Pamela Samuelson's Critique of the NII Inteellectual Property Green Paper Part 2

[David Farber <farber@central.cis.upenn.edu>]

ABOLISHING THE FIRST SALE RULE?


The "first sale" rule allows members of the public who have
purchased a copy of a copyrighted work to sell it, give it away, lend
it, or even rent the copy to other people.  (In the United States, only
sound recordings and software cannot be rented; in some countries,
no works can be rented without permission from the copyright
owner.)   The first sale rule grew out of judicial decisions holding that
Congress had not granted copyright owners monopoly power over all
distributions of their works, but only a right to control the first sale
of the work to the public.  The first sale rule promotes public access
to copyrighted works by allowing members of the public to borrow
works from one another (and from libraries) without fear of
infringement.  It is this rule that the NII Report proposes to abolish
for works distributed by digital transmission.


The rationale for abolition of the first sale rule focuses attention on a
difference between printed and digital works.  The first sale rule
presumes that when the owner of a physical copy of a work shares
that copy with another person, he or she will give up possession of
that copy.  Although one copy may move from person to person, such
a transmission does not result in more copies being made.  With
digital transmissions, however, someone who shares his or her copy
of a work with another person may retain a copy of it as well.  A
digital transmission may result in a multiplication of copies.  This
poses a threat to the economic rights that copyright law gives to
authors (and through them, to publishers).


Abolition of the first sale rule may, however, be unnecessary to
respond to this threat.  A narrower approach would be to limit the
application of the first sale rule to situations in which the digital
transmitter did not delete his or her copy.  (I don't know about the
rest of you, but I routinely forward information I receive by email to
people who would be interested in it, following which I delete the
information.  In truth, I delete this information less because I am
concerned about abiding by copyright law than because I can only
manage so much information at a time.  Even if I retain a copy, I
consider most of the information I forward to another person to be
fair use because of its private, noncommercial character.)


However, even without an abolition of the first sale rule, copyright
owners can control this kind of potential consumer abuse of
copyrighted works by means of the exclusive reproduction
right.  If the owner of a copy of digitally transmitted work begins
transmitting copies of that copy to a thousand of his or her closest
friends, that person will be responsible for multiple reproductions of
copyrighted works.  Since the first sale rule only limits the
distribution right of copyright, not the reproduction right, there is
way to deal with the multiplication of copies under existing law.
(Just because you own a copy of a book, you do not think you are
entitled to make a thousand copies of it for your friends.  But you can
share your copy with others.)


The NII Report does consider either alternative discussed here, but
rather recommends abolition of the first sale rule.  It does not
provide persuasive reasons why the public should not be entitled to
continue to enjoy the right to share their copy of a copyrighted work
with a friend, regardless of whether it was received by digital
transmission or otherwise.


ABOLITION OF FAIR USE?


U.S. law, like that of some other countries, regards some copying
from copyrighted works as "fair" and noninfringing of copyright.
Under the fair use doctrine, the author of a book on the assassination
of President Kennedy, for example, did not infringe copyright when
he reproduced several frames from Zapruder's movie of this tragic
event in order to illustrate his theory about the assassination.


It would be inaccurate to say that the NII Report recommends
abolishing fair use law.  And yet, it takes such a narrow view of
existing fair use law and predicts such a dim future for fair use law
when works are distributed via the NII that the Report might as well
recommend its abolition.  Since the fair use doctrine has been one of
the historically important ways in which the law has promoted
public access to copyrighted works, the virtual abolition of fair use
law for which the Report argues would represent another vast
expansion of copyright law in favor of publishers.


As with its treatment of the browsing issue, the Report attempts to
constrict user rights by acting as though this constriction has already
occurred, rather than by admitting that the Report is coming down
on one side of, at best, a debatable issue.  Without even admitting
that any controversy exists about fair use law, the Report purports to
resolve definitely one of the pressing controversies of U.S. copyright
law today:  whether private, noncommercial copying of copyrighted
works is noninfringing under fair use law or otherwise.


On this issue, the public and the publishers could hardly have more
different ideas.  (On this issue, as on most of the rest of the copyright
issues discussed in this column, I believe that authors are generally
closer to the general public's view because so many of us rely on
private noncommercial copying in the course of our research.)  The
public generally thinks that private noncommercial copying of
copyrighted works is not, and should not be, copyright infringement.
Publishers, however, regard all reproductions of copyrighted works
as infringing.  Publishers argue that private noncommercial copying
cannot be justified as fair use because it provides a consumer with
the benefit of a copy for which the consumer has not paid and usurps
a sale that the publisher should have made if the consumer wanted a
copy of the work.


The NII Report comes firmly down on the publishers' side in this
controversy and fails to mention that the Supreme Court's *Sony
Betamax* decision told courts to *presume* that private
noncommercial copying is fair use.  Only if there is some meaningful
likelihood of economic harm to the copyright owner arising from the
use should the presumption of fair use be overcome.   (The only fair
use issue for which the Report cites the *Sony* case is for its
statement that commercial uses of copyrighted works should be
presumed unfair.  Interestingly, the Report neglects to mention that
this second *Sony* presumption was repudiated by the Supreme
Court this spring in *Campbell v. Acuff-Rose* in which 2Live Crew
claimed fair use for the groups' rap parody of "Pretty Woman.")  The
Report also neglects to mention other sources and precedents that
would support the Supreme Court's view that private noncommercial
copying should be presumed to be fair use.


Another major fair use controversy concerns the extent to which it is
fair to copy portions of copyrighted works for research or
educational purposes.  As with the private noncommercial copying
issue, the Report cites cases that favor the publisher position on this
issue without mentioning cases that do not favor the publisher
position.  For example, the Report mentions the *Basic Books v.
Kinko* case in which publishers successfully sued a copying center
for making and selling multiple copies of coursepacks to students
without being sure that the professors submitting the coursepacks
had gotten permission from copyright owners to make them.
However, the Report fails to mention the *Williams & Wilkins* case
in which a research library persuaded an appellate court that it had
made fair use of articles from medical research journals when
copying them for research scientists doing work in that field.


As with the private noncommercial copying issue, the Report does
not acknowledge the existence of genuine and principled differences
of opinion on this issue.  It simply acts as though the rule already is
what the publishers want it to be.  Although the Report says that the
Working Group will hold a set of workshops to discuss educational
fair use issues, it does not admit any educational use to be fair except
if it meets a set of guidelines adopted some years ago that allow
teachers to make photocopies of short articles pertinent to their
classes that are published during the school term.


The Report also predicts that fair use defenses will be unsuccessful
when controversies arise in digital networked environments because
it will be so much easier for consumers in these environments to
license additional uses if they think they need them.  The Report fails
to mention two recent appellate decisions that prefigure a broader
potential for fair use defenses in dealing with digital data and new
technology issues:   *Galoob v. Nintendo* in which a fair use defense
was successful because kids using Galoob's Game Genie had already
tithed to Nintendo by buying its games, and *Sega v. Accolade* in
which an appellate court ruled that a competitor's disassembly of a
Sega game in order to determine how to make its game cartridges
compatible with the Sega machine was fair use[2].  By not
acknowledging the existence of these cases, the Report
underestimates the potential for fair use to remain a viable defense
in disputes erupting in digital networked environments.


OUTLAWING DEVICES TO DEFEAT ANTI-COPYING SYSTEMS?


The NII Report foresees the potential for broad use of technological
strategies to protect copyrighted works in digital networked
environments.  Copyright owners, for example, may distribute
products in encrypted form so that, despite a distribution over the
net, the work could not be enjoyed by one who had not paid the
price for it.  The Report recognizes that technological protections may
not be entirely secure:  what one technology can do, another
technology can often undo.  Thus, technological protection of
copyrighted works may prove useless unless there is a ban on the
manufacture and distribution of devices or services aimed at
overcoming technological means of protecting copyrighted works.


To remedy this problem, the Report recommends enactment of the
following provision:  "No person shall import, manufacture, or
distribute any device, product, or component incorporated into a
device or product, or offer 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 exercise of any of the exclusive rights [of copyright]."


The Report further recommends making manufacture or sale of such
devices or services into an act of copyright infringement.  It also
recommends that any copyright owner whose works *could* be
infringed by such a device should be able to sue the maker or seller
of such a device or service for copyright infringement, regardless of
whether anyone had ever used the device or service to infringe that
owner's copyrights.  (Sellers of the technological device being
circumvented would not, however, be able to sue those who unlocked
the device for copyright infringement.)


The Report admits that these recommendations would overturn
Supreme Court caselaw under which it does not infringe copyright to
distribute a technology that can be used to infringe as long as the
device is *capable* of substantial noninfringing uses (i.e., because
videotape machines could be used for noninfringing purposes, the
Supreme Court decided that Sony was not liable for copyright
infringement despite the fact that some consumers might use
Betamax machines to infringe copyrights in Universal or Disney
movies.)


The Report is not clear about whether adoption of its
recommendations would overturn the *Vault v. Quaid* case in which
an appellate court ruled that sale of a program to "unlock" the copy-
protection program sold by the plaintiff was not copyright
infringement because copyright law gave owners of copies of
copyrighted software rights to make backup copies of their software.
Since the unlocking software gave owners of copies of software an
opportunity to exercise their rights to make backup copies, the court
thought that the sale of this software promoted copyright policy, not
undermined it.


The drafters of the NII Report would probably say that their
recommendation would not undo this case because that lawsuit was
brought by the maker of the locking software, not by software
publishers who had made use of the locking software.  The ban the
Report recommends would give rights to sue only to software
publishers.  Yet the issue of whether selling a product or service that
would undo a technological lock on a copyrighted work so that a user
could exercise fair use or backup copying rights is not addressed by
the report.  Given the publisher bias that pervades the Report, it
seems likely that the drafters intend to restrict user access in this
respect, although they do not say so directly.


Nor does the Report address the question as to whether distribution
of programs in object code form should be regarded as a
technological means for protecting software, such that tools or
services that would be useful in disassembling or decompiling object
code would be within the scope of the ban.  For those who are
concerned about the future of interoperability, it should be of
especial concern that the Report does not mention the caselaw
favoring fair use to achieve interoperability and speaks only in
vague terms about the value of interoperability.


The NII Report acknowledges that its recommended ban on
technological "keys" may restrict public access to both copyrighted
and uncopyrighted works (the latter are as likely as the former to be
distributed in encrypted form on the net).  Although the Report
expresses some regret that such restrictions may occur, it concludes
that, on balance, such "incidental" restrictions on public access are
necessary and that the public interest in access is outweighed by the
countervailing need to protect the interests of copyright owners.  The
Report hopes that the "primary purpose and effect" language of the
ban will provide a proper balancing of interests.  This, of course,
depends on the willingness of information providers to encrypt
uncopyrighted materials with a different encryption algorithm than
they use to encrypt copyrighted works.  If the same encryption
scheme is used for both, any unlocking technology can be kept off
the market until a court rules that the primary purpose or effect of
the technology would not be to promote copyright infringement.


While I might be able to support a more narrowly drawn provision
aimed at dealing with the problem of technological circumventions of
technological strategies for protecting copyrighted works in digital
networked environments, I cannot support the proposed provision.
As WIRED magazine recently pointed out, the proposed ban is so
broad, publishers could probably use it to ban sales of photocopy
machines.  And they wouldn't even have to prove that *any* of their
copyrights had been infringed; it would be enough that the machine
*could* infringe their copyrights.


BUILDING ON THE STRENGTHS OF THE EXISTING NII


A curious omission from the NII Report is any discussion of the
extent to which existing digital networks, such as the Internet, have
furthered the constitutional purposes of copyright.  The drafters of
the Report seem to view the existing digital networks as empty
pipelines awaiting content that publishers today are afraid of putting
there because copyright law today doesn't give them enough control
over their works.  The drafters also act as though the principal norm
of the net is "to require copyright owners to check their copyrights at
the door" when they enter the digital domain.  Neither assumption is
correct.


The growth of the Internet has been one of the phenomenal success
stories of our time.  People have flocked to the net by the hundreds
of thousands not because their favorite movies or books may be
available there in another five to ten years, but because a wide
variety of resources are available there already.  Since its inception,
the Internet has greatly facilitated and enhanced communication and
learning of the very sort that copyright law is supposed to promote.
It has enabled researchers to gather and share data more easily, to
engage in collaborative work at remote locations, to criticize and
refine one another's work, and to make research results and the like
available at ftp sites, thereby enabling those interested in these
results access to them.  A large number of newsletters, journals, and
listservs have sprung up and serve as forums for discussion of public
policy and research issues in a wide variety of fields.  Debate on the
Internet could hardly be more robust.


Notwithstanding the occasional "pirate" bulletin board on which
commercially distributed software is posted for unauthorized
copying and the pronouncements of some who would abolish
copyright law, the Internet has promoted public access to
information far more than it has promoted copyright infringements.
I believe that the vast majority of net users are law-abiding citizens
who generally make no more than fair and reasonable uses of
copyrighted works.


The NII Report does not recognize that there are already both formal
and informal ways in which denizens of cyberspace are influencing
one another about copyright concerns and the ethics of making
certain kinds of uses of other people's work.  Policies that actively
discourage copyright infringement are one means by which bbs
operators have an influence on the practices of those who use their
systems.  Violation of bbs policy may result in being kicked off the
system, a punishment more feared by many users than being sued
for copyright infringement.  But if this is an effective sanction, this
should be appreciated by drafters of an NII Report on intellectual
property issues.


Informal exchanges about copyright issues also occur in electronic
newsletters, listservs, and on bbs's on the net.  If one person makes
an unauthorized use of another's writing, a third person may well
question the fairness of this conduct and start a dialogue on the
issue.  The result of this dialogue is discouragement of unfair
postings.  "Netiquette" limits the extent to which users of the net
appropriate other people's work.  It simply isn't fair to repost
someone else's message on another bbs or insert it into a newsletter
without asking that person's permission.  However, merely
forwarding the message to one or a small number of people who
would find it especially interesting is regarded as fair conduct, just as
a telephonic exchange of the same information or photocopying a
short article from a newspaper or magazine to mail to one's
colleagues would be.


The NII Draft Report should acknowledge and build upon the
strengths of existing digital networked environments.  Its policy
recommendations should permit exchanges that promote the learning
function of copyright law without having harmful effects on the
economic interests of copyright owners.  Before recommending
dramatic changes to copyright law that would favor those who want
to use the NII, the drafters of the Report should consider what effect
those policies will have on existing user communities.  It should seek
to adopt solutions that would improve the lot of those who want to
enter the net without harming the lot of the millions of people who
now use the net.  (Economists speak of this as the search for "Pareto
optimal" solutions.)   We can only hope that this omission will be
cured in the Final Report of the NII Working Group on Intellectual
Property Rights.


CONCLUSION


The problem with which the NII Report contends is a deep and
important one.  Members of the general public believe that copying
of copyrighted material for private noncommercial purposes,
whether it be a photocopy of an article or an audio tape of a compact
disk recording of one's favorite artist, is not unlawful.  Historically,
private noncommercial copying has rankled publishers but there
wasn't much they could do about it, and besides, as long as copying
technology was relatively primitive or expensive, private
noncommercial copying didn't cut into sales all that much.  As
reprography technology has improved and gotten cheaper, private
noncommercial copying has become of greater concern to publishers.


As the NII Report observes, owners of very valuable copyrights, such
as motion picture producers, recording studios, and publishers of
books, are unlikely to want to distribute their works via the NII
unless they have reasonable assurance that their intellectual
property rights will be respected.  One can commend the drafters of
this Report for tackling a very difficult problem and for offering
recommendations that would overcome some of the fears that
owners of valuable copyrights have about digital networked
environments without approving of the strategy employed to achieve
the Report's objectives and without concurring in its judgment about
where a proper balance lies between the interests of copyright
owners and the public.


I remain unpersuaded that copyright owners really need the
dramatic expansion of rights which the NII Report would give them.
I believe this proposal would restrict public access to information far
out of proportion to the harm likely to result to copyright owners,
and that existing law provides plenty of ammunition with which
publishers can attack infringers.   But I admit the issue of what is
proper copyright policy in the coming age of digital networked
environments is a subject on which reasonable people can disagree.
If the Report had been explicit about attempting to achieve a radical
transformation of copyright law so that each and every use of a
copyrighted work is infringing unless authorized by copyright
owners, then at least there could have been public debate on the
issues.


The most objectionable aspect of the NII Report is, in my view, lies in
its effort to avert the hard issues and controversy that a plain
statement of its intentions would engender.  It is simply not true that
the Report recommends only minor clarifications and changes to
copyright law, even though the press coverage of the Report dutifully
echoed the Report's statements that they were.  (Where are the
investigative reporters when we really need them?)  This column
aims to provide readers with enough information about the policy
issues raised by this Report so that they can begin the policy debate
that is so sorely needed in this area and so that they can contribute
their views about a solution that will achieve a fair balance between
the public interest and the interest of copyright owners.


SOURCES


[1] Working Group on Intellectual Property Rights, Information
Infrastructure Task Force, Green Paper:  Intellectual Property And
the National Information Infrastructure (Preliminary Draft, July
1994).


[2] Pamela Samuelson, Legally Speaking:  Copyright's Fair Use
Doctrine and Digital Data, Comm. ACM 37: 21 (Jan. 1994).