PRIVACY, SECURITY AND INTELLECTUAL PROPERTY:
PROPRIETARY INTERESTS OVER THE INTERNET
Laurie Thomas Lee, Ph.D.
Department of Broadcasting
University of Nebraska-Lincoln
Lincoln, NE 68588-0131
[log in to unmask] edu
Copyright (c) 1999 Laurie Thomas Lee
PRIVACY, SECURITY AND INTELLECTUAL PROPERTY:
PROPRIETARY INTERESTS OVER THE INTERNET
The Internet presents a kind of tradeoff between incredible gains in economic,
political, and social opportunities, and corresponding losses in privacy and
intellectual property rights. While it offers exciting new ways to communicate
and collect, market, and deliver information, some of the online information is
considered proprietary. Who has the right to access, collect, use, and exploit
this online, digital material?
This paper provides a useful overview of the online issues and policies
associated with privacy, security, and intellectual property rights on the
Internet. It first explores privacy and security and then examines intellectual
property, providing an analysis of reactions at the individual, organizational,
national, and international levels.
PRIVACY, SECURITY AND INTELLECTUAL PROPERTY:
PROPRIETARY INTERESTS OVER THE INTERNET
The Internet creates new issues and poses new questions when it comes to online
security and privacy rights. Individuals have come to enjoy the opportunities
of online socializing, community activism, education, and shopping, yet fear
they are losing their privacy to businesses and government agencies able to take
advantage of the Internet's enhanced tracking and record-keeping capabilities.
The economic efficiencies of mass commercial emails are weighed against the
privacy concerns of recipients. The prospects for e-commerce and the needs of
law enforcement are also simultaneously weighed against interests in encryption
and security. While some nations have already created online privacy policies,
the United States grapples with a political hotbed of privacy and security
issues, debating whether to create new laws or rely on industry self-regulation.
Intellectual property rights also face similar conflicts. The Internet affords
authors and creators expanded opportunities to share, publicize and exploit
their works, while making it much easier for others to steal, manipulate, and
distribute the proprietary material. Legal protection serves to encourage the
development of more intellectual property and a free flow of information, which
is socially, politically, and economically desirable in a democracy and market
economy. Existing legal principles and precedents may certainly govern many of
the rights and responsibilities, but digitized information and online
distribution present new challenges and uncertainties.
The Internet essentially presents a kind of tradeoff between incredible gains in
economic, political, and social opportunities, and corresponding losses in
privacy and intellectual property rights. While it offers exciting new ways to
communicate and collect, market, and deliver information, some of the
information is considered proprietary. Who has the right to access, collect,
use, and exploit this online, digital material?
Because these interests and the Internet are rapidly evolving, this paper offers
an overview of the online issues and policies associated with privacy, security,
and intellectual property rights over the Internet. It first explores the
issues and legal dimensions of privacy and security, followed by a similar
review for intellectual property. An analysis of reactions at the individual,
organizational, national, and international levels follows.
Privacy and Security
Internet security and privacy rights are leading topics of concern among
consumers and prompting some of the most intense policy debates in the U.S. and
abroad. In the 1970s, about one-third of Americans said they were worried about
threats to personal privacy (Dorney, 1997). Today, over 80 percent are
concerned (Allard, 1998), saying that privacy protection is "important" or "very
important." At least one study indicates privacy is the number one issue among
online consumers (Tweney, 1998).
In general, studies show people are troubled by such matters as public access to
personal and corporate data from online databases and government access to
private information (Lawton, 1998). Specific complaints range from the
collection and transfer of private data identifying buying habits, to the
development of programs that can access or monitor personal files, and the
invasion of junk e-mail or "spam." The concerns are not unfounded. One study
by the Federal Trade Commission discovered that many Web sites collect personal
information from users and release the information without the users' knowledge
or permission. Other studies reveal that more companies are accessing employee
email files while the incidence of unsolicited email is increasing at alarming
rates. The development of full-scale e-commerce and other Internet growth
opportunities may be hindered when many people choose to steer clear of the
Internet, citing personal privacy concerns as their single biggest reason for
staying off-line (Allard, 1998). Nearly one in four Americans say they would
use the Internet more if their privacy was protected ("You are," 1998), and
nearly two-thirds believe Internet privacy legislation is needed ("Net Surfers,"
The Right to Privacy
"Privacy" is a very broad concept that has many meanings and definitions (Lee
and LaRose, 1994). Westin (1967) was among the first to study the nature of
privacy, defining privacy as "the claim of individuals, groups, or institutions
to determine for themselves when, how, and to what extent information about them
is communicated to others." Others have defined privacy as an interest in
managing transactions or interactions (Margulis, 1977). Still others have
considered privacy to include a desire to control inputs from others (Altman,
1975) and maintain freedom from surveillance and unwanted intrusions (Burgoon,
A "right to privacy" is relatively new and not well-articulated in the law.
There is no right to privacy expressly provided for in the United States
Constitution, although privacy interests are found in some provisions such as
the Fourth Amendment, which forbids searches and seizures by the government
without a warrant. Not until 1965 did the Supreme Court recognize a fundamental
"right to privacy" inferred from the Bill of Rights (Griswold v. Connecticut,
1965). Today, courts will generally consider a fundamental privacy right based
on such factors as whether there is a "reasonable expectation of privacy."
Privacy rights grounded in the Constitution, however, protect individuals from
intrusions by the government, not by private parties.
A number of state and federal statutory laws serve to govern the interception,
collection, use, and distribution of certain types of information by either
government or private parties. The Electronic Communications Privacy Act of
1986 (ECPA) and many similar state wiretapping laws protect against unauthorized
interception and disclosure of electronic communications while in transit or
storage. The Privacy Act of 1974 provides limited privacy protections against
government collection and disclosure of certain personal records held in
government-maintained databases. Other laws that may serve as models or
indirectly affect privacy and the Internet include: the Fair Credit Reporting
Act (1970) (governing the disclosure of information by consumer credit reporting
agencies), the Right to Financial Privacy Act (1978) (restricting government
access to financial institution customer records), the Telephone Consumer
Protection Act (1991) (prohibiting unsolicited commercial faxes), the
Telecommunications Act of 1996 (limiting the use of customer proprietary network
information by common carriers), the Cable Communications Policy Act of 1984
(restricting the collection and disclosure of subscriber information), and the
Video Privacy Act of 1988 (restricting the disclosure of information about video
Finally, privacy rights may be found in common law, protecting against the
conduct of private parties. This type of law can be traced back to a famous law
review article published over a century ago which recognized "the right to enjoy
life-the right to be let alone" (Warren and Brandeis, 1890). Since then, the
courts have recognized four widely accepted privacy torts: 1) misappropriation
of a name or likeness for commercial purposes, 2) publicity that places a person
in a false light, 3) public disclosure of embarrassing, private facts, and 4)
intrusion upon seclusion or solitude (Prosser, 1960; Restatement, 1977). Here,
the courts will generally consider such factors as whether the privacy invasion
was "highly offensive to the reasonable person." Each of these torts has
implications for Internet privacy.
Privacy Dimensions and Issues
In the context of the Internet, several dimensions of privacy interests emerge:
1) Freedom from intrusion of unwanted information into one's personal space,
2) Freedom from surveillance and improper access by others,
3) Autonomy over personal information collected and disclosed by others, and
The first dimension focuses on concerns such as "spam" or unsolicited commercial
email (UCE). Spam is becoming a major concern among Internet service providers
(ISPs) and users. Up to one-fourth of all messages handled by ISPs is thought
to be junk mail. Companies complain it clogs the network, increases Internet
costs, and reduces employee productivity, while many users complain spam is a
nuisance and an intrusion into their system, demanding that it be stopped. In
the meantime, spammers enjoy this new opportunity to reach thousands of
potential customers at little or no cost, essentially shifting advertising costs
to ISPs and recipients. The extent to which spam is a form of "trespass" or
recipients are "captive audiences" is not yet clear. Several court cases have
considered spam as trespassing onto proprietary networks. One model for
legislation may be the Telephone Consumer Protection Act of 1991 (TCPA), which
prohibits sending unsolicited advertisements to fax machines because of the
unfair cost-shifting to consumers.
2) Surveillance/Improper Access
The second dimension concerns improper monitoring and tracking as well as
interceptions and computer hacking. Employee email monitoring, the use of
"cookies," and encryption fall under this category. Employee email monitoring
concerns arose in the early 1990s when employees at Epson American, Inc. and
Nissan were fired after discovering and complaining about supervisors reading
their email (Lee, 1994). At that time, a survey of large and small companies
found that over 40 percent had searched employee email files (Piller, 1993).
The Electronic Communications Privacy Act (1986) prohibits the interception of
electronic communications and therefore applies to private email over the
Internet, although it may not protect email within intracompany networks.
Internet service providers may disclose information with the originator's
consent. They may also intercept, disclose or use any communication while
engaged in an activity that is part of the normal course of business such as
performance control checks. As a result, systems operators and employers may
monitor employees' email provided that employees are given prior written notice
that their email may be monitored in the normal course of business (Lee, 1994).
Several lawsuits have emerged, and more companies now post policy statements
indicating that email on company-owned systems is not protected.
Another privacy controversy centers on a unique characteristic of the Internet
called "cookies." Cookies are essentially small strings of text characters that
are sent to a person's hard disk via his or her browser while visiting a Web
site. The cookies store certain pieces of information about the person which
are passed back to the Web server when the person returns to the site. Cookies
and other similar tracking systems are meant to help consumers by remembering
preferences and eliminating repetitive tasks such as signing on. But cookies
also place information on one's personal hard disk and function largely without
one's knowledge. They also pose a privacy concern as they track usage history
and preferences, eventually building detailed user profiles (Randall, 1997).
Data security is another prime concern among Internet users, who fear their
messages and files will be broken into or intercepted. Strong encryption
standards are demanded by users and required by online companies offering such
services as banking and Internet stock trading which need guaranteed data
integrity in order to survive. A 56-bit data encryption standard (DES) has
sufficed since the 1970s, but a 128-bit standard is now coveted, particularly
since the Electronic Frontier Foundation and Distributed Net demonstrated they
could crack a 56-bit DES encrypted message in less than 23 hours ("Encryption,"
Probably the biggest problem facing encryption is the conflict between
individual and corporate security needs and the needs of law enforcement and
national security. With greater security comes more opportunities for drug
dealers, terrorists, and other criminals to shield their communications from the
law. U.S. policies to restrict encryption have garnered the support of law
enforcement and the wrath of privacy advocates and industry. Only recently has
the U.S. begun to back down, relaxing its 1996 policy that required U.S. vendors
exporting strong encryption software to make duplicate keys available to law
enforcement. The administration now says vendors can ship products with keys as
long as 56 bits without a license or "key-recovery" plan to as many as 45
countries for use by insurance, health and medical companies and online
merchants ("FAQ," 1998; Bureau, 1999). The policy change still prohibits
stronger encryption, such as 128-bit, which has yet to be broken. In the
meantime, other countries have put pressure on the U.S. to further ease its
The third dimension relates to the desire to control the collection,
compilation, and transfer or sale of one's personal information to others. This
includes the desire to keep one's name and other tracking information off of
marketing lists, for example. Data integrity also comes into play, where
personal data maintained by others is expected to be secure, with limited access
to others. These types of privacy issues are not new, but with the Internet,
the potential for infringement and the magnitude of concern have increased.
In terms of data collection, private entities such as banks, insurance
companies, department stores, credit card companies and credit reporting
agencies maintain extensive databases of information on individuals that can be
compiled, cross-referenced, and potentially used in a discriminatory manner.
Government agencies also collect information through social security records,
tax payments, medicare payments, and military records. Individuals are often
not aware that the information is collected, to what extent or how it is used.
Likewise, they may not know whether or how they can access and correct their
Subsequent distribution of personal data is also a concern, particularly when it
is done for financial gain and for purposes other than the purpose for which it
was collected. Once consumers are aware of the practice, however, their
complaints may attract attention. A noted case involved American Online selling
its subscriber contact information, financial information, and information about
Internet activities (Wang, Lee and Wang, 1998). Another case that gained
national notoriety involved Lexis-Nexis database service which began selling
personal information about citizens, even though the information was pulled
together from publicly available sources (Richards, 1997). In yet another case,
a class action suit was brought against American Express, which gathered and
sold data on cardholders' spending habits. But because the court reasoned that
the information was given by cardholders voluntarily, the claims were dismissed.
There is no single statutory law or policy that regulates the collection, use,
and distribution of personal information. The ECPA (1986) prohibits the
intentional disclosure of the contents of a personal electronic communication
intercepted or reviewed while in storage by system operators, employers and the
like. The Privacy Act of 1974 restricts government collection and disclosure of
personal records, requiring that the data be relevant and accurate, and that
individuals have the right to review, copy, and correct the information as well
as control disclosure. The Act does not govern collection and disclosure by
private parties, however. Specific policies already exist pertaining to
financial, insurance, employment, education, health and medical records, but
individuals must otherwise rely on industry self-regulation when it comes to the
collection and distribution of other types of personal information. The Federal
Trade Commission is, however, considering drafting policies governing the
privacy of consumer data.
Other related information autonomy concerns may be addressed by existing privacy
common law, resulting in civil suits. For example, if information is gathered
over the Internet in such a way to be "highly offensive to the reasonable
person," the tort pertaining to "intrusion upon seclusion" would apply. Tort
law would also address the publication of embarrassing but true personal
information that a scorned lover might spread over the Internet. If the image
of a person is merged with offensive text, sounds, or other images, the tort of
"false light" applies. Misappropriation of someone's name or likeness for
commercial purposes is also recognized as a privacy tort. Here, a Web
advertisement that intentionally features a model "resembling" a movie star
could constitute misappropriation. Another example might include the Internet
practice called "spoofing," which is the impersonation of a return-address in
order to encourage recipients to view the contents.
The fourth dimension relates to a basic privacy interest in surfing the Web
and communicating online anonymously. Anonymity is particularly useful for
whistle-blowers, political and religious dissidents, shy individuals, and others
who simply want to avoid a backlash of emails (i.e., sales calls) or having
their personal data collected or movements tracked. Researchers from Vanderbilt
University found that 94 percent of Web users have refused to provide
information to a Web site, and 40 percent have given fake information. Indeed,
people have come to expect a degree of confidentiality in private correspondence
and telephone calls, and this expectation may carry over to the Internet (Lee,
Yet anonymity can also serve as a cloak for online harassers, pornographers,
terrorists, and other criminals. The Supreme Court has recognized a First
Amendment right to speak anonymously, but says a ban that is limited to
fraudulent, false, or libelous speech may pass constitutional scrutiny (McIntyre
v. Ohio Elections Commission, 1995). At least one state has unsuccessfully
banned anonymous and pseudonymous online communication ("Ban on anonymous,"
1997), yet several states recently enacted statutory laws forbidding false
headers and misleading subject lines in unsolicited commercial email. Whether
ISPs have an obligation to preserve subscribers' anonymity is also in question.
When a Navy investigator contacted American Online to find out the name of a
sailor who had identified himself as gay, he was given the name of a U.S. Navy
senior chief petty officer who was subsequently discharged. Privacy advocates
questioned whether or not there was a violation of the ECPA (1986) which bars
the release of customer information without a subpoena, court order, or customer
consent. As a result, ISPs are taking greater strides in preserving online
Responses To Privacy/Security Issues
Even though privacy and security concerns appear as largely an individual
matter, the impacts and effects are certainly felt in the business, national,
and international arenas where a variety of responses are being considered.
At the very basic level, it is the individual who obviously bears the brunt of
the privacy invasions, potentially losing a significant measure of information
autonomy and anonymity. But to what extent might individuals be able to retain
their privacy while reaping service benefits? There are many questions to
consider. For example, to what extent do individuals have a proprietary right
in their personal data collected by others? How might users technically
maintain anonymity and data security? Who will bear the costs of protecting
privacy online? Is spam an intrusion into proprietary systems or upon captive
audiences who unfairly bear the costs? What are the available legal and
While some legislative bills, agency policies, and civil suits are testing the
legal waters, many individuals are resorting to various self-help means. For
example, individuals are learning to delete or disable cookies using certain
technological tools and software options. They are also turning to (sometimes
free) anti-spam software filters and encryption software such as PGP ("Pretty
Good Privacy"). Other technological solutions include anonymous remailers and
"anonymizers," which give consumers control over their personal data by
stripping away personally identifiable information, and pseudonymizers, which
create an artificial identity. Some promising technological opportunities
include the Platform for Privacy Preferences (P3P) and Trustlabels, which permit
consumers to automatically determine the privacy policies of a particular
website and then choose whether or not to interact with or accept cookies. With
P3P, users can select their privacy preferences, and P3P will warn them if they
preferences. Trustlabels go a step further by prompting users to accept or
reject individual cookies whose trustlabels fall outside the user's privacy
preferences. All of these solutions give users greater control, effectively
preventing the surreptitious collection and use of personal information. More
individuals are also becoming better educated about data collection practices
and avoiding emailing or giving out personal information. Assuming a more
active role and complaining or boycotting offending businesses is also having
At the organizational level, industry plays a major yet delicate role in the
privacy equation, hoping not to alienate potential customers while seeking to
maximize consumer data. How far can businesses go technically, legally, and
ethically? To what extent must industry provide notice that data are collected?
Must businesses afford people an opportunity to access, change, or determine the
distribution of their personally identifying information? How far can
businesses go in monitoring or tracking customers and employees online? Do
companies have a First Amendment right to distribute unsolicited commercial
The industry response in the wake of a groundswell of privacy complaints and
potential legislation has been a resounding promise to regulate itself. Various
industry coalitions and associations devoted to online privacy have formed,
pledging to gain and restore consumer trust. The Online Privacy Alliance, for
example, is a coalition of 50 Internet companies committed to fostering privacy
online and engaged in certifying companies that abide by Alliance privacy
policies. TRUSTe is a program that provides a third-party "trustmark seal"
which allows Web publishers to inform users of their site's gathering and
dissemination practices, assuring users and providing a dispute resolution
mechanism (www.truste.org). The Association of Accredited Advertising Agencies
(AAAA) has also issued privacy goals for electronic commerce aimed at ensuring
full disclosure of marketers' practices and the "appropriate" use of personal
how the data are collected, used, and disclosed. Greater strides are also being
made to limit the use of the data and ensure accuracy. Some specific strategies
include giving adequate notice such as "cookie prompts," which alert users that
their Web site wishes to place a cookie on their browser. Marketers are also
offering opt-in and opt-out features to consumers reluctant to reveal
information. Others are even offering incentives such as free online services
in exchange for consumer data-essentially recognizing and paying for the value
of the data. Still others are pulling back and practicing restraint by not
selling consumer lists, avoiding spam, and limiting monitoring practices.
At the national level, legislators and other policy-makers juggle an onslaught
of consumer complaints, industry pleas for self-regulation, and international
pressures for conformance. The arguments raise a host of political, economic,
and social questions. For example, what role should government play in
preserving privacy interests while promoting a marketplace economy? Is privacy
a commodity to be bought and sold in an open marketplace? Should there be more
legislation protecting privacy, or will industry self-regulation work? How can
a balance be achieved across commercial, privacy, law enforcement and national
security interests? How might U.S. policies come into compliance with stricter
international privacy policies?
Despite a number of federal and state bills ("Electronic," 1999), U.S. Internet
industry self-regulation. U.S. policy-making has tended to support marketplace
solutions, relying on legislation as a last resort. So it is not surprising
that the White House formally called for industry self-regulation of Internet
privacy. Now the effectiveness of this approach is being debated, with such
agencies as the Federal Trade Commission announcing guidelines and scrutinizing
the industry's response. Privacy advocates argue that the industry response has
been inadequate and that without enforcement, privacy objectives will not be
Pressure from the European Union and others is also sparking some reaction. The
European Union's Directive on Data Protection, which went into effect late 1998,
grants European citizens control over personal data and demands that foreign
governments--including the U.S.--provide equal data protection under a similar
regulatory structure. Countries that fail to adhere to the standards may be
banned from doing business with the EU. This puts both U.S. industry and the
government in a precarious regulatory position. Some regulatory promises have
been made, but proponents suggest they may not be enough. In the meantime, some
U.S. companies are entering into contracts with European companies that provide
the necessary protection in order to continue conducting business, effectively
treating European customers differently. The U.S. Department of Commerce and the
European Commission have also considered a "safe harbor" for self-certified U.S.
companies voluntarily adhering to the principles.
The U.S. is also responding to international and domestic industry pressures to
revise its encryption policies. The Administration's policy of restricting
encryption exports is considered outdated and counterproductive, putting U.S.
industry at a competitive disadvantage relative to its foreign counterparts.
U.S. lawmakers face three basic choices when regulating encryption technology.
First, they can do nothing, giving both consumers and criminals free access to
these products. Second, they can bar encryption that the government cannot
break, forcing private parties to use weak forms of encryption, rendering them
vulnerable to security breaches and effectively stunting the growth of
electronic commerce. Finally, a compromise approach may be followed, whereby
strong encryption is allowed, but with some type of government access to keys
(Allard, 1998). In late 1998, 33 nations agreed to the Wassenaar Arrangement
(www.wassenaar.org), which bans the export of encryption software with keys of
64 bits or longer. Nonetheless, some countries such as France have liberalized
their encryption policies to allow 128-bit encryption. So far, the U.S.
response has been to loosen its restrictions to permit the exportation of 56-bit
Considerable progress has been made in securing privacy rights in some parts of
the international community. With the European Union's Directive on Data
Protection and other countries' privacy initiatives, many foreign citizens may
enjoy greater control over their personal data than U.S. citizens. The policies
are generally in sync with the social, political, and economic philosophies of
the concerned countries where privacy is viewed as a fundamental right
(Wellbery, 1997). Yet, how will enforcement occur when the Internet has no
national boundaries? Can U.S. privacy policies co-exist? How will
international conflicts be resolved?
Over a decade ago, the EU began an inquiry into the impact of technology on
society, ultimately creating its Directive on Data Protection in 1995 which went
into effect three years later. The EU Directive grew out of a need to harmonize
the national privacy laws of the 15 member nations. It requires companies
wishing to use personal data to first obtain permission, explain the specific
purpose, and allow people to access and correct their personal data. The
directive gives EU commissioners the right to prosecute companies and block Web
sites if they do not adhere to the data privacy standards (Baker, 1998).
Furthermore, the data legislation prohibits the transfer of personal data to a
third party country unless that country ensures comparable protection for the
data. Other countries such as Hong Kong are following Europe's lead, adopting
Digital information and the Internet present special challenges when it comes to
preserving intellectual property interests. Online information can be much more
easily copied, edited, morphed and otherwise manipulated, and a digital copy may
be virtually flawless. It can also be instantly distributed to a worldwide
audience at little or no cost. In the meantime, the source of the infringement
may be untraceable, making enforcement and prosecution extremely difficult.
Based on the many infringement lawsuits filed in the last few years alone,
billions of dollars are being lost to problems such as software pirating, domain
name hijacking, and the unlicensed distribution of copyrighted music. In fact,
the Software Publishers Association says online copyright infringement is a
$13.2 billion annual problem (Packard, 1998). Intellectual property rights may
be implicated when someone forwards email, downloads Web pages, uploads
copyrighted photos, swaps files, scans photos, copies a web page, incorporates a
movie clip, and posts links. The magnitude of the problem comes into focus when
one considers, for example, that most of the text, images, sounds, and software
communicated online consist of copyrighted material. Authors and creators
presume traditional intellectual property laws apply in cyberspace, while the
growing number of online users and infringers either do not understand
intellectual property interests or believe their actions are somehow
permissible, forgivable, or undetectable in the relatively new territory of the
Intellectual Property Rights
Intellectual property essentially encompasses the intangible mental work
products of authors and creators, and includes writings, trade symbols,
processes, and secrets. Unlike most tangible goods, information rights exist
separately from any particular copy of the information, permitting the owner to
maintain rights to the work while distributing copies. Property rights may also
be spread across several individuals or organizations. For example, with a Web
site, one person may own the rights to a photograph posted, another person may
have the publicity rights to his or her image in that photo, while yet another
owns the patent rights to the GIF compression technique used. Someone else may
have the rights to the recording of the music bed, while someone else may own
the rights to its composition. Still, another individual may have pulled the
elements together while that person's employer ultimately controls the rights to
the site design and its domain name.
Unlike privacy law, intellectual property law in the U.S. dates back to the
Constitution and the nation's founding fathers who established a concept of
protection for authors and inventors by granting them exclusive rights in their
writings and discoveries for limited periods of time. The U.S. Supreme Court
has recognized that protection draws upon the economic incentives to ensure
continuing innovation and the promulgation of creative works. Today,
information rights essentially permit owners to control access to their work and
its use, copying, and distribution.
Common law actions such as misappropriation and unfair competition address some
intellectual property interests, and there are also some applicable state
statutory laws. Most intellectual property interests, however, are governed by
federal statutory laws, such as the Copyright Act of 1976 (as amended), the
Digital Millennium Copyright Act (1998) and the Lanham Act (as amended). Other
countries have similar laws and there are a number of international treaties,
such as the Berne Convention, which address the preservation of rights across
Intellectual Property Dimensions and Issues
Although there are intellectual property interests addressed as trade secrets,
misappropriation, and unfair competition, intellectual property rights will
primarily within the following areas of law: 1) Copyright, 2) Trademark, and 3)
Copyright is governed by the Copyright Act of 1976, which protects "original
works of authorship" (section 102a). Among the types of work granted copyright
protection are literary and musical works, pictorial and graphic works, motion
pictures and other audio-visual works, and sound recordings. Copyright
protection was extended to software in 1980 and online, digital recordings in
1995. Essentially, email and other online text are protected, as well as
certain compilations of data (databases), WAV files, GIF files, and other
audio-visual elements. What is not protected under copyright law is factual
information such as domain names, digital signatures, URL addresses, and
encryption keys, as well as ideas, short phrases, and titles. The facts within
a database are not copyrightable, for example, but the selection, coordination,
and arrangement of the material may be copyrighted (Feist Publications, Inc. v.
Rural Telephone Service Co., 1991).
The law requires the work to be "fixed in any tangible medium of expression,"
which has posed some concern for online information. Essentially, information
stored on computer disk or CD-ROM qualifies, and even information stored briefly
in RAM may meet the definition (MAI Systems Corp. v. Peak Computer Inc., 1993;
Triad Systems Corporation v. Southeastern Express Co., 1994). Information
transmitted "live" over the Internet, however, is not afforded protection unless
it is simultaneously fixed.
Copyright owners have the exclusive right to control their work, including the
ability to make copies and derivative works, as well as distribute, display and
perform the work publicly. Here, the Internet poses unique challenges to users
who may easily and even unwittingly infringe on these rights. For example,
simply viewing a work online requires one to copy it in RAM, technically
constituting a copyright infringement. While a 1980 copyright law amendment
permits the owner of a copy of a software program to copy the program into RAM,
the law does not address online transmissions where no physical copy exists.
Thus, without consent or implied license, browsing a Web site or downloading an
email attachment could be against the law.
Users may also be more tempted to lift and modify pictures, HTML code, and
available material to incorporate into their own Web sites, only to be
infringing on the original authors' rights to make derivative works and
adaptations. The Internet also makes it easy to forward email, technically
violating the author's right to distribute his or her work. At least one court
has indicated that allowing subscribers access to copyrighted pictures over a
computer bulletin board constitutes an unlawful display (Playboy Enterprises,
Inc. v. Frena, 1993). In addition, playing someone else's video over the
Internet might infringe a performance right. In fact, the Digital Performance
Right in Sound Recordings Act of 1995 specifically protects sound recordings
performed publicly via digital audio transmission.
Copyright owners' rights are not absolute, however. The Copyright Act recognizes
a number of exceptions, permitting some use of materials without permission.
Aside from noncopyrightable facts, ideas and short phrases, individuals can use
any material deemed to be in the public domain. This occurs when a work is
created by the federal government, when copyright protection is waived or
vacated, or the term of the copyright has expired (lifetime plus 50 years for
individuals and 75 years for corporations and works for hire, with longer
extensions now permitted). Also, works may be copied if there is "implied
license." For example, putting up a Web site essentially presumes and may
therefore permit users to copy the contents to their RAM in order to view it
(Religious Technology Center v. Lerma, 1995, albeit involving trade secrets).
Although debatable, providing links to a copyrighted site should not result in
liability if the linked sites' home pages are the destinations (Sovie, 1998).
Copying short, insignificant portions of a work may also be permitted, although
this depends on the quantity and quality taken of the particular work.
Copyright law also considers "fair use" to be an exception, which applies to
such uses as teaching, scholarship, research, news reporting, criticism and
commentary. Here the law considers the purposes and character of the use; the
nature of the copyrighted work; the amount and substantiality copied; and the
effect of the use on the market or value of the work. For example, if the
copying is for educational purposes, very little is taken, and there is no
market impact on the original, then the action may be permitted as fair use.
The courts construe fair use narrowly, however. For example, no fair use
existed when photographs from a magazine were digitized and offered online for a
fee (Playboy Enterprises, Inc. v. Frena, 1993) and when entire documents were
posted with little added criticism (Religious Technology Center v. Netcom,
One particular copyright concern has been the liability of ISPs which carry
infringing material. The Digital Millennium Copyright Act (1998) relieves ISPs
from liability for infringements where the ISP essentially serves as a conduit
and does not financially benefit from or is unaware of the infringement, or upon
actual knowledge acts expeditiously to stop the infringing activity. The law
also frees service providers from liability for caching (temporarily storing
material on the system's server) and linking to material that is infringing
In most countries including the U.S., information is automatically protected by
copyright from the moment it is created. Thus, a simple email message is
essentially protected by copyright. Affixing a notice and registration with the
U.S. Copyright Office is not necessary, although it can help dissuade copying,
and registration permits an infringement suit for more than actual damages.
Copyright infringements are filed as civil suits, although criminal penalties
can apply if infringements are willful and for commercial or financial gain.
Yet, the No Electronic Threat (1997) makes it a crime to copy or distribute
copyrighted software, music recordings, and other creative works with a retail
value of more than $1,000, regardless of any direct financial profit. The law
essentially protects software, music recordings, and other creative products
easily pirated over the Internet. The Digital Millennium Copyright Act (1998)
makes it a crime to possess and use tools that remove copyright protection
mechanisms from software and digital media.
Trademark protection applies to words and symbols used to distinguish particular
goods and services. This includes words and phrases such as "United Airlines,"
pictures or icons such as the McDonald's arches and Mickey Mouse ears, numbers
and letters such as MCI and 3M, as well as abbreviations, nicknames and even
colors. Trademark in cyberspace applies to domain names and online services
such as Yahoo, as well as existing products and services advertised online.
Trademark allows consumers to clearly identify a good or service with its source
and reputation for quality and value. Infringement occurs when another party
uses the same or similar mark in that market, creating a likelihood that
consumers may be confused as to source or sponsorship. For example, an
individual offering unauthorized copies of Sega games over the Internet would
likely cause consumers to erroneously believe the games came from Sega (Sega
Enterprises, Inc. v. MAPHIA, 1994). A likelihood of confusion is not the only
criterion, though. The Federal Trademark Dilution Act of 1995 provides
trademark owners relief even if there is no product or service competition or
confusion, provided the other mark somehow dilutes the former's mark. Dilution
includes "tarnishment" of the mark, essentially done in an immoral or otherwise
unappealing way. For example, Hasbro, the maker of the children's game
CandyLand, successfully sued a company based on this theory when the company
used the domain name "candyland.com" for sexually-oriented products (McDonald,
Reich and Bain, 1997).
The owner of a trademark has the right to use the mark relative to specified
goods or services in a particular market. Trademark protection applies only
within the market it is recognized, whether a town, state, region, or nation.
Therefore, it is possible for many "Al's Autoparts" to exist across the country,
for example, each enjoying trademark rights within their respective markets.
Expanding the business into new communities can pose trademark problems where
similar goods or services with the same mark are offered. Trademark rights go
to whomever was first to use the mark; conflicts may otherwise be negotiated or
a new mark created. This has serious implications for online use, where
creating a website advertising "Al's Autoparts," now gives this business global
reach, easily infringing on others' trademark rights in their respective
communities locally and abroad.
Trademark law has particularly been an issue is the areas of domain names and
Web site links. Domain names present a unique trademark problem in cyberspace.
Domain names are alphanumeric addresses for Internet sites and often consist of
trade names. This can lead to disputes where companies with similar names but
offering different products or services in different parts of the country battle
over the rights to a single, abbreviated domain name. In addition, some people
quickly secure domain names of well-known companies in the hopes of selling the
name at a later date. For example, Microsoft is suing two men for registering
the Internet domain names microsoftwindows.com and microsoftoffice.com. Calling
them "cybersquatters," Microsoft complained that the men had also registered
domain names such as AirborneExpress.com, AlamoRentalCar.com,
AssociatedPress.com, and Hollywood-Video.com. Network Solutions, Inc. had the
monopoly in domain name administration and developed a policy of requiring
applicants to certify that they would not infringe on the tradename of others.
A new, nonprofit corporation called the Internet Corporation for Assigned Names
and Numbers (ICANN) is taking over, however, which may mean some procedural
Another problem implicating trademark is the linking of one Web site to another
(Maloney, 1997). In Washington Post Co. v. TotalNews, Inc. (1997), the latter
provided a link to the Washington Post Web site while displaying the site within
the TotalNews frame which obscured the Post's advertising and URL. The Post
sued under the Federal Trademark Dilution Act of 1995, but settled out of court.
Whether or not providing links or pulling a remote site into a frame is a
dilution is not clear (Maloney, 1997).
Trademarks (and servicemarks) are obtained by applying the marks to the goods
(or services) so that they are prominently displayed, and by using the marks in
commerce. No registration is necessary in the U.S., although under the Lanham
Act (1946), registration with the U.S. Patent and Trademark Office (PTO) gives
the mark nationwide rights and allows owners to sue infringers in federal court.
Trademarks may be federally registered if they are distinctive and used in
interstate or foreign commerce. The strongest and most secure trademarks are
those that are highly distinctive (i.e., Alta Vista and Lycos) and unrelated to
the nature of the product (such as Amazon.com and Sega). It is possible,
however, for more generic names (i.e., American Online) to acquire
distinctiveness after five years of exclusive use. New products or services
such as software and online services may need specific trademark protection,
even if the original good or service is already trademarked. It is possible to
register in advance of intended use and hence reserve a trademark. Trademark
registration only provides protection within the respective country, however;
registration must be obtained in each and every country where protection is
Patents are issued to a person who invents or discovers a new and useful
process, machine, manufacture, or composition of matter, or any new and useful
improvement. Unlike copyright which is limited to expression, patent provides
protection for the invention itself (or its functionality). Abstract ideas or
laws of nature are not eligible for a patent, nor are methods of doing business
or printed matter (which may otherwise qualify for trade secret protection or
copyright) (Ellis, 1998). In addition, mathematical algorithms used in computer
programs are not themselves patentable; however, the Supreme Court has ruled
that utilization of algorithms in an original and useful computer program may
rise to the level of a patentable invention.
A patent is a grant by the federal government to an inventor, giving him or her
the right to exclude others from making, using, selling the invention throughout
the country for a limited period of time. A patent provides a strong basis for
licensing the technology to others. A patent also protects against the creation
of similar versions or obvious improvements. Hence, an updated or enhanced
computer program that simply manipulates more calculations or handles more
accounts would not be patentable (Ellis, 1998).
There are two kinds of patents applicable to the Internet: utility patents,
covering functional innovations in products or processes, and design patents,
covering ornamental aspects of an article of manufacture. In both cases, to
achieve a patent, an invention must be patentable by definition, useful, and
truly novel. Utility patents must also be nonobvious.
Utility patents may apply to computer software, which was previously considered
unpatentable. Now, the PTO and the courts recognize software patents if the
software is characterized as a machine for performing certain functions or a
process that manipulates or physically changes some physical structure. For
example, certain interactive functions and interfaces, communications protocols,
data compression techniques, and encryption techniques may be protected by
patent law. One recently awarded patent, for example, was for an online system
called "attention brokerage" created by CyberGold Inc., which lets Web users
earn money by clicking on banner ads and corporate Web sites. Utility patents
provide strong protection, giving the user an exclusive right to the idea
embodied in the software, not just the code itself, therefore preventing
competitors from creating new code to perform the same function (McDonald,
Reich, and Bain, 1997).
Design patents can be obtained for computer screen icons, according to PTO
guidelines (McDonald, Reich, and Bain, 1997). With respect to graphical user
interfaces, design patents can provide stronger protection than copyright.
Design patents will not cover functional aspects of a display or GUI, however.
Patents are granted through the Patent and Trademark Office pursuant to the
Patent Act of 1952. Unlike other intellectual property registrations, the
process usually takes two or more years, sometimes costing several thousand
dollars. Notice must be affixed or damages for infringement may be limited.
Falsely marking an item as patented is against the law. Utility patents expire
20 years after being filed, while design patents last 14 years from the date of
issuance. Patents issued in the U.S. are not recognized in other countries. To
protect inventions in other countries, applications must be filed separately.
Responses to Intellectual Property Issues
The rights of authors and creators are certainly impacted by Internet
intellectual property issues, but so are the interests of potential users and
creators. Individuals, industry and national and international policy-makers
are responding in a number of ways.
At the individual level, interests range from demanding maximum intellectual
property protection for personal creations, to seeking flexible protections and
exceptions in order to access and use the works of others. There are many
questions that are only sometimes answerable by existing law. The basic
questions are, who exactly owns what information? What rights do they have?
What rights do non-owners (users) have? How do the traditional laws apply to
From the standpoint of intellectual property owners, the questions expand to how
the information can be protected and how its value should be exploited. For
example, how might implied license or fair use negate a copyright? Which owner
of a trademark has priority when online advertising causes an overlap in
markets? How can a mark now be used online without infringing on others'
trademarks in the U.S. or abroad? To what extend can an existing interface or
compression technique be incorporated into new software without infringing
While some copyright holders are refraining from online distribution, more
actively registering their copyrights, or limiting access and use to paid
subscribers, others are jumping on the Internet bandwagon and offering their
information for free in exchange for viewing advertising or as an inducement to
buy more information or other goods or services. Some people with trademark
interests are adopting highly distinctive marks to avoid potential territorial
disputes over trademark as well as registering for trademark in advance of
intended use and using the mark on the Internet to obtain national rights.
Where conflicts arise, some owners are unfortunately negotiating rights or
changing marks altogether, oftentimes at considerable expense.
More individuals are interested in intellectual property rights as potential
users, however. In this sense, they are concerned about what information can be
used without infringing owners' rights. How can users find out if a work is
protected? When do fair use and other exceptions apply? When is permission
implied or required?
The initial excitement of the Internet prompted many authors and creators to
provide their works online for free. As a result, many users have come to
expect valuable information at little or no cost, with little effort, and with
little or no negative consequence. Many individual users mistakenly believe
that copying, using and distributing online material is either permissible,
tolerable, or essentially undetectable. However, more publicity of infringement
cases and prominently displayed notices are causing more potential infringers to
pause. While the average user does not understand intellectual property law or
its implications, more are paying attention, particularly since knowledge of the
law is not a requisite for a successful copyright infringement lawsuit. More
are also turning to the Internet for answers, using various search engines and
available databases to quickly find out if any information is proprietary or in
the public domain. Seeking permission through the Internet itself is making the
process much easier, quicker, and less expensive.
Industry and other organizations face the same competing interests as both
owners and users of intellectual property. As with individuals, the same basic
questions apply. Yet with more invested and deeper pockets, the stakes for
businesses are much higher. Companies also face additional concerns. For
example, what are the liabilities of ISPs when subscribers infringe intellectual
property rights? Might overly broad patents prevent interoperability between
programs? Are there technological means or self-regulatory approaches that can
be developed to address problems?
When it comes to collecting damages, ISPs are easy targets for lawsuits because
they are more easily located than individual infringers and are
well-capitalized. ISPs may escape direct liability, but may be liable for
contributory or vicarious infringement--well-recognized doctrines applying
standard tort law concepts (Maloney, 1997). In response, the industry has
lobbied hard for the Digital Millennium Copyright Act (1998) which now provides
some protection. Still, ISPs are being more careful in regard to monitoring
their services, since liability still applies if it can be shown that the ISP
had knowledge of the infringing action, could have controlled it, or financially
When it comes to patent rights, there is a fear that broad patents might prevent
programs from being able to interface or work together. As a result,
interoperability is hindered and the development of new software is stifled.
The market will not accept programs that do not adhere to certain standards, and
designing around the patents may be impossible without infringement. Some
patent owners resort to injunctions while others demand royalties, costing
prospective developers millions of dollars. In the meantime, computerized
patent databases are helping businesses track patent activity to avoid problems.
In some cases, patentees are focusing their enforcement efforts on suppliers,
rather than company end-users. Nonetheless, organizations need to be aware of
using software from a vendor that did not secure a suitable license.
In response to the many challenges of a digital, online world, some
organizations are working toward joint licensing or contractual limitations on
use of works on the Internet, and others are developing technology that would
permit practical enforcement of these limitations (Maloney, 1997). For example,
in Frank Music Corp. v. CompuServe (1995), plaintiffs sued CompuServe, alleging
copyright infringement of 947 songs that subscribers were uploading and
downloading without permission. The suit was settled with the grant of a
license to upload or download musical works (Maloney, 1997). Other
organizations have established Internet licensing schemes, which ensure
copyright holders are fairly rewarded for the use of their works. For example,
the Copyright Clearance Center now licenses articles and pictures on the
Internet, and Broadcast Music Inc. (BMI) provides a blanket license to an ISP
called Onramp (Packard, 1998). Some even envision a pay-peruse system, whereby
users would license from a publisher each and every time for access to and use
of protected works. This has implications for the need for the sweeping concept
of "fair use" if immediate licensing of every work is possible.
At the national level, lawmakers are listening to, debating, proposing, and
enacting various legal remedies in response to intellectual property concerns
raised by both owners and users as well as the international community. How can
conflicts over trademark rights be resolved domestically and internationally, as
more individuals and businesses go online? How can the works of authors and
creators be protected and encouraged while furthering a free flow of
information? Should more regulation be created or should solutions be
The White House has assumed a fairly active role in examining the issues,
creating several initiatives, and issuing reports such as its 1995 White Paper.
The administration encouraged the adoption of the World Intellectual Property
Organization (WIPO) Treaties and endorsed limitations on devices designed to
circumvent copyright protection. Congress has likewise been active, putting
these and other recommendations into law, such as the Digital Millennium
Copyright Act, (1998) and the No Electronic Threat Act (1997). In addition, a
number of bills have been offered, addressing such matters as database
protections and the misappropriation of collections of information. National
organizations such as Network Solutions, Inc. have also attempted to resolve
problems like the battle for domain names, where more subdomains or suffixes are
being created to alleviate conflicts.
The international community is faced with the problem of reaching consensus and
uniformity in protection and enforcement across borders. A variety of social,
political, and economic factors contribute to the differing types of protections
available in each country. For example, Europe has historically recognized the
existence of moral rights, which has not gained support in the U.S. On the
other hand, policies in the U.S. are more likely to be driven by marketplace
interests in the free flow of information. The sociological, political and
economic effects of cross-border information flow must be considered as national
barriers are broken down by the Internet. Can international conflicts over
rights be resolved? What protection is there for information copied and
distributed in another country? In which countries must registration be
obtained in order to receive protection? How might trademarks, copyrights, and
patents be enforced internationally?
Different international policies have only created confusion among intellectual
property owners and users. For example, users are discovering that works
created by other governments are not necessarily in the public domain as
government works are in the U.S. Moreover, works that fall into the public
domain in the U.S. may still be copyrighted in another country, making online
availability difficulty. Trademark rights may be infringed in other countries
once the trademark is available globally on the Internet. Even policies
regarding Web caching vary, as the the Internet Society is urging the European
Parliament to ease provisions of a directive that would make Web caching
Despite the various approaches, several international treaties have been
successfully created to establish minimum standards for protecting works across
borders. The Berne Convention, for example, extends a country's copyright
protection to foreigners whose works are infringed in that country. In
addition, the Agreement on Trade-Related aspects of Intellectual Property Rights
(TRIPS), effective 1995, was a major development with regard to harmonizing
intellectual property rights. Over 100 countries signed on to TRIPS, which
recognizes software as literary works and protects certain compilations of data.
Two 1996 World Intellectual Property Organization (WIPO) treaties--the Copyright
Treaty and the Performances and Phonograms Treaty--addressed literary and
artistic works in cyberspace, and were ultimately incorporated into U.S. law
(Digital Millennium Copyright Act, 1998). They encouraged nations to provide
effective remedies against technologies designed to defeat protections. A
controversial measure considering RAM as potentially infringing copyright was
dropped (Maloney, 1997), as well as a proposed treaty to provide protection for
non-original databases. More WIPO conferences are being held to negotiate
international policies, including the 1999 International Conference on
Electronic Commerce and Intellectual Property, addressing the impact of
electronic commerce on intellectual property.
Information over the Internet has considerable value, whether it be a personal
data profile, a Web document, software, or a tradename. Companies are able to
easily target and reach customers, information providers are able to distribute
their content quickly and globally, and users are able to enjoy a wealth of
information at the touch of a mouse click. Yet there are also varying degrees
of proprietary interest existing in this online, digital information. These
proprietary interests are manifested in such rights as privacy, copyright,
trademark, and patent, which recognize the rights to maintain autonomy, and
control access, use, copying, disclosure, and distribution.
The Internet presents new challenges when it comes to balancing these
proprietary interests against the competing interests of users in a democratic,
market economy. Interests in a free flow of information must be balanced
against intellectual property rights and the desire to stimulate new
intellectual property development. Perhaps one of the most challenging public
policy issues of the information age is balancing the benefits realized by data
collection, distribution, and monitoring with the privacy rights of individuals.
Adding to the difficulty is the changing nature of these interests relative to
the rapidly evolving Internet. For example, marketplace forces, social
pressures, or new laws may shift the privacy balance back, or individual privacy
expectations may change and adapt. Likewise, the free nature of the Internet
has been changing the dynamics of intellectual property rights, although shifts
toward a pay peruse system may further change the nature of the debate.
The stakes are high in the trade-off between Internet market opportunities and
intellectual property and privacy rights. How to achieve a balance is a
challenge facing individuals, organizations, and national and international
policy-makers, as the Internet and interests in privacy and intellectual
property evolve. While the courts struggle to understand the nature of the
Internet and how traditional guidelines fit, lawmakers are considering new laws
and international agreements. It is vital that industry self-regulation,
legislation, education, and technological solutions be coordinated to ensure a
framework satisfactory to all.
As these issues evolve, some online sources for further information about
privacy and intellectual property rights include:
Electronic Privacy Information Center: www.epic.org
Internet Privacy Coalition: www.privacy.org/pi
Consumer Project on Technology: www.essential.org/cpt/cpt.html
Center for Democracy and Technology: www.cdt.org/
Electronic Frontier Foundation: www.eff.org/
American Intellectual Property Law Association: www.aipla.org
Copyright Clearing Center: www.copyright.com
Intellectual Property Owners: www.ipo.org
International Trademark Association: www.inta.org
U.S. Patent and Trademark Office: www.uspto.gov
U.S. Copyright Office: lcweb.loc.gov/copyright/
World Intellectual Property Organization (WIPO): www.wipo.org
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