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Administration White Paper on the National Information Infrastructure Fails to Give New Direction to the Law

October 1995

The Church of Scientology (“CoS”) is engaged in a highAs the era of digital communications advances, commercial empires will rise and fall based on policies established within the bureaucracies of Washington. It is no overstatement to suggest that for the entertainment, communications and publishing industries, billions of dollars in licensing revenues are at stake.

An Administration Working Group on Intellectual Property Rights, comprising representatives from 26 agencies, was chartered in 1993 to examine the intellectual property implications of the National Information Infrastructure (the “NII”) and recommend appropriate changes to U.S. intellectual property law and policy. The NII was viewed broadly to include present and future digital interactive services, with the Internet to represent the present embodiment of the NII.

More than a year after issuing a preliminary draft, the Working Group has published a “White Paper” Report grandly entitled “Intellectual Property and the National Information Infrastructure.” This was a rare opportunity to evaluate whether existing laws are capable of coping with digital technologies and to propose legislation to bring intellectual property law into the age of the Internet. It was a chance to shape the future.

Sadly, the Working Group did not rise to the occasion. It is remarkable that an effort that started years ago under the aegis of Vice President Gore to enable the U.S. to reap the benefits of the “Information Superhighway” has culminated in a 250 page document which expresses the views of the old-line content providers; that is, that the on-line world has created mechanisms by which copyrighted works can be copied and distributed so easily and so widely that the ability of the content owner to control and profit from the process is at great risk, and the content owner’s rights must be protected at all costs.

Three aspects of the lengthy report illustrate our observations.

First, the Group sought to close even potential, minor loopholes in copyright protection of digital works. The very first of its recommendations is notable mostly for its triviality. The Group argues that the Copyright statute should be revised to eliminate any question that the electronic transmission of digital copies of a work falls within the exclusive “distribution right” of copyright owners. This appears to be a statement of the obvious; there is little argument that under the current law transmission of a digital work can constitute a distribution. However, whether or not the proposed change in the law would actually expand the rights of copyright owners, it shows that the Group is intent upon ensuring that the rights in digital works are at least equal to the rights in traditional works, with little reflection on the more fundamental question of whether it is appropriate to recreate the old regime in cyberspace.

Not content to stop there, the Group then gratuitously urges the creation of a new right in the music world: For the first time, the owner of the copyright in a musical performance would be able to restrict (and therefore, profit from) the public performance of recordings of the work, where today, only the owner of the composition itself has this right. Of course, the “public performance” of a work is not limited to digital transmissions – for example, it includes the analog transmission of music by radio. Why the Group suddenly saw the need for a change in this area, almost a hundred years after Marconi and in the context of digital transmissions, is an interesting and unanswered question.

Second, the Report throws a chill on the development of new technologies, by proposing to outlaw any product whose “primary purpose” is to defeat copy-protection. This is surprising given the fact that in 1984 the Supreme Court refused to hold that the manufacturers of VCRs were liable as “contributory infringers” in the illegal copying of movies. The Supreme Court’s 1984 Sony decision held that a product was not illegal, even if its “primary purpose” was to defeat copy protection, so long as the product also had a “substantial non-infringing use.” The White Paper’s recommendation is at odds with the Sony case, and would overrule an important Supreme Court precedent. Moreover, any rational consideration of this issue suggests that attempts to enforce copy restrictions by telling inventors what they can and can not do is highly counterproductive. The question of whether the illegal use is “primary” or “secondary” is often difficult to determine. From the perspective of the authors of the White Paper, the VCR might never have been invented or commercialized, for fear that its “primary purpose” might be viewed to be violative of the law.

Third, the White Paper tells online service providers (“OLSPs”) that they must be the front-line enforcers of copyrights. Even the smallest OLSP can be the conduit for transmission and postings of vast amounts of data, which is no more possible to monitor for copyright infringement or defamatory statements than the traffic on the telephone network. Whether OLSPs should be liable for the illegal acts (e.g., copyright infringements, defamation and obscenity) of their customers is highly controversial, both in the courts and within the online industry. The Report derides the policy and technological arguments against absolute or “strict” OLSP liability, oversimplifies case precedents to support the Report’s position, and fails completely to cite cases where the courts have held OLSPs not to be liable.

TLB Comment : As we have noted, the actual legislative recommendations made in the White Paper are modest. However, the document contains voluminous discussions about the application of intellectual property law to the technologies involved in the NII. A real concern is that the courts will place undue weight on these discussions, and therefore the White Paper will influence future interpretations of copyright law.

One factor in how much weight the courts and policy makers will give to the Report is whether the legislative recommendations are adopted as law. The White Paper’s proposed legislative changes have been filed in Congress, and we will report on whether, and in what final form, they are adopted.