Congressman Howard L. Berman

Statement of Rep. Howard L. Berman

For the House Judiciary Subcommittee on Courts, the Internet, and
Intellectual Property Hearing on
"Piracy of Intellectual Property on Peer-to-Peer Networks"

September 26, 2002

Mr. Chairman, before I give my statement, I want to take a moment to reflect on your tenure as Chairman. For those of you who are unaware of it, Chairman Coble's tenure as Chairman of this Subcommittee ends with the 107th Congress.
I have tremendously enjoyed and deeply valued our working and personal relationship as Chairman and Ranking Member. I have watched with great admiration as you steered us through innumerable legislative and political challenges, and did so with characteristic charm, willpower, and an always easygoing demeanor.
Your record of legislative accomplishments as Chairman is great. The Digital Millennium Copyright Act. The American Inventors Protection Act. The Sonny Bono Copyright Term Extension Act. The No Electronic Theft Act. The Satellite Home Viewer Improvement Act. The Anti-Cybersquatting Consumer Protection Act. The Work Made for Hire and Copyright Correction Act. The Madrid Protocol Implementation Act - not once, not twice, but at least three times. The Copyright Theft Deterrence legislation. And innumerable, unheralded bills - Federal Court Improvement Acts, Patent Technical Corrections, and the like - that you assiduously moved through the legislative process in fulfillment of your more mundane duties as Chairman.
The American public owes you a debt of thanks for your dedicated service over the past six years. I too owe you a personal debt of thanks for including me as a partner in the leadership of this Subcommittee.
Mr. Chairman, thank you for calling this oversight hearing on P2P piracy. We have both been subjected to some truly outrageous press attacks for introducing the P2P Piracy Prevention Act. I welcome this opportunity to set the record straight.
When we first introduced the P2P piracy bill, I fully expected to hear concerns about its drafting, potential breadth, and unintended consequences. In fact, the legislation was introduced at the end of the 107th Congress with the expressed intent of perfecting it before reintroduction in the 108th Congress.
I never expected that anyone would - with a straight face at least - challenge the basic premise of the bill: namely, that copyright owners should be able to use reasonable, limited self-help measures to thwart rampant, notorious P2P piracy.
Incredibly, some folks actually challenge that premise. Heads of respectable consumer electronics trade associations state that it isn't illegal for you to make unauthorized distributions of copyrighted works to 100 million of your fellow P2P users. P2P software companies claim that, even if illegal, P2P piracy causes no harm. Representatives of the computer industry say that only record companies suffer harm, and they deserve it anyway for charging too much. Other piracy profiteers claim that even reasonable self-help measures by copyright owners may have unknown security or privacy consequences. And still others attempt to thwart any solution to P2P piracy, then throw their hands up and say it is an insoluble problem.
Let's start with a basic fact. Unauthorized distribution or downloading of copyrighted works on public P2P networks is illegal. To paraphrase the 9th Circuit in the Napster case: public P2P users "infringe at least two of the copyright holders' exclusive rights: the rights of reproduction and distribution. P2P users who upload file names to the search index for others to copy violate a copyright holder's distribution rights. P2P users who download files containing copyrighted music violate a copyright holder's reproduction rights." Any attempt to say otherwise is a bald-faced attempt to rewrite well-settled law.
Let's move on to another objectively indisputable fact. Massive theft of copyrighted works is the predominant use for public P2P networks today. By the most recent numbers, approximately 3 billion files are now being downloaded monthly through the most popular P2P networks. The vast majority of these downloaded files - virtually all of them - contain copies of copyrighted works for which the creators and copyright owners receive no compensation.
Now another fact - the one the piracy profiteers most try to obscure. P2P piracy doesn't just affect the record companies and movie studios that piracy profiteers paint as bogeymen. P2P piracy destroys the livelihoods of everyday people - copyright owners of all stripes in all walks of life.
What do piracy profiteers have to say to Linn Skinner, a Los Angeles needlework designer whose livelihood has been destroyed by Internet piracy? What do the piracy profiteers have to say about Steve Boone, a Charlotte small businessman who has watched P2P piracy decimate his karaoke tape company? What do they say in response to Mike Wood, a struggling Canadian recording artist who believes P2P piracy will derail his recording career before it gets off the ground? What do piracy profiteers say to the vast majority of songwriters who make less than $20,000 per year, and have yet to make one thin dime from the massive P2P piracy of their works?
Let me focus on songwriters in particular for a moment, because we can actually quantify their P2P piracy losses.
By statute, a songwriter is both entitled and limited to collecting 8 cents for every "digital phonorecord delivery" of sound recordings containing her songs. Each illegal P2P download of a song robs the songwriter of that 8 cents.
Those eight cents may not seem like much, but multiply 8 cents by the reported 1.1 billion monthly downloads on KaZaA. It calculates out to $88,000,000 dollars...a month. Divide even 1/10th of that money among the 5,000 members of the Songwriters Guild of America, and you begin to see that P2P piracy robs songwriters on a massive scale.
Now another fact. If piracy profiteers were truly concerned about security and privacy threats to P2P users, they would address the security and privacy threats posed by the P2P networks themselves. A recent white paper by four computer security professors at the University of Tulsa Center for Information Security details how KaZaA, Gnutella, and other popular P2P networks expose P2P users to spyware, trojan horses, system exploits, denial of service attacks, worms, and viruses. A joint paper by HP labs and the University of Minnesota details how the vast majority of P2P users are exposing personal information, such as credit card numbers, to every other P2P user. In fact, the U.S. Courts, the House, and the Senate all block the use of public P2P networks because of the security concerns they pose.
Do the piracy profiteers talk about these real, verifiable security and privacy concerns, or otherwise do anything to ameliorate them? No. And you know why? Because it is the piracy profiteers who put the spyware on the computers of P2P users so they can surreptitiously collect their personal information and sell it to third parties. Given this reality, how can anyone give any credence to their hypothetical security concerns about copyright owner self-help?
Another fact. P2P companies could design their software to stop piracy, they just don't want to. Grokster has designed its P2P software to filter out pornography, so why not at least try to filter out copyright infringements? Napster claimed it couldn't stop piracy, but after the court ordered it to do so, it suddenly found a way to stop most, if not all, piracy on its networks.
Rather than looking for solutions to piracy, P2P companies are designing their systems to be better piracy tools. Both Morpheus and KaZaA have upgraded their software specifically to impair the ability of copyright owners to proliferate decoy files through the networks.
Based on these facts, what can an objective person conclude other than that P2P companies plan to profit from piracy, and have no intent or desire to stop it?
I look at these facts and figures, and most importantly the faces of these copyright owners, and I see a problem in desperate need of a solution. P2P piracy must be cleaned up, and cleaned up now. The question is, How?
The solution to P2P piracy is multifaceted. While my P2P Piracy bill is an important part of the solution, it isn't the whole package. Other parts of the solution include effective digital rights management technologies, better online access to legal copyrighted works, prosecution of infringers, and increased respect for property rights in the mind of the public.
I am committed to implementing all parts of this solution. However, the part that most merits a legislative remedy is enabling copyright owners to use reasonable, limited self-help measures to thwart P2P piracy. Thus, this is the piece I have chosen to focus on through legislation.
The Peer to Peer Piracy Prevention Act is quite simple in concept. It says that copyright owners should not be liable for thwarting the piracy of their works on P2P networks IF they can do so without causing harm.
You might reasonably wonder why we need to pass legislation giving property owners the right to protect their property against theft. After all, if someone steals your bike and brazenly stores it on their front lawn, you are allowed to trespass on that lawn to take your bike back. The U.S. Supreme Court has held that "[A]n owner of property, who seeks to take it from one who is unlawfully in possession, has long been recognized to have greater leeway than he would have but for his right to possession. The claim of ownership will even justify a trespass and warrant steps otherwise unlawful." In light of this, why can't a copyright owner use self-help to thwart P2P piracy of her works?
It's a reasonable question. The answer is that a variety of state and federal statutes can be read to create liability for copyright owners engaging in such harmless self-help. In fact, to extend the bike analogy further, these statutes can be read to prohibit copyright owners from even standing on the electronic equivalent of the sidewalk and preventing others from passing their stolen property back and forth.
This is not fair. Copyright owners should have the same right as other property owners to stop the notorious, brazen, and open theft of their property. The P2P Piracy bill simply ensures that the law will no longer discriminate against copyright owners by creating a safe harbor from liability in appropriate circumstances.
Obviously, it is critical that a liability safe harbor be appropriately limited. In drafting the P2P Piracy bill, I tried to ensure that only reasonable self-help technologies would be immunized, that the public would be protected from harm, and that over-reaching or abuses by copyright owners would be severely punished.
The most important limitation in the bill is the narrow breadth of the safe harbor itself. The bill says copyright owners get immunity from liability under any theory, but ONLY for impairing the "unauthorized distribution, display, performance, or reproduction" of their own works on public P2P networks.
If a copyright owner can find a way to ONLY impair the piracy of her copyrighted work on a P2P network, she won't have liability under any theory for doing that. However, if the copyright owner's impairing activity has some other effect, like knocking a corporate network offline, the copyright owner remains liable under whatever previous theory was available.
Some, particularly the piracy profiteers, claim that the bill is not limited in this way. Their claim appears to be that the bill gives a copyright owner immunity for anything she does, as long as it has the effect of stopping piracy on a P2P network. By their logic, the bill allows a copyright owner to burn down a P2P pirate's house if the arson stops the pirate's illegal file trading. Clearly, the bill says nothing of the sort, and no judge or disinterested party could read it that way.
Besides the limitations inherent in the safe harbor itself, the P2P piracy bill contains a variety of other important limitations.
The bill specifically states that the safe harbor does not allow a copyright owner to delete or alter ANY file or data on the computer of a file trader. Thus, a copyright owner can't send a virus to a P2P pirate, it can't remove any files on the pirate's computer, and it can't even remove files that include the pirated works.
The safe harbor does not protect a copyright owner whose anti-piracy actions impair the availability of other files or data within the P2P network, except in certain necessary circumstances. Some folks have raised concerns about this provision, and I am thinking about alternative language that could resolve their concerns.
The bill denies protection to a copyright owner if her anti-piracy action causes any economic loss to any person other than the P2P pirate.
The safe harbor is also lost if the anti-piracy action causes more than de minimis loss to the property of the P2P pirate.
Finally, the safe harbor is lost if the copyright owner fails to notify the Attorney General of the anti-piracy technologies she plans to use, or if she fails to identify herself to an inquiring file-trader.
These limitations appropriately restrict the scope of the safe harbor. However, these limitations would be meaningless if copyright owners did not have adequate incentive to operate within these limitations. The P2P piracy bill provides such incentives by subjecting transgressing copyright owners to MORE liability than they have under current law.
This is a critical point: If a copyright owner falls outside the safe harbor - for instance, by impairing distribution of unprotected works through a P2P system - the P2P bill subjects the copyright owner to MORE liability than they have under current law. An aggrieved party is able to sue the copyright owner for any remedy available under current law. For instance, the aggrieved party might be able to bring a civil action under the Computer Fraud and Abuse Act or a state denial of service statute. Further, an aggrieved party would now be able to sue the copyright owner with a NEW civil remedy provided by the P2P piracy bill. Finally, the bill gives the U.S. Attorney General a new power to seek an injunction against the transgressing copyright owner, and thus ensures that the Attorney General can stand in the shoes of aggrieved parties.
The potential for liability under this wide variety of remedies provides copyright owners with strong incentives to only use self-help measures that clearly qualify for the safe harbor.
I think the P2P piracy bill provides a strong starting point for legislation enabling copyright owners to thwart P2P piracy through reasonable, limited self-help measures. However, I don't claim to have drafted a perfect bill, and I welcome suggestions for improvements.
I welcome such suggestions, but only so long as they are consistent with the goal of thwarting P2P piracy. I will listen carefully to those who wish to solve the P2P piracy problem, but not to those who wish to profit from it.
Thank you, Mr. Chairman.