Copyright Law and the Internet

The Internet and its associated technologies have improved our ability to communicate rapidly, and have provided us with instantaneous access to vast amounts of information. While this has been an undoubted boon for many, the road has nonetheless had its bumps. While consumers of information view the Internet's vast information exchange capability as a benefit, commercial purveyors of information think about how the Internet might be exploited for profit, and holders of intellectual property potentially subject to distribution on the net worry about the protection of their rights. Central to all of these concerns is the question of copyright law and its application to the distribution of information electronically.

The Nature of Copyright Law

In the United States, the founding principles for copyright law are in the Constitution. The granting of copyrights and patents was deemed a matter whose importance justified its inclusion in a list of fundamental governmental duties, such as coining money, regulating commerce, and establishing uniform rules of naturalization - among others.

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States;

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; [italics added]1

Interestingly, the stated purpose of the copyright clause is not to protect the writers and inventors, but to protect the societal benefits of promoting arts and sciences. However, protection of the writer or inventor is deemed vital to the protection of the public interest. As stated 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.2

Information is most useful to a society if it is freely and fully distributed. On the other hand, as the drafters of the Constitution recognized, the creators of new information have little incentive to create, if they receive no compensation for their efforts. Over the years, copyright laws have often been revisited as legislators and courts have struggled to balance these issues. Current law defines copyrightable material as:

sec 102. Subject matter of copyright: In general

(a) Copyright protection subsists, in accordance with this title, 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. Works of authorship include the following categories:

(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.

(b) In no case does copyright protection for an original work of authorship 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.3

In other words, it is the tangible expression of an idea, such as a book or recording, rather than the idea itself, which may be copyrighted. This is a significant limitation on the rights of the intellectual property creator. There are other significant limitations on the creator's rights. Even for the tangible object, there are limitations. Consider the "Fair Use" provision of current copyright law:

sec 107. Limitations on exclusive rights: Fair use

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, 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:

the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

the nature of the copyrighted work;

the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

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.4

Exactly what constitutes fair use is decided on a case-by-case basis, and as a result, there has been considerable litigation over the matter. However, the end result is that consumers may extract and use portions of copyrighted material without paying royalties and without violating the law, provided (1) they use the material for the purposes cited above, and (2) the economic value of the copyrighted material is not substantially affected by the use in question. If the use is substantial enough, even a use otherwise within the Fair Use doctrine may be infringing.5

Another restraint on the rights of copyright holders is the "First Sale" doctrine. This doctrine stipulates that once consumers have legitimately purchased copyrighted material, they may resell or otherwise transfer it without paying further royalties or fees to the copyright holder.

Beyond these uses, however, the copyright holder has a wide range of rights. Except for copies created under the Fair Use doctrine, the copyright holder's permission must be obtained (and if the copyright holder so chooses, a royalty must be paid) for every copy created by another. Similarly, public performances of musical or theatrical works can only be given with the copyright owner's permission. For works that are commonly reproduced in informal fashion, such as journal articles and musical performances, clearinghouses have been set up for the purpose of collecting and distributing royalties.

If permission for use is not obtained, the copyright holder may seek monetary damages in court. Even unintentional and innocent infringement of a copyright entitles the copyright holder to seek damages, although the damages may be less than those for a knowing or willful infringement. The copyright holder may also have additional remedies available, such as seeking an injunction to stop the infringing activity.6

Copyright in the Digital Age

In the era of traditional media, these doctrines created a fairly stable balance between the rights of copyright holders, the rights of information consumers, and public policies encouraging the creation of new work. Although illegal copies of protected material were made, existing technology limited the extent of the problem and the quality of the resulting copies. For example, analog sound recordings could be illegally reproduced, but the sound quality noticeably deteriorated as the reproductions passed through second and third generations. Print publications could be reproduced, but short of typesetting, printing, and binding a new, illegal edition, the resulting copies were necessarily both few in number and poor in quality. Such activities damaged the economic interests of copyright holders, but the extent of the damage was limited.

The advent of digital technologies rapidly changed the landscape. Perhaps the first arena in which this became apparent was consumer and business software for personal computers. Computer software can be copied easily, with absolutely no loss of information quality - each copy is a perfect replica of the original. Software producers, quick to realize that illegal software copies could damage profitability, initiated copyprotected software. Copy-protected software proved very unpopular with consumers, however, and eventually disappeared from the scene. The replacement was the so-called shrink-wrap license agreement, wherein the purchaser agrees to make only a limited number of copies for installation on a computer hard drive or backup for disaster recovery

Ease of replication is a feature of any digitally stored information. CD-ROMs, digital tape recordings, and many other products can be perfectly reproduced, and there exists a worldwide market for pirated software and musical works. Perhaps worse from the standpoint of copyright holders, the Internet now permits immediate transmission of unlimited illegal copies. In the view of many, this is precisely what has occurred, and a perusal of the Internet seems to confirm it. People routinely post and download pictures, articles, artistic creations, and other materials from on-line services, bulletin boards, usenets, and other Internet sources, and transfer them from one party to another via e-mail. For copyrighted material, all such transactions are copyright violations unless they fall within the Fair Use doctrine. Further, there have been a number of criminal prosecutions for flagrantly illegal bulletin board postings of copyrighted computer software programs.7

Opposing Parties on the Internet

The Internet was originally an academic medium, designed and built for the exchange of data and commentary between institutions, researchers, professors, and students. More recently, the Internet has become a haven for advocacy and political groups, and a range of others who view it as a cheap and easy way to reach a wide audience with their message. These groups tend to view the Internet as a medium for free exchange of information, and are wary of the idea that Internet transmissions ought to result in the payment of fees.

On the other side are commercial organizations that seek to exploit the Internet and copyright holders (some of whom are large commercial organizations themselves) who seek to stop any illegal transmission of copyrighted material in order to maximize its economic value.

The Government's Response

The philosophical differences between these groups, along with the government's desire to encourage Internet usage and Internet commerce, has resulted in government intervention and the first steps toward legal regulation of Internet copyright matters. In 1993, the Clinton Administration formed the Information Infrastructure Task Force (IITF), charged with the development of the national information infrastructure (NII). This group produced two reports on what it perceived as needed changes in copyright law. The first report, the so-called "Green Paper," recommended few changes in existing law. It did, however, advocate one critical change, that of a "right of transmission." The Green Paper loosely defines transmission as any copy beyond the point from which it was sent. This change could possibly make any transmission of a copyrighted work an act requiring permission or the payment of royalties.

The "Intellectual Property and the National Information Infrastructure" report, the so-called "White Paper" followed, and it advocated a controversial position regarding the Fair Use doctrine.8 The authors of the White Paper's suggested that the Fair Use doctrine could be limited in situations where technology allowed the copyright holder to charge a fee for uses normally considered fair use.9 In the words of one opposing commentator, "There is no piece of a copyrighted work small enough that [copyright owners] are uninterested in charging for its use, and no use private enough that they aren't willing to track it down and charge for it."10 Another controversial recommendation of the White Paper was the elimination of the First Sale doctrine with respect to transmitted digital works. Building on the Green Paper's right of transmission idea, the White Paper concluded that, because the transmitter (the original purchaser) retains a copy of a transmitted digital work, any subsequent unlicensed transmission violates copyright law.11 Presumably, this would include such transmissions as making personal copies, full or partial, of articles or other materials located or obtained online. In addition, the White Paper advocated making Internet Services Providers (ISPs) responsible for policing copyright violations, stating:

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. 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.12

Current Legislation

The White Paper, and the ensuing controversy, has prompted various suggestions on how to amend copyright law so as to consider the realities of the digital age. There are two pieces of legislation before Congress that address this issue.

The Senate passed The Digital Millennium Copyright Act13 in May 1998. This bill alters current copyright law in several respects.

An ISP's liability to copyright holders is eliminated if the ISPs remove infringing material upon notification, and they are exempt from liability for removing allegedly infringing material in good faith.

Circumvention of copyright protection measures is proscribed, even if the use contemplated is legal under the Fair Use doctrine.

Circumvention of technological copyright protection measures is made a criminal, as well as a civil, offense.

The second piece of legislation, the Digital Era Copyright Enhancement Act,14 was awaiting House approval at this writing. This legislation differs from the Senate bill in several respects.

The Fair Use doctrine is made applicable to digital works.

The First Sale doctrine is applied to digital works, allowing for the transfer of a single unauthorized copy without the author's permission, provided that the transmitter destroys his copy at substantially the same time.

Circumvention of copyright protection measures is proscribed only for the purposes of infringement.

Current civil, as compared with criminal, penalties for copyright infringement are retained.

Since the two bills differ in important aspects, it is likely that significant compromises will be necessary before final passage of a new act; and given the number of interested parties on both sides of the issue, the direction in which the compromises will go is difficult to determine. What is clear, however, is that most unauthorized transmission of copyrighted material will continue to be copyright infringement, and that future law will sanction and protect the use of anti-privacy technology to enforce the rights of copyright owners. The Fair Use doctrine is unlikely to undergo any significant expansion, and may undergo a degree of retraction. Academic uses and similar uses provided for under the Fair use doctrine will, however, continue to be protected, since both bills so provide. Neither house appears interested in adopting the position of the White Paper and requiring ISPs to unilaterally police potential copyright violations.

Until now, the Internet has been something of a free-for-all with respect to its adherence to copyright law. The commercialization of the Internet will inevitably bring regulation, of which the two pending pieces of legislation are only the first wave. Users of the Internet will need to continue to monitor the progress of legislation if they are to avoid running afoul of copyright law.

1 Article 1, Section 8, Constitution of the United States of America

2 Madison, James, The Federalist, No. 43.

3 17 U.S.C. sec 102

4 17 U.S.C. sec 107

5 See, e.g., Marcus v. Rowley, 695 F.2d 1171 (9th Cir. 1983) (teacher denied fair use exemption for reproduction in text material, of another teacher's copyrighted material).

6 Sega Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994).

7 See, e.g., Sega Enterprises Ltd. v. MAPHIA, supra.

8 Intellectual Property and the National Information Infrastructure, the Report of the Working Group on Intellectual Property Rights, September, 1995

9 Id., p. 98.

10 Samuelson, Pamela, The Copyright Grab, Wired Magazine (online edition) 4.01, January 1996

11Intellectual Property and the National Information Infrastructure, supra, p. 73.

12 Id., p. 141.

13 S. 2037

14 H.R. 3048

John Montana, JD is "chief records brain" of Brain Core, a records management consulting firm. Montana specializes in records retention and destruction, and the legal requirements and ramifications of records retention.

Copyright Association of Records Managers and Administrators Inc. Jan 1999
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