ARCHIVED: An. Mtg of the Federal Libraries and Information Coordinating Committee (FLICC) Copyright 1998: Recalibrating the Balance - March 8, 1999

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Copyright 1998: Recalibrating the Balance

by Robert L. Oakley1

Prepared for Presentation at the Annual Meeting of the Federal Libraries and Information Coordinating Committee (FLICC)

Held at the Library of Congress
Washington, D.C.
March 8, 1999

Good afternoon. It is truly an honor to be invited to speak to you today. This forum is always an important one, regardless of the topic, and the audience is always one of the most demanding, sophisticated, and influential anywhere. So I am pleased to be here and to have the opportunity to address you.

I was asked to talk today about some of the recent developments in copyright and related areas. Although I believe that there are others on the program who could do that equally well, if not better, I think I was asked to be here to provide a slightly different "take" on the issues than you might get from some of the others. Since I expect to be giving a somewhat different perspective, I should note here for the record that in making this presentation, I am speaking only for myself and not for any organization, certainly not Georgetown, but also not the American Association of Law Libraries or any other library association.

When the program for today was put together, some clever person - not me, for sure, but someone - created the title for my talk: "Recalibrating the Balance." Even though that idea was not mine, I thought it was a good one, because it gave me the opportunity to discuss what is going on in a way that I might not have done otherwise. Because in truth, that is exactly what is going on: a major effort is being made to recalibrate the copyright balance to give copyright owners much greater control over the use of their works than they have had in the past at the expense of those who use information.

There are, of course, reasons why these changes are being made now. The development of the Internet, with its capacity for the high speed reproduction of multiple copies of copyrighted works, has made content owners worried about the potential of the Internet to facilitate piracy. This fear is strong in all parts of the content community, but it is especially strong in the video and music industries. At the same time, high level policy makers have come to see intellectual property as an international trade issue at least as much as it is a matter of author's rights. There is significant concern about international piracy, especially of software and movies, and there is a high level interest in protecting U.S. authors and creators in overseas markets. These twin concerns of Internet development and international trade have created a new interest in finding ways to protect U.S. creativity and investment.

The challenge in the legislative process was to enhance the protection against piracy in a way that did not interfere with the reasonable, expected, and legitimate rights of information users, researchers, and scholars. Did we succeed? I think not. Although the laws that passed last year contain a few things for users of information, the big picture remains one of higher control for copyright owners and less flexibility for information users. Indeed, if one looks closely, it might well appear that last year's legislation sets the stage for licensing to replace sales for many information products and for pay-per-view to replace free public access to information through libraries. If so, that change is not merely a recalibration; it is a fundamental change in the equation.

In order to present this picture of what has been going on, I thought I would talk briefly about four areas: term extension, the Digital Millennium Copyright Act, database protection, and a proposal to revise the Uniform Commercial Code with a new Article 2B.

First, Term Extension.

Term extension is a relatively clean example of my theme, because simply stated, it declares a twenty year moratorium on any new works coming into the public domain because of age.2 The Sonny Bono Copyright Term Extension Act was approved on October 27, last year,3 extending the term of copyright protection for an additional twenty years over the previous term. For newer works, created since 1978, the term of protection is now the life of the author plus 70 years. (In my, judgment, though obviously not that of Congress, that is a far longer period than what is needed to be an incentive to create.) For older works not yet in the public domain, and for corporate works, the new maximum is 95 years from the date of publication. I think the way the arithmetic works out is that works published in 1922, or before, are in the public domain; works published after 1923, and not already in the public domain,4 will not come into the public domain for at least 20 more years. And of course, there's no guarantee that another extension will not be passed then.

The term extension legislation was strongly supported by the music industry and the movie industry. The 1920's and 1930's were a particularly fertile period in American cultural life, and the owners of some of those properties do not want them to come into the public domain. In addition, a number of countries in Europe had begun to migrate to the longer copyright term, and it was argued that the United States needed an equivalent term in order to prevent our authors from being disadvantaged overseas. The combination of powerful industries and an overseas precedent made it difficult to resist lengthening the term.

But the longer copyright term has many implications. In the creative community, it places barriers in the way of using these older works for the creation of newer works. The recent adaptations of the works of Jane Austen for television and the movies, or the very popular movie "Shakespeare in Love," are examples of how older works in the public domain can be turned into something new and vital for the modern age. Other examples include the incorporation of an older work into a new multi-media work on a CD-ROM. To be sure, such new works can be created by asking permission and paying royalties, but in many cases, that is prohibitive in both time and money. The whole point of having a public domain is to encourage older works to be used in new and creative ways. Term extension slows that process down by another twenty years.

A longer copyright term also has implications for libraries, both in terms of the library's ability to serve its clientele and especially in terms of preservation. With that in mind, the Act did carve out an exception for non-profit libraries, archives, and educational institutions, which I will discuss later.

Second, I need to talk about the Digital Millennium Copyright Act.

This major Act is the centerpiece of legislation designed to protect digital works through the use of encryption systems which can close users out of uses that would be lawful today, and which set the stage for a pay-per-view world for access to information.

More formally, the Digital Millennium Copyright Act implements the provisions of the World Intellectual Property Organization treaty which was concluded at Geneva, Switzerland on December 20, 1996. The treaty establishes what might be considered a new right for copyright owners: a "right of communication to the public," which is obviously intended to encompass digital transmissions. Many people thought that that new right could be inferred from our existing rights of reproduction and distribution, so it never became controversial.

The Act is long and complex, but to try to simplify - in order to implement the treaty, the new law does three main things: it makes it illegal to break through encryption technology to gain access to a protected work, even when the use would otherwise be lawful under the Copyright Act; it makes it illegal to manufacture, import, sell, or otherwise distribute technology that might enable someone to break through such encryption technology; and it makes it unlawful to alter copyright management information that is embedded in or associated with a work. Taken altogether, these three things allow copyright owners to have total control over the use of their works, a level of control far beyond what they have now. Although the law does provide for a number of limitations and exceptions, those limitations do not change the basic picture of owner control.

Let me expand just a little. In the Internet environment, many copyright owners have felt that technology - through systems of encryption, scrambling, or even just passwords - offered the best mechanism for the protection of their works. One way to think about these systems is that works are placed into an electronic envelope and sealed. On the outside of the envelope are written the terms and conditions for opening the envelope, terms that may include the payment of a fee, limitations on copying or re-distribution, and so on. If the user is willing to pay the fee and agree to the terms, they may open the envelope; otherwise not. Accommodating this view, and as a primary means of implementing the treaty, the D.M.C.A. makes it a violation of the law to break through a system of technological protection, even if doing so is for an otherwise lawful purpose, such as to make a fair use of a work.

Fortunately, the ban on circumvention does not take effect for two years. During that time, the Librarian of Congress, in consultation with the Register of Copyrights and others, is to make a determination of whether users are likely to be adversely affected in their ability to make fair uses of protected works. If the Librarian determines that users will be adversely affected, he is to identify particular classes of works that will continue to be exempt from the ban for the next three years, at which time the evaluation will be repeated. In making his evaluation, the librarian is to consider: the availability for use of copyrighted works, the availability for use of works for nonprofit archival, preservation, and educational purposes, the impact of the prohibition on criticism, comment, new reporting, teaching, scholarship, or research, the effect circumvention has on the market for or value of copyrighted works, and any other factors he considers appropriate.

All that sounds good, and this proceeding will be very important to protect the future of fair use. But if you stop and think about it, it is going to be very difficult for the user community to show a negative impact of encryption. First, it is always difficult to prove a negative. How do you quantify the articles that would have been written or would have been written differently if researchers had had greater access to source material? Second, the most sophisticated systems of encryption have not yet been widely deployed and may not be deployed before the two year period is over. As a result, it will be very difficult to show a significant negative impact from a technology that is not yet in widespread use. But if such an impact cannot be shown, the ban on circumvention will be lifted, encryption technology will be deployed, and copyright owners will be able to dictate the terms of usage for their works far more than they have been able to do in the past.

In addition to prohibiting the circumvention of technological protection systems, the second key element of the law is a ban on the technology that would enable such circumvention to be done. If the encryption is effective and you can't get any devices to break through it, then the copyright owner can effectively deny access to the information except on their own terms. The law makes it essentially impossible to acquire such equipment by specifying that the manufacture, importation, sale, or trafficking in such devices is prohibited.

Third and finally, in the highly controlled environment envisioned by the Act, the integrity of Copyright Management Information is crucial. The Digital Millennium Copyright Act makes it unlawful to remove or alter such information knowing that such a change will conceal or facilitate an infringement. It also makes it a violation to provide false management information with an intent to facilitate or conceal an infringement.

The encryption systems envisioned by this Act will rely on embedded copyright management information to control access to the work, to track usage, and to provide a mechanism for payment to the copyright owner. Such information consists of standard bibliographic information, including author, title, and copyright owner, as well as the names of any performers, writers, or directors who might be credited with the work. In addition, it includes any terms and conditions for the use of the work. Such terms and conditions include the cost of access, restrictions on subsequent distributions, cost of printing, limitations on printing, and payment mechanisms. These terms and conditions provide the basis to charge individual users for the use of individual articles. They set the stage and provide the means to move to a pay-per-view information environment.

So, that's the picture created by the Digital Millennium Copyright Act. Under the law, copyright owners can seal up their works, set terms and conditions for the envelope to be opened, and no one can do anything about it because it's unlawful to get around the system even for a legitmate purpose. What happens to fair use? Well, in that kind of environment, I don't see where it fits. What happens to the other limitations on the rights of copyright owners, provided for in the copyright act. Regrettably, they don't seem to have a place either. In this system of high level control by copyright owners, all of that is superseded by the copyright owner's ability to control the use of their own work.

Now, this picture is an over-simplification of the Act. I am very much aware of that. In response to concerns from various interest groups, the Act does establish a series of exceptions, including under certain specified conditions, exceptions for reverse engineering, for law enforcement and intelligence, and for encryption research and security testing. It also allows circumvention when necessary to protect children from pornography and to protect individual privacy. It even allows libraries to engage in circumvention for the sole purpose of evaluating a work for purchase. The library exemption doesn't add much, though, because most publishers trying to sell a work to a library will allow the library to look at it, without the necessity for circumvention. In addition to these narrow exceptions, the law contains a provision to protect maintenance and repair organizations as well as a long and complex section designed to permit online service providers to continue to operate without incurring a risk of monetary liability for actions over which they have little control. This section creates safe harbors for online service providers to transmit or route materials through their systems, to cache materials on their systems for more efficient subsequent use, to store material, such as a web page, for a user, and to provide search engines and links to other sites. To be eligible for these exceptions, the online service provider has to comply with a number of conditions, one of the most important of which is to act expeditiously to remove infringing material from its site, when notified by a copyright owner that it is there.

These exceptions are important, but you should be aware that the sections of the statute are detailed and technical, setting forth a lot of conditions. All I can do here today is provide a superficial sketch. But, it is important to note that, as important as these exceptions are, they are all for very narrow specified purposes; they do nothing for the general user of information. They do not change the fundamental picture I described before.

Before I move on, I must note two other benefits that have been accorded to libraries, else I might be accused of distorting the picture. First, there has been a much-needed update to the preservation sections of the Copyright Act. As important as those sections have been, they had become outdated, because they did not permit the use of digital techniques for preservation, and they did not allow libraries to make the number of copies required by accepted preservation standards. The Digital Millennium Copyright Act solved both of those problems, although it did place limits on what could be done with the preservation copies.

Finally, under the Term Extension Act, an exception was granted for libraries. It says that during the last twenty years of the copyright term - in other words, during the new extension - a library may "copy, distribute, display or perform a work in digital or facsimile form for purposes of preservation, scholarship, or research, provided that the work is not still subject to normal commercial exploitation by the owner." That actually sounds pretty reasonable, but there is a concern about the meaning of the phrase "normal commercial exploitation." If the phrase is interpreted reasonably, then this provision could be useful to libraries. If it is interpreted expansively, then it could turn out to be meaningless.

So, those are the laws that passed last year. What is still to come?

The third area I wanted to talk about was Database Protection.

For the last several years, the producers of some databases have sought statutory protection. Not only are they worried about the unauthorized user, in the electronic environment, they also fear that someone could take a substantial part of their database and set up a competing product without having to make the initial investment in collecting and organizing the information. As a result, the free-rider would be able to undercut the price of the original compiler. These fears arise because neither facts5 nor U.S. government information6 are protectible under copyright, but some publishers have developed very large businesses by compiling such information and selling it to their clients. They believe that the lack of protection for their investment represents a major gap in United States intellectual property laws and leaves them vulnerable to large scale piracy.

The first attempt to create a system of sui generis protection for databases under copyright failed, because it was very broad and aroused a lot of concern from many different constituencies. In the last Congress, the proponents of protection tried a different approach: to protect databases against a misappropriation that causes harm to the market. At first, this approach seemed more promising. It would provide protection for investment in the compilation of information, including compilations of factual data and governmental works, as well as other kinds of compilations. The owner of the database could sue if someone extracted information in a way that caused harm to their actual or even their potential market. The term established for this protection was 15 years, but if the owner of the database invested significantly in its maintenance or updating, the protection could be extended essentially indefinitely.

There were a number of concerns with this bill raised by a variety of groups, including librarians, representatives of other segments of the information industry, and members of the research community, especially in science and medicine. They were concerned about the absence of a meaningful fair use provision that would allow researchers the ability to extract modest amounts of data as needed for their research. They were concerned about the need for a definition of "harm to the market" and the need for a definition of "potential market." It seemed that even a small extraction could potentially cause some harm to the market and, therefore, be actionable. They were concerned further about the impact of the legislation on free public access to government information, especially in situations where there was a de-facto monopoly. Finally, they were concerned about the potential for an unlimited term of protection.

Despite these concerns, this bill did pass the House last year, and an effort was made to insert it into the Senate version of the Digital Millenium Copyright Act and pass it without a Senate hearing. Eventually, however, the Senate decided to hold off on database protection for another year and make it a high priority for this year. Already, Representative Coble has introduced a new version of the bill in the House. This new bill is improved in that it does contain a section that looks a lot like fair use. However, many of the other issues remain and will undoubtedly be the focus of attention this year. I am told that hearings are set to be held in the House next week, on March 18.

Finally, let me talk briefly about the effort to create a new Uniform Commercial Code, Article 2B.

The Uniform Commercial Code is the basic law governing commercial transactions in the United States. It has been adopted in all 50 states and provides, among other things, for a uniform law of contracts throughout the 50 states. A few years ago, a group of people decided that while Article 2 dealt with contracts for the sales of goods, a new article was needed to deal with the licensing of software and information. Since that time, a new, proposed uniform state law has been drafted. Like its Article 2 counterpart, proposed Article 2B deals with the formation of an agreement and the default terms that might be used in case the contract is silent or omits some elements. Such default terms might include terms about warranties, what constitutes performance of the contract, and remedies, in case one of the parties defaults.

There are many aspects of this proposed legislation that are controversial, but from the consumer perspective, probably the most controversial is the provision that would validate shrink-wrap, or clickable licenses. These so-called mass-market licenses have been controversial in the courts because they are not really negotiated between the parties, and, in fact, the consumer often agrees to the terms without even reading them, much less knowing what they say.

From the perspective of today's program, the worry many of us have had about validating such mass-market licenses is that consumers who click on such agreements may unwittingly agree to give up some of their basic rights under the Copyright Act, without even being aware that that is what they are doing.

Now, see how all these pieces fit together. Remember when I was talking about encryption and copyright management systems, I talked about the envelope with the terms and conditions on it? Well, maybe those terms and conditions are really just summarized on the outside, or they're buried several screens down in a lengthy license agreement. And among those terms are limits on your ability to quote or criticize or otherwise make fair uses of the work. Some of us have thought that if you are giving up some fundamental rights, at the very least, that fact should be drawn to your attention, and not be buried in the fine print somewhere.

The validity of the mass-market license is a key part of the effort to restrict what users can do with the information they have. At this stage, this law is just a proposal from the drafting committee. If it gets out of committee, it will be referred to the states for passage by the 50 state legislatures. As matters now stand, it will not be smooth sailing in the states; many groups are now lining up in opposition.

Okay. Let's summarize now and see what has happened to the balance. On the positive side for users of information and libraries is, first, an updated preservation section of the Copyright Act, second, a narrow exception to the anti-circumvention provisions for libraries for the limited purposes of evaluating a work for purchase, third, a two year stay on the implementation of the ban on encryption, and fourth, an uncertain exception for libraries to the Term Extension Act. On the positive side for copyright owners is a twenty year moratorium on new works entering the public domain, allowing the owners of book, movie, and music rights to profit that much longer from their work. In addition, the legitimization and protection of encryption systems will give copyright owners much greater control over their works and set the stage for pay per view. If the database bill passes - which seems likely - then large amounts of public domain data now in unprotected databases will suddenly be protected against an extraction that harms the market or the potential market. Finally, if UCC2B is adopted as it now stands, consumers agreeing to license agreements may well unknowingly give up their legitimate rights under the Copyright Act.

You can, of course, draw your own conclusions from this picture. To me, it doesn't sound like merely a re-calibration of the balance. It sounds more like a fundamental change in the equation, largely abandoning the idea of balance, and relying instead on an entirely new approach - I guess a marketplace approach. In some ways, these changes seem like a windfall for the owners of information and a few tidbits for others. It seems to me that if copyright owners were going to be given such significant new benefits in order to protect their works in the digital environment, then there needed to be a larger return back to the American public.

Thank you for inviting me to be with you today; I have very much enjoyed being here.

  1. Robert Oakley is Director of the Law Library and Professor of Law at the Georgetown University Law Center.
  2. Of course, new works from the U.S. government will continue to be in the public domain.
  3. P.L. 105-298 (1998).
  4. Such works might have come into the public domain because they did not renew their copyright at the conclusion of the first 28 year term of copyright that existed at that time. In fact, studies have shown that most works did not renew their copyright after 28 years.
  5. Under Feist v. Rural Telephone Co. (499 U.S. 340 (1991)), to be protected under copyright, a work must exhibit some "modicum of originality."
  6. See 17 U.S.C. ¤ 105 (1994).