Imagine, for example, that ideas were copyrightable. Rightholders could then control the use of ideas which obviously would be to the detriment of public discourse. This could serve as an explanation for the limitation of the object of the right. A similar argument may lay at the root of limitations which allow quotations or copying in news media. Copyright, according to this view, is limited to the extent that the interest in a free flow of information outweighs the rightholders' interests.

Some of the copyright limitations may be explained as serving the users' right to privacy. Until now a copyright holder generally could not prohibit the activities of private persons. The mere 'consumption' of a work has never been an infringement. Even if the copy was pirated, the reader could not be held accountable for reading it. Moreover, in many jurisdictions, performances within the private circle are explicitly exempted from copyright. In some countries rightholders are entitled to an equitable remuneration for private copying, but mostly they cannot prohibit the activity. It is argued that the copyright holder is thus kept out of the users' private sphere, because to enforce an exclusive 'right to read' or an exclusive 'right to copy privately' would necessarily involve monitoring private behavior. To have one person policing which information another person uses or accesses is considered undesirable in a democratic society. Thus, the scope of the exclusive right is presumed to be balanced with the right to privacy.[3] 

The main alternative explanation for the copyright limitations stems from the law and economics approach. Two main lines of reasoning can be differentiated in this approach. The first emphasizes that information is a so-called 'public good'. The second is related to the view that copyright is an instrument to 'internalize external effects'.[4] 

Information is thought to be (to some extent) a public good, which implies that it is non-excludable and non-rival. If others cannot be excluded from using the good, it is impossible to generate income by producing it. Anybody can take it without payment. Therefore, nobody is willing to pay for the good. As a consequence, no one will invest in producing the public good and thus, presumably, no information products will be created. The exclusive rights are granted to heal this market failure, and to thereby provide an incentive to create. However, the exclusion of uses of non-rival public goods results in another market failure. Non-rival goods can be used by many people without degeneration or rivalry (e.g. a story can be told many times, while an apple - which is not a public good - can be eaten only once). It is said that excluding such use causes a social loss - i.e. it hinders a potential gain in social welfare - since one person could be better off without another being worse off if the use were not excluded. The copyright limitations are inserted to ensure that the deadweight loss caused by the exclusion of non-rival uses does not outweigh the gain in social welfare which follows from the incentive to create. Clearly, in this view too much exclusion, either on the basis of the law or of technology, is intrinsically undesirable.[5] 

In contrast, according to the other main economic explanation of copyright, the exclusive rights can, in principle, not be broad enough. An information producer should be able to reap the full value of any use of the information he produces. To demand payment for any use, he should be able to prohibit any use. Only then will he respond to the market (i.e. to demand) correctly and will the investments in information products rise to the optimal level. If the full social benefits of an economic activity are not reflected in the price, economists say that they are 'external effects'. It is believed that the market will only function properly - and that maximum social welfare will therefore only be reached - if such effects are 'internalized'. Copyright enables a rightholder to internalize the external effects of producing information products. However, economic theory predicts that external effects can only be internalized by granting exclusive property rights, when high transaction costs do not impede market formation. If the costs involved in licensing and in enforcement of the contract exceed the value of the use concerned, a license will never be concluded. The (potential) customer simply finds the price too high. Thus, a market will not evolve and the use will never occur, which is to nobody's benefit. Copyright must therefore be limited to instances where the value of the use is higher than the transaction costs. In this perspective, limitations are only necessary where high transaction costs exist.

Copy-Protection

Applying the different ways of reasoning to the question of what the appropriate scope of protection of technological measures would be, leads to ambiguous results. Arguments can be made for a statutory backing of technological exclusion as well as against it. One reason put forward to sanction the broader exclusivity based on technology is the presumed vulnerability of the copyright holder in the digital environment. To make perfect copies and to distribute a work world-wide becomes much easier. Anybody can be a pirate at almost no cost. Mass infringement is feared. In the balancing process - whether it is a balancing of rights or interests, or instead a balancing of incentive versus non-rivalry in the economic approach - the copyright holder loses out. To even the scales again, some weight should be added to the rightholders' side. More exclusivity is needed. Thus, it is argued that protection of the extra control which technological measures provide for is justified by the loss of control over the use of information in the digital environment.

Another often-mentioned argument to expand the scope of control over information uses is that transaction costs will go down in the on-line environment. Contracts will be concluded and enforced automatically - and therefore cheaply - through the application of technological measures. These measures facilitate the internalization of external effects to a further extent than is possible in the off-line world. Therefore, according to this view, uses which currently do not fall within the scope of copyright because they are of low value should, in a world where technological measures exist, be controlled by the rightholder.

Of course, there are also arguments against a statutory endorsement of the possibilities to technologically exclude uses. First, it seems hard to explain why fundamental rights would carry less weight in the digital environment. Second, it is uncertain how the information market will develop. The 'digital revolution' may have more advantages than disadvantages for rightholders. Clearly, the emerging possibility to directly market information products on-line and to establish lasting customer relations may be conducive to the generation of more revenue. Also, as the costs of printing and of distribution become much lower not only for pirates, but also for rightholders, they will be able to sell their products at a lower price, even if the profit per unit sold remains the same. Since demand will go up, when the price goes down, more units may be sold and total profit may rise. Additionally, it may be that the enforcement of copyright will be much cheaper and easier in the on-line environment than it is in the off-line hard-copy world. By using search-engines infringing material can be traced automatically. Streamlined notice and take-down procedures may facilitate the cheap and rapid cessation of infringing activities.[6]  If the limitations are regarded as the result of a balancing process and if copyright owners will indeed be better off in the on-line environment, there is no need to protect by way of statute the enhanced exclusivity based on technological measures. It can even be argued that less exclusivity is needed.

A final reason not to protect technological measures could be that such protection may not solve the problem it intends to address. Mass infringement may still occur, but not of copyright but of the protection of technological measures. The same problems that allegedly arise in enforcing copyright may arise in enforcing an anti-circumvention prohibition. If the prohibition will be violated en masse, enforcement will be just as unfeasible as it is to enforce copyright itself. (To give an example: perhaps home-copying can technologically be controlled, but to enforce a prohibition on circumvention to make a private copy may encounter similar problems, as does the enforcement of an exclusive right to prohibit home-copying.) A more realistic strategy may be for rightholders to target circumvention devices rather than persons who actually circumvent. As stated above, if circumvention devices are not available, most people will be unable to circumvent anyway. However, recent examples show that circumvention devices (e.g. DeCSS) may proliferate over the internet as do infringing copies.[7]  If the protection of technological measures does not cure the problem it is supposed to solve, it could be argued that it should not be inserted. The difficult choice between the protection of the measures and maintaining the limits of copyright needs then not be made.

Access Control

Until now, a copyright holder could not prohibit access to a work, in the sense that there is no exclusive 'copyright to read'. But on the basis of other areas of the law, the end-users' access to (copies or performances of) works can be controlled at some stages in the off-line information distribution chain. On the basis of the doctrine of trespass on land, the owner of a theatre can demand payment for access to the theatre - and therefore for access to the play or the movie. Similarly, it is unlawful to steal a copy from a bookshop. As in both these cases copyright does not apply, neither do the copyright limitations. Should the protection of technological measures which control access follow this precedent and be unlimited as well? Or, now that the protection is inserted in copyright law, should the copyright limitations apply in full to the protection of technological measures that control access? A third alternative is to design specific limitations to the protection of such measures, as the US legislator did.[8] 

The preferred option will probably depend on which type of access one thinks of when considering the proper scope of the protection of access-controlling technologies. If so-called 'initial' access is considered - i.e. control comparable to the access control exercised by a bookshop or theatre - perhaps it should be unlimited. It seems hard to defend, for example, that it must be permitted to break into a password protected website to download a work to make non-infringing use of it.

However, perhaps it is not problematic that this form of access control is unlimited in the off-line 'analogue' world, because there often are alternative sources to obtain access to a work. It can, for instance, be borrowed in a library. It remains to be seen whether such sources will exist in the on-line environment. If not, one way to limit this type of access control could be to ensure that alternative channels to obtain access remain available which are not under the control of the copyright owner. A precedent may be found in regulations on scrambled TV-signals. In many countries unauthorized access to the contents of such signals is prohibited. However, often it is also provided that certain programs may not be distributed exclusively via encrypted services, but must be available on open channels.[9] 

The other main form of access control is the control of access to the contents of lawfully acquired copies, e.g. the technical DVD-protection (CSS) or control of access to downloaded (and encrypted) files. Where this type of control is concerned, a much stronger case can be made to follow the precedent of the copyright limitations. Once purchased, an 'analogue' hard-copy can be used 'fairly'. It seems to come in conflict with the information policy expressed in copyright law, if a person - as may be the case under the amended U.S. Copyright Act - can be held accountable on the basis of the anti-circumvention provisions for breaking the access control applied to a lawfully obtained copy, when the act of circumvention is necessary to use the work in a non-infringing way. Intentionally the legislator kept the use concerned outside of the scope of control of the rightholder under copyright law, but by prohibiting such circumvention he statutorily brings it within the sphere of control of the latter again. This hardly seems a coherent approach.

The most common argument in favor of unlimited protection of technological access control, even control of the latter type, is related to the view on copyright as a means to internalize external effects. When a rightholder controls each access, in fact he can control any use of a work (of course, to use a work, one has to access it first). For each use the rightholder needs to be contacted and this can easily be accomplished over the internet. Tailor-made contracts can then be concluded. This development will facilitate the internalization of (formerly) external effects. In the ideal scenario, everybody gets what he wants for exactly the price he is willing to pay. A person who reads a book twice will pay more than a person who reads it only once. New technologies will keep the transaction costs down. Each time a page is turned a small sum will automatically be transferred. The play button will be the pay button. If it is feasible to bill for such consumptive uses, the rightholder should be able to do so. Thus, it is said that complete control over access would enhance social welfare and is therefore desirable.[10] 

Obviously, the outcome will be completely different if one is of the opinion that mere private uses are kept outside of the sphere of control of the rightholder, because the enforcement of a right to prohibit such uses comes into conflict with the right to privacy.

Concluding Remarks

The above analysis shows that no definite conclusions can be drawn as yet. There are no easy answers. Assuming that copyright law reflects some sort of balancing process, it is too early to know whether - to even the scales again (if at all necessary) - more weight should be attached to the copyright holders' interests or rather to the interests of information users. Apart from one's view on future developments, the opinion on the function and rationale of the copyright limitations determines what one considers to be the proper scope of protection of technological measures. If copyright is regarded as a means to internalize external effects, a broad protection of technological measures may be desirable. However, if the non-rival nature of use of information goods is taken into account, too much exclusivity may not be recommendable. In the latter perspective, some limitations are called for, even if it is feasible to control all uses by way of technologically and if transaction costs are low. Moreover, if the copyright limitations are viewed as related to fundamental rights, a good argument can be made against the protection of technological measures. Especially, if it is considered that it seems impossible to reconcile effective protection with the copyright limitations. The reasoning would be that the requirements of a democratic society should prevail over the (mainly) monetary interests of copyright owners.

The recently enacted legislation on the protection of technological measures can be analyzed as expressing the belief that copyright holders will be worse off in the 'digital millennium'. The rightholders' interests generally prevail. The exclusivity based on technology is protected even in cases where the copyright owner cannot claim exclusivity on the basis of copyright law. An alternative explanation may be that the legislature views the internalization of external effects as the main function of copyright. Apparently, the limitations can be done away with now that transaction costs are expected to go down. The amended U.S. Copyright Act may protect access controlling measures, even in situations where they prevent acts not relevant under copyright, thus providing statutory backing for new lucrative forms of exploitation. The E.U. Copyright Directive implies that the copyright exemptions are of no importance when the exempted use is technologically controlled and the user agreed contractually not to perform the exempted act, i.e. when the transaction costs did not prevent the conclusion of a contract.[11] 

Both the regulations mentioned require an administrative body to monitor the impact of the protection of technological measures and explicitly leave open the possibility to limit - to some extent - that protection.[12]  Apparently, the legislature is aware of the fact that it may have acted somewhat prematurely. However, the rightholders' interests get the benefit of the doubt at this stage as well. The onus of proof is no longer on the copyright owners to show that additional exclusivity is necessary. Instead, it seems that the protection will only be limited if it is conclusively established that it is to the detriment of non-infringing uses under copyright law. Will this be the case, for instance, if (currently) non-infringing uses can still be performed, except that they will have to be paid for?

[1] See on the overlap of technology and the law L. Lessig, Code and Other Laws of Cyberspace, New York: Basic Books 1999; J.R. Reidenberg, 'Lex Informatica: The Foundation of Information Policy Rules through Technology', Texas Law Review 1998, p. 568-581; L. Lessig, 'Intellectual Property and Code', St. John's Journal of Legal Comment 1996, p. 635-639. Return to Text