ARCHIVED: Legislative and Regulatory Update - July 23, 1996

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Presentation by Robert L. Oakly

Good afternoon. Lolly has set the stage by talking about the White Paper. I will follow up on her remarks by discussing some of the specific responses to the White Paper and also by talking about another proposal that would extend the term of copyright by 20 years.

First, I was asked to talk about the Response of the So-Called Digital Future Coalition to the White Paper proposals.

Shortly after the White Paper was released, it became clear that many groups had problems with the recommendations. These groups included the library and education communities, broadcasters, civil liberties and privacy groups, the electronics industry, and online service providers. Those groups met first last fall at American University and agreed to form a coalition to express their concerns about the proposals.

The Group, which adopted the name Digital Future Coalition, found out quickly, however, that it was not going to be good enough just to express reservations about the legislation and leave it at that. Congressional staff wanted answers, and criticisms without fixes were seen as obstructionist and not helpful. As a result, the DFC began to identify solutions to each of the problems. I presented the D.F.C. proposals to the Congress when I testified before the Senate Judiciary Committee on May 17,1996, and I was asked to try to summarize them here. Bear with me; there are seven. I'll cover them in about five minutes.

First, the most sweeping D.F.C. proposal is directly parallel to the core proposal of the White Paper. The White Paper proposes to extend the rights of copyright owners to include distributions by transmission. It calls this proposal a clarification. That being the case, it seemed entirely consistent to seek a similar clarification of fair use, to ensure that fair use would cover uses that resulted from Aa transmission, and very simple language was submitted to achieve that result. The Coalition does not believe that Copyright owners need a change in the law to protect their rights, but its members believe that if such a change is adopted, it should be balanced by moving the fair use doctrine into the electronic age at the same time.

Second, the D.F.C. proposal on First Sale is similarly intended to extend into the electronic environment the existing ability of an owner or possessor of a work to lend or give that work to someone else. The ability to transfer ownership or possession of a work of intellectual property has permitted the creation of lending libraries and video stores, and it allows individuals to lend copies of works to friends or colleagues. So long as no additional copies are made, the D.F.C. believes the electronic environment should be no different.

Third, educators today deliver non-profit educational services to students in rural communities, disabled individuals, adults enrolled in continuing education programs, and many other special communities of learners. (Now this is a little tricky; you'll have to follow this closely.) Distance education is possible today in large part because of provisions in the Act that explicitly permit the "performance or display" of certain works delivered by means of "transmission" in non-profit educational settings. The proposed legislation, however, defines transmissions of copyrighted works by means of digital networks not as Aperformance or display, but as a "distribution" of copies, making the existing exception inapplicable. Thus, if passed as currently written, the existing exemptions for distance learning would not apply.

To rectify this situation, the DFC proposal would amend the relevant sections of the Act by adding "distribution" to the list of conditionally exempt educational uses. To allow distribution to individual computers rather than merely remote classrooms, the D.F.C. proposal would eliminate current restrictions on the kinds of places in which exempt transmissions may legally be received, and on the kinds of works subject to the exemption. But, to help assure that these provisions are not abused, the D.F.C. also proposed new restrictive language that would limit the scope the exemption to transmissions primarily intended for the use of "officially enrolled" students. The apparently unintended impact of the White Paper proposals on distance education has caught the attention of Congress, because many states --especially rural states --have developed extensive distance learning programs, and the D.F.C. proposals have, therefore, struck a responsive chord in Congress.

Fourth, the Digital Future Coalition believes that the mere fact that a work in digital form is loaded into the random access or cache memory of a computer does not, in and of itself, constitute the sort of "copying" with which the law of copyright should be concerned. Such copies are required for the lawful use of an electronic work, and the D.F.C. submitted a proposal that would permit the necessary and incidental reproduction of digital works in connection with their lawful use on computer systems. It would have no application to situations in which permanent electronic copies, such as those made on a computer's hard drive or floppy disk, are made.

Fifth, members of the DFC felt that the proposal to prohibit reproductive technology was too broad in that it would outlaw devices that have significant non-infringing purposes along with those that have no other purpose. The D.F.C. does not advocate allowing consumers to circumvent properly protected copyrighted works through the use of "black boxes" that have no commercially significant use other than to circumvent copy protection. But they do support the right of consumers to continue to make legal, fair use reproductions of copyrighted works. As a result, the D.F.C.recommended that Congress defer consideration of that Section of the bill in favor of future legislation specifically drafted to define the targeted devices.

Sixth, the D.F.C. was also troubled by the breadth of the seemingly innocuous provision that would penalize the knowing distribution of false copyright management information. Such a provision would render a second hand bookseller or librarian liable, if they were aware that the copyright status of a work had changed and yet they sold or lent the item in question anyway. The D.F.C. proposed language to make the Section achieve its intended purpose which was the wrongful distribution of such information.

Seventh, and finally, the library community was pleased that the White Paper recognized the need to use digital technology to preserve our collections. That recognition was largely a product of the fair use discussions that Sally will be talking about in a few minutes. Despite the general agreement in those meetings as to the need, it was felt that fair use was the wrong way to approach the issue, and so instead the White Paper included proposals to amend the library section of the Act. Unfortunately, there were some technical problems with the way that was handled, and the D.F.C. proposed some essentially technical changes to make the resulting section work the way it was intended.

That is a much too quick summary of the proposed solutions to the problems with the White Paper. The D.F.C. believes, and many others seem to agree, that these proposals are reasonable and consistent with the basic intent of this bill to write a digital update for the Copyright Act. Because they are reasonable on their face, they have received a good hearing on the hill, and there is a good chance that at least some of them will be adopted if the Act moves forward.

But, speaking of preservation, the second issue that I need to tell you about is the proposal to extend the term of copyright.

As you probably know, the term of copyright is one of the most basic limits on the rights of creators. Copyright started out as a fourteen year, renewable term. Over the years, however, the term has gotten longer and longer --first to a 28 year renewable term, and then up to 75 years, total. The 75 year term still applies to most older works, but for new works it is life of the author plus 50 years. To me, this already goes well beyond what is needed for an incentive to create --well beyond being a reasonable period to exploit a work --and well beyond a limit on the rights of creators. Now it is just a limit on the ability of the heirs to benefit from the work of their ancestor.

The term of copyright is closely linked to preservation. Many librarians, when facing the question of whether or not to preserve a work by reformatting, find that the uncertainties of the Copyright Act create greater risks than they are willing to accept. As a result, many, if not most librarians choose to follow the secure path of preserving only those materials that are in the public domain. In general, this means that materials published in 1920 or before are now clearly in the public domain and can safely be digitized or preserved and distributed in any manner the librarian deems appropriate.

Despite the existence of Copyright terms that extend well beyond the life of the creator, a proposal surfaced1 early in this Congress to extend the term of copyright by an additional 20 years. For current works, that change would mean that the new term would be life plus 70. For older works, the new maximum would be 95 years, and works published in the 1920's and 30's would not come into the public domain for an additional 20 years.

Ostensibly, the reason behind this proposal is international harmonization. The real reason behind the proposal is that some very valuable properties from the 1920's are about to enter the public domain. Specifically, the Disney Company and the Gershwin estate are working hard to protect their interests. Many wonderful Gershwin tunes were written in the 20's, and even the venerable Mickey Mouse will lose his copyright protection in about ten years if nothing is done. As you can understand, then, there are some powerful forces behind the proposed term extension, and we were told very early on that this proposal will go through.

From a preservation perspective, however, this change comes at a critical time in the life of a work. As you all know, the life expectancy of a book is about 75 years plus or minus, maybe 25 years. Nonetheless, at 75 years of age, most library materials are showing significant signs of brittleness and deterioration, and an additional 20 years of protection will significantly reduce the ability of most libraries to preserve the materials in their collections.

When this proposal first surfaced, I suggested to the library community that if proprietors were going to get an extra 20 years, we should seek a solution to the preservation issue, as a quid pro quo. Everyone agreed, but the suggestion was made to seek a more complete exemption so that libraries could make copies for research, scholarship, and distance learning, in addition to preservation. As a result, the library community advanced such a proposal on the hill last year. Initially, the proposal went nowhere, but eventually the Library of Congress and the Register of Copyright saw the merits of the matter and initiated a series of discussions among the interested parties.

In response, the industry has proposed a series of increasingly complex provisions, insisting that to take advantage of the exemption, a library must ascertain that the work had not recently been commercially exploited. At the same time, the AAP has insisted that commercial exploitation would have to include licensing, whether the copyright owner had possession of the work or not. If they had made a work available by license arrangement, that would be sufficient to constitute commercial exploitation and remove it from this provision. Such a requirement basically makes the proposal a nullity, and the discussions have been in serious danger of falling apart.

In the meantime, both Houses of Congress have taken steps that assure that the talks will continue. First, in the House, the original, broad library language has been appended to the NII bill. That language is clearly unacceptable to the industry. Markup of that bill has been scheduled, but postponed several times. There is now no definite date by which the proposal is to be taken off the table. Over in the Senate, new language, recommended by the Register of Copyright and generally favorable to libraries and digital preservation was passed out of committee as a free-standing bill. Clearly, neither of these approaches will be the last word. Copyright proprietors are putting a lot of time, attention and money into getting term extension passed. They will try to accommodate our needs to the extent necessary to get the bill passed, but they will not agree to something that they believe will undercut their basic market.

To really bring you up to date and give you the full picture, we need now to move beyond the White Paper and talk about a new proposal for the protection of databases outside of copyright altogether.

The beginnings of this issue occured in 1991 when the Supreme Court decided the Feist case.2 That case held that the White pages of the phone book were not copyrightable because they lacked sufficient originality. Noting that originality is the bedrock principle of copyright, the Court in Feist explicitly overruled a line of cases that had allowed copyright protection based on the so-called sweat of the brow rationale, where the basis for protection had been hard work and investment, not originality. The Court said that to obtain copyright protection some modicum of originality must be found, if only in the selection, coordination, or arrangement of the material. Mere investment or hard work was not enough.

The case dealt only with the white pages, but the holding was broad enough to call into question the copyrightability of many databases, especially those created automatically or from materials in the public domain, unless there is some demonstrative selection, coordination, or arrangement of the material in question.

About a year after Feist, the Commission of the European Union presented a proposal to the Council for a Directive on the protection of databases outside the traditional systems of copyright. Over the next few years, that proposal progressed through two readings, and last March it was finalized as a Directive and transmitted to the member states for implementation.

Two months later, in May, a substantially similar proposal was introduced into our Congress as H.R. 3531 by Representative Moorhead. This new proposal is supported by the Information Industries Association, but has aroused concern among many groups who are concerned about the breadth of the bill and its potential to significantly undo the copyright balance in the United States. Let me highlight four key provisions of this new bill for you.

First, the bill would explicitly overrule Feist. Instead of requiring some level of originality, the bill states that

a database is subject to the Act if it is the result of a ... substantial investment of human, technical, financial or other resources ...

Second, the scope of the bill is very broad. Database is defined as  

a collection, assembly or compilation, in any form or medium now or later known or developed, of works, data or other materials, arranged in a systematic or methodical way.

The medium neutral quality of this provision suggests that this new protection will be applicable to databases presented on paper as well as electronic formats. Indeed, the preamble to the European Directive makes it clear that

database Ashould be understood to include collections of works, whether literary, artistic, or musical or of other material such as texts, sounds, images, numbers, facts, data or combinations of any of these. This scope is so broad that some believe it will largely supplant copyright for many materials.

Third, the bill states that a database may be protected, even if it consists of government information that would otherwise be in the public domain. That means that if one company is smart enough or lucky enough to collect the information from the government at the outset, no one else will be able to use that information, without going to that company, even though under copyright it could not have been protected.

Fourth, the bill grants the database owner a 25 year term of protection. But it also provides that whenever the database is updated, corrected, or changed in any way a new 25 year term is established. In other words, protection of databases will last in perpetuity, so long as the database owner continues to make changes to it.

Finally, I just need to note that the bill contains no provisions like the fair use provision or the library exemptions in our current Copyright Act. If this bill becomes law, it will substantially change intellectual property law as we know it.

Finally, I wanted to alert you to the international dimension of these issues.

As you can tell from this last discussion, the international dimension of intellectual property policy is becoming increasingly important. Almost immediately after the White Paper was released, and certainly before there was any domestic consensus, the administration's representative to the World Intellectual Property Organization began to press for amendments to the Berne Convention that were substantially the same as the recommendations of the White Paper.

Over the summer, there will be a series of regional conferences in which the proposals will be discussed in different parts of the world. In December, it is expected that there will be a three week meeting in Brussels to conclude language which will then be sent to the Senate for ratification.

This is an effective way of bypassing the bi-cameral nature of our legislative process. Sufficient questions have been raised about the NII legislation to slow it down. Nonetheless, it is likely to come back as a proposed treaty early in the next Congress. At that point, the argument will be that we need to pass it to remain in harmony with the rest of the world. Moreover, it will not be subject to usual legislative process of compromise and amendment.

To sum up, there are major intellectual property changes under development right now. These include the White Paper and the NII bill, the proposal to extend the term of copyright, and the new proposal for the protection of databases. All of these proposals either started in Europe or, in the case of the NII bill, they have been more quickly embraced in Europe. Increasingly, it appears that U.S. intellectual property policy is being determined in the international environment. It may just be that if we want to change what is happening we are going to have to get involved at an earlier stage of the process, when the proposals are being developed overseas.

Thank your for your attention to all of this. These are critical issues that will define our ability to use information in the years to come.