Technology Law Column

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Published in the Chicago Daily Law Bulletin, January 8, 1998 at page 5.

The good, bad, ugly of copyright law rewrites.

Copyright 1998 by David Loundy

Congress is actively trying to update the U.S. copyright law to account for digital technology, in part because of a deep-seated need to regulate, and in part to bring the law in line with the requirements of a treaty sponsored by the World Intellectual Property Organization, the WIPO Copyright Treaty). As is often the case, some pieces of legislation are better than others. Also, as is frequently the case in the high-tech context, the legislation that leaves something to be desired is being signed into law.

To begin on a positive note, one of the best pieces of proposed digital technology legislation I have seen in some time is H.R. 3048, the "Digital Era Copyright Enhancement Act" proposed by Representatives Rick Boucher (D-Va) and Tom Campbell (R-Ca). The legislation has merit on several grounds

The Digital Era Copyright Enhancement Act begins by addressing the issue of "fair use" of a digital work. The legislation offers that the technology used for transmitting a copyrighted work should be irrelevant for determining whether that transmission is a fair one. The technological means of initially performing, displaying or distributing a work should also be irrelevant in determining whether a subsequent use of the work is a fair one. A controversial stance the legislation takes, discussed in more detail later in this article, is that a fair use analysis should not be affected by whether a digital work is protected from reproduction by technological measures. Similarly, the legislation would allow an expansion of the use of copyrighted works for classroom teaching, even if the "classroom" constitutes remote locations comprising a "distance learning" environment.

The bill also contains provisions for libraries and archives-- expanding the ability to make copies of digital works to preserve such works. The legislation particularly notes that some copies may be needed as a result of storage and display technologies becoming obsolete.

Another provision contained in the proposed legislation is one that allows preservation of the "first sale" doctrine for digital works. The first sale doctrine states that a copyright holder can control the first sale of a work, but not any subsequent transfers of a particular copy of a work. However, the exclusive right to reproduce a work is not affected. This allows businesses such as used book and CD stores to operate-- the copyright holder cannot prevent the subsequent distribution of a work after the first sale of a particular copy. In the digital context, however, computers work by making copies. If you have a copy of an electronic book on the hard drive of your computer, and you e-mail it to someone, you have made a reproduction of the work-- a right still reserved to the copyright holder-- and have not just made a transfer of the work as allowed under the first sale doctrine.

The proposed legislation addresses this issue sensibly by allowing you to make a copy by transmitting a work to another, but only if you destroy your copy of the work at "substantially" the same time.

The bill also clears up an issue I have been concerned about for some time. Because the use of an electronic work requires that a copy be made, any use of an electronic work is a potential infringement. Because this is an obviously silly outcome, in the 1970s, the National Commission on New Technological Uses of Copyrighted Works proposed Section 117 of the Copyright Act to allow certain copies of computer programs to be made as may be necessary to use or preserve such works. Although Section 117 was adopted, it covers "computer programs," and arguably dose not cover data. Thus, although you can copy your word processor in order to use it, you may still be infringing by viewing someone else's documents with your word processor.

The Digital Era Copyright Enhancement Act broadens Section 117 to apply clearly to all digital works.

Perhaps the most striking aspect of the proposed legislation is that it would overturn cases such as Pro-CD v. Zeidenberg, 1996 U.S. App. LEXIS 14951 (7th Cir. 1996), thus bringing the 7th Circuit in line with the rest of the country in limiting "shrink-wrap" licenses. The bill provides that non-negotiable contracts which attempt to limit use of non-copyrightable material, such as the listings of telephone numbers at issue in Pro-CD, would be specifically preempted. The same preemption would apply to any non-negotiable licenses which attempt to restrict a user's rights to use a copyrighted work as may be specifically allowed under provisions of the Copyright Act, such as the fair use provision. This provision would also throw a wrench into the proposed Article 2B to the Uniform Commercial Code which would support such non-negotiated licenses.

Another provision of the bill would implement a requirement of the WIPO Copyright Treaty that requires signatories to have in place legislation which makes it illegal to bypass digital copyright protection management systems. This requirement has been very controversial, which brings us back to the fair use discussion.

Some people argue that an additional bypass prohibiting provision is unnecessary under the U.S. Copyright Act, and that adequate protection is already provided by the current U.S. Copyright Act.

Others disagree, and have proposed strict prohibitions against any attempts to bypass digital copyright protection schemes. H.R. 2281, proposed by Representatives Coble, Hyde, Conyers and Frank, contains a blanket prohibition against bypassing protection schemes. Such a blanket prohibition risks removing the ability to make fair use of a digital work, as is specifically provided for in the Constitution. The inability to bypass protection schemes would also make it impossible to reverse-engineer software to develop new products based on an existing one. It also could potentially require a payment in order to so much as read an electronic work-- with no allowance for use of such a work for teaching or scholarship. For these reasons, H.R. 2281 has been opposed by 60 law professors in a letter sent to Representative Coble.

The Digital Copyright Enhancement Act also prohibits bypassing copyright protection schemes, but, unlike the Coble bill, would allow protection schemes to be bypassed if the purpose of the circumvention does not amount to an infringement. Both bills also allow a court to reduce or remit damages if a violation is found to be "innocent."

Two bills are also pending which would address system operator liability for infringements that occur on or through a provider's system. H.R. 2181, the "On-Line Copyright Liability Limitation Act" is a short statute which would provide immunity from claims of copyright infringement where the service provider merely transmits or provides access to infringing material where the provider does not know of the presence of infringing material. The legislation sets forth a number of other requirements for a service provider to remain free from liability, such as not receiving financial benefit for any particular act of infringement. Such a provision would strongly advise against a service provider imposing "traffic charges" where any traffic, some of which might be infringing, results in extra income for the service provider. The bill also eliminates liability where the provider does not know of the presence of infringing material, and provides some immunity from claims based on the provider's removing infringing material once the provider has become aware of its presence. Unfortunately, the draft legislation does not adequately flesh out this provision, and will inevitably result in litigation.

The other bill to address service provider liability does provide more detail for when a service provider has notice of infringements ocurring on the provider's system-- it has an extensive provision for a service provider's handling infringement claims. Unfortunately, the provisions of Senator Ashcroft's "Digital Copyright Clarification and Technology Education Act of 1997" (S. 1146) require that any material which a copyright holder asks to have removed be the subject of a copyright registration or at least subject to an application for a registration-- a requirement that is otherwise largely unnecessary, and is discouraged by international convention.

The final piece of copyright legislation, the No Electronic Theft Act (The NET Act-- H.R. 2265) was, unfortunately, recently signed into law. The Act expands criminal penalties for non-profit copyright infringement. The Act was intended to close the "LaMacchia Loophole" which came to light in the attempted prosecution of a college student for running a computer bulletin board system intended for the distribution of pirated computer software (U.S. v. LaMacchia, No. 9410092-RGS (D. Mass. Dec. 28, 1994)). The prosecution in that case failed because charges were brought under the Wire Fraud Statute, rather than under the Copyright Act. The court held that because the bulletin board operator was not profiting from any infringements, the requirements for a fraud conviction were not present.

Under the NET Act, non-commercial copyright infringement of a sufficient dollar value would now be a criminal act. Thus, copyright holders could now ask the government to bear the cost of prosecuting infringers instead of using the already-available remedies provided by the Copyright Act. In other words, the No Electronic Theft Act closes a loophole that does not really exist.

Unfortunately, when put into an Internet context, the NET Act creates a potential chilling effect and upsets the Constitutional balance provided by the Copyright Act. The Internet works, in essence, by making copies. If I post something to usenet news, I may create a million copies of whatever I transmit. If I post a quote from a newspaper article, the use of which I believe to be a fair one and thus protected from liability, but if that use is not actually fair and the value of the work which I post is even a fraction of a cent, arguably I could be subject to up to a year in jail under the terms of this new law. This is clearly a stiff deterrent to impose as a result of a failed attempt at a creative prosecution in a case where another remedy was already readily available.

I have long claimed that the Copyright Act contains some legitimate holes to be filled when the law is applied to a digital context. Unfortunately, too much of the resulting legislation is reactionary and poorly considered. While the Digital Copyright Enhancement Act is a refreshingly informed and balanced attempt to fill some of these holes, why is it that Congress always seems to be most excited about mistakes such as the NET Act?

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