Hi everybody, welcome back.

The second technological revolution that has decisively shaped intellectual property law was the invention of the photocopy machine in the 1960s. It's the invention primarily associated with the Xerox Corporation. Based then and now in my home state of Connecticut. Photocopying the ability to cheaply and reliably, that is with good fidelity copy entire books, relatively very cheaply. Relative to purchasing the book itself transformed the previous trickle of fair use copying that had been the subject of a gentlemen's agreement of 1935. Into a torrent of fair use copying and led ultimately led to a vast expansion of fair use so as to promote the broad, public dissemination and distribution of intellectual goods. The copyright, excuse me, the photocopy machine entered into American law in 1973. With the Williams and Wilkins companies suit against the National Library of Medicine. The National Library of Medicine is an institution of United States government and its purpose is to deciminate as broadly as possible The latest advances in scientific research to scientific researchers, specifically in the life sciences everywhere in the United States. The library that is, is a facilitator of research done by people against terrible diseases. Cancer researchers are the sorts of people who use the research which is stored in the National Library of Medicine. And the library attempts to get that research as quickly as possible into the hands of as many people as possible. With the invention of photocopying, with the invention of the Xerox machine, the library saw an easy way to expand their law of omission of transmitting as much scientific research to people in the field who were doing important medical research. They purchased a Xerox machine, which in those days, took up a better part of a room. And installing the Xerox machine, they let it be know that they would produce a complete Xerox'd copy of an article in any of the journals it held at the library, and send this copy to a

researcher in the United States for free. The library, of course, subscribed to a very large number of scientific journals, all of which were published by private scientific publishing companies which held the copyrights on all of the articles in their journal. Now the Library is taking those reports and with its extensive Xerox facilities, it's big enough to purchase a Xerox machine that could fill room. It is now producing very large numbers of copies of the copyrighted articles on demand for American researchers and then sending those copies to the researchers for free. The researchers didn't pay the library for the copies and the library didn't pay the publishers for the copies. One of the publishers of medical journals, the Williams and Wilkins Company of Baltimore found this situation quite intolerable They, like every scientific publishing company then and now, runs on a very thin profit margin. So, as the president of Williams and Wilkins testified in the suit that the company brought against the National Library of Medicine for large-scale copyright infringement, as the president of Williams and Wilkins said, if they lost as few as 47 subscriptions. To one of the most widely copies journals at the National Library of Medicine then the journal would turn out to lose money and they'd have to fold it. And if they folded it, of course, they wouldn't be able to publish any scientific research in that journal and the scientific community itself would be injured by the demise of the publishing companies. So the publishing companies felt themselves, to be terribly threatened by the practice of the Library of Medicine. Though one suspects, that the researchers themselves were delighted, to be able to have such easy and free access, to all of the latest journal articles in their field. Without having to go to the expense of purposing those articles for themselves. So Williams and Wilkins sued the Library of Medicine for copyright infringement and the library's defense was fair use. This was, they said copying in the public interest for a productive use. And nobody disputed that. But it was the copying of entire copywrited works, and Williams and

Wilken-, was, Wilkens was claiming it was doing substantial financial harm to them, or at the very least, it had the potential to do very substantial harm to their publishing business. When the case was decided, not by the Supreme Court of the United States but by the Court of Claims which is specially established to hear cases of this sort, the court reached a surprising decision. at least surprising for William and Wilkins. Citing the unchallenged social value of scientific research and the productive nature of the copying that the library was doing, the court declared the national libraries practice of large scale free distribution of these articles to be a fair use. This was the first time that the transfer of an entire intellectual good to a free rider's host was held to be legal. This was itself a vast expansion of Justice Story's theory of fair use. And the court went further than that in dismissing Williams and Wilkins' claims that the copying was or at least could easily do them a great deal of harm and dismissed these claims of lost sales as speculative and unproven. Of course it's very difficult to prove something that hasn't happened. What the court did in Williams and Wilkins was to apply an older vision of fair use, which sees fair use as a vehicle for the education of the people, or for the furtherance of human knowledge and research, to a radically new set of technological conditions, to which this new doctrine of fair use was quite unsuited. What the court did was to single out copy write owners and force them through the doctrine of fair use to make a substantial, involuntary, uncompensated contribution to the production of scientific research. I say that they singled them out, because in fact if you compare the fair use restriction on the copyright that Williams and Wilkins had in its journal articles to the ordinary property rights that say, the makers of test tubes hold over their products. You can see the difference between fair use in this new interpretation, and ordinary property rights. If Williams and Wilkins is to be asked to distribute its contribution to cancer research for free, because the public

will benefit greatly from that distribution. Why is not the same command made to the makers of test tubes? Why aren't they required to give some part of their output for free to cancer researchers, who need those test tubes to do their research, just as much as they need the scholarship that comes to them from the Library of Medicine. And indeed, what about the researchers themselves, who don't do that cancer research for free? They expect to be paid for it. Why aren't they required to be conscripted into the army of scientific research, as Williams & Wilkins has And be made to perform their research services for free, in the name of producing the cure for cancer. An interesting aspect of the Williams and Wilkins case is that the company Williams and Wilkins could stop all of the copying that it objected to by successfully suing the only secondary producer that their was, of their goods. Of course, they weren't successful in the suit. But if they had been successful in the suit, it would have ended their problem. They could have in fact, had they one the suit, stopped all of the illegal copying because the national library was the only institution or entity that was actually doing the copying. And the National Library was the secondary, the single, sole secondary publisher of, of the cop, copied books. And therefore, if Williams and Wilkins could stop the N L M from the uncompensated use of their articles in this way, they could stop the entire problem. A second important aspect of the Williams and Wilkins case is that Williams and Wilkins did not ask to stop the copying altogether, nor did it occur to them to ban the xerox machine, which everybody knew at the time had many, many uses beyond illegal lifting of intellectual goods from journals. Instead, Williams and Wilkins recognized that it was a good thing for those articles to be in the hands of the cancer researchers. All that it wanted the court to do was to order the National Library to place a small royalty in a can every time it copied one of Williams and Wilkins articles, and then send The money that

was in the can to Williams and Wilkins. So for example, rather than coping and giving Williams and Wilkins articles away for free to researchers the national library might say to researchers if you send in 50 cents we'll copy the article for you and send it to you. And then the library would take the 50 cents and pass it on as Compensations for the use of the intellectual good to the Williams and Wilkins. But alas, for Williams and Wilkins, they lost the case and therefore they couldn't stop what they perceived to be the illegal copying of their intellectual goods. But the procedural advantage that Williams and Wilkins had, that if it could stop the library, it could stop the copying, was lost when copying became personal in teh 1970s and 1980s. Now Xerox machines themselves were much smaller than they were before, now we rather than taking up the room, a Xerox machine can be put on a corner of a room and now a Xerox machine can be put on a desk. Indeed, other kind of copiers In particular, video recorders have been invented around 1980, and these threatened the copyrights of another group of copyright owners who were the producers of television programs. Now, with television programs being easily taped on video recorders, not by the library of medicine to be distributed to the end users. But by the end users themselves, there were thousands and thousands of video xerox machines flooding the American market, and thousands and thousands of secondary publishers now having the ability in their own homes. To copy copyrighted programs that were coming on their television set, and transfer those television programs to their own host the video tape, and use the video tape as they wished. Either for time shifting, so they could watch the program at another time, or perhaps to give to somebody else to watch on their own television at their own leisure. Now, because there were thousands of copiers out there, in this case the Universal studios and several other plantiffs going into the suit with them, because they couldn't sue the individual people who they believed were actually violating their copyrights by taping

their programs at home, they unlike the Williams and Wilkins company, decided to sue the makers of the copying technology. And, they sued to have the copying technology banned. They believed that if they could ban the video recorder, then they could ban the uncompensated copying of their programs. They did not as Williams and Wilkins did in the analgous case, the studios did not ask simply for the payment of royalties, perhaps a small sum to be added to the purchase price of the video recorder itself. Or to blank tapes and the revenue from the small additional prices, royalties being sent to the owners of the copyrights, a perfectly plausible scheme. But the copyright owners went for the big prize, which was to to ban the video technology itself, and thereby simply making it impossible for people to copy. Of course the Crown in England had tried to ban the printing press and they hadn't been successful and it seems unlikely that even if the court had agreed with them that the copy writer holders could in fact have successfully stopped the video recording from being produced or used in the United States. Nonetheless, they did sue to have the recorders banned, which is much like suing the makers of burglars tools in order to stop the burglar. So to say to stop the time-shifting, the studios attempted to ban the video recorders just like this one, the Sony Betamax Instead of asking to receive compensation for copyright violations, and this was a mistake. There were millions of Betamax machines out there, and Sony tried to have them all declared illegal. Courts quite properly are very reluctant to ban technologies that have significant legal uses. And everybody understood, that there were at least a few things that you could do with a Son-Sony Betamax machine that were illegal. For example, you could get a video camera, and you could take a video. Movie of your own children, or your own friends, and then you can play the videotape on your video recorder, and that would be perfectly legal. But, everybody understood that the reason that most people bought the Sony Betamax machine, was not to show their own tapes of their, that they had made themselves,

but to copy programs that came over the television, and to have copies of those programs for their own convenience. To use when they wanted to use them, and perhaps even to distribute them to other people. Still, courts are reluctant, even in such a circumstance, to ban the technology itself. Some American say about guns, "Machine don't violate copyrights, people do." And the appropriate way to stop the illegal copying is to stop the copiers rather than to attack the makers of the tools and rules. So the Supreme Court has asked, did the video recorder had significant legal uses? Because if it did, then it couldn't be banned as the copyright owners to do, and interestingly, the single most important legal use that the Justices found for the video recorders was exactly what people were doing. And exactly what the companies, the studios, objected to. And that was time-shifting for entertainment programs, time-shifted programs, entertainment programs, simply for the personal entertainment or convenience of the watcher, which the court now declared fair use. This was a very controversial decision at the time, and indeed one wonders whether the sharply split Supreme Court that made this decision, Was made not on the basis of ideological differences but only on the basis of whether the justices themselves owned a video recorder and actually engaged in the time shifting that they were being asked to rule about now. So that those who were time shifters might have thought that it should be a fair use, and those that weren't argued that it might not be. So at the end of the day, Sony Corporation, the maker of the Betamax machine, is not liable for contributory infringement. That is, they are not liable for building the tool that the direct infringers, the home tapers If used to infringe a copyright, and therefore its products are not banned because what their products are being used to do by the home copiers to take in time shift programs is not in violation of the copyright because the court in this case has declared it a fair use.

Even though this use of the copyrighted programs by the home tapers had no public value as the copying that Justice Storey envisioned, and the copying in Williams and Wilkins both were. Here the copying was purely private for personal entertainment and convenience, and nobody claimed that there was any great public edification's that would come from widespread distribution of situation comedies on the television. This was in any light a radical expansion of the boundaries of fair use. And at the time large numbers of people, I must say myself included, predicted that this radical expansion of fair use meant that the destruction of industries producing and publishing copyright works was directly on the horizon. Similar arguments have been made in the 19th century when the institution of public libraries was introduced in England and America. Book publishers thought that if there were public libraries where people could borrow their books and not pay for them at the book store that it would destroy the market for their books But in fact it didn't do so. Instead public libraries with a two edged sword increased the number of readers and the demand for books greatly and so the publishers were in fact helped by the introduction of the public library. When the new fair use was introduced in Sony versus Universal Studios Some people, again myself included, felt that there would be problems for the publishing industry as a result of this decision. In some regards, that prediction was born out. In particular, the two kinds of intellectual goods that were specifically an issue in Williams and Wilkins and Sony, In the first case, articles from scholarly journals with a very limited readership, and in the second case, television programs broadcast widely over the television. In both of those cases, the expansion of fair use that allows ample free writing of both of those kinds of goods has led to very much higher prices original publication of both of those kinds of books. The publishers of scholarly journal articles and producers of television programs know that after Williams and Wilkins and Sony, as soon as their

article or program leaves their control. Millions of people potentially will be able to copy their program or their article without compensating the owner of the copyright for it. And therefore, their only opportunity to collect value for all of the uses that they expect their intellectual good to be put to. Their only opportunity to collect revenue from users, is at the moment that the intellectual good is first published. And that's what these publishers have done. The publishers of scholarly journals have now raised the price of scholarly journals to literally hundreds or thousand dollars, thousands of dollars a year for 4 copies of printed magazines. Only libraries, and indeed only some research libraries, can now afford to have a range of journals published at such enormously high prices. And similarly, after Sony, what had once been almost exclusively free programming offered to consumers at no charge through the broadcast networks. Has now largely migrated to the cable where one has to pay the copyright owner before one can see the program for the first time and have an opportunity to copy it. Nonetheless neither of these industries was destroyed by the new fair use because the sword in both of these cases has also proven to be double edged. The photocopier and the video recorder both have increased demand for content in these two media, and in the same time that the law has forced producers to donate some of these rights to their intellectual goods to the public. But soon the competition of technologies was rejoined with the introduction of yet another new breaching technology, this one file-sharing. And file-sharing represented an expansion of the threat to publishers that magnified many times over those produced by the Xerox machine and the video recorder. Now, literally tens of millions of people could easily copy and share copyrighted mp3 files with one another without purchasing those files from the one who owned the copyright to them. Copyright owners who were now record companies who held the copyrights to the songs that people were file sharing again found themselves with no recourse, but to

ask the law to declare file sharing illegal to help them deter the free writing that they perceived threatened them so enormously. And just as that case was in Sony, the copyright holders of the music copyrights had no way to reach the ultimate copyright infringers. It was the people who were infringing in their view. And those were the anonymous people sitting in their rooms at home and file sharing on their own private personal computers. And so, in order to stop the file sharing, just as the studios had tried to stop the copying of their television programs by banning the video recorder The copyright music owners, the music copyright owners sued to stop the Napster technology that was being used to do the file sharing. [COUGH] And when they did the tables were turned for the Sony Corporation. In the earlier video recorder case Sony was the defendant, It was its technology, the Sony Betamax machine, that was the burglar tools that were being used by end users in se;f end in the, view of the copyright owners to illegally lift their copyrights. And Sony won that case. Now, however, another arm of Sony, the Sony Entertainment Division, which owns enormous numbers of copyrights to popular music, now Sony found itself as the plaintiff in a very similar suit to the earlier one. And now, it was indeed in a situation where it was trying to ban the use of the technology, Napster, that was being used, in Sony's view, to illegally copy and share their intellectual goods. But this time, the Appellate court thought the copying had gone too far. You can read the Napster opinion decided by the 9th federal circuit in California in 2001 at the citation I've put on the screen. The appellate court held in Sony's suit against Napster, Sony and other's suit against Napster that the file sharing represented a qualitative increase in the amount of copying that was represented by the video recorder or the Xeroxing machine As a result, they concluded that uncompensated sharing of MP3 music files was not a fair use of those copy-writed files and that Napster was contributorily liable so that the Napster technology

itself would be shut down. Sony won both times. Lucky Sony. For now, sellers seem to have the advantage in the competition of technologies, at least in the MP3 business. Potential file sharers seems to have agreed that file sharing is theft, and they seem to have reconciled themselves to paying for files. For example, in the iTunes store, rather than engaging in wholesale file sharing for free, that was represented by Napster and Kazoo and the earlier services. And at the same time, Apple, the owner of the itunes store, has found a way to secure the files that it sells online from free riders. Nobody has yet figured out a way, easily and cheaply, to break into the itunes store and steal the MP3s that the itunes store sells for 99 cents At least the sellers have the advantage in the competition of technologies, until someone finds a way to Way to burglarize the iTunes store.