Millennium Act Influences Downloading
Copyright Issues in
the Online Marketplace
by Jonathan Yarowsky
NATO Washington Counsel
an act passed by Congress in 1998 seems to be at the important intersection
of public policy and litigation in terms of intellectual property
rights and newly developing consumer technologies. That act, with
the impressive title of the Digital Millennium Copyright Act (DMCA),
was enacted into law with the intent to harmonize existing copyright
laws with new issues arising from emerging technologies particularly
with the distribution of music and video on the Internet.
At its core, the much-discussed Napster case, and now other pending
suits, are all about the judiciarys interpretation of the
DMCA and its practical effect on copyright and technology. As discussed
in previous issues of In Focus, the recording industry filed in
March 2000 a lawsuit against Napster for copyright infringement.
Napster was an Internet-based service which allowed users to swap
for free CD-quality copyrighted music files in a compressed
MP3 digital format. The MP3 file is actually transmitted
between users over the Internet, although the steps necessary to
make the connection could not take place without the Napster server.
It is nearly impossible to bring copyright infringement actions
against individual users because users can log on anonymously. In
the Napster lawsuit, the recording labels won their motion to enjoin
Napster from engaging in or assisting others in copying, downloading
or distributing copyrighted music without the express permission
of the rights owner. The recording labels won a preliminary injunction
in the case, and have entered into court-approved negotiations to
determine whether a settlement can be reached.
The litigation takes place against the backdrop of a changing digital
marketplace. New technology services may be welcomed by consumers,
but if such services traverse established copyright law, they will
be found illegal. Already, the tension between copyright law and
emerging technologies has led to the creation of new record-label-created
online services that will attempt to provide the same wide selection
of offerings but within a business model that will not run
afoul of our intellectual property laws. This is a laudable development,
but those companies new to offering downloadable music and movies
over the Internet the ones that will abide by copyright protection
also need to participate in the digital marketplace if the
Internet is to fully realize its potential for consumers.
Because the film industry is facing similar challenges involving
the protection of its product online, this will be an important
ongoing dialogue for NATO members to monitor. As you may recall,
movie studios announced in 2001 the formation of online distribution
services for their films. While online movie distribution is not
intended to compete with first-run theatrical exhibition, those
services will surely come under the same kind of scrutiny as the
services the music industry is creating.
As these developments unfold in the marketplace and in the
courts Congress is also turning its attention to the issue
of how to protect intellectual property in the digital age, while
at the same time protecting the legal concept of fair use.
In fact, this was recently the subject of hearings in the Senate
Foreign Relations Committee. The Senate Commerce Committee has also
announced that it will hold hearings dealing with whether a technical
standard should be established for the protection of intellectual
For NATO members, it will be important to monitor developments in
this debate because of the antitrust and economic implications it
has for the exhibition industry. While this may not be a front-burner
issue for NATOs membership at this time, the time will come
when NATO may well need to have a seat at the negotiation table.