III. (a) copyright and related rights

40 This Chapter addresses the developments that have taken place in the field of copyright and related rights, as a result of the impact of digital technologies. It begins with an introduction to ‘digital copyright,’ then addresses the WIPO ‘Internet Treaties,’ and describes emerging developments in law and technologies that relate to the protection and exploitation of copyright works online. Finally, it describes developments in licensing and collective management of rights that enable creators and rightsholders to manage and exploit their rights in the digital environment.

(I) introduction to digital copyright

41 The protection of copyright and related rights covers a wide array of human creativity. Much of the creative content that fuels electronic commerce is subject to such protection. Under the most important international copyright convention, the Berne Convention,⁶⁵ copyright protection covers all “literary and artistic works.” This term encompasses diverse forms of creativity, such as writings, both fiction and non-fiction, including scientific and technical texts and computer programs; databases that are original due to the selection or arrangement of their contents; musical works; audiovisual works; works of fine art, including drawings and paintings; and photographs. Related rights protect the contributions of others who add value in the presentation of literary and artistic works to the public: performing artists, such as actors, dancers, singers and musicians; the producers of phonograms, including CDs; and broadcasting organizations.

42 Digital technology enables the transmission and use of all of these protected materials in digital form over interactive networks. The process of ‘digitization’ allows the conversion of such materials into binary form, which can be transmitted across the Internet, and then

re-distributed, copied and stored in perfect digital form. While the transmission of text, sound, images and computer programs over the Internet is already commonplace, this is also becoming true for transmission of audiovisual works such as feature films, as the technical constraints of narrow bandwidth begin to disappear.⁶⁶ Materials protected by copyright and related rights, spanning the range of information and entertainment products, constitutes much of the valuable subject matter of e-commerce.⁶⁷

43 Given the capabilities and characteristics of digital network technologies, e-commerce has had a tremendous impact on the system of copyright and related rights, and the scope of copyright and related rights in turn is affecting how e-commerce evolves. It is essential that legal rules are set and applied appropriately, to ensure that digital technology does not undermine the basic tenets of copyright and related rights. From one perspective, the Internet has been described as “the world’s biggest copy machine.”⁶⁸ Whereas earlier technologies such as photocopying and taping allow mechanical copying by individual consumers, they do so in limited quantities, requiring considerable time, and resulting in copies of lesser quality. Moreover, the copies are physically located in the same place as the person making the copy. On the Internet, by contrast, one can make an unlimited number of copies, virtually instantaneously, without perceptible degradation in quality.⁶⁹ And these copies can be transmitted to locations around the world in a matter of minutes. The result could be the disruption of traditional markets for the sale of copies of programs, art, books and movies.⁷⁰ In the music industry, for example, the emergence of Internet-based file swapping services such as Napster and others, described below, have enabled a large-scale exploitation of music and recordings without the authorization of the rightsholders. That exploitation was further aggravated by the simultaneous broad commercialization of CD burners and portable MP3 players, adapted to the most commonly used file format.

44 These challenges face the copyright industry at a time when the share of copyright in national economies is reaching unprecedented levels. The economic value of the copyright industry in the United States alone is estimated at US$91.2 billion (motion pictures, music and television), according to International Intellectual Property Alliance (IIPA). ⁷¹ The share of copyright industries currently represents 5.24% of the U.S. gross domestic product, growing more than twice as fast as the rest of the economy, a growth largely attributed to America’s strong copyright laws and effective enforcement mechanisms. Similarly, a study of the copyright industries in the MERCOSUR countries reveals that the share of copyright-protected activities in the value added of Uruguay was 6% in 1997, and of Brazil was 6.7% in 1998, accounting in the latter for 1.3 million jobs.⁷² This significance gives weight to the copyright industries’ search for technical and legislative solutions to protect copyright from digital piracy.

45 It is therefore critical to adjust the legal system to respond to the new technological developments in an effective and appropriate way, and to do so quickly and continuously, because technologies and markets evolve increasingly rapidly. This will ensure the continued furtherance of the fundamental guiding principles of copyright and related rights, which remain constant whatever may be the technology of the day: giving incentives to creators to produce and disseminate new creative materials; recognizing the importance of their contributions, by giving them reasonable control over the exploitation of those materials and allowing them to profit from them; providing appropriate balance for the public interest, particularly education, research and access to information; and thereby ultimately benefiting society, by promoting the development of culture, science, and the economy.