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Battles Looming Over New International Copyright Treaties

February 3, 1997

Companies in the software, entertainment, publishing and telecommunications industries around the world may be faced with potential new copyright laws this year that will affect their business well into the next century. As a result of new multilateral treaties, many countries will be forced to update their national copyright laws in 1997-98. In the process, competing interests will do battle over whether Internet Service Providers ("ISPs") and Online Service Providers ("OSPs") can be held liable when others use their networks and online services to transmit infringing materials on the Internet. The result of these battles could have an important impact on the continued development of the Internet as a commercial medium – particularly in those countries struggling to keep up with the rapid pace of the current revolution in Information Technology.

As 1996 drew to a close, delegations from nearly 160 countries meeting at the World Intellectual Property Organization ("WIPO") in Geneva approved new international copyright treaties designed, in part, to update the existing international copyright regime to deal with issues relating to the digital transmission of information on the Internet. The original draft of the treaties contained provisions that would impose liability for copyright infringement on ISPs and OSPs when others used their facilities to store and transmit infringing material. However, after a contentious debate among the delegates to the Diplomatic Conference, these provisions were dropped from the final text of the treaties.

Although the final treaties adopted by WIPO do not require that a country's national law impose liability on ISPs for infringing material transmitted over their networks and services, the treaties do permit a country to impose such liability as a matter of national law. As a result, it is expected that as various governments around the world seek ratification of the treaties in 1997, there will be pitched battles over who will bear responsibility for infringing material transmitted over the Internet. The battle lines in the coming fights will be drawn between content providers (such as software publishers and music and film producers) on one side and ISPs and OSPs on the other.

Content providers are concerned that the Internet offers an easy means for pirates to duplicate their valuable intellectual property and believe that ISPs must help to police such piracy. New digital technologies make it easy to create near-perfect copies of many copyrighted works. Although it has been possible to utilize these digital technologies to create infringing works in the past, the explosive growth of the Internet in the last two or three years has introduced for the first time a mechanism for making such works instantly available to millions of people around the world. Some content providers argue that the strongest possible measures must be available to prevent piracy over the Internet. Since it is not always possible to determine who was responsible for placing infringing material on the Internet, many content providers believe that laws must be in place to force ISPs and OSPs to police the use of their networks and online services.

On the other hand, ISPs and OSPs point out that literally millions of communications are transmitted across the Internet every day, many of them in encrypted form, and that it would be technologically impractical to monitor each of these communications to determine whether they contained material that infringes on the copyright of another. They argue that it would be fundamentally unfair to hold them liable when they do nothing more than provide the facilities that are used to transmit infringing material placed on the Internet by others without their knowledge. ISPs and OSPs maintain that the networks and online services that they operate are "mere conduits" of information, and that to hold them liable for wrongful infringement by others is tantamount to holding the Post Office liable when someone mails infringing material to another.

ISPs and OSPs further suggest that imposing liability on them for copyright infringement would stifle the development of the Internet as an commercial medium. As a vehicle for commerce, the Internet is still in its infancy. Much of the explosive growth in popularity of the Internet over the last few years has been driven by smaller companies with limited resources. ISPs and OSPs argue that the liabilities that some content providers seek to impose on them would discourage many of these smaller companies from entering the business. The impact would be felt most strongly, they say, in those parts of the world where the growth of the Internet is being fueled mostly by these small companies that can least afford to bear the risk of vicarious liability for the wrongful acts of third parties.

We urge our clients in the software, entertainment, publishing and telecommunications industries around the world to participate in the coming debate. There is no doubt that the Internet and other digital communications tools are of vital business importance to these industries. Because international copyright treaties historically have been updated only every 15 - 20 years, the laws which emerge from these battles could govern domestic and international copyright laws for a decade or more. Companies now have a unique opportunity to become involved in a debate that will affect the business climate well into the new millennium.

This GT ALERT is issued for informational purposes only and is not intended to be construed or used as general legal advice. Greenberg Traurig attorneys provide practical, result-oriented strategies and solutions tailored to meet our clientsí individual legal needs.