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Designing New Rules of the Road for Electronic Commerce in Digital Information

Pamela Samuelson, University of California, Berkeley

Currently, there are three new sets of rules being proposed for the information superhighway. One set is about the validity and meaning of contracts, another is on revisions to copyright law, and a third concerns new intellectual property law for database contents. All three areas will change the law (both national and international), strengthening the rights of information vendors. These changes are being made to encourage the electronic commerce market and to help United States information providers continue to dominate the market. These rules are close to being implemented.

One of the proposed laws would validate the terms of ``shrink wrap'' licenses. These are traditionally debatable since a licensee does not see the license until after the shrink wrap has been broken. A federal court ruled in favor of this view, finding that a shrink wrap license was indeed invalid. However, an appellate court overturned this ruling, stating that the license was valid and could be enforced if a user continued to use the product after seeing the license. This decision implies that a license to use software, rather than ownership of a copy of the software, can be sold. If a person violates the license, then that person loses the license to use the software.

Another change is coming in the area of implied warranties. Currently, an implied warranty basically says that a product should work. But under the proposed changes, unless there is an explicit statement of quality, the implied warranty would be that the manufacturer did its best to make the software correct.

In the area of copyright law, a large expansion over the control of reproduction has been proposed. Today, a copy has to be ``tangibly fixed'' to be considered an infringement. In the future, temporary copies, even caching an image in RAM, could be considered an infringement and thus can be controlled by the owner of the original. Any digital transmission of an object would be considered a communication of the work to the public and could be controlled by the object's owner. This would mean that, contrary to traditional copyright law, a person can be restricted from giving a document to a friend when he no longer wants it. Also, web crawlers, since they keep temporary copies of documents, would become illegal.

All of these proposals are part of a Clinton administration white paper. The strategy behind these proposals is to garner international support, which will force these changes to be adopted in the United States. Congress would not need to adopt any international treaties that are proposed, but could simply implement equivalent legislation.

In the area of database content, there is a proposal to grant the producer of a database, if a significant amount of effort was invested in creating it, 15 or 25 years of exclusive control over the extraction of information from the database without exceptions for fair use or research. The goal of this proposal is to protect the United States database industry against people who pirate information.

Bob Gezelter predicted that not allowing caching would drive the Internet into the ground with high load. He wondered whether there would be an exception for delivery mechanisms. Pam answered that if the Clinton administration had thought about delivery mechanisms, they would probably view them as infringing. Another opinion is that caching is an aid to people who deliver information, so under fair use, it should be acceptable. But in the Clinton administration white paper, caching in RAM was specifically mentioned as a cause for infringement. Another person asked whether these proposals were sparked by ``banality or stupidity.'' Pam replied that the motivation was to protect the entertainment industry, but that it's time we moved away from the attitude that something that's good for a specific business is good for the whole country.

One question was whether everything on the World Wide Web would need to explicitly state what rights were granted to users. Pam replied that the proposals would change the ground rules and we would no longer be able to assume rights such as keeping temporary copies. One person wondered whether people would own their personal information, such as data traditionally used for marketing. Twenty years ago, Pam replied, the answer would have been a flat ``No.'' Today and in the future, information is becoming more like property. In fact, the proposed database treaty would make information into property.

Another question was whether a web site with many links to other sites could be considered a database. Pam said that this issue has not been addressed yet, but the database bill in the House of Representatives defines a database as a collection of information materials arranged in a systematic way. In addition, copyright law would still apply to the content of the web site.

One person was curious about whether the Europeans would have fair use exceptions to copyright laws. Pam responded that there are several rules about this. In one approach, users would have the right to take insubstantial parts. Another approach would be to disallow taking any part, no matter how small. The last approach is that a piece, even a substantial one, could be extracted for illustrative purposes such as education, but not for analysis. The drive for new database legislation was unknown at first in the scientific and education communities. Recently, these communities are coming out against the new legislation.

One person wondered whether we could use cryptography and fair competition laws to take care of concerns about people copying CD-ROMs. Pam replied that most violations of the proposed laws would already be violations of current laws. The goal is to stop a slight leakage from becoming a hemorrhage.

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