court last year ruled that grain market goods can be freely purchased abroad and imported to the country. justice briars think we think it congress intended it. if not they can tell us. it's something alive now. there's an a parallel issue in the domestic front which is cloud computing. it introduces new rule of the road. it essentially eliminates the safe guards of the for sale doctrine. congress needs to look at what rules and wishes to have for the road for uncharted territory of the cloud. >> thank you, mr. chairman. >> time is expired. ms. chu from california. >> thank you, mr. chairman. as the co-chair of the creative right caucus along with chairman, i believe that making available right is ingrained in the current statute as an essential part of the copyright framework. congress repeatedly concluded that no change to the copyright law was necessary because

existing law already nablgdz making available right. the federal appellate court arrived at the same conclusion. it's also the case in various international agreement such as wipo and the wipo copyright treaty. think about the making evacuate right is an right to give creators the freedom to economic rights press themselves and more importantly to decide how and when they choose to do gribt and publicly perform their own works. so professors, what if any impact carving out a separate making available right to the copyright act. what effect would have on online theft would explicitly help -- or make the process easier for them to prove the work have been infringed upon. >> thank you, representative. i believe it would streamline

the cases instead of having a large federal case about every activity of peer-to-peer sharing, there could be an expeditious proceeding if congress adopted my decision of having small claim court spreadings. -- proceed iings. i think it would be a change streamline the procedure and quick and fair expeditious justice in them. >> as you might guess, i disagree with the professor. it used to be under napster you find one use we are the file and download it from the particular user. that sort is largely -- most file sharing today is -- the file is divided up in to separate segments and sent out in a swarm of people who are all simultaneously and downloading the work. so the issue of whether you have to prove a download is part of the case is essentially

irrelevant under the protocol. whether we have the making available right or the existing distribution right. as a practical matter, almost all of these instances where file sharing is down, what happens is the investigators identifies the person, the ip address, they go court and get the subpoena to the isp to get the consumer's information theyset send a threat letter. that's as far as it goes. it's setted or consumer can present some sort of evidence they were not the person who did the downloading. and that's it. only a relative handful a few hundred ever two any further that that. if it goes to trial they get a copy of your hard drive. that the point it's relatively trivial to prove the file sharing activity. i don't see how it would facility or help small creators. >> and professor, you'll like you have an opinion on this. >> no thank you.

[laughter] >> then -- okay. professor schultz. let me turn to a different issue, which is i would like to ask specifically about the case. of course we know the supreme court agreed to area the case to determine whether or not online streaming of broadcast substitutes an infringement of a copyright holder's exclusive right of public performance. given the economic performance of intelligent yule property in our country and the constant evolution of modern technology in which more people are viewing content over the internet is this inappropriate question for the court to determine or should congress legislate and set this area of law and how would a decision fairchl to it change the landscape of how broadcast con at the present time would be delivered to consumers in the future? thank you excellent question. i think i'll begin with the second part of it. told change the landscape of broadcast. so it's not the only court case

that the broadcast and television creators face. we have one court saying that essentially intercepting signals and aggravating them and sending them to the customers is not does not require payment of retransmission fees. we have another court saying that stripping commercials out of broadcast is perfectly okay. we have another court in cable vision essentially saying virtual on-demand sf is permissible. when it's all said and done you have to ask where the revenue come from. how the companies will get there -- get compensated for their work. so i think an intention comes out favor of it would undermine the very premise in is which the system is based that local broadcasters can be compensated

for the tremendous investment they have in broadcasting and content creators can be compensated for their work. i think this isn't appropriate topic for the court, but if the court act -- if the court interpret the copyright act in a way that undermines these fundamental policy this congress will have to act. thank you. >> i yield back. >> thank you, congresswoman. the chair recognizes the gentleman from north carolina congressman holding. >> thank you, mr. chairman. the professor, maybe this is best directed toward you, but could you take a minute or two and explain further how u.s. copyright law compares to that of other nations particularly distinguishing features.

okay. the theory of anglo american copyright law is basically instrumental. it's there for a purpose to promote the progress of science. in the continent in europe, the underlying theory is much more based on natural right there's an intreensic connection between the author and the author's creation and therefore there's a natural right to compensation just by virtue of having created regardless of the social policy that come out that have activity of copying. so that's the broadest answer to your question. the philosophical underpinnings i've outlined played through with practical implications we see in continental jurisprudence a strict recognition of moral right which is something that is alien to the u.s. way of copyright and was only put in

grudgingly when only with respect to work of visual art in 1990 and plays out in other ways as well nap is a very brief answer to an extremely interesting and broad range of question. >> maybe we can duck down on specific in the context of negotiating trade agreement ttip in particular and thinking of what type of copyright issues might be brought up in that context. and do you foresee any divergence which can cause particular arguments? let me ask representative holding. are you talking about the free trade agreement? >> right. insofar as i'm aware, the u.s. government has had great screes in reaching agreement with other countries with respect to those free trade agreements. there are 20 countries now with whom the u.s. has bilateral

relations. they do, i think every single one possibly with one two or two exceptions include making available right. and so notwithstanding the philosophical differences between different countries with different roots of copyright, there has not been disagreement insofar as i'm aware with the free trade agreement. i would like that open it to the panel if anyone would like to chime in in particular issues having to do with our copyright laws versus other nations, and problems there. yes, sir? >> the u.s. has -- as far as damages are concerned. a lot of foreign countries -- but the u.s. has broader fair use. the combination is such that the technology company which are dominant in a lot of internet

areas have been able to operate. with the u.s. is doing in the free trade agreement is sort of cherry picking the part of the u.s. law that the -- in some cases publishers like. they sort of pick really aggressive standards as far as damages to the extent require congress consider the full retail value for the basis of damages which isn't found in u.s. law is contrary to u.s. law. on the one hand, and then kind of a half hearted way look at the fair use way. you have a shift of increased liability for u.s. technology companies operating overseas. u.s. has, you know, it has strong candle damages but we have more exception in the foreign law than most foreign country which is a paradox. i think the problem from trade policy are secret. we help leak the september --

tpp negotiation the negotiation something like 40% of the world's gdp in that negotiation. we don't know what the current version is. neither do you. i don't see how you can expect a trade agreement which you can and mexico basically newscast that triple square with that much gdp on the table. not even know what is going on. not have it transparent. i think the congress is fallen down by allowing copyright policy to be made in secret in the trade agreement. >> thank you. i yield back. >> thank you. the gentleman from florida. thank you, mr. chairman. >> professor, i wanted to so. assertion you make in your written testimony. all of this to support your assertion there's no need for making available right.

you say the unauthorized copying distribution of streaming work as cro the internet are not a problem with copyright would have us believe. you talk about the purpose of copyright is not maximize revenue, but to make the work more widely available. you said here today that the measures of outspot what we should look at. no the the money made the -- better work in file sharing encouraging this. >> and you went to on 0 say even while formally illegal it provided more broader access to existing work in the preexisting market mechanism that are established. there are a few things i'm trying to wrap my arms around. first, you had said earlier that the copyright law in this area that focused on never on individual but corporations.

and i wonder if you draw the distinction at the individual download a song for a movie illegally. what happens when that individual starts creates an opportunity to share hundreds and thousand and millions of songs and movies and other that can be shared with others. goes beyond what you're prepared to accept. >> thank you for the question. it is a hard area to get our hands around. it is counter intuitive to suggest that it could lead to more work. it would be a surprise result. i was surprised by the result why did the empire call work myself. and of course, from my perspective, i'm sort of an ivory tower comeek. i don't expect it to have any real world significance. i don't want it to. i want to try to figure things out.

and so you get a result like this and you publish it and you're the controversy. oivelt it's not a never ended you can't add more and more and expect get more work. there's diminishing return at some level. >> i'm not asking you to read your testimony. i understand it. i'm asking when you say that file sharing the sharing of copyright material is it okay. is it okay just for an individual or individual to share tens of thousand of song or films? there's file sharing. the potential at least for sharing tens of thousand which offered competing copy in the marketplace. >> well, except that's -- here is what i don't understand with the argument of illegal file sharing is somehow okay. if the goal is to spread the amount of music and creative

works and film all of this great intellectual property and to spread it as far and wide as possible, why is it different in the computer in that the setting of technology to share files that way than it would be for big box retailer to have someone come in through the back door, scoop up all the cd and dvd and take them out on the street corners after they have copied them and gone on to business on their own. why is it different with the physical product than online. >> that's different when consumers doing it than a commercial entity is doing it. i'm suggesting to you that the individual who breaks in so the big box retailer and keeps uptake a couple. a couple of cd and dvd and make

copy of those and goes ahead and shares those. spread the information far and wide get the information throughout. why is it different. why should it be acceptable for that to happen online but not on the streets. the individual breaking in, are they offering the copy for free or -- >> is that archie -- >> i think it is an important distinction for profit or not for profit. >> right. if we had just some one's goal is to spread the great american property we are so proud of by making copies and distributing it out of his or her own good will thousand of copies tens of thousand of copies, million of copies that is perfectly acceptable. >> i think we do have such individuals. i think they are called libraries. and they have coexisted with the commercial market for hundreds of years without undermining it. >> right they have libraries that operate and have operated

for hundreds of years not setting the people going to make the millions of copies to freely disrupt to be used without any regulation. i don't see the difference. and your example -- this is also confusing to me. when you talk about the fact that as you explain you say, you know, the question isn't whether file sharing is causing the record sales but the record sales affect the music. you talk about other ways that creators can be compensated. separate and apart. you go through all of them and conclude yourself. you reach your own conclusion that all of those other areas are not enough to make up for the amount that are lost as a result of the intellectual property that you think do gooders are certainly cape -- capable of doing to spread the property which makes the performers better off and the song writers better off, and the actor and actresses and anyone

involved in the production of any film or tv show. you received -- refute the argument and ultimately your conclusion is yes, you acknowledge in a footnote that, yes, there is less money going to the industry. but then it's not fair to point out that may mean there may be fewer creators willing to engage in their work. tall means if you had tougher enforcement that the dollars that floated at those industries are dollars that would have otherwise been in other industries that racialization doesn't seem to make sense ultimately the conclusion you reach that somehow it's in the best interest of creators in our country for their creative works to be spread far and wide without compensation. as you now have acknowledged not just a couple of kids trading songs that hopefully they purchase, but in fact the spread of tens of thousand or millions

that ultimately the goal is just to spread that the diminishment in the amount of compensation to those creators will have no impact, you say, on their ability to continue do their job. it just doesn't -- it's inconsistent with what all of those they talked to who rely on copyright to protect their intellectual property. it's inconsistent with what they tell us they need in order for us to continue to uphold this great american intellectual property we value so much. i yield back. >> i thank the gentleman. >> thank you, mr. chairman. it's been very enlightening. you made a statement concerning standards and how they apply to life in general. do you think we could be served by the industry i.t. setting standards. do you believe we need to legislate more?

[inaudible] >> i think that the way the system works now is a public/private partnership where standards developing organization who have technical expertise working with the federal regulators who are in their space. together through that partnership they develop, you know, regulations that made the requirements of the regulate -- whatever it may be. in this country that's a diverse group of people and there are many groups that do that. but what the standards developers organizations bring to that is providing the administrative support that permits the group that sits that the table to be open and balanced and transparent and not dominated by any one group. they provide the administrative support for having consumers sit at the table and provide input

that would not otherwise be provided if it was just a government-driven event. i think that balance is what makes it fulsome and makes it system that it is. >> thank you. >> professor schultz, you talked about notice of takedown. lelt have an example here. i have a search engine. i create a search engine. name it after my son. victor's search engine. you are a musician. and a writer -- singer or writer or the musician, but at this point, you have a record out. you had a cd out, you have music out, and i do not buy it from you. you are paid no compensation from me. but when people put your name in my search engine, your music comes up.

you send me a notice and i do nothing about it. your music comes up because i'm the guy who is illegally selling music to people and you're not getting paid for it. you send me notice and notice. what do you think should be done about it? >> thank you for the question. i think indeed the there are two difficulties you identify here. one, is that the current notice and take down system is based on identifying the particular file rather than a work, and as said, it's based on an old paradigm that what we had to do in 1998 was stop a file if it escaped on the internet qua quarantine it. pull it back. it's not easy now. now every time everybody's work is infringed they have to send a separate notice. >> do you think i should be held

responsible even though you're not sure how many people are downloading that music? because every time someone gets on any search engine your name comes up. i'm selling it to somebody for 10 cents a pop. >> absolutely. if you're the site hosting and profiting from somebody else's work, whether it's through advertising or -- >> do you think i should be held criminally liable? >> criminally liable. that's a more challenging question. >> [inaudible] >> so -- i was prosecutor for 18 years. i'm stealing something from you and selling and making a profit. do you think i should be charged criminally? >> of course, we're going beyond the scope of the hearing today, but yes, i think criminal law can be a useful tool, but it has to be very carefully applied to instances where -- >> okay. >> the users -- >> thank you.

>> instead of a brilliant attorney you're a struggling poet. you live in a one room apartment and you don't have heat in the winter. you write -- i'm a song writer and looking through your book of poetry. i find magnificent poem you wrote, and i take that and put it to music and i make $10 million on it. so you a problem with that? >> it's a difficult one. i personally would not have a problem with that. >> you personally are struggling -- >> you write the book of poetry and you don't have a problem with it. >> i feel in derivative work context it's the inventive effort and creative as a second comer. >> your father is a great poet. struggling though trying to keep a family, and i use his poetry and make $10 million and he can't feed his children. should anything be done about

that? do you have a problem with that? >> well, i'm not sure what you're doing with the poetry. >> i'm selling and making a lot of money because -- >> are you selling in in music; right? >> derivative. >> the market he originally exploited. he was just a poet. >> he was just a poet. >> and he wrote a book and wanted to sell. it and stopped making good -- i took a poem out of the book and made $10 million and he can't feed his kids. >> right. my perspective we shouldn't require necessarily license in all of those context. but it's really the derivative author who has the real value to that. >> we tend to degree on that. i think i would be a little angry if my father said we're not eating, folk, but i think the guy should be able to take my work. i yield back, thank you. >> thank the gentleman from pennsylvania. the gentlelady from california. >> thank you.

>> thank you, thank you, mr. chairman. >> if we were to clarify the making available right in the law, would that -- do you think it would raise any first amendment or free speech issues. if so, what do you think we might be able to do to avoid those challenges? >> able simple clarification that the copyright owner distribution right include making the work available does not implication any first amendment special interest that not arise automatically anyway. i believe we don't need to pay special attention to that. it could be if congress twoish have a special surgical of the peer-to-peer domain because the state of pornography lawsuit. if they wish to limit the protection for pornography. it may be a raise the question of what level first amendment scrutiny would apply and is

there sufficient governmental interest to satisfy that? but strength making available aspect of the distribution right, i believe does not raise any special first amendment concerns. >> i actually agree with him on this issue. if you had passed a narrow amendment, perhaps creating presumption that a work made available in the sharing folder could be presumed to have been downloaded. it would be infringement under the interpretation of the existing distribution right. i don't believe that would raise any first amendment problems. if you pass a general making available right raising questions about whether a link might be infringement of public displaywright. whether cloud competing or social networking. you goat first amendment issues there. i agree with you try to go out of copyright troll by differentiating for foreign versus other it may raise first amendment issues. >> if we feel the making available right is implied in the law today why do you think

the court have having so much dpiflty with this right now? >> i believe the 66 faint in the room is the statutory damages. when a young single mother is cup -- and yet she could be held by the jury liable for $100 million in statutory damages they are reluctant to apply the law as written. that's why urging congress have a global solution. at the same time it reaffirms the making available aspect of the distribution right it would -- statutory damages to a reasonable extent. >> and do you agree with professor's statement earlier that make the -- or having exmy it reference to making available right could cause economic harm? >> i'm not positive which aspect of professor's statement you're looking at, but i kind of look at the economic differently than

he does. suffice to say it's an interesting study but what tuesday t does not ill lum nate how much created in the last ten years of lowering peer-to-peer illegal file sharing. >> do you think there's any way to define it more specific they are cause cases to be reopened and the uncertainty you talked about earlier? >> yeah. there certainly would be. if you want to effect an distribution in the peer-to-peer file sharing context you could create a bankruptcy in the work made available. you can make a rebuttal presumption if the defendant wants to come forward with evidence. he'll never get that far. it never gets that far in any existing cases. in the one case where it was raised jamie thomas case she was found guilty of copyright infringement the first time of makingavailable destruction.

she was found guilty. ..

>> mr. malamud, i will read the short as part of the constitution for a moment where it says to establish post offices, it says to promote progress, i will skip over of science and useful arts for a moment come and live it to times. i will just read how it reads to copyright to promote the progress for limited times to authors. that's it. that is the constitution. it is only one paragraph to promote science and useful arts by securing for a limited time to authors of the exclusive right to their expected of writings and discoveries but that short one to promote to authors.

who offers the law? that is my point of the state of idaho or georgia mississippi, if they produce a law, every single person who voted for it is the author. it does not belong to some entity by definition. isn't every lot and obamacare has people who do not want to be authors and some that do but on the day that it passed we were all authors. so my question is in the rawest form is in.in fact, every single person who participates in the creation of a law, or the inclusion

of the association by a standard therefore authors. therefore as an owner of the copyright, don't you alternately have no possibility of a protection? the state of idaho is wrong if they consider any parts of the law required or mandated it to be eligible for copyright. and my point to is i have been in congress 13 years and eight days. i know the i don't need a copyright to promote politicians making laws. so by definition at the basis for copyright don't we have a decision to make if laws or anything else forget

about what we do with this copyright is eligible for copyright? >> that is the crux of the matter will kidnap whether the building code of texas had the law that there was no incentive needed for the politicians to make laws i have never seen a standards body of jack to be incorporated by law. that is specially by preference by guidance out to be used but for those that are crucial, as though law on testing the toxicity of water is something every citizen in west virginia wants to know and if they were carried out properly.

you cannot have it both ways. i respect the rights but once they has become the wall law than it needs to be available. a standards body can say please do not incorporate a river for it does not become a law that is perfectly acceptable there are multiple standards of bodies several fire codes are building codes are planning to go sandy will find immediately a group standing up to say please designate mind -- mine. >> i will elaborate the voluntary standard is available for copyright. i a understand a but at that point shouldn't you object

to a being incorporated or recognize you are waiving any copyright objective from the free and fair act to essentially a lot they must comply with? >> the answer is incorporated to the policy of omb and the nttaa that federal agencies incorporate consensus standards in lieu of standards whenever they're able to do so. >> but it does not have the explicit legislative authority that committee that might decide what can and or cannot be covered under the exclusive element of copyright the panel is important. we were korn did all the

time that in the digital age people's access to lot that they must comply with inherently this committee has to decide if it should be stripped of any and all copyright to the extent we have the authority which has nothing to do with the omb because quite frankly they think they can make laws without congress getting up in the morning ever again. constitutconstitut ionally on what basis would you say that has any grounding? >> i will tell you the second circuit. >> briefly as possible. time is expired. >> i will tell you what they said with that vmi case that due process requirements of free access to a sell-off may be relevant but does not justify a termination of the ama copyright there is no evidence anyone wishing to

use that standard issue had any difficulty that was the case of the ninth circuit the with those vibrations of results? weld there are policy considerations bear countervailing considerations for example, it deprives substantial problems of the takings clause of the constitution although i jump to the last sentence although it is opposed in effect a call to the act. so at the end of the day it is a balance between the rights of copyright holders

and a value that those bring to federal regulations. >> thank-you. >> i appreciate your indulgence for our want to go on the record with a copyright reform we are considering as a committee, in order to have my vote on final passage we will have to rectify the ambiguity of the loss of every american has free access to every law that he/she does spinet aerobee ample time after the hearing. nobody is being shoved off abruptly. >> i thank you distinguished chair and the witnesses.

in to get some clarity from written testimony on pages six and seven you state has been previously discussed copyright is not to maximize the music industry or copyright owners? is that correct? >>. >> was a fair to say content creators are entitled to reasonable compensation? >> we have to define what a reasonable is. that would be a more difficult task than what you imagine. >> so you think that they are not entitled to any compensation whatsoever? >> not at all i would be happy to say they would be very well-paid but in terms of constitutional focus it

should be on the production of output. a well compensated artist and musician is important for long-term output of creative work. >> let's focus on the constitution. so with ford article one section eight, clause eight which reads to secure exclusive rights to the respective writings and discoveries. so the parts that gives congress i believe to give congress a robust patent system? >> it is promote the u.s. -- the use of arts is for congress science has a copyright. >> what is one of the basis.

>> the supreme court has said that it has a parallel structure for authors and inventors and writings and discoveries. each of those three pairs of birds the first is for the copyright the senate is for patent. >> that is to encompass to legitimate and? >> second to encourage dissemination of the works. is it fair to say so with content creators with the opportunity and to benefit from the fruits of their labor in some meaningful way serves a purpose to the courage the work?

>> i have no disagreement with that statement. >> what would you agree? >> it is always a question how broad the rights need to be. do we have to address every specific instance we talk about leakage of the copyright system instances where individuals or companies copy but they are not suits or it does not constitute infringement and that is a important part of the system. some are straightforward. i think we would agree a commercial competitor takes the same thing for less is the inventor but if they take six years romeo and juliet but it creates west side story is not. >> it is your position as it relates to determining after

a meaningful compensation is not provided is that simply allow for illegal dissemination or reproduction or sharing of works then evaluated content has decreased? is that your position? >> i am not advocating randomly changing the of lot to see what has happened it should be social science but it was formerly illegal but it nevertheless happened in revenues from the music industry even considering all the sources they have wind down. what happened to the output? what does that tell us if we had not enough or too much for just amount -- just right now of output? if you have just as much creative output bin for me that suggest we may have had too much copyright to begin with. >> sabir it concerned about the impact on the economy?

>> it depends what you mean for rising economist copyright protection how do we strike that appropriate

balance and if it is what we should be seeing? >> i agree it is. a i reproduce one word, one page from 50 years ago from the register of copyrights 1965 and said we don't know what the law will be 50 years from now but they said it is becoming increasingly apparent the transmission of works by we computers may be the most important means. the final statement was we believe the day has passed with any particular use of works should be exempted for the sole reason it is not for profit. those are wise words. this was written at the culmination of 10 years steady and beautifully encapsulates the philosophy. that is my watchword going forward. >> i yield back.

>> professor, ipo you a belated apology by pronounced your surname. you were not lunate. [laughter] >> i always tell my students in rhymes with funny and i am not crazy. [laughter] >> and professor lunney you may have summed up the entire discussion that copyright protection to strike innovation and help innovation to grow. you made a comment in the midst of the exchange that is just a poet. it might come strange but they have changed a the

world's air their worlds -- words mean something for me that sums up the entire hearings. but just a writer or just a poet what you mean? that is the heart of what we're talking about today. but if you sum it up that is where we are today. but i want to continue the discussion the definition of what we have an interesting comment because i am from georgia and you have a difference. i think what you'd do is a public service. but i have a problem where we are not right now with what we define. in your letter to the speaker in senator from my state of georgia you said georgette annotated every

component of the official law. let's explore that perhaps some short questions. what is an invitation? >> it can be anything from freelance editorial comment by a commercial provider to the comments by the legislative council or the state itself as to the import of the code to. >> is an annotation a statute? >> i am glad to ask that because that comes to the crux of one of the problems we face and why i think this committee was to deal with this issue. i am just a law school dropout. i want to put all 50 states but a and their laws of mine. >> i have no problem. the problem we get into is what is an invitation if you go to the free public web site it took three clicks to get there and you get the

free ga. code annotated it says the annotated code is copyrighted by any specific reference that the law or any other recognized is not. it is the work of the invitation which is more they and the law. >> but in terms of that three sites prohibit me from making a copy of that spinet to prohibits you to take a book to turn knitted as your own work. that was called cheating or plagiarism. how else you want to describe it. the annotation part is where we're getting you make a claim and i read your book you made a comment with the states such as georgia or idaho or mississippi with all due respect i am not as concerned with them have spread fear and throw a deep chill. you are a good doctor you

should have been protected. but if you pointed out there that is your choice. frankly i believe you are being disingenuous you can go three steps and get it for free? the part that i am concerned about here is the bigger step to take part of which we all recognize, the law, the statute, the gentleman from california we vote on that non annotated code? to say that the imitation is the law is like taking this committee part of the federal code it is already free.

it is the work of someone else. said we need to make sure copyright laws and the others we have discussed with the state of georgia and others to make a point that is not true it is part of the public record but a somebody brought my invitation and i have done the work then we respect to the work we don't say i've got the book lets copy it simply because i don't want to do the work of meditation and. that is the problem might have had with that we will have many more conversations. if you do so look -- the work of protection is there not just a short cut.

>> the gentleman from new york. >> thank you to the witnesses for your testimony to bring these issues before the committee because i do believe we have to do a better job to protect content owners to make sure they are appropriately compensated for their work. but to ask more broadly about protecting copyright copyright, a professor -- professor lunney you mentioned there is no need to make available does not have the effect of curbing online theft. uploading in diluting simultaneously making thousands of copies. it is a legal but has not stopped it but they go across the internet and

obviously someone observe the of copyright act is broken what would you suggest to protect copyright works on the internet? is there any? we have to explore the idea to have a levee you at a charge to the internet bill each month that goes into a pot and reid dash treated to the copyright owners whose works are being bombed. i am not certain there is in any of their solution. >> wait. you set up a system like we do four songs where you can download google's does not have the takedown notice but

knows that you have down loaded and you pay or who pays? anybody who goes on to the internet? >> it is the surcharge to your internet bill. >> i never listen to music. >> that is one of the central concerns for those who do not file a share bid is the mechanism to compensate as it goes on. >> kinnealey to access internet pays zero levy three new or old organization and the funds would go based on someone's assessment how many people listen to my song? >> how they would be distributed that we could use it as a similar system investigators that bring

actions for the subpoena. >> mr. nimmer what is your reaction? >> that is interesting. >> you pre-empted life first answer. [laughter] >> was my written statement with the non-commercial use to allow free peer to peer file sharing that is one of many solutions professor lunney himself has written on the issue. says of fascinating vehicle that requires a lot of study the devil is in the details but it is a completely different way to look up the issue and it deserves --.

>> are there other suggestions available? >> professor fisher at harvard has proposed something that i will call the entertainment tax the government could decide how much has been made and allow free sharing of culture. viable almost lampooning his book but in essence that is what it is. >> it may be interesting if you take out the word tax that has a certain ring around here. [laughter] >> the levy i dna is a terrible idea. you invite the government to set prices in the fundamental concept of copyright law is the owner gets to decide. when you take away that

liberty and tell the of value of the price signals. >> so this private aspect? >> no. that system like that. >> what is your comment on that then? pemmican a system like that? sure. there are some organizations when they are privately entered into a base of a lot of problems but it is essential they remain private. >> okay. okay. mr. love wanted to comment. >> we have of a long history of compulsory licenses were the most markets function very well. so with a technology it is not beyond the pale that you move to a compulsory license.

you touched on the issue had repaid the money out. the first instance people look at is to sample that's a different approaches to have consumers takes the collection and that rewards the artists that they prefer so in effect the consumer is a patron of the arts. >> yes. you would pick perhaps they would give all the money to madonna or brick neece peers maybe they would give it differently then you could pick to support the arts in the way the you prefer. that is a different model than the sampling model. >> the sound like things we have to explore my time is

expired. >> the gentleman from texas. >> if we were to codify or make available what would it do we could not do already? >> with a file sharing context it would not change what is going on in that arena at all it is easy to pursue file shares. >> other than making it easier for the plaintiff what other protection do we provide? >> the essence is to make easier so to comply with the treaty obligations to resolve the conflict of the case law. >> how many bad guys get away now that would not if we were to do this? >> i don't have those empirical figures. >> are there any?

>> nobody brought into the legal process has gotten all because the down load cannot be proven. >> talk about a traditional upload context to put in a shared folder and make it available have you if you put a leak to it if you are a search engine and have not posted anything but it is a link a broad definition is make available but you could potentially gets nine guilty parties. >> but if you adopt a bride making we would know if linking is infringing >> if i took my copy and donated to a the library then do i make that

available in and then reenter mind up for sale doctrine? >> both the treaty and the distribution content there is the exception by the making available. >> what about making available? i have my tunes in my house there is a shared folder that i have made available to my television set and probably my daughter's television set. where do you draw the lines? >> the danger is the standalone make available. if congress would pass all the dangers that you have cited but i believe we can avoid all of those including the danger to share with your wife and daughter if we define copyright owners public distribution rights when you include your wife and daughter that is not an

act of public distribution. >> i need to go to professor schultz i understand how tough it is for local broadcasters but if you look at something don't they want as many eyes as possible fuming their newscast so they have more value for advertisers? >> advertising revenue is one component of how they constitute their business. but the other components with a the every transmission fees are essentials to supporting local broadcast. >> the other issue becomes at what point do i have to negotiate a deal with all

television stations to put a ceiling box in my house to watch the corpus christi newscast in washington d.c.? bennett you absolutely don't. >> i want to make sure it does not go that far. i will have to agree once something is enacted the public ought to have the right to get to give free. don't the standard setting organizations collect membership dues and generate revenue from the members that participate? i am understand in the old days it costs money to print the books but now the marginal cost to make it available over the internet is almost none in there is the real value. it does not fit the label standard to use your analogy. shouldn't that private sector that benefits have

them free? why should i be able to print data copy of the electric code to hook up the green wire in my house? >> each has a different business model. many based revenues on membership but many of those don't their large of a not-for-profit mission generated that keeps the barriers to entry low. they have low entry fees sanders defeased for the very reason that they derive for the sale. >> my time is expired. i would love to sit down with you we could debate this for over an hour. because it is important. you may waive your right to that once you fight to get it enacted. something we can talk about when we have more time.

>> there will be ample time to revisit this again. the gentleman from georgia. >> i started practicing law back in 1980 going into law libraries at georgia state university to represent those in my practice to come across mr. nimmer books. i cannot believe he is sitting here looking as young as he looks eyes that he would be 90 years old by now. think you for your contribution in. with the backbone of innovation and public good but the materials created by the u.s. government and

state government did not deserve copyright protection nor have they ever received it. 1888 the supreme court held there it has always been a consensus that judicial opinions are in the public domain because of work of judges bines every citizen. should remain free for publication says they have been continuously upheld the state or federal law is in the public domain. section 105 in the copyright act reflects this view specifically denying copyright protection to statutes and regulations to touch on one of the ideals for justice this right is fundamental to the rule of

law particularly when the concept of ignorance is no excuse and pervades our process. it is also central to upholding a our system of checks and balances to hold congress responsible for what it fails to pass as we review copyright protection through the next great copyright act excuse me we must protect americans' access to laws and justice by protecting access to public materials in the public domain. mr. malamud thank you for your work to make public what accessible and unknown. it is easy to take for granted how important public databases are in our increasingly digital democracy.

less public documents are digitized but often out of reach of many. in your written testimony, you note you worker and they -- currently in producing codes as a former commissioner and i appreciate the importance of private citizens working to improve local communities. what is the benefit to make bulk public data available for municipal governments? and i will add to my comments the fact if you are a citizen of the state of georgia and want to look up a code for a subdivision it is very nice to go on line and get the information about what is of benefit to make public data available

for municipal governments? limit thank you for your comments congressman johnson. the issue with georgia code is you cannot get the bulk data or to the free web site to download whole thing. what happens when it does become available is volunteers sometimes commercial operations or citizens will make the cut significantly more urgent accessible. this happened in the district of columbia recently where copyright law was waived on code. several volunteers have developed a vastly better version of the d.c. code that inform citizens in a better way so having that available be encouraged citizen participation to inform each other why we care so much about the official code of georgia. >> how have local

governments responded to making them available? >> we had significant push back at the state level of the city level they welcome us with open arms. at the city of chicago i stood up with former staff members and former obama officials and volunteers with the city clerk and unveiled a new chicago code, a san francisco recently revamped their municipal code there are 2,000 municipalities that will ensure those available because of the efforts of these volunteers. >> my time is expiring. i yield back. >> i am told there will be a house vote. i hope we don't have to detain or witnesses. >> mr. malamud i am assuming

you agree with the southern building code case? >> absolutely. >> what about the circuit cases we have the amicus brief that were discussed one is the ama code the other was the red book and in those instances the courts found there was copyright protection so what is your opinion? do you agree with the outcome? >> i am not a lawyer but just a citizen but my take is that decision was about a crucial public safety code inc. into the law. worthy of their cases were about medical codes that needed to be used by doctors to the it was the distinguishing factor that the extent the public safety was at stake. looked at the building codes

they begin with this sample ordinance we the people of certain name of jurisdiction in do so by adopt this kozo it is meant to be the of what. that is the difference between those cases. >> so you think the government could have been administrative scheme or program that something is referenced if it is a red book you see the distinction between those situations and one in which the of law is adopted verbatim? >> for safety public standard one that specifically incorporated by reference as opposed to casually. we look at state codes they will mention something in passing we keep our hands off but if it is part and parcel of fell lot and if it is an external document is no different than if they offered that themselves. >> then what is your position ms. griffin on the southern building code?

was that incorrect? >> there is a sharper distinction to be drawn on those that i cited. that was a very unique situation in the case limited to very unusual fax. in that case the model code writer wrote the code with a specific intent it was incorporated word for word and the defending copied that law and not the model code. with those circumstances the circuit said as a lot, this content loses the copyright protection but the accord was quick 2.0 it was a very limited case that it did not apply to the extrinsic standards that are incorporated by reference into law like the standards of the second and ninth circuit case is.

so that is a limited holding to its fax. have that might be decided today is unclear. >> they use the model codes. how often do they adopt completely verbatim like what happened in the case where legislators could use these model clothes as guidance. that is more of a unique case when you adopt everything wholesale? >> i -- my a organization does not standards developing i don't have statistics at hand. some enter into licensing agreements with the governmental entities so the code could be adopted but there is a site in the regulation back to the organization web site for the sale. there are very different kinds and multiple opportunities for dealing

with that situation. that is one reason why in the context of the reasons evaluation leave this to the federal regulators to come up with no way to make access reasonable. at the end of the day it is about access whether the public has access to the standards not how much they cost but if they have access. >> but when that decision was appealed to the supreme court the solicitor general suggested that decision was good lot and is a prime one dash supreme court should deny search but they followed the recommendation. >> right. with this standard air and coats are developed by different associations, what is the risk for that viability without that copyright protection? >> it is a huge risk to the

standards developing organization a favorite not permitted to derive revenue from the sales of standards and they would not be able to fund operations that include to providing administrative support for the development of standards to ensure all reasonable and material interested parties are sitting at the table. consumers are at the table. no one will pay for that but the standard developing organizations that are mission related and not for profit are able to do that how? by selling the standards to use the revenues. if by contrast to the government would take that process the way there would have to provide that expertise that administrative support and taxpayers would pay for that. so the changes in a profound and detrimental change.

>> my time is expired. >> i will be brief because i want to make sure my colleague also has an opportunity to participate. as i have listened to some of these proposals it seems to me interesting that people have seen to have forgotten our experience one year ago. is someone feels differently please speak up at the american people's attitudes from the sopa has done a u-turn with the idea the performance available goes in the same direction that is a nonstarter in my opinion i value getting viewpoints and academic discussions but it will not happen.

one of the things we should review is the issue of statutory damages. when you take a look at these outrageous things with statutory damages looking at the case of the single mother there is a case where a jury awarded 1.$5 million for downloading 24 songs was no indication she eddie finn share them and that was reduced at 54,000 because of the disproportionate nature of the statue by the judge but if you have that statutory scheme and is irrational it needs to be change. i spent a long time trying to work on that and finally gave up with the other members of the committee

because of the intransigence of some of the participants by what we ought to take a look at is the damage we did by extending the copyright term. we now have one that is one century and a half and we have aggravated the issue by doing so. unfortunately you wish you could go back in time that is one of was convinced that the treaty required that'' now i know that is not the case. wish i could undo a yes vote on the sonny bono copyright extension act. but their real value is the issue raised about the standards of public law. i was going to ask unanimous consent to put into the record but i need to do that

because my colleague has already done so but it seems very clear you cannot have a super lot if you require people to win here to standard it has to be in the public domain. i am sympathetic. in the stand there is a business model set up you cannot allow that to trump the rule of law. i am mindful of the discussion we had of publicly funded research. we had a hearing here a couple of years ago with the non-profit societies that are basically funded for the peer review process, which is essential by the publisher. but yet as a business model that was deleterious to the

public's right to have publicly funded research made available. we have not changed that and overtime the way we find a non-profit societies have to follow along as well because they do provide a useful model. but you cannot allow that current business model to dictate the end result if your reference a document that has to be part of the public record if there is a fee that assumes the public does not have an interest. if i am a contractor of the dead can afford to pay the fee i will make money on that but there is a public interest not just people in the business but the public's right to know. is a sufficient standard? you way is to have free access. to as part of the law is

clearly and wholly inappropriate. i agree with mr. ice said there is no copyright reform that we should support that does not resolve this issue. i have listened with great interest although there is academic interest surveyed the public spoke very loudly about sopa and i don't believe we will have the appetite to revisit that either with copyright laws or frankly with the ttp but the leaks to wikileaks is sopa and if it is ttp it is dead in my judgment. i yield back. >> let me thank the chairman and ranking member for the generosity of dawn i want to associate myself with my

colleague as an excellent panel and will committed in this area with a lot of history in this area as well. not enough time for questions but i know that you spoke to different issues but i just want a yes or no. do you feel congress to it should way into your testimony today? mr. nimmer? >> yes. professor lunney? no. mr. schultz? >> not yet. >> mr. love. >> you should pay attention to the wife by broadcast treaties. >> is that a yes or a note? >> michelle you change the law in that area? we don't know what the treaty is yet.

>> thank you. >> it has been suggested by mr. malamud. >> absolutely. >> to a98 your testimony you saw where the user goes through trial that a judge would feel the award is disproportionate is inappropriate may be inclined not to make the makings available of their actual feelings about the law. could you elaborate? i have wondered to other questions and what about statutory damages so that jamie thomas does not face a multibillion-dollar judgment and also professor lunney could you expand on in your view of the broken window parable? that which is seen in that which is on scene?

and i do want mr. schultz i know we already asked about this but could you expand? >> wendy b. thomas went to trial as has been noted, the award against her was 1.$1 billion. she had the option to settle the plaintiffs offered a settlement she could pay several thousand dollars to a charity design for musicians and turned it down because she had committed perjury in the trial was so egregious the jury hamburger but what is a reasonable measure? it did make sense in 1999 to calibrates statutory damages how many had been infringed because of that time it was not impossible to infringe 100 or 10,000 works.

but today with year-to-year it is. so congress needs to look at what level of damage would cause teacherages and compensate to be someone related to the harm. i did not come here with a ready metric like several hundred dollars for each end every work or $100,000 in any given lawsuit or another measure within reason that does not get as to the hundreds of millions of dollars. >> refinement, clarity to determine how someone could be made whole. professor lunney? >> it was explained when that government creates a subsidy program for the arts it is not new money they take that from consumers through taxes to give it to the arts there is new

employment in the arts we see that but we don't see by taking the money from the consumers through taxes they will have that many and cannot spend it on something else of those jobs lost in the other sectors is not seen and we tended to ignore it. if he were just moving money from one to another thing and there is no net gain. if we could come up with a magic formula to restore to the music industry some of the money that is lost as a result of file sharing that would not be a net gain in jobs but forcing consumers to pay more for music and less money to pay for everything else. whatever jobs we gain from the revenue we would lose elsewhere in the american economy. >> professor schultz just a little bit more expansion. >> you have a company with

aereo to string a signal to many customers that is a definition of public performance however aereo what they perceive is a loophole of copyright law is using antiquated technology to have in tennis to distribute the signal they are not paying free transmission fees did you have to ask yourself that is between the broadcasters air and creators of aereo who has the right to you distribute those signals a profit? i hope the supreme court rejects the interpretation of the law that allows aereo to do this but if they don't i hope the congress will address that. >> you have been gracious with your time. i think there are a lot of

competing issues wake-up chris respect for our broadcasters in the stand that professor nimmer has taken i look forward to future hearings on these issues. i yield back my time. . . [inaudible conversations]

[inaudible conversations] [inaudible conversations] coming up on c-span2, a federal court hears legal arguments about the regulation of internet companies in the case of verizon versus fcc. new jersey governor chris christie give the yearly state of the state address. a house hearing on copyright and protecting intelligent yule copyright on the internet. tomorrow, former fcc chairman propose change to the federal communiques act.

>> i think i just had little antennas that went up and told me when somebody had their own agenda. then i tell them, you know, but i tell him. it usually worked out. watch our program on first lady nancy reagan on our website c-span.org or see it saturday. our series continues live monday as we look at first lady barbara bush. you're watching c-span2 with politic and public affairs.

the d.c. care cut court of appeals today ruled that the federal communications commission doesn't have the authority to regulate internet service providers. the fcc tried to enforce net neutrality rules requiring internet companies to treat all internet traffic equality. the court heard oral argument in the case of verizon vfcc back in september. this is two hours. good morning. >> good morning. with the court's petition i would like to reserve five minute of my time for rebuttal. the decision whether and how to regulate the operations of broadband providers in a

decision for congress to make whatever the wisdom of such regulation it is not up to fcc to decide those important and hotly debated questions entirely on it own. that is what happened here. the agency's claims that congress delegated authority for the rules on purely basis and conglomeration of over 20 different statutory provisions viewed as a whole is simply not credible for three basic reasons. >> the alleges for the number? [laughter] >> well, i'll let him speak to nap what the agency did say is 116 of the order it had no instructions in any one or even two or three provision of the act which was all 24 quote, unquote, view adds a whole support even then it argues only some part was implied authority because it says elsewhere it has

nothing specific. and disclaimed any express authority in the area. i have three overarching reasons why the authority theory must fail. and that is that, first, given the undisputed economic and political significance of the internet, it's highly unlikely congress would have dell -- gel gaited authorities for opaque and way. -- [inaudible] >> go back to the statutory argument. >> yes. >> and focus on 706. a particular 706 d. >> 706 b. that suffers from the general problems i was about to describe. so if i may, talk about those in the context of 706 b. >> talk about the lang drveg language. >> yes. congress would have authorized these kind of rules in a provision is that's is about accelerating broadband

deployment that statute on the space about the construction of broadband networks. it doesn't even proport to deal with the operations of networks once constructed. much less mandatory access right for third parties on regulated rights -- >> back to your argument. it seems to me that the statutory authority the conditions for the order is unreasonable. >> no. isn't that your point? >> no. we think they lack statutory authority under case like brown and williamson, this the court's cases. >> 706. >> a. or b? >> b. says that the agency may when it makes a finding of inadequate deployment, which they found scintd -- consistently with perfectly adequate but -- >> it says the commission dedetermination made it shall

take a leading edge to accelerate -- >> yes. >> by removing barriers, structure -- [inaudible] and promoting competition and communications market. >> right. that on its face, your honor, doesn't proport to deal with the subject at hand. the subject at hand is the regulation of the operation of networks once constructed. >> do you think it clearly bars it? in other words, is it plain to here is the commission for a long time ak acknowledged as having been delegated broad authority in this area.

and now in 1996, congress comes along with this 70 of and has broad language. in that context doesn't the court have to look at the language and interpret the plain language of a very broad authorization given the background which congress is deemed to be aware in term of what the supreme court has said about the authority of the commission? >> well, you look at the language that doesn't deal with the third patient actions that regulate. the communications market but in all terms. >> it does. it's also limited geographically. these are actually information services. >> [inaudible]

we are. >> let me ask you this question. suppose hypothetically i know that the commission started this and but suppose hypothetically you are exercising market power -- is that -- to broadband development? no. it's not. the statute said 706 b. starts 706 b. said the commission should take action to accelerate deployment which is building of a network. >> but if you were emphasizing market power it would be difficult for anybody else to get in to the market. and -- [inaudible] >> it actually claims that. >> hypothetically -- >> the justice department and the ftc both in their comments to the fcc caution them caution the fcc to limit their concerns

with market power. >> i think in your -- >> yes. >> yes. the fcc concluded generally or specifically with respect to certain markets that one of the program -- exercise market power just within the language of 706. that is to say we're leaving market power -- the market power would accelerate broadband. >> 706 b. still has geographic call limits just as -- >> the fcc had limited the inquiry to those areas where there was market power. that would be consistent with the geographic limitations, twont? >> i think looking a at that only language might have a reasonable reading there, your honor. assuming they limited to areas where there was no broadband at all. again, we have to look at the

other initiative of -- >> [inaudible] hypothetical question is under those circumstances the agency of the fcc could legitimately interpret 706 b. to regulate broadband provider in a fashion in which they try to do it here. >> we also have an argument. >> could you answer the question. >> i think, yes. >> that would be consistent with 706. >> i think that's possible. ownership 706 b. >> do you argue in your brief where the absence or the market power determination is relevant originated -- [inaudible] you making the market power in your . >> simply made an argument those kinds of considerations are really policy determinations. >> you argued -- the way i read your 20eu7 and the other 702 is arbitrary commission doesn't --

[inaudible] your position is even if you get past the statutory the arbitrary commission because a., added some support, and b., it's [inaudible] and open area will lead to broadband investment. it's reasonable. those are your arguments. >> yes. we have argue that. i would like not -- [inaudible conversations] in question the point of -- [inaudible] argument. and you did argue there was not adequate evidence to support the proposition that there was evidence of market power in the particular locality that would be instance that would fall within 706 b. >> yes. of course the burden is on the commission to show the statutory authority. whether we explicitly.

whether we pointed out they didn't make a finding of market power is no negative for our set . >> if i could just -- >> you have referred to 706 b. as including a geographic requirement. how does that work in the context of the internet. in other words when you look at the brief that was filed by on the internet engineers of technologist. that concept of geographic limitation might make sense in the context in putting up telephone pole in that -- it wouldn't in the internet context. >> 706 b. not referred to a geographic limitation shouldn't be written that way.

>> i believe 706 b. said that congress should make an inquire troy make any broadband service at all. not even one broadband provider and if they make a finding of inadequate deployment. they shall take immediate aca. >> well, the commission made that finding, didn't it. it said actually for the first time in six reports conveniently done prior to the order. they said deployment of not adequate even though 95% of americans have broadband. we think that unlocking of 706 b. was itself unveiled. it would to create -- for the rules. >> be you don't in reading your brief i didn't see any challenge to the commission's -- we, did your honor. you said it was after that it was an effort contrast or something. but the reasons was --

[inaudible] was not enough. not enough given to provide internet to all americans. so the increase available therefore the percentage of americans who traditionally broadband service. >> well, still the area of the country whether there are multiple broadband providers. presents most areas of the country. we think marked bit statute. we can't just look at the words in 706 b. they looked to the rest of the act, the structure of the act and so forth. here we have other provisions in the communications act 230 b. that was passed at the same time as 706 that makes congress' intent perfectly clear. it should remain unfettered by regulation. >> the remarking of power.

that might not be a barrier. >> i think it would be easier or possible to reconcile that with the plain language of 230 b. these, your honor, cannot be reconciled with the plain language of 230 b. we have other structure indication. >> it talks about the maximizing these or control -- >> 230 b. said it's a policy of the united states that the internet shall remain unfettered by regulation. >> that's the last clause but the policy before that talks about maximizing. >> yeah. that was the basis for the civil immunity that broadband providers got elsewhere in the statute. there's other part of the act here that are directly relevant. congress also created a distingtd regulatory scheme as to telecom services on the one hand and information services on the other. these are information services that are to be not regulated pursuant to title ii. and throughout the communications act, we see that congress knows how to create

access regimes with rate regulations when it wants to do so. and knows how to do that very directly -- the statute which is just like this except in a different context in section 251 which requires interconnection on descroiment story terms. even other statutes like the -- [inaudible] congress said the pipeline have to provide access to competitors and has to be on nondescroiment or it terms. there's nothing like that in 706 and 706 b. >> we'll come back too a little bit. we focus on 706 b. what about 706 a. the same problems relate to 706 a. which is not credible. and again, this is a step-one argument when you take all the nefd to account here under brown and williamson. this language is just not sufficiently clear to provide the basis. it's not that congress would

have staffed a massive authority. >> with all respect, it's a step one arguement in brown and williamson. >> this language. >> i'm just not sure. i mean, i'm happy but what is clear about this? the argument of what the language is here a policy statement or a greater authority; correct? because of the two options. >> 706 a. >> yeah. together. >> we don't think it contains any stand alone power. 706 a. in nearly -- >> we don't if does not. it does not. it only recently -- the commission shall. shall what? shall encourage and how shall it do that? through the three different techniques. or over regulating method that remove barrier infrastructured. that's what the commission said.

i think the creation of barriers to infrastructure investment. >> first, your honor. i don't think other regulating method can be read as a stand alone grant of substitute regulatory power. it's an important point and one debated. the commission fails to take any account, any account of the reference to state commissions. 706 a. is the fcc regulatory authority, over and above or separate is already contained elsewhere in the act, then that's they have to do the same thing for state commission. >> you didn't have the policy even with -- it says shall. >> shall encourage. >> congress can't direct state agencies for the policy. >> that's probably why it's at the end of the day more story because it shall encourage not shall regulate. but the readings is even more likely. when you consider by the own characterization these are over at least is three steps removed

from that actual statutory goal. the rules were not really adapt inspected is -- >> removed. >> they say that the way they get to promoting broadband employment is through the three-step chain of logic. they have. they have to try to find some way to link the rules. statutory lank wage in 706. they said an open internet will cause more people to want use the internet which will drive demand and in turn drive -- >> the tremendous amount of evidence but there is a try amount of evidence that supports that. >> we disagree. but the damage story authority is that makes it even less credible nape have to start so far remove from the purpose of the rule to squeeze it in the language of the statute. and on the reading 706 even apart from the fact they don't have. >> why is it --

i guess i'm not sure why it's so such a removed area. one that piece of evidence -- you know, what really spurred of broadband was the first development of it. they made it possible -- [inaudible] they make the same point. i think it's a debatable issue but the so -- to make what the condition -- >> the notion of these rules were really adapted in order to encourage it by removing barrier to infrastructure derive order the face of the rules themselves. rule says the purpose of the rule is to preserve the open internet. not to encourage broadband

employment. the construction of networks. it just is boot strapping. and secondly, brown and williamson, requires a clear statement in cases like that. it said and mci said we are there as a question of extraordinary important which all the parties agree exists. it's not enough to institute a implied -- supreme court required clear statement. so even if you think this language is ambiguous. even if you think it's not crazy these rules under 706a or b. you're setting a clear statement here. >> i will the argue -- [inaudible] the evidence in question. i'm not sure i don't think

there's nidis piewt of evidence. the only evidence i see in the case is the number of fcc asserted in which there was only one broadband provider. that's not disputed issue or a fact. >> no. but we have -- >> what i understand is the dispute is a projection as to what might happen in the future. i don't think -- if i don't see any evidence dispute between the two of you in term of re-elected, is there? >> we have an mounted an arbitrary and capricious challenge. [inaudible] >> i think there is also. we said in our brief that the rules don't. the rules actually disinsent broadband buildout rather than encouraging it. >> as i understand this. the projection on this. but --

[inaudible] see any readies piewt. they pointed out record evidence we think shows that the rules will deter broadband deployment. >> the historical fact those are projections; right? >> necessarily because these are prof lactic rules. >> as i understand. i'm not sure there's really an dispiewt -- the question what is the -- well, when the agency regulates by the own admission purely in order to shut down and entire side of potentially two-sided market and essentially freeze the development of commercial arrangement with respect to the internet business, i think we are necessarily. isn't it really important -- it's a balancing here is how i read it. one side said --

said very articulately if the rule the are -- these rules will limit broadband providers. on the other side what they are saying is perhaps it will be. but perhaps it is won't. but overall will be overall by the positive physical flow from any discrimination law. what will come from that will care about would be produce a better system and limitation on the other side. the two-sided work. the commission said both sides. then we decided that discrimination against the providers is more beneficial. >> it is -- >> result in some districts.

>> thing would have been fine, judge. had the agency had a warrant from congress to actually adopt rule like this. and that is what you positive with the perhaps preexisting clear authority necessary existing prior authority from congress. [inaudible] necessarily agree with -- [inaudible] wow. >> yes. which is recent one of the more -- [inaudible] [laughter] necessary agree with you on that. >> yes. >> which would mean that the

antidiscrimination all of -- [inaudible] >> anything would go. >> is there anything that would remain? what about the transparency rule? >> well, -- >> that would depend on 706 wouldn't it. then 218 couldn't apply. i want to make that clarification. the larger point is the sort not sufferable. it does not contain severability clause. they didn't contest it. all they would bring themselves to no reply is it applies here. the rules are --

the long pregnant pause after that. they didn't say the rules are servable. it doesn't apply ally. level as well as fix. i was dreatszing the point that the sort not severable. now is down here we believe is the common carrier ground. which the condition has not really contest the the merit. it's a important distinction. the condition here neither -- >> why don't -- [inaudible] [laughter] >> can we just pursue the question. >> yes. which is that i want to ask about the difference -- and antidiscrimination for it. we assume the antidiscrimination

rules care and -- and the antiblocking rule by itself. well, as sheriff 64 of the order. the agency says also from no providers -- present the discrimination. >> it's blocking rule. they say would be blocking if you charged providers to reach the end user. it's a corollary of the no blocking rule in the order. >> if you were allowed to charge which assuming you're allowed to charge because of the anti-- [inaudible] someone refuse to pay just like in the dispute between cbs and time warner if they refuse. >> if it were not -- they can't.

right. and -- >> absolutely. that seems to be -- that's true. it has to go too. you somebody refuses to pay. >> absolutely. we have to right to terminate service under the rules. >> no right to terminate. >> exactly. no right to terminate service for anywhere in the order. we have to -- >> the commission. >> i really -- i read this you can use a charge to block but you can charge for different kinds of services. is not right under the antiblocking rule? you can't charge in such way to make it unusable. you still charge. assuming antidiscrimination. you can charge for different kinds of services. >> 76 is in the section regarding the