Copyright in the Digital Medium: A Comparison of Two Proposals

Greg Hudson

Oct. 25, 1995

Paper for MIT 6.805/STS085: Ethics and Law on the Electronic Frontier, Fall 1995

The rise of computer networks as social and market forces presents problems for copyright and other intellectual property protections. By adding value to nontangible goods and services, and by making mass copying easy for individuals with very little capital investment, computers and computer networks challenge the models behind intellectual property protections. In the past several years, many proposals have been made to adjust copyright protections to reflect the changes caused by computer networks. This article attempts to summarize and evaluate two such proposals: one made by the Clinton administration's Working Group on Intellectual Property Rights ("the Working Group" for short), and another made by Jessica Litman, a law professor at Wayne State University. I will argue that both proposals would be likely to have significant negative effects. At the end of this article, I will tentatively propose a more measured set of modifications to current copyright law.

In this article, I will use the term "digital medium" to refer to any technology which use bits to represent information and processors to manipulate them. Thus, the term "digital medium" includes computers, computer networks, embedded processors in toasters, and so forth.

Section 1: Method

My goal is to speculate on the practical effects of the two proposals, not to expose the biases behind the proposals or to judge their intrinsic fairness. I will consider the following five questions when evaluating the proposals.

The Constitutional basis of copyright protection is the advancement of the arts and sciences. How will the proposal help promote the arts and sciences in the digital medium?
How well does the proposal agree with the views of most individual consumers?
How clear is the proposal? Is it likely to cause more or less costly litigation than the current law?
If the proposal were to become law, how practical would it be to enforce?
One of the major drives behind the progress of the digital medium is the free software community. How will the proposal help or hinder the free software community?

I will begin with a brief summary of the two proposals.

Section 2: Summary of the NII White Paper

The proposal from the Working Group, known as the NII White Paper (NII stands for "National Information Infrastructure"), consists mainly of an analysis of current intellectual property law (focusing on copyright) and a set of recommended changes to the Copyright Act. In its analysis of the current law, the White Paper comes to the following notable conclusions:

Commercial and contract law ought to be adjusted to allow online contracts.
The public performance right granted by copyright encompasses transmitting a digital version of a motion picture which is then rendered by many individual receivers.
Every act of copying performed by a computer is implicated under the exclusive reproduction right granted by copyright.
The first sale doctrine (which allows owners of legitimate copies of works to dispose of them as they like) does not protect any transactions in the digital medium because all such transactions involve making copies (reproduction), and the first sale doctrine only limits the distribution right.
The fair use restriction on copyright might be held to "reduced application and scope" in the future as technology develops new means of licensing uses.
Online service providers are liable for infringement performed by their customers, which is for the best since service providers are better equipped to prevent copyright infringement by their customers than the copyright owners. Service providers should know what their customers are doing, and limit their liability to damages for "innocent infringement" by investigating infringing activities when they are pointed out.

The White Paper's literalistic interpretation of the current statute grants copyright owners some powerful new functional rights in the digital medium, including the exclusive right to essentially all uses of a work on a computer. The White Paper's analysis of current case law (which is biased; see either Samuelson criticism in the bibliography) also indicates that copyright owners should be able to successfully sue the access providers of people who infringe copyrights. The White Paper does not recommend any changes to the statute in these areas, but does recommend a couple of changes where a literalistic interpretation of the statute does not correspond to publisher interests:

Amend the distribution right to cover transmission of works. Also amend copyright-based import restrictions to cover importation by transmission.
"Publication" as defined in the copyright act should allow publication by transmission (current case law does not consider a work to be published unless physical copies change hands).

The White paper also makes the following additional recommendations:

Add an exclusive public performance right for sound recordings.
Make it a criminal offense to copy a retail value of $5,000 of works even if not for profit.
Prohibit devices whose "primary purpose" is to defeat copyright security systems.
Prohibit unauthorized alteration of copyright management information on works (including information identifying the author of the work, the copyright owner, and the terms and conditions of use).
Add a library exemption to allow three copies of works in digital form, with only one copy in use at a time, to make copyright notices on published copies of works non-mandatory, and to allow libraries to make digital copies of works for purposes of preservation.
Allow reproductions of works for the visually impaired if the copyright owner does not enter that market within a year following publication.

When evaluating the White Paper, I will consider the establishment of its biased analysis of the current state of the law as part of its proposal: most importantly, that most computerized uses of works should be implicated under the reproduction right, that online service providers should be liable for infringing activities of their customers, that the first sale doctrine should not apply to the digital medium, and that fair use should be deprecated as copyright owners develop new licensing technologies.

Section 3: Summary of the Litman proposal

In response to the NII White Paper, law professor Jessica Litman wrote a paper titled "Revising Copyright Law for the Information Age". In the paper, she discusses the need for balance between the interests of publishers and consumers, and the need for simplicity in the copyright statute if it applies to people who can't afford copyright lawyers. She recommends a much simpler copyright law, along the lines of the following four proposals:

Abandon the exclusive reproduction right in favor of an exclusive commercial exploitation right and a protection against unauthorized copying which presents a "significant burden on the commercial market."
Give the public a "right to read," in the form of an express ephemeral recording privilege.
Give the public a right to extract and reuse public domain material from protected works, including ideas, facts, and information contained in the work. Such a privilege would extend to performing essentially any of the exclusive rights granted by copyright for the purpose of gaining access to unprotected elements.
Add an integrity right, making it illegal to distribute a modified work without disclaiming the modification and citing the original.

Section 4: Promoting the Arts and Sciences

Almost any proposal for amending copyright law will attempt to justify itself on the Constitutional basis of "promoting the progress of science and useful arts." The Working Group argues that the best way to achieve this goal in the digital medium is to give copyright owners strong intellectual property protections: "The full potential of the NII will not be realized if the education, information and entertainment products protected by intellectual property laws are not protected effectively when disseminated via the NII." On the other hand, beyond a certain point the arts and sciences fail to be advanced if the public is denied access to new works. By denying consumers the right to read computerized copies of works they have purchased without a license, the NII White Paper would seem to retard the advancement of the arts from the public's point of view.

Moreover, the White Paper's position on service provider liability has the potential to scuttle many existing computer networks, including the Internet. The White Paper argues that photo finishers, book sellers, record stores, and other kinds of businesses operate under strict liability--all traditional commercial businesses. The Working Group evidently does not realize how much of the Internet and other computer networks are cooperative ventures, put together by non-profit entities making a negative profit, with no interest in or margin for the "cost of doing business" associated with their customers' copyright infringements and often no "business relationship" with the majority of their users. If copyright owners decide to enforce what the White Paper claims is their right to make access providers police their computer networks, it could drastically reduce the size of all computer networks except for commercial access providers like America Online. This result would drastically reduce people's ability to communicate with each other in the digital medium, and would impede the progress of the arts and sciences in that medium.

Meanwhile, Litman's proposal seeks to promote the progress of the arts and sciences by allowing everyone the right to read works they purchase in the digital medium, and to access them in arbitrary ways in order to extract public domain information contained in the works. Certainly, these two measures would seem to be effective. The danger in Litman's proposal is that copyright owners might find it so difficult to enforce the "significant burden on the commercial market" right that they would lose the incentive to create and publish works. In particular, the proposed consumer right to do virtually anything with a copyrighted work in order to extract public domain information from it could become a powerful defense for people performing widespread noncommercial copying of works.

Section 5: Views of Individual Consumers

One consequence of the emergence of the digital medium is that a single individual with virtually no capital investment can make enough copies of a work to significantly affect its market value. Coupled with the White Paper's assertion that most computerized uses of works are implicated by the reproduction right, that consequence means that individuals are responsible for being aware of and following the copyright statute much more than they ever have been in the past. If the copyright law is to restrict the activities of individual consumers, it is advantageous for the law to coincide with the usual beliefs and activities of consumers; it would be unwise to render a large fraction of the population liable for copyright infringement for activities they don't consider wrong.

For lack of a good source of information about popular views, I will consider it more or less unquestionable that the average consumer considers it his or her prerogative to read a legitimate copy of a work. I will consider it a much more debatable assertion that the average consumer considers it okay to make small numbers of copies of copyrighted works for friends. As an example, it is widely suspected that a lot of people pirate computer software on a small scale, but at the same time I think most people consider software piracy wrong.

The White Paper's assertion that copyright owners can control all computerized uses of their works flies in the face of the attitudes of most individual consumers. Although reading an on-line book may involve making a copy of parts of the book from CD-ROM to computer memory to video memory, such ephemeral copies don't prevent the copyright owner from making money by selling the CD-ROM. The Working Group is quite aware that its proposals depart from the consumer viewpoint. Noting that individuals are now capable of becoming "printers, publishers, exhibitors and distributors" of works in the digital age, and that customers "do not appreciate the impact that an unauthorized use of a protected work can have" in the market for copyrighted works, the White Paper recommends an education campaign to teach people about copyright, appealing to people's own interests in protecting the works they might create in the digital medium. But people cannot simply be "educated" into views which differ significantly from their current beliefs; they must be persuaded, and greed is so far not a sufficient motivation for people to want to give up their right to read works they have purchased.

Of course, some of the proposals in the White Paper are much less controversial, such as providing convenience exemptions for libraries or providing exemptions for reproductions for the visually impaired.

Litman's proposal seems to agree with the interests of consumers much more than the White Paper does, but Litman's proposal may go too far in this direction. By legalizing noncommercial copying of works as long as it does not present a "significant burden on the commercial market," Litman would apparently legalize small-scale software piracy, a practice most people probably regard as unfair to the software author. On the other hand, Litman's proposed ephemeral copying right and integrity right don't seem like they should be offensive to anyone except exceptionally greedy publishers.

Section 6: Clarity and Likelihood of Litigation

When a statute is not clear, its precise meaning must be determined by case law, an expensive and error-prone process. Until the details of the meaning of unclear statutes are resolved, they can have a "chilling effect" on legitimate activities which were not intended to be prohibited by the statute.

The White Paper's proposals to amend current statutes seem clear, with one exception: the White Paper does propose an amendment which would prohibit products "the primary purpose or effect of which is to avoid, bypass, remove, deactivate, or otherwise circumvent any program or circuit which implements, in whole or in part, a [serial copy management system or similar system]". This proposed amendment offers no test for determining whether the "primary purpose or effect" of a device is to defeat copy protection. Law professor Pamela Samuelson believes the ban could probably encompass photocopy machines; certainly, the ban could have a "chilling effect" on many products with legitimate uses, such as decompilers and debuggers.

Moreover, the White Paper's support of certain interpretations of current case law could lead to expensive court battles over online service provider liability. As Samuelson has argued, it is not at all clear that online service providers are liable for their customers' infringing activities, since they don't directly benefit from user infringements and in many cases they must respect the privacy of their customers' information. If copyright owners choose to believe the White Paper's interpretation and sue access providers for their customers' infringing activities, we will need to go through several rounds of court battles to interpret the meaning of the existing copyright statute.

Litman's proposals are also unclear in several respects. She states that causing "a significant burden on the commercial market" could be defined as copyright infringement in order to protect copyright owners from losing profits to noncommercial copying; but it is unclear just who would be liable for such infringement. If only half as many people buy a software product because every customer made one unauthorized copy for a friend who would otherwise have bought it, the software author has lost half of his or her revenues even though no single individual has imposed a significant burden on the commercial market. Would all of the customers become liable, even if they didn't know that every other customer was engaged in similar small-scale copying?

Furthermore, Litman's proposal to include a privilege to "reproduce, adapt, transmit, perform or display so much of the protected expression [of a work] as is required in order to gain access to the [public domain] elements [of the work]" is unclear because it doesn't put any limits on how much copying I can do to extract such information. Can I post a copy of a software program to a Usenet newsgroup so that readers of the newsgroup can disassemble it for me and tell me what factual information it contains? Without clear limits on this proposed privilege (for instance, perhaps copies should not be allowed to enter the possession of people who don't already own authorized copies of the work), it would be difficult to determine where legitimate experimentation ends and copyright infringement begins.

Section 7: Practicality of Enforcement

If a copyright law cannot be enforced, the incentives it offers authors to create and publish works are illusory. A law may be unenforceable if it prohibits activities which many people engage in, if it prohibits activities which are difficult to detect, or if it requires a plaintiff to establish difficult claims about the defendant's activities to recoup civil damages.

The White Paper seeks to implicate all computerized uses of works under the reproduction right. Computerized uses of works are common and easily concealed; therefore it would be very difficult to enforce such an implication without significant and burdensome changes to digital technology. The White Paper seeks to change this situation by allowing copyright owners to develop legally protected technology to protect their programs, but such devices certainly cannot prevent all unauthorized copying of works as long as computer hardware remains similar to the way it is now.

In addition, to recover damages from the distributor of a product which compromises copy protection schemes, a copyright owner would have to establish that the "primary purpose or effect" of the product is to compromise copy protection schemes. Establishing such a claim could be difficult when the product has multiple purposes.

Litman's proposal would make it difficult for copyright owners to protect their works for three reasons: first, a copyright owner would have to establish that nonprofit copying resulted in a "significant burden on the commercial market" for a product in order to recoup damages from such copying. Second, the right to extract public domain copying would effectively prevent contributory infringement claims against products whose only use is to defeat technological protections against unauthorized copying, since it would virtually always be legitimate to defeat such technological protections in order to extract public domain information from the product. Third, defendants in nonprofit copyright cases could claim they were attempting to extract public domain information from a work, and it could be difficult for a plaintiff to contradict such a claim.

Section 8: Effect on the Free Software Community

The Internet is largely built on free software: the standard E-mail transfer agent, Eric Allman's sendmail program, is free, as was all of the initial World Wide Web software and virtually all of current Usenet software used on the Internet. Many of the operating systems people use to connect to the Internet are free, and those which aren't borrow significant ideas and even code from free operating systems. Other computer networks, such as Fidonet, are also built on free software. Despite its accomplishments, the free software community is quite fragile in the face of harmful laws; programmers will generally not develop and release software for public use if they are likely to get sued or thrown in jail for it. To impede the growth of the free software community is to retard the process of the arts and sciences in the digital medium.

The White Paper proposal could damage, and possibly even destroy, the free software community for at least two reasons: first, just as the Internet was built on free software, the free software community now relies on the Internet for its survival. As I argued previously, the White Paper's advocacy of holding service providers liable for customers infringements could scuttle the Internet, dealing a major blow to the communications of the free software community (as well as much of the motivation for its existence).

Second, the White Paper's proposal to ban technological devices which infringe copyright could implicate tools for debugging, disassembling, and otherwise manipulating binary programs. Such tools have crucial legitimate uses in the development of all software.

Litman's proposal would probably have mixed effects on the free software community. While the privilege to extract ideas and information from copyrighted works could be very useful in the development of free software, the ability to make free copies of commercial software products could remove much of the demand for free software. Thus, instead of having a lot of freely modifiable and redistributable programs, we would instead have a lot of limited copying of programs which can only be modified and distributed (on a large scale) by their authors. Although this situation might give some people access to some higher-quality commercial software in the short run, I don't see it as an improvement over the current situation.

Section 9: Conclusions

In each of the five areas I have discussed, I have argued that both the White Paper proposal and Litman's proposal have significant potential to make the current copyright situation worse. I will not deny that both proposals have their benefits, and that some of my predictions may be alarmist in nature. Nevertheless, I think the White Paper goes too far in trying to protect the interests of copyright owners, and that the Litman proposal goes too far in trying to further the interests of consumers.

Having studied both proposals and others, I feel myself in a position to tentatively offer the following, relatively minor revisions to current copyright law to restore the balance in the digital medium to what it was before computer networks emerged into the public domain:

To restore the functional right of users to read works they have purchased, the fair use privilege should be extended to encompass ephemeral reproductions where copies do not change hands.
To restore the functional right of users to dispose of copies of works they have purchased, the first sale doctrine should be extended to encompass reproductions made during transmission of a work when all copies possessed by the sender are immediately destroyed upon verification of receipt.
On-line service providers should generally not be liable for infringing activities of their users, when they have no knowledge of and no financial interest in the infringement. I don't think this requires any changes to the statute, since the White Paper's citation on vicarious liability requires "an obvious and direct financial interest in the exploitation of copyrighted materials". However, a clear legal precedent or clarification in statute would be helpful.

I believe these proposals to be measured, fair, and to have clear meaning (although they are not properly worded for inclusion in a statute). Although extending the first sale doctrine to restrict the reproduction right would be a significant departure from past copyright law, I don't think it would subject copyright owners to unfair competition or degradation of market value. With my proposed changes to the current copyright act, I think publishers would continue to be able to make money in the digital medium, consumers would continue to be able to use products they buy, and free software authors would not be further prevented from writing programs to perform legitimate tasks.

Bibliography

I would like to thank Hal Abelson and Mike Fischer for providing an excellent archive of information on this subject at http://swissnet.ai.mit.ed/u6905/readings-ip.html#NII. All of my citable source material is from sources listed there.

"Intellectual Property and the National Information Infrastructure", by the Working Group on Intellectual Property Rights, chaired by Bruce Lehman. Released September 5, 1995. Available at: http://www.uspto.gov/web/ipnii/ipnii.txt

"The National Information Infrastructure Protection Act", Senate bill 1284 in the 104th US Congress. Proposed September 8, 1995. Available at: ftp://ftp.loc.gov/pub/thomas/c104/s1284.is.FTP

"`White Paper' On Intellectual Property and the National Information Infrastructure Released on September 5", by the American Library Association, September 8, 1995. Posted to comp.org.cpsr.talk on September 12, 1995. Currently available at: http://swissnet.ai.mit.edu/6805/articles/int-prop/ala-on-wp-sept95.txt

"Commerce Department's White Paper on National and Global Information Infrastructure", by Arnold P. Lutzker, September 20, 1995. Currently available at: http://swissnet.ai.mit.edu/6805/articles/int-prop/arl-on-wp-sept95.txt

"The NII Intellectual Property Report", by Pamela Samuelson, December 1994. Currently available at: http://swissnet.ai.mit.edu/6095/articles/int-prop/samuelson-nii-cacm-dec94.html

"Tightening the Copyright Noose: Why You Should Be Worried About the White Paper on Intellectual Property Rights and the National Information Infrastructure", by Pamela Samuelson, October 1995, to be published in a future issue of _Wired_, which maintains an archive at http://www.hotwired.com/wired/toc.html

"Revising Copyright Law for the Information Age", by Jessica Litman, October 2, 1995. Currently available at: http://swissnet.ai.mit.edu/6805/articles/int-prop/litman-revising/revising.html