Senate Committee Holds Hearing on Napster and Gnutella

(July 12, 2000) The Senate Judiciary Committee held a hearing on the technologies involved in the duplication of digital music files on the Internet, the application of intellectual property laws, and the consequences for consumers.

The event was unlike most hearings on intellectual property issues. It was held in the huge Hart Building hearing room, not the Senate Judiciary Committee's much smaller room. The room was packed, but not with the usual lobbyists and trade group representatives. A throng of teenagers and twenty-somethings came early and lined up outside the room. Also, while some intellectual property related hearings attract only a handful of Capitol Hill print reporters, this event brought out over one hundred members of the press.

The Committee is not considering any legislation on this topic. Nor is it conducting oversight of any government agency. It simply brought together interested parties to express their wildly divergent views.

While Congress is not currently considering legislation to address these copyright issues, there are numerous lawsuits against Napster and MP3.com in the courts which may have the effect of clarifying the application of copyright laws to music duplication in cyberspace.

Sen. Orrin Hatch (R-UT)

Sen. Orrin Hatch (R-UT), the Chairman of the Committee, presided. The ranking minority member of the Committee, Sen. Pat Leahy (D-VT), was present for most of the hearing also. The two Senators, who are primarily responsible for steering bills to protect intellectual property through the Senate, did not condemn the practices of Napster, Gnutella, or their users.

Instead, they maintained a jovial attitude, and sought to entertain their audience with humor, anecdotes, and music. The hearing included demonstrations of how the peer to peer music duplication systems work. The hearing also included the playing of songs by the rockers Creed, Stevie Ray Vaughn, and the Steve Miller Band.

The two Senators sought to portray themselves as hip aficionados of rock music. Sen. Leahy recounted his experiences at Grateful Dead concerts. Sen. Hatch said he listened to, and appreciated, the music of Metallica. Sen. Hatch also discussed his own religious music recordings, and quipped that he wished it were duplicated by Napster's users.

Sen. Charles Schumer (D-NY) attended part of the hearing, and offered some comments. He said "you can download all of my speeches for free." Sen. Leahy then interjected, "There goes the Senate server."

Only Sen. Dianne Feinstein (D-CA) was not amused. She grilled Hank Barry of Napster about the harm he is doing. She stated that "Napster has found a methodology that entirely defeats the purpose of copyright protection." She continued that this sort of technology could damage not only music the music industry, but also book publishing and movies. "You are setting up a technique that could be applied broadly across any kind of spoken or written intellectual property."

Sen. Herb Kohl (D-WI) also briefly attended, but did not speak or ask questions. He did, however, introduce a statement in which he said that while Napster says "that this is music 'sharing,' it certainly looks to me more like music stealing." He concluded that the music industry "should not be forced to accept the wholesale theft of intellectual property by Internet pirates.

Notably, while the press and public turned out for the hearing, most of the members of the Committee did not.

The hearing was also full of ironies.

The heavy metal rocker Lars Ulrich, drummer for the band Metallica, and an icon of sex, drugs and rock and roll, lectured the conservative Republican Senator Hatch on the merits of capitalism and private property rights.

Hank Barry, the CEO of Napster, who has secured $15 Million in venture capital funding, belittled intellectual property rights, repeatedly stated that he had no revenues, and repeatedly ducked questions about what his future revenue sources might be.

Sen. Hatch began the hearing by reading a long opening statement. He stated that "I take it as a basic premise that our copyright laws must play a role – a strong role – in protecting creative works over the Internet. These protections, however, must be secured in a manner which is mindful of the impact related regulation can have on the free flow of ideas that a decentralized, open network like the Internet creates. We must protect the rights of the creator. But we cannot, in the name of copyright, unduly burden consumers and the promising technology the Internet presents to all of us."

He concluded that "While I do not think that copyright owners have any general duty to license their products to others, a complete lack of licensing puts in question the labels’ professed desire to be ubiquitous, and a policy of merely cross-licensing among major label-related entities might raise some competition concerns that this committee would have a duty to consider."

Then, at the end of the three hour hearing, he stated that "I think what we are hearing is that fair and reasonable licensing needs to take place."

	Sen. Pat Leahy (D-VT)

Sen. Leahy also gave an opening statement. He said that "protecting intellectual property rights today is just as important as it was when American was a fledgling nation," and "the intellectual property generated in this country is the envy of the world." He cited his work on the No Electronic Theft Act and the Digital Millennium Copyright Act.

However, he then continued. "Too often the discussion over how to protect intellectual property rights has devolved into a debate over whether such protection will stop technological innovation. That should not be the case. Protection of intellectual property provides incentives to promote scientific and artistic advancement. But as demonstrated in the current debate over new file-sharing software -- such as Napster, and new online music services, such as MP3.com – the interests of intellectual property protection and technological innovation sometimes appear to collide."

The Committee heard testimony from eight witnesses. In addition, Hillary Rosen of the Recording Industry Association of America joined the panel for the question and answer session.

The panel included four advocates of protecting intellectual property rights on the Internet: Lars Ulrich (drummer for the band Metallica), Fred Ehrlich (President of New Technology at Sony Music), Hillary Rosen (RIAA), and Gene Hoffman (CEO of emusic.com, a company which licenses music before it sells it online).

None was more adamant in his defense of intellectual property rights than the drummer Ulrich. He accused Napster of "old fashioned trafficking in stolen goods."

Gene Hoffman complained that his company, emusic.com, is a legitimate company that licenses music before it sells it online. He stated that his company cannot compete with its illegitimate competitors which give away music for free.

The committee also heard from the anti-copyright companies. Hank Barry (the CEO of Napster) and Gene Kan (a youthful software developer for Gnutella) both testified. Barry stuck to the assertion that what Napster does not constitute copyright infringement. He responded a variety of questions from Senators by stating that there is no copyright violation.

Napster asserted that he does believe in intellectual property law, but provided no examples. (Lars Ulrich pointed out that Napster asserts copyright on the contents of its web site.)

In contrast, Gene Kan took the approach that copyright law does not matter. Technology defeats and supercedes copyright law. "Encryption, locks, they are all useless," said Kan.

However, he accused Sen. Hatch of copyright infringement for his demonstration early, and playing of downloaded music by Creed. Sen. Hatch replied that it was not an infringement because "it was for government and educational purposes."

In his written statement, Kan elaborated that "Napster and Gnutella are but the first of a succession of technologies which will make it increasingly difficult to control the distribution of intellectual property. Napster was the first. It involved a central server, which has demonstrated that it can be a point at which controls can be applied. Gnutella was second. It involves no central server, eliminating the possibility of easily controlling the habits of Gnutella users by strictly legal means. Gnutella is only pseudo-anonymous. FreeNet corrects that. It, like Gnutella, is fully distributed with no central server, and it is completely anonymous. If laws are enacted against these technologies, the ensuing replacements for these technologies would only be more difficult, if not entirely unfeasible, to police. This is only the beginning."

Sen. Hatch asked witnesses if an accounting system which provided for the payment of copyright royalties for music duplicated over systems like Napster and Gnutella. Kan, and other witnesses, stated that it would be extremely difficult.

At the conclusion of the hearing Sen. Hatch asked the panel of witnesses what Congress should do, including whether it should enact legislation, require compulsory licensing, or clarify the fair use doctrine.

Supporters of intellectual property rights (including Hoffman, Ehrlich, and Rosen) stated that they opposed any new legislation. For example, the RIAA's Rosen stated that "the copyright law is adequate now," and "the market place is working." Perhaps her reference to the market place was a euphemism for the litigation process.

Of the copyright law advocates only Lars Ulrich advocated legislation.

In contrast, others on the panel advocated compulsory licensing laws. Kan added too that "clarification of fair use is definitely needed."

Sen. Hatch then concluded, "I think what we are hearing is that fair and reasonable licensing needs to take place."