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1 —
The Emergence of the Digital Dilemma

The role of information products and services in the U.S. economy is vast and still growing rapidly. The addition of an ''Information Sector" category to the federal government's new industry classification system is recognition of both the sector's economic importance and the fundamental kinship of publishing (print and software), motion picture and sound recording, radio and television broadcasting, libraries, and information and data processing services.1

The widespread use of computer networks and the global reach of the World Wide Web have added substantially to the information sector's production of an astonishing abundance of information in digital form, as well as offering unprecedented ease of access to it. Creating, publishing, distributing, using, and reusing information have become many times easier and faster in the past decade. The good news is the enrichment that this explosive growth in information brings to society as a whole. The bad news is the enrichment that it can also bring to those who take advantage of the properties of digital information and the Web to copy, distribute, and use information illegally. The Web is an information resource of extraordinary size and depth, yet it is also an information reproduction and dissemination facility of great reach and capability; it is at once one of the world's largest libraries and surely the world's largest copying machine.

1See Murphy (1998).



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Page 23 1 — The Emergence of the Digital Dilemma The role of information products and services in the U.S. economy is vast and still growing rapidly. The addition of an ''Information Sector" category to the federal government's new industry classification system is recognition of both the sector's economic importance and the fundamental kinship of publishing (print and software), motion picture and sound recording, radio and television broadcasting, libraries, and information and data processing services.1 The widespread use of computer networks and the global reach of the World Wide Web have added substantially to the information sector's production of an astonishing abundance of information in digital form, as well as offering unprecedented ease of access to it. Creating, publishing, distributing, using, and reusing information have become many times easier and faster in the past decade. The good news is the enrichment that this explosive growth in information brings to society as a whole. The bad news is the enrichment that it can also bring to those who take advantage of the properties of digital information and the Web to copy, distribute, and use information illegally. The Web is an information resource of extraordinary size and depth, yet it is also an information reproduction and dissemination facility of great reach and capability; it is at once one of the world's largest libraries and surely the world's largest copying machine. 1See Murphy (1998).

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Page 24 The traditional tool for dealing with use and misuse of information is intellectual property law, the constellation of statutes and case law that govern copyrights, patents, and trade secrets. Part of the case for granting rights in intellectual property (IP) is the belief that protecting IP promotes the development of new products and services, and that erosion of those rights could threaten the economic performance of the information sector and curtail the major benefits it has brought.2 But as this report argues, with this new abundance of information and the ease with which it can be accessed, reproduced, and distributed have come problems that must be seen in all of their complexity, including related economic, social, technical, and philosophical concerns, as well as the accompanying legal and policy challenges. Debates over these issues matter because the outcome will have a significant impact on today's information sector companies and will help determine the character of the digital economy of the future.3 An Enduring Balance Upset? The task of intellectual property protection has always been difficult, attempting as it does to achieve a finely tuned balance: providing authors and publishers enough control over their work that they are motivated to create and disseminate, while seeking to limit that control so that society as a whole benefits from access to the work. The challenge was elegantly stated some 200 years ago in a legal case in Great Britain: We must take care to guard against two extremes equally prejudicial; the one, that men of ability who have employed their time for the ser- 2A second argument in support of IP law is the principle that the creator of an information product ought to be entitled to control the dissemination and use of that information, an issue that is considered throughout this report. For the moment, note that the constitutional language granting Congress the authority to create copyright and patent protection mentions only an instrumental purpose: "To promote the progress of science and the useful arts" (U.S. Constitution, Art. 1, Sec. 8, Para. 8). 3Those debates include the Digital Millennium Copyright Act of 1998 (P.L. 105–304), which amends the Copyright Act, title 17 U.S.C., to legislate new rights in copyrighted works, and limitations on those rights, when copyrighted works are used on the Internet or in other digital, electronic environments. Efforts to enact legislation to provide protection for databases that do not qualify for copyright are taking place in the 106th Congress through H.R. 354, the Collections of Information Antipiracy Act, and H.R. 1858, the Consumer and Investor Access to Information Act. In its Treasury and General Government Appropriation Bill for FY2000 (S. 1282), the Senate Appropriations Committee endorsed the creation of an interagency federal office to fight against the infringement of IP rights of U.S. entertainment and computer companies. This action came in response to requests from industry executives such as Bill Gates, chairman and CEO of Microsoft Corporation, and Jack Valenti, chairman and CEO of the Motion Picture Association of America (Rogers, 1999).

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Page 25 vice of the community, may not be deprived of their just merits, and the reward of their ingenuity and labour; the other, that the world may not be deprived of improvements, nor the progress of the arts be retarded.4 In more recent times, a U.S. court reiterated the significance of balancing rights and access: We must remember that the purpose of the copyright law is to create the most efficient and productive balance between protection (incentive) and dissemination of information, to promote learning, culture and development.5 In the two centuries between those two statements, the United States has changed enormously, moving from an agrarian society to one heavily dependent on information and high technology. Yet many of the fundamental concepts of U.S. intellectual property have been in place for those 200 years and have, with some success, weathered substantial changes in technology and society. The first U.S. copyright statute was enacted in 1793 and protected only maps, charts, and books. Yet it has been adapted successfully over the past 200 years, in part by expanding both the set of exclusive rights conferred by copyright and the scope of the subject matter (embracing photographs, sound recordings, motion pictures, software, and more) and by qualifying those rights with exceptions such as the fair use rule. (Box 1.1 defines "fair use" and other key terms.) During that time, copyright and patent law have had an instrumental role in the promotion and creation of a vast array of informational works, resulting in vibrant markets for IP. But copyright and patent laws have also defined limits on protection in order to facilitate the public interest in and benefit from shared information. Over time, compromises have evolved to balance the interests of the creators and consumers of intellectual work, fulfilling a number of important public policy objectives. But the carefully crafted balance may be in danger of being upset. The emergence in the past 10 years of a new information infrastructure marked by the proliferation of personal computers, networks that connect them, and the World Wide Web has led to radical changes in how informational works are created and distributed, offering both enormous new opportunities and substantial challenges to the current model of intellectual property. 4Lord Mansfield in Sayre v. Moore, 1785, cited in Kaplan (1967), p. 17. 5Whelan v. Jaslow, 797 F.2d 1222; 21 Fed. R. Evid. Serv. (Callaghan) 571; U.S. Court of Appeals for the Third Circuit, March 3, 1986, Argued, August 4, 1986, Filed.

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Page 26 BOX 1.1 Key Terms Used in This Report Author: Used generically to refer to a person or legal entity creating any variety of intellectual property, including books, music, films, and so forth. Bootleg: An unauthorized recording of a broadcast or live performance. Content: Usedgenerically to indicate any work produced by an author, whatever the medium of expression (text, pictures, music or musical performances, computer programs, and so on). Copy: A reproduction of a work. The definition of "copy" is complex and is discussed throughout the report. Copyright: Copyright law protects artistic and expressive work; a copyright on certain uses of the work (e.g., reproduction, distribution to the public, public performances and public displays, and adaption). Counterfeit: An unauthorized reproduction of both the content and packaging of a work. Fair use: The use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research as permitted under 17 U.S.C. sec. 107. Intellectual Property (IP): Intellectual property is the generic descriptor of the work product of protected by copyrights, patent, trademark, and trade secret law. License: Grant of permission from the rights holder of a work to engage in acts that in the absence of permission would be infringing. Patent: Patent law protects useful inventions and discoveries, requiring them to be novel, useful, and nonobvious. A patent gives its owner sole right to control the gainful application of the specific idea the patent discloses. Piracy: Unauthorized duplication on a commercial scale of a copyrighted work with the intention to defraud the rights holder. Rights holder: Used to indicate someone holding the IP rights to a work, whether the author, publisher, inventor, or some person or other legal entity to which the rights have been transferred. Trademark: Trademark law covers the uses of trademarks, the compact patterns associated with an enterprise or a product line. A trademark is intended to unequivocally distinguish the marked objects from similar objects from different sources.

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Page 27 Scope of the Report There is a healthy ferment of experimentation and debate going on in attempts to realize the promise of the digital age. This report seeks to explain and demystify the underlying technology trends, explore the range of technological and business tools that may be useful, and recommend a variety of actions that can be taken to help ensure that the benefits of the information infrastructure are realized for rights holders and society as a whole. This report builds on recent previous studies in the area of intellectual property and digital technology. Perhaps the most visible effort was undertaken by the Information Infrastructure Task Force, which issued the report Intellectual Property and the National Information Infrastructure (IITF, 1995),6 sometimes referred to as the IITF white paper. The IITF white paper presents the detailed legal issues concerning copyright and digital technology, but it does not address business models, protection technologies, or other issues in any particular depth. More recently, the U.S. Copyright Office commissioned a study on the future of copyright in the networked world (Hardy, 1998). That report, which provides good descriptive coverage of the relevant technologies and trends and some discussion of the pertinent economic and legal issues, identified trends but did not provide conclusions and recommendations. This report of the Committee on Intellectual Property Rights in the Emerging Information Infrastructure does not duplicate the detailed legal analyses of the IITF white paper or the extensive review of technologies in the Hardy report. Instead, it offers a framework for the evaluation and construction of public policy, as well as a variety of specific conclusions and recommendations designed to help legislators, courts, administrators, and the public to understand what is at issue, to formulate questions clearly, and to assess alternatives. The focus on copyright derives from the observation that copyright protects a large variety of the IP frequently encountered by the public and has the highest visibility in the debates over IP and the information infrastructure. The members of the study committee were selected to provide the diverse expertise needed to ensure that stakeholders' wide-ranging perspectives were represented.7 For the most part, this report focuses on circumstances and actions possible in the United States. However, as discussed below, the study committee's conclusions and recommendations need to be considered in 6The Working Group on Intellectual Property Rights, chaired by Bruce A. Lehman, assistant secretary of commerce and commissioner of patents and trademarks, was established within the Information Policy Committee of the Information Infrastructure Task Force. 7See Appendix A for the biographies of study committee members.

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Page 28 a worldwide context. One of the consequences of global networks is the inevitable interaction between U.S. law and culture and those of other countries. This can be problematic because laws and IP practice differ widely across countries and are likely to remain different despite efforts at harmonization. Origins of the Issues Given the successful growth and adaptation of intellectual property law over the years, any claim that the established balance is in danger of being upset must be clear and convincing about the origins of that danger. The committee identified problems arising from two primary sources: changes in technology and the availability of the digital information infrastructure as a routine part of everyday life. Three technological changes in particular—the increased use of information in digital form, the rapid growth of computer networks, and the creation of the World Wide Web—have fundamentally altered the landscape and lie at the heart of many of the issues presented by the evolving information infrastructure. These changes, coupled with the emergence of the information infrastructure as a part of daily life, present significant legal, social, economic, and policy challenges. Technology Has Changed: Digital Information, Networks, and the Web Representing information in digital form, as opposed to the more traditional analog form, means using numbers to capture and convey the information. Music offers a clear example of the difference between the two. Capturing musical sounds requires describing the shape of the vibrations in air that are the sound. Records capture that information in the shape of the groove in the vinyl. CDs, by contrast, capture the same information as a large collection of numbers (see Box 1.2). Digital information has a remarkable breadth of descriptive ability, including text, audio (music, speech), video (still and moving pictures), software, and even shape (e.g., in computer-aided design). Why Digital Information Matters Access Is by Copying When information is represented digitally, access inevitably means making a copy, even if only an ephemeral (temporary) copy. This copying action is deeply rooted in the way computers work: Even an action as simple as examining a document stored on your own disk means copying it, in this case twice—from the disk to the computer's

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Page 29 BOX 1.2 Capturing and Compressing information in Digital Form Representing information in digital form means caputuring it as a collection of numbers. Music offers an easy example. Music (or any other sound) is a vibration that can be described by a sound wave (Figure 1.2.1). Traditional vinyl records capture the sound by putting a groove in the vinyl that has the same shape as the sound wave.   FIGURE 1.2.1 A sound wave Digitizing a sound wave is done by measuring its height thousands of times a second (Figure 1.2.2). Measuring the wave at such closely spaced intervals provides a reasonably accurate approximation to the shape of the wave and, hence, the sound.   FIGURE 1.2.2 A sound wave measured (text box continued on next page)

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Page 30 (text box continued from previous page) BOX 1.2 Continued For a standard music CD, measurements are done 44,100 times/second, using numbers that range from 0 to 65,535 (i.e., 16-bit samples), with one measurement for each channel of music. As 16 bits is 2 bytes, a stereo recording thus requires 2 bytes/sample * 44,100 samples/second * 2 channels = 176,400 bytes/second of music, or roughly 10 megabytes/minute. A standard music CD is around 1 hour of music encoded this way and contains about 320,000,000 samples (i.e., 320,000,000 numbers).1 There are other ways of digitizing music, for example, using the Musical Instrument Digital Interface (MIDI) format typically employed with musical synthesizers. Where techniques like MP3 digitize the actual sound of the music, MIDI captures how the song was played on the synthesizer. Hence, while a MIDI file is also a collection of numbers, those numbers indicate which notes were played and when, how long they lasted, their volume, and so on. MIDI was created as a way of allowing music composed on one synthesizer to be played back on another, but it became for a time a popular way to digitize music. Pictures can be digitized by measuring the color at closely spaced dots (often 600 or 1,200 dots per inch), then representing the color at each dot with a triple of numbers indicating what combination of red, green, and blue will produce the color found at that spot. The picture is reproduced by putting the appropriate dots of color at the right places on paper or on the screen. Video can be digitized as a sequence of digitized frames. Text is the simplest thing to "digitize," as there is already a code—the ASCII code—that assigns code numbers to each typewriter character (an "A" for example is given the code 65, "B" is 66, while an "a" is 97); ASCII is used almost universally. In all of these cases, the size of the digitized file of information can be made considerably smaller by compressing it. The simplest compression techniques rely on finding more compact ways to capture the same information. One technique, called "run length encoding," takes advantage of the fact that numbers can repeat. Consider a very simple example of a file containing a sequence of 1s and 0s and imagine it contains the following: 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 1 1 1 1 1 1 1 1. Exactly the same information could be captured by indicating that the file contains five 1s, twelve 0s, a 1, a 0, a 1, four 0s, eight 1s. There is no information lost in describing the bits this way, yet this description can take up considerably less space. A variety of more sophisticated compression algorithms are available, many of which rely on specific properties of the information being compressed. Video compression, for example, often relies on the fact that typically very few things in a scene change from one frame to the next (i.e., in 1/30th of a second). This makes it possible to encode one frame by indicating only what changed compared to the previous frame. 1As accurate as this is, the human ear can still hear some of the distortion produced by approximating the wave with 44,100 samples per second. This has led to calls within the industry to move to 96,000 samples per second. This faster sampling, along with the desire for more channels (e.g., to support surround-sound), will mean future CDs may contain more data per second of music.

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Page 31 memory and then again onto the video display.8 Before you can view a page from the World Wide Web, the remote computer must first send your computer a copy of the page. That copy is kept on your hard disk, copied again into memory, and then displayed on the screen.9 In addition, intermediate copies of the page may have been made by other computers as the page is transported over the network from the remote computer to yours.10 Such copying occurs with all digital information. Use your computer to read a book, look at a picture, watch a movie, or listen to a song, and you inevitably make one or more copies. Contrast this with the use of traditional media: Reading a book does not involve making a copy of it, nor does watching a movie or listening to a song. This intimate connection between access and copying has considerable significance in the context of intellectual property protection. One of the essential elements of copyright—the right to control reproduction—works as expected in the world of traditional media, where there is an obvious distinction between access and reproduction and where the copyright owner's control of reproduction provides just that. But in the digital world, where no access is possible except by copying, complete control of copying would mean control of access as well. This intimate connection has consequences for all parties in the digital world. Rights holders may seek to control access to digital information, because access involves reproduction. Readers may find their traditional access to information susceptible to control in unprecedented ways. Policymakers, meanwhile, must consider how to maintain the appropriate balance between control and dissemination. Economics, Character, and Speed of Digital Reproduction Digital representation changes both the economics and the character of reproduction. Copying digital information, even on a home computer, is easy and inexpensive: A standard (1.44 megabyte) floppy disk, which holds the equivalent of about 500 pages of text, takes no more than a minute to duplicate and is treated as if it were a piece of paper (e.g., routinely given away). A CD, which holds 650 megabytes (the equivalent of about 220,000 pages, or 44 cartons), can be copied in 15 minutes to a blank compact disk that costs 8The information could be displayed directly from the disk to the screen, but disks are much too slow to make this practical. Main memory is thousands of times faster; hence, several pages of the information are copied there first. This copy is typically ephemeral, disappearing as soon as you view a different page. 9The copy on your disk may disappear from your disk when you exit your Web browser, but it can often easily be saved permanently. 10A primer on the operation of the Internet is given in Appendix C.

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Page 32 about $1.00, using equipment now widely available for PCs and costing only a few hundred dollars.11 Copying information has always been possible, but the advent of digital information brings an extraordinary increase in the amount of information that can be easily and inexpensively reproduced. Given the widespread availability of computers, many people now have the ability to casually reproduce vast amounts of information. Consequently, the traditional physical and economic impediments to copyright infringement have been considerably undermined. Its size once meant that a 30-volume encyclopedia could be reproduced only by those with considerable means and motive; now an encyclopedia on a CD can be reproduced in a few minutes on what is fast becoming ordinary technology. The character of reproduction has changed as well. Although a photocopy often isn't as sharp as the original,12 a digital copy is indistinguishable from the original as are all successive digital copies. For every form of digital information, every copy is as good as the original and can therefore be the source of additional perfect copies, which greatly reduces what was once a natural impediment to copyright infringement. With the traditional form of information, the successively lower quality of each generation of copy offered a natural limitation to redistribution. With digital information there is no such limitation. Content Liberated from Medium Information in digital form is largely liberated from the medium that carries it. When information is sent across networks, there is no need to ship a physical substrate; the information alone flows to the recipient. The liberation of content is also evident when bits are copied across media (disk to tape to CD to floppy) with the greatest of ease. The choice of media may have consequences for the amount of storage or speed of access, but the content of the information and its properties (e.g., the ability to make exact copies) are preserved perfectly across a variety of media. Information in traditional analog forms (movies, paintings, sculpture) is, by contrast, far more tightly bound to the underlying physical media. 11Text is a particularly compelling example because it puts, relatively speaking, little information on a page. Graphic images contain far more information: a single 5" x 7" color photograph may require 14 megabytes to store digitally (300 bits per inch resolution and 36 bits of color); hence a CD might hold about 46 such photographs. There are also a variety of ways to compress digital information so that it takes up even less space; sometimes this means being able to fit 30 times more information onto a disk than it could hold without compression. 12The difference between a copy and an original depends of course on the quality of the equipment being used. Audio or video tapes copied using standard (i.e., analog) technology, for example, are markedly inferior in quality to digital copies.

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Page 33 It is not easily transported without the underlying medium, nor is it so easily extracted for copying (consider copying a sculpture). The point, of course, is comparative: Bits still need to be stored someplace, and even a sculpture can be copied, but the difference is so large—several orders of magnitude and constantly increasing with advancing technology—that the experience from the individual's viewpoint is qualitatively different. The liberation of content from the medium has unsettling consequences for the protection of IP in digital form. Until very recently, intellectual works have been produced and distributed largely as analog works embedded in a physical artifact (e.g., printed books, movies on video tape). IP law and practice have been worked out in the context of such artifacts, and much of our comfort with IP law is based on the familiar properties of information closely bound to a physical substrate. Digital information changes those properties in substantial ways. New Kinds and Uses of Information Digital information is plastic, easily searched and indexed, and easily cross-indexed. It is plastic in the sense that it is easily changed. Although a paper book is difficult to alter and hard to search even with a good index, online text can be changed easily, for instance, by adding and rearranging paragraphs. Coupled with digital transmission, plasticity of information confers, along with great advantages, the potential for fraudulent acts such as plagiarism or forgery.13 In addition, although traditional documents are static—a printed book contains the same words from one moment to the next—digital documents can be dynamic, changing from moment to moment or offering different views. For example, articles posted on the Web often undergo revision in response to comments from readers. Short of making a (static) local copy, how does one cite such a thing, if it may say something different tomorrow? Even with a static local copy, who is to say what the document once said at a particular point in time, if there are at least two different versions? The plasticity of digital information could have a significant impact on the nature and value of citations and on scholarly research. The ease of searching and indexing digital information enormously facilitates the creation of derivative works of unusual forms.14 Consider 13The use of a digital signature (see Appendix E) may be of some assistance by providing a way to ''sign" a digital document. If the document is subsequently altered, there will be a detectable mismatch between the signature and the document. Large-scale use of digital signatures requires a substantial infrastructure that is only now emerging, with the growth of e-commerce. 14A "derivative work" is a work based on one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, (footnote continued on next page)

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Page 65 times the term "repurposing" is used to describe some of this activity. The work of the creator concerns selection, arrangement, and linkage as much as in the creation of wholly original content. The use of works still under copyright requires authorization from the rights holder, making a wide range of multimedia works economically impractical because of the costs of clearing rights. There are two components to this cost. The first is the overhead cost of determining whether the existing material is copyrighted and who holds the copyright and then negotiating with that entity. The second component is the actual payment that must be made to the rights holder once he or she has been identified and the license negotiated.36 Developments such as rights clearinghouses, stock photo archives, and the like may greatly reduce the overhead costs (the cost of the clearinghouse operations can result in lower royalty rates to the artist). Because a considerable amount of material remains protected by copyright, there is a significant amount of work that cannot readily be reused because the overhead costs of clearing rights so greatly exceeds the amount that would be paid for its use. The inclusion of copyright management information with digital objects may facilitate the tasks of rights clearance and payment. Distributors There are many kinds of distributors of intellectual property: • A wide variety of publishers, including mass media (newspapers, magazines, and so on), entertainment enterprises (film and television distributors, music publishers, and performance organizers), think tanks with their own employees and relationships with creators based elsewhere (e.g., the Brookings Institution, Cato Institute, and the National Bureau of Economic Research), scholarly journal publishers (commercial, nonprofit societies, universities, and so on), and the government (e.g., the U.S. Government Printing Office). Some publishers are content producers as well. • Aggregators that bring together access to the IP products of others for resale, for example, book and music stores, video rental stores, and catalog merchants of packaged software. • Services that organize information conveniently for the purpose of offering that package of information to a public audience, ranging from 36The first component is a measure of the inefficiency of the current system of managing IP rights; the second component represents a measure of the real value of the existing content. The unfortunate reality today is that the overhead costs alone in many cases are large enough to discourage projects from being undertaken.

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Page 66 such services as Lexis-Nexis, Yahoo, or MSNBC, to libraries (both hard copy or electronic) and link-filled Web sites. In addition to the general issues that creators of intellectual property are concerned with, content distributors are concerned about the following issues: • Economic viability. Most distributors are in business: They are concerned about developing a framework that permits them to be economically viable. Digital technology presents additional challenges to the business plans of distributors; if it promotes disintermediation, for example, it is reasonable to expect a change in the number, identity, and size of distributors. • Legal uncertainty. Many of the legal issues surrounding content in the information infrastructure are unclear, and they are being settled slowly and haphazardly through case law. The international nature of networked access generates additional concerns relating to jurisdiction and conflict of laws that raise questions about international legal consistency and international enforcement of intellectual property rights. This type of uncertainty is very dangerous and discouraging to distributors and is reflected in pricing that incorporates a "risk premium." In particular, distributors are concerned about the liability that they may incur in distributing intellectual property. The nature of rights associated with intellectual property influences liability. For example, have they been transferred appropriately to enable the intended distribution to proceed lawfully? Distributors are concerned about incurring additional obligations in return for their IP rights. These obligations include permanent access or archiving responsibility, requirements for use tracking, maintenance of the confidentiality of use, censorship, and so on. Finally, distributors may be concerned about liability associated with the content of intellectual property (e.g., the risk of libel or defamation charges). • The boundaries of fair use. Copyright distributors and certain categories of users differ over what kinds of use are fair uses of digital works, with distributors tending toward a more limited interpretation. • The boundaries of derivative works. Derivative works may have a substantial effect on the ability of distributors to distribute their content. As one example, "framing" takes a page from one Web site and surrounds it with other content in another Web site, often obliterating the identity of the original site and blocking out advertising that was placed on the original site. This seriously concerns publishers or distributors who mount the original site as well as to those who want the right to "frame." • Protection of trademarks and related brand and corporate identification.

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Page 67 Because content distributors are often the entities providing the ''branding" of the distributed content, they have special interest in protecting their brand. There are stakeholder issues because of the relatively limited availability of Internet domain names as compared to the number of trademarks, as well as the question of whether holders of trademarks have the right to insist on using certain domain names by virtue of the ownership of their trademark. • Efficient management of the rights process. Content distributors frequently bring together the rights of many parties. Although permissions and licenses may be governed by standard processes designed to cover large numbers of content creators under a variety of circumstances (e.g., publishers' policies, standard contract terms and conditions), efficient processing of payments is the distributors' responsibility. Publishers have been moving to secure more control over the works they publish, given the severe uncertainty about the impact of digital media on revenue, including the effective value of existing content to which they hold rights, potential losses from experiments with new media, consolidation in media industries, and so on. It is generally understood that few publishers can accept agreements covering only print distribution, because digital distribution is increasingly a standard and essential part of their business. However, to the degree that digital rights are sought solely to protect a future option (not a present product), pricing is difficult. It is difficult for both parties to place a value on future rights or future exploitation, as relatively few works will achieve classic or best-seller status, and discounting of future value is as appropriate for information as for other investments. Many media distributors have argued that the global exploitation of content and the swiftness with which such exploitation must take place in the marketplace requires that companies obtain broad assignment of rights from authors. They argue that it is simply too costly to find an author in order to obtain subsequent rights. One solution to this concern is the use of rights clearinghouses and the ability of digital networks to facilitate rights management and clearances. This would require the creation of digital-age versions of the American Society for Composers, Authors and Publishers (ASCAP) or Broadcast Music, Inc. (BMI)—clearinghouse-type structures for handling author payments and licenses.37 The concept is quite simple. An author would assign his or her rights to the licensing entity (or designate the licensing entity as an agent), which 37Information about ASCAP is available at <http://www.ascap.com>; information about BMI is at <http://www.bmi.com>.

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Page 68 could then grant, in turn, the right to any user—individual or corporate—to use a piece of content for an agreed-upon price, based on the duration and type of use. Technology allows speedy presentation of rights options and price: A page at the clearinghouse's Web site would indicate what an article would cost to purchase for a particular use and allow the user to click on an icon to complete the purchase and receive the content. The system might also allow the user to contact the owner of a work to conduct a direct negotiation. Two relatively new author-operated models exist in the United States: the Publication Rights Clearinghouse (PRC), a project of the National Writers Union; and the Media Photographers Copyright Agency (MPCA), a project of the American Society of Media Photographers.38 Author-operated models have also been established abroad, including The Electronic Rights Licensing Agency in Canada and the Authors Licensing and Collecting Society in the United Kingdom. Schools and Libraries Historically, schools and libraries have played two special roles with regard to public access to intellectual property. They serve as custodians for the cultural record, and they make intensive and integral use of a wide range of intellectual property in the course of teaching and supporting scholarship. Libraries and schools also share a common tradition of concern for free expression, free inquiry, academic freedom, and unfettered discourse, including freedom of research, commentary, and criticism, all based on a foundation of accurate and authentic information. Schools and libraries are at the center of tensions among competing policy goals relating to intellectual property rights, privacy, and free speech—all of which affect who has access to information and under what conditions. Schools and libraries are also vulnerable to changes in long-standing practices and expectations resulting from broad shifts in the production, distribution, access, and use of information occasioned by networking. Schools care about the following issues: • Fair use. Educators need to know in direct and simple language under what terms or conditions portions of copyrighted works can be used in classroom presentations, course packs, and electronic reserves. Does fair use differ if the source is digital rather than hard copy or if the 38See <http://www.nwu.org/prc/prchome.htm> for the PRC, and <http://www.mpca.com> for the MPCA.

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Page 69 distribution is digital? For example, should copying a paper for distribution to students be viewed differently from posting an electronic copy of the paper on a Web site? Do school licenses constrain student and/or faculty fair use in specific ways? What are the limits of fair use in a context in which course-related information can be distributed to networked students anywhere in the world? Fair use relates both to how educators obtain and share information and how they convey the process and the ethics of using intellectual property—the nature of "fairness." • Rights management procedures. Educators would like to adapt what they teach to changing circumstances and discovery of relevant materials. It would help them if requirements for clearance of rights were not time and process intensive. • Educational use of research results. Educators who have produced work protected by copyright (and, in particular, works for which they have transferred copyright to others) want the ability to use those works in their classrooms. Conditions limiting such use have been imposed by some conventional journal publishers. The strict copyright transfer policies of some academic publishers, with few rights retained by authors, have caused a backlash: Scientists in some disciplines have begun to develop their own refereed online publications or to support systems to deposit papers on public servers. Libraries care about the following issues:39 • Archiving and preservation of the public record and cultural heritage. Libraries have an interest in long-term access to information; part of their mission is to act as agents on behalf of future generations of students and researchers. How is digital archiving to be organized and what rights does the library and archival community have pertaining to the archiving of copyrighted works?40 • Fair use. What is fair use in the sharing of digital resources with other libraries or individuals? What does a "loan" mean in the digital environment—is that concept still appropriate? Who is a member of a library's authorized community in a networked environment? What is fair use in gaining access to protected digital materials?41 • Liability. Will librarians have liability in cases of patron abuse of copyrighted information, carried out on the library's network? 39For an additional discussion, see Henderson (1998), available online at <http://www.ala.org/washoff/copyhb.html>. See also Office of Technology Assessment (1993). 40See Chapter 3 for a discussion. 41See Chapter 4 for a discussion.

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Page 70 The Research Community The research community, associated largely with higher education, has a number of specific concerns that are closely related to those of libraries and schools:42 • Access to information. A very large body of information vital to continued progress in research and development is available in the open research literature. Proposed changes to intellectual property (particularly copyright) law that may strengthen rights holders' control over IP should be evaluated with respect to possible implications for the research community and the nation's research capability. Researchers also value access to information and databases for its educational value and its potential for reuse and development. • Impact of technology on current models for dissemination of research results. Researchers are prolific producers of IP, which typically is published, sold, and distributed primarily by commercial publishers and professional societies, the business models of which depend heavily on existing copyright law. Technological changes challenge the viability of today's publication system through electronic publishing of journals, pre-published material ("preprints"), and direct posting of articles. • Web-specific issues. World Wide Web publishing raises questions about who has rights to create links to which Web pages and who owns the links themselves. A number of researchers have produced Web bibliographies—featuring either links to specific works or to sites containing works and other links. (Some collections of links are large, highly structured, and potentially commercially valuable.) Determining who has the rights to such links could have significant effects on all research communities by the effects on fundamental scholarly practices such as quotation and citation. The technology, for example, supports the production of Web articles that link directly to cited material, but the law may or may not support such links. Universities are increasingly claiming IP rights over the course materials that faculty post on a university Web server. As distance education grows in importance (including its financial contribution), arguments over who owns digital course material can be expected to increase. Changes in electronic distribution and in the way academic research is distributed (e.g., posting preprints and finished papers on personal Web sites) mean that an increasing number of publishers now permit authors to retain more rights, including in some cases the right to 42See AAU (1994) (available online at <http://www.arl.org/aau/IPTOC.html> for a discussion of the IP concerns of universities. See Appendix G for a discussion of the specific concerns of cryptography and security researchers.

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Page 71 post their paper on their own Web server for free public access, even though this is in direct competition with the published version. The General Public Until fairly recently, the general public remained largely untouched by copyright law and the policy debates that shaped it. Copyright issues have instead been resolved primarily by negotiation among representatives of the entities most directly involved—publishers, libraries, educational institutions, entertainment industry, communications, music companies, and the software industries. The recent policy debates have seen a continuation of that historical pattern: Those parties are invested in, familiar with, and equipped to address the issues. By contrast, most citizens have not seen themselves individually as IP producers or rights holders, a characterization that is changing as the Web enables many people to see themselves as suppliers of information (whether or not they regard it as "property" or appreciate the legal rights). To the extent that the interests of the general public have been represented, the burden of advocacy has often fallen on libraries and universities. Individual citizens, in their role as information consumers, have the following concerns: • Availability. Individuals want the broadest range of intellectual property to be available with the least impediment to access. Broadness of range includes concern about diversity of views; public concern about the potential for limiting diversity through control of information sources has in the past motivated public policy relating to broadcasting content, and new digital media raise new questions about risks of and antidotes to such control. Impediments to access can include price, procedural difficulty, licensing terms constraining how material can be used, and continuity over time. Historically, public libraries and broadcast media have provided a lot of information without fees; digital media are associated with both fee and no-fee content. • Quality. Individuals often relate the value and usefulness of intellectual property to its "quality." Quality ranges from the fidelity of a copy relative to an original, to such attributes as accuracy or completeness. Authenticity can be associated with quality: Assurances about the source of content can contribute to authenticity. • Privacy. Individuals have legitimate concerns, especially in the context of access to networked information, over the privacy of their use of intellectual property. Because accessing networked information involves an interaction between the consumer and a server run by a distributor, there is the potential that consumers may be revealing informa-

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Page 72 tion about themselves or what they are reading. Media attention to Amazon.com's publication of the books bought most by employees of different organizations illustrates some of the potential,43 and the flaunting of former U.S. Supreme Court nominee Robert Bork's video rental records led to legislation protecting the privacy of such records.44 • Simplicity and clarity of the legal regime. The actions of individuals are governed by a set of IP laws that they may not understand well and that, even when understood, they may not easily be able to conform to. In certain cases, there is a mismatch between the law and common sense models of information and ownership. The personal use/fair use distinction has been especially problematic in this regard (Chapter 4). Also, individuals should be able to determine whether they incur liability in using intellectual property, yet this is often not easy.45 Discussion of the general public or citizens at large raises questions about the concept of public interest as opposed to private interest, which may be organizational or personal. Public interest is an elusive and abused concept; it is enhanced by private and public action, and it is abstract and therefore harder to measure than the costs and benefits of changes in the treatment of IP on private parties. In a 1998 editorial, the New York Times stated, "What vexes any discussion of copyright is the idea of benefit. It is easy to see what the Disney Corporation will lose when Mickey Mouse goes out of copyright. It is harder to specify what the public will lose if Mickey Mouse does not go out of copyright. The tendency, when thinking about copyright, is to vest the notion of creativity in the owners of copyright" (New York Times, 1998). The circumstances that gave rise to this situation have changed, however, and the rate of change is increasing. Beginning with the development of inexpensive document copying in the 1950s and 1960s, copyright law emerged as a matter of direct concern to individual citizens. The development of successful tape recording formats in the 1960s and 1970s made the copying and transcription of music and other sound program- 43See Streitfeld (1999). 44The Video and Library Privacy Protection Act of 1988 was enacted on November 5 (P.L. 100–618). For additional information, see Hinds (1988). 45IP, as it affects the average citizen, is moving beyond copyright: Web sites raise trademark issues; content placed on Web sites may involve state law about rights of likeness and publicity; and perhaps most alarming, software authors can unwittingly infringe patents on a regular basis as they learn to program. If copyright is arcane, these other issues are even more obscure to the average citizen, and he or she will surely be incredulous as the lawyers descend with cease and desist orders. Unfortunately, the popular press has not yet recognized these issues in a serious way and drawn public attention to them.

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Page 73 ming accessible to consumers. The emergence of videotape recording in the late 1970s and 1980s raised the stakes for individuals still higher. The widespread diffusion of personal computers in the 1980s and 1990s has made the copying of software and other forms of digital material easy even for unsophisticated consumers. Other Consumers and Producers of Intellectual Property Governmental Organizations Government at all levels—federal, regional, state, and local—is a producer, distributor, and consumer of intellectual property. The federal government differs from other producers in its goals, being concerned with universal accessibility of most of its information and being unable to hold copyright in the works that it creates. Government has not traditionally sought to maximize revenue from its IP assets, but that is changing somewhat with the privatization of certain functions, budget pressures that motivate user-fee charges for certain services, and recognition that information has value for which at least some are willing to pay.46 Government agencies are concerned about the following issues: • Information integrity. Documents published by the government in many instances have an important, authoritative status, ranging from their immediate impact (e.g., interest rate changes, major reports) to their archival role (e.g., legislative histories). These documents must be available in verifiably unmodified form. • Universality of access. Government addresses all citizens by definition. Networked information is, in principle, vastly more accessible than print information distributed through physical distribution systems such as the depository library program. In addition, the flexibility of electronic information allows it to be much more accessible to citizens with disabilities, for example. It does require access to appropriate equipment and network services, which imply different costs than those of traveling to a library or government office, and raises questions about differentials in citizens' ability to access government information. (See Box 1.10.) • Rights of access. Repackaging, adding value, and sale of some government information by commercial vendors raises questions about loss of information from the public domain. 46See Chapter 3 for additional discussion.

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Page 74 BOX 1.10 Digital Intellectual Property and the Digital Divide According to a report from the National Telecommunications and Information Administration (NTIA), Falling Through the Net: Defining the Digital Divide (NTIA, 1999), more Americans than ever have access to telephones, computers, and the internet. However, NTIA also found that two distinct groups of "haves" and "havenots," remain and that, in many cases, this digital divide has widened in the past year. For example: • Households with income of $75,000 and higher are more than 20 times more likely to have access to the internet than those at the lowest income levels, and more than nine times as likely to have a computer at home. • Black and Hispanic households are approximately one-third as likely to have home internet access as households of Asian/Pacific Islander descent, and roughly two-fifties as white households. • Americans in rural areas are lagging behind in internet access. At the lowest income levels, those in urban area more than twice as likely to have internet access than those earning the same income in rural areas. The proliferation of digital intellectual property has important implications for the digital divide. In some respects, the digital revolution holds the promise of new and innovative ways to improve information access for both haves and have-nots. The Web provides easy access to an enormous and rapidly growing amount of information—much of it free. It is "essay access" for those with convenient access to computers and internet connections, with the requisite proficiency in the technology to find and organise the desired information, and the capability to adapt readily to the likely changes in IP mechanisms—licensing, fair use practices, and so on. For those who lack such technology access, proficiency, and ability to adapt readily, the digital divide may become a digital chasm. Government is also concerned about the role of IP and IP industries in the local, state, regional, and U.S. economies; in international trade; and in reducing piracy, both domestically and abroad. Private Sector Organizations Private sector organizations—comprising for-profit companies and not-for-profit organizations—use prodigious quantities of intellectual property in the course of their operations and, consequently, share with other consumers of IP many similar concerns already discussed, such as fair use and information integrity. In addition, private sector organizations, as visible targets for those who conduct IP enforcement programs,

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Page 75 are concerned about complying with IP laws in a simple way that can be readily documented (e.g., the purchase and use of site licenses for digital IP). Journalists The press has a special role in our society implied by the First Amendment to the Constitution. Journalists have some specific concerns with intellectual property and suffer intensely from the "multiple roles" problem described above. As authors, they are very concerned about control over their work; in particular, the efforts of newspapers and magazines to exercise broad, long-term control over that work—as a condition of publication—and with the incorporation of their own writings into the cultural record. As researchers, they share with educators, libraries, and the research community concerns about the availability of the public record, government information, and factual information; accountability as it is operationalized by the archiving of the cultural record; freedom of speech (including the ability to use copyrighted materials freely for criticism and for news reporting); and fair use. Standards Organizations Standards organizations play an important role in the continuing evolution and health of the information infrastructure. They make extensive use of copyright to ensure control over their works, the integrity of these works, and the continuity of access to these works. In this regard, they are much like other producers and distributors of intellectual property. Standards organizations also have some specific concerns related to patents and their interaction with the standards development process; the incorporation of a patented technology into a standard may give an unfair advantage to the patent holder or raise the difficult issue of licensing terms. Standards organizations must also operate under certain expectations of openness of participation and information flow associated with antitrust law.