1997 Cooley Godward L.L.P.

UCLA B.A. 1988, M.B.A., J.D. 1994. The author is an attorney practicing cyberspace law with Cooley Godward L.L.P. <http://www.cooley.com>, Palo Alto, California, and is also an adjunct professor of Cyberspace Law at the Santa Clara University School of Law. The author wishes to extend special thanks to: the members of the CNI-COPYRIGHT mail list, whose contributions to an initial draft of this paper were invaluable to refining his interest in this topic; Stephan Paternot and Todd Krizelman of Cooley Godward's client WebGenesis, whose leading edge business models have led to numerous insights; and Lisa Sanger, a constant source of inspiration. The author also appreciates the comments to pre-publication drafts of this paper given by Brad Biddle, John Cummerford, Viraj Jha, Michael Lean, Mark Lemley, Shawn Molodow, Ross Mutton, Mark Perkins, Eric Reifschneider, Lisa Sanger, Paul Startz and Shelly Warwick.

The views expressed in this article are the author's own and do not necessarily reflect those of Cooley Godward or its clients. Cooley Godward represents some of the companies referenced in this article.

The author can be reached at schlachtere@cooley.com.


2. See U.S. DEP'T OF COMMERCE, INFORMATION INFRASTRUCTURE TASK FORCE, INTELLECTUAL PROPERTY AND THE NATIONAL INFORMATION INFRASTRUCTURE: THE REPORT OF THE WORKING GROUP ON INTELLECTUAL PROPERTY 10-11 (1995) [hereinafter NII WHITE PAPER], available at <http://www.uspto.gov/web/offices/com/doc/ipnii>; Ken Kay & Steve Metalitz, Copyright Act Needs Digital Expansion, LEGAL TIMES, Apr. 8, 1996 <http://www.cic.org/clip5.html>; Mark Stefik, Trusted Systems, SCI. AM., Mar. 1997 <http://www.sciam.com/0397issue/0397stefik.html> ("Uncontrolled copying has shifted the balance in the social contract between creators and consumers of digital works to the extent that most publishers and authors do not release their best work in digital form.").

[Throughout this article, websites are referenced as both primary and secondary sources. Unless otherwise noted, all websites were verified on May 1, 1995.]

3. NII WHITE PAPER, supra note 2, at 17. However, criticism of the NII WHITE PAPER has been widespread, with commentators arguing that its proposed changes are not minor. See, e.g., Pamela Samuelson, The Copyright Grab, WIRED, Jan. 1996, at 134, available at <http://www.hotwired.com/wired/4.01/features/white.paper.html>; Digital Future Coalition <http://www.ari.net/dfc>.

Although this article focuses on the Internet, much of the analysis applies with equal force to other networks such as BBSs and on-line services.

4. See John Perry Barlow, Selling Wine Without Bottles: the Economy of Mind on the Global Net (a.k.a. The Economy of Ideas), WIRED, Mar. 1994, at 85, available at <http://www.hotwired.com/wired/2.03/features/economy.ideas.html> ("Intellectual property law cannot be patched, retrofitted, or expanded to contain digitized expression any more than real estate law might be revised to cover the allocation of broadcasting spectrum . . ."); Esther Dyson, Intellectual Value, WIRED, July 1995, at 136, available at <http://www.hotwired.com/wired/3.07/features/dyson.html>.

5. This article discusses only U.S. copyright law, although other copyright law schemes are similarly worthy of analysis.

6. See, e.g., NII WHITE PAPER, supra note 2, at 19-147; Terry Carroll, Frequently Asked Questions About Copyright, version 1.1.3, January 6, 1994 <http://www.eff.org/pub/ intellectual_property/copyright.faq>.

7. U.S. CONST. art. 1, sec. 8, cl. 8.

8. 17 U.S.C. 101 et seq. (1994).

9. See Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 340 (1991), available at <http://www.seamless.com/rcl/feist.html.

10. 17 U.S.C. 106 (1994).

11. Id. 302.

12. Id. 107.

13. See Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 449-50 (1984).

14. See NII WHITE PAPER, supra note 2, at 79.

15. Lance Rose, The Emperor's Clothes Still Fit Just Fine, WIRED, Feb. 1995, at 103, 104, available at <http://www.hotwired.com/wired/3.02/departments/rose.if.html>; See Philip E. Ross, Cops Versus Robbers in Cyberspace, FORBES, Sept. 9, 1996, at 134, 137, available at <http://www.forbes.com/forbes/090996/5806134a.htm> (noting that "[intellectual] property owners rely heavily on old-fashioned methods: police raids, lawsuits and tip-offs," all of which become more likely as the size of the venture increases).

16. See Jessica Litman, The Exclusive Right to Read, 13 CARDOZO ARTS & ENT. L.J. 29, at 50-51 (1994), available at <http://yu1.yu.edu:80/csl/journals/aelj/articles/13-1/ litman.html> ("The current copyright statute has proved to be remarkably education-resistant. . . . [O]ur current copyright statute could not be taught in elementary school, because elementary school students couldn't understand it. Indeed, their teachers couldn't understand it. Copyright lawyers don't understand it.").

17. See Steve G. Steinberg, Seek and Ye Shall Find (Maybe), WIRED, May 1996, at 108, available at <http://www.hotwired.com/wired/4.05/features/indexweb.html> (noting that "at its current growth rate, the Web will contain more words than the giant Lexis-Nexis database by [summer 1996], and more than today's Library of Congress by the end of 1998").

18. See Netbot <http://www.netbot.com/>. For example, the Internet provides numerous "agents" for buying music CDs. These agents search the available pricing databases on the Internet and deliver a comprehensive set of results, allowing customers to easily compare prices and, presumably, choose the lowest. See, e.g., BargainFinder Agent <http://bf.cstar.ac.com/bf/>.

19. See part III.B supra. In part, transaction costs are limited due to current market conditions of pricing for access that does not vary with usage. There has been much discussion suggesting that per-byte or per-unit pricing will be required because of the problems inherent in a system where users can get unlimited use of the scarce resources of the Internet without paying marginal costs. See Jeffrey K. MacKie-Mason & Hal R. Varian, Economic FAQs About the Internet (June 1995) <http://www.spp.umich.edu/ ipps/papers/info-nets/Economic_FAQs/FAQs/FAQs.html>.

20. A producer will continue to produce so long as the marginal revenue from an additional unit of output is greater the marginal cost of such output, since the difference represents a contribution towards fixed costs. In an efficient market, the party with the lowest marginal cost sets the price, since it is able to undercut its competitors' prices and therefore win customers.

21. In the long run, all costs are variable costs. However, in the short run, costs that cannot be varied easily are fixed costs. Therefore, costs such as salaries, hardware and software expenses and contractual commitments for Internet service are all fixed costs in the short run.

22. See, e.g., James Gleick, I'll Take the Money, Thanks, NEW YORK TIMES MAGAZINE, Aug. 4, 1996, at 16, available at <http://www.around.com/copyright.html>.

23. See Hal R. Varian, Differential Pricing and Efficiency (June 1996) <http:// alfred.sims.berkeley.edu/Different/different.html> (arguing that it is optimal for intellectual property to be offered on a price-discriminated basis). Price discrimination is tricky because it requires careful definition of the product being price-discriminated. If the business model adopted by an Internet company is to provide free intellectual property as an inducement to sell other goods or services, is the "product" the intellectual property or the package of intellectual property plus the ancillary goods or services?

24. See Robert Metz, Shaking the Money Tree (Nov. 4, 1996) <http://www.talks.com/ library/rm110496.html>.

25. It is generally believed that few, if any, Internet businesses are currently making a profit. See, e.g., Kathy Rebello, Making Money on the Net, BUS. WEEK, Sept. 27, 1996, at 104, available at <http://www.businessweek.com/1996/39/b34941.htm> (indicating that Internet businesses losing money outnumber moneymakers two to one); See Jeff Moad, Web Shakeout, PC WEEK, July 15, 1996, at E1, available at <http://www8.zdnet.com/ pcweek/ExecConnect/0715/15emain.html> (describing a number of high-profile failures of Internet businesses). This limited empirical evidence does not yet prove that the Internet will provide insufficient profits to induce the creation of intellectual property. The Internet is far from mature, either as a commercial environment or in terms of the predictability its technical or legal framework. Further, in most industries, significant upfront investments must be made before profits accrue-and most Internet businesses are less than 3 years old. Instead, the high stock valuations of many Internet companies indicates that many investors forecast significant future profits.

26. See, e.g., Juno On-line <http://www.juno.com> and Hotmail <http:// www.hotmail.com>. Other companies, such as Cyber FreeWay <http://cyberfreeway.net> and @bigger.net <http://bigger.net> are offering lifetime email accounts for a low one-time fee. However, Freemark, one of the early entrants in this arena, has already gone defunct.

27. See, e.g., Pointcast Network <http://www.pointcast.com>, Freeloader <http:// www.freeloader.com> and Mercury Mail <http://www.merc.com/>.

28. See, e.g., HotWired <http://www.hotwired.com> and C|Net <www.cnet.com>.

29. See, e.g., HotBot <http://www.hotbot.com/>, Yahoo! <http://www.yahoo.com>, Excite <http://www.excite.com>, InfoSeek <http://www.infoSeek.com>, Switchboard <http://www.switchboard.com>, Four11 <http://www.four11.com> and BigBook <http://www.bigbook.com/>.

30. See Lauren Gibbons Paul, Web Rewards Wait Only for the Patient, PC WEEK, July 15, 1996, at E4, available at <http://www8.zdnet.com/pcweek/archive/1328/ pcwk0007.htm> (suggesting that content sites should not expect to break even before the year 2000); Rosalind Resnick, Follow the Money, INTERNET WORLD, May 1996, at 34, 34-36 [hereinafter Resnick, Follow the Money], available at <http://www.iw.com/1996/05/ money.html> (noting that advertising revenue is heavily concentrated among a small number of sites, leaving few advertising dollars for other sites); See also Hunter Madsen, Reclaim the Deadzone, WIRED, Dec. 1996, at 206, 212, available at <http://www.wired.com/ wired/4.12/esmadsen.html> (describing how the limited real estate for banner advertisements suggests that banner advertisements will be insufficient to support Web publishing). Web advertisement revenues were $71.7 million in the first six months of 1996, although they are expected to increase to $5 billion in 2000. Rebello, supra note 25, at 107.

31. See Zachary Schiller, For More About Tide, Click Here, BUS. WEEK, June 3, 1996, at 44, available at <http://www.businessweek.com/1996/23/b3478129.htm> (describing how Procter & Gamble, America's largest advertiser, has attempted to pay based solely on click-through rates, not page impressions).

32. See Craig R. Evans, The Web's REAL Opportunity-Advertising!, ELEC. RETAILING, Sept./Oct. 1996, at 6 (describing a survey of Web users indicating that 46% of those who used the Web to research products and services went on to buy the product at retail).

33. See Rosalind Resnick, AdTech '96: Is Banner Advertising Dead?, INTERACTIVE PUBL'G ALERT, July 1, 1996 <http://www.netcreations.com/ipa/banners.html> [hereinafter Resnick, Banner Advertising] (describing "sponsored content," "targeted direct mail" and "pay-per-use" advertising strategies).

34. Madsen, supra note 30, at 220.

35. In another example, IBM makes the full text of patents issued to it since 1971 available for free on its website. IBM's motivation is, in part, to reinforce the message that IBM has received more patents than anyone else for the past several years. See IBM Patent Server <http://patent.womplex.ibm.com/>.

36. Resnick, Banner Advertising, supra note 33.

37. See Margie Wylie, Can Copyright Survive the Digital Age? Should It?, DIGITAL MEDIA: A SEYBOLD REPORT, July 3, 1995 (on file with author) ("'Some of the more popular spreadsheet and wordprocessing programs were greatly aided by being ripped off to a certain degree.' It let people use them enough that they were convinced it was worth the money to buy a legitimate copy, with documentation, support and upgrades." (quoting R.W. Lucky of Bellcore Labs)).

38. This model is exemplified by the long-standing "shareware" industry. See, e.g., McAfee, <http://www.mcafee.com>, which makes anti-virus shareware software, and Netscape <http://www.netscape.com>, which gives its browser away as shareware. Id Software, the makers of Doom II, a popular (and violent) computer game, took a slightly different approach-they gave away the first 3 basic "levels" of the Doom II dungeon; the other 47 levels were made available for a charge.

39. Numerous pornography sites on the Internet offer a few free photos for browsing as a teaser to purchasing access to the remaining database of photos. See generally <http:www.yahoo.com/Society_and_Culture/Sexuality>.

40. See, e.g., the Wall Street Journal Interactive Edition <http://www.wsj.com>, which offers a free two-week trial subscription.

41. See Paulina Borsook, Steal This Article, UPSIDE, Mar. 1996 at 80, 88 [hereinafter Borsook, Steal This Article], available at <http://www.upside.com/texis/archive/ search/article.html?UID=9603011002> (describing how music groups have a love/hate relationship with their underground fans, knowing that infringement by the underground is often a way to expand their fan base). Spectrum Press <http://users.aol.com/ specpress/free.htm> gives away samples of short stories and novels that it sells in electronic form delivered on floppy disks. But see id. ("'You can upgrade software, not music.'" (quoting Judith Saffer, in house attorney for BMI)).

42. See Caryn Gillooly, Cabletron's Unbeatable Price Plan, INFO. WEEK, July 24, 1995, at 28 (describing how Cabletron was giving away its Spectrum software, worth $20,000, as an entree to sell its other network management products).

43. Rose Aguilar, Digital to Market Alta Vista, Mar. 29, 1996 <http:// www.news.com/News/Item/0,4,1005,00.html>.

44. This model may explain why companies tolerate unauthorized fan sites. Cf. Constance Sommer, Film Rights Falling Through the Net, SAN JOSE MERCURY NEWS, Dec. 10, 1996, at 10E (referring to Disney's laissez-faire attitude toward on-line fan sites).

45. See Paulina Borsook, Music Lessons, UPSIDE, Mar. 1996 at 84, [hereinafter Borsook, Music Lessons] (describing how music companies can add value to free on-line music sufficient to induce purchases of CDs through better packaging, thicker CD booklets, and accompanying video).

46. A "cookie" is a file on the user's hard drive where websites may store user-specific information. Most browser software programs support the use of the cookie.

47. See, e.g., CyberGold <www.cybergold.com> (a service which will pay users to read advertisements sent to them based on their articulated preferences).

48. Cf. Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 <http://www2.echo.lu/legal/en/dataprot/directiv/directiv.html> (discussing the protection of individuals with regard to the processing of personal data and the free movement of such data).

49. See Rebello, supra note 25, at 106 ("'[Community-building] is the secret weapon of an electronic merchant.'" (quoting Amazon.com founder Jeff Bezos)). See generally Arthur Armstrong & John Hagel III, The Real Value of On-Line Communities, HARV. BUS. REV., May-June 1996, at 134.

50. See Neil Gross & Peter McCoy, The Technology Paradox, BUSINESS WEEK, Mar. 6, 1995, at 76, 80 (describing how giving intellectual property away for free can build mindshare in the coming "attention economy").

51. Id. at 77.

52. 17 U.S.C. 106A applies only to "visual works," which include paintings, drawings, prints or sculptures in a limited edition of less than 200 copies which are signed and consecutively numbered, or a still photographic image which is a single copy signed by the author or is a limited edition of less than 200 copies signed and consecutively numbered. Id. 101. While it theoretically possible for a work existing on the Internet to be categorized as such, this possibility is highly remote.

53. None of the six exclusive rights of copyright have been interpreted to require attribution. See Mark A. Lemley, Rights of Attribution and Integrity in On-line Communications, 1995 J. ON-LINE L. art. 2 <http://warthog.cc.wm.edu/law/publications/ jol/lemley.html>.

54. See John S. Erickson, Open Commerce through Enhanced Attribution (1996) <http://www.netrights.com/EnhancedAttribution.html>; cf. Borsook, Music Lessons, supra note 44, at 84 (describing how a musical group used the name of a Japanese character for one of the group's songs; the litigation over the use of the name was amicably settled when the group pointed out that the character owner could not buy the kind of free advertising it had received).

Some of the business models, such as advertising, may require the attribution to occur only on the site where the advertising is located. Therefore, not every business using cross-subsidization will necessarily encourage widespread infringement.

55. NII WHITE PAPER, supra note 2, at 235. See also Julie A. Cohen, Some Reflections on Copyright Management Systems and Laws Designed to Protect Them, 12 BERKELEY TECH. L.J. 161 (1997) [hereinafter Cohen, Copyright Management Systems] (discussing policies prohibiting alteration of copyright management information).

56. Id. The reference to terms and conditions of use may be problematic because it suggests that owners can unilaterally impose "contract" terms on all consumers of the file. See Julie E. Cohen, A Right to Read Anonymously: A Closer Look at Copyright Management in Cyberspace, 28 CONN. L. REV. 981 (1996) [hereinafter Cohen, Right to Read Anonymously]. While this unilateral contract approach might be the right result, as found in ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996), available at <http:// www.kentlaw.edu/7circuit/1996/jun/96-1139.htm>, no consensus currently exists that the federal government should be dictating that licensors should be permitted to unilaterally impose contract terms on licensees. See U.C.C. proposed Article 2B (Mar. 21, 1997 draft) <http://www.lawlib.uh.edu/ucc2b/> (a controversial attempt to develop model state legislation permitting increased ease in the formation of unilateral contracts by licensors); See also Maureen O'Rourke, Copyright Preemption After the ProCD Case: A Market-Based Approach, 12 BERKELEY TECH. L.J. 53, 71 (1997). This issue is particularly important because presumably the licensor-imposed terms will exceed the licensor's rights under copyright law (otherwise, why would they need to impose them?). However, terms and conditions would be less problematic if they were merely grants of licensor's copyright rights (i.e., "you may use this material for any noncommercial use").

57. See World Intellectual Property Organization, Diplomatic Conference on Certain Copyright and Neighboring Rights Questions, WIPO Copyright Treaty (Dec. 23, 1996) <http://www.wipo.org/eng/diplconf/distrib/94dc.htm>; World Intellectual Property Organization, Diplomatic Conference on Certain Copyright and Neighboring Rights Questions, WIPO Performances and Phonograms Treaty (Dec. 23, 1996) <http://www.wipo.org/eng/diplconf/distrib/95dc.htm>. See also Cohen, Copyright Management Systems, supra, note 56 at 161, 165-69.

58. Prof. Samuelson also notes that the proposal could protect devices incorporated into files that effectively report on users' behavior, raising potentially serious privacy concerns. Samuelson, supra note 3, at 188; See also Cohen, Right to Read Anonymously, supra note 56.

59. The HTML command "img src," followed by a URL, instructs the user's browser software to access the file contained at the referenced URL and to incorporate that file into the page displayed to the user. The user will see the file displayed on the page, but the user will not see the site from which the file originated, nor will the linking site store a copy of the linked-to file on its server. Issues related to linking are discussed in part VI.D.1, infra.

60. Cf. CompuServe, Inc. v. Cyber Promotions, Inc., 1997 U.S. Dist. LEXIS (S.D. Ohio Feb. 3, 1997), available at <http://www.bna.com/e-law/cases/compus1.html> (discussing how when a mass email sender was notified by CompuServe that their "junk" email was no longer welcome, the sender's continued sending of mass emails was a trespass to chattels; however, notice "may be insufficiently communicated to potential third-party users when it is merely posted at some location on the network.").

61. See, e.g., SavvySearch <http://williams.cs.colostate.edu:1969/>.

A recent case involving the use of "frames" raises similar issues which arise when one site engages in "free riding" on the efforts of other sites. See Washington Post Co. v. Totalnews, Inc. (complaint filed Feb. 20, 1997) <http://www.ljx.com/internet /complain.html>. However, Totalnews does provide attribution to the sites it frames.

62. But see Cohen, Right to Read Anonymously, supra note 56 (assuming that each intellectual property is unique to the point that owners are able to exercise monopoly powers sufficient to impose unfair terms on consumers seeking access to the work).

63. See generally Gross & McCoy, supra note 50 (describing the recurring phenomenon of valuable goods and services being given away for free, even where manufacturing and distribution have marginal costs).

64. Which categories these are is presently unclear, but presumably they will be categories lacking high fungibility between specific intellectual property outputs.

65. See Lance Rose, Is Copyright Dead on the Net?, WIRED, Nov. 1993, at 112, available at <http://www.hotwired.com/wired/1.5/departments/idees.fortes/copyright.on.net.htm>(discussing various visions of what copyright law means on the Internet).

66. See generally Berne Convention for the Protection of Literary and Artistic Works (Paris Text 1971), 6bis <http://www.law.cornell.edu/treaties/berne/6bis.html>.

67. See NII WHITE PAPER, supra note 2, at 146.

68. 17 U.S.C. 106A (1994).

69. See Rose, supra note 15, at 104.

70. See Rebello, supra note 25, at 113-14.

71. Cf. Litman, supra note 16, at 34-35 ("Most of us can no longer spend even an hour without colliding with copyright law. Reading one's mail or picking up one's telephone messages these days requires many of us to commit acts that [the NII WHITE PAPER] now tells us ought to be viewed as unauthorized reproductions or transmissions.").

72. See NII WHITE PAPER, supra note 2, at 64-65.

73. See The Shetland Times Ltd v. Wills, Court of Sessions, Edinburgh, October 24, 1996 <http://www.shetland-news.co.uk/opinion.html> (a United Kingdom court enjoined one newspaper from hypertext linking to stories at a competing newspaper's website).

74. See Mitch Betts, On-line Pay Per View, COMPUTERWORLD, June 5, 1995, at 58, available at <http://www.computerworld.com/search/AT-html/9506/950605SL22 rights.html> (citing a survey of 255 information systems professionals which indicating that 72% believed they "should be able to download on-line news articles and share them with as many people as they want").

75. For example, when Lucasfilms, the owner of Star Wars, contacted a dedicated fan who had established a Star Wars appreciation website regarding alleged infringements, the fan transcribed the conversation and posted the transcription on the website. After Lucasfilms was flooded "with angry emails, demanding to know how it could presume to assert such totalitarian control over a product some fans had woven into the very fabric of their lives," Lucasfilms backed down. Sommer, supra note 44, at 10E.

76. See Wylie, supra note 37 ("Copyright doesn't work today because people pay 100 percent of the time. It works because people pay often enough that intellectual property owners make a profit."); cf. Borsook, supra note 45, at 84 (noting that the music industry long ago accepted that it would lose 15-20% of its potential revenues to home copying).

77. A good example can be found in the movie studios' action against video cassette recorder manufacturers, Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984), where the studios' victory would have inhibited the development of an industry (video cassette rental) that generated $13 billion in revenues for the studios in 1993. See Current Revenue of Target Markets, UPSIDE, Dec. 1994 at 18 (graph referencing a Yankee Group study); cf. Litman, supra note 16, at 46 ("Whenever we have discovered or enacted a copyright exception, an industry has grown up within its shelter.").

78. The Property of the Mind, ECONOMIST, July 27, 1996, at 57, 57. <http://www. economist.iconnet.net/issue/27-07-96/wbsf1.html>.

79. Tom Steinert-Threlkeld, The Buck Starts Here, WIRED, August 1996 at 132, 134, available at <http://www.wired.com/wired/4.08/features/nanobucks.html>.

80. Ross, supra note 15, at 137.

81. Id. Compare the approach used by Lexis in delivering cases on a screen-by-screen basis; compiling the full case by capturing each screen would be arduous.

82. See, e.g., Release Software's SalesAgent <http://www.releasesoft.com/ sadiagram.html>.

83. Ross, supra note 15, at 136.

84. Cf. id. (describing how Macrovision "spoilers" are inserted into movies; the spoilers confuse VCRs and produce distorted versions of the movies if copied).

85. Maximized Software's SiteShield software <http://www.maximized.com/ products/siteshield/> encodes files in such a way that they may be browsed but not otherwise copied.

86. "'Now, people say to themselves "Hey, let me take this for free," but with [Maximized Software's SiteShield], they'd have to decide to be trespassers. . . . People would have to put effort into stealing the images, and they'd know they were violating the copyright.'" Ross, supra note 15, at 139 (quoting Kenneth Spreitzer, president of Maximized Software).

87. See <http://www.cryptolope.ibm.com/wiacc.htm>; See also Digital Delivery's TitleBuilder <http://www.digitaldelivery.com/tbpage.html>; Portland Sotware's ZipLock <http://www.portsoft.com/ziplock.html>.

88. In some circumstances the enforcement of the contract will be limited because the contract provisions are preempted by copyright law. See Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 268-70 (5th Cir. 1988). See generally I. Trotter Hardy, Contracts, Copyright and Preemption in a Digital World, 1 RICH. J.L. & TECH. 2 (1995) <http://www.urich.edu/~jolt/v1i1/hardy.html>; See also, O'Rourke, supra, note 56.

89. Cf. ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996), available at <http://www.kentlaw.edu/7circuit/1996/jun/96-1139.htm> (holding that a shrinkwrap license, the functional equivalent of a "clickthrough" license, could constitute a properly formed contract); Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir. 1997) (following ProCD); U.C.C. proposed Article 2B (Mar. 21, 1997 draft) <http://www.lawlib.uh.edu/ucc2b/> (making it easier for licensors to form shrinkwrap agreements with end users).

90. See InterTrust <http://www.intertrust.com/products/flow.html> (describing the DigiBox envelope, which communicates with a clearinghouse based on business rules encapsulated in the envelope); Gary N. Griswold, A Method for Protecting Copyright on Networks, 1994 <http://www.cni.org/docs/ima.ip-workshop/www/Griswold.html> (describing a software envelope which requires periodic confirmation with a home base prior to permitting further access); Stefik, supra note 2 (describing protocols to permit the permanent transfer or temporary lending of files while holding the number of files to the number actually paid for).

91. Brad Cox, Superdistribution, WIRED, Sept. 1994, at 89, available at <http://www.hotwired.com/wired/2.09/departments/idees.fortes/superdis.html>; see Infosafe Systems <http://www.infosafe.com/> (offering both a hardware system and a software-only system).

92. See ASCAP <http://www.ascap.com/ascap.html> and BMI <http://bmi.com/>.

93. 17 U.S.C. 115 (making and distributing phonorecords), 116 (public performances by means of coin-operated phonorecord players ("juke boxes").

94. The Copyright Clearance Center <http://www.copyright.com/> can grant licenses to reproduce 1.75 million documents-an impressive number, but clearly far short of the overall set of works subject to copyright available in the world.

95. Project Xanadu, an attempt to ensure compensation to creators whenever even small chunks of intellectual property are used, was initiated in 1960. Xanadu FAQ, 1b, June 29, 1996 <http://www.xanadu.com.au/xanadu/faq.html>.

96. See Seybold Report on Desktop Publishing, July 8, 1996 <http://www. media.sbexpos.com/OldHotStories/960702.htm> (describing digital object identifiers and the LicensIt product from NetRights).

97. See Stanford Copy Analysis Mechanism (SCAM) <http://www-db.stanford.edu/~shiva/SCAM/scamInfo.html>; see also Hyperstamps CyberGumshoe Services <http://www.hyperstamps.com/misc/gumshoe.html> (offering a robotic search of the Internet for documents containing serialized document numbers that developers may insert (for a cost) into an HTML page); Intellectual Protocols' Copysight <http://www.ip2.com/copysight.cgi> (offering a service similar to Hyperstamps); cf. MarkWatch <http://www.markwatch.com/> (providing an automated monitoring service for trademark usage on the Internet); Alex Alben, The Death of Copyright in a Digital World: The Reports are Slightly Exaggerated, ENT. LAW REP., July 1995 (describing "bounty hunter" programs used by intellectual property owners to cut down on infringements; third-party attorneys bringing suits against infringers were allowed to keep any damages won in the actions).

98. See Digimarc <http://www.digimarc.com/~digimarc/>; Highwater FBI <http://www.highwaterfbi.com/>; SysCoP <http://syscop.igd.fhg.de/>; Argent, a product created by the Palo Alto startup Dice (reported in Ross, supra note 15, at 139). Tests have indicated that digital watermarks are resilient enough to survive most editing and are still discernible after numerous reproductions. Ben Long, Watermarking Makes Impression on Photos, MACWEEK, Oct. 21, 1996, at 16, available at <http://www.macweek.com/mw_1040/ga_watermark.html>.

99. David Voss, Stop That Copy, WIRED, Aug. 1994, at 34, available at <http://www.hotwired.com/wired/2.08/departments/electric.word.html>; see also Jim Warren, GovAccess.107, March 12, 1995 <http://www.eff.org/ftp/Publications/E-journals/GovAccess/govaccess.107> (describing a similar approach).

100. See Borsook, Steal This Article, supra note 41.

101. See Lance Rose, The Copyright Escalator of Fear, BOARDWATCH, Nov. 1994 at 92, (describing $500,000 settlement reached in Playboy v. Event Horizons BBS), available at <http://www.boardwatch.com/november/LEGALLY.htm>; COMPUTER INDUSTRY LITIG. REP., Jan. 4, 1996 at 21634 (reporting on a $600,000 settlement reached in Sega of America v. The Ghetto); Playboy Enters. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993), available at <http://www.jmls.edu/cyber/cases/frena.txt>; Sega v. MAPHIA (N.D. Cal. Dec. 18, 1996) <http://www.bna.com/e-law/cases/sega2.html>; Sega v. Sabella, 1996 U.S. Dist. LEXIS 20470 (N.D. Cal. Dec. 18, 1996).

There have also been well-publicized criminal indictments, including actions against Davey Jones Locker, Rose, supra note 15, at 104, and Rusty & Edie's BBS, Michael A. Hobbs, ACLU Cries Foul in Computer Raid, THE PLAIN DEALER, Feb. 19, 1993 at 3B.

102. See, e.g., James Evans, Internet Issue: Use of the Web Raises Copyright Concerns, L.A. DAILY J., Feb. 9, 1995, at 1.

103. If browsing the Web is an infringement because a copy of the page is made and sent to the user's computer, as proposed by the NII WHITE PAPER, supra note 2 at 64-65, then the linking site has arguably committed contributory infringement by substantially contributing to the user's infringement (which occurred during the process of browsing). See Niva Elkin-Koren, Copyright Law and Social Dialogue on the Information Superhighway: The Case Against Copyright Liability of Bulletin Board Operators, 13 CARDOZO ARTS & ENT. L.J. 345, 353-56 (1995), available at <http://yu1.yu.edu:80/csl/journals/aelj/articles/ 13-2/elkin.html>. The assertion that browsing is an actionable infringement has met strong criticism. See id. at 354; Samuelson, supra note 3, at 137.

104. Although the term "implied license" is frequently bandied about on the Internet, the concept is rather amorphous under copyright law. At its heart, an implied license is an estoppel doctrine, arising because the infringing party detrimentally and justifiably relied on the intellectual property owner's actions.

105. See R. Lee Sullivan, Toll Booths on the Info Highway, FORBES, March 25, 1996, at 118.

106. See Maximized Software's SiteShield <http://www.maximized.com/products/ siteshield/> (providing a product that prevents linking from all URLs other than those on the specific website); Kristi Coale, Intellecast Smartens Up to Banner Bypass, WIRED NEWS (Mar. 28, 1997) <http://www.wired.com/news/technology/story/2844.html> (describing how Intellicast, a weather site, prevented links to its weather maps which bypassed the associated banner advertisements).

107. This is one of the features of the Copysight service from Intellectual Protocols <http://www.ip2.com/copysight.cgi>.

108. For example, @home <http://www.home.net> is deploying a network that permits users to use high-speed cable modems for Internet access. So that users will experience cable modem speeds as often as possible, @home will cache (or archive or mirror, depending on the terminology) the entire Internet on regional servers to which users will connect via their cable modems.

The recent start-up Marimba <http://www.marimba.com/> uses caching as a way to make the use of Java programs more robust.

Also, the number of offline browsers is growing. Offline browsers are software that automatically download some or all of an Internet site to the user's computer, allowing the user to browse without having to wait for the delivery of each page. See, e.g., WebEx <http://www.gowebex.com>, WebWhacker <http://www.ffg.com/whacker/index. html>, InContext Flashsite <http://www.incontext.com/products/flashsite/ index.html> and DocuMagix HotCargo Express <http://www.documagix.com/products/ hotcargo_express/welcome.html>.

109. See Lisa Sanger, Caching on the Internet, Spring 1996 <http:// seamless.seamless.com/eric/cache.html>; Eric Schlachter, Cache-22, INTELL. PROP. MAG. OF THE RECORDER, Summer 1996, at 15, available at <http://www.ipmag.com/schlacht.html>.

110. Toys R Us v. Akkaoui, 1996 U.S. Dist. LEXIS 17090 (N.D. Cal. Oct. 29, 1996) (describing injunction granted in favor of a trademark owner against an infringing website requiring the website to notify all publishers of directories or lists to remove reference to the website and to flush all references to the website from their caches).

111. A different analysis might apply in regard to trade secret and trademark law. In the case of trade secrets, the owner must use efforts, whether technological or otherwise, to keep the information secret in order to preserve the information's status as a trade secret. In the case of trademarks, the owner must use quality control, whether technological or otherwise, to maintain the trademark.

112. See, e.g., NII WHITE PAPER, supra, note 2, at 7-17.

113. At least two important exceptions to this general statement exist. First, the conclusion that loading a copy into RAM is an infringement creates a great deal of uncertainty for browsing. At a minimum, clarifying that browsing is not an actionable infringement would be helpful. Second, although generally a topic outside the scope of this paper, the conclusion reached in some cases that sysops are directly liable for copyright infringements occurring because users upload works subject to copyright onto their system has caused a great deal of consternation. If as a policy matter a consensus exists that sysops should not be liable in this circumstance, statutory clarification would be useful.