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For most Americans, the unquestioned goal of intellectual property laws, and of the copyright law in particular, is preserving and protecting the rights of creators. Since our Nation's Framers first implanted an intellectual property clause in the Constitution, it has been commonly assumed that the main purpose of these laws is to prevent theft of the property of the mind, and that ensuring economic rewards for creators -- for today's "content providers" -- is paramount.
Intellectual property law, however, has always been a delicate balance, a bargain, if you will, between the owners of intellectual property, on the one hand, and users (who include artists and creators) and consumers, on the other. The Constitution and our statutes reflect this balance in granting monopoly rights to creators only for limited times, after which their works fall into the public domain. Congress and the Supreme Court have emphasized repeatedly that authors' statutory rights are intended principally to benefit the great body of the public; to provide access to information, and not only to ensure a flow of revenues to creators or to protect works solely for the sake of protection. Various provisions of our law, such as the fair use doctrine, are an insurance policy that safeguards legitimate and accepted uses of intellectual property, including uses by artists who stand on the shoulders of those who have preceded them.
In Washington, where I work, during the past thirteen years we have seen legislative debates on copyright policy between copyright owners and manufacturers of consumer electronics equipment, distributors, retailers and millions of American consumers. Today, as part of the Clinton Administration's National Information Infrastructure ("NII") initiative, people are thinking how to reform the copyright law in light of potentially unlimited digital access to -- and distribution and reproduction of -- copyrighted works.
In these discussions, some may argue that each and every unauthorized use of an author's work that technically falls within that author's exclusive rights under the law is an infringement. At this time, before we have developed an approach that allows for conditional access to creative works, such an approach would stifle new distribution technologies. This so-called "toll booth" approach, which demands payment for each and every use of a work, would hinder consumers' access to -- and use of -- artistic and information works of all sorts.
There are useful alternatives to this "toll booth" -- payment for each use -- approach. To illustrate, I will briefly describe three matters in which I have been personally involved. These matters raise novel questions at the intersection of new technologies and the law, and may give some guidance as to how we might resolve today's and tomorrow's controversial issues of digital technology and intellectual property.
The first such matter was litigation over the Betamax videocassette recorder and related activity in Congress to impose royalties on VCRs and blank videotape. The second was a similar congressional controversy over consumer audio recording, coupled with a lawsuit over the digital audio tape recorder, or DAT. Finally, a couple of recent judicial decisions, as well as pending litigation brought by music publishers against CompuServe, are jeopardizing the interactive distribution of copyrighted material over the Information Superhighway.
Example 1: The creative community has often seen new technologies -- talkies, over-the-air television, and cable television -- as threatening to their interests. In the early 1970's, Sony introduced the Betamax VCR in the United States. Two motion picture studios sued to block the sale of the VCR, fearing that home videotaping would destroy the industry and arguing that people who made off-air copies of programs at home were infringers, and no better than commercial pirates. Then, in 1981-82, the motion picture industry made an all-out effort to persuade Congress to require consumers to pay royalties on every VCR and blank video tape, as partial and inexact compensation for "losses" from home videotaping. (We represented Sony, I should add.)
Eventually, in 1984, nearly eight years after the commencement of the suit, the Supreme Court decided for Sony. It concluded that home, off-air videotaping was a legitimate fair use under the copyright law, that the motion picture industry had not demonstrated that it would be harmed economically by the widespread use of the VCR and that Sony, as a manufacturer, could not be considered "contributorily" liable for home tapers' videotaping activities.
Concurrently, in the early and mid-1980's, consumer electronics manufacturers, retailers and consumers were successful in explaining to Congress that the payment of royalties to the motion picture industry would be unnecessary because VCRs create enormous income streams for the creative community and that, indeed, home taping would expand the audience for a work, and not diminish it. Nearly a decade later -- almost two months ago -- Jack Valenti, head of the Motion Picture Association of America, was reported as acknowledging that the VCR had not been the disaster he had foreseen, but that its magical technology had skyrocketed the viewing of movies.
Example 2: Beginning in the early 1980's, record companies also tried to persuade Congress to impose royalties on all audio tape recorders and blank audio tape, notwithstanding the widespread popularity and unquestioned use of tape recorders for a couple of decades. Throughout the next ten years, fierce debates raged as to, first, the legality of home audio taping practices and, second, whether a royalty was necessary because home audio taping either did, or did not, displace sales of records, or, to the contrary, did or did not stimulate record purchases.
The creative community believed that the new generation of audio tape recorders based on digital technology, the DAT, was a greater threat than copying on conventional, compact cassette recorders because DATs could make multiple generations of nearly perfect copies. The music industry, manufacturers and consumers tried for a couple of years to break this logjam by agreeing on a broad, statutory solution. The need became more urgent when a class of music publishers brought suit against Sony in 1990 on the basis that its DAT made it "contributorily" liable for consumer digital audio taping. (We represented Sony in all these legislative and judicial proceedings.)
These various manufacturer, creator and consumer interests need to cooperate to make the benefits of new digital technologies available to consumers. For this reason, they realized that a comprehensive solution would be preferable to litigation. They agreed on an approach which is reflected in the 1992 enactment of the Audio Home Recording Act. This statute has three interlocking components that neatly balance the various needs and interests. First, it clarified that consumers who tape at home could not be sued for copyright infringement. Second, to address the music industry's concerns over digital serial -- or multigenerational -- copying, digital recorders must implement a technical system that would essentially make it impossible to make a digital copy of a digital copy made from a CD or other digital original. Third, a modest royalty was imposed on digital audio recorders and recording media, in lieu of forcing users to pay a fee for each and every recording made at home.
Example 3: Today's online information revolution makes it possible to distribute virtually all kinds of intellectual property -- literary, visual, musical and audiovisual -- on an interactive basis. Trillions of bits traverse the network daily, either over the Internet, about which we are hearing so much, or through such commercial online services as CompuServe, America Online and Prodigy. Among the materials that subscribers upload to, store on and download from these huge systems (which each have millions of subscribers) are copyrighted works. The provocative copyright questions raised by online distribution are the subject of a Green Paper put out by the Administration, which solicited views on how the copyright law should be changed to protect copyright owners' rights in a world of very easy digital reproduction and distribution.
The emergence of new digital distribution technologies raises various legal issues both for creators and distributors. For example, are creators who have already licensed their rights for newspaper or periodical publication able to exercise separate rights as to subsequent electronic distribution of the same periodical? Currently, we are representing The New York Times and other publishers and electronic distributors in a case of first impression that tees up this issue, where plaintiffs are seeking to block the electronic publication of works already published in print form unless an additional royalty is paid.
For the new digital distribution community, the most significant copyright issue is potential liability for works transmitted or distributed over their systems. A subscriber's uploading of a work authored by someone else may be an unauthorized reproduction or distribution that the work's author may view as an infringement of his or her rights. Currently, the strict liability standard of the copyright law may make operators of online systems liable for such activities, even if they are totally unaware that the uploader is not the copyright owner of the work.
Whether providers of online services should be held liable for copyright infringement in these circumstances is the subject of an important class action lawsuit which was brought by music publishers against CompuServe, the largest commercial online service, right here in New York. (We represent CompuServe.) The plaintiffs in this case challenge uploading, storage and downloading of a certain type of copyrighted works; songs in MIDI (Musical Instrument Digital Interface) format.
Any decision that would impose liability on distributors due to the actions of some maverick subscribers, who may not be properly sensitive to the importance of intellectual property, would cripple online distributors. Providers of online services would be hobbled by continuing and potentially unlimited exposure to copyright litigation, and requiring them to pay damages for their subscribers' actions would profoundly alter the economics of the industry. To insulate themselves from liability, they would have to monitor for infringement, and possibly censor, each and every uploaded and downloaded work, which is technically and economically impossible. Inevitably, the consequence would be to impair opportunities for the creative community itself, which increasingly will use online digital technologies to disseminate works to the public. Who else will be harmed? The millions of consumers who are using these services to gain unprecedented access to millions of creative and informational works.
For all these reasons, the distributor community is urging that the Administration and others rethink the liability standards of the current copyright law in light of the penetration and popularity of new digital distribution technologies -- and the extent to which they directly serve broader goals of making artistic works and other information widely available. Distributors are proposing a more sensible approach: that they be subject to liability only when they actually know that a work on their system infringes the copyright of another, and they do nothing about it.
From these three examples, the various copyright owner, distribution and user interests, as well as the Administration, Congress and other legal policy-makers, might draw several lessons for the future. First, technology generally creates significant opportunities for artists; it usually doesn't turn out to be the threat that it is initially perceived to be. Second, threatened or actual litigation is generally regarded as counterproductive; it produces an unsettled business environment which is unfavorable for creators, manufacturers, and distributors. Third, a successful resolution of novel copyright issues may require a broader, industry-wide legal or legislative approach that properly balances, and achieves a consensus among, various interests.
Two other points about the law and new digital distribution technologies might also be mentioned. First, as exemplified by the Audio Home Recording Act, the law can impose technical controls on unauthorized digital copying by requiring manufacturers to adopt various copy-control technologies. Where there is a consensus on such technical measures, and where they are enacted into law so that they can be followed by manufacturers and distributors, technology could both protect copyright owner interests against piracy and assist in monitoring and tracking uses of copyrighted material for purposes of compensating copyright owners.
Second, the issues we are discussing here today are global. Already, today's electronic networks extend far beyond the boundaries of the United States. The law of any one country operates only within its national territory, however. For this reason, the United States cannot be isolated in balancing interests to promote opportunities for artists and distributors alike to take advantage of the NII and the Global Information Superhighway. We must work together, on a transnational basis, as creators, presenters, distributors, and users -- and as their lawyers -- to develop a sensible, harmonized global approach that will foster the spread of digital technology, while ensuring that technology itself does not erode core rights in intellectual property.
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