The Honorable Ron Brown
Secretary
U.S. Department of Commerce
14th & Constitution Ave., N.W.
Washington, D.C. 20240

Dear Secretary Brown:

On behalf of the National Information Infrastructure Advisory Council (NIIAC), this letter responds to your October 14 request to assess the Administration's National Information Infrastructure (NII) activities to date. Specifically, the NIIAC was asked to identify:

• those areas in which the Administration has made noteworthy progress; and
• any changes to the Administration's direction or priorities.

NOTEWORTHY PROGRESS --

The Administration's NII efforts have been noteworthy in many important respects.

• Leadership -- By personally devoting the time and energy necessary to raise the visibility and discuss the importance of the NII, you and the Vice President have elevated the NII to a priority both for the Administration and the American public. Your leadership has helped to increase the media's awareness of and attention to NII related issues.

• Vision -- The Administration has successfully underscored the link between the NII, U.S. competitiveness, economic growth and jobs. YOU have also done a great deal to show how the NII has the potential to deliver applications with social benefits in areas such as education, healthcare and government services.

• National Goals -- The Council strongly believes that articulating national NII goals and challenges is critical. To that end, the Council supports the Administration's goal of linking every classroom, library, hospital and clinic to the NII by the year 2000.

• Competition and Deregulation -- Your attempts to move toward domestic telecommunications competition and deregulation have been a very significant contribution to the NII debate. In our view, the general direction you are advocating will continue to increase private sector investment in the National Information Infrastructure.

• Significant Issues -- The Administration has shown a willingness to confront the challenging issues to accelerate the deployment of the NII. In fact, we commend the Administration's bold leadership in offering its own proposals in these challenging areas, such as telecommunications, privacy, intellectual property, and security.

  While the Council has not completed its substantive analyses of these proposals, the Council believes the Administration has made a major and significant contribution to the NII debate by moving these issues forward.

• Government as a Technology User -- Your Administration has found innovative ways to use NII technology to improve the functioning of government. Key examples of this include:

  • The White House World-Wide-Web Server;
  • The IITF Bulletin Board;
  • "Virtual Conferences";
  • Electronic Distribution of Government Documents; and
  • A myriad of new government uses of information technology, as recommended in the National Performance Review.

• Global Leadership -- Together, both you and the Vice President have been instrumental in putting the Global Information Infrastructure (GII) on the international agenda. The NII is ultimately a global issue and we commend you for having the vision and commitment to successfully create an exciting international dialogue on this critical subject and the related policy issues.

NEW "DIRECTIONS AND PRIORITIES" --

We would like to suggest the following ways in which the directions and priorities of the Administration's efforts might be enhanced in 1995:

• Stimulate Competition and Speed Deregulation -- The Administration should continue its efforts to get domestic telecommunications competition and deregulation legislation through the Congress. In that context, the Administration should work closely with Congress to achieve the objectives of increased competition, diversity of ownership, the establishment of regulatory parity, open access and continued deployment of an advanced infrastructure.

• Enhance Public Awareness Campaign -- The degree to which the public understands and supports the NII will be critical over the next two years. The Administration must place a much higher priority on finding ways to communicate effectively the benefits of the NII to the average American. This might include the potential impact of the NII on jobs, lifelong learning, health, and public safety. This will require as much effort in a public education campaign as the Administration has put into various aspects of its public policy agenda. Once such a public education campaign is designed, the Advisory Council would be pleased to comment on it. Members of the Council also look forward to finding ways that they could participate and be supportive of such a campaign.

  We hope the Administration will work jointly with the Advisory Council on the "stakeholder outreach" part of the Council's work. The public education materials that the Administration develops could be helpful in this phase of the Council's work.

• Protect Intellectual Property -- The Administration has made its intellectual property agenda a high priority. The Council is still considering its specific substantive recommendations in this area. However, the Council believes that for the NII to succeed, intellectual property must be protected and should therefore be a high priority.

  Once the Administration completes the process of reviewing the existing intellectual property laws, the Administration should actively pursue any legislative measures that may be necessary to adapt those laws to the NII to ensure the protection of intellectual property.

• Overcome Hurdles to Applications -- While specific application areas are being highlighted by the Administration and the Advisory Council, not enough is being done to identify the public policy hurdles to their implementation and to develop plans to address those barriers. The Administration should work collaboratively with industry to bring together "stakeholder" panels (including state and local government officials) in application areas to recommend specific actions and timetables that could accelerate implementation of key applications. This discussion should also focus on whether the separate applications are working together closely enough and leveraging their common strengths.

• Incorporate State and Local Perspectives -- Much of the NII is happening at a local grassroots level. The Administration must not turn the NII into largely a federal enterprise when it is in reality, a tapestry of thousands of local and state efforts. More work needs to be done in both acknowledging and working with the outstanding state and local efforts currently supporting the development of the NII. Information gleaned from the state and local levels could serve to augment the Administration's NII efforts. Programs at the state and local level could also be evaluated as testbeds and models for emerging best practices for delivering government services and enhancing access to government information. The federal government could also publicize the "best practices" of state and local efforts so they can be emulated around the country.

• Evaluate Costs and Financing -- The Council feels strongly that the Administration needs to place a much higher priority on the real costs of various aspects of their NII proposals. In addition, it must place more emphasis on developing appropriate proposals for funding.

• Establish Goals and Deadlines -- The establishment of time deadlines or calendar goals for certain aspects of the NII can help galvanize public support for its implementation. The Vice President's goal of connecting schools, libraries, hospitals and clinics by the year 2000 is an outstanding example of this. We would recommend that the Administration build a consensus and propose funding mechanisms to achieve this goal.

  The Administration should also consider whether there are additional aspects of its NII work that will lend themselves to such goals and deadlines. Otherwise, affected communities may feel general intentions do not translate into concrete action. For example, while the Administration has rhetorically supported progress related to the NII and disabilities, it would be more helpful to have specific timetables whereby specific milestones, (e.g., significant R&D on access barriers related to disability) could be completed.

• Build Consensus Between Industry and the Public Interest -- While the Administration has consulted with many outside groups, in many instances consultation has not been adequate. Some areas require actual consensus building between government and stakeholder groups.

  For example, privacy and security is one area in which the Administration needs to work towards building real consensus with the private sector, and may need to bring the international community into these discussions.

  The GII is another area in which additional consensus building is needed between the Administration and stakeholder groups. Our Advisory Council would like to take a more active role in working with the Administration on the GII issue. The Administration should also reach out to the public interest sector on the GII. There are public interest groups functioning at the international level that can be helpful in this regard.

• Human Resources and the NII -- We recommend that the Administration place a high priority on the human resource impacts of the NII. We also hope the Administration will explore the degree to which worker training and lifelong learning will be needed to support its development.

• Integrate Technology and Public Policy Perspectives -- Where possible, public policy perspectives and technological perspectives should be integrated. The IITF and all of its subcommittees and working groups should work toward bringing a technological perspective to as wide a range of NII public policy issues as possible.

  More reliance should be placed on private sector technological expertise. It will also be important for the government to avoid choosing amongst or favoring specific competitive technical solutions to realizing the NII.

• Address Liability Issues -- The Administration has already addressed several key issues that could represent significant challenges to NIl implementation if not addressed. One additional such area is liability. Certainty with respect to liability may be an incentive to private sector investment in the NIl. Therefore, the Administration should analyze the issue of liability and make recommendations.

We hope these observations and suggestions are taken in the context of our strong endorsement of the Administration's outstanding record on the NII. Your national and international leadership and vision have been an outstanding contribution to progress of the NII to improve our quality of life at home, work and in our schools. We are glad to be given the opportunity to offer our comments to you as you formulate your NII priorities for 1995.

In summation, we applaud you and your track record in moving the NII forward. We are available to elaborate on any of these items in more detail. We commend you for the noteworthy progress you have made to date and look forward to working with you in the months ahead. We hope you will call upon us.

Sincerely,

Delano E. Lewis
Co-Chair, NII Advisory Council

Edward R. McCracken
Co-Chair, NII Advisory Council

The Honorable Ronald H. Brown
Secretary of Commerce
14th and Constitution, N.W.
Washington, DC 20230

Dear Secretary Brown:

We understand that you will be heading the U.S. Delegation to the upcoming G-7 Conference in Brussels, which will address the emerging Global Information Infrastructure ("GII"). On behalf of the National Information Infrastructure Advisory Council, we are writing to provide you with the recommendations of the Advisory Council concerning the issues to be addressed at the G-7 Conference.

We believe that the Administration has laid an important foundation in articulating its basic vision of the GII and challenging the world community to join in the development of the GII. Of course, the process of developing an international consensus on the GII will require resolution of a number of significant issues, and the G-7 Conference represents only an early phase of that process. In addition, we believe that the successful development of the GII will depend on the active participation of U.S. private industry and closer consultation between private industry and the Administration. We are confident, however, that the collaborative efforts of industry and government will ultimately prove successful.

As you know, the Advisory Council has been actively engaged in assessing a range of legal, technological, and social issues associated with the development of the National Information Infrastructure ("NII"). After considerable deliberation and debate, the Advisory Council has adopted fundamental principles concerning intellectual property, electronic commerce, and lifelong learning. We will provide you with these principles shortly, and we will forward principles addressing access, privacy and security, and overall issues once the Council completes them. While some of these principles may be most applicable in the context of the NII, we believe that the objective and spirit of the principles may also be applied in the GII environment.

The Advisory Council recognizes that many countries have distinct legal, cultural, and social traditions that affect how the GII may be implemented. The preservation of distinct cultures and national sovereignty are important for all nations; and the GII must accommodate these considerations. However, while there is unlikely to be a common approach to implementing the GII, the Council believes that it is appropriate for the Administration to pursue a consensus among the G-7 nations on GII goals and to work toward agreement and measurable progress in achieving those goals.

The Advisory Council commends the Administration's leadership in identifying five basic principles for the GII. The Advisory Council agrees that the keys to the successful development of the GII are private investment and competition. Complementing these two building block principles is the need for a flexible regulatory environment that permits private enterprise to flourish while protecting the public interest. Open access for information providers is also essential to the development of the GII. Finally, while we recognize that universal service may be a desirable long-term goal, its attainment must remain subject to the resources and priorities of each country.

In your discussions with the leaders of the other G-7 member countries, the Advisory council also believes that the following specific matters warrant special emphasis:

• National markets should be internally competitive and open to foreign competition. This is a "First Principle" which all global markets should honor.

• Intellectual property rights on the GII must be ensured.

• The United States should pursue technology trials that are jointly supported by the participating nations and that explore pre-competitive GII technologies.

• The harmonization of laws and regulations consistent with the United States' national interest is essential to the successful development of the GII.

• The United States should promote the goal of interoperability among national information infrastructures.

• The United States should seek to promote the development of the GII through every means possible, including multilateral, bilateral, and, in certain instances, unilateral means.

National markets should be internally competitive and open to foreign competition. This is a "First Principle" which all global markets should honor. The building block principles of private investment and competition should apply to national markets as well as to international markets. The telecommunications and computer revolution in the United States over the past twenty-five years is traceable to the adoption of policies aimed at promoting competition and private investment. The Advisory Council believes that other countries will realize similar benefits by taking steps to promote competition and private investment within their domestic markets. Moreover, progress in the development of the GII will depend on the extent to which markets are open to competition. We also believe that procurement decisions should be open, transparent, pro-competitive, non-discriminatory, and based solely on reasonable business decisions and sound commercial principles.

To the extent there are limitations on market access derived from cultural or other domestic public interest considerations, the G-7 member countries should pursue ways to accommodate their concerns without merely denying foreign access to national markets. Because of the substantial transmission capacity that the GII is expected to offer, a country might reserve a reasonable portion of its overall total capacity for indigenous or other public interest programming, without effectively denying access to their market to foreign program producers and providers by, for instance, applying these restrictions to individual channels.

Intellectual property rights on the GII must be ensured. In an electronic environment offering instant, worldwide communication, the rights of those who own, create, or contribute to intellectual property must be respected and preserved. It is essential to provide meaningful incentives for the creation and dissemination of works in the GII, while ensuring adequate access to and appropriate privileges of use of those works.

Complementing the legal recognition of intellectual property rights in the GII is the practical need for technical mechanisms to control the use of protected works. Enforcement of intellectual property interests will continue to occur primarily through private means, and the GII will need to offer rights owners the technical means of controlling the exploitation of their works.

The United States should pursue technology trials that are jointly supported by the participating nations and that explore pre-competitive GII technologies. While public policy is important to the development of the GII, the adoption of technology will ultimately determine how the GII actually develops. Just as domestic U.S. technology trials have offered invaluable experience with basic NII technologies, the United States should pursue cooperative test-bed ventures with its trading partners. The Council believes that such joint technology trials should focus on innovative applications, such as environmental, educational, library, and electronic commerce applications, should be supported by the participating nations, and should explore pre-competitive technologies.

The harmonization of laws and regulations consistent with the United States' national interest is essential to the successful development of the GII. Part of the promise of the GII is its potential capability to enable individuals to share in the diversity of cultures, traditions, and viewpoints around the world. To realize this potential, however, the GII will have to accommodate a variety of legal and social structures. Part of the process will involve efforts to develop common approaches to legal and technological issues. Where agreement on specific approaches to implementing the GII is not achievable, however, the United States should work towards agreement on approaches that are consistent with the national interests of the United States.

The United States should promote the goal of interoperability among national information infrastructures. Because of the unique legal, cultural, and social traditions of individual G-7 members, it is essential for the United States to stress the goal of achieving interoperability among national information infrastructures. This goal will be accomplished through a variety of means, including primarily through voluntary, industry-led standard setting processes. While the United States and its G-7 partners should support those efforts, the interests of key contributors to the development of the GII must not be sacrificed. Thus, for instance, the goal of interoperability should not be achieved through means that denigrate U.S. intellectual property rights.

The United States should seek to promote the development of the GII through every means possible, including multilateral, bilateral, and, in certain instances, unilateral means. The United States currently seeks to promote its legitimate interests through multilateral, bilateral, and, in certain instances, unilateral means. While agreement on fundamental objectives and approaches to developing the GII will depend on multilateral initiatives, such as the G-7 Conference, there will remain a need to utilize bilateral and, in appropriate circumstances, unilateral measures to achieve specific objectives.

Sincerely,

The National Information Infrastructure Advisory Council

by:

Delano E. Lewis
Co-Chair

Edward McCracken
Co-Chair

The Honorable Bruce A. Lehman
Assistant Secretary of Commerce and Commissioner of Patents and Trademarks
Department of Commerce
Washington, D.C. 20231

Dear Commissioner Lehman:

On behalf of the National Information Infrastructure Advisory Council, we are enclosing the Council's response to "Intellectual Property and the National Information Infrastructure," the preliminary draft of the report of the Working Group on Intellectual Property Rights.

We recognize and support the important work that you and the Working Group have undertaken. The NII Advisory Council appreciates the opportunity to comment on the Green Paper, and looks forward to hearing a response to the Working Group. We would be pleased to provide further input or participate in discussions on the issues raised.

Sincerely,

Delano E. Lewis
NIIAC Co-Chair

Edward R. McCracken
NIIAC Co-Chair

cc. Secretary Ronald Brown
Sally Katzen

Response to the Green Paper

The members of the National Information Infrastructure Advisory Council commend the July 1994 Preliminary Draft of the Report of the Working Group on Intellectual Property Rights (known as "the Green Paper") as a thoughtful and well-formulated document. The Green Paper is a valuable contribution, providing a good starting point and general framework for an analysis of the copyright issues raised by the NII. Moreover, as described below, the Advisory Council endorses several fundamental principles espoused in the Green Paper as well as a number of its specific recommendations.

Nevertheless, concerns were expressed about a number of issues. A few of the Green Paper's recommendations proved controversial. Members of the Council also identified various issues discussed in the Green Paper that may warrant further exploration, either because the recommendations need clarification as to their rationale or scope, or because other resolutions might be preferable. Finally, several issues not addressed in the Green Paper were identified by individual members as important, including the relationship between copyright and other areas of law.

The majority of the Advisory Council found the Green Paper to reflect a good faith effort to promote the public interest. However, a few members expressed the view that the Green Paper's proposals tip the balance of interests between proprietors and the public interest so as to disfavor the latter.

B. Areas of Agreement

1. Fundamental Principles

The Advisory Council strongly supports the Green Paper's premise that adequate and effective protection of intellectual property is essential in order to develop a successful NII. Unless copyright owners are assured that their rights will be protected, they will not be willing to license their product -- without which the NII cannot function at its full potential.

The Council agrees that existing U.S. copyright law applies to uses of works on the NII, and will cover most of the problems that can currently be anticipated. It also agrees that some modifications and clarifications may be advisable in order to ensure adequate and effective protection in the digital environment. Such modifications, however, must not undermine existing rights or established limitations on those rights, such as fair use and the first sale doctrine.

2. Specific Recommendations

The Advisory Council agrees that transmissions and other communications of copyrighted works over the NII should fall within the scope of the copyright owner's exclusive rights. As one member put it, it is important for the copyright owner to enjoy a "seamless web of protection." More controversial are the questions of which existing right is implicated, or whether a new right must be added, and how existing limitations on rights will be incorporated within the digital realm.

As a matter of principle, the Advisory Council supports the grant of a performance right for sound recordings applicable to their transmission or other communication through the NII, other than by conventional broadcasting (whether analog or digital), provided that this new right shall be granted in such a way that it does not derogate from existing rights. The Council takes no position on the specific recommendations included in the Green Paper, insofar as they may relate to the grant of a broader performance right in sound recordings, including its applicability to conventional broadcasting. Some Council members believe that it is premature to take any position on this issue, but do believe that it warrants further exploration. The concern was also expressed that whatever is done in the NII should be compatible with the future evolution of technology.

The majority of the Advisory Council also agrees with the Green Paper's recommendation against adding any new compulsory licenses to the Copyright Act, stressing that the copyright owner should retain control through the ability to grant exclusive rights. To the majority, the difficulty of clearing rights for multimedia works is not a sufficient justification to eliminate this control. A suggestion was made that consideration be given to phasing out current compulsory licensing schemes and emphasizing the need to develop rights management systems for the NII. On the other hand, some suggested that a compulsory license may be a practical necessity when marketplace solutions do not work, or in other appropriate circumstances.

There is general consensus that technological protection against unauthorized uses is necessary to supplement legal rights, and that public education about the importance and meaning of copyright and about the fair use doctrine is critical to successful implementation of the NII.

Finally, given the complexity of the issues and the diversity of opinion over intellectual property in the digital networked environment, a few members of the Advisory Council recommended the establishment of a second National Commission on New Technological Uses of Copyrighted Works ("CONTU2"); however, the majority of the Council does not believe there is a need for a CONTU2.

C. Areas of Disagreement

The chief area of disagreement relates to the Green Paper's conclusion that a transmission must involve either a distribution of a copy or a performance. Members of the Advisory Council made several comments: that all transmissions to the public of works such as music constitute public performances under existing law; that more than one right can be implicated by the same conduct, and a digital transmission may involve both distribution and performance rights; and that some transmissions may involve neither a distribution nor a performance.

In addition, some members felt that a broadcast transmission should be defined to constitute a distribution; some expressed concern about the potential adverse effect if the new right of distribution by transmission were to replace or supplant the existing right of public performance.

As to the "primary purpose or effect" test proposed in the Report for distinguishing between transmissions of reproductions and transmissions of performances, reactions were uniformly negative. Objections ranged from the philosophical, questioning the relevance of "purpose" or the distinction between "primary" and secondary," to the practical, noting the inherent uncertainty of the test and the resulting likelihood of burdensome litigation.

D. Issues to Be Explored

The most basic question raised by the Advisory Council is the degree to which the proposals in the Green Paper would effectively protect creators and copyright owners while accommodating the interests of users, and whether there are ways in which protection could be made more effective. There was also a concern that the application of fair use in the NII environment be adequately explored in the Working Group's final report. Other issues identified by members of the Council were more specific. They are listed below without indicating any consensus within the Council as to their basis or relative importance.

1. Issues Addressed in the Green Paper

a. Exclusive rights generally

Do the proposed definitions of the copyright owner's exclusive rights cover "the entire mosaic of all delivery and communications in the NII . . . so there are no gaps for unauthorized users to escape liability"?

b. New "transmission" right

Is it necessary to change existing law? Aren't transmissions covered by the existing exclusive rights?

Is "transmission" too narrow a concept? Should the law instead adopt the broader concept of "communication"?

Under current law, rights can co-exist, with a single act potentially implicating more than one right. Is it "clear" that every transmission involves either a performance or the distribution of a reproduction? What other options are there?

If there is to be a new right, why define it in terms of a distribution of copies by transmission? Could there instead be a right "to transmit" a work, which need not necessarily involve either a performance or a reproduction?

Would the "transmission of a reproduction" cover the situation where binary digits, but not images or sounds, are received at a remote computer? How would the existing definition of "transmit" under section 101 of the copyright law apply where only bits are sent and received?

How would the new distribution by transmission right be reconciled with established limitations on the exclusive rights of owners? Should such a right be added without the enactment of limitations corresponding to the limitations on existing rights?

Will an economic analysis be done of the effect on authors of placing electronic transmissions under the proposed distribution right rather than the existing performance right? How will "back end payment structures" for compensating copyright owners, such a royalty payments and residuals, be affected by proposed changes in the law?

What would be the impact of the proposed distribution by transmission right on case law holding that a work does not have to be audible or visible for a television or radio transmission of the work to constitute an infringement of the right of public performance?

What is the rationale behind the "primary purpose or effect" test for distinguishing between the transmission of a reproduction and the transmission of a performance? Could a transmission involve both a distribution of a reproduction and a public performance? Could the transmission of a reproduction be commercially significant even if it is "secondary" in purpose or effect? Who should decide, and won't this test lead to much litigation?

c. Concepts of "Public" and "Publication"

Does the concept of "public" performance or display under current copyright law need to be redefined to ensure that it covers individuals at home calling up works from a server, or accessing a computer program on an interactive basis?

Should we eliminate the "public" limitation on the copyright owner's exclusive rights of performance and display, and instead privilege truly "private" uses through exemptions and limitations on the exclusive rights (such as fair use)?

What are the implications of the proposed new definition of "publication," both domestic and international? As noted in the Green Paper, the concept of publication appears in many different contexts in the Copyright Act, including the Library of Congress deposit requirement in section 407. Would all electronically disseminated works become subject to the deposit requirement?

d. First sale doctrine

Does the suggested change in the law go far enough in making clear that copies taken off the NII can't be distributed further? What would be the status of copies of performances made in the course of communication to the public or at the point of reception?

Does the suggested change in the law go too far? What is the electronic equivalent of routing a single printed copy? Can technical fixes be exploited to achieve the same result?

Should the law expressly affirm the ability of copyright owners to impose contractual restrictions on the use of transmitted copies? Would contractual restrictions defeat claims of fair use, the right to make copies of computer programs pursuant to section 117 of the Copyright Act, or conduct within other statutory limitations on exclusive rights?

e. Categories of works

Have developments in technology erased the distinctions between the categories of works listed in section 102(a) of the Copyright Act? If so, should the distinctions be eliminated from the law?

What are the implications, both national and international, of eliminating the definitions of different categories of works?

f. Importation rights

Is it "clear" that current copyright law does not cover importation from abroad by transmission? If not, how would this be handled under communications law? trade law? or other agreements?

g. Fair use

The Green paper postpones analysis of the important issues of fair use, and educational use generally, until the conclusion of conferences and hearings. What are the issues? Will uses beyond educational and library settings be addressed, as well as the full range of educational activities such as distance education? What recommendations should be made? What is the basis for the fair use analysis? Existing law and technology? If not, what scenarios should be used for guidance? How will fair use be accommodated within the digital networked environment?

h. Other exemptions/limitations

The Green Paper notes that various specific exemptions and limitations on the copyright owner's rights, most of which apply only to certain rights, may be affected by which right is determined to be implicated by an unauthorized transmission. Have all of the exemptions and limitations in sections 108-120 of the Copyright Act been analyzed in detail to determine whether any modifications are necessary in light of the Report's proposals? For example, in what circumstances would existing compulsory licenses for secondary transmissions apply?

i. Bans on decoding devices and services

Should bans on unauthorized decoding devices and services be placed in the Copyright Act or elsewhere in the U.S. Code, such as Title 18 or Title 47? Should the manufacture, distribution or use of such unauthorized devices or services be considered copyright infringement, if a cause of action will be given to manufacturers and operators as well as copyright owners? If it is defined as copyright infringement, how should the fair use doctrine be taken into account (for example, as applied to the provision of public access channels)? What impact will a ban on unauthorized decoding devices have on the ability to achieve interoperability under fair use, or to gain access to encrypted works that are not protected by copyright?

In addition to banning unauthorized decoding devices and services, should the law also bar the development and dissemination of software that decodes or "unlocks" programs without the copyright owners' permission? Should it expressly recognize the right to encode against copying?

j. Liability of service providers

Should service providers, such as electronic bulletin board service ("BBS") operators, be required to periodically scan and delete any unauthorized copies, or face liability as a contributory or vicarious infringer?

The Green Paper suggests the possible application of libel law principles to issues of vicarious and contributory liability for service providers. Since defamation law appears to impose different standards for liability than current copyright law, how should copyright principles be reinforced and distinguished?

k. Digital signatures

Should the law explicitly state that copyright owners may affix a digital signature or fingerprint to their works? Why should this be different from encryption of cable programming today?

Should the proposed prohibition against altering copyright management information be expanded to include a prohibition against modifying or deleting digital signatures?

l. Derivative works

Would the Green Paper's recommendations continue current law in prohibiting the creation and exploitation of derivative works without the consent of the owners of the underlying works? Can rights in derivative works be strengthened without weakening rights in underlying works?

Is there a point at which a work can become so transformed that it can no longer be considered a derivative work? Can sophisticated information search and retrieval tools that become essential navigational aids for content providers and users of the NII be seen as violating copyright if they require transmission of a work, but not its viewing, to evaluate suitability in response to a user query?

m. "Rendering" software

In referring to "rendering" software, a distinction can be drawn between software that renders an output for humans to interpret and software that renders an output for delivery to another machine or program. Should both types of "rendering" be included (separately or together) within the scope of the copyright owner's exclusive rights as "performances"?

n. International issues

How would the Green Paper's proposals interact with our international treaty obligations? Are the proposals all consistent with Berne?

In particular, would the new "distribution by transmission" right undercut or violate Berne Article 11, which requires member countries to grant to authors of dramatic, dramatico-musical and musical works the rights of public performance "by any means or process" and of "communication to the public"? If so, what would be the likely consequences of American copyright owners abroad?

What are the international implications of the Green Paper's interpretation of the public display right as covering virtually all NII uses, in light of Berne's lack of an independent public display right? How will licensing be handled, in circumstances involving primary displays of the work at the point of origination, embodied in communications that are further distributed to the public, and intermediate displays that may occur in the telecommunications pathway? When would there be "private displays" that are not subject to a copyright owner's exclusive rights?

How would the Green Paper's proposals be integrated into a Global Information Infrastructure?

Are the Green Paper's proposals important in securing global harmonization of intellectual property law?

How do the Green Paper's proposals relate to the Administration's current international efforts, including negotiations with respect to the Berne Protocol and the proposed rights and obligations of U.S. record companies, performers, songwriters, performing rights organizations, and broadcasters?

Many of the developing countries that will benefit greatly from a Global Information Convention are members of the Universal Copyright Convention, but not Berne. Would this issue become moot if GATT TRIPs is adopted by most of these countries? How should we take into account the freedom-enhancing potential of a Global Information Infrastructure, while still providing adequate protection for copyrights?

2. Issues Not Addressed in the Green Paper

a. Relationship to other areas of law

How will the proposed changes in copyright law fit into the various legal regimes that apply to communications? For example, how do the current cable and satellite compulsory licenses fit into the picture? How would the proposed right to distribute fit into the picture? How would the proposed right to distribute by transmission coexist with legal rights outside of copyright? What is the effect of various aspects of patent protection that may overlap with copyright rights in the NII?

b. Special issues in applying traditional copyright concepts in the network environment

In the network environment, it is necessary to separate out the need for clearance of copyrights from the task of delivery of packaged objects independent of their contents? (In the broadcast industry, by analogy, retransmission consent is a level of authorization separate from the authorization by the owners of copyright in the programs that are broadcast.)

The Green Paper refers to "information objects" transmitted on the NII. A more fundamental concept, however, may be a "digital object which incorporates the information in the form of bits," which can be "unwrapped" to obtain the "information entities" it contains. The legal framework under communications law that governs interception of and access to such objects should be addressed, apart from the licensing of any rights under copyright. The Green Paper does not address the incorporation of "intelligent software agents" that might access a computer program and query it on behalf of a user. In the course of providing a reply, might there be a "rendering" or other performance of the program as well as of the "agent," and is it likely that one or more derivative works will be created?

c. Analog environments

Since both analog and digital technologies will exist side-by-side for a number of years, both need to be addressed. For example, will bridging the analog world and the digital world involve the transformation of signals in ways that may result in the creation of derivative works?

d. Impact on digitized format

Should the law make clear that the status of a work does not change when it is placed in a digitized format?

Are there circumstances in which a separate derivative work may be generated when an existing work is placed in digitized format?

Will the communication of works in digitized format materially affect the economic relationship between owners and users of works?

e. Unauthorized manipulation of digital works

Does the law need to be modified in any way to take into account the ease of unauthorized manipulation of digital works?

f. Scope of reproduction right in sound recordings

Should we remove the limitation in section 114(b) of the Copyright Act, which limits the reproduction right for sound recordings to reproduction in the form of phonorecords, motion pictures or other audiovisual works, and which could be interpreted to rule out liability for unauthorized reproduction in multimedia works?

g. Specific exemptions

Should any of the existing exemptions in the Copyright Act, for example those applying to educational institutions, be revisited, in light of the increased opportunities for commercial exploitation in the NII environment or in order to assure access for noncommercial educational and other uses?

How can the existing exemptions in the Copyright Act be accommodated in the digital networked environment, continuing the traditional balance between the rights of intellectual property owners and the privileges of users?

h. Possibility of implementing voluntary copyright identification system

Could a voluntary copyright identification system provide many practical benefits without violating the Berne Convention's prohibition on formalities?

i. Ownership and joint authorship

The principal focus of the common law copyright tradition has been the protection of economic rights. Do the Green Paper's proposals do this for all copyright owners, whether individuals or corporations?

In the digital universe, there may be more collaborative authorship. Does this require any changes in existing law?

j. Criminal liability

Are the provisions of current law dealing with criminal liability adequate to handle the potential for massive infringement on the NII?

The NII Advisory Council appreciates the opportunity to comment on the Green Paper, and looks forward to hearing a response from the Working Group on Intellectual Property Rights of the Information Infrastructure Task Force. We would be pleased to provide further input or participate in discussion of the issues raised.

The Honorable Sally Katzen
Administrator, Office of Information & Regulatory Affairs
Office of Management and Budget
Washington, DC 20503

Dear Ms. Katzen:

On behalf of the NII Advisory Council, we are responding to your request for comments on the draft report entitled "NII Security: The Federal Role." We appreciate the opportunity to continue our ongoing discussions in this manner, and we commend you for the openness of the process for the development of NII policies and for your collaborative efforts. We look forward to continued cooperation in the future.

The members of the Council are favorably impressed with the discussion, analysis, and readability of the report. The subject is complex, and the report does a good job of offering an evenhanded portrayal of the current situation. This letter discusses the larger issues raised by the report, and the appendix includes other points and editorial suggestions.

Overall, the report fairly describes the role of the federal government in NII security matters. With a few exceptions noted below, the federal actions described in part IV are comprehensive and appropriate. In this regard, the paper largely fulfills its promise of setting out the government's role as lawmaker, user, and role model. There is, however, a broader framework for NII security issues that extends well beyond the federal government. The paper's concentration on federal action does not offer the background or context that places those actions in perspective. The reader is not made aware of the important role played by the private sector in assuring NII security.

Security is not an abstract or externally imposed requirement. It is a response to demands that come from users of the NII, including individuals, corporations, non-profits, and government. The paper does not offer a definition of security or the applied concept of privacy, and perhaps it should. As defined in Common Ground, the first report of the NIIAC, these terms reflect distinct but related user concerns about protecting valuable information and controlling the use of personal data. Users need to be aware of their responsibilities to secure their own information, and service providers have a responsibility to let users know about the types of protections that are available. Greater knowledge and awareness will serve the interests of all and will lead to better responses to the concerns of the marketplace.

I. The Role of Users and the Private Sector

The Advisory Council believes strongly that responses to the security needs of the NII will and must come principally from the private sector in response to demands from users. There is, or course, an important part for the government to play as well. This point is well established in the paper. The essential and primary role of the private sector in meeting NII security needs to be highlighted in the paper.

The paper's structure is illustrative. The first three sections lead the reader through a balanced discussion of the issues and to conclusions that recommend government actions. The final section concentrates attention almost exclusively on the government, suggesting that the government is the key player in NII security matters. Each of the final subsections lists a series of federal government security actions.

The implied message is that the primary solution to security needs will come from the government. The central role played by the private sector role is lost here rather than misrepresented. For example, on page 19, the paper correctly and fairly states:

These public discussions indicated that the marketplace, to the extent that users are demanding security, is responding with both specific security products as well as general NII products and services that incorporate security protection

This is a vitally important conclusion that reflects the importance of the marketplace and the role of user demand. It is, however, in the middle of a paragraph in the middle of a discussion of technology.

The reports notes on page 11 that the power grid, transportation systems, financial institutions, and economic transaction data will all be dependent on the NII. The importance of these institutions indisputably makes NII security a vital national interest. Yet the private sector operates these critical infrastructure components. There is, to be sure, some government regulation, but essential operations are controlled by the private sector. While nothing in the report directly suggests otherwise, this will also be true for NII security.

Security needs in other areas are the responsibility of the private sector. This ranges from basic locked doors to sophisticated protections for high-risk activities. This pattern must be followed for the NII, where security devices include encryption, digital signatures, and authentication. In an era of rapidly changing technology, reliance on the private sector is essential because of the budgetary and bureaucratic limitations of government. Not all needed security measures have been invented, but the private sector should be allowed the opportunity to develop products and services to meet the needs of users. The government in its role as user and as educator can help to define those needs.

The report would benefit from a discussion of the differing roles of the private and public sectors and from greater recognition of the interests of users. The role of the private sector is broader and deeper than is suggested by the description on page 27 as one requiring governmental promotion for the development of high-quality security products and services.

It is the private sector that will design and implement the system architecture, develop and make available hardware and software security products and services, respond to market demands for better and easier-to-use security methods, and provide the capital necessary to accomplish these tasks. These are the major elements of NII security. The report should acknowledge that the private sector should and will build the global NII security system. This includes all aspects of security, including appropriate safeguards for children and effective protections for intellectual property. The title of the report might be adjusted to lessen the implication that the federal role in NII security is the only or primary one.

The report would be improved by including a broader discussion of the types of threats faced by NII users. For example, there should be more recognition that significant threats to user privacy and security interests arise from abuses of system and network insiders. External threats, such as those form spies and hackers, are real but may cause less damage because they are relatively rarer. This is an appropriate security issue for the private sector to address because many of the problems arise in the private sector.

Nothing in these comments is intended to undermine the clear responsibilities that the federal government has to establish the necessary legal foundations for NII security. The government actions proposed in the report are appropriate. In some cases, a stronger case can be made for a government role as a catalyst and convener. For example, in the setting of standards, the government could facilitate more rapid development through increased financing, mediating disputes, and supporting research.

II. Relationship Between the Private Sector and the Government

The federal government can assist the private sector in the development and implementation of needed NII security, and this assistance is appropriately described in this paper. Another way that the government can help is by not interfering with the ability of the private sector to find security solutions. There are three prime examples.

First, it is apparent to all that encryption is an important element of network security. Encryption tools have been and are being created privately. The federal government should not interfere with the development, use, or export of encryption software and hardware. There are additional comments on encryption below.

Second, the government should step aside and allow for the private development of suitable software and hardware filters for end users to protect children from accessing unsuitable materials. Several companies are already offering filters for children, and other products and services are being actively developed, including restrictive access schemes, metering and intellectual property protection methods, encryption devices, and farewells. In addition, other non-technical methods for accomplishing these purposes exist, including parental and teacher supervision and administrative policies and procedures. The need for government-sponsored content prohibitions has not been demonstrated nor is there evidence of market failure. The private sector should be given time to meet these needs. The real effect of government controls over editorial content will be to undermine the utility of the NII. Undue interference by government in this arena will have disastrous effects.

Third, criminal and civil laws are appropriately identified in the report as playing a role in encouraging NII participants to respect security rules. It is vital that any such laws deter harmful conduct. Laws also should be written to support participants who are willing and able to undertake fair and appropriate security measures. Rules should create positive incentives for system operators to provide security, control access, and respond reasonably to complaints regarding wrongdoing.

III. Encryption in a National and Global Environment

Export limitations on encryption make it more difficult for the private sector to meet NII security needs. Export restrictions put U.S. encryption developers and other vendors who incorporate their products at a competitive disadvantage by preventing their participation in an established international market. Legal constraints also make it harder for American businesses with international operations to use available encryption techniques.

These existing constraints and the possibility of new restrictions are also unduly inhibiting the use of encryption domestically. Any restrictions -- direct or indirect -- on the domestic use of encryption could significantly undermine NII security.

The government must allow American companies to develop products and to compete globally without restrictions that are not productive because of the worldwide availability of encryption technology. The private sector should be free to meet encryption needs without federal mandates for hardware or software. This will do the most to enhance NII security by fostering the use of commercially viable encryption. Market forces will meet the demand if left alone. The commitment in the report to overseas use of encryption for personal use is insufficient.

In the existing global environment, international restrictions are not consistent with overall NII security needs. Not only must the U.S. government recognize this, but it should take the lead with other nations in removing international barriers. The Advisory Council urges that the United States take steps to raise these concerns in discussions of the global information infrastructure with the G-7 nations. The government should also work closely with the private sector to develop a better balance between privacy and security and between public and private roles.

This comment is not intended to prejudge or exclude fair consideration of legitimate law enforcement needs. Nothing here is inconsistent with the private sector's willingness or ability to meet fully law enforcement and national security needs. Of course, those needs must be clearly defined, be consistent with constitutional requirements, and not interfere with the development of global networks. Because there are strongly held views on all sides of this complex issue, it will not be easy to develop consensus. What is essential is that the process for defining government encryption requirements be public and open to participation for everyone.

The private sector may actually be in a position to adopt more quickly standards that have more effective global reach and that will ensure both privacy protections and appropriate process for responding to requests from law enforcement and national security agencies. The private sector and the government should work closely together to develop means by which sound procedures for cooperation and for protection of basic rights can be addressed globally.

IV. Intellectual Property

The appropriate protection of intellectual property is a key issue relating to NII security. The importance of this issue calls for more recognition of the dilemmas now faced by content producers, system operators, and transport providers and the implications for the NII. The discussion of civil liability on pages 15-16 and the problems currently faced by content providers, system operators, and transport providers does not adequately reflect the seriousness of the issue or the depth of concern.

The paper would benefit greatly from a commitment for action to address the issue. An already adopted NII Advisory Council intellectual property principle emphasizes that "intellectual property laws, and effective legal means for enforcing those laws, must keep pace with technological development." The Council asks for greater recognition and acceptance of this principle. Protection of intellectual property is crucial because the potential of the NII will never be achieved if content entitled to legal protection is not secure. There is also a need to recognize and balance the incentives for system operators and transport providers to adopt reasonable preventive measures on the one hand and the avoidance of undue risks of liability as a result of user actions on the other.

Thank you for your consideration of these comments. The Council is prepared to offer additional assistance in the future.

Sincerely,

Delano Lewis
Co-Chair, NIIAC

Edward R. McCracken
Co-Chair, NIIAC

Appendix: Additional Points and Editorial Suggestions

• There is a potential conflict between the first and second security tenets on page 4. Caller ID offers a clear example because there may be differing and conflicting interests on different ends of the telephone line. The ability to control information and the ability to know who is being communicated with may conflict. There is a general recognition that the tenets must be read in light of the need to protect another's rights. While this is appropriate, it does not adequately recognize the sharpness of the potential conflict. The second tenet implies that blocking a caller ID may be inappropriate, and this implied right of authentication may be either overstated or unintended.

• On page 6, there is a discussion of technological approaches for entertainment, software, and computer services. Because security needs are defined in part by technological alternatives, more detailed consideration of technology options would be helpful.

• The same section states that "participants indicated that adequate technical capability was being developed to protect their own products." It is unclear whether this refers to protection of systems or to protection of intellectual property, and this vagueness might lead to the incorrect conclusion that there are current technological methods for protecting intellectual property once it has been released from a protected network. More clarity is needed here. The same section also would benefit from a mention of the issue of liability and a reference to the later discussion. Also appropriate here would be some consideration of the conflict between the benefits of open systems and the benefits of encryption.

• The paper is too summary in some places. For example, a non-expert reader would benefit from a more complete discussion of the consequences of the NII on health care information (page 7) and a clearer description of the functions of emergency response teams.

• The discussion of ethics and education beginning on page 11 might include a reference to the Copyright Awareness Campaign sponsored by the Patent and Trademark Office and the Department of Education.

• The section on civil law fairly reflects the uncertainty that surrounds liability for negligent security and takes note of the benefits of civil incentives for improving security. Clearer laws would certainly help. The present legal uncertainties do not, however, preclude recognition for a policy that each person is responsible for his or her own actions. The paper already concludes appropriately by emphasizing awareness of risk and informed choice in light of that risk. An additional emphasis on personal responsibility is both consistent with broader goals and beneficial to the reliability of the NII for everyone.

• The discussion of technology that begins on page 19 is such an essential component of the paper that it might usefully be moved to an earlier point. No one can fully appreciate security issues without an understanding of the technology. In addition, a better description of technological alternatives would be very helpful. For example, the brief discussion of protecting content from unauthorized duplication in a digital environment would benefit from an analysis of possible solutions and the barrier to their development. A highly relevant example is the possibility of legislation for digital visual recording devices and media that would be similar in purpose to the Audio Home Recording Act. This would give the reader a sharper understanding of the difficulties and trade-offs that are involved.

• The paper would benefit from a discussion of certification and authentication of the NII. Principal concerns include how trust will be implemented on the NII; what it means to "certify" digital communications, records, and information; and what bodies and procedures are appropriate to carry out these functions. Both private and public means of authentication and certification may be desirable.

The Honorable Ronald H. Brown
Secretary of Commerce
Department of Commerce
15th St. & Constitution Ave., NW
Washington, DC 20230

Dear Mr. Secretary:

As you know, the important subject of free speech in a digital environment is currently being debated on Capitol Hill. Today, the NII Advisory Council has adopted recommendations on a number of issues, including that of free speech.

The Council has agreed on a KickStart Initiative, which recommends that every community provide points of access to the information superhighway through its schools, libraries and community centers. We must provide parents and teachers with the tools to guide children. The NIIAC believes that appropriate access to the data superhighway can be handled without government intervention and restrictions. Our KickStart Initiative gives guidance to parents and schools on this issue and points to available means of filtering out inappropriate material and rating systems which can be used to guide children's access to material.

The NIIAC believes that the rights of free speech should not be abridged in the digital age. Furthermore, technologies, content and services which may be appropriate for some, may be inappropriate for others. Rather than restrict all people from access to that content and services, we should find other ways to deal with the issue. Also, to ensure that information technology and services may evolve in a timely, productive and competitive fashion, maximum freedom of choice by individuals and organizations selecting the technologies, content and services is critical. Therefore, the NIIAC has unanimously adopted the following recommendation:

The government should not be in the business of regulating content on the Information Superhighway. It should defer to the use of privately provided filtering, reviewing, and rating mechanisms, and parental supervision as the best means of preventing access by minors to inappropriate materials.

We hope that this recommendation will be useful to you in your deliberations on this issue.

Sincerely,

Delano Lewis
Co-Chair

Edward R. McCracken
Co-Chair