Adding up the Bits

Appropriate Rights for Protected Works

The increasing ease with which digitised works can be distributed has led to renewed pressure for the introduction of a distribution right. The proposal for a distribution right was rejected by the Stockholm Conference in 1967. At that time, the view was that a right of distribution followed from the reproduction right, and it was therefore unnecessary to specify it separately. Furthermore, in many countries the right was deemed to be exhausted after the first sale of the work. The current proposal is to include a general distribution right in the Protocol to the Berne Convention which would be restricted to the distribution of physical and tangible copies.

As for digital transmissions, when the work is transmitted in non-tangible form, there are currently two proposals at the international level. The first would be to interpret extensively the current provision for a right to communicate a work to the public. The point at issue here is that the right to communicate the work to the public has traditionally been thought to be the right to communicate the work to many members of the public simultaneously, as for example in a cable system. But other countries consider that this right covers the right to communicate the work on a one-to-one basis. By applying this right in conjunction with the right of reproduction, and possibly the right of distribution, the right owner could prevent illegal copying at the recipient end of the network.

The other possible approach would be to extend the right of distribution to include digital transmissions. Either way, as the Committee of Experts on a Possible Protocol to the Berne Convention has already recognised, it would be necessary for there to be international agreement on the appropriate norms.

A key difference between these two approaches is that the digitised distribution right for the work would be a new right, whereas the right to communicate the work to the public is an old right. This difference will be crucial in establishing the transitional arrangements from the old regime to the new regime. The policy issue at stake here is which will better promote the progress of science and the useful arts, the extensive re-interpretation of an old right or the introduction of a new right? If the international community extensively re-interprets the right to communicate the work to the public as a de facto digital distribution right, then the effect will simply be to create a new market for old works, not to encourage new investment for a new market. If the international community adopts this approach it will be the old rights owners, who already dominate the old markets, who will be the principal beneficiaries. But if a digitised distribution right is adopted however, it will be a new right. This would permit the right to be restricted to new works. If the international community wishes to encourage investment for new works on the GII, it would seem sensible not to extend the new right to old works, but to restrict it to works which are published after it has been introduced, thus encouraging new investment for the GII. Regrettably however, the European Union has already taken the opposite view. The Rental Right Directive awards a distribution right to all works which were still protected on 1 July 1994. This is simply creating a new market for old works, and new revenues for old rights holders.

A particular variant of the distribution right is the rental right. In the TRIPS agreement, authors of computer programs, cinematograph works and phonogram producers were granted a right to prohibit the commercial rental of their works. States need not provide a rental right for cinematograph works however, unless rental practices have led to "widespread copying of such works which is materially impairing the exclusive right of reproduction."

The current proposals for a Protocol to the Berne Convention go further. They propose to introduce a rental right, not merely for audiovisual works, phonograms and computer programs, but also for any other literary or artistic work, such as writings, graphic works or databases, when the copy is in a digital format. The European Union has already gone even further by awarding a rental right to all authors, except those of buildings and applied art. Like the digital distribution right, the rental right would be a new right and if the international community has a genuine desire to encourage the production of new works on the GII, it would seem unwise to extend the right to already published works. As with the distribution right however, the European Union has already adopted the opposite approach.

Linked to the general question of the distribution right is the issue of a right of importation. This would allow a right owner to prevent the importation into one country of a work which had been circulated in another. As yet there is no international agreement on the wisdom of introducing a right of importation. Those countries resisting the introduction of such a right have argued that once copies of a work were placed on the market the right of distribution should be internationally exhausted; and that for a right owner to control the importation of copies of works would be an unacceptable restriction on the free circulation of goods and cultural products, as it might restrict the flow of cultural goods across national borders by requiring that licenses for the use of works were negotiated on a country by country basis. Those countries which advocated the introduction of a right of importation argued that investors required the security of dividing markets territorially, that the long-term effect of allowing parallel importation would be to concentrate the international distribution system in the hands of a few major entities that can afford global presence to the detriment of small entities that sought to promote alternative markets. The absence of a right of importation would end the current system of supply from a plurality of sources; and it might contribute to illegal copying by allowing the piracy of lawfully -made copies of works which were intended for markets where the risk of unauthorised copying was less.

At the heart of these discussions by the Committee of Experts on a Possible Protocol to the Berne Convention lies a deepening international debate in intellectual property and trade circles. Broadly speaking, net importers of products embodying intellectual property rights favour the international exhaustion of rights. In Australia, for instance, three successive enquiries carried out by the Price Surveillance Authority concluded that the right of importation had forced Australian consumers to pay higher prices for books, sound recordings and computer software than consumers in other countries, and had the effect of restricting the availability of copies to customers. Not surprisingly however, net exporters of products embodying intellectual property rights, such as the USA, favoured an importation right. Within the European Union, an importation right would be exhausted once the work had been put onto the European market.

These discussions concerned the sale of physical and tangible goods, not the provision of services. As yet there has been no proposal at the international level to introduce a right of digital importation. If there were, the concept of a Global information infrastructure would be dead in the water. What would emerge would be a series of interlocking national information infrastructures. But if a right of importation were introduced for physical and tangible goods alone, two separate systems of international distribution would be put in place. One for physical and tangible goods which, except in the European Union would be divided nationally. The second for digitised goods and services, would be genuinely international. One of the outstanding issues still to be resolved, is whether a right owner should be able to use the proposed new importation right to prevent the importation and circulation of works which have been transmitted overseas in digital form via the information superhighway.

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