Today, Congressman Jerrold Nadler (NY-10), the Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet, delivered an opening statement at a field hearing in New York City as part of the comprehensive review of the Copyright Act and the first sale doctrine.

"New York City is home to thousands of creators – songwriters, performers, musicians, playwrights, journalists, authors, and inventors.  It is the heart of the publishing industry.  Some of the nation’s leading technology companies call New York City their home – or at least one of their homes.  Several of the country’s leading colleges and universities are located here –including my alma mater Columbia – and we have one of the finest public libraries in the nation,” said Rep. Nadler. "Given the wealth of talent, experience, and expertise in this city, it is fitting that Chairman Goodlatte chose to hold one of the Subcommittee’s comprehensive Copyright Act review hearings here."

The following is the full text of Congressman Nadler’s opening statement (as prepared for delivery):

             “Thank you, Mr. Chairman, and welcome to New York.  I also want to welcome my other colleagues – Representative Deutch from Florida, my colleague from New York City, Representative Jeffries, Representative Chaffetz from Utah and Representative Holding from North Carolina.  We appreciate you traveling to be with us in the greatest city in the world. 

             “I’d also like to welcome and thank our witnesses and everyone else with us today.  Many of you also traveled to be here.  Thank you for doing so, and welcome.     

             “New York City is home to thousands of creators – songwriters, performers, musicians, playwrights, journalists, authors, and inventors.  It is the heart of the publishing industry.  Some of the nation’s leading technology companies call New York City their home – or at least one of their homes.  Several of the country’s leading colleges and universities are located here –including my alma mater Columbia – and we have one of the finest public libraries in the nation.  Given the wealth of talent, experience, and expertise in this city, it is fitting that Chairman Goodlatte chose to hold one of the Subcommittee’s comprehensive Copyright Act review hearings here. 

            “Today we explore the first sale doctrine, codified in Section 109 of the Copyright Act.  First sale allows the owner of a particular copy of a copyrighted work to resell or otherwise dispose of that copy without the rights holder’s consent.  Once a copyright owner sells or transfers ownership of a particular copy of a work, the exclusive right to distribute that particular copy is exhausted, and the person who now owns that copy is free to gift, resell, or otherwise dispose of it. 

            “Because of first sale, I can give a book that I’ve purchased and read to a friend, donate it to my public library, or sell it to a second-hand bookstore.  Our public libraries rely heavily on first sale to lend books, thus providing access to thousands of creative works that help inspire life-long learning and greater engagement in this nation’s rich cultural and historical heritage.   

            “First sale had its origins in a world of physical – not digital – goods.  The Supreme Court first announced the doctrine in the 1908 case of Bobs-Merrill Co. v. Straus, and Congress first codified it in Copyright Act of 1909.  It is a gross understatement to say that much has changed since that time, more than a century ago. 

            “Innovative technologies have made it possible to create, access, and share content through digital platforms.  At the same time, the marketplace for physical goods has become increasingly international, raising questions about whether the law currently strikes the proper balance between first sale and the right to control importation of one’s creative works.  Today’s hearing gives us an opportunity to explore these critical issues.    

            “More than a decade ago, the Copyright Office reported to Congress on the first sale doctrine in the digital age, concluding in its 2001 report that the first sale doctrine in Section 109 does not extend to digital works.  Because first sale exhausts the right of distribution but not the right of reproduction and because the transmission of digital works resulted in the creation of a new digital copy, the Copyright Office concluded that first sale was not a defense to infringement for digital transmissions.  More recently, in August of last year, the Department of Commerce’s Internet Policy Task Force reached the same conclusion.  The Internet Policy Task Force also recently announced that it will conduct roundtables in Nashville, Tennessee; Cambridge, Massachusetts; Los Angeles and Berkeley, CA to discuss numerous topics including the relevance and scope of the first sale doctrine in the digital environment.  These roundtables will provide an opportunity to continue to hear from relevant stakeholders about this issue

             “After concluding that Section 109 does not protect digital transmissions, the Copyright Office recommended against expanding Section 109 to do so. It noted that because a digital transmission results in a perfect copy, the market for original goods would be harmed significantly.  It also raised concerns that digital distribution would introduce vast numbers of pirated copies into the marketplace.  At that time, the Copyright Office also felt that the likely harm of expanding Section 109 outweighed any need for doing so.

             “I am interested in hearing from our witnesses whether this remains true today.  Is there any greater need for expansion now?  And, if so, how would any changes impact copyright holders, consumers, and the existing marketplace for digital works?

             “In addition to exploring first sale in the digital environment, I am also interested in hearing whether the Supreme Court’s recent decision in Kirtsaeng (‘curt sang’) v. John Wiley & Sons appropriately interpreted and applied the first sale doctrine to imported goods. In that case, books manufactured and sold abroad were imported, without the copyright holders’ consent, and resold in the United States.  At issue was the interplay between the first sale doctrine and the prohibition on importation without consent of the copyright owner in Section 602 of the Copyright Act.

             “The Court ruled that the first sale doctrine applies to copies of works lawfully made abroad and that importation and resale of such goods is therefore permissible without the copyright owners’ consent.  In so ruling, the Court noted that booksellers, libraries, museums, and second-hand stores rely on first sale to protect them when lending or reselling copyrighted works made outside the United States.  At the same time, the Court acknowledged that its ruling would make it impossible for copyright holders to produce and price works differently for domestic and foreign markets.  Several amici warned that this would discourage U.S. copyright owners from competing in foreign markets at all because goods sold abroad could be imported to compete in the domestic market.  They cautioned that this would harm American workers and businesses and reduce access to works, both here and abroad.

             “While it may be too soon to know the full impact of the Kirtsaeng decision, I am interested in hearing from the witnesses on how, if at all, publishers and other rights holders have modified their business practices to accommodate the ruling, the impact on consumers as well as American workers and companies, and whether any response from Congress is warranted.

              “These are just a few of the many issues that we will begin grappling with today as part of the Subcommittee’s ongoing comprehensive review of the Copyright Act.  Once again, we are fortunate to have a broad range of witnesses to provide a diversity of perspectives and wide range of experience, and I look forward to hearing from them.

               “With that, I yield back the balance of my time.”

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