“To promote the progress of knowledge on the Internet, those who are building the Net itself need fair and predictable ground rules”  U.S. Telephone Association
The above quotes, the first from a member of the content community and the second from an association representing telephone companies and Internet Service Provider (ISP), highlight the tension that exists between copyright holders and Internet Service Providers concerning the issue of on-line copyright infringement liability. As the Internet has grown, the problem of on-line copyright infringement has developed into an economically significant issue.  According to the Motion Picture Association of America, U.S. companies are losing millions per year to on-line copyright pirates, and with the current growth of the Internet, the content community fears that the amount lost to pirates will only increase.  The ISP industry, however, while acknowledging its unique position in terms of the Internet, does not want to become a “deep-pocket”, third-party defendant in every on-line copyright infringement lawsuit. The Internet Service Providers have argued that the law’s lack of predictability in this area and its standards for ISP copyright liability over the past few years have caused real concerns for this new and growing industry.  ISPs have argued that due to the nature of the Internet and the unique role of the ISP industry, a narrow limitation on copyright infringement liability should be established for Internet Service Providers so that those who are building the Internet will have a clearer sense of how and when they might be held liable for on-line copyright infringement.  In turn, they argue that a heightened level of certainty about this issue will help speed the growth of the Internet by encouraging more entrepreneurs to enter the ISP industry. 
How fast has the Internet grown? At the end of the Reagan-Bush era, just six years ago, the world of cyberspace consisted of fewer than 50 World Wide Web sites, most of them used by computer scientists and physicists.  Today the Internet is no longer just for researchers, and it is expected that within five years international commerce on the Internet could reach $3.2 trillion.  The fact is that in the past 72 months the number of Internet users has risen from hundreds to millions of users, and is estimated by some experts to reach perhaps a billion users by the year 2008.  In terms of copyright infringement, the commercialization and exponential growth of the Internet create an entirely new set of problems for copyright holders. 
In this context, it is understandable why writers, publishers, and researchers often look upon using the Internet as “riding the Tiger.” While the Internet has allowed researchers, educators, artists and publishers to expand their markets at an unprecedented rate, the same technology allows any anonymous and invisible copyright pirate to copy and disseminate instantaneously anything that is displayed on the Internet. Understanding how easy it is to duplicate copyrighted material from the Internet today, the content community has valid concerns about how much easier pirating could be five or ten years from now, and they argue that something must be done now to address this problem. 
Recognizing the inherent difficulty of enforcing copyrights against individual Internet users world-wide, some experts have argued that the answer to this problem is placing legal liability for copyright infringement on those who allow and enable Internet copyright pirates to exist, namely the ISPs.  It is argued that ISPs profit from the pirates’ use of the Internet, and in comparison to an independent publisher or author, an ISP is in a much better position to police how its subscribers use the Internet.  On the other side of the argument, ISPs claim that they are passive carriers similar to telecommunications companies and therefore should be granted some limitation from copyright infringement liability.  In addition, they argue that to make ISPs liable could stifle the growth of the Internet. 
Others argue that the answers to this problem will come from technological innovations, such as the use of “digital watermarking”, rather than through legal reforms.  In addition, the argument has been made that cooperation between ISPs and the content community is what is truly needed to solve this problem.  ISPs share the content community’s desire to see the Internet grow, and some believe that the threat of holding ISPs liable for copyright infringement may not be the best way to encourage ISPs to help minimize Internet copyright piracy. 
The issue of on-line copyright infringement has been around since the use of the Internet started to expand rapidly in the early 1990’s and has been the subject of extensive federal executive branch activities, court cases, and Congressional action. In the closing days of the 105th Congress, President Clinton signed into law a bill that addressed this issue; Title II of the Digital Millennium Copyright Act, the Online Copyright Infringement Liability Limitation Act of 1998. 
This paper will analyze the policy arguments, the court cases, and the legislative process that produced this law.
As for the structure of the paper, the first section will discuss the Clinton Administration’s activities concerning this issue. The second section will briefly address statutory copyright law in general and will put the specific issue of on-line copyright infringement liability in context by analyzing the five leading court cases in this area of law. The third section will address the policy arguments for and against the establishment of a limitation on copyright infringement liability for Internet Service Providers. Lastly, this paper will analyze the final version of the legislation that has been signed into law, and discuss why enacting this bill into law is a step in the right direction for the Internet.
Mark E. Harrington