Computer Software Rental Amendments Act of 1990: Nonprofit Library Lending Exemption to "Rental Right"

The

Register

of

Copyrights

of the

United States of America

Library

of

Congress

Department

17

Washington,

o.c. 20540

March

31,

1994

(202)

707-8350

Dear Mr.

Speaker:

I

have the

honor of

sending you

a

copy

of the

Copyright

Ofﬁce’s

Report

on the

Computer

Software

Rental

Amendments

Act of

r

1990:

The

Nonproﬁt

Library

Lending

Exemption

to the

"Rental

Right."

As

required

by

17

USC

§l09

(2)(B),

I

have consulted

with

copyright

owners

and

librarians

on

whether the

exemption

has "achieved

its intended

purpose

of

maintaining

the

integrity

of the

copyright

system

while

providing

nonprofit

libraries

the

capability

to

fulﬁll their

function."

I

would

be

pleased

to

elaborate

any aspect

of the

Report.

on

Sincerely,

,@A,LA@4G/

/ﬁfe:

Barbara

Ringer

Acting Register

of

Copyrights

The

Honorable

Thomas

S.

Foley

Speaker

of

the

House of

Representatives

Office

of

the

Speaker

H-204

The

Capitol

Washington,

D.C.

20515

17

U S.C.

§109

(2)(B)

§

109

Limitations on exclusive

rights:

Effect of

transfer of

particular

copy

or

phonorecord

>i<

*

=Z<

>I<

*

(B)

Not later than three

years

after

the date of the enactment

of

the

Computer

Software Rental

Amendments

Act of

1990,

and at such

times

thereafter

as

the

Register

of

Copyright

considers

appropriate,

the

Register

of

Copyrights,

after

consultation

with

representatives

of

copyright

owners

and

librarians,

shall submit

to

the

Congress

a

report stating

whether this

paragraph

has achieved its

intended

purpose

of

maintaining

the

integrity

of the

copyright

system

while

providing nonproﬁt

libraries

the

capability

to fulﬁll their function.

Such

report

shall advise

the

Congress

as to

any

information

or

recommendations

that the

Register

of

Copyrights

considers neces

sary

to

carry

out the

purposes

of

this

subsection.

THE

COMPUTE

R

SOFTWARE

RENTAL

AMENDMENTS

ACT

OF

1990:

THE

NONPROFIT

LIBRARY

LENDING

EXEM

PTION

TO

THE

‘RENTAL

RIGHT”

MARCH

1994

A

REPORT

OF

THE

ACTING REGISTER

or

COPYRIGHTS

Doc

S5

L50

LC

40

$1

A-h

‘H

:1’

O

"'6

"’e.~

Z,

=

-

————————

--

Library

of

Congress

Catal0ging—in—Publication

Data

Library

of

Congress.

Copyright

Office.

The

Computer

Software

Rental

Amendments Act

of

1990 the

nonprofit

library

lending exemption

to the "rental

right"

1 a

report

of

the

Register

of

Copyrights.

p.

cm.

"March 1994."

Copy

3

2663.5 .C585

1994

1.

Copyright—-Computer

programs--United

States. 2. Public

lending

rights

(of authors)-—United

States. 3.

Lease

and

rental services

—Law and

legislation-—United

States.

I. Title.

KF3024.C6A833

1994

346.7304‘82—-dc20

[347.30s4e2l

94-11714

CIP

For sale

by

theU.S. Govemment

Printing

Ofﬁce

Superintendent

Mail

Stop:

SSOP,

Washington.

DC 20402-9328 of

Documents.

ISBN

O-16-045090-X

CONTRIBUTORS

Barbara

Ringer

Acting

Register

of

Copyrights

Marybeth

Peters

Acting

General

Counsel

Marilyn

Kretsinger

Assistant General

Counsel

Jennifer

Hall

Attorney

Advisor

The

work

of

this

group

was

supported

by

other

attorneys,

legal

interns,

or

professional

staff in

the

Copyright

Office who

assisted

in

research,

read

drafts,

and

made

suggestions;

by

graphic

design

and

publications

staff who

created the

physical

product;

and

by

secretaries

whose

patience

and

skill made the

production

process

bearable.

Their names should

appear

here

in

recognition

of their contribution:

Alicia

Byers

Mary Gray

Ed

Mahan

Laurie Rhoades

Donna

Carter

William

Jebram

Marylyn

Martin

Eric Schwartz

Rebecca

Daugherty

Sandy

Jones Harriet Oler

Trellis

Wright

Guy

Echols

Mary

Levering

Denise Prince

ACKNOWLEDGEMENT

We

wish

to

express

our

gratitude

to

the numerous

librarians,

library

associations,

software

associations,

educators,

and other interested

parties

who

participated

in

this

project

either

by

submitting

written

comments or

participating

in

the Roundtable

Discussion.

We

also

//"l)z06'5b

wish

to thank

Edward

Valauskas,

American

Library

Association,

for

distributing

the

Notice of

Inquiry

over

the

Internet.

THE COMPUTER SOFTWARE

RENTAL

AMENDMENTS ACT

OF

1990:

THE NONPROFIT

LIBRARY LENDING

EXEMPTION

TO

THE

"RENTAL

RIGHT"

TABLE OF

CONTENTS

EXECUTIVE SUMMARY . . .

. .

. . . . . . . . . . . . . . .

.

. .

. . . . . . . . . . .

. . . . . . . . .

. . . . . .

. .

i

INTRODUCTION . . . . . .

. . .

.

. . . . .

.

. .

. . . . .

.

. . . . . .

. . . .

. .

. . . . . . .

. . . . . . . 1

I THE

COMPUTER

SOFTWARE

AMENDMENTS ACT AND THE

NONPROFIT

LIBRARY LENDING EXEMPTION . . . . . . . .

. . . . . . . . . .

. . . . . . . . . . . . 2

A.

THE RENTAL RIGHT

AS

A

LIMIT ON THE FIRST SALE

DOCTRINE

. . . .

.

. . . . . 2

B. PERMANENT RENTAL RIGHT FOR COMPUTER

PROGRAMS AND

SOUND

RECORDINGS . . .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . . .

.

6

C. DESCRIPTION

OF COMPUTER SOFTWARE RENTAL

AMENDMENTS . . .

.

. . .

.

. . .

8

1.

Prospective Application

. . . . .

.

. .

. . . . . . . .

. .

. . .

. . . . . . . . . . . . . . . . . . 8

2. Remedies for

Infringement

. .

. . .

. .

.

. .

. . . . . . . .

.

. . . . . . . . . . . . . . .

.

. . . 9

3.

Programs

in Machines and

Other Products

.

. .

.

. .

.

. . .

. . . . . . . . . . . . . . . . . 9

4. Exclusion for Audiovisual Games . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . 10

5.

Nonproﬁt

Libraries and

Nonproﬁt

Educational Institutions

. .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

H. THE LEGISLATIVE

HISTORY OF THE EXEMPT IONS FOR

NONPROFIT

LIBRARIES AND

NONPROFIT EDUCATIONAL INSTITUTIONS

. .

.

. .

.

. . . .

. .

. . . . . . . . . . . . . . . .

12

A. THE SENATE

HEARING

. . .

.

. . . . . .

.

. . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . 13

1.

Position

of Software

Community

. . . .

.

. . .

. .

. . . . .

. .

. . . . . . . . . . .

.

. . . . . . 13

2. Position

of Educational

Community

. . .

. . . .

.

. .

. . . . . . . . . . . . .

.

. . . . . . 14

B.

THE COMPROMISE

.

. . .

. .

. . . . . . . . . . . .

. .

. . . .

. .

. . . . . .

. .

. . .

.

. . .

.

. . 16

C.

HOUSE HEARING . . .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

1.

Position

of Educational

Institutions

. . . . .

. .

.

. . . . . . . . . . . . . . . . . . . . . . . .

. . . 17

2. Position of Software Associations

. . . . . . . . . . . . . . . . . . .

.

. . . .

.

. . . . . . . .

. .

. 18

D.

PASSAGE OF

BILL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . 19

'

_

'

III.

.COPYRIGHT

OFFICE.RESPONSIBILITIES

. . . . . . . . . . . . .

.

. . . .

. .

. . . . . . . .

. . . . .

'-

\

0

l

.

1

.:

21

A.

REGULATION

ON WARNING OF COPYRIGHT FOR

COMPUTER

PROGRAMS

. . . . . Z1

B. PREPARATION or REPORT . . . . . . . . . . . . . . . .' . . . . .

. . . . . . . . . . . . .

22

J

1.

Notice of

Inquiry

. . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. .

. . . . . . . . . . . . . .

. . 23

2. Publication

and Distribution

.

. . .

. . . . . .

. .

.

. . . . . . . . . . . . . .

. . . . . . . . . . .

. 25

3.

Scope

of

Inquiry

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. .

. . .

. . . . . . . . .

26

4.

Roundtable

Discussion

. . . .

.

. .

. . . .

.

. . . . . . . . . . .

. . . . . . . . . . . . . .

. .

. . . 27

IV. SUMMARY

AND

ANALYSIS OF

THE

PUBLIC

COMMENTS

. . .

.

. . .

. . . . . . . . . . . . . . .

29

A.

FULFILLING

LIBRARY

FUNCTION: DOES

THE

LENDING EXEMPTION TO THE RENTAL

u

I

.

CAPABILITY

'5

FUNCTION?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.'

. .

. . . . . . . . . . . 31

RIGHT

PROVIDE

NONPROFIT.

LIBRARIES THE

‘I

TO FULFILL THEIR

1 Positive

Responses

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. .

.

. .

. . . . . . . . . 31

a.

Library

associations . . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . . . 31

b.

Individual librarians

or libraries

. . . .

.

. .

.

. . . . . . . . . . . . . . . . .

. . . . . . . .

32

c. Libraries

in

educational

institutions

. . . . . . . . .

.

. . . . . .

.

. . . . .

.

. . . . . . .

33

d.

Computer

centers or laboratories . . .

.

. . . .

.

. .

. . . . . . . . . . . . . . . . . . . 34

e.

Library

patron

. . . . . . . . . . . . . . .

.

. .

.

. .

.

. . . . . . . . . . . . . . . . . . . . 35

2.

Negative Responses

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . . . .

.

. . .

35

a.

Individual libraries .

.

. .

.

. .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35

._

b.

Computer laboratory

at educational institution . . . . . . . . . . . . . . . . . . . . . . .

.

. 36

c.

Library

associations . .

. . .

.

. . . . .

.

. . . . . . . . . . . . . .

. . . . . . . . . . . . . . . 36

3

Questions

Raised

. . . . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . . . 37

'

FREQUENCY

OF LENDING: HOW

OFTEN

DO

YOU LEND

COPIES OF

COMPUTER

.

. .

.

. .

.

. .

.

. . . . . . . . . . . . . . .

.

. .

. . . . . . . . . .

. . . .

.

. .

. . .

39

PROGRAMS?

1. Insufﬁcient

Knowledge

of

Extent and Patterns of

Library'Software

Loans . . . . . .

. .

.

39

a. Individual libraries .

.

. . . . . . . . . . . . . . .

. . . . . . . . . .

. . . . . . .

.

. .

. . . .

40

b.

Library

associations

. .

.

. . . . .

.

. . . . . .

. .

.

. .

.

. . . . . . . . . . .

. . . . .

. . 41

c.

Libraries

in

educational institutions

.

. .

. . .

. .

.

. . . . . . . . . . . . . .

. . . . . . .

41

d.

Computer

centers

. .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .

.

42

2. Access

Via File

Server

. . . . . . .

.

. . . . . .

.

. . . . . . . . . . . . . . . . . .

.

. . . . .

.

43

3.

Questions

Raised

. . . . . . .

.

. .

. . . .

. . . . . .

.

. . . . .

.

. . . . . . . . . . . . . . . . . .

43

DO

THE REGULATIONS

REQUIRING

A WARNING OF

COPYRIGHT

REPRESENT

AN

ONEROUS

BURDEN?

. . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . . .

.

. . . .

.

. . . . . .

44

1. Those

Saying

No: Not a Burden . . . . . . . . . . . . . . . . .

.

. . . . .

. . .

.'. . . . . . . . . 44

a.

Library

associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

.

. . .

. . . 44

b.

Libraries

in

educational institutions

. . . . . . . . . . . . . . . .

.

. .

. . . . . . . . .

.

. .

44

c.

Computer

centers

in

educational institutions .

. .

.

. . . . . . . . . . . . . . . . . . . . . 45

2.

Those

Saying

Yes: The

Warning

ls

a Burden . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

46

a.

Library

associations . . . . . . . . . . . . . . . . . . . .

.

. .

.

. . .

.

. .

.

. . . . . . . . .

46

b Other commentators.

. . .

.

. . . . . . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . . . 46

c.

Materials center

in educational

institution

. . . . . . . . . . . . . . . . . . . . . . . . . . . 46

3.

Electronic Transmission

. . .

.

. . . . . . .

.

. . .

.

. . . . . . . . . . . . . . . . . . . . . . . .

. .

47

4.

Questions

Raised

. .

. . . . .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

48

IS UNAUTHORIZED

COPYING, ADAPTATION,

REDISTRIBUTION,

PUBLIC

PERFORMANCE

OR DISPLAY OF COMPUTER PROGRAMS

TAKING PLACE?

IS THERE

EVIDENCE OF UNAUTHORIZED COPYING?

. . . . . . . . .

.

. . . . . . . . . . . 50

1.

Yes,

There

Probably

Is Some

Infringement

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

a. Software associations

. . . . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

50

b. Software

publisher

. . . . . . . . . . . . . .

. .

.

. .

.

. . . . . . . . . . . . . . . . . . .

.

53

c.

Systems programmer

. . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . .

. . . . . . .

53

d. Software user . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .

. . . . .

54

2.

No,

There

Is

No Evidence of Unauthorized

Copying

. .

. . . . . . . .

.

. . . .

. . . . . . . . .

54

a.

Library

associations . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . .

. . . . . . . . . . .

54

b.

Responses

of individual

public

or educational

libraries

. . .

. . . . . . . . . .

. . .

55

3.

Questions

Raised

. . . . . . . . . . . . . . . . . . . .

. .

.

. . . . .

.

. .

. . . . . .

58

E. IS

THE

l09(A)

EXEMPTION

HARMFUL TO

THE

INTERESTS AND INCOME OF

COPYRIGHT OWNERS?

. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . .

.

. . . . . . . . .

58

1. Those

Who Believe the

Exemption

Is

Probably

Harmful

. . . . .

.

. . . .

. . . . . . . .

. . .

.

58

a. Software

publishers’ position

. . . . . . . . . . . .- . . . . . . . .

. .

. . . . . . . . .

.

58

b.

Media

library

.

. .' . . .

.

. . . . . . . . . . . . . . . . . . . . . . . .

.

. . .

. . . . . . . . . .

59

2. Those

Who Believe

the

Exemption

Is Not Harmful . . . . . .

. . . . . . . . . . . . . . . . . . .

59

a.

Individual

libraries

. . . .

.

. . . . . . . . .

.

. .

.

. .

. . . . . . . . . . . . . . . . .

60

b.

Computer

centers

at educational institutions . . . . . . . . .

. . . . . . . . . . .

.

. .

.

60

c. Software

publisher

.

. . .

.

. .

. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . 61

d.

Library

associations

. . . . . . . . . .

. .

.

. . .

.

. . . . . . . . . . .

. . . . . . . . . . . . . 61

3.

Question

Raised

. . . . . .

. . . . . . . . . . . .

.

. . .

. . . . . . . . . . . . . . . . . . . . . . . .

62

F.

REQUESTS

FOR

LEGISLATIVE

CHANGES OR

CLARIFICATION

. .

.

. . .

. . . . .

. . .

63

1.

Software

Industry Proposals

for

Legislative

Changes

.

. . .

. . . . . . . . . . .

.

. .

. . .

.

63

a.

Narrowing

the

nonproﬁt lending exemption

. . . . . . . . . . . . . . . . . . . . . . . . . . 63

b.

Review

the denial

of rental

rights

to certain

computer programs

. . . . . . . .

.

. . . . 64

2. Librarians’

Request

for Clariﬁcation of the Law . .

. . . . .

.

. . .

. .

. . . . . . . . . . . .

.

64

V. HAS

THE COMPUTER

SOFTWARE LENDING EXEMPTION FOR

NONPROFIT

LIBRARIES

ACHIEVED

ITS

PURPOSE?

. . . . . . . . . . .

. . . . . .

.

. .

.

. . . . . . . . . .

.

. . .

.

67

A. RESPONSE

TO CONGRESSIONAL MANDATE

. . . . . . . . . . . . . . . . . . . . . . . . . . . 68

11

H

ZZ

'

--

'

-

~

-

'

B.

QUESTIONS

PRESENTED IS UNAUTHORIZED

COPYING

OCCURRING

AS

A

RESULT

or

THE NONPROFIT

LIBRARY

LENDING

IN

SECTION 109

OF

COMPUTER

SOFTWARE?

.

. . .

.

. . . . .

. . . . . .

. .

. . . . .

. . .

. . . . . . . . . . . . . .

. . . . . . . . 71

1.

Copying

.

. . . . . . .

.

. . . . . .

.

. .

. . . . . . . . . . . . . . .

. . . . . . . . . . .

. . . . 71

.

a.

Copying

by

library

patrons

or transferees

. . . . . . . . . .

. . . .

.

. . . . . . . . . . . . 71

b.

Library

copying

under

§108.,

including

the issue of

interlibrary

loan

. . . . . .

.

74

c.

Archival

copies

made

by

libraries

.

. . .

. .

.

. .

. . .

.

. . . . . . . . . . .

76

2. What Constitutes

a

Computer Program

for

Purposes

of Section

109? . . . . . . . . . . . . . . .

. . .

.

. . .

. .

.

. . . . . . . . . . . . 78

3.

What Is

a

Nonproﬁt Library?

. . . . . . . . . . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . 83

4. What

Nonproﬁt

Library

Lending

of

Computer

Programs?

. .

.

. . . . . .

.

. . . .

85

Constitutes

a.

"Lending"

and "transfer of

possession"

. . . . . . .

. .

. . . .

.

. . . . . . . . . . . . . . .

85

b.

Lending

and access . . . . . . . . . .

.

. . .

. . . . . . . . . . . . . . . . . . . . .

.

. . .

86

c.

Lending

and on-line transmission . . .

.

. . .

. .

. . . . . . . . . . . . . . . . . . . 86

C. RECOMMENDATIONS

FOR CHANGES IN LAW OR REGULATIONS

. . . . . . . . . . . . 87

1.

Shrink

Wrap

Licenses

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. . 87

2.

Warning

of

Copyright Required

By Regulations

. . . . . . . . . . . . . . . . . . . .

.

. . .

90

a. Can the

warning

of

copyright

be

simpliﬁed?

. . . . . . . . . . . . . . . . . . . . . . . . . . 90

b.

Is

the

warning

of

copyright applicable

to

nonproﬁt

educational

institutions?

. . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . . . . . . . . . . 91

c. Should the

warning

of

copyright

be

required

for all

computers?

. . . .

.

. . .

. .

.

92

d. What

kind

of

warning

of

copyright

is

appropriate

for electronic

transmission?

. . . . . 93

3.

Limitation to On-Premise

Use

. . . . . . . . . .

.

. . .

.

. . .

. . . . . .

.

. . . . . . . . . . . . .

93

1).

EXTENSION

or RENTAL RIGHT

TO vrmzo GAMES

. . . . . . . . . . . . .

.

. . .

. . 95

. .

.

. .

.

. . . . . . . . . . .

. .

APPENDIX

. . . . .

.

. . . . . . . . .

l

.

n

THE

COMPUTER SOFTWARE RENTAL

AMENDMENTS ACT

OF

1990:

THE

NONPROFIT

LIBRARY

LENDING

EXEMPTION TO

THE

"RENTAL

RIGHT"

EXECUTIVE SUMMARY

INTRODUCTION

On

December

1,

1990,

President Bush

signed

into

law the

Computer

Software Rental

Amendments

Act,"

an amendment of section 109 of the

copyright

law,

prohibiting

the

rental,

lease,

or

lending

of a

computer

program

for

direct or indirect

commercial

gain

unless authorized

by

the

owner of

copyright

in

the

program.

Behind the amendment

was

a

concern that

commercial rental of

computer programs

encourages

illegal copying

of the rented

programs,

depriving copyright

owners

of a return on their

investment and

discouraging

creation of new

works.

By

granting

copyright

owners of

computer

programs

a

newly

created "rental

right,"

Congress

created an

exception

to

the "first sale doctrine." This traditional

copyright

doctrine,

which

is codified

in

section

109

of the

Copyright

Code,

limits

the

copyright

owner’s exclusive

right

of distribution

by

allowing

the owner of a

particular lawfully

made

copy

of a

work,

or

any

person

authorized

by

that

owner,

to sell or otherwise

dispose

of

possession

of that

copy

without

authority

of the

copyright

owner.

The

1990

amendment

also includes

a

special

provision

permitting nonprofit

libraries

to

lend

computer

programs

for

nonprofit

purposes,

if the

packaging

contains

a

prescribed

warning

of

copyright.

This

"library

lending" provision

is

an

express

exception

to the new "rental

right"

which

is itself

an

exception

to the basic

"first sale doctrine." In

creating

this

exceptional

i

prerogative

for

nonprofit

libraries,

Congress

was

aware

that,

like

commercial

lending,

nonprofit

library lending

could

trigger

unauthorized

copying.

For this

reason,

the

amendment asked the

Register

of

Copyrights

to make a

three-year study

and

prepare

a

report

on the extent

to

which

the

exemption

for

nonproﬁt

libraries

"has achieved

its

intended

purpose

of

maintaining

the

integrity

of the

copyright

system

while

providing nonprofit

libraries

the

capability

to fulfill their

function,"

including

any

information

or

recommendations the

Register

considers

necessary

to

carry

out the

purposes

of the subsection.

In

carrying

out this mandate we

published

and

circulated

a notice of

inquiry,

and

See also

Corsello,

supra

note

13,

at 198

201

(one

reason for lack

of evidence is that

.

. rental

industry

never became

very large.").

l‘

Senate

Software

Rental

Hearing, supra

note

15,

at

68

(statement

of Bruce

Kennedy,

chair of

the

American

Association

of

Law

Libraries’

Copyright

Committee).

17

Record Rental

Amendment

Act of

1984,

Pub. L.

No.

98-450,

98 Stat. 1727

(1984) (codiﬁed

as

amendments

to

l7

U.S.C.

§§10l

and 115

(1993)).

18

H.R.

Rep.

No. 735

,

101st

Cong.,

2d

Sess. 8

(1990).

An

earlier

proposed

rental

right

for video cassette

tapes

was not enacted.

See

Copyright Infringements

(Audio

and Video

Recorders)

S.1758:

Hearings

before

the

Committee on

the

Judiciary,

97th

Cong.,

lst

and 2d Sess.

(1981-82).

5

--

6

Following

enactment of the Record Rental

Amendment Act of

1989,

the

computer

software

industry began

to

lobby

Congress

for a similar rental

right

for

computer

programs.”

Simultaneously,

because of fear of retaliation

against

its

computer

programs

by

other

countries,

the

United States

began

pushing

very

hard for

a

rental

right

for

computer programs

in

the

Uruguay

Round

of the General

Agreement

on Tariffs and Trade

(GATT).

Better

international

protection

of

computer

programs,

therefore,

was an additional

incentive for

a

software rental

law.2°

Hearings

were held on

computers

and intellectual

property

in

1989,21

and

again

in

1990.22

The

Computer

Software

Rental

Amendments

Act

became law on

December

1990.22

B.

PERMANENT RENTAL

RIGHT FOR COMPUTER PROGRAMS AND

SOUND

RECORDINGS

1,

J

The North

American Free Trade

Agreement

(NAFTA),2“

obligates

the

United States to

make the rental

right

for

both sound

recordings

and

computer

programs permanent.

Congress

1°

Edward

Valauskas,

Copyright:

Know Your Electronic

Rightsl,

117

Library

Journal

See

41

(1992).

.

2°

House

Software

Rental

Hearing, supra

note

14,

at 40

(statement

of

Register Ralph

Oman).

2‘

See

Senate

Software

Rental

Hearing, supra

note

15;

and

Computers

and Intellectual

Property

Oversight:

Hearings

Before

the Subcomm.

on

Courts,

Intellectual

Property,

and

the Administration

of

Justice

of

the House

Comm. on the

Judiciary,

101st

Cong.,

1st &

2d

Sess.

(1989-90).

22

See House

Software

Rental

Hearing, supra

note

14.

See

infra

notes 41-78 and

accompanying

text

(discussing legislative history).

Computer

Software

Rental Amendments

Act of

1990,

Title

VIII

of the Judicial

Improvements

Act of

1990,

Pub.

L. No.

101-650,

104 Stat.

5089,

5134

(codiﬁed

at 17 U.S.C.

§109(b) (1993)).

2‘

North

America

Free

Trade

Agreement

of December

8,

11, 14,

&

17,

1992.

H.R. Doc. No.

159,

Vol.

1,

103d

Cong.,

1st Sess.

(1993).

22

has

already

amended

the

Copyright

Code

to make the

rental

right

for

sound

recordings

permanent

and

is under

a

treaty

obligation

to do the same with

computer programs.

Congress

initially

set

the Record Rental Amendment Act of 1984 to

expire

after

five

years,

but

renewed

it

in 1988.25

The

record rental

right

now

has become

permanent

in

the

United

States

as

part

of

the North

American Free Trade

Agreement

(NAFTA)

implementing

legislation,

which

became effective

on

January

1,

1994.26

The software rental law is scheduled

to

expire

after seven

years,

on October

1,

1997,

the same

year

that

the

record rental

right

was

to

expire

after

its

first

extension.”

NAFTA

requires

signatories

to

provide

a rental

right

for

computer

programs.”

As

originally

drafted,

the

implementing

legislation

for

NAFTA also

contained

a

provision

eliminating

the "sunset"

(that

is,

automatic

termination)

of

statutory

protection

for

computer

program

rentals.

However,

representatives

of a

Japanese company

sought

to

expand

the

computer

program

rental

right

to cover all

video

games.

At the last

minute,

25

Extension

of Record

Rental

Amendment

Act,

Pub. L. No.

100-617,

102

Stat.

3194

(1988).

As extended

in

1988,

the amendments

would "not

apply

to

rentals,

leasing, lending

(or

acts or

practices

in the nature of

rentals,

leasing,

or

lending)

occurring

after

the date which is 13

years

after

[October

4,

1984]."

Id.

2‘

North American

Free

Trade

Agreement Implementation

Act,

Pub.

L.

No.

103-182,

107 Stat. 2057

(1993).

27

Amendments

to section

109(b)

would "not

apply

to

rentals,

leasing,

or

lending

(or

acts or

practices

in the

nature

of

rentals,

leasing,

or

lending) occurring

on

or after October

1,

1997."

Computer

Software

Rental

Amendments

Act of

1990,

Pub.

L. No.

101-650,

104 Stat.

5089,

5134.

See

also H.R.

Rep.

No.

735,

101st

Cong.,

2d Sess.

10

(1990).

The

language

applying

to

practices

"in

the

nature of"

rental,

lease,

or

lending

was intended

to address

activities

involving

indirect

commercial

advantage,

such

as "where a store offers

to

repurchase

software

for a substantial

part

of

the

purchase price

and offers free

blank diskettes

for

copying."

See 136

Cong.

Rec.

Hl3,315

(daily

ed.

Oct.

27,

1990) (statement

of

Rep.

Kastemneier).

See

also H.R.

Rep.

No.

987,

98th

Cong.,

2d Sess.

4

(1984)

(discussing

similar

language

in

the Record Rental

Amendment).

28

North America

Free

Trade

Agreement, supra

note 24.

7

as a

compromise,

the

computer

program

rental

right

provision

was deleted

from the NAFTA

implementing legislation.”

The

Uruguay

Round

of the

General

Agreement

on

Tariffs and

Trade

(GATT),

which was

concluded on

December

15, 1993,

contains an annex

known as

TRIPs

(Agreement

on Trade

Related Intellectual

Property Rights).

The TRIPs text is

scheduled to

come into

force on

July

1,

1995. Since

the TRIPs text also

provides

an

obligation

to

provide

a

computer

program

rental

right,”

the issue

will

again

be before

Congress

in

the near

future,

and

it seems

likely

that the

issue

of

videogames

will once

again

be raised.

C. DESCRIPTION

OF COMPUTER SOFTWARE

RENTAL

AMENDMENTS

1.

Prospective

Application.

The software

rental amendments were

prospective

in their

application. Anyone

who

acquired

lawfully

made

copies

of a

computer

program

before

enactment

of the rental

right

may

dispose

of those

copies

in

any

manner that was

permitted

before the

amendments to section

2°

Telephone

conversation between

Marybeth

Peters,

Acting

General

Counsel,

and

William

F.

Patry,

Counsel,

Subcoimnittee

on Intellectual

Property

and

Judicial

Administration.

(March

23,

1994).

3°

The

Agreement

on TRIPS

provides:

In

respect

of

at

least

computer

programs

. .

.,

a Member shall

provide

authors

and their successors in title

the

right

to authorize

or

to

prohibit

the

commercial

rental to

the

public

of

originals

or

copies

of their

copyright

works. . . .In

respect

of

computer programs,

this

obligation

does not

apply

to rentals where

the

program

itself is not

the essential

object

of the rental.

Part

II,

Sec.

1,

Art.

11,

TRIPS

Agreement,

Annex

1C

of

the

Agreement Establishing

the World Trade

Organization

of 15 December

1993,

MTN-FA,

15 Dec.

1993;

MTN-FA-Corr.

1,

15

Dec.

1993;

MTN-FA-Add.

1,

15

Dec.

1993.

8

109.2‘

Congress

believed that

prospective

application

would

satisfy

any

constitutional

concerns

raised

by

earlier

versions of the bill. Earlier bills

applied

to rentals of all

existing programs,

and could have been

interpreted

as an unlawful

taking

under

the

"Just

compensation

clause"

of

the Fifth Amendment to the United States Constitution.32

2. Remedies for

Infringement.

Under

the software rental

amendments,

any

person

who distributes a

copy

of a

computer

program

in violation

of

§109(b)(1)

is an

infringer

of

copyright

under

section 501 of the

Copyright

Code,

and is

subject

to the

remedies

set forth

in

sections

502, 503, 504, 505,

and

509.22

3.

Programs

in

Machines and

Other Products.

The

Computer

Software

Rental Amendments

Act does

not

provide

a rental

right

for

computer programs

embodied

in a

machine or

product

(such

as an

automobile

or

calculator)

that

cannot be

copied

during

the

ordinary

operation

or

use

of the

device.“ Without this

exclusion,

the

bill

could have been

interpreted

to interfere with

day-to-day

business

operations:

that

is,

the

3‘

Pub. L. No.

101-650,

104 Stat.

5089,

5134.

(1990).

The Record Rental

Act was also made

prospective.

Record Rental

Amendment

Act of

1984,

Pub.

L. No.

98-450,

98 Stat. 1727.

(1984).

See H.R.

Rep.

No.

735,

101st

Cong.,

2d

Sess.

10

(1990).

22

".

.

nor shall

any person

be

. . .

deprived

of

life,

liberty,

or

property,

without due

process

of

law;

nor

shall

private property

be taken for

public

use without

just

compensation

. .

.

."

U.S. Const.

amend.

V. See H.R.

Rep.

No.

735,

101st

Cong.,

2d Sess. 10

(1990)

(discussing prospective application).

22

17 U.S.C.

§109(b)(4) (1992).

Such

a

violation is

not to be considered

a criminal offense

under section

506,

or to

subject

the

infringer

to the criminal

penalties

set forth

in

section 2319 of title

18 of the United States

Code. Id.

2‘

17

U.S.C.

§109(b)(1)(b)(i) (1992).

9

"first sale and

subsequent

rental

of

computer programs

found in .

. .

automobiles,

personal

computers,

telefaxes,

charter

airplanes,

apartment

houses and

condominiums.

"35

4. Exclusion for Audiovisual Games.

The

law

also does not extend a rental

right

to

computer programs

embodied

in

limited

purpose

computers

that are

designed

primarily

for

playing

video

games.“

Congress recognized

that there is a "substantial

rental market"

for electronic audiovisual

games played

on these

computers,

but concluded

that

computers

of this sort are

"generally

used

solely

for

the

playing

"37

of these

games

and

not used to

copy

the

computer programs

that

generate

the

game.

Although

the House

Judiciary

Committee was aware that some

computers

on which

electronic

audiovisual

games

are

played may

be

designed

for other

purposes

not

involving

the

playing

of

these

games,

the Committee determined

that,

"[s]o

long

as these other

purposes

do

not

involve the

copying

of

computer programs,

these

computers

are

exempt

under new clause

(ii)

of section

109(b)(1)(b).

"38

The Committee

stipulated

that the

phrase "may

be

designed

for

other

purposes,"

as contained

in new clause

(ii)

of section

109(b)(1)(b),

is

"intended to

refer

to

other

limited uses and

would not

apply

to a

computer

program

embodied or

used in

conjunction

"39

with a

general

purpose

computer

that is also

capable

of

being

used to

play

video

games.

35

House

Software

Rental

Hearing, supra

note

14 at 15

(statement

of

Rep.

Kastenmeier).

See also

Corsello,

supra

note

13,

at

202 n. 131

(suggesting

that the

exemptions

for libraries and educational

institutions

were

shaped

by

"fear

.

that

the

physical

or electronic

acquisition

of software would be considered

‘in

the nature of

rental’

[and

hence]

covered

by

the Software

Act.").

17

65

"

--

62

possession

of

the institution’s

software to

students.

At least

by my

understanding

of the

term,

this

constitutes

doing

something,

"in

the nature

of,

lending

software.“

2.

Position

of Software

Associations.

On behalf

of

the Software Rental

Coalition,“

R. Duff

Thompson,

Vice-President

and

General Counsel of WordPerfect

Corporation,

stated that the

software

rental

legislation

was

drafted to achieve

a limited

purpose

to

give

copyright

owners the

ability

to

control commercial

practices

which

directly

result

in

unauthorized

copying.

He

argued

that it

should not

impose

needless

restrictions on other

practices,

including

the

legitimate practices

of

not-for-profit

libraries.2°

He asked that the

joint

letter

reﬂecting

the Coalition’s

agreement

be

placed

in

the

record,

and this

was

done."

House

Software

Rental

Hearing, supra

note

14,

at

86. At the House

hearing,

Connolly

argued

that the

following

sorts of

curriculum-related software uses also were

legitimate lending

activities which educational

institutions should

be free

to

engage

in:

lending faculty

members software for use on

faculty

member’s

personal

systems

to

prepare

materials for

class;

lending specialized

software

for

students

to

use

on

their

own

machines;

lending

software

and hardware for short

periods

of time for evaluation

purposes; lending

software and hardware

to

faculty

for

special projects

such

as

writing

a book or

evaluating

class

materials;

renting

computer

laboratories

including

software to conduct

specialized

training

or to do

projects.

Id. at 94-95.

6°

The Software Rental Coalition

included "WordPerfect

Corporation,

Microsoft,

Ashton-Tate,

Lotus

Development

Corporation,

Autodesk,

Aldus,

and

more

than 650 members of the

Software

Publishers Association.

Collectively,

we

represent

an

overwhelming majority

of U.S.

companies

which

develop

and sell software for

personal computers."

House

Software

Rental

Hearing, supra

note

14,

at

46

(statement

of R. Duff

Thompson,

Vice

President and General

Counsel,

WordPerfect

Corporation).

7°

Id. at 49

(statement

of R. Duff

Thompson,

WordPerfect

Vice

President

and General

Counsel).

7‘

Id. The draft

report language

and

proposed

amendment to the Senate bill was

also

made

part

of the record

of the

House

hearing.

18

D. PASSAGE

OF

BILL

The

stage

had now been set in both the

House and the

Senate

for enactment of the

Software

Rental

Bill.72

As

amended,

S.

198 contained both the

exemption

for

nonproﬁt library

lending”

and the

language exempting

from the rental

right

transfers

by

nonproﬁt

educational

institutions

of

lawfully

made

copies

of

computer programs.

The transfer

language

in

S.198

was

virtually

identical to that

proposed

in

the

joint

letter.“ The Senate

Report

noted:

[M]any

educational institutions

legally acquire copies

of

computer programs

for

use

by multiple

users.

Examples

of this include the

lending by

instructors to

students

of

programs

to be used

by

the student in

completing

a class

assignment.

This

practice

or other

practices involving

the transfer of

possession

of an

authorized

copy

of

a

computer program

owned

by

an

educational institution

among faculty,

students,

and

staff for individual

use,

or to another

nonproﬁt

educational

institution,

which does not involve

the

making

of

unauthorized

copies,

does not constitute

rental,

lease

or

lending

for direct or indirect

commercial

purposes

under this

act.

22

See

S.

Rep.

No.

265,

101st

Cong.,

2d Sess.

1,

7

(1990).

75

S.

198

provided:

(2)(A)

Nothing

in

this subsection shall

apply

to

the

lending

of a

computer

center

program

by

a

nonproﬁt library, providing

that each

copy

of a

copyrighted

computer program

which is lent

by

such

library

shall

have afﬁxed to the

packaging containing

the

program

the

following

notice

. . .

[warning

of

copyright].

Reprinted

in S.

Rep.

No.

265,

101st

Cong.,

2d Sess.

1,

2

(1990)

and in House

Software

Rental

Hearing,

supra

note

14,

at

9.

7‘

S. 198

provided:

The transfer

of

possession

of

a

lawfully

made

copy

of a

computer program by

a

nonproﬁt

educational institution

to another

nonproﬁt

educational institution

or

to

faculty,

staff and

students does not constitute

rental,

lease or

lending

for

direct or indirect commercial

purposes

under this

Act.

Reprinted

in S.

Rep.

No.

265,

101st

Cong.,

2d Sess. 2

(1990).

19

. . .Under

this

paragraph,

the

prohibition

against renting phonorecords

does not

,

apply

in

the case of

nonproﬁt

libraries or educational

institutions

that lend

copies

for

nonproﬁt purposes.

Furthermore,

the

transfer of

possession

of a

lawfully

made

copy

of

computer

software

by

a

nonproﬁt

educational

institution

among

faculty,

staff, students,

or

to another school

is

not

prohibited.”

The Senate

passed

S.198,

as

amended,

on

May

1,

1990.76

Explaining

the amendments

on the Senate

ﬂoor,

Senator

Hatch

remarked that the

changes

to the

bill

addressed concerns

raised

by

libraries

and the educational

community,

and

"make

it clear that the

bill would not

prohibit

the

lending

of authorized

copies

of

software

by

nonprofit

libraries

and

nonprofit

"77

educational

institutions.

The

House

passed

the rental amendments

as

part

of the

Copyright

Amendments Act

of

1990.78

In the

accompanying

Report,

the

House stated that it was

Congress’

intent not "to

prohibit nonprofit

lending

by

nonprofit

libraries

and

nonprofit

educational institutions.

"79

The

House

Report

mirrored

the Senate

language

on transfer

by

an

educational institution.8°

President

Bush

signed

the

Computer

Software

Rental Amendments

Act on December

1,

1990.8‘

75

S.

Rep.

No.

265,

101st

Cong.,

2d Sess. 6-7

(1990).

See

Appendix p.

3

(reproducing

the

portion

of the

Senate

Report

relating

to

"Lending by

Libraries

and

Educational

Institutions").

7°

136

Cong.

Rec. S5533

(daily

ed.

May

1,

1990).

T’

Id.

(remarks

of Senator Orrin

Hatch).

78

136

Cong.

Rec. H 8266

(daily

ed.

September

27,

1990).

7°

H.R.

Rep.

No.

735,

101st

Cong.,

2d

Sess. 8

(1990).

8°

See

id. at 15

("Additionally,

the

bill states that the transfer of

possession

of a

lawfully

made

copy

of a

computer

program by

one

nonproﬁt

educational institution to another

or to

faculty,

staff,

or students is also

exempt.

")

8‘

Pub.

L. No. 101-650

(1990). [Title

VII

of the "Judicial

Improvements

Act of

1990)].

20

III. COPYRIGHT OFFICE

RESPONSIBILITIES

In

amending

§109,

Congress gave

the

Copyright

Office

two

responsibilities:

to issue

regulations

on

the

copyright warning

required

and,

within

three

years,

to

prepare

a

report

on

the

extent to

which the

exemption

for

nonprofit

libraries had achieved its

intended

purpose.

A. REGULATION

ON WARNING OF COPYRIGHT FOR

COMPUTER PROGRAMS

The

nonprofit

library

exemption requires

librarians

to

place

a

warning

of

copyright

on

every

computer program

lent. On March

28, 1991,

the

Copyright

Office

issued

regulations

establishing requirements

for the

warning;

these

regulations

can be found in 37 CFR

201.2422

The

"Warning

of

Copyright

for

Software

Rental" to be affixed to the

packaging

must consist

of

a

verbatim

reproduction

of the

following

notice:

Notice:

Warning

of

Copyright

Restrictions

The

copyright

law of the United States

(Title

17,

United States

Code)

governs

the

reproduction,

distribution,

adaptation, public performance,

and

public

display

of

copyrighted

material.

Under certain

conditions

speciﬁed

in

law,

nonproﬁt

libraries

are

authorized to

lend,

lease,

or rent

copies

of

computer programs

to

patrons

on

a

nonproﬁt

basis

and for

nonproﬁt purposes.

Any

person

who makes an

unauthorized

copy

or

adaptation

of the

computer program,

or redistributes the

loan

copy,

or

publicly performs

or

displays

the

computer program, except

as

permitted

by

title

17

of the United States

Code,

may

be liable for

copyright

infringement.

The

regulation

went into effect on March

28,

1991.

56 Fed.

Reg.

7,811

(1991).

21

22

This institution reserves the

right

to

refuse to fulﬁll a loan

request

if,

in its

judgment,

fulﬁllment of the

request

would lead to

violation

of the

copyright

law.”

Librarians must ensure that this

waming

appears

on the

packaging

of

every

copy

of a

computer

program

they

lend to

patrons.“

The

notice must be

legible,

comprehensible,

and

readily

apparent

to a casual user

of the

computer

program.“

B.

PREPARATION OF REPORT

Under

section

109(b)(2)(b),

the

Copyright

Office

is directed to

report

to

Congress°5

as

to whether

the

legislation

"has achieved its intended

purposes

of

maintaining

the

integrity

of the

copyright

system

while

providing nonprofit

libraries the

capability

to fulfill

their function." The

Office

is also asked

"to advise the

Congress

as to

any

information

or

recommendations that

the

"3

37

C.F.R.

§201.24

(1992).

5‘

The

warning may

be afﬁxed

by

means of a label

cemented,

gummed,

or otherwise

durably

attached to the

copies

or to

a

box, reel,

cartridge,

cassette,

or other container used as

a

permanent receptacle

for

the

copy

of

the

computer program.

Id.

55

Id.

55

The

Report

was due on December

1,

1993,

but we were

granted

an extension of time until March

31,

1994.

See

pp.

4-7

of the

Appendix

to this

Report

for letters

requesting

the extension.

22

Register

of

Copyrights

considers

necessary

to

carry

out the

purposes

of the

subsection."87

Later studies and

reports

after

this one are also authorized.”

1.

Notice of

Inquiry.

On

July

13, 1993,

the

Copyright

Ofﬁce

issued a Notice of

Inquiry

requesting

public

comments on and information

about

lending

of

computer programs

for

nonproﬁt

purposes by

nonprofit

libraries,

for

the

purpose

of

evaluating

how the

nonprofit

lending

provision

is

working.”

The Office invited

comment

"from all

interested

parties

including

software

proprietors,

librarians,

and

library

patrons.

"9°

The Office

expressed

interest

in

"receiving

comments

about

any

issues relevant to

§109(b)(2)

which

concern

copyright

owners,

librarians,

and

library

patrons"

and

identified seven

areas

of

particular

interest:

1.

If

you

are

a

nonprofit library

or

educational

institution,

do

you

feel

you

are

meeting

the needs

of

87

Section

109(b)(2)(b)

provides:

(B)

Not later than

three

years

after

the

date

of the enactment of the

Computer

Software Rental Amendments

Act of

1990,

and at such times

thereafter

as the

Register

of

Copyrights

considers

appropriate,

the

Register

of

Copyrights,

after consultation with

representatives

of

copyright

owners

and

librarians,

shall submit to the

Congress

a

report

stating

whether this

paragraph

has

achieved its intended

purposes

of

maintaining

the

integrity

of the

copyright

system

while

providing nonproﬁt

libraries

the

capability

to fulﬁll their function.

Such

report

shall advise

the

Congress

as to

any

information or recommendations

that

the

Register

of

Copyrights

considers

necessary

to

carry

out

the

purposes

of

this

subsection.

See also

E-mail Comment 4.6

(J

.S.

Reynolds Community College)

at 1.

‘2"

See

Comment

9

(Univ.

of

Northern

Iowa)

at

2;

E-mail Comment 4.10

(Univ.

of Southem

California)

at

1;

E-mail Comment 4.5

(Tulsa

Jr.

College)

at

1;

and

E-mail Comment 4.13

(North

Carolina

State

Univ.)

at 1.

‘2‘

E-mail Comment

4.5

(Tulsa

Jr.

College)

at 1.

33

"

software available to users.

Since the NCSU libraries

are not

making

all

software

available,

according

to

the

commentator,

the

existing

law and

regulations pose

no

impediment.‘22

d.

Computer

centers or laboratories. Three

representatives

of

computer

centers

or laboratories

in

educational institutions that lend

software also

reported

that their

institutions

are

responsive

to their

patrons.‘25

Anita Almond

stated that the

CCIT

Faculty

Resources for

Instruction

Computer

Center

at the

University

of Arizona

provides

software access

to

a

campus

of

36,000

students and has been

lending

software for evaluation

purposes

for the

last

five

years.

The Center

lends about

1,106

software

packages

a

year

for two

weeks at a time.

Ms.

Almond

said that

she is

meeting

patrons’ requests

in

"trying

to find the

right

tool for

the

job."12“

Pointing

to the

expressed

desire of

faculty

and

staff to

be able

to look at software

in order to

find

something

that

they

understand and that can do a

particular job,

and

reporting

that most

customers

look

at two

or

three

software

packages

before

determining

which one to

buy,

Ms.

Almond

considered

that evaluation before

purchase

is

very important

for

meeting

campus

software

requests.

125

The

University

of Wisconsin-Madison’s Instructional Materials Center

reported

that

it

"Processes

computer

files

in

accordance with the software laws and that

the intent of the law

meets

its

needs.125 Another

media center

at

Niskayuna

High

School

in New

York

reported

‘22

E-mail Comment

4.13

(Jennie

Y.

Davis,

North Carolina

State

Univ.)

at

1.

'25

E-mail

Corrmient

4.15

(Univ.

of

Arizona)

at

1;

E-mail Comment 4.9

(Univ.

of

Wisconsin-Madison)

at

1;

and

E-mail

Comment

4.3

(Niskayuna

High

School)

at 1.

12"

E-mail Comment 4.15

(Univ.

of

Arizona)

at 1.

'25

E-mail Comment 4.9

(Univ.

of

Wisconsin-Madison)

at

1.

34

125

1

that it is

spending

"a

great

deal of

money

for

computer

software to

support

our

curriculum,

both

"127

in

single copy

and

network license.

e.

Library

patron.

Someone identified as

a

longtime

library-user

who

is

just

beginning

to use software

emphasized

the value of

the libraries’

resources for self-education in

this

field,

and the

public’s right

to have free access to

software

information as well as the

printed

word. This

patron

urged

the

library

associations in

the

age

of the

"information

superhighway"

widely

.;_

policy

that is clear and

coherent,

software and that makes materials

to

develop

a

accessible to more

than

a

"wealthy

elite.

"128

2.

Negative Responses.

Librarians

who are not

taking advantage

of the

lending

provisions

were concerned that

only

certain

kinds of software

are

being

lent

or

that,

in some

cases,

software

is

not

being

lent

at all.

They

attributed

this situation to

insufficient funds or

staff,

or to lack of

knowledge

of the

legal requirements.

a.

Individual libraries. Two

library

representatives

said that

they

are unable

to

supply

the

demands

of

patrons

for access to

software.”

One

Pennsylvania

library

reported

that software

purchase,

maintenance,

and

instructions

for

usage

make

it

too

expensive

to

furnish

service to

patrons

in this area.

Recently

this

library

was

given money

to

purchase

its

first

it

from

computer

and

start-up

software

for free

public

use but

budgetary

constraints

keep

m

E-mail Comment 4.3

(Niskayuna High

School)

at

‘28

E-mail Comment

4.17

("longtime library

user")

at

1.

12°

Comment

(John

K. Tener

Library)

at

1;

Comment

6

(Jefferson

County Library)

at

1.

35

purchasing

additional

software.‘3"

The

director

of a

public library

in

Colorado would like

to

make software

available,

but

has

been advised

by

the

county

attomey

that it is

probably

not

possible

to circulate most software.

He commented:

While

the Act

was

probably

intended to allow the

Library

to

circulate software

programs

to its

patrons,

there

appears

to

be

some

legal support

that the software

companies

can,

by

the

"shrinkwrap"

license

agreements

afﬁxed to the

software,

prohibit

such circulation.

The

Act,

it could be

argued,

protects

only

libraries which own

the software

program.

In

most

cases,

the

library

is

only

a license-holder not an

owner;

thus

the

library

is

not

protected.

Even

if the

Library

were

protected

under

the

Act,

the

companies

may prohibit

circula

tion

by including

such

prohibition

in the

contract or license

‘2‘

agreement.

b.

Computer laboratory

at educational

institution.

A

staff member from

a

personal

computer

laboratory

at the

University

of Massachusetts at Amherst

noted that his

laboratory

does

not circulate

copies

of

computer programs.

He did not believe

any

other

facility

at this

University

lends software either.‘22 He further asserted that "the Act is ineffective due

either to the

unwillingness

of software firms to

participate

or the failure of libraries or

non-profit

agencies

in this area

[to]

provide

such

a service."‘22

c.

Library

associations.

The

Joint Libraries stated that

the

Act has achieved

its intended

purpose

with

respect

to

nonprofit

libraries,‘2"

but

they expressed

concern

about

‘2"

Comment

1

(John

K.

Tener

Library)

at

1.

‘3‘

Comment 6

(Jefferson

County

Library)

at

1.

‘22

E-mail Comment

4.4

(Univ.

of

Mass.)

at 2.

‘"3

Id.

‘"4

Comment

2

(Joint Libraries)

at 4-5.

36

--

the

general

exemption

provided

by

section

109

itself,

and the

limits

it

places

on

the

first sale

doctrine:

We believe

. . . that whether a work of intellectual

property

may

be lent

by

libraries should

not

depend

on

the format of

the work. Section 109 of the

Copyright

Act

permits

other

intellectual

property

to

be

lent, sold,

or

leased

that

also

are

easily copied

for

example, print

media and audio cassettes.

We are concerned

that the software

amendments

portend

future diminutions

of

users[’]

rights

based on the format of a

work,

a distinction

that,

with few

exceptions,

Congress

chose

not to

make

in

drafting

and

passing

the

Copyright

Act

of

1976.155

3.

Questions

Raised.

Some of the comments

suggested

that

librarians

who

are not satisfied With the

present

law

are uncertain

as to what

the

Software

Rental Act allows them to do.

Specifically

they

asked the

following

questions:

1)

Does the

exemption

allowing

the

lending

of

"computer programs"

cover

"a broad

range

of

software"

such

as information

resources

(CD-ROM

databases

or

directories),

office

applications

(spreadsheets,

word

processing

programs),

educational

materials,

and

multimedia works?‘25

2)

Can

software

copyright

owners

through

"shrink

wrap"

license

agreements

accompanying purchased

135

155

See,

e.g.,

Comment 8

(Medical

Library

Association)

at

1;

E-mail Comment

4

13

(North

Carolina State

Univ.)

at 1.

37

"

copies

of

computer programs

prohibit

nonprofit

lending

and

thereby

override the

statutory

exemption?‘37

Other

questions

concern

the activities of educational

1)

If

nonprofit

educational institutions are

exempt

from

"the first sale restrictions

relating

to

lending"‘38

and if electronic distribution is "transfer" under

§109(b)(1)(a),

does it

follow that

computer

programs

can be

distributed

by

educational

institutions

on

a network to

multiple

users

without

a

license to do so?

b)

Does

"online"

electronic

transmission

of

copies

of

computer programs

(from

a file server

or

network)

by

nonprofit

educational

institutions

constitute

"lending

or

"transfer?"

institutions

Two trade associations

(BSA

and

SPA)

told the

Copyright

Ofﬁce

that the software

industry

has

no

interest

in

asserting

that shrink

wrap

licenses override

the

capability

of

nonproﬁt

libraries under section

109(b)

to lend

copies

of

computer

programs

for

nonproﬁt purposes.

See

infra

Part

V(C)(1)

discussing

shrink

wrap

licenses

1”

See

Comment

11

(National

School Boards

Association)

at 1. See also 17 U.S

C

§109(b)(1)(a)

38

137

-

“"

“‘

B.

FREQUENCY

OF

LENDING: HOW OFTEN

DO

YOU LEND

COPIES OF

COMPUTER PROGRAMS?

1. Insufficient

Knowledge

of Extent and

Patterns

of

Library

Software Loans.

While

most commentators

addressed this

question,

the

responses

fail

to

provide

sufficient

evidence

on the extent of

lending

of

computer

programs by

libraries. The

Business Software

Alliance

(BSA)

reported

that it lacks

adequate

knowledge

of

library

lending

practices,

but

that

it

would

be interested

in the

type

and volume

of software lent to

library

patrons, adding

that this

could

help

it determine the

scope

of software

piracy.‘2"

Some

librarians cited insufficient

money

to

acquire

software for

lending,

or

inadequate

information

about

what the

amendment

pennits.

Some libraries

seemed unaware that the Act allows them to

lend

copies

of

computer

programs

for

their

patrons’

home use.

The

comments revealed that software

lending

practices

vary

from

library

to

library;

moreover,

the Joint Libraries’

comment

reported

on an Association

of Research Libraries

(ARL)

survey

of

all of

its U.S. members. This

survey

indicates that some

libraries lend software

and some do not.“‘"

Although

most of

the librarians

responding

to our

questions reported

that their libraries

lend

software,

a 1991

survey

on

interlibrary

loan

policies

of

1,500

libraries indicates that fewer

than 100 of them would

lend software.‘4‘ This

survey

has been

updated,

and the

compiler

‘"9

Comment

3

(Business

Software

Alliance)

at 2.

Accordingly

BSA

sought

"another

opportunity

to comment

after information

regarding

the

lenders institutions’

experience

becomes

available." Id.

Comment

2

(Joint

Libraries)

at 2. ARL sent our Notice of

Inquiry

to

104 of its members and

47

responded.

Comment

7

(Niagara

University)

at 1.

Leslie

Morris,

director of libraries

at the

Niagara University

Library,

and

compiler

of

Interlibrary

Loan Policies

See also

Mitzi

Waltz,

Net

T

rajﬁcking:

the

server

Copyright

Rift:

File

and

ﬁle

sharing

make

illegal

copying

of software far

easier,

but

program

licenses

lag

behind current

technology,

Macweek

(August

20,

1991) [hereinafter "Waltz"]

(quoting

Microsoft

manager

of

corporate

accounts

marketing

Ron

Davis).

155

See,

e.g.,

Comment

7

(Niagara University)

at 1.

43

software

lending,

what can be done

to clear

up

confusion and

misconceptions

and

to

develop

that

better

understanding?

C. DO

THE

REGULATIONS

REQUIRING

A

WARNING OF

COPYRIGHT

REPRESENT AN

ONEROUS BURDEN?

1.

Those

Saying

No: Not

A

Burden. Most

responding

libraries

or

associations did

not

regard

the

waming

of

copyright provided

by

the

Copyright

Office

regulations

in

37 C.F.R.

§201.24

as

a burden.157

a.

Library

associations. The

Joint Libraries

stated that the

copyright

warning

"does not

present

an undue burden to its

members."158 The

Medical

Library

Association

agreed

that

affixing

a

copyright

warning

notice

statement is not

a

burden and

can

be

incorporated

into

library

processing procedures,

but it

pointed

out that the

statement is too

long

for

the

space

available on software

packages.159

b.

Libraries

in

educational

institutions.

Three librarians

from

libraries in

nonprofit

educational institutions

reported

that

they

are

adhering

to the

waming

of

copyright

requirement

in

lending

software and that

it

does

not

pose

a

problem.16°

The

Planning

Director

at

North

Carolina

State

University

Libraries

said

that,

during

the initial

processing

of software

157

See

supra

text

accompanying

note

83

(quoting

text of

warning).

153

Comment

2

(Joint Libraries)

at

2;

See also

Comment

11

(National

School

Boards

Association)

at 1

("Speciﬁcally,

we did

not

want our activities covered

by

the

library

language.

").

‘2"

Comment 11

(National

School Boards

Association)

at 2.

48

1)

Are libraries

in

nonprofit

educational institutions

that

lend

copies

of

computer programs required

under section

109(b)

to

label the

package

in

accordance with 37 C.F.R.

§20l.24?

2)

Are

nonprofit

educational institutions that lend

physical

copies

of

computer programs

to

faculty,

staff,

or students

through computer

centers

or

curriculum

centers

required

to

label with notice of

copyright

under

§109(b)(2)(a),

or

are

they exempt

under

§109(b)(1)(a)?179

3)

Is there a

copyright waming

notice

requirement

under

§l09(b)

for

electronic transmission

of

copies

of

computer programs

by

nonprofit

libraries or

educational

institutions?

Should

there be a

copyright

waming

requirement

for online

distribution

of

copies

of

computer programs

or

other

software

(i.e.,

a

waming

placed

on-line or

posted

at

on-premises computer

work

stations?).

4)

Should

the

warning

of

copyright

required

by

37

C.F.R.

§20l.24

to be affixed

to

each

package

containing

a

copy

of a

computer

program

that is the

The answer

is

probably

no. These "transfers"

are

probably

exempt

under

§109(b)1)(a)

See

infra

Part

V(C)(2)(b)

49

179

subject

of a

library

loan be

simplified

or

reduced in

length?

D.

IS UNAUTHORIZED

COPYING,

ADAPTATION,

REDISTRIBUTION,

PUBLIC

PERFORMANCE

OR DISPLAY OF COMPUTER PROGRAMS

TAKING PLACE?

IS

THERE EVIDENCE

OF UNAUTHORIZED COPYING?

This is

another area where the

responses

seemed

inconclusive.

We

asked

two

in our

Notice

of

Inquiry:

1)

Do

you

have reason to believe

that unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

of

computer program

is

occuring

as a result

of the

nonproﬁt

lending permitted

by

§109(b)?

2)

Are

you

aware of

any

evidence that

unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

results from

nonproﬁt lending

of

computer

software?

The

first

question

was

supposed

to

find out what

people thought

was

probably

happening;

the

second

was aimed at

getting

direct

evidence,

if

any.

The

answers

suggest

that there is little or

no direct

evidence

and that

suppositions

are based

on

convictions rather than fact.

Software

representatives

asserted

that

copying

is in fact

taking place.

Library

representatives

asserted

that

members are

making

every

effort to

ensure

the

law is followed. Individual commentators took

varying positions.

1.

Yes,

There

Probably

Is Some

Infringement.

a.

Software associations.

The

Software Publishers Association

pointed

out

that,

although

it "does not have

either the

resources

or the information to

present quantitative

50

evidence of software sales lost to

infringement

of

computer

programs

lent

by

nonprofit

libraries,"‘""

it

is

convinced

that

the

nonprofit library

rental

right

results

in

unauthorized

copying

of software.

The

SPA asserted that "the

nonprofit

lending exemption

in

its current form

does not

protect

the

integrity

of the

copyright system

because it facilitates

unauthorized

copying

11181

by

library

patrons.

Although

SPA

could cite no

specific

evidence

of unauthorized

copying

under the

lending

exemption,‘82

it

urged

that economic factors and the

present

broad

scope

of the

nonprofit

li

brary lending exemption

"threaten to

eviscerate

the critical

right

of

copyright

owners to control

"‘2"

unauthorized

reproduction

of

computer programs.

The

SPA comment

expressed

the belief

that unauthorized

copying

does in fact result from

lending by

nonprofit

libraries,

and

reported

a claim

by

commercial software rental businesses that

community

public

libraries

provide

alternative sources

of unauthorized

computer copying

of

programs.‘8“

Like

rental,

lending

computer programs

for

use

outside the

library premises

simply

invites

library patrons

to

make

unauthorized

copies

in

the

privacy

of their own homes. The

only

capital equipment

needed to make

perfect copies

of com

puter programs

is the

very computer

on which

the borrowed

programs

would

be used in the ﬁrst

place.

Then,

with the

push

of a few

keys

or

the click

of a

mouse,

entire

computer

programs

can be

reproduced

almost

instantaneously.

Unlike

the burdensome

process

of

photocopying

a

book,

copying

a

computer program

is

easy,

quick,

and makes

perfect reproduc

'8"

Comment

5

(Software

Publishers

Association)

at 5.

"*1

Id. at 2.

‘"2

Id.

at 4-5.

‘"3

Id.

at 4. SPA

quoted

from

the

House

Report accompanying

the

Computer

Software Rental Amendments

Act

of

1990,

where it was

acknowledged

that "the same economic factors that lead to unauthorized

copying

in

a

commercial

context

may

lead

library patrons

also

to

engage

in such conduct." Id.

‘"4

Id. at 4-5

(citing reports given

to

SPA Executive Director Ken

Wasch).

5

1

-- --

tions. This ease

encourages

infringement by

unscrupulous

library patrons

that is

virtually impossible

for

the

nonproﬁt

library

or

the

copyright

owner to

detect.155

The Business

Software Alliance

also

expressed

serious concern

about

piracy

of

software

in

general,

and

argued

that the

single greatest

threat to the

viability

of the

software

industry

is

unauthorized

duplication

and distribution of

computer

software

programs.185

Although

BSA

conceded

that

it had been unable to

develop

empirical

data about the

extent to which

piracy

can

be traced

directly

to the

lending practices

of

nonprofit

libraries,

it

passed

on

reports

received

"via its domestic

piracy

hotline,

that

nonprofit

entities,

including

educational institutions and

academic

departments

are

involved in unlawful

copying.

"157

Robert

M.

Kruger,

who

directs BSA'S North American

Anti-Piracy

campaign,

said that

federal

law enforcement

authorities have

informed him that "one

particular

form

of software

piracy piracy

carried

out

by

illicit bulletin

board and hacker

operations

tends to

disproportionately

involve

inhabitants

of

the

university

environment."155

Kruger

argued

that

library

patrons

are no

different from the

general

population,

adding

that the academic

enviromnent

is

quite

vulnerable to software

abuse,

and that

existing requirements

should

not be

further

relaxed.

159

155

Id.

at 4.

1"5

Comment 3

(Business

Software

Alliance)

at 1.

BSA estimated losses to the

domestic

industry

from

use

of unlicensed software

throughout

the world total

$12

billion

annually,

and that

losses

due to software

piracy

in

the

United States

run as

high

as

$1.9

billion

annually.

Id.

157

Id. at

1-2. BSA

reported

that,

in the ﬁrst nine

months

of

1993,

its

domestic

hotline "received hundreds

of calls

reporting illegal duplication

of

copyrighted

software

by

businesses,

organizations

and institutions." Id.

155

Id.

at 2.

189

52

b.

Software

publisher.

A

supporter

of the

library

lending

exemption,

Balloons Software’s

Phil

Shapiro,

emphasized

that

librarians should

impress

upon

patrons

"their

legal

and

moral

duty

to use the

software for

legitimate

evaluation

purposes

only."

Software

publishers,

like all

copyright

owners,

he

argued,

require

assurances that

their

hard work

is not

unlawfully

appropriated

through

software

piracy.

To

understand the

dimensions of the

piracy problem

it is sufﬁcient to know

that

a

single

ﬂoppy

disk,

representing

several thousand hours

of

programming

work,

can

be

easily

duplicated

in

under

a

minute. The

facility

with which

microcomputer

software can

be

unlawfully appropriated

suggests

that

libraries that choose

to circulate

commercial

microcomputer

software

ought

to take

proactive

steps

to diminish the

possibility

that circulated soft

ware is

illegally

copied.1°°

c.

Systems

programmer. Gary

Warner,

a

systems

programmer

at Samford

University Computer

Services,

shared

Kruger

,

s

concerns.

Warner

argued

that

library lending

of

software

will

always

lead to the

illegal

copying

by

some

patrons

and should be

discouraged.191

As

evidence,

he

pointed

out that

programs

for

spreadsheets

and

word

processing

call for weeks of

use,

and that the

average

user would

have no

legitimate

use for

them

if

limited

to a shoit loan

period.192

He added

that,

where software must be

copied

before

it

can

be

used,

requiring

both hard disk

space

and an hour

or

more

to

install,193

it

is

highly

unlikely

that the

library

patron

will delete it.

19°

E-mail Comment

4.1

(Balloons Software)

at 1-2.

191

E-mail Comment

4.2

(Samford

University)

at 1.

1°’

Id. at

2.

197

Id. See also

Sajjadi

G.

Shiva,

Computer Design

and

Architecture

216

(2d

ed.

1991),

cited in

Corsello,

supra

note

13,

at 186

n. 40.

53

d. Software user.

One Intemet

respondent

admitted that

"on

many

occasions

[he

had]

copied

friends’ software."‘94

Although

his comments do not

relate

directly

to

library

lending,

they

do have

relevance to the

kind of unauthorized

copying

that

may go

on

outside the

library:

On no

occasion,

have

I

continued

using

the

software after

determining

I

really

wanted the software . . . . even if I

have

lots

of

bootlegged

software

laying

[sic]

around,

I

seldom

if

ever use it. On the occasion when I ﬁnd

something

that I

really

need,

I

buy

it.

My

experience

with other

people

that

do

software

development

and use

computers

leads me to believe

that

they

are

doing

the same kind of

thing.‘°5

His conclusion

was that

bootlegging

software

for

personal

use

actually

causes more

products

to

be sold than

would have

been otherwise.‘9"

2.

No,

There

Is No Evidence

of

Unauthorized

Copying.

a.

Library

associations.

Library

associations

reported they

have no evidence

of unauthorized

copying.‘92

The Joint

Libraries,

which

commented

on

behalf of law

libraries,

research

libraries,

and

special

libraries,

asserted

that,

"[b]ased

on

a

survey

of selected

members

we

have no evidence

that unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

results from

nonprofit

lending

of

computer

software.

"‘98

The Joint

Libraries

emphasized

that

every

effort is

made to assure

that unauthorized

copying,

adaptation,

redistri

bution,

public

performance

and

display

of

computer programs

do not occur

in

their

member

‘"4

E-mail Comment

4.16

(Fittery)

at

1,2.

1”

Id.

1%

Id.

‘2"

Comment

2

(Joint

Libraries)

at 2-3.

“2"

Id. at 4.

54

--

libraries

as a result

of

library

lending

of

software.

They

pointed

to

librarians’ efforts

to educate

staff,

students,

faculty,

and other users

about what

may

and

may

not be

done

with

copyrighted

works,

including

computer programs.

These

educational efforts include both

posting

notices and

issuing

policy

statements.199

The

library

associations stressed that

librarians

have a

vested interest in

the

copyright

system

and

in intellectual

property protection.

They

pointed

out that librarians

and

library

users are creators

as well as users of

intellectual

property,

and

therefore have an added

incentive to

respect

copyright.2°°

Recognizing

that

copyright infringement

leads to lost sales

and increased

costs,

as consumers

of

information librarians

want to

keep

costs

for all creative

works low.2°1

The

American

Library

Association

stated: "Libraries

and educational

institutions

manage

software in

completely

different

ways

from other materials in

order

to

"2°2

protect

the interests

of

software

developers.

b.

Responses

of

individual

public

or educational libraries. Six librarians

responded

that

they

have no evidence that unauthorized

copying

results from the

lending

of

12°

Id.

at 3.

2°°

Id.

Faculty,

librarians, researchers, students,

and other institutional

employees

write

books and

articles,

create audiovisual

works,

and

develop

software.

While

continu[ing]

to

emphasize

the

importance

of sections 107 and

108 of the

Copyright

Act

in

striking

the

appropriate

balance

between

creators’ and users’

rights,

we have

an

obligation

to our

patrons

and

to

our

larger

institutions to

help

ensure

that owners’

rights

are not abused within our libraries.

Id.

2°1

Id. at 4-5.

See also

id.

at

15-16

(statement

of

Rep. Synar)

(A

result

affecting

a

computer program

"which...

runs a microwave

or

a household kitchen utensil... was not intended and will be addressed

in

this

legislation.

").

27"

17

U.S.C.

§109

(b)(l)(B)(ii)(l992).

275

S.

Rep.

No.

509,

101st

Cong.

2d

Sess.

5

(1990).

83

-

libraries and

nonprofit

educational institutions. Such

institutions

provide

a

valuable

public

purpose.

.

."22" Both the

House and Senate

Reports222

refer

to the

1984

Record Rental

Amendment to section

109,

which

exempts

"a

nonprofit library

or

nonprofit

educational

institution from

copyright liability

for "the

rental,

lease,

or

lending

of a

phonorecord

for

nonprofit purposes,"

but the

legislative

history

of that Act is

equally unhelpful.

The

1984 House

Report

simply

states:

"These activities must be

directly

related to the

ordinary

lending activity

"22"

of the

nonprofit

library

or

the educational mission of the

nonprofit

educational institution.

Section

108,

which

permits

qualifying

libraries

to make facsimile

copies

under certain

circumstances,

applies

only

if the

copying

is not done for either direct or

indirect commercial

advantage.

Although

section 108

does not contain

a definition of

library,

the

legislative

history

emphasized

that

A

purely

commercial

enterprise

could not establish a collection of

copyrighted

works,

call

itself

a

library

or

archive,

and

engage

in

for-profit

reproduction

and distribution of

photocopies.229

In

the section

108 context

an issue has also arisen

as to how one should

distinguish

between a

library

on

the one

hand and

a

library

system

and

its

members,

on the

other.2""

22"

H.R.

Rep.

No.

735,

101st

Cong.

2d

Sess. 8

(1990).

222

S.

Rep.

No.

509,

101st

Cong.

2d

Sess. 5

(1990);

H.R.

Rep.

No.

735,

101st

Cong,

2d

Sess. 8

(1990).

22"

H.R.

Rep.

No.

987,

98th

Cong,

2d

Sess 4-5

(1984).

22°

See

H.R.

Rep.

No.

1476,

94th

Cong.,

2d

Sess. 74

(1976).

22"

Report

of the

Register

of

Copyrights,

Library

Reproduction

of

Copyrighted

Works

(17

U.S.C.

§108)

66

(Jan.

1983).

84

4.

What Constitutes

Nonprofit Library

Lending

of

Computer Programs?

a.

"Lending"

and "transfer of

possession."

The

distinction

between

"lending"

and

"transfer

of

possession"

was discussed

earliei251

and need not be

repeated

here.

As a

practical

matter

the terms

are

virtually

coextensive,

since

"lending"

is

certainly

a "transfer

of

possession"

and

when educational

institutions "transfer

possession"

to

faculty,

staff,

and

students,

the act

is almost

always

a loan.

The real distinction here

involves the

organizational

unit

within

an educational

institution

that does the

transferring.

The General Counsel

of the

National School

Boards

Association252

stated that

a curriculum

center rather than a school

library usually

transfers

school

district owned curriculum material

including

computer

programs.

A

school

system

may

treat

software that it owns

as a

textbook,

and transfer it from student

to

student.

However,

it

may

not

reproduce

this software

without

the

permission

of the

copyright

proprietor.

For

purposes

of this

report,

we

gathered

information from

nonprofit

libraries

in

educational

institutions that lend

computer

software.

It is clear that

such libraries would

fall

Within

the

nonprofit

library

exemption

and that their

lending

is

subject

to the

warning

of

copyright

requirement.

Curriculum

centers, laboratories,

computer

centers,

and other

centers

within educational

institutions

also

commented;

some

of their

activity

may

fall under the

educational

transfer

provision

described

above.

In

cases

where

a

laboratory

or

computer

center

is

doing

more

than

transferring

a

physical

copy,

there

may

be other concerns

as discussed

below.

2111

See

supra

notes

43-81

and

accompanying

text.

2112

Comment

11

(National

School

Boards

Association)

at 2.

85

b.

Lending

and access.

The

library

exemption

envisions

"lending,"

which

one would

normally

think

of as circulation

beyond

the

library

premises.

However,

a number

of libraries

responding

to

our

Notice

of

Inquiry

indicated

that

their

library

practices

regarding

software resemble

their

practices

for reference material: a

patron may

have

access to the

software at

the

library

but

may

not check the software out

to

be used at home.

An informal

survey

confirms

that for a

variety

of

reasons,

most

libraries are not

purchasing

or

lending

copies

of

computer

programs.

The Software

Publishers Association

proposed

that

library

"lending"

be

limited

to

on-premise

use,

and we

will discuss the

issue

in

more detail

in

considering

that

proposal?”

c.

Lending

and on-line transmission.

Although

most

nonproﬁt

libraries

have not

progressed

very

far

in

developing computer

software

lending

facilities,

some have

evolved

their

services

beyond

the

lending

of a

physical

copy

of a

program

to one

patron

after

another.

These

libraries

have facilities that

permit multiple

users to have simultaneous access

to the

same

program,

or

that

give patrons

access to

a

library’s

computer programs

via a

telephone

line.

Librarians

also

report

that

"lending"

is

being

done

electronically

by

installing

the

program

on a local

network

file

server or

computer

hard

drive. This

practice requires

the

patron

to use

the

program

on the

library’s

premises,

but

it is not the

physical

copy

of the

purchased

software

or the archival

copy

of that software that

is

given

to

the

patron.

Instead,

there is

a transmission

of

the

program

from

the

host

computer

to

the

user’s

computer

within the

library,

and a

copy

of

the

program

is loaded

in the resident

random access

memory

of the user’s

computer.

The end

"3

See

infra

part

C(3).

86

result for the user

may

be

the same

as

in

the kind of

lending

of

a

physical copy

envisioned

by

section

109,

but the

method

for

achieving

that

result,

and the

copyright

implications

of this

practice,

are

very

different.

There is

nothing

in section

109,

or

elsewhere in the

Copyright

Code,

that

would sanction

the unlicensed electronic

transmission

of

copies

of

copyrighted

works

by

nonprofit

libraries or

educational

institutions.

The Software Publishers Association observed

that

nonprofit

educational

institutions

are a

large

and

important

market and

that

licensing

programs

have been

developed

to

enable them

to meet

their

needs.2"4

C.

RECOMMENDATIONS

FOR

CHANGES

IN LAW OR

REGULATIONS

1.

Shrink

Wrap

Licenses.

As

noted

earlier,285

one

library

is

refraining

from

lending

computer

programs

because

of concern

that shrink

wrap

licenses

may

prohibit

circulation. That

library

has asked for a

clarification

concerning

these

licenses,

arguing

that unless

the

exemptions

of section 109 are

made to

prevail

over

these

"agreements,"

the

intent of

the law would be

vitiated.2""

More and

more

computer programs

are

being

mass-marketed

in the

form of software

packages

through

bookstores,

computer

retail stores and

by

mail.2"2

Individually

negotiated,

signed

license

agreements,

which are the nonn

in

other

situations,

are not feasible

in

a

mass

2"4

Comment 5

(Software

Publishers

Association)

at 3-4.

225

See

supra

notes 237-258 and

accompanying

text.

22"

Cormnent 6

(Jefferson

County

Library

)

at 1.

222

William Neukom &

Robert W.

Gomulkiewicz,

Licensing Rights

to

Computer

Software,

(March-April

1993).

See also

Raymond

T.

Nimmer,

Falling

Prey

to

a

Paper Tiger, Computerworld,

Nov.

6,

1984,

at 134.

87

market

setting.255

Still

wishing

to exercise control over

the

customer’s use and

further

distribution

of their

programs,

however,

software

publishers

have

developed

"Shrink

wrap,"

"break the

seal,"

or

box-top

licenses.259

The various shrink

wrap procedures

include:

1

Printing

the license

agreement

on an

envelope

inside

the

package

in

which

the software diskettes are

sealed,

indicating

that the

user

should read the

license before

opening

the

envelope

and that

by

opening

the

envelope

the user

agrees

to

all

the

terms

of the license.

2. The same as in

1,

except

the

agreement

also states

in

boldface

type

at the

top

of the

agreement

that a

buyer

who

does not

agree

with the terms of the

license

should

return the software

unopened

to the

vendor

or retailer for a

full

refund.

3.

Writing

the

computer program

in

a

way

that before

the user can

begin

using

the

program,

the user is

asked to

acknowledge

(via

the

keyboard)

that the

user

read

and

agrees

to the terms of the license

enclosed

in the

package.

4.

Placing

the license

agreement

on

the

outside

of

the

package

under the

shrink

wrap--the plastic

covering

-with

a

statement that the

buyer

should return the

package

to the vendor

unopened

for a full refund if

the

buyer

does not

agree

to the terms of the

li

cense.29°

One other

similar device involves

asking

the

buyer

to

sign

and return an

acknowledgment

card

stating

that he

or

she

agrees

to be

bound

by

the

terms of the

license.

28"

Neukom,

supra

note 288.

Scott,

supra

note

266,

at sec.

l2.08(d).

2°°

Id.

88

259

There

is considerable

question

about the

enforceability

of

shrink

wrap

licenses?”

Much

has been written and

several cases

have addressed the

issue.

It

has been

argued

that these

H

agreements"

are

adhesion

contracts

which are

unenforceable

against purchasers;

there

are

questions

concerning

lack

of mutual

consent and

lack of

consideration.292

In

the

informal

library

guidelines

referred to

earlier,

the authors

state

that these

licenses

should,

in the absence

of

authority

(cases

or state

statutes)

to the

contrary,

be treated as

binding?”

The authors advise libraries to

avoid

problems

by stating

on

their

purchase

orders

the intended use

of the software

by

including

a

legend

such

as

"PURCHASE IS ORDERED

FOR LIBRARY CIRCULATION AND

PATRON USE."

There are

widely varying

forms

of shrink

wrap

licenses.

Some

clearly

attempt

to

prohibit

rental or

lending.

Others

limit

use of the

program

to one identified

computer.

The

Copyright

Ofﬁce did

not

attempt

to determine

whether

licenses used after the

1990 amendments

took into

account

the

library lending

provisions

now in

the

Copyright

Code.

However,

the

question

of

whether shrink

wrap

licenses override the

specific

statutory

exemption

for

library lending

29‘

The

enforceability

of shrink

wrap

licenses is

currently being

considered

by

the Commission on Uniform

Commercial Laws.

Comp.

L. & Tax

Rep.

(E.

Roditti

and A. Fontaine

ed.)

Mar. 1994 at 6.

2”

See Deborah

Kemp,

Mass

Marketed Software: The

Legality

of the

Form License

Agreement,

48

La.L.

Rev. 87

(1988);

Amelia

H.

Boss,

Harold R.

Weinberg,

&

William

J.

Woodward,

Jr.,

Scope

of the Uniform

Commercial

Code: Advances in

Technology

and

Survey

of

Computer

Contracting

Cases,

44

Bus.

Law.

1671,

(1988

89);

Page

M.

Kaufman, Note,

The

Enforceability

of

State

"Shrirrk-Wrap"

License

Statutes in

Light

of Vault

Corp.

v.

Quaid

Software,

Ltd.,

74

Cornell L. Rev. 222

(1988).

See also

Step-Saver

Data

Systems

v.

Wyse Technology,

939

F.2d 91

(3d

Cir.

l99l)(holding

that

application

of

warranty provision

in

shrink-wrap

license was invalid under

article

2 of the Unifomr Commercial

Code

as

applied

to a

value-added retailer with whom

plaintiff

had

prior

agreement);

Vault v.

Quaid

Software,

847

F.2d 255

(5th

Cir.

1988)(holding

invalid section

of Louisiana License

statute that

permitted copyright

owners

to restrict

right

to

copy program through

included license

agreement

because

state license act "touches

upon

an

area"

of federal

copyright

law in that

section

117

was

speciﬁc

statement on

subject

of

software

duplication).

2”

Mary

Hutchings

Reed

& Debra

Stanek,

ALA,

Library

and

Classroom Use

of

Copyrighted Videotapes

and

Computer

Software,

American

Libraries,

Feb.

1986,

at B.

89

--

appears

to

be resolvable

without

any legislative

action.

Representatives

of two

trade associations

(BSA

and

SPA),

have told us that the software

industry

has no

interest in

asserting

that

shrink

wrap

licenses override

the

capability

of

nonprofit

libraries

under

section

109(b)

to

lend

copies

of

computer programs

for

nonprofit

purposes.294

We

hope

this

information is

correct,

and

the

Office is

prepared

to

bring

the

parties

together

to discuss the issue

further.

2.

Warning

of

Copyright

Required by Regulations.

Section

109(b)(2)(a)

requires

that

nonprofit

libraries

lending

software under the

exemption

affix a

warning

of

copyright

to each software

package

lent.

The

warning

must

be

in

accordance with the

regulations prescribed

by

the

Register

of

Copyrights,

and

these are found

in

37 C.F.R.

§201.24.

As

discussed

earlier,

most

librarians

in

nonprofit

libraries that lend

software

including

libraries

in

educational institutions

reported

that

they

are

complying

with

the

regulations

and that

they

do

not

find them

to be an undue

burden.295 At the same time

there were some

complaints.

a. Can the

warning

of

copyright

be

simplified?

The

required

warning

is

a

long

one,

and some commentators

reported they

have or foresee

problems

with it.

They

emphasized

the

difficulty

in

affixing

the

warning

to a small

space;

they

criticized the

waming

in

its

present

form as

expensive

to

create,

difficult

to

read,

and an administrative and

budgetary

burden. Others

pointed

to

problems

that

may

become

significant

in

the future: for

example,

that

the

warning

on a software

package

will

never be seen

by many

users of the software under the

294

See

Letter and

Agenda

for Roundtable

Discussion,

App.

at 8-9.

Participants

discussed shrink

wrap

licenses

that

accompany computer programs,

not informational

works

embodied

in

CD-ROMs or multimedia works. We

propose

to consider

library practices relating

to CD-ROM in a future

study.

295

See

supra part

II C

(discussing

copyright

warning

and related

questions).

90

library

exemption,

and

that,

as the number of

works that

include

software

increases,

the

additional time

required

for

library

processing

of

the

warning may

become

a

workload

problem.

We realize that the

waming

now

required by

our

regulations

is

needlessly long

and

wordy,

and

we are

going

forward

with

a

rulemaking

procedure

to

simplify

it. Other

questions

concerning

the

warning

may

not be

easy

to solve.

b. Is the

warning

of

copyright

applicable

to

nonprofit

educational

institu

tions?

A

question

has come

up

about

the use of the

waming

in

cases where educational

institutions

are

transferring possession

of

copies

of

computer programs

under

the section 109

exemption.

The issue is

explored

in the

comments of the National

School

Boards

Association’s

General

Counsel,

August

Steinhilber,

who

argued

that one cannot

expect

a

library’s waming

of

copyright

to

accompany

the software and

computer

that

may

be transferred

to

a

handicapped

student

who

is

taking

courses

at

home.295

Librarians and other

library

staff are

accustomed to

including

copyright

notices on

photocopies

and

complying

with

the

warning requirements

of 17 U.S.C. 108.

Librarians not

only

post

warnings

of

copyright

at

copying

machines

but

frequently develop

written

copyright

policies

of their own and

post

them

as well.

Librarians’

efforts to

comply

with

the

copyright

law

include

routinely providing

the

warning

of

copyright

required by

section

108,

and this

established

practice

has made it easier

to set

up

a

routine of

placing

a

warning

of

copyright

on all software

packages

to be lent under

section 109.

To

qualify

for

the

library

lending exemption

all

libraries,

whether in educational

institutions or

not,

must

affix a

warning

of

copyright

when

they

lend

software. It

may

also be

295

Cormnent

11

(National

School Boards

Association)

at 2.

91

a

good

idea for librarians and staff at

computer

centers,

laboratories,

media

centers,

or other

educational

divisions that transfer

possession

of

copies

of

computer

programs

to

comply

with

the

warning

of

copyright

requirement

even

if

it

technically

does not

apply

to

them.

Congress

was

aware

that

lending

software

posed

threats to

copyright proprietors;

that is the

reason

they

asked

us to do this

study.

Software is vulnerable to the kind of

copying

that

displaces

sales,

and a

voluntary

effort

by

librarians

and

other staffers to

inform

their

users

of

copyright

requirements

would be

a valuable service to

copyright

owners and the

public.

c.

Should the

warning

of

copyright

be

required

for all

computers?

The

Software

Publishers Association

proposed

that all librarians do

what some are

already

doing:

treat

the

section

109

warning

in

the same

way

they

treat

that

required

under section

108

with

respect

to

library photocopying.

The

SPA would like enactment of

legislation

requiring

libraries

to

post

a clear

warning

on

every computer

available

for use

by

patrons

that it is

illegal

to

copy

computer

software

without

permission

of the

copyright

owners,

and

that

violators

are

subject

to

civil and

criminal

penalties.

In the absence of

legislation,

we recommend that librarians take this

additional

step

voluntarily

and,

in our future

discussions

of the

copyright

waming,

we will work with

copyright

owners and librarians

to

develop

standardized

language

for this

purpose.

We also think it would

be a

good

idea to work

out a

system

for

showing

warnings

on

the

screen when

a

program

is

loaded on the user’s

hard drive.

For their

part,

copyright proprietors

should

provide

clear

guidelines

delineating

what

they expect

of their licensees when

copies

of

computer

programs

are

lent or transferred

under

license

rather than

section 109.

92

li.____i

d. What kind of

warning

of

copyright

is

appropriate

for electronic

transmission?

Checking

out a software

package

for a

patron

to use

at

a

work-station

located

on

library

premises

or

in

the

patron’s

home

computer

is

akin to

lending.

Launching

a

program

via

a file

server,

or

networking

it so that there can be

multiple

simultaneous

uses,

is

not,

and

the

provisions

of

section

109,

including

the

warning

requirement,

are

inapplicable.

Nevertheless,

a number of librarians stressed that

many patrons

who use

copyrighted

computer

programs

never

see the software

package,

and

some of them have been

exploring

alternate

methods to ensure

that the

library

patron

sees a

copyright warning

in an electronic

enviromnent.

3.

Limitation

to On-Premise Use.

As

mentioned

earlier,292

software

proprietors,

librarians,

and

educators have

disagreed

as to whether a

library

patron

should be

permitted

under section 109 to check out software and

take it

off the

library

premises

for his or her

personal

use.

Although

it

recognized

that

lending

could lead to unauthorized

copying,

Congress

intended

the

physical copy

of a

computer

software

program

to be lent to

patrons

for

home use.

"Lending"

connotes a

change

of

possession

of

a

material

object.

Both

software

proprietors

and librarians understand that

lending

software

to

patrons

for

off-premise

use

is

within the

meaning

of the

present exemption.

The Software

Publishers Association recommends that section 109 be amended to narrow

the

nonprofit

library

lending exemption: computer programs

should be available

for use

within

a

library,

but

patrons

should not be able to check them out.

They

argued

that

treating

software

See

supra

notes

231-233 and

accompanying

text

(discussing

SPA

proposal

to narrow

lending

exemption).

93

292

like reference

materials

would

discourage

unauthorized

copying

while

permitting

access to those

who

need it.

Some

librarians

countered

that there is

no need to limit the

present exemption

and that

the

ability

to

lend software

is vital

to

a

library’s

role in

making

information accessible

to

everyone.298

They

argued

that there is

no

proven

relationship

between

lending

and unautho

rized

copying,

and

that

lending

for home use

promotes

sales since most

people

do not

purchase

software

without

reviewing

it. Even

so,

a

significant

number of libraries have restricted access

to

their software

to

on-premise

use;

librarians are

being

cautious

for a number of

reasons,

including

lack of

knowledge

of

what is

legally permitted

and,

notably,

lack

of

funds to establish

full scale

lending programs.

Given

the clear

statutory

intention to

allow

circulation

of

programs,

we believe there

is

insufficient

evidence

at this time to

justify

recommending

narrowing

the

nonprofit

library’s

lending

right.

Anticipating

that

this

might

be our

conclusion,

SPA

asked us to review our

decision

in

one

year

to

assess

the

impact

of new

optical storage

media on the needs of

library

patrons

and

the commercial

impact

on software

publishers.

We

concur

that there should

be

a

continuing

review,

and in addition we believe

that this is

a

subject

that

would benefit from

further

exploration

and

discussion

among

all

parties

affected,

including library

patrons

and users.

298

See,

e.g.,

Comment

1

(John

K. Tener

Library)

at

2;

Comment 2

(Joint

Libraries)

at

4;

Comment

4

(American

Library

Association)

at 3.

94

D. EXTENSION

OF RENTAL

RIGHT TO VIDEO

GAMES

As discussed

earlier in this

Report,

the Software

Publishers

Association

noted that it

favored

the extension

of

the rental

right

to all video

games

and

encouraged

the Ofﬁce to review

the denial of rental

rights

to certain video

games

under section

109(b)(l)(b)(ii).2"

The

issue of rental

rights

for

computer programs

used

in limited

purpose

video

game

computers

is

beyond

the

scope

of this

report.

As noted

earlier,

this was an issue in the NAFTA

Implementation

process

and it seems

likely

that it will be an issue in the

GATT

implementation process.3°°

If

concerned

parties

wish to raise this

issue,

they

should

do so

with the

appropriate

Congressional

committees.

29°

Comment 5

(Software

Publishers

Association)

at

2,

6.

3°”

See

supra

notes

28-30

(discussing

rental

right

in

NAFTA and GATT

TRIPS).

95

THE

COMPUTER SOFTWARE

RENTAL AMENDMENTS

ACT

OF

1990:

I

1

THE

NONPROFIT

LIBRARY

LENDING EXEMPTION TO

THE

“RENTAL

RIGHT”

APPENDIX

LETTERS

AND

COMMENTS

APPENDIX

(Table

of

Contents)

PAGE

Joint

Letter from the American

Council on Education

to Sen. Dennis Deconcini and Sen. Orrin G. Hatch

With Draft

Attachments

(Nov.

13,

1989)

. .

.

. .

. . . . .

.

. . . . . .

.

. . . . .

1

Text from the Senate

Report

on

the

Computer

Software

Rental Amendments Act

Pertaining

to

"Lending

by

Libraries and Educational

Institutions."

.

. . . . . .

. . . . . . . . . .

. . . . . . . . .

.

. . . .

3

Letter from

Acting Register

of

Copyrights,

Barbara

Ringer

to Demus

Deconcini,

Chairman,

Subcommittee on

Patents,

Copyrights

and

Trademarks,

Requesting

Extension of Time

for Software

Study

(Nov.

29,

1993).

. . . . . . . . . . .

.

. .

. . . . . . . .

. . . . . . . . . .

4

Letter from

Acting

Register

of

Copyrights,

Barbara

Ringer

to William J.

Hughes,

Chairman,

Subcommittee on Intellectual

Property

and Judicial Administration

Requesting

Extension of

Time

for Software

Study

(Nov.

29,

1993).

. . . . . . . . . . . .

.

. .

.

. .

. . . . . .

.

5

Letter from

Acting Register

of

Copyrights

Barbara

Ringer

to

Hayden Gregory,

Chief

Counsel,

Subcommittee

on

Intellectual

Property

& Judicial Administration

Requesting

Extension

on

Software

Study

(Nov.

29,

1993).

. .

.

. . . . .

.

. . . . . . . . . . . . . . . . . . . . .

6

Letter from

Acting Register

of

Copyrights

Barbara

Ringer

to Karen

Robb,

Chief

Counsel,

Subcommittee

on

Patents,

Copyrights

&

Trademarks,

Requesting

Extension

on Software

Study

(Nov.

29,

1993).

. . . . . . . . . . . . . . . .

. .

.

. .

. . . .

. 7

Letter

from

Acting Register

of

Copyrights

Barbara

Ringer

to

Participants

in

ACCORD and Software

Lending

Study

(Jan.

4,

1994)

Inviting

them to Roundtable Discussion . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . .

8

I

Agenda

Roundtable

Discussion . . .

. .

.

. . . . . . . . . . . . . . . . . . . . .

9

0

Attendees Roundtable

Discussion

. . . . . . . . . . . . . . . . . . .

.

. . . .

10

Liverpool

Public

Library

Comment

on

S. 198 . . . . . . . . . . . . . . . . . . . . . . . . .

.

11

Text of the Federal

Register

Notice of

Inquiry

. .

. . . . . .

.

. . . . . . . . . . . . . . .

.

12

1

'

Index to Comments

Letters/NOI

The

Computer

Software Rental

Amendments Act of

1990:

The

Nonprofit

Library

Lending

Exemption

to the "Rental

Right"

1

Docket No.

93-7

Comment

No.

Name and-or

Organization

Page

1

2

3

4

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

John K. Tener

Library

Paula

L.

Bassi,

Member

of Board of

Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

. 14

American Association of Law Libraries

(AALL),

Association of

Research Libraries

(ARL),

Special

Libraries Association

(SLA)

. . . . . . . . . . . . . . . . .

.

17

Business Software Alliance

(BSA)

Robert

M.

Kruger,

Director

of Enforcement . . . . .

. .

. . . . . . . . . . . 23

American

Library

Association

(ALA)

Edward J.

Valauskas,

Chair,

ALA

Copyright

Ad Hoe

Subcommittee

. .

.

. . . . . . .

.

. . . . . . .

.

. . .

.

. . . . . . . 25

E-MAIL ATTACHMENTS

Balloons Software

Phil

Shapiro,

President

. . . . . . .

.

. . .

. . . . .

.

. . . . . . . . . . . . . .

34

Samford

University Computer

Services

Gary

Warner

Systems

Programmer

. . .

. . . . . . .

. . . . . . . .

. .

.

. . .

36

Niskayuna

High

School

Media

Center

1

John Danek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

University

of Massachusetts

at

Amherst

Prescott Smith

.

. . . . . . . . . . . . . . . . . . . . . . . . . .

. . .

.

. .

. . . 41

Tulsa Junior

College Learning

Resources Center

Pat

McCall,

Coordinator

. . . . . .

. . . . . . . . . .

. . . . . . . . . . .

.-

.

45

J.

Jargearit Reynolds Community College

Abdul J.

Miah,

Director & Bruce M. Bartek

Coordinator

of Institutional Research

.

. . . . . . .

. . . . .

. . . . . . . . . 46

El

Paso

Community College

Rebecca‘

Falkner,

Coordinator

Documentation

and

Training

.

. . . . .

.

. . . . . .

. . . . . . . . .

.

. . . . . . . . . .

47

University

of

Texas

Library

Karl

Miller,

Media

Librarian . . . . . .

.

. . .

.

. . . . . . . . . . . . . . .

. .

48

ii

'

4.9

University

of

Wisconsin-Madison

Instructional

Materials Center

Michael Cohen

. . .

.

50

4.10

University

of Southern

California

Science and

Engineering

Library

Julie

Kwan,

Head

Librarian

51

4.1

1 Leslie

McKnight,

MLS . . . . .

53

4.12 Glendora Public

Library

. . .

.

54

4.13

North Carolina

State

University

Libraries

Jennie

Y.

Davis,

Asst. Director

for

Planning

& Research .

56

4.14

Maxine

Moser,

DIA,

Librarian

58

4.15

University

of Arizona

Faculty

Resources

for Instruction

Anita Almond . . . . .

59

4.16

Elmer

Fittery

. . . . . .

.

. .

.

62

4.17 Individual

Library

User

. . . .

65

5

Software Publishers Association

(SPA)

Mark

Traphagen,

Counsel,

SPA

66

6

Jefferson

County

Public

Library

William A.

Knott,

Library

Director 73

7

Niagara

University

Library

Leslie

Morris,

Library

Director 74

8

Medical

Library

Association

(MLA)

Carla

J.

Funk,

Executive

Director

75

9

University

of Northern Iowa

Herbert

D.

Safford,

Director

of

Library

Services

J. Michael

Yohe,

Director of Information

Systems

and

Computing

Services

77

10

Liverpool

Public

Library

Fay

Ann

Golden,

Library

Director 80

ll National School Boards Association

(NSBA)

August

W.

Steinhilber,

General Counsel 81

12

University

of Northern

Iowa

Herbert D.

Safford,

Director

of

Library

Services

J. Michael

Yohe,

Director

of

Information Services

and

Computing

Services

83

iii

_

1

AMl:RlCANCOLNCil.ON

Ewcanou

DlvlslonoJGoverr\mervolRelonore

The Honorable

Dennis

Deconcini

The

Honorable

Orrin

G.

Hatch

Chairman.

Subcommittee on

Patents.

Copyrights

Subcommittee

on

Patents.

Copyrights

and

Trademarks

and Trademarks

Committee on

the

Judiciary

Committee

on

the

Judiciary

United

States

Senate

United

States

Senate

Washington.

DC

20510

Washington.

DC 20510

Dear Mr. Chairman

and

Senator Hatch:

Thank

you

for

your

leadership

on S.

198.

the

Computer

Software

Rental

Amendments

Act

of 1989.

We

appreciate

your

willingness

to

work

with all

concerned

parties

to

ensure

that

this

legislation

not

only

provides

the

protections

of

the

copyright

law

which

are

necessary

10

111%

health of

the

nations

computer

software

industry.

but also to

reflect

the

special

needs

of

nonproﬁt

libraries and educational

institutions.

In

recognition

of the

special

needs

of

nonprofit

elementary.

secondary

and

higher

educational

institutions,

we are

requesting

that the

attached

amendment

and

accompanying

Committee

Report

language

be included

in

S.

198

when it

is considered

by

the

full

Judiciary

Committee

and when the

Committee’:

Report

is

ﬁled.

The

proposed

amendment makes clear

that

the

provisions

of the

Act do not

apply

staff

and

students who

exchange

copies

of software

in

the

ordinary

course

of

their

to.

by

the

faculty.

academic

With

the

adoption

of

this

amendmentactivities.

all

organizations

represented

undersigned

can endorse

the ofenactment S. 198.

j

2

//Z”

August

W. Steinhilber Sheldon E.

Steinbach

General Counsel Vice President

and

General Counsel

National

School Boards

American Council

on

Education

Association

B,.aZiX-_

Bnice

A. Lehman

The

Software

Rental

Coalition

Attachments

November

13.

1989

Draft

Report

Language

to

Accompany

S198

The

Comittee

understands that

many

educational institutions

legally

acquire

copies

of

computer programs

for

use

by

multiple

users.

Examples

of this

include

the

lending

by

instructors

to

students

of

programs

to

be used

by

the

student

in

completing

a

class

assignment.

This practice

or other

practices

involving

transfer

of

possession

of

an

authorized

copy

of

a

computer

program

owned

by

an

educational

institution

among

faculty

and students

for

individual

use,

which

does

not

involve

the

making

of

unauthorized

copies,

does not

constitute

rental,

lease

or

lending

for direct

or

indirect

commercial

purposes

under this

act.

In some

areas

of the

United

States

primary

and

secondary

educational

systems

have joined

together

in

cooperative

agreements

for

the

purpose

of

sharing

educational

materials

such

as books.

where

computer

programs

are

shared

among

such

cooperatives

for

instructional

use

by

teachers and

students.

such

sharing

arrangements

do

not

constitute

commercial

rental,

lease or

lending

under

this act.

However,

any

copies of

the

program

made

incidental

to

its use

must be

erased

following

completion

of

the

class

assignment

or

educational

use involved.

The Committee is

particularly

sensitive

to the need

for

libraries

and

educational

institutions

to utilize

computer

programs

for the

purpose

of

combatting

illiteracy

in

the

United

States.

It is

the

Committee's

hope

that

the copyright

incentive

will

encourage

programs

useful in

combatting

illiteracy

to

be

created.

Programs

of the

kind used

in

the battle

against

illiteracy

are

examples

of the

kinds

of

programs

commonly

lent

without

any

direct or indirect

commercial

purpose.

The

Committee

understands

that these

programs

are

examples

of

the

kind

of

copyrighted material which

will be shared

among

faculty

and

students

and

lent

by

libraries

and educational

institutions.

The Committee

understands that

nothing

in

his

act

restricts

the

ability

of

copyright

owners and

users

to

enter

into

license

agreements

regarding

the

use

of

computer programs.

2

LENDING

BY LIBRARIES

AND

EDUCATIONAL

INSTITUTIONS

The

committee

understands

that

many

nonprofit

libraries

legally

acquire

copies

of

computer

software

for

use

by

their

patrons

Either

at the

library

or

at

home.

Because

of

their

nonproﬁt

status

and

the

fact

that

they

were

renting

records

which

were

generally

not

being

recorded,

Congress

exempted

nonproﬁt

libraries

from

coverage

under the Record

Rental

Amendments

Act.

While the

committee

believes

that the

differences

between

software

and

records

make

software

a

much

more

likely

candidate

for

illegal

duplication,

the

committee

has

attempted

to

address

in this

legislation

the librar

ies’

needs.

The

lending

of

software to

library

patrons

is

therefore

not

prohibited

under this act

provided

that

an

adequate

warning,

as

required

in

the

legislation,

is afﬁxed

to

the

packaging

of

the

software.

The

committee

will

monitor this

practice

for

abuse.

The

committee also

understands that

many

educational institu

tions

legally acquire

copies

of

computer

programs

for

use

by

mutli

ple

users.

Examples

of

this include

the

lending

by

instructors

to

students

of

programs

to be used

by

the student in

completing

a

class

assignment.

This

practice

or

other

practices involving

the

transfer

of

possession

of

an authorized

copy

of a

computer

program

owned

by

an

educational

institution

among faculty,

students,

and

staff

for

individual

use,

or to

another

nonprofit

educational

institu

tion,

which

does

not involve the

making

of unauthorized

copies,

does

not

constitute

rental,

lease or

lending

for

direct

or indirect

commercial

purposes

under

this

act.

In

some areas

of the United States

primary

and

secondary

educa

tional

systems

have

joined

together

in

cooperative agreements

for

the

purpose

of

sharing

educational

materials such as books.

Where

computer programs

are

shared

among

such

cooperative

for instruc

tional use

by

teachers and

students,

such

sharing arrangements

do

not

constitute commercial

rental,

lease

or

lending

under this

act.

However,

any

copies

of the

program

made

incidental

to its use

must be erased

following completion

of the

class

assignment

or

educational use involved.

The

committee is particularly

sensitive to

the

need

for

libraries

and

educational

institutions to

utilize

computer programs

for the

purpose

of

combating

illiteracy in the

United

States.

It is the

com

mittee’s

hope.

that the

copyright

incentive

will

encourage

the cre

ation of

programs

useful

in

combating

illiteracy.

Programs

used

in

the

battle

against

illiteracy

are

examples

of

programs

commonly

lent

without

any

direct or indirect commercial

purpose.

The

com

mittee

understands that these

programs

are

examples

of

copyright.

ed

material

which will

be shared

among faculty

and

students

and

lent

by

libraries

and

educational

institutions.

The

committee

understands that

nothing

in this act restricts

the

ability

of

copyright

owners and users to

enter into

license

agree

ments

regarding

the use of

computer

programs.

3

-

‘

The

Register

of

Copyrights

of

the

United States of America

Library

of

Congress

Department

17

Washington,

D.C.

20540

(202)

707 331

November

29,

1993

Dear Mr. Chairman:

As

you

know,

today

is the

ﬁrst

day

of

my

tenure as

Acting Register

of

Copyrights.

On

Wednesday,

December

1,

a

report,

mandated

by

section

109(b)

of the

law,

is due on whether or not

the

exemption

to the

software rental

provision

for

nonproﬁt

lending

by

nonproﬁt

libraries

has achieved its

intended

purposes

of

maintaining

the

integrity

of the

copyright

system

while

providing nonproﬁt

libraries

the

capability

of

fulﬁlling

their function.

I

have not been able to

focus

fully

on

this

report.

However,

after a

quick

ﬁrst

reading,

I

came to the

immediate

conclusion that

more

work needed to be

done.

The

questions

raised

by

the

language

of the law are broader and

more

complicated

than

one

might

believe.

Thus,

although

the staff of the

Copyright

Ofﬁce

has been

diligent

in

preparing

the

report,

and

they

believe that a

report

could be

delivered on December

l,

my

strong

belief is

that

we need additional time to allow for a broader

inquiry,

including

a

public

hearing.

I

talked to

your

chief

counsel,

Karen

Robb,

about the

possibility

of an

extension

of the deadline of

the

study

to

March

31,

1994.

She indicated that

under the

circumstances

(the

deadline

being

only

two

days

after

my

ﬁrst

day

on the

job),

she

thought

you

might

be amenable to

an

extension.

I

believe

that

with

this

extension we can

deliver a ﬁrst

rate,

comprehensive report

that raises

and

addresses

all of the issues.

I

should

appreciate

your

conﬁrmation

to

permit

this

extension,

and

I thank

you

in

advance

for

your

consideration

and

understanding.

Sincerely,

/’~

Barbara

Ringer

Acting Register

of

Copyrights

Enclosure: Section

109(b)

The

Honorable

Dennis Deconcini

Chairman,

Subcommittee

on

Patents,

Copyrights

and Trademarks

Committe

on the

Judiciary

United

States Senate

Washington,

1).c. 20515

4

5

‘gj

C

OP\-‘,6

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Q

314

U~”‘0

“U

\

e

,"“ﬁr

or

¢°“°

The

Register

of

Copyrights

of

the

United

States of

America

Library

of

Congress

»

Department

l7

Washington,

8-‘,

Dear

Mr. Chairman:

‘c

S5

the ﬁrst

day

of

my

tenure as

Acting Register

ofAs

you

know,

today

is

l09(b)

of the

rental

provision

for

nonproﬁt

On

Wednesday,

December

Copyrights.

l,

mandated

by

section

a

report,

law,

is

due on whether or

not the

exemption

to the software

lending

by

nonproﬁt

libraries

has

achieved

its intended

purposes

of

maintaining

the

integrity

of the

copyright

system

while

providing nonproﬁt

libraries

the

capability

of

fulﬁlling

their

function.

have

not been able

to focus

fully

on this

report.

However,

after

a

quick

I

came to

the immediate

conclusion that more work

needed to be done.

ﬁrst

reading,

I

The

questions

raised

by

the

language

of the law are broader

and more

complicated

than

one

might

believe.

Thus,

although

the

staff of the

Copyright

Ofﬁce

has

been

diligent

in

preparing

the

report,

and

they

believe that

a

report

could be delivered on December

l,

to allow for

a

broader

inquiry,

including

my

strong

belief

is

that

we

need additional

time

public

hearing.

a

talked to

your

chief

counsel,

Hayden

Gregory,

about the

possibility

of

an

I

extension of the deadline of the

study

to

March

31,

1994. He indicated that

under the

circumstances

(the

deadline

being

only

two

days

after

my

ﬁrst

day

on the

job),

he

that

with this extension

thought

you

might

be amenable

to an extension.

I

believe

we can

all of

the

issues.

deliver

a

ﬁrst

rate,

comprehensive

report

that raises and

addresses

I

should

appreciate

your

conﬁrmation

to

permit

this

extension,

and

I

thank

you

in

advance

for

your

consideration and

understanding.

Sincerely,

.”?:*;.";:’f"r

Acting Register

of

Copyrights

Enclosure: Section

l09(b)

The Honorable

Willim

J.

Hughes

Chairman,

Subcommittee

on Intellectual

Property

and

Judicial Administration

Committe on

the

Judiciary

.

U.S. House

of

Representatives

Washington,

D.C. 20510

70

6

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The

Register

of

Copyrights

of

the

United States of

America

Library

of

Congress

$5.

Department

17

Washington,

D.C. 20540

(202)

)(

I

(H

November

29,

1993

Dear

Hayden:

want

to thank

you

for

assistance

in

the

grant

of

the

extension

of

time for

the section

l09(b)

report

on

nonproﬁt library

lending

of

computer

software. Some

of the

complex

and

controversial,

would

like to devote

considerable time

I

and

report.

questions

are

we

deliver

a

ﬁrst class

the

inquiry

and hold

a

to

seeing

that

to

broaden

plan

I

public

hearing.

to

you

for

your

support

in

the

past

few

months,

andam

extremely

grateful

I

look

forward

to

working

with

you

during

my

tenure

in

the

Copyright

Ofﬁce.

I

Sincerely,

”@“M£%

Barbara

Ringer

Acting

Register

of

Copyrights

Enclosure:

Section

109(b)

Hayden Gregory,

Esquire

Chief Counsel

Subcommittee

on Intellectual

Property

Committee

&

Judicial Administration

on the

Judiciary

\a

‘

U.S. House

of

Representatives

Washington,

D.C. 20510

7

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The

Register

of

Copyrights

of

the

United

States of

America

Library

of

Congress

Department

17

W8ShlI1gf0ﬂ,

D.C. 20540

(202)

7078350

G35

3)

£5‘)

November

29,

1993

Dear Karen:

I

want to thank

you

for

assistance

in

the

grant

of

the extension of time

for

I

the section

109(b)

report

on

nonproﬁt

library

lending

of

computer

software. Some

of the

and

complex

and

controversial,

would

like

to devote considerable time

questions

are

that

we deliver ﬁrst class

report. plan

to

broaden the

inquiry

and hold

a

to

seeing

a

I

public

hearing.

grateful

to

you

for

your

support

in

the

past

few

months,

and

am

extremely

I

look forward to

working

with

you

during

my

tenure

in

the

Copyright

Ofﬁce.

I

Sincerely,

Barbara

Ringer

Acting Register

of

Copyrights

Enclosure: Section

l09(b)

Karen

Robb,

Esquire

Chief Counsel

Subcommittee

on

Patents,

Copyrights

& Trademarks

Committee

on the

Judiciary

United

States Senate

Washington,

D.C. 20515

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3514*

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Qf

co"

1“;

Q

(1

The

Register

of

Copyrights

of

the

United States

of America

Library

of

Congress

January

94

Department

17

Washington,

D.C.

20540

4

,

1

9

(202) 707-8354

Dear

Participant:

As

you

know,

the

Copyright

Office is

preparing

a

study

for

Congress

on

nonprofit

lending

of

computer programs

by

nonprofit

libraries. Several

policy

issues have

emerged

from this

inquiry.

During

the

January

ACCORD

meeting,

several

of

those

who

participated

in

the Office's initial

coment

period,

as well

as

other

interested

parties,

will

be

present

in

Washington.

We

would

like to

hold

an informal

discussion

of

some of

the

primary

software

lending

issues on

January

12,

1994,

at

3:00

p.m.,

in the West

Dining

Room,

of

the

Madison

Building,

101

Independence

Avenue,

S.E.,

Washington,

D.C.

20540.

Attached

is a memo

outlining

these issues.

We

hope you

can

be

present

on

January

12

to

share

your

views on

these

questions.

If

you

would

prefer

to

submit

written

responses,

please

do so

by

no

later

than

February

11,

1994.

Sincerely,

/K

,/\ELTY§L¢¢"/

¢e7a@,

Barbara

Ringer

Acting

Register

of

Copyrights

7

"

AGENDA

Software

Lending

Study

Several

policy

issues have

emerged

from

the

Copyright

Ofﬁce

study

of

nonproﬁt lending

of

computer programs by nonproﬁt

libraries.

The issues are:

1. What is the distinction between

library "lending

and

"transfers"

by

nonproﬁt

educational institutions?

2. Electronic

(online)

distribution:

(a)

whether "transfer" or

"lending"

include electronic

distribution;

(b)

whether

the

warning

notice

of

copyright requirement applies

to

online distribution or

display;

(c)

whether

the

warning

notice should be

required

on line or

afﬁxed

to

library computer

terminals.

3. Licenses:

(a)

do

individually negotiated

software licenses

preempt

the

lending exemption?

(b)

do shrink

wrap

"licenses"

preempt

the

lending exemption?

(c)

does

the

lending exemption apply

to

owners

of

copies,

or

to license holders?

(d)

does ﬁrst

sale doctrine in section 109 which

applies

to owners of

copies

also

apply

to

owners

of

copies

of software

programs?

4. What is the

copyright signiﬁcance

of

making

a

copy

for the hard

drive

in

order

to

use the

program?

5.

Lending:

(a)

whether

lending

means a

change

of

physical

possession-allowing patrons

to take software

out;

(b)

whether we

accept

the

analogy

between

library

reference books and

software,

(c)

whether

a

§117

archival

"back

up" copy may

be lent or circulated?

(d)

what

is

the deﬁnition of a

"library"?

6. Software:

(a)

whether "software" includes CD-ROM

and other

databases;

(b)

whether deﬁnition

of

"computer program"

in the

Copyright

Act is

adequate.

7. Whether unauthorized

copying

occurs as a result of

nonproﬁt library lending.

Whether there is

any way

to tell if it is

occurring.

8. Whether the

copyright warning

can

be cut

down-reduced in

size.

9

SOFTWARE-ACCORD

PUBLIC

MEETING

ATTENDEES

JANUARY

12,

1994

NAME

Morton David

Goldberg

Sheldon Steinbach

Bernard

R. Sorkin

Peter

Young

Robert

Oakley

Prudence Adler

Edward Valauskas

Robert

M.

Kruger

Brian

Fitzgerald

Ollie

Smoot

Ronald

J .

Palensky

Jon

Baumgarten

Bill Ellis

Mark

Traphagen

Stanley Rothenberg

The Honorable

Raya

S.

Robert

Wedgeworth

COMPANY

Schwab,

Goldberg,

Price

&

Dannay

American Council on

Education

Time-Warner,

Inc.

NCLIS

AALL

ARL

ALA

Business

Swidler

Software

Alliance

& Berlin

(Business

Software

Alliance)

CBEMA

ITAA

Proskauer, Rose,

Goetz &

Mendelsohn

IBM

SPA

Moses &

Singer

Dreben

Appeals

Court

University

of

Illinois

COPYRIGHT OFFICE

ATTENDEES INCLUDE:

Barbara

Ringer

Mary

Levering

Marybeth

Peters

Eric Schwartz

Jennifer

Hall

10

-

'

108

Liverpool

Public

Library

Fay

Ann

Golden

Library

Director

(315)

4570310

Tulip

and Second

Streets

Liverpool,

N.Y.

13088-4997

$~

Compiled by

Jean

Armour

Polly.

Assismt director

Public

Services

The

Liverpool

Public

Library

ha

promoted

public

access to

computers

and

electronic

information

since 1981. The

Computerworks

Lab

currently

contains

many types

of

computers

and

about

650

pieces

of software. Software

circulated

for home use

topped

13,500

in

1988,

while another

12.000

pieces

were used in the lab itself. Patrons

preview

the software

and

many

later

buy

their

own

copies.

Many

patrons

enjoy

the entertainment

and educational

programs

for

short-terrn

use.

The

public

computer

lab

at

Liverpool

Public

Library

was

booked

for

over

l2.(I)0

hours

in

1988.

and

most of the

usage

was

by

adults.

They

utilized

public computers

and

software to

generate

resumes,

newsletters.

wedding

invitations.

and

many

other

near-typeset

quality

items.

The

most

popular computers

were the

Macintoshes.

which

are

easy

to

learn

and

use.

'l1iis

year

was

extremely

busy,

as reﬂected

in

the

following

statistics.

12,321

7,999

67.9%

2,684

22.9%

1,638

9.1%

Of

great

concern to

our

patrons

is

the amendment

to

Copyright

Law,

S.

198,

the

Computer

Software Rental Act. The

text of

the

legislation

is

similar

to

that of

the

Record Rental

Act of

1985,

however,

the latter contains

an

exemption

for both

libraries

and

educational

institutions.

In S.

198's

originally

proposed

form,

no

such

exemption

was allowed.

Passage

would

have

precluded

circulation

both

out

of the

library

as

well

as

in-House.

unless

conu-acts

were

negotiated

with software

publishers.

Libraries

have

neither

the

time

nor

funds

to

do

this. Software

collections

would

have been limited to titles whose

publishers

chose to

negotiate.

This

might

have made

collection balance difﬁcult

Since

the

beginning

of

1989,

we have been

working closely

with

representatives

of

the American

Library

Association

and the Software Publisher's

Association to

make

sure

that both

Library.

and

copyright

owners’,

needs are met.

During

the

4/19/89

hearing

before the

Copyright,

Trademarks,

and Patents

Subcommittee,

an

amendment

to S.

198

will

be

proposed

It

will

contain

an

exemption

for

non-proﬁt

libraries. It is

gratifying

to see that the software

industry

was

willing

to

address

our

concerns

with

the bill. And that libraries have

agreed

to

provide

additional

copyright

mfa-mationlabelsoatiiesoftwarematcialsdieycoﬂectandchciﬂate.

We

welcomethisrnoodof

cooperation

and

hope

that

we

may

continue

this

relationship.

Priortothismeedngofdnmindasoftwuepubhshashadurgedusmbehevedimsoﬁwareisa

special

case

forcopyrightlaw.

However,

we

suggested

that the cost,

and

ease of

copying

factors.

arenotpertinent.MmyhtIuymataialsueexpensivearidnnybeeasﬂydupEcated.1heissuewas

thatthisbill,asp'oposed,wouldhaveinfringedonthelibrary'srighttocollectandmakeavailable

whateveritseesﬁt.

whichwillprovideservioestoits

patrons

Libraries

havetherighttocollect

andcirculate

whatevertheirpetronsneedtofurthertheirpersonal

advancement.

This

bill

may

still affect

school district labs and

academic labs.

The bill's

language,

as

now

proposed,

has

no

speciﬁc

educational

exemption.

Only

the

phrase

“non-proﬁt

libraries"

is

used in

regard

to

exemptions.

We

urge

legislators

to

protect

the

of

library

patrons,

non-proﬁt

institutions.

and educational

institutions

when

they

consider the

rights

guage

of

this bill.

O

11

1

ML-463

_

‘

from the

Copyright

Ofﬁce,

Library

of

Congress, Washington,

D.C.

20559

NOTICE

OF

INQUIRY

COMPUTER PROGRAM

RENTAL BY

LIBRARIES:

REPORT

OF

THE

REGISTER OF COPYRIGHTS ON

THE

EFFECTS

OF

17

U.S.C.

109(b)(2).

The

following

excerpt

is taken

from Volume

58,

Number 132 of

the Federal

Register

for

Tuesday,

July

13,

1993

(pp.37757-37758)

LIBRARY

OF CONGRESS

Copyright

Oﬁlee

[Docket

No.

RM

93-7]

Computer

Program

Rental

Libraries:

Report

of the

Reg

by

ster

of

Copyrl

hte

on the

Eﬂecte of 17

U.S.C.

10g(b)(2).

AGENCY:

Copyright

Ofﬁce;

Library

of

Congress.

Ac‘l1ON: Notice of

inquiry.

SUMMARY:

The

Copyright

Office

of the

Library

of

Congress

is

preparing

a

report

for

Congress

on

the extent to

which

the

Computer

Software Rental Amendments

Act of 1990

has

achieved

its intended

purpose

with

respect

to

lending by

nonproﬁt

libraries.

This Act

permits

lending

of a

computer program

for

nonproﬁt

purposes

by

a

nonproﬁt library,

if

each

copy

lent

by

such

library

has

8ff X6d to the

packaging containing

the

program

a

waming

of

copyright

in

accordance with

regulations

prescribed

by

the

Register

of

Copyrights.

The

Act also

requires

the Office

to

report

to

Congress

by

December

1, 1993,

on whether

I7

U.S.C.

l09(b)(2)

has achieved its intended

purpose

of

maintaining

the

integrity

of the

copyright

system

while

providing

non

proﬁt

libraries

the

capability

to

fulﬁll their

function. This

report

shall also advise

provision

is

working.

The Ofﬁce

invites

comment

from all

interested

parties

including

software

proprietors,

librarians,

and

library

patrons.

EFFECTIVE

DATE:

Comments should

be

received

on

or before October

12,

1993.

ADDRESSES:

Interested

persons

should

submit

ten

copies

of their written comments

as follows

If

sent

by

mail:

Dorothy

Schrader,

General

Counsel,

United

States

Copyright

Office,

Library

of

Congress,

Department

17,

Washington,

D.C.

20540.

If

delivered

by

hand: Ofﬁce

of

the

Register

of

Copyrights, Copyright

Ofﬁce,

James Madison Memorial

Building,

room

407,

First

Street and

Independence

Avenue,

S.E..

Washington,

D.C.

20559.

FOR ADDITIONAL INFORMATION OONT

ACT:

Dorothy

Schrader,

General

Counsel,

Copyright

Ofﬁce,

Library

of

Congress,

Department

17,

Washington,

D.C. 20540.

Telephone:

(202)

707-8380.

SUPPLEMENTARY INFORMATION:

1.

Background

Section

109 of

the

Copyright

Act contains

an

important

limitation on

the exclusive

rights

of

copyright

owners;

this

limitation is

known

as the ﬁrst-sale doctrine.

Under

this

doctrine,

the owner of

a

lawfully

made

copy

of a

work,

or

any person

authorized

by

such

owner,

is entitled without

authority

of

the

copyright

owner

to

sell

or

otherwise

dispose

of

the

possession

of that

copy.

On

December

1, 1990,

President

Bush

signed

into

law,

Pub.

L.

101-650,

104 Stat.

lending

of

computer

software could

encourage

unauthorized

copying

and

deprive copyright

owners

of a return

on

their

investment

Congress

had

already

amended

the

ﬁrst

sale doctrine

in

1984 to

give

owners

of

copyright

in

sound

recordings

control

over commercial rental

of

phonorecords

by prohibiting

the

commercial

rental of

these

works without the

authorization

of

the

copyright

owner.

In

1988,

the

Record

Rental Amendment

Act was

renewed,

with

expiration

set for

October

1,

1997.

The

Computer

Software

Rental

Amendments

Act does

not accord

a rental

right

with

respect

to

computer

programs

embodied

in

a machine or

product

(such

as

automobiles or

calculators)

that

cannot

be

copied during

the

ordinary operation

or

use

of

the

machine or

product;

or

computer

programs

embodied

in

video

games.

17

U.S.C.

l09(b)(1)(b).

The

Act

also

provides

that the

transfer of

posses

sion of a

lawfully

made

copy

of a

computer

program by

a

nonproﬁt

educational institution to another

non

proﬁt

educational

institution or

to

faculty,

staff,

and

students

does

not

constitute

rental,

lease,

or

lending

for direct or

indirect

commercial

purposes.

17

U.S.C.

l09(b)(1)(A)

Congress

also did not

wish to

prohibit

the

nonproﬁt

lending

of

computer

programs by

nonproﬁt

libraries

and

nonproﬁt

educational

institutions. These

instrtiitions serve

a

valuable

public

purpose by

making computer

software

available

to students and

others

who

would

not otherwise

have access

to

it.

At

time,

Congress recognized

that

in

the

Congress

as to

any

information

in

2

or recom

5059

containing

the

“Computer

Software

the same

mendations

that

the

Register

considers

Rental Amendments

Act” Section

library

patrons

could

engage

type

of

unauthorized

copying

same

to

carry

out

Congress’s

intent

l09(b)(l)(a)

of

that Act

prevents

the

The Ofﬁce

commercial

rental, lease,

or

lending

of

that occurs

necessary

public

comments on

commercial

The

Computer

seeks

context.

a

and

information about

lending

of

computer

computer programs

without the authorization

programs

for

nonproﬁt

purposes by

of the

copyright

owner.

Congress

enacted

nonproﬁt

libraries,

for

the

purpose

of

limitation on the ﬁrst

sale doctrine

evaluating

how

the

nonproﬁt

lending

July

1993-500

12

H.

Rep.

No.

735,

l0lst

Cong.,

2d Sess.

Id.

(1990).

this

2

I

because

it

recognized

that the

commercial

8

ML-463

2

_

Software

Rental

Amendments

Act

Q.

Reporting

Requirement

(3)

Do

the

regulations

201.24

pertaining

to

warning

of

copyright

37

CFR

in

therefore

permits

nonproﬁt

lending

of

computer

programs

by nonproﬁt

hbranes,

Section

l09(b)(2)(b)

of title

I7,

United

States

Code,

established

tmder

for

software

rental

represent

an

onerous

the

if each

copy

lent

by

such

library

has

burden?

Computer

Software

Rental

Amendments

Act,

requires

the

Registu

of

Copyrights,

(4)

Do

you

have

reason

to believe that

afﬁxed

to the

packaging

containing

the

program

a

warning

of

copyright

in

unauthorized

copying,

adaptation,

redisui

notlaterthanthreeyearsﬁomthedateof

accordance

with

regulations

rnescribed

by

bution,

public performance

or

display

of

and such

times

thereafter as the

17 U.S.C.

l09(b)(2)(a).

enactment,

result

occmring

the

Register.

is

computer

programs

of

the

nonproﬁt

lending permitted

by

a

as

Register

considers

appropriate,

to submit

§

The

regulations

governing

waming

of

toCongressareportstatingwhetherthe

l09(b)

software

lending

by

non

library lending provisions

of the

Act have

(5)

Do

you

feel

the

contained

in

37 CFR their intended

purpose

of

maintain

for

nonproﬁt

libraries and

educational

for

proﬁt

libraries are

201.24. Under

that

section,

the

“Warning

ing

the

integrity

of

the

copyright

system,

of

Copyright

for Software

Rental” to

be

copyright

109(b)

exemption

§

served

of

institutions harmful to the

interests

is

while still

providing nonproﬁt

libraries the

capacity

to fulﬁll their

function. The

copyright

owners? Has

there been

any

result

of

affixed to the

packaging

containing

the

program

lent

by

the

nonproﬁt

change

in

authors’

income

as

nonproﬁt lending

of software?

a

report

shall also advise

the

Congress

as to

or

recommendations

that

computa

library

shall consist

of a verbatim

repro

any

information

(6)

Are

you

aware

of

any

evidence

that

duction

of the

following

notice:

the

Register

considers

necessary

to

carry

unauthorized

copying,

adaptation,

redistri

out the

purposes

of the subsection.

bution,

public performance

or

display

Warning

of

Copyright

Restrictions

The

report

The

copyright

law

of

the United

States

thatis,notlaterthanthreeyearsafterthe

(Title

l7,

United

States

Code)

governs

due on December

1,

Notice:

is

1993,

results from

nonproﬁt

lending

of

computer

software?

date of the enactment of the

Computer

reproduction,

distribution,

adaptation,

public

Software Rental

Amendments

Act of 1990.

the

(7)

Do

you

feel

that

new

legislation

either

to

clarify

existing legislation

is

needed

and

public

display

of

copy

In

order to assist

the

Copyright

Office

performance,

in

or to

rectify any

imbalance between

the

rights

of owners and the

needs

of

users?

If

righted

material.

preparing

this

report, public

comment on

the

subject

of

nonproﬁt lending

of

invited. The Office

certain

conditions

specified

in

law,

Under

so,

please specify

as

precisely

as

what

provisions

such

legislation

to

lend,

nonproﬁt

libraries

are authorized

lease,

or

rmt

copies

of

computer

nonproﬁt

basis and for

nonproﬁt

is

in

computer

programs

surveying

the

practices

of

possible

programs

to

is

interested

should

contain.

patrons

on

a

libraries with

regard

to

computer

software.

We also seek

advisory

comments on

of all

comments received

will

who makes

Copies

be

available

Any

person

an

purposes.

for

public

inspection

between the hours

of

8:30 am.

and

of the

unauthorized

copy

or

adaptation

whether

and how

the

purposes

of

could be better carried

out.

§

copying

and

computer program,

or redistributes

the loan

l09(b)(2)

p.m.,

Monday

through

Friday,

in

Room

401,

James

Madison Memorial

copy,

or

publicly

performs

or

displays

the

4

computer program,

except

as

permitted by

title 17 of the United

States

Code,

3.

Specific

Questions

may

be

Building, Library

of

Congress,

First

Suit and

Independence

Avenue,

D.C.

The

Copyright

Office

liable

for

copyright

This institution

in

is

interested

S.E.,

infringement.

the

right

to

refuse

in its

judgment,

§

receiving

comments about

any

issues

relevant to

reserves

Washington,

if,

to fulfill

a

loan

request

l09(b)(2)

which

concern

fulﬁllment

of

the

request

would lead

to

copyright

owners,

librarians,

and

library

violation of the

copyright

law.

patrons.

Of

particular

interest

are the

Dated:

July

6,

1993

If

following questions.

nonproﬁt library

or

Ralph

Oman,

This

waming

shall

be afﬁxed to

the

(1)

you

are

a

Register

of

Copyrights.

packaging

that

contains

educational

institution,

do

you

feel

you

are

meeting

the needs of

your patrons

with

aituuc

cone: mom

copy

of the

computer

program

which is

the

SUb]6Cl

of

library

loan to

patrons, by

means of a label

a

regard

to

computer

software? Does

§

Q

PRINTEDon nscvctso

PAPER

gummed,

or otherwise

durably

l09(b)(2)(a)

facilitate or

impede

fulﬁll

attachedtothecopiesortoabox,reel,

ment

of

your

function

or other container

used

cemented,

nonproﬁt

a

as

cartridge,

cassette,

library

or educational institution?

How

often do

you

lend

copies

of

in

permanent

receptacle

for

the

copy

of

(2)

the

computer program.

The notice shall

be

computer programs

to other

nonproﬁt

I‘

as

a

such manner as to be

clearlyprinted

libraries,

or

nonproﬁt

educational institu

tions?

a

legible, comprehensible,

and

readily

How

often do

you

lend

computer

casual user

of the

computer

programs

tostafforusersofyourown

37 CFR 201.24

(1992).

institution?

apparent

to

a

See

program.

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September

29

,

1993

N°

€

i

responses

questions:

Dorothy

Schrader,

General Counsel

United

States

Copyright

Office

Library

of

Congress

Washington,

D.C.

20540

Dear Ms. Schrader:

I am a member of

Library

in

Charleroi,

from our district li

the Board

of

Pennsylvania.

brarian

asking

Directors of the John

Recently

I

received

to the

K.

Tener

a letter

following

Queston

1: Whether

nonprofit

libraries and

educational

institutions are

meeting

patron

needs with

regard

to computer

software,

and.whether the software

lending

provisions

facilitate or

impede

fulfilling

institutional functions.

Answer:

We do not

believe

that

any

Library

or educational

institution is

currently‘

adequately' meeting

the

needs of its

clientele with

regard

to

computer usage and software.

The reasons

for this is

simply

that the

expense

of

software

purchase,

maintenance,

and instruction for

usage

makes it unavailable. Most

libraries

are

struggling

to

keep

their doors

open

and

provide

free

sources of

information

to the

public.

Costly

services such

as

computers

and software are not

available to all.

The

John K.

Tener

Library

of Charleroi was

recently

granted

monies

to purchase

our

first

public

use

computer

with

start-up

software. The

computer

and

software

are free to use

by

anyone.

We

have not been able to meet

the

needs and

request

for software additions

simply

due to

lack of

finances.

Questions

2: How often are institutions

lending

software?

Answer: Due to financial

constraints,

the John K. Tener

Library

has

not been

able to

develop

a

library

of software

for

lending.

We

look forward to the

time,

hopefully

in

the near

future,

that

we

can better

serve

the

people

of our

community by

providing

them with a

lending

service of software.

14

Dorothy

Schrader,

General

Counsel

U. S.

Copyright

Office,

Library

of

Congress

Page

Two

Question

3:

Whether

unauthorized

copying, adaptation,

redistribution,

public

performance

or

display

of

computer

programs

is

occurring

as a

result

of

lending

by

libraries.

Answer:

I have

not

studied the

problems

inherent

to

this

subject.

I

can

only

speak

for the J.

K. Tener

Library

of

Charleroi.

We

have not loaned

any

software.

Neither

are we

aware

of

any

copies

having

been made on the

premises.

we

feel that

computer

software

should

enjoy

the same

copyright

privilege

that

books have.

This

privilege,

however,

should not

exclude the

right

of libraries to loan software.

Question

4: Whether

the exemption

allowing

libraries to lend

software is harmful to

the

interests of

copyright

owners.

Answer:

Libraries

and

schools are at the heart of

every

community's

academic mission.

For

hundreds

of

years

books have

been shared

and

used

by

more than one.

Computer

software is

simply

another

means

of

obtaining

information.

The

library

purchases

a

book for

lending

just

as

it

purchases

software

for

lending.

The

explosion

of

technology

and information

have made

it

impossible

and

at times

impractical

for

man

to

depend

only

on a book for sources

of information.

It

is

imperative

that

we as a

society

seeking

to

promote

education and stimulate intellectual

growth

responsibly

respond to our

Country's

needs for information

by making

it

readily

available

to all.

To

regress

to

a

time

in

history

when

only

the

wealthy

were

granted

the

privilege

of

access to

information

would

be unconscionable. Let

us

not

be dictated

to

by

policies

akin to

third

world

countries that

suppress

access

to information

rather

than make it

freely

available.

A free

nation

must be

supportive

to

freely

sharing

sources

of

information that will allow its

people

to

grow.

.

Books

provide

valuable sources

of

information,

research,

reference

and entertainment. This same information

can

be

provided

on

computer disc and CD

ROM.

Once the

library

has

made

the initial

investment of

computer

hardware

and

instruction,

it can

make available to the

public

this computer

access. The

computer

allows

us to

provide

greater

volumes

of information

more

economically

and with

greatly

enhanced

speed

than

the traditional

method of

access

only

through

books.

Prohibiting

the

use

in

libraries

and

lending

by

libraries

can

only

serve to

greatly

stunt

the

intellectual

growth

of our

Country.

Information

must

be

shared.

15

_

~

_

_ _

Dorothy

Schrader,

General

Counsel

U. S.

Copyright

Office,

Library

of

Congress

Page

Three

Question

Eh Whether

new

legislation

is

needed to

clarify

existing

legislation

or to

rectify

any

imbalance

between the

rights

of owners

and

the needs of users.

Answer:

We ask that new

legislation

continue to allow the

public

use

of

computers

and

software in

libraries. We

implore

you

to

continue

to

allow

libraries

to

loan software.

New

legislation

should not

be such that it

impedes

the

access

to

information

or

limits

it

only

to

those of financial

means. We

support

the

author's

right

to

copyright

and

earnings

for their

product.

We

support

the

author's

right

not to

have the

product copied

and

redistributed

for the

gain

of others.

We ask that

any

new

_-'

legislation

not be such that

it

deters incentive

by

the inventor or

)

author

to concentrate

on research

and

development

for new

products

in the

delivery

of information.

Thank

you

for this

opportunity

to

express

these

thoughts

and

concerns

regarding

this

very important

issue.

Very

truly

yours,

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51!!

October

7,

1993

Dorothy

Schrader

General Counsel

United

States

Copyright

Office

Library

of

Congress

Department

17

Washington,

D.C.

20540

Dear Ms.

Schrader:

I am

pleased

to

provide

to

the

Copyright

Office

ten

copies

of the

joint

statement

of the

American

Association

of Law

Libraries,

the

Association of Research

Libraries,

and the

Special

Libraries

Association

as to whether the

Computer

Software Rental

Amendments

Act of 1990

has achieved its intended

purpose

with

respect

to

lending

by

nonprofit

libraries.

Sincerely,

J mes S. Heller

irector of the Law

Library

and

(gaméwéq

/

rofessor of Law

Chair,

Copyright

Committee

American

Association of Law Libraries

17

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oct~§~3g

RECEIVED

STATEMENT

BY THE AMERICAN

ASSOCIATION

OF LAW

LIBRARIES,

THE ASSOCIATION OF RESEARCH

LIBRARIES,

AND THE

SPECIAL

LIBRARIES

ASSOCIATION

TO

THE

UNITED

STATES

COPYRIGHT

OFFICE

AS TO

WHETHER THE

COMPUTER

SOFTWARE

RENTAL

AMENDMENTS

ACT

OF

1990

HAS

ACHIEVED ITS

INTENDED

PURPOSE

WITH

RESPECT

TO

LENDING

BY NONPROFIT LIBRARIES

The

American

Association

of

Law Libraries

(AALL),

headquartered

in

Chicago,

Illinois,

is a

nonprofit

organization

of

more

than

5,000

members

serving

the law'

and

law-related

information. needs

of

legislators,

judges

and other

public

officials

at

all levels

of

government,

law

professors

and

students,

lawyers

in

private

practice,

corporate

and small business

persons,

and members

of the

general

public.

The

Association

of Research

Libraries

(ARL)

is

an association

of

119

research libraries

in North America. ARL

programs

and services

promote

equitable_

access

to,

and effective use

of,

recorded

knowledge

in

support

of

teaching,

research,

scholarship,

and

community

service.

The

Special

Libraries Association

(SLA),

also

based in

Washington,

D.C.,

is

an

international

organization comprising

members

of the

information

profession,

including special

librarians

and

information

managers,

brokers,

and consultants.

Special

libraries

are

located in

organizations

with

specialized

or

focused

information

needs,

such

as

corporations,

law

firms,

news

organizations,

government

agencies,

associations, colleges,

museums,

and

hospitals.

The American

Association of Law

Libraries,

Association

of Research

Libraries,

and

Special

Libraries Association are

pleased

to

respond

to the United

States

Copyright

Office's invitation

to

provide

written comments about

the

lending

of

computer programs for

nonprofit

purposes.

1.

Whether

nonprofit

libraries

and

educational

institutions

are

meeting

patron

needs

with

regard

to

computer

software,

and

whether

the

software

lending

provisions

facilitate or

impede

fulfilling

institutional functions?

Our

member libraries

are

able to meet

their

patrons’

needs

with

respect

to

the

lending

of

computer

software. The

software

lending

provisions

of the

Computer

Software

Rental Amendments Act

of

1990

(17

U.S.C.

§

109(b)(2)

neither facilitate

nor

impede

our members

fulfilling

their institutional

functions.

18

1

We

must add that

without

the

library

provision

it

would

be

a

significant

hinderance to the

role

of

libraries to

make

information

available

to their

clients

regardless

of

format.

Lending computer

software

is

a

legitimate

activity

of

libraries,

and

the

provision

of the

Computer

Software Rental Amendments

Act

of

1990

that

allows

nonprofit

libraries

to lend

computer

software

is

both

appropriate

and essential.

2.

How

often do our

member

institutions lend

software

to other

nonprofit

libraries and

nonprofit

educational

institutions or

to

staff or

users

of

the

library?

Practices

change

from

library

to

library

regarding

the

lending

of

software.

Based on a

survey

of some

of our

members,

some libraries

lend

software,

others

do not. The

libraries that lend software

generally

do so in—House

only.

Many

of our members have

licensing

agreements

with software

providers

that permit

then

to load

software

on

library-run

computer

networks

and much software never

is lent to

library

patrons.

Some

copyright

owners

expressly permit

the

lending

or

copying

of

their

software.

For

example,

the Center for

Computer—Assisted

Legal

Instruction

(CALI)

expressly permits

their educational

programs to be

copied

to

disk

and

loaded

onto

personal

computers in

one's home.

Libraries

that have

acquired

CALI software do lend

the

software to

their

patrons.

We

believe,

however,

that whether a work

of

intellectual

property

may

be

lent

by

libraries should not

depend

on

the format

of

the

work.

Section 109 of the

Copyright

Act

permits

other

intellectual

-

property

to

be

lent,

sold,

or

leased

that also

are

easily

copied

for

example,

print

media and

audio cassettes.

We

are

concerned

that

the software amendments

portend future diminutions of

users

rights

based on

the format

of a

work,

a distinction

that,

with

few

exceptions,

Congress chose

not

to make in

drafting

and

passing

the

Copyright

Act of

1976.

3.

Whether

the

regulations

in

37 CPR

201.24

requiring

warning

labels

represent

an onerous burden?

The warning

of

copyright

notice

that

must

be attached to software

does

not

present

an

undue burden to our

members. Because

software

may

be

loaded onto

a

personal

computer's

hard

drive

or on

a local

or wide area

network,

many

patrons

never

see the

software

package

itself and the

accompanying

warning. Some libraries are

exploring

alternative methods of

providing

warning

notices.

Some

have

affixed warning

notices

to

library-owned

computers,

and

others

have

installed an warning

notice that

appears

automatically

when

the

software program

is

called

up.

2

19

4.

Whether unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

of

computer

programs

is

occurring

as

a

result

of

lending

by

libraries?

We

have no

evidence of

unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

of computer

programs

in our members libraries as a

result

of

lending

software

for

nonprofit

purposes.

The warning

label

attached to

library-owned

software

provides

adequate

notice to

borrowers

that

the

software

is

protected

by

copyright

and that

uses not

permitted

by

the

Copyright

Act

are

infringing.

Many

of

our members educate

their

students,

faculty,

staffs,

and

other

institutional

users

about

the

permissible

and

impermissible

uses

of

copyrighted

works,

including

computer

software,

through

educational programs,

drafting

and

circulating

policy

statements

and

directive

memos,

putting

notices

on

equipment,

and

posting

signs

in areas

in

which

library

computers

are used.

We must

point

out that our members

patrons

are both users

and

creators of intellectual

property. Faculty,

librarians,

researchers, students,

and other

institutional

employees

write

books and

articles,

create audiovisual

works,

and

develop

software.

While we

continue

to

emphasize

the

importance

of sections 107

and

108

of the

Copyright

Act

in

striking

the

appropriate

balance

between creators’ and

users’

rights,

we have

an

obligation

to our

patrons

and

to

our

larger

institutions

to

help

ensure that

owners

rights

are not abused within our libraries.

S.

Whether

the

exemption

allowing

libraries

to lend software

is

harmful to the

interests of

copyright

owners,

and whether there

has

been

any change

in authors’ income

as a

result

of

nonprofit

lending

of

software?

We

do not

believe that the

exemption

harms

copyright

owners,

nor

are

we

aware of

any

change

in authors’ income

as a result

of

nonprofit

lending

of software.

Libraries

acquire

software

for

internal

use

and,

occasionally,

for

lending. Obviously,

libraries

would not

purchase

software

for

lending

if

they

were

prohibited

from engaging

in

that

activity.

A

prohibition

against

lending

all

software for

any

purpose

would

in

certain

circumstances

result

in

fewer sales

to

libraries,

and

fewer

profits

for software

producers.

Some of

the

lending

that

takes

place

is

to other libraries

or to

other

departments

within the

larger

institution

(e.g.,

the

university).

Such

lending

results in

more sales

of

the software

if

the

borrower

decides

that

the software is indeed useful and

decides

to

purchase

it. Rather than

harming

the

copyright

owner,

lending

software

for

nonprofit

purposes

may

provide

a

financial benefit

to

the

copyright

owner.

3

20

——

6.

Whether

we

are aware of

any

evidence that

unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

results

from

nonprofit

lending

of

computer

software?

Based on a

survey

of selected

members

we

have

no

evidence

that

unauthorized copying,

adaptation,

redistribution,

public

performance

or

display

results

from

nonprofit

lending

of computer

software.

7.

Whether

new

legislation

is

needed to

clarify

existing

legislation

or

to

rectify

any

imbalance

between the

rights

of

owners and the needs

of

users.

We. do

not

believe

that

any

legislation.

is needed

to

clarify

existing

legislation

or

to

rectify

any

imbalance

between the

rights

of

owners

and

the

needs of users. The

exemption

that

permits

nonprofit

libraries to lend software for

nonprofit

purposes under

the

Computer

Software Rental Amendments Act of 1990

provides

the

appropriate

balance

between the

rights

of

copyright

owners

and the

needs of

users in

nonprofit

organizations.

We

understand and

appreciate copyright

owners

concern

over

infringing'

activities,

including

‘unlawful copying,

adaptation,

redistribution,

or

public

performance

or

display,

and we

recognize

that computer

software

may

be

particularly

vulnerable

to

such

unlawful uses.

Although we

view The

Computer

Software

Rental

Amendments

Act of 1990

as a

regrettable

but

justifiable

limitation

on the

first sale

doctrine,

we are concerned that

continued

erosion

of the

doctrine would

severely

limit

legitimate

borrowing

activities.

Lending

educational,

recreational

and

utility

computer

software

is

a

legitimate

activity

of libraries and is a

core or

library

service.

Furthermore,

such

lending

is

an

innocent

activity,

and no

causal

connection.

has

been shown between

library

lending

and

software

infringement.

Copyright

owners create works in

a

variety

of

formats,

and

libraries

collect

mixed

media information

products

that include

software

components

books with software

appendices and software

driven

interactive

video

programs

are

two

such

examples.

Prohibiting

the

lending

of the software

component

of a mixed

media

work

may

make

the remainder

of

the

work

functionally

non

circulating,

and in certain circumstances

may

make

the entire

work

unusable.

American libraries have a vested interest

in

helping

to

ensure

that

infringing

activities

of all

types of

copyrighted

works

do not

occur.

Librarians

want to

avoid

even the

perception

that

they

are

involved in

infringing

activities.

Librarians also realize

that

copyright

infringement

results

in

diminished

sales,

which

in

turn

4

21

results

in

higher

costs to

purchase

or

lease

intellectual

property.

As

consumers

of

information,

librarians want to see

the

cost

of

all

creative

works,

including

books,

periodicals,

microforms,

CD—Rom

products,

and

computer

software remain as low

as

possible.

conclusion

The American

Association of Law

Libraries,

Association

of

Research

Libraries,

and

Special

Libraries Association

believe

that the

section

108

library

exemption

and the fair use

provisions

of the

Copyright

Act

of

1976

provide

the

appropriate

balance

between the

rights

of owners and

needs of

users of

intellectual

property.

We

believe

'that the

nonprofit

lending

exemption.

of the

Computer

Software Rental Amendments

Act

of

1990

provides

a similar

appropriate

balance for

nonprofit

libraries and that the Act

has

achieved

its intended

purpose

with

respect

to

nonprofit

libraries.

5

22

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-——

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5

TEL

202.872.5500

October

12’

FAX

202.872-5501

Hand

Deliver

Office

of the

Register

of

Copyrights

Copyright

Ofﬁce

James Madison

Memorial

Building

Room

407

First

Street and

Independence

Avenue,

S.E.

Washington,

D.C.

20559

Attention:

Dorothy

Schrader,

General

Counsel

Re:

Computer

Program Lending

by

Non-Profit

Libraries

Dear

Ms.

Schrader:

On

behalf

of

the

Business Software

Alliance,

I

appreciate

the

opportunity

to

respond

to

the

Notice of

Inquiry

published

in

the Federal

Register

on

July

13,

1993,

seeking

comments

about

the

lending

of

computer programs

for

nonprofit

purposes

by

nonprofit

libraries.

The Business

Software

Alliance

("BSA")

promotes

the

continued

growth

of the software

industry

through

international

education,

public

policy

and enforcement

programs

in

the

United States and

more

than

ﬁfty

countries

throughout

North

America,

Europe,

Asia and

Latin America. The

members of the

BSA

include

Aldus,

Apple

Computer,

Autodesk,

Computer

Associates,

Lotus

Development,

Microsoft,

Novell

and

WordPerfect.

Together,

the

members

of the BSA

produce

nearly

75%

of

the world's

packaged

software

published

by companies

based

in

the

United States.

Despite

increased

awareness,

greater

copyright

protection

and

stepped-up

enforcement activities

around

the

globe,

unauthorized

duplication

and

distribution of

computer

software

programs

remains the

single

greatest

threat to the

viability

of the software

industry.

The

BSA

estimates

that

losses

to

the domestic

industry

from

the

use

of unlicensed

software total $12

billion

annually

In

the United

States,

losses

due

to software

piracy

are

estimated to run

as

high

as

$1.9

billion

annually.

As the Director of

the BSA'S North

American

Anti-Piracy Campaign,

I

am

in

a

position

to know

firsthand how

prevalent

this

problem

has become.

In

the United

States,

as

in

twenty

countries

throughout

the

world,

the BSA

operates

a

toll-free

telephone

hotline to receive

reports

of software

piracy

and to

provide

information

about

proper

software

practices.

In

the ﬁrst nine months ol

1993

alone,

the

BSA

domestic hotline has

received

hundreds

of calls

reporting

illegal duplication

of

copyrighted

software often

in

willful

disregard

for the law

by

businesses,

organizations

and institutions

of

every

size,

nature

and

geographic

location.

A

percentage

of those

reports

haw

23

--

Dorothy

Schrader

October

12,

1993

Page

2

involved

Unlawful

copying

by

nonproﬁt

entities,

including

educational

institutions

and

academic

departments.

In addition to

reports

of software

piracy

made to and

pursued

by

the software

industry

itself,

I

know

that federal

law enforcement

authorities have

independently

identiﬁed,

investigated

and,

increasingly,

prosecuted

software

copyright

violations. It

is

my

understanding

from consultation

with these authorities

that one

particular

form

of software

piracy

carried out

by

illicit

bulletin

board

and hacker

operations

tends to

disproportionately

involve inhabitants of the

university

environment.

Unfortunately,

there is no reason to believe

that

library

patrons

are

exempt

from the

influences

and

behavior

patterns

reflected

in the

general population.

Indeed,

the

industry's

experience,

as

noted

above,

indicates that

at least

the academic environment in

which libraries

play

a central

role is

quite

vulnerable to software

abuse.

For these

reasons,

the

industry strongly

favors

continued

vigilance

in

this area

and

opposes any

relaxation of

existing

requirements.

The

BSA

has been limited

in

its

ability

to

develop

empirical

data about the extent to which

piracy

can

be

directly

traced to the

lending practices

of

nonproﬁt

libraries. One reason these data

have been

difficult

to

gather

is

because

software

piracy

is,

almost

by

deﬁnition,

carried out

in

such

a

way

as to avoid detection.

In

this

regard,

the

experience

of

the

lending

institutions

responding

to

the Notice of

Inquiry

in

particular

what

they report

as to the

type

and volume

of

software

being

lent

to

patrons

could

help

inform the

BSA'S view of the

scope

of the

problem.

Accordingly,

the BSA would

very

much

appreciate

another

opportunity

to comment

after

information

regarding

the lenders

institutions‘

experience

becomes

available.

be

of

any

furtherPlease contact

me

if

I

assistance.

can

.

0

Robert M

Kruger

Director

of Enforcement

Business Software Alliance

Enclosures:

10

Copies

'

24

-

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,

October

12,

1993

.

9

3

_

7

om

12

ms

Ms.

Dorothy

Schrader

General

Counsel

United States

Copyright

Office

of

the

Register

of

Copyrights

James Madison

Memorial

Building

Room

407

R

E

C

I

'

V

I

D

First

Street

and

Independence

Avenue,

S.E.

Washington,

D.C.

20559

Re:

Software

availability

in

nonprofit

libraries and

educational

institutions,

pursuant

to 17

U.S.C. 109

(b)(2),

Docket No". RM

93-7

Dear Ms. Schrader:

The American

Library

Association

(ALA)

would like to

respond

on

behalf

of

its

membership

to the Notice of

Inquiry,

published

July

13,

1993 in

58

Federal

Register

37757 on the

exemption

which

nonprofit

libraries and

nonprofit

educational institutions

currently enjoy

in

the

Computer

Software

Rental

Amendments Act

of

1990

allowing

the

circulation

of software.

As the

Chair

of the American

Library

Association

Copyright

Ad

Hoc

Subcommittee,

I

thought

it was

important

to

reach

the

largest possible

audience

on this issue. I distributed

a

copy

of

the Notice of

Inquiry (originally published

in

the Federal

Register)

electronically

to 30

discussion lists on the Internet in

order

to secure comments.

Discussion

lists are

digital

conferences on

specific topics,

moderated

by

one

or

several

editors,

hosted

on

a

given

computer.

There are

1,152

academic

discussion

lists available

electronically,

with hundreds devoted

to

specific

topics

in

education and

librarianship.

The comments that l received

on

the Notice

of

Inquiry support

the

continuation of the

exemption

for

nonprofit

libraries

and

educational institutions

to continue

to make software

available

to

their

patrons

and

clients.

First

of

all,

software

developers

recognize

the value of

making

software

available

in

libraries and educational institutions.

Phil

Shapiro,

the President

of

Balloons

Software

in

Washington,

D.C.,

wrote,

and

l

quote,

that

"Substantial benefits

accrue

to both

patrons

and

publishers

when software can be examined

closely

before a

purchase

is

made.

When

given

the chance

to examine software before

purchase, patrons

can scrutinize both the software

itself,

and

the

accompanying

documentation.

Having

a chance

to take a close

look at the

documentation allows

patrons

to discover

whether that

particular

program

calls

for

a level

Of technical

sophistication beyond

what

they

could

comfortably

achieve with a reasonable amount of

effort.

Patrons can also

discover

whether the documentation

achieves a

balance between

being

complete

and

being

to-the-point."

25

—

Gary

Warner,

System

Programmer

at

Computer

Services

of

Samford

University agreed,

agruing

that individuals do not have

the

opportunity

to test

software before

purchase.

Individuals

are

handicapped

in that software

usually

cannot be returned after a seal on

packaging

is

broken,

so there is no

chance

to

really

test a

product.

He

mentioned,

and

l

quote

from his

electronic

note,

that

"lf

a user is

trying

to decide

between

several

competing products

the

opportunity

for

an "evaluation"

might

be

quite

valuable.

As

a

corporate buyer,

I

am offered this

opportunity

by

most

software

vendors,

but as an

individual,

with

buying

power

of ON

E,

no one is

likely

to

provide

this

opportunity.

I

think it should be

seriously

examined

why

most

software vendors refuse

to allow the return of

software once the diskette seal has

been broken. ls

it not because

they

feel

that

once

the

seal has

broken,

the user

has

in all likelihood

stolen the

product

and is now

returning

it? Would

they

be

more,

or

less

trusting

to someone who has no

"hassle"

to

go

through

but can

freely

use

the

software

and

return

it

with

no

questions

asked."

Prescott

Smith,

of the

University

of

Massachusetts at

Amherst,

noted

that

software

developers

fail to

recognize

the value

of

making

software available

in

libraries and educational institutions.

He

wrote

"My

guess

is

that

developers

would benefit far more from

it

than

they

lose.

Ihe_dif:ficulLpart_oj_selling_sQttiiiLare

i-s-gettlng

someone

~ecogmze

the benefits

oLit.“

[emphasis

mine]

There are indeed economic benefits

to

software

developers

by making

their

products

available

for use

in libraries and educational institutions. Pat

McCall,

of the

Learning

Resources Center at the Tulsa

(Okla.)

Junior

College,

remarked

that

"ln

some

cases,

patrons

say they

are

going

to

buy

the software

after

trying

the

library's copy

at home."

Indeed,

I

would

argue

that the

library

and educational communities

should

work

together

with software

developers

to test

more

rigorously

this link

between the

availability

of software and

its sale. Libraries and educational

institutions

promote

the

sale

of

software,

by

making

it available for

intelligent

evaluation.

Libraries and educational

institutions

provide uncompensated

support

to software

developers

by

educating patrons

and students

in

the use

of

their

products

and

by

making

equipment

and

printed

materials available

to

assist in the

optimal functioning

of

programs.

Libraries and educational institutions

manage

software

in

completely

different

ways

from other materials

in order

to

protect

the interests of software

developers.

Librarians tend

to "err on

the

side of

access,"

to

quote

Karl Miller of

the

University

of Texas at

Austin,

in

protecting

the

rights

of

copyright

owners.

The

labels that libraries and educational institutions

currently

use

on

26

—

'

"

circulating

software are difficult

to

create,

unreadable,

and

expensive.

To

quote

Michael

Cohen of the Instructional

Mate_rials'Center

at the

University

of

Wisconsin at

Madison

1"

'

.

"There seems to be no

commercial vendor who

is

selling

labels

with the exact

copyright warning

text as

specified

by

law.

We had labels

typeset,

reduced,

and

printed

locally--which

seems

like a lot of

duplicate

effort

if

everyone

Ts

doing the same thing.

Also,

is the

full

3

paragraph

text

really necessary

on

every

piece

of

software?

We

got

the

copyright

warning

reduced

to a'

2"x3" label--which

I'm sure

nobody

can

read.“

For some

libraries,

according

to Prescott Smith of

the

University

of

Massachusetts

at

Amherst,

these

requirements

add to our "administrative

burden

at a time when

budgets

have been slashed

so

severely

the

main

functions

of the

library

cannot be

maintained,

let alone new services." The

alternatives are

economically impractical,

according

to John Danek of the

Media Center of the

Niskayuna

(N.Y.)

High

School,

who

wrote and

l

quote

that

"l'd

hate to think what would

happen

if

I couldn't continue to

offer

this service.

As an educational

institution funded

by

hard earned

taxpayer

dollars

l

couldn't

buy

a

copy

for

each

and ever student

for

their

personal

use.

The instructional

program

would die

and

we

wouldn't

buy

what

we

already

are."

I

hope

these

comments,

collected from electronic letters

posted

on the

Internet,

provide

you

with some

sense of the

importance

of this

exemption

to

nonprofit

libraries

and

nonprofit

educational

institutions.

if

you

have

any questions,

contact

me

at

your

convenience.

Sincerely,

//

I

//Z//ﬂ4~

Edward J. Valauskas

Chair,

American

Library

Association

Copyright

Ad Hoc Subcommittee

27

The

following

notice was

distributed

electronically

via the

Internet;

Nonprofit

libraries

and

nonprofit

educational institutions

currently

enjoy

an

exemption

in the

Computer

Software

Rental

Amendments

Act

of

1990

allowing

the circulation of software. Software in

circulation

requires

a

copyright

notice,

using

text

as described

by

the

Register

of

Copyrights,

but

no

other

requirements

are made

on

nonprofit

libraries and

educational

institutions.

The

Copyright

Office has been asked to

report

on the extent of

software circulation in

nonprofit

libraries

and

educational

institutions.

and

to

report

on

the

impact

of

this

form

of software

availability

to

patrons,

libraries,

educational

institutions,

software

distributors,

and

software

developers.

In order

to reach

the

largest possible

audience,

I have

been asked

to

distribute the

Notice

electronically

in order to

secure comments.

if

you

have

any

questions,

contact me

at

your

convenience.

Edward Valauskas

Chair,

American Library

Association

Copyright

Ad Hoc

Subcommittee

[email protected]

Library

of

Congress

U.S.

Copyright

Office

Notice

of

inquiry:

Computer

Program

Rental

by

Libraries

The

Copyright

Office of

the

Library

of

Congress

is

preparing

a

report

for

Congress

on the extent

to

which

the

Computer

Software

Rental

Amendments Act

of 1990

has achieved

its

intended

purpose

with

respect

to

lending

by

nonprofit

libraries.

The Act

permits lending

of

a

computer

program

for

nonprofit

purposes

by

a

nonprofit

library,

if each

copy

lent

by

such

library

has

affixed

to the

package

containing

the

program

a

warning

of

copyright

in

accordance with

regulations

prescribed by

the

Register

of

Copyrights.

17 U.S.C.

l09(b)(2).

l

28

The

Office seeks

public

comment

on

and

information about

such

lending

of

computer programs

for

the

purpose

of

evaluating

how

well

the

provision

maintains

the

integrity

of the

copyright

system

while

providing

nonprofit

libraries

the

capability

to

fulfill

their

function.

The

Copyright

Office

is

interested

in

receiving

comments

about

any

issues relevant to

S

lo9(b.l(2l

which

concern

copyright

owners.

librarians.

and

library

patrons.

Of

particular

interest

are the

following

questions:

ll

If

you

are a librarian in a

nonprofit

library

or

educational

institution,

do

you

feel

you

are

meeting

the needs of

your

patrons

with

regard

to

computer

software? Does

$

l09-bl-2l-a)

facilitate

or

impede

fulfillment of

your

function to

provide

information

to

your

patrons

in

your

nonprofit

library

or educational institution?

Z)

How often do

you

lend

copies

of

computer programs

to other

nonprofit

libraries or

nonprofit

educational institutions? How often

do

you

lend

computer

programs

to staff or users of

your

own

institution?

3)

Do the

regulations

in

37

CFR

201.24

pertaining

to the

warning

of

copyright

for software circulation

represent

an onerous burden?

4)

Do

you

have reason

to believe that unauthorized

copying,

adaptation,

redistribution,

public

performance

or

display

is

occurring

as a result of the

lending permitted

by

$

l09(b)?

S)

Do

you

feel the

$ l09(b)

exemption

for

nonprofit

libraries and

educational institutions is harmful to the interests

of

copyright

owners?

Has there been

any

change

in authors’

and

developers‘

income

as a

result of

nonprofit

lending

by

libraries?

bl

Are

you

aware of

any

evidence that unauthorized

copying,

adaptation,

redistribution,

public performance

or

display

results

from

nonprofit lending

of

computer

software?

7)

Do

you

feel that new

legislation

is needed to either

clarify

existing legislation

or to

rectify any

imbalance between the

rights

of

owners and the

needs

of users? if

so,

please

specify

as

precisely

as

possible

what

provisions

such

legislation

should

contain.

Effective

date:

Comments

should

be received on or before

October

13.

2

29

1993.

Addresses: Interested

persons

should

submit their

comments

electronically

to:

Edward].

Valauskas,

Chair of

the

American

Library

Association

Copyright

Ad Hoc

Subcommittee.

[email protected]

Comments

by

mail should

be

sent

to:

Dorothy

Schrader,

General

Counsel.

United

States

Copyright

Off

ice,

Library

of

Congress,

Department

17,

Washington,

D.C.

20540.

Copies

of all

comments

received will

be

available

for

public

inspection

and

copying

between the

hours

of

8:30

a.m. and 4

p.m.,

Monday

through

Friday,

in Room

401,

James

Madison Memorial

Building,

Library

of

Congress,

First Street and

Independence

Avenue,

S.E.,

Washington,

D.C.

For

further

information,

contact

Dorothy

Schrader,

General

Counsel,

U.S.

Copyright

Office,

Library

of

Congress,

Washington,

D.C.

20540,

(202)707-8380.

Requests

to

post

this Notice were sent to the

following

discussion lists on the

Internet.

List

Moderator Moderator‘: 0-

addreu

lubjoct

speciality

PUBLI B

Jean

Armour

Polly

[email protected] public

libraries

CNl-

Copyright Mary

Jensen

miensenocharlie

usd.edu

copyright

K

IDSPHERE

Bob Carlitz

[email protected]

K-l2

computing

&

education

ARLXS-L

Mary

Molinaro

molinarooykcc.uky.edu

art libraries

CIRCPLUS

Dan Lester

alilesteo

idbsu.idbsu.edu

library

circulation

COLLDV—L

Lynn

Sipe [email protected]

library

collections

development

GEONET-L Lois Heiser

heiseroucsindianaedu

geoscience

librarians

lLl..—L

Patricia Mardeusz

pmardeus

ouvmvm

interlibrary

loan

lNFO+REP

John

B.

Harlan

iibh200@indyvax

information and referral

services

3

30

4

l..lBRA

RY

John

B.

Harlan

iibh200@indyvax

libraries

LAW-LIB

Elizabeth

St. Goal"

estgoaroucdavisedu

law libraries

WBADMIN

Pamela Bluh

pbluheumab

library

administration

LM-NET

Mike

Eisenberg

mikeosuvm.acs.syr.edu

school

library

media

MEDLIB-L

Nancy

Start

hslstartoubvm.cc.buffalo.edu

medical libraries

EDAD-L

Ed

Lilley

u5b35-wvnvm

educational

administration

EDNET

Prescott Smith

[email protected]

education & the Internet

EDTECH

Vicki

Banks

21

602vb-msu

educational

technology

ICU-L

Jim

Garland

listmgreubvm

computing

in

education

AAUA-L

Jerry

Neuner

neunerocanisius

university

administration

COMMCOLL Anne

Kearney

iccannek

eukcc

administration

at

two-year

academic

institutions

COMP

ACADEMIC

FREEDOM

TALK Carl Kadie

kadieeefforg

academic freedom

lPCT—L

Zane

Berge [email protected]

education and

computing

connectivity

SO FTPATS

Garrett A.

Wollman

[email protected]

software

patents

COMP-

CEN

Rich Hintz

opsriheuccvma.ucop.edu computer

centers

HDESK-L

Roman

J.

Olynyk

u0ba9owvnvm

computer help

desks

SLA-PAM

[email protected]

special

libraries

..

hese 26

discussion lists

represent

only

2%

of

the

1,152

academic

discussion

;ists

on

the

Internet.

They

reach

probably only

a

small

portion

of

the

23

million

computers

estimated to be hooked

in one

way

or another to the

inter-net.

It

would

be

extremely

difficult to estimate the

size

of the

audience

reached

by

postings

to

discussion

lists. These lists are subscribed

by

thousands of

inidividuals around the

world;

individuals

may

have

re-posted

the

Notice to

other lists

and

colleagues

as well.

Responses

to the

request

varied.

Some

moderators

replied

that

they

would be

happy

to

post

it;

others

31

I-1

did not

reply.

It is unclear

that the Notice

appeared

on

all

of these

lists,

because

the

lists

were

not

moderated

during

the

experiment.

The amount

of

traffic

generated

by

all

of

these

lists would

have

made

it

impossible

to track

each for

any

length

of

time.

Subscriptions

to

SLA-PAM

and

CNI—Copyright

indicated

that the

Notice

was

posted

on

those

lists,

and the

kinds

of

responses

indicate

that the Notice

appeared

on

many

of the

lists

noted

above.

The addresses

for

many

of these lists were

found

in

Diane

K.

Kovacs,

"Directory

of

scholarly

electronic

conferences,"

I

n;