proposal, which is a compromise, takes care of both of these goals. It allows distance education to continue. It allows both asynchronous and synchronous education, but only when those technological measures are in place. We need an amendment now if distance education is to be a reality for our citizens. Mr. COBLE. Ms. Gasaway, if you will, repeat what you said in your illustration about the professor at UNC Greensboro. I didn't follow you. Ms. GASAWAY. But you picked up on the Greensboro, didn't you? Right now under section 110(2), if a professor is teaching a class in a classroom, face to face, he or she may show a videotape to the students and the students can watch that tape. If there are any students located remotely, rather than in the classroom, then that videotape cannot be shown, because the types of works are limited to non-dramatic literary and musical works. Audio-visual works are currently excluded, so there could be a way to prevent downstream copying by saying you have to have a staff member in that classroom remotely. But right now that doesn't do it, so we need an amendment right now, Mr. Chair. Mr. COBLE. Thank you very much, Ms. Gasaway. PREPARED STATEMENT OF LAURA GASAWAY, DIRECTOR OF THE LAW LIBRARY AND I am Laura Gasaway, Director of the Law Library and Professor of Law at the University of North Carolina at Chapel Hill. I appreciate the opportunity to testify before you today on behalf of the undersigned higher education associations in support of legislation that would update the existing exemption for educational transmissions in the 1976 Copyright Act. I was also privileged to represent these organizations in testimony at a hearing last January before the Copyright Office. That hearing was part of the comprehensive study mandated by this Congress when it passed the Digital Millenium Copyright Act, resulting in the recommendations we are considering today. Before I comment on any of the specific recommendations contained in the Copyright Office's report, I would like to commend the Copyright Office staff for the fair and balanced way in which they conceived and carried out their mandate. The depth and breadth of information contained in the report reflects the seriousness and thoroughness with which they conducted this study. We believe that the report's recommendations reflect the care and thoroughness put into their study, and represents a thoughtful effort. This set of recommendations goes a long way toward enabling educational institutions to fully utilize digital technologies without jeopardizing the market value of copyrighted works. Mr. Chairman, I have attached to my testimony today a copy of my statement and written comments subsequently submitted by higher education associations to the Copyright Office during the course of its study of the issues. Together these documents describe the terms for an exemption we believe will allow distance education to fully utilize the potential of the digital environment in a manner that protects the interests of copyright owners. We continue to believe that the basic objective of a distance education legislative exemption should be to enable remotely all instructional activities that are currently permitted in the classroom, provided that adequate safeguards exist against the misuse of copyrighted material that would harm the market for that material. I do not plan to use my time here today to reiterate the proposal that we submitted to the Copyright Office. However, please feel free to ask me any questions you may have about it, and I will be happy to respond either orally or in writing. As you will note, a large number of national educational organizations endorsed the proposal these organizations I represent today developed. However, some of our colleagues within education circles felt then and continue to feel that our proposal falls short of the exemption necessary to promote distance education. Nevertheless, we understand the need for compromise on a difficult issue such as this. With that in mind, we believe the Copyright Office recommendations generally represent a balanced, reasonable approach that we strongly support. In my statement today I plan to address only three or four major recommendations, but I hope that we will be allowed to expand on our statement at a later date. First, let me say that we heartily endorse a great number of the Copyright Office recommendations without reservation. For instance, the Copyright Office would eliminate the provision in 17 U.S.C. §110(2) requiring exempted displays and performances to be transmitted to a classroom or similar place of instruction. Eliminating the classroom requirement is critical to enabling distance education programs to reach students where they are, and to fully utilize the vast potential of distance education to benefit the public. We encourage the Subcommittee to incorporate recommendations such as this one into legislation. Without these provisions, distance education programs would continue to be unnecessarily curtailed. We likewise support the Copyright Office recommendation that distance education programs should be exempt for whatever reproductions and distributions are technologically necessary to digitally transmit a display or performance over computer networks. We also agree that the purpose in extending the exemption to incidental reproductions and distributions should be only to permit exempted displays and performances to be viewed by the remote student. Based on our understanding of the Copyright Office recommendations, we believe that the proposed amendments to 17 U.S.C. §110(2) allowing transient copies and to § 112 allowing ephemeral copies to be posted to a server would be sufficient to accomplish this goal. We believe that, together, these proposed amendments would permit access to course materials at times selected by the student. In order, however, to ensure that the statutory language is not limited to current technology, we would ask Congress to clarify its intent that the exemption would be available to both synchronous and asynchronous transmissions. Anything less would severely limit the development of and potential benefits from the use of digital technologies in distance education. Second, as we clearly indicated in our proposal to the Copyright Office, we agree with the recommendation that reasonable technological safeguards against downstream copying and distribution must accompany any expansion of the distance education exemption to digital transmissions. Consistent with the recommendations, we explicitly supported a requirement that access to materials must be limited to bona fide students enrolled in the course, as well as the adoption of policies and procedures that promote compliance with copyright laws. We agree with the Copyright Office that an exemption should not become a substitute for student purchase of course materials. However, we question the Copyright Office recommendation that, in addition to reasonable technological protections against unauthorized uses of copyrighted materials, there is a further need to limit the portion of a work that may be transmitted to students. Where the potential for infringement is no greater remotely than in a local classroom, we see no reason, for instance, why a professor in a supervised, video teleconferencing situation should not be able to display or perform whatever he or she could in a classroom setting. The Copyright Office argues that limiting a performance to a portion of a work helps protect the market for that work, since the public would have no interest in less than the whole work. However, this argument is not relevant because, when there are technological measures to prevent downstream copying, the public does not have access to the work. Rather, it applies only where the public has access to the work because safeguards against unauthorized copying and distribution are not in place. As we suggested to the Copyright Office, a limited exemption, such as one that limits the portion of works that may be performed, should be available to distance education programs that limit access to the course and implement strategies to promote compliance with copyright law, but are unable to employ technologies to prevent downstream use of materials. Finally, there are a number of recommendations contained in the report that we would be pleased to support with further clarification regarding their intended effect. For instance, the report recommends that the law should impose an obligation on educational institutions not to interfere with technological protections copyright owners may apply to their works. This provision is apparently adapted from the Digital Millennium Copyright Act exempting internet service providers from liability for infringing acts by a subscriber. It is not obvious how a similar requirement would work as a practical matter in the context of distance education. An ISP serves as a passive conduit for materials uploaded by others, whereas in distance education the works are uploaded by the educational institution. It would appear that the distance education exemption could be nullified by copyright owners whenever protections applied by them would prevent legally acquired works from being uploaded in the first place. In these circumstances educational institutions would lose the dis tance education exemption and be reduced to having access to material only on terms chosen by the copyright owner by a license. We would hope that Congress will clarify that, by prohibiting interference with protections applied by a copyright owner, it does not intend to prevent the transient and ephemeral copies or the transmission and reception of exempt displays or performances. Congress clearly recognized the import and complexity of a copyright exemption for digital distance education when it charged the Copyright Office with responsibility for conducting the study and making the recommendations you now have before you. This issue is of vital concern to the educational institutions we represent. The higher education associations have been pleased to participate in the process created by the Copyright Office. We agree with the Copyright Office characterization of their recommendations as extending the policy enacted by Congress in 1976 into the digital environment of today and the future. We believe the Copyright Office recommendations represent a balanced, reasonable approach and we endorse a great number of the recommendations without question. We urge Congress to adopt these recommendations by making the necessary changes to current law. In doing so, we hope you will give careful consideration to our modest suggestions for modifications to, or clarification of, those recommendations. Thank you for the opportunity to present our views. On behalf of: American Association of Community Colleges American Associations of State Colleges and Universities American Council on Education Association of American Universities Association of Research Libraries EDUCAUSE National Association of Independent Colleges and Universities National Association of State Universities and Land-Grant Colleges [Note: Additional material submitted by Ms. Gasaway is on file with the House Judiciary Committee's Subcommittee on Courts and Intellectual Property.] Mr. COBLE. Mr. Ochsenreiter. STATEMENT OF GLENN OCHSENREITER, VICE PRESIDENT, INDUSTRY RELATIONS, iCOPYRIGHT.COM Mr. OCHSENREITER. Mr. Chairman and members of the committee, on behalf of iCopyright.com, I would like to express our appreciation for the invitation to testify this afternoon. I hope our perspective is useful as you consider the U.S. Copyright Office recommendations on copyright and digital distance. As we are all aware, technology is creating exciting new educational opportunities for students and teachers both in schools and beyond traditional school boundaries. The same technology, however, creates new challenges for schools and copyright owners because of the unique elements presented by digital transmission display. I am here on behalf of iCopyright.com to testify that new technology is coming on-line that will help overcome these obstacles. iCopyright.com is a privately funded Internet start-up that is launching this fall the first comprehensive automated copyright permissions and reprints clearinghouse. It is a non-punitive system that respects both the culture of the web and the value of intellectual property. This Web-based clearinghouse will greatly simplify the process of obtaining a license to reuse copyrighted material. It covers not only traditional uses such as photocopying and reprints, but a broad range of new electronic reuse opportunities as well, such as electronic reprints or e-prints as we call them, and the distribution of copyrighted material through e-mail. Our service encourages users to do the right thing by making it convenient to do so. There is no fee for content owners to register their material or for users to review licensing terms and be put in contact with the publisher. The service is currently in a pilot program with a number of leading publishers that represent traditional media as well as original Web content, including Barrons on-line, COMTEXT, Newsweek interactive, PricewaterhouseCoopers, Wall Street Journal Interactive edition, and Washingtonpost.com. iCopyright enables content owners and users to find each other easily and provides the automated processing infrastructure to immediately execute licensing transactions for the benefit of both parties. As a true clearinghouse, iCopyright is independent of publishers, corporate customers, academic institutions, and any particular encryption or payment technology. As such, iCopyright does not choose sides of how to lobby an agenda with respect to the challenging issues of copyright, exemptions to copyright, and fair use. We are, however, in a position to testify that the benefits of technologies like ours will soon transform the copyright permission process itself from a cumbersome and extended undertaking that frequently produces no results into a streamlined, efficient operation providing enhanced benefits for intellectual property licensees and licensors. As described in the Copyright Office Report, many educational institutions that would like to license material for digital distance education have reported a number of difficulties. First, in locating copyright owners; second, in obtaining the timely response from the copyright owner, once located; and third, in meeting the terms set by the copyright owner. We believe iCopyright's automated permissions clearinghouse will have a positive impact on all these problem areas. Publishers can easily register their content with iCopyright and list the types of clearances they are willing to license. Users interested in obtaining a license can quickly review available clearances. This can be as easy as clicking on the iCopyright logo at the bottom of a Web document. This service at no cost to either party will reduce from months to moments the time it takes to locate the copyright holder and learn what clearances are available. In addition, we believe most content owners will choose to offer instant clearances through iCopyright's patent pending Web-based transaction engine which automates the clearance process, collects and distributes licensing royalties, and delivers the content in the desired format, with proof of clearance. Licensing terms and all decisions about the types of clearances offered through iCopyright are determined entirely by content owners. We believe, however, that the transition to real-time clearance transactions via the Internet will strongly influence and encourage the simplification of these terms and the moderation of license fees. Because the automation of clearance transactions removes most of the overhead associated with licensing, publishers are likely to offer a range of clearances that they would not economically justify in the past. Most importantly, access to real-time information about prices leads to a more efficient marketplace, a marketplace where the price you pay reflects actual demand. On-line auctions are a prime example of this. Pricing will tend to find its way to a point that is low enough to motivate institutions to obtain rights for the reuse of coveted material and avoid possible liability for unauthorized use but high enough to create meaningful new revenue for content owners. iCopyright applauds the Copyright Office's fundamental premise that emerging markets should be permitted to develop with minimal government regulation and that copyright owners and users should have the opportunity to establish mutually satisfying relationships as new technology leads to the development of new markets for copyrighted works. We are confident that the frictionless efficiency and immediacy of automated Web-based copyright clearance transactions will provide the foundation for effective market mechanisms to quickly take hold without the requirement of adjustments to existing law. Thank you again for the opportunity to testify today and I look forward to any questions that may be raised by my testimony. Mr. JENKINS [Presiding]. Thank you, sir. [The prepared statement of Mr. Öchsenreiter follows:] PREPARED STATEMENT OF GLENN OCHSENREITER, VICE PRESIDENT, INDUSTRY RELATIONS, ICOPYRIGHT.COM As we are all aware, technology is creating exciting new educational opportunities for students and teachers both in schools and beyond traditional school boundaries. This same technology, however, creates new challenges for schools and copyright owners because of the unique elements represented by digital transmission and display. I am here on behalf of iCopyright to testify that new technology is coming online that will help overcome these obstacles. iCopyright is a privately funded Internet start-up that is launching the first comprehensive, automated copyright permissions and reprints clearinghouse this fall. It is a non-punitive system that respects both the culture of the Web and the value of intellectual property. This Web-based clearinghouse will greatly simplify the process of obtaining a license to reuse copyrighted material. It covers not only traditional reuses such as photocopying and reprints but a broad range of new electronic reuse opportunities as well, such as electronic reprints, or "e-prints," and the distribution of copyrighted material through e-mail. Our service encourages users to do the right thing by making it convenient to do so. There is no fee for content owners to register their material or for users to review licensing terms and be put in contact with the publisher. The service is currently in a pilot program with a number of leading publishers that represent traditional media as well as original Web content, including Barron's Online, COMTEX, Newsweek Interactive, PricewaterhouseCoopers, Wall Street Journal Interactive and Washingtonpost.com. iCopyright enables content owners and users to find each other easily and provides the automated processing infrastructure to immediately execute licensing transactions for the benefit of both parties. As a true clearinghouse, iCopyright is independent of publishers, corporate customers, academic institutions and any particular encryption or payment technology. As such, iCopyright does not choose sides or have a lobbying agenda with respect to the challenging issues of copyright, exemptions to copyright and fair use. We are, however, in a position to testify that the benefits of technologies like ours will soon transform the copyright permission process itself from a cumbersome and extended undertaking that frequently produces no results into a streamlined, efficient operation providing enhanced benefits for intellectual property licensees and licensors. At iCopyright, we are convinced that most corporations and institutional users want to do the right thing in properly licensing the reuse of content-they are often creators and owners of intellectual property in their own right. It should be noted as well that although our service is based on the honor system, our digital tools do allow for self-policing by publishers and regulatory agencies that are seeking to locate unauthorized reuses of content that has been registered with iCopyright. As described in the Copyright Office report, many educational institutions that would like to license material for digital distance education have reported a number |