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Intellectual Property and the National Information





Intellectual Property
and the
National Information Infrastructure

The Report of the Working Group on Intellectual
Property Rights

Bruce A. Lehman
Assistant Secretary of Commerce and
Commissioner of Patents and Trademarks
Chair





Information Infrastructure Task Force

Ronald H. Brown
Secretary of Commerce
Chair




Intellectual Property
and the
National Information Infrastructure

The Report of the Working Group on Intellectual
Property Rights

Bruce A. Lehman
Assistant Secretary of Commerce and
Commissioner of Patents and Trademarks
Chair





Information Infrastructure Task Force

Ronald H. Brown
Secretary of Commerce
Chair

September 1995



Single copies of this Report may be obtained,
free of charge, by sending a written request
to:

"Intellectual Property and the NII"
c/o Terri A. Southwick, Attorney-Advisor
Office of Legislative and
International Affairs
U.S. Patent and Trademark Office
Box 4
Washington, D.C. 20231

Copies will also be available from the IITF
Bulletin Board. The Bulletin Board can be
accessed through the Internet by pointing the
Gopher Client to iitf.doc.gov or by telnet to
iitf.doc.gov (log in as gopher). The
Bulletin Board is also accessible at 202-501-
1920 using a personal computer and a modem.








Library of Congress Cataloging-in-Publication
Data

United States. Information Infrastructure
Task Force. Working Group on Intellectual
Property Rights.
Intellectual Property and the National
Information Infrastructure: The Report of
the Working Group on Intellectual Property
Rights / Bruce A. Lehman, Chair.
1. Intellectual property -- United States.
2. Copyright -- United States.
3. Information superhighway -- United
States. 4. Information technology --
United States. I. Lehman, Bruce A.
II. Title.
KF2979.U55 1995
346.7304'8--dc20
[347.30648]

ISBN 0-9648716-0-1

Table of Contents
INTRODUCTION 1
BACKGROUND 7
I. LAW 19
A. COPYRIGHT 19
1. PURPOSE OF COPYRIGHT LAW 19
2. SUBJECT MATTER AND SCOPE OF PROTECTION
23
A. ELIGIBILITY FOR PROTECTION 23
B. PUBLISHED AND UNPUBLISHED WORKS 28
C. WORKS NOT PROTECTED 32
D. CATEGORIES OF PROTECTIBLE WORKS 35
3. COPYRIGHT OWNERSHIP 45
A. TRANSFER OF OWNERSHIP 47
B. LICENSING 49
C. ON-LINE TRANSACTIONS 53
4. TERM OF PROTECTION 59
5. NOTICE, DEPOSIT AND REGISTRATION 60
6. EXCLUSIVE RIGHTS 63
A. THE RIGHT TO REPRODUCE THE WORK 64
B. THE RIGHT TO PREPARE DERIVATIVE WORKS 66
C. THE RIGHT TO DISTRIBUTE COPIES 67
D. THE RIGHT TO PERFORM THE WORK PUBLICLY 70
E. THE RIGHT TO DISPLAY THE WORK PUBLICLY 72
7. LIMITATIONS ON EXCLUSIVE RIGHTS 73
A. FAIR USE 73
B. LIBRARY EXEMPTIONS 84
C. FIRST SALE DOCTRINE 90
D. EDUCATIONAL USE EXEMPTIONS 95
E. OTHER LIMITATIONS 96
8. COPYRIGHT INFRINGEMENT 100
A. GENERAL 100
B. INFRINGING IMPORTATION 107
C. CONTRIBUTORY AND VICARIOUS LIABILITY 109
D. ON-LINE SERVICE PROVIDER LIABILITY 114
E. CIVIL REMEDIES 124
F. CRIMINAL OFFENSES 126
G. DEFENSES 128
9. INTERNATIONAL IMPLICATIONS 130
A. BACKGROUND 130
B. INTERNATIONAL FRAMEWORK 132
C. INTERNATIONAL TREATIES AND AGREEMENTS 135
D. COPYRIGHT COMPARED TO AUTHORS' RIGHTS 139
E. NATIONAL TREATMENT 140
F. PRIVATE COPYING ROYALTY SYSTEMS 144
G. MORAL RIGHTS 145
H. CONFLICT OF LAWS 147
I. HARMONIZATION OF INTERNATIONAL SYSTEMS 147
B. PATENT 155
1. PATENTABILITY DETERMINATIONS 162
2. INFRINGEMENT DETERMINATIONS 165
3. PATENTABILITY OF SOFTWARE 166
C. TRADEMARK 168
D. TRADE SECRET 173
II. TECHNOLOGY 177
A. CONTENT SECURITY AND USER ACCESS NEEDS 178
B. THE INTERNET EXPERIENCE 179
C. ACCESS AND USE TECHNOLOGICAL CONTROLS 183
1. SERVER AND FILE LEVEL CONTROLS 183
2. ENCRYPTION 185
3. DIGITAL SIGNATURES 187
4. STEGANOGRAPHY 188
D. CONTROLLING USE OF PROTECTED WORKS 189
E. MANAGING RIGHTS IN PROTECTED WORKS 191
F. ENCRYPTION EXPORT CONTROL 194
G. DEVELOPMENT OF STANDARDS 197
III. EDUCATION 201
A. BACKGROUND 201
B. COPYRIGHT AWARENESS CAMPAIGN 203
IV. RECOMMENDATIONS 211
A. COPYRIGHT 211
1. THE TRANSMISSION OF COPIES AND
PHONORECORDS 213
A. THE DISTRIBUTION RIGHT 213
B. RELATED DEFINITIONAL AMENDMENTS 217
C. THE IMPORTATION PROVISIONS 221
2. PUBLIC PERFORMANCE RIGHT FOR SOUND
RECORDINGS 221
3. LIBRARY EXEMPTIONS 225
4. REPRODUCTION FOR THE VISUALLY IMPAIRED 227
5. CRIMINAL OFFENSES 228
6. TECHNOLOGICAL PROTECTION 230
7. COPYRIGHT MANAGEMENT INFORMATION 235
B. PATENT 236
C. TRADEMARK 237
APPENDICES

Introduction

In February 1993, President Clinton formed
the Information Infrastructure Task Force
(IITF) to articulate and implement the
Administration's vision for the National
Information Infrastructure (NII). The IITF
is chaired by Secretary of Commerce Ronald H.
Brown and consists of high-level
representatives of the Federal agencies that
play a role in advancing the development and
application of information technologies.
Guided by the principles for government
action described in NII Agenda for Action1
and GII Agenda for Cooperation,2 the
participating agencies are working with the
private sector, public interest groups,
Congress, and State and local governments to
develop comprehensive telecommunications and
information policies and programs that will
promote the development of the NII and best
meet the country's needs.

To drive these efforts, the IITF is
organized into three committees: the
Telecommunications Policy Committee, which
formulates Administration positions on
relevant telecommunications issues; the
Committee on Applications and Technology,
which coordinates Administration efforts to
develop, demonstrate and promote applications
of information technologies in key areas; and
the Information Policy Committee, which
addresses critical information policy issues
that must be dealt with if the NII is to be
fully deployed and utilized. In addition,
the IITF established a Security Issues Forum
to assess the security needs and concerns of
users, service providers, information
providers, State and local governments and
others. Finally, the U.S. Advisory Council
on the National Information Infrastructure
(NII Advisory Council) was established within
the Department of Commerce to advise the
Secretary of Commerce on a national strategy
for promoting the development of the NII.3

The Working Group on Intellectual Property
Rights, which is chaired by Assistant
Secretary of Commerce and Commissioner of
Patents and Trademarks Bruce A. Lehman, was
established within the Information Policy
Committee to examine the intellectual
property implications of the NII and make
recommendations on any appropriate changes to
U.S. intellectual property law and policy.4

This Report represents the Working Group's
examination and analysis of each of the major
areas of intellectual property law, focusing
primarily on copyright law and its
application and effectiveness in the context
of the NII.5 The approach of this Report is
to discuss the application of the existing
copyright law and to recommend only those
changes that are essential to adapt the law
to the needs of the global information
society.6 By providing a generalized legal
framework, based on the extensive analysis
and discussion of the way in which the law
has been and should be interpreted, we can
lay the groundwork for the rapid and
efficient development of the NII.

To prepare this Report, the Working Group
drew upon expertise within the participating
departments and agencies of the Federal
government.7 In addition, the Working Group
received and considered views of the public,
including those of the NII Advisory Council.

The Working Group held a public hearing in
November 1993, at which 30 witnesses
testified.8 The Working Group also solicited
written comments and received some 70
statements during a public comment period
which closed on December 10, 1993.9
Following its review of the public comments
and analysis of the issues, the Working Group
released a preliminary draft of its report
("Green Paper") on July 7, 1994.10 The
Working Group issued the report in
preliminary draft form to ensure broad
dissemination and ample opportunity for
public comment prior to making final
recommendations and issuing this Report.
Thousands of copies of the Green Paper were
distributed in paper form as well as
electronically via the IITF Bulletin Board.11

Following the release of the Green Paper,
the Working Group heard testimony from the
public in four days of hearings in Chicago,
Los Angeles and Washington, D.C., in
September 1994.12 In addition, more than
1,500 pages of written comments on the Green
Paper and reply comments were filed, in paper
form and through the Internet, by more than
150 individuals and organizations --
representing more than 425,000 members of the
public -- during the comment period, which
extended over four months.13

The Working Group convened a Conference on
Fair Use (CONFU) to bring together copyright
owner and user interests to discuss fair use
issues and, if possible, to develop
guidelines for uses of copyrighted works by
librarians and educators. Some 60 interest
groups are participants in the Conference and
have been meeting regularly since September
1994 in sessions that are open to the public.
The Working Group also kicked off a Copyright
Awareness Campaign (CAC) in March 1995.
Approximately 40 participating individuals
and organizations are coordinating their
educational efforts and joining with the
Working Group and the Department of Education
to raise public awareness of copyright.
Meetings of the Campaign are also open to the
public.

Interested parties had numerous
opportunities to submit their views on the
intellectual property implications of the
development and use of the NII and on the
Working Group's Green Paper, including its
preliminary findings and recommendations.
The open process instituted by the Working
Group resulted in a well-developed,
voluminous record indicating the views of a
wide variety of interested parties, including
various electronic industries, service
providers, the academic, research, library
and legal communities, and individual
creators, copyright owners and users, as well
as the computer software, motion picture,
music, broadcasting, publishing and other
information and entertainment industries.

The special intellectual property concerns
and issues raised by the development and use
of the NII are the subject of this Report.14
It does not, however, provide all of the
answers. It may not even present all of the
questions. There is much that we do not --
and cannot -- now know about how the NII will
develop. Technology is advancing at such an
incredible pace that issues will certainly
continue to arise in the future, perhaps
demanding more comprehensive legislation.
However, because there is much that we do
know, the fact that future developments will
raise additional issues not currently ripe
should not deter us from addressing those
that are.15

Background

Intellectual property is a subtle and
esoteric area of the law that evolves in
response to technological change.16 Advances
in technology particularly affect the
operation and effectiveness of copyright law.
Changes in technology generate new industries
and new methods for reproduction and
dissemination of works of authorship, which
may present new opportunities for authors,
but also create additional challenges.
Copyright law has had to respond to those
challenges, from Gutenberg's moveable type
printing press to digital audio recorders and
everything in between -- photocopiers, radio,
television, videocassette recorders, cable
television and satellites.17

Uses of computer technology -- such as
digitization -- and communications technology
-- such as fiber optic cable -- have had an
enormous impact on the creation, reproduction
and dissemination of copyrighted works. The
merger of computer and communications
technology into an integrated information
technology has made possible the development
of the National Information Infrastructure
which will generate both unprecedented
challenges and important opportunities for
the copyright marketplace.

An information infrastructure already
exists, but it is not integrated into a
whole. Telephones, televisions, radios,
computers and fax machines are used every day
to receive, store, process, perform, display
and transmit data, text, voice, sound and
images in homes and businesses throughout the
country. Fiber optics, wires, cables,
switches, routers, microwave networks,
satellites and other communications
technologies currently connect telephones,
computers and fax machines. The NII of
tomorrow, however, will be much more than
these separate communications networks; it
will integrate them into an advanced high-
speed, interactive, broadband, digital
communications system. Computers,
telephones, televisions, radios, fax machines
and more will be linked by the NII, and users
will be able to communicate and interact with
other computers, telephones, televisions,
radios, fax machines and more -- all in
digital form.18

The NII has tremendous potential to
improve and enhance our lives. It can
increase access to a greater amount and
variety of information and entertainment
resources that can be delivered quickly and
economically from and to virtually anywhere
in the world in the blink of an eye. For
instance, hundreds of channels of
"television" programming, thousands of
musical recordings, and literally millions of
"magazines" and "books" can be made available
to homes and businesses across the United
States and around the world.19

The NII can provide access to rich
cultural resources around the world,
transforming and expanding the scope and
reach of the arts and humanities. It will
provide opportunities for the development of
new markets for cultural products. It can
broaden our cultural experiences through
diversity of content, and increase our
understanding of other societies.

The NII can support our education systems
by, for example, linking students and
educators in remote locations around the
world. It can also improve the nation's
health care systems by increasing public
awareness of health issues, providing
continuing education of health care
professionals, and allowing patients to take
a more active role in their own health care.

The NII can dramatically increase the
opportunity for democratic participation in
government. The Task Force has shown some of
the potential in its work. For instance, the
IITF Bulletin Board makes available copies of
Task Force reports, testimony, speeches,
meeting schedules and minutes, hearing
notices, transcripts, and other documents
related to the work of the Administration and
opportunities for public participation.20 The
Task Force has also accepted comments from
the public through the Internet and has
conducted an on-line public conference.21

Individuals and entities that heretofore
have been predominately consumers of works
can now become authors and providers through
the NII. It can put easier, more
sophisticated communication and publishing
tools in the hands of the public, increasing
the ability to communicate with, and
disseminate works of authorship to, others.

The NII can boost the ability of U.S.
firms to compete and succeed in the global
economy, thereby generating more jobs for
Americans. It can spur economic growth.
More than half of the U.S. work force is in
information-based jobs, and the
telecommunications and information sector is
growing faster than any other sector of the
U.S. economy. New job opportunities can be
created in the processing, organizing,
packaging and dissemination of the
information and entertainment products
flowing through the NII.

The NII can provide benefits to authors
and consumers by reducing the time between
creation and dissemination. It will open
additional markets for authors. If authors
choose to enter those new markets, it will
provide a wider variety and greater number of
choices for consumers, which should increase
competition and reduce prices. The
availability of these benefits is by no means
assured, however. Authors are wary of
entering this market because doing so exposes
their works to a higher risk of piracy and
other unauthorized uses than any of the
traditional, current modes of dissemination.
Therefore, authors may withhold their works
from this environment. Further, even if
authors choose not to expose their works to
this more risky environment, the risk is not
eliminated. Just one unauthorized uploading
of a work onto a bulletin board, for instance
-- unlike, perhaps, most single reproductions
and distributions in the analog or print
environment -- could have devastating effects
on the market for the work.

Thus, the full potential of the NII will
not be realized if the education, information
and entertainment products protected by
intellectual property laws are not protected
effectively when disseminated via the NII.
Creators and other owners of intellectual
property rights will not be willing to put
their interests at risk if appropriate
systems -- both in the U.S. and
internationally -- are not in place to permit
them to set and enforce the terms and
conditions under which their works are made
available in the NII environment. Likewise,
the public will not use the services
available on the NII and generate the market
necessary for its success unless a wide
variety of works are available under
equitable and reasonable terms and
conditions, and the integrity of those works
is assured. All the computers, telephones,
fax machines, scanners, cameras, keyboards,
televisions, monitors, printers, switches,
routers, wires, cables, networks and
satellites in the world will not create a
successful NII, if there is no content. What
will drive the NII is the content moving
through it.

Ensuring consumer access to and enjoyment
of both copyrighted works and new
technologies is an attainable goal, and
recent experience has confirmed this.22 For
example, the introduction of digital audio
tape recorders recently posed significant
problems for copyright owners. Congress
responded to the increased threat of rampant
unauthorized use with legislation that
incorporated both technological and legal
measures to protect the interests of both
consumers and copyright owners.23

Advances in digital technology and the
rapid development of electronic networks and
other communications technologies raise the
stakes considerably. Any two-dimensional
work can readily be "digitized" -- i.e.,
translated into a digital code (usually a
series of zeros and ones). The work can then
be stored and used in that digital form.
This dramatically increases: the ease and
speed with which a work can be reproduced;
the quality of the copies (both the first and
the hundredth "generation" are virtually
identical); the ability to manipulate and
change the work; and the speed with which
copies (authorized and unauthorized) can be
"delivered" to the public. Works also can be
combined easily with other works into a
single medium, such as a CD-ROM, which
contributes to a blurring of the lines that
typically divide types of works and the
rights and limitations applicable thereto.

The establishment of high-speed, high-
capacity electronic information systems makes
it possible for one individual, with a few
key strokes, to deliver perfect copies of
digitized works to scores of other
individuals -- or to upload a copy to a
bulletin board or other service where
thousands of individuals can download it or
print unlimited "hard" copies. The emergence
of integrated information technology is
dramatically changing, and will continue to
change, how people and businesses deal in and
with information and entertainment products
and services, and how works are created,
reproduced, distributed, adapted, displayed,
performed, owned, licensed, managed,
presented, organized, sold, accessed, used
and stored. This leads, understandably, to a
call for adaptation of -- or change in -- the
law.

Thomas Jefferson stated:

I am not an advocate for frequent
changes in laws and constitutions.
But laws and institutions must go
hand and hand with the progress of
the human mind. As that becomes more
developed, more enlightened, as new
discoveries are made, new truths
discovered and manners and opinions
change, with the change of
circumstances, institutions must
advance also to keep pace with the
times. We might as well require a
man to wear still the coat which
fitted him when a boy . . . .24

Our task is to determine whether the coat
still fits in this new information age. An
effective intellectual property regime must
(1) ensure that users have access to the
broadest feasible variety of works by (2)
recognizing the legitimate rights and
commercial expectations of persons and
entities whose works are used in the NII
environment.

For more than two centuries, copyright
law, with periodic amendment, has provided
protection for an increasing variety of works
of authorship. The most recent complete
revision of the law -- The Copyright Act of
197625 -- was enacted in response to
"significant changes in technology [that had]
affected the operation of the copyright law."26
The legislative history of the 1976 Act notes
that those changes had "generated new
industries and new methods for the
reproduction and dissemination of copyrighted
works, and the business relations between
authors and users [had] evolved new
patterns."27

We are once again faced with significant
changes in technology that upset the balance
that currently exists under the Copyright
Act. Our goal is to maintain the existing
balance.

Some assert that copyright protection
should be reduced in the NII environment.
The public wants information to be free and
unencumbered on the NII, it is argued, and
the law should reflect the public interest.
Without doubt, this is a valid concern.
Information per se should not be protected by
copyright law -- nor is it. Facts and ideas
from any work of authorship may be freely
copied and distributed; the Copyright Act
expressly excludes such information from the
scope of the protection it accords.28 The
copyright law should also serve the public
interest -- and it does. While, at first
blush, it may appear to be in the public
interest to reduce the protection granted
works and to allow unfettered use by the
public, such an analysis is incomplete.
Protection of works of authorship provides
the stimulus for creativity, thus leading to
the availability of works of literature,
culture, art and entertainment that the
public desires and that form the backbone of
our economy and political discourse. If
these works are not protected, then the
marketplace will not support their creation
and dissemination, and the public will not
receive the benefit of their existence or be
able to have unrestricted use of the ideas
and information they convey.

Others assert that technological advances
justify reduced protection. Since computer
networks now make unauthorized reproduction,
adaptation, distribution and other uses of
protected works so incredibly easy, it is
argued, the law should legitimize those uses
or face widespread flouting. This argument
is not valid. Technology makes many things
possible. Computer networks can be and have
been used to embezzle large sums of money and
to commit other crimes. Yet, these acts are
prohibited by law. Simply because a thing is
possible does not mean that it should be
condoned.

Finally, there are those who argue that
intellectual property laws of any country are
inapplicable to works on the NII or GII
because all activity using these
infrastructures takes place in "Cyberspace,"
a sovereignty unto itself that should be self-
governed by its inhabitants, individuals who,
it is suggested, will rely on their own
ethics -- or "netiquette" -- to determine
what uses of works, if any, are improper.
First, this argument relies on the fantasy
that users of the Internet, for instance, are
somehow transported to "chat rooms" and other
locations, such as virtual libraries. While
such conceptualization helps to put in
material terms what is considered rather
abstract, activity on the Internet takes
place neither in outer space nor in parallel,
virtual locations. Satellite, broadcast, fax
and telephone transmissions have not been
thought to be outside the jurisdiction of the
nations from which or to which they are sent.
Computer network transmissions have no
distinguishing characteristics warranting
such other-world treatment. Further, such a
legal free-for-all would transform the GII
into a veritable copyright Dodge City. As
enticing as this concept may seem to some
users, it would hardly encourage creators to
enter its confines.

Nonetheless, content providers are
currently experimenting with a number of
business models in the networked environment,
and it is already clear that a wide variety
of such models may coexist. Some content
providers will choose not to enforce all --
or any -- of their rights; others may change
their business practices. For instance, some
newspaper publishers are selling individual
articles using electronic payment mechanisms,
in addition to selling subscriptions and
individual issues. Some software companies
are making their "client" software freely
available for individual use in an effort to
increase the market share of their "server"
software. Some hypermedia magazine
publishers on the World Wide Web are choosing
to give away their product but charge
sponsors for advertising space. A number of
information service providers are charging
for the use of the search engines that add
value to freely available public domain
content.

Some content providers will not be
motivated by any commercial considerations.
For instance, certain scientific communities
are working together to create archives of
freely available electronic pre-prints on the
Internet. The copyright law allows copyright
owners to exercise the rights granted to
them, to license their rights to others, or
to give them away. Those creators who wish
to dedicate their works to the public domain
may, of course, do so notwithstanding the
availability of protection under the
Copyright Act. Nothing in the law prevents
those who do not wish to claim copyright from
waiving their rights and allowing
unrestricted reproduction, distribution and
other use of their works. Indeed, notices to
that effect are not uncommon on the Internet.

The absence on the NII of copyrighted
works for which authors do wish to exercise
their rights -- fully or to some limited
extent -- under the copyright law, of course,
would not necessarily result in its demise.
The Internet, for instance, could continue to
serve as a communications tool and resource
for Government, public domain and works of
willing authors. However, unless the
framework for legitimate commerce is
preserved and adequate protection for
copyrighted works is ensured, the vast
communications network will not reach its
full potential as a true, global marketplace.
Copyright protection is not an obstacle in
the way of the success of the NII; it is an
essential component. Effective copyright
protection is a fundamental way to promote
the availability of works to the public.

Preserving the framework does not require,
however, a dramatic increase in authors'
rights, such as more limited or no further
applicability of the fair use doctrine in the
NII environment. Some have argued that
because it may now be technically feasible to
"meter" each use of a copyrighted work, and
to charge a user a fee for the use, the
concept of fair use has no place in the NII
environment. They argue equally that other
limitations on rights should be abolished or
narrowed for similar reasons. The Working
Group believes that weakening copyright
owners' rights in the NII is not in the
public interest; nor would a dramatic
increase in their rights be justified.

With no more than minor clarification and
limited amendment, the Copyright Act will
provide the necessary balance of protection
of rights -- and limitations on those rights
-- to promote the progress of science and the
useful arts.29 Existing copyright law needs
only the fine tuning that technological
advances necessitate, in order to maintain
the balance of the law in the face of
onrushing technology. There must be,
however, effort in three disciplines -- law,
technology and education -- to successfully
address the intellectual property issues
raised by the development and use of the NII.


I. Law

A.Copyright

1.Purpose of Copyright Law

The Constitution of the United States
provides that Congress has the power to
"promote the Progress of Science and useful
Arts, by securing for limited Times to
Authors and Inventors the exclusive Right to
their respective Writings and Discoveries."30
The framers of the Constitution did not
discuss this clause at any length prior to or
after its adoption.31 The purpose of the
clause was described in the Federalist Papers
by James Madison:

The utility of this power will
scarcely be questioned. The
copyright of authors has been
solemnly adjudged, in Great Britain,
to be a right of common law. The
right to useful inventions seems with
equal reason to belong to the
inventors. The public good fully
coincides in both cases with the
claims of individuals.32

The Constitution outlines both the goal
that Congress may try to achieve (to promote
the progress of science and useful arts) and
the means by which they may accomplish it (by
securing for limited times to authors and
inventors the exclusive right to their
respective writings and discoveries).33 The
Supreme Court has often spoken about the
purpose of copyright:

[I]t should not be forgotten that the
Framers intended copyright itself to
be the engine of free expression. By
establishing a marketable right to
the use of one's expression,
copyright supplies the economic
incentive to create and disseminate
ideas.34

We have often recognized the monopoly
privileges that Congress has
authorized, while "intended to
motivate the creative activity of
authors and inventors by the
provision of a special reward," are
limited in nature and must ultimately
serve the public good.35

The primary objective of copyright is
not to reward the labor of authors,
but "[t]o promote the Progress of
Science and useful Arts." To this
end, copyright assures authors the
right in their original expression,
but encourages others to build freely
upon the ideas and information
conveyed by a work.36

The economic philosophy behind the
[Constitutional] clause . . . is the
conviction that encouragement of
individual effort by personal gain is
the best way to advance the public
welfare through the talents of
authors and inventors . . . .
Sacrificial days devoted to such
creative activities deserve rewards
commensurate with the services
rendered.37

The monopoly privileges that Congress
may authorize are neither unlimited
nor primarily designed to provide a
special private benefit. Rather, the
limited grant is a means by which an
important public purpose may be
achieved. It is intended to motivate
the creative activity of
authors . . . by the provision of a
special reward, and to allow the
public access to the products of
their genius after the limited period
of exclusive control has expired.38

[C]opyright is intended to increase
and not to impede the harvest of
knowledge . . . . [T]he scheme
established by the Copyright
Act . . . foster[s] the original
works that provide the seed and
substance of this harvest. The
rights conferred by copyright are
designed to assure contributors to
the store of knowledge a fair return
for their labors.39

The copyright law, like the patent
statutes, makes reward to the owner a
secondary consideration . . . . It
is said that reward to the author or
artist serves to induce release to
the public of the products of his
creative genius.40

Copyright is "intended definitely to grant
valuable, enforceable rights to authors . . .
'to afford greater encouragement to the
production of literary works of lasting
benefit to the world.'"41 The purpose is not
to reward the author, but the law does so to
achieve its ultimate purpose -- "to induce
release to the public of the products of his
creative genius."42 The "immediate effect" of
the copyright law is that authors receive a
"fair return for [their] creative labor";
however, the "ultimate aim is, by this
incentive, to stimulate artistic creativity
for the general public good."43

Congress also interpreted the clause when
it enacted the Copyright Act of 1909:

The enactment of copyright
legislation by Congress under the
terms of the Constitution is not
based upon any natural right that the
author has in his writings, . . . but
upon the ground that the welfare of
the public will be served and
progress of science and useful arts
will be promoted by securing to
authors for limited periods the
exclusive rights to their
writings . . . .44

By granting authors exclusive rights, the
authors receive the benefit of economic
rewards and the public receives the benefit
of literature, music and other creative works
that might not otherwise be created or
disseminated. The public also benefits from
the limited scope and duration of the rights
granted.45 The free flow of ideas is promoted
by the denial of protection for facts and
ideas.46 The granting of exclusive rights to
the author "does not preclude others from
using the ideas or information revealed by
the author's work."47

While copyright law "ultimately serves the
purpose of enriching the general public
through access to creative works,"48 copyright
law imposes no obligation upon copyright
owners to make their works available. While
it is hoped that the potential economic
benefits to doing so will induce them,
copyright owners are not obligated to provide
access to their works -- either during the
term of protection or after. Hence,
unpublished works never distributed to the
public are granted as much (if not more)
protection as published works. However, once
an author publishes a work, copies of the
work must be deposited with the Library of
Congress for the benefit of the public.

2.Subject Matter and Scope of
Protection

a.Eligibility for Protection

The subject matter eligible for protection
under the Copyright Act is set forth in
Section 102(a):

Copyright protection subsists . . .
in original works of authorship fixed
in any tangible medium of expression,
now known or later developed, from
which they can be perceived,
reproduced, or otherwise
communicated, either directly or with
the aid of a machine or device.49

From this provision, the courts have derived
three basic requirements for copyright
protection -- originality, creativity and
fixation.50

The requirements of originality and
creativity are derived from the statutory
qualification that copyright protection
extends only to "original works of
authorship."51 To be original, a work merely
must be one of independent creation -- i.e.,
not copied from another. There is no
requirement that the work be novel (as in
patent law), unique or ingenious. To be
creative, there must only be a modicum of
creativity. The level required is
exceedingly low; "even a slight amount will
suffice."52

The final requirement for copyright
protection is fixation in a tangible medium
of expression. Protection attaches
automatically to an eligible work of
authorship the moment the work is
sufficiently fixed.53 A work is fixed "when
its embodiment in a copy or phonorecord . . .
is sufficiently permanent or stable to permit
it to be perceived, reproduced, or otherwise
communicated for a period of more than
transitory duration."54

Congress provided considerable room for
technological advances in the area of
fixation by noting that the method of
fixation in copies or phonorecords may be
"now known or later developed."55 The
Copyright Act divides the possible media for
fixation into "copies" and "phonorecords":

"Copies" are material objects, other
than phonorecords, in which a work is
fixed by any method now known or
later developed, and from which the
work can be perceived, reproduced, or
otherwise communicated, either
directly or with the aid of a machine
or device.56

"Phonorecords" are material objects
in which sounds, other than those
accompanying a motion picture or
other audiovisual work, are fixed by
any method now known or later
developed, and from which the sounds
can be perceived, reproduced, or
otherwise communicated, either
directly or with the aid of a machine
or device.57

According to the House Report accompanying
the Copyright Act of 1976, Congress intended
the terms "copies" and "phonorecords" to
"comprise all of the material objects in
which copyrightable works are capable of
being fixed."58

The form of the fixation and the manner,
method or medium used are virtually
unlimited. A work may be fixed in "words,
numbers, notes, sounds, pictures, or any
other graphic or symbolic indicia"; may be
embodied in a physical object in "written,
printed, photographic, sculptural, punched,
magnetic, or any other stable form"; and may
be capable of perception either "directly or
by means of any machine or device 'now known
or later developed.'"59

In digital form, a work is generally
recorded (fixed) as a sequence of binary
digits (zeros and ones) using media specific
encoding. This fits within the House
Report's list of permissible manners of
fixation.60 Virtually all works also will be
fixed in acceptable material objects -- i.e.,
copies or phonorecords. For instance, floppy
disks, compact discs (CDs), CD-ROMs, optical
disks, compact discs-interactive (CD-Is),
digital tape, and other digital storage
devices are all stable forms in which works
may be fixed and from which works may be
perceived, reproduced or communicated by
means of a machine or device.61

The question of whether interactive works
are fixed (given the user's ability to
constantly alter the sequence of the
"action") has been resolved by the courts in
the context of video games and should not
present a new issue in the context of the
NII. Such works are generally considered
sufficiently fixed to qualify for protection.62
The sufficiency of the fixation of works
transmitted via the NII, however, where no
copy or phonorecord has been made prior to
the transmission, may not be so clear.

A transmission, in and of itself, is not a
fixation. While a transmission may result in
a fixation, a work is not fixed by virtue of
the transmission alone. Therefore, "live"
transmissions via the NII will not meet the
fixation requirement, and will be unprotected
by the Copyright Act, unless the work is
being fixed at the same time as it is being
transmitted.63 The Copyright Act provides
that a work "consisting of sounds, images, or
both, that are being transmitted" meets the
fixation requirement "if a fixation of the
work is being made simultaneously with its
transmission."64 To obtain protection for a
work under this "simultaneous fixation"
provision, the simultaneous fixation of the
transmitted work must itself qualify as a
sufficient fixation.

A simultaneous fixation (or any other
fixation) meets the requirements if its
embodiment in a copy or phonorecord is
"sufficiently permanent or stable to permit
it to be perceived, reproduced, or otherwise
communicated for a period of more than
transitory duration."65 Works are not
sufficiently fixed if they are "purely
evanescent or transient" in nature, "such as
those projected briefly on a screen, shown
electronically on a television or cathode ray
tube, or captured momentarily in the 'memory'
of a computer."66 Electronic network
transmissions from one computer to another,
such as e-mail, may only reside on each
computer in RAM (random access memory), but
that has been found to be sufficient
fixation.67

b.Published and Unpublished Works

Historically, the concept of publication
has been a major underpinning of copyright
law. Under the dual system of protection
which existed until the 1976 Copyright Act
took effect, unpublished works were generally
protected under state law. Published works,
on the other hand, were protected under
Federal copyright law.68 On the effective
date of the 1976 Act, Federal copyright
protection became available for unpublished
as well as published works.69 The concept of
publication thus lost its "all-embracing
importance" as the threshold to Federal
statutory protection.70

However, while the importance of
publication has been reduced through
amendment to the law (e.g., granting Federal
protection to unpublished works and removing
the notice requirement for published works),
the status of a work as either published or
unpublished still has significance under the
Copyright Act. For example:

? only works that are published in the
United States are subject to mandatory
deposit in the Library of Congress;71

? deposit requirements for registration
with the Copyright Office differ
depending on whether a work is
published or unpublished;72

? the scope of the fair use defense may
be narrower for unpublished works;73

? unpublished works are eligible for
protection without regard to the
nationality or domicile of the author;74

? published works must bear a copyright
notice if published before March 1,
1989;75 and

? certain limitations on the exclusive
rights of a copyright owner are
applicable only to published works.76

The Copyright Act provides a definition of
"publication" to draw the line between
published and unpublished works:

"Publication" is the distribution of
copies or phonorecords of a work to
the public by sale or other transfer
of ownership, or by rental, lease, or
lending. The offering to distribute
copies or phonorecords to a group of
persons for purposes of further
distribution, public performance, or
public display, constitutes
publication. A public performance or
display of a work does not of itself
constitute publication.77

The definition uses the language of Section
106 describing the exclusive right of
distribution, and was intended to make clear
that "any form of dissemination in which a
material object does not change hands --
performances or displays on television, for
example -- is not a publication no matter how
many people are exposed to the work."78 It
also makes clear that the distribution must
be "to the public."79 In general, the
definition continues principles that had
evolved through case law under previous
copyright laws,80 including the doctrine of
limited publication.81 The doctrine was
developed by courts to save works from losing
copyright protection when copies of the work
were only distributed to a restricted number
of people and for a restricted purpose
without a copyright notice.82 Those works
would not be considered distributed to the
public (i.e., published) and, therefore, not
subject to the notice requirement. Although
the notice requirement has been eliminated,
and thus the most critical justification for
the doctrine, the few cases dealing with
publication since 1989 suggest that courts
will continue to apply the doctrine of
limited publication.83

c.Works Not Protected

Certain works and subject matter are
expressly excluded from protection under the
Copyright Act, regardless of their
originality, creativity and fixation.
Titles, names, short phrases, and slogans
generally do not enjoy copyright protection
under the Copyright Act.84 Other material
ineligible for copyright protection includes
the utilitarian elements of industrial
designs;85 familiar symbols or designs; simple
geometrical shapes; mere variations of
typographic ornamentation, lettering or
coloring; and common works considered public
property, such as standard calendars, height
and weight charts, and tape measures and
rulers.

Copyright protection also does not extend
to any "idea, procedure, process, system,
method of operation, concept, principle, or
discovery, regardless of the form in which it
is described, explained, illustrated, or
embodied" in such work even if it meets the
criteria for protection.86 Thus, although a
magazine article on how to tune a car engine
is protected by copyright, that protection
extends only to the expression of the ideas,
facts and procedures in the article, not the
ideas, facts and procedures themselves, no
matter how creative or original they may be.
Anyone may "use" the ideas, facts and
procedures in the article to tune an engine -
- or to write another article on the same
subject. What may not be taken is the
expression used by the original author to
describe or explain those ideas, facts and
procedures.87

Copyright does not prevent subsequent
users from copying from a prior
author's work those constituent
elements that are not original -- for
example . . . facts or materials in
the public domain -- as long as such
use does not unfairly appropriate the
author's original contributions.88

This idea/expression dichotomy "assures
authors the right to their original
expression, but encourages others to build
freely upon the ideas and information
conveyed by a work."89 Although it "may seem
unfair that much of the fruit of the
[author's] labor may be used by others
without compensation," it is "a
constitutional requirement" -- the "means by
which copyright advances the progress of
science and art."90

As a matter of law, copyright protection
generally is not extended under the Copyright
Act to works of the U.S. Government.91
Therefore, nearly all works of the U.S.
Government -- including this Report -- may be
reproduced, distributed, adapted, publicly
performed and publicly displayed without
infringement liability in the United States
under its copyright laws.92 While the
Copyright Act leaves most works created by
the U.S. Government unprotected under U.S.
copyright laws, Congress did not intend for
the section to have any effect on the
protection of U.S. government works abroad.93

d.Categories of Protectible Works
The Copyright Act enumerates eight broad
categories of protectible subject matter:

(1) literary works;

(2) musical works, including any
accompanying words;

(3) dramatic works, including any
accompanying music;

(4) pantomimes and choreographic
works;

(5) pictorial, graphic and sculptural
works;

(6) motion pictures and other
audiovisual works;

(7) sound recordings; and

(8) architectural works.94

Literary Works

Although many categories of works will be
available via the NII, the majority of works
currently available on computer networks such
as the Internet are literary works.

"Literary works" are works, other
than audiovisual works, expressed in
words, numbers, or other verbal or
numerical symbols or indicia,
regardless of the nature of the
material objects, such as books,
periodicals, manuscripts,
phonorecords, films, tapes, disks, or
cards, in which they are embodied.95

Literary works include computer programs,96
articles, novels, directories, computer
databases, essays, catalogs, poetry,
dictionaries, encyclopedias, and other
reference materials.97

Musical Works

A musical work consists of the musical
notes and lyrics (if any) in a musical
composition.98 A musical work may be fixed in
any form, such as a piece of sheet music or a
compact disc.99 Musical works may be
"dramatic," i.e., written as a part of a
musical or other dramatic work, or
"nondramatic," i.e., an individual, free-
standing composition.

Dramatic Works

Generally, a dramatic work is one in which
a series of events is presented to the
audience by characters through dialogue and
action as the events happen, such as in a
play.100

Pantomimes and Choreographic Works

This category was first added to the list
of protectible subject matter in 1976.101
While pantomimes and choreographic works,
such as dances, can be fixed in a series of
drawings or notations, they are usually fixed
on film or videotape.

Pictorial, Graphic and Sculptural Works

A significant number of works traveling
through the NII will be pictorial and graphic
works. Works in this category include:

[T]wo-dimensional and three-
dimensional works of fine, graphic,
and applied art, photographs, prints
and art reproductions, maps, globes,
charts, diagrams, models, and
technical drawings, including
architectural plans.102

A work of art which is incorporated into the
design of a useful article, but which can
stand by itself as art work separate from the
useful article, is copyrightable, but the
design of the useful article is not.103

Motion Pictures and other Audiovisual Works

The Copyright Act provides definitions of
"audiovisual works" and the subcategory
"motion pictures":

"Audiovisual works" are works that
consist of a series of related images
which are intrinsically intended to
be shown by the use of machines, or
devices such as projectors, viewers,
or electronic equipment, together
with accompanying sounds, if any,
regardless of the nature of the
material objects, such as films or
tapes, in which the works are
embodied.104

"Motion pictures" are audiovisual
works consisting of a series of
related images which, when shown in
succession, impart an impression of
motion, together with accompanying
sounds, if any.105

The House Report notes that the key to the
subcategory "motion pictures" is the
conveyance of the impression of motion, and
that such an impression is not required to
qualify as an audiovisual work.106

Sound Recordings

A "sound recording" is the work that
results from the fixation of sounds,
including those that are musical or spoken.107
When those sounds are included in an
audiovisual work, such as a music video, they
are considered part of the audiovisual work
rather than a sound recording.108

Architectural Works

An "architectural work" is "the design of
a building as embodied in any tangible medium
of expression, including a building,
architectural plans, or drawings."109 It
includes the overall form as well as the
"arrangement and composition of spaces and
elements" in the design of the building.110

Compilations and Derivative Works

A compilation is "a work formed by the
collection and assembling of preexisting
materials or of data that are selected,
coordinated, or arranged in such a way that
the resulting work as a whole constitutes an
original work of authorship."111 Directories,
databases, magazines and anthologies are
types of compilations.

A derivative work is a work "based upon"
one or more preexisting works.112 A derivative
work is created when one or more preexisting
works is "recast, transformed, or adapted"
into a new work, such as when a novel is used
as the basis of a movie or when a drawing is
transformed into a sculpture.113 Translations,
musical arrangements and abridgments are
types of derivative works.

The Copyright Act makes clear that the
subject matter of copyright specified in
Section 102 (literary works, musical works,
sound recordings, etc.) includes compilations
and derivative works.114 The copyright in a
derivative work or compilation, however,
extends only to the contribution of the
author of the derivative work or compilation
(the compiler), and does not affect the
copyright protection granted to the
preexisting material.115 Protection for an
individual musical work, for instance, is not
reduced, enlarged, shortened or extended if
the work is included in a collection, such as
a medley of songs.

Moreover, copyright in a compilation or
derivative work does not imply any exclusive
right in the preexisting material employed in
the compilation or derivative work.116 The
copyright in a compilation, for example, is
limited to the original selection or
arrangement of the facts or other elements
compiled; protection for the compilation in
no way extends to the facts or elements.117
Copyright protection is not granted simply
for the hard work that may be involved in
compiling facts. The Supreme Court struck
down the doctrine that had protected such
efforts, known as the "sweat of the brow" or
"industrial collection" theory.118

"Multimedia" Works

Increasingly, works from different
categories are fixed in a single tangible
medium of expression.119 This will certainly
be true as development of the NII progresses
and the ability to create and disseminate
interactive "multimedia" or "mixed media"
products increases.

A prefatory note may be warranted because
of the manner in which these terms are used
in the context of copyright law. The terms
"multimedia" and "mixed media" are, in fact,
misnomers. In these works, it is the types
or categories of works that are "multiple" or
"mixed" -- not the types of media. The very
premise of a so-called "multimedia" work is
that it combines several different elements
or types of works (e.g., text (literary
works), sound (sound recordings), still
images (pictorial works), and moving images
(audiovisual works)) into a single medium
(e.g., a CD-ROM) -- not multiple media.120
However, in recognition of the prevalent use
of the term, this Report refers to this type
of work as a "multimedia" work.

Multimedia works are not categorized
separately under the Copyright Act; nor are
they explicitly included in any of the eight
enumerated categories. While most current
multimedia works would be considered
compilations,121 that classification does not
resolve the issue of subject matter
categorization.122

Despite the fact that the Copyright Act
enumerates eight categories of works, works
that do not fit into any of the categories
may, nevertheless, be protected. The list of
protectible works in Section 102 is intended
to be illustrative rather than inclusive.123
The House Report explains that the categories
of works "do not necessarily exhaust the
scope of 'original works of authorship' that
the [Copyright Act] is intended to protect."124
However, absent the addition of a new
category, a work that does not fit into one
of the enumerated categories is, in a sense,
in a copyright no-man's land.125

Under the current law, the categorization
of a work holds a great deal of significance
under the Copyright Act. For instance, two
of the exclusive rights granted in Section
106 apply only to certain categories of
works.126 In addition, many of the limitations
on rights in Sections 108 through 120 are not
applicable to all types of works.127
Therefore, categorization of multimedia and
other new types of works is an important
issue.

Generally, multimedia works include two or
more of the following preexisting elements:
text (literary works), computer programs
(literary works), music (musical works and
sound recordings), still images (pictorial
and graphic works) and moving images
(audiovisual works). The definition of
"literary works" begins with the phrase
"works, other than audiovisual works . . . ."128
Therefore, a reasonable interpretation may be
that text and computer programs that would
otherwise be categorized as literary works
may be considered part of an audiovisual work
if included in a work of that type. Such is
also the case with sound recordings. A music
video is not categorized as both a sound
recording and an audiovisual work; it is
categorized as an audiovisual work.129
Audiovisual works also include still images -
- at least related ones.130 Therefore, in many
instances, a multimedia work may be
considered -- as a whole -- an audiovisual
work. The legislative history makes clear
that a work in one category may contain works
in other categories.131

The somewhat strained analysis needed to
find a category for multimedia works and the
increasing "cross-breeding" of types of works
demonstrate that categorization may no longer
be useful or necessary. While the Working
Group does not recommend at this time the
consolidation or elimination of categories
(and harmonization of the differing
application of rights and limitations on
those rights), it is likely that such
consolidation or elimination will be
appropriate in the future.

3.Copyright Ownership

Copyright ownership in a work initially
vests in the author of the work.132 If the
work is a "joint work" (a work with two or
more authors), the authors are co-owners of
the copyright in the work.133

Under certain circumstances, the copyright
in a work is not granted to the actual
preparer of the work. In the case of "works
made for hire," the employer of the preparer
or the person for whom the work was prepared
is considered the "author" for purposes of
the Copyright Act.134 There are two types of
works made for hire -- those prepared by an
employee and those prepared by an independent
contractor by special order or commission.
The copyright in a work prepared by an
employee within the scope of employment vests
in the employer, and the employer is the
author.135 The copyright in a work specially
ordered or commissioned vests in the person
for whom the work was prepared if the work
falls into one of nine specified categories
and if the parties expressly agree in writing
that the work will be considered a work made
for hire.136

Copyright ownership entitles the copyright
owner to:

? exercise the exclusive rights granted
under Section 106;

? authorize others to exercise any of
those exclusive rights; and

? prevent others from exercising any of
those exclusive rights.

An important distinction to understand is
the difference between ownership of a
copyright in a work and ownership of a copy
of a work. Ownership of a copy -- the
material object in which a copyrighted work
is embodied (e.g., a book, CD or
videocassette) -- carries with it no interest
in the copyright.137

Ownership of a copyright, or any of
the exclusive rights under a
copyright, is distinct from ownership
of any material object in which the
work is embodied. Transfer of
ownership of any material object,
including the copy or phonorecord in
which the work is first fixed, does
not of itself convey any rights in
the copyrighted work embodied in the
object; nor, in the absence of an
agreement, does transfer of ownership
of a copyright or of any exclusive
rights under a copyright convey
property rights in any material
object.138

Ownership, possession or any other attachment
to or relationship with a copy of a
copyrighted work (including obtaining access
to it through a computer network or other
service) does not entitle one to exercise any
of the exclusive rights of the copyright
owner (e.g., to reproduce it or to perform it
publicly).

a.Transfer of Ownership

Copyright ownership, or ownership of any
of the exclusive rights (in whole or in
part), may be transferred to one or more
persons.139 A transfer of rights must be in
writing and must be signed by the transferor.140
A transfer may occur through an assignment,
exclusive license, mortgage, "or any other
conveyance, alienation, or hypothecation" of
a copyright or any of the exclusive rights.141
A transfer of copyright ownership may be
limited in time or in place, but it must be
an exclusive transfer of whatever right or
rights are involved (i.e., nonexclusive
licenses are not considered transfers of
ownership).142 Any of the exclusive rights in
the work143 may be separately transferred and
owned, and the owner of a particular right is
considered the "copyright owner" with respect
to that right.144

In the case of any copyrighted work other
than a "work made for hire," all transfers of
copyright ownership (as well as all
nonexclusive licenses) executed by the author
of the work may be terminated by the author
35 years after the transfer.145 This right to
terminate, intended to protect authors,
cannot be waived by contract or other
agreement.146 However, termination is not
automatic; an author must assert his or her
termination rights and comply with certain
statutory requirements to regain copyright
ownership.147

b.Licensing

The exclusive rights of a copyright owner
may be licensed on an exclusive basis (i.e.,
copyright ownership in one or more rights is
transferred by the copyright owner) or on a
nonexclusive basis (i.e., the copyright owner
retains ownership of the copyright and may
grant similar licenses to others). A
nonexclusive licensee is not a copyright
owner and thus does not have standing to sue
for any infringement of the copyright in the
work by others.148 Unlike exclusive licenses,
nonexclusive licenses need not be in writing.149

Limitations on the exclusive rights, such
as the first sale doctrine, fair use or
library exemptions, may be overridden by
contract.150 However, such contract terms can
be enforced only under state law. For
instance, the fair use of a work (outside the
scope of the license) by a licensee whose
license precludes any use other than that
specified by the license would not be an
infringement of copyright, but would be a
breach of the license agreement. Licenses
and other contracts cannot transform
noninfringing uses (such as fair uses) into
infringements; they can, however, make such
uses violations of the terms and conditions
of the agreements:

A library that has acquired ownership
of a copy is entitled [under the
Copyright Act] to lend it under any
conditions it chooses to impose.
This does not mean that conditions on
future disposition of copies or
phonorecords, imposed by a contract
between their buyer and seller, would
be unenforceable between the parties
as a breach of contract, but it does
mean that they could not be enforced
by an action for infringement of
copyright.151

Licensing issues are, and will continue to
be, significant in the context of the
development of the NII. Services on the NII
will provide the opportunity for new uses for
copyrighted works. If rights with respect to
these new uses are not expressly granted or
retained in license agreements, conflicts
will arise between copyright owners and
licensees. For instance, public display on a
bulletin board system may not have been
contemplated in licenses granting a public
display right that were executed before the
advent or proliferation of such systems.

Some argue that new uses which were not
contemplated at the time of licensing but
which fall within rights granted, such as the
public display example above, should
automatically fall within the scope of the
license. Others contend that new uses which
are not contemplated and, therefore, not
specifically mentioned in a grant of rights
should be considered retained by the licensor
-- even in the case of a complete assignment
of rights.

Failure to contemplate possible future
developments, of course, is not a new
problem, and is one based primarily in
contract rather than copyright law. Whenever
new technologies have produced a new use for
works, courts have been called upon to decide
whether the new use is covered by old
licenses.152 That is the proper jurisdiction
for such determinations. License agreements
must be interpreted individually and under
the law of the governing state.

A variety of licensing methods will be
possible as the NII develops. For instance,
rights in copyrighted works offered via the
NII may be licensed off-line or on-line.
They may be licensed directly (through
individual transactions between the
rightsholder and the licensee) or through
other licensing arrangements, such as
voluntary collective licensing. Licensing of
rights may be on a per-use, per-work or other
basis.

The licensing of rights for the creation
of multimedia works -- whose creators may
wish to include dozens of preexisting works
(or portions thereof) -- can be difficult.
Because registration and copyright notices
are not required for copyrighted works,
identification of copyright owners alone can
be complicated. Furthermore, the relative
newness of the multimedia industry can result
in an uncertainty on the part of copyright
owners and multimedia creators with regard to
appropriate terms and conditions for such
uses.

With limited exceptions, intellectual
property law leaves the licensing of rights
to the marketplace. In certain
circumstances, particularly where transaction
costs are believed to dwarf per-transaction
royalties, Congress has found it necessary to
provide for compulsory licenses.153 The
Working Group finds that, under current
conditions, additional compulsory licensing
of intellectual property rights is neither
necessary nor desirable. Compulsory
licensing disregards marketplace forces.
Such licensing schemes treat all works alike,
even though their value in a competitive
marketplace would likely vary dramatically.
It also treats all users alike. It alters
the free market relationship between buyers
and sellers. Moreover, transaction costs --
and the attendant savings from compulsory
licensing -- can be minimized in a digital
environment.

Technology will facilitate individual
licensing schemes.154 Many projects and
studies have been initiated to explore ways
in which technology can be used to enhance a
user's ability to identify the rightsholder
of a work and license its use. The inclusion
of copyright management information in copies
of works will also facilitate licensing.155

The marketplace should be allowed to
develop whatever legal licensing systems may
be appropriate for the NII. However, the
Working Group encourages copyright owners to
explore with libraries and schools special,
institutional licenses. These licenses would
enable the costs to be borne, for instance,
by the library so that its patrons might
access and use works without direct costs, as
they generally do in the print domain.156 The
Working Group also endorses increased funding
for libraries and educational institutions to
assist their ability to purchase and license
works in digital form.

c.On-Line Transactions

The NII will be a conduit for many types
of commercial transactions.157 Electronic
purchasing of goods facilitates the ordering,
shipment, and tracking of inventory for
nearly any manufactured product. Consumers
increasingly will have access to on-line
banking, catalogues, video tours of homes,
and countless other services. Payment for
these goods and services may be made through
conventional methods, such as checks or
credit cards, or through "digital cash" -- on-
line funds transfers between a consumer's
bank and an on-line provider.158 In addition,
certain NII uses of protected works will be
regulated through electronic licenses.

The law dealing with electronic commerce
is not clear -- especially for totally
paperless transactions.159 On-line contracting
and licensing raise a number of concerns
about the validity and enforceability of such
transactions. The NII will not be used to
its fullest commercial potential if providers
and consumers cannot be confident that their
electronic agreements are valid and
enforceable.

Considering a number of different
transactions that may take place on the NII
helps identify where contract law is strained
and the impact of this strain on NII users.
Although some of the transactions identified
may not involve the license or transfer of
rights in a copyrighted work, examination of
the principles involved in, for example, the
on-line sale of copies of copyrighted works
in the NII environment may provide useful
background and understanding of the overall
legal atmosphere for on-line transactions.

On-Line Contracts Not
Involving the Sale of Goods

At common law, a contract is formed when
the contracting parties manifest mutual,
voluntary assent to be bound by a set of
terms -- typically through an offer and
acceptance.160 In addition, under the "mirror
image rule," the parties must agree to
identical terms before a contract is formed -
- the so-called "meeting of the minds." The
threshold question is whether an electronic
message of offer or acceptance or the simple
use of the "accept" or "return" key in
response to a provider's offer or consumer's
request is assent.161

A second issue is whether an electronic
manifestation of assent meets the mirror
image rule162 -- that is, whether there was a
meeting of the minds. If the seller provides
an on-line contract form with terms that are
essentially non-negotiable, then, like the
"shrink wrap" licenses used by software
publishers,163 the purchaser can only accept or
reject the terms. If the purchaser accepts,
the mirror image rule is met. However, when
a consumer assents to such a "standard form"
contract, and there is no alternative source
for a similar service, the result may be a
contract of adhesion.164

Assent in contracts of adhesion has been
considered in the context of on-line services
and shrink wrap licenses.165 While there is no
clear "rule," a traditional analysis looks to
the reasonableness of terms and the
applicability of the agreement's terms to
similarly situated parties.166 The status of
shrink wrap licenses for software provides
some guidance; however, shrink wrap licenses
have not been treated consistently.167 In some
cases, the U.C.C. has been applied, thus
avoiding the question of adhesion by
inferring formation.168 In addition, Illinois
and Louisiana have both attempted to
statutorily "validate" such shrink wrap
licenses.169

A third issue involves writing and
signature requirements for certain contracts.170
In the NII, where transactions may be
entirely paperless, it may be unclear whether
electronic messages are written and what will
be considered an adequate signature.171

On-Line Sale of Goods
with Conventional Delivery

For the sale of goods, the U.C.C.
alleviates many of these common law concerns.172
With regard to assent, the U.C.C. states
that, "[a] contract for sale of goods may be
made in any manner sufficient to show
agreement, including conduct by both parties
which recognizes the existence of such a
contract."173 Likewise, "an offer to make a
contract shall be construed as inviting
acceptance in any manner and by any medium
reasonable in the circumstances."174 Thus,
application of the U.C.C. may infer assent
through any reasonable conduct -- including
transmission of electronic messages.

Similarly, the U.C.C. loosens the
requirements of the mirror image rule. The
U.C.C. infers formation and focuses on
establishing the contract's controlling
terms.175 The formalities necessary for
enforceability are also relaxed by the U.C.C.176
As sales of goods become more common via the
NII, the U.C.C. will likely become more
useful based on the flexible "course of
dealing" and "usage of trade" definitions.177

On-line Sale of Goods with
Electronic Delivery

A third transaction is where goods are
both ordered and delivered via the NII. The
primary difference between goods delivered
via the NII and those discussed earlier is
that the goods themselves may not "exist"
prior to the delivery. Rather, they are
reproduced upon transmission to the buyer's
computer system. Because the goods do not
exist prior to the sale, the goods are
considered "future goods" under the U.C.C.,
and remedies for breach of contract are
limited.178

On-Line Licenses for Uses of Works

The licensing of copyrighted works via the
NII is more problematic. Application of
U.C.C. Article 2 is questionable, because the
works involved may not be "goods" under the
U.C.C., and because the transaction itself is
not a "sale," but rather a license to use or
access the work.179 Common law principles of
contract law, therefore, may apply to on-line
licenses.180 Amendment of Article 2 of the
U.C.C. to cover such licensing transactions
is being actively considered by the Permanent
Editorial Board for the Uniform Commercial
Code.181

The challenge for commercial law, as for
intellectual property law, is to adapt to the
reality of the NII by providing clear
guidance as to the rights and
responsibilities of those using the NII.
Without certainty in electronic contracting,
the NII will not fulfill its commercial
potential. The Working Group believes that,
regardless of the type of transaction, where
parties wish to contract electronically, they
should be able to form a valid contract on-
line.

In particular, on-line licenses should be
encouraged because they offer efficiency for
both licensors and licensees. Moreover,
state validating statutes -- similar to those
used to validate shrink wrap licenses -- can
be used for on-line licenses to help overcome
concerns regarding adhesion; and such
statutes should not be preempted as long as
they do not attempt to grant rights
equivalent to any of the exclusive rights
within the general scope of copyright.182
Thus, a statute that merely recognizes the
validity of on-line licenses -- even those
licenses which cover the exclusive rights of
the copyright owner -- would not usurp
Federal power and should be upheld.

Further, just as the copyright law needs
minor clarifications to account for new
technology, so too might commercial law.
Historically, the U.C.C. has been extremely
successful in clarifying the law. However,
as technology advances, the way in which
business is conducted places strains upon the
U.C.C. -- especially Article 2. Therefore,
the Working Group supports the efforts
presently underway to revise Article 2 of the
U.C.C. to encompass licensing of intellectual
property.

4.Term of Protection

Generally, a copyrighted work is protected
for the length of the author's life plus
another 50 years.183 In the case of joint
works, copyright protection is granted for
the length of the life of the last surviving
joint author plus another 50 years.184 Works
made for hire, as well as anonymous and
pseudonymous works, are protected for a term
of either 75 years from the year of first
publication or 100 years from the year of
creation, whichever is shorter.185 When the
term of protection for a copyrighted work
expires, the work falls into the "public
domain."186

5.Notice, Deposit and Registration

Prior to the United States accession to
the Berne Convention and the concomitant
amendments to the Copyright Act, a copyright
notice was required on all publicly
distributed copies or phonorecords of works.
Omission of the notice could result in the
loss of copyright protection for the work.
However, in 1989, the use of a copyright
notice became permissive rather than
required.187 Section 401(a) of the Copyright
Act provides:

Whenever a work protected under this
title is published in the United
States or elsewhere by authority of
the copyright owner, a notice of
copyright . . . may be placed on
publicly distributed copies from
which the work can be visually
perceived, either directly or with
the aid of a machine or device.188

If a copyright notice is used, it
generally must consist of three elements:

? the letter "C" in a circle (?) or the
word "Copyright" or the abbreviation
"Copr." (in the case of sound
recordings embodied in phonorecords,
the letter "P" in a circle);

? the year of first publication of the
work; and

? the name of the owner of copyright in
the work.189

As a general rule, two copies of a
published work must be deposited in the
Copyright Office within three months of
publication for the benefit of the Library of
Congress.190 The Register of Copyrights may
exempt categories of works from the deposit
requirements. The Register may also require
only one copy of the work or allow
alternative forms of deposit.191 Although
required by the Copyright Act, the deposit of
copies is not a prerequisite to or condition
of copyright protection. Failure to deposit
copies of a work after a written demand by
the Register of Copyrights, however,
generally results in the imposition of a
fine.192

Registration with the Copyright Office is
permissive, rather than mandatory. It is not
a prerequisite to the grant of exclusive
rights.193 It is, however, generally a
prerequisite to the enforcement of those
rights in court.194 The copyright owner of a
work (or the owner of any of the exclusive
rights) may register the copyright in the
work by depositing with the Copyright Office
a completed application form, registration
fee and a copy or copies of the work.195 The
deposit requirement under the Act may be
fulfilled through the registration
procedures.196

Although not required, registration may be
advisable. A certificate of copyright
registration constitutes prima facie evidence
of the validity of the copyright and the
facts stated in the certificate, if
registration is made within five years of
first publication.197 In addition, certain
remedies are available in infringement suits
only if registration is made prior to the
date of the infringement or within three
months of first publication.198

The lack of notice and registration
requirements may make it harder to
differentiate between protected and
unprotected works, including those in the
public domain and those in which the author
does not wish to claim copyright. It may
also make it more difficult to identify the
copyright owner. This has led some to
suggest, at least with respect to works
disseminated via computer networks, that one
should be free to copy any work that does not
contain a copyright notice and that
registration should be required.

While these arguments may have some merit,
the balance of interests has not changed
since these issues were considered by
Congress and the requirements were
eliminated. Conditioning copyright
protection on the affixation of copyright
notices and/or registration would be
inconsistent with our obligations under the
Berne Convention.199 Further, the benefits of
utilizing Copyright Management Information
should encourage copyright owners to include
or affix information historically included in
copyright notices, as well as additional
useful information for consumers, such as the
terms and conditions for use.

6.Exclusive Rights

The Copyright Act grants copyright owners
certain exclusive rights that, together,
comprise the bundle of rights known as
copyright. (Limitations on the exclusive
rights and infringement of the rights are
discussed in subsequent sections. The fact
that a particular use of a copyrighted work
is said to implicate one or more of the
rights, therefore, does not necessarily mean
that such use is an infringement or
unlawful.)

The exclusive rights of the copyright
owner include --

(1) to reproduce the copyrighted work
in copies or phonorecords;

(2) to prepare derivative works based
upon the copyrighted work;

(3) to distribute copies or
phonorecords of the copyrighted work
to the public by sale or other
transfer of ownership, or by rental,
lease, or lending;

(4) in the case of literary, musical,
dramatic, and choreographic works,
pantomimes, and motion pictures and
other audiovisual works, to perform
the copyrighted work publicly; and

(5) in the case of literary, musical,
dramatic, and choreographic works,
pantomimes, and pictorial, graphic, or
sculptural works, including the
individual images of a motion picture
or other audiovisual work, to display
the copyrighted work publicly.200

These rights, in most instances, have been
well elaborated by Congress and the courts in
both "conventional" and digital contexts.
For the most part, the provisions of the
current copyright law serve the needs of
creators, owners, distributors, users and
consumers of copyrighted works in the NII
environment. In certain instances, small
changes in the law may be necessary to ensure
public access to copyrighted works while
protecting the rights of the intellectual
property owner.

a.The Right to Reproduce the Work

The fundamental right to reproduce
copyrighted works in copies and phonorecords201
will be implicated in innumerable NII
transactions. Indeed, because of the nature
of computer-to-computer communications, it
will be implicated in most NII transactions.
For example, when a computer user accesses a
document resident on another computer, the
image on the user's screen exists -- under
contemporary technology -- only by virtue of
the copy that is reproduced in the user's
computer memory. It has long been clear
under U.S. law that the placement of
copyrighted material into a computer's memory
is a reproduction of that material (because
the work in memory then may be, in the law's
terms, "perceived, reproduced, or . . .
communicated . . . with the aid of a machine
or device").202

The 1976 Copyright Act, its legislative
history, the CONTU Final Report, and repeated
holdings by courts make it clear that in each
of the instances set out below, one or more
copies is made.203

? When a work is placed into a computer,
whether on a disk, diskette, ROM, or
other storage device or in RAM for
more than a very brief period, a copy
is made.204

? When a printed work is "scanned" into
a digital file, a copy -- the digital
file itself -- is made.

? When other works -- including
photographs, motion pictures, or sound
recordings -- are digitized, copies
are made.

? Whenever a digitized file is
"uploaded" from a user's computer to a
bulletin board system (BBS) or other
server, a copy is made.

? Whenever a digitized file is
"downloaded" from a BBS or other
server, a copy is made.

? When a file is transferred from one
computer network user to another,
multiple copies generally are made.205

? Under current technology, when an end-
user's computer is employed as a
"dumb" terminal to access a file
resident on another computer such as a
BBS or Internet host, a copy of at
least the portion viewed is made in
the user's computer. Without such
copying into the RAM or buffer of the
user's computer, no screen display
would be possible.

b.The Right to Prepare Derivative
Works

The copyright law grants copyright owners
the right to control the abridgment,
adaptation, translation, revision or other
"transformation" of their works.206 A user who
modifies -- by annotating, editing,
translating or otherwise significantly
changing -- the contents of a downloaded file
creates a derivative work. Derivative works
may also be created by transforming a work,
such as an audiovisual work, into an
interactive work.

c.The Right to Distribute Copies

Before addressing issues raised by the
distribution right in the context of the NII,
it is necessary to understand its application
and limitations with respect to conventional
modes of exploitation and infringement.

The right to distribute legitimate copies
of works is substantially circumscribed by
the "first sale" doctrine:

Notwithstanding the provisions of
section 106(3), the owner of a
particular copy or phonorecord
lawfully made under this title, or
any person authorized by such owner,
is entitled, without the authority of
the copyright owner, to sell or
otherwise dispose of the possession
of that copy or phonorecord.207

This means that the copyright owner generally
has only the right to authorize or prohibit
the initial distribution of a particular
lawful copy of a copyrighted work.208 It is
important to understand, however, that the
distribution of an unlawfully made (i.e.,
infringing) copy will subject any distributor
to liability for infringement.209

One court decision has construed the
unauthorized downloading of digitized
photographic images (whose reproduction was
unauthorized) by BBS subscribers as
"implicating" the distribution right.210 The
discussion in Playboy Enterprises Inc. v.
Frena211 reflects the reach of the distribution
right with respect to infringing copies:

Public distribution of a copyrighted
work is a right reserved to the
copyright owner, and usurpation of
that right constitutes
infringement . . . . [Playboy
Enterprise's] right under 17 U.S.C.
?106 to distribute copies to the
public has been implicated by
Defendant Frena [the BBS operator].
Section 106(3) grants the copyright
owner "the exclusive right to sell,
give away, rent or lend any material
embodiment of his work." There is no
dispute that Defendant Frena supplied
a product containing unauthorized
copies of a copyrighted work. It
does not matter that Defendant Frena
claims it did not make the copies
itself.212

The court may not have focused on the
reproduction right, apparently because of its
uncertainty whether the operator of the
bulletin board system could itself be held to
have reproduced a work that was (a) uploaded
by one subscriber213 and (b) downloaded by
another. (As discussed below, the BBS
operator publicly displayed the works by the
same conduct, and was found liable by the
court for infringing the display right.)

Whether the litigants in Playboy put the
issue properly in dispute or not, the right
to distribute copies of a work has
traditionally covered the right to convey a
possessory interest in a tangible copy of the
work. Indeed, the first sale doctrine
implements the common law's abhorrence of
restraints on alienation of property by
providing that the distribution right does
not generally prevent owners of lawfully made
copies from alienating them in a manner of
their own choosing.214 It is clear that a
Frena subscriber, at the end of a
transaction, possessed a copy of a Playboy
photograph, but it is perhaps less clear
whether, under the current law, Frena
"distributed" that photograph and whether
Frena or the subscriber "reproduced" it (and,
if the latter, whether current law clearly
would have made Frena contributorily liable
for the unauthorized reproduction).215

In a similar case, Sega Enterprises Ltd.
v. MAPHIA,216 a court, on a motion for a
preliminary injunction, made findings of fact
regarding (a) the use of a bulletin board
system to "make and distribute" copies of
copyrighted video games, (b) the
"unauthorized copying and distribution" of
the games on the bulletin board, and © the
profits made by the defendant from the
"distribution" of the games on the bulletin
board. The court's conclusions of law held
that the reproduction right was infringed but
apparently did not reach a like conclusion
with respect to the distribution right.

d.The Right to Perform the Work
Publicly

The public performance right is available
to all types of "performable" works --
literary, musical, dramatic, and
choreographic works, pantomimes, motion
pictures, and other audiovisual works -- with
the exception of sound recordings.217 While
some have urged that many, if not all, NII
transactions be characterized as
"performances," it is important to
understand:

? the definition of "perform" in the
copyright law,218

? that only "public" performances are
covered by the copyright law,219 and

? the limitations set out in the statute
that render the performance right
inapplicable in a variety of
circumstances (mostly of a nonprofit
nature).220

A distinction must be made between
transmissions of copies of works and
transmissions of performances or displays of
works.221 When a copy of a work is transmitted
over wires, fiber optics, satellite signals
or other modes in digital form so that it may
be captured in a user's computer, without the
capability of simultaneous "rendering" or
"showing," it has rather clearly not been
performed. Thus, for example, a file
comprising the digitized version of a motion
picture might be transferred from a copyright
owner to an end user via the Internet without
the public performance right being
implicated. When, however, the motion
picture is "rendered" -- by showing its
images in sequence -- so that users with the
requisite hardware and software might watch
it with or without copying the performance,
then, under the current law, a "performance"
has occurred.

The "public" nature of a performance --
which brings it within the scope of copyright
-- is sufficiently broadly defined to apply
to multiple individual viewers who may watch
a work being performed in a variety of
locations at several different times. Courts
have repeatedly imposed public performance
infringement liability upon entities that,
for example, develop novel modes of
delivering motion picture performances to
customers and advance novel legal arguments
as to why their performances are not
"public."222 Therefore, in the context of the
NII, the fact that performances and displays
may occur in diverse locations and at
different times will not exempt them from the
public performance and public display rights.

e.The Right to Display the Work
Publicly

The right to display a work publicly is
extremely significant in the context of the
NII. To display a work means to "show a copy
of it, either directly or by means of
a . . . television image, or any other device
or process . . . ."223 The complex analyses to
determine whether a particular transmission
might amount to a "distribution" or a
"performance" are rarely necessary in this
context. The definition of "display" clearly
encompasses, for instance, the actions of the
defendant BBS operator in the Playboy case.224
Thus, when any NII user visually "browses"
through copies of works in any medium (but
not through a list of titles or other "menus"
that are not copies of the works),225 a public
display of at least a portion of the browsed
work occurs. A display is "public" on the
same terms as a performance is "public";
therefore, many NII uses would appear to fall
within the law's current comprehension of
"public display."226 Whether such acts would
be an infringement would be determined by
separate infringement analyses.

7.Limitations on Exclusive Rights

The copyright law provides a number of
exceptions to the "exclusive" rights of
copyright owners. The Copyright Act
specifies that certain uses of copyrighted
works are outside the control of the
copyright owner.227 While many regard these
exceptions as rights of users, they are, as a
technical matter, outright exemptions from
liability or affirmative defenses to what
would otherwise be acts of infringement.

a.Fair Use

The most significant and, perhaps, murky
of the limitations on a copyright owner's
exclusive rights is the doctrine of fair use.228
Fair use is an affirmative defense to an
action for copyright infringement.229 It is
potentially available with respect to all
manners of unauthorized use of all types of
works in all media. When it exists, the user
is not required to seek permission from the
copyright owner or to pay a license fee for
the use.

The doctrine of fair use is rooted in some
200 years of judicial decisions. The most
common example of fair use is when a user
incorporates some portion of a pre-existing
work into a new work of authorship.230 For
example, quotation from a book or play by a
reviewer, or the incidental capturing of
copyrighted music in a segment of a
television news broadcast is fair use. In
the recent Campbell case, the Supreme Court
expressly accepted the proposition that such
"transformative" uses are more favored in
fair use analyses than uses that amount to
little more than verbatim copying.231 As one
moves away from such transformative uses into
the area of uses that -- for practical
purposes -- compete with the copyright
owner's exploitation of the work, the
analysis becomes more difficult (as the
number of litigated cases grows).

Before examining the doctrine developed by
the courts, it is useful to examine the
statutory language concerning fair use.
Section 107 of the Copyright Act provides:

Notwithstanding the provisions of
sections 106 and 106A, the fair use
of a copyrighted work, including such
use by reproduction in copies or
phonorecords or by any other means
specified by that section [sic], for
purposes such as criticism, comment,
news reporting, teaching (including
multiple copies for classroom use),
scholarship, or research, is not an
infringement of copyright. In
determining whether the use made of a
work in any particular case is a fair
use the factors to be considered
shall include --
(1) the purpose and character
of the use, including whether
such use is of a commercial
nature or is for nonprofit
educational purposes;
(2) the nature of the
copyrighted work;
(3) the amount and
substantiality of the portion
used in relation to the
copyrighted work as a whole; and
(4) the effect of the use upon
the potential market for or
value of the copyrighted work.

The fact that a work is unpublished
shall not itself bar a finding of
fair use if such finding is made upon
consideration of all the above
factors.232

The language may usefully be divided into
two parts: the first sentence, which is
largely tautological ("fair use . . . is not
an infringement of copyright"), and the
analysis required by the second sentence.
The recitation of assorted uses in the middle
of the first sentence has been held neither
to prevent a fair use analysis from being
applied to other "unlisted" uses nor to
create a presumption that the listed uses are
fair.233 It does, however, provide some
guidance on the types of activities which
might be considered fair use.

The core of Section 107 is the second
sentence, in which Congress elaborates a test
similar to that articulated by Justice Story
more than 150 years ago.234 It is clear that
courts must evaluate all four factors in
determining whether a particular use is fair,
but may also take into account unenumerated
"extra" factors, when appropriate.

The Purpose and Character of the Use

Although the fourth factor has repeatedly
been held to be the most important of the
four factors, the first factor often plays a
major role in determining the result when a
defendant asserts a fair use defense.

The first factor contrasts "commercial"
uses with "nonprofit educational" uses.
There is, of course, a continuum between
these two opposites, with most uses falling
neatly into neither the favored nor
disfavored pigeonhole. The weight of the
factor may be inferred from the Supreme
Court's very limited fair use jurisprudence:
In the four fair use cases that it has
decided, one noncommercial, noneducational
use was held fair,235 two commercial uses were
held unfair,236 and one commercial use was held
potentially fair.237

In the Sony case, the Court announced a
"presumption" that helps explain courts' near
universal rejection of fair use claims in
commercial contexts. It declared that all
commercial uses were to be presumed unfair,238
thus placing a substantial burden on a
defendant asserting that a particular
commercial use is fair. The Campbell case
made clear that the Sony presumption was of
greatest applicability in the context of
verbatim copying, thus giving greater leeway
to commercial but transformative uses.

For the most part, "mere reproduction" has
fared rather badly in court under the
Copyright Act, even in actual and ostensible
educational contexts.239 Courts have denied
fair use,240 for example, to:

? a teacher's reproduction, in text
materials, of the copyrighted material
of another teacher;241

? a school system's practice of taping
educational broadcasts for later use
in classrooms;242 and

? off-campus copy shops' manufacture --
per teachers' specifications -- and
distribution of photocopies of
anthologies containing portions of
textbooks and periodicals.243

The Nature of the Copyrighted Work

This second factor tends to play a less
significant role than the first in fair use
litigation. Courts have held that this
factor weighs in the copyright owner's favor
when works of fiction244 and unpublished works245
are copied, and in the defendant's favor when
factual works246 and published works247 are
copied. In the NII context, it is quite
possible that a court might evaluate whether
a work in digital form should be treated
differently from a work in a conventional
print or other analog form for the purposes
of evaluating this factor.

The Amount and Substantiality of the Portion
Used

This is probably the least important
factor, given that the taking of even a small
amount -- if it is considered the "heart" of
the work -- can lead to a finding of
infringement.248 Indeed, the most frequently
cited copyright treatise devotes only four
sentences to its discussion:

The third factor listed in ? 107 is
"the amount and substantiality of
the portion used in relation to the
copyrighted work as a whole." This
raises an issue discussed in a
preceding section [concerning the
quantum of copying that constitutes
infringement], and may be regarded
as relating to the question of
substantial similarity rather than
whether the use is "fair." This
includes a determination of not
just quantitative, but also
qualitative substantiality. In any
event, whatever the use, generally
it may not constitute a fair use if
the entire work is reproduced.249

The Economic Effect of the Use

Courts have repeatedly identified this as
the most significant of the four factors.250
It is important to recall that it weighs
against a defendant not only when a current
market exists for a particular use, but also
when a potential market could be exploited by
the copyright owner. Harm in either market
will, in most instances, render a use unfair.251

The Supreme Court's decisions demonstrate
the significant weight given this factor:

? In Sony, the absence of any market for
home taping licenses, combined with
the testimony of some copyright owners
that they were indifferent to home
copying, led the Court to conclude
that there was no cognizable harm.252

? In Harper & Row, the Court accepted
the argument that the defendant's
"scooping" of "Time" magazine's right
to make the first serial publication
of President Ford's memoirs, which
caused cancellation of the magazine's
contract with Harper & Row, caused
harm to the copyright owner.253

? In Stewart v. Abend, performances of a
movie palpably harmed the economic
interests of the owner of the
copyright in the underlying short
story.254

? In Campbell, the Court -- because the
parody was "transformative" --
rejected the court of appeals'
determination that the commercial
purpose of the parody required the
parodist to overcome Sony's
presumption of market harm.255

It is reasonable to expect that courts
would approach claims of fair use in the
context of the NII just as they do in
"traditional" environments. Commercial uses
that involve no "transformation" by users and
harm actual or potential markets will likely
always be infringing, while nonprofit
educational transformative uses will likely
often be fair. Between these extremes,
courts will have to engage in the same type
of fact-intensive analysis that typifies fair
use litigation and frustrates those who seek
"bright lines" clearly separating the lawful
from the unlawful.256

Courts in two cases decided to date
concerning the unauthorized "uploading" and
"downloading" of copyrighted materials to and
from bulletin board services have held that
such uses were not fair uses.257 In the
Playboy case, the court characterized the
issue as whether "unrestricted and widespread
conduct of the sort engaged in by the
defendant bulletin board system operator
(whether in fact engaged in by the defendant
or others) would result in a substantially
adverse impact on the potential market for or
value of [Playboy's copyrighted
photographs],"258 and determined that it would.
This, in turn, led the court to conclude that
there was market harm and, thus,
infringement.

In the MAPHIA case,259 the court found that
Sega established a prima facie case of direct
and contributory infringement in the
operation of the defendant's bulletin board
system (where Sega's copyrighted video game
programs were uploaded and downloaded). In
issuing a preliminary injunction, the court
found that each of the four factors weighed
against a finding of fair use, but found that
the fourth factor, in particular, weighed
"heavily" against such a finding:

Based on Defendants' own statement
that 45,000 bulletin boards like
MAPHIA operate in this country, it is
obvious that should the unauthorized
copying of Sega's video games by
Defendants and others become
widespread, there would be a
substantial and immeasurable adverse
effect on the market for Sega's
copyrighted video game programs.260

Cases already decided in other contexts
will give valuable guidance to courts
confronted with NII-related cases. Just as
courts have distinguished between home use of
a VCR to make time-shifting tapes of
materials broadcast over the air (fair use)
and school systems' attempts to use VCRs to
download broadcast instructional materials
for the creation of an educational film
library (not fair use), courts will subject
users of copyrighted works available via the
NII to like scrutiny. Educational uses that
serve the same ends and are constrained in
the same manner as the copying permitted
under the Classroom Guidelines261 will likely
be fair, while attempts to supplant the
market for books, films, software and other
materials by proliferating them without
permission via the NII will likely be
infringing.

Finally, it may be that technological
means of tracking transactions and licensing
will lead to reduced application and scope of
the fair use doctrine. Thus, one sees in
American Geophysical Union v. Texaco Inc.,262 a
court establishing liability for the
unauthorized photocopying of journal articles
based in part on the court's perception that
obtaining a license for the right to make
photocopies via the Copyright Clearance
Center was not unreasonably burdensome. The
court also speculated that should the
proprietors fail to establish a licensing
system for the use in question, then the
balance might shift in favor of a finding of
fair use.

Fair Use Guidelines for Libraries and
Educational Institutions

The fair use, library copying and
educational use provisions of the current
copyright law have been the subject of four
sets of "guidelines" for libraries and
educational institutions, to which contending
parties agreed, that are enshrined at various
places in the legislative history.263 The
result has been, in certain circumstances, a
quantitative gloss on the construction of
fair use and library copying privileges. For
instance, the classroom guidelines generally
permit the copying, for educational purposes,
of short extracts of works, provided that the
copying is spontaneously done or requested by
the instructor (and the copies are neither
used nor re-made repeatedly over time).264

The Conference on Fair Use

To determine whether educational or
library guidelines of a similar nature might
prove attainable in the NII context, the
Working Group has convened a conference of
more than 60 interested parties who have met
more or less monthly since September 1994.
To date, no formal guidelines have been the
subject of agreement, but it appears
reasonable to anticipate that drafts now in
preparation may be formalized as guidelines
before the end of 1995. The participants in
the conference are discussing several areas,
including multimedia, library preservation,
"browsing" and "distance learning."

In most such instances, current law often
provides clear rules while the "digital
difference" tests, bends or sometimes breaks
those rules. For example, library
preservation is covered in some detail in the
analog context (paper, microfiche, etc.) in
Section 108 of the law, but that section's
terms do not appear to encompass digital
copying in the quantities to which libraries
have become accustomed,265 and many
conventional distance learning issues are
arguably covered -- with respect to the
performance but not the reproduction of works
-- in Section 110.

Some participants have suggested that the
United States is being divided into a nation
of information "haves" and "have nots" and
that this could be ameliorated by ensuring
that the fair use defense is broadly generous
in the NII context. The Working Group
rejects the notion that copyright owners
should be taxed -- apart from all others --
to facilitate the legitimate goal of
"universal access."266

Should the participants in the Conference
on Fair Use fail to agree on appropriate
guidelines, the Working Group may conclude
that the importance of such guidelines may
necessitate regulatory or legislative action
in that area.

b.Library Exemptions

Section 108 of the Copyright Act provides
that in certain circumstances and under
certain conditions it is not an infringement
of copyright for a library or archives, or
its employees acting within the scope of
their employment,267 to reproduce or distribute
one copy or phonorecord of a work268 under
circumstances that would typically not amount
to fair use. The conditions of the library
exemption are that (1) the reproduction or
distribution must be made without any purpose
of direct or indirect commercial advantage;
(2) the collections of the library must be
open to the public or available not only to
researchers affiliated with the library, but
also to other persons doing research in a
specialized field; (3) the reproduction or
distribution of the work must include a
notice of copyright;269 and (4) a specific
exemption in subsections (b) through (g) of
Section 108 applies.

The exemptions granted under Section 108
extend only to isolated and unrelated
reproduction of a single copy or phonorecord
of the same material on separate occasions,270
and do not apply to (1) musical works;
(2) pictorial, graphic, or sculptural works;
or (3) motion pictures or other audiovisual
works, except news programs.271

The circumstances under which a library
may reproduce or distribute a copyrighted
work without infringement liability include:

Archival Copies

A library may reproduce and distribute a
copy or phonorecord of an unpublished work
reproduced in facsimile form if the sole
purpose is preservation and security, and if
the copy or phonorecord reproduced is
currently in the collection of the library.272
The House Report notes that this right "would
extend to any type of work, including
photographs, motion pictures and sound
recordings." However, the copy or
phonorecord made must be in "facsimile form."
A library may "make photocopies of
manuscripts by microfilm or electrostatic
process, but [may] not reproduce the work in
'machine-readable' language for storage in an
information system."273 Thus, this exemption
does not allow for preservation in electronic
or digital form.

Replacement Copies

A library may reproduce a published work
duplicated in facsimile form solely for the
purpose of replacing a copy or phonorecord
that is damaged, deteriorated, lost or
stolen, if the library has, after reasonable
efforts, determined that an unused
replacement cannot be obtained at a fair
price.274 Again, the copy or phonorecord made
must be in "facsimile form." The exemption
does not allow for replacement of a published
work by reproduction in digital form (at
least when the original copy of the published
work was not in digital form).

Articles and Short Excerpts for Users

A library may make and distribute a copy
of one article or other contribution to a
copyrighted collection or periodical issue,
or a copy or phonorecord of a small part of
any other copyrighted work at the request of
a user, subject to two conditions.275 First,
the copy or phonorecord must become the
property of the user, and the library or
archives must have no notice that the copy or
phonorecord will be used for any purpose
other than private study, scholarship, or
research. Second, the library or archives
must prominently display a warning of
copyright at the place where orders are
accepted and on its order form.276

Out-of-Print Works for Scholarly Purposes

A library may make and distribute a copy
or phonorecord of an entire work if it has
determined that a copy or phonorecord of the
copyrighted work cannot be obtained at a fair
price, subject to two additional conditions.277
First, the copy or phonorecord must become
the property of the user, and the library or
archives must have no notice that the copy or
phonorecord will be used for any purpose
other than private study, scholarship, or
research. Second, the library or archives
must prominently display a warning of
copyright at the place where orders are
accepted and on its order form.278

News Programs

A library may reproduce and distribute by
lending a limited number of copies of an
audiovisual news program.279

Interlibrary Loan

The Copyright Act allows a library to make
single copies of copyrighted works and to
enter into interlibrary arrangements, but
prohibits copying "in such aggregate
quantities as to substitute for a
subscription to or purchase of [a
copyrighted] work."280 CONTU offered its
offices to the interested parties --
copyright owners, educators and libraries --
to develop guidelines to interpret the quoted
phrase. The parties were successful in
defining when such copying for the purpose of
"borrowing" was not done in such aggregate
quantities as to substitute for the
subscription to or purchase of a work. These
so-called CONTU Guidelines were later
included in the Conference Report on the
Copyright Act of 1976.281 The guidelines
provide that a library may "borrow" not more
than five copies per year of articles from
the most recent five years of any journal
title.282

The CONTU Guidelines have been an
effective means to protect both the interests
of copyright owners and to provide libraries
a clear "safe" guide to follow in "borrowing"
from other libraries. 283 In 1976, there were
no readily available systems for the supply
of single copies of, or for the licensing of
the reproduction of multiple copies of
copyrighted works. Now, that situation has
changed and the continuing evolution of the
NII will permit the establishment of
licensing systems to supply copies or to
permit users to make reproductions of works
or portions of works more widely available.
Indeed, a publisher's license to access or
download all or a portion of the aggregated
copyrighted works on a server might be viewed
as the on-line equivalent of a subscription.
A publisher might allow free access to a
table of contents and then through an
appropriate payment mechanism such as
electronic cash or a credit card, license the
downloading of a single article. This
"publication on demand" might become an
effective and economic substitute for
interlibrary loan on the NII. While the
precise nature of all such systems cannot be
known at this time, it is clear that the
CONTU Guidelines, while remaining effective
for print materials, cannot readily be
generalized to "borrowing" electronic
publications.

The Working Group emphasizes that the
existence of systems for the supply of
licensed copies of works or portions of works
by electronic means does not negate the
privileges conferred on libraries in Section
108(g)(2), nor do they limit "borrowing"
permitted under existing voluntarily
negotiated guidelines or such guidelines to
set rules for interlibrary loan via the NII
that may be negotiated in the future.284 While
it is clear that Section 108 does not
authorize unlimited reproduction of copies in
digital form, it is equally clear that
Section 108(g)(2) permits "borrowing" in
electronic form for interlibrary loan in the
NII environment, so long as such "borrowing"
does not lead to "systematic" copying.
However, the existence of such licensing
systems in a world of electronic publishing
may make it difficult, if not impossible, to
define "subscription or purchase" as
intended, and equally impossible to apply the
existing guidelines to all electronic
transactions.

Therefore, new scenarios should be
considered to avoid ambiguity and to continue
to protect both the interests of copyright
owners and to continue to provide libraries
with a safe "borrowing" guide. Such
scenarios are being considered in the on-
going Conference on Fair Use. Should the
parties fail to reach agreement in that
forum, as noted earlier, a regulatory or
legislative solution may be appropriate.
Appropriate use of such electronic publishing
systems by libraries can provide a ready
means for avoiding not only liability for
"borrowing" that exceeds that which is
permitted under Section 108(g)(2) or any
voluntarily negotiated guidelines developed
by the concerned parties but also any need to
devote resources to consider whether the
"nth" transaction is "safe."

c.First Sale Doctrine

A fundamental tenet of copyright law, and
another limitation on the exclusive rights,
is the "first sale doctrine," which prevents
an owner of copyright in a work from
controlling subsequent transfers of copies of
that work. Once the copyright owner
transfers ownership of a particular copy (a
material object) embodying a copyrighted
work, the copyright owner's exclusive right
to distribute copies of the work is
"extinguished" with respect only to that
particular copy.285

Section 109(a) of the Copyright Act
provides:

Notwithstanding the provisions of
section 106(3) [which grants
copyright owners the exclusive right
to distribute copies or phonorecords
of a work], the owner of a particular
copy or phonorecord lawfully made
under this title, or any person
authorized by such owner, is
entitled, without the authority of
the copyright owner, to sell or
otherwise dispose of the possession
of that copy or phonorecord.286

This limitation on the copyright owner's
distribution right allows wholesalers who buy
books to distribute those copies to retailers
and retailers to sell them to consumers and
consumers to give them to friends and friends
to sell them in garage sales and so on -- all
without the permission of (or payment to) the
copyright owner of the work.

The first sale doctrine allows the owner
of a particular copy of a work to dispose of
possession of that copy in any way -- for
example, by selling it, leasing it, loaning
it or giving it away. However, there is an
exception to this exemption with respect to
two types of works -- computer programs and
sound recordings. The owner of a particular
copy of a computer program or a particular
phonorecord of a sound recording may not
rent, lease or lend that copy or phonorecord
for the purpose of direct or indirect
commercial advantage.287 These exceptions were
enacted because of the ease with which
reproductions of those works can be made at a
lower cost than the original with minimum
degradation in quality.288 The rationale for
these exceptions may apply to other types of
works as more types of works become available
in digital form and the "nexus" of rental and
reproduction of those works "may directly and
adversely affect the ability of copyright
holders to exercise their reproduction and
distribution rights under the Copyright Act."289

This provision of the first sale doctrine
limits only the copyright owner's
distribution right; it in no way affects the
reproduction right. Thus, the first sale
doctrine does not allow the transmission of a
copy of a work (through a computer network,
for instance), because, under current
technology the transmitter retains the
original copy of the work while the recipient
of the transmission obtains a reproduction of
the original copy (i.e., a new copy), rather
than the copy owned by the transmitter. The
language of the Copyright Act, the
legislative history and case law make clear
that the doctrine is applicable only to those
situations where the owner of a particular
copy disposes of physical possession of that
particular copy.290

If the owner of a particular copy
transmits a copy to another person without
authorization (either from the copyright
owner or the law), such a transmission would
involve an unlawful reproduction of a work,
and the first sale doctrine would not shield
the transmitter from liability for the
reproduction nor for the distribution. Under
the first sale doctrine, the owner of a
particular copy of a copyrighted work may
distribute it, but may not reproduce it.291
Therefore, the transmission would constitute
infringement of the copyright owner's
reproduction right.292 If the reproduction is
unlawful, further distribution of the
unlawful reproduction would not be allowed
under the first sale doctrine because the
copy distributed would not be one "lawfully
made" under the Copyright Act, as required by
the statute.

The requirement that copies distributed
under the doctrine be "lawfully made" under
the Copyright Act does not limit the
doctrine's application to copies made or
authorized by the copyright owner.293 A copy
could be "lawfully made," for example, if the
reproduction is lawful under the fair use
provision; the distribution of such a copy
would be permitted within the limits of the
first sale doctrine.

It has also been suggested that the scope
of the first sale doctrine be narrowed to
exclude copies obtained via transmission.
This would mean, for instance, that if a copy
of a literary work is legally purchased on-
line and the copy so purchased is downloaded
onto the purchaser's disk, the disk could not
be resold. Clearly, the first sale doctrine
should apply if the particular copy involved
is in fact the copy that is further
distributed, even if the copy was first
obtained by transmission. Further, if the
technology utilized allows the transmission
of a copy without making an unlawful
reproduction -- i.e., no copy remains with
the original owner -- the first sale doctrine
would apply and the transmission would not be
an infringement.

Some argue that the first sale doctrine
should also apply to transmissions, as long
as the transmitter destroys or deletes from
his or her computer the original copy from
which the reproduction in the receiving
computer was made. The proponents of this
view argue that at the completion of the
activity, only one copy would exist between
the original owner who transmitted the
copy and

the person who received it -- the same number
of copies as at the beginning. However, this
zero sum gaming analysis misses the point.
The question is not whether there exist the
same number of copies at the completion of
the transaction or not. The question is
whether the transaction when viewed as a
whole violates one or more of the exclusive
rights, and there is no applicable exception
from liability. In this case, without any
doubt, a reproduction of the work takes place
in the receiving computer. To apply the
first sale doctrine in such a case would
vitiate the reproduction right.

A copyright owner's exclusive right to
publicly display copies of a work is also
limited by Section 109:

Notwithstanding the provisions of
section 106(5) [which grants
copyright owners the exclusive right
to display publicly copies of a
work], the owner of a particular copy
lawfully made under this title, or
any person authorized by such owner,
is entitled, without the authority of
the copyright owner, to display that
copy publicly, either directly or by
the projection of no more than one
image at a time, to viewers present
at the place where the copy is
located.294

Thus, an art gallery that purchases a
painting may publicly display it without
liability. The owner of a particular copy of
an electronic audiovisual game intended for
use in coin-operated equipment may also
publicly perform or display that game in that
equipment.295

This exemption from liability would not
apply to the public display of a copy of a
work on a bulletin board system or other
computer or communications network, because
more than one image would likely be displayed
at a time (to different viewers) and viewers
would not be "present at the place where the
copy is located."

The first sale doctrine allows the owner
of a particular, lawfully-made copy of a work
to dispose of it in any manner, with certain
exceptions,296 without infringing the copyright
owner's exclusive right of distribution. It
seems clear that the first sale model -- in
which the copyright owner parts company with
a tangible copy -- should not apply with
respect to distribution by transmission,
because transmission by means of current
technology involves both the reproduction of
the work and the distribution of that
reproduction. In the case of transmissions,
the owner of a particular copy of a work does
not "dispose of the possession of that copy
or phonorecord." A copy of the work remains
with the first owner and the recipient of the
transmission receives another copy of the
work.

d.Educational Use Exemptions

Section 110(1) exempts from infringement
liability the performance or display of a
copyrighted work in the course of face-to-
face teaching activities by a non-profit
educational institution in a classroom or
similar setting.297

Section 110(2) exempts from liability the
transmission of a performance or display of a
copyrighted work if (1) the performance or
display is a regular part of the systematic
instructional activities of the non-profit
educational institution; (2) the performance
or display is directly related and of
material assistance to the teaching content
of the transmission; and (3) the transmission
is made primarily for reception in classrooms
or similar places or by persons to whom the
transmission is directed because of their
disabilities.298

Like the library exemptions, the
educational use exemptions are provided in
addition to the fair use and other general
exemptions, which are also available to
educational institutions.

e.Other Limitations

Reproduction of Computer Programs

The rights of an owner of a copyright in a
computer program are limited such that the
owner of a particular copy of a computer
program may make a copy or adaptation of the
program as an "essential step" in using the
computer program in a computer or for
archival purposes.299 This limitation applies
only with respect to "owners" of copies of
programs, not licensees, borrowers or mere
possessors.

Certain Performances and Displays

Certain performances and displays are
exempt from infringement liability under
Section 110 of the Copyright Act, including:

? the performance or display of certain
works in the course of religious
services;300

? the performance of certain works by
governmental or non-profit
agricultural or horticultural
organizations;301

? the performance of certain musical
works in retail outlets for the sole
purpose of promoting retail sales;302

? the transmission of performances of
certain works to disabled persons;303
and

? the performance of certain works at
non-profit veterans' or fraternal
organizations for charitable purposes.304

The "communication of a transmission
embodying a performance or display of a work
by the public reception of the transmission
on a single receiving apparatus of a kind
commonly used in private homes" is also
exempted if there is no direct charge to see
or hear the transmission and the transmission
is not further transmitted to the public.305
This exemption allows proprietors to play
radios or televisions (i.e., to perform or
display copyrighted works in those radio or
television transmissions) in public
establishments such as restaurants, beauty
shops and bars.306 The applicability of this
exemption is extremely fact-specific and what
qualifies as a type of receiving apparatus
"commonly used in private homes" will
certainly change as home equipment merges
(into, for example, radio/television/computer
units) and becomes more sophisticated.

Ephemeral Recordings

Section 112 provides that it is not an
infringement of copyright for a "transmitting
organization" that has the right to transmit
to the public a performance or display of a
work "to make no more than one copy or
phonorecord of a particular transmission
program embodying the performance or display"
under certain conditions.307

Compulsory Licenses

Sections 111 and 119 are compulsory
licensing provisions that allow cable systems
and satellite operators to retransmit
copyrighted programming without infringement
liability if they pay a statutory licensing
fee (which is then distributed among the
copyright owners of the programming
retransmitted).308 A compulsory license under
Section 111 is only available to a "cable
system," which is defined as "a
facility . . . that in whole or in part
receives signals transmitted or programs
broadcast by one or more television broadcast
stations . . . ." A compulsory license under
Section 111 generally would not be available
with respect to NII transmissions because
case law and regulations make clear that the
term "cable system" does not encompass
facilities such as those used for computer
network transmissions.309 Similarly, the
compulsory license under Section 119 would
not be available unless the transmitting
entity qualified as a "satellite carrier" and
met the other statutory criteria.310

Compulsory licenses are also available for
the public performance of nondramatic musical
works by means of jukeboxes,311 for the use of
certain works in connection with
noncommercial broadcasting,312 and for the
reproduction and distribution of nondramatic
musical works in the course of making and
distributing phonorecords of such works.313

8.Copyright Infringement

a.General

Anyone who, without the authorization of
the copyright owner, exercises any of the
exclusive rights of a copyright owner, as
granted and limited by the Copyright Act, is
an infringer of copyright.314 Thus, any
activity that falls within the scope of the
exclusive rights of the copyright owner is an
infringement and the infringer is liable,
unless it is authorized by the copyright
owner or is excused by a defense (such as
fair use) or an exemption.315 For purposes of
this discussion of infringement, the lack of
such authorization, defense or exemption is
generally presumed.

Copyright infringement is determined
without regard to the intent or the state of
mind of the infringer; "innocent"
infringement is infringement nonetheless.316
Moreover, although the exclusive rights refer
to such rights with respect to "copies"
(plural) of the work,317 there is no question
that under the Act the making of even a
single unauthorized copy may constitute an
infringement.318

Courts generally use the term "copying" as
shorthand for a violation of any of the
exclusive rights of the copyright owner (not
just the reproduction right). Courts usually
require a copyright owner to prove ownership
of the copyrighted work and "copying" by the
defendant to prevail in an infringement
action.

Since there is seldom direct evidence of
copying (witnesses who actually saw the
defendant copy the work, for instance), a
copyright owner may prove copying through
circumstantial evidence establishing that the
defendant had access to the original work and
that the two works are substantially similar.
Other indications of copying, such as the
existence of common errors, have also been
accepted as evidence of infringement.319

The copying of the copyrighted work must
be copying of protected expression and not
just ideas;320 likewise, the similarity between
the two works must be similarity of protected
elements (the expression), not unprotected
elements (the facts, ideas, etc.). The
portion taken must also be more than de
minimis.

The similarity between the two works need
not be literal (i.e., phrases, sentences or
paragraphs need not be copied verbatim);
substantial similarity may be found even if
none of the words or brush strokes or musical
notes are identical.321 Various tests have
been developed to determine whether there has
been sufficient non-literal copying to
constitute substantial similarity between a
copyrighted work and an allegedly infringing
work.322 Judge Learned Hand articulated the
well-known "abstractions test," where the
expression and the idea are, in essence,
treated as ends of a continuum, with
infringement found if the allegedly
infringing work crosses the line delineating
the two.323 Such a line, as Judge Hand
recognized, is not fixed in stone; indeed, as
he put it, its location must "inevitably be
ad hoc . . . ."324 The "pattern" test has also
been suggested, where infringement is found
if the "pattern" of the work is taken (in a
play, for instance, the "sequence of events,
and the development of the interplay of
characters").325

The "subtractive" test -- which dissects
the copyrighted work, disregards the
noncopyrightable elements, and compares only
the copyrightable elements of the copyrighted
work to the allegedly infringing work -- has
been the traditional method for determining
substantial similarity.326 Following the 1970
Ninth Circuit decision in Roth Greeting Cards
v. United Card Co.,327 the "totality" test
became popular for determining substantial
similarity. The totality test compares works
using a "total concept and feel" standard to
determine whether they are substantially
similar. Although chiefly used by the Ninth
Circuit in the 1970s and 1980s,328 the test was
used by other circuits as well.329

The Ninth Circuit further defined an
"extrinsic/intrinsic" test in proof of
substantial similarity in Sid & Marty Krofft
Television Productions, Inc. v. McDonald's
Corp.330 The intrinsic portion of the test
measures whether an observer "would find the
total concept and feel of the works" to be
substantially similar.331 The extrinsic
portion of the test, meanwhile, is an
objective analysis of similarity based on
"specific criteria that can be listed and
analyzed."332 Thus, this test requires
substantial similarity "not only of the
general ideas but of the expressions of those
ideas as well."333

More recently, however, both the Ninth and
Second Circuits have moved away from the
totality test, particularly with respect to
computer applications. In Data East USA,
Inc. v. Epyx, Inc.,334 the Ninth Circuit
rediscovered "analytic dissection of
similarities" in the substantial similarity
determination of video games.335 Similarly,
the Second Circuit, in Computer Associates
International, Inc. v. Altai, Inc.,336
fashioned an "abstraction-filtration-
comparison test" for a computer program that
combined Judge Learned Hand's "abstraction"
test (to separate ideas from expression) and
"filtration" reminiscent of traditional
"subtraction" analysis in distinguishing
protectible from non-protectible material.337

In addition to the evolution of
substantial similarity tests, there is
disagreement as to the appropriate "audience"
for determining substantial similarity. The
"ordinary observer test" -- alluded to in
Arnstein v. Porter338 and followed in a number
of Second Circuit decisions339 -- considers the
question of substantial similarity from the
viewpoint of the "average lay observer."340
The Fourth Circuit, however, set forth a
modified test in Dawson v. Hinshaw Music
Inc.,341 requiring the ordinary observer to be
the "intended" audience for the particular
work. Relying on decisions by both the Ninth
and Seventh Circuits,342 the court in Dawson
stated:

[i]f the lay public fairly represents
the intended audience, the court
should apply the lay observer
formulation of the ordinary observer
test. However, if the intended
audience is more narrow in that it
possesses specialized
expertise, . . . the court's inquiry
should focus on whether a member of
the intended audience would find the
two works to be substantially
similar.343

The challenge of this test, especially in
more advanced technologies, is determining
when, if ever, a work is not directed to an
audience possessing specialized expertise,
and at what point a work once intended for a
specialized audience becomes accepted by the
general public.

The ability to manipulate works in digital
form raises an issue with respect to
infringement of the reproduction and
derivative works rights. A copyrighted
photograph, for instance, can be manipulated
in the user's computer in such a way that the
resulting work is not substantially similar
to the copyrighted work (in fact, it may bear
little or no resemblance to the copyrighted
work upon which it was based). The initial
input of the copyrighted work into the user's
computer may be an infringement of the
copyright owner's reproduction right, but the
infringing (or noninfringing) nature of the
resulting work is less clear. Although
courts traditionally rely on a "substantial
similarity" test to determine infringement
liability -- including with regard to the
derivative works right -- neither the meaning
of "derivative work" nor the statutory
standard for infringement appears to require
an infringing derivative work to be
substantially similar.344

b.Infringing Importation

The exclusive right to distribute copies
or phonorecords includes the right to limit
the importation of copies or phonorecords of
a work acquired outside the United States
into the U.S. without the authority of the
copyright owner.345 Such unauthorized
importation, whether it be of pirated items
(i.e., "copies or phonorecords made without
any authorization of the copyright owner")346
or "gray market" products (i.e., those copies
or phonorecords legally produced overseas for
foreign distribution, but not authorized for
the U.S. market),347 is an infringement of the
distribution right.348

There are three exceptions to the
importation right, which include a "suitcase"
exception that exempts importation for the
private use of the importer of one copy of a
work at a time or of articles in the personal
baggage of travelers entering the United
States.349

The applicability of the importation
provisions to the transmission of works into
the United States via the NII (or GII) may be
debated. Nevertheless, the importation right
is an outgrowth of the distribution right,
both of which refer to "copies or
phonorecords."350 A data stream can contain a
copyrighted work in the form of electronic
impulses, but those impulses do not fall
within the definition of "copies" or
"phonorecords." Therefore, it may be argued
that the transmission of a reproduction of a
copyrighted work via international
communication links fails to constitute an
"importation" under the current law, just as
it is less than clear that a domestic
transmission of a reproduction of a work
constitutes a distribution of a copy under a
literal reading of the Copyright Act.351

c.Contributory and Vicarious
Liability

Direct participation in infringing
activity is not a prerequisite for
infringement liability, as the Copyright Act
grants to copyright owners not only the right
to exercise the exclusive rights, but also
the right "to authorize" the exercise of
those rights. The inclusion of the right "to
authorize" was "intended to avoid any
questions as to the liability of contributory
infringers" -- those who do not directly
exercise the copyright owner's rights, but
"authorize" others to do so.352 Other than the
reference to a copyright owner's right "to
authorize" exercise of the exclusive rights,
however, the Copyright Act does not mention
or define "contributory infringement" or
"vicarious liability," the standards for
which have developed through case law.353

If someone has the "right and ability" to
supervise the infringing action of another,
and that right and ability "coalesce with an
obvious and direct financial interest in the
exploitation of copyrighted materials -- even
in the absence of actual knowledge" that the
infringement is taking place -- the
"supervisor" may be held vicariously liable
for the infringement.354 Vicarious liability
is based on a connection to the direct
infringer (not necessarily to the infringing
activity).

The best known copyright cases involving
vicarious liability are the "dance hall"
cases, where vicarious liability was found
when dance hall owners allowed the
unauthorized public performance of musical
works by the bands they hired, even when the
owners had no knowledge of the infringements
and had even expressly warned the bands not
to perform copyrighted works without a
license from the copyright owners.355

"Contributory infringement" may be found
when "one who, with knowledge of the
infringing activity, induces, causes or
materially contributes to the infringing
conduct of another."356 Contributory
infringement is based on a connection to the
infringing activity (not necessarily to the
direct infringer). A contributory infringer
may be liable based on the provision of
services or equipment related to the direct
infringement.357

Services

Liability may be based on the provision of
services related to the infringement. Courts
have found contributory infringement
liability, for instance, when a defendant
chose the infringing material to be used in
the direct infringer's work,358 and vicarious
liability when a defendant was responsible
for the day-to-day activities where the
infringement took place.359

Equipment

Infringement liability may also be based
on the provision of equipment or other
instrumentalities or goods used in or related
to the infringement.360 However, the Supreme
Court in Sony Corp. v. Universal City
Studios, Inc.,361 a 5 to 4 decision, held that
the manufacturer of videocassette recorders
was not a contributory infringer for
providing the equipment used in the
unauthorized reproduction of copyrighted
works. Borrowing a patent law principle, the
Court reasoned that manufacturers of staple
articles of commerce that are capable of
substantial noninfringing uses should not be
held liable as contributory infringers.362 The
Court held:

[T]he sale of copying equipment, like
the sale of other articles of
commerce, does not constitute
contributory infringement if the
product is widely used for
legitimate, unobjectionable purposes.
Indeed, it need merely be capable of
substantial noninfringing uses.363

The Court determined that the key question
was whether the videocassette recorder was
"capable of commercially significant
noninfringing uses."364 The Court also held
that in an action for contributory
infringement against a manufacturer of
copying devices, "the copyright holder may
not prevail unless the relief that he seeks
affects only his programs, or unless he
speaks for virtually all copyright holders
with an interest in the outcome."365

Other cases against producers or providers
of the instrumentalities of infringement
since Sony generally have not been
successful.366 However, the court in the
recent Sega case367 issued a preliminary
injunction against a BBS operator who sold
special copiers, the "only substantial use"
of which was to copy Sega's copyrighted video
games.368 The court found that Sega
established a prima facie case of
contributory infringement by the BBS operator
based on the operator's "advertising, sale
and distribution" of the video game copiers.369

d.On-Line Service Provider
Liability

There is a view that on-line service
providers, such as bulletin board operators,
should be exempt from liability or given a
higher standard for liability, such as
imposing liability only in those cases where
infringement was willful and repeated or
where it was proven that the service provider
had both "actual knowledge" of the infringing
activity and the "ability and authority" to
terminate such activity. The latter proposed
standard would combine the contributory
infringement standard with the requirements
for vicarious liability and apply it to all
infringements (including direct
infringements) of the service provider.
Altering the standards of liability for
infringement would be a significant departure
from current copyright principles and law and
would result in a substantial derogation of
the rights of copyright owners. It is a
difficult issue, with colorable arguments on
each side.370

Copyright law imposes different standards
of liability for direct, contributory and
vicarious liability. Direct infringers are
held to a standard of strict liability.
Liability for direct infringement is,
therefore, generally determined without
regard to the intent of the infringer.371
However, the Copyright Act gives courts the
discretion to consider the innocent intent of
the infringer in determining the amount of
damages to be awarded.372 Related infringers -
- those found to be contributory infringers
or vicariously liable -- are not held to
strict liability, but rather to a higher
threshold for liability.373

Arguments made by service providers
wishing exemption or a higher standard for
liability include: that the volume of
material on a service provider's system is
too large to monitor or screen; that even if
a service provider is willing and able to
monitor the material on its system, it cannot
always identify infringing material; that
failure to shield on-line service providers
will impair communication and availability of
information; that exposure to liability for
infringement will drive service providers out
of business, causing the NII to fail; and
that the law should impose liability only on
those who assume responsibility for the
activities their subscribers (and,
presumably, they) engage in on their system.

It is estimated by some that trillions of
bits representing millions of messages and
files travel through networks each day. Of
course, only a percentage of those appear on
any given service provider's system.
Nevertheless, it is still virtually
impossible for operators of large systems to
contemporaneously review every message
transmitted or file uploaded. On-line
service providers are not alone in this
position. Millions of photographs are taken
to photo finishers each day by individual
consumers. It is virtually impossible for
these service providers to view any of those
works before they are reproduced from the
undeveloped film. Yet, they operate under
strict liability standards.374 Likewise, book
sellers, record stores, newsstands and
computer software retailers cannot possibly
read all the books, listen to all the
records, review all the newspapers and
magazines or analyze all the computer
programs that pass through their
establishments for possible infringements.
Yet, they may be held strictly liable as
distributors if the works or copies they deal
in are infringing.

Further, while it may be argued that a bit
is a bit and infringing bits are
indistinguishable from authorized ones, and
that discovery of infringing material may be
made more difficult if the title or other
identifying information is removed or
altered, on-line service providers can
certainly investigate and take appropriate
action when notified of the existence of
infringing material on their systems and thus
limit their liability for damages to those
for innocent infringement. Again, this
problem has been a part of the cost of doing
business for many other distributors of
material that is provided to them by others.375

Clearly, on-line service providers play an
integral role in the development of the NII
and facilitate and promote the free exchange
of ideas.376 But that has not been grounds for
removing or reducing liability for copyright
infringement. One can perform these
functions without infringing or facilitating
the infringement of the copyrighted
expression of others.

On-line service providers have a business
relationship with their subscribers. They --
and, perhaps, only they -- are in the
position to know the identity and activities
of their subscribers and to stop unlawful
activities.377 And, although indemnification
from their subscribers may not reimburse them
to the full extent of their liability and
other measures may add to their cost of doing
business, they are still in a better position
to prevent or stop infringement than the
copyright owner. Between these two
relatively innocent parties, the best policy
is to hold the service provider liable.

The on-line services provide subscribers
with the capability of uploading works
because it attracts subscribers and increases
usage -- for which they are paid. Service
providers reap rewards for infringing
activity. It is difficult to argue that they
should not bear the responsibilities. We are
not aware that cost/benefit analyses have
prompted service providers to discontinue
such services. The risk of infringement
liability is a legitimate cost of engaging in
a business that causes harm to others, and
that risk apparently has not outweighed the
benefits for the more than 60,000 bulletin
board operators currently in business.378

There has been tremendous growth in the on-
line service industry over the past several
years, and it shows no signs of reversing the
trend under current standards of liability.
Other entities have some of the same costs of
doing business, have instituted practices and
taken appropriate precautions to minimize
their risk of liability, such as
indemnification agreements and insurance.

The Supreme Court has stated:

Intention to infringe is not
essential under the Act. And
knowledge of the particular selection
to be played or received is
immaterial. One who hires an
orchestra for a public performance
for profit is not relieved from a
charge of infringement merely because
he does not select the particular
program to be played. Similarly,
when he tunes in on a broadcasting
station, for his own commercial
purposes, he necessarily assumes the
risk that in doing so he may infringe
the performing rights of another.379

During the deliberations preceding
enactment of the 1976 general revision of the
Copyright Act, changes to the standards of
liability were "considered and rejected."380
For instance, Congress was asked to alter the
standard for vicarious liability for business
owners whose independent contractors directly
infringed the public performance right in
copyrighted works (such as owners of dance
halls).381

A well-established principle of
copyright law is that a person who
violates any of the exclusive rights
of the copyright owner is an
infringer, including persons who can
be considered related or vicarious
infringers . . . . The committee has
decided that no justification exists
for changing existing law, and
causing a significant erosion of the
public performance right.382

Congress also determined that the innocent
infringer provision, which allows reduction
of damages for innocent infringers "is
sufficient to protect against unwarranted
liability in cases of occasional or isolated
innocent infringement, and it offers adequate
insulation to users, such as broadcasters and
newspaper publishers, who are particularly
vulnerable to this type of infringement
suit."383 Congress believed that "by
establishing a realistic floor for liability,
the provision preserves its intended
deterrent effect; and it would not allow an
infringer to escape simply because the
plaintiff failed to disprove the defendant's
claim of innocence."384

Commentators have supported Congress'
decision:

Innocent intent should no more
constitute a defense in an
infringement action than in the case
of conversion of tangible personalty.
In each case the injury to a property
interest is worthy of redress
regardless of the innocence of the
defendant. Moreover, a plea of
innocence in a copyright action may
often be easy to claim and difficult
to disprove. Copyright would lose
much of its value if third parties
such as publishers and producers were
insulated from liability because of
their innocence as to the culpability
of the persons who supplied them with
the infringing material.385

Infringement may be alleged against
service providers, such as BBS operators, in
NII-related cases. As noted earlier, the
court in Playboy386 found the BBS operator
directly liable for the display of the
unauthorized copies on the service, as well
as the distribution of unauthorized copies to
subscribers. The court held:

There is irrefutable evidence of
direct copyright infringement in this
case. It does not matter that [the
operator] may have been unaware of
the copyright infringement. Intent
to infringe is not needed to find
copyright infringement. Intent or
knowledge is not an element of
infringement . . . .387

In Sega Enterprises Ltd. v. MAPHIA,388 the
court issued a preliminary injunction against
the BBS operator, finding a prima facie case
was established for both direct infringement,
based on the BBS operator's permitting the
uploading of the copyrighted games onto the
BBS, and contributory infringement, based on
the operator's "role in copying [Sega's
copyrighted video games], including provision
of facilities, direction, knowledge and
encouragement."389 At least two other relevant
cases are pending -- one against a commercial
on-line service provider390 and another against
an uploading subscriber, a BBS operator and
an Internet access provider.391

The Working Group believes it is -- at
best -- premature to reduce the liability of
any type of service provider in the NII
environment. On-line service providers
currently provide a number of services. With
respect to the allowance of uploading of
material by their subscribers, they are, in
essence, acting as an electronic publisher.
In other instances, they perform other
functions. No one rule may be appropriate.
If an entity provided only the wires and
conduits -- such as the telephone company, it
would have a good argument for an exemption
if it was truly in the same position as a
common carrier and could not control who or
what was on its system.392 The same could be
true for an on-line service provider who
unknowingly transmitted encrypted infringing
material.

It would be unfair -- and set a dangerous
precedent -- to allow one class of
distributors to self-determine their
liability by refusing to take responsibility.
This would encourage intentional and willful
ignorance. Whether or not they choose to
reserve the right to control activities on
their systems, they have that right. Service
providers expect compensation for the use of
their facilities -- and the works thereon --
and have the ability to disconnect
subscribers who take their services without
payment. They have the same ability with
respect to subscribers who break the law.

Exempting or reducing the liability of
service providers prematurely would choke
development of marketplace tools that could
be used to lessen their risk of liability and
the risk to copyright owners, including
insuring against harm caused by their
customers,393 shifting responsibility for
infringement to the infringing subscriber
through indemnification and warranty
agreements, licensing (including collective
license agreements), educating their
subscribers about infringement and using
technological protections, such as tracking
mechanisms.

Circumstances also vary greatly among
service providers. A bulletin board is
simply a computer that the owner allows to be
accessed by others using their computers and
modems. One needs only a personal computer,
a modem, a phone line, and some software to
go into business -- at a cost of less than
$2,000. There are small, non-profit and
large, commercial operators. There are those
that try to prevent and react when notified
and those that encourage infringing activity.
Different service providers play different
roles -- and those roles are changing and
being created virtually every day. At this
time in the development and change in the
players and roles, it is not feasible to
identify a priori those circumstances or
situations under which service providers
should have reduced liability. However, it
is reasonable to assume that such situations
could and should be identified through
discussion and negotiation among the service
providers, the content owners and the
government. We strongly encourage such
actions in the interest of providing
certainty and clarity in this emerging area
of commerce.

Implementation of preventative measures,
compliance with the law, and development of
technological mechanisms to guard against
infringement must be encouraged. Service
providers should have incentive to make their
subscribers more aware of copyright law and
to react promptly and appropriately to notice
by copyright owner that infringing material
is available on their systems. Service
providers should make clear that infringing
activity is not tolerated on the system and
reserve the right to remove infringing
material or disconnect the subscriber who
participated in the placement of it on the
system.

e.Civil Remedies

Various remedies are available to
copyright owners in infringement actions. A
copyright owner may seek a preliminary or
permanent injunction to prevent or restrain
infringement.394 Courts generally grant
permanent injunctions where liability is
established and there is a threat of
continuing infringement.395 Courts may also
order the impounding of all copies or
phonorecords at any time an action is
pending.396 As part of a final judgment, the
court may order the destruction (or any other
"reasonable disposition") of the infringing
copies or phonorecords.397

At any time before final judgment is
rendered, a copyright owner may elect to
recover actual damages and profits of the
infringer or be awarded statutory damages.398
Actual damages may be awarded in the amount
of the copyright owner's losses plus any
profits of the infringer attributable to the
infringement (that are not taken into account
in the calculation of the losses).399
Statutory damages may be awarded in an amount
between $500 to $20,000 per work infringed.400

If an infringer can show that he or she
was not aware and had no reason to believe
that the activity constituted an
infringement, the court may find there was an
innocent infringement.401 Such a finding is a
factual determination, and does not absolve
the defendant of liability for the
infringement.402 It does, however, give the
court discretion to reduce the amount of
damages awarded to the copyright owner.403

If a copyright owner can show that the
infringement was willful, the court may
increase statutory damages up to a maximum of
$100,000.404 An infringement may be found to
be willful if the infringer had knowledge
that the activity constituted infringement or
recklessly disregarded the possibility of
infringement.405

Courts have discretion to allow the
recovery of full costs by or against any
party other than the United States or its
officer.406 Courts may also award reasonable
attorney's fees to the prevailing party under
certain circumstances.407

f.Criminal Offenses

Criminal sanctions are levied against
infringers if the infringement was willful
and for purposes of commercial advantage or
private financial gain.408 Criminal
proceedings must begin within three years
after the criminal action arose. Where there
is a conviction, the court must order the
forfeiture and destruction or other
disposition of all infringing copies and "all
implements, devices, or equipment" used in
the manufacture of the infringing copies.409

A recent court decision demonstrates that
the current law is insufficient to prevent
flagrant copyright violations in the NII
context. In United States v. LaMacchia,410 a
university student provided clandestine BBS
locations on the Internet for the receipt and
distribution of unauthorized copies of
commercially published, copyrighted software.
Because he sought no profit from his actions
-- actions that caused substantial economic
harm to copyright owners -- he could not be
charged under the current criminal provisions
of the copyright law, and the court dismissed
an indictment charging him with wire fraud,
on the ground that his acts did not violate
the wire fraud statute.411 (There would
appear, nevertheless, to be every reason to
believe that he had committed many civil
infringements.)

The Copyright Act also makes certain non-
infringements criminal acts, including:

? the placement, with fraudulent intent,
of a copyright notice that a person
knows to be false on any article;412

? the public distribution or importation
for public distribution, with
fraudulent intent, of any article
containing a copyright notice the
distributor or importer knows to be
false;413

? the removal or alteration, with
fraudulent intent, of any notice of
copyright on a copy of a copyrighted
work;414 and

? false representation, with knowledge,
of a material fact in an application
for copyright registration or in any
written statement filed in connection
with an application.415

g.Defenses

The Supreme Court has stated that "[a]
successful defense of a copyright
infringement action may further the policies
of the Copyright Act every bit as much as a
successful prosecution of an infringement
claim by the holder of the copyright."416
There are a number of legal and equitable
defenses available to defendants in copyright
infringement actions. Fair use is the most
common of the defenses.417 Others include
misuse of copyright by the copyright owner,418
abandonment of copyright,419 estoppel,
collateral estoppel, laches, res judicata,
acquiescence, and unclean hands.

Generally, a claim of innocent
infringement is not a defense against a
finding of infringement. An innocent
infringer is liable for the infringement, but
a court may reduce -- or, in some instances,
remit altogether -- the amount of damages.420
However, under certain, specified
circumstances, a good faith reliance on a
presumption that the term of protection had
expired is a complete defense to an
infringement action.421

As noted earlier, certain uses do not rise
to the level of infringement, such as
reproduction of a de minimis portion of a
work.422 In those cases, the plaintiff will
not be able to sustain its burden of proof
and no defense will be necessary.423 In other
cases, a defendant may successfully assert
that the activity is noninfringing due to the
existence of a license -- statutory,
negotiated or implied.424

All of these defenses are available in the
NII environment. For instance, one or more
of these defenses, such as fair use or the
existence of an implied license, may be
successful where a copyright owner's posting
to an automatic electronic mail distribution
list ("listserv") is reproduced and
distributed to the subscribers of that same
listserv in connection with a response to or
comment on the posting.

9.International Implications

a.Background

Other countries -- including Australia,
Canada, Finland, France, Germany, Japan,
Singapore, Sweden, the United Kingdom -- and
the European Union are conducting their own
studies on their planning for implementation
of their national information
infrastructures. At the February 1995 G-7
Ministerial Meeting on the Global Information
Infrastructure (GII), the Ministers noted
that unless rules for the effective
protection of intellectual property are taken
into account from the outset, the development
of the international information superhighway
will be severely hindered. How disparate
domestic information infrastructures will
evolve into a GII will depend on the rules of
the road, and one of the most important sets
of rules will be those ensuring protection
for the works of intellectual property that
move through international channels and into
the emerging national information
infrastructures. As a result, Ministers
endorsed the need to work in international
fora, including the World Intellectual
Property Organization (WIPO), to achieve
standards for the adequate and effective
protection of intellectual property in
international electronic commerce.

Development of the GII will make copyright
laws and international copyright rules a
concern for every user. When the globe is
blanketed with digital information
dissemination systems, a user in one country
will be able to manipulate information
resources in another country in ways that may
violate that country's copyright laws.
Indeed, it may be difficult to determine
where and when possible infringements may
take place because, under the present level
of development, a user in France can access a
database in the United States and have a copy
downloaded to a computer in Sweden. Whose
copyright law would apply to such a
transaction? Because copyright laws are
territorial, and the standards of protection
embodied in the international conventions
leave room for national legislative
determinations, acts that may constitute
infringement in one country may not be an
infringement in another country. The
complexity that such a system creates will
make "electronic commerce" over the
information superhighways difficult unless
the United States moves promptly to identify
needs for protection and initiates efforts to
work toward a new level of international
copyright harmonization.

U.S. copyright industries are significant
contributors to the United States' current
trade accounts, reducing our balance of
payments deficit by some $45.8 billion in
1993. Inadequacies in the present system of
intellectual property protection for
copyrights and neighboring425 or related
rights, and the consequent losses to these
industries from piracy and from trade
barriers arising from differences in forms of
protection, have been estimated by industry
to cost them $15 to 17 billion annually.
Improved protection for copyrights and
neighboring rights would contribute to
reducing these losses and improving the
balance of payments.426

An important aspect of the participation
of foreign entities through a GII in the U.S.
domestic information infrastructure is the
provision of adequate and effective
intellectual property protection in the
country wishing to participate. To the
extent that participation in the NII can be
linked to the provision of intellectual
property protection, it will promote the
ability of U.S. businesses to use the NII and
the GII to disseminate works to foreign
consumers via other countries' information
infrastructures. If commercial enterprises
are to make full use of the capabilities of
the NII to communicate and deliver
information and entertainment products, there
must be assurances that their intellectual
property rights will be protected effectively
under strong copyright laws in all countries
participating in a GII.

In considering linkages, careful
consideration will have to be given to
obligations under international intellectual
property treaties and other international
agreements, such as the North American Free
Trade Agreement (NAFTA) and the World Trade
Organization (WTO) Agreement on the Trade-
Related Aspects of Intellectual Property
(TRIPs Agreement), especially in view of the
various intellectual property and market
access provisions in those agreements.

b.International Framework

In the 1970's, then-U.S. Register of
Copyrights Barbara Ringer observed that if
Justice Story considered copyright to be the
metaphysics of the law, then international
copyright is its cosmology. That message is
brought home to us in 1995 by the need to
evaluate the applicability of copyright in
the context of the complexities of
international commerce in information and
entertainment products via advanced
information infrastructures.

First, one must understand that there is
no such thing as an international copyright,
but rather, there is an international system
that sets norms for protection to be
implemented in national laws. Several
international treaties link together the
major trading nations and establish both
minimum standards for protecting, under their
own laws, each others' copyrighted works and
the basis upon which protection is to be
extended (e.g., national treatment).

The situation is further complicated
because there are two major legal traditions
applicable to the protection of what the
United States regards as copyrighted works.
To understand the complexities of the
international copyright law system and the
international treaties, it is necessary to
have a basic appreciation of these two major
legal regimes.427

The United States and other countries that
follow the Anglo-American or common law legal
tradition have "copyright" systems in which
the principal focus is on promoting the
creation of new works for the public benefit
by protecting the author's economic rights.
This is seen as part of the basic "social
contract" between the State and its citizens.
This theory is reflected in the patent and
copyright clause in Article 1, Section 8,
clause 8 of the U.S. Constitution. The
thesis is that providing such protection will
induce the creation of more works which will
"promote the progress of science" and redound
to the public benefit. History has validated
this principle which benefits the public as
well as creators of copyrighted works.

Countries that follow the civil law
tradition, however, regard authors' rights as
natural human rights, or part of one's right
of personality. As a part of this tradition,
in addition to the protection of the author's
economic rights, the protection of the
author's "moral rights" is an essential part
of the system.428 Moral rights, as reflected
in Article 6bis of the Berne Convention,
include the right of an author to be named as
the author of a work and the right to object
to uses of the work which could bring
dishonor or discredit on the author's
reputation. Often, in civil law systems,
moral rights reflect a part of the author's
personality and are non-transferable, and may
be not waivable. Economic rights, in some
instances, may be subordinated to moral
rights. Under these systems, only works
which are original, in that they reflect the
personality of the author, are entitled to
authors' rights protection. Productions that
do not meet this originality requirement, but
still merit some protection, are protected
under a system of "neighboring rights."

Needless to say, with such divergent
theoretical bases, the copyright and the
authors' rights systems are sometimes in
conflict. One of these areas of conflict is
in the nature and level of rights for owners
of neighboring rights.

Neighboring rights are similar to the
rights protected by copyright or authors'
rights and are applied to protect the rights
of producers of phonograms, performers and
broadcasters. Under the copyright system,
many of the rights covered under neighboring
rights are protected as copyright rights.
For example, under the U.S. copyright law,
sound recording producers and performers are
regarded as joint authors of sound
recordings. Under droit d'auteur (or
authors' rights) systems, such producers' and
performers' rights would be protected as
neighboring rights. Neighboring rights,
while similar in economic character to
authors' rights, may be protected at a lower
level than authors' rights and are entirely
separate and distinct from the higher-level
rights granted to authors.

c.International Treaties and
Agreements

The World Intellectual Property Organization
(WIPO)

WIPO is responsible for the administration
of, and activities concerning revisions to,
the international intellectual property
treaties.429 The principal WIPO copyright and
neighboring rights conventions include the
Berne Convention for the Protection of
Literary and Artistic Works (Paris 1971)
(Berne Convention),430 the International
Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting
Organizations (Rome Convention),431 and the
Geneva Convention for the Protection of
Producers of Phonograms Against the
Unauthorized Reproduction of their Phonograms
(Geneva Phonograms Convention).432 UNESCO433 and
WIPO jointly administer the Universal
Copyright Convention (Paris 1971),434 which is
a lower-level copyright convention that was
negotiated in the years following World
War II largely to bring the United States
into the world of international copyright.
Virtually all of the members of the Universal
Copyright Convention are also members of the
Berne Convention, and by the terms of the
conventions the Berne Convention governs
relations between members of both.

The Berne Convention is the principal
international copyright convention and
includes the most detailed provisions. In
1989, the United States joined the Berne
Convention, which is the largest copyright
convention.435 While it is generally regarded
as providing adequate international standards
of protection, some believe that it should be
updated to account for advances in electronic
communications and information processing
technology. Its members come from the
world's major legal traditions -- the Anglo-
American common law copyright system and the
European civil law droit d'auteur system.
However, despite its level of detail, as
previously noted, and in part because it must
accommodate differing legal traditions, in
some areas its standards may be insufficient
to deal with the world of digital
dissemination of copyrighted works.

The principal treaty for the protection of
neighboring rights, the Rome Convention, was
adopted in 1961, and is considered by many to
include standards that are inadequate for
dealing with the problems raised by current
technological advances and the level of trade
in the products and subject matter affected
by its operation. It provides for the
protection of producers of phonograms against
unauthorized reproduction of their
phonograms, for performers to prevent certain
reproductions and fixations of their
performances and it provides limited rights
for broadcasting organizations. The Rome
Convention requires that these rights endure
for a period of 20 years. It also provides
for protection against certain "secondary
uses" of phonograms, such as broadcasting,
but it contains the ability for members to
reserve, or decline to implement, this right.
The United States is not a signatory to the
Rome Convention.

The Geneva Phonograms Convention provides
for the protection of phonograms against
unauthorized reproduction and distribution
for a minimum term of 20 years. It does not
require signatories to provide a performance
right in sound recordings. The United States
belongs to the Geneva Phonograms Convention.

WIPO has convened a Committee of Experts
on a Possible Protocol to the Berne
Convention to account for developments since
the 1971 revision of the Convention, and a
Committee of Experts on a Possible New
Instrument for the Protection of Performers
and Producers of Phonograms to consider how
to provide improved rights for performers and
producers of phonograms.

The World Trade Organization (WTO)

In addition to the traditional WIPO forum,
other international fora now have a
significant role in intellectual property
policy formulation. The TRIPs Agreement,
concluded during the recent Uruguay Round
Negotiations, is administered by the World
Trade Organization (WTO). The TRIPs
Agreement sets significant standards for the
protection of copyright and related rights.
Perhaps most importantly, it contains
provisions to ensure that parties to the
TRIPs Agreement fully implement obligations
under it.

After defining the relationship between
the TRIPs Agreement and the Berne Convention,
the TRIPs Agreement reiterates the basic
principle of copyright protection -- that
protection extends only to expression and not
to ideas, methods of operation, or
mathematical concepts.436

Article 10 of the TRIPs Agreement confirms
that all types of computer programs are
"literary works" under the Berne Convention,
and requires each WTO country to protect them
as such. It also requires copyright
protection for compilations of data or other
material that are original by reason of their
selection or arrangement.

Article 11 of the TRIPs Agreement requires
member countries to provide exclusive rights
for authors or their successors in title to
authorize or to prohibit commercial rental to
the public of originals or copies of their
copyrighted works for at least computer
programs and cinematographic works. The
obligation as to rental rights for
cinematographic works need not be implemented
unless rental has led to widespread copying
that is having a material effect on the
author's exclusive right of reproduction.

Article 12 of the TRIPs Agreement provides
minimum standards for the term of protection
for copyrighted works. The term of
protection for most works is the life of the
author plus 50 years, but whenever the term
of protection is not linked to the life of a
person, it must be a minimum of fifty years,
except for works of applied art or
photographs.

Article 9(2) of the Berne Convention bars
imposition of limitations on, or exceptions
to, the reproduction right except when such
limits or exceptions do not conflict with a
normal exploitation of the work and do not
unreasonably prejudice the legitimate
interests of the right holder. Article 13 of
the TRIPs Agreement widens the scope of this
provision to all exclusive rights in
copyright and related rights, thus narrowly
circumscribing the limitations and exceptions
that WTO member countries may impose.437

Article 14 of the TRIPs Agreement goes
beyond the obligations of the Rome Convention
and the Geneva Phonograms Convention and
requires member countries to provide sound
recording producers a 50-year term of
protection and the rights to authorize or
prohibit the direct or indirect reproduction
and commercial rental of their sound
recordings. However, a WTO member country
that on April 15, 1994, had a system of
payment of equitable remuneration to
compensate for rental of recordings is
permitted to keep that system.438

The Agreement requires WTO countries to
make it possible for performers to prevent
unauthorized sound recording or reproduction
of their live performances. Broadcasting
organizations are to be accorded similar
rights, although member countries have the
option of providing protection consistent
with the Rome Convention or providing owners
of copyright in works broadcast the right to
prevent the same acts. The Agreement also
makes Article 18 of the Berne Convention
regarding copyright protection of existing
works applicable to sound recordings.

d.Copyright Compared to Authors'
Rights

Countries with common-law copyright
systems such as the United States, and
countries with authors' rights systems such
as those in Europe, have in some cases
defined the rights of certain categories of
right holders differently. For instance,
European performers, both in audiovisual
works and in sound recordings, enjoy certain
statutory rights that U.S. performers do not.
In the United States, these performers rights
are guaranteed under contractual or
collective bargaining agreements between the
audiovisual producers and the performers'
unions. Broadcasters have been concerned
that harmonization of protection along
European lines might have implications for
the establishment of performance rights in
sound recordings. A consequence of this
divergence is that U.S. performers and
producers have been denied the ability to
share in remuneration for the use of their
products and performances in some countries.

e.National Treatment

The principle of national treatment is the
cornerstone of the great international
intellectual property treaties -- Berne and
Paris. It also has been the keystone of
international trade treaties, such as the
General Agreement on Tariffs and Trade and
the recently established WTO. It is of
enormous significance to our copyright
industries. As a general matter, the
principle of national treatment means that
under a nation's laws, a foreigner enjoys no
lesser rights and benefits than a citizen of
that nation receives, subject to the specific
terms of the relevant international
conventions. In copyright terms, it means,
for example, that a German work for which
copyright enforcement is sought in the United
States would be treated under U.S. law
exactly as if it were a U.S. work.

Some argue, however, that intellectual
property rights should be granted only on the
basis of reciprocity. The concept of
"material reciprocity" means that the United
States should grant a right to a foreigner
only if his or her country grants U.S.
citizens the same right. Under this
scenario, the work of a German citizen would
only be able to obtain protection under the
U.S. law to the extent that German law
provided the same, or at least equivalent,
protection to works of a U.S. citizen.

The Berne Convention

Article 5(1) and 5(2) of the Berne
Convention establish the principle of
national treatment for works protected by
copyright.439 Under Article 5(1), there is an
obligation to grant to nationals of countries
of the Berne Union national treatment in
respect of the rights specifically covered by
the Convention. This point is not disputed.440
However, with respect to any new rights which
may be hereafter granted, some have taken the
position that the national treatment
obligation applies only to the minimum rights
in the Convention.441

The Rome Convention

The fundamental problem with the Rome
Convention is that, while it generally
imposes a national treatment obligation, it
permits a number of reservations and
exceptions that allow a Member to avoid that
obligation for important rights otherwise
provided for in the Convention. Article 3.1
of the TRIPs Agreement provides that "[i]n
respect of performers, producers of
phonograms and broadcasting organizations,
this obligation [national treatment] only
applies in respect of the rights provided
under this Agreement."442 It also provides
that a Member may avail itself of the
"possibilities provided in . . . paragraph
1(b) of Article 16 of the Rome
Convention . . ." relating to reciprocity for
the broadcasting right in respect of
phonograms.443

The TRIPs Agreement

Additionally, the TRIPs Agreement includes
a national treatment obligation.444 In respect
of copyright the TRIPs national treatment
provision incorporates the standards of the
Berne Convention, but in respect of
neighboring rights, it allows members to
impose the exceptions to national treatment
permitted by the Rome Convention.445
Permitting such exceptions can lead to
problems in the implementation of a GII.

The NAFTA

The NAFTA includes a very broad national
treatment provision that does not include the
possibility of making the broad exceptions
provided for under the TRIPs agreement.446

f.Private Copying Royalty Systems

The manner in which portions of the audio
and video private copying royalties collected
in some European countries are distributed to
claimants may prove to be an impediment to
future development of the GII if a similar
approach is adopted in respect of digital
information dissemination systems. To
illustrate, France's Law of July 3, 1985
(1985 Law) establishes a system of
neighboring rights protection for performers,
audiovisual communication enterprises,
producers of phonograms and producers of
videograms. The 1985 Law, inter alia, grants
specified categories of right holders an
entitlement to equitable remuneration in
respect of the private copying of their
works. Some of the 1985 law's provisions are
based on reciprocity and thus discriminate
against, for example, foreign motion picture
interests. Consequently, those provisions
may be inconsistent with France's obligations
under the Berne Convention and the Universal
Copyright Convention, at least to the extent
that they apply to Berne or UCC protected
subject matter and rights. If this pattern
is followed in implementing future
legislation, serious impediments to the
development of the GII may arise.

g.Moral Rights

The author's moral rights are provided for
under Article 6bis of the Berne Convention
which requires recognition of the right of an
author to be named as the author of a work
(the right of paternity) and the right for an
author to object to uses of a work which
would bring dishonor or discredit on his or
her reputation (the right of integrity).447
The controversy over moral rights was one of
the reasons that kept the United States out
of the Berne Convention for over a century.
However, during that time our legal regime
evolved and when the United States finally
joined Berne, the Congress determined that no
changes to U.S. law were necessary to comply
with the moral rights provisions of Article
6bis. Congress found that the existing
panoply of remedies available under U.S.
common law, various state statutes and
Federal laws provided sufficient moral rights
protection. These findings were explicitly
stated in the Berne Convention Implementing
Act.448 When the Congress was convinced that
enhanced protection for moral rights was
necessary, legislation was passed.449

For the United States, the question is
what should be the scope of moral rights
under our law. What is the appropriate role
for Federal and state legislation? There are
even serious Constitutional questions about
the possible scope of moral rights
legislation that could be part of our Federal
copyright law. Such rights would have to be
seen as promoting the progress of science and
useful arts. They would have to be viewed as
part of the Constitutional quid pro quo of
providing protection in order to promote
creativity. Some have argued that such a
justification may prove difficult to make.

Even among Berne members, the nature and
scope of moral rights varies considerably
from country to country, but regardless of
their scope and extent, moral rights are
typically not transferable and sometimes, may
not be waived. The fact that these rights
are non-waivable may create difficulties for
the commercialization of works in the GII
environment. A current report of the
multimedia study committee of the Japanese
Institute for Intellectual Property suggests
that there may be a need either to permit the
specific waiver of the right of integrity or
to limit its application in the digital
world.450

h.Conflict of Laws

Conflict of laws issues may arise in GII-
related copyright infringement actions.
Resolution of these issues determines what
country's law the court should apply. If the
infringer and the infringement are in the
United States, the U.S. Copyright Act would
apply. However, different situations may
present themselves which will raise conflict
issues. For instance, users in country A,
where certain actions are not considered
copyright infringements, may use works
located on servers in country B, where such
actions are. Which country's law controls
the resolution of a copyright infringement
dispute -- the country from which a
copyrighted work is uploaded or to which it
is downloaded, or the country where the host
server is located? In the case of direct
transmissions, which country's law applies --
the country of origin of the transmission or
the transmitter, or the country of the
reception? It may be that rights of the
copyright owner are exercised in each
country. These issues, however, may be no
more problematic than the current conflict
issues that arise due to the use of
telephones, fax machines or modems in
international commerce.

i.Harmonization of International
Systems

There is little dispute that worldwide
high-speed digital communications networks
will have an enormous effect on the way in
which works of authorship will be created,
stored, communicated to the public,
distributed and paid for. The communication
revolution is now bringing new opportunities
and new challenges to creators and users of
intellectual property. The full
implementation of the NII and the GII will
have an immense effect on our economy, and
implementation of such systems
internationally will have an equally broad
impact on world-wide commerce. The United
States must be committed to finding the means
to preserve the integrity of intellectual
property rights in the materials that will
flow in the commerce created in this
environment. This is a daunting challenge in
the context of the U.S. domestic market. It
is an even greater challenge to lay an
international groundwork which will ensure
adequate and effective protection throughout
the world.

As we move toward a world where
dissemination of entertainment and
information products through on-demand
delivery services operating through
interactive digital information
communications networks is the norm, it may
be necessary to harmonize levels of
protection under disparate systems of
copyright, authors' rights and neighboring
rights, and consideration should be given to
ways to bridge the gaps among these systems.

If the GII is to flourish, then the
intellectual property rights that will
undergird the economic structure supporting
these infrastructures must unequivocally be
granted in national legislation fully on the
basis of national treatment for all rights
and benefits. However, there is some
controversy over the scope of the national
treatment obligation under the Berne
Convention and its application to what some
may regard as newly created rights and
subject matter. Similar questions arise
under other international copyright and
neighboring rights conventions as will be
later discussed.

The United States is committed to making
progress in WIPO toward improving
international protection for works protected
by copyright and authors rights and the
subject matter of neighboring rights. Such
progress is essential, especially in view of
the needs to deal with the intellectual
property issues associated with the emerging
GII. The transition into a world-wide
information society demands both a narrowing
of the focus on specific issues in the cases
of the Berne Protocol and the New Instrument,
and the expansion of the WIPO efforts to
encompass the digital world in both areas.

In the emerging world of the GII with its
digital distribution systems and multimedia
works, distinctions among the rights of
authors, producers and performers that are
the basis for the separation of copyright and
neighboring rights are rapidly becoming
irrelevant. This new world of information
superhighways will mean economic growth,
jobs, and exports for all economies to the
benefit of authors, producers and performers.
Governments need to consider carefully the
implications of the inevitable development of
the GII for their national economies and
their copyright systems. The work in WIPO is
relevant to the rapidly emerging digital
world of the GII in order to set sound
policy, and select the essential elements of
the present Berne Protocol and New Instrument
texts and work toward reaching international
agreement on them.

Discussions on a Berne Protocol and New
Instrument afford an opportunity to consider
what enforcement norms, beyond the broadly
applicable disciplines clearly established in
the TRIPs text, will be necessary if
rightsholders are to be adequately protected
in the NII/GII environment. Thus, rather
than replicate the TRIPs enforcement
provisions -- which would be redundant and
would create the very real possibility of
conflicting norms -- work on a Berne Protocol
and New Instrument should focus on issues not
addressed in TRIPs, such as protection of
rights management information, the use of
technical security measures and the
prohibition of devices and services whose
primary purpose or effect is to defeat
technical security measures.

One of the most important issues for
international norm setting is to define the
nature of a dissemination of a work or a
transmission of a work in digital form. Is
it a public performance of the work or a
reproduction and distribution? Can it be all
at the same time? How do rules concerning
the right of importation apply in a digital
environment? Just as these questions are
critical in the domestic context, they are
equally acute in the context of international
treaties and harmonization of levels of
protection. The right to distribute copies
of a work by transmission should be included
both in the Berne Protocol and the New
Instrument, perhaps as a separate right, as
an aspect of a distribution right, as part of
a right of communication to the public, or an
aspect of the reproduction right. While this
is an issue that needs much further
discussion, the United States believes that
such a right is an important part of the
Berne Protocol and New Instrument which would
be aimed at meeting the needs of the emerging
GII.

Provisions to prohibit decoders and anti-
copy prevention devices and services also
should be included in the Berne Protocol and
the New Instrument.451 The Protocol and the
New Instrument should also include a
prohibition of the fraudulent inclusion of
rights management information and the
fraudulent removal or alteration of such
information.452

To permit the effective development of the
GII, national treatment must be the basis for
protection in any intellectual property
agreement. At an absolute minimum, national
treatment must apply to the minimum
obligations established in any agreement in
WIPO. The author or rights holder should be
able to realize fully the economic benefits
flowing from the free exercise of his or her
rights in any country party to the Protocol
or New Instrument. The United States
continues to believe that, in respect of any
work, this is required by Article 5 of the
Berne Convention. To do otherwise in either
a Berne Protocol or another agreement on
copyright protection would be contrary to
Article 20 because it would be a derogation
of rights existing under Berne and would not
be an Agreement to "grant to authors more
extensive rights than those granted by the
Convention, or contain other provisions not
contrary to this Convention" as provided for
under Article 20.453 To the extent that it has
been agreed that the principles of the New
Instrument should follow those of the Berne
Convention, to do otherwise in respect of
related rights would be contrary to the
letter and the spirit of the Convention.

U.S. copyright legislation has granted
rights that some other nations may regard as
new rights beyond those set forth in the
Berne Convention -- for example, rental
rights in computer programs, sound
recordings, and musical works embodied in
sound recordings -- and has done so
exclusively on the basis of national
treatment. The United States has instituted
a system of royalties on blank digital audio
recording media and digital audio recorders.
Benefits from these rights have all been
granted on the basis of full national
treatment. The United States believes that
this is consistent with our obligations under
the Berne Convention and other international
intellectual property and trade treaties and
agreements.

The author or rights holder should be able
to realize fully the economic benefits
flowing from the free exercise of his or her
rights in any country participating in a GII.
This is required by Article 5 of the Berne
Convention. To do otherwise in either a
Berne Protocol or another agreement on
copyright protection would be contrary to
Article 20 because it would be a derogation
of rights existing under Berne and not be an
Agreement to "grant to authors more extensive
rights than those granted by the Convention,
or contain other provisions not contrary to
this Convention" as provided for under
Article 20. To protect new works or to grant
new rights in respect of new or presently
protected works on the basis of reciprocity,
would be contrary to the letter and the
spirit of the Convention.

As the GII continues to develop through
the international interconnection of NIIs,
rules must be formulated to protect the
economic rights of providers of entertainment
and information products. Such rules should
be based on principles of national treatment
along the lines of the following:

1.Each country participating in the GII
must accord to nationals of another
country participating in the GII no
less favorable treatment than it
accords to its own nationals with
regard to all rights and benefits now,
or hereafter, granted under its
domestic laws in respect of literary
and artistic works or fixations454
embodying such works.

2.Benefits must include the same
possibility to exploit and enjoy
rights in the national territory of a
country participating in the GII as
the respective country grants to its
own nationals.

3.No country participating in the GII
may, as a condition of according
national treatment, require rights
holders to comply with any formalities
in order to acquire rights in respect
of literary and artistic works or
fixations embodying such works.

In addition to these issues of general
concern, there are issues that are applicable
specifically to the Berne Protocol and to the
New Instrument.

Following the Supreme Court decision in
the Feist case,455 there is increasing concern
that many valuable, factually-oriented
databases may be denied copyright protection,
or that courts may determine infringement in
ways that severely limit the scope of
copyright protection for data bases.
Providing for a sui generis unfair extraction
right to supplement copyright protection may
prove to be useful in view of legal
developments in various national laws and
should be given serious consideration. How a
right, such as the unfair extraction right
proposed in the EU database directive, could
protect such databases should be carefully
evaluated.

Additionally, the issue of multimedia
works will take on an important international
dimension. If these are regarded at the
international level as works in a new,
separate category, the issue of their
coverage under the existing conventions and
the rule of national treatment will be open
to debate. If, however, as current
discussions seem to indicate, they are
subsumed into the existing categories of
works, establishing meaningful rules
internationally will be simplified.

Further study to determine what existing
rights should be clarified or what other
rights may need to be adapted to the emerging
digital environment are underway both in
domestic and international fora. However,
some issues merit identification here, and
one of those is the level of protection to be
accorded to sound recordings.

Many believe that the time has come to
bring protection for the performers and
producers of sound

recordings into line with the protection
afforded to the creators of other works
protected under the Berne Convention. This
includes providing high-level standards for
rights and benefits granted on the basis of
national treatment. This is necessary for a
number of reasons. First, there is no just
reason to accord a lower level of protection
to one special class of creative artists.
Second, the extent of international trade in
sound recordings makes it imperative that
standards of protection be harmonized at a
high level. Third, and perhaps most
importantly, the digital communications
revolution -- the creation of advanced
information infrastructures -- is erasing the
distinctions among different categories of
protected works and sound recordings and the
uses made of them.

Concerns also have been raised over the
extent and scope of moral rights in the world
of digital communications. Some believe that
the ability to modify and restructure
existing works and to create new multimedia
works makes strengthening international norms
for moral rights more important than ever
before. Others take the view that any
changes to international norms for the
protection of moral rights must be carefully
considered in the digital world. The United
States agrees with this view. Careful
thought must be given to the scope, extent
and especially the waivability of moral
rights in respect of digitally fixed works,
sound recordings and other information
products.

There are issues such as digital fixation,
storage and delivery that will need to be
taken into account in the New Instrument.
There are also questions concerning the scope
of rights and the right owners that might be
covered by the New Instrument. To the extent
possible, definitions in the New Instrument
should be identical to those in the Berne
Protocol. Otherwise, differences in phrasing
could lead to differences in interpretation,
and jeopardize the "bridging" of the New
Instrument with the Berne Convention and the
Protocol. Many of these issues are critical
to the United States and other countries.

To attain the needed level of protection
internationally, ways to span the differences
between the continental droit d'auteur and
neighboring rights systems and the Anglo-
American copyright systems must be developed.
An essential element of this effort will be
to harmonize levels of protection by
establishing standards that can be
implemented through either system.

B.Patent

Development of the NII will depend upon,
and stimulate innovation in, many fields of
technology, especially computer software,
computer hardware and telecommunications. An
effectively functioning patent system that
encourages and protects innovations in these
fields of technology is, therefore, important
for the overall success of the NII.

The primary goal of the patent system is
to encourage innovation and commercialization
of technological advances. To this end, the
patent system offers an incentive to
inventors to publicly disclose their
inventions in exchange for the exclusive
right to prevent others from making, using,
offering for sale or selling the inventions
throughout the United States or importing the
inventions into the United States. The
patent system serves as an important
complement to the copyright system for
computer and software innovations by
providing protection for functional aspects
of these innovations.

Unlike copyright protection which attaches
automatically at the moment of fixation, an
inventor must specifically request protection
by filing a patent application and establish
that the invention meets all of the statutory
requirements of patentability. Rights are
obtained by filing a patent application with
the Patent and Trademark Office (PTO), and
proceeding through an examination process.
To be patentable, an invention must be new,456
useful457 and nonobvious.458 In addition, the
inventor must fully describe and disclose the
invention for which patent protection is
sought in a patent application.459 If the PTO
determines that all the patentability
requirements have been met for the invention
for which patent protection is requested, a
patent will be granted to the applicant.

Patent protection is available in the
United States for inventions without
differentiation as to the field of
technology: "any new and useful process,
machine, manufacture, or composition of
matter" can be patented.460 Despite this
breadth, certain limits do exist on what can
be patented. For example, a person cannot
patent a process that consists exclusively of
the steps one would follow to apply a
mathematical principle to solve a
mathematical problem.461 This restriction is
not statutory; instead, it arises from
judicial interpretation of the law governing
patentable categories of invention, and is
based on the notion that one cannot preempt
use of laws of nature or mathematical truths.
Similarly, one cannot patent an arrangement
of information or a writing, as such things
do not fall within one of the enumerated
categories of inventions eligible to be
patented.462

Once it is determined that an applicant
has requested protection for subject matter
that is eligible to be patented, the
examination process shifts to evaluate the
substantive merits of the invention. This
evaluation is performed to determine if the
invention is "novel" and "non-obvious." The
PTO performs this evaluation by comparing the
invention undergoing examination to the
"prior art." Generally speaking, prior art
includes information that is publicly
available prior to the filing date of a
patent application.463 An invention satisfies
the novelty requirement if it differs in any
material way from what is known in the "prior
art."464 An invention satisfies the
nonobviousness requirement if a "person of
ordinary skill in the art" would not have
viewed the invention as having been obvious
in view of the prior art at the time the
invention was made.465 Some flexibility is
provided to patent applicants in the United
States regarding when they must seek
protection to avoid losing patent rights due
to prior public disclosure of the invention.466

An applicant must also satisfy a number of
requirements that govern the contents and
form of a patent application. A patent
application consists of a specification and
claims. The claims of a patent define the
metes and bounds of the invention by
specifically defining the features of an
invention which are protected. Among other
things, Section 112 requires that the
inventor provide an adequate disclosure of
the invention that the applicant has claimed.467
A disclosure is adequate when it enables a
person of ordinary skill to "practice" the
invention as claimed without undue
experimentation or effort.468 Section 112 also
requires that the inventor disclose the "best
mode" of practicing the invention known to
him. The requirements of Section 112 serve
to ensure that the patent provides a high-
quality, technically accurate disclosure of
the invention.

Once issued, a patent grants its owner the
exclusive right to prevent others from
making, using, offering for sale, or selling
the claimed invention in the United States,
or importing the claimed invention into the
United States.469 A patent owner is given a
term of protection that begins on the date
the patent is granted and ends 20 years from
the date the application leading to the
patent was filed.470 The patent owner must
assert these rights against a party that
performs any of the acts that would infringe
the patent. The patent owner has the initial
burden of proving that the accused party
infringed one or more of the patent claims.471
Patent infringement is established by
demonstrating that the accused party has
made, used, sold, imported or offered to sell
a product that falls within the scope of a
product patent claim.472 Similarly, if a
patent has been granted on a process, the
patent owner must show that the accused party
engaged in activity that would infringe the
process claims, or that the accused party
made, used, sold, offered to sell or imported
a product produced using the claimed process.473
A patent owner's failure to promptly enforce
its rights once an infringement is discovered
can limit his or her remedies or may even
preclude enforcement against that party.

A party accused of infringement can avoid
liability by asserting that the patent does
not cover the accused product or process.474
The accused infringer can also assert that
one or more of the patent claims is either
invalid475 or that the patent as a whole is
unenforceable.476 Every claim in a patent,
however, is presumed valid.477 Thus, in
district court, the party challenging patent
validity must demonstrate through clear and
convincing evidence that the patent fails to
satisfy one or more of the statutory criteria
of patentability (e.g., novelty, utility,
nonobviousness), or that the application is
defective because it has an inadequate
disclosure.478

1.Patentability Determinations

The NII will have a tremendous impact on
the flow of information. As new sources of
information are made available and old
sources are made more accessible, the
accumulated body of knowledge available for
use in patentability determinations will
expand. This means that more information
will be available to influence decisions on
the patentability of an invention, whether in
the context of the patent examination process
or during challenges to patent validity
through litigation in the Federal courts.479
Thus, the most significant impact that the
NII will have on the patent system will be in
relation to issues that are affected by the
degree of availability of "prior art."

Over the past twenty years, access to
sources of information -- particularly
patents and printed publications -- has been
vastly improved through the development and
use of on-line database services. These
services document the existence and content
of patents and printed publications, and in
some instances, provide access to the
complete text and electronic images of such
documents. It is important to recognize,
however, that the information that can be
retrieved through these services invariably
exists as an original, paper document
disseminated through traditional publication
channels (e.g., technical journals or
publications, domestic and foreign patent
documents).

The NII will dramatically change the way
information is prepared and disseminated. It
will improve the number, diversity,
accessibility and quality of traditional on-
line services. It will also foster creation
of new forms of "electronic publications"
that are different in character from
traditional paper-based publications.
Examples of such electronic publications
include electronic versions of traditional
paper-based publications that supplement or
reorganize presentation of the content of the
paper-based publication; informally prepared
documents such as a posting of technical or
other information on a particular topic-
driven forum; and formally designed and
developed electronic publications that are
not printed on paper, but are disseminated
exclusively through an electronic forum.

Electronic publications such as these will
supplement the wealth of publicly accessible
information that is used in patentability
determinations. However, these new types of
electronically disseminated documents are
different in character from traditionally
printed and indexed patents and publications,
and as such, could raise questions when used
as prior art in a patentability
determination, either before the PTO or
during litigation. For example, the
information contained in electronically-
disseminated documents may not be printed
originally on paper, and as such, there may
be no tangible evidence regarding the date
the information was first publicly disclosed
or as to the contents of the document as
disclosed on that date. There are no uniform
guidelines or industry standards presently
that govern the memorialization of either the
contents or the date of first public
disclosure of such documents. A second
problem is that the degree of distribution of
or public accessibility to electronic
documents is not presently measured and may
prove unmeasurable. Limited availability of
a document can render that document unusable
as a source of information as prior art.480
Both issues, however, are key factors in
determining whether a document is in the
prior art.

A second category of concerns relates to
the technical accuracy of electronically
disseminated documents. To be a usable and
reliable prior art document, the contents of
the document must be technically accurate and
informative. The types of documents that are
disseminated electronically today, however,
vary tremendously as to their content and
accuracy. Thus, while certain information
could be posted on a forum, with a reliable
documentation of the date of that disclosure
and its contents, it would not be certain
that the disclosure itself is technically
accurate and usable as prior art. Informally
created documents, such as postings on a
forum, are not typically subjected to any
form of peer review or content screening.
The lack of quality control could therefore
complicate evaluation of information
contained in these electronic documents,
which, in turn, could affect patentability,
particularly in the context of litigation.

2.Infringement Determinations

As noted in other sections of this Report,
some questions exist regarding whether or how
copyright owners will be able to effectively
enforce their rights in their works on the
NII. The issues related to the enforcement
of copyrights on the NII do not have an
analogue with regard to patent protection.
This is because each patent provides a
precise definition of the nature of
activities that will infringe the patent
owner's rights. And while some have raised
concerns over the ability of patent owners to
prove infringement where the infringing
activities were facilitated by or conducted
on the NII, these concerns do not appear to
be well founded.

Consider a patent claim covering a new
data compression process used for
communicating information over the NII. To
infringe the patent owner's rights, one would
have to perform each of the acts specifically
outlined in the process claim. To prove
infringement, the patent owner could rely on
any evidence that the accused party used the
process. This could be done by showing that
the accused infringer developed and
distributed a software program that, when
used by a third party, would infringe the
process claim (e.g., the software would
require the third party to follow the steps
outlined in the process claim and thus lead
to infringement of that claim).
Alternatively, the patent owner could show
that data was distributed over the NII in the
compressed format, and then establish the
source of the data. Considered fully, it
does not appear to be an insurmountable
problem for the patent owner to identify
infringing parties and establish a sufficient
quantum of proof that the accused infringer
performed a particular series of acts, which,
once performed, infringed one or more patent
claims.

3.Patentability of Software

Another issue considered with regard to
its relationship to the NII is the
eligibility of computer software for patent
protection. Computer software-related
inventions have enjoyed some degree of
protection under the patent system since the
beginning of the computer industry. In terms
of distinguishing which aspects of software-
related inventions could or could not be
patented, the courts and the PTO have relied
on a number of legal doctrines. Under one of
these doctrines, computer program code per se
has been held to be ineligible for patent
protection because it is a writing that does
not fall within one of the enumerated
categories of invention. Another of these
doctrines provides that processes, including
those implemented in software, that are
indistinguishable from the steps one would
follow in applying a mathematical principle
to solve a mathematical problem cannot be
patented.481 These two doctrines have served
to exclude protection for software-related
inventions independent of machines or
processes as implemented on a computer.

A series of decisions rendered in 1994 by
the Court of Appeals for the Federal Circuit
has clarified the boundaries of patent-
eligible subject matter for software-related
inventions. In one decision, the Federal
Circuit concluded that an "old" memory that
was "reconfigured" through the storage
thereon of a "data structure" (an ordered
arrangement of information) constituted a
patentable invention.482 In other cases, both
before and after this holding, the Federal
Circuit concluded that a data structure, per
se, and as incorporated into a process
without any additional physical elements or
steps in the process, did not create
patentable subject matter.483 The combined
effect of the cases suggests that software
can transform unpatentable objects into
patentable ones and as such must be given
weight in patentability determinations, but
information per se and abstract ideas
continue to be treated as non-statutory
subject matter. The trend -- as far as can
be ascertained -- is to provide a broader
eligibility for software aspects of
inventions than was available previously.

While there may be some degree of
uncertainty relating to the precise
boundaries of patent-eligibility for
software, this alone does not suggest that
this topic should or even could be resolved
by the Working Group. Finer resolution of
the boundaries of patent-eligibility for
software could result in greater or more
restricted protection for software. Whatever
the result, the ramifications run far past
those that must be considered in the context
of the NII. Changes affecting patent
eligibility for software-related technologies
will affect more than simply the software
innovation that will develop incident to
development and use of the NII. And
resolution of these boundaries of protection
under the patent law for software will not
directly affect the significant development
efforts underway now related to the NII.
Considered from a different perspective,
development of the NII may lead to more
software development, particularly related to
telecommunications and networking, but it
will not present unique issues in terms of
patent eligibility for software.

C.Trademark

A trademark is quite different from either
a copyright or a patent. A trademark is any
word, name, symbol or device, or any
combination thereof, that serves to identify
and distinguish the source of one party's
goods or services from those of another
party. A service mark is the same as a
trademark, except that it identifies and
distinguishes the source of services rather
than goods. In this report, the terms
"trademark" and "mark" are intended to refer
to both types of marks.

The purpose of a trademark is twofold --
to identify the source of products or
services and to distinguish the trademark
owner's goods and services from those of
others. As long as a trademark fulfills
these functions, it remains valid. Trademark
ownership rights in the United States arise
through use of a mark. Continued use of a
mark is necessary to maintain trademark
rights. The owner of a trademark is entitled
to the exclusive right to use the mark. This
entitlement includes the ability to prevent
the use, by unauthorized third parties, of a
confusingly similar mark. Marks used by
unrelated parties are confusingly similar if,
by their use on the same, similar, or related
goods or services, the relevant consumer
population would think the goods or services
come from the same source.

Unlike patent and copyright law, Federal
trademark law coexists with state and common-
law trademark rights. Therefore,
registration at either the Federal or state
level is not necessary to create or maintain
ownership rights in a mark. For example,
priority of trademark rights between owners
of confusingly similar marks, regardless of
whether the marks are Federally registered,
is based upon first use of the mark.484

Federal trademark law is embodied in the
Lanham Act485 and is based upon the commerce
clause of the Constitution.486 Therefore, to
obtain a Federal trademark registration, in
most cases487 the owner of a mark must
demonstrate that the mark is used in a type
of commerce that may be regulated by
Congress.488 Additionally, the Trademark Law
Reform Act of 1988489 amended the Lanham Act to
establish trademark rights, which vest upon
registration following use of the mark in
commerce, as of the filing date of a
trademark application indicating a bona fide
intent to use the mark in commerce.490

Goods and services to which a mark applies
in a trademark registration are categorized
according to the Nice Agreement Concerning
the International Classification of Goods and
Services for the Purposes of the Registration
of Marks of June 15, 1957, as revised at
Stockholm on July 14, 1967, and at Geneva on
May 13, 1977 (International Classification).
This treaty, of which the United States is a
member, is administered by WIPO. WIPO
convenes a meeting of experts, including
representatives of the United States, every
five years to consider and adopt changes to
the International Classification. These
meetings will be an important means to effect
changes to the International Classification
to accommodate the changing goods and
services available in connection with the NII
and the GII. In preparation for the next
meeting of experts, which is likely to take
place in late 1995, a working group which
includes the United States convened in March
1995 at WIPO to discuss proposals to amend
the International Classification.

Remedies against trademark infringement
and unfair competition are available to
trademark owners under both state and Federal
law.491 In this regard, the owner of a Federal
trademark registration has certain benefits.
In a court proceeding, registration on the
Principal Register constitutes prima facie
evidence of the registrant's ownership of the
mark.492 Registration on the Principal
Register may also be used as a basis to block
importation of infringing goods493 or to obtain
remedies against a counterfeiter.494 The
Lanham Act provides that under certain
conditions the right to use a registered mark
may become incontestable.495 Additionally, the
Lanham Act provides for cancellation of
registrations on certain grounds.496

Existing legal precedent accepts
electronic transmission of data as a service
and, thus, as a valid trademark use for the
purpose of creating and maintaining a
trademark.497 Additionally, existing legal
precedent applies the available remedies for
infringement and unfair competition to such
acts occurring through the unauthorized use
of trademarks electronically.498 However, in
the future, with widespread access to and use
of the NII, both the legitimate and
infringing electronic uses of trademarks may
increase. Unfair competition may increase in
the context of the NII to the extent that it
may be easier to copy or remove trademarks
from electronically transmitted information
than from labeled products or from services
identified in print media.

In the global context for trademarks,
there are likely to be ramifications of
global electronic transmission of trademarks
in view of the fact that trademark rights are
national in scope. Conflicts may arise where
the same or similar trademarks are owned by
different parties in different countries, or
where different countries apply different
standards for determining infringement.
Additionally, conflicts may arise where terms
are in general use in one country, but
restricted as either trademarks or
geographical indications in another country.

With regard to access to the NII, several
conflicts have arisen where trademark owners
are aware that third parties have registered
Internet domain names that are identical to
their trademarks. One of the first
opportunities for a court to define the legal
relationship between trademarks and the
registration and use of site domain names on
the Internet could be presented in an action
presently in Federal district court in the
Southern District of New York. The owners of
the MTV cable network ("MTV") have filed an
action seeking injunctive relief and monetary
damages from a former employee who is
offering a daily report about the rock music
industry on the Internet using the site name
"mtv.com." MTV is alleging, inter alia,
trademark infringement and unfair
competition.499 In another instance, Kaplan
Educational Centers filed an action alleging
trademark infringement and unfair competition
against its competitor, Princeton Review,
which had registered an Internet domain name
of "Kaplan.com." Kaplan reported that an
arbitration panel ruled, in an unreported
opinion, that Princeton Review must
relinquish all rights in the "Kaplan.com"
name and transfer it to Kaplan. Other
companies noted in the news that have
expressed concern recently about third party
domain name registration of their well-known
trademarks include Coca Cola, McDonald's, MCI
and Hertz.

D.Trade Secret

Unlike many of the other forms of
intellectual property protection previously
mentioned, trade secrets are generally
protected by state law, not Federal law.500
Trade secret protection is very limited. A
trade secret holder is only protected from
unauthorized disclosure and use of the trade
secret by others and from another person
obtaining the trade secret by some improper
means.501

There are several factors used to
determine if subject matter qualifies as a
trade secret. Among the factors considered
are the extent of measures taken by the trade
secret owner to guard the secrecy of the
information and the ease or difficulty with
which the information could be properly
acquired or duplicated by others.502 Based on
these considerations, the general rule is
that subject matter cannot be successfully
protected as a trade secret if it is widely
distributed. However, if adequate security
precautions are taken to ensure that access
to the subject matter being distributed is
treated as secret, the subject matter may
still be considered a trade secret.

Whether trade secret owners distribute
their trade secrets through the NII will
largely depend on the extent that they
believe that the secrecy of the trade secret
will not be compromised by such a
distribution. Consequently, if the NII is
going to be used as a tool for disseminating
trade secret information the NII must be
equipped with adequate security measures to
ensure that trade secrets distributed through
the NII will remain secret.503

In addition to the concerns regarding
security precautions, issues of jurisdiction
may also arise when the NII is used to
transmit trade secrets. As trade secrets are
generally protected by state law, determining
which state's law should control in a trade
secret dispute may become an important choice
of law issue in the NII. This choice of law
issue, however, is no more problematic than
those issues presently associated with the
distribution of trade secrets and can be
adequately resolved by the choice of law
rules presently codified in state law.

To some degree, whether trade secret
owners distribute their trade secrets through
the NII may also depend on the type of
information products and services being
disseminated. For instance, it has been
suggested that the most common way to protect
software is through trade secret protection.504
Unlike most trade secret information,
computer programs can be copied and used
without the copier ever understanding or
viewing the information in a comprehensible
form. Although the trade secrecy problems
associated with computer programs are not
unique to the NII, the capabilities of the
NII may cause these problems to become more
prevalent.

II.Technology

The NII has the potential to be a robust
and widely used medium for the creation,
dissemination and use of information-based
products and services. To realize this goal,
the technical and security needs of users,
service providers, carriers and content
providers must be addressed. First, to be
successful, the NII must deliver on its
promise to facilitate the flow of information
and information-based products and services
to consumers. The easier it is for a
consumer to retrieve, purchase or use an
information product or service, the more
likely it is that the consumer will do so.
Second, content providers must have secure
and reliable means for delivering information
products and services to consumers. This
means that content providers must be
confident that the systems developed to
distribute these works will be secure and
that works placed on these systems will
remain authentic and unaltered. If content
providers cannot be assured that they will be
able to realize a commercial gain from the
sale and use of their products using the NII,
they will have little incentive to use it.
Third, service providers and carriers must be
able to ensure that their systems which will
serve as the physical infrastructure of the
NII will address the needs of users and
content providers.

Technological solutions are playing and
will continue to play a significant role in
meeting these needs. A wide variety of new
tools to facilitate access and use of
Internet-based information products and
services are being rapidly developed and
deployed. Concurrently, copyright owners are
developing and implementing technical
solutions to facilitate the delivery of
protected works in an easy, consumer-friendly
yet reliable and secure way. These solutions
enable copyright owners not only to protect
their works against unauthorized access,
reproduction, manipulation, distribution,
performance or display, but also serve to
assure the integrity of these works and to
address copyright management and licensing
concerns.

A.Content Security and User Access Needs

It is important to recognize that access
needs of users of the NII have to be
considered in context with the needs of
copyright owners to ensure that their rights
in their works are recognized and protected.
One important factor is the extent to which
the marketplace will tolerate measures that
restrict access to or use of a copyrighted
work. Conversely, without providing a secure
environment where copyright owners can be
assured that there will be some degree of
control over who may access, retrieve and use
a work, and, perhaps most importantly, how to
effectuate limits on subsequent dissemination
of that work without the copyright owner's
consent, copyright owners will not make those
works available through the NII.505

Technology can provide the solutions for
these needs. Technological solutions exist
today and improved means are being developed
to better protect digital works through
varying combinations of hardware and
software. Protection schemes can be
implemented at the level of the copyrighted
work or at more comprehensive levels such as
the operating system, the network or both.
For example, technological solutions can be
used to prevent or restrict access to a work;
limit or control access to the source of a
work; limit reproduction, adaptation,
distribution, performance or display of the
work; identify attribution and ownership of a
work; and manage or facilitate copyright
licensing.

B.The Internet Experience

In the past few years, there has been an
explosion in the popularity and volume of use
of the Internet. The Internet serves today,
through electronic mail and remote access, to
connect people to information and to deliver
information products and services. An almost
incomprehensible variety of information has
been made widely and easily accessible
through this system, originally designed to
serve the needs of the Department of Defense
in the 1960s.

Because the Internet and applications
which use it, like electronic mail and "World
Wide Web," have exploded in popularity and
use, systems used today and being designed
for short term implementation are likely to
serve as the foundation for communications
through the NII. Indeed, in one very real
sense, the Internet that is in use today is a
prototype for the NII. Therefore, it is
useful to discuss briefly the foundation of
the Internet as it exists today.

The Internet provides individuals many
different ways to disseminate and retrieve
information. The basic concept of
communications underlying the Internet is
that a user with his or her personal computer
or workstation can "connect," either directly
or through a succession of intermediary
computers, in a uniform manner to a "remote"
computer that acts as a "server" of
information. The user attaches to the remote
computer and uses the services offered by the
remote computer system (hence the term
"server" for the remote system). The service
may provide for immediate transfer of
information (e.g., file transfer) or eventual
transmission (e.g., electronic mail). For
example, a user can direct a remote computer
to send data through an established
connection to the user's computer.
Alternatively, the user can send information
to the remote computer that will eventually
result in information being sent back to the
user's computer from that remote computer.
In either sense, there is a "connection"
established between the two computers that
permits the flow of information, typically at
the request of the user.

The simplest type of connections use a
character-based "dumb terminal" interface
(e.g., characters alone are used to convey
information to and from the user). This type
of scheme consists essentially of the user
using his computer to do nothing more than
type commands which the computer executes.
The "controlled" computer executes the
appropriate programs that handle location and
transfer of data. One such scheme is the
"telnet" protocol. Telnet uses a command
line interface (e.g., one types commands) to
initiate actions at the remote computer.
Using telnet, a user can execute a program or
routine on a remote computer to obtain a
directory of files resident on that computer,
navigate among directories of information,
and transfer files.

If a user wishes to simply retrieve
information stored as a file on the remote
server, he or she can execute a process on
the remote computer termed "file transfer
protocol" or ftp. This is the most basic
form of transfer; one simply instructs the
remote computer to send to a specific file
resident on the remote computer to the
requester's computer. A menu driven
interface and service for retrieving files
from remote servers was subsequently
developed by the University of Minnesota.
This scheme, termed "gopher," relies on
established directories of information that
are consolidated at specific sites on the
Internet. The requester uses his or her
computer to instruct the remote computer to
execute the gopher program, which then
establishes a connection to a directory
server (e.g., a "gopher server"). The gopher
server will provide the requesting user
easily navigable listings of files that can
be retrieved from the gopher server. The
gopher server acts more or less as a conduit
for identifying a specific file and
delivering it to the requesting computer.

Other schemes have been established for
searching pre-established indices of
information about information resources on
the Internet. Examples include "Archie,"
"Veronica" and the Wide Area Information
Search (WAIS).506 All of these examples were
originally developed as UNIX-implemented
programs to perform file transfer-related
tasks; namely, searching and retrieval of
information about either the location of
remote servers with certain types of
information or of remote servers that had
specific files. The information sent back to
the user with these tools consists of
information about these servers that can then
be used with the other tools (e.g., ftp or
gopher) to retrieve a specific file.

There are now more sophisticated tools for
users to access and retrieve information on
remote servers on the Internet. These tools
typically are programs that implement the
common UNIX-based protocols but which
actually run on the user's personal computer
or workstation. Thus, once a connection to
an appropriate "Internet provider" is
established, a user may start a program on
his personal computer that acts as a "gopher
client." The "gopher client" will permit the
user to retrieve information from a remote
server directly to his or her personal
computer. Connections between the user's
personal computer and the "Internet provider"
to carry these communications can be
established using a "dial-up" or analog phone
connection using an appropriate communication
protocol or a link over a digital
transmission line. The most significant
benefit of these tools is that they are
typically based on a graphical interface,
which makes it easier for the user to manage
the connection and interact with remote
servers.

Many of the established protocols have
been integrated and enhanced using tools that
can access what is termed the World Wide Web.
The World Wide Web (Web) is a scheme whereby
organizations use graphical "front ends" to
provide remote users with point and click
access to information stored on their
servers, as well as access through "links" to
information stored on other remote servers.
Web "browsers" are programs that run on a
personal computer or workstation that enable
a user to establish connections to these
graphical front ends, view, retrieve and
manipulate data provided by those remote
servers. Examples of popular, currently
available Web browsers include: Mosaic, from
the National Center for Supercomputing
Applications; Netscape Navigator, from
Netscape Communications Corporation; and
Enhanced Mosaic, from Spyglass, Inc. Web
browsers typically provide support for
electronic mail, gopher and ftp sessions,
and, most importantly, support retrieval and
display of a much broader variety of
information (e.g., text, audio, image and
multimedia data).

At the root of the Web are several of the
established protocols (e.g., gopher, ftp,
various e-mail standards) and three new
protocols: the Hypertext Markup Language
(HTML), a file format for embedding
navigational information in graphical and
text-based documents; the Hypertext Transfer
Protocol (HTTP), a communications protocol
for communicating navigational information
and other data between the remote server and
the requesting computer; and the Uniform
Resource Locator (URL) scheme for identifying
the location (e.g., the location of the
remote server and the location on that server
of the file corresponding to the URL) of Web-
accessible documents. A number of
organizations and groups are also working to
develop additional protocols to enable secure
communications. Some of these protocols have
been published as draft specifications at
this point, including the Secure Sockets
Layer (SSL), the Secure Hypertext Transfer
Protocol (SHTTP) and the Enhanced Mosaic
Security Framework. The integration of these
various protocols into a single, easy to use,
understandable interface has led to a
tremendous increase in the popularity and use
of the World Wide Web and, correspondingly,
of the Internet as a means for providing and
retrieving information.

C.Access and Use Technological Controls

1.Server and File Level Controls

Technology will likely play a central role
in implementing controls on the access to and
use of protected works at both the file and
server level.

Distribution of digital works can be
regulated by controlling access to the source
of copies of the works -- information or data
servers. Access to these servers can vary
from completely uncontrolled access (e.g.,
the full contents of the server are available
without restriction) to partially controlled
access (e.g., unrestricted access is granted
to only certain data on the server) to
completely controlled access (e.g., no
uncontrolled access in any form is
permitted). Access control is affected
through user identification and
authentication procedures that deny access to
unauthorized users to a server or to
particular information on a server.507

Nearly all service providers, including
commercial on-line services such as
CompuServe and America Online, private dial-
up bulletin board systems, and servers
accessible through the Internet, control
access to their systems. For example, via
the Internet, users today can connect to a
bewildering array of public servers using a
variety of schemes, including telnet, ftp,
gopher and the World Wide Web. Some
information providers grant full unrestricted
access to all the information contained on
their servers, and use control simply to
comport with physical limitations of their
servers (e.g., to limit the number of
concurrent users). Other information
providers restrict access to users with
accounts or grant only limited access to
unregistered users. For example, using ftp a
user can often log on to a remote server
through the Internet as an "anonymous" user
(e.g., a user for which no account has been
created in advance); however, such a user
will normally only be able to access specific
data on the server. Of course, an
information provider can elect not to provide
uncontrolled access, and permit only those
with pre-established accounts to access the
server. This is more common with
commercially-oriented on-line service
providers. Control over access to a server
containing protected works will typically be
the first level of protection a content
provider will look for before making their
protected works accessible through the
server.

A second level for controlling access to
and use of protected works can be exerted
through control measures tied to the
electronic file containing the work.

Restrictions on access at the file level
can be implemented using features in
"rendering" software. For example, a content
provider may develop specialized software
products or implement features in general
purpose software products that would control
by whom, and to what degree, a protected work
may be used. Such restrictions could be
implemented using features in the rendering
software, a unique file format or features in
an established file format, or a combination
of both. "Control" measures could also be
implemented to determine if the content
provider had authorized certain uses of the
work, as well as some means to control the
degree to which a user would be able to
subsequently "manipulate" the work. For
example, the rendering software could
preclude a user who had not obtained the
appropriate authority from the content
provider or who enters an unauthorized or
expired password from using the data.
Rendering software can also be written to
deny general access to the work if the file
containing the work is not a properly
authenticated copy (e.g., the file has been
altered from the version as distributed by
the content provider). Such features will be
possible provided that sufficient information
regarding authorized use can be associated
with the file containing the information
product (e.g., through inclusion in a file
header, packaged and sealed in an "electronic
envelope" sealed with a digital signature,
embedded through steganographic means,508
etc.).509

2.Encryption

In its most basic form, encryption amounts
to a "scrambling" of data using mathematical
principles that can be followed in reverse to
"unscramble" the data. File encryption thus
simply converts a file from a manipulable
file format (e.g., a word processor document
or a picture file that can be opened or
viewed with appropriate software) to a
scrambled format.510 Authorization in the form
of possession of an appropriate "key" is
required to "decrypt" the file and restore it
to its manipulable format.

Encryption techniques use "keys" to
control access to data that has been
"encrypted." Encryption keys are actually
strings of alphanumeric digits that are
plugged into a mathematical algorithm and
used to scramble data using that algorithm.
Scrambling means that the original sequence
of binary digits (i.e., the 1s and 0s that
make up a digital file) that constitute the
information object is transformed using a
mathematical algorithm into a new sequence of
binary digits (i.e., a new string of 1s and
0s). The result is a new sequence of digital
data that represents the "encrypted" work.511
Anyone with the key can decrypt the work by
plugging it into a program that applies the
mathematical algorithm in reverse to yield
the original sequence of binary digits that
comprise the file. Although most commonly
thought of as a tool for protecting works
transmitted via computer networks, encryption
can be and is used with virtually all
information delivery technologies, including
telephone, satellite and cable
communications. Of course, once the work is
decrypted by someone with the key, there may
be no technological protection for the work
if it is stored and subsequently
redistributed in its "decrypted" or original
format.

A widely publicized technique for sending
secure transmissions of data is "public key"
encryption. This technique can be used to
encrypt data using an algorithm requiring two
particular keys -- a "public" key and a
"private" key. The two keys are affiliated
with the recipient to which the information
is to be sent. The "public" key is
distributed publicly, while the private key
is kept secret by recipient. Data encrypted
using a person's public key can only be
decrypted using that person's secret, private
key. For instance, a copyright owner could
encrypt a work using the public key of the
intended recipient. Once the recipient
receives the encrypted transmission, he could
then use his private key to decrypt that
transmission. No secret (private) keys need
to be exchanged in this transaction. Without
the private key of the intended recipient,
the work cannot be read, manipulated or
otherwise deciphered by other parties. Of
course, if a decrypted copy is made and
shared, then others could manipulate the work
unless other means are used to protect it.

There may be instances where someone other
than the communicating parties needs access
to the encrypted data. A key escrow system
is one way such access might be obtained. A
key escrow system would hold the key needed
to decrypt an encrypted transmission in
"escrow." Such a system could be maintained
by a private organization or the government,
and anyone seeking access to an encrypted
transmission would have to demonstrate their
need for the key through a process, such as
obtaining a search warrant, that ensures the
legitimate privacy and security needs of
users of encrypted transmissions.

3.Digital Signatures

Mathematical algorithms can also be used
to create digital "signatures" that, in
effect, place a "seal" on a digitally
represented work. Generating a digital
signature is referred to as "signing" the
work. The algorithms can be implemented
through software or hardware, or both. The
digital signature serves as means for
authenticating the work, both as to the
identity of the entity that authenticated or
"signed" it and as to the contents of the
file that encodes the information that
constitutes the work. Thus, by using digital
signatures one will be able to identify from
whom a particular file originated as well as
verify that the contents of that file have
not been altered from the contents as
originally distributed.

A digital signature is a unique sequence
of digits that is computed based on (1) the
work being protected, (2) the digital
signature algorithm being used, and (3) the
key used in digital signature generation.512
Generating a digital signature uses
cryptographic techniques, but is not
encryption of the work; the work may remain
unencrypted so it can be accessed and used
without decryption. In fact, digital
signatures and encryption can be used
simultaneously to protect works. Generally,
a signature is computed for a copyrighted
work first and then the work (including the
seal) is encrypted. When the work is to be
used, the work is decrypted, then the
signature (i.e., the seal) is verified to be
sure the work has not been modified (either
in its original or encrypted form). If the
work is never changed, the seal need never be
removed or changed. If the work is changed,
a new seal must be computed on the revised
information.

Typically, the digital signature is
incorporated in some manner in the
transmission that constitutes the work.
Often, the sender will also distribute his
public key as well. The signature serves as
a "seal" for the work because the seal
enables the information to be independently
checked for unauthorized modification.513 If
the seal is verified (independently computed
signature matches the original signature),
then the work is a bona fide copy of the
original work -- i.e., nothing has been
changed in the file that constitutes the
work.

4.Steganography

Innovative new techniques are being
developed to address security or management
driven concerns relating to dissemination and
use of digitally-encoded information. For
example, methods have been developed that can
encode digitized information with attributes
that cannot be disassociated from the file
that contains that information. This field
of technology has been termed "steganography"
and been conceptually referred to as "digital
fingerprinting" or "digital watermarking."

In essence, using steganographic
techniques, a party can embed hidden messages
in digitized visual or audio data. The
embedded information does not degrade or
otherwise interfere with the audio or visual
quality of the work. Instead, the embedded
information can only be detected if
specifically sought out. More advanced
steganographic techniques based on
statistical or entropically-directed encoding
are proving to be difficult to defeat. For
example, one system modulates a known noise
signal with the information to be embedded
and adds the "scaled" signal to the original
data. Once encoded in this fashion, the
steganographically encoded identification
data is distributed throughout the work as
subliminal noise and, like noise, cannot be
fully eliminated from the work. Thus, one
can ensure detection of an embedded message
even after substantial corruption of the
data, such as might occur through
compression/decompression, encoding,
alteration or excerpting of the original
data. By providing a means to indelibly tag
a work with specific information,
steganography is likely to play a
complementary role to encryption as well as
authentication techniques based on digital
signatures.

D.Controlling Use of Protected Works

Content providers will rely on a variety
of technologies, based in software and
hardware, to protect them against
unauthorized uses of their information
products and services.

One example can be found in the Audio Home
Recording Act. This Act requires that
manufacturers of digital audio recording
devices and digital audio interface devices
incorporate features that limit serial
copying.514 The hardware is programmed to read
certain coding information contained in the
"digital subcode channel" of digital sound
recordings and broadcasts. Based on the
information it reads, the hardware circuitry
will permit unrestricted copying, permit
copying but label the copies it makes with
codes to restrict further copying, or
disallow copying. The serial copy management
system allows unlimited first generation
copying -- digital reproduction of originals
(such as CDs distributed by record
companies), but prevents further digital
copying from those reproductions.515

Similar systems can be implemented through
hardware, software or both, using the
concepts discussed above (e.g., rendering
software and encryption technology). For
example, files containing works can include
instructions used solely to govern or control
distribution of the work. This information
might be placed in the "header" section of a
file516 or another part of the file. In
conjunction with receiving hardware or
software, the information, whether in the
header or elsewhere, can be used to limit
what can be done with the original or a copy
of the file containing the work. It can
limit the use of the file to view- or listen-
only. It can also limit the number of times
the work can be retrieved, opened, duplicated
or printed.

E.Managing Rights in Protected Works

Systems for managing rights in works are
being contemplated in the development of the
NII. These systems will serve the functions
of tracking and monitoring uses of
copyrighted works as well as licensing of
rights and indicating attribution, creation
and ownership interests. A combination of
file- and system-based access controls using
encryption technologies, digital signatures
and steganography are, and will continue to
be, employed by owners of works to address
copyright management concerns. Such security
measures must be carefully designed and
implemented to ensure that they not only
effectively protect the owner's interests in
the works but also do not unduly burden use
of the work by consumers or compromise their
privacy. And measures should be studied to
ensure that systems established to serve
these functions are not readily defeated.

To implement these rights management
functions, information will likely be
included in digital versions of a work (i.e.,
copyright management information) to inform
the user about the authorship and ownership
of a work (e.g., attribution information) as
well as to indicate authorized uses of the
work (e.g., permitted use information). For
instance, information may be included in an
"electronic envelope" containing a work that
provides information regarding authorship,
copyright ownership, date of creation or last
modification, and terms and conditions of
authorized uses. As measures for this
purpose become incorporated at lower levels
(e.g., at the operating system level), such
information may become a fundamental
component of a file or information object.

Once information such as this is
affiliated with a particular information
object (e.g., data constituting the work) and
readily accessible, users will be able to
easily address questions over licensing and
use of the work. For example, systems for
electronic licensing may be developed based
on the attribution or permitted use
information associated with an information
object. Electronic contracts may be used.517
Providers may inform the user that a certain
action -- the entering of a password, for
instance, to gain access to the service or a
particular work, or merely the use of the
service -- will be considered acceptance of
the specified terms and conditions of the
electronic license.

The Library of Congress' Electronic
Copyright Management System may be
instrumental in rights management schemes.
The proposed system, which is under
development, has three distinct components:
(1) a registration and recordation system,
(2) a digital library system with affiliated
repositories of copyrighted works, and (3) a
rights management system.518 The system will
serve as a testbed to gain experience with
the technology, identify issues, prototype
appropriate standards, and serve as a working
prototype if full deployment is pursued
later.

An important element of doing business in
the digital environment will be the ability
to move money from users to the providers of
the various information and entertainment
products and services.519 Presently,

transactions follow models wherein the actual
assets do not move in the system, but rather
only representations of the assets. That is
to say, if a consumer selects a pay-for-view
motion picture from a cable service provider,
the consumer gives the service provider a
credit card number. The service provider
sends the credit information to a
clearinghouse where it is verified and sent
on to a bank for payment. Such methods of
payment are relatively expensive because of
the number of players and transactions
involved.

Some believe that a more efficient and
cheaper method of payment is "digital cash."
Using a digital cash system, actual assets
are transferred through digital
communications means in the form of
individually identified representations of
bills and coins -- similar to serial numbers
on hard currency. There are a number of
systems being developed to accomplish such
money movement, which should allow consumers
to move actual assets through the NII or GII,
rather than simply transferring a message to
other existing systems to move the money for
a transaction.

One payment system relies on the existing
credit and debit card and banking systems.
It avoids transaction costs by simply
accumulating users' transactions and charging
their debit card or billing the accumulated
charges to their credit card once in a fixed
time period, depending on volume and the
cumulative amount of charges. However, the
use of the third party bank for verification
and collection adds cost to the transactions.
In addition, the anonymity of cash purchases
is lost, and there is an increased risk that
transactions may be monitored by
organizations that track spending habits of
consumers.

A more complex system uses "smart cards"
and public key encryption to move actual
assets within the system. Such systems are
common in Europe, for instance, for public
transportation and telephone charges. Under
such systems, a pre-paid card with a
programmed amount of value or "cash" is
issued to a consumer, and the card's account
is debited when it is used for a purchase.
Such systems protect anonymity because
debiting of the card does not require the
consumer to reveal her identity; it is legal
tender just like cash. Such systems for use
in the NII and GII are under development by
both European and U.S. firms.

F.Encryption Export Control

U.S. manufacturers are currently prevented
from exporting software and hardware with
certain types of encryption technology.520
This is due to an export licensing system
developed over the last 50 years in order to
limit proliferation of encryption technology
that could hinder efficient intelligence
gathering and effective law enforcement.
U.S. software manufacturers that produce
"mass market" products indicate that there is
a significant demand internationally for
software products with strong encryption
capabilities. They believe that their
inability to deliver such products is leading
to the development and sale of these needed
products by foreign software developers.
Relaxation of export controls would permit
U.S. businesses to compete with foreign
companies that presently incorporate strong
encryption technology in their products, but
would make it even more difficult for the
United States and its allies to fight
international terrorism, narcotic
trafficking, corruption, smuggling of nuclear
materials, and other criminal activities.

Export controls are administered through a
bifurcated system in the United States. The
nature of the technology, product or
information to be exported dictates the
Agency from which the party wishing to export
must turn to obtain a license to export.

? Export licensing of arms, ammunition,
and implements of war is handled by
the Office of Defense Trade Controls
(ODTC) of the Department of State
pursuant to the Arms Export Control
Act.521

? Export licensing of items not
exclusively controlled for export by
another Department or agency of the
Federal Government is handled by the
Bureau of Export Administration (BXA)
of the Department of Commerce.522

When a party wishes to export products
containing an encryption technology, a
Commodity Jurisdiction (CJ) Ruling is made
that determines whether the item is on the
Munitions List or the Commerce Control List
(CCL). If the item is determined to be on
the Munitions list, the State Department
reviews the request for an export license.
Conversely, if the item is found to be on the
CCL, then it is assigned an Export Control
Classification Number (ECCN) which is used to
determine the requirements for its export
licensing.523 The Commerce Department has
exclusive statutory jurisdiction over
licensing of CCL items, and in practice
presents a less stringent licensing scheme
than for munitions items.

Development of an optimal NII and GII
requires strong security as well as strong
intellectual property rights. Copyright
owners will not use the NII or GII unless
they can be assured of strict security to
protect against piracy. Therefore,
encryption technology is vital because it
gives copyright owners an additional degree
of protection against misappropriation.

Encryption is equally important to other
users of the NII and GII as well. Industries
that transmit sensitive information -- either
internally or to other businesses -- also
require high levels of security. Banks,
accounting firms, and securities houses are
prime examples of businesses that routinely
transmit sensitive transactional information.
In addition, absent strong encryption,
medical and legal professionals using the NII
may have difficulty reassuring their clients
that sensitive personal information will not
be compromised.

The growth of the NII and GII is sparking
increased international demand for encryption
technology. However, for national security
reasons, the United States strictly controls
the export of many encryption products for
sale abroad. This policy protects vital U.S.
national security and law enforcement
interests, but critics contend that it is
slowing the spread of encryption technologies
that could be used to protect intellectual
property transmitted through the NII and GII
and causing U.S. manufacturers to lose sales
to foreign competitors who are not
constrained by U.S. export controls. To
evaluate these complaints, the Clinton
Administration has directed the Commerce
Department, through the newly created Office
of Strategic Industries and Economic
Security, to conduct studies on the export
controls of encrypted software and their
impact on U.S. manufacturers -- which were
expected to be completed by July 1995.

Recognizing the important role that
encryption technology plays in fostering a
secure and useful NII, the Working Group
supports efforts to work with industry on key-
escrow encryption technologies and other
encryption products which could be exported
without compromising U.S. intelligence
gathering and law enforcement. The Working
Group believes that proliferation of such
technology will enable U.S. industry to meet
the needs of the international market for
these products and continue to lead the
development of the GII.

G.Development of Standards

A common concern related to development of
the NII is the development of standards.
Obviously, some level of interconnection,
interoperability and standardization of
telecommunications, computer, wireless,
satellite, broadcast and cable television
technologies and networks will be needed to
achieve the full potential of the NII. The
need for standards, however, does not suggest
that any one entity must be established to
develop and implement a comprehensive suite
of standards. Rather, consistent with
historical trends firmly established in the
computer industry, the marketplace will
develop the best suite of standards to make
the NII viable.

The computer industry tends to follow
certain general trends in the development and
implementation of solutions to commonly
encountered problems.524 The most common trend
is for an "early implementer" to develop a
"point-to-point" solution to a specific
problem (e.g., a solution which solves the
problem solely from the perspective of that
developer's needs). Alternatively, a
consortium of companies will work together to
jointly develop a solution to address the
problem. Depending on the frequency of the
problem, other individual companies or
consortia will develop different solutions to
the problem. Over time, one solution will
begin to emerge as a de facto industry
standard. It may gain that status through
consumer or user preference, through
effective promotion by one company or a
consortium of companies, or, more typically,
a combination of both. Once it appears that
an industry consensus is emerging, efforts
begin to convert that de facto standard into
a more formally recognized industry standard.
This can occur through accreditation efforts
sponsored by private organizations, such as
the American National Standards Institute
(ANSI) or the Institute for Electrical and
Electronic Engineers (IEEE); through domestic
governmental standard setting organizations,
such as the National Institute for Standards
and Technology (NIST), the Department of
Energy (DOE) or the Department of Defense
(DOD); or through international organizations
like the International Telecommunication
Union. As these de facto standards become
established, either informally or formally,
vendors and systems providers incorporate
these standards into their products or make
those products compatible with those
standards. Once established, the standards
tend to evolve to accommodate improvements
using the standard setting organizations.
Eventually, many standards are implemented at
the operating system level.525

Understanding this common progression is
important in understanding how the NII will
likely develop. At this point in time, many
different solutions are being developed to
address the needs of users, content
providers, service providers and carriers.
Most of these developments fall into the
class of point-to-point solutions to serve
specific needs. As these early systems lead
to development of standards, the various
industries supporting the NII's development
will formally or informally establish de
facto and formally recognized standards.
Once standards begin to emerge or become
established, the major operating systems
developers will incorporate or support them
at the operating system level. Thus,
solutions developed to address the needs and
concerns of users, content providers, service
providers and carriers will evolve and become
integrated into the infrastructure of the
NII.

Over time, point-to-point solutions will
become established as standards and/or
incorporated into operating systems. When
this happens, uniform means for identifying
the author of a work, authenticating the
contents of an information object, ensuring
the secure transmission of information
objects between remote sites, and authorizing
subsequent use of information objects after
the first transfer, will be possible. At
this point, however, given the nascent state
of the NII, it would be inappropriate to
suggest that a comprehensive system could
best be devised from a central planning
perspective.

Interoperability and interconnectivity of
networks, systems, services and products
operating within the NII will enhance its
development and success. Standardization of
copyright management (standardized header
information and format, for instance), as
well as technological protection methods
(such as encryption), may also be useful.
The question of whether any standards should
be established, either through government
regulation or industry consensus, however, is
not within the purview of this Working Group.
The issue of what those standards should be,
if established, is similarly outside the
scope of the area of inquiry of the Working
Group.526 If a standard is established,
however, protection of intellectual property
rights used in that standard is of concern to
this Group.

The intellectual property rights
implications of the standards-setting process
are not new with the development of the NII.
The Federal Communications Commission, for
instance, has established standards in
related areas without interfering with the
legitimate rights of intellectual property
rights owners.527

The Working Group finds that in the case
of standards to be established, by the
government or the private sector, the owner
of any intellectual property rights involved
must be able to decline to have its property
used in the standard, if such use would
result in the unauthorized exercise of those
rights. If the rights holder wishes to have
its intellectual property as part of the
standard, an agreement to license the
necessary rights on a nondiscriminatory basis
and on reasonable terms may be required. In
the case of de facto standards, arising out
of market domination by an intellectual
property rights holder, the antitrust laws
may provide a remedy for anticompetitive uses
of the standards.

III. EDUCATION

A.Background

Public awareness of the importance of
intellectual property in the information age
is essential to the successful implementation
and growth of the NII. The average citizen
has only the most general understanding that
there are patents, copyrights and trademarks,
let alone an understanding of the legal,
economic and trade issues involved. Indeed,
many lawyers do not have an understanding of
this highly specialized area of the law.
However, as the convergence of computer and
communications technology brings the
capability of high speed computers and
communications networks into our homes, we
all have the possibility to become not only
authors and users of copyrighted works, but
printers, publishers, exhibitors and
distributors as well.

Most people do not have a very clear idea
about the role of intellectual property law
in encouraging creativity and the importance
of intellectual property to our economic well-
being. Recent studies show that the core
copyright industries -- those that create
copyrighted works -- represent an estimated
$238.6 billion in annual contribution to the
U.S. economy. Moreover, other related
industries, such as those that distribute
copyrighted works, account for an additional
contribution of approximately $120 billion
annually. Between 1991 and 1993, while the
entire U.S. economy grew at an annual rate of
approximately 2.7 percent, the core copyright
industries grew twice as fast, at the rate of
5.6 percent. Furthermore, the employment
generated by these industries grew at four
times the annual rate of the whole economy in
the period between 1988 and 1993.528 Users
must learn enough about this topic to
appreciate just what respect for intellectual
property laws can do for them, and why a
seemingly harmless transaction on a computer
network may have a great effect on the
benefits they get from the intellectual
property system.

Users are likely creators, too. In that
role they will benefit directly from being
able to decide how and under what conditions
other users will be able to use their works.
It may be that a user will decide to dedicate
his or her work to the community at large and
not assert the rights that the law grants.
Others may chose to assert their rights in a
general way and make their works available on
a good faith "pay if you like it" basis like
much of the shareware available today.
Others may insist on strict enforcement of
their rights and allow only specified access
on limited terms and conditions. The point
is that all users should understand the law
sufficiently to know that they have all of
these options available to them. Copyright
is the body of law that lets such a system
work. It appropriates to intangible goods --
copyrighted works -- the characteristics of
tangible property. This is what lets the
information marketplace work.

While it is necessary to increase public
awareness in these areas, it will not be
easy. Intellectual property law is typically
perceived by non-lawyers as being
incomprehensible with its own "technical"
jargon and legalistic terminology that do not
provide clear cut rules in many
circumstances. Many often resist learning
such "legalese" and want to see clearer and
more easily understandable rules.
Unfortunately, a mere recitation of "do's and
don'ts" is not enough to explain to NII users
how the copyright system affects their
interests, and why certain activities are not
allowed by the law.

It is not only intellectual property law
that presents complexities for the NII user.
The underlying information technology is also
difficult to understand, and it is constantly
evolving and presenting users with new
capabilities. Just learning about these
capabilities and how to use them is difficult
enough for users. It is also difficult for
users to understand that they may not be able
to always use all of the new facilities to
copy, perform and use works that the
technology allows.

Overcoming these barriers is also
difficult because the market for copyrighted
works is complex with many participants.
Individual users generally do not appreciate
the impact that an unauthorized use of a
protected work can have in that market. This
is especially true when the unauthorized use
has an immediate benefit to the user, and no
immediately visible harm to others. How
tempting it is to simply make yourself a copy
of a piece of shareware and not pay its
author, or to make just one copy of a sound
recording that someone has put up on a
bulletin board. What harm could there be?
However, in Cyberspace, where reproduction
and dissemination are so easy and quick, even
one unauthorized reproduction -- onto a
server for instance -- can have a substantial
ripple effect that could even supplant the
market for legitimate copies of the work.
Just think what happens to the shareware
author's expectation of a profit or the sales
of a commercial sound recording if ten
thousand individuals make such seemingly
harmless personal copies.

B.Copyright Awareness Campaign

To address these concerns about education,
the Working Group has initiated the Copyright
Awareness Campaign. The kick-off meeting of
the Campaign, which was held in March 1995,
brought together educator associations, media
organizations, copyright owners, the
Copyright Office, and the Departments of
Education and Commerce to begin this
important discussion on how to educate the
public on the importance of copyright in the
NII. All of the participants agree that this
Campaign is critical to the successful
development of the NII, and many suggestions
were offered on how best to educate the
public.

The participants in the Campaign generally
agreed that education of the public about
intellectual property has a number of
aspects. First, public awareness needs to be
raised about the existence of copyright law
and the protections that it provides.
Second, model curricula need to be developed
so that state and local educators (and other
organizations) have available to them
comprehensive material about intellectual
property that could be incorporated into all
levels of education. Third, the public needs
quick access to up-to-date information on
intellectual property rights, and guidance as
to where the information is located.

The first goal -- raising public awareness
of the existence of intellectual property --
is a broad goal to which anyone may
contribute. The Campaign's participants felt
that, at present, few people understand what
intellectual property is, or the types of
intellectual property protection available.
Generally, owners of intellectual property
should strive to get the word out about
intellectual property, whether individually
or collectively, so that the public becomes
more familiar with the concept. As people
begin to associate intellectual property with
public benefits, they will be more receptive
to learning about and respecting intellectual
property.

The second goal is to develop educational
curricula about intellectual property --
especially with regard to its role in the
NII. In addition to heightening public
awareness, such curricula would reinforce the
important role of intellectual property as an
incentive to create and innovate, provide
guidance as to legal use of protected works,
and dispel the notion that intellectual
property is a barrier to the public
availability of works. The substantive
components of the curricula may be broken
down further into a number of elements.
Initially, respect for copyright protection
needs to be highlighted -- intellectual
property needs to become a "household word."
This element will work in conjunction with
the goal of public awareness, but should
focus more on the importance of intellectual
property, and not simply on its existence.
Second, a comprehensive program needs to be
developed to target different educational
levels. Not only must a curricula be
developed and made available for all
educational levels, but also a methodology
must be established for the continual
reinforcement of the importance of
intellectual property throughout the lifelong
learning of every NII user.

A number of initiatives that are presently
underway in both the public and private
sectors were reviewed during the kick-off
meeting of the Copyright Awareness Campaign.
While each of these initiatives is useful in
its targeting of a specific audience, a more
coordinated effort may be more successful.
Ideally, copyright owners, users, and
educators will seek to develop broad-based
"model curricula" that incorporate all of the
substantive issues that are required for
useful education about copyright. Such model
curricula could then be disseminated to state
school boards, private schools, libraries,
community centers and other educational
institutions for incorporation into their
programs.

In considering such model curricula, the
Campaign's participants noted that a number
of factors should be considered, including
the age of the persons being taught, their
level of experience with the NII, the
specific applications for which they use the
NII, and their previous exposure to
intellectual property laws. Certain core
concepts should be introduced at the
elementary school level -- at least during
initial instructions on computers or the
Internet, but perhaps even before such
instruction. For example, the concepts of
property and ownership are easily explained
to children because they can relate to the
underlying notions of property -- what is
"mine" versus what is "not mine," just as
they do for a jacket, a ball, or a pencil.
At the same time that children learn basic
civics, such as asking permission to use
somebody else's pencil, they should also
learn that works on a computer system may
also be property that belongs to someone
else. Therefore, they should learn what one
participant refers to as "electronic
citizenship," including how to determine the
owner of a work, and how to go about asking
for permission to use it. Similarly,
they should learn that the taking of
someone else's property, including
copyrighted works, without permission is not
right. Additionally, as noted previously,
users will also be creators of copyrighted
works, and therefore should know what their
rights are and that they may expect those
rights to be respected by others.

Other concepts of intellectual property
should perhaps be introduced later. Soon
after learning about property and ownership,
students should learn more about the various
forms of intellectual property, and why their
protection is so important. Students should
learn about the many valuable technologies
that would not have been developed without
protections of the patent system to recover
costly research and development investments.
Similarly, students should be aware of the
substantial economic contributions of the
industries that rely on copyright protection -
- including the computer, entertainment,
publishing, and broadcasting industries. In
addition, people of all ages should recognize
that millions of U.S. workers are employed by
industries that rely heavily on intellectual
property protection, and that intellectual
property rights are truly a matter of
national interest.

Additional concepts regarding copyright
may be explored throughout a person's
education. For example, the economic
rationale for granting authors and inventors
exclusive property rights in their creative
efforts for a limited period of time in order
to foster creativity and innovation might fit
neatly in a high school economics course.
Similarly, a number of topics might be
explored during social studies or history
classes including the constitutional roots of
patent and copyright law, the nature of a
governmental grant of a property right, or
the role of the copyright and patent systems
in fostering the present day information and
communications revolution. Business courses
could discuss the concepts of licensing
intellectual property rights, the use of
intellectual property as a marketing device,
the concept of intellectual property as a
corporate asset, and the trademark concept of
good will. At the college level, concepts
of intellectual property could be included in
many programs. For example, basic patent and
trade secret law could be taught in all
science and engineering programs, while
copyright law could be included in any
instruction dealing with literature, art or
computer science.

Along with the initial consideration of
the substantive component of what should be
taught, a procedural component must also be
determined. This component actually
considers a number of related questions --
when should a specific topic be taught, and
in what order as related to other topics; how
should the specific topic be presented,
including general tone; and what form of
communication is most effective given the
nature of the topic and the audience
involved. The participants at the kick-off
meeting discussed a number of factors that
should be considered in making these
determinations.

Determining when a topic should be
presented depends on its degree of
complexity. As noted earlier, basic concepts
of intellectual property -- such as ownership
-- are easily taught at a young age. More
complicated topics, such as the exclusive
rights of intellectual property owners and
fair use, would likely be reserved for later
study. However, complexity of the subject
matter alone is not the only consideration.
A complex topic can be simplified for earlier
ages, leaving more detailed instruction for
future study. For example, the basic notion
of ownership may be introduced at an early
age, but should also be reinforced when
discussing exclusive rights, licensing, and
in other related topics throughout a person's
education. Thus, the answer to the question
of when a given topic should be taught may be
"always," with increasing degrees of
complexity so that students are not
overwhelmed by a subject that they are too
young to understand.

A slightly different factor to consider is
how a particular topic should be presented.
A point raised in the first meeting of the
Copyright Awareness Campaign was that
copyright education should not be a series of
"thou shall nots." Instead, education should
carry a "just say yes" message -- that works
may be accessed and used, and that seeking
permission is not an insurmountable barrier.
The prohibitions against unauthorized use of
intellectual property should be cast in terms
of a right to control one's property. The
public should also understand that copyright
protection is specifically prescribed for a
limited period of time, after which the
underlying work becomes dedicated to the
public. In addition, users should recognize
that as on-line licensing becomes more
readily available for accessing protected
works on the NII, the delays in seeking
authorization from the property owner will be
minimized.

Another problem with the determination of
how a topic should be presented is ensuring
accurate and consistent information. In
order for the public to respect and
participate in educational programs, they
must be able to rely on the information they
receive. As many private organizations have
already developed their own educational
materials -- often directed at specific
audiences and applications -- confusion may
result on the part of the layperson based on
perceived "mixed signals" of what is and is
not permitted. Therefore, as curricula and
other educational programs are developed,
clear and consistent information must be
ensured in order to avoid confusion and
contempt. A system for "peer review" of
educational material by impartial editors may
aid in presenting accurate and consistent
information.

The third factor, and perhaps most
important, is the form of communication used
to deliver an education program. Clearly,
audiences respond differently to varied
methods of communication. Numerous methods
have been suggested through the Copyright
Awareness Campaign for getting the message
across including: classroom learning; video
instruction; distance learning; broadcast
television and radio; satellite
teleconferencing; cable television; on-line
services; billboards; books, magazines, and
other publications; music; and art.
Combinations of these methods in copyright
workshops will reinforce key concepts and
help tie information together. Many of these
forms of communication are already being used
to educate the public about copyright law --
and the producers of these materials should
work together to determine which methods are
most effective for a given audience. The
sharing of such information will go a long
way toward reducing duplication of efforts --
especially those that are less effective.

Educators and media organizations can have
tremendous impact on the procedural component
because they possess the expertise required
to determine whether a particular educational
message is being effectively communicated.
Through testing procedures, educators may
determine whether certain concepts are
comprehended by students. Similarly, through
marketing surveys, media organizations can
determine the forms of communication that are
most effective for particular audiences.
These methods of evaluation are already
available for other educational and
communication materials, thus requiring only
minor adaptation for the evaluation of an
intellectual property curricula.

The final goal of the Campaign is the
establishment of a system that provides the
public with easy access to accurate and up-to-
date information on copyright, including
guidance on when and how to get authorization
to use copyrighted works. While educational
programs and curricula may raise public
awareness, they cannot teach the public every
facet of the law as it applies to new and
previously unencountered situations. People
soon will become frustrated with such
programs if they cannot get quick answers to
their questions regarding compliance with
copyright law. In order for NII users to
comply with the law, they need to know where
and how to receive additional information on
copyright as they encounter new situations on
the NII.

A number of methods could be used to
provide this service. A directory of
attorneys having expertise in a particular
field, such as copyright issues dealing with
educational or library applications, could be
developed and maintained. Additionally, as
was suggested in the Copyright Awareness
Campaign, a package of copyright basics could
be established on a World Wide Web home page
for access by interested users. Similarly, a
copyright information news group could be
established on Usenet to keep users informed
of where to go to get important copyright
information. The U.S. Copyright Office
provides on-line access to its circulars,
announcements, and regulations (proposed and
final), as well as information regarding
registration information (original and
renewal), and other recorded documents.
Other private organizations also provide such
information and counseling, often for nominal
charges.

IV.Recommendations

A.Copyright

It is difficult for intellectual property
laws to keep pace with technology. When
technological advances cause ambiguity in the
law, courts look to the law's underlying
purposes to resolve that ambiguity. However,
when technology gets too far ahead of the
law, and it becomes difficult and awkward to
adapt the specific statutory provisions to
comport with the law's principles, it is time
for reevaluation and change. "Even though
the 1976 Copyright Act was carefully drafted
to be flexible enough to be applied to future
innovations, technology has a habit of
outstripping even the most flexible
statutes."529

From its beginning, the law of
Copyright has developed in response
to significant changes in technology.
Indeed, it was the invention of a new
form of copying equipment -- the
printing press -- that gave rise to
the original need for copyright
protection. Repeatedly, as new
developments have occurred in this
country, it has been the Congress
that has fashioned the new rules that
new technology made necessary.530

The Working Group has examined the
adequacy of the Copyright Act to cope with
the pace of technological changes. In
applying the law to new uses, media and
technology, the issues presented vary.
Certain issues merely require an explanation
of the application of the current law, and
clearly are appropriately covered. Others
present rights or limitations that clearly
fit within the spirit of the law but the
letter of the law is in need of clarification
to avoid uncertainty and unnecessary
litigation. Still others need new solutions.
Technology has altered the balance of the
Copyright Act -- in some instances, in favor
of copyright owners and in others, in favor
of users. The goal of these recommendations
is to accommodate and adapt the law to
technological change so that the intended
balance is maintained and the Constitutional
purpose is served.531

While it is not advisable to propose
amendment of the law with every technological
step forward, neither is it appropriate to
blindly cling to the status quo when the
market has been altered.

Sound policy, as well as history,
supports our consistent deference to
Congress when major technological
innovations alter the market for
copyrighted materials. Congress has
the constitutional authority and the
institutional ability to accommodate
fully the varied permutations of
competing interests that are
inevitably implicated by such new
technology.532

Throughout more than 200 years of history,
with periodic amendment, United States law
has provided the necessary copyright
protection for the betterment of our society.
The Copyright Act is fundamentally adequate
and effective. In a few areas, however, it
needs to be amended to take proper account of
the current technology. The coat is getting
a little tight.533 There is no need for a new
one, but the old one needs a few alterations.

1.The Transmission of Copies and
Phonorecords

a.The Distribution Right

The Copyright Act gives a copyright owner
the exclusive right "to distribute copies or
phonorecords of the copyrighted work" to the
public. It is not clear under the current
law that a transmission can constitute a
distribution of copies or phonorecords of a
work.534 Yet, in the world of high-speed,
communications systems, it is possible to
transmit a copy of a work from one location
to another. This may be the case, for
instance, when a computer program is
transmitted from one computer to ten other
computers. When the transmission is
complete, the original copy typically remains
in the transmitting computer and a copy
resides in the memory of, or in storage
devices associated with, each of the other
computers.535 The transmission results
essentially in the distribution of ten copies
of the work. However, the extent of the
distribution right under the present law may
be somewhat uncertain and subject to
challenge. Therefore, the Working Group
recommends that the Copyright Act be amended
to expressly recognize that copies or
phonorecords of works can be distributed to
the public by transmission, and that such
transmissions fall within the exclusive
distribution right of the copyright owner.

The proposed amendment does not create a
new right. It is an express recognition
that, as a result of technological
developments, the distribution right can be
exercised by means of transmission -- just as
the reproduction, public performance and
public display rights may be.536

It is argued by some that the existing
right of distribution encompasses
transmissions of copies and that no amendment
is necessary. Indeed, the distribution
right, as set forth in Section 106(3) of the
Copyright Act, can be -- and, in at least one
case, has been -- interpreted to include
transmissions which distribute copies of
works to, for example, the memories of
computers. Transmission, it is argued, is
logically and legally a means of
distribution. The Working Group has no
argument with such an interpretation; it
properly conforms to the intent of the
distribution right and, we believe, is
correct from both a practical and legal
standpoint.

Others suggest that amendment of the law
may not be necessary because even if the
distribution right does not cover the
distribution of reproductions by
transmission, the reproduction right is
clearly implicated and that will protect the
copyright owner. However, the fact that more
than one right may be involved in infringing
activity does not, and should not, mean that
only one right should apply.537 Each of the
exclusive rights is distinct and separately
alienable and different parties may be
responsible for infringements or licensing of
different rights -- and different rights may
be owned by different people.538 Because
transmissions of copies may constitute both a
reproduction and a distribution of a work,
transmissions of copies should not constitute
the exercise of just one of those rights.
Indeed, those licensed only to reproduce a
work should not be entitled to also
distribute the work through transmission --
thereby displacing the market for the
copyright owner or his distribution licensee.

Infringement takes place when any one
of the rights is violated: where,
for example, a printer reproduces
copies without selling them or a
retailer sells copies without having
anything to do with their
reproduction.539

Clearly, not all transmissions of copies
of copyrighted works will fall within the
copyright owner's exclusive distribution
right. Moreover, even if a transmission of a
copy falls within the scope of the right, it
is not necessarily unlawful. First, the
distribution must be a distribution to the
public. The case law interpreting
"publication" provides guidance as to what
constitutes distribution to the public.540 If
a distribution would not constitute a
publication of the work, then it would likely
be found to be outside the scope of the
copyright owner's distribution right.
Therefore, the transmission of a copyrighted
work from one person to another in a private
e-mail message would not constitute a
distribution to the public.541 Second, all of
the limitations, exemptions and defenses that
currently apply to the distribution right and
allow users to distribute certain copies to
the public or to distribute copies under
certain circumstances will continue to apply.
For example, any exercise of one of the
exclusive rights may be fair use -- including
the reproduction and distribution of copies
by transmission.

Some are of the view that the current
language of the Act does not encompass
distribution by transmission. They argue
that the proposed amendment expands the
copyright owner's rights without a
concomitant expansion of the limitations on
those rights. However, since transmissions
of copies already clearly implicate the
reproduction right, it is misleading to
suggest that the proposed amendment of the
distribution right would expand the copyright
owner's rights into an arena previously
unprotected. Further, even if the premise is
correct (that the amendment expands the
distribution right), the conclusion that the
limitations of that right are not similarly
expanded is invalid. The limitations on the
right -- which place certain distributions to
the public outside the scope of the copyright
owner's right -- would necessarily expand to
also place similar distributions by means of
transmission outside the scope of the right.

Nevertheless, there is no reason to treat
works that are distributed in copies to the
public by means of transmission differently
than works distributed in copies to the
public by other, more conventional means.542
Copies distributed via transmission are as
tangible as any distributed over the counter
or through the mail. Through each method of
distribution, the consumer receives a
tangible copy of the work.

When the public performance right was
initially granted, it was thought to
encompass only "live," in-person
performances. When it became clear that
copyrighted works could be publicly
performed by other means -- i.e., broadcast
and, later, cable transmissions -- the law
was clarified. The same is true today with
respect to the distribution right.
Transmission is a means of distribution of
copies, just as it can be a means of
performance. However, the differences of
opinion summarized above underscore the need
for clarification and legal certainty. The
costs and risks of litigation to define more
clearly the right -- and the time achieving
such clarity would take -- would discourage
and delay use of the NII.

b.Related Definitional Amendments

The Working Group also recommends other
related amendments to two definitions.

To "Transmit"

As explained above, under current
technology, a copy of a work may be
transmitted. However, the Copyright Act
defines only what it is to transmit a
performance or display of a work. Therefore,
the Working Group recommends that the
definition of "transmit" in Section 101 of
the Copyright Act be amended to include a
definition of a transmission of a
reproduction.543

How to delineate between these types of
transmissions is a difficult issue to
resolve. The transmissions themselves hold
no clues; one type often looks the same as
the other during the transmission. If the
transmitter intends to transmit a performance
of the work, as well as to distribute a
reproduction of it -- or if the receiver is
able to hear or see a performance of the work
in the course of receiving a copy of it --
what rights are exercised by the
transmission? A transmission could be a
transmission of a reproduction or a
performance or both. The resolution of these
issues should rest upon the specific facts of
the case. Such issues will typically be
clarified between rightsholders and users in
appropriate license arrangements. If
confusion or disagreement exists in a
specific context, the courts -- rather than
Congress -- are in the better position to
determine which, if any, exclusive rights are
involved in a particular transmission.
Courts regularly make such determinations in
other cases where rights overlap.544

"Publication"

The legislative history of the Copyright
Act makes clear that "any form of
dissemination in which a material object does
not change hands . . . is not a publication
no matter how many people are exposed to the
work."545 Thus, a work that is only displayed
or performed via the NII would not be
considered published, no matter how many
people have access to the display or
performance, because a material object -- a
copy of the work -- does not change hands.546
However, in the case of transmissions of
reproductions, the recipients of the
transmissions receive copies of the work
(i.e., copies of the work have been
distributed) -- although they may not have
"changed hands" in the literal sense.

Whether the transmission of copies of
works is clearly within the scope of the
distribution right is also a problem with
respect to the act of publication by the
transmission of copies. Indeed, the
definition of "publication" incorporates the
language used to describe the distribution
right, which the Working Group's proposal
amends.547 Publication largely turns on
whether the work has been distributed to the
public. Thus, if copies of a work may be
distributed to the public by transmission,
then a work may be published by the
transmission of copies to the public.
Therefore, consistent with the proposed
amendment of the distribution right, the
Working Group recommends that the definition
of "publication" in Section 101 of the
Copyright Act be amended to recognize that a
work may be published through the
distribution of copies of the work to the
public by transmission.548

The effects under the law of a work being
considered published (rather than
unpublished) generally are negative from the
viewpoint of the copyright owner. Published
works, for example: (1) must be deposited in
the Library of Congress; (2) are subject to
more limitations on the exclusive rights,
including a broader application of fair use;
(3) must meet certain author nationality or
domicile requirements to be eligible for
protection; and (4) must bear a copyright
notice if published before March 1, 1989.549
However, the designation of works distributed
to the public by transmission as published
will be important in the case of works
distributed first -- or solely -- on-line.
The deposit requirement will aid in the
preservation of those works, which otherwise
might be updated or revised on-line,
destroying -- or at least obscuring -- the
original published versions. This may be
particularly critical in preserving the
scholarly and scientific record.550

Just as not all distributions of copies by
transmission will constitute distributions to
the public (and fall within the distribution
right), not all transmissions of copies will
constitute publication. Private e-mail
messages would not be regarded as published.551
Neither would other restricted transmissions
of copies, such as those in a typical
corporate setting, where transmissions of
copies within the company computer network
are restricted as to further distribution.552
However, as in the print environment, the
distribution of copies to a small group under
circumstances where further distribution is
authorized would publish the work.553

c.The Importation Provisions

The Working Group also recommends that the
prohibitions on importation be amended to
reflect the fact that, just as copies of
copyrighted works can be distributed by
transmission in the United States, they can
also be imported into the U.S. by
transmission. If an infringing literary
work, for instance, were physically shipped
into the U.S. in the form of a paper copy, a
CD-ROM disk or even stored on a memory chip,
then it would be an infringing importation if
the statutory conditions existed.554

Cross-border transmission of copies of
copyrighted works should be subject to the
same restrictions as shipping them by
airmail. Just as the distribution of copies
of a copyrighted work is no less a
distribution than the distribution of copies
by mail, the international transmission of
copies of copyrighted works is no less an
importation than the importation by airmail.

Although we recognize that the U.S.
Customs Service cannot, for all practical
purposes, enforce a prohibition on
importation by transmission, given the global
dimensions of the information infrastructure
of the future, it is important that copyright
owners have the other remedies for
infringements of this type available to them.
Therefore, the Working Group recommends that
Section 602 of the Copyright Act be amended
to include importation by carriage or
shipping of copies as well as by transmission
of them.

2.Public Performance Right for Sound
Recordings

Transmissions of sound recordings will
certainly supplement and may eventually
replace the current forms of distribution of
phonorecords. In the very near future,
consumers will be able to receive digital
transmissions of sound recordings on demand -
- for performance in the home or for
downloading -- from the so-called "celestial
jukebox." The legal nature of such
transmissions -- whether they are
performances or distributions -- has been
widely debated. As discussed above, the
Working Group recommends that Section 106 of
the Copyright Act be amended to make clear
that copies or phonorecords can be
distributed by transmission. However, many
of these transmissions will clearly
constitute exercise of the public performance
right -- a right which the Copyright Act
fails to grant to copyright owners of sound
recordings.555

The lack of a public performance right in
sound recordings under U.S. law is an
historical anomaly that does not have a
strong policy justification -- and certainly
not a legal one. Sound recordings are the
only copyrighted works that are capable of
being performed that are not granted that
right. Therefore, for example, to transmit a
performance of a sound recording without
infringement liability, an audio-on-demand
service acting as a "celestial jukebox" must
obtain a license from, and pay a royalty to,
the copyright owner of the underlying musical
work (i.e., the person or entity who owns the
rights in the notes and the lyrics), but it
does not have to obtain permission from, or
pay a license fee to, the copyright owner of
the sound recording or the performer. The
Working Group believes that this inequity
should be rectified.

Public performance rights are granted in
many foreign markets. Due to the lack of a
performance right in the United States, U.S.
performers and record companies are denied
their fair share of foreign royalty pools for
the public performance of U.S. sound
recordings in some countries and are in
danger of losing access to their share in
others.

By granting performance rights in sound
recordings, the United States will treat the
creators of these culturally and economically
important copyrighted works the same as all
other works capable of being publicly
performed. This legislation will provide
increased incentive for the creators of sound
recordings to produce and disseminate more
works, thereby expanding consumer choice. In
addition, the enactment of these rights will
strengthen the hand of Government negotiators
and private advocates seeking a fair share of
foreign royalty pools.

Some argue that copyright owners of sound
recordings should not be granted a public
performance right because they derive some
indirect benefit from the public performance
of their works. This argument is based on
the theory that the public performance of a
work increases the sales of reproductions of
that work. Therefore, the copyright owner
gets an indirect benefit (i.e., increased
sales of reproductions) from the so-called
"free advertising" that public performances
provide. This, in fact, may be true in some
cases. However, it is not a valid policy
argument against providing sound recording
copyright owners with the full panoply of
exclusive rights other copyright owners
enjoy.

The exercise of one right often increases
the value of the exercise of another right,
but we do not restrict any other copyright
owners from exercising all of his or her
rights. For instance:

? The copyright owner of the musical
composition embodied in a sound
recording is paid both when recordings
of the composition are sold and when
the composition is publicly performed
-- even though the public performance
might increase the number of records
sold and thus benefit the copyright
owner.

? Serial excerpts from a novel that are
published in a magazine might increase
sales of the book, but the magazine
nonetheless must obtain permission
from the author of the book.

? The copyright owner of that novel may
also increase his book sales when a
motion picture based on the novel is
released. However, no one suggests
that the motion picture company should
not have to pay the copyright owner of
the novel for the right to turn it
into a movie, just because the movie
might indirectly benefit the copyright
owner.

The copyright owners of sound recordings
should be able to decide for themselves, as
do all other copyright owners, if "free
advertising" is sufficient compensation for
the use of their works. If the users'
arguments regarding the benefit copyright
owners derive from the public performance of
their sound recordings are correct, the users
should be able to negotiate a very low rate
for a license to do so.

It also has been argued that the copyright
owners of sound recordings should not be
granted the "exclusive" right that all other
copyright owners enjoy, but instead be
subject to a compulsory license, so that they
cannot act as a "gatekeeper" to the licensing
of performances of the musical works embodied
in sound recordings. It is asserted that
while a copyright owner of a sound recording
with an exclusive public performance right
could block the performance of the musical
work by denying a license to publicly perform
the sound recording, the copyright owner of
the musical work could not. This argument is
based on the incorrect assumption that
copyright owners of musical works are not
granted exclusive public performance rights.
Section 106(4) of the Copyright Act clearly
grants exclusive rights to the copyright
owners of musical works, and, while virtually
all music performance licensing is handled
for those copyright owners by performing
rights societies on a nonexclusive basis, the
copyright owners could license their
performance rights on an exclusive basis if
they chose to do so.556

Two bills introduced in the 104th Congress
would grant a very limited performance right
in sound recordings.557 A full public
performance right -- particularly with
respect to all digital transmissions -- is
warranted. There is no just reason to afford
a lower level of protection to one class of
creative artists. Further, any special
limitations on this right weakens our
position internationally. The digital
communications revolution -- the creation of
advanced information infrastructures -- is
erasing the distinctions among different
categories of protected works and the uses
made of them.

3.Library Exemptions

The copyright law carefully balances the
rights of copyright owners with the
legitimate needs of users. Nowhere is this
balancing more apparent than in the
exemptions that are intended to permit
libraries reasonable use of copyrighted works
to serve the legitimate demands of their
patrons.

Many have expressed concern that the
special exemptions for libraries in Section
108 of the Copyright Act are no longer
relevant in the digital era. Libraries, of
course, may make fair use of any copyrighted
works pursuant to the provisions of Section
107.558 Section 108, however, provides
additional exemptions specifically for
libraries and archives On the one hand,
there are those who believe that since
licensing of transactions of works in digital
form will be a feature of the digital
distribution systems of the future, there is
no need for library exceptions. Each copying
transaction will be cheap and libraries can
simply pay for all of the copying in which
they engage. On the other hand, there are
those who believe that unrestricted copying
in libraries should be the rule, without the
special conditions and limitations set forth
in Section 108.

The Working Group agrees with neither
those who would delete the exemptions for
library copying nor those who would permit
wholesale copying in libraries. It believes
that there is an important public interest in
exempting certain library uses of copyrighted
works and that the public interest is no less
important -- and, indeed, may be more
important -- when such use involves digital
technology. It also believes that there is
an equally important interest in recognizing
the legitimate interests of copyright owners
in licensing uses of their works through
voluntary systems.

Therefore, notwithstanding the legislative
history of the 1976 Act which clearly
intended that Section 108 did not permit
digital reproduction,559 the Working Group
believes that it is important to expand the
exemption so that digital copying by
libraries and archives is permitted under
certain circumstances. In supporting this
departure from the generally accepted view of
the scope and intention of Section 108, the
Working Group believes that the law must
preserve the role of libraries and archives
in the digital era.

Libraries and archives are the trustees of
our collective knowledge and must be able to
make use of digital technology to preserve
the Nation's heritage and scholarship.
Therefore, the Working Group recommends that
the library exemptions be amended: (1) to
accommodate the reality of the computerized
library by allowing the preparation of three
copies of works in digital form, with no more
than one copy in use at any time (while the
others are archived); (2) to recognize that
the use of a copyright notice on a published
copy of a work is no longer mandatory; and
(3) to authorize the making of digital copies
for purposes of preservation.560

4.Reproduction for the Visually
Impaired

The NII offers real opportunities to many
visually impaired people to participate in
learning, communication and discourse to a
greater extent than when only conventional
modes of communication are available. With
the aid of software and computer equipment
that is widely available, people now have the
capacity to view text on CD-ROM on screen in
a "large-type" format even if the publisher
did not include such a feature, but the
publication and distribution of large-type
editions remains very important. To ensure
fair access to all manner of printed
materials, it is necessary to amend the
copyright law.

The laws of many Berne Convention
countries contain express exemptions from
liability for the unauthorized manufacture
and distribution of Braille or other editions
designed to assist the visually impaired.561
The Working Group believes that similar
provisions should be included in the
Copyright Act, and has modeled its proposal
on the Australian law, so as to maintain
private rights while recognizing certain
readers' special needs. The proposed
amendment would provide an exemption for non-
profit organizations to reproduce and
distribute to the visually impaired -- at
cost -- Braille, large type, audio or other
editions of previously published literary
works in forms intended to be perceived by
the visually impaired, provided that the
owner of the exclusive right to distribute
the work in the United States has not entered
the market for such editions during the first
year following first publication of the work.562

5.Criminal Offenses

Although the Copyright Act provides
criminal penalties when the infringement is
willful and is for purposes of commercial
advantage or private financial gain,563 the
dismissal of the criminal charges in United
States v. LaMacchia demonstrates a serious
lacuna in the criminal copyright provisions:
it does not now reach even the most wanton
and malicious large-scale endeavors to copy
and provide on the NII limitless numbers of
unauthorized copies of valuable copyrighted
works unless the copier seeks profits.564
Since there is virtually no cost to the
infringer, certain individuals are willing to
make such copies (or assist others in making
them) for reasons other than monetary reward.
For example, someone who believes that all
works should be free in Cyberspace can easily
make and distribute thousands of copies of a
protected work and may have no desire for
commercial advantage or private financial
gain.

The Working Group agrees with the
LaMacchia court:

Criminal as well as civil penalties
should probably attach to willful,
multiple infringements of copyrighted
software even absent a commercial
motive on the part of the infringer.
One could envision ways that the
copyright law could be modified to
permit such prosecution. But, "[i]t
is the legislature, not the Court
which is to define a crime, and
ordain its punishment."

Therefore, the Working Group generally
supports the amendments to the copyright law
and the criminal law (which sets out
sanctions for criminal copyright violations)
set forth in S. 1122, introduced in the 104th
Congress by Senators Leahy and Feingold
following consultations with the Justice
Department. The bill would make it a
criminal offense to willfully infringe a
copyright by reproducing or distributing
copies with a retail value of $5,000 or more.
By setting a monetary threshold and requiring
willfulness, the bill ensures that merely
casual or careless conduct resulting in
distribution of only a few copies will not be
subject to criminal prosecution and that
criminal charges will not be brought unless
there is a significant level of harm to the
copyright owner's rights.565

6.Technological Protection

The ease of infringement and the
difficulty of detection and enforcement will
cause copyright owners to look to technology,
as well as the law, for protection of their
works. However, it is clear that technology
can be used to defeat any protection that
technology may provide. The Working Group
finds that legal protection alone will not be
adequate to provide incentive to authors to
create and to disseminate works to the
public. Similarly, technological protection
likely will not be effective unless the law
also provides some protection for the
technological processes and systems used to
prevent or restrict unauthorized uses of
copyrighted works.

The Working Group finds that prohibition
of devices, products, components and services
that defeat technological methods of
preventing unauthorized use is in the public
interest and furthers the Constitutional
purpose of copyright laws. Consumers of
copyrighted works pay for the acts of
infringers; copyright owners have suggested
that the price of legitimate copies of
copyrighted works may be higher due to
infringement losses suffered by copyright
owners. The public will also have access to
more copyrighted works via the NII if they
are not vulnerable to the defeat of
protection systems.

Therefore, the Working Group recommends
that the Copyright Act be amended to include
a new Chapter 12, which would include a
provision to prohibit the importation,
manufacture or distribution of any device,
product or component incorporated into a
device or product, or the provision of any
service, the primary purpose or effect of
which is to avoid, bypass, remove,
deactivate, or otherwise circumvent, without
authority of the copyright owner or the law,
any process, treatment, mechanism or system
which prevents or inhibits the violation of
any of the exclusive rights under Section
106. The provision will not eliminate the
risk that protection systems will be
defeated, but it will reduce it.

The proposed prohibition is intended to
assist copyright owners in the protection of
their works.566 The Working Group recognizes,
however, that copyright owners may wish to
use such systems to prevent the unauthorized
reproduction, for instance, of their works,
but may also wish to allow some users to
deactivate the systems. Furthermore, certain
uses of copyrighted works are not unlawful
under the Copyright Act. Therefore, the
proposed legislation prohibits only those
devices or products, the primary purpose or
effect of which is to circumvent such systems
without authority. That authority may be
granted by the copyright owner or by
limitations on the copyright owner's rights
under the Copyright Act.

It has been suggested that the prohibition
is incompatible with fair use. First, the
fair use doctrine does not require a
copyright owner to allow or to facilitate
unauthorized access or use of a work.
Otherwise, copyright owners could not
withhold works from publication; movie
theatres could not charge admission or
prevent audio or video recording; museums
could not require entry fees or prohibit the
taking of photographs. Indeed, if the
provision of access and the ability to make
fair use of copyrighted works were required
of copyright owners -- or an affirmative
right of the public -- even passwords for
access to computer databases would be
considered illegal. Second, if the
circumvention device is primarily intended
and used for legal purposes, such as fair
use, the device would not violate the
provision, because a device with such
purposes and effects would fall under the
"authorized by law" exemption.

Concern has also been expressed with
regard to the ability to defeat technological
protection for copies of works not protected
by copyright law, such as those whose term of
protection has expired or those in the public
domain for other reasons (such as
ineligibility for protection). However,
devices whose primary purpose and effect is
to defeat the protection for such works would
not violate the provision. The proposed
provision exempts all devices, products and
services primarily intended and used for
legal purposes, which would include the
reproduction and distribution of copies of
works in the public domain. Further, a
protection system on copies of works in the
public domain would not qualify with respect
to such copies as a system which "prevents or
inhibits the violation of any of the
exclusive rights of the copyright owner under
Section 106." Works in the public domain are
not protected by copyright, and thus have no
copyright owner or exclusive rights
applicable to them. Finally, while
technological protection may be applied to
copies of works in the public domain, such
protection attaches only to those particular
copies -- not to the underlying work itself.567

It has also been suggested that the
provision places an unwarranted burden on
manufacturers. The proposed amendment would
impose no requirement on manufacturers to
accommodate any protection systems, such as
those required in Chapter 10 of manufacturers
of digital audio recording devices.568 The
provision would only prohibit the manufacture
of circumvention devices.569

Neither does the proposed amendment
require copyright owners to use technological
protection, or, if they do, to employ any
particular type. Copyright owners should be
free to determine what level or type of
protection (if any) is appropriate for their
works, taking into consideration cost and
security needs, and different consumer and
market preferences. Moreover, there is no
evidence that one technological protection
system could -- or should -- take care of all
types of works.

Legislation of this type is not
unprecedented. The Copyright Act already
protects sound recordings and musical works
by prohibiting the circumvention of any
program or circuit that implements a serial
copy management system or similar system
included in digital audio recording devices
and digital audio interface devices. Section
1002 provides:

No person shall import, manufacture,
or distribute any device, or offer or
perform any service, the primary
purpose or effect of which is to
avoid, bypass, remove, deactivate, or
otherwise circumvent any program or
circuit which implements, in whole or
in part, a [serial copy management
system or similar system].570

The Communications Act includes a similar
provision:

Any person who manufactures,
assembles, modifies, imports,
exports, sells, or distributes any
electronic, mechanical, or other
device or equipment, knowing or
having reason to know that the device
or equipment is primarily of
assistance in the unauthorized
decryption of satellite cable
programming, or is intended for any
other activity prohibited by [Section
605(a)] shall be fined not more than
$500,000 for each violation, or
imprisoned for not more than 5 years
for each violation, or both. For
purposes of all penalties and
remedies established for violations
of this paragraph, the prohibited
activity established herein as it
applies to each such device shall be
deemed a separate violation.571

Precedent for this type of legislation is
also found in the international arena. The
NAFTA requires each party to make it a
criminal offense to "manufacture, import,
sell, lease or otherwise make available a
device or system that is primarily of
assistance in decoding an encrypted program-
carrying satellite signal without the
authorization of the lawful distributor of
such signal . . . ."572 In 1988, the United
Kingdom enacted legislation prohibiting the
manufacture, distribution or sale of a device
designed or adapted to circumvent copy-
protection systems.573

7.Copyright Management Information

In the future, the copyright management
information associated with a work -- such as
the name of the copyright owner and the terms
and conditions for uses of the work -- may be
critical to the efficient operation and
success of the NII. Copyright management
information will serve as a kind of license
plate for a work on the information
superhighway, from which a user may obtain
important information about the work. The
accuracy of such information will be crucial
to the ability of consumers to find and make
authorized uses of copyrighted works on the
NII. Reliable information will also
facilitate efficient licensing and reduce
transaction costs for licensable uses of
copyrighted works (both fee-based and royalty-
free).

The public should be protected from false
information about who created the work, who
owns rights in it, and what uses may be
authorized by the copyright owner.
Therefore, the Working Group recommends that
the Copyright Act be amended to prohibit the
provision, distribution or importation for
distribution of copyright management
information known to be false and the
unauthorized removal or alteration of
copyright management information. Under the
proposed amendment, copyright management
information is defined as the name and other
identifying information of the author of a
work, the name and other identifying
information of the copyright owner, terms and
conditions for uses of the work, and such
other information as the Register of
Copyrights may prescribe by regulation -- to
provide adequate flexibility in the future.574

While the proposed amendment does not
require copyright owners to provide copyright
management information, it does require that
when such information is included, it be
accurate. However, the Working Group
encourages copyright owners to include the
information to enable consumers to more
easily find and make authorized uses of
copyrighted works. Nor does it specify
standardized formats or content, although
private sector initiatives in this area are
underway and are also encouraged by the
Working Group. Finally, it does not require
transmitting entities to include the
copyright information as part of their
transmission of a work where such information
has been included in the work.575 However,
such a proposal deserves further
consideration.

The proposal prohibits the falsification,
alteration or removal of any copyright
management information -- not just that which
is included in or digitally linked to the
copyrighted work. Many users will obtain
such information from public registers, where
the integrity of such information will be no
less important. The proposal also contains a
knowledge requirement; therefore, inadvertent
falsification, alteration or removal would
not be a violation.576

B.Patent

The present law governing the eligibility
of inventions for patent protection and the
enforcement of patent rights appears adequate
to address the needs of inventors and the
public with regard to technology used on the
NII. The NII will increase the accessibility
and content of the body of prior art, which
in turn will affect patentability
determinations. The law governing
information that properly is considered part
of the prior art appears to be adequate to
address new forms of "printed" publications;
however, some issues related to the
authenticity, including the date of
origination, the contents as originally
disclosed, and the extent of dissemination of
electronically disseminated publications,
deserve further study.

The Working Group recommends that the
Patent and Trademark Office obtain public
input related to measures that can be adopted
to ensure the authenticity of electronically-
disseminated publications, particularly with
respect to verifying the contents and date of
first public dissemination of the
publication, and evaluating the substantive
value of the information contained in the
publication as to its role in patentability
determinations.

The Working Group also recommends that the
PTO explore the feasibility of establishing
requirements or standards that would govern
authentication of the date and contents of
electronically-disseminated information for
purposes of establishing their use as prior
art. Such standards would assist in
patentability determinations, whether they
occur before the PTO or before a court. To
develop such standards, the PTO should invite
public comment and work with other interested
Federal agencies working on authentication
standards outside the direct sphere of the
patent system.

C.Trademark

The Nice Agreement Concerning the
International Classification of Goods and
Services for the Purposes of the Registration
of Marks must be sufficiently flexible to
accommodate the changing goods and services
available in connection with the NII and the
GII. Such flexibility is essential to the
owners of marks identifying goods and
services connected with the NII and the GII,
as well as to the continued viability of the
International Classification system in the
electronic information age. Therefore, the
Working Group recommends that the Patent and
Trademark Office, in the context of WIPO
experts meetings on the International
Classification system, propose changes to the
International Classification system to ensure
that the system reflects the goods and
services of modern information technology.
Additionally, the Working Group recommends
that the Patent and Trademark Office
regularly update its Manual for the
Identification of Goods and Services to
reflect new goods and services used on or in
connection with the NII and GII.





Appendices



1. Proposed Legislation

2. Statutory Mark-Up

3. Participating Agencies





104th CONGRESS [S./H.R.] _____
1st Session

To amend title 17 to adapt the copyright law
to the digital, networked environment of
the National Information Infrastructure,
and for other purposes.

____________________________


IN THE [SENATE/HOUSE OF REPRESENTATIVES] OF
THE UNITED STATES

September __ , 1995


M_. __________ (for h__self and M_.
__________) introduced the following
bill; which was read twice and referred
to the Committee on the Judiciary.

____________________________


A BILL

To amend title 17 to adapt the copyright law
to the digital, networked environment of
the National Information Infrastructure,
and for other purposes.

Be it enacted by the Senate and House of

Representatives of the United States of

America in Congress assembled,


Section 1. Short Title.


This Act may be cited as the "NII

Copyright Protection Act of 1995".


Sec. 2. Transmission of Copies.


(a) Distribution. -- Section 106(3) of

title 17, United States Code, is amended by

striking "or by rental, lease, or lending"

and inserting "by rental, lease, or lending,

or by transmission".


(b) Definitions. -- Section 101 of title

17, United States Code, is amended --


(1) in the definition of "publication"

by striking "or by rental, lease, or

lending" in the first sentence and insert

"by rental, lease, or lending, or by

transmission"; and


(2) in the definition of "transmit" by

inserting at the end thereof the

following: "To 'transmit' a reproduction

is to distribute it by any device or

process whereby a copy or phonorecord of

the work is fixed beyond the place from

which it was sent.".


© Importation. -- Section 602 of title

17, United States Code, is amended by

inserting "whether by carriage of tangible

goods or by transmission," after "Importation

into the United States,".


Sec. 3. Exemptions for Libraries and the

Visually Impaired.


(a) Libraries. -- Section 108 of title 17,

United States Code, is amended --


(1) in subsection (a) by deleting "one

copy or phonorecord" and inserting in

lieu thereof "three copies or

phonorecords";


(2) in subsection (a) by deleting

"such copy or phonorecord" and inserting

in lieu thereof "no more than one of

such copies or phonorecords";


(3) by inserting at the end of

subsection (a)(3) "if such notice

appears on the copy or phonorecord that

is reproduced under the provisions of

this section";


(4) in subsection (b) by inserting "or

digital" after "facsimile" and by

inserting "in facsimile form" before

"for deposit for research use"; and


(5) in subsection © by inserting

"or digital" after "facsimile".


(b) Visually Impaired -- Title 17, United

States Code, is amended by adding the

following new section:


"? 108A. Limitations on exclusive rights:

Reproduction for the Visually

Impaired.


"Notwithstanding the provision of section

106, it is not an infringement of copyright

for a non-profit organization to reproduce

and distribute to the visually impaired, at

cost, a Braille, large type, audio or other

edition of a previously published literary

work in a form intended to be perceived by

the visually impaired, provided that, during

a period of at least one year after the first

publication of a standard edition of such

work in the United States, the owner of the

exclusive right to distribute such work in

the United States has not entered the market

for editions intended to be perceived by the

visually impaired."


Sec. 4.Copyright Protection Systems and

Copyright Management Information.


Title 17, United States Code, is amended

by adding the following new chapter:


"Chapter 12. -- COPYRIGHT PROTECTION AND

MANAGEMENT SYSTEMS


"Sec.


"1201. Circumvention of Copyright Protection

Systems


"1202. Integrity of Copyright Management

Information


"1203. Civil Remedies


"1204. Criminal Offenses and Penalties


"? 1201. Circumvention of Copyright

Protection Systems


"No person shall import, manufacture or

distribute any device, product, or component

incorporated into a device or product, or

offer or perform any service, the primary

purpose or effect of which is to avoid,

bypass, remove, deactivate, or otherwise

circumvent, without the authority of the

copyright owner or the law, any process,

treatment, mechanism or system which prevents

or inhibits the violation of any of the

exclusive rights of the copyright owner under

section 106.


"? 1202. Integrity of Copyright Management

Information


"(a) False Copyright Management

Information. -- No person shall knowingly

provide copyright management information that

is false, or knowingly publicly distribute or

import for public distribution copyright

management information that is false.


"(b) Removal or Alteration of Copyright

Management Information. -- No person shall,

without authority of the copyright owner or

the law, (i) knowingly remove or alter any

copyright management information, (ii)

knowingly distribute or import for

distribution copyright management information

that has been altered without authority of

the copyright owner or the law, or

(iii) knowingly distribute or import for

distribution copies or phonorecords from

which copyright management information has

been removed without authority of the

copyright owner or the law.


"© Definition. -- As used in this

chapter, "copyright management information"

means the name and other identifying

information of the author of a work, the name

and other identifying information of the

copyright owner, terms and conditions for

uses of the work, and such other information

as the Register of Copyrights may prescribe

by regulation.


"? 1203. Civil Remedies


"(a) Civil Actions. -- Any person

injured by a violation of Sec. 1201 or 1202

may bring a civil action in an appropriate

United States district court for such

violation.


"(b) Powers of the Court. -- In an

action brought under subsection (a), the

court --


"(1) may grant temporary and

permanent injunctions on such terms as it

deems reasonable to prevent or restrain a

violation;


"(2) at any time while an action is

pending, may order the impounding, on

such terms as it deems reasonable, of any

device or product that is in the custody

or control of the alleged violator and

that the court has reasonable cause to

believe was involved in a violation;


"(3) may award damages under

subsection ©;


"(4) in its discretion may allow

the recovery of costs by or against any

party other than the United States or an

officer thereof;


"(5) in its discretion may award

reasonable attorney's fees to the

prevailing party; and


"(6) may, as part of a final

judgment or decree finding a violation,

order the remedial modification or the

destruction of any device or product

involved in the violation that is in the

custody or control of the violator or has

been impounded under subsection (2).


"© Award of Damages. --


"(1) In general. -- Except as

otherwise provided in this chapter, a

violator is liable for either (i) the

actual damages and any additional profits

of the violator, as provided by

subsection (2) or (ii) statutory damages,

as provided by subsection (3).


"(2) Actual Damages. -- The court

shall award to the complaining party the

actual damages suffered by him or her as

a result of the violation, and any

profits of the violator that are

attributable to the violation and are not

taken into account in computing the

actual damages, if the complaining party

elects such damages at any time before

final judgment is entered.


"(3) Statutory Damages. --


"(A) At any time before final

judgment is entered, a complaining

party may elect to recover an award

of statutory damages for each

violation of section 1201 in the sum

of not less than $200 or more than

$2,500 per device, product, offer or

performance of service, as the court

considers just.


"(B) At any time before final

judgment is entered, a complaining

party may elect to recover an award

of statutory damages for each

violation of section 1202 in the sum

of not less than $2,500 or more than

$25,000.


"(4) Repeated Violations. -- In any

case in which the injured party sustains

the burden of proving, and the court

finds, that a person has violated section

1201 or 1202 within three years after a

final judgment was entered against that

person for another such violation, the

court may increase the award of damages

up to triple the amount that would

otherwise be awarded, as the court

considers just.


"(5) Innocent Violations. -- The

court in its discretion may reduce or

remit altogether the total award of

damages in any case in which the violator

sustains the burden of proving, and the

court finds, that the violator was not

aware and had no reason to believe that

its acts constituted a violation.


"? 1204. Criminal Offenses and Penalties


"Any person who violates section 1202 with

intent to defraud shall be fined not more

than $500,000 or imprisoned for not more than

5 years, or both."


Sec. 5. Conforming Amendments.


(a) Table of Sections. -- The table of

sections for chapter 1 of title 17, United

States Code, is amended by inserting after

the item relating to section 108 the

following:


"108A. Limitations on exclusive rights:

Reproduction for the Visually Impaired."


(b) Table of Chapters. -- The table of

chapters for title 17, United States Code, is

amended by adding at the end the following:


"12. COPYRIGHT PROTECTION AND

MANAGEMENT SYSTEMS 1201".


Sec. 6. Effective Date.


This Act, and the amendments made by this

Act, shall take effect on the date of the

enactment of this Act.

Statutory Mark-Up

Language added by a proposed amendment is in
italics. Proposed deletions are indicated by
strike-throughs.


17 U.S.C. ? 106(3)

"(3) to distribute copies or
phonorecords of the copyrighted work to the
public by sale or other transfer of
ownership, or by rental, lease, or lending,
or by transmission."

17 U.S.C. ? 101

'"Publication' is the distribution of
copies or phonorecords of a work to the
public by sale or other transfer of
ownership, or by rental, lease, or lending,
or by transmission. The offering to
distribute copies or phonorecords to a group
of persons for purposes of further
distribution, public performance, or public
display, constitutes publication. A public
performance or display of a work does not of
itself constitute publication."

"To 'transmit' a performance or display is
to communicate it by any device or process
whereby images or sounds are received beyond
the place from which they are sent. To
'transmit' a reproduction is to distribute it
by any device or process whereby a copy or
phonorecord of the work is fixed beyond the
place from which it was sent."

17 U.S.C. ? 108

"(a) Notwithstanding the provisions of
section 106, it is not an infringement of
copyright for a library or archives, or any
of its employees acting within the scope of
their employment, to reproduce no more than
one copy or phonorecord three copies or
phonorecords of a work, or to distribute such
copy or phonorecord no more than one of such
copies or phonorecords, under the conditions
specified by this section, if--

"(1) the reproduction or
distribution is made without any purpose
of direct or indirect commercial
advantage;

"(2) the collections of the library
or archives are (i) open to the public,
or (ii) available not only to researchers
affiliated with the library or archives
or with the institution of which it is a
part, but also to other persons doing
research in a specialized field; and

"(3) the reproduction or
distribution of the work includes a
notice of copyright if such notice
appears on the copy or phonorecord that
is reproduced under the provisions of
this section.

"(b) The rights of reproduction and
distribution under this section apply to a
copy or phonorecord of an unpublished work
duplicated in facsimile or digital form
solely for purposes of preservation and
security or in facsimile form for deposit for
research use in another library or archives
of the type described by clause (2) of
subsection (a), if the copy or phonorecord
reproduced is currently in the collections of
the library or archives.

"© The right of reproduction under
this section applies to a copy or phonorecord
of a published work duplicated in facsimile
or digital form solely for the purpose of
replacement of a copy or phonorecord that is
damaged, deteriorating, lost, or stolen, if
the library or archives has, after a
reasonable effort, determined that an unused
replacement cannot be obtained at a fair
price."

17 U.S.C. ? 108A

"? 108A. Limitations on exclusive rights:
Reproduction for the Visually
Impaired.

"Notwithstanding the provisions of section
106, it is not an infringement of copyright
for a non-profit organization to reproduce
and distribute to the visually impaired, at
cost, a Braille, large type, audio or other
edition of a previously published literary
work in a form intended to be perceived by
the visually impaired, provided that, during
a period of at least one year after the first
publication of a standard edition of such
work in the United States, the owner of the
exclusive right to distribute such work in
the United States has not entered the market
for editions intended to be perceived by the
visually impaired."

17 U.S.C. ? 602

"(a) Importation into the United States,
whether by carriage of tangible goods or by
transmission, without the authority of the
owner of copyright under this title, of
copies or phonorecords of a work that have
been acquired outside the United States is an
infringement of the exclusive right to
distribute copies or phonorecords under
section 106, actionable under section 501."

Title 17, Chapter 12

"Chapter 12. -- COPYRIGHT PROTECTION AND
MANAGEMENT SYSTEMS

"Sec.

"1201. Circumvention of Copyright Protection
Systems

"1202. Integrity of Copyright Management
Information

"1203. Civil Remedies

"1204. Criminal Offenses and Penalties

"? 1201. Circumvention of Copyright
Protection Systems

"No person shall import, manufacture or
distribute any device, product, or component
incorporated into a device or product, or
offer or perform any service, the primary
purpose or effect of which is to avoid,
bypass, remove, deactivate, or otherwise
circumvent, without the authority of the
copyright owner or the law, any process,
treatment, mechanism or system which prevents
or inhibits the violation of any of the
exclusive rights of the copyright owner under
section 106.

"? 1202. Integrity of Copyright Management
Information

"(a) False Copyright Management
Information. -- No person shall knowingly
provide copyright management information that
is false, or knowingly publicly distribute or
import for public distribution copyright
management information that is false.

"(b) Removal or Alteration of Copyright
Management Information. -- No person shall,
without authority of the copyright owner or
the law, (i) knowingly remove or alter any
copyright management information, (ii)
knowingly distribute or import for
distribution copyright management information
that has been altered without authority of
the copyright owner or the law, or
(iii) knowingly distribute or import for
distribution copies or phonorecords from
which copyright management information has
been removed without authority of the
copyright owner or the law.

"© Definition. -- As used in this
chapter, "copyright management information"
means the name and other identifying
information of the author of a work, the name
and other identifying information of the
copyright owner, terms and conditions for
uses of the work, and such other information
as the Register of Copyrights may prescribe
by regulation.

"? 1203. Civil Remedies

"(a) Civil Actions. -- Any person
injured by a violation of Sec. 1201 or 1202
may bring a civil action in an appropriate
United States district court for such
violation.

"(b) Powers of the Court. -- In an
action brought under subsection (a), the
court --

"(1) may grant temporary and
permanent injunctions on such terms as it
deems reasonable to prevent or restrain a
violation;

"(2) at any time while an action is
pending, may order the impounding, on
such terms as it deems reasonable, of any
device or product that is in the custody
or control of the alleged violator and
that the court has reasonable cause to
believe was involved in a violation;

"(3) may award damages under
subsection ©;

"(4) in its discretion may allow
the recovery of costs by or against any
party other than the United States or an
officer thereof;

"(5) in its discretion may award
reasonable attorney's fees to the
prevailing party; and

"(6) may, as part of a final
judgment or decree finding a violation,
order the remedial modification or the
destruction of any device or product
involved in the violation that is in the
custody or control of the violator or has
been impounded under subsection (2).

"© Award of Damages. --

"(1) In general. -- Except as
otherwise provided in this chapter, a
violator is liable for either (i) the
actual damages and any additional profits
of the violator, as provided by
subsection (2) or (ii) statutory damages,
as provided by subsection (3).

"(2) Actual Damages. -- The court
shall award to the complaining party the
actual damages suffered by him or her as
a result of the violation, and any
profits of the violator that are
attributable to the violation and are not
taken into account in computing the
actual damages, if the complaining party
elects such damages at any time before
final judgment is entered.

"(3) Statutory Damages. --

"(A) At any time before final
judgment is entered, a complaining
party may elect to recover an award
of statutory damages for each
violation of section 1201 in the sum
of not less than $200 or more than
$2,500 per device, product, offer or
performance of service, as the court
considers just.

"(B) At any time before final
judgment is entered, a complaining
party may elect to recover an award
of statutory damages for each
violation of section 1202 in the sum
of not less than $2,500 or more than
$25,000.

"(4) Repeated Violations. -- In any
case in which the injured party sustains
the burden of proving, and the court
finds, that a person has violated section
1201 or 1202 within three years after a
final judgment was entered against that
person for another such violation, the
court may increase the award of damages
up to triple the amount that would
otherwise be awarded, as the court
considers just.

"(5) Innocent Violations. -- The
court in its discretion may reduce or
remit altogether the total award of
damages in any case in which the violator
sustains the burden of proving, and the
court finds, that the violator was not
aware and had no reason to believe that
its acts constituted a violation.

"? 1204. Criminal Offenses and Penalties

"Any person who violates section 1202 with
intent to defraud shall be fined not more
than $500,000 or imprisoned for not more than
5 years, or both."

Participating Agencies

Advanced Research Projects Agency
Council of Economic Advisers
Environmental Protection Agency
General Services Administration
National Archives and Records
Administration
National Economic Council
National Endowment for the Arts
National Endowment for the Humanities
National Institute of Standards and
Technology
National Library of Medicine
National Science Foundation
National Security Agency
National Telecommunications and
Information Administration
Office of Science and Technology Policy
Office of Consumer Affairs
Office of Management and Budget
Office of the U.S. Trade Representative
U.S. Copyright Office
U.S. Department of Commerce
U.S. Department of Defense
U.S. Department of Education
U.S. Department of Energy
U.S. Department of Justice
U.S. Department of State
U.S. Department of Treasury
U.S. Patent and Trademark Office
_______________________________
1 Information Infrastructure Task Force,
National Telecommunications and Information
Administration, National Information
Infrastructure: Agenda for Action (Sept.
1993).
2 Information Infrastructure Task Force,
Global Information Infrastructure: Agenda
for Cooperation (Feb. 1995).
3 See Exec. Order No. 12,864, 3 C.F.R. 634
(1993).
4 In the course of its work, the Working
Group identified issues in other areas of
jurisprudence, such as defamation and
obscenity, which will be considered
separately by the Information Policy
Committee.
5 The "National Information Infrastructure,"
as it is discussed in this Report,
encompasses digital, interactive services now
available, such as the Internet, as well as
those contemplated for the future. To make
the analyses more concrete, however, the
Working Group has, in many instances,
evaluated the intellectual property
implications of activity on the Internet, the
superstructure whose protocols and rules
effectively create (or permit the creation
of) a "network of networks." This reflects
neither an endorsement of the Internet nor a
derogation of any other existing or proposed
network or service that may be available via
the NII, but, rather, an acknowledgment that
a currently functioning structure lends
itself more readily to legal analysis than a
hypothetical construct based on future
developments.
6 Because of the legal nature of the
subject, this Report uses certain words and
phrases that may be unfamiliar to some
readers or that do not have their ordinary
meaning when used in the context of
intellectual property law. The Working Group
has attempted to identify these terms of art
and provide their legal definitions.
Further, every attempt has been made to
present trademarks that appear in the Report
with initial capital letters. However, not
all terms appearing with initial capital
letters in the Report are trademarks. Where
a question may exist regarding whether a term
may be or is a trademark, the use of such
term in the Report does not constitute any
position regarding the trademark status of
the term.
7 See list of Working Group participants
infra Appendix 3.
8 See Request for Comments on Intellectual
Property Issues Involved in the National
Information Infrastructure Initiative, 58
Fed. Reg. 53,917 (Oct. 19, 1993).
9 See id.
10 See Information Infrastructure Task Force,
Working Group on Intellectual Property
Rights, Intellectual Property and the
National Information Infrastructure: A
Preliminary Draft of the Report of the
Working Group on Intellectual Property Rights
(July 1994).
11 The IITF Bulletin Board can be accessed
through the Internet by pointing the Gopher
Client to iitf.doc.gov or by telnet to
iitf.doc.gov (log in as gopher). The
Bulletin Board is also accessible at 202-501-
1920 using a personal computer and a
telephone modem.
12 The public hearing in Chicago was held on
September 14, 1994, at the University of
Chicago. The hearing in Los Angeles was held
on September 16, 1994, at the University of
California at Los Angeles. The hearings in
Washington, D.C., were held on September 22
and 23, 1994, in the Andrew W. Mellon
Auditorium. See Notice of Hearings and
Request for Comments on Preliminary Draft of
the Report of the Working Group on
Intellectual Property Rights, 59 Fed. Reg.
42,819 (Aug. 19, 1994). Transcripts of the
public hearings may be obtained by writing
the U.S. Patent and Trademark Office, Office
of Legislative and International Affairs, Box
4, Washington, D.C., 20231. The transcripts
are also available on the IITF Bulletin
Board. See supra note 11.
13 See Notice of Hearings and Request for
Comments on Preliminary Draft of the Report
of the Working Group on Intellectual Property
Rights, 59 Fed. Reg. 42,819 (Aug. 19, 1994);
Extension of Deadline for Comments on
Preliminary Draft of the Report of the
Working Group on Intellectual Property
Rights, 59 Fed. Reg. 50,222 (Oct. 3, 1994).
Comments received are available for public
inspection at the Scientific and Technical
Information Center of the U.S. Patent and
Trademark Office, Room 2CO1, Crystal Plaza
34, 2021 Jefferson Davis Highway, Arlington,
Virginia, between the hours of 9 a.m. and 4
p.m., Monday through Friday.
14 This Report does not attempt to address
all existing intellectual property issues.
For instance, current debates over protection
of the design of useful articles and whether
or to what extent certain aspects of computer
programs are or should be protected under
copyright law are not covered by this Report.
Likewise, certain patent issues, such as pre-
grant publication and reexamination, are not
addressed.
15 In the process of preparing this Report,
the Working Group constantly received and
evaluated information concerning a large
variety of technological and other
developments that bear on the NII and
intellectual property rights in works
distributed thereon. In April 1995, the
Working Group was compelled to place the
Report in concrete form, and, thus, to stop
adjusting the text with respect to just-
received news. As a result, the Working
Group has elected to: (a) pose in some
detail -- but not try to definitively answer
-- certain questions, and (b) not discuss
every possible technological development of
which it recently became aware. We are
confident that the legislative and political
processes will offer the opportunity for
additional comments from both the U.S.
Government and interested parties.
16 Supreme Court Justice Story found that
copyright and patent cases come "nearer than
any other class of cases belonging to
forensic discussions, to what may be called
the metaphysics of the law where the
distinctions are, or at least may be, very
subtile [sic] and refined, and, sometimes,
almost evanescent." See Folsom v. Marsh, 9
F. Cas. 342, 344 (C.C.D. Mass. 1841)
(No. 4,901).
17 The original copyright law upon which our
system was based (England's Statute of Anne)
was a reaction to the invention of the
printing press.
18 These devices will be linked not only to
each other (computer to computer, for
example) but will also be cross-linked
(computer to television set).
19 The United States and other countries are
working toward the development of an advanced
Global Information Infrastructure (GII) that
"will allow us to share information, to
connect, and to communicate as a global
community." And as that information moves
through international channels, "[p]rotecting
intellectual property is absolutely
essential." See Remarks Prepared for
Delivery by Vice President Al Gore at the
International Telecommunications Union in
Buenos Aires, Argentina (March 21, 1994).
20 The IITF Bulletin Board can be accessed
through the Internet or by use of a personal
computer and modem. See supra note 11.
21 Comments on the Green Paper were accepted
at an Internet address. See Notice of
Hearings and Request for Comments on
Preliminary Draft of the Report of the
Working Group on Intellectual Property
Rights, 59 Fed. Reg. 42,819 (Aug. 19, 1994);
Extension of Deadline for Comments on
Preliminary Draft of the Report of the
Working Group on Intellectual Property
Rights, 59 Fed. Reg. 50,222 (Oct. 3, 1994).
The IITF Universal Service Working Group and
the Commerce Department's National
Telecommunication and Information
Administration hosted a "Virtual Public
Conference" in November 1994 utilizing a
series of electronic mail discussion groups.
See 59 Fed. Reg. 55,081 (Nov. 3, 1994).
22 See, e.g., Sony Corp. v. Universal City
Studios, Inc., 464 U.S. 417, 430-31 nn. 11-12
(1984) (hereinafter Sony) (discussing
significance of changes in technology and
their effect on copyright law); Final Report
of the National Commission on New
Technological Uses of Copyrighted Works
(hereinafter CONTU Final Report) at 3
(reporting about the issues raised by
photocopiers and computers back in 1978, in
language that is equally applicable today)
(citations omitted):
The ownership and control of
information and the means of
disseminating it are emerging as
national and international policy
issues. Concerns about the impact on
individual freedom posed by the
control of the flow of information
are at the forefront of public
debate. The adequacy of the legal
structure to cope with the pace and
rate of technological change
frequently has been called into
question.
23 Congress enacted the Audio Home Recording
Act of 1992, which combined legal and
technological protection for sound
recordings. See 17 U.S.C. ? 1001 et seq.
(Supp. V 1993). The Audio Home Recording Act
requires a serial copy management system in
all digital audio recording devices and
digital audio interface devices imported,
manufactured or distributed in the United
States. Such a system allows unlimited first
generation digital copying of sound
recordings, but prevents the making of
digital copies from copies. The Act
prohibits the importation, manufacture or
distribution of any device, or the offering
or performance of any service, the primary
purpose of which is to circumvent any program
or circuit which implements a serial copy
management system. The Act also establishes
a royalty system through which importers and
manufacturers of digital audio recording
devices and digital audio recording media
make royalty payments on each device or
medium they distribute. Such payments are
collected by the Copyright Office and
distributed annually to record companies,
performers, music publishers and songwriters.
24 See Inscription at the Jefferson Memorial,
Washington, D.C. As Secretary of State,
Thomas Jefferson was the first head of the
U.S. Patent Office.
25 The Copyright Act of 1976, as amended, is
codified at 17 U.S.C. ? 101 et seq. (1988 &
Supp. V 1993). Hereinafter, the Act is cited
as "17 U.S.C. ? ."
26 See H.R. Rep. No. 1476, 94th Cong., 2d
Sess. 47 (1976), reprinted in 1976
U.S.C.C.A.N. 5659 (hereinafter House Report)
("During the past half century a wide range
of new techniques for capturing and
communicating printed matter, visual images,
and recorded sounds have come into use, and
the increasing use of information storage and
retrieval devices, communications satellites,
and laser technology promises even greater
changes in the near future.").
27 See House Report at 47, reprinted in 1976
U.S.C.C.A.N. 5660.
28 See 17 U.S.C. ? 102(b); see also
discussion infra pp. 32-34.
29 The Working Group believes that no
revision of the patent, trademark or trade
secret law is warranted at this time. See
discussion infra pp. 155-75, 236-38.
30 See U.S. Const., art. I, ? 8, cl. 8.
31 On August 18, 1787, James Madison
submitted to the delegates to the
Constitutional Convention a list of powers to
be granted Congress, which included the power
"To secure to literary authors their
copyrights for a limited time" and "To
encourage, by premiums and provisions, the
advancement of useful knowledge and
discoveries." At the same time, Charles
Pinckney submitted a list which included the
power "To grant patents for useful
inventions" and "To secure to authors
exclusive rights for a certain time." On
September 5, the clause "To promote the
progress of science and the useful arts, by
securing for limited times, to authors and
inventors, the exclusive right to their
respective writings and discoveries" was
agreed to unanimously. On September 17,
1787, the draft was signed by the delegates
to the convention with no substantive
changes. See Debates on the Adoption of the
Federal Constitution as reported by James
Madison. The clause was finally ratified in
its present form in 1788. George Washington
signed the first copyright law on May 31,
1790.
32 The Federalist No. 43 (James Madison).
33 Goldstein v. California, 412 U.S. 546, 555
(1973).
34 Harper & Row, Publishers, Inc. v. Nation
Enterprises, 471 U.S. 539, 558 (1985)
(hereinafter Harper & Row). See also id. at
546 ("'monopoly created by copyright thus
rewards the individual author in order to
benefit the public'").
35 Fogerty v. Fantasy, Inc., 114 S. Ct. 1023,
1029 (1994) (quoting Sony, supra note 22, at
429).
36 Feist Publication, Inc. v. Rural Telephone
Service Co., 499 U.S. 340, 349-50 (1991)
(citations omitted) (hereinafter Feist).
37 Mazer v. Stein, 347 U.S. 201, 219 (1954).
38 Sony, supra note 22, at 429.
39 Harper & Row, supra note 34, at 545-46
(citing Twentieth Century Music Corp. v.
Aiken, 422 U.S. 151, 156 (1975)).
40 United States v. Paramount Pictures, Inc.,
334 U.S. 131, 158 (1948).
41 Washingtonian Publishing Co. v. Pearson,
306 U.S. 30, 36 (1939).
42 Id.
43 Twentieth Century Music Corp. v. Aiken,
422 U.S. 151, 156 (1975).
44 H.R. Rep. No. 2222, 60th Cong., 2d Sess.,
7 (1909) (report accompanying the Copyright
Act of 1909, the first comprehensive revision
of the copyright laws).
45 See discussion of term of protection infra
pp. 59-60 and fair use and other limitations
on an author's exclusive rights infra pp. 73-
100.
46 See discussion of unprotected subject
matter infra pp. 32-35.
47 House Report at 56, reprinted in 1976
U.S.C.C.A.N. 5669.
48 Fogerty, supra note 35, at 1030.
49 17 U.S.C. ? 102(a) (1988 & Supp. V 1993).
The Copyright Act specifically excludes from
protectible subject matter any "idea,
procedure, process, system, method of
operation, concept, principle or discovery"
even if it meets the criteria for protection.
See 17 U.S.C. ? 102(b) (1988). The Copyright
Act also preempts any grant of equivalent
rights for works of authorship within the
specified subject matter. Section 301
provides:
On and after January 1, 1978, all
legal or equitable rights that are
equivalent to any of the exclusive
rights within the general scope of
copyright as specified by section 106
in works of authorship that are fixed
in a tangible medium of expression
and come within the subject matter of
copyright as specified by sections
102 and 103, whether created before
or after that date and whether
published or unpublished, are
governed exclusively by this title.
Thereafter, no person is entitled to
any such right or equivalent right in
any such work under the common law or
statutes of any State.
17 U.S.C. ? 301(a) (1988).
50 Many courts consider creativity to be an
element of originality. For purposes of
discussion, we examine originality and
creativity as separate requirements.
51 See 17 U.S.C. ? 102(a) (1988 & Supp. V
1993). The statutory qualification is
derived from Congress' limited Constitutional
authority to grant copyright protection to
"authors" for their "writings." See U.S.
Const., art. I, ? 8, cl. 8.
52 Feist, supra note 36, at 345 ("vast
majority of works make the grade quite
easily, as they possess some creative
spark").
53 Copyright protection literally begins
when, for instance, the ink dries on the
paper. There are no prerequisites, such as
registration or affixation of a copyright
notice, for obtaining or enjoying copyright
protection.
54 17 U.S.C. ? 101 (1988) (definition of
"fixed").
55 See 17 U.S.C. ? 102(a) (1988 & Supp. V
1993).
56 17 U.S.C. ? 101 (1988) (definition of
"copies").
57 17 U.S.C. ? 101 (1988) (definition of
"phonorecords").
58 House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666-67. This Report generally
uses the term "copy" or "copies" to refer to
copies and phonorecords except in those
instances where the distinction is relevant.
59 House Report at 52, reprinted in 1976
U.S.C.C.A.N. 5665-66.
60 See id.
61 See, e.g., Stern Electronics, Inc. v.
Kaufman, 669 F.2d 852, 855 (2d Cir. 1982)
(putting work in "memory devices" of a
computer "satisf[ies] the statutory
requirement of a 'copy' in which the work is
'fixed'").
62 See, e.g., Atari Games Corp. v. Oman, 888
F.2d 878 (D.C. Cir. 1989).
63 Unfixed broadcasts are not within the
subject matter of Federal copyright law.
Therefore, protection of such works is not
preempted and may be provided by state
statutory or common law. See 17 U.S.C. ? 301
(1988 & Supp. V 1993).
64 See 17 U.S.C. ? 101 (1988) (definition of
"fixed"); see also Baltimore Orioles, Inc. v.
Major League Baseball Players Assoc., 805
F.2d 663, 668 (7th Cir. 1986) (telecasts that
are videotaped at the same time that they are
broadcast are fixed in tangible form), cert.
denied, 480 U.S. 941 (1987); National
Football League v. McBee & Bruno's, Inc., 792
F.2d 726, 731-32 (8th Cir. 1986) ("the
legislative history [of the Copyright Act]
demonstrates a clear intent on the part of
Congress to resolve, through the definition
of 'fixation' . . ., the status of live
broadcasts, using -- coincidentally but not
insignificantly -- the example of a live
football game"). It is understood that the
"fixation" must be made or authorized by the
author.
65 17 U.S.C. ? 101 (1988) (definition of
"fixed").
66 House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666-67.
67 See Advanced Computer Services of Michigan
Inc. v. MAI Systems Corp., 845 F. Supp. 356,
363 (E.D. Va. 1994) (conclusion that program
stored only in RAM is sufficiently fixed is
confirmed, not refuted, by argument that it
"disappears from RAM the instant the computer
is turned off"; if power remains on (and the
work remains in RAM) for only seconds or
fractions of a second, "the resulting RAM
representation of the program arguably would
be too ephemeral to be considered 'fixed'");
Triad Systems Corp. v. Southeastern Express
Co., 1994 U.S. Dist. LEXIS 5390, at *15-19
(N.D. Cal. March 18, 1994) ("[C]opyright law
is not so much concerned with the temporal
'duration' of a copy as it is with what that
copy does, and what it is capable of doing,
while it exists. 'Transitory duration' is a
relative term that must be interpreted and
applied in context.").
68 See Wheaton v. Peters, 33 U.S. (1 Peters)
591, 662-63 (1834).
69 See 17 U.S.C. ? 104 (1988 & Supp. V 1993).
Prior to 1978, certain unpublished works,
particularly dramatic works and musical
compositions, could obtain Federal copyright
protection through registration with the
Copyright Office. Since 1978, all otherwise
eligible unpublished works are protected
under Federal law. See 17 U.S.C. ? 104(a)
(1988 & Supp. V 1993).
70 House Report at 129, reprinted in 1976
U.S.C.C.A.N. 5745.
71 17 U.S.C. ? 407 (1988). "[T]he owner of
copyright or of the exclusive right of
publication in a work published in the United
States shall deposit, within three months
after the date of publication -- (1) two
complete copies of the best edition; or (2)
if the work is a sound recording, two
complete phonorecords of the best edition,
together with any printed or other visually
perceptible material published with such
phonorecords." 17 U.S.C. ? 407(a) (1988).
The deposit requirements are not conditions
of copyright protection, but failure to
deposit copies of a published work may
subject the copyright owner to significant
fines. See 17 U.S.C. ? 407(a), (d) (1988).
72 See 17 U.S.C. ? 408(b) (1988) ("the
material deposited for registration shall
include -- (1) in the case of an unpublished
work, one complete copy or phonorecord; (2)
in the case of a published work, two complete
copies or phonorecords of the best edition;
(3) in the case of a work first published
outside the United States, one complete copy
or phonorecord as so published; (4) in the
case of a contribution to a collective work,
one complete copy or phonorecord of the best
edition of the collective work").
73 The first factor of the fair use analysis
-- the nature of the copyrighted work --
generally weighs against a finding of fair
use if the work is unpublished. See Harper &
Row, supra note 34. In 1992, Congress was
prompted to amend Section 107 by the near
determinative weight courts were giving to
the unpublished nature of a work. See Act of
October 24, 1992, Pub. L. 102-492, 1992
U.S.C.C.A.N. (106 Stat.) 3145 (adding to the
fair use provisions, "The fact that a work is
unpublished shall not itself bar a finding of
fair use if such finding is made upon
consideration of all the above factors.").
74 17 U.S.C. ? 104(a) (1988 & Supp. V 1993);
House Report at 58, reprinted in 1976
U.S.C.C.A.N. 5671 (Section 104(a) "imposes no
qualification of nationality and domicile
with respect to unpublished works"); see also
17 U.S.C. ? 104(b) (1988 & Supp. V 1993)
(national origin requirements for published
works).
75 17 U.S.C. ? 405 (1988 & Supp. V 1993).
For such works, failure to include a
copyright notice risks total loss of
copyright protection. See id. Works
published after March 1, 1989 (the effective
date of the Berne Implementation Act) may
(but are not required to) bear a copyright
notice identifying the year of publication
and the name of the copyright owner. See 17
U.S.C. ? 401 (1988 & Supp. V 1993).
76 See generally 17 U.S.C. ?? 107 - 120 (1988
& Supp. V 1993). See, e.g., 17 U.S.C. ? 118
(1988 & Supp. V 1993) (compulsory license is
available for the use of certain published
works in connection with noncommercial
broadcasting).
77 17 U.S.C. ? 101 (1988) (definition of
"publication").
78 See House Report at 138, reprinted in 1976
U.S.C.C.A.N. 5754. See also discussion of
transmissions and the "distribution" of
copies infra pp. 67-69, 217-20.
79 See, e.g., Salinger v. Random House, Inc.,
811 F.2d 90 (2d Cir.), supplemented, reh'g
denied, 818 F.2d 252, cert. denied, 484 U.S.
890 (1987) (copyrighted letters did not lose
unpublished status by placement in library);
WPOW, Inc. v. MRLJ Enterprises, 584 F. Supp.
132 (D.D.C. 1984) (filing of work with
federal agency did not constitute
publication).
80 See 1 M. Nimmer & D. Nimmer, Nimmer on
Copyright ? 4.04 (1994) (hereinafter Nimmer
on Copyright). In a couple of aspects, the
concept of publication was broadened to
include the authorization of offers to
distribute copies in a commercial setting and
the distribution to certain middlemen, such
as retailers, motion picture exhibitors and
television stations. See Paramount Pictures
Corp. v. Rubinowitz, 217 U.S.P.Q. 48, 50
(E.D.N.Y. 1981) (discussing evolution of
definition of publication); National
Broadcasting Co., Inc. v. Sonneborn, 630 F.
Supp. 524, 532-33 (D. Conn. 1985).
81 See 1 Nimmer on Copyright ? 4.13[B];
Kunycia v. Melville Realty Co. Inc., 755 F.
Supp. 566, 574 (S.D.N.Y. 1990).
82 See White v. Kimmell, 193 F.2d 744, 746-47
(9th Cir. 1952). Before the notice
requirement was eliminated, the Copyright Act
generally provided for the invalidation of
the copyright in a work if copies of the work
were distributed to the public, under the
authority of the copyright owner, without a
copyright notice. In virtually all instances
where limited publication was applied, the
distribution was noncommercial in nature.
83 See Academy of Motion Picture Arts and
Sciences v. Creative House Promotions, Inc.,
944 F.2d 1446, 1451-54 (9th Cir. 1991)
(distribution of personalized Oscar
statuettes to select group of distinguished
artists constituted limited publication);
Lish v. Harper's Magazine Found., 807
F. Supp. 1090, 1102 (S.D.N.Y. 1992) (letter
distributed to members of class remained
unpublished).
84 See 37 C.F.R. ? 202.1(a) (1994); see also,
e.g., Takeall v. PepsiCo Inc., 29 U.S.P.Q.2d
1913, 1918 (4th Cir. 1993) (unpublished)
(holding phrase "You Got the Right One, Uh-
Huh" is not copyrightable and, thus, was not
infringed by commercial using phrase "You Got
the Right One Baby, Uh-Huh"). While short
phrases may not be copyrightable standing
alone, they may be protected as part of a
larger, copyrighted work. See, e.g., Dawn
Assocs. v. Links, 203 U.S.P.Q. 831, 835 (N.D.
Ill. 1978) (holding phrase "When there is no
room in hell . . . the dead will walk the
earth" to be an integral part of a
copyrighted advertisement, and defendant's
unauthorized use of it demonstrated
likelihood of success on the merits of
infringement suit); Grand Upright Music Ltd.
v. Warner Bros. Records, Inc., 780 F. Supp.
182, 183-85 (S.D.N.Y. 1991) (finding lyric
"alone again" to be protected as part of a
copyrighted work and infringed by defendant
rap artist's "sampling"). Short phrases may
also be eligible for trademark protection if
used to identify goods or services.
85 In Mazer v. Stein, the Supreme Court held
that works of art which are incorporated into
the design of useful articles, but which can
stand by themselves as art works separate
from the useful articles, are copyrightable.
See 347 U.S. 201, 214-17 (1954). See also 17
U.S.C. ? 101 (defining "useful article" as
"an article having an intrinsic utilitarian
function that is not merely to portray the
appearance of the article or to convey
information); 17 U.S.C. ? 101 (in the
definition of "pictorial, graphic, and
sculptural works" noting that "the design of
a useful article . . . shall be considered a
pictorial, graphic, or sculptural work only
if, and only to the extent that, such design
incorporates pictorial, graphic, or
sculptural features that can be identified
separately from, and are capable of existing
independently of, the utilitarian aspects of
the article"). The House Report indicates
that the required separability may be
physical or conceptual. See House Report at
55, reprinted in 1976 U.S.C.C.A.N. 5668; see
also Kieselstein-Cord v. Accessories By
Pearl, Inc., 632 F.2d 989, 993 (2d Cir.
1980).
86 17 U.S.C. ? 102(b) (1988); see Feist,
supra note 36, at 359 ("facts contained in
existing works may be freely copied"); Harper
& Row, supra note 34, at 547 ("no author may
copyright facts or ideas").
87 The ideas are not protected; the
expression is. Baker v. Seldon, 101 U.S. 99,
103 (1879); Beal v. Paramount Pictures Corp.,
20 F.3d 454, 458-59 (11th Cir.), cert.
denied, 115 S. Ct. 675 (1994); see also
Harper & Row, supra note 34, at 547-48
("copyright is limited to those aspects of
the work -- termed 'expression' -- that
display the stamp of the author's
originality"). The line between idea and
expression is not easy to draw. The
distinction is not that one is fixed and the
other is not -- they are both fixed in the
copyrighted work of authorship. At some
point, the idea becomes detailed enough to
constitute expression. Judge Learned Hand
explained:
Upon any work . . . a great number of
patterns of increasing generality
will fit equally well, as more and
more of the incident is left out.
The last may perhaps be no more than
the most general statement of what
the [work] is about, and at times
might consist only of its title; but
there is a point in this series of
abstractions where they are no longer
protected, since otherwise the
[author] could prevent the use of his
"ideas," to which, apart from their
expression, his property is never
extended.
Nichols v. Universal Pictures Corp., 45 F.2d
119, 121 (2d Cir. 1930).
88 Harper & Row, supra note 34, at 548.
89 Feist, supra note 36, at 349-50 (citing
Harper & Row, supra note 34, at 556-57).
90 Feist, supra note 36, at 349-50.
91 17 U.S.C. ? 105 (1988). There are limited
exceptions to this noncopyrightability
provision. For instance, the Secretary of
Commerce is authorized to secure copyright on
behalf of the United States "in all or any
part of any standard reference data which he
prepares or makes available" under the
Standard Reference Data Program. See 15
U.S.C. ? 290(e) (1988). Works of the U.S.
Postal Service, such as designs on postage
stamps, are also copyrightable by the Postal
Service. See House Report at 60, reprinted
in 1976 U.S.C.C.A.N. 5674 ("the Postal
Service could . . . use the copyright law to
prevent the reproduction of postage stamp
designs for private or commercial non-postal
services"). Copyright interests transferred
to the U.S. Government by assignment, bequest
or otherwise may be held and enforced by it.
See 17 U.S.C. ? 105 (1988).
92 A work of the U.S. Government is a work
"prepared by an officer or employee of the
United States Government as part of that
person's official duties." 17 U.S.C. ? 101
(definition of "work of the United States
Government"). Although the wording of this
definition is not identical to that of a
"work made for hire," the concepts "are
intended to be construed in the same way."
House Report at 58, reprinted in 1976
U.S.C.C.A.N. 5672. See discussion of works
made for hire infra notes 134-36 and
accompanying text.
93 See House Report at 59, reprinted in 1976
U.S.C.C.A.N. 5672.
94 17 U.S.C. ? 102(a) (1988 & Supp. V 1993).
95 17 U.S.C. ? 101 (1988) (definition of
"literary works").
96 Following the recommendation of CONTU,
Congress amended the Copyright Act in 1980 to
recognize that computer programs are
protected works. See Act of December 12,
1980, Pub. L. 96-517, 1980 U.S.C.C.A.N. (94
Stat.) 3015, 3028. "Computer programs" are
defined as a "set of statements or
instructions to be used directly or
indirectly in a computer in order to bring
about a certain result." See 17 U.S.C. ? 101
(1988 & Supp. V 1993).
97 See House Report at 54, reprinted in 1976
U.S.C.C.A.N. 5667.
98 Congress did not define the term "musical
work" in the statute based on the assumption
that the term had a "fairly settled" meaning.
See House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666-67.
99 A phonorecord generally embodies two works
-- a musical work (or, in the case of spoken
word recordings, a literary work) and a sound
recording. Musical works available through
services on the NII may also be the subject
of Musical Instrument Digital Interface
("MIDI") recordings. A MIDI is a data stream
between a musical unit in a computer and a
music-producing instrument. The data stream
instructs the instrument, such as a
synthesizer, on what notes to play.
100 See H. Abrams, The Law of Copyright
? 204[C][3][b][iv] (1993). The term
"dramatic works" is not defined in the Act.
See House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666-67.
101 Congress also declined to define the terms
"pantomimes" and "choreographic works," again
relying on "fairly settled meanings." See
House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666-67.
102 17 U.S.C. ? 101 (1988) (definition of
"pictorial, graphic, and sculptural works").
103 Mazer v. Stein, 347 U.S. 201, 214-17
(1954); see supra note 85.
104 17 U.S.C. ? 101 (1988) (definition of
"audiovisual works").
105 17 U.S.C. ? 101 (1988) (definition of
"motion pictures").
106 See House Report at 56, reprinted in 1976
U.S.C.C.A.N. 5669.
107 See 17 U.S.C. ? 101 (1988) (definition of
"sound recordings").
108 The sounds accompanying an audiovisual
work are specifically excluded from the
definition of sound recordings. See id.
109 17 U.S.C. ? 101 (Supp. V 1993) (definition
of "architectural work"). The category of
architectural works was added in 1990 by the
Architectural Works Copyright Protection Act,
Public Law 101-650, 1990 U.S.C.C.A.N. (104
Stat.) 5089, 5133.
110 Id.
111 17 U.S.C. ? 101 (1988) (definition of
"compilation"). A "collective work," which
is one kind of "compilation," is "a work,
such as a periodical issue, anthology, or
encyclopedia, in which a number of
contributions, constituting separate and
independent works in themselves, are
assembled into a collective whole." 17
U.S.C. ? 101 (1988) (definition of
"collective work").
112 17 U.S.C. ? 101 (1988) (definition of
"derivative work").
113 See id.
114 See 17 U.S.C. ? 103(a) (1988).
115 17 U.S.C. ? 103(b) (1988).
116 Id.
117 See Feist, supra note 36, at 350-51
(alphabetical "arrangement" of comprehensive
list of telephone subscribers not
sufficiently "original" and therefore
noncopyrightable); see also supra pp. 32-34
(discussion of the noncopyrightability of
facts).
118 See Feist, supra note 36, at 354 ("to
accord copyright protection on this basis
alone distorts basic copyright principles in
that it creates a monopoly in public domain
materials without the necessary justification
of protecting and encouraging the creation of
'writings' by 'authors'").
119 The embodiment of two or more different
types of works in one medium is not a new
concept. For instance, a book may contain
both a literary work and pictorial works. A
compact disc may contain a musical work and a
sound recording.
120 A true "multimedia" work would be one in
which several material objects, such as a
book, a videocassette and an audiocassette,
are bundled into one product.
121 See discussion of compilations supra pp.
40-41.
122 While expressly protected under the
Copyright Act, the category of "compilations"
is not a particularly useful subject matter
category. Works in any of the eight
enumerated categories of protectible subject
matter outlined above may take the form of a
compilation, and a protectible compilation
must fit into one or more of the subject
matter categories. "A compilation or
derivative work is copyrightable if it
represents an 'original work of authorship'
and falls within one or more of the
categories listed in section 102." House
Report at 57, reprinted in 1976 U.S.C.C.A.N.
5670 (emphasis added).
123 The list "sets out the general area of
copyrightable subject matter, but with
sufficient flexibility to free the courts
from rigid or outmoded concepts of the scope
of particular categories." House Report at
53, reprinted in 1976 U.S.C.C.A.N. 5666.
124 House Report at 53, reprinted in 1976
U.S.C.C.A.N. 5666. Indeed, Congress amended
the Copyright Act in 1990 to add
"architectural works" as a category of
protectible works. See supra note 109.
125 It should be noted that the Copyright
Office classifies works into four broad
categories for purposes of registration:
nondramatic literary works, works of
performing arts, works of visual arts, and
sound recordings. See 37 C.F.R.
? 202.3(b)(i)-(iv) (1994). The Copyright
Office notes that in cases "where a work
contains elements of authorship in which
copyright is claimed which fall into two or
more classes, the application should be
submitted in the class most appropriate to
the type of authorship that predominates in
the work as a whole." See 37 C.F.R.
? 202.3(b)(2) (1994). However, the Copyright
Act makes clear that the Copyright Office
classification of works for purposes of
registration "has no significance with
respect to the subject matter of copyright or
the exclusive rights provided." See 17
U.S.C. ? 408©(1) (1988); see also House
Report at 153, reprinted in 1976 U.S.C.C.A.N.
5769 ("[i]t is important that the statutory
provisions setting forth the subject matter
of copyright be kept entirely separate from
any classification of copyrightable works for
practical administrative purposes").
126 See 17 U.S.C. ? 106(4),(5) (1988 & Supp. V
1993). The public performance right is
limited to literary, musical, dramatic, and
choreographic works, pantomimes, and motion
pictures and other audiovisual works. The
public display right is limited to literary,
musical, dramatic, and choreographic works,
pantomimes, and pictorial, graphic, or
sculptural works, including the individual
images of a motion picture or other
audiovisual work. Id.
127 See, e.g., 17 U.S.C. ? 108(h) (1988)
(limitation not applicable to musical works,
pictorial, graphic or sculptural works, or
motion pictures or other audiovisual works
other than audiovisual works dealing with
news); 17 U.S.C. ? 109(b) (Supp. V 1993)
(certain limitations not applicable to sound
recordings and musical works embodied in
sound recordings or to computer programs);
17 U.S.C. ? 110(4) (1988) (limitation
applicable only to nondramatic literary or
musical works); 17 U.S.C ? 110(8) (1988)
(limitation applicable only to nondramatic
literary works); 17 U.S.C. ? 110(9) (1988)
(limitation applicable only to dramatic
literary works); 17 U.S.C. ? 112(a) (1988)
(limitation not applicable to motion pictures
or other audiovisual works); 17 U.S.C. ? 113
(1988 & Supp. V 1993) (limitation applicable
only to pictorial, graphic, or sculptural
works); 17 U.S.C. ? 114 (1988) (limitation
applicable only to sound recordings); 17
U.S.C. ? 115 (1988) (limitation applicable
only to nondramatic musical works); and 17
U.S.C. ? 120 (Supp. V 1993) (limitation
applicable only to architectural works).
128 See 17 U.S.C. ? 101 (1988) (definition of
"literary works") (emphasis added).
129 The definition of "sound recordings"
explicitly excludes from the category of
sound recordings musical, spoken or other
sounds "accompanying a motion picture or
other audiovisual work . . . ." See 17
U.S.C. ? 101 (1988) (definition of "sound
recordings"). The definition of "audiovisual
works" also expressly includes any
"accompanying sounds." See 17 U.S.C. ? 101
(1988) (definition of "audiovisual works").
130 Audiovisual works are "works that consist
of a series of related images which are
intrinsically intended to be shown by the use
of machines or devices such as projectors,
viewers, or electronic equipment . . . ." 17
U.S.C. ? 101 (1988) (definition of
"audiovisual works").
131 Categories are "overlapping in the sense
that a work falling within one class may
encompass works coming within some or all of
the other categories." House Report at 53,
reprinted in 1976 U.S.C.C.A.N. 5666.
132 17 U.S.C. ? 201(a) (1988).
133 Id. A "joint work" is "a work prepared by
two or more authors with the intention that
their contributions be merged into
inseparable or interdependent parts of a
unitary whole." 17 U.S.C. ? 101 (1988)
(definition of "joint work").
134 See 17 U.S.C. ? 201(b) (1988). This legal
conclusion may only be altered by the parties
in a written instrument signed by them
expressly agreeing otherwise. Id.
135 The Copyright Act does not define
"employee." In 1989, the Supreme Court held
that an employment relationship determination
for copyright purposes should be made by
reference to the "general common law of
agency." See Community for Creative Non-
Violence v. Reid, 490 U.S. 730, 740-41
(1989). The central question in an agency
law inquiry is whether the hiring party has
the "right to control the manner and means by
which the product is accomplished." Id. at
751. The factors to be considered include
the skill required, the source of the
instrumentalities and tools used in creating
the work, where the work was created, the
duration of the relationship between the
parties, whether the hiring party has the
right to assign additional projects to the
hired party, the method of payment, the
extent of the hired party's discretion over
when and how long to work, the hired party's
role in hiring and paying assistants, whether
the hiring party is in business and whether
the work is part of the regular business of
the hiring party, the provision of employee
benefits, and the tax treatment of the hired
party. Id. at 751-52. The Court did not
specify any factors that should be weighed
more heavily than others, but made clear that
an "employee" under the Copyright Act is not
limited to a formal, salaried employee.
136 To qualify as a work made for hire under
the second prong, the work must be specially
ordered or commissioned for use as (1) a
contribution to a collective work, (2) part
of an audiovisual work, (3) a translation,
(4) a supplementary work, (5) a compilation,
(6) an instructional text, (7) a test, (8)
answer material for a test or (9) an atlas.
17 U.S.C. ? 101 (1988) (definition of "work
made for hire").
137 See 17 U.S.C. ? 202 (1988).
138 Id.
139 See 17 U.S.C. ? 201(d)(1) (1988)
("ownership of a copyright may be transferred
in whole or in part by any means of
conveyance or by operation of law, and may be
bequeathed by will or pass as personal
property by the applicable laws of intestate
succession").
140 17 U.S.C. ? 204(a) (1988). An exclusive
license is considered a transfer of copyright
and, therefore, must be in writing. Although
an exclusive license may be limited in time,
place or scope, it nevertheless extends the
benefits of copyright ownership with respect
to the rights granted to the licensee for the
duration of the license. The rights of a
copyright owner may also be licensed on a
nonexclusive basis to one or more licensees.
The Copyright Act does not require
nonexclusive licenses to be in writing.
141 17 U.S.C. ? 101 (1988) (definition of
"transfer of copyright ownership"). With the
exception of transfers by operation of law,
all transfers of copyright ownership must be
in writing. 17 U.S.C. ? 204(a) (1988)
("transfer of copyright ownership, other than
by operation of law, is not valid unless an
instrument of conveyance, or a note or
memorandum of the transfer, is in writing and
signed by the owner of the rights conveyed or
such owner's duly authorized agent").
142 See 17 U.S.C. ? 204(a) (1988).
143 See discussion of the exclusive rights of
a copyright owner infra pp. 63-72.
144 See 17 U.S.C. ? 201(d)(2) (1988); 17
U.S.C. ? 101 (1988) (definition of "copyright
owner").
145 See 17 U.S.C. ? 203(a) (1988); see also 17
U.S.C. ? 304© (1988 & Supp. V 1993).
146 17 U.S.C. ? 203(a)(5) (1988)
("[t]ermination of the grant may be effected
notwithstanding any agreement to the
contrary, including an agreement to make a
will or to make any future grant").
147 See 17 U.S.C. ? 203(a) (1988).
148 See 17 U.S.C. ? 501(b) (1988) ("legal or
beneficial owner of an exclusive right under
a copyright is entitled . . . to institute an
action for any infringement of that
particular right committed while he or she is
the owner of it"). In certain circumstances,
television broadcast stations and others are
treated as legal or beneficial owners and may
bring actions for infringement by cable
systems and satellite carriers. See 17
U.S.C. ? 501©, (d), (e) (1988).
149 However, like exclusive licenses,
nonexclusive licenses may be terminated 35
years after the effective date of the
license. See 17 U.S.C. ?? 203(a) (1988),
304© (1988 & Supp. V 1993).
150 For example, a user could decide to
participate in a licensing program covering
all copies made, for a nominal fee per copy,
rather than to indulge in the record-keeping
necessary to determine which copies are
subject to a licensing fee and which are fair
use. Copyright owners may not be allowed,
however, to seek to increase the term of
protection without implicating the doctrine
of copyright misuse. Cf. Saturday Evening
Post Co. v. Rumbleseat Press, Inc., 816 F.2d
1191, 1200 (7th Cir. 1987) (claims of misuse
must be judged by antitrust standards);
Lasercomb America, Inc. v. Reynolds, 911 F.2d
970, 979 (4th Cir. 1990) (contract purporting
to license copyright for 99 years rendered
copyright owner guilty of copyright misuse).
The doctrine of copyright misuse might be
implicated in other situations where the
scope of protection is significantly
expanded.
151 House Report at 79, reprinted in 1976
U.S.C.C.A.N. 5693.
152 See, e.g., Harper Bros. v. Klaw, 232 F.
609 (S.D.N.Y. 1916) (license to dramatize
"Ben Hur" in a play did not include right to
produce a movie, but licensor enjoined from
producing movie because licensee's right to
produce a play would be harmed by licensor's
production of a movie); L.C. Page & Co. v.
Fox Film Corp., 83 F.2d 196 (2d Cir. 1936)
(grant of exclusive "moving picture" rights
embraced technical improvements in movies
that might be developed during the term of
the license; thus, license held to cover
"talkies"); Bartsch v. Metro-Goldwyn-Mayer,
Inc., 391 F.2d 150 (2d Cir.), cert. denied,
393 U.S. 826 (1968) (1930 license of film
rights in a play, when television was a known
technology but its full impact not yet
realized, included television rights; as
experienced businessman, licensor had reason
to know of new technology's potential and had
burden of negotiating exception).
153 See, e.g., 17 U.S.C. ? 111 (1988 & Supp. V
1993). The cable compulsory license was
enacted to reduce the need for negotiations
among thousands of program copyright owners
and hundreds of cable systems for the right
to retransmit the copyrighted programs that
are included in the broadcast signals
retransmitted by cable systems.
154 See discussion of on-line transactions
infra pp. 53-59.
155 See discussion infra pp. 191-92, 235-36.
156 Library subscription costs for print
journals have for many years been two or more
times those for individual subscriptions.
This additional cost has been assumed by some
to permit use of the material by the
library's patrons. Licenses would serve to
convert this assumption to explicit terms
that could be negotiated, avoiding
misunderstandings and litigation.
157 See generally Information Infrastructure
Task Force, Committee on Applications and
Technology, Putting the Information
Infrastructure to Work, 25-40 (May 1994).
158 See discussion infra pp. 192-94; see
generally Uniform Commercial Code, Art. 4A
(1990); K. Epper, Money Creators: Point of
Sale Pioneer Setting Sail on the Internet,
The American Banker 14 (Feb. 10, 1995).
159 B. Wright, The Law of Electronic Commerce
235 (1991 & Supp. 1994) (hereinafter Wright).
160 See J. Calamari & J. Perillo, The Law of
Contracts 25 (3d ed. 1987) (hereinafter
Calamari & Perillo).
161 In Corinthian Pharmaceutical v. Lederle
Laboratories, the court found that the
"automated, ministerial act" of a seller
issuing an electronic order tracking number
to a purchaser's on-line purchase order did
not constitute assent or acceptance by the
seller. See 724 F. Supp. 605, 610 (S.D. Ind.
1989); see also Wright, supra note 159, at
236 (1991); Electronic Messaging Task Force,
The Commercial Use of Electronic Data
Interchange -- A Report and Model Trading
Partner Agreement, A.B.A. Sec. Bus. Law,
reprinted from 45 Bus. Law 1647 (1990)
(hereinafter A.B.A. Report or A.B.A. Model
Agreement).
162 See Step-Saver Data Systems, Inc. v. Wyse
Technology, 939 F.2d 91 (3d Cir. 1991).
163 See id. at 96 n.7.
164 See Standard Oil Co. v. Perkins, 347 F.2d
379, 385 n.5 (9th Cir. 1965).
165 Compare D. Johnson & K. Marks, Mapping
Electronic Data Communications onto Existing
Legal Metaphors: Should We Let Our
Conscience (and Our Contracts) be Our Guide?,
38 Vill. L. Rev. 487, 488-89 (1993) with
Note, Offers Users Can't Refuse: Shrink-Wrap
License Agreements as Enforceable Adhesion
Contracts, 10 Cardozo L. Rev. 2105, 2120
(1989).
166 See Restatement (Second) of Contracts
? 211 (1981).
167 Compare Step-Saver, supra note 162, at 99
with Arizona Retail Systems v. Software Link,
831 F. Supp. 759 (D. Ariz. 1993).
168 See Step-Saver, supra note 162, at 99; see
also J. Peys, Comment, Commercial Law -- The
Enforceability of Computer "Box-Top" License
Agreements Under the U.C.C., 7 Whittier L.
Rev. 881, 885-92 (1985).
169 See Ill. Rev. Stat. ch. 29, para. 801-08
(1986); La. Rev. Stat. ?? 51:1961-66 (1987).
The Louisiana statute was declared partially
invalid in a controversial decision in Vault
Corp. v. Quaid Software, Ltd. because the
court found that it impinged on "rights"
under the U.S. copyright laws, and was
therefore preempted. See 847 F.2d 255, 270
(5th Cir. 1988).
170 See Restatement (Second) of Contracts
? 131 (1981). Signed writings are also
required for exclusive licenses and
assignments under the Copyright Act. See 17
U.S.C. ? 204 (1988).
171 See Wright, supra note 159, at 274 (1991).
172 See U.C.C. ? 1-102(2)(b) (1990).
173 U.C.C. ? 2-204 (1990).
174 Id. at ? 2-206 (1990).
175 See U.C.C. ? 2-207 (1990).
176 The U.C.C. contains a Statute of Frauds
which raises the same questions as common law
concerning whether a purely electronic
contract can meet the writing and signature
requirements. However, the U.C.C. Statute of
Frauds includes exceptions to the
requirements -- for specially manufactured
goods not suitable for sale to others which
the seller has begun to manufacture, and for
goods that have been received and accepted.
See U.C.C. ? 2-201(2), (3) (1990).
177 See U.C.C. ? 1-205(1), (2) (1990).
178 See U.C.C. ?? 2-105(2), 716(3) (1990).
See D. Frisch, Symposium: The Revision of
the Uniform Commercial Code, 35 Wm. & Mary L.
Rev. 1691, 1729 (1994).
179 See U.C.C. ? 1-102 (1990). But see
Calamari & Perillo, supra note 160, at 16;
Step Saver, supra note 162, at 94; Advent
Systems Ltd. v. Unisys Corp., 925 F.2d 670
(3d Cir. 1991).
180 See supra notes 160-71 and accompanying
text.
181 See R. Nimmer, Symposium: The Revision of
Article 2 of the Uniform Commercial Code, 35
Wm. & Mary L. Rev. 1337, 1341-50 (1994).
182 See 17 U.S.C. ? 301 (1988).
183 See 17 U.S.C. ? 302(a) (1988). The terms
of protection for works created before
January 1, 1978 (the effective date of the
1976 revisions to the Copyright Act) are set
forth in Sections 303 and 304 of the Act.
See 17 U.S.C. ?? 303, 304 (1988 & Supp. V
1993). Bills introduced in the 104th
Congress would extend by 20 years the term of
protection for all works. See S. 483, 104th
Cong., 1st Sess. (1995); H.R. 989, 104th
Cong., 1st Sess. (1995). A directive adopted
by the Council of Ministers of the European
Union requires all EU member states to
provide a term of protection for copyrighted
works of life of the author plus 70 years.
Although a number of member states have yet
to enact legislation extending terms, the
obligations of the directive were to go into
effect on July 1, 1995. See Council
Directive 7831/93 of 13 July 1993 on
Harmonizing the Term of Protection of
Copyright and Certain Related Rights.
184 17 U.S.C. ? 302(b) (1988).
185 17 U.S.C. ? 302© (1988). The term for
anonymous or pseudonymous works differs if
the identity of one or more of the authors is
revealed before the end of the term of
protection. See id.
186 The public domain is the legal status of
works whose term of copyright protection has
ended or which are not protected for other
reasons, such as the noncopyrightability of
the subject matter.
187 See Act of October 31, 1988, Pub. L. 100-
568, 1988 U.S.C.C.A.N. (102 Stat.) 2853,
2857. Copyright notice is still required on
copies and phonorecords of works publicly
distributed prior to March 1, 1989, the
effective date of the Act.
188 17 U.S.C. ? 401(a) (1988) (emphasis
added). The copyright owner of a sound
recording may also place a notice of
copyright on publicly distributed
phonorecords of the sound recording. 17
U.S.C. ? 402(b) (1988).
189 See 17 U.S.C. ?? 401(b), 402(b) (1988).
190 See 17 U.S.C. ? 407 (1988).
191 See 17 U.S.C. ? 407© (1988); see also 37
C.F.R. ? 202.19(e) (1994).
192 See 17 U.S.C. ? 407(d) (1988).
193 17 U.S.C. ? 408(a) (Supp. V 1993).
194 17 U.S.C. ? 411(a) (Supp. V 1993).
Registration is required before a suit for
infringement may be brought for works of U.S.
origin and for foreign works from countries
which are not members of the Berne
Convention.
195 See 17 U.S.C. ? 408 (a), (b) (1988 & Supp.
V 1993). Only one copy of the work is
required for certain types of works,
including unpublished works.
196 17 U.S.C. ? 408(b) (1988).
197 17 U.S.C. ? 410© (1988); Bibbero
Systems, Inc. v. Colwell Systems, Inc., 893
F.2d 1104, 1106 (9th Cir. 1990). The weight
to be accorded a certificate when
registration has been made more than five
years from the date of first publication is
within the discretion of the court. 17
U.S.C. ? 410© (1988).
198 See 17 U.S.C. ? 412 (1988 & Supp. V 1993).
199 The Berne Convention prohibits member
states from conditioning copyright protection
for works of Berne nationals on the
compliance with formalities. See Article 5
of the Berne Convention infra note 439.
200 17 U.S.C. ? 106 (1988 & Supp. V 1993).
Section 106(A) grants additional rights for
certain works of visual art in single copies
or limited editions. The development of the
NII does not raise unique issues with respect
to those rights. See 17 U.S.C. ? 106(A)
(Supp. V 1993).
201 See 17 U.S.C. ? 101 (1988) (definitions of
"copies" and "phonorecords").
202 In 1978, the CONTU Final Report noted,
"[T]he application of principles already
embodied in the language of the [current]
copyright law achieves the desired
substantive legal protection for copyrighted
works which exist in machine-readable form.
The introduction of a work into a computer
memory would, consistent with the [current]
law, be a reproduction of the work, one of
the exclusive rights of the copyright
proprietor." CONTU Final Report at 40. See
also MAI Systems Corp. v. Peak Computer,
Inc., 991 F.2d 511, 519 (9th Cir. 1993),
cert. denied, 114 S. Ct. 671 (1994); Vault
Corp. v. Quaid Software Ltd., 847 F.2d 255,
260 (5th Cir. 1988); Advanced Computer
Services v. MAI Systems Corp., 845 F. Supp.
356 (E.D. Va. 1994); Triad Systems Corp. v.
Southeastern Express Co., 1994 U.S. Dist.
LEXIS 5390 (N.D. Cal. March 18, 1994); 2
Nimmer on Copyright ? 8.08[A] (1994).
203 That copying has occurred does not
necessarily mean that infringement has
occurred. When copying is (1) authorized by
the copyright owner, (2) exempt from
liability as a fair use, (3) otherwise exempt
under the provisions of Sections 108-119 or
Chapter 10 of the Copyright Act, or (4) of
such a small amount as to be de minimis, then
there is no infringement liability.
204 See, e.g., MAI Systems Corp. v. Peak
Computer, Inc., 991 F.2d 511, 519 (9th Cir.
1993). (While this court's determination
with respect to fair use may be open to
question, its holding that booting a PC
involves copying the operating system seems
quite unexceptional.)
205 For example, if an author transfers a file
(such as a manuscript) to a publisher with an
Internet account, copies will typically, at a
minimum, be made (a) in the author's Internet
server, (b) in the publisher's Internet
server, © in the publisher's local area
network server, and (d) in the editor's
microcomputer. It has been suggested that
such "copying" of files in intermediate
servers is only of transitory duration and
consequently not covered by the reproduction
right. However, it is clear that if the
"copy" exists for more than a period of
transitory duration, the reproduction right
is implicated. Whether such reproduction is
an infringement would be a separate
determination.
206 See 17 U.S.C. ? 106(2) (1988). "A
'derivative work' is a work based upon one or
more preexisting works, such as a
translation, musical arrangement,
dramatization, fictionalization, motion
picture version, sound recording, art
reproduction, abridgment, condensation, or
any other form in which a work may be recast,
transformed, or adapted. A work consisting
of editorial revisions, annotations,
elaborations, or other modifications which,
as a whole, represent an original work of
authorship, is a 'derivative work.'" 17
U.S.C. ? 101 (1988) (definition of
"derivative work").
207 17 U.S.C. ? 109(a) (1988). See discussion
infra pp. 90-95.
208 See discussion of rental rights for
computer programs and sound recordings infra
p. 91.
209 Furthermore, with respect to international
distributions, Section 602 of the Copyright
Act makes unauthorized importations a
violation of the distribution right. See
discussion infra pp. 107-09.
210 The court elsewhere in its opinion, in a
small but perhaps significant deviation from
conventional usage, appears to use
"implicate" to mean "infringe" rather than
"involve."
211 839 F. Supp. 1552 (M.D. Fla. 1993).
212 Id. at 1556.
213 Whether such reproduction was legally
performed by the subscriber, the BBS
operator, or both is not clear.
214 Owners of copyrights in computer programs
and sound recordings have the right to
control post-first-sale rentals of copies of
their works; owners of copyrights in other
works do not. See 17 U.S.C. ? 109 (1988 &
Supp. V 1993). This inconsistency may be
important in the NII context, particularly
with respect to "multimedia works" that are
neither expressly nor self-evidently in any
particular category of copyrighted work (and
whose treatment under various exemptions and
special provisions may thus be unclear). See
discussion of multimedia works supra pp. 41-
45.
215 See discussion of contributory
infringement and vicarious liability infra
pp. 109-14.
216 857 F. Supp. 679 (N.D. Cal. 1994).
217 See 17 U.S.C. ? 106(4) (1988).
218 "To 'perform' a work means to recite,
render, play, dance, or act it, either
directly or by means of any device or process
or, in the case of a motion picture or other
audiovisual work, to show its images in any
sequence or to make the sounds accompanying
it audible." 17 U.S.C. ? 101 (1988)
(definition of "perform").
219 To perform or display a work "publicly"
means --
(1) to perform or display it at a
place open to the public or at any
place where a substantial number of
persons outside of a normal circle of
a family and its social acquaintances
is gathered; or
(2) to transmit or otherwise
communicate a performance or display
of the work to a place specified by
clause (1) or to the public, by means
of any device or process, whether the
members of the public capable of
receiving the performance or display
receive it in the same place or in
separate places and at the same time
or at different times.
17 U.S.C. ? 101 (1988) (definition of
"publicly").
220 See 17 U.S.C. ? 110 (1988).
221 The current law addresses only
transmissions of "performances" and
"displays."
222 See, e.g., Columbia Pictures Indus. v.
Redd Horne, Inc., 749 F.2d 154 (3d Cir. 1984)
(video store operator liable for public
performance violation where he rented tapes
of motion pictures to customers and provided
semi-private screening rooms where the tapes
could be viewed); Columbia Pictures Indus. v.
Aveco, Inc., 800 F.2d 59 (3d Cir. 1986) (same
result where customers also rented rooms for
viewing); On Command Video Corp. v. Columbia
Pictures Indus., 777 F. Supp. 787 (N.D. Cal.
1991) (infringement found where hotel guests
in rooms selected tapes to be played on
remotely controlled console in hotel basement
with signal then sent to rooms).
223 17 U.S.C. ? 101 (1988 & Supp. V 1993)
(definition of "display").
224 See discussion of Playboy case supra pp.
68-69 and infra pp. 81, 120-21.
225 Of course, to the extent that such lists
or menus are protectible under the Copyright
Act, the authors of such lists would have the
exclusive right to publicly display them.
226 The copyright law's legislative history,
describing the introduction of the display
right, distinguishes displays "on a screen or
tube" from reproductions. This language,
written before the advent of the personal
computer, applies easily to displays with
which Congress was familiar in 1976 (those
rendered by broadcast television receivers),
but is inapplicable to digital "browsing"
where the law itself clearly -- without
resort to explanatory Congressional language
-- defines such acts as implicating the
display and reproduction rights.
227 Although sometimes referred to as "rights"
of the users of copyrighted works, "fair use"
and other exemptions from infringement
liability are actually limitations on the
rights of the copyright owners. Thus, as a
technical matter, users are not granted
affirmative "rights" under the Copyright Act;
rather, copyright owners' rights are limited
by exempting certain uses from liability. It
has been argued, however, that the Copyright
Act would be unconstitutional if such
limitations did not exist, as they reduce
First Amendment and other concerns. Others
have argued that fair use is an anachronism
with no role to play in the context of the
NII.
228 See 17 U.S.C. ? 107 (1988 & Supp. V 1993).
The judicially created doctrine, although now
codified in the Copyright Act, has been
described as "so flexible as virtually to
defy definition." See Time Inc. v. Bernard
Geis Assoc., 293 F. Supp. 130, 144 (S.D.N.Y.
1968).
229 Campbell v. Acuff-Rose Music, Inc., 114
S. Ct. 1164, 1177 (1994). As an affirmative
defense, the burdens of persuasion and coming
forward with evidence both must be carried by
defendants to avoid liability (i.e., a
copyright owner need not prove an accused use
not fair, but, rather, the defendant must
prove its fairness).
230 Id.
231 See id.
232 17 U.S.C. ? 107 (1988 & Supp. V 1993).
233 Harper & Row, supra note 34, at 561.
234 Justice Story stated that courts should
"look to the nature and the objects of the
selections made, the quantity and value of
the material used, and the degree in which
the use may prejudice the sale, or diminish
the profits, or supersede the objects, of the
original work." Folsom v. Marsh, 9 F. Cas.
342, 348 (C.C.D. Mass. 1841) (No. 4,901).
235 See Sony, supra note 22, at 456
(videotaping by individuals at home of off-
the-air television broadcast programming for
purpose of "time-shifting" -- as
distinguished from "librarying" -- held fair
use).
236 See Stewart v. Abend, 495 U.S. 207, 216
(1990) (theatrical and television
distribution of motion picture over objection
of owner of renewal copyright in underlying
short story held infringing); Harper & Row,
supra note 34, at 569 ("Nation" magazine's
scoop of "Time" magazine's first serial
rights in President Ford's memoirs held
infringing, notwithstanding newsworthiness of
the account of the Nixon pardon set out
therein).
237 See Campbell, supra note 229, at 1177-79
(parodic lyrics of popular song not per se
unfair by virtue of commercial purpose of
parody; case remanded for further factual
determination).
238 See 464 U.S. at 451. The subsequent
Campbell decision indicates that the
presumption is strongest in cases of "mere
duplication" and weakest when a second
commercial comer makes a transformative use
and creates a derivative work. See Campbell,
supra note 229, at 1177.
239 Congress has expressly declined to enact a
specific exemption from copyright liability
for educational uses. See House Report at 66-
67, reprinted in 1976 U.S.C.C.A.N. 5680.
Cases holding reproduction of an entire work
as a fair use are few. In Haberman v.
Hustler Magazine, Inc., 626 F. Supp. 201, 212
(D. Mass. 1986) a magazine's reproduction of
an artist's post cards was found to be fair
use because there was no market harm.
240 The consequences of denying a fair use
defense in certain legitimate educational
contexts are far smaller than in the
commercial context. Under the provisions of
Section 504©(2), statutory damages (damages
that may be imposed without proof of the
quantum of actual harm to the copyright
owner) may not be imposed against a nonprofit
educational institution, its employees or
agents -- when acting within the scope of
their employment -- in respect of copying
that they performed with reasonably based
grounds for believing the copying was fair
use. 17 U.S.C. ? 504©(2) (1988).
241 Marcus v. Rowley, 695 F.2d 1171 (9th
Cir. 1983).
242 Encyclopaedia Britannica Educ. Corp. v.
Crooks, 558 F. Supp. 1247 (W.D.N.Y. 1983).
243 Basic Books, Inc. v. Kinko's Graphics
Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991).
244 See Twin Peaks Prods., Inc. v.
Publications Int'l, Ltd., 996 F.2d 1366, 1376
(2d Cir. 1993).
245 See New Era Publications Int'l, ApS v.
Henry Holt & Co., 873 F.2d 576 (2d Cir.
1989), cert. denied, 493 U.S. 1094 (1990).
246 See National Rifle Ass'n v. Handgun
Control Fed'n, 15 F.3d 559, 562 (6th Cir.
1994).
247 See New Era Publications Int'l, ApS v.
Carol Publishing Group, 904 F.2d 152, 157 (2d
Cir. 1990).
248 See Harper & Row, supra note 34, at 569
(taking of some 300 words held infringing).
249 3 Nimmer on Copyright ? 13.05[A] (1993)
(footnotes omitted).
250 See Stewart v. Abend, supra note 236, at
238.
251 Cf. American Geophysical Union v. Texaco,
Inc., 37 F.3d 881, 895 (2d Cir. 1994)
("analysis under the fourth factor must focus
on the effect of [defendant's] photocopying
upon the potential market for or value of
these individual articles"); Salinger v.
Random House, Inc., 811 F.2d 90, 99 (2d
Cir.), cert. denied, 484 U.S. 890 (1987)
(protecting potential market for author's
letters notwithstanding author's profound
disinclination ever to publish them).
252 See Sony, supra note 22, at 443-47
(plaintiffs "failed to carry their burden
with regard to [the harm of] time-
shifting . . . . Harm from time-shifting is
speculative and, at best, minimal").
253 See Harper & Row, supra note 34, at 562.
254 See Stewart v. Abend, supra note 236, at
238.
255 See Campbell, supra note 229, at 1173.
256 The inability of our common law system to
provide guidance covering every possible
permutation of behavior is not necessarily a
weakness. By permitting courts to reach
decisions on a case-by-case basis, our system
permits both necessary gap-filling and
jurisprudential evolution without requiring
repeated pleas to Congress for additional
elaboration.
257 See supra notes 210-16 and accompanying
text (discussing Playboy and MAPHIA
decisions).
258 Playboy, supra note 211, at 1558.
259 MAPHIA, supra note 216.
260 MAPHIA, supra note 216, at 688.
261 See infra pp. 83-84.
262 802 F. Supp. 1 (S.D.N.Y. 1992), aff'd, 37
F.3d 881, 892 (2d Cir. 1994). The Court of
Appeals noted, with respect to Texaco's
argument that such photocopying was
"reasonable and customary," that "whatever
validity this argument might have had before
the advent of . . . photocopying
licensing . . . the argument today is
insubstantial." This suggests that, together
with Section 108's proscription on most
"systematic" photocopying (discussed below),
the precedential value of Williams & Wilkins
Co. v. United States, 487 F.2d 1345 (Ct. Cl.
1973) (Federal libraries not liable for
infringement where no licensing option
existed as between full price subscription to
scientific journals and holding of fair use)
may be reduced.
263 Existing guidelines cover certain copying
by and for teachers in the classroom context,
the copying of music for educational
purposes, the copying of relatively recent
journal articles by one library for another,
and the off-air videotaping of educational
broadcast materials.
264 See House Report at 68-74, reprinted in
1976 U.S.C.C.A.N. 5681-88.
265 See discussion of the Working Group's
proposed amendments to Section 108 infra pp.
225-27.
266 The laws of economics and physics protect
producers of equipment and tangible supplies
to a greater extent than copyright owners. A
university, for example, has little choice
but to pay to acquire photocopy equipment,
computers, paper and diskettes. It may,
however, seek subsidization from copyright
owners by arguing that its copying and
distribution of their works should, as a fair
use, not be compensated.
267 Hereinafter, the term "library" will be
used to refer to a library or archives, or
any of its employees acting within the scope
of their employment.
268 See 17 U.S.C. ? 108(a) (1988). Section
108 limitations are additional exemptions
provided specifically for certain libraries.
Libraries, of course, may also take advantage
of fair use privileges or any other
exemptions to the Copyright Act (see 17
U.S.C. ? 108(f)(4) (1988)), but the
exemptions in Section 108 generally exceed
fair use. See generally Report of the
Register of Copyrights on Library
Reproduction of Copyrighted Works (1983).
269 See 17 U.S.C. ? 108(a) (1988).
270 See 17 U.S.C. ? 108(g) (1988).
271 17 U.S.C. ? 108(h) (1988).
272 See 17 U.S.C. ? 108(b) (1988).
273 House Report at 75, reprinted in 1976
U.S.C.C.A.N. 5689.
274 17 U.S.C. ? 108© (1988); see House
Report at 75, reprinted in 1976 U.S.C.C.A.N.
5689.
275 17 U.S.C. ? 108(d) (1988).
276 Id.
277 17 U.S.C. ? 108(e) (1988).
278 Id.
279 See 17 U.S.C. ? 108(f)(3) (1988).
280 17 U.S.C. ? 108(g)(2) (1988).
281 See H.R. Rep. No. 1733, 94th Cong., 2d
Sess. 72-73 (1976), reprinted in 1976
U.S.C.C.A.N. 5810, 5813-14 (hereinafter
Conference Report).
282 Id. at 72, reprinted in 1976 U.S.C.C.A.N.
5813.
283 See discussion supra pp. 87-88.
284 See discussion supra pp. 87-88.
285 See T.B. Harms Co. v. Jem Records, Inc.,
655 F. Supp. 1575, 1582 (D.N.J. 1987);
Columbia Pictures Indus., Inc. v. Aveco,
Inc., 612 F. Supp. 315, 319-20 (M.D. Pa.
1985), aff'd, 800 F.2d 59 (3d Cir. 1986).
286 17 U.S.C. ? 109(a) (1988).
287 See 17 U.S.C. ? 109(b)(1)(A) (Supp. V
1993). The prohibition with respect to
record rental does not apply to nonprofit
libraries or nonprofit educational
institutions for nonprofit purposes. Id. In
addition, a nonprofit educational institution
may transfer possession of a lawfully made
copy of a computer program to another
nonprofit educational institution or to
faculty, staff and students. Id. Nonprofit
libraries may also lend a computer program
for nonprofit purposes if each copy has a
copyright warning affixed to the package. 17
U.S.C. ? 109(b)(2)(A) (Supp. V 1993). The
prohibition with respect to computer program
rental does not apply to a computer program
"which is embodied in a machine or product
and which cannot be copied during the
ordinary operation or use of the machine or
product" or "a computer program embodied in
or used in conjunction with a limited purpose
computer that is designed for playing video
games and may be designed for other
purposes." 17 U.S.C. ? 109(b)(1)(B) (Supp. V
1993).
288 K. Corsello, The Computer Software Rental
Amendments Act of 1990: Another Bend in the
First Sale Doctrine, 41 Cath. U. L. Rev. 177,
192 (1991).
289 See H.R. Rep. No. 98-987, 98th Cong., 2d
Sess. 2 (1984), reprinted in 1984
U.S.C.C.A.N. 2898, 2899 (justifying the
Record Rental Amendment of 1984).
290 See 17 U.S.C. ? 109(a) (1988) ("the owner
of a particular copy or phonorecord . . . is
entitled . . . to sell or otherwise dispose
of the possession of that copy or
phonorecord"); House Report at 79, reprinted
in 1976 U.S.C.C.A.N. 5693 (under the first
sale doctrine in Section 109 "the copyright
owner's exclusive right of public
distribution would have no effect upon anyone
who owns 'a particular copy or phonorecord
lawfully made under this title' and who
wishes to transfer it to someone else . . .")
See also, e.g., Columbia Pictures Indus. v.
Redd Horne, Inc., 749 F.2d 154, 159 (3d Cir.
1984) ("first sale doctrine prevents the
copyright owner from controlling the future
transfer of a particular copy once its
material ownership has been transferred").
291 House Report at 79, reprinted in 1976
U.S.C.C.A.N. 5693 (under the first sale
doctrine, "the owner of the physical copy or
phonorecord cannot reproduce or perform the
copyrighted work publicly without the
copyright owner's consent").
292 If the reproduction is lawful under
another provision of the Copyright Act, the
transmission would likely not be an
infringement. See infra p. 95.
293 See House Report at 79, reprinted in 1976
U.S.C.C.A.N. 5693.
294 17 U.S.C. ? 109© (1988).
295 Section 109(e) reversed the decision in
Red Baron-Franklin Park, Inc. v. Taito Corp.,
883 F.2d 275 (4th Cir. 1989), cert. denied,
493 U.S. 1058 (1990), which held that video
games could not be operated in an arcade
without the permission of the copyright owner
because such operation entailed violation of
the copyright owner's exclusive rights to
perform and display the work publicly.
Section 109(e), however, does not allow the
public display or performance of any other
work of authorship embodied in the
audiovisual game if the copyright owner of
the game is not also the copyright owner of
the other work. See 17 U.S.C. ? 109(e)
(Supp. V 1993).
296 See discussion of rental rights with
regard to phonorecords and copies of computer
programs supra notes 287-89 and accompanying
text.
297 See 17 U.S.C. ? 110(1) (1988).
298 See 17 U.S.C. ? 110(2) (1988).
299 Section 117 of the Copyright Act provides:
Notwithstanding the provisions of
section 106, it is not an
infringement for the owner of a copy
of a computer program to make or
authorize the making of another copy
or adaptation of that computer
program provided:
(1) that such a new copy or
adaptation is created as an essential
step in the utilization of the
computer program in conjunction with
a machine and that it is used in no
other manner, or
(2) that such new copy or adaptation
is for archival purposes only and
that all archival copies are
destroyed in the event that continued
possession of the computer program
should cease to be rightful.
17 U.S.C. ? 117 (1988 & Supp. V 1993). Any
identical copies made in accordance with
Section 117 "may be leased, sold, or
otherwise transferred, along with the copy
from which such copies were prepared, only as
part of the lease, sale, or other transfer of
all rights in the program." Adaptations made
may be transferred only with the
authorization of the owner of the copyright
in the original program. Id.
300 See 17 U.S.C. ? 110(3) (1988).
301 See 17 U.S.C. ? 110(6) (1988).
302 See 17 U.S.C. ? 110(7) (1988).
303 See 17 U.S.C. ? 110(8), (9) (1988).
304 See 17 U.S.C. ? 110(10) (1988).
305 See 17 U.S.C. ? 110(5) (1988).
306 See, e.g., the decision in Twentieth
Century Music Corp. v. Aiken, 422 U.S. 151
(1975), which was essentially codified in
Section 110(5) (owner of a small food
establishment exempt from infringement
liability for the performance of copyrighted
works via a radio and four small ceiling
speakers). See also Sailor Music v. The Gap
Stores, Inc., 516 F. Supp. 923 (S.D.N.Y.),
aff'd, 668 F.2d 84 (2d Cir. 1981), cert.
denied, 456 U.S. 945 (1982); Rodgers v.
Eighty Four Lumber Co., 617 F. Supp. 1021
(W.D. Pa. 1985); Springsteen v. Plaza Roller
Dome, Inc., 602 F. Supp. 1113 (M.D.N.C.
1985).
307 See 17 U.S.C. ? 112(a) (1988). This
limitation of the copyright owner's
reproduction right is applicable only if:
(1) the copy or phonorecord is
retained and used solely by the
transmitting organization that made
it, and no further copies or
phonorecords are reproduced from it;
and
(2) the copy or phonorecord is used
solely for the transmitting
organization's own transmissions
within its local service area, or for
purposes of archival preservation or
security; and
(3) unless preserved exclusively for
archival purposes, the copy or
phonorecord is destroyed within six
months from the date the transmission
program was first transmitted to the
public.
Id.
308 See 17 U.S.C. ?? 111, 119 (1988 & Supp. V
1993). These provisions are referred to as
"compulsory licenses" because under such
provisions, copyright owners are compelled to
grant the licenses. No license agreements
are signed and the terms of such licenses are
set forth in the statute; the copyright owner
cannot object to the use of the work and must
be satisfied with the license fees collected
under the statute, which are distributed
among all of the affected copyright owners by
arbitrators impaneled by the Librarian of
Congress.
309 The Copyright Office issued a regulation
in 1992 stating that a cable system is a
facility that both receives and transmits
signals from within the same state. See 37
C.F.R. ? 201.17(k) (1994). This ruling makes
clear that Section 111 should not be
applicable to any entities other than
community-based cable systems. Moreover, in
Satellite Broadcast Networks, Inc. v. Oman,
17 F.3d 344 (11th Cir.), cert. denied, 115 S.
Ct. 88 (1994), the 11th Circuit upheld the
regulation, finding it valid, enforceable and
to be used by courts when determining whether
a facility qualifies as a cable system.
Since facilities used to transmit works
through the NII will generally be inherently
capable of receiving and transmitting outside
any particular state, these facilities will
not qualify for the cable compulsory license.
310 A "satellite carrier" is defined as "an
entity that uses facilities of a satellite
service licensed by the Federal
Communications Commission to establish and
operate a channel of communications for point-
to-multipoint distribution of television
station signals . . . ." See 17 U.S.C.
? 119(d)(6). Unless the NII transmission
occurs through a satellite service licensed
by the FCC for the statutorily prescribed
purposes, the compulsory license provisions
would not be applicable.
311 See 17 U.S.C. ? 116 (Supp. V 1993). This
compulsory license may only be invoked if
private negotiations fail to produce a
consensual license.
312 See 17 U.S.C. ? 118 (1988 & Supp. V 1993).
313 See 17 U.S.C. ? 115 (1988).
314 See 17 U.S.C. ? 501(a) (Supp. V 1993).
Anyone who "trespasses into [the copyright
owner's] exclusive domain by using or
authorizing the use of the copyrighted work
in one of the five ways set forth in the
statute" is an infringer of the copyright.
Sony, supra note 22, at 433.
315 See discussion of the scope of the
exclusive rights supra at pp. 63-72. For
instance, activities such as loading a work
into a computer, scanning a printed work into
a digital file, uploading or downloading a
work between a user's computer and a BBS or
other server, and transmitting a work from
one computer to another may be infringements
(in those cases, of the reproduction right).
See, e.g., MAI Systems Corp. v. Peak
Computer, Inc., 991 F.2d 511 (9th Cir. 1993)
(the turning on of the computer, thereby
causing the operating system to be copied
into RAM, constituted an infringing
reproduction of the copyrighted software);
Advanced Computer Services v. MAI Systems
Corp., 845 F. Supp. 356 (E.D. Va. 1994)
(loading software into computer's random
access memory constituted infringing
reproduction); see also 2 Nimmer on Copyright
? 8.08 at 8-103 (1993) ("input of a work into
a computer results in the making of a copy,
and hence . . . such unauthorized input
infringes the copyright owner's reproduction
right").
316 The innocence or willfulness of the
infringing activity may be relevant with
regard to the award of statutory damages.
See 17 U.S.C. ? 504© (1988); see also
discussion of remedies infra pp. 130-33.
317 See 17 U.S.C. ? 106 (1988 & Supp. V 1993).
318 See House Report at 61, reprinted in 1976
U.S.C.C.A.N. 5674 ("references to 'copies or
phonorecords' are intended [in Section 106(1)-
(3)] and throughout the bill to include the
singular"; "the right 'to reproduce the
copyright work in copies or phonorecords'
means the right to produce a material object
in which the work is duplicated, transcribed,
imitated, or simulated . . . "). Further
evidence of the intent of Congress to make
even a single act of unauthorized
reproduction an infringement is found in
specific exemptions created for certain
single-copy uses. See, e.g., 17 U.S.C.
?? 108(a), 108(f)(2), 112(a) (1988); see also
Texaco, supra note 251, at 17.
319 See, e.g., Rockford Map Publishers, Inc.
v. Directory Serv. Co., 224 U.S.P.Q. 851
(C.D. Ill. 1984), aff'd, 768 F.2d 145 (7th
Cir. 1985), cert. denied, 474 U.S. 1061
(1986); Sub-Contractors Register, Inc. v.
McGovern's Contractors & Builders Manual,
Inc., 69 F. Supp. 507, 509 (S.D.N.Y. 1946).
It is common for publishers of directories
and other compilations to deliberately insert
mistakes into the work (such as periodically
adding a fictitious name, address and phone
number in a telephone directory) to detect
and help establish copying. See 2 H. Abrams,
The Law of Copyright ? 14.02[B][3][c], at 14-
19 to 20 (1993).
320 This should be implied in the requirement
that there be copying of the copyrighted
work. Ideas and facts, of course, are not
copyrightable. In the case of compilations,
such as databases, if enough facts are
copied, the copyrighted expression (the
selection, arrangement or coordination of the
facts) may be copied and infringement may be
found. See CONTU Final Report at 42 ("The
use of one item retrieved from such a work --
be it an address, a chemical formula, or a
citation to an article -- would not . . .
conceivably constitute infringement of
copyright. The retrieval and reduplication
of any substantial portion of a data base,
whether or not the individual data are in the
public domain, would likely constitute a
duplication of the copyrighted element of a
data base and would be an infringement.").
321 See Donald v. Zack Meyer's T.V. Sales &
Service, 426 F.2d 1027, 1030 (5th Cir. 1970)
("paraphrasing is equivalent to outright
copying"), cert. denied, 400 U.S. 992 (1971);
Davis v. E.I. DuPont de Nemours & Co., 240 F.
Supp. 612, 621 (S.D.N.Y. 1965) ("paraphrasing
is tantamount to copying in copyright law");
see generally 3 Nimmer on Copyright
? 13.03[A] at 13-28 to 13-58 (1993). Nimmer
identifies two bases upon which courts impose
liability for less than 100 percent verbatim
copying: (1) "fragmented literal similarity"
(where words, lines or paragraphs are copied
virtually word-for-word, although not
necessarily verbatim) and (2) "comprehensive
nonliteral similarity" (where the
"fundamental essence or structure" of a work
is copied); see also P. Goldstein, Copyright
? 7.2.1 at 13-17 (1989). Goldstein
identifies three types of similarity: (1)
where the infringing work "tracks" the
original work "in every detail," (2)
"striking similarity" (where a brief portion
of both works is "so idiosyncratic in its
treatment as to preclude coincidence") and
(3) similarities that "lie beneath the
surface" of the works ("[i]ncident and
characterization in literature, composition
and form in art, and rhythm, harmony and
musical phrases in musical composition").
Id. at 13 (citations omitted).
322 For analyses of the various tests that
have been used, see 3 Nimmer on Copyright
? 13.03[A] at 13-28 to -58 (1993); M.
Leaffer, Understanding Copyright Law ?? 9.5 -
9.7 at 268-76 (1989).
323 See Nichols v. Universal Pictures, Corp.,
45 F.2d 119, 121 (2d Cir. 1930).
324 See Peter Pan Fabrics Inc. v. Martin
Weiner Corp., 274 F.2d 487 (2d Cir. 1960).
325 See Z. Chaffee, Reflections on the Law of
Copyright: I, 45 Columbia L. Rev. 503, 513
(1945).
326 See Universal Athletic Sales Co. v.
Salkeld, 511 F.2d 904, 908-09 (3d Cir.),
cert. denied, 423 U.S. 863 (1975)
(subtracting all but the "stick figures" from
chart as non-protectible subject matter);
Alexander v. Haley, 460 F. Supp 40, 46
(S.D.N.Y. 1978) (finding "alleged
infringements display no similarity at all in
terms of expression or language, but show at
most some similarity of theme or setting.
These items, the skeleton of creative work
rather than the flesh, are not protected by
the copyright laws.").
327 See 429 F.2d 1106 (9th Cir. 1970).
328 See, e.g., Sid & Marty Krofft Television
Prods., Inc. v. McDonald's Corp., 562 F.2d
1157 (9th Cir. 1977); McCulloch v. Albert E.
Price, Inc., 823 F.2d 316 (9th Cir. 1987).
329 See, e.g., Reyher v. Children's Television
Workshop, 533 F.2d 87 (2d Cir. 1976); Atari,
Inc. v. North American Philips Consumer
Electronics Corp., 672 F.2d 607 (7th Cir.),
cert. denied, 459 U.S. 880 (1982); Atari
Games Corp. v. Oman, 888 F.2d 878 (D.C. Cir.
1989); Whelan Assocs., Inc. v. Jaslow Dental
Lab., Inc., 797 F.2d 1222 (3d Cir. 1986),
cert. denied, 479 U.S. 877 (1987).
330 562 F.2d 1157 (9th Cir. 1977).
331 See Pasillas v. McDonald's Corp., 927 F.2d
440, 442 (9th Cir. 1991).
332 See Brown Bag Software v. Symantec Corp.,
960 F.2d 1465, 1475 (9th Cir. 1992).
333 Krofft, supra note 330, at 1164.
334 862 F.2d 204 (9th Cir. 1988).
335 See also Apple Computer, Inc. v. Microsoft
Corp., 35 F.3d 1435, 1445 (9th Cir. 1994)
(approving of district court's use of
analytical dissection and agreeing with other
courts' use of the "same analysis although
articulated differently").
336 982 F.2d 693 (2d Cir. 1992). See
Autoskill Inc. v. National Educational
Support Systems, Inc., 994 F.2d 1476, 1490-91
(10th Cir. 1993).
337 Other circuits have applied this test.
See Engineering Dynamics, Inc. v. Structural
Software, Inc., 26 F.3d 1335, 1343 (5th Cir.
1994); Gates Rubber Co. v. Bando Chemical
Indus., Ltd., 9 F.3d 823, 834 (10th Cir.
1993).
338 154 F.2d 464 (2d Cir. 1946).
339 See, e.g., Peter Pan Fabrics, Inc. v.
Martin Weiner Corp., 274 F.2d 487 (2d Cir.
1960); Ideal Toy Corp. v. Fab-Lu Ltd., 360
F.2d 1021 (2d Cir. 1966); Eden Toys, Inc. v.
Marshall Field & Co., 675 F.2d 498 (2d Cir.
1982).
340 Ideal Toy Corp. at 1023 n.2.
341 905 F.2d 731 (4th Cir. 1990).
342 See Aliotti v. R. Dakin & Co., 831 F.2d
898, 902 (9th Cir. 1987) (holding that
perceptions of children must be considered in
substantial similarity analysis because they
are intended market for product); Atari, Inc.
v. North American Philips Consumer
Electronics Corp., 672 F.2d 607, 619 (7th
Cir.), cert. denied, 459 U.S. 880 (1982)
(holding that "[v]ideo games, unlike an
artist's painting, . . . appeal to an
audience that is fairly undiscriminating
insofar as their concern about more subtle
differences in artistic expression").
343 Dawson, supra note 341, at 736.
344 An infringer is anyone who violates "any
of the exclusive rights" of the copyright
owner. 17 U.S.C. ? 501(a) (Supp. V 1993).
One of the exclusive rights is "to prepare
derivative works based upon the copyrighted
work." 17 U.S.C. ? 106(2) (1988). A
"derivative work" is a work "based upon one
or more preexisting works, such as a . . .
condensation, or any other form in which a
work may be recast, transformed, or adapted."
17 U.S.C. ? 101 (1988) (definition of
"derivative work"). The Ninth Circuit has
suggested that "a work is not derivative
unless it has been substantially copied from
the prior work." See Litchfield v.
Spielberg, 736 F.2d 1352, 1357 (9th Cir.
1984) (emphasis added). It is unclear,
however, whether the court is suggesting that
a derivative work must be substantially
similar to the prior work or that it simply
must incorporate in some form a portion of
the prior work, as noted in the legislative
history. See House Report at 62, reprinted
in 1976 U.S.C.C.A.N. 5675. The court noted
that there is "little available authority" on
infringement of the derivative works right.
See Litchfield at 1357.
345 17 U.S.C. ? 602(a) (1988).
346 House Report at 169-70, reprinted in 1976
U.S.C.C.A.N. 5785.
347 Id. (Section 602 covers "unauthorized
importation of copies or phonorecords that
were lawfully made").
348 See T.B. Harms Co. v. Jem Records, Inc.,
655 F. Supp. 1575 (D.N.J. 1987); Parfums
Givenchy, Inc. v. C&C Beauty Sales, Inc., 832
F. Supp. 1378 (C.D. Cal. 1993). Courts are
divided as to whether the first sale doctrine
limits the ability of copyright owners to
enforce the importation rights (as it does
with respect to the domestic distribution
right). Compare BMG Music v. Perez, 952 F.2d
318, 319 (9th Cir. 1991) (first sale doctrine
does not circumscribe importation rights
under Section 602) with Sebastian Int'l, Inc.
v. Consumer Contacts (PTY) Ltd., 847 F.2d
1093, 1097 (3d Cir. 1988) (contra).
349 See 17 U.S.C. ? 602(a) (1988) (subsection
does not apply to "(1) importation of copies
or phonorecords under the authority or for
the use of the Government of the United
States or of any State or political
subdivision of a State, but not including
copies or phonorecords for use in schools, or
copies of any audiovisual work imported for
purposes other than archival use; (2)
importation, for the private use of the
importer and not for distribution, by any
person with respect to no more than one copy
or phonorecord of any one work at any one
time, or by any person arriving from outside
the United States with respect to copies or
phonorecords forming part of such person's
personal baggage; or (3) importation by or
for an organization operated for scholarly,
educational, or religious purposes and not
for private gain, with respect to no more
than one copy of an audiovisual work solely
for its archival purposes, and no more than
five copies or phonorecords of any other work
for its library lending or archival purposes,
unless the importation of such copies or
phonorecords is part of an activity
consisting of systematic reproduction or
distribution, engaged in by such organization
in violation of the provisions of section
108(g)(2)"); House Report at 170, reprinted
in 1976 U.S.C.C.A.N. 5786.
350 See discussion of transmissions and the
distribution right supra pp. 67-69.
351 See discussion infra pp. 213-21.
352 See House Report at 61, reprinted in 1976
U.S.C.C.A.N. 5674. There must be a direct
infringement upon which contributory
infringement or vicarious liability is based.
353 The concepts of contributory and vicarious
liability are well-established in tort law.
Contributory infringement of intellectual
property rights was first codified in patent
law. See 35 U.S.C. ? 271© (1988).
354 Shapiro, Bernstein & Co. v. H.L. Green
Co., 316 F.2d 304, 307 (2d Cir. 1963)
(holding that company that leased floor space
to phonograph record department was liable
for record department's sales of "bootleg"
records despite absence of actual knowledge
of infringement, because of company's
beneficial relationship to the sales).
355 See, e.g., Dreamland Ball Room, Inc. v.
Shapiro, Bernstein & Co., 36 F.2d 354 (7th
Cir. 1929); Famous Music Corp. v. Bay State
Harness Horse Racing & Breeding Ass'n, Inc.,
554 F.2d 1213 (1st Cir. 1977); KECA Music,
Inc. v. Dingus McGee's Co., 432 F. Supp. 72
(W.D. Mo. 1977). Indeed, the "cases are
legion which hold the dance hall proprietor
liable for the infringement of copyright
resulting from the performance of a musical
composition by a band or orchestra whose
activities provide the proprietor with a
source of customers and enhanced income. He
is liable whether the bandleader is
considered, as a technical matter, an
employee or an independent contractor, and
whether or not the proprietor has knowledge
of the compositions to be played or any
control over their selection." Shapiro,
Bernstein & Co. v. H.L. Green Co., 316 F.2d
304, 307 (2d Cir. 1963) (citing some 10
cases).
356 Gershwin Publishing Corp. v. Columbia
Artists Management, Inc., 443 F.2d 1159, 1162
(2d Cir. 1971) (holding management firm's
authorization of clients' performances of
copyrighted compositions to be contributory
infringement).
357 A library is exempted from liability for
the unsupervised use of reproducing equipment
located on its premises provided that the
equipment displays a copyright law notice.
17 U.S.C. ? 108(f)(1) (1988). This exemption
does not apply to the user of such equipment,
and no other provider of equipment enjoys any
statutory immunity. See 17 U.S.C.
? 108(f)(2) (1988).
358 See Universal Pictures Co. v. Harold Lloyd
Corp., 162 F.2d 354, 366 (9th Cir. 1947)
(rejecting defendant's argument that as an
employee, he was not responsible for his
employer's decision to use infringing
material, in light of defendant's personal
selection and appropriation of the protected
material).
359 See Boz Scaggs Music v. KND Corp., 491 F.
Supp. 908, 913 (D. Conn. 1980) (finding
defendant liable based on own admission of
responsibility and control over radio
performances of protected works).
360 See, e.g., Cable/Home Communication Corp.
v. Network Prods., Inc., 902 F.2d 829, 845-47
(11th Cir. 1990).
361 464 U.S. 417 (1984).
362 Id. at 440.
363 Id. at 442. The Court cited two
principles of patent law, but used only one
as the appropriate analogy for copyright law:
The Copyright Act does not expressly
render anyone liable for infringement
committed by another. In contrast,
the Patent Act expressly brands
anyone who "actively induces
infringement of a patent" as an
infringer, 35 U.S.C. ? 271(b), and
further imposes liability on certain
individuals labeled "contributory"
infringers, ? 271©.
Id. at 434-35. Section 271(b) of the Patent
Act provides, "Whoever actively induces
infringement of a patent shall be liable as
an infringer." 35 U.S.C. ? 271(b) (1988).
Section 271© provides, "Whoever sells a
component of a patented machine, manufacture,
combination or composition, or a material or
apparatus for use in practicing a patented
process, constituting a material part of the
invention, knowing the same to be especially
made or especially adapted for use in an
infringement of such patent, and not a staple
article or commodity of commerce suitable for
substantial noninfringing use, shall be
liable as a contributory infringer." 35
U.S.C. ? 271© (1988).
364 Sony, supra note 361, at 442. "In order
to resolve that question, we need not explore
all the different potential uses of the
machine and determine whether or not they
would constitute infringement. Rather, we
need only consider whether on the basis of
the facts as found by the District Court a
significant number of them would be
noninfringing." Id. The Court declined to
"give precise content" to the issue of how
much use is needed to rise to the level of
"commercially significant." See id.
The four dissenting Justices did not agree
that the patent "staple article of commerce"
doctrine of contributory infringement was
applicable to copyright law. See Sony, supra
note 361, at 490-91 n.41 (Blackmun, J.,
dissenting) ("[t]he doctrine of contributory
patent infringement has been the subject of
attention by the courts and by Congress . . .
and has been codified since 1952, . . . but
was never mentioned during the copyright law
revision process as having any relevance to
contributory copyright infringement"); see
also id. at 491 (disagreeing that "this
technical judge-made doctrine of patent law,
based in part on considerations irrelevant to
the field of copyright . . . should be
imported wholesale into copyright law.
Despite their common constitutional
source, . . . patent and copyright
protections have not developed in a parallel
fashion, and this Court in copyright cases in
the past has borrowed patent concepts only
sparingly.") Recognizing the "concerns
underlying the 'staple article of commerce'
doctrine," the dissent concluded that "if a
significant portion of the product's use is
noninfringing, the manufacturers and sellers
cannot be held contributorily liable for the
product's infringing uses." See id. at 491
(Blackmun, J., dissenting).
365 Id. at 446.
366 See, e.g., Vault Corp. v. Quaid Software
Ltd., 847 F.2d 255 (5th Cir. 1988) (seller of
computer programs that defeat anti-copying
protection is not liable as contributory
infringer because programs can be used to
enable user to make legal archival copies of
copyrighted computer programs under
Section 117, which the court found to be a
substantial noninfringing use). But see RCA
Records v. All-Fast Systems, Inc., 594 F.
Supp. 335 (S.D.N.Y. 1984) (operator is liable
for contributory infringement based on its
provision of sound recording facilities where
public could make unauthorized phonorecords).
367 Sega Enterprises Ltd. v. MAPHIA, 857 F.
Supp. 679 (N.D. Cal. 1994).
368 See id. at 685.
369 See id. at 687. The court found that
there was "no need to make archival copies of
[Sega's] ROM game cartridges" because the
"ROM cartridge format is not susceptible to
breakdown" and Sega would replace defective
cartridges. See id. at 685. The court also
found that it was unlikely that customers
would buy the copiers, at a cost of $350, for
the purpose of backing up Sega's video game
programs, which sold for $30 to $70 each.
Id. at 685.
370 For detailed analyses of arguments on both
sides of this liability issue, see I. Trotter
Hardy, The Proper Legal Regime for
"Cyberspace," 55 U. Pitt. L. Rev. 993 (1994).
371 This differs from other bodies of law with
which service providers, as well as
broadcasters, newspaper publishers and
others, come in contact. Defamation, for
example, has a knowledge requirement for
liability. This standard is the same whether
in a conventional or NII environment. In
Auvil v. CBS "60 Minutes," 800 F. Supp. 928
(E.D. Wash. 1992), the court held that a
network affiliate which exercised no
editorial control over the network broadcast
(although it had the power to do so) served
only as a conduit and was not liable for
republishing defamatory statements. The
court borrowed reasoning from book seller
cases -- "one who only delivers or transmits
defamatory material published by a third
person is subject to liability if, but only
if, he knows or had reason to know of its
defamatory character" -- finding "no logical
basis for imposing a duty of censorship on
the visual media which does not likewise
attach to the print chain of distribution."
The court also found that the injured parties
were not impaired by limiting conduit
liability to those situations where
culpability is established; "[t]he generating
source, which in a national broadcast will
generally be the deepest of the deep pockets,
may still be called upon to defend." A
similar result was reached in Cubby, Inc. v.
CompuServe Inc., 776 F. Supp. 135 (S.D.N.Y.
1991), where the court held that libelous
material uploaded to a bulletin board system
by a subscriber did not subject the BBS
operator to damages for libel. The court
determined that a BBS was a "distributor"
(akin to a public library or bookstore)
rather than a "republisher," and thus the
operator was liable only if it "knew or had
reason to know of the allegedly
defamatory . . . statements" that had been
uploaded.
372 See discussion of innocent infringement
infra p. 125.
373 See discussion of contributory
infringement and vicarious liability supra
pp. 109-14.
374 See Olan Mills, Inc. v. Linn Photo Co., 23
F.3d 1345 (8th Cir. 1994).
375 See P. Goldstein, Copyright, ? 1.15, at 45
(1989) ("The exercise of due
diligence . . . can reduce, but never
entirely exclude, the risk of a copyright
infringement claim. Copyright law's rule of
strict liability poses particularly hard
problems for an intermediary, . . . which
must accept on faith its author's
representation that he originated the
work.").
376 The same can be said of other information
providers and facilitators, such as book
stores, photocopying services, photo
finishers, broadcasters, etc.
377 The subscriber may be unknown --
particularly in the case of anonymous
messages -- to everyone but the service
provider.
378 Some estimates of the number of BBS
operators are as high as 100,000.
379 See Buck v. Jewell-LaSalle Realty Co., 283
U.S. 191, 198-99 (1931) (citations omitted)
(at the time, infringement of the public
performance right required that the
performance was "for profit"); see also ABKCO
Music, Inc. v. Harrisongs Music, Ltd., 722
F.2d 988, 999 (2d Cir. 1983) ("the problems
of proof inherent in a rule that would permit
innocent intent as a defense to copyright
infringement could substantially undermine
the protections Congress intended to afford
copyright holders").
380 See, e.g., House Report at 159-60,
reprinted in 1976 U.S.C.C.A.N. 5775-76.
Within the cable compulsory licensing
provisions, one narrow exemption from
liability was granted with respect to
secondary transmissions by independent
carriers that provided transmission capacity
for the distribution of superstation signals
to local cable operators. See 17 U.S.C.
? 111(a)(3) (1988). This exemption is only
available if the primary transmission is made
for reception by the public at large. If the
primary transmission is limited to a
particular segment of the public, such as
subscribers to a service, the exemption does
not apply and the standards for copyright
liability are fully applicable.
381 See cases cited supra note 355.
382 House Report at 159-60, reprinted in 1976
U.S.C.C.A.N. 5775-76.
383 House Report at 163, reprinted in 1976
U.S.C.C.A.N. 5779.
384 Id.
385 3 Nimmer on Copyright ? 13.08 at 13-291
(1994). See P. Goldstein, Copyright ? 9.4 at
162 (1989) ("the standard rationale for
excluding innocence as a defense to copyright
infringement is that, as between the
copyright owner and the infringer, the
infringer is better placed to guard against
mistake"; "the strict liability rule should
discipline an infringer, who might otherwise
mistakenly conclude that his copying will not
infringe the copyrighted work, to evaluate
the legal consequences of his conduct more
carefully").
386 Playboy Enterprises Inc. v. Frena, 839 F.
Supp. 1552 (M.D. Fla. 1993).
387 Id. at 1559.
388 Sega Enterprises Ltd. v. MAPHIA, 857 F.
Supp. 679 (N.D. Cal. 1994).
389 Id. at 686-87. With regard to the
contributory liability issues, the court
found that the BBS operator had knowledge of
the uploading and downloading of unauthorized
copies of Sega's copyrighted video games and
that it solicited the copying of the games.
Id. at 683.
390 See Frank Music Corp. v. CompuServe Inc.,
Civil Action No. 93 Civ. 8153 (JFK)
(S.D.N.Y.) (complaint filed Nov. 29, 1993).
The Complaint alleges that defendant, by
providing access to its BBS by subscribers,
engaged in: (1) "permitting, facilitating
and participating in the recording of
performances of the [Plaintiffs' works] into,
and storing such recordings in, CompuServe's
computer database by permitting and enabling
its paying subscribers to upload such
performances thereto"; (2) "maintaining a
storage of unauthorized recordings of [the
Plaintiffs' works] (uploaded by its
subscribers) in and as part of CompuServe's
computer database"; and (3) "permitting,
facilitating and participating in the
recording (i.e., re-recording) of the
performances of [the Plaintiffs' works]
(theretofore stored in its computer database)
by permitting and enabling its paying
subscribers to download such recorded
performances therefrom." Complaint at 6-7.
In addition, the Plaintiffs allege that
CompuServe had "control over the nature and
content of materials stored in its Bulletin
Board and downloaded therefrom"; that
CompuServe "had actual knowledge of, or in
the exercise of reasonable diligence could
have determined, the nature and content of
materials stored in its Bulletin Board and
downloaded therefrom"; and that CompuServe
"had actual notice, or in the exercise of
reasonable diligence could have determined,
that recordings of [the Plaintiffs' works]
were uploaded (recorded) to, stored in, and
downloaded (re-recorded) from its computer
database." See Complaint at 7.
391 See Religious Technology Center v. NETCOM,
No. C95-20091 (N.D. Cal.) (verified first
amended complaint filed March 3, 1995).
392 Under the Communications Act of 1934, a
common carrier is required to furnish service
to the public upon reasonable request. See
47 U.S.C. ? 201. A common carrier is defined
as "any person engaged as a common carrier
for hire, in interstate or foreign
communication by wire or radio . . . ." See
47 U.S.C. ? 153(h). The Supreme Court
examined this somewhat circular definition
and found that a common carrier in the
communications context is one that "makes a
public offering to provide [communications
facilities] whereby all members of the public
who choose to employ such facilities may
communicate or transmit intelligence of their
own design and choosing . . . ." See Federal
Communications Commission v. Midwest Video
Corp., 440 U.S. 689, 701 (1979) (citing
Report and Order, Industrial Radiolocation
Service, Docket No. 16106, 5 F.C.C.2d 197,
202 (1966)).
393 See P. Goldstein, Copyright ? 1.15 at 45
(1989) ("[a]n intermediary can to some extent
protect itself by shifting or sharing the
risk of infringement through a warranty from
the author that he originated the work in
question or through an errors and omissions
insurance policy").
394 See 17 U.S.C. ? 502 (1988).
395 Superhype Publishing, Inc. v. Vasiliou,
838 F. Supp. 1220, 1226 (S.D. Ohio 1993).
396 See 17 U.S.C. ? 503(a) (1988).
397 See 17 U.S.C. ? 503(b) (1988).
398 17 U.S.C. ? 504 (1988). Statutory damages
generally are not available if the
infringement occurred before the effective
date of registration of the work, unless the
infringement occurred after first publication
and registration was made within three months
of first publication. See 17 U.S.C. ? 412
(1988 & Supp. V 1993).
399 See 17 U.S.C. ? 504(b) (1988).
400 See 17 U.S.C. ? 504©(1) (1988).
401 17 U.S.C. ? 504©(2) (1988).
402 D.C. Comics Inc. v. Mini Gift Shop, 912
F.2d 29, 35 (2d Cir. 1990); Innovative
Networks, Inc. v. Satellite Airlines
Ticketing, Inc., 871 F. Supp. 709, 721
(S.D.N.Y. 1995). However, the court must
remit statutory damages if (1) the infringer
"believed and had reasonable grounds for
believing" that the use was a fair use, and
(2) the infringer was a nonprofit educational
institution, library or archives (or its
employee or agent) and infringed the
reproduction right or a public broadcasting
entity (or a person who "as a regular part of
the nonprofit activities" of a public
broadcasting entity) that infringed by
performing a published nondramatic literary
work or reproducing a transmission program
embodying a performance of such work. See 17
U.S.C. ? 504©(2) (1988).
403 See 17 U.S.C. ? 504©(2) (1988) ("where
the infringer sustains the burden of proving,
and the court finds, that such infringer was
not aware and had no reason to believe that
his or her acts constituted an infringement
of copyright, the court . . . may reduce the
award of statutory damages to a sum of not
less than $200"); D.C. Comics Inc., supra
note 402, at 35 (defendant's lack of business
sophistication and absence of copyright
notice on copies were basis for a finding of
innocent infringement and statutory damages
of only $200). A person who is misled and
innocently infringes by relying on the lack
of a copyright notice on a copy of a work
that was lawfully publicly distributed before
March 1, 1989, is not liable for any damages
(actual or statutory) for infringements
committed before actual notice of
registration of the work is received. 17
U.S.C. ? 405(b) (1988). The court may allow,
however, the recovery of any of the
infringer's profits attributable to the
infringement. Id.
404 See 17 U.S.C. ? 504©(2) (1988).
405 Twin Peaks Prods., Inc. v. Publications
Int'l, Ltd., 996 F.2d 1366, 1382 (2d Cir.
1993); Video Views, Inc. v. Studio 21, Ltd.,
925 F.2d 1010, 1020 (7th Cir.), cert. denied,
502 U.S. 861 (1991).
406 17 U.S.C. ? 505 (1988).
407 Id.; see also Roth v. Pritikin, 787 F.2d
54, 57 (2d Cir. 1986) (attorney's fees
generally awarded to prevailing plaintiffs
because Copyright Act is intended to
encourage suits to redress infringement); Chi-
boy Music v. Charlie Club, Inc., 930 F.2d
1224, 1230 (7th Cir. 1991) (attorney's fees
and costs serve to deter infringement,
dissuade defendant's disdain for copyright
law, and encourage plaintiffs to bring
colorable claims against infringers). No
attorney's fees may be awarded for an
infringement of copyright before its
registration unless, in the case of published
works, the infringement occurred after first
publication and registration was made within
three months of first publication. 17 U.S.C.
? 412 (1988 & Supp. V 1993).
408 See 17 U.S.C. ? 506 (a) (1988).
409 17 U.S.C. ? 506(b) (1988).
410 871 F. Supp. 535 (D. Mass. 1994).
411 The indictment alleged that the resultant
loss of revenue to the copyright owners was
in excess of $1,000,000 over a period of
approximately six weeks.
412 17 U.S.C. ? 506© (1988). The penalties
in Section 506© apply with regard to
copyright notices or "words of the same
purport." Id.
413 Id.
414 17 U.S.C. ? 506(d) (1988).
415 17 U.S.C. ? 506(e) (1988).
416 See Fogerty v. Fantasy, supra note 35, at
1029.
417 See discussion of the fair use defense
supra pp. 73-82.
418 See F.E.L. Publications, Ltd. v. Catholic
Bishop of Chicago, 754 F.2d 216, 220-22 (7th
Cir. 1985); but see Columbia Pictures Indus.
v. Redd Horne, Inc., 749 F.2d 154, 161-62 (3d
Cir. 1984).
419 See Pacific & Southern Co., Inc. v.
Duncan, 572 F. Supp. 1186 (N.D. Ga. 1983),
aff'd, 744 F.2d 1490 (11th Cir. 1984).
420 See 17 U.S.C. ? 504©(2) (1988); see also
supra pp. 125-26. If a proper copyright
notice was affixed to the published copy to
which the infringer had access, the court may
not give any weight to a claim of innocent
infringement in mitigation of damages, except
in limited circumstances involving certain
infringers (including nonprofit educational
institutions and libraries) who violated
certain exclusive rights and who believed,
and had reasonable grounds for believing that
the use was a fair use. See ?? 401(d),
504©(2) (1988); see also 17 U.S.C. ? 405(b)
(1988) (effect on innocent infringers of
omission of copyright notice on copies
publicly distributed before March 1, 1989).
421 See 17 U.S.C. ? 302(e) (1988) (after a
period of 75 years from first publication of
a work, or 100 years from its creation,
whichever is shorter, a person who obtains
from the Copyright Office a certified report
that the records relating to the deaths of
authors disclose nothing to indicate that the
author is living, or died less than 50 years
before, may presume that the author has been
dead for at least 50 years, and good faith
reliance on that presumption is a complete
defense).
422 See generally discussion of infringement
supra pp. 100-07.
423 Further, no action will lie if the statute
of limitations has run. See 17 U.S.C. ? 507
(1988).
424 A nonexclusive license may be implied from
conduct. See Effects Assocs., Inc. v. Cohen,
908 F.2d 555, 558 (9th Cir. 1990), cert.
denied, 498 U.S. 1103 (1991); MacLean
Assocs., Inc. v. Wm. M. Mercer-Meidinger-
Hansen, Inc., 952 F.2d 769, 779 (3d Cir.
1991); see also 3 Nimmer on Copyright
? 10.03[A] at 10-38 (1994). Implied
licenses, like oral licenses, are always
nonexclusive in nature and may be limited in
scope. See Oddo v. Ries, 743 F.2d 630, 634
(9th Cir. 1984); Gilliam v. American
Broadcasting Cos., 538 F.2d 14, 19-21 (2d
Cir. 1976). Delivery of a copy of a work by
the copyright owner to the moderator of a
newsgroup may imply a license to reproduce
and distribute copies of the work to the
subscribers of that newsgroup, but may not be
evidence of an implied license to reproduce
and distribute copies to other newsgroups.
425 "Neighboring rights" are discussed infra
p. 134.
426 See S. Siwek & H. Furchtgott-Roth,
International Intellectual Property Alliance,
Copyright Industries in the U.S. Economy
(1995).
427 See generally S. Stewart, International
Copyright and Neighbouring Rights (2d ed.
1989) (hereinafter Stewart). Stewart
presents a summary of international copyright
principles and synopses of the copyright laws
of a number of countries. Stewart also
identifies socialist copyright laws as a
category. However, since the demise of the
USSR, many of the former socialist countries
have moved to enact modern copyright
legislation. The copyright laws of the
People's Republic of China and Russia follow
the civil law model.
428 Stewart at 6. In some common law
countries, moral rights are protected by a
combination of statutory provisions and
common law. In the United States, for
instance, this protection is found in Federal
legislation, such as the Lanham Act and the
Copyright Act, various state legislative
provisions and the common law of privacy,
defamation and the like. See Final Report of
the Ad Hoc Working Group on U.S. Adherence to
the Berne Convention, 10 Colum. VLA J.L. &
Arts 513, 548-57 (1986); 2 Nimmer on
Copyright ? 8D.02[A] at 8D-10 to -11 (1994).
429 There are 155 members of the Convention
Establishing the World Intellectual Property
Organization (WIPO) as of July 1, 1995. Done
at Stockholm on July 14, 1967; entered into
force for the United States on August 25,
1970. 21 UST 1749; TIAS 6932; 828 UNTS 3.
WIPO also administers the Paris Convention
for the Protection of Industrial Property
(Stockholm 1967), which is not discussed in
this Report.
430 Berne Convention (with Appendix) for the
Protection of Literary and Artistic Works of
September 9, 1886, completed at Paris on May
4, 1896, revised at Berlin on November 13,
1908, completed at Berne on March 20, 1914,
revised at Rome on June 2, 1928, at Brussels
on June 26, 1948, at Stockholm on July 14,
1967, and at Paris on July 24, 1971, amended
at Paris on July 24, 1979. Done at Paris on
July 24, 1971; entered into force for the
United States on March 1, 1989.
431 There were 48 members of the convention as
of July 1, 1995, but the United States is not
a member. The Rome Convention is jointly
administered by WIPO, the International Labor
Organization (ILO) and the United Nations
Educational, Scientific and Cultural
Organization (UNESCO).
432 Done at Geneva on October 29, 1971;
entered into force on April 18, 1973; for the
United States on March 10, 1974. 25 UST 309;
TIAS 7808; 888 UNTS 67. There were 53
members of the Convention as of July 1, 1995.
433 UNESCO is the United Nations Educational,
Scientific and Cultural Organization.
434 Universal Copyright Convention, as
revised, with two protocols annexed thereto.
Done at Paris on July 24, 1971, entered into
force on July 10, 1974. 25 UST 1341; TIAS
7868. As of May 31, 1995, there were 96
members of the Convention.
435 As of July 1, 1995, there were 114
signatories to the Berne Convention.
436 This fundamental principle is set forth in
Section 102(b) of the U.S. Copyright Act.
See discussion supra pp. 32-35.
437 This approach is consistent with Section
107 of the U.S. Copyright Act (relating to
fair use of copyrighted works).
438 Only Japan and Switzerland qualify under
this exception.
439 Article 5 provides:
(1) Authors shall enjoy, in respect
of works for which they are protected
under this Convention, in countries
of the Union other than the country
of origin, the rights which their
respective laws do now or may
hereafter grant to their nationals,
as well as the rights specially
granted by this Convention.
(2) The enjoyment and the exercise
of these rights shall not be subject
to any formality; such enjoyment and
such exercise shall be independent of
the existence of protection in the
country of origin of the work.
Consequently, apart from the
provisions of this Convention, the
extent of protection, as well as the
means of redress afforded to the
author to protect his rights, shall
be governed exclusively by the laws
of the country where protection is
claimed.
(3) Protection in the country of
origin is governed by domestic law.
However, when the author is not a
national of the country of origin of
the work for which he is protected
under this Convention, he shall enjoy
in that country the same rights as
national authors.
(4) The country of origin shall be
considered to be:
(a) in the case of works first
published in a country of the Union,
that country; in the case of works
published simultaneously in several
countries of the Union which grant
different terms of protection, the
country whose legislation grants the
shortest term of protection;
(b) in the case of works
published simultaneously in a country
outside the Union and in a country of
the Union, the latter country;
© in the case of unpublished
works or of works first published in
a country outside the Union, without
simultaneous publication in a country
of the Union, the country of the
Union of which the author is a
national, provided that:
(i) when these are
cinematographic works the maker of
which has his headquarters or his
habitual residence in a country of
the Union, the country of origin
shall be that country, and
(ii) when these are works of
architecture erected in a country of
the Union or other artistic works
incorporated in a building or other
structure located in a country of the
Union, the country of origin shall be
that country.
440 See World Intellectual Property
Organization, BCP/CE/III/3, Report of the
Committee of Experts on a Possible Protocol
to the Berne Convention, Third Session, June
21 to 25, 1993, 20-21 (June 25, 1993).
441 Id. at 21.
442 See Trade-Related Aspects of Intellectual
Property, Final Act Embodying the Results of
the Uruguay Round of the Multilateral Trade
Negotiations, Office of the U.S. Trade
Representative (Dec. 15, 1993).
443 Id.
444 Article 3 (National Treatment) provides:
1.Each Member shall accord to the
nationals of other Members treatment
no less favourable than that it
accords to its own nationals with
regard to the protection of
intellectual property, subject to the
exceptions already provided in,
respectively, the Paris Convention
(1967), the Berne Convention (1971),
the Rome Convention and the Treaty on
Intellectual Property in Respect of
Integrated Circuits. In respect of
performers, producers of phonograms
and broadcasting organizations, this
obligation only applies in respect of
the rights provided under this
Agreement. Any Member availing
itself of the possibilities provided
in Article 6 of the Berne Convention
and paragraph 1(b) of Article 16 of
the Rome Convention shall make a
notification as foreseen in those
provisions to the Council for Trade-
Related Aspects of Intellectual
Property Rights.
2.Members may avail themselves of the
exceptions permitted under
paragraph 1 above in relation to
judicial and administrative
procedures, including the designation
of an address for service or the
appointment of an agent within the
jurisdiction of a Member, only where
such exceptions are necessary to
secure compliance with laws and
regulations which are not
inconsistent with the provisions of
this Agreement and where such
practices are not applied in a manner
which would constitute a disguised
restriction on trade.
445 Article 4 of TRIPs (Most-Favoured-Nation
Treatment) provides:
With regard to the protection of
intellectual property, any advantage,
favour, privilege or immunity granted
by a Member to the nationals of any
other country shall be accorded
immediately and unconditionally to
the nationals of all other Members.
Exempted from this obligation are any
advantage, favour, privilege or
immunity accorded by a Member:
(a) deriving from international
agreements on judicial assistance and
law enforcement of a general nature
and not particularly confined to the
protection of intellectual property;
(b) granted in accordance with
the provisions of the Berne
Convention (1971) or the Rome
Convention authorizing that the
treatment accorded be a function not
of national treatment but of the
treatment accorded in another
country;
© in respect of the rights of
performers, producers of phonograms
and broadcasting organizations not
provided under this Agreement;
(d) deriving from international
agreements related to the protection
of intellectual property which
entered into force prior to the entry
into force of the WTO Agreement,
provided that such agreements are
notified to the Council for TRIPs and
do not constitute an arbitrary or
unjustifiable discrimination against
nationals of other Members.
446 See NAFTA, H.R. Doc. No. 159, 103d Cong.,
1st Sess. (1993); 32 I.L.M. 289-456, 605-799
(1993). The NAFTA is binding among the
United States, Mexico and Canada.
447 Article 6bis provides:
(1) Independently of the author's
economic rights, and even after the
transfer of the said rights, the
author shall have the right to claim
authorship of the work and to object
to any distortion, mutilation or
other modification of, or other
derogatory action in relation to, the
said work, which would be prejudicial
to his honor or reputation.
(2) The rights granted to the author
in accordance with the preceding
paragraph shall, after his death, be
maintained, at least until the expiry
of the economic rights, and shall be
exercisable by the persons or
institutions authorized by the
legislation of the country where
protection is claimed. However,
those countries whose legislation, at
the moment of their ratification of
or accession to this Act, does not
provide for the protection after the
death of the author of all the rights
set out in the preceding paragraph
may provide that some of these rights
may, after his death, cease to be
maintained.
(3) The means of redress for
safeguarding the rights granted by
this Article shall be governed by the
legislation of the country where
protection is claimed.
448 See Act of October 31, 1988, Pub. L. 100-
568, 1988 U.S.C.C.A.N. (102 Stat.) 2853.
449 See Visual Artists Rights Act of 1990,
Pub. L. 101-650, 1990 U.S.C.C.A.N. (104
Stat.) 5128.
450 See Exposure '94: A Proposal for the New
Rule of Intellectual Property for Multimedia,
Institute of Intellectual Property 18 (Feb.
1994).
451 See discussion infra pp. 189-90, 230-36.
452 See discussion infra pp. 191-94, 236-38.
453 Article 20 states:
The Governments of the countries of
the Union reserve the right to enter
into special agreements among
themselves, in so far as such
agreements grant to authors more
extensive rights than those granted
by the Convention, or contain other
provisions not contrary to this
Convention. The provisions of
existing agreements which satisfy
these conditions shall remain
applicable.
454 This reference to fixations includes the
subject matter of neighboring rights related
to works and their performance.
455 Feist, supra note 36, at 345.
456 See discussion of 35 U.S.C. ? 102 infra
notes 463-64 and accompanying text.
457 To be eligible for patent protection, an
invention must be either a process, an
article of manufacture, a composition or a
machine. Discoveries, laws of nature,
mathematical algorithms, methods of doing
business and the like are not eligible for
patent protection. See 35 U.S.C. ? 101
(1988).
458 See discussion of 35 U.S.C. ? 103 infra
note 465 and accompanying text.
459 See 35 U.S.C. ? 112 (1988).
460 See 35 U.S.C. ? 101 (1988). This language
has been interpreted broadly by the Supreme
Court in Diamond v. Chakrabarty, 447 U.S.
303, 309 (1980), wherein the Court held:
The subject-matter provisions of the
patent law have been cast in broad
terms to fulfill the constitutional
and statutory goal of promoting "the
Progress of Science and the useful
Arts" . . . . Congress employed
broad general language in drafting
[Section] 101 precisely because such
inventions are often unforeseeable.
Judicial precedent does exist denying
patentability under Section 101 for claims
directed to laws of nature and methods of
doing business. See Parker v. Flook, 437
U.S. 584, 589 (1978).
461 See Diamond v. Diehr, 450 U.S. 175, 185
(1981) ("[e]xcluded from such patent
protection are laws of nature, natural
phenomena, and abstract ideas"); Diamond v.
Chakrabarty, supra note 460, at 309 ("new
mineral discovered in the earth or a new
plant found in the wild is not patentable
subject matter. Likewise, Einstein could not
patent his celebrated law that E=mc2; nor
could Newton have patented the law of
gravity. Such discoveries are
'manifestations of . . . nature, free to all
men and reserved exclusively to none.'");
Gottschalk v. Benson, 409 U.S. 63, 72 (1973)
("the patent would wholly pre-empt the
mathematical formula and in practical effect
would be a patent on the algorithm itself");
In re Alappat, 33 F.3d 1526, 1542 (Fed. Cir.
1994) (noting that the Supreme Court did not
intend to make mathematical algorithms a
fourth category of unpatentable subject
matter along with Diehr's holding that laws
of nature, natural phenomena and abstract
ideas, but rather that some types of
mathematical subject matter standing alone
are only abstract ideas).
462 See In re Gulack, 703 F.2d 1381, 1385
(Fed. Cir. 1983) ("[w]here the printed matter
is not functionally related to the substrate,
the printed matter will not distinguish the
invention from the prior art in terms of
patentability").
463 Section 102 of Title 35 defines the
different categories of prior art to include
patents issued prior to the applicant's
filing date by the United States or by other
countries, patents issued by the United
States after but filed prior to the
applicant's filing date, printed publications
distributed in the United States or abroad,
evidence of public use or public disclosure
of the claimed invention in the United States
more than one year before the applicant's
filing date, and evidence of a sale or an
offer to sell the claimed invention in the
United States more than one year prior to
applicant's filing date. These categories
are defined in 35 U.S.C. ? 102 (1988):
A person shall be entitled to a
patent unless -
(a) the invention was known or used
by others in this country, or
patented or described in a printed
publication in this or a foreign
country, before the invention thereof
by the applicant for patent, or
(b) the invention was patented or
described in a printed publication in
this or a foreign country or in
public use or on sale in this
country, more than one year prior to
the date of the application for
patent in the United States,
or . . . .
* * *
(e) the invention was described in a
patent granted on an application for
patent by another filed in the United
States before the invention thereof
by the applicant for patent, or on an
international application by another
who has fulfilled the requirements of
paragraphs (1), (2), and (4) of
section 371© of this title before
the invention thereof by applicant
for patent, or
(f) he did not himself invent the
subject matter sought to be patented,
or
(g) before the applicant's invention
thereof the invention was made in
this country by another who had not
abandoned, suppressed, or concealed
it. In determining priority of
invention there shall be considered
not only the respective dates of
conception and reduction to practice
of the invention, but also the
reasonable diligence of one who was
first to conceive and last to reduce
to practice, from a time prior to
conception by the other.
464 Novelty exists unless the prior art
completely discloses the invention that is
claimed by the patent applicant. For
example, if a patent application is filed two
years after an article is published in a
technical journal which completely discloses
the invention claimed in the patent
application, the application will be rejected
by the PTO on the grounds that the claimed
invention lacks novelty over that printed
publication through operation of Section
102(b).
465 Section 103 sets forth the nonobviousness
requirement, in pertinent part, as follows:
A patent may not be obtained though
the invention is not identically
disclosed or described as set forth
in section 102 of this title, if the
differences between the subject
matter sought to be patented and the
prior art are such that the subject
matter as a whole would have been
obvious at the time the invention was
made to a person having ordinary
skill in the art to which said
subject matter pertains.
Patentability shall not be negatived
by the manner in which the invention
was made.
35 U.S.C. ? 103 (1988).
466 Under U.S. law, an inventor may rely on a
"grace period" to avoid the otherwise patent-
defeating effect of an earlier public
disclosure of his or her invention. For
example, an inventor may be able to obtain a
patent on an invention that was disclosed in
a technical journal provided she can
establish that she conceived of the invention
prior to that disclosure. There is a
statutory limit of one year imposed by
Section 102(b) on the grace period. This
grace period is not available in all
countries. As a result, applicants must
exercise care before disclosing their
invention to avoid forfeiting patent rights
in countries other than the United States.
467 Every patent concludes with one or more
claims that outline the boundaries of the
rights granted by the Government to the
patentee. Claims must be commensurate in
scope with the disclosure of the applicant,
and must be clear and understandable.
468 The first paragraph of Section 112 states:
The specification shall contain a
written description of the invention,
and of the manner and process of
making and using it, in such full,
clear, concise, and exact terms as to
enable any person skilled in the art
to which it pertains, or with which
it is most nearly connected, to make
and use the same, and shall set forth
the best mode contemplated by the
inventor of carrying out his
invention.
469 See 35 U.S.C. ? 154(a)(1) (1988), as
amended by Uruguay Round Agreements Act, Pub.
L. 103-465, 1994 U.S.C.C.A.N. (108 Stat.)
4809, 4984 ("[e]very patent shall
contain . . . a grant to the patentee . . .
the right to exclude others from making,
using, offering for sale, or selling the
invention throughout the United States or
importing the invention into the United
States, and, if the invention is a process,
of the right to exclude others from using,
offering for sale or selling throughout the
United States, or importing into the United
States, products made by that process,
referring to the specification for the
particulars thereof").
470 The term of patents was changed as part of
the Uruguay Round Agreements Act, Pub. L. 103-
465, 1994 U.S.C.C.A.N. (108 Stat.) 4809,
4984. Under the former system, patent rights
would begin on the date a patent was granted
and would end 17 years later. As part of the
transition to the new system, the term of
patents that were pending on June 8, 1995, or
which result from applications pending on
that date, will begin on the date the patent
was granted and will end on the date that is
the later of 17 years from the date of grant
or 20 years from the earliest effective
filing date of the application leading to the
patent.
471 See 35 U.S.C. ? 271 (1988).
472 See 35 U.S.C. ? 271(a) (1988), as amended
by Uruguay Round Agreements Act, Pub. L. 103-
465, 1994 U.S.C.C.A.N. (108 Stat.) 4809, 4984
("[e]xcept as otherwise provided in this
title, whoever without authority makes, uses,
offers to sell, or sells any patented
invention, within the United States, or
imports into the United States any patented
invention during the term of the patent
therefor, infringes the patent").
473 The United States allows the holder of a
United States patent on a process to enforce
its rights against a third party that uses a
process patented in the United States outside
the territorial boundaries of the United
States and then attempts to import a product
produced using that patented process. See 35
U.S.C. ? 295 (1988).
474 There are two forms of infringement,
"literal" and infringement through operation
of the "doctrine of equivalents." Literal
infringement means that the accused product
or process contains each and every element
set forth in the patent claims. Infringement
through the "doctrine of equivalents" refers
to a situation where the accused product or
process does not have each of the elements
set forth in the claims but the accused
product or process "performs substantially
the same function in substantially the same
way to obtain the same result as the patented
invention." The latter form of infringement
is intended to address situations where an
accused infringer has made insubstantial
changes to a product to avoid liability for
infringement. See Graver Tank & Mfg. Co. v.
Linde Air Prods. Co., 339 U.S. 605, 607
(1950).
475 This is most often accomplished by
submitting new prior art which was not
considered by the PTO in the examination of
the application. The accused infringer will
typically argue that the new information
anticipates or makes obvious the claimed
invention. While the statute provides that
all claims of a patent are presumed valid,
the disclosure of new information that was
not considered by the PTO can have
significant repercussions when these claims
are considered by a court. The party may
also show that the claims are defective in
view of Section 112 because they are broader
than what is actually supported by the
disclosure.
476 A party can also preclude the enforcement
of a patent without specifically addressing
the validity of the patent. This can occur,
for example, if the patent owner engaged in
"inequitable conduct" before the PTO (e.g.,
the inventor withheld material prior art from
the patent office or made other
misrepresentations intended to mislead the
PTO), or misused its patent rights (e.g., in
an antitrust context). In both instances,
the patent will be unenforceable against any
and all infringers, even if the patent
satisfies all patentability requirements.
477 See 35 U.S.C. ? 282 (1988):
A patent shall be presumed valid.
Each claim of a patent (whether
independent, dependent, or multiple
dependent form) shall be presumed
valid independently of the validity
of other claims; dependent or
multiple dependent claims shall be
presumed valid even though dependent
upon an invalid claim. The burden of
establishing invalidity of a patent
or any claim thereof shall rest on
the party asserting such invalidity.
478 A party can also challenge the validity of
a patent in a reexamination proceeding before
the Patent and Trademark Office. In such a
proceeding, however, the basis for challenge
is limited to novelty and obviousness in view
of only certain types of prior art, namely,
printed publications and patents.
479 Prior art plays a critical role in
patentability determinations. It serves to
define the state of the art at the time a
patent application is filed (e.g., it
establishes the level of ordinary skill in
the art). Specific items of prior art serve
as the basis of denying patentability to a
particularly claimed invention, either
singularly in the context of novelty or
through combination in the context of
obviousness. Because of this, it is
imperative that all sources of information
that relate to an invention be integrated
into patentability determinations.
480 See In re Hall, 781 F.2d 897, 899 (Fed.
Cir. 1986) (publicly catalogued doctoral
dissertation in publicly accessible library
properly considered prior art document).
481 The courts developed a test -- the Freeman-
Walter-Abele test -- to distinguish claims
covering "mathematical algorithms" from those
on products and processes that use or rely
upon mathematical principles. See In re
Freeman, 573 F.2d 1237 (CCPA 1978), as
modified by In re Walter, 618 F.2d 758, 766-
68 (CCPA 1980); In re Abele, 684 F.2d 902,
907 (CCPA 1982). See also In re Meyer, 688
F.2d 789, 796 (CCPA 1982). The Patent and
Trademark Office has promulgated guidelines
for interpreting and applying the two-part
test for statutory subject matter for
inventions involving mathematical algorithms.
See 1106 Off. Gaz. Pat. Office 5 (Sept. 5,
1989) and 1122 Off. Gaz. Pat. Office 189
(Jan. 1, 1991).
482 In re Lowry, 32 F.3d 1579 (Fed. Cir.
1994).
483 In re Trovato, 42 F.3d 1376 (Fed. Cir.
1994); In re Warmerdam, 33 F.3d 1354 (Fed.
Cir. 1994).
484 Priority may also be established by the
filing date of a Federal registration based
upon an intent to use a mark (15 U.S.C.
? 1051(b) (1988)) or a foreign filing (15
U.S.C. ? 1126 (1988)).
485 15 U.S.C. ? 1051 et seq. (1988 & Supp. V
1993). The Lanham Act, as amended, forms
Chapter 22 of Title 15 of the U.S. Code.
486 The first Federal trademark law in the
United States was found unconstitutional
because it was premised on the patent clause
of the Constitution.
487 Certain foreign-based applications may
register without a showing of use in
commerce. 15 U.S.C. ? 1126(e) (1988).
488 15 U.S.C. ? 1127 (1988 & Supp. V 1993).
"The word 'commerce' means all commerce which
may lawfully be regulated by Congress." This
includes interstate commerce, commerce
between the United States and a foreign
country, and territorial commerce.
489 Pub. L. 100-667, 1988 U.S.C.C.A.N. (102
Stat.) 3935.
490 15 U.S.C. ? 1051(b) (1988).
491 See 15 U.S.C. ?? 1114 - 1121, 1125(a)
(1988 & Supp. V 1993) for relevant Federal
law provisions. State and common law unfair
competition provisions include such torts as
passing off and dilution.
492 15 U.S.C. ? 1057(b) (1988).
493 15 U.S.C. ? 1124 (1988).
494 15 U.S.C. ? 1116(d) (1988); 18 U.S.C.
? 2320 (1988).
495 15 U.S.C. ? 1065 (1988).
496 15 U.S.C. ? 1064 (1988).
497 See In re Metriplex Inc., 23 U.S.P.Q.2d
1315 (TTAB 1992), where the PTO's Trademark
Trial and Appeal Board authorized
registration of a mark identifying "data
transmission services accessed via computer
terminal" and accepted, as evidence of use of
the mark, a print-out of the mark as it
appeared on the computer screen during
transmission.
498 In the case of Playboy Enterprises Inc. v.
Frena, supra note 386, the operator of a
subscription computer bulletin board system
(Frena) transmitted as part of its bulletin
board system photographs owned by Playboy
Enterprises Inc. (PEI). PEI's trademarks
were obliterated on some photographs
transmitted by Frena and PEI's "Playboy" and
"Playmate" marks appeared on other
photographs transmitted by Frena. These
transmissions were without authorization from
PEI. The court found, in part, that Frena
infringed PEI's registered trademarks when it
used PEI's "Playboy" and "Playmate" marks in
unauthorized transmissions of PEI's
photographs as part of its computer bulletin
board system. The court also found Frena to
have committed acts of unfair competition, in
violation of Section 43(a) of the Lanham Act
(15 U.S.C. ? 1125(a) (Supp. V 1993)), both by
obliterating PEI trademarks from photographs
and by placing its own advertisement on PEI
photographs. Such acts made it appear as if
PEI authorized Frena's use of the images on
the bulletin board; see also Showtime/The
Movie Channel, Inc. v. Covered Bridge
Condominium Ass'n, 693 F. Supp. 1080 (S.D.
Fla. 1988), modified, 881 F.2d 983 (11th Cir.
1989), remanded, 895 F.2d 711 (1990), in
which the court found that interception of
cable television programming broadcast via
satellite which appropriates trademarks and
trade names in a manner likely to cause
confusion is unfair competition in violation
of Section 43(a) of the Lanham Act (15 U.S.C.
? 1125(a) (Supp. V 1993)). See also Pacific
& Southern Co. Inc. v. Satellite Broadcast
Networks Inc., 694 F. Supp. 1575 (N.D. Ga.
1988).
In California, a U.S. District Court has
entered a preliminary injunction against the
owner of a computer bulletin board system
based upon claims of copyright and trademark
infringement and unfair competition. In Sega
Enterprises Ltd. v. MAPHIA, supra note 388,
Sega demonstrated that the bulletin board
system knowingly solicited the uploading and
downloading of unauthorized copies of Sega's
video games, and that whenever such a copy is
played, Sega's trademark appears on the
screen. Further, Sega's trademark appeared,
with the BBS operator's knowledge, on file
descriptors on the bulletin board. With
regard to the trademark and unfair
competition claims, the court concluded that
there is support for the conclusion that the
transferred games are counterfeit under the
Lanham Act, and that confusion, if not on the
part of the bulletin board users, is
inevitable on the part of third parties who
may see the copied games after they enter the
stream of commerce.
499 To send and receive information on the
Internet, various organizations connected to
the Internet must register their domains,
networks and autonomous systems numbers with
Network Solutions, part of the Internet
National Information Center (InterNIC). The
InterNIC performs this function under a
cooperative agreement with the National
Science Foundation. Within the context of a
prescribed format, the Internet user may
register any domain name as long as the
identical domain name has not been previously
registered with the InterNIC by another
party. According to the InterNIC, there is
no state or Federal statutory or regulatory
authority under which the InterNIC performs
this registration function. The InterNIC
does not conduct an examination of trademark
or other records before registering a domain
name. However, the applicant is required to
follow a policy relating to assumption of
responsibility and to potential conflict
resolution. The InterNIC policy is available
at URL http://rs.internic.net.
500 Federal law does prohibit the disclosure
of confidential information obtained by
federal officials in the course of their
official duties. See 18 U.S.C. ? 1905
(1988).
501 "A trade secret is commonly defined as any
formula, pattern, device or compilation of
information which is used in one's business,
and which gives him an opportunity to obtain
an advantage over competitors who do not know
or use it." Restatement of Torts ? 757,
Comment b (1939).
502 Id. The trade secret owner may
communicate the trade secret to others
provided that those to whom the trade secret
is communicated pledge not to reveal the
trade secret to others. Id.
503 See discussion of methods of protection
for material distributed through the NII
infra pp. 183-200.
504 See CONTU Final Report at 127.
505 For a detailed discussion of these and
other applications of technology that may be
used to provide protection for copyrighted
works, see Symposium, Technological
Strategies for Protecting Intellectual
Property in the Networked Multimedia
Environment, cosponsored by the Coalition for
Networked Information, Harvard University,
Interactive Multimedia Association, and the
Massachusetts Institute of Technology (April
2-3, 1993); see also M. D. Goldberg & J. M.
Feder, Copyright and Technology: The Analog,
the Digital, and the Analogy, Symposium, WIPO
Worldwide Symposium on the Impact of Digital
Technology on Copyright and Neighboring
Rights, 37 (March 31 - April 2, 1993).
506 Archie is a service which provides
directories of repositories of gopher
servers; Veronica provides indices of
documents which contain key words.
507 The most common elements of such systems
involve authentication of the user desiring
access to the server. Typically, the server
will require entry of a user name and a
password. More elaborate mechanisms,
however, have been developed. For example,
some servers do not grant access once a user
is verified, but rather, they terminate the
connection and reestablish it from the server
to the registered user's site. Such call-
back systems tend to govern fully controlled
server environments (e.g., where access will
only be granted to known and verified users).
Other systems are being implemented that use
more elaborate authentication systems. For
example, a number of companies are developing
hardware key systems that require the user,
after establishing a preliminary connection,
to verify that connection by inserting a
hardware device similar to a credit card into
the user's computer system. That device then
sends an indecipherable code to verify the
identity of the user.
Protection of works by means of access
control mechanisms assumes that the system in
question is in a physically secure
environment and is not vulnerable to external
means to circumvent access control. Several
instances have been reported where the
security of a supposedly secure server system
was compromised, for example, through passive
monitoring during the exchange of unencrypted
passwords. As a consequence, many are
currently pursuing efforts to improve
security at the access control level.
508 See discussion of stenography infra pp.
188-89.
509 For example, the software may deny access
to a work if the electronic file containing
the work has been altered or information
stored in the file does not match data
supplied by a user necessary to open and use
the file. See discussion of digital
signatures infra pp. 187-88.
510 Rendering or viewing software may
integrate encryption and file manipulation
into a single software package. In other
words, the rendering software, after getting
a password, will decode the file and permit
the user to manipulate the work (e.g., view
it or listen to it), but only with the
provided rendering software.
511 An algorithm is a set of logical rules or
mathematical specification of a process which
may be implemented in a computer.
512 The signature is generated using the
binary digits of the work plus the value of
the private key as inputs to the computation
defined by the algorithm. Thus, the digital
signature for an information object is a
unique sequence of digits for that work.
Specifically, a signature is not the same for
different works using the same private key.
513 Anyone who has access to an information
object, in addition to having access to the
work, also has access to the digital
signature for the object. Consequently, the
digital signature for the object may be
recomputed and used to independently confirm
the integrity of the object by comparing it
to the digital signature appended to the
object.
514 See 17 U.S.C. ? 1002 (Supp. V 1993).
515 See H.R. Rep. No. 102-873(I), 102d Cong.,
2d Sess., reprinted in 1992 U.S.C.C.A.N.
3578, 3579-80, 3583 n15.
516 A "header" is a section of a digital work
where information, data, codes and permitted
uses may be embedded. Such information may
actually be embedded anywhere in the work,
but for ease of reference, this Report refers
to such information as embedded in a header.
Terms such as "label" and "wrapper" are also
used to refer to what this Report refers to
as a "header."
517 See discussion of electronic contracting
supra pp. 53-59.
518 See R.E. Kahn, Deposit, Registration and
Recordation in an Electronic Copyright
Management System, Proceedings of Technical
Strategies for Protecting Intellectual
Property in the Networked Multimedia
Environment, Interactive Multimedia Assoc.
(Jan. 1994). The registration and
recordation system will be operated by the
Library of Congress and will enable
electronic filing of documents, automated
registration and recordation of transfers of
ownership and other copyright-related
documents. The digital library system will
be composed of a set of distributed
repositories for copyrighted works, and will
support search and retrieval based upon an
electronic bibliographic record. The rights
management system will be a distributed
system which will permit use of selected
copyrighted materials on the Internet, and
will have some on-line rights-granting
services. Electronic mail will be used to
license nonexclusive rights, with or without
recordation of the transactions.
519 The IITF Committee on Applications and
Technology is addressing electronic commerce
issues, including the electronic transfer of
funds through the NII.
520 There is an ongoing review of policies
governing the export of computer and
networking technologies that incorporate
effective encryption technology, and there
has been some relaxation of prior controls.
For example, technologies used to identify
and authenticate users and files are
generally not restricted. This, however,
does not address the concerns as articulated
by U.S. manufacturers.
521 ODTC maintains the U.S. Munitions List --
a list of specific technologies subject to
their review for export licensing purposes.
See 22 U.S.C. ? 2778 (1988).
522 BXA maintains the Commerce Control List
(CCL), which governs export control of all
items (commodities, software, and technical
data) subject to BXA export controls. See 15
C.F.R. ? 799.1(a) (1994).
523 See 15 C.F.R. ? 799.1(g) (1994).
524 Many examples of this evolutionary pattern
exist. Examples of de facto and formally
recognized standards that derived from a
single company include the Hayes-compatible
modem command set, developed by the Hayes
Company to control its modem products; the
Ethernet local area network standard
developed by Xerox to link minicomputers at
the Palo Alto Research Center which
eventually led to the development of the IEEE
802.3 standard; and the PCL and Postscript
printer control/page description languages,
developed by Hewlett-Packard and Adobe,
respectively.
Examples of standards that evolved from a
collaboration of companies include: the
Extended Industry Standard Architecture
(EISA) bus standard, introduced by a
consortium of nine companies including AST
Research, Compaq, Epson, Hewlett-Packard,
NEC, Olivetti, Tandy, Wyse, and Zenith; the
Musical Instrument Digital Interface (MIDI)
interface standard for the connection of
synthesizers, instruments, and computers,
developed by the major synthesizer
manufacturers; and the Personal Computer
Memory Card International Association
(PCMCIA) standard for PC Cards, PC Card-based
peripherals, and the slot designed to accept
them developed by the PCMCIA group of
manufacturers and vendors.
525 For example, essentially every modern
personal computer operating system available
today supports a number of de facto or
recognized industry standards such as
Ethernet, PCL/Postscript, and TCP/IP.
526 The IITF Committee on Applications and
Technology has responsibility for addressing
the issue of standards.
527 Recently, the FCC adopted technical
standards that define a patented system as
the AM radio stereophonic transmitting
standard in the United States. See 58 Fed.
Reg. 66,300 (daily ed. Dec. 20, 1993). The
FCC conditioned the selection of the patented
system as the standard on the agreement of
the patent owner to license its patents to
other parties "under fair and reasonable
terms." Id. at 66,301.
528 See Copyright Industries in the U.S.
Economy, supra note 426.
529 H.R. Rep. No. 101-735, 101st Cong., 2d
Sess. 7 (1990), reprinted in 1990
U.S.C.C.A.N. 6935, 6938 (report accompanying
legislation granting copyright owners of
computer software an exclusive rental right).
530 Sony, supra note 361, at 430-31.
531 See discussion of the Constitutional
purpose of copyright supra pp. 19-23.
532 Sony, supra note 361, at 431.
533 See supra p. 13.
534 See discussion supra pp. 70-73.
535 In contrast, a "standard" distribution of
a copy necessarily divests the distributor of
his copy. In the case of a distribution by
transmission, the distributor generally
retains his copy of the work and a
reproduction is distributed.
536 It has been suggested that recognition of
distribution by transmission may diminish the
public performance right. However, if a work
is publicly performed by transmission, then
there has been a public performance --
whether or not the distribution right is or
is not also involved. The fact that some
transmissions may constitute a reproduction
and distribution of copies to the public does
not mean that transmissions that constitute
public performances are not public
performances. The scope of the public
performance right is not diminished by the
recognition that a transmission may fall
within the scope of the distribution right.
If a copy of a motion picture is transmitted
to a computer's memory, for instance, and in
the process, the sounds are capable of being
heard and the images viewed as they are
received in memory, then the public
performance right may well be implicated as
well. See 17 U.S.C. ? 101 (1988) (definition
of "perform").
537 The exclusive rights, "which comprise the
so-called 'bundle of rights' that is a
copyright, are cumulative and may overlap in
some cases. Each of the five enumerated
rights may be subdivided indefinitely,
and . . . each subdivision of an exclusive
right may be owned and enforced separately."
House Report at 61, reprinted in 1976
U.S.C.C.A.N. 5674.
538 See discussion supra pp. 45-47.
539 House Report at 61, reprinted in 1976
U.S.C.C.A.N. 5674.
540 See discussion supra pp. 28-32. The term
"public" as used in connection with the
distribution right is not coincident with the
meaning assigned to that term in connection
with the public performance or public display
right.
541 If copies of works are offered to
the public -- even though they may be
distributed one copy at a time -- it would
likely constitute distribution to the public.
See 17 U.S.C. ? 101 (1988) (definition of
"publication"); 1 Nimmer on Copyright ? 4.04
at 4-20.
542 In the future, transmission may become the
conventional means of distribution.
543 Under the proposed definition, to transmit
a reproduction is to distribute it by any
device or process whereby a copy or
phonorecord of the work is fixed beyond the
place from which it was sent.
544 To delineate between those transmissions
that are communications of performances or
displays and those that are distributions of
reproductions, one may look at both ends of
the transmission. Did the transmitter intend
to communicate a performance or display of
the work or, rather, to distribute a
reproduction of the work? Did the receiver
simply hear or see the work or rather/also
receive a copy of it? Did the receiver
simply receive a copy or was it possible for
her to hear or see it as well? License rates
and terms will assist in determining the
intent of the parties.
545 See House Report at 138 (emphasis added),
reprinted in 1976 U.S.C.C.A.N. 5754.
546 See discussion supra pp. 28-32. The House
Report also states, however, that the
definition was intended to clarify that the
offering of copies or phonorecords to a group
of, for instance, wholesalers, broadcasters
or motion picture theater operators
constitutes publication if the purpose of the
offering is "further distribution, public
performance, or display." See House Report
at 138, reprinted in 1976 U.S.C.C.A.N. 5754.
Therefore, if an author offers copies to
bulletin board system operators or others for
further distribution, public performance or
public display on a computer network,
publication may occur.
547 Under the current law, the distribution
right is identified as the right "to
distribute copies or phonorecords of the
copyrighted work to the public by sale or
other transfer of ownership, or by rental,
lease, or lending." See 17 U.S.C. ? 106(3)
(1988). Publication is "the distribution of
copies or phonorecords of the copyrighted
work to the public by sale or other transfer
of ownership, or by rental, lease, or
lending." See 17 U.S.C. ? 101 (1988) (part
of definition of "publication").
548 Under the law of the United Kingdom,
making a work available to the public by
means of an electronic retrieval system
constitutes publication. See Copyright,
Designs and Patents Act of 1988, ? 175(1)(b).
549 See supra notes 68-83 and accompanying
text.
550 In the print domain, prior published
editions are more easily and generally
available for reference, partially because of
the deposit requirement, but primarily
because subsequent versions do not override
the originals -- which is possible in the on-
line environment.
551 See discussion supra pp. 28-32.
552 See discussion of the doctrine of limited
publication supra pp. 31-32.
553 See White v. Kimmell, 193 F.2d 744 (9th
Cir. 1952) (unrestricted circulation of 200
copies of a manuscript to friends and
acquaintances published the work);
Continental Casualty Co. v. Beardsley, 253
F.2d 702 (2d Cir. 1958) (distribution of
approximately 100 sets of forms to corporate
officers and surety companies for possible
purchase of more constituted publication).
554 See discussion of the importation right
supra pp. 107-09.
555 Some transmissions that clearly constitute
public performances may, in effect,
substitute for distributions in the future.
If consumers are offered a service through
which they can receive a performance of any
sound recording at any time, they may stop
buying phonorecords. The market for
distributed phonorecords may shrink to
include only the providers of that service to
consumers.
556 If the copyright owners of sound
recordings abused the exclusivity that the
law should provide, the solution would lie in
the enforcement of the antitrust laws --
where the music licensing problems have been
addressed -- not in the reduction of rights
under the Copyright Act.
557 See S. 227, 104th Cong., 1st Sess. (1995);
H.R. 1506, 104th Cong., 1st Sess. (1995).
558 See discussion supra pp. 73-82.
559 The legislative history makes it clear
that digital uses are generally not
encompassed by Section 108: "Under this
exemption, for example, a repository could
make photocopies of manuscripts by microfilm
or electrostatic process, but could not
reproduce the work in 'machine-readable'
language for storage in an information
system." House Report at 75, reprinted in
1976 U.S.C.C.A.N. 5689; Senate Report at 67
(emphasis added). The Senate Report also
speaks precisely of "the photocopying needs
of . . . multi-county regional systems." Id.
at 70 (emphasis added).
560 The Working Group believes that
replacement copies may be digital in nature,
and may be made under this provision only
when an unused replacement is not available
in either digital or analog form.
561 See, e.g., Section 53D of the Australian
law (privilege conditioned on copyright
owner's abstention from market for Braille
edition); Section 18 of the Finnish law
(Braille editions and talking books may be
manufactured "for use by lending libraries
for blind persons"); Section 80 of the
Portuguese law (Braille editions may be
manufactured if not for profit).
562 The visually impaired were the only users
with a disability who provided comments or
testimony concerning a need for a narrow
exemption to ensure the availability of
literary works in a usable form. By its
recommendation of such an exemption for the
visually impaired, the Working Group does not
intend to dismiss the possibility that other
disabled users may have needs of which it has
not been made aware and, therefore, has not
considered.
563 See discussion of criminal offenses supra
pp. 126-28.
564 See discussion of the LaMacchia case supra
p. 127.
565 As noted earlier, the idea/expression
dichotomy and the limitations on the
exclusive rights, including fair use, address
First Amendment concerns. See supra pp. 32-
35, 73-100 and note 227. See also Harper &
Row, Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 560 (1985) ("First Amendment
protections [are] embodied in the [Copyright]
Act's distinction between copyrightable
expression and uncopyrightable facts and
ideas, and the latitude for scholarship and
comment traditionally afforded by fair use").
566 Legislation of a similar type has been
introduced with respect to technological
protection of audiovisual works. See, e.g.,
S. 1096, 102d Cong., 1st Sess., 137 Cong.
Rec. S. 6034 (1991); H.R. 3568, 101st Cong.,
1st Sess., 135 Cong. Rec. H. 7924 (1989).
567 Copies of the work in the marketplace free
from copyright protection could be freely
reproduced (and, in fact, the lower
distribution costs of the NII may encourage
increased availability of public domain
works). Further, technological protection
that restricts the ability to reproduce the
work by technical means does not prevent
reproduction by other means (such as quoting,
manually copying, etc.).
568 However, the Working Group does encourage
the equipment manufacturing and copyright
industries to work together on bilateral
solutions for other types of recording
devices and categories of works. In response
to a request from Congressional leaders,
representatives of the motion picture
industry and the consumer electronics
industry are presently drafting a joint
legislative proposal addressing legal and
technical measures pertaining to consumer
recording of motion pictures. This proposal
would set forth a technical means to be
applied that would respect the legitimate
commercial expectations of copyright owners
and the reasonable and customary copying
practices of consumers.
569 Some have suggested that while
manufacturers will surely know the primary
purpose of the devices they produce, they may
inadvertently find themselves liable for
devices which they intended for legal
purposes, but which have the incidental
effect of circumventing copyright protection
systems. For a manufacturer to find himself
in this situation, the device would have to
fail to be used primarily for the purpose for
which it was sold, and be primarily used, to
the surprise of its manufacturer, for
defeating protection systems. It is likely
that such a situation would occur rarely, if
ever. (It would be self-defeating for
copyright owners to begin using a protection
system that an existing device could defeat.)
However, the chapter contains an "innocent
violation" provision for just such a case. A
court would have the ability to reduce or
eliminate altogether any damages for which
the manufacturer would otherwise be liable,
to avoid an unfair result but still protect
the copyright owner.
570 17 U.S.C. ? 1002© (Supp. V 1993).
571 47 U.S.C. ? 605(e)(4) (1988).
572 See NAFTA, supra note 446, at art.
1707(a). The NAFTA also requires parties to
make it a civil offense to "receive, in
connection with commercial activities, or
further distribute, an encrypted program-
carrying satellite signal that has been
decoded without the authorization of the
lawful distributor of the signal or to engage
in any activity prohibited under [the
criminal provisions]." See NAFTA, supra note
446, at art. 1707(b).
573 See Copyright, Designs and Patents Act of
1988, Part VII, ? 296.
574 Other information that may become
important to the efficient operation of the
NII includes the country of origin of the
work, the year of creation or first
publication, a description of the work, the
name and other identifying information of
licensees and standardized codes.
575 While a transmitting entity may not remove
the copyright management information, if such
information is not included in the normal
course of the transmission (such as when a
work in digital form is broadcast through
analog transmission), no violation would
occur.
576 For criminal liability, both knowledge and
the intent to defraud are required.
 
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