Statement of Marybeth Peters
The Register of Copyrights
before the
Subcommittee on Legislative Branch,
Committee on Appropriations

United States House of Representatives
111^st Congress, 1^st Session

April 29, 2009

Fiscal Year 2010 Budget Request

Madam Chair, Mr. Aderholt, and other Members of the Subcommittee:

Thank you for the opportunity to present the Copyright Office’s Fiscal 2010 budget request.  Today I would like speak with you about some of the work and challenges the Copyright Office faced in Fiscal 2008.  In addition, I would like to talk about the Office’s Historic Records Project that was funded as part of the Fiscal 2009 Budget and our request for additional offsetting authority to complete our Licensing Reengineering effort, which is part of the Library’s Fiscal 2010 budget request.

Highlights of Copyright Office Work

Policy and Legal Activities

On June 30, 2008, the Office presented its Report to Congress on the statutory licenses (Sections 111, 119, and 122 of the Copyright Act) that allow cable operators and satellite carriers to retransmit programming carried on over-the-broadcast television signals.  The Report, which Congress had requested as part of the Satellite Home Viewer Extension and Reauthorization Act of 2004, analyzed the differences in the terms and conditions of these statutory licenses and considered their continued necessity in light of changes in the marketplace over the last thirty years.  The Report has served as the starting point for continuing discussions on legislation to extend the Section 119 statutory license, which is set to expire on December 31, 2009, unless reauthorized by Congress.  The Office is working with House Judiciary staff and stakeholders on proposed amendments to these licenses.

The Office has worked closely with the House Judiciary Committee, and the (former) Subcommittee on Courts, the Internet and Intellectual Property, on other pressing copyright matters.  One significant issue has been orphan works, i.e., the situation where a potential user cannot identify or locate the owner of copyrighted works (including literary works, photographs, motion pictures, sound recordings, and other creative works).  The Register testified on March 13, 2008, before the Subcommittee about the convergence of issues that had contributed to the existence of orphan works, including the relaxation of formalities such as registration and copyright notice.  Subsequently, the House introduced the Orphan Works Act of 2008 (H.R. 5889), and the Senate introduced the Shawn Bentley Orphan Works Act of 2008 (S. 2913), which the Senate passed by unanimous consent on September 26, 2009.  Because of several unresolved issues in the House, the Office expects to assist the House Judiciary staff on this subject in 2009.

Another issue that the Office will be addressing in 2009 concerns the copyright treatment of pre-1972 sound recordings.  The issue is complicated because these works were not eligible for Federal copyright protection before February 15, 1972; rather, they were governed by state law which, in many cases, is not well-defined. Pursuant to the Omnibus Appropriations Act of 2009, the Office has been directed by Congress to conduct a study on the desirability of, and means for, bringing sound recordings fixed before February 15, 1972, under Federal jurisdiction.  The Office’s report is due in March 2011.

In 2008, the Copyright Office assisted federal government agencies with a number of multilateral, regional and bilateral negotiations and served on many U.S. delegations.  Notable among these meetings were meetings of the World Intellectual Property Organization’s (WIPO’s) General Assemblies and its Standing Committee on Copyright and Related Rights, negotiations regarding a proposed Anti-Counterfeiting Trade Agreement, and negotiations and meetings relating to intellectual property provisions of existing and proposed Free Trade Agreements.  The Office also was a key advisor to the United States Trade Representative in a successful World Trade Organization (WTO) dispute settlement proceeding against China relating to intellectual property protection and enforcement in China, The Office expects to continue to play a leading role in the United States delegations to WIPO and in other multilateral and bilateral meetings and to advise other agencies of the federal government on international and domestic copyright law and policy matters.

Last year, the Office assisted the Justice Department in a number of important court cases, including some involving constitutional challenges to various provisions of the Copyright Act.

In addition to the Office’s work on legal and policy issues, Fiscal 2008 was an exciting and challenging year for Copyright Office operations.

Reengineering Program

At the end of Fiscal 2007, the Copyright Office implemented its reengineering project: redesigned processes, retrained the entire staff in new operations, established new organizations, launched a new integrated IT system to process registrations, and renovated facilities.  In addition, on July 1, 2008, the online registration system electronic Copyright Office (eCO) was released to the public through the Copyright Office website.  In Fiscal 2009, we are moving steadily toward capitalizing on efficiency gains through realigned staffing, and technology system enhancements. Looking ahead we will maintain a continuous improvement initiative focused on identifying and implementing workflow and IT system improvements.

Processes

Through its continuous improvement initiative, the Office further refined the reengineered processes by examining workflows and support systems. On occasion, we adjusted and improved work processes or systems to enhance efficiencies; in some cases, we resolved unexpected issues. Throughout the year, we identified issues, developed alternative processes, and tested and implemented the best options. For example, realizing that missing or incorrect fees were slowing the registration workflow, we shifted the fee resolution step to earlier in the registration process. This improved the registration process time and evened the staff’s workload.

We also examined how to improve eCO’s responsiveness. By analyzing how eCO processed data, we were able to implement basic system redesigns, reducing user wait times. 

Organization

At the beginning of Fiscal 2008, all staff had been reassigned or selected for new positions.  Honoring the Register’s commitment to ensure all Copyright staff had positions after reengineering; the Office continued its major program to retrain former examiners and catalogers to work in a combined position, Copyright Registration Specialist.  The Registration Specialists use eCO and the redesigned registration process to:  examine claims including any related correspondence, complete a registration record, and in many cases, make selections for the Library’s collections.  Training was conducted in house by Senior Registration Specialists. To date all Registration Specialists with us in August 2007 have received at least one full year of training and experience in eCO. Training began in Fiscal 2007, extended through Fiscal 2008, and concluded in February 2009. Targeted training to meet individual employee needs is still provided.  As more Registration Specialists completed training and achieved independence, the Senior Registration Specialists who served as trainers were able to return to full time registration production.  

During the initial implementation of reengineering, Copyright Office management announced a one-year suspension of performance requirements, permitting staff sufficient time to gain the requisite training, familiarity, and experience with the new processes and IT system  In August, 2008, Office management and AFSCME Local 2910 (the Guild) representing the affected employees signed an agreement regarding implementation and impact of the new performance requirements   As agreed, written performance requirements for individual employees went into effect October 1, 2008.  The requirements, phased in following a 90-day grace period after each Registration Specialist reached his/her one-year anniversary working in the new system, included a productivity rate of 2.5 claims opened per hour and qualitative benchmarks.

With the implementation of new performance requirements, productivity rose in the second quarter of Fiscal 2009. For Registration Specialists who are still within the 90-day grace period before the performance requirements take effect, the overall group average is 2.6 per hour.  For Registration Specialists who have completed training and for whom the performance requirement is in force, the overall group average is approximately 3.0 per hour.

Information Technology

The electronic Copyright Office system has two components: eCO Service, which supports online registration (e-Service) and enables processing of both electronic and hardcopy claim submissions; and eCO Search, which permits searching of more than twenty million registration records dating to 1978.

The Office applies the continuous improvement concept to the ongoing refinement of eCO. Earlier this year the Copyright Technology Office restructured the Copyright Office’s systems oversight board. The new board is comprised of Office processing divisions’ supervisors and staff.  The board is responsible for reviewing, evaluating, prioritizing and recommending proposed eCO system improvements. The board gives the employees directly involved with eCO a voice to suggest system improvements to enhance operations. To date, the Office has implemented a large number of incremental enhancements to improve system performance and functionality.  As we continue to move into 2009, we expect the process will continue to be effective. 

In Fiscal 2008, the Office initiated an eCO system Performance Improvement Project (eCO PIP) designed to optimize eCO performance and to develop short-and long-term recommendations for additional system improvements. Following the first round of optimization efforts, system performance improved by fifty percent.  

Electronic submissions.  On July 1, 2008, the Office opened to the public eCO e-Service for basic claims, enabling users to submit via the Internet, copyright applications and certain classes of copyright deposits.  Prior to July 2008, e-Service was opened under a limited-access beta test.  During the last quarter of Fiscal 2008, the Office created 46,118 e-Service user accounts and processed 59,850 e-Service claims.  Approximately 43,000 users charged copyright application fees to credit cards or bank accounts and the rest charged fees to existing deposit accounts.  Users submitted approximately 35,000 electronic deposit copies; the remaining claims were submitted with hard copy deposits sent in by regular mail.  By the end of Fiscal 2008, approximately 72,500 individuals and organizations were registered e-Service users. Electronic claims through e-Service now account for well over 50% of weekly copyright applications received.

Form CO with 2-D Barcode. On July 1, 2008, the Office released the new Form CO that incorporates two dimensional (2-D) barcode technology. The first Form CO submissions were received and processed in September. The forms, which are completed online, are intended for applicants who prefer not to transact business over the Internet. When printed out, each form has scannable 2-D barcodes that encode all the data entered in the form. When the Office scans the 2-D barcodes, all fields of the eCO record are populated automatically without the need for manual data entry.

Registration of Copyright Claims, Recordation of Documents, and Deposit of Copies of Copyrighted Works

During Fiscal 2008, the Copyright Office received 561,428 copyright claims covering more than a million works. Of the claims received, 232,907 were registered and 526,508 copies of registered and unregistered works valued at $24 million were transferred to the Library of Congress for its collections and exchange programs. The Office recorded 11,341 documents which included more than 330,000 titles of works.

There were 231,000 claims in process in eCO one year ago; today there are approximately 500,000. The number of copyright claims received in FY2008 is comparable to previous years, but the Office registered fewer than half the number of claims compared to previous years and transferred fewer than half the typical annual number of deposit copies to the Library.  These reductions are reflective of the significant challenges the Office faced in the wake of reengineering implementation. There were a number of contributing factors.

• As mentioned earlier, Registration Specialists required extensive training in new processes and the use of eCO.  This training impacted productivity in multiple ways: first senior Registration Specialist needed to learn the system then the senior specialists needed to train junior staff.  In effect, the first few months of Fiscal 2008, production was significantly limited.

• The Office implemented eCO in August 2007, with electronic claims processing officially opening almost a year later. Processing paper claims electronically proved to be more difficult than originally anticipated, with OCR technology being less successful than anticipated.  The paper claims became labor intensive requiring manual data entry into the eCO system before the claim could be examined. Combined with staff retraining, slow processing of paper claims was a contributing factor to the build-up of claims on hand in Fiscal 2008.  Public acceptance of eService filing, 2D barcode technology and a fully trained staff have helped us overcome these issues.

• Some large submitters have been slow to adopt electronic filing; however, there is every indication that in the very near future more will move to eService.

• As with any large-scale IT implementation, eCO underwent adjustments for usability, efficiency, and stability. The Office has largely resolved the issues.

• Although the Office lost Registration Specialists through normal attrition, to focus training efforts on existing staff, management made the decision to hold new hiring until 2009.  While the decision was necessary, it lead to a temporary staffing shortage, adversely affected production. As of this week, all Registration Specialists positions are filled.

The Office has taken a number of steps to improve processing time and reduce the number of claims on hand. Subsequently, the production trends are very positive in a number of areas.

• Large bottlenecks of unprocessed works received in the mail have been reduced, by more than 65 percent.
• Paper applications awaiting data entry into eCO have been reduced by more than 85 percent: from a high of 34,000 to under 5,000.
• Unprocessed check batches were reduced from a six-week lag to real-time processing.
• During Fiscal 2008, we closed approximately 40% of submitted claims: to date through Fiscal 2009, we are at 60% closed claims
• As mentioned earlier, training has concluded for all Registration Specialists who were on board as of August 2007. As a result, Registration Specialist productivity increased across the board to double that of one year ago.
• As more Registration Specialists become fully independent, the number of staff requiring quality assurance reviews of their work declines, allowing  Senior Registration Specialists, currently responsible for quality assurance reviews, to focus more time on processing claims.
• The Office recently appointed two new Registration Specialists in the Visual Arts and Recordation Division and seven new Registration Specialists in the Performing Arts Division.  On April 27, eight new Registration Specialists started in the Literary Division. These actions address the short staffing situation that contributed to low production and growth in the volume of claims in process.
• The eCO e-Service online registration system was released to the public on July 1, 2008.  By the end of Fiscal 2008, e-filings reached almost 50 percent of all claims entered. The percentage for Fiscal 2009 thus far has been 53 percent.  As the volume of e-Service claims increases the volume of paper claims decreases, which has a favorable effect on productivity.
• Registration Specialists have been freed from activities that detracted from reducing the number of claims in process:
  • The Office established a quality assurance program targeting data entry errors during the process of manually keying data from scanned paper applications into electronic records. This action reduced the time spent by Registration Specialists correcting data entry errors.
  • The Office began identifying and routing claims with fee problems to the Accounts Section earlier in the production process. This action dramatically reduced the volume of correspondence that Registration Specialists were required to generate in response to short fees and other fee-related problems.

The volume of paper claims on hand will continue to affect processing times until actions already taken or planned by the Office—eliminating the short staffing in the Registration Divisions, achieving a fully trained staff, implementing strategies to attract more filers to eCO, and upgrading to the newest version of the software application that powers eCO—have taken full effect.

Thus far in Fiscal 2009 the Office is experiencing a downturn in the number of claims received, which we believe is related to the current economic environment.  At this time, projections indicate a possible Fiscal 2009 decline in copyright claims of somewhat over 5 percent compared with Fiscal 2008.  The Office is taking a fiscally cautious approach to managing the Fiscal 2009 budget to ensure that we remain within the forecasted revenue base.  

Copyright Records Digitization Project 

In July 2008, the Copyright Office initiated a study to determine how to approach the digitization of its 70 million pre-1978 copyright records, many of which are sole copy records. The Office is now ready to move beyond the initial planning stages of the project. The objectives of the project are to:

• Provide online access to records of copyright ownership for the years from 1923 to 1977 inclusive.
• Provide online indexes as a finding aid to these records.
• Create preservation copies of the paper records of copyright ownership dating back to 1870.
• Move from microfilm to online digital records.

Earlier this year the Office issued a Request for Information (RFI) targeting vendors with expertise in records digitization. The Office received and reviewed 21 responses to the RFI. In Fiscal 2009, we intend to initiate a pilot test of several options for digitization across a representative sample of the copyright record types and formats.  Based on the Office’s pilot test, we will determine the best alternative and begin full production digitization in Fiscal 2010.  The project’s duration may extend over several years as necessary based on funding availability.  However, the plan also calls for flexibility allowing us to seek out partnering opportunities that may both reduce the digitization cost and shorten the project’s duration.

Licensing Reengineering

In Fiscal 2009, the Licensing Division resumed its reengineering efforts, reviewing its current administrative practices and underlying technology, performing a needs analysis for future operations, and beginning to design its re-engineered systems. The goals of this reengineering effort are to decrease statement of account processing times by 30 percent or more and to improve public access to Office records. The estimated $1.1 million cost of re-engineering will be assessed against royalty funds as soon as the Office is granted the authority to do so. Fiscal 2010 year will be a challenging one for the Licensing Division. The IT system design and implementation must go forward even as changes to the copyright law, particularly §111 and 1l9l, are being considered.  Licensing Division staff may also be forced to work through statements of account using the old processing system as the new system is piloted.

Conclusion

Madam Chair, I ask you to support the Fiscal 2010 budget request including the request for additional offsetting authority to complete the Licensing Reengineering efforts. Fiscal 2008 was a transitional year for the Office; we are hopeful that the measures we implement in Fiscal 2009 will help us to overcome many of the reengineering challenges. 

I also want to thank the Congress for its past support of the Copyright Office reengineering efforts and our budget requests.