In the past several years I’ve written a number of columns which have emphasized the desirability of balance in intellectual property law.  Some of these columns have been about the “look and feel” lawsuits, some about fair uses of copyrighted works, and some about the Clinton Administration’s proposals to revise copyright law in response to the challenges posed by digital technologies.  There are both utilitarian and justice-based reasons why it’s a good idea to provide authors and other innovators with a healthy dollop of exclusive rights that will allow them enough control over commercial exploitations of their works so that they have adequate incentives to undertake the substantial time and effort necessary to produce these works and make them available to the rest of us.  However, the public interest in competition and follow-on innovation, as well as cultural policies favoring freedom of discourse and the free movement of goods, are among the counterbalancing values that have historically caused governments to limit the scope of innovator rights to achieve the right balance.

 All of this talk about balance may have made it seem as though there was some sort of natural balancing force in the law akin to the natural laws that maintain steadiness in the orbits of the earth around the sun and the moon around the earth.  If I have given this impression, I want here to dispel it.  The struggle for balance in intellectual property law is a never ending one in which the forces representing the strong protectionist positions are relentless in pursuit of their interests, politically well-connected, and able to mount well-funded public relations campaigns or lawsuits to accomplish their objectives.  Sometimes the public interest in balance gets protected when one set of titans (e.g., telephone companies) takes on another (e.g., Hollywood), but other times, balance is achieved against great odds only by the hard work and imagination of a few underfunded and seemingly overwhelmed individuals or groups.

The main reason I expend so much effort in these columns to explain legal initiatives that will affect computing professionals is to empower my readers to feel that they can help make a difference in the resolution of complex social problems connected to the emergence of networked computing technologies.  Without interventions from people in the affected communities, policymakers may only perceive the alternatives which the strong protectionist forces have presented.

 As the title of this column suggests, the struggle for balance in the law is never-ending.  Even after one important battle for balance has been successfully won, there is almost no time for celebration because the next set of battles is often already underway by the time the first one is over.  And so it should come as no surprise that I say here that even though there is reason to cheer the outcome of the diplomatic conference on intellectual property issues recently held in Geneva at the World Intellectual Property Organization (WIPO) because the forces favoring balance defeated the maximalist treaty proposals that U.S. officials had initially supported, the forces that favor strong protectionist rules are not about to fold up their tents and give up.  Further legislative and treaty activity on digital intellectual property issues will undoubtedly occur this year.  They will provide new opportunities for those who favor strong protectionist norms.

Threats to balance in intellectual property law also arise from newly proposed draft commercial law rules that, among other things, would validate common terms of shrinkwrap and online “licenses,” including perhaps those that aim to restrict the ability of consumers to engage in acts that would otherwise be fair uses under copyright law.  Copyright is thus not the only law to which attention should be paid in the neverending struggle for balance between the rights of information producers and information consumers.

OVERVIEW OF THE WIPO TREATY PROCESS

 In December 1996, WIPO hosted a three-week diplomatic conference to consider three draft treaties:  one on copyright issues, one on legal protection for sound recordings, and one legal protection for the contents of databases.  Delegates from approximately 160 nations participated in this conference.  Two treaties, one on copyright issues and one on legal protection in sound recordings, were concluded on the last day of this conference.

One of the best pieces of news out of Geneva was that the draft treaty that would have required countries to establish a new form of intellectual property protection for the data in databases was taken off the table in Geneva.  The grave misgivings I expressed about this treaty in the December 1996 issue of CACM were apparently widely shared by delegates to the conference.  So many red flags about the draft database treaty went up at the preconference agenda-setting meetings that it was never seriously debated at the conference.

 But lest you become complacent about this good news, understand that by the time you read this column, a group of intellectual property experts will already have met at WIPO headquarters to set in motion a reworking of the database treaty in the hope of convening a new diplomatic conference in the not-too-distant future so that a treaty of this sort can be concluded.  In addition, legislation to protect the contents of databases will almost certainly be introduced in the U.S. Congress very soon.  And member states of the EU will be under the gun this year to enact legislation to implement the directive that the EU Council of Ministers adopted last March that, among other things, requires protecting the data in databases against unauthorized extractions and reuses.

The other good news out of Geneva was that the overbroad and overstrong protectionist provisions of the draft copyright treaty published last summer were rejected by the delegates.  The copyright treaty that was finally concluded there didn’t just give lipservice to the idea of balancing the rights of copyright owners and the public interest in education, research and access to information; it also genuinely contained balanced rules. (Copies of the final and draft treaties are available at http://www.wipo.org.)

The US and EU delegations to the WIPO diplomatic conference were not just seeking a vast expansion of publisher rights in the digital environment.  They also tried to expand author rights in at least two other ways.  These delegations supported a provision that would have given publishers an exclusive right to control rentals of all types of protected works throughout the world.  In addition, they sought to confine “first sale” rights so that purchasers of copies of protected works could not redistribute their copies beyond national or regional boundaries (e.g., a group of scientists could not lawfully ship used science books to African colleagues without special permission).  Both of these efforts failed in Geneva, as did some efforts to get more expansive rights in the digital environment.

 The three most controversial parts of the digital agenda for the WIPO Copyright Treaty were those that concerned draft treaty provisions:  (1) to grant authors rights to control temporary copies of protected works, (2) to curtail national authority to apply or grant exceptions or limitations on authors’ rights (e.g., fair use), and (3) to regulate technologies and services the primary purpose or effect of which would be to circumvent technological protection for copyrighted works.

After representatives of telephone companies pointed out that the proposed temporary copying provision proposed in the draft copyright treaty was so broad that it would have made illegal the transitory copies made as telephone company equipment transmits digital content from one user to another, delegates to the conference realized that it was premature to decide what the international norm on temporary copying ought to be.  Although the draft treaty was decidedly hostile to fair use and private use privileges, particularly as they might apply to digital works, the final treaty not only affirms the continuing viability of fair use and similar privileges, it also expresses faith that new exceptions and limitations on rights are likely to arise in the digital environment.  A preamble to the treaty even recognizes the need to “maintain a balance between the rights of authors and the larger public interest, particularly education, research, and access to information.”  In contrast to the overbroad draft treaty provision to regulate circumvention technologies about which I wrote last July, all that the treaty says is that countries should have “adequate protection” and “effective remedies” against such technologies, leaving to the judgment of individual nations what sort of rule they should have (see “Regulating Technologies To Protect Copyrights” in the July 1996 CACM).

 Under the treaty, authors will have the right to control digital transmissions of their works insofar as these constitute a communication of their works to the public.  In response to concerns expressed by online service providers and telephone companies about the potential overbreadth of this right, the conference approved a statement that interprets the treaty as rejecting the idea that merely providing facilities for transmission of digital works should be the basis for liability.  The treaty also requires nations to protect rights management information which may be attached to digital copies of protected works against unauthorized removal or alteration insofar these would facilitate or conceal infringement.  It also commits countries to use copyright law to protect computer programs and databases.

 Some of the highly protectionist proposals rejected at the diplomatic conference may yet resurface in the course of considering legislation to implement the WIPO treaties.  These treaties, it should be understood, only set a floor of rights below which countries cannot go; they don’t forbid the granting of more extensive rights.  Those who support preserving balance in intellectual property law should pay close attention to the treaty implementation legislation, especially as to its regulations of technologies that can be used for infringing purposes and protection of rights management information.

DRAFT ARTICLE 2B OF THE UCC

 One way to conceive of copyright law is as a set of default rules to regulate the buying and selling of copyrighted works.  However, commercial law provides some rules to govern transactions in copies of books, CDs, and the like.  The Uniform Commercial Code (UCC) is a model law for various kinds of commercial transactions which was initially drafted under the auspices of the American Law Institute (ALI), a body of prominent lawyers, and the National Conference of Commissioners on Uniform State Laws (NCCUSL) for adoption by state legislatures.  The idea underlying the UCC is that commercial law should be as nearly uniform as possible from state to state in order to foster nationwide commerce.  State legislatures have substantially implemented the UCC in their own laws, and this has indeed fostered national commerce.

 Article 2 of the UCC is the set of rules that regulates the sales of goods (e.g., when contracts are formed, how contracts should be construed, what the default rules should be if the parties to the contract haven’t specifically addressed some issues, what remedies should be available if one party to the contract breaches it, and the like).  The UCC has some fairly strict rules for those who sell goods.  Among these are the “perfect tender rule,” which provides that if goods do not conform to the contract, the buyer can reject them, and the implied warranty of merchantability, which requires merchants to stand behind their goods as fit for the purpose for which they were sold.

 Although the software industry has become a major US industry in an era in which software was largely treated as “goods” under the UCC, some software companies have argued that software should be treated differently.  The “perfect tender rule,” they say, is inappropriate given that every piece of software has bugs.  They also argue that they do not “sell” software, but only “license” it, and that different rules are appropriate for licensing than for sales of goods.  Some years ago, the ALI decided to set up a committee to study these issues.  The result of these efforts is draft Article 2B of the UCC which would regulate the licensing of software and of information more generally.  (UCC 2B can be found at http://www.law.uh.edu/ucc2b).  This draft will be submitted to the NCCUSL for a vote in the summer of 1997.

 Among the rules that the current draft of UCC 2B would recommend for state law adoption is one that would validate mass-market licenses, such as those typically found in packages of software.  As we all know, “shrinkwrap licenses” typically say that if you open the plastic packaging to get the software you paid for, you have thereby agreed to the terms of the license in the package.  Until very recently, these documents were generally thought not to be enforceable contracts because the buyer had not assented to the terms of the license at the time the sale was consummated (i.e., when one bought the package at the store).  Some cases had even struck down shrinkwrap provisions as conflicting with federal copyright policy (e.g., a restriction on making backup copies when federal law permitted this).

Article 2B would change all that.  While you can’t be bound by a license unless you assent to it, UCC 2B would allow your assent to be inferred from opening the software package or from continued use of the product after you learned, or had the opportunity to learn about, the license terms.  Under UCC 2B, a licensor will even be able to enforce terms that are so unreasonable that ordinary people would reject the license because of them, as long as the licensor can show you assented to them.

 Among the common terms of shrinkwrap licenses that may be affected by UCC 2B are those that prohibit decompilation or disassembly of computer program object code.  The commentary to an earlier draft of UCC 2B’s mass-market license provision spoke approvingly of validating this kind of license term.  Because federal courts had by then decided that it was fair use to decompile or disassemble programs for a legitimate purpose, such as to make a compatible program, this commentary caused considerable controversy among intellectual property and contract lawyers.  Many intellectual property lawyers were concerned that such clauses would be harmful to competition and that the public should have access to information embodied in a mass-marketed product.  While the current draft of UCC 2B’s mass-market license provision is more circumspect now about the relationship between shrinkwrap terms and federal intellectual property norms, there is arguably room for those who wish to license software or other information products under this provision (if adopted) to enforce restrictions on use that copyright law would permit.  Some intellectual property lawyers worry that shrinkwrap licenses may start containing terms waiving other fair use rights.  Once this sort of trend gets started, even books may come with notices that fair use rights are waived by those who use the book.

 While another column will be devoted to a discussion of other aspects of draft UCC 2B, such as its warranty and remedy provisions (which generally lower the level of rights that consumers can expect the law to provide them when they acquire software or information products as compared with the goods they buy), it is enough for now to note that preserving a balance of rights between providers and consumers of information products is not just a matter of intellectual property rules.  Commercial law rules, such as those now proposed as UCC 2B, will have considerable influence on the extent to which balance will be achieved in commerce in electronic information products.

CONCLUSION

 It is heartening that the WIPO Copyright Treaty preserves fair use and other balancing principles of traditional copyright law.  As long as the proponents of balanced copyright policy remain vigilance, there is reason to be optimistic that balance will also be maintained in any legislation needed to implement the WIPO Copyright Treaty.  However, the battle for balance in laws affecting intellectual property rights in the digital environment is far from over.  There are three principal developments to watch out for:

? renewed proposals to grant intellectual property rights in the contents of databases,
? continuing assertions that copyright owners have “rights” to control temporary copies of works in digital form, and
? draft commercial law rules that provide far less protection to consumers of information in shrinkwrapped packages or cyberspace marketplaces than traditional laws have done.

Your involvement in these issues really can make a difference.  Last year, a number of computer and software companies, computing professional groups, and even some individuals made their views on digital copyright issues known to Congress.  This helped to stop the unbalanced White Paper legislation from being enacted.  Last fall, many of these same companies, groups, and individuals, as well as many new ones, let the Clinton Administration know their concerns about the overprotective nature of the database treaty proposal scheduled for consideration at the WIPO diplomatic conference.  This led to the Administration’s decision to back away from endorsing this treaty which in turn contributed to the decision to defer consideration of this treaty.

The expertise that computing professionals have about the present and likely future evolution of digital technologies, networked environments, and electronic communications and commerce can be used not just to construct the technologies and infrastructure that will bring the future into being.  It can also be drawn upon in the formulation of sensible policies to regulate these new environments.  Many key policy decisions that will determine or shape the future of digital technologies, networked environments, and electronic communications and commerce will be made in the coming year.  Help construct a digital future in which you will want to live.

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Pamela Samuelson is a Professor of Information Management and of Law at the University of California at Berkeley.  Her email address is pam@sims.berkeley.edu.

ACKNOWLEDGEMENTS

Special thanks to Seth Greenstein for his masterful day-by-day reports on the happenings in Geneva during the WIPO diplomatic conference on behalf of the Home Recording Rights Coalition.