Webcast: House Oversight Hearing on “Remedies for Small Copyright Claims”

Webcast of the Oversight Hearing
“Remedies for Small Copyright Claims”
House Judiciary Subcommittee on Courts, The Internet, and Intellectual Property

http://judiciary.house.gov/oversight.aspx?ID=226

Look under HEARING DOCUMENTATION and then click on “Video Webcast”.
The complete video is 54:54 minutes long and uses RealPlayer.

Witness List

Paul Aiken Executive Director, Authors Guild.

Jenny Toomey Executive Director, Future of Music Coalition.

Brad Holland Founding Board Member, Illustrators' Partnership of America.

Victor S. Perlman General Counsel and Managing Director, American Society of Media Photographers, Inc.

Statement of Brad Holland: House Oversight Hearing on “Remedies for Small Copyright Claims”

Statement of Brad Holland
Founding Board Member
Illustrators' Partnership of America

Subcommittee on Courts, the Internet, and Intellectual Property
Committee on the Judiciary
U.S. House of Representatives March 29th, 2006

Re: Oversight Hearings on Remedies for Small Copyright Claims

Chairman Smith, Ranking Member Berman, members of the Subcommittee: My name is Brad Holland. I’ve been a freelance artist since I was 17 and I’m here to represent the Illustrators’ Partnership of America. The IPA is the outgrowth of a grassroots movement started by artists in 2000 for the specific purpose of adapting our cottage industry to the challenges of the digital era. In that capacity, we filed a submission last year to the Orphan Works Study. It was endorsed by 42 international arts organizations, representing a broad spectrum of popular artists, fine artists, medical and architectural illustrators, cartoonists and educators who work in the U.S. and overseas. The Illustrators’ Partnership is a non-profit, self-funded organization and an associate member of the International Federation of Reproduction Rights Organizations. I’m pleased to have the opportunity to say a few words about the subject of Remedies for Small Copyright Infringement Claims.

Wherever possible, artists have attempted to work on a traditional business model. Our work is commissioned by clients to whom we license initial rights for one-time usage for an agreed-upon price. Most artists retain their supplementary rights, which with the advent of the digital era, have been recognized as a potential stream of income — and therefore a contested prize - for any party that can obtain access to them.

Now comes a proposal that risks transferring a vast body of those rights into an orphan works limbo by legalizing the infringement of any work whose creator is said to be hard to find. This would harm artists and photographers disproportionately because images are often published without identifying information, signatures may be illegible and information can be removed by others. We’ve been told that this committee plans to pass Orphan Works legislation quickly, but will consider the creation of a small claims courts or arbitration mechanism to try to litigate the infringement cases that will follow.

We strongly oppose the creation of such courts. The Orphan Works Report states that a “good faith reasonably diligent search” for a copyright holder will be “a very general standard” defined solely by the users themselves, many of whom may well have an interest in an unsuccessful search for the copyright holder. Absent a settlement by negotiation after the infringement has taken place, the copyright owner’s sole recourse will be to bring an action before the courts.

Copyright law is a Federal law. There are only 11 Federal Circuits in the country with 97 U.S. District Courts. Would copyright holders have to travel to one of them every time we need to file a small dollar infringement claim? If so, we wouldn’t be able to add travel and lodging expenses. And under the proposed “limitations on remedies,” the copyright owner could not obtain court costs or attorneys’ fees, not even if the work were pre-registered. The Orphan Works amendment virtually guarantees that the cost of suing an infringer would exceed whatever sum the copyright owner could recover in a successful small claims action.

By “limiting remedies,” the Orphan Works amendment will create a no-fault license to infringe. Let’s look at a hypothetical small claims action that I might be obliged to bring in the future.

In the 1990’s, I licensed a series of pictures for one-time use in a corporate annual report. In such cases, copyright notice and credits are most often omitted by art directors for annual reports, and almost always for advertisements in spite of the wishes of the artist to preserve his credit. I registered my copyright in the work as part of a group registration, the title of which was based on the annual report. I subsequently licensed some of these pictures for exclusive use in various ads in the United States, and I make it a practice never to license my work for inexpensive or distasteful products.

But let’s say an infringer finds the annual report. He likes the pictures, sees no credit and does a “good faith” search that fails to identify me as the owner of the copyright. He begins selling cheap t-shirts bearing my art. Under current copyright law, my remedies would include statutory damages, attorney’s fees, impoundment and injunction for this flagrant infringement because it’s damaged my exclusive right to license my work in high-end markets. But in small claims court my remedy would be what? Reasonable compensation for use of my work on cheap t-shirts. And even this would be limited to whatever maximum the small claims court might set and would be constructed not to deprive the infringer of the profits he made “in reliance” on his so-called failure to locate me.

Without the deterrent of statutory damages and attorneys fees - and without a permanent injunction against repeat offenses by the same t- shirt seller, this experience would now act as an incentive for the infringer to exploit other uncredited (and therefore, effectively orphaned) images by other artists. He’s discovered that infringing art is just a rational business decision. In turn, this would inspire yet other infringers.

This clearly violates the Three-step test of the Berne Convention, which states that exceptions to an author’s exclusive rights should apply only to certain special cases, should not conflict with the author’s normal exploitation of the work and should not prejudice the author’s legitimate interests. As legal scholars Jane Ginsburg and Paul Goldstein stated In their submission to the Orphan Works Study:

“Compliance with Berne/TRIPs is required by more than punctilio; these rules embody an international consensus of national norms that in turn rest on long experience with balancing the rights of authors and their various beneficiaries, and the public. Thus, in urging compliance with these technical-appearing rules, we are also urging compliance with longstanding practices that have passed the test of time.” 1., p. 1, OWR0107-Ginsburg-Goldstein (emphasis added)

Creating a new form of legalized infringement without statutory remedies - even for registered copyrights - and offering a small claims court as a solution to the wave of infringements that will result is not a workable approach. It will only serve to legitimize the taking of our copyrights. For these and other reasons, we would respectfully ask this committee to consider the negative effects that OW legislation will have on free market transactions. The attempt to lessen the damage by adding the burden of a small claims court to our overloaded federal judiciary is simply not a viable approach.

IPA Written Testimony, House Judiciary Subcommittee, March 14, 2006

This is the text of IPA’s written testimony to the House Judiciary Subcommittee, submitted March 14, 2006.

by Brad Holland and Cynthia Turner

RE: Orphan Works Amendment to 1976 Copyright Act

The Orphan Works proposal would legalize the infringement of any work of art, regardless of age, country of origin, published or unpublished, where the rights holder cannot be identified or located. This would affect illustrations and photographs disproportionately because images are commonly published without identifying information, signatures may be illegible and information can be removed by others. By exposing to infringement any work that cannot be sourced by “reasonable effort,” the OW amendment risks orphaning millions of valuable copyrights that cannot otherwise be distinguished from true orphaned works.

The inability to distinguish between abandoned copyrights and those whose owners are simply hard to find is the Catch 22 of the Orphan Works project. When Congressmen wrote the 1976 Act, they considered the OW problem, but chose to leave it unresolved, citing “the near impossibility of distinguishing between types of works in fixing a statutory term.” That Congress erred on the side of protecting private property. Unless this Congress can devise a reliable test to distinguish true orphans, it will commit the greater error of encouraging potential users of art to unilaterally exploit — and possibly devalue - the self-created property of countless artists, both in the U.S. and abroad.

Many users responding to the OW Study have asserted that orphaned works have little or no commercial value. While this may be true of real orphaned work, it is not true of the numberless managed copyrights that will be caught in the orphan works net.

Non-profit organizations, which assert that only work of little or no commercial value will be affected, have not documented those assertions. Since non-profits typically offer rights holders little or no compensation for the work they solicit, government should not infer that such charitable donations by artists to non-profits reflect the commercial market value of the artists’ work. Users who wish to exploit work royalty-free have every incentive to minimize its value. Congress should not rely on their assertions as evidence that the work has little or no value in commercial markets. Value is based on quality and demand, not on genre or age.

The use of any work without the author’s permission violates the author’s exclusive right to permit or deny usage. Similarly, payment for use after the fact violates a basic principal of negotiation: An author whose work has already been exploited has no leverage to negotiate for a fee higher than the user is willing to pay. The Orphan Works amendment would act as a de facto compulsory license, which is nowhere acknowledged in the OW Report.

Artists have the right to maintain the value of their work by keeping it out of downscale or inappropriate markets. The OW amendment would violate that right by giving users the unilateral privilege of exploiting another’s property, regardless of the adverse effects this could have on the integrity or the value of the product.

Many artists in markets such as advertising and proprietary research enter into exclusive licensing arrangements with their clients. Because these artists are rarely permitted to sign and mark their work, this art would be subject to orphan status from its conception. This would destroy the artists’ ability to guarantee exclusivity to a client, undermine the value of the art itself and retroactively jeopardize existing contracts of exclusivity between artists and clients.

Currently, copyright law is enforced by the threat of substantial penalties for infringement. By “limiting” these remedies, the OW amendment invites abuse of the law. Without effective remedies for infringement, a user might find it a rational business decision to infringe first and pay “reasonable compensation” only if the infringement is detected.

While the OW Report is concerned exclusively with the difficulty a user may now have in locating an author, it does not address the difficulty an author may have under OW law in locating an infringer.

The OW amendment would place an impossible burden of diligence on rights holders, who will never have the resources to police infringement, which could occur anytime, anywhere in the world. We do not see how Congress can justify legislation that places an impossible burden on a property owner as a condition of protecting his property.

Because of the “limitation on remedies,” artists will never have the resources to go to court - as the OW amendment will require - to establish the case-by-case definition of a user’s “reasonable search.” This would constitute another impossible burden placed on rights holders and undermine any premise of fairness in the system.

The OW amendment will favor infringers by providing them with a no-fault defense. Since the infringer need only show that a good faith effort was made to identify or locate the artist of an unmarked image - the assertion that an artist’s signature was illegible may be good enough - a judge may be forced to uphold the majority of infringements, regardless of the ill effect it will have on the copyright holder and the value of his work.

Because every infringement of a managed copyright will create a family tree of potential successive infringements, samples of the infringed work will linger in the public domain even if a rights holder comes forward to stop the infringement. These orphans-of-orphans will be available to other would-be users, who would be justified by OW law in re-infringing the work. In this fashion, the effect of OW law would be viral.

A "take-down" of orphaned work posted online will be insufficient to restore its integrity. The Internet Archive, The Wayback Machine and Google Cache all provide access to defunct and removed web pages. These back-ups will allow falsely-designated orphans to remain in circulation, making it impossible for a rights holder to get back the rights to work unleashed into the public domain by the actions of others.

Because it would be retroactive, the OW amendment would betray artists, who for 28 years have published in the confidence that, even without formalities, their work enjoyed the basic protections guaranteed them by the 1976 Copyright Act. We do not think Congress should withdraw protections that have become settled expectations in the marketplace, especially as the remedies provided by the 1976 Act constitute the only enforcement mechanism artists now have for protecting their valuable copyrights.

Advocates of the OW amendment claim that copyright inhibits scholarship. But that was refuted by the authors of the 1976 Act:

“[I]t is important to realize that the [1976] bill would not restrain scholars from using any work as source material or from making “fair use” of it; the restrictions would extend only to the unauthorized reproduction or distribution of copies of the work, its public performance, or some other use that would actually infringe the copyright owner’s exclusive rights. SOURCE: H.R. Rep. No. 94-1476, at 136 (1976) (Emphasis added)

The OW amendment in effect re-imposes formalities. By forcing the rights holder to rely on registries, metadata and notice as a condition of copyright protection it violates the letter and spirit of the Berne Convention.

The letter and spirit of Berne is addressed in this submission to the i2010 Digital Libraries project by the International Federation of Reproduction Rights Organizations (IFRRO):

“Digitisation is an act of reproduction subject to the authorisation of the copyright holder. On the basis of Article 5(2)(c) of the Directive 2 001/29, exceptions have been introduced in favour of libraries and archives that allow these institutions to reproduce works without prior consent of the rightsholders, mainly for preservation purposes. These exceptions do not cover and should not be extended to cover reproductions on a mass scale, which would clearly conflict with the normal exploitation of works and prejudice the legitimate interests of the copyright holders, and would thus not pass the three step test of the Berne Convention and Article 5.5 of the Directive200/l29 -p.2, (Spelling in the original, emphasis added).” http://www.ifrro.org/show.aspx?pageid=home

Professors Jane Ginsburg and Paul Goldstein have also warned that the Orphan Works provision must narrowly define the scope of the orphaned works or fail to meet the three-step test of TRIPS art. 13 and Article 5(2) of the Berne Convention:

“[T]he diversity of responses highlights the fundamental importance of precisely defining the category of "orphan" works. The broader the category, or the lower the bar to making the requisite showing of due diligence, the greater the risk of inconsistency with our international obligations to uphold authors' exclusive rights under copyright. Compliance with Berne/TRIPs is required by more than punctilio; these rules embody an international consensus of national norms that in turn rest on long experience with balancing the rights of authors and their various beneficiaries, and the public. Thus, in urging compliance with these technical-appearing rules, we are also urging compliance with longstanding practices that have passed the test of time.” 1., p. 1, OWR0107-Ginsburg-Goldstein (Emphasis added)

In the OW Report, the authors state:“[W]e believe that registries are critically important, if not indispensable, to addressing the orphan works problem (p.106).” Yet they acknowledge (p.95) that the Copyright Office lacks the resources to create and administer them. If Congress cannot allocate funds to create the kind of registry that the OW amendment will make “indispensable,” lawmakers should not be persuaded to impose that burden on rights holders as a condition of maintaining their copyrights. To do so will literally force artists to make their rights available to others at the risk of losing those rights by default.

At the Orphan Works roundtables, 7/26/05, Alexander MacGilivray of Google stated that “Google strongly believes that these orphan works are both worthwhile, useful, and extremely valuable” ( p.119). Also: “we expect that [Google’s] use of these orphan works will likely be in the 1 million works range...(p.166, emphasis added).” Since Google has already demonstrated their disregard for copyright by embarking on the Google Book Search project, there’s no reason to believe that they, or a similar firm, will not take advantage of the OW amendment to harvest images wherever artists and photographers can be characterized as “difficult or impossible to locate.” We do not believe that government should interfere with the free market exchange of goods and services by legislating a government-sanctioned royalty-free archive to compete with authors.

On page 14 of the OW Report, the authors write: “if our recommendation resolves users’ concerns in a satisfactory way, it will likely be a comprehensive solution to the orphan works situation (our emphasis).” With all due respect, we believe a solution cannot be “comprehensive” if it “prejudices the legitimate interests of the copyright holders,” and interferes with the free market principles on which our cottage industry is based.

Last year, the Illustrators' Partnership submitted a defense of existing copyright law to the Orphan Works Study. It was signed by nearly 2,000 individual artists and endorsed by 42 organizations representing countless thousands of other artists from around the world. This was an unprecedented expression of international concern that the principles of the Berne convention be respected as the foundation of international copyright law. These principles have been built up over centuries and should not be legislated away in haste to conform to a debatable theory that the internet has changed the nature of creativity and the value of private property.

For all of the above reasons, we strongly urge reconsideration of the statutory language developed by the Copyright Office.

-Brad Holland and Cynthia Turner, for the Board and members of the Illustrators’ Partnership of America

© 2006 Brad Holland and Cynthia Turner

This may be republished, posted or forwarded in its entirety to any interested party.

Not an Orphan Works Amendment.

For over a year, we’ve used these emails to warn you about the coming Orphan Works amendment. Now it’s time to call it by its real name: This is not an “orphan works amendment.” An OW amendment would have applied to old work whose authors are hard to find. This proposal will apply to past, present and future work. It will be retroactive. It will interfere with working artists and commercial markets. It will nullify your exclusive rights to your work. It is the undoing of existing copyright law and it’s a challenge to the rest of the world to follow. If you’ve never cared about copyright law before, this is the time to start.

The madcap rush to ram a bill through Congress suggests that there are special interests who want to get it on the books before it can be exposed for what it is. These special interests are still not happy with the Copyright Office’s proposal. They want no penalties for infringement or a cap no higher than $200. These groups are well-funded, well staffed and they’ll be lobbying full-time to get what they want. Congress has warned us that very little is negotiable, but this is not the time to lie down and die. Last Wednesday, the IPA filed written testimony with the House Judiciary Subcommittee. We’ll email you the text of that testimony tomorrow.

– Brad Holland, for the Board of the Illustrators’ Partnership
This may be republished, posted or forwarded in its entirety to any interested party.

“Consumer Group” Seeks to Fix Prices on 'Orphan Works’

March 8 - Public Knowledge President Gigi B. Sohn said today that Congress should set a fixed amount of damages - $200 per use or a similar amount,” to compensate artists whose work would be infringed under the proposed Orphan Works amendment.

“The Copyright Office’s report was an excellent analysis of the issue,” Sohn said, “and we agree with the majority of their recommendations.” But Public Knowledge disagrees that artists should receive “reasonable compensation” for unauthorized use.

“We would like to see more certainty in the process,” she said. “Setting a low amount of damages, whether “$200 per use or a similar amount, would encourage the use of orphan works while giving artists some ground rules...The ‘reasonable compensation’ approach keeps the orphans in the orphanage.”

Should Congress adopt a reasonable compensation standard, Sohn said that the “safe harbor” provisions which protect non-commercial users should be expanded to include commercial users as well. That way, no payment would be due artists who emerge to request that the use of their work be stopped.

“Small individual artists are engaged in commerce,” Sohn said, “and should have the same protections as non-commercial institutions...The goal is to be able to expand the use of orphan works, and the combination of low damages and a safe harbor should accomplish that goal.” http://www.publicknowledge.org/pressroom/releases/pressrelease.2006-03-08.6326791227

Public Knowledge is funded by the MacArthur Foundation, Ford Foundation, Rockefeller Foundation, and Andy Warhol Foundation, among others. http://www.publicknowledge.org

— The Illustrators’ Partnership of America
This may be republished, posted or forwarded in its entirety to any interested party.

The TRIPs Three-Step Test: Limitations and Exceptions to Exclusive Rights

In our last two emails, we’ve cited the opinion of experts that the Orphan Works amendment must pass the TRIPS Three-Step Test or risk “inconsistency” with international copyright law. So what is TRIPs? And what is the Three-Step Test?

TRIPs is the international Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The US is a member. The Three-Step Test is a sequence of three simple questions that let a nation decide whether the exceptions they write into their national copyright laws will interfere with your right to market your work — and therefore make that country a copyright renegade.

Remember, copyright law gives you the exclusive right to decide whether your work is to be exploited - and when, where and under what terms. The law acknowledges narrow limitations and exceptions to that right — so long as the exceptions don’t exceed the constraints of the Three-Step Test. Here’s the test, as described in Article 13 of the TRIPs Agreement:

“Member [countries] shall confine limitations and exceptions to exclusive rights to:

(1) certain special cases
(2) which do not conflict with a normal exploitation of the work
(3) and do not unreasonably prejudice the legitimate interests of the rights holder.”

The TRIPs three-step test is important because if any nations attempt to reduce the scope of their own country’s copyright law by passing laws which exceed the test, the World Trade Organization (WTO) could impose trade sanctions.

We think it’s self-evident that the proposed Orphan Works amendment will interfere with an artist’s “normal exploitation of the[ir] work...and unreasonably prejudice the[ir] legitimate interests...” There’s no other rational way to read a law that could legally force millions of managed copyrights into the public domain.

The IPA is an associate member of the International Federation of Reproduction Rights Organizations (IFRRO). We’ve been providing comprehensive updates on these developments to other members of that body, as well as to the 42 international arts organizations that signed our submission to the Copyright Office last year.

— The Illustrators' Partnership of America
This may be republished, posted or forwarded in its entirety to any interested party.

Orphan Works: Conflict with Berne?

Legal scholars Jane Ginsburg and Paul Goldstein have warned that Orphan Works legislation risks “inconsistency” with the three-step test of TRIPS art. 13 and Article 5(2) of the International Berne Copyright Convention. They’ve permitted us to quote from their Reply Comment to the Copyright Office:

“[T]he diversity of [orphan works] responses highlights the fundamental importance of precisely defining the category of "orphan" works. The broader the category, or the lower the bar to making the requisite showing of due diligence, the greater the risk of inconsistency with our international obligations to uphold authors' exclusive rights under copyright. Compliance with Berne/TRIPs is required by more than punctilio; these rules embody an international consensus of national norms that in turn rest on long experience with balancing the rights of authors and their various beneficiaries, and the public. Thus, in urging compliance with these technical-appearing rules, we are also urging compliance with longstanding practices that have passed the test of time.”1., p. 1, OWR0107-Ginsburg-Goldstein (emphasis added)

Yesterday we quoted this from the International Federation of Reproduction Rights Organizations (IFRRO):

“Digitisation is an act of reproduction subject to the authorisation of the copyright holder... exceptions have been introduced in favour (sic) of libraries and archives that allow these institutions to reproduce works without prior consent of the rightsholders, mainly for preservation purposes. These exceptions do not cover and should not be extended to cover reproductions on a mass scale, which would clearly conflict with the normal exploitation of works and prejudice the legitimate interests of the copyrightholders, and would thus not pass the three step test of the Berne Convention and Article 5.5 of the Directive200/l29 (p.2, emphasis added).”http://www.ifrro.org/show.aspx?pageid=home:

Are we missing something, or is the US preparing to “go it alone”?

-- From The Illustrators’ Partnership of America

This may be republished, posted or forwarded in its entirety to any interested party.