**[Intellectual Property]{.smallcaps}**

**[and the]{.smallcaps}**

**[National Information Infrastructure]{.smallcaps}**

[The Report of the Working Group on Intellectual Property
Rights]{.smallcaps}

*[Bruce A. Lehman]{.smallcaps}*

*Assistant Secretary of Commerce and*

*Commissioner of Patents and Trademarks*

*[Chair]{.smallcaps}*

[Information Infrastructure Task Force]{.smallcaps}

*[Ronald H. Brown]{.smallcaps}*

*Secretary of Commerce*

*[Chair]{.smallcaps}*

**[Intellectual Property]{.smallcaps}**

**[and the]{.smallcaps}**

**[National Information Infrastructure]{.smallcaps}**

[The Report of the Working Group on Intellectual Property
Rights]{.smallcaps}

*[Bruce A. Lehman]{.smallcaps}*

*Assistant Secretary of Commerce and*

*Commissioner of Patents and Trademarks*

*[Chair]{.smallcaps}*

[Information Infrastructure Task Force]{.smallcaps}

*[Ronald H. Brown]{.smallcaps}*

*Secretary of Commerce*

*[Chair]{.smallcaps}*

[September 1995]{.smallcaps}

Single copies of this Report may be obtained, free of charge, by sending
a written request to:

> *\"Intellectual Property and the NII\"*
>
> *c/o Terri A. Southwick, Attorney-Advisor*
>
> *Office of Legislative and International Affairs*
>
> *U.S. Patent and Trademark Office*
>
> *Box 4*
>
> *Washington, D.C. 20231*

Copies will also be available from the IITF Bulletin Board. The Bulletin
Board can be accessed through the Internet by pointing the Gopher Client
to iitf.doc.gov or by telnet to iitf.doc.gov (log in as gopher). The
Bulletin Board is also accessible at 202-501-1920 using a personal
computer and a modem.

**Library of Congress Cataloging-in-Publication Data**

United States. Information Infrastructure Task Force. Working Group on
Intellectual Property Rights.

> Intellectual Property and the National Information Infrastructure: The
> Report of the Working Group on Intellectual Property Rights / Bruce A.
> Lehman, Chair.

1.   Intellectual property \-- United States. 2.   Copyright \-- United
States. 3.   Information superhighway \-- United States.
4.   Information technology \-- United States. I.   Lehman, Bruce A.
II.   Title.

KF2979.U55   1995

346.7304\'8\--dc20

\[347.30648\]

**ISBN 0-9648716-0-1**

**[Table of Contents]{.smallcaps}**

**IntroductioN**

**Background**

**I. Law**

A. Copyright

*1. Purpose of Copyright Law*

*2. Subject Matter and Scope of Protection*

a\. Eligibility for Protection

b\. Published and Unpublished Works

c\. Works Not Protected

d\. Categories of Protectible Works

*3. Copyright Ownership*

a\. Transfer of Ownership

b\. Licensing

c\. On-Line Transactions

*4. Term of Protection*

*5. Notice, Deposit and Registration*

*6. Exclusive Rights*

a\. The Right to Reproduce the Work

b\. The Right to Prepare Derivative Works

c\. The Right to Distribute Copies

d\. The Right to Perform the Work Publicly

e\. The Right to Display the Work Publicly

*7. Limitations on Exclusive Rights*

a\. Fair Use

b\. Library Exemptions

c\. First Sale Doctrine

d\. Educational Use Exemptions

e\. Other Limitations

*8. Copyright Infringement*

a\. General

b\. Infringing Importation

c\. Contributory and Vicarious Liability

d\. On-Line Service Provider Liability

e\. Civil Remedies

f\. Criminal Offenses

g\. Defenses

*9. International Implications*

a\. Background

b\. International Framework

c\. International Treaties and Agreements

d\. Copyright Compared to Authors\' Rights

e\. National Treatment

f\. Private Copying Royalty Systems

g\. Moral Rights

h\. Conflict of Laws

i\. Harmonization of International Systems

B. Patent

*1. Patentability Determinations*

*2. Infringement Determinations*

*3. Patentability of Software*

C. Trademark

D. Trade Secret

**II. Technology**

A. Content Security and User Access Needs

B. The Internet Experience

C. Access and Use Technological Controls

*1. Server and File Level Controls*

*2. Encryption*

*3. Digital Signatures*

*4. Steganography*

D. Controlling Use of Protected Works

E. Managing Rights in Protected Works

F. Encryption Export Control

G. Development of Standards

**III. EDUCATION**

A. Background

B. Copyright Awareness Campaign

**IV. Recommendations**

A. Copyright

*1. The Transmission of Copies and Phonorecords*

a\. The Distribution Right

b\. Related Definitional Amendments

c\. The Importation Provisions

*2. Public Performance Right for Sound Recordings*

*3. Library Exemptions*

*4. Reproduction for the Visually Impaired*

*5. Criminal Offenses*

*6. Technological Protection*

*7. Copyright Management Information*

B. Patent

C. Trademark

**Appendices**

Introduction

In February 1993, President Clinton formed the Information
Infrastructure Task Force (IITF) to articulate and implement the
Administration\'s vision for the National Information Infrastructure
(NII). The IITF is chaired by Secretary of Commerce Ronald H. Brown and
consists of high-level representatives of the Federal agencies that play
a role in advancing the development and application of information
technologies. Guided by the principles for government action described
in *NII Agenda for Action*[^1] and *GII Agenda for Cooperation*,[^2] the
participating agencies are working with the private sector, public
interest groups, Congress, and State and local governments to develop
comprehensive telecommunications and information policies and programs
that will promote the development of the NII and best meet the
country\'s needs.

To drive these efforts, the IITF is organized into three committees: the
Telecommunications Policy Committee, which formulates Administration
positions on relevant telecommunications issues; the Committee on
Applications and Technology, which coordinates Administration efforts to
develop, demonstrate and promote applications of information
technologies in key areas; and the Information Policy Committee, which
addresses critical information policy issues that must be dealt with if
the NII is to be fully deployed and utilized. In addition, the IITF
established a Security Issues Forum to assess the security needs and
concerns of users, service providers, information providers, State and
local governments and others. Finally, the U.S. Advisory Council on the
National Information Infrastructure (NII Advisory Council) was
established within the Department of Commerce to advise the Secretary of
Commerce on a national strategy for promoting the development of the
NII.[^3]

The Working Group on Intellectual Property Rights, which is chaired by
Assistant Secretary of Commerce and Commissioner of Patents and
Trademarks Bruce A. Lehman, was established within the Information
Policy Committee to examine the intellectual property implications of
the NII and make recommendations on any appropriate changes to U.S.
intellectual property law and policy.[^4]

This Report represents the Working Group\'s examination and analysis of
each of the major areas of intellectual property law, focusing primarily
on copyright law and its application and effectiveness in the context of
the NII.[^5] The approach of this Report is to discuss the application
of the existing copyright law and to recommend only those changes that
are essential to adapt the law to the needs of the global information
society.[^6] By providing a generalized legal framework, based on the
extensive analysis and discussion of the way in which the law has been
and should be interpreted, we can lay the groundwork for the rapid and
efficient development of the NII.

To prepare this Report, the Working Group drew upon expertise within the
participating departments and agencies of the Federal government.[^7] In
addition, the Working Group received and considered views of the public,
including those of the NII Advisory Council.

The Working Group held a public hearing in November 1993, at which 30
witnesses testified.[^8] The Working Group also solicited written
comments and received some 70 statements during a public comment period
which closed on December 10, 1993.[^9] Following its review of the
public comments and analysis of the issues, the Working Group released a
preliminary draft of its report (\"Green Paper\") on July 7, 1994.[^10]
The Working Group issued the report in preliminary draft form to ensure
broad dissemination and ample opportunity for public comment prior to
making final recommendations and issuing this Report. Thousands of
copies of the Green Paper were distributed in paper form as well as
electronically via the IITF Bulletin Board.[^11]

Following the release of the Green Paper, the Working Group heard
testimony from the public in four days of hearings in Chicago, Los
Angeles and Washington, D.C., in September 1994.[^12] In addition, more
than 1,500 pages of written comments on the Green Paper and reply
comments were filed, in paper form and through the Internet, by more
than 150 individuals and organizations \-- representing more than
425,000 members of the public \-- during the comment period, which
extended over four months.[^13]

The Working Group convened a Conference on Fair Use (CONFU) to bring
together copyright owner and user interests to discuss fair use issues
and, if possible, to develop guidelines for uses of copyrighted works by
librarians and educators. Some 60 interest groups are participants in
the Conference and have been meeting regularly since September 1994 in
sessions that are open to the public. The Working Group also kicked off
a Copyright Awareness Campaign (CAC) in March 1995. Approximately 40
participating individuals and organizations are coordinating their
educational efforts and joining with the Working Group and the
Department of Education to raise public awareness of copyright. Meetings
of the Campaign are also open to the public.

Interested parties had numerous opportunities to submit their views on
the intellectual property implications of the development and use of the
NII and on the Working Group\'s Green Paper, including its preliminary
findings and recommendations. The open process instituted by the Working
Group resulted in a well-developed, voluminous record indicating the
views of a wide variety of interested parties, including various
electronic industries, service providers, the academic, research,
library and legal communities, and individual creators, copyright owners
and users, as well as the computer software, motion picture, music,
broadcasting, publishing and other information and entertainment
industries.

The special intellectual property concerns and issues raised by the
development and use of the NII are the subject of this Report.[^14] It
does not, however, provide all of the answers. It may not even present
all of the questions. There is much that we do not \-- and cannot \--
now know about how the NII will develop. Technology is advancing at such
an incredible pace that issues will certainly continue to arise in the
future, perhaps demanding more comprehensive legislation. However,
because there is much that we do know, the fact that future developments
will raise additional issues not currently ripe should not deter us from
addressing those that are.[^15]

Background

Intellectual property is a subtle and esoteric area of the law that
evolves in response to technological change.[^16] Advances in technology
particularly affect the operation and effectiveness of copyright law.
Changes in technology generate new industries and new methods for
reproduction and dissemination of works of authorship, which may present
new opportunities for authors, but also create additional challenges.
Copyright law has had to respond to those challenges, from Gutenberg\'s
moveable type printing press to digital audio recorders and everything
in between \-- photocopiers, radio, television, videocassette recorders,
cable television and satellites.[^17]

Uses of computer technology \-- such as digitization \-- and
communications technology \-- such as fiber optic cable \-- have had an
enormous impact on the creation, reproduction and dissemination of
copyrighted works. The merger of computer and communications technology
into an integrated information technology has made possible the
development of the National Information Infrastructure which will
generate both unprecedented challenges and important opportunities for
the copyright marketplace.

An information infrastructure already exists, but it is not integrated
into a whole. Telephones, televisions, radios, computers and fax
machines are used every day to receive, store, process, perform, display
and transmit data, text, voice, sound and images in homes and businesses
throughout the country. Fiber optics, wires, cables, switches, routers,
microwave networks, satellites and other communications technologies
currently connect telephones, computers and fax machines. The NII of
tomorrow, however, will be much more than these separate communications
networks; it will integrate them into an advanced high-speed,
interactive, broadband, digital communications system. Computers,
telephones, televisions, radios, fax machines and more will be linked by
the NII, and users will be able to communicate and interact with other
computers, telephones, televisions, radios, fax machines and more \--
all in digital form.[^18]

The NII has tremendous potential to improve and enhance our lives. It
can increase access to a greater amount and variety of information and
entertainment resources that can be delivered quickly and economically
from and to virtually anywhere in the world in the blink of an eye. For
instance, hundreds of channels of \"television\" programming, thousands
of musical recordings, and literally millions of \"magazines\" and
\"books\" can be made available to homes and businesses across the
United States and around the world.[^19]

The NII can provide access to rich cultural resources around the world,
transforming and expanding the scope and reach of the arts and
humanities. It will provide opportunities for the development of new
markets for cultural products. It can broaden our cultural experiences
through diversity of content, and increase our understanding of other
societies.

The NII can support our education systems by, for example, linking
students and educators in remote locations around the world. It can also
improve the nation\'s health care systems by increasing public awareness
of health issues, providing continuing education of health care
professionals, and allowing patients to take a more active role in their
own health care.

The NII can dramatically increase the opportunity for democratic
participation in government. The Task Force has shown some of the
potential in its work. For instance, the IITF Bulletin Board makes
available copies of Task Force reports, testimony, speeches, meeting
schedules and minutes, hearing notices, transcripts, and other documents
related to the work of the Administration and opportunities for public
participation.[^20] The Task Force has also accepted comments from the
public through the Internet and has conducted an on-line public
conference.[^21]

Individuals and entities that heretofore have been predominately
consumers of works can now become authors and providers through the NII.
It can put easier, more sophisticated communication and publishing tools
in the hands of the public, increasing the ability to communicate with,
and disseminate works of authorship to, others.

The NII can boost the ability of U.S. firms to compete and succeed in
the global economy, thereby generating more jobs for Americans. It can
spur economic growth. More than half of the U.S. work force is in
information-based jobs, and the telecommunications and information
sector is growing faster than any other sector of the U.S. economy. New
job opportunities can be created in the processing, organizing,
packaging and dissemination of the information and entertainment
products flowing through the NII.

The NII can provide benefits to authors and consumers by reducing the
time between creation and dissemination. It will open additional markets
for authors. If authors choose to enter those new markets, it will
provide a wider variety and greater number of choices for consumers,
which should increase competition and reduce prices. The availability of
these benefits is by no means assured, however. Authors are wary of
entering this market because doing so exposes their works to a higher
risk of piracy and other unauthorized uses than any of the traditional,
current modes of dissemination. Therefore, authors may withhold their
works from this environment. Further, even if authors choose not to
expose their works to this more risky environment, the risk is not
eliminated. Just one unauthorized uploading of a work onto a bulletin
board, for instance \-- unlike, perhaps, most single reproductions and
distributions in the analog or print environment \-- could have
devastating effects on the market for the work.

Thus, 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. Creators and other owners of intellectual
property rights will not be willing to put their interests at risk if
appropriate systems \-- both in the U.S. and internationally \-- are not
in place to permit them to set and enforce the terms and conditions
under which their works are made available in the NII environment.
Likewise, the public will not use the services available on the NII and
generate the market necessary for its success unless a wide variety of
works are available under equitable and reasonable terms and conditions,
and the integrity of those works is assured. All the computers,
telephones, fax machines, scanners, cameras, keyboards, televisions,
monitors, printers, switches, routers, wires, cables, networks and
satellites in the world will not create a successful NII, if there is no
*content*. What will drive the NII is the content moving through it.

Ensuring consumer access to and enjoyment of both copyrighted works and
new technologies is an attainable goal, and recent experience has
confirmed this.[^22] For example, the introduction of digital audio tape
recorders recently posed significant problems for copyright owners.
Congress responded to the increased threat of rampant unauthorized use
with legislation that incorporated both technological and legal measures
to protect the interests of both consumers and copyright owners.[^23]

Advances in digital technology and the rapid development of electronic
networks and other communications technologies raise the stakes
considerably. Any two-dimensional work can readily be \"digitized\" \--
*i.e.*, translated into a digital code (usually a series of zeros and
ones). The work can then be stored and used in that digital form. This
dramatically increases: the ease and speed with which a work can be
reproduced; the quality of the copies (both the first and the hundredth
\"generation\" are virtually identical); the ability to manipulate and
change the work; and the speed with which copies (authorized and
unauthorized) can be \"delivered\" to the public. Works also can be
combined easily with other works into a single medium, such as a CD-ROM,
which contributes to a blurring of the lines that typically divide types
of works and the rights and limitations applicable thereto.

The establishment of high-speed, high-capacity electronic information
systems makes it possible for one individual, with a few key strokes, to
deliver perfect copies of digitized works to scores of other individuals
\-- or to upload a copy to a bulletin board or other service where
thousands of individuals can download it or print unlimited \"hard\"
copies. The emergence of integrated information technology is
dramatically changing, and will continue to change, how people and
businesses deal in and with information and entertainment products and
services, and how works are created, reproduced, distributed, adapted,
displayed, performed, owned, licensed, managed, presented, organized,
sold, accessed, used and stored. This leads, understandably, to a call
for adaptation of \-- or change in \-- the law.

Thomas Jefferson stated:

I am not an advocate for frequent changes in laws and constitutions. But
laws and institutions must go hand and hand with the progress of the
human mind. As that becomes more developed, more enlightened, as new
discoveries are made, new truths discovered and manners and opinions
change, with the change of circumstances, institutions must advance also
to keep pace with the times. We might as well require a man to wear
still the coat which fitted him when a boy . . . .[^24]

Our task is to determine whether the coat still fits in this new
information age. An effective intellectual property regime must (1)
ensure that users have access to the broadest feasible variety of works
by (2) recognizing the legitimate rights and commercial expectations of
persons and entities whose works are used in the NII environment.

For more than two centuries, copyright law, with periodic amendment, has
provided protection for an increasing variety of works of authorship.
The most recent complete revision of the law \-- The Copyright Act of
1976[^25] \-- was enacted in response to \"significant changes in
technology \[that had\] affected the operation of the copyright
law.\"[^26] The legislative history of the 1976 Act notes that those
changes had \"generated new industries and new methods for the
reproduction and dissemination of copyrighted works, and the business
relations between authors and users \[had\] evolved new patterns.\"[^27]

We are once again faced with significant changes in technology that
upset the balance that currently exists under the Copyright Act. Our
goal is to maintain the existing balance.

Some assert that copyright protection should be reduced in the NII
environment. The public wants information to be free and unencumbered on
the NII, it is argued, and the law should reflect the public interest.
Without doubt, this is a valid concern. Information *per* *se* should
not be protected by copyright law \-- nor is it. Facts and ideas from
any work of authorship may be freely copied and distributed; the
Copyright Act expressly excludes such information from the scope of the
protection it accords.[^28] The copyright law should also serve the
public interest \-- and it does. While, at first blush, it may appear to
be in the public interest to reduce the protection granted works and to
allow unfettered use by the public, such an analysis is incomplete.
Protection of works of authorship provides the stimulus for creativity,
thus leading to the availability of works of literature, culture, art
and entertainment that the public desires and that form the backbone of
our economy and political discourse. If these works are not protected,
then the marketplace will not support their creation and dissemination,
and the public will not receive the benefit of their existence or be
able to have unrestricted use of the ideas and information they convey.

Others assert that technological advances justify reduced protection.
Since computer networks now make unauthorized reproduction, adaptation,
distribution and other uses of protected works so incredibly easy, it is
argued, the law should legitimize those uses or face widespread
flouting. This argument is not valid. Technology makes many things
possible. Computer networks can be and have been used to embezzle large
sums of money and to commit other crimes. Yet, these acts are prohibited
by law. Simply because a thing is possible does not mean that it should
be condoned.

Finally, there are those who argue that intellectual property laws of
any country are inapplicable to works on the NII or GII because all
activity using these infrastructures takes place in \"Cyberspace,\" a
sovereignty unto itself that should be self-governed by its inhabitants,
individuals who, it is suggested, will rely on their own ethics \-- or
\"netiquette\" \-- to determine what uses of works, if any, are
improper. First, this argument relies on the fantasy that users of the
Internet, for instance, are somehow transported to \"chat rooms\" and
other locations, such as virtual libraries. While such conceptualization
helps to put in material terms what is considered rather abstract,
activity on the Internet takes place neither in outer space nor in
parallel, virtual locations. Satellite, broadcast, fax and telephone
transmissions have not been thought to be outside the jurisdiction of
the nations from which or to which they are sent. Computer network
transmissions have no distinguishing characteristics warranting such
other-world treatment. Further, such a legal free-for-all would
transform the GII into a veritable copyright Dodge City. As enticing as
this concept may seem to some users, it would hardly encourage creators
to enter its confines.

Nonetheless, content providers are currently experimenting with a number
of business models in the networked environment, and it is already clear
that a wide variety of such models may coexist. Some content providers
will choose not to enforce all \-- or any \-- of their rights; others
may change their business practices. For instance, some newspaper
publishers are selling individual articles using electronic payment
mechanisms, in addition to selling subscriptions and individual issues.
Some software companies are making their "client" software freely
available for individual use in an effort to increase the market share
of their "server" software. Some hypermedia magazine publishers on the
World Wide Web are choosing to give away their product but charge
sponsors for advertising space. A number of information service
providers are charging for the use of the search engines that add value
to freely available public domain content.

Some content providers will not be motivated by any commercial
considerations. For instance, certain scientific communities are working
together to create archives of freely available electronic pre-prints on
the Internet. The copyright law allows copyright owners to exercise the
rights granted to them, to license their rights to others, or to give
them away. Those creators who wish to dedicate their works to the public
domain may, of course, do so notwithstanding the availability of
protection under the Copyright Act. Nothing in the law prevents those
who do not wish to claim copyright from waiving their rights and
allowing unrestricted reproduction, distribution and other use of their
works. Indeed, notices to that effect are not uncommon on the Internet.

The absence on the NII of copyrighted works for which authors do wish to
exercise their rights \-- fully or to some limited extent \-- under the
copyright law, of course, would not necessarily result in its demise.
The Internet, for instance, could continue to serve as a communications
tool and resource for Government, public domain and works of willing
authors. However, unless the framework for legitimate commerce is
preserved and adequate protection for copyrighted works is ensured, the
vast communications network will not reach its full potential as a true,
global marketplace. Copyright protection is not an obstacle in the way
of the success of the NII; it is an essential component. Effective
copyright protection is a fundamental way to promote the availability of
works to the public.

Preserving the framework does not require, however, a dramatic increase
in authors\' rights, such as more limited or no further applicability of
the fair use doctrine in the NII environment. Some have argued that
because it may now be technically feasible to \"meter\" each use of a
copyrighted work, and to charge a user a fee for the use, the concept of
fair use has no place in the NII environment. They argue equally that
other limitations on rights should be abolished or narrowed for similar
reasons. The Working Group believes that weakening copyright owners\'
rights in the NII is not in the public interest; nor would a dramatic
increase in their rights be justified.

With no more than minor clarification and limited amendment, the
Copyright Act will provide the necessary balance of protection of rights
\-- and limitations on those rights \-- to promote the progress of
science and the useful arts.[^29] Existing copyright law needs only the
fine tuning that technological advances necessitate, in order to
maintain the balance of the law in the face of onrushing technology.
There must be, however, effort in three disciplines \-- law, technology
and education \-- to successfully address the intellectual property
issues raised by the development and use of the NII.

I. Law

A. Copyright

1\. Purpose of Copyright Law

The Constitution of the United States provides that Congress has the
power to \"promote the Progress of Science and useful Arts, by securing
for limited Times to Authors and Inventors the exclusive Right to their
respective Writings and Discoveries.\"[^30] The framers of the
Constitution did not discuss this clause at any length prior to or after
its adoption.[^31] The purpose of the clause was described in the
Federalist Papers by James Madison:

The utility of this power will scarcely be questioned. The copyright of
authors has been solemnly adjudged, in Great Britain, to be a right of
common law. The right to useful inventions seems with equal reason to
belong to the inventors. The public good fully coincides in both cases
with the claims of individuals.[^32]

The Constitution outlines both the goal that Congress may try to achieve
(to promote the progress of science and useful arts) and the means by
which they may accomplish it (by securing for limited times to authors
and inventors the exclusive right to their respective writings and
discoveries).[^33] The Supreme Court has often spoken about the purpose
of copyright:

\[I\]t should not be forgotten that the Framers intended copyright
itself to be the engine of free expression. By establishing a marketable
right to the use of one\'s expression, copyright supplies the economic
incentive to create and disseminate ideas.[^34]

We have often recognized the monopoly privileges that Congress has
authorized, while \"intended to motivate the creative activity of
authors and inventors by the provision of a special reward,\" are
limited in nature and must ultimately serve the public good.[^35]

The primary objective of copyright is not to reward the labor of
authors, but \"\[t\]o promote the Progress of Science and useful Arts.\"
To this end, copyright assures authors the right in their original
expression, but encourages others to build freely upon the ideas and
information conveyed by a work.[^36]

The economic philosophy behind the \[Constitutional\] clause . . . is
the conviction that encouragement of individual effort by personal gain
is the best way to advance the public welfare through the talents of
authors and inventors . . . . Sacrificial days devoted to such creative
activities deserve rewards commensurate with the services rendered.[^37]

The monopoly privileges that Congress may authorize are neither
unlimited nor primarily designed to provide a special private benefit.
Rather, the limited grant is a means by which an important public
purpose may be achieved. It is intended to motivate the creative
activity of authors . . . by the provision of a special reward, and to
allow the public access to the products of their genius after the
limited period of exclusive control has expired.[^38]

\[C\]opyright is intended to increase and not to impede the harvest of
knowledge . . . . \[T\]he scheme established by the Copyright Act . . .
foster\[s\] the original works that provide the seed and substance of
this harvest. The rights conferred by copyright are designed to assure
contributors to the store of knowledge a fair return for their
labors.[^39]

The copyright law, like the patent statutes, makes reward to the owner a
secondary consideration . . . . It is said that reward to the author or
artist serves to induce release to the public of the products of his
creative genius.[^40]

Copyright is \"intended definitely to grant valuable, enforceable rights
to authors . . . \'to afford greater encouragement to the production of
literary works of lasting benefit to the world.\'\"[^41] The purpose is
not to reward the author, but the law does so to achieve its ultimate
purpose \-- \"to induce release to the public of the products of his
creative genius.\"[^42] The \"immediate effect\" of the copyright law is
that authors receive a \"fair return for \[their\] creative labor\";
however, the \"ultimate aim is, by this incentive, to stimulate artistic
creativity for the general public good.\"[^43]

Congress also interpreted the clause when it enacted the Copyright Act
of 1909:

The enactment of copyright legislation by Congress under the terms of
the Constitution is not based upon any natural right that the author has
in his writings, . . . but upon the ground that the welfare of the
public will be served and progress of science and useful arts will be
promoted by securing to authors for limited periods the exclusive rights
to their writings . . . .[^44]

By granting authors exclusive rights, the authors receive the benefit of
economic rewards and the public receives the benefit of literature,
music and other creative works that might not otherwise be created or
disseminated. The public also benefits from the limited scope and
duration of the rights granted.[^45] The free flow of ideas is promoted
by the denial of protection for facts and ideas.[^46] The granting of
exclusive rights to the author \"does not preclude others from using the
ideas or information revealed by the author\'s work.\"[^47]

While copyright law \"ultimately serves the purpose of enriching the
general public through access to creative works,\"[^48] copyright law
imposes no obligation upon copyright owners to make their works
available. While it is hoped that the potential economic benefits to
doing so will induce them, copyright owners are not obligated to provide
access to their works \-- either during the term of protection or after.
Hence, unpublished works never distributed to the public are granted as
much (if not more) protection as published works. However, once an
author publishes a work, copies of the work must be deposited with the
Library of Congress for the benefit of the public.

2\. Subject Matter and Scope of Protection

> a\. Eligibility for Protection

The subject matter eligible for protection under the Copyright Act is
set forth in Section 102(a):

Copyright protection subsists . . . in original works of authorship
fixed in any tangible medium of expression, now known or later
developed, from which they can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a machine or
device.[^49]

From this provision, the courts have derived three basic requirements
for copyright protection \-- originality, creativity and fixation.[^50]

The requirements of originality and creativity are derived from the
statutory qualification that copyright protection extends only to
\"original works of authorship.\"[^51] To be original, a work merely
must be one of independent creation \-- *i.e.*, not copied from another.
There is no requirement that the work be novel (as in patent law),
unique or ingenious. To be creative, there must only be a modicum of
creativity. The level required is exceedingly low; \"even a slight
amount will suffice.\"[^52]

The final requirement for copyright protection is fixation in a tangible
medium of expression. Protection attaches automatically to an eligible
work of authorship the moment the work is sufficiently fixed.[^53] A
work is fixed \"when its embodiment in a copy or phonorecord . . . is
sufficiently permanent or stable to permit it to be perceived,
reproduced, or otherwise communicated for a period of more than
transitory duration.\"[^54]

Congress provided considerable room for technological advances in the
area of fixation by noting that the method of fixation in copies or
phonorecords may be \"now known or later developed.\"[^55] The Copyright
Act divides the possible media for fixation into \"copies\" and
\"phonorecords\":

\"Copies\" are material objects, other than phonorecords, in which a
work is fixed by any method now known or later developed, and from which
the work can be perceived, reproduced, or otherwise communicated, either
directly or with the aid of a machine or device.[^56]

\"Phonorecords\" are material objects in which sounds, other than those
accompanying a motion picture or other audiovisual work, are fixed by
any method now known or later developed, and from which the sounds can
be perceived, reproduced, or otherwise communicated, either directly or
with the aid of a machine or device.[^57]

According to the House Report accompanying the Copyright Act of 1976,
Congress intended the terms \"copies\" and \"phonorecords\" to
\"comprise all of the material objects in which copyrightable works are
capable of being fixed.\"[^58]

The form of the fixation and the manner, method or medium used are
virtually unlimited. A work may be fixed in \"words, numbers, notes,
sounds, pictures, or any other graphic or symbolic indicia\"; may be
embodied in a physical object in \"written, printed, photographic,
sculptural, punched, magnetic, or any other stable form\"; and may be
capable of perception either \"directly or by means of any machine or
device \'now known or later developed.\'\"[^59]

In digital form, a work is generally recorded (fixed) as a sequence of
binary digits (zeros and ones) using media specific encoding. This fits
within the House Report\'s list of permissible manners of fixation.[^60]
Virtually all works also will be fixed in acceptable material objects
\-- *i.e.*, copies or phonorecords. For instance, floppy disks, compact
discs (CDs), CD-ROMs, optical disks, compact discs-interactive (CD-Is),
digital tape, and other digital storage devices are all stable forms in
which works may be fixed and from which works may be perceived,
reproduced or communicated by means of a machine or device.[^61]

The question of whether interactive works are fixed (given the user\'s
ability to constantly alter the sequence of the \"action\") has been
resolved by the courts in the context of video games and should not
present a new issue in the context of the NII. Such works are generally
considered sufficiently fixed to qualify for protection.[^62] The
sufficiency of the fixation of works transmitted via the NII, however,
where no copy or phonorecord has been made prior to the transmission,
may not be so clear.

A transmission, in and of itself, is not a fixation. While a
transmission may result in a fixation, a work is not fixed by virtue of
the transmission alone. Therefore, \"live\" transmissions via the NII
will not meet the fixation requirement, and will be unprotected by the
Copyright Act, unless the work is being fixed at the same time as it is
being transmitted.[^63] The Copyright Act provides that a work
\"consisting of sounds, images, or both, that are being transmitted\"
meets the fixation requirement \"if a fixation of the work is being made
simultaneously with its transmission.\"[^64] To obtain protection for a
work under this \"simultaneous fixation\" provision, the simultaneous
fixation of the transmitted work must itself qualify as a sufficient
fixation.

A simultaneous fixation (or any other fixation) meets the requirements
if its embodiment in a copy or phonorecord is \"sufficiently permanent
or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.\"[^65] Works
are not sufficiently fixed if they are \"purely evanescent or
transient\" in nature, \"such as those projected briefly on a screen,
shown electronically on a television or cathode ray tube, or captured
momentarily in the \'memory\' of a computer.\"[^66] Electronic network
transmissions from one computer to another, such as e-mail, may only
reside on each computer in RAM (random access memory), but that has been
found to be sufficient fixation.[^67]

> b\. Published and Unpublished Works

Historically, the concept of publication has been a major underpinning
of copyright law. Under the dual system of protection which existed
until the 1976 Copyright Act took effect, unpublished works were
generally protected under state law. Published works, on the other hand,
were protected under Federal copyright law.[^68] On the effective date
of the 1976 Act, Federal copyright protection became available for
unpublished as well as published works.[^69] The concept of publication
thus lost its \"all-embracing importance\" as the threshold to Federal
statutory protection.[^70]

However, while the importance of publication has been reduced through
amendment to the law (*e.g.*, granting Federal protection to unpublished
works and removing the notice requirement for published works), the
status of a work as either published or unpublished still has
significance under the Copyright Act. For example:

• only works that are published in the United States are subject to
mandatory deposit in the Library of Congress;[^71]

• deposit requirements for registration with the Copyright Office differ
depending on whether a work is published or unpublished;[^72]

• the scope of the fair use defense may be narrower for unpublished
works;[^73]

• unpublished works are eligible for protection without regard to the
nationality or domicile of the author;[^74]

• published works must bear a copyright notice if published before March
1, 1989;[^75] and

• certain limitations on the exclusive rights of a copyright owner are
applicable only to published works.[^76]

The Copyright Act provides a definition of \"publication\" to draw the
line between published and unpublished works:

\"Publication\" is the distribution of copies or phonorecords of a work
to the public by sale or other transfer of ownership, or by rental,
lease, or lending. The offering to distribute copies or phonorecords to
a group of persons for purposes of further distribution, public
performance, or public display, constitutes publication. A public
performance or display of a work does not of itself constitute
publication.[^77]

The definition uses the language of Section 106 describing the exclusive
right of distribution, and was intended to make clear that \"any form of
dissemination in which a material object does not change hands \--
performances or displays on television, for example \-- is not a
publication no matter how many people are exposed to the work.\"[^78] It
also makes clear that the distribution must be \"to the public.\"[^79]
In general, the definition continues principles that had evolved through
case law under previous copyright laws,[^80] including the doctrine of
limited publication.[^81] The doctrine was developed by courts to save
works from losing copyright protection when copies of the work were only
distributed to a restricted number of people and for a restricted
purpose without a copyright notice.[^82] Those works would not be
considered distributed to the public (*i.e.*, published) and, therefore,
not subject to the notice requirement. Although the notice requirement
has been eliminated, and thus the most critical justification for the
doctrine, the few cases dealing with publication since 1989 suggest that
courts will continue to apply the doctrine of limited publication.[^83]

> c\. Works Not Protected

Certain works and subject matter are expressly excluded from protection
under the Copyright Act, regardless of their originality, creativity and
fixation. Titles, names, short phrases, and slogans generally do not
enjoy copyright protection under the Copyright Act.[^84] Other material
ineligible for copyright protection includes the utilitarian elements of
industrial designs;[^85] familiar symbols or designs; simple geometrical
shapes; mere variations of typographic ornamentation, lettering or
coloring; and common works considered public property, such as standard
calendars, height and weight charts, and tape measures and rulers.

Copyright protection also does not extend to any \"idea, procedure,
process, system, method of operation, concept, principle, or discovery,
regardless of the form in which it is described, explained, illustrated,
or embodied\" in such work even if it meets the criteria for
protection.[^86] Thus, although a magazine article on how to tune a car
engine is protected by copyright, that protection extends only to the
expression of the ideas, facts and procedures in the article, not the
ideas, facts and procedures themselves, no matter how creative or
original they may be. Anyone may \"use\" the ideas, facts and procedures
in the article to tune an engine \-- or to write another article on the
same subject. What may not be taken is the expression used by the
original author to describe or explain those ideas, facts and
procedures.[^87]

Copyright does not prevent subsequent users from copying from a prior
author\'s work those constituent elements that are not original \-- for
example . . . facts or materials in the public domain \-- as long as
such use does not unfairly appropriate the author\'s original
contributions.[^88]

This idea/expression dichotomy \"assures authors the right to their
original expression, but encourages others to build freely upon the
ideas and information conveyed by a work.\"[^89] Although it \"may seem
unfair that much of the fruit of the \[author\'s\] labor may be used by
others without compensation,\" it is \"a constitutional requirement\"
\-- the \"means by which copyright advances the progress of science and
art.\"[^90]

As a matter of law, copyright protection generally is not extended under
the Copyright Act to works of the U.S. Government.[^91] Therefore,
nearly all works of the U.S. Government \-- including this Report \--
may be reproduced, distributed, adapted, publicly performed and publicly
displayed without infringement liability in the United States under its
copyright laws.[^92] While the Copyright Act leaves most works created
by the U.S. Government unprotected under U.S. copyright laws, Congress
did not intend for the section to have any effect on the protection of
U.S. government works abroad.[^93]

> d\. Categories of Protectible Works

The Copyright Act enumerates eight broad categories of protectible
subject matter:

\(1\) literary works;

\(2\) musical works, including any accompanying words;

\(3\) dramatic works, including any accompanying music;

\(4\) pantomimes and choreographic works;

\(5\) pictorial, graphic and sculptural works;

\(6\) motion pictures and other audiovisual works;

\(7\) sound recordings; and

\(8\) architectural works.[^94]

**[Literary Works]{.smallcaps}**

Although many categories of works will be available via the NII, the
majority of works currently available on computer networks such as the
Internet are literary works.

\"Literary works\" are works, other than audiovisual works, expressed in
words, numbers, or other verbal or numerical symbols or indicia,
regardless of the nature of the material objects, such as books,
periodicals, manuscripts, phonorecords, films, tapes, disks, or cards,
in which they are embodied.[^95]

Literary works include computer programs,[^96] articles, novels,
directories, computer databases, essays, catalogs, poetry, dictionaries,
encyclopedias, and other reference materials.[^97]

Musical Works

A musical work consists of the musical notes and lyrics (if any) in a
musical composition.[^98] A musical work may be fixed in any form, such
as a piece of sheet music or a compact disc.[^99] Musical works may be
\"dramatic,\" *i.e.*, written as a part of a musical or other dramatic
work, or \"nondramatic,\" *i.e.*, an individual, free-standing
composition.

Dramatic Works

Generally, a dramatic work is one in which a series of events is
presented to the audience by characters through dialogue and action as
the events happen, such as in a play.[^100]

Pantomimes and Choreographic Works

This category was first added to the list of protectible subject matter
in 1976.[^101] While pantomimes and choreographic works, such as dances,
can be fixed in a series of drawings or notations, they are usually
fixed on film or videotape.

Pictorial, Graphic and Sculptural Works

A significant number of works traveling through the NII will be
pictorial and graphic works. Works in this category include:

\[T\]wo-dimensional and three-dimensional works of fine, graphic, and
applied art, photographs, prints and art reproductions, maps, globes,
charts, diagrams, models, and technical drawings, including
architectural plans.[^102]

A work of art which is incorporated into the design of a useful article,
but which can stand by itself as art work separate from the useful
article, is copyrightable, but the design of the useful article is
not.[^103]

Motion Pictures and other Audiovisual Works

The Copyright Act provides definitions of \"audiovisual works\" and the
subcategory \"motion pictures\":

\"Audiovisual works\" are works that consist of a series of related
images which are intrinsically intended to be shown by the use of
machines, or devices such as projectors, viewers, or electronic
equipment, together with accompanying sounds, if any, regardless of the
nature of the material objects, such as films or tapes, in which the
works are embodied.[^104]

\"Motion pictures\" are audiovisual works consisting of a series of
related images which, when shown in succession, impart an impression of
motion, together with accompanying sounds, if any.[^105]

The House Report notes that the key to the subcategory \"motion
pictures\" is the conveyance of the impression of motion, and that such
an impression is not required to qualify as an audiovisual work.[^106]

Sound Recordings

A \"sound recording\" is the work that results from the fixation of
sounds, including those that are musical or spoken.[^107] When those
sounds are included in an audiovisual work, such as a music video, they
are considered part of the audiovisual work rather than a sound
recording.[^108]

Architectural Works

An \"architectural work\" is \"the design of a building as embodied in
any tangible medium of expression, including a building, architectural
plans, or drawings.\"[^109] It includes the overall form as well as the
\"arrangement and composition of spaces and elements\" in the design of
the building.[^110]

Compilations and Derivative Works

A compilation is \"a work formed by the collection and assembling of
preexisting materials or of data that are selected, coordinated, or
arranged in such a way that the resulting work as a whole constitutes an
original work of authorship.\"[^111] Directories, databases, magazines
and anthologies are types of compilations.

A derivative work is a work \"based upon\" one or more preexisting
works.[^112] A derivative work is created when one or more preexisting
works is \"recast, transformed, or adapted\" into a new work, such as
when a novel is used as the basis of a movie or when a drawing is
transformed into a sculpture.[^113] Translations, musical arrangements
and abridgments are types of derivative works.

The Copyright Act makes clear that the subject matter of copyright
specified in Section 102 (literary works, musical works, sound
recordings, etc.) includes compilations and derivative works.[^114] The
copyright in a derivative work or compilation, however, extends only to
the contribution of the author of the derivative work or compilation
(the compiler), and does not affect the copyright protection granted to
the preexisting material.[^115] Protection for an individual musical
work, for instance, is not reduced, enlarged, shortened or extended if
the work is included in a collection, such as a medley of songs.

Moreover, copyright in a compilation or derivative work does not imply
any exclusive right in the preexisting material employed in the
compilation or derivative work.[^116] The copyright in a compilation,
for example, is limited to the original selection or arrangement of the
facts or other elements compiled; protection for the compilation in no
way extends to the facts or elements.[^117] Copyright protection is not
granted simply for the hard work that may be involved in compiling
facts. The Supreme Court struck down the doctrine that had protected
such efforts, known as the \"sweat of the brow\" or \"industrial
collection\" theory.[^118]

\"Multimedia\" Works

Increasingly, works from different categories are fixed in a single
tangible medium of expression.[^119] This will certainly be true as
development of the NII progresses and the ability to create and
disseminate interactive \"multimedia\" or \"mixed media\" products
increases.

A prefatory note may be warranted because of the manner in which these
terms are used in the context of copyright law. The terms \"multimedia\"
and \"mixed media\" are, in fact, misnomers. In these works, it is the
types or categories of *works* that are \"multiple\" or \"mixed\" \--
not the types of *media*. The very premise of a so-called \"multimedia\"
work is that it combines several different elements or types of works
(*e.g.*, text (literary works), sound (sound recordings), still images
(pictorial works), and moving images (audiovisual works)) into a *single
medium* (*e.g.*, a CD-ROM) \-- not multiple media.[^120] However, in
recognition of the prevalent use of the term, this Report refers to this
type of work as a \"multimedia\" work.

Multimedia works are not categorized separately under the Copyright Act;
nor are they explicitly included in any of the eight enumerated
categories. While most current multimedia works would be considered
compilations,[^121] that classification does not resolve the issue of
subject matter categorization.[^122]

Despite the fact that the Copyright Act enumerates eight categories of
works, works that do not fit into any of the categories may,
nevertheless, be protected. The list of protectible works in Section 102
is intended to be illustrative rather than inclusive.[^123] The House
Report explains that the categories of works \"do not necessarily
exhaust the scope of \'original works of authorship\' that the
\[Copyright Act\] is intended to protect.\"[^124] However, absent the
addition of a new category, a work that does not fit into one of the
enumerated categories is, in a sense, in a copyright no-man\'s
land.[^125]

Under the current law, the categorization of a work holds a great deal
of significance under the Copyright Act. For instance, two of the
exclusive rights granted in Section 106 apply only to certain categories
of works.[^126] In addition, many of the limitations on rights in
Sections 108 through 120 are not applicable to all types of works.[^127]
Therefore, categorization of multimedia and other new types of works is
an important issue.

Generally, multimedia works include two or more of the following
preexisting elements: text (literary works), computer programs (literary
works), music (musical works and sound recordings), still images
(pictorial and graphic works) and moving images (audiovisual works). The
definition of \"literary works\" begins with the phrase \"works, *other
than audiovisual works* . . . .\"[^128] Therefore, a reasonable
interpretation may be that text and computer programs that would
otherwise be categorized as literary works may be considered part of an
audiovisual work if included in a work of that type. Such is also the
case with sound recordings. A music video is not categorized as both a
sound recording and an audiovisual work; it is categorized as an
audiovisual work.[^129] Audiovisual works also include still images \--
at least related ones.[^130] Therefore, in many instances, a multimedia
work may be considered \-- as a whole \-- an audiovisual work. The
legislative history makes clear that a work in one category may contain
works in other categories.[^131]

The somewhat strained analysis needed to find a category for multimedia
works and the increasing \"cross-breeding\" of types of works
demonstrate that categorization may no longer be useful or necessary.
While the Working Group does not recommend at this time the
consolidation or elimination of categories (and harmonization of the
differing application of rights and limitations on those rights), it is
likely that such consolidation or elimination will be appropriate in the
future.

3\. Copyright Ownership

Copyright ownership in a work initially vests in the author of the
work.[^132] If the work is a \"joint work\" (a work with two or more
authors), the authors are co-owners of the copyright in the work.[^133]

Under certain circumstances, the copyright in a work is not granted to
the actual preparer of the work. In the case of \"works made for hire,\"
the employer of the preparer or the person for whom the work was
prepared is considered the \"author\" for purposes of the Copyright
Act.[^134] There are two types of works made for hire \-- those prepared
by an employee and those prepared by an independent contractor by
special order or commission. The copyright in a work prepared by an
employee within the scope of employment vests in the employer, and the
employer is the author.[^135] The copyright in a work specially ordered
or commissioned vests in the person for whom the work was prepared if
the work falls into one of nine specified categories and if the parties
expressly agree in writing that the work will be considered a work made
for hire.[^136]

Copyright ownership entitles the copyright owner to:

• exercise the exclusive rights granted under Section 106;

• authorize others to exercise any of those exclusive rights; and

• prevent others from exercising any of those exclusive rights.

An important distinction to understand is the difference between
ownership of a *copyright* in a work and ownership of a *copy* of a
work. Ownership of a copy \-- the material object in which a copyrighted
work is embodied (*e.g.*, a book, CD or videocassette) \-- carries with
it no interest in the copyright.[^137]

Ownership of a copyright, or any of the exclusive rights under a
copyright, is distinct from ownership of any material object in which
the work is embodied. Transfer of ownership of any material object,
including the copy or phonorecord in which the work is first fixed, does
not of itself convey any rights in the copyrighted work embodied in the
object; nor, in the absence of an agreement, does transfer of ownership
of a copyright or of any exclusive rights under a copyright convey
property rights in any material object.[^138]

Ownership, possession or any other attachment to or relationship with a
copy of a copyrighted work (including obtaining access to it through a
computer network or other service) does not entitle one to exercise any
of the exclusive rights of the copyright owner (*e.g.*, to reproduce it
or to perform it publicly).

> a\. Transfer of Ownership

Copyright ownership, or ownership of any of the exclusive rights (in
whole or in part), may be transferred to one or more persons.[^139] A
transfer of rights must be in writing and must be signed by the
transferor.[^140] A transfer may occur through an assignment, exclusive
license, mortgage, \"or any other conveyance, alienation, or
hypothecation\" of a copyright or any of the exclusive rights.[^141] A
transfer of copyright ownership may be limited in time or in place, but
it must be an exclusive transfer of whatever right or rights are
involved (*i.e.*, nonexclusive licenses are not considered transfers of
ownership).[^142] Any of the exclusive rights in the work[^143] may be
separately transferred and owned, and the owner of a particular right is
considered the \"copyright owner\" with respect to that right.[^144]

In the case of any copyrighted work other than a \"work made for hire,\"
all transfers of copyright ownership (as well as all nonexclusive
licenses) executed by the author of the work may be terminated by the
author 35 years after the transfer.[^145] This right to terminate,
intended to protect authors, cannot be waived by contract or other
agreement.[^146] However, termination is not automatic; an author must
assert his or her termination rights and comply with certain statutory
requirements to regain copyright ownership.[^147]

> b\. Licensing

The exclusive rights of a copyright owner may be licensed on an
exclusive basis (*i.e.*, copyright ownership in one or more rights is
transferred by the copyright owner) or on a nonexclusive basis (*i.e.*,
the copyright owner retains ownership of the copyright and may grant
similar licenses to others). A nonexclusive licensee is not a copyright
owner and thus does not have standing to sue for any infringement of the
copyright in the work by others.[^148] Unlike exclusive licenses,
nonexclusive licenses need not be in writing.[^149]

Limitations on the exclusive rights, such as the first sale doctrine,
fair use or library exemptions, may be overridden by contract.[^150]
However, such contract terms can be enforced only under state law. For
instance, the fair use of a work (outside the scope of the license) by a
licensee whose license precludes any use other than that specified by
the license would not be an infringement of copyright, but would be a
breach of the license agreement. Licenses and other contracts cannot
transform noninfringing uses (such as fair uses) into infringements;
they can, however, make such uses violations of the terms and conditions
of the agreements:

A library that has acquired ownership of a copy is entitled \[under the
Copyright Act\] to lend it under any conditions it chooses to impose.
This does not mean that conditions on future disposition of copies or
phonorecords, imposed by a contract between their buyer and seller,
would be unenforceable between the parties as a breach of contract, but
it does mean that they could not be enforced by an action for
infringement of copyright.[^151]

Licensing issues are, and will continue to be, significant in the
context of the development of the NII. Services on the NII will provide
the opportunity for new uses for copyrighted works. If rights with
respect to these new uses are not expressly granted or retained in
license agreements, conflicts will arise between copyright owners and
licensees. For instance, public display on a bulletin board system may
not have been contemplated in licenses granting a public display right
that were executed before the advent or proliferation of such systems.

Some argue that new uses which were not contemplated at the time of
licensing but which fall within rights granted, such as the public
display example above, should automatically fall within the scope of the
license. Others contend that new uses which are not contemplated and,
therefore, not specifically mentioned in a grant of rights should be
considered retained by the licensor \-- even in the case of a complete
assignment of rights.

Failure to contemplate possible future developments, of course, is not a
new problem, and is one based primarily in contract rather than
copyright law. Whenever new technologies have produced a new use for
works, courts have been called upon to decide whether the new use is
covered by old licenses.[^152] That is the proper jurisdiction for such
determinations. License agreements must be interpreted individually and
under the law of the governing state.

A variety of licensing methods will be possible as the NII develops. For
instance, rights in copyrighted works offered via the NII may be
licensed off-line or on-line. They may be licensed directly (through
individual transactions between the rightsholder and the licensee) or
through other licensing arrangements, such as voluntary collective
licensing. Licensing of rights may be on a per-use, per-work or other
basis.

The licensing of rights for the creation of multimedia works \-- whose
creators may wish to include dozens of preexisting works (or portions
thereof) \-- can be difficult. Because registration and copyright
notices are not required for copyrighted works, identification of
copyright owners alone can be complicated. Furthermore, the relative
newness of the multimedia industry can result in an uncertainty on the
part of copyright owners and multimedia creators with regard to
appropriate terms and conditions for such uses.

With limited exceptions, intellectual property law leaves the licensing
of rights to the marketplace. In certain circumstances, particularly
where transaction costs are believed to dwarf per-transaction royalties,
Congress has found it necessary to provide for compulsory
licenses.[^153] The Working Group finds that, under current conditions,
additional compulsory licensing of intellectual property rights is
neither necessary nor desirable. Compulsory licensing disregards
marketplace forces. Such licensing schemes treat all works alike, even
though their value in a competitive marketplace would likely vary
dramatically. It also treats all users alike. It alters the free market
relationship between buyers and sellers. Moreover, transaction costs \--
and the attendant savings from compulsory licensing \-- can be minimized
in a digital environment.

Technology will facilitate individual licensing schemes.[^154] Many
projects and studies have been initiated to explore ways in which
technology can be used to enhance a user\'s ability to identify the
rightsholder of a work and license its use. The inclusion of copyright
management information in copies of works will also facilitate
licensing.[^155]

The marketplace should be allowed to develop whatever legal licensing
systems may be appropriate for the NII. However, the Working Group
encourages copyright owners to explore with libraries and schools
special, institutional licenses. These licenses would enable the costs
to be borne, for instance, by the library so that its patrons might
access and use works without direct costs, as they generally do in the
print domain.[^156] The Working Group also endorses increased funding
for libraries and educational institutions to assist their ability to
purchase and license works in digital form.

> c\. On-Line Transactions

The NII will be a conduit for many types of commercial
transactions.[^157] Electronic purchasing of goods facilitates the
ordering, shipment, and tracking of inventory for nearly any
manufactured product. Consumers increasingly will have access to on-line
banking, catalogues, video tours of homes, and countless other services.
Payment for these goods and services may be made through conventional
methods, such as checks or credit cards, or through \"digital cash\" \--
on-line funds transfers between a consumer\'s bank and an on-line
provider.[^158] In addition, certain NII uses of protected works will be
regulated through electronic licenses.

The law dealing with electronic commerce is not clear \-- especially for
totally paperless transactions.[^159] On-line contracting and licensing
raise a number of concerns about the validity and enforceability of such
transactions. The NII will not be used to its fullest commercial
potential if providers and consumers cannot be confident that their
electronic agreements are valid and enforceable.

Considering a number of different transactions that may take place on
the NII helps identify where contract law is strained and the impact of
this strain on NII users. Although some of the transactions identified
may not involve the license or transfer of rights in a copyrighted work,
examination of the principles involved in, for example, the on-line sale
of copies of copyrighted works in the NII environment may provide useful
background and understanding of the overall legal atmosphere for on-line
transactions.

**[On-Line Contracts Not Involving            the Sale of
Goods]{.smallcaps}**

At common law, a contract is formed when the contracting parties
manifest mutual, voluntary assent to be bound by a set of terms \--
typically through an offer and acceptance.[^160] In addition, under the
\"mirror image rule,\" the parties must agree to identical terms before
a contract is formed \-- the so-called \"meeting of the minds.\" The
threshold question is whether an electronic message of offer or
acceptance or the simple use of the \"accept\" or \"return\" key in
response to a provider\'s offer or consumer\'s request is assent.[^161]

A second issue is whether an electronic manifestation of assent meets
the mirror image rule[^162] \-- that is, whether there was a meeting of
the minds. If the seller provides an on-line contract form with terms
that are essentially non-negotiable, then, like the \"shrink wrap\"
licenses used by software publishers,[^163] the purchaser can only
accept or reject the terms. If the purchaser accepts, the mirror image
rule is met. However, when a consumer assents to such a \"standard
form\" contract, and there is no alternative source for a similar
service, the result may be a contract of adhesion.[^164]

Assent in contracts of adhesion has been considered in the context of
on-line services and shrink wrap licenses.[^165] While there is no clear
\"rule,\" a traditional analysis looks to the reasonableness of terms
and the applicability of the agreement\'s terms to similarly situated
parties.[^166] The status of shrink wrap licenses for software provides
some guidance; however, shrink wrap licenses have not been treated
consistently.[^167] In some cases, the U.C.C. has been applied, thus
avoiding the question of adhesion by inferring formation.[^168] In
addition, Illinois and Louisiana have both attempted to statutorily
\"validate\" such shrink wrap licenses.[^169]

A third issue involves writing and signature requirements for certain
contracts.[^170] In the NII, where transactions may be entirely
paperless, it may be unclear whether electronic messages are written and
what will be considered an adequate signature.[^171]

            On-Line Sale of Goods with             Conventional Delivery

For the sale of goods, the U.C.C. alleviates many of these common law
concerns.[^172] With regard to assent, the U.C.C. states that, \"\[a\]
contract for sale of goods may be made in any manner sufficient to show
agreement, including conduct by both parties which recognizes the
existence of such a contract.\"[^173] Likewise, \"an offer to make a
contract shall be construed as inviting acceptance in any manner and by
any medium reasonable in the circumstances.\"[^174] Thus, application of
the U.C.C. may infer assent through any reasonable conduct \-- including
transmission of electronic messages.

Similarly, the U.C.C. loosens the requirements of the mirror image rule.
The U.C.C. infers formation and focuses on establishing the contract's
controlling terms.[^175] The formalities necessary for enforceability
are also relaxed by the U.C.C.[^176] As sales of goods become more
common via the NII, the U.C.C. will likely become more useful based on
the flexible \"course of dealing\" and \"usage of trade\"
definitions.[^177]

        On-line Sale of Goods with           Electronic Delivery

A third transaction is where goods are both ordered and delivered via
the NII. The primary difference between goods delivered via the NII and
those discussed earlier is that the goods themselves may not \"exist\"
prior to the delivery. Rather, they are reproduced upon transmission to
the buyer\'s computer system. Because the goods do not exist prior to
the sale, the goods are considered \"future goods\" under the U.C.C.,
and remedies for breach of contract are limited.[^178]

On-Line Licenses for Uses of Works

The licensing of copyrighted works via the NII is more problematic.
Application of U.C.C. Article 2 is questionable, because the works
involved may not be \"goods\" under the U.C.C., and because the
transaction itself is not a \"sale,\" but rather a license to use or
access the work.[^179] Common law principles of contract law, therefore,
may apply to on-line licenses.[^180] Amendment of Article 2 of the
U.C.C. to cover such licensing transactions is being actively considered
by the Permanent Editorial Board for the Uniform Commercial Code.[^181]

The challenge for commercial law, as for intellectual property law, is
to adapt to the reality of the NII by providing clear guidance as to the
rights and responsibilities of those using the NII. Without certainty in
electronic contracting, the NII will not fulfill its commercial
potential. The Working Group believes that, regardless of the type of
transaction, where parties wish to contract electronically, they should
be able to form a valid contract on-line.

In particular, on-line licenses should be encouraged because they offer
efficiency for both licensors and licensees. Moreover, state validating
statutes \-- similar to those used to validate shrink wrap licenses \--
can be used for on-line licenses to help overcome concerns regarding
adhesion; and such statutes should not be preempted as long as they do
not attempt to grant rights equivalent to any of the exclusive rights
within the general scope of copyright.[^182] Thus, a statute that merely
recognizes the validity of on-line licenses \-- even those licenses
which cover the exclusive rights of the copyright owner \-- would not
usurp Federal power and should be upheld.

Further, just as the copyright law needs minor clarifications to account
for new technology, so too might commercial law. Historically, the
U.C.C. has been extremely successful in clarifying the law. However, as
technology advances, the way in which business is conducted places
strains upon the U.C.C. \-- especially Article 2. Therefore, the Working
Group supports the efforts presently underway to revise Article 2 of the
U.C.C. to encompass licensing of intellectual property.

4\. Term of Protection

Generally, a copyrighted work is protected for the length of the
author\'s life plus another 50 years.[^183] In the case of joint works,
copyright protection is granted for the length of the life of the last
surviving joint author plus another 50 years.[^184] Works made for hire,
as well as anonymous and pseudonymous works, are protected for a term of
either 75 years from the year of first publication or 100 years from the
year of creation, whichever is shorter.[^185] When the term of
protection for a copyrighted work expires, the work falls into the
\"public domain.\"[^186]

5\. Notice, Deposit and Registration

Prior to the United States accession to the Berne Convention and the
concomitant amendments to the Copyright Act, a copyright notice was
required on all publicly distributed copies or phonorecords of works.
Omission of the notice could result in the loss of copyright protection
for the work. However, in 1989, the use of a copyright notice became
permissive rather than required.[^187] Section 401(a) of the Copyright
Act provides:

Whenever a work protected under this title is published in the United
States or elsewhere by authority of the copyright owner, a notice of
copyright . . . *may* *be* placed on publicly distributed copies from
which the work can be visually perceived, either directly or with the
aid of a machine or device.[^188]

If a copyright notice is used, it generally must consist of three
elements:

• the letter \"C\" in a circle (©) or the word \"Copyright\" or the
abbreviation \"Copr.\" (in the case of sound recordings embodied in
phonorecords, the letter \"P\" in a circle);

• the year of first publication of the work; and

• the name of the owner of copyright in the work.[^189]

As a general rule, two copies of a published work must be deposited in
the Copyright Office within three months of publication for the benefit
of the Library of Congress.[^190] The Register of Copyrights may exempt
categories of works from the deposit requirements. The Register may also
require only one copy of the work or allow alternative forms of
deposit.[^191] Although required by the Copyright Act, the deposit of
copies is not a prerequisite to or condition of copyright protection.
Failure to deposit copies of a work after a written demand by the
Register of Copyrights, however, generally results in the imposition of
a fine.[^192]

Registration with the Copyright Office is permissive, rather than
mandatory. It is not a prerequisite to the grant of exclusive
rights.[^193] It is, however, generally a prerequisite to the
enforcement of those rights in court.[^194] The copyright owner of a
work (or the owner of any of the exclusive rights) may register the
copyright in the work by depositing with the Copyright Office a
completed application form, registration fee and a copy or copies of the
work.[^195] The deposit requirement under the Act may be fulfilled
through the registration procedures.[^196]

Although not required, registration may be advisable. A certificate of
copyright registration constitutes prima facie evidence of the validity
of the copyright and the facts stated in the certificate, if
registration is made within five years of first publication.[^197] In
addition, certain remedies are available in infringement suits only if
registration is made prior to the date of the infringement or within
three months of first publication.[^198]

The lack of notice and registration requirements may make it harder to
differentiate between protected and unprotected works, including those
in the public domain and those in which the author does not wish to
claim copyright. It may also make it more difficult to identify the
copyright owner. This has led some to suggest, at least with respect to
works disseminated via computer networks, that one should be free to
copy any work that does not contain a copyright notice and that
registration should be required.

While these arguments may have some merit, the balance of interests has
not changed since these issues were considered by Congress and the
requirements were eliminated. Conditioning copyright protection on the
affixation of copyright notices and/or registration would be
inconsistent with our obligations under the Berne Convention.[^199]
Further, the benefits of utilizing Copyright Management Information
should encourage copyright owners to include or affix information
historically included in copyright notices, as well as additional useful
information for consumers, such as the terms and conditions for use.

6\. Exclusive Rights

The Copyright Act grants copyright owners certain exclusive rights that,
together, comprise the bundle of rights known as copyright. (Limitations
on the exclusive rights and infringement of the rights are discussed in
subsequent sections. The fact that a particular use of a copyrighted
work is said to implicate one or more of the rights, therefore, does not
necessarily mean that such use is an infringement or unlawful.)

The exclusive rights of the copyright owner include \--

\(1\) to reproduce the copyrighted work in copies or phonorecords;

\(2\) to prepare derivative works based upon the copyrighted work;

\(3\) to distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, or by rental, lease,
or lending;

\(4\) in the case of literary, musical, dramatic, and choreographic
works, pantomimes, and motion pictures and other audiovisual works, to
perform the copyrighted work publicly; and

\(5\) in the case of literary, musical, dramatic, and choreographic
works, pantomimes, and pictorial, graphic, or sculptural works,
including the individual images of a motion picture or other audiovisual
work, to display the copyrighted work publicly.[^200]

These rights, in most instances, have been well elaborated by Congress
and the courts in both \"conventional\" and digital contexts. For the
most part, the provisions of the current copyright law serve the needs
of creators, owners, distributors, users and consumers of copyrighted
works in the NII environment. In certain instances, small changes in the
law may be necessary to ensure public access to copyrighted works while
protecting the rights of the intellectual property owner.

> a\. The Right to Reproduce the Work

The fundamental right to reproduce copyrighted works in copies and
phonorecords[^201] will be implicated in innumerable NII transactions.
Indeed, because of the nature of computer-to-computer communications, it
will be implicated in most NII transactions. For example, when a
computer user accesses a document resident on another computer, the
image on the user\'s screen exists \-- under contemporary technology \--
only by virtue of the copy that is *reproduced* in the user\'s computer
memory. It has long been clear under U.S. law that the placement of
copyrighted material into a computer\'s memory is a reproduction of that
material (because the work in memory then may be, in the law\'s terms,
\"perceived, reproduced, or . . . communicated . . . with the aid of a
machine or device\").[^202]

The 1976 Copyright Act, its legislative history, the *CONTU Final
Report*, and repeated holdings by courts make it clear that in each of
the instances set out below, one or more copies is made.[^203]

• When a work is placed into a computer, whether on a disk, diskette,
ROM, or other storage device or in RAM for more than a very brief
period, a copy is made.[^204]

• When a printed work is \"scanned\" into a digital file, a copy \-- the
digital file itself \-- is made.

• When other works \-- including photographs, motion pictures, or sound
recordings \-- are digitized, copies are made.

• Whenever a digitized file is \"uploaded\" from a user\'s computer to a
bulletin board system (bbs) or other server, a copy is made.

• Whenever a digitized file is \"downloaded\" from a bbs or other
server, a copy is made.

• When a file is transferred from one computer network user to another,
multiple copies generally are made.[^205]

• Under current technology, when an end-user\'s computer is employed as
a \"dumb\" terminal to access a file resident on another computer such
as a bbs or Internet host, a copy of at least the portion viewed is made
in the user\'s computer. Without such copying into the RAM or buffer of
the user\'s computer, no screen display would be possible.

> b\. The Right to Prepare Derivative Works

The copyright law grants copyright owners the right to control the
abridgment, adaptation, translation, revision or other
\"transformation\" of their works.[^206] A user who modifies \-- by
annotating, editing, translating or otherwise significantly changing \--
the contents of a downloaded file creates a derivative work. Derivative
works may also be created by transforming a work, such as an audiovisual
work, into an interactive work.

> c\. The Right to Distribute Copies

Before addressing issues raised by the distribution right in the context
of the NII, it is necessary to understand its application and
limitations with respect to conventional modes of exploitation and
infringement.

The right to distribute legitimate copies of works is substantially
circumscribed by the \"first sale\" doctrine:

Notwithstanding the provisions of section 106(3), the owner of a
particular copy or phonorecord lawfully made under this title, or any
person authorized by such owner, is entitled, without the authority of
the copyright owner, to sell or otherwise dispose of the possession of
that copy or phonorecord.[^207]

This means that the copyright owner generally has only the right to
authorize or prohibit the *initial* distribution of a particular
*lawful* copy of a copyrighted work.[^208] It is important to
understand, however, that the distribution of an *unlawfully* made
(*i.e.*, infringing) copy will subject any distributor to liability for
infringement.[^209]

One court decision has construed the unauthorized downloading of
digitized photographic images (whose reproduction was unauthorized) by
bbs subscribers as \"implicating\" the distribution right.[^210] The
discussion in *Playboy Enterprises Inc*. *v. Frena*[^211] reflects the
reach of the distribution right with respect to infringing copies:

Public distribution of a copyrighted work is a right reserved to the
copyright owner, and usurpation of that right constitutes
infringement . . . . \[Playboy Enterprise\'s\] right under 17 U.S.C.
§106 to distribute copies to the public has been implicated by Defendant
Frena \[the bbs operator\]. Section 106(3) grants the copyright owner
\"the exclusive right to sell, give away, rent or lend any material
embodiment of his work.\" There is no dispute that Defendant Frena
supplied a product containing unauthorized copies of a copyrighted work.
It does not matter that Defendant Frena claims it did not make the
copies itself.[^212]

The court may not have focused on the reproduction right, apparently
because of its uncertainty whether the operator of the bulletin board
system could itself be held to have reproduced a work that was (a)
uploaded by one subscriber[^213] and (b) downloaded by another. (As
discussed below, the bbs operator publicly displayed the works by the
same conduct, and was found liable by the court for infringing the
display right.)

Whether the litigants in *Playboy* put the issue properly in dispute or
not, the right to distribute copies of a work has traditionally covered
the right to convey a possessory interest in a tangible copy of the
work. Indeed, the first sale doctrine implements the common law\'s
abhorrence of restraints on alienation of property by providing that the
distribution right does not generally prevent owners of lawfully made
copies from alienating them in a manner of their own choosing.[^214] It
is clear that a Frena subscriber, at the end of a transaction, possessed
a copy of a Playboy photograph, but it is perhaps less clear whether,
under the current law, Frena \"distributed\" that photograph and whether
Frena or the subscriber \"reproduced\" it (and, if the latter, whether
current law clearly would have made Frena contributorily liable for the
unauthorized reproduction).[^215]

In a similar case, *Sega Enterprises Ltd*. *v. MAPHIA*,[^216] a court,
on a motion for a preliminary injunction, made findings of fact
regarding (a) the use of a bulletin board system to \"make and
distribute\" copies of copyrighted video games, (b) the \"unauthorized
copying and distribution\" of the games on the bulletin board, and
(c) the profits made by the defendant from the \"distribution\" of the
games on the bulletin board. The court\'s conclusions of law held that
the reproduction right was infringed but apparently did not reach a like
conclusion with respect to the distribution right.

> d\. The Right to Perform the Work Publicly

The public performance right is available to all types of
\"performable\" works \-- literary, musical, dramatic, and choreographic
works, pantomimes, motion pictures, and other audiovisual works \-- with
the exception of sound recordings.[^217] While some have urged that
many, if not all, NII transactions be characterized as \"performances,\"
it is important to understand:

• the definition of \"perform\" in the copyright law,[^218]

• that only \"public\" performances are covered by the copyright
law,[^219] and

• the limitations set out in the statute that render the performance
right inapplicable in a variety of circumstances (mostly of a nonprofit
nature).[^220]

A distinction must be made between transmissions of *copies* of works
and transmissions of *performances* or *displays* of works.[^221] When a
copy of a work is transmitted over wires, fiber optics, satellite
signals or other modes in digital form so that it may be captured in a
user\'s computer, without the capability of simultaneous \"rendering\"
or \"showing,\" it has rather clearly not been performed. Thus, for
example, a file comprising the digitized version of a motion picture
might be transferred from a copyright owner to an end user via the
Internet without the public performance right being implicated. When,
however, the motion picture is \"rendered\" \-- by showing its images in
sequence \-- so that users with the requisite hardware and software
might watch it *with or without copying the performance*, then, under
the current law, a \"performance\" has occurred.

The \"public\" nature of a performance \-- which brings it within the
scope of copyright \-- is sufficiently broadly defined to apply to
multiple individual viewers who may watch a work being performed in a
variety of locations at several different times. Courts have repeatedly
imposed public performance infringement liability upon entities that,
for example, develop novel modes of delivering motion picture
performances to customers and advance novel legal arguments as to why
their performances are not \"public.\"[^222] Therefore, in the context
of the NII, the fact that performances and displays may occur in diverse
locations and at different times will not exempt them from the public
performance and public display rights.

> e\. The Right to Display the Work Publicly

The right to display a work publicly is extremely significant in the
context of the NII. To display a work means to \"show a copy of it,
either directly or by means of a . . . television image, or any other
device or process . . . .\"[^223] The complex analyses to determine
whether a particular transmission might amount to a \"distribution\" or
a \"performance\" are rarely necessary in this context. The definition
of \"display\" clearly encompasses, for instance, the actions of the
defendant bbs operator in the *Playboy* case.[^224] Thus, when any NII
user visually \"browses\" through copies of works in any medium (but not
through a list of titles or other \"menus\" that are not copies of the
works),[^225] a public display of at least a portion of the browsed work
occurs. A display is \"public\" on the same terms as a performance is
\"public\"; therefore, many NII uses would appear to fall within the
law\'s current comprehension of \"public display.\"[^226] Whether such
acts would be an infringement would be determined by separate
infringement analyses.

7\. Limitations on Exclusive Rights

The copyright law provides a number of exceptions to the \"exclusive\"
rights of copyright owners. The Copyright Act specifies that certain
uses of copyrighted works are outside the control of the copyright
owner.[^227] While many regard these exceptions as rights of users, they
are, as a technical matter, outright exemptions from liability or
affirmative defenses to what would otherwise be acts of infringement.

> a\. Fair Use

The most significant and, perhaps, murky of the limitations on a
copyright owner\'s exclusive rights is the doctrine of fair use.[^228]
Fair use is an affirmative defense to an action for copyright
infringement.[^229] It is potentially available with respect to all
manners of unauthorized use of all types of works in all media. When it
exists, the user is not required to seek permission from the copyright
owner or to pay a license fee for the use.

The doctrine of fair use is rooted in some 200 years of judicial
decisions. The most common example of fair use is when a user
incorporates some portion of a pre-existing work into a new work of
authorship.[^230] For example, quotation from a book or play by a
reviewer, or the incidental capturing of copyrighted music in a segment
of a television news broadcast is fair use. In the recent *Campbell*
case, the Supreme Court expressly accepted the proposition that such
\"transformative\" uses are more favored in fair use analyses than uses
that amount to little more than verbatim copying.[^231] As one moves
away from such transformative uses into the area of uses that \-- for
practical purposes \-- compete with the copyright owner\'s exploitation
of the work, the analysis becomes more difficult (as the number of
litigated cases grows).

Before examining the doctrine developed by the courts, it is useful to
examine the statutory language concerning fair use. Section 107 of the
Copyright Act provides:

Notwithstanding the provisions of sections 106 and 106A, the fair use of
a copyrighted work, including such use by reproduction in copies or
phonorecords or by any other means specified by that section \[sic\],
for purposes such as criticism, comment, news reporting, teaching
(including multiple copies for classroom use), scholarship, or research,
is not an infringement of copyright. In determining whether the use made
of a work in any particular case is a fair use the factors to be
considered shall include \--

> \(1\) the purpose and character of the use, including whether such use
> is of a commercial nature or is for nonprofit educational purposes;
>
> \(2\) the nature of the copyrighted work;
>
> \(3\) the amount and substantiality of the portion used in relation to
> the copyrighted work as a whole; and
>
> \(4\) the effect of the use upon the potential market for or value of
> the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of
fair use if such finding is made upon consideration of all the above
factors.[^232]

The language may usefully be divided into two parts: the first sentence,
which is largely tautological (\"fair use . . . is not an infringement
of copyright\"), and the analysis required by the second sentence. The
recitation of assorted uses in the middle of the first sentence has been
held neither to prevent a fair use analysis from being applied to other
\"unlisted\" uses nor to create a presumption that the listed uses are
fair.[^233] It does, however, provide some guidance on the types of
activities which might be considered fair use.

The core of Section 107 is the second sentence, in which Congress
elaborates a test similar to that articulated by Justice Story more than
150 years ago.[^234] It is clear that courts must evaluate all four
factors in determining whether a particular use is fair, but may also
take into account unenumerated \"extra\" factors, when appropriate.

The Purpose and Character of the Use

Although the fourth factor has repeatedly been held to be the most
important of the four factors, the first factor often plays a major role
in determining the result when a defendant asserts a fair use defense.

The first factor contrasts \"commercial\" uses with \"nonprofit
educational\" uses. There is, of course, a continuum between these two
opposites, with most uses falling neatly into neither the favored nor
disfavored pigeonhole. The weight of the factor may be inferred from the
Supreme Court\'s very limited fair use jurisprudence: In the four fair
use cases that it has decided, one noncommercial, noneducational use was
held fair,[^235] two commercial uses were held unfair,[^236] and one
commercial use was held potentially fair.[^237]

In the *Sony* case, the Court announced a \"presumption\" that helps
explain courts\' near universal rejection of fair use claims in
commercial contexts. It declared that all commercial uses were to be
presumed unfair,[^238] thus placing a substantial burden on a defendant
asserting that a particular commercial use is fair. The *Campbell* case
made clear that the *Sony* presumption was of greatest applicability in
the context of verbatim copying, thus giving greater leeway to
commercial but transformative uses.

For the most part, \"mere reproduction\" has fared rather badly in court
under the Copyright Act, even in actual and ostensible educational
contexts.[^239] Courts have denied fair use,[^240] for example, to:

• a teacher\'s reproduction, in text materials, of the copyrighted
material of another teacher;[^241]

• a school system\'s practice of taping educational broadcasts for later
use in classrooms;[^242] and

• off-campus copy shops\' manufacture \-- per teachers\' specifications
\-- and distribution of photocopies of anthologies containing portions
of textbooks and periodicals.[^243]

The Nature of the Copyrighted Work

This second factor tends to play a less significant role than the first
in fair use litigation. Courts have held that this factor weighs in the
copyright owner\'s favor when works of fiction[^244] and unpublished
works[^245] are copied, and in the defendant\'s favor when factual
works[^246] and published works[^247] are copied. In the NII context, it
is quite possible that a court might evaluate whether a work in digital
form should be treated differently from a work in a conventional print
or other analog form for the purposes of evaluating this factor.

The Amount and Substantiality of the Portion Used

This is probably the least important factor, given that the taking of
even a small amount \-- if it is considered the \"heart\" of the work
\-- can lead to a finding of infringement.[^248] Indeed, the most
frequently cited copyright treatise devotes only four sentences to its
discussion:

> The third factor listed in § 107 is \"the amount and substantiality of
> the portion used in relation to the copyrighted work as a whole.\"
> This raises an issue discussed in a preceding section \[concerning the
> quantum of copying that constitutes infringement\], and may be
> regarded as relating to the question of substantial similarity rather
> than whether the use is \"fair.\" This includes a determination of not
> just quantitative, but also qualitative substantiality. In any event,
> whatever the use, generally it may not constitute a fair use if the
> entire work is reproduced.[^249]

The Economic Effect of the Use

Courts have repeatedly identified this as the most significant of the
four factors.[^250] It is important to recall that it weighs against a
defendant not only when a current market exists for a particular use,
but also when a potential market could be exploited by the copyright
owner. Harm in either market will, in most instances, render a use
unfair.[^251]

The Supreme Court\'s decisions demonstrate the significant weight given
this factor:

• In *Sony*, the absence of any market for home taping licenses,
combined with the testimony of some copyright owners that they were
indifferent to home copying, led the Court to conclude that there was no
cognizable harm.[^252]

• In *Harper & Row*, the Court accepted the argument that the
defendant\'s \"scooping\" of \"Time\" magazine\'s right to make the
first serial publication of President Ford\'s memoirs, which caused
cancellation of the magazine\'s contract with Harper & Row, caused harm
to the copyright owner.[^253]

• In *Stewart v. Abend*, performances of a movie palpably harmed the
economic interests of the owner of the copyright in the underlying short
story.[^254]

• In *Campbell*, the Court \-- because the parody was \"transformative\"
\-- rejected the court of appeals\' determination that the commercial
purpose of the parody required the parodist to overcome *Sony*\'s
presumption of market harm.[^255]

It is reasonable to expect that courts would approach claims of fair use
in the context of the NII just as they do in \"traditional\"
environments. Commercial uses that involve no \"transformation\" by
users and harm actual or potential markets will likely always be
infringing, while nonprofit educational transformative uses will likely
often be fair. Between these extremes, courts will have to engage in the
same type of fact-intensive analysis that typifies fair use litigation
and frustrates those who seek \"bright lines\" clearly separating the
lawful from the unlawful.[^256]

Courts in two cases decided to date concerning the unauthorized
\"uploading\" and \"downloading\" of copyrighted materials to and from
bulletin board services have held that such uses were not fair
uses.[^257] In the *Playboy* case, the court characterized the issue as
whether \"unrestricted and widespread conduct of the sort engaged in by
the defendant bulletin board system operator (whether in fact engaged in
by the defendant or others) would result in a substantially adverse
impact on the potential market for or value of \[Playboy\'s copyrighted
photographs\],\"[^258] and determined that it would. This, in turn, led
the court to conclude that there was market harm and, thus,
infringement.

In the *MAPHIA* case,[^259] the court found that Sega established a
*prima* *facie* case of direct and contributory infringement in the
operation of the defendant\'s bulletin board system (where Sega\'s
copyrighted video game programs were uploaded and downloaded). In
issuing a preliminary injunction, the court found that each of the four
factors weighed against a finding of fair use, but found that the fourth
factor, in particular, weighed \"heavily\" against such a finding:

Based on Defendants\' own statement that 45,000 bulletin boards like
MAPHIA operate in this country, it is obvious that should the
unauthorized copying of Sega\'s video games by Defendants and others
become widespread, there would be a substantial and immeasurable adverse
effect on the market for Sega\'s copyrighted video game programs.[^260]

Cases already decided in other contexts will give valuable guidance to
courts confronted with NII-related cases. Just as courts have
distinguished between home use of a VCR to make time-shifting tapes of
materials broadcast over the air (fair use) and school systems\'
attempts to use VCRs to download broadcast instructional materials for
the creation of an educational film library (not fair use), courts will
subject users of copyrighted works available via the NII to like
scrutiny. Educational uses that serve the same ends and are constrained
in the same manner as the copying permitted under the Classroom
Guidelines[^261] will likely be fair, while attempts to supplant the
market for books, films, software and other materials by proliferating
them without permission via the NII will likely be infringing.

Finally, it may be that technological means of tracking transactions and
licensing will lead to reduced application and scope of the fair use
doctrine. Thus, one sees in *American Geophysical Union v. Texaco
Inc.*,[^262] a court establishing liability for the unauthorized
photocopying of journal articles based in part on the court\'s
perception that obtaining a license for the right to make photocopies
via the Copyright Clearance Center was not unreasonably burdensome. The
court also speculated that should the proprietors fail to establish a
licensing system for the use in question, then the balance might shift
in favor of a finding of fair use.

**[Fair Use Guidelines for Libraries and Educational
Institutions]{.smallcaps}**

The fair use, library copying and educational use provisions of the
current copyright law have been the subject of four sets of
\"guidelines\" for libraries and educational institutions, to which
contending parties agreed, that are enshrined at various places in the
legislative history.[^263] The result has been, in certain
circumstances, a quantitative gloss on the construction of fair use and
library copying privileges. For instance, the classroom guidelines
generally permit the copying, for educational purposes, of short
extracts of works, provided that the copying is spontaneously done or
requested by the instructor (and the copies are neither used nor re-made
repeatedly over time).[^264]

The Conference on Fair Use

To determine whether educational or library guidelines of a similar
nature might prove attainable in the NII context, the Working Group has
convened a conference of more than 60 interested parties who have met
more or less monthly since September 1994. To date, no formal guidelines
have been the subject of agreement, but it appears reasonable to
anticipate that drafts now in preparation may be formalized as
guidelines before the end of 1995. The participants in the conference
are discussing several areas, including multimedia, library
preservation, \"browsing\" and \"distance learning.\"

In most such instances, current law often provides clear rules while the
\"digital difference\" tests, bends or sometimes breaks those rules. For
example, library preservation is covered in some detail in the analog
context (paper, microfiche, etc.) in Section 108 of the law, but that
section\'s terms do not appear to encompass digital copying in the
quantities to which libraries have become accustomed,[^265] and many
conventional distance learning issues are arguably covered \-- with
respect to the performance but not the reproduction of works \-- in
Section 110.

Some participants have suggested that the United States is being divided
into a nation of information \"haves\" and \"have nots\" and that this
could be ameliorated by ensuring that the fair use defense is broadly
generous in the NII context. The Working Group rejects the notion that
copyright owners should be taxed \-- apart from all others \-- to
facilitate the legitimate goal of \"universal access.\"[^266]

Should the participants in the Conference on Fair Use fail to agree on
appropriate guidelines, the Working Group may conclude that the
importance of such guidelines may necessitate regulatory or legislative
action in that area.

> b\. Library Exemptions

Section 108 of the Copyright Act provides that in certain circumstances
and under certain conditions it is not an infringement of copyright for
a library or archives, or its employees acting within the scope of their
employment,[^267] to reproduce or distribute one copy or phonorecord of
a work[^268] under circumstances that would typically not amount to fair
use. The conditions of the library exemption are that (1) the
reproduction or distribution must be made without any purpose of direct
or indirect commercial advantage; (2) the collections of the library
must be open to the public or available not only to researchers
affiliated with the library, but also to other persons doing research in
a specialized field; (3) the reproduction or distribution of the work
must include a notice of copyright;[^269] and (4) a specific exemption
in subsections (b) through (g) of Section 108 applies.

The exemptions granted under Section 108 extend only to isolated and
unrelated reproduction of a single copy or phonorecord of the same
material on separate occasions,[^270] and do not apply to (1) musical
works; (2) pictorial, graphic, or sculptural works; or (3) motion
pictures or other audiovisual works, except news programs.[^271]

The circumstances under which a library may reproduce or distribute a
copyrighted work without infringement liability include:

Archival Copies

A library may reproduce and distribute a copy or phonorecord of an
unpublished work reproduced in facsimile form if the sole purpose is
preservation and security, and if the copy or phonorecord reproduced is
currently in the collection of the library.[^272] The House Report notes
that this right \"would extend to any type of work, including
photographs, motion pictures and sound recordings.\" However, the copy
or phonorecord made must be in \"facsimile form.\" A library may \"make
photocopies of manuscripts by microfilm or electrostatic process, but
\[may\] not reproduce the work in \'machine-readable\' language for
storage in an information system.\"[^273] Thus, this exemption does not
allow for preservation in electronic or digital form.

Replacement Copies

A library may reproduce a published work duplicated in facsimile form
solely for the purpose of replacing a copy or phonorecord that is
damaged, deteriorated, lost or stolen, if the library has, after
reasonable efforts, determined that an unused replacement cannot be
obtained at a fair price.[^274] Again, the copy or phonorecord made must
be in \"facsimile form.\" The exemption does not allow for replacement
of a published work by reproduction in digital form (at least when the
original copy of the published work was not in digital form).

Articles and Short Excerpts for Users

A library may make and distribute a copy of one article or other
contribution to a copyrighted collection or periodical issue, or a copy
or phonorecord of a small part of any other copyrighted work at the
request of a user, subject to two conditions.[^275] First, the copy or
phonorecord must become the property of the user, and the library or
archives must have no notice that the copy or phonorecord will be used
for any purpose other than private study, scholarship, or research.
Second, the library or archives must prominently display a warning of
copyright at the place where orders are accepted and on its order
form.[^276]

Out-of-Print Works for Scholarly Purposes

A library may make and distribute a copy or phonorecord of an entire
work if it has determined that a copy or phonorecord of the copyrighted
work cannot be obtained at a fair price, subject to two additional
conditions.[^277] First, the copy or phonorecord must become the
property of the user, and the library or archives must have no notice
that the copy or phonorecord will be used for any purpose other than
private study, scholarship, or research. Second, the library or archives
must prominently display a warning of copyright at the place where
orders are accepted and on its order form.[^278]

News Programs

A library may reproduce and distribute by lending a limited number of
copies of an audiovisual news program.[^279]

Interlibrary Loan

The Copyright Act allows a library to make single copies of copyrighted
works and to enter into interlibrary arrangements, but prohibits copying
\"in such aggregate quantities as to substitute for a subscription to or
purchase of \[a copyrighted\] work.\"[^280] CONTU offered its offices to
the interested parties \-- copyright owners, educators and libraries \--
to develop guidelines to interpret the quoted phrase. The parties were
successful in defining when such copying for the purpose of
\"borrowing\" was not done in such aggregate quantities as to substitute
for the subscription to or purchase of a work. These so-called CONTU
Guidelines were later included in the Conference Report on the Copyright
Act of 1976.[^281] The guidelines provide that a library may \"borrow\"
not more than five copies per year of articles from the most recent five
years of any journal title.[^282]

The CONTU Guidelines have been an effective means to protect both the
interests of copyright owners and to provide libraries a clear \"safe\"
guide to follow in \"borrowing\" from other libraries. [^283] In 1976,
there were no readily available systems for the supply of single copies
of, or for the licensing of the reproduction of multiple copies of
copyrighted works. Now, that situation has changed and the continuing
evolution of the NII will permit the establishment of licensing systems
to supply copies or to permit users to make reproductions of works or
portions of works more widely available. Indeed, a publisher's license
to access or download all or a portion of the aggregated copyrighted
works on a server might be viewed as the on-line equivalent of a
subscription. A publisher might allow free access to a table of contents
and then through an appropriate payment mechanism such as electronic
cash or a credit card, license the downloading of a single article. This
\"publication on demand\" might become an effective and economic
substitute for interlibrary loan on the NII. While the precise nature of
all such systems cannot be known at this time, it is clear that the
CONTU Guidelines, while remaining effective for print materials, cannot
readily be generalized to \"borrowing\" electronic publications.

The Working Group emphasizes that the existence of systems for the
supply of licensed copies of works or portions of works by electronic
means does not negate the privileges conferred on libraries in Section
108(g)(2), nor do they limit \"borrowing\" permitted under existing
voluntarily negotiated guidelines or such guidelines to set rules for
interlibrary loan via the NII that may be negotiated in the
future.[^284] While it is clear that Section 108 does not authorize
unlimited reproduction of copies in digital form, it is equally clear
that Section 108(g)(2) permits \"borrowing\" in electronic form for
interlibrary loan in the NII environment, so long as such \"borrowing\"
does not lead to \"systematic\" copying. However, the existence of such
licensing systems in a world of electronic publishing may make it
difficult, if not impossible, to define \"subscription or purchase\" as
intended, and equally impossible to apply the existing guidelines to all
electronic transactions.

Therefore, new scenarios should be considered to avoid ambiguity and to
continue to protect both the interests of copyright owners and to
continue to provide libraries with a safe "borrowing" guide. Such
scenarios are being considered in the on-going Conference on Fair Use.
Should the parties fail to reach agreement in that forum, as noted
earlier, a regulatory or legislative solution may be appropriate.
Appropriate use of such electronic publishing systems by libraries can
provide a ready means for avoiding not only liability for "borrowing"
that exceeds that which is permitted under Section 108(g)(2) or any
voluntarily negotiated guidelines developed by the concerned parties but
also any need to devote resources to consider whether the "nth"
transaction is "safe."

> c\. First Sale Doctrine

A fundamental tenet of copyright law, and another limitation on the
exclusive rights, is the \"first sale doctrine,\" which prevents an
owner of copyright in a work from controlling subsequent transfers of
copies of that work. Once the copyright owner transfers ownership of a
particular copy (a material object) embodying a copyrighted work, the
copyright owner\'s exclusive right to distribute copies of the work is
\"extinguished\" with respect only to that particular copy.[^285]

Section 109(a) of the Copyright Act provides:

Notwithstanding the provisions of section 106(3) \[which grants
copyright owners the exclusive right to distribute copies or
phonorecords of a work\], the owner of a particular copy or phonorecord
lawfully made under this title, or any person authorized by such owner,
is entitled, without the authority of the copyright owner, to sell or
otherwise dispose of the possession of that copy or phonorecord.[^286]

This limitation on the copyright owner\'s distribution right allows
wholesalers who buy books to distribute those copies to retailers and
retailers to sell them to consumers and consumers to give them to
friends and friends to sell them in garage sales and so on \-- all
without the permission of (or payment to) the copyright owner of the
work.

The first sale doctrine allows the owner of a particular copy of a work
to dispose of possession of that copy in any way \-- for example, by
selling it, leasing it, loaning it or giving it away. However, there is
an exception to this exemption with respect to two types of works \--
computer programs and sound recordings. The owner of a particular copy
of a computer program or a particular phonorecord of a sound recording
may not rent, lease or lend that copy or phonorecord for the purpose of
direct or indirect commercial advantage.[^287] These exceptions were
enacted because of the ease with which reproductions of those works can
be made at a lower cost than the original with minimum degradation in
quality.[^288] The rationale for these exceptions may apply to other
types of works as more types of works become available in digital form
and the \"nexus\" of rental and reproduction of those works \"may
directly and adversely affect the ability of copyright holders to
exercise their reproduction and distribution rights under the Copyright
Act.\"[^289]

This provision of the first sale doctrine limits only the copyright
owner's distribution right; it in no way affects the reproduction right.
Thus, the first sale doctrine does not allow the transmission of a copy
of a work (through a computer network, for instance), because, under
current technology the transmitter retains the original copy of the work
while the recipient of the transmission obtains a reproduction of the
original copy (*i.e.*, a *new* copy), rather than the copy owned by the
transmitter. The language of the Copyright Act, the legislative history
and case law make clear that the doctrine is applicable only to those
situations where the owner of a particular copy disposes of physical
possession of that particular copy.[^290]

If the owner of a particular copy transmits a copy to another person
without authorization (either from the copyright owner or the law), such
a transmission would involve an unlawful reproduction of a work, and the
first sale doctrine would not shield the transmitter from liability for
the reproduction nor for the distribution. Under the first sale
doctrine, the owner of a particular copy of a copyrighted work may
distribute it, but may not reproduce it.[^291] Therefore, the
transmission would constitute infringement of the copyright owner\'s
reproduction right.[^292] If the reproduction is unlawful, further
distribution of the unlawful reproduction would not be allowed under the
first sale doctrine because the copy distributed would not be one
\"lawfully made\" under the Copyright Act, as required by the statute.

The requirement that copies distributed under the doctrine be \"lawfully
made\" under the Copyright Act does not limit the doctrine\'s
application to copies made or authorized by the copyright owner.[^293] A
copy could be \"lawfully made,\" for example, if the reproduction is
lawful under the fair use provision; the distribution of such a copy
would be permitted within the limits of the first sale doctrine.

It has also been suggested that the scope of the first sale doctrine be
*narrowed* to exclude copies obtained via transmission. This would mean,
for instance, that if a copy of a literary work is legally purchased
on-line and the copy so purchased is downloaded onto the purchaser\'s
disk, the disk could not be resold. Clearly, the first sale doctrine
should apply if the particular copy involved is in fact the copy that is
further distributed, even if the copy was first obtained by
transmission. Further, if the technology utilized allows the
transmission of a copy without making an unlawful reproduction \--
*i.e.*, no copy remains with the original owner \-- the first sale
doctrine would apply and the transmission would not be an infringement.

Some argue that the first sale doctrine should also apply to
transmissions, as long as the transmitter destroys or deletes from his
or her computer the original copy from which the reproduction in the
receiving computer was made. The proponents of this view argue that at
the completion of the activity, only one copy would exist between the
original owner who transmitted the copy and

the person who received it \-- the same number of copies as at the
beginning. However, this zero sum gaming analysis misses the point. The
question is not whether there exist the same number of copies at the
completion of the transaction or not. The question is whether the
transaction when viewed as a whole violates one or more of the exclusive
rights, and there is no applicable exception from liability. In this
case, without any doubt, a reproduction of the work takes place in the
receiving computer. To apply the first sale doctrine in such a case
would vitiate the reproduction right.

A copyright owner\'s exclusive right to publicly display copies of a
work is also limited by Section 109:

Notwithstanding the provisions of section 106(5) \[which grants
copyright owners the exclusive right to display publicly copies of a
work\], the owner of a particular copy lawfully made under this title,
or any person authorized by such owner, is entitled, without the
authority of the copyright owner, to display that copy publicly, either
directly or by the projection of no more than one image at a time, to
viewers present at the place where the copy is located.[^294]

Thus, an art gallery that purchases a painting may publicly display it
without liability. The owner of a particular copy of an electronic
audiovisual game intended for use in coin-operated equipment may also
publicly perform or display that game in that equipment.[^295]

This exemption from liability would not apply to the public display of a
copy of a work on a bulletin board system or other computer or
communications network, because more than one image would likely be
displayed at a time (to different viewers) and viewers would not be
\"present at the place where the copy is located.\"

The first sale doctrine allows the owner of a particular, lawfully-made
copy of a work to dispose of it in any manner, with certain
exceptions,[^296] without infringing the copyright owner\'s exclusive
right of distribution. It seems clear that the first sale model \-- in
which the copyright owner parts company with a tangible copy \-- should
not apply with respect to distribution by transmission, because
transmission by means of current technology involves both the
reproduction of the work and the distribution of that reproduction. In
the case of transmissions, the owner of a particular copy of a work does
not \"dispose of the possession of *that* copy or phonorecord.\" A copy
of the work remains with the first owner and the recipient of the
transmission receives another copy of the work.

> d\. Educational Use Exemptions

Section 110(1) exempts from infringement liability the performance or
display of a copyrighted work in the course of face-to-face teaching
activities by a non-profit educational institution in a classroom or
similar setting.[^297]

Section 110(2) exempts from liability the transmission of a performance
or display of a copyrighted work if (1) the performance or display is a
regular part of the systematic instructional activities of the
non-profit educational institution; (2) the performance or display is
directly related and of material assistance to the teaching content of
the transmission; and (3) the transmission is made primarily for
reception in classrooms or similar places or by persons to whom the
transmission is directed because of their disabilities.[^298]

Like the library exemptions, the educational use exemptions are provided
in addition to the fair use and other general exemptions, which are also
available to educational institutions.

> e\. Other Limitations

Reproduction of Computer Programs

The rights of an owner of a copyright in a computer program are limited
such that the owner of a particular copy of a computer program may make
a copy or adaptation of the program as an \"essential step\" in using
the computer program in a computer or for archival purposes.[^299] This
limitation applies only with respect to \"owners\" of copies of
programs, not licensees, borrowers or mere possessors.

Certain Performances and Displays

Certain performances and displays are exempt from infringement liability
under Section 110 of the Copyright Act, including:

• the performance or display of certain works in the course of religious
services;[^300]

• the performance of certain works by governmental or non-profit
agricultural or horticultural organizations;[^301]

• the performance of certain musical works in retail outlets for the
sole purpose of promoting retail sales;[^302]

• the transmission of performances of certain works to disabled
persons;[^303] and

• the performance of certain works at non-profit veterans\' or fraternal
organizations for charitable purposes.[^304]

The \"communication of a transmission embodying a performance or display
of a work by the public reception of the transmission on a single
receiving apparatus of a kind commonly used in private homes\" is also
exempted if there is no direct charge to see or hear the transmission
and the transmission is not further transmitted to the public.[^305]
This exemption allows proprietors to play radios or televisions (*i.e.*,
to perform or display copyrighted works in those radio or television
transmissions) in public establishments such as restaurants, beauty
shops and bars.[^306] The applicability of this exemption is extremely
fact-specific and what qualifies as a type of receiving apparatus
\"commonly used in private homes\" will certainly change as home
equipment merges (into, for example, radio/television/computer units)
and becomes more sophisticated.

Ephemeral Recordings

Section 112 provides that it is not an infringement of copyright for a
\"transmitting organization\" that has the right to transmit to the
public a performance or display of a work \"to make no more than one
copy or phonorecord of a particular transmission program embodying the
performance or display\" under certain conditions.[^307]

Compulsory Licenses

Sections 111 and 119 are compulsory licensing provisions that allow
cable systems and satellite operators to retransmit copyrighted
programming without infringement liability if they pay a statutory
licensing fee (which is then distributed among the copyright owners of
the programming retransmitted).[^308] A compulsory license under Section
111 is only available to a \"cable system,\" which is defined as \"a
facility . . . that in whole or in part receives signals transmitted or
programs broadcast by one or more television broadcast
stations . . . .\" A compulsory license under Section 111 generally
would not be available with respect to NII transmissions because case
law and regulations make clear that the term \"cable system\" does not
encompass facilities such as those used for computer network
transmissions.[^309] Similarly, the compulsory license under Section 119
would not be available unless the transmitting entity qualified as a
\"satellite carrier\" and met the other statutory criteria.[^310]

Compulsory licenses are also available for the public performance of
nondramatic musical works by means of jukeboxes,[^311] for the use of
certain works in connection with noncommercial broadcasting,[^312] and
for the reproduction and distribution of nondramatic musical works in
the course of making and distributing phonorecords of such works.[^313]

8\. Copyright Infringement

> a\. General

Anyone who, without the authorization of the copyright owner, exercises
any of the exclusive rights of a copyright owner, as granted and limited
by the Copyright Act, is an infringer of copyright.[^314] Thus, any
activity that falls within the scope of the exclusive rights of the
copyright owner is an infringement and the infringer is liable, unless
it is authorized by the copyright owner or is excused by a defense (such
as fair use) or an exemption.[^315] For purposes of this discussion of
infringement, the lack of such authorization, defense or exemption is
generally presumed.

Copyright infringement is determined without regard to the intent or the
state of mind of the infringer; \"innocent\" infringement is
infringement nonetheless.[^316] Moreover, although the exclusive rights
refer to such rights with respect to \"copies\" (plural) of the
work,[^317] there is no question that under the Act the making of even a
single unauthorized copy may constitute an infringement.[^318]

Courts generally use the term \"copying\" as shorthand for a violation
of any of the exclusive rights of the copyright owner (not just the
reproduction right). Courts usually require a copyright owner to prove
ownership of the copyrighted work and \"copying\" by the defendant to
prevail in an infringement action.

Since there is seldom direct evidence of copying (witnesses who actually
saw the defendant copy the work, for instance), a copyright owner may
prove copying through circumstantial evidence establishing that the
defendant had access to the original work and that the two works are
substantially similar. Other indications of copying, such as the
existence of common errors, have also been accepted as evidence of
infringement.[^319]

The copying of the copyrighted work must be copying of protected
expression and not just ideas;[^320] likewise, the similarity between
the two works must be similarity of protected elements (the expression),
not unprotected elements (the facts, ideas, etc.). The portion taken
must also be more than *de* *minimis*.

The similarity between the two works need not be literal (*i.e.*,
phrases, sentences or paragraphs need not be copied verbatim);
substantial similarity may be found even if none of the words or brush
strokes or musical notes are identical.[^321] Various tests have been
developed to determine whether there has been sufficient non-literal
copying to constitute substantial similarity between a copyrighted work
and an allegedly infringing work.[^322] Judge Learned Hand articulated
the well-known \"abstractions test,\" where the expression and the idea
are, in essence, treated as ends of a continuum, with infringement found
if the allegedly infringing work crosses the line delineating the
two.[^323] Such a line, as Judge Hand recognized, is not fixed in stone;
indeed, as he put it, its location must \"inevitably be *ad*
*hoc* . . . .\"[^324] The \"pattern\" test has also been suggested,
where infringement is found if the \"pattern\" of the work is taken (in
a play, for instance, the \"sequence of events, and the development of
the interplay of characters\").[^325]

The \"subtractive\" test \-- which dissects the copyrighted work,
disregards the noncopyrightable elements, and compares only the
copyrightable elements of the copyrighted work to the allegedly
infringing work \-- has been the traditional method for determining
substantial similarity.[^326] Following the 1970 Ninth Circuit decision
in *Roth Greeting Cards v. United Card Co*.,[^327] the \"totality\" test
became popular for determining substantial similarity. The totality test
compares works using a \"total concept and feel\" standard to determine
whether they are substantially similar. Although chiefly used by the
Ninth Circuit in the 1970s and 1980s,[^328] the test was used by other
circuits as well.[^329]

The Ninth Circuit further defined an \"extrinsic/intrinsic\" test in
proof of substantial similarity in *Sid & Marty Krofft Television
Productions, Inc. v. McDonald\'s Corp*.[^330] The intrinsic portion of
the test measures whether an observer \"would find the total concept and
feel of the works\" to be substantially similar.[^331] The extrinsic
portion of the test, meanwhile, is an objective analysis of similarity
based on \"specific criteria that can be listed and analyzed.\"[^332]
Thus, this test requires substantial similarity \"not only of the
general ideas but of the expressions of those ideas as well.\"[^333]

More recently, however, both the Ninth and Second Circuits have moved
away from the totality test, particularly with respect to computer
applications. In *Data East USA, Inc*. *v. Epyx, Inc*.,[^334] the Ninth
Circuit rediscovered \"analytic dissection of similarities\" in the
substantial similarity determination of video games.[^335] Similarly,
the Second Circuit, in *Computer Associates International, Inc*. *v.
Altai, Inc*.,[^336] fashioned an \"abstraction-filtration-comparison
test\" for a computer program that combined Judge Learned Hand\'s
\"abstraction\" test (to separate ideas from expression) and
\"filtration\" reminiscent of traditional \"subtraction\" analysis in
distinguishing protectible from non-protectible material.[^337]

In addition to the evolution of substantial similarity tests, there is
disagreement as to the appropriate \"audience\" for determining
substantial similarity. The \"ordinary observer test\" \-- alluded to in
*Arnstein v. Porter*[^338] and followed in a number of Second Circuit
decisions[^339] \-- considers the question of substantial similarity
from the viewpoint of the \"average lay observer.\"[^340] The Fourth
Circuit, however, set forth a modified test in *Dawson v. Hinshaw Music
Inc*.,[^341] requiring the ordinary observer to be the \"intended\"
audience for the particular work. Relying on decisions by both the Ninth
and Seventh Circuits,[^342] the court in *Dawson* stated:

\[i\]f the lay public fairly represents the intended audience, the court
should apply the lay observer formulation of the ordinary observer test.
However, if the intended audience is more narrow in that it possesses
specialized expertise, . . . the court\'s inquiry should focus on
whether a member of the intended audience would find the two works to be
substantially similar.[^343]

The challenge of this test, especially in more advanced technologies, is
determining when, if ever, a work is not directed to an audience
possessing specialized expertise, and at what point a work once intended
for a specialized audience becomes accepted by the general public.

The ability to manipulate works in digital form raises an issue with
respect to infringement of the reproduction and derivative works rights.
A copyrighted photograph, for instance, can be manipulated in the
user\'s computer in such a way that the resulting work is not
substantially similar to the copyrighted work (in fact, it may bear
little or no resemblance to the copyrighted work upon which it was
based). The initial input of the copyrighted work into the user\'s
computer may be an infringement of the copyright owner\'s reproduction
right, but the infringing (or noninfringing) nature of the resulting
work is less clear. Although courts traditionally rely on a
\"substantial similarity\" test to determine infringement liability \--
including with regard to the derivative works right \-- neither the
meaning of \"derivative work\" nor the statutory standard for
infringement appears to require an infringing derivative work to be
substantially similar.[^344]

> b\. Infringing Importation

The exclusive right to distribute copies or phonorecords includes the
right to limit the importation of copies or phonorecords of a work
acquired outside the United States into the U.S. without the authority
of the copyright owner.[^345] Such unauthorized importation, whether it
be of pirated items (*i.e.*, \"copies or phonorecords made without any
authorization of the copyright owner\")[^346] or \"gray market\"
products (*i.e.*, those copies or phonorecords legally produced overseas
for foreign distribution, but not authorized for the U.S. market),[^347]
is an infringement of the distribution right.[^348]

There are three exceptions to the importation right, which include a
\"suitcase\" exception that exempts importation for the private use of
the importer of one copy of a work at a time or of articles in the
personal baggage of travelers entering the United States.[^349]

The applicability of the importation provisions to the transmission of
works into the United States via the NII (or GII) may be debated.
Nevertheless, the importation right is an outgrowth of the distribution
right, both of which refer to \"copies or phonorecords.\"[^350] A data
stream can contain a copyrighted work in the form of electronic
impulses, but those impulses do not fall within the definition of
\"copies\" or \"phonorecords.\" Therefore, it may be argued that the
transmission of a reproduction of a copyrighted work via international
communication links fails to constitute an \"importation\" under the
current law, just as it is less than clear that a domestic transmission
of a reproduction of a work constitutes a distribution of a copy under a
literal reading of the Copyright Act.[^351]

> c\. Contributory and Vicarious Liability

Direct participation in infringing activity is not a prerequisite for
infringement liability, as the Copyright Act grants to copyright owners
not only the right to exercise the exclusive rights, but also the right
\"to authorize\" the exercise of those rights. The inclusion of the
right \"to authorize\" was \"intended to avoid any questions as to the
liability of contributory infringers\" \-- those who do not directly
exercise the copyright owner\'s rights, but \"authorize\" others to do
so.[^352] Other than the reference to a copyright owner\'s right \"to
authorize\" exercise of the exclusive rights, however, the Copyright Act
does not mention or define \"contributory infringement\" or \"vicarious
liability,\" the standards for which have developed through case
law.[^353]

If someone has the \"right and ability\" to supervise the infringing
action of another, and that right and ability \"coalesce with an obvious
and direct financial interest in the exploitation of copyrighted
materials \-- even in the absence of actual knowledge\" that the
infringement is taking place \-- the \"supervisor\" may be held
vicariously liable for the infringement.[^354] Vicarious liability is
based on a connection to the direct infringer (not necessarily to the
infringing activity).

The best known copyright cases involving vicarious liability are the
\"dance hall\" cases, where vicarious liability was found when dance
hall owners allowed the unauthorized public performance of musical works
by the bands they hired, even when the owners had no knowledge of the
infringements and had even expressly warned the bands not to perform
copyrighted works without a license from the copyright owners.[^355]

\"Contributory infringement\" may be found when \"one who, with
knowledge of the infringing activity, induces, causes or materially
contributes to the infringing conduct of another.\"[^356] Contributory
infringement is based on a connection to the infringing activity (not
necessarily to the direct infringer). A contributory infringer may be
liable based on the provision of services or equipment related to the
direct infringement.[^357]

Services

Liability may be based on the provision of services related to the
infringement. Courts have found contributory infringement liability, for
instance, when a defendant chose the infringing material to be used in
the direct infringer\'s work,[^358] and vicarious liability when a
defendant was responsible for the day-to-day activities where the
infringement took place.[^359]

Equipment

Infringement liability may also be based on the provision of equipment
or other instrumentalities or goods used in or related to the
infringement.[^360] However, the Supreme Court in *Sony Corp*. *v.
Universal City Studios, Inc*.,[^361] a 5 to 4 decision, held that the
manufacturer of videocassette recorders was not a contributory infringer
for providing the equipment used in the unauthorized reproduction of
copyrighted works. Borrowing a patent law principle, the Court reasoned
that manufacturers of staple articles of commerce that are capable of
substantial noninfringing uses should not be held liable as contributory
infringers.[^362] The Court held:

\[T\]he sale of copying equipment, like the sale of other articles of
commerce, does not constitute contributory infringement if the product
is widely used for legitimate, unobjectionable purposes. Indeed, it need
merely be capable of substantial noninfringing uses.[^363]

The Court determined that the key question was whether the videocassette
recorder was \"capable of commercially significant noninfringing
uses.\"[^364] The Court also held that in an action for contributory
infringement against a manufacturer of copying devices, \"the copyright
holder may not prevail unless the relief that he seeks affects only his
programs, or unless he speaks for virtually all copyright holders with
an interest in the outcome.\"[^365]

Other cases against producers or providers of the instrumentalities of
infringement since *Sony* generally have not been successful.[^366]
However, the court in the recent *Sega* case[^367] issued a preliminary
injunction against a bbs operator who sold special copiers, the \"only
substantial use\" of which was to copy Sega\'s copyrighted video
games.[^368] The court found that Sega established a *prima* *facie*
case of contributory infringement by the bbs operator based on the
operator\'s \"advertising, sale and distribution\" of the video game
copiers.[^369]

> d\. On-Line Service Provider Liability

There is a view that on-line service providers, such as bulletin board
operators, should be exempt from liability or given a higher standard
for liability, such as imposing liability only in those cases where
infringement was willful and repeated or where it was proven that the
service provider had both \"actual knowledge\" of the infringing
activity and the \"ability and authority\" to terminate such activity.
The latter proposed standard would combine the contributory infringement
standard with the requirements for vicarious liability and apply it to
all infringements (including direct infringements) of the service
provider. Altering the standards of liability for infringement would be
a significant departure from current copyright principles and law and
would result in a substantial derogation of the rights of copyright
owners. It is a difficult issue, with colorable arguments on each
side.[^370]

Copyright law imposes different standards of liability for direct,
contributory and vicarious liability. Direct infringers are held to a
standard of strict liability. Liability for direct infringement is,
therefore, generally determined without regard to the intent of the
infringer.[^371] However, the Copyright Act gives courts the discretion
to consider the innocent intent of the infringer in determining the
amount of damages to be awarded.[^372] Related infringers \-- those
found to be contributory infringers or vicariously liable \-- are not
held to strict liability, but rather to a higher threshold for
liability.[^373]

Arguments made by service providers wishing exemption or a higher
standard for liability include: that the volume of material on a service
provider\'s system is too large to monitor or screen; that even if a
service provider is willing and able to monitor the material on its
system, it cannot always identify infringing material; that failure to
shield on-line service providers will impair communication and
availability of information; that exposure to liability for infringement
will drive service providers out of business, causing the NII to fail;
and that the law should impose liability only on those who assume
responsibility for the activities their subscribers (and, presumably,
they) engage in on their system.

It is estimated by some that trillions of bits representing millions of
messages and files travel through networks each day. Of course, only a
percentage of those appear on any given service provider\'s system.
Nevertheless, it is still virtually impossible for operators of large
systems to contemporaneously review every message transmitted or file
uploaded. On-line service providers are not alone in this position.
Millions of photographs are taken to photo finishers each day by
individual consumers. It is virtually impossible for these service
providers to view any of those works before they are reproduced from the
undeveloped film. Yet, they operate under strict liability
standards.[^374] Likewise, book sellers, record stores, newsstands and
computer software retailers cannot possibly read all the books, listen
to all the records, review all the newspapers and magazines or analyze
all the computer programs that pass through their establishments for
possible infringements. Yet, they may be held strictly liable as
distributors if the works or copies they deal in are infringing.

Further, while it may be argued that a bit is a bit and infringing bits
are indistinguishable from authorized ones, and that discovery of
infringing material may be made more difficult if the title or other
identifying information is removed or altered, on-line service providers
can certainly investigate and take appropriate action when notified of
the existence of infringing material on their systems and thus limit
their liability for damages to those for innocent infringement. Again,
this problem has been a part of the cost of doing business for many
other distributors of material that is provided to them by others.[^375]

Clearly, on-line service providers play an integral role in the
development of the NII and facilitate and promote the free exchange of
ideas.[^376] But that has not been grounds for removing or reducing
liability for copyright infringement. One can perform these functions
without infringing or facilitating the infringement of the copyrighted
expression of others.

On-line service providers have a business relationship with their
subscribers. They \-- and, perhaps, only they \-- are in the position to
know the identity and activities of their subscribers and to stop
unlawful activities.[^377] And, although indemnification from their
subscribers may not reimburse them to the full extent of their liability
and other measures may add to their cost of doing business, they are
still in a better position to prevent or stop infringement than the
copyright owner. Between these two relatively innocent parties, the best
policy is to hold the service provider liable.

The on-line services provide subscribers with the capability of
uploading works because it attracts subscribers and increases usage \--
for which they are paid. Service providers reap rewards for infringing
activity. It is difficult to argue that they should not bear the
responsibilities. We are not aware that cost/benefit analyses have
prompted service providers to discontinue such services. The risk of
infringement liability is a legitimate cost of engaging in a business
that causes harm to others, and that risk apparently has not outweighed
the benefits for the more than 60,000 bulletin board operators currently
in business.[^378]

There has been tremendous growth in the on-line service industry over
the past several years, and it shows no signs of reversing the trend
under current standards of liability. Other entities have some of the
same costs of doing business, have instituted practices and taken
appropriate precautions to minimize their risk of liability, such as
indemnification agreements and insurance.

The Supreme Court has stated:

Intention to infringe is not essential under the Act. And knowledge of
the particular selection to be played or received is immaterial. One who
hires an orchestra for a public performance for profit is not relieved
from a charge of infringement merely because he does not select the
particular program to be played. Similarly, when he tunes in on a
broadcasting station, for his own commercial purposes, he necessarily
assumes the risk that in doing so he may infringe the performing rights
of another.[^379]

During the deliberations preceding enactment of the 1976 general
revision of the Copyright Act, changes to the standards of liability
were \"considered and rejected.\"[^380] For instance, Congress was asked
to alter the standard for vicarious liability for business owners whose
independent contractors directly infringed the public performance right
in copyrighted works (such as owners of dance halls).[^381]

A well-established principle of copyright law is that a person who
violates any of the exclusive rights of the copyright owner is an
infringer, including persons who can be considered related or vicarious
infringers . . . . The committee has decided that no justification
exists for changing existing law, and causing a significant erosion of
the public performance right.[^382]

Congress also determined that the innocent infringer provision, which
allows reduction of damages for innocent infringers \"is sufficient to
protect against unwarranted liability in cases of occasional or isolated
innocent infringement, and it offers adequate insulation to users, such
as broadcasters and newspaper publishers, who are particularly
vulnerable to this type of infringement suit.\"[^383] Congress believed
that \"by establishing a realistic floor for liability, the provision
preserves its intended deterrent effect; and it would not allow an
infringer to escape simply because the plaintiff failed to disprove the
defendant\'s claim of innocence.\"[^384]

Commentators have supported Congress\' decision:

Innocent intent should no more constitute a defense in an infringement
action than in the case of conversion of tangible personalty. In each
case the injury to a property interest is worthy of redress regardless
of the innocence of the defendant. Moreover, a plea of innocence in a
copyright action may often be easy to claim and difficult to disprove.
Copyright would lose much of its value if third parties such as
publishers and producers were insulated from liability because of their
innocence as to the culpability of the persons who supplied them with
the infringing material.[^385]

Infringement may be alleged against service providers, such as bbs
operators, in NII-related cases. As noted earlier, the court in
*Playboy*[^386] found the bbs operator *directly* liable for the display
of the unauthorized copies on the service, as well as the distribution
of unauthorized copies to subscribers. The court held:

There is irrefutable evidence of direct copyright infringement in this
case. It does not matter that \[the operator\] may have been unaware of
the copyright infringement. Intent to infringe is not needed to find
copyright infringement. Intent or knowledge is not an element of
infringement . . . .[^387]

In *Sega Enterprises Ltd*. *v. MAPHIA*,[^388] the court issued a
preliminary injunction against the bbs operator, finding a *prima*
*facie* case was established for both *direct* infringement, based on
the bbs operator\'s permitting the uploading of the copyrighted games
onto the bbs, and *contributory* infringement, based on the operator\'s
\"role in copying \[Sega\'s copyrighted video games\], including
provision of facilities, direction, knowledge and encouragement.\"[^389]
At least two other relevant cases are pending \-- one against a
commercial on-line service provider[^390] and another against an
uploading subscriber, a bbs operator and an Internet access
provider.[^391]

The Working Group believes it is \-- at best \-- premature to reduce the
liability of any type of service provider in the NII environment.
On-line service providers currently provide a number of services. With
respect to the allowance of uploading of material by their subscribers,
they are, in essence, acting as an electronic publisher. In other
instances, they perform other functions. No one rule may be appropriate.
If an entity provided only the wires and conduits \-- such as the
telephone company, it would have a good argument for an exemption if it
was truly in the same position as a common carrier and could not control
who or what was on its system.[^392] The same could be true for an
on-line service provider who unknowingly transmitted encrypted
infringing material.

It would be unfair \-- and set a dangerous precedent \-- to allow one
class of distributors to self-determine their liability by refusing to
take responsibility. This would encourage intentional and willful
ignorance. Whether or not they choose to reserve the right to control
activities on their systems, they have that right. Service providers
expect compensation for the use of their facilities \-- and the works
thereon \-- and have the ability to disconnect subscribers who take
their services without payment. They have the same ability with respect
to subscribers who break the law.

Exempting or reducing the liability of service providers prematurely
would choke development of marketplace tools that could be used to
lessen their risk of liability and the risk to copyright owners,
including insuring against harm caused by their customers,[^393]
shifting responsibility for infringement to the infringing subscriber
through indemnification and warranty agreements, licensing (including
collective license agreements), educating their subscribers about
infringement and using technological protections, such as tracking
mechanisms.

Circumstances also vary greatly among service providers. A bulletin
board is simply a computer that the owner allows to be accessed by
others using their computers and modems. One needs only a personal
computer, a modem, a phone line, and some software to go into business
\-- at a cost of less than \$2,000. There are small, non-profit and
large, commercial operators. There are those that try to prevent and
react when notified and those that encourage infringing activity.
Different service providers play different roles \-- and those roles are
changing and being created virtually every day. At this time in the
development and change in the players and roles, it is not feasible to
identify *a* *priori* those circumstances or situations under which
service providers should have reduced liability. However, it is
reasonable to assume that such situations could and should be identified
through discussion and negotiation among the service providers, the
content owners and the government. We strongly encourage such actions in
the interest of providing certainty and clarity in this emerging area of
commerce.

Implementation of preventative measures, compliance with the law, and
development of technological mechanisms to guard against infringement
must be encouraged. Service providers should have incentive to make
their subscribers more aware of copyright law and to react promptly and
appropriately to notice by copyright owner that infringing material is
available on their systems. Service providers should make clear that
infringing activity is not tolerated on the system and reserve the right
to remove infringing material or disconnect the subscriber who
participated in the placement of it on the system.

> e\. Civil Remedies

Various remedies are available to copyright owners in infringement
actions. A copyright owner may seek a preliminary or permanent
injunction to prevent or restrain infringement.[^394] Courts generally
grant permanent injunctions where liability is established and there is
a threat of continuing infringement.[^395] Courts may also order the
impounding of all copies or phonorecords at any time an action is
pending.[^396] As part of a final judgment, the court may order the
destruction (or any other \"reasonable disposition\") of the infringing
copies or phonorecords.[^397]

At any time before final judgment is rendered, a copyright owner may
elect to recover actual damages and profits of the infringer or be
awarded statutory damages.[^398] Actual damages may be awarded in the
amount of the copyright owner\'s losses plus any profits of the
infringer attributable to the infringement (that are not taken into
account in the calculation of the losses).[^399] Statutory damages may
be awarded in an amount between \$500 to \$20,000 per work
infringed.[^400]

If an infringer can show that he or she was not aware and had no reason
to believe that the activity constituted an infringement, the court may
find there was an innocent infringement.[^401] Such a finding is a
factual determination, and does not absolve the defendant of liability
for the infringement.[^402] It does, however, give the court discretion
to reduce the amount of damages awarded to the copyright owner.[^403]

If a copyright owner can show that the infringement was willful, the
court may increase statutory damages up to a maximum of \$100,000.[^404]
An infringement may be found to be willful if the infringer had
knowledge that the activity constituted infringement or recklessly
disregarded the possibility of infringement.[^405]

Courts have discretion to allow the recovery of full costs by or against
any party other than the United States or its officer.[^406] Courts may
also award reasonable attorney\'s fees to the prevailing party under
certain circumstances.[^407]

> f\. Criminal Offenses

Criminal sanctions are levied against infringers if the infringement was
willful and for purposes of commercial advantage or private financial
gain.[^408] Criminal proceedings must begin within three years after the
criminal action arose. Where there is a conviction, the court must order
the forfeiture and destruction or other disposition of all infringing
copies and \"all implements, devices, or equipment\" used in the
manufacture of the infringing copies.[^409]

A recent court decision demonstrates that the current law is
insufficient to prevent flagrant copyright violations in the NII
context. In *United States v. LaMacchia*,[^410] a university student
provided clandestine bbs locations on the Internet for the receipt and
distribution of unauthorized copies of commercially published,
copyrighted software. Because he sought no profit from his actions \--
actions that caused substantial economic harm to copyright owners \-- he
could not be charged under the current criminal provisions of the
copyright law, and the court dismissed an indictment charging him with
wire fraud, on the ground that his acts did not violate the wire fraud
statute.[^411] (There would appear, nevertheless, to be every reason to
believe that he had committed many civil infringements.)

The Copyright Act also makes certain non-infringements criminal acts,
including:

• the placement, with fraudulent intent, of a copyright notice that a
person knows to be false on any article;[^412]

• the public distribution or importation for public distribution, with
fraudulent intent, of any article containing a copyright notice the
distributor or importer knows to be false;[^413]

• the removal or alteration, with fraudulent intent, of any notice of
copyright on a copy of a copyrighted work;[^414] and

• false representation, with knowledge, of a material fact in an
application for copyright registration or in any written statement filed
in connection with an application.[^415]

> g\. Defenses

The Supreme Court has stated that \"\[a\] successful defense of a
copyright infringement action may further the policies of the Copyright
Act every bit as much as a successful prosecution of an infringement
claim by the holder of the copyright.\"[^416] There are a number of
legal and equitable defenses available to defendants in copyright
infringement actions. Fair use is the most common of the defenses.[^417]
Others include misuse of copyright by the copyright owner,[^418]
abandonment of copyright,[^419] estoppel, collateral estoppel, laches,
*res judicata*, acquiescence, and unclean hands.

Generally, a claim of innocent infringement is not a defense against a
finding of infringement. An innocent infringer is liable for the
infringement, but a court may reduce \-- or, in some instances, remit
altogether \-- the amount of damages.[^420] However, under certain,
specified circumstances, a good faith reliance on a presumption that the
term of protection had expired is a complete defense to an infringement
action.[^421]

As noted earlier, certain uses do not rise to the level of infringement,
such as reproduction of a *de* *minimis* portion of a work.[^422] In
those cases, the plaintiff will not be able to sustain its burden of
proof and no defense will be necessary.[^423] In other cases, a
defendant may successfully assert that the activity is noninfringing due
to the existence of a license \-- statutory, negotiated or
implied.[^424]

All of these defenses are available in the NII environment. For
instance, one or more of these defenses, such as fair use or the
existence of an implied license, may be successful where a copyright
owner\'s posting to an automatic electronic mail distribution list
(\"listserv\") is reproduced and distributed to the subscribers of that
same listserv in connection with a response to or comment on the
posting.

9\. International Implications

> a\. Background

Other countries \-- including Australia, Canada, Finland, France,
Germany, Japan, Singapore, Sweden, the United Kingdom \-- and the
European Union are conducting their own studies on their planning for
implementation of their national information infrastructures. At the
February 1995 G-7 Ministerial Meeting on the Global Information
Infrastructure (GII), the Ministers noted that unless rules for the
effective protection of intellectual property are taken into account
from the outset, the development of the international information
superhighway will be severely hindered. How disparate domestic
information infrastructures will evolve into a GII will depend on the
rules of the road, and one of the most important sets of rules will be
those ensuring protection for the works of intellectual property that
move through international channels and into the emerging national
information infrastructures. As a result, Ministers endorsed the need to
work in international fora, including the World Intellectual Property
Organization (WIPO), to achieve standards for the adequate and effective
protection of intellectual property in international electronic
commerce.

Development of the GII will make copyright laws and international
copyright rules a concern for every user. When the globe is blanketed
with digital information dissemination systems, a user in one country
will be able to manipulate information resources in another country in
ways that may violate that country's copyright laws. Indeed, it may be
difficult to determine where and when possible infringements may take
place because, under the present level of development, a user in France
can access a database in the United States and have a copy downloaded to
a computer in Sweden. Whose copyright law would apply to such a
transaction? Because copyright laws are territorial, and the standards
of protection embodied in the international conventions leave room for
national legislative determinations, acts that may constitute
infringement in one country may not be an infringement in another
country. The complexity that such a system creates will make
\"electronic commerce\" over the information superhighways difficult
unless the United States moves promptly to identify needs for protection
and initiates efforts to work toward a new level of international
copyright harmonization.

U.S. copyright industries are significant contributors to the United
States\' current trade accounts, reducing our balance of payments
deficit by some \$45.8 billion in 1993. Inadequacies in the present
system of intellectual property protection for copyrights and
neighboring[^425] or related rights, and the consequent losses to these
industries from piracy and from trade barriers arising from differences
in forms of protection, have been estimated by industry to cost them
\$15 to 17 billion annually. Improved protection for copyrights and
neighboring rights would contribute to reducing these losses and
improving the balance of payments.[^426]

An important aspect of the participation of foreign entities through a
GII in the U.S. domestic information infrastructure is the provision of
adequate and effective intellectual property protection in the country
wishing to participate. To the extent that participation in the NII can
be linked to the provision of intellectual property protection, it will
promote the ability of U.S. businesses to use the NII and the GII to
disseminate works to foreign consumers via other countries\' information
infrastructures. If commercial enterprises are to make full use of the
capabilities of the NII to communicate and deliver information and
entertainment products, there must be assurances that their intellectual
property rights will be protected effectively under strong copyright
laws in all countries participating in a GII.

In considering linkages, careful consideration will have to be given to
obligations under international intellectual property treaties and other
international agreements, such as the North American Free Trade
Agreement (NAFTA) and the World Trade Organization (WTO) Agreement on
the Trade-Related Aspects of Intellectual Property (TRIPs Agreement),
especially in view of the various intellectual property and market
access provisions in those agreements.

> b\. International Framework

In the 1970's, then-U.S. Register of Copyrights Barbara Ringer observed
that if Justice Story considered copyright to be the metaphysics of the
law, then international copyright is its cosmology. That message is
brought home to us in 1995 by the need to evaluate the applicability of
copyright in the context of the complexities of international commerce
in information and entertainment products via advanced information
infrastructures.

First, one must understand that there is no such thing as an
international copyright, but rather, there is an international system
that sets norms for protection to be implemented in national laws.
Several international treaties link together the major trading nations
and establish both minimum standards for protecting, under their own
laws, each others' copyrighted works and the basis upon which protection
is to be extended (*e.g.*, national treatment).

The situation is further complicated because there are two major legal
traditions applicable to the protection of what the United States
regards as copyrighted works. To understand the complexities of the
international copyright law system and the international treaties, it is
necessary to have a basic appreciation of these two major legal
regimes.[^427]

The United States and other countries that follow the Anglo-American or
common law legal tradition have \"copyright\" systems in which the
principal focus is on promoting the creation of new works for the public
benefit by protecting the author's economic rights. This is seen as part
of the basic \"social contract\" between the State and its citizens.
This theory is reflected in the patent and copyright clause in Article
1, Section 8, clause 8 of the U.S. Constitution. The thesis is that
providing such protection will induce the creation of more works which
will \"promote the progress of science\" and redound to the public
benefit. History has validated this principle which benefits the public
as well as creators of copyrighted works.

Countries that follow the civil law tradition, however, regard authors'
rights as natural human rights, or part of one's right of personality.
As a part of this tradition, in addition to the protection of the
author's economic rights, the protection of the author's \"moral
rights\" is an essential part of the system.[^428] Moral rights, as
reflected in Article 6*bis* of the Berne Convention, include the right
of an author to be named as the author of a work and the right to object
to uses of the work which could bring dishonor or discredit on the
author's reputation. Often, in civil law systems, moral rights reflect a
part of the author's personality and are non-transferable, and may be
not waivable. Economic rights, in some instances, may be subordinated to
moral rights. Under these systems, only works which are original, in
that they reflect the personality of the author, are entitled to
authors' rights protection. Productions that do not meet this
originality requirement, but still merit some protection, are protected
under a system of \"neighboring rights.\"

Needless to say, with such divergent theoretical bases, the copyright
and the authors' rights systems are sometimes in conflict. One of these
areas of conflict is in the nature and level of rights for owners of
neighboring rights.

Neighboring rights are similar to the rights protected by copyright or
authors' rights and are applied to protect the rights of producers of
phonograms, performers and broadcasters. Under the copyright system,
many of the rights covered under neighboring rights are protected as
copyright rights. For example, under the U.S. copyright law, sound
recording producers and performers are regarded as joint authors of
sound recordings. Under *droit* *d'auteur* (or authors' rights) systems,
such producers' and performers' rights would be protected as neighboring
rights. Neighboring rights, while similar in economic character to
authors' rights, may be protected at a lower level than authors' rights
and are entirely separate and distinct from the higher-level rights
granted to authors.

> c\. International Treaties and Agreements

The World Intellectual Property Organization (WIPO)

WIPO is responsible for the administration of, and activities concerning
revisions to, the international intellectual property treaties.[^429]
The principal WIPO copyright and neighboring rights conventions include
the Berne Convention for the Protection of Literary and Artistic Works
(Paris 1971) (Berne Convention),[^430] the International Convention for
the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations (Rome Convention),[^431] and the Geneva Convention for the
Protection of Producers of Phonograms Against the Unauthorized
Reproduction of their Phonograms (Geneva Phonograms Convention).[^432]
UNESCO[^433] and WIPO jointly administer the Universal Copyright
Convention (Paris 1971),[^434] which is a lower-level copyright
convention that was negotiated in the years following World War II
largely to bring the United States into the world of international
copyright. Virtually all of the members of the Universal Copyright
Convention are also members of the Berne Convention, and by the terms of
the conventions the Berne Convention governs relations between members
of both.

The Berne Convention is the principal international copyright convention
and includes the most detailed provisions. In 1989, the United States
joined the Berne Convention, which is the largest copyright
convention.[^435] While it is generally regarded as providing adequate
international standards of protection, some believe that it should be
updated to account for advances in electronic communications and
information processing technology. Its members come from the world's
major legal traditions \-- the Anglo-American common law copyright
system and the European civil law *droit d'auteur* system. However,
despite its level of detail, as previously noted, and in part because it
must accommodate differing legal traditions, in some areas its standards
may be insufficient to deal with the world of digital dissemination of
copyrighted works.

The principal treaty for the protection of neighboring rights, the Rome
Convention, was adopted in 1961, and is considered by many to include
standards that are inadequate for dealing with the problems raised by
current technological advances and the level of trade in the products
and subject matter affected by its operation. It provides for the
protection of producers of phonograms against unauthorized reproduction
of their phonograms, for performers to prevent certain reproductions and
fixations of their performances and it provides limited rights for
broadcasting organizations. The Rome Convention requires that these
rights endure for a period of 20 years. It also provides for protection
against certain \"secondary uses\" of phonograms, such as broadcasting,
but it contains the ability for members to reserve, or decline to
implement, this right. The United States is not a signatory to the Rome
Convention.

The Geneva Phonograms Convention provides for the protection of
phonograms against unauthorized reproduction and distribution for a
minimum term of 20 years. It does not require signatories to provide a
performance right in sound recordings. The United States belongs to the
Geneva Phonograms Convention.

WIPO has convened a Committee of Experts on a Possible Protocol to the
Berne Convention to account for developments since the 1971 revision of
the Convention, and a Committee of Experts on a Possible New Instrument
for the Protection of Performers and Producers of Phonograms to consider
how to provide improved rights for performers and producers of
phonograms.

The World Trade Organization (WTO)

In addition to the traditional WIPO forum, other international fora now
have a significant role in intellectual property policy formulation. The
TRIPs Agreement, concluded during the recent Uruguay Round Negotiations,
is administered by the World Trade Organization (WTO). The TRIPs
Agreement sets significant standards for the protection of copyright and
related rights. Perhaps most importantly, it contains provisions to
ensure that parties to the TRIPs Agreement fully implement obligations
under it.

After defining the relationship between the TRIPs Agreement and the
Berne Convention, the TRIPs Agreement reiterates the basic principle of
copyright protection \-- that protection extends only to expression and
not to ideas, methods of operation, or mathematical concepts.[^436]

Article 10 of the TRIPs Agreement confirms that all types of computer
programs are \"literary works\" under the Berne Convention, and requires
each WTO country to protect them as such. It also requires copyright
protection for compilations of data or other material that are original
by reason of their selection or arrangement.

Article 11 of the TRIPs Agreement requires member countries to provide
exclusive rights for authors or their successors in title to authorize
or to prohibit commercial rental to the public of originals or copies of
their copyrighted works for at least computer programs and
cinematographic works. The obligation as to rental rights for
cinematographic works need not be implemented unless rental has led to
widespread copying that is having a material effect on the author\'s
exclusive right of reproduction.

Article 12 of the TRIPs Agreement provides minimum standards for the
term of protection for copyrighted works. The term of protection for
most works is the life of the author plus 50 years, but whenever the
term of protection is not linked to the life of a person, it must be a
minimum of fifty years, except for works of applied art or photographs.

Article 9(2) of the Berne Convention bars imposition of limitations on,
or exceptions to, the reproduction right except when such limits or
exceptions do not conflict with a normal exploitation of the work and do
not unreasonably prejudice the legitimate interests of the right holder.
Article 13 of the TRIPs Agreement widens the scope of this provision to
all exclusive rights in copyright and related rights, thus narrowly
circumscribing the limitations and exceptions that WTO member countries
may impose.[^437]

Article 14 of the TRIPs Agreement goes beyond the obligations of the
Rome Convention and the Geneva Phonograms Convention and requires member
countries to provide sound recording producers a 50--year term of
protection and the rights to authorize or prohibit the direct or
indirect reproduction and commercial rental of their sound recordings.
However, a WTO member country that on April 15, 1994, had a system of
payment of equitable remuneration to compensate for rental of recordings
is permitted to keep that system.[^438]

The Agreement requires WTO countries to make it possible for performers
to prevent unauthorized sound recording or reproduction of their live
performances. Broadcasting organizations are to be accorded similar
rights, although member countries have the option of providing
protection consistent with the Rome Convention or providing owners of
copyright in works broadcast the right to prevent the same acts. The
Agreement also makes Article 18 of the Berne Convention regarding
copyright protection of existing works applicable to sound recordings.

> d\. Copyright Compared to Authors\' Rights

Countries with common-law copyright systems such as the United States,
and countries with authors' rights systems such as those in Europe, have
in some cases defined the rights of certain categories of right holders
differently. For instance, European performers, both in audiovisual
works and in sound recordings, enjoy certain statutory rights that U.S.
performers do not. In the United States, these performers rights are
guaranteed under contractual or collective bargaining agreements between
the audiovisual producers and the performers' unions. Broadcasters have
been concerned that harmonization of protection along European lines
might have implications for the establishment of performance rights in
sound recordings. A consequence of this divergence is that U.S.
performers and producers have been denied the ability to share in
remuneration for the use of their products and performances in some
countries.

> e\. National Treatment

The principle of national treatment is the cornerstone of the great
international intellectual property treaties \-- Berne and Paris. It
also has been the keystone of international trade treaties, such as the
General Agreement on Tariffs and Trade and the recently established WTO.
It is of enormous significance to our copyright industries. As a general
matter, the principle of national treatment means that under a nation's
laws, a foreigner enjoys no lesser rights and benefits than a citizen of
that nation receives, subject to the specific terms of the relevant
international conventions. In copyright terms, it means, for example,
that a German work for which copyright enforcement is sought in the
United States would be treated under U.S. law exactly as if it were a
U.S. work.

Some argue, however, that intellectual property rights should be granted
only on the basis of reciprocity. The concept of \"material
reciprocity\" means that the United States should grant a right to a
foreigner only if his or her country grants U.S. citizens the same
right. Under this scenario, the work of a German citizen would only be
able to obtain protection under the U.S. law to the extent that German
law provided the same, or at least equivalent, protection to works of a
U.S. citizen.

The Berne Convention

Article 5(1) and 5(2) of the Berne Convention establish the principle of
national treatment for works protected by copyright.[^439] Under Article
5(1), there is an obligation to grant to nationals of countries of the
Berne Union national treatment in respect of the rights specifically
covered by the Convention. This point is not disputed.[^440] However,
with respect to any new rights which may be hereafter granted, some have
taken the position that the national treatment obligation applies only
to the minimum rights in the Convention.[^441]

The Rome Convention

The fundamental problem with the Rome Convention is that, while it
generally imposes a national treatment obligation, it permits a number
of reservations and exceptions that allow a Member to avoid that
obligation for important rights otherwise provided for in the
Convention. Article 3.1 of the TRIPs Agreement provides that \"\[i\]n
respect of performers, producers of phonograms and broadcasting
organizations, this obligation \[national treatment\] only applies in
respect of the rights provided under this Agreement.\"[^442] It also
provides that a Member may avail itself of the \"possibilities provided
in . . . paragraph 1(b) of Article 16 of the Rome Convention . . .\"
relating to reciprocity for the broadcasting right in respect of
phonograms.[^443]

The TRIPs Agreement

Additionally, the TRIPs Agreement includes a national treatment
obligation.[^444] In respect of copyright the TRIPs national treatment
provision incorporates the standards of the Berne Convention, but in
respect of neighboring rights, it allows members to impose the
exceptions to national treatment permitted by the Rome Convention.[^445]
Permitting such exceptions can lead to problems in the implementation of
a GII.

The NAFTA

The NAFTA includes a very broad national treatment provision that does
not include the possibility of making the broad exceptions provided for
under the TRIPs agreement.[^446]

> f\. Private Copying Royalty Systems

The manner in which portions of the audio and video private copying
royalties collected in some European countries are distributed to
claimants may prove to be an impediment to future development of the GII
if a similar approach is adopted in respect of digital information
dissemination systems. To illustrate, France\'s Law of July 3, 1985
(1985 Law) establishes a system of neighboring rights protection for
performers, audiovisual communication enterprises, producers of
phonograms and producers of videograms. The 1985 Law, *inter alia*,
grants specified categories of right holders an entitlement to equitable
remuneration in respect of the private copying of their works. Some of
the 1985 law\'s provisions are based on reciprocity and thus
discriminate against, for example, foreign motion picture interests.
Consequently, those provisions may be inconsistent with France\'s
obligations under the Berne Convention and the Universal Copyright
Convention, at least to the extent that they apply to Berne or UCC
protected subject matter and rights. If this pattern is followed in
implementing future legislation, serious impediments to the development
of the GII may arise.

> g\. Moral Rights

The author's moral rights are provided for under Article 6*bis* of the
Berne Convention which requires recognition of the right of an author to
be named as the author of a work (the right of paternity) and the right
for an author to object to uses of a work which would bring dishonor or
discredit on his or her reputation (the right of integrity).[^447] The
controversy over moral rights was one of the reasons that kept the
United States out of the Berne Convention for over a century. However,
during that time our legal regime evolved and when the United States
finally joined Berne, the Congress determined that no changes to U.S.
law were necessary to comply with the moral rights provisions of Article
6*bis*. Congress found that the existing panoply of remedies available
under U.S. common law, various state statutes and Federal laws provided
sufficient moral rights protection. These findings were explicitly
stated in the Berne Convention Implementing Act.[^448] When the Congress
was convinced that enhanced protection for moral rights was necessary,
legislation was passed.[^449]

For the United States, the question is what should be the scope of moral
rights under our law. What is the appropriate role for Federal and state
legislation? There are even serious Constitutional questions about the
possible scope of moral rights legislation that could be part of our
Federal copyright law. Such rights would have to be seen as promoting
the progress of science and useful arts. They would have to be viewed as
part of the Constitutional *quid pro quo* of providing protection in
order to promote creativity. Some have argued that such a justification
may prove difficult to make.

Even among Berne members, the nature and scope of moral rights varies
considerably from country to country, but regardless of their scope and
extent, moral rights are typically not transferable and sometimes, may
not be waived. The fact that these rights are non-waivable may create
difficulties for the commercialization of works in the GII environment.
A current report of the multimedia study committee of the Japanese
Institute for Intellectual Property suggests that there may be a need
either to permit the specific waiver of the right of integrity or to
limit its application in the digital world.[^450]

> h\. Conflict of Laws

Conflict of laws issues may arise in GII-related copyright infringement
actions. Resolution of these issues determines what country's law the
court should apply. If the infringer and the infringement are in the
United States, the U.S. Copyright Act would apply. However, different
situations may present themselves which will raise conflict issues. For
instance, users in country A, where certain actions are not considered
copyright infringements, may use works located on servers in country B,
where such actions are. Which country\'s law controls the resolution of
a copyright infringement dispute \-- the country from which a
copyrighted work is uploaded or to which it is downloaded, or the
country where the host server is located? In the case of direct
transmissions, which country\'s law applies \-- the country of origin of
the transmission or the transmitter, or the country of the reception? It
may be that rights of the copyright owner are exercised in each country.
These issues, however, may be no more problematic than the current
conflict issues that arise due to the use of telephones, fax machines or
modems in international commerce.

> i\. Harmonization of International Systems

There is little dispute that worldwide high-speed digital communications
networks will have an enormous effect on the way in which works of
authorship will be created, stored, communicated to the public,
distributed and paid for. The communication revolution is now bringing
new opportunities and new challenges to creators and users of
intellectual property. The full implementation of the NII and the GII
will have an immense effect on our economy, and implementation of such
systems internationally will have an equally broad impact on world-wide
commerce. The United States must be committed to finding the means to
preserve the integrity of intellectual property rights in the materials
that will flow in the commerce created in this environment. This is a
daunting challenge in the context of the U.S. domestic market. It is an
even greater challenge to lay an international groundwork which will
ensure adequate and effective protection throughout the world.

As we move toward a world where dissemination of entertainment and
information products through on-demand delivery services operating
through interactive digital information communications networks is the
norm, it may be necessary to harmonize levels of protection under
disparate systems of copyright, authors\' rights and neighboring rights,
and consideration should be given to ways to bridge the gaps among these
systems.

If the GII is to flourish, then the intellectual property rights that
will undergird the economic structure supporting these infrastructures
must unequivocally be granted in national legislation fully on the basis
of national treatment for *all* rights and benefits. However, there is
some controversy over the scope of the national treatment obligation
under the Berne Convention and its application to what some may regard
as newly created rights and subject matter. Similar questions arise
under other international copyright and neighboring rights conventions
as will be later discussed.

The United States is committed to making progress in WIPO toward
improving international protection for works protected by copyright and
authors rights and the subject matter of neighboring rights. Such
progress is essential, especially in view of the needs to deal with the
intellectual property issues associated with the emerging GII. The
transition into a world-wide information society demands both a
narrowing of the focus on specific issues in the cases of the Berne
Protocol and the New Instrument, and the expansion of the WIPO efforts
to encompass the digital world in both areas.

In the emerging world of the GII with its digital distribution systems
and multimedia works, distinctions among the rights of authors,
producers and performers that are the basis for the separation of
copyright and neighboring rights are rapidly becoming irrelevant. This
new world of information superhighways will mean economic growth, jobs,
and exports for all economies to the benefit of authors, producers and
performers. Governments need to consider carefully the implications of
the inevitable development of the GII for their national economies and
their copyright systems. The work in WIPO is relevant to the rapidly
emerging digital world of the GII in order to set sound policy, and
select the essential elements of the present Berne Protocol and New
Instrument texts and work toward reaching international agreement on
them.

Discussions on a Berne Protocol and New Instrument afford an opportunity
to consider what enforcement norms, beyond the broadly applicable
disciplines clearly established in the TRIPs text, will be necessary if
rightsholders are to be adequately protected in the NII/GII environment.
Thus, rather than replicate the TRIPs enforcement provisions \-- which
would be redundant and would create the very real possibility of
conflicting norms \-- work on a Berne Protocol and New Instrument should
focus on issues not addressed in TRIPs, such as protection of rights
management information, the use of technical security measures and the
prohibition of devices and services whose primary purpose or effect is
to defeat technical security measures.

One of the most important issues for international norm setting is to
define the nature of a dissemination of a work or a transmission of a
work in digital form. Is it a public performance of the work or a
reproduction and distribution? Can it be all at the same time? How do
rules concerning the right of importation apply in a digital
environment? Just as these questions are critical in the domestic
context, they are equally acute in the context of international treaties
and harmonization of levels of protection. The right to distribute
copies of a work by transmission should be included both in the Berne
Protocol and the New Instrument, perhaps as a separate right, as an
aspect of a distribution right, as part of a right of communication to
the public, or an aspect of the reproduction right. While this is an
issue that needs much further discussion, the United States believes
that such a right is an important part of the Berne Protocol and New
Instrument which would be aimed at meeting the needs of the emerging
GII.

Provisions to prohibit decoders and anti-copy prevention devices and
services also should be included in the Berne Protocol and the New
Instrument.[^451] The Protocol and the New Instrument should also
include a prohibition of the fraudulent inclusion of rights management
information and the fraudulent removal or alteration of such
information.[^452]

To permit the effective development of the GII, national treatment must
be the basis for protection in any intellectual property agreement. At
an absolute minimum, national treatment must apply to the minimum
obligations established in any agreement in WIPO. The author or rights
holder should be able to realize fully the economic benefits flowing
from the free exercise of his or her rights in any country party to the
Protocol or New Instrument. The United States continues to believe that,
in respect of any work, this is required by Article 5 of the Berne
Convention. To do otherwise in either a Berne Protocol or another
agreement on copyright protection would be contrary to Article 20
because it would be a derogation of rights existing under Berne and
would not be an Agreement to \"grant to authors more extensive rights
than those granted by the Convention, or contain other provisions not
contrary to this Convention\" as provided for under Article 20.[^453] To
the extent that it has been agreed that the principles of the New
Instrument should follow those of the Berne Convention, to do otherwise
in respect of related rights would be contrary to the letter and the
spirit of the Convention.

U.S. copyright legislation has granted rights that some other nations
may regard as new rights beyond those set forth in the Berne Convention
\-- for example, rental rights in computer programs, sound recordings,
and musical works embodied in sound recordings \-- and has done so
exclusively on the basis of national treatment. The United States has
instituted a system of royalties on blank digital audio recording media
and digital audio recorders. Benefits from these rights have all been
granted on the basis of full national treatment. The United States
believes that this is consistent with our obligations under the Berne
Convention and other international intellectual property and trade
treaties and agreements.

The author or rights holder should be able to realize fully the economic
benefits flowing from the free exercise of his or her rights in any
country participating in a GII. This is required by Article 5 of the
Berne Convention. To do otherwise in either a Berne Protocol or another
agreement on copyright protection would be contrary to Article 20
because it would be a derogation of rights existing under Berne and not
be an Agreement to \"grant to authors more extensive rights than those
granted by the Convention, or contain other provisions not contrary to
this Convention\" as provided for under Article 20. To protect new works
or to grant new rights in respect of new or presently protected works on
the basis of reciprocity, would be contrary to the letter and the spirit
of the Convention.

As the GII continues to develop through the international
interconnection of NIIs, rules must be formulated to protect the
economic rights of providers of entertainment and information products.
Such rules should be based on principles of national treatment along the
lines of the following:

1\. Each country participating in the GII must accord to nationals of
another country participating in the GII no less favorable treatment
than it accords to its own nationals with regard to all rights and
benefits now, or hereafter, granted under its domestic laws in respect
of literary and artistic works or fixations[^454] embodying such works.

2\. Benefits must include the same possibility to exploit and enjoy
rights in the national territory of a country participating in the GII
as the respective country grants to its own nationals.

3\. No country participating in the GII may, as a condition of according
national treatment, require rights holders to comply with any
formalities in order to acquire rights in respect of literary and
artistic works or fixations embodying such works.

In addition to these issues of general concern, there are issues that
are applicable specifically to the Berne Protocol and to the New
Instrument.

Following the Supreme Court decision in the *Feist* case,[^455] there is
increasing concern that many valuable, factually-oriented databases may
be denied copyright protection, or that courts may determine
infringement in ways that severely limit the scope of copyright
protection for data bases. Providing for a *sui* *generis* unfair
extraction right to supplement copyright protection may prove to be
useful in view of legal developments in various national laws and should
be given serious consideration. How a right, such as the unfair
extraction right proposed in the EU database directive, could protect
such databases should be carefully evaluated.

Additionally, the issue of multimedia works will take on an important
international dimension. If these are regarded at the international
level as works in a new, separate category, the issue of their coverage
under the existing conventions and the rule of national treatment will
be open to debate. If, however, as current discussions seem to indicate,
they are subsumed into the existing categories of works, establishing
meaningful rules internationally will be simplified.

Further study to determine what existing rights should be clarified or
what other rights may need to be adapted to the emerging digital
environment are underway both in domestic and international fora.
However, some issues merit identification here, and one of those is the
level of protection to be accorded to sound recordings.

Many believe that the time has come to bring protection for the
performers and producers of sound

recordings into line with the protection afforded to the creators of
other works protected under the Berne Convention. This includes
providing high-level standards for rights and benefits granted on the
basis of national treatment. This is necessary for a number of reasons.
First, there is no just reason to accord a lower level of protection to
one special class of creative artists. Second, the extent of
international trade in sound recordings makes it imperative that
standards of protection be harmonized at a high level. Third, and
perhaps most importantly, the digital communications revolution \-- the
creation of advanced information infrastructures \-- is erasing the
distinctions among different categories of protected works and sound
recordings and the uses made of them.

Concerns also have been raised over the extent and scope of moral rights
in the world of digital communications. Some believe that the ability to
modify and restructure existing works and to create new multimedia works
makes strengthening international norms for moral rights more important
than ever before. Others take the view that any changes to international
norms for the protection of moral rights must be carefully considered in
the digital world. The United States agrees with this view. Careful
thought must be given to the scope, extent and especially the
waivability of moral rights in respect of digitally fixed works, sound
recordings and other information products.

There are issues such as digital fixation, storage and delivery that
will need to be taken into account in the New Instrument. There are also
questions concerning the scope of rights and the right owners that might
be covered by the New Instrument. To the extent possible, definitions in
the New Instrument should be identical to those in the Berne Protocol.
Otherwise, differences in phrasing could lead to differences in
interpretation, and jeopardize the \"bridging\" of the New Instrument
with the Berne Convention and the Protocol. Many of these issues are
critical to the United States and other countries.

To attain the needed level of protection internationally, ways to span
the differences between the continental *droit* *d'auteur* and
neighboring rights systems and the Anglo-American copyright systems must
be developed. An essential element of this effort will be to harmonize
levels of protection by establishing standards that can be implemented
through either system.

B. Patent

Development of the NII will depend upon, and stimulate innovation in,
many fields of technology, especially computer software, computer
hardware and telecommunications. An effectively functioning patent
system that encourages and protects innovations in these fields of
technology is, therefore, important for the overall success of the NII.

The primary goal of the patent system is to encourage innovation and
commercialization of technological advances. To this end, the patent
system offers an incentive to inventors to publicly disclose their
inventions in exchange for the exclusive right to prevent others from
making, using, offering for sale or selling the inventions throughout
the United States or importing the inventions into the United States.
The patent system serves as an important complement to the copyright
system for computer and software innovations by providing protection for
functional aspects of these innovations.

Unlike copyright protection which attaches automatically at the moment
of fixation, an inventor must specifically request protection by filing
a patent application and establish that the invention meets all of the
statutory requirements of patentability. Rights are obtained by filing a
patent application with the Patent and Trademark Office (PTO), and
proceeding through an examination process. To be patentable, an
invention must be new,[^456] useful[^457] and nonobvious.[^458] In
addition, the inventor must fully describe and disclose the invention
for which patent protection is sought in a patent application.[^459] If
the PTO determines that all the patentability requirements have been met
for the invention for which patent protection is requested, a patent
will be granted to the applicant.

Patent protection is available in the United States for inventions
without differentiation as to the field of technology: \"any new and
useful process, machine, manufacture, or composition of matter\" can be
patented.[^460] Despite this breadth, certain limits do exist on what
can be patented. For example, a person cannot patent a process that
consists exclusively of the steps one would follow to apply a
mathematical principle to solve a mathematical problem.[^461] This
restriction is not statutory; instead, it arises from judicial
interpretation of the law governing patentable categories of invention,
and is based on the notion that one cannot preempt use of laws of nature
or mathematical truths. Similarly, one cannot patent an arrangement of
information or a writing, as such things do not fall within one of the
enumerated categories of inventions eligible to be patented.[^462]

Once it is determined that an applicant has requested protection for
subject matter that is eligible to be patented, the examination process
shifts to evaluate the substantive merits of the invention. This
evaluation is performed to determine if the invention is \"novel\" and
\"non-obvious.\" The PTO performs this evaluation by comparing the
invention undergoing examination to the \"prior art.\" Generally
speaking, prior art includes information that is publicly available
prior to the filing date of a patent application.[^463] An invention
satisfies the novelty requirement if it differs in any material way from
what is known in the \"prior art.\"[^464] An invention satisfies the
nonobviousness requirement if a \"person of ordinary skill in the art\"
would not have viewed the invention as having been obvious in view of
the prior art at the time the invention was made.[^465] Some flexibility
is provided to patent applicants in the United States regarding when
they must seek protection to avoid losing patent rights due to prior
public disclosure of the invention.[^466]

An applicant must also satisfy a number of requirements that govern the
contents and form of a patent application. A patent application consists
of a specification and claims. The claims of a patent define the metes
and bounds of the invention by specifically defining the features of an
invention which are protected. Among other things, Section 112 requires
that the inventor provide an adequate disclosure of the invention that
the applicant has claimed.[^467] A disclosure is adequate when it
enables a person of ordinary skill to \"practice\" the invention as
claimed without undue experimentation or effort.[^468] Section 112 also
requires that the inventor disclose the \"best mode\" of practicing the
invention known to him. The requirements of Section 112 serve to ensure
that the patent provides a high-quality, technically accurate disclosure
of the invention.

Once issued, a patent grants its owner the exclusive right to prevent
others from making, using, offering for sale, or selling the claimed
invention in the United States, or importing the claimed invention into
the United States.[^469] A patent owner is given a term of protection
that begins on the date the patent is granted and ends 20 years from the
date the application leading to the patent was filed.[^470] The patent
owner must assert these rights against a party that performs any of the
acts that would infringe the patent. The patent owner has the initial
burden of proving that the accused party infringed one or more of the
patent claims.[^471] Patent infringement is established by demonstrating
that the accused party has made, used, sold, imported or offered to sell
a product that falls within the scope of a product patent claim.[^472]
Similarly, if a patent has been granted on a process, the patent owner
must show that the accused party engaged in activity that would infringe
the process claims, or that the accused party made, used, sold, offered
to sell or imported a product produced using the claimed process.[^473]
A patent owner's failure to promptly enforce its rights once an
infringement is discovered can limit his or her remedies or may even
preclude enforcement against that party.

A party accused of infringement can avoid liability by asserting that
the patent does not cover the accused product or process.[^474] The
accused infringer can also assert that one or more of the patent claims
is either invalid[^475] or that the patent as a whole is
unenforceable.[^476] Every claim in a patent, however, is presumed
valid.[^477] Thus, in district court, the party challenging patent
validity must demonstrate through clear and convincing evidence that the
patent fails to satisfy one or more of the statutory criteria of
patentability (*e.g.*, novelty, utility, nonobviousness), or that the
application is defective because it has an inadequate disclosure.[^478]

1\. Patentability Determinations

The NII will have a tremendous impact on the flow of information. As new
sources of information are made available and old sources are made more
accessible, the accumulated body of knowledge available for use in
patentability determinations will expand. This means that more
information will be available to influence decisions on the
patentability of an invention, whether in the context of the patent
examination process or during challenges to patent validity through
litigation in the Federal courts.[^479] Thus, the most significant
impact that the NII will have on the patent system will be in relation
to issues that are affected by the degree of availability of \"prior
art.\"

Over the past twenty years, access to sources of information \--
particularly patents and printed publications \-- has been vastly
improved through the development and use of on-line database services.
These services document the existence and content of patents and printed
publications, and in some instances, provide access to the complete text
and electronic images of such documents. It is important to recognize,
however, that the information that can be retrieved through these
services invariably exists as an original, paper document disseminated
through traditional publication channels (*e.g.*, technical journals or
publications, domestic and foreign patent documents).

The NII will dramatically change the way information is prepared and
disseminated. It will improve the number, diversity, accessibility and
quality of traditional on-line services. It will also foster creation of
new forms of \"electronic publications\" that are different in character
from traditional paper-based publications. Examples of such electronic
publications include electronic versions of traditional paper-based
publications that supplement or reorganize presentation of the content
of the paper-based publication; informally prepared documents such as a
posting of technical or other information on a particular topic-driven
forum; and formally designed and developed electronic publications that
are not printed on paper, but are disseminated exclusively through an
electronic forum.

Electronic publications such as these will supplement the wealth of
publicly accessible information that is used in patentability
determinations. However, these new types of electronically disseminated
documents are different in character from traditionally printed and
indexed patents and publications, and as such, could raise questions
when used as prior art in a patentability determination, either before
the PTO or during litigation. For example, the information contained in
electronically-disseminated documents may not be printed originally on
paper, and as such, there may be no tangible evidence regarding the date
the information was first publicly disclosed or as to the contents of
the document as disclosed on that date. There are no uniform guidelines
or industry standards presently that govern the memorialization of
either the contents or the date of first public disclosure of such
documents. A second problem is that the degree of distribution of or
public accessibility to electronic documents is not presently measured
and may prove unmeasurable. Limited availability of a document can
render that document unusable as a source of information as prior
art.[^480] Both issues, however, are key factors in determining whether
a document is in the prior art.

A second category of concerns relates to the technical accuracy of
electronically disseminated documents. To be a usable and reliable prior
art document, the contents of the document must be technically accurate
and informative. The types of documents that are disseminated
electronically today, however, vary tremendously as to their content and
accuracy. Thus, while certain information could be posted on a forum,
with a reliable documentation of the date of that disclosure and its
contents, it would not be certain that the disclosure itself is
technically accurate and usable as prior art. Informally created
documents, such as postings on a forum, are not typically subjected to
any form of peer review or content screening. The lack of quality
control could therefore complicate evaluation of information contained
in these electronic documents, which, in turn, could affect
patentability, particularly in the context of litigation.

2\. Infringement Determinations

As noted in other sections of this Report, some questions exist
regarding whether or how copyright owners will be able to effectively
enforce their rights in their works on the NII. The issues related to
the enforcement of copyrights on the NII do not have an analogue with
regard to patent protection. This is because each patent provides a
precise definition of the nature of activities that will infringe the
patent owner's rights. And while some have raised concerns over the
ability of patent owners to prove infringement where the infringing
activities were facilitated by or conducted on the NII, these concerns
do not appear to be well founded.

Consider a patent claim covering a new data compression process used for
communicating information over the NII. To infringe the patent owner\'s
rights, one would have to perform each of the acts specifically outlined
in the process claim. To prove infringement, the patent owner could rely
on any evidence that the accused party used the process. This could be
done by showing that the accused infringer developed and distributed a
software program that, when used by a third party, would infringe the
process claim (*e.g.*, the software would require the third party to
follow the steps outlined in the process claim and thus lead to
infringement of that claim). Alternatively, the patent owner could show
that data was distributed over the NII in the compressed format, and
then establish the source of the data. Considered fully, it does not
appear to be an insurmountable problem for the patent owner to identify
infringing parties and establish a sufficient quantum of proof that the
accused infringer performed a particular series of acts, which, once
performed, infringed one or more patent claims.

3\. Patentability of Software

Another issue considered with regard to its relationship to the NII is
the eligibility of computer software for patent protection. Computer
software-related inventions have enjoyed some degree of protection under
the patent system since the beginning of the computer industry. In terms
of distinguishing which aspects of software-related inventions could or
could not be patented, the courts and the PTO have relied on a number of
legal doctrines. Under one of these doctrines, computer program code
*per se* has been held to be ineligible for patent protection because it
is a writing that does not fall within one of the enumerated categories
of invention. Another of these doctrines provides that processes,
including those implemented in software, that are indistinguishable from
the steps one would follow in applying a mathematical principle to solve
a mathematical problem cannot be patented.[^481] These two doctrines
have served to exclude protection for software-related inventions
independent of machines or processes as implemented on a computer.

A series of decisions rendered in 1994 by the Court of Appeals for the
Federal Circuit has clarified the boundaries of patent-eligible subject
matter for software-related inventions. In one decision, the Federal
Circuit concluded that an \"old\" memory that was \"reconfigured\"
through the storage thereon of a \"data structure\" (an ordered
arrangement of information) constituted a patentable invention.[^482] In
other cases, both before and after this holding, the Federal Circuit
concluded that a data structure, *per se,* and as incorporated into a
process without any additional physical elements or steps in the
process, did not create patentable subject matter.[^483] The combined
effect of the cases suggests that software can transform unpatentable
objects into patentable ones and as such must be given weight in
patentability determinations, but information *per se* and abstract
ideas continue to be treated as non-statutory subject matter. The trend
\-- as far as can be ascertained \-- is to provide a broader eligibility
for software aspects of inventions than was available previously.

While there may be some degree of uncertainty relating to the precise
boundaries of patent-eligibility for software, this alone does not
suggest that this topic should or even could be resolved by the Working
Group. Finer resolution of the boundaries of patent-eligibility for
software could result in greater or more restricted protection for
software. Whatever the result, the ramifications run far past those that
must be considered in the context of the NII. Changes affecting patent
eligibility for software-related technologies will affect more than
simply the software innovation that will develop incident to development
and use of the NII. And resolution of these boundaries of protection
under the patent law for software will not directly affect the
significant development efforts underway now related to the NII.
Considered from a different perspective, development of the NII may lead
to more software development, particularly related to telecommunications
and networking, but it will not present unique issues in terms of patent
eligibility for software.

C. Trademark

A trademark is quite different from either a copyright or a patent. A
trademark is any word, name, symbol or device, or any combination
thereof, that serves to identify and distinguish the source of one
party\'s goods or services from those of another party. A service mark
is the same as a trademark, except that it identifies and distinguishes
the source of services rather than goods. In this report, the terms
\"trademark\" and \"mark\" are intended to refer to both types of marks.

The purpose of a trademark is twofold \-- to identify the source of
products or services and to distinguish the trademark owner\'s goods and
services from those of others. As long as a trademark fulfills these
functions, it remains valid. Trademark ownership rights in the United
States arise through use of a mark. Continued use of a mark is necessary
to maintain trademark rights. The owner of a trademark is entitled to
the exclusive right to use the mark. This entitlement includes the
ability to prevent the use, by unauthorized third parties, of a
confusingly similar mark. Marks used by unrelated parties are
confusingly similar if, by their use on the same, similar, or related
goods or services, the relevant consumer population would think the
goods or services come from the same source.

Unlike patent and copyright law, Federal trademark law coexists with
state and common-law trademark rights. Therefore, registration at either
the Federal or state level is not necessary to create or maintain
ownership rights in a mark. For example, priority of trademark rights
between owners of confusingly similar marks, regardless of whether the
marks are Federally registered, is based upon first use of the
mark.[^484]

Federal trademark law is embodied in the Lanham Act[^485] and is based
upon the commerce clause of the Constitution.[^486] Therefore, to obtain
a Federal trademark registration, in most cases[^487] the owner of a
mark must demonstrate that the mark is used in a type of commerce that
may be regulated by Congress.[^488] Additionally, the Trademark Law
Reform Act of 1988[^489] amended the Lanham Act to establish trademark
rights, which vest upon registration following use of the mark in
commerce, as of the filing date of a trademark application indicating a
bona fide intent to use the mark in commerce.[^490]

Goods and services to which a mark applies in a trademark registration
are categorized according to the Nice Agreement Concerning the
International Classification of Goods and Services for the Purposes of
the Registration of Marks of June 15, 1957, as revised at Stockholm on
July 14, 1967, and at Geneva on May 13, 1977 (International
Classification). This treaty, of which the United States is a member, is
administered by WIPO. WIPO convenes a meeting of experts, including
representatives of the United States, every five years to consider and
adopt changes to the International Classification. These meetings will
be an important means to effect changes to the International
Classification to accommodate the changing goods and services available
in connection with the NII and the GII. In preparation for the next
meeting of experts, which is likely to take place in late 1995, a
working group which includes the United States convened in March 1995 at
WIPO to discuss proposals to amend the International Classification.

Remedies against trademark infringement and unfair competition are
available to trademark owners under both state and Federal law.[^491] In
this regard, the owner of a Federal trademark registration has certain
benefits. In a court proceeding, registration on the Principal Register
constitutes *prima* *facie* evidence of the registrant\'s ownership of
the mark.[^492] Registration on the Principal Register may also be used
as a basis to block importation of infringing goods[^493] or to obtain
remedies against a counterfeiter.[^494] The Lanham Act provides that
under certain conditions the right to use a registered mark may become
incontestable.[^495] Additionally, the Lanham Act provides for
cancellation of registrations on certain grounds.[^496]

Existing legal precedent accepts electronic transmission of data as a
service and, thus, as a valid trademark use for the purpose of creating
and maintaining a trademark.[^497] Additionally, existing legal
precedent applies the available remedies for infringement and unfair
competition to such acts occurring through the unauthorized use of
trademarks electronically.[^498] However, in the future, with widespread
access to and use of the NII, both the legitimate and infringing
electronic uses of trademarks may increase. Unfair competition may
increase in the context of the NII to the extent that it may be easier
to copy or remove trademarks from electronically transmitted information
than from labeled products or from services identified in print media.

In the global context for trademarks, there are likely to be
ramifications of global electronic transmission of trademarks in view of
the fact that trademark rights are national in scope. Conflicts may
arise where the same or similar trademarks are owned by different
parties in different countries, or where different countries apply
different standards for determining infringement. Additionally,
conflicts may arise where terms are in general use in one country, but
restricted as either trademarks or geographical indications in another
country.

With regard to access to the NII, several conflicts have arisen where
trademark owners are aware that third parties have registered Internet
domain names that are identical to their trademarks. One of the first
opportunities for a court to define the legal relationship between
trademarks and the registration and use of site domain names on the
Internet could be presented in an action presently in Federal district
court in the Southern District of New York. The owners of the MTV cable
network (\"MTV\") have filed an action seeking injunctive relief and
monetary damages from a former employee who is offering a daily report
about the rock music industry on the Internet using the site name
\"mtv.com.\" MTV is alleging, *inter* *alia*, trademark infringement and
unfair competition.[^499] In another instance, Kaplan Educational
Centers filed an action alleging trademark infringement and unfair
competition against its competitor, Princeton Review, which had
registered an Internet domain name of \"Kaplan.com.\" Kaplan reported
that an arbitration panel ruled, in an unreported opinion, that
Princeton Review must relinquish all rights in the \"Kaplan.com\" name
and transfer it to Kaplan. Other companies noted in the news that have
expressed concern recently about third party domain name registration of
their well-known trademarks include Coca Cola, McDonald's, MCI and
Hertz.

D. Trade Secret

Unlike many of the other forms of intellectual property protection
previously mentioned, trade secrets are generally protected by state
law, not Federal law.[^500] Trade secret protection is very limited. A
trade secret holder is only protected from unauthorized disclosure and
use of the trade secret by others and from another person obtaining the
trade secret by some improper means.[^501]

There are several factors used to determine if subject matter qualifies
as a trade secret. Among the factors considered are the extent of
measures taken by the trade secret owner to guard the secrecy of the
information and the ease or difficulty with which the information could
be properly acquired or duplicated by others.[^502] Based on these
considerations, the general rule is that subject matter cannot be
successfully protected as a trade secret if it is widely distributed.
However, if adequate security precautions are taken to ensure that
access to the subject matter being distributed is treated as secret, the
subject matter may still be considered a trade secret.

Whether trade secret owners distribute their trade secrets through the
NII will largely depend on the extent that they believe that the secrecy
of the trade secret will not be compromised by such a distribution.
Consequently, if the NII is going to be used as a tool for disseminating
trade secret information the NII must be equipped with adequate security
measures to ensure that trade secrets distributed through the NII will
remain secret.[^503]

In addition to the concerns regarding security precautions, issues of
jurisdiction may also arise when the NII is used to transmit trade
secrets. As trade secrets are generally protected by state law,
determining which state's law should control in a trade secret dispute
may become an important choice of law issue in the NII. This choice of
law issue, however, is no more problematic than those issues presently
associated with the distribution of trade secrets and can be adequately
resolved by the choice of law rules presently codified in state law.

To some degree, whether trade secret owners distribute their trade
secrets through the NII may also depend on the type of information
products and services being disseminated. For instance, it has been
suggested that the most common way to protect software is through trade
secret protection.[^504] Unlike most trade secret information, computer
programs can be copied and used without the copier ever understanding or
viewing the information in a comprehensible form. Although the trade
secrecy problems associated with computer programs are not unique to the
NII, the capabilities of the NII may cause these problems to become more
prevalent.

II\. Technology

The NII has the potential to be a robust and widely used medium for the
creation, dissemination and use of information-based products and
services. To realize this goal, the technical and security needs of
users, service providers, carriers and content providers must be
addressed. First, to be successful, the NII must deliver on its promise
to facilitate the flow of information and information-based products and
services to consumers. The easier it is for a consumer to retrieve,
purchase or use an information product or service, the more likely it is
that the consumer will do so. Second, content providers must have secure
and reliable means for delivering information products and services to
consumers. This means that content providers must be confident that the
systems developed to distribute these works will be secure and that
works placed on these systems will remain authentic and unaltered. If
content providers cannot be assured that they will be able to realize a
commercial gain from the sale and use of their products using the NII,
they will have little incentive to use it. Third, service providers and
carriers must be able to ensure that their systems which will serve as
the physical infrastructure of the NII will address the needs of users
and content providers.

Technological solutions are playing and will continue to play a
significant role in meeting these needs. A wide variety of new tools to
facilitate access and use of Internet-based information products and
services are being rapidly developed and deployed. Concurrently,
copyright owners are developing and implementing technical solutions to
facilitate the delivery of protected works in an easy, consumer-friendly
yet reliable and secure way. These solutions enable copyright owners not
only to protect their works against unauthorized access, reproduction,
manipulation, distribution, performance or display, but also serve to
assure the integrity of these works and to address copyright management
and licensing concerns.

A. Content Security and User Access Needs

It is important to recognize that access needs of users of the NII have
to be considered in context with the needs of copyright owners to ensure
that their rights in their works are recognized and protected. One
important factor is the extent to which the marketplace will tolerate
measures that restrict access to or use of a copyrighted work.
Conversely, without providing a secure environment where copyright
owners can be assured that there will be some degree of control over who
may access, retrieve and use a work, and, perhaps most importantly, how
to effectuate limits on subsequent dissemination of that work without
the copyright owner\'s consent, copyright owners will not make those
works available through the NII.[^505]

Technology can provide the solutions for these needs. Technological
solutions exist today and improved means are being developed to better
protect digital works through varying combinations of hardware and
software. Protection schemes can be implemented at the level of the
copyrighted work or at more comprehensive levels such as the operating
system, the network or both. For example, technological solutions can be
used to prevent or restrict access to a work; limit or control access to
the source of a work; limit reproduction, adaptation, distribution,
performance or display of the work; identify attribution and ownership
of a work; and manage or facilitate copyright licensing.

B. The Internet Experience

In the past few years, there has been an explosion in the popularity and
volume of use of the Internet. The Internet serves today, through
electronic mail and remote access, to connect people to information and
to deliver information products and services. An almost incomprehensible
variety of information has been made widely and easily accessible
through this system, originally designed to serve the needs of the
Department of Defense in the 1960s.

Because the Internet and applications which use it, like electronic mail
and \"World Wide Web,\" have exploded in popularity and use, systems
used today and being designed for short term implementation are likely
to serve as the foundation for communications through the NII. Indeed,
in one very real sense, the Internet that is in use today is a prototype
for the NII. Therefore, it is useful to discuss briefly the foundation
of the Internet as it exists today.

The Internet provides individuals many different ways to disseminate and
retrieve information. The basic concept of communications underlying the
Internet is that a user with his or her personal computer or workstation
can \"connect,\" either directly or through a succession of intermediary
computers, in a uniform manner to a \"remote\" computer that acts as a
\"server\" of information. The user attaches to the remote computer and
uses the services offered by the remote computer system (hence the term
\"server\" for the remote system). The service may provide for immediate
transfer of information (*e.g.*, file transfer) or eventual transmission
(*e.g.*, electronic mail). For example, a user can direct a remote
computer to send data through an established connection to the user\'s
computer. Alternatively, the user can send information to the remote
computer that will eventually result in information being sent back to
the user\'s computer from that remote computer. In either sense, there
is a \"connection\" established between the two computers that permits
the flow of information, typically at the request of the user.

The simplest type of connections use a character-based \"dumb terminal\"
interface (*e.g.*, characters alone are used to convey information to
and from the user). This type of scheme consists essentially of the user
using his computer to do nothing more than type commands which the
computer executes. The \"controlled\" computer executes the appropriate
programs that handle location and transfer of data. One such scheme is
the \"telnet\" protocol. Telnet uses a command line interface (*e.g.*,
one types commands) to initiate actions at the remote computer. Using
telnet, a user can execute a program or routine on a remote computer to
obtain a directory of files resident on that computer, navigate among
directories of information, and transfer files.

If a user wishes to simply retrieve information stored as a file on the
remote server, he or she can execute a process on the remote computer
termed \"file transfer protocol\" or ftp. This is the most basic form of
transfer; one simply instructs the remote computer to send to a specific
file resident on the remote computer to the requester's computer. A menu
driven interface and service for retrieving files from remote servers
was subsequently developed by the University of Minnesota. This scheme,
termed \"gopher,\" relies on established directories of information that
are consolidated at specific sites on the Internet. The requester uses
his or her computer to instruct the remote computer to execute the
gopher program, which then establishes a connection to a directory
server (*e.g.*, a \"gopher server\"). The gopher server will provide the
requesting user easily navigable listings of files that can be retrieved
from the gopher server. The gopher server acts more or less as a conduit
for identifying a specific file and delivering it to the requesting
computer.

Other schemes have been established for searching pre-established
indices of information about information resources on the Internet.
Examples include \"Archie,\" \"Veronica\" and the Wide Area Information
Search (WAIS).[^506] All of these examples were originally developed as
UNIX-implemented programs to perform file transfer-related tasks;
namely, searching and retrieval of information about either the location
of remote servers with certain types of information or of remote servers
that had specific files. The information sent back to the user with
these tools consists of information about these servers that can then be
used with the other tools (*e.g.*, ftp or gopher) to retrieve a specific
file.

There are now more sophisticated tools for users to access and retrieve
information on remote servers on the Internet. These tools typically are
programs that implement the common UNIX-based protocols but which
actually run on the user\'s personal computer or workstation. Thus, once
a connection to an appropriate \"Internet provider\" is established, a
user may start a program on his personal computer that acts as a
\"gopher client.\" The \"gopher client\" will permit the user to
retrieve information from a remote server directly to his or her
personal computer. Connections between the user\'s personal computer and
the \"Internet provider\" to carry these communications can be
established using a \"dial-up\" or analog phone connection using an
appropriate communication protocol or a link over a digital transmission
line. The most significant benefit of these tools is that they are
typically based on a graphical interface, which makes it easier for the
user to manage the connection and interact with remote servers.

Many of the established protocols have been integrated and enhanced
using tools that can access what is termed the World Wide Web. The World
Wide Web (Web) is a scheme whereby organizations use graphical \"front
ends\" to provide remote users with point and click access to
information stored on their servers, as well as access through \"links\"
to information stored on other remote servers. Web \"browsers\" are
programs that run on a personal computer or workstation that enable a
user to establish connections to these graphical front ends, view,
retrieve and manipulate data provided by those remote servers. Examples
of popular, currently available Web browsers include: Mosaic, from the
National Center for Supercomputing Applications; Netscape Navigator,
from Netscape Communications Corporation; and Enhanced Mosaic, from
Spyglass, Inc. Web browsers typically provide support for electronic
mail, gopher and ftp sessions, and, most importantly, support retrieval
and display of a much broader variety of information (*e.g.*, text,
audio, image and multimedia data).

At the root of the Web are several of the established protocols (*e.g.*,
gopher, ftp, various e-mail standards) and three new protocols: the
Hypertext Markup Language (HTML), a file format for embedding
navigational information in graphical and text-based documents; the
Hypertext Transfer Protocol (HTTP), a communications protocol for
communicating navigational information and other data between the remote
server and the requesting computer; and the Uniform Resource Locator
(URL) scheme for identifying the location (*e.g.*, the location of the
remote server and the location on that server of the file corresponding
to the URL) of Web-accessible documents. A number of organizations and
groups are also working to develop additional protocols to enable secure
communications. Some of these protocols have been published as draft
specifications at this point, including the Secure Sockets Layer (SSL),
the Secure Hypertext Transfer Protocol (SHTTP) and the Enhanced Mosaic
Security Framework. The integration of these various protocols into a
single, easy to use, understandable interface has led to a tremendous
increase in the popularity and use of the World Wide Web and,
correspondingly, of the Internet as a means for providing and retrieving
information.

C. Access and Use Technological Controls

1\. Server and File Level Controls

Technology will likely play a central role in implementing controls on
the access to and use of protected works at both the file and server
level.

Distribution of digital works can be regulated by controlling access to
the source of copies of the works \-- information or data servers.
Access to these servers can vary from completely uncontrolled access
(*e.g.*, the full contents of the server are available without
restriction) to partially controlled access (*e.g.*, unrestricted access
is granted to only certain data on the server) to completely controlled
access (*e.g.*, no uncontrolled access in any form is permitted). Access
control is affected through user identification and authentication
procedures that deny access to unauthorized users to a server or to
particular information on a server.[^507]

Nearly all service providers, including commercial on-line services such
as CompuServe and America Online, private dial-up bulletin board
systems, and servers accessible through the Internet, control access to
their systems. For example, via the Internet, users today can connect to
a bewildering array of public servers using a variety of schemes,
including telnet, ftp, gopher and the World Wide Web. Some information
providers grant full unrestricted access to all the information
contained on their servers, and use control simply to comport with
physical limitations of their servers (*e.g.*, to limit the number of
concurrent users). Other information providers restrict access to users
with accounts or grant only limited access to unregistered users. For
example, using ftp a user can often log on to a remote server through
the Internet as an \"anonymous\" user (*e.g.*, a user for which no
account has been created in advance); however, such a user will normally
only be able to access specific data on the server. Of course, an
information provider can elect not to provide uncontrolled access, and
permit only those with pre-established accounts to access the server.
This is more common with commercially-oriented on-line service
providers. Control over access to a server containing protected works
will typically be the first level of protection a content provider will
look for before making their protected works accessible through the
server.

A second level for controlling access to and use of protected works can
be exerted through control measures tied to the electronic file
containing the work.

Restrictions on access at the file level can be implemented using
features in \"rendering\" software. For example, a content provider may
develop specialized software products or implement features in general
purpose software products that would control by whom, and to what
degree, a protected work may be used. Such restrictions could be
implemented using features in the rendering software, a unique file
format or features in an established file format, or a combination of
both. \"Control\" measures could also be implemented to determine if the
content provider had authorized certain uses of the work, as well as
some means to control the degree to which a user would be able to
subsequently \"manipulate\" the work. For example, the rendering
software could preclude a user who had not obtained the appropriate
authority from the content provider or who enters an unauthorized or
expired password from using the data. Rendering software can also be
written to deny general access to the work if the file containing the
work is not a properly authenticated copy (*e.g.*, the file has been
altered from the version as distributed by the content provider). Such
features will be possible provided that sufficient information regarding
authorized use can be associated with the file containing the
information product (*e.g.*, through inclusion in a file header,
packaged and sealed in an \"electronic envelope\" sealed with a digital
signature, embedded through steganographic means,[^508] etc.).[^509]

2\. Encryption

In its most basic form, encryption amounts to a \"scrambling\" of data
using mathematical principles that can be followed in reverse to
\"unscramble\" the data. File encryption thus simply converts a file
from a manipulable file format (*e.g.*, a word processor document or a
picture file that can be opened or viewed with appropriate software) to
a scrambled format.[^510] Authorization in the form of possession of an
appropriate \"key\" is required to \"decrypt\" the file and restore it
to its manipulable format.

Encryption techniques use \"keys\" to control access to data that has
been \"encrypted.\" Encryption keys are actually strings of alphanumeric
digits that are plugged into a mathematical algorithm and used to
scramble data using that algorithm. Scrambling means that the original
sequence of binary digits (*i.e.*, the 1s and 0s that make up a digital
file) that constitute the information object is transformed using a
mathematical algorithm into a new sequence of binary digits (*i.e.*, a
new string of 1s and 0s). The result is a new sequence of digital data
that represents the \"encrypted\" work.[^511] Anyone with the key can
decrypt the work by plugging it into a program that applies the
mathematical algorithm in reverse to yield the original sequence of
binary digits that comprise the file. Although most commonly thought of
as a tool for protecting works transmitted via computer networks,
encryption can be and is used with virtually all information delivery
technologies, including telephone, satellite and cable communications.
Of course, once the work is decrypted by someone with the key, there may
be no technological protection for the work if it is stored and
subsequently redistributed in its \"decrypted\" or original format.

A widely publicized technique for sending secure transmissions of data
is \"public key\" encryption. This technique can be used to encrypt data
using an algorithm requiring *two* particular keys \-- a \"public\" key
and a \"private\" key. The two keys are affiliated with the recipient to
which the information is to be sent. The \"public\" key is distributed
publicly, while the private key is kept secret by recipient. Data
encrypted using a person\'s public key can only be decrypted using that
person\'s secret, private key. For instance, a copyright owner could
encrypt a work using the public key of the intended recipient. Once the
recipient receives the encrypted transmission, he could then use his
private key to decrypt that transmission. No secret (private) keys need
to be exchanged in this transaction. Without the private key of the
intended recipient, the work cannot be read, manipulated or otherwise
deciphered by other parties. Of course, if a decrypted copy is made and
shared, then others could manipulate the work unless other means are
used to protect it.

There may be instances where someone other than the communicating
parties needs access to the encrypted data. A key escrow system is one
way such access might be obtained. A key escrow system would hold the
key needed to decrypt an encrypted transmission in \"escrow.\" Such a
system could be maintained by a private organization or the government,
and anyone seeking access to an encrypted transmission would have to
demonstrate their need for the key through a process, such as obtaining
a search warrant, that ensures the legitimate privacy and security needs
of users of encrypted transmissions.

3\. Digital Signatures

Mathematical algorithms can also be used to create digital
\"signatures\" that, in effect, place a \"seal\" on a digitally
represented work. Generating a digital signature is referred to as
\"signing\" the work. The algorithms can be implemented through software
or hardware, or both. The digital signature serves as means for
authenticating the work, both as to the identity of the entity that
authenticated or \"signed\" it and as to the contents of the file that
encodes the information that constitutes the work. Thus, by using
digital signatures one will be able to identify from whom a particular
file originated as well as verify that the contents of that file have
not been altered from the contents as originally distributed.

A digital signature is a unique sequence of digits that is computed
based on (1) the work being protected, (2) the digital signature
algorithm being used, and (3) the key used in digital signature
generation.[^512] Generating a digital signature uses cryptographic
techniques, but is not encryption of the work; the work may remain
unencrypted so it can be accessed and used without decryption. In fact,
digital signatures and encryption can be used simultaneously to protect
works. Generally, a signature is computed for a copyrighted work first
and then the work (including the seal) is encrypted. When the work is to
be used, the work is decrypted, then the signature (*i.e.*, the seal) is
verified to be sure the work has not been modified (either in its
original or encrypted form). If the work is never changed, the seal need
never be removed or changed. If the work is changed, a new seal must be
computed on the revised information.

Typically, the digital signature is incorporated in some manner in the
transmission that constitutes the work. Often, the sender will also
distribute his public key as well. The signature serves as a \"seal\"
for the work because the seal enables the information to be
independently checked for unauthorized modification.[^513] If the seal
is verified (independently computed signature matches the original
signature), then the work is a bona fide copy of the original work \--
*i.e.*, nothing has been changed in the file that constitutes the work.

4\. Steganography

Innovative new techniques are being developed to address security or
management driven concerns relating to dissemination and use of
digitally-encoded information. For example, methods have been developed
that can encode digitized information with attributes that cannot be
disassociated from the file that contains that information. This field
of technology has been termed \"steganography\" and been conceptually
referred to as \"digital fingerprinting\" or \"digital watermarking.\"

In essence, using steganographic techniques, a party can embed hidden
messages in digitized visual or audio data. The embedded information
does not degrade or otherwise interfere with the audio or visual quality
of the work. Instead, the embedded information can only be detected if
specifically sought out. More advanced steganographic techniques based
on statistical or entropically-directed encoding are proving to be
difficult to defeat. For example, one system modulates a known noise
signal with the information to be embedded and adds the \"scaled\"
signal to the original data. Once encoded in this fashion, the
steganographically encoded identification data is distributed throughout
the work as subliminal noise and, like noise, cannot be fully eliminated
from the work. Thus, one can ensure detection of an embedded message
even after substantial corruption of the data, such as might occur
through compression/decompression, encoding, alteration or excerpting of
the original data. By providing a means to indelibly tag a work with
specific information, steganography is likely to play a complementary
role to encryption as well as authentication techniques based on digital
signatures.

D. Controlling Use of Protected Works

Content providers will rely on a variety of technologies, based in
software and hardware, to protect them against unauthorized uses of
their information products and services.

One example can be found in the Audio Home Recording Act. This Act
requires that manufacturers of digital audio recording devices and
digital audio interface devices incorporate features that limit serial
copying.[^514] The hardware is programmed to read certain coding
information contained in the \"digital subcode channel\" of digital
sound recordings and broadcasts. Based on the information it reads, the
hardware circuitry will permit unrestricted copying, permit copying but
label the copies it makes with codes to restrict further copying, or
disallow copying. The serial copy management system allows unlimited
first generation copying \-- digital reproduction of originals (such as
CDs distributed by record companies), but prevents further digital
copying from those reproductions.[^515]

Similar systems can be implemented through hardware, software or both,
using the concepts discussed above (*e.g.*, rendering software and
encryption technology). For example, files containing works can include
instructions used solely to govern or control distribution of the work.
This information might be placed in the \"header\" section of a
file[^516] or another part of the file. In conjunction with receiving
hardware or software, the information, whether in the header or
elsewhere, can be used to limit what can be done with the original or a
copy of the file containing the work. It can limit the use of the file
to view- or listen-only. It can also limit the number of times the work
can be retrieved, opened, duplicated or printed.

E. Managing Rights in Protected Works

Systems for managing rights in works are being contemplated in the
development of the NII. These systems will serve the functions of
tracking and monitoring uses of copyrighted works as well as licensing
of rights and indicating attribution, creation and ownership interests.
A combination of file- and system-based access controls using encryption
technologies, digital signatures and steganography are, and will
continue to be, employed by owners of works to address copyright
management concerns. Such security measures must be carefully designed
and implemented to ensure that they not only effectively protect the
owner\'s interests in the works but also do not unduly burden use of the
work by consumers or compromise their privacy. And measures should be
studied to ensure that systems established to serve these functions are
not readily defeated.

To implement these rights management functions, information will likely
be included in digital versions of a work (*i.e.*, copyright management
information) to inform the user about the authorship and ownership of a
work (*e.g.*, attribution information) as well as to indicate authorized
uses of the work (*e.g.*, permitted use information). For instance,
information may be included in an \"electronic envelope\" containing a
work that provides information regarding authorship, copyright
ownership, date of creation or last modification, and terms and
conditions of authorized uses. As measures for this purpose become
incorporated at lower levels (*e.g.*, at the operating system level),
such information may become a fundamental component of a file or
information object.

Once information such as this is affiliated with a particular
information object (*e.g.*, data constituting the work) and readily
accessible, users will be able to easily address questions over
licensing and use of the work. For example, systems for electronic
licensing may be developed based on the attribution or permitted use
information associated with an information object. Electronic contracts
may be used.[^517] Providers may inform the user that a certain action
\-- the entering of a password, for instance, to gain access to the
service or a particular work, or merely the use of the service \-- will
be considered acceptance of the specified terms and conditions of the
electronic license.

The Library of Congress\' Electronic Copyright Management System may be
instrumental in rights management schemes. The proposed system, which is
under development, has three distinct components: (1) a registration and
recordation system, (2) a digital library system with affiliated
repositories of copyrighted works, and (3) a rights management
system.[^518] The system will serve as a testbed to gain experience with
the technology, identify issues, prototype appropriate standards, and
serve as a working prototype if full deployment is pursued later.

An important element of doing business in the digital environment will
be the ability to move money from users to the providers of the various
information and entertainment products and services.[^519] Presently,

transactions follow models wherein the actual assets do not move in the
system, but rather only representations of the assets. That is to say,
if a consumer selects a pay-for-view motion picture from a cable service
provider, the consumer gives the service provider a credit card number.
The service provider sends the credit information to a clearinghouse
where it is verified and sent on to a bank for payment. Such methods of
payment are relatively expensive because of the number of players and
transactions involved.

Some believe that a more efficient and cheaper method of payment is
\"digital cash.\" Using a digital cash system, actual assets are
transferred through digital communications means in the form of
individually identified representations of bills and coins \-- similar
to serial numbers on hard currency. There are a number of systems being
developed to accomplish such money movement, which should allow
consumers to move actual assets through the NII or GII, rather than
simply transferring a message to other existing systems to move the
money for a transaction.

One payment system relies on the existing credit and debit card and
banking systems. It avoids transaction costs by simply accumulating
users' transactions and charging their debit card or billing the
accumulated charges to their credit card once in a fixed time period,
depending on volume and the cumulative amount of charges. However, the
use of the third party bank for verification and collection adds cost to
the transactions. In addition, the anonymity of cash purchases is lost,
and there is an increased risk that transactions may be monitored by
organizations that track spending habits of consumers.

A more complex system uses "smart cards" and public key encryption to
move actual assets within the system. Such systems are common in Europe,
for instance, for public transportation and telephone charges. Under
such systems, a pre-paid card with a programmed amount of value or
\"cash\" is issued to a consumer, and the card\'s account is debited
when it is used for a purchase. Such systems protect anonymity because
debiting of the card does not require the consumer to reveal her
identity; it is legal tender just like cash. Such systems for use in the
NII and GII are under development by both European and U.S. firms.

F. Encryption Export Control

U.S. manufacturers are currently prevented from exporting software and
hardware with certain types of encryption technology.[^520] This is due
to an export licensing system developed over the last 50 years in order
to limit proliferation of encryption technology that could hinder
efficient intelligence gathering and effective law enforcement. U.S.
software manufacturers that produce \"mass market\" products indicate
that there is a significant demand internationally for software products
with strong encryption capabilities. They believe that their inability
to deliver such products is leading to the development and sale of these
needed products by foreign software developers. Relaxation of export
controls would permit U.S. businesses to compete with foreign companies
that presently incorporate strong encryption technology in their
products, but would make it even more difficult for the United States
and its allies to fight international terrorism, narcotic trafficking,
corruption, smuggling of nuclear materials, and other criminal
activities.

Export controls are administered through a bifurcated system in the
United States. The nature of the technology, product or information to
be exported dictates the Agency from which the party wishing to export
must turn to obtain a license to export.

• Export licensing of arms, ammunition, and implements of war is handled
by the Office of Defense Trade Controls (ODTC) of the Department of
State pursuant to the Arms Export Control Act.[^521]

• Export licensing of items not exclusively controlled for export by
another Department or agency of the Federal Government is handled by the
Bureau of Export Administration (BXA) of the Department of
Commerce.[^522]

When a party wishes to export products containing an encryption
technology, a Commodity Jurisdiction (CJ) Ruling is made that determines
whether the item is on the Munitions List or the Commerce Control List
(CCL). If the item is determined to be on the Munitions list, the State
Department reviews the request for an export license. Conversely, if the
item is found to be on the CCL, then it is assigned an Export Control
Classification Number (ECCN) which is used to determine the requirements
for its export licensing.[^523] The Commerce Department has exclusive
statutory jurisdiction over licensing of CCL items, and in practice
presents a less stringent licensing scheme than for munitions items.

Development of an optimal NII and GII requires strong security as well
as strong intellectual property rights. Copyright owners will not use
the NII or GII unless they can be assured of strict security to protect
against piracy. Therefore, encryption technology is vital because it
gives copyright owners an additional degree of protection against
misappropriation.

Encryption is equally important to other users of the NII and GII as
well. Industries that transmit sensitive information \-- either
internally or to other businesses \-- also require high levels of
security. Banks, accounting firms, and securities houses are prime
examples of businesses that routinely transmit sensitive transactional
information. In addition, absent strong encryption, medical and legal
professionals using the NII may have difficulty reassuring their clients
that sensitive personal information will not be compromised.

The growth of the NII and GII is sparking increased international demand
for encryption technology. However, for national security reasons, the
United States strictly controls the export of many encryption products
for sale abroad. This policy protects vital U.S. national security and
law enforcement interests, but critics contend that it is slowing the
spread of encryption technologies that could be used to protect
intellectual property transmitted through the NII and GII and causing
U.S. manufacturers to lose sales to foreign competitors who are not
constrained by U.S. export controls. To evaluate these complaints, the
Clinton Administration has directed the Commerce Department, through the
newly created Office of Strategic Industries and Economic Security, to
conduct studies on the export controls of encrypted software and their
impact on U.S. manufacturers \-- which were expected to be completed by
July 1995.

Recognizing the important role that encryption technology plays in
fostering a secure and useful NII, the Working Group supports efforts to
work with industry on key-escrow encryption technologies and other
encryption products which could be exported without compromising U.S.
intelligence gathering and law enforcement. The Working Group believes
that proliferation of such technology will enable U.S. industry to meet
the needs of the international market for these products and continue to
lead the development of the GII.

G. Development of Standards

A common concern related to development of the NII is the development of
standards. Obviously, some level of interconnection, interoperability
and standardization of telecommunications, computer, wireless,
satellite, broadcast and cable television technologies and networks will
be needed to achieve the full potential of the NII. The need for
standards, however, does not suggest that any one entity must be
established to develop and implement a comprehensive suite of standards.
Rather, consistent with historical trends firmly established in the
computer industry, the marketplace will develop the best suite of
standards to make the NII viable.

The computer industry tends to follow certain general trends in the
development and implementation of solutions to commonly encountered
problems.[^524] The most common trend is for an \"early implementer\" to
develop a \"point-to-point\" solution to a specific problem (*e.g.*, a
solution which solves the problem solely from the perspective of that
developer\'s needs). Alternatively, a consortium of companies will work
together to jointly develop a solution to address the problem. Depending
on the frequency of the problem, other individual companies or consortia
will develop different solutions to the problem. Over time, one solution
will begin to emerge as a *de* *facto* industry standard. It may gain
that status through consumer or user preference, through effective
promotion by one company or a consortium of companies, or, more
typically, a combination of both. Once it appears that an industry
consensus is emerging, efforts begin to convert that *de* *facto*
standard into a more formally recognized industry standard. This can
occur through accreditation efforts sponsored by private organizations,
such as the American National Standards Institute (ANSI) or the
Institute for Electrical and Electronic Engineers (IEEE); through
domestic governmental standard setting organizations, such as the
National Institute for Standards and Technology (NIST), the Department
of Energy (DOE) or the Department of Defense (DOD); or through
international organizations like the International Telecommunication
Union. As these *de facto* standards become established, either
informally or formally, vendors and systems providers incorporate these
standards into their products or make those products compatible with
those standards. Once established, the standards tend to evolve to
accommodate improvements using the standard setting organizations.
Eventually, many standards are implemented at the operating system
level.[^525]

Understanding this common progression is important in understanding how
the NII will likely develop. At this point in time, many different
solutions are being developed to address the needs of users, content
providers, service providers and carriers. Most of these developments
fall into the class of point-to-point solutions to serve specific needs.
As these early systems lead to development of standards, the various
industries supporting the NII\'s development will formally or informally
establish *de* *facto* and formally recognized standards. Once standards
begin to emerge or become established, the major operating systems
developers will incorporate or support them at the operating system
level. Thus, solutions developed to address the needs and concerns of
users, content providers, service providers and carriers will evolve and
become integrated into the infrastructure of the NII.

Over time, point-to-point solutions will become established as standards
and/or incorporated into operating systems. When this happens, uniform
means for identifying the author of a work, authenticating the contents
of an information object, ensuring the secure transmission of
information objects between remote sites, and authorizing subsequent use
of information objects after the first transfer, will be possible. At
this point, however, given the nascent state of the NII, it would be
inappropriate to suggest that a comprehensive system could best be
devised from a central planning perspective.

Interoperability and interconnectivity of networks, systems, services
and products operating within the NII will enhance its development and
success. Standardization of copyright management (standardized header
information and format, for instance), as well as technological
protection methods (such as encryption), may also be useful. The
question of whether any standards should be established, either through
government regulation or industry consensus, however, is not within the
purview of this Working Group. The issue of what those standards should
be, if established, is similarly outside the scope of the area of
inquiry of the Working Group.[^526] If a standard is established,
however, protection of intellectual property rights used in that
standard is of concern to this Group.

The intellectual property rights implications of the standards-setting
process are not new with the development of the NII. The Federal
Communications Commission, for instance, has established standards in
related areas without interfering with the legitimate rights of
intellectual property rights owners.[^527]

The Working Group finds that in the case of standards to be established,
by the government or the private sector, the owner of any intellectual
property rights involved must be able to decline to have its property
used in the standard, if such use would result in the unauthorized
exercise of those rights. If the rights holder wishes to have its
intellectual property as part of the standard, an agreement to license
the necessary rights on a nondiscriminatory basis and on reasonable
terms may be required. In the case of *de* *facto* standards, arising
out of market domination by an intellectual property rights holder, the
antitrust laws may provide a remedy for anticompetitive uses of the
standards.

III\. EDUCATION

A. Background

Public awareness of the importance of intellectual property in the
information age is essential to the successful implementation and growth
of the NII. The average citizen has only the most general understanding
that there are patents, copyrights and trademarks, let alone an
understanding of the legal, economic and trade issues involved. Indeed,
many lawyers do not have an understanding of this highly specialized
area of the law. However, as the convergence of computer and
communications technology brings the capability of high speed computers
and communications networks into our homes, we all have the possibility
to become not only authors and users of copyrighted works, but printers,
publishers, exhibitors and distributors as well.

Most people do not have a very clear idea about the role of intellectual
property law in encouraging creativity and the importance of
intellectual property to our economic well-being. Recent studies show
that the core copyright industries \-- those that create copyrighted
works \-- represent an estimated \$238.6 billion in annual contribution
to the U.S. economy. Moreover, other related industries, such as those
that distribute copyrighted works, account for an additional
contribution of approximately \$120 billion annually. Between 1991 and
1993, while the entire U.S. economy grew at an annual rate of
approximately 2.7 percent, the core copyright industries grew twice as
fast, at the rate of 5.6 percent. Furthermore, the employment generated
by these industries grew at four times the annual rate of the whole
economy in the period between 1988 and 1993.[^528] Users must learn
enough about this topic to appreciate just what respect for intellectual
property laws can do for them, and why a seemingly harmless transaction
on a computer network may have a great effect on the benefits they get
from the intellectual property system.

Users are likely creators, too. In that role they will benefit directly
from being able to decide how and under what conditions other users will
be able to use their works. It may be that a user will decide to
dedicate his or her work to the community at large and not assert the
rights that the law grants. Others may chose to assert their rights in a
general way and make their works available on a good faith \"pay if you
like it\" basis like much of the shareware available today. Others may
insist on strict enforcement of their rights and allow only specified
access on limited terms and conditions. The point is that all users
should understand the law sufficiently to know that they have all of
these options available to them. Copyright is the body of law that lets
such a system work. It appropriates to intangible goods \-- copyrighted
works \-- the characteristics of tangible property. This is what lets
the information marketplace work.

While it is necessary to increase public awareness in these areas, it
will not be easy. Intellectual property law is typically perceived by
non-lawyers as being incomprehensible with its own \"technical\" jargon
and legalistic terminology that do not provide clear cut rules in many
circumstances. Many often resist learning such \"legalese\" and want to
see clearer and more easily understandable rules. Unfortunately, a mere
recitation of \"do's and don'ts\" is not enough to explain to NII users
how the copyright system affects their interests, and why certain
activities are not allowed by the law.

It is not only intellectual property law that presents complexities for
the NII user. The underlying information technology is also difficult to
understand, and it is constantly evolving and presenting users with new
capabilities. Just learning about these capabilities and how to use them
is difficult enough for users. It is also difficult for users to
understand that they may not be able to always use all of the new
facilities to copy, perform and use works that the technology allows.

Overcoming these barriers is also difficult because the market for
copyrighted works is complex with many participants. Individual users
generally do not appreciate the impact that an unauthorized use of a
protected work can have in that market. This is especially true when the
unauthorized use has an immediate benefit to the user, and no
immediately visible harm to others. How tempting it is to simply make
yourself a copy of a piece of shareware and not pay its author, or to
make just one copy of a sound recording that someone has put up on a
bulletin board. What harm could there be? However, in Cyberspace, where
reproduction and dissemination are so easy and quick, even one
unauthorized reproduction \-- onto a server for instance \-- can have a
substantial ripple effect that could even supplant the market for
legitimate copies of the work. Just think what happens to the shareware
author's expectation of a profit or the sales of a commercial sound
recording if ten thousand individuals make such seemingly harmless
personal copies.

B. Copyright Awareness Campaign

To address these concerns about education, the Working Group has
initiated the Copyright Awareness Campaign. The kick-off meeting of the
Campaign, which was held in March 1995, brought together educator
associations, media organizations, copyright owners, the Copyright
Office, and the Departments of Education and Commerce to begin this
important discussion on how to educate the public on the importance of
copyright in the NII. All of the participants agree that this Campaign
is critical to the successful development of the NII, and many
suggestions were offered on how best to educate the public.

The participants in the Campaign generally agreed that education of the
public about intellectual property has a number of aspects. First,
public awareness needs to be raised about the existence of copyright law
and the protections that it provides. Second, model curricula need to be
developed so that state and local educators (and other organizations)
have available to them comprehensive material about intellectual
property that could be incorporated into all levels of education. Third,
the public needs quick access to up-to-date information on intellectual
property rights, and guidance as to where the information is located.

The first goal \-- raising public awareness of the existence of
intellectual property \-- is a broad goal to which anyone may
contribute. The Campaign\'s participants felt that, at present, few
people understand what intellectual property is, or the types of
intellectual property protection available. Generally, owners of
intellectual property should strive to get the word out about
intellectual property, whether individually or collectively, so that the
public becomes more familiar with the concept. As people begin to
associate intellectual property with public benefits, they will be more
receptive to learning about and respecting intellectual property.

The second goal is to develop educational curricula about intellectual
property \-- especially with regard to its role in the NII. In addition
to heightening public awareness, such curricula would reinforce the
important role of intellectual property as an incentive to create and
innovate, provide guidance as to legal use of protected works, and
dispel the notion that intellectual property is a barrier to the public
availability of works. The substantive components of the curricula may
be broken down further into a number of elements. Initially, respect for
copyright protection needs to be highlighted \-- intellectual property
needs to become a \"household word.\" This element will work in
conjunction with the goal of public awareness, but should focus more on
the importance of intellectual property, and not simply on its
existence. Second, a comprehensive program needs to be developed to
target different educational levels. Not only must a curricula be
developed and made available for all educational levels, but also a
methodology must be established for the continual reinforcement of the
importance of intellectual property throughout the lifelong learning of
every NII user.

A number of initiatives that are presently underway in both the public
and private sectors were reviewed during the kick-off meeting of the
Copyright Awareness Campaign. While each of these initiatives is useful
in its targeting of a specific audience, a more coordinated effort may
be more successful. Ideally, copyright owners, users, and educators will
seek to develop broad-based \"model curricula\" that incorporate all of
the substantive issues that are required for useful education about
copyright. Such model curricula could then be disseminated to state
school boards, private schools, libraries, community centers and other
educational institutions for incorporation into their programs.

In considering such model curricula, the Campaign\'s participants noted
that a number of factors should be considered, including the age of the
persons being taught, their level of experience with the NII, the
specific applications for which they use the NII, and their previous
exposure to intellectual property laws. Certain core concepts should be
introduced at the elementary school level \-- at least during initial
instructions on computers or the Internet, but perhaps even before such
instruction. For example, the concepts of property and ownership are
easily explained to children because they can relate to the underlying
notions of property \-- what is \"mine\" versus what is \"not mine,\"
just as they do for a jacket, a ball, or a pencil. At the same time that
children learn basic civics, such as asking permission to use somebody
else\'s pencil, they should also learn that works on a computer system
may also be property that belongs to someone else. Therefore, they
should learn what one participant refers to as \"electronic
citizenship,\" including how to determine the owner of a work, and how
to go about asking for permission to use it. Similarly, they should
learn that the taking of someone else\'s property, including copyrighted
works, without permission is not right. Additionally, as noted
previously, users will also be creators of copyrighted works, and
therefore should know what their rights are and that they may expect
those rights to be respected by others.

Other concepts of intellectual property should perhaps be introduced
later. Soon after learning about property and ownership, students should
learn more about the various forms of intellectual property, and why
their protection is so important. Students should learn about the many
valuable technologies that would not have been developed without
protections of the patent system to recover costly research and
development investments. Similarly, students should be aware of the
substantial economic contributions of the industries that rely on
copyright protection \-- including the computer, entertainment,
publishing, and broadcasting industries. In addition, people of all ages
should recognize that millions of U.S. workers are employed by
industries that rely heavily on intellectual property protection, and
that intellectual property rights are truly a matter of national
interest.

Additional concepts regarding copyright may be explored throughout a
person\'s education. For example, the economic rationale for granting
authors and inventors exclusive property rights in their creative
efforts for a limited period of time in order to foster creativity and
innovation might fit neatly in a high school economics course.
Similarly, a number of topics might be explored during social studies or
history classes including the constitutional roots of patent and
copyright law, the nature of a governmental grant of a property right,
or the role of the copyright and patent systems in fostering the present
day information and communications revolution. Business courses could
discuss the concepts of licensing intellectual property rights, the use
of intellectual property as a marketing device, the concept of
intellectual property as a corporate asset, and the trademark concept of
good will. At the college level, concepts of intellectual property could
be included in many programs. For example, basic patent and trade secret
law could be taught in all science and engineering programs, while
copyright law could be included in any instruction dealing with
literature, art or computer science.

Along with the initial consideration of the substantive component of
*what* should be taught, a procedural component must also be determined.
This component actually considers a number of related questions \--
*when* should a specific topic be taught, and in what order as related
to other topics; *how* should the specific topic be presented, including
general tone; and *what* *form* of communication is most effective given
the nature of the topic and the audience involved. The participants at
the kick-off meeting discussed a number of factors that should be
considered in making these determinations.

Determining when a topic should be presented depends on its degree of
complexity. As noted earlier, basic concepts of intellectual property
\-- such as ownership \-- are easily taught at a young age. More
complicated topics, such as the exclusive rights of intellectual
property owners and fair use, would likely be reserved for later study.
However, complexity of the subject matter alone is not the only
consideration. A complex topic can be simplified for earlier ages,
leaving more detailed instruction for future study. For example, the
basic notion of ownership may be introduced at an early age, but should
also be reinforced when discussing exclusive rights, licensing, and in
other related topics throughout a person\'s education. Thus, the answer
to the question of when a given topic should be taught may be
\"always,\" with increasing degrees of complexity so that students are
not overwhelmed by a subject that they are too young to understand.

A slightly different factor to consider is how a particular topic should
be presented. A point raised in the first meeting of the Copyright
Awareness Campaign was that copyright education should not be a series
of \"thou shall nots.\" Instead, education should carry a \"just say
yes\" message \-- that works may be accessed and used, and that seeking
permission is not an insurmountable barrier. The prohibitions against
unauthorized use of intellectual property should be cast in terms of a
right to control one\'s property. The public should also understand that
copyright protection is specifically prescribed for a limited period of
time, after which the underlying work becomes dedicated to the public.
In addition, users should recognize that as on-line licensing becomes
more readily available for accessing protected works on the NII, the
delays in seeking authorization from the property owner will be
minimized.

Another problem with the determination of how a topic should be
presented is ensuring accurate and consistent information. In order for
the public to respect and participate in educational programs, they must
be able to rely on the information they receive. As many private
organizations have already developed their own educational materials \--
often directed at specific audiences and applications \-- confusion may
result on the part of the layperson based on perceived \"mixed signals\"
of what is and is not permitted. Therefore, as curricula and other
educational programs are developed, clear and consistent information
must be ensured in order to avoid confusion and contempt. A system for
\"peer review\" of educational material by impartial editors may aid in
presenting accurate and consistent information.

The third factor, and perhaps most important, is the form of
communication used to deliver an education program. Clearly, audiences
respond differently to varied methods of communication. Numerous methods
have been suggested through the Copyright Awareness Campaign for getting
the message across including: classroom learning; video instruction;
distance learning; broadcast television and radio; satellite
teleconferencing; cable television; on-line services; billboards; books,
magazines, and other publications; music; and art. Combinations of these
methods in copyright workshops will reinforce key concepts and help tie
information together. Many of these forms of communication are already
being used to educate the public about copyright law \-- and the
producers of these materials should work together to determine which
methods are most effective for a given audience. The sharing of such
information will go a long way toward reducing duplication of efforts
\-- especially those that are less effective.

Educators and media organizations can have tremendous impact on the
procedural component because they possess the expertise required to
determine whether a particular educational message is being effectively
communicated. Through testing procedures, educators may determine
whether certain concepts are comprehended by students. Similarly,
through marketing surveys, media organizations can determine the forms
of communication that are most effective for particular audiences. These
methods of evaluation are already available for other educational and
communication materials, thus requiring only minor adaptation for the
evaluation of an intellectual property curricula.

The final goal of the Campaign is the establishment of a system that
provides the public with easy access to accurate and up-to-date
information on copyright, including guidance on when and how to get
authorization to use copyrighted works. While educational programs and
curricula may raise public awareness, they cannot teach the public every
facet of the law as it applies to new and previously unencountered
situations. People soon will become frustrated with such programs if
they cannot get quick answers to their questions regarding compliance
with copyright law. In order for NII users to comply with the law, they
need to know where and how to receive additional information on
copyright as they encounter new situations on the NII.

A number of methods could be used to provide this service. A directory
of attorneys having expertise in a particular field, such as copyright
issues dealing with educational or library applications, could be
developed and maintained. Additionally, as was suggested in the
Copyright Awareness Campaign, a package of copyright basics could be
established on a World Wide Web home page for access by interested
users. Similarly, a copyright information news group could be
established on Usenet to keep users informed of where to go to get
important copyright information. The U.S. Copyright Office provides
on-line access to its circulars, announcements, and regulations
(proposed and final), as well as information regarding registration
information (original and renewal), and other recorded documents. Other
private organizations also provide such information and counseling,
often for nominal charges.

IV\. Recommendations

A. Copyright

It is difficult for intellectual property laws to keep pace with
technology. When technological advances cause ambiguity in the law,
courts look to the law\'s underlying purposes to resolve that ambiguity.
However, when technology gets too far ahead of the law, and it becomes
difficult and awkward to adapt the specific statutory provisions to
comport with the law\'s principles, it is time for reevaluation and
change. \"Even though the 1976 Copyright Act was carefully drafted to be
flexible enough to be applied to future innovations, technology has a
habit of outstripping even the most flexible statutes.\"[^529]

From its beginning, the law of Copyright has developed in response to
significant changes in technology. Indeed, it was the invention of a new
form of copying equipment \-- the printing press \-- that gave rise to
the original need for copyright protection. Repeatedly, as new
developments have occurred in this country, it has been the Congress
that has fashioned the new rules that new technology made
necessary.[^530]

The Working Group has examined the adequacy of the Copyright Act to cope
with the pace of technological changes. In applying the law to new uses,
media and technology, the issues presented vary. Certain issues merely
require an explanation of the application of the current law, and
clearly are appropriately covered. Others present rights or limitations
that clearly fit within the spirit of the law but the letter of the law
is in need of clarification to avoid uncertainty and unnecessary
litigation. Still others need new solutions. Technology has altered the
balance of the Copyright Act \-- in some instances, in favor of
copyright owners and in others, in favor of users. The goal of these
recommendations is to accommodate and adapt the law to technological
change so that the intended balance is maintained and the Constitutional
purpose is served.[^531]

While it is not advisable to propose amendment of the law with every
technological step forward, neither is it appropriate to blindly cling
to the status quo when the market has been altered.

Sound policy, as well as history, supports our consistent deference to
Congress when major technological innovations alter the market for
copyrighted materials. Congress has the constitutional authority and the
institutional ability to accommodate fully the varied permutations of
competing interests that are inevitably implicated by such new
technology.[^532]

Throughout more than 200 years of history, with periodic amendment,
United States law has provided the necessary copyright protection for
the betterment of our society. The Copyright Act is fundamentally
adequate and effective. In a few areas, however, it needs to be amended
to take proper account of the current technology. The coat is getting a
little tight.[^533] There is no need for a new one, but the old one
needs a few alterations.

1\. The Transmission of Copies and Phonorecords

> a\. The Distribution Right

The Copyright Act gives a copyright owner the exclusive right \"to
distribute copies or phonorecords of the copyrighted work\" to the
public. It is not clear under the current law that a transmission can
constitute a distribution of copies or phonorecords of a work.[^534]
Yet, in the world of high-speed, communications systems, it is possible
to transmit a copy of a work from one location to another. This may be
the case, for instance, when a computer program is transmitted from one
computer to ten other computers. When the transmission is complete, the
original copy typically remains in the transmitting computer and a copy
resides in the memory of, or in storage devices associated with, each of
the other computers.[^535] The transmission results essentially in the
distribution of ten copies of the work. However, the extent of the
distribution right under the present law may be somewhat uncertain and
subject to challenge. Therefore, the Working Group recommends that the
Copyright Act be amended to expressly recognize that copies or
phonorecords of works can be distributed to the public by transmission,
and that such transmissions fall within the exclusive distribution right
of the copyright owner.

The proposed amendment does not create a new right. It is an express
recognition that, as a result of technological developments, the
distribution right can be exercised by means of transmission \-- just as
the reproduction, public performance and public display rights may
be.[^536]

It is argued by some that the existing right of distribution encompasses
transmissions of copies and that no amendment is necessary. Indeed, the
distribution right, as set forth in Section 106(3) of the Copyright Act,
can be \-- and, in at least one case, has been \-- interpreted to
include transmissions which distribute copies of works to, for example,
the memories of computers. Transmission, it is argued, is logically and
legally a means of distribution. The Working Group has no argument with
such an interpretation; it properly conforms to the intent of the
distribution right and, we believe, is correct from both a practical and
legal standpoint.

Others suggest that amendment of the law may not be necessary because
even if the distribution right does not cover the distribution of
reproductions by transmission, the reproduction right is clearly
implicated and that will protect the copyright owner. However, the fact
that more than one right may be involved in infringing activity does
not, and should not, mean that only one right should apply.[^537] Each
of the exclusive rights is distinct and separately alienable and
different parties may be responsible for infringements or licensing of
different rights \-- and different rights may be owned by different
people.[^538] Because transmissions of copies may constitute both a
reproduction and a distribution of a work, transmissions of copies
should not constitute the exercise of just one of those rights. Indeed,
those licensed only to reproduce a work should not be entitled to also
distribute the work through transmission \-- thereby displacing the
market for the copyright owner or his distribution licensee.

Infringement takes place when any one of the rights is violated: where,
for example, a printer reproduces copies without selling them or a
retailer sells copies without having anything to do with their
reproduction.[^539]

Clearly, not all transmissions of copies of copyrighted works will fall
within the copyright owner\'s exclusive distribution right. Moreover,
even if a transmission of a copy falls within the scope of the right, it
is not necessarily unlawful. First, the distribution must be a
distribution *to* *the* *public*. The case law interpreting
\"publication\" provides guidance as to what constitutes distribution to
the public.[^540] If a distribution would not constitute a publication
of the work, then it would likely be found to be outside the scope of
the copyright owner\'s distribution right. Therefore, the transmission
of a copyrighted work from one person to another in a private e-mail
message would not constitute a distribution to the public.[^541] Second,
all of the limitations, exemptions and defenses that currently apply to
the distribution right and allow users to distribute certain copies to
the public or to distribute copies under certain circumstances will
continue to apply. For example, any exercise of one of the exclusive
rights may be fair use \-- including the reproduction and distribution
of copies by transmission.

Some are of the view that the current language of the Act does not
encompass distribution by transmission. They argue that the proposed
amendment expands the copyright owner\'s rights without a concomitant
expansion of the limitations on those rights. However, since
transmissions of copies already clearly implicate the reproduction
right, it is misleading to suggest that the proposed amendment of the
distribution right would expand the copyright owner\'s rights into an
arena previously unprotected. Further, even if the premise is correct
(that the amendment expands the distribution right), the conclusion that
the limitations of that right are not similarly expanded is invalid. The
limitations on the right \-- which place certain distributions to the
public outside the scope of the copyright owner\'s right \-- would
necessarily expand to also place similar distributions by means of
transmission outside the scope of the right.

Nevertheless, there is no reason to treat works that are distributed in
copies to the public by means of transmission differently than works
distributed in copies to the public by other, more conventional
means.[^542] Copies distributed via transmission are as tangible as any
distributed over the counter or through the mail. Through each method of
distribution, the consumer receives a tangible copy of the work.

When the public performance right was initially granted, it was thought
to encompass only \"live,\" in-person performances. When it became clear
that copyrighted works could be publicly performed by other means \--
*i.e.*, broadcast and, later, cable transmissions \-- the law was
clarified. The same is true today with respect to the distribution
right. Transmission is a means of distribution of copies, just as it can
be a means of performance. However, the differences of opinion
summarized above underscore the need for clarification and legal
certainty. The costs and risks of litigation to define more clearly the
right \-- and the time achieving such clarity would take \-- would
discourage and delay use of the NII.

> b\. Related Definitional Amendments

The Working Group also recommends other related amendments to two
definitions.

To \"Transmit\"

As explained above, under current technology, a copy of a work may be
transmitted. However, the Copyright Act defines only what it is to
transmit a performance or display of a work. Therefore, the Working
Group recommends that the definition of \"transmit\" in Section 101 of
the Copyright Act be amended to include a definition of a transmission
of a reproduction.[^543]

How to delineate between these types of transmissions is a difficult
issue to resolve. The transmissions themselves hold no clues; one type
often looks the same as the other during the transmission. If the
transmitter intends to transmit a performance of the work, as well as to
distribute a reproduction of it \-- or if the receiver is able to hear
or see a performance of the work in the course of receiving a copy of it
\-- what rights are exercised by the transmission? A transmission could
be a transmission of a reproduction or a performance or both. The
resolution of these issues should rest upon the specific facts of the
case. Such issues will typically be clarified between rightsholders and
users in appropriate license arrangements. If confusion or disagreement
exists in a specific context, the courts \-- rather than Congress \--
are in the better position to determine which, if any, exclusive rights
are involved in a particular transmission. Courts regularly make such
determinations in other cases where rights overlap.[^544]

\"Publication\"

The legislative history of the Copyright Act makes clear that \"any form
of dissemination in which a material object does not *change*
*hands* . . . is not a publication no matter how many people are exposed
to the work.\"[^545] Thus, a work that is only displayed or performed
via the NII would not be considered published, no matter how many people
have access to the display or performance, because a material object \--
a copy of the work \-- does not change hands.[^546] However, in the case
of transmissions of reproductions, the recipients of the transmissions
receive copies of the work (*i.e.*, copies of the work have been
distributed) \-- although they may not have \"changed hands\" in the
literal sense.

Whether the transmission of copies of works is clearly within the scope
of the distribution right is also a problem with respect to the act of
publication by the transmission of copies. Indeed, the definition of
\"publication\" incorporates the language used to describe the
distribution right, which the Working Group\'s proposal amends.[^547]
Publication largely turns on whether the work has been distributed to
the public. Thus, if copies of a work may be distributed to the public
by transmission, then a work may be published by the transmission of
copies to the public. Therefore, consistent with the proposed amendment
of the distribution right, the Working Group recommends that the
definition of \"publication\" in Section 101 of the Copyright Act be
amended to recognize that a work may be published through the
distribution of copies of the work to the public by transmission.[^548]

The effects under the law of a work being considered published (rather
than unpublished) generally are negative from the viewpoint of the
copyright owner. Published works, for example: (1) must be deposited in
the Library of Congress; (2) are subject to more limitations on the
exclusive rights, including a broader application of fair use; (3) must
meet certain author nationality or domicile requirements to be eligible
for protection; and (4) must bear a copyright notice if published before
March 1, 1989.[^549] However, the designation of works distributed to
the public by transmission as published will be important in the case of
works distributed first \-- or solely \-- on-line. The deposit
requirement will aid in the preservation of those works, which otherwise
might be updated or revised on-line, destroying \-- or at least
obscuring \-- the original published versions. This may be particularly
critical in preserving the scholarly and scientific record.[^550]

Just as not all distributions of copies by transmission will constitute
distributions to the public (and fall within the distribution right),
not all transmissions of copies will constitute publication. Private
e-mail messages would not be regarded as published.[^551] Neither would
other restricted transmissions of copies, such as those in a typical
corporate setting, where transmissions of copies within the company
computer network are restricted as to further distribution.[^552]
However, as in the print environment, the distribution of copies to a
small group under circumstances where further distribution is authorized
would publish the work.[^553]

> c\. The Importation Provisions

The Working Group also recommends that the prohibitions on importation
be amended to reflect the fact that, just as copies of copyrighted works
can be distributed by transmission in the United States, they can also
be imported into the U.S. by transmission. If an infringing literary
work, for instance, were physically shipped into the U.S. in the form of
a paper copy, a CD-ROM disk or even stored on a memory chip, then it
would be an infringing importation if the statutory conditions
existed.[^554]

Cross-border transmission of copies of copyrighted works should be
subject to the same restrictions as shipping them by airmail. Just as
the distribution of copies of a copyrighted work is no less a
distribution than the distribution of copies by mail, the international
transmission of copies of copyrighted works is no less an importation
than the importation by airmail.

Although we recognize that the U.S. Customs Service cannot, for all
practical purposes, enforce a prohibition on importation by
transmission, given the global dimensions of the information
infrastructure of the future, it is important that copyright owners have
the other remedies for infringements of this type available to them.
Therefore, the Working Group recommends that Section 602 of the
Copyright Act be amended to include importation by carriage or shipping
of copies as well as by transmission of them.

2\. Public Performance Right for Sound Recordings

Transmissions of sound recordings will certainly supplement and may
eventually replace the current forms of distribution of phonorecords. In
the very near future, consumers will be able to receive digital
transmissions of sound recordings on demand \-- for performance in the
home or for downloading \-- from the so-called \"celestial jukebox.\"
The legal nature of such transmissions \-- whether they are performances
or distributions \-- has been widely debated. As discussed above, the
Working Group recommends that Section 106 of the Copyright Act be
amended to make clear that copies or phonorecords can be distributed by
transmission. However, many of these transmissions will clearly
constitute exercise of the public performance right \-- a right which
the Copyright Act fails to grant to copyright owners of sound
recordings.[^555]

The lack of a public performance right in sound recordings under U.S.
law is an historical anomaly that does not have a strong policy
justification \-- and certainly not a legal one. Sound recordings are
the only copyrighted works that are capable of being performed that are
not granted that right. Therefore, for example, to transmit a
performance of a sound recording without infringement liability, an
audio-on-demand service acting as a \"celestial jukebox\" must obtain a
license from, and pay a royalty to, the copyright owner of the
underlying musical work (*i.e.*, the person or entity who owns the
rights in the notes and the lyrics), but it does not have to obtain
permission from, or pay a license fee to, the copyright owner of the
sound recording or the performer. The Working Group believes that this
inequity should be rectified.

Public performance rights are granted in many foreign markets. Due to
the lack of a performance right in the United States, U.S. performers
and record companies are denied their fair share of foreign royalty
pools for the public performance of U.S. sound recordings in some
countries and are in danger of losing access to their share in others.

By granting performance rights in sound recordings, the United States
will treat the creators of these culturally and economically important
copyrighted works the same as all other works capable of being publicly
performed. This legislation will provide increased incentive for the
creators of sound recordings to produce and disseminate more works,
thereby expanding consumer choice. In addition, the enactment of these
rights will strengthen the hand of Government negotiators and private
advocates seeking a fair share of foreign royalty pools.

Some argue that copyright owners of sound recordings should not be
granted a public performance right because they derive some indirect
benefit from the public performance of their works. This argument is
based on the theory that the public performance of a work increases the
sales of reproductions of that work. Therefore, the copyright owner gets
an indirect benefit (*i.e.*, increased sales of reproductions) from the
so-called \"free advertising\" that public performances provide. This,
in fact, may be true in some cases. However, it is not a valid policy
argument against providing sound recording copyright owners with the
full panoply of exclusive rights other copyright owners enjoy.

The exercise of one right often increases the value of the exercise of
another right, but we do not restrict any other copyright owners from
exercising *all* of his or her rights. For instance:

• The copyright owner of the musical composition embodied in a sound
recording is paid both when recordings of the composition are sold *and*
when the composition is publicly performed \-- even though the public
performance might increase the number of records sold and thus benefit
the copyright owner.

• Serial excerpts from a novel that are published in a magazine might
increase sales of the book, but the magazine nonetheless must obtain
permission from the author of the book.

• The copyright owner of that novel may also increase his book sales
when a motion picture based on the novel is released. However, no one
suggests that the motion picture company should not have to pay the
copyright owner of the novel for the right to turn it into a movie, just
because the movie might indirectly benefit the copyright owner.

The copyright owners of sound recordings should be able to decide for
themselves, as do all other copyright owners, if \"free advertising\" is
sufficient compensation for the use of their works. If the users\'
arguments regarding the benefit copyright owners derive from the public
performance of their sound recordings are correct, the users should be
able to negotiate a very low rate for a license to do so.

It also has been argued that the copyright owners of sound recordings
should not be granted the \"exclusive\" right that all other copyright
owners enjoy, but instead be subject to a compulsory license, so that
they cannot act as a \"gatekeeper\" to the licensing of performances of
the musical works embodied in sound recordings. It is asserted that
while a copyright owner of a sound recording with an exclusive public
performance right could block the performance of the musical work by
denying a license to publicly perform the sound recording, the copyright
owner of the musical work could not. This argument is based on the
incorrect assumption that copyright owners of musical works are not
granted exclusive public performance rights. Section 106(4) of the
Copyright Act clearly grants exclusive rights to the copyright owners of
musical works, and, while virtually all music performance licensing is
handled for those copyright owners by performing rights societies on a
nonexclusive basis, the copyright owners could license their performance
rights on an exclusive basis if they chose to do so.[^556]

Two bills introduced in the 104th Congress would grant a very limited
performance right in sound recordings.[^557] A *full* public performance
right \-- *particularly* with respect to all *digital* transmissions \--
is warranted. There is no just reason to afford a lower level of
protection to one class of creative artists. Further, *any* special
limitations on this right weakens our position internationally. The
digital communications revolution \-- the creation of advanced
information infrastructures \-- is erasing the distinctions among
different categories of protected works and the uses made of them.

3\. Library Exemptions

The copyright law carefully balances the rights of copyright owners with
the legitimate needs of users. Nowhere is this balancing more apparent
than in the exemptions that are intended to permit libraries reasonable
use of copyrighted works to serve the legitimate demands of their
patrons.

Many have expressed concern that the special exemptions for libraries in
Section 108 of the Copyright Act are no longer relevant in the digital
era. Libraries, of course, may make fair use of any copyrighted works
pursuant to the provisions of Section 107.[^558] Section 108, however,
provides additional exemptions specifically for libraries and archives
On the one hand, there are those who believe that since licensing of
transactions of works in digital form will be a feature of the digital
distribution systems of the future, there is no need for library
exceptions. Each copying transaction will be cheap and libraries can
simply pay for all of the copying in which they engage. On the other
hand, there are those who believe that unrestricted copying in libraries
should be the rule, without the special conditions and limitations set
forth in Section 108.

The Working Group agrees with neither those who would delete the
exemptions for library copying nor those who would permit wholesale
copying in libraries. It believes that there is an important public
interest in exempting certain library uses of copyrighted works and that
the public interest is no less important \-- and, indeed, may be more
important \-- when such use involves digital technology. It also
believes that there is an equally important interest in recognizing the
legitimate interests of copyright owners in licensing uses of their
works through voluntary systems.

Therefore, notwithstanding the legislative history of the 1976 Act which
clearly intended that Section 108 did not permit digital
reproduction,[^559] the Working Group believes that it is important to
expand the exemption so that digital copying by libraries and archives
is permitted under certain circumstances. In supporting this departure
from the generally accepted view of the scope and intention of Section
108, the Working Group believes that the law must preserve the role of
libraries and archives in the digital era.

Libraries and archives are the trustees of our collective knowledge and
must be able to make use of digital technology to preserve the Nation\'s
heritage and scholarship. Therefore, the Working Group recommends that
the library exemptions be amended: (1) to accommodate the reality of the
computerized library by allowing the preparation of three copies of
works in digital form, with no more than one copy in use at any time
(while the others are archived); (2) to recognize that the use of a
copyright notice on a published copy of a work is no longer mandatory;
and (3) to authorize the making of digital copies for purposes of
preservation.[^560]

4\. Reproduction for the Visually Impaired

The NII offers real opportunities to many visually impaired people to
participate in learning, communication and discourse to a greater extent
than when only conventional modes of communication are available. With
the aid of software and computer equipment that is widely available,
people now have the capacity to view text on CD-ROM on screen in a
\"large-type\" format even if the publisher did not include such a
feature, but the publication and distribution of large-type editions
remains very important. To ensure fair access to all manner of printed
materials, it is necessary to amend the copyright law.

The laws of many Berne Convention countries contain express exemptions
from liability for the unauthorized manufacture and distribution of
Braille or other editions designed to assist the visually
impaired.[^561] The Working Group believes that similar provisions
should be included in the Copyright Act, and has modeled its proposal on
the Australian law, so as to maintain private rights while recognizing
certain readers\' special needs. The proposed amendment would provide an
exemption for non-profit organizations to reproduce and distribute to
the visually impaired \-- at cost \-- Braille, large type, audio or
other editions of previously published literary works in forms intended
to be perceived by the visually impaired, provided that the owner of the
exclusive right to distribute the work in the United States has not
entered the market for such editions during the first year following
first publication of the work.[^562]

5\. Criminal Offenses

Although the Copyright Act provides criminal penalties when the
infringement is willful and is for purposes of commercial advantage or
private financial gain,[^563] the dismissal of the criminal charges in
*United States v. LaMacchia* demonstrates a serious lacuna in the
criminal copyright provisions: it does not now reach even the most
wanton and malicious large-scale endeavors to copy and provide on the
NII limitless numbers of unauthorized copies of valuable copyrighted
works unless the copier seeks profits.[^564] Since there is virtually no
cost to the infringer, certain individuals are willing to make such
copies (or assist others in making them) for reasons other than monetary
reward. For example, someone who believes that all works should be free
in Cyberspace can easily make and distribute thousands of copies of a
protected work and may have no desire for commercial advantage or
private financial gain.

The Working Group agrees with the *LaMacchia* court:

Criminal as well as civil penalties should probably attach to willful,
multiple infringements of copyrighted software even absent a commercial
motive on the part of the infringer. One could envision ways that the
copyright law could be modified to permit such prosecution. But,
\"\[i\]t is the legislature, not the Court which is to define a crime,
and ordain its punishment.\"

Therefore, the Working Group generally supports the amendments to the
copyright law and the criminal law (which sets out sanctions for
criminal copyright violations) set forth in S. 1122, introduced in the
104th Congress by Senators Leahy and Feingold following consultations
with the Justice Department. The bill would make it a criminal offense
to willfully infringe a copyright by reproducing or distributing copies
with a retail value of \$5,000 or more. By setting a monetary threshold
and requiring willfulness, the bill ensures that merely casual or
careless conduct resulting in distribution of only a few copies will not
be subject to criminal prosecution and that criminal charges will not be
brought unless there is a significant level of harm to the copyright
owner\'s rights.[^565]

6\. Technological Protection

The ease of infringement and the difficulty of detection and enforcement
will cause copyright owners to look to technology, as well as the law,
for protection of their works. However, it is clear that technology can
be used to defeat any protection that technology may provide. The
Working Group finds that legal protection alone will not be adequate to
provide incentive to authors to create and to disseminate works to the
public. Similarly, technological protection likely will not be effective
unless the law also provides some protection for the technological
processes and systems used to prevent or restrict unauthorized uses of
copyrighted works.

The Working Group finds that prohibition of devices, products,
components and services that defeat technological methods of preventing
unauthorized use is in the public interest and furthers the
Constitutional purpose of copyright laws. Consumers of copyrighted works
pay for the acts of infringers; copyright owners have suggested that the
price of legitimate copies of copyrighted works may be higher due to
infringement losses suffered by copyright owners. The public will also
have access to more copyrighted works via the NII if they are not
vulnerable to the defeat of protection systems.

Therefore, the Working Group recommends that the Copyright Act be
amended to include a new Chapter 12, which would include a provision to
prohibit the importation, manufacture or distribution of any device,
product or component incorporated into a device or product, or the
provision of any service, the primary purpose or effect of which is to
avoid, bypass, remove, deactivate, or otherwise circumvent, without
authority of the copyright owner or the law, any process, treatment,
mechanism or system which prevents or inhibits the violation of any of
the exclusive rights under Section 106. The provision will not eliminate
the risk that protection systems will be defeated, but it will reduce
it.

The proposed prohibition is intended to assist copyright owners in the
protection of their works.[^566] The Working Group recognizes, however,
that copyright owners may wish to use such systems to prevent the
unauthorized reproduction, for instance, of their works, but may also
wish to allow some users to deactivate the systems. Furthermore, certain
uses of copyrighted works are not unlawful under the Copyright Act.
Therefore, the proposed legislation prohibits only those devices or
products, the primary purpose or effect of which is to circumvent such
systems *without* *authority*. That authority may be granted by the
copyright owner or by limitations on the copyright owner\'s rights under
the Copyright Act.

It has been suggested that the prohibition is incompatible with fair
use. First, the fair use doctrine does not require a copyright owner to
allow or to facilitate unauthorized access or use of a work. Otherwise,
copyright owners could not withhold works from publication; movie
theatres could not charge admission or prevent audio or video recording;
museums could not require entry fees or prohibit the taking of
photographs. Indeed, if the provision of access and the ability to make
fair use of copyrighted works were required of copyright owners \-- or
an affirmative right of the public \-- even passwords for access to
computer databases would be considered illegal. Second, if the
circumvention device is primarily intended and used for legal purposes,
such as fair use, the device would *not* violate the provision, because
a device with such purposes and effects would fall under the
\"authorized by law\" exemption.

Concern has also been expressed with regard to the ability to defeat
technological protection for copies of works not protected by copyright
law, such as those whose term of protection has expired or those in the
public domain for other reasons (such as ineligibility for protection).
However, devices whose primary purpose and effect is to defeat the
protection for such works would *not* violate the provision. The
proposed provision exempts all devices, products and services primarily
intended and used for legal purposes, which would include the
reproduction and distribution of copies of works in the public domain.
Further, a protection system on copies of works in the public domain
would not qualify with respect to such copies as a system which
\"prevents or inhibits the violation of any of the exclusive rights of
the copyright owner under Section 106.\" Works in the public domain are
not protected by copyright, and thus have no copyright owner or
exclusive rights applicable to them. Finally, while technological
protection may be applied to copies of works in the public domain, such
protection attaches only to those particular copies \-- not to the
underlying work itself.[^567]

It has also been suggested that the provision places an unwarranted
burden on manufacturers. The proposed amendment would impose *no*
requirement on manufacturers to accommodate any protection systems, such
as those required in Chapter 10 of manufacturers of digital audio
recording devices.[^568] The provision would only prohibit the
manufacture of circumvention devices.[^569]

Neither does the proposed amendment require copyright owners to use
technological protection, or, if they do, to employ any particular type.
Copyright owners should be free to determine what level or type of
protection (if any) is appropriate for their works, taking into
consideration cost and security needs, and different consumer and market
preferences. Moreover, there is no evidence that one technological
protection system could \-- or should \-- take care of all types of
works.

Legislation of this type is not unprecedented. The Copyright Act already
protects sound recordings and musical works by prohibiting the
circumvention of any program or circuit that implements a serial copy
management system or similar system included in digital audio recording
devices and digital audio interface devices. Section 1002 provides:

No person shall import, manufacture, or distribute any device, or offer
or perform any service, 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 \[serial copy
management system or similar system\].[^570]

The Communications Act includes a similar provision:

Any person who manufactures, assembles, modifies, imports, exports,
sells, or distributes any electronic, mechanical, or other device or
equipment, knowing or having reason to know that the device or equipment
is primarily of assistance in the unauthorized decryption of satellite
cable programming, or is intended for any other activity prohibited by
\[Section 605(a)\] shall be fined not more than \$500,000 for each
violation, or imprisoned for not more than 5 years for each violation,
or both. For purposes of all penalties and remedies established for
violations of this paragraph, the prohibited activity established herein
as it applies to each such device shall be deemed a separate
violation.[^571]

Precedent for this type of legislation is also found in the
international arena. The NAFTA requires each party to make it a criminal
offense to \"manufacture, import, sell, lease or otherwise make
available a device or system that is primarily of assistance in decoding
an encrypted program-carrying satellite signal without the authorization
of the lawful distributor of such signal . . . .\"[^572] In 1988, the
United Kingdom enacted legislation prohibiting the manufacture,
distribution or sale of a device designed or adapted to circumvent
copy-protection systems.[^573]

7\. Copyright Management Information

In the future, the copyright management information associated with a
work \-- such as the name of the copyright owner and the terms and
conditions for uses of the work \-- may be critical to the efficient
operation and success of the NII. Copyright management information will
serve as a kind of license plate for a work on the information
superhighway, from which a user may obtain important information about
the work. The accuracy of such information will be crucial to the
ability of consumers to find and make authorized uses of copyrighted
works on the NII. Reliable information will also facilitate efficient
licensing and reduce transaction costs for licensable uses of
copyrighted works (both fee-based and royalty-free).

The public should be protected from false information about who created
the work, who owns rights in it, and what uses may be authorized by the
copyright owner. Therefore, the Working Group recommends that the
Copyright Act be amended to prohibit the provision, distribution or
importation for distribution of copyright management information known
to be false and the unauthorized removal or alteration of copyright
management information. Under the proposed amendment, copyright
management information is defined as the name and other identifying
information of the author of a work, the name and other identifying
information of the copyright owner, terms and conditions for uses of the
work, and such other information as the Register of Copyrights may
prescribe by regulation \-- to provide adequate flexibility in the
future.[^574]

While the proposed amendment does not require copyright owners to
provide copyright management information, it does require that when such
information is included, it be accurate. However, the Working Group
encourages copyright owners to include the information to enable
consumers to more easily find and make authorized uses of copyrighted
works. Nor does it specify standardized formats or content, although
private sector initiatives in this area are underway and are also
encouraged by the Working Group. Finally, it does not require
transmitting entities to include the copyright information as part of
their transmission of a work where such information has been included in
the work.[^575] However, such a proposal deserves further consideration.

The proposal prohibits the falsification, alteration or removal of any
copyright management information \-- not just that which is included in
or digitally linked to the copyrighted work. Many users will obtain such
information from public registers, where the integrity of such
information will be no less important. The proposal also contains a
knowledge requirement; therefore, inadvertent falsification, alteration
or removal would not be a violation.[^576]

B. Patent

The present law governing the eligibility of inventions for patent
protection and the enforcement of patent rights appears adequate to
address the needs of inventors and the public with regard to technology
used on the NII. The NII will increase the accessibility and content of
the body of prior art, which in turn will affect patentability
determinations. The law governing information that properly is
considered part of the prior art appears to be adequate to address new
forms of \"printed\" publications; however, some issues related to the
authenticity, including the date of origination, the contents as
originally disclosed, and the extent of dissemination of electronically
disseminated publications, deserve further study.

The Working Group recommends that the Patent and Trademark Office obtain
public input related to measures that can be adopted to ensure the
authenticity of electronically-disseminated publications, particularly
with respect to verifying the contents and date of first public
dissemination of the publication, and evaluating the substantive value
of the information contained in the publication as to its role in
patentability determinations.

The Working Group also recommends that the PTO explore the feasibility
of establishing requirements or standards that would govern
authentication of the date and contents of electronically-disseminated
information for purposes of establishing their use as prior art. Such
standards would assist in patentability determinations, whether they
occur before the PTO or before a court. To develop such standards, the
PTO should invite public comment and work with other interested Federal
agencies working on authentication standards outside the direct sphere
of the patent system.

C. Trademark

The Nice Agreement Concerning the International Classification of Goods
and Services for the Purposes of the Registration of Marks must be
sufficiently flexible to accommodate the changing goods and services
available in connection with the NII and the GII. Such flexibility is
essential to the owners of marks identifying goods and services
connected with the NII and the GII, as well as to the continued
viability of the International Classification system in the electronic
information age. Therefore, the Working Group recommends that the Patent
and Trademark Office, in the context of WIPO experts meetings on the
International Classification system, propose changes to the
International Classification system to ensure that the system reflects
the goods and services of modern information technology. Additionally,
the Working Group recommends that the Patent and Trademark Office
regularly update its *Manual for the Identification of Goods and
Services* to reflect new goods and services used on or in connection
with the NII and GII.

Appendices

> **[1. Proposed Legislation]{.smallcaps}**
>
> **[2. Statutory Mark-Up]{.smallcaps}**
>
> **[3. Participating Agencies]{.smallcaps}**

+------------------------+---------------------------------------------+
| 104[th]{.smallcaps}    | \[**S./H.R.**\] **\_\_\_\_\_**              |
| CONGRESS               |                                             |
|                        |                                             |
| [1st                   |                                             |
| Session]{.smallcaps}   |                                             |
+------------------------+---------------------------------------------+

To amend title 17 to adapt the copyright law to the digital, networked
environment of the National Information Infrastructure, and for other
purposes.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

IN THE \[SENATE/HOUSE OF REPRESENTATIVES\] OF THE UNITED STATES

September \_\_ , 1995

M\_. \_\_\_\_\_\_\_\_\_\_ (for h\_\_self and M\_. \_\_\_\_\_\_\_\_\_\_)
introduced the following bill; which was read twice and referred to the
Committee on the Judiciary.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**A BILL**

To amend title 17 to adapt the copyright law to the digital, networked
environment of the National Information Infrastructure, and for other
purposes.

*Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,*

**[Section 1. Short Title.]{.smallcaps}**

This Act may be cited as the \"NII Copyright Protection Act of 1995\".

**[Sec. 2. Transmission of Copies.]{.smallcaps}**

\(a\) [Distribution]{.smallcaps}. \-- Section 106(3) of title 17, United
States Code, is amended by striking \"or by rental, lease, or lending\"
and inserting \"by rental, lease, or lending, or by transmission\".

\(b\) [Definitions]{.smallcaps}. \-- Section 101 of title 17, United
States Code, is amended \--

> \(1\) in the definition of \"publication\" by striking \"or by rental,
> lease, or lending\" in the first sentence and insert \"by rental,
> lease, or lending, or by transmission\"; and
>
> \(2\) in the definition of \"transmit\" by inserting at the end
> thereof the following: \"To \'transmit\' a reproduction is to
> distribute it by any device or process whereby a copy or phonorecord
> of the work is fixed beyond the place from which it was sent.\".

\(c\) [Importation. \--]{.smallcaps} Section 602 of title 17, United
States Code, is amended by inserting \"whether by carriage of tangible
goods or by transmission,\" after \"Importation into the United
States,\".

**[Sec. 3. Exemptions for Libraries and the Visually
Impaired.]{.smallcaps}**

\(a\) [Libraries.]{.smallcaps} \-- Section 108 of title 17, United
States Code, is amended \--

> \(1\) in subsection (a) by deleting \"one copy or phonorecord\" and
> inserting in lieu thereof \"three copies or phonorecords\";
>
> \(2\) in subsection (a) by deleting \"such copy or phonorecord\" and
> inserting in lieu thereof \"no more than one of such copies or
> phonorecords\";
>
> \(3\) by inserting at the end of subsection (a)(3) \"if such notice
> appears on the copy or phonorecord that is reproduced under the
> provisions of this section\";
>
> \(4\) in subsection (b) by inserting \"or digital\" after
> \"facsimile\" and by inserting \"in facsimile form\" before \"for
> deposit for research use\"; and
>
> \(5\) in subsection (c) by inserting \"or digital\" after
> \"facsimile\".

\(b\) [Visually Impaired]{.smallcaps} \-- Title 17, United States Code,
is amended by adding the following new section:

\"§ 108A. Limitations on exclusive rights: Reproduction for the Visually
Impaired.

\"Notwithstanding the provision of section 106, it is not an
infringement of copyright for a non-profit organization to reproduce and
distribute to the visually impaired, at cost, a Braille, large type,
audio or other edition of a previously published literary work in a form
intended to be perceived by the visually impaired, provided that, during
a period of at least one year after the first publication of a standard
edition of such work in the United States, the owner of the exclusive
right to distribute such work in the United States has not entered the
market for editions intended to be perceived by the visually impaired.\"

**[Sec. 4. Copyright Protection Systems and Copyright Management
Information.]{.smallcaps}**

> Title 17, United States Code, is amended by adding the following new
> chapter:

\"Chapter 12. \-- COPYRIGHT PROTECTION AND MANAGEMENT SYSTEMS

\"Sec.

\"1201. Circumvention of Copyright Protection Systems

\"1202. Integrity of Copyright Management Information

\"1203. Civil Remedies

\"1204. Criminal Offenses and Penalties

\"§ 1201. Circumvention of Copyright Protection Systems

\"No person shall import, manufacture or distribute any device, product,
or component incorporated into a device or product, or offer or perform
any service, the primary purpose or effect of which is to avoid, bypass,
remove, deactivate, or otherwise circumvent, without the authority of
the copyright owner or the law, any process, treatment, mechanism or
system which prevents or inhibits the violation of any of the exclusive
rights of the copyright owner under section 106.

\"§ 1202. Integrity of Copyright Management Information

\"(a) [False Copyright Management Information]{.smallcaps}. \-- No
person shall knowingly provide copyright management information that is
false, or knowingly publicly distribute or import for public
distribution copyright management information that is false.

\"(b) [Removal or Alteration of Copyright Management
Information]{.smallcaps}. \-- No person shall, without authority of the
copyright owner or the law, (i) knowingly remove or alter any copyright
management information, (ii) knowingly distribute or import for
distribution copyright management information that has been altered
without authority of the copyright owner or the law, or (iii) knowingly
distribute or import for distribution copies or phonorecords from which
copyright management information has been removed without authority of
the copyright owner or the law.

\"(c) [Definition.]{.smallcaps} \-- As used in this chapter, \"copyright
management information\" means the name and other identifying
information of the author of a work, the name and other identifying
information of the copyright owner, terms and conditions for uses of the
work, and such other information as the Register of Copyrights may
prescribe by regulation.

\"§ 1203. Civil Remedies

\"(a) [Civil Actions]{.smallcaps}. \-- Any person injured by a violation
of Sec. 1201 or 1202 may bring a civil action in an appropriate United
States district court for such violation.

\"(b) [Powers of the Court.]{.smallcaps} \-- In an action brought under
subsection (a), the court \--

> \"(1) may grant temporary and permanent injunctions on such terms as
> it deems reasonable to prevent or restrain a violation;
>
> \"(2) at any time while an action is pending, may order the
> impounding, on such terms as it deems reasonable, of any device or
> product that is in the custody or control of the alleged violator and
> that the court has reasonable cause to believe was involved in a
> violation;
>
> \"(3) may award damages under subsection (c);
>
> \"(4) in its discretion may allow the recovery of costs by or against
> any party other than the United States or an officer thereof;
>
> \"(5) in its discretion may award reasonable attorney\'s fees to the
> prevailing party; and
>
> \"(6) may, as part of a final judgment or decree finding a violation,
> order the remedial modification or the destruction of any device or
> product involved in the violation that is in the custody or control of
> the violator or has been impounded under subsection (2).

\"(c) [Award of Damages]{.smallcaps}. \--

> \"(1) [In general]{.smallcaps}. \-- Except as otherwise provided in
> this chapter, a violator is liable for either (i) the actual damages
> and any additional profits of the violator, as provided by subsection
> (2) or (ii) statutory damages, as provided by subsection (3).
>
> \"(2) [Actual Damages.]{.smallcaps} \-- The court shall award to the
> complaining party the actual damages suffered by him or her as a
> result of the violation, and any profits of the violator that are
> attributable to the violation and are not taken into account in
> computing the actual damages, if the complaining party elects such
> damages at any time before final judgment is entered.
>
> \"(3) [Statutory Damages]{.smallcaps}. \--
>
> \"(A) At any time before final judgment is entered, a complaining
> party may elect to recover an award of statutory damages for each
> violation of section 1201 in the sum of not less than \$200 or more
> than \$2,500 per device, product, offer or performance of service, as
> the court considers just.
>
> \"(B) At any time before final judgment is entered, a complaining
> party may elect to recover an award of statutory damages for each
> violation of section 1202 in the sum of not less than \$2,500 or more
> than \$25,000.
>
> \"(4) [Repeated Violations.]{.smallcaps} \-- In any case in which the
> injured party sustains the burden of proving, and the court finds,
> that a person has violated section 1201 or 1202 within three years
> after a final judgment was entered against that person for another
> such violation, the court may increase the award of damages up to
> triple the amount that would otherwise be awarded, as the court
> considers just.
>
> \"(5) [Innocent Violations.]{.smallcaps} \-- The court in its
> discretion may reduce or remit altogether the total award of damages
> in any case in which the violator sustains the burden of proving, and
> the court finds, that the violator was not aware and had no reason to
> believe that its acts constituted a violation.

\"§ 1204. Criminal Offenses and Penalties

\"Any person who violates section 1202 with intent to defraud shall be
fined not more than \$500,000 or imprisoned for not more than 5 years,
or both."

**[Sec. 5. Conforming Amendments.]{.smallcaps}**

\(a\) T[able of Sections. \--]{.smallcaps} The table of sections for
chapter 1 of title 17, United States Code, is amended by inserting after
the item relating to section 108 the following:

*\"108A. Limitations on exclusive rights: Reproduction for the Visually
Impaired.\"*

\(b\) T[able of Chapters. \--]{.smallcaps} The table of chapters for
title 17, United States Code, is amended by adding at the end the
following:

\"12. COPYRIGHT PROTECTION AND

MANAGEMENT SYSTEMS 1201\".

**[Sec. 6. Effective Date.]{.smallcaps}**

This Act, and the amendments made by this Act, shall take effect on the
date of the enactment of this Act.

**[Statutory Mark-Up]{.smallcaps}**

Language added by a proposed amendment is in *italics.* Proposed
deletions are indicated by ~~strike-throughs~~.

**17 U.S.C. § 106(3)**

\"(3) to distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, ~~or~~ by rental,
lease, or lending*, or by transmission*.\"

**17 U.S.C. § 101**

\'\"Publication\' is the distribution of copies or phonorecords of a
work to the public by sale or other transfer of ownership, ~~or~~ by
rental, lease, or lending*, or by transmission*. The offering to
distribute copies or phonorecords to a group of persons for purposes of
further distribution, public performance, or public display, constitutes
publication. A public performance or display of a work does not of
itself constitute publication.\"

\"To \'transmit\' a performance or display is to communicate it by any
device or process whereby images or sounds are received beyond the place
from which they are sent. *To \'transmit\' a reproduction is to
distribute it by any device or process whereby a copy or phonorecord of
the work is fixed beyond the place from which it was sent.\"*

**17 U.S.C. § 108**

\"(a) Notwithstanding the provisions of section 106, it is not an
infringement of copyright for a library or archives, or any of its
employees acting within the scope of their employment, to reproduce no
more than ~~one copy or phonorecord~~ *three copies or phonorecords* of
a work, or to distribute ~~such copy or phonorecord~~ *no more than one
of such copies or phonorecords,* under the conditions specified by this
section, if\--

> \"(1) the reproduction or distribution is made without any purpose of
> direct or indirect commercial advantage;
>
> \"(2) the collections of the library or archives are (i) open to the
> public, or (ii) available not only to researchers affiliated with the
> library or archives or with the institution of which it is a part, but
> also to other persons doing research in a specialized field; and
>
> \"(3) the reproduction or distribution of the work includes a notice
> of copyright *if such notice appears on the copy or phonorecord that
> is reproduced under the provisions of this section.*

\"(b) The rights of reproduction and distribution under this section
apply to a copy or phonorecord of an unpublished work duplicated in
facsimile *or digital* form solely for purposes of preservation and
security or *in facsimile form* for deposit for research use in another
library or archives of the type described by clause (2) of subsection
(a), if the copy or phonorecord reproduced is currently in the
collections of the library or archives.

\"(c) The right of reproduction under this section applies to a copy or
phonorecord of a published work duplicated in facsimile *or digital*
form solely for the purpose of replacement of a copy or phonorecord that
is damaged, deteriorating, lost, or stolen, if the library or archives
has, after a reasonable effort, determined that an unused replacement
cannot be obtained at a fair price.\"

**17 U.S.C. § 108A**

*\"§ 108A. Limitations on exclusive rights: Reproduction for the
Visually Impaired.*

*\"Notwithstanding the provisions of section 106, it is not an
infringement of copyright for a non-profit organization to reproduce and
distribute to the visually impaired, at cost, a Braille, large type,
audio or other edition of a previously published literary work in a form
intended to be perceived by the visually impaired, provided that, during
a period of at least one year after the first publication of a standard
edition of such work in the United States, the owner of the exclusive
right to distribute such work in the United States has not entered the
market for editions intended to be perceived by the visually
impaired.\"*

**17 U.S.C. § 602**

\"(a) Importation into the United States, *whether by carriage of
tangible goods or by transmission,* without the authority of the owner
of copyright under this title, of copies or phonorecords of a work that
have been acquired outside the United States is an infringement of the
exclusive right to distribute copies or phonorecords under section 106,
actionable under section 501.\"

**Title 17, Chapter 12**

*\"Chapter 12. \-- COPYRIGHT PROTECTION AND MANAGEMENT SYSTEMS*

*\"Sec.*

*\"1201. Circumvention of Copyright Protection Systems*

*\"1202. Integrity of Copyright Management Information*

*\"1203. Civil Remedies*

*\"1204. Criminal Offenses and Penalties*

*\"§ 1201. Circumvention of Copyright Protection Systems*

*\"No person shall import, manufacture or distribute any device,
product, or component incorporated into a device or product, or offer or
perform any service, the primary purpose or effect of which is to avoid,
bypass, remove, deactivate, or otherwise circumvent, without the
authority of the copyright owner or the law, any process, treatment,
mechanism or system which prevents or inhibits the violation of any of
the exclusive rights of the copyright owner under section 106.*

*\"§ 1202. Integrity of Copyright Management Information*

*\"(a) [False Copyright Management Information]{.smallcaps}. \-- No
person shall knowingly provide copyright management information that is
false, or knowingly publicly distribute or import for public
distribution copyright management information that is false.*

*\"(b) [Removal or Alteration of Copyright Management
Information]{.smallcaps}. \-- No person shall, without authority of the
copyright owner or the law, (i) knowingly remove or alter any copyright
management information, (ii) knowingly distribute or import for
distribution copyright management information that has been altered
without authority of the copyright owner or the law, or (iii) knowingly
distribute or import for distribution copies or phonorecords from which
copyright management information has been removed without authority of
the copyright owner or the law.*

*\"(c) [Definition.]{.smallcaps} \-- As used in this chapter,
\"copyright management information\" means the name and other
identifying information of the author of a work, the name and other
identifying information of the copyright owner, terms and conditions for
uses of the work, and such other information as the Register of
Copyrights may prescribe by regulation.*

*\"§ 1203. Civil Remedies*

*\"(a) [Civil Actions]{.smallcaps}. \-- Any person injured by a
violation of Sec. 1201 or 1202 may bring a civil action in an
appropriate United States district court for such violation.*

*\"(b) [Powers of the Court.]{.smallcaps} \-- In an action brought under
subsection (a), the court \--*

> *\"(1) may grant temporary and permanent injunctions on such terms as
> it deems reasonable to prevent or restrain a violation;*
>
> *\"(2) at any time while an action is pending, may order the
> impounding, on such terms as it deems reasonable, of any device or
> product that is in the custody or control of the alleged violator and
> that the court has reasonable cause to believe was involved in a
> violation;*
>
> *\"(3) may award damages under subsection (c);*
>
> *\"(4) in its discretion may allow the recovery of costs by or against
> any party other than the United States or an officer thereof;*
>
> *\"(5) in its discretion may award reasonable attorney\'s fees to the
> prevailing party; and*
>
> *\"(6) may, as part of a final judgment or decree finding a violation,
> order the remedial modification or the destruction of any device or
> product involved in the violation that is in the custody or control of
> the violator or has been impounded under subsection (2).*

*\"(c) [Award of Damages]{.smallcaps}. \--*

> *\"(1) [In general]{.smallcaps}. \-- Except as otherwise provided in
> this chapter, a violator is liable for either (i) the actual damages
> and any additional profits of the violator, as provided by subsection
> (2) or (ii) statutory damages, as provided by subsection (3).*
>
> *\"(2) [Actual Damages.]{.smallcaps} \-- The court shall award to the
> complaining party the actual damages suffered by him or her as a
> result of the violation, and any profits of the violator that are
> attributable to the violation and are not taken into account in
> computing the actual damages, if the complaining party elects such
> damages at any time before final judgment is entered.*
>
> *\"(3) [Statutory Damages]{.smallcaps}. \--*
>
> *\"(A) At any time before final judgment is entered, a complaining
> party may elect to recover an award of statutory damages for each
> violation of section 1201 in the sum of not less than \$200 or more
> than \$2,500 per device, product, offer or performance of service, as
> the court considers just.*
>
> *\"(B) At any time before final judgment is entered, a complaining
> party may elect to recover an award of statutory damages for each
> violation of section 1202 in the sum of not less than \$2,500 or more
> than \$25,000.*
>
> *\"(4) [Repeated Violations.]{.smallcaps} \-- In any case in which the
> injured party sustains the burden of proving, and the court finds,
> that a person has violated section 1201 or 1202 within three years
> after a final judgment was entered against that person for another
> such violation, the court may increase the award of damages up to
> triple the amount that would otherwise be awarded, as the court
> considers just.*
>
> *\"(5) [Innocent Violations.]{.smallcaps} \-- The court in its
> discretion may reduce or remit altogether the total award of damages
> in any case in which the violator sustains the burden of proving, and
> the court finds, that the violator was not aware and had no reason to
> believe that its acts constituted a violation.*

*\"§ 1204. Criminal Offenses and Penalties*

*\"Any person who violates section 1202 with intent to defraud shall be
fined not more than \$500,000 or imprisoned for not more than 5 years,
or both."*

**[Participating Agencies]{.smallcaps}**

[Advanced Research Projects Agency]{.smallcaps}

[Council of Economic Advisers]{.smallcaps}

[Environmental Protection Agency]{.smallcaps}

[General Services Administration]{.smallcaps}

[National Archives and Records Administration]{.smallcaps}

[National Economic Council]{.smallcaps}

[National Endowment for the Arts]{.smallcaps}

[National Endowment for the Humanities]{.smallcaps}

[National Institute of Standards and Technology]{.smallcaps}

[National Library of Medicine]{.smallcaps}

[National Science Foundation]{.smallcaps}

[National Security Agency]{.smallcaps}

[National Telecommunications and Information Administration]{.smallcaps}

[Office of Science and Technology Policy]{.smallcaps}

[Office of Consumer Affairs]{.smallcaps}

[Office of Management and Budget]{.smallcaps}

[Office of the U.S. Trade Representative]{.smallcaps}

[U.S. Copyright Office]{.smallcaps}

[U.S. Department of Commerce]{.smallcaps}

[U.S. Department of Defense]{.smallcaps}

[U.S. Department of Education]{.smallcaps}

[U.S. Department of Energy]{.smallcaps}

[U.S. Department of Justice]{.smallcaps}

[U.S. Department of State]{.smallcaps}

[U.S. Department of Treasury]{.smallcaps}

[U.S. Patent and Trademark Office]{.smallcaps}

[^1]: Information Infrastructure Task Force, National Telecommunications
    and Information Administration, *National Information
    Infrastructure: Agenda for Action* (Sept. 1993).

[^2]: Information Infrastructure Task Force, *Global Information
    Infrastructure: Agenda for Cooperation* (Feb. 1995).

[^3]: *See* Exec. Order No. 12,864, 3 C.F.R. 634 (1993).

[^4]: In the course of its work, the Working Group identified issues in
    other areas of jurisprudence, such as defamation and obscenity,
    which will be considered separately by the Information Policy
    Committee.

[^5]: The \"National Information Infrastructure,\" as it is discussed in
    this Report, encompasses digital, interactive services now
    available, such as the Internet, as well as those contemplated for
    the future. To make the analyses more concrete, however, the Working
    Group has, in many instances, evaluated the intellectual property
    implications of activity on the Internet, the superstructure whose
    protocols and rules effectively create (or permit the creation of) a
    \"network of networks.\" This reflects neither an endorsement of the
    Internet nor a derogation of any other existing or proposed network
    or service that may be available via the NII, but, rather, an
    acknowledgment that a currently functioning structure lends itself
    more readily to legal analysis than a hypothetical construct based
    on future developments.

[^6]: Because of the legal nature of the subject, this Report uses
    certain words and phrases that may be unfamiliar to some readers or
    that do not have their ordinary meaning when used in the context of
    intellectual property law. The Working Group has attempted to
    identify these terms of art and provide their legal definitions.
    Further, every attempt has been made to present trademarks that
    appear in the Report with initial capital letters. However, not all
    terms appearing with initial capital letters in the Report are
    trademarks. Where a question may exist regarding whether a term may
    be or is a trademark, the use of such term in the Report does not
    constitute any position regarding the trademark status of the term.

[^7]: *See* list of Working Group participants *infra* Appendix 3.

[^8]: *See* Request for Comments on Intellectual Property Issues
    Involved in the National Information Infrastructure Initiative, 58
    Fed. Reg. 53,917 (Oct. 19, 1993).

[^9]: *See* *id.*

[^10]: *See* Information Infrastructure Task Force, Working Group on
    Intellectual Property Rights, *Intellectual Property and the
    National Information Infrastructure: A Preliminary Draft of the
    Report of the Working Group on Intellectual Property Rights* (July
    1994).

[^11]: The IITF Bulletin Board can be accessed through the Internet by
    pointing the Gopher Client to iitf.doc.gov or by telnet to
    iitf.doc.gov (log in as gopher). The Bulletin Board is also
    accessible at 202-501-1920 using a personal computer and a telephone
    modem.

[^12]: The public hearing in Chicago was held on September 14, 1994, at
    the University of Chicago. The hearing in Los Angeles was held on
    September 16, 1994, at the University of California at Los Angeles.
    The hearings in Washington, D.C., were held on September 22 and 23,
    1994, in the Andrew W. Mellon Auditorium. *See* Notice of Hearings
    and Request for Comments on Preliminary Draft of the Report of the
    Working Group on Intellectual Property Rights, 59 Fed. Reg. 42,819
    (Aug. 19, 1994). Transcripts of the public hearings may be obtained
    by writing the U.S. Patent and Trademark Office, Office of
    Legislative and International Affairs, Box 4, Washington, D.C.,
    20231. The transcripts are also available on the IITF Bulletin
    Board. *See* *supra* note 11.

[^13]: *See* Notice of Hearings and Request for Comments on Preliminary
    Draft of the Report of the Working Group on Intellectual Property
    Rights, 59 Fed. Reg. 42,819 (Aug. 19, 1994); Extension of Deadline
    for Comments on Preliminary Draft of the Report of the Working Group
    on Intellectual Property Rights, 59 Fed. Reg. 50,222 (Oct. 3, 1994).
    Comments received are available for public inspection at the
    Scientific and Technical Information Center of the U.S. Patent and
    Trademark Office, Room 2CO1, Crystal Plaza 34, 2021 Jefferson Davis
    Highway, Arlington, Virginia, between the hours of 9 a.m. and 4
    p.m., Monday through Friday.

[^14]: This Report does not attempt to address all existing intellectual
    property issues. For instance, current debates over protection of
    the design of useful articles and whether or to what extent certain
    aspects of computer programs are or should be protected under
    copyright law are not covered by this Report. Likewise, certain
    patent issues, such as pre-grant publication and reexamination, are
    not addressed.

[^15]: In the process of preparing this Report, the Working Group
    constantly received and evaluated information concerning a large
    variety of technological and other developments that bear on the NII
    and intellectual property rights in works distributed thereon. In
    April 1995, the Working Group was compelled to place the Report in
    concrete form, and, thus, to stop adjusting the text with respect to
    just-received news. As a result, the Working Group has elected to:
    (a) pose in some detail \-- but not try to definitively answer \--
    certain questions, and (b) not discuss every possible technological
    development of which it recently became aware. We are confident that
    the legislative and political processes will offer the opportunity
    for additional comments from both the U.S. Government and interested
    parties.

[^16]: Supreme Court Justice Story found that copyright and patent cases
    come \"nearer than any other class of cases belonging to forensic
    discussions, to what may be called the metaphysics of the law where
    the distinctions are, or at least may be, very subtile \[sic\] and
    refined, and, sometimes, almost evanescent.\" *See* *Folsom v.
    Marsh*, 9 F. Cas. 342, 344 (C.C.D. Mass. 1841) (No. 4,901).

[^17]: The original copyright law upon which our system was based
    (England\'s Statute of Anne) was a reaction to the invention of the
    printing press.

[^18]: These devices will be linked not only to each other (computer to
    computer, for example) but will also be cross-linked (computer to
    television set).

[^19]: The United States and other countries are working toward the
    development of an advanced Global Information Infrastructure (GII)
    that \"will allow us to share information, to connect, and to
    communicate as a global community.\" And as that information moves
    through international channels, \"\[p\]rotecting intellectual
    property is absolutely essential.\" *See* Remarks Prepared for
    Delivery by Vice President Al Gore at the International
    Telecommunications Union in Buenos Aires, Argentina (March 21,
    1994).

[^20]: The IITF Bulletin Board can be accessed through the Internet or
    by use of a personal computer and modem. *See* *supra* note 11.

[^21]: Comments on the Green Paper were accepted at an Internet address.
    *See* Notice of Hearings and Request for Comments on Preliminary
    Draft of the Report of the Working Group on Intellectual Property
    Rights, 59 Fed. Reg. 42,819 (Aug. 19, 1994); Extension of Deadline
    for Comments on Preliminary Draft of the Report of the Working Group
    on Intellectual Property Rights, 59 Fed. Reg. 50,222 (Oct. 3, 1994).
    The IITF Universal Service Working Group and the Commerce
    Department\'s National Telecommunication and Information
    Administration hosted a \"Virtual Public Conference\" in
    November 1994 utilizing a series of electronic mail discussion
    groups. *See* 59 Fed. Reg. 55,081 (Nov. 3, 1994).

[^22]: *See, e.g., Sony Corp*. *v. Universal City Studios, Inc*., 464
    U.S. 417, 430-31 nn. 11-12 (1984) (hereinafter *Sony*) (discussing
    significance of changes in technology and their effect on copyright
    law*); Final Report of the National Commission on New Technological
    Uses of Copyrighted Works* (hereinafter *CONTU Final Report*) at 3
    (reporting about the issues raised by photocopiers and computers
    back in 1978, in language that is equally applicable today)
    (citations omitted):

    > The ownership and control of information and the means of
    > disseminating it are emerging as national and international policy
    > issues. Concerns about the impact on individual freedom posed by
    > the control of the flow of information are at the forefront of
    > public debate. The adequacy of the legal structure to cope with
    > the pace and rate of technological change frequently has been
    > called into question.

[^23]: Congress enacted the Audio Home Recording Act of 1992, which
    combined legal and technological protection for sound recordings.
    *See* 17 U.S.C. § 1001 *et* *seq*. (Supp. V 1993). The Audio Home
    Recording Act requires a serial copy management system in all
    digital audio recording devices and digital audio interface devices
    imported, manufactured or distributed in the United States. Such a
    system allows unlimited first generation digital copying of sound
    recordings, but prevents the making of digital copies from copies.
    The Act prohibits the importation, manufacture or distribution of
    any device, or the offering or performance of any service, the
    primary purpose of which is to circumvent any program or circuit
    which implements a serial copy management system. The Act also
    establishes a royalty system through which importers and
    manufacturers of digital audio recording devices and digital audio
    recording media make royalty payments on each device or medium they
    distribute. Such payments are collected by the Copyright Office and
    distributed annually to record companies, performers, music
    publishers and songwriters.

[^24]: *See* Inscription at the Jefferson Memorial, Washington, D.C. As
    Secretary of State, Thomas Jefferson was the first head of the U.S.
    Patent Office.

[^25]: The Copyright Act of 1976, as amended, is codified at 17 U.S.C.
    § 101 *et* *seq*. (1988 & Supp. V 1993). Hereinafter, the Act is
    cited as \"17 U.S.C. §  .\"

[^26]: *See* [H.R. Rep. No]{.smallcaps}. 1476, 94th Cong., 2d Sess. 47
    (1976), *reprinted* *in* 1976 U.S.C.C.A.N. 5659 (hereinafter [House
    Report]{.smallcaps}) (\"During the past half century a wide range of
    new techniques for capturing and communicating printed matter,
    visual images, and recorded sounds have come into use, and the
    increasing use of information storage and retrieval devices,
    communications satellites, and laser technology promises even
    greater changes in the near future.\").

[^27]: *See* [House Report]{.smallcaps} at 47, *reprinted* *in* 1976
    U.S.C.C.A.N. 5660.

[^28]: *See* 17 U.S.C. § 102(b); *see* *also* discussion *infra* pp.
    32-34.

[^29]: The Working Group believes that no revision of the patent,
    trademark or trade secret law is warranted at this time. *See*
    discussion *infra* pp. 155-75, 236-38.

[^30]: *See* [U.S. Const]{.smallcaps}., art. I, § 8, cl. 8.

[^31]: On August 18, 1787, James Madison submitted to the delegates to
    the Constitutional Convention a list of powers to be granted
    Congress, which included the power \"To secure to literary authors
    their copyrights for a limited time\" and \"To encourage, by
    premiums and provisions, the advancement of useful knowledge and
    discoveries.\" At the same time, Charles Pinckney submitted a list
    which included the power \"To grant patents for useful inventions\"
    and \"To secure to authors exclusive rights for a certain time.\" On
    September 5, the clause \"To promote the progress of science and the
    useful arts, by securing for limited times, to authors and
    inventors, the exclusive right to their respective writings and
    discoveries\" was agreed to unanimously. On September 17, 1787, the
    draft was signed by the delegates to the convention with no
    substantive changes. *See* *Debates on the Adoption of the Federal
    Constitution* as reported by James Madison. The clause was finally
    ratified in its present form in 1788. George Washington signed the
    first copyright law on May 31, 1790.

[^32]: [The Federalist No]{.smallcaps}. 43 (James Madison).

[^33]: *Goldstein v. California*, 412 U.S. 546, 555 (1973).

[^34]: *Harper & Row, Publishers, Inc*. *v. Nation Enterprises*, 471
    U.S. 539, 558 (1985) (hereinafter *Harper & Row*). *See* *also*
    *id.* at 546 (\"\'monopoly created by copyright thus rewards the
    individual author in order to benefit the public\'\").

[^35]: *Fogerty v. Fantasy, Inc*., 114 S. Ct. 1023, 1029 (1994) (quoting
    *Sony*, *supra* note 22, at 429).

[^36]: *Feist Publication, Inc*. *v. Rural Telephone Service Co*., 499
    U.S. 340, 349-50 (1991) (citations omitted) (hereinafter *Feist*).

[^37]: *Mazer v. Stein*, 347 U.S. 201, 219 (1954).

[^38]: *Sony*, *supra* note 22, at 429.

[^39]: *Harper & Row*, *supra* note 34, at 545-46 (citing *Twentieth
    Century Music Corp*. *v. Aiken*, 422 U.S. 151, 156 (1975)).

[^40]: *United States v. Paramount Pictures, Inc*., 334 U.S. 131, 158
    (1948).

[^41]: *Washingtonian Publishing Co*. *v. Pearson*, 306 U.S. 30, 36
    (1939).

[^42]: *Id.*

[^43]: *Twentieth Century Music Corp*. *v. Aiken*, 422 U.S. 151, 156
    (1975).

[^44]: [H.R. Rep. No]{.smallcaps}. 2222, 60th Cong., 2d Sess., 7 (1909)
    (report accompanying the Copyright Act of 1909, the first
    comprehensive revision of the copyright laws).

[^45]: *See* discussion of term of protection *infra* pp. 59-60 and fair
    use and other limitations on an author\'s exclusive rights *infra*
    pp. 73-100.

[^46]: *See* discussion of unprotected subject matter *infra* pp. 32-35.

[^47]: [House Report]{.smallcaps} at 56, *reprinted* *in* 1976
    U.S.C.C.A.N. 5669.

[^48]: *Fogerty, supra* note 35, at 1030.

[^49]: 17 U.S.C. § 102(a) (1988 & Supp. V 1993). The Copyright Act
    specifically excludes from protectible subject matter any \"idea,
    procedure, process, system, method of operation, concept, principle
    or discovery\" even if it meets the criteria for protection. *See*
    17 U.S.C. § 102(b) (1988). The Copyright Act also preempts any grant
    of equivalent rights for works of authorship within the specified
    subject matter. Section 301 provides:

    > On and after January 1, 1978, all legal or equitable rights that
    > are equivalent to any of the exclusive rights within the general
    > scope of copyright as specified by section 106 in works of
    > authorship that are fixed in a tangible medium of expression and
    > come within the subject matter of copyright as specified by
    > sections 102 and 103, whether created before or after that date
    > and whether published or unpublished, are governed exclusively by
    > this title. Thereafter, no person is entitled to any such right or
    > equivalent right in any such work under the common law or statutes
    > of any State.

    17 U.S.C. § 301(a) (1988).

[^50]: Many courts consider creativity to be an element of originality.
    For purposes of discussion, we examine originality and creativity as
    separate requirements.

[^51]: *See* 17 U.S.C. § 102(a) (1988 & Supp. V 1993). The statutory
    qualification is derived from Congress\' limited Constitutional
    authority to grant copyright protection to \"authors\" for their
    \"writings.\" *See* U.S. C[onst.]{.smallcaps}, art. I, § 8, cl. 8.

[^52]: *Feist*, *supra* note 36, at 345 (\"vast majority of works make
    the grade quite easily, as they possess some creative spark\").

[^53]: Copyright protection literally begins when, for instance, the ink
    dries on the paper. There are no prerequisites, such as registration
    or affixation of a copyright notice, for obtaining or enjoying
    copyright protection.

[^54]: 17 U.S.C. § 101 (1988) (definition of \"fixed\").

[^55]: *See* 17 U.S.C. § 102(a) (1988 & Supp. V 1993).

[^56]: 17 U.S.C. § 101 (1988) (definition of \"copies\").

[^57]: 17 U.S.C. § 101 (1988) (definition of \"phonorecords\").

[^58]: [House Report]{.smallcaps} at 53, *reprinted* *in* 1976
    U.S.C.C.A.N. 5666-67. This Report generally uses the term \"copy\"
    or \"copies\" to refer to copies *and* phonorecords except in those
    instances where the distinction is relevant.

[^59]: [House Report]{.smallcaps} at 52, *reprinted* *in* 1976
    U.S.C.C.A.N. 5665-66.

[^60]: *See* *id.*

[^61]: *See, e.g., Stern Electronics, Inc*. *v. Kaufman*, 669 F.2d 852,
    855 (2d Cir. 1982) (putting work in \"memory devices\" of a computer
    \"satisf\[ies\] the statutory requirement of a \'copy\' in which the
    work is \'fixed\'\").

[^62]: *See, e.g., Atari Games Corp. v. Oman*, 888 F.2d 878 (D.C. Cir.
    1989).

[^63]: Unfixed broadcasts are not within the subject matter of Federal
    copyright law. Therefore, protection of such works is not preempted
    and may be provided by state statutory or common law. *See* 17
    U.S.C. § 301 (1988 & Supp. V 1993).

[^64]: *See* 17 U.S.C. § 101 (1988) (definition of \"fixed\"); *see*
    *also* *Baltimore Orioles, Inc*. *v. Major League Baseball Players
    Assoc*., 805 F.2d 663, 668 (7th Cir. 1986) (telecasts that are
    videotaped at the same time that they are broadcast are fixed in
    tangible form), *cert*. *denied*, 480 U.S. 941 (1987); *National
    Football League v. McBee & Bruno\'s, Inc*., 792 F.2d 726, 731-32
    (8th Cir. 1986) (\"the legislative history \[of the Copyright Act\]
    demonstrates a clear intent on the part of Congress to resolve,
    through the definition of \'fixation\' . . ., the status of live
    broadcasts, using \-- coincidentally but not insignificantly \-- the
    example of a live football game\"). It is understood that the
    \"fixation\" must be made or authorized by the author.

[^65]: 17 U.S.C. § 101 (1988) (definition of \"fixed\").

[^66]: [House Report]{.smallcaps} at 53, *reprinted* *in* 1976
    U.S.C.C.A.N. 5666-67.

[^67]: *See* *Advanced Computer Services of Michigan Inc*. *v. MAI
    Systems Corp*., 845 F. Supp. 356, 363 (E.D. Va. 1994) (conclusion
    that program stored only in RAM is sufficiently fixed is confirmed,
    not refuted, by argument that it \"disappears from RAM the instant
    the computer is turned off\"; if power remains on (and the work
    remains in RAM) for only seconds or fractions of a second, \"the
    resulting RAM representation of the program arguably would be too
    ephemeral to be considered \'fixed\'\"); *Triad Systems Corp*. *v.
    Southeastern Express Co*., 1994 U.S. Dist. LEXIS 5390, at \*15-19
    (N.D. Cal. March 18, 1994) ("\[C\]opyright law is not so much
    concerned with the temporal 'duration' of a copy as it is with what
    that copy does, and what it is capable of doing, while it exists.
    'Transitory duration' is a relative term that must be interpreted
    and applied in context.").

[^68]: *See* *Wheaton v. Peters*, 33 U.S. (1 Peters) 591, 662-63 (1834).

[^69]: *See* 17 U.S.C. § 104 (1988 & Supp. V 1993). Prior to 1978,
    certain unpublished works, particularly dramatic works and musical
    compositions, could obtain Federal copyright protection through
    registration with the Copyright Office. Since 1978, all otherwise
    eligible unpublished works are protected under Federal law. *See* 17
    U.S.C. § 104(a) (1988 & Supp. V 1993).

[^70]: [House Report]{.smallcaps} at 129, *reprinted* *in* 1976
    U.S.C.C.A.N. 5745.

[^71]: 17 U.S.C. § 407 (1988). \"\[T\]he owner of copyright or of the
    exclusive right of publication in a work published in the United
    States shall deposit, within three months after the date of
    publication \-- (1) two complete copies of the best edition; or (2)
    if the work is a sound recording, two complete phonorecords of the
    best edition, together with any printed or other visually
    perceptible material published with such phonorecords.\" 17 U.S.C.
    § 407(a) (1988). The deposit requirements are not conditions of
    copyright protection, but failure to deposit copies of a published
    work may subject the copyright owner to significant fines. *See* 17
    U.S.C. § 407(a), (d) (1988).

[^72]: *See* 17 U.S.C. § 408(b) (1988) (\"the material deposited for
    registration shall include \-- (1) in the case of an unpublished
    work, one complete copy or phonorecord; (2) in the case of a
    published work, two complete copies or phonorecords of the best
    edition; (3) in the case of a work first published outside the
    United States, one complete copy or phonorecord as so published; (4)
    in the case of a contribution to a collective work, one complete
    copy or phonorecord of the best edition of the collective work\").

[^73]: The first factor of the fair use analysis \-- the nature of the
    copyrighted work \-- generally weighs against a finding of fair use
    if the work is unpublished. *See* *Harper & Row*, *supra* note 34.
    In 1992, Congress was prompted to amend Section 107 by the near
    determinative weight courts were giving to the unpublished nature of
    a work. *See* Act of October 24, 1992, Pub. L. 102-492, 1992
    U.S.C.C.A.N. (106 Stat.) 3145 (adding to the fair use provisions,
    \"The fact that a work is unpublished shall not itself bar a finding
    of fair use if such finding is made upon consideration of all the
    above factors.\").

[^74]: 17 U.S.C. § 104(a) (1988 & Supp. V 1993); [House
    Report]{.smallcaps} at 58, *reprinted* *in* 1976 U.S.C.C.A.N. 5671
    (Section 104(a) \"imposes no qualification of nationality and
    domicile with respect to unpublished works\"); *see* *also* 17
    U.S.C. § 104(b) (1988 & Supp. V 1993) (national origin requirements
    for published works).

[^75]: 17 U.S.C. § 405 (1988 & Supp. V 1993). For such works, failure to
    include a copyright notice risks total loss of copyright protection.
    *See* *id.* Works published after March 1, 1989 (the effective date
    of the Berne Implementation Act) may (but are not required to) bear
    a copyright notice identifying the year of publication and the name
    of the copyright owner. *See* 17 U.S.C. § 401 (1988 & Supp. V 1993).

[^76]: *See* *generally* 17 U.S.C. §§ 107 - 120 (1988 & Supp. V 1993).
    *See, e.g.,* 17 U.S.C. § 118 (1988 & Supp. V 1993) (compulsory
    license is available for the use of certain published works in
    connection with noncommercial broadcasting).

[^77]: 17 U.S.C. § 101 (1988) (definition of \"publication\").

[^78]: *See* [House Report]{.smallcaps} at 138, *reprinted* *in* 1976
    U.S.C.C.A.N. 5754. *See* *also* discussion of transmissions and the
    \"distribution\" of copies *infra* pp. 67-69, 217-20.

[^79]: *See, e.g., Salinger v. Random House, Inc*., 811 F.2d 90 (2d
    Cir.), *supplemented*, *reh\'g* *denied*, 818 F.2d 252, *cert*.
    *denied*, 484 U.S. 890 (1987) (copyrighted letters did not lose
    unpublished status by placement in library); *WPOW, Inc*. *v. MRLJ
    Enterprises*, 584 F. Supp. 132 (D.D.C. 1984) (filing of work with
    federal agency did not constitute publication).

[^80]: *See* 1 [M. Nimmer & D. Nimmer]{.smallcaps}, [Nimmer on
    Copyright]{.smallcaps} § 4.04 (1994) (hereinafter [Nimmer on
    Copyright)]{.smallcaps}. In a couple of aspects, the concept of
    publication was broadened to include the authorization of offers to
    distribute copies in a commercial setting and the distribution to
    certain middlemen, such as retailers, motion picture exhibitors and
    television stations. *See* *Paramount Pictures Corp*. *v.
    Rubinowitz*, 217 U.S.P.Q. 48, 50 (E.D.N.Y. 1981) (discussing
    evolution of definition of publication); *National Broadcasting Co.,
    Inc. v. Sonneborn*, 630 F. Supp. 524, 532-33 (D. Conn. 1985).

[^81]: *See* 1 [Nimmer on Copyright]{.smallcaps} § 4.13\[B\]; *Kunycia
    v. Melville Realty Co. Inc*., 755 F. Supp. 566, 574 (S.D.N.Y. 1990).

[^82]: *See* *White v. Kimmell*, 193 F.2d 744, 746-47 (9th Cir. 1952).
    Before the notice requirement was eliminated, the Copyright Act
    generally provided for the invalidation of the copyright in a work
    if copies of the work were distributed to the public, under the
    authority of the copyright owner, without a copyright notice. In
    virtually all instances where limited publication was applied, the
    distribution was noncommercial in nature.

[^83]: *See* *Academy of Motion Picture Arts and Sciences v. Creative
    House Promotions, Inc*., 944 F.2d 1446, 1451-54 (9th Cir. 1991)
    (distribution of personalized Oscar statuettes to select group of
    distinguished artists constituted limited publication); *Lish v.
    Harper\'s Magazine Found*., 807 F. Supp. 1090, 1102 (S.D.N.Y. 1992)
    (letter distributed to members of class remained unpublished).

[^84]: *See* 37 C.F.R. § 202.1(a) (1994); *see* *also, e.g., Takeall v.
    PepsiCo Inc*., 29 U.S.P.Q.2d 1913, 1918 (4th Cir. 1993)
    (unpublished) (holding phrase \"You Got the Right One, Uh-Huh\" is
    not copyrightable and, thus, was not infringed by commercial using
    phrase \"You Got the Right One Baby, Uh-Huh\"). While short phrases
    may not be copyrightable standing alone, they may be protected as
    part of a larger, copyrighted work. *See, e.g.,* *Dawn Assocs*. *v.
    Links*, 203 U.S.P.Q. 831, 835 (N.D. Ill. 1978) (holding phrase
    \"When there is no room in hell . . . the dead will walk the earth\"
    to be an integral part of a copyrighted advertisement, and
    defendant\'s unauthorized use of it demonstrated likelihood of
    success on the merits of infringement suit); *Grand Upright Music
    Ltd*. *v. Warner Bros. Records, Inc*., 780 F. Supp. 182, 183-85
    (S.D.N.Y. 1991) (finding lyric \"alone again\" to be protected as
    part of a copyrighted work and infringed by defendant rap artist\'s
    \"sampling\"). Short phrases may also be eligible for trademark
    protection if used to identify goods or services.

[^85]: In *Mazer v. Stein*, the Supreme Court held that works of art
    which are incorporated into the design of useful articles, but which
    can stand by themselves as art works separate from the useful
    articles, are copyrightable. *See* 347 U.S. 201, 214-17 (1954).
    *See* *also* 17 U.S.C. § 101 (defining \"useful article\" as \"an
    article having an intrinsic utilitarian function that is not merely
    to portray the appearance of the article or to convey information);
    17 U.S.C. § 101 (in the definition of \"pictorial, graphic, and
    sculptural works\" noting that \"the design of a useful
    article . . . shall be considered a pictorial, graphic, or
    sculptural work only if, and only to the extent that, such design
    incorporates pictorial, graphic, or sculptural features that can be
    identified separately from, and are capable of existing
    independently of, the utilitarian aspects of the article\"). The
    House Report indicates that the required separability may be
    physical or conceptual. *See* [House Report]{.smallcaps} at 55,
    *reprinted* *in* 1976 U.S.C.C.A.N. 5668; *see* *also*
    *Kieselstein-Cord v. Accessories By Pearl, Inc*., 632 F.2d 989, 993
    (2d Cir. 1980).

[^86]: 17 U.S.C. § 102(b) (1988); *see* *Feist*, *supra* note 36, at 359
    (\"facts contained in existing works may be freely copied\");
    *Harper & Row*, *supra* note 34, at 547 (\"no author may copyright
    facts or ideas\").

[^87]: The ideas are not protected; the expression is. *Baker v.
    Seldon*, 101 U.S. 99, 103 (1879); *Beal v. Paramount Pictures
    Corp*., 20 F.3d 454, 458-59 (11th Cir.), *cert*. *denied*, 115 S.
    Ct. 675 (1994); *see* *also* *Harper & Row*, *supra* note 34, at
    547-48 (\"copyright is limited to those aspects of the work \--
    termed \'expression\' \-- that display the stamp of the author\'s
    originality\"). The line between idea and expression is not easy to
    draw. The distinction is not that one is fixed and the other is not
    \-- they are both fixed in the copyrighted work of authorship. At
    some point, the idea becomes detailed enough to constitute
    expression. Judge Learned Hand explained:

    > Upon any work . . . a great number of patterns of increasing
    > generality will fit equally well, as more and more of the incident
    > is left out. The last may perhaps be no more than the most general
    > statement of what the \[work\] is about, and at times might
    > consist only of its title; but there is a point in this series of
    > abstractions where they are no longer protected, since otherwise
    > the \[author\] could prevent the use of his \"ideas,\" to which,
    > apart from their expression, his property is never extended.

    *Nichols v. Universal Pictures Corp*., 45 F.2d 119, 121 (2d Cir.
    1930).

[^88]: *Harper & Row*, *supra* note 34, at 548.

[^89]: *Feist*, *supra* note 36, at 349-50 (citing *Harper & Row*,
    *supra* note 34, at 556-57).

[^90]: *Feist*, *supra* note 36, at 349-50.

[^91]: 17 U.S.C. § 105 (1988). There are limited exceptions to this
    noncopyrightability provision. For instance, the Secretary of
    Commerce is authorized to secure copyright on behalf of the United
    States \"in all or any part of any standard reference data which he
    prepares or makes available\" under the Standard Reference Data
    Program. *See* 15 U.S.C. § 290(e) (1988). Works of the U.S. Postal
    Service, such as designs on postage stamps, are also copyrightable
    by the Postal Service. *See* [House Report]{.smallcaps} at 60,
    *reprinted* *in* 1976 U.S.C.C.A.N. 5674 (\"the Postal Service
    could . . . use the copyright law to prevent the reproduction of
    postage stamp designs for private or commercial non-postal
    services\"). Copyright interests transferred to the U.S. Government
    by assignment, bequest or otherwise may be held and enforced by it.
    *See* 17 U.S.C. § 105 (1988).

[^92]: A work of the U.S. Government is a work \"prepared by an officer
    or employee of the United States Government as part of that
    person\'s official duties.\" 17 U.S.C. § 101 (definition of \"work
    of the United States Government\"). Although the wording of this
    definition is not identical to that of a \"work made for hire,\" the
    concepts \"are intended to be construed in the same way.\" [House
    Report]{.smallcaps} at 58, *reprinted* *in* 1976 U.S.C.C.A.N. 5672.
    *See* discussion of works made for hire *infra* notes 134-36 and
    accompanying text.

[^93]: *See* [House Report]{.smallcaps} at 59, *reprinted* *in* 1976
    U.S.C.C.A.N. 5672.

[^94]: 17 U.S.C. § 102(a) (1988 & Supp. V 1993).

[^95]: 17 U.S.C. § 101 (1988) (definition of \"literary works\").

[^96]: Following the recommendation of CONTU, Congress amended the
    Copyright Act in 1980 to recognize that computer programs are
    protected works. *See* Act of December 12, 1980, Pub. L. 96-517,
    1980 U.S.C.C.A.N. (94 Stat.) 3015, 3028. \"Computer programs\" are
    defined as a \"set of statements or instructions to be used directly
    or indirectly in a computer in order to bring about a certain
    result.\" *See* 17 U.S.C. § 101 (1988 & Supp. V 1993).

[^97]: *See* [House Report]{.smallcaps} at 54, *reprinted* *in* 1976
    U.S.C.C.A.N. 5667.

[^98]: Congress did not define the term \"musical work\" in the statute
    based on the assumption that the term had a \"fairly settled\"
    meaning. *See* [House Report]{.smallcaps} at 53, *reprinted* *in*
    1976 U.S.C.C.A.N. 5666-67.

[^99]: A phonorecord generally embodies two works \-- a musical work
    (or, in the case of spoken word recordings, a literary work) and a
    sound recording. Musical works available through services on the NII
    may also be the subject of Musical Instrument Digital Interface
    (\"MIDI\") recordings. A MIDI is a data stream between a musical
    unit in a computer and a music-producing instrument. The data stream
    instructs the instrument, such as a synthesizer, on what notes to
    play.

[^100]: *See* H. [Abrams]{.smallcaps}, [The Law of
    Copyright]{.smallcaps} § 204\[C\]\[3\]\[b\]\[iv\] (1993). The term
    \"dramatic works\" is not defined in the Act. *See* [House
    Report]{.smallcaps} at 53, *reprinted* *in* 1976 U.S.C.C.A.N.
    5666-67.

[^101]: Congress also declined to define the terms \"pantomimes\" and
    \"choreographic works,\" again relying on \"fairly settled
    meanings.\" *See* [House Report]{.smallcaps} at 53, *reprinted* *in*
    1976 U.S.C.C.A.N. 5666-67.

[^102]: 17 U.S.C. § 101 (1988) (definition of \"pictorial, graphic, and
    sculptural works\").

[^103]: *Mazer v. Stein*, 347 U.S. 201, 214-17 (1954); *see* *supra*
    note 85.

[^104]: 17 U.S.C. § 101 (1988) (definition of \"audiovisual works\").

[^105]: 17 U.S.C. § 101 (1988) (definition of \"motion pictures\").

[^106]: *See* [House Report]{.smallcaps} at 56, *reprinted* *in* 1976
    U.S.C.C.A.N. 5669.

[^107]: *See* 17 U.S.C. § 101 (1988) (definition of \"sound
    recordings\").

[^108]: The sounds accompanying an audiovisual work are specifically
    excluded from the definition of sound recordings. *See* *id.*

[^109]: 17 U.S.C. § 101 (Supp. V 1993) (definition of \"architectural
    work\"). The category of architectural works was added in 1990 by
    the Architectural Works Copyright Protection Act, Public Law
    101-650, 1990 U.S.C.C.A.N. (104 Stat.) 5089, 5133.

[^110]: *Id.*

[^111]: 17 U.S.C. § 101 (1988) (definition of \"compilation\"). A
    \"collective work,\" which is one kind of \"compilation,\" is \"a
    work, such as a periodical issue, anthology, or encyclopedia, in
    which a number of contributions, constituting separate and
    independent works in themselves, are assembled into a collective
    whole.\" 17 U.S.C. § 101 (1988) (definition of \"collective work\").

[^112]: 17 U.S.C. § 101 (1988) (definition of \"derivative work\").

[^113]: *See* *id.*

[^114]: *See* 17 U.S.C. § 103(a) (1988).

[^115]: 17 U.S.C. § 103(b) (1988).

[^116]: *Id.*

[^117]: *See* *Feist*, *supra* note 36, at 350-51 (alphabetical
    \"arrangement\" of comprehensive list of telephone subscribers not
    sufficiently \"original\" and therefore noncopyrightable); *see*
    *also* *supra* pp. 32-34 (discussion of the noncopyrightability of
    facts).

[^118]: *See* *Feist*, *supra* note 36, at 354 (\"to accord copyright
    protection on this basis alone distorts basic copyright principles
    in that it creates a monopoly in public domain materials without the
    necessary justification of protecting and encouraging the creation
    of \'writings\' by \'authors\'\").

[^119]: The embodiment of two or more different types of works in one
    medium is not a new concept. For instance, a book may contain both a
    literary work and pictorial works. A compact disc may contain a
    musical work and a sound recording.

[^120]: A true \"multimedia\" work would be one in which several
    material objects, such as a book, a videocassette and an
    audiocassette, are bundled into one product.

[^121]: *See* discussion of compilations *supra* pp. 40-41.

[^122]: While expressly protected under the Copyright Act, the category
    of \"compilations\" is not a particularly useful subject matter
    category. Works in any of the eight enumerated categories of
    protectible subject matter outlined above may take the form of a
    compilation, and a protectible compilation must fit into one or more
    of the subject matter categories. \"A compilation or derivative work
    is copyrightable if it represents an \'original work of authorship\'
    *and* falls within one or more of the categories listed in section
    102.\" [House Report]{.smallcaps} at 57, *reprinted* *in* 1976
    U.S.C.C.A.N. 5670 (emphasis added).

[^123]: The list \"sets out the general area of copyrightable subject
    matter, but with sufficient flexibility to free the courts from
    rigid or outmoded concepts of the scope of particular categories.\"
    [House Report]{.smallcaps} at 53, *reprinted* *in* 1976 U.S.C.C.A.N.
    5666.

[^124]: [House Report]{.smallcaps} at 53, *reprinted* *in* 1976
    U.S.C.C.A.N. 5666. Indeed, Congress amended the Copyright Act in
    1990 to add \"architectural works\" as a category of protectible
    works. *See* *supra* note 109.

[^125]: It should be noted that the Copyright Office classifies works
    into four broad categories for purposes of registration: nondramatic
    literary works, works of performing arts, works of visual arts, and
    sound recordings. *See* 37 C.F.R. § 202.3(b)(i)-(iv) (1994). The
    Copyright Office notes that in cases \"where a work contains
    elements of authorship in which copyright is claimed which fall into
    two or more classes, the application should be submitted in the
    class most appropriate to the type of authorship that predominates
    in the work as a whole.\" *See* 37 C.F.R. § 202.3(b)(2) (1994).
    However, the Copyright Act makes clear that the Copyright Office
    classification of works for purposes of registration \"has no
    significance with respect to the subject matter of copyright or the
    exclusive rights provided.\" *See* 17 U.S.C. § 408(c)(1) (1988);
    *see* *also* [House Report]{.smallcaps} at 153, *reprinted* *in*
    1976 U.S.C.C.A.N. 5769 (\"\[i\]t is important that the statutory
    provisions setting forth the subject matter of copyright be kept
    entirely separate from any classification of copyrightable works for
    practical administrative purposes\").

[^126]: *See* 17 U.S.C. § 106(4),(5) (1988 & Supp. V 1993). The public
    performance right is limited to literary, musical, dramatic, and
    choreographic works, pantomimes, and motion pictures and other
    audiovisual works. The public display right is limited to literary,
    musical, dramatic, and choreographic works, pantomimes, and
    pictorial, graphic, or sculptural works, including the individual
    images of a motion picture or other audiovisual work. *Id.*

[^127]: *See, e.g.,* 17 U.S.C. § 108(h) (1988) (limitation not
    applicable to musical works, pictorial, graphic or sculptural works,
    or motion pictures or other audiovisual works other than audiovisual
    works dealing with news); 17 U.S.C. § 109(b) (Supp. V 1993) (certain
    limitations not applicable to sound recordings and musical works
    embodied in sound recordings or to computer programs); 17 U.S.C.
    § 110(4) (1988) (limitation applicable only to nondramatic literary
    or musical works); 17 U.S.C § 110(8) (1988) (limitation applicable
    only to nondramatic literary works); 17 U.S.C. § 110(9) (1988)
    (limitation applicable only to dramatic literary works); 17 U.S.C.
    § 112(a) (1988) (limitation not applicable to motion pictures or
    other audiovisual works); 17 U.S.C. § 113 (1988 & Supp. V 1993)
    (limitation applicable only to pictorial, graphic, or sculptural
    works); 17 U.S.C. § 114 (1988) (limitation applicable only to sound
    recordings); 17 U.S.C. § 115 (1988) (limitation applicable only to
    nondramatic musical works); and 17 U.S.C. § 120 (Supp. V 1993)
    (limitation applicable only to architectural works).

[^128]: *See* 17 U.S.C. § 101 (1988) (definition of \"literary works\")
    (emphasis added).

[^129]: The definition of \"sound recordings\" explicitly excludes from
    the category of sound recordings musical, spoken or other sounds
    \"accompanying a motion picture or other audiovisual work . . . .\"
    *See* 17 U.S.C. § 101 (1988) (definition of \"sound recordings\").
    The definition of \"audiovisual works\" also expressly includes any
    \"accompanying sounds.\" *See* 17 U.S.C. § 101 (1988) (definition of
    \"audiovisual works\").

[^130]: Audiovisual works are \"works that consist of a series of
    related images which are intrinsically intended to be shown by the
    use of machines or devices such as projectors, viewers, or
    electronic equipment . . . .\" 17 U.S.C. § 101 (1988) (definition of
    \"audiovisual works\").

[^131]: Categories are \"overlapping in the sense that a work falling
    within one class may encompass works coming within some or all of
    the other categories.\" [House Report]{.smallcaps} at 53,
    *reprinted* *in* 1976 U.S.C.C.A.N. 5666.

[^132]: 17 U.S.C. § 201(a) (1988).

[^133]: *Id.* A \"joint work\" is \"a work prepared by two or more
    authors with the intention that their contributions be merged into
    inseparable or interdependent parts of a unitary whole.\" 17 U.S.C.
    § 101 (1988) (definition of \"joint work\").

[^134]: *See* 17 U.S.C. § 201(b) (1988). This legal conclusion may only
    be altered by the parties in a written instrument signed by them
    expressly agreeing otherwise. *Id.*

[^135]: The Copyright Act does not define \"employee.\" In 1989, the
    Supreme Court held that an employment relationship determination for
    copyright purposes should be made by reference to the \"general
    common law of agency.\" *See* *Community for Creative Non-Violence
    v. Reid*, 490 U.S. 730, 740-41 (1989). The central question in an
    agency law inquiry is whether the hiring party has the \"right to
    control the manner and means by which the product is accomplished.\"
    *Id.* at 751. The factors to be considered include the skill
    required, the source of the instrumentalities and tools used in
    creating the work, where the work was created, the duration of the
    relationship between the parties, whether the hiring party has the
    right to assign additional projects to the hired party, the method
    of payment, the extent of the hired party\'s discretion over when
    and how long to work, the hired party\'s role in hiring and paying
    assistants, whether the hiring party is in business and whether the
    work is part of the regular business of the hiring party, the
    provision of employee benefits, and the tax treatment of the hired
    party. *Id.* at 751-52. The Court did not specify any factors that
    should be weighed more heavily than others, but made clear that an
    \"employee\" under the Copyright Act is not limited to a formal,
    salaried employee.

[^136]: To qualify as a work made for hire under the second prong, the
    work must be specially ordered or commissioned for use as (1) a
    contribution to a collective work, (2) part of an audiovisual work,
    (3) a translation, (4) a supplementary work, (5) a compilation, (6)
    an instructional text, (7) a test, (8) answer material for a test or
    (9) an atlas. 17 U.S.C. § 101 (1988) (definition of \"work made for
    hire\").

[^137]: *See* 17 U.S.C. § 202 (1988).

[^138]: *Id.*

[^139]: *See* 17 U.S.C. § 201(d)(1) (1988) (\"ownership of a copyright
    may be transferred in whole or in part by any means of conveyance or
    by operation of law, and may be bequeathed by will or pass as
    personal property by the applicable laws of intestate succession\").

[^140]: 17 U.S.C. § 204(a) (1988). An exclusive license is considered a
    transfer of copyright and, therefore, must be in writing. Although
    an exclusive license may be limited in time, place or scope, it
    nevertheless extends the benefits of copyright ownership with
    respect to the rights granted to the licensee for the duration of
    the license. The rights of a copyright owner may also be licensed on
    a nonexclusive basis to one or more licensees. The Copyright Act
    does not require nonexclusive licenses to be in writing.

[^141]: 17 U.S.C. § 101 (1988) (definition of \"transfer of copyright
    ownership\"). With the exception of transfers by operation of law,
    all transfers of copyright ownership must be in writing. 17 U.S.C.
    § 204(a) (1988) (\"transfer of copyright ownership, other than by
    operation of law, is not valid unless an instrument of conveyance,
    or a note or memorandum of the transfer, is in writing and signed by
    the owner of the rights conveyed or such owner\'s duly authorized
    agent\").

[^142]: *See* 17 U.S.C. § 204(a) (1988).

[^143]: *See* discussion of the exclusive rights of a copyright owner
    *infra* pp. 63-72.

[^144]: *See* 17 U.S.C. § 201(d)(2) (1988); 17 U.S.C. § 101 (1988)
    (definition of \"copyright owner\").

[^145]: *See* 17 U.S.C. § 203(a) (1988); *see* *also* 17 U.S.C. § 304(c)
    (1988 & Supp. V 1993).

[^146]: 17 U.S.C. § 203(a)(5) (1988) (\"\[t\]ermination of the grant may
    be effected notwithstanding any agreement to the contrary, including
    an agreement to make a will or to make any future grant\").

[^147]: *See* 17 U.S.C. § 203(a) (1988).

[^148]: *See* 17 U.S.C. § 501(b) (1988) (\"legal or beneficial owner of
    an exclusive right under a copyright is entitled . . . to institute
    an action for any infringement of that particular right committed
    while he or she is the owner of it\"). In certain circumstances,
    television broadcast stations and others are treated as legal or
    beneficial owners and may bring actions for infringement by cable
    systems and satellite carriers. *See* 17 U.S.C. § 501(c), (d), (e)
    (1988).

[^149]: However, like exclusive licenses, nonexclusive licenses may be
    terminated 35 years after the effective date of the license. *See*
    17 U.S.C. §§ 203(a) (1988), 304(c) (1988 & Supp. V 1993).

[^150]: For example, a user could decide to participate in a licensing
    program covering all copies made, for a nominal fee per copy, rather
    than to indulge in the record-keeping necessary to determine which
    copies are subject to a licensing fee and which are fair use.
    Copyright owners may not be allowed, however, to seek to increase
    the term of protection without implicating the doctrine of copyright
    misuse. *Cf*. *Saturday Evening Post Co*. *v. Rumbleseat Press,
    Inc.*, 816 F.2d 1191, 1200 (7th Cir. 1987) (claims of misuse must be
    judged by antitrust standards); *Lasercomb America, Inc*. *v.
    Reynolds*, 911 F.2d 970, 979 (4th Cir. 1990) (contract purporting to
    license copyright for 99 years rendered copyright owner guilty of
    copyright misuse). The doctrine of copyright misuse might be
    implicated in other situations where the scope of protection is
    significantly expanded.

[^151]: [House Report]{.smallcaps} at 79, *reprinted* *in* 1976
    U.S.C.C.A.N. 5693.

[^152]: *See, e.g., Harper Bros*. *v. Klaw*, 232 F. 609 (S.D.N.Y. 1916)
    (license to dramatize \"Ben Hur\" in a play did not include right to
    produce a movie, but licensor enjoined from producing movie because
    licensee\'s right to produce a play would be harmed by licensor\'s
    production of a movie); *L.C. Page & Co*. *v. Fox Film Corp*., 83
    F.2d 196 (2d Cir. 1936) (grant of exclusive \"moving picture\"
    rights embraced technical improvements in movies that might be
    developed during the term of the license; thus, license held to
    cover \"talkies\"); *Bartsch v. Metro-Goldwyn-Mayer, Inc*., 391 F.2d
    150 (2d Cir.), *cert*. *denied*, 393 U.S. 826 (1968) (1930 license
    of film rights in a play, when television was a known technology but
    its full impact not yet realized, included television rights; as
    experienced businessman, licensor had reason to know of new
    technology\'s potential and had burden of negotiating exception).

[^153]: *See, e.g.,* 17 U.S.C. § 111 (1988 & Supp. V 1993). The cable
    compulsory license was enacted to reduce the need for negotiations
    among thousands of program copyright owners and hundreds of cable
    systems for the right to retransmit the copyrighted programs that
    are included in the broadcast signals retransmitted by cable
    systems.

[^154]: *See* discussion of on-line transactions *infra* pp. 53-59.

[^155]: *See* discussion *infra* pp. 191-92, 235-36.

[^156]: Library subscription costs for print journals have for many
    years been two or more times those for individual subscriptions.
    This additional cost has been assumed by some to permit use of the
    material by the library\'s patrons. Licenses would serve to convert
    this assumption to explicit terms that could be negotiated, avoiding
    misunderstandings and litigation.

[^157]: *See* *generally* Information Infrastructure Task Force,
    Committee on Applications and Technology, *Putting the Information
    Infrastructure to Work,* 25-40 (May 1994).

[^158]: *See* discussion *infra* pp. 192-94; *see* *generally* Uniform
    Commercial Code, Art. 4A (1990); K. Epper, *Money Creators: Point of
    Sale Pioneer Setting Sail on the Internet,* The American Banker 14
    (Feb. 10, 1995).

[^159]: [B. Wright]{.smallcaps}, [The Law of Electronic
    Commerce]{.smallcaps} 235 (1991 & Supp. 1994) (hereinafter
    [Wright]{.smallcaps}).

[^160]: *See* [J. Calamari & J. Perillo]{.smallcaps}, [The Law of
    Contracts]{.smallcaps} 25 (3d ed. 1987) (hereinafter [Calamari &
    Perillo]{.smallcaps}).

[^161]: In *Corinthian Pharmaceutical v. Lederle Laboratories*, the
    court found that the \"automated, ministerial act\" of a seller
    issuing an electronic order tracking number to a purchaser\'s
    on-line purchase order did *not* constitute assent or acceptance by
    the seller. *See* 724 F. Supp. 605, 610 (S.D. Ind. 1989); *see*
    *also* [Wright]{.smallcaps}, *supra* note 159, at 236 (1991);
    Electronic Messaging Task Force, *The Commercial Use of Electronic
    Data Interchange \-- A Report and Model Trading Partner Agreement*,
    A.B.A. Sec. Bus. Law, *reprinted from* 45 [Bus. Law]{.smallcaps}
    1647 (1990) (hereinafter A.B.A. Report or A.B.A. Model Agreement).

[^162]: *See* *Step-Saver Data Systems, Inc. v. Wyse Technology*, 939
    F.2d 91 (3d Cir. 1991).

[^163]: *See* *id.* at 96 n.7.

[^164]: *See* *Standard Oil Co. v. Perkins*, 347 F.2d 379, 385 n.5 (9th
    Cir. 1965).

[^165]: *Compare* D. Johnson & K. Marks, *Mapping Electronic Data
    Communications onto Existing Legal Metaphors: Should We Let Our
    Conscience (and Our Contracts) be Our Guide?*, 38 [Vill. L.
    Rev]{.smallcaps}. 487, 488-89 (1993) *with* Note, *Offers Users
    Can\'t Refuse: Shrink-Wrap License Agreements as Enforceable
    Adhesion Contracts*, 10 [Cardozo L. Rev]{.smallcaps}. 2105, 2120
    (1989).

[^166]: *See* [Restatement (Second) of Contracts]{.smallcaps} § 211
    (1981).

[^167]: *Compare* *Step-Saver*, *supra* note 162, at 99 *with* *Arizona
    Retail Systems v. Software Link*, 831 F. Supp. 759 (D. Ariz. 1993).

[^168]: *See* *Step-Saver*, *supra* note 162, at 99; *see* *also* J.
    Peys, *Comment, Commercial Law \-- The Enforceability of Computer
    \"Box-Top\" License Agreements Under the U.C.C.*, 7 [Whittier L.
    Rev]{.smallcaps}. 881, 885-92 (1985).

[^169]: *See* [Ill. Rev. Stat.]{.smallcaps} ch. 29, para. 801-08 (1986);
    [La. Rev. Stat.]{.smallcaps} §§ 51:1961-66 (1987). The Louisiana
    statute was declared partially invalid in a controversial decision
    in *Vault Corp*. *v. Quaid Software, Ltd*. because the court found
    that it impinged on \"rights\" under the U.S. copyright laws, and
    was therefore preempted. *See* 847 F.2d 255, 270 (5th Cir. 1988).

[^170]: *See* [Restatement (Second) of Contracts]{.smallcaps} § 131
    (1981). Signed writings are also required for exclusive licenses and
    assignments under the Copyright Act. *See* 17 U.S.C. § 204 (1988).

[^171]: *See* [Wright]{.smallcaps}, *supra* note 159, at 274 (1991).

[^172]: *See* U.C.C. § 1-102(2)(b) (1990).

[^173]: U.C.C. § 2-204 (1990).

[^174]: *Id.* at § 2-206 (1990).

[^175]: *See* U.C.C. § 2-207 (1990).

[^176]: The U.C.C. contains a Statute of Frauds which raises the same
    questions as common law concerning whether a purely electronic
    contract can meet the writing and signature requirements. However,
    the U.C.C. Statute of Frauds includes exceptions to the requirements
    \-- for specially manufactured goods not suitable for sale to others
    which the seller has begun to manufacture, and for goods that have
    been received and accepted. *See* U.C.C. § 2-201(2), (3) (1990).

[^177]: *See* U.C.C. § 1-205(1), (2) (1990).

[^178]: *See* U.C.C. §§ 2-105(2), 716(3) (1990). *See* D. Frisch,
    *Symposium: The Revision of the Uniform Commercial Code*, 35 [Wm. &
    Mary L. Rev]{.smallcaps}. 1691, 1729 (1994).

[^179]: *See* U.C.C. § 1-102 (1990). *But* *see* [Calamari &
    Perillo]{.smallcaps}, *supra* note 160, at 16; *Step Saver*, *supra*
    note 162, at 94; *Advent Systems Ltd. v. Unisys Corp.*, 925 F.2d 670
    (3d Cir. 1991).

[^180]: *See* *supra* notes 160-71 and accompanying text.

[^181]: *See* R. Nimmer, *Symposium: The Revision of Article 2 of the
    Uniform Commercial Code,* 35 [Wm. & Mary L. Rev]{.smallcaps}. 1337,
    1341-50 (1994).

[^182]: *See* 17 U.S.C. § 301 (1988).

[^183]: *See* 17 U.S.C. § 302(a) (1988). The terms of protection for
    works created before January 1, 1978 (the effective date of the 1976
    revisions to the Copyright Act) are set forth in Sections 303 and
    304 of the Act. *See* 17 U.S.C. §§ 303, 304 (1988 & Supp. V 1993).
    Bills introduced in the 104th Congress would extend by 20 years the
    term of protection for all works. *See* S. 483, 104th Cong., 1st
    Sess. (1995); H.R. 989, 104th Cong., 1st Sess. (1995). A directive
    adopted by the Council of Ministers of the European Union requires
    all EU member states to provide a term of protection for copyrighted
    works of life of the author plus 70 years. Although a number of
    member states have yet to enact legislation extending terms, the
    obligations of the directive were to go into effect on July 1, 1995.
    *See* Council Directive 7831/93 of 13 July 1993 on Harmonizing the
    Term of Protection of Copyright and Certain Related Rights.

[^184]: 17 U.S.C. § 302(b) (1988).

[^185]: 17 U.S.C. § 302(c) (1988). The term for anonymous or
    pseudonymous works differs if the identity of one or more of the
    authors is revealed before the end of the term of protection. *See*
    *id.*

[^186]: The public domain is the legal status of works whose term of
    copyright protection has ended or which are not protected for other
    reasons, such as the noncopyrightability of the subject matter.

[^187]: *See* Act of October 31, 1988, Pub. L. 100-568, 1988
    U.S.C.C.A.N. (102 Stat.) 2853, 2857. Copyright notice is still
    required on copies and phonorecords of works publicly distributed
    prior to March 1, 1989, the effective date of the Act.

[^188]: 17 U.S.C. § 401(a) (1988) (emphasis added). The copyright owner
    of a sound recording may also place a notice of copyright on
    publicly distributed phonorecords of the sound recording. 17 U.S.C.
    § 402(b) (1988).

[^189]: *See* 17 U.S.C. §§ 401(b), 402(b) (1988).

[^190]: *See* 17 U.S.C. § 407 (1988).

[^191]: *See* 17 U.S.C. § 407(c) (1988); *see* *also* 37 C.F.R.
    § 202.19(e) (1994).

[^192]: *See* 17 U.S.C. § 407(d) (1988).

[^193]: 17 U.S.C. § 408(a) (Supp. V 1993).

[^194]: 17 U.S.C. § 411(a) (Supp. V 1993). Registration is required
    before a suit for infringement may be brought for works of U.S.
    origin and for foreign works from countries which are not members of
    the Berne Convention.

[^195]: *See* 17 U.S.C. § 408 (a), (b) (1988 & Supp. V 1993). Only one
    copy of the work is required for certain types of works, including
    unpublished works.

[^196]: 17 U.S.C. § 408(b) (1988).

[^197]: 17 U.S.C. § 410(c) (1988); *Bibbero Systems, Inc*. *v. Colwell
    Systems, Inc*., 893 F.2d 1104, 1106 (9th Cir. 1990). The weight to
    be accorded a certificate when registration has been made more than
    five years from the date of first publication is within the
    discretion of the court. 17 U.S.C. § 410(c) (1988).

[^198]: *See* 17 U.S.C. § 412 (1988 & Supp. V 1993).

[^199]: The Berne Convention prohibits member states from conditioning
    copyright protection for works of Berne nationals on the compliance
    with formalities. *See* Article 5 of the Berne Convention *infra*
    note 439.

[^200]: 17 U.S.C. § 106 (1988 & Supp. V 1993). Section 106(A) grants
    additional rights for certain works of visual art in single copies
    or limited editions. The development of the NII does not raise
    unique issues with respect to those rights. *See* 17 U.S.C. § 106(A)
    (Supp. V 1993).

[^201]: *See* 17 U.S.C. § 101 (1988) (definitions of \"copies\" and
    \"phonorecords\").

[^202]: In 1978, the *CONTU Final Report* noted, \"\[T\]he application
    of principles already embodied in the language of the \[current\]
    copyright law achieves the desired substantive legal protection for
    copyrighted works which exist in machine-readable form. The
    introduction of a work into a computer memory would, consistent with
    the \[current\] law, be a reproduction of the work, one of the
    exclusive rights of the copyright proprietor.\" *CONTU Final Report*
    at 40. *See* *also* *MAI Systems Corp*. *v. Peak Computer, Inc*.,
    991 F.2d 511, 519 (9th Cir. 1993), *cert*. *denied*, 114 S. Ct. 671
    (1994); *Vault Corp*. *v. Quaid Software Ltd*., 847 F.2d 255, 260
    (5th Cir. 1988); *Advanced Computer Services v. MAI Systems Corp*.,
    845 F. Supp. 356 (E.D. Va. 1994); *Triad Systems Corp*. *v.
    Southeastern Express Co*., 1994 U.S. Dist. LEXIS 5390 (N.D. Cal.
    March 18, 1994); 2 [Nimmer on Copyright]{.smallcaps} § 8.08\[A\]
    (1994).

[^203]: That copying has occurred does not necessarily mean that
    infringement has occurred. When copying is (1) authorized by the
    copyright owner, (2) exempt from liability as a fair use, (3)
    otherwise exempt under the provisions of Sections 108-119 or Chapter
    10 of the Copyright Act, or (4) of such a small amount as to be *de*
    *minimis*, then there is no infringement liability.

[^204]: *See, e.g., MAI Systems Corp*. *v. Peak Computer, Inc.*, 991
    F.2d 511, 519 (9th Cir. 1993). (While this court\'s determination
    with respect to fair use may be open to question, its holding that
    booting a PC involves copying the operating system seems quite
    unexceptional.)

[^205]: For example, if an author transfers a file (such as a
    manuscript) to a publisher with an Internet account, copies will
    typically, at a minimum, be made (a) in the author\'s Internet
    server, (b) in the publisher\'s Internet server, (c) in the
    publisher\'s local area network server, and (d) in the editor\'s
    microcomputer. It has been suggested that such \"copying\" of files
    in intermediate servers is only of transitory duration and
    consequently not covered by the reproduction right. However, it is
    clear that if the \"copy\" exists for more than a period of
    transitory duration, the reproduction right is implicated. Whether
    such reproduction is an infringement would be a separate
    determination.

[^206]: *See* 17 U.S.C. § 106(2) (1988). \"A \'derivative work\' is a
    work based upon one or more preexisting works, such as a
    translation, musical arrangement, dramatization, fictionalization,
    motion picture version, sound recording, art reproduction,
    abridgment, condensation, or any other form in which a work may be
    recast, transformed, or adapted. A work consisting of editorial
    revisions, annotations, elaborations, or other modifications which,
    as a whole, represent an original work of authorship, is a
    \'derivative work.\'\" 17 U.S.C. § 101 (1988) (definition of
    \"derivative work\").

[^207]: 17 U.S.C. § 109(a) (1988). *See* discussion *infra* pp. 90-95.

[^208]: *See* discussion of rental rights for computer programs and
    sound recordings *infra* p. 91.

[^209]: Furthermore, with respect to international distributions,
    Section 602 of the Copyright Act makes unauthorized importations a
    violation of the distribution right. *See* discussion *infra* pp.
    107-09.

[^210]: The court elsewhere in its opinion, in a small but perhaps
    significant deviation from conventional usage, appears to use
    \"implicate\" to mean \"infringe\" rather than \"involve.\"

[^211]: 839 F. Supp. 1552 (M.D. Fla. 1993).

[^212]: *Id.* at 1556.

[^213]: Whether such reproduction was legally performed by the
    subscriber, the bbs operator, or both is not clear.

[^214]: Owners of copyrights in computer programs and sound recordings
    have the right to control post-first-sale rentals of copies of their
    works; owners of copyrights in other works do not. *See* 17 U.S.C.
    § 109 (1988 & Supp. V 1993). This inconsistency may be important in
    the NII context, particularly with respect to \"multimedia works\"
    that are neither expressly nor self-evidently in any particular
    category of copyrighted work (and whose treatment under various
    exemptions and special provisions may thus be unclear). *See*
    discussion of multimedia works *supra* pp. 41-45.

[^215]: *See* discussion of contributory infringement and vicarious
    liability *infra* pp. 109-14.

[^216]: 857 F. Supp. 679 (N.D. Cal. 1994).

[^217]: *See* 17 U.S.C. § 106(4) (1988).

[^218]: \"To \'perform\' a work means to recite, render, play, dance, or
    act it, either directly or by means of any device or process or, in
    the case of a motion picture or other audiovisual work, to show its
    images in any sequence or to make the sounds accompanying it
    audible.\" 17 U.S.C. § 101 (1988) (definition of \"perform\").

[^219]: To perform or display a work \"publicly\" means \--

    > \(1\) to perform or display it at a place open to the public or at
    > any place where a substantial number of persons outside of a
    > normal circle of a family and its social acquaintances is
    > gathered; or
    >
    > \(2\) to transmit or otherwise communicate a performance or
    > display of the work to a place specified by clause (1) or to the
    > public, by means of any device or process, whether the members of
    > the public capable of receiving the performance or display receive
    > it in the same place or in separate places and at the same time or
    > at different times.

    17 U.S.C. § 101 (1988) (definition of \"publicly\").

[^220]: *See* 17 U.S.C. § 110 (1988).

[^221]: The current law addresses only transmissions of \"performances\"
    and \"displays.\"

[^222]: *See, e.g., Columbia Pictures Indus*. *v. Redd Horne, Inc.*, 749
    F.2d 154 (3d Cir. 1984) (video store operator liable for public
    performance violation where he rented tapes of motion pictures to
    customers and provided semi-private screening rooms where the tapes
    could be viewed); *Columbia Pictures Indus*. *v. Aveco, Inc.*, 800
    F.2d 59 (3d Cir. 1986) (same result where customers also rented
    rooms for viewing); *On Command Video Corp*. *v. Columbia Pictures
    Indus*., 777 F. Supp. 787 (N.D. Cal. 1991) (infringement found where
    hotel guests in rooms selected tapes to be played on remotely
    controlled console in hotel basement with signal then sent to
    rooms).

[^223]: 17 U.S.C. § 101 (1988 & Supp. V 1993) (definition of
    \"display\").

[^224]: *See* discussion of *Playboy* case *supra* pp. 68-69 and *infra*
    pp. 81, 120-21.

[^225]: Of course, to the extent that such lists or menus are
    protectible under the Copyright Act, the authors of such lists would
    have the exclusive right to publicly display them.

[^226]: The copyright law\'s legislative history, describing the
    introduction of the display right, distinguishes displays \"on a
    screen or tube\" from reproductions. This language, written before
    the advent of the personal computer, applies easily to displays with
    which Congress was familiar in 1976 (those rendered by broadcast
    television receivers), but is inapplicable to digital \"browsing\"
    where the law itself clearly \-- without resort to explanatory
    Congressional language \-- defines such acts as implicating the
    display *and* reproduction rights.

[^227]: Although sometimes referred to as \"rights\" of the users of
    copyrighted works, \"fair use\" and other exemptions from
    infringement liability are actually limitations on the rights of the
    copyright owners. Thus, as a technical matter, users are not granted
    affirmative \"rights\" under the Copyright Act; rather, copyright
    owners\' rights are limited by exempting certain uses from
    liability. It has been argued, however, that the Copyright Act would
    be unconstitutional if such limitations did not exist, as they
    reduce First Amendment and other concerns. Others have argued that
    fair use is an anachronism with no role to play in the context of
    the NII.

[^228]: *See* 17 U.S.C. § 107 (1988 & Supp. V 1993). The judicially
    created doctrine, although now codified in the Copyright Act, has
    been described as \"so flexible as virtually to defy definition.\"
    *See* *Time Inc*. *v. Bernard Geis Assoc*., 293 F. Supp. 130, 144
    (S.D.N.Y. 1968).

[^229]: *Campbell v. Acuff-Rose Music, Inc*., 114 S. Ct. 1164, 1177
    (1994). As an affirmative defense, the burdens of persuasion and
    coming forward with evidence both must be carried by defendants to
    avoid liability (*i.e.,* a copyright owner need not prove an accused
    use not fair, but, rather, the defendant must prove its fairness).

[^230]: *Id.*

[^231]: *See* *id.*

[^232]: 17 U.S.C. § 107 (1988 & Supp. V 1993).

[^233]: *Harper & Row*, *supra* note 34, at 561.

[^234]: Justice Story stated that courts should \"look to the nature and
    the objects of the selections made, the quantity and value of the
    material used, and the degree in which the use may prejudice the
    sale, or diminish the profits, or supersede the objects, of the
    original work.\" *Folsom v. Marsh*, 9 F. Cas. 342, 348 (C.C.D. Mass.
    1841) (No. 4,901).

[^235]: *See* *Sony*, *supra* note 22, at 456 (videotaping by
    individuals at home of off-the-air television broadcast programming
    for purpose of \"time-shifting\" \-- as distinguished from
    \"librarying\" \-- held fair use).

[^236]: *See* *Stewart v. Abend*, 495 U.S. 207, 216 (1990) (theatrical
    and television distribution of motion picture over objection of
    owner of renewal copyright in underlying short story held
    infringing); *Harper & Row*, *supra* note 34, at 569 (\"Nation\"
    magazine\'s scoop of \"Time\" magazine\'s first serial rights in
    President Ford\'s memoirs held infringing, notwithstanding
    newsworthiness of the account of the Nixon pardon set out therein).

[^237]: *See* *Campbell*, *supra* note 229, at 1177-79 (parodic lyrics
    of popular song not *per* *se* unfair by virtue of commercial
    purpose of parody; case remanded for further factual determination).

[^238]: *See* 464 U.S. at 451. The subsequent *Campbell* decision
    indicates that the presumption is strongest in cases of \"mere
    duplication\" and weakest when a second commercial comer makes a
    transformative use and creates a derivative work. *See* *Campbell*,
    *supra* note 229, at 1177.

[^239]: Congress has expressly declined to enact a specific exemption
    from copyright liability for educational uses. *See* [House
    Report]{.smallcaps} at 66-67, *reprinted* *in* 1976 U.S.C.C.A.N.
    5680. Cases holding reproduction of an entire work as a fair use are
    few. In *Haberman v. Hustler Magazine, Inc*., 626 F. Supp. 201, 212
    (D. Mass. 1986) a magazine's reproduction of an artist\'s post cards
    was found to be fair use because there was no market harm.

[^240]: The consequences of denying a fair use defense in certain
    legitimate educational contexts are far smaller than in the
    commercial context. Under the provisions of Section 504(c)(2),
    statutory damages (damages that may be imposed without proof of the
    quantum of actual harm to the copyright owner) may not be imposed
    against a nonprofit educational institution, its employees or agents
    \-- when acting within the scope of their employment \-- in respect
    of copying that they performed with reasonably based grounds for
    believing the copying was fair use. 17 U.S.C. § 504(c)(2) (1988).

[^241]: *Marcus v. Rowley*, 695 F.2d 1171 (9th Cir. 1983).

[^242]: *Encyclopaedia Britannica Educ. Corp*. *v. Crooks*, 558 F. Supp.
    1247 (W.D.N.Y. 1983).

[^243]: *Basic Books, Inc*. *v. Kinko\'s Graphics Corp*., 758 F. Supp.
    1522 (S.D.N.Y. 1991).

[^244]: *See* *Twin Peaks Prods., Inc*. *v. Publications Int\'l, Ltd*.,
    996 F.2d 1366, 1376 (2d Cir. 1993).

[^245]: *See* *New Era Publications Int\'l, ApS v. Henry Holt & Co*.,
    873 F.2d 576 (2d Cir. 1989), *cert*. *denied*, 493 U.S. 1094 (1990).

[^246]: *See* *National Rifle Ass\'n v. Handgun Control Fed\'n*, 15 F.3d
    559, 562 (6th Cir. 1994).

[^247]: *See* *New Era Publications Int\'l, ApS v. Carol Publishing
    Group*, 904 F.2d 152, 157 (2d Cir. 1990).

[^248]: *See* *Harper & Row*, *supra* note 34, at 569 (taking of some
    300 words held infringing).

[^249]: 3 [Nimmer on Copyright]{.smallcaps} § 13.05\[A\] (1993)
    (footnotes omitted).

[^250]: *See* *Stewart v. Abend*, *supra* note 236, at 238.

[^251]: *Cf.* *American Geophysical Union v. Texaco, Inc*., 37 F.3d 881,
    895 (2d Cir. 1994) (\"analysis under the fourth factor must focus on
    the effect of \[defendant\'s\] photocopying upon the potential
    market for or value of these individual articles\"); *Salinger v.
    Random House, Inc.*, 811 F.2d 90, 99 (2d Cir.), *cert*. *denied*,
    484 U.S. 890 (1987) (protecting potential market for author\'s
    letters notwithstanding author\'s profound disinclination ever to
    publish them).

[^252]: *See* *Sony*, *supra* note 22, at 443-47 (plaintiffs \"failed to
    carry their burden with regard to \[the harm of\]
    time-shifting . . . . Harm from time-shifting is speculative and, at
    best, minimal\").

[^253]: *See* *Harper & Row*, *supra* note 34, at 562.

[^254]: *See* *Stewart v. Abend*, *supra* note 236, at 238.

[^255]: *See* *Campbell*, *supra* note 229, at 1173.

[^256]: The inability of our common law system to provide guidance
    covering every possible permutation of behavior is not necessarily a
    weakness. By permitting courts to reach decisions on a case-by-case
    basis, our system permits both necessary gap-filling and
    jurisprudential evolution without requiring repeated pleas to
    Congress for additional elaboration.

[^257]: *See* *supra* notes 210-16 and accompanying text (discussing
    *Playboy* and *MAPHIA* decisions).

[^258]: *Playboy*, *supra* note 211, at 1558.

[^259]: *MAPHIA*, *supra* note 216.

[^260]: *MAPHIA*, *supra* note 216, at 688.

[^261]: *See* *infra* pp. 83-84.

[^262]: 802 F. Supp. 1 (S.D.N.Y. 1992), *aff\'d,* 37 F.3d 881, 892 (2d
    Cir. 1994). The Court of Appeals noted, with respect to Texaco\'s
    argument that such photocopying was \"reasonable and customary,\"
    that \"whatever validity this argument might have had before the
    advent of . . . photocopying licensing . . . the argument today is
    insubstantial.\" This suggests that, together with Section 108\'s
    proscription on most \"systematic\" photocopying (discussed below),
    the precedential value of *Williams & Wilkins Co. v. United States*,
    487 F.2d 1345 (Ct. Cl. 1973) (Federal libraries not liable for
    infringement where no licensing option existed as between full price
    subscription to scientific journals and holding of fair use) may be
    reduced.

[^263]: Existing guidelines cover certain copying by and for teachers in
    the classroom context, the copying of music for educational
    purposes, the copying of relatively recent journal articles by one
    library for another, and the off-air videotaping of educational
    broadcast materials.

[^264]: *See* [House Report]{.smallcaps} at 68-74, *reprinted* *in* 1976
    U.S.C.C.A.N. 5681-88.

[^265]: *See* discussion of the Working Group's proposed amendments to
    Section 108 *infra* pp. 225-27.

[^266]: The laws of economics and physics protect producers of equipment
    and tangible supplies to a greater extent than copyright owners. A
    university, for example, has little choice but to pay to acquire
    photocopy equipment, computers, paper and diskettes. It may,
    however, seek subsidization from copyright owners by arguing that
    its copying and distribution of their works should, as a fair use,
    not be compensated.

[^267]: Hereinafter, the term \"library\" will be used to refer to a
    library or archives, or any of its employees acting within the scope
    of their employment.

[^268]: *See* 17 U.S.C. § 108(a) (1988). Section 108 limitations are
    *additional* exemptions provided specifically for certain libraries.
    Libraries, of course, may also take advantage of fair use privileges
    or any other exemptions to the Copyright Act (*see* 17 U.S.C.
    § 108(f)(4) (1988)), but the exemptions in Section 108 generally
    exceed fair use. *See* *generally* *Report of the Register of
    Copyrights on Library Reproduction of Copyrighted Works* (1983).

[^269]: *See* 17 U.S.C. § 108(a) (1988).

[^270]: *See* 17 U.S.C. § 108(g) (1988).

[^271]: 17 U.S.C. § 108(h) (1988).

[^272]: *See* 17 U.S.C. § 108(b) (1988).

[^273]: [House Report]{.smallcaps} at 75, *reprinted* *in* 1976
    U.S.C.C.A.N. 5689.

[^274]: 17 U.S.C. § 108(c) (1988); *see* [House Report]{.smallcaps} at
    75, *reprinted* *in* 1976 U.S.C.C.A.N. 5689.

[^275]: 17 U.S.C. § 108(d) (1988).

[^276]: *Id.*

[^277]: 17 U.S.C. § 108(e) (1988).

[^278]: *Id.*

[^279]: *See* 17 U.S.C. § 108(f)(3) (1988).

[^280]: 17 U.S.C. § 108(g)(2) (1988).

[^281]: *See* [H.R. Rep. No]{.smallcaps}. 1733, 94th Cong., 2d Sess.
    72-73 (1976), *reprinted* *in* 1976 U.S.C.C.A.N. 5810, 5813-14
    (hereinafter [Conference Report]{.smallcaps}).

[^282]: *Id.* at 72, *reprinted* *in* 1976 U.S.C.C.A.N. 5813.

[^283]: *See* discussion *supra* pp. 87-88.

[^284]: *See* discussion *supra* pp. 87-88.

[^285]: *See* *T.B. Harms Co*. *v. Jem Records, Inc*., 655 F. Supp.
    1575, 1582 (D.N.J. 1987); *Columbia Pictures Indus., Inc*. *v.
    Aveco, Inc*., 612 F. Supp. 315, 319-20 (M.D. Pa. 1985), *aff\'d*,
    800 F.2d 59 (3d Cir. 1986).

[^286]: 17 U.S.C. § 109(a) (1988).

[^287]: *See* 17 U.S.C. § 109(b)(1)(A) (Supp. V 1993). The prohibition
    with respect to record rental does not apply to nonprofit libraries
    or nonprofit educational institutions for nonprofit purposes. *Id.*
    In addition, a nonprofit educational institution may transfer
    possession of a lawfully made copy of a computer program to another
    nonprofit educational institution or to faculty, staff and students.
    *Id.* Nonprofit libraries may also lend a computer program for
    nonprofit purposes if each copy has a copyright warning affixed to
    the package. 17 U.S.C. § 109(b)(2)(A) (Supp. V 1993). The
    prohibition with respect to computer program rental does not apply
    to a computer program \"which is embodied in a machine or product
    and which cannot be copied during the ordinary operation or use of
    the machine or product\" or \"a computer program embodied in or used
    in conjunction with a limited purpose computer that is designed for
    playing video games and may be designed for other purposes.\" 17
    U.S.C. § 109(b)(1)(B) (Supp. V 1993).

[^288]: K. Corsello, *The Computer Software Rental Amendments Act of
    1990: Another Bend in the First Sale Doctrine*, 41 [Cath. U. L.
    Rev]{.smallcaps}. 177, 192 (1991).

[^289]: *See* [H.R. Rep. No]{.smallcaps}. 98-987, 98th Cong., 2d Sess. 2
    (1984), *reprinted* *in* 1984 U.S.C.C.A.N. 2898, 2899 (justifying
    the Record Rental Amendment of 1984).

[^290]: *See* 17 U.S.C. § 109(a) (1988) (\"the owner of a particular
    copy or phonorecord . . . is entitled . . . to sell or otherwise
    dispose of the possession of that copy or phonorecord\"); [House
    Report]{.smallcaps} at 79, *reprinted* *in* 1976 U.S.C.C.A.N. 5693
    (under the first sale doctrine in Section 109 \"the copyright
    owner\'s exclusive right of public distribution would have no effect
    upon anyone who owns \'a particular copy or phonorecord lawfully
    made under this title\' and who wishes to transfer it to someone
    else . . .\") *See* *also, e.g., Columbia Pictures Indus*. *v. Redd
    Horne, Inc.*, 749 F.2d 154, 159 (3d Cir. 1984) (\"first sale
    doctrine prevents the copyright owner from controlling the future
    transfer of a particular copy once its material ownership has been
    transferred\").

[^291]: [House Report]{.smallcaps} at 79, *reprinted* *in* 1976
    U.S.C.C.A.N. 5693 (under the first sale doctrine, \"the owner of the
    physical copy or phonorecord cannot reproduce or perform the
    copyrighted work publicly without the copyright owner\'s consent\").

[^292]: If the reproduction is lawful under another provision of the
    Copyright Act, the transmission would likely not be an infringement.
    *See* *infra* p. 95.

[^293]: *See* [House Report]{.smallcaps} at 79, *reprinted* *in* 1976
    U.S.C.C.A.N. 5693.

[^294]: 17 U.S.C. § 109(c) (1988).

[^295]: Section 109(e) reversed the decision in *Red Baron-Franklin
    Park, Inc*. *v. Taito Corp*., 883 F.2d 275 (4th Cir. 1989), *cert*.
    *denied*, 493 U.S. 1058 (1990), which held that video games could
    not be operated in an arcade without the permission of the copyright
    owner because such operation entailed violation of the copyright
    owner\'s exclusive rights to perform and display the work publicly.
    Section 109(e), however, does not allow the public display or
    performance of any other work of authorship embodied in the
    audiovisual game if the copyright owner of the game is not also the
    copyright owner of the other work. *See* 17 U.S.C. § 109(e) (Supp. V
    1993).

[^296]: *See* discussion of rental rights with regard to phonorecords
    and copies of computer programs *supra* notes 287-89 and
    accompanying text.

[^297]: *See* 17 U.S.C. § 110(1) (1988).

[^298]: *See* 17 U.S.C. § 110(2) (1988).

[^299]: Section 117 of the Copyright Act provides:

    > Notwithstanding the provisions of section 106, it is not an
    > infringement for the owner of a copy of a computer program to make
    > or authorize the making of another copy or adaptation of that
    > computer program provided:
    >
    > \(1\) that such a new copy or adaptation is created as an
    > essential step in the utilization of the computer program in
    > conjunction with a machine and that it is used in no other manner,
    > or
    >
    > \(2\) that such new copy or adaptation is for archival purposes
    > only and that all archival copies are destroyed in the event that
    > continued possession of the computer program should cease to be
    > rightful.

    17 U.S.C. § 117 (1988 & Supp. V 1993). Any identical copies made in
    accordance with Section 117 \"may be leased, sold, or otherwise
    transferred, along with the copy from which such copies were
    prepared, only as part of the lease, sale, or other transfer of all
    rights in the program.\" Adaptations made may be transferred only
    with the authorization of the owner of the copyright in the original
    program. *Id.*

[^300]: *See* 17 U.S.C. § 110(3) (1988).

[^301]: *See* 17 U.S.C. § 110(6) (1988).

[^302]: *See* 17 U.S.C. § 110(7) (1988).

[^303]: *See* 17 U.S.C. § 110(8), (9) (1988).

[^304]: *See* 17 U.S.C. § 110(10) (1988).

[^305]: *See* 17 U.S.C. § 110(5) (1988).

[^306]: *See, e.g.,* the decision in *Twentieth Century Music Corp*. *v.
    Aiken*, 422 U.S. 151 (1975), which was essentially codified in
    Section 110(5) (owner of a small food establishment exempt from
    infringement liability for the performance of copyrighted works via
    a radio and four small ceiling speakers). *See* *also* *Sailor Music
    v. The Gap Stores, Inc*., 516 F. Supp. 923 (S.D.N.Y.), *aff\'d*, 668
    F.2d 84 (2d Cir. 1981), *cert*. *denied*, 456 U.S. 945 (1982);
    *Rodgers v. Eighty Four Lumber Co*., 617 F. Supp. 1021 (W.D. Pa.
    1985); *Springsteen v. Plaza Roller Dome, Inc*., 602 F. Supp. 1113
    (M.D.N.C. 1985).

[^307]: *See* 17 U.S.C. § 112(a) (1988). This limitation of the
    copyright owner\'s reproduction right is applicable only if:

    > \(1\) the copy or phonorecord is retained and used solely by the
    > transmitting organization that made it, and no further copies or
    > phonorecords are reproduced from it; and
    >
    > \(2\) the copy or phonorecord is used solely for the transmitting
    > organization\'s own transmissions within its local service area,
    > or for purposes of archival preservation or security; and
    >
    > \(3\) unless preserved exclusively for archival purposes, the copy
    > or phonorecord is destroyed within six months from the date the
    > transmission program was first transmitted to the public.

    *Id.*

[^308]: *See* 17 U.S.C. §§ 111, 119 (1988 & Supp. V 1993). These
    provisions are referred to as \"compulsory licenses\" because under
    such provisions, copyright owners are compelled to grant the
    licenses. No license agreements are signed and the terms of such
    licenses are set forth in the statute; the copyright owner cannot
    object to the use of the work and must be satisfied with the license
    fees collected under the statute, which are distributed among all of
    the affected copyright owners by arbitrators impaneled by the
    Librarian of Congress.

[^309]: The Copyright Office issued a regulation in 1992 stating that a
    cable system is a facility that both receives and transmits signals
    from within the same state. *See* 37 C.F.R. § 201.17(k) (1994). This
    ruling makes clear that Section 111 should not be applicable to any
    entities other than community-based cable systems. Moreover, in
    *Satellite Broadcast Networks, Inc*. *v. Oman*, 17 F.3d 344 (11th
    Cir.), *cert*. *denied*, 115 S. Ct. 88 (1994), the 11th Circuit
    upheld the regulation, finding it valid, enforceable and to be used
    by courts when determining whether a facility qualifies as a cable
    system. Since facilities used to transmit works through the NII will
    generally be inherently capable of receiving and transmitting
    outside any particular state, these facilities will not qualify for
    the cable compulsory license.

[^310]: A \"satellite carrier\" is defined as \"an entity that uses
    facilities of a satellite service licensed by the Federal
    Communications Commission to establish and operate a channel of
    communications for point-to-multipoint distribution of television
    station signals . . . .\" *See* 17 U.S.C. § 119(d)(6). Unless the
    NII transmission occurs through a satellite service licensed by the
    FCC for the statutorily prescribed purposes, the compulsory license
    provisions would not be applicable.

[^311]: *See* 17 U.S.C. § 116 (Supp. V 1993). This compulsory license
    may only be invoked if private negotiations fail to produce a
    consensual license.

[^312]: *See* 17 U.S.C. § 118 (1988 & Supp. V 1993).

[^313]: *See* 17 U.S.C. § 115 (1988).

[^314]: *See* 17 U.S.C. § 501(a) (Supp. V 1993). Anyone who \"trespasses
    into \[the copyright owner\'s\] exclusive domain by using or
    authorizing the use of the copyrighted work in one of the five ways
    set forth in the statute\" is an infringer of the copyright. *Sony*,
    *supra* note 22, at 433.

[^315]: *See* discussion of the scope of the exclusive rights *supra* at
    pp. 63-72. For instance, activities such as loading a work into a
    computer, scanning a printed work into a digital file, uploading or
    downloading a work between a user\'s computer and a bbs or other
    server, and transmitting a work from one computer to another may be
    infringements (in those cases, of the reproduction right). *See,
    e.g., MAI Systems Corp*. *v. Peak Computer, Inc*., 991 F.2d 511 (9th
    Cir. 1993) (the turning on of the computer, thereby causing the
    operating system to be copied into RAM, constituted an infringing
    reproduction of the copyrighted software); *Advanced Computer
    Services v. MAI Systems Corp*., 845 F. Supp. 356 (E.D. Va. 1994)
    (loading software into computer\'s random access memory constituted
    infringing reproduction); *see* *also* 2 [Nimmer on
    Copyright]{.smallcaps} § 8.08 at 8-103 (1993) (\"input of a work
    into a computer results in the making of a copy, and hence . . .
    such unauthorized input infringes the copyright owner\'s
    reproduction right\").

[^316]: The innocence or willfulness of the infringing activity may be
    relevant with regard to the award of statutory damages. *See* 17
    U.S.C. § 504(c) (1988); *see* *also* discussion of remedies *infra*
    pp. 130-33.

[^317]: *See* 17 U.S.C. § 106 (1988 & Supp. V 1993).

[^318]: *See* [House Report]{.smallcaps} at 61, *reprinted* *in* 1976
    U.S.C.C.A.N. 5674 (\"references to \'copies or phonorecords\' are
    intended \[in Section 106(1)-(3)\] and throughout the bill to
    include the singular\"; \"the right \'to reproduce the copyright
    work in copies or phonorecords\' means the right to produce *a*
    material object in which the work is duplicated, transcribed,
    imitated, or simulated . . . \"). Further evidence of the intent of
    Congress to make even a single act of unauthorized reproduction an
    infringement is found in specific exemptions created for certain
    single-copy uses. *See, e.g.,* 17 U.S.C. §§ 108(a), 108(f)(2),
    112(a) (1988); *see* *also* *Texaco*, *supra* note 251, at 17.

[^319]: *See, e.g., Rockford Map Publishers, Inc. v. Directory Serv.
    Co*., 224 U.S.P.Q. 851 (C.D. Ill. 1984), *aff\'d*, 768 F.2d 145 (7th
    Cir. 1985), *cert. denied*, 474 U.S. 1061 (1986); *Sub-Contractors
    Register, Inc. v. McGovern\'s Contractors & Builders Manual, Inc*.,
    69 F. Supp. 507, 509 (S.D.N.Y. 1946). It is common for publishers of
    directories and other compilations to deliberately insert mistakes
    into the work (such as periodically adding a fictitious name,
    address and phone number in a telephone directory) to detect and
    help establish copying. *See* 2 H. [Abrams]{.smallcaps}, [The Law of
    Copyright]{.smallcaps} § 14.02\[B\]\[3\]\[c\], at 14-19 to 20
    (1993).

[^320]: This should be implied in the requirement that there be copying
    of the copyrighted work. Ideas and facts, of course, are not
    copyrightable. In the case of compilations, such as databases, if
    enough facts are copied, the copyrighted expression (the selection,
    arrangement or coordination of the facts) may be copied and
    infringement may be found. *See* *CONTU Final Report* at 42 (\"The
    use of one item retrieved from such a work \-- be it an address, a
    chemical formula, or a citation to an article \-- would not . . .
    conceivably constitute infringement of copyright. The retrieval and
    reduplication of any substantial portion of a data base, whether or
    not the individual data are in the public domain, would likely
    constitute a duplication of the copyrighted element of a data base
    and would be an infringement.\").

[^321]: *See* *Donald v. Zack Meyer\'s T.V. Sales & Service*, 426 F.2d
    1027, 1030 (5th Cir. 1970) (\"paraphrasing is equivalent to outright
    copying\"), *cert*. *denied*, 400 U.S. 992 (1971); *Davis v. E.I.
    DuPont de Nemours & Co*., 240 F. Supp. 612, 621 (S.D.N.Y. 1965)
    (\"paraphrasing is tantamount to copying in copyright law\"); *see*
    *generally* 3 [Nimmer on Copyright]{.smallcaps} § 13.03\[A\] at
    13-28 to 13-58 (1993). Nimmer identifies two bases upon which courts
    impose liability for less than 100 percent verbatim copying: (1)
    \"fragmented literal similarity\" (where words, lines or paragraphs
    are copied virtually word-for-word, although not necessarily
    verbatim) and (2) \"comprehensive nonliteral similarity\" (where the
    \"fundamental essence or structure\" of a work is copied); *see*
    *also* [P. Goldstein]{.smallcaps}, [Copyright]{.smallcaps} § 7.2.1
    at 13-17 (1989). Goldstein identifies three types of similarity: (1)
    where the infringing work \"tracks\" the original work \"in every
    detail,\" (2) \"striking similarity\" (where a brief portion of both
    works is \"so idiosyncratic in its treatment as to preclude
    coincidence\") and (3) similarities that \"lie beneath the surface\"
    of the works (\"\[i\]ncident and characterization in literature,
    composition and form in art, and rhythm, harmony and musical phrases
    in musical composition\"). *Id.* at 13 (citations omitted).

[^322]: For analyses of the various tests that have been used, *see*
    3 [Nimmer on Copyright]{.smallcaps} § 13.03\[A\] at 13-28 to -58
    (1993); [M. Leaffer]{.smallcaps}, [Understanding Copyright
    Law]{.smallcaps} §§ 9.5 - 9.7 at 268-76 (1989).

[^323]: *See* *Nichols v. Universal Pictures, Corp*., 45 F.2d 119, 121
    (2d Cir. 1930).

[^324]: *See Peter Pan Fabrics Inc. v. Martin Weiner Corp*., 274 F.2d
    487 (2d Cir. 1960).

[^325]: *See* Z. Chaffee, *Reflections on the Law of Copyright: I*, 45
    [Columbia L. Rev.]{.smallcaps} 503, 513 (1945).

[^326]: *See* *Universal Athletic Sales Co*. *v. Salkeld*, 511 F.2d 904,
    908-09 (3d Cir.), *cert.* *denied*, 423 U.S. 863 (1975) (subtracting
    all but the \"stick figures\" from chart as non-protectible subject
    matter); *Alexander v. Haley*, 460 F. Supp 40, 46 (S.D.N.Y. 1978)
    (finding \"alleged infringements display no similarity at all in
    terms of expression or language, but show at most some similarity of
    theme or setting. These items, the skeleton of creative work rather
    than the flesh, are not protected by the copyright laws.\").

[^327]: *See* 429 F.2d 1106 (9th Cir. 1970).

[^328]: *See, e.g., Sid & Marty Krofft Television Prods., Inc. v.
    McDonald\'s Corp*., 562 F.2d 1157 (9th Cir. 1977); *McCulloch v.
    Albert E. Price, Inc*., 823 F.2d 316 (9th Cir. 1987).

[^329]: *See, e.g., Reyher v. Children\'s Television Workshop*, 533 F.2d
    87 (2d Cir. 1976); *Atari, Inc*. *v. North American Philips Consumer
    Electronics Corp*., 672 F.2d 607 (7th Cir.), *cert*. *denied*, 459
    U.S. 880 (1982); *Atari Games Corp*. *v. Oman*, 888 F.2d 878 (D.C.
    Cir. 1989); *Whelan Assocs., Inc*. *v. Jaslow Dental Lab., Inc*.,
    797 F.2d 1222 (3d Cir. 1986), *cert*. *denied*, 479 U.S. 877 (1987).

[^330]: 562 F.2d 1157 (9th Cir. 1977).

[^331]: *See* *Pasillas v. McDonald\'s Corp*., 927 F.2d 440, 442 (9th
    Cir. 1991).

[^332]: *See* *Brown Bag Software v. Symantec Corp*., 960 F.2d 1465,
    1475 (9th Cir. 1992).

[^333]: *Krofft*, *supra* note 330, at 1164.

[^334]: 862 F.2d 204 (9th Cir. 1988).

[^335]: *See* *also* *Apple Computer, Inc*. *v. Microsoft Corp*., 35
    F.3d 1435, 1445 (9th Cir. 1994) (approving of district court\'s use
    of analytical dissection and agreeing with other courts\' use of the
    \"same analysis although articulated differently\").

[^336]: 982 F.2d 693 (2d Cir. 1992). *See* *Autoskill Inc*. *v. National
    Educational Support Systems, Inc*., 994 F.2d 1476, 1490-91 (10th
    Cir. 1993).

[^337]: Other circuits have applied this test. *See* *Engineering
    Dynamics, Inc*. *v. Structural Software, Inc*., 26 F.3d 1335, 1343
    (5th Cir. 1994); *Gates Rubber Co*. *v. Bando Chemical Indus.,
    Ltd*., 9 F.3d 823, 834 (10th Cir. 1993).

[^338]: 154 F.2d 464 (2d Cir. 1946).

[^339]: *See, e.g., Peter Pan Fabrics, Inc*. *v. Martin Weiner Corp*.,
    274 F.2d 487 (2d Cir. 1960); *Ideal Toy Corp*. *v. Fab-Lu Ltd*., 360
    F.2d 1021 (2d Cir. 1966); *Eden Toys, Inc*. *v. Marshall Field &
    Co*., 675 F.2d 498 (2d Cir. 1982).

[^340]: *Ideal Toy Corp*. at 1023 n.2.

[^341]: 905 F.2d 731 (4th Cir. 1990).

[^342]: *See* *Aliotti v. R. Dakin & Co*., 831 F.2d 898, 902 (9th Cir.
    1987) (holding that perceptions of children must be considered in
    substantial similarity analysis because they are intended market for
    product); *Atari, Inc*. *v. North American Philips Consumer
    Electronics Corp*., 672 F.2d 607, 619 (7th Cir.), *cert*. *denied*,
    459 U.S. 880 (1982) (holding that \"\[v\]ideo games, unlike an
    artist\'s painting, . . . appeal to an audience that is fairly
    undiscriminating insofar as their concern about more subtle
    differences in artistic expression\").

[^343]: *Dawson*, *supra* note 341, at 736.

[^344]: An infringer is anyone who violates \"any of the exclusive
    rights\" of the copyright owner. 17 U.S.C. § 501(a) (Supp. V 1993).
    One of the exclusive rights is \"to prepare derivative works based
    upon the copyrighted work.\" 17 U.S.C. § 106(2) (1988). A
    \"derivative work\" is a work \"based upon one or more preexisting
    works, such as a . . . condensation, or any other form in which a
    work may be recast, transformed, or adapted.\" 17 U.S.C. § 101
    (1988) (definition of \"derivative work\"). The Ninth Circuit has
    suggested that \"a work is not derivative unless it has been
    substantially *copied* from the prior work.\" *See* *Litchfield v.
    Spielberg*, 736 F.2d 1352, 1357 (9th Cir. 1984) (emphasis added). It
    is unclear, however, whether the court is suggesting that a
    derivative work must be substantially *similar* to the prior work or
    that it simply must incorporate in some form a portion of the prior
    work, as noted in the legislative history. *See* [House
    Report]{.smallcaps} at 62, *reprinted* *in* 1976 U.S.C.C.A.N. 5675.
    The court noted that there is \"little available authority\" on
    infringement of the derivative works right. *See* *Litchfield* at
    1357.

[^345]: 17 U.S.C. § 602(a) (1988).

[^346]: [House Report]{.smallcaps} at 169-70, *reprinted* *in* 1976
    U.S.C.C.A.N. 5785.

[^347]: *Id.* (Section 602 covers \"unauthorized importation of copies
    or phonorecords that were lawfully made\").

[^348]: *See* *T.B. Harms Co*. *v. Jem Records, Inc*., 655 F. Supp. 1575
    (D.N.J. 1987); *Parfums Givenchy, Inc*. *v. C&C Beauty Sales, Inc*.,
    832 F. Supp. 1378 (C.D. Cal. 1993). Courts are divided as to whether
    the first sale doctrine limits the ability of copyright owners to
    enforce the importation rights (as it does with respect to the
    domestic distribution right). *Compare* *BMG Music v. Perez*, 952
    F.2d 318, 319 (9th Cir. 1991) (first sale doctrine does not
    circumscribe importation rights under Section 602) *with* *Sebastian
    Int\'l, Inc*. *v. Consumer Contacts (PTY) Ltd*., 847 F.2d 1093, 1097
    (3d Cir. 1988) (*contra*).

[^349]: *See* 17 U.S.C. § 602(a) (1988) (subsection does not apply to
    \"(1) importation of copies or phonorecords under the authority or
    for the use of the Government of the United States or of any State
    or political subdivision of a State, but not including copies or
    phonorecords for use in schools, or copies of any audiovisual work
    imported for purposes other than archival use; (2) importation, for
    the private use of the importer and not for distribution, by any
    person with respect to no more than one copy or phonorecord of any
    one work at any one time, or by any person arriving from outside the
    United States with respect to copies or phonorecords forming part of
    such person\'s personal baggage; or (3) importation by or for an
    organization operated for scholarly, educational, or religious
    purposes and not for private gain, with respect to no more than one
    copy of an audiovisual work solely for its archival purposes, and no
    more than five copies or phonorecords of any other work for its
    library lending or archival purposes, unless the importation of such
    copies or phonorecords is part of an activity consisting of
    systematic reproduction or distribution, engaged in by such
    organization in violation of the provisions of section 108(g)(2)\");
    [House Report]{.smallcaps} at 170, *reprinted in* 1976 U.S.C.C.A.N.
    5786.

[^350]: *See* discussion of transmissions and the distribution right
    *supra* pp. 67-69.

[^351]: *See* discussion *infra* pp. 213-21.

[^352]: *See* [House Report]{.smallcaps} at 61, *reprinted* *in* 1976
    U.S.C.C.A.N. 5674. There must be a direct infringement upon which
    contributory infringement or vicarious liability is based.

[^353]: The concepts of contributory and vicarious liability are
    well-established in tort law. Contributory infringement of
    intellectual property rights was first codified in patent law. *See*
    35 U.S.C. § 271(c) (1988).

[^354]: *Shapiro, Bernstein & Co*. *v. H.L. Green Co*., 316 F.2d 304,
    307 (2d Cir. 1963) (holding that company that leased floor space to
    phonograph record department was liable for record department\'s
    sales of \"bootleg\" records despite absence of actual knowledge of
    infringement, because of company\'s beneficial relationship to the
    sales).

[^355]: *See, e.g., Dreamland Ball Room, Inc. v. Shapiro, Bernstein &
    Co*., 36 F.2d 354 (7th Cir. 1929); *Famous Music Corp. v. Bay State
    Harness Horse Racing & Breeding Ass\'n, Inc*., 554 F.2d 1213 (1st
    Cir. 1977); *KECA Music, Inc. v. Dingus McGee\'s Co*., 432 F. Supp.
    72 (W.D. Mo. 1977). Indeed, the \"cases are legion which hold the
    dance hall proprietor liable for the infringement of copyright
    resulting from the performance of a musical composition by a band or
    orchestra whose activities provide the proprietor with a source of
    customers and enhanced income. He is liable whether the bandleader
    is considered, as a technical matter, an employee or an independent
    contractor, and whether or not the proprietor has knowledge of the
    compositions to be played or any control over their selection.\"
    *Shapiro, Bernstein & Co. v. H.L. Green Co*., 316 F.2d 304, 307 (2d
    Cir. 1963) (citing some 10 cases).

[^356]: *Gershwin Publishing Corp*. *v. Columbia Artists Management,
    Inc*., 443 F.2d 1159, 1162 (2d Cir. 1971) (holding management
    firm\'s authorization of clients\' performances of copyrighted
    compositions to be contributory infringement).

[^357]: A library is exempted from liability for the unsupervised use of
    reproducing equipment located on its premises provided that the
    equipment displays a copyright law notice. 17 U.S.C. § 108(f)(1)
    (1988). This exemption does not apply to the user of such equipment,
    and no other provider of equipment enjoys any statutory immunity.
    *See* 17 U.S.C. § 108(f)(2) (1988).

[^358]: *See* *Universal Pictures Co*. *v. Harold Lloyd Corp*., 162 F.2d
    354, 366 (9th Cir. 1947) (rejecting defendant\'s argument that as an
    employee, he was not responsible for his employer\'s decision to use
    infringing material, in light of defendant\'s personal selection and
    appropriation of the protected material).

[^359]: *See* *Boz Scaggs Music v. KND Corp*., 491 F. Supp. 908, 913 (D.
    Conn. 1980) (finding defendant liable based on own admission of
    responsibility and control over radio performances of protected
    works).

[^360]: *See, e.g., Cable/Home Communication Corp*. *v. Network Prods.,
    Inc*., 902 F.2d 829, 845-47 (11th Cir. 1990).

[^361]: 464 U.S. 417 (1984).

[^362]: *Id.* at 440.

[^363]: *Id.* at 442. The Court cited two principles of patent law, but
    used only one as the appropriate analogy for copyright law:

    > The Copyright Act does not expressly render anyone liable for
    > infringement committed by another. In contrast, the Patent Act
    > expressly brands anyone who \"actively induces infringement of a
    > patent\" as an infringer, 35 U.S.C. § 271(b), and further imposes
    > liability on certain individuals labeled \"contributory\"
    > infringers, § 271(c).

    *Id.* at 434-35. Section 271(b) of the Patent Act provides,
    \"Whoever actively induces infringement of a patent shall be liable
    as an infringer.\" 35 U.S.C. § 271(b) (1988). Section 271(c)
    provides, \"Whoever sells a component of a patented machine,
    manufacture, combination or composition, or a material or apparatus
    for use in practicing a patented process, constituting a material
    part of the invention, knowing the same to be especially made or
    especially adapted for use in an infringement of such patent, and
    not a staple article or commodity of commerce suitable for
    substantial noninfringing use, shall be liable as a contributory
    infringer.\" 35 U.S.C. § 271(c) (1988).

[^364]: *Sony*, *supra* note 361, at 442. \"In order to resolve that
    question, we need not explore *all* the different potential uses of
    the machine and determine whether or not they would constitute
    infringement. Rather, we need only consider whether on the basis of
    the facts as found by the District Court a significant number of
    them would be noninfringing.\" *Id.* The Court declined to \"give
    precise content\" to the issue of how much use is needed to rise to
    the level of \"commercially significant.\" *See* *id.*

    The four dissenting Justices did not agree that the patent \"staple
    article of commerce\" doctrine of contributory infringement was
    applicable to copyright law. *See* *Sony*, *supra* note 361, at
    490-91 n.41 (Blackmun, J., dissenting) (\"\[t\]he doctrine of
    contributory patent infringement has been the subject of attention
    by the courts and by Congress . . . and has been codified since
    1952, . . . but was never mentioned during the copyright law
    revision process as having any relevance to contributory *copyright*
    infringement\"); *see* *also* *id.* at 491 (disagreeing that \"this
    technical judge-made doctrine of patent law, based in part on
    considerations irrelevant to the field of copyright . . . should be
    imported wholesale into copyright law. Despite their common
    constitutional source, . . . patent and copyright protections have
    not developed in a parallel fashion, and this Court in copyright
    cases in the past has borrowed patent concepts only sparingly.\")
    Recognizing the \"concerns underlying the \'staple article of
    commerce\' doctrine,\" the dissent concluded that \"if a
    *significant* portion of the product\'s use is *noninfringing*, the
    manufacturers and sellers cannot be held contributorily liable for
    the product\'s infringing uses.\" *See* *id.* at 491 (Blackmun, J.,
    dissenting).

[^365]: *Id.* at 446.

[^366]: *See, e.g., Vault Corp*. *v. Quaid Software Ltd*., 847 F.2d 255
    (5th Cir. 1988) (seller of computer programs that defeat
    anti-copying protection is not liable as contributory infringer
    because programs can be used to enable user to make legal archival
    copies of copyrighted computer programs under Section 117, which the
    court found to be a substantial noninfringing use). *But* *see* *RCA
    Records v. All-Fast Systems, Inc*., 594 F. Supp. 335 (S.D.N.Y. 1984)
    (operator is liable for contributory infringement based on its
    provision of sound recording facilities where public could make
    unauthorized phonorecords).

[^367]: *Sega Enterprises Ltd*. *v. MAPHIA*, 857 F. Supp. 679 (N.D. Cal.
    1994).

[^368]: *See* *id.* at 685.

[^369]: *See* *id.* at 687. The court found that there was \"no need to
    make archival copies of \[Sega\'s\] ROM game cartridges\" because
    the \"ROM cartridge format is not susceptible to breakdown\" and
    Sega would replace defective cartridges. *See* *id.* at 685. The
    court also found that it was unlikely that customers would buy the
    copiers, at a cost of \$350, for the purpose of backing up Sega\'s
    video game programs, which sold for \$30 to \$70 each. *Id.* at 685.

[^370]: For detailed analyses of arguments on both sides of this
    liability issue, *see* I. Trotter Hardy, *The Proper Legal Regime
    for "Cyberspace,"* 55 [U. Pitt. L. Rev]{.smallcaps}. 993 (1994).

[^371]: This differs from other bodies of law with which service
    providers, as well as broadcasters, newspaper publishers and others,
    come in contact. Defamation, for example, has a knowledge
    requirement for liability. This standard is the same whether in a
    conventional or NII environment. In *Auvil v. CBS \"60 Minutes,\"*
    800 F. Supp. 928 (E.D. Wash. 1992), the court held that a network
    affiliate which exercised no editorial control over the network
    broadcast (although it had the power to do so) served only as a
    conduit and was not liable for republishing defamatory statements.
    The court borrowed reasoning from book seller cases \-- \"one who
    only delivers or transmits defamatory material published by a third
    person is subject to liability if, but only if, he knows or had
    reason to know of its defamatory character\" \-- finding \"no
    logical basis for imposing a duty of censorship on the visual media
    which does not likewise attach to the print chain of distribution.\"
    The court also found that the injured parties were not impaired by
    limiting conduit liability to those situations where culpability is
    established; \"\[t\]he generating source, which in a national
    broadcast will generally be the deepest of the deep pockets, may
    still be called upon to defend.\" A similar result was reached in
    *Cubby, Inc*. *v. CompuServe Inc*., 776 F. Supp. 135 (S.D.N.Y.
    1991), where the court held that libelous material uploaded to a
    bulletin board system by a subscriber did not subject the bbs
    operator to damages for libel. The court determined that a bbs was a
    \"distributor\" (akin to a public library or bookstore) rather than
    a \"republisher,\" and thus the operator was liable only if it
    \"knew or had reason to know of the allegedly defamatory . . .
    statements\" that had been uploaded.

[^372]: *See* discussion of innocent infringement *infra* p. 125.

[^373]: *See* discussion of contributory infringement and vicarious
    liability *supra* pp. 109-14.

[^374]: *See* *Olan Mills, Inc*. *v. Linn Photo Co*., 23 F.3d 1345 (8th
    Cir. 1994).

[^375]: *See* [P. Goldstein]{.smallcaps}, [Copyright]{.smallcaps},
    § 1.15, at 45 (1989) (\"The exercise of due diligence . . . can
    reduce, but never entirely exclude, the risk of a copyright
    infringement claim. Copyright law\'s rule of strict liability poses
    particularly hard problems for an intermediary, . . . which must
    accept on faith its author\'s representation that he originated the
    work.\").

[^376]: The same can be said of other information providers and
    facilitators, such as book stores, photocopying services, photo
    finishers, broadcasters, etc.

[^377]: The subscriber may be unknown \-- particularly in the case of
    anonymous messages \-- to everyone but the service provider.

[^378]: Some estimates of the number of bbs operators are as high as
    100,000.

[^379]: *See* *Buck v. Jewell-LaSalle Realty Co*., 283 U.S. 191, 198-99
    (1931) (citations omitted) (at the time, infringement of the public
    performance right required that the performance was \"for profit\");
    *see* *also* *ABKCO Music, Inc*. *v. Harrisongs Music, Ltd*., 722
    F.2d 988, 999 (2d Cir. 1983) (\"the problems of proof inherent in a
    rule that would permit innocent intent as a defense to copyright
    infringement could substantially undermine the protections Congress
    intended to afford copyright holders\").

[^380]: *See, e.g.,* [House Report]{.smallcaps} at 159-60, *reprinted*
    *in* 1976 U.S.C.C.A.N. 5775-76. Within the cable compulsory
    licensing provisions, one narrow exemption from liability was
    granted with respect to secondary transmissions by independent
    carriers that provided transmission capacity for the distribution of
    superstation signals to local cable operators. *See* 17 U.S.C.
    § 111(a)(3) (1988). This exemption is only available if the primary
    transmission is made for reception by the public at large. If the
    primary transmission is limited to a particular segment of the
    public, such as subscribers to a service, the exemption does not
    apply and the standards for copyright liability are fully
    applicable.

[^381]: *See* cases cited *supra* note 355.

[^382]: [House Report]{.smallcaps} at 159-60, *reprinted* *in* 1976
    U.S.C.C.A.N. 5775-76.

[^383]: [House Report]{.smallcaps} at 163, *reprinted* *in* 1976
    U.S.C.C.A.N. 5779.

[^384]: *Id.*

[^385]: 3 [Nimmer on Copyright]{.smallcaps} § 13.08 at 13-291 (1994).
    *See* [P. Goldstein]{.smallcaps}, [Copyright]{.smallcaps} § 9.4 at
    162 (1989) (\"the standard rationale for excluding innocence as a
    defense to copyright infringement is that, as between the copyright
    owner and the infringer, the infringer is better placed to guard
    against mistake\"; \"the strict liability rule should discipline an
    infringer, who might otherwise mistakenly conclude that his copying
    will not infringe the copyrighted work, to evaluate the legal
    consequences of his conduct more carefully\").

[^386]: *Playboy Enterprises Inc*. *v. Frena*, 839 F. Supp. 1552 (M.D.
    Fla. 1993).

[^387]: *Id.* at 1559.

[^388]: *Sega Enterprises Ltd*. *v. MAPHIA*, 857 F. Supp. 679 (N.D. Cal.
    1994).

[^389]: *Id.* at 686-87. With regard to the contributory liability
    issues, the court found that the bbs operator had knowledge of the
    uploading and downloading of unauthorized copies of Sega\'s
    copyrighted video games and that it solicited the copying of the
    games. *Id.* at 683.

[^390]: *See* *Frank Music Corp*. *v. CompuServe Inc*., Civil Action No.
    93 Civ. 8153 (JFK) (S.D.N.Y.) (complaint filed Nov. 29, 1993). The
    Complaint alleges that defendant, by providing access to its bbs by
    subscribers, engaged in: (1) \"permitting, facilitating and
    participating in the recording of performances of the \[Plaintiffs\'
    works\] into, and storing such recordings in, CompuServe's computer
    database by permitting and enabling its paying subscribers to upload
    such performances thereto\"; (2) \"maintaining a storage of
    unauthorized recordings of \[the Plaintiffs\' works\] (uploaded by
    its subscribers) in and as part of CompuServe's computer database\";
    and (3) \"permitting, facilitating and participating in the
    recording (*i.e*., re-recording) of the performances of \[the
    Plaintiffs\' works\] (theretofore stored in its computer database)
    by permitting and enabling its paying subscribers to download such
    recorded performances therefrom.\" Complaint at 6-7. In addition,
    the Plaintiffs allege that CompuServe had \"control over the nature
    and content of materials stored in its Bulletin Board and downloaded
    therefrom\"; that CompuServe \"had actual knowledge of, or in the
    exercise of reasonable diligence could have determined, the nature
    and content of materials stored in its Bulletin Board and downloaded
    therefrom\"; and that CompuServe \"had actual notice, or in the
    exercise of reasonable diligence could have determined, that
    recordings of \[the Plaintiffs\' works\] were uploaded (recorded)
    to, stored in, and downloaded (re-recorded) from its computer
    database.\" *See* Complaint at 7.

[^391]: *See* *Religious Technology Center v. NETCOM*, No. C95-20091
    (N.D. Cal.) (verified first amended complaint filed March 3, 1995).

[^392]: Under the Communications Act of 1934, a common carrier is
    required to furnish service to the public upon reasonable request.
    *See* 47 U.S.C. § 201. A common carrier is defined as \"any person
    engaged as a common carrier for hire, in interstate or foreign
    communication by wire or radio . . . .\" *See* 47 U.S.C. § 153(h).
    The Supreme Court examined this somewhat circular definition and
    found that a common carrier in the communications context is one
    that \"makes a public offering to provide \[communications
    facilities\] whereby all members of the public who choose to employ
    such facilities may communicate or transmit intelligence of their
    own design and choosing . . . .\" *See* *Federal Communications
    Commission v. Midwest Video Corp*., 440 U.S. 689, 701 (1979) (citing
    Report and Order, *Industrial Radiolocation Service, Docket No.
    16106*, 5 F.C.C.2d 197, 202 (1966)).

[^393]: *See* [P. Goldstein]{.smallcaps}, [Copyright]{.smallcaps} § 1.15
    at 45 (1989) (\"\[a\]n intermediary can to some extent protect
    itself by shifting or sharing the risk of infringement through a
    warranty from the author that he originated the work in question or
    through an errors and omissions insurance policy\").

[^394]: *See* 17 U.S.C. § 502 (1988).

[^395]: *Superhype Publishing, Inc*. *v. Vasiliou*, 838 F. Supp. 1220,
    1226 (S.D. Ohio 1993).

[^396]: *See* 17 U.S.C. § 503(a) (1988).

[^397]: *See* 17 U.S.C. § 503(b) (1988).

[^398]: 17 U.S.C. § 504 (1988). Statutory damages generally are not
    available if the infringement occurred before the effective date of
    registration of the work, unless the infringement occurred after
    first publication and registration was made within three months of
    first publication. *See* 17 U.S.C. § 412 (1988 & Supp. V 1993).

[^399]: *See* 17 U.S.C. § 504(b) (1988).

[^400]: *See* 17 U.S.C. § 504(c)(1) (1988).

[^401]: 17 U.S.C. § 504(c)(2) (1988).

[^402]: *D.C. Comics Inc*. *v. Mini Gift Shop*, 912 F.2d 29, 35 (2d Cir.
    1990); *Innovative Networks, Inc*. *v. Satellite Airlines Ticketing,
    Inc*., 871 F. Supp. 709, 721 (S.D.N.Y. 1995). However, the court
    must remit statutory damages if (1) the infringer \"believed and had
    reasonable grounds for believing\" that the use was a fair use, and
    (2) the infringer was a nonprofit educational institution, library
    or archives (or its employee or agent) and infringed the
    reproduction right or a public broadcasting entity (or a person who
    \"as a regular part of the nonprofit activities\" of a public
    broadcasting entity) that infringed by performing a published
    nondramatic literary work or reproducing a transmission program
    embodying a performance of such work. *See* 17 U.S.C. § 504(c)(2)
    (1988).

[^403]: *See* 17 U.S.C. § 504(c)(2) (1988) (\"where the infringer
    sustains the burden of proving, and the court finds, that such
    infringer was not aware and had no reason to believe that his or her
    acts constituted an infringement of copyright, the court . . . may
    reduce the award of statutory damages to a sum of not less than
    \$200\"); *D.C. Comics Inc*., *supra* note 402, at 35 (defendant\'s
    lack of business sophistication and absence of copyright notice on
    copies were basis for a finding of innocent infringement and
    statutory damages of only \$200). A person who is misled and
    innocently infringes by relying on the lack of a copyright notice on
    a copy of a work that was lawfully publicly distributed before March
    1, 1989, is not liable for any damages (actual or statutory) for
    infringements committed before actual notice of registration of the
    work is received. 17 U.S.C. § 405(b) (1988). The court may allow,
    however, the recovery of any of the infringer\'s profits
    attributable to the infringement. *Id.*

[^404]: *See* 17 U.S.C. § 504(c)(2) (1988).

[^405]: *Twin Peaks Prods., Inc*. *v. Publications Int\'l, Ltd*., 996
    F.2d 1366, 1382 (2d Cir. 1993); *Video Views, Inc*. *v. Studio 21,
    Ltd*., 925 F.2d 1010, 1020 (7th Cir.), *cert*. *denied*, 502 U.S.
    861 (1991).

[^406]: 17 U.S.C. § 505 (1988).

[^407]: *Id.*; *see* *also* *Roth v. Pritikin*, 787 F.2d 54, 57 (2d Cir.
    1986) (attorney\'s fees generally awarded to prevailing plaintiffs
    because Copyright Act is intended to encourage suits to redress
    infringement); *Chi-boy Music v. Charlie Club, Inc*., 930 F.2d 1224,
    1230 (7th Cir. 1991) (attorney\'s fees and costs serve to deter
    infringement, dissuade defendant\'s disdain for copyright law, and
    encourage plaintiffs to bring colorable claims against infringers).
    No attorney\'s fees may be awarded for an infringement of copyright
    before its registration unless, in the case of published works, the
    infringement occurred after first publication and registration was
    made within three months of first publication. 17 U.S.C. § 412 (1988
    & Supp. V 1993).

[^408]: *See* 17 U.S.C. § 506 (a) (1988).

[^409]: 17 U.S.C. § 506(b) (1988).

[^410]: 871 F. Supp. 535 (D. Mass. 1994).

[^411]: The indictment alleged that the resultant loss of revenue to the
    copyright owners was in excess of \$1,000,000 over a period of
    approximately six weeks.

[^412]: 17 U.S.C. § 506(c) (1988). The penalties in Section 506(c) apply
    with regard to copyright notices or \"words of the same purport.\"
    *Id.*

[^413]: *Id.*

[^414]: 17 U.S.C. § 506(d) (1988).

[^415]: 17 U.S.C. § 506(e) (1988).

[^416]: *See* *Fogerty v. Fantasy*, *supra* note 35, at 1029.

[^417]: *See* discussion of the fair use defense *supra* pp. 73-82.

[^418]: *See F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago*,
    754 F.2d 216, 220-22 (7th Cir. 1985); *but* *see Columbia Pictures
    Indus. v. Redd Horne, Inc*., 749 F.2d 154, 161-62 (3d Cir. 1984).

[^419]: *See* *Pacific & Southern Co., Inc*. *v. Duncan*, 572 F. Supp.
    1186 (N.D. Ga. 1983), *aff\'d*, 744 F.2d 1490 (11th Cir. 1984).

[^420]: *See* 17 U.S.C. § 504(c)(2) (1988); *see* *also* *supra* pp.
    125-26. If a proper copyright notice was affixed to the published
    copy to which the infringer had access, the court may not give any
    weight to a claim of innocent infringement in mitigation of damages,
    except in limited circumstances involving certain infringers
    (including nonprofit educational institutions and libraries) who
    violated certain exclusive rights and who believed, and had
    reasonable grounds for believing that the use was a fair use. *See*
    §§ 401(d), 504(c)(2) (1988); *see* *also* 17 U.S.C. § 405(b) (1988)
    (effect on innocent infringers of omission of copyright notice on
    copies publicly distributed before March 1, 1989).

[^421]: *See* 17 U.S.C. § 302(e) (1988) (after a period of 75 years from
    first publication of a work, or 100 years from its creation,
    whichever is shorter, a person who obtains from the Copyright Office
    a certified report that the records relating to the deaths of
    authors disclose nothing to indicate that the author is living, or
    died less than 50 years before, may presume that the author has been
    dead for at least 50 years, and good faith reliance on that
    presumption is a complete defense).

[^422]: *See generally* discussion of infringement *supra* pp. 100-07.

[^423]: Further, no action will lie if the statute of limitations has
    run. *See* 17 U.S.C. § 507 (1988).

[^424]: A nonexclusive license may be implied from conduct. *See*
    *Effects Assocs*.*, Inc*. *v. Cohen*, 908 F.2d 555, 558 (9th Cir.
    1990), *cert*. *denied*, 498 U.S. 1103 (1991); *MacLean Assocs.,
    Inc*. *v. Wm. M. Mercer-Meidinger-Hansen, Inc*., 952 F.2d 769, 779
    (3d Cir. 1991); *see* *also* 3 [Nimmer on Copyright]{.smallcaps}
    § 10.03\[A\] at 10-38 (1994). Implied licenses, like oral licenses,
    are always nonexclusive in nature and may be limited in scope. *See*
    *Oddo v. Ries*, 743 F.2d 630, 634 (9th Cir. 1984); *Gilliam v.
    American Broadcasting Cos*., 538 F.2d 14, 19-21 (2d Cir. 1976).
    Delivery of a copy of a work by the copyright owner to the moderator
    of a newsgroup may imply a license to reproduce and distribute
    copies of the work to the subscribers of that newsgroup, but may not
    be evidence of an implied license to reproduce and distribute copies
    to other newsgroups.

[^425]: \"Neighboring rights\" are discussed *infra* p. 134.

[^426]: *See* S. Siwek & H. Furchtgott-Roth, International Intellectual
    Property Alliance, *Copyright Industries in the U.S. Economy*
    (1995).

[^427]: *See* *generally* [S. Stewart, International Copyright and
    Neighbouring Rights]{.smallcaps} (2d ed. 1989) (hereinafter
    [Stewart]{.smallcaps}). [S]{.smallcaps}tewart presents a summary of
    international copyright principles and synopses of the copyright
    laws of a number of countries. Stewart also identifies socialist
    copyright laws as a category. However, since the demise of the USSR,
    many of the former socialist countries have moved to enact modern
    copyright legislation. The copyright laws of the People's Republic
    of China and Russia follow the civil law model.

[^428]: [Stewart]{.smallcaps} at 6. In some common law countries, moral
    rights are protected by a combination of statutory provisions and
    common law. In the United States, for instance, this protection is
    found in Federal legislation, such as the Lanham Act and the
    Copyright Act, various state legislative provisions and the common
    law of privacy, defamation and the like. *See* *Final Report of the
    Ad Hoc Working Group on U.S. Adherence to the Berne Convention*, 10
    [Colum. VLA J.L. & Arts]{.smallcaps} 513, 548-57 (1986); 2 [Nimmer
    on Copyright]{.smallcaps} § 8D.02\[A\] at 8D-10 to -11 (1994).

[^429]: There are 155 members of the Convention Establishing the World
    Intellectual Property Organization (WIPO) as of July 1, 1995. Done
    at Stockholm on July 14, 1967; entered into force for the United
    States on August 25, 1970. 21 UST 1749; TIAS 6932; 828 UNTS 3. WIPO
    also administers the Paris Convention for the Protection of
    Industrial Property (Stockholm 1967), which is not discussed in this
    Report.

[^430]: Berne Convention (with Appendix) for the Protection of Literary
    and Artistic Works of September 9, 1886, completed at Paris on May
    4, 1896, revised at Berlin on November 13, 1908, completed at Berne
    on March 20, 1914, revised at Rome on June 2, 1928, at Brussels on
    June 26, 1948, at Stockholm on July 14, 1967, and at Paris on July
    24, 1971, amended at Paris on July 24, 1979. Done at Paris on July
    24, 1971; entered into force for the United States on March 1, 1989.

[^431]: There were 48 members of the convention as of July 1, 1995, but
    the United States is not a member. The Rome Convention is jointly
    administered by WIPO, the International Labor Organization (ILO) and
    the United Nations Educational, Scientific and Cultural Organization
    (UNESCO).

[^432]: Done at Geneva on October 29, 1971; entered into force on April
    18, 1973; for the United States on March 10, 1974. 25 UST 309; TIAS
    7808; 888 UNTS 67. There were 53 members of the Convention as of
    July 1, 1995.

[^433]: UNESCO is the United Nations Educational, Scientific and
    Cultural Organization.

[^434]: Universal Copyright Convention, as revised, with two protocols
    annexed thereto. Done at Paris on July 24, 1971, entered into force
    on July 10, 1974. 25 UST 1341; TIAS 7868. As of May 31, 1995, there
    were 96 members of the Convention.

[^435]: As of July 1, 1995, there were 114 signatories to the Berne
    Convention.

[^436]: This fundamental principle is set forth in Section 102(b) of the
    U.S. Copyright Act. *See* discussion *supra* pp. 32-35.

[^437]: This approach is consistent with Section 107 of the U.S.
    Copyright Act (relating to fair use of copyrighted works).

[^438]: Only Japan and Switzerland qualify under this exception.

[^439]: Article 5 provides:

    > \(1\) Authors shall enjoy, in respect of works for which they are
    > protected under this Convention, in countries of the Union other
    > than the country of origin, the rights which their respective laws
    > do now or may hereafter grant to their nationals, as well as the
    > rights specially granted by this Convention.
    >
    > \(2\) The enjoyment and the exercise of these rights shall not be
    > subject to any formality; such enjoyment and such exercise shall
    > be independent of the existence of protection in the country of
    > origin of the work. Consequently, apart from the provisions of
    > this Convention, the extent of protection, as well as the means of
    > redress afforded to the author to protect his rights, shall be
    > governed exclusively by the laws of the country where protection
    > is claimed.
    >
    > \(3\) Protection in the country of origin is governed by domestic
    > law. However, when the author is not a national of the country of
    > origin of the work for which he is protected under this
    > Convention, he shall enjoy in that country the same rights as
    > national authors.
    >
    > \(4\) The country of origin shall be considered to be:
    >
    > \(a\) in the case of works first published in a country of the
    > Union, that country; in the case of works published simultaneously
    > in several countries of the Union which grant different terms of
    > protection, the country whose legislation grants the shortest term
    > of protection;
    >
    > \(b\) in the case of works published simultaneously in a country
    > outside the Union and in a country of the Union, the latter
    > country;
    >
    > \(c\) in the case of unpublished works or of works first published
    > in a country outside the Union, without simultaneous publication
    > in a country of the Union, the country of the Union of which the
    > author is a national, provided that:
    >
    > \(i\) when these are cinematographic works the maker of which has
    > his headquarters or his habitual residence in a country of the
    > Union, the country of origin shall be that country, and
    >
    > \(ii\) when these are works of architecture erected in a country
    > of the Union or other artistic works incorporated in a building or
    > other structure located in a country of the Union, the country of
    > origin shall be that country.

[^440]: *See* World Intellectual Property Organization, BCP/CE/III/3,
    Report of the Committee of Experts on a Possible Protocol to the
    Berne Convention, Third Session, June 21 to 25, 1993, 20-21 (June
    25, 1993).

[^441]: *Id.* at 21.

[^442]: *See* Trade-Related Aspects of Intellectual Property, Final Act
    Embodying the Results of the Uruguay Round of the Multilateral Trade
    Negotiations, Office of the U.S. Trade Representative (Dec. 15,
    1993).

[^443]: *Id.*

[^444]: Article 3 (National Treatment) provides:

    > 1\. Each Member shall accord to the nationals of other Members
    > treatment no less favourable than that it accords to its own
    > nationals with regard to the protection of intellectual property,
    > subject to the exceptions already provided in, respectively, the
    > Paris Convention (1967), the Berne Convention (1971), the Rome
    > Convention and the Treaty on Intellectual Property in Respect of
    > Integrated Circuits. In respect of performers, producers of
    > phonograms and broadcasting organizations, this obligation only
    > applies in respect of the rights provided under this Agreement.
    > Any Member availing itself of the possibilities provided in
    > Article 6 of the Berne Convention and paragraph 1(b) of Article 16
    > of the Rome Convention shall make a notification as foreseen in
    > those provisions to the Council for Trade-Related Aspects of
    > Intellectual Property Rights.
    >
    > 2\. Members may avail themselves of the exceptions permitted under
    > paragraph 1 above in relation to judicial and administrative
    > procedures, including the designation of an address for service or
    > the appointment of an agent within the jurisdiction of a Member,
    > only where such exceptions are necessary to secure compliance with
    > laws and regulations which are not inconsistent with the
    > provisions of this Agreement and where such practices are not
    > applied in a manner which would constitute a disguised restriction
    > on trade.

[^445]: Article 4 of TRIPs (Most-Favoured-Nation Treatment) provides:

    > With regard to the protection of intellectual property, any
    > advantage, favour, privilege or immunity granted by a Member to
    > the nationals of any other country shall be accorded immediately
    > and unconditionally to the nationals of all other Members.
    > Exempted from this obligation are any advantage, favour, privilege
    > or immunity accorded by a Member:
    >
    > \(a\) deriving from international agreements on judicial
    > assistance and law enforcement of a general nature and not
    > particularly confined to the protection of intellectual property;
    >
    > \(b\) granted in accordance with the provisions of the Berne
    > Convention (1971) or the Rome Convention authorizing that the
    > treatment accorded be a function not of national treatment but of
    > the treatment accorded in another country;
    >
    > \(c\) in respect of the rights of performers, producers of
    > phonograms and broadcasting organizations not provided under this
    > Agreement;
    >
    > \(d\) deriving from international agreements related to the
    > protection of intellectual property which entered into force prior
    > to the entry into force of the WTO Agreement, provided that such
    > agreements are notified to the Council for TRIPs and do not
    > constitute an arbitrary or unjustifiable discrimination against
    > nationals of other Members.

[^446]: *See* NAFTA, H.R. Doc. No. 159, 103d Cong., 1st Sess. (1993); 32
    I.L.M. 289-456, 605-799 (1993). The NAFTA is binding among the
    United States, Mexico and Canada.

[^447]: Article 6*bis* provides:

    > \(1\) Independently of the author\'s economic rights, and even
    > after the transfer of the said rights, the author shall have the
    > right to claim authorship of the work and to object to any
    > distortion, mutilation or other modification of, or other
    > derogatory action in relation to, the said work, which would be
    > prejudicial to his honor or reputation.
    >
    > \(2\) The rights granted to the author in accordance with the
    > preceding paragraph shall, after his death, be maintained, at
    > least until the expiry of the economic rights, and shall be
    > exercisable by the persons or institutions authorized by the
    > legislation of the country where protection is claimed. However,
    > those countries whose legislation, at the moment of their
    > ratification of or accession to this Act, does not provide for the
    > protection after the death of the author of all the rights set out
    > in the preceding paragraph may provide that some of these rights
    > may, after his death, cease to be maintained.
    >
    > \(3\) The means of redress for safeguarding the rights granted by
    > this Article shall be governed by the legislation of the country
    > where protection is claimed.

[^448]: *See* Act of October 31, 1988, Pub. L. 100-568, 1988
    U.S.C.C.A.N. (102 Stat.) 2853.

[^449]: *See* Visual Artists Rights Act of 1990, Pub. L. 101-650, 1990
    U.S.C.C.A.N. (104 Stat.) 5128.

[^450]: *See* *Exposure '94: A Proposal for the New Rule of Intellectual
    Property for Multimedia*, Institute of Intellectual Property 18
    (Feb. 1994).

[^451]: *See* discussion *infra* pp. 189-90, 230-36.

[^452]: *See* discussion *infra* pp. 191-94, 236-38.

[^453]: Article 20 states:

    > The Governments of the countries of the Union reserve the right to
    > enter into special agreements among themselves, in so far as such
    > agreements grant to authors more extensive rights than those
    > granted by the Convention, or contain other provisions not
    > contrary to this Convention. The provisions of existing agreements
    > which satisfy these conditions shall remain applicable.

[^454]: This reference to fixations includes the subject matter of
    neighboring rights related to works and their performance.

[^455]: *Feist*, *supra* note 36, at 345.

[^456]: *See* discussion of 35 U.S.C. § 102 *infra* notes 463-64 and
    accompanying text.

[^457]: To be eligible for patent protection, an invention must be
    either a process, an article of manufacture, a composition or a
    machine. Discoveries, laws of nature, mathematical algorithms,
    methods of doing business and the like are not eligible for patent
    protection. *See* 35 U.S.C. § 101 (1988).

[^458]: *See* discussion of 35 U.S.C. § 103 *infra* note 465 and
    accompanying text.

[^459]: *See* 35 U.S.C. § 112 (1988).

[^460]: *See* 35 U.S.C. § 101 (1988). This language has been interpreted
    broadly by the Supreme Court in *Diamond v. Chakrabarty*, 447 U.S.
    303, 309 (1980), wherein the Court held:

    > The subject-matter provisions of the patent law have been cast in
    > broad terms to fulfill the constitutional and statutory goal of
    > promoting \"the Progress of Science and the useful Arts\" . . . .
    > Congress employed broad general language in drafting \[Section\]
    > 101 precisely because such inventions are often unforeseeable.

    Judicial precedent does exist denying patentability under Section
    101 for claims directed to laws of nature and methods of doing
    business. *See* *Parker v. Flook*, 437 U.S. 584, 589 (1978).

[^461]: *See* *Diamond v. Diehr*, 450 U.S. 175, 185 (1981)
    (\"\[e\]xcluded from such patent protection are laws of nature,
    natural phenomena, and abstract ideas\"); *Diamond v. Chakrabarty*,
    *supra* note 460, at 309 (\"new mineral discovered in the earth or a
    new plant found in the wild is not patentable subject matter.
    Likewise, Einstein could not patent his celebrated law that E=mc2;
    nor could Newton have patented the law of gravity. Such discoveries
    are \'manifestations of . . . nature, free to all men and reserved
    exclusively to none.\'\"); *Gottschalk v. Benson*, 409 U.S. 63, 72
    (1973) (\"the patent would wholly pre-empt the mathematical formula
    and in practical effect would be a patent on the algorithm
    itself\"); *In re Alappat*, 33 F.3d 1526, 1542 (Fed. Cir. 1994)
    (noting that the Supreme Court did not intend to make mathematical
    algorithms a fourth category of unpatentable subject matter along
    with *Diehr*\'s holding that laws of nature, natural phenomena and
    abstract ideas, but rather that some types of mathematical subject
    matter standing alone are only abstract ideas).

[^462]: *See* *In re Gulack*, 703 F.2d 1381, 1385 (Fed. Cir. 1983)
    (\"\[w\]here the printed matter is not functionally related to the
    substrate, the printed matter will not distinguish the invention
    from the prior art in terms of patentability\").

[^463]: Section 102 of Title 35 defines the different categories of
    prior art to include patents issued prior to the applicant's filing
    date by the United States or by other countries, patents issued by
    the United States after but filed prior to the applicant's filing
    date, printed publications distributed in the United States or
    abroad, evidence of public use or public disclosure of the claimed
    invention in the United States more than one year before the
    applicant's filing date, and evidence of a sale or an offer to sell
    the claimed invention in the United States more than one year prior
    to applicant's filing date. These categories are defined in 35
    U.S.C. § 102 (1988):

    > A person shall be entitled to a patent unless ---
    >
    > \(a\) the invention was known or used by others in this country,
    > or patented or described in a printed publication in this or a
    > foreign country, before the invention thereof by the applicant for
    > patent, or
    >
    > \(b\) the invention was patented or described in a printed
    > publication in this or a foreign country or in public use or on
    > sale in this country, more than one year prior to the date of the
    > application for patent in the United States, or . . . .
    >
    > \* \* \*
    >
    > \(e\) the invention was described in a patent granted on an
    > application for patent by another filed in the United States
    > before the invention thereof by the applicant for patent, or on an
    > international application by another who has fulfilled the
    > requirements of paragraphs (1), (2), and (4) of section 371(c) of
    > this title before the invention thereof by applicant for patent,
    > or
    >
    > \(f\) he did not himself invent the subject matter sought to be
    > patented, or

    \(g\) before the applicant's invention thereof the invention was
    made in this country by another who had not abandoned, suppressed,
    or concealed it. In determining priority of invention there shall be
    considered not only the respective dates of conception and reduction
    to practice of the invention, but also the reasonable diligence of
    one who was first to conceive and last to reduce to practice, from a
    time prior to conception by the other.

[^464]: Novelty exists unless the prior art completely discloses the
    invention that is claimed by the patent applicant. For example, if a
    patent application is filed two years after an article is published
    in a technical journal which completely discloses the invention
    claimed in the patent application, the application will be rejected
    by the PTO on the grounds that the claimed invention lacks novelty
    over that printed publication through operation of Section 102(b).

[^465]: Section 103 sets forth the nonobviousness requirement, in
    pertinent part, as follows:

    > A patent may not be obtained though the invention is not
    > identically disclosed or described as set forth in section 102 of
    > this title, if the differences between the subject matter sought
    > to be patented and the prior art are such that the subject matter
    > as a whole would have been obvious at the time the invention was
    > made to a person having ordinary skill in the art to which said
    > subject matter pertains. Patentability shall not be negatived by
    > the manner in which the invention was made.

    35 U.S.C. § 103 (1988).

[^466]: Under U.S. law, an inventor may rely on a \"grace period\" to
    avoid the otherwise patent-defeating effect of an earlier public
    disclosure of his or her invention. For example, an inventor may be
    able to obtain a patent on an invention that was disclosed in a
    technical journal provided she can establish that she conceived of
    the invention prior to that disclosure. There is a statutory limit
    of one year imposed by Section 102(b) on the grace period. This
    grace period is not available in all countries. As a result,
    applicants must exercise care before disclosing their invention to
    avoid forfeiting patent rights in countries other than the United
    States.

[^467]: Every patent concludes with one or more claims that outline the
    boundaries of the rights granted by the Government to the patentee.
    Claims must be commensurate in scope with the disclosure of the
    applicant, and must be clear and understandable.

[^468]: The first paragraph of Section 112 states:

    > The specification shall contain a written description of the
    > invention, and of the manner and process of making and using it,
    > in such full, clear, concise, and exact terms as to enable any
    > person skilled in the art to which it pertains, or with which it
    > is most nearly connected, to make and use the same, and shall set
    > forth the best mode contemplated by the inventor of carrying out
    > his invention.

[^469]: *See* 35 U.S.C. § 154(a)(1) (1988), *as* *amended* *by* Uruguay
    Round Agreements Act, Pub. L. 103-465, 1994 U.S.C.C.A.N. (108 Stat.)
    4809, 4984 (\"\[e\]very patent shall contain . . . a grant to the
    patentee . . . the right to exclude others from making, using,
    offering for sale, or selling the invention throughout the United
    States or importing the invention into the United States, and, if
    the invention is a process, of the right to exclude others from
    using, offering for sale or selling throughout the United States, or
    importing into the United States, products made by that process,
    referring to the specification for the particulars thereof\").

[^470]: The term of patents was changed as part of the Uruguay Round
    Agreements Act, Pub. L. 103-465, 1994 U.S.C.C.A.N. (108 Stat.) 4809,
    4984. Under the former system, patent rights would begin on the date
    a patent was granted and would end 17 years later. As part of the
    transition to the new system, the term of patents that were pending
    on June 8, 1995, or which result from applications pending on that
    date, will begin on the date the patent was granted and will end on
    the date that is the later of 17 years from the date of grant or 20
    years from the earliest effective filing date of the application
    leading to the patent.

[^471]: *See* 35 U.S.C. § 271 (1988).

[^472]: *See* 35 U.S.C. § 271(a) (1988), *as* *amended* *by* Uruguay
    Round Agreements Act, Pub. L. 103-465, 1994 U.S.C.C.A.N. (108 Stat.)
    4809, 4984 (\"\[e\]xcept as otherwise provided in this title,
    whoever without authority makes, uses, offers to sell, or sells any
    patented invention, within the United States, or imports into the
    United States any patented invention during the term of the patent
    therefor, infringes the patent\").

[^473]: The United States allows the holder of a United States patent on
    a process to enforce its rights against a third party that uses a
    process patented in the United States outside the territorial
    boundaries of the United States and then attempts to import a
    product produced using that patented process. *See* 35 U.S.C. § 295
    (1988).

[^474]: There are two forms of infringement, \"literal\" and
    infringement through operation of the \"doctrine of equivalents.\"
    Literal infringement means that the accused product or process
    contains each and every element set forth in the patent claims.
    Infringement through the \"doctrine of equivalents\" refers to a
    situation where the accused product or process does not have each of
    the elements set forth in the claims but the accused product or
    process \"performs substantially the same function in substantially
    the same way to obtain the same result as the patented invention.\"
    The latter form of infringement is intended to address situations
    where an accused infringer has made insubstantial changes to a
    product to avoid liability for infringement. *See* *Graver Tank &
    Mfg. Co. v. Linde Air Prods. Co*., 339 U.S. 605, 607 (1950).

[^475]: This is most often accomplished by submitting new prior art
    which was not considered by the PTO in the examination of the
    application. The accused infringer will typically argue that the new
    information anticipates or makes obvious the claimed invention.
    While the statute provides that all claims of a patent are presumed
    valid, the disclosure of new information that was not considered by
    the PTO can have significant repercussions when these claims are
    considered by a court. The party may also show that the claims are
    defective in view of Section 112 because they are broader than what
    is actually supported by the disclosure.

[^476]: A party can also preclude the enforcement of a patent without
    specifically addressing the validity of the patent. This can occur,
    for example, if the patent owner engaged in "inequitable conduct"
    before the PTO (*e*.*g*., the inventor withheld material prior art
    from the patent office or made other misrepresentations intended to
    mislead the PTO), or misused its patent rights (*e*.*g*., in an
    antitrust context). In both instances, the patent will be
    unenforceable against any and all infringers, even if the patent
    satisfies all patentability requirements.

[^477]: *See* 35 U.S.C. § 282 (1988):

    A patent shall be presumed valid. Each claim of a patent (whether
    independent, dependent, or multiple dependent form) shall be
    presumed valid independently of the validity of other claims;
    dependent or multiple dependent claims shall be presumed valid even
    though dependent upon an invalid claim. The burden of establishing
    invalidity of a patent or any claim thereof shall rest on the party
    asserting such invalidity.

[^478]: A party can also challenge the validity of a patent in a
    reexamination proceeding before the Patent and Trademark Office. In
    such a proceeding, however, the basis for challenge is limited to
    novelty and obviousness in view of only certain types of prior art,
    namely, printed publications and patents.

[^479]: Prior art plays a critical role in patentability determinations.
    It serves to define the state of the art at the time a patent
    application is filed (*e*.*g*., it establishes the level of ordinary
    skill in the art). Specific items of prior art serve as the basis of
    denying patentability to a particularly claimed invention, either
    singularly in the context of novelty or through combination in the
    context of obviousness. Because of this, it is imperative that all
    sources of information that relate to an invention be integrated
    into patentability determinations.

[^480]: *See* *In re Hall,* 781 F.2d 897, 899 (Fed. Cir. 1986) (publicly
    catalogued doctoral dissertation in publicly accessible library
    properly considered prior art document).

[^481]: The courts developed a test \-- the Freeman-Walter-Abele test
    \-- to distinguish claims covering \"mathematical algorithms\" from
    those on products and processes that use or rely upon mathematical
    principles. *See* *In re Freeman*, 573 F.2d 1237 (CCPA 1978), *as
    modified by* *In re Walter*, 618 F.2d 758, 766-68 (CCPA 1980); *In
    re Abele*, 684 F.2d 902, 907 (CCPA 1982). *See* *also* *In re
    Meyer*, 688 F.2d 789, 796 (CCPA 1982). The Patent and Trademark
    Office has promulgated guidelines for interpreting and applying the
    two-part test for statutory subject matter for inventions involving
    mathematical algorithms. *See* 1106 Off. Gaz. Pat. Office 5
    (Sept. 5, 1989) and 1122 Off. Gaz. Pat. Office 189 (Jan. 1, 1991).

[^482]: *In re Lowry*, 32 F.3d 1579 (Fed. Cir. 1994).

[^483]: *In re Trovato*, 42 F.3d 1376 (Fed. Cir. 1994); *In re
    Warmerdam*, 33 F.3d 1354 (Fed. Cir. 1994).

[^484]: Priority may also be established by the filing date of a Federal
    registration based upon an intent to use a mark (15 U.S.C. § 1051(b)
    (1988)) or a foreign filing (15 U.S.C. § 1126 (1988)).

[^485]: 15 U.S.C. § 1051 *et* *seq*. (1988 & Supp. V 1993). The Lanham
    Act, as amended, forms Chapter 22 of Title 15 of the U.S. Code.

[^486]: The first Federal trademark law in the United States was found
    unconstitutional because it was premised on the patent clause of the
    Constitution.

[^487]: Certain foreign-based applications may register without a
    showing of use in commerce. 15 U.S.C. § 1126(e) (1988).

[^488]: 15 U.S.C. § 1127 (1988 & Supp. V 1993). \"The word \'commerce\'
    means all commerce which may lawfully be regulated by Congress.\"
    This includes interstate commerce, commerce between the United
    States and a foreign country, and territorial commerce.

[^489]: Pub. L. 100-667, 1988 U.S.C.C.A.N. (102 Stat.) 3935.

[^490]: 15 U.S.C. § 1051(b) (1988).

[^491]: *See* 15 U.S.C. §§ 1114 - 1121, 1125(a) (1988 & Supp. V 1993)
    for relevant Federal law provisions. State and common law unfair
    competition provisions include such torts as passing off and
    dilution.

[^492]: 15 U.S.C. § 1057(b) (1988).

[^493]: 15 U.S.C. § 1124 (1988).

[^494]: 15 U.S.C. § 1116(d) (1988); 18 U.S.C. § 2320 (1988).

[^495]: 15 U.S.C. § 1065 (1988).

[^496]: 15 U.S.C. § 1064 (1988).

[^497]: *See* *In re Metriplex Inc.*, 23 U.S.P.Q.2d 1315 (TTAB 1992),
    where the PTO\'s Trademark Trial and Appeal Board authorized
    registration of a mark identifying \"data transmission services
    accessed via computer terminal\" and accepted, as evidence of use of
    the mark, a print-out of the mark as it appeared on the computer
    screen during transmission.

[^498]: In the case of *Playboy Enterprises Inc. v. Frena*, *supra* note
    386, the operator of a subscription computer bulletin board system
    (Frena) transmitted as part of its bulletin board system photographs
    owned by Playboy Enterprises Inc. (PEI). PEI\'s trademarks were
    obliterated on some photographs transmitted by Frena and PEI\'s
    \"Playboy\" and \"Playmate\" marks appeared on other photographs
    transmitted by Frena. These transmissions were without authorization
    from PEI. The court found, in part, that Frena infringed PEI\'s
    registered trademarks when it used PEI\'s \"Playboy\" and
    \"Playmate\" marks in unauthorized transmissions of PEI\'s
    photographs as part of its computer bulletin board system. The court
    also found Frena to have committed acts of unfair competition, in
    violation of Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)
    (Supp. V 1993)), both by obliterating PEI trademarks from
    photographs and by placing its own advertisement on PEI photographs.
    Such acts made it appear as if PEI authorized Frena\'s use of the
    images on the bulletin board; *see* *also* *Showtime/The Movie
    Channel, Inc*. *v. Covered Bridge Condominium Ass\'n,* 693 F. Supp.
    1080 (S.D. Fla. 1988), *modified*, 881 F.2d 983 (11th Cir. 1989),
    *remanded*, 895 F.2d 711 (1990), in which the court found that
    interception of cable television programming broadcast via satellite
    which appropriates trademarks and trade names in a manner likely to
    cause confusion is unfair competition in violation of Section 43(a)
    of the Lanham Act (15 U.S.C. § 1125(a) (Supp. V 1993)). *See* *also*
    *Pacific & Southern Co. Inc. v. Satellite* *Broadcast Networks
    Inc.*, 694 F. Supp. 1575 (N.D. Ga. 1988).

    In California, a U.S. District Court has entered a preliminary
    injunction against the owner of a computer bulletin board system
    based upon claims of copyright and trademark infringement and unfair
    competition. In *Sega Enterprises Ltd*. *v. MAPHIA*, *supra* note
    388, Sega demonstrated that the bulletin board system knowingly
    solicited the uploading and downloading of unauthorized copies of
    Sega\'s video games, and that whenever such a copy is played,
    Sega\'s trademark appears on the screen. Further, Sega\'s trademark
    appeared, with the bbs operator\'s knowledge, on file descriptors on
    the bulletin board. With regard to the trademark and unfair
    competition claims, the court concluded that there is support for
    the conclusion that the transferred games are counterfeit under the
    Lanham Act, and that confusion, if not on the part of the bulletin
    board users, is inevitable on the part of third parties who may see
    the copied games after they enter the stream of commerce.

[^499]: To send and receive information on the Internet, various
    organizations connected to the Internet must register their domains,
    networks and autonomous systems numbers with Network Solutions, part
    of the Internet National Information Center (InterNIC). The InterNIC
    performs this function under a cooperative agreement with the
    National Science Foundation. Within the context of a prescribed
    format, the Internet user may register any domain name as long as
    the identical domain name has not been previously registered with
    the InterNIC by another party. According to the InterNIC, there is
    no state or Federal statutory or regulatory authority under which
    the InterNIC performs this registration function. The InterNIC does
    not conduct an examination of trademark or other records before
    registering a domain name. However, the applicant is required to
    follow a policy relating to assumption of responsibility and to
    potential conflict resolution. The InterNIC policy is available at
    URL http://rs.internic.net.

[^500]: Federal law does prohibit the disclosure of confidential
    information obtained by federal officials in the course of their
    official duties. *See* 18 U.S.C. § 1905 (1988).

[^501]: \"A trade secret is commonly defined as any formula, pattern,
    device or compilation of information which is used in one\'s
    business, and which gives him an opportunity to obtain an advantage
    over competitors who do not know or use it.\" [Restatement of
    Torts]{.smallcaps} § 757, Comment b (1939).

[^502]: *Id.* The trade secret owner may communicate the trade secret to
    others provided that those to whom the trade secret is communicated
    pledge not to reveal the trade secret to others. *Id.*

[^503]: *See* discussion of methods of protection for material
    distributed through the NII *infra* pp. 183-200.

[^504]: *See* *CONTU Final Report* at 127.

[^505]: For a detailed discussion of these and other applications of
    technology that may be used to provide protection for copyrighted
    works, *see* Symposium, Technological Strategies for Protecting
    Intellectual Property in the Networked Multimedia Environment,
    cosponsored by the Coalition for Networked Information, Harvard
    University, Interactive Multimedia Association, and the
    Massachusetts Institute of Technology (April 2-3, 1993); *see*
    *also* M. D. Goldberg & J. M. Feder, *Copyright and Technology: The
    Analog, the Digital, and the Analogy*, Symposium, WIPO Worldwide
    Symposium on the Impact of Digital Technology on Copyright and
    Neighboring Rights, 37 (March 31 - April 2, 1993).

[^506]: Archie is a service which provides directories of repositories
    of gopher servers; Veronica provides indices of documents which
    contain key words.

[^507]: The most common elements of such systems involve authentication
    of the user desiring access to the server. Typically, the server
    will require entry of a user name and a password. More elaborate
    mechanisms, however, have been developed. For example, some servers
    do not grant access once a user is verified, but rather, they
    terminate the connection and reestablish it from the server to the
    registered user\'s site. Such call-back systems tend to govern fully
    controlled server environments (*e*.*g*., where access will only be
    granted to known and verified users). Other systems are being
    implemented that use more elaborate authentication systems. For
    example, a number of companies are developing hardware key systems
    that require the user, after establishing a preliminary connection,
    to verify that connection by inserting a hardware device similar to
    a credit card into the user\'s computer system. That device then
    sends an indecipherable code to verify the identity of the user.

    Protection of works by means of access control mechanisms assumes
    that the system in question is in a physically secure environment
    and is not vulnerable to external means to circumvent access
    control. Several instances have been reported where the security of
    a supposedly secure server system was compromised, for example,
    through passive monitoring during the exchange of unencrypted
    passwords. As a consequence, many are currently pursuing efforts to
    improve security at the access control level.

[^508]: *See* discussion of stenography *infra* pp. 188-89.

[^509]: For example, the software may deny access to a work if the
    electronic file containing the work has been altered or information
    stored in the file does not match data supplied by a user necessary
    to open and use the file. *See* discussion of digital signatures
    *infra* pp. 187-88.

[^510]: Rendering or viewing software may integrate encryption and file
    manipulation into a single software package. In other words, the
    rendering software, after getting a password, will decode the file
    and permit the user to manipulate the work (*e*.*g*., view it or
    listen to it), but only with the provided rendering software.

[^511]: An algorithm is a set of logical rules or mathematical
    specification of a process which may be implemented in a computer.

[^512]: The signature is generated using the binary digits of the work
    plus the value of the private key as inputs to the computation
    defined by the algorithm. Thus, the digital signature for an
    information object is a unique sequence of digits for that work.
    Specifically, a signature is not the same for different works using
    the same private key.

[^513]: Anyone who has access to an information object, in addition to
    having access to the work, also has access to the digital signature
    for the object. Consequently, the digital signature for the object
    may be recomputed and used to independently confirm the integrity of
    the object by comparing it to the digital signature appended to the
    object.

[^514]: *See* 17 U.S.C. § 1002 (Supp. V 1993).

[^515]: *See* [H.R. Rep. No]{.smallcaps}. 102-873(I), 102d Cong., 2d
    Sess., *reprinted in* 1992 U.S.C.C.A.N. 3578, 3579-80, 3583 n15.

[^516]: A \"header\" is a section of a digital work where information,
    data, codes and permitted uses may be embedded. Such information may
    actually be embedded anywhere in the work, but for ease of
    reference, this Report refers to such information as embedded in a
    header. Terms such as \"label\" and \"wrapper\" are also used to
    refer to what this Report refers to as a \"header.\"

[^517]: *See* discussion of electronic contracting *supra* pp. 53-59.

[^518]: *See* R.E. Kahn, *Deposit, Registration and Recordation in an
    Electronic Copyright Management System*, Proceedings of Technical
    Strategies for Protecting Intellectual Property in the Networked
    Multimedia Environment, Interactive Multimedia Assoc. (Jan. 1994).
    The registration and recordation system will be operated by the
    Library of Congress and will enable electronic filing of documents,
    automated registration and recordation of transfers of ownership and
    other copyright-related documents. The digital library system will
    be composed of a set of distributed repositories for copyrighted
    works, and will support search and retrieval based upon an
    electronic bibliographic record. The rights management system will
    be a distributed system which will permit use of selected
    copyrighted materials on the Internet, and will have some on-line
    rights-granting services. Electronic mail will be used to license
    nonexclusive rights, with or without recordation of the
    transactions.

[^519]: The IITF Committee on Applications and Technology is addressing
    electronic commerce issues, including the electronic transfer of
    funds through the NII.

[^520]: There is an ongoing review of policies governing the export of
    computer and networking technologies that incorporate effective
    encryption technology, and there has been some relaxation of prior
    controls. For example, technologies used to identify and
    authenticate users and files are generally not restricted. This,
    however, does not address the concerns as articulated by U.S.
    manufacturers.

[^521]: ODTC maintains the U.S. Munitions List \-- a list of specific
    technologies subject to their review for export licensing purposes.
    *See* 22 U.S.C. § 2778 (1988).

[^522]: BXA maintains the Commerce Control List (CCL), which governs
    export control of all items (commodities, software, and technical
    data) subject to BXA export controls. *See* 15 C.F.R. § 799.1(a)
    (1994).

[^523]: *See* 15 C.F.R. § 799.1(g) (1994).

[^524]: Many examples of this evolutionary pattern exist. Examples of
    *de* *facto* and formally recognized standards that derived from a
    single company include the Hayes-compatible modem command set,
    developed by the Hayes Company to control its modem products; the
    Ethernet local area network standard developed by Xerox to link
    minicomputers at the Palo Alto Research Center which eventually led
    to the development of the IEEE 802.3 standard; and the PCL and
    Postscript printer control/page description languages, developed by
    Hewlett-Packard and Adobe, respectively.

    Examples of standards that evolved from a collaboration of companies
    include: the Extended Industry Standard Architecture (EISA) bus
    standard, introduced by a consortium of nine companies including AST
    Research, Compaq, Epson, Hewlett-Packard, NEC, Olivetti, Tandy,
    Wyse, and Zenith; the Musical Instrument Digital Interface (MIDI)
    interface standard for the connection of synthesizers, instruments,
    and computers, developed by the major synthesizer manufacturers; and
    the Personal Computer Memory Card International Association (PCMCIA)
    standard for PC Cards, PC Card-based peripherals, and the slot
    designed to accept them developed by the PCMCIA group of
    manufacturers and vendors.

[^525]: For example, essentially every modern personal computer
    operating system available today supports a number of *de facto* or
    recognized industry standards such as Ethernet, PCL/Postscript, and
    TCP/IP.

[^526]: The IITF Committee on Applications and Technology has
    responsibility for addressing the issue of standards.

[^527]: Recently, the FCC adopted technical standards that define a
    patented system as the AM radio stereophonic transmitting standard
    in the United States. *See* 58 Fed. Reg. 66,300 (daily ed. Dec. 20,
    1993). The FCC conditioned the selection of the patented system as
    the standard on the agreement of the patent owner to license its
    patents to other parties \"under fair and reasonable terms.\" *Id.*
    at 66,301.

[^528]: *See Copyright Industries in the U.S. Economy, supra* note 426.

[^529]: [H.R. Rep. No]{.smallcaps}. 101-735, 101st Cong., 2d Sess. 7
    (1990), *reprinted* *in* 1990 U.S.C.C.A.N. 6935, 6938 (report
    accompanying legislation granting copyright owners of computer
    software an exclusive rental right).

[^530]: *Sony*, *supra* note 361, at 430-31.

[^531]: *See* discussion of the Constitutional purpose of copyright
    *supra* pp. 19-23.

[^532]: *Sony*, *supra* note 361, at 431.

[^533]: *See* *supra* p. 13.

[^534]: *See* discussion *supra* pp. 70-73.

[^535]: In contrast, a \"standard\" distribution of a copy necessarily
    divests the distributor of his copy. In the case of a distribution
    by transmission, the distributor generally retains his copy of the
    work and a reproduction is distributed.

[^536]: It has been suggested that recognition of distribution by
    transmission may diminish the public performance right. However, if
    a work is publicly performed by transmission, then there has been a
    public performance \-- whether or not the distribution right is or
    is not also involved. The fact that some transmissions may
    constitute a reproduction and distribution of copies to the public
    does not mean that transmissions that constitute public performances
    are not public performances. The scope of the public performance
    right is not diminished by the recognition that a transmission may
    fall within the scope of the distribution right. If a copy of a
    motion picture is transmitted to a computer\'s memory, for instance,
    and in the process, the sounds are capable of being heard and the
    images viewed as they are received in memory, then the public
    performance right may well be implicated as well. *See* 17 U.S.C.
    § 101 (1988) (definition of \"perform\").

[^537]: The exclusive rights, \"which comprise the so-called \'bundle of
    rights\' that is a copyright, are cumulative and may overlap in some
    cases. Each of the five enumerated rights may be subdivided
    indefinitely, and . . . each subdivision of an exclusive right may
    be owned and enforced separately.\" [House Report]{.smallcaps} at
    61, *reprinted* *in* 1976 U.S.C.C.A.N. 5674.

[^538]: *See* discussion *supra* pp. 45-47.

[^539]: [House Report]{.smallcaps} at 61, *reprinted* *in* 1976
    U.S.C.C.A.N. 5674.

[^540]: *See* discussion *supra* pp. 28-32. The term \"public\" as used
    in connection with the distribution right is not coincident with the
    meaning assigned to that term in connection with the public
    performance or public display right.

[^541]: If copies of works are offered to the public \-- even though
    they may be distributed one copy at a time \-- it would likely
    constitute distribution to the public. *See* 17 U.S.C. § 101 (1988)
    (definition of \"publication\"); 1 [Nimmer on Copyright]{.smallcaps}
    § 4.04 at 4-20.

[^542]: In the future, transmission may become the conventional means of
    distribution.

[^543]: Under the proposed definition, to transmit a reproduction is to
    distribute it by any device or process whereby a copy or phonorecord
    of the work is fixed beyond the place from which it was sent.

[^544]: To delineate between those transmissions that are communications
    of performances or displays and those that are distributions of
    reproductions, one may look at both ends of the transmission. Did
    the transmitter intend to communicate a performance or display of
    the work or, rather, to distribute a reproduction of the work? Did
    the receiver simply hear or see the work or rather/also receive a
    copy of it? Did the receiver simply receive a copy or was it
    possible for her to hear or see it as well? License rates and terms
    will assist in determining the intent of the parties.

[^545]: *See* [House Report]{.smallcaps} at 138 (emphasis added),
    *reprinted in* 1976 U.S.C.C.A.N. 5754.

[^546]: *See* discussion *supra* pp. 28-32. The House Report also
    states, however, that the definition was intended to clarify that
    the offering of copies or phonorecords to a group of, for instance,
    wholesalers, broadcasters or motion picture theater operators
    constitutes publication if the purpose of the offering is \"further
    distribution, public performance, or display.\" *See* [House
    Report]{.smallcaps} at 138, *reprinted* *in* 1976 U.S.C.C.A.N. 5754.
    Therefore, if an author offers copies to bulletin board system
    operators or others for further distribution, public performance or
    public display on a computer network, publication may occur.

[^547]: Under the current law, the distribution right is identified as
    the right \"to distribute copies or phonorecords of the copyrighted
    work to the public by sale or other transfer of ownership, or by
    rental, lease, or lending.\" *See* 17 U.S.C. § 106(3) (1988).
    Publication is \"the distribution of copies or phonorecords of the
    copyrighted work to the public by sale or other transfer of
    ownership, or by rental, lease, or lending.\" *See* 17 U.S.C. § 101
    (1988) (part of definition of \"publication\").

[^548]: Under the law of the United Kingdom, making a work available to
    the public by means of an electronic retrieval system constitutes
    publication. *See* Copyright, Designs and Patents Act of 1988,
    § 175(1)(b).

[^549]: *See* *supra* notes 68-83 and accompanying text.

[^550]: In the print domain, prior published editions are more easily
    and generally available for reference, partially because of the
    deposit requirement, but primarily because subsequent versions do
    not override the originals \-- which is possible in the on-line
    environment.

[^551]: *See* discussion *supra* pp. 28-32.

[^552]: *See* discussion of the doctrine of limited publication *supra*
    pp. 31-32.

[^553]: *See* *White v. Kimmell*, 193 F.2d 744 (9th Cir. 1952)
    (unrestricted circulation of 200 copies of a manuscript to friends
    and acquaintances published the work); *Continental Casualty Co*.
    *v. Beardsley*, 253 F.2d 702 (2d Cir. 1958) (distribution of
    approximately 100 sets of forms to corporate officers and surety
    companies for possible purchase of more constituted publication).

[^554]: *See* discussion of the importation right *supra* pp. 107-09.

[^555]: Some transmissions that clearly constitute public performances
    may, in effect, substitute for distributions in the future. If
    consumers are offered a service through which they can receive a
    performance of any sound recording at any time, they may stop buying
    phonorecords. The market for distributed phonorecords may shrink to
    include only the providers of that service to consumers.

[^556]: If the copyright owners of sound recordings abused the
    exclusivity that the law should provide, the solution would lie in
    the enforcement of the antitrust laws \-- where the music licensing
    problems have been addressed \-- not in the reduction of rights
    under the Copyright Act.

[^557]: *See* S. 227, 104th Cong., 1st Sess. (1995); H.R. 1506, 104th
    Cong., 1st Sess. (1995).

[^558]: *See* discussion *supra* pp. 73-82.

[^559]: The legislative history makes it clear that digital uses are
    generally not encompassed by Section 108: \"Under this exemption,
    for example, a repository could make photocopies of manuscripts by
    microfilm or electrostatic process, but *could not reproduce the
    work in \'machine-readable\' language* for storage in an information
    system.\" [House Report]{.smallcaps} at 75, *reprinted* *in* 1976
    U.S.C.C.A.N. 5689; Senate Report at 67 (emphasis added). The Senate
    Report also speaks precisely of \"the *photocopying* needs of . . .
    multi-county regional systems.\" *Id.* at 70 (emphasis added).

[^560]: The Working Group believes that replacement copies may be
    digital in nature, and may be made under this provision only when an
    unused replacement is not available in either digital or analog
    form.

[^561]: *See, e.g.,* Section 53D of the Australian law (privilege
    conditioned on copyright owner\'s abstention from market for Braille
    edition); Section 18 of the Finnish law (Braille editions and
    talking books may be manufactured \"for use by lending libraries for
    blind persons\"); Section 80 of the Portuguese law (Braille editions
    may be manufactured if not for profit).

[^562]: The visually impaired were the only users with a disability who
    provided comments or testimony concerning a need for a narrow
    exemption to ensure the availability of literary works in a usable
    form. By its recommendation of such an exemption for the visually
    impaired, the Working Group does not intend to dismiss the
    possibility that other disabled users may have needs of which it has
    not been made aware and, therefore, has not considered.

[^563]: *See* discussion of criminal offenses *supra* pp. 126-28.

[^564]: *See* discussion of the *LaMacchia* case *supra* p. 127.

[^565]: As noted earlier, the idea/expression dichotomy and the
    limitations on the exclusive rights, including fair use, address
    First Amendment concerns. *See supra* pp. 32-35, 73-100 and note
    227*. See also Harper & Row, Publishers, Inc. v. Nation
    Enterprises*, 471 U.S. 539, 560 (1985) (\"First Amendment
    protections \[are\] embodied in the \[Copyright\] Act\'s distinction
    between copyrightable expression and uncopyrightable facts and
    ideas, and the latitude for scholarship and comment traditionally
    afforded by fair use\").

[^566]: Legislation of a similar type has been introduced with respect
    to technological protection of audiovisual works. *See, e.g.,* S.
    1096, 102d Cong., 1st Sess., 137 Cong. Rec. S. 6034 (1991); H.R.
    3568, 101st Cong., 1st Sess., 135 Cong. Rec. H. 7924 (1989).

[^567]: Copies of the work in the marketplace free from copyright
    protection could be freely reproduced (and, in fact, the lower
    distribution costs of the NII may encourage increased availability
    of public domain works). Further, technological protection that
    restricts the ability to reproduce the work by technical means does
    not prevent reproduction by other means (such as quoting, manually
    copying, etc.).

[^568]: However, the Working Group does encourage the equipment
    manufacturing and copyright industries to work together on bilateral
    solutions for other types of recording devices and categories of
    works. In response to a request from Congressional leaders,
    representatives of the motion picture industry and the consumer
    electronics industry are presently drafting a joint legislative
    proposal addressing legal and technical measures pertaining to
    consumer recording of motion pictures. This proposal would set forth
    a technical means to be applied that would respect the legitimate
    commercial expectations of copyright owners and the reasonable and
    customary copying practices of consumers.

[^569]: Some have suggested that while manufacturers will surely know
    the primary *purpose* of the devices they produce, they may
    inadvertently find themselves liable for devices which they intended
    for legal purposes, but which have the incidental effect of
    circumventing copyright protection systems. For a manufacturer to
    find himself in this situation, the device would have to fail to be
    used primarily for the purpose for which it was sold, and be
    *primarily* used, to the surprise of its manufacturer, for defeating
    protection systems. It is likely that such a situation would occur
    rarely, if ever. (It would be self-defeating for copyright owners to
    begin using a protection system that an existing device could
    defeat.) However, the chapter contains an \"innocent violation\"
    provision for just such a case. A court would have the ability to
    reduce or eliminate altogether any damages for which the
    manufacturer would otherwise be liable, to avoid an unfair result
    but still protect the copyright owner.

[^570]: 17 U.S.C. § 1002(c) (Supp. V 1993).

[^571]: 47 U.S.C. § 605(e)(4) (1988).

[^572]: *See* NAFTA, *supra* note 446, at art. 1707(a). The NAFTA also
    requires parties to make it a civil offense to \"receive, in
    connection with commercial activities, or further distribute, an
    encrypted program-carrying satellite signal that has been decoded
    without the authorization of the lawful distributor of the signal or
    to engage in any activity prohibited under \[the criminal
    provisions\].\" *See* NAFTA, *supra* note 446, at art. 1707(b).

[^573]: *See* Copyright, Designs and Patents Act of 1988, Part VII,
    § 296.

[^574]: Other information that may become important to the efficient
    operation of the NII includes the country of origin of the work, the
    year of creation or first publication, a description of the work,
    the name and other identifying information of licensees and
    standardized codes.

[^575]: While a transmitting entity may not remove the copyright
    management information, if such information is not included in the
    normal course of the transmission (such as when a work in digital
    form is broadcast through analog transmission), no violation would
    occur.

[^576]: For criminal liability, both knowledge and the intent to defraud
    are required.