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Thank you all for being active in the fight to protect intellectual property. To show you where my priorities are - the full name of the Subcommittee I chair is Courts, the Internet, and Intellectual Property Subcommittee, but I usually refer to it as the IP Subcommittee. As our nation continues to shift from an industrial economy to an information-based economy, our economic assets are increasingly based in intellectual property. We lead the world in the creation and export of intellectual property and IP-related products. And, thankfully, our courts understand the relationship between intellectual property and a growing economy. In a 1992 case that says it all a U.S. District Court observed, "the future of the nation depends in no small part on the efficiency of industry, and the efficiency of industry depends in no small part on the protection of intellectual property." There is a good reason why those who wrote the Constitution embraced the concept of intellectual property protection. The Founders realized that if creators cannot gain from their creations, they won’t bother to create. Intellectual property laws allow people to hold a particular bundle of rights pertaining to their creativity, innovation, and in some cases, brilliance, in a similar way that they own physical property. Through these rights, the IP owner is rewarded in the marketplace, and this encourages further creativity, innovation and brilliance. That benefits us all. Intellectual property is essential to a thriving market. And a thriving market encourages the creation of intellectual property. One cannot function without the other. In looking for ways to protect both intellectual property and free exchange in the marketplace, there are a number of issues Congress must consider that affect every organization represented here today: piracy, the broadcast flag, patent rights, and a standard of "fair use" that protects consumer rights. One thing I hope all of us can agree on is that there is no way to completely protect an intellectual property right. Look at what is happening on our university campuses. University students widely and illegally download music, sometimes on publicly supported computers. When encouraged to exercise disciplinary measures, too many university administrators react with relative indifference: kids will be kids, they say. Yet these same university administrators pursue research and development projects as champions of strong intellectual property laws. It’s a curious inconsistency. To some, there appears to be a major difference between intellectual property rights and physical property rights. It’s a dynamic that applies to a major, high tech firm located in the state of Washington that produces a product called Windows. It’s certainly an understatement to say this company is a holder of intellectual property rights. That’s like saying Babe Ruth hit a baseball. Yet, employees of this same company are aligned with anti-private property rights movements in the Northwest, such as those fighting landowners over forest use and endangered species. To me, both intellectual property rights and private property rights should be protected. No discussion of intellectual property can be complete without addressing piracy. Starting with the invention of Napster, much has been in the media about the effect of piracy on intellectual property. However, many people do not realize the impact piracy has on our economy. The worldwide losses suffered by American copyright-based industries due to piracy are enormous: $9 billion in 56 countries. Most people agree that stealing is wrong. We can all agree that it is wrong to walk into a record store, put a CD in your pocket, and walk out. It’s just as wrong to illegally download a song from the Internet. But, many people do not recognize that these actions are one and the same. We’ve had success recently against criminal pirates. The FBI and Justice Department took prompt and aggressive action in the ‘Hulk’ online piracy case. The individual responsible for this felony pled guilty to making an unauthorized digital copy of the film and uploading it on to the Internet in advance of it’s release in theaters, an action that may have cost the producers $20 million. While ‘The Hulk’ is a comic book hero known to millions, copyright pirates practice their illegal trade in relative anonymity. The FBI brought the face of copyright piracy public, and for that they are to be commended. As I mentioned, the distinction between intellectual and physical property should not be a stark one. Property is property, whether it’s your backyard or your Blackberry. But within the context of intellectual property there remains a critical question: What constitutes an intellectual property crime? Right now it is difficult to determine exactly what intellectual property crimes are and how often they occur. The data reported to Congress by the DOJ on intellectual property crimes is confusing and often inaccurately reflects the actual crime rates. This is caused mostly by the fact that there is currently no separate reporting code for DOJ to use to track intellectual property cases. The Federal government brings cases, and reports them, by particular statute, which means that intellectual property cases charged under one Federal law are counted separately from those charged under another. For instance, when U.S. Attorneys report conspiracies to counterfeit trademarks, they report these crimes only as conspiracy crimes rather than as conspiracy to commit trademark counterfeiting, an intellectual property crime. This is because under the current reporting requirements there is no way to break down the crimes by type. As a result, intellectual property prosecutions are undercounted. This presents a significant problem because neither law enforcement officials nor lawmakers can have an accurate view of the extent of intellectual property crimes. Current law should be reformed so we have a specific and accurate reporting code for IP cases. Unless we can get a clear idea of the problem facing us, we will never be able to address it. I have begun discussions with the Department of Justice to develop legislation to eliminate the confusing and inaccurate reporting requirements that currently exist and replace them with easy-to-understand reporting. The systematic infringement of intellectual property rights is occurring not only in the United States, but globally. When combined with an official IP crime reporting process in need of reform, this unacceptable situation goes from bad to worse. Fortunately, there is action we can take unilaterally. My office has begun compiling statistics on intellectual property crime from the private sector. Next week, I hope to announce an independent "Intellectual Property Crime Index." The Index will track IP crimes and analyze statistical trends. This index will be updated on a quarterly basis. Our analysis will break down the numbers so we know precisely what type of IP crimes are occurring, from copyright law to trademark violations to the theft of trade secrets. We will also share our information with the DOJ. While some of these statistics will be familiar to us, they will also be a useful tool for lawmakers as we move forward to increase the enforcement and identification of intellectual property crimes. I understand the gravity of intellectual property crimes, which are too often dismissed by those who believe they have a right to work created and owned by others. So please stay tuned to our efforts in developing this Index. It will focus attention on IP crime in a new way. Intellectual property is a result of American creativity. When properly commercialized, these works lead to jobs, profits, and a more enjoyable quality of life. We are in the midst of a transition to digital television. As early as 2006, all broadcasts must be aired in digital format. This presents opportunities for American consumers, businesses, and copyright owners. As with many technological advances, the DTV transition has been frustrated by both technological and legal hurdles. Again, we are confronted with piracy. There is a great danger of massive piracy of unprotected broadcasts once the transition to DTV is complete. Pirates can easily copy and redistribute millions of digital files in a matter of seconds. In the absence of protection against unauthorized redistribution, it is unlikely that content owners will make high-value programming available to broadcasters. The broadcast flag is one solution strongly supported by copyright owners and broadcasters. It is a sequence of digital bits embedded in a television program that signals that the program must be protected from unauthorized redistribution. Last year, the Federal Communications Commission adopted a notice of proposed rulemaking on digital broadcast copy protection. My Subcommittee has great interest in the FCC’s action because the agency might issue rules that impact the Copyright Act and therefore involve my Subcommittee’s jurisdiction. I know controversy continues over what the broadcast flag will and will not do. And whether it will have an adverse affect on the ability of consumers to make "fair use" of copyrighted broadcast television. We know fair use is a defense that may limit any of the copyright owner’s exclusive rights. The Copyright Act states that fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research does not constitute infringement. Fair use is determined on a case-by-case basis. It is important that the transition to DTV and any implementation of rules requiring the use of the broadcast flag technology does not have an adverse affect on how consumers may legitimately use lawfully acquired entertainment products. Since I am addressing The Media Institute I would be remiss if I didn’t speak about . . . the media. I do have some concerns about the media’s professional responsibility and its commitment to objectivity. There are a few examples that illustrate my concern. And please know that this will be as brief and painless as possible! I know it is easy to criticize the media. Anyone can do it. It seems that everyone does. But please consider this question: if one of your employees consistently provided you with only part of the information you needed, would you be satisfied with that employee’s performance? In narrating an interview with Fidel Castro last year, ABC’s Barbara Walters said: "For Castro, freedom starts with education. And if literacy alone were the yardstick, Cuba would rank as one of the freest nations on Earth." Appearing on Inside Washington a Newsweek Assistant Managing Editor referred to German surveillance of Al-Qaeda and said: "If we’d really been watching and paying attention we could have headed off 9-11. But the German prosecutorial system was pretty laid back and didn’t want to be John Ashcroft, you know, they didn’t want to be the SS, they had that worry there, no Gestapos. And so it was a great place for terrorists to operate." And last month, in a discussion of President Bush’s campaign fundraising, a CNN anchor said: "Is it inherently a shakedown? I mean, it’s a kind of subtle shakedown, and in some cases, by the way, not so subtle." These comments were offered not under the label of opinions, but as straight news stories. Americans who only receive their news from these media outlets could reasonably conclude that Cuba is a virtual democracy, John Ashcroft is a Nazi, and President Bush’s fundraisers are nothing more than extortion rackets. How wrong, and how regrettable. Is it any wonder that a Pew survey released this week showed that most Americans - 53 percent - believe that news organizations are politically biased? There are also trends to consider. One disturbing trend on the rise is the gray area between entertainment and serious journalism. It’s been called "infotainment." Are "Good Morning America" and the "Today Show" programs where Americans can expect substantive news reports? Or are they harmless morning fare dominated by puff pieces? I can’t say I know the answer. Let me end on a positive note today because there are reporters, anchors and editors who serve the public well. One, for example, is Tim Russert. His questions are tough, yet fair. In a recent Washington Post profile he was asked about his technique of putting a guest’s prior comment on screen before discussing it. He replied, "The reason I developed the technique is that it became so tiresome having these trivial discussions where the guest says, 'I didn't say that' or 'You took it out of context.' I said, let's end all that and put it on the screen." I could not agree more with Mr. Russert’s technique: Put it on the screen. And, for that matter, put it in the paper. Just be sure both sides are represented fairly and accurately. I’d like to thank The Media Institute for inviting me to this luncheon. Your mission to educate elected officials, opinion leaders and the public about communications policy and the First Amendment is praiseworthy. Thank you for all you do.
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