General Practice, Solo & Small Firm DivisionBest of ABA Sections

FALL 1997

Entertainment & Sports Industries

Copyright Enforcement in a Digital Environment: Tolls on the Superhighway?

Virginie L. Parant

Appropriate copyright management systems are a condition precedent to protecting rights on digital networks. Solutions to the problems created by digitization are being sought in new technologies. Until some of the proposed ideas are implemented, content providers may be reluctant to authorize on-line uses of their works because of uncertainty as to rights enforcement.

National and international institutions are seeking technological solutions to identify works and their copyright status. Among the options is the use of electronic markings or signatures that could identify rights holders, inform users of licensing fees or signal whether the work in question has been altered.

The Clinton administration’s White Paper report on Intellectual Property and the National Information Infrastructure intends copyright management information to serve as "a kind of license plate for work on the Information Superhighway," giving users information about the work and its ownership status.

In November 1995, the International Standardization Organization (ISO) approved the inscription of an identification zone in digital binary chains. These "blank" zones will be used as copyright identifiers. Codification of the information contained in these identifiers is being elaborated by various organ-izations representing rights holders: the U.S. Copyright Office is developing the Handle Management System that will assign a unique "handle" as an identifier to each digital work registered: World Intellectual Property Organization (WIPO) is preparing an international system of identifying numbers for works used in a digital environment; and the European Union is financing "imprimatur," an initiative to achieve a single copyright management system for the Internet. Meanwhile, private companies are experimenting with various technologies.

Fees for the use of protected works on digital networks can take three forms: per-use rates, per-access rates, or subscriptions. The entertainment industry customarily applies per-use rates, based on each specific use of a work. With the advent of digital networking, a per-use billing will be feasible only if digital distribution and downloading can be monitored effectively. Steganography (or "digital fingerprinting") techniques are currently being developed that will allow digital watermarks to record every use of a work.

However, in most instances, the volume of uses may prohibit cost-effective individual monitoring. For minor uses such as browsing, permission should be obtainable quickly and easily each time a particular work is accessed, notwithstanding the use that is made of it. A per-access rate is thus preferable and could be implemented through the use of electronic tolls. Also, subscription rates collected by on-line service providers cover access to works whose on-line use was licensed to these providers. Access to a particular work or use of a service will be considered acceptance of the terms and conditions of an electronic license.

Recently introduced technology may offer an effective tracking and payment device in the form of "electronic envelopes": prospective users first access an electronic label that offers copyright management information pertaining to the contents of the "envelope." If interested, they can access the contents—"open the envelope"—upon paying the fee applicable to the particular use they intend to make of the information accessed (browsing, downloading, distributing, etc.).

Even though digital technology eventually may provide for easy and accurate tracking of all uses of a work, the sheer volume of transactions in cyberspace should, in many cases, render individual licensing impracticable. Just as composers and music publishers have had to delegate the management of their public performance right and, to a lesser extent, their right of reproduction, digital publishers may have to resort to collective licensing for the exploitation of their works.

While collective rights management is well established in the music business, other industry sectors have been more reluctant. For some categories of works, digital exploitation is a double-edged sword: inherent to a broader exposure is the surrender of traditional licensing patterns and of close control over exploitation. However, examples of "individualized" forms of collective management, such as that offered by the Copyright Clearance Center, where members retain control over the terms and conditions of the licenses, show that various degrees of "collectively" may apply to various kinds of works. In March 1995, the CCC announced the creation of Information Marketplace, an electronic copyright clearance program that uses metering software to provide "information by the slice" and will allow content providers to charge a subscription rate or a per-use rate.

An agency-type form of collective administration is also possible, such as offered by the Harry Fox Agency (HFA), a mechanical right collection organization, which negotiates model agreements for each individual member. Finally, performing rights societies such as ASCAP and BMI have authority to grant blanket licenses for the works of all their members without their prior approval. In April 1995, BMI granted the first Internet music license to On Ramp, Inc., to cover the service provider’s transmission of BMI music over the Internet. The blanket license covers a variety of planned uses such as browsing, listening, and transmission to consumers at home.

Collective licensing is arguably the best solution for authors’ compensation in a digital environment. Adopting an "individualized" form of collective management would provide a single source of information as to rights clearance for all categories of works and would centralize requests for licenses.

To be comprehensive, such licensing should encompass all the rights involved in digital transmissions: the rights of reproduction, distribution, and public performance and display. Downloading could be handled under more individualized terms, by organizations such as CCC and HFA.

In many cases, compulsory licensing is perceived as the only way to compensate authors. Indeed, where uses cannot be monitored, or where monitoring costs would be prohibitive, compulsory licensing is the only alternative to no remuneration at all.

The White Paper finds that "under current conditions, additional compulsory licensing of intellectual property rights is neither necessary nor desirable." Should compulsory licensing be extended to some aspects of digital exploitation, the royalties could be collected from manufacturers of personal computers and recording media (e.g., floppy disks or blank CD-ROMs) and possibly from on-line services.

The romantic view of a cyberspace where information flows freely is simply inconsistent with constitutional principles. From a market perspective, the White Paper notes that "the ambiguity surrounding copyright protection in cyberspace has been a serious obstacle to the development of computer networks as a means of distribution." Until effective enforcement schemes are implemented, rights holders may remain unwilling to launch marketable content into cyberspace.

Virginie L. Parant is an associate at Gonderson Dettmer Strough Villenueve Franklin & Hachigian LLP in Menlo Park, California.

 This article is an abridged and edited version of one that originally appeared in The Entertainment & Sports Lawyer, Summer 1996 (14:2).

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