Testimony presented by Testimony presented by Brian Kahin, General Counsel, Interactive Multimedia Association at the public hearing on "Intellectual Property and the National Information Infrastructure," A Preliminary Draft of The Report of the Working Group on Intellectual Property Rights Information Infrastructure Task Force, Washington, DC, September 22, 1994. Mr. Chairman, I am Brian Kahin, General Counsel for the Interactive Multimedia Association, a 300-member trade association for the growing multimedia industry, based in Annapolis. While IMA encompasses a wide variety of members, our testimony emphasizes the perspective of multimedia developers and publishers. Today, I will speak to the scope and focus of the report and then to our concerns about expansion of the distribution right. Multimedia developers and publishers are very sensitive to intellectual property issues because they acquire content, they integrate content, and they distribute content. They are both owners and users of intellectual property, positioned, at different times, at different points in the distribution chain. They deal with all forms of content -- images, text, sounds, audiovisual works, computer programs -- in an increasingly multifunctional, increasingly networked environment. They inherit everybody's intellectual property issues -- compounded by the problems of clearing rights for a changing technological landscape with some poorly defined and speculative markets. So, in one respect, we approach this topic with some humility and a reluctance to jump to specific solutions. We are also wary of any tinkering with the law that may exacerbate the risks and uncertainty of managing intellectual property rights in this complex environment. We are concerned that the title of report, "Intellectual Property and the National Information Infrastructure," is overly ambitious. Many important issues under that broad subject are addressed summarily or not at all. The report reflects the "superhighway" view of information infrastructure: big pipes through which simple familar objects shoot at high speeds. The real challenge and opportunity of information infrastructure lies in the rich intelligent fabric between simple transport and simple content that digital technology makes possible: the many modes of interactivity, new ways of accessing information, hybrid forms of communications and publishing.... These opportunities involve many issues of pressing concern to multimedia developers: the scope of patentable subject matter; the impact of patents on access to information; patent breadth; patent office operations; and pregrant publication of patent applications. These are tough, controversial issues, and some of them divide our membership, but they are central to the strategies and policies for realizing the NII. Another issue that arises in the context of IMA's work on cross-platform compatibility is the relationship between intellectual property and interoperability, which is often cited as a principal feature of the NII. The broader the scope of patentable subject matter and the broader the scope of copyright protection, the more difficult it becomes for industries to work together on the consensual standards important to the NII. This has not been a problem in the telecommunications arena in the past, because most rights holders were large companies willing to license on reasonable terms. However, the growing acquisition of increasingly broad patents by nonmanufacturing entities ups the risks of conflict. Improvidently issued patents and submarine patents are a growing threat to rapid deployment of infrastructure based on consensual standards. The drawn out negotiations over the many patents related to MPEG2 suggest the potential scope of this problem. Contract law -- vital to mediating the use of intellectual property in a networked environment -- is conspicuously absent from the report. The relationship between copyright and contract merits particular attention. Should a contractual relationship affect a determination of fair use? We are disappointed that despite the question about the need for standards for managing intellectual property in the initial Request for Comments, the report states (without discussion) that this issue is not within the purview of the Working Group. The need for such standards has been expressed by AAP, IIA, and many others. While individual industries might be expected to develop their own specifications, individual industries are not prepared to do so in a convergent multi-industry environment. The scope of the undertaking -- defining requirements, developing a transaction set, architecting a syntax for handling transactions -- is daunting. It must fit with the evolving specifications for EDI, object management, and distributed resource navigation, while accommodating the many dimensions of managing intellectual property rights. The great amount of work required and the need to coordinate among many different industries argues for federal support -- not federal standards, but federal encouragement and support for coordinated work in this area. An issue that has concerned some multimedia developers is the scope of the adaptation right. Do I need permission to offer a view of someone else's data through a lens, filter, template, or add-on program? Is this preparing a derivative work, even if there is no unauthorized copying or display? How do you reconcile Galoob v. Nintendo on the one hand with Williams v. Artic and A. R. T. Reproductions v. Albuquerque on the other? I turn now to the recommendations in the report. First, let me observe that multimedia developers and publishers very much want content owners to feel secure in the network environment. We held the first and only workshop on technological strategies to protect intellectual property in April 1993 and published the proceedings. We will probably support legislation (along the lines of the Report's recommendations) to maintain the integrity of technologies and header information designed to protect and manage intellectual property. However, we are very also sensitive to the difficulties and costs of interpreting, negotiating, and managing rights, and we have concerns about the proposed expansion of the distribution right to include transmissions. Additional rights which overlap with or extend existing rights can create new burdens for agents, content integrators, and distributors. Established practices may be disrupted, and the balance between stakeholders (even among industries) may be shifted. While we greatly respect the rights of content owners, we do not believe that those rights should necessarily be enlarged at the expense of legitimate functions and services in the distribution chain. The potential for disrupting legimate business expectations and public uses argues that new rights should be created only where clearly justified. The 1976 Act elegantly splits principal rights into the reproduction right on the one hand and the public display/public performance rights on the other. In the old analog world these were mutually exclusive: Neither a display nor a performance involved a new "fixation," so there was no reproduction incidental to a display. (The CONTU Report recognized that computers copy programs in the course of executing them and so recommended the "essential step" exception to the reproduction right embodied in Section 117; CONTU did not address the fact that the same incidental copying happens in displays of digital data, including digital images, but the same principle could apply.) The ease of "transmitting" copies from one computer to ten others is cited in the report to justify expanding the distribution right. However, it is not clear what the real need for a new right is since the reproduction right is necessarily involved, whether there is a mailing from the originating computer or a posting on a bulletin board computer and a retrieval from the board by ten individual users. While it may be difficult or impractical to go after individual users, there is no discussion in the report of the desirability of holding bulletin board operators strictly liable. This issue is further confused by the report's assertion that images are displayed by a bulletin board system. This assumption, which was also the basis of the District Court's decision in Playboy Enterprises v. Frena, is technologically incorrect. In a conventional bulletin board system, files must be copied from the bulletin board system to the user's computer. The files are opened and displayed on the user's computer, not on the remote host. (There would be a public display in the case of remote visualization over the Internet using the telnet protocol, where the display is generated in real time by the remote computer.) When the technological nature of the transactions in Playboy v. Frena is properly understood as a reproduction, then it appears that the BBS operator is not an active infringer and is not liable unless contributory infringement can be established as was the case in Sega v. MAPHIA. The arguments against strict copyright liability for bulletin boards, online services, and other services that mix communications and publishing functions should be recognized. As multimedia products and services become increasingly networked, the opportunities and benefits of incorporating user-generated information increase. A strict liability rule would stifle the development of hybrid publishing environments. Indeed, it would preclude participation by individuals and small entities into multipublisher software environments because ultimately they would have to bear the high costs of immediate filtering and patrolling of their own communications. In conclusion, the report should be clear about its focus. It could focus explicitly on protecting content under copyright, or it could deal comprehensively with how intellectual property systems interact with the long-term development of functionally enriched information infrastructure. The broad approach would require an understanding of the emerging business and service models, the technological characteristics of a distributed, public information infrastructure, and the range of strategic and policy issues at stake. If you choose a more amibitious approach, whether by expanding the draft report, or by viewing the report as the first in a series of related inquiries, we would be pleased to work with you. Thank you. .