▶ 0:18:33>> this year will come to order. Welcome to everyone. Strong copyright protections encourage the creation of content which employs vast numbers of U.S. citizens. This in turn leads to continued economic growth of our country and helps to solidify the united states as the world's cultural leader. According to one report, the contributions from all copyright industries added over $3 trillion to U.S. gdp and employed over 21 million workers . Those are staggering numbers.
▶ 0:19:01Without strong copyright laws, our favorite books and songs but like you never have been created in the first place, thus, we must do everything in our power to ensure a strong clear, reliable, and predictable ip rights remain central to this country. While I'm extremely proud of the work that we have done in the past to strengthen copyright, more needs to be done.
▶ 0:19:28We must press forward and continually iterate to ensure our ip system remains strong, clear, reliable, and predictable. Because of the unfortunate reality, our nation's copyright system is under assault from adversaries both foreign and domestic. That is why I've partnered with senator coons, blackburn, shift, and representative lofgren on draft legislation that would target foreign operated websites which are dedicated to piracy.
▶ 0:20:01I've also partnered with senator schiff, blackburn, in koons on draft legislation that would target bad actors who create unauthorized and illegal live streams of life events and distribute those streams. Then there is a I. With the proliferation of ai, we should do, we would do best to remember that there would not be anything to ingest for the training of ai models if it had not been for copyright law.
▶ 0:20:31Which has encourage the creation of content. Content often created primarily here in the united states. While there is no question the U.S. is in an ai race with china, the U.S. should not be in a race to the bottom. Such a race would only weaken the very ip rights that have made the U.S. and innovation and creation powerhouse.
▶ 0:20:56A careful balance must be struck between those training and creating ai tools and those creating the material which fuels those same tools. I look forward to the discussion today but before I introduce the witness, I will turn to my writing member and colleague senator schiff.
▶ 0:21:16Sen. Schiff: Thank you, Mr. chairman, thank you for your incredible leadership on the subcommittee. A privilege to work with you. Ms. perlmutter, wonderful to see you, thank you for being here. Although the subcommittee holds this oversight hearing of the copyright office every congress, it's more important than ever that you come to congress to underscore the unique and vital role that your office plays as a centralized independent administrator of our nation's copyright laws.
▶ 0:21:41Sen. Schiff: The copyright office provides a critical bedrock of support for creators of all sizes including millions of creatures across my home state of california. The independence of this office is an important constitutional safeguard that ensures our copyright system remains focused on promoting human progress and ingenuity. Furthermore, this independence protects the unique functions of the office from administering the copyright act and registering works to advising congress through comprehensive reports and more.
▶ 0:22:09Sen. Schiff: I want to touch on a couple topics that are key importance to creators in california and across the country. First, from film sets to recording studios to local newspaper offices, the rapid rise of generative ai has created both incredible opportunity as well as significant anxiety. The role of the copyright office has never been more critical in ensuring that protections for creators keep pace with technology.
▶ 0:22:35Sen. Schiff: We have watched as ai models are trained on copyrighted data, often without the consent or compensation of the original owners and authors. Creators are rightly concerned about whether their lifework may be used to build systems that will eventually serve as market substitutes for the original authors. Greeters are rightly concerned about whether their work will be used in this way and without any renumeration.
▶ 0:23:02Sen. Schiff: This is a topic many in congress care about and I'm proud to have introduced the clear act with senator curtis to ensure creators have adequate transparency when their verbs are used to train generative ai models. Without this transparency, creators are left with very few options to protect their works. Beyond ai, right holders are also continuing to face the persistent threat of foreign based digital piracy which drains billions from local economies.
▶ 0:23:29Sen. Schiff: Digital privacy in the streaming aid is no longer just a minor nuisance, it is a sophisticated to billion dollar a year global industry that cost the U.S. economy hundreds of thousands of jobs and harms consumers alike. Because many of these operations are based outside of the reach of U.S. courts, our traditional enforcement mechanisms are hitting a brick wall.
▶ 0:23:51Sen. Schiff: That is why I'm really proud to team up with the chairman as well as senator coons, blackburn on a legislative solution to allow for no-fault injunctions. Over 40 countries have already moved in the direction to protect their creators, and it's time that we discuss how the U.S. can implement similar protections while maintaining robust safeguard for free expression and due process.
▶ 0:24:14Sen. Schiff: I look forward to hearing about the copyright office's modernization efforts, to ensure creators and operations of all sizes can protect their livelihoods, whether it is the copyright claims board providing a streamlined alternative for smallclaims disputes or the long-awaited launch of the electronic copyright system. I'll be very interested in your office's work to ensure there is no barrier to entry for copyright protection. Thanks again, Mr.
▶ 0:24:39Sen. Schiff: Chairman, for all your work on the legislation , as well as holding this hearing. I yelled back.
▶ 0:24:44Sen. Tillis: Ms. perlmutter serves as the register of copyrights and director of U.S. copyright office. She was art appointed in october 2020. Ms. perlmutter advises congress and executive branch agencies on copyright policies and leads a workforce of nearly 500 employees. Prior to her appointment as register, Ms. perlmutter served as the chief policy officer and director for international affairs at the U.S. patents and trademark office.
▶ 0:25:13Sen. Tillis: I want to add, you have been remarkably successful over the course of time that I have been in this position. We welcome you back to the committee. I also thank you for the generous amount of time you spent with me in my office not long ago. Would you please rise and we will administer the oath. Do you affirm that the testimony you are about to get before the committee will be the truth, the whole truth, and nothing but the truth so help you god?
▶ 0:25:45Sen. Tillis: You may be seated. Begin your opening statement.
▶ 0:25:57Ms. Perlmutter: On this 50th anniversary of the copyright act of 76, it's an auspicious moment to take stock of how copyright and the copyright office continue to evolve. The office has provided services for over 150 years in the library of congress. We do so with a modest budget and a dedicated staff of now about 450 significantly fewer than in 1976.
▶ 0:26:25Ms. Perlmutter: When congress enacted the 76 act, it sought to make copyright law fit for the late 20th century and beyond. The office played a critical role in drafting the act. Over the past 50 years, we have continued to advise and serve congress which has assigned us more responsibilities as both the copyright ecosystem and the statute have grown in complexity.
▶ 0:26:48Ms. Perlmutter: These responsibilities now include operating or overseeing systems created by congress and recent legislation specifically at the copyright small claims tribunal and the blanket compulsory license usable works. We have also added an in-house economic research capability. To start with law and policy, one big success story has been the creation of the copyright claims board providing access to justice for copyright small claims.
▶ 0:27:15Ms. Perlmutter: The office submit a support on the ccbs first three years of operation to february. We found that it had been working well with growing demand for its services but noted concerns about the length and complexity of proceedings and recommended some targeted amendments to the case act.
▶ 0:27:35Ms. Perlmutter: The 20 music modernization act task the office with designating the two entities that administer the blanket compulsory license pay we are engaged now in the periodic review of those designations and will issue our recommendation soon. A major policy focus has been the issues raised for copyright by generative ai. The office launched a comprehensive ai initiative in 2023. After reviewing more than 10,000 comments from the public, we issued a report in several parts.
▶ 0:28:06Ms. Perlmutter: Part one addressed unauthorized digital replicas and concluded there was an urgent need for protection at the federal level. Part two addressed the copyrightability of ai outputs and outlined the human contributions that can qualify as authorship. In fact, the office has not registered more than 7000 claims that incorporate ai generated materials.
▶ 0:28:29Ms. Perlmutter: Part three addressed the use of copyrighted works in training generative ai systems, concluding the acts involved are likely to qualify as fair use in some circumstances, but not in others. We look forward to assisting congress as it considers ai-related topics that touch on copyright. In my written testimony, I identified certain additional topics as ripe for legislative action. The office has been, and remains available for technical assistance on any of these.
▶ 0:28:59Ms. Perlmutter: Where was in the process of adjusting our fees. Since we last did so in 2020, the cost of providing services has increased significantly in part due to inflation. We have propose a new fee schedule that would allow recovery of a portion of our costs closer to historical levels and are now reviewing the comments. As to our administration of the copyright act, the office offers a variety of services including registration, recordation, and education.
▶ 0:29:28Ms. Perlmutter: My written testimony provides the recent statistics which reflect strong demand and consistent production. Before the lapse of appropriations this past fall, registration processing times were at historic lows. We expect to reduce them again in the coming months. The ongoing modernization of the office's I.t. Services remain a top priority.
▶ 0:29:52Ms. Perlmutter: We are committed to making regular updates to avoid again having to overhaul legacy systems, but budget uncertainties may impact timing. Development of the enterprise copyright system, ecs, is our primary project. I'm pleased to report that three of its four components are now in production and use. The fourth one, registration, is the largest and most complex. It will replace the existing online system which is almost 20 years old.
▶ 0:30:19Ms. Perlmutter: The office has worked with the library's chief information officer to reallocate resources so we can accelerate development. Finally, let me mention the budget. The office has been operating with basically a flat budget for two years. This year, we are requesting funds to catch up with inflation and other cost increases. We anticipate that additional resources will be needed in fiscal 28 to enable delivery of the full ecs on our planned timetable.
▶ 0:30:50Ms. Perlmutter: I'd like to close by stressing the copyright office plays a critical part in supporting the american economy and culture. We appreciate the subcommittee's continued support of our work to benefit the creative community and the public, to serve congress, and to further the constitutional mission of promoting the progress of science and useful arts.
▶ 0:31:13Sen. Tillis: Thank you, Ms. perlmutter. You may want to copyright at opening statement. From the time you gave it to the time you finished it, you ended up back in the room with young people who I'm sure are here to hear all about intellectual property. For whatever reason you might be here, thank you for joining us today. Ms. perlmutter, where a website is clearly dedicated to copyright infringement but located abroad and beyond U.S.
▶ 0:31:45Sen. Tillis: Jurisdiction, does the dmca framework provide a truly meaningful remedy to protect american creators?
▶ 0:31:52Ms. Perlmutter: I think the dmca, while useful for many things, has not proved sufficient to deal with that particular --
▶ 0:32:00Sen. Tillis: That would be a no. Can you speak about the harm to the public caused by large-scale piracy sites and the harm of piracy more generally?
▶ 0:32:11Ms. Perlmutter: Of course, every member of the public these days who uses the internet is a creator. First of all, as a creator, the members of the public stand to lose from infringement without compensation. More broadly, what happens when you have that level of privacy, it undermines incentives to create. It gives an incentive not to make content available online.
▶ 0:32:36Ms. Perlmutter: At the end of the day, it means the public will have less access to as much high-quality content from safe locations where they don't risk malware and other problems. In various distributional mechanisms of their choice. In the long run, it hurts the american economy, and as I think senator schiff alluded to, there is data out there that assigns some numbers to what those losses are.
▶ 0:33:05Ms. Perlmutter: There are many different levels at which the public can be heard as well.
▶ 0:33:08Sen. Tillis: Have you had an opportunity to review blackbeard, your staff? A bill that we put together with senator coons, shift, blackburn? What is your assessment?
▶ 0:33:23Ms. Perlmutter: We have reviewed it, been available to provide technical advice and comments on the language. I think the time is right to move forward on this type of remedy that would allow for no-fault injunctive relief. It is a way to make sure that infringement is curved without having to assign liability and without the risk of large amounts of damages.
▶ 0:33:47Sen. Tillis: Are there any areas that you all would say -- we have talked before in the red, yellow, green category. Is everything more or less in the green come other things that we should talk about to tighten it up before we may have an opportunity to move it?
▶ 0:34:02Ms. Perlmutter: Good question. I would be happy to get back to you with more details. I know the legislation does do this. To make sure their adequate safeguards built in against the blocking of content and to ensure due process. I believe the legislation does that. I'm happy to engage further on the details.
▶ 0:34:21Sen. Tillis: I think it's a good step forward. This meant to be could not come up with blackbeard being from north carolina but acronyms are what they are. Because we have some members here, I want to get to them quickly. I may ask questions on the backside. I will turn to senator schiff.
▶ 0:34:38Sen. Schiff: I just want to follow up on your questions. Can you tell us the experience of other countries that have used those no-fault injunctions, how they have been successful, how they haven't got anything that you would improve upon in terms of what other countries are doing?
▶ 0:34:53Ms. Perlmutter: Of course, different countries are doing somewhat different things. As you pointed out earlier, we have over 40 countries internationally that have no-fault injunctions in one form or another. First of all, I should say, three years ago, we looked at the evidence and the studies and found that work done by academics, governments, court reviews, and the private sector, all indicated that these injunctions could be very
▶ 0:35:24Ms. Perlmutter: Successful in curbing infringement if they were applied appropriately and broadly enough. I have not seen anything that questions that, so we are convinced they are helpful. As to what made them work or not work, I think what was critical was to give the courts some discretion and ability to balance the interests on all sides in terms of the scope of the injunction, when it was appropriate. Also an appropriate definition of what kinds of websites we are talking about.
▶ 0:35:55Ms. Perlmutter: Foreign websites, primarily dedicated to infringement. It should not sweep up those websites that are just multipurpose sites.
▶ 0:36:01Sen. Schiff: Is their adequate provision in those other models for situation where a pirate site, somebody changes its domain, moves from one webpage to another, do the court orders have enough validity, flexibility to travel the internet and enjoying them wherever they move?
▶ 0:36:23Ms. Perlmutter: Yes, I think those are in effect, the new and improved models for no-fault injunctions are those that are dynamic and able to ensure it is not just one site allowing the infringer to move from one place to another at will.
▶ 0:36:40Sen. Schiff: One thing that is fascinating, and you are trying to strike the right balance here , is to what degree the copyright laws protect the output of ai, requiring a substantial human component. Not just asking prompts, but more engagement than that.
▶ 0:37:02Sen. Schiff: Is the consequence of that, if a studio, for example, or an individual, were to produce an entire let's say animated film, where the story was written by ai, the graphics, the action, the different animation technologies are all driven by ai, and put that filled out in theaters, it would have no protection whatsoever?
▶ 0:37:30Ms. Perlmutter: It is unlikely in that circumstance that there would not be human contributions that would qualify as authorship. It is just a question of what they would cover within the film. The components that were entirely generated by ai would not be protected by copyright, but what we have tried to elucidate is that if you have a human that selects, coordinates, arranges the outcome come output, that can be sufficiently creative to qualify.
▶ 0:37:59Sen. Schiff: I would imagine if it is a studio, they would imagine they have enough human input needed or not to qualify. Does that mean, though, if I write a movie with ai, produced a movie, develop the animation, I put it out, that others can put it out at will because it would have no protection?
▶ 0:38:22Ms. Perlmutter: Probably those portions of it that did not involve human contribution could be copied from a copyright perspective. There might be other bodies of law, contract law that may come into play.
▶ 0:38:34Sen. Schiff: How is the copyright claims board working? What can we do to make it even more efficient and effective, accessible?
▶ 0:38:46Ms. Perlmutter: In many ways, I think of the copyright claims board as being a miracle that it came into being so quickly and so smoothly. It has been working very well. It's final determinations have been hailed as being reasonable and appropriate, thoughtful. We have a panel a panel of really fantastic officials on the board, three of them. Copyright claims officers.
▶ 0:39:16Ms. Perlmutter: What I find particularly persuasive is not only that they have issued excellent decisions, and with very appropriate and reasonable amount of damages, but they have also facilitated a lot of settlements. Both of those that we know about and those that we don't necessarily get reported to us. They have also incentivized licensing and private negotiations.
▶ 0:39:41Ms. Perlmutter: Perhaps the most important, I would say, they greatly enhanced respect for copyright because the existence of a forum where rights and claims can be litigated practically, as a practical matter, means that copyright rights are meaningful in a way that they were not before. Having said that, we did identify a number of ways in which the system can be improved to make it faster and less complicated. We would be delighted to work with you to look at legislative language to take that forward.
▶ 0:40:11Sen. Schiff: Thank you.
▶ 0:40:13Sen. Tillis: Senator blackburn, you are in the timing award today.
▶ 0:40:19Sen. Blackburn: We like winning the timing award. Very timely that you are in front of us. Thank you again for the time that you spent with me a couple weeks ago. I appreciate it. As you know, with all of our creator's in tennessee, our patent holders, copyright holders, the work you do is really so incredibly important.
▶ 0:40:47Sen. Blackburn: You and I discuss the work I've done on creating one rulebook for ai. Of course, the discussion is out on my trumpet america ai act, which really response to the president's executive order to bring together the necessity for that one rulebook, and to put in place protections for what I call the four c's, which are children, creators, communities
▶ 0:41:21Sen. Blackburn: From high electric rates and job loss, and censorship, and the bias that is in the training for a lot of these llms. You all have been so supportive of the work that senator coons and I have done on the no fakes act. Getting this on the books. We are really pushing for senator grassley to get that worked up in committee. If we can get it moved forward.
▶ 0:41:53Sen. Blackburn: I would love for you to talk for just a moment about why it is important to have that one rulebook when it comes to ai, why it is imperative that we get some guardrails in place?
▶ 0:42:07Ms. Perlmutter: Thank you, senator. I will only speak to the copyright issues since I'm not an expert in the other three c's. I think it was critical a year and a half ago when we issued part one of our ai report, to move to protect any federal level, to have consistent protection against the unauthorized distribution of digital replicas.
▶ 0:42:35Ms. Perlmutter: I think people are being harmed every day by that come economically, personally, reputational he. We absolutely applaud the work that is being done in that respect. I know another big part of the proposed legislation deals with transparency, enabling copyright owners to know when their births have been used to train ai systems. I think that's a critically important goal. Without that knowledge, it's difficult to either be able to enforce rights or to be able to license rights.
▶ 0:43:08Ms. Perlmutter: I definitely applaud those portions of the bill. Thank you.
▶ 0:43:11Sen. Blackburn: Speak for a minute about fair use when it comes to music. In nashville, we refer to the fair use doctrine as a fairly useful way to steal my music. That is the way so many have looked at it.
▶ 0:43:41Sen. Blackburn: Then you look at the warhol case the supreme court took outcome of the judgment there when in favor of the photographer who took that first picture, which was a big win and kind of gives us precedent. Talk about some of the park that you have done with fair use.
▶ 0:44:04Ms. Perlmutter: In the ai context, the contents -- comments we received from the public very much agreed that fair use was the right way to assess the legality of the use of copyrighted works and ai training. They of course disagree how fair use applied. In our part three of our report, we concluded that in some circumstances the ingestion of copyrighted works could be fair use, and in some circumstances, likely not to be.
▶ 0:44:37Ms. Perlmutter: The value of fair use, of course come on the one hand, he let you take into account all the circumstances. We identified in particular, was the source legal or pirated? Bring their guardrails to make sure the output didn't include copyrighted content? What exactly is the purpose of the use? How transformational is it? What is the impact on the market? The beauty of the doctrine is it allows you to consider all of these things. The negative is that it is not entirely predictable.
▶ 0:45:08Ms. Perlmutter: Right now, we are seeing the courts struggle with that. We are getting some diverse opinions, judgments being made on the basis of different factors. We will have to see where the courts go with that. I do think it's important to recognize, this is a nuanced issue. If you are using copyrighted content and training in order to produce something different, in order to do research and analysis, there is a strong case.
▶ 0:45:38Sen. Blackburn: Looking at that and use is vitally important. That comes to bear whether it is photographs or art or music or publications, beginning to look at that. In december, senator welch and I introduce the visual artist copyrights reform act because so few of our photographers actually use the register.
▶ 0:46:10Sen. Blackburn: I know that is something that you and your office is trying to fix, and we appreciate the effort that you have made their. Thank you, Mr. chairman.
▶ 0:46:20Sen. Tillis: Senator hirono.
▶ 0:46:24Sen. Hirono: Thank you. I find the discussion about fair use interesting. By the way, it is nice to see you. As I was listening to your discussion on fair use, would you say that we should still leave it alone for the courts to continue to develop the case law around fair use? As opposed to trying to come up with legislation that better provides guidance?
▶ 0:46:50Ms. Perlmutter: It's a very good question because obviously it will take a long time to get clarity on fair use. It may take a supreme court decision eventually if the courts continue to look at issues and possibly go in different directions. On the other hand, I think it's very difficult to legislate in this area and to come up with legislative language that captures the relevant nuances. What I find encouraging is how much licensing markets are developing in the interim.
▶ 0:47:19Ms. Perlmutter: Of course, licensing is a very good way to avoid the uncertainties of fair use. In a sense, that continued process in the courts is incentivizing discussions among the interested parties.
▶ 0:47:33Sen. Hirono: That sounds as if we should let things develop without legislation. I do have a question about the fact that president trump tried to illegally fire you. You don't need to discuss the case, etc. I realize that is not something you can do. Can you speak about the value rooted in the long history of the copyright office being within the legislative branch as opposed to the executive branch?
▶ 0:48:04Ms. Perlmutter: Thank you for that question. Obviously, the copyright office has been in the legislative branch since its inception, more than 100 50 years now. The value we have seen is, first of all, our role working with the congress as nonpartisan, apolitical experts. I think that has been very important and valuable.
▶ 0:48:28Ms. Perlmutter: We produce multiple deeply researched reports every year, provide technical assistance informally and formally. Second, because of our location, we have a very close relationship with the library of congress. Part of that is the fact that is a natural home for copyright, given the overlap in our missions. Our mission is to promote creativity and to incentivize the creation of more expressive works.
▶ 0:48:59Ms. Perlmutter: The library's mission is to preserve culture and knowledge. It is a very good fit. We also make major contributions, the copyright system makes major contributions to the collections of the library. Over time, approximately a quarter of the collections come from the copyright system without the need for congress to appropriate that money to the library for purchases. I would also say the system has just been working well.
▶ 0:49:30Ms. Perlmutter: We are very productive, we are accomplishing a lot, especially given the size of our office and budget. Any change that would involve moving the copyright office elsewhere would inevitably result in additional cost and disruption.
▶ 0:49:44Sen. Hirono: I agree with you. I think the copyright office should remain within the library of congress. The supreme court issued a decision relatively recently in march, cox v. Sony, really narrowed the secondary liability in the context of copyright law. Justice sotomayor issued a concurrence where she said it upends the statutory incentive structure that congress created.
▶ 0:50:16Sen. Hirono: Can you briefly go over the balance that congress struck in the dmca, whether that balance c survivesox v. Sony?
▶ 0:50:30Ms. Perlmutter: I think it is fair to say that it change the landscape in the copyright space. Regardless of who should have one, it is a significant narrowing of potential secondary liability. It remains to be seen how lower courts will interpret and apply it but it will take some time again for that to become clear. Meanwhile, it is definitely altered the incentives for online service providers to take steps to curb infringement.
▶ 0:50:59Ms. Perlmutter: That is what the dmca was intended to address as well. We have already seen some effects from this, lawsuits that have been withdrawn, some negotiations that have stopped. In my view, there may be, this might be an appropriate moment for a legislative response. The question is what that should look like.
▶ 0:51:21Ms. Perlmutter: I will say, while one possibility could be to codify the doctrine of contributory infringement, another possibility is to directly address the content online infringement, cooperation from service providers, and that could be done in parts with the tailored approach of the no-fault injunctions.
▶ 0:51:39Sen. Hirono: Thank you, Mr. chairman.
▶ 0:51:42Sen. Tillis: Thank you for bring up that point, and senator hirono. That was next question that I had. We will turn to the next senator. >> I want to commend you and your staff or do a good job stabilizing things and improving things. Thank you for that. I have a couple areas I want to talk about, the train act I want to talk about. The adjustments and the right to repair.
▶ 0:52:10Sen. Tillis: I speak to you as a senator from vermont, which as you know, is the music capital of the world. [laughter] stratford, vermont. Fish in burlington. Grace potter. I got my plug in.
▶ 0:52:32Sen. Tillis: The train act, which senator blackburn and I introduced, is about having copyright enforcement for people whose works have been utilized in large language models. What it would do is create a good-faith opportunity for people to get information, get a subpoena to determine whether their work has been used, then not being compensated.
▶ 0:53:02Sen. Tillis: Do you have a point of view on the train act, what it's intended to do?
▶ 0:53:05Ms. Perlmutter: Definitely I support the idea that we need transparency for copyright owners to know when their works are used. The train act seems to me to be a very creative idea of how to go about doing that. It is similar in some ways to approach being discussed in france right now. I think we should consider all options on the table.
▶ 0:53:30Ms. Perlmutter: The issue has been come in many of these areas, if you on its own required disclosure, how much detail needs to be disclosed. That is where a lot of the debate has been. This represents an alternative approach.
▶ 0:53:45Sen. Welch: Absent the ability of the artist to get information about the use of his or her product, they basically lose any protection that copyright is intended to provide.
▶ 0:53:55Ms. Perlmutter: I agree, this needs to be dealt with.
▶ 0:53:59Sen. Welch: The high volume artist, senator blackburn asked you about this, but that is often time the photographers. You and I spoke, you mentioned the work you are doing there. Perhaps on the record you can go over that again.
▶ 0:54:15Ms. Perlmutter: We are very aware that photographers, visual artists, especially photographers are among the groups that have the most issues with being able to register effectively. The office, over the years, has done a number of things to try to ameliorate that for them, going back to when we first established group registration for photographs. In 2000, we established an online group registration for up to 750 photographs in one application.
▶ 0:54:45Ms. Perlmutter: We know that is not enough for what photographers do today with the technology they have. We have done a number of things. First of all, the establishment of the ccb was something that photographers very much wanted because it is very difficult for them for it to be cost-effective for them to initiate federal litigation in court. That was a big step forward for photographers.
▶ 0:55:09Sen. Welch: I will interrupt because I have one other question. I want to thank you because that does appear to be responsive and user-friendly. We have to protect those artists and what is a difficult, often times financially unrewarding occupation within reach for people who do so much for us. Another topic was the right to repair. One of the concerns I had is that farmers these days no longer can fix their tractors.
▶ 0:55:39Sen. Welch: There are prohibition from the tractor companies. If there is anything that farmers do well, it is fix things. It is estimated farmers lose about $4.2 billion a year, $3 billion to tractor down time, $1.2 billion in excess repair cost. It may seem odd that I'm asking you about right to repair, but I understand you are involved with right to repair with respect to how copyright has an impact on it. Could you elaborate on that?
▶ 0:56:05Ms. Perlmutter: Copyright ends up being an important part of a right to repair because so much of the machinery and technology these days is software enabled, and software is protected by copyright. The law makes it illegal to circumvent technical measures used to protect copyrighted works like software. So copyright does get implicated.
▶ 0:56:28Ms. Perlmutter: Over the years, in the triennial rulemaking that we operate for the library of congress, we have recommended from the library and has adopted various exceptions to allow the repair of machinery. We believe that the time is ripe for congress to consider making some of those exceptions permanent, including for repairing farm machinery.
▶ 0:56:52Sen. Welch: This is a tractor, for instance, these can be half $1 million. All it would allow is for the person that bought it to fix it. I appreciate your cooperation on the right to repair and giving the consumer, the person that paid the price, the opportunity to keep the equipment going with all of that down time and expense. Thank you. Mr. chairman, I yield back.
▶ 0:57:18Sen. Tillis: Senator schiff and I, you prompted me to initiate a discussion with senator schiff. I would assert that north carolina is the movie capital of the world. I think senator coons is coming along. I have a follow-up question, related somewhat to the discussion you had with senator hirono. I have heard, let's just let the courts settle this thing.
▶ 0:57:45Sen. Tillis: It is one of the reasons for it -- why we are pushing so they are not related to you but patent eligibility. The court did opine on a lot of stuff and now we are trying to abrogate it. I will come back after I turned to senator coons to ask you some follow-up questions about how we should handle the court case is pending right now. Senator coons.
▶ 0:58:08Sen. Coons: Thank you, senator tillis, ranking member. Great to be with you, Ms. perlmutter. Thank you for everyone that works in the copyright office. I know there has been conversation, as I've been at another hearing, but I think it bears the examination about digital piracy and no-fault injunctions. The readily availability of copyrighted materials on foreign websites available for copyright is a huge problem for america.
▶ 0:58:37Sen. Coons: I introduced a bill last summer with senator tillis, schiff, blackburn called the blackbeard act. Tackling this issue with no-fault injunctions. I appreciate your offices feedback and engagement as we work to advance this bill. We have been written on this quite a while. I'm eager for us to reach a conclusion.
▶ 0:58:57Sen. Coons: One thing I've heard from opponents is that site blocking orders can be too broad, arguments that the orders block access to lawful content and restrict free speech, or that orders are issued without sufficient due process. Your office has generally been supportive of site blocking. What would you say in response to those critiques, and are any of our peer countries in your view straighten the right balance between protecting and promoting free speech and protecting creators?
▶ 0:59:23Ms. Perlmutter: Very good question. I think those are the key questions. How do you avoid both of those problems? I believe a number of countries have done so effectively. I would point to the u.k., which was perhaps the first country to put in place this remedy. I think what is key is to have the courts have some discretion, have the ability to balance the interests at stake, tailor the injunctions appropriately.
▶ 0:59:53Ms. Perlmutter: If that is done and the type of website that can be targeted is appropriately defined to be those that are -- I don't want to limit myself to specific words for legislation -- but those that are primarily dedicated to infringement, then I think you avoid most of that problem.
▶ 1:00:12Sen. Coons: If you focus on websites whose principal purpose is commercial benefit from piracy of copyrighted material, you think we would strike the right balance?
▶ 1:00:23Ms. Perlmutter: Yes.
▶ 1:00:25Sen. Coons: Thank you. I hope my colleagues agree. Fees, something I've been very attentive to is the fact that the copyright and trademark office can set their own fees. You just published a notice of proposed rulemaking proposing increased copyright fees by more than 40%, in some rare cases, more than 200. Help me understand why those are necessary and what those fees would be.
▶ 1:00:49Ms. Perlmutter: We last raised our fees for six years ago based on 10-year-old data about our costs. Under the statute, the register may adjust fees after doing a cost study, not about the actual cost but can include inflationary and cost increases. That is essentially what we are doing.
▶ 1:01:11Sen. Coons: Sally tori capability that I hope you can also extend with trademark.
▶ 1:01:18Ms. Perlmutter: We're in a slightly different position because we've never been entirely fee funded for a number of reasons. In recent decades, we have been approximately 60% fee funded, 40% appropriations. What has happened over the last six years because of inflation and cost increases especially for I.t. Related work, we are now at 40/60, so we have reverse the presented. We are proposing a number that would get us back closer. That 43% is an average.
▶ 1:01:51Ms. Perlmutter: About 33% is what inflation has been over the last six years. We adjusted for three years of estimated inflation into the future. Then we tweak to numbers a bit so that individual creators would pay less of a percentage increase than corporate entities. I am simply buying a little bit, but that is essentially what we did.
▶ 1:02:15Ms. Perlmutter: The problem is, if we cannot increase the fees by something along these lines right now, we are going to need to seek a greater percentage of our funding through appropriations. That is the situation we find ourselves in. We are trying to be good stewards of the public money. I will say, a standard application, the proposed fee would be $85. That is still way below other government fees like, for example, for getting a passport, or register a single class of trademark.
▶ 1:02:44Sen. Coons: One last question for you if I may. I was a cosponsor of the case act that helped to create the claims board. It's been up and running several years, your office issued a report about the ccb. How is it working in your view? Why so few cases to a final judgment? Are there a few legislative fixes you'd like to point us to?
▶ 1:03:05Ms. Perlmutter: It is working well. We are getting an increasing number of cases coming in, steady increase. It has managed to issue very good, reasonable decisions. It has incentivized and facilitated settlements, negotiations and licensing, really helped improve respect for copyright around the country. There are issues that were probably unforeseen.
▶ 1:03:33Ms. Perlmutter: There was a lot of concern about making sure that we built due process safeguards into the act and that means a lot of time lag. Each step takes a couple of months. A lot of claims are made that are not within the ccb's jurisdiction come have to be examined three times with multiple opportunities to amend. I won't go into the details, but we have proposed a number of ways to make the process more streamlined, quicker, and simpler, which should also make it easier for the board to get to the merits of appropriate claims.
▶ 1:04:03Sen. Coons: Thank you. I appreciate the input. Look forward to working on reforms. I remember negotiating some of those provisions and think about how they would work out. Thank you.
▶ 1:04:14Sen. Tillis: Senator padilla.
▶ 1:04:18Sen. Padilla: Thank you, Mr. chairman. Thank you for being here today to advise congress on matters of copyright law. I have the privilege as you know of serving as ranking member of the rules committee which has jurisdiction over the legislative branch agencies.that include the library of congress , legislative branch agency which houses the copyright office. I enjoy taking every opportunity, encourage everyone, it is the library of congress, not a library of anybody.
▶ 1:04:52Sen. Padilla: Part of the legislative branch and always has been, it is a library of congress. The library established in 1800, over 200 years ago, to provide books to congress. In 1870, congress centralized copyright administration in the library. This partnership made sense. The nation's library continued to grow as registered works were required to be added to the library's collection.
▶ 1:05:22Sen. Padilla: Since then, the library has continued to help members of congress perform their constitutional duties. The library and other entities within it provide invaluable, nonpartisan advice and insight to members that is critical to our work. For instance, the library houses the congressional research service which is a primary research entity for congress.
▶ 1:05:49Sen. Padilla: The register of copyrights is also required by statute to share her expertise in copyright law and policy with congress. As register poll her mother is doing here today. And as register perlmutter highlights in her testimony, the copyright office has played an important role in informing congress of passage of major copyright reforms including the copyright act of 1976 and the more recent case to copyright
▶ 1:06:20Sen. Padilla: Alternative in small claims enforcement act and music modernization act. The library has a constitutional duty to safeguard these legislative communications including every crs request that are protected by the speech or debate clause. Let me repeat, it has a constitutional duty to protect legislative branch material. As a result, the copyright office's communications with congress are similarly protected.
▶ 1:06:52Sen. Padilla: I know senator hirono earlier in the hearing brought up the fact that about a year ago, president trump tried to illegally take over the library after terminating the librarian. Then he went after the copyright office. President trump actually tried to install todd blanche as the librarian of congress. That paragraph failed, but it's a clear assault on the legislative branch nonetheless.
▶ 1:07:23Sen. Padilla: Thankfully, the move was not just resisted but strongly opposed by bipartisan congressional leadership. Now congress must continue to stand up for article one of the constitution. We must protect the legislative branch from further takeover attempts by the white house. After this attempt a power grab, it is now clear that congress alone should appoint the heads of legislative branch agencies. This isn't a novel proposition.
▶ 1:07:51Sen. Padilla: Congress already did this for the architect of the capitol in 2023. As you consider legislation to change these appointments, we must be careful to ensure the copyright office remains in the legislative branch to protect its independence and ensure it can continue to advise congress on copyright issues and protected from political interference from the executive branch.
▶ 1:08:16Sen. Padilla: The primary questions I have for today's hearing, I have asked the members previously, so I yield back the balance of my time.
▶ 1:08:21Sen. Tillis: Thank you, senator padilla. Register perlmutter, I believe senator hirono mentioned sony v. Cox. There are hundreds of lawsuits related to ai systems. In the past, you have all worked hand in glove with the doj, filed amicus briefs on other matters.
▶ 1:08:46Sen. Tillis: What is the go forward strategy here working with doj on this new set of laws that is beginning to work its way through the courts?
▶ 1:08:53Ms. Perlmutter: We do consult with doj on copyright matters regularly along with other agencies that have particular expertise or interests in the topic such as the patent and trademark office. The consultations include whether to get involved, whether to file an amicus brief come at what stage in the proceeding, and then what position the government will take on the issues.
▶ 1:09:16Ms. Perlmutter: At the end of the day, however, it is up to the department of justice and solicitor general to make the ultimate call after those consultations.
▶ 1:09:26Sen. Tillis: It would be impossible to consider all the variables that come up in a court case. The specific use case before the courts, I understand that. Back to the point that senator padilla may, maybe a different take, but it is kind of our job to create laws that instruct the court on future cases.
▶ 1:09:55Sen. Tillis: Just to sit back and have congress say, hold my beer, doesn't make a lot of sense to me. How do you strike that balance, so we are giving some point of reference between having two adversarial positions in the court decide something that maybe congress should weigh into? Had to restrict that balance, have you given that much thought?
▶ 1:10:16Ms. Perlmutter: Very good question. One element of the decision is at the level are the decision being made in the court. Often when congress steps in, it is after the supreme court has said something. That has been true in the patent eligibility context, not that that is my field. It is a little bit more difficult in the fair use context.
▶ 1:10:40Ms. Perlmutter: For example, congress did amend section 10 seven to respond to an appellate court level decision about unpublished letters of jd salinger actually. It added a sentence to section 107 which otherwise is very straightforward as a codification of a judicial doctrine. I think that single sentence ended up being not necessary and not that much relied on, so it is always difficult to figure out what the right time is and what the right need is.
▶ 1:11:12Ms. Perlmutter: I do think, for example, the cox v. Sony case left a bit of a hole in the law where they used to be the possibility to contribute to infringement, so that hole in the law is something to be addressed. Where as the fair use doctrine still seems to be adequately dealing with some of the issues involved in the ai training.
▶ 1:11:34Ms. Perlmutter: Unless and until it becomes clear that that is not the case, it seems potentially premature, especially given the difficulty of crafting language that would work in section 107.
▶ 1:11:46Sen. Tillis: I think as we move forward, I have two her 36 more days in this job. Not counting the days, mindful of the project budget. As we move forward on the subject, if you come up with other ideas as you see this flow of cases coming through where you feel like congress should play a role, we would really like to get that feedback as quickly as possible. We still have time in the project budget to get it done in this congress.
▶ 1:12:13Sen. Tillis: When you are going through the fee discussion -- members, I am kind of defect going into another round, so if you want to ask questions. I will not go too long. When was the last time that you adjusted fees?
▶ 1:12:25Ms. Perlmutter: Six years ago, 2020.
▶ 1:12:28Sen. Tillis: You and I did discuss in my office where you are headed with fees. Have you looked back and done a simple sort of assessment, that if we had tied fees to some generally accepted inflationary measure, how much of the incremental fees would have already been addressed without you having to go through this effort?
▶ 1:12:53Ms. Perlmutter: I don't think we have done the exercise, but I believe it would help.
▶ 1:12:57Sen. Tillis: I think it will be helpful. What you will find, as much as you are having to work for, any time you are changing fees, there will be people concerned with it. I told you in my office, I always feel like these should be exactly what it cost to process. You are a unique organization, so maybe I can accept that maybe we should help at some level in terms of congressional appropriations.
▶ 1:13:23Sen. Tillis: I think it would be helpful to do that, to see how much of the gap between what the fee structure is and what would have been addressed, prevent you from going to work. It's a lot of work. People need to understand the work of trying to figure out the new fees have a cost to themselves.
▶ 1:13:42Sen. Tillis: So if we came up with a formula that more or less addressed most of the base cost, barring some new sort of effort that is required to process a copyright request, it would be a better way to run government. It would be helpful to get that. Not urgent but helpful, instructive, going forward. The other question, a weird question, I don't expect an answer to it, but this is stuff that people will be talking about long after I'm gone from here.
▶ 1:14:16Sen. Tillis: I use ai every day. Sometimes I ask it really dumb questions, other times I asked really thoughtful, well thought out, detailed questions that I didn't have to load into one of the models I use for a response.
▶ 1:14:33Sen. Tillis: One of the things that I think will be interesting is, when you look at the creator who developed a work that instructed an ai engine to produce a work product, how do you deal with that? I had not seen anything in reading. I haven't seen anything in reading, but have we seen people say the question itself is worthy of copyright?
▶ 1:15:04Ms. Perlmutter: The question itself could be worthy of copyright if it is expressive and creative enough. You will have to send me yours and I will take a look.
▶ 1:15:12Chair Tillis: It's fascinating, people need to get their head around just how complicated this is and how many directions it could come from. And it is one of the reasons congress has a role to play. We just can't outsource some of this stuff to a judiciary that may or may not produce an outcome that can be built upon. Thank you. Members have follow-up questions ? Senator schiff.
▶ 1:15:35Sen. Schiff: Thank you, chairman. I wonder come back to the claim -- I want to come back to the copyright claims board. Three copyright claims officers -- what is the demand like? One of the proposals is to allow a single officer to adjudicate these claims. Tell us about that. But if we were going to meet either the demand today or the projected demand, should we empower a lot more officers to handle these cases?
▶ 1:16:05Ms. Perlmutter: So far we don't see the need. So for the growth has been steady, but not overwhelming. If we make some of the improvements we are talking about, we think so far we can handle it. If we get to a point where we can't come we would come back to you.
▶ 1:16:21Ms. Perlmutter: I think the logic behind empowering a single officer to handle a case is that, first of all, it's done that way in other small claims courts, and of course in the federal courts. There could be reconsideration by the full panel. But that's another way to speed up the process, because of the delay -- some of the time it takes to come out with a determination is the three officers having to consult with each other and agree on how they want to handle the matter.
▶ 1:16:51Sen. Schiff: I guess the average period of time is still fairly lengthy, 500 or more days, short compared to federal court. But I know when the proposal involves waving the mandatory 60-day opt out peirod, can weeks plane with the trade-off is there --can you explain what the trade-off is there?
▶ 1:17:18Ms. Perlmutter: The idea would be, yes, people have 60 days to opt out, but if they decided they do want to participate, in more than half do seem to want to participate, it shouldn't be required to keep waiting. They could affirmatively say I'm happy to participate and the opt-out period could end. We could save six weeks or so that way.
▶ 1:17:41Sen. Schiff: Any other reforms want to elaborate on now?
▶ 1:17:44Ms. Perlmutter: Having -- right now there is three opportunities to amend a claim before a final determination, whether it is compliant or not, can proceed. It would be helpful to allow the copyright claims officers to make a decision at an earlier stage that a claim is -- for example, they get claims for patent infringement. They get claims for against foreign citizens that they don't have jurisdiction to entertain.
▶ 1:18:14Ms. Perlmutter: Things like that. We could maybe shorten the compliance review period.
▶ 1:18:20Sen. Schiff: I don't want to take issue by comments --I do want to take issue with comments by some of my colleagues. First of all, california is clearly the leader in film. [laughter] it is not even arguable. And I would say we are the leader in music, which -- oh, yeah. Oh, yeah. [laughter] by number of artists, by volume, by greatness and creativity. It's all the golden state. Yeah, there's a lot of jealousy, I get that.
▶ 1:18:50Sen. Schiff: But the good news is we are willing to share. We are willing to share. I yield back, Mr. chairman.
▶ 1:18:57Chair Tillis: Thank you, senator schiff. Senator coons, anything else? Ms. perlmutter, it is a pleasure having you today. We thank you for your testimony and we know a lot of preparation goes into it. We will keep the record open for one week for any additional material you would want to submit. We may have some questions for the record. But for now, the hearing is adjourned. Thank you. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]