners
5 cannot unilaterally develop and implement technical
6 measures of their own choosing. Why is this? Well,
7 sound recordings and audio/visual works can only be
8 enjoyed by the use of receiving and playback devices
9 such as television sets, CD or record players,
10 videocassette players, personal computers, et
11 cetera.
12 Therefore, we as content owners cannot
13 simply apply technical measures to our works that
14 will cause all receiving and playback devices to be
15 unable to play our works. If we were to do this, we
16 would quickly be out of business.
17 Equally important, however, the goal of
18 protecting works cannot be achieved if receiving,
19 playback and recording devices do not recognize and
20 respond to the technical measures that we seek to
21 incorporate in our works, but they simply ignore
22 them.
23 So, to work properly, copy protection
24 technologies must be bilateral. The technologies
25 applied by content owners need to function with
26 consumer electronics and computer devices. This
PAGE 186
1 bilateral requirement means that protection measures
2 are not simply a matter of technological innovation.
3 And they are not simply a matter of fulfilling a
4 list of demands by content owners.
5 Rather, copy protection technologies
6 such as the CSS system for DVD require a high level
7 of consensus among the content industry and the
8 consumer electronics industry and computer industry.
9 This consensus requirement means that access control
10 and copy protection structures, and the use of
11 technical measures, are heavily negotiated across
12 industries.
13 And, indeed, the negotiations over the CSS system
14 spanned at least two years and possibly longer than
15 that.
16 Because the consumer electronics and
17 computer industries have strong vested interests in
18 ensuring that their devices permit users wide
19 latitude to use copyrighted works, the copy
20 protection structures and technologies that are, in
21 fact, being developed and implemented in the area of
22 audio/visual and musical works fully recognize user
23 concerns.
24 Finally, this inquiry is not a one-shot
25 deal. At the moment it seems clear that there has
26 been no evidence presented of any adverse effect,
PAGE 187
1 and hence it seems premature for any exceptions to
2 Section 1201(a) to be enacted. The fears expressed
3 that the DMCA and the anticircumvention provisions
4 will harm users or the fair use doctrine have not
5 materialized, and indeed these fears may never come
6 to pass.
7 If any of the "parade of horribles" that
8 have been described by some of the witnesses
9 materialize in the future, then the Register and the
10 Librarian will have the opportunity to consider
11 appropriate remedies in future rulemaking
12 procedures. At the moment, frankly, this exercise
13 appears to be a case of attempting to devise a
14 solution in search of a problem.
15 I now want to turn specifically to the
16 case of DVD and CSS. In several of the comments
17 received by the Copyright Office, reference was made
18 to DVDs and the alleged inability of users of the
19 Linux operating system to play DVDs on their
20 computers.
21 Much confusion, I would even say
22 misconception and misinformation, surrounds the
23 issue of DVD, CSS and Linux. First, there is no
24 legal or technical barrier to building an open
25 source interface between the Linux operating system
PAGE 188
1 and a CSS compliant application that will play DVDs
2 encrypted with CSS on the Linux system.
3 Second, the CSS technology and
4 manufacturer's license necessary to build any CSS
5 compliant application or device is available on a
6 non-discriminatory basis. The current license
7 requires a one-time fee of $10,000. It is expected
8 in the future that an annual fee of $5,000 will also
9 be assessed. These payments are administrative
10 fees, the license itself is royalty free.
11 None of the technical or legal
12 conditions of the CSS license prevent implementation
13 in the Linux environment. And indeed, two CSS
14 licensees have in fact developed CSS implementations
15 for the Linux operating system. One, called Sigma
16 Systems, is hardware-based and another -- whose name
17 I unfortunately don't have with me -- is software-
18 based. But both of these implementations are
19 available on the market.
20 It is true that most software
21 applications that permit the playback of DVDs are
22 designed for the Windows operating system. But this
23 is simply because of market-driven decisions on the
24 part of software developers who seek to develop and
25 sell applications for the prevailing operating
26 system.
PAGE 189
1 Neither movie studios nor the licensors
2 of the CSS technology have sought to prevent the
3 development of the applications in any other
4 platforms, including Linux. Indeed, much to the
5 contrary, the film studios have a strong interest in
6 the development of as many CSS licensed and
7 compliant playback devices as possible, be they
8 consumer electronic players, DVD drives for
9 computers, software programs or other platforms,
10 such as the recently introduced Sony PlayStation 2.
11 The greater the number and variety of CSS compliant
12 playback devices available in the market, the
13 greater the demand will be, hopefully, for DVDs that
14 carry our content.
15 Some consumers who have been unable to
16 play DVDs on their Linux operating system have
17 argued that they should be permitted to circumvent
18 the CSS encryption technology in order to gain
19 access to the content of the DVDs that they have
20 purchased. I want to make clear from the outset
21 that my discussion of that particular argument in
22 this hearing is separate from the ongoing litigation
23 in the Reimerdes case, commonly known as the CSS
24 case.
25 That case involves violations of Section
26 1201(a)(2) -- the prohibitions concerning
PAGE 190
1 circumvention devices, products or services and
2 therefore that case is not directly relevant to the
3 issue at hand in this hearing, namely Section
4 1201(a)(1) and the prohibition on circumvention
5 conduct. Because the Reimerdes litigation is
6 ongoing and because my company is a Plaintiff in
7 that litigation, and because I have recently been
8 noticed for a deposition in that litigation, it is
9 inappropriate for me to discuss that case.
10 With respect to the argument for an
11 exemption on the prohibition of circumvention
12 conduct for purposes of playing DVD discs on the
13 Linux platform, I respond as follows:
14 First, as the number of Linux users
15 grows, the market will naturally fill the demand for
16 CSS compliant applications that will play DVDs on
17 Linux. As mentioned above, two companies already
18 offer DVD playback applications for the Linux
19 operating system. Hence, adoption of a
20 circumvention exemption is neither justified nor
21 necessary.
22 Second, a consumer who purchases a copy
23 of a work but does not have the proper equipment to
24 play back the work does not, in my view, entitle the
25 consumer to circumvent access control protection
26 measures.
PAGE 191
1 I want to take an example here. A
2 consumer who purchased a subscription to HBO -- Home
3 Box Office pay television service -- soon after its
4 launch, but did not own, the consumer did not own a
5 television set that could accommodate a cable set
6 top box necessary to descramble the encrypted HBO
7 signal, would not have been entitled to circumvent
8 the encryption on the HBO signal. And that would
9 have not been entitled, is a legal issue.
10 Encryption television signals are
11 protected by various sections of the Communications
12 Act. None of these sections provide for exceptions
13 for users to decrypt signals without the
14 authorization of the broadcaster. We have all been
15 living with this legal regime for more than a decade
16 with no difficulties, legal or otherwise.
17 Mindful of this longstanding precedent
18 in the realm of encrypted broadcasts, no exemption
19 to the prohibition of circumvention of access
20 control technology appears justified merely to
21 accommodate users who lack playback equipment that
22 is readily available in the market.
23 Third, copyright owners are applying
24 technical protection measures today, not simply to
25 ensure proper payment for access to a work, but they
26 are apply measures also to manage the exponentially
PAGE 192
1 increasing risks of subsequent unauthorized
2 reproduction and re-distribution posed by the
3 digital environment.
4 The danger of permitting circumvention
5 to facilitate an individual's access to a work is
6 that such circumvention will also likely undermine
7 protections against unauthorized copying and
8 transmission, such as Internet retransmission.
9 Once circumvention is permitted, there is no
10 practical manner -- and likely no technical way --
11 to ensure that subsequent uses of the work will be
12 non-infringing.
13 For example, if circumvention of CSS
14 were allowed solely to permit access to content on
15 DVDs to Linux users for home viewing, such
16 circumvention would likely involve a copy of the
17 content being made in the hard drive of the Linux
18 user's computer. Once a copy is readily available
19 in the hard drive, it is easily subject to massive
20 replication and distribution for unlimited purposes.
21 Such risks are not speculative.
22 Napster, iCrave, Gnutella, MyMP3 and Freenet all
23 stand as very real examples of the ease with which
24 works protected by copyright are subject to enormous
25 unauthorized copying and redistribution once such
26 works reside on the hard drive of a computer.
PAGE 193
1 These very real risks militate against
2 allowing exceptions to the prohibition on
3 circumvention conduct. If any cases of adverse
4 impact on non-infringing uses of works are
5 demonstrated in the future, then that would be the
6 time to discuss alternative remedies. An exception
7 to the prohibition on circumvention conduct should
8 be considered only as a remedy of last resort.
9 Thank you.
10 I also wanted to express my response
11 concerning regional coding. But I can do that now,
12 or wait for the question period, if you would like.
13 Better to do it now?
14 There's been some discussion of the
15 regional coding issues, and how regional coding is
16 used or misused by content providers to prevent
17 users around the world from playing. For example, a
18 DVD disc, a Region 1 disc that they might purchase
19 in the U.S. And I want to make a few remarks about
20 that.
21 First of all, the way that consumer
22 electronics equipment have been developed. There
23 are different formats in different countries of the
24 world. The U.S. is NTSC format, Europe is PAL
25 format. If someone were to buy a videocassette that
26 had been manufactured -- straight old analog
PAGE 194
1 videocassette that had been manufactured in the
2 U.S., it would be in the NTSC format.
3 That videocassette would not be playable
4 in Europe on PAL format televisions and
5 videocassette players. This situation has existed
6 since the introduction of video in the early or mid-
7 80s with no complaint. So I find it a little bit
8 interesting that now this issue of regional coding
9 has become such a hot button for certain
10 communities.
11 Second, why do movie studios impose
12 regional coding in the first place? It has to do
13 with the way the economics of the film business
14 work. Films are very, very expensive to produce,
15 and they become increasingly expensive to produce as
16 the years go by. Many people assume that the
17 revenues from theatrical distribution are the main
18 source of economic return from movie production.
19 That, in fact, is not the case.
20 As of today, the receipts from
21 theatrical distribution usually, on average, account
22 for only 20 to 25 percent of the gross revenues
23 earned by a motion picture. The balance of those
24 revenues are earned by what have typically been
25 referred to as ancillary markets. But now they are,
PAGE 195
1 frankly, primary markets because they account for
2 the lion's share of the revenue.
3 These markets include home video, pay-
4 per-view television, pay television and over the air
5 free broadcast. The reason why movie studios are
6 concerned about regional coding is that it is very,
7 very expensive to produce theatrical prints. And
8 therefore, unlike the music business, which
9 currently tends to release new works on a worldwide
10 basis -- the new Madonna CD tends to be released all
11 over the world on the same date -- it is not really
12 economically practicable for movie studios to do so,
13 due to the enormous costs of producing prints, and
14 the costs involved in dubbing or translating of the
15 prints.
16 Added onto that are just regional habits
17 that we try to take account of. Summer is a big
18 movie-going season in the United States. Summer is
19 a very low season for movie-going in Mediterranean
20 countries, particularly Italy, where even today a
21 lot of the cinemas are not air-conditioned.
22 So therefore if we have a blockbuster
23 that we want to release in the summer in the United
24 States, we don't necessarily want to release it in
25 the summer in Italy. The importance of having to
26 exploit the different windows of exploitation of
PAGE 196
1 theatrical, video, pay-per-view, pay, free broadcast
2 means that we are concerned that if we released
3 region-free DVDs in the United States six months
4 after theatrical release in the United States, and
5 those DVDs were widely available in Italy where the
6 movie had not even been theatrically released, that
7 the impact would be to cannibalize the theatrical
8 release. And take away from the potential economic
9 return of the theatrical release.
10 So that, I wanted to lay out, is some of
11 the explanation as to why we use regional coding in
12 the DVD system.
13 Finally, I just wanted to turn to some
14 of the fair use and First Amendment questions. It
15 seemed to me that uses described by Ms. Gross were,
16 in large part, not the typical fair uses for
17 education or comment, criticism, parody, but were
18 consumptive uses. Making copies for other people,
19 or copies for your children.
20 I don't understand how protecting
21 expressive works from piracy with the use of
22 technological measures adversely affects free
23 expression, dissemination of knowledge or creation.
24 The wider dissemination of works, in fact, that
25 technological protection measures can afford, in my
PAGE 197
1 view, further the goal of spreading culture and
2 knowledge.
3 The fact that one million DVD movies are
4 sold each week indicates that these works are
5 getting into the hands of users at a tremendous
6 rate. And not that users are somehow being denied
7 or deprived access from the works. If DVDs were not
8 readily playable, it is difficult to understand how
9 millions and millions of DVDs could be sold.
10 Similarly, I fail to see how the CSS
11 system deprives any individual of his or her First
12 Amendment rights. And I look forward to answering
13 your questions. Thank you very much.
14 MS. PETERS: Thank you, Mr. Marks. Mr.
15 Riley?
16 MR. RUSSELL: Russell.
17 MS. PETERS: Russell, excuse me.
18 MR. RUSSELL: I'd like to introduce
19 myself. My name is Riley Russell, I am the Vice
20 President of Legal Affairs at Sony Computer
21 Entertainment America. I am also accompanied by Mr.
22 Mort Goldberg.
23 I think it's worth, very briefly -- as I
24 look around the room and I don't see any 15-year-
25 olds -- at least to describe very quickly what the
PAGE 198
1 PlayStation is. And that is a video game device
2 that, of course, plays video games.
3 Along with the Sony PlayStation, Sony
4 Computer Entertainment markets and sells over 50
5 video game products and other services. Along with
6 that there are over 350 independent video game
7 publishers or developers licensed by SCA who produce
8 approximately 300 games a year for the Sony
9 PlayStation system. The independent developers
10 employ in excess of 6,000 people, most in the United
11 States.
12 I would like to thank the Copyright
13 Office for the opportunity to testify in this
14 rulemaking proceeding, which deals with what I
15 believe is a critical issue to the copyright
16 industries and their customers in the digital age.
17 This rulemaking poses the narrow question of whether
18 there are particular classes of copyrighted works
19 whose users have been, or in the next three years
20 are likely to be substantially adversely affected in
21 their ability to accommodate non-infringing use of
22 the works if the class is not exempted from the
23 scope of Section 1201(a)(1)(A). The rulemaking is
24 to focus on distinct, verifiable and measurable
25 impacts, speculation, de minimis effects and mere
26 inconvenience should be disregarded in this inquiry.
PAGE 199
1 As you are aware, Congress intended that
2 the burden of persuasion as to the necessity of any
3 exemption fall squarely upon the advocates.
4 Congress, furthermore, had no expectation that in
5 this proceeding the conditions for any exemption
6 necessarily would be found to exist. They, in fact,
7 may not.
8 To the contrary, according to the House
9 Manager's Report, the absence of any such finding
10 would indicate that "the digital information
11 marketplace is developing in the manner which is
12 most likely to occur, with the availability of
13 copyrighted materials for lawful uses being
14 enhanced, not diminished, by the implementation of
15 technological measures and the establishment of
16 carefully targeted legal prohibitions against acts
17 of circumvention." I submit to you that this is
18 exactly what's happened.
19 As a benchmark, Congress described the
20 hypothetical scenario under which it "could be
21 appropriate" to modify 1201(a)(1)(A)'s flat
22 prohibition of the circumventing of technological
23 access controls. One in which the use of
24 technological access controls might result in less,
25 rather than more, access to copyrighted materials
26 because of a confluence of factors including the
PAGE 200
1 adoption of business models to restrict, rather than
2 maximize, distribution and availability. It goes
3 without saying that nothing remotely resembling such
4 a scenario has been shown to exist today, or to be
5 likely to arise in the next three years. In fact,
6 experience has shown otherwise.
7 It is telling that, despite the sound
8 and fury raised in many submissions, few of the
9 advocates of exemptions responded straightforwardly
10 to the questions posed in the statute itself and in
11 the Notice of Inquiry. A number of respondents
12 would have the Copyright Office overturn or subvert
13 the DMCA itself. Others concerned themselves with
14 issues beyond the scope of this inquiry, such as the
15 DeCSS legislation, or issues unripe for examination,
16 such as preservation of works in a digital format.
17 In short, Section 1201(a)(1)'s opponents
18 -- and they're opponents of the statute as Congress
19 enacted it, have not identified either distinct,
20 verifiable and measurable impacts -- actual or
21 prospective -- or lawful use of copyrighted works
22 caused by the prohibition on circumvention, or a
23 class of works -- i.e., a "narrow and focused subset
24 of the broad categories of works and
25 authorship...identified in Section 102 of the
26 Copyright Act," which is subject to such an impact.
PAGE 201
1 Accordingly, the advocates of exemption have not
2 sustained their burden, and Section 1201(a)(1)
3 should come into effect intact.
4 The backdrop for and impetus behind the
5 law under discussion here is, of course, the vastly
6 altered environment in which copyright owners have
7 been operating since the advent of digital media and
8 the Internet. In this brave new digital, networked
9 world, the traditional arrangements among copyright
10 owners, copyright works, and the consumers of those
11 works have already been radically transformed by a
12 single unprecedented fact: every consumer, with a
13 single touch of a button, is now potentially a
14 global distributor -- or a receiver -- of an
15 unlimited number of perfect copies of any
16 copyrighted work which may come into his or her
17 possession in digital form.
18 Once distributed, these copies can no longer be
19 retrieved.
20 Much has been said of the importance of
21 maintaining the traditional balance between the
22 copyright holders' rights and consumers' privileges.
23 The WIPO and Congress have acknowledged that
24 technological access control measures, backed up by
25 laws prohibiting circumvention, are essential to
26 doing just that.
PAGE 202
1 As Congress implicitly recognized, and
2 as it should be clear to any observer, it would be
3 derelict for content owners to release their works
4 in digital form into this new environment without
5 availing themselves of every practical means of
6 protecting those works from unauthorized access.
7 Congress, we recall, mandated that this
8 proceeding consider the positive effects of these
9 technological measures on the availability of
10 copyrighted materials. For SCEA and, we believe,
11 many other copyright holders large or small, the
12 availability of effective access control measures
13 has had far more than a mere "positive effect" on
14 the ability to make digital works available.
15 In fact, the availability of technical
16 measures offers to the copyright holders means and
17 scopes of distribution which were unimaginable just
18 a few short years ago. For all of us, however,
19 effective access control will be a precondition to
20 the wide dissemination of commercial copyrighted
21 works in digital form.
22 While SCEA and other content owners
23 clearly need the protection of access control
24 technology in order to release works in digital
25 form, it is equally clear that technology alone is
26 not enough. There is not, and there never will be,
PAGE 203
1 such a thing as an un-hackable access control
2 technology. At least not one that functions
3 appropriately in the marketplace.
4 As WIPO and Congress recognized, in
5 order for access control technology to work
6 practically in the marketplace for copyright owners
7 and consumers, it must be supported by laws
8 prohibiting its circumvention. Otherwise the
9 copyright holder is no better off than if the work
10 was distributed without the access control. Such a
11 tradeoff would result in a far narrower distribution
12 for most works that currently exist.
13 The WIPO Company Treaty, like Section
14 1201, refers to "effective technological measures
15 that are used by authors in connection with the
16 exercise of their rights." Some contend that once
17 the initial access to a copy of a work has been
18 made, the prohibition on circumvention should no
19 longer apply.
20 That the law should protect only a
21 single "gatekeeper" function for an access control
22 measure, after which it may be circumvented with
23 impunity. There is nothing to suggest, however,
24 that Congress and the WIPO intended such a result,
25 and the notion makes little sense.
PAGE 204
1 Here I speak not only for SCEA, but I
2 believe for all copyright holders who deserve the
3 benefit for protection of technologies. As perhaps
4 the author of modest means, the small publisher, who
5 may well be best benefitted by these technologies.
6 He may have no other means of enforcing his or her
7 copyrights in the digital world, and therefore it is
8 the content holders who require the extra security
9 afforded by strong access controls.
10 Of course, under copyright law benefit
11 to the consumers is an ultimate interest. To date,
12 the consuming public has benefitted immensely from
13 copyright owners' use of technological access
14 controls which have been instrumental in permitting
15 dissemination in digital form of enormous numbers of
16 works which would otherwise not be available today.
17 It's worth pointing out that SCEA, like
18 most of the copyright holders that you've heard of,
19 earns its keep by getting its works into the hands
20 and ears and before the eyes of its paying
21 customers.
22 This is a fundamental characteristic of
23 our business and all our businesses, that we assure
24 that for the foreseeable future the benefits of
25 access control technologies, in the form of enhanced
26 availability of copyrighted works will continue to
PAGE 205
1 flow to the public. The prospect has been raised
2 that this most basic business model could someday be
3 replaced by one based on restriction rather than
4 dissemination.
5 SCEA, however, sees no such change on
6 the horizon, and continues to have a strong
7 incentive not to risk alienating its customers with
8 unreasonable or unwielding restrictions on the use
9 of SCEA's copyrighted works.
10 In my industry, we survive on plug-in
11 and play mentality. We succeed by satisfying the
12 consumer with what they want. Access control
13 measures which include encryption and regional
14 coding are essential tools in maintaining the high
15 quality of our copyrighted works, and in controlling
16 the nature and quality of the goods and services
17 that bear our trademarks.
18 Effective access control measures are of
19 great utility in our ongoing campaign against
20 counterfeiting and other pirated works with respect
21 to our products. As such, they allow us to adopt
22 technologies that help to keep down the price -- and
23 therefore increase the availability of our products
24 that purchasers of lawful copies, who ultimately
25 must bear some of the costs of infringement.
PAGE 206
1 Access control measures also help
2 protect the consumer's interest, as well as our
3 reputation and good will, by ensuring that
4 legitimately produced PlayStation video games are
5 distributed only in those areas of the world where
6 they are properly licensed.
7 PlayStation games, like products in many
8 other industries, are produced in multiple versions
9 tailored, in terms of language and other features,
10 for use by consumers in particular markets.
11 Distribution of these games in other, unauthorized
12 markets will inevitably produce dissatisfied
13 customers and distributors.
14 The benefits to consumers will continue
15 if the anticircumvention provision is allowed to
16 come into effect unimpaired. As the House Manager's
17 Report pointed out, the technological measures
18 protected by Section 1201(a) can be deployed to
19 support new ways of disseminating copyrighted
20 materials to users.
21 Access control technologies enable
22 copyright owners to offer consumers a wider array of
23 options tailored more closely to the individual
24 needs, giving each consumer better value, as well as
25 allowing more consumers to access a given work. The
PAGE 207
1 importance of such flexibility can be illustrated by
2 an example from today's marketplace.
3 We all know that consumers currently
4 have the option of purchasing a popular video game,
5 thereby acquiring the right to an unlimited number
6 of private performances. They have the right to
7 dispose of their copy in the marketplace.
8 While a certain number take advantage of this
9 option, millions more choose instead to spend what
10 is considerably a more modest sum by purchasing a
11 narrower set of privileges. By renting the game for
12 a night or two at their local Blockbuster, or paying
13 for a single performance, for example, in a hotel
14 room.
15 We also offer play and promotional discs
16 that are distributed, often free for a small fee,
17 that sometimes give limited access to the players to
18 try the game before they actually purchase it. All
19 this is available to us because of our ability to
20 control access.
21 If the consumer likes the game enough,
22 he or she may find it worthwhile to purchase a copy
23 outright rather than repeatedly either rent copies
24 or pay for views. In many cases the single viewing
25 or rental suits the customer needs and they're
26 happy. And if the consumers don't particularly like
PAGE 208
1 it, at least the consumer only spent a small sum
2 rather than the cost of the entire game.
3 What is important is that this variety
4 of options enables many more consumers to avail
5 themselves of our work than if the only option were
6 to exist in the marketplace. It is only through the
7 application of these effective technological access
8 controls that this kind of flexibility can be made
9 available in the digital environment, where perfect
10 copies can be made and circulated around the world
11 almost instantaneously.
12 Those in this proceeding who have urged
13 you to make broad blanket exemptions would thwart
14 the creation of flexible digital-age business
15 models for making works available to consumers.
16 Without effective controls -- that is, technology
17 reinforced with a legal prohibition of circumvention
18 -- consumers of digital works will in many ways be
19 left with fewer, more expensive options, and many
20 which are less desirable.
21 Proposals for exemptions that were
22 responsive to the clear parameters the Office set
23 out in the Notice of Inquiry have been conspicuously
24 absent in these hearings. Of course, those who have
25 advocated the crafting of broad and ill-defined
26 exemptions based on classes of users or uses, rather
PAGE 209
1 than of works, are asking the Office to do something
2 not within the Office's powers.
3 Since the number and variety of works
4 which would fall outside 1201(a)(1)(A) under such
5 exceptions is potentially infinite, these advocates
6 are in effect asking that the statute be overturned.
7 Even if properly delineated, "narrow and focused"
8 classes of works had been proposed for exemption, we
9 would remain concerned that in practice any
10 exemption would spill over to encompass the entire
11 Section 102 "category of works" within which the
12 "class of works" fell.
13 I would like to emphasize that SCEA, as
14 a responsible member of the copyright community, is
15 interested in the vitality of the fair use doctrine.
16 Clearly, however, and contrary to the assertions of
17 certain educators and librarians in this proceeding,
18 the fair use defense simply cannot serve as the
19 basis for delineating a "class of works" that might
20 properly be the subject of an exemption to be
21 recommending in this proceeding.
22 Fair use is a defense to infringement,
23 whose applicability is determined through a fact-
24 intensive inquiry undertaken on a case by case
25 basis. Fair use, in appropriate circumstances, may
26 be made of many, many copyrighted works. To declare
PAGE 210
1 in advance that any work of which fair use might be
2 made is within a class of works exempt from the
3 statutory prohibition on circumvention would render
4 the entire provision a nullity -- which may be the
5 objective of the advocates of "Fair Use Works" as an
6 exempt class.
7 It appears, furthermore, that to anoint
8 a huge number of works, wholesale, as "fair works"
9 would be incompatible with fair use itself, as an
10 equitable defense and an equitable rule of reason,
11 it would contravene Section 1201(c), which mandates
12 that nothing in Section 1201 is to affect either
13 copyright rights or "defenses to infringement,
14 including fair use."
15 Contentions aside, there has been no
16 showing that 1201(a)(1)(A) has had a negative impact
17 on the availability of the fair use defense, or that
18 any impact is likely in the next three years. The
19 same is true of the first sale doctrine, as to which
20 some commentators have voiced concern.
21 The first sale doctrine is, of course,
22 the product of a world in which copyrighted content
23 was overwhelmingly distributed via sale of tangible
24 copies. Even in that world, however, there are
25 categories of copyrighted works such as broadcast
PAGE 211
1 television programming to which the first sale
2 doctrine have little or no application.
3 In point of fact, notwithstanding these
4 ill-defined fears for the future of the first sale
5 doctrine, technological access control measures to
6 date have had little discernible negative effect on
7 it. Visit virtually any computer software store and
8 you will find a section devoted to used PlayStation
9 games. A quick browse of the Web shows that there
10 is a flourishing market in second-hand video games
11 and DVDs as well, particularly if you look on the
12 auction sites on the Web.
13 The anticircumvision provisions of the
14 DMCA comprise a carefully crafted corrective measure
15 designed to maintain in the digital environment the
16 balance of rights and privileges of authors and
17 users worked out over the past two centuries in the
18 copyright law. The narrow question posed in this
19 rulemaking is whether classes of copyrighted works
20 exist whose users are likely to be substantially
21 adversely affected in their ability to make non-
22 infringing use without exemption from Section
23 1201(a)'s prohibition of circumvention of access
24 controls.
PAGE 212
1 The advocates of exemptions bear the
2 burden of persuasion, and they have not sustained
3 it.
4 I thank you again for giving me this
5 opportunity, and I will be pleased to answer any
6 questions.
7 MS. PETERS: Thank you, Mr. Russell. We
8 now will hear from Mr. Jonathan Hangartner.
9 MR. HANGARTNER: Thank you very much.
10 My name is Jonathan Hangartner. I'm an attorney in
11 San Diego and I represent the company, Bleem Inc.
12 I'd like to thank the Copyright Office for giving
13 Bleem an opportunity to speak today. I'm still
14 hopeful that Mr. Herpolsheimer will make it here so
15 that he can answer any questions you might have.
16 I think it would be helpful for me to
17 briefly describe Bleem and what it does. And it
18 provides a good counterpoint to both Mr. Russell's
19 testimony and also to some of the DVD discussions
20 that you've heard already this afternoon.
21 Bleem is a software company that
22 provides interoperability between different computer
23 systems. Specifically, Bleem produces a software
24 emulator that allows the consumer to play their
25 PlayStation video games on a personal computer. And
26 Bleem will soon introduce a new computer program
PAGE 213
1 that allows consumers to play their PlayStation
2 video games on a Sega Dreamcast video game console.
3 For the past year I've spent an awful
4 lot of my time defending Bleem against a lawsuit
5 filed by Sony Computer Entertainment America, and
6 one of the principal claims in that lawsuit is a
7 Digital Millennium Copyright Act claim, although
8 obviously not under Section 1201(a)(1). It alleged
9 that Bleem is a circumvention device because it
10 allows these games to be played -- the PlayStation
11 video games to be played on a personal computer.
12 I think it's important to get into a
13 little bit of detail about how this access
14 restriction that Sony alleges works. Because there
15 are an awful lot of different possibilities for
16 access control technologies, and Sony has a specific
17 one in place which -- it has been sort of put on the
18 table here by Sony. And I think it's useful to take
19 a little bit closer look at it.
20 The access control device that Mr.
21 Russell has described, which he calls the whiz code,
22 is actually a code that is placed onto the
23 PlayStation game discs themselves. A PlayStation
24 video game console, which Sony produces -- and it's
25 their device which plays PlayStation video games --
26 looks for that access control code. And if it's not
PAGE 214
1 present, unless the console's modified, it will not
2 play that disc.
3 So, in effect, this whiz code only
4 controls access to PlayStation games on a
5 PlayStation console. If a PlayStation game disc is
6 placed into a regular personal computer, CD-drive or
7 into any other CD-drive, that CD-drive will actually
8 read the data on the disc.
9 The access control device, this whiz
10 code, does not prevent the information from being
11 accessed by the disc. Because essentially what
12 happens is the disc drive doesn't know to look for
13 the whiz code. And since it doesn't know to look
14 for the whiz code, the access control doesn't take
15 effect.
16 And this type of situation is addressed
17 in the DMCA in the no-mandate provisions, which do
18 not require consumer devices to search for codes or
19 to look for codes that might control access. But
20 what's happened is that Sony has alleged in the
21 litigation against Bleem that Bleem is a
22 circumvention device.
23 And, in fact, earlier this week a
24 similar claim in another case brought by Sony
25 Computer Entertainment America against another
26 company which produces a PlayStation device,
PAGE 215
1 emulation device similar to Bleem -- the District
2 Court in the Northern District of California ruled
3 that it was, in fact, not a violation of DMCA's
4 circumvention device provisions.
5 The concern that Bleem has at this point
6 is that similar lawsuits will come along as soon as
7 Section 1201(a)(1) takes effect. But those lawsuits
8 could be directed at Bleem's customers. It's a very
9 real and likely possibility that, upon enaction of
10 this provision, when this provision takes effect,
11 Sony could allege that Bleem's consumers, when they
12 access the information on the PlayStation disc and
13 play a PlayStation game on either their PC or their
14 Dreamcast are, in fact, circumventing Bleem's
15 technological measures that it alleges are designed
16 to control access to its copyrighted works.
17 This concern, while we think that Bleem
18 certainly could defend such claims, or could assist
19 its customers in defending such claims, the threat
20 of these claims could have a very serious chilling
21 effect on the sales of Bleem and on the use of
22 Bleem's products by consumers.
23 It also has a serious risk of chilling
24 Bleem's ability to distribute its products. Because
25 distributors, retailers, all of the folks up and
26 down the distribution chain are very concerned about
PAGE 216
1 potential lawsuits against customers. So the threat
2 of a lawsuit, even if successfully defended, has a
3 powerful impact on the market.
4 The risk is also, I think, very real
5 given the behavior that's been exhibited by Sony in
6 the past. Bleem felt early on, quite strongly, that
7 its device was not covered under the DMCA. It was
8 not a circumvention device. But it's taken a year's
9 worth of litigation and substantial expense to go
10 through the process of litigating claims under this
11 new act.
12 So, in considering these issues of
13 burdens of persuasion and the availability of
14 evidence that establishes a class of works that may
15 be affected by this new provision, I think it's
16 important to keep in mind the detrimental effect of
17 ambiguity. Ambiguity works in favor of large
18 companies, and it allows them to bring lawsuits
19 which, while ultimately unsuccessful, can drive a
20 small company right out of business before they ever
21 get to market.
22 Taking this sort of to the next step, I
23 think it's useful to compare the situation with the
24 PlayStation disc with the DVD/CSS issues that we've
25 been talking about, which involve complicated issues
26 of licensing up and down the distribution chain.
PAGE 217
1 The PlayStation CDs don't have any of
2 these issues. As Mr. Russell described, the
3 PlayStation CDs are actually acquired by the user.
4 So we don't have a situation where the copyrighted
5 work is being licensed to the customer. You have a
6 situation where that customer lawfully acquires a
7 copy of the copyrighted work.
8 Bleem feels very strongly that the
9 consumer's ability to play that copy of the
10 copyrighted work on any platform they choose is a
11 non-infringing use of the copyrighted work, and that
12 must be protected. This provision opens the door
13 for substantial impacts on the consumer's ability to
14 perform that non-infringing use.
15 If, in fact, it was determined that
16 playing a PlayStation disc using Bleem was a
17 circumvention, then all of these consumers would be
18 foreclosed from a clear non-infringing use of that
19 copyrighted work which they paid $40 for, for a
20 simple CD.
21 So in looking -- again, taking this to
22 the specific and maybe working outward, and trying
23 to get to the particular question the Office has to
24 address here, should there be a class of works that
25 is exempted from this. The PlayStation game CD
26 provides a pretty good example.
PAGE 218
1 You have a disc which is sold to
2 customers, which this provision could and is likely
3 to substantially affect their ability to perform
4 non-infringing uses. To the extent that you can get
5 around the chicken and egg problem that you have
6 with this provision in trying to put the burden on
7 the proponents of a particular class of works when
8 the statute has not yet taken effect, so it's
9 virtually impossible to come up with discrete
10 verifiable measurable impacts, this example goes
11 pretty far towards that.
12 Because we have shown the impacts, or we
13 can show the impacts that even a simple DMCA has had
14 on Bleem in trying to sell its product over the past
15 year. And that it's likely, very likely to have a
16 similar effect on consumers down the road.
17 The problem with letting this act take
18 effect, so that we can then ultimately prove this
19 impact, is that three years down the road is an
20 eternity in the age we live in, in terms of the
21 technological advancements. There's a new
22 PlayStation platform coming into effect that's DVD-
23 based. A variety of changes.
24 So these issues will tend to become moot
25 over the course of that time period. So there's a
26 real risk here that in the course of the three years
PAGE 219
1 that it would take to reevaluate a particular
2 exemption, the question will no longer be relevant.
3 I think with that I'll kind of stop my
4 comments here -- we've been talking a lot about in
5 theory and the different ideas going out -- and
6 maybe open it up to questions. If you have any
7 particular questions we can certainly discuss how
8 these access devices work, and the distinctions with
9 the licensing issues between the DVD issues.
10 MS. PETERS: All right. Thank you. It
11 is now five minutes after four. Some people have
12 been sitting here since 1:30. And what we're going
13 to do is take a short break.
14 When we come back, before we ask our own
15 questions, I'm going to give anyone on the panel an
16 opportunity to say anything else that they may want,
17 based on what they've already heard. So why don't
18 we take -- it's now, what, 4:15? We'll come back.
19 (Whereupon, a brief recess was taken.)
20 MS. PETERS: Good afternoon again. We
21 are going to resume the final part of our hearing.
22 And for those of you who find this room a little
23 warm, we have been told that all the facility people
24 have gone for the day. And so there is nothing we
25 can do about it. So, hopefully this won't take too
26 much longer.
PAGE 220
1 I left it with anyone who had anything
2 that they wanted to add before we got into questions
3 could do so now. So is there anyone who wishes to
4 speak?
5 MS. GROSS: I just wanted to go back to
6 a few points raised by a couple other folks, and
7 talk about them. The first would be the example
8 given why it should be illegal to circumvent a DVD
9 the same way it's illegal to circumvent HBO. It's
10 really an irrelevant example.
11 Circumventing HBO is something you
12 haven't paid for. If you bought a DVD, if you
13 purchased it, it is something that you have a right
14 to view as opposed to HBO. So that example really
15 doesn't add anything to this discussion.
16 I think it's also important to point out
17 that if many VHS movies are unplayable on machines
18 because of the international difference in
19 standards, that's a pretty good reason to exempt
20 them, simply because it will provide greater
21 opportunity for people to receive copyrighted works
22 they never would have had a right to, or the ability
23 to receive beforehand.
24 I think it's also important to point out
25 that equipment to play a different region's DVDs is
26 not readily available. CSS prohibits such equipment
PAGE 221
1 from being marketed in other regions. And Sigma
2 Systems website offers an OEM card for Linux
3 drivers, but it does not sell its computers. So as
4 far as I'm aware there is not yet an available Linux
5 player available to consumers.
6 Another point I wanted to make was that
7 if having content on a single hard disk means that
8 instant massive piracy will occur, why is there no
9 massive piracy since October when DCSS was released?
10 Or since December when it was publicized?
11 I think it's also important to note that
12 the MPAA has said, both publicly and in court
13 depositions, they don't have a single piece of
14 evidence of DCSS-related piracy. Technological
15 measures can never implement the true contours of
16 fair use. So far, every measure offered by
17 providers has been more restrictive than the law
18 allows, not less restrictive.
19 And I also think it's important to point
20 out that Congress intended that access to things
21 like a book be protected, only before purchase, not
22 after. Not after it's been read with impunity. So
23 what's wrong with that for the new media, too? In
24 fact, the DMCA states explicitly that the same
25 limitations shall apply.
PAGE 222
1 And my last point is I want to raise
2 that the Supreme Court has said that every person's
3 a publisher on the Internet. And that gives a
4 greater First Amendment protection than paper or
5 other traditional media, not less protection as the
6 copyright -- so I just wanted to make those few
7 points regarding different views that you've heard.
8 MS. PETERS: Thank you. Anyone else?
9 Mr. Goldberg.
10 MR. GOLDBERG: I'm Mort Goldberg. I
11 have some general comments based on the last --
12 well, all five days of the hearing.
13 Much of the five days' testimony appears
14 to me within the scenario that has been scripted by
15 Lewis Carroll. I don't propose to revisit the
16 entire scenario, but only to comment briefly on what
17 we've been exposed to, and what may seem to some of
18 us to be a trip down the rabbit hole.
19 Specifically, I propose to mention
20 briefly just the following: One, the threats of
21 being thrown in jail or fined criminally. Second,
22 the issue of a congressional imbalance -- and I
23 refer to the legislation, not the legislators.
24 Third, the treaty obligations of the United States.
25 Fourth, the claim of an exemption for fact works or
26 so-called thin copyright works as being a -- as
PAGE 223
1 constituting a particular class exemption if the
2 First Amendment, freedom of speech in 1201. And
3 lastly, an overview of the five days of testimony.
4 With regard to the criminal penalties,
5 there's been a good deal of apprehension voiced,
6 both here and in the hearings in Washington, about
7 the criminal provisions. Apprehension, that is, by
8 librarians and educators.
9 This is perhaps raised, or these
10 statements of apprehension are perhaps made as a
11 proffer of evidence as to some sort of adverse
12 effect. But unless I'm missing something in my
13 reading of the statute, these claims ignore 1204(b),
14 which exempts libraries and educational institutions
15 from criminal liabilities with regard to 1201.
16 If the witnesses are concerned, not
17 about the institutions themselves, but about the
18 library users, the students and faculty,
19 researchers, then I think we have to look at 1204(a)
20 which says that to constitute a criminal violation
21 it has to be willful. It has to be for purposes of
22 commercial advantage or private financial gain.
23 As the panel knows, this is essentially
24 the same language as in the criminal copyright
25 provision 506(a)(1). And I'm not aware, and I don't
26 think the panel is aware, of any evidence that the
PAGE 224
1 longstanding 506 has filled our presence with
2 librarians, educators, researchers and students.
3 With regard to the matter of balance,
4 the claim has been made that it's up to the
5 Copyright Office and up to the Librarian to strike a
6 balance. Congress has already done so in many
7 pages, many, many pages of exhaustive and exhausting
8 detail.
9 There is essentially just a single
10 sentence to 1201(a)(1)(A), but there are pages and
11 pages of exceptions.
12 And nothing in Section 1201(a)(1) suggests or
13 permits this panel, or the Librarian, to make
14 amendments to those exceptions, to enlarge them or
15 to diminish them.
16 There are also numerous exceptions in
17 Section 108 and elsewhere giving special treatment
18 to a variety of not for profit institutions.
19 Congress has again struck the balance in those
20 provisions. And you can mumble various latin
21 phrases, but in English the essence of it is that
22 specific legislation is to be followed specifically.
23 Treaties. We have the WCT and the WPPT,
24 the WIPO Copyright Treaty, the WIPO Performances of
25 Phonograms Treaty, and we have TRIPS and we have the
26 Berne convention. As Ms. Gross has reminded you,
PAGE 225
1 Article 11 of the WCT and parallel provision in WPPT
2 obligates the U.S. to provide adequate legal
3 protection and effective legal remedies against the
4 circumvention of effective technological measures.
5 Whether there is an access right granted
6 under Section 1201 really doesn't make any
7 difference. It's clear that adequate legal
8 protection and effective legal remedies can't be
9 provided against circumvention without 1201. TRIPS
10 requires the U.S. also to give adequate and
11 effective intellectual property protection.
12 The broad exemptions of the sort that
13 have been requested in the five days of the hearings
14 clearly would violate these treaties. The
15 exemptions would not qualify under the three-step
16 test under the WCTR 10.2, Berne 9.2 and TRIPS 13.
17 Mainly the three steps that such exemptions can be
18 only in certain special cases, not all works, not
19 all works of which fair use is to be made, et
20 cetera.
21 And secondly, exemptions have to be
22 those that do not conflict with a normal
23 exploitation of the work. Selling copies of the
24 Bible in Guttenberg days was the normal exploitation
25 of work. Now we have many, many, many normal
26 exploitations of the work. And clearly the kind of
PAGE 226
1 exemptions that have been requested here would
2 violate that -- or would not comply with that
3 portion of the three-step test.
4 And lastly, the three-step test requires
5 that any exemption not unreasonably prejudice
6 legitimate interests of the author. There has been
7 a great deal of testimony by the copyright owners as
8 to the significant prejudice that would be incurred
9 by them if the exemptions were to be adopted.
10 With regard to fact works and thin
11 copyright. Mention, as we may, that these -- that
12 the anticircumvention provision with regard to these
13 works should not apply, but there should be an
14 exemption for them. And if we look at some of them,
15 we have to wonder exactly what such an exemption
16 would bring.
17 Newspapers are, of course, notably fact
18 works. The Wall Street Journal, it's my
19 understanding, is available online, as is the New
20 York Times. But unlike the New York Times, the Wall
21 Street Journal charges for its subscription. It
22 seems to me that the Wall Street Journal has many,
23 many facts in it.
24 And I just do not think that the
25 congressional contemplation was the Librarian should
26 adopt an exemption for fact works in order to permit
PAGE 227
1 people to circumvent the access control mechanisms
2 of Dow Jones, which I do not represent. And to
3 thereby make fair use of the facts that are found in
4 The Wall Street Journal.
5 Likewise, with regard to the fact-heavy
6 legal treatises. I think the argument would be that
7 all they do is give you the facts of the cases, and
8 the cases, of course, are public domain. So it's
9 clearly fair use to just look at a treatise and get
10 at the public domain material if you just want to
11 know what the case held. I don't think that such
12 fact-intensive works should qualify for exemptions.
13 And on and on.
14 Histories have also been mentioned. I
15 guess this would permit us to circumvent access
16 control mechanisms with regard to Arnold Toynbee,
17 Carl Sandburg, Winston Churchill, and on and on, all
18 historians. Because clearly there are lots and lots
19 of facts, and we want to get fair use access to
20 them. 0
21 freedom of speech. Freedom of speech is what the
22 protesters yesterday and today in this proceeding
23 have been exercising, quite properly. Telling
24 Congress and the Copyright Office what they should
25 do with the DMCA. That's kind of a base to the
26 themes of this proceeding. 0
PAGE 228
1 That's freedom of speech. But freedom of speech is
2 not -- what I understood a speaker to say in the
3 Washington sessions -- some sort of right to get at
4 and use copyrighted expression. And if I heard
5 correctly the speaker in Washington said that the
6 Supreme Court in Harper v. The Nation supported her
7 view in that decision.
8 My recollection of Harper v. The Nation
9 is the decision held just the opposite. That the
10 First Amendment gives no privilege to U.S. copyright
11 expression, even when the expression is of such
12 great public significance as the memoirs of a
13 current President of the United States.
14 And contrary to what may have been the
15 implication attributed to that decision a few
16 minutes ago, or earlier this afternoon, the fair use
17 safety valve certainly does not exculpate all
18 infringements as mere free speech.
19 I may be the only one, other than the
20 members of the Copyright Office panel, that has sat
21 through the entire five days of the hearings. But
22 it's apparent to me that only in a Lewis Carroll
23 scenario could it be deemed that there's been
24 sufficient showing of the actual impact or likely
25 impact that the statute requires.
PAGE 229
1 There's been no showing of any
2 substantial diminution of availability for non-
3 infringing uses, there's been no showing that the
4 prohibition is the cause of any substantial adverse
5 impact. And prospectively, there also has been no
6 showing of extraordinary circumstances of likely
7 impact. There's been no showing that the basis of
8 evidence that is highly specific, strong and
9 persuasive. And in the absence of which, Congress
10 has made clear, that the prohibition would be unduly
11 undermined.
12 I, too, thank you for the opportunity to
13 make these observations at the hearing. And I join
14 Mr. Russell in being pleased to answer any questions
15 you may have.
16 MS. PETERS: Thank you very much.
17 Anyone else? If not, we will start the questioning
18 with our General Counsel, David Carson.
19 MR. CARSON: Thank you. Mr. Marks, we
20 heard from Ms. Gross that there is not yet an
21 available -- Linux player available to consumers.
22 That the Sigma player was the only one available.
23 It's available in OEM product. Is that your
24 understanding, first of all?
25 MR. MARKS: I wish I had more
26 information on that. I know there are two licensees
PAGE 230
1 of the CSS technology who are producing applications
2 for Linux system. I know the Sigma design is a
3 hardware application. I don't know exactly how it
4 functions. But I will be happy to get information,
5 more information to you when I find out the details
6 of this license.
7 MR. CARSON: Yes. Thank you.
8 MR. MARKS: I also wanted to mention
9 that the DVD Copy Control Association was actually
10 the organization responsible for administrating the
11 CSS licenses. I would be happy to supply the
12 Copyright Office and the Register with any
13 information that they would like.
14 So I will try and get that information,
15 but I would also suggest perhaps an inquiry to them.
16 Or maybe I should suggest to them that they file
17 additional written statements with you.
18 MR. CARSON: The latter might be a good
19 idea. Let's assume for a moment, though, that the
20 statement is correct. Which means, I assume, that
21 if I'm running Linux operating system on my
22 computer, and I want to play DVD, there is no way
23 that I can do that unless I go out and buy a new
24 computer which has this driver on it that's an OEM
25 installation.
26 Isn't that a problem?
PAGE 231
1 MR. MARKS: I don't think it's a
2 problem. Because I think, first of all, if you have
3 bought a DVD and you have a software operating
4 system that doesn't support an application to play
5 the DVD, you don't have to buy a new personal
6 computer. You might need to purchase a new
7 operating system, or you might need to purchase a
8 new software application when it becomes available
9 to play DVD, to install on your computer.
10 For example, even under the prevalent Windows
11 operating system -- and if I am misspeaking myself,
12 I hope maybe someone who's in the audience from
13 Microsoft will correct me. But I think on prior
14 versions of Microsoft, Microsoft Windows operating
15 system, they didn't have media player pre-installed
16 on the Windows operating system that would allow for
17 playback of DVDs.
18 Therefore if you purchased a DVD and you
19 had a Windows operating system, and you had a PC
20 that had a DVD-ROM drive, you might still need to
21 purchase a software application to enable your PC to
22 play the DVD. So I really don't see where there's a
23 great difference between that situation and the
24 Linux situation.
25 MR. CARSON: Although anyone can get a
26 little media player for free, I think. Can't they?
PAGE 232
1 MR. MARKS: That may be the case. But
2 then there's no prohibition to a software developer
3 in taking out a license to create the equivalent
4 application, software application for the Linux
5 system and making it available to its users for
6 free.
7 MR. CARSON: But if no one has done
8 that, why is it a problem for an individual user who
9 wants to be able to watch that DVD on his own
10 computer, which happens to run a Linux operating
11 system, to do what he has to do so that he can view
12 it?
13 MR. MARKS: The problem with that is
14 that it's not simply a matter of the encryption and
15 protection on the DVD disk guaranteeing the payment
16 by that individual user for the copy of the disk.
17 The whole purpose of the encryption in the first
18 place is because it carries with it certain copy
19 control applications.
20 As Ms. Gross correctly said, one of
21 those applications, for example, is that the content
22 not be permitted to flow out a digital outport from
23 a computer. If the user is allowed to circumvent
24 the technical protection measures, yes, that may
25 enable the consumer to view the content from the DVD
26 disk.
PAGE 233
1 But it may also, and likely would also
2 undermine the other protections that are inherent in
3 the DVD system, and allow for very easy unauthorized
4 reproduction and distribution of the content of the
5 DVD. For example, over the Internet. So that's the
6 risk that is entailed by allowing for that
7 individual circumvention.
8 MR. CARSON: Ms. Gross, let's assume
9 that between now and October 28th, Sigma or somebody
10 else do release whatever equipment it is for
11 commercial purchase, so you can go down to Comp USA
12 or wherever, and buy what you need to put on your
13 machine running with this operating system and view
14 DVDs. Is that going to moot the issue, at least
15 with respect to Linux users?
16 MS. GROSS: Well, the problem is that
17 there are additional operating systems that are
18 being created every day. And individuals should not
19 be required to go out and purchase a $10,000 license
20 in order to build an application that will play
21 their DVDs. That's something that would be
22 unprecedented in other forms of media.
23 Additionally, there are problems with --
24 there are antitrust problems for tying the hardware,
25 the machine, to the software itself, the DVD.
26 Microsoft is about to be broken up for this very
PAGE 234
1 reason. And so I think you need to think about
2 antitrust implications in tying the two together as
3 well.
4 MR. CARSON: Okay. But let's focus just
5 on Linux users. I know there are other operating
6 systems out there. But certainly, from personal
7 experience I can say, having looked at the comments
8 that have come in to us, the vast majority of
9 comments we have received in this proceeding have
10 been from people who run computers on -- with a
11 Linux operating system that are upset that they
12 can't use those computers to watch DVDs.
13 So let's focus purely on those people.
14 MS. GROSS: Linux users.
15 MR. CARSON: Linux users, yes. If, in
16 fact, the Sigma piece of equipment suddenly were
17 available on the shelves of your nearest computer
18 equipment store, would there still be a problem for
19 Linux users? Or would Linux users basically --
20 would you have to say on behalf of Linux users --
21 assuming you're speaking on behalf of them -- will
22 find that problem solved? No need for the Librarian
23 to address that aspect of the problem?
24 MS. GROSS: Well, I think it would
25 depend on the terms of the license for CSS. The
26 thing that is so attractive to people for using
PAGE 235
1 Linux is their ability to manipulate their own
2 software on their own machines.
3 And if the Linux player prohibits
4 people's ability to use their machines, and to
5 manipulate the software and images in ways that they
6 have a legal right to do, I think we'd still have a
7 problem. So I wait and see this machine, and what
8 it does and what it doesn't do.
9 MR. CARSON: Okay. Let me ask a
10 question for any of the representatives of the
11 copyright owners who would like to take a stab at
12 it. And I recognize we've heard this a hundred
13 different ways over the five days of testimony. But
14 if someone could just sort of put in a nutshell why
15 is it that we want to protect technological measures
16 that control access to copyrighted works? Why is it
17 important to do that?
18 MR. METALITZ: I'll answer that question
19 on two levels. One that I think is -- we should
20 never overlook, is that it's important because
21 Congress has decided its important. And that
22 obviously constrains what this rulemaking proceeding
23 can do within that determination that's already been
24 made.
25 But I think the larger reason, and the
26 reason why Congress decided that it was important to
PAGE 236
1 protect it, is that these types of measures are
2 really key enabling tools for electronic commerce.
3 And if we're serious about developing electronic
4 commerce being works of authorship, then we have to
5 recognize -- as you've heard today from Sony
6 Computer Entertainment America and from Time Warner
7 and MPAA -- that that commerce is not going to
8 exist, or it's going to be extremely stunted and
9 distorted unless copyright owners have the ability
10 to use these types of technological control
11 measures.
12 That they have the ability to manage and
13 control access to their works in order to
14 disseminate them more broadly. And that they have
15 the legal back-up to prevent, or to deal with
16 instances of circumvention.
17 So if we want to see a thriving
18 electronic marketplace in these works, we need to
19 have these tools to do that, and Congress recognized
20 that. And so did the other countries, the hundred
21 and some countries that adopted the WIPO treaties.
22 And I think that is a real -- that's a very
23 important step.
24 Because this is a new aspect to
25 international discipline in the field of copyright.
26 It really is not like what has been done in the
PAGE 237
1 Berne convention, TRIP. It goes a step beyond that.
2 And I think that is fueled by a recognition that
3 this is essential. We need these tools in order to
4 make copyrighted materials available around the
5 world in a global electronic market.
6 MR. GOLDBERG: If the value can be taken
7 without having to pay for it, then the copyright
8 owners are not going to create the value.
9 MR. MARKS: I would also like to
10 supplement that. While the protections for
11 technical -- while the legal protections for
12 technical protection measures are new and are
13 copyright law and the DMCA, and are relatively new -
14 - international treaties only dating back to 1996
15 with the adoption of the two WIPO treaties -- the
16 concept of giving legal protection to technical
17 measures that control access to works is not new.
18 The Communications Act of our United
19 States law, as passed by Congress, has protected
20 encrypted broadcast signals, whether they be radio
21 signals or television signals, for decades. I
22 cannot tell you exactly from when that law dates. I
23 have it back in my office, and I'd be happy to do a
24 supplemental submission on that.
25 But there's the Satellite Home Viewer
26 Act of, I think, 1988 or 1984. And Section -- I
PAGE 238
1 think it's 301 or 201 of the Communications Act
2 beforehand which prohibits the unauthorized
3 descrambling of encrypted signals for exactly the
4 reasons that have been stated by the other speakers.
5 That it has been deemed necessary to provide that
6 legal back-up for these technological protection
7 measures to facilitate commerce and copyrighted
8 broadcasts or signals. Or, now in the new digital
9 environment, other works that can be made available
10 in electronic form.
11 MR. CARSON: Now, CSS -- clarify for me.
12 CSS is an access control device, or a copy control
13 device, or both?
14 MR. MARKS: I'm so glad you asked that
15 question. Because this is the way CSS works. Can I
16 give a little bit of background on this?
17 MR. CARSON: I think you need to answer
18 it, yes.
19 MR. MARKS: Okay. Originally, when
20 content owners were looking to try and protect their
21 content on this new digital format of DVD, they
22 tried to come up with a legislative approach whereby
23 copy control flags would be inserted in the DVDs,
24 which is strictly a copy control technology. And
25 playback devices, whether they be consumer
26 electronic devices or computers, would be mandated
PAGE 239
1 by legislation to look for and respond to those copy
2 control flags.
3 So that would have involved strictly a
4 copy control technology, as enforced by law.
5 Somewhat similar and based on the Audio Home
6 Recording Act. The Motion Picture Association of
7 America started -- entered into negotiations with
8 the consumer electronics companies to develop
9 exactly such a technological system and legislative
10 structure.
11 Those discussions resulted in a draft
12 piece of legislation called the Digital Video Home
13 Recording Rights Act, or Home Recording Act.
14 Something like that, DVRA, I think we refer to it.
15 When those discussions were opened up to
16 the computer industry, the computer industry said,
17 "No. We cannot sign onto this. We do not agree
18 with the concept of having Congress mandate that our
19 devices look for and respond to copy control flags
20 and content. Copy control flags are essentially
21 ancillary data that are easy to get lost and it
22 would be very burdensome to make our machines have
23 to look at all the streams of data, especially
24 digital data which basically are just ones and
25 zeroes, and have to assertively look for these copy
PAGE 240
1 control flags. We won't do it, we won't sign up for
2 it."
3 And the strength of the computer
4 industry is really demonstrated in the no-mandate
5 provision of the DMCA. That there is no mandate to
6 affirmatively look for copy protection measures.
7 So here we were, after months if not
8 years of work, kind of back at square zero. What
9 are we going to do? The computer industry did
10 acknowledge that making our films available in
11 digital format did pose works. We did, after weeks
12 and months of discussions, get them to realize that,
13 unlike software, you know, Warner Brothers is still
14 exploiting Casablanca in Version 1.0.
15 Now, we don't update it, we don't change
16 it. We -- you know, it's the same classic movie
17 that we exploit. So once somebody has a copy of it,
18 they don't have an incentive to get the revised
19 copy. The work is the work.
20 Understanding that, the computer
21 industry came back to us and said, "Fine. This is
22 our position. If data is coming to our machines in
23 the clear," meaning unencrpyted, descrambled, "We
24 believe we have no obligation to look for any copy
25 control flags, to look for any copy protection
26 devices, or to really follow any rules with respect
PAGE 241
1 to that data. The data comes in the clear, and we
2 can -- our machines should be able to do whatever
3 they like with that data, and send it out the
4 machine in the clear."
5 Now, this is completely apart from any
6 copyright rules, or the fact that if a user is
7 making unauthorized copies that he may be infringing
8 the copyright law.
9 They said, "But if that data is
10 scrambled, if it is encrypted, and we want our
11 machines, our computers to make use of that data,
12 then we have a choice. We can either sign up and
13 get a license to decrypt that data and follow the
14 rules and conditions that are in that license. Or
15 our machines will simply pass along the encrypted
16 data, keeping it in encrypted form. We agree that
17 our devices and machines should not be permitted to
18 simply descramble and hack through and encryption
19 system without any sort of authorization or
20 permission."
21 Having reached that understanding, that
22 is the basis upon which we built the CSS system.
23 The CSS system, called Content Scramble System,
24 involves initially scrambling the content on the DVD
25 disk. So it is encrypted, even though that's
26 completely transparent to the user.
PAGE 242
1 Because when you put your DVD into your
2 DVD player, or your DVD computer, in most
3 circumstances you just press "Play" and the disk
4 plays. So you don't even necessarily realize that
5 it's encrypted, but the disks are encrypted.
6 Those devices, whether they be players
7 or personal computers or the Sony PlayStation who
8 would like to have their devices be able to display
9 and play back those DVD disks need to get a license
10 to be able to decrypt the CSS encryption system.
11 They do that by going to the DVD-CCA and applying
12 for a CSS license.
13 That CSS license gives them the keys and
14 tools to be able to decrypt the disks. It also
15 imposes certain conditions on what the device can do
16 with the content once it is decrypted. One of those
17 obligations, for example, is that the content is not
18 allowed to flow out in the clear on a digital
19 output.
20 Another example of an obligation is that
21 the device has to insert Macrovision on content
22 before it goes out the analog output. So by this
23 combination of encryption technology and licensing,
24 you have really a structure that involves access
25 control and copy protection.
PAGE 243
1 MR. CARSON: Well, it sounds -- I'm
2 sorry, someone else?
3 MR. HANGARTNER: I was just about to
4 jump in with a comment. I mean, I think this
5 discussion needs to step back a little bit and look
6 at the DMCA. As Professor Samuelson mentioned in
7 her comments to the court in one of the CSS cases
8 back in New York, that these DMCA access provisions,
9 circumvention provisions are really an adjunct means
10 of regulating company infringement. They're not
11 really an end in themselves, particularly when we're
12 talking about a lot of different situations.
13 We've got broadcast situations, we've
14 got pay-per-view situations, you've got end-users
15 that actually buy a copy of the copyrighted work.
16 It really has to be viewed in that context, that
17 this is a means of regulating copyright infringement
18 rather than an end in itself.
19 I think it's also important to, as you
20 look at these things, to think a little bit about
21 what these access control mechanisms do. For
22 example, the whiz code that's used by Sony is not
23 really a copy protection system. What it does is it
24 limits the games that can be played on a PlayStation
25 console.
PAGE 244
1 This serves a variety of purposes. By
2 linking together this access control system with the
3 patents that Sony has obtained that relate to that
4 access control system, Sony's created a system where
5 PlayStation video games can only be published by a
6 licensed game developer. So they use this as a
7 means to control the ability of people to make games
8 that can be played on a PlayStation console. So
9 that they maintain control over all of the creative
10 works that can be used on that console system.
11 They also use it to put in place these
12 regional controls that we talked a little bit about
13 before. So this whiz code, it doesn't prevent
14 copying of the disks. I mean, you can copy a
15 PlayStation disk. It may or may not copy that whiz
16 code, but you can copy the PlayStation disk and
17 access the information off that copy on a device
18 other than a PlayStation console.
19 So, I guess the thrust of my comment is
20 really to keep in mind that core purpose of access,
21 circumvention and control as an adjunct to copyright
22 infringement, which is what this is really all
23 about. Preventing infringement of people's
24 copyright.
25 I wanted to mention, David Herpolsheimer
26 has showed up. I think he may want to jump here
PAGE 245
1 with a quick comment on the same subject, if that's
2 okay.
3 MR. CARSON: Well, if we get a chance,
4 in a while. But I sort of would like to stick with
5 what I was talking about with Mr. Marks.
6 It strikes me that what we are
7 describing is perhaps a copying control device in
8 access control clothing. In other words, you've got
9 a device that controls access to a work, but not in
10 the way that, certainly before this rulemaking
11 began, I thought we were talking about. We were
12 talking about access control devices.
13 In other words, I assumed -- naively,
14 perhaps -- that a technological measure that
15 controls access to a work, the purpose of that is to
16 make sure that authorized users and only authorized
17 users are getting access to the works. So if I paid
18 the price to the copyright owner otherwise be able
19 to use that work, then I'm entitled to use it.
20 And if he somehow gets access to it by
21 circumventing encryption or passwords, or whatever,
22 then she's in trouble because she's not an
23 authorized user. I'm not in trouble because I am.
24 That's got nothing to do, as far as I can tell, with
25 what you're talking about.
PAGE 246
1 What you're really talking about, I
2 think, is an access control measure that is designed
3 to channel someone towards a device which has copy
4 controls on it. Is that a fair description, or am I
5 misdescribing it?
6 MR. MARKS: I think it's partially a
7 fair description. I think it is also used -- the
8 fact that the work is encrypted is used to try and
9 guarantee that the user has legitimately -- has
10 legitimate access to the work as well. I mean, I
11 don't think it's completely devoid, the CSS system,
12 of trying to ensure that those people that -- for
13 example, would just simply duplicate the DVD disks -
14 - you know, pirates who would duplicate the DVD
15 disks.
16 And if there were pirate players that
17 were unlicensed, they wouldn't be able to play those
18 disks because they were encrypted with CSS. That
19 serves an access control function as well.
20 MR. CARSON: But a duplicated --
21 MR. MARKS: A duplicated DVD disk is
22 going to duplicate the CSS encryption.
23 MR. CARSON: And can be played on any
24 legitimate player.
PAGE 247
1 MR. MARKS: And can be played on any
2 legitimate player, legitimate licensed CSS player.
3 And not be played on non-licensed players.
4 MR. CARSON: Okay. So I don't see how
5 you're stopping the -- I don't see how you're
6 stopping the piracies of DVDs in that respect.
7 Pirated DVDs can be sold on the open marketplace and
8 played in any legitimate DVD player.
9 MR. MARKS: Without infringement
10 copyright?
11 MR. CARSON: No, no, no. Certainly not.
12 But we know pirated goods are on the market all the
13 time.
14 MR. MARKS: Yes, they are.
15 MR. CARSON: And infringing copyrights,
16 that's very nice to know they're still out there.
17 So I'm trying to figure out what this technological
18 measure is doing, and I'm not seeing it as really in
19 any way restricting access to authorized users.
20 I'll get to you in a moment, Steve.
21 In other words, there's no reason to
22 believe as a general proposition that someone who
23 has a commercially manufactured and marketed DVD,
24 manufactured by Sony, perhaps, or any of the major
25 studios -- Time Warner, whatever -- is not an
26 authorized user.
PAGE 248
1 If someone has that DVD which is
2 manufactured by Time Warner, you're going to presume
3 they're an authorized user, aren't you?
4 MR. MARKS: Yes. Although you'd have to
5 sort of define what you mean by authorized user. If
6 someone has purchased a DVD from Time Warner,
7 they're authorized to play it on a licensed DVD
8 player. They can play it as many times as they
9 want, there's no restriction on saying it's a one-
10 time play, it's a two-time play.
11 Are they authorized to make
12 reproductions of it, are they authorized to copy it
13 to their hard drive, are they authorized to
14 redistribute it in electronic form? The answer is
15 no. So what do you mean by authorized user?
16 MR. CARSON: Are they authorized to view
17 it on any machine they can find, that they can make
18 to view it?
19 MR. MARKS: No, no. They're authorized
20 to view it on a licensed device. If someone were to
21 buy a VHS cassette, and they didn't have a VHS
22 player, are they authorized to disassemble the
23 videocassette, reproduce the film in there in 35-
24 millimeter print and play it on their movie camera?
25 I don't think so.
PAGE 249
1 MR. CARSON: Okay. But, first of all,
2 there's no contractual privity between the purchaser
3 of that DVD and Time Warner, I assume. There's no
4 shrink-wrapped license. You know, you don't sign a
5 license saying, "I agree only to play this on an
6 authorized player," when you purchase the DVD.
7 MR. MARKS: That's correct. And neither
8 is there a shrink-wrapped license when you buy a VHS
9 cassette that's in NTSC format, and you only have a
10 PAL player.
11 MR. CARSON: Okay. I go to Europe, I
12 buy a videocassette, it's PAL. I bring it back here
13 and when I play it, I find, oh my God, I got a --
14 what was I thinking?
15 MR. MARKS: Right.
16 MR. CARSON: But, wait a minute. I can
17 take it down to a shop and they can convert it for
18 me to NTSC, and they'll make a copy for my own
19 personal use for NTSC. Would doing that be a
20 violation of Section 1201(a)?
21 MR. MARKS: It would not be a violation
22 of Section 1201(a), because that's not a technical
23 protection measure. The fact that it's in PAL is
24 not a technical -- or encryption. It's not a form
25 of technological protection measure.
PAGE 250
1 I thought you were going to ask me,
2 frankly, would that be a violation of copyright.
3 And I'm not sure I have the answer to that. A
4 commercial service that is reproducing copyrighted
5 films into different formats, I think they might
6 well be violating copyright law.
7 MR. CARSON: We don't have to resolve
8 anything here.
9 MR. MARKS: I'm glad we don't have to.
10 MR. CARSON: But getting back to what we
11 were talking about. The kinds of things you were
12 talking about -- yes, if I buy the DVD I certainly
13 would have the right to make copies of it, I'll
14 grant you that. But why don't I have the right to
15 put it on my computer that maybe running a Linux
16 operating system? And maybe I can't get a hold of
17 any equipment that is authorizing license that will
18 allow me to view that DVD player.
19 But if I can get a hold of that DCSS
20 code, and if I can manage to crack that myself, so
21 that I can view it on my own computer, where's the
22 problem? Whose rights have I violated?
23 MR. MARKS: Okay. I'm a little
24 uncomfortable about talking about DCSS because of
25 the ongoing litigation.
PAGE 251
1 MR. CARSON: Well, let me tell you that
2 you better get comfortable because this is a
3 rulemaking that could affect DCSS.
4 MR. MARKS: That's fine, that's fine.
5 But, you know, let me try and answer the question
6 for you. It's a matter of balance.
7 As I was trying to describe before, if I
8 can, as an individual user, circumvent the
9 technological protection measure on a DVD disk, and
10 copy that content to my hard drive, there is a risk
11 that the content owner has that the use by that
12 individual will not simply be home viewing, but may
13 also be infringing. Making unauthorized
14 reproductions, making distributions over the
15 Internet.
16 This is not sort of speculative use,
17 people do that with MP3 files all the time today, of
18 music. Given that degree of risk, the inconvenience
19 that is posed to a user who purchases a DVD disk,
20 but doesn't have a DVD player -- which you can get
21 for under $200 -- or a software program that he can
22 install on his computer, or her computer to play the
23 disk, if you balance those out I think the
24 inconvenience to the individual user is far
25 outweighed by the risks to the copyright owners.
PAGE 252
1 And the risk to the general public that
2 if this sort of circumvention is permitted, then
3 millions of DVDs that are sold today may not be sold
4 tomorrow. Because content owners may decide it's
5 simply too great of a risk for them to put their
6 content on that digital format. That's the
7 balancing that needs to take place, in my view.
8 MR. CARSON: And I'm not sure you've got
9 the wrong balance there, philosophically. But just
10 looking at the scheme we have in Section 1201,
11 Congress made the judgment that it was not going to
12 make it unlawful for an individual to circumvent the
13 technological measure that controls the use of a
14 work. Copying and so on.
15 It did make the judgment that it would
16 make it unlawful to circumvent a technological
17 measure that controls access to a work. And again,
18 isn't this access control measure -- CSS that you're
19 talking about -- a measure that is really designed
20 as its end, not to control access but to control the
21 use, by channeling you to that device whose purpose
22 is to control use?
23 MR. MARKS: Well, I think the problem
24 is, is it's mixed. I mean, as I was trying to
25 describe, we could not put in an effective
26 technological measure that would not fail us with
PAGE 253
1 respect to the no-mandate provision in the DMCA,
2 without employing encryption, which is an access
3 control technology.
4 So the very structure of the DMCA
5 itself, in terms of the no-mandate provision kind of
6 forced our hand to go to the structure. Now, I want
7 to be very clear. We already had devised the CSS
8 structure prior to the implementation of the DMCA in
9 October of 1998.
10 But it only reinforced that structure
11 that we moved to, as a result of the computer
12 industries saying to us, "If the content is
13 scrambled, we will not descramble it. We will not
14 have our machines descramble it without
15 authorization. If the content is in the clear,
16 don't ask us to try and follow any rules with
17 respect to that content."
18 MR. CARSON: Steve, you've been wanting
19 to jump in.
20 MR. METALITZ: Yes. If I may, just
21 three reactions to your -- to this line of
22 questioning. First, I've said it before and I'm
23 sure we'll say it again.
24 But it is significant that in your
25 drawing a distinction between access controls that
26 are set up with the goal of preventing infringement,
PAGE 254
1 piracy, unauthorized uses, and some other types of
2 access controls that perhaps don't have that close a
3 link -- it is significant to me that Congress did
4 not make that distinction.
5 Congress did not say that access control
6 mechanisms that are for some pure and noble purpose
7 other than preventing piracy have a privileged
8 status, and more protection against circumvention
9 than those that are -- as I think Dean has indicated
10 -- closely linked to the preventing or dealing with
11 a huge risk of rampant piracy that CSS has intended
12 to address.
13 And since this is not a congressional
14 committee, but a rulemaking created by Congress, I
15 think those -- it's important to respect both the
16 distinctions Congress did make and the distinctions
17 Congress did make.
18 Secondly, I don't think that the type of
19 system that CSS represents is quite as brand new and
20 unprecedented as your question might have implied.
21 I don't think it's really much different in kind
22 from other types of access controls such as what
23 we've heard before, and probably you heard earlier
24 this week. A license that would only allow access
25 to certain material from certain designated
PAGE 255
1 machines, designated by IP number, or some other
2 fashion.
3 Now, that's not the exactly the same as
4 only allowing it from licensed players. But it's
5 similar in the sense that it is an access control
6 that manifests itself by saying, "This material may
7 be accessed on certain machines, and not on other
8 machines."
9 And again, that's exactly the kind of
10 access control Congress had in mind when it enacted
11 Section 1201(a)(1), and that it wanted this
12 rulemaking to look at.
13 And finally, it just strikes me that
14 this whole CSS issue is very -- I mean, it's almost
15 a model for a case of -- a business case of a
16 problem, if it is one, that can be solved by the
17 marketplace, and probably is being solved by the
18 marketplace.
19 If there isn't currently a freestanding
20 Linux player, a Linux plug-in that can be used to
21 play DVDs on a Linux-based computer -- if there's a
22 market to do that, it strikes me that having to pay
23 $10,000 for the license if the market is more than,
24 you know, a couple thousand people, that's probably
25 a pretty good deal. And that market need will be
26 filled.
PAGE 256
1 And similarly with other -- I think it's
2 also important to recognize that we sometimes think
3 of the only platforms for playing DVDs as DVD
4 players and computers. But, in fact, I would
5 venture to say that at least in Japan today, neither
6 of those is the main way that people watch DVDs.
7 The main way they
8 watch DVDs is using their PlayStation 2. And that
9 did more to advance the sales of DVDs in Japan than
10 anything else. And that may someday be the case
11 here.
12 There are going to be many platforms.
13 There already are, and there are going to be more.
14 I think the only thing that perhaps makes it a
15 little difficult for us to see that this is an issue
16 that the market is going to solve, and that people
17 will have access to a wide variety of platforms on
18 which to play DVDs is that there's kind of a
19 theological taint to this as well. I think we ought
20 to get it out in the open.
21 And even if the plug-in for playing --
22 for example, for playing a DVD on Windows were
23 available for free -- and maybe it is, for all I
24 know. I don't know what the strategy is for
25 distributing that. There are people, probably some
26 in this room, that wouldn't do it because they don't
PAGE 257
1 want their machines to be tainted by anything that
2 emanates from Redmond, Washington.
3 That's a fact. And if that constitutes
4 a sufficient market, that market need is going to be
5 fulfilled. But it is a little different from the
6 typical market situation, where people aren't
7 theologically motivated in their decisions, but
8 they're motivated by other factors of what's
9 cheapest and what's most efficient and what works
10 best, and so on and so forth.
11 So, I think that sometimes clouds the
12 picture a little bit. It makes it a little harder
13 to see that this is really a marketplace issue that
14 the marketplace is likely to resolve. And the
15 result is going to be that virtually anybody that
16 wants to watch DVDs on any platform that's readily
17 available will be able to do so.
18 MR. MARKS: Can I take one more shot at
19 responding? I think one of the underlying
20 assumptions of your question, if I can be so
21 presumptuous, is that if you have bought a DVD disk
22 you have the right to access the content that's on
23 the DVD disk. And so if you don't have the
24 appropriate playback equipment, why shouldn't you be
25 able to circumvent the protections to get at the
26 content?
PAGE 258
1 I think that argument would be more
2 powerful if, in fact, the content was only released
3 on a DVD disk. But, in fact, if you want to see
4 "The Matrix," you don't have to buy a DVD to do so.
5 You could see it in the theater, you could see it on
6 VHS.
7 So the fact that the work is available
8 in many alternative formats seems to me to also
9 justify the fact that one should not permit
10 circumvention of a technological protection measure
11 by a user simply because the user has chosen to
12 purchase the work in a format for which the user
13 doesn't have an appropriate player. And for which
14 alternative players are available on the market at
15 very consumer-friendly prices. It seems like a
16 fairly weak argument to me.
17 MR. CARSON: But it is my understanding
18 that the quality of what you see on DVD is much
19 better than that which you see on VHS, for example.
20 And it's also my understanding that oftentimes when
21 you get a motion picture on DVD, there's a lot of
22 added value material that you don't get on a VHS.
23 MR. MARKS: Precisely why consumers go
24 out and buy new equipment. When CDs were first
25 released, nobody had CD players. Consumers decided
26 that, "Hey, this is a great format, it's worth my
PAGE 259
1 investment in a new piece of playback equipment." I
2 see no difference in the DVD context.
3 If consumers like the new material
4 that's available on DVD, like the new quality that's
5 available on DVD, they have a choice. They can buy
6 the DVD and buy a piece of playback equipment, or
7 not.
8 MR. CARSON: Ms. Gross, maybe you can
9 help me out. I'm reading my notes, but I'm not
10 quite sure I'm recalling what you said. But you
11 said something to the effect that -- were you saying
12 that someone from MPAA had stated that a person
13 wanting to make a fair use of a DVD should have to
14 obtain a license to do so?
15 MS. GROSS: That's right.
16 MR. CARSON: Repeat that, and tell me
17 who it was that said that.
18 MS. GROSS: Sure. Let me just remember.
19 I was at a conference at Yale Law School a few weeks
20 ago, and General Deputy Counsel of the MPAA -- I
21 believe Geckner was his last name. One of the
22 audience members posed him a question, and said,
23 "I'm a multimedia artist, and I rely on making fair
24 use of clips of videos for creating new works. If I
25 want to use the DVD to copy a small clip of that to
26 include in a new work that I'm going to create, is
PAGE 260
1 it your position that I would be required to get a
2 license?" And the MPAA said yes, it is.
3 MR. CARSON: Would that be your
4 position,
5 Dean?
6 MR. MARKS: What my position would be is
7 that I don't think wanting to use clips from a DVD
8 that might constitute and qualify for fair use in a
9 new work would be sufficient justification to
10 circumvent the technological protection measure of a
11 CSS system that's on a DVD.
12 Does that mean that the multimedia
13 artist is completely out of luck? I don't think so.
14 Because the multimedia artist can access clips of
15 the content from a VHS copy, or when the content is
16 on screen, make a camcorder copy of the content and
17 use it.
18 And people may laugh about that, but the
19 highest -- one of the largest sources of piracy of
20 our films is from people bringing camcorders into
21 movie theaters and making camcorder copies, and then
22 reproducing them. And you'd be surprised at how
23 good the quality is.
24 MR. CARSON: Well, I've seen some of the
25 pretty poor quality ones.
PAGE 261
1 MR. MARKS: Some are pretty poor
2 quality, some are pretty good quality.
3 MR. CARSON: Okay. One last thing I'd
4 like to ask you, Mr. Marks, on this subject. You
5 give a very articulate explanation and justification
6 for the regional codes, and the way in which motion
7 pictures are marketed.
8 Given all that, however, why should it
9 be a violation of the law for an individual who may
10 go to Europe or Asia, or wherever, and pick up a DVD
11 of a motion picture there and bring it home, to
12 circumvent for his or her own personal use, so he or
13 she can view that DVD in his or her own home? Why
14 is that a problem?
15 MR. MARKS: It really goes to the same
16 question you asked about the access control, why
17 it's a problem if they don't have a player. It's
18 because of the fact that the technological
19 protection measure is not only dealing with access,
20 but is also dealing with subsequent uses of the
21 content.
22 I would like to just say a couple of
23 points about the regional coding, which I missed.
24 And which some of my colleagues pointed out to me.
25 MR. CARSON: Okay.
PAGE 262
1 MR. MARKS: Another reason why we need
2 regional coding, why we do regional coding is that
3 the law in various territories is different with
4 regard to censorship requirements. So we cannot
5 simply distribute the same work throughout the world
6 in the same version. Local laws impose censorship
7 regulations on us that require us to both exhibit
8 and distribute versions of the films that comply
9 with those censorship requirements.
10 In addition, the way -- at least the
11 economics of our business currently work, when we
12 license distribution of our works to licensees in
13 other countries, whether it be video distributors or
14 broadcast distributors, often a precondition in the
15 license contract that the distributor seeks is that
16 the film has had a theatrical release in the U.S.
17 prior to being exploited in the foreign country.
18 So, those are two other additional
19 considerations as to why the regional coding scheme
20 is in place in the first place.
21 MR. CARSON: Now, if I understand your
22 explanation why it's a problem to even let the
23 individual user circumvent, to watch that foreign
24 DVD, it's not that it would be such a horrible thing
25 for the copyright owner if one person, one
26 individual happened to see it in his or her home at
PAGE 263
1 a time when he shouldn't have, but that it's linked
2 to these other protections.
3 MR. MARKS: That's correct. If there
4 was some way to guarantee that a person who was
5 circumventing the CSS protection technology to view
6 a Region 2 disk on a Region 1 player was only going
7 to view that disk on the player in the privacy of
8 his or her own home, without further distributing or
9 copying the disk, it would be less of a problem.
10 There's still the problems associated
11 that I described before about the windows of
12 exploitation. Which would make it problematic if
13 you're one individual with the entire population of
14 Italy that, in the privacy of their own homes
15 circumvented regional coding to play a DVD of a
16 movie that had never been -- that had not never
17 been, but had not yet been theatrically released in
18 Italy and was scheduled -- yes, that would have a
19 detrimental impact on us.
20 But in your hypothetical of a single
21 individual user I would say, yes, if that single
22 individual user was circumventing solely to be able
23 to view the content of the DVD disk in the privacy
24 of their own home, with some iron-clad guarantee
25 that that circumvention was not going to lead to
PAGE 264
1 further risks of unauthorized reproduction and
2 distribution, I would agree with you.
3 MR. CARSON: But why is it that CSS had
4 to be designed in such a way that someone who
5 circumvented in order to overcome the regional
6 coding, also necessarily would be circumventing the
7 copy protection? Couldn't you have done it in a
8 different way that it wouldn't have been a problem?
9 MR. MARKS: No. It isn't that it's
10 necessarily designed that way. Well, let me back
11 up.
12 The way the CSS system works is that the
13 content in the clear is restricted from being made
14 available on a hard drive of a computer, or what's
15 known as a user-accessible bus. I can only speak to
16 the unauthorized decryption systems that have --
17 that the hack, frankly, of DSS that has occurred to
18 date. And with that hack the content of the DVD
19 disk is made available in the clear, on a computer
20 user's hard drive. And so that is a problem.
21 We didn't design it so that any attempts
22 to circumvent would mean it killed the whole system,
23 but in fact the circumvention device program that's
24 been developed to date accomplishes that, imposes
25 that risk. And the problems with that is that that
26 circumvention device is distributed with messages
PAGE 265
1 that say, "Here it is, copy DVDs to your heart's
2 content, send them to your friends." So it sort of
3 poses the parade of horrible risks that we're
4 concerned about.
5 MR. CARSON: On the subject of regional
6 coding, Ms. Gross, you spent a fair amount of time
7 talking about that as being a problem. I'm trying
8 to figure out how big a problem it really is. And
9 how many U.S. residents actually go abroad and bring
10 back foreign DVDs, and then find themselves
11 frustrated by their inability to play them?
12 MS. GROSS: I think many probably do. I
13 don't have a number, I don't have a statistic. But
14 I think it's fairly common. When you travel, you
15 like to -- myself, I like to get music from whatever
16 region I'm in, and bring it back home with me. I'm
17 sure some people are perhaps the same way for
18 movies. 0
19 problem. But again, I don't have a number that this
20 number of people by DVDs abroad. That I can't tell
21 you.
22 MR. CARSON: You think it's huge enough,
23 though, that we should make an exemption to a right
24 that Congress has said that copyright owners have a
25 right to do, just because you think that there may
PAGE 266
1 be a few people -- or even quite a few people -- who
2 might find themselves inconvenienced in that way?
3 MS. GROSS: Well, I think I know that we
4 are. I think that, judging from the enormous number
5 of comments that were received from people
6 complaining about their inability to watch their
7 DVDs, that it is a problem. It's a rather large
8 problem. And it also is a problem outside the U.S.
9 The proceeding here was not just
10 designed to decide whether or not U.S. residents
11 would be able to watch their DVDs, but whether
12 people in general were allowed to watch their --
13 would be restricted from non-infringing uses.
14 And you think about entire worldwide
15 audience of people who want access to watching DVDs
16 from worldwide producers, that's a large number.
17 MR. CARSON: Are you saying that Section
18 1201 has extra-territorial application? I'm not
19 sure I follow what you're saying.
20 MS. GROSS: No, I'm not saying that at
21 all. I'm just saying that there's a lot of people
22 in the U.S. and in the world who are prohibited.
23 MR. CARSON: Okay. But I'm trying to
24 figure out why we should be concerned about people
25 elsewhere in the world who are prohibited. Because
26 I don't understand how Section 1201 affects them,
PAGE 267
1 and therefore I don't understand why we should be
2 considering an exemption for Section 1201 for their
3 benefit.
4 MS. GROSS: Well, I think it's also
5 important to note that it's not just when you travel
6 that you want to get a DVD and bring it back. But
7 you simply can't purchase or order DVDs from foreign
8 distributors. Maybe you want to get a DVD of an
9 Indian movie, and you're prohibited from playing it
10 on your device when you bring it -- when it arrives
11 in the mail.
12 MR. MARKS: But if I could respond just
13 for a moment. The Indian producer, the Indian film
14 producer is not prohibited from producing DVD disks
15 that would be playable on Region 1 machines. So,
16 for example, we produce DVD disks that are playable
17 on Region 1 disks and Region 2 disks and Region 3
18 disks. And there's no prohibition on a producer
19 from producing DVD disks that are playable on
20 different regions.
21 And, in fact, the producer has the
22 ability to produce a single DVD disk that would be
23 playable on all regions. If you have a producer, a
24 content owner who is not concerned about the windows
25 of exploitation, they can produce a DVD disk that's
26 multiregion, and playable on all regional players
PAGE 268
1 throughout the world. So there is flexibility built
2 into the system.
3 MR. CARSON: I may be exhausting your
4 knowledge here, but let's take that example. And
5 India has, I think, the second-largest film industry
6 in the world. First? Okay. 0
7 of India the market for those films is probably
8 fairly limited. Do you know whether most Indian
9 films are coded so that -- on DVDs, so that they can
10 be viewed worldwide? Or are they simply regionally
11 coded?
12 MR. MARKS: Do you know what? I don't
13 know, but I will try and find out. I don't even
14 know if Indian producers are making their films
15 available on DVD, but I will try to find that out.
16 MR. CARSON: Okay.
17 MS. GROSS: I just wanted to clarify
18 what I was saying. The Notice of Inquiry was
19 requesting whether or not there was harm to people,
20 and it didn't ask whether or not there was harm to
21 U.S. people.
22 MR. CARSON: Okay. But let's keep in
23 mind that ultimately what we're trying to do here is
24 figure out whether we should recommend an exemption,
25 and that exemption -- I don't think -- can directly
26 affect what happens outside the United States.
PAGE 269
1 All right. So, the harm I've heard from
2 yourself -- and I want to make sure I've got your
3 catalogue of problems here with DVDs. We've got the
4 problem for people with Linux operating systems,
5 which some people would say is being resolved or may
6 soon be resolved, depending on how available this
7 driver is, I guess. You've certainly got your
8 doubts about that.
9 You've got the problem of regional
10 coding. What are the other specific problems we've
11 got that we need to be worried about with respect to
12 DVDs?
13 MS. GROSS: The fact that fair use is
14 completely prevented. As we've heard here today,
15 people are required to get a license in order to
16 make a fair use of a DVD. This idea that, well, you
17 can simply go out and buy a VHS, it doesn't work.
18 And it doesn't work because DVDs are a completely
19 different experience than a VHS.
20 They have director's cuts, you can look
21 at different shot angle, different camera angles.
22 There's all sorts of additional information that is
23 included in the DVD that you simply cannot get on a
24 VHS. There is no equivalent to a DVD, so fair use
25 is severely impacted. It's completely prohibited.
PAGE 270
1 MR. CARSON: What other fair uses of a
2 DVD can't engage in under the current regime?
3 MS. GROSS: If I want to make a back-up
4 copy for my own personal use.
5 MR. CARSON: Okay. Let's stop with
6 that. What case law tells you that you have a fair
7 use right to make a back-up copy of the DVD for your
8 own personal use?
9 MS. GROSS: I think that Sony v.
10 Universal Cities says that.
11 MR. CARSON: Really? That's an
12 interesting proposition.
13 MR. MARKS: I don't think so.
14 MS. GROSS: Software law specifically
15 allows you to do that, and DVDs certainly fall under
16 software.
17 MR. CARSON: DVDs fall within Section
18 117, is that what you're saying?
19 MS. GROSS: DVDs are software.
20 MR. CARSON: Okay. Are you saying that
21 they're covered by Section 117?
22 MS. GROSS: I'm not really sure what 117
23 is.
24 MR. CARSON: Okay. You might want to
25 take a look at it, and let us know in your post-
26 hearing comments.
PAGE 271
1 MS. GROSS: But I think that the 9th
2 Circuit decision in the Diamond RIAA case, that
3 people have a fair use right to copy an entire song
4 onto their computer hard drives for personal use --
5 I think you'll find a lot of that in the case law.
6 MR. CARSON: You might want to cite a
7 few cases to us, then, too.
8 MS. GROSS: I will do that.
9 MR. CARSON: I'm not terribly familiar
10 with a whole lot of case law that says you can do
11 that. Let's go on. What are the fair uses are that
12 you're saying can't be done right now?
13 MS. GROSS: Well, in one of the
14 affidavits submitted in the DCSS case was Professor
15 Charlie Nessen (phonetic) from Harvard Law School,
16 who talked about how he typically would like to use
17 a portion of a DVD from the movie, "The Client," I
18 think it was, as part of educating the law students
19 on how to handle certain situations.
20 And he's now prohibited from taking that
21 snippet of the DVD and showing it to his students.
22 That's an educational use that is prohibited.
23 MR. CARSON: Okay. He could do that
24 with a VHS version, correct?
25 MS. GROSS: Well, he might be able to.
26 But there's no guarantee that he could.
PAGE 272
1 MR. CARSON: Why is there no guarantee
2 that he could? What on earth could stop him?
3 MS. GROSS: Because there's no guarantee
4 that the film will be released in VHS. There's no
5 guarantee that the DVD is the same equivalent
6 content.
7 MR. CARSON: Okay. That particular film
8 is in VHS right now.
9 MS. GROSS: Okay, that film may be.
10 MR. CARSON: Okay. We're talking about
11 now and the next three years. Are you seriously
12 telling me that there are films that are going to be
13 released in DVD in the next three years that will
14 not be available in VHS?
15 MS. GROSS: I think that's right.
16 MR. CARSON: Why do you think that's
17 right?
18 MS. GROSS: Because they're completely
19 separate products, a DVD and a VHS.
20 MR. CARSON: Well, if they're the same
21 film -- although the DVD may have added value.
22 MS. GROSS: I think they're very
23 different. When you incorporate all the additional
24 information and the incredibly rich multimedia
25 experience that a DVD provides, it's not at all the
26 same.
PAGE 273
1 MR. CARSON: Okay. Professor Nessen
2 wants to show a film clip from the motion picture.
3 He's going to be able to do that with a VHS version.
4 There's no question, is there?
5 MR. MARKS: He'll be able to do that
6 with the DVD version. I mean, if he has a DVD
7 player in his classroom, Section 110 covers that use
8 of display in the classroom. There's no prohibition
9 on that.
10 MR. CARSON: I'm just baffled. I don't
11 know how he can't do what you're saying he can't do,
12 with what's available to him now. And I think Mr.
13 Marks is correct. He can take a DVD player into the
14 classroom, and a tv, and he can show that clip.
15 MS. GROSS: As long as that movie is
16 available in that format, that's true.
17 MR. CARSON: Well, if it's not available
18 in that format, he's in trouble anyway. Because
19 we're talking about a DVD right now, and a DVD
20 player. I'm sorry, I'm just trying to understand
21 the fair uses that people can't engage in using the
22 currently authorized equipment. And so far I
23 haven't heard any.
24 MS. GROSS: Simply playing their DVD on
25 their computer --
PAGE 274
1 MR. CARSON: Okay, we've talked about
2 that. Let's talk about fair use, though. What are
3 the fair uses that are prevented under the current
4 regime?
5 MS. GROSS: If I wanted to make a small
6 copy, or a small excerpt of a certain part for a
7 certain reason that's only available in DVD, I'm
8 prohibited.
9 MR. CARSON: Is that correct, Mr. Marks?
10 MR. MARKS: Are you talking about
11 legally prohibited?
12 MS. GROSS: I'm talking about --
13 MR. MARKS: Or having technically --
14 making it technically difficult to do so?
15 MS. GROSS: I'm talking about
16 technically prohibited.
17 MR. MARKS: Again, my answer would be
18 that, yes, when it comes out the analog output it
19 will be protected by Macrovision. And yes, the
20 content will not go out a digital output at the
21 beginning. So it makes it more technically
22 difficult to make a copy of a small clip from a DVD.
23 Is it impossible? No one. And that's
24 the camcording example that I used. When it is
25 running, you can copy a snippet of it on a
26 camcorder. It may not be convenient, it may not be
PAGE 275
1 the best copy quality that you would like, but I
2 don't believe the fair use doctrine says that a user
3 gets to take fair use copies of the best format and
4 best quality of the work is available.
5 Nobody has ever argued that film studios
6 have to make their 35-millimeter theatrical prints
7 available to users who want to take out clips or
8 snippets for the purpose of fair use.
9 MR. CARSON: So you're basically saying
10 analog is good enough for fair use?
11 MR. MARKS: Yes, I am.
12 MR. HANGARTNER: But doesn't the law
13 already actually cover that, in that you've kind of
14 separated the idea of access versus fair use. That
15 if this person wants to copy it, that they have to
16 circumvent Macrovision in order to make the snippet.
17 I thought that that was covered under fair use in
18 some of the comments -- actually, Marybeth Peters
19 early on before Congress that access versus
20 infringement, or am I just totally out of my mind?
21 MR. CARSON: We're not psychiatrists, we
22 couldn't answer that.
23 MS. PETERS: Thank you.
24 MR. HANGARTNER: In actually being able
25 to copy the works, I thought we were talking more
26 here about access than really talking about copying
PAGE 276
1 the works. It this professor wants to copy the work
2 with a Macrovision output that comes out, and they
3 circumvent the technological measure for that
4 purpose, that's very separate from what we're
5 talking about here in Section 1201(a) for access in
6 particular.
7 MR. CARSON: Well, the point's a fair
8 one. That if the access control is preventing you
9 from having the means to make a copy which might be
10 fair use, then maybe you have a problem. I think
11 that's Ms. Gross's point.
12 MR. HANGARTNER: That already exists, I
13 guess, with Macrovision and with the copying that's
14 there. Not to argue the other side of things. I'm
15 just trying to understand it as well.
16 MS. GROSS: Since all copying is
17 prohibited by the DVDs, fair use by definition is
18 prohibited.
19 MR. CARSON: All right.
20 MR. MARKS: See, I think that's a
21 mistake in conception of fair use. To equate fair
22 use with copying is almost like equating fair use
23 with consumption. I mean, fair use can involve not
24 literally copying a work, but copying some of the
25 expression of a work for parody. Copying some of
26 the expression of a work for criticism and comment.
PAGE 277
1 It's not just about physically copying the format
2 that the work happens to be in.
3 MR. CARSON: Well, I'm trying to think.
4 Aside from the time-shifting situation in Sony, have
5 there been cases holding that the actual copying of
6 a motion picture is fair use?
7 MS. GROSS: The Diamond multimedia
8 decision, RIAA v. Diamond. That's not motion
9 pictures, but MP3.
10 MS. PETERS: And there's an Audio Home
11 Recording Act.
12 MR. MARKS: That's correct.
13 MS. PETERS: That has the serial copy
14 management piece in it, that says there's no
15 infringement when you make the copy.
16 MR. CARSON: So I think we're going
17 into, at best, maybe a murky area as to whether fair
18 use is even available in that context. I'd be
19 interested in hearing or seeing some authority from
20 you about actual replication of portions of motion
21 pictures as being fair use. Because I'm not sure
22 the case law is out there, but I may have overlooked
23 it.
24 MS. GROSS: Well, I think that the Sony
25 v. Universal Cities case was about people's ability
26 to make a complete copy of a complete movie.
PAGE 278
1 MR. CARSON: In the context of time-
2 shifting, you're absolutely right.
3 MR. MARKS: Time-shifting of free over-
4 the-air television. Sony v. Betamax does not stand
5 for the proposition that you can make a complete
6 copy of a work from pay-per-view television, from a
7 videocassette, from DVD. It simply does not stand -
8 - fair use always balances the rights of the
9 copyright owner and the use interests that are being
10 asserted by the putative fair use user. It's not an
11 absolute.
12 MR. CARSON: All right. Mr. Hangartner
13 and Mr. Herpolsheimer, feel free to jump in. Well,
14 first of all, you mentioned a decision just handed
15 down here in the Northern District of California.
16 We're not aware of that decision, but we'd certainly
17 like to know more about it. If you have a copy of
18 it, we'd like to see it.
19 MR. HANGARTNER: Oh, there actually is
20 not a written decision yet. It was an oral ruling
21 from the bench last Tuesday in the case, Sony
22 Computer Entertainment America v. Connectix
23 Corporation.
24 MR. CARSON: Oh, this is on remand?
25 MR. HANGARTNER: No. Actually, this was
26 on summary judgment. Connectix moved for a summary
PAGE 279
1 judgment on the DMCA claim brought by Sony, which
2 claimed that it was a circumvention device.
3 MR. CARSON: I'm sorry, go ahead.
4 MR. HANGARTNER: And the court granted
5 summary judgment for Connectix. The transcript
6 should be available next week, and we could provide
7 a copy if you'd like that.
8 MR. CARSON: Yes, that would be great.
9 And I gather you expect a written decision to be
10 forthcoming?
11 MR. HANGARTNER: It's not clear. The
12 court was not clear if it would be doing a written
13 decision in the near future, or if it would be
14 holding off on a written decision until sometime in
15 the future. But I think the transcript may -- well,
16 it will contain the court's comments regarding a
17 written decision.
18 MR. CARSON: Okay. One thing I wasn't
19 able to get out of your testimony is what classes,
20 if any, you are advocating that we recommend the
21 Librarian exempt from Section 1201(a). Do you have
22 a suggestion for us?
23 MR. HANGARTNER: Well, the thing of that
24 I threw out, right off the top of my head, was -- I
25 mean, I'm not sure of his name, but the fellow over
26 here in the green tie who was talking earlier. He
PAGE 280
1 mentioned that one way to look at this is to start
2 from the very specific and move to the more general.
3 And so I was sort of throwing out to
4 start from the very specific. In our instance, the
5 particular class of works that Bleem is most
6 concerned about at this point is PlayStation video
7 games, which are produced on CD-ROM.
8 Now, I know David's been thinking a bit
9 about other classes of works, and maybe I'll turn it
10 over to him. This is one of these things that I'm
11 sure we'll have an awful lot to say about in our
12 post-hearing comments. But how you move from that
13 very specific example, which as I described earlier,
14 you've got a class of works which are distributed
15 without license, that are actually sold so that the
16 person acquires a copy of it. And they're sent out
17 on a CD format that is accessible. So it's a very
18 specific type of disk that forms that very
19 particular class of works.
20 Now, whether there is that class of
21 works shall be defined more generically than
22 PlayStation video disks is an issue that, I think,
23 requires some thought. How you can create a class
24 of works that strikes the right balance here. I
25 don't know, David, do you have thoughts on that?
PAGE 281
1 MR. HERPOLSHEIMER: My concern is more
2 with the way that we've seen 1201 used specifically
3 against us, and against the Japanese variant of that
4 law used against some of our retailers in Japan. Is
5 that it seems to be being used to expand the scope
6 of copyright beyond where it already affords
7 protection for copying for infringement for a lot of
8 areas.
9 That they're taking this sort of
10 technological measure and applying almost a self-
11 help program that some content providers can use to
12 really lock down their content. And limit the
13 ability of end-users to actually not just have fair
14 uses, but have uses at all to the content that they
15 have gone out and lawfully purchased copies of
16 copyrighted works.
17 And that the imposition of -- like I
18 said, expanding 117 to go beyond -- or not 117. It
19 should be 1201 to go beyond what I've seen in some
20 of the early history, and some of the statements,
21 again from Ms. Peters, really talking about it being
22 something to expand the growth of digital networks.
23 And to allow copyrighted works to be disseminated
24 more freely over digital networks by protecting the
25 rights of copyright holders. And we're all in favor
26 of that, because we produce content just like
PAGE 282
1 everybody else here. We want to have our works
2 protected.
3 But to then take that protection that's
4 really going more towards specific kinds of uses.
5 When you're talking about digital networks, it's
6 almost like protecting -- in the example that he had
7 of walking in and videotaping a movie in a movie
8 theater.
9 What we're really talking about here is
10 specific accesses of watching a one-time pay-per-
11 view movie, or you know, playing a copyrighted video
12 game over a network where you need to protect that
13 content to make sure it doesn't just get kind of
14 sucked off and reproduced.
15 I think it's a different issue, when you
16 start taking that protection to access, where the
17 encryption is really essential to protecting the
18 work over that network. And then trying to apply it
19 to areas where there are already substantial and
20 very effective protections against infringement.
21 You know, to start wrapping access
22 around that starts, I think, hobbling the ability of
23 users to actually use their works. And gives an
24 unfair amount of control, I think, to the copyright
25 holder that's beyond the rights that they should
PAGE 283
1 have under the copyright law. The rights that this
2 Act is supposed to support.
3 MR. CARSON: Mr. Russell, if I don't
4 happen to have the Sony PlayStation equipment, but
5 I've got a Sony PlayStation game, why on earth
6 shouldn't I be allowed to use the Bleem emulators
7 where I can play that game on my computer, or on the
8 Sega equipment or something else?
9 MR. RUSSELL: Well, quite frankly, and I
10 don't want to try our case here. It's not limited
11 to the DMCA claim. We have concerns about other IP
12 rights that we have in these games and in the
13 system, and to the way we build these games, that we
14 have alleged that Bleem and both Connectix has
15 violated.
16 So I think the case goes well beyond
17 what is on issue here, which is 1201(a)(1)(A), and
18 that is not -- we did not bring any action, of
19 course, against Bleem or Connectix in those. And
20 the ruling in the court is not under that section.
21 MR. CARSON: All right. Okay. But what
22 I'm trying to get at -- let me put it another way.
23 If I did use the Bleem emulator, say, after October
24 28th of this year, so that I could play one of the
25 PlayStation games on my PC, would it be your
26 position that I would be violating Section 1201?
PAGE 284
1 MR. RUSSELL: I think that the issue is
2 an interoperability issue. And I think that is
3 dealt with in the DMCA under, I believe, it's --
4 MS. PETERS: F.
5 MR. RUSSELL: F. And I think F amends
6 or is an exemption from Section 1201(a). So you
7 know, I think that what we're dealing with here, if
8 that's what we're concerned with, there is a
9 provision that deals with this. And then the
10 question is whether it's lawful reverse engineering
11 to achieve interoperability.
12 And I'm not going to go through that.
13 That's not the area of discussion here, and I think
14 that's something that is very, very fact-specific.
15 And certainly should not be made -- determined on
16 the -- they come up on an individual basis, and
17 shouldn't be determined on a broad exemption by a
18 video game class.
19 MR. CARSON: This is late in the day, so
20 maybe I'm not making myself clear. But what I'm
21 trying to understand is if I were to use a Bleem
22 emulator, would I, in engaging in that conduct, be
23 circumventing some technological measures that Sony
24 has that were designed to restrict my access to the
25 PlayStation games? And if so, would I be violating
26 Section 1201(a)?
PAGE 285
1 MR. RUSSELL: Again, I believe that it
2 will fall under the exemption that falls under
3 Section 1201(f). Because I believe what's happening
4 here is, no, you may not be violating the -- you may
5 not be circumventing it, you will be having reverse
6 engineered it.
7 MR. CARSON: No, I wouldn't be. I'm
8 using the --
9 MR. RUSSELL: You're the end-user?
10 MR. CARSON: I'm the end-user.
11 MR. RUSSELL: No, I don't believe the
12 end-user is.
13 MR. CARSON: And you don't think the
14 end-user is circumventing technological protections,
15 either?
16 MR. RUSSELL: The technological
17 protection is in the disk and in the machine. So I
18 don't believe that the end-user is.
19 MR. CARSON: Okay, okay. That's really
20 what I was getting at. Thanks.
21 MR. HERPOLSHEIMER: Okay. Well, just on
22 that level, one thing that's interesting is that's
23 exactly what they alleged against us in court. Is
24 that if the end-user isn't doing it by using our
25 product, and our product certainly couldn't be doing
26 it -- and the thing that I'm really afraid of here
PAGE 286
1 in the United States is what's happening to us right
2 now in Japan.
3 They have a very similar implementation
4 as we do in 1201. Their law there, I think, is the
5 Unfair Competition Act. But it's very similar in
6 that it protects against unauthorized circumvention
7 of technological measures that effectively control -
8 - blah, blah, blah.
9 But they have some very specific
10 language that say that the playing of pirated video
11 games -- this is one of the concerns that, in our
12 particular circumstance, comes up, is that because
13 this whiz code is proprietary to Sony, and in fact
14 patented, if we were to recognize it we would be in
15 violation of their patent.
16 That because of the whiz code -- that
17 because we don't recognize the whiz code we are
18 violating or we are circumventing their protections.
19 In Japan, they say the that the act of playing a
20 pirated game isn't actually an infringement. It's
21 making the copied game is an infringement there.
22 They specifically preclude video games,
23 they specifically speak towards issues like whether
24 or not the protection on the disk is actually
25 voluntary. In the case of video games it's one
26 where every manufacturer of PlayStation games is
PAGE 287
1 required to appoint Sony as part of their license
2 for the development tools. They're required to make
3 them their sole manufacturers of CDs, and that
4 protection is included in the CDs. So is it truly
5 voluntary?
6 In spite of all this, Sony is still
7 going out and going to our retailers there and
8 basically threatening them with lawsuits unless they
9 cease to carry our product and pay back -- I don't
10 know, $200 per copy, I think, for every copy they've
11 sold. And write a letter apologizing to Sony for
12 ever carrying it in the first place.
13 And these are the kinds of things that,
14 if there's any vagueness or if there isn't a clear
15 exemption for certain kinds of uses in the law that
16 we can point to, and that we can make clear and
17 understandable -- this is in the face of MIDI
18 (phonetic) in Japan. Actually telling the people,
19 "No, we don't see that there's anything wrong with
20 it, but who knows what the judge will say?"
21 But I'm just afraid that we're going to
22 have the same kind of issues in this country. Where
23 they can go and they can say, "Look, Bleem is a
24 product that violates the DMCA. You, by selling it
25 as a store, are in violation of the DMCA," with the
26 further enactments going down to end-users. And
PAGE 288
1 putting out ads and saying, "Anybody who uses Bleem
2 is in violation of the DMCA, and we're going go
3 after them."
4 Contrary to what he said here today,
5 that's not what they have expressed in court and in
6 numerous threatening letters to our retailers.
7 MR. RUSSELL: Quite frankly, I don't
8 feel this is an appropriate forum to try our case.
9 MR. CARSON: I'm not trying to try
10 anyone's case. I'm just trying to figure out
11 whether there's an issue here within our domain,
12 which is why I'm asking --
13 MR. RUSSELL: No, I understand that.
14 MR. HANGARTNER: I'd just point out,
15 too, that it's not really a matter of trying the
16 case. But the fact is that Sony and many of the
17 other folks who have spoken here today are putting
18 the burden on the proponents of a specific exemption
19 to establish that there is an impact. And I think
20 that this discussion is relevant to that.
21 This is an actual impact that, despite
22 the fact that 1201(a)(1)(A) is not yet in effect, we
23 can point to -- provide tangible evidence that this
24 is a -- there's a real risk of this. And that's the
25 only reason this is coming out. It's not an issue
26 of trying cases here, or anything else. But it's
PAGE 289
1 relevant experience that I think bears on this
2 discussion.
3 MR. GOLDBERG: May I point out that it
4 is not the copyright owners who have placed the
5 burden, it's Congress.
6 MS. PETERS: That is right. And we
7 still do have one more comment period for people who
8 want the opportunity to add additional material.
9 MR. CARSON: In response to positions
10 taken at these hearings.
11 MS. PETERS: It is now quarter of six.
12 So instead of going in order, I'm just going to
13 basically ask if there's anyone here who wants to
14 ask questions. I'm going to look around. Okay,
15 Rachel, we'll start with you.
16 MS. GOSLINS: I know it's late and it's
17 hot. So I'll try and keep it really, really brief.
18 Ms. Gross, I was just wondering how you would
19 respond to Mr. Marks' argument that, without these
20 technological protections in existence, without the
21 existence of them, his company or other companies
22 wouldn't have put out these products at all.
23 So, you know, in a sense they're out
24 there and they're doing some consumers some good.
25 Why should the fact that they decided to put them
26 out in a protected format mean that you -- that
PAGE 290
1 anybody has a right to circumvent that, in lieu of -
2 - if we accept his argument that in lieu of these
3 protections, they wouldn't even be on the market.
4 MS. GROSS: Well, I wouldn't say anybody
5 has a right. But I think that it's really kind of
6 false to say that people will not create, that
7 society will not create absent of technological
8 protection measures. People have always created,
9 and they will continue to create.
10 And I think we can look right now to the
11 music business, and what's going on in the Internet
12 with music and MP3s. And companies like MP3.com and
13 eMusic, and all sorts of new business models that
14 are coming up and proliferating, and all sorts of
15 new artists who are putting their music out there.
16 Society has never had more choice in
17 accessing music legitimately. So I think it's
18 really sort of false to say that society will
19 discontinue creation of intellectual property absent
20 this level of protection.
21 MS. GOSLINS: Okay. Dean, just two
22 really quick questions. Do you currently stagger
23 video? Does your company, or do you know if other
24 companies currently stagger video releases between
25 the -- whatever the initials are of the U.S. format
26 and the PAL format?
PAGE 291
1 MR. MARKS: Yes, there is staggering.
2 Really, it depends upon the distribution channels of
3 the media -- windows of exploitation. Generally, in
4 general, movies are released first in the United
5 States before they are overseas. And in general --
6 this is subject to some exceptions -- video release
7 occurs six months after in the United States.
8 So, to the extent that the theatrical
9 release in Europe is later than the theatrical
10 release in the U.S., the video release in Europe is
11 later than in the U.S. And in some countries -- and
12 I'm not sure it's still the case today, but it
13 certainly up to recently was the case in France,
14 there was a law that said you could not release on
15 video prior to six months after theatrical release.
16 So we're constrained by some of those laws as well.
17 If I may, I just wanted one quick
18 response to Ms. Gross' reply to your answer -- your
19 question, rather. It's late in the day for all of
20 us.
21 I wasn't asserting that absent
22 technological protection measure people would stop
23 creating. I was saying that, absent the ability to
24 use technological protection measure, creators and
25 publishers and distributors may not make their works
26 available on certain formats like DVD. I was not
PAGE 292
1 saying that there would no longer be creative
2 activity.
3 MS. GOSLINS: Okay. And one more quick
4 question. And I know -- I certainly don't want to
5 get into a long discussion about it at this hour.
6 But I'm curious, the question I posed to Steve this
7 morning about what happens if we do decide that we
8 exempt a class of works, what does that mean under C
9 & D. I'm just curious to hear your answer to that,
10 since we're taking a poll.
11 MR. MARKS: I was hopeful that Steve's
12 scholarly and forthright answer would settle it for
13 everyone. But I basically agree with what Steve
14 said. And it's -- on the one hand I'm sort of
15 sympathetic to the argument that the reference to
16 users in 1201(d) is users who are making only non-
17 infringing uses.
18 But the problem that I have with that is
19 fair use is -- as we all know and as the Supreme
20 Court has said -- a balancing test that operates on
21 a case by case basis that's very factually
22 intensive, and like in Acoff-Rose you have courts
23 that, at every level of the way, reversed one
24 another.
25 So it's hard for me to imagine creating
26 bright line rules concerning classes of works for
PAGE 293
1 non-infringing uses, and determining sort of ab
2 initio what those non-infringing uses are. Is it
3 impossible for all non-infringing uses? No. I
4 would say private viewing of videos, for example, in
5 one's own home is a non-infringing use. Clear.
6 Clear enough.
7 But there are all sorts of copying for
8 what purpose, or for example, where it's really hard
9 to come up with those bright line rules ab initio.
10 And so that somewhat leads me to think that maybe
11 Steve is correct, that when 1201(D) was referring to
12 users, it was referring to users in general, and not
13 just users who are making non-infringing uses.
14 The second point being, if one was
15 limiting that to users who are making non-infringing
16 uses, how do you really monitor and sort of enforce
17 that? It would be rather difficult.
18 That being said, I was very sensitive to
19 Mr. Carson's argument that we don't want to
20 necessarily turn 1201(b) into the bluntest
21 instrument possible. So I think it's a very
22 complicated question.
23 MS. GOSLINS: Okay. Mort, do you have a
24 response to that?
PAGE 294
1 MR. GOLDBERG: I'm not sure I agree that
2 the users are to be defined in that way. But I'll
3 have to take another look at it.
4 MS. GOSLINS: Four questions, and then
5 that's it.
6 MR. KASUNIC: I have one question. This
7 is in regards to CSS. I know we've talked a lot
8 about it. But CSS protects both access and the
9 Section 106 rights of the copyright owners, as you
10 said before.
11 MR. MARKS: Right.
12 MR. KASUNIC: 1201(a)(1) protects only
13 technical protection measures that protect access.
14 MR. MARKS: Right.
15 MR. KASUNIC: And Congress specifically
16 chose not to have a prohibition for circumvention of
17 the conduct -- of measures that protect the Section
18 106 rights. So if we have a technological
19 protection measure that does not discriminate
20 between access and copy protection measures, the
21 latter of which was not -- was specifically chosen
22 by Congress not to
23 be -- that conduct not to be prohibited, who should
24 bear that burden of this indiscriminate use of
25 technology?
PAGE 295
1 Since Congress did choose that the
2 latter will not be protected, shouldn't this burden
3 be placed on the copyright owner to show that
4 there's a need for this, or why the indiscriminate
5 use is necessary?
6 MR. MARKS: Let me answer that in a
7 couple of pieces. One, that I don't think it's
8 indiscriminate use. I was trying to describe
9 through the history of the development of the CSS
10 copy protection structure why the content industry
11 was really -- I don't want to say forced, but really
12 led to develop a structure where encryption was the
13 hook.
14 It was because of the reactions we were
15 getting from the computer industry, and the fact
16 that we knew these works were going to be played on
17 computer platforms. And by the limits in the law
18 that say if you put a mere copy control technology,
19 like an SEMS flag in audio, absent a particular
20 legislative provision like the Audio Home Recording
21 Act that mandates consumer electronic players to
22 look for and respond to SEMS, the law under the DMCA
23 says there's no obligation to respond.
24 So the notion of trying to implement
25 copy protection technology in a way that devices
26 will respond, required us to go to a system where
PAGE 296
1 encryption was the initial hook. So it's not really
2 an indiscriminate use, it's a way -- it was really,
3 frankly, our only way of trying to implement
4 effective copy protection technology.
5 But I'm not quite done yet, though.
6 Thankfully, in the area of CSS -- and this goes to
7 the gentleman, David, David's remark. In this
8 particular instance, the content flows out the
9 analog output with Macrovision. Macrovision is the
10 copy control technology that inhibits copying of the
11 analog signal.
12 And the CSS license, a condition of the
13 CSS license is that devices, whether they be the
14 computers or the DVD players, apply Macrovision to
15 the signal as it goes out the analog output.
16 If a user circumvents Macrovision in
17 order -- on the content of the DVD as it flows out
18 the analog output, in order to make a copy the lack
19 of the prohibition in the law of circumventing copy
20 protection technology by an individual applies.
21 So, therefore, if the individual user --
22 and I think this is what you were getting at -- were
23 to circumvent Macrovision, it doesn't fall within
24 the 1201(a)(A) prohibition. It would be a
25 circumvention of a copy control technology that is
26 permitted under the law.
PAGE 297
1 MR. METALITZ: Rob, could I add just a
2 sentence or two to that answer?
3 MR. MARKS: But I want to clarify, if
4 there are any lingering questions on that. Because
5 I think it's a very important point
6 MR. METALITZ: I was just going to say
7 your question used the word "burden," and we may be
8 confusing two burdens here. In any particular case
9 if someone were alleging a violation of
10 1201(a)(1)(A) the Plaintiff would have to prove that
11 what was circumvented was an access control. And if
12 that's the issue, and it was put into the issue --
13 you know, the burden of proof on that would rest
14 with the Plaintiff to show that.
15 Here, of course, we're only talking
16 about the burden in this proceeding. Things are a
17 little bit different. Congress has already decided
18 that these circumventions should be outlawed, and
19 the question of exception is that the burden is on
20 the proponent of the exceptions. But I just wanted
21 to clarify that.
22 MR. KASUNIC: But the burden is on the
23 proponent of the exemptions for the access controls.
24 But here we have some, at least testimony that there
25 are some adverse effects from -- whether they're
26 cured or not is another question. So there was some
PAGE 298
1 showing that there were adverse effects to certain
2 users of this, in terms of the access.
3 The hypothetical we had in Congress of
4 going into the bookstore to buy the book doesn't
5 seem appropriate here, in terms of access. Here we
6 had legitimate users going into that bookstore and
7 buying the book, the DVD, only to find that then
8 that was locked in addition. And that different
9 uses of that were restricted after that lawful
10 access was --
11 MR. METALITZ: The way you pose that
12 question -- and it really has come up in a lot of
13 the comments here. You know, it almost sounds like
14 you're raising a consumer protection issue. That
15 somehow the consumer is surprised to find that when
16 she buys a DVD in Europe that she can't play it on a
17 U.S. machine, or that if you -- to use the late
18 lamented DIVX technology -- it's probably unlamented
19 by many in this room. But that was a technology
20 that was a time-limited DVD, in effect. And you
21 could only play it three times or over a certain
22 period of time.
23 I think we have to distinguish between
24 whether someone maybe wasn't aware when they bought
25 it, and therefore didn't know what the limitations
26 were, versus the question of whether it's legitimate
PAGE 299
1 to have the limitations at all. Or whether there's
2 some problem, from the perspective of this
3 proceeding, with using access control mechanisms to
4 enforce those limitations.
5 Now, when people subscribe to HBO, they,
6 I think generally do know. They're put on notice
7 that it's a time-limited subscription. They can't
8 go back later and put in a black box to see again
9 what their subscription has expired to.
10 But, you know, that's a separate -- the
11 consumer protection side of that is a separate
12 question from whether, A, the copyright owner can
13 use those access control mechanisms, and B, whether
14 it's illegal to circumvent those. And, as Dean has
15 pointed out, for some 20 years it's been illegal to
16 circumvent those protections. So this, again, is
17 not really a new concept.
18 MR. MARKS: Steve, I just want to
19 supplement the HBO example, because there had been a
20 comment that the HBO example was irrelevant because
21 if you had paid for your HBO subscription -- if you
22 were descrambling because you hadn't paid for your
23 HBO subscription, that was a different case for
24 having bought a DVD, paid for it and not be able to
25 play it.
PAGE 300
1 That was not the example that I used in
2 my testimony. The example I used was you had
3 purchased a subscription to HBO, and during the time
4 that you are a legitimate purchaser of HBO's
5 service, you own a television set -- granted there
6 aren't many around today, probably, except maybe in
7 antique stores. But the tv set that was not cable-
8 ready, that could not accommodate a set-top box.
9 The HBO signal would be coming to your
10 home in encrypted form. If you had a television set
11 that could not accommodate the set-top box with a
12 descrambler for the HBO system, under the
13 Communications Act you do not have a right to buy a
14 black box and decrypt the HBO signal in order to get
15 the content. Even if you're a subscriber and have
16 paid for HBO. And that's the point I wanted to try
17 and make.
18 MR. GOLDBERG: May I comment on the
19 implication of the question there? I think the
20 question implicates the matter of burden very
21 clearly. And we are to focus on distinct,
22 verifiable and measurable impacts, isolated or de
23 minimis effects, speculation, conjecture, et cetera.
24 That does not amount to meeting of burden. And I
25 think that those effects that are isolated, de
PAGE 301
1 minimis, speculation, et cetera, should be regarded
2 as such. And not as meeting a burden.
3 MR. KASUNIC: I just want to offer Ms.
4 Gross or anyone else an opportunity.
5 MS. PETERS: I just want to ask one
6 question on behalf of libraries. Libraries purchase
7 DVDs. And DVDs, do they deteriorate or do they stay
8 good forever? You're a library that's an archive.
9 MR. MARKS: Right. My understanding --
10 and again, this is going to be an additional
11 question for me to research for you -- is that the
12 life of a DVD disk is greater than the life of a VHS
13 tape, an analog videocassette. That that will
14 deteriorate more quickly than a DVD disk will. But
15 it is not my understanding that a DVD disk will not
16 ever degradate over time.
17 MS. PETERS: Are you aware of libraries
18 purchasing and then seeking in the purchase, the
19 ability to somehow make a back-up copy that isn't in
20 exactly the same format, but in a neutral format
21 that they can basically have as machines become not
22 available? Or do you know what libraries are doing
23 with regard to that?
24 MR. MARKS: I don't know. And I haven't
25 heard of any such request being made.
PAGE 302
1 MS. PETERS: Well, they clearly have a
2 right under Section 108, to the point where it's
3 deteriorating, to make back-up copies. And the
4 question is if you had an access control on it,
5 wouldn't that then inhibit the ability that they
6 have by law with regard to the copy?
7 MR. MARKS: It may, it may. And I think
8 if that sort of problem develops, I think a much
9 more sensible remedy to that problem is for the
10 library and the content owner to work out some sort
11 of guideline, whereby the content owner needs to
12 make available a copy that's suitable for archiving
13 to the library. Rather than enacting or adopting an
14 exception to the prohibition on circumvention.
15 I understand that 1201(a)(1)(B) really
16 only gives you rulemaking authority in this context,
17 to adopt exceptions or exemptions for circumvention.
18 But I know the Library of Congress has other
19 rulemaking abilities in terms of preservation or
20 archiving or library exceptions. And I think that
21 would be proper place to address those concerns.
22 MS. PETERS: Okay. Well, it's now after
23 six o'clock. I want to thank all the witnesses for
24 -- I'm looking around before I do this. Is there
25 anyone else who wants to ask a question on the
PAGE 303
1 panel? Is there anyone else out there who wants to
2 say anything?
3 All right. It's after six, and that I
4 really do appreciate all the effort that went into
5 people to appear here today. And also your
6 willingness to answer our questions so thoroughly.
7 And I also want to thank people who attended.
8 There is one more opportunity to have
9 input into the evidence that we're gathering. And
10 that, of course, is the comments that can come in up
11 to June the 23rd on what was raised in here. Thank
12 you very much.
13 (Whereupon, at 6:05 p.m., the hearing
14 was adjourned.)
15
16
17