SPEAKERS CONTENTS INSERTS
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UNITED STATES COPYRIGHT OFFICE
SUBCOMMITTEE ON COURTS AND INTELLECTUAL
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
JULY 23, 1998
Serial No. 105
Printed for the use of the Committee on the Judiciary
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For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
Page 3 PREV PAGE TOP OF DOCMARY BONO, California
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
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
STEVEN R. ROTHMAN, New Jersey
THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director
Subcommittee on Courts and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
ELTON GALLEGLY, California
Page 4 PREV PAGE TOP OF DOCBOB GOODLATTE, Virginia
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
BILL McCOLLUM, Florida
CHARLES T. CANADY, Florida
JAMES E. ROGAN, California
MARY BONO, California
BARNEY FRANK, Massachusetts
JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
MITCH GLAZIER, Chief Counsel
BLAINE MERRITT, Counsel
VINCE GARLOCK, Counsel
DEBBIE K. LAMAN, Counsel
ROBERT RABEN, Minority Counsel
EUNICE GOLDRING, Staff Assistant
C O N T E N T S
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Coble, Hon. Howard, a Representative in Congress from the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property
Perlmutter, Shira, Associate Register for Policy and International Affairs, Copyright Office of the United States, The Library of Congress
Peters, Hon. Marybeth, Register of Copyrights, Copyright Office of the United States, The Library of Congress
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Peters, Hon. Marybeth, Register of Copyrights, Copyright Office of the United States, The Library of Congress: Prepared statement
UNITED STATES COPYRIGHT OFFICE
THURSDAY, JULY 23, 1998
House of Representatives,
Subcommittee on Courts and
Page 6 PREV PAGE TOP OF DOCIntellectual Property,
Committee on the Judiciary,
The subcommittee met, pursuant to call, at 10 a.m., in Room 2226, Rayburn House Office Building, Hon. Howard Coble [chairman of the subcommittee] presiding.
Present: Representative Howard Coble.
Staff Present: Debbie Laman, Majority Counsel; Vince Garlock, Majority Counsel; Eunice Goldring, Staff Assistant; and Robert Raben, Minority Counsel.
OPENING STATEMENT OF CHAIRMAN COBLE
Mr. COBLE. Good morning. The Subcommittee on Courts and Intellectual Property will come to order.
We are scheduled to be at many places simultaneously, so the fact that there is nobody up here does not indicate a lack of interest in your operation, and they may come and go as we proceed.
Today we are conducting an oversight hearing on the administration of the Copyright Office of the United States. The House Judiciary Committee is charged with the responsibility of overseeing the administration and operation of the Copyright Office of the United States. To that end, we will be reviewing the administrative activities and the funding and expenditures of the Copyright Office to ensure that it is utilizing its resources effectively.
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The Copyright Office is a division of the Library of Congress. It performs several functions aside from its primary responsibility to examine and register copyright claims. These other functions include: maintaining records regarding transfers and terminations of copyright, administering the Copyright Arbitration Royalty Panel, providing information to the public about copyright law and registration procedures, providing technical assistance to the Congress, assisting the domestic and international copyright community in copyright protection, and collecting works to be deposited in the Library of Congress.
The Copyright Office raises revenue only through the collection of fees for the registration of copyrights. Currently, the cost of filing and receiving a certificate of registration is $20. The fees are deposited to a Copyright Office account in the U.S. treasury. In the budgetary process, those fees are taken into account in determining the amount of money to be appropriated to the Copyright Office.
In fiscal 1998 the Copyright Office received a total appropriation of $34,361,000, including $22,426,000 for Offsetting Collection Authority for a net appropriation of $11,935,000. In fiscal 1997 the Copyright Office received a total appropriation of $33,402,000, including $22,269,000 for Offsetting Collection Authority for a net appropriation of $11,133,000. The subcommittee will focus on how this money is allocated between the various functions of the office and whether or not it is being utilized efficiently and effectively.
Several topics will be discussed. The subcommittee will explore the possibility of creating a self-sufficient Copyright Office. As the amount of fees collected increases, many take the position that the Office should receive less in appropriations and raise fees in an effort to be self-sustaining. Others are concerned that the increase in fees could result in fewer registrations and deposits or that increased fee collection means a heavier workload for the same number of employees.
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The subcommittee will also discuss the Copyright Office's implementation of an electronic access system, the cost of implementing the system and how the system will impact operating costs and efficiency in performing its duties.
This list of topics to be covered is by no means exhaustive. All members of the subcommittee, should they appear prior to adjournment, are welcome to address any issues related to the administration of the Copyright Office of the United States.
It is a pleasure to have you all with us.
Our first witness is the Honorable Marybeth Peters, who is the Register of Copyrights for the Copyright Office of the United States. She has also served as Acting General Counsel of the Office and is Chief of both the Examining and Information and Reference Divisions. She has served as consultant on copyright law to the World Intellectual Property Organization and authored the General Guide to the Copyright Act of 1976.
Our second witness is Shira Perlmutter, who has been the Associate Register for Policy and International Affairs at the U.S. Copyright Office since 1995. In 1996, Shira was a key member of the U.S. delegation which negotiated the two new world intellectual property organization treaties on copyright and neighboring rights. From 1990 to 1995, Ms. Perlmutter was a law professor at Catholic University of America, teaching copyright law, trademarks and unfair competition and international intellectual property law.
Our witnesses today are accompanied by David O. Carson, who is the General Counsel at the Copyright Office; Marilyn Kretsinger, Assistant General Counsel of the Copyright Office; and Louis Mortimer, Chief Operating Officer, also at the Copyright Office. They are available to help respond to questions in the event that Marybeth and Shira call for such assistance.
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We have your written testimony and, without objection, it shall be made a part of the record.
As you all know, we try to adhere to the 5-minute rule. But you were offered four witnesses and only two have appeared, so, in a gesture of great generosity, we are going to extend that 5-minute rule to a 7-minute rule.
So when that red light illuminates in your eyes, you know that your time has expired. You will not be keel-hauled if you violate it, but if you can please conclude around the 7-minute time frame.
STATEMENT OF HON. MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, THE LIBRARY OF CONGRESS
Ms. PETERS. Mr. Chairman, I appreciate to opportunity to testify before you on the operations of the Copyright Office. My oral remarks will focus on important accomplishments and challenges. Associate register, Shira Perlmutter, will focus her remarks on policy and international work.
First, let me thank you and your staff as well as the members of the subcommittee and their staffs for all of the support that you have given to me and to the Copyright Office. I appreciate your interest and efforts, and I applaud your accomplishments, particularly the enactment of the Technical Corrections Bill, which addressed a number of our most pressing administrative and operational needs.
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As you mentioned, the Copyright Office has a myriad of duties and responsibility. Last year, with 496 employees, we received more than 630,000 claims to copyright; registered 569,000 of those, which contained more than 700,000 works. We recorded more than 16,500 documents, which reflected titles of more than 250,000 works.
We handled more than 420,000 requests for information, collected over $196 million in statutory royalty fees, obtained from the Library of Congress over 850,000 copies valued at more than $25 million, and completed three major studies for Members of Congress.
The Copyright Office's goal is timely, quality service. Despite valiant efforts by supervisors and staff, registration has gone from the norm of 6 to 8 weeks in 1993 to 6 to 8 months today. This clearly is unacceptable, and turning this around is my highest priority.
To address this, we hired 13 additional examiners last year and in the next fiscal year will hire eight more. Relief will also come from our electronic registration, deposit and recordation system, which is known as CORDS, as it becomes more operational. This innovative system, which allows electronic filing over the Internet, will streamline our internal procedures and ultimately lead to major savings and improved service.
Much effort has recently gone into designing a new fee structure. As you know, the law allows the Office to propose fees up to full cost recovery. However, as the law states, the fees must be fair and equitable and must give due consideration to the objectives of the copyright system.
Page 11 PREV PAGE TOP OF DOC We must be sure that any fee increase does not place an unreasonable burden on authors. If individual authors cannot afford timely registration of their works, they will be barred from obtaining valuable remedies even against willful infringers.
Additionally, we must keep in mind the interest of the public. If the number of registrations decreases significantly, the Library's collections will be severely undermined. This will jeopardize the ability of the Library to sustain its unique role as the keeper of the mint record of American creativity. It would also diminish public access to information about copyrighted works. A diminished public data base of information would make it more difficult for users to determine who owns what rights in a particular work at a given point in time. This would be unfortunate, given the potential of the global marketplace.
With respect to determining the cost of our services, we have received reports from two consulting firms with expertise in cost accounting and the new Federal Managerial Cost Accounting Standards. Additionally, our own task group on fees, which called itself FEATAG, has studied the consultants' reports and prepared its own report which included a schedule of recommended fees.
During June and the early part of July, I met with representatives of authors and copyright owners to listen to any particular concerns that their members may have. Their input was extremely valuable.
We will publish a Notice of Proposed Rulemaking with suggested fees and specific questions during the first week of August and seek public input through a comment period and a hearing to be held on October 1. We will then consider the input from the public, the economic analyses and studies, the operational factors of the office and policy issues. We plan to submit a proposed fee schedule with the required documentation to the Congress early in 1999 with the hope that the new schedule could become effective on July 1, 1999.
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Another major activity, as you mentioned, has been administration of the Copyright Royalty Arbitration Panel System. There has been much activity: decisions of arbitration panels on royalty distributions and adjustment or setting of rates, review of those decisions, making recommendations to the Librarian, and eventually defending the Librarian's decisions when they are appealed, as they inevitably have been.
As you know, we have identified a number of inefficiencies of the present system and look forward to working with you to improve this function.
In the past year, we have made much information available through the Internet. Our Web site includes Copyright Office studies, proposed and final regulations, Office practices, application forms which can be downloaded and used to file, informational circulars, frequently asked questions with their answers, WIPO treaties and documents, and the law itself. We have a new e-mail alert publication called NewsNet, and we accept e-mail inquiries. Our public records from 1978 to date are accessible at no cost through the Internet.
I am extremely proud of the work of the Copyright Office. I believe that during the 100 years that the Copyright Office has been in existence, its record has been one of leadership and solid achievement in establishment of copyright policy and service to the Nation. This will continue. We will creatively and enthusiastically address the challenges of the future.
Thank you, and I will be pleased to answer your questions after we hear from Associate Register Ms. Shira Perlmutter.
Page 13 PREV PAGE TOP OF DOC [The prepared statement of Ms. Peters follows:]
PREPARED STATEMENT OF HON. MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, THE LIBRARY OF CONGRESS
Mr. Chairman and Members of the Subcommittee: The Copyright Office appreciates the opportunity to testify at this Oversight Hearing. My statement reviews our operations, major accomplishments and challenges.
Last year, 1997, was an important year for the Copyright Office; it was the 100th anniversary of the Copyright Office and of the position of Register of Copyrights. During these 100 years, the role of the Office has been one of leadership in the establishment of U.S. copyright policy and service to the nation.
The Copyright Office's duties and responsibilities are many. First, it provides expert assistance to Congress as well as the Administration on copyright matters. The Office works closely with members of Congress and their staffs, providing policy and technical advice, and legislative drafting and testimony on an ongoing basis. It prepares studies, analyses and reports on timely and critical issues; acts as a technical advisor to the Executive Branch in the international arena; and cooperates with international organizations in conferences and educational programs.
The Copyright Office is also an office of record, a place where claims to copyright are registered and certificates of registration are issued, or if the legal and other formalities of the law are not met, refused. Such refusals may be appealed and ultimately may be reviewed by a court. It is also a place where documents relating to copyright may be recorded. These include, assignments, licenses, security interests, wills and notices filed under the Uruguay Round Agreements Act and the North American Free Trade Agreement. It creates a public record of these actions, which, at least for actions taken since 1978, is available online.
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With respect to these records, the Copyright Office provides copies of them and certifies them when requested. It reports on information found, e.g., whether or not a work is registered, when a work was published and the name and address of the current owner of record. The Copyright Office also administers a number of statutory licenses, including collecting and distributing royalty fees, and oversees and participates in the Copyright Arbitration Royalty Panel system.
The Office also furnishes information about provisions of the copyright law and practices and procedures of the Office and maintains a Public Office which is open MondayFriday from 8:30 a.m. until 5:00 p.m., eastern time. Finally, we administer the mandatory deposit provisions of the law which provide for demand of two copies of the best edition of copyrighted works published in the United States for the use of the Library of Congress in its collections or exchange programs.
Timely action by the Copyright Office, and complete, reliable and objective records of copyrights showing their authorship, ownership and legal status are essential to copyright owners and the public. Additionally, benefits are tied to registration; United States owners may not initiate a copyright infringement suit without first registering with the Copyright Office or without obtaining the Office's refusal to register. Certificates of registration and certified copies of transfers of ownership are relied on by our courts, customs officials and even foreign courts. Despite valiant efforts by the management and staff of the Office, some of which are outlined below, the Office lost ground in providing essential copyright services, and we have a significant arrearage with registration now taking between six and eight months, instead of six to eight weeks.
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In fiscal year 1997, the Office, with a staff of 496 full time employees, received approximately 630,000 claims, registering 569,226 which represented over 700,000 works, recording 16,548 documents with more than 250,000 titles, collecting $15,076,608 for our services and obtaining over 850,000 copies of works worth over $25,000,000 for the collections of the Library of Congress. Additionally, we handled 421,150 requests for information, and we accepted numerous cable, satellite, and DART claims. In calendar year 1997, the Licensing Division collected over $196 million in royalty fees and distributed over $175 million in royalties collected in earlier years.
On the registration side, the statistics are somewhat misleading. In the past several years the Office has moved to expand its group registrationsthat is, the use of a single application to cover multiple works at a reduced fee. Group registration is possible for: unpublished works that are authored and owned by the same individuals; serials, daily newspapers; newsletters; databases, and works restored under the Uruguay Rounds Agreement Act. Group registrations were established to encourage publishers of works that the Library needs for its collections to register their works immediately after publication and in certain cases to ease the burden on authors. The result is that the number of registrations decreased but the work did not decrease proportionately because in most cases each individual work in the group must be examined.
Our focus this year is on:
1. Improving our technical assistance to Congress and the Administration;
2. Developing the Copyright Office Electronic Registration, Recordation and Deposit System, CORDS;
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3. Improving our service by providing more timely registration of claims and recordation of documents as well as making more information available to the public electronically;
4. Establishing a new schedule of statutory fees;
5. Overseeing the compulsory license system; and
6. Acquiring and assuring the security of materials received through mandatory deposit.
I. IMPROVING OUR TECHNICAL ASSISTANCE TO CONGRESS AND THE ADMINISTRATION
A. Assistance to Congress
The United States Copyright Office continued to provide its expertise in support of the legislative work of Members of Congress and their staff by providing policy and technical advice, testifying on bills, assisting in the drafting of statutory language and legislative history, conducting negotiations, and preparing studies and background memoranda.
1. Studies of legislative and policy issues.
The Office continues to study and report on significant national and international copyright questions. During the 105th Congress, it completed three studies. It also commissioned two reports, one on the long-term future directions of digital technology and another on CARP reform.
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a. Review of the copyright licensing regime's retransmission of broadcast signals. At the request of Senator Hatch, the Copyright Office conducted a review of the copyright licensing regimes governing the retransmission of over-the-air broadcast signals by cable systems, satellite carriers, and other multichannel video providers.
The report considered the advisability of extending the satellite compulsory license, the disputes surrounding the implementation of that compulsory license, and the ''unserved household'' restriction for the retransmission of network television stations. The report also considered the possibility of harmonizing the cable and satellite compulsory licenses, and whether to extend those licenses to new technologies and allow retransmission of broadcast signals over the Internet or by telephone companies.
The final report was delivered to Senator Hatch on August 1, 1997. For the convenience of the public, the Office posted the full report on its website at www.loc.gov/copyright.
b. Report on the legal protection for databases. Also at the request of Senator Hatch, the Office held numerous meetings and prepared a report on legal protection for databases. The report gave an overview of the past and present domestic and international legal framework for database protection. It identified the issues to be addressed in considering new statutory protection for databases in the United States, and described the views and concerns of the interested communities. This report was delivered to Senator Hatch on August 18, 1997, and is also available on the Office's website.
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c. Funding the arts through a copyright term extension fee. Senators Kennedy, Dodd, Simpson, Leahy, and Brown requested that the Copyright Office and the Congressional Research Service conduct a joint study on the costs to the general public of extending the copyright term. The study considers the financial implications of the copyright term extension proposed in current legislation, and the costs and benefits of imposing an additional filing fee on works made for hire during the extended term to create federal funds for the public arts and humanities communities. The study considers whether such an assessment on works for hire would violate international treaty obligations as well as whether it would represent sound public policy. The Office submitted its part of the report to Senators Dodd, Kennedy, and Leahy in February of 1998.
d. Project Looking Forward. In order to assist us in our role as an advisor to Congress, the Copyright Office commissioned a study by a leading expert on Internet law, Professor I. Trotter Hardy, on the long-term future directions of digital technology and the issues likely to be raised for copyright law. His final report, entitled ''Project Looking Forward: Sketching the Future of Copyright in a Networked World,'' was released by the Office just this week and is also available on our Web site.
2. Legislative assistance.
Satellite reform. The Office's cable and satellite report recommended legislation that would harmonize the satellite and cable compulsory licenses and adopt other reforms in those licenses. The Copyright Compulsory License Improvement Act, H.R. 3210, which you introduced, Mr. Chairman, incorporates some of those recommendations.
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WIPO treaty implementation. The Copyright Office drafted the technical provisions of the proposed language to implement the two 1996 World Intellectual Property Organization treaties that was sent to Congress by the Administration in July 1997. After H.R. 2281, the WIPO Copyright Treaties Implementation Act, was introduced, the Register of Copyrights testified at the Subcommittee's hearing on the bill. The Office also assisted members and staff of the Subcommittee and full Judiciary Committee in developing various amendments. One of the amendments added to the bill was a provision permitting the maintenance and servicing of computers, which had been negotiated under the auspices of the Copyright Office in the 104th Congress pursuant to the request of then-Chairman Moorhead.
On-line service provider liability. The Copyright Office assisted in ongoing discussions of the issue of on-line service provider liability for infringements on the Internet, including providing analyses of existing law and drafting statutory language to implement various different approaches to the issue. The Register of Copyrights presented testimony to the Subcommittee on H.R. 2180, the On-Line Copyright Liability Limitation Act.
Database protection. After having issued our 1997 Report on Legal Protection for Databases, the Copyright Office worked with the Subcommittee extensively on the development of legislation that responded to the issues and concerns identified in the Report. The Register testified on H.R. 2652, the Collections of Information Antipiracy Act, which passed the House in amended form on May 19, 1998.
Term extension. The Copyright Office provided ongoing technical assistance and advice on issues involved in the extension of the term of copyright protection. At the request of Chairman Coble, the Office also presided over negotiations among the motion picture industry and the actors', screenwriters' and directors' union to develop a provision guaranteeing the continuing payment of residuals, by imposing on transferees of rights in motion pictures certain existing obligations under collective bargaining agreements. This provision was added to H.R. 2589, which also included an exemption for libraries that was recommended by the Register of Copyrights as the outgrowth of negotiations in the 104th Congress among library and copyright owner groups. H.R. 2589 passed the House in amended form on March 25, 1998.
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LaCienega/Technical corrections. The Copyright Office worked closely with the Subcommittee on achieving passage of legislation reversing a court decision that jeopardized copyrights in pre-1978 recorded musical works, and legislation clarifying and correcting technical errors and ambiguities in various provisions of the Copyright Act, including the restoration provisions of the Uruguay Round Implementation Act. This legislation was enacted into law on November 13, 1997, as Public Law No. 10580.
Other legislation. The Register of Copyrights testified at Subcommittee hearings on H.R. 789, the Fairness in Music Licensing Act; H.R. 2265, the No Electronic Theft (NET) Act (enacted as Public Law No. 105147 on December 16, 1997); and H.R. 2696, the Vessel Hull Design Protection Act.
The Office provided to Congressional staff written analyses of numerous issues addressed in bills introduced in Congress.
The Office held for Members of Congress and their staff the second of an annual program of educational seminars, ''Copyright Principles and the Legislative Agenda.'' The seminars focused on important issues of copyright law and policy relevant to the legislative business of Congress, including basic principles of copyright law and issues raised by pending legislation.
B. International Activities
1. Technical assistance to the Executive Branch.
Page 21 PREV PAGE TOP OF DOC The Copyright Office continued to work closely with agencies in the Executive Branch on international copyright issues. The Register of Copyrights and various attorneys from the Office of Policy and International Affairs participated as members of the U.S. delegations at WIPO meetings on database protection, audiovisual performers' rights, design protection and technical cooperation; at World Trade Organization (WTO) meetings and consultations with respect to implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs); and in negotiations over a Multilateral Agreement on Investment at the Organization for Economic Cooperation and Development (OECD). In addition, the Copyright Office provided technical assistance to the U.S. Trade Representative and the State Department on application of U.S. trade laws and policies, including regional and bilateral negotiations, WTO accessions, and reviews of other countries' laws. Finally, Office staff participated in USIA programs in various countries dealing with copyright issues.
2. Cooperation with international organizations.
Office staff participated in conferences and seminars sponsored by the World Intellectual Property Organization, the European Commission's Imprimatur project, the International Bar Association, the International Telecommunications Society, and the International Federation of Library Associations.
The International Copyright Institute of the Copyright Office hosted a three-week study tour for a delegation from the National Copyright Administration of China. The Office is preparing to co-sponsor with the World Intellectual Property Organization a week-long global program on copyright and neighboring rights in December.
Page 22 PREV PAGE TOP OF DOCII. DEVELOPMENT OF THE COPYRIGHT OFFICE'S ELECTRONIC REGISTRATION, RECORDATION AND DEPOSIT SYSTEM (CORDS)
A. Initiating Development
CORDS is an innovative system that will result in a national centralized system that allows electronic filing over the Internet of applications, deposits, and fees for copyright registration as well as documents of transfers of ownership including licensing information, such as terms and conditions of use. A feature of the system will be the storage and retrieval of copyrighted works from secure repositories for electronic dissemination in accordance with terms and conditions established by copyright owners.
The system is the result of the cooperation of the Copyright Office, the Library of Congress and the Corporation for National Research Initiatives (CNRI). Funding has come from the Library of Congress and the Advanced Research Projects Agency of the Department of Defense.
CORDS will help the Office improve productivity by streamlining operations and will provide better service to the public. All Office functions will be performed online: the acknowledgement of receipt, examination of the claim, any correspondence concerning the claim or the deposit copy, production of the certificate, and cataloging. When a work is registered it will be placed in the Office's digital repository, which will provide a means of ensuring authenticity and integrity of the work.
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The first claim came from a graduate student at Carnegie Mellon University on February 27, 1996. Since then Stanford University, MIT Press Journals Division, and the University of Phoenix became test partners, further proving the concept of the system. The system's capabilities were expanded to cover additional classes of works, multiple hardware platforms and operating environments, as well as multiple Internet browsers. Planning is being finalized for accepting electronic applications with traditional deposits. A long-range business plan analyzing the costs and benefits has been completed. Recently, a batch mode interface was created to support publishers who submit large numbers of claims, and an extensive outreach effort to gain new partners for the full or the partial system is underway.
D. Future Developments
The Copyright Office and its expert consultants will continue to build on and enhance the basic production system, incorporating changes as well as the latest advances in technology.
The Examining and Cataloging Divisions are prepared to begin receiving and processing submissions from UMI, one of the Office's largest remitters, which will be registering approximately 20,000 dissertations and theses each year by means of our electronic filing system. Because of the consistent nature of these claims, the processing will be done by technicians rather than examiners. Technician processing frees examiners to handle more complex claims.
Page 24 PREV PAGE TOP OF DOCIII. IMPROVING OUR SERVICE BY PROVIDING MORE TIMELY REGISTRATION OF CLAIMS AND RECORDATION OF DOCUMENTS AS WELL AS MAKING MORE INFORMATION AVAILABLE TO THE PUBLIC ELECTRONICALLY
A. Improving Service for Copyright Owners and Users
1. Implement streamlining initiatives.
a. Restructuring process. The Office has been discussing the restructuring of processing of claims which would reduce the movement of materials by combining several traditional operations and have them performed in one area. This is referred to within the Office as a product line. A product line operation essentially exists for the registration of motion pictures and television programs selected the Library for its collections.
Work is being done to expand these efforts to include serials and periodicals. The processing of serials is quicker than that of most other categories; serials almost never present a copyrightability problem, since the author and claimant are generally the sameusually the publisher of the serial.
The Copyright Office is currently structured around the distinct functions of processing registrations, e.g., incoming mail, fiscal control, examining, certificate production, outgoing mail, and cataloging. Thus, our efforts at streamlining and combining operations will require an extensive analysis and planning effort for which we are seeking additional funding approval.
Page 25 PREV PAGE TOP OF DOC b. Implement Pitney-Bowes Ergonomic Solutions' Recommendations. The operation under which staff processes all incoming submissions to the Copyright Office for registrations and other services has changed very little over the past twenty years. This system is labor intensive with 56 separate steps. With over one million items coming in to the Office to be processed each year, this once effective method is no longer efficient.
Pitney Bowes Ergonomic Solutions evaluated the incoming and outgoing Mail Units. This evaluation produced recommendations for better utilization of available space and proposed enhancements that would result in more timely handling of submissions and a more accurate audit trail for all items received. While some of the recommendations were cost-prohibitive, they served as a springboard to other, more affordable options that should reap substantially comparable results.
Over the next few years, the Office expects to implement a number of these recommendations to reduce the initial processing time of submissions and to establish a more timely online tracking/audit record for registration and all others services. The changes will result in improved service to authors, the copyright industries, the public and to the Library.
B. Improving Public Service
The Office has implemented and is continuing to implement a number of improvements to enhance public service including making more information available electronically. These improvements move the Office forward to a future that will permit instant access to its records and informational material and reduce the necessity for distributing paper copies.
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The Office has developed NewsNet, an electronic publication, distributed via the Internet. NewsNet issues periodic e-mail messages to alert subscribers to hearings, deadlines for comments, new and proposed regulations, new publications and other copyright-related subjects of interest. Since November of 1997 when the first issue was distributed, the number of subscribers to NewsNet has increased to over 2,000. Issues are sent out as frequently as needed to provide information to the public in a timely manner.
The Office has increased the number of materials available on its website. The website permits remote access to post-1977 Copyright Office records, including records of copyright registrations and documents relating to copyright. Last year the Copyright Office website was accessed over 1.3 million times, and that number will increase each year. The information currently available on the website includes: Frequently Asked Questions; HTML version of the copyright law; revised chapters of the Compendium of Copyright Office Practices; all copyright application forms; new and revised Copyright Office regulations; Copyright Office studies; Copyright Office informational circulars; and WIPO documents and treaties.
The Public Information Office now accepts inquiries pertaining to Copyright Office procedures and practices, copyright law, and other inquiries from the public via e-mail. Last year the Office responded to over 5,000 e-mail inquiries. The Examining Division is also using e-mail to get needed information about claims from applicants.
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4. Fax on demand.
The Office has a FAX on demand system which provides via fax transmission copyright informational circulars and public announcements seven days a week, 24 hours a day. The system sends out over 5,000 documents each year.
5. Electronic Freedom of Information Act Amendments.
The Office amended its regulations regarding the Freedom of Information Act (FOIA) to bring it into compliance with the Electronic Freedom of Information Act Amendments Act of 1996 (EFOIA). EFOIA brings the law into the electronic/digital age by requiring agencies to provide electronic access to covered agency records. As a result, where practicable, Copyright Office records that affect members of the public, as well as an index of such records, are now available to the public in electronic format.
6. Exploring use of credit cards.
On January 1, 1996, the Copyright Office began a trial acceptance of credit cards for use in payment of a limited category of servicesregistration of claims and recordation of Notices of Intent to Enforce (NIE's) copyrights restored under terms of the Uruguay Round Agreements Act (URAA). Between January 1, 1996, and May 12, 1998, a total of 123,377 registration claims and NIE's were received. Credit cards were used in payment of 1,390 submissions; credit card payments totalled $46,354, which accounted for 12.16 percent of all income received for these submissions.
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A report detailing the two-year pilot program has identified problems to be solved before the use of credit cards can be expanded. Additionally, a cost/benefit analysis must be prepared.
B. Ensuring Copyright Office Systems are Ready for 2000 and Beyond
The Office is working hard to ensure that all of its automated systems are fully operational in the year 2000.
COINS, our existing workload tracking system is being redeveloped to improve service and reduce maintenance costs. The new system will be implemented by January 1999 and will be fully capable of handling all dates.
COPICS, our cataloging system, has already had changes applied that will make it year 2000 compliant. CORDS, our new electronic registration system, is already year 2000 compliant. The Copyright Imaging System which is used to prepare certificates and reproduce recorded documents is undergoing analysis to determine what changes are needed to make it compliant.
By June 1999, all workstations in the Copyright Office will be upgraded to be year 2000 compliant. More than 62 percent of this work is already completed. The Office also has 12 internal systems, eight of which are already year 2000 compliant, and the remaining four will be upgraded with new releases purchased in fiscal years 1998 and 1999.
C. Existing ChallengesOperational Arrearages
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The Office continues to experience serious processing arrearages, particularly affecting the operation of the Examining Division. Some of these arrearages are due to staff shortages; others stem from increased responsibilities or increasingly complex duties.
1. Increasingly complex claims.
Some works such as Internet content/websites, works fixed in digital formats and multi-media works have made the examining process more demanding and complex. The substantive problems are more difficult, but also it takes more time to handle the physical deposit copies, such as CDROMs.
2. Restoration of copyright in certain works: Uruguay Round Agreements Act.
The GATT Uruguay Round Agreements Act was signed by the President on December 8, 1994; implementation of the Uruguay Round Agreement on Trade-Related Aspects of Intellectual Propertyknown as the TRIPS agreementresulted in three changes in the copyright law; one of these changes had a major impact on the operations and workload of the Copyright Office. This change restored copyright protection in a vast amount of foreign works which were previously in the public domain in the United States for a variety of reasons, e.g., publication without the notice of copyright formerly required by our law, failure to renew the U.S. copyright, and the absence of copyright relations between the United States and a foreign country.
Although protection is automatic, the act contained complicated provisions covering a prior user of a restored work, defined as a ''reliance party,'' who is insulated from liability for infringement in certain circumstances and for a certain period of time after restoration. The ability of the owner of a restored copyright to enforce rights against reliance parties turns on his filing a notice of intent to do so with the Copyright Office or alternatively serving a notice directly on the reliance party. Notices filed with the Copyright Office must be filed within two years of the date of restoration of the copyright in the work. A notice may be served at any time on a particular reliance party against whom the rights are to be enforced.
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With respect to notices of intent to enforce a restored copyright that are filed with the Copyright Office, the Office is required to publish in the Federal Register a list identifying the restored works for whom such notices have been filed with the names of owners of the restored rights. Reliance parties are granted a one year grace period to sell off existing stock of the restored work; this period begins on the date the information is published in the Federal Register. Thus, timely submission of the information to the Federal Register is critical.
The Office was given a number of new responsibilities under the Uruguay Round Agreements Act covering both registration of works whose copyright had been restored and recording of Notices of Intent to Enforce (NIE's) copyright in the restored works. The major part of that work was completed with the publication of the last major NIE list for works restored effective January 1, 1996. The Office will continue to register eligible works, and record notices of works by authors of those countries still eligible to file NIE's.
A majority of NIEs received under the URAA were for Spanish language films. There were also filings for French, German, and Russian films. NIEs were filed for many of the most famous operas, from ''Aida'' to ''Turandot''; the major works of authors such as Virginia Woolf, C.S. Lewis, T.S. Eliot, and Federico Garcia Lorca; and hundreds of works by Picasso. Representative titles from various NIE lists are Stravinsky's ''The Rite of Spring,'' Jacques Cousteau's ''The Silent World,'' and Alfred Hitchock's ''The Man Who Knew Too Much.''
Many waited until the end of the two-year period to file, causing workflow problems. Our first list published in the Federal Register in April, 1996 contained 2,793 titles representing 1,259 NIEs. By contrast, the last NIE list published in April, 1998 contained 14,000 titles representing 11,848 NIES, and ran nearly 80 pages in the Federal Register!
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3. Final appeals of denials of registration.
On its own initiative, the Copyright Office implemented a more labor intensive, but more equitable appeal procedure. Under the new appeals procedures, the first appeal of denial of registration is directed to the appropriate section head in the Examining Division. If a second appeal follows, it is directed to a Board comprised of the Register of Copyrights, the General Counsel, and the Chief of the Examining Division. In fiscal year 1997, the Board of Appeals issued decisional letters responding to 31 final appeals. It reversed the decisions regarding three works and upheld the decision to deny registration regarding 87 works.
D. Office's Responses to These Challenges
1. Hiring new staff.
Between 1993 and 1996, examiner staffing had fallen by 38%. In 1997 the Office hired 13 new examiners. This hiring did not, however, return the Office to the staffing levels of 1993. In order to return to previous levels of 64 fully-trained and independent examiners sufficient to process the approximately 620,000(see footnote 1) claims per year, which has the been the level of receipts for the past six years, the Office must hire another eight examiners.
The 13 examiners hired in 1997 are beginning to make a difference in production as they make progress in learning the examining work and contribute to reduction of arrearages. Funding permitting, the Office will hire an additional eight examiners in the next fiscal year.
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2. Working overtime.
The Office has used overtime to encourage completion of outstanding tasks in critical processing areas such as the Examining, Cataloging, and Receiving and Processing Divisions.
3. Hiring temporary staff.
Because of the long training time involved in preparing people to handle examiner duties, the Office has not hired outside temporary staff to examine claims. For the past eight months, however, it has invited all previous examinersthose still working in the Library of Congress and those who have retiredto come back to work any number of hours they can.
4. End of microfilming and assumption of the imaging workload
Before September 1997, the Documents Section sent all documents recorded in the Office off-site for microfilming. Now it is reproducing the documents by creating digital images in-house.
D. Simplification of Existing Procedures
The Examining Division is simplifying certain of its procedures:
Page 33 PREV PAGE TOP OF DOC1. Some claims processed at lower level.
As mentioned earlier, technicians are handling the entire examining processing for certain categories of claims which do not present problems of a type requiring analysis by examiners.
2. Use of short forms.
The Copyright Office developed a short version of three of its application forms to make submitting and processing certain copyright claims easier. The information requested is minimal, and the instructions are brief and to the point.
This short form may be used by any living author who is the only author of his or her work and the sole owner of the copyright in the work. If there is more than one author of the work or if a business organization is the copyright claimant, the standard form must be used.
3. Project special remitter.
This method of handling the claims to registration originated a few years ago within the Performing Arts section of Examining and has since been extended to the Literary and the Visual Arts sections for applicants who frequently register. This represents a significant improvement in processing because one examiner is assigned to handle all claims which are received from a specific applicant. The examiner becomes familiar with the situation for a given applicant and also becomes familiar with the personnel of that applicant who normally handle copyright registrations. Much of the formal written correspondence, which is more expensive and time-consuming for the Office, has been replaced by phone or e-mail contact, resulting in more efficient handling of both routine and more complex claims, and in an expedited issuance of the final certificate. Good public relations are built by using such personalized service for a specific applicant; both staff and applicant appreciate the enhanced communication which is possible when knowledge has developed on both ends of the registration activity over a period of time.
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IV. ESTABLISHING A NEW SCHEDULE OF STATUTORY FEES
Through your leadership, the technical corrections bill, H.R. 1861, became law on November 13, 1997, and we are in the process of designing a new fee structure based on costs while considering the objectives of the copyright system, fairness and equity. Registration must be encouraged so that the value to the public of the Office's database of information on copyrighted works is not diminished and so that there is no substantial decrease in the number or quality of deposit copies that come in automatically through the registration system and that are made available to the Library of Congress.
Each year the Library selects more than 500,000 works for its collections. Copyright deposits are the Library's primary source for books, serials, and other print materials published in the United States. Nearly all U.S. newspapers are received on microfilm via copyright deposit. The Library's motion picture and sound recording collections are heavily dependent on copyright. Moreover, more than 60,000 books, not selected for the collections but selected for our exchange program, allow the Library to receive important foreign works without any cost to the taxpayer. Any substantial decrease in registrations would undermine the collections of the Library.
In July, 1997, anticipating enactment of the fee bill, the Copyright Office began the process of determining the costs of registering claims, recording documents and providing related services. It hired two consulting firms with expertise in cost accounting and the new Federal Managerial Cost Accounting Standards and established a Copyright Office Fee Analysis Task Group (FEATAG). FEATAG submitted a report to the Register of Copyrights which made certain recommendations on the fees.
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The Office has also contacted representatives of interested parties to invite them to discuss the forthcoming fee increases and identify their members' concerns. A number met with the Register; some others submitted comments.
In early August, the Office will publish a Notice of Proposed Rulemaking (NOPR) with one or more possible fee schedules and formally seek public input through a hearing to be held on October 1, and a comment period. After considering the studies, the operational and policy issues and the input from the public, the Office will propose a schedule of statutory fees to Congress early in 1999. Given the Congressional 120-day period, it seems unlikely that the statutory fees could be increased before July, 1999.
V. OVERSEEING THE COMPULSORY LICENSES
A. Update on Compulsory License Proceeding
The Copyright Office administers a number of statutory compulsory licenses, including the licenses for retransmission of broadcast signals by cable systems and satellite carriers; public performances of sound recordings by digital audio transmissions; making and distributing phonorecords of musical compositions, including digital phonorecord delivery; public performance of published and nondramatic musical works by jukeboxes; and public broadcasting entities' use of nondramatic musical works and pictorial, graphic and sculptural works. The Office also administers the statutory obligation on sales of digital audio recording devices and technology (DART). In 1993, Congress broadened the responsibilities of the Office in this area when it replaced the independent Copyright Royalty Tribunal with a system of Copyright Arbitration Royalty Panelsor CARPswhose decisions are reviewed by the Register and the Librarian of Congress.
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With respect to royalty distribution, the Librarian announced the final determinations of the distribution in 1990, 1991, and 1992 cable royalty fees, and the distribution of the 1992, 1993, and 1994 DART royalty fees. Both decisions were appealed to the Court of Appeals for the District of Columbia Circuit. Additionally, the Office initiated two distribution proceedings. The first involved a controversy between an individual claimant and the performance rights organizations (ASCAP, BMI, Inc. and SESAC) over the distribution of the 1991 cable royalty fees in the Music Claimants category. This proceeding was decided on the written pleadings, and like all the other decisions, it too has been appealed.
The second proceeding involving the distribution of the 1992, 1993, 1994, and 1995 satellite royalties was scheduled for hearing, then suspended at the request of the parties pending the outcome of the appeal of the first distribution proceeding. It has been rescheduled to begin in November of this year.
The Office also has a number of additional proceedings to schedule in order to distribute funds for past years, including those to determine the distribution of the 1993, 1994, 1995, 1996, and 1997 cable royalties, the distribution of the 1996 and 1997 satellite royalties, and the distribution of the 1995, 1996, and 1997 DART royalty funds.
Fiscal year 1997 was a particularly busy year because it covered the window years for the adjustment of, or the setting of, the royalty rates for five compulsory licenses: 1) the cable compulsory license, 17 U.S.C. 111; 2) the satellite compulsory license, 17 U.S.C. 119; 3) the noncommercial broadcasting license, 17 U.S.C. 118; 4) the mechanical license, 17 U.S.C. 115; and 5) the sound recording performance rights license, 17 U.S.C. 114.
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Perhaps because this is a new system, negotiations have been time consuming and not particularly fruitful. Out of the five potential rate adjustment proceedings, only the parties concerned with adjusting the cable royalty license fees have agreed to continue with the current rates and not seek an adjustment. Attempts to negotiate an agreement among the parties interested in setting rates and/or terms for the remaining four licenses have not been so successful and have required or will require a hearing before a CARP.
Two of these proceedings have been completed. The first set new rates for the satellite compulsory license and the other established rates and terms that nonexempt subscription services must pay for the public performance of sound recordings by means of a digital audio transmission. The Librarian's final orders setting these rates and terms have been appealed, and in the case of the satellite rate, also the subject of congressional reaction.
B. CARP Reform
Under the CARP system, a CARP makes the initial decision on royalty rates and terms for the statutory licenses. A CARP also makes the initial decision on how the royalties for a number of these licenses shall be distributed among copyright owners. For each ratemaking or distribution procedure, the Librarian of Congress impanels a new ad hoc CARP whose members are selected from a list of potential arbitrators. After the CARP renders its decision, the Register, with the assistance of the General Counsel and his staff, reviews the decision and recommends to the Librarian whether to accept the decision of the CARP or to reject it as arbitrary or contrary to law. If the Librarian rejects the CARP's decision, he makes his own decision on the advice of the Register.
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Our experience with this system over the past few years has persuaded us that it is burdensome, costly and inefficient. Last fall, the Subcommittee asked us to make recommendations to reform or replace the CARP system. After an exhaustive study of a number of alternatives, we submitted a report on February 23 that addressed the deficiencies in the current system and explored five options to improve or replace it. Those options included (1) improving the existing system by changing some of the qualifications of CARP panelists, extending statutory deadlines, providing for streamlined small claims procedures, and so on; (2) replacing the CARPs with administrative law judges; (3) replacing the CARPs with non-ALJ presiding judges; (4) replacing the panels with a Copyright Royalty Adjudication Board within the Copyright Office; and (5) creating an independent regulatory agency.
We recommended the establishment of a Copyright Royalty Adjudication Board within the Copyright Office. This recommendation was incorporated into H.R. 3210, the Copyright Compulsory License Improvement Act, which has been approved by the Subcommittee. The Office supports this legislation, and we are ready to continue to work with the Subcommittee and with copyright owners and users affected by the compulsory licenses to explore how to improve the current system.
VI. ACQUIRING AND ASSURING THE SECURITY OF MATERIALS RECEIVED THROUGH MANDATORY DEPOSIT
As you know, the Copyright Office is a division within the Library of Congress and works with the Library in fulfilling the Library's mission of service to Congress and the American people.
Page 39 PREV PAGE TOP OF DOCA. Acquiring Deposits for the Library of Congress
The Copyright Acquisition Division (CAD) staff works very closely with the service units of the Library to acquire copyrighted materials that have not been registered or deposited. The mandatory deposit requirement, 17 U.S.C. §407, is seen as an invaluable avenue to acquire needed and often expensive resources at a significant savings. CAD librarians communicate with more than 100 Recommending Officers to identify those works to be acquired via the mandatory deposit requirement. Additionally, CAD, working with the Congressional Research Service and the Law Library developed a process which assures timely availability of high priority serials.
1. Addressing security concerns.
The Library of Congress' mission statement recognizes collections security as a high priority, stressing that the collections of the Library are for the benefit of future generations of scholars as well as those using the vast Library resources today. Security tagging is a large and integral component of collection security and has been identified in the 1997 Library of Congress Security Plan as a minimum physical security standard. Anti-theft devices are currently being placed in hardbound book materials received through the Copyright Office. The project to apply these devices was begun in 1993 as a cooperative effort between the Library Services, Collections Management Division and the Copyright Office to reduce losses. Staff of the Collections Management Division applies the strips in the Receiving and Processing Division, Materials Control Section. The project was recently expanded to include softbound paperback books.
Library Service Units heads recently approved the Collection Security Oversight Committee (CSOC) to conduct a computer disc (CD) and CDROM security project to test the effects of applying anti theft devices to CD/CD ROM materials. If the project is successful, the Library will expand the application of anti-theft devices to increase security for these high-risk materials. Further research is necessary to determine whether anti-theft devices can be applied to other non-print materials.
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The Copyright Office appreciates the tremendous support it has received from you and the Subcommittee especially in recognizing the Copyright Office's unique role and in moving forward the legislation which produced the new fee structure.
ANNUAL REPORT OF THE COPYRIGHT OFFICE FY 1997
This year, Copyright Office management concentrated efforts on expanding the pilot program testing of its new electronic registration and recordation system; supporting Congress and its staff by providing information on current copyright legislative issues; assisting the courts by providing expertise on legal and regulatory matters; expanding the office's participation in the international copyright arena; reducing the arrearage of registration claims within the Office; and improving the security of the staff and deposit materials. The Register announced the appointment of David Carson as General Counsel, and Louis Mortimer joined the staff as Chief Operating Officer.
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The Office achieved significant advances in research, development, testing, planning, and outreach for CORDS (Copyright Office Electronic, Registration, Recordation, and Deposit System). Highlights of the year's initiatives included: opening CORDS' 2nd and 3rd external test site. (Stanford University and MIT Press/Journals Division); initiating CORDS Electronic Recordation planning with major copyright industries including publishers, motion picture companies and sound recording producers; creating a generic CORDS registration certificate after publishing a ''Notice of Inquiry'' in the Federal Register; collaborating with expert consultants on development of a framework and concepts for an ''access management system'' for the Copyright Office and Library of Congress secure digital repositories; completion of a detailed long-range CORDS business plan analyzing costs and benefits, and continued operational and technical planning of ''Mixed CORDS'' for receipt of electronic claims with hard copy deposits. Technical developments included coding the Serial (SE) and Visual Arts (VA) input forms. Planning was initiated with several potential CORDS test partners for the submission of digital dissertations, electronic newsletters, digital images and digital audio files. CORDS outreach expanded with more than 15 formal briefings and demonstrations of CORDS, both within Library of Congress and externally; distribution of a CORDS technical survey to about 100 serial and monograph publishers with Copyright Office deposit accounts, and awarding a contract for development of two CORDS videos.
The Register, the Associate Register for Policy and International Affairs, and the staff of that office, along with two guest lecturers, presented a series of instructional seminars for members of Congress and their professional staff titled ''Copyright Principles and the Legislative Agenda.'' The four lectures covered the recent World Intellectual Property Organization (WIPO) treaties, basic principles of copyright law for policy makers, the history of adapting copyright law to technological change, and the future of copyright in a networked world. The sessions, which qualified for CLE credit, were enthusiastically received, with Congressman Ed Pease who attended the sessions congratulating the Office on ''the professionalism of the staff and the assistance they have given us.'' He noted that the Register and her staff ''led one of the most professionally conducted seminars on intellectual property that I have ever seen.''
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Report on Compulsory Licensing of Broadcast Signals
The Office prepared a comprehensive report in response to Senator Hatch's request that we review the various copyright licensing regimes that cover the retransmission of broadcast signals. Based upon information gleaned through public hearings and a Federal Register Notice of Inquiry, the report did not recommend eliminating the existing cable and satellite compulsory licenses. The Office, traditionally opposes compulsory licenses that diminish an author's control over the exploitation of his or her. However, the report recognized that the two licenses in the United States ''have become an integral part of the means of bringing video services to the public, that business arrangements and investments have been made in reliance upon them, that some copyright owners . . . favor their continuation, and that, at this time, the parties advocating elimination have not presented a clear path toward eliminating the licenses.''
The cable compulsory license, which has been part of the copyright law since 1978, permits cable systems to transmit over-the-air television and broadcast signals to subscribers upon payment of statutory fees based upon the number of distant signals the cable system imports. The report recommended that Congress reform the complex cable rate structure to a flat per subscriber, per signal, per month fee; the amount of the fee to be determined by a Copyright Arbitration Royalty Panel (CARP).
The satellite carrier license permits a satellite carrier to retransmit television broadcast signals to their subscribers for private home viewing. This license is scheduled to expire on the last day of 1999, and part of the report's recommendation was that Congress eliminate this expiration date. Finally, the report recommended modification of the satellite license to resolve consumers' confusion that arises from the present ''unreserved household'' restriction. The office declined to adopt arguments to extend the compulsory licensing scheme to Internet operations.
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At the request of Senator Orrin Hatch, the Office prepared a report that identified issues related to database protection and examined the advantages and disadvantages of creating sui generis intellectual property protection for those valuable works.
The Supreme Court's 1991 decision in Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340 (1991), denied copyright protection to compilations that represent the ''industrious collection'' of comprehensive bodies of data but which lack original selection, coordination or arrangement. In addition, the Court said that even those works that meet the threshold of protection enjoy ''thin protection'' against infringing works, because the protection available under copyright covers only the original elements of a compilation's selection, arrangement or coordination.
The decision aroused concern within the database industry that was reflected in Congress and in treaty discussions sponsored by the World Intellectual Property Organization. Legislative and treaty proposals raised the question of whether the commercial investment in databases warranted the creation of a new federal intellectual property right for creators of databases, or whether such a right might unduly restrict access to information for research and education.
In preparing its report, the Register and the Associate Register for Policy and International Affairs held sixteen meetings with a broad spectrum of affected industries, scholars, science groups, educators and library groups, and had informal talks with other interested persons. The views expressed in these discussions were synthesized in the report. The report also described the history and legal status of database protection, both domestically and internationally. It discussed issues raised by recent proposals to create a new federal intellectual property right in databases and outlined various options to address the concerns that were voiced.
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The report made no final recommendations; rather, it offered an informed starting point for Congress to evaluate the need for new legislation.
Databases also commanded a considerable amount of the Office's efforts on the international level. Their protection as copyrightable subject matter is guaranteed by two major international treaties: the Berne Convention for the Protection of Literary and Artistic Worke and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In addition, the European Union and the United States submitted a new draft treaty for consideration at the WIPO Diplomatic Conference held in Geneva last December. The proposed new treaty would have offered protection separate and distinct from copyright for databases, obligating members to protect those that evidence a ''substantial investment in the collection, assembly, verification, organization or presentation'' of the contents without regard to the presence of creative copyrightable authorship. Protection would be guaranteed for a term of either 15 or 25 years, and countries could provide exceptions to the rights, provided they did not conflict with the normal exploitation of the work or unreasonably prejudice the owner's interest. The draft treaty proved extremely controversial, and had not been sufficiently discussed at the international level; therefore, action on the proposed treaty was delayed. In March 1997 at a special meeting of WIPO, it was decided that the next step would be an informational meeting in September. The Office played an active role in that meeting. Copies of the Office's report on database protection were delivered to each delegation. No additional meetings are scheduled; however, an analytic document summarizing the questions that were raised in the informal meeting and the results of consultations on those questions will be distributed by WIPO by the end of September 1998.
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New WIPO Treaties
The Register and the Associate Register for Policy and International Affairs were members of the U.S. Delegation to the Diplomatic Conference that formulated and adopted two new World Intellectual Property Organization treaties in Geneva last December. The two treaties are the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT); both are designed to respond to digital technologies and to standardize international practice. The Register later testified at a House Subcommittee hearing in support of quick ratification of the treaties and enactment of domestic implementing legislation.
The Copyright Treaty updates the Berne Convention by acknowledging that Berne protects both computer programs and original databases, by establishing a rental right for certain categories of works, and by providing for a distribution right. It also ensures that authors have the exclusive right to control communication of their works to the public in today's digital environment including on-demand transmissions. It allows individual countries to create exceptions and limitations, so long an they do not conflict with the normal exploitation of the work or unreasonably prejudice the author's interests. The Performances and Phonograms Treaty provides an international framework of protection for performers and producers of sound recordings to cover technological developments since the 1961 Rome Convention. It recognizes performers' and producers' rights to authorize the reproduction, distribution, rental, and on-demand transmission of works, and accords performers a right against bootlegging. The treaty does not completely resolve the level of performers' and producers' rights with respect to the broadcasting and communication of their works that should be enjoyed by them in the digital age. Moreover, the Treaty does not cover audiovisual performers, and a protocol to the treaty to cover such performers, is under consideration. A Committee of Experts meeting was held in Geneva in September 1997, and another one is scheduled for June 1998.
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International Copyright Institute
The Office continued its successful international initiative to provide training for high-level government officials from developing and newly industrialized countries who are responsible for copyright policy and enforcement. To date, training has been offered to more than 200 officials from approximately 90 countries in 17 programs. This year the Office, in conjunction with WIPO, held a four-day program for governmental officials from 14 Asian and Pacific countries.
Apart from the formal Institute, the Register presented a paper and participated in the UNESCO-WIPO Worldwide Forum on the Protection of Folklore held in Phuket, Thailand in April 1997, was a speaker in two WIPO regional seminars for Latin American and Caribbean countries held in Bogota, Colombia in April 1997 and served as the copyright expert in the WIPO regional seminar on intellectual property for Asian and Pacific countries held in Colombo, Sri Lanka in August 1997. Additionally, she presented a discussion of current issues for the Standing Committee on Civil Law of the Swedish Parliament, and the Office sponsored a visiting scholar from Nigeria for a six week study program with representatives of the U.S. copyright industries.
Copyright Arbitration Royalty Panel (CARP) Activities
Each year, the Copyright Office collects over two hundred million dollars in royalty fees from cable systems and satellite carriers that make secondary transmissions of broadcast signals under the terms of their respective compulsory licenses, 17 U.S.C. 111 and 119. The Copyright Office also collects royalty fees under a statutory license from manufacturers and distributors of digital audio recording technology (DART), that is, the devices and media.
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Until 1994 these fees were distributed by the Copyright Royalty Tribunal (CRT), an independent agency with commissioners appointed by the President and approved by the Senate. In addition to distributing royalties, the CRT adjusted royalty rates. The new system, a copyright arbitration royalty panels system (CARP), is administered by the Copyright Office with the Librarian of Congress making final decisions.
A panel of three arbitrators, on the basis of a fully documented record, decides the issues and submits it report to the Librarian of Congress and the Register of Copyrights who review the decision to make sure that it is not contrary to law or arbitrary. If the decision or any part of it does not meet these legal standards, the Librarian substitutes his judgment, which is based on the recommendation of the Register. The final order of the ultimate decision is published in the Federal Register.
The first two decisions were announced in fiscal year 1997. The Librarian announced the final determination of the 1990-1992 cable royalties, which amounted to $550 million, and the final determination of the contested amounts in the Musical Works Fund for the 1992-1994 digital audio recording technology (DART) royalties. Both decisions have been appealed to the Court of Appeals for the District of Columbia.
In addition to a wide range of regulatory and other legal duties, the Office successfully defended its registration practices in two important cases. The first, Southwestern Bell Telephone Co. v. Peters, No. 4 Civ. 00886 (E.D. Mo. July 31, 1996), upheld the Office's refusal to register the white pages of the Saint Louis telephone directory. The Office's action was based on the work's lack of original selection, arrangement or coordination that is required by the copyright code and the U.S. Constitution. Feist v. Rural Telephones Service Co., Inc., supra. The Missouri court, testing the Office's rejection under an ''abuse of discretion'' standard, agreed with the Office that the white pages were neither a copyrightable compilation nor an original pictorial, graphic, or sculptural work. In so doing, it rejected the company's argument that the book's design featuresthe number of columns per page, the Family Space Listings and Signature Listings, the surname suppression, the cross-references, the split running head masthead, and the bleed barconstituted original visual arts authorship.
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The Office was a party in a case involving a 1963 John Wayne film that fell into the public domain because the copyright owner failed to renew the work in its 28th year. Maljack Productions, Inc. v. UAV Corp., 964 F. Supp. 1416 (C.D. Cal. 1997). In 1996, the plaintiff copyright owner applied for registration of claims to copyright in two versions of the screenplay on which the film was based. The Office refused to register the complete screenplays on grounds that publication of the motion picture published those parts of the screenplays that were embodied in it. The principle that publication of a motion picture publishes the component parts is a longstanding Office policy embodied in the Code of Federal Regulations and the Compendium of Copyright Office practices, as well as in court decisions. The district court for the Central District of California granted the Register's motion for summary judgment and plaintiff Batjac has appealed this decision to the 9th Circuit Court of Appeals. An Office brief will be filed in early December.
This fiscal year, the Office received 627,864 claims and registered 569,226. (The discrepancy in figures is explained largely by the number of claims in process within the Office). 13,890 documents were cataloged, covering 260,590 titles. The Office continued its efforts to reduce the backlog of unprocessed claims. Most notable was the success of the Examining Division, who utilized innovative team efforts and overtime to reduce its backlog of 114,500 claims on June 1997, to 75,500 claims by the end of the fiscal year, nearly a 34% decrease in three months. Thirteen new examiners have been recently hired; eventually they will permit more timely processing of registrations.
Page 49 PREV PAGE TOP OF DOCImproved Security
Following the Library's lead, the Copyright Office appointed a Security Officer to review Office procedures and to propose and implement measures to assure the security of the deposit materials and the staff. In addition to implementing the action items recommended by the Computer Sciences Corporation, the Office reviewed the risk assessment of compact disk and CD-ROM format material produced by KPMG Peat/Marwick and improved the signs in the public services areas as suggested by Jands, Inc. A firm was contracted to study security in the Office's mail room. Public access to work areas was restricted by locking corridor doors other than those at a main entry point. Finally, the Office improved its tracking of high-risk materials throughout the registration process. Each division established protective storage areas for high-risk materials that await processing, and once those claims are processed, they are hand delivered to the next processing station. We also expanded our missing item database to include items reported missing in divisions throughout the Office. These tracking reports showed a marked reduction in losses during the fiscal year. Further tracking recommendations are being studied by a newly constituted tracking system group. They promise even better results when all of the recommendations are implemented.
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Mr. COBLE. Ms. Perlmutter.
STATEMENT OF SHIRA PERLMUTTER, ASSOCIATE REGISTER FOR POLICY AND INTERNATIONAL AFFAIRS, COPYRIGHT OFFICE OF THE UNITED STATES, THE LIBRARY OF CONGRESS
Ms. PERLMUTTER. Thank you, Mr. Chairman.
Throughout its history, the Copyright Office has played a major role in policy and international matters for the U.S. government. In 1995, the Register established the Office of Policy and International Affairs as a separate unit headed by an Associate Register. Over the past 3 years, I am pleased to report that we have built up a high-quality legal staff handling policy and international matters.
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At present, there are five lawyers working full time in the Office of Policy and International Affairs. Our time is devoted primarily to assisting Congress in developing copyright law and policy; advising executive branch agencies as technical consultants on copyright; cooperating with international organizations on policy forums and educational and training programs; and generally serving as sources of copyright expertise for the government, the American public and the international community.
I will briefly describe the nature of our work.
Our assistance to Congress takes several forms. Like the Office of the General Counsel, we conduct studies and write reports on topics of particular relevance and timeliness to policy makers, typically at the request of Congress, but occasionally on our own initiative. Since the Office of Policy and International Affairs was established, we have prepared or contributed to two reports requested by Members of Congress, both described in our written statement. One was the Report on Legal Protection for Databases, and the other was the joint report of the Copyright Office and the Congressional Research Service on funding the arts through a copyright term extension fee.
In addition, we commissioned a study from an outside expert, Professor Trotter Hardy of William and Mary Law School, in order to better prepare ourselves to help address the long-term issues raised for copyright by evolving digital technologies. His report, which is called ''Project Looking Forward: Sketching the Future of Copyright in a Networked World,'' is now available on our Web site as of last week.
Page 52 PREV PAGE TOP OF DOC In addition to these more formal studies, we provide Congress on an ongoing basis with analyses of existing copyright law on issues raised by pending bills, as well as analyses of the effect of proposed amendments.
The bulk of our work with Congress, however, consists of assisting in the preparation and development of legislation. We contribute to the drafting of statutory language and legislative history on a regular basis. Upon request, we conduct negotiations among interested parties to develop compromise solutions for incorporation into legislation.
In addition, we prepare testimony for the Register for congressional hearings on copyright issues, primarily on pending bills. The Policy and International Affairs staff has performed these functions in connection with most of the copyright bills considered by the House in the 104th and 105th Congresses, in the past year alone, on the WIPO Treaties Implementation Act, the Online Copyright Liability Limitation Act, the Collections of Information Antipiracy Act, copyright term extension and music licensing, the No Electronic Theft Act, and the Vessel Hull Design Protection Act.
We have also sought to provide background information to Congress to assist in grappling with the often complex and technical subject matter of copyright legislation. Last year, we initiated an annual program of seminars for Members and their staff on ''Copyright Principles and the Legislative Agenda.'' These seminars provide an overview of central issues of copyright law and policy that are relevant to current legislative initiatives.
Turning to our assistance to the executive branch, the Policy and International staff works cooperatively with the executive branch on international matters, most often USTR, the Patent and Trademark Office and the State Department.
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One such area involves programs of the World Intellectual Property Organization, or WIPO. We have played a major role on U.S. delegations to WIPO, notably at the 1996 Diplomatic Conference where the two new treaties were negotiated. We have also participated in all Committees of Experts' meetings on copyright-related issues, including the current topics of audiovisual performers' rights and database protection.
In the World Trade Organization, we have served as substantive experts for the United States in TRIPs Council activities of various kinds. These include the week-long reviews of the copyright laws and of the enforcement regimes of the developed member countries of the WTO, as well as disputes with other countries over compliance with the TRIPs Agreement, and negotiations over conditions of accession for would-be new WTO members.
We have assisted the administration in activities in the OECD. Among other things, we have led discussions on behalf of the United States on the intellectual property issues involved in the proposed Multilateral Agreement on Investment.
Other work with executive branch agencies has included technical advice on numerous bilateral and regional agreements dealing with trade, investment and intellectual property; the application of the U.S. trade laws, particularly Special 301; reviews of other countries' copyright laws; and various other consultations with foreign governments. We have also participated in USIA programs abroad, most recently in China, Hong Kong and Romania.
We have close and ongoing contacts with the major international organizations involved in copyright. One of our major projects for years has been an annual week-long International Copyright Institute, generally cosponsored with the World Intellectual Property Organization. This year, we also organized a 3-week study tour for a delegation from the National Copyright Administration of China.
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In addition, we have participated in numerous conferences and seminars around the world sponsored by WIPO, by the European Commission's Imprimatur project, and by various private sector international groups.
Finally, another important part of our mission is outreach to the public. In addition to speaking regularly at conferences here in the United States, attorneys in our office meet almost weekly with foreign visitors representing a wide range of regions and affiliations, who are interested in learning about the U.S. copyright system and exchanging information about topics of mutual concern.
In sum, the Office of Policy and International Affairs is a full-service unit of the Copyright Office, providing assistance to both the government and the private sector on the entire range of domestic and international copyright issues. We look forward to continuing to work with you and your staff on the important and challenging issues that lie before you.
Mr. COBLE. Thank you for your testimony.
Your written testimony underscores the benefits tied to the registration of copyrights. What can you do or we do that we are not doing now to encourage a greater number of registrations?
Ms. PETERS. I wish there was an easy answer. We are a member of the Berne Convention, which basically prohibits any formal requirements being attached to the exercise or enjoyment of rights. So we actually have fewer incentives than we did under the previous law. The way that we are trying to handle this is to create a database that has great value. However, we are only at the beginning of this.
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Ultimately, we do believe that a system that allows instantaneous registration with a certificate being issued within a short period of time will have value, but we are not there yet.
I don't know if anyone on my staff has any other bright ideas on what incentives we could build in.
Mr. COBLE. Any other ideas?
Ms. PERLMUTTER. Part of the answer, I believe, is public education, so people understand the benefits of registration. This is a critical function that the Office tries to perform.
Mr. COBLE. Your testimony indicates an extensive outreach effort to gain new partners for participating in CORDS, and you touched on that in your statement as well. Comment for me, if you will, on these efforts, A; and, B, is it your goal to have CORDS generally available to any member of the general public?
Ms. PETERS. Absolutely. This is a totally online system; and as soon as someone creates a work, he or she can submit it. Our goal is for every author in the United States, in fact anywhere in the world, to be able to take advantage of that system. We are starting with corporations because of the requirement of digital signatures and public key, private key technology; it is a controlled environment.
Page 56 PREV PAGE TOP OF DOC Most of our partners to date have been universities. University Microfilms is about to come on board.
We think probably by the year 2004 we can roll it out to the general public. One way is that people could submit their claims through libraries. We are looking at kiosks that would be in various Federal information centers. But the goal is anyone who wanted to submit claims electronically would be able to do that.
Mr. COBLE. As you know, several have discussed the possibility of making the Copyright Office self-sustaining, as I mentioned in my opening statement. To accomplish this, the fees probably would have to be increased.
In your testimony you indicated that the Copyright Office fee analysis task group studied the issue and made recommendations. What were those recommendations and have there been any other studies or reports done on this issue? And, if so, what were their findings?
Ms. PETERS. Well, Marilyn Kretsinger is our fee expert, but let me start by saying that we looked at not everything that was in the Copyright Office. We looked at service to the public, and then we put a value on that service. What does it take to perform it?
A key part is the way that we looked at this; our goal was not full recovery for the Copyright Office because, unlike patents, where you have to go to the Patent Office to get a patent, copyright is totally automatic, so you get the protection, without registering with us. And so only certain people choose to register.
Page 57 PREV PAGE TOP OF DOC Many of our activities benefit all copyright owners, not just those who register. So we identified those activities. For example, we have a section that does nothing but demand deposit copies for the Library of Congress under Section 407 of the law. Who are the people they demand from? Those who don't register. We can't charge the people who are registering to get copies for those who don't.
We identified our policy programs, the area that Shira talked about, Policy and International Affairs where the work is on behalf of all of the copyright owners. We did not include this activity in our cost recovery analysis.
Our initial consultant was a company, Abacus; they came up with a model that we used to increase our special service fees this year. They looked at how much each class of material generally costs to register. We can give you a chart that shows you their recommendations. We would be submitting this when we submitted our fee proposal. We are going to give you everything that they gave us.
Abacus made a distinction between sound recordings, visual arts material, periodicals and literary works. I think their range of fees was somewhere between $39 to $58, I believe. But it was different for every class.
The internal group of the Copyright Office made a recommendation that, for operational reasons, they did not want to see different fees for different types of work and no distinction made between published and unpublished works. Therefore, their recommendation is a flat fee of $45 which is almost a 125 percent increase over the current fee.
Page 58 PREV PAGE TOP OF DOC This was the figure that we shared with people who came in to talk with me about how that would affect their industry. So we don't have a proposed schedule, but you do have the range in the $40-45 area.
Mr. COBLE. I have never asked you this before, but do you support making the Copyright Office self-sustaining?
Ms. PETERS. I don't support 100 percent cost recovery. I strongly believe that the policy function that is on behalf of all copyright owners and some of the maintenance of the database, which basically serves the public and not copyright owners, should come from appropriated funds.
Mr. COBLE. Ms. Perlmutter, what do you see as the significant issues looming on the international scene or international horizon regarding copyright law that we on this subcommittee, and you, should be keeping a lookout for?
Ms. PERLMUTTER. At the moment, one of the top priorities is to get the new WIPO treaties implemented and in effect around the world. Obviously, this subcommittee has been extremely actively involved in trying to take a leadership position for the United States in doing that.
Mr. COBLE. As we speak, we are still trying to do it, not only on our subcommittee but you all and many others.
Ms. PERLMUTTER. And that will clearly be critical to establishing an adequate level of protection in the digital age.
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Second, working on implementation of the TRIPs Agreement, in particular in the area of enforcement, to make sure that copyright owners are able to enforce their rights around the world.
These are issues which have already been discussed for a long time and intensively in the United States, but now we are getting to the stage of trying to make things have meaning internationally.
In terms of substance, one issue is database protection. Again, this subcommittee has taken a leadership role in passing legislation on this issue, which is being carefully examined around the world. WIPO is considering the possibility of, eventually, a treaty on the subject, and also looking into the subject of protection for audiovisual performers' rights around the world. That is something that the United States has made a proposal on, and is engaged in discussions of in Geneva.
I think those are the most immediate topics.
Mr. COBLE. Has the Copyright Office's international activities increased in the last few years? And, if so, how has that increase in demands had an effect on the ability of your Office to perform its other functions?
Ms. PETERS. The Copyright Office has always played a significant role in international affairs, and in 1983 then-Register David Ladd created five policy planning advisors whose principal duty was international affairs.
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There was a short period when most of the people who filled those positions went elsewhere, and we didn't do much in the international area. So I would say that we have built back up to where we were. Because it is a dedicated, separate staff, I don't think it really does affect the operations of the rest of the Copyright Office at all. So I don't think that it takes away from other things that we would otherwise be doing.
Mr. COBLE. Do you want to add anything to that?
Ms. PERLMUTTER. No, I agree. It is a snowball effect in the sense that the more work that we do, the more work there is to do. But it does solely involve my staff, although we do sometimes get assistance from the General Counsel's Office.
Ms. PETERS. There were five positions funded then, and there are five positions funded now. Their limit is five. What we have done is create the position of Associate Register, but there is no difference in level of funding.
Mr. COBLE. Ms. Peters, you indicated that the processing time for completing applications for registration is now 8 months?
Ms. PETERS. Up to.
Mr. COBLE. What steps have been taken to maybe turn this around or to decrease that time frame or to accelerate processing claims?
Page 61 PREV PAGE TOP OF DOC Ms. PETERS. Many, many steps. We have streamlined certain practices. We have brought back anyonewhoever examined, whether they are elsewhere in the Library or retired. We put in place, on a temporary basis, some creative solutions where certain people who are good at writing letters do nothing but write and others do nothing but examine. We have hired additional examiners, and we are in the process of training 13 and need to hire eight more. We are using overtime.
It is probably going to take us a year to turn this around, but that is my main objective. We will turn this around. The electronic system can have a registration going throughwe have done it in 1 dayin 2 to 3 weeks, at the most. So the more we go electronic, the better it is.
Mr. COBLE. It is my belief that you at the Copyright Office do a good job. I thank each of you for your testimony today. The subcommittee very much appreciates your contribution.
This concludes the oversight hearing on the United States Copyright Office. The record will remain open for 1 week.
Thank you again, and the subcommittee stands adjourned.
[Whereupon, at 10:31 a.m., the subcommittee was adjourned.]
(Footnote 1 return)
Because of the many new opportunities for group registration offered, the number of works actually registered has grown exponentially.