By William A. Tanenbaum

1. The Challenge of the Internet

The electronic transmission of documents on the Internet presents four fundamental challenges to current copyright law. First, copyright law has historically protected the intellectual property in a book or other copyrighted work by protecting the reproduction and distribution of copies of the work. On the Internet, however, there are no physical copies. Second, copyright law provides different results depending upon whether the work is published or unpublished and whether it is used for commercial or non-commercial purposes. However, on computer networks in general and on the Internet in particular, such distinctions are blurred and difficult to draw. Third, copyright laws are territorial, but on the Internet, a copyrighted work is available anywhere and everywhere throughout the World. Fourth, the machine that enables a member of the public to have access to works on the Internet is the same machine - namely, a personal computer - that allows that person to clone perfect copies of work and electronical transmit them to a virtually unlimited number of people across the globe. This introduces a risk of infringement that was not present when individuals could make unauthorized copies only one at a time.

The challenge of the Internet was addressed in the United States in the "National Information Infrastructure (NII) White Paper." (The NII is essentially the same as the information superhighway.) The White Paper is the final report issued by the Clinton Administration's "Working Group on Intellectual Property of the Information Infrastructure Task Force." The White Paper contains of a survey of current intellectual property law - both U.S. and international law - with particular emphasis on copyright law in a digital or network environment. It contains a series of proposed amendments to the U.S. Copyright Act, which have now been introduced in Congress. This article discusses the proposed copyright amendments that address electronic transmissions.

According to White Paper, if the NII is to achieve its potential and become a channel for creative and useful works, publishers and authors will need reasonable assurances that their intellectual property rights will be protected. In the past, technological developments such as photocopiers and tape recorders presented challenges to the existing copyright law. The Internet, however, presents a challenge of a different order of magnitude because of the ease and speed with which a copyrighted work can be reproduced and distributed in the digital environment. In short, almost anyone can be an alternative publisher - or infringer - as well as a reader.

2. Distribution

Section 106(3) of the U.S. Copyright Act now provides that a copyright owner has the exclusive right to "distribute copies or phono records of the copyrighted work to the public by sale or other transfers of ownership or by rental lease, or lending." In the White Paper view, there are two problems with this definition as applied to digital networks. First, under the Copyright Act, "copies or phonorecords" must be "material objects." Second, as now written, the existing definition of distribution assumes a transaction in which a single material copy leaves the sender's hands and ends up in the recipient's (or reader's) hands. With an electronic transmission, however, the original copy can remain in the sender's computer while a second copy will be made in the recipient's computer. The White Paper concludes that an unauthorized digital transmission of a work may not qualify as a violation of the current distribution right because the digital work may not be found to be a "material copy" of the work under current law.

To remedy this, the Working Group proposes adding "transmission" as another way in which copies can be distributed. According to the White Paper, this proposed amendment does not create a new right. The amendment is, instead, an express recognition that as a result of electronic networks, the distribution right can be exercised by the means of transmission.

Some commentators, however, have said that this proposed amendment is not necessary. They argue that when a copy is transmitted from one computer to ten computers, copies of the work are made in those ten computers, and that right to the distribution right does not cover transmissions, the reproduction right is clearly implicated, and is violated when the copies are made at the receiving computers. For support, these commentators cite a few U.S. court decisions which have held that storing a copy of a work in computer RAM - which is random access memory - is a reproduction, even though RAM is temporary memory and the work is deleted when the computer is turned off or if the work is never moved to main memory. Accordingly, they assert that it is not necessary to amend the definition of distribution.

The White Paper's response to this as follows: Transmissions of copyrighted works constitute both a reproduction of the work and a distribution of a copy. The right of reproduction and the right of distribution are separate rights, and each of them is set forth as one of the five exclusive rights of the copyright owner in Section 106. These rights can be licensed separately. For example, a retailer might have the right to distribute copies received from a publisher but not have the right to make more copies. Enterprise (company-wide) software licenses provide an example of this. Similarly, a licensee could have the right to reproduce the work, but not to distribute it. In the view of the Working Group, if such a licensee were also free to distribute the work to the public, this would interfere with a right the owner might have intentionally reserved to himself or licensed to another party. Therefore, because electronic transmissions result both in the making of a copy and the distribution of the work, theWhite Paper concludes that the distinction between copying and distributing should not be collapsed.

Looking at this from an international perspective, one problem with the White Paper approach is that not all countries' copyright laws provide an exclusive distribution right. A different approach to the same problem in the European Union is to treat electronic transmission under the rubric of the copyright owner's exclusive right to communicate the work to the public. This right under European law is similar but not the same as the performance right in U.S. law. The performance right is discussed below.

The Working Group's position prompts the following question: What is the effect of this on electronic mail? In the view of the White Paper authors, the answer to this depends on whether or not the e-mail is a private transmission. Not all transmissions of copyrighted works fall within the copyright owner's exclusive right of distribution. Under U.S. law, a distribution must be a distribution to the public to become subject to copyright owner's permission. The White Paper authors say that the case law interpreting when a publication has occurred provides guidance on what constitutes distribution to the public. They therefore conclude that transmission of a copyrighted work from one person to another person in a private e-mail message would not constitute a distribution because it would not be a publication. This analysis, however, does suggest that if a distribution by transmission is made to more than one person, it could constitute a distribution to the public and would result in copyright infringement if unauthorized. Another potential problem is that accessing a work on the network may be deemed to be a transmission of the work which requires the permission of the copyright owner. Thus, while no one would claim that reading an article in a library is an act of infringement, reading the same article on the Internet may be an infringement if a transmission is deemed to have occurred.

3. Transmission

The change the White Paper authors seek to make in the definition of "distribution" cannot be made without also changing the current definition of "transmission" (which is found in Section 101). The current definition speaks only of transmitting a "performance or a display" of a work and does not apply to a physical copy of the work. Transmission under U.S. law is "to transmit a performance or a display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent." The problem with this definition, according to the White Paper, is that some transmissions are not communications of a performance or a display - which is what the current definition reaches - but are transmissions of a reproduction. Such is the case when an individual uses his computer to send copies of a work to ten other computers. The copies made in the receiving computers' memory are reproductions under the U.S. Copyright Act.

Accordingly, the White Paper proposes an amendment to provide that a reproduction can result from a transmission. The difficulty with this, however, is that it makes it necessary to determine whether a transmission is either a communication of a performance or a distribution of a reproduction. To accomplish this, the White Paper states that courts will need to determine whether the "primary purpose" of the transmission is communicate a performance or distribute a copy. This leaves open the question of what kind of transmission results if the transmitter intended both to communicate a display of the work across the network and distribute a reproduction of it - or if the receiver both sees a performance and receives a copy of it.

4. Importation by Transmission

The third amendment proposed by the White Paper concerns the importation provisions of the Copyright Act. Section 602 of the Act currently provides that it is an infringement of the copyright owner's distribution right to import into the United States copies of copyrighted works which have been acquired outside of the country. This implicitly assumes the shipping of tangible, physical goods into the United States. The White Paper authors conclude that just as electronic copies can be distributed within the United States by electronic transmission, copies also can be imported by transmission from overseas computers. Therefore, the White Paper recommends amending Section 602 to expressly provide that importation "whether by carriage of tangible goods or by transmission" constitutes an infringement of the distribution right. The White Paper authors recognize that as a practical matter, the U.S. Customs Service will not be able to enforce this prohibition against importation by transmission. The report concludes, however, that copyright holders should have this right available to them, and that future technological or collective licensing schemes may provide a way to enforce it.

5. Publication

A fourth amendment proposed by the White Paper addresses the definition of "publication" found in Section 101 of the Copyright Act. When the last general revisions of the U.S. Copyright Act took place in 1976, a hard line was drawn between publication of a work in a physical copy and other modes of presenting it to the public. Accordingly, the legislative history contains the statement that "any form or dissemination in which a material object does not change hands ... is not a publication no matter how many people are exposed to the work." Under that reasoning, it is possible that a transmission of a work could not be a publication of the work, just as it would not be a distribution for copyright purposes. The White Paper found that this distinction has become outdated.

Under current technology, a copy of the work itself can be transmitted electronically in addition to broadcast over radio or television and other older forms of technology which displayed or offered a performance of the work without actually transmitting a digital form of it to the viewer. The way to summarize the White Paper's position is to say that when a recipient acquires a copy of the work by transmission in such fashion that a distribution of the work occurs under the proposed amendment to the distribution section, then the transmission should also result in a publication of the work for copyright purposes. Thus, the White Paper proposes amending the definition of "publication" to expressly provide that transmission is one of the means by which a public distribution can occur.

Although the legal significance of publication is less important than it used to be under U.S. law, the White Paper's position in classifying transmission as publication would have considerable impact. Previously, the general rule under U.S. law was that if a work was published without a copyright notice, then copyright protection was lost and the work entered the public domain in the U.S. With United States adherence to the Berne Convention, which occurred in March 1989, copyright notice and other formalities were eliminated as conditions of copyright protection, and now the publication of a work without notice does not result in loss of protection.

However, whether a work is considered published or unpublished has consequences for the term of protection and different timing and deposit requirements for U.S. copyright registration purposes. Thus, the White Paper's proposed amendment to make transmissions of what were previously considered to be unpublished works. For example, if an author kept his private letters in long hand in a notebook, they would be unpublished works even if they were subsequently deposited in an academic library. If, however, he kept them in his computer and then transmitted the letters from the computer by email, the transmission could destroy their unpublished status. In addition, in order for a copyright owner to preserve his right to obtain attorneys' fees and statutory damages in the event he prevails in an infringement action, he must register the work within three months of publication. One of the implications of the proposed amendment is that the three-month period begins when a qualifying electronic transmission occurs, even if the work has not been otherwise published in printed form.

Some commentators have suggested that the way to protect copyright owners in the NII is to treat a transmission as a "performance," because one of the copyright owner's exclusive rights is the right to control performances. The White Paper considered and rejected this approach. It did so because the performance right is more limited than the reproduction and distribution right in that the performance right does not apply to all types of works, as do the reproduction and distribution rights. In addition, not all performances are public performances, and non-public performances cannot be regulated by the copyright owner.

6. U.S. "First Sale" Limitation on Copyright Owners' Rights

The "first sale" doctrine is another area addressed by the White Paper with respect to electronic transmissions. Historically, the first sale doctrine in the U.S. has recognized the difference between the writer's copyright in underlying work and the purchaser's right to sell his physical copy of the book in which the copyrighted authorship is embodied.

The first sale doctrine prevents the copyright owner from controlling the distribution of that book after its first sale to a customer. It allows a college student to give his textbook to a friend or sell it to a used book store for subsequent resale, all without the permission of or any payment to the copyright owner. In the context of the National Information Infrastructure, where the owner of a copy of a work can give multiple third parties copies of the same work without giving up his own copy - as can result from transmitting copies of the work across the Internet - the copyright owner has lost the ability to control the distribution of the work. Because the White Paper authors view the copy created on the recipient's computer as infringing the copyright owner's reproduction right, they do not want this copying immunized by the first sale doctrine. The White Paper concludes that a purchaser cannot use the first sale doctrine to send copies of a work across the Internet, because, as in the example above, where ten copies are transmitted to ten different computers, the original copy remains on the sender's computer. Thus, the first sale doctrine does not apply, because the owner of that copy has not physically relinquished his copy.

What result occurs when the sender transmitted one copy over the Internet and then deleted the original copy from his own computer. At the end of this transaction, only one copy of the work remains, and the original purchaser does not retain a copy. The White Paper authors conclude that because the transmission of the copy was a reproduction of the work made without authorization of the copyright owner, it is not within the protection afforded by the first sale doctrine, which applies to distributions of lawful copies, not to unauthorized reproductions. Therefore, the White Paper concludes that the first sale doctrine should not apply to transmissions followed by a deletion of the work, because that would be applying the first sale in such a way as to vitiate the copyright owner's right to control the reproduction of the work. The way to summarize the White Paper's position is to say that because transmission results in both a reproduction of the work and a distribution of the reproduction, the fact of reproduction means that the first sale doctrine does not apply even if the original copy is subsequently erased.

7. Derivative Works

The White Paper has an extended discussion of infringement of the right to make reproductions by electronic transmissions, but pays surprisingly little attention to what are the equally important problems of derivative works in a digital network environment. Under U.S. law, a "derivative work" is one that results from the modification, transformation or adaptation of pre-existing work by the addition of additional creative effort. Creating a derivative work requires the permission of the owner of the pre-existing work. However, the person creating a derivative work is entitled to own the copyright in the new elements added in creating the derivative work. The White Paper authors observe that the digital environment is "uniquely susceptible" to infringement of the owner's right to prepare derivative works, but it is conspicuously silent and does not make any recommendations in the derivative work area. The ownership status of a derivative work is an important problem in the digital arena, and will need to be addressed.

8. Licensing Implications

The White Paper has recognized some valid concerns about transmissions in the digital environment and how works are used in electronic networks. However, given the current provisions of Copyright Act, and the current state of the case law, an attorney should consider including certain provisions when representing licensees and licensors of software or online works. The licensee should obtain an express right to transmit, reproduce, display and perform the work on a computer network in order to forestall the licensor from claiming that another license is required for network use of the product. From the licensor's perspective, the license should limit the scope of the licensee's license to the licensee's internal network in order to make access as non-public as possible.

9. Conclusion

Accommodating electronic transmissions across the Internet is the new frontier in copyright law. The NII White Paper proposes a series of amendments to bring transmissions within the existing copyright regime and protect copyright owners' rights in the digital dissemination of their works. A complete solution will require modifications to the Berne Convention and the harmonization of national copyright laws because of the transmissions on the Internet are not limited by respect national borders.

William A. Tanenbaum is a partner in Rogers & Wells, where he is a member of the Intellectual Property & Technology Law Group in the firm's New York office. This article is based on an article that will be published in the Fall 1997 issue of IPAsia. Rogers & Wells is an international law firm with additional offices in Frankfurt, London, Paris, Hong Kong, Los Angeles and Washington, D.C. Mr. Tanenbaum is the Immediate Past President of the Computer Law Association, an international organization, and is currently the Chairman of the Internet and Online Task Force, and international, cross-industry task force focusing on the convergence issues.

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