“A Midlife Crisis? IP and the Internet After 40”
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House Judiciary Subcommittee on Courts, Intellectual Property, Artificial Intelligence, and the Internet U.S. House of Representatives
Follow its sittingsSpeaker 4
That's the economic cost. I've already covered the in fact the cost that I'm not, I'm not overreacting to say people have died as a result of the money that is gained from that piracy. While millions, millions of listings for copyright infringing content are removed every day under notice and takedown process set forth in the Digital Millennium Copyright Act, right holders have raised concerns with the speed.
Speaker 5
Today our witnesses come prepared to answer the major question. What is the reasonable speed? Can we do it at the speed of sound? Can we do it at the speed of light? More importantly, in a 45-minute or sometimes a fraction of that live sports broadcast, can we do it soon enough to make it no longer profitable for those who pop up and sell their clandestine wares?
The internet has opened substantial new sales revenues for brands. That is enabling the trafficking of fake brands. And I want to make it very clear. I live on the Mexican border. My district covers 80 miles of the Mexican border.
In my district, we have a holding facility that can... that holds up to 40,000 square feet racked three and four high of illicit drugs. Those drugs often look like the real drug. They're in similar packaging. The...
the pill or other container always seems to look very legitimate, even has the right letters on it. But when it's fentanyl, it has led to people dying. So counterfeiting is not simply a matter of getting a purse that looks cool that you can take to a party and maybe no one will know, or even you may even brag that it's a fake. It is also includes the counterfeiting of pharmaceuticals that in fact once again lead to people dying. The patchwork of laws in many of these cases state by state asks the question: should we continue to have states make decisions that make honest law-abiding purveyors of products' life difficult, while in fact not effectively stopping the clandestine work?
We made this decision in 1972 through both legislation and court that we weren't going to do it with copyright for music. It's been a long time since that and there's needed to be some additional items done. But we have profited as a nation from having not just one standard, but having the federal government being able to aid states in the enforcement of copyright protection. The same needs to happen relative to AI. I think we all know it has to happen.
And more importantly, if we're going to protect the law-abiding citizen, we can't have it be simply an additional law on top of hodgepodge laws that in fact can create conflicts or greater regulatory requirements. There needs to be a congressional act targeted in a measured way, meaning don't overreact. Any federal legislation must balance three goals to avoid hobbling American innovation in online services and AI technology, which will in fact ensure the continued leadership around the globe of US technology. Let's make it sure in closing that there is one thing beyond all that I have mentioned that is at stake. And that is global leadership.
America leads the world in high tech. We do so because we welcome people from around the world to join us through immigration. Our universities are the envy of the world for both those who come and stay and those who come and go back.
Speaker 4
But that leadership is challenged by many others, but particularly by a China that in fact does not respect intellectual property, but does appreciate the innovation. They appreciate it so much, they steal it. It is Congress's responsibility thus to in fact make clear, make clear that, that we are in a war, we're in a battle, we're in a competition against China, and we are determined to win. Before I recognize the ranking member for his opening statement, I'd like to set a tone quickly with a short video, if we could please run the video. With audio.
Speaker 1
Movies all over the world, from the last four Jurassic World films in too many locations to count, to Twisters in the great state of Oklahoma. Filmmaking is global, but truly gifted storytelling is an American specialty and one worth protecting. I want to thank Chairman Issa and Ranking Member Johnson for your important work. Today, our filmmakers have no remedy to combat rampant competition from piracy websites based overseas, offering up exact digital copies of our work for free. This illegal marketplace is threatening the bedrock of America's creative economy.
Congress has the ability to provide an effective remedy to this. Please pass the same laws already being used by our friends and allies in nearly 60 countries around the world: site-blocking legislation. Please act now to save millions of American livelihoods, Americans who get up each day to make the next dinosaur movie or sci-fi epic or rom-com that will bring joy and entertainment to audiences around the globe, all while bringing profits and jobs back to us here at home.
Speaker 2
My name is Denise Huth, and I was the executive producer of The Walking Dead, which shot almost entirely in Georgia for over a decade. I come to you today with an urgent problem and the sincere hope for your help. The United States is the best incubator of talent and innovation in the world, as evidenced by the movies and TV shows that we make here every day. On the last season of The Walking Dead, we hired almost 4,000 people in Georgia, spending over 57 million dollars over 11 months. But even more enduring than those statistics is the fact that the little town where we shot the series, Senoia, Georgia, was completely revitalized, from a few businesses when we arrived to becoming a thriving tourist mecca.
Our local productions continue to be undermined by widespread digital piracy, accessible on websites and apps from any home with internet service. Most are based overseas, outside US law enforcement's reach. The United States needs site-blocking legislation urgently. We must give our hardworking American workforce the ability to be paid fairly for their work, rather than have their success and the profits from it stolen by criminals overseas. Please protect these livelihoods, the millions of Americans working in the film and TV industry, and the vitality of the culture that we export to the world.
Speaker 3
My name is Wendy Finerman, and I'm a film producer. America is the global leader in storytelling and innovation, and nowhere is this more evident than in the movies and TV shows that we export around the world. In all 50 states, over 2 million workers get up every day to make the entertainment that audiences love. For my most recent film, The Devil Wears Prada 2, we employed almost 1,500 local cast and crew in New York State alone. We paid more than 45 million dollars in local wages, and the production contributed over 67 million dollars in economic activity to the local economy, and that was just in 46 days.
But this work is increasingly undermined by widespread digital piracy. Each year, this piracy causes an estimated loss of between 29 and 71 billion dollars from the US economy and costs as many as 560,000 American jobs. Congress should enact the same laws already used by our friends and allies in over 60 countries around the world. The United States needs site-blocking legislation, and we need it today. We must act to stop offshore piracy.
I'm asking you to protect the millions of Americans working in the industry that I love and the one that represents one of our most valuable exports. Thank you for protecting it.
Speaker 12
Hi, my name is Mark Verradian and I'm a film producer. Last year, I was happy to speak to visiting members of Congress at a field hearing in Los Angeles about the urgent need for a solution. I want to thank Chairman Issa and Ranking Member Johnson for the important work this subcommittee has been doing to address digital piracy. Today, we can't release a movie without immediately losing significant income to piracy websites based overseas. This is an existential threat to the American film business at a time when Hollywood economics are under tremendous stress.
America remains the world's best storyteller, exporting those stories globally and creating an economic engine here in the US that benefits millions of Americans in all 50 states. But those jobs are at risk from digital piracy. Congress can and should enact the same laws already being used by our friends and allies in nearly 60 countries around the world. The United States needs site-blocking legislation, we need it today. Please act now to protect one of America's most successful export industries, preserve millions of well-paying jobs, and ensure that future generations of American filmmakers will continue creating the stories that move audiences around the world.
Speaker 9
I'm Scott Turow. I certainly don't need to remind this audience that protection of authors and their copyrights is delegated to the Congress in the Constitution. It reflects the vision of our founders that an independent class of creators, supported by their audience, not by the government, not by private patrons, is essential to the flourishing of our democracy and the free flow of ideas. For more than a decade now, that constitutional vision has been jeopardized by the existence of offshore pirate sites that have sold millions of stolen e-books without a cent in compensation to authors or their publishers. If this was a storefront selling stolen books, we'd have no hesitation about closing it down.
And we should have no hesitation in this case either about the needed federal legislation that will allow authors to enforce their rights in the face of theft that has been organized and industrial and flourishing beyond our borders.
Speaker 13
My name is Lee Thomas Miller. I'm the president of the Nashville Songwriters Association International and I am an American songwriter. Growing up on a farm in Nicholasville, Kentucky, the radio was my window to the world. I dreamed of someday being part of the music industry that delivered the songs I loved. After moving to Nashville, I struggled for 11 years in a 10-year town, trying to pay the bills with a wife, four young kids.
Along the way, I signed a music publishing deal and one day I finally started to hear my songs on the radio. But over the last few decades, the internet has made that tough. First came music piracy. It is hard to make a living when your creation is being illegally offered for free. Then there was music streaming, almost free, pay so low that our jobs were immediately threatened.
Now there's artificial intelligence, software that takes what I create without my permission or payment, creating songs for which I get nothing. I thank the subcommittee for today's hearing. American songwriters need your help.
Thank you.
Speaker 15
I now recognize the ranking member of the subcommittee for his opening statement.
Henry Johnson
Thank you, Mr. Chairman. When the modern internet was born in January of 1983, many considered it just another Department of Defense project for the military. But thanks to taxpayer funding, the United States was able to partner with research universities and eventually private companies to harness this innovation for use by the general public. Over its first 10 years, the internet evolved from an application to compete with the Soviets to a place where people could socially connect, conduct business, and communicate with others, and even to it evolved into a medium for artistic expression. Today it's hard for many of us to imagine a world without new recipes at our fingertips, instant news updates, or pictures of our friends and family on our social media news feeds.
Good or bad is no longer the question. The internet is inescapable from modern society. This is quickly becoming the same with generative artificial intelligence, which has been adopted by businesses and consumers alike in just a few short years. Even with widespread adoption of transformative technology, it is imperative that we continue to protect rights holders when technology is used to steal intellectual property, defraud consumers, and increase inequality. Products available online from a trusted website can seem identical to those at brick and mortar stores, but instead are produced with harmful chemicals or contain dangerous malware.
These nearly identical knockoffs can damage your favorite brand's reputation and harm their ability to stay in business. Websites that miraculously have Project Hail Mary streaming for free really are too good to be true. And that product with Tom Hanks in the commercial may not have actually been endorsed by Tom Hanks, just a replica created with AI. Some of these may seem harmless at first glance, but they matter to me and my constituents. Film and TV spending in Georgia, the Hollywood of the South, hit $4.4 billion in 2022 with 412 productions.
But increased costs have devastated our film and TV market. Spending was down $2.3 billion in the last fiscal year with just 245 productions. Our writers and actors need jobs to keep creating, and market changes have made that all the more difficult to achieve. Across creative industries, innovators from writers and software developers to musicians and painters are watching their works used to train AI models for free while the barrier to entry gets higher and higher. If Congress's role today is to play armchair psychologist to the internet's midlife crisis, it is imperative we view harms to creators as the symptom of a more pernicious disease.
The question we should be asking ourselves is, are the innovations before us serving the American people or do they exclusively benefit a small handful of the wealthiest, most powerful corporations and individuals in the world? Georgia's 11 million plus residents have a median household income of just under $82,000. Mark Zuckerberg is worth $220 billion as of December 2025. Groceries in Georgia were found to be the 11th highest in the country earlier this month. Elon Musk just became the world's first trillionaire.
Homes in 79% of Georgia's counties are considered unaffordable for the average worker. Jeff Bezos just spent an estimated nearly $50 million on his wedding. Americans are clearly facing an affordability crisis, but those at the very top are doing well and getting wealthier and wealthier every day. The price of everyday consumer devices, such as your laptops and computers, have continued to climb, now to an estimated 15 to 25%. Data centers are driving up utility costs, straining the grid and degrading the quality of the everyday appliances families depend on, like our air conditioning and heating systems.
Senior citizens are having to choose between paying their utility bills and their prescriptions. And the rich get richer, the middle class shrinks, and the poor get poorer. The benefits from technological innovations, while impressive, are minimized if everyone can't enjoy their benefits. We can do this by meaningfully deploying technology in a way that uplifts us all. This means acknowledging creators as a key part of the ecosystem that is building AI and compensating them as such.
This means enacting protections for American workers, building responsibility and deploying equitably. I look forward to hearing from the witnesses how we can better protect America's artists, innovators and the creative fields. I thank Chairman Issa for holding this important hearing and I yield back the balance of my time.
Speaker 11
Gentleman yields back. Thank you. We now recognize the chairman of the full committee, Mr. Jordan, for his opening statement.
Thank you, Mr. Chairman, and I'll be brief. I just want to thank you for your work for now over two decades on trying to stop copyright piracy and harmful uses of AI while not harming choice, innovation and maybe most importantly, First Amendment liberties. We appreciate your tireless work and I know this is your last session in Congress. We'll probably have a few more hearings, but I did want to take the time to thank you for this issue and so many others that you've worked so hard on. And I look forward, I thank our witnesses for being here and look forward to hearing from today's panel.
With that, I yield back.
Speaker 10
I thank the chairman. I profusely thank the chairman. We now recognize the ranking member of the full committee, Mr. Raskin, for his opening statement.
Jamie Raskin
Thank you kindly, Mr. Chairman. Welcome to our witnesses. A couple months ago, I got a postcard in my mailbox which let me know that three books that I've written over the course of my career had been used to train Anthropic's Claude AI large language models and because of this, I was entitled to be part of this settlement in the Bartz versus Anthropic case. Now this surprised me because first of all, it reminded me that I used to write books.
Now I just post 280 characters every day. But it also surprised me because I didn't know anything about the litigation, much less did I know anything about the fact that Anthropic had essentially swallowed up the contents of three of my books, apparently rejecting the relevance and the utility of several other books I'd written. But Anthropic had never called to ask me to use my books. But a judge found that Anthropic's ingestion and digestion of my books without payment was fair use. Claude AI may not be allowed to simply reprint my book and regurgitate it line for line and sell it, but it may profit off of my word choice, my cadence, my style, such as it is, my conceptualizations, and my research, among other attributes of my writing, for free.
Now, if I finally get around to filling out the form, which means I have to finally get around to finding the postcard, I may get a de minimis check in the mail because the judge did find Anthropic had used pirated versions of the books that it used to train its large language model, and the parties, including apparently me, settled shortly after this holding. Now, we'd be cavalier to write these training episodes off as a random or minor incidents. AI companies intentionally select works with which to train their large language models, often with zero intention of paying the creators any royalties for use of their creative intellectual labor. Barts versus Anthropic is just one ominous decision floating in a sea of developing case law in this brave new world, to engage in a fair use vernacular borrowing of H.G. Wells' famous work of science fiction. But it's illustrative of the proliferating tensions between existing law and social values that have materialized as we live through this time of astonishing technological transformation.
The advent of the internet and the explosive emergence of AI have fundamentally changed the way that we interact with each other, the way we conduct business, the way we think about human thought, human feelings, and human work, and the way we create and consume books, songs, and other creative works. Now, I tend much more to the heady enthusiast side of such changes over the brooding Luddite side when it comes to technological innovation. But that's only because I have a profound faith in democracy, in our capacity to manage technological change when we put our minds to it. So now is the time to pose and grapple with urgent and searching questions about the moment. How do we integrate titanic new technological changes in a way that supports rather than undermines the basic needs and values of our society?
We know from experience that innovations mean little if they are left to create inequality and domination, joblessness, and poverty. How do we prevent the concentration of power and wealth, but instead work to fairly distribute the benefits of new technology so they become part of our common life and inheritance? In this new era, we must ask ourselves what is fair and what is just and what will secure the greatest good to the greatest number of people. And that's what I hope we will be doing today. When the DMCA became governing copyright law nearly 30 years ago, dangerous products and merchandise that infringed on intellectual property rights overwhelmingly had to be bought in person.
Movie and music pirates created physical copies of recordings and literally sold them on the street corners. Our laws did not contemplate the spread of streaming where content piracy occurs on a daily basis all over the world, as far away as Vietnam and the Philippines, and the pirates can create a new infringing site the moment one gets taken down.
Consumer products used to be bought almost exclusively in stores, with the occasional counterfeit handbag on the street. Today, harmful counterfeit products like exploding batteries, toxic baby cream, and asbestos-laden crayons can be bought, often usually unwittingly, by consumers online, and they arrive at their doorsteps in a matter of hours. Even our music laws were designed for a world where listeners discovered music through their stereos, which is why we are left with laws that prevent performers from being paid when their music is played on the radio. These issues affect not just the two million employees of the movie industry or the nearly twelve billion dollars in revenue from the music industry, but also the consumers who end up paying the cost of counterfeit goods that break or cause harm or just drive up the price of the real product. The laws on the books may no longer be fair for these affected industries, and they are almost certainly unfair to consumers.
I understand there are many proposals out there with ideas for improving on the current situation. I'm a proud cosponsor of one of them, the American Music Fairness Act, which would ensure that performers are paid when their music is actually played on the radio. In many ways, AI has supercharged problems that have been percolating since the advent of the internet. Generative AI models allow us to use the internet faster, more accurately, and beyond our individual technological capacities, but our laws have not kept pace with all the changes. Our intellectual property laws were created at a time when it was safe to presume that one must be human to have cognition and an intellect.
Some would argue that's no longer the case. It's long past time we considered how to continue protecting the creative fields and address the ramifications of the proliferation of deepfakes, training AI models on copyrighted material, and other areas where AI may be unfair to both consumers and creators. I know some of my colleagues want to do away with the regulation of AI companies altogether, but we can protect content creators and help businesses thrive at the same time. We don't have to choose. Congress should help provide for the safe adoption of generative AI models that take into account the environmental, labor, and social consequences of such technology, and we should do so while allowing the states to experiment with different approaches.
I'm dismayed by those who have caved to a small group of billionaires and now a trillionaire who own these AI models and have proposed broad preemption of state common law causes of action and state legislative decision-making with no federal regulation at all. There's no reason we should do away with common law tort claims that act as the basic national safety net for fairness. The National Institute of Science and Technology should absolutely be allowed to test frontier models, and if AI models are being built on the hard work of artists, writers, and inventors, we should be thinking long-term to ensure that there are more artists, writers, and inventors a generation from now creating material to sustainably train the next wave of generative innovation to come. The rational next step for this committee is to ask ourselves how we can map a path forward for all Americans to use technology while ensuring laws that protect consumers and creators, workers and families. Thank you, Mr. Chairman, I yield back to you.
Speaker 5
The gentleman yields back. Without objection, all other opening statements will be included in the record. We now go to our distinguished panel of witnesses. Mr. Sean Astin. Mr. Astin is the president of the Screen Actors Guild.
By the way, one of the few things I haven't done and I continue to say I'm available for a bit part.
Am I allowed to do that? Anyhow. The American Federation of Television and Radio Artists, commonly known as SAG-AFTRA. He is himself an actor and a long distinguished career in film and television. To name just a few, he has appeared in The Goonies, Rudy.
By the way, we're going to talk about Rudy. That's going to happen, how can we not, even if you didn't go to the right college. The Lord of the Rings trilogy, Stranger Things, Teenage Mutant Ninja Turtles, and many more. Thank you for being here as a well-knowledgeable expert witness in addition to your current role. Mr. Chris Floyd.
Mr. Floyd is a legal and business strategy advisor to Amblin Entertainment and film and television production company. Basically, he's Steven Spielberg's most trusted advisor. He previously served as the Chief Operating Officer and General Counsel at the partnership for a decade and held various positions with DreamWorks Studios, Universal Pictures, Paramount, and Walt Disney Productions. Welcome. Mr. Steve Francis.
Mr. Francis is the Executive Chairman and President of IP House, a global intelligent, excuse me, intellectual property enforcement company. He previously served as the Acting Executive Associate Director of Homeland Security Investigations as the Director of National Intellectual Property Rights Coordinator. Thank you and very much welcome. Mr. Christopher Mohr. Mr. Mohr is President and Chief Executive Officer of the Software and Information Industry Association, a collection of entertainment, consumer, and business software companies.
He previously served as the Senior Vice President for Intellectual Property and General Counsel at the same organization, where he led the association's intellectual property policy and anti-piracy. Lastly, but not leastly by a long shot, Dr. Vishwanathan, or close to it. The doctor is a non-resident fellow at the Kernochan Center for Law, Media and the Arts at Columbia University. She is also a visiting assistant professor at Suffolk University Law School, where she teaches courses in contract and transactional law. The doctor is in fact the author of a number of pieces including How Creative Industries Can Harness Intellectual Property to Survive in a Digital Age.
Welcome, and I apologize. You know, as one left-hander to another, I said I'm not going to mess this up, and between my hoarse throat and the other, I apologize. I want to thank all of you for being here. Pursuant to the committee rules, I'd ask you please rise, raise your right hand to take the oath. Do you solemnly swear or affirm under penalty of perjury that the testimony you're about to give is true and correct to the best of your knowledge, information, and belief, so help you God?
Thank you, you may be seated. Let the record reflect that all witnesses answered in the affirmative. If you've watched C-SPAN, you know I have to give this admonishment, that you'll have five minutes in your opening statements, but 100% of all the material you brought with you in your opening statement plus additional material you may supplement with will be placed on the record, thus leaving you completely free not to just read what you brought, although some of you just might. So with that, we begin, Mr. Astin.
Sean Astin
Well, this is good stuff you're going to want to hear.
Chairman Issa, Ranking Member Johnson, members of the committee, thank you very much for convening the hearing and for your continued work modernizing American intellectual property law. Thank you, Representative Lofgren, for your leadership on combating foreign digital piracy, and Chairman Issa, for all of your work and for your work on the American Music Fairness Act. The issues therein matter to the livelihoods of the 160,000 union performers and media professionals I represent as president of SAG-AFTRA. Today, I'd like to speak about the abuse of non-consensual digital replicas of our voices and likenesses. For all of human history, if someone saw your face, they knew it was you.
If they heard your voice, they knew you had spoken. For thousands of years, that simple connection was enough. Your face, your voice, your presence, reality itself was affirmed and simply put, we knew who we were to each other. Artificial intelligence has begun to intervene and break that ancient connection. Today, someone can realistically make you appear to say something you never said, to endorse something you don't believe in, or even convincingly depict you confessing to something you had no knowledge of.
For the first time in human history, the experiences we've always shared are no longer secure. Our relationship to community is distorting, thanks to a wave of technology made widely available without much concern for public safety. In my line of work, we deal with emotions, so on behalf of our performers, I'm here to tell you what this moment feels like. To begin, we make our livings by granting the use of our voices and likenesses to our employers, that's what they pay us for. Through every audition and with every career setback, we know we rely on the fact that when the jobs finally come, we have something uniquely ours to offer.
Now imagine a performer waking up one morning to discover on their phone a version of themselves that never was, but they're watching it, and so is the rest of the world. The voice and face are a perfect match. For the performer, it's a moment of terror. Who is seeing it? Will anyone ever hire them again?
Will their reputation built over a lifetime be destroyed in a moment? Every casting director, every producer, every executive, every member of the public can see it. Even their family may hesitate for a moment. But they can reach for something deeper. He would never say that.
That's not who she is. But who are we? Think about anyone you love. Your understanding of them is built from memory. Imagine that memory being contaminated.
The thing that brings us back to the real person is our faith in who they truly are. In the world of deepfakes, the damage is done instantly and without mercy. The public has no obligation to discover the truth about someone. They just keep scrolling. Our members have no ability to protect themselves from this kind of abuse.
Neither does the teenager humiliated by a fabricated image. Neither do parents trying to protect their children. Neither does anyone whose reputation can be threatened by a digital replica they never authorized. Artificial intelligence is changing the way human beings experience life. We all know that this moment demands wisdom and action.
Technology is not our enemy. Throughout our history, America has chosen both innovation and responsibility, usually sadly only after ordinary people have suffered some calamity. But there is a right path. It is obvious that civilization is in the throes of a technological whirlwind the likes of which we have never seen, and as of this moment, Americans are being forced to surrender their basic relationship to one another. We don't want to stop progress.
We need to civilize it. Many Americans may never own a home or accumulate significant financial wealth, but every American does possess something of immeasurable value: their identity. That God-given gift really should belong to us, and surely we can all agree that no one else should be permitted to commercially exploit our identity without our consent. In the world of entertainment, our image and likeness have been the substance of our transactions, but in the wild, we do not own them. We should, and you can make it so.
Members of the committee, what I'm saying about this moment and about who we are is that every human being should remain the author of their own existence. Reality should remain verifiable. Consent is not a nuisance. Reputation matters, and truth is truth, and it's worth protecting. Thank you very much.
I thank the gentleman, Mr. Floyd.
Chris Floyd
Chairman Issa, Ranking Member Johnson, and distinguished members of the subcommittee, thank you for inviting me here today. I am of counsel at Amblin Entertainment, Steven Spielberg's film and television company. I've worked in the Amblin family for 20 years, including a decade as Chief Operating Officer and General Counsel. I've overseen many business and legal functions, including content protection. Two weeks ago, Amblin and Universal released Steven's film Disclosure Day, adding to his legacy of films like War of the Worlds and Minority Report.
Disclosure Day fully embodies Steven's beloved sci-fi genre, embracing modern technology that makes transporting audiences to another world even more thrilling. However, these technological advancements also present challenges. Steven's prior sci-fi movies were released in a drastically different marketplace, before the internet supercharged digital piracy. When Minority Report was released in 2002, piracy was still limited largely to hard goods: DVD bootlegs from camcorders in a theater with muddled sound and shaky video, then sold on street corners. They were poor knockoffs, and customers knew it.
While the scale of piracy was reason for some concern then, today, digital piracy costs the US economy a staggering amount, at least 29 billion dollars annually. We now expect each release will be made available immediately in perfect digital form from offshore pirate sites with global reach. This substantial increase in quality, coupled with wide and immediate availability on any device, makes this an urgent economic and consumer safety problem. Together with our studio distribution partners, we spend hours seeking removal of these infringing videos. Additionally, all the studios and streamers created the Alliance for Creativity and Entertainment to work with global law enforcement to combat piracy, but even with these extensive efforts, representing tens of millions of dollars and countless work hours, piracy still inflicts huge harm on the market for our films.
When we find Disclosure Day online, we have limited recourse, primarily because most pirate sites are operated by overseas criminal enterprises. We have laws that enable us to go after pirate sites in the US, but Bulgaria, Vietnam, the Philippines—these jurisdictions sit outside the practical reach of US law enforcement, but easily reach US consumers online. Now, global revenues from US films are shared with cast and crew in residuals and pension, health, and welfare payments. Profits are poured into new productions in every state of the union, including with local businesses. Shooting a one-hour television episode generates around 475,000 dollars per day locally, while a feature film generates 670,000 dollars per day.
The billions siphoned from our economy by these overseas criminals should be available for these future productions and payments to industry workers, but they're not. Today, piracy detrimentally impacts millions of creatives in the US entertainment industry and the economy as a whole, while funding a global network of crime. According to Digital Citizens Alliance, European authorities dismantled a piracy operation across 11 countries in 2024 that generated 3.5 billion dollars yearly, seizing drugs, weapons, and millions in cryptocurrency.
In Spain, Operation Fake exposed another site that also dealt in drug trafficking and money laundering, resulting in 30 arrests and millions in frozen assets. So, what is to be done? Well, I ask you today for the tool proven effective in nearly 60 countries globally, but still lacking in the US: judicial site blocking. Under these laws, when a court determines through a full and transparent process that an offshore site is dedicated to piracy, it can direct internet providers to block local access. Studies prove site blocking results in fewer visits to piracy sites and an increase to legitimate sites.
Portugal witnessed a 70% drop in traffic, Australia saw a 25% decrease, and the UK experienced a 10% surge to legal services. This would be a game changer for our industry's 2.3 million workers and America's creative economy. Historically, the US led the world in IP enforcement, but we've lagged behind for the past decade. Other countries have shown us how to do this without impacting speech, due process, or the internet. It's time the US reasserts its leadership role on anti-piracy.
And finally, allow me to turn briefly to artificial intelligence, where the US is the leader in innovation, as it should be. As a tool, AI can further empower us to tell compelling stories and reach audiences. But as we consider how to maintain America's competitive advantage against China and other countries, we must also remain the global leader in both the innovation and creative industries. How these AI companies win the AI race and how they treat copyrighted work will affect the force of human creativity in the future. We'll never maintain America's lead by lowering our IP standards to match those of the Chinese.
That's why our industry supports the No Fakes Act, which combats dissemination of unauthorized AI-generated deepfakes while safeguarding protected expression such as parody, news, and biopics. My community thanks the subcommittee for your dedication as we look forward to working together to rebuild a vibrant US entertainment industry. Thank you.
I thank the gentleman. Mr. Francis.
Derek Francis
Chairman Issa, Ranking Member Johnson, and distinguished members of the subcommittee, thank you for the opportunity to testify today. I spent over 25 years in federal law enforcement, including as the director of the National IPR Center, working alongside colleagues from Homeland Security Investigations, US Customs and Border Protection, the Department of Justice, and law enforcement partners across more than 30 countries. I've seen IP enforcement from multiple angles. I know where the government excels and where the prioritization creates challenges for enforcement. I appear today on behalf of IP House, a global IP protection enforcement company I co-founded after recognizing critical gaps in the enforcement landscape.
IP House operates across every major jurisdiction because IP crime is truly global. We detect and disrupt infringement networks at scale, bringing global intelligence and operational visibility that complements the work of governments and rights holders worldwide. What I see at IP House confirms what I witnessed throughout my career. As commerce has moved online, IP crime has grown more sophisticated, more organized, and harder to disrupt. Criminal networks now exploit the speed, scale, and anonymity of the internet to steal IP and endanger consumers on a global scale.
So today's hearing is incredibly timely. Counterfeiters operate through anonymous digital storefronts on the trusted online marketplaces American consumers use every day. They rapidly cycle through seller identities, domains, and payment processors to evade enforcement, often moving illicit proceeds long before traditional legal remedies can take effect. That is why IP House focuses on following the networks and the money, not just removing individual listings, to dismantle criminal organizations rather than chasing one product at a time.
They are not harmless knockoffs. They include counterfeit pharmaceuticals, automotive parts, electronics, children's toys, and household products that threaten the health and safety of American consumers. One of the most effective US civil tools against counterfeiting is what practitioners call Schedule A litigation. It allows rights holders to bring a single action against multiple anonymous foreign sellers engaged in the same infringing conduct. Just as importantly, it allows the courts to quickly freeze the seller accounts and related assets before these proceeds disappear beyond the reach of US jurisdiction.
That changes the economics of infringement. Without this tool, rights holders are forced to file dozens or even hundreds of nearly identical lawsuits against anonymous defendants who have moved assets and simply reappear under new identities faster than the courts can reach a judgment. Schedule A is one of the most is one of the few law enforcement tools capable of matching the speed, scale, and anonymity of today's online infringers while preserving judicial efficiency and due process. Online piracy presents an equally sophisticated challenge. Our recent organized piracy crime report published with the Digital Citizens Alliance demonstrates the that many of today's piracy operations have evolved into criminal enterprises built on the systematic theft of American intellectual property.
A single network we examined reached more than 22 million subscribers and generated roughly $288 million a month. When law enforcement dismantled that operation, they uncovered drugs, weapons, and cryptocurrency, evidence that these organizations are engaged in far more copyright infringement. Large-scale piracy networks view IP theft as low-risk, high-reward criminal enterprise, and changing the calculation is what IP House was built to do. The enforcement gap is real and measurable. Rights holders are stuck with reactive platform tools that provide relief measured in just hours.
More than 40 peer nations now use court-ordered site blocking to cut off foreign fully infringing content sites and services at the source. The results have been significant. In the UK, traffic to the targeted piracy fell nearly 89% after blocking orders took effect. The United States has not kept pace with its international partners, leaving creators, consumers, and businesses at a competitive disadvantage. Meanwhile, criminal organizations are now using generative AI to accelerate infringement to an unprecedented scale.
These include mass-produced counterfeit listings and brand impersonation to synthetic media as well as the name, image, and likeness violations. While the technology is new, the underlying challenge is not. Bad actors continue to exploit innovation faster than our enforcement tools can adapt. I hope my testimony today provides the subcommittee with an operational perspective on how today's online infringement networks actually function. Where the current enforcement tools are succeeding and where meaningful gaps remain.
IP House is committed to working with Congress to ensure American innovators, creators, consumers, and businesses are protected in the digital age. Thank you, and I welcome your questions.
Thank you, Mr. Jones. Yield back. Mr. Moore.
Chris Moore
Chairman Issa, Ranking Member Johnson, and members of the subcommittee, thank you for the opportunity to appear here today. Before I get into the substance, I just want to take a moment to thank you, Mr. Chairman, on behalf of our members. You've been a genuine ally to us on patents and a straight shooter even when we've disagreed. That leadership shows up here too, convening roundtables on foreign piracy, advancing thoughtful site-blocking discussions, and choosing an educational hearing over a rush to markup. It's been a privilege to work with you, and we're grateful for the way that you've sought to both protect and advance American innovation.
SIIA represents more than 350 companies in the business of information, AI developers, publishers, financial data firms, and software creators. Unusually for a technology trade association, our members sit on both sides of many IP issues. We have platforms that distribute works and they're rights holders.
When examining new IP and other policy proposals, we tend to ask the same questions every time. Does existing law already address the harm, what new risk does a technology create, and what limits make a statute both effective and constitutional? I'm going to briefly highlight two areas. Two years ago, SIA testified in front of this committee about unauthorized digital replicas. And on digital replicas, the harm that these unauthorized uses cause is real.
These AI-generated voices and likenesses are already defrauding consumers and exploiting performers. We support the creation of a federal right here, and we supported the Take It Down Act last year as proof Congress can build precise, targeted tools for AI-enabled harms. In terms of vehicles that have recently moved, the NO FAKES Act has received a lot of attention. But from our perspective, there are four problems that remain, and each one is fixable. First, the preemption clause grandfathers in existing state law and only displaces state regimes for expressive works, so the bill doesn't really deliver on the promise of a national standard.
Second, the counter-notification safeguard against wrongful takedowns only exists inside the bill's safe harbor framework. At statutory damages up to $750,000 per work and a life plus 70 term, no company will risk staying outside that framework, so in practice, this isn't a narrow opt-in category, it's close to the entire digital ecosystem operating under a takedown regime with no guarantee necessarily to put wrongly removed content back up. That raises concerns over speech at scale. Third, there is no general intent requirement, risking liability for general-purpose AI tools and inadvertent lookalikes alongside the actual bad actors. And fourth, again, this goes to scope, the bill's framed as touching only user content platforms, but it reaches deep into the broader digital economy and shifts Section 230 treatment along the way.
We don't have a problem with that resolution, but it emphasizes the importance of getting the details right. Now, we've supplied redline language on these issues. And these are fixes, not objections to the bill's premise, and we're ready to keep working on it until we handle these problems correctly. The second topic that I'm going to address is foreign piracy. This is, and site blocking specifically.
This is a different question, and our members are genuinely split on site blocking as a remedy. And my goal here is not to advocate a specific solution, but to present the equities that Congress has already begun to consider. First, the underlying problem is real. These pirate sites sit outside US courts' reach, and they keep operating through mirror domains and offshore hosting no matter how many times they're shut down. But the concerns over how blocking gets implemented are just as real.
Blocking at the level of DNS resolvers doesn't respect borders. Targets increasingly share cloud infrastructure with thousands of unrelated lawful sites, so a narrow order can have overbroad effects. And foreign experience shows that legitimate services can get swept up by mistake. So we're not here to endorse or oppose a specific proposal. We're here to say that if Congress moves forward, four guardrails should be non-negotiable.
Real judicial process with some adversarial testing, not rubber-stamp petitions, targeting precise enough to protect shared infrastructure and lawful content, strong good-faith safe harbors for the providers required to comply, and no mandate for a single government-prescribed technical method. On both issues, our position is the same: get the goal right, get the mechanism right, and we all win.
And our members are going to have to operate under whatever regime Congress creates. Thank you again for the opportunity to testify, and I welcome your questions.
Bhamati Viswanathan
Chairman Issa, Ranking Member Jordan, Ranking Member Raskin, thank you, Johnson, pardon me. It's catching.
Thank you so much for having me. My name is Bhama-thee Viswanathan. I teach at Suffolk Law School where I teach copyright law, constitutional law, contracts, and artificial intelligence in the law. Happily for all of us, I'm here today to talk about contracts and copyright both,
and not constitutional law. And I want to frame this with three thoughts quickly, and then I'm going to move on to three potential solutions that I see. The framing is I'm going to take it from the title of this hearing, which struck me: the midlife crisis question. Those of us who sit around thinking about our midlives sometimes,
think of midlife as both a crisis sometimes, but also an opportunity. It's an opportunity to rethink, and it's a very strategic moment for us to rethink. Disruption, as we found with the internet 40 years ago,
which is how we framed this hearing, begins with opportunity and it begins with innovation. It also begins with disruption. And we're at another moment, another inflection point. And I want to frame this by saying we're not talking about one industry,
we're talking about two, two critical industries. So, Mr. Issa, you said that America leads the world in high tech. Yes, we also lead the world in arts and entertainment, in culture. Two billion dollar industry for tech,
many people are surprised to hear 3.3 trillion dollars and more in 2024 was the estimate that was given. So two robust industries. We cannot kill the goose that lays the golden eggs. We need the goose to be alive and we need the eggs to be cold, right? We need both sides.
Second, we believe in our IP system. We have a strong and robust IP system. It's the pride and joy of our country and it's in our Constitution. Sorry, I said I wasn't going to talk about Con Law and I just did. But we believe in the patent system.
The patent system is strong and robust. We need to make sure that the copyright side is strong and robust too. We can't just throw it up and scrap it at the behest of a few tech companies that say, "Oh, we're going to lose the arms race." There are multiple arms races going on here. Our arts and culture, no one compares to it.
K-pop, Bollywood, Eurovision, sorry, nothing is as great as our export of IP in both areas of technology and culture. It's a new time. We need new rights and importantly, we need new enforcement mechanisms. So let me get to my three solutions that I think are strong on the table and that we should really contemplate right now as urgent. The first, as you've heard my fellow panelists speak about, judicial site blocking.
For those of you who don't know what that is, it's a process through which you ask a court to stop an infringing website. You know already that it exists almost exclusively to disseminate infringing materials. So you're worried about a bad actor here. And there are due process steps in place to say, "Okay, we need to make sure that's true."
But once we've made sure that's true, what can we do? We can ask a court to say through a no-fault process without seeking damages, "You need to shut this down because we can't." We can't go after these bad actors. They're often extraterritorial. We really have no other recourse.
It's over 50 countries have adopted it, as you've heard.
The US Copyright Office has written a letter of support to to you Congress about it. It's it's timely and I think it's a a fair and reasonable balanced solution. Second, I'm going to talk very quickly about digital replicas because I know you've heard about them a lot. They are a problem. They affect people.
And because we are people, we have personal property rights in our identity and in our autonomy. Let's not forget why this exists. It's rights in ourselves. As Mr. Aston said, we have human rights and those rights deserve to be federalized. They deserve to be made into a federal property right and this needs to be made something that that occurs across the country.
We can carve out First Amendment concerns. We can carve out the scope of it. But it's something that needs to be addressed now. Thirdly, and perhaps nearest and dearest to my heart is the question of the treatment of the ingestion of copyrighted materials by large language models, LLMs. What does that mean?
We use this word a lot. We say LLMs train themselves on copyrighted material. Well, they can train, but just like the rest of us who train, they have to pay for the training. Licensing agreements need to flourish. They are beginning to happen.
We need to make sure that creators, creators who create the stuff that we consume are compensated, small creators too, not just large intermediaries. And we need to do that now. There's a lot of court cases pending as Mr. Raskin said, fair use cases, but we also need to make sure that there are licensing and market-based solutions that make it fair for all of us. Thank you so much for giving me the time to hear.
Speaker 5
Thank you, Doctor. We will now proceed under the five-minute rule for questions. By mutual agreement, we will go to the gentleman from Virginia, Mr. Cline first.
Ben Cline
Thank you, Mr. Chairman. Thank you for your leadership on this issue. You've given us a historical perspective that dates back many decades and I know many here and watching have been a large part of that history. And so as you said in your opening remarks, it's important to remember that history, but also to be cautious in our in any movement that we take moving forward, recognizing that the DMCA, notice and takedown, all of these things that were put in place 20 years ago may need updating but don't need wholesale replacing. Not going to throw out the baby with the bathwater, the goose that laid the golden eggs, whatever metaphor we want to use.
Mr. Moore, in Cox versus Sony this spring, the Supreme Court held nine to zero that an internet service provider is not contributorily liable for its users' piracy unless it induced the infringement or tailored its service to it, which retired the older knowledge plus material contribution theory. With that route against intermediates now narrowed, does a no-fault judicial remedy to restrict access to foreign piracy sites become both the cleaner legal tool and the more realistic one since it turns on blocking rather than on anyone's fault?
Chris Moore
So I think I think certainly from the rights holder side of our constituency that that is exactly how they view the significance of the Cox decision. I will say that for the platforms that we represent that they're the you know, the problem, however, of these offshore sites existed well before the Cox decision was decided. And the folks that are the folks like Sci-Hub or the that I mentioned in my testimony and the other sites that are ripping off the other folks on this panel don't don't care about Cox. And so that's really the reason for the you know, from the copyright owner side for the push for site-blocking orders because they need a way to get at websites that US courts can't reach.
Speaker 24
Because if these websites existed in the United States, they would not last long.
Speaker 22
You're absolutely right. And the chairman led a delegation of members on a visit to the UK and other countries more than a year ago and to see firsthand how their site blocking regimes are working. And what we saw very clearly was that these remedies can work to reduce traffic to foreign pirate sites and increase traffic to legitimate sites while safeguarding speech, due process, and legitimate internet activities, all without imposing undue burden or liability risks on the ISPs that are directed to implement the court orders. My understanding is that liability concerns on the part of domestic ISPs has been the most significant impediment to advancing legislation in the US, though I'm also told that the proposals offered to date in the House and Senate all include provisions to address that concern. My questions are these.
First, do we now know enough from the experience of the many foreign jurisdictions that have implemented this remedy successfully over the last 15 years that we can confidently move forward with US legislation and avoid any unintended consequences? And two, in light of the Cox decision, is the concern about ISP liability now a moot issue?
Chris Moore
I'm not sure I understand the second part of that question. With respect to the first part, I think as my testimony makes clear, I'm not in a position where I can say a bill is good, a bill is bad. But what I can say is, you know, is that a bill that contains the guardrails is one that I believe Congress can advance. And those guardrails I mentioned in the opening, but adversarial testing, the targeting is the biggest concern because the internet architecture, again, from from the kind of infrastructure/internet side of our membership, right, the architecture of the internet is not designed is designed to efficiently distribute, not necessarily it's not designed to throttle. And so the risk then of overblocking because of that architecture and, you know, liability for overblocking from the standpoint of those providers is real.
And so with respect to the guardrails, if the safe harbors are there, you know, if there's no tech mandate, if the targeting is precise and the process is fair, that is a roadmap for a successful site blocking bill. And then again, devil's in the details and I am not in a position where I can give you those.
Thank you. Yield back.
Speaker 5
Gentleman yields back. We now go to the ranking member of the subcommittee, Mr. Johnson, for his five minutes.
Henry Johnson
Thank you, Mr. Chairman. Professor Viswanathan, AI systems require massive amounts of data for their training and development, and AI companies are continuing to train on copyrighted material to release better and better models. Should AI developers be required to disclose the datasets used to train their models?
Bhamati Viswanathan
Thank you so much for asking me that question, Mr. Johnson. Um, I want to start by saying we use the word training, and I'm not sure that that is always the right word. They do ingest enormous amounts of material to generate what they generate. But when we train, when you and I train, when we learn, when we go use things, we pay for those materials. We license them or we buy them.
I buy a book in the bookstore, I use it in the library, which has already paid a licensing fee. I am training in a respect, but that's not the same thing that the AI companies are doing. What they're doing is they're gobbling up huge amounts of material.
Do they need to disclose their datasets? Yes, that's I think one part of it. I think that in the fair use cases I've been talking about that Mr. Raskin was just referring to the one where his books were ingested, right? What happened there? I don't think they ever paid you for those books.
You will be paid, go find that postcard in the settlement, because it's the point is, right, it's not just disclosing what they trained on. By the way, in Bart's, in the Bart's case, we found that they were in fact training on pirate sites as well, right? So we're learning what they're training on and it's not good. But they should also be made to realize that you can't just take it. It's not a get out of jail for free card to say, oh, it's expensive to license.
They need to license the materials that they're using as one does. It needs to, I think market-based solutions are the preferred solution because parties come to them, but we can't, we need to monitor what in fact they're doing. I think disclosure is a part of that, but not the entire story. I think it's an important part of it. But most of all, I think we need to recognize that harm is being done to the market, the actual and potential markets of copyright holders.
That is not what fair use in the copyright fair use term was ever legally or in the spirit meant to have happened, right? It was not meant to be a, oh, it's beneficial and so you get to use it for free. It's beneficial, but it's also valuable and the value needs to be paid.
Chris Floyd
Thank you. Mr. Floyd, how has the proliferation of internet piracy changed the way that movies are made?
It's had a direct impact on the number of movies that we make and which movies we make. When we're making a decision as to go forward with a film, we do a profit and loss analysis and we look at the history of the movies in the last few years and we look and see what kind of revenues have been generated. As piracy cuts down on the revenues, the legitimate revenues that we're getting, we determine that our next movie's going to make fewer dollars and so that impacts maybe our ability to spend a certain amount of money on a movie or make that movie at all. So what you end up with are fewer movies being made, fewer people being employed along the way, and more risk being taken by the studios on the movies that they do go forward on.
Henry Johnson
Thank you. Mr. Austin, you've made a career off of your name, image, likeness, and voice, everything we talk about when we examine digital replica legislation. What about individuals whose names or likenesses is not a commercial business? Do you think those individuals need to be protected as well?
Sean Astin
Absolutely. They need it as much if not more. I mean, and they're, yes. I mentioned in my testimony that if you're a teenager somewhere in your district, for example, and for whatever reason with very little difficulty someone's able to depict you as you, not you, this imagined teenager, saying or doing something, or you too, we all, everyone in here. I mean, we traffic in our identity and our reputations all the time.
Well, so does a fourteen-year-old kid. And yet these big platforms benefit financially from when some horrible, you know, depiction is done of them. And they have no ability to do anything about it. So yes, they should have their identity protected as a right. Thanks.
Thank you. I yield back.
Speaker 4
The gentleman yields back. We now go to the gentleman from Wisconsin, Mr. Fitzgerald.
Scott Fitzgerald
Thank you, Chairman. I just wanted to go back to February of 2024 for a moment because that's when our committee first began discussing the issue of AI and digital replicas.
And I see a lot of familiar faces on the witness stand as well and in the audience where we also we were in Los Angeles for that field hearing. Mr. Moore, in fact, you testified at that hearing if I remember correctly. And it was also the first time I think Mr. Ashton was was there as well, that first time we met. Mr. Moore, let me start with you. When you testified in 2024 at that field hearing, you mentioned that there are already a number of state and federal laws that address many of the concerns with digital replicas.
So if Congress were to act, and it should act in areas where AI poses a particular risk of harm left unaddressed by current federal state laws. So is that still kind of your testimony today or has anything changed in the past two years since we last debated kind of the issue of AI?
Chris Moore
So I think what I would say is that it is true that a number of the harms that occur from the unauthorized use of digital replicas are covered by in many instances will be covered by existing state laws and remedies. But there is no federal remedy. And that presents an opportunity for Congress to present a uniform rule and uniform protection, which will benefit both the folks who are injured and the businesses that actually have to implement this by a uniform set of rules and a clear standard of what's allowed and what's not allowed. And in order to do that, there are a number of, you know, equities that this body will have to balance. But, you know, our members view the current state of digital replica law as an opportunity to legislate constructively.
Scott Fitzgerald
Mr. Ashton, let me come to you. I remember that we were able to visit in LA. I know this is kind of general and wide open, but why is the federal digital replica right, why is it important to you and those that are in the entertainment industry right now? What's prompting people to kind of move in one direction or another?
Sean Astin
Well, every day we're having our images and our voices and our faces and us created, you know, fictitiously in ways that people don't can't tell the difference. So it looks like I'm saying or doing things. It's happening all the time. I had one friend, a colleague, I saw a video image of him and he was really upset in this image and he was talking in great detail about some problem that happened. And I called him up and I said, hey man, are you okay?
And he goes, yeah, what are you talking about? And I said, well, I saw you were so upset about this thing. He said, no, I wasn't. I said, you were sitting in this room and there was a thing behind you. He said, no, I wasn't.
And his wife walks in and says, I can't believe you fell for that fake. And I'm thinking, I went back and looked at it and I opened it up and I I couldn't tell the difference between him and this creation. So you know what, it's like, could you please take this down, YouTube? Could you please pull this off your site? They need this law in order to have the instruction that it's okay to take it down.
And the process to do that is tedious. No, they're they just have to know it's okay. Let them work out the tech. Or these guys back here have it worked out pretty good. Right?
You guys they got a system for how to take it down, right? Yeah. It's working. You just they have to know that it's okay. That we've got our First Amendment that we love and we want and we have to protect.
And the First Amendment is implicated in this NO FAKES Act in both directions. You have to be able to do satire, tell the news, you have to be able to tell historical things, you have to be able to do all these things. You also can't rob someone else of their First Amendment right by having it misrepresented as them. So the it needs to be clarified for these companies where this country stands in federal law on the nature of, you know, intellectual property, individual intellectual property. Thank you for asking.
Very well said. Very well said. I'll yield back, Chair.
The gentleman yields.
I do yield.
Speaker 5
I just want to cover one thing. Dr. Yu, you said you're not going to do constitutional, but since you're here, I'm going to pinch you a little bit. Is it true that states under the Constitution don't have international reach? In other words, they by definition might be able to pass a law, but to enforce against countries outside the US is completely limited in the Constitution to the federal government.
Bhamati Viswanathan
I invite you to my Con Law class next year and we'll talk. It's, it's still to a certain extent an open question, but yes, what you're saying is essentially true. There's a case called Veder right now that's pending that's asking about international reach of certain copyrights that we have, and that case is in the Fifth Circuit and going up hopefully. And it's unclear. So I think that one thing that federalizing laws like the Digital Replicas Law does is it gives us a level of security that we're playing at a national level and that we're not getting into the morass of states' rights versus international rights.
Site blocking too, when this is something that's so agreed upon amongst so many countries in the developed world, I think it's relatively uncontroversial at this point. I think it's fair to say that. And I think digital replicas are going to be a problem worldwide. I think we can get not just bipartisan support, but international support behind this, which it's a rare opportunity, I think we should grab it.
Thank you, Doctor. That tees it up for our constitutional scholar here on the dais, the gentleman, the ranking member, Mr. Raskin.
Speaker 5
Well, thank you for that, Mr. Chairman. I'll have to get you a copy of some of my books.
Not pirated.
Jamie Raskin
So Professor Vishwanathan, the Northern District Court in California held in Bartz v. Anthropic that the use of copyrighted works for AI training constitutes fair use. You just voiced your skepticism about thinking that as training, but according to the court, Anthropic is permitted to purchase a copy of a book and then use that work to train the model on language, writing, and story. Do you agree with the court's conclusion? Is that, is that the right analysis?
Bhamati Viswanathan
That's not constitutional, that's a leading question. I think that the court is, I think that courts are struggling. And they're struggling for the same reason we are. The court said, to be accurate, that it was transformative. But it's still a question about fair use.
Y'all, for those of you who are not copyright people, I'm sorry for you, but you know, there's still time and I will help you through this, right? So you say, I say to you, you infringed. And you say, well, you're right, I did, but I did it for good reason. It's an affirmative defense. And it has four prongs to it.
The biggest ones are, did you do something really important, transformative, did you change it in some meaningful way that makes it important that we preserve that?
And the fourth factor is, does it affect the market? And I want to point this out, actual or potential market, right, for the work, for the original work. The courts are confused and they're concerned because they see the effect on potential markets, at least the Bartz court does, right? What's the potential market? You could license that work otherwise, right?
Speaker 28
All right, so are there licensing regimes in copyright law that can serve as a model?
Bhamati Viswanathan
Absolutely there are. There are licensing regimes that exist right now. You just asked someone a couple moments ago, how are movies made? They license and cross-license all the time. That's how movies get made.
When you embed a piece of song into a movie, you license it, you cross-license it. So there are regimes that exist, and fair use is not an open and shut case. There's over a hundred cases that are pending right now.
Jamie Raskin
All right, so let me just ask you, are we going to be able to get to the solution within the existing contours of copyright law, or do we need to legislate to address the brave new world we're in?
Bhamati Viswanathan
It's hard because we're at a moment right now where we want to go with a light hand because we don't want to hamper innovation. We'd like to encourage licensing regimes. The thing I'm concerned about, Mr. Raskin, is the small creator who can't go up against the big tech company and say, help me here. There are also, by the way, schemes to help pay small creators. We have BMI and ASCAP standing in as examples of collective rights, collective rights organizations that clear rights for people so that they can get their royalties.
So what exists right now, there's a lot that exists right now that we need to tap into.
Jamie Raskin
Okay, thank you. Mr. Aston, I know that digital replicas are a big issue for SAG-AFTRA. You negotiated hundreds of pages of a four-year deal with the Motion Picture Association that would prevent studios from creating fake actors, as I understand it, absent some compelling reason for doing so, or replicating real ones, and that seems to be more categorical, you can't do that, to get out of using living, breathing individuals on screen. Could you explain why collective bargaining agreements with provisions like those are necessary, and then answer whether they're sufficient to protect creators from individuals using AI to replicate name, image, likeness, voice, intonation, and so on?
Sean Astin
Yeah, absolutely. So they're absolutely necessary because the relationship between workers and their bosses is often fraught with being taken advantage of, and so we're very grateful that the companies in the previous cycle when we had our big strike, but in this cycle, were willing to work with us to try and figure out how to manage the fairness when it comes to digital replication and what you were talking about with synthetics. And you know, when it comes to digital replication, we're able in bargaining to achieve an understanding about how much we should be compensated.
Jamie Raskin
Is that sufficient in your field? Does it cover all of the people in the workforce?
Sean Astin
Well, our collective bargaining agreement is our labor. So no. I mean, each different union, the writers, the directors, the IATSE, everybody has to make their own deal.
Jamie Raskin
But is everybody represented such that they could come up with a similar agreement?
Sean Astin
Everybody has to try to accomplish what we did first, which is to get meaningful artificial intelligence protections language in our bargaining. And we're respected, the SAG-AFTRA and our policy writers, our contract negotiating team has really been in the vanguard in this. But to me, for this moment, the important thing is it's only good for contracts that we are working with, you know, people who are signatory to our union. This NO FAKES Act and the digital replication we're talking about exists everywhere else. And that's where nobody other than this body can offer the protections that we require, which is why we really appreciate you all working so hard on the piracy, but on this NO FAKES Act.
Speaker 30
I thank the gentleman. We now go to the gentleman from Texas, Mr. Gooden, for five minutes.
Thank you, Mr. Chairman, I yield back.
Speaker 29
Thank you. And I'm impressed with the ranking member who can turn a Republican witness into a collective bargaining chat. Not surprised, but impressed. I actually have questions.
Speaker 5
You do know that Ronald Reagan once sat in a similar position. It can happen.
Speaker 31
It can happen. Yes. No, we're not surprised. Professor, I was, I'm so fascinated with some of the things I've heard. These long, these LLMs, how do they ingest all of this material?
Like these, the books we're talking about, the things that you're talking about they should have paid in, so to speak, for. How do they, how do they consume all of this?
Bhamati Viswanathan
Think of them as a giant Hoover. They suck them up. Where do they get them? They get them, they trawl the internet. They get them from various websites.
As I said, it's come out in some discovery in some of the cases that they get them from pirate websites as well. In the Anthropic case, interestingly, they bought tons of books and ripped the covers off of them and copied them. But it's essentially disambiguating and copying.
Speaker 31
So what do you say, and I'm not trying to be combative, I'm genuinely curious. What would you say if I said, well yeah, but what if I pay for the book and give it to you? You're not going to then go write a check to the author. You're just going to read the book I gave you. So how's that any different than me just giving a book to an LLM?
Bhamati Viswanathan
It's not, but who's given it to them? I don't give them my book. I wrote a book called Cultivating Copyright and it was uploaded to ResearchGate, a pirate website, in about three minutes. I mean, I know I don't get a lot of royalties on my book, okay, but that's 200.
I'm sure it was interesting, too.
Bhamati Viswanathan
No, it was, but it was 200 bucks that could have been a couple Starbucks, you know. So I think that it's a little false to say that they are, it's just like receiving a book. And sure, the first sale doctrine would say that you could receive a book, but they're not receiving it. They're trawling the internet. They're finding it.
They're taking it. I mean, they're actually claiming fair use. And again, I'll just say, fair use means you're saying I infringed. You're not saying I have the right to this. You're saying I infringed, but I did this for a good reason.
So there's an admission there that they're in fact taking stuff that's under copyright. The whole point of copyright law, y'all, is to make sure that creators get incentivized, but also that they get paid so that they keep doing what they do. Right, we all work because we love what we do, but we also need to put food on the table.
Speaker 31
Do you think that there's a solution that they would go for? Or do you believe, is it your impression that they're just against any and all, no matter what?
Bhamati Viswanathan
No, I think that there have been some licensing agreements, especially like in music licensing, for example, that have been emerging. I just think they think it's very expensive and they think that in terms of the arms race against China, it might grind, put salt in the gears and that it might, you know, slow things down. But again, I want to just emphasize that two industries here. We can't just talk about the cost to the tech industry. We should talk about the cost to the copyright industries.
Speaker 33
Thank you. I've enjoyed hearing you and I'd love to take one of your classes someday. Yield back the gentleman's time, sir, please.
Speaker 5
I thank you. I want to follow up on the question of fair use and so on.
As you see it, Doctor, clearly the right to input, in other words, the right to read a book, isn't in controversy. The right to read or to learn from what's on the internet is not in controversy. So the part that I want to ask all our panelists for a moment is, as we look at the absolute right to read, we seem to have two questions. Do you pay for that which is copyrighted, similar to the way you would buy a book? And that's a fairly straightforward, the cost is, the cost of your books is on the cover of it, so to speak.
The question, though, that I have for all of you is, once somebody has learned from, should this committee look to the nature of the output? Meaning, because I want to go back to fair use, which you cited very accurately. Shaquille O'Neal took my very words and put it in one of his rap songs, literally my voice, not my likeness, but my voice. When I asked him about it one day, he looked down at me and said, "Fair use." I've never forgotten that I never followed up after he said it.
So the question, though, is should we be looking at output more than input? Meaning, some input is the result of education, meaning it doesn't look like the original input in any way, shape, or form, it's a result of learning. Some has a similarity, and some, as Rudy would say, if you will, is him, his likeness. Should that be a standard that is not in any of the current legislation per se relative to the ingestors? And I'll let you quickly answer.
Quickly, it's tough.
Each of you.
Bhamati Viswanathan
Quickly is tough, right? It's a complicated, law professor's favorite answer, it is complicated. When, this is why I take exception to the word training. When I as a creative artist train, I train so that I can learn things, so that I can make something new. Some people use AI, right, and these large language models to create new things, and I think we should encourage that.
I also think we should be restrained in saying you took something in my style. We don't want to start copyrighting style because style is something that we want to see develop and grow, and it's not something that's copyrightable in fact, and I don't think it should be. Your exact words, boy, I mean, maybe a short phrase was not copyrightable. If he took a paragraph from your book, that'd be less likely to be fair use.
Bhamati Viswanathan
I know it was you saying, "Protected by Viper, stand back." Okay, well, that's a tough one, right, as a short phrase. But yeah, but the point stands, right? We should be able to use short phrases from each other, I think, unless it's a trademark violation, which is another question altogether. The question about outputs is tough, right?
When they're exact copies, we already have copyright to protect against that kind of infringement. It gets squishier and more difficult. The other question is, as those outputs get more and more created by prompt and less and less created by humans, do we want to copyright that stuff at all? Well, if there's some human authorship, the Copyright Office has drawn a hard line and said there needs to be an author behind that, and I think that is the right line to draw.
Okay, and on that note, I think one answer was going to have to be sufficient. We now go to the gentlelady, my friend and indulgent to my question, Ms. Lofgren.
Zoe Lofgren
Thank you, Mr. Chairman. Mr. Moore, in your testimony, you note that copyright holders currently lack a targeted judicial remedy against foreign pirate sites operating beyond the reach of US courts. And so current law isn't effectively reaching many of the worst foreign piracy sites. That's exactly the gap that the Foreign Anti-Digital Piracy Act is intended to address. The bill is bipartisan and bicameral, and it was crafted really very carefully for more than two years, actually.
I engaged with copyright holders, technology experts, service providers, public interest advocates, and after two years of sorting through the various issues, it resulted in that bill commonly known by the unlovely sounding FADPA.
Speaker 35
It's grounded in the simple principle that Congress can fight online piracy without sacrificing due process, free expression, privacy, or the open internet. Now, I've continued working with colleagues both in the Senate and here on discussion drafts. We are working and dialoguing, trying to find a viable path forward. I'd just like to mention, people have understandably raised the role that I played in SOPA so many years ago. As many of you know, I played a central role in stopping that adoption, and that's not because I support piracy.
I don't. It was because those proposals raised real risks to the open internet, free expression, and due process. So I'm hopeful that we will be able to make progress even in this Congress, or if necessary, in the next, in getting something like FADPA adopted. Professor, your testimony describes judicial site blocking as kind of a no-fault process, no damages, no blame assigned, no effort to hold providers liable for infringement. Given that, is it fair to say that Congress can provide strong liability protections for service providers that comply with the court order without also codifying broader secondary liability rules from Cox?
What do you think of that?
Bhamati Viswanathan
Yeah, if you're asking me whether there are sufficient protections built into judicial site blocking, I think absolutely there are. We've been talking about it for a while now, and we've seen it implemented in various countries, and I think yes. I think legitimate non-infringing uses will still flourish. I think the question is really the bad actors, the pirate sites that we can't go after. It's whack-a-mole.
That's what we're trying to solve.
Speaker 35
I'm interested, you know, as we noted, Congress is not usually quick to act, and we've discussed the ruling in California on fair use, essentially finding that data for training models is transformative, non-expressive, and therefore protected. A reasonable argument can be made on the other side. Meanwhile, we're not doing much here. And I'm wondering if anybody can address the technological protections that could be available to individuals. There can be digital watermarking, and it is possible to make sites unavailable to AI scoping up.
And the question is, would Congress by rule, or could the executive by rule, or do we need to by rule, enhance that opportunity for people to take technological steps to protect themselves from the hoovering up of data? Anybody got an idea?
Bhamati Viswanathan
So far it's been sort of leaky. There are watermarks and there's encryption and there are ways, but there's so many end runs, and I think that's part of the problem. One of the things I think is important that we could do is perhaps incentivize companies that are creating technologies, possibly by subsidizing them somewhat. I think the caution is fair and reasonable. I think we can't progress quickly, and again, we're concerned about stifling innovation.
It's a very reasonable concern. But I think the technological solutions have been, there's a will, and hopefully where there's a will there's a way, but so far they haven't been perfect, and meanwhile technology's moving so rapidly.
Speaker 35
The Copyright Office was working on what's copyrightable.
Their ultimate conclusion was you have to have a human author to have the protection. I agree with that. But here's the the rub. If a human author is using AI to create then they should have protection. And where do you draw the line between it's AI generated and it's a human using AI as a tool?
Unfortunately before they reached the end of that process the president illegally fired the registrar and then fired the librarian and they've not been refilled. Do you think existing copyright law sufficiently addresses AI's role in creating or do we need some more revision and guidance from experts in the copyright office professor?
Bhamati Viswanathan
Yeah at the moment I think the copyright office is holding a fair line. It's basically saying show us the human back here. If you can show what you did how you prompted I tell my students this show me your prompts and I better be able to do it by doing those prompts as well. That's copyrightable. I think that's fair.
It shows that the human in fact guided the AI. That's going to happen like with any tool. Whether we can continue to do that or not remains to be seen.
Speaker 5
I thank the gentlelady. We now go to the gentlelady from Florida Ms. Lee.
Laurel Lee
Thank you Mr. Chairman. As we're hearing today the internet has created extraordinary opportunities for innovation but it has also made it easier to steal intellectual property and exploit identity through AI generated content. And as Congress considers whether our laws have kept pace we have a responsibility to protect creators innovators and everyday Americans while preserving free expression and ensuring that the United States remains the global leader in AI innovation. So I thank all of you for being here today to share your insights and your expertise in helping us strike that balance. Mr. Floyd I'd like to start with you.
You made the point that America should win the AI race but not at the expense of lowering our intellectual property standards to match those of countries like China and I think that's exactly the right approach that we shouldn't have to choose between innovation and protecting American creativity. As counsel to Amblin Entertainment you've seen firsthand how much investment planning and talent go into bringing a project from script to screen. And it's important that we recognize that uncertainty surrounding AI generated digital replicas affects not just actors but studios production companies and the thousands of people whose jobs depend on the success of the creative industries. How would a clear federal framework like the NO FAKES Act provide the certainty needed to continue investing in American storytelling while preserving our leadership in AI innovation?
Chris Floyd
Thank you for that question. It's a good balance and we've the other witnesses have talked about we do need to balance the interests of AI and the interests of of our creative industry. And the rules do that. Something like NO FAKES they carve out exceptions for biopics and news and documentaries so we have a legal standard and a balance so we know going in what can be used and what can't be used. And we spend a motion picture company will spend anywhere from ten to two hundred million dollars on a project.
And so that is a huge investment. It's thousands of people who are working on on disclosure today we had four thousand employees.
And so to spend that kind of money and to hire that amount of people, we need to have the ground rules to know that our investment is going to be protected along the way. And balancing those with a... a federal law would help that.
Laurel Lee
And Mr. Aston, you spoke about the impact that AI-generated digital replicas can have on performers, but also that these same technologies are increasingly being used to target everyday Americans as well. Whether it is an actor whose performance is replicated without consent, or a teacher, a veteran, a small business owner, a teenager whose voice and likeness is cloned to commit fraud or damage their reputation, the underlying harm is the same. Someone is exploiting another person's identity without permission. Would you speak... to how protecting an individual's voice and likeness should be a right for all of those people, but also what you're hoping to see Congress do to make that a reality?
Sean Astin
Absolutely, thank you so much for that. You know, it's... it's easy and obvious when you look at performers, if something happens with their reputation, their identity, their... their likeness and their voice, the impact to their... to our... our business is immediate. But really what's at stake is you want to have some mechanism to stop someone from doing something harmful to you. And the way you do that is Congress tells these companies, you're not allowed to use a deepfake of some... I keep... to me, I don't know if it's because I have three daughters. I picture their... they're... oh gosh, they're getting older now.
Sorry guys, they're 29, 23, and 20. And if somebody deepfakes them and there's nothing I can do about it, it's... it feels so... it's so horrible. So the idea that you guys could pass a law that says I can go to YouTube and say please take this down, or my daughters on their own behalf can say please take this down, and they have a law that says oh yes, we... that's been established as a deepfake, that's not your identity, and they can take it down. I just want to live in a world where they... they just can't abuse people like this. They just can't make you... you know, it's an... it should be an outlier that... someone steals your identity, your credit card identity, whatever that, you know, it should be an outlier that somebody bad... there's a bad actor out there, bad behavior, right?
This is like so massively available to everybody to do without... just... it's so simple. You just prompt a little thing, make Sean look like he's doing this and whatever, and it looks so realistic, and their creativity, their nefariousness can have me doing something, and we're just sitting here like, uh, that should not be allowed. It's just as plain as the nose on your face. It should not be allowed to make somebody do something or say something they didn't do or they didn't say. And... and that goes for every American.
It goes for everybody around the world. But I'd appreciate if you guys'd fix that for us.
Laurel Lee
Well, Mr. Aston, as a policymaker and as a parent, I agree wholeheartedly with that assessment. So thank you for your input. And Mr. Chairman, I yield back.
Speaker 38
I thank the gentlelady. I might note that a generation ago somebody once said, where do I go to get my reputation back? And perhaps that's a lot of what we're talking about with deepfakes.
Speaker 40
You want to hear a... a Shakespeare one? Or it's a... it's sort of a paraphrase of Shakespeare.
If the gentlelady from North Carolina will indulge.
I'll indulge, but I won't yield my time.
Exactly. All right, please.
Sean Astin
But this is a good one. You take away my life, you take that which is bestial. You take away my reputation, you take the immortal part of my soul. So that's a paraphrase, but sounds good.
Speaker 39
Okay, he went back further than I could. With that, we go to the gentlelady from North Carolina.
Speaker 41
We've gone from the constitutional to the biblical. Um, Mr. Francis, you haven't gotten much action. Um, and... many of my questions about... about AI have been taken, so I'm going to ask you the next question, which by the way my Secretary of State is very interested in, because she ends up having to enforce counterfeit laws in North Carolina because there are not enough federal resources to do it.
And by the way, she used to get grants to do that from the federal government, and about 20 years ago that dried up. And so I want to ask you a few questions and then also ask you about who our partners should be in enforcing some of these trademark and copyright counterfeit laws. So you testified that counterfeits in our supply chain pose significant risk to Americans' health and safety. They range from unsafe counterfeit auto parts, dangerous technology knockoffs, poisonous prescription drugs, and toxic personal care products. So what happens when counterfeits steal the goodwill that legitimate companies have spent decades building and use it to sell products that put customers' health and safety at risk?
And how would the SHOP SAFE Act help with that?
Derek Francis
Well, I will start with the partnerships. The Secretary of State in North Carolina, there are so many task forces that at the state and local levels that do tremendous amount of work. And yes, ma'am, you're right, the Bureau of Justice Assistance grants that were available for almost 25 years have essentially stopped funding these task forces, which have a significant impact on enforcing intellectual property. And we would love to see the support of that bringing these grants back because we know the consequences without the Bureau of Justice Assistance grants. Yeah, these counterfeit goods remain to be an extreme problem, especially with the health and safety risk to the American consumers.
I think it's very difficult to kind of assess the entirety of the issue. But when we're looking at these marketplaces that have these anonymous foreign sellers that are selling goods online, there's very few effective ways to take them down from state and local law enforcement. And something we have seen as a very useful tool are Schedule A litigation. This allows a rights holder to file a lawsuit and join all these anonymous foreign sellers online in an effort to recover some of the losses to them. As it relates to the SHOP SAFE Act, I'm, you know, from a consumer's perspective, I can answer it that way.
I would, as a consumer, expect to understand where the origin of these products came from. And I think most consumers believe that there's a continuous monitoring of these sellers online, and we'd love to have and see continuous vetting of these sellers and where the products came from.
Speaker 41
Right, but basically there has not been effective enforcement, either at the federal level or now it's pretty much unfunded at the state level. We're leaving it up to the state legislatures to decide whether or not they're going to give state law enforcement the tools they need. Is that correct?
That is correct, yes.
Derek Francis
Yeah, and I'll speak for the entire IP industry, the grants that are provided to state and locals are, you know, incredibly valuable. Today with the, you know, priorities of the federal government, I think there's no one more important than the state level law enforcement that are actually doing the work on the ground each and every day.
Speaker 41
Great. Thank you so much. I do want to pick up on something that the chairman asked about the output because we've been focusing a lot on the input. We've had this Anthropic lawsuit and I took copyright law when I was in and I had great, I had David Lange at Duke University who taught me copyright law. It was so much fun.
We started with Ansel Adams. But I want to talk about the output because I know that the Copyright Office is coming up with rules for what is produced and whether or not there's human content. But Professor, could you tell us a little bit about how we could apply copyright law that from derivative works to this? Because it seems to me that if you're actually using something that somebody else had, you should have gotten the license in the first place. It wasn't a fair use.
But then it is considered a derivative work and a derivative work has to have the attribution and all those other things. And so I'm going to ask for indulgence for the answer to that question.
Bhamati Viswanathan
Great question. Definitely product of Professor Lange's excellent instruction. It's a good question. Derivative works are works that come from other works, right? And as a copyright holder, you have rights in your own derivative works.
For example, the translation of your book. Right, you have that right. So if AI is being used to create a work that's clearly a derivative, we have the copyright law now. We keep talking about how we want to amend the Copyright Act. It's now 50 years old and that's fair.
There are new things that need to come into place, but let's use the tools we have now. The derivative rights right is an important part of it. It's an important part of it. It's not the only part of it. The tough question becomes what if somebody creates something that's close but not the same?
We want to encourage that, but we also want to say you can't come too close, right? You can't take where the authorship is. What did I put into that thing that made me the author? And author, by the way, can talk about a musician or anybody else creative. So copyright law exists and has been enforced for 50 years successfully.
We can apply it to this space in the question of derivative works.
Thank you very much and I yield back.
Speaker 5
I thank the gentlelady. I now ask unanimous consent that a letter statement from the Entertainment Software Association be placed in the record. Without objection, so ordered. Additionally, we will be placing in the record the Fifth Circuit decision in Vetter versus Resnick since it's been included so much as a part of this hearing. Without objection, so ordered.
And we now go to the gentleman from South Carolina for five minutes.
Speaker 43
Thank you, Mr. Chairman, for having this hearing. Thank you guys for being here today. Appreciate your testimony. Mr. Aston, the actors that you represent are generally not the copyright owners in the films and television shows in which they appear. Can you explain how piracy, however, impacts you or the members that you represent and is the adoption of site blocking in the US important to those members and why?
Sean Astin
We see our work exhibited in places like on YouTube and around the world where they have not made an agreement with the people who hold the copyrights. So we are powerless in two directions. We're powerless to go to those big companies and get them to compensate us according to our contracts. And the people we have the contracts with don't seem to be doing anything about it. So and that's not actually true.
Yesterday a lawsuit was filed and so we're very, we're looking forward to it. But you know, we're on the business end of a lot of this stuff and we don't have a lot of control. So we do the best we can to negotiate the best deals that we can. And then we hope that the companies we're in business with advocate for the protection of their IP. And we really want them to be good at that.
Speaker 42
Would site blocking be something that you, you and your members would like to see and appreciate, and would that, would that have an impact for your members?
Sean Astin
Well, just as I said, the ability for our employers who we have our collective bargaining with to successfully impose the, you know, the law or the, you know, that copyright, to protect their copyright. If that mechanism, if that tool's going to help them, then we're all for it, absolutely.
Speaker 43
From a global perspective, I think it's been testified today that we were a leader, and maybe still are in some aspects, but were a leader in establishing standards for strong IP. But we've got some catching up to do. That if we were to do something, create a more robust system to target these offshore criminal actors, can you explain what this would mean for the US generally and our ability to maintain the status as that global leader in creativity and innovation?
Sean Astin
I think my colleagues would probably speak to it better than I would. I mean, I was pretty moved by what I heard here today about the other 60 countries that are, you know, our collaborators in other areas are, you know, accomplishing in this space. But I would rather hear their experts in that, you know.
Speaker 43
Mr. Francis, IP House and Digital Citizens Alliance issued a report in April exploring the growing connection between global organized crime and online piracy. What are some of your top-line observations of that to the US economy and also to our citizens?
Derek Francis
Yeah, the joint publication, Organized Piracy and Crime, just reiterated that I think we are seeing a shift towards criminal organization syndicates when the profits are very high and the risks are very low. We're seeing a significant amount of bad actors organized in many ways. We showed that these are criminal organizations because they have a structure, they have operators, they have supply chains, they have ways to finance the funds, they have IT technology, and significantly impacting the way these networks need to be looked at, right? I think the UN, Interpol, Europol have all said that these types of behaviors are more towards indicators of organized crime syndicates.
Speaker 42
How does it affect our citizens, though? I mean, what does that translate to to the average person in South Carolina or New York or California that are not, say, directly involved with these criminal syndicates or in the film industries or the TV or whatever? How does it affect normal Americans every day?
Derek Francis
So I think the effect is the malware that, you know, when they're watching these unpaid or paid subscriptions that are illicit and piracy, that the malware that they're downloading, it impacts them because there's a significant amount of data that shows that they're also victims of identity theft. I think it also shows that, you know, there's probably not enough education and awareness around this issue. And this report with the Digital Citizens Alliance really highlights the importance of education around this area of digital piracy. It has a significant economic impact really across all sectors and around the world.
Speaker 43
Thank you for that. Mr. Floyd, real quick as we wrap up, what are the online effects, or the effects of online piracy on the economics of film and television productions from the industry itself to the workers, to legitimate streaming sites, and even our citizens? What are the effects?
Chris Floyd
So the impact will hit both the company in deciding what movies to make and how often to make them, and that impacts the workers and how many people get hired and paid. It also impacts people like Mr. Aston's group who have already made a movie.
What happens is when when someone streams it online and pays for it legitimately, we automatically share a portion of those revenues with the Screen Actors Guild, with the directors, with all those people who worked on the movie. And that's that gives them a a buffer for when they're not working. It's sort of like a mini retirement plan. If we're not receiving that money, we don't have the money to share. So they end up making less money along the way for the work they've already done.
So it impacts us and our ability to hire new people and it impacts them and their ability to make a living off the work they've already done.
Speaker 43
So, in an effect, I mean, a lot of I think starving actors in LA, the the stereotype is that they're like baristas first or bartenders. So you're saying that we might actually see a scenario where they're making less as an actor than a barista or a bartender.
Chris Floyd
Absolutely. When there are millions of dollars gone that we're unable to share, they're losing a lot of money.
Speaker 44
Thank you for that, Mr. Chairman. I see my time has expired. I yield back.
Speaker 45
I thank the gentleman. We now go to the gentlelady from California for five minutes.
Speaker 46
Thank you, Mr. Chair. Thank you, Mr. Chair, and I want to start by saying that I am glad that we are finally having a hearing on the issue of IP. From my district's perspective, today is the day when we're actually talking about issues that the American people care about. We have had twelve hearings in this subcommittee and this is the first one on this issue. I think the videos that were played at the beginning are a testament to the critical nature of this topic and I actually hope we have more hearings because each of these topics deserve their own hearing.
This is personal to me. My district includes Los Angeles and Culver City. It is home to actors and musicians, writers, journalists, content creators, video game developers, and everyday Americans. And for these and more of my constituents, their voice, their image, their likeness, and their performance, that is their livelihood. AI, we know, can create opportunities, but it can also be used to profit off of humans' identities, their voices, and their likeness.
I'm also reminded of a scene in Anaconda between these two Paul Rudd's character and Jack Black's character. And Paul Rudd's character says, "Who cares about IP?" And Black's response is, "Literally everyone." That is what big movies are about. That is why we are here.
I'm also going to make a plug for my Republican colleagues to join on as a co-sponsor to the NO FAKES Act. So the NO FAKES Act includes exclusions for documentaries, news, commentary, satire, parody, and fleeting uses as well as safe harbors for multipurpose creative tools, unless they are primarily designed to produce unauthorized digital replicas. The video game industry has raised some good faith concerns that because games rely on fictional characters, background characters, user-created avatars, that the bill could unintentionally capture lawful content or expose developers to claims based on incidental resemblance. So, Mr. Floyd, how can Congress make sure that the bill doesn't sweep in fictional characters, incidental likenesses, or legitimate tools that are used in these interactive games?
Chris Floyd
Well, I think as long as there are guidelines in the legislation to help guide what everyone moves forward on, it will be helpful. There are under the copyright laws now, you can have incidental uses or uses that are similar, but it's the it's the substantiality of what goes on. So the legislation talks about that, that will help give guidance to everybody as to know so there's if there's one background actor that looks similar, maybe that's not enough, but if it's an exact one exact replica would be too much, but many that are similar might be too much, but you have that balancing act sort of with those guidelines.
Speaker 46
Thank you for that. This has come up about counterfeiters. Mr. Francis, I know you don't know this about me, but I support the resale marketplace in a very real way. And trusted resale marketplaces are incredibly important. One problem is that bad actors use online spaces to traffic counterfeit goods.
We talked about pharmaceuticals, but it really harms consumers and legitimate businesses. And we do need policies to crack down on counterfeiters while clearly distinguishing organized counterfeit trafficking from lawful resale.
Speaker 47
So, Mr. Francis, how do counterfeiters exploit the ambiguity between legitimate resale and sale of infringing goods online? And why is consumer confusion so important to mitigate in this context?
Derek Francis
Yeah, I think, thank you, Congressman. I think it's just deliberate deception that the confusion really is the goal of these counterfeiters. And it's very challenging when you are a consumer and trying to distinguish between what's real, what's fake, the listings, the reviews. These are very extremely deliberate and, of course, extremely challenging for a consumer. And yes, we're very much in favor of the re-commerce platforms.
I think it's a growing market and it's one that really needs to pay particular attention from what other marketplaces have been dealing with in the sense of they've also been deceived, these marketplaces. But, you know, this resale market, yes, it's very, especially with antiques and luxury brands and other products that I think are growing in this space.
Speaker 46
Right. And, Mr. Floyd, in the remaining time I have left, about piracy, how much traffic do pirated websites receive? And outside of copyrighted content being stolen, what are the harms that consumers face when they enter these sites and are asked to enter personal information to access the content?
Chris Floyd
I don't have the exact numbers on the traffic, but I can get them back to you. It is massive, though. And because when you get on one of these sites, you're put on, it looks, you type in, you know, watch Disclosure Day, and you think you're going to a regular site, and then you end up on one of these pirate sites that has thousands of movies that are available. And what happens then is the consumer thinks it's a legitimate site. It looks like Netflix.
It has thumbnail photographs of everything. It has the list of people who worked on the movie. You think you're in a legitimate site and you type in your credit card. And when you type in your credit card, now that money is now used for all kinds of nefarious purposes. Also, there's malware that's on the ads.
If you click on one of those, you're now impacted that way. And they may steal your credit card information. So you as a regular innocent consumer have now been detrimentally harmed for trying to watch one movie online.
Speaker 46
Hmm. Thank you for that. And, Mr. Chair, I'd like to enter, I ask unanimous consent to enter into the record a statement from the Motion Picture Association before this subcommittee on this particular hearing topic.
Speaker 5
Without objection, so ordered. Thank you so much. And I want to thank the gentlelady for her comments. The twelve hearings we've done, some have been clearly, many have been on IP, but the fact that this one focuses on piracy specifically, I take note that if I had to do it over again, I'd have done more and I'd have done sooner. So with that, I will recognize myself for my five minutes.
Five minutes isn't enough to deal with all the issues we're dealing with. I think that's clear. So I'm going to ask all of you to please revise, extend, give us your thoughts, Doctor. We'll take it all, even though we couldn't have it all here. I want to focus on a couple of things.
First of all, it is clear that we have some laws that the courts have found they're unable to use effectively. Mr. Moore, I'm going to ask you a tough one, one that you may not have actually come prepared for. In the ClearCorrect case, the Fed Circuit limited the ITC from enforcing essentially what we've been talking about here.
They can't enforce that which comes in from outside the country which is intangible. And I'm going to ask you and then the others, as we look to do site blocking and the other enforcement, including and notwithstanding states that try to enforce federal law or contract, should we be looking to empower organizations like the ITC and any other existing body to in fact have the ability to deal in this growing thing of intangible or non-physical property in a way that would allow for a broader enforcement of our laws? And I use that example because it is frustrating, most of us didn't know until that case that the ITC can tell the customs to seize the fake DVD, but they can't seize the incoming, if you will, fake product. And when we talk about site blocking, if the ITC had that authority, perhaps they already would have done it. I'll start with you, Mr. Moore.
Chris Moore
You weren't kidding about that being a tough question. So what I would say, what I would say is this, I think when you look at site, I think a couple of things. One, putting aside the merits of the decision itself, right, if you are looking, my mind would go to what the remedy is. And so in that sense, what would the ITC have to do to stop this? They couldn't issue an order in the abstract.
They would have to find someone, an entity, and tell it, okay, you might not be doing this conduct, but you must cease enabling it. That is essentially where site, that is site blocking. Right? And so the question then becomes for us, the questions would become what the guardrails are and whether they're appropriate.
Speaker 5
Absolutely. I'm not going to claim that Ways and Means and we wouldn't have a lot to do. But Mr. Francis, I'm going to stay on this line because it's the one thing we didn't cover. The port of entry into America is Baltimore, Los Angeles, etc., Seattle. But the port of entry for products that are worth countless billions, literally trillions of dollars, in fact today is the internet.
Are we to a great extent looking at the customs process coming into the United States of product that has not been paid for, product that is in fact counterfeit? Are we looking at customs in the broadest sense having to be expanded to include intangible and should that be the work of this and the other committees for the foreseeable future?
Derek Francis
Yes, Mr. Chairman, I do think that the, you know, the non-tangible items have been a concern. When I was even at the Director of the IPR Center, that we didn't really focus our efforts there. But I do think that there could be some legislative and enforcement frameworks that can be built around that to ensure that we can do something beyond just the tangible items that we're seizing at the ports of entry.
Speaker 5
Quickly, Mr. Floyd, would you say that, that in fact the problem is bigger than today's hearing and bigger than this committee's jurisdiction if we do that?
Chris Floyd
Yes, it is a, it is a massive problem. So we're very happy that this committee's working on it, but it is, it will go much beyond this. Yes.
Speaker 5
Mr. Austin, you've been a superb witness and I'm a fan of your work before you had this job. But you mentioned support for deepfakes. Mr. Moore and others have shown us some areas that where there could be some unintended problems. Is it your position that if we can find the solutions that meet the goal of deepfakes, that in fact you'd be equally supportive as an organization to that as long as we can get to it?
Sean Astin
Well, I'll do you one better. I've been watching for three years our team and the other incredible coalition work hard to meet every single one of these potential concerns with openness, with creativity. And so, you know, I mentioned YouTube. YouTube is part of this coalition. OpenAI is part of this coalition.
Is it complex? Yes, it's very, very complex. But they know they're as far as I'm concerned, the core, the essence of this NO FAKES Act is to protect people's identity. So I've actually been reading and learning and watching some podcasts about all your laws, all these kind of enterprise. Whoa, that's a different, that's a different lifetime.
But this sausage is coming together nice from my point of view. And so I feel like the group that's here and the group that you're working with will do it. And of course, SAG-AFTRA stands foursquare behind getting NO FAKES passed into law.
Speaker 5
Mr. Moore, I'd like you to be able to close on where you think we can get to the goal of deepfakes and other legislation and where the challenges remain.
Chris Moore
Thank you. I think the chal- when we talk about the challenges, I mean, I think I list four, I'm going to focus on two. The first one is preemption. So what we don't want is a situation where the rights are uneven and that leads to uncertainty both for individuals and for the developers of these tools, some of whom are now the subject of state statutes that would purport to create standards for them. That should be, I think, in the domain of digital replicas, a matter of federal law.
The second thing I would want to mention is for us the counter-notification piece of this, which is that, you know, I come back to something Mr. Astin said before in that there was a situation where a friend of his had a video and he simply couldn't tell who the- whether it was real or not. And I think of there are instances where there will be things that are real and we can't yet tell the difference. And so in those circumstances, we should take care to ensure that those particular instances of expression remain available as best we can.
Speaker 5
That was good, succinct. I understand that you have a unanimous consent. The gentleman's recognized.
Henry Johnson
Thank you, Mr. Chairman. I ask unanimous consent to enter into the record a letter from the Council for Innovation Promotion supporting the NO FAKES Act, the SHOP SAFE Act, and judicial site-blocking legislation.
Speaker 5
Without objection, so ordered. In closing, this is in fact not our last and not this committee's last hearing on this subject. Hopefully, though, it will be the last one before some of this legislation begins to move. I think that in fact people you've seen on both sides of this hearing are close. The issues that Mr. Moore mentioned are of great concern, but they do seem to be surmountable.
I'm going to make one closing statement, rights of the chairman if you will.
So, this legislation is going to, if I have my way, move under my watch. It means that those who have said they're close, they're not opposed to it, but, you know, they want to... we're going to test that, which is that enough is known, language is being distributed on what we believe is final compromises to get to legislation, and it's going to be my intention, with the help of my chairman and old friend Mr. Jordan, that we will move it out of this committee. And I say so today because I think all of you have made the case that allowing this continued damage is simply no longer possible. I'm going to further close by saying just one thing, which is I started in the era of protecting my trademarks. And I certainly understood that the standard for confusion as to source was all you really had to prove in order to prove that you had been infringed.
It shocks me many years later, and Professor, you know the history of this, but that we didn't use that standard in the courts. Having said that, if the courts aren't willing to use trademark for likeness, then we will have to give them the authority and the mandate to do so, and that will be the goal of this committee. The part I have to say at the close is simply that we will have five legislative days, which with our current schedule could give you a lot more than five days, to accept additional statements here and questions for all of you and then a reasonable time to respond. Will all of you agree to take those questions and answer them to the best of your ability?
Speaker 5
Thank you all. You've been very generous with your time. This committee subcommittee stands adjourned.