Copyright Background, CQ Researcher, 2000

'Exclusive' Rights

Copyright law in the United States has evolved over two centuries through a combination of legislative actions and judicial rulings laid over a marketplace for creative works periodically reshaped by technological advances. Lawmakers and judges, as well as the individuals and industries in the so-called creative community, have searched for an optimal balance between the two conflicting goals of rewarding creative endeavor while also protecting the public's interest in enjoying creative works. [7]

The Constitution viewed copyright in utilitarian terms in contrast to the approach of some European countries that today still stress the “moral right” of authors. The framers authorized Congress to pass legislation to grant authors, “for limited times,” “the exclusive right” to their “writings” in order to “promote the progress of science.” (Art. I, Sec. 8, cl. 8.) In its first major copyright decision, the Supreme Court treated copyright as a statutory creation aimed primarily at serving the public interest and only secondarily at rewarding authors. [8]

Congress approved the first national copyright law in 1790, just a year after the ratification of the Constitution. The act allowed authors a 14-year copyright, renewable for a second 14-year term, subject to registering their work with a local district court and publishing a notice in local newspapers. Originally, only books could be copyrighted. But coverage was expanded through the 19th century, either by legislation or court ruling, to include prints, musical compositions, dramatic works, photographs, artistic works and sculpture.

A copyright dispute early in the 20th century serves as a harbinger of sorts of the end-of-century clashes over copyright on the Internet. The issue then was whether the statutory protection for “musical compositions” extended to piano rolls. The cylindrical devices with illegible scatterings of holes did not physically resemble copyrightable sheet music, but they served a similar purpose -- and were viewed by composers and publishers as cutting into their markets. They asked the Supreme Court for copyright protection, but the justices in 1908 rejected their plea in a literalistic application of the Copyright Act.

Congress, which had already been working on overhauling the law, then stepped in. As part of the Copyright Act of 1909, lawmakers decided to provide copyright protection for piano rolls as well as the then-newfangled invention of phonograph records. But, as Stanford University law Professor Paul Goldstein explains, the law subjected this new right to a compulsory license.

“Once a copyright owner authorized a pianola or record company mechanically to copy his musical composition,” Goldstein writes, “any other company was free to make its own recording of the composition by . . . paying the copyright owner two cents for each record it produced.” [9]

The 1909 law expanded copyright to cover “all writings” -- including speeches, for example -- and extended the copyright term to 28 years, with the option of a 28-year renewal. The act disfavored authors and composers in another respect, however, by preserving the formal requirements for securing a copyright that had been written into law in 1790 but eliminated in some European copyright acts.

Almost seven decades later, Congress enacted another comprehensive revision of copyright law. The 1976 act expanded the scope of copyright to cover all written works, even if unpublished, and extended the duration of copyright to the life of the author plus 50 years. In addition, the formal notice and registration requirements were loosened, though not completely discarded. Most significantly perhaps, the law codified the judicially created doctrine of “fair use” as a defense to copyright-infringement claims.

The act listed four factors for courts to consider in determining whether a claimed infringement was, in fact, a legal fair use but provided no guidance on how to weigh those factors. The issue had already emerged as pivotal in a copyright dispute over photocopying, and it was to become more important and more contentious in disputes still to come over videotaping and digital copying and distribution of copyrighted material.

Copying Rights

The invention of photocopiers and videocassette recorders (VCRs) allowed consumers to copy copyrighted material -- at first books, articles and other printed matter, and then televised movies -- with minimal effort and at minimal cost. Copyright holders turned to the courts for protection but were rebuffed in two legal showdowns that each reached the U.S. Supreme Court. [10]

The photocopying test case emerged in the 1960s in a dispute between a company that published medical journals and the government's National Library of Medicine, which had an assembly-line practice of photocopying articles from journals for patrons and other libraries. William Passano, president of Williams & Wilkins Co., the publishing firm, asked the library to pay two cents per page for copies; when the library turned him down, he filed a claim for compensation with the U.S. Court of Claims in 1968. The government contended that what it called the library's “longstanding practice of making copies for scholarly use” amounted to a protected “fair use.”

A trial-level commissioner ruled in Passano's favor in February 1972, saying that the library's photocopying reduced the market for subscriptions. In November 1973, however, the Court of Claims reversed the decision by a 4-3 vote. The majority found the evidence of reduced demand unpersuasive. Passano then took the case to the Supreme Court, which heard arguments in December 1974. Two months later, on Feb. 25, 1975, the court announced that the justices were deadlocked 4-4, with one justice recused; the tie vote left the Court of Claims' ruling in the government's favor on the books.

Congress then wrote the final word on the issue. The 1976 copyright revision specifically provided that libraries could reproduce a single copy of a work if the reproduction was not intended for commercial gain. In addition, it allowed libraries to make copies for interlibrary exchange -- just as the National Library of Medicine had done -- as long as the copying did not substitute for a subscription or purchase. And the law immunized libraries from liability for patrons' unsupervised use of copying machines as long as a copyright warning was posted nearby.

The VCR issue moved into the courts within a month after the copyright revision was signed into law in October 1976. Movie studios saw VCRs as a threat because they allowed consumers to record televised motion pictures and thereby reduced the studios' ability to charge broadcasters or cable channels for repeated showings. Two of the major movie studios -- Universal City Studios and Walt Disney Productions -- sued in federal court in Los Angeles in November 1976 to try to control the practice.

The studios targeted the Sony Corp., manufacturer of the then-dominant Betamax VCR, and argued that the company was guilty of “contributory infringement” by enabling consumers to copy copyrighted material. Sony adopted a fair-use defense. Judge Warren Ferguson rejected the studios' suit, saying that they had failed to show any adverse present or future effects from home video recording. In October 1981, however, the federal appeals court in San Francisco disagreed. It ruled that home video recording did not constitute fair use and that Sony could be held responsible for the copyright infringement.

The Supreme Court settled the issue with a 5-4 ruling in 1984. The majority said that home viewers' use of VCRs for “time shifting” -- viewing a movie at a later time -- amounted to fair use because it was a “non-commercial, nonprofit activity” that had “no demonstrable effect upon the potential market for, or the value of, the copyrighted work.”

The VCR debate continues to this day. The movie studios insist that they lose millions of dollars from unauthorized copying of films. MPAA President Valenti also stresses that the studios were not trying to block the use of VCRs but only wanted to impose a royalty on all blank videotapes in order to compensate copyright holders. But law Professor Boyle notes that the VCR boom has proved to be a financial bonanza for movie studios. “They wanted a protectionist rule,” Boyle says. “If they'd gotten it, videotapes would have been more expensive, and it would have taken a long time for the market to develop.”

'Digital Millennium'

The digital revolution transformed the creation, storage and distribution of information, including all of the creatures of copyright -- from books and periodicals to photographs, audio recordings and video. As Stanford's Goldstein observes, the very attributes that made the digital format so appealing -- fidelity, compression and malleability -- also posed daunting challenges to traditional ideas of copyright law based on works in fixed media that could not be reproduced without a loss of --> quality. [11]

Courts and lawmakers first grappled with a surprisingly difficult issue: what legal protection to give to computer programs themselves. [12] Initially, many software developers thought computer programs were patentable inventions, but a Supreme Court decision in 1972 cast doubt on that approach. Instead, Congress in 1980 followed a study commission's recommendation to provide for copyright protection for computer programs.

But, as American University's Jaszi observes, software “wasn't like the traditional subject matter of copyright. It's more mechanical, more practical.” As a result, courts have somewhat limited the protection for computer programs under copyright creating hurdles for plaintiffs in all but the most flagrant cases of copying. Meanwhile, though, patent protection was resurfacing as an option, thanks to a Supreme Court decision in 1981 that looked more favorably on that approach. Still, patent protection has its own problems: a difficult standard to meet for patentability and a shorter term (17 years) than the copyright period.

The introduction of digital audiotape technology (DAT) in the 1980s created another difficult issue for copyright holders -- in this case, the music industry. [13] Composers, artists and record companies feared that the use of digital tape decks would enable consumers to produce master-quality copies of music tapes and thereby cause reduced sales and royalties. A protracted legal and lobbying battle between the music industry on the one hand and electronics manufacturers on the other ended in 1992 with the passage of the Audio Home Recording Act.

The law allowed “consumers” to make single copies of sound recordings for “non-commercial use” without running afoul of copyright law. In return, manufacturers of digital tapes and tape decks must pay a royalty to the U.S. Copyright Office for distribution to copyright holders. In addition, the law prohibits the manufacture of digital tape decks that can copy copies thus, reducing the potential for mass-quantity reproductions of original tapes.

The rise of the Internet posed another problem for copyright law: what liability, if any, Internet access providers might face for copyright infringement for the posting of protected materials by network users. Copyright holders feared the easy availability of copyrighted works on the Internet, but access providers contended they could not police users to prevent copyright infringements.

In an influential case (Religious Tech. Center v. Netcom On-Line Comm. Corp.), a federal court in San Francisco ruled in 1995 that Netcom, a major Internet access provider, was not directly liable for the posting of copyrighted materials on the network but might be “vicariously liable” if it knew of an infringement and failed to take steps to remove the protected material. Congress adopted a somewhat similar approach in a provision of the 1998 copyright revision by giving digital networks immunity from copyright liability if they remove protected material after receiving notice from the copyright holder.

The 1998 law -- the Digital Millennium Copyright Act -- was the culmination of a legislative initiative by the Clinton administration that began with the issuance of a so-called white paper in 1995 advocating a number of new protections to “update” copyright law for the digital age. The anti-circumvention provision emerged immediately as a focal point of dispute. The administration strongly sided with the movie and recording industries in calling for a ban on equipment, devices or software that could defeat copyright-protective encryption. A coalition of equipment manufacturers, libraries and consumer and user groups unsuccessfully opposed the proposal. The final version, which cleared Congress on Oct. 12, 1998, left Hollywood pleased.

“Passage of the legislation brings us a step closer to being able to utilize the Internet as a means of providing information and entertainment to consumers,” MPAA spokesman Richard Taylor said. [14]

'Celestial Jukebox'

Internet advocates began dreaming of on-line entertainment -- music, movies or books -- as early as the start of the 1990s. They conjured up the image of a “celestial jukebox” -- a phrase of uncertain origin that Stanford's Goldstein used in the subtitle of his 1994 book on the future of copyright. In his rendering, Goldstein imagined computer-linked networks that could deliver a film, recording or book instantaneously to a user's computer and automatically charge the subscriber for the service. [15]

But the businesses that did emerge at the end of the decade -- MyMP3.com, Napster and Scour.com -- omitted any charge to users or any licensing fee to copyright holders. The recording and film industries responded with litigation aimed, they insisted, not at killing the services but simply at ensuring proper compensation to composers, performers and music publishers and to film studios for their copyrighted materials.

Actually, the on-line service provider CompuServe was the first major company to feel the legal wrath of the music industry. CompuServe established an on-line bulletin board for users to share music by uploading files to the service or downloading files from it. The National Music Publishers' Association and its licensing subsidiary, the Harry Fox Agency, filed a class action copyright-infringement suit against CompuServe in 1993. In November 1995, CompuServe settled the suit by paying an undisclosed amount and agreeing to a licensing arrangement in the future. Association President Edward Murphy voiced the hope that other on-line services would reach similar agreements -- “obviating the need for further legal actions.” [16]

Murphy's hope proved illusory. Through the decade, the recording industry waged what one court called “a well-nigh constant battle” against so-called pirate Web sites with cease-and-desist letters and litigation. The comment by the federal appeals court in San Francisco came in a June 1999 decision that rejected the recording industry's attempt to outlaw a portable music player capable of playing audio MP3 files downloaded from a personal computer. [17]

In the midst of the record industry's battles, however, some independent record labels and unsigned artists were making fully legitimate use of the Internet to distribute and promote their music. And record companies themselves were professing interest in developing their own digital distribution businesses.

Napster and MP3.com beat the record companies to the punch. Napster went on-line in May 1999 as the brainchild of Fanning, a one-time Northeastern University computer science student inspired by his roommate's complaints about the difficulty of finding MP3 files on the Internet. [18] Fanning used money from his uncle and a venture-capital firm to get his music search-engine running. Word spread quickly through colleges and universities, high schools and middle schools throughout the country. By the end of the year, the Napster “community” included at least 200,000 users; today, Napster says the number is 27 million.

MP3.com traced its origins back further, to a conventional search-engine service started in 1996 by Michael Robertson, a software entrepreneur with a degree in cognitive science from the University of California at San Diego. [19] Robertson learned of the MP3 software in October 1997, acquired rights to the domain name, renamed the company, and began offering up-and-coming artists a chance to distribute their music through the Internet. By spring 1999, MP3.com was drawing about 250,000 visitors a day. Then in January 2000, Robertson moved to draw more visitors by creating a library of tens of thousands of CDs on the MyMP3.com server for users to download.

The record industry landed on both services with both feet, filing lawsuits against Napster in December and against MP3.com in January. Lower court judges sided with the record companies, depicting MP3.com and Napster as nothing less than intellectual-property pirates. Judge Rakoff, in his initial ruling in late April, said that MP3.com's defense against the RIAA's copyright-infringement suit “amounts to nothing more than a bald claim that defendant should be able to misappropriate plaintiffs' property simply because there is a consumer demand for it.” Three months later, Judge Patel was similarly dismissive of Napster's defenses. “Pirating be damned is the sense one gets,” the judge said.

Meanwhile, the motion picture association was pressing its case against the hacker magazine 2600 for disseminating the DVD decryption program. In his ruling backing the film industry, Judge Kaplan characterized the magazine as part of “a movement that believes that information should be available without charge to anyone clever enough to break into the computer systems or data storage media in which it is located.”

Industry officials praised all three rulings, while defendants in each of the cases vowed to appeal. But many observers warned that whatever the ultimate court rulings, the industry's legal efforts would not stop the work of anti-encryption hackers or the proliferation of on-line music-distribution networks.

“Napster or no Napster, these services will exist,” Mark Mooradian, a senior analyst at Jupiter Communications, told the Los Angeles Times following Patel's ruling. “The one thing this does is buys the [record] industry a little bit of time.” [20]

[7] Background drawn from Paul Goldstein, Copyright's Highway: From Gutenberg to the Celestial Jukebox (1994), and Robert P. Merges, Peter S. Menell, Mark A. Lemley and Thomas M. Jorden, Intellectual Property in the New Technological Age (1997). See also Paul Goldstein, Copyright, Patent, Trademark and Related State Doctrines (4th ed., 1997).

[8] See Merges et al., op. cit., p. 327. The decision is Wheaton v. Peters (1834); for a discussion, see Goldstein, Copyright's Highway, pp. 53-55.

[9] Ibid., p. 67.

[10] Background drawn from ibid., pp. 78-128 (photocopying), pp. 129-164 (VCRs).

[11] Background drawn from ibid., pp. 197-236.

[12] For a brief overview, see ibid., pp. 815-816.

[13] For background, see 1992 CQ Almanac, pp. 192-193.

[14] Quoted in 1998 CQ Almanac, p. 22-9.

[15] Goldstein, Copyright's Highway, op. cit., pp. 28-29. Goldstein says he was unable to track down who coined the term “celestial jukebox.”

[16] Patent, Trademark and Copyright Journal (BNA), Vol. 51, p. 48 (Nov. 9, 1995).

[17] The case is Recording Industry Association of America v. Diamond Multimedia Systems, Inc., decided June 15, 1999, by the 9th U.S. Circuit Court of Appeals.

[18] Background drawn from The New York Times, March 7, 2000. Fanning was nicknamed “Napster” in high school because of his haircut.

[19] Background drawn from The New York Times, April 11, 1999. See also Boston Globe, Jan. 28, 2000.

[20] Quoted in the Los Angeles Times, July 27, 2000, p. A9.