PUBLIC HEARING
                                
                          at
               The University of Chicago
                   Chicago, Illinois
                                
                                
                  September 14, 1994
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
         INFORMATION INFRASTRUCTURE TASK FORCE
     WORKING GROUP ON INTELLECTUAL PROPERTY RIGHTS
                                     
 Bruce A. Lehman, Assistant Secretary of Commerce and 
     Commissioner of Patents and Trademarks, Chair


                     P R O C E E D I N G S

MR. MAMBRETTI:  I'd like to welcome you to the University of 
Chicago and this public forum on the National Information 
Infrastructure and Intellectual Property Rights.  Before we 
begin, I'll note a few logistics.  First of all, my name is Joe 
Mambretti.  I'm Director of Academic Information Technologies at 
the university.  If you have any questions about orchestration 
logistics you can bring them to me about local matters.  A major 
logistic question that has come up is where are the restrooms.  
They are downstairs.  You can go outside to the lobby and go to, 
for the women's, go down the right set of stairs, and for the 
men's on the left.  There will be a two hour lunch today.  A list 
of local restaurants has been provided. At this time I would like 
to introduce Pat Swanson, Associate Provost for the University of 
Chicago, who will make some opening remarks welcoming you on 
behalf of the university. 

MS. SWANSON:  I do want to do that just briefly, and then get on 
with the proceedings.  It  seems to me that universities are 
major players and have a stake in intellectual property issues 
and so it's particularly fitting that we are able to host these 
hearings today.  For those of you who haven't been on the campus 
before, this is our most austere time of the year in terms of 
people because the summer session has ended and we're on the 
quarter system and school doesn't start until the 1st of October.  
So lest you think there are no people, that's the reason why.  It 
is usually one of our most hospitable times of the year in terms 
of weather.  It's better to be at a hearing here now than in 
January, I assure you. 

     The other thing I'd like to say is that the book stores are 
better in this area than the restaurants are, so if on your lunch 
hour you decide that you would rather have sustenance for the 
mind, there are two book stores, there are used book stores along 
57th Street, one at Harper and 57th and one between Kimbark and 
Kenwood on 57th.  And then there are two wonderful new book 
stores, one called 57th Street Books which is at the corner of 
Kimbark and 57th and another called the Seminary Coop Book Store 
which is right over here across from the institute at 58th and 
University, so should you need entertainment at lunch time.

     I'm really pleased now to introduce Bruce Lehman.  Before I 
do that, I just want to acknowledge Mike O'Neil who has worked 
with Joe Mambretti to make these arrangements, and also to 
acknowledge Joe's effort and initiative to make this day 
possible. Bruce Lehman is Assistant Secretary of Commerce, 
Commissioner of Patents and Trademarks.  He has been an attorney 
in private practice and also has served as counsel to the House 
Judiciary Committee.  Welcome from all of us. 

MR. LEHMAN:  Thank you very much.  And I want to thank the 
University of Chicago for having this, for offering us this very 
nice room, this very nice forum and helping us organize this.  
This one of the great academic institutions in the world and it's 
really an appropriate place to have a hearing on intellectual 
property, since a lot of intellectual property has been generated 
and is continuing to be generated from this institution.  

     The Working Group on Intellectual Property Rights, which was 
established as part of the White House Information Infrastructure 
Task Force by the President is what we're about here today.  The 
Task Force is chaired by Secretary of Commerce Ronald Brown and 
has been created to articulate and implement President Clinton's 
vision for the National Information Infrastructure.  The Task 
Force is working with the private sector, public interest groups, 
Congress, and State and local governments to develop 
comprehensive telecommunications and information policies and 
programs to meet our country's needs.  

     The preliminary draft of the report of our Working Group on 
Intellectual Property Rights -- we often call it the Green Paper 
because it has a green cover is right here and I know it's been 
available and probably most of you here have read it -- is really 
the first cut at the examination and analysis of the intellectual 
property implications of the emerging National Information 
Infrastructure.  While it addresses each of the major areas of 
intellectual property law, it focuses on copyright law and the 
application of copyright law for the effectiveness of the 
National Information Infrastructure.  

     Our Working Group has issued a preliminary draft, this 
preliminary draft, to solicit public comment.  These public 
hearings are a major part of that solicitation.  Following the 
hearings we will analyze all the comments that we've received, 
oral and written, so that we can take proper account of them in 
preparing the final report, which we hope will be produced early 
next year.  

     The NII has the potential to make information and 
entertainment resources available quickly and economically 
anywhere in our country in the blink of an eye.  Hundreds of 
channels of television programming, thousands of musical 
recordings and millions of magazines and books can be made 
available to homes and businesses across the United States, and 
eventually the world.  It can improve the nation's education and 
health care systems.  It can enhance the availability of U.S. 
firms to compete and succeed in the global economy generating 
more jobs for Americans.  New job opportunities can also be 
created in the processing, organizing, packaging and 
dissemination of the information and entertainment products that 
flow through the NII.  Our job is to ensure that all of those 
potentialities are fully realized. 

     The National Information Infrastructure is not just 
hardware; computers, telephones, fax machines, scanners, 
keyboards, etc.  The real significance of the National 
Information Infrastructure lies in the content that will move 
through it.  But its potential will not be realized if content is 
not protected effectively, if in fact that content gets hijacked 
on the entrance ramp to the information highway.  Owners of 
intellectual property rights will not be willing to make their 
intellectual property available through the NII unless 
appropriate systems, here in this country and in other countries, 
are in place to permit them to set and enforce the terms and 
conditions under which their works are made available, just as 
they are now in the print world.  Likewise, the public will not 
use the NII and generate the market necessary for its success 
unless a wide variety of works are available under equitable and 
reasonable terms and conditions and the integrity of those works 
is assured. 

     The principal recommendations of our preliminary report 
we've issued fall into three areas -- law technology and 
education. In the area of law our principal early conclusion is 
that the current copyright law is generally in good shape to deal 
with the many issues that are likely to arise under the NII and 
we have described in great detail in the report a blueprint of 
how we think that is going to take place.  However, the report 
recommends a few important clarifications and modifications in 
the current copyright law.  Among those recommendations are --

     First, to ensure that the delivery of copies of works or 
phonorecords via electronic transmission is an act of 
distribution.  

     Secondly, to prohibit devices or services that can defeat, 
without the authorization of the copyright owner or the law, 
security measures intended to protect works or phonorecords in 
the NII.  

     Third, to prohibit introduction of fraudulent copyright 
management information or the fraudulent removal or modification 
of such management information.  

     Fourth, to provide a limited performance right for sound 
recordings. 

     In addition, fifth, we have acknowledged that fair use and 
related rights under sections 107 and 108 of the copyright law 
are very important to educators, librarians with respect to 
public access to works.  Therefore, the Working Group has 
recommended that a conference on fair use be convened to develop 
fair use guidelines and that will be held later this month, the 
first session, in Washington. 

     Sixth, we do not believe that any further compulsory 
licenses are necessary or desirable in the copyright law in the 
context of the NII. 

     Finally, we recognize the essential need to work on an 
international level to ensure that levels of protection are 
harmonized among all the countries of the globe to ensure that 
the emerging Global Information Infrastructure will succeed. 

     Now, with respect to technology, the Working Group has 
recommended that where standards are needed there should be no 
diminution of intellectual property protection in the standard 
setting process. 

     With regard to education, we're going to sponsor a second 
conference on intellectual property education, after the fair use 
conference.  The purpose of that conference will be to develop 
curricula that may be used in schools and libraries so that 
students will know the rules of the road of the NII.  Additional 
means of education, particularly those that use the NII itself, 
will also be explored and developed.  Participation in this 
conference will be by invitation but all proceedings -- including 
the fair use conference, including this one, everything we're 
doing -- are open to the public. 

     Today's hearing is not by invitation only.  Anyone who 
wished to, was permitted to testify.  The hearing will focus on 
these issues that I just described and will give everybody here 
who wishes to, an opportunity to air their views on the 
preliminary report and its recommendations.  Because of the 
number of the participants, many of whom aren't here, and we've 
organized this well enough to give people time slots, so if they 
don't wish to hear what everybody has to say here today, they 
don't have to.  We have tried to limit -- we have limited 
everybody's time to a maximum of 12 minutes.  This is, of course, 
necessary to make sure that everybody can have an opportunity to 
get their two cents in.  A list of the witnesses was available 
out front, at the door, and the schedule gives the approximate 
times, but it's been our experience in these hearings that 
usually we end up pretty much in schedule, but sometimes the 
normal thing, it's been my experience, that we'll actually gain 
on time because some witnesses who were supposed to be here won't 
show up.  So those are approximate times and people should be 
prepared to speak either a half hour earlier or later than the 
time on the schedule.  In order to facilitate the timely 
proceeding of the hearing we request that all the witnesses -- 
I'm not sure this is necessary because we don't have so many 
people here.  Normally we request that people sit in the front 
row so that they can come right up to the podium.  This is a 
small room and a small group of people so that probably won't be 
necessary.  But hopefully you'll make it up to the podium quickly 
when you're called and we'd appreciate it if each participant 
would begin their testimony by identifying themselves and the 
organization, if any, that they're representing.  

     If time allows, the panel may wish to ask questions and of 
course, we may want to submit written questions later on.  Now, 
everybody has 12 minutes.  I'd just say, out of fairness to the 
other witnesses, we can't really go with an individual witness 
beyond those 12 minutes.  So if you'd like to offer us the 
opportunity to have a dialogue with you, which might be helpful,. 
it would be nice if you could kind of give yourself a few minutes 
leeway in that 12 minute segment.  Now, a computer screen, which 
you see right here, that you'll be able to see from the podium, 
will serve as a traffic light.  When the green light is lit, when 
the screen is green you should start presenting your remarks and 
that green screen will be on for approximately ten minutes.  Not 
approximately, it will be on for ten minutes.  Then it will turn 
to yellow or amber at the end of ten minutes.  That lets you know 
that you have two more minutes, and it will stay amber for two 
minutes.  And then when the red light is on, I would really 
appreciate it if people would really stop speaking.  It's been 
our experience in these hearings that people have been really 
good about it.  It enables it to be very organized and it's fair 
to everybody -- they're given the same amount of time.  So when 
the red light is on, you conclude and leave the podium. If you 
have any questions about this hearing or wish to submit any 
written statement, you can contact Michael O'Neil who is sitting 
right here and is manning the machine and is the person that is 
responsible, along with the University of Chicago, for all of the 
logistics of this enterprise, and he'll be available during the 
breaks and so on to talk to you. 

     I should add that I'd like to introduce the other people who 
are here.  The person to my left is Terri Southwick who is an 
attorney in my office and more than any other human being is 
responsible for the physical drafting of this very fine 
preliminary report that you've seen, and she'll be paying close 
attention to what everyone has to say.  Now, also in the front of 
the room as you came in, sitting there right now, this is Ruth 
Ford who is our director of media affairs.  So if we have any 
press interest or follow up in this activity, Ruth is the person 
to contact.  

     Now, there are just four of us here today from the Commerce 
Department.  I think it's important to note that the Working 
Group consisted of representatives of over 20 federal agencies 
and they were invited, all of them, to come and participate in 
these hearings.  But given the fact that we're very much trying 
to reduce the federal budget deficit and also lower the number of 
employees in federal service, in fact, it was reported yesterday 
that President Clinton has already decreased the federal work 
force by 74,000 people.  That's the first time I think that's 
happened in modern times, in addition to decreasing the federal 
budget deficit by $250 million already in his first two years in 
office.  Because of that, we're very sensitive about not having 
overkill here and so I think most of those people opted to read 
the transcript which we will prepare for them and work that way. 

     Now, that transcript will also be available to all of you or 
anyone else who wishes to read it and it will be available in 
approximately two weeks time and if you wish to get a copy of it, 
you can either call our office which is 703-305-9300 or you can 
write a letter or send a fax message to us, to the attention of 
Terri Southwick and the fax number is 703-305-8885.  Copies of 
the transcript and any written comments that are submitted will 
also be available for public inspection in the Scientific and 
Technical Information Center of the Patent and Trademark office 
which is 2C01 Crystal Plaza, 21 Jefferson Davis Highway in 
Arlington, Virginia.  We also, I believe, are preparing and 
already have pretty much in the works, because it's hard for 
people to sit there and photocopy things in the technical 
library, copies just at the cost of printing, all of the comments 
also if people want to receive them.  

     So with that, I would like again to especially thank the 
University of Chicago.  It's a great pleasure for me to be here, 
back in the Midwest which is where I grew up, not very far north 
of here, in Wisconsin, right on the Illinois/Wisconsin border.  
It's a pleasure to be in this wonderful City of Chicago.  I'd 
like to ask if our first witness, Mr. Jager, is -- Mr. Jager is 
not testifying today.  He was on our witness list.  So instead 
we're going to start with Mr. Edward Valauskas who is Chair of 
the Ad Hoc Committee on Copyright of the American Library 
Association.  It will be very appropriate since libraries are 
probably the biggest users there are of copyrighted works and 
will be very much impacted by the NII.  So welcome, Mr. 
Valauskas, to this hearing and you can proceed.

MR. VALAUSKAS:  Thank you.  Good morning, Commissioner Lehman and 
other members of the Commerce Department.  I am Edward J. 
Valauskas and I represent the American Library Association or ALA 
and serve as Chair of the Committee on Legislation's Ad Hoc 
Committee on Copyright.  ALA is a non-profit educational 
organization of 57,000 librarians, library educators, library 
trustees and others from public, school, academic, research, 
state and specialized libraries and schools of library and 
information science.  My testimony is endorsed by several other 
organizations, library and scholarly organizations and they 
include the American Association of Law Libraries, the 
Association of Academic Health Science Library Directors, the 
Association of Research Libraries, the Medical Library 
Association, the National Humanities Alliance and the Special 
Libraries Association. 

     All of these organizations are agreed on the following three 
recommendations.  One, a balance policy frame work is essential 
for the NII.  This policy frame work must balance protection of 
the interests of intellectual property rights holders with the 
presumption in favor of free dissemination of ideas embedded in 
the First Amendment and the intellectual property clause of the 
Constitution.  Two, expanded limitations must accompany expanded 
rights.  No expansion of copyright holders' rights to include 
electronic transmission should be enacted without adoption of 
corresponding limitations on these rights in areas such as fair 
use, classroom use and library use.  Marginalizing these 
interests, now protected in the Constitution and the Copyright 
Act, to a conference for the development of nonstatutory 
guidelines will certainly not maintain balance.  Further, the 
library provisions of the copyright law should be strengthened to 
allow preservation activities that use electronic or other 
appropriate technologies as they emerge.  Three, a new CONTU is 
needed.  ALA and the other organizations endorsing this testimony 
urge the Working Group to recommend enactment of a new National 
Commission on New Technological Uses of copyrighted works or 
CONTU.  The complexity of the copyright problems raised by the 
NII technology surpasses those of photocopying and early computer 
technologies that led to the creation of CONTU by Congress in 
1974.  A new CONTU is needed to conduct studies, compile data and 
better justify needed changes in copyright law both to assure 
public access to material disseminated via the NII and to respect 
the rights of the owners of copyrighted works. 

     ALA and the other organizations strongly advise the Working 
Group to reconsider many of its recommendations in the draft 
report for changes to copyright law.  Let me summarize our 
concerns with the draft report.  The report, in our view, calls 
for a significant shift in copyright law to protect the interests 
of the owners of intellectual property.  For two centuries, 
copyright has provided a limited degree of protection to 
copyright owners for a specific period of time in order to quote, 
"promote the progress of science and the useful arts" end quote, 
through board public access to and use of copyrighted materials 
for the public's own intellectual health.  The Working Group 
suggests that these roles be reversed.  Copyright owners gain 
unlimited protection to their property in a digital environment 
and the public earns access only at a specific price. Copyright 
should balance the interests of the owners of intellectual 
property with the needs of the public to use information, without 
regard to is form or medium.  Any attempt to expand the rights of 
owners of intellectual property should not dilute the limitations 
of those rights already enjoyed by the public which is fair use, 
classroom use and library use.  The rights of the public are 
guaranteed by the Constitution, centuries of legal decision and 
the Copyright Act.  To throw away these rights because of this 
new medium called the National Information Infrastructure is 
incredibly short-sighted.  The implications are serious for a 
democracy dependent on the free flow of ideas to all of its 
constituents, not just those who can afford it. 

     Experimentation is the best way to prove or disprove the 
effects of this electronic infrastructure on the flow of 
information between the owners of intellectual property and the 
public.  We strongly urge the Working Group to recommend the 
creation of a new National Commission on New Technological Uses 
of copyrighted works or CONTU, to design these sorts of 
experiments.  A new CONTU could conduct studies, compile data and 
with evidence, determine whether changes are needed in copyright 
law. Let me examine in further detail our concerns with the draft 
report.  The Clinton/Gore administration has made it quite clear 
in a number of public statements that the Information 
Infrastructure will be a means of bringing information to the 
people.  The NII will open libraries to children in schools and 
allow them to communicate with their peers as never before.  For 
adults, this infrastructure will provide new ways to further 
their education, to find jobs, to understand their health, and to 
communicate with their elected officials.  This vision of the NII 
fits well within the rights of the public to use intellectual 
property.  Unfortunately, the cumulative effect of the Working 
Group's recommendations would be at odds with the 
administration's own vision. 

     It's fundamentally wrong to assume that in the digital 
environment users' rights disappear, that every use of a 
copyrighted work is criminal.  For the owners of intellectual 
property, it certainly cannot be good business practice to assume 
that every potential customer is a thief.  Yet, that, to us, 
seems to be the underlying premise that seems to stimulate the 
Working Group to consider the doctrines, such as fair use and 
first sale, null and void.  Intellectual property, encrypted and 
locked behind electronic meters is no longer a catalyst for 
creativity.  Instead it is the crown jewel for a society whose 
imagination is starved, available for viewing only with the 
proper economic key.  We are opposed to any reduction in the 
rights of the public to use information because is form and 
format has changed.  Access is defined by intellectual 
parameters, not by economic and technological ones. 

     The Working Group in its report also views every digital 
work as infinitely valuable, eternally enlightening, and 
incredibly desirable.  The mere residence of a copy of a work on 
a server does not mean that its transmission reduces its value to 
its ultimate audience.  In fact, the availability of information 
on line has been shown to increase the marketability of a work.  
The power of a network is its ability to enlighten an audience to 
the availability of information, by pointing to its sheer 
existence.  It can be one of the most important tools in 
marketing information to the public, a catalyst for the sale of, 
say, traditional printed materials.  Let me explain with a 
personal example.  I am a columnist for several magazines on 
computer technology and libraries.  Last year I wrote an article 
for a magazine about an Internet tool called TurboGopher.  the 
article was well received, but nevertheless I was surprised to 
receive an electronic note from a librarian in Hungary about it.  
He was very excited about the article and on his own translated 
it into Hungarian.  He wanted to share the translation with his 
colleagues by putting it on an electronic discussion list in 
Hungary.  He asked me if he could do that.  I told him that I 
didn't own the copyright to the piece but that my publisher did.  
I explained that I would need to talk to him and see what they 
would like to do.  I contacted my editor and she in turn talked 
to the publisher.  Never before had someone asked to republish 
any article from any magazine electronically over the Internet.  
Nor had anyone ever taken the time to translate an article into 
another language, especially Hungarian.  There was no precedent, 
so the publisher decided to use the one standing policy of 
charging $250 to quote, "reprint," unquote, the piece.  I 
forwarded the news to my Hungarian fan.  In Hungary $250 is as 
scarce as $250,000.  There was no way my distant colleague could 
come up with the money.  I decided to further intercede I pleaded 
with my editor and publisher.  Eventually they relented and 
allowed the translated article to appear on a discussion list in 
Hungary.  As a consequence, subscriptions and interest in the 
magazine soared.  The publisher, once convinced that the Internet 
was dangerous, is now constructing his own Internet Gopher server 
for all his publications, where excerpts from magazines and books 
will be available for anyone, along with subscription forms and 
other forms. 

     Certainly there are other examples of publishers who see the 
value in making their property available over the Internet.  From 
the Encyclopedia Britannica and its Britannica Online to Marvel 
Comics and its electronic version of Generation X, smart 
publishers do not see the electronic infrastructure as a threat, 
but as an opportunity.  To set rules that unduly restrict access, 
will restrict not only the rights of the public but also the 
competitive structure of our economy.  Experiments of one sort or 
another are already proving the point every day.  One publisher, 
for example, was experiencing moderate but not wildly 
enthusiastic sales of a book about the Internet.  Its author 
suggested putting a few chapters on the Internet to stimulate 
interest in it.  The publisher was way of this approach but 
relented.  The public found the chapters, loved them, and orders 
flowed in.  The first edition of the book sold 250,000 copies in 
18 months because first of all it was a quality product.  Access 
to it on the Internet merely stimulated sales beyond everyone's 
expectations. 

     The National Information Infrastructure will work as a 
catalyst for the owners of intellectual property only if the 
rights of the public to information are never compromised.  the 
principles of fair use and first sale have real importance in 
this digital environment.  Fair use is the intellectual catalyst 
for all citizens.  a conference, as suggested by the Working 
Group, to reduce the fair use doctrine into a series of do's and 
don'ts is not sufficient to balance the major statutory expansion 
of exclusive rights recommended in the draft report.  The first 
sale doctrine sets a well defined boundary on the rights of 
copyright holders, a grant of limited monopoly.  Elimination of 
this doctrine would effectively give copyright owners control of 
the secondary market, and thus empower them with far too great of 
a monopoly.  The effect would be to reduce competition and 
advance inequities in access, with results opposite to the intent 
of copyright and the Working Group's own stated intentions. 

     We recognize that the task facing the Working Group is a 
formidable one.  The National Information Infrastructure is in 
its infancy, the evolving technological changes are revolutionary 
and unpredictable.  Policies must be created with care.  We 
strongly urge that the Working Group seek broader public input by 
recommending to Congress the creation of a second National 
Commission on New Technological Uses of copyrighted works.  A 
high level commission with representatives of copyright owners, 
users including libraries and public representatives could, with 
a modest budget, devise experiments and commission studies to 
undergird its recommendations.  The library community would 
support, participate actively, and work cooperatively with a new 
CONTU effort.  Thank you for this opportunity to comment on the 
draft report. 

MR. LEHMAN:  I would like to ask you a question.  You made it 
pretty clear that your view is the guidelines won't do the trick, 
that we really need a new statutory provision on fair use.  Is 
that only because of the proposed changes in the first sale 
doctrine?  In other words, if there were no changes in the first 
sale doctrine, would you then think that existing Section 107 of 
the copyright law would be adequate?

MR. VALAUSKAS:  It perhaps would be.

MR. LEHMAN:  So your view basically on the need for statutory 
fair use provision is really, it really stems from what you 
perceive to be an expansion here, primarily because of the change 
in the first sale doctrine of owners' rights? 

MR. VALAUSKAS:  Right.  The tone that we saw in the report was 
one in which it emphasized control of this property in this new 
medium.  The evidence that we see, from our own experiences in 
using the Internet, we don't see that as a problem.  In part 
there is interesting work that's been done with the way that 
people have used material electronically and how they use the 
material electronically versus how they use that same information 
on paper.  Basically those studies indicate that no one likes to 
read anything of any great length electronically because of the 
way computer screens work it's very irritating.  No one will want 
to read all of Moby Dick from a computer screen.

MR. LEHMAN:  But what about the situation where, we're not 
talking necessarily here about printed works but about the 
downloading of a sound recording, just simply through the 
Internet.  Or we have fabulous printing technology that's coming 
along, laser jet printer technology.  Already some newsletters 
and other periodical type formats are being distributed that way.  
We're probably a long way from having 1,000 page novels read that 
way but ten page newsletters are another matter.  Then they can 
be printed out on a laser jet printer.

MR. VALAUSKAS:  The example I provided about this publisher with 
their journals and seeing the access to material from their 
journal actually producing a stimulus of the print sales, I think 
indicates that I don't see how there can be a  correlation, this 
worry about making the information  available electronically 
actually hurting an operation, a publisher's operation. 

MR. LEHMAN:  But one could argue that that was a very good 
example of the marketplace functioning because the publisher, 
obviously to the extent that one does not make their work 
available at a reasonable price, then you would suffer the 
consequences.  But I'd love to continue this dialogue because 
your organization is a very, very important one and we will 
continue to do that.  We appreciate your coming and unfortunately 
I think we have to get on with the other people.  But really, 
thank you very much, Mr. Valauskas, for coming here. 

MR. VALAUSKAS:  Thank you.  

MR. LEHMAN:  Next, I'd like to call John F. Dill, Chairman and 
CEO and President of Mosby Year Book Incorporated from St. Louis. 

MR. DILL:  I speak to you somewhat from a unique position.  I am 
the Chairman, CEO and President of Mosby, a subsidiary of the 
Times Mirror Corporation of Los Angeles.  Mosby is a recognized 
world leader in the publishing in the health science information.  
With 23 locations throughout the world, we publish 5,000 
references and texts, 70 journals and 45 different year books in 
almost every specialty and sub-specialty of health science.  But 
I also speak to you as the incoming Chairman of the International 
Group of Scientific, Technical and Medical Publishers which was 
founded in 1969 and represents nearly 300 individual publishing 
houses in 27 countries. 

     Professional publishing is, and always has been, a global 
business.  Consequently we think, not only in national terms, but 
internationally as well.  Recently I was commissioned by the 
International Publishers' Association to write a paper on the 
creative role of the professional or STM publisher.  It is my 
pleasure to provide the copies of that now to the committee in 
the hope that it will help to clearly define the contribution 
made by professional publishing.  I should clarify that while the 
words are mine, the work has been vetted by a substantial number 
of professional publishers from professional publisher 
associations around the world.  So I say with some confidence 
that the brochure speaks for the global professional publishing 
community. 

     I bring this to your attention because I wish to emphasize 
that while we work on copyright protections for our own National 
Information Infrastructure, it is vitally important that we make 
sure that our connections to global information infrastructure 
assure no less.  In that regard, I think it is critical that we 
continue to work with the global associations that are focused on 
achieving those worthwhile objectives.  In the end, as the Green 
Paper has made clear, copyright protection will help insure the 
success of the NII and the GII and will surely increase the free 
flow of information around the globe. 

     The dissemination of knowledge is the essence of publishing.  
There is no other reason to publish or to make public an author's 
work than to accumulate and refine the world's knowledge base.  
No publisher wants to restrict that flow of information.  We have 
a responsibility, however, to our authors to insure that the 
fruits of their labor are protected.  The NII represents a 
breathtaking advance in dissemination of knowledge.  Equally 
impressive is the potential to erode or even destroy the 
incentives and protections of current copyright law.  I am very 
pleased that the Green Paper underscores the importance of those 
protections.  One of the cornerstones of intellectual property 
rights is that of the copyright owner to hold sole authority to 
reproduce a work unless allowed by fair use or other exemption.  
As agents for our authors, professional publishers have 
historically been in the forefront of taking action against 
copyright infringement.  Working with reproduction rights 
organizations around the world, we have established systems to 
provide efficient and equitable compensation for authorized use 
of materials.  Our own RRO in the United States, the Copyright 
Clearance Center has struggled for years to insure legitimate use 
of intellectual property with fair compensation to publishers and 
authors.  The battle has been long and costly, however and is not 
yet won.  For that reason, we strongly support the 
recommendations of the Working Group for a campaign to educate 
the public concerning copyright protection and its implications.

      Fair use is a recognized and respected tenet of the 
publishers' scholarship scholar relationship.  As publishers, we 
recognize the right of others to make fair use as that is 
currently defined of our copyrighted materials.  The concept of 
fair use, while complex and admittedly difficult to enforce, must 
be an integral part of the NII.  However, we urge careful review 
of lessons learned from experience since the concept was crafted 
after 1976, and I applaud the hearings that will be forthcoming 
on that.  Without a well crafted doctrine of fair use everyone 
suffers; publishers, authors, librarians, scholars.  

     As I have mentioned professional publishing has always 
concerned itself with the global market.  That concern has 
fostered a deep understanding of and respect for the intricacy of 
disseminating information outside the country of origin.  We 
believe that the transmission of copyrighted works via 
international communication links does indeed constitute 
importation as defined by Section 602 of the Copyright Act.  Such 
transmission would result in a copy of the copyrighted work 
existing at the end of the transmission while the original work 
remained in existence at the point of origin.  This is a danger 
in our view that needs to be addressed judiciously.  It has been 
our experience that seemingly small exceptions sometimes turn 
into rending tears in the fabric by many who exploit them.  The 
very technology that has brought us such vital advantages as 
photocopy machines, facsimile machines, interactive media and 
virtual reality has also created the means with which to 
circumvent protection of intellectual property.  Although the 
Green Paper does not deal specifically with the issue of 
photocopying, it does touch on the subject on page seven, where 
it is stated it was and still is more efficient and cheaper to 
buy an extra copy of most books than to photocopy them.  And the 
quality of the book from the original publisher is typically  
higher than that of a photocopy.  Well, this may have been true 
at one time.  Current technology as such, high quality copies of 
complete books, journals and other materials are now readily 
available at minimal cost.  Photocopying technology has come a 
long way in the last decade and must be considered in light of 
current possibilities.  For that reason, we believe that the 
statement referenced above from page seven of the Green Paper is 
inaccurate and does not adequately reflect the potential impact 
of this technology.

      As libraries have faced declining budgets over time, they 
have searched for ways to provide their patrons with an ever 
increasing amount of information on a decreasing budget.  That 
need encouraged the use of inter-library loans, a laudable and 
sincere effort by libraries to better serve their patrons.  
Recent years however, have seen an increasing number of document 
delivery services improperly labeled inter- library loans.  The 
unauthorized transmittal of copyright materials between libraries 
threatens the very foundation of journal publishing in 
particular.  The NII will provide a convenient relatively 
inexpensive means for libraries to continue and even expand this 
practice.  We believe that the final report must address this 
issue and provide appropriate protection for the publishing 
community and the authors it serves.  

     The importance of the global information infrastructure 
cannot be overstated.  We can no longer look within our own 
borders for the sum of human knowledge, and indeed we never 
could.  Civilization has always drawn upon the best and brightest 
minds throughout the known world for knowledge, ideals and 
beliefs upon which it is founded.  The world today is a very 
complex place, however, and the information that will flow along 
the NII and GII will be vast, wide and deep.  Adequate and 
effective copyright protection will be imperative if this great 
endeavor is to succeed.  While that protection must recognize and 
provide for the needs of all nations, we must not allow the 
pressure for standardization compromise the level of protection 
afforded.  We must hold all nations, as well as ourselves, to the 
very highest standards as we craft the laws governing the 
international protection of intellectual property.  To that end, 
we must work closely with our international colleagues.  By 
working together with the professional associations that 
represent publishers, authors and consumers throughout the world, 
I am confident that we can and will create a frame work of laws 
and regulations that will serve everyone throughout the turbulent 
years head. 

     This is an exciting time for professional publishing because 
the promise of the electronic age is that the transfer of 
knowledge will be accomplished more quickly and efficiently than 
is possible using the printed word and illustration.  
Professional publishers worldwide are even now digitizing text 
and illustration for the creation of data bases that will be 
published on world electronic networks such as NII and GII.  As 
you know and understand, digitizing allows the publisher to 
quickly repurpose works into formats that individual customers 
require according to their needs.  Much of what professional 
publishers do is transparent to the end user, who often takes for 
granted the quality, accuracy, packaging and availability of the 
information that they are using.  Therefore, there are those who 
assume that the marvels of the electronic age will minimize or 
eliminate the need for professional publishers.  If one considers 
that more than 80 percent of our technological inventions have 
occurred since 1900, and that computers are indeed making it 
easier to create more and fast communications, it is not also 
conceivable, that this tidal wave of information needs to be 
selected, sorted, assessed, evaluated, checked, packaged, 
promoted and protected in the same way as the printed word?  Is 
it not also true that authors themselves will require these 
services as never before?  

     The professional publishing community has endured and taken 
pride in their profession throughout the ages.  We have taken 
that pride from our skill in communicating the genius of our 
authors to those who can use it best.  We must never allow 
technology to get in the way of our maintaining that sacred 
trust.  Rather technology should facilitate the flow of that 
information while never compromising on its protection of 
copyright.  The future of civilization demands no less.  I really 
appreciate the opportunity to be able to express my thoughts.

MR. LEHMAN:  Thank you very much, Mr. Dill.  Ms. Southwick has a 
question. 

MS. SOUTHWICK:  You were talking about that inter-library loan 
can be abused especially in the case of journals and that you 
wanted the report to address this.  Are you suggesting that some 
amendment to those provisions is necessary?

MR. DILL:  Yeah, I think it needs clarification on exactly what 
is considered legitimate inter-library loan and what may not be.  
It is our impression that there is excessive use of that vehicle 
for transmitting information that does not offer the same kinds 
of protections. 

MR. LEHMAN:  Would that be appropriate for the fair use 
discussions?

MR. DILL:  I think it would be.  I really do applaud that you are 
holding such a conference.  It's been a very difficult issue.  My 
personal history goes back to the time around 1976 when that was 
being worked out with the library community and I recall a lot of 
the sensitivities as to how fair use is defined and how it was 
going to develop.  So I realize how difficult it is.  So were the 
Texaco case and many of the other issues that we're struggling to 
find what is the proper use of information.

MR. LEHMAN:  I think we view in many ways the Information 
Infrastructure Task Force as being a new CONTU on a much broader 
scale than in all aspects of the National Information 
Infrastructure.  Do you think we need a special congressionally 
mandated independent commission to look at the issues? 

MR. DILL:  No, I don't think so.  I think I am impressed and the 
associations with which I am associated, including the AAP, are 
impressed with the work that you are doing.  I feel that you're 
on the right track.  

MR. LEHMAN:  Thank you very much.

MR. DILL:  Thank you very much.

MR. LEHMAN:  Next, I'd like to ask Charlotte Gibberman, counsel 
to the Tribune Company, right here in Chicago, to step up please.

MS. GIBBERMAN:  Good morning.  As you stated, I'm Charlotte 
Gibberman, counsel for the Tribune Company.  The Tribune Company 
is one of the nation's leading information and entertainment 
companies.  Tribune publishes six daily newspapers, owns and 
operates eight television and six radio stations and two on-line 
information sources, including Chicago On- Line and Destination 
Florida.  Tribune publishes books and information in print and in 
multimedia format and produces and syndicates a variety of 
television and radio programming.  Strong copyright protection is 
important to the growth and success of Tribune Company.  
Copyright protection enhances and stimulates the creation of new 
information and entertainment sources and therefore, contributes 
to the national economic growth.  Accordingly the Tribune Company 
supports the general approach of the Working Group with only a 
few exceptions. 

     The National Information Infrastructure has already 
dramatically eased access to and delivery of information on a 
national and international level.  At the same time it has also 
made it faster and easier to infringe copyright works and to 
compromise the integrity of those same works.  As an example, our 
newspapers have encountered serious problems with what has been 
dubbed republication or repackaging.  This is where articles and 
news pieces on a particular issue or topic have been taken off 
various on-line services, rearranged into a newsletter and 
resold.  Not only is the information generally taken out of 
context but it appears almost universally without copyright 
notice.  Rather than increasing our sales as some speakers have 
said, we found it has hurt sales because the people accessing the 
information don't even have an idea where the actual source is of 
that information.  In addition we are concerned that the original 
story or article may have passed several levels of scrutiny to 
insure that the piece meets not only our company's high standards 
of journalistic accuracy and ethics but also certain legal 
things.  We're obviously concerned with defamation, etc..  Our 
articles pass these tests.  When these articles are reprinted we 
have no such assurances.  These articles can be the information, 
these facts in them, all of them, can be altered and this is of 
great concern to us. 

     We believe that the Copyright Act provides adequate 
foundation for protecting works; however, refinements to current 
law are necessary to insure that legal protections for 
copyrighted works keep pace with the advancing technology.  We 
agree with the report's conclusion that electronic transmission 
and copies of works should be treated as distributions rather 
than reproductions.  However, we are concerned that the primary 
purpose or effect, as suggested by the report, to define the 
transmission of a reproduction may be too subjective and perhaps 
unworkable in the long run, and suggest that other tests be 
considered which would not only cover the needs of the 
transmitters but also that of the recipients. We also support 
changes in the law that would exclude works -- 

MR. LEHMAN:  Can you just tell us what those tests might be?

MS. GIBBERMAN:  Oh, darn it.  I was afraid you'd ask that.  I 
think our main concern was that we weren't considering how the 
recipients viewed it at all, and I think it was more that.  So if 
we could add to the test. 

MS. SOUTHWICK:  It was primary purpose or effect, and the effect 
would be what happens with the end user.

MS. GIBBERMAN:  Well, I think the concern is what happens when 
the transmitter and the recipient differ on that.  That's what 
we're concerned about, that there's always room for disagreement 
there. 

     We also support changes in the law that would exclude works 
distributed by electronic transmission from the first sale 
exception to copyright protection, as well as any changes that 
would limit end users from downloading, re-using, changing or 
retransmitting works without the copyright owner's permission.  
We would also like to see laws to prohibit the fraudulent 
alteration of copyright notices, digitally linked with 
copyrighted work and laws to prohibit the tampering of -- excuse 
me -- prohibit tampering with electronic information.  This is 
particularly of concern to us as a news source. 

     We would like to see the prohibition of the importation of 
copyrighted works by electronic transmission without 
authorization and to insure that these laws are enforced 
effectively, it is essential that the copyright owners be given 
legal remedies to assert against those who would fraudulently 
alter the copyrighted materials and the copyright notices, as 
well as legal remedies against those that act with malicious 
mischief or reckless disregard to its copyrighted materials.  Our 
concern is the hacker, the weekend user that may not rise to the 
level of fraud but certainly interferes with our work, and we 
would like to also see some sort of law, some sort of remedy that 
we can use against those people. 

     While changes in the law are important, statutory 
prohibitions are not always enough to discourage certain 
behavior.  Therefore, we also feel it is important to encourage 
the private sector to develop encryption or security devices 
which would help prevent misuse of copyrights and to prohibit 
devices that would allow end users to defeat encryption or 
security technologies.  And probably where we're going to 
disagree with most everyone else here, is that as a radio 
broadcaster we are unalterably opposed to any changes in the 
copyright law that would create a public performance right in 
sound recordings when they are broadcast by a radio station.  And 
we support those comments that were submitted by the National 
Association of Broadcasters regarding this area. 

     As far as fair use and licensing, we believe that there's a 
need to insure that end users will have access to the copyrighted 
materials for purposes of criticism, comments, news reporting, 
teaching, scholarship or research.  We certainly want our news 
gatherers to have the ability to access information from as many 
sources as possible.  At the same time, we don't want the ease of 
electronic copying to allow for use beyond that of the 
traditional fair use notion and agree with many that further 
study will be needed.  The changes in the market have already 
resulted in the creation of a variety of licensing arrangements.  
Advances in technology will continue to allow private parties to 
reach voluntary licensing agreements that will insure widespread 
availability of copyrighted products.  

     To that end we would like to see some protections for 
electronic licenses, those that appear at the beginning of an 
on-line service where the end user is required to agree that they 
will not misuse the information, will not redistribute it and so 
on.  There hasn't been much case law on this to this point and 
we'd like to see something inserted that would uphold the 
validity of these licenses. And while we can point to many 
examples of successful voluntary collective licensing and 
compulsory or statutory licensing in the broadcast and music 
industry, we are a bit concerned about them in regards to the 
publishing industry.  Specifically our concern would be that, for 
example, if there was a collective licensing for a company.  A 
company bought a license to take the Chicago Tribune Newspaper or 
a journal, that same company who might normally buy 20 or 25 
copies a day will now only buy one or will not buy that but will 
simply pay the simple royalty.  So while we will receive money 
from the royalties, we feel that we will definitely lose sales of 
our copies.  So that is of concern.  So we will hope, as you 
continue with the revisions of this draft or the proposed 
legislation, continues to be sensitive to the needs of the 
American newspaper and broadcast entities.  Thank you.

MR. LEHMAN:  Thank you very much.  Next, I'd like to ask John 
Berry, Director of Advancement and Special Programs at the 
University Library of the University of Illinois at Chicago, to 
step forward.

MR. BERRY:  Thank you very much.  Good morning.  The University 
Library at UIC, and I'll refer to the University of Illinois at 
Chicago as UIC a few times, is a member of the Association of 
Research Libraries or ARL, a non-profit membership organization 
consisting of 119 of the largest research libraries in North 
America.  The following statement is based really on a May 1994 
statement of intellectual property principles that was adopted by 
the ARL membership at its 124th meeting in Austin, Texas.  For 
each of the past three years, the University Library, the 
Academic Computer Center, the Office of University Counsel and 
the Intellectual Property Office at our university at UIC has 
hosted an annual copyright symposium directed at the university 
community and librarians and university legal counsel staff from 
across the greater Chicago area based on our belief that 
intellectual property rights are fundamental to the academic 
research community and to the free and orderly flow of scholarly 
communication.

      The real genius of the United States copyright law, we 
feel, is that it balances the intellectual property rights of 
authors, publishers and copyright owners with society's need for 
the free exchange of ideas.  Taken together, fair use and other 
public rights to utilize copyrighted works, as established in the 
Copyright Act of 1976, constitute indispensable legal doctrines 
for promoting the dissemination of knowledge, while ensuring 
authors, publishers and copyright owners protection of their 
creative works and economic investments.  The preservation and 
continuation of these balanced rights in an electronic 
environment are essential to the free flow of information and to 
the development of an information infrastructure that serves the 
public good and the public interest. 

     Although the emerging information infrastructure is raising 
awareness of technological changes that pose new challenges to 
copyright systems, the potential impact of technology was, I 
think, anticipated by the passage of the Copyright Act of 1976.  
Congress expressly intended that the revised copyright law would 
apply to all types of media..  With few exceptions, the 
protections and provisions of the copyright statute are as 
relevant and applicable to an electronic environment as they are 
to a print and broadcast environment. 

     What are some of the major issues?  Well, fair use for 
libraries and other relevant educational organizations must be 
preserved so that copyright ownership does not become an absolute 
monopoly over the distribution of and access to copyrighted 
information.  We applaud the Working Group's support of the 
notion of fair use.  The loss of these provisions in our view, in 
the emerging information infrastructure, would greatly harm 
scholarship, teaching and the responsible operation of a free and 
democratic society. Secondly, in the age of information, a 
diminished scope of public rights could lead to an increasingly 
polarized society of information haves and have nots. In this 
environment, the information resources that are available only to 
those who could pay, we feel, is not appropriate.  The public 
information systems that libraries have carefully developed over 
the past century could be replaced by commercial information 
vendors alone. By continuing fair use, the library and other 
relevant educational organizations covered by the Copyright Act 
of 1976 applied in an electronic environment offer the prospects, 
in fact, of better library services, better teaching and better 
research without impairing the market for copyrighted materials. 

     The research library community believes that the development 
of an information infrastructure does not require a major 
revision of the copyright law at this time.  In general, the 
stakeholders affected by intellectual property law continue to be 
well served by the existing copyright statute.  Just as intended, 
the law's flexibility with regard to dissemination media fosters 
change and experimentation in educational and research 
communication.  However, some specific legislative changes may be 
needed to ensure that libraries are able to utilize the latest 
technology to provide continued and effective access to 
information and to preserve knowledge.  It is here that 
modifications to the CONTU guidelines, referred to in earlier 
testimony, are relevant. 

     The Association of Research Libraries has affirmed the 
following intellectual property principles as they apply to 
librarians, teachers, researchers and other information mediators 
and consumers.  As a large land grant institution, we at the 
University of Illinois joint our national leaders in the 
determination to develop a policy framework for the emerging 
information infrastructure that strengthens the constitutional 
purpose of copyright law to advance science and the useful arts. 

     Very briefly, these statements of principle include 
copyright exists for the public good.  Fair use and other public 
right to utilize copyrighted works, specifically and 
intentionally included in the 1976 revision of the law, provide 
the essential balance between the rights of authors, publishers 
and copyright owners and society's interest in the free exchange 
of ideas. 

     The second principle, fair use and other relevant provisions 
are the essential means by which teachers teach, students learn 
and researchers advance knowledge.  The copyright law of 1976 
defines intellectual property principles in a way that is 
independent of the form of publication or distribution.  These 
provisions apply to all formats and are essential to current and 
emerging library and information services.

      The third principle, that as trustees of the rapidly 
growing record of human knowledge, libraries and archives must 
have full use of the technology in order to preserve our heritage 
of scholarship and research. 

      The fourth principle, licensing agreements should not be 
allowed to abrogate the fair use and library provisions 
authorized in the copyright statute.  Licenses may define the 
rights and privileges of the contracting parties differently than 
those defined by the Copyright Act of 1976.  But licenses and 
contracts should not negate fair use and the public right to 
utilize copyrighted works.  The research library community 
recognizes that there will be a variety of payment methods for 
the purchase of copyrighted materials in electronic formats, just 
as there are differing contractual agreements for acquiring 
printed information.  We further our commitment with working with 
our publisher colleagues and database producers to develop model 
agreements that deploy licenses that do not limit fair use or 
other copyright provisions.

      The fifth principle, librarians and educators have an 
obligation to educate information users about their rights and 
responsibilities under intellectual property law.  We feel very 
strongly that we have a responsibility to do this.  In many of 
our courses that we're teaching on Internet access, we stress 
very strongly that our students and our faculty be very aware of 
the ownership rights of material that they're looking at.  
Institutions of learning must continue to employ the policies and 
procedures that encourage copyright compliance.  You recall that 
the Copyright Act of 1976 required the posting of copyright 
notices on photocopy equipment and this practice should be 
updated to other technologies which allow the duplication of 
copyrighted works. 

     The sixth principle, copyright should not be applied to U.S. 
government information.  the Copyright Act of 1976 prohibits 
copyright of U.S. government works.  And only under selected 
circumstances has Congress granted limited exceptions to this 
policy.  The Copyright Act of 1976 is one of the several laws 
that support a fundamental principle of democratic government 
that the open exchange of public information is essential to the 
functioning of a free and open society.  

     And the seventh and last principle, the information 
infrastructure must permit authors to be compensated for the 
success of their creative works and copyright owners must have an 
opportunity for a fair return on their investment.  There's every 
reason to believe that the increasing demand for and use of 
copyrighted works fostered by the new information technologies 
will result in an equivalent or even greater compensation for 
authors, publishers and copyright owners.  The information 
infrastructure however, must be based on an underlying ethos of 
abundance rather than scarcity. With such an approach, authors, 
copyright owners and publishers will have a full range of new 
opportunities in an electronic information environment and 
libraries will be able to perform their roles as partners in 
promoting science and the useful arts. 

     And I conclude by quoting Supreme Court Justice Sandra Day 
O'Connor.  "The primary objective of copyright is not to reward 
the labor of authors but to promote the progress of science and 
the useful arts.  To this end, copyright assures authors the 
right to their original expression, but encourages others to 
build freely upon the ideas and information conveyed by a work.  
This result is neither unfair nor unfortunate.  It is the means 
by which copyright advances the progress of science and art."  
Thank you very much. 

MR. LEHMAN:  Thank you very much, Mr. Berry.  Are there 
circumstances under which you think that -- you talked about the 
right of the author or publisher to receive compensation.  Do you 
think that copyright includes the right literally to withhold use 
of a work in certain circumstances?

MR. BERRY:  Well, I think I would have to say that access is the 
key issue here.  No, I think not.  I think that the fundamental 
principle is assess to information -- not to withhold, but to 
share.

MR. LEHMAN:  Thank you very much. 

MR. BERRY:  Thank you.

MR. LEHMAN:  I'd like to note that we, or other members of the 
Working Group, who aren't here but will read these comments, may 
want to follow up with questions to witnesses in writing so I 
hope that you'll all be prepared to help us, so that we can have 
an ongoing dialogue on some of these issues to flesh out more of 
what people mean by some of the comments that they've made. This 
brings us to our scheduled break.  So I would like to reconvene 
at ten minutes to 11, with Linda Hopkins. 

(A short recess was taken.)

MR. LEHMAN:  We're pretty much right on time and I'd like to ask 
Linda Hopkins, Chair of the ABA subcommittee for copyright issues 
in the NII from Minnesota to join us.  Is she here?  Apparently 
she is not here.  Like I said, that happens sometimes and then 
that causes us to get ahead of schedule. Is Robert Thompson from 
Vanderbilt University here?  Good.

MR. THOMPSON:  Good morning.  My name is W. Robert Thompson.  I 
am a member of the bar in Colorado and Tennessee, admitted to 
practice and while the agenda, identifying me as Professor of 
ethics at the Owen Graduate School of Business, I wish to 
emphasize this morning that the remarks are entirely my own, with 
the usual disclaimer that they may not necessarily represent the 
views of either the Graduate School or the University. 

     First of all, I want to thank the Chair, Commission Lehman 
and the panel, as well as the staff for providing the opportunity 
to share some thoughts about the development of the so called 
information highway. Some have referred to it as the information 
hypeway, very recently as a matter of fact in the Washington 
Post.  In any event, the observations I would like to share are 
based on more than 40 years experience in the intellectual 
property business and I respectfully request the Chair permit me 
to supplement and expand the record. 

     To begin with I would also like to be clear that in general 
the large number of very thoughtful people who contributed to the 
preliminary report and the Green Paper be commended on their 
diligence in producing the product.  And I say that primarily 
because the testimony already this morning clearly demonstrates 
that it is served to engender a substantial number of questions 
which is a very fine function for a preliminary report. 

     As a matter of style and importance I might suggest, 
however, that the final report place significantly more emphasis 
on the education process than I believe is present in the 
preliminary draft.  The reason I say that is because the word 
information connotes a certain free as air, free as water 
connotation to the average person.  In that regard I might humbly 
suggest that some consideration be given to reformulating this 
process and perhaps even calling the highway the intellectual 
property network or IPNET.  It's odd that that's a large part of 
your electronic address, as a matter of fact.  The reason I say 
that is to educate the general public to the fact that what they 
will be accessing through this technology is in fact property, 
private property in some cases with regard to that which is 
protected by copyright and even those things that are in the 
public domain certainly are still property.

      I make that suggestion because on the cover of the February 
1994 issue of Scientific America is a digitally prepared image 
combining Marilyn Monroe's famous photograph from Some Like It 
Hot with a picture of Abraham Lincoln.  I'm not going to 
speculate on whose reputation is more enhanced by the photograph 
but the article written by a learned professor at Massachusetts 
Institute of Technology makes clear that the digital world's 
dangers are inherent in its ability to falsify the truth.  That 
is the greatest danger of the quantum physics world of digital 
communication.  And I ask that you remember your high school 
days, some of you who may be as old as I, when Aldous Huxley's 
Brave New World was a fantasy trip through the future, when in 
fact almost everything contained in that book is now 
technologically possible.  One quote from the forgery article I 
think is appropriate.  "The information super highway will bring 
us a growing flood of information in digital format but we will 
have to take great care to sift the facts from the fiction and 
the falsehood." 

     In that regard my work, as both a practitioner of law and my 
fundamental belief, is in authors' rights.  I have come down on 
the side of that substantial group of people who believe that 
examining the moral rights of authors in the context of the 
development of this technology may provide, in fact, some of the 
solutions to these otherwise seemingly insurmountable problems.  
I don't think that the concept is incompatible with the 
constitutional mandate.  I find no mention in the constitution of 
publishers, copyright proprietors, technologists, scientists or 
anyone else, only the mention of authors.  So I believe it to be 
a primary starting point.

     The point I'm making about digital forgery and the 
alteration of truth to the extent that history could effectively 
be recreated for future generations,  if, in fact, this method of 
knowledge dissemination is all that some of its proponents 
advertise it to be.  And that was contained in the CONTU report 
in 1979 when discussing the copyrightability of computer 
programs.  That report stated that computers are enormously 
complex and powerful instruments which vastly extend human powers 
to calculate, select, rearrange, display, design and do other 
things involved in the creation of works.  And I add this 
emphasis from the quotation, "However, it is only a human power 
that this technology extends."  And with these thoughts in mind, 
I would argue that the moral right of authors, particularly in 
the context described earlier by the witness for the Tribune 
Company, where you have also issues of plagiarism, defamation and 
certain other interlocking aspects of law having nothing to do 
with copyright, presents some unique and perhaps more wholistic 
problems with the subject under discussion. 

     I am less than convinced --

MR. LEHMAN:  May I ask you a question?

MR. THOMPSON:  Certainly.

MR. LEHMAN:  You may have heard me ask Mr. Berry how far he 
thought the right of the copyright owner and the author extended 
and he really said it was just a right of remuneration.  Do you 
agree with that? 

MR. THOMPSON:  No, I do not agree with that.  I do not agree with 
that.  I don't think there's anything either in our present 
statute, its legislative history or any prior law that gives that 
indication.  I also think that that's inconsistent with the 
constitution provisions providing for the structure of 
intellectual property.  The right to royalties or remuneration 
having to do with the copy, and if I recall the context of your 
question, you asked whether or not an author had the right to 
withhold his works.  Certainly under prior regimes absent 
participation in the federal scheme of things an author always 
had that right and I would suggest to you now that if I decide 
that what I write is going to be in the form of a private letter 
left only to my children, it's copyrighted because its in 
discernible form but that doesn't mean that it has open access to 
the world. 

     That brings us also to the issue of transmission.  I share 
the belief that existing statutory law amply provides for this 
technology.  I would also suggest that digital technology is an 
evolutionary aspect of quantum physics.  It's only about 75 years 
old which makes it neither new nor terribly unique in the sense 
of its dissemination.  I also would say to you, Mr. Commissioner, 
as well as to those members of the Working Group, if the purpose 
of raising the issue of these new definitions with respect only 
to the sound recording industry was to raise the pole around 
which forces would rally, I would commend you because undoubtedly 
you will have succeeded in that task.  I think the definition of 
transmission is sufficient as it presently exists.  The report 
emphasizes the number of times the word distribute is used in the 
context of the law without definition.  If, perhaps, there's some 
area of focus that would solve the problem, I might suggest that 
it would be to consider amending Section 101 only with respect to 
distribution.  I cannot conclude, as the report does, that we may 
be on the future threshold of the only method of distributing 
sound recordings being in a digital transmission format; i.e., 
using the capabilities of the networks involved in the 
information highway.  That would be the same as looking backward 
in time when the motion picture industry was absolutely convinced 
that the days were finished in 1950 when network television 
became a reality.  Quite the contrary, the motion picture 
industry now serves as almost a platform for the use of that 
technology without which both the networks and the cable industry 
would be hard pressed.

      There's another problem that I find with the approach that 
the preliminary report has taken to the sound recording issue.  
That is the creation of an exclusive right for a derivative use 
by stripping a pre-existing right for the underlying work.  That 
to me is historically anomalous, unless I misread the 
suggestions. 

      Once having dealt with those issues, the other thing that I 
hope will come into the final report, and I've heard suggestions 
for convening a new CONTU, I agree with the Chair's comment that 
I think the Working Group is precisely to accomplish the same 
task and I would not like to see either a replication of the hard 
work you've already done or some other fresh start.  I think 
you're well along the way.  However, the final report of CONTU 
was made after significant analysis of economic issues and 
economic impact of fundamental changes.  There's nothing in the 
preliminary report that examines industry contract practices, 
existing expectations and those kinds of matters which would be 
dramatically effected by such a sudden shift into a world of 
uncertainty and with regard to that, since you're in this quantum 
world, I have taken trouble to remember some remarks about it at 
its beginning, when Einstein said, "God does not play dice."  
Neils Bohr, an advocate of the quantum theory, responded by 
saying, "Don't tell God what to do."  I feel minimally like 
Einstein this morning.  I emphasize the minimally and I would not 
be unduly chastised if the Working Group and the Chair were to 
admonish me in the same form as Mr. Bohr did.  In the time 
remaining, if you have any questions, I would be very happy to 
respond.

MR. LEHMAN:  Thank you very much.  I would say that I think I 
assume by stripping out the underlying rights in creating a 
stronger distribution right for sound recordings, you're talking 
about the music rights? 

MR. THOMPSON: Primarily music, yes.

MR. LEHMAN:  I don't think it was certainly the intention to do 
that.  I don't think that's what the suggestion is.  But there is 
an emerging issue of that.  Is a point to point sale of a record 
a public performance or is it a distribution?

MR. THOMPSON:  Well, having worked in that industry for a number 
of years, I might suggest to you that it's going to undoubtedly 
be both.  The concept that a record will be bought or purchased 
without having heard it first, is rather unique otherwise there 
wouldn't be the enormous efforts and amounts of money spent in 
the promotion.

MR. LEHMAN:  But when a person goes into a record store and buys 
a copy of a CD the record store doesn't pay a public performance 
right.  So why is it any different in a digital context?  What 
you're doing is simply delivering an album to somebody who calls 
up or key strokes into a data bank, looks at a list of albums 
that might be available, then types in their Master Charge/Visa 
number and then the album is then downloaded to them for $17.95 
and their Master Card is billed.  Is that a public performance?  
Or is that just the same thing that goes on to the record store 
when you go stand at the cash register and hand over your money 
and get the CD? 

MR. THOMPSON:  Now you're into that area of subjectivity which is 
involved in that intent provision.  As the present system works, 
I dare say you will find few people going into the record store 
to pick up the digital CD in material form who have not been 
exposed orally to the sounds on that CD.

MR. LEHMAN:  We're not talking about changing the broadcast 
performance right.

MR. THOMPSON:  I understand.  But to say that the transmission, 
point to point, through electronic methodology is the exact 
equivalent to the delivery by truck, by truck driver, of a 
manufactured item from a manufacturing plant to a point of 
delivery to the consumer, I think is not quite accurate.

MR. LEHMAN:  You think if it goes through the wire, if it's 
digital, if it goes through electronic impulses at any point, 
then it's just public performance? 

MR. THOMPSON:  No.  I say it could be both and in most 
likelihood, in most circumstances I would say there would be 
both.  Yesterday when Mr. O'Neil faxed to me the information 
about today's meeting, I knew it was coming in because orally I 
heard my modem tell me of the data.  I don't think that's going 
to be any different in the digital world of tomorrow where you 
have two speakers sitting on either side of the computer screen.  
My suggestion to you is that the so called juke box in the sky 
will allow a browse situation, not unlike that which you find now 
for pay TV movies, in which the consumer will listen before 
making the choice.

MS. SOUTHWICK:  But you believe even if the consumer is not 
listening at this point -- it is simply a point to point 
transmission with no sounds, nothing -- that that would always be 
a performance, and may sometimes be a distribution as well, but 
will always be a public performance? 

MR. THOMPSON:  I think the current law would support that 
argument.

MR. LEHMAN:  And therefore would require the entity making the 
distribution to pay a certain percentage of its gross receipts to 
the performer?

MS. SOUTHWICK:  Performance license as well as the distribution 
license? 

MR. THOMPSON:  Let's be clear now that it may not in fact be the 
copyright owner of the sound recording copyright that's making 
this transmission.  It may be a carrier, not unlike an 
over-the-air broadcast system.

MS. SOUTHWICK:  Whoever is the server -- an on- line service 
provider -- if he is making point to point dissemination or 
delivery of a digital, let's say, sound recording, he must obtain 
the rights both for performance and distribution?

MR. LEHMAN:  For the public performance and the right of 
reproduction?

MS. SOUTHWICK:  In other words, a license from ASCAP, BMI, SESAC, 
as well as a license for the distribution? 

MR. THOMPSON:  Yes, I think that is the result that should be 
obtained -- two licenses.  In that regard you raise now the issue 
of what effect the compulsory license for phonograph records has 
on the recommendation you're making, which is an entirely 
separate issue.  Thank you very much for the opportunity to 
respond to the inquiry. 

MR. LEHMAN:  Thank you very much, Mr. Thompson.  Has Linda 
Hopkins arrived?  If not, then we'll go onto Priscilla Walter, 
Gardner, Carton & Douglas here in Chicago. 

MS. WALTER:  Good morning and thank you.  I am a partner in the 
Chicago law firm of Gardner, Carton & Douglas and Chairman of its 
intellectual property department.  A number of our clients are 
participants or plan to be participants in on-line systems for 
the delivery of information and entertainment products.  Some of 
our clients are building their own networks for delivery of such 
services, while others are focusing on developing content.  
Examples of some of the products that our clients have developed 
or are in the process of developing include video on demand, 
interactive home shopping experiences, educational programs, 
delivery of targeted marketing lists, on-line advertising and the 
software to control all of the foregoing.  

     I was very pleased to read the report which I found to be 
comprehensive, thoughtful and written with really admirable 
clarity.  I couldn't agree more with the comment on page six of 
the report that the NII has great potential to increase access to 
information and entertainment resources that will be delivered 
quickly and economically anywhere in the country and with the 
ensuing comments in the report about the potential for economic 
development and improving our standard of living.  However, I 
also very strongly agree with the report's statement that the 
potential of the NII will not be realized if the information and 
entertainment products protectible by intellectual property laws 
are not protected effectively when disseminated on the NII.  
"Owners of intellectual property rights will not be willing to 
put their interests at risk if appropriate systems are not in 
place to permit them to set and enforce the terms and conditions 
under which their works are made available in the NII 
environment."  That is a quote from the report.  And I couldn't 
agree more.  I can certainly assure you that my clients will not 
continue to invest the millions they are now investing in 
building networks and developing entertainment and information 
products to be disseminated over them if they believe that they 
will not be able to protect that distribution or earn a fair 
return on their investment. 

     I believe the report's emphasis on the importance of 
intellectual property rights is critical and I also agree with 
most of its fundamental conclusions and suggestions.  In 
particular I agree that copyright law is adequate, perhaps with a 
few clarifications and amendments to serve the needs of both the 
providers and users of electronic content.  The copyright law has 
proved remarkably adaptable and has already begun to adapt to new 
electronic media.  Further it appears to offer the best vehicle 
for international agreement on how to treat electronic products, 
agreement that is critical if the United States is to maintain 
its competitiveness in this area. I therefore believe that the 
report has made a very important contribution to the appropriate 
resolution of these issues presented by the development of 
powerful electronic information infrastructure.  I have also read 
the comments submitted by the Information Industry Association 
and generally am in agreement with them.  

     I think many of the issues addressed in the lengthy report 
are very important but I'd like to confine my brief comments to 
the four that seem to me most important to my clients; contract 
formation, fair use, amendment to the Copyright Act and education 
of users. 

     With respect to contract formation, I would like to 
emphasize my very strong agreement with the report statement that 
additional compulsory licensing of intellectual property rights 
is neither necessary nor desirable.  And I guess that answers 
whether or not I agree with Mr. Berry as well.  I believe that 
compulsory licensing would stunt the development of high quality 
varied information products that are to be used on electronic 
networks.  Although copyright offers very significant protection 
for content providers, many of our clients rely very heavily on 
contract, certainly to establish the terms of their licenses.  
Contract rights are especially important for those of our clients 
whose products contain primarily facts or otherwise non- 
copyrightable materials.  After the Feist versus Rural 
Publications case, such clients rely almost totally on 
contractual protection.  

     The nature of electronic distribution media almost dictates 
that contracts be created electronically.  I was therefore 
heartened by the comment in the report that electronic licenses 
may be used in connection with works offered on the NII.  
Electronic contracts may be analogized to shrink wrap licenses 
used for pre-packaged software.  Unfortunately, as I'm sure the 
panel is well aware, enforceability of shrink wrap licenses is in 
some doubt.  I believe that for electronic contracts to be fully 
reliable developments in both the law and technology are 
required.  The law must evolve to recognize with more clarity 
than exists today that at least certain kinds of electronic 
contracting are acceptable and the resulting contracts 
enforceable.  Contract law, of course, is primarily a matter of 
state law.  A project is currently underway to suggest revisions 
to Article II of the Uniform Commercial Code that would cover 
trade and software and other intangibles.  This change, if 
adopted, might accommodate electronic licensing.  It is, however, 
not clear what provisions would be included in the revised 
article or even that one will be passed.  While this effort, in 
my view, provides a logical and appropriate way to resolve the 
legal issues presented by electronic contracting, we will not 
know for several years whether it's going to be a success.  
Electronic contracting can work, even if it is legally 
sanctioned, only if the appropriate technology is in place to 
facilitate it.  The technical developments addressed by the 
report, including access control, digital signatures and 
copyright management systems, will all be important to making 
electronic contracts practical.  The role of the federal 
government should, in my view, be to encourage and to create an 
environment for the development of such technologies.  The 
Library of Congress' electronic copyright management system is a 
good example of the kind of experiment that I think the 
government can usefully undertake.  Funding technology 
development in the areas of embedded electronic information, 
digital signatures and the like would also be very helpful. 

     Turning now to the issue of fair use, a number of our 
clients are concerned about how that doctrine effects electronic 
transmissions and digitized works, usually they seek to republish 
in digital form works to which they already have certain rights 
or because they are multimedia developers wishing to incorporate 
small portions of a large number of pre- existing works.  In 
these situations, issues of contract interpretation, copyright 
clearance and licensing can be very time consuming and 
frustrating.  At the same time, these clients and others are very 
anxious to protect and control the uses to which their own 
digitized works are put.  I believe that current business 
practices and the interpretation of the fair use doctrine are 
both evolving rapidly, so that the uncertainty and the 
frustration some are feeling now in determining what uses may be 
made of pre-existing works, will soon be reduced to reasonable 
bounds. 

     With respect to the suggestions in the report about 
amendment of the Copyright Act, I'd like to comment very briefly.  
I think the idea of making it clear that electronic transmission 
can constitute an infringing display or performance of a digital 
work is interesting, the concept that the Copyright Act need be 
amended at all.  It's an extremely technical area, of course, and 
one that I know the Working Group has spent a lot more time than 
I have on.  However, I do find the suggestion and the comment by 
the Information Industry Association that the Working Group 
consider again whether electronic transmission might not 
adequately be covered under the reproduction right, rather than 
the display or performance right, might be very attractive.  It 
would, I think, perhaps go to address the point to point delivery 
of sound recordings as well. International protection of U.S. 
works is obviously of critical importance, particularly because 
of the pre-eminence of U.S. technology and creative works and 
because of the reluctance of some countries to give full 
protection to such works.  If the Working Group concludes, as the 
Information Industry Association has suggested, that 
characterizing an authorized electronic transmission as offending 
the reproduction right, rather than the display or performance 
right, would make international protection more likely.  That in 
itself would be a strong factor in its favor.

     On a related matter, I note that the report comments that 
multimedia works might be considered new works, considered by 
some new works not traditionally covered by the Berne convention.  
I think any such characterization should be strongly resisted. 
The reason I think it might be helpful to amend the copyright 
law, even though I think unauthorized electronic transmissions 
are already copyright violations, is that it seems to me helpful 
to clarify for the millions of people who are going to be using 
electronic networks exactly what the scope of the copyright law 
is in this area.  I know with discussions with our clients who 
are users, particularly users of the Internet, that they are 
really confused about what they may and may not do.  A succinct 
statement in the copyright law would be a very helpful first step 
in educating all users.

     Finally, with respect to education of users, I agree with 
the report's view that education of users to respect intellectual 
property rights is going to be critical to the success of the new 
electronic networks.  No amount of clarity in the law or in 
contract rights is going to protect information products 
adequately if millions of users feel free simply to ignore their 
legal obligation.  The report seems to focus primarily on 
educating students and teachers in the proper use of electronic 
media.  This is obviously a critical first step and one that the 
federal government, as it makes the information infrastructure 
available to schools, should allocate funds and time for this 
important purpose.  However, I do not think we can afford to wait 
for today's students to grow up to be responsible users of 
electronic information.  Electronic networks are currently being 
used by many adults who do not seem to understand that the 
products offered on them may be protected by copyright.  
Providing the ability to educate users through the use of the 
electronic media themselves should certainly be a goal of the 
NII.  Also I would hope that the federal government will take 
every opportunity to reinforce the message that respect for 
intellectual property rights of those who create and disseminate 
content is essential, if users wish to continue to be 
beneficiaries of that investment.  Eventually the industry itself 
will probably have to find ways to educate its own audience much 
as the software industry has educated its users that software may 
be used only in conformance with licensed terms.

     I appreciate this opportunity to express my views on this 
very important subject of the Working Group, and I hope that the 
Working Group and the Administration generally will continue to 
promote not only the national information infrastructure but also 
to emphasize the respect for intellectual property rights which 
is critical to its success.  Thank you.

MR. LEHMAN:  Thank you very much.  You talked about the Feist 
case and the conclusion from that case that contract is the 
primary form of protection for data bases.  The difficulty, of 
course, with contracts, although I understand that electronic 
technology and encryption technology permits you to assert 
greater contractual control, but the difficulty of contracting is 
still that it's very difficult, if not impossible, to bring in 
third parties under a contract.  So once the work gets beyond the 
parties to the contract then you've lost control.  Yet at the 
same time, it's my understanding, there's sort of a reluctance on 
the part of the people in the information industry to support 
some kind of unfair extraction right or something like that.  And 
the reason I ask this question is because it comes up in the 
international context because the European Union has a directive 
which would establish in Europe a right of an unfair extraction 
right for the data that is contained in a copyrighted work but 
that might not meet the test of originality or authorship in the 
copyright law.  Since you work with people today who spend a lot 
of resources to assemble data, do you think this is an area that 
we need to pay more attention to and look into?

MS. WALTER:  As I understand the concerns about the unfair 
extraction right, particularly vis a vis the European data base 
directive, it is a concern that by having a two tier protection 
level, one that is protected by copyright law and a separate 
lower tier for what doesn't rise to that level but is still 
protectible for an unfair extraction right, that it will have the 
effect of watering down copyright protection.  Of course, Feist 
says that facts are not copyrightable.  It also says that 
original arrangements, selections or combinations of facts are 
copyrightable.  I think that the concern of a lot information 
providers is that that aspect of being able to protect fact based 
data bases will be reduced if we go to a two tier system.  I do 
think an unfair extraction right is, as a practical matter, very 
helpful and I think most of my clients are trying to establish 
like that by contract.  Obviously you're correct, if it gets 
disseminated beyond the contract and it's not protectible by 
copyright and you don't have a statutory unfair extraction right, 
then they may have no right and that goes, I suppose in part, to 
the development of technical means for tracing further 
dissemination, digital dissemination.

MR. LEHMAN:  This is, to some degree, an NII issue because the 
NII technologies basically make it considerably easier to extract 
the data without changing the copyrighted elements of a given 
work.  Therefore all of your efforts to exercise authorship in 
the assembly of data are going to have less impact in the future 
in actually protecting valuable data, which they may have spent a 
lot of resources in putting together.  So the sweat of the brow 
doctrine, so to speak, is out the window with the Feist case.  
There's no recognition for that activity.  I just wanted to bring 
that to your attention.  It's something that's going to be coming 
up in the international context because I think we're going to be 
under some considerable pressure from our trading partners to go 
in their direction on this and if we sort of go off in one 
direction and they go off on another, we won't achieve the 
objectives of a global, harmonious global set of norms for the 
global information infrastructure.  

MS. WALTER:  I understand that.  I guess I think most people that 
I'm familiar with hope that we can convince the Europeans to go 
our way.  That may not be feasible.  Thank you.

MR. LEHMAN:  Thank you very much.  Next I'd like to ask John 
Grozik, Associate Director -- oh, I'm sorry.  I skipped over.  
Oh, yes.  John Rademacher from the American Farm Bureau 
Federation, almost here in Chicago -- Park Ridge.

MR. RADEMACHER:  That's correct, Chairman Lehman.  We needed a 
super information highway to get in here better by motor vehicle 
this morning.  My colleague, Mr. Hosemann and I intended to be 
here somewhat earlier, but we're here now.  Thank you very much 
for the opportunity to be here.  I'm general counsel for the 
American Farm Bureau Federation which is located, its 
headquarters office is in Park Ridge, Illinois, and we have a 
legislative affairs office in Washington, D.C. 

     Chairman Lehman and distinguished members of the Working 
Group, I'm pleased to have the opportunity to make a brief 
statement to you here on behalf of the American Farm Bureau 
Federation.  Introductorly we probably appear to a little bit out 
of place or a curious witness at this hearing.  Why do farmers 
and ranchers want to make some views known to this distinguished 
group on intellectual property? 

     The American Farm Bureau Federation was organized in 1919, 
right here in Chicago at the LaSalle Hotel as a voluntary 
non-governmental farm and ranch membership organization.  Today 
we are organized in 50 states and in Puerto Rico.  There are Farm 
Bureau organizations existing in 2,700 counties throughout the 
United States and in Puerto Rico.  Our membership, including 
farmers and ranchers and member families who support the policies 
and purposes of the organization number in excess of four million 
member families.  The Farm Bureau has taken a long standing and 
active role in the development of U.S. intellectual property laws 
with regard to the plant variety protection act and the various 
debates on biotechnology, patents, the patenting of plant 
varieties and livestock and other similar issues.  Our 
organization is thus pleased to provide some additional input to 
you and your colleagues today regarding the next generation of 
intellectual property law issues that will effect American 
farmers. 

     Today's American farmer is technologically adept, having at 
his or her disposal a considerable working knowledge of 
chemistry, biology, meteorology, soil engineering, mechanical 
engineering and increasingly information technology.  The next 
generation of gains must be driven by the power of computer and 
micro-electronics.  As in other sections of our nation's economy, 
the ability to collect, store and retrieve data and to turn that 
data into useful information for business and scientific 
decisions will become essential for every level and type of U.S. 
agriculture technology.  I would like to outline a specific 
initiative now being explored in American agriculture which I 
think more fully explains to you why we're here and why we would 
like to present these views.  This technology depends on advanced 
micro-electronics and information technology.  And then to 
highlight how the Green Paper of your Working Group can 
potentially impact technological efforts to advance agriculture 
and what I'm talking about here is a concept known as site 
specific farming which deals extensively with global positioning 
satellites, the so-called Star Wars defense system of satellites.  

     One of the most promising new concepts in American 
agriculture is known as site specific farming or more informally, 
farming by the foot.  This concept which is being tried 
experimentally throughout the nation involves the following 
elements installed in agricultural equipment such as tractors, 
planters, combines, fertilizer trucks and applicators.  Those 
elements are global positioning satellite monitors, laptop or 
other portable computers with appropriate geographic information 
system software, bio-sensors which monitor soil and other 
conditions and measuring instruments which monitor and control 
the type and amount of agricultural input.  As a farmer maps his 
or her farm with the GPS equipment, that farmer can also record 
how each square meter of that farm is in fact being farmed.  
However, the promise of site specific farming goes beyond the 
data that could be accumulated by each individual farmer.  Farm 
Bureau believes, as well as a number of other groups, is 
examining the adoption and implementation of data communication 
protocols that would establish new national standards for 
suppliers of hardware and software used in site specific farming.  

     Today there are dozens of individual vendors whose equipment 
and software cannot inter-operate and hence, whose data are not 
portable from application program to application program.  These 
fundamental incompatibilities stem from the absence of widely 
accepted standards, a problem similar to that in the other fields 
of communications.  Once these standards can be established the 
Farm Bureau and others envision a series of vast new cooperative 
data bases that can be build up at the county, state and national 
levels all on a voluntary basis with standardized data 
contributions made electronically by the participating farmers.  
We envision that this set of data bases will create unimagined 
opportunities for interactive communications with farmers and 
interactive data analysis everywhere in the nation.  The sheer 
volume of data collected in these data bases over millions of 
square acres of farm land and over years of farming would be 
essentially staggering.  Built up over time and with 
participation eventually of hundreds of thousands of farmers 
across the country, these data bases will eventually provide 
massive and unprecedented amounts of digitized information that 
would serve multiple users including individual farmers, farm 
equipment manufacturers, agricultural chemical and fertilizer 
suppliers, food processors, agricultural industry analysts, 
environmental regulators and agricultural science researchers. 

     The Farm Bureau has identified one key issue that should be 
addressed in your group's future work and that is adequate 
statutory protection for private data bases in the U.S. copyright 
law.  The current law, the law in the United States, to us in 
unacceptably vague as to copyright protection for computerized 
data bases.  We cannot conceive of a long term stable collection 
and utilization of site specific farming data bases without a 
revision to the Copyright Act.  The case that has already been 
cited to you at least once since I've been here this morning is 
Feist versus Rural Telephone Service Company.  The Farm Bureau is 
concerned that the Feist Court failed to define what selection, 
coordination and arrangement will constitute sufficient 
originality to qualify for the copyright protection of data 
bases.  

     Once the communications protocol for site specific farming 
become widely publicized and available as open standards for 
industrial use, it is at least arguable that under Feist standard 
that the resulting data bases built upon data collected and 
organized using those necessarily universal formats will be 
unprotected and unprotectible under U.S. copyright law.  Will the 
established data fields within these agriculture communications 
protocols be viewed by the Courts as the equivalent of the 
arrangement of names, towns and telephone numbers in the 
telephone directories as was the case in Feist?  The copyright 
office has regulations specifically tailored to the registration 
of compilation and data bases.  The Farm Bureau submits that 
those procedures in and of themselves will not suffice to create 
the necessary legal foundation for agricultural data bases unless 
Congress intervenes in this area and brings order to the arena.  
The information highway will have little value if most of its 
valuable traffic can be pirated away with little impunity.  

     The Farm Bureau believes America needs and desires legal 
protection of data base compilations that is decidedly better 
than thin if the national information infrastructure is to be 
fully realized.  Your Working Group is ideally situated to 
rectify this problem in our country's intellectual property laws.  
Furthermore, we want to express a concern with the national 
information infrastructure philosophy which may erode, in our 
view, both the property and privacy interests in such private 
data bases.  The Green Paper quotes in part that to fill its 
constitutional purpose, the law should strive to make the 
information contained in protected works of authorship freely 
available to the public.  Agricultural data bases could 
potentially be more valuable than any other farm commodity.  The 
Farm Bureau has long stood for the concepts of private property, 
protection of personal privacy from undue government surveillance 
and regulation.  Thus, even if data bases become more clearly 
subject to copyright protection, will the government carve out 
exceptions for compulsory licensing or allow its own agencies to 
expropriate this property for its own end? 

     Site specific farming data bases will contain mountains of 
sensitive information at least as private, at least as revealing, 
at least as valuable as bank or medical records.  The Farm Bureau 
therefore urges the adoption of clear and specific legislation 
that would bar members of the general public or federal agencies 
unregulated and free access to such data bases.  And therefore we 
urge your group to take a strong and clear stand against any form 
of compulsory licensing for data bases as a necessary corollary 
to copyright protection.  

     We support your Green Paper's proposal to create a private 
right of action for copyright infringement against persons who 
are using the national information infrastructure to gain 
unauthorized electronic access to and use of private data bases 
such as those contemplated by our organization.  

     Although not strictly a matter of intellectual property law, 
there's a further legal concern that we have.  No federal agency 
should be allowed access to these data bases for any kind of 
regulatory or investigative purposes except with proper 
safeguards of the type now used to deter and control unfettered 
government access to personal bank and medical records.  Access 
should be made solely and exclusively by means of subpoena or an 
exigent circumstance with judicially supervised search warrants.  
While it is possible and even desirable that such electronic data 
may lead to voluntary electronic filing of certain information 
with federal regulators, there should be an expressed statutory 
ban upon any mandatory access by government agencies. 

     So in summation Chairman and on behalf of our constituents, 
America's farmers and ranchers, we would urge three specific 
steps to be adopted by your Working Group for proposed revisions 
to the intellectual property law.  One, make a separate study of 
the need to provide express statutory protection under the 
copyright laws for private computerized data bases and similar 
compilations, so as to reverse or at least clarify the law after 
Feist. Two, even if private data bases become more clearly 
protectible as works of authorship under U.S. copyright laws, to 
protect the property rights inherent in those works, separate 
legislation is needed to insure that recognition as private 
property and not as being subject to any compulsory licensing so 
as to make such data bases available unless the government is 
going to do so under the conventional Fifth Amendments.  And even 
if data bases become more clearly protected as works of 
authorship under U.S. copyright laws to protect the privacy 
rights inherent in those works, the administration should also 
introduce and support separate federal legislation modeled on 
existing bank and medical record privacy statutes to insure those 
data bases will not be used for any regulatory or investigative 
purposes except to issuance of subpoena or warrant. 

     We thank you for letting me go overtime.  Thank you for the 
opportunity to submit these comments and would request your 
permission, Mr. Chairman, to supplement the record with written 
submissions at a later date.

MR. LEHMAN:  Thank you very much, Mr. Rademacher.  That was an 
excellent statement and it's in many ways a very exciting one 
because it proves the potential of the emerging NII and that it 
can be used in all kinds of ways that we haven't traditionally 
thought of, at least those of us who are lay people, of the 
various applications.  I just want to clarify one point.  It's 
pretty clear from your statement that you would not agree with 
Mr. Berry that we're really talking about a right of 
remuneration.  The copyright law plays an important role really 
as part of the First Amendment in permitting people to control 
their speech or how their writings are used.

MR. RADEMACHER:  I think it's more than a right of remuneration 
for us.

MR. LEHMAN:  Also part of the Department of Commerce -- the 
National Oceanographic and Atmospheric Administration is a part 
of that.  Just out of my own curiosity, have you been working 
with them?  Are they are part of this since they operate the 
weather service and the satellite system?

MR. RADEMACHER:  Potentially, yes.  If you want a little bit 
more, I would invite my colleague Mr. Hosemann here to respond to 
that.  The site specific farming is almost unimaginable in its 
scope of the potential industries that would want to be involved, 
and government agencies as well.  We have not worked with NOAA or 
the others as yet.  USDA, of course, is expressing a keen 
interest in all of this, and of course the other cabinet level 
agencies.

MR. LEHMAN:  I will pass along all of this information to Jim 
Baker who is the head of NOAA and I'm sure he'll be very 
interested in it as well.

MR. RADEMACHER:  Thank you very much.  We appreciate that.

MR. LEHMAN:  Thank you.  Next, I'd like to call John Grozik, 
Associate Director of Media Design and Production Services of the 
University of Wisconsin, Milwaukee.  Now, we have to give you 
twice as much time since I'm a graduate of the University of 
Wisconsin, even though it's Madison.

MR. GROZIK:  Madison is our poor cousin, so it's okay.

MR. LEHMAN:  We always used to think that when you came across 
that Illinois/Wisconsin line, all of a sudden the quality of the 
air went down, wasn't quite the same.

MR. GROZIK:  Our infobahn is a little quicker than yours down 
here I noticed as I got on the expressway coming down.

      I'm really here not representing the university, but I'm 
here more on behalf of myself and also a group of people who 
belong to something called the Consortium of College and 
University Media Centers.  It's an international group, 
non-profit, that meet twice a year.  One of the main issues we do 
discuss is copyright intellectual issues.  So I have a brief 
statement and assuming my batteries don't run down here and my 
Walgreen glasses don't fail, we'll be all set. 

     The members of CCUMC, the college consortium and university 
media centers range from small media centers serving traditional 
AV users to very large facilities encompassing libraries, media 
development centers and electronic distribution systems.  Our 
members have been struggling with issues raised in your 
preliminary draft on intellectual property rights for decades.  
The advent of a freely accessible infobahn causes us to strongly 
support your initiative to more clearly define the rights of the 
author, balanced by the needs of the end user.  Most of us are 
involved daily with the end user so we do have to act as a buffer 
between those end users and the producers.  

     For the past 25 years I've been involved with the 
acquisition, production and distribution of copyrighted materials 
for universities, private colleges, museums, libraries and public 
information centers.  As an associate director for a media design 
and production department at the University of Wisconsin at 
Milwaukee, I'm responsible for a staff of graphic designers, 
photographers, television producers and others involved in the 
daily media needs of a large teaching institution.  Most of our 
activity involves production or use of intellectual property.  My 
staff often acts as the gatekeeper, an enforcer of what we 
understand to be the laws and guidelines related to the use of 
copyrighted materials.  

     To say that it has been a difficult and often frustrating 
experience would be an understatement to say the least.  
Increasingly easy access to information, coupled with decreasing 
educational budgets, has led to what may be wholesale disregard 
to copyright laws.  In some ways this mass civil disobedience may 
be similar to what it taking place on our expressways.  Although 
speed limits are clearly displayed on road signs, almost every 
driver disobeys the law to some degree.  For most of my trip on 
the tollway this morning I observed that almost no one was 
obeying the speed limit.  I believe that the new infobahn, like 
our expressways, will make it too easy for users to disobey 
intellectual property rights, no matter how logical the new laws 
are applied or how much the end users are educated about the 
intellectual property rights.  As a media administrator I am very 
worried about our ability to administer the new copyright laws.

      I'm also president of a software company that produces 
programs for the media production area, and I have other worries.  
As president of that company, my company is often involved to 
support end users, are often asked to support end users who for 
some reason are not in our data base.  They have questions and it 
becomes very obvious to us very soon that these people have 
illegally purchased our program.  We tried copy protected 
software which people rejected.  We tried hardware dongles, which 
of course people lose.  And recently what we've started doing was 
pre-registering the software in code before we send it to our end 
user.  So when you receive it, it already has your name and 
serial number on it.  We know that most people or many people 
make copies of their software before they register it so they 
don't have a registered of the software, they can use it any way 
they want to up to that point.  We find that our copyright 
notices are commonly ignored by end users who, like freeway 
speeders, have their own rationale for disobeying the law.  Laws 
without teeth may not reduce illegal copying of our software 
products.  We have an international market and have a very 
difficult time policing anything that leaves this country.  So we 
know we have an awful lot of people who are using our software 
with somebody else's name on the first screen, but they don't 
read that either.

      I often teach about emerging communication technologies at 
the graduate level at the university and also a speaker also at 
conferences on emerging technologies like virtual reality.  As an 
educator, I'm always on the prowl for free media, media that I 
can use to define an issue or illustrate a point.  Well, things 
have changed in the last few years and with minuscule materials 
budgets, I and other instructors often use materials in ways 
which some would say do not fall under the issue of fair use.  
Since it is so easy to access media from on- line sources, to 
store it on recordable CD's and to place it on file service so 
that our students can access what is needed, many faculty are not 
always logical when applying intellectual property rights to 
other people's property.  They're very concerned about their own 
but they seem to disregard others.  I think copy machines started 
the process and the electronic media has only exacerbated the 
problem. 

MR. LEHMAN:  You know, your professors aren't the only people 
that do that.  You heard the testimony from the Tribune Company 
that we should have capital punishment for every form of 
intellectual property rights excepting when it involved their 
broadcast interests.

MR. GROZIK:  Well, that's kind of what we run into; the laws are 
okay as long as it's applied to somebody else, and most of our 
questions really revolve around can I use this or why can't I use 
this or how much is going to cost and that's too much so I'll 
just go ahead and use it and you don't know anything about it.  
I've been in a number of universities and there are pockets of 
illegal materials on every university that I've been to and some 
of these pockets are quite large.  The rationale is quite good, 
but they're still illegal.

      I just have a couple quick recommendations, and since my 
light is still green, I can do that.  Abstract terms like fair 
use has made it almost impossible to administer media usage in an 
education setting.  Fair use is how you define it and it depends 
on your point of view.  Fair use is open to too much 
interpretation by the producers of the media, by the 
administrators and by the end users and it becomes a continuing 
point of conflict in our daily work with faculty.  What do you 
mean fair use?  I'm only using it by myself.  Nobody else is 
going to see it but my students.  We get involved in issues of 
distance education, non-local locations and also displaced 
learning takes place where we'll send it out, it gets recorded 
and those recordings are then distributed after the educational 
process takes place.  So we need a very clear, definite 
definition of fair use, something that we can sink our teeth in 
as administrators and that we can present to educators as saying 
ten days, twice, two times users, once at home and once in the 
classroom.  I've heard so many different variations of what fair 
use really means that people are so confused that it's very 
difficult to even follow through on that.  

     One of the major problems we have as producers, I feel that 
all copyrighted work should be part of a national electronic 
registry.  One of the main problems we face as multimedia 
producers is finding out who owns the copyrighted materials in 
the first place.  I recently helped produce a video disk about 
cartography which used 30,000 images from more than 700 maps.  
Finding and getting copyright approval became a most time 
consuming and frustrating task.  I believe a national registry 
would facilitate our needs to be able to reach these copyright 
owners and I believe it should be part of any copyright 
registration procedure.  It could include thumbnails of the 
images, could include a sound byte but it would be a way for us 
to find out whether the material that we just received from 
Amsterdam via the Worldwide Web or Mosaic is indeed copyrighted 
because like most materials we do get on the network they don't 
carry copyright notices and we don't know if they were 
copyrighted originally or not.  We'll reuse them in media and we 
might find out ten years from now that we've stolen somebody's 
property from Bangkok.  So we have to be careful about how -- and 
we'd like to be able to find that information.  It would be a 
fairly sophisticated data base that would allow us to search on 
descriptions of the information and it would be up to the 
copyright applicant to provide the description of that material 
to be included in the data base, and it should be accessible over 
Internet. 

     And then as a final comment on intellectual property rights, 
I personally have begun to operate under the principle that the 
only way to keep my ideas safe is not to tell anybody about them. 
Thank you very much for the opportunity present some of these 
ideas.

MR. LEHMAN:  Thank you very much.  I think your last comment 
indicated what the balance is, and that is that users will not 
have available to them and the public will not have available 
copyrighted materials or works of authorship if there isn't some 
protection for the copyright integrity the works and so we're not 
talking about favoring one group over another here at all.  We're 
trying to find the right balance. Are you familiar with the 
Library of Congress' in this area where they're trying to develop 
an electronic registration system that could form the basis of 
what you're talking about?  Have you worked with them at all? 

MR. GROZIK:  I'm familiar with that.  If the responsibility is 
placed on the copyright applicant to provide the information, to 
input that information as part of that process, it would take the 
burden off the registration office to actually help define what 
that might be.  I as a copyright owner for my software know about 
it.  I know what it contains.  I know what the description should 
be.  And I should be responsible as part of that electronic 
registration process to make sure that that information is 
available.  I also want to make sure it's easy for people to find 
it, so I'm going to be sure it has descriptors on it that people 
can find it in an easy manner.  So it's in my best interest to 
make that information about who owns the copyright as easily 
accessible to potential end users as possible.  Right now it's 
almost impossible to find out who owns the copyright, especially 
with mergers.  And the copyright should follow the ownership, so 
if the ownership changes, whoever owns that copyright is going to 
have to update the copyright notice.  And currently it's too 
difficult to find who owns it and many people disregard that and 
use the information anyway.

MR. LEHMAN:  It's my impression that what you're really 
describing is that particularly in the area of multimedia, this 
is where you can cut and paste all kinds of other people's works, 
that you can have easy electronic access to.  The marketplace 
mechanisms are not yet adequately developed to provide very easy, 
rapid clearance, rights clearance at an acceptable and reasonable 
cost that people would be willing to pay and that's a real 
serious impediment to the explosion or growth or use of this.  
That's what you're really describing.

MR. GROZIK:  And also you get derivative works of derivative 
works, where the original copyright is no longer part of that 
derivative work and I see more and more of that, where students 
produce media and I don't know where they get some of the 
materials they were downloading off of Internet.  I have no idea 
whether it was copyrighted initially and I have to counsel them.  
And we do a lot of multimedia literacy training on campus.  We do 
talk to people about intellectual property rights and copyrights 
and who is responsible for it but people still speed.  They know 
that it's dangerous to go over the speed limit, it's illegal, 
they could get into trouble but not me.  So it's kind of this, 
nobody can find me attitude when you're in a crowd.

MR. LEHMAN:  Have you been involved with EDUCOM at all? 

MR. GROZIK:  Yes.

MR. LEHMAN:  Now, they worked on basically guidelines for use of 
computer programs but are they helping to evolve a set of rules 
for the road here?

MR. GROZIK:  CCUMC, the consortium of college and university 
media centers, has been struggling with this idea for a long 
time.  So we have made presentations, typically we make 
presentations at major conventions that are educational based, 
ITVA conventions and other places and the goal really is to let 
people know that there is a problem, that the solution isn't 
necessarily -- the solution is very difficult.  It may not be a 
solvable problem.  Once things become electronic, it may be 
difficult to even call it back.  So dongles and other kinds of 
hardware protection is one possible solution, putting information 
within the document that's a copyright can be too easily 
stripped, and they'll do that off of ours anyway, off of our 
software.  So I'm not sure.  It's a little bit like the 
expressway.  How do you keep people from speeding when everybody 
is doing it?  I think we're approaching that with the ease of 
access.  I think what we now have are a set of laws that we can 
apply, and if those laws are clear at least I can apply them as 
an administrator.  Right now they're too confusing.

MS. SOUTHWICK:  I assume when you talk about  a national 
registry, it would be a voluntary system and not required?  

MR. GROZIK:  It would be required.  If you want a copyright and 
you want copyright protection, you would be required to register. 

MS. SOUTHWICK:  But we have a problem with the prohibition of the 
Berne Convention against formalities -- anything that you must do 
in order to get copyright protection.

MR. GROZIK:  Well, if I want to end up in Court, want to defend 
my product in Court, I have a much better chance if I go through 
all of the procedures with copyright trademarks and those types 
of things.  If I file the paperwork I have a much better defense 
of my product.  I get automatic copyright with the production my 
material but if I really want to have some protection in the 
Courts I need to go through the formal process of registration.  
I guess that's what I'm looking at, what everyone is looking at 
but I think we're getting into some nuances here that -- my 
problem is if you don't register and somebody uses it --

MR. LEHMAN:  We hear what your point is, that we need very 
powerful incentives.  We need to have a registration system and 
have powerful incentives for people to use it so that it will be 
effective and available.

MR. GROZIK:  Powerful incentives, yes. 

MR. LEHMAN:  Thank you very much.  Finally, this morning we'll 
hear from Mr. James Schatz counsel for West Publishing who has 
come down from Minneapolis. 

MR. SCHATZ:  As indicated, I am Jim Schatz and I'm representing 
West Publishing Company today.  West is a leading legal 
publisher, publishing or providing such products and services as 
the National Reporter System, the American Digest System and the 
West Law Computer System, Legal Research Service.  Less well 
known is the fact that West is also a major educational 
publisher, publishing textbooks and related teaching aids in the 
college and law school markets.

      West is pleased to be able to testify regarding the 
detailed and thoughtful preliminary draft of the Working Group's 
report to the Information Infrastructure Task Force.  In it's 
written comments, West discussed some relatively minor, yet 
important concerns regarding some specific points in the 
preliminary draft.  West's comments reference the detailed 
comments of the Association of American Publishers and the 
Information Industry Association regarding the same concerns.  
And while I will not be repeating these concerns they are 
nonetheless important points and deserve consideration and 
hopefully action by the Working Group.

      West's testimony will instead emphasize the well supported 
conclusion of the Working Group regarding the importance of 
content to the development and success of the NII and comment on 
few of the specific proposals that have been made by the Working 
Group to fulfill a goal of more effectively protecting 
intellectual property rights and such content.  As stated in the 
preliminary draft, what will drive the success of the NII is the 
content moving through it.  Therefore, the potential of the NII 
will not be realized if the content is not protected effectively.  
The key importance of content has remained the constant truth as 
mankind has moved from communicating through cave drawings to 
drums to spoken words to written words to printed words and most 
recently to electronic words.  There always must be something 
worthwhile to communicate.  The Working Group is absolutely 
correct that the content providers will not be willing to include 
their content on the NII if their intellectual property rights 
are not effectively protected.  Of course, if content providers 
don't include their content on the NII, the NII cannot reach its 
lofty goals and great potential.

      The basis for many of the concerns the content providers 
have is the ease of misappropriating and transforming electronic 
content through a communications network such as the NII and the 
difficulty of tracking down and effectively dealing with such 
violations.  As a result, of the inclusion of copyrighted 
material on the NII is to be fostered, it is imperative that the 
following Working Group proposals be adopted. 

     First, provide adequate protection against the violation of 
overriding a technological protection of copyrighted material. 
Second, protect the continuing existence and integrity of 
copyright management information, and third, better educate the 
public regarding the importance of, and societal need for 
intellectual property rights.  In fact, West suggests, along with 
the IIA and AAP, that such proposals be bolstered. As the Working 
Group insightfully notes, given the ease of infringement in a 
network environment, copyright proprietors are going to be forced 
to look to technological protection as well as legal protection 
to prevent unauthorized uses of their works.  In order to obtain 
the richest possible content on the NII is imperative as the 
Working Group has included that devices and services meant to 
defeat anti-copying technology be outlawed.  While West agrees 
with the goals of the proposed changes to the Copyright Act that 
would make the providers of such devices and services guilty of 
copyright infringement and agrees with the related provisions 
regarding impounding and destruction, West believes that the 
Working Group should carefully consider making such actions 
criminal infringement under Section 506(a) of the Copyright Act, 
and as suggested by the IIA consider providing a non-copyright 
civil remedy for both copyright owners and interested persons 
other than copyright owners, persons such as distributors and 
others with an interest in upholding technological protection.  
The IIA also makes some other good points regarding other 
technological protections which West recommends be considered and 
adopted as well. 

     As recognized in the preliminary draft, the copyright 
management information associated with the work such as the 
identity of the owner of the copyright therein and terms and 
conditions applicable to the use thereof, will often be crucial 
to the efficient operation and success of the NII, properly 
dealing with and protecting the work.  If the NII does not 
adequately fulfill these functions, copyright owners are unlikely 
to allow their works to be used on the NII.  As in the print 
world, copyright owners, distributors and customers will likely 
develop varying systems of clearance and payment for the use of 
copyrighted materials on the NII.  It is critical that the NII be 
flexible enough to allow experimentation with and use of 
different systems to further the development of the NII and its 
contribution to our culture and economy.  An important facet of 
the needed flexibility is that the NII insure that copyright 
management information remain with the work.  Although there may 
also be technological ways to accomplish this goal, West applauds 
the Working Group's proposal to prohibit the wrongful addition, 
manipulation or deletion of copyright management information.  
West does suggest that the Working Group consider and adopt the 
IIA's suggestions that a civil remedy with a lower standard of 
intent be provided and that the digitally linked requirement be 
deleted. 

     West commends the Working Group's timely recognition that a 
strong and continuing education program at every educational 
level is necessary to reverse the present and growing attitude of 
many citizens that works should be free for the taking in the 
electronic environment.  As noted in its written comments, West 
has an appreciation of the power of an effective educational 
effort consistently applied and is anxious to cooperate with the 
proposed educational program.  West believes that the present 
trend can be turned around with the proper effort. 

     In conclusion, West thanks the Working Group for its 
extraordinary contribution in focusing public attention on the 
key intellectual property issues whose resolution is essential to 
the birth and growth of the NII and for going out on a limb by 
recommending specific solutions.  West looks forward to 
participating in the process of solving these issues and helping 
to make the NII all it can be.  Thank you.

MR. LEHMAN:  Thank you very much. 

MS. SOUTHWICK:  I just have one question.  When you say that you 
would like us to consider a provision that would protect 
copyright management information even if it's not digitally 
linked, do you mean on paper copies as well?

MR. SCHATZ:  I guess the point is I don't understand exactly what 
digitally linked means and what that requirement is.  I'd hate to 
see somebody be arguing that, yeah, it was with the material but 
it wasn't digitally linked, therefore it's not a violation.  
That's the concern. 

MR. LEHMAN:  Thank you very much.  That concludes our -- oh, yes.  
Linda Hopkins, I assume has not arrived.  If not, we've done an 
excellent job of staying on schedule.  We will reconvene here at 
2:00, and our witness will be Scott Turow representing the 
Author's Guild.

(A recess was taken.) 

MR. MAMBRETTI:  Good afternoon.  Welcome to the University of 
Chicago, a forum that the university is hosting on behalf of the 
Commerce Department which is holding a public hearing here on 
intellectual property rights and the national information 
infrastructure.  I'm Joe Mambretti, Director of Academic 
Information Technologies and the Office of Strategic Technologies 
at the University of Chicago.  These are critical issues to us 
and to all of education and we appreciate the opportunity to host 
this forum.  Without any further information, I'm going to turn 
this over to Bruce Lehman, Assistant Secretary of Commerce and 
his staff.

MR. LEHMAN:  Thank you very much and again, thank you to the 
University of Chicago.  It's great being in this wonderful city 
and this great institution of learning.  For those who weren't 
here this morning, I'll just repeat a little bit about what the 
rules are that we've established.  Our hearing went very smoothly 
this morning because of it.  Each witness has been allotted 12 
minutes in which to make their presentation.  We have a timing 
device here, and in the first ten minutes the computer screen 
will be green and then after ten minutes it will turn yellow or 
amber and it means you have two minutes left and then when the 
red screen comes on, we'd appreciate it if you would conclude 
your remarks at that point in time.  Also to the extent that it's 
possible to get all of your thoughts in, in less than ten 
minutes, that would be appreciated, or less than 12 minutes, 
because that gives us a little bit more time without taking it 
out on the other witnesses to ask questions and have a little bit 
of a dialogue.  Now, we may have a little spill over and not be 
exactly on time, but we are proceeding along quite well.  So 
hopefully this afternoon will go as well as this morning did. I'd 
also like to remind people that copies of the transcript will be 
available in about two weeks.  You can obtain them by calling the 
following telephone numbers, 703-305-9300 and you can ask for 
Michael O'Neil.  That's the person to ask for.  Mr. O'Neil is 
sitting here on my right.  And the fax number is 703- 305-8885 
and you can request copies by fax as well.  We also have copies 
of all of the written comments that have been submitted and they 
are available for public viewing at the Scientific and Technical 
Information Center of the Patent and Trademark Office which is in 
Room 2C01, Crystal Plaza, 2021 Jefferson Davis Highway, 
Arlington, Virginia. 

     I'd like to also re-introduce my other colleagues who are 
here.  Terri Southwick is to my left.  Terri was the principle 
draft person of the preliminary report of the Working Group, our 
so called Green Paper.  And Ruth Ford.  Why don't you just stand 
up, Ruth.  Ruth is our press person in the Patent and Trademark 
Office.  If there are any inquiries of that nature about what 
we're doing here today, please see Ruth.  If there are any other 
logistical issues, after this meeting we'll be here for a few 
minutes, feel free to see Mike O'Neil who is responsible for 
those. With that, I would like to get underway this afternoon by 
calling our first witness, if he's here, Scott Turow.  It's 
always a pleasure to call someone who is such an eminent and well 
known man of letters, but even more of a pleasure to know that 
one of our esteemed legal profession, which isn't always esteemed 
by too many people, has made it into this prominent situation.  
So welcome to our proceedings, Mr. Turow.  And I understand 
you'll be representing the Author's Guild.  

     I should say, even though I'll try to announce everybody's 
name and who they're representing, if you'd, just as part of your 
presentation, make it clear what your name is and what group, if 
any, you're representing, that would help us.  Thank you very 
much.

MR. TUROW:  Thank you, Assistant Secretary Lehman.  My name is 
Scott Turow.  I am an attorney and novelist and I am here on 
behalf of the Author's Guild which is the nation's largest 
professional society of writers.  I want to thank you, Assistant 
Secretary Lehman and the Working Group for the opportunity to 
speak to you today.  I have tendered to Mr. O'Neil a written 
statement and with your permission, rather than going through 
that point by point, I would prefer just to summarize it and my 
remarks before you and I hope that I'll be able to crawl under 
your 12 minute limit that way. 

     From an author's perspective the NII poses both great 
benefits and also a substantial threat.  On the darker side of 
things, the idea of a sort of information super highway without 
any recognition of the current rights of intellectual property 
holders would amount to a very dire situation and really from the 
author's point of view, as I say, as the greatest threat that 
we've faced since the invention of the copying machine.  For that 
reason, we generally support the approach in the Green Paper.  

     I'm not an intellectual property lawyer and I don't pretend 
to great expertise but even to a non- intellectual property 
lawyer, it seems clear that the amendments that are proposed in 
the Green Paper to the Copyright Act are sensible and necessary, 
especially the making of transmissions, something that falls 
within the exclusive rights of copyright owners and making 
transmission an act of publication and making transmissions 
something not covered by the first sale doctrine.  For the same 
reasons we support the enhanced technological controls.  We 
support the notion of control at the server level.  We certainly 
welcome the idea of greater promotion of the Library of Congress 
Electronic  Management System.  

     Now, in speaking in behalf of all of those changes, I 
suppose any member of any interest group likes to think that 
there are noble motives and we certainly do.  I think that there 
are really two, from a policy level, two general areas of concern 
that motivate our position.  The NII has every potential of being 
of enormous benefit to writers and authors, especially those of 
our membership who write non- fiction especially are highly 
dependent on research and the breadth of the NII offers an 
opportunity to our members to do research that's both more 
comprehensive and quicker.  That means they can write better 
books, more quickly and that's obviously enormously appealing to 
all of our members, including even the writers of fiction who 
also are researchers from time to time.  But obviously we can't 
endorse that at the expense the intellectual property rights that 
authors currently hold.  We agreed with the vision in the Green 
Paper which is to say that if the rights of current intellectual 
property right holders aren't' protected, those intellectual 
property right holders can be expected to take steps to keep 
their materials from reaching the NII and so the broad access 
that's really, I think, the underlying vision of the NII can't be 
achieved without protecting the rights of intellectual property 
right holders. 

     Beyond that sort of general policy perspective, there is 
sort of issues of culture and the impact on our culture that 
failing to protect the rights that authors, for example, 
currently enjoy would have.  It probably is a bit of an 
overstatement to characterize authors as an endangered species.  
I think people always go on writing as long as there are 
implements and paper or computer screens now.  But we are in a 
phase where there is a tremendous adjustment taking place, and 
it's commonplace in New York, the center of the publishing 
industry, to hear about the demise of the author.  It's harder 
and harder, as the borders of popularity and the mainstream sort 
of overwhelm everything else for many writers to make a living 
writing.  Obviously for those of us, that smaller group of which 
I am lucky enough to be included, this is not true but I, in 
addition to being a writer, I am also a reader and I'm concerned 
about maintaining the diversity of our culture.  Any step that 
would cut into the earnings that are really minimal for many 
authors would obviously imperil the cultural diversity that the 
NII itself both champions and benefits from.  We want to be 
encouraging creation of original works and for that reason it's 
important to protect the rights of intellectual property right 
holders. 

     The one particular area of concern that the Author's Guild 
has, of course, is with the issue of fair use and how it will 
function with the NII, and I know that the answer to that has not 
been completely formulated.  We obviously would like to 
participate and share our concerns.  We have, as I said, seen 
certain technologies that we think act in derogation of author's 
rights.  The photocopying machine, notwithstanding the fact that 
whole books are seldom copied, still I think represents a device 
that's often used to circumvent author's rights and we would hope 
to see the NII structured in a way that doesn't allow those kinds 
of wholesale incursions into the rights of authors.  But those 
are our general perspectives and I thank you very much for the 
opportunity to present them to you.  I'd be happy to answer any 
questions or to allow the next speaker.

MR. LEHMAN:  Actually I wanted to follow up a little bit on fair 
use.  You mentioned that you were concerned about it but you 
didn't say very much about what your concerns are.  Let me just 
give you a little help or try to narrow it down.  Are your 
concerns, do they have more to do with the special pressure, 
unique new kinds of pressures that are being put on the fair use 
doctrine through technology or do they go more to general 
concerns for fair use?  For example, we recently had the 
legislation which passed Congress which made it clear.  In this 
sense I think authors tended to favor the fair use doctrine, 
favor an expansion of it, permitting access to unpublished works.  
Is it that sort of thing that is your concern?  Is access your 
concern or is it the other way around, that you're concerned that 
fair use might permit too much uncontrolled access? 

MR. TUROW:  Our concern, in terms of the amendments to Section 
107, I actually testified against one of the earlier versions 
because I felt it pitted authors of original works against 
authors of secondary works.  But our concerns with fair use, just 
to take a very concrete example, is right now somebody can 
certainly go into a book store, pick up a book and browse in the 
book and I don't think anybody regards that as an infringement of 
copyright, but how you create an analogous function in the NII is 
a bit mysterious.  You can't say that we don't want to discourage 
browsing but by the same token if browsing means fours worth of 
looking so that the entire work is read, it's obvious that fair 
use has become the exception has swallowed the rule.  And it's 
that kind of thing that is the concern of the Author's Guild, and 
especially as we really do celebrate the ideas of broad access to 
a wide range of expression, there's a concern that fair use may 
become a bit of the tail that wags the dog.  It's hard to 
formulate because frankly, my technological expertise ends pretty 
much when my fingertips touch the keys and I magically see the 
images light up on the screen, but I can imagine the sort of 
circumstances that I was talking about and a few others where 
it's hard for me as a non-technical person to know how that can 
be limited.

MR. LEHMAN:  Well, that did answer my question.  I think the 
browsing example is a very good example of when does that 
constitute fair use and when it would not.  Of course there are 
technological responses to that, too, technological limitations 
that can be put on it.

MR. TUROW:  The challenge, I think, and obviously we think the 
Working Group thus far has done a really admirable job of 
adapting the current law to this new media, but the challenge is 
now, I mean you're now talking about fair use doctrine, for 
example, with a time limit and that's a radically different 
concept in law than what we've had thus far. 

MR. LEHMAN:  Is it your view that if one of your works or one of 
your Guild member's works, where a copy of the work were in 
effect sold, distributed and you talked a little bit of the 
distribution right to someone through the NII electronically, 
that that could also be a public performance of the work, or 
public display bringing in the public display right or is it 
something that really is a sale of the copy of the work?

MR. TUROW:  Yeah, I'm really not equipped to answer the question.  
I can certainly get you a Guild response to it but I think rather 
than going beyond the pretty narrow understanding I have of the 
Copyright Act, I think I would be speaking out of school, Mr. 
Lehman, if I tried to answer that question.

MR. LEHMAN:  I appreciate that and I think it would be useful to 
have more feedback from the Guild on that, because there are and 
we've heard it discussed this morning, there clearly is a view 
that electronic transmissions, point to point electronic 
transmissions, even of a single copy, even if it isn't widely 
disseminated to a lot of people, is in fact a public performance 
or display and in effect invokes the use of two rights, the 
traditional right to distribute or the right to make a copy and 
also then the right of public performance and display.  That 
becomes an important issue because sometimes those rights are 
not, at the moment that would probably not be true in the case of 
print authors like yourself, but sometimes those rights are 
possessed by two different parties or a separable rights and that 
has an impact about how we manage rights under the system so it 
would be interesting to see what print authors think about this.

MR. TUROW:  As I said, we, certainly in the discussions that I've 
had with the Guild officials, many of whom are more learned in 
these areas technically and legally than I am, certainly we 
support the position of the Working Group in terms of 
transmissions not being -- that support an amendment to the 
Copyright Act so that transmissions are no longer part of the 
bundle of rights conferred under the first sale doctrine and I 
tend to think I know where that means we're going to be on the 
question you asked regarding performance.  But let me turn to 
them and you will get an answer from the Guild in writing.

MR. LEHMAN:  Thank you very much. 

MR. TUROW:  Thank you.  Thank you for letting me appear here 
today. 

MR. LEHMAN:  Is Julie Gold here?  You had your choice, I guess, 
to come to Washington or to come to Chicago and it's an honor for 
the people of Chicago that you chose them instead.

MS. GOLD:  Thank you, it's my honor.

MR. LEHMAN:  You could have even gone to Los Angeles because 
we're going to be there on Friday.

MS. GOLD:  That's true.  I get to Washington a lot.  I never get 
to Chicago. 

     Good afternoon, Mr. Commissioner and members of the Working 
Group.  My name is Julie Gold and I appreciate the opportunity to 
be able to testify concerning how the proposed provisions of the 
preliminary draft report affect me and other individuals who rely 
upon income from song writing for their livelihoods. 

     All my life I've been a songwriter, though only recently 
have I been acknowledged as one, thanks to a song I wrote called 
"From a Distance," which won the Grammy for song of the year in 
1991.  Knock wood.  And I wrote it in 1985 when I was a 
secretary.  Song writing is my passion and my profession.  I'm 
not a recording artist, as you could plainly hear nor do I have 
any other substantial business interests in the music industry.  
I depend entirely upon my songs for my income.  The vast majority 
of that income comes from my performance royalties.  In order to 
keep writing I rely upon the fact that I'll receive royalties on 
a consistent and regular basis every time my songs are performed 
anywhere in the world. 

     You are to be commended for focusing upon the global 
implications of American creative product.  Clearly the 
information super highway will make intellectual property 
accessible to millions of people throughout the world faster and 
easier than ever before.  It's a new and exciting time for a 
songwriter like me, even though, technically speaking I just got 
an electric can opener and probably will never own a computer. It 
appears to me, however, that certain provisions in the draft 
report may substantially weaken my ability to receive continued 
compensation in the future because of the way the report 
recommends that the copyright law be changed to accommodate that 
technology.  It should be assured that in this new world of the 
information super highway, as they call it, that performing 
rights and music will be protected and not eroded.  Otherwise it 
will become difficult for songwriters like me who rely upon such 
royalties to continue to make music. 

     Though I receive mechanical royalties from the record 
company whenever a record with one of my songs on it is sold, the 
amount that I receive depends upon my contract with the publisher 
and was fixed before the song had a chance to receive any degree 
of success.  As I stated earlier, I was a secretary when I wrote 
"From a Distance," and I had no negotiating clout.  But with 
performance royalties I don't need any special clout, since I 
know that my songs will be treated the same as the songs of all 
songwriters, big, small, famous and otherwise, as far as the 
performances are concerned.  Even if records aren't being sold, 
as long as the song is being played somehow or somewhere, I know 
I'll be paid and that's the performing right. 

     With the new proposed right of distribution by transmission, 
if one of my songs is sent down a wire, I may no longer be 
entitled to performance royalties even though the recipient 
intends to listen to it, and why should it matter whether the 
listener makes a copy at the same time.  My song is the one 
chosen because that person wanted to hear it and that's why I 
wrote it.  It seems fair to me that I should be paid for it 
whether it heard at the moment it comes down or after it is 
loaded.  As it is now, when my song is transmitted on radio, 
television or cable, I get paid for that performance, even if the 
recipient records it for later listening or viewing.  The new 
technology should strengthen this long standing principle not 
alter it.  I hope you will consider these comments when you 
access the impact that a distribution by transmission right, as 
it is now contemplated, may have on songwriters, and I thank you 
for allowing me to present my views.

MR. LEHMAN:  Thank you very much.  You know, one of the things 
that's not in our report but you referred to your mechanical 
rights, but actually is in some legislative proposal made to the 
Congress on another matter, and that is right now there is a 
compulsory license that requires you to license your work for a 
set sum of money to a sound recording company once you have 
licensed it to any other sound recording company.  We're the only 
country in the world, just about, that has that system.  
Obviously that's a limitation in your rights.  Do you think 
that's something we should do away with, whether or not it's in 
the digital context or in the old-time context?

MS. GOLD:  No.  I don't see why the two can't sort of co-exist 
like they do now, right?

MR. LEHMAN:  In other words you favor having a compulsory license 
that is a limitation on your capacity to withhold your work to a 
record company?  Right now you can't withhold your work to a 
record company once one sound recording has been published with 
your work on it.

MS. GOLD:  Right.

MR. LEHMAN:  Any other company can have access to your work under 
a compulsory license.  You don't have the normal copyright right 
we have, for example, with your public performance rights, which 
is an exclusive right, although you may choose to license that 
non-exclusively.  You're telling me that you would just as soon 
keep the compulsory license and not have the full power to 
control it?

MS. GOLD:  I don't really understand the ramifications.  You 
know, really all I know is that I'm much more comfortable at a 
piano than a yellow legal pad and pen and the fact that I even 
get paid for songs for me is a miracle beyond compare.  But 
knowing songwriters who have struggled all their lives at other 
jobs, who finally get the privilege of being able to license them 
or hear them on the radio, it just seems to me that they deserve 
compensation for it.  Unfortunately I really don't understand the 
principles.

MR. LEHMAN:  It's unfair of me.  At least Mr. Turow is a lawyer 
and he acknowledged that he wasn't even a copyright lawyer and 
you're neither, so I apologize for asking you a legal, technical 
question.  I think we have gotten the point, that is that you 
very much believe that it is appropriate and right and just for 
you to be paid for the use of your works.

MS. GOLD:  And as technology increases I sort of feel that the 
umbrella of legislation should just broaden.

MR. LEHMAN:  One of the reasons I asked the question was because 
the issue has arisen from others here today as to whether you 
really have a right to simply get paid or a right to remuneration 
or do you really have a right to control the use of your work, 
and that's a distinction that we're trying to our way through 
here.

MS. GOLD:  Interesting.  Well, thank you for allowing me to be 
part of history.

MR. LEHMAN:  Thank you very much for joining us today and coming 
all this way out to Chicago from New York City to speak to us.

MS. GOLD:  Where's the wind?  I thought it was the Windy City. 

MR. LEHMAN:  It's hot and it's calm and hazy.  You'd think you 
were in Washington today.  That's why you came to Chicago.  You 
thought it was going to be nice weather.  You could have come to 
the Potomac instead.

MS. GOLD:  Thank you.

MR. LEHMAN:  Next I'd like to ask Pat Rogers, Executive Director 
of the Nashville Songwriters Association to come forward.  
Welcome to Chicago.  This is a little closer.  It was probably 
equal distance either way, to come to Washington or here. 

MS. ROGERS:  I'm going to Washington next week so I wanted to go 
to Chicago this week. Good afternoon, Mr. Commissioner and 
members of the Working Group.  The NSAI would like to thank you 
for allowing us this opportunity to speak to you today.  My name 
is Pat Rogers and I'm Executive Director of the Nashville 
Songwriters Association International. NSAI is a not-for-profit 
trade association for songwriters and serves a membership of over 
4,500 in all 50 states and 17 countries.  At present we have 57 
workshops which function as chapters, if you will, for the NSAI 
members who wish to meet monthly in their respective cities, and 
six of the 57 workshops are international.  Our primary mission 
is to foster and protect the profession of song writing. 

     Last March in partnership with the Ministry of Culture and 
the Department of Information of the Romanian government, NSAI 
took ten of our top songwriters to Bucharest to meet, make 
friends and write with some of the top songwriters in Romania.  
We were also invited to give a seminar concerning the need for 
protection of intellectual property and more specifically, why 
Romania must pass a copyright law to participate in the global 
market.  Each of the American songwriters came home not only with 
new friends from the Eastern Bloc but with a new appreciation for 
the protection of intellectual property and the right to creative 
incentive through the U.S. copyright law.  This Romanian 
experience makes us particularly grateful that you are conscious 
of the global implications of your recommendations because the 
information super highway will allow our creations to be used all 
over the world with little effort, making protection of our 
rights more important than its ever been before. 

     Becoming a successful songwriter takes many years.  It is 
like any other profession; no one is an overnight success.  Most 
songwriters have that proverbial day job in order to live while 
they're trying to become a staff writer for a publishing company.  
After signing with a publishing company, a songwriter's draw is 
recoupable by the publisher from mechanical earnings of record 
sales, and in some cases, the performance royalties also.  This 
means that the average songwriter depends upon performance 
royalties to feed and clothe his or her family.  I can assure you 
that the believe that all songwriters are wealthy is just not 
true.  There is no guarantee in this business.  A songwriter's 
income fluctuates yearly and often depends upon the politics of 
the industry with a high level of competition.  In speaking with 
one of our professional members who has fortunately been able to 
have a consistent, maybe not so lucrative, but consistent song 
writing career, I was told that if he had a hit song the bulk of 
earnings on that song would come in during three quarters and 
given the climate of his career, he had to budget that income 
over three years before another hit might come down his way.  For 
the average songwriter it takes both streams of royalties, 
mechanical and performance to make a living. 

     Royalties for the right of reproduction, which the new 
distribution by transmission right would essentially be, cannot 
substitute for performance royalties.  Songwriters have come to 
depend upon the concept of continued payment for continue use, 
the basis of a performance income.  Mechanical royalties are only 
paid to the writer when there is a sale of the product or album.  
Hit songs are performed years after the career of an artist has 
peaked and the product or album may no longer be available for 
sale.  Moreover, certain kinds of creative relationships can 
affect a songwriter's mechanical income.  A recording artist who 
records his owns songs is often paid less than a full statutory 
mechanical rate by the record label.  And if that 
artist/songwriter has collaborated on a song that he is 
recording, his non-performing collaborator is also compelled to 
accept that lesser rate.  This is known in the industry as 
control composition.  Unfortunately practices such as this by the 
record labels are not likely to disappear in the future and are 
subject to being transferred to other forms of reproduction of 
music.  Performance royalties on the other hand are not subject 
to such influences.  A songwriter knows that he or she will be 
paid when the song is performed on the same basis as everyone 
else.  

     We all know that the world loves American music, and in 
fact, American music is one of our biggest exports.  Should we 
not be interested in protecting the American songwriter when the 
world is traveling the super highway?  If the new proposed right 
of distribution by transmission indeed replaces the performance 
royalty would this not erode the copyright law by which Congress 
intended to encourage creative incentive?  Songwriters know that 
when their works are performed they will be compensated.  It has 
never mattered how the performance was accomplished.  Songwriters 
never have had to be concerned as to the way television, radio or 
cable transmitted songs, since the fact that they were 
transmitted, was what entitled songwriters to compensation.  By 
the way the new distribution by transmission right is envisioned, 
however, the performing right will be transformed from a right 
dependent upon performance to one dependent upon the manner of 
performance.  If a song is sent to a listener's computer where a 
copy is made and only listened to afterwards, the songwriter 
would not be entitled to a performance royalty.  This seems to me 
to be unjustified and I think would have a serious negative 
effect on songwriters in the high tech years ahead.  Through our 
experiences in Romania, we've witnessed firsthand what happens 
without protection of intellectual property and without creative 
incentive. 

     On behalf of the American songwriters I ask you to 
reconsider the concept of distribution by transmission and make 
it a right which is in addition to and not instead of the right 
of performance by transmission.  NSAI believes the future of 
American music would be at stake and we all believe that it 
begins with a song.  Thank you very much for your time. 

MR. LEHMAN:  Thank you very much.  Would you mind answering a 
question?  I think Ms. Southwick has one.

MS. SOUTHWICK:  If I understand your position, when you said 
there at the end that you want it to be in addition to the 
performance right, then do I understand that if a work is 
transmitted from a service provider, downloaded into the computer 
of an end user, you would consider that a distribution subject to 
a mechanical licensing fee?

MS. ROGERS:  As long as it does not replace that performance 
right, yes.

MS. SOUTHWICK:  But you consider that a distribution that would 
be subject to a mechanical licensing fee? -- I understand that in 
addition to that you consider it a performance.  When a radio 
station broadcasts a song, you consider that broadcast subject to 
a public performance royalty fee?

MS. ROGERS:  Yes. 

MS. SOUTHWICK:  Because you're capable -- and many people do -- 
make a copy from that transmission, would you also believe then 
that there should be a mechanical licensing fee for that 
transmission because it results in the making of copies?

MS. ROGERS:  Well, I don't know how you would collect them, do 
you, if you're copying from a radio?  I think we solved the 
copying problem with the DART bill.

MR. LEHMAN:  Well, actually some of our trading partners in 
Europe have devised a very nice system of collecting.  They have 
levy systems on blank tapes and then the blank tape levy money is 
distributed very much the same way as, in fact, in Europe by the 
same collecting societies.

MS. ROGERS:  Isn't that what we have now?

MR. LEHMAN:  No, we don't have that in the United States. 

MS. SOUTHWICK:  If I could ask one more question and just to 
clarify that you believe that it would be a public performance --

MS. ROGERS:  Excuse me.  I want to go back to Mr. Lehman's point.  
Do you mind?  How would a levy -- oh, I see.  Okay.

MR. LEHMAN:  We don't have levies.  We have public performance 
rights in radio broadcasts but in Europe, in addition to that, if 
you were a European composer you would also get money from the 
blank tape levy which would compensate you for that taping that 
takes place, then the keeping of the work in someone's library.  
That's an equivalent to a mechanical license that would be paid.

MS. ROGERS:  I'm sorry.  But is that not comparable to our new 
legislation which would be collecting on blank software?

MR. LEHMAN:  But that's in the digital tape context only and not 
on the traditional.  You're absolutely correct, yes.

MS. SOUTHWICK:  I just wondered if you could distinguish between 
the digital delivery of a copy, point to point distribution.  
When you say that even though it may not be listened to or heard 
at all for some time -- let's say, a week -- that there's no 
sound at all, that it's just downloaded into the computer, how do 
you distinguish that from a copy delivered in a record store and 
a week later the consumer listens to it?

MS. ROGERS:  Because it's transmitted. 

MR. LEHMAN:  Because it goes through a wire?

MS. ROGERS:  It doesn't necessarily have to go through a wire; it 
could be wireless.

MR. LEHMAN:  It's an electronic distribution.  In other words, 
the distinguishing factor is -- as opposed to being a physical 
distribution, it's an electronic distribution, and when it 
becomes that, then the performance right attaches?  Should in 
that case, and this gets back to what I asked Mr. Turow, in that 
case should the same thing be true about print authors or people 
that do other than music?  Should they also have a right of 
public performance or display that attaches when their works are 
distributed that way?

MS. ROGERS:  I can't speak for them.  I can only speak for the 
writers that I represent.  When it is transmitted digitally, it 
is a performance in our eyes and we should be compensated for it.

MR. LEHMAN:  I think we understand exactly where you are and I 
really appreciate your coming all the way up here.

MS. ROGERS:  I appreciate the time.  Thank you. 

MR. LEHMAN:  I should also say that the whole purpose --  I think 
it's pretty obvious that the purpose of the Green Paper is to see 
that our creative community and our user community are treated 
fairly in the United States.  Next, Stephen Paulus, also a 
composer.

MR. PAULUS:  Good afternoon, Mr. Chairman and members of the 
Working Group.  I am Stephen Paulus and I'm a composer in the 
field of symphonic and concert music, representing my thousands 
of colleagues who also write music in this field. 

MR. LEHMAN:  This is an interesting distinction.  Nashville 
people are songwriters; you're a composer. 

MR. PAULUS:  Well, I write the songs that people have yet to 
learn to love.  I write songs as well but they're a little more 
complicated sometimes, but we call ourselves composers.  It's not 
a derogatory term. Anyway, I'm representing my colleagues in this 
field as well.  I'm also a member of ASCAP and since 1990 I've 
been a member of ASCAP's Board of Directors.  I want to thank you 
for allowing me to testify today and offer my comments on the 
preliminary draft report.  I grew up in Minnesota and a very 
musical family, where everyone played an instrument, or two or 
three.  And I began studying piano when I was about ten.  I wrote 
my first compositions or songs when I was 13 or 14 and eventually 
attended the University of Minnesota where I received my Ph.D. in 
music theory and composition.  I co-founded the Minnesota 
Composers Forum which is a national organization representing 
over 900 composers.  And I've been honored to hold positions of 
composer in residence with the Minnesota Orchestra, as well as 
with the symphony orchestra.  Also orchestras of New York, 
Philadelphia, St. Louis and several other distinguished 
orchestras and opera companies have commissioned and/or premiered 
my works. 

     I'm very proud that my work has been well received but I've 
learned over the years that while composing is an enormously 
rewarding task, it is not easy to make a living writing 
symphonies and operas.  So called serious music, such as mine, 
and that of my colleagues is not performed as widely and does not 
sell as many records, as you probably already know, as the latest 
hit by a rock star, sometimes songwriter.  I, for one, look 
forward to the expanded availability and use of my work on the 
national information infrastructure.  I'm glad that President 
Clinton has organized a task force to study the potential risks 
and benefits of the information super highway.  We all know that 
the NII is coming but many of us in the serious music field are 
very concerned about how it will impact intellectual property in 
this country.  

     I thank you for this preliminary draft report which assures 
me that people are looking into these matters.  There's much to 
digest in this report, as we all know.  For the most part, it 
seems to me that the intellectual property Working Group means to 
protect and strengthen creator's rights, and this is most 
laudable.  Yet for that very reason I was surprised by two basic 
and related points in the preliminary draft. First off, is the 
suggestion that all transmissions of musical works over the 
national information infrastructure may not be considered 
performances or displays.  This means that my work may be 
transmitted over the NII such that an end user could listen to it 
possibly and see the musical notations and I might have no right 
to compensation.  I've been receiving performing rights royalties 
from transmission of my work by radio, television, satellite and 
other technology to people's homes and businesses.  I'm not a 
copyright expert by any means, but I do understand that with 
limited exceptions, when my work is sent to the public, from here 
to there, whether by wires or sound waves, laser beams or 
whatever, my performing right is involved.  I have entrusted to 
ASCAP the authority to license that right and I expect ASCAP to 
keep track of such performances.  I also expect a check when my 
work is used.  Why should transmissions to the public using 
computer technology be any different?  Why should I lose my 
rights when in theory the NII technology should serve my 
interests as well as the interests of those who send and receive 
over it?  

     As I understand it, works will be more easily accessible by 
more people, more efficiently and at an improved quality.  In 
other words, there will be a large increase in transmissions of 
musical works to the public.  Why should this increase by 
accompanied by a curtailment of the long established definition 
of public performing rights?  The preliminary draft does not 
explain how we will distinguish between transmission which are 
performances and displays and those which are not.  Unless the 
distinction is purely artificial, I cannot see how it would be 
possible.  Nor does the preliminary draft why that conclusion was 
reached, how it advances the goals of the NII.  It seems to me 
that it does not.  In fact, this suggestion could seriously 
impair my ability to earn my living as a composer.  The 
preliminary draft also proposes that when a transmission is both 
a performance and a distribution of a copy of a musical 
composition, it should be classified as one or the other, but not 
both, contrary to logic and as I understand it, the current law.  
I've tried to picture how this might work.  A technologically up 
to date person, Mr. End User, who seems to be a popular guy these 
days, having all of the latest sound equipment, accesses the 
information super highway and browses through the opera menu.  
Mr. End User spots a work of mine, "The Postman Always Rings 
Twice," a two act opera and decides to listen to it.  He pushes a 
few buttons and his home is filled with glorious sound.  He leans 
back in his chair, closes his eyes and for a moment he's there.  
He could see the orchestra and the singers in his mind.  The 
transmission is a performance, is it not?  But wait.  When the 
piece is complete, my friend and opera fan says and thinks, "That 
was beautiful.  My wife has got to hear this.  As a matter of 
fact her birthday is next week.  I'll put it on one of these 
disks and she can listen to it on the way to work every day."  So 
he pushes a few more buttons and he has a copy.  What has 
happened?  What was a moment ago very clearly a performance has 
just entered the Twilight Zone.  Now under the preliminary draft 
scheme we need a ruling.  What is the primary purpose or effect 
of the transmission?  To transmit a performance or to distribute 
a copy, and who, by the way, gets to decide?  Trying to analyze 
this, it becomes apparent that the proposal in the preliminary 
draft is not fair and simply will not work.  Mr. End User wanted 
to hear the music and NII delivered.  That performance was not 
eradicated by the distribution of the copy nor was the 
distribution of the copy overwhelmed by the performance.  The 
transmitter, the celestial jukebox if you will, would  have 
transmitted a performance and distributed a copy.  Two different 
rights were implicated by the transmission and neither was 
primary, relegating the other to secondary status.  Why should 
only one right be protected?  Why should the current state of the 
law change?  My colleagues and I will be hurt by the proposed 
amendment, but who will benefit?  No one that I can see.  The NII 
operator will still need a license to perform musical works 
because it will never know when any transmission is going to be a 
performance or distribution of a copy.  

     I hope this exercise has convinced the Working Group that 
there's no good reason to amend the definition of transmit to 
make performances and distribution of copies in either/or 
proposition in the NII context.  The rights are now separately 
set forth in the Copyright Act.  Congress allows us to license 
those rights separately and both rights should have the full 
support of the Working Group on intellectual property rights. 
Before I drop the subject, let me emphasize that in my example 
the result would not and should not be different if the end user 
had not first listened, but had simply retrieved the opera from 
the system and taken a copy.  It's the same as if I set my VCR to 
tape a concert while I'm out to dinner.  The work was performed I 
just wasn't listening or watching at the time of the 
transmission.  The point is that there is a process of 
performance.  When the Copyright Act was amended in 1976, 
Congress, to its credit, considered all of these angles.  It used 
all kinds of words and phrases like render and by any devise or 
process to make clear that these uses were performances.  

     Throughout most of the preliminary draft we can see the 
Working Group's interest in protecting and strengthening the 
rights of creators.  In fact, the preliminary draft goes so far 
as to heartily endorse a brand new performing right, for sound 
recordings and digital transmissions.  I, and I am sure my 
colleagues, favor an amendment to have such a right.  I'm not 
sure, however, that the broad proposal set forth in the 
preliminary draft has been sufficiently well considered.  I sit 
on the Board of Directors of ASCAP, as I mentioned at the 
beginning, and therefore I know that the various interested 
parties have spent a great deal of time and effort considering 
this issue.  It is of critical importance to composers and 
authors of music that performing right for sound recordings not 
derogate the existing rights of the creators of the musical 
compositions underlying the recordings.  The interested parties 
have reached agreement with respect to the appropriate scope of 
performing right for sound recording, one that all parties can 
live with.  We have shared that proposal with the Patent and 
Trademark Office and we would like to see the final report of the 
Working Group embrace that agreement.  

     Thank you for your time and attention.  The challenges and 
opportunities of the national information infrastructure are vast 
and significant and I appreciate your taking my views and those 
of my fellow composers into consideration. 

MR. LEHMAN:  Thank you very much.  I'd like to ask a question to 
flesh out a little bit more what you have told us. I heard what 
you said about a work that's strictly a musical work, in effect 
what we might think of now as a sound recording that is 
transmitted through the NII, maybe it could be distribution, 
maybe it could be public performance.  What about a situation, 
let's take a multimedia computer program, an educational computer 
program which contains music in it and the at the present time 
you can down to a computer store and buy the hard disc or the 
floppy disc or the accompanying CD ROM and so on, take them home.  
Now, would you agree that that is not a public performance, when 
the computer store sells the work?

MR. PAULUS:  I think I would contend that any time there's a 
transmission of a piece of mine or a piece of music, that's a 
performance. 

MR. LEHMAN:  So that should be a public performance?  I'm just 
trying to get a the distinctions here.  I'm not trying to quiz 
you or anything.

MR. PAULUS:  I understand. 

MR. LEHMAN:  As a practical matter, I don't think that is being 
treated as a public performance now.  Perhaps one of the 
performers could bring a lawsuit and test that issue.

MR. PAULUS:  You're suggesting if there was music included.

MR. LEHMAN:  In the sale of a work, yes.  It's exactly the same 
situation as selling a recording, but here we're talking about a 
video.

MR. PAULUS:  I don't think I've considered that aspect yet. 

MR. LEHMAN:  If what is done is instead of going down to the 
computer store and buying a multimedia work, instead I order the 
work through some kind of service, and it may well be this 
computer store just decides to set up a service, an 800 number 
where you can dial into their store and then get electronic 
delivery of the work.  Now, from what you've told me, you would 
consider that to be a, at that point, a public performance which 
would require, since the work contains music, contains one of 
your songs, a public performance to a performing right society.

MR. PAULUS:  Right, because there is a transmission. 

MR. LEHMAN:  I just want to make it very clear.  That means that 
this business at that point would then start to have to account 
for those royalties.  Now they don't, when they're not using the 
NII.  They would have to start doing that.  

MR. PAULUS:  Right.  I also wanted to back up just a second.  I 
think in the case of multimedia, as you point out in the report, 
is somewhat of a misnomer and a difficult thing, when you're 
combining these things.  I believe that's the spot in the report 
where you speak, already you're getting into -- 

MR. LEHMAN:  It's a collective work, but it contains, it's 
collective in a little different sense than what we've 
traditionally thought of, but it's a collective work, but it 
contains your music and as long as it goes through the wire, over 
the air, through the satellite, however, digitally, at that point 
the performance right attaches and somebody has to pay that. 

MR. PAULUS:  That's right.

MR. LEHMAN:  I guess it would be the video store or the computer 
store?  

MR. PAULUS:  I think so, sure.

MR. LEHMAN:  I think it's important for us, if we're to take your 
suggestion in our final report, to identify the parties who would 
be responsible for the payment of that royalty.  

MS. SOUTHWICK:  I just have one quick question.  You didn't cover 
this in your testimony, and I don't want to catch you off guard, 
but I just wondered if you have any views on digital sampling and 
whether that constitutes fair use of your work.

MR. PAULUS:  I have sort of a minimal knowledge of that at this 
point.  I know it's under a lot of discussion because you quickly 
get into some real murky areas depending on how much and what 
kind of use.  I might have to defer to someone else on that.  
Sorry.

MS. SOUTHWICK:  I apologize.  I know it wasn't part of your -- it 
was beyond the scope of your testimony.  I just wondered if you 
had any ideas. 

MR. LEHMAN:  Thank you very much.  It's hard for me sometimes, 
when I see people who are so distinguished and I realize I'm 
getting old. 

MR. PAULUS:  We're all aging at the same rate, though.

MR. LEHMAN:  Thank you.  Next is Edward Massie, President and CEO 
of CCH, Incorporated.  There's not a lawyer in the world who 
isn't intimately familiar with Mr. Massie's company.  Welcome.

MR. MASSIE:  Mr. Commissioner, thanks for the kind words.  I'm 
President and CEO of a law book publishing company and yet I'm 
not a lawyer.  I also have our counsel here today, Mary Ann 
Hines, so your detailed questions that I don't feel capable of, 
I'm going to call on Mary Ann.  So today you might view me as a 
messenger within our company.

MR. LEHMAN:  You're a good Chicago company, too. 

MR. MASSIE:  A good Chicago company.  I am President and CEO of 
Commerce Clearing House.  We're located in Riverwoods, Illinois 
which is a northern suburb and we're happy to be here today. I 
grew up in sales in our company and therefore I'm somewhat 
uncomfortable with what I'm about to do which is to read this 
testimony, so bear with me. 

     First of all, we welcome this opportunity to express our 
need for strong copyright protection in the NII and we commend 
the Working Group for its recognition of that need in its draft 
report of intellectual property in the national information 
infrastructure.  First of all, let me tell you a little bit about 
CCH.  We're a global provider of tax and business law 
information, software and services in a variety of media.  Last 
year our sales totaled just under $578 million.  CCH's domestic 
publishing business segment creates knowledge products for 
professionals worldwide.  Books and loose leaf products in print, 
on-line data bases and most recently CD ROM products, some of 
which we refer to as intellectual power tools.  The foundation of 
these power tools is a textual rule base that is grounded in 
state and federal law.  To this we add layers of questions to be 
answered interactively by users.  Sophisticated software then 
matches the users responses to the rules base and creates the 
professional's work product.  This might be a client memo, might 
be a policy statement or it might be completed forms ready for 
filing.  CCH's investment in these types of products is enormous.  
Each product marries the brain power and creativity of highly 
skilled employees, and we have almost 6,000 worldwide utilizing 
the very latest information technology.  It's even more important 
as product life cycles are decreasing in length.  

     We make this investment because the marketplace requires it 
of us.  Our reputation, our continued growth and the stability of 
the jobs we provide all depend on our continuing to make that 
investment.  But many of us who run information companies are 
concerned about risking that investment by making our products 
accessible via the NII. We are concerned because the very 
marketplace into which these valuable products would be sold, the 
very environment in which they are designed to be used currently 
seems to offer relatively safe haven for the pirates of the 
information age.  The draft report represents an excellent first 
step in addressing many of our specific concerns.  To illustrate 
why I say that, let me mention what some of those concerns are. 

     First, we're concerned about the technical ease of fast, 
clandestine conversion of printed works to digital form without 
authorization of the copyright owner. Second, we view the 
electronic network environment as one that makes it easier than 
ever for information shoplifters to operate and more difficult 
than ever to identify who they are. Third, we believe information 
on demand world, but we see no means to electronically create a 
binding contractual terms and conditions by which intellectual 
property rights are currently protected. Fourth, we are unsure 
how the NII will permit copyright information to travel with 
copyrighted data and how its legal underpinnings will deter 
tampering with such information. Fifth, we expect to be paid for 
our creative effort, yet we note that the current network user 
community has some predisposition for free information and sees 
the NII as increasing the availability of information without 
cost. Sixth, in an era where all users should be concerned 
whether the data they are receiving is authentic, we worry about 
how our data will be secured against the on screen tampering or 
corruption. Seventh, we are concerned about rhetoric.  We're 
concerned about the use of metaphors for the NII such as 
information highway, digital library or universal service, that 
imply that all of the information available might be free.  In 
fact, much of the information that could be made available would 
be copyrighted and it is not, and never has been, available free 
of charge.

      Eighth, as a global company we're concerned not only about 
the instant worldwide availability of misappropriated data, but 
with the ability, even the inclination of various countries to 
deal with violations and the lack of willingness of some to grant 
national treatment of foreign authors, we see one of two things 
happening and these concerns are not addressed.  One is that 
creators of copyrightable information will decide not to make 
that information available on the NII.  The other is that they 
will run the risk of the new environment, make the information 
accessible and see their worst fears realized.  These companies 
will leave or be driven from the field and with them will go 
their investments in the economy and the jobs they provide.  And 
either way the public will have lost some of the benefit an 
advanced NII could deliver.

      It was because of these types of concerns that CCH awaited 
with interest the Working Group's report on intellectual property 
rights.  On the whole we are very pleased with its tone and 
substance.  Clearly the report does not address all of our 
concerns.  We did not expect that it would.  It is fair to say 
that we might not agree with all of the specific recommendations 
in it, but in our view the Working Group is to be commended for 
its insight, its support of strong copyright protection and its 
pragmatic approach to a set of very complex issues. 

     Let me mention several specific areas of concurrence.  We 
agree that wholesale revisions of the copyright law are not 
necessary and that many of our concerns can be dealt with by 
clarification in existing law to make sure that the capabilities 
offered by new technologies are accounted for.  We are pleased to 
see that the report recognizes the potential for encryption and 
other technologies to safeguard data against tampering or 
unauthorized access, and that it recommends legislation to 
protect such technologies against those who would defeat their 
purpose.  In the same vein we applaud the group's stance 
regarding the need for copyright management information to alert 
users of copyright status and licensing terms, and the need to 
protect against removal or fraudulent creation of such 
information.  We agree wholeheartedly that compulsory licensing 
is neither necessary or desirable and that the marketplace should 
be allowed to develop the legal licensing systems appropriate for 
the NII, and we endorse the group's conclusion that each country 
participating in a global information infrastructure should 
protect the works of nationals of other member countries without 
discrimination.  

     There are several areas we think require further study.  
First, we tend to believe that issues involving downloading, 
uploading and forwarding should be dealt with by a clarification 
of the reproduction right, not the distribution right. Second, we 
are concerned that there may be some unintended consequences if 
publication is defined precisely as the report recommends.  And 
third we note the report applies the notion of fair use to 
electronic browsing rather more broadly than we would like.  
Beyond that, I think it's sufficient to say that the Information 
Industry Association of which we're an active member has covered 
these and other issues in detail and written comments in its 
report.  We endorse those comments and ask the Working Group to 
give them serious consideration as it works towards a final 
report.  As to terms of concern not covered in this report, we 
especially urge you to consider the IIA's suggestion that the 
Working Group look into the need for a clear legal basis for 
creation and execution of electronic contracts, electronic 
billing methods and other ingredients necessary for true 
electronic commerce to occur.  While admittedly ancillary to the 
main focus of the group, these matters will bear significantly on 
the success of the NII.

      I have one last comment on the report itself.  CCH commends 
the Working Group for recognizing a need for further study of 
issues regarding fair use and responsible use in this environment 
and we look forward to participating in those conferences.  

     Finally let me thank you on behalf of my company for placing 
copyright center stage in this debate.  This is where it belongs.  
Its complex suite of issues must be resolved in a way that offers 
broader access to copyrighted works while protecting intellectual 
property.  If that balance can be struck, the pay back will be 
enormous, in the industry's continued investment in new products, 
in the jobs that will be created and we are sure in the 
commercial success of NII.  That concludes my remarks and if you 
have any questions, Mary Ann would probably be glad to answer 
them.

MR. LEHMAN:  Thank you very much.  We appreciate your appearance 
here and I think we'll forego questions and move on since we've 
got quite a few more witnesses.

MR. MASSIE:  Thanks very much.

MR. LEHMAN:  Next is Mr. Jim LiSaachi, Executive Director for 
Instructional Technology at McDougal Littell/Houghton Mifflin 
from Evanston.

MR. LISAACHI:  Mr. Chairman, members of the Working Group, thank 
you for allowing me to appear here this afternoon.  My name is 
Jim LiSaachi and I'm the Executive Editor for Instructional 
Technology at McDougal Littell/Houghton Mifflin, Incorporated 
located just down the lake shore in Evanston, Illinois. We 
publish educational material for the middle school and high 
school market, grades 6 through 12.  I'm appearing today on 
behalf of McDougal Littell/Houghton Mifflin and our corporate 
parent, Houghton Mifflin Company. 

     As publishers we are very concerned with the subjects being 
discussed today.  We have been closely involved with the 
activities of the Association of American Publishers, the AAP, in 
reviewing and commenting on the Working Group's preliminary 
report.  We will continue to work closely with the AAP and other 
industry groups in this process.  We also believe that there are 
some issues of particular concern to those publishers who 
developing and marketing educational materials for elementary and 
secondary schools which may also be of interest to the Working 
Group.  That is why Houghton Mifflin asked me to appear here 
today. 

     From the time Houghton Mifflin first began publishing the 
works of Nathaniel Hawthorne, its been a widely respected 
publishing company.  The company publishes adult and children's 
trade titles and has an extensive line of college textbooks.  
Although these activities are and will continue to be important 
to the company, more than half of the company's sales have always 
come from elementary and high school texts and other educational 
materials.  The significance of this area of the company's 
business has increased since the acquisition in March of this 
year, of McDougal Littell.  Together Houghton Mifflin's school 
division and McDougal Littell/Houghton Mifflin published text and 
multimedia materials that teach reading, spelling, handwriting, 
language arts, geometry, algebra, history, economics and foreign 
languages to kindergarten through 12th grade students.  To give 
just a few examples of how important our publications are to 
primary education in this country, we estimate that 20 to 25 
percent of all students in the United States have learned to read 
from Houghton Mifflin reading textbooks.  At the secondary level, 
more than 1.2 million high school students are today using 
McDougal Littell's writers craft and literature and language 
series to perfect their language art skills. 

     The creation of such basal programs is an enormously complex 
and expensive undertaking, sometimes costing tens of millions of 
dollars per program.  As the type of technological advances, 
which are the subject of the preliminary report, become more 
widely available within schools, complimentary and supplementary 
technical components such as video discs, audio tapes and CD's, 
software programs, multimedia CD ROM's are being developed and 
distributed.  This year, for example, McDougal Littell published 
its first integrated multimedia instructional system, a one 
semester course of economics and free enterprise that included 
video tape, video disc, original software programs, in addition 
to extensive print materials.  All educational publishers are 
devoting enormous amounts of time, energy and financial resources 
to the creation and dissemination of these materials.  These 
efforts will, we believe, have the effect of raising the quality 
of education generally available to our students.  The 
proliferation of different media facilitated by the delivery 
mechanisms offered by the NII will help us to help teachers teach 
and students learn more effectively.  Some subjects and concepts 
are presented most effectively through the printed word, others 
may be taught and learned best by video or multimedia technology.  
If we are able to continue to invest in the development of new 
products which use these technologies, we will be able to make 
educational materials available in their most effective formats.  
The ability of Houghton Mifflin and of other educational 
publishers to continue to develop and improve teaching materials 
and to provide those materials in all the various formats and all 
the differing platforms now available will be profoundly effected 
by the legal considerations addressed in the preliminary report.  

     We were pleased to see the affirmation in the report of the 
importance and relevance of effect copyright protection.  We 
absolutely agree with the statement in the preliminary report 
that, "The potential of the NII will not be realized if the 
information and entertainment products protectible by 
intellectual property laws are not protected effectively when 
disseminated by NII."  If educational publishers are not able to 
secure a reasonable return on their investment, they simply won't 
be able to continue to invest.  Our ability to achieve that 
return on investment is directly related to our ability to 
protect, through copyright, the intellectual property that we 
create. I understand that there are to be separate hearings on 
the definition of fair use in the context of the NII, 
particularly of educational materials or for educational 
purposes.  I do, however, want to address briefly the question of 
fair use.

      Publishers of educational materials are participating in a 
technological revolution in teaching.  We are developing, testing 
and publishing  sophisticated programs to teach basic skills to 
school children and we are providing support and training for 
teachers as they learn to take full advantage of these new tools.  
The widespread unauthorized use of these materials, whether under 
the guise of fair use or otherwise, will hamper further 
development efforts and impair our efforts to provide students 
and teachers with innovative effective educational materials.  
Publishers are making substantial investments in these new media, 
often with little likelihood of immediate financial reward 
because of such practical considerations as the lack of a large 
installed hardware base at many schools at the present time.  If 
these substantial investments cannot ultimately be justified 
economically, innovation will slow and education will suffer.  

     We are pleased that the preliminary report acknowledges the 
importance of effective copyright protection for works 
transmitted via the NII and we look forward to participating in 
the continuing discussions over how to best implement that 
protection for educational materials on other intellectual 
property for the benefit of creators and users alike.  Thank you.  

MR. LEHMAN:  Thank you very much.  We appreciate your testimony 
this afternoon.  Next I'd like to ask Bruce Iglauer, President of 
Alligator Records to come forward, from Chicago.

MR. IGLAUER:  Good afternoon.  My name is Bruce Iglauer.  I'm 
President and founder of Alligator Records, a 23-year-old 
independent record label based here in Chicago.  I'm also a 
founder and for 19 years a member of the Board of Directors of 
the National Association of Independent Record Distributors and 
Manufacturers. 

     First, I'd like to thank Assistant Secretary Lehman and the 
Working Group for their efforts in the area of protection of 
intellectual property and especially in the protection of 
copyrighted sound recordings.  Specifically I want to speak in 
support of the performance rights bill pending in Congress. 

     I think I bring a somewhat unique view to these hearings, as 
I don't believe you've heard for anyone in the independent record 
business.  Let me explain what I mean by the independent record 
business.  The large record labels like Sony, MCA, Polygram, for 
example, and others are multi-national conglomerates.  They own 
their own distributing companies.  So when they sell a record to 
a store, they make a profit, not only from the sale to the 
distributor but also from the sale of their wholly owned 
distributor to the store.  On the other hand, the independent 
record labels sell to distributors which they don't own.  
Obviously the independent labels make significantly income per 
sale than the so called major labels.  Nonetheless, independent 
labels have managed to survive and sometimes even thrive in the 
very competitive record business climate.  In fact, independent 
labels represent about 15 percent of the record sales in the 
United States.  This is not only because we're marvelously smart 
business people, but also because many of us have devoted our 
recordings to forms of music which the major labels have tended 
to ignore, music which has strong cultural and artistic validity, 
but which isn't always perceived as highly commercial.  This 
music includes all types of traditional American music, such as 
blues, my specialty, blue grass, more traditional types of 
country music, folk music and various types of ethnic music.  It 
also includes the majority of jazz being recorded today, as well 
as quite a lot of contemporary classical and other music that's 
outside of the pop mainstream of Madonna, Billy Joel and the 
Rolling Stones.

      Many independent labels operate on very thin profit 
margins, sometimes at a loss.  But the struggling entrepreneurs 
that operate these labels have intense belief in the value of the 
music they record and in their artists.  In fact, I would guess 
that the combined artist rosters of literally thousands of 
independent record labels would far surpass those of the major 
labels.  In other words, there are more musicians recording for 
independent labels than for major companies.  Mostly these aren't 
the artists and labels which are having huge pop hits and getting 
rich.  These are musicians and business people who are building 
roots businesses and preserving American art forms.  The 
financial health of these companies and musicians is very fragile 
and taking away any potential source of income from them could 
destroy the possibility of many of the labels continuing to 
survive.  As it is the vast majority of records on both big and 
small labels never recoup their production costs and the minority 
of records on these labels must support the labels.  To give you 
an example, for an independent label like mine, a record that I 
manufacture that sells 5,000 copies over the break even point is, 
in my world, a hit. 

     I've read the proposed amendment to the existing copyright 
law with a great deal of excitement.  I believe its an essential 
piece of legislation for the preservation of independent music 
and recording in the United States.  Digital transmission is a 
reality.  The technology is here and available and we can't stop 
it.  It, in fact, can create wonderful opportunities for the 
independent record industry by bringing a selection of music 
almost unavailable on commercial radio to every household.  Even 
now, digital cable systems provide channels of blues, blue grass, 
folk, jazz, classical right next to, and just as accessible, as 
channels of the big pop hits.  And they provide this music in 
beautiful digital sound.  It's great for me to see that an 
obscure blues artist recording for Alligator is on equal footing 
with Pearl Jam or Tony Bennett but, a big but, unlike commercial 
radio in which the listener is bribed into listening to 
commercials by being given music, the end salable product of 
digital broadcast is the music itself.  Subscribers are paying 
for uninterrupted musical performances in perfect sound, musical 
performances which are the copyrighted property of the record 
labels which paid the cost of recording them.  Obviously this 
type of delivery is competition for every record company.  Why 
buy something you can have in your home for free?  And we're only 
minutes away from being able to dial up any song or any album we 
want on our home computer, rather than passively listen to what 
the digital cable provides. 

     If digital delivery of music cuts deeply in the sales of 
recording, as it obviously will and soon, how could record 
companies, big or little, survive unless they're compensated for 
what is, in effect, the sale by subscription of their product?  
I've spoken about the income of record companies but not about 
the income of recording artists.  Under most record contracts, 
any licensed income received by record labels is split with the 
recording artist, usually on a 50/50 basis.  For a struggling 
musician and his or her family, this could be a very important 
part of their income.  And even after recording artists die, the 
royalties pass on to their heirs.  I recently had the very 
pleasant experience of giving a check for $10,000 to the long 
lost daughter of an artist I recorded in 1972.  He had been dead 
for over ten years.  The money enabled her to make a down payment 
on a shotgun house in Memphis where she's taking care of her 
paraplegic son, the grandson of the artist I recorded.  True 
story.  For most independent label artists royalties are not an 
issue of being able to buy an extra Mercedes but being able to 
feed their families and keep a roof over their heads.  

     You, the Working Group, deserve our thanks for your 
continuing strong support of this piece of legislation and of 
intellectual property rights in the present technological 
climate.  Assuming and hoping that this amendment passes, the 
next step will be the necessary setting up of monitoring systems 
to log the use of music by digital transmission, as we begin the 
negotiation of licenses.  Further, you must consider recording 
from digital transmission.  The Home Recording Act deals with 
authorized recording, though the mechanics of the distribution of 
income from this legislation are still being developed and it 
seems to me that such income cannot be distributed fairly unless 
monitoring of digital transmission takes place.  Beyond that is 
the inevitable headache of trying to halt the technology that 
would allow home copiers to circumvent monitoring and make 
bootleg copies of copyrighted musical material. 

     You have a very complex job and I don't envy it, but what 
you are doing is absolutely essential to the protection of our 
artists, our art forms and those of us who are the bridge between 
the artist and the public.  Sound recordings have traditionally 
been more vulnerable than any other copyrighted material.  Your 
efforts will begin to stop that abuse.  Thank you.  If you have 
questions, I'll try to answer them.

MS. SOUTHWICK:  I just want to make this clear -- that you are 
supporting the bill that is now pending in Congress?

MR. IGLAUER:  Yes. 

MS. SOUTHWICK:  It gives a limited performance right, limited to 
digital transmissions --

MR. IGLAUER:  I understand.  In my ideal world, it would be 
wonderful if commercial radio broadcasts also paid record labels.  
But traditionally in this country that hasn't been the case.  In 
many countries, in the majority of industrialized nations, it is 
the case.  I don't expect that that's going to happen at this 
time or maybe in the future, but my concern right now is with the 
digital delivery, which because of the quality of delivery and 
the availability for digital recording, is much more of a threat 
to our business.

MS. SOUTHWICK:  I'm sorry, but can I go outside the scope of your 
testimony also and ask if you have any views on digital sampling 
and the fair use doctrine?

MR. IGLAUER:  Frankly I'm still becoming a little more educated 
in this area.  I have dealt in the general area of sampling and 
have negotiated a number of licenses when other artists have 
wanted to sample copyrighted material from my company.  These 
negotiations are wildly varying in the amounts of money, the 
royalty rights, etc. and standards are still be established but 
it's in the nature of the business that we have to do this type 
of negotiation.  I'm sure negotiations with digital outlets for 
our music are also going to be very complex.

MR. LEHMAN:  Thank you very much.

MR. IGLAUER:  Thank you. 

MR. LEHMAN:  Next I'd like to ask Kent Stuckey, general counsel 
and secretary of CompuServe, Incorporated to come forward. 

MR. STUCKEY:  Good afternoon.  I want to thank you for the 
opportunity to speak today and to express CompuServe's views with 
regard to the Working Group intellectual property draft. 

     CompuServe is the largest worldwide information service 
provider, with some 2.3 million accounts worldwide with around 
one fourth of those outside of the United States.  CompuServe has 
great respect for the rights of copyright content owners, as 
CompuServe is itself an owner of copyrighted software required to 
offer information service functionality.  In addition, we have 
great respect for the mission of the national information 
infrastructure initiative in this Working Group and its fine work 
in the draft in its attempts to deal with the challenge of 
intellectual property issues presented by electronic 
communications and interactive technologies. 

     CompuServe was instrumental in drafting and revising the 
comments to achieve a consensus joint filing on behalf of 
CompuServe, America On-line, Prodigy, Genie Delphi, ZIF, LEXIS 
Counsel Connect and a leading representative of the Bulletin 
Board or BBS community.  I speak today on behalf of CompuServe 
and I hope and expect other information service providers to 
testify at the Working Group's future hearings. 

     In reviewing the adequacy of current copyright law as a 
foundation to promote the NII, the Working Group borrowed Thomas 
Jefferson's analogy in asking whether the coat still fits in this 
new information age and whether we are requiring the man or 
perhaps the adolescent in this case to wear the coat which fit 
him when he was a boy.  This analogy is equally fitting for an 
introduction to CompuServe's testimony.  The Working Group draft 
recognizes the evolution and growth of the NII and recommends an 
alteration to make room for the information content in light of 
digitized transmission.  The Working Group appropriately 
recognizes the body of information content to be at the core or 
perhaps the heart of the NII.  We must recognize the extremities 
which enable the movement and reach of the body of information 
content which are the communications and information service 
systems.  I urge the Working Group to recognize that in today's 
real time world of potentially all to all electronic 
communications that continued application of a strict liability 
standard of direct copyright infringement threatens to greatly 
burden or cut off circulation through the extremities as well as 
the movement or burden the movement of the body of information 
content. 

     It is in the best interest of the whole of the NII, 
including content, the communications and consumers, that the 
copyright clothing accommodate not just the core of the body but 
its arms and legs as well.  As the Working Group recognized in 
its draft, it's not clear if the information service system 
providers and interactive service providers are liable for direct 
infringement.  A clarification that a form of contributory 
infringement liability based on actual knowledge would greatly 
enhance the ongoing development of the NII.  There's a choice 
here between the strict liability of direct infringement and an 
actual knowledge standard or a knowledge standard which the 
Working Group should make and we urge them to make the choice of 
actual knowledge for those providing a system function or dealing 
with interactive information, as I hope to demonstrate. 

     This being the University of Chicago, I think it fitting we 
consider this issue using an economic legal model, albeit a 
rather basic one.  Although many potential gradations exist, I 
reduce this down to choice between plan A and plan B, with a 
review of the consequences.  Plan A is a strict liability regime, 
Plan B an actual knowledge standard.  Plan A is in essence a kill 
the messenger standard.  With strict liability the system 
provider and interactive system provider, not being the content 
owners or the content providers on the system, bear the direct 
cost of wrongdoing of end users under a strict liability regime.  
This is the case with traditional publishers, producers and 
broadcasters in copyright; however, these media models are a one 
to many or a few to many model.  This is not often appreciated or 
it's not appreciated by certain content owners that CompuServe 
attempts to work with on occasion.  The technology is great news.  
For the first time we have the potential to enable all to all 
communication on a real time, affordable basis which is the 
overriding goal of the NII.  This a quantum leap in media 
technology and we should take action to protect and realize the 
potential. 

     Strict liability establishes a requirement or an incentive 
to review and screen of censor in order to avoid or reduce 
liability.  Now, if this is attempted, the technology is severely 
handicapped, both regarding its real time aspects and its 
efficiencies and then on the resorting economic benefit, all 
reduced by the cost of screening and censoring, as well as the 
deprival of the real time efficiencies.  These costs would indeed 
be passed on to the consumers and this is the threat of 
presenting a society of information haves and have nots.  The end 
users would bear the cost of the potential abuse by the few under 
a strict liability regime.  Also screening is not effective.  We 
cannot know what is copyrighted or if there are new levels or 
elements of expression of another that have been introduced.  
CompuServe alone, for example, in the most recent week, 
transmitted over 400 billion characters of data.  If we assume 
that these are all transmitted in the context of full screens of 
information, we're talking over 200 million full screens of 
information weekly.  There is an incentive to avoid all risks 
that would arise through a continued direct infringement or a 
clear establishment of an infringement regime.  This would put 
information service providers and interactive service providers 
in the role of judge and jury on copyright issues, with a stake 
in every potential loss so that we would be likely to foreclose 
any progressive uses of the system presented by third parties 
undertaking innovation and some of the attendant risks.  We 
believe that a choice of Plan A or clear establishment of direct 
infringement liability for a system provider does not reflect an 
appreciation of the full scope of the all to all real time 
essence of the technology and the inability to control and 
monitor effectively. 

     Now, Plan B would be based on an actual knowledge standard.  
It would free system providers and those offering interactive 
service to act as a value added conduit.  Plan B places initial 
accountability where it should be, on the wrongdoer and it avoids 
the detriment to all end users arising from strict liability, 
again increased costs and handicapping technology.  It strikes 
the proper balance between the interests of content owners and 
consumers and communication system providers and interactive 
service providers.  The Working Group should not choose Plan A, 
assuming that the incentive for content creation will be 
destroyed.  These are well established industries.  The markets 
are expanding.  They are expanding through he national 
information infrastructure.  There's always some level of abuse 
by consumers but when that reaches a commercial scope it is 
quickly snuffed out.  The question being, who should bear the 
cost where there is no knowledge of wrongdoing?  The book stores, 
libraries and news stands have not been held liable to this type 
of infringement. 

     Great harm arises from the Working Group not making the 
choice now and clearly recommending a knowledge based standard.  
Uncertainty has great costs to responsible providers who are 
perceived as deep pockets.  Assuming the services could survive, 
we believe that the pockets would be those of the end users and 
consumers as well as the national purse which would result from 
an unrealized boost in efficiency and productivity offered by 
these new technologies.  Also there would be harm to the values 
underlying the First Amendment.  There's a great threat to the 
ongoing insurability of information service system providers.  In 
this uncertain environment the costs of litigation are indeed 
great and the source of insurance are very rare.  As you can 
imagine the costs are increasing dramatically with recent 
developments and it's being looked at closely by the insurance 
providers.  A clear establishment of a Plan A or strict liability 
of direct infringement approach would likely dry up the market 
providing copyright infringement insurance to information service 
providers.  Thus, the concern regarding vulnerability of this 
industry is quite real. 

     We believe that the rationale of the Sony case should be 
applied due to the futility and impossibility of effective 
screening in this new all to all media technology, as well as the 
capability for significant commercial non-infringing uses.  In 
sum, we urge an additional alteration to the coat or clothing of 
copyright law, so it fits both content and its distribution in 
the new information age.  This can be achieved by establishing an 
actual knowledge standard of liability for those providing the 
functions of information service systems and dealing in the realm 
of interactive services.  Thank you.  Do you have any questions?

MS. SOUTHWICK:  I have just one.  You are suggesting that even 
though it would be a technical, direct infringement, there be an 
exemption of sort -- because obviously innocent infringement is 
infringement nonetheless under the Copyright Act -- that there be 
a special carve out for service providers?  Rather than strict 
liability, there would be a different test -- a knowledge test?

MR. STUCKEY:  Of course, I wouldn't agree that it is currently 
well established to be a technical direct infringement.

MS. SOUTHWICK:  Assuming --

MR. STUCKEY:  Assuming that be established, if you are providing 
the function of the interactive service system, as opposed to a 
content provider, yes, there would be a carve out requiring 
actual knowledge.

MS. SOUTHWICK:  When you say "actual knowledge," is that -- what 
would constitute actual knowledge?  Would notice by a copyright 
owner that you have an unauthorized reproduction up on your 
system be enough, or would they be required to prove it in some 
way for you to have actual knowledge?

MR. STUCKEY:  It's a challenging issue.  The answer depends on 
what role you want the system provider to play.  Do you really 
want them to be judging whether the copyright infringement 
allegation is appropriate or not, where there appears to be a 
good faith defense?  If there is a good faith issue then the 
information service provider is likely to just foreclose 
provision of that service and deprive the consumers of the 
potential benefit of it, even though there's a good faith legal 
issue here.  It's my belief that the system provider should be 
taken out of the middle and those attempting to conduct an 
information service business or an information business that is 
challenged by the owner work it out.  I would still feel much 
better also that if we ended up with a knowledge standard where 
we're dealing with what we knew or should have known which would 
involve a bit more of a gray determination, what the information 
service provider should have concluded from notice of the 
allegation. 

MS. SOUTHWICK:  Well, it would seem under actual knowledge that 
the only way you would have actual knowledge is if in fact the 
underlying infringement were litigated, if you say you don't want 
to be in the role of determining whether there's a good faith 
defense to counter the copyright owner's allegation of 
infringement.

MR. STUCKEY:  There are injunctive avenues of relief available to 
the copyright owners if they want to take action to cease 
distribution of that information.  Again, it's a tough issue.  I 
don't necessarily, I'm not committed to an actual knowledge 
requiring determination by a Court.  As you note in our comment, 
there was a footnote, and only one of the commenting parties 
would require a binding determination by a Court of law.  

MS. SOUTHWICK:  I'm sorry.  I haven't read your comments, so 
maybe the answer is in there. 

MR. LEHMAN:  I have a question.  You compared yourself to a book 
store at one point in your comments.  Are you a book store or are 
you a broadcaster?

MR. STUCKEY:  We are an information service provider.  I don't 
say that to be smart, I just suggest we must be evaluated and 
dealt with on the basis of what it is we actually do, rather than 
analogize.

MR. LEHMAN:  Would you say that you both deliver copies of works 
to people but also publicly performed works in the context of 
what we think of as a broadcast?  I think you were here a little 
earlier and heard some of the earlier discussions of songwriters.  
I'm trying to get at that issue.  As I see it, you are the 
organization that would pay the royalty, public performance 
royalty that they believe should be paid in the case of, say, 
multimedia work transmitted through your system that uses music 
or any work.

MR. STUCKEY:  The trouble with the broadcast analogy is that it 
again looks at a one to many type of model.  We're in the middle.  
It's an all to all model.  We can't anticipate or know what the 
spontaneous use of now over two and a half million users, 
increasing close to, or over 50 percent for us -- 

MR. LEHMAN:  What that suggests to me is that you, in fact, do, 
at least on occasion, engage in a one to many transmission and 
that in a sense even taking a more liberal view or more 
conservative view of the performance than some of the earlier 
witnesses who would even cover a one to one transmission, you 
really should be paying -- are you paying ASCAP and BMI royalties 
right now?

MR. STUCKEY:  We are not because it is not clear what we are 
doing, actually I'm not sure we're doing anything that could 
conceivably be characterized as a performance. 

MR. LEHMAN:  Well, if we accept the views that were expressed 
earlier today, you are for sure. 

MR. STUCKEY:  I think we need to clarify one thing.  I make very 
clear that CompuServe is not running the specific information 
services on its system.  Those are indeed third parties, such as 
the Associated Press or many other entities ranging in size.  We 
just provide a system and we don't --

MR. LEHMAN:  You don't program it?  Well, you sort of program it.  
You have a magazine every month that comes out?

MR. STUCKEY:  We have a magazine that tells about what the 
services are in the CompuServe system. 

MR. LEHMAN:  In a sense that's not unlike a cable system that has 
channels of programming that are available to it.

MR. STUCKEY:  Again I encourage you to look at what we actually 
do because it's very different from cable.

MR. LEHMAN:  I'm just trying to get at what the facts are here 
because one of the central issues, I believe one of the most 
important issues that has emerged thus far, the most serious 
criticisms are of our preliminary draft report has to do with the 
distribution right.  Every one of the witnesses this afternoon 
before you has talked about it.  It is very clear that 
particularly people in the music industry, composers and authors 
of music believe very strongly that any distribution of a work, 
even the intention of that distribution is to distribute a copy, 
no different from buying a copy in a record store or what have 
you, any distribution through a system such as yours simply, 
maybe it's also a distribution of copy, but it also is a public 
performance and therefore, their right to receive public 
performance royalties, at least where music in involved, attach.  
Now, then somebody has to be liable for that right and it seems 
to me that it's highly likely that you might be one of the target 
parties.  So I would advise you to take a very close look at that 
and get back with us as to what you think about that, because if 
we were to modify our report and take their suggestions, then 
there's this -- it's clear somebody's going to have to pay that 
royalty and maybe that's the Associated Press, maybe it's some of 
the bulletin boards or is it you?  And I think we need to tie 
that down as to who is going to be responsible for it.

MR. STUCKEY:  Here's where I hope that you will read our comments 
carefully to see that we differentiate between the function we 
play, which is a mere system function, and then those people, 
those businesses managing information content and sending what 
the content that's being questioned here and they are perfectly 
capable of holding a license.  In some cases, we, on their 
behalf, administer collection and administration of revenues 
functions but we're the system, we're not in the content 
management business.

MR. LEHMAN:  I understand that and there are some cable systems 
that might take that position as well.  I'm not trying to argue 
about it.  Obviously we're getting different points of view from 
different people and we need to try to reconcile them and figure 
out exactly what people's position is, whose ox is going to be 
gored by whatever position we might take before we go forward.  
Thank you very much. 

     Next I'd like to ask Charles Kapper.  We're going to get 
somebody apparently from the patent side here to talk to us, 
finally.  And also a fellow Wisconsinite.

MR. KAPPER:  Right.  My name is Charles Kapper and I represent no 
specific organization but I'm representing all of the small 
individual private non- commercial inventors who have small 
budgets for legal fees related to filing a patent application for 
their invention.  In other words, to some extent we are in 
competition with the big firms, but when they have the kind of 
budget that they have, which is typically below $700, whether we 
are competition or not is very debatable. At the present time I 
am affiliated with a law office called Muhroney & Muhroney in 
Barrington, Illinois.  I work there part time as a patent 
searcher and paralegal and that law office specializes with 
inventors who, as I say, work on small budgets.  In fact, many of 
those inventors have budgets of less than $150 for a patent 
search which is a very small amount of money and that includes 
the cost of copies, by the way.

     My specific area of interest is patent data bases for patent 
searching and it appears to me at this time that no one is 
representing the small individual inventors.  I have seen a lot 
of very well organized companies, law firms, various trade 
organizations but nobody is representing small inventors.  I have 
some politically gut wrenching questions to bring up and I am 
bringing these up at a substantial risk to my personal career, 
mostly because some of this has to do with the data base 
providers.  What is at issue is the data base information that 
the Commerce Department distributes and owns within their patent 
data base system.  As the Commissioner is aware, the patent 
office does have their own distribution system called the APS 
system which is being used experimentally right now in 12 patent 
depository libraries across the country.  This is a trial system 
and the patent data base is a full text patent data base which is 
free of charge to the public.

     I am very concerned about what I am reading and what I am 
finding out behind the scenes as it relates to the large data 
base providers and who is going to be providing these data bases 
to the public.  I believe that the goal of the Commerce 
Department should be to foster invention and innovation and I 
believe that I would like to see the APS system expanded which 
again, is one of the main reasons why I'm here today.  Now, I 
personally do use the APS system and what I'm trying to say is 
the issue is, is this going to be an example in terms of will it 
be possible for the government to provide this data base which is 
needed by inventors free of charge or on a pay per fee basis 
substantially cheaper than the major data base providers?  I 
believe that this is largely a political issue and as I say, the 
system, the APS patent searching system, is available free of 
charge to inventors at these 12 libraries and I think that 
probably one of the logical questions that you would want to ask 
is, well, if the system is available free of charge, why should I 
be able to use it working for a law firm, when other law firms 
have to pay a data base service as part of their expense 
operating costs?  

     And my response to that is that first of all, we are 
bringing inventors and innovators into the patent system who 
otherwise would never come into the system.  That's reason number 
one. The reason number two is that without us, their inventions 
would probably lay dormant and nothing would happen to it.  And 
the third thing is that we guarantee our results as a law office 
as far as the completeness and thoroughness of our work and the 
way I want to differentiate that is that there are a lot of 
computer services that are pretending to be invention development 
services that have no professional standards.  We, as a law 
office, have professional standards.  

     So I can only tell you that the issue, one of the main 
issues, that we would like to see addressed is this policy issue 
of will the Commerce Department provide data bases to the public 
on the information super highway that are now being provided on a 
fee per hour basis?  As far as the political ramifications of 
this, the people who use the APS system at the Milwaukee County 
Library were just very unhappy and outraged that beginning 
January 1st 1995, according to the proposal, the Patent Office 
wants to charge, I believe it is, a $6,000 yearly subscription 
fee.  I have been told by the County Library officials that they 
cannot afford that $6,00 and that the system may shut down.  So 
these are the kinds of issues that the small independent 
inventors are very, very concerned about.  I have alerted the 
office of Senator Herbert Kohl on this and he may be trying to 
get ahold of you but that pretty much are my comments and I 
welcome your questions.

MR. LEHMAN:  Thank you very much.  I'll just tell you that the 
Patent and Trademark Office is fully fee funded.  We receive no 
tax revenue for our operations and therefore, the services that 
you just described are paid for by the people who file patent 
applications.  So there's a question to start with as to who 
should pay.  Should it be the people who want those services or 
should it be subsidized or cross subsidized by the patent or 
trademark applicant?  But beyond that the Congress recently 
siphoned off $30 million so far of fee revenue to provide for 
other activities of the federal government and if they're going 
to continue to do that I think it's going to be impossible for us 
to ask the fee payers to pay for these very fine services such as 
the one you described at the Milwaukee Library.  So you might 
want to pursue that issue with Senator Kohl and others before 
going too much farther on this.

MR. KAPPER:  Okay.  You're saying that we should pursue the idea?

MR. LEHMAN:  What I'm saying is that we cannot provide services 
for free if we don't have the money to do it and Congress is 
taking our fee money and sending it off to other departments of 
the federal government.  So you might want to look into that 
issue.

MR. KAPPER:  Okay.  Just in talking to people who work at the 
library, what they were saying to me is that they don't 
necessarily mind paying for the system but they have no way of 
collecting the money.  That's the problem.  In other words, they 
can't come up with the $6,000 up front.

MR. LEHMAN:  Well, we understand that's a problem and we'll see 
if we can't work with them to resolve it.  Thank you very much.

MR. KAPPER:  Thank you.

MR. LEHMAN:  Next I'd like to ask David Curtis who is the general 
counsel for International Law and Corporate Affairs of Microsoft 
Corporation who has come all the way out from Washington State, 
testifying on behalf of the Business Software Alliance and APSI, 
which is -- you'll have to tell me. 

MR. CURTIS:  Alliance to Promote Software Innovation.

MR. LEHMAN:  Alliance to Promote Software Innovation.  Thank you.

MR. CURTIS:  Mr. Assistant Secretary, my name is David Curtis.  
Thank you for giving me the opportunity to speak this afternoon 
on behalf of the BSA and APSI.  As you may know, we have 
submitted lengthier comments in Washington and there's a written 
statement here today that I think you have as well.  I'm going to 
summarize the latter of those in the interest of time. 

     First, on behalf of both organizations, I want to thank you 
and congratulate you and the Working Group on a comprehensive and 
thorough report that you have prepared.  APSI and BSA represent 
the major software publishers in this country, including Adobe 
systems, Apple Computer, Autodesk, Borland, Computer Associates, 
Intergraph, IBM, Lotus, Microsoft, Novell, now including the 
WordPerfect Applications Group and the Santa Cruz Operation.  As 
you know, the software industry has played a vital role in our 
country's economic development, a point highlighted in a recent 
study prepared by Economists, Inc. which is cited in the written 
statement.  We believe that the software industry's role in the 
growth of the nation's economy will be even more critical in the 
future as new and more advanced technologies evolve, including 
the NII.  Each of the member companies of APSI and BSA has 
already made substantial investments in developing software and 
other technologies specifically adapted for use on the super 
highway.  We all believe that the complex of NII networks will 
gain consumer acceptance only if it delivers high quality content 
information, applications, works and services.  We also believe 
that there are three areas of law and policy, all of which are 
identified in your Working Group's report, that must be addressed 
in order for the dream of the information highway to become 
reality. 

     First, incentives must be in place encouraging authors and 
other creators to produce the content to be distributed on the 
NII.  Quality and variety of content are critical to the NII 
becoming a reality.  We fully agree with the preliminary report's 
view that intellectual property laws are well suited to create 
the necessary incentives and rewards for authors and creators. 

     Second, authors and creators must be confident that the 
products of their labor are secure on the network.  They must be 
assured that their works and services will not be 
misappropriated.  Making the content readily available to users 
through the network while prohibiting unauthorized use is the 
essential balance that must be obtained.  We fully support the 
preliminary report's recommendations in this area as well. 

     Third, methods to attach information to a work identifying 
ownership, licensing terms and conditions as well as other 
information needed for management of use, will be indispensable 
to the success of the NII.  The preliminary report recognizes 
this as and recommends prohibitions against fraudulent copyright 
notices and fraudulent removal of these notices.  We strongly 
support these recommendations. 

     The protection of intellectual property through copyright is 
an essential element of the successful development and deployment 
of the NII.  For that reason we fully endorse the two principal 
themes and conclusions of the preliminary report. 

     First, rights under our intellectual property laws should 
neither be determined nor diminished by the mere fact that the 
work is acquired in digital form and delivered by means of 
transmission.  We completely agree with the Working Group's 
principle conclusion that a major overhaul of our intellectual 
property laws is not required and that with only minor 
clarifications and amendments the current copyright law is 
adequate to insure the availability and protection of works and 
materials on the NII. 

     Second, technological means must be implemented as early as 
possible to mitigate misuses and misappropriation of works.  The 
Working Group's preliminary report recommendation prohibiting 
devices, products, components and services that defeat 
technological methods of preventing unauthorized use is fully 
supported by APSI and BSA. 

     I think I'll end my comments there.  Again, there is a 
lengthier written statement.  If you have any questions, I'd be 
happy to try to address those.

MR. LEHMAN:  Thank you very much.  I'd like to ask you about the 
question that has really surfaced a lot this afternoon.  
Microsoft is a producer, at least from what I read in the paper, 
of multimedia works and has all kinds of ideas for developing new 
products for the information superhighway that will undoubtedly 
contain music.  I'm assuming that you will intend to distribute 
some of those works at some point, not through conveying to 
people CD ROMs, hard discs, floppy discs, etc., but ultimately to 
be able to transmit them digitally by fiber optic cable, 
satellite signal, etc.  Will that activity constitute a public 
performance in your view and does the fact that the work -- of 
course if it's a public performance in any, in the literal 
aspects and everything else including your underlying computer 
programs would enjoy the public performance right it seems to me, 
but certainly we've heard that the music industry, certainly the 
songwriters and composers, very much feel that's a public 
performance and that those performances should be licensed 
through a performing rights society like ASCAP or BMI.  What's 
your view about that?  Do you think they are public performances, 
they should be public performances, that there should be some 
kind of compensation to the songwriters and who should pay?

MR. CURTIS:  I think they can be a public performance or a 
distribution of a copy.  I concede or confess that I'm not sure 
I'm prepared to tell you exactly where the line between those two 
activities should be drawn, but I think it's important to 
recognize that a copy can be distributed by digital means of 
transmission and recognizing that and clarifying that is, in my 
view, an important step forward. 

MS. SOUTHWICK:  Do you believe that to be true without 
implicating the public performance right?  That it's possible to 
have a distribution of, say, a computer program -- 

MR. CURTIS:  That does not implicate the public performance 
right?

MS. SOUTHWICK:  Yes.

MR. CURTIS:  Yes, I do, very much.  We have works today that are 
capable of being moved around electronically that it's difficult 
for me to think about it in terms of public performance concepts.  
MS-DOS, for example, can be moved digitally, but that's not a 
work that one associates with a public performance, and that is 
an activity, moving copies of that kind of work around the 
network, is an activity that we are very concerned about and want 
to be sure where our rights are.

MR. LEHMAN:  We were concerned about it, too.  That's why we made 
the recommendation.  But clearly one of the principal issues that 
has emerged here is that music performing rights societies have 
taken the position that every distribution would also be a public 
performance, without exception.  So I think it's important for 
you to think about that and the implications of it, because what 
it means is, as we draft our final report, if we accept their 
view that these are both distributions and public performances, 
then you'll have to think through what the implications of that 
are for moving around MS-DOS.  We could also, I suppose, sort of 
cut the baby in the middle a little and say that only where music 
is involved are they both, which would be sort of a pragmatic 
solution to the problem since nobody else seems to be asking for 
the specific inclusion or tacking on the performance right to the 
right of distribution.  But even then, Microsoft is producing 
products that will include music.  So I think it's really 
important.  You don't have to get back to us right now, but give 
some serious thought to that.  If that becomes a problem and we 
find that we are at an impasse, that we have two major competing 
groups in the country that are going to make it impossible for us 
to go forward, we might have to sort of think up some other 
theory here and abandon the distribution right concept that we 
have in our report.  So it's really important for Microsoft and 
for the two organizations that you represent to give that some 
thought and we need to hear more from you, as we will need to 
hear from the other witnesses as well.

MR. CURTIS:  I'd be happy to do that.

MR. LEHMAN:  Thank you very much.  That concludes our hearing, 
unless one of the witnesses who was scheduled has now arrived.  I 
think there was only one.  I guess not.  With that, we're 
finished for the day.  Let me just say in conclusion, remind 
everyone, if you weren't here earlier, that copies of the 
transcript will be available in about two weeks from our office.  
The telephone number is 703-305-9300.  You can ask for Michael 
O'Neil and he will tell you how you can obtain them.  The fax 
number is 703-305-8885.  This is the first session of these 
hearings that we're going to be having.  

     We're going from here to Los Angeles and then we'll return 
to Washington, D.C. and we'll have two final days of hearings 
there, keeping in mind that we started out this process last fall 
with hearings on the overall NII project.  It's very interesting 
to me how its developed since then.  We had about 60 groups that 
testified at the first hearings or submitted comments and it was 
just kind of amorphous NII, before we had actually come up with 
the Green Paper -- we had something with meat on it -- for people 
to talk about and to respond to.  We didn't really get nearly the 
kind of interesting comments that we've gotten today.  I must say 
I'm very satisfied with the hearing and I really think the 
process is working and I'm sure that we'll be making further 
modifications in our report before it becomes a final report, 
based on these comments today and based on the written 
submissions, which -- have no fear -- we will read every one of 
them, not only of all those people that testified today but of 
all those people that sent them to us.  

     I want to close by thanking the University of Chicago again.  
It's been a wonderful place to have this hearing and they were 
wonderful hosts.  And I thank all of the witnesses and the people 
in the audience who came.
 
(Hearing concluded.)