GROSHEIDE f both data base protection and music distribution on-line it seems appropriate devote somewhat more attention to these issues here Databases As far as database protection is concerned the following may be stated: for decades, aal protection should be given to databases has figure prom inently on the agenda of international and national govemmental and non-govermmental bodies 20 Since data bases are prone to full-scale misappropriation, a back of adequate legal protection could have a range of damaging effects on everyday life. Databases are subject to misappropriation because the information contained therein is highly vulnerable. Infomation, by its very nature, is ubiquitous, inexhaustible, and indivisible. As a consequence, the second use of some particular new infomation does not dim inish or exhaust it. Once disclosed to the public information can generally be used, ignoring contractual or tortious liability, without charge and without the da tabase prov iders perm ission orany obligation to reimburse him for his investment. This holds equally true for the off-line as well as the on-line market. Paradoxically, providing protection to one database provider creates a legal barrier for other potentally competing database providers attem pting to enter the market. This barrier is particularly effective in the case of sole source database producers. It becomes clear that the need for protection should be balanced against database industry that are at stake. Equally involved is the public interest in the dissem ination of culture and kwowledge in today's society requiring full access to all types of information. The above state of affairs demands a coherent and firm strategy by the governmental and non-governmental bodies in charge on both a national and international level. It is essential to realize that the legal protection of databases should not be dealt with in isolation, but should be seen as part of the legal protection of intellectual property rights in the Information Society in general Considering that databases have not always fitted within existing legal systems and leavingcontract law aside, there have been three ways in which to offer legal rotection:copyright law, unfa ir competition law, and sui generis law. In 1996, the EU finally adopted the EU Data base Directive. The Directive created a two-tier protection scheme for electronic and non-electronic databases. Member states are required to protect data bases by copyright as intellectual creations, or to provide a novel sui generis right in order to prevent the una uthorized extraction or reutilization of the contents of a database. The difference between the two is that copyright infringement implies copy ing the structure, while the sui generis right infringement implies copy ing the contents themselves, irrespective of their"copyrightability'.The Digital Information by the Use of Shrink-wrap and Clip-wrap Licenses, n F.w. Grosheide, K Boele-Woelki, Molengrafica 1998(Vemande Lelystad 1998) pp. 263-319, L. Guibault, Copyright Limitations and Contract(Kluwer Law International, The Hague, London, Boston 2002) See generally F.w. Grosheide, Database Protecton- The European Way, Washington University Joumal of Law and Pohcy, Vol 8(2002)(forthcoming, broadly discussing the eC Database Directive 96/9
GROSHEIDE 216 of both database protection and music distribution on-line it seems appropriate to devote somewhat more attention to these issues here. Databases As far as database protection is concerned the following may be stated: for decades, the question of what legal protection should be given to databases has figured prominently on the agenda of international and national governmental and non-governmental bodies.20 Since databases are prone to full-scale misappropriation, a lack of adequate legal protection could have a range of damaging effects on everyday life. Databases a re subject to misappropriation because the information contained therein is highly vulnerable. Information, by its very nature, is ubiquitous, inexhaustible, and indivisible. As a consequence, the second use of some particular new information does not diminish or exhaust it. Once disclosed to the public, information can generally be used, ignoring contractual or tortious liability, without charge and without the database provider’s permission or any obligation to reimburse him for his investment. This holds equally true for the off-line as well as the on-line market. Paradoxically, providing protection to one database provider creates a legal barrier for other potentially competing database providers attempting to enter the market. This barrier is particula rly effective in the case of sole source database producers. It becomes clear that the need for protection should be balanced against the need for competition. However, it is not only the particular interests of the database industry that are at stake. Equally involved is the public interest in the dissemination of culture and kwowledge in today’s society requiring full access to all types of information. The above state of affairs demands a coherent and firm strategy by the governmental and non-governmental bodies in charge on both a national and international level. It is essential to realize that the legal protection of databases should not be dealt with in isolation, but should be seen as part of the legal protection of intellectual property rights in the Information Society in general. Considering that databases have not always fitted within existing legal systems and leavingcontract law aside, there have been three ways in which to offer legal protection: copyright law, unfair competition law, and sui generis law. In 1996, the EU finally adopted the EU Database Directive. The Directive created a two-tier protection scheme for electronic and non-electronic databases. Member states are required to protect databases by copyright as intellectual creations, or to provide a novel sui generis right in order to prevent the unauthorized extraction or reutilization of the contents of a database. The difference between the two is that copyright infringement implies copying the structure, while the sui generis right infringement implies copying the contents themselves, irrespective of their ‘copyrightability’. The Digital Information by the Use of Shrink-wrap and Clip-wrap Licenses, in F.W. Grosheide, K. Boele-Woelki, Molengrafica 1998 (Vermande Lelystad 1998), pp. 263-319, L. Guibault, Copyright Limitations and Contract (Kluwer Law International, The Hague, London,Boston 2002). 20. See generally F.W. Grosheide, Database Protection – The European Way, Washington University Journal of Law and Policy, Vol. 8 (2002) (forthcoming), broadly discussing the EC Database Directive 96/9
COPYRIGHT ISSUES ANDTHEINFORMATION SOCIETY notion of ones own intellectual creation serves as a criterion for the determination of the object of protection under copyright law. No database is copyrightable if its structure does not reflect the author 's own intellectual creation of its author It is sa id that this notion, which in its terminology differs from expressions like originality, personal stamp, and the like mainly used to indicate the threshold of the protection has taken from the French Pachot case 2 1 According to Article 7(1), the sui generis protection only applies if the producer of a database has made a qualitatively or quantitatively substantal investment. This limited application seems to illustra te that the sui generis right solely protects the investment, for example, sweat of the brow Recitals 39 and 40 also seem to express this view From a conceptual point of view, It may be more accurate to say that the investment as incorpora ted in a database is protected. However, when it comes to substantiating the amount of investment required in order to obta in sui generis protection, the Directive offers little guidance Indeed, it seems to be presumable that in order to keep in line with the prev iously existing thin copyright protection in some European countries, a relatively low investment threshold may suffice. But assum ing that a more or less abstract statutory definition is not possible, setting the terms is up to the courts. Recently, some ational courts in the eu mem ber sta tes have been asked to address the issue of what constitutes a substantal investment. In doing so, the courts are also faced with another factor indicated in Article 7(1), that is that the substantal investment must be expended in either the obtaining, verification, or presentation of the contents of the It is clear that the two-tier system of protection which the Directive introduces derives its significance from the new sui generis right, since most data bases will not be eligible for copyright protection, no matter how low the standard of originality may be. However, it is quite possible that both copyright and the sui generis right will simultaneously apply. In that case, both rights will run and can be exploited independently. If one copies or distributes the contents of such a double protected database without the consent of the copy right owner, the copyright owner can, in these circumstances, instigate legal proceedings for copyright and sui generis right Music distribution on-lt Next comes music distribution on-line. 23 From a legal point of view musical works Cass, ass plen. Mar. 7, 1986, JCP 86, Il, 20631 Comp. Michae Lehman, The European Database Directive and Its Implementation into German Law, IIC776, 776.93(1998)(stating"Ithi specification of a Europe-wide ' standard of orignality alsoserves to harmonize copyright m the EU since certain countries will beobliged torase their req uirements forprotection, such as Holland and the United Kingdom, white others will generally have to be lowered, such as in Germany); see for an appraisal of the new originality criterion n the context of the Computer Program Directive. Report from the commission to the council the European Parlament and the Economic and Social Committee on the Implementation and Effects ofDirective 91/EEC(2000)199 final (Apr. 10, 2000). See for an account of such court decisions grosheide referred to in footnote 20 23. See for an overviewof the state of affairs per ultimo 2001 F.w. Grosheide, Is the Approprate EU Legal Framework in Place for Music Online? IIC 2002/(forthcoming) 217
COPYRIGHT ISSUES AND THE INFORMATION SOCIETY 217 notion of one’s own intellectual creation serves as a criterion for the determination of the object of protection under copyright law. No database is copyrightable if its structure does not reflect the author’s own intellectual creation of its author. It is said that this notion, which in its terminology differs from expressions like originality, personal stamp, and the like mainly used to indicate the threshold of the protection, has taken from the French Pachot case.211 According to Article 7 (1), the sui generis protection only applies if the producer of a database has made a qualitatively or quantitatively substantial investment. This limited application seems to illustrate that the sui generis right solely protects the investment, for example, sweat of the brow. Recitals 39 and 40 also seem to express this view. From a conceptual point of view, it may be more accurate to say that the investment as incorpora ted in a database is protected. However, when it comes to substantiating the amount of investment required in order to obtain sui generis protection, the Directive offers little guidance. Indeed, it seems to be presumable that in order to keep in line with the previously existing thin copyright protection in some European countries, a relatively low investment threshold may suffice. But assuming that a more or less abstract statutory definition is not possible, setting the terms is up to the courts. Recently, some national courts in the EU member states have been asked to address the issue of what constitutes a substantial investment. In doing so, the courts are also faced with another factor indicated in Article 7(1),that is that the substantial investment must be expended in either the obtaining, verification, or presentation of the contents of the database.22 It is clear that the two-tier system of protection which the Directive introduces derives its significance from the new sui generis right, since most databases will not be eligible for copyright protection, no matter how low the standard of originality may be. However, it is quite possible that both copyright and the sui generis right will simultaneously apply. In that case, both rights will run and can be exploited independently. If one copies or distributes the contents of such a double protected database without the consent of the copyright owner, the copyright owner can, in these circumstances, instigate legal proceedings for copyright and sui generis right infringement. Music distribution on-line Next comes music distribution on-line.23 From a legal point of view musical works 21. Cass.ass.plén. Mar. 7, 1986, JCP 86, II, 20631 Comp. Michael Lehman, The European Database Directive and Its Implementation into German Law, IIC 776, 776-93 (1998) (stating “[t]his specification of a Europe-wide ‘standard of originality’ also serves to harmonize copyright in the EU since certain countries will be obliged to raise their requirements for protection, such as Holland and the United Kingdom, white others will generally have to be lowered, such as in Germany”); see for an appraisal of the new originality criterion in the context of the Computer Program Directive. Report from the commission to the council, the European Parliament and the Economic and Social Committee on the Implementation and Effects of Directive 91/EEC (2000) 199 final (Apr. 10, 2000). 22. See for an account of such court decisions Grosheide referred to in footnote 20. 23. See for an overview of the state of affairs per ultimo 2001 F.W. Grosheide, Is the Appropriate EU Legal Framework in Place for Music Online? IIC 2002/ (forthcoming)
GROSHEIDE have been protected by copyright law ever since the establishment of modern intellectual property bw at the end of the 19th century and the national and international recognition thereof(in the Great Conventions of 1883 and 1886) Copyright law grants the rightowners in musical works, e ither fixed in print or on a ound recording, as well as their perfomances, prerogatives with regard to reproduction, distribution and communication to the public. Similar prerogatives are today granted to the performers of musical works(Rome Convention 1961). Such prerogatives nevertheless have to be exercised with due regard to the exceptions and limitations set by the aw in view of the interests of society at large. Obv iously the indicated prerogatives were developed in a historic perspective for the off-line world successively for sheet music, gramophone records, and radio transmissions. As long as the developments in this respect concemed modernization and adaptation of existing ana bg technologies(e.g long-playing sound recordings, television), some stretching of the established legal framework sufficed in order to cope with those new developments However, things changed considera bly from the moment when computer technology began to spread, particularly from the moment that the Internet became the main vehicle for on-line music distribution. Indeed. distribution of music on-line is one of those new transactions which can be executed entirely by electronic means through the Internet. Not surprisingly, such distribution has increasingly become a major part of so-called electronic commerce. Understandably, music distribution on- line is of only ones who have an interest in this distribution. This equally applies to the new dotcoms that prov ide intemediary distribution services, to consumers and not least to musicians and performers. However, the interests of those involved do not coincide in every respect. As a consequence, legislators and courts both on an international and national level are challenged to balance the interests at stake by providing, on the one hand, sufficient legal protection to copyright owners of music for the legitimate exploitation of their vulnerable digital products, while on the other hand ensuring that particularly consumers, i.e. society at large, haveapproprate rules to access these products. It may be said that until recently the music industry has failed to serve the need for tailor-made music distribution on-line at reasona ble prices This factor, together with an ideologically inspired view of Internet music distribution that confronts the monopolistic approach of the big producers, has resulted in the advent of a host of alternative dotcom music distributors It is notably this development in connection with the introduction of a new technology known as MP3 and the way in which it changed the on-line distribution of musical works that shook the foundations upon which the record industry had traditionally controlled the distribution of music. MP3 technology and related technologies are altering the way in which composers and performers release the work, the way record companies sell it, and the way the public consumes it. Legally speaking, the MP3 technology has given rise to serious controversy with regard to the application of the traditional legal framework to the distribution and consumption of musical works in the internet environment. On the one side. the esta blished industry is arguing that many MP3 distribution sites are purely illegal, the music being uploaded for unlimited use, and distributed by intemedaries and downloaded by consumers who do not pay the royalties due for such use. Allowing MP
GROSHEIDE 218 have been protected by copyright law ever since the establishment of modern intellectual property law at the end of the 19th century and the national and international recognition thereof(in the Great Conventions of 1883 and 1886). Copyright law grants the rightowners in musical works, either fixed in print or on a sound recording, as well as their performances, prerogatives with regard to reproduction, distribution and communication to the public. Similar prerogatives are today granted to the performers of musical works (Rome Convention 1961). Such prerogatives nevertheless have to be exercised with due regard to the exceptions and limitations set by the law in view of the interests of society at large. Obviously the indicated prerogatives were developed in a historic perspective for the off-line world successively for sheet music, gramophone records, and radio transmissions. As long as the developments in this respect concerned modernization and adaptation of existing analog technologies (e.g. long-playing sound recordings, television), some ‘stretching’ of the established legal framework sufficed in order to cope with those new developments. However, things changed considerably from the moment when computer technology began to spread, particularly from the moment that the Internet became the main vehicle for on-line music distribution. Indeed, distribution of music on-line is one of those new transactions which can be executed entirely by electronic means through the Internet. Not surprisingly, such distribution has increasingly become a major part of so-called electronic commerce. Understandably, music distribution on-line is of vital interest to the established music industry. Yet the record companies are not the only ones who have an interest in this distribution. This equally applies to the new dotcoms that provide intermediary distribution services, to consumers and not least to musicians and performers. However, the interests of those involved do not coincide in every respect. As a consequence, legislators and courts both on an international and national level are challenged to balance the interests at stake by providing, on the one hand, sufficient legal protection to copyright owners of music for the legitimate exploitation of their vulnerable digital products, while on the other hand ensuring that particularly consumers, i.e. society at large, have appropriate rules to access these products. It may be said that until recently the music industry has failed to serve the need for tailor-made music distribution on-line at reasonable prices. This factor, together with an ideologically inspired view of Internet music distribution that confronts the monopolistic approach of the big producers, has resulted in the advent of a host of alternative dotcom music distributors. It is notably this development in connection with the introduction of a new technology known as MP3 and the way in which it changed the on-line distribution of musical works that shook the foundations upon which the record industry had traditionally controlled the distribution of music. MP3 technology and related technologies are altering the way in which composers and performers release their work, the way record companies sell it, and the way the public consumes it. Legally speaking, the MP3 technology has given rise to serious controversy with regard to the application of the traditional legal framework to the distribution and consumption of musical works in the Internet environment. On the one side, the established industry is arguing that many MP3 distribution sites are purely illegal, the music being uploaded for unlimited use, and distributed by intermediaries and downloaded by consumers who do not pay the royalties due for such use. Allowing MP3