Author: Vincent Porter

ADDING UP THE BITS by Vincent Porter

The Changing Balance of Interests

The laws protecting intellectual property rights (IPRs) will play a key role in shaping the economy of the information superhighway, or the Global Information Infrastructure (GII) as it is now called in international circles. Although the technologies themselves are protected by patent rights, it is the details of copyright law that will structure the market.

According to legal theory in the USA, copyright was granted to serve the welfare of the public by promoting the progress of science and the useful arts. But in continental Europe, on the other hand, the author’s right was granted to protect the intrinsic human right of the individual author in works which he or she had created. In the final analysis however, the laws of copyright are not natural laws, but laws made by governments, at the national, the European and the international level. The same will hold true for the laws regulating traffic down the Information Superhighway.

In both legal philosophies, the law has traditionally balanced the interests of authors, investors and the public. But that balance is changing as the author’s right tradition of civil law countries is merged with the copyright tradition of common law countries. Both at the international level and in the European Union, harmonisation has been achieved by raising the minimum levels of national protection and by limiting the rights of natural authors.

Today, legal persons are increasingly recognised as authors. Neighbouring rights are almost as extensively protected as authors rights; and copyright now protects computer software and electronic databases, neither of which are truly in the literary or artistic domain. In addition, the term of protection has been extended far beyond that necessary to encourage science or the useful arts; and many works which were in the public domain have now been brought back into the marketplace, by giving them, like Lazarus, a new lease of life.

In some countries, employers own the rights of their employees, while in others, investors can require authors to waive their moral rights. Elsewhere, the provisions in the Berne Convention which guarantee freedom of information and encourage learning are being restrictively interpreted. Finally, the TRIPS Agreement requires GATS signatory states to augment civil sanctions for breach of copyright with criminal penalties.

Within the European Union the situation is even more complicated. In intra-Community trade, the provisions of the Treaty of Rome take precedence over those of the multilateral conventions. Each Member State must therefore afford equal protection to nationals of all other Member States in the European Union and European Economic Area, although once a work has been offered for sale on the European market, the right of authorisation in other Member States is exhausted. This does not apply however, if the work is performed, broadcast or communicated to the public. Finally, the exercise of copyright within the Union may also constitute a breach of competition policy, such as the abuse of a dominant position.

As a result, the simple humanist certainties of the theory of the author’s right have been twisted and deformed, almost beyond recognition; and the pragmatic policies of the original proponents of copyright have been highjacked by investors to afford themselves protection far beyond that necessary to promote the progress of science and the useful arts. The precedence given by the European Union to competition law, over the manner in which copyrights are exercised, may eliminate some of the most gross abuses by rights holders of their monopoly powers over protected works, but competition law is an insufficient guarantee of public welfare. As yet, there has been inadequate consideration at the European level of the impact of these changes on the public’s right to receive information and ideas, which is guaranteed by the European Convention on Human Rights; or on the needs of educators. Furthermore, it is unlikely that when the new intellectual property regime is agreed for the GII, the whole world will accept the supremacy of European competition law. It will therefore be necessary to return to fundamental principles when designing the new regime. Unfortunately this will not be easy, as many of the rules are already in place.

The Issues for the GII

In designing an IPR regime for the GII, the international community has to address two major challenges simultaneously. The first is conceptual, the second is administrative. At the heart of the intellectual challenge is the digital nature of the signals transmitted. This means that signals can exist in atom-sized packets, they can be transformed electronically, they can be copied without loss of quality and they, or the copies, can travel with the speed of light.

The ease with which a copy of a digital work can be copied, or transformed and the speed with which copies of digital works can be moved around the globe also poses administrative challenges. If a consumer acquires a copy of a work, is there any guarantee that it is authentic? Furthermore, if a deformed copy was supplied, or if an illegal copy was made, in which jurisdiction did the offence take place, and in which jurisdiction must any suit for infringement be brought? Finally, even if the international community can reach an agreement as to the appropriate jurisdiction in which an aggrieved consumer should bring a suit for the supply of deformed copies, or an aggrieved right holder should sue for illegal copying, the ease and speed with which works and their copies can travel between jurisdictions will mean that the minimum standards of protection become the de facto maximum standards of protection.

Paradoxically however, I believe that if the international community addresses these intellectual challenges with foresight and imagination they can be overcome. But in order to do so, old thinking and old structures will have to be replaced by new structures. Essentially there are five key issues. They are:

(a) the international dimension of the GII;
(b) the subject matter of protection;
(c) the appropriate right for protected works;
(d) the authenticity of the work; and
(e) the problem of enforcement.

One of the potentially most exciting aspects of the International Superhighway is its international reach. But it is precisely this international reach that may cause problems for the protection of intellectual property rights. If the international community persists with the traditional approach of setting down minimum standards of protection for national laws, there is a grave danger that a two tier system will be established for the GII. On the one hand, there will be an international structure, like the present internet, where there will effectively be no protection of IPRs. On the other hand, there will be a series of national superhighways down which protected works may travel, protected by the copyright law of the country concerned. Even if international links between national superhighways were established by bilateral treaties, it would still be necessary to decide in which jurisdiction any alleged offence occurred. If the European Union were to agree to such an approach, the opportunity of constructing a genuine European superhighway would be lost.

An alternative approach, would be to establish a new international law which protected all intellectual property rights on the GII. All member states would then compel their telecommunication operators to require all subscribers to obey these laws. The same law would then apply over all the GII. I submit that the new law should be distinct from, but related to the provisions set out in the Berne and the Rome Conventions. Furthermore, just as the protection afforded by the Rome Convention leaves intact and in way affects the protection afforded to literary and artistic works, so the new law should not affect the protection afforded by either the Berne or the Rome Conventions. I shall turn first to the protection afforded by these conventions.

The Subject Matter of Protection

Article 2(1) of the Berne Convention has a dual structure. It provides that:

“The expression ‘literary and artistic works’ shall include every production in the literary artistic and scientific domain, whatever may be the mode or form of its expression, such as …”

There then follows a long list of forms of works. In effect the list of different forms of expression, such as books, pamphlets and other writings, dramatic or dramatico-musical works, cinematographic works etc., constitutes a mandatory minimum requirement for signatory states. But in addition, many states have granted more extensive protection within their territory to other pseudo-literary works, such as compilations, which are not universally protected.

The TRIPS agreement also requires the protection of computer programs as literary works and the protection of databases if the way in which the data is selected or arranged constitutes an intellectual creation. In this, the TRIPS agreement echoes article 2(5) of the Berne Convention, which requires signatory states to afford protection to collections of literary and artistic works (but not data) “which by reason of the selection and arrangement of their contents constitute intellectual creations.” However, the TRIPS Agreement does not protect the data and any other material the database may contain, although in some states they may enjoy protection per se. As a result, negotiations are currently under way to establish a Protocol to the Berne Convention which, among other things, would afford protection to computer programs and to databases which constituted intellectual creations by reason of the selection, coordination or arrangement of data or other material. However some countries, notably the USA, also want to protect compilations of data or unprotected materials as literary or artistic works. Even though the US Supreme Court has already required originality in the selection and arrangement of materials in order to justify the protection of compilations, the US Government is still concerned “that many factually-oriented databases may be denied copyright protection or that courts may determine infringement in ways that severely limit the scope of copyright protection for databases.” But at the present time, it therefore seems unlikely that the international community will accept the suggestion of the United states to protect collections of data or other unprotected materials as literary or artistic works.

One of the key difficulties for the international community is to agree a standard of originality. In general, the Anglo-American or common law system requires a relatively low level of originality for protection, whereas in continental countries, the civil-law system requires a relatively high level of originality. In some countries, database owners may also call on unfair competition laws to defend their interests. The solution of the European Union has been to propose a sui generis right of unfair extraction, although individual Member States still have different unfair competition laws.

This caution by the international community in extending the subject matter of protection is wise. For the advent of digitisation means that it is necessary for the international community to draw a clear distinction between protected works and unprotected information. Because information can be digitised, it does not follow that it should be protected. Conversely, even if a protected work, such as a cinematograph film, can be stored or transmitted in digital form, it is more than mere information, and should continue to be protected. But in establishing the GII, there will need to be international agreement as to which packets of digitised information are protected and which are not. Under the present system, the answer varies according to the details of the national jurisdiction under which protection is claimed.

The extent of protection may involve the interplay of at least three elements in a national law, none of which are precisely defined in the Berne Convention. They are the subject matter protected, the level of originality and the protection afforded by unfair competition law. There are thus essentially two options for the international community when it establishes the GII. The first is to continue with the present system. If so, the GII will be regulated by linked national jurisdictions, and thus as a series of linked national networks, analogous to the system developed for terrestrial goods and services. The second would be to establish a new international regime for the GII which would address its specific problems by putting in place new internationally agreed definitions of the subject matter to be protected, the level of originality demanded for protection and the nature of unfair competition in the supply and consumption of digitized works. The simplest way to achieve this would be to establish a separate international jurisdiction to protect IPRs on the GII, above and beyond national jurisdictions. If the international community were unable to agree on this, the European Union could establish its own autonomous European regime.

The increasing ease with which digitised works can be distributed has led to renewed pressure for the introduction of a distribution right. The proposal for a distribution right was rejected by the Stockholm Conference in 1967. At that time, the view was that a right of distribution followed from the reproduction right, and it was therefore unnecessary to specify it separately. Furthermore, in many countries the right was deemed to be exhausted after the first sale of the work. The current proposal is to include a general distribution right in the Protocol to the Berne Convention which would be restricted to the distribution of physical and tangible copies.

As for digital transmissions, when the work is transmitted in non-tangible form, there are currently two proposals at the international level. The first would be to interpret extensively the current provision for a right to communicate a work to the public. The point at issue here is that the right to communicate the work to the public has traditionally been thought to be the right to communicate the work to many members of the public simultaneously, as for example in a cable system. But other countries consider that this right covers the right to communicate the work on a one-to-one basis. By applying this right in conjunction with the right of reproduction, and possibly the right of distribution, the right owner could prevent illegal copying at the recipient end of the network.

The other possible approach would be to extend the right of distribution to include digital transmissions. Either way, as the Committee of Experts on a Possible Protocol to the Berne Convention has already recognised, it would be necessary for there to be international agreement on the appropriate norms.

A key difference between these two approaches is that the digitised distribution right for the work would be a new right, whereas the right to communicate the work to the public is an old right. This difference will be crucial in establishing the transitional arrangements from the old regime to the new regime. The policy issue at stake here is which will better promote the progress of science and the useful arts, the extensive re-interpretation of an old right or the introduction of a new right? If the international community extensively re-interprets the right to communicate the work to the public as a de facto digital distribution right, then the effect will simply be to create a new market for old works, not to encourage new investment for a new market. If the international community adopts this approach it will be the old rights owners, who already dominate the old markets, who will be the principal beneficiaries. But if a digitised distribution right is adopted however, it will be a new right. This would permit the right to be restricted to new works. If the international community wishes to encourage investment for new works on the GII, it would seem sensible not to extend the new right to old works, but to restrict it to works which are published after it has been introduced, thus encouraging new investment for the GII. Regrettably however, the European Union has already taken the opposite view. The Rental Right Directive awards a distribution right to all works which were still protected on 1 July 1994. This is simply creating a new market for old works, and new revenues for old rights holders.

A particular variant of the distribution right is the rental right. In the TRIPS agreement, authors of computer programs, cinematograph works and phonogram producers were granted a right to prohibit the commercial rental of their works. States need not provide a rental right for cinematograph works however, unless rental practices have led to “widespread copying of such works which is materially impairing the exclusive right of reproduction.”

The current proposals for a Protocol to the Berne Convention go further. They propose to introduce a rental right, not merely for audiovisual works, phonograms and computer programs, but also for any other literary or artistic work, such as writings, graphic works or databases, when the copy is in a digital format. The European Union has already gone even further by awarding a rental right to all authors, except those of buildings and applied art. Like the digital distribution right, the rental right would be a new right and if the international community has a genuine desire to encourage the production of new works on the GII, it would seem unwise to extend the right to already published works. As with the distribution right however, the European Union has already adopted the opposite approach.

Linked to the general question of the distribution right is the issue of a right of importation. This would allow a right owner to prevent the importation into one country of a work which had been circulated in another. As yet there is no international agreement on the wisdom of introducing a right of importation. Those countries resisting the introduction of such a right have argued that once copies of a work were placed on the market the right of distribution should be internationally exhausted; and that for a right owner to control the importation of copies of works would be an unacceptable restriction on the free circulation of goods and cultural products, as it might restrict the flow of cultural goods across national borders by requiring that licenses for the use of works were negotiated on a country by country basis. Those countries which advocated the introduction of a right of importation argued that investors required the security of dividing markets territorially, that the long-term effect of allowing parallel importation would be to concentrate the international distribution system in the hands of a few major entities that can afford global presence to the detriment of small entities that sought to promote alternative markets. The absence of a right of importation would end the current system of supply from a plurality of sources; and it might contribute to illegal copying by allowing the piracy of lawfully -made copies of works which were intended for markets where the risk of unauthorised copying was less.

At the heart of these discussions by the Committee of Experts on a Possible Protocol to the Berne Convention lies a deepening international debate in intellectual property and trade circles. Broadly speaking, net importers of products embodying intellectual property rights favour the international exhaustion of rights. In Australia, for instance, three successive enquiries carried out by the Price Surveillance Authority concluded that the right of importation had forced Australian consumers to pay higher prices for books, sound recordings and computer software than consumers in other countries, and had the effect of restricting the availability of copies to customers. Not surprisingly however, net exporters of products embodying intellectual property rights, such as the USA, favoured an importation right. Within the European Union, an importation right would be exhausted once the work had been put onto the European market.

These discussions concerned the sale of physical and tangible goods, not the provision of services. As yet there has been no proposal at the international level to introduce a right of digital importation. If there were, the concept of a Global information infrastructure would be dead in the water. What would emerge would be a series of interlocking national information infrastructures. But if a right of importation were introduced for physical and tangible goods alone, two separate systems of international distribution would be put in place. One for physical and tangible goods which, except in the European Union would be divided nationally. The second for digitised goods and services, would be genuinely international. One of the outstanding issues still to be resolved, is whether a right owner should be able to use the proposed new importation right to prevent the importation and circulation of works which have been transmitted overseas in digital form via the information superhighway.

The Authenticity of the Work

One of the key differences between works which are stored or transmitted in digitized form is the ease in with which they can be transformed, or as their rights owners would say, deformed. A key aspect of consumer protection on the information highway will therefore be to ensure that the version of the work which is rented, or bought, is genuine and complete. This will be particularly important as the consumer, or perhaps more properly the subscriber, will be paying to see or hear the work before it can be inspected. In effect, the work will be electronically shrink-wrapped.

One obvious way to tackle this problem would be to rethink the role of the author’s moral right, and in particular the right of integrity. The moral rights of authors have been virtually ignored in the headlong rush to international harmonisation. The USA has been allowed to ratify the Berne Convention even though its domestic laws afford virtually no protection for an author’s moral rights. In the United Kingdom an author can be required by a publisher to waive his or her moral rights. Under the TRIPS Agreement, although member states have to comply with the substantive provisions of the Berne Convention, they are under no obligation to protect the moral rights of authors. Finally, in the European Union, all four copyright directives are silent on moral rights.

Until recently, common law countries have had a sound economic argument for denying authors their right of integrity. If the rationale of copyright law was to serve the welfare of the public by promoting the progress of science and the useful arts, in most cases this required a marriage of labour and capital – the author and the investor. It would therefore be unwise to grant a right of integrity to the author, as it would be likely to discourage investment, for if the investor wanted to modify a work in order better to satisfy the needs of the consumer, the assertion by the author of a right of integrity could prevent this.

It must be remembered however, that this argument only holds good so long as two conditions pertain. The first is that the investor can retain control over the integrity of the work once it has been put onto the market. This will now be difficult to enforce once a work is digitised. The second is that the consumer can inspect the work before purchasing it – by browsing through a book for instance. In some fields of exploitation, such as film exhibition, consumers have traditionally had no means of knowing whether or not they were seeing the integral version of a work, they have relied on the retailer, here the cinema exhibitor. But in others, such as television transmission, neither the investor nor the consumer has been able to prevent the work being interrupted by advertising commercials.

One way to overcome these difficulties would be to augment the author’s right of integrity with a new right of integrity for a work when it was digitally transmitted. This right would be owned by the person making the arrangements for the production of the work, that is the producer. It would therefore encourage, not just the labour to create the work, but also the investment necessary to produce the work. In addition, it would provide the consumer with a guarantee of authenticity.

The Problem of Enforcement

I have indicated above, that if the GII is to be international, it will be necessary to harmonise the separate national provisions for the subject matter to be protected, the level of originality demanded for protection and the laws of unfair competition when establishing the GII. And that the best way to achieve this would be to establish a new international jurisdiction for the information superhighway. I now want to consider the separate, but additional, problem of enforcing those conditions.

One of the major problems with the Berne and Rome Conventions was that there was no international mechanism for ensuring that national legislation in all member countries did indeed afford adequate protection for rights holders. This was one of the main reasons why the TRIPS agreement was included in the GATS. The dispute mechanism administered by the WTO was effectively superimposed over those of the domestic courts in all countries, in order to guarantee to rights holders the protections afforded by the Berne and the Rome Conventions. But this is a messy approach for three main reasons. First, the dispute mechanism cannot be invoked by an individual right holder, only by a national government. Second, there is a grave danger that a nation’s general trade policy will become embroiled in disputes over intellectual property rights. And third, the procedure is awfully slow and cumbersome. Although this approach has enabled the developed world to bring into line nations offering inadequate protection for intellectual property rights by threatening them with trade sanctions, these arrangements would be unusable for resolving IPR disputes on the GII.

The TRIPS agreement also laid down new international norms for enforcing IPRs. No doubt these will be taken into account when establishing the enforcement provisions for the GII. However, the international community will also need to reach a common view on three further key issues if they are to resolve IPR disputes on the GII.

First, jurisdiction. If an alleged offence occurs on the Superhighway, in which jurisdiction does it take place? If there is an unauthorised extraction from a database, does the offence take place in the jurisdiction where the database is located? Or is it in the jurisdiction in which the digitised information is finally stored? If a digitised signal is intercepted unlawfully, does the offence occur in the jurisdiction through which the signal was passing when it was intercepted, or does the offence not occur until the illegally intercepted signal is copied onto the interceptor’s own computer?

Second, extradition. What, if any, arrangements will be made for the extradition of the alleged offender to face trial in the appropriate jurisdiction? What defence can an alleged offender offer in order to prevent extradition? If found innocent, will the defendant be given the right to receive adequate compensation for extradition, as well as for wrongfully suffered injuries, as provided in the TRIPS agreement?

Third, enforcement. What remedies can courts impose? Can courts in one jurisdiction order the seizure of alleged offending copies in a second jurisdiction? Can a preliminary injunction be served in one jurisdiction against an alleged offender living in another jurisdiction? Can a court in one jurisdiction enforce a guilty party who is living in another jurisdiction to desist from repeating the offence?

Clearly whatever system is set up, will have to balance the rights of defendants with those of rights holders. Yet the more international the dimensions of the alleged offence, the more difficult it will be to protect the interests of both parties. These problems of jurisdiction, extradition and enforcement would be far easier to solve if a new international jurisdiction was established for the GII.

In future, users of the GII will effectively become subscribers to an international network. The rules of the network, including rules of enforcement, would therefore be established by international body which would be set up by governments. Subscribers will each have their own e-mail address, or subscriber reference. Writs of alleged offences could be served electronically, by the network management body, and the accused could also submit any defence electronically to the court responsible for the enforcement of network justice, without having to appear personally. Injunctions could be served and enforced electronically, and any fines could be added to the offender’s network charges. In the last resort, an offender could be banned from the network. For non-network offences, national courts would retain jurisdiction.

Conclusion

I have tried to show in this paper that in order to establish an international GII, rather than a series of linked national networks, it would be sensible to introduce a new system of protection for copyrights on the GII. This would augment the current provisions of the Berne and the Rome Conventions, augmented by the TRIPS agreement.

The new system would establish a common legal system for protecting these new rights. This would include an internationally agreed definition of the subject matter of digitised information protected, the level of originality required for protection and the details of a new law on unfair competition. Ideally, this new system would be established on a global basis, but if not, the European Union could establish an autonomous supranational system in Europe. Digitised information would remain free and unprotected unless it fell within the subject matter specifically protected by the international community.

In order to encourage investment for new works for the GII, the new rights of distribution or rental should only to extend to new works. In this regard, the international community should not follow the precedent set by the European Union. In addition, the progress of science and the useful arts on the GII could also be encouraged, the distortion of digitised works discouraged and the rights of consumers protected, by giving investors in new works a right of integrity in the digitised transmission of those works.

The GII could also be centrally administered as a self-regulating jurisdiction set up by the international community. Procedures would then be put in place to balance measures for the enforcement of IPRs, with the rights of defendants.

ADDING UP THE BITS by Vincent Porter

Research by author