Intellectual Property
                      and the
        National Information Infrastructure

  The Report of the Working Group on Intellectual
                  Property Rights

                  Bruce A. Lehman
        Assistant Secretary of Commerce and
      Commissioner of Patents and Trademarks
                       Chair

       Information Infrastructure Task Force

                  Ronald H. Brown
               Secretary of Commerce
                       Chair

               Intellectual Property
                      and the
        National Information Infrastructure

  The Report of the Working Group on Intellectual
                  Property Rights

                  Bruce A. Lehman
        Assistant Secretary of Commerce and
      Commissioner of Patents and Trademarks
                       Chair

       Information Infrastructure Task Force

                  Ronald H. Brown
               Secretary of Commerce
                       Chair

                  September 1995

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
INTRODUCTION                            1
BACKGROUND                              7
I. LAW                                 19
A. COPYRIGHT                           19
 1. PURPOSE OF COPYRIGHT LAW           19
 2. SUBJECT MATTER AND SCOPE OF PROTECTION
 23
   A. ELIGIBILITY FOR PROTECTION       23
   B. PUBLISHED AND UNPUBLISHED WORKS  28
   C. WORKS NOT PROTECTED              32
   D. CATEGORIES OF PROTECTIBLE WORKS  35
 3. COPYRIGHT OWNERSHIP                45
   A. TRANSFER OF OWNERSHIP            47
   B. LICENSING                        49
   C. ON-LINE TRANSACTIONS             53
 4. TERM OF PROTECTION                 59
 5. NOTICE, DEPOSIT AND REGISTRATION   60
 6. EXCLUSIVE RIGHTS                   63
   A. THE RIGHT TO REPRODUCE THE WORK  64
   B. THE RIGHT TO PREPARE DERIVATIVE WORKS 66
   C. THE RIGHT TO DISTRIBUTE COPIES   67
   D. THE RIGHT TO PERFORM THE WORK PUBLICLY 70
   E. THE RIGHT TO DISPLAY THE WORK PUBLICLY 72
 7. LIMITATIONS ON EXCLUSIVE RIGHTS    73
   A. FAIR USE                         73
   B. LIBRARY EXEMPTIONS               84
   C. FIRST SALE DOCTRINE              90
   D. EDUCATIONAL USE EXEMPTIONS       95
   E. OTHER LIMITATIONS                96
 8. COPYRIGHT INFRINGEMENT            100
   A. GENERAL                         100
   B. INFRINGING IMPORTATION          107
   C. CONTRIBUTORY AND VICARIOUS LIABILITY 109
   D. ON-LINE SERVICE PROVIDER LIABILITY 114
   E. CIVIL REMEDIES                  124
   F. CRIMINAL OFFENSES               126
   G. DEFENSES                        128
 9. INTERNATIONAL IMPLICATIONS        130
   A. BACKGROUND                      130
   B. INTERNATIONAL FRAMEWORK         132
   C. INTERNATIONAL TREATIES AND AGREEMENTS 135
   D. COPYRIGHT COMPARED TO AUTHORS' RIGHTS 139
   E. NATIONAL TREATMENT              140
   F. PRIVATE COPYING ROYALTY SYSTEMS 144
   G. MORAL RIGHTS                    145
   H. CONFLICT OF LAWS                147
   I. HARMONIZATION OF INTERNATIONAL SYSTEMS 147
B. PATENT                             155
 1. PATENTABILITY DETERMINATIONS      162
 2. INFRINGEMENT DETERMINATIONS       165
 3. PATENTABILITY OF SOFTWARE         166
C. TRADEMARK                          168
D. TRADE SECRET                       173
II. TECHNOLOGY                        177
A. CONTENT SECURITY AND USER ACCESS NEEDS 178
B. THE INTERNET EXPERIENCE            179
C. ACCESS AND USE TECHNOLOGICAL CONTROLS 183
 1. SERVER AND FILE LEVEL CONTROLS    183
 2. ENCRYPTION                        185
 3. DIGITAL SIGNATURES                187
 4. STEGANOGRAPHY                     188
D. CONTROLLING USE OF PROTECTED WORKS 189
E. MANAGING RIGHTS IN PROTECTED WORKS 191
F. ENCRYPTION EXPORT CONTROL          194
G. DEVELOPMENT OF STANDARDS           197
III. EDUCATION                        201
A. BACKGROUND                         201
B. COPYRIGHT AWARENESS CAMPAIGN       203
IV. RECOMMENDATIONS                   211
A. COPYRIGHT                          211
 1. THE TRANSMISSION OF COPIES AND
 PHONORECORDS                         213
   A. THE DISTRIBUTION RIGHT          213
   B. RELATED DEFINITIONAL AMENDMENTS 217
   C. THE IMPORTATION PROVISIONS      221
 2. PUBLIC PERFORMANCE RIGHT FOR SOUND
 RECORDINGS                           221
 3. LIBRARY EXEMPTIONS                225
 4. REPRODUCTION FOR THE VISUALLY IMPAIRED 227
 5. CRIMINAL OFFENSES                 228
 6. TECHNOLOGICAL PROTECTION          230
 7. COPYRIGHT MANAGEMENT INFORMATION  235
B. PATENT                             236
C. TRADEMARK                          237
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  Action1
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
197625   --   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

    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 work143 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

    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 rule162 -- 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 phonorecords201
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.
Frena211 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  subscriber213 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 fiction244 and unpublished works245
are copied, and in the defendant's favor when
factual  works246 and published works247  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 Guidelines261 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

     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 work268  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. Porter338 and followed in a number
of Second Circuit decisions339 -- 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  case367  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  Playboy386 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 provider390 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  neighboring425  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  6bis  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  UNESCO433 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  6bis 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
6bis.    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  fixations454
      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
useful457 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
invalid475 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  Act485 and is based upon the commerce
clause of the Constitution.486  Therefore, to
obtain  a Federal trademark registration,  in
most  cases487  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 1988489 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 goods493 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
file516  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

     2.  Statutory Mark-Up

     3.  Participating Agencies

104th CONGRESS   [S./H.R.] _____
   1st Session

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.

     This  Act  may  be  cited  as  the  "NII

Copyright Protection Act of 1995".

Sec. 2.    Transmission of Copies.

    (a)  Distribution. -- 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. -- 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. -- 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.

   (a) Libraries. -- 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 -- 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.

   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.  --  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. -- 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. -- 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.  --  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.  --  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. --

        "(1)     In  general.  --  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. -- 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. --

           "(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. -- 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.  --  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.

    (a)  Table of Sections. -- 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)  Table of Chapters. -- 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.

    This Act, and the amendments made by this

Act,  shall  take effect on the date  of  the

enactment of this Act.

              Statutory Mark-Up

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.  --  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. -- 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. -- 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.  --  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.  --  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. --

        "(1)     In  general.  --  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. -- 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. --

           "(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. -- 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.  --  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

Advanced Research Projects Agency
Council of Economic Advisers
Environmental Protection Agency
General Services Administration
National Archives and Records
Administration
National Economic Council
National Endowment for the Arts
National Endowment for the Humanities
National Institute of Standards and
Technology
National Library of Medicine
National Science Foundation
National Security Agency
National Telecommunications and
Information Administration
Office of Science and Technology Policy
Office of Consumer Affairs
Office of Management and Budget
Office of the U.S. Trade Representative
U.S. Copyright Office
U.S. Department of Commerce
U.S. Department of Defense
U.S. Department of Education
U.S. Department of Energy
U.S. Department of Justice
U.S. Department of State
U.S. Department of Treasury
U.S. Patent and Trademark Office
_______________________________
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. 1476, 94th Cong.,  2d
Sess.   47   (1976),   reprinted   in    1976
U.S.C.C.A.N. 5659 (hereinafter House  Report)
("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 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., 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. 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. 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 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.
Const., 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 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 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 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 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  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 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, Nimmer  on
Copyright   4.04 (1994) (hereinafter  Nimmer
on  Copyright).  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    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  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 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  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 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 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 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, The Law  of  Copyright
    204[C][3][b][iv]   (1993).    The   term
"dramatic works" is not defined in  the  Act.
See  House  Report 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  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 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  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  at
53, reprinted in 1976 U.S.C.C.A.N. 5666.
124   House Report 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 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 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 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, The Law of Electronic Commerce
235 (1991 & Supp. 1994) (hereinafter Wright).
160  See J. Calamari & J. Perillo, The Law of
Contracts   25  (3d  ed.  1987)  (hereinafter
Calamari & Perillo).
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, 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  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. 487, 488-89  (1993)  with
Note,  Offers Users Can't Refuse: Shrink-Wrap
License  Agreements  as Enforceable  Adhesion
Contracts,  10  Cardozo L.  Rev.  2105,  2120
(1989).
166   See  Restatement (Second) of  Contracts
 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. 881, 885-92 (1985).
169  See Ill. Rev. Stat. ch. 29, para. 801-08
(1986);  La. Rev. Stat.  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
  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, 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. 1691, 1729 (1994).
179   See  U.C.C.   1-102 (1990).   But  see
Calamari  & Perillo, 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. 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  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 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  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 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 at 75, reprinted  in  1976
U.S.C.C.A.N. 5689.
274   17  U.S.C.  108(c) (1988);  see  House
Report  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. 1733, 94th Cong.,  2d
Sess.   72-73  (1976),  reprinted   in   1976
U.S.C.C.A.N.   5810,   5813-14   (hereinafter
Conference Report).
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. 177,
192 (1991).
289  See H.R. Rep. No. 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 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 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 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
 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 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,
The Law of Copyright  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
  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, Copyright
   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
   13.03[A]  at  13-28  to  -58  (1993);  M.
Leaffer, Understanding Copyright Law  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.  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 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 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 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 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. 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, Copyright,  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  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 at 159-60, reprinted in 1976
U.S.C.C.A.N. 5775-76.
383   House Report at 163, reprinted in  1976
U.S.C.C.A.N. 5779.
384  Id.
385   3 Nimmer on Copyright  13.08 at 13-291
(1994).  See P. Goldstein, Copyright  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, Copyright  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
   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  (2d  ed.
1989)    (hereinafter   Stewart).     Stewart
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  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   513,   548-57  (1986);  2  Nimmer   on
Copyright  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 6bis 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    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. 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. 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  at  61,  reprinted  in   1976
U.S.C.C.A.N. 5674.
538  See discussion supra pp. 45-47.
539   House Report 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   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 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
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 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.