House Judiciary Chairman to launch sweeping review of US copyright law — Topping the US copyright news this week was Rep. Goodlatte’s announcement that his Committee will be conducting a series of comprehensive hearings over the next several months with the aim of taking a thorough look at the current state of copyright law. Hilicon Valley reports, with statements from several copyright-related organizations responding to Goodlatte’s announcement.

Why Aereo encourages the wrong kind of innovation — Peter Leung discusses the Aereo decision, with a brief look at cases from Australia, Japan, and South Korea which held that similar services infringed on copyright protections. But the heart of Leung’s argument is that a win for Aereo is a loss for everyone else. “Although IP law is generally supposed to promote innovation, it is strange to think that Aereo’s business plan largely involves creatively engineering its way around the law rather than solving an actual technical problem. Other than Aereo, the clear winners in this are manufacturers of server hard drives and tiny antenna arrays.”

Embedding is no criminal offence, the Brussels Court of Appeal says — A court in Belgium ruled that embedding an infringing YouTube video does not rise to the level of a criminal offense under that country’s laws. Unlike civil liability, criminal liability requires the additional element of malicious or fraudulent intent. Here, the court found that lacking, in part because YouTube’s terms of service prohibit the uploading of infringing content, so it cannot be presumed that the defendant was aware the video was infringing.

Churnalism: Where is Your Journalism Coming From? — A new tool from the Sunlight Foundation allows you to check online news sites and articles to see if passages from Wikipedia or press releases show up without attribution. An interesting tool. Plagiarism Today’s Jonathan Bailey points out, “The big idea behind both versions of Churnalism is not so much to detect all kinds of plagiarism or spot instances of copyright infringement. Rather, the goal is to find instances where journalists recycle content from sources that readers might not deem trustworthy or, in other cases, may take quotes out of context.”

MPAA Supports Meaningful Treaty for Visually Impaired — Chris Dodd of the MPAA writes, “We believe that access for the blind to books and other publications is a cause worth promoting. We also believe in the fundamental principles of copyright that empower creators and encourage creativity around the world. Unlike those who seek to weaken copyright protection, we believe these two objectives are not mutually exclusive.”

What Hunter S. Thompson Really Said About the Music Industry… — Paul Resnikoff digs up an interesting tidbit showing that the oft-quoted line attributed to Thompson is not entirely accurate.

Facebook Home Propaganda Makes Selfishness Contagious — Not copyright related per se, but the ethics observed in the article are shared by some who argue against effective copyright protection. The author writes, “This isn’t intended to be a “get off my lawn!” argument, though it is indeed old-fashioned to believe everyone deserves respect. Back in the 1700’s, German philosopher Immanuel Kant made a big deal out of these ideals, asking what right we have to be self-absorbed while expecting others to rise above indifference. My argument is that some convictions deserve to be innovation proof.”

Time to Think About ‘The Next Great Copyright Act’ in the US? — Emmanuel Legrand takes a thorough look at US Register of Copyrights Maria Pallante’s recent call for broad copyright revision. “She admitted in her statement that the list of issues she wanted to tackle ‘is long’: ‘clarifying the scope of exclusive rights, revising exceptions and limitations for libraries and archives, addressing orphan works, accommodating persons who have print disabilities, providing guidance to educational institutions, exempting incidental copies in appropriate instances, updating enforcement provisions, providing guidance on statutory damages, reviewing the efficacy of the DMCA, assisting with small copyright claims, reforming the music marketplace, updating the framework for cable and satellite transmissions, encouraging new licensing regimes, and improving the systems of copyright registration and recordation.’”

Creators need copyright protection — Speaking of copyright revision, Neil Portnow, president and CEO of the Recording Academy, discusses three principles that should be central to any discussion of such an effort. “The more art is created, the more businesses that rely on content will succeed. It’s not content versus innovation — content drives innovation.”

“It Is What It Is” // an interview with Sound Fix owner James Bradley; store to close after nine years this saturday (Record Store Day)Freeloading author Chris Ruen interviews the proprietor of an indie record store that has finally decided to close shop. “…we created this atmosphere that people warmed up to. The idea of a place where you can soak up the whole experience, where music was performed and sold and embraced and artists came there.”

Not all change is innovation — “Advertising, which yields about 90% of Google’s extraordinary wealth, has no independent, intrinsic value; it must be pegged to products and services that do have intrinsic value in the consumer market. We literally cannot all be in sales and marketing; some of us have to make things. Hence, any business practice that dilutes intrinsic value for the sake of advertising value is not only not innovative, but is a form of cannibal economics over the long term.”

How YouTube “Monetizes” Your Songs to Sell Illegal Goods — “They can pay $500,000,000 in punishment to the government, but they can’t quite manage to find a way to tell advertisers or songwriters that their songs or ads are being used to push drugs to YouTube’s young audience.”

If Only the Tech Industry Understood the Music Industry They Want to ‘Replace’… — Says Helienne Lindvall: “Copyright without control, without the ability to say no, creates a race to the bottom as far as being able to monetise “content” – it lines the pockets of the distributors (YouTube, The Pirate Bay et. al.) but not those who created it.”

The exclusive right to publicly perform a copyrighted work1 has been the source of a fair amount of confusion over its history. The Second Circuit’s 2008 decision in Cartoon Network v. CSC Holdings (“Cablevision“) added to this confusion; though, at the same time, it provided “a clear roadmap that other businesses could use to evade their obligations under the public performance right.”2 Indeed, earlier this month, the Second Circuit all but said outright that, but for its decision in Cablevision, online service Aereo would be liable for publicly performing the television broadcasts it retransmits to paid subscribers.3 A few weeks prior, a California court not bound by Cablevision’s precedent granted a preliminary injunction against Aereokiller, a service using essentially the same technology as Aereo.4

And things are just starting to heat up. Aereokiller has appealed its loss to the Ninth Circuit; if the Circuit Court upholds the lower court’s decision, it would create a circuit split that may make a trip to the Supreme Court more likely. Before then, though, TV broadcasters have petitioned the Second Circuit for an en banc rehearing on Aereo.

I’ve written a number of times on both cases,5 but I have yet to delve into a legal analysis of Cablevision, the case that looms large over these current cases. In my opinion, Cablevision — at least that portion that addressed the public performance issue — was decided incorrectly. The Second Circuit committed a number of logical errors that culminated in a conclusion that doesn’t follow from the plain meaning of the statutory text and stands in opposition to the clear intent of Congress when it drafted the public performance provisions of the 1976 Copyright Act.

But the problems of Cablevision go beyond logical infidelity. The decision drifts away from copyright law’s technology-neutral ideal and elevates form over function. Most importantly, it runs contrary to the public interest. We are, some might argue, in a new golden age of television, with shows that are enjoyed by millions. This is possible in no small part because of the robust marketplace secured through copyright law.

So how exactly did the Cablevision court go astray? Let’s start with a brief discussion of the public performance right in U.S. law.

Public Performance Under the 1976 Copyright Act

Along with exclusive rights to reproduce, distribute, and make derivative works, copyright law secures the exclusive right of a copyright owner to publicly perform her work. The Copyright Act defines performing a work publicly in the following manner:

(1) to perform6 … it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit7 or otherwise communicate a performance … of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance … receive it in the same place or in separate places and at the same time or at different times.

The first definition is easy to conceive — a band in a concert hall is clearly performing a musical work publicly. The first part of the second definition (transmitting the performance of a work to a public place) is also not difficult to imagine — replace the band with giant television set. It is the last part of the second definition — the “separate places/different times” language — that confused the Cablevision court.

This language was added in the 1976 Copyright Act to cover services like cable television and radio broadcasters — services that perform a work to the general public even if each individual performance is ultimately perceived in a private setting.8 Although such performances were initially considered public under the previous Copyright Act,9 a series of Supreme Court decisions beginning in the late 1960s casually dismantled this interpretation.10

The language can no doubt provoke some challenging applications. On the one hand, it is very broad: a public performance includes transmissions by any device or process, in the same place or to separate places, at the same time or at different times.11 But on the other hand, there necessarily must be a limit; if Congress didn’t intend there to be nonpublic performances, it needn’t have bothered limiting the right to only public performances.

The district and circuit court in Cablevision approached this sphinxian language differently. But first, it may be helpful to take a look at how the product involved in the Cablevision decision — the Remote Storage DVR System (“RS-DVR”) — operated.

The RS-DVR

Like any other cable service, Cablevision licenses television programming from broadcasters and cable channers and offers it to paid subscribers. In 2006, Cablevision began offering RS-DVR to its customers. The service operated like any set-top DVR, allowing a TV viewer to record and store programs for later viewing, but the hardware was all located centrally at Cablevision facilities. Cablevision gathers the streams from the various television stations it is licensed to provide into a single signal, which is then split. One stream is routed to customers’ homes in real time (as happens with most cable providers). The second stream is transmitted to the RS-DVR servers, where programs are stored according to subscribers’ requests.

Both these transmissions — one to a customer in real time, one to a customer’s storage for later viewing — are transmissions of public performances. Cablevision had a license for the former; it is unclear whether that license covers the latter.12 But television broadcasters13 argued (among other things) that the performance from the RS-DVR to a customer’s home when she hit “play” was an additional performance, and a public one at that.

Cablevision didn’t contest that this was a separate performance, just that it isn’t liable for it, and advanced several arguments in support.

The district court rejected as flawed Cablevision’s argument that its performances were private since each streaming came from a distinct copy that was unique to each individual customer.14 It said that Cablevision was engaged in public performance under the plain language of the transmit clause. “Cablevision would transmit the same program to members of the public, who may receive the performance at different times, depending on whether they view the program in real time or at a later time as an RS-DVR playback.” The district court also found it relevant that the relationship between Cablevision and its customers was a commercial one, as courts have held that such a relationship has an inherently “public” character.15

On appeal, the Second Circuit would reverse the district court’s holding on this issue. It began by looking at the “transmit clause” anew. To the Second Circuit, “it is evident that the transmit clause directs us to examine who precisely is ‘capable of receiving’ a particular transmission of a performance.” Under this interpretation, the district court’s suggestion that, “in considering whether a transmission is ‘to the public,’ we consider not the potential audience of a particular transmission, but the potential audience of the underlying work (i.e., “the program”) whose content is being transmitted” is wrong. Instead, says the Circuit Court, “That clause speaks of people capable of receiving a particular ‘transmission’ or ‘performance,’ and not of the potential audience of a particular ‘work.’”

After marching through its argument, the Court says “Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances ‘to the public,’ and therefore do not infringe any exclusive right of public performance.”

Several scholars have identified the court’s treatment of the terms “transmission” and “performance” interchangeably as its primary error.16 But they aren’t synonymous; they are each defined separately in the Copyright Act.

This error contributed the most to the Second Circuit’s ultimate conclusion. But its reasoning was riddled with other errors, some of which I’ll look at in more detail below.

An Unexplained Logical Leap

First, look at the court’s response to plaintiff’s argument that “to determine whether a given transmission of a performance is ‘to the public,’ we would consider not only the potential audience of that transmission, but also the potential audience of any transmission of the same underlying ‘original’ performance”:

Like the district court’s interpretation, this view obviates any possibility of a purely private transmission. Furthermore, it makes Cablevision’s liability depend, in part, on the actions of legal strangers. Assume that HBO transmits a copyrighted work to both Cablevision and Comcast. Cablevision merely retransmits the work from one Cablevision facility to another, while Comcast retransmits the program to its subscribers. Under plaintiffs’ interpretation, Cablevision would still be transmitting the performance to the public, solely because Comcast has transmitted the same underlying performance to the public. Similarly, a hapless customer who records a program in his den and later transmits the recording to a television in his bedroom would be liable for publicly performing the work simply because some other party had once transmitted the same underlying performance to the public.

The court doesn’t explain why accepting an interpretation that looks at the potential audience of a work by one performer necessarily means looking at the potential audience of all performers of a work. The fact is that the latter doesn’t follow the former.

The Second Circuit is not entirely at fault for making this unexplained leap. Its analysis is drawn from and mirrors Melville Nimmer’s in his eponymous copyright treatise. Nimmer looks at the definition in question, “which provides that a work is performed ‘publicly’ regardless of ‘whether the members of the public capable of receiving the performance … receive it in the same place or separate places. …’”17

That same definition goes on to provide that a work is performed “publicly” regardless of whether such members of the public receive the performance “at the same time or at different times.” The Senate and House Reports offer no explanation of this latter phrase, and it is difficult to believe that it was intended literally. It would mean, for example, that the performance of music on a commercial phonograph record in the privacy of one’s home constitutes a public performance because other members of the public will be playing duplicates of the same recorded performance “at different times.”

Again, it is not clear to me what is happening here. Aggregating performances by other performers doesn’t follow from the text of the definition, and doesn’t make sense from a legal perspective.

For Nimmer, at least, interpreting the transmit clause to look at performances of the same copy of a work rather than performances of the work was intended to avoid the absurd result of private performances turning into public performances based on the unrelated actions of third parties. Yet creating a “same copy” requirement doesn’t directly address this problem — a result that Nimmer himself recognizes:

In the abstract, it may be argued that the practice of renting a given videocassette of a motion picture to various members of the public gives rise to “public” performances of the work, although each such performance of the work on a home television set is received only by an individual or family group. Nevertheless, the same copy gives rise to numerous performances, which are received by the public “at different times.” Therefore, under the wording of the Act, and by reason of the underlying rationale of what constitutes a “public” performance, it may follow that each individual rental performance is a “public” performance.

In other words, Nimmer — and later, the Second Circuit — created a requirement that wasn’t present in the statutory text in order to solve a problem that didn’t logically follow from the requirement’s absence, and the newly created requirement doesn’t even entirely solve that problem.

Two for me, none for you

In a bit of verbal sleight-of-hand, the court next states, “Plaintiffs contend that it is ‘wholly irrelevant, in determining the existence of a public performance, whether `unique’ copies of the same work are used to make the transmissions.’ But plaintiffs cite no authority for this contention.” Did you catch that? The court invented a “unique copies” requirement that does not appear in the statutory text (or legislative history) and then chides plaintiffs for not citing any authority that the statute does not contain such a requirement.

What makes this worse is that plaintiffs had cited authority to this effect. Specifically, they cited a 1967 House Committee report that discussed what would become the definition in question. This report noted that the definition of “to the public” was intended to cover transmissions “capable of reaching different recipients at different times, as in the case of sounds or images stored in an information system and capable of being performed or displayed at the initiative of individual members of the public [Emphasis added].” The House Committee literally described Cablevision’s RS-DVR service nearly four decades before it was released, and said the Copyright Act’s public performance language would cover such a service. In what could only be described as chutzpah, the Second Circuit dismisses outright this on-point bit of legislative history, saying only that “We question how much deference this report deserves.”

A Minor Fallacy

Finally, the Second Circuit rejects the lower court’s argument that the commercial relationship between performer and viewer supported the conclusion that the performance is a public, rather than a private, one. It calls the argument “untenable” and not supported by the statutory language. But then it states, “In addition, this interpretation overlooks, as Congress did not, the possibility that even non-commercial transmissions to the public may diminish the value of a copyright.” The court is saying that if all commercial performances are public performances, then that also means that only commercial performances are public performances. This is an obvious logical error.

Stay Tuned for More

Cablevision‘s reasoning on the public performance issue leaves a lot to be desired. Yet, at the same time, I believe the court could have reached the same result — that Cablevision’s transmission of programming that it licensed from broadcasters from the RS-DVR servers to subscribers would not require additional licensing — without creating a mess of the public performance provisions in the Copyright Act. As the subsequent decision in Aereo shows, the consequences of Cablevision have been wider than the Second Circuit anticipated.

In future posts, I hope to look at how Aereo made things worse by not only extending Cablevision beyond its specific facts, but misapplying it as well. I also hope to take a stab at providing a workable definition of the Copyright Act’s public performance language that is more consistent with the statutory text, Congressional intent, and the goals of copyright law.

Special thanks to Copyhype contributor Devlin Hartline (who blogs at Law Theories) for providing useful feedback in writing this post.

Footnotes

  1. 17 U.S.C. § 106(4). []
  2. See Brief for Copyright Alliance as Amicus Curiae in Support of Petitioners, Cable News Network v. CSC Holdings, pg. 24, 129 S.Ct. 2890 (2008) (No. 08-448). []
  3. WNET v. AereoNos. 12-2786-cv, 12-2807-cv (2nd Cir., 2013). []
  4. Fox Television Stations v. Barrydriller Content Systems, Civil Minutes, No. CV-12-6921-GW (JCx) (CD Cali Dec. 27, 2013). []
  5. Aereo, ivi, and the Public Interest in Protecting Copyright, Aereo, Cablevision, and the “Missing Link”, Aereo Takes its Tiny Antennas to Opposite Town, EFF Files Amicus Brief in Aereokiller, You Keep Using that Word: Aereo and “Innovation”. []
  6. “To ‘perform’ a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” []
  7. “To ‘transmit’ a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.” []
  8. On Command Video v. Columbia Pictures, 777 F. Supp. 787, 790 (ND Cali. 1991), citing H.R.Rep. No. 83, 90th Cong., 1st Sess. at 29 (1967). []
  9. See Buck v. Jewell-LaSalle Realty, 283 US 193 (1931). []
  10. Twentieth Century Music v. Aiken, 422 US 151 (1975); Teleprompter v. Columbia Broadcasting System, 415 US 394 (1974); Fortnightly v. United Artists Television, 392 US 390 (1968). []
  11. As noted in the legislative history: The definition of ‘transmit’ . . . is broad enough to include all conceivable forms and combinations of wires and wireless communications media, including but by no means limited to radio and television broadcasting as we know them. Each and every method by which the images and sounds comprising a performance . . . are picked up and conveyed is a ‘transmission,’ and if the transmission reaches the public in[any] form the case comes within the scope of . . . section 106. H.R. Rep. No. 94-1476, at 64 (1976). []
  12. The Second Circuit notes that plaintiffs argued “Cablevision publicly performs a work when it splits its programming stream and transmits the second stream to the RS-DVR system.” It appears to conclude that this performance is a private one by extension of its general reasoning, but does not indicate whether this transmission, from Cablevision to RS-DVR, is distinct from the transmission from RS-DVR to customer. I would argue that they are distinct. []
  13. Plaintiffs included The Cartoon Network, Cable News Network, Turner Broadcasting System, Turner Network Sales, Turner Classic Movies, Turner Network Television, Twentieth Century Fox Film, Universal City Studios, Paramount Pictures, Disney, CBS, and NBC. []
  14. Twentieth Century Fox Film v. Cablevision, 478 F.Supp. 2d 607, 622 (SDNY 2007). []
  15. Id. at 623, citing On Command Video Corp. v. Columbia Pictures Indus., 777 F.Supp. 787, 790 (N.D.Cal.1991). []
  16. See, e.g., 2 Paul Goldstein, Goldstein on Copyright, § 7.7.2.2, at 7:168 (3d ed. 2013); Jeffrey Malkan, The Public Performance Problem In Cartoon Network LP v. CSC Holdings, Inc., 89 Oregon Law Review 505, 536 (2010); Jane C. Ginsburg, Recent Developments in US Copyright Law – Part II, Caselaw: Exclusive Rights on the Ebb? 26 (Colum. Pub. L. & Legal Theory Working Papers, No. 08158, 2008). []
  17. Nimmer on Copyright, § 8.14[C][3]. []

The Purpose of Copyright? Examining the Retracted Republican Study Committee Brief — From the Bolt, an online offshoot of the Berkeley Technology Law Journal, comes a look at Derek Khanna’s infamous copyright memo, and my response to it here last November.

Fair Use is Fair Game: MPAA Files Amicus Brief in NFL Intellectual Property Case — Earlier this week, the MPAA filed a brief in support of a filmmaker’s fair use of a Baltimore Ravens logo appearing on screen. That the MPAA would defend fair use in court surprised only those who have become convinced of their own caricature of the organization as being “copyright maximalists.”

MPAA and Fair Use: A Quick History — Ben Sheffner at the MPAA responds to “the suggestion in some of the commentary about our brief that the MPAA and its members somehow “oppose” fair use, or that our embrace of it in the Baltimore Ravens brief represents a  shift in our position. That’s simply false, a notion that doesn’t survive even a casual encounter with the facts. Our members rely on the fair use doctrine every day when producing their movies and television shows – especially those that involve parody and news and documentary programs. And it’s routine for our members to raise fair use – successfully – in court.”

WNET v. Aereo: Split Appellate Panel Rules That “Remote-Storage DVR” Decision Insulates Provider of Internet Streaming from Liability — Eleanor Lackman examines the recent Second Circuit decision involving internet TV rebroadcaster Aereo. Great analysis and timely, as a similar case with a different outcome (Aereokiller) is set to appear in front of the Ninth Circuit.

Mossoff on Copyright & Innovation in Scholarly Publishing — The Legal Theory Blog highlights Adam Mossoff’s latest, must-read article that details the investment and innovation that scholarly publishers provide to help disseminate academic works.

Jurassic Park is Frightening in the Dark — The best dinosaur movie ever is celebrating its 20th anniversary with a theatrical release in 3D. While the film incorporated stunning advances in computer generated imagery, it also featured equally groundbreaking “real-life” props by Stan Winston Studios. Here is a collection of videos showing a behind the scenes look at how some of these props were built.

Google’s Design Defect of Moral Hazard — “Just like the iconic exploding gas tank, it is clear that Google’s current product creates an unsafe environment for consumers.  From illegal drugs, to human trafficking to copyright infringement, Google is the leading source of criminals making their wares available to unsuspecting consumers. Not only does Google’s advertising of legitimate brands on illegal sites create the veneer of respectability, Google holds itself out to the public as a reliable source of information.”

 — Copyright infringement? Or just an incredibly inefficient way to print articles from the web?

“Innovation” is one of the Internet’s favorite words (along with “disruption”).1  It’s a glittery word — who can be against innovation! — and seems to be used to express just about any concept that is needed. The word was once a pejorative; “A spirit of innovation is generally the result of a selfish temper, and confined views,” wrote Edmund Burke. Its normative meaning has since flipped.2

On April 1st, the Second Circuit affirmed the denial of an injunction against Aereo. The company had been sued by several television broadcasters alleging copyright infringement for retransmitting programs without permission. Last year, a district court refused to grant a preliminary injunction after finding that the broadcasters had been unable to distinguish Aereo’s system from a system held not infringing in the earlier Second Circuit decision in Cartoon Network v. CSC Holdings (“Cablevision“). On appeal, the Second Circuit agreed with the lower court, holding “Plaintiffs have provided us with no adequate basis to distinguish Cablevision from the Aereo system.”

Technology advocates celebrated the decision. The Disruptive Competition Project wrote that it considers Aereo a perfect example of the type of “disruptive innovation” it champions. Consumer Electronics Association CEO Gary Shapiro called the decision a “big victory for innovation.” Public Knowledge hailed the decision as a victory for “video innovation.” The EFF proclaimed the court decision as a Victory for Aereo, TV Watchers, and Innovation Without Permission ((One might find it telling how consistently internet focused civil society groups are aligned with the consumer electronics industry.)) Even Aereo itself has proudly proclaimed that it is on the side of innovation, progress, and consumer choice.

But how innovative is Aereo? From a viewer’s perspective, the system is largely indistinguishable from cable TV, which has been around for decades. Pay a monthly fee, watch television.

At least one of the Second Circuit judges didn’t see anything particularly innovative about the company. In a dissenting opinion, Judge Chin called Aereo’s “technology platform” a “sham”, describing it as “a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”

Aereo is doing precisely what cable companies, satellite television companies, and authorized Internet streaming companies do — they capture over-the-air broadcasts and retransmit them to customers — except that those entities are doing it legally, pursuant to statutory or negotiated licenses, for a fee. By accepting Aereo’s argument that it may do so without authorization and without paying a fee, the majority elevates form over substance. Its decision, in my view, conflicts with the text of the Copyright Act, its legislative history, and our case law.

The decision also seems to conflict with the idea, as expressed above, that Aereo is innovative.

To put it another way: imagine the reaction to Aereo if it was in all respects identical — e.g., same channel lineup, same price — except it was licensed to retransmit programming. Would we still be hearing about how innovative the service is? I don’t think it would be too far off to imagine such a service being greeted by yawns, or even derided as outdated. That is, it seems plausible that the primary feature that makes Aereo lauded as an innovation is the fact that it is unlicensed.

It is heartening to see that others besides Judge Chin recognize this. In When copyright leads to wasted innovation, Alex Hern observes, “All of this innovation – the tiny antennas, better transcoding technology, and office placed with line-of-sight to the Empire State Building for perfect reception – isn’t being focused towards making life better for customers, or even just making money for Aereo. Instead, it’s just being used to get around the law.” I disagree with Hern, however, when he concludes that “The government could render all that effort useless overnight by just allowing Aereo to stream signal from one aerial to all its users at once.” Aereo is allowed to do this under current law, it just doesn’t want to bother seeking the necessary permission from the owners of the programs it wants to retransmit or pay the necessary licenses.

So how is it that so many celebrate this type of free-riding as innovation?

Part of the blame may be the vague definition of “innovation” itself by those who employ it the most. Author Evgeny Morozov recently wrote of this phenomenon

While the brightest minds of Silicon Valley are “disrupting” whatever industry is too crippled to fend off their advances, something odd is happening to our language. Old, trusted words no longer mean what they used to mean; often, they don’t mean anything at all. Our language, much like everything these days, has been hacked. Fuzzy, contentious, and complex ideas have been stripped of their subversive connotations and replaced by cleaner, shinier, and emptier alternatives; long-running debates about politics, rights, and freedoms have been recast in the seemingly natural language of economics, innovation, and efficiency. Complexity, as it turns out, is not particularly viral.

Part may also be the embrace of “permissionless innovation” as a norm. The idea was once defined rather narrowly, referring to the fact that one could deploy an online service or website without needing any sort of prior approval by any central governing body.3 Since then it has been expanded to include an absence any sort of obstacles to Innovation, both online and off.

An unqualified endorsement of such a broad definition of permissionless innovation is troublesome, not least of which because it contradicts the centrality of consent and rule of law in any free society. But to the concept’s proponents, permission is simply an obstacle to Innovation that must be torn down. “Permission” can be required by governments in the form of regulations and laws. These are often described solely as rent-seeking by incumbent firms, holding no legitimate purpose on their own and existing only to keep “disruptive innovators” out of the market.4 But permission can also be required from other individuals. Copyright and other forms of intellectual property, held by individuals or other entities, are characterized as the quintessential obstacle to innovation. This is essentially the core thesis in Lawrence Lessig’s 2003 book, Free Culture: The Nature and Future of Creativity: copyright is a restriction that creates a “permission culture“, as opposed to a free one.

Is copyright a restriction that blocks innovation? I say no. As Ronald Cass and Keith Hylton note in their new book, Laws of Creation: Property Rights in the World of Ideas this view is premised on the erroneous “zero sum” view of intellectual property that has become engrained in copyright skeptic thinking.

[T]he modern academic view treats intellectual property law as a set of rules determined in a zero-sum conflict between rights-holders and members of the public. Beyond some modest realm, for one side to gain, the other side must lose. The individual is encouraged y this view to choose a side: either you are with the public or with the rights-holders. For some writers, the choice is put in even more loaded terms: either you side with those who are rooted in the past or line up with the vanguard of the future, freed of entangling rights.5

But copyright is not a zero sum game. Cass and Hylton explain that IP protection, including copyright, comes with static costs, but it produces dynamic benefits. IP protection benefits society when those dynamic benefits are greater than the static costs, leading Cass and Hylton to conclude that, while not perfect, “existing legal rules are generally defensible within an analysis of their costs and benefits.”6

George Mason law professor Adam Mossoff has recently provided a real world example of this equation in action. In his latest article, How Copyright Drives Innovation in Scholarly Publishing, Mossoff looks at an area that has been especially fertile to charges of copyright as an obstacle. In his abstract, Mossoff writes

Today, copyright policy is framed solely in terms of a trade off between the benefits of incentivizing authors to create new works and the losses from restricting access to those works. This is a mistake that has distorted the policy and legal debates concerning the fundamental role of copyright within scholarly publishing, as the incentive-to-create conventional wisdom asserts that copyright is unnecessary for researchers who are motivated for non-pecuniary reasons. As a result, commentators and legal decision-makers dismiss the substantial investments and productive labors of scholarly publishers as irrelevant to copyright policy. Furthermore, widespread misinformation about the allegedly “zero cost” of digital publication exacerbates this policy distortion.

This paper fills a gap in the literature by providing the more complete policy, legal and economic context for evaluating scholarly publishing. It details for the first time the $100s millions in ex ante investments in infrastructure, skilled labor, and other resources required to create, publish, distribute and maintain scholarly articles on the Internet and in other digital formats. Based on interviews with representatives from scholarly publishers, it reveals publishers’ extensive and innovative development of digital distribution mechanisms since the advent of the World Wide Web in 1993. Even more important, this paper explains how these investments in private-ordering mechanisms reflect fundamental copyright policy, as copyright secures to both authors and publishers the fruits of their productive labors. In sum, copyright spurs both authors to invest in new works and publishers to invest in innovative, private-ordering mechanisms. Both of these fundamental copyright policies are as important today in our fast-changing digital world as they were in yesteryear’s world in which publishers distributed scholarly articles in dead-tree format.

True innovation grows the entire pie. The type of false innovation of services like Aereo simply shift the pieces around — and, if such a service negatively affects those providing the television programs that Aereo relies on to attract subscribers, then, in the long run, nobody wins.

Footnotes

  1. Its overuse by some borders on unintentional parody; for example, this recent article on Techdirt features an amazing four instances of some form of “disrupt” and three instances of some form of “innovate” in the first paragraph alone. []
  2. A 2009 literature review found that only 1 in 1,000 social science articles discussing innovation studied the undesirable consequences of innovation, suggesting a strong pro-innovation bias in recent decades. []
  3. See, for example, Vint Cerf in 2009: “Many now-successful companies have deployed their services on the Internet without the need to negotiate special arrangements with Internet Service Providers, and it’s crucial that future innovators have the same opportunity. We are advocates for “permissionless innovation” that does not impede entrepreneurial enterprise.” []
  4. Larry Downes, for example, said in a recent article, Ready to Innovate? Get a Lawyer, “But more often the imposition of legal constraints comes indirectly, the maneuverings of incumbents caught off-guard by something dramatically better and often cheaper than their core products and services. Performing a bit of regulatory judo, they often respond to such threats by pressuring regulators who oversee their own activities to declare the innovator illegal or otherwise in violation of rules that were never designed to cover it.” []
  5. Pp. 209-10. []
  6. Pg. 220. []