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2006
REPORT ON ORPHAN WORKS BY THE COPYRIGHT OFFICE

HEARING

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY

OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 8, 2006

Serial No. 109–94

Printed for the use of the Committee on the Judiciary
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Available via the World Wide Web: http://judiciary.house.gov

COMMITTEE ON THE JUDICIARY

F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
DANIEL E. LUNGREN, California
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
SPENCER BACHUS, Alabama
BOB INGLIS, South Carolina
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
DARRELL ISSA, California
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
STEVE KING, Iowa
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TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California
CHRIS VAN HOLLEN, Maryland
DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, General Counsel-Chief of Staff
PERRY H. APELBAUM, Minority Chief Counsel

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Subcommittee on Courts, the Internet, and Intellectual Property

LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
SPENCER BACHUS, Alabama
BOB INGLIS, South Carolina
RIC KELLER, Florida
DARRELL ISSA, California
CHRIS CANNON, Utah
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia

HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
ROBERT WEXLER, Florida
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California
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BLAINE MERRITT, Chief Counsel
DAVID WHITNEY, Counsel
JOE KEELEY, Counsel
RYAN VISCO, Counsel
SHANNA WINTERS, Minority Counsel

C O N T E N T S

MARCH 8, 2006

OPENING STATEMENT
    The Honorable Lamar Smith, a Representative in Congress from the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property

    The Honorable Howard L. Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property

    The Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

    The Honorable Darrell Issa, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

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WITNESSES

Mr. Jule L. Sigall, Associate Register for Policy and International Affairs, Copyright Office of the United States, The Library of Congress
Oral Testimony
Prepared Statement

Mr. Allan Adler, Vice President for Legal and Government Affairs, Association of American Publishers, Inc.
Oral Testimony
Prepared Statement

Mr. David P. Trust, Chief Executive Officer, Professional Photographers of America, Inc.
Oral Testimony
Prepared Statement

Ms. Maria A. Pallante, Associate General Counsel and Director of Licensing, The Solomon R. Guggenheim Foundation
Oral Testimony
Prepared Statement

APPENDIX

Material Submitted for the Hearing Record

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    Prepared Statement of the Honorable Howard Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property

    Prepred Statement of the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

    Prepared Statement of the Honorable Maxine Waters, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property

    Amended ''Appendix'' to the Prepared Statement of Maria A. Pallante, Associate General Counsel and Director of Licensing, The Solomon R. Guggenheim Foundation

    Letter and accompanying paper from the Advertising Photographers of America (APA)

    Prepared Statement of the American Society of Composers, Authors and Publishers (ASCAP)

    Letter and proposed legislative revision from the Artists Rights Alliance (ARS)

    Prepared Statement of Broadcast Music, Inc. (BMI)
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    Prepared Statement of Reed Stager, Executive Vice President, Digimarc Corporation

    Prepared Statement of the Directors Guild of America (DGA)

    Letter from the Graphic Artists Guild

    Letter from the Illustrators' Partnership

    Prepared Statement of Association of Independent Video and Filmmakers (AIVF), Doculink, Film Arts Foundation, FIND (Film Independent), International Documentary Association (IDA), IFP (Independent Feature Project), National Alliance for Media Arts and Culture (NAMAC), National Video Resources (NVR), and Public Knowledge0

    Letter to the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Subcommittee on Courts, the Internet, and Intellectual Property from Lawrence Lessig

    Prepared Statement of Jerry Brito, Legal Fellow, Mercatus Center at George Mason University, and Bridget Dooling, Editor-in-Chief, Federal Circuit Bar Journal

    Prepared Statement of Gerard Colby, President, National Writers Union

    Letter from David Sanger, President, the Stock Artists Alliance (SAA)
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REPORT ON ORPHAN WORKS BY THE COPYRIGHT OFFICE

WEDNESDAY, MARCH 8, 2006

House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.

    The Subcommittee met, pursuant to call, at 2:08 p.m., in Room 2141, Rayburn House Office Building, the Honorable Lamar Smith (Chairman of the Subcommittee) presiding.

    Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order.

    Thank you all for your interest and for your in presence in being here. We will open with opening statements and then proceed directly to hear from our witnesses today as well.

    I recognize myself.

    Today's hearing is an oversight hearing on the Copyright Office Report on Orphan Work. The orphan works issue arises when someone who wants to use a copyrighted work cannot find the owner no matter how diligently they search. The owner may have moved several times, died, or in the case of corporate owners may have changed names or been bought out. This leaves the potential user with no options even though they want to do the right thing by paying a reasonable royalty to the copyright owner of a photograph, book, or other work.
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    Responding to this issue, the Copyright Office has released the adjusted statutory language that they believe will address the orphan works issue in a balanced manner. I have heard from a number of interested parties on the orphan works issue and the language suggested by the Copyright Office from potential owners and users of orphan works to others who are merely concerned about the impact of any new orphan works legislation on existing statutes.

    I have long been a proponent of strong copyright protections. So I look forward to hearing from the witnesses today who are seeking to address the orphan works issue by limiting the remedies for specific uses of orphan works. It is important that copyright owners still receive a fair royalty under an effective system if the owner does reappear to claim ownership of his work.

    Some copyright owners, such as photographers, illustrators, and artists have unique business issues that are different from those of other copyright owners. I look forward to hearing of their specific concerns and whether or not this adjusted language has adequately addressed them or can be modified to do so in either statutory or report language. Numerous interested parties have been meeting in numerous areas to develop modifications to the copyright office language in order to better protect their interests. The successful completion of such negotiations will enable us to move an orphan works bill in the coming weeks.

    Moving a bill in Congress does not require unanimity. Parties who feel that they can simply stop the legislative process by failing to negotiate in good faith or at all tend to be ignored. Maybe I should say left behind.

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    I look forward to working with other Members of the Committee and interested parties to advance a near consensus bill on the issue at hand.

    That concludes my testimony. The gentleman from California, Mr. Berman is recognized for his.

    Mr. BERMAN. Thank you very much, Mr. Chairman, for scheduling the hearing on the Copyright Office's report on orphan works. Unfortunately for me, perhaps fortunately for you and the other Members, I am going to have to leave a little early because of another hearing in a different Committee. So I would like to use the opening statement to raise some questions.

    I want to start out by commending the Copyright Office on their legislative proposal. It's united a number of owner and user groups in search of a solution to the orphan works problem. The recommendation goes a long way to meeting users' concerns of making beneficial uses of works when copyright owners can't be found. This allows our society to be enriched by access to works that otherwise and most likely would be lost. All of this must coexist against the backdrop of continuing to maintain the incentive for creators to pursue their art.

    So when it comes specifically to the category of owners of visual arts work such as photographers and illustrators, which seems to be a group that is most concerned about this proposal, I want to raise some questions about the affect of the Copyright Office proposal on an orphan works provision.

    Currently, a user can begin a search by typing in search terms in a registry, be it in the Copyright Office or from musical works by contacting BMI or ASGAP. There is no collective registry, however, for photographic or illustration information which makes owner information in many instances almost impossible to find. According to this proposal, if a reasonable search and attribution allows one to qualify for a limitation of on remedies, will most owners of photographs be required to forego their normal remedies when the information can't be found? That issue shy is to me the large elephant remaining in the room.
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    Is the current copyright system layered by the orphan works provision adequate to protect visual arts owners. The most basic question seems unanswerable. Where does one even begin the process of finding the owner information for most illustrations or photographs? No doubt this question may be addressed in part by some non-legislative solutions or possibly legislative in that an appropriation is required.

    For example, when I wrote to the Copyright Office about the orphan works issue, I requested that they explore the viability of creating an accurate, updated, and electronically searchable data base of copyright ownership, how much would such a data base cost. Currently on the Copyright Office's search file, unless one has a registration number, the title, or the author's name, one can't search for the work. Even with that all that information, the search feature is extremely rudimentary. With photographs, however, where often times there is no title of the work, there is currently no mechanism to search a description of the work and the possibility of matching the work is limited since there is no thumbnail of the photograph.

    Granted, part of the problem has been exacerbated by attempts to accommodate the needs of the photographers by allowing group registration; however, if the orphan works provision limits an owner's right to reasonable compensation without access to statutory damages or attorneys fees, what's the motivation for photographers to register their works in the first place which gives them the opportunity to get those remedies?

    While some have stated that this issue should be resolved outside the scope of this orphan works solution, I think we have to be somewhat wary of going down a road that small copyright owners claim will isolate them from the benefits of the copyright system and potentially harm them. Currently, copyright owners can use the threat of litigation with the possibility of statutory damages and attorneys fees to hinder unauthorized uses of their works. Under this orphan works provision, while the use is still considered infringement, the remedies are so limited that the likelihood of recovery of even reasonable compensation becomes questionable. The cost of litigation to determine reasonable compensation would often times far exceed the actual reasonable compensation.
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    To discuss the orphan works recommendation without addressing a core problem for major stakeholders in the process alters the balance in maintaining the exclusive rights for locatable copyright owners. Where but for the fact that there is no adequate data base, some of these children could be matched with their parents.

    So the issues, I just wanted to raise. I know I'm taking a little longer, but I'll make up for it on the other end. I would hope the witnesses could address a few of these questions.

    For cases in which the Copyright Office has a registration for a work with locatable information on its face, should there be an exception or carve-out to the orphan works provision? Should an owner, if able to show a registration, be able to reclaim his right to statutory damage or attorneys fees? What if the work was not only registered, but the owner took steps to make his work locatable by providing a description of the work? Would this make a difference? If the Copyright Office is proposing that this data base be a voluntary data base established by the photographers, should it we look at a later enactment date to allow time for the photographers to acclimate to this new scheme or perhaps provide a transition period? Finally, would the witness be amenable to having the option of a resolution of the orphan works issue in a small claims court to reduce the cost to small copyright owners?

    There are some other issues to consider, but it is in this particular area that I thought that I would hope the witnesses might address this discrete problem that I see in the proposal, which I generally commend and appreciate the Copyright Office submitting to us in response to our request.
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    Thank you Mr. Chairman.

    Mr. SMITH. Thank you, Mr. Berman.

    The gentlewoman from California, Ms. Lofgren, is recognized for an opening statement.

    Ms. LOFGREN. Thank you, Mr. Chairman. I would ask unanimous consent to put my full statement in the record.

    Mr. SMITH. Without objection, so ordered.

    Ms. LOFGREN. To save time, I would just like to mention how interested I am in the Copyright Office proposal. I think that, as you know, I introduced a bill, H.R. 2408, that took a somewhat different approach than the one proposed by the Copyright Office. In my bill, I set forward a concept of a national registry system to avoid their works becoming orphaned. Under my bill, copyright holders would register their works in a national registry after 50 years.

    I recently received a letter from Professor Lawrence Lessig of Stanford Law School in support of a registry system. I would like to make that a part of the record. It is not my proposal, but I am interested in what the witnesses might think. I think it's been on the web.

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    Mr. SMITH. Without objection, that proposal will be made a part of the record as well as any other items that the gentlewoman wants to submit as a part of her opening statement.

    Ms. LOFGREN. Thank you.

    I would just like to note that one of the values that I had hoped for in a registration approach is certainty on the of all parties. On the other hand, the Copyright Office's proposal has some benefits because it doesn't have the arbitrary 50-year date, and I think there's value in that. On the other hand, I'm not sure the certainty principle is there. So I'm interested in all of the witnesses talking about what further efforts could be made to provide certainty, and then certainly if you expend money, time, and effort on an orphan work, you want to have some level of certainty that you are doing so on firm ground. I'm not sure that the proposal before us really gives that level of certainty, and perhaps there is some way to do absent a registry system or maybe that is the better system.

    So thank you, Mr. Chairman, for allowing me. I don't generally do opening statements, but I appreciate the opportunity to do so today.

    Mr. SMITH. Thank you, Ms. Lofgren.

    The gentleman from California, Mr. Issa, is recognized for an opening statement.

    Mr. ISSA. Thank you, Mr. Chairman. I'll put my written statement into the record to save time.
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    I just want to compliment and echo Mr. Berman's comments by saying that if I can find what is unfindable on the Government site by going to Google, then, in fact, we're not living up to the expectations of the public, and I would hope that as we go through this legislation or proposal and in the future that we recognize that in a digital age, there should be nothing unsearchable including, to be honest, a digital image from a picture being matched with the entire data base of pictures. That technology exists today, and I would hope during the statements, we could discuss if not today, then when would we have those capabilities so that there would not be a true orphan of intellectual property, copyright property, particularly in the Government's hands.

    Thank you. I yield back.

    Mr. SMITH. Thank you, Mr. Issa.

    Would our panelists stand so that you all can be sworn in?

    [Witnesses sworn.]

    Mr. SMITH. Our first witness is Jule Sigall, the Associate Register for Policy and International Affairs at the U.S. Copyright Office. Mr. Sigall is the head of the Office of Policy and International Affairs which assists the Register of Copyrights in advising Congress and Executive Branch agencies on domestic and international copyright policy matters. Mr. Sigall is also an adjunct professor of law at the George Washington University Law School where he teaches copyright. Mr. Sigall is a graduate of Duke University and a suma cum laude graduate of the Catholic university School of Law.
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    Our next witness is Allan Adler, Vice President for Legal and Governmental Affairs for the Association of American Publishers which represents book and journal publishing industries. He deals with intellectual property, freedom of speech, new technology, and other industry-related issues. Mr. Adler holds a B.A. in history from the State University of New York at Binghamton and a J.D. from the George Washington University Law School.

    Our next witness is David Trust, the Chief Executive Officer of the Professor Photographers of America. Founded in 1880, the PPA is the world's largest nonprofit trade association for professional photographers with 15,000 members. Mr. Trust is also the CEO of the Alliance of Visual Artists. The AVA is an umbrella group representing the interests of photographer organizations which also represents the International Association of Professional Event Photographers, Commercial Photographers International, and the Student Photographic Society as well. Mr. Trust graduated with a B.S. in journalism from the University of Georgia.

    Our final witness is Maria Pallante, the Associate General Counsel and Director of Licensing at the Solomon R. Guggenheim Foundation where she has managed intellectual property and related business affairs since 1999. Ms. Pallante received her J.D. from the George Washington University Law School, and her B.A. from College Misericordia.

    In closing, we should note, Mr. Trust, that you are at a slight disadvantage today since you are the only one with no connection to George Washington University School of Law. I don't remember coming this close, I think, before to a clean sweep by one law school with three having graduated from one. You may be outnumbered, but not out testimonied, but we'll find out.
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    Okay. Mr. Sigall we'll begin with you.

TESTIMONY OF JULE L. SIGALL, ASSOCIATE REGISTER FOR POLICY AND INTERNATIONAL AFFAIRS, COPYRIGHT OFFICE OF THE UNITED STATES, THE LIBRARY OF CONGRESS

    Mr. SIGALL. Thank you, Mr. Chairman.

    Chairman Smith, Mr. Berman, and Members of the Subcommittee, I am pleased to appear today on behalf of the Copyright Office to testify about our report on orphan works. We would like to thank Chairman Smith and Mr. Berman for supporting our study in the report which we published at the end of January.

    As you summarized, Mr. Chairman, the term ''orphan works'' describes the situation where someone would like to use a copyrighted work, but cannot identify and locate the copyright owner. Even where the user makes a diligent effort to find the owner, if the owner is not found, the user faces a dilemma. She cannot determine whether the owner would permit the use. Where the proposed use is infringing, the user cannot reduce the risk of copyright liability because there is the possibility that a copyright owner could bring an infringement action after that use has begun.

    In each situation, the productive and beneficial use may be forestalled, not because the owner has asserted exclusive rights or because the user and owner cannot agree on the terms of a license, but merely because the user cannot locate the owner. For many users, the risk of infringement liability even though remote is enough to prompt them not to make use of the work. This outcome is not in the public interest, especially where the owner no longer exists or otherwise does not care to restrain the use of the work.
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    Based on our study of this issue, we concluded the following: The orphan works problem is real, but it is illusive to quantify and describe comprehensively. Some orphan work situations may be addressed by existing law, but many are not, and legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today. The report recommends with specific legislative language an amendment to the Copyright Act's remedy section.

    Our proposal is motivated by two primary goals. First, any system to deal with orphan works should seek to make it more likely a user finds the relevant owner in the first instance and negotiates a voluntary agreement over the use of the work. Second, where the user cannot identify and locate the owner after a reasonably diligent search, then the system should permit that user to make use of the work subject to provisions that resolve issues that arise if the owner surfaces after the use has commenced.

    Our proposed amendment follows the core concept that many participants favor as an orphan works solution. If the user has performed a reasonably diligent search but does not locate that copyright owner, then the remedies for infringement by that user should be limited. Both our written testimony and the report go into the specifics of a recommendation. So I won't spend much time on those details now. I would like to focus my remarks today on the reactions that interested parties have given to our report.

    By and large, that reaction has been quite positive. A diverse array of copyright owners and users, book publishers, authors, libraries, archives, museums, motion picture studios, record companies, educational institutions, documentary film-makers and others all agree with our conclusion that the orphan works issue is real and needs to be addressed and they agree with the basic concept and structure of our proposed legislation. Some of these groups have made constructive suggestions for changes to the specific provisions, and we are confident that further discussion among the interested parties can resolve any remaining issues.
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    Certain groups representing individual copyright owners, however, such as photographers, illustrators, and graphic artists oppose our proposal. They argue that many of their works will be inaccurately labeled orphan works because it is often difficult to find the owner of a visual image, usually because the name of the creator is not on copies of the work. As Mr. Berman pointed out, the Copyright Office records are text based and in many cases do not contain much, if any, description of the subject matter of the image in part because we have eased the registration requirements for photographers at that request. So even if a photographer has registered his works, a user may not be able to locate that owner.

    In other words, these groups concede the very problem at the heart of the report. A user seeking to locate a photographer of an image that has no identifying information on it faces a daunting challenge. Our proposal provides safeguards for this problem in a number of ways. First, in most cases, including all commercial uses, the user of an orphan work must pay the copyright owner reasonable compensation if the owner resurfaces. Also, the user will not be able to continue making the use after the owner asserts his copyright except in defined circumstances and even in that case must pay reasonable compensation for that future use. So when critics say that our proposal would strip thousands of photographers and other visual artists of their rights, that is simply not true.

    Photographers claim that bringing a lawsuit to collect reasonable compensation will be prohibitively expensive. We agree that legal actions to enforce copyrights are expensive just as any access to our court system is costly. However, this problem exists for visual images today regardless of whether orphan works legislation is passed or not. More over, there are nonlegal actions that photographers and others can take to protect their copyrights. These steps include consistent marking copies of their works, development of collective licensing mechanisms, and employing technology to allow effective searches where the user only has the image and no contextual information for the work. Steps like these will also ensure that visual images are locatable and that their works do not become orphan works.
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    Regarding the expense of litigation, we noted in the report that a new small claims procedure might also help individual owners protect their copyright generally and also allow them to obtain reasonable compensation if their work falls into the orphan category. We will be pleased to work with the Subcommittee and interested parties in exploring possible new procedures; however, the key to enhancing copyright protection in visual images is not increased litigation, but making it easier for owners and users to find each other, which our orphan work proposal encourages.

    In conclusion, many users, especially cultural institutions like libraries, museums, and archives, made clear that any orphan work solution must include photograph and other visual images given the persistent orphan works problems that exist with these works. In fact, orphan works legislation may be the catalyst needed to prompt the nonlegal marketplace reforms that will most efficiently address the problems identified by these creators. For this reason and others, Congress should not delay its consideration and enactment of orphan works legislation.

    Thank you for the opportunity to testify today and I look forward to answering any questions that you might have.

    [The prepared statement of Mr. Sigall follows:]

PREPARED STATEMENT OF JULE L. SIGALL

    Chairman Smith, Ranking Member Berman, and Members of the Subcommittee, I am pleased to appear before you on behalf of the Copyright Office to testify about our Report on Orphan Works, published in January of this year. In this testimony, we provide a description of the orphan works issue and the contents of the Report, as well as a discussion of some of the reactions to the Report we have received from interested parties since its publication.
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    By and large the reaction has been quite positive. A broad and diverse array of interests from both copyright owner and user communities including book publishers, authors, libraries, archives, museums, motion picture studios, record companies, educational institutions, documentary filmmakers and others agree with the Copyright Office's conclusion that the orphan works issue is real and needs to be addressed, and they also agree in basic concept and structure with the legislative solution proposed by the Report. Some of these groups have made constructive suggestions for changes to specific provisions of our proposal, and we are confident that issues raised by these comments can be resolved with further discussion among the interested parties.

    Some individual authors and creators, however, primarily in the photography and visual image industries, are opposed to our effort to solve the orphan works problem, despite the fact that the proposal does not remove copyright for orphan works, and requires, in most cases, that the user pay the copyright owner reasonable compensation for the use of the work. Their concerns stem mostly from the fact that legal action to enforce their copyrights is expensive, often prohibitively so. As described below and in the Report, the enforcement problems faced by these creators are real and should be addressed, but they exist whether or not orphan works legislation is passed. As a result, these concerns do not justify any delay in addressing the orphan works problem. In fact, enactment of orphan works legislation may be the catalyst necessary to prompt the non-legal, marketplace reforms that will most efficiently address the problems identified by photographers and creators of visual images.

I. DESCRIPTION OF THE REPORT

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A. Introduction and Background

    The Report addresses the important issue of ''orphan works,'' a term used to describe the situation where the owner of a copyrighted work cannot be identified and located by someone who wishes to make use of the work in a manner that requires permission of the copyright owner. Even where the user has made a reasonably diligent effort to find the owner, if the owner is not found, the user faces uncertainty—she cannot determine whether or under what conditions the owner would permit use. Where the proposed use goes beyond an exemption or limitation to copyright, the user cannot reduce the risk of copyright liability for such use, because there is always a possibility, however remote, that a copyright owner could bring an infringement action after that use has begun.

    Concerns have been raised that in such a situation, a productive and beneficial use of the work is forestalled—not because the copyright owner has asserted his exclusive rights in the work, or because the user and owner cannot agree on the terms of a license—but merely because the user cannot locate the owner. Many users of copyrighted works have indicated that the risk of liability for copyright infringement, however remote, is enough to prompt them not to make use of the work. Such an outcome is not in the public interest, particularly where the copyright owner is not locatable because he no longer exists or otherwise does not care to restrain the use of his work.

    The Copyright Office has long shared these concerns, and considered the issue of orphan works to be worthy of further study. The Office was pleased that in January 2005, Chairman Smith and Mr. Berman expressed interest in the issue and supported the request from Senators Orrin Hatch and Patrick Leahy to study the orphan works issue in detail, and to provide a report with the Office's recommendations.
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    After that request, in January 2005, the Office issued a Notice of Inquiry initiating this study. We received over 850 written initial and reply comments from the public, and held three days of roundtable discussions in late July in Washington, D.C. and Berkeley, California. The Office subsequently met informally with various organizations separately, in a effort to explore more specific issues raised in the comments and roundtables; they were also invited to further express their individual concerns. Our Report is the culmination of those efforts.

II. DESCRIPTION OF ORPHAN WORKS SITUATIONS

    Section III of the Report catalogs and organizes the various situations described in the comments as ''orphan work'' situations. The written initial and reply comments, most of which were authored by individuals, described an enormous variety of problems and proposed uses. It is difficult, however, to quantify the extent and scope of the orphan works problems from these comments, for several reasons. First, about 40% of the comments do not identify an instance in which someone could not locate a copyright owner, and another significant portion identified situations that were clearly not orphan work situations. Still, about 50% of the comments identified a situation that could fairly be categorized as an orphan works situation, and even more instances were collected in comments filed by trade associations and other groups. Thus, there is good evidence that the orphan works problem is real and warrants attention, and none of the commenters made any serious argument questioning that conclusion.

    The Report describes the most common obstacles to successfully identifying and locating the copyright owner, such as (1) inadequate identifying information on a copy of the work itself; (2) inadequate information about copyright ownership because of a change of ownership or a change in the circumstances of the owner; (3) limitations of existing copyright ownership information sources; and (4) difficulties researching copyright information.(see footnote 1) It then describes other situations raised by commenters that were alleged to be ''orphan work'' situations but upon closer inspection were outside the scope of the inquiry. These included situations where the user contacted the owner, but did not receive permission to use the work, either because the owner did not respond to the request, refused the request, or required a license fee that the user felt was too high. Other such problems included general difficulties determining the status of copyright protection for a given work, and problems related to the legal protection accorded pre-1972 sound recordings.(see footnote 2)
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    Finally, the Report catalogs the proposed uses that the commenters indicated were most affected by the orphan works situations. In our view these uses fall into one of four general categories: (1) uses by subsequent creators who add some degree of their own expression to existing works to create a derivative work; (2) large-scale ''access'' uses where users primarily wish to bring large quantities of works to the public, usually via the Internet; (3) ''enthusiast'' or hobbyist uses, which usually involve specialized or niche works, and also appear frequently to involve posting works on the Internet; and (4) private uses among a limited number of people.(see footnote 3)

III. LEGAL BACKGROUND

    Section IV of the Report provides the legal backdrop for consideration of the orphan works issue.(see footnote 4) First, it sets out the historical factors that affect the orphan works problem by describing how the issue is, in some respects, a result of the omnibus revision to the Copyright Act in 1976. Specifically, the 1976 Act made obtaining and maintaining copyright protection substantially easier than the 1909 Act. Copyrighted works are protected the moment they are fixed in a tangible medium of expression, and do not need to be registered with the Copyright Office. Also, the 1976 Act changed the basic term of copyright from a term of fixed years from publication to a term of life of the author plus 50 (now 70) years. In so doing, the requirement that a copyright owner file a renewal registration in the 28th year of the term of copyright was essentially eliminated.

    These changes were important steps toward the United States' assumption of a more prominent role in the international copyright community, specifically through accession to the Berne Convention, which prohibits formalities like registration and renewal as a condition on the enjoyment and exercise of copyright. Moreover, there was substantial evidence presented during consideration of the 1976 Act that the formalities such as renewal and notice, when combined with drastic penalties like forfeiture of copyright, served as a ''trap for the unwary'' and caused the loss of many valuable copyrights. These changes, however, exacerbate the orphan works issue, in that a user generally must assume that a work he wishes to use is subject to copyright protection, and often cannot confirm whether a work has fallen into the public domain by consulting the registration records of the Copyright Office.
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    Section IV of the Report then goes on to describe existing provisions of copyright law that might address the orphan works situation in certain circumstances. While U.S. copyright law does not contain an omnibus provision addressing all orphan works as such, it does contain a few provisions that permit certain users to make certain uses of certain classes of orphan works, and other provisions that reduce the risk in using an orphan work. These provisions include section 108(h), section 115(b), section 504(c)(2), and the termination provisions (sections 203, 304(c), and 304(d)). These existing sections provide models that may be useful in the development of an omnibus orphan works provision.

    This discussion demonstrates that the current Copyright Act does not contain provision designed to address the orphan works situation that is the subject of the Report. While some provisions, like section 108(h), might address the question for some users in certain situations, in general a user faced with an orphan works situation will not find a specific section or other provision of the Act on which he might rely to make use of the work.

    Nevertheless, we believe that the focus on developing legislative text to address orphan works should not obscure the fact that the Copyright Act and the marketplace for copyrighted works provide several alternatives to a user who is frustrated by the orphan works situation. Indeed, assessing whether the situations described to use in the comments were true ''orphan works'' situations was difficult, in part because there is often more than meets the eye in a circumstance presented as an ''orphan works'' problem.

    For purposes of developing a legislative solution we have defined the ''orphan works'' situation to be one where the use goes beyond any limitation or exemption to copyright, such as fair use. However, in practice, most cases will not be so neatly defined, and a user may have a real choice among several alternatives that allow her to go forward with her project: making noninfringing use of the work, such as by copying only elements not covered by copyright; making fair use; seeking a substitute work for which she has permission to use; or a combination of these alternatives. Indeed, evidence presented to us indicates that users in the orphan works situation make exactly these types of choices. Section IV of the Report describes some of those alternatives and how they might be applicable to different scenarios described in the comments.
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    Finally, Section IV of the Report sets out the international law context for consideration of an orphan works solution. Specifically, it describes the obligations that the various international copyright treaties impose on the United States with respect to imposition of formalities to copyright, limitations and exceptions to copyright and copyright remedies.

IV. DESCRIPTION OF PROPOSED SOLUTIONS

    Numerous comments received in the orphan works proceeding proposed solutions to the orphan works problem, and Section V of the Report catalogs and describes them. These solutions can be grouped into four categories:

 Solutions that already exist under current law and practice. These were usually noted only in passing; commenters (even commenters opposed to any orphan works provision) did not take the position that the existing law is sufficient to solve the orphan works problem.(see footnote 5)

 Non-legislative solutions. An example of a solution in this category is a proposal for improved databases for locating owners of works. These solutions were also usually noted only in passing, and were not advanced as sufficient to fix the problem.(see footnote 6)

 Legislative solutions that involve a limitation on remedies when a user uses an orphan work. The most substantive comments fell into this category, and most of the comments by professional organizations or academics fell into this category.(see footnote 7)
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 Other legislative solutions. Examples of proposed solutions in this category are deeming all orphaned works to be in the public domain, or changing the tax or bankruptcy codes to reduce the factors that cause orphan works to come into existence in the first place.(see footnote 8)

    As explained in Section V, most of the comments focused on various aspects of the third category, legislative proposals involving a limitation on remedies. Almost every commenter who advocated a limitation-on-remedies system agreed that a fundamental requirement for designation of a work as orphaned is that the prospective user have conducted a search for the owner of the work, and that the search results in the owner not being located. The commenters differed in the types of searches they would consider adequate.

    Many commenters were in favor of determining whether a search was reasonable on an ''ad hoc'' or case-by-case basis, whereby each search is evaluated according to its circumstances. This approach was offered as having the advantage of flexibility to cover the wide variety of situations that depend on the type of work and type of use involved. Several others were in favor of a ''formal'' approach, whereby the copyright owner is required to maintain his contact information in a centralized location, and a user need only search those centralized locations to perform a reasonable search. That approach was offered as being more certain than the ''ad hoc'' approach.

    The commenters also discussed the role that registries would play in an orphan works system. Some proposed a mandatory registry for owner information, which was opposed by several commenters as reinstating the problematic features of the pre-1976 copyright law, and might violate international obligations related to formalities. Many commenters expressed support for voluntary registries of owner information that could be consulted by users in performing their reasonable searches. Some copyright owners expressed concern about even voluntary registries as not offering much efficiency in certain cases, such as photographs. Some commenters proposed that user registries be established in which a user would file a notice that he intends to use a work for which he cannot locate an owner. Both voluntary and mandatory user registries were proposed. Concerns were raised as to whether user registries were unnecessarily burdensome on owners, who might have to consult the registry frequently to monitor use of their copyrights.
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    Other issues discussed by the commenters and described in Section V include whether the orphan works system should be limited based on the age of the work, on whether the work is unpublished, and on whether the work is of foreign origin. Many commenters expressed the view that none of these characteristics should disqualify any particular work; rather, these aspects of a work should be considered in the determination of whether the search for the owner was reasonable. Some commenters also proposed that the use of orphan works be limited to non-profit educational or cultural institutions.

    Once a work has been designated as an orphan work, several comments addressed whether the user would have to pay any fees for the use of the work. A common suggestion was that the user be obligated to pay a reasonable license fee if the copyright owner surfaced after use began. Others proposed a low fixed statutory fee, such as $100 per work used, and another suggestion was the actual damages caused by the use be limited by a low statutory cap. Some participants favored the use of an escrow that users would pay into upon use of the orphan work, with that money distributed to owners if they surfaced.

    If an owner does appear and claim infringement, most commenters agreed that some limitation on the remedies for infringement is essential to enabling the use of the work. Most agreed that statutory damages and attorneys fees should not be available, because those remedies create the most uncertainty in the minds of users. With respect to injunctive relief, many commenters proposed that the orphan work user be permitted to continue the use he had been making before the owner surfaced, but that new uses of the work remain subject to injunction and full copyright remedies.

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V. CONCLUSIONS AND RECOMMENDATIONS

    Section VI of the Report contains the Copyright Office's conclusions and recommendations.(see footnote 9) Our conclusions are:

 The orphan works problem is real.

 The orphan works problem is elusive to quantify and describe comprehensively.

 Some orphan works situations may be addressed by existing copyright law, but many are not.

 Legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today.

    The Report recommends that the orphan works issue be addressed by an amendment to the Copyright Act's remedies section. The specific language we recommend is provided at the end of the Report.(see footnote 10)

    In considering the orphan works issue and potential solutions, the Office has kept in mind three overarching and related goals. First, any system to deal with orphan works should seek primarily to make it more likely that a user can find the relevant owner in the first instance, and negotiate a voluntary agreement over permission and payment, if appropriate, for the intended use of the work. Second, where the user cannot identify and locate the copyright owner after a reasonably diligent search, then the system should permit that specific user to make use of the work, subject to provisions that would resolve issues that might arise if the owner surfaces after the use has commenced. In the roundtable discussions, there seemed to be a clear consensus that these two goals were appropriate objectives in addressing the orphan works issues. Finally, efficiency is another overarching consideration we have attempted to reflect, in that we believe our proposed orphan works solution is the least burdensome on all the relevant stakeholders, such as copyright owners, users and the federal government.
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    The proposed amendment follows the core concept that many commenters favored as a solution to the orphan works problem: if the user has performed a reasonably diligent search for the copyright owner but is unable to locate that owner, then that user should enjoy the benefit of limitations on the remedies that a copyright owner could obtain against him if the owner showed up at a later date and sued for infringement. The recommendation has two main components:

 the threshold requirements of a reasonably diligent search for the copyright owner and attribution to the author and copyright owner; and

 the limitation of remedies that would be available if the user proves that he conducted a reasonably diligent search.

    The details of the recommendation are set out in Section VI, followed by a discussion of some other proposals that we considered carefully, but ultimately decided not to recommend.(see footnote 11)

A. The Reasonably Diligent Search Requirement

    Subsection (a) sets out the basic qualification the user of the orphan work must meet—he must perform a ''reasonably diligent search'' and have been unable to locate the owner of the copyright in the work. Such a search must be completed before the use of the work that constitutes infringement begins. The user has the burden of proving the search that was performed and that it was reasonable, and each user must perform a search, although it may be reasonable under the circumstances for one user to rely in part on the search efforts of another user.
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    Several commenters complained of the situation where a user identifies and locates the owner and tries to contact the owner for permission, but receives no response from the owner. They suggested that works in these situations should be considered orphan works. We have concluded that such a solution is not warranted, as it touches upon some fundamental principles of copyright, namely, the right of an author or owner to say no to a particular permission request, including the right to ignore permission requests. For this reason, once an owner is located, the orphan works provision becomes inapplicable.

    The proposal adopts a very general standard for reasonably diligent search that will have to be applied on a case-by-case basis, accounting for all of the circumstances of the particular use. Such a standard is needed because of the wide variety of works and uses identified as being potentially subject to the orphan works issues, from an untitled photograph to an old magazine advertisement to an out-of-print novel to an antique postcard to an obsolete computer program. It was not possible for our Report to craft a standard that could be specific to all or even many of these circumstances. Moreover, the resources, techniques and technologies used to investigate the status of a work also differ among industry sectors and change over time, making it hard to specify the steps a user must take with any particularity.

    Section VI contains a discussion of several factors that commenters identified as being relevant to the reasonableness of a search, including:

 The amount of identifying information on the copy of the work itself, such as an author's name, copyright notice, or title;

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 Whether the work had been made available to the public;

 The age of the work, or the dates on which it was created and made available to the public;

 Whether information about the work can be found in publicly available records, such as the Copyright Office records or other resources;

 Whether the author is still alive, or the corporate copyright owner still exists, and whether a record of any transfer of the copyright exists and is available to the user; and

 The nature and extent of the use, such as whether the use is commercial or noncommercial, and how prominently the work figures into the activity of the user.

    Importantly, our recommendation does not exclude any particular type of work from its scope, such as unpublished works or foreign works. Section VI explains why we believe that unpublished works should not be excluded from this recommendation, and how the unpublished nature of a work might figure into a reasonable search determination.

    Our recommendation permits, and we encourage, interested parties to develop guidelines for searches in different industry sectors and for different types of works. Most commentators were supportive of voluntary development of such guidelines. When asked whether the Copyright Office should have authority to embody guidelines in more formal, binding regulations to provide certainty, we were surprised to hear that most user groups—whom we thought would desire more certain rules for searches—opposed the Copyright Office issuing rules related to search criteria. Based on our desire to maintain flexibility in the reasonable search standard and this expressed opposition to formal rulemaking, we have not proposed that the orphan works legislation provide the Office with any rulemaking authority.
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B. The Attribution Requirement

    We also recommend one other threshold requirement for a user to qualify for the orphan works limitations on remedies: throughout the use of the work, the user must provide attribution to the author and copyright owner of the work if such attribution is possible and as is reasonably appropriate under the circumstances. The idea is that the user, in the course of using a work for which he has not received explicit permission, should make it clear to the public that the work is the product of another author, and that the copyright in the work is owned by another. While only a handful of commenters proposed a requirement along these lines, we found several good reasons to support this requirement, described in Section VI, including the notion that attribution is critically important to authors, even those who consent to free use of their works. The requirement of attribution should be a flexible rule, and should not be interpreted in a strict way to create unnecessarily another obstacle to the use of orphan works.

C. Other Alternatives Considered

    There were two other mechanisms proposed to help address the orphan works issue that we considered but ultimately concluded would not be appropriate to recommend at this time. First, as noted above, some commenters suggested that users should be required to file with the Copyright Office some public notice that they have conducted a reasonable search and intend to use an orphan work. While a centralized registry of user certifications or notice of intent to use sounds promising on the surface, upon closer examination there are potential pitfalls that outweigh the benefits at this time, for reasons that we describe in Section VI.

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    The other mechanism proposed by some commenters is a requirement that orphan works users pay into an escrow before commencing use. In our view, an escrow requirement in an ''ad hoc'' reasonable search system like we recommend would be highly inefficient. Every user would be required to make payment, but in the vast majority of cases, no copyright owner would resurface to claim the funds, which means the system would not in most cases actually facilitate payments between owners and users of orphan works. We are sympathetic to the concerns of individual authors about the high cost of litigation and how, in many cases, the individual creator may have little practical recourse in obtaining relief through the court system. We believe that consideration of new procedures to address this situation, such as establishment of a ''small claims'' or other inexpensive dispute resolution procedure, would be an important issue for further study by Congress.

D. Limitation on Remedies

    If a user meets his burden of demonstrating that he performed a reasonably diligent search and provided reasonable attribution to the author and copyright owner, then the recommended amendment would limit the remedies available in that infringement action in two primary ways: First, it would limit monetary relief to only reasonable compensation for the use, with an elimination of any monetary relief where the use was noncommercial and the user ceases the infringement expeditiously upon notice. Second, the proposal would limit the ability of the copyright owner to obtain full injunctive relief in cases where the user has transformed the orphan work into a derivative work like a motion picture or book, preserving the user's ability to continue to exploit that derivative work. In all other cases, the court would be instructed to minimize the harm to the user that an injunction might impose, to protect the user's interests in relying on the orphan works provision in making use of the work.
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  1. Monetary Relief

    A vast majority of the commenters in our study agreed that the prospect of a large monetary award from an infringement claim, such as an award of statutory damages and attorneys' fees, was a substantial deterrent to users who wanted to make use of an orphan work, even where the likelihood of a claim being brought was extremely low. Most of the proposals for addressing the orphan works problem called for clear limitations on the statutory damages and attorneys' fees remedies in cases involving orphan works. Our recommendation follows this suggestion by limiting the possible monetary relief in these cases to only ''reasonable compensation,'' which is intended to represent the amount the user would have paid to the owner had they engaged in negotiations before the infringing use commenced. In most cases it would equal a reasonable license fee, as that concept is discussed in recent copyright case law.

    While many commenters supported a general remedy like ''reasonable compensation,'' some expressed concern about the impact that any monetary remedy at all might have on their ability to go forward and use orphan works. For example, museum representatives explained that they would like to use hundreds or even thousands of orphan works in their collections, so the potential of even a minimal monetary award for each work, would, in their view, be prohibitive. Libraries and archives made similar observations, noting their desire to make large collections of orphan works accessible.

    In our view, a general standard of reasonable compensation is the right solution to this problem, for several reasons. First, with respect to the concern about a chilling effect of any monetary remedy, it must be noted that in nearly all cases where a diligent search has been performed, the likelihood of a copyright owner resurfacing should be very low, so that no claim for compensation is ever made. Second, it should be clear that ''reasonable compensation'' may, in appropriate circumstances, be found to be zero, or a royalty-free license, if the comparable transactions in the marketplace support such a finding. Our discussions with museums, universities and libraries indicated that in many orphan works situations a low or zero royalty is likely to be the reasonable compensation.
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    In addition, to make absolutely sure that the concerns of nonprofit institutions like libraries, museums and universities about monetary relief are assuaged, we recommend an additional limitation on monetary relief where the user is making a non-commercial use of the work and expeditiously ceases the infringement after receiving notice of the infringement claim. In that case, there should be no monetary relief at all. Libraries, archives and museums indicated that posting material on the Internet was a primary use they would like to make of orphan works, and that they would take down any material if a copyright owner resurfaced. This additional provision provides certainty about their exposure in that circumstance. If the organization wishes to continue making use of the work, it would have to pay reasonable compensation for its past use, and, as described below, for future use of the work.

  2. Injunctive Relief

    In addition to the limits on monetary relief, several commenters in this proceeding suggested that limitations on injunctive relief were needed as well. Most specifically, users who would like to create derivative works based on orphan works, most notably filmmakers and book publishers, stressed that the fear of an untimely injunction—brought just as the book was heading to stores, or just before release of the film—provides enough uncertainty that many choose not use the work, even though the likelihood of such injunction is small.

    In light of these comments, we recommend that injunctive relief for infringement of an orphan work be limited in two ways. First, where the orphan work has been incorporated into a derivative work that also includes significant expression of the user, then injunctive relief will not be available to stop the use of the derivative work, provided the user pays reasonable compensation to the copyright owner. Second, in all other cases, full injunctive relief is available, but the court must account for and accommodate any reliance interest of the user that might be harmed by an injunction. For example a full injunction will still be available where a user simply republishes an orphan work, or posts it on the Internet without transformation of the content.
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E. Administrative Provisions

    We also recommend two other administrative provisions. First, a savings clause that makes clear that nothing in the new section on orphan works affects rights and limitations to copyright elsewhere in the Copyright Act, which is consistent with the structural approach of placing the provision in the remedies chapter. Second, we recommend that the provision sunset after ten years, which will allow Congress to examine whether and how the orphan works provision is working in practice, and whether any changes are needed.

F. International Context

    The Notice of Inquiry asked questions about how any proposed solution to the orphan works issue would comport with the United States' international obligations in the various copyright treaties. Our recommendation does not exclude foreign works from its scope, so it must comport with the United States' international copyright obligations. We believe that one of the primary advantages of the ad hoc, reasonably diligent search approach is that it is fully compliant with international obligations.

G. Application to Types of Uses

    To further explain how our recommendation would work in practice, Section VI takes the four general categories of users described in Section III and describes how the recommended limitation on remedies would apply in each scenario.(see footnote 12) The Section describes how the Subsequent Creator, Large-Scale Access User, Enthusiast User and Personal User would proceed under the recommendation. We believe that nearly all orphan work situations are encompassed by one of those four categories, so that if our recommendation resolves these users' concerns in a satisfactory way, it will likely be a comprehensive solution to the orphan works situation.
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VI. REACTIONS TO THE REPORT

    The reactions we have heard to our Report, for the most part, have been overwhelmingly positive. A broad array of copyright owners and copyright users: book publishers, libraries, archives, museums, educational institutions, record companies, motion picture studios, independent filmmakers, software publishers and others, have praised the Report and support the basic concept and structure of the proposed legislation. Several of these groups have pointed out specific features of our recommendation that might create unintended consequences, or suggested modifications to the language to address specific concerns.

    In this section of the testimony, we comment on some of these reactions and suggestions. As noted in the Report, we proposed specific legislative language to help clarify our conclusions and recommendations by giving interested parties a more concrete understanding of what our conclusions entail. We also recognized that interested parties might have suggested revisions that would improve the clarity of the text or avoid unintended consequences of the language that we proposed.(see footnote 13) In other words, we recognize that our proposal is likely a starting point for legislation to address orphan works, and would be pleased to work with the Committee, its staff and interested parties on modifying that language. In general, however, these groups are supportive of the overall approach, and the proposed changes are issues that very likely can be resolved with further discussion, and which will result in compromise draft legislation supported by the vast majority of copyright owner and user interests.

A. The Problem of Photographs and Other Visual Images
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    The one exception to the broad support for our proposed legislation involves certain groups representing individual copyright owners of visual works, such as photographers, illustrators, and graphic artists. They oppose our proposal, which was not unexpected, as many of them filed comments in our proceeding recommending that no change be made to the law to address the orphan works problem. They argue that many, if not most, of their works will be inaccurately labeled orphan works, because it is difficult and often impossible to find the copyright owner of a visual image, usually because the name of the creator is not on the copies of the works distributed to the public. Moreover, existing sources of ownership information are text-based and often not useful if the user only has the work, and not any other information about the work, before him.

    In other words, these groups concede the very problem that is at the heart of the Report—a user seeking to locate a photographer or illustrator of an image that has no identifying information on the work itself faces a daunting challenge. The Copyright Office registration records are text-based, and in most cases registration records do not contain much, if any, description of the subject matter of the image. Indeed, efforts by the Office to accommodate photographers by making it easier to register photographs (e.g., the recent regulations permitting group registration of published photographs), while responding to complaints from photographers about the difficulties they have had in registering their works, have probably made the registration system less useful for determining copyright ownership of particular photographs. So even if a photographer has registered his works with the Copyright Office, it may be the case that a user will not be able locate that owner.

    Our proposal anticipates and provides safeguards for this situation in a number of ways, primarily by preserving meaningful remedies for owners of works that might be subject to the orphan works legislation. First, in most cases, including all commercial uses, the user of an orphan work is obligated to pay the copyright owner ''reasonable compensation'' for the use prior to the time the owner resurfaces. Also, the user will not generally not be able to continue making the use after the owner asserts his copyright, unless the user meets the requirements of Section 514(b)(2)(A), and even in that case will be required to pay reasonable compensation to the owner going forward. And in order for noncommercial users to avoid the requirement of reasonable compensation, they must cease the infringement expeditiously after the owner assert his rights, thus preserving future exploitation to the owner's exclusive rights.
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    Despite being entitled to ''reasonable compensation'' and these remedies in most orphan work cases, photographers oppose the proposal because they claim that bringing a lawsuit to collect this compensation will be prohibitively expensive. We agree that legal actions to enforce copyrights in visual images are expensive for individual creators, just as any access to our court system is costly. However, this problem exists for copyrighted visual images regardless of whether orphan works legislation is passed or not. Moreover, there are non-legal actions that the photographers, illustrators and similar creators can take to enforce and exploit their copyrights, and at the same time, help eliminate the possibility that their works would fall into the orphan works system.

    As a practical matter, a marketplace of licenses and permissions for use of photographs simply cannot exist where potential buyers cannot find the sellers of rights in visual images. Creators of visual images need to address the problem first and foremost, and primarily through non-legal actions—through more consistent marking of copies of their works, through development of mechanisms like collective licensing organizations that can provide ownership and licensing information to users, and by deploying technology to allow searches for owners where the user only has the image and no contextual information. Steps like these will help individual owners enforce and receive payment for their copyrighted images, and, at the same time, ensure that they are locatable and that their works do not become orphan works. It is important that any legislative solution to address orphan works include photographs and other visual images within its scope to resolve the numerous orphan works problems that exist with these types of works. Moreover, failing to include such works in the scope of the legislation would likely allow visual image copyright owners to avoid resolving these more fundamental problems with non-legal, marketplace reforms.
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    As to the legal actions that individual creators can take to enforce their rights, our Report acknowledges the real obstacle faced by photographers and other individual copyright owners from the expense of infringement lawsuits. We agree that a more efficient dispute resolution procedure, such as a ''small claims'' procedure for copyright infringement claims involving relatively small damage amounts, would offer individual owners better access to legal protection of their rights. Such a procedure would also allow these owners to obtain the ''reasonable compensation'' they would be due under our orphan works proposal even if their works fall into the orphan category. We would be pleased to work with the Subcommittee and interested parties in exploring possible new procedures. It should be noted, however, that the key to creating a more efficient marketplace for copyrighted visual images is not increased litigation, but making it easier for owners and users to find each other, which our orphan works proposal encourages.

    In sum, we understand the concerns of photographers and other visual image creators. They face difficulties exploiting their copyright, particularly in light of new technology like the Internet, and solutions to those problems, both legal and non-legal, should be explored and developed. That fact, however, does not deny that there is a very real problem of orphan works that needs to be addressed, and those issues should not delay Congress in its consideration and enactment of orphan works legislation.

B. Other Comments and Suggestions

    The other comments and suggestions we have received concern specific provisions in the Report's proposed language. First, some groups remain concerned that a general standard of ''reasonable compensation'' might result in high damage awards that would discourage use of orphan works. For reasons set out in the Report, we think this concern is unfounded, particularly in light of the exception that limits monetary relief to no compensation where the use is noncommercial and the user ceases the infringement when the owner resurfaces.
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    One suggestion made to address this issue is for the statute to define ''reasonable compensation'' with language from the Report that specifies that it ''would equal what a reasonable willing buyer and reasonable willing seller in the positions of the owner and user would have agreed to at the time the use commenced, based predominantly by reference to evidence of comparable marketplace transactions.''(see footnote 14) We agree that including language like this in the legislation would be a helpful clarification. We also believe that legislative history providing examples of how reasonable compensation would be determined in different circumstances would also be helpful.

    On the related question of whether the orphan work user's activity is done ''without direct or indirect commercial advantage,'' which would make that user potentially eligible for no monetary relief, our Report attempts to recognize that some non-profit organizations engage in different types of activity, some of which is commercial and some non-commercial. Museums and other nonprofit organizations have asserted that their activities involving the sale of books or other items using copyrighted materials are simply a matter of ''cost recovery'' and should not be considered commercial for the purposes of our proposal. We cannot accept that proposition categorically, especially where the institution has paid other located copyright owners for the use of their works in the same book or product that contains the orphan work. Nevertheless, we agree the drawing lines between situations is difficult, and look forward to working with museums and others on illustrative examples that can be used in the legislative history to help draw those lines.

    Second, some groups have expressed concern with our requirement that the orphan work user attribute the author and copyright owner during their use of the work. Specifically, museums and others have said that determining the copyright owner, as opposed to the author, is often difficult and confusing, and therefore it should not be required. In our view, however, as the Report explains, attributing the copyright owner, if possible, is an important piece of information that other users and the public should be able to learn from the orphan work user. It also will increase the likelihood that the owner will surface after use begins and voluntary agreement over the use can be reached. If the user is unsure of who owns the copyright, then it may not be possible for him to attribute the copyright owner. Also, the manner of attribution should be determined as is reasonable under the circumstances. These two considerations, embodied in our proposal, account for the concerns expressed about attributing the copyright owner, and thus it should remain a requirement.
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    Third, with respect to injunctive relief provision of proposed Section 514(b)(2)(A), some have expressed concern about what types of works would be included in that provision. Specifically, some are concerned that the use of the term ''derivative work'' might not be broad enough to encompass works that our Report explains should be included—the historical book which includes photographs or the inclusion of a sculpture in a scene of a motion picture—because these works do not necessarily ''transform'' or alter the underlying orphan work. As we note in the Report, the concept behind this provision—with which we have not heard disagreement—was to capture the situation where the user creates a new work that relies to a significant extent on the underlying orphan work, as contrasted with the situation where the user merely republishes the orphan work, either alone or as part of a compilation. We agree that the language in this section could be more clear, and would be pleased to work with interested parties on ways it could be amended to better reflect the concept that underlies it.

    Fourth, several groups have expressed concerned about the sunset provision, and have questioned how it applies where a use begins before the 10-year period is over but continues afterward. It was our intent to allow any user who begins use in reliance on the proposed Section 514 before the 10-year period is over to be able to benefit from the provision, even after the 10-year period ends. Changing the word ''occurring'' to ''commencing'' would help make that clear, and we would be pleased to discuss further changes to clarify this point. As to whether a sunset provision is appropriate, it is likely that at least some minor—and perhaps some major—adjustments to the orphan works legislation will be advisable after we have had a few years' worth of experience with it.(see footnote 15) We certainly do not believe that the provisions of the orphan works legislation should actually expire. But without a sunset provision, it may be difficult to persuade a future Congress to modify the existing legislation if it is deemed to be ''good enough.'' Requiring reauthorization after a reasonable number of years will ensure that Congress will, as a practical matter, have little choice but to ask itself at that point whether and how the existing regime can be improved.
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    As noted above, we would be pleased to work with the Committee, its staff and the interested parties on these or any other issues related to our proposal. We have been greatly encouraged by the generally positive reaction so far, and hope that balanced, comprehensive and effective legislation to address this important issue can be introduced and enacted in the near future.

    Mr. SMITH. Thank you, Mr. Sigall.

    Mr. Adler.

TESTIMONY OF ALLAN ADLER, VICE PRESIDENT FOR LEGAL AND GOVERNMENT AFFAIRS, ASSOCIATION OF AMERICAN PUBLISHERS, INC.

    Mr. ADLER. Thank you, Mr. Chairman, Mr. Berman, Ms. Lofgren.

    As both users and producers of copyrighted works, book publishers have considerable experience with the frustration caused by the orphan works problem in seeing necessary permissions to incorporate photos, illustrations, and other discrete third-party copyrighted works into the histories, biographies, and other kinds of literary works they publish. AAP was gratified to learn that the Copyright Office report recommended the same basic framework that the book publishing community has proposed, and we have been hopeful of reaching a consensus since learning that representatives of the library, higher education, museums, and scholarly society communities have endorsed an initiative that was strikingly similar to the AAP proposal in almost all key respects.
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    In general, we think the Copyright Office did an excellent job in its report, wisely rejecting a variety of orphan work proposals that seemed excessively complex, discriminatory, costly, or bureaucratic in favor of advocating a relatively straightforward flexible and self-executing scheme. By its terms, the Copyright Office proposal may be viewed as a fine-tuning of statutory law because it would not impose any new prerequisites for registration or enforcement of copyright or in any way affect the duration of copyright, the scope of copyright liability, or the applicability of fair use or other defenses against infringement.

    However, AAP, like other orphan works stakeholders, does have some concerns about the Copyright Office's draft statutory language to implement its recommendations. With respect to the important issue of the conduct of a reasonably diligent search, AAP generally agrees with the Copyright Office approach and we think that the Copyright Office has provided helpful explanations and examples in its report which should be included in legislative history to inform how the analysis and factors will be employed in determining whether a particular search satisfies the statutory standard, but we have some questions regarding when it should be appropriate for an orphan work user to qualify for the statutory limitation on remedies in reliance on the results of a previous third-party search rather than a user's own reasonably diligent search, and we think that we need further detail in the statutory language and explanations and legislative history on three sets of issues:

    First, clarifying that a reasonably diligent search conducted by the user's employees acting within the scope of their employment or by a third-party acting in an agency capacity on behalf of the user should qualify the user for statutory limitation on remedies in the same way as would a search conducted by a user.
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    Secondly, we want to clarify that any person who engages in a related infringing use of the same work as the user who conducted a reasonably diligent search should qualify for the statutory limitations on remedies based on the user's search without conducting their own reasonably diligent search at least where the related infringing use occurs pursuant to a license from the user or the user's licensee. The example in our industry would be if an author has conducted the reasonably diligent search, we would hope that the publisher, the printer, the licensee who is authorized to do paperback versions of the book would not all have to do their own separate reasonably diligent searches in order to rely on the limitation of remedies.

    Third, there is the important other situation of so-called piggybacking on a previously conducted search, but in those instances, there would be a second user of the work who is not tied in any way to the original user by a license or other basis for asserting the claim of legal privity and the use of the work by the second user would be different from and unrelated to the use of the work by the original user. Our concern there is that if the standard is simply one of reasonableness under the circumstances, that may lead second users to do nothing other than determine whether a previous reasonably diligent search has been conducted by another user in which case they would perpetuate a mistaken notion that orphan works is a designation which adheres to the work in question and creates a status for the work that governs all of its future uses by any users. This would be contrary to the more accurate and appropriate view that orphan works designation actually applies to the work only in connection with a particular use by particular user or users.

    The attribution requirement that the Copyright Office would also require in order for the user to be able to rely upon the statutory limitation of remedies is somewhat troubling. The attribution requirement, predictably in these kinds of cases if we are trying to identify the author and the copyright owner, will be not terribly reliable, and in those circumstances, we are concerned that requiring attribution as a condition for obtaining the limitation on remedies is likely to mean that an emerging copyright owner will sue and basically attack the attribution to make the individual user not subject to the limitation on remedies. So we would hope that this could be clarified.
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    There are other respects in which we would hope to be able to clarify the plan proposed by the Copyright Office. We would hope most of that could be done through examples and illustrations contained in legislative history while retaining a fairly simple statutory framework for orphan works treatment.

    [The prepared statement of Mr. Adler follows:]

PREPARED STATEMENT OF ALLAN ADLER

    Thank you for inviting me to appear here today on behalf of the Association of American Publishers (''AAP'') to discuss the U.S. Copyright Office ''Report on Orphan Works.''

    As you may know, AAP is the principal national trade association of the U.S. book publishing industry, representing some 300 member companies and organizations that include most of the major commercial book and journal publishers in the United States, as well as many small and non-profit publishers, university presses and scholarly societies. AAP members publish hardcover and paperback books and journals in every field of human interest. In addition to publishing print materials, many AAP members are active in the emerging market for ebooks, and also produce computer programs, databases, Web sites and a variety of multimedia works for use in online and other digital formats.

BACKGROUND

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    AAP has been on the public record urging the need to resolve the problem of ''orphan works'' at least since the proceedings that resulted in the issuance of the Copyright Office ''Report on Copyright and Digital Distance Education'' in May 1999. Book publishers understand the central issue to concern how U.S. copyright law might permit uses of a copyrighted work that implicate the exclusive rights of the copyright owner, when the uses are not authorized by any of the statutory limitations or exceptions applicable to such rights and the would-be users cannot locate the copyright owner in order to obtain required permission.

    As both users and producers of copyrighted works, book publishers have a fundamental interest in advocating the widespread availability and use of copyrighted works consistent with established principles of copyright law. They also have considerable experience in seeking necessary permissions to incorporate photographs, illustrations and other discrete, third-party copyrighted works into the histories, biographies and other kinds of copyrighted literary works they publish.

    For these reasons, book publishers fully understand the frustration that can arise when the desire to incorporate a third-party work as part of a new work being prepared for publication is thwarted by a concern over potential infringement liability based not on the copyright owner's refusal to authorize such use of the third-party work but on the inability of the publisher—or author—of the new work to locate that copyright owner in order to request the permission that is necessary to legally make the intended use.

    When the Copyright Office invited public comment on ''orphan works'' in a ''Notice of Inquiry'' published early last year, AAP (working jointly with the Association of American University Presses and the Software and Information Industry Association) submitted Comments and Reply Comments that urged modest revisions in copyright law to mitigate the risk of infringement liability, and thereby encourage otherwise infringing uses of copyrighted works, in the typical ''orphan works'' situation where permission for use is required by law but cannot be obtained due to the user's inability to locate the copyright owner. AAP and several member publishers subsequently participated in the public roundtable discussions of ''orphan works'' that were conducted by the Copyright Office.
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THE COPYRIGHT OFFICE REPORT ON ORPHAN WORKS

    When the Copyright Office published its ''Report on Orphan Works'' in January of this year, AAP was gratified to learn that the Report recommended the same basic framework that the book publishing community had proposed for dealing with the ''orphan works'' problem. AAP had been hopeful that a consensus would grow around that basic framework after its review of submitted Comments and Reply Comments made clear that numerous representatives of the library, higher education, museum and scholarly society communities had endorsed a proposal from the Glushko-Samuelson Intellectual Property Clinic at American University that was strikingly similar to the AAP proposal in almost all key aspects.

    In general, AAP believes that the Copyright Office did an excellent job of evaluating the diverse ideas that were proposed in submitted Comments and Reply Comments regarding how the uncertain status of ''orphan works'' might be addressed so that users of such works will not be needlessly discouraged from incorporating them in new creative efforts or making them available to the public.

    From the perspective of the book publishing community, the Copyright Office wisely rejected a variety of proposed ''orphan works'' schemes that seemed excessively complex, discriminatory, costly or bureaucratic, in favor of advocating a relatively simple, uniform, flexible and self-executing way of addressing the problem. Its minimalist approach seems calculated to require the fewest possible changes to current U.S. copyright law, no impact on U.S. obligations under international copyright agreements, and the least possible bureaucratic impact on governmental entities, as well as on owners and users of copyrighted works. By its terms, it may be characterized as a ''fine tuning'' of statutory law that would not impose any new prerequisites for registration or enforcement of copyright, or in any way affect the duration of copyright, the scope of copyright liability, or the applicability of ''fair use'' or other defenses against infringement.
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    The core concept of the Copyright Office recommendation, which also constitutes the basic premise of the proposal advanced by AAP, is fairly straightforward:

    If the infringing user of a copyrighted work has first performed a reasonably diligent but, ultimately, unsuccessful search to locate the copyright owner to obtain permission before engaging in an infringing use of the work, then that infringing user generally would be entitled to have the benefit of limitations on the compensation and injunctive remedies that the copyright owner could obtain if the owner turns up subsequent to the commencement of such infringing use and sues on the grounds of infringement.

    Clearly, however, the Copyright Office draft legislative language, despite or, perhaps, because of its relative brevity, is already generating concerns regarding the potential implications of an enacted statutory scheme for different ''orphan works'' stakeholders, including book publishers.

    For example:

    Reasonably Diligent Search: AAP generally agrees with the Copyright Office that its requirement for the user to conduct a ''good faith, reasonably diligent search'' to locate the copyright owner, as one of two threshold eligibility requirements to qualify for the limitations on remedies, should be deermined on a case-by-case basis measured against a flexible standard of reasonableness in the totality of the circumstances. Moreover, in our view, the Copyright Office Report contains a number of helpful explanations and examples that clarify the kind of analysis and factors to be employed in determining whether a particular ''search'' satisfies the statutory standard. The inclusion of this guidance in the legislative history of the related statutory language, combined with the prospect that private stakeholders will develop and highlight the availability of voluntary guidelines and ownership information resources on a sector-by-sector basis within the communities that use and produce copyrighted works, should make it unnecessary for Congress to provide a more detailed treatment of the standard in statutory language, especially if the legislative history is further developed to address other issues related to the meaning of the standard issue.
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    However, with respect to the question of when it should be appropriate for a would-be user to be eligible for the limitations on remedies in reliance upon the results of a previous third-party search, rather than the user's own search efforts, AAP believes further detail in the statutory language, as well as explanations in the legislative history, may be warranted to address three sets of issues.

    First, it should be made clear that a reasonably diligent search conducted by a would-be user's employees acting within the scope of their employment, or by a third-party acting in an agency capacity on behalf of the user, will qualify the user for the statutory limitations on remedies in the same way as would such a search conducted by the user. Enactment of the proposed ''orphan works'' scheme will create new business opportunities in the marketplace for third parties offering professional search services, and AAP believes the statutory language itself should anticipate such a development.

    Second, it should be made clear that any person who engages in a related infringing use of the same work as the user who conducted a reasonably diligent search, should be able to qualify for the limitations on remedies based on the user's search where the related infringing use occurs pursuant to a license from the user or the user's licensee. For example, if the original user of the ''orphan work'' is an author who incorporates the work into a new work pursuant to conducting a search that meets the statutory standard, then the publisher of the new work, as well as the publisher's distributors and licensees, would also qualify for the limitations on remedies without having to each conduct their own search for the copyright owner of the original work. AAP urges that this form of ''piggybacking'' on a previously-conducted search should be addressed in the statutory language, with legislative history providing additional explanation and examples to clarify the kind of ''related'' infringing uses and users that would qualify for such reliance.
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    Third, if possible, the statutory language should address other instances of potential ''piggybacking'' on previously-conducted searches that will arise in situations where the second user of the work is not tied to the original user by any license or other basis for asserting a claim of legal privity, and the use of the work by the second user is different from and unrelated to the use of the work by the original user.

    In its consideration of permissible reliance in the context of unrelated uses, the Copyright Office has taken the view that ''the test is whether it was reasonable under the circumstances for that second user to do so—there should not be any per se rule preventing or permitting one user's 'piggybacking' on another's search.'' See Report, p. 96–97. While AAP is sympathetic to the idea of applying an objective ''reasonableness'' standard in these determinations, there is a real danger that this view of the second user's ability to use the work under the protection of the limitations on remedies may lead such users, as a matter of practice, to not make any independent effort to locate the copyright owner other than to determine whether a previous search was conducted by another user. This could have the unfortunate effect of perpetuating the mistaken notion that ''orphan work'' is a designation which, once applied, adheres to the work in question and creates a status for that work that governs all of its future uses by all users, instead of reflecting the more accurate and appropriate notion that the designation applies to the work only in connection with a particular use by a particular user or users.

    AAP does not suggest that a subsequent unrelated user should never be permitted to reasonably rely on the results of a previous search conducted by another user. However, we urge that any treatment of this issue should avoid conveying the idea that a subsequent user would qualify for the limitations on remedies simply by reference to the previous search efforts of another user. The statutory language and supporting legislative history should make clear that, as a general rule, the responsibility to conduct a reasonably diligent search for the copyright owner prior to using an ''orphan work'' attaches to each use of the work, rather than to each user. This will help to ensure that a reasonable legal process established to provide for the use of ''orphan works'' without undue risks of infringement liability will not degenerate into a means by which such works are treated, in common practice, as though they were no longer subject to copyright protection.
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    Attribution: In addition to conducting a ''good faith, reasonably diligent search'' for the copyright owner, the Copyright Office recommendation requires that an infringing user of an ''orphan work'' must, ''throughout the course of the infringement, provide attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances,'' in order to qualify for the limitations on remedies. Insofar as U.S. copyright law contains no general requirement for attribution when third-party works are used, it is unclear why attribution should be required for a use under ''orphan work'' treatment, especially since the ''orphan work'' situation will predictably be one in which the accuracy of any attribution to the copyright owner frequently will be inherently suspect.

    In justifying its attribution requirement as a condition for obtaining the limitations on remedies, the Copyright Office claims that such notice will facilitate market transactions by alerting the author and copyright owner to the use of their work; preserve the author's ability to pursue ''moral rights''-type interests in the work; curb abusive use of such works under the ''orphan works'' scheme; and not impose undue burdens on the user. But, given the circumstances in which such notice will be provided, it is likely that the provided attribution in many instances may be more misleading than informative.

    The Copyright Office explains in its Report that the purpose of the attribution is not so much to identify the actual author or copyright owner, but to ''make it as clear as possible to the public that the work is the product of another author, and that the copyright is owned by another.'' See Report, p. 110. It also urges that the attribution requirement ''should be a flexible rule, and should not be interpreted in a strict way to unnecessarily create another obstacle'' to an ''orphan works'' use. See Report, p. 112. But, while the inclusion of such comments in the legislative history will be helpful to ensure that, as the Copyright Office states, ''formalistic errors or similar omissions in the attribution should not be cause to disqualify the user from the orphan works category,'' AAP remains concerned that requiring attribution as a condition for obtaining the limitations on remedies could make a questionable attribution a litigation target for an emergent copyright owner who may want to challenge the infringing user's entitlement to such protection, notwithstanding the user's satisfaction of the ''reasonably diligent search'' requirement. Congress should consider whether, in light of these concerns, if attribution is to be required at all pursuant to the ''reasonable under the circumstances'' standard urged by the Copyright Office, it should not be made a condition for obtaining the limitations on remedies.
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    Limitations on Remedies: Overall, AAP believes the Copyright Office has done a good job in developing and articulating proposed ''limitations on remedies'' policies. Its handling of the availability of ''reasonable compensation'' for the copyright owner who comes forward subsequent to the commencement of a qualifying ''orphan work'' use seems fair and reasonable in most respects, as does its approach to the availability of injunctive relief. However, AAP does have a few concerns about the Copyright Office recommendations.

    Limitation on Remedies—Monetary Relief: Inherent in the very concept of ''orphan work'' treatment, as urged by AAP and recommended by the Copyright Office, is the expectation that the issue of ''reasonable compensation'' is unlikely to arise in the vast majority of cases. If the ''reasonably diligent search'' requirements for obtaining limitations of remedies are implemented in good faith by would-be users of ''orphan works,'' such users will seldom, if ever, subsequently encounter a claim for monetary relief by the copyright owner. Nevertheless, in those cases where a copyright owner does subsequently surface, the point of the ''reasonable compensation'' provision is to put the owner and user, to the greatest extent possible, in the respective positions they would have occupied in an ordinary marketplace negotiation occurring prior to the infringing use, where the amount paid to the owner by the user would represent what a reasonable willing user would have paid a reasonable willing owner based on knowledge and evidence of comparable marketplace transactions.

    However, the copyright owners of certain types of works are apparently concerned that the proposed implementation of the limitations-on-remedies principle, which would eliminate the availability of an award of attorney fees and costs to the emergent copyright owner, as well as the availability of actual or statutory damages, may not provide sufficient economic incentive for them to pursue a claim of infringement in circumstances where the infringing user unreasonably refuses to pay reasonable compensation to the owner. For this reason, in the interest of fairness, AAP would support a revision of the Copyright Office's proposed statutory language that would give the federal courts discretion to award reasonable attorney fees and costs to a prevailing plaintiff-owner if the court finds that such fees and costs were incurred as the result of bad faith or other unreasonable behavior on the part of the infringing user in dealing with an owner's request for reasonable compensation.
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    In addition, even if they are not defined in statutory language, AAP would urge Congress to make sure that the practical meaning and application of ''reasonable compensation,'' ''direct or indirect commercial advantage,'' and other key terms that establish the limitations on monetary relief in the statutory scheme are fully explained in legislative history. Among other things, the legislative history should make clear that actions by the infringing user other than selling copies of the infringed work may constitute ''commercial advantage,'' and that the provision's purpose in providing a safe harbor for infringing uses ''performed without any purpose of direct or indirect commercial advantage'' is not to lay a foundation for the assertion of a general ''personal use'' or ''private use'' exemption from infringement liability but only to effectuate the limitations on remedies for non-profit infringing uses that qualify for ''orphan work'' treatment, regardless of whether the user is an individual or an entity.

    Limitation on Remedies—Injunctive Relief: AAP generally supports the distinctions that are drawn in the Copyright Office proposed statutory language regarding the availability of injunctive relief. However, AAP believes that the attempt by the Copyright Office to use the concept of ''derivative works'' in describing the circumstances where injunctive relief may not be awarded to ''restrain the infringer's continued preparation and use'' of a new work that ''recasts, transforms or adapts'' the infringed work is awkward, confusing and inconsistent with the kind of results that the Copyright Office seeks to effectuate as described in its Report. For example, although the discussion in the body of the Report clearly contemplates that this limitation shall apply where the infringed work is a photo or manuscript that the infringing user incorporates into a new literary work, such a use of the infringed work does not constitute the creation of a ''derivative work'' based on that infringed work. Moreover, it is questionable as to whether the concept of ''incorporation'' of the infringed work into a new work is in any meaningful way captured by the terms in the draft statutory language that characterize how the use of the infringed work in connection with the new work affects the infringed work (i.e., it is not clear that such use ''recasts, transforms or adapts'' the infringed work).
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    AAP believes that these issues are more drafting problems than disagreements over the concept of limiting injunctive relief, and believes they can be addressed in a manner that is consistent with the Copyright Office recommendation in this area. However, there is another issue regarding the limitation on injunctive relief that was not addressed in the Copyright Office report but warrants your consideration.

    AAP believes that a serious problem of unfairness to copyright owners and, potentially, for U.S. adherence to its international treaty obligations will arise if State entities are permitted to claim the proposed ''limitation of remedies'' protection for their attempts to engage in ''orphan works'' use.

    As the result of a series of federal court decisions on the sovereign immunity of States under the Eleventh Amendment, State entities cannot be liable for monetary damages resulting from their acts of copyright infringement. They may, however, be subject to injunctions prohibiting further infringing use of copyrighted works. Since the proposed ''orphan work'' scheme would, in some circumstances, allow the copyright owner of the infringed work to obtain monetary damages (in terms of court-determined ''reasonable compensation'') but not injunctions, letting State entities avail themselves of the ''orphan work'' scheme would mean that a copyright owner who comes forward to confront a State entity that is an infringing user would be unable to get either an injunction (under the ''orphan works'' scheme) or, if the State entity balks at providing ''reasonable compensation,'' a monetary award (under the existing case law) and, thus, would be left with no recourse. This would be a patently unfair result, which almost certainly would violate U.S. obligations under the TRIPs Agreement, among others. Accordingly, in order to avoid this situation, the ''orphan work'' scheme should not be available to limit injunctive relief against a State entity unless the State is willing to waive its sovereign immunity in connection with its entities' ''orphan works'' uses.
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    Sunset: The Copyright Office recommendation would ''sunset'' the ''orphan works'' scheme 10 years after the date of enactment. This makes no sense to AAP because the impact of such a ''sunset'' requirement is likely to be extremely disruptive to infringing users who have relied on the protection of the statutory ''orphan works'' scheme for ongoing infringing uses of infringed works. If the goal of the ''sunset'' requirement is to permit Congress to evaluate the way in which the ''orphan works'' scheme has operated, it makes more sense to impose a ''Report to Congress'' requirement whereby the Copyright Office can conduct its evaluation and report its findings to Congress without creating problems for infringing users in their reliance on ''orphan works'' treatment of their infringements.

    Effective Date: Although the issue of an effective date for implementation of the statutory ''orphan works'' scheme was not addressed by the Copyright Office, AAP believes the effective date should be the date of enactment. However, we understand that some stakeholders may want to delay the effective date for implementation in order to provide time for their communities to become familiar with the intended operation of the enacted scheme, and to develop the voluntary guidelines and owner information resources that will help facilitate a fair and efficient implementation of ''orphan works'' treatment. Accordingly, AAP would not be opposed to a delayed effective date of one year after the date of enactment.

    Conclusion

    AAP is aware of problems that photographers, museums and certain other users and producers of copyrighted works claim the Copyright Office proposal will cause for their constituencies. Some of these stakeholder concerns may require only a tweaking of the Copyright Office draft legislative language so that it more accurately reflects and properly implements certain policy and operational objectives that are specifically discussed in the body of the Report; others, however, may require dealing with more organic complaints regarding the overall Copyright Office proposal and its alleged inadequacies from the perspective of these and other communities of users or producers of copyrighted works.
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    Book publishers are ready, willing and able to work with Congress, the Copyright Office and all interested stakeholders to refine the Copyright Office draft legislative language and implement its underlying core concept for addressing the ''orphan works'' problem. In the interest of avoiding the pitfalls of attempting to craft unnecessarily lengthy and detailed statutory language, AAP urges that efforts to resolve outstanding issues should focus, wherever appropriate and to the greatest extent possible, on the creation of a negotiated consensus legislative history that incorporates specific examples and illustrations to clarify the purpose and intended operation of the ''orphan works'' statutory scheme.

    Once again, thank you for this opportunity to present AAP's views on the Copyright Office ''Report on Orphan Works.''

    Mr. SMITH. Thank you, Mr. Adler.

    Mr. Trust.

TESTIMONY OF DAVID TRUST, CHIEF EXECUTIVE OFFICER, PROFESSIONAL PHOTOGRAPHERS OF AMERICA, INC.

    Mr. TRUST. Thank you, Mr. Chairman.

    Mr. Chairman and Ranking Member Berman and Members of the Committee, we thank you for the opportunity to testify concerning the Copyright's report on orphan works. As you mentioned, I'm here representing Professional Photographers of America. We have also received endorsement or support from the American Society of Media Photographers, our good friends there. The Picture Archives Council of America, and the American Society of Picture Professionals have each contacted us separately to endorse the statement that we are about to make.
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    The 130,000 professional photographers in the United States are quite literally the copyright owner next door, earning on average less than $35,000 a year. They are middle class American entrepreneurs found in every congressional district. While they are among the smallest copyright-owning businesses, photographers can easily create more than 20,000 works a year, each one having a relatively modest dollar value. They are the group most likely to have their works fall into the orphan category.

    Now, some would have you believe that all orphan works are willfully abandoned, that photographers don't value those works. It indicates a lack of understanding about the photographic industry. The truth is that an artist who marks his work and takes every reasonable step to make herself known can still have her images labeled as orphan. In the commercial context, this occurs at alarming frequency when editorial or advertising images are not properly credited or have metatags removed before publication to the internet.

    For the retail photographer, the threat comes from both unauthorized copies that do not contain attribution as well as from clients who make the photographer's contact information inaccessible by doing perfectly innocent things like gluing images into albums. Quite contrary to the Copyright Office's statement, 90 percent of our members mark their work. They are available.

    Now, because of their position in the marketplace and the ease with which their work falls into orphan status, a change in the law that might only cause a ripple for a large corporation is enough to capsize the person earning power of photographers and other visual artists. Unfortunately, it is our feeling that the Copyright Office proposal on orphan works while well-intended effectively tosses independent visual artists over the side of the copyright boat. It attempts to correct a bad situation by creating another bad situation.
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    Of particular concern with the proposal is the limitation on and in some cases the elimination of monetary damages, the denial of any monetary relief if the infringer's use of the orphan work is not for commercial advantage and if the infringer stops the use when notified by the rightful owner. The proposal fails to recognize that for the vast majority of professional photographers, noncommercial personal use copying undermines the entire market for their work. In addition, most photography infringements have long been completed by the time they are discovered. So requiring that an infringer cease the infringement is at best meaningless.

    If enacted, this provision would create the perverse result of a copyright owner proving infringement but receiving no monetary award at all, no compensation, no legal fees, no costs, no reasonable royalty, just a congratulatory handshake and a bill from her attorney. We find this to be patently unfair.

    Now, we do understand that this elimination of damages for certain orphan infringements was included to address the concerns of nonprofit museums, libraries, and archives. We want to be part of finding a solution. However, we implore the Committee to use a scalpel rather than a chain saw when carving out an exemption for such uses. The standard in the proposal is simply too broad. Even in cases where reasonable royalty is called for, the Copyright Office proposal will not work in the real world. For almost all visual artists, and orphan works infringement will never generate enough in damages to make a suit economically viable or even to make a threat of such a lawsuit credible. There is no incentive for individuals of ill will not to claim every work is an orphan work.

    Some creators have suggested making attorney fees available in order to solve this problem. While we believe this to be a reasonable solution, our friends in the user community don't. This apparent impasse points to a larger problem. The fact is individual copyright owners, whether of regular or orphan works, find it economically impossible to gain any sort of meaningful relief through the courts. Without access to statutory damages and attorney fees, enforcing rights in Federal District Court simply is not a real option.
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    In order to solve the damages issue for orphan works and to provide relief for individual copyright owners, we propose the creation of an optional administrative proceeding to decide low value copyright cases, a small claims-type procedure. Elements of our proposal were included in our response to the Copyright Office's Notice of Enquiry, and we've included proposed statutory language in our written testimony as well. We believe that orphan works and the accessibility of damages are inseparably linked. How could they not be? Without a mechanism for encouraging payment by infringers, the orphan works proposal is simply a way to skirt a creator's rights.

    Concluding, we are eager to see the problem of orphan works solved. We recognize that it is a problem. However, we must ensure that our legislative cure for the problem is free of side effects that will do irreparable harm to an entire class of copyright owners. We urge you to consider the devastating affect this legislation would have in its present form. Again, let us not try to solve a bad situation by creating another bad situation.

    Mr. Chairman and Members of the Committee, again, we thank you for the opportunity to bring the problems of independent copyright owners to your attention.

    [The prepared statement of Mr. Trust follows:]

PREPARED STATEMENT OF DAVID P. TRUST

    Mr. Chairman, Ranking Member Berman and members of the committee, thank you for the opportunity to testify regarding the Copyright Office's proposal on orphan works.
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    As the CEO of Professional Photographers of America, I am here today representing 33,000 professional photographers. This includes PPA and it affiliates, as well as three other organizations that have endorsed our testimony: the International Association of Professional Event Photographers, Commercial Photographers International and the Student Photographic Society.

    According to the latest available data, professional photography is a nearly $18 billion a year industry. While the industry as a whole is a robust contributor to the economy, the individual businesses that make up the industry are fragile. The 129,000 individual professional photographers in the United States are quite literally the copyright owner next door. They work an average of 45 hours a week and earn less than $35,000 a year. As middle-class Americans and entrepreneurs, photographers typically work in studios having less than three full-time employees and they can be found in every Congressional district.

    While they are among the smallest copyright-owning businesses, photographers also produce a higher volume of works than other artists. While almost all other copyright industries are based on the mass distribution of a limited number of relatively lucrative copyrights, a photographer will create more than 20,000 works a year with each copyrighted image having a relatively modest dollar value.

    Because of these business conditions, we believe photographers are also the group most likely to have their works fall into the orphan category. While some groups would have you believe that all orphan works are willfully abandoned, the truth is that a photographer or other visual artist who marks his work and takes every reasonable step to make himself known to the world can still have his images labeled as orphans. In the commercial context, this occurs with alarming frequency when images published in editorial or advertising spreads are not properly credited. For the retail photographer, the threat comes from both unauthorized copies that do not contain attribution, as well as clients who make the photographer's contact information inaccessible by doing perfectly innocent things like gluing images into albums.
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    This susceptibility to having their works labeled as orphans and the business model dictated by the marketplace, means that a change in the law that might only cause a ripple for a large corporate copyright owner is enough to capsize the earning power of photographers and other independent visual artists.

    Unfortunately, we believe the Copyright Office proposal on orphan works, while certainly well intentioned, effectively tosses independent visual artists over the side of the copyright boat.

    The fact remains, and the Copyright Office acknowledges in its report, that individual copyright owners often find it impossible to gain any sort of meaningful relief under the current copyright statute. The orphan works proposal makes a bad situation worse by exponentially increasing the risks for individual copyright owners who are forced to pursue an infringer in court.

    That being said, PPA does not oppose the creation of a properly constructed orphan works regime. Such a system would still limit damages against infringers who have made a reasonable, good-faith search for the current owner of a work and have failed to locate them. However, it would also recognize the value of an artist's work and provide a mechanism that makes it economically feasible for artists to enforce their rights against infringers who refuse to pay a reasonable royalty.

    Before providing PPA's proposal for such a system, we offer our comments and suggestions on the original proposal by the Copyright Office.
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SECTION 514(A): SEARCH AND ATTRIBUTION REQUIREMENTS

    We believe the Copyright Office's requirement of a good faith, reasonably diligent search combined and attribution when possible, provides a solid framework for determining if a use qualifies as an orphan work.

    However, we do have two reservations regarding this section of the proposal. The first comes not from the statute itself, but from the Copyright Office's unwillingness to lead groups of creators and users to develop guidelines to assist courts in determining what constitutes a ''good faith, reasonably diligent search'' and when attribution is appropriate.

    We agree wholeheartedly with the assessment that a statutory definition of a good faith, diligent search would be too rigid; however, the Copyright Office's notion of allowing various user and artists' groups to develop their own criteria independent of another provides too much opportunity for confusion and chaos. By having multiple ''reasonable'' search standards within the same industry, the Copyright Office proposal increases the probability of conflicting judicial decisions. This lack of guidance will make it more difficult for people of good faith to know when their search is sufficient, and allows those with less than noble intentions an opportunity to skirt the law.

    While the development of search guidelines under the oversight of the Copyright Office is our preference, PPA is also willing to consider the inclusion of very concrete examples of what does and does not constitute a reasonable search in the legislative history of any orphan works bill that is passed. While such legislative history would not be all-inclusive, it would provide at least provide some minimal guidance to judges and yield greater predictability in their decisions.
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    Our second concern deals with the language of the subsection on attribution. We believe the requirement of attribution when ''possible and as appropriate'' serves the goal of making it easier for the rightful owner of an orphan work to discover its use. However, there have been some concerns regarding the possibility that a user would accidentally mislabel a work. The concern is that subsequent viewers of the work might be misled as to the true identity of the work's author. In order to mitigate this problem, PPA proposes that in addition to requiring attribution when appropriate, the statutory language should also require that user indicate that the work is being used as an orphan work. This will provide a clear signal that any attribution of ownership is provisional and should not necessarily be relied upon by subsequent users.

SECTION 514(B)(1): LIMITATIONS ON REMEDIES: MONETARY RELIEF

    The limitation on remedies section is where we feel the Copyright Office proposal falls apart. While we firmly believe that some reduction in available damages is both necessary and desirable in an orphan works setting, those damages must also be accessible.

    The language of the proposed statute puts the burden on the copyright owner to prove their work had fair-market value and creates a rapid race to the bottom when it comes to compensation for artists. Under this proposal, the less an infringer pays for other photography, the more advantageous their position when defending against an infringement claim.

    The entire approach to this issue turns the traditional assessment of copyright damages on its head. Rather than look at the harm done to the copyright owner, this proposal attempts to impose the terms of a fictional transaction that looks primarily at what a reasonable buyer would have been willing to pay. In addition to giving a ''buyer's veto'' to an infringer, this approach completely ignores the fact that different artists use radically different business models. For instance, large corporate owners that license millions of royalty-free images a year, semi-professionals who are just happy to be published somewhere and independent professionals who normally sell only limited usage rights all suffer differing degrees of harm when their work is infringed. Unfortunately, the proposal at hand forces all of these copyright owners into a single mold, without regard for their individual circumstances.
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    In addition to ignoring the damage to the copyright owner, limiting compensation to a ''reasonable royalty'' creates a system in which it is impossible for independent artists to enforce their rights. While a ''reasonable royalty'' seems perfectly rational in theory, the reality is that when you are paying hundreds of dollars an hour in legal fees, the damages in this proposal become worthless. For almost all visual artists, an orphan works infringement will never generate enough in damages to make a suit economically viable or even to make the threat of such a lawsuit credible. As such, the Copyright Office proposal provides no incentive for an infringer to voluntarily pay for their use of an orphan work. We believe that any orphan works legislation must provide for compensation that is accessible in the event that an infringer refuses a reasonable request for payment.

    If the ''reasonable royalty'' standard is ultimately adopted, PPA recommends that in addition to providing some cost-effective mechanism for collecting damages, that the burden of proving damages be shifted so that the only evidence the artist needs to come forward with is the amount the artist, or an artist who is similarly situated, would normally charge for such a use. The burden would then be on the infringer to show that the claimed royalty is not a reasonable one.

    While the reasonable royalty approach to damages is problematic, it pales in comparison to the damage that the elimination of all monetary relief for uses without any purpose of direct or indirect commercial advantage.

    This provision ignores the fact that for many photographers eliminating monetary relief for non-commercial uses destroys the economic value of their works. That is to say, for the vast majority of professional photographers, allowing non-commercial personal use copying of purported orphan works would ravage the entire market for their work. In addition, most photography infringements have long been completed by the time they are discovered, so requiring that an infringer cease the infringement is, at best, meaningless.
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    This provision is particularly harmful in that it traps artists who make every reasonable effort to make themselves known to the world, but who fall victim to a third party who fails to properly identify the artist when distributing the work.

    Two brief examples:

 Scenario A: A wedding photographer provides images to a client and properly marks the work. Later, the wedding client places the images in an album using adhesives that make viewing the copyright information impossible. A few years pass, and the memory of the client becomes clouded as to the exact identity of their photographer. At that point, the child of the client decides to distribute copies of the wedding album to the bride and grooms' descendants—finding it impossible to identify the photographer from the prints themselves or from his parents—he proceeds with his plan under the orphan works exception. The photographer discovers the distribution of the albums and attempts to seek redress for the infringement.

 Scenario B: A photographer's work is used in an advertising campaign. While the photographer leaves identifying metadata in the digital file and marks any prints that leave her studio, the standard in the advertising world is to not provide a credit line when an agency publishes the work. A subsequent user sees the image and wants to use it. Finding no credit line identifying the photographer, this subsequent user contacts the company whose product was advertised and perhaps even the ad agency, but no one who currently works there can recall who created the image or they simply refuse to take the time to talk to him. The subsequent user then posts the image his personal web page on an online community where the image is copied thousands of times over.
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    Under the proposed statute, neither of these photographers has a financial remedy for these infringements, even though they took reasonable steps to make themselves known or knowable to all subsequent users. In short, this provision of the statute creates not just a ''trap for the unwary,'' but for the savvy rights holder as well.

    In its report, the Copyright Office alludes to the fact that this particular provision is designed to reduce the uncertainty non-profit libraries, museums and archives face when they display and reproduce massive collections of photographs legitimately believed to be orphaned. We are sympathetic to these concerns, but suggest that the legislative equivalent of a scalpel, rather than a chainsaw, be used to carve out a damages exception to address their concerns.

SECTION 514(B)(2): LIMITATIONS ON REMEDIES, INJUNCTIVE RELIEF

    In contrast to the section on monetary relief, we believe that the limitation on injunctive relief is a reasonable one. We commend the Copyright Office for taking economic considerations into account and striking a fair balance between the rights of artists and the investment a subsequent user may make in creating derivatives from an orphaned work.

SECTION 512(C) AFFECT ON RIGHTS, LIMITATIONS AND DEFENSES

    While we believe that this verbiage may simply be excess, we understand the desire of certain parties to make this point as clear as possible and we see no compelling reason to eliminate it.
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SECTION 514(D)—THE SUNSET PROVISION

    Based on the public comments of organizations on both sides of the orphan works issue, it appears that there is broad agreement that whatever legislation is passed should not have a 10-year sunset provision attached to it.

    Rather than having all of the involved parties repeat their efforts in 2016, PPA supports language that would require the Copyright Office to report to the Congress on the effect of this legislation five years after passage. While it is our sincere hope that we will take the necessary time to develop legislative language that gets it right the first time, such a provision would afford a good opportunity to make any necessary adjustments to the legislation.

ADDITIONAL RECOMMENDATIONS FOR ORPHAN WORKS LEGISLATION

    There are two items not contained in the Copyright Office proposal that we believe must be included in any legislation designed to address the issue of orphan works.

    The first item is a window of time between any passage of the Act and its effective date. Such an interval would allow time for owner and user groups to work together and develop reasonable search guidelines. It would also provide an opportunity to for organizations to set-up, promote and populate voluntary artist registries. As such, we recommend that no orphan works legislation become effective until two years after the date of passage.

    Our other recommendation is mentioned in the Copyright Office report on orphan works. It is our sincere belief that any orphan works legislation must contain provisions that make it possible for an independent artist to obtain the relief promised by the statute. Anything less would do significant harm to photographers, illustrators and other visual artists. Simply put, filing a federal copyright suit is simply not an option in any area where attorney fees and statutory damages are unavailable. Indeed, many photographers have discovered that under the current law the actual damages from almost all photographic infringements are too low to make a suit economically viable or even to make the threat of a suit credible. While this problem is currently limited to high-volume creators who find it practically impossible to register their work with the U.S. Copyright Office, the creation of an orphan works regime has the potential to put any copyright owner in this unenviable position.
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    Some creators have suggested making attorney fees available in order to solve this problem. While we believe this to be a reasonable solution, our friends in the user community are quick to point out that the possibility of paying a large award of attorney fees has the net effect of making orphan works unusable.

    In order to solve this impasse, Professional Photographers of America proposes the creation of an administrative or other proceeding to decide low-value copyright cases; or, as some have called it a ''small claims copyright court.''

THE COURT OF SMALL COPYRIGHT CLAIMS

    Elements of our proposal for the administrative adjudication of small copyright claims were included in our initial response to the Copyright Office's notice of inquiry. While the Copyright Office mentioned that this area was deserving of additional study in the orphan works report, it deemed the idea to be outside the scope of its assigned task. While that view may be technically correct, we believe that without some mechanism for making ''reasonable royalty'' damages accessible to artists, any proposed legislation on orphan works is simply unworkable.

    Regardless of the actual mechanism employed, we envision a ''court of small copyright claims'' that would offer the following features:

 If the actual damages claimed by a copyright plaintiff are below a certain dollar limit, he or she may elect to submit the claim to the court of copyright claims, rather than federal district court.
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 By submitting the dispute to this type of copyright proceeding, the plaintiff will not be eligible for statutory damages.

 Damage awards in this proceeding would be tied directly to the value of the infringement. In order to produce a sufficient deterrent to infringement, and to avoid the creation of a de facto compulsory licensing scheme, damages should be set at a small multiple of the actual damages, with a higher damages multiplier applied when infringement is found to be willful.

 A defendant in this administrative proceeding who successfully proves an orphan works or innocent infringement defense would only be liable for a reasonable royalty as determined by the tribunal.

 All other defenses available under Title 17 would apply.

 If the tribunal determines that an infringement claim was brought frivolously, or if the defendant offered no non-frivolous defense, the tribunal may award costs and fees to the opposing party.

 Copyright registration shall have no effect on the availability of damages available in this proceeding. However, in order to preserve and further the mission of the Copyright Office and Library of Congress a work must be registered prior to submitting a claim to this proceeding.

    We should also point out that such a copyright small claims court could also be useful in deciding disputes related to counter-notifications issued under 17 U.S.C. §512(g). This will allow both sides to get an official determination as to whether online access to a particular work must be disabled in a timely fashion.
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CONCLUSION

    Professional Photographers of America is eager to see a solution to the problem of orphan works. However, any legislative prescription aimed at curing this particular ill should be free of damaging side effects that will do irreparable harm to an entire class of copyright owners. As such, we ask the committee to take great care and deliberation before moving forward.

    We once again emphasize the fact that without an alternative to federal district court, the damages orphan works proposal will be impossible to obtain. As such, they provide no incentive to an infringer to honor a reasonable request for payment. This factor alone makes the Copyright Office's original orphan works proposal a vehicle for widespread harm to, and in some cases outright abuse of, the copyright interests of individual owners. We have attached sample legislative language detailing a mechanism that would make it possible to both limit damages against infringers of orphan works, while still making those damages accessible to a legitimate copyright owner.

    As we move forward, it is our hope that we can work with all parties to develop a solution that encourages the use of truly orphaned works and provides adequate relief to copyright owners when they surface.

    Mr. Chairman, Ranking Member Berman and members of the committee, we again thank you for the opportunity to bring the problems of independent copyright owners to your attention.
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ATTACHMENT

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    Mr. SMITH. Thank you, Mr. Trust.

    Ms. Pallante.

TESTIMONY OF MARIA PALLANTE, ASSOCIATE GENERAL COUNSEL AND DIRECTOR OF LICENSING, THE SOLOMON R. GUGGENHEIM FOUNDATION

    Ms. PALLANTE. Thank you, Chairman Smith, Members of the Subcommittee. I appreciate the invitation to be here today.

    I would like to state for the record that my testimony has been endorsed by 18 cultural and educational organizations representing a combined 144,000 museums, libraries, universities, and archives and more than 135,000 independent historians, educators, artists, and scholars who want to make productive use of orphan works. It is our view that the orphan works amendment has one ultimate goal. It should help to make cultural heritage more broadly available to the public; therefore, it must give users the confidence necessary to take works outs of obscurity.

    Scholars, museums, libraries, and universities struggle every day to balance the rights of lost copyright holders on the one hand with the mission of making letters, manuscripts, and photographs available for educational purposes on the other hand. At times, we are all also custodians, that is we have millions of working works in our institutional collections and we care for these at our own expense to the ultimate benefit of the public. For us, the importance of an orphan works solution cannot be stressed enough.
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    We would like to recognize the Copyright Office for its leadership on this topic over the past year. Their report on orphan works is a tremendous contribution. On balance, we found it to be accurate, insightful, and comprehensive. In fact, we and a majority of parties who commented during the office proceedings completely agree with many of its findings. Such consensus is remarkable in an undertaking as innovative as an orphan works amendment.

    For example, we agree with others that actual and statutory damages should be unavailable to a copyright claimant in an orphan works context. We agree that with respect to searching for a copyright owner, the standards of due diligence must be general and flexible. We agree that in order to be meaningful, orphan works must include unpublished works and works of foreign origin. And we agree that there should be some additional protection available to those of us who use orphan works for non-commercial purposes. These are complex points, but in our view, the Copyright Office got them right.

    This said, we do have a few concerns with the proposed statutory language. I should note, however, that we have spoken with Jule in the Copyright Office as well as others in the copyright industry, including Allan and the publishers, and we are confidence that these concerns can be addressed.

    First, we believe the statutory language should define reasonable compensation. We like and suggest the definition that is quoted in the report itself. We also believe there must be clear and thoughtful legislative history with detailed examples of compensation, including illustrations where the user is a nonprofit library, museum, archive, university, small publisher, or independent scholar and the use is typically free.
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    Second, to qualify for this safe harbor provision, the copyright office suggests that a use must be made, quote, without any purpose of direct or direct commercial advantage, unquote. This phrase requires clarification. For example, as nonprofit institutions, we produce books in accordance with our educational missions, but we do sell them for the same reason we charge admissions to exhibitions, to cover the cost of production.

    We need confirmation that the creation and sale of mission-related publications are uses undertaken without any purpose of direct or indirect commercial advantage. Likewise, though independent scholars may sometimes earn royalties, this does not make their activities commercial. On a related point with respect to the safe harbor, we agree that users should cease activity expeditiously if an owner emerges, but we hope the term can be clarified to allow users some time to actually verify the claims.

    Third, because orphan works will often, perhaps most often, be incorporated into other works of authorship, we would like to see language that more clearly defines the circumstances under which a user may avoid an injunction in cases of books, films, art works, and web sites.

    Fourth, we agree that users should credit authors when known but disagree that users should credit copyright owners. Crediting authors is a question of scholarship. The latter, crediting copyright owners, is pointing to err in the orphan context. We would hate to see additional confusion in the marketplace.

    Fifth and last, we oppose a sunset provision, but would like to see a follow-up study by the Copyright Office within 7 years from the passage of legislation.
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    In closing, we recognize that orphan works legislation is a complicated undertaking which requires consideration of diverse constituencies. We appreciate the concerns of photographers in particular. Photography is important to the cultural sector. In past days, we have had conversations with several representatives of this important community, including David, in an effort to better understand their issues. We are quite confident that Congress can achieve a solution that is fair to all.

    Thank you.

    [The prepared statement of Ms. Pallante follows:]

PREPARED STATEMENT OF MARIA PALLANTE

[Note: Image(s) not available in this format. See PDF version of this file.]

    Mr. SMITH. Thank you, Ms. Pallante.

    Let me say at the outset before I direct my questions to a particular witness that it is my impression there is, with the possible exception of the photographers, general agreement on say, 80 to 90 percent of the statutory language that has been offered by the Copyright Office. And we'll come back to the photographers in a minute, but I saw you nod your head, Ms. Pallante, and assume that's true, Mr. Adler, based upon your testimony as well.

    Mr. Sigall, I just want to thank you for the work that the Copyright Office has done. Believe me, to achieve agreement on 80 to 90 percent is a high level of accomplishment, indeed. So we appreciate all the effort that you put into it. In just a minute, I'm going to give you Mr. Adler a chance to respond to some of the concerns that have been mentioned, but on the way there, Ms. Pallante, I had a first question for you.
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    Ms. PALLANTE. Yes.

    Mr. SMITH. There were a number of examples that you gave where you felt that the statutory language could be improved if language was more clearly defined. One example you gave was reasonable compensation. I'm not sure you can define reasonable compensation. We'll see if they can come up with it. I think there's too many possible objects involved. I think usually we use the standard that's reasonable at that particular time involving that particular, as I say, object, and I don't know that you're going to be able to more clearly define that.

    However, just the fact that you think that that's achievable and the language can be defined in such a way that it would be helpful to your membership, I think is good. Also, as you know, there's already a fairly large carve-out for a memberships such as yours, and they've gone a long ways, I think, to try to accommodate some of your concerns. But I'm pleased to hear how optimistic you are about taking those last final steps.

    Mr. Trust, initially I was going to ask you to repeat all your concerns, but you did such a good job in your testimony, I think I'm going to skip directly to the response and give you a chance to respond to the suggestions that Mr. Sigall and Mr. Adler might make.

    Gentlemen, I wanted to ask you if you would respond directly to the concern by the photographers. I do think we're going to get there in the end, and I know that there's good faith negotiations that are ongoing and I hope you all will be able to conclude those negotiations in the next week or two, and I'm sure you will be able to; but how do you propose addressing the concerns of the photographers, if you intend to address them at all, and as I understand it, there are some areas for compromise, and would you fairly quickly go into those areas too?
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    Mr. Sigall, we'll start with you and then go to Mr. Adler.

    Mr. SIGALL. Thank you, Mr. Chairman, and thank you for the kind words. We are very pleased to have participated in this effort.

    I think with respect, a part of our testimony was designed to make sure we understand the different areas where the photographers claims are relevant. Some of it is relevant to the orphan works proposal and some of it is relevant to larger questions about enforcement of copyright generally. With respect to our proposal and the proposal to solve the orphan works problem, I think we've heard of two suggestions that might alleviate the problem.

    The first would be some exception to the limitation on remedies for the situation where the user refuses to negotiate with the resurfacing owner in good faith. There is a question of how you define that and how you get that language right, but in that situation, where the owner resurfaces and asks for reasonable compensation and there is no good faith negotiation, then perhaps at that point statutory damages and attorneys fees might become available for photographers who have timely registered their copyrights before the infringement occurred. So the current status quo rules would still apply.

    The caveat on that kind of solution is that you don't want to recreate the orphan works problem again by creating uncertainty in the mind of the user that they might be hit with that liability, but I think we can come to some language that avoids that.

    The second suggestion, I think which was mentioned in Mr. Trust's testimony, was the one about delaying the effective date of any legislation for a short period of time, maybe a year, which I think would help both in terms of helping individual creators start developing systems so that they can be found and located and also help develop some of the criteria for reasonably diligent search for both users and creators to understand what the scope of the orphan works designation would be.
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    I think those are two suggestions to our proposal that would help address the problems.

    Mr. SMITH. Thank you, Mr. Sigall.

    Mr. Adler, do you have anything to add to that?

    Mr. ADLER. I would only say that I think the book publishing industry would support the recommendations made by Jule just now with respect to both attorneys fees and perhaps a delayed implementation date, effective date for legislation. We are somewhat in conflict over this issue because, of course, photographs are precisely the kind of third-party copyrighted work that book publishers exhaust a great deal of effort and resources in having to license. I think that probably Mr. Trust would agree that book publishers generally are not a source of situations where these works are being published generally without attribution. For the most part, the works are licensed and they are attributed.

    So I think we would have to think through what additional types of specific remedies we might be able to afford to them that would not have an adverse impact on the problem that already exists for book publishers with respect to photos that are orphan works.

    Mr. SMITH. Okay. Mr. Trust, the two remedies that you heard Mr. Sigall just mention, how do they sound to you?

    Mr. TRUST. Well, I think the exception to the remedies is certainly a step in the right direction, and we're grateful for that. We would like to pursue that, obviously, but please understand it still requires the filing of a lawsuit in Federal Court.
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    Mr. SMITH. Which, as you pointed out, not everybody can afford and especially if the royalty is so small it's hard to justify the cost?

    Mr. TRUST. Yes, sir. If you're a $30,000 a year photographer, $35,000 a year photographer, $300 is a lot of money.

    Mr. SMITH. Right.

    Mr. TRUST. $300 determines whether or not your daughter gets to play soccer, your son gets to play baseball.

    Mr. SMITH. What about a small claims court?

    Mr. TRUST. Well, we're very much in favor of the idea of a small claims option for copyright issues. We think that that solves an awful lot of the problem. As far as the waiting period, that is wait a year, that is in our testimony. We're in favor of that.

    Mr. SMITH. Okay. Thank you, Mr. Trust.

    I just want to say that we have been joined by the gentleman from South Carolina, Mr. Inglis, but I turned around and that individual has been replaced by the gentleman from California who has already been recognized today. I appreciate his attendance, but I look forward to others returning as well.
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    The gentle woman from California, Ms. Lofgren, is recognized for her questions.

    Ms. LOFGREN. Thank you, Mr. Chairman.

    I think we've actually made some progress here and I think that's very—it is not exactly what I thought it would be, but I think it is important and probably workable, although I think we have a few more things yet to do.

    One of the questions I had, it's easier conceptually to think about this in the context of nonprofit uses, frankly, than for profit uses, and yet the issue of orphan works isn't just about nonprofit use. It's about the culture being able to take advantage of material that's essentially been abandoned, and that is important for all of us, and sometimes that use will be a commercial use.

    I'm wondering, Mr. Adler, about your comment about reliance, if I could just explore that. I was trying to think of a circumstance where you did a diligent search, couldn't find the copyright owner, and so the publisher and the printer and the like rely on this, and then later the screen writer relies on it and is not in the chain that you've described. Why shouldn't the screen writer be able to rely on that?

    Mr. ADLER. Well, Ms. Lofgren, I wouldn't disagree with you. I think that what we've asked for is that, in particular legislative history more so than in the statutory language, that we try to provide examples of these kinds of successive chains of interest. You can't call them chains of title because there's really no ownership interest that passes from hand to hand, but there clearly are certain types of business models where one party with full expectation of the other is going to be relying on, for example, the fact that when an author transfers copyrights to a publisher, they will provide in the contract a warranty with respect to the fact that they're not infringing somebody else's copyright, and the publisher will rely on that.
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    Now, in contracts, there will be indemnification agreements that deal with the situations where those warranties fail. We don't have the ability to, I think, impose that on this kind of a process, but therefore I think it would be helpful if we could define the kinds of chains of relationships that should qualify for reliance upon a previously done reasonably diligent search in order to qualify for a subsequent limitation on remedies.

    Ms. LOFGREN. I'm also thinking that when you get to reasonable damages, wouldn't it be important also in that to identify the risks taken by the individual who exploited what they thought was an orphan work? For example, I think Justice Breyer—I don't know if he was right or not—identified that 95 percent of what is protected is not being exploited and a lot has just been abandoned. Some of that is film, and to restore film is very expensive, and you want to be sure before you sink that kind of money into it that you're not going to end up holding the bag for it financially.

    So I think we need to make clear that reliance, good faith reliance, after following the rules of trying to determine ownership is going to be protected in the financial area. Does anybody disagree with that?

    The other question I have is really whether the—I understand the language is purposely general, and I value that. On the other hand, having watched the patent courts go crazy with conjunctive relief, I'm a little bit nervous about things that aren't actually in statute and whether we can rely safely on examples and legislative history, because the one thing we do want to have is some certainty in the system. That's one of the values of a registration proposal that this would replace in my bill, and I don't have a problem with that because there are other values with this; but if we don't have certainty in the system so that people know if they do one, two, three, and four, that they're safe, then we really won't have achieved our goal.
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    Is there a thought about how we could have that certainty here?

    Mr. SIGALL. That was an issue that came up a lot in the discussions at the roundtables and during our study, most on the question of what exactly does a reasonable search entail; and the conclusions, especially from the user-based community, was that it's better to take what—uncertainly is also sometimes called inflexibility of having—because the situations of use and the types of works being used is so varied and can happen in different situations, you need that.

    What most people also agreed to do, though, was to start building voluntary criteria as to what a reasonable due diligent search is on a sector-by-sector basis for the film industry or for the photography industry.

    Ms. LOFGREN. That makes sense.

    Mr. SIGALL. And you can develop those. At some point, you can formalize those in some way to make clear. The question of exactly how to do that is one that's still open, but I think the best place to start is with the development of those kinds of criteria and then we can decide how to best——

    Ms. LOFGREN. And that would be something the Copyright Office could take the lead on.

    Mr. SIGALL. We could take the lead on it. Most user groups when we proposed having some sort of rule-making authority to codify these things were opposed to that, at least for now. So there's different mechanisms and vehicles by way that these criteria can be formalized, but at least we should start getting that out.
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    Ms. LOFGREN. You can could do it in a collaborative manner.

    Mr. SIGALL. I think that's right, and we can get that information out to both users and owners so they know a little bit more about what the scope of the statute is.

    Ms. LOFGREN. I realize my time is over. I wonder if I could just say—I know Mr. Trust wants to say something, but I just want to thank Ms. Pallante for her comment about creators versus copyright owners. I hadn't really thought about that, but you're right. Michael Jackson isn't The Beatles and we ought to make a distinction between the creator and the copyright holder.

    And I wonder if Mr. Trust had a final comment.

    Mr. SMITH. Without objection, the gentlewoman is recognized for an additional minute, and that minute will be used by Mr. Trust, I think, to respond to the question.

    Mr. TRUST. Congresswoman Lofgren , we certainly share some of your concern in that. We feel like there is some sort of, if not definition, some sort of samples or examples of what a reasonably diligent search would entail, if those don't exist, people of goodwill, good people who want to find the owners, won't know where to look in some cases people, and people who, frankly, just want to get around the issue, their feet won't be held to the fire, so to speak.
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    So we share your concern. We certainly think if not in the legislation where it could be loosely defined, there needs to be quite a bit in the legislative history. We're in favor of having something even loose in the legislation just to help the process.

    Ms. LOFGREN. Finally, and I don't expect an answer now, Professor Lessig did raise the issue of the Berne Convention and that there might be problems relative to this proposal. I'm wondering if anybody has thought about that, and if you have thoughts after the hearing, if you could share them.

    Mr. SMITH. Thank you, Ms. Lofgren.

    The gentleman from California, Mr. Issa, is recognized for his questions.

    Mr. ISSA. Thank you, Mr. Chairman.

    You know, I always wrestle with copyright law because trademark is kind of easy to understand. You have affirmative responsibility if you're to keep your trademark and you can own it in perpetuity. Patents are easy to understand because they're for a finite period subject to renewal fees and they're published and they're very clear and they're available in a single searchable data bank, and then you have this infinite amount of things, some of them great creative works, some of them a snapshot technically. And I'm not trying to put all your photographers with snapshots, but I'm a snapshot. So I have to look and say are all my pieces anything other than whatever happened when the shutter opened, some of which look okay.

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    In the series of reforms that are being proposed, I have one particular question of why something isn't there, and that is in trademarks, we have constructive abandonment law. It's very clear that if you don't take reasonable steps, your trademark becomes abandoned. Now, that's obviously something you can end up in Federal Court debating because nobody ever thinks they abandon it. Even when they wrote ''we're never going to make that product again and we hate that name'', if somebody else starts using it, sometimes they change their mind.

    Is it possible that, in fact, we can put more material—of course, we're not exactly talking about orphans. We're talking about things that were intended to be orphans. Can we, in fact, find language that puts more into the public domain, more expediously by making it clear that, as Judge Breyer is paraphrased to have said, 95 percent of what is protected is, in fact, not in use?

    Mr. Sigall.

    Mr. SIGALL. I think the main impediment to a system like constructive abandonment and trademark law is the international copyright system which prohibits the imposition of formalities on the enjoyment and exercise of the copyright. So to the extent like in trademark law or in patent law there's a requirement that you have file something with a centralized office or do some other formal requirement to maintain or enjoy the protection, that would run afoul of the international system which is incorporated in the TRIPS agreement with the WTO system.

    So there are external constraints on the kinds of mechanisms that you might apply to solve this problem, and a large part of our report is devoted to analyzing the various solutions that people have brought up and how they fit within that framework. Part of the reason we chose the recommendation that we did and I think for the reasons that the parties support it is because it avoids any of those problems, because it's an ad hoc case-by-case basis. It is somewhat more uncertain, but also more flexible, but it as avoids any problems or suggestion that we're imposing a formality or other requirement that is prohibit by the international system.
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    So that's, I think, the benefit of the proposal that we put out, is that it's perfectly consistent with that system.

    Mr. ISSA. I appreciate that, but isn't that creative ambiguity erased when the court rules and precedent becomes there and it does the same thing as what legislation would have done? You say it's case by case, but as we all know, case makes case law which makes law.

    Mr. SIGALL. If the courts were to impost a hard and fast requirement that someone would have to—has to put notice in order to avoid being an orphan work or something like that, those situations might arise, but the question, that really remains to be seen, and we'll have to see how the courts go with that. I would hope that the courts are mindful of international obligations that we do live under in the copyright system.

    Mr. ISSA. Okay. Mr. Trust, I have a question for you. Particularly as to photographers, the fact that you're not going to get the normal statutory presumption, which is a value tool and does put people on the defensive when they simply take something and say, Well, I didn't know who owned it, would you feel more comfortable—and I know you've covered some of this in your testimony, but wouldn't you feel more comfortable if, in fact, we said set some—and we talked about examples, but we created something that made it clear that there are standards and if those standards of search are not reasonably conducted, then, in fact, statutory damages would apply? Is that something you would feel is worth our effort to continue looking for?

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    Mr. TRUST. Well, I think of course. I think all of photographers would be feel better knowing that before someone declared something that they created an orphan, that there was some standard that other people could look at and determine based on that standard whether they had actually conducted a search. Now, for some, they may say, Well, I looked in the yellow pages; that was a search. You know what? It might be a search. In a specific case, that could actually be the search, but for the majority of works, yeah. I think photographers are nervous about that very fact, people saying I looked in the phone book, I didn't see the name that I thought might be there, therefore we used it because it was an orphan work. And if that's the case, the exact example that you're talking about will encourage people to participate more fully in the search process and conducting reasonably diligent searches.

    Mr. ISSA. Can I suggest, and Mr. Chairman's indulgence, if, in fact, during a period of time somebody found you and paid you a royalty, would that be sufficient in your opinion for us to say that that should be codified as if somebody else could find you and somebody else negotiated and somebody else paid, then, in fact, there should be some peril that these eight people are finding you and paying and this one says he couldn't find you and thus says sorry?

    Mr. TRUST. Clearly, yes. We think that there should be some peril if the others managed to find a photographer and then one claimed to have conducted a diligent search and couldn't find him. Now, the reason we say this is because photographers, active photographers, are not that hard to find. In this discussion, we're talking about works that have been created some time ago. Existing photographers, photographers who are in business, it will require little more than a Google search to find.

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    Mr. ISSA. Thank you for using my example.

    Mr. TRUST. To find them. And so it won't take much to find active photographers. They're not hiding. These are active businesses. They want people to find them. They're not trying to keep themselves concealed.

    The issue really is completely around works that were created some time back, and those photographers may or may not still be in business.

    Mr. ISSA. Thank you, Mr. Chairman. Thanks for letting me make my point.

    Mr. SMITH. Sure. Thank you, Mr. Issa.

    Let me observe that I think there have been good questions today and reasonably enlightened answers, and this has been very helpful to me and I'm sure to others as well. Also, let me emphasize that I do hope that you all will come to an agreement on specific language that will help refine some of the terms that Mr. Adler mentioned and Ms. Pallante mentioned and Mr. Trust is worried about.

    Is it reasonable to feel that by the last week of this month you could some kind of a general agreement on the statutory language and have reached accommodations? Mr. Sigall, does that sound like a possibility to you?

    Mr. SIGALL. That certainly sounds like a possibility to us. Most of the discussions have been taking place between the private sector representatives, and we've been informed of them and we've started to participate in them. I think that sounds reasonable from the Copyright Office's perspective.
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    Mr. SMITH. Mr. Adler, does that sound reasonable to you?

    Mr. ADLER. There are other stakeholders who are, of course, not necessarily represented.

    Mr. SMITH. Right, not present.

    Mr. ADLER. But we have begun conversations with them and we would hope to be able to continue the dialogue toward that end.

    Mr. SMITH. And toward the end of the month.

    And Ms. Pallante.

    Ms. PALLANTE. Yes. Absolutely. The cultural sector is nothing if not reasonable.

    Mr. SMITH. Okay. So you think by the end of the month is a reasonable amount of time?

    Ms. PALLANTE. Absolutely.

    Mr. SMITH. Okay. Mr. Trust, I obviously tried to box you in here.
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    Mr. TRUST. I hadn't noticed.

    Mr. SMITH. What do you think?

    Mr. TRUST. I would echo the comments of Mr. Adler. There are other stakeholders here that we don't represent.

    Mr. SMITH. We know that. There's lots of them, but still——

    Mr. TRUST. But we certainly feel like we can work with everyone to help pull them together.

    Mr. SMITH. By the end of the month?

    Mr. TRUST. And make substantial progress, yeah, and do it by the end of the month.

    Mr. SMITH. Great. Thank you all. We look forward to your work product.

    We stand adjourned.

    [Whereupon, at 3:08 p.m., the Subcommittee was adjourned.]
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A P P E N D I X

Material Submitted for the Hearing Record

PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND RANKING MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

    Mr. Chairman,

    Thank you for scheduling this oversight hearing on the Copyright Office's report on orphan works. Unfortunately, I have to leave the hearing a little early, so my opening statement will be a little unconventional—in that it will consist of the questions I would like to ask, but may not get a chance to. Before I begin though, I must commend the Copyright Office on their legislative proposal, which seems to have united many owner and user groups in search of a solution to the orphan works problem.

    Clearly, the recommendation goes a long way to meeting users concerns of making beneficial uses of works when copyright owners cannot be found. This allows our society to be enriched by access to works that otherwise, and most likely, would be lost. However, this must all co-exist against the backdrop of maintaining the incentive for creators to pursue their art. When it comes specifically to the category of owners of visual art works such as photographers and illustrators, I have some concerns about the effect of the orphan works provision.

    Currently, a user can begin a search by typing in search terms in a registry, be it the copyright office, or for musical works by contacting BMI or ASCAP—however, there is no collective registry for photographic or illustration information making owner information, in many instances, almost impossible to find. Therefore, according to this proposal, if a reasonable search and attribution allows one to qualify for a limitation on remedies, will most owners of photographs be required to forgo their normal remedies when the information cannot be found?
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    This issue is the elephant in the room. Is the current copyright system layered by the orphan works provision adequate to protect visual arts owners? After all, the most basic question seems unanswerable: Where does one even begin the process of finding the owner information for most illustrations/photographs?

    No doubt this question may be addressed in part by some non-legislative solutions—or possibly legislative in that an appropriation is required. For example, when I wrote to the Copyright Office about the orphan works issue I requested that they ''explore the viability of creating an accurate, updated and electronically searchable database of copyright ownership.'' How much would such a database cost?

    Currently on the Copyright Office search site, unless one has a registration number, the title, or the author name, one cannot search for the work. Even with all that information, the search feature is extremely rudimentary. With photographs however, where often times there is no title to the work, there is currently no mechanism to search a description of the work and the possibility of matching the work is limited, since there is no thumbnail of the photograph. Granted, part of the problem has been exacerbated by attempts to accommodate the needs of the photographers by allowing group registration. However, if the orphan works provision limits an owner's right to reasonable compensation, without access to statutory damages or attorneys fees, what is the motivation for photographers to register their works in the first place?

    While some have stated that this issue should be resolved outside the scope of this orphan works solution, I think we must be wary of going down a road that small copyright owners claim will isolate them from the benefits of the copyright system and potentially harm them. Currently, copyright owners can use the threat of litigation with the possibility of statutory damages and attorneys fees to hinder unauthorized uses of their works. Under this orphan works provision, while the use is still considered infringement, the remedies are so limited that likelihood of recovery, of even reasonable compensation, becomes questionable. The cost of litigation to determine reasonable compensation would often-times far exceed the actual reasonable compensation.
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    To discuss the orphan works recommendation without addressing a core problem for major stakeholders in the process alters the balance in maintaining the exclusive rights for locatable copyright owners—where but for the fact that there is no adequate database—some of these children could be matched with their parents.

    Some of the issues I would hope the witnesses could address are the following:

    For cases in which the Copyright Office has a registration for a work with locatable information on its face, should there be an exception/carve-out to the orphan works provision? Should an owner, if able to show a registration, be able to reclaim his right to statutory damages or attorneys fees?

    What if a work was not only registered, but the owner took the steps to make his work locatable by providing a description of the work—would this make a difference?

    If the Copyright Office is proposing that this database be a voluntary database established by the photographers, should we look at a later effective date to allow time for the photographers to acclimate to this new scheme or perhaps provide a transition period?

    Finally, would the witnesses be amendable to having the option of resolution of the orphan works issue in a small claims court to reduce the costs to small copyright owners?

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    Of course, there are additional issues to consider such as the definition of derivative work, sovereign immunity, the right of an ''interested party'' to reacquire or exploit the work, all I'm sure which be addressed during the on-going negotiations. This is a great first step and I look forward to working with the Chairman and the parties in moving ahead with orphan works legislation.

     

PREPARED STATEMENT OF THE HONORABLE ZOE LOFGREN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

    I want to thank the Copyright Office for initiating its proceeding seeking comment on orphan works, and for issuing this report. I am glad to see that the Copyright Office recognizes a problem with orphan works, and glad to see such a comprehensive analysis based on the comments in its proceedings. There is nearly universal recognition that reforms in our copyright system are needed so that orphan works can reenter circulation to the public.

    As you know, I have for quite some time believed that the problem of orphan works is a great one. In too many instances, libraries, museums, publishers, authors, filmmakers and others seek to reuse existing works, sometimes in derivative works, sometimes merely for such simple things as screening or displaying those works. But they are unable to find the original copyright holders, and out of fear of an infringement action that might arise down the road, these existing works and derivative works remain unused and inaccessible.

    Just to give one particularly perverse example, I have heard of instances where library collections have sought to actually preserve original nitrate film masters, but cannot resolve the copyright ownership. As a result, they are unable to display the films in order to help secure funding for their preservation. It is an ironic result of copyright law indeed if it functions to lose historic works forever for posterity, rather than preserving them for the public.
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    I agree with the principles adopted in the Copyright Office's report. Those seeking to use orphan works should use due diligence to find the copyright holder, and if they can't locate the owner, they should be enabled to use the work without fear of infringement liability somewhere down the road.

    I am interested in hearing more from the Copyright Office about the specific solution it proposed. My view of the Copyright Office proposal is that it essentially would create a new legal defense for the use of orphan works, a legal defense to the full range of monetary and injunctive relief available in an infringement lawsuit.

    As you know, I introduced a bill, H.R. 2408, that took a somewhat different approach than the one proposed by the Copyright Office. In my bill, I set forward the concept of a national registry system. To avoid their works becoming orphaned, under my bill copyright holders would register their works in a national registry after 50 years.

    I recently received a letter from Professor Lawrence Lessig of Stanford Law School in support of a registry system. His letter suggests some modifications to the registry system I proposed in my bill. Mr. Chairman, with your permission I'd like to add Professor Lessig's letter to the record for this hearing, and I'd like to ask the witnesses for their reactions to Professor Lessig's proposal.

    One of the values I had hoped for in a registration approach is that it would create certainty for both copyright holders and those wishing to use orphan works. On the other hand, one of the values I see in the Copyright Office's proposal is that it would allow the use of orphan works immediately, rather than only after waiting 50 years. I am eager to understand how we can create more legal certainty under the Copyright Office's proposal, for both copyright holders and users of orphan works. I want users of orphan works to be able to know as much as possible about what their rights and obligations are before making use of those orphan works. I am also interested in hearing from the other witnesses their thoughts on creating a registry system as opposed to a new defense to infringement, and how we can create legal certainty for copyright holders and users under either approach.
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    Thank you Mr. Chairman.

     

PREPARED STATEMENT OF THE HONORABLE MAXINE WATERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

    Chairman Smith and Ranking Member Berman, I thank you for holding today's hearing on orphan works. From the initial request for a report made by the Chairman, the Ranking Member, and Senators Hatch and Leahy to the actual issuance of the ''Report on Orphan Works,'' due diligence has been undertaken in order to elicit a healthy analysis of the status of specific orphan works.

    It is very important to the advancement of technology that orphan works either be utilized with proper permission or expounded upon after its entrance into the public domain. However, I do sympathize with those who advise lawmakers to keep some of the current regulations intact that ensure that copyright owners receive remuneration for unauthorized duplication or use of this property.

    The draft statutory language crafted by the Copyright Office offers plenty of latitude for orphan works to be utilized. While the proposed 10-year sunset provision in section 514(d) has been widely criticized, it is prudent for this body to set a deadline by which it must assess the effectiveness of the new language. The sunset does not pose a threat to any parties; if, at the end of the sunset, it is determined that a sufficient number of parties benefit from the section, Congress will leave it intact, undoubtedly.
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    Today's hearing is important, not only insofar as this body reviews the Copyright Office's report. In addition, through the testimony of our distinguished witnesses and the record created by our queries to them, we will analyze the feasibility and need for other fixes required in the area of orphan works, such as the issue of digital rights to published works. The court dockets are replete with cases such as the ones against internet content giant Google where publishers argue that works are impermissibly featured on the site, while Google rebuts this contention by citing the orphan works dilemma. Our suggestion for improvements to the law must include proper treatment of this issue.

    I thank the panel of witnesses and the Subcommittee leadership for today's hearing, and I yield back.

AMENDED ''APPENDIX'' TO THE PREPARED STATEMENT OF MARIA A. PALLANTE, ASSOCIATE GENERAL COUNSEL AND DIRECTOR OF LICENSING, THE SOLOMON R. GUGGENHEIM FOUNDATION

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LETTER AND ACCOMPANYING PAPER FROM THE ADVERTISING PHOTOGRAPHERS OF AMERICA (APA)

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PREPARED STATEMENT OF THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS (ASCAP)

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LETTER AND PROPOSED LEGISLATIVE REVISION FROM THE ARTISTS RIGHTS ALLIANCE (ARS)

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PREPARED STATEMENT OF BROADCAST MUSIC, INC. (BMI)

    Chairman Smith, Ranking Member Berman, and Members of the Subcommittee, Broadcast Music, Inc. (''BMI'') is pleased to submit its written comments for the hearing record on the Copyright Office's legislative proposal for how to deal with the problem of so-called ''orphan works''. BMI commends the Subcommittee for holding a hearing on the complex and important goal of creating a new copyright law system designed to facilitate the use of copyrighted content whose owners/creators cannot be located. BMI thanks Marybeth Peters and the Copyright Office for their extensive work on this subject made at your behest. BMI urges the Congress to proceed deliberately and with caution in this area, however, because any orphan works regime that Congress may adopt entails the risk of unfairly compromising the rights and economic interests of this country's creators.

STATEMENT

    BMI is a music performing right licensing organization whose business centers on licensing of public performances of over 6.5 million musical works by a wide spectrum of users, including digital and analog broadcasting entities such as radio, broadcast television, cable, satellite and the Internet, as well as restaurants, stores, concerts, background music services, aerobics and dance studios, and many more. BMI's fundamental and lawful role is to license to these users the ''public performing'' right in musical works on behalf of its over 300,000 affiliated songwriters, composers and music publishers. The majority of these songwriters are neither performers nor major recording artists and therefore do not receive income from making sound recordings of their own music, or from concert tours, television appearances, commercial endorsements, sales of souvenirs or any other activities enjoyed by recording artists. As a result, the majority of BMI's affiliated songwriters and publishers are the consummate ''small businessmen and women'' who depend on their BMI royalties for a major portion of their income.
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    BMI also has entered into reciprocal license agreements with more than 70 foreign performing right societies worldwide that permit BMI to license in the U.S. the public performing right in many thousands of musical works by foreign songwriters and composers. Through these reciprocal agreements, BMI also collects royalties from those societies for performances of BMI musical works occurring overseas. BMI operates as a non-profit making business and does not retain earnings. Instead BMI returns all license fees collected, less operating expenses, as royalties to its affiliated songwriters, composers, and music publishers whose works are publicly performed.

    Last year BMI submitted comments to the Copyright Office in its orphan works proceeding. In those comments, BMI contended that at least with respect to the public performing right in musical works, the orphan works scenario should not be a problem because the performing rights organizations, BMI, the American Society of Composers, Authors and Publishers (''ASCAP'') and SESAC, together represent the rights to in excess of 99% of copyrighted music. The significance of this is that a user seeking to license the public performing right in music can obtain licenses from the performing rights organization whose repertoire includes that work.

    BMI and ASCAP also maintain extensive proprietary databases of copyright information as well as contact information for their respective affiliates and members. BMI pioneered an online database greatly facilitating the public's ability to identify the copyright owners of BMI musical works. The Harry Fox Agency also submitted comments to the Office that it is able to identify publishers for purposes of mechanical rights licensing. In the circumstances, it is not likely that a user will encounter a work for which licensing and/or contact information is not available.
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    Although the Copyright Office's report takes notice of the existence and the efficacy of collective licensing organizations,(see footnote 16) the Office's legislative proposal does not itself reflect the role that collective licensing organizations can play in reducing the incidents of orphan works problems. Jule Sigall did candidly acknowledge in his written testimony on behalf of the Office that the adoption of the proposed legislation by Congress might galvanize the non-music copyright industries to create collective licensing organizations similar to the music performing rights organizations. Mr. Sigall stated that: ''In fact, enactment of orphan works legislation may be the catalyst necessary to prompt the non-legal marketplace reforms that will most efficiently address the problems identified by photographers and creators of visual images.''(see footnote 17) The logic of this statement is apparent.

    While most commentators would agree that adherence to the Berne Convention would preclude any orphan works legislation that called for mandatory registration of works, it appears that the Office's proposal creates a scenario in which, for all practical purposes, a copyright owner must keep his or her address on file somewhere that is publicly available in order to preserve the economic value of his or her copyright rights. Even if the creator is capable of meeting this burden, the creator must ensure that the corporate entity owning or controlling the copyright (e.g., a work-for-hire owner) is similarly locatable. In addition to public access to contact information, there must be adequate assurance that someone coming across a copy of the work can reasonably link it to that particular creator or copyright owner. In this regard, concern has been expressed that the Office's proposal for attribution to copyright owners by orphan works users (which should be helpful to authors) may actually lead to improper or incorrect information being put on works by orphan works' users, which in turn could lead to reliance by subsequent orphan works users on incorrect data when they do their searches. All of this tends to argue for the creation of collective licensing organizations in non-music fields.
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    BMI is confident that the Committee will be able to address the many difficult issues presented by orphan works situations. BMI believes that any legislation adopted by Congress should, at a minimum, be accompanied by legislative history that addresses the case of a copyrighted work for which a license is available through a readily locatable collective licensing organization, such as the music performing rights organizations. The legislative history should clarify that: (1) a reasonably diligent good faith search to locate the owner should include research of databases of collective licensing organizations which may have the rights to license to the user; and (2) if a license is available from the collective (which itself is an ''owner'' of non-exclusive rights in the work) and is not taken, the work would not be considered ''orphaned'' (stated otherwise, the search would not be considered reasonable within the meaning of the Act). Such a provision would serve as a further incentive to the marketplace ''reform'' being advocated by the Copyright Office.

    BMI also believes that orphan works treatment should not be allowed for any uses subject to statutory compulsory licenses (e.g. sections 111, 115, 118 and 119) where Congress has created the means of access to a license and the Copyright Royalty Board has established the fees, and there are established methods and practices for dealing with unidentified works.

    David Trust of the Professional Photographers of America association testified that in the case of uses that have relatively small value, it will not be cost efficient for the owner of an orphan work to negotiate a reasonable fee when the incentives created by statutory damages and attorneys fees are removed from the negotiating equation. Jule Sigall testified that a ''small claims'' court for copyright owners could be the solution to this problem but the cost of going to even a small claims court is going to be relatively high in some cases. Attorneys fees should therefore be available to copyright owners who have to pursue legal remedies such as reasonable license fees for orphan works uses, at least in cases of flagrant and willful disregard of the owners' economic interest.
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CONCLUSION

    Mr. Chairman, BMI applauds your efforts and initiative—and those of the Copyright Office—in this challenging area of law. Collective licensing organizations such as BMI can serve as a cost-effective marketplace solution to orphan works licensing and BMI believes that at a minimum the legislative history to any orphan works bill should reflect this valuable role by specifying that reasonable searches include licensing through such organizations where available.

     

PREPARED STATEMENT OF REED STAGER, EXECUTIVE VICE PRESIDENT, DIGIMARC CORPORATION

EXECUTIVE SUMMARY

    In 2005, the U.S. Copyright Office embarked on a study of the issues raised by ''orphan works''—copyrighted works whose owners may be impossible to identify and locate. Concerns had been raised that the uncertainty surrounding ownership of such works might needlessly discourage subsequent creators and users from incorporating such works in new creative efforts, or from making such works available to the public.

    Digimarc is pleased to have the opportunity to submit written testimony to the Judiciary Committee Oversight Hearing on ''The Report on Orphan Works by the Copyright Office'' and the role digital watermarking technology can play in providing content identification and copyright communication to address the issue of orphan works.
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    Balancing the needs of consumers with the rights of content owners is of paramount importance. Consumers deserve to have access to the content options available to them. Content owners and artists deserve to be recognized and compensated for their work. But the rapid proliferation of technology has made this balancing act increasingly difficult. The U.S. Supreme Court recently tackled this issue in Metro-Goldwyn-Mayer Studios v. Grokster, in which the court ruled that file-sharing networks (also known as peer-to-peer or P2P networks) can be held liable when their users illegally exchange copyrighted material.

    In its ruling, the Court identified digital watermarking as a technology that can be used by rights holders and file-sharing networks to communicate copyrights and deter piracy and illegal use of copyrighted entertainment content.

    Digital watermarking technology is currently available from many suppliers such as Digimarc, Philips Electronics, Dolby Laboratories, Thomson, Verance, Activated Content, Verimatrix, Jura, Teletrax, GCS Research, Signum Technologies, Nielsen Media Research and others.

    Digital watermarking can enable content identification and copyright communication on a broad scale and can provide a range of solutions for identifying, securing, managing and tracking digital images, audio, video, and printed materials. In fact, digital watermarking technology has already been adopted by many photographers, movie studios, record labels, television broadcasters, and corporate enterprises as a way to identify, protect and manage the rights to their content while still offering their consumers the convenience and portability they have become accustomed to.

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    Digital watermarks can identify copyrighted content and associated rights, during and after distribution, to determine copyright ownership enable rights management policy while enabling innovative new content distribution and usage models. Digital watermarks are broadly deployed with billions of watermarked objects and hundreds of millions of watermark detectors in the market, supporting various applications.

    We believe that policy makers can facilitate the adoption of technologies such as digital watermarking to enable content owners and users to improve their level of collaboration to help address the challenge of orphan works. In particular, we urge the Committee to consider:

1. Amending Chapter 5 of the Copyright Act , expressly authorizing courts to consider whether a copied digital work included a publicly-readable digital watermark—by which the copyright owner could have been identified and contacted—in determining whether infringement of the work was ''willful;''

2. If provisions akin to those proposed by the Glushko/Samuelson Copyright Clearance Initiative are adopted, then listing a search for a publicly-readable digital watermark—by which the copyright owner could have been identified and contacted—as one of the factors appropriate for consideration in determining whether a user's inquiry was a ''reasonable efforts search;'' and

3. Recommending that the Copyright Office host a web page with information about digital watermark reader software that can be freely downloaded by the public, to check audio, video and image content for watermarked data by which the copyright owner of such content may be identified and contacted.
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PROBLEM

    Today, a large number of ''orphan works''—presumably copyrighted works whose owners cannot be identified or located—exists. Typically, such works are excerpts or newly digitized versions of books, movies, photos, and music whose ownership information has been stripped away or lost during distribution, re-formatting or editing.

    Unfortunately for those individuals and organizations seeking permission to use such works, much of this rich material ends up left untouched due to the fact that ownership cannot be determined.

    In its study of the problem, the U.S. Copyright Office solicited responses from the public. From libraries and business to legal institutions and individuals, the problem of orphan works is clear. A few examples from the responses:

 198 works from 397 were deemed to have unresolved copyright issues during the digitization of The Core Historical Literature of Agriculture by the A.R. Mann Library at Cornell University.

 More than 100,000 photographs made by participants on oceanographic voyages had no identifying photographer or copyright information, causing The Scripps Archives at the University of California, San Diego to only publish 4,000 of these images online.

 Countless other libraries, universities, artists, teachers and students have been unable to use works because of the inability to identify or locate copyright owners.
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SOLUTION: IDENTIFYING COPYRIGHTED MATERIAL WITH DIGITAL WATERMARKING

    When music, movies, images, programming or books are digitized, their identity (the detailed information about the content, its copyright ownership or the purchaser's rights) is often lost, having been reduced to ones and zeros that only computers can read. This makes the content difficult to manage, protect and track, leaving the door wide open for both casual—and malicious—digital piracy and copyright infringement.

    As a result, content often circulates anonymously, without identification of the owner, or without an easy means to contact the owner/distributor to obtain rights for use.

    The U.S. Supreme Court recently tackled this issue in Metro-Goldwyn-Mayer Studios v. Grokster, in which the court ruled that file sharing networks (also known as peer-to-peer or P2P networks) can be held liable when their users illegally exchange copyrighted material.

    In its ruling, the Court identified digital watermarking as a technology that can be used by rights holders and file-sharing networks to communicate copyrights and deter piracy and illegal use of copyrighted entertainment content.

    Digital watermarking is the science of hiding extra information, such as identification or control signals, in media content. For example, the digital ''pixels'' making up a movie or a photograph can be slightly altered in value to represent extra information, while not visibly impairing the appearance of the movie to human viewers.
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    The extra information represented by digital watermarks travels with the content—persisting through changes in file format, and through transformation between digital and analog form.

    Digital watermarks enable copyright holders to communicate their ownership, usually with a public detector, enabling infringement detection and promoting licensing. A digital watermark embedded within a piece of content can carry a persistent copyright owner identifier that can be linked to information about the content owner and copyright information in an associated database or to appropriate usage rules and billing information. Digital watermarks are broadly deployed with billions of watermarked objects and hundreds of millions of detectors in the market, supporting various applications.

    For example, photographs can be embedded with the photographer owner's ID to determine copyright information and usage rights. The same can occur with video (e.g., TV news and commercials), DVDs, and music.

CASE STUDY EXAMPLE: DIGITAL IMAGES

    Millions of copies of Digimarc's digital watermark reader software are currently in distribution, and thousands of creative professionals, organizations and businesses use digital watermarking to embed copyright notification information into their content, such as images. Leading image-editing applications, from companies like Adobe, Cerious Software, Corel, Jasc software include Digimarc watermarking technology as a standard feature.

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    These Digimarc-aware applications are capable not only of embedding digital watermarks, but also of reading and detecting digital watermarks already embedded in digital images. When an image is opened within one of these applications, the Digimarc auto-detection software quickly scans the image for the presence of a digital watermark. If a digital watermark is present, the application displays a copyright symbol (c) in the title bar of the image window, providing an instant, visual cue that copyright and ownership information are available by reading the Digimarc digital watermark. The passive detection and proactive notification are key features of Digimarc's copyright communication system.

    The digital watermark can provide a link to a publicy-accessible database, where complete contact details for the copyright holder or image distributor are stored. This makes it easy for the viewer to license the image, license another one like it, or commission new work.

    In addition to the embedder and reader plug-ins within many image editing applications, Digimarc also offers its own stand-alone reader product for detecting digital watermarks within images on your desktop or on the web. This free reader download enables users to detect digitally watermarked images directly from Internet Explorer or Windows Explorer. If a digital watermark is present, the image displays a ''D'' symbol in the lower right corner of the image.

    By simply clicking an ''Image Info'' button, the user viewing an image can link directly to the publicly accessible database, to obtain complete contact details for the image owner or distributor.

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    Once an image contains a digital watermark, it can be searched and monitored as the image is distributed over the public Internet to determine its location and compliance with usage rights.

    The Digimarc MarcSpider image tracking service scans the web and reports to image owners and distributors where their digitally watermarked images are found. This service enables photographers, web content developers, stock photography libraries, corporations and other users and creators of digital images to discover both authorized and unauthorized uses of their works migrating across the web.

    The core of Digimarc MarcSpider technology is a search engine that crawls through publicly accessible areas of the Internet looking for digitally watermarked images. It scans hundreds of millions of pieces of information, locating Digimarc-watermarked images and reporting back to their owners where and when they were found.

    Through the information found in the digital watermark, anyone with a Digimarc ''reader'' (available in the stand-alone free software reader as well as in the plug-ins) can obtain complete contact details about an image's creator and/or its distributor, making it simple to license the image, license another one like it, or commission new work.

    Current digital watermarks are robust against attack. Attempts to impair a digital watermark require impairing the host content, e.g., making a movie blurry, or a song noisy. Moreover, such tampering with a copyright protection measure can trigger liability under the Digital Millennium Copyright Act.(see footnote 18)
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IN SUMMARY: POLICY RECOMMENDATIONS

    Digital watermarks are available and widely deployed today, and can help speed and facilitate deployment of online digital content by enabling identification of copyrighted content, facilitating rights management policy, and enhancing consumer experiences.

    Content owners can digitally watermark image, audio and video now for forensic tracking, copyright notification and monitoring. We believe that policy makers can facilitate the adoption of technologies that can enable content owners and users to improve their level of collaboration to help address the challenge of orphan works. In particular, we urge the Committee to consider:

1. Amending Chapter 5 of the Copyright Act , expressly authorizing courts to to consider whether a copied digital work included a publicly-readable digital watermark—by which the copyright owner could have been identified and contacted—in determining whether infringement of the work was ''willful;''

2. If provisions akin to those proposed by the Glushko/Samuelson Copyright Clearance Initiative are adopted, then listing a search for a publicly-readable digital watermark—by which the copyright owner could have been identified and contacted—as one of the factors appropriate for consideration in determining whether a user's inquiry was a ''reasonable efforts search;'' and

3. Recommending that the Copyright Office host a web page with information about digital watermark reader software that can be freely downloaded by the public, to check audio, video and image content for watermarked data by which the copyright owner of such content may be identified and contacted.
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    In addition to addressing these ideas through direct legislation, the avenue of legislative report language could also be considered. Courts, for instance, could be invited to consider an award of enhanced damages if an infringement plaintiff proves that it marked the copied content with a digital watermark by which the copyright owner of such content could have been identified and contacted. Similarly, courts could be invited to consider a defendant's unsuccessful attempt to identify or contact a copyright owner by reference to such a digital watermark in assessing a reduced damages award. Private sector organizations, such as the various library associations, could be urged to develop best practice models leveraging advances in technology of the kind discussed above.

    In conclusion, we appreciate the opportunity to share our thoughts on ways in which technology can be used to help address the growing challenge of orphan works. We stand ready to assist in whatever manner may be helpful as the Copyright Office and the Judiciary Committee address the orphan works issue.

PREPARED STATEMENT OF THE DIRECTORS GUILD OF AMERICA (DGA)

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LETTER FROM THE GRAPHIC ARTISTS GUILD

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LETTER FROM THE ILLUSTRATORS' PARTNERSHIP
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PREPARED STATEMENT OF ASSOCIATION OF INDEPENDENT VIDEO AND FILMMAKERS (AIVF), DOCULINK, FILM ARTS FOUNDATION, FIND (FILM INDEPENDENT), INTERNATIONAL DOCUMENTARY ASSOCIATION (IDA), IFP (INDEPENDENT FEATURE PROJECT), NATIONAL ALLIANCE FOR MEDIA ARTS AND CULTURE (NAMAC), NATIONAL VIDEO RESOURCES (NVR), AND PUBLIC KNOWLEDGE

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LETTER TO THE HONORABLE ZOE LOFGREN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY FROM LAWRENCE LESSIG

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PREPARED STATEMENT OF JERRY BRITO, LEGAL FELLOW, MERCATUS CENTER AT GEORGE MASON UNIVERSITY, AND BRIDGET DOOLING, EDITOR-IN-CHIEF, FEDERAL CIRCUIT BAR JOURNAL

    Mr. Chairman and Members of the Committee:

    We appreciate the opportunity to enter written testimony into the record of the Committee's hearing on orphan works. Jerry Brito is a research fellow with the Regulatory Studies Program of the Mercatus Center, a 501(c)(3) research, educational, and outreach organization affiliated with George Mason University. Bridget Dooling is a law student and the editor-in-chief of the Federal Circuit Bar Journal, a legal journal at George Mason University.(see footnote 19)
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    We recently completed an analysis of the orphan works problem and evaluated several of the leading proposed solutions. Our study, which is published in the current issue of the Michigan Telecommunications and Technology Law Review, is attached as an appendix to this testimony.(see footnote 20)

    While our proposed legislative solution differs from the one proposed by the Copyright Office, we concur with the analysis in its Report on Orphan Works. We would like to highlight a few conclusions of our own analysis that we think might be helpful to your deliberations.

 The orphan works problem was created in large part by the elimination of formalities that resulted from the United States' ascension to the Berne Convention. While the reintroduction of formalities into U.S. Copyright law might help fix the orphan works problem, it is not a practical solution unless we are prepared to abrogate Berne and other international intellectual property treaties.

 The Supreme Court has made clear in at least 74 years of jurisprudence that the grant of temporary monopoly rights to creators is a secondary concern of the Constitution's Copyright Clause. The primary aim is the furtherance of creative innovation that benefits the public at large.(see footnote 21) With that in mind, it is not unthinkable for a reasonable solution to the orphan works problem to impinge somewhat on the existing rights of authors if doing so serves the public interest.

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 An efficient solution to the orphan works problem will create an incentive for authors to take every reasonable step to identify themselves so that would-be users of their works can find them and seek their permission.

 An efficient solution to the orphan works problem will create an incentive for would-be users of a work to take every reasonable step, in good faith, to identify the work's copyright owner in order to acquire permission to use the work. Perfunctory attempts to seek permission, or sham attempts made in bad faith, should not qualify a user for protection.

 To protect both copyright owners and would-be users, courts should apply any orphan works protection on a case-by-case basis. Only through case-by-case analysis can would-be users' claims that they could not locate an owner be fairly judged. A categorical approach-defining a class of works as orphan works and automatically limiting liability for using works in that class-impinges on authors' rights more than is necessary to address the orphan works problem.

 If a user of an orphan work is found by a court to have conducted a reasonable search in good faith, she should not be subject to any monetary liability. This will help create the needed incentive for authors to take steps to make themselves locatable. Additionally, it would eliminate the need for courts to have to speculate on what would be reasonable compensation for use of a work. Of course, users should have to acquire permission before they can make future uses of the work.

 If a user of an orphan work is found by a court to have conducted a reasonable search in good faith, she should not be subject to injunction where the orphan work is part of a derivative work that includes her own expression. This will help create the incentive for authors to take steps to make themselves locatable. Additionally, it will foster the creation of new works that would otherwise go unrealized if the possibility of injunction existed.
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 Orphan works are not a transitory problem. Additionally, Congress may modify the Copyright Act any time it becomes necessary. Therefore, there is no reason why an orphan works amendment to the Copyright Act should include a sunset provision.

    The orphan works problem undermines the purpose of copyright law, which is ''[t]o promote the Progress of Science''(see footnote 22) to ensure ''broad public availability of literature, music, and the other arts.''(see footnote 23) It stifles this goal by putting a large swath of the public domain in doubt and by making it practically impossible to locate many rightsholders to license their works. Some have suggested solutions that require an overhaul of U.S. copyright law, but these solutions are impractical and unnecessary. Recognizing this, Congress should enact a safe harbor from copyright infringement liability for those who conduct a reasonable search in good faith for a work's copyright holder before using the work. Doing so would remove the unfortunate choice between using an orphan work and bearing the risk of infringement litigation, or abstaining from the very derivative use that the copyright laws are intended to encourage.

    We hope our findings are useful to the Committee as it weighs various options for orphan works reform.

     

PREPARED STATEMENT OF GERARD COLBY, PRESIDENT, NATIONAL WRITERS UNION

    The National Writers Union—UAW Local 1981 welcomes the U.S. Copyright Office study of orphan works. Freelance writers' ownership rights have long been ignored and abused. The lawsuit New York Times v Tasini and the related class action lawsuits, as well as similar lawsuits won by freelencers in recent years, indicate that this situation has led to freelancers losing considerable income. A major contributor to this abuse and loss of income is the difficulty of keeping track of rights owners when the owners are individuals and small businesses.
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    The National Writers Union maintains that a registry and licensing agency (or agencies) are essential to ease of use of copyrighted works in compliance with the law. As Justice Ruth Bader Ginsberg explained in the majority decision in New York Times v Tasini, there is a simple way for prospective users to gain access to copyrighted material: pay for it. Private licensing agencies already exist and are ready means to access copyrighted material, including when the individual rights owner may not be available for one reason or another.

    Remedies such as the Canadian Copyright Board are partial and insufficient. At best, they allow others to use a work. They do not insure that rights owners get the income that such use earns. While allowing others to use a work is a critical goal of copyright law, the law must also relieve the harm done to infringed rights owners and protect them against further harm. As the summary to the present study makes clear, current means of relieving the harm have largely failed. There seems no means of relieving that harm other than a registry and licensing agency.

    It would be inappropriate of a government agency, including the Copyright Office to establish either of these functions either as a monopoly or in competition with private enterprise.

    While we sincerely applaud Congress and the Copyright Office for undertaking this study, we also note that the study would be unnecessary if the publishing industry had the same protections as the music and entertainment industries. In these industries, use and protection alike are facilitated by registries, licensing agencies, unions, and associations. Little such facilitation exists in the publishing industry, leading to problems such as the one presently under study. The above industries provide a ready model for the publishing industry, one that, if it were adopted, would remove the obstacles to lawful use that lay the foundation for such lawsuits as New York Times v Tasini.
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SPECIFIC QUESTIONS:

1. Nature of the Problems Faced by Subsequent Creators and Users

    Identification and communication with the current owner of the desired right is the key difficulty. The owner is often not the registered copyright holder, and there are often multiple owners of multiple rights to a single work. For instance, newspapers and magazines that obtain first serial rights to freelance writers' contributions will register the issue but not the individual works under the copyright holder. A potential user only knows of the publication, and the publication will not know the name or location of the owner or owners of the works' remaining rights. Even if a freelancer registers the work separately, it is highly unlikely that s/he will go to the expense of re-registering the work every time s/he changes address or makes modifications to an original work. However, s/he would maintain a current address with a registry/licensing agency that was paying her royalties for uses of the work.

2. Nature of ''Orphan Works'': Identification and Designation

    Any passive system that allows use without actively contacting the rights owner and soliciting her agreement is not only inadequate for protecting the rights of the owner of the work; it is standing copyright law on its head, asserting a form of eminent domain for private use that has already alarmed much of the nation when applied to real estate. Such permitted use will violate the purpose and meaning of the copyright clause of the Constitution ''To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.'' Article 1, Section 8.
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    This guarantee of exclusive ownership for a limited time was designed to encourage the growth of culture and commerce of the new nation, and it has, until recent times, worked well for the nation. Now this constitutional right is under attack by those who seek to use technology's advances in digital reproduction and Internet communication and commerce for their own commercial gain through advertising sales and fees by employing only a ''good faith effort'' to find the rightsowner and secure permission to use the rightsowner's property. Post facto compensation does not remove the legal burden under the Constitution to secure the rightsowner's permission. Nor will such change in copyright law protect the rights owner but will allow practices that will mislead the intellectual property community and the broader citizenry into believing permission by the rightsholder exists and that traditional copyright protection under the Constitution is still honored in this land.

3. Formal Approach

    A registry should be a private rather than government enterprise. A registry can only work if it is policed, and, in this case, private enterprise in the form of licensing agencies would be adequate to meet most market demands (Here we leave aside the problem of widespread copying and recopying over the Internet for commercial gain, which licensing agencies and even government agencies are challenged to address).

    Likewise, elaborate systems of optional registration will not serve to facilitate use by marketers to end users, and, further, will confuse rights owners. In the National Writers Union's quarter century of experience, many freelancers and even some publishers often assume that registration with the Copyright Office is unnecessary because copyright is automatic once the work is put into tangible form. But when the complicated system of additional protections, legal deadlines, compensatory versus statutory damages, and so on, that are provided by registration are explained to them, their eyes often glaze over and they either defer or look for lawyers. The present system, in fact, is one that only a lawyer can like, with the exception that requiring registration to gain access to the full protection of the law (statutory damages) creates an onerous and unnecessary burden on the rights owner which, unless undertaken, does not attract lawyers to take up the rights owner's plea for relief. Yet another complicated system of optional registration would compound the problems that the system already fails to remedy.
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4. Nature of ''Orphan Works'': Age

    Adjusting requirements according to the age of a work is a needless complication that further interferes with understanding and compliance. KISS should be the watchword.

5. Effect of a Work Being Designated ''Orphaned''

    Official designation of a copyrighted work as ''orphaned'' would, of course, be unnecessary in a system of registries and licensing agencies, which can better assure legal use of copyrighted work and compliance with the law. Arbitrarily declaring a copyrighted work, the property of a citizen, an ''orphan'' merely sets the stage for the work being effectively declared a ward of the state as a prelude to a rights grab by a third party seeking to exploit the ''orphan'' for commercial advantage. Let us be sure, instead, that the United States is not moving business practices back in time to when kidnapping and exploiting of ''orphans'' was tolerated, never mind legally condoned.

LETTER FROM DAVID SANGER, PRESIDENT, THE STOCK ARTISTS ALLIANCE (SAA)

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(Footnote 1 return)
See United States Copyright Office, Report on Orphan Works 23–34 (Jan. 2006) [hereinafter ''Report''].


(Footnote 2 return)
See Report at 34–46.


(Footnote 3 return)
See Report at 36–40.


(Footnote 4 return)
See Report at 41–68.


(Footnote 5 return)
See Report at 69.


(Footnote 6 return)
See Report at 70.


(Footnote 7 return)
See Report at 71–89.


(Footnote 8 return)
See Report at 89.


(Footnote 9 return)
See Report at 92.


(Footnote 10 return)
See Report at 127.


(Footnote 11 return)
See Report at 93–122.


(Footnote 12 return)
See Report at 122–126.


(Footnote 13 return)
See Report at 93.


(Footnote 14 return)
See Report at 116.


(Footnote 15 return)
To that end, we would also welcome a study at some point before the end of the 10-year period to assess how the orphan works legislation is working, even if no sunset provision is enacted.


(Footnote 16 return)
See Office Report at pp. 30–31.


(Footnote 17 return)
Sigall Testimony at page 2.


(Footnote 18 return)
E.g., Section 1202(b) provides ''No person shall, without the authority of the copyright owner or the law, (1) intentionally remove or alter any copyright management information, . . . (3) distribute, import for distribution, or publicly perform works, copies of works, or phonorecords, knowing that copyright management information has been removed or altered . . .''


(Footnote 19 return)
This testimony reflects only the views of its authors and does not represent an official position of George Mason University or their other affiliations.


(Footnote 20 return)
The study can also be found at 12 Mich. Telecomm. Tech. L. Rev. 75 (2005).


(Footnote 21 return)
Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932) (''[T]he primary object in conferring the [copyright] monopoly lie[s] in the general benefits derived by the public from the labors of authors.''); United States v. Paramount Pictures, Inc., 334 U.S. 131, 158 (1948) (''The copyright law . . . makes reward to the owner a secondary consideration.''); Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975) (''The immediate aim of our copyright law is to secure a fair return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.''); Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349–50 (1991) (''The primary objective of copyright is not to reward the labor of authors but 'to promote the Progress of Science and the useful Arts.' ''); Fogerty v. Fantasy Inc., 510 U.S. 517, 524 (1994) (''The primary objective of the Copyright Act is to encourage the production of original literary, artistic, and musical expression for the good of the public.'').


(Footnote 22 return)
U.S. CONST. art. I, §8.


(Footnote 23 return)
Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975).