Edward Samuels  [FNa]

1994 Annual Survey of American Law 383

Copyright 1994 Annual Survey of American Law; Edward Samuels

        I teach copyright and intellectual property law at New York Law School, and have Professors Michael Botein and Allen Hammond in what we call our "Media Law Center" just downstairs from my office. So whenever someone approaches me with a communications question, I can say, "Oh, I don't know anything about that, why don't you go ask Mike or Al?" And then when someone asks them a question that relates to copyright law, they can say, "I don't know anything about that, why don't you talk to Ed?" We specialize because it's so difficult to know everything.

        I've been listening to Ms. Lyons, and I talked to her on the phone before the meeting today, and I'm fascinated by what she's saying. I don't think we're ultimately talking about different things. She's focusing upon a "package," upon things that are in a repository that may be sent over the electronic superhighway. An information provider or someone who manages a repository may not know whether the information in a package is a picture, a musical work, a computer program, a bunch of gibberish, a private letter, or the Encyclopedia Britannica. Copyright law, however, does look at what is in the package. Some of the packages contain works that are copyrightable, because they are original works of authorship; and some of the packages contain material not protected by copyright. I'm particularly interested in the possibility of protecting the package, as such, because there are recent indications that copyright law does not adequately protect such things as computer databases.[FN1] To the extent that we can find other sources of protection, I'm listening and I want to hear where her observations lead. But in the meantime, I think copyright law already accommodates many of the concerns of the parties, from the suppliers and distributors to the users of the so-called information superhighway.

        [p. 384] Our formal topic for this morning's panel is "Property Panel: Managing Copyright Infringement in Electronic Fora." Since there is as yet not a lot of case law dealing directly with copyright on the information superhighway,[FN2] I assume that our role is not only to convey some sense of the law that does exist, but, more importantly, to indicate how future problems should be resolved. Ms. Lyons suggests in her presentation that, in our search for analogies for resolving the legal issues in this area, we look at the development of communications regulations. This emphasis seems to assume that copyright law has somehow failed to adequately resolve, or even define, the intellectual property issues raised by or exacerbated by this new technology.  My view is that the copyright laws have in fact proven fairly flexible in adapting to new technologies.[FN3] The copyright problems on the information superhighway are or can be resolved by existing copyright law, or with relatively few statutory changes to that law.  Like Senator Kastenmeier, who during the 1970's insisted on working out a cable compromise within the framework of copyright law,[FN4] I think that the guiding principles will be found in, or should be incorporated into, the copyright law, and not resolved within some independent regulatory framework. As I will discuss later, the primary issues posed by the new information superhighway are in the related areas of enforcement and contributory infringement.

        [p. 385] One of the features of copyright law is that it is relatively medium-neutral.  That is, if copies are made of a copyrighted work, copyright infringement generally will be found, whatever the medium in which the work was originally stored or the technology by which the work is copied.[FN5]

        If a New York subscriber to Compuserve or America OnLine uses E-Mail or an electronic bulletin board to send copies of Microsoft Word, or copyrighted pictures from Playboy magazine, or digitized versions of copyrighted songs, to friends in California, I doubt that any court in the country would have difficulty finding that a copyright infringement has occurred.[FN6] It doesn't matter whether the transmission takes place over a system regulated as a broadcaster or over a system regulated as a common carrier, the result under copyright law is the same.

        Of course, I am assuming in my analysis that the recipient of the infringing transmission ends up with a copy of the copyrighted work, and that the sender of the transmission doesn't part with a copy, so that the transmission has resulted in the creation of two or more copies where only one existed before. In that case, under Section 106(1), there has been a violation of the owner's right to reproduce the copyrighted work in copies or phonorecords.[FN7]

        In its recent study, the Working Group on Intellectual Property Rights concludes that, while there are some strains in the existing law raised by the emerging information infrastructure, "there is no need for a new [coat]," though "the old one needs a few alterations."[FN8] [p. 386] One of the Working Group's few recommendations for statutory change is a proposed expansion of the exclusive right to distribute copyrighted works under Section 106(3), to include distributions "by transmission," and an expansion of the definition of "transmit" in Section 101 to include the transmission of a reproduction as well as the transmission of a performance or display.[FN9] The recommendation is probably helpful in clarifying that the sender who transmits a copy of a copyrighted work infringes copyright as well as the recipient who more directly makes a copy of the work, but the same result could probably be reached under existing law if a recipient of a transmission makes a copy of the transmitted copyrighted work, and the sender has sufficient knowledge of the recipient's use to make the sender a contributory infringer.

        While the copyright law either handles most of the intellectual property problems on the information superhighway, or with minor adaptation can be made to handle most of the problems, the primary issues are going to revolve around the related problems of enforcement and contributory infringement.

        The problem of enforcement is obvious.[FN10] Even if a clear copyright infringement takes place, how is the copyright owner going to discover the infringement and protect against it? The Working Group suggests that copyright owners will and should look to technological [p. 387] as well as legal protection, and recommends amendments to the copyright and communications law that will prohibit the manufacture or sale of devices that are designed to defeat anti-copying systems.[FN11]Of course, technological protection is only as good as the technology used, and it is possible that, as in the field of computer software, overly invasive schemes to control copying will meet with considerable customer resistance.[FN12]

        The Working Group concludes that "sufficient protection cannot be gained through suits for contributory infringement."[FN13] That may be a correct assessment of the existing law, but I suggest that one can analyze the pervasive copyright problems in terms of an expansive view of what constitutes or should constitute contributory infringement. Basically, the question is, who should be responsible for the copying of copyrighted works that we know will take place over the information superhighway? In particular, to what extent should the system operator or system provider be responsible for infringing activities taking place over the system?

        The copyright law has essentially adopted different ways of treating different secondary parties who are involved in copyright infringement, but who are not the primary infringers. In some such contexts, we have chosen to protect from copyright infringement parties who are not primarily responsible for infringing activity. Many of the cases have arisen in a fair use context. For example, in the Sony case, the Supreme Court held that a manufacturer of a video recording device was not liable for copyright infringement by the purchaser, because the video recorder was usable for "time shifting," which, it was found, was a substantial noninfringing use.[FN14]In a totally different context, the settlement of a photocopying infringement case against New York University ("NYU") and others basically resulted in protecting NYU against claims of copyright infringement based upon the activities of its professors.[FN15]And in a context related to fair use, Section 108 of the [p.388] Copyright Act is designed to immunize libraries from liability for copyright infringement done in the name of the library patrons.[FN16]

        Other secondary parties are protected against liability for copyright infringement by means of compulsory licensing schemes. The cable compulsory license of Section 111 is designed to protect cable operators who, after all, don't control the selection of particular programs that might be deemed to infringe.[FN17]Similarly, the new digital audio tape recording compulsory license is designed to protect the manufacturers of such devices against liability for activity that they don't directly control.[FN18]

         There are other contexts in which we choose to hold secondary parties fully liable for infringing activities, sometimes in contexts where they have little control over the actual copying. For example, Section 109 was amended to exclude from the first sale doctrine the rental, lease or lending of copyrighted sound recordings or computer programs.[FN19] If in fact the copyrighted works were merely rented and not copied, then there would be no more harm than in the renting of video tapes, which is allowed under the first sale doctrine. The reason for a separate rule is that we essentially know that the customer renting a sound recording or a computer program is doing so to copy it, or is so likely to copy it that we don't want to even allow the possibility.[FN20] Another context for determining secondary liability is in the determination of the extent to which employers may be liable for the infringing activities of their employees. Our basic response is to [p.389] hold such employers liable,[FN21] but the reality is that the employers can immunize themselves from copyright infringement claims by themselves policing the workplace to see that infringing copying is not taking place.[FN22]

        There is thus a wide range of analogies within copyright law from which to choose how to deal with contributory infringers; and the wide range of contexts results in a wide range of "prices" that we charge the secondary infringers to buy their immunity. At the most lenient extreme, we have basically given the manufacturers of video recorders an absolute immunity against claims of contributory infringement.[FN23] At a slightly increased cost, we grant immunity to libraries, but only if the libraries keep within carefully prescribed limits set forth in Section 108. In the context of the [p.390] cable and digital audio tape recording compulsory licenses, we basically give the cable operators and manufacturers of digital audio recording devices and media the right to proceed, but on condition that they pay a compulsory licensing fee to compensate the copyright owners for the otherwise infringing activity.[FN24]

        In the case of university or company photocopying, we hold out the threat of copyright suits, and use the threat to induce the cooperation of the universities or companies in paying for copying, or in policing against illegitimate copying. At the most rigid extreme, we practically prohibit certain types of activities, such as rental of sound recordings or computer programs, because we know that uncontrolled infringement will take place if we allow such activity.[FN25]

        The beauty--and sometimes the beast--of copyright law is in its very flexibility. The basic doctrines of copyright--such as originality, idea-expression dichotomy, substantial similarity, fair use--are almost frustratingly complex and fact specific. Users of copyrighted works want clearcut answers to copyright infringement questions (How many notes constitute substantial similarity in a musical infringement case, how many words can I quote from a book or a poem?), and copyright law refuses to give quantitative answers.

        As we view the expansion of the information superhighway, there is a similar temptation to find clearcut answers. Regulatory schemes ("broadcast" regulation versus "common carrier" regulation) may appear to offer clear dividing lines between liability and nonliability. But the regulatory schemes were developed in a different context, to deal with government regulation versus First Amendment rights. The regulatory scheme doesn't and shouldn't decide the copyright issues, since copyright infringement can take place even over "private" telephone lines, or in the privacy of one's own home.[FN26] There will be a period of uncertainty if we leave the development to case law, as there has been in the area of protecting computer programs by copyright law. But the case law will handle the problems, and it may be better to leave the courts flexible to respond to the situations on a case by case basis. Or, if the courts get it wrong or don't resolve some of the problems fast enough, we [p. 391] can amend and fine-tune the copyright laws, as has been suggested by the Working Group.

        The "correct" solution may still leave a range of outcomes.[FN27]A system operator who advocates and facilitates the use of an electronic bulletin board for copyright infringement will and should be liable for the infringing activity.[FN28] A system operator who facilitates private E- mail communications probably should not be held liable for infringing activities of subscribers of which the system operator is unaware. But we probably want to enlist the system operators, as we have enlisted libraries and employers,[FN29] to help educate their users about the copyright laws, and to set up a reasonable system for policing against infringing activities.[FN30] And perhaps the only effective means for inducing their cooperation is to hold them liable for copyright infringement if they fail to provide adequate safeguards against infringing activity, or at least infringing activity of which they have knowledge.

        It might seem logical to base responsibility upon a system operator or an information provider in exactly the same contexts as we place responsibility upon them for other possible wrongdoings that can take place over their facilities. That is, if we think it advisable not to make system operators liable for defamatory remarks distributed over their systems,[FN31] or for criminal activity of their customers (such as planning crimes, or disclosing private passwords or credit- [p.392] card numbers, or soliciting children for sex), then it might seem appropriate to make them not liable, or liable to the same extent and in the same circumstances, for copyright infringement. But the issues are different, and it is possible that we might want the standards for liability to be different. It might be, for example, that criminal activity on electronic bulletin boards warrants more invasive scrutiny than does copyright infringement, since the latter arguably involves only economic harm while the former involves arguably more serious injuries. In that case, we might hold system operators to a higher standard if they become aware of criminal activities occurring over their systems. Or we might conclude that, to the extent that system operators share in any ill-gotten gains from the use of their systems for copyright infringement, and whether or not they or their customers have First Amendment rights against government regulation in other contexts, we should make the system operators liable for civil (but not criminal) penalties unless they police their systems the same way we expect employers or operators of local area networks to police their systems for copyright infringement. The point is that the issues are different, and the standards for judging responsibility may also be different.

        I assume that we will hear more, indeed may hear more today, about the inability of copyright law to keep up with the emerging technologies. My own assessment is that "it ain't necessarily so." To be sure, there is within the copyright law a wide range of options in determining how to deal with the legal issues, and we might not yet know how we as a society are going to resolve these issues. But if we can come to a fair consensus, within about ten or twenty years, about regulating computer programs within the framework of copyright law,[FN32] I think that we will be able to resolve the property rights issues on the information superhighway over the next few years.

[FNa]. Edward Samuels is Professor of Law, New York Law School.

[FN1]. Although the recent Supreme Court case of Feist Publications, Inc. v. Rural Telephone Service, 499 U.S. 340 (1991), held only that telephone directories are not protected as "original works of authorship," since they are mere alphabetical listings of otherwise unprotected facts, the case has had wide repercussions for the protection of databases and computer retrieval systems generally. See, e.g., Philip Miller, Life After Feist: The First Amendment and The Copyright Status of Automated Databases, 60 Fordham L. Rev. 507 (1991).

[FN2]. The best summary of the law in this area is the preliminary draft of a report by a working group, chaired by Bruce Lehman, Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, of the Information Infrastructure Task Force, chaired by Ronald Brown, Secretary of Commerce. See Intellectual Property and the National Information Infrastructure, A Preliminary Draft of the Report of the Working Group on Intellectual Property Rights (July 1994) [hereinafter "Report of the Working Group"].

[FN3]. "New" is a relative term. I include developments from photography to motion pictures, from radio to broadcast television to cable television and newer video technologies, and from sound recordings to audio digital recordings. On the infringement side, I think the law has dealt, more or less adequately, with the new reprographic technologies, from photocopiers to audio and digital tape recorders, and from video recorders to computers.

[FN4]. The difficulties in the area of cable copyright regulation arise, in part, because that compromise, Section 111 of the Copyright Act, too greatly deferred to existing policies of the Federal Communications Commission. Later changes in such regulation have produced tensions between the regulatory and the copyright scheme. Most recently, amendments to the Communications Act have arguably been inconsistent with Section 111, and Section 111 has not been amended to resolve the inconsistencies. However, legislation was introduced to phase out Section 111, and bring it into harmony with the Communications Act's retransmission consent provisions. See, e.g., 44 BNA's Patent, Trademark, and Copyright Journal 661 (1992).

[FN5]. As stated in one current copyright casebook: "It is worth noting that when such copying is indeed substantial, it matters not what kind of technology was used in making the unauthorized reproduction. Photocopy machines have been used for such purposes for at least two decades, and computers have also become familiar devices for making electronic reproductions. More recently, telefax machines have become commonplace in using telephone lines to make what are in effect long-distance photocopies." Robert Gorman and Jane Ginsburg, Copyright for the Nineties, Cases and Materials (4th ed. 1993) 406.

[FN6]. The copyright law is statutory, and applies in general terms to the information superhighway, even before any court holds that it does. The Report of the Working Group, for example, while purporting to address the issues of the information superhighway, in fact reads like a copyright primer outlining basic copyright principles, such as the general rules on subject matter of copyright, scope and term of protection, copyright ownership, limitations on exclusive rights, and issues of infringement.

[FN7]. Section 106(1) covers the exclusive right to reproduce the work in copies. "Copies" are defined in Section 101 as "material objects ... 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."

[FN8]. Report of the Working Group at 120. The approach is in contrast to another recent study, by the Office of Technology Assessment, which seemed to adopt the view that existing law was inadequate to the task of regulating the new technologies. See Office of Technology Assessment, Intellectual Property Rights in an Age of Electronics and Information (1986). The OTA report, particularly in its treatment of copyright in computer programs, was outdated by the time it was issued, and in any event seems not to have been instrumental in the development of copyright law in the area of technology. For critiques of the OTA report and its assumptions, see Jon Baumgarten & Christopher Meyer, Program Copyright and the Office of Technology Assessment, Computer Lawyer, vol. 4, no. 10, at 8 (Oct. 1987), no. 11, at 1 (Nov. 1987); Edward Samuels, The Idea-Expression Dichotomy in Copyright Law, 56 Tenn. L. Rev. 321, at 367-70 (1989).

[FN9]. Report of the Working Group at 121. The Working Group also recommends amendments to the first sale doctrine under Section 109 to make clear that the distribution by transmission does not result in a first sale of the work. Id. at 124.

[FN10]. The United States, as a nation, has recently come to view copyright enforcement as one of the primary problems on the international copyright scene. Even as we have joined the Berne Union, we were instrumental in the discussions to bring intellectual property law within the framework of GATT, precisely in order to provide an enforcement mechanism that is inadequate under Berne. The Act implementing the General Agreement on Tariffs and Trade was finally signed on December 8, 1994. See 49 BNA's Patent, Trademark, and Copyright Journal 129 (1994).

[FN11]. Report of the Working Group at 126.

[FN12]. Many or most computer software companies have abandoned the use of the most intrusive protection schemes because of vocal opposition by legitimate users who want to be able to make backup copies.

[FN13]. Report of the Working Group at 126.

[FN14]. Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984).

[FN15]. See 25 BNA's Patent, Trademark, and Copyright Journal 483, 493 (1983). Another part of the case, Addison-Wesley Pub'g Co. v. New York University, is reported at 1983 Copyr. L. Dec. 25,544, 1983 WL 1134 (S.D.N.Y.). The "minimum" level of fair use described in the Agreement on Guidelines for Classroom Copying in Not-For-Profit Educational Institutions thus became the maximum, at least at NYU (unless a professor is willing to personally assume the full risk of copyright liability).

[FN16]. 17 U.S.C. 108. Similarly, the Williams & Wilkins case can be viewed as a caselaw determination that the libraries in that case should not be liable for assisting their patrons in the photocopying of the scientific and medical journals involved in that case. See Williams & Wilkins v. U.S., 487 F.2d 1345 (Ct. Cl. 1973), aff 'd by an equally divided Court, 420 U.S. 376 (1975).

[FN17]. 17 U.S.C. 111.

[FN18]. 17 U.S.C. 1008 (1992).

[FN19]. Record Rental Amendment of 1984, Pub. L. No. 98-450, and Computer Software Rental Amendment of 1990, Pub. L. No. 101-650, adding and amending 17 U.S.C. 109(b).

[FN20]. "The Committee has no doubt that the purpose and result of record rentals is to enable and encourage customers to tape their rented albums at home.... The rental is a direct displacement of a sale." S. Rep. No. 98-162, 98th Cong., 1st Sess. 2 (1983). Of course, rental stores could negotiate separate licenses for permission to rent such works, but the reality is that the local audio or computer program rental store as a practical matter has been prohibited.

[FN21]. This situation falls under the rubric of "vicarious liability" rather than "contributory infringement," and is based upon the power to supervise rather than the knowing participation in infringing activity.

[FN22]. In the photocopying context, the recent case of American Geophysical Union v. Texaco, Inc., 37 F.3d 881 (2d Cir. 1994), holds that companies are liable for the photocopying even of scientific journals. They can comply with their copyright obligations, and thus immunize themselves from further copyright liability, by entering into licensing agreements with the Copyright Clearance Center.

        My favorite context for determining secondary liability is that of employee copying of computer programs. Companies can protect themselves by setting up systems for policing against illicit copying by their employees. There are several commercially available computer programs for keeping an inventory of licensed copies of computer programs, and detecting illicit copies being used within the company. The Software Publishers Association and the Business Software Alliance, through widespread advertising and selective test cases, have been successful in converting many large corporations from computer copyright infringement accomplices to computer copyright enforcers. (Ask your local network operator or computer services manager about the "copyright police," and what "they" will do if the employees copy computer programs or the network operator fails to set up effective enforcement mechanisms. The answer may astound you!)

[FN23]. While Sony Corp. of America v. Universal Studios, 46 U.S. 417 (1984), effectively resolved the issue, it was not a foregone conclusion that Sony would be found free of liability, as evidenced by the four justices who dissented and by the contrary holding by the Ninth Circuit Court of Appeals. Once the case was decided, however, Congress lost whatever desire it might have had to regulate the matter any differently, such as by adopting a compulsory license. In a fascinating book, James Lardner details how the Hollywood interests were "outgunned" in lobbying for legislative relief, and how the VCR had come to be viewed even within Hollywood as a source of revenue rather than merely a threat to such revenue. See James Lardner, Fast Forward: Hollywood, The Japanese, and the VCR Wars (1987). (Portions of the book were previously published in The New Yorker.) The fact of the matter is that there are today more revenues to be made from video release of movies than from theatrical release (see, e.g., Home Video Still Fast Growing Communications Category, Video Week, vol. 14, no. 47 (1993)), and there is enough money for everyone that a compulsory license fee is not necessary.

[FN24]. 17 U.S.C. 111 and 1003-07.

[FN25]. See text accompanying note 20, supra.

[FN26]. There is no "home use exemption," and not even the Sony case says that copying copyrighted works in one's home is generally allowed. Only time shifting of works broadcast over the public airwaves was fair use, though that was enough to find Sony not liable as a contributory infringer. Sony Corp. of America v. Universal Studios, 46 U.S. 417 (1984).

[FN27]. Cf., e.g., Eric Schlachter, Cyberspace, the Free Market and the Free Marketplace of Ideas: Recognizing Legal Differences in Computer Bulletin Board Functions, 16 Hastings Comm/Ent. L. J. 87 (1993), in which the author identifies different functions of a system operator and suggests different regulatory standards for each function.

[FN28]. See, e.g., Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993), which, despite some uncertainty over the applicable copyright law, found a system operator liable for the knowing infringement of copyrighted works over the bulletin board system. Similarly, the court in Sega Enterprises, Ltd. v. MAPHIA, No. C93-4262 CW, 1994 U.S. Dist. LEXIS 5266 (N.D. Cal., Mar. 28, 1994) found liable a system operator who had knowledge of and actually solicited the uploading and downloading of unauthorized video games on the bulletin board.

[FN29]. See text accompanying notes 16 and 21-22, supra.

[FN30]. At the very least, we might require the system operator to make available to the proper parties the actual names and addresses of subscribers who are known to transmit or receive copyrighted works over the system, so that the subscribers cannot hide behind the anonymity otherwise provided by the system. Such a requirement must be carefully weighed against the legitimate privacy concerns of subscribers, and would probably best be handled by legislation rather than case law.

[FN31]. See, e.g., Auvil v. CBS "60 Minutes," 800 F. Supp. 928 (E.D. Wash. 1992), and Cubby, Inc. v. CompuServe, Inc., 776 F. Supp. 135 (S.D.N.Y. 1991), holding that a television network affiliate and a bulletin board operator were not liable for defamatory statements distributed over the airwaves or over the bulletin board, at least under the facts of those cases.

[FN32]. It was only a few years from the CONTU report, which tentatively concluded that computer programs should be covered by copyright law, to the case of Apple v. Franklin, which seems to have finally put an end to suggestions that computer programs, or at least some computer programs, were not protectable. See Final Report of the National Commission on New Technological Uses of Copyrighted Works (1978); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983). Or it was "only" twenty years from the time the copyright office first started accepting computer program registrations under a "rule of doubt" to the Apple case.

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