Technology Law Column

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Published in the Chicago Daily Law Bulletin, March 7, 1996, at page 6.

Authors waging fight in Brave New World.

Copyright 1996 by David Loundy

The concept is really not difficult to understand. If you are going to use a work, you must obtain the necessary rights to use a work in the manner in which you intend to use it. This is not a new issue, but lately it has created quite a bit of new debate, which is a result of the tremendous increase in the use of copyrighted works in electronic form.

The law is clear. In Section 106 of the Copyright Act (17 U.S.C. 106), a copyright holder is given the exclusive right to make and distribute copies of his or her work, or to authorize others to make or distribute copies of the work. Therefore, unless one of the exceptions (17 U.S.C. 107-120) applies, in order to reproduce an author's work, a publisher must first obtain the necessary permission from the copyright holder.

Traditionally, this has taken the form of something like "first North American print rights." For instance, my agreement with the Law Bulletin regarding these columns, and the agreement I have had with most of the journals that have published articles of mine has been for "first North American print rights."

The need to obtain the proper rights to distribute copyrighted works electronically is a topic that is of particular interest to me, as I was recently surprised to see a company offering for sale copies of three of my law journal articles to anyone who sends them an $8.50 faxing fee, in addition to a $3.00-$8.50 "copyright fee." The rights necessary to distribute my works in this fashion do not fall under "first North American print rights" (which is actually irrelevant, since the journals did not authorize these reproductions either).

I learned about this situation in the course of corresponding with an officer of the National Writers Union, an organization which has been actively working at promoting awareness of these electronic publishing rights issues-- in some cases, through litigation.

The litigation over electronic publishing rights has taken the form of a suit against The New York Times, Mead Data Central (which at the time owned Lexis-Nexis) and others and is ongoing in a New York federal court. This suit, which includes Jonathan Tasini, the president of the National Writers Union, and ten other authors as plaintiffs, alleges copyright infringements caused by the electronic servicesŐ use of articles for which they did not have the electronic distribution rights. Similar complaints have been made against many other publishers, including a recent article in The Reader (Feb. 2, 1996) complaining that the Chicago Tribune is using a freelancer's articles on their on-line service without appropriate permission.

Authors' concerns about their electronic distribution rights are growing because they often earn much of their income from additional sales of their printed pieces subsequent to the work's initial publication.

A recent Kelsey Group/Editor & Publisher survey has found that nearly 50 percent of daily and weekly newspapers with a circulation greater than 30,000 already have on-line services, and 81 percent of the daily newspapers that do not yet have an on-line service are planning to create one. Also on the rise is electronic distribution by large multi-publisher databases, such as Dialog, Nexis, Dow Jones News Retrieval, Magazine ASAP, and others.

Authors receive compensation from such databases not from newspaper subscription dollars or advertising fees, but from royalties made as a result of accessing specific articles. An example is access time charged to read or download the article, or the "copyright fee" charged by UnCover. Because of this method of compensation, freelance authors feel particularly entitled to additional royalties when their works are distributed through the use of electronic database services; the accounting systems are in place, and the money being paid is directly as a result of their work.

Electronic service operators are being forced to pay more attention to electronic rights. This summer, the National Writers Union reached a settlement with the CARL Corporation over its UnCover fax-for-fee database. The settlement establishes the Publication Rights Clearinghouse, billed as "the first-ever transaction-based royalty system for writers in Cyberspace."

Authors can sign up for a fee of $20-$40, at which point the Clearinghouse will collect set royalties from its licensees (currently only the UnCover database) when the authors' works are sold. The Clearinghouse then forwards the royalties to the authors, minus a twenty percent administrative fee. The service is an attempt to set up a collective licensing organization for writers, performing a similar function to that which ASCAP and BMI performs for musicians, but with more accurate tracking of actual usage levels for specific works.

The National Writers Union is not the only organization trying to set up a royalty clearinghouse. One organization that has been working at collecting royalties for a number of years is the Copyright Clearance Center (CCC) set up at the suggestion of Congress.

The CCC (located on the Internet at works to provide licenses to copyright users to make photocopies of works for which the Center serves as the non-exclusive licensing agent. The CCC issues limited-scope and annual licenses to academics, corporations, and businesses such as law firms wishing to photocopy works and which wish to obtain clearance to make the copies legally. The CCC represents approximately 9,000 publishers, and it allows the publishers to set the royalty rate they wish to receive. The CCC collects the royalties from its licensees, and passes the royalties on to the publisher, minus a nine percent service charge.

Computer technology is allowing the CCC to work with companies such as Xerox and NouSoft to create automatic copyright clearance systems which allow college bookstores to prepare course packs (at issue in the recent and controversial Princeton University Press v. Michigan Document Services, Inc., No. 94-1778, (6th Cir. February 12, 1996) while using the CCC's pre-approved rights database to calculate automatically for collection the royalties due. The CCC is also working at the development of schemes that will allow metering, tracking and control of electronic distribution of copyrighted works over networks such as the Internet.

All of these licensing schemes, however, do not address the original issue-- who owns distribution rights in the first place. Nor do the licensing schemes address the issue of papers such as the Law Bulletin, Tribune, or Reader, signing up with royalty collection services and collecting fees for uses of works to which the papers have only first print publication rights.

As publishers increase their electronic distribution outlets, they are beginning to account for electronic rights in their contracts with authors. Unfortunately, rather than negotiating for separate electronic rights, they have generally acted by lumping in unlimited electronic rights in with already accounted for print rights.

This has not made many of the authors any happier. In fact, these "rights grab" contracts (which attempt to obtain every possible right for any possible medium for the same compensation) have resulted in attempts to boycott papers like The New York Times.

What is needed is a more careful balancing of interests. Authors should be allowed to earn a fair living from the varied uses of their works, yet publishers should be allowed to advance into new electronic delivery systems. To reach these goals, publishers should develop a better understanding of what rights they need to obtain from authors, and then negotiate only for these rights. It is possible to write a contract to obtain fairly electronic rights, but only when both parties understand the uses and the transaction at issue.

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