September 29, 1995 [#11]

William S. Galkin

This is the first of a series of articles discussing recommendations made in the report issued September 5, 1995 by President Clinton's Information Infrastructure Task Force. The report is entitled "Intellectual Property and the National Information Infrastructure," and is commonly referred to as the White Paper. At the end of the article there is information on how to get print and electronic copies of the White Paper.

The White Paper reviews and interprets current U.S. intellectual property law and makes various recommendations for changes to facilitate the development of the national information infrastructure (NII). These recommendations take the form of new proposed legislative changes as well as lending support to currently pending legislation.

This article discusses recommendations relating to criminal penalties imposed for certain copyright offenses perpetrated over the Internet. A 1994 case in Massachusetts is one example given in the White Paper of why criminal laws need to be strengthened. In U.S. v. LaMacchia, a university student established several bulletin board systems (BBS) that were accessible via the Internet. The purpose of these BBS systems was to allow users to download (pirate) commercially produced software for free. The keyword here is "free." The student's objective was "altruistic" and did not seek to make a profit on these unlawful transfers of software. The court found that, without a profit motive, the student could not be convicted of criminal violations under the U.S. Copyright Act, and his actions did not amount to wire fraud. The indictment claimed that over a period of six weeks the copyright owners lost over $1,000,000. It is important to keep in mind that civil remedies would nevertheless be available in such a case. These include damages, preliminary injunctions to prevent or restrain infringement, permanent injunctions where liability is established and there is a threat of continuing infringement, and impounding or destruction of all copies.

Why would anyone distribute software for free on such a large scale? First of all, there is little cost involved in setting up a BBS or other system for this purpose. Secondly, the White Paper points out that there are those who have the philosophical belief that Cyberspace should be a free realm and will create such systems to promote this concept.

The court in LaMacchia stated that it believed that the actions committed should be criminal, but said that it was up to the legislature to restructure the statutes to make it so: "Criminal as well as civil penalties should probably attach to willful, multiple infringements of copyrighted software even absent a commercial motive on the part of the infringer. One could envision ways that the copyright law could be modified to permit such prosecution. But, "[i]t is the legislature, not the Court which is to define a crime, and ordain its punishment."

To rectify this problem, Senate Bill 1122, endorsed in the White Paper, was introduced in the 104th Congress by Senators Leahy and Feingold. This Bill would make it a criminal act under the copyright laws to willfully reproduce or distribute copyrighted material which has a retail value of more than $5,000. The prohibition includes assisting someone to do the same. Because of this "assisting" provision, online system providers will need to take specific precautions where users can freely upload materials which are then made available to all users.

The drafters of the Bill believe that it is drafted in such a way that unintentional or careless acts of infringement will not fall under the criminal provisions. For this conclusion they rely on the "wilful" requirement and the $5,000 threshold to distinguish between the criminals and the inadvertent infringers. However, criminal liability is probably easier to arise than they suspect.

Most people would agree that it should be criminal for LaMacchia to distribute software in the manner he did, thereby robbing the copyright owners of potential profits. However, this criminal liability will also apply to many text transfers that are currently occurring where there is no criminal intent. Whether such acts are deemed criminal will depend upon how a court interprets "wilful."

Prior to the U.S. joining the Berne Convention on March 1, 1989, a work distributed without a copyright notice would pass into the public domain. Therefore, a person could claim that since the work did not have a notice, they thought it was in the public domain. However, under the Berne Convention, this is no longer the case. Works do not need any notice to maintain their copyright. Therefore, it can no longer be assumed that if there is no copyright notice that the work is in the public domain. The presumption would be, rather, that the work is not in the public domain. Therefore, transfers of documents, where it cannot be demonstrated were reasonably believed to be in the public domain, though they had the appearance of public domain documents, may often be deemed wilful.

Additionally, while the $5,000 amount may sound like a lot of copying, on the Internet documents available for downloading on web pages or otherwise may be downloaded hundreds or thousands of times. Therefore, a report for which the owner might charge $50, if downloaded one hundred times, would be a criminal act. It is important to remember that the requirement under the copyright law for criminal sanctions that the infringement be "willful" applies to the act of reproducing or distributing and does not mean that the infringer "willfully" intended to reproduce or distribute material he or she knew was worth $5,000.

Indemnifications from users might provide some limited protection for online systems, but these would probably not go over well from a marketing standpoint - unless universally required by all similar services.

A result of this legislation, if it passes (which is likely), will be that vendors of information must make greater efforts to verify the right to distribute materials. Or at least establish that the materials are probably in the public domain. As competition between commercial interests increases, and as scrutiny of activities by government entities also increases, vendors must develop vigilant procedures to clear ownership issues, or face the consequences.

[HOW TO GET THE WHITE PAPER: Print copies of the White Paper may be obtained for free by sending a written request to: "Intellectual Property and the NII" c/o Terri A. Southwick, Attorney-Advisor Office of Legislative and International Affairs U.S. Patent and Trademark Office Box 4 Washington, D.C. 20231. Copies are also available from the IITF Bulletin Board, which can be accessed through the Internet by pointing the Gopher Client to or by telnet to (log in as gopher).]

Date: Fri, 29 Sep 1995 13:53:56 -0400
Subject: The Computer Law Report #11 (9/29/95)
GENERAL INFO: The Computer Law Report is distributed weekly for free and is prepared by William S. Galkin, Esq. The Report is designed specifically for the non-lawyer. To subscribe, send e-mail to All information contained in The Computer Law Report is for the benefit of the recipients, and should not be relied on or considered as legal advice. Copyright 1995 by William S. Galkin.
ABOUT THE AUTHOR: Mr. Galkin is an attorney in private practice in Owings Mills, Maryland (which is a suburb of Baltimore), and he is also an adjunct professor of Computer Law at the University of Maryland School of Law. Mr. Galkin has concentrated his private practice in the Computer Law area since 1986. He represents small startup, midsized and large companies, across the U.S. and internationally, dealing with a wide range of legal issues associated with computers and technology, such as developing, marketing and protecting software, purchasing and selling complex computer systems, and launching and operating a variety of online business ventures. He also enjoys writing about computer law issues!
Last Updated 95/10/02