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Appendix A A Copyright Primer For those readers less familiar with the development of copyright, this appendix describes how the basic logic of copyright is reflected in the structure and evolution of the law. We focus on U.S. law, with some attention to how it fits into the international copyright system. ORIGINS The precursors of modern copyright protection trace back to the inven- tion and diffusion of the printing press in the second half of the fifteenth century, which dramatically expanded the size and competitiveness of the potential market for copies of books. In the fifteenth and sixteenth centu- ries, European governments obliged the emerging printing industry by granting individual printers exclusive privileges to print specified books or classes of books. It was not until the passage of the Statute of Anne in 1710, however, that the English Parliament enacted the basic features of modern copyright protection: exclusive but transferable rights for authors of printed works to print, reprint, and sell those works for specified times, all for the purpose of “the encouragement of learning.” Most U.S. states, shortly after gaining their independence, enacted copyright laws modeled on the Statute of Anne, but with significant varia- tion. Problems with applying these different laws across state borders led to a consensus that a national law was necessary. Among the first enactments of the first United States Congress was the Copyright Act of 1790. Authorized by the constitutional directive “to Promote the Progress 65

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66 APPENDIX A of Science and the Useful Arts” and modeled on the Statute of Anne, the Copyright Act granted authors or their transferees protection though rem- edies of forfeiture and monetary penalties against infringing “print[ing], reprint[ing], publish[ing], and vend[ing]” of books, maps, and charts for 14 years and allowed renewal for a second 14-year term. Like other legislation of this era, Congress left many of the details to be fleshed out by the courts. As a result, many essential elements of copy- right protection, such as infringement standards and defenses, developed through judicial decisions. Some of these doctrines were later codified, but many continue to exist solely in case law. Private copyright-related insti- tutions and transactional practices and technology for creating, copying, and distributing works are also important contributions to the evolution of the copyright policy environment as we describe below. EVOLUTION Advances in the technologies for creating and distributing works of authorship have played a critical role in shaping copyright law starting in the nineteenth century and continuing to today. As technology for mak- ing and reproducing works of authorship has expanded and the arts have flourished, Congress has repeatedly amended the Copyright Act to extend to new media and means of exploitation. The domain of copyrighted works expanded over the course of the nineteenth century due to technological advances, changes in the creative market, and resulting changes in the scope of protectable subject matter. The publishing industry experienced explosive growth, with innovations in technologies for embodying artistic expression, such as the invention of photography. Whole new categories of works were created with Congress and the courts expanded protection to cover them. As the Supreme Court would later observe, “[a]s our technology has expanded the means avail- able for creative activity and has provided economical means for repro- ducing manifestations of such activity, new areas of federal protection have been initiated” Goldstein v. California, 412 U.S. 546, 562 n.17 (1973). Over the course of the nineteenth century, the nature of the exclusive rights granted by U.S. copyright law changed from the initial relatively narrow rights to print, reprint, publish, and vend. Some of this change occurred in the courts whose decisions were later codified in subsequent statutory amendments. In 1856, copyright holders’ exclusive rights were expanded by statute to cover the right to publicly perform dramatic works. In 1870, translation and dramatic adaptation were added to the Copyright Act. In 1897, a public performance right was added for dra- matic musical compositions. The process of judicial development and legislative codification also included limitations to the scope of copyright.

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APPENDIX A 67 The fair use doctrine, for example, now set forth in Section 107 of the Copyright Act, traces back to Justice Joseph Story’s seminal 1841 decision in Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass. 1841). 1909 Act Congress comprehensively overhauled the Copyright Act in 1909. Building on the more modest amendments of the prior half century, the 1909 Act broadened the scope of copyright protection. It defined copy- rightable subject matter to encompass “all the writings of an author.” It added to the copyright holder’s exclusive rights the right to “make any other version[s]” of literary works. The 1909 Act doubled the duration of copyright protection and codified two important doctrines that had been recognized in the copyright case law. The 1909 Act’s “work-for-hire” provision specified that “the word ‘author’ shall include an employer in the case of works made for hire.” The 1909 Act also codified the “first sale doctrine,” providing that the owner of an authorized copy of a copy- righted work may distribute and display that copy publicly notwithstand- ing the copyright owner’s exclusive rights. The increasing scope and complexity of copyright law in the early twentieth century interacted with efforts by private parties, some of them government encouraged, to manage those rights through contractual and institutional mechanisms. The foremost example of innovative private ordering was the formation in 1914 of ASCAP for the purpose of enforcing the public performance rights that had been created in 1897. After initiat- ing a series of lawsuits to confirm their right to object to the performance of their compositions in restaurants and similar venues, ASCAP estab- lished a blanket license that alleviated the transaction costs that might otherwise have made it difficult for those venues and later radio stations to license the rights to perform a wide variety of musical compositions owned by publishers and individual composers. 1976 Act and Related Reforms Through the middle of the 20th century, advances in technology for creating and distributing works of authorship—most notably, sound recording and broadcasting—as well as anachronisms of the 1909 Act periodically aroused interest in reforming the copyright law. In 1955, Con- gress funded the Copyright Office to undertake a series of studies aimed at assessing the copyright system and set in motion an effort aimed at comprehensive reform of the statute through negotiation among govern- ment officials, the principal interest groups affected by copyright policy, and scholars. The reform efforts stalled in the mid- to late 1960s. Although

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68 APPENDIX A a more comprehensive reform was delayed, Congress did proceed with a narrower change to the law. It provided copyright protection for sound recordings in 1971. Finally, after two decades of study, negotiation, and debate, Congress approved the 1976 Act, which continues to serve as the principal framework for copyright protection in the United States. The 1976 Act expanded the scope of copyrightable subject matter to any original work of authorship fixed in a tangible medium of expres- sion, thus spanning the broad range of literary and artistic expression including literature, music, dance, sculpture, graphics, painting, photog- raphy, sound, movies, and computer programming. The Act established a new trigger for protection of these works, replacing publication with mere “fixation” of an original work in a “tangible medium of expres- sion” and relaxing formal registration requirements. The Act thus made copyright protection easier to acquire. It also extended copyright dura- tion. The 1976 Act replaced the dual term of protection with a unitary term that lasted in most cases for the life of the author plus 50 years, 75 years in the case of anonymous works, pseudonymous works, and works made for hire. The comprehensive reworking of the copyright law also introduced new language defining copyright protections: Reproduction. The owner has the exclusive right to make copies of the protected work. Courts have interpreted this to mean that the owner may sue a copier for infringement if the copying is “substantial,” even if the copy is in a different form or is only part of the whole. Derivative Works. The owner has the exclusive right to prepare derivative works, which are works based on the original but in different forms or otherwise altered (e.g., translations, movies based on books, etc.). These derivative works are themselves copyrightable to the extent that they contain original expression. Note that the right to create derivative works is closely related to the right to reproduce and employs essentially the same standard for infringement. Distribution. The owner has the right to control the sale and distribution to the public of the original and all copies or derivative works. However, this right extends only to the first sale of such works. The owner does not have the right to bar resale or lending by purchasers of her works except in certain limited circumstances, such as rental of sound recordings. Performance and Display. The owner has the right to control public but not private performance and display of her works, including both liter- ary and performance-oriented works. This right extends to computer programs and other audiovisual works. The owner generally does not, however, have the right to prevent the display of a particular original or copy of a work of art in a public place.

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APPENDIX A 69 The 1976 Act codified and expanded limits on the rights of copy- right holders. It clarified that protection does not extend to any “idea, procedure, process, system, method of operation, concept, principle, or discovery” embodied in protected works, but only to their expression (17 U.S.C. §102(b)). It preempted most state and common law protec- tions that overlap with federal copyright protection, established several new compulsory licensing regimes, approved numerous exemptions from liability for specified users and uses, and codified the fair use doctrine that had developed in the courts. Congress explicated the doctrine’s general contours—to create leeway for criticism, comment, news reporting, teach- ing, scholarship, and research—and set forth a multi-factor test to deter- mine whether use of copyrighted material should be permitted without the owner’s authorization. The 1976 Act also included several provisions regarding the transfer- ability of copyrights, more fully acknowledging the variety of mecha- nisms by which authors may transfer or simply share their rights in whole or in part. A new provision ended a doctrine known as “indivisibility” and enabled authors to execute outright transfers via a signed written instrument of one, some, or all of their exclusive rights, which can then be transferred again by subsequent owners. Authors and subsequent owners may also grant nonexclusive licenses that merely authorize uses that copyright law otherwise secures to them, without transferring their copyrights. The Act also granted authors an inalienable right to reclaim copyrights 35 years after transfer. Berne Convention Accession As the global content market expanded in the 1980s, the United States became the last major industrialized country to join the Berne Convention for the Protection of Literary and Artistic Works. U.S. accession heralded important changes in the fabric of the U.S. copyright system by making compliance with formalities (registration of works with the government) 1 discretionary, introducing a narrow concept of the continental doctrine of “moral rights,” and restoring copyright for qualifying foreign works that had lost protection in the United States for failure to comply with formali- ties. In 1994, with the conclusion of the Uruguay Round of multilateral trade negotiations, the United States implemented the Agreement on 1Under the Copyright Act of 1909, which governs works published with proper notice prior to 1978, copyright registration was not required during the first term (28 years) of protection. Registration was required to obtain a renewal term during the 27th year of copyright susbsitence. That renewal registration requirement was abolished in 1992. Formal registration has never been required for works created after 1978, although the Copyright Act encourages registration through enhancement of remedies and procedural advantages.

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70 APPENDIX A Trade Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS Agreement led to some substantive changes to U.S. copyright law—such as restoration of U.S. copyright protection for foreign works that had been injected into the public domain as a result of failure to comply with formalities—and subjects the United States, like other members of the WTO to mandatory dispute settlement for domestic copyright provisions, including judicial decisions, that may be deemed inconsistent with treaty obligations. THE DIGITAL AGE By the early 1990s, advances in digital technology were beginning to be felt in the major content markets. The traditional content indus- tries believed that widespread availability of technology for making and distributing low-cost, perfect copies of digital media could undermine their ability to enforce their rights. In response, Congress passed several detailed amendments to the Copyright Act aimed at reforming copyright law for the digital age. The Audio Home Recording Act of 1992 regu- lated the design of now largely obsolete digital audio tape technology and imposed a levy on the sale of devices and blank media to compen- sate copyright owners for losses from home copying. The Digital Perfor- mance Right in Sound Recordings Act of 1995 afforded owners of sound recordings a basis for earning income on digital streams of their works. The No Electronic Theft (NET) Act of 1996 expanded criminal enforce- ment for piracy over digital networks. The Digital Millennium Copyright Act (DMCA) of 1998, implementing two international treaties, afforded copyright owners rights against those who circumvent copy protection technologies subject to several exceptions and limitations, and insulated online service providers from liability for infringing acts of their subscrib- ers. In 1998, Congress also added an additional 20 years to the duration of copyright protection. The Digital Theft Deterrence and Copyright Dam- ages Improvement Act of 1999 significantly increased statutory damages for the infringement of copyright. COMPARING THE COPYRIGHT AND PATENT REGIMES Although the copyright and patent laws flow from the same consti- tutional text and share the same general approach—statutorily created exclusive rights—they reflect very different fields of endeavor. Copyrights are generally easier to secure and last substantially longer than patents, although the scope of protection afforded copyrights is far narrower than that given to patents. In contrast to patents, the exclusive rights under copyright law are

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APPENDIX A 71 subject to far more exemptions as well as statutory licenses. Copyright law protects only against copying and distribution of protected expres- sion, some public performances or displays of copyrighted works, and the unauthorized creation of derivative works. Thus, independent creation of a copyrighted work does not violate the Copyright Act, nor does copying the unprotected elements of a work, such as facts, ideas, or material that is unoriginal or in the public domain. Although the United States Copy- right Office registers works, it does not, unlike the Patent Office, conduct a search of the prior art or make any assessment of validity other than to ensure a modicum of creativity. The Copyright Office functions largely as a recording office. Registration today merely records a presumptively valid copyright. Patent law offers the possibility of a limited period of exclusive rights to encourage research and development aimed at discovering new pro- cesses, machines, and compositions of matter, and improvements thereof. Obtaining a patent involves a detailed government examination to assess protectability. To obtain a utility patent, an inventor must submit an appli- cation to the Patent and Trademark Office (PTO) meeting five require- ments: patentable subject matter, usefulness, novelty, nonobviousness, and adequate disclosure. Although the utility threshold is low, the novelty and nonobviousness standards are more substantial, and the PTO con- ducts an independent review of the application to ensure that it meets these requirements. If the PTO grants a patent, the inventor obtains rights that can be substantially broader than those encompassed by a copyright—a fun- damental difference between the two systems. Whereas patents protect the claimed invention whether or not the accused device, manufacture, composition of matter, or process was copied by the defendant, copyright law only protects against copying. Therefore, truly independent creation of the copyrighted work does not violate copyright law. Furthermore, oth- ers are free to use the unprotected elements of a copyrighted work. They may also make “fair use” of a copyrighted work. In contrast, a patent grants its holder the exclusive rights to make, use, and sell the innovation, regardless of how another comes by the knowledge. The patent grant is nearly absolute within the boundaries of the patent’s claims, barring even those who independently develop the invention from practicing its art.2 Infringement will be found where the 2The America Invents Act, passed in 2011, establishes prior user rights. See 35 U.S.C. § 273. In addition, in the aftermath of the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), injunctive relief is not longer routinely awarded in patent cases. Courts now apply an equitable balancing test that can result in a court-determined perma- nent damage award.

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72 APPENDIX A accused device, composition, or process embodies all of the elements of a valid patent claim or accomplishes substantially the same function in substantially the same way to achieve the same result. A patent’s breadth is counterbalanced by a term that is short relative to the duration of copy- right protection. A patent lasts for 20 years from the application filing date—roughly one-fifth the length of copyright protection. Despite these differences in scope, the rights granted by copyright and patent law are similar in an important respect—they do not vary much across the wide range of respective forms of subject matter. Under copyright law, a motion picture costing tens of millions of dollars to pro- duce is treated in the same manner as a relatively modest graphic image on a shampoo bottle. The same is largely true for patent protection, which affords pharmaceutical discoveries that could cost hundreds of millions of dollars to develop comparable protection to relatively modest advances in computer software, although the patent system has subtly differenti- ated patent protection across technological fields. Copyright law affords somewhat greater categorical variation, as reflected in the distinctive rules applicable to music compositions, which are subject to compulsory licens- ing, and sound recordings, which only enjoy a limited public performance right for broadcast transmissions. In general, however, both copyright and patent can be characterized as granting exclusive rights across broad fields of innovative and creative endeavors, although subject to statutory and jurisprudential variation in scope, rights, exceptions and defenses.