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6 —
Conclusions and Recommendations

Three technological trends—the ubiquity of information in digital form, the widespread use of computer networks, and the rapid proliferation of the World Wide Web—have profound implications for the way intellectual property (IP) is created, distributed, and accessed by virtually every sector of society. The stakes are high in terms of both ideology and economics. Not surprisingly, much discussion of these issues has occurred in the Congress, among stakeholder groups, and in the press. But the effects of the information infrastructure extend beyond these institutions; as never before there are also important and direct effects on individuals in their daily life.

The information infrastructure offers both promise and peril: promise in the form of extraordinary ease of access to a vast array of information, and peril from opportunities both for information to be reproduced inappropriately and for information access to be controlled in new and problematic ways. Providing an appropriate level of access to digital IP is central to realizing the promise of the information infrastructure. Ensuring that this appropriate level of access becomes a reality raises a number of difficult issues that in the aggregate constitute the digital dilemma. This report articulates these difficult issues, provides a framework for thinking about them, and offers ways of moving toward resolving the dilemma.

One salient theme in the committee's conclusions and recommendations is an acknowledgment of the multiplicity of stakeholders and forces that must be considered. Intellectual property has a pervasive impact in



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Page 199 6 — Conclusions and Recommendations Three technological trends—the ubiquity of information in digital form, the widespread use of computer networks, and the rapid proliferation of the World Wide Web—have profound implications for the way intellectual property (IP) is created, distributed, and accessed by virtually every sector of society. The stakes are high in terms of both ideology and economics. Not surprisingly, much discussion of these issues has occurred in the Congress, among stakeholder groups, and in the press. But the effects of the information infrastructure extend beyond these institutions; as never before there are also important and direct effects on individuals in their daily life. The information infrastructure offers both promise and peril: promise in the form of extraordinary ease of access to a vast array of information, and peril from opportunities both for information to be reproduced inappropriately and for information access to be controlled in new and problematic ways. Providing an appropriate level of access to digital IP is central to realizing the promise of the information infrastructure. Ensuring that this appropriate level of access becomes a reality raises a number of difficult issues that in the aggregate constitute the digital dilemma. This report articulates these difficult issues, provides a framework for thinking about them, and offers ways of moving toward resolving the dilemma. One salient theme in the committee's conclusions and recommendations is an acknowledgment of the multiplicity of stakeholders and forces that must be considered. Intellectual property has a pervasive impact in

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Page 200 society, resulting in a corresponding diversity of interests, motivations, and values. Some stakeholders see the issues in economic terms; some in philosophical terms; others in technological terms; and still others in legal, ethical, or social policy terms. There are also a variety of important forces at work—regulations, markets, social norms, and technology—all of which must be considered and all of which may also be used in dealing with the issues. Knowing about the full range of forces may open up additional routes for dealing with issues; not every problem need be legislated (or priced) into submission. Individuals exploring these issues are well advised to be cognizant of all the forces at work, to avoid being blind-sided by any of them; to avail themselves of the opportunity to use any of the forces when appropriate; to be aware of the process by which each of them comes about; and to consider the degree of public scrutiny of the values embedded in each. The committee believes that the issue of intellectual property in the information infrastructure cannot be viewed as solely a legal issue (as it was, for example, in the white paper Intellectual Property and the National Information Infrastructure, IITF, 1995)1 or through any other single lens. Such an approach will necessarily yield incomplete, and often incorrect, answers. One of the committee's key contributions is to urge an appropriately broad framework for use by policy makers, one that acknowledges the full spectrum of stakeholders and forces. The first two sections of this chapter focus on the implications for society and individuals that arise from the everyday use of the information infrastructure, with an emphasis on intellectual property that has been published in the traditional sense.2 The next two sections address research and data collection that are needed and near-term actions that can be initiated to help in getting beyond the digital dilemma. The last section offers guidance on and principles for the formulation of law and public policy. A significant portion of the committee's deliberations can be characterized as spirited and energetic discussions expressing a range of perspectives on controversial issues. For some of those issues, a summary of alternative perspectives is provided, with the intent of exposing the core issues to aid future discussion. That this committee, a diverse and balanced group of experts, had difficulty in achieving consensus in many areas, despite extensive briefings, background reading, and deliberations, 1When the IITF's white paper was written, the Web was only beginning to be widely used by the general public; hence some aspects of the digital dilemma touched on here (e.g., business models) had yet to develop. 2The committee was unable to address some important subjects (e.g., the cable television industry) thoroughly because of the limited time and resources available.

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Page 201 should serve as a caution to policy makers to contemplate changes to law or policy with the utmost care. The Digital Dilemma: Implications for Public Access Public access to published works is an important goal of copyright law. The traditional model of publication—the distribution of physical copies of a work—has been effective as the fundamental enabler of public access.3 Enough copies of a work are usually purchased (e.g., through libraries and other institutions and by private individuals) that it becomes part of the social, cultural, and intellectual record and is thus accessible to sufficiently motivated members of the public. There is also a long-standing (if not always explicitly articulated) understanding that this social and cultural record will continue to accumulate, be preserved, and be available for consultation. At least since the modern era of public libraries, broad access to a college education, and mass media, such information has become increasingly available. Yet there are aspects of the information infrastructure that, although vastly increasing access in some ways, also have the potential to diminish that access, which is a valuable component of our social structure. The Value of Public Access Public access, and the social benefits that arise from it, may be an undervalued aspect of our current social processes and mechanisms. As one example, while the first-sale rule enables access that may result in loss of revenue for publishers (because some people or organizations who are able to borrow a book would have purchased it instead),4 the larger social benefits—an informed citizenry and the democratization of information and knowledge—can be substantial.5 Those benefits also have a significant and longer-term impact in encouraging the creation of new knowl- 3The traditional model of publication has been more applicable to some forms of information (e.g., books and magazines) than others (e.g., first-run movies and television broadcasts). 4The first-sale rule stipulates that the initial sale of a copy of a work exhausts the copyright owner's right to control further distribution of that copy. An individual, library, or other entity is free to give away, lend, rent, or sell its copies of books and many other materials (17 U.S.C. sec. 109). 5Some materials (e.g., academic journals) are rarely bought by individuals and hence would not represent any substantial lost revenue. There may also be some countervailing effect, because some people who get access to a book through borrowing are motivated to buy it; lending is in effect a form of advertising. The point here is that even if there is some degree of loss, the benefits must also be considered.

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Page 202 edge and new works. Being well informed and educated has value that increases with the population of others similarly informed and educated, and ultimately contributes to a larger potential market for authors and publishers. Hence, the public access to material that is made possible in the hard-copy world by the first-sale rule can be worth more to society than the modest revenue lost to publishers. Beyond the economic issues, an informed citizenry and informed discourse are vital to the health of a free and democratic society. Public access may suffer, however, as the evolution of the information infrastructure compels a reexamination of the first-sale rule and other mechanisms for achieving access. As one example of the difficulties digital information brings, a single online copy of a work available from a digital library could diminish the market for the work much more than the distribution of hard copies to traditional libraries. One reasonable response of publishers might be to avoid making some works available to libraries in digital form, resulting in a net decrease in the accessibility of information. Other challenges to ensuring access arise from the changing nature of publication, the growing use of licenses rather than sale of works, and the use of technical protection mechanisms. As a consequence, historically simple provisions such as the first-sale rule become much more complex in the digital environment, involving difficult questions with respect to technology and business practices. Conclusion: The tradition of providing for a limited degree of access to published materials that was established in the world of physical artifacts must be continued in the digital context. But the mechanisms for achieving this access and the definition of ''limited degree" will need to evolve in response to the attributes of digital intellectual property and the information infrastructure. Consequences of the Changing Nature of Publication and the Use of Licensing and Technical Protection Services In liberating content from its medium of presentation, digital information challenges many long-held assumptions about copyrighted works, most notably those regarding the nature and character of publication. In the physical world publication is public, irrevocable, and provides a fixed copy of the work; in the digital world none of these may be true. Publication has traditionally been public in the sense noted above (i.e., that works are widely distributed and become part of the cultural record). Publication is irrevocable in the sense that works may go out of print, but once published can never subsequently be effectively with-

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Page 203 drawn from circulation and become "unpublished." Publication also implies a stability of the work. Copies distributed provide a stable snapshot of the work at a particular moment; subsequent editions only add to this record. In the digital world, however, documents published by being posted on the public Internet can be removed from scrutiny at the pleasure of the rights holder. Access can be controlled to allow many levels of dissemination between publication and private distribution, and older versions of a document can be (and are routinely) replaced by newer ones, obliterating any historical record. The widespread use of licensing and technical protection services (TPSs) also has important implications. Licensing is a familiar mechanism for providing access to some types of digital information (e.g., software) but is relatively new for other types (e.g., research journals). Even where the practice is familiar, it has often stirred controversy, as in the still-developing notion of shrink-wrap licenses. Where licensing is unfamiliar, publishers and their customers are still learning how to establish reasonable licensing relationships. By offering a distribution model different from that represented by copyright and sale, licensing has the potential to open new markets. Some material that has been made available through licensing would not have been published at all in the traditional manner; the restricted distribution of information is thus an important option for the publisher and public. But the use of licensing also raises significant concerns about the consequences for public access and the maintenance of a healthy corpus of materials in the public domain, particularly where license restrictions differ from legal rules that would otherwise apply. The libraries' role as a permanent repository of material that constitutes a cultural heritage is threatened by a change in the model of distribution from sale to licensing. Libraries could instead become transient, temporary points of access to collections of information that may be available today and gone tomorrow, when licenses expire. Additional concerns arise from the fact that material distributed by license may not become a part of the long-term public record. Some technical protection services have been developed (and others are being developed) to confront the key problem that digital information seemingly cannot be distributed without the risk of large-scale copying and redistribution.6 TPSs offer rights holders some assurance that distributing a single copy of a digital work need not result in subsequent unlimited and uncontrollable dissemination. By enabling network distri- 6Technical protection services are discussed further below under "Moving Beyond the Digital Dilemma: Additional Mechanisms for Making Progress" and in greater detail in Chapter 5.

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Page 204 bution of information products that otherwise would never have been distributed digitally, TPSs could open new markets and substantially increase dissemination of and access to works. Conversely, without such an ability, some rights holders may decide to avoid digital distribution entirely for some works (e.g., investment newsletters), thereby reducing the offerings available to the general public. But technical protection services may also permit limitations on the distribution of content such that most consumers can only view it—distribution without the ability to save and/or print is now contemplated for several mass market content businesses. Consider the consequences of this model of publication: Information might be distributed but never easily shared, substantially defeating the original intent of publication as an act that leads, eventually, to a contribution to the shared, permanent social and cultural heritage. Time- and audience-limited distribution could increase.7 Although limited distribution is a possibility, it may prove to be thoroughly unpopular with consumers if it significantly constrains access to, enjoyment, or use of a product. The marketplace might thus facilitate public access. Nevertheless, policy makers should monitor the situation and be prepared to address the issue in the event that limited distribution models begin to have a significant impact on public access to information. Conclusion: The confluence of three developments—the changing nature of publication in the digital world, the increasing use of licensing rather than sale, and the use of technical protection services—creates unprecedented opportunities for individuals to access information in improved and novel ways, but also could have a negative impact on public access to information. Developments over time should be monitored closely. Some members of the committee voiced the concern that highly constrained models of distribution undermine the fundamental pact between society and authors that is embodied in copyright, a pact that encourages the creation and dissemination of information for society's ultimate benefit. These individuals are concerned that a limited-distribution model of publication may undermine a constitutional intent, namely that rights be granted to authors for a limited time in exchange for assurance that materials will pass eventually into the public domain and the public record. 7Time- and audience-limited access has been commonplace for some kinds of IP for many years (e.g., movies exhibited in a theater), but this is a new phenomenon for traditionally published IP.

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Page 205 Recommendation: Representatives from government, rights holders, publishers, libraries and other cultural heritage institutions, the public, and technology providers should convene to begin a discussion of models for public access to information that are mutually workable in the context of the widespread use of licensing and technical protection services. Publication and Private Distribution In a digital world offering options for distribution other than printing and selling copies, it is not always easy to tell when information has been published and when it has not. The distinction between publication and private distribution is blurred by options such as distribution on electronic mailing lists, posting on password-protected Web sites, or posting on preprint servers available to members of professional societies. Further blurring results from the multiple, finely controlled layers of conditional access that computer systems can provide, offering many degrees of access between public and private. The issue is further complicated by the impermanent nature of digital information, which facilitates the distribution of works in varying states of completion (e.g., posting numerous versions of an article as it evolves). The question of what constitutes publication has significant consequences with respect to public access to the information—facts and ideas in published works are freely available to the public—but deciding whether a work in digital format has been published may be difficult. Although the distinction between public and private may never have been crystal clear in the copyright regime, it has become far murkier in the digital environment. Conclusion: The information infrastructure blurs the distinction between publication and private distribution. Recommendation: The concept of publication should be reevaluated and clarified (or reconceptualized) by the various stakeholder groups in response to the fundamental changes caused by the information infrastructure. The public policy implications of a new concept of publication should also be determined. Mass Market Licenses Non-negotiated licenses for mass market items also raise important public access questions. The issue is whether the terms of mass market licenses offered on a take-it-or-leave-it basis would override fair use or

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Page 206 other limiting policies of copyright law. The question is controversial and as yet unresolved in the law. The public policies associated with intellectual property law may sometimes be seen as sufficiently important that mass market license terms should not be permitted to override them. For example, public policy favoring competition and innovation may call into question the enforceability of a term in a mass market license for computer software that forbids reverse engineering the software. Similarly, concerns related to free speech may arise if mass market licenses seek to limit criticism of a digital information product or disclosure of its flaws. Part of the intent of fair use is to encourage critical analysis; however, if works are licensed, there is currently no automatic fair use provision and hence no established foundation for criticism.8 Some committee members favor subjecting mass market licenses to fair use limitations, viewing fair use and other limiting doctrines of copyright as having an affirmative character—i.e., as providing a right for users under copyright law, rather than solely a defense to infringement. According to this view, rescinding that right in a license should not be possible (even though other rights may, with few exceptions, be waived by agreement). Those who do not favor subjecting mass market licenses to fair use conditions generally perceive copyright as providing default rules that should be overridable by a contract in free market transactions. Conclusion: The committee as a whole points out an important underlying legal and philosophical issue—the question of whether fair use is an affirmative right or a defense—and emphasizes the consequences for access that follow from taking one position or the other on this issue.9 Archiving and Preservation of Digital Information Digital Archives Archiving our cultural heritage and ensuring a record of intellectual discourse are critical tasks for society. The importance of archiving is discussed in Chapter 3, along with many of the associated problems. 8Consider the hypothetical case of an electronic commerce software package and an authorized user who discovers a security problem with the software. The vendor may wish to issue licenses that prohibit the authorized user from disclosing such information to third parties. 9Similarly, the committee is unable to take a definitive position with respect to the Uniform Computer Information Transactions Act (UCITA). See Chapter 3 for a discussion of the issues concerning UCITA.

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Page 207 Despite several years of intense effort, little practical progress is being made in establishing digital archives. The lack of progress is attributable to several factors: • Lack of funding for large-scale digital archiving overall and lack of any agreement about how responsibility for providing funding will be divided among government and cultural heritage research institutions. There is also an absence of mechanisms to effectively pool the contributions of the many organizations with some interest in and responsibility for funding archiving. • Reluctance among major research libraries and archives to make digital archiving a part of their missions or, if there is acceptance of responsibility, the inability to proceed without certainty of funding. Justification of funding is complicated by the difficulty of offering any real access to materials prior to the expiration of copyright, with the result that digital archives may not produce tangible benefits for a century or more, making this investment in the preservation of culture and scholarship a hard sell. • Insufficient expertise within the most likely archiving institutions; the technical and intellectual problems involved are difficult and experienced individuals correspondingly difficult to find. • Worry about potential liability for contributing to copyright infringements—for example, fear that any unauthorized use of archived material by a member of the public could result in the archive being held liable for contributing to infringement. Archives are also concerned about liability for copyright infringement, both in the actual processes of capture and management of digital content and in any actions taken to make archived digital materials available to the public prior to the expiration of the term of copyright. • The daunting scale of the task and the need to develop processes for selecting what will be preserved. Hard intellectual and technological problems exist, some of which require the development of social and scholarly consensus. • The uncertain relationship between archiving and licensing. The rights to archiving can be negotiated, and indeed many research libraries are starting to do so. These negotiations seem to have been reasonably successful thus far when carried out with scholarly publishers that share an interest with libraries, authors, and readers in ensuring that electronic publications will be archived. The likelihood of success is less clear with mass market publishers and content providers outside the print tradition (e.g., in the music industry). Licensing is simply a contract between a publisher and a client, so the publisher is under no obligation to include provisions for archiving. This situation is unlike that in the print world,

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Page 208 where publishing and selling a book (for instance) automatically make archival preservation possible both logistically and legally. There are significant economic and legal issues to be resolved if archives and libraries are to act as digital archives during the term of copyright. Acquiring works after copyrights expire is clearly ineffective, as it is unlikely that most works will be available for acquisition: Few digital (or traditional) works remain economically viable for 100 years, and thus available in the marketplace. The Congress, the Administration, and the combined managements of the top research libraries and archives should lead these efforts. Preservation of works on paper and in other physical media has evolved as a responsibility shared by many autonomous institutions. The committee advocates a similar approach to digital archives and encourages practical steps toward distributed digital archives for which existing research libraries and archives share responsibility. The committee believes that starting now is urgent, so that digital archives of significant extent will be established within a decade. The first step is to initiate a process that engages all relevant stakeholders, develop a plan for moving forward, and begin assembling the political constituency that will ultimately be needed to implement the necessary actions. Conclusion: Significant economic, technical, and legal issues need to be resolved if libraries and archiving institutions are to be as successful with digital information as they have been with hard-copy information. Recommendation: A task force on electronic deposit should be chartered to determine the desirability, feasibility, shape, and funding requirements of a system for the deposit of digital files in multiple depositories. The task force membership should broadly represent the relevant stakeholders and should be organized by an unbiased entity with a national reputation, such as the Library of Congress or some other governmental organization that has a pertinent charter and relevant expertise. The task force should be assigned for a limited term (2 years maximum) and should be charged with the following responsibilities: • Determining the desirability, feasibility and general design of a system for the deposit of digital files in multiple depositories; • Considering incentives for rights holders that encourage

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Page 209 their participation in such a system and encourage them to move material into the public domain earlier than the term of copyright protection if that material is not being exploited; • Proposing both the legal and procedural framework for the deposit and subsequent use of digital files; • Addressing the intellectual property and liability concerns of libraries and rights holders; • Reporting on and recommending to Congress the long-term funding requirements for making the system work. A recommendation on funding is particularly important, because without funding nothing will happen when the task force's study is completed. This committee does not have sufficient information to indicate what the congressional or total funding level should be, but wants to make clear its belief that the total funding needed is substantial; and • Evaluating other nations' strategies for the deposit and preservation of information and considering how a U.S. system could build on and relate to these other national efforts, recognizing that the creation and dissemination of digital information are global activities, and that preservation of content is thus a global problem.10 Preservation Preservation within the context of the information infrastructure introduces new challenges. Digital information is often stored on media with relatively short life spans: because the medium itself degrades (e.g., magnetic tape) or the relentless advance of formats, hardware, and soft- 10To illustrate possible outcomes of the task force, one scenario might call for voluntary (or mandatory) deposit of digital works that are protected by copyright in the United States and that are either offered for sale under license or, if distributed free of charge, are protected by a TPS. Such deposited copies would not be made available to the public by the depository as long as they are still offered to the public by the rights holder, except for viewing in the library itself (as is the case with hard-copy works). All deposited copies would be "in the clear" (i.e., with no encryption or other access-limiting mechanism). The depositors would have no technical responsibility for migrating the copies over time. Libraries and other archives would not be held liable for unauthorized access to these files but would be required to take reasonable steps to prevent and stop such violations. The intent here is to extend into the digital world the traditional balancing act of IP—providing enough control over a work to offer an incentive for creation, yet ensuring that in the long term all work becomes a part of the public intellectual record to the benefit of society as a whole. Providing for deposit of materials "in the clear" may aid in dealing with problems of access that arise from technical protection mechanisms, as well as issues raised by archiving.

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Page 229 issues (e.g., copies made in the course of a transmission by a telecommunications provider), Congress has legislated some specific privileges. Rather than developing the law on temporary copies on a case-by-case, or lobby-by-lobby approach, it would be desirable to develop a taxonomy of temporary copies made in computer systems, and then to assess the economic significance of each category. From this information might emerge some principles about when temporary copies should or should not be regulated by copyright owners, which could then be adapted into a more general-purpose and flexible rule. For example, there might be a workable distinction between "ephemeral" and other temporary copies.29 There is also the question of whether "copies," whether temporary or not, are still the most appropriate basis for copyright; see a discussion of this topic below. • Derivative work rights. The dynamic and interactive character of digital information raises a host of questions about how the derivative work right of copyright law should be applied. At least one court has thus far taken a fairly narrow view of the derivative work right in the digital environment.30 But filtering, framing, "morphing," real-time language translating, and visualization by other than the rights holder are among the many uses of digital works that raise derivative work rights issues that have yet to be settled. 29A useful principle for distinguishing ephemeral reproduction from ordinary reproductions is that the user can determine the time and circumstances under which an ordinary reproduction is rendered, while this is not the case for an ephemeral reproduction. 30In Lewis Galoob v. Nintendo, the Ninth Circuit Court of Appeals decided that the maker of a "Game Genie" program did not infringe Nintendo's derivative work right by selling a tool with which users could alter certain aspects of the play of Nintendo games. The court held that the Game Genie was not a derivative work because it did not incorporate a protected work or any part thereof in a concrete or permanent form. This ruling suggests that add-on programs will generally not infringe the derivative work right, but many questions remain about how far derivative work rights should extend in the digital environment. In the view of one writer (Patry, 1994), the Ninth Circuit Court erred because the right to prepare derivative works is not limited to reproduction in copies. Accordingly,"... an unauthorized, unfixed, derivative work will infringe as long as it incorporates a substantial portion of the fixed original work." In a later case, Micro Star v. Formgen, the Ninth Circuit Court ruled that there was infringement because the derivative work at issue was recorded in permanent form. The court also ruled that there was infringement because Micro Star infringed Formgen's story by creating sequels to that story. The court also considered and rejected Micro Star's argument that it was protected by the fair use defense.

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Page 230 Recommendation: Legal research should be undertaken on the status of temporary reproductions and derivative work rights to inform the process of adapting copyright law to the digital environment, and to assist policy makers and judges in their deliberations.31 As in the case of patents, digital IP and the information infrastructure create new conflicts and raise questions with respect to other information laws and policies.32 Recommendation: Research should be undertaken in the areas that are most likely to intersect with intellectual property law, namely, contract law, communications policy, privacy policy, and First Amendment policy (see Box 6.1 for specifics). The interaction of intellectual property law and contract law is likely to be of particular significance in the relatively near future, as licensing becomes a more common means of information distribution, leading to potential conflicts with the goals of IP law. The international nature of digital networks contributes to difficulties of applying national laws. Although some work has been done on developing a framework for dealing with conflicts of law, choice of law, and other jurisdictional issues, no international consensus as yet exists on these issues. Thus, legal research should be initiated to help clarify the issues, build consensus, and further the harmonization of intellectual property rules, to promote global information commerce. Is "Copy" Still the Appropriate Foundational Concept? The committee suggests above that the notion of copy may not be an appropriate foundation for copyright law in the digital age. Where digital information is concerned, legitimate copies are made so routinely that the act of copying has lost much of its predictive power: So many non-infringing copies are made in using a computer that noting that a copy has been made tells us little about the legitimacy of the behavior. In the digital world, copying is also an essential action, so bound up with the 31Only a few years ago, proxy caching by online service providers and linking from one Web site to another on the World Wide Web were the subjects of considerable debate. Both are now generally thought to be lawful as a matter of U.S. copyright law, a position enabled in part by legal research that has explored the implications of alternative resolutions. 32A new field of law, cyberlaw, is being established, with its own courses and journals.

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Page 231 BOX 6.1 Areas of Legal and Policy Research at the Intersection of Intellectual Property and Other Information Policies and Laws Contract Law. With the proliferation of licensing as a mode of commercial distribution for digital information, courts will need to decide when and how licensing rules should relate to certain public policies, such as those favoring competition, innovation, and freedom of expression. It will take some time before courts reach any consensus on working out this relationship, determining which policies are fundamental and when public can or should override license terms. Communications policy. Communications and copyright policies inevitably intersect because digital networks are communications systems. One example is an effort by some copyright industry groups to persuade the Federal Communications Commission to require broadcasters to include copyright management information in digital broadcasts.That information might encourage rights holders to distribute work (because its origin was labeled), thereby increasing access, but could also include, among other things, digital signals that tell a consumer's video recorder not to allow recording of programs. Privacy policy. Information technologies generally make it easier for copyright owners to monitor an individual's use of a work. Copyright management systems in particular are designed for this purpose (e.g., to enable billing). Clearly, legitimate uses of this information exist, but the information can also be misused. The Digital Millennium Copyright Act contemplates this situation and provides some limited protections for privacy concerns raised by digital technologies. First Amendment policy. With an expansion of IP rights in the digital environment and a possible contraction of fair use and other exceptions, the First Amendment to the U.S. Constitution may take on new importance in mediating between the rights of rights holders and the public. This new role for the First Amendment may apply not only to copyright but to patents and trade secrets as well. With patents, the issues include whether a patent can be infringed by teaching the subject matter of the patent or writing about it. For trade secrets the issues include determining when information is public enough that there are First Amendment concerns associated with its dissemination. Making such a determination may be difficult, given the unclear line between publication and nonpublication in the digital environment. Database protection legislation may also raise First Amendment issues.

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Page 232 way computers work that control of copying provides unexpectedly broad powers, considerably beyond those intended by the copyright law. Recommendation: The committee suggests exploring whether or not the notion of copy is an appropriate foundation for copyright law, and whether a new foundation can be constructed for copyright, based on the goal set forth in the Constitution ("promote the progress of science and the useful arts") and a tactic by which it is achieved, namely, providing incentive to authors and publishers. In this framework, the question would not be whether a copy had been made, but whether a use of a work was consistent with the goal and tactic (i.e., did it contribute to the desired "progress" and was it destructive, when taken alone or aggregated with other similar copies, of an author's incentive?). This concept is similar to fair use but broader in scope, as it requires considering the range of factors by which to measure the impact of the activity on authors, publishers, and others. The committee recognizes that this undertaking will be both difficult and controversial but suggests, nevertheless, that such an investigation is likely to prove both theoretically revealing and pragmatically useful. Content Creators and the Digital Environment The evolution in the information infrastructure presents both potential dangers and opportunities for individual authors of all varieties. A media economy in transition may well produce a realignment of interests, some of which may not be favorable for content creators or publishers. A public policy course of action is needed that maintains a balance between the interests of creators and the interests of those who commercialize intellectual property, with attention given to ensuring that creators will continue to pursue their work. Because digital works are more malleable than works in other media, new concerns arise about authenticity and integrity. Visual artists have the right to be attributed as creators of their works and have a limited right to protect the integrity of their works, but U.S. copyright law does not expressly protect moral rights of content creators beyond these stipulations.33 Discussion is warranted about what protection might be available to creators of digital works, including the possible role of moral rights. 33The attribution and integrity rights are enumerated in sec. 106A of the Copyright Law.

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Page 233 Conclusion: The digital environment will continue to bring significant and unpredictable consequences for content creators. Further analysis is needed to determine the impact of these consequences and whether any steps should be taken to intervene in the marketplace. Point of Discussion: Many members of the committee believe that a task force on the status of the author should be established. The goal of such a task force would be to preserve the spirit of the constitutional protection and incentives for authors and inventors. Its mission statement might be as follows: ''The task force shall examine how technological change has affected and is likely to affect the individual creator, recognizing the importance of preserving the economic well-being of creators, balanced with the principle that a democratic society requires broad access to public information." Such a task force would evaluate the viability of mechanisms that facilitate both distribution and control of work (e.g., rights clearance mechanisms) and examine whether issues should be addressed with government action or kept within the framework of private-sector bargaining. The task force would have significant stature with an appropriate level of charter and a limited lifetime (but not less than 2 years); include a cross-section of content creators, rights holders, and other stakeholders; and be financed by public and private funds. The Process of Formulating Law and Public Policy The committee has tried, wherever possible, to recommend specific legal and policy actions that will assist in dealing with the digital dilemma. But society is still in the early stages of the ferment brought about by the information infrastructure and still has much to learn about the multiplicity of forces that affect intellectual property. Hence no one can specify with any precision all of the legal or policy actions that will be needed. Where the committee cannot recommend specifics, it has tried to articulate a set of guiding principles that it believes will assist legislators and policy makers in effective formulation and revision of law and policy. This section describes those principles. Intellectual property and IP protection are primarily conceived as legal constructs, but problems arising in the interaction of IP and the information infrastructure need to be considered in the broader context of other forces as well—markets, social norms, and technology (hardware and software). As discussed above, not every problem requires a legisla-

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Page 234 tive solution. Technology, business models, and education can all provide effective mechanisms and means for dealing with problems. The multiplicity of forces and the new models of content distribution being explored both contribute to the possibility of substitutions. One such substitution is contract law for copyright law: With information products increasingly distributed under license rather than being sold, contract law may begin to substitute for copyright law as the dominant force shaping our information environment. A second substitution has been pointed out by Reidenberg (1998) and Lessig (1999a,b), who note the potential for software to substitute for law. Software can be a form of private regulation, constraining some behaviors just as effectively as legal statutes. The software written to control access to a Web site, for example, can make certain behaviors easy and others nearly impossible. These sorts of substitutions matter because of what may be gained and what lost in any particular substitution. As the report makes clear earlier, for example, there are both pros and cons in using either contract law or copyright law as a foundation for the information environment. Changing from one to the other should be undertaken with careful consideration of the consequences the shift may bring. Conclusion: Law and public policy must be crafted to consider all the relevant forces in the digital environment. Initiatives that consider or rely on only one or a subset of the relevant forces are not likely to serve the nation well. The rapid pace of technological change in the computer industry is the stuff of legend, and it shows no signs of slacking off. This pace is, if anything, increasing. References are made to "Internet time," reflecting the breakneck speed with which business, technology, and social practices change. No appropriately deliberative process has a chance of keeping up. This rapid evolution, particularly in technology, will be an ongoing source of uncertainty and, likely, frustration for policy makers who conceive of and attempt to deal with issues in terms of the extant technology. Such policies are built on shifting sand and run the risk of rapid irrelevance. Even those in the field cannot always cope easily with the pace of change. Conclusion: Policy makers must conceive of and analyze issues in a manner that is as technology-independent as possible, drafting policies and legislation in a similar fashion. The question to focus on is not so much exactly what device is causing the problem today, as what the underlying issue is. Nor should policy makers base their decisions on the specifics of any particular business model.

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Page 235 Because the information infrastructure makes infringement of IP rights vastly easier, it also makes detection, prevention, and enforcement of laws against private infringement by individuals in their homes far more difficult. As a consequence, individual standards of moral and ethical conduct and individual perceptions of right and wrong become considerably more important in encouraging appropriate behavior. A risk also exists that if IP law is perceived or presented as being so absolute in its prohibitions as to preclude behavior most individuals feel is morally appropriate, then even the more reasonable restrictions in the law may be painted with the same brush and viewed as illegitimate. Conclusion: Public compliance with intellectual property law requires a high degree of simplicity, clarity, straightforwardness, and comprehensibility for all aspects of copyright law that deal with individual behavior. New or revised intellectual property laws should be drafted accordingly. Conclusion: The movement toward clarity and specificity in the law must also preserve a sufficient flexibility and adaptability so that the law can accommodate technologies and behaviors that may evolve in the future. Principles for the Formulation of Law and Public Policy In addition to the specific guidelines offered above, the committee developed a broader set of principles for policy makers to use in their decision making. The principles are intended to be general and enduring in nature, reflect areas of general agreement, and incorporate the specific guidelines above. Among other things, the principles may serve as a checklist of important issues to consider during the policy decision-making process. Recommendation: Policy makers should use the principles outlined in Box 6.2 in the formulation of intellectual property law and public policy.

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Page 236 BOX 6.2 Principles for the Formulation of Law and Public Policy 1. There is abiding wisdom in Article I, sec. 8, cl. 8 of the U.S. constitution, which empowers Congress "to promote the progress of science and (the) useful arts by securing to authors and inventors for limited times exclusive rights in their respective writings and discoveries," that should guide policy making on intellectual property now and into the future. 2. The wisdom of the constitutional clause lies, in part, in enabling Congress to confer exclusive rights on creators as a way to motivate them to invest their resources and efforts to develop socially beneficial works. Its wisdom also lies in its limitation on congressional power to grant rights of perpetual duration or rights so extensive that they would undermine achieving progress in science (by which the founders meant knowledge) and the useful arts (by which the founders meant technological innovation). 3. Intellectual regimes should be tailored to provide adequate incentives to invest in developing and and misseminating innovative works. 4. Intellectual property regimes should also be tailored to balance fairly the interests of crestors and the public. As the U.S. Supreme Court noted in its decision in Sony Corp. of America v. Universal City Studios, "[t]he monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to promote a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved,"1 namely, providing public access to information nad innovative products and services after the period of exclusive control has expired, so as to advance the greater societal good. 5. although the interests of creators and the interests of those who commercialize intellectual property are aligned in most respects, they may diverge in some ways. A balance of interests should be maintained. Enough deference should be given both to the interests of creators to ensure that creators will not be deterred from pursuing their work, and to the interests of publishers so that they are not deterred from their role in disseminating works. 6. Although crafted exceptions to and limitations on the exclusive rights conferred on innovators by intelectual property laws are a well-accepted means of accomplishing balance in intellectual property law. the fair use doctrine is an example of this. 7. Although achieving balance in intellectual property law is important for many reasons, it expecially important because knowledge creation and innovation are dynamic and cumulative in character. Providing extensive protection to a first-generation innovator may stifle follow-on innovation that, if developed, would be in 1Sony corp. of America v. Universal City Studios, Inc., 464 U.S. 417(1984). (text box continued on next page)

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Page 237 (text box continued from previous page) the public interest. Providing too little protection to a first-generation innovator can also be problematic because he or she may decide that there is too little prospect of reward to make the effort worthwhile. 8. Maintaining a vital public domain of ideas, information, and works in which intellectual property rights have expired is important not only because it enables and promotes on going onnovation but also because it promotes other societal values, such as education and democratic discourse. 9. Policies that promote low-cost public access to government data and to data developed with governmental funding, especially those of scientific importance, should be preserved in the digital context because they, too, promote constitutional purposes of promoting science and technological innovation as, for example, by enabling the development of value-added information products and services. 10. If congress decides to create new forms of intellectual property protection, the new regimes should conform to these principles. 11. When revising existing intellectual property regimes, Congress should ensure that the principles enunciated here continue to be respected. 12. Policy makers and judges should respond to challenges that information technologies pose for intellectual property law in a manner that conforms to these principles, It should be reassuring to these actors to know that intellectual property laws have adapted to challenges posed by new technologies in the past and that digital technologies provide some opportunities for greater protection of IP. 13. Intellectual property law, business models, and technical protection services are generally complementary ways to provide appropriate protection to rights holder in competitive markets. However, each of these protections can be exercised in an abusive manner, for example, by unduly interfering with competition, innovation, and free speech interests. When such abuse occurs, there are and should continue to be legal processes to deal with them. 14. Intellectual property policy is an important component of the information policy of a society, but it is not the only important information policy. Policy makers concerred with forming appropriate IP rules should not ignore other information policy dimensions of their decisions, such as those that concern privacy of civil liberties. 15. Intellectual property law should not be used to address issues other than intellectual property issues. To do so would imslead the public and unnaturally constrain technology developers.2 2Consider, for example, the issue of online personal privacy, which has at times been cast as an IP issue, but should not be. Users of all sorts of information services (e.g., shopping continued (footnote continued on next page) (text box continued on next page)

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Page 238 (text box continued from previous page) BOX 6.2 Continued 16. Intellectual property rules should be as technology neutral as possible to maximize the chances that the rules will be flexible enough to enable the law to adapt well to raw situations in an era of rapid technological change. 17. Policy makers should strive to make intellactual property rules as simple and as easily comprehansible to the general public as is feasible. Such simplicity and clarity will not only enable compliance with legal norms but also assist potential participats in the marketplace in knowing when and how they must clear rights to engage in certain activities. 18. There will, however, always need to be some flexibility in intellectual property rules. Experience with the fair use limitation on copyright, for example, has provided a workable framework for applying general norms in a manner that responds to particular situations where rights of copyright owners and other legitimate interests may be in tension. 19. Laws and policies should be formulated based on a realistic assessment of their success. Attempts to develop prefect laws and policies are unlikely to be practical or even possible. 20. Creating rules of law imposes costs on society. The costs enhanced intellectual property rules. including the costs of enforcement, should be carefully weighed in comparison with the benefits of such rules (footnote continued from previous page) services, government services, and even e-mail) regularly supply personal information in order to use those services (such as address, phone numbers, and social security numbers). Those users are antilled to know how the service provider intends to use this information and are entitled to refuse to use the service if they don't agree with the provider's practices. It has been suggested by some that if each place of personal information were regarded as the intellectual property of the person being described, users would have a legal framework in which to object to service-providers' information practices, on the grounds that "information about me is my intellectual property and you cannot use it without my permission. "Therein arises the temptation to use IP law to "solve" the online privacy problem. Copyright, trademark, and patent law were designed to "promote the useful arts," not protect privacy. The two goals do not align: Legal, commercial, and artistic considerations that must be taken into account when deciding whether something should be protected under IP law ofter do not apply to users' personal information, Although originality is a requirement for copyright protection, it hardly seems to make sense to require an individual to dispaly originality in order to protect personal information such as address, phone number, and social security number and to demand that service providers use that information appropriately. Put somewhat differently, personal information should not have to be copyrightable, trademarkable, or patentable to be deserving of protection. In the internet age, technologists and policy makers are challenged to develop a legal framework in which privacy is addressed as such on its own terms.

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Page 239 Concluding Remarks Intellectual property will surely survive the digital age. It is clear, however, that major adaptations will have to take place to ensure sufficient protection for content creators and rights holders, thereby helping to ensure that an extensive and diverse supply of IP is available to the public. Major adaptations will also be needed to ensure that the important public purposes embodied in copyright law, such as public access, are fulfilled in the digital context. Considering the vitality of the participants, the committee is optimistic that workable solutions will be forthcoming in time. The committee has been cautious about major legislative initiatives because it is early in the evolution of digital intellectual property and much remains unknown—both because of the yet-to-come evolution in the information industries, user communities, and technologies and because of the need for research and data collection to improve knowledge and understanding of the issues. Under such circumstances, major changes in legal regimes and public policy are ill-advised.