The following executive summary and analysis of the white paper
report, "Intellectual Property and the National Information
Infrastructure," was written by Arnold P. Lutzker of the Washington firm
of Fish & Richardson. This analysis was prepared at the request of AALL,
the American Library Association, the Association of Research Libraries,
the Special Libraries Association and the Medical Library Association.
COMMERCE DEPARTMENT'S WHITE PAPER
ON NATIONAL AND GLOBAL INFORMATION INFRASTRUCTURE
FOR THE LIBRARY AND EDUCATIONAL COMMUNITY
By Arnold P. Lutzker, Esq.
Fish & Richardson, P.C.
September 20, 1995
INTELLECTUAL PROPERTY AND THE NATIONAL INFORMATION INFRASTRUCTURE
The Commerce Department has released its long awaited "White
Paper," which sets forth recommendations on changes to intellectual
property laws. The Report of the Working Group on Intellectual Property
Rights (the "Report"), which is part of the Information Infrastructure
Task Force ("IITF"), provides an extensive discussion of current laws
and policies (most notably copyright, but also patent, trademark and
trade secret law) as they relate to digital information and reforms that
are needed to maintain a legal structure conducive to exploitation of
the new technology. --Importantly, it sets the stage for Congressional
hearings and legislative reform in the current Congress.--
The Thesis of the Report is that
... 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.
The Working Group believes copyright law is not an obstacle to
enhancing the information infrastructure, but rather an essential
component in making works available. The principal conclusion in the
238 page Report is that current laws are substantially adequate for the
task of advancing the national and global information infrastructures
(the "NII" and the "GII"). However, some changes to copyright law are
urged to eliminate uncertainty which has materialized. As will be
discussed below, the Report has a subtle but meaningful impact on
libraries and educational institutions. By emphasizing the economics of
copyright over the public interest in accessibility to copyrighted
works, it underscores what may be the increasing difficulty of
non-profit institutions to secure or grant access to works for little or
A. PROPOSED STATUTORY AMENDMENTS
Specifically, the Report recommends amending The Copyright Act of 1976
in the following ways:
Clarify Section 106(3) by expressly recognizing 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. Related amendments expand the definitional
section a) to recognize publication by transmission and b) to indicate
that distributing a copy by a device or process so that it can be fixed
at a distant location is a transmission.
The Working Group is explicit in its belief that transmissions
which are stored in a remote computer constitute a public distribution
even if they are not viewed, and may also implicate the reproduction and
public performance rights. The amendment, however, would remove legal
uncertainty as to whether transmissions are distributions under
While the proposed amendments appear modest, they are based on
the premise that --all-- transmissions are within the exclusive domain of
the copyright proprietor. If that assumption were enacted by the
proposed amendments, it would establish a threshold burden for libraries
and educational institutions seeking to use digital works. To the
extent that the educational exemptions in Section 110 are limitations on
the --performance right,-- they may not be recognized as exceptions to the
--distribution right.-- As a result, the impact of these changes on
"distance learning," where classroom teaching is not only performed
live, but also transmitted to remote locations and stored for future
review, could be dramatic. If third party works are incorporated in
distance learning classes and transmitted to remote locales where they
are independently recorded without prior clearance, that downloading
could be held to violate the newly clarified "distribution right."
2. Libraries and Archives
Expand the exemption in Section 108 for --libraries and archives,--
which are allowed to engage in certain archival, preservation and
Under current law and subject to a number of pre-conditions,
libraries (and their staff) may a) reproduce and distribute one copy of
an unpublished work in their collection --in facsimile form-- for
preservation or research, b) reproduce --in facsimile form-- one copy of a
published work to replace a damaged, deteriorated, lost or stolen copy,
which is not available at a fair price, and c) reproduce and distribute
one copy of an article from a library collection to a qualified
researcher, or an entire work when it is determined that the work cannot
be acquired at a fair price.
The Report's recommendations would allow libraries to prepare
--three copies of works in digital form for preservation purposes-- (only
one of which could be publicly used). It would also recognize that
copyright notice is no longer mandatory.
The Working Group also discusses interlibrary loan and
recognizes the need for institutions to allow reasonable, shared access
to copyrighted works. In instances where the fair use doctrine or other
exemptions apply, that access may be for no fee, even when borrowing is
of the electronic version of a work. But because it believes there is
questionable applicability to electronic transactions of CONTU
guidelines (which clarify Section 108(g)(2) and provide guidance on the
number of copies a library may request through interlibrary loans), the
Report urges copyright owners to develop "special, institutional
licenses" for schools and libraries as they do in the print domain to
facilitate public access.
Unfortunately, the White Paper hedges on the rights of libraries
to engage in the real-world use of digital works; namely, their ability
to permit digitally acquired (or created) copies to be sufficiently
available to the public for research, scholarship and criticism. For
example, in the proposed amendment, the Working Group would specifically
modify Section 108(b) to permit the making of a --facsimile or digital--
copy of any unpublished work for preservation, but it would allow only a
--facsimile-- copy for deposit for researchers.
For the educational and library community, the sobering message
of the Report is this:
As long as the commercial marketplace has established a metered,
encrypted system for access, the ability of libraries to serve
a public mission, which allows for --no fee-- access to published
and unpublished works, may be diminished.
3. Visually Impaired
Establish a new exemption for non-profit organizations to
reproduce and distribute works to the visually impaired, at cost,
provided that the copyright owner has not entered that market during a
period of at least one year after first publication.
If the works are made available commercially by the copyright
owner within one year of initial publication, this right would be
negated. In other words, unless the copyright owner authorizes
preparation of these works for the visually impaired, the benefits of
access could be delayed at least one year until the copyright owner's
plans become known.
4. Anti-Copy Devices or Technology
Prohibit the importation, manufacture or distribution of any
device or product, or the provision of any service, the primary purpose
or effect of which is to defeat anti-copy devices or technology, or to
violate the rights of copyright owners.
This provision would restrict the creation and sale of equipment
intended to defeat technology which protects copyright owner rights.
However, it could generate controversy when applied to certain
technology which may have multiple uses, e.g. is a VCR a device to
duplicate copyrighted films or to play original videos. Fair use allows
some copying without permission of the copyright owner; however,
provisions of the sort proposed by the Working Group would discourage
the manufacturer of such equipment from the start.
The Report also recommends criminalization of the mere "offer"
or "perform[ance]" of "any service, the primary purpose of effect of
which is to avoid, bypass, remove, deactivate, or otherwise circumvent"
technology which is intended to inhibit copyright violations. The
troubling aspect of the proposed language is that it does not
distinguish exemptions or fair uses from outright violations. The
nature and scope of "the offer or performance of any service" is vague
and could place libraries or educational institutions at criminal risk
if they acquire and use equipment with multi-purpose capabilities or
attempt novel exercise of their statutory exemptions.
5. Copyright Management Information
Prohibit the dissemination of copyright management information
which is known to be false or the removal or alteration of such
Although the Copyright Act no longer requires copyright notice
to secure rights in the United States (a requirement of our joining the
Berne Convention), the White Paper foresees the imbedding of copyright
ownership information within the digital code as an important tool to
protect copyright rights. Tampering with that information would be made
a crime. For libraries, the capacity to access source materials is an
important cataloging function and the creation of this information could
enhance the researcher's ability to authenticate works.
6. Public Performance
Establish a public performance right for sound recordings.
Pending legislation would accomplish this to a limited extent and the
Report endorses the legislation, although its authors recommend --full--
performance rights for owners of sound recordings.
While the creators of songs and lyrics and their publishers have
enjoyed all copyright rights of Section 106, owners of sound recordings
(masters from which records, tapes and CDs are made) have enjoyed
limited rights, and most particularly are not entitled to the rights of
public performance and public display. First protected in 1972 to
prevent tape duplication or record piracy, the key issue for sound
recordings has been the absence of a "performance right." Pending
legislation would grant the performance right (the ability to collect
royalties for broadcasting or other transmissions of recordings) for
some digital works. The Working Group would prefer to see the right
extended to all recordings, not just digital works.
Again, for libraries and educational institutions, the expansion
of any right means that unless use is exempted or covered by fair use,
there is greater exposure to a claim of infringement. Any library or
educational institution which pays performance societies today for use
of music on records, tapes or CDs, could face cost increases if the
sound recording owners' rights are enlarged.
7. Criminal Copyright Violation
Establish a criminal copyright violation when works with retail
value of $5,000 are wilfully reproduced or copied without permission.
By establishing a $5,000 threshold, the intent of this provision
would be to criminalize larger scale distribution of computer programs
or copyrighted works, not incidental, individual exploitation. The
panel was particularly concerned that one defendant who made Internet
distribution of computer programs, even though such distribution was not
for commercial gain, escaped criminal liability. This provision would
change that result. It does not matter that the defendant did not make
a profit. As long as the aggregate value of the works exceeded $5,000,
the criminal sanctions would apply.
B. ROLE OF TECHNOLOGY
The Working Group expresses confidence in the marketplace to
develop strong protections against infringements. There is an extensive
discussion of technological solutions at the server levels, by
encryption, digital signatures and steganography ("digital
watermarking"). It rejects statutory licensing schemes and argues
strongly for creative licensing in the on-line environment. To
facilitate licensing, the Report suggests that the Uniform Commercial
Code (U.C.C.) should expressly recognize the validity of agreements
entered on-line or electronically.
The Working Group's faith in technology poses a dilemma for
educational institutions and libraries. To the extent that the
commercial owners control transmissions of works as a public
distribution, copy or display, and are encouraged to develop and employ
technological envelopes to restrict unauthorized, non-compensated access
to works, those in the public sector that wish enhanced access to
copyrighted works may be stymied. As long as a paid mechanism for
access exists, the commercial vendors may challenge fair use claims.
Moreover, merely opening a technologically sealed envelope may
be a copyright violation. However, that is not the law. Fair use,
which is a defense to a claim of infringement, allows that
notwithstanding the exclusive grant of copyright to creators of works,
use may be made of a work without the copyright owner's express consent
(e.g. no fee use). Fair use fulfills certain statutory goals,
including serving education, comment, criticism, scholarship, teaching
and the like. The criteria at the heart of a fair use analysis are: the
nature of the use (commercial or non-commercial), the nature of the
work, the substantiality of the portion used as a percent of the whole,
and the impact of the use on the marketplace value of the original.
It is important to understand that these are criteria - tools of
analysis - not absolute standards. The fair use analysis is "fact
driven." This means that how works are acquired may also be reviewed;
however, merely because a work is sealed technologically does not mean
that work is not subject to fair use. Otherwise, all a copyright owner
would have to do is place figurative fence around a work and warn the
public NO USE is allowed without express permission and compensation.
That result would negate the statutory doctrine.
In sum, if the Report's thorough embrace of technology as an
answer to digital copying and distribution takes hold, applying
the fair use doctrine and the policies behind the library and
educational exemptions would become more difficult.
C. INTERNATIONAL CONSIDERATIONS
The Report frankly acknowledges the importance of intellectual
property to international trade and places the debate in an
international context. The GII is developing as fast as the NII, and
the exposure of copyrighted works to infringement internationally is
perhaps a greater threat than domestically. The Commerce Department
makes no pretense in suggesting that the United States is taking the
lead in the development of standards for the information infrastructure
and will look to modifying international conventions along the lines
proposed in the White Paper.
Internationally, the Working Group sees harmonization as a
theme, with the goal of bridging differences between common law and
civil law systems. However, its perspective is set forth in its
discussion of "moral rights," the European principal that independent of
economic interests there are rights of personality in works which
individuals may assert (e.g. "paternity" or right of authorship and
"integrity" the right to prevent material changes which harm one's
Even though "moral rights" are embodied in the Berne Treaty, the
pre- eminent international copyright convention, and even though when
the United States acceded to the convention in 1988 the U.S. Congress
found that U.S. laws had sufficient legal protection of moral rights
interest to support ratification of the Treaty, the White Paper
questions the constitutionality of moral rights. The effort at harmony
will be to move foreign copyright laws and treaties closer to the U.S.
D. FAIR USE
The Working Group convened a Conference on Fair Use ("CONFU")
and has continued to support discussion groups on this central issue.
The work of CONFU is to focus on achieving voluntary agreements
respecting the definition of fair use in the digital environment,
especially for educational and library purposes.
Throughout the Report, the Working Group acknowledges that while
policy considerations could drive a regulatory or legislative solution,
it will await the results of CONFU, before articulating its position.
To the extent that interested groups can reach accord and establish
workable guidelines, that would minimize the need for fair use copyright
reform. However, the treatment of fair use is incomplete. The
references to the doctrine as being a "murky" limitation, to metering as
a way of tracking use, and to the --Texaco-- case, which found liability by
a commercial researcher where copies were available at "reasonable cost"
through the Copyright Clearance Center, suggests an interest in
contracting fair use. Libraries and educational institutions should be
very attentive to these discussions and watchful over any effort to
diminish fair use.
E. ON-LINE TECHNOLOGY
The Report contains numerous discussions of the impact of
copyright and related legal principles on the evolving on-line/Internet
environment. The Working Group's most fundamental conclusion is that it
is premature to relieve those who use the NII to transmit information
(e.g. bulletin board and on-line services) of legal responsibility for
the transmissions on their network.
While some courts have split on the issue of service provider
liability for copyright infringement, libel and other legal offenses and
calls for legal reform have been heard, the Working Group does not
agree. It believes the service provider should be responsible and that
it is in the most practical position to correct abuses. The meaning of
this principle for educational institutions is not at all clear;
however, it must be assumed that if educators and libraries offer large
amounts of materials on-line, under this standard they could be held
legally responsible for all that content.
F. FIRST SALE DOCTRINE.
In the preliminary draft of this Report, the so-called "Green
Paper," the Working Group proposed a change in the "first sale
doctrine." This copyright doctrine acknowledges that the physical copy
of a work is different from its copyright and that the copyright owner
should not prevent redistribution of lawfully acquired copies. In other
words, when one purchases a book, he "owns" that copy, even though one
does not own the copyright to the work. Under the first sale doctrine,
the copyright owner is given very substantial freedom to choose the
first medium of sale of a work; however, once the work is publicly
distributed, anyone who acquires a lawful copy is free to sell, give or
otherwise dispose of that copy.
Reconciling the first sale doctrine to the issues of
transmissions was the subject of the Green Paper proposal. In that
case, the Working Group proposed to exempt disposing of a copy --by
transmission-- from the first sale doctrine. In the White Paper, the
Working Group has retreated from the recommendation that first sale
provision of the Copyright Act be amended. Rather, it discusses the
doctrine as it applies in practice and concludes that there are
sufficient safeguards for owners under the rights of reproduction,
distribution and display (including specific language limiting the
doctrine as it relates to computer programs and sound recordings) so
that no change is required.
The retreat on the change to the first sale doctrine is not as
dramatic as might appear at first blush. In the text of the Report, the
Working Group establishes several legal theories under current law that
suggest transmissions of works would violate copyright rights of owners,
despite the protective shell of the first sale doctrine. Of special
importance to libraries is that matter of how to display works lawfully
acquired and dispose of them to others without running afoul of the
doctrine. The most restrictive interpretation, that only one copy might
be displayed at a given time and if a work were transferred from a
computer to a computer, the first computer owner would have to erase the
work in the hand-off, leaves the library community with limited room to
maneuver in the digital world.
G. RELATED AREAS OF THE LAW
The Report reviews patent, trademark and trade secret law.
Although it makes no recommendations for changes of these related areas
of intellectual property law, it acknowledges that the NII will have an
important impact. For example, since the NII will make much more
information publicly available, it could trigger reassessment of patent
grants, which are dependent upon review of publicly available data
(so-called "prior art").
With regard to trademark law, the Report acknowledges there may
be increased potential for international conflicts over domain names.
The current national system may yield overlapping disputes over name
ownership and use. Further, the Working Group encourages changes in the
international classification scheme to ensure the status of goods and
services for information technology.
Trade secret law operates on a common law or state statutory
system, not a federal basis. The most direct impact of the NII on this
body of law will be the capacity of those concerned with trade secrets
to utilize the NII as a secure means of communication.
H. SUMMARY AND CONCLUSIONS
After almost two years of consideration and hearings, the Report
of the Working Group is one of the most comprehensive assessments of
legal issues and on-line/digital technology. While its legal
initiatives appear modest, the core thrust of the Report is
far-reaching. It posits the thesis that copyright is an economic right
of owners to be exploited. In its view, the copyright law as a code of
regulation should facilitate economic exploitation of works which is in
the commercial interests of the United States and its citizenry. It
defines copyright law as a flexible statute which needs only minor,
definitional tinkering to greet the digital era.
Although the Report makes some positive recommendations to
enhance the capacity of libraries to copy certain works in a digital
format, the broader impact of the Report should not be lost. Since the
pervasive theme of the recommendations is enhancement of the economic
exploitation of copyrighted works, less heed is paid to the public
interest aspects of copyright law or established exceptions to copyright
There is also a strong article of faith that technology can
solve current problems, through the wizardry of encryption, digital
signatures, steganography and the like. The weakest part of the Report
is its assessment of the relationship of fair use to digital use. The
Working Group will await the recommendations of CONFU before tackling
this thorny question.