Advances in digital technologies are presenting new challenges for national and international copyright law, says Marybeth Peters, head of the Library of Congress' United States Copyright Office. Peters warns, however, that regulation should be managed by the private sector so as not to stifle creativity and innovation in this rapidly changing field.

ADVANCES IN DIGITAL TECHNOLOGIES

Since its inception, copyright law has responded to technological change. The changes that are grabbing all the headlines today relate to digital technology and digital communications networks. The issues are unquestionably daunting and can be justifiably described as "new" or "unique." But at the same time, they are merely one step in a journey of continual and successful adaptation that characterizes the history of copyright law. This article examines some of the digital issues faced by copyright law today.

Characteristics of Digital Technologies With Copyright Implications

The technologies that are presently raising issues for copyright law are those related to digital storage and transmission of works. There are a number of aspects to these technologies that have implications for copyright law, including the following.

Ease and Ubiquity of Reproduction: Once a work is rendered in digital form, it can be reproduced rapidly, at little cost, and without any loss of quality. Each copy, in turn, can be further reproduced, again without any loss of quality. In this way a single copy of a work in digital form can supply the needs of a multitude of users.

In addition to deliberate reproductions, digital technology creates the phenomenon of ubiquitous incidental copying. One of the inherent qualities of digital technology is that many of the activities that take place in the world of hard copies and analog transmissions necessarily entail making temporary, incidental copies. For example, "browsing" an electronic document requires, at the very least, that a temporary copy of the work be made in the random access memory (RAM) of the browsing computer. In the context of computer programs, such copies have been held to implicate the reproduction right.

Digital transmissions of works over networks similarly entail temporary copying. The work is reproduced in the RAM of the sending computer before it is broken into packets of binary information and transmitted on the network. As the packets traverse computer networks, temporary copies (in RAM and on disc) are made as they move along the way from source to destination. Finally, a temporary copy (or even a permanent copy) is made on the receiving computer. All of these reproductions generally are made automatically, and transparently to the user, and many persist only for as long as the activity takes place.

Ease of Dissemination: The emergence of global digital networks permits the rapid, worldwide dissemination of works in digital form. Like broadcasting, digital networks allow dissemination to many individuals from a single point (although, unlike broadcasting, digitized materials need not reach each individual simultaneously). Unlike broadcasting, though, digital networks allow each recipient on the network to engage in further dissemination of the work, which can cause the work to spread at a geometric rate of increase. This, combined with the ease of reproducing works, means that a single digital copy of a work can be multiplied many thousands of times around the world within a few hours.

Concentration of Value: Digital storage is dense, and it gets denser with each passing year. Ever increasing quantities of material can be stored in a single medium. Compact discs, which can store over 600 megabytes of data, are used by commercial pirates for storing entire libraries of computer programs with an aggregate retail value in the thousands of dollars. Yet the compact disc (CD) technology may soon be supplanted (or at least supplemented) by the far denser digital video disc (DVD) format.

Some of the most difficult challenges posed by new technology are those that enable new means of exploiting copyrighted works. They are not, however, exclusively challenges of public policy. New forms of exploitation have periodically unsettled preexisting business arrangements. This is common, for example, in cases where it is unclear whether a preexisting license from an author or copyright owner grants rights to exploit a work in ways that did not exist when the license was granted. This is a vexing question that has arisen numerous times in this century, with the emergence of radio, broadcast television, videocassette recorders, and the like. It is not, however, necessarily a public policy issue requiring government intervention. In the United States, such issues have generally been worked out in the marketplace and -- in the case of disputes between parties -- in the courts.

That is not to say that the emergence of new technologies for the exploitation of copyright works has not created the need for legislative action. The advent of digital audio recording devices, for example, rendered the works stored on compact discs vulnerable to flawless multigenerational (serial) copying both privately and on a commercial scale. In the United States, it became necessary to preserve copyright owners' exclusive reproduction rights by requiring technological controls on multigenerational copying and imposing a levy on devices and blank tapes to compensate copyright owners for an inevitable amount of private copying.

One of the challenges, then, facing policy-makers with the advent of any new technology is determining whether the issues raised by the technology can be left to the marketplace to resolve.

COMMON THEMES

Several common themes can be identified in the approach that copyright law has taken to past technological changes.

Embracing New Forms of Expression: Time and again over the last two centuries, the subject matter of copyright had embraced new forms of authorship. Photography, cinematography, electronic databases, and computer programs are some examples. In each case, policy-makers ultimately were able to look beyond the particular technology or medium of expression in order to recognize the common thread of creative authorship that runs through all of copyright.

Maintaining the Framework of Exclusive Rights: The Berne Convention for the Protection of Literary and Artistic Works, the primary international copyright convention, articulates the principle that granting exclusive rights to authors promotes literary and artistic creativity, thus benefiting the public welfare. This same principle is recognized in a provision of the U.S. Constitution authorizing Congress to grant exclusive copyrights "To promote the Progress of Science and useful Arts." As new technologies have expanded the means by which works may be exploited, policy-makers have periodically had to reexamine the exclusive rights granted to authors under copyright, to assure that authors and owners of copyright continue to exercise exclusive control over their works.

On occasion, this has required a more expansive interpretation of existing rights. In the United States, for example, an existing right of public performance was interpreted to include radio and television broadcasts. On other occasions, new rights have been added to the copyright bundle, as when rights of communication to the public were added to the Berne Convention in response to the advent of broadcasting.

At the same time, legislators have had to examine the nature and scope of exemptions from exclusive rights. For example, the limited exemptions for reproduction of computer programs contained in section 117 of the U.S. Copyright Act were considered an appropriate means of tailoring exclusive rights to the need of that technology, namely, the need to make copies in the course of authorized use and the need to make backup copies to guard against mechanical failure or accidental erasure.

Market-Driven Solutions: An exclusive right does not necessarily benefit a rightsholder if inefficiencies in the marketplace make the exercise of the right impracticable. The exploitation of public performance rights in musical works is a classic example in the United States. Typically, the value of any single public performance of a musical work is small. The class of users, which includes broadcasters, bars, restaurants, supermarkets, and the like, is extremely large. In aggregate, the value of this form of exploitation is substantial, but so is the cost of administering rights over such a large base of users.

This inefficiency of the marketplace has largely been overcome in the United States through a familiar market-driven solution: collective administration of the right of public performance. A similar approach is being attempted for administering reproduction rights -- photocopying, electronic copying -- with some success.

To maintain a framework of exclusive rights, however, it is essential that collective administration of rights not become the equivalent of a right of equitable remuneration. This requires that any system of collective administration be voluntary, non-exclusive, and responsive to market forces (including market forces brought on by technological change). All three of these factors point toward private entities for collective administration of rights, operating within a competitive environment. In addition, the third factor suggests that collective administration of rights should be decentralized in order to account for different market conditions in different countries.

Another approach to purported inefficiencies of the marketplace has been compulsory licensing. However, the imposition of a compulsory license can be costly to society. First, a compulsory license is a significant derogation from the norm of exclusive rights. Second, a compulsory license can cause significant distortions in the marketplace since it serves to control prices, both directly through the mechanisms for setting royalty rates, and indirectly through the control of supply. Third, once a compulsory license has become established, a web of reliance interests builds up around it, making it extraordinarily difficult to eliminate even after the conditions that justified its adoption cease to exist.

For all of these reasons, compulsory licenses are permitted sparingly under Berne and should be approached with great caution at the national level. Market failure, such as the existence of a natural monopoly in the marketplace, may be one justification for use of a compulsory license.

PRESENT AND FUTURE CHALLENGES

Maintaining the Framework of Exclusive Rights

Because of the degree to which advances in digital technology have facilitated rapid, widespread reproduction and dissemination of works, significant consideration has been given in recent years to the need to adjust the existing framework of exclusive rights to address issues of new technology. The conclusion internationally has been that the existing framework is generally adequate to accommodate the new technologies and needs minor revisions rather than a major overhaul. This is reflected in the modest, though important, scope of the new WIPO Copyright Treaty (WCT).

Right of Communication to the Public: The WCT extends the right of communication that existed under Berne for different categories of works to apply to all works. This right of communication includes the right of the owners to control "the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them." The "making available" component clarifies that on-demand transmissions are a communication to the public as a whole (and therefore within an owner's control), even if each individual chooses when to exploit the work.

Distribution Right: The WCT recognizes the exclusive right of an owner to distribute its work to the public through sale or other transfer of ownership. Though Berne did not contain a general distribution right for all categories of works, this right was already recognized by some countries, including the United States.

Rental Right: The WCT recognizes an exclusive rental right (echoing existing obligations under the TRIPs agreement), as a means of protecting the reproduction right.

Technological Adjuncts to Copyright Protection

While the WCT leaves the existing framework of exclusive rights largely intact, it does contain provisions, new to international copyright agreements, on technological adjuncts to copyright protection. These adjuncts are intended to further the development of digital networks by making them a safe environment for the exploitation of copyrighted works and by facilitating authorizations for such exploitation.

Under the WCT, countries must put effective legal remedies into place against the circumvention of technological measures that are used by owners to safeguard their rights. Countries must also provide legal remedies against persons who delete or alter rights management information that the copyright owner has attached to the work. In the United States, the principal change to U.S. law contemplated by legislation implementing the WCT is the addition of provisions on technological adjuncts to copyright protection.

The WCT, therefore, recognizes that owners cannot rely on technological measures alone to protect their works, because every technical device can be defeated by someone intent on accessing a work. In other words, while the framework of existing property rights continues to be appropriate, the meaningful exercise of these rights in the context of new uses, such as those on the Internet, requires supplementing them with legal assurances that they can be technologically safeguarded.

Markets and Management of Rights

As discussed above, collective management of rights is a market response to the inefficiencies of individually licensing rights to large numbers of works to large numbers of users, where the value of any individual use is relatively small. Traditionally, individually licensing of such works would result in transaction costs exceeding the value of the license.

At first blush, collective management of rights appears to be an attractive approach to managing rights to at least some works on digital networks. It's unclear, however, to what extent the same conditions apply. The information infrastructure that permits rapid, inexpensive dissemination of works may also enhance the ability of right holders to manage rights individually. Work is currently under way by the private sector to create standards that would facilitate the location and retrieval of digital objects containing works, identification of the right holder and terms and conditions of use, and remitting of payment. The intensive use of automation could reduce the cost of such a transaction to levels that would make individual rights management economically feasible. Alternatively, or additionally, such technologies could be used within a framework of collective management, as a supplement to traditional blanket licenses.

For these technologies to meet their full potential in the marketplace, however, they must be allowed to develop with minimal interference. Whether collective management of rights, individual management of rights, or some combination prevails must be determined by market forces and not by governments.

Multimedia works are a case in point. There have been suggestions in the past several years that the difficulty of clearing rights may stifle the creation of multimedia works. The implication is that rights should be managed collectively, or even through compulsory licenses. In the absence of these, however, the United States has a thriving industry developing multimedia works. Thus far, at least, the market has been working to the benefit of creators and users alike.