culture. With specific respect to trademarks, the proposed legislation would allow security interests to be an exception to the granting of rights in an intent-to-use (ITU) application. (3(b)(5). The purpose of prohibiting assignments of ITU applications, except to a successor in interest, is to avoid trafficking in marks. Although not specifically an issue for the PTO, it is clear that debtors could file ITU applications, grant a security interest in exchange for a loan, and default on the loan. Presumably, the only collateral value would be the $245 filing fee.

The proposed legislation would also permit charging fees "in the same manner as the other fees charged by that office." 3(g). Si Since some PTO fees are set by statute and others by regulation, it is unclear which fee mechanism should apply. The PTO would prefer that the fees be set by regulation, to permit market-type flexibility in recovering costs or passing on savings. The bill is silent on whether funds would be provided to establish the database.

The bill proposes minor amendments to Section 10 of the Trademark Act and to 35 U.S.C. §261 of the Patent Act to make clear the effect of filing a "federal financing statement."

We note that many of the legal and practical issues raised by the Federal Intellectual Property Security Act may be addressed by a study to be completed by the Franklin Pierce Law Center in cooperation with the PTO. The study, mandated under P.L. 105-277 and Senate Report 105-235 (S.2260), will assess the feasibility of establishing a centralized intellectual property registry. The study shall assess and define the technical, economic and legal requirements associated with such a centralized registry. Federal recordation of security interests in federally created intellectual property rights appears to be an important area of focus for this Congressionally mandated study. We would therefore suggest that the results of the "Franklin Pierce" study, due in early 2000, be taken into account as this draft bill moves through the legislative process.

As a final matter, we note that international discussions in the area of electronic registries for security filings, particularly at the United Nations Commission on International Trade Law (UNCITRAL), are underway. Therefore, consistency with any international developments and obligations should be taken into account as this draft bill moves through the legislative process.

We look forward to working with the Committee to craft a bill that provides service, certainty, and efficiency to security-interest recordation constituents, without jeopardizing the services available to our existing Patent and Trademark Office customers. We also note that the Department of Agriculture continues to evaluate the draft bill and may have further comments.

PREPARED STATEMENT OF JOHN C. HOLLAR, EXECUTIVE VICE PRESIDENT, LEARNING VENTURES, PUBLIC BROADCASTING SERVICE

Mr. Chairman and Members of the Subcommittee, I am John Hollar, Executive Vice President of Learning Ventures at the Public Broadcasting Service. I am pleased to have the opportunity to tell you about distance learning programs at PBS, and to share our response to the Copyright Office Report on Copyright and Digital Distance Education.

Let me first commend Register of Copyrights Marybeth Peters and her staff for the balanced report to Congress analyzing the copyright law applicable to distance education in the midst of rapid technological change. As defined by the Copyright Office, distance education is fundamentally "a form of education in which students are separated from their instructors by time and/or space." 1 The revolution in distance education that began with educational broadcasting has become the quantum leap forward of the Internet. Because we are deeply involved in the fusion of these media for educational purposes, PBS has a great interest in the Copyright Office proceeding. We thank the subcommittee for allowing PBS to participate in this hearing.

PBS DISTANCE LEARNING ACTIVITIES

At PBS, education is at the core of our mission. PBS is a nonprofit, noncommercial enterprise that makes a vast quantity of educational, cultural and informational content available in broadcast, print and electronic formats to its member television stations throughout the United States.2 We provide programming and related services to 349 noncommercial stations in all 50 states, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. Nearly two-thirds of public television station licensees are universities or state and local governments. Each week, more than 97 million Americans watch and learn from PBS programming, teacher's guides, outreach efforts and web sites.

PBS is the leading television resource for classroom programming for adults and children. More teachers nationwide use programs from PBS in the classroom than from any other source.3 More than two million teachers and 70,000 elementary and secondary schools-serving some 30 million elementary and secondary students-integrate PBS services into their curriculum. The trends are even more dramatic for post-secondary and adult learning students. As the Copyright Office noted in its Report, "telecourses" distributed by PBS have had a large audience since the 1950s and continue to expand. In 1996, more than 400,000 students were enrolled in PBS telecourses, as compared to 55,000 in 1981, according to the National Center for Education Statistics.4

PBS is Actively Embracing Digital Technology

Public television stations pioneered the nation's first distance learning programs, using both traditional terrestrial broadcast and instructional television fixed service (ITFS).5 Today, to fulfill our congressional mandate of bringing PBS's educational content to all Americans, we use satellite, cable, videocassettes, and compressed digital video, and, of course, the Internet.

PBS is embracing digital technology and developing strategies for its use in meeting our educational and public service mission. While all television broadcasters are required under new FCC rules to have digital broadcasts on air no later than May 1,200 2003, PBS and its stations were the first to develop all-digital networks and technical faci facilities, and played a leading role in developing digital broadcast transmission standards. In 1998, we launched regular broadcasts of high-definition programming and successfully broadcast the world's first digitally enhanced programming. We look forward to another breakthrough by our member stations: the digital multicasting of standard definition programming so that, for example, a single station can carry on a single digital channel its current programming plus a dedicated children's channel, a dedicated adult lifelong learning channel, and a dedicated local programming channel.

We are doing even more to fuse television and video programming into new, interactive online content. PBS ONLINE, one of the leading web services in the country, is pioneering the integration of broadcast television, images, audio and information into a complete multimedia learning experience for home and school. More than 6 million unique users a month spend time with PBS ONLINE, including tens of thousands of teachers, children and adult learners each day. The Internet provides the powerful "feedback loop" between our educational content and end users that has never existed before.

Recognizing the importance of these new technologies to fulfilling our mission, PBS President Ervin Duggan formed PBS Learning Ventures in 1995 to accelerate development of our lifelong learning, classroom and new media services for preschool, K-12 and adult learners. As just one example of our digital distance education activities, some 5 million Americans have enrolled in PBS ADULT LEARNING SERVICE telecourses and tele WEBcourses (which combine telecourse video and digital online instructional elements). Other programs include GOING THE DISTANCE, which provides adults the opportunity to earn full degrees using distance education; ADULT LEARNING SATELLITE SERVICE, which digitally transmits via satellite to universities, schools and libraries who download and record programs; and LITERACY LINK, which provides video and online instruction in reading, writing and arithmetic under a grant from the U.S. Department of Education. We foresee a tremendous expansion of these services in the next decade.

Public television stations work with schools and government to provide distance education throughout the nation. In rural Iowa, college degrees are accessible through the Iowa Communications Network. The Kentucky Authority for Educational Television has partnered with K-12 schools, higher education facilities and state agencies. In College of the Air, a partnership of Maryland Public Television and 33 colleges and universities throughout Maryland, Northern Virginia, Delaware and parts of Pennsylvania, individuals earn college credits toward a degree. Seventeen thousand students have earned college credit through telecourses offered by WHYY in Philadelphia and the Delaware Valley Distance Learning Consortium, an alliance of 26 colleges and universities. The The Mississippi Authority for Educational Television helps

lps meet education needs in that rural state. 6

PBS Comments on Copyright Law Recommendations

In the Digital Millenium Copyright Act (DMCA), Congress asked the Copyright Office to recommend ways to "promote distance education through digital technologies, including interactive digital networks, while maintaining an appropriate balance" between the rights of copyright owners and users. The Register was asked to consider "the need for an exemption from exclusive rights of copyright owners for distance education through digital networks." 8

Taking its cue from earlier legislative proposals and within a limited time frame, the Copyright Office report focuses principally on the "instructional broadcasting" exemption in section 110(2) of the 1976 Copyright Act, but PBS notes that the congressional inquiry focuses more broadly on promotion of distance education through digital technologies and digital networks overall. There are a number of copyright provisions of vital importance to the educational mission of PBS and its member stations. As the Copyright Office observes, the computer is "the most versatile of distance education instruments," 10 but provisions in the copyright law delineating educational uses for which permission is not required were written more than twenty years ago, before current digital technologies were in widespread use. 11 Provisions on transmission of noncommercial educational programming should be examined or updated in light of the new technology.

The Instructional Broadcasting Exemption in Section 110(2)

Under section 110(2) the performance of a nondramatic literary or musical work, or the display of any work, "by or in the course of a transmission," is exempt if it is "a regular part of the systematic instructional activities of a.. nonprofit educational institution;" is "directly related to the teaching content of the transmission;" and is made primarily for reception in "classrooms or similar places normally devoted to instruction," or by persons whose disabilities or special circumstances prevent their attendance in classrooms or similar places, or by government officers or employees as part of their official duties. 12

The instructional broadcasting exemption in section 110(2) was designed in part for "educational television or radio" entities 13 that transmit, with a participating nonprofit educational institution or governmental body, certain distance learning content for reception in a classroom, "a studio, a workshop, a gymnasium, a training field, a library or the auditorium" when used for systematic instruction 14; or for reception by persons whose "special circumstances" keep them out of a classroom, such as "preschool children, displaced workers, illiterates, and shut-ins." 15 Section 110(2) "is intended to include instructional television college credit courses" such as "telecourses" aimed at "regularly enrolled" students "who are unable to attend daytime classes because of daytime employment, distance from campus, or some other intervening reason." 16

The exemption thus permits instructional broadcasters a range of distance education activities with respect to displays of works, and performances of literary and musical works. At the same time, PBS holds broad audiovisual rights in most of our distributed programming, and we represent the interests of our program producers and producing member stations in providing programming to the K-12 and adult education communities. Maintaining the proper copyright balance is, therefore, of concern to PBS. The important task, in our view, is to begin to examine specific copyright law provisions and exemptions as they affect distance education in the digital environment.

Digital Transmission under Section 110

The Register of Copyrights recommends updating the instructional broadcasting exemption in section 110(2) to clarify that the same performances and displays the provision has always permitted may also be delivered by means of digital technologies. To accomplish this, the Copyright Office has three recommendations. First, the Register recommends clarifying that a "transmission” may be digital. Notably, the Copyright Office urges that the term “transmission" in section 110(2) should be clarified through legislative history rather than statutory amendment: "Because the term does not specify any particular technology, we interpret it to cover transmission in any form, including digital. Amending the statute to add the words 'digital or analog is therefore unnecessary, and risks implying that references to 'transmission' elsewhere in the Copyright Act are limited to analog transmissions." 17 The Office notes that the definition of "transmission" in section 101 of the Act is technologically neutral, covering communication "by any device or process whereby images or sounds are received beyond the place from which they are sent" and should therefore include digital transmissions. 18

Second, the Register recommends permitting the transient copies that are necessarily created by intermediate RAM storage as a work is performed or displayed by digital transmission. As described in the Report, transient copies are created in a computer's random access memory as digital information is transported over a digital network, so that even where there is an applicable exemption from the performance or display display righ right, a transmission online may implicate the reproduction right as well.19 According to the Copyright Office, these temporary copies occur along the network even with video or audio "streaming" (i.e., real time transmission) even though no complete copy is reassembled on the recipient's computer. 20 The Office would permit these temporary copies as part of legitimate distance education under 110(2).

Third, to permit the section 110(2) exemption to be used in asynchronous distance education, the Office would add a new ephemeral recording exemption in section 112 of the Copyright Act to permit an educator or other entity to upload a copyrighted work onto a network server for subsequent transmission to students under the conditions set out in 110(2).21

PBS supports the Register's recommendation to confirm through legislative history the applicability of the copyright law exemptions to digital transmissions. One goal of the copyright law revision in the 1970s was to craft a statute flexible enough to accommodate new technologies.22

17 Report, supra note 1, at 146 (emphasis added). See also Melville B. Nimmer and David Nimmer, Nimmer on Copyright §8-15[C][1] (transmission in 110(2) includes not only radio and television broadcasts over-the-air but communication by any device or process).

18 Id. at 83.

19 Id. at 70-71 (citing MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993), cert. dismissed, 114 S.Ct. 671 (1994)).

20 Id. at 71 n. 159.

21 Section 112(b) already permits a nonprofit organization, such as an instructional broadcaster, entitled to perform or display a work under section 110(2) to make up to 30 copies of a particular transmission program embodying the performance or display under 110(2). According to the legislative history, an organization that has made copies under 112(b) may use one of them for purposes of its own exempt transmissions under section 110(2), and may do so repeatedly in any number of transmissions for seven years from the date the program was first transmitted to the public. H.R. Rep. No. 94-1476 at 103–04 (1976). The Office believes this provision might not permit the indefinite number of transient RAM copies generated by digital transmission from the server copy. Report, supra note 1, at 94.

The Office observes that allowing a network server copy for asynchronous access could displace sales. Id. at 148. See also H.R. Rep. No. 94-1476 at 103-04 (1976) (discussing effect of ephemeral recording exemption on educational video market). To address this, the Office would require the server copy to be made from a lawfully acquired copy, with all technological protections intact; allow the server copy only for duration of the course, with no further copies made from it "except for the transient technologically necessary copies that would be permitted by section 110(2)"; and replace the requirement of "systematic instructional activities" with a "mediated instruction" requirement such that the performance or display is made at the direction of an instructor, Report, supra note 1, at 148, 161, which PBS believes could narrow the exemption. See H.R. Rep. No. 94-1476 at 83 (transmission need not be related to specific course work if in accordance with pattern of systematic teaching methods established by the nonprofit educational institution or government body).

Digital Transmission under Section 118

In this context, we would bring to your attention the statutory license in section 118 for certain uses by public broadcasting entities of published nondramatic musical works, or pictorial graphic and sculptura sculptural works, in the course of a transmission made by a noncommercial educational broadcast station, subject to the terms of any voluntary, industry-wide license agreement. The legislative history reflects that public broadcasting should be assured "access to copyrighted materials at reasonable royalties and without administratively cumbersome and costly 'clearance' problems that would impair the vitality of their operations" and that public broadcasting "may encounter problems not confronted by commercial broadcasting enterprises, due to such factors as the special nature of programming, repeated use of programs, and, of course, limited financial resources." 23 The idea was not to "subsidize public broadcasters," but to "assure a fair return to copyright owners without unfairly burdening public broadcasters." 24

Music performing and mechanical rights societies have asserted that programs incorporating musical works under section 118 licenses may not be transmitted in new media without further license. Public broadcasters have faced the challenges in obtaining licenses for digital uses that some reported to the Office during the study of digital distance education. 25 Licensing issues have become ever more complex as technology has evolved and programs must be cleared for different distribution methods. While satellite digital broadcasts may be adequately addressed in other provisions of the Copyright Act, it would be helpful and in the public interest for Congress to clarify that licenses for "transmission" by public broadcasters under section 118 may include other digital transmissions. 26 As the Copyright Office states in its report, "Where a statutory provision that was intended to implement a particular policy is written in such a way that it becomes obsolete due to changes in technology, the provision may require updating if that policy is to continue. Doing so may be seen not as preempting a new market, but as accommodating existing markets that are being tapped by new methods." 27

Digital Transmissions under Section 114

PBS was also pleased that the Copyright Office took note of public broadcasting's exemption with respect to sound recordings in section 114(b), under which the reproduction, distribution and derivative work rights in section 106(1)-(3) do not apply to sound recordings included in "educational television and radio programs" distributed or transmitted by or through “public broadcasting entities," so long as copies or phonorecords of the programs are not commercially distributed by or through public broadcasting entities to the general public. 28 The Office observed that there is no exemption in 114(b) from section 106(6), such that in "the digital world" the performance right "would still apply." 29 While the Office is correct that the public broadcasting exemption for sound recordings in 114(b) does not specifically mention the digital performance right in 106(6), when Congress added the digital performance right for sound recordings in 1995 it expressly excluded the transmission of an audiovisual work from the definition of "digital audio transmission." 30 In so doing, it intended "to make clear that the performance right applies only to digital transmissions of sound recordings and that nothing in the bill creates any new copyright liability with respect to the transmission of a motion picture or other audiovisual work, whether digital or analog, whether subscription or nonsubscription, and whether interactive or noninteractive." 31 In its essential function of delivering noncommercial educational and cultural audiovisual programming, therefore,

23 Id. at 117-18.

24 Id.

25 See Report, supra note 1, at 41-44.

26 The Report distinguishes between "digital transmissions" (reproduction over networks that automatically automatically create intermediate copies) and "digital broadcasts" (which may be communicated by microwave or cable and which do not involve automatic creation of intermediate