Resent developments in the cyber space in relation to copyright.

Intellectual property rights has seen a new dimension in the works routed through internet or cyberspace, as it is commonly referred today. Unlike any other area related to law the growth in the information technology brings in new techniques everyday and the internet users too adopt them quickly before it is proved safe. For this reason the law makers and practitioners have to keep themselves updated frequently the technological developments before they worry about the legal implecations surround the issue. It is often the experience in most countries that before the law, which is drafted to protect the intellectual property rights, put into implementation it becomes outdated or insufficient due to the fast technological changes. In this context this compiled report attempts to update the reader enabling to correlate the law that regulates the area under consideration. Major portion of this report is compiled from the bulky report, of World Intellectual Property Organization (WIPO) on Intellectual Property on the Internet, released during December 2002.

The ‘On-line’ Revolution

About 10% of the world’s population is now online, representing more than 605 million users. This figure is increasing more quickly than earlier foreseen, given that 1999 forecasts envisaged 250 million Internet users in 2002. Certain optimistic forecasts even estimate that the world online population could reach one billion by 2005.

When the World Wide Web was first developed in the 1990s, it transformed the Internet from a

technological infrastructure into a popular network linking people in diverse communities throughout the world. The Internet became the instrument by which people throughout the world exchanged and shared ideas, information and, gradually, goods and services. What had begun as a military and research tool became the conduit for electronic commerce forecast to be worth US$6 trillion by 2004, and the harbinger of the ‘information age’. The Web now contains several billion pages of information, growing at the rate of more than seven million pages each day. It is this ready availability of information on every conceivable subject, combined with advancements in digitization, that has made the Internet such a revolutionary tool.

The number of countries connected to the Internet has increased significantly in the past ten years. Whereas at the beginning of the 1990s, a little over ten countries were connected to the Internet, this figure stood at 214 at the end of 2001. However, the rate of Internet penetration still remains imbalanced throughout the different regions of the world. The regions with the largest numbers of users are mainly the North American (31%). Asian (31%) and European (29%) regions. However, recent statistics demonstrate that the regional pattern in terms of number of Internet users is changing. In May 2002. the countries or regions with the highest level of Internet penetration were located primarily on the European continent: Sweden (64.6%). Denmark (60.3%). Netherlands (58.07%). United Kingdom (56.88%) and Norway (54.4%): in the Asian region: Hone Kong. SAR of China (59.58 %) and in North America: United States (59.22%) and Canada (52.79%).

The culture of the Internet, which was largely Anglo-American in its early stages, is in transformation.

Where once the English language dominated, increasingly some of the 6700 languages that are spoken in 228 countries throughout the world are finding a voice on the Internet. It is envisaged that by 2003, non-English speakers will represent one third of the community of Internet users, the major part of this expansion coming from Asia and Latin America. This diversification of the languages used online is in no way surprising when it is considered that 92% of the world population has a mother tongue other than English. It can therefore be anticipated that the Web will increasingly reflect the diversity of cultures and that this will be accompanied by an increase in its non-English content. According to forecasters, the most widely used language on the Web in 2007 will be Chinese.

In most countries the Internet is used mainly for e-mail and searching for information relating to goods or services. In the United States of America, for example, e-mail and information searches represent the most common uses of the Internet, constituting 84% and 67% respectively of individuals’ activities online. There is, however, a trend toward other categories of activities, such as purchasing of goods and services, watching films, or listening to the radio. These developments in Internet use inevitably have an impact on intellectual property, insofar as these activities involve works protected by intellectual property laws.

The value of commercial transactions on the Internet has increased substantially over the past five years. Whereas in 2000, it was estimated at US$433 billion, it is envisaged that in 2002 it will represent US$1.9 trillion and, by 2004, US$6 trillion. Despite the significant value of commercial transactions over the Internet their share of global trade remains small. In certain countries the use of the Internet in commercial transactions represents 0.4 to 3.78% of all commercial transactions. It appears, therefore, that businesses use the Internet mainly as a marketing tool rather than as a commercial tool and that consumers are still reluctant to make transactions over the Internet.

The number of individuals who purchase goods and services over the Internet is generally quite small in relation to the overall number of Internet users. This percentage varies considerably between countries. Sweden, for example. has the highest figure, given that 43% of individuals residing in Sweden and using the Internet bought goods online in

2000. It is followed by the United Kingdom (33%) and the United States of America (30%). In Finland and Australia one in seven individuals buys goods on the Internet, and there would appear to be potential for even greater growth given that around half of all households in these countries owned a computer in 2000. This relatively small amount of business-to-consumer (B2C) commerce can be explained, inter alia, by the increasing concern of users with respect to protection of personal data and security of Internet transactions.

In the same way that habits of consumption differ from one country to another, the type of goods purchased on the Internet also varies among countries. Overall, computer goods, clothing and digital products represent the largest share of Internet sales. Digital goods such as music, computer software and books also represent a significant source of sales. This is notable insofar as transactions of these goods, which may be the subject of intellectual property rights, either as a mark, patent or copyright, will necessarily have an impact on the intellectual property system and rights holders.

Intellectual Property in Cyberspace

It is, however, the digitization of works of intellectual property, by a process that reduces text, visual images and sound to computer-readable binary code of ‘0’s and ‘1’s, grouped in bits and bytes that can travel over the networks, that has enabled intellectual property to transfer so efficiently to the Internet. Internet traffic has been doubling every six months, and the flow of this data over the Internet, first measured in megabits and gigabits, and now in terabits and petabits (1,000 trillion bits), includes the transmission of works of intellectual property.

The character of the intellectual property system is evolutionary and while the nature of the rights themselves, to control and exploit the products of one’s creativity and innovation, remains relatively constant, the manner by which they are expressed and exchanged is constantly adapting to developments in the underlying technologies. The invention of, in turn, the printing press, phonograms, radio and television broadcasting, cable and satellite transmission, video cassette recorders, compact disc (CD) and digital versatile disc (DVD) technology and, now, the Internet, has affected both the form and the substance of intellectual property rights. Ever adaptable, intellectual property has now migrated to the Interne

and is being modified to suit the online environment. Intellectual property has gained importance in this digital environment as, increasingly, business assets are reflected in intellectual as opposed to physical property. The value of many online companies, for example, may be found in their vast databases of customer information, which may be the subject of intellectual property protection.

This migration of intellectual property onto the Internet can be seen with respect to each species of rights. In the field of copyright, vast numbers of works of literature, film and art, and notably computer programs, have already transferred to the digital environment. Software, protected as a form of intellectual property by patent and copyright law, underlies the operation of all digital technologies. Much software is protected by intellectual property law, and its theft is endemic. It is estimated that 40% of business software programs worldwide were pirated in 2001, at a cost to the industry of some US $ 11 billion. How does one make computer systems secure from code writers whose goal is to defeat such security? And how does one protect digital content when technology, by its nature, encourages copying?”

Textual works such as books and newspapers are ideally suited to digitization and, although online publishing of popular literature has had a mixed reception with a public accustomed to paper and ink, there is evidence of a growing demand for e-books. There has been real success in the online availability of science, technology and medical publications, where the demand for fee-based research has supported the e-publishing industry. Demand has also grown for the online collections of more than 7,300 libraries that have provided free remote access to the texts of hundreds of thousands of e-books, with particular demand for non-English language texts. One commercial operation, Ebrary, offers consumers paid access to more than 10,000 recently published titles, as well as maintaining a database of digital books for libraries. Online newspaper publishing is also prolific, although many of these initially free sites are now seeking to introduce subscription access. In September 2002, for the first time, The New York Times received more visitors to anytimes.com (1.28 million daily), than its weekday paper circulation (1.2 million daily).

Copyright and digital piracy

Given the capabilities and characteristics of digital network technologies, e-commerce has had a tremendous impact on the system of copyright and related rights, and the scope of copyright and related rights in turn is affecting how e-commerce evolves. It is essential that legal rules are set and applied appropriately, to ensure that digital technology does not undermine the basic tenets of copyright and related rights. From one perspective, the Internet has been described as “the world’s biggest copy machine.” Whereas earlier technologies such as photocopying and taping allow mechanical copying by individual consumers, they do so in limited quantities, requiring considerable time, and resulting in copies of lesser quality. Moreover, the copies are physically located in the same place as the person making the copy. On the Internet, by contrast, one can make an unlimited number of copies, virtually instantaneously, without perceptible degradation in quality. And these copies can be transmitted to locations around the world in a matter of minutes. The result could be the disruption of traditional markets for the sale of copies of programs, art, books and movies. In the music industry, for example, the emergence of Internet-based file swapping services such as Napster and others have enabled a large-scale exploitation of music and recordings without the authorization of the rights holders. That exploitation was further aggravated by the simultaneous broad commercialization of CD burners and portable MP3 players, adapted to the most commonly used file format.

These challenges face the copyright industry at a time

when the share of copyright in national economies is reaching unprecedented levels. The economic value of the copyright industry in the United States alone is estimated at US$ 91.2 billion (motion pictures, music and television), according to International Intellectual Property Alliance (IIPA). The share of copyright industries currently represents 5.24% of the U.S. gross domestic product, growing more than twice as fast as the rest of the economy, a growth largely attributed to America’s strong copyright laws and effective enforcement mechanisms. Similarly, a study of the copyright industries in the MERCOSUR countries reveals that the share of copyright-protected activities in the value added of Uruguay was 6% in 1997, and

of Brazil was 6.7% in 1998, accounting in the latter for 1.3 million jobs. This significance gives weight to the copyright industries’ search for technical and legislative solutions to protect copyright from digital piracy.

The current levels of online piracy were described by an American litigant as “a 21st century piratical bazaar.1′ New international laws such as the WIPO Internet Treaties adapt the intellectual property laws to facilitate the dissemination of protected material over the Internet. Technological tools such as encryption and watermarking provide practical solutions and, together with digital rights management initiatives, contribute to meeting this concern. However, many creators and rights holders remain apprehensive.

One approach is to employ business models by which subscribers, eager to access intellectual property in the form of music, film, software or text, can be persuaded to legitimately purchase these products, instead of relying upon illegal markets. In the music industry, for example, subscription music downloads and streaming services are available through a variety of proprietary systems including, eMusic, MusicNet, Full Audio, Rhapsody, Liquid Audio, Inc. and PressPlay, that seek to replace the popularity of more than 200,000 unauthorized online music sharing sites, including Napster, Morpheus and KaZaa. These ‘peer-to-peer’ (P2P) networks enable millions of users to upload and share their music and film files via the Internet, often infringing copyright in the works they trade. The copyright industry in various countries has taken legal action to prevent the widespread piracy via the P2P networks, with some success, although the problem is not yet solved. Some systems, like Napster, use a centralized server to process the transfers, while others are decentralized and more difficult to regulate, and the industry has grappled with how to target millions of individual pirates and rapidly evolving technological methods. Although the music industry is now embracing the online medium, it continues to grapple with the problem of piracy, as 950 million pirated music discs were sold in 2001, in a world pirate-music market valued at US$4.3 billion.

The online distribution of audiovisual works has been held back until recently by the lack of bandwidth, which has prevented the relatively large data files

required to transmit video to be downloaded or streamed at a speed or quality acceptable to consumers. Nevertheless, more than a million users are typically online with Morpheus, a P2P site that enables users to trade video files, and most PCs now come with CD burners that can be used to compress and store films on discs without any significant loss in quality. As in the music industry, copyright owners in the film industry are also reluctant to release their audiovisual works online while there is a lack of adequate copy protection that could protect them from rampant piracy, that today sees 400,000 to 600,000 films downloaded illegally every day. For these reasons, major studio executives have forecast that film distribution via the Internet will account for only 4% of revenue by distribution channel by 2010.

Digital technology enables the transmission and use of all of these protected materials in digital form over interactive networks. The process of ‘digitization’ allows the conversion of such materials into binary form, which can be transmitted across the Internet, and then re-distributed, copied and stored in perfect digital form. While the transmission of text, sound, images and computer programs over the Internet is already commonplace, this is also becoming true for transmission of audiovisual works such as feature films, as the technical constraints of narrow bandwidth begin to disappear. Materials protected by copyright and related rights, spanning the range of information and entertainment products, constitutes much of the valuable subject matter of e-commerce.

It is therefore critical to adjust the legal system to respond to the new technological developments in an effective and appropriate way, and to do so quickly and continuously, because technologies and markets evolve increasingly rapidly. This will ensure the continued furtherance of the fundamental guiding principles of copyright and related rights, which remain constant whatever may be the technology of the day: giving incentives to creators to produce and disseminate new creative materials

The Digital War by WIPO

Significant issues in the field of copyright have been examined for a number of years through various public and private processes, at WIPO and other international organizations, and at national and regional levels. “Significant progress has been made, with international consensus having already emerged on some of these issues. In 1996, two treaties were adopted by consensus by more than 100 countries at WIPO: the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) (commonly referred to as the “Internet Treaties”). The treaties, each having reached their 30th ratification or accession, both have entered into force: the WCT on March 6, 2002, and the WPPT on May 20, 2002.

The WIPO Internet Treaties are designed to update and supplement the existing international treaties on copyright and related rights, namely, the Berne Convention and the Rome Convention. They respond to the challenges posed by the digital technologies and, in particular, the dissemination of protected material over the global networks that make up the Internet. The contents of the Internet Treaties can be divided into three parts: (1) incorporation of certain provisions of the TRIPS Agreement not previously included explicitly in WIPO treaties (e.g., protection of computer programs and original databases as literary works under copyright law)

right of communication to the public)

The ‘global information society’ foreseen in the early days of the Internet has yet to become a worldwide reality, but the focus on information remains the key to the e-commerce economy. Although a good proportion of the information on the Web is in the public domain, that is, freely available to use and copy, an increasingly significant amount is protected as intellectual property. The enthusiasm excited by the availability of so much online information, easily accessible through browsing and hyper linking, contributed to a general expectation that this information was free and its use uncontrolled. Even the term ‘hacking’, as initially understood, was a positive concept that implied expertise in computer programming. The intellectual property community has been addressing the challenge of this perception, in an effort to determine and exert legal rights over digital content, ever since.

Digital content represents leap of technology, that is why it requires new set of digital laws. Amending the previous laws will not do any justice. Law has to understand the technology and develop rules to protect copyrights in the digital medium, as it is far easier to reproduce, store, transmit and amend a work in digital settings.