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Public/Private and Copyright Reform in Cyberspace

    Niva Elkin-Koren Law School, Haifa University Mt. Carmel, Haifa, Israel

 Abstract

     A report recently released by the Information Insfrastructure Task Force, a Committee formed by the Clinton administration to articulate and implement its vision for the National Information Infrastructure (NII), recommended several amendments in copyright law. Among other things, the Report recommended expansion of the exclusive right of public distribution to cover not only physical distribution of copyrighted works to the public, but also on-line transmission. Cyberspace, however, transforms the notion of private and public, and blurs their boundaries. Therefore, this paper argues that the notion of "public" may no longer serve to define the scope of copyright monopoly. The continuous use of the public/private dichotomy as a basis for defining the scope of copyright, expands the power of copyright owners to exclude their works and fails to serve the purpose of copyright law. Proposals for copyright reform should take account for the transformation of the public/private distinction in Cyberspace.

 Introduction

Computer mediated communication merges many of our current methods of communication, and transforms the way we produce and exchange knowledge. Many of our everyday activities, such as writing and reading, casual browsing through information, or engagement in social interactions, are increasingly facilitated by online services. Copyright law which governs the production and dissemination of information needs to adjust to this new cyberspacial environment.

A Report was recently released in the United States by the Information Infrastructure Task Force, a Committee formed by the Clinton administration to articulate and implement its vision for the National Information Infrastructure (NII). Among several amendments to the copyright law recommended was the expansion of the exclusive right of public distribution to cover not only physical distribution of copyrighted works to the public but also online transmission. In cyberspace, however, the boundaries between private and public are blurred. Therefore, this paper argues that the notion of “public” may no longer be a useful legal concept to define the scope of copyright monopoly. The continuous use of the public/private dichotomy as a basis for defining the scope of copyright, expands the power of copyright owners to exclude their works, and fails to serve the original purposes of copyright law to promote the public interest in wide dissemination of information. Proposals for copyright reform should account for the transformation of the public/private distinction in cyberspace.

This paper begins by examining the notion of “public” under copyright law, and turns to examine the Report’s recommendations regarding the right of public distribution. It criticizes the Report for overlooking this transformation of the public/private distinction in computer mediated communication. The paper concludes by discussing the significance of the Report’s recommendations for the future of communications in the Networld.

 Copyright law and the Public Private Distinction

The public/private dichotomy is fundamental to copyright law (see [ 1), and plays two major roles under this legal regime: a definitional role and a functional role.

The first and foremost role of the public/private dichotomy is definitional. Copyright law sets the boundaries between public and private information [ 2 ]. The ultimate purpose of copyright law under the US Constitution is to promote a public goal of encouraging knowledge and learning. The law seeks to accomplish that by temporarily placing some information under private control, and allowing creators to charge for the use. The law excludes some works from the public domain, by defining them as private property for a designated period of time [ 3 ]. The underlying assumption of copyright law is that granting limited rights in information, would allow creators to benefit from their works by licensing its use for a fee. Thus, the exclusive rights provided by copyright law would secure sufficient incentives and guarantee further creation.

The United States Constitution empowers Congress to enact copyright law "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" [ 4 ]. Under the Constitution Congress is empowered to grant rights to authors only to the extent that such a grant would serve the policies of promoting knowledge and learning [ 5 ]. The constitutional authority does not afford creators any private property rights in their works. It is within the mandate of Congress to protect rights of creators only as a means, and only to the extent that such protection serves the constitutional purpose of promoting progress [ 6 ]. Consequently, all rights and commercial expectations of individuals are instrumental and are protected only for the purpose of promoting progress. In other words, the rights afforded to creators are contingent, and dependent on their instrumental role in enhancing learning and knowledge. Copyright law, therefore, mediates two conflicting public interests: the public interest in maximizing the production of information, and the public interest in providing maximum access to information [ 7 ].

The second role played by the public/private distinction under the current copyright regime is functional. It serves to define the scope of rights granted under copyright law to copyright owners. A “copyright” is not a single right, but a bundle of exclusive rights. The law provides owners with a set of exclusive rights: the right to reproduce the work, to prepare derivative works, and to publicly distribute, display, and perform the work[ 8 ].

The exclusivity restricts everyone else, other than the owner, from using the work without a license. It thus allows owners to license their works for a fee. The public character of the use makes an otherwise permissible use, into a copyright infringement. In other words, the distinction between public and private effects the operation of the law by distinguishing between permissible and non-permissible uses of copyrighted works [ 9 ]. In spite of the general distinction, some private uses may also be infringing. Copyright owners are able to prevent the reproduction [ 10 ] of their works, or the preparation of derivative works [ 11 ], even when these acts are done privately. Yet, the private use of a copyrighted work, for one’s own learning, would rarely be considered an infringement of copyright [ 12 ]. Thus, unauthorized reproduction and adaptation of works would be legally significant only when they effect the market for the copyrighted work.

The rationale for the functional role of the public/private distinction has to do with the purpose of copyright law. The ultimate goal of copyright law is to enhance learning and knowledge. Therefore, the law seeks to release works from the private sphere of the creator, into the public sphere. Consequently, incentives are necessary not only to guarantee the creation of works, but also for sharing these works with the public. Yet, when a work leaves the sole control of the author, and becomes accessible to the public, it becomes the most vulnerable. The authors' ability to collect compensation (or royalties) for the use of the work decreases. Copyright law secures monetary incentives to authors, when their works become the most vulnerable to unauthorized exploitation - namely, when it becomes available to the public.

Distribution to the Public in Cyberspace

It is widely recognized that the cyberspace environment in which works are created and disseminated is different. Yet, the nature and significance of this transformation are controversial.

One approach is reflected in a Report of the Working Group on Intellectual Property Rights of the Information Infrastructure Task Force (IITF). The IITF was formed by President Clinton in February 1993 to articulate and implement the administration's vision for the National Information Infrastructure (NII). The Working Group on Intellectual Property Rights was established to examine the intellectual property implications of the NII [ 13 ]. On September 1995 the Working Group released its recommendations on how to adjust intellectual property to the new circumstances of the NII. The Report found that although technology had gotten too far ahead of copyright law, there is no need for a new law. Therefore, it recommended only a small number of changes in the current law, to resolve confusion regarding copyright concepts.

The Report perceived cyberspace to be an environment in which works are more vulnerable to copyright infringement. Therefore, the Report concludes, it is necessary to enhance the legal means that are available to copyright owners. This paper, by contrast, argues that computer mediated communication fundamentally transforms the creation and dissemination of information. This new environment changes the underlying assumptions of copyright law. One of these changes is the transformation of the public/private distinction so central to copyright law. This change of circumstances was completely overlooked by the Report. Its recommendations sustain the public/private dichotomy in cyberspace. Relying on this dichotomy, without considering its transformation, would fail to achieve the ultimate goal of copyright law to facilitate public access to information. The next section reviews the Report’s approach to public distribution. The following discussion shows how the public/private perspective highlights the legal significance of the Report’s recommendations.

From Public Distribution to Transmission

The Report’s approach to control over distribution to the public is based on a broad interpretation of the exclusive rights of copyright owners under current copyright law, combined with several amendments in copyright law recommended by the Report. The Report broadly interpreted the exclusive right of copyright owners to reproduce their works. It further recommended to amend the distribution right, and to abolish the ‘first sale doctrine’. This section reviews these recommendations.

Broad interpretation of the reproduction rights

Section 106(3) of the 1976 U.S. Copyright Act provides copyright owners with the exclusive right to "distribute copies...of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." [ 14 ]. Digital dissemination, the Report argued, differs from previous methods of distribution in that it involves "proliferation of copies". The dissemination of works does not involve the distribution of copies, but the creation of new copies [ 15 ]. Every agent in the dissemination chain may both disseminate the work and retain a copy [ 16 ].

If digital dissemination results in the “creation of additional copies,” then it is covered under the reproduction right. Section 106(1) of the 1976 Copyright Act provides owners with an exclusive right to "reproduce the copyrighted work in copies or phonorecords" [ 17 ]. This right was broadly interpreted by the Report, to cover any placement of a work into a computer's memory, since the work may be "perceived, reproduced, or communicated ... with the aid of a machine or device." [ 18 ]. In other words, the unlicensed creation of any digital copy, even if "fixed" only in RAM, constitutes a copyright infringement [ 19 ].

This expansive interpretation of the right to reproduce would provide copyright owners with absolute control over the transmission of their works any publicly accessible cyberspace. Any “digital transmission” would infringe the reproduction right, due to the unlicensed copies made during the transmission, and when the transmission arrives at its destination.

Such a broad interpretation of reproduction rights not only expands owners control over public distribution, but also enhances the power of copyright owners to control private uses of works. Access to works in a digitized form involves reproduction. Digitized works are represented abstractly in ones and zeros, and therefore require processing by a machine to make them accessible to potential users. If such processing is considered a reproduction - no access and no use of any copyrighted work would be exempted from the copyright monopoly. In other words, many of the privileges we currently enjoy in our everyday use of copyrighted works (such as reading a book, or browsing a text) would no longer be permissible under the Report’s interpretation. Expansive reproduction rights would prohibit any uploading or downloading of works from, or onto, a server. It would also prohibit unauthorized browsing of a document on another computer, placing a work into a computer's RAM, and any transfer of files among networked users. It would further cover any incidental copy created in the course of using a file. Indeed, the reproduction right, as interpreted by the Report, would cover all conceivable uses of digitized works in computer mediated communication.

Amending statutory definitions

The ‘distribution right’ provided by Section 106(3) of the 1976 Copyright Act, is defined in terms of physical dissemination of copies [ 20 ]. Owners, under this Section, are granted a monopoly over the first distribution of copies to the public. The Report recommended to expand the definition of `distribution' to cover also dissemination by transmission [ 21 ]. It further recommended to amend the definition of transmission to include transmission of a reproduction of a work [ 22 ]. Accordingly, "to ‘transmit a reproduction,’” the Report proposed, "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." [ 23 ]

The exclusive right to distribute copies is the primary right on which print publishers rely. A digital transmission right, however, mostly resembles the exclusive rights of public performance [ 24 ] and public display [ 25 ]) on which broadcasters rely for protecting their broadcasts. Digital transmission, just like broadcasting, does not involve any transfer of physical objects. Instead it transmits information in an intangible form.

The Report noted that even though no material objects are involved, the transmission of a copy of the work from one location to several others results in the distribution of additional copies of the work. The Report therefore recommended that the "Copyright Act be amended to reflect that copies of works can be distributed to the public by transmission, and such transmissions fall within the exclusive distribution right of the copyright owner [ 26 ].

The Report further proposed to add transmission to the definition of publication under Section 101 [ 27 ]. Although copyright protection equally applies to published and unpublished works under the 1976 Copyright Act [ 28 ], the act distinguishes between published and unpublished works [ 29 ]. The definition of publication under Section 101 [ 30 ] currently covers only instances in which material objects change hands [ 31 ]. The Report recognized that "a work only displayed or performed via the NII would not be considered "published" under the Copyright Act, no matter how many people have access to it." [ 32 ] It goes on, however, to argue that "if a sufficient number of actual copies of the work are offered to bulletin board system ("BBS") operators, or others for upload onto systems on the NII, publication may occur." [ 33 ]

Abolishing the First Sale Doctrine

The Report was particularly concerned with the limitation on the “distribution right” under the "first sale doctrine" in Section 109(a) [ 34 ]. The exclusive right to distribute copies to the public, allows owners to control the initial distribution of a particular copy. The right to control further distribution of copies that were already distributed to the public, is limited under the `first sale doctrine’. The “first sale doctrine” allows the owner of a copy to dispose of that copy at will. Thus, a book publisher may exercise its exclusive right to distribute a copyrighted book, when it is first sold to a retailer. The publisher will have no control, under copyright law, over any further transaction, such as sales by the retailer, or by consumers.

If online dissemination is perceived as “distribution,” then copyright owners would only be able to control the first time a work is being disseminated online. Any further dissemination by users would be lawful (unless restricted by a special license). Consequently, the Report concluded that the right to distribute, as restricted by the “first sale doctrine” appears to fit only conventional transactions in which possessor interests in tangible copies are conveyed in the first instance." [ 35 ]

The Report concluded that the first sale doctrine does not apply to digital transmission. Transmission under the amended definition involves reproduction of copies, which are not exempt under section 109(a) [ 36 ]. The Report's rationale was that the first sale doctrine is based on the assumption that at any case of transferring a physical copy of a work to another person, the transferor will give up possession of that copy. Consequently, in any transfer no more than one copy would be involved. In the Networld however, "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 a reproduction of the work." Overall the distribution of tangible copies, differs substantially from online transmission. Whereas physical distribution releases a limited number of copies to the public, online transmission allows infinite, and unpredictable numbers of users to access the copyrighted work. Consequently, online transmission may threaten the economic interests of copyright owners.

Furthermore, the first sale doctrine has been restricted in the last decade with respect to computer programs and sound recordings [ 37 ]. Those works are easy to reproduce at lower cost, without any degradation in quality. Consequently, access to such copies may allow its reproduction. The Report suggested that the same rationale should apply to other works in a digitized form [ 38 ].

To clarify that the first sale doctrine does not apply to transmissions, the Report recommended to explicitly exclude transmission from the reach of the first sale doctrine (see [ 39 ].

Expanding Control Over Dissemination

The overall effect of the Report’s approach is to expand the power of copyright owners. The Report’s recommendations would allow copyright owners to control all conceivable uses of their works, whether in private or in public. While transmission would only be infringing if it is communicated to the public [ 40 ], the broad reproduction right would allow copyright owners to control not only public, but also private uses of their works.

The Report focused on a limited aspect of the shift to online dissemination. Distribution in a networked environment was thus perceived by the Report as the “proliferation of copies.” The Report sought to provide copyright owners with the power to control subsequent dissemination of their works, in the absence of physical copies. It failed, however, to give adequate consideration to the way digital dissemination may affect public access to information, and the ability of users to use it. Online dissemination of works changes the balance between copyright owners and users. The expansion of copyright monopoly from protecting the distribution of copies to protecting all transmissions tilts the balance in favor of copyright producers over the interests of users in greater accessibility and freedom of re-use.

Abolishing the first sale doctrine is yet another way of enhancing author’s and publisher’s rights to control dissemination. The first sale doctrine restricts the power of distributors to control secondary markets of their works. Purchasers of books, for instance, are entitled to share their books with friends or colleagues or sell them to others. The freedom of individuals to share information with others, and the power of secondary players in the marketplace to redistribute works, stimulates dissemination of information [ 41 ]. Furthermore, alternative channels of distribution have the effect of decentralizing dissemination. Abolishing the first sale doctrine would enhance owners' power to control secondary markets of their works, and would further centralize the dissemination of information.

Overall, the Report’s approach changes the balance between user's rights and owners rights under the existing law. It favors owners’ private interests and commercial expectations over the public interest in making works accessible.

Balancing Interests in Cyberspace

The Public/Private perspective highlights the inadequacy of the Reports’ recommendations. Computer mediated communication is transforming the nature of the production and dissemination of knowledge. It thus challenges the underlying assumptions of copyright law regarding the public interest and the private interests. The public/private dichotomy is no longer adequate for distinguishing legitimate uses from infringements in cyberspace. This conclusion rests on several grounds.

One ground has to do with the rationale for using the public/private distinction as a functional standard in the print world. It is justified to protect works when physical copies, such as books, are distributed to the public, and make the information accessible with no constraints. “Distribution,” in the traditional sense, involves the dissemination of physical copies to the public for a profit. Consequently, it guarantees public access to works that were distributed. The public is able to use the physical copies over and over again. Furthermore, the existence of a copy of the work that is not controlled by the copyright owner guarantees that the work will eventually fall into the public domain.

The economic structure of online dissemination, however, is entirely different. Dissemination online no longer involves the distribution of physical copies. Instead, it is based on access privileges. Works may be disseminated in cyberspace by placing them in a server that is accessible to the public, or only to those with a licensed account or special password. Digital dissemination (transmission) involves merely a limited access to copyrighted works. Transmission allows copyright owners to charge a fee for access to their works. Yet, transmission does not make works available to the public for subsequent use.[ 42 ] Transmission and distribution are essentially different. Providing access to information, rather than to copies, allows owners to control access to their works [ 43 ]. Owners may limit access of users to information or deny it all together. Users become more dependent on copyright owners for access. While physical copies not easily recopied are allowed repetitive use or access to the copyrighted work, transmission does not guarantee such freedom of access. Furthermore, transmission allows copyright owners to control uses that are not protected under copyright law [ 44 ]. Consequently, transmission to the public does not guarantee public access to the work in the same way distribution does. If copyright protection is provided to owners in exchange for access, the limited public access involved in transmission weakens the case for providing copyright protection.

Furthermore, online dissemination does not make works vulnerable in the same way distribution of hard copies does. The ultimate goal of granting copyright is to encourage authors to share their works with the public by protecting their economic interests in the marketplace. Copyright law traditionally served to protect copyright interest when owners lost the physical control over their works. Mass distribution of works required a substitute for contractual restraints over the use of copyrighted works. The situation in cyberspace is entirely different. Online dissemination allows publishers to control the use of disseminated information even in cases of mass distribution. This may be done by subordinating the use to contractual restraints [ 45 ], supplemented by technical means of monitoring and restricting the use. Transmission online increases the feasibility of monitoring and restricting the use of copyrighted works. Networking allows more control over the type of use (browsing, downloading, annotating) the number of uses, and the identity of users. It allows not only monitoring the use, but also charging different prices for different uses and/or users. This gives the copyright owner greater power over the transaction. The technical ability of copyright owners to monitor and control the use of their works when disseminated in cyberspace weakens the case for copyright protection.

Finally, granting distribution rights in cyberspace, according to the Report’s recommendations, may undermine the purpose of copyright law. The exclusive right to distribute was granted to copyright owners against competitors in the market . Distribution rights traditionally sought to guarantee the ability of copyright owners to commodify their works in the market by selling or licensing copies. A right to control transmission expands the power of owners beyond the marketplace to any use by users. This is due to the technical means that allow monitoring any use of works, both in private and in public. It is also due to the fact that digital networks displace the focus of the dissemination process from publishers to users. Nondigitized methods of distribution required professional distributors and a large investment in infrastructure. Dissemination in cyberspace does not involve these kinds of costs. Dissemination in cyberspace was, therefore performed primarily by private users, and only recently by large commercial enterprises.

Computer mediated communication renders personal use of copyrighted works more feasible for more people. Traditionally, the process of communicating a message to an audience required substantial economic resources. The large investment involved in publishing a book, or a record, imposed a centralized mechanism of selection and production, and allowed only a selective group of people to get published. Computer mediated communication, by contrast, allows individual users to communicate their works directly to others without going through an intermediary. It makes it possible for increasing numbers of people to become self-published authors. Information distributed in cyberspace is increasingly originated by individual users, and continuously updated, revised and reused by other users. Users are able to share information with a large number of people. Computer mediated communication may, thus, open up an opportunity for a larger number users to effectively participate in exchanging information. Consequently, the purpose of copyright law, promoting learning and knowledge, is no longer served exclusively by providing incentives to publishers, and protecting the market for works. The “progress of science and useful arts,” as mandated by the US Constitution, may require, in cyberspace, direct exchanges among users.

On the other hand, personal use by individuals may threaten the commercial interests of copyright owners in an unprecedented way. The ability of individual users, to cause a substantial commercial harm to copyright owners, by private use, is typical of a digitized context [ 46 ]. No special equipment training or skills are necessary for downloading a file, changing it or redistributing it. Usually the same equipment that allows access to a work would allow its redistribution. Individual users are not competing with the copyright owner in public, namely, in the market. Furthermore, in most cases private dissemination in Cyberspace would not involve any financial gains. Yet, users may still affect the market of copyrighted works. An accumulation of a large number of users, each using the work individually for personal purposes, can overall displace the marketability of the copyrighted work.

This means that netusers will become a major target of copyright owners. Yet, invoking rights over public distribution against private users involves different considerations. The shift of emphasis to personal use shakes the fundamental scheme of copyright law. The Report’s approach to copyright reform relies on a distinction between the “public” and the “private” that is no longer valid. It is, therefore, necessary to design an alternative scheme of copyright protection that would target issues unique to the transmission and dissemination of information in cyberspace.

Striking a balance between users' rights of personal use, and owners' economic interests involves the following issues.

First, enhancing the ability of individual users to access use, interact and transform preexisting works, is the ultimate purpose of copyright law [ 47 ]. Users are playing an active role in both disseminating information and retrieving it. [ 48 ] The power of copyright owners to control and limit private use would increase the social cost involved in the copyright system. The potential public benefit in facilitating personal use and decentralization should be weighed against the prospective loss of opportunity for private gain. [ 49 ]

Second, copyright law had always reflected a trade-off between the cost of restricting the availability of the work against the benefits of providing incentives to create the work in the first place. Finding the correct balance between access and incentives is the central problem in applying copyright law [ 50 ]. The legal powers granted under copyright law seek to guarantee incentives to create. They allow copyright owners to prevent competitors from distributing their works at a lower price, thus decreasing the incentives to create [ 51 ]. Copyright law is thus equipped to balance the rights of copyright owners against competitors in the market place. [ 52 ]. A monopoly over personal use levies a tax on every use, and not just uses for commercial gains. It may thus further reduce the use of copyrighted works.[ 53 ]

Conclusion

This analysis of the Report’s recommendations demonstrates the danger in using copyright concepts, such as public/private distinction, in cyberspace. The Report took current copyright law as its baseline and recommended modifying copyright definitions to cover the new circumstances facilitated by a new technology. Its analysis forced computer mediated communication into copyright framework of public and private, distribution and copies. The Report failed to examine whether the assumptions reflected in this framework are still valid. The absence of a critical standpoint regarding the biases of copyright discourse itself, undermines the purpose of copyright law. Failing to understand the way in which copyright discourse serves the needs of specific technologies, favors the interests of existing stakeholders. The rights that were necessary to protect the interests of publishers and broadcasters may no longer be justifiable. Copyright reform should not focus on translating copyright concepts to cover new technological means. Instead, it should identify the opportunities and threats to knowledge and learning in cyberspace.

Footnotes

  1. Peter Jaszi, Towards a Theory of Copyright: The Metamorphoses of `Authorship', Duke Law Journal 1991, 455-502. See also James Boyle, A Theory of Law and Information: Copyright, Genes, Blackmail, and Insider Trading, 80 Calif. L. Rev. 1413, 1992.
  2. Mark Rose, Authors and Owners, Harvard University Press, MA: Cambridge, 1992, p. 140.
  3. See J.H. Reichman, Electronic Information Tools - The Outer Edge of World Intellectual Property Law, 17 Dayton L. Rev 797 (1992), p. 820-21 ("In effect, copyright law established a surrogate form of ownership by instituting a system of portable fences, valid against the world and backed by the power of the state, that accompany an author's creation on its journey from mind to mind. Even though third parties legitimately exercise dominion over artifacts that embody original intellectual creations, these fictitious portable fences neutralize essential attributes of property that possession would ordinarily confer."]
  4. U.S Const. art. 1, 8, cl. 8.
  5. See Berne Convention Implementation Act of 1988, H.R Rep. No. 609, 100 Cong., 2d Sess. 23 (1988) ( "...[T]he primary objective of our copyright laws is not to reward the author, but rather to secure for the public the benefits from the creations of authors."]
  6. See also Feist Publications, Inc. v. Rural Telephone Service Co., 499 US 340, 349 (1991) ("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 to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work... This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.")
  7. See Mark Rose, Authors and Owners 140 (1993).
  8. 17 U.S.C Section 106.
  9. Section 106(3) of the 1976 Copyright Act, provides copyright owners with the exclusive right to "distribute copies...of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”. 17 U.S.C Section 106(3).
  10. 17 U.S.C 106 (1).
  11. 17 U.S.C 106(2).
  12. This is because the exclusive rights of copyright owners are restricted by the ‘fair use’ doctrine. Fair use doctrine had been one of the most important means of promoting public access to works under copyright law. When a use is found to be "fair" under Section 107 of the 1976 Copyright Act, the user is exempted of copyright liability. Even though private use is not necessarily a ‘fair use’ under American copyright law, private non- commercial use would weigh in favor of fair use defense. See Campbell v. Acuff-Rose Music, Inc., 114 S.Ct 1164 (1994).
  13. See Intellectual Property and the National Information Infrastructure, The Report of the Working Group on Intellectual Property Rights, September, 1995 (hereinafter - “White Paper”). The preliminary draft of the Report was released on July 1994 (“Green Paper”).
  14. 17 U.S.C Section 106(3) See White Paper, p. 63 and 213.
  15. White Paper, p. 64
  16. White Paper, p. 68-69.
  17. 17 U.S.C Section 106(1).
  18. 17 U.S.C Section 101.
  19. The Report relied on recent cases in which digital copies "fixed" only in RAM were found to constitute an infringement of the exclusive right to reproduce. White Paper, p. citing MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 519 (9th Cir. 1993), cert. dismissed, 114 S.Ct. 671 (1994). These controversial rulings are inconsistent with the language of the statute and the legislative history, which indicates a Congressional intention to limit the scope of the reproduction right to sufficiently permanent or stable copies. See H.R. Rep. No. 1476, 94th Cong., 2d Sess. 62 (1976) ("Reproduction under clause (10 of section 106 is to be distinguished from "display" under clause (5). For a work to be "reproduced", its fixation in tangible form must be "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Thus, the showing of images on a screen or tube would not be violation of clause (1), although it might come within the scope of clause (5).") See Litman, Exclusive Right to Read, 13 Cardozo Arts and Entertainment Law Journal 29 (1994), p.42-43.
  20. Section 106(3) of the 1976 Copyright Act provides copyright owners with the exclusive right to "distribute copies...of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”
  21. The exclusive right to "distribute copies...of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." The Report recommended to add "or by transmission" after "lending" in the statute. See White Paper, p. 213
  22. Transmission is defined by Section 101 with respect to a performance or a display: "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." 17 U.S.C Section 101. The Report purposed to amend this definition by adding the notion of `transmission of a reproductions'. The Report further proposed that "in the case when a transmission may constitute both a communication of a performance or display and a distribution of a reproduction, such transmission shall be considered a distribution of a reproduction if the primary purpose or effect of the transmission is to distribute a copy or phonorecord of the work to the recipient of the transmission." White Paper, p.215 and 217.
  23. Id. One issue that would have to be resolved is what would be considered "beyond the place from which it was sent". Would a different machine at the same office be considered a different place? Would a different place require a different geographical place? Or, may be a different legal entity?
  24. Performance requires that a works would be recited, rendered, played danced or acted, and in the case of a motion picture or other audiovisual works, that its images would be shown in sequence. 17 U.S.C Section 101 (1988) ("to perform"). For a performance to be infringing, however, it is necessary that it would be performed in public. The Report found the definition of public performance to be broad enough to convert multiple individual viewers who watch a work in various locations and at different times. White Paper, p. 71 and Page 70 footnote 218.
  25. The right of public display was perceived by the Report as the most important right in the context of the NII. It concluded that under the broad definition of a display, "virtually all NII uses would appear to fall within the law's current comprehension of "public display". White Paper, p. 72. The copyright owner's monopoly over the public display of their works is restricted under 17 U.S.C Section 109(c) (1988). While section 109(c) permits the public display of a copy by its owner, it requires "the projection of no more than one image at a time, to viewers present at the place where the copy is located." Id. Display via a computer networks would usually be transmitted to viewers which are not present at the place where the copy is located. See White Paper, p.71. The Report further noted that the exemption under Section 109(c) does not apply to the public display of a copy of a work on a bulletin board system or other computer networks.
  26. White Paper, p. 213.
  27. White Paper, p. 30, and 219 "Publication" is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, by rental, lease, lending or by transmission."
  28. See White Paper, p. 23 and 28-29. Under the 1909 Act copyright law protected only published works, while unpublished works were covered by common law. Therefore, `publication' continues to be significant for works published prior to January 1, 1978. See Nimmer, Nimmer on Copyright, 4.01 [7-94].
  29. Publication on or after January 1, 1978 would be significant for various rules under the 1976 Copyright Act: 1) a copyright notice is required on copies and phonorecords published before March 1, 1989 (the effective date of the BCIA), which includes the year of first publication 17 U.S.C Sections 401(a), 402(a); 2) deposit requirements apply only to published works. 17 U.S.C 407(a)(d); 3) different rules of protection apply to publish and unpublished works of foreign origin. 17 U.S.C Section 104(a),(b); 4) copyright duration of anonymous and pseudonymous works, and works made for hire, begins on the year of first publication. 17 U.S.C Section 302(c); 5) 75 years from first publication (or 100 years from creation if that is sooner) a presumption that the author has been dead for at least 50 years applies. 17 U.S.C Section 302(d)(e); 6) transfers of copyright executed on or after January 1, 1978, may be terminated during a five years period beginning "thirty five years from the date of publication under the grant or at the end of forty years from the date of execution of the grant, whichever ends earlier." 17 U.S.C Section 203(a)(3). 7) Registration in the Copyright Office is required within five years of first publication in order for a registration certificate to constitute prima facie evidence of the validity of the copyright. 17 U.S.C Section 410(c); 8) statutory damages and attorney's fees 17 U.S.C Section 412; 9)reproduction rights of libraries and archives, 17 U.S.C Section 108(b); the exemption of performance for dramatic works primarily directed to the blind may be invoked only ten years after publication. 17 U.S.C Section 110(9); 10) the compulsory performance license for noncommercial broadcasting is applicable to nondramatic musical which have been published, 17 U.S.C Section 118(b); 11) works that were unpublished on the effective day of the 1976 Copyright Act received an extended period of protection, 17 U.S.C 303; 12) the scope of fair use defense is different for published and unpublished works. See Nimmer, Nimmer on Copyright, 4.01, p. 4 3-5.
  30. 17 U.S.C. Section 101 ("publication") ("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.") Also, see White Paper, p. 30 and 218.
  31. The definition of publication under Section 101 intended to make clear that "any form of dissemination in which a material object does not change hands - performance or displays on television for example -is not a publication no matter how many people are exposed to the work." House Report, p. 138, reprinted in 1976 U.S.C.C.A.N 5754. Cited by the committee on p. 31 and p. 218.
  32. White Paper, p. 31.
  33. White Paper, p. 215. This description is misleading. In the vast majority of cases works are uploaded or transmitted by users directly to a BBS, and rarely distributed in a physical copy to be uploaded by a BBS operator. For an analysis of BBS operation from the perspective of copyright law see Elkin-Koren, Copyright Law and Social Dialogue on the Information Superhighway: the Case Against Copyright Liability of Bulletin Broad Operators, 13 Cardozo Arts & Ent. 345 (1995).
  34. 17 U.S.C Section 109(a) (1988). See White Paper, p. 67 and 90.
  35. White Paper, p. 90.
  36. White Paper, p. 91.
  37. The first sale doctrine does not apply to sound recordings and computer programs. The owners of copies of such works may not rent lease or lend them for purposes of direct or indirect commercial advantage. See 17 U.S.C. Section 109(b)(1)(A) (Supp. V 1993). Certain restrictions apply to this prohibition see 17 U.S.C 109(b)(2)(A), 109(b)(1)(B) (Supp. V 1993). Also, see White Paper, p. 91
  38. White Paper, p. 91 ("The rationale of these exceptions may apply to other types of works as more types of works become available in digital format, 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.").
  39. White Paper, p. 95 ("This subsection does not apply to the sale or other disposal of the possession of that copy or phonorecord by transmission."]
  40. Under Section 106(3) copyright owners would have the right to control any distribution of their works to the public by transmission. See White Paper, p. 31 and 215.
  41. See Goldstein, infra note 49, section 5.6.1 ("The intent behind section 109(a) was to provide that, once the copyright owner parts with ownership of a copy or phonorecord, everyone in the succeeding chain of title - owners and nonowners alike - will enjoy the privilege."]
  42. Compare to See L. Ray Patterson & Stanely W. Lindberg, The Nature of Copyright, A Law of Users' Rights, (The University of Georgia Press: 1991), p. 99-100. Even though Patterson & Lindberg discuss television broadcasts, the concerns they raise are also applicable to the context of the NII. The underlying assumption of the public performance clause is that performance is equivalent to publication, and thereby supposedly satisfying the promotion of learning condition required by the copyright clause. Patterson and Lindberg argue that the protection of a live broadcast on television (under what they call `electronic copyright') reflects three fictions: the corporate copyright fiction which perceives the employer as an author, the fiction of fixation, which perceives a broadcast as being fixed even if it is being transmitted, and the fiction that performance is equivalent to publication. Id.
  43. See J.H. Reichman, supra note 3, at p. 823 ("For example, to the extent that publishers supply online information to a network of licensed subscribers from computerized and constantly updated data bases kept on their own premises, they avoid the kind of dissemination in hard copies that made intellectual creations vulnerable to third-party appropriation in the past."]
  44. Id. ("Because subscribers entering any given data base must log in and out, the proprietors' physical control over the data may enable them to charge for each and every use of electronically processed information, even though the copyright law itself grants no exclusive right to control either end use in general or the use of disparate facts in particular."]
  45. Id. ("The growing importance of electronic information tools, however, threatens to undermine the balance of public and private interests achieved in the past by restoring the publishers' power to subordinate even the use of disseminated information to the terms of two-party contractual agreements.") It is unclear, though, what is the status of online contracts, and under what circumstances they would constitute an agreement.
  46. For instance, the ability of individual users to threaten the market for CD's by producing perfect copies of recorded music by using DAT (Digital Audio Tape) led to the enactment of the Audio Home Recording Act of 1992 [Act of Oct. 28, 1992, Pub. L. 102-563 @ 1, 106 Stat. 4248. Nimmer, Nimmer on Copyright, 8B.01[A], 8B 6-7.
  47. Sony, 431-32 ("The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an 'author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. 'The sole interest of the United States and the primary object in conferring the monopoly,' this Court has said, 'lie in the general benefits derived by the public from the labors of authors.'") (footnotes omitted).
  48. The potentially interactive nature of use of digitized works may also support finding of fair use. Thus, in Acuff-Rose the Supreme Court held that the central purpose of fair use analysis is to allow transformative uses of works, namely, a use which supplant the original, adds something new, or altering the first with new expression, meaning, or message. ("Although such transformative use is not absolutely necessary for a finding of fair use,...the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, ....and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.") 114 S. Ct. 1164, 1994 U.S. LEXIS 2052, at p. 20.
  49. See Paul Goldstein, Copyright: Principles, Law and Practice, (Boston: Little Brown & Company, 1989 & Supp. 1994), p. 821 (arguing that fair use doctrine would exempt certain unauthorized uses because the resulting public benefit is thought to outweigh the loss of private gain.)
  50. Liebowitz, S.J., Copyright Law, Photocopying, and Price Discrimination, 8 Research in Law and Economic, (1986) 181, (hereinafter "Liebowitz") at p.184.
  51. The underlying assumption of the copyright model is that to guarantee an optimal level of investment in the creation of new works, it is necessary to allow creators to reap that investment. Publisher need to cover cost of development plus cost of distribution. Competitor, however, may copy the work and only pay the cost of distribution. Consequently, competitors are able to charge a lower price for works, and impair the ability of publishers to reap of their initial investment. If copies made by the creator are priced close to marginal cost, others may be discouraged from making copies. But then, however, creator's total revenues may not be sufficient to cover the cost of creating the work. If the creator cannot reap the marginal value of his efforts, he will undersupply the works. Copyright law seek to correct this market failure by granting owners with the legal power to prevent such exploitation of their works. See Landes W. M., & Posner, R., An Economic Analysis of Copyright Law, 18 Journal of Legal Studies 325 (1989) (hereinafter "Landes & Posner"), p.326.
  52. Patterson & Lindberg, supra note 42, p. 192: "The only protection that copyright owners need is protection against the piracy of their works by competitors in the marketplace."
  53. Patterson & Lindberg, supra note 42, argue that protection against consumers rather than against competitors, means securing profits from monopoly rather than a market:

    54. "The greater the protection they can obtain, of course, the less their competition - and the higher the price they can charge. The less their protection, the more competitive their prices must be. The ultimate goal of such copyright owners, it appears, is to transmute copyright from a device to protect the work for a market (a limited monopoly) into a device for guaranteeing a profit (an absolute monopoly). In other words, they want copyright to protect the work not only against the competitor but also against the customer."

 About the Author

     Niva Elkin-Koren is a faculty member at Haifa University School of Law. She received her LL.B in 1989 from Tel-Aviv University, her LL.M in 1991 from Harvard Law School, and her SJD in 1995 from Stanford Law School. Her research focuses on Law and Technology and Copyright Law. Among her publications: Copyright Law and Social Dialogue on the Information Superhighway: The Case Against Copyright Liability of Bulletin Board Operators, 13 Cardozo Arts & Entertainment Law Journal, 1995; Copyright Reform and Social Change in a Digital Era, Science Communication, Dec. 1995.

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