Copyright in the New World of Electronic Publishing

William S. Strong
Kotin, Crabtree, and Strong
Attorneys at Law
One Bowdoin Square
Boston, MA 02114

Presented at the workshopElectronic Publishing Issues II at the Association of American University Presses (AAUP) Annual Meeting, June 17, 1994, Washington, D.C.

I don't guarantee a common theme to the remarks I am going to make here. If there is one, it is probably "education." Because of who you are, this message will be much easier to sell than to some other people in the publishing business. I am speaking here of educating the public about what you do, which requires different skills from those required for publishing books.

I have been asked to say something about how copyright will, if it can, deal with the new world of electronic publishing. Before addressing that, let me first say a few words about what we mean by electronic publishing.

The term "electronic publishing" is like "intellectual property," one of those popular buzzwords that covers a multitude of things which are in fact disparate in certain significant ways. Electronic publishing includes not only on-line publishing but also CD-ROM and related technologies such as CDI. Of these two, CD-ROM and related technologies are much more analogous to classic publishing than on-line publishing. They involve the physical transfer from the publisher to the reader of a tangible thing in which the published work is embodied. I do not mean to minimize the difference between this form of publishing and classic print publishing, but by the same token it is possible to underestimate the similarities.

CD-ROM involves the production of a package. This package, like the cover of a book or a journal, serves a valuable purpose not only in helping to sell the product but also in helping to establish in the reader's or buyer's mind the identity of the publisher. The packaging gives the publisher an opportunity to give the reader/buyer subtle messages concerning quality, reliability, seriousness, excitement, and so on. These images help to sell a particular title, to be sure, but they also cumulatively help to establish in the reader's mind the identity of the publisher as a source of good writing, or sound scholarship, or romance, or what have you. In cases of doubt or where the author may be unknown to us, we tend in buying books, as in buying any other commodity -- if you will forgive my using that word -- to go to a source that we have learned to trust. Furthermore, this image-building does not stop at the check-out counter; it goes on indefinitely on the bookshelves in the reader's own library at home or office.

The image we are speaking of is of course the publisher's trademark and good will. Curiously, trademarks are regarded as intellectual property, although there is nothing inherently intellectual about them at all. I suppose they qualify because they depend for their existence on the mental response of customers.

Another consequence of the fact that CD-ROM involves the publisher in delivering a physical commodity to the buyer is that the channels of distribution are potentially identical. One of the anomalies of CD-ROM publishing to date, which my wife (who was in the business for some years) has pointed out to me, is how few CD-ROMs are available in bookstores; the typical place you look for one is at your local Egghead Software store or other such outlet. This will surely change as the technology becomes more widespread at the user end. I am told that some reference, education and STM titles are already in some university bookstores, and that some publishers are talking to PubNet about carrying CD-ROM titles. As the technology becomes more widespread, bookstores will have reason to carry CD-ROMs and you will start to see CD-ROM sections in your local Walden Books or university bookstore, or indeed to see CD-ROMs intermingled with print volumes on the shelves. This kind of publishing requires muscles that are already developed and in good tone.

On-line publishing is a very different kettle of fish. It does not necessarily deprive the publisher of the opportunity to create a visual identity in the mind of the reader, but to avoid being a faceless address on the Internet the publisher is going to have to resort to new stratagems for helping to create or preserve its identity. Likewise, marketing strategies will have to be thoroughly revamped in light of the loss of familiar opportunities and the gain of new opportunities for reaching one's potential audience.

One exciting thing about on-line publishing is that for the first time it creates the opportunity for the publisher, the reader, and the author or editor to be in a constant dialog. This dialog will not come about automatically. The publisher is going to have to create the incentives and opportunities for it to happen. But consider the opportunities for learning about one's customer base, for getting feedback from readers, and for improving one's product without having to wait years for one's inventory of the first printing to be sold out.

These ruminations on trademarks and so on are not a digression from my topic, though I can understand how you might think so. There are many people who think that the role of publishers is going to wither away, just as Maxists thought the state would wither away. I respectfully suggest that the opposite may occur. First, I believe that what publishers do will become increasingly important as time goes by. Already most of us feel so inundated by random information that we despair of ever managing to know even the essentials of what we must know. Good publishers, by screening this information for quality, and validating it during the publishing process, perform an enormous service. Can you imagine how desperate all of us would be if we no long had any source to which we could turn to to hear, "this is something you really ought to read"?

Second, the digital age can be the age of disinformation. When text and even images can be manipulated and altered seemlessly, and without a trace, authenticity becomes a paramount consideration. Jonathan Swift once destroyed a hostile critic by spreading the rumor that the men was dead. So convincing was Swift that the man's attempts to counter the rumor were dismissed as a prank. If this could happen centuries ago in the world of hot type, the opportunities for such mischief are greatly increased on the Internet. So what a publisher can offer is a reliable source for the real thing.

Now what about copyright for this brave new world? I have heard all kinds of eyewash on this topic. I have heard Chicken Littles say that the sky is falling in on copyright owners. I have heard people say in the tones once reserved for statements that God is dead, that copyright is somehow defunct. I have heard people say copyright will have to be drastically overhauled in order to avoid becoming obsolete. With all due respect, I submit that all of these statements are wrong.

Let's take a look for a moment at first principles. Copyright in the United States is based upon a very simple utilitarian calculus which is embodied with wonderful candor in our Constitution. The Constitution says, "Congress shall have power... To Promote the Progress of Science and Useful Arts, by securing for limited Times, to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries." In other words copyright is a limited monopoly created for the purpose of providing people with a financial incentive to create copyrightable materials, to create works of literature, art, and so on. In the last 200 years no one has thought of any better way of compensating or providing incentives for creative persons and no improvement is on the horizon. I do not expect any national intellect plan that would bear any resemblance to a national health plan, with employer mandates, purchasing alliances, and all the rest of it. No, I think we are stuck with copyright as the only way that we can collectively fund the production of materials for our own edification, amusement, and progress.

But, you will say, all that is well and good, nevertheless, with the new digital technologies the opportunities for theft are so much greater than they ever were that in fact the market for legitimate sales will shrink as the market of readers and users increases. I do not deny that this is a serious problem, but I think its seriousness has been overstated. I expect many of you read in the newspapers or elsewhere of the recent case in Massachusetts where a young man was indicted for committing massive theft of copyrighted materials by means of the Internet. I imagine he saw himself as a Robin Hood of Cyberwood Forest, but the bottom line was that he was nabbed and is facing serious criminal charges.

Having read a lot of nonsense in the last year or so, much of it coming out of the university community, I fear, about how everything should be free for everybody to use, I was curious as to how people would react to this episode. Well, the Boston Globe ran an E-mail poll of those of its readers who were wired in, and the results were quite encouraging. Although there seemed to be a lot of sentiment to the effect that the sentence proposed for this young man was out of proportion to his crime, there was only one answer in the samples I saw supported what he done on philosophical grounds. Quite the contrary, nearly all the respondents agreed that what he had done was wrong. All of which should confirm something that we intuitively know already, which is that copyright is based in human terms on something more than mere utility.

In fact, copyright in continental European countries is much more explicitly derived from what its progenitors believed to be natural law. The right of every author to control the reproduction of the products of his or her own brain is seen there as an extension of the author's personality. We don't go in for such stuff in a big way in this country, but nevertheless I think that everyone subconsciously agrees that when someone has gone to the effort to write or paint or compose a work, his or her control over that should be acknowledged.

In short, there is a moral element present in most people's view of these things that can be built upon and reinforced as a way of reinforcing copyright. Yes, there will be piracy, lots of it, if by piracy we include helping one's self to things for which one really ought to pay. A sort of cybernetic shoplifting, if you will. But to picture this as the end of publishing I think ignores the historical evidence. After all we have been living with massive piracy of that kind in the music world for decades, but the music world has not come crashing down. For decades people have been able to copy songs and symphonies off the air or they have borrowed tapes from friends and have made copies of them or they have made copies and distributed them to their friends. All this is considered by music lovers to be somehow legitimate activity; subconsciously I suppose that they feel that the author and performer have already been paid enough and should not be further enriched, at least not at their expense. When you sit down to analyze it, this is a contemptible position, but it is certainly widespread.

The important thing is not its vice or virtue, but simply the fact that it has not destroyed the resource on which it poaches. Similarly, for the past decade the movie and television industry have managed to survive the widespread videotaping of broadcast materials. Of course there is the software example to worry about. The software industry puts out staggering estimates of the amount of illicit copying of their product. These estimates probably have some validity. But how did we come to this pass?

When software began it was a whole new industry, making a product so different from anything ever seen before that the old rules did not seem to apply. That extended to work habits, dress, time management... and copying. The early software ethic was a sort of freemasonry, and copying of software was actually approved by most people.

The industry lost a crucial opportunity to educate its own ranks, let alone the great unwashed. Educate and discipline, by targeted lawsuits such as the AAP routinely brings. Now they are caught in a vicious cycle where they want to keep their prices up to compensate for copying, and the higher prices drive people to copy. To the extent that copying is done by laymen, it is also driven, I think, in part by computerphobia. It is easier and safer to get a copy from a friend than to wander into a software store and be bombarded and embarrassed by incompressible jargon.

Admittedly, copying in the digital age is faster, cheaper, and better than copying in the good old days of analog. The tools for illicit copying will be more widely distributed. This is where education has a major role to play.

I think it is fair to say that the great majority of Americans are entirely ignorant of how copyright works, where it came from, or why we have it. This is correctable. It will take time and effort and some amount of money, although perhaps less than you may at first fear. After all, on-line publishing gives you the opportunity to communicate things to your customers that you have never had the opportunity to say before. One of those things could be a gentle sermon every now and then about what's right and what's wrong about various uses of your materials. In fact, up front, when you establish a licensing agreement with a recipient of materials, you have an opportunity to educate. It doesn't have to be preachy and it can't be long-winded, but a few choice sentences about the meaning of copyright in user-friendly language will, if repeated often enough, sink in with most people.

A word about these licensing agreements. Is it not an extraordinary thing that suddenly publishers are obliged to enter into contracts with their customers? This has never been the case before. The typical transaction between a publisher and a customer occurred in a bookstore where the customer plunked down money and walked out with the product. Even for journals and magazines the contract was extraordinarily simple, and the buyer's input was limited to checking a box indicating whether she wished to have a one-year or two-year subscription. Now suddenly the buyer is being asked to sign something with a lot of small print telling her all the things that she can and cannot do with the material that she believes she has purchased. As the publisher/customer relationship becomes closer, it will either become more hostile -- if the purchaser feels put upon by the contracts he is obliged to sign -- or it will become more interactive and more mutually educational. In any event, the contract is one of your principal opportunities for getting your point across to your customers about copyright. Also, by having the customer sign a contract that recites the rights that you have and the limitations on the customer's usage of your material, you have added another string to your moral bow, or should I say your moral harp. Most people really do not like breaking contracts, and they will abide by a contract of this kind even though they have little chance to negotiate its terms, so long as they feel they are being treated reasonably and fairly.

On this point I think a certain degree of pragmatism is called for. You may write, if you wish, a contract which severely circumscribes the reader's use of the material that he has obtained from you on-line or on CD-ROM, but such an approach is likely to backfire. If a buyer feels you are not being reasonable in your demands, he will either reject the product or he will accept it resentfully and do what he thinks is fair anyway. Most important, perhaps, his mind will have been somewhat poisoned against the entire system of restraint on which copyright relies.

So it behooves you as publishers to think hard about what kinds of uses you can allow your readers to make without losing your shirt. What are those uses? I do not have any hard and fast answers to the question and I'm not sure that any exist. It helps to some degree, I think, to analogize what can be done with electronic copies to what can be done with the traditional sort of hard copies. As things stand at the moment, you are losing sales on your print products -- if you believe these are indeed sales you are losing -- whenever someone lends a book to a friend or takes a book out of a library, or photocopies a chapter from it for a friend or has a friend photocopy a chapter for him. It may not be reasonable to assume that these are in fact lost sales. These may be marginal readers who, but for the free access, would not bother to read your product at all, let alone buy it, and there are plenty of such people in cyberspace as there are in normal life.

Are such marginal readers likely to "library" digital information that they borrow from their friends? Perhaps, but one suspects that if it is of marginal utility to them, it is not likely to be something they will wish to dedicate storage space to on their hard disks. The major risk, if there is a risk, is that people who would otherwise pay for copies of your products, will obtain copies from their friends or associates and duplicate them. This is what causes publishers to wake up with cold sweats in the middle of the night. And yet how serious a danger is it? Some people who buy from you will share with others, some will not. Some will feel like chumps for having paid money if those around them are then taking advantage of that to obtain free copies. Human nature will probably not allow sharing to happen on a massive scale.

Then, of course, there are the people who will form purchasing groups to buy works and share them digitally at no additional revenue to you. This, too, may happen, but I suspect that it is not going to be a widespread disease. Most people really do have some shred of conscience left, and activity of that kind, overt and premeditated, is not something that most of them are likely to feel comfortable doing. And the more readers are educated about the entire issue, the less comfortable most of them will feel with such a scam.

So I suggest your best course is to assume that there will be some leakage, but not enough to ruin your profit margins -particularly since your costs will decline. And I suggest that if your contracts strike a reasonable balance, allowing the buyer some latitude in what she can do with what you have sold her, you will find that the buyer will be reasonable in response by not participating in the kind of theft that really would cause you harm.

Another stratagem you should use is to make legitimate access to your material as easy as possible at a price that will not encourage pilferage. While it is true that the marginal cost of an unlawful copy is very low to the copier, the marginal cost of a lawful copy is equally low to you.

Similarly for licensing of your works and for granting rights and permissions. Use the Internet for these traditional activities; it will make you more accessible. The easier it is to license your material the more it will be used and the less it will be stolen.

I learned on Monday that the Copyright Office here in Washington is working with DARPA, the originator of Internet, to develop a system that will make it possible to register works, to record copyright transfers, and to carry out licensing on-line. If this should see the light of day, and I believe it will, use it to the fullest.

What about fair use? Is the concept relevant to this discussion? If so, what are its parameters?

Here, again, I am deeply skeptical of some people's claims that the whole law of fair use will have to be rewritten, and presumably in favor of the user. I can imagine a trend toward permitting a customer who pays for information to retain it in his or her own hard disk, regardless of what the "license" agreement with the publisher says. A lot of these license agreements, so-called, are outright sales tricked out as leases, and it would not surprise or offend me to see courts disregard the fiction and treat the information that a "licensee" downloads no differently from a copy she might buy in a bookstore.

With that exception, I see no justification for expanding the boundaries of fair use merely because the material at issue is in digital form.

The touchstone of fair use is whether there is harm to the copyright owner's market. If there is no harm, then the use is much more likely to be fair. In the digital context, this may actually point toward a shrinking of the fair use boundaries. After all, if the publisher has made it possible to obtain any quantity of information, large or small, quickly and with minimal hassle, unauthorized use looks more and more like harm to a real and functioning market.

All that said, I would personally hate to see this fair use issue litigated in the courts. Rather, I would suggest that part of the process of education involve, at some stage, a concerted effort by all interested communities to arrive at a common definition at what is acceptable use of digital information. I would strongly suggest that the publishing industry, the library community, and the academic community, at some point in the not-to-distant future, sit down together to work this out. The goal of such a conference would be to promulgate guidelines for acceptable electronic copying. If every interested group has its say in those guidelines, they could easily acquire the same force of law that people accord to the educational photocopying guidelines.

So far my remarks have focussed on your role as licensors. But in electronic publishing you will often find yourselves in the role of licensees. One of the questions I am repeatedly asked is, how can we make sure that we have the rights we need in order to exercise electronic rights in material that we wish to publish?

If you have an author contract which makes a grant of "all right, title and interest in and to the work, including copyright," you are probably safe. But if instead, you have a license of publishing rights -- for example, if your contract gives you the exclusive right to publish the work in the English language -- you run the risk that that clause will be narrowly construed against you, and that you will be deemed to have acquired only traditional publishing rights.

A much better way to phrase such a license, would be, "the exclusive license to reproduce the work and distribute it by all means and media now known or hereafter discovered, including, without limitation, print, microform, and electronic media." You would also do well to add to that clause, the following: "as well as the right to display and transmit the work publicly on-line." The reason I recommend the addition of those words "display and transmit" is that there is some question as to whether, in fact, what is happening when an on-line access occurs is a "publication" of a "copy." In some sense, of course, there is a set of electronic impulses being distributed to the user. But in another sense what the user is doing is viewing the material on-line -- at least until such time as the user decides to download it to his or her own computer -- and for that interval of time, all that is happening is really a display of the work. The word "transmit" is a word that relates, of course, to the specific technology of on-line distribution, while finessing the question of whether there has been a distribution of a "copy."

And, of course, author contracts are not the only ones you have to worry about. When you obtain permission to use a photograph, a chart, or selections of text from someone else's work, you must be very careful to insure that the rights you are receiving include the rights I have just described. A typical clause might read something as follows:

A grants to B permission to include the following material from the copyrighted work in [name of your work] and in all editions thereof, however the latter may be exploited in any language or in any medium now known or hereafter discovered, including without limitation, print, microform, and electronic media, and in translations of the work in all languages.

What do you do if this issue arises with respect to a work that has been on your backlist for some years, and the contract is silent on the topic of electronic rights? This is what lawyers call -- and it strikes fear into the hearts of their clients -- an "interesting question." If you have a grant of "all rights" from the author, again you are safe. But if not...?

Insofar as publication in a journal is concerned, the Copyright Act provides specifically that in the absence of a written agreement the copyright owner of a contribution to a periodical will be deemed to have given the periodical publisher only the right to reproduce the article as part of the issue of the periodical in which it appears and any revision of that periodical.

While technically this is not relevant to an interpretation of an actual written contract, I believe it is fair to say that the presumptions which the statute creates here would probably be applied by any court forced to grapple with a contract that was silent on the question of electronic rights. That being so, it seems to me fair to assume that you as a periodical publisher will have the right to include the entire contents of that journal in any publication that you make of that journal in any form whatsoever. Thus it appears that you should be able to place the entire contents of the journal in an on-line database service.

But perhaps the inquiry cannot end there. What happens when the journal gets put on-line is that it becomes available to users to extract not the journal in its entirety, but rather specific articles that a user may wish to read. And at this point we must either say that an infringement is taking place -because there is a distribution of the article in a stand-alone form, that the author has not authorized -- or we must say that there has been no infringement (at least by you, the publisher) because the targeted downloading by the user is really no different from the targeted reading of a journal that a user might do in a library, or indeed the targeted photocopying of that article that a user might do in a library or office.

Which of these arguments will prevail? Personally, I think the latter analogy is a more compelling one, but I would be foolish, indeed, to say unequivocally that that is how the case would come out if it ever should be litigated. There is indeed a case pending right now in the Southern District of New York, brought by the authors of various freelance pieces in leading news magazines, arguing that their copyrights have been infringed by the inclusion of those magazines in on-line databases. Don't hold your breath for an answer from this case, as it will likely be two years or more before a decision is rendered. In the meantime, if you wish to proceed without benefit of clergy, as it were, your exposure is probably relatively limited given the financial stakes involved in the kind of material that you publish. It is not for me to advise you whether to take that risk or not. But I would certainly hate to discourage you from taking advantage of the enormous opportunities that electronic publishing has created.

A final word about those opportunities. The MIT Press, a client of mine, is engaged in a journal project that some of you are no doubt aware of. The journal is in the field of computer science, and appropriately it is done entirely on-line. Manuscripts are submitted, edited, and reviewed on line. The journal is available through a central file site and is available article-by-article for a fixed annual subscription price. For subscribers, we have fashioned what I think is an unusually short and user-friendly license agreement. This is just one of a number of such experiments going on. The jury is still out, of course, but to me this represents the enormous promise of this technology. No laws have had to be changed; only people's conventional wisdom about what a journal is and what it means to be a publisher. If we find massive piracy occurring -- which I doubt we will -- then you can pull my beard and tweak me by the nose. I am reasonably confident that the scholarly community, for all its communistic talk about information being free, will me us half-way and make the project a success for everyone concerned.


298 Delivered at AAUP Electronic Publishing Seminar II: Policies, Strategies, Possibilities, Annual Meeting of the American Association of University Presses, Washington, D.C., June 18, 1994.