Today, the Supreme Court released its decision in Kirtsaeng v. John Wiley & Sons, reversing the Second Circuit’s decision that held the first sale doctrine does not allow importation without the authorization of the copyright owner of copyrighted works manufactured and acquired outside of the U.S. Justice Breyer penned the 6-3 decision, with a concurrence by Kagan (joined by Alito) and a dissent by Ginsburg (joined by Kennedy and Scalia).

What’s interesting about this case, from an academic perspective, is that the amici arguments of both sides were not actually opposing. Both sides wanted different things that put them against each other only because of how three interrelated statutory provisions acted. Copyright owners who supported John Wiley wanted the ability to differentiate foreign markets that the importation provision of §602(a)(1) purported to protect. Those who supported Kirtsaeng, including libraries and resellers, wanted clarification that §109(a) prevented restraints on downstream sales and other disposition for goods manufactured outside the U.S. Taken separately, neither argument on its face contradicts the other. The conflict only occurs when the provisions, along with §106(3), are read together.

This suggests that there is a resolution to the outcome of this case that would be satisfactory to all parties. And fortunately, Justice Kagan shines a light on one possible way forward in her concurrence.

Kagan begins by noting that, even though she joins the majority opinion, she is concerned about the effect it has on the Copyright Act’s importation provisions, which are now limited “to a fairly esoteric set of applications.”

But if Congress views the shrinking of §602(a)(1) as a problem, it should recognize Quality King—not our decision today—as the culprit. Here, after all, we merely construe §109(a); Quality King is the decision holding that §109(a) limits §602(a)(1). Had we come out the opposite way in that case, §602(a)(1) would allow a copyright owner to restrict the importation of copies irrespective of the first-sale doctrine [Emphasis added].

How so? Kagan explains in a footnote that Quality King erroneously interpreted the statutory text to foreclose this outcome. A more “cogent” argument was provided by the Solicitor General in Quality King, who made the case “that §109(a) does not limit §602(a)(1) because the former authorizes owners only to ‘sell’ or ‘dispose’ of copies—not to import them: The Act’s first-sale provision and its importation ban thus regulate separate, non-overlapping spheres of conduct.”

This interpretation would result in a win-win. Kagan explains that it “would enable the copyright owner to divide international markets in the way John Wiley claims Congress intended when enacting §602(a)(1). But it would do so without imposing downstream liability on those who purchase and resell in the United States copies that happen to have been manu- factured abroad.”

In other words, that outcome would target unauthorized importers alone, and not the “libraries, used-book dealers, technology companies, consumer-goods retailers, and museums” with whom the Court today is rightly concerned. Assuming Congress adopted §602(a)(1) to permit market segmentation, I suspect that is how Congress thought the provision would work—not by removing first-sale protection from every copy manufactured abroad (as John Wiley urges us to do here), but by enabling the copyright holder to control imports even when the first-sale doctrine applies (as Quality King now prevents).

Kagan concludes by emphasizing that, “If Congress thinks copyright owners need greater power to restrict importation and thus divide markets, a ready solution is at hand—not the one John Wiley offers in this case, but the one the Court rejected in Quality King.” On a personal note, I find this argument compelling. Following oral arguments in Kirtsaeng last October, I even suggested the Supreme Court consider this very idea of overturning this portion of Quality King (as well as going into more detail about the argument Kagan makes here). Congress could restore the original purpose of §602(a)(1) without touching the first sale doctrine by making it clear that “importation” is not considered a sale or other disposition. This way forward would not only be elegant, but likely agreeable to both sides.

Last Monday was the deadline for comments on orphan works to be submitted to the U.S. Copyright Office. All comments are currently publicly available at the Office’s orphan works section. Legislation that have limited remedies for the use of orphan works if a copyright owner later emerged failed to pass in 2008, and the issue of orphan works lay dormant in Congress since then. Last year, however, the Copyright Office indicated that addressing orphan works was still one of its priorities, especially in the context of mass digitization projects, which have been growing in size and scope. And so it solicited comments on legal and business developments regarding orphan works since 2008 and inquired about potential orphan work solutions in the context of mass digitization projects.

Orphan works, of course, are works where the copyright owner is either unidentifiable or unlocatable. Such works may still have commercial, cultural, or historical value, but because there is no one to grant permission for these uses, the works lie fallow, especially by risk-averse institutions like libraries and archivists.

As with any discussion of copyright issues, some respondents could not resist using this opportunity to get in a few digs at some of the fundamental aspects of current copyright law. One such aspect is copyright’s automatic nature — protection vests as soon as a work is created and fixed in a tangible medium, as opposed to requiring registration and publication.

In its comment, the Computer & Communications Industry Association claims “Moving away from an ‘opt-in’ default for copyright protection was the most proximate cause of the orphan works problem.” This is echoed by several other respondents, including a joint comment from the Electronic Frontier Foundation and Public Knowledge:

While the renewed interest in orphan works is much appreciated, it also is worth noting that the persistent problem of orphan works is due mostly to three dangerous and sadly persistent aspects of U.S. copyright law: extremely long terms, high statutory damages, and a lack of formalities for copyright protection. With copyright terms commonly lasting more than a century, the number of works that cannot be matched with their rightsholders will necessarily be high. Add to this the fact that no effort beyond the initial fixation of the work itself is required for protection, and the number of copyrighted works in existence in the world becomes astronomical, and increases by millions each day.

Similarly, the Digital Media Association writes:

As the Office has repeatedly noted, including most recently in the present NOI itself, the acceleration of the orphan works issue, an unavoidable result of the progress into the current age of mass utilization, has been further exacerbated by a series of changes in U.S. copyright law over the past half century. These changes have seen the United States Copyright Act modified with relaxed registration requirements, random exceptions and various, difficult-to-interpret extensions to copyright terms for works. These changes, both unilateral and as part of U.S. attempts to come into compliance with various obligations under international treaties, resulted in the removal of certain obligations for copyright owners to proactively assert and manage their rights. The removal of those formalities, which helped enable the public and copyright users to identify the creators and owners of copyrighted works, coupled with the various ever-increasing scope and term of copyrights, has made the issue of orphan works particularly important and something that must be dealt with immediately.

To be fair, the Copyright Office itself has referred to these changes in the Copyright Act of 1976 as exacerbating the orphan works problems on multiple occasions, including in its 2006 Report on Orphan Works.

Nevertheless, when it comes to unpublished works, this is wrong. Provisions in the 1976 Copyright Act addressing unpublished works did far more to alleviate any orphan works problems than any other law or proposal — and solved more problems than those that may have been caused by registration or duration provisions.

Unpublished works comprise a major part of the orphan works population as the comments received by the Copyright Office indicate.

The response from University of North Carolina-Chapel Hill Libraries, for example, indicates that its special collections includes “unpublished manuscripts, letters, and diaries”, such as the Watson Collection, which “consists of 7.5 linear feet of correspondence written between 1873 and 1986.” Emory University Libraries notes, “Much of the special collection materials in libraries … consist of unpublished works or works never created for commercial gain.” And the Society of American Archivists specifically cites unpublished works in its collections that require greater protections to use. And the Copyright Office’s 2006 Report notes strong opposition to excluding unpublished works from any legislation, opposition that came from a “good number of commenters.”1

So what did the Copyright Act of 1976 do that fundamentally changed the situation regarding unpublished works? Simply put, it eliminated common law protection of such works and brought them under the umbrella of federal, statutory protection.

History of common law protection for unpublished works

The protection of unpublished works at common law was recognized consistently and continuously for nearly as long as statutory copyright first appeared in England in 1710.

One of the earliest and most influential cases to enunciate this doctrine was Pope v. Curl, in 1741. Noted English poet Alexander Pope sought an injunction against bookseller Edmund Curl to stop him from printing a book of Pope’s letters. Curl argued that Pope maintained no form of property over the letters once he had sent them. The Court disagreed and held that Pope was entitled to an injunction. This despite the Statute of Anne, passed in 1710, applying only to published books, not unpublished letters.

Courts, including U.S. courts, would continue to cite to Pope for the proposition that, even in the presence of statutory copyright law, the common law continued to protect unpublished works. Within a century of the decision, the U.S. would confront issues of common law copyright in Wheaton and Donaldson v Peters. The Court ultimately held that U.S. copyright statutes supplanted any common law copyright upon publication of a work. Before publication, however, was a different story — “That an author, at common law, has a property in his manuscript, and may obtain redress against any one who deprives him of it, or by improperly obtaining a copy endeavours to realise a profit by its publication, cannot be doubted.”

Exactly 100 years after Pope, the Supreme Court confirmed that holding in Folsom v. Marsh, regarded as the origin of the fair use doctrine in the United States. Justice Story explained in his opinion there:

In short, the person, to whom letters are addressed, has but a limited right, or special property, (if I may so call it), in such letters, as a trustee, or bailee, for particular purposes, either of information or of protection, or of support of his own rights and character. The general property, and the general rights incident to property, belong to the writer, whether the letters are literary compositions, or familiar letters, or details of facts, or letters of business. The general property in the manuscripts remains in the writer and his representatives, as well as the general copyright. A fortiori, third persons, standing in no privity with either party, are not entitled to publish them, to subserve their own private purposes of interest, or curiosity, or passion.

These and other cases addressing unpublished works noted that though their protection was similar to protection of published works under statutory copyright, there was a major distinction between the two forms of copyright. Statutory copyright was primarily seen as protecting pecuniary interests, but common law copyright protection of unpublished works was decidedly not pecuniary — by keeping such works from the public, the author either wasn’t interested in or refused to commercially exploit them. As Folsom indicates, protection was justified primarily because jurists considered such works the property of the individual. It would not be until the end of the 19th Century that the reason for such protection would be expressed in more modern terms: as a right to privacy.

Louis Brandeis and Samuel Warren nearly single-handedly gave us the current day conception of the doctrine of the right to privacy — the “right to be let alone” — in the seminal 1890 Harvard Law Review article, The Right to Privacy.2 Brandeis and Warren position this right to privacy as a generalized concept that includes within it the common law copyright for literary and artistic works.

The common law secures to each individual the right of determining, ordinarily, to what extent his thoughts, sentiments, and emotions shall be communicated to others. … The existence of this right does not depend upon the particular method of expression adopted. It is immaterial whether it be by word or by signs, in painting, by sculpture, or in music.

They note that protection does not hinge on the literary merit of the work. “The same protection is accorded to a casual letter or an entry in a diary and to the most valuable poem or essay, to a botch or daub and to a masterpiece. In every such case the individual is entitled to decide whether that which is his shall be given to the public. No other has the right to publish his productions in any form, without his consent.” Also noted is the terminus of this right — publication — and how this serves as one of the distinctions between common law and statutory copyright:

The right is lost only when the author himself communicates his production to the public, — in other words, publishes it. It is entirely independent of the copyright laws, and their extension into the domain of art. The aim of those statutes is to secure to the author, composer, or artist the entire profits arising from publication; but the common-law protection enables him to control absolutely the act of publication, and in the exercise of his own discretion, to decide whether there shall be any publication at all. The statutory right is of no value, unless there is a publication; the common-law right is lost as soon as there is a publication.

Brandeis and Warren later argue that, unlike statutory copyright, common law copyright protects specific expression and any facts native to that expression, as well as what today we would call “metadata.”

A man records in a letter to his son, or in his diary, that he did not dine with his wife on a certain day. No one into whose hands those papers fall could publish them to the world, even if possession of the documents had been obtained rightfully; and the prohibition would not be confined to the publication of a copy of the letter itself, or of the diary entry; the restraint extends also to a publication of the contents. What is the thing which is protected? Surely, not the intellectual act of recording the fact that the husband did not dine with his wife, but that fact itself. It is not the intellectual product, but the domestic occurrence. A man writes a dozen letters to different people. No person would be permitted to publish a list of the letters written. If the letters or the contents of the diary were protected as literary compositions, the scope of the protection afforded should be the same secured to a published writing under the copyright law. But the copyright law would not prevent an enumeration of the letters, or the publication of some of the facts contained therein. The copyright of a series of paintings or etchings would prevent a reproduction of the paintings as pictures ; but it would not prevent a publication of list or even a description of them.

Well-settled at this point, common law copyright protection of unpublished works survived the first major revision of copyright law in the 20th century. The 1909 Copyright Act explicitly recognized this common law copyright, stating that the Act “shall [not] be construed to annul or limit the right of the author or proprietor of an unpublished work, at common law or in equity, to prevent the copying, publication, or use of such unpublished work without his consent, and to obtain damages therefor.”3

Protection of unpublished works remained strong in the decades that followed. Perhaps the strongest endorsement of this principle comes from a DC Circuit Court in 1936, which stated, “That there is and always has been a property right in letters and other writings which a court of equity will protect is too well settled to discuss. It is one of those rights which antedate the Constitution. It is inherent in a free government.”4

C.I.A.: Copyright In Action

For a good history of common law copyright protection of unpublished works arising from a remarkably intriguing set of facts, check out the 1977 case Birnbaum v. U.S.5

This case involves HTLINGUAL, a secret (and unlawful) CIA project that involved the opening, reading, and copying of mail that came in and out of the United States for two decades.  The government did not dispute the illegality of its acts during the lawsuit — the only issue confronting the court was whether the government could be sued for its actions and, if so, whether its actions were compensable under state tort law (in this case, New York). The court held that the government could be sued, then turned to consider which cause of action it could be sued for.

Among these, the court considered common law copyright. The court began its discussion by saying,

Common law copyright reserves to authors the right to control the time and circumstances of the first publication of their works. The right has been important to artists, professional writers, scholars and others whose intellectual productions have some commercial value. But the doctrine also has been utilized to shield writers of ordinary, nonliterary letters against the misappropriation and nonconsensual publication of their correspondence.

The court launches into an examination of the legal history of common law copyright, discussing Pope v. Curl, than seguing to Folsom v. Marsh. Aside from a few early decisions that held otherwise, the law seemed settled that common law copyright protected personal letters. The court here continued,

Story expounded further on this theme in his treatise on equity jurisprudence, where he eloquently urged that the true value preserved in many instances by the application of common law copyright was not dollars and cents but privacy. His thesis greatly influenced American courts and was explicitly adopted in New York in Woolsey v. JuddThe court placed its decision squarely on the need of society for a “free interchange,” writing:

Our own views and feelings, we do not hesitate to declare, correspond entirely with those which Mr. Justice Story, in the most elaborate and useful of his works, has very forcibly expressed. We agree with him, that the unauthorized publication of [personal] letters, “unless in cases where necessary to the vindication of the rights or conduct of the party against unjust claims or imputations, is perhaps, one of the most odious breaches of private confidence, of social duty, and of honorable feelings which can well be imagined. It strikes at the root of that free interchange of advice, opinions and sentiments, which seems essential to the well-being of society . . ..” (2 Story’s Equity Jur. § 946.)6

To drive the point home even more sharply that common law copyright is a device by which New York courts protect the privacy interest in the property of a letter, the opinion concluded:

[I]t is with no ordinary satisfaction that, in closing this discussion, we find ourselves in a condition to affirm that the rules of law relative to the publication of private letters, are in perfect harmony with those of social duty and sound morality, and, in the protection which they afford to individuals, consult and promote the highest interests of society.

The few subsequent New York cases to consider the issue have reaffirmed the theme that common law copyright protects an author’s privacy as well as his pocketbook.

The court ultimately held that the government had violated plaintiffs’ common law copyright in this case by copying their personal letters and “publishing” them (under the meaning of that term for common law copyright purposes).

Absolute and Perpetual Property

There is no doubt that the protection of unpublished works by common law copyright until the Copyright Act of 1976 was enacted was well-established. But what was the nature and scope of this protection?

Absolute and perpetual.

Authorities over the past two centuries on multiple occasions have stated that common law copyright protection endured until the work was published — which conceivably means forever if a work is never published.7

At least one court has held that these rights continue indefinitely in the U.S. even if they fall into the public domain in the country of their origin.8 And, it should be added, since common law copyright arises from the states, this unlimited duration is not subject to the Federal Constitution’s “limited times” requirement, a point upheld by the Supreme Court.9

In addition, the doctrine of fair use does not apply to unpublished works under common law copyright.10 In fact, no limitations in copyright law affected common law copyright.11 And, if Brandeis and Warren were correct, protection extended to certain ideas and facts in unpublished works that are not protected under statutory copyright.

Copyright Act of 1976

In the blink of an eye, centuries of common law copyright doctrine vanished when the Copyright Act of 1976 went into effect. The Act included the following provision:

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.12

This had the effect of preempting state and common law copyright. This and other provisions in the 1976 Act brought unpublished works under the protection of federal copyright law. It eliminated publication as the dividing line between common law and statutory protection, extending protection to all works at the moment of creation.13 This also meant that, for the first time in history, fair use (and every other statutory limitation on copyright) extended to unpublished works.

Copyright Office Study on Unpublished Works

This wasn’t accidental. The revision process that led to the 1976 Copyright Act took decades. As part of it, the Copyright Office undertook a number of studies, including one on unpublished works that was released in 1961. In it, the Office examined the current law and considered the pros and cons of bringing unpublished works under federal protection. At times, the study looks at some of the same issues that motivate the present day orphan works efforts. For example, at one point the study notes:

[I]t may be argued that the privacy of authors should be respected by protecting their undisseminated writings against unauthorized disclosure for an unlimited time unless and until they or their heirs or assigns choose to make the disclosure. Thus, the author and his heirs may wish to withhold from the public his less successful works which, in their opinion, might detract from his reputation; or they may wish to keep from the public writings which contain the author’s personal observations regarding contemporary persons or events. On the other hand, it can be argued that after a considerable period of time after the death of the author and his contemporaries, the sensitivity of their remote heirs is no longer entitled to the same consideration, while the accessible “private” writings of the author may be of great interest to scholars, historians, and the public in general. The author or his heirs, or others in possession of his “private” writings, may of course destroy any writings which they believe should never be disclosed; but if these writings remain in existence, there may be a public interest in eventually allowing anyone in possession of an old manuscript to make it available for research or publication without the risk of infringement claims by remote and unknown heirs.14

Included in the final study are a number of comments from individuals that had been solicited by the Copyright Office. Of note is the fact that many who favored protection of unpublished works so that they would eventually be available to scholars and the general public believed that a term of life of the author plus fifty years (which the 1976 Copyright Act would end up adopting) was perfectly adequate to advance this public interest.15

It’s also worth noting that not everyone agreed with protecting unpublished works under federal copyright law. Noted authors’ advocate Irwin Karp wrote in response to the study:

There is no reason, either in history or considerations of policy, to bemoan the fact that an unpublished novel, a personal letter, or an unperformed play, may be protected by common law for periods exceeding the term of statutory copyright. …

It seems to me that the common law property rights in undisclosed works should be preserved. This right is in accordance with a fundamental concept of the democratic form of government; the right of privacy (even though it is not specifically granted in the Constitution). To me, it is also an inevitable concomitant of the right of free speech—that right should include not only the privilege of speaking but of withholding speech.

If an author does not choose to publish something he has conceived and written, that is his own business and nobody else’s. The theoretical loss of valuable works to the community is a risk that must be taken to preserve freedom of thought, speech and privacy—at best it is only a theoretical risk. For every author who may exercise the right of withholding his work, there are a hundred who are only too anxious to disclose the fruits of their minds to the public at the earliest possible opportunity. There is little danger that much will be lost to posterity by permitting those who do not choose to disclose to exercise that privilege.16

Always double-check copyright reform claims

When it comes to unpublished works, the Copyright Act of 1976 did not have the effect that groups mentioned at the beginning of this article say it had: all unpublished works were protected before the Act under common law copyright and protected after the Act under federal law. But more importantly, because of the differences between the two forms of copyright, the Act arguably opened the door for a lot more unpublished works to be made publicly accessible by libraries, museums, and archivists.

Under the 1976 Act, unpublished works would eventually fall into the public domain, unlike under common law. And before the copyright term ends, other parties are now able to make fair use of them. This is especially important for libraries, a number of whom assert in their orphan works comments (erroneously, in my opinion) that the fair use doctrine shields the bulk of their uses of orphan works under mass digitization projects.17 Additionally, Brandeis and Warren suggest that so-called “non-expressive” uses of unpublished works under common law — e.g., indexing, computational linguistics, natural language processing — were previously not allowed. Under federal law, they are. Again, this is important since many mass digitization projects (as well as search engines like Google) have derived great benefit from these “non-expressive” uses of copyrighted works.18

Footnotes

  1. Report on Orphan Works, pg. 100. []
  2. Dorothy Glancy, The Invention of the Right to Privacy, 21 Arizona Law Review 1 (1979). []
  3. 17 USC § 2, added by 35 US Stat 1076 [1909]). []
  4. Hearst v Black, 87 F.2d 68, 70. []
  5. 436 F.Supp 967 (EDNY). []
  6. That is, publishing without permission infringes freedom of speech. []
  7. Drone on Copyright (1879):

    As the law is now expounded, there are important differences between the statutory and the common-law right. The former exists only in works which have been published within the meaning of the statute, and the latter only in works which have not been so published. In the former case ownership is limited to a term of years; in the latter it is perpetual. The rights do not coexist in the same composition; when the statutory right begins the common-law right ends. Both may be defeated by publication. Thus, when a work is published in print, the owner’s common-law rights are lost, and, unless the publication be in accordance with the requirements of the statute, the statutory right is not secured.

    Copyright Office, Copyright Law Revision Study 29, Protection of Unpublished Works, pg. 32 (1961), “The historical theory of copyright law in the U.S. has been to protect private manuscripts against public disclosure, under the common law, for as long as the author or his successors choose to withhold the work from the public.” []

  8. Capitol Records v Naxos, 4 N.Y.3d 540, 562 (NY 2005). []
  9. Goldstein v California, 412 US 546, 560 (1973). []
  10. Harper & Row, Publishers v Nation Enterprises, 471 US 539, 550-51 (1985). []
  11. Protection of Unpublished Works, pg. 4. []
  12. 17 U.S.C. § 301(a). []
  13. Harper & Row at 552. []
  14. Protection of Unpublished Works, pp. 32-33. []
  15. Among them was Judge Learned Hand, who wrote, “I would impose a time limit [on works not publicly disseminated] say for 100 years after the work is created or for 50 years after the author’s death.” []
  16. Protection of Unpublished Works, pg 49, (letter dated April 4, 1958). []
  17. See, for example, comments by the Library Copyright Alliance and MIT Libraries. []
  18. See Matthew Sag, Orphan Works as Grist for Data Mill (Forthcoming, Sept. 1, 2012), for further discussion on nonexpressive uses, data processing in mass digitization projects, and orphan works. []

Reality should always be our starting point for discussing policy, and copyright policy should be no different. This seemingly goes without saying, but when it comes to copyright in particular, a funny thing happens to reality and evidence.

William Patry’s latest book, How to Fix Copyright, is premised largely on the claim that copyright policy lacks any empirical support. More recently, you can see such arguments coming from non-profits like the EFF — Congress Shouldn’t Debate Copyright in a Reality-Free Zone — or bloggers like Cory Doctorow — Copyright policy in the UK: an evidence-free zone.

The irony is that the evidence is there, the reality is there, but sadly, it is all too often ignored or even misrepresented — whether we’re talking about empirical evidence, historical claims, or the realities of operating creative enterprises. It’s troubling to see disagreements about the proper scope of copyright law transform into denialism. (I last addressed this topic in How Much More Evidence?)

Carnegie-Mellon economics professor Michael Smith recently spoke at the Digital Book World conference in New York on the topic of piracy’s negative effects. That was the topic of a meta-study he wrote, along with fellow professor Rahul Telang, that summarized the growing body of research concerning piracy: Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales.

Smith and Telang found that of the papers based on empirical data (as opposed to theoretical models), 25 found economic harm from piracy, while only 4 found little or no harm. And for those who are skeptical of non-academic papers: Smith found that 12 peer-reviewed papers published in academic journals found a negative impact from piracy while only 2 did not (and there are legitimate questions concerning the methodology of those 2 outlier papers, some of which are explored in Stan Liebowitz’s 2005 article Economists’ Topsy-Turvy View of Piracy).

Evidence like this, of course, does not tell us where to go from here. But it is amazing how many who join with skeptics of copyright either don’t know about the scholarly record on piracy or don’t care. Problems with economic arguments stretch beyond just this issue of the harm from piracy. Edmund Kitch explores four broader issues in this area in his 2000 article Elementary and Persistent Errors in the Economic Analysis of Intellectual Property — including the assumption that intellectual property rights are economic monopolies.

This feature of copyright debates, a “willful blindness” to reality if you will, is not limited to just economics — the same could be said of history.

Recent criticisms of copyright, such as the retracted RSC memo or articles published by the Cato Institute, continue the cavalier revision of the historical record that is not uncommon among copyright skeptics. Appeals are made to a copyright past that bears little resemblance to reality. Appeals are made to motivations of the original drafters of U.S. copyright law that just aren’t supported by the historical record, and occasionally are made out of whole cloth.

The Center for Individual Freedom recently published a paper rebutting some of these claims: The Constitutional and Historical Foundations of Copyright Protection. I’ve also written about some of the myths from the birth of copyright law before and pointed to other articles that delve into these and other historical inaccuracies that tend to crop up in copyright discussions.

And an entire book could be written about the myopic view from skeptics of the business realities that creators and industries that rely on copyright face.

So when debates over specific issues in copyright law pop up, or even discussions of more generalized reform, we should be sure that assumptions and claims are grounded in reality. On that, we can all agree. The difficult part is picking which reality — the one based on evidence and facts, or one based on something else.

This past Thursday, the Cato Institute held a forum called Copyright Unbalanced: From Incentive to Excess to discuss the current state of copyright law and issues raised by the Institute’s recently released book with the same title. The panel discussion featured the book’s editor, Jerry Brito of the Mercatus Center, Mitch Glazier of the RIAA, and one of the book’s contributors, law professor Tom Bell.

Much could be said concerning the event and book. I’d like to focus in on one specific point.

Tom Bell says in the book that “to change the way that people think about copyright, we have to change the way they talk about it.” To do so, he proposes banishing the conception of copyright as “property” and instead consider it a “mere privilege”, capable of all sorts of capricious intervention by the government. Bell argues that copyrights do not “deserve” to be called property. What accounts for all this property-talk throughout history?1 According to Bell, “bad philosophy.”

He next provides several examples that purport to distinguish a copyright from other forms of property. Today I want to focus on one specific example Bell provides to distinguish copyright from more deserving forms of property: that “copyright does not qualify for just compensation under the Fifth Amendment’s takings clause.” Bell is correct in noting that “the exact question remains as yet unlitigated,” but how does the rest of his analysis stack up?

Does the Takings Clause Apply to Copyright?

The “Takings Clause” of the Fifth Amendment prohibits Congress (and the States through the Fourteenth Amendment)2 from taking private property for public use, without just compensation. Literally, the government cannot take private property, unless it is for public use, and the government provides just compensation. The clause has been broadened over time: today, it applies not only to an actual taking of legal title to property, but also to regulations that impact the economic use of property in such a way that they can be characterized as a “taking.”3 But, on its face, the clause requires some interest in “property.” It is here Bell makes his argument: if copyright is, indeed, “property”, then the government should be limited by the Fifth Amendment in what it could do.

One could look toward the Supreme Court to see if it is. Indeed, in 1998, four Supreme Court Justices stated that “The ‘private property’ upon which the [Takings] Clause traditionally has focused is a specific interest in physical or intellectual property.” [Emphasis added.]4

That may not be satisfactory enough, since it, though a descriptive statement, is not binding precedent.

We can look instead to another case, where a majority held that trade secrets are property and subject to the Takings Clause (citing, among others, William Blackstone and John Locke):

This general perception of trade secrets as property is consonant with a notion of “property” that extends beyond land and tangible goods and includes the products of an individual’s “labour and invention.”

Although this Court never has squarely addressed the question whether a person can have a property interest in a trade secret, which is admittedly intangible, the Court has found other kinds of intangible interests to be property for purposes of the Fifth Amendment’s Taking Clause. That intangible property rights protected by state law are deserving of the protection of the Taking Clause has long been implicit in the thinking of this Court:

“It is conceivable that [the term `property' in the Taking Clause] was used in its vulgar and untechnical sense of the physical thing with respect to which the citizen exercises rights recognized by law. On the other hand, it may have been employed in a more accurate sense to denote the group of rights inhering in the citizen’s relation to the physical thing, as the right to possess, use and dispose of it. In point of fact, the construction given the phrase has been the latter.”5

The Court later adds:

The right to exclude others is generally “one of the most essential sticks in the bundle of rights that are commonly characterized as property.” With respect to a trade secret, the right to exclude others is central to the very definition of the property interest. Once the data that constitute a trade secret are disclosed to others, or others are allowed to use those data, the holder of the trade secret has lost his property interest in the data. That the data retain usefulness for Monsanto even after they are disclosed — for example, as bases from which to develop new products or refine old products, as marketing and advertising tools, or as information necessary to obtain registration in foreign countries — is irrelevant to the determination of the economic impact of the EPA action on Monsanto’s property right. The economic value of that property right lies in the competitive advantage over others that Monsanto enjoys by virtue of its exclusive access to the data, and disclosure or use by others of the data would destroy that competitive edge.

Patents and copyrights would also be included in this analysis since they enjoy at least as much status (if not more) as property than trade secrets.6

Zoltek v US

Bell, however, relies on Zoltek v US, a 2006 Federal Circuit Court decision, as his sole support for the claim that “copyright does not qualify for just compensation under the Fifth Amendment’s takings clause.”7

But I don’t think the case suggests what Bell says it suggests. In Zoltek, the Federal Circuit rejected the Takings Clause claim of a patent owner whose patent was infringed by the US Government. Not because patents are not Fifth Amendment “property”, but because patent owners already have a remedy against the United States for infringement (the same holds true for copyright infringement).8

The court did not expand its holding past the issue of infringement by the federal government — that is, one cannot draw from the court’s decision the general case, that any interference in a patent or copyright is not subject to the Takings Clause, from the specific case, that infringement by the United States involves a “taking.” (It’s also worth noting that the court’s decision drew a vigorous dissent both in its original decision and in its denial for rehearing.)9

Contrary Case Law

Much more fatal to Bell’s claim that a solitary Circuit Court decision “strongly suggests” copyright is not subject to the Takings Clause is the existence of decisions from five other Circuit Courts that suggest otherwise.

In a 1989 case, the First Circuit was confronted with a situation similar to the one in Zoltek, except here the alleged infringement was done by the state of Massachusetts rather than the federal government, raising the issue of sovereign immunity under the Eleventh Amendment.10 Ultimately, the court held that the Copyright Act did not abrogate sovereign immunity for copyright infringement, but noted that not all was lost for the copyright owner. Massachusetts had separate statutes that allowed tort claims against the state and claims for compensation when private property is confiscated. Said the court:

The statutory scheme manifests a recognition that where private property is taken for public use, a constitutional right to just compensation attaches. Since a copyright is property, [the plaintiff] may very well be able to sue in state court on a state-law claim for essentially the harm that she contends the Commonwealth has perpetrated. And if she exhausts State remedies and establishes that the Massachusetts legal system affords her no just compensation for the wrongful confiscation of her property, the Takings Clause of the federal Constitution might at that point enable her to pursue a damage remedy in federal court.11

A few years prior, the Second Circuit was confronted with a dispute over the validity of a work-for-hire contract.12 The agreement was entered into right before the Copyright Act of 1976 went into effect, while the work at issue, and the subsequent dispute, did not arise until shortly after the Act became law. The Copyright Act of 1976 changed the rules governing the work-for-hire doctrine, and under the circumstances of this case, the difference between the old rule and the new rule would result in a different outcome.

Said the court:

Although the language of the Act, its legislative history and rules of statutory interpretation are sufficient answers to Roth’s claim, we note, en passant, adoption of her interpretation of § 301 would, in addition, raise a serious issue concerning the Act’s constitutionality. An interest in a copyright is a property right protected by the due process and just compensation clauses of the Constitution. The agreement between Roth and the appellees, pursuant to which Roth surrendered any rights she might otherwise have obtained in the copyright, was valid when it was entered into, and a subsequently enacted statute which purported to divest Pritikin and McGrady of their interest in the copyright by invalidating the 1977 agreement could be viewed as an unconstitutional taking. Resolution of this issue is not required for our holding, and will have to wait for an appropriate case.

Moreover, the district court failed to make any findings relevant to this question, and accordingly, we do not decide whether retroactive application would, in fact, violate constitutional restrictions. Even the spectre of a constitutional issue concerning the proper application of the “takings clause”, however, is sufficient cause to construe the statute to provide for exclusively prospective relief, particularly in the absence of any clear congressional mandate to the contrary.13

The Second Circuit again noted the possibility that the Takings Clause applies to copyright in CCC Information Serv. v Maclean Hunter Mkt. Rep.14 There, the creator of a database of used car valuations (CCC) sought a declaration that its copying and republishing of used car values from a competitor was not copyright infringement. It argued, in part, that since the competitor’s used car valuations were incorporated by reference into several state insurance regulations, the compilation of values had “passed into the public domain.” The Second Circuit disagreed, saying:

We are not prepared to hold that a state’s reference to a copyrighted work as a legal standard for valuation results in loss of the copyright. While there are indeed policy considerations that support CCC’s argument, they are opposed by countervailing considerations. For example, a rule that the adoption of such a reference by a state legislature or administrative body deprived the copyright owner of its property would raise very substantial problems under the Takings Clause of the Constitution.15

The Ninth Circuit relied in part on CCC Information to uphold the validity of a copyright in Practice Management Info. v American Medical Ass’n, quoting approvingly the Second Circuit’s Takings Clause discussion.16

The Fifth Circuit has had occasion to weigh in on this issue of copyright and the Takings Clause. Like several of the cases already discussed, Chavez v Arte Publico Press concerned tensions between the Copyright Act and the Eleventh Amendment’s protection of state sovereign immunity.17 Here, an author alleged copyright infringement and breach of contract against the University of Houston, a state institution. During its discussion, the Circuit Court stated, “Copyrights are indeed a species of property, but the extent to which they are protectable against the states raises troubling issues.” Citing to the Supreme Court’s holding in Ruckelshaus that trade secrets are property protected by the Takings Clause, the court said, “By analogy, copyrights constitute intangible property that, for some purposes at least, receives constitutional protection.” The court ultimately held, however, that one of those purposes does not include copyright infringement by a State.

Finally, the Sixth Circuit also appears to have taken the view that copyrights may be subject to the Takings Clause. In a non-precedential opinion, it affirmed the dismissal of a copyright infringement claim against the National Science Foundation because the plaintiff had failed to register his work with the Copyright Office before bringing suit.18 But not without expressing “some doubt as to the grounds for dismissal.” The source of this doubt stemmed from constitutional concerns; as the court noted, “the Copyright Act does not preempt the Fifth Amendment’s Takings Clause.”

In short, it’s reasonable to conclude that the Takings Clause would apply to copyrights — the opposite of what Bell claims. This is obviously but one point in the larger work of Copyright Unbalanced. I may look at other points raised in the book at a later date, but for now would suggest to anyone reading it to approach it with a skeptical eye.

Footnotes

  1. For just one example, see Myths from the Birth of US Copyright for evidence that the Founding Fathers primarily conceived copyright as a property right. []
  2. Chicago B & QR v Chicago, 166 US 226 (1897). []
  3. See Penn Central Transport v New York City, 438 US 104, 124 (1978). []
  4. Eastern Enterprises v Apfel, 524 US 498, 554 (Dissent, J. Stevens, J. Souter, J. Ginsburg, and J. Breyer). []
  5. Ruckelshaus v Monsanto, 467 US 986, 1002-03 (1984). []
  6. In Kewanee Oil v Bicron Corp., 416 US 470, 497 (1974) (J. Douglas & J. Brennan dissenting)., two Supreme Court Justices stated off-hand that, contrary to this case, “A trade secret, unlike a patent, has no property dimension.” So it would follow that a subsequent decision saying trade secrets do in fact have a property dimension for Fifth Amendment purposes implies patents and copyrights certainly fall within the Clause’s scope. []
  7. 442 F.3d 1335. []
  8. See 28 USC § 1498(a), (b). []
  9. 464 F.3d 1335 (2006). []
  10. Lane v First National Bank of Boston, 871 F.2d 166 (1st Cir. 1989). []
  11. Id. at 174. []
  12. Roth v Pritikin, 710 F.3d 934 (2nd Cir. 1983). []
  13. Id. at 939. []
  14. 44 F.3d 61 (2nd Cir. 1994). []
  15. Id. at 74. []
  16. 1212 F.3d 516, 520 (9th Cir. 1997). []
  17. 157 F.3d 282 (5th Cir. 1998). []
  18. Cawley v Sw’earer, 936 F.2d 572 (6th Cir. 1991). []

Late last Friday evening, a policy brief written by 24 year old Derek Khanna was posted to the website for the Republican Study Committee (RSC), a caucus of conservative House Republicans. The brief, Three Myths About Copyright Law and Where to Start to Fix It, was removed from the site Saturday morning, but copies were all over the internet shortly afterward, with critics of copyright applauding the paper.

Many on the internet were quick to declare the paper the absolute most stunningly brilliant paper history has ever produced. Techdirt’s Mike Masnick lamented the fact that, having read the paper, he will no longer be able to enjoy future papers, for they will only pale in comparison.

RSC spokesman Brian Staessle remarked upon retracting the brief that “we hope people will now use this opportunity to engage in polite and serious discussion of copyright law.” I agree. Copyright law increasingly requires dialogue from all corners of society; this is, in fact, one of the reasons I began writing this blog over two years ago.

But any debate or dialogue should begin with sound premises. This policy brief doesn’t. Instead, like an unfortunate strand of copyright skepticism, it runs from reality, rewrites history, and hides from logic.

The brief begins with Khanna presenting three “myths” that he debunks, and then turns to several areas of concern under current copyright law while finally offering a number of potential policy solutions. Today I want to begin an in-depth look at the brief, starting with the first two “myths”. In later posts, I will look at the remaining sections.

Myth 1. The purpose of copyright is to compensate the creator of the content

Khanna begins:

It’s a common misperception that the Constitution enables our current legal regime of copyright protection – in fact, it does not. The Constitution’s clause on Copyright and patents states:

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” (Article I, Section 8, Clause 8)

Thus, according to the Constitution, the overriding purpose of the copyright system is to “promote the progress of science and useful arts.” In today’s terminology we may say that the purpose is to lead to maximum productivity and innovation

Khanna is correct on one point: the view of the Copyright Clause he disagrees with is indeed common. But rather than being a misperception, this is the view embraced by the Founding Fathers and, over the past 200 years, the Supreme Court, Congress, and numerous jurists, scholars, and writers.1

In recent decades, many copyright skeptics have increasingly turned to the Founding period of US history in search of arguments against the perceived overreach of the law. This search has given birth to many myths about the goals and purposes of Congress’s copyright power.

Though there was little said about the copyright power during this time, what was said more often than not supports a property right to establish a functioning market for the creation and dissemination of expressive works, not the utilitarian view embraced by Khanna here.

This is evident several years before the Constitution would be drafted. James Madison, who would author the Copyright Clause sat on the committee of the Continental Congress which recommended that the states pass laws protecting copyright. In March 1783, this committee issued a report saying it was “persuaded that nothing is more properly a man’s own than the fruit of his study, and that the protection and security of literary property would greatly tend to encourage genius.”2

Most of the States that subsequently adopted copyright statutes explicitly adopted the Continental Congress’s natural rights language.3

If compensating creators is not the purpose of copyright law, then early lawmakers must not have gotten the memo either. As the first Congress worked on a copyright act, South Carolina Representative Aedenus Burke urged his fellow Representatives of the importance to creators of passing a copyright bill, noting “several gentlemen had lately published the fruits of their industry and application, and were every hour in danger of having them surreptitiously printed.”4

Most telling, the Supreme Court has spoken on the Constitutional purpose of copyright twice in the past decade. Claims similar to Khanna’s were thoroughly rejected by the Court in 2003:

JUSTICE STEVENS’ characterization of reward to the author as “a secondary consideration” of copyright law understates the relationship between such rewards and the “Progress of Science.” As we have explained, “[t]he economic philosophy behind the [Copyright] [C]lause … is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors.” Accordingly, “copyright law celebrates the profit motive, recognizing that the incentive to profit from the exploitation of copyrights will redound to the public benefit by resulting in the proliferation of knowledge…. The profit motive is the engine that ensures the progress of science.” Rewarding authors for their creative labor and “promot[ing] … Progress” are thus complementary; as James Madison observed, in copyright “[t]he public good fully coincides . . . with the claims of individuals.” JUSTICE BREYER’s assertion that “copyright statutes must serve public, not private, ends,” similarly misses the mark. The two ends are not mutually exclusive; copyright law serves public ends by providing individuals with an incentive to pursue private ones.5

And again in 2012:

Even were we writing on a clean slate, petitioners’ argument would be unavailing. Nothing in the text of the Copyright Clause confines the “Progress of Science” exclusively to “incentives for creation.” Evidence from the founding, moreover, suggests that inducing dissemination—as opposed to creation—was viewed as an appropriate means to promote science. Until 1976, in fact, Congress made “federal copyright contingent on publication[,] [thereby] providing incentives not primarily for creation,” but for dissemination. Our decisions correspondingly recognize that “copyright supplies the economic incentive to create and disseminate ideas.6

Khanna next attempts to cast proponents of copyright as somehow taking an “entitlement” mentality toward their rights. He concludes this first section by saying:

Strictly speaking, because of the constitutional basis of copyright and patent, legislative discussions on copyright/patent reform should be based upon what promotes the maximum “progress of sciences and useful arts” instead of “deserving” financial compensation.

I doubt many — if any — creators believe they are “entitled” to financial compensation merely because they have created something. Like any market, creators are only entitled to seek profit, not have it given to them. As Irwin Karp testified during the last Copyright Act revision, though the Copyright Clause establishes these rights, “it does not guarantee a fair reward, or any reward.”

For authors and publishers, both commercial and non-profit, must depend on income derived from uses of their books and journals to compensate for the talent, labor and money expended in creating them, and provide working capital for further publications. And as entrepreneurs, they must assume the ever-present risk that books and journals produced by substantial labor and cash outlays will fail financially although they make valuable intellectual contributions to the public interest.

But there’s a huge difference between feeling entitled to a reward and arguing for compensation when economic users exploit one of the exclusive rights of a work — by reproducing or publicly performing a work, for example. One of the favorite claims of copyright skeptics is that creators routinely oppose new technology because it “disrupts their business model.”7 On the contrary, it is often the case that the businesses utilizing the new technology are the ones who feel entitled — entitled to profit off the exploitation of established rights without compensating creators merely because they are using new technology. In this case, creators do “deserve” compensation. This isn’t a prize at the bottom of the box, it’s one of the foundations of a just capitalist society.

Myth 2. Copyright is free market capitalism at work

Khanna next writes:

Copyright violates nearly every tenet of laissez faire capitalism. Under the current system of copyright, producers of content are entitled to a guaranteed, government instituted, government subsidized content-monopoly

These two sentences are packed with so many misconceptions that I want to address them each one by one.

First, copyright has historically been treated like property — not a government subsidy.

Thomas Paine said in 1782, “in all countries where literature is protected, and it never can flourish where it is not, the works of an author are his legal property.”

At the birth of the United States, copyright was couched in terms of property more often that not. In Copyright and Incomplete Historiographies: Of Piracy, Propertization, and Thomas Jefferson, Justin Hughes traces the “robust history of copyright being referred to as ‘property.’”8 Most frequently, those involved in the creation and maintenance of copyright law have cited to the work of John Locke and his labor theory of property to justify copyright — a view that remains viable to this day.

Eaton Drone’s 1879 treatise on copyright, considered “the most extensive and comprehensive published on the topic in the United States in the nineteenth century” and the dominant treatise for decades, also embraced the view of copyright as property in Lockean terms. More importantly, it noted, in stark terms, that “To preserve the sanctity of property has ever been a chief function of government. Next to protecting the lives and liberties of the people, it is the highest.”

Not only is the security of property a chief function of government, but its protection is inextricably linked to the advancement of life and liberty. Even today, this important role of property in free capitalist societies continues to be expressed:

States which did not guarantee property and contract did not flourish economically compared to states that did. . . Property and contract law have indeed been foundational to enabling capitalism to take off. . . The emergence of well defined, secure property rights was a part of a much broader historical process in which absolute monarchies and their legitimating political philosophies lost their institutional dominance to be replaced by the institution of the modern state and secular political philosophies that recognized the rights of individuals within and against the state. . . The idea of a natural right of property was one crucial premise in John Locke’s rejection of the absolute authority of Kings.9

Like property in general, copyright — the recognition of the rights of creators — has contributed to free society. Former Register of Copyrights Barbara Ringer wrote in 1974, “It is striking that the second and third copyright statutes in the world — those of the United States of America and of France — were adopted immediately following the revolutions in those countries that overthrew autocratic government and were based on ideals of personal liberty and individual freedom.” She adds:

Freedom of speech and freedom of the press are meaningless unless authors are able to create independently from control by anyone, and to find a way to put their works before the public. Economic advantage and the shibboleth of “convenience” distort the copyright law into a weapon against authors. Anyone who cares about freedom and authorship must insure that, in the process of improving the efficiency of our law, we do not throw it all the way back to its repressive origins in the Middle Ages.

Far from the government instituted regulation that Khanna suggests in his policy brief, copyright is no more and no less like any other free market system.10

In fact, the Constitutional Convention delegates explicitly rejected proposals that would give the federal government a more active role in promoting the progress of the sciences and useful arts — for example, the establishment of a national university or provisions for premiums and rewards to inventors and authors.11 The delegates tossed these aside for the hands-off approach embodied in the Copyright Clause, which would establish a functioning market for expression. This suggests that the delegates thought the pursuit of self-interest would best serve to promote the public interest — as James Madison said of the Clause in the Federalist Papers, “The public good fully coincides. . . with the claims of individuals.”

Some might argue that the promotion of the public interest through the pursuit of self-interest is one of the cornerstones of capitalism.12

Much along the same lines, Khanna’s characterization of copyright as “government-subsidized” is completely erroneous. The government offers nothing to creators except a functioning market to pursue their own ends. Khanna’s suggestion that because copyright holders can pursue civil and criminal remedies for infringement acts as a subsidy is bizarre. That would make all property a government subsidy — contracts too, since contractual parties can turn to courts in the event of a breach. Khanna asserts that because the statutory damages are “massive”, this creates a subsidy. While I think it’s completely appropriate to debate whether copyright remedies are fair and effective, for purposes of this myth, it’s enough to point out that the nature of the remedies does not transform a copyright into a government subsidy.

Second, Khanna describes copyright as a “content-monopoly.”

There is perhaps no more elementary and persistent error in the history of copyright then the claim that it is a monopoly.13 And, just as persistently, it has been debunked.

As in the entry for “monopolies” in an 1839 encyclopedia, which states, “Copyright and patents are now generally placed among monopolies by legal writers, but not correctly.”14 A treatise on literary property written around the same time says:

[The author's] case is precisely the same as that of the maker of houses, who cannot get a monopoly rent, because other men make more houses, as soon as he demands too much. So, when an author who has produced a book for which the demand is great, is unwise enough to ask too high a price, another author, (perhaps greater than he,) will write another book on the same subject, and thus demolish his ideal monopoly.15

An 1896 book on copyright goes into more detail, noting that such “monopoly language” is based more on rhetoric than reality:

It is sometimes attempted to stigmatize copyright as monopoly, and writers of loose and careless habit sometimes speak of copyright as monopoly. It is no more monopoly than is the ordinary ownership of a horse or a piece of land. Blackstone says that a monopoly is—

A license or privilege . . . whereby the subject in general is restrained from that liberty of manufacturing or trading which he had before.

The law dictionaries define it in the same way. A monopoly takes away from the public the enjoyment of something which the public before possessed. Neither copyright nor patent does this, for neither can be applied to anything which is not new; neither can be applied to anything which the public before possessed. The author and inventor must produce something new in order to be entitled to copyright or patent.16

There are many other examples from more recent decades.17

Finally, as the Supreme Court said in one of its more recent copyright cases, “copyright gives the holder no monopoly on any knowledge. A reader of an author’s writing may make full use of any fact or idea she acquires from her reading.”18

Final Notes

Next time, I’ll dive into the remaining pages of Derek Khanna’s policy brief, but, in my opinion it has so far not gotten off to a great start.

Parker Higgins of the EFF said of the paper that Congress shouldn’t debate copyright in a reality-free zone. I agree. But we should concentrate on actual reality, not the alternative reality that Khanna and some other copyright skeptics have constructed over the past few years. No doubt there are areas of copyright law that need improving. And certainly there’s no argument that some who favor the continuing vitality of creators’ rights at times use unhelpful rhetoric. But Khanna’s brief is Exhibit A in what not to do. A fair, just, and equitable marketplace for creative expression deserves better.

Read Republican Study Committee Policy Brief on Copyright: Part 2

Footnotes

  1. See my post Copyright is for the Author First and the Nation Second. []
  2. 24 Journals of the Continental Congress 326. []
  3. The preambles to the Massachusetts, New Hampshire, and Rhode Island copyright acts stated:

    Whereas the improvement of knowledge, the progress of civilization, the publick weal of the Commonwealth, and the advancement of human happiness, greatly depend on the efforts of learned and ingenious persons in the various arts and sciences: As the principal encouragement such persons can have to make great and beneficial exertions of this nature, must exist in the legal security of the fruits of their study and industry to themselves, and as such security is one of the natural rights of all men, there being no property more peculiarly man’s own than that which is produced by the labour of his mind.

    In a similar fashion, North Carolina’s copyright act read:

    Whereas nothing is more strictly a man’s own than the fruit of his study, and it is proper that men should be encouraged to pursue useful knowledge by the hope of reward; and as the security of literary property must greatly tend to encourage genius, to promote useful discoveries and to the general extension of art and commerce. []

  4. Annals of Congress, 1st Cong., 2nd sess., 1080. []
  5. Eldred v Ashcroft, 537 US 186, n.18. []
  6. Golan v Holder, 565 US ___ (2012). []
  7. See, for example, previous posts on The Story of John and Jack and 100 Years of Copyright and Disruptive Technology. []
  8. 79 Southern California Law Review 993, 1004 (2006). []
  9. Dr. Peter Drahos, The Universality of Intellectual Property Rights: Origins and Developments. []
  10. See also Testimony of Irwin Karp: “the instrument chosen by the Constitution to serve the public interest, i.e., the securing of literary and scientific works of lasting value — is an independent, entrepreneurial property-rights system of writing and publishing”; David Householder, The Progress of Knowledge: A Reexamination of the Fundamental Principles of American Copyright Law, 14 Loy. L.A. Ent. L. Rev. 1, 35 (1993): the Copyright Clause “assumes that promoting the progress of knowledge is advantageous and directs Congress to achieve this benefit by securing exclusive rights in intellectual property. It mandates the creation of a marketplace, wherein this unique form of property, the copyright, may be traded and protected.” []
  11. The Records of the Federal Convention of 1787, Vol. 2, August 18, 1787, ed. Max Farrand (New Haven: Yale University Press, 1911). []
  12. Some might also argue that “to oppose copyright is to oppose capitalism.” []
  13. This phrase comes from Edmund W. Kitch, Elementary and Persistent Errors in the Economic Analysis of Intellectual Property, 53 Vand. L. Rev. 1727 (2000). []
  14. The Penny Cyclopedia of the Society for the Diffusion of Useful Knowledge, Vol. 15, pg 341 (C. Knight, London, 1839). []
  15. Philip H. Nicklin, Remarks on Literary Property (Phila. 1838). []
  16. The Question of Copyright, pg. 86 (GP Putnam, 1896). []
  17. See, for example, RR Bowker, Copyright, Its History and Its Law, pg 50 (Houghton Mifflin 1912), “Copyright is a monopoly only in the sense that any ownership is a monopoly”; Karp, Id.,

    The copyright in a book is not a “monopoly” in the antitrust sense. It does not give the author control over the market in books, or the business of publishing them. His book must compete in the market place with the 40,000 other titles published that year and the hundreds of thousands still in print from prior years, including many that deal with the same subject. His copyright only gives him certain rights to use the book he created. The owner of a copyright only has a “monopoly” in the innocuous sense that all property owners do — each owns a collection of rights, granted by law, to use that which he has created, purchased or inherited.

    Householder, Id.,

    It is like saying the owner of the lot on the northwest comer of Elm and First Streets controls, and is able to exclude competitors from the market for, property on the northwest comer of Elm and First Streets. That owner’s right is a property right; calling it a monopoly adds nothing to an understanding of the owner’s rights. Such usage merely serves to make the meaning of the term “monopoly” less precise and therefore less useful. []

  18. Eldred v Ashcroft, 537 US 186, 217 (2003). []

Last week, Google expanded its Transparency Report to include data on notices it has received from copyright owners for links to infringing content. The Report now shows the number of notices, as well as their sources and targets, since July 2011.

The massive data release has triggered plenty of comment from news outlets and bloggers following copyright and internet issues. But there is one interesting fact drawn from Google’s Report that I want to highlight.

Copyright skeptics commonly try to make the claim that copyright enforcement is prone to abuse.1

These claims were especially prevalent during last winter’s debates over SOPA and PIPA. In an article on Popular Mechanics, for example, Adam Savage of Mythbusters said, “This is exactly what will happen with Protect IP and SOPA. We’ve seen it again and again. Give people a club like this and you can kiss the Internet as you know it goodbye.”2

The Google Report, however, paints quite a different story.

Google notes that, “From time to time, we may receive inaccurate or unjustified copyright removal requests for search results that clearly do not link to infringing content,” adding that it does not comply with such requests. How many of these requests are there? According to Google, “We removed 97% of search results specified in requests that we received between July and December 2011.” That means that out of all the requests Google receives, only 3% were sent by mistake or in bad faith.

Three percent.

Given the popularity of Google’s search engine3 and the large size of notices in the Report, it is reasonable to conclude that this percentage is representative of DMCA notices as a whole.

Google provides several examples of erroneous notices in its Report FAQ, and tech bloggers have had a field day reporting on these. But the fact remains that they represent a tiny sliver of the population of notices received. Among the noncomplying notices were also some made in apparent bad faith. These are never acceptable, but the number of them among total notices seems reasonable and does not indicate any systemic abuse. The level of “inaccurate or unjustified” requests reported by Google is in line with low-merit claims in other areas of the law — for example, a Harvard School of Public Health study found that 3% of medical malpractice lawsuits involved “no adverse outcomes from medical care.” And, it should be noted, the DMCA provides penalties for making misrepresentations on DMCA notices, penalties that have had negative consequences on several copyright owners — including some claims that copyright skeptics hold up as examples of copyright enforcement abuse.4

The Google Transparency Report reveals that the bogeyman of abusive copyright enforcement is nowhere near as frightening as copyright skeptics have repeatedly portrayed it to be. This is something that should be kept in mind the next time policymakers address the issue of protecting creator’s rights online.

Footnotes

  1. A few examples: The EFF has said, “We’ve seen that power abused time and again.” How PIPA and SOPA Violate White House Principles Supporting Free Speech and Innovation (Jan. 16, 2012); Rebecca MacKinnon and Ivan Sigal warned, “even existing copyright law is abused in attempts to stifle criticism and public debate” Online piracy laws must preserve Web freedom, CNN (Dec. 14, 2011); according to Mike Linksvayer of Creative Commons, “The DMCA was decried by advocates of free speech and the Internet, and has over past 13 years had many harmful effects.” Urgent: Stop [U.S.] American censorship of the Internet, (Nov. 11, 2011). []
  2. Other examples include: NetCoalition, a lobbyist group for Google, Facebook, and Yahoo, warned the bills have a “great potential for abuse by rights holders”; Rebecca MacKinnon of the New America Foundation stated, “Abuses under existing American law serve as troubling predictors for the kinds of abuse by private actors that the House bill would make possible.” Stop the Great Firewall of America, NY Times (Nov. 15, 2011); Julian Sanchez at TechDirt wrote, “This would be more convincing if the content industries weren’t so clearly continuing their long, proud tradition of making aggressive and overbroad copyright claims that would impede speech and innovation.” How SOPA Will be (Ab)Used (Dec. 19, 2011); Mike Loukides of O’Reilly Radar wrote, “there’s already a very lengthy history of copyright abuse by actors ranging from outright trolls such as Righthaven to supposedly reputable movie studios and record labels,” From SOPA to speech: Seven tech trends to monitor (Jan. 19, 2012); these and other claims can be summed up by the question asked by Alex Wexelblat on Copyfight: “It seems to me that the process is broken and people are not following the laws-as-written. How about we focus on fixing what’s on the books and in operation already before we go passing more new laws and further restrictions?” []
  3. According to Search Engine Watch, Google commanded two-thirds of the US market for internet search in February 2012. []
  4. For example, Adam Savage mentions a 2007 DMCA notice sent by Uri Gellar as an example of the kind of abuse that could “destroy the internet as we know it.” Gellar, however, ended up settling a subsequent lawsuit alleging misrepresentation for an undisclosed monetary amount and a court order to freely license the video footage that was the subject of the claim. []

Following the shutdown of Megaupload, Internet folk hero Jonathan Coulton asked:

[W]here is the proof that piracy causes economic harm to anyone? Looking at the music business, yes profits have gone down ever since Napster, but has anyone effectively demonstrated the causal link between that and piracy? There are many alternate theories (people buying songs and not whole albums, music sucking more, niches and indie acts becoming more viable, etc.). The Swiss government did a study and determined that unauthorized downloading (which 1/3 of their citizens do) does not create any loss in revenue for the entertainment industry. I remember but am now too lazy to find links to other studies that say the same thing. I can’t think of any study I’ve seen that demonstrates the opposite. If there is one, please point me to it.

Now, before addressing Coulton’s remarks, I want to be clear — since The Internet can be touchy about such things — that I’m not picking on Coulton; I like some of his music.

Having said that, his remarks about the evidence concerning piracy are quite common. Facts and evidence are important to discussions of copyright policy, and it’s important that we understand exactly what those facts are.

Piracy Causes Harm

As for pointing to studies that demonstrate the harm of unauthorized downloading, I would point to the same link Coulton provided. The Swiss government report1 — not, technically, a study — cites an academic literature review that points to not only one such study but fourteen.

The review, The Economics of Music File Sharing – A Literature Overview, by Peter Tschmuck (Microsoft Word version here), examines 22 studies which look at the effects of filesharing on the music industry. Because some are skeptical of industry generated studies, it should be pointed out that all the studies here are independent, academic studies — working papers, academic journal articles, and dissertations. Of these 22 studies, 14 — roughly two-thirds — conclude that unauthorized downloads have a “negative or even highly negative impact” on recorded music sales.2

Studies since Tschmuck’s only confirm these findings. One notable contribution is economist Stan Liebowitz’s study The Metric is the Message: How Much of the Decline in Sound Recording Sales is Due to File-Sharing? released in November 2011. In it, Liebowitz translates the conclusions of existing studies on the effects of unauthorized downloads on recorded music sales into a common metric to answer the question posed in his title.

His conclusion is stunning: “file-sharing has caused the entire decline in sound recording sales that has occurred since the ascendance of Napster.”

Looking at the available evidence, one thing is clear. It is a fact that there are multiple academic studies that show a significant negative effect on music sales caused by unauthorized downloading, and this conclusion has been reached by a significant majority of researchers. Coulton is not alone in being unaware of these findings — you don’t have to look far to find those who don’t know about the existence of these studies.

But there they are.

Enforcement Boosts Legal Alternatives to Piracy

The fact that evidence backs up one of the central premises of copyright law is, however, only a precursor to the real question: what, if anything, should be done to address the harm from online copyright infringement? The role of law in answering this question attracts perhaps the most heated debate. That leads to the next question: does copyright enforcement work?

Some point to the 400+ page Media Piracy in Emerging Economies report, released in 2011 by the Social Science Research Council and funded by the Ford Foundation, as providing evidence that enforcement “doesn’t work.” But that’s not what the report concludes, as the editor of the report itself, Joe Karaganis, pointed out in a Torrentfreak article last week:

We talk about the efficacy of enforcement at some length in our Media Piracy report. Many readers have concluded that enforcement doesn’t work.  But that isn’t what we say.  We say, rather, that we’ve found no evidence that it has worked.

It’s also important to note what the report researchers looked at to come to that conclusion: the research was primarily qualitative rather than quantitative, relying on interviews, focus groups, and analysis of media reporting.

That said, this is but one study. Other researchers have found evidence that enforcement has led to increases in legal purchases of music.

In a paper released last week, Dr. George Barker of Australian National University analyzed the data from a 2006 Industry Canada survey to conclude that “P2P downloads have strong negative effects on legitimate music purchases” and “stronger copyright laws would substantially increase music purchases and music industry sales revenues.”

These findings are confirmed by another recent study by four economists from Wellesley College and Carnegie Mellon University, which determined that France’s graduated response program (Hadopi) caused “iTunes song and album sales to increase by 22.5% and 25% respectively relative to” countries in a control group that hadn’t enacted graduated response programs.

A Multipronged Approach

The idea that there is no evidence showing a harm from online piracy is erroneous, as is the idea that there is no evidence that people will turn to legal alternatives with more effective enforcement.

So where does that lead us?

I think it’s incorrect to draw the conclusion that better enforcement of copyright equals more enforcement. That’s not true in any area of law, including copyright.

But at the same time, I think it’s incorrect to ignore the evidence. There are those who say piracy is only a business model problem, or a marketing problem, and enforcement should play zero role.

This puts copyright at odds with most other issues. Take driving, for example: we prefer to minimize the harm that comes from accidents. To that end, we build safer cars, we have driver education, but we also have traffic laws and cops to enforce those laws.

There’s nothing inherent to copyright law that warrants an exception to this general practice. The challenges faced by creators and businesses that invest in creativity in the online environment are myriad and require continuing innovation to craft sustainable business models and take advantage of emerging technologies. But they also require attention to legal protection of private rights to ensure that the public continues to benefit from the talents and creativity of authors and artists.

Footnotes

  1. The report is in German. I haven’t tracked down an English version yet, but you can read a Google-translated version here. []
  2. Three of the studies found no significant impact while the remaining five found a positive impact. The literature review looked at a 23rd study but did not classify it here since the author presented a mixed conclusion: the overall effect of unauthorized downloads is insignificant, but for unknown artists, there is a “strongly negative” effect on recorded music sales. []

With rogue sites legislation moving through Congress, there have been some suggestions that, even if the bills were changed to address the (largely unfounded) criticisms of them, the PROTECT IP Act or Stop Online Piracy Act are simply not worth it. Some say that online piracy is not an enforcement issue but a business model issue, or that enforcement just doesn’t work.

The case for the need for such legislation has been made by many others. Judiciary Committee Chairman Lamar Smith noted the harm that rogue sites cause by profiting off the work of others in a statement issued for the Stop Online Piracy Act hearings earlier this month. Smith also pointed out how the DMCA is ineffective against the types of sites targetted by the bill.

I’ve examined the specific provisions in both the House and Senate bills previously, and they are very much likely to change as they move through Congress — Smith says he hopes to markup SOPA by the end of the year. But broadly speaking, is more effective enforcement necessary to protect the incentive for the creation of expressive works?

I think the answer to that is yes. I don’t think online piracy is solely an enforcement issue — just as it’s not solely a business model issue, or a technology issue. It’s all of these and more. There are a range of reasons why consumers pirate, a range of obstacles to building successful digital business models. It defies common sense to completely remove an entire approach from the table.

Ensuring a climate that doesn’t create incentives for pirate services

Harvard law professor Joseph William Singer sums this up eloquently in his recent paper, Subprime: Why a Free and Democratic Society Needs Laws. Singer talks specifically about the subprime mortgage crisis, but from a broader perspective, one that is just as relevant to the market for creativity:

The truth is that markets function because we have the rule of law, and liberty is possible only if we have a robust regulatory state. Markets are defined by a legal framework that sets minimum standards for social and economic relationships. And because we live in a free and democratic society (or aspire to do so), our regulations must be compatible with the norms, ideals, and values that democracies represent.

The exclusive, limited rights of copyright provide the minimum standards for the social and economic relationships at the heart of the market for expressive works. Free Ride author Robert Levine sums it up succinctly when he says “an information economy needs a functioning market for information. Traditionally, that market was created by copyright, but those laws haven’t been enforced effectively online.” Or, as Singer puts it, “Markets are enabled by law; without law, one cannot have a market.”

Any business relies on some level of legal framework — through enforcement of private property rights or contractual obligations. Businesses that rely on intellectual property are even more reliant on legal protection because of the intangible nature of their work. Enforcement of this legal protection remains a vital component of ensuring a functioning market for creative works.

Current law is insufficient to provide this protection online. Economists Olivier Bomsel and Heritiana Ranaivoson explain that

As a consequence, incentives arise all along the vertical chain to let the consumer free ride on copyright. Innovation signals can be then distorted in the sense that copyright infringement may drive industrial research and development, with the consequence of increasing more and more copyright enforcement costs. In other words, as long as the consumer can free-ride on copyright at nearly no cost, the whole copyright institution and the growing benefits it can bring to creative industries are threatened by the powerful incentives given to new infringing means.1

Though Bomsel and Ranaivoson were talking specifically about efforts against end users, the same holds true for online intermediaries. Without effective protection of copyright, intermediaries have every incentive to misappropriate other people’s work as part of their business model. This forestalls the development of legitimate business models — ones that give consumers what they want while also ensuring that the type of high-quality content they want can continue to be produced in the future. And it shows why the solution to online piracy cannot be an either/or choice between better enforcement and better business models: just as enforcement alone won’t lead to increased revenues if there are no legal alternatives for consumers, legal alternatives for consumers have difficulty developing without proper enforcement against infringement.

The Evidence

Album sales reversed their downward trend for the first time in years in 2003 and 2004, after the major record labels began end user litigation.2 More recently, we’ve seen music sales rise following Limewire’s demise. According to Nielsen, after Limewire was shut down by a federal court, “The spike in sales was immediate, noticeable and lasting.”

These effects are likely short term due to the one-off nature of litigation. More lasting effect must come from improved enforcement through legislation.

The March 2009 Final report by Oxford Economics on Economic impact of legislative reform to reduce audio-visual piracy surveyed evidence of the positive effect of enforcement. It noted the following research:

• Short term indications from recent UK research (Entertainment Media Research 2008) of 520 users who obtained unauthorised content digitally indicated 70% would stop their activities if they received an email or call from an ISP.

• Likewise BERR (2009b) refers to international evidence that two thirds of copyright infringers change their behaviour after receiving notification that their conduct is unlawful.

• Waterman et. al.’s (2007) review of the history of film piracy notes how the MPAA tackled the earlier problem of VHS piracy. This involved the introduction of harsher penalties against commercial piracy in 1982, which were further strengthened with the Digital Millennium Copyright Act (DMCA) in 1998. US states simultaneously began to increase penalties. The MPAA also brought prosecutions and raids against video retailers involved in the 16 manufacture and distribution of counterfeit videos. The authors report that losses from US video piracy fell from some 10-15% of legitimate video release revenues to studios in 1987 to roughly 7% of all legitimate video revenues in 2005. While they note the role of changing retail practices and technology, the authors clearly point to enforcement of legislation as an effective deterrent.

• A more sceptical assessment of historical copyright theft – Alexander’s (2007) analysis of legal attempts to confront illegal sheet music in the early 20th century – also acknowledges that the introduction of specific legal measures (the Musical Copyright Act 1906) played an important role in curbing this form of IP theft. She also pointed to the negative relationship between crime rates and the likelihood of conviction. Alexander reviewed these issues in the context of the Gowers Review and the question of whether history could throw any light on the effectiveness of criminal sanctions.

• Walls (2008) conducts a 26 nation cross-country quantitative analysis of film theft in which the cost of enforcing legal contracts (to prevent film theft) is a statistically significant dependent variable. That is, the greater the obstacles to legal methods such as enforcement, the higher the rate of piracy. Likewise, Proserpio et al’s (2005) 64 country study finds a higher degree of likely enforcement of international IP agreements is statistically related to lower movie piracy levels. Andres’ (2006) survey of software piracy in 23 European counties over three time periods (1994,1997 and 2000) finds a statistically significant negative relationship between software piracy and an index of copyright software protection (based on data from national copyright laws as well as civil and criminal codes and international data). Thus, countries with stronger antipiracy legal provisions tend to have lower software piracy levels.

• Finally, on a theoretical level, Harbaugh and Khemka (2001) point to the fact that broader based copyright enforcement (i.e. which captures a wider range of copyright theft rather than just “high value” types such as government and business) can ultimately lead to both lower consumer prices and higher industry profits. So there are social welfare benefits from enforcement. They also argue that private enforcement by copyright holders will tend to be “insufficiently extensive”. This suggests there is a need for government intervention through explicit copyright protection measures and that such measures should be broad in their scope.

The report itself concluded that changes to UK copyright law — including “Anti-camcording legislation”;ƒ “Regulation of car boot sales and occasional markets”; “Effective codes of practice with ISPs, underpinned by legislation”; “Implementation of additional damages regime”; andƒ an “Ongoing copyright awareness campaign” — would result in a direct increase of  revenues in the film and television industries of £268 million.

The Oxford Economics report noted broader results of implementing new antipiracy legislation: “Improvement of the theatre-going experience”, “Higher spending/employment on sets”, “Improved visual effects (UK)”, “Increased production of films”, “Improved employment opportunities for UK actors”, and “Better range/quality of legal online products”.

It also noted some negative effects of not improving the laws: “Loss of first release rights/prestige”, “Camcording in small cinemas and community effects”, and “Exodus of artistic talent”.

For creativity and culture to thrive in the online environment, a host of factors need to work in conjunction: effective enforcement, improved legal business models, more efficient licensing, increased awareness of copyright issues. None of these on their own represent a “silver bullet”, but each is a necessary component.

Footnotes

  1. Olivier Bomsel and Heritiana Ranaivoson, Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response, 6 Review of Economic Research on Copyright Issues 13, 24 (2009). []
  2. Kristina Groennings, An Analysis of the Recording Industry’s Litigation Strategy Against Direct Infringers, 7 Vanderbilt Journal of Entertainment Law & Practice 389 (2005), in response to RIAA litigation, “album sales increased for the first time in several years by 4.7 percent in the last quarter of 2003. In January 2004, sales showed a 10.4 percent increase since January of the previous year”; David Blackburn, On-line Piracy and Recorded Music Sales, Harvard University working paper (2004), “lawsuits brought by the RIAA have resulted in an increase in album sales of approximately 2.9% during the 23 week period after the lawsuit strategy was publicly announced. Furthermore, if files available on-line were reduced across the board by 30%, industry sales would have been approximately 10% higher in 2003″. []

[With the House Judiciary Committee holding a hearing underway on H.R. 3261, the Stop Online Piracy Act, I'd like to share my thoughts on the bill on a more personal level.]

I’m passionate about the framework provided by copyright law because I am passionate about the expressive works that have been created in the US over the past 200 plus years because of this framework. From the silly to the sublime, to those that educate and those that entertain, these works have advanced our society, our culture, and our economy.

As a media and cultural consumer, I am excited by the increasingly innovative new ways I can access the news, movies, television shows, music, and other works I love online, and I strongly hope that those who create them can continue to create. I believe the Stop Online Piracy Act is both necessary and carefully crafted to ensure creators have effective recourse against sites that profit off misappropriation of their work.

Effective copyright protection, on a fundamental level, is a significant governmental interest, and one of the few enumerated powers of the federal government in the Constitution. In 1832, the Supreme Court said “To promote the progress of the useful arts is the interest and policy of every enlightened government.”1

Only two years later, Supreme Court Justice Thompson said in his dissent to the seminal opinion in Wheaton v. Peters, “In my judgment, every principle of justice, equity, morality, fitness and sound policy concurs, in protecting the literary labours of men, to the same extent that property acquired by manual labour is protected.”2

The history of copyright law presents a common theme of technological advancement bringing challenges to creators. In the past, we’ve seen these challenges with the introduction of new forms of media that allowed the recording of sound, images, and motion pictures; broadcasting in the form of radio and television; and even advancements in transportation that have made our world smaller and more connected. Today, creators face challenges to adapt to digital technologies and the Internet, which allows global communication on an unprecedented scale.

But no matter how rapidly technology advances, we should not lose sight of the fundamental principles of “justice, equity, morality, fitness and sound policy” that the protection of expression is built on.

In the words of James Madison, “The public good fully coincides” with “the claims of individuals” under copyright law.3 The introduction of new expressive works, whether in the form of books, music, films, television, or photographs, do much to advance this public good. They teach, entertain, and shed light on the human condition. So it is vitally important that those works are protected just as much online as they are offline.

Copyright Online

The Internet today looks vastly different today than it did in 1998, when the Digital Millennium Copyright Act was enacted. There was no Google, no YouTube, and no Facebook. The technologies that make rich, fully-interactive sites like these possible simply didn’t exist at the time. It would be hard to imagine a world wide web like this today. Today’s web allows a myriad of ways for people to engage in communication, commerce, social networking, entertainment, and learning. This is possible because the technology behind the web continued to progress, rather than being frozen in place. The same should be true of copyright law.

The consensus is that the DMCA has generally worked well for copyright holders and service providers. Its safe harbors shield service providers from liability for material uploaded by users where the service provider doesn’t have knowledge that the material is infringing, doesn’t receive a direct financial benefit from the infringing activity where the provider has the right and ability to control the activity, and acts expeditiously to disable access to uploaded material when it receives a notification of claimed infringement.

These notice-and-takedown provisions can be more effective and efficient for removing infringing material than litigation. They work well, in other words, for good faith, legitimate service providers who cooperate with copyright holders to detect and deal with online infringement.

They should not, however, provide cover for service providers who deliberately set out to build sites based on infringement — where, for example, the site was primarily designed to have no other purpose than to engage in or facilitate infringing acts, the site operator has taken deliberate action to remain unaware of a high probability that the site is used for infringement, or the site operator has taken affirmative steps to promote the use of the site for infringing acts.

The DMCA safe harbors were crafted to provide legal certainty in the new online world and protect service providers from the risk of liability for inadvertent or incidental infringement that they aren’t aware of or can’t monitor or control. They certainly weren’t crafted to protect against those who actively and deliberately design and operate their sites to profit off piracy.

In practice, the DMCA notice-and-takedown provisions are ineffective against sites like this. Many creators would find it a full time job to send notices against these types of sites. And the provisions are especially ineffective against sites that are directed at and easily accessible by US residents but located outside the US and dismissive of US law.

Sections 102 and 103 of the Stop Online Piracy Act fill this gap by giving the Attorney General and copyright holders new tools that directly target rogue sites. The goal of this legislation is not to completely eradicate online piracy, or allow copyright owners to “go back to the way things were.” Piracy is inherently part of the copyright landscape, and it will always exist in some form or another.

The goal is rather to allow creators and legitimate intermediaries to continue to develop sustainable business models that allow both widespread dissemination of content and the ability to be remunerated for investing time and money creating that content. Obviously, one of the big challenges facing creators is figuring out these business models, but that doesn’t mean the law shouldn’t also play a role.

Nearly forty years ago, former Register of Copyrights Barbara Ringer delivered an essay at a time when Congress was in the midst of reforming the Copyright Act to ensure it would remain relevant in the information age. Like today, it was a time of rapid technological change, with new stakeholders emerging and contentious debate. But though the technologies and players were different, Ringer’s words remain just as relevant today:

If the copyright law is to continue to function on the side of light against darkness, good against evil, truth against newspeak, it must broaden its base and its goals. Freedom of speech and freedom of the press are meaningless unless authors are able to create independently from control by anyone, and to find a way to put their works before the public. Economic advantage and the shibboleth of “convenience” distort the copyright law into a weapon against authors. Anyone who cares about freedom and authorship must insure that, in the process of improving the efficiency of our law, we do not throw it all the way back to its repressive origins in the Middle Ages.4

Copyright Law and Freedom of Expression

The introduction of the Stop Online Piracy Act has raised free speech concerns from various parties. It’s absolutely vital that the proposed bill — any bill for that matter — conforms with the First Amendment, which, I believe, it does. Noted First Amendment expert Floyd Abrams believes the bill is fully compatible with First Amendment protections as well, as he explained in a recent letter.

But it’s also important to keep in mind that copyright law itself serves an important role in furthering the goals of freedom of expression. This role has been recognized since the founding of the United States. As the Supreme Court said in Eldred v. Ashcroft, “the Framers intended copyright itself to be the engine of free expression.”5

Founding Father and second president John Adams once wrote, “Property must be secured, or liberty cannot exist.” Our fourth president, and the Father of the Constitution, James Madison added, “The advancement and diffusion of knowledge is the only guardian of true liberty.”

The Copyright Clause in the Constitution incorporates both these ideas, thus serving as a critical component in the protection of liberty. It gives Congress the power to secure to authors the exclusive rights in their writings in order to promote the progress of the useful arts and sciences. The importance of this power cannot be understated, and neither can the importance that these exclusive rights be truly secure in order to promote progress and spur diffusion of new expression.

That copyright law complements rather than conflicts with freedom of expression has been recognized many times since then.

For example, in an 1844 article appearing in The Reasoner magazine, the author writes: “If the public desire a really free press, they must not look to it as a source of taxation; and if they are anxious for truth, for elevated and elevating sentiments, for ideas matured by study and reflection, and an honest exposition of grievances, they must recognise original articles as property, and secure them against a plundering appropriation by a copyright.”

And in an 1880 treatise on the liberty of the press, the author characterizes the “valuable property in the hands of the author who composes and publishes his thoughts” as one of the forms “which the right of free speech and thought assumes.”

Perhaps the best examination of the complementary relationship between copyright and freedom of expression comes Barbara Ringer, who noted:

[I]t is important to recognize that the Statute of Anne of 1710, the first copyright statute anywhere and the Mother of us all, was enacted precisely because the whole autocratic censorship/monopoly/ licensing apparatus had broken down completely. As a result of the bloodless revolution taking place in the English constitutional system, basic individual freedoms, notably freedom of speech and freedom of the press, were becoming established under common law principles. The Statute of Anne marked the end of autocracy in English copyright and established a set of democratic principles : recognition of the individual author as the ultimate beneficiary and fountainhead of protection and a guarantee of legal protection against unauthorized use for limited times, without any elements of prior restraint of censorship by government or its agents.

She later observes, “It is striking that the second and third copyright statutes in the world — those of the United States of America and of France — were adopted immediately following the revolutions in those countries that overthrew autocratic government and were based on ideals of personal liberty and individual freedom.”

Prior restraint and censorship are antithetical to the First Amendment, but doing nothing in the face of rampant online piracy disgraces the goals of freedom of expression as well. The Stop Online Piracy Act helps secure creators’ rights online. Rogue sites jeopardize the ability of creators and firms to invest time and resources into creating new expression that advances society and culture. Current law is insufficient to address this harm; this bill would help restore the security of copyrights online.

Due Process

The rule of law is one of the most central and vital aspects of a free society. The US Constitution guarantees fair and impartial proceedings, protects citizens from arbitrary and unequalapplications of law, and limits what the government can do before depriving someone of life, liberty, or property.

But like freedom of speech, the concept of due process encompasses more than just Constitutional limits. Due process requires that rights have effective remedies available. Doing nothing violates the spirit of the rule of law.

The Stop Online Piracy Act strikes the correct balance between giving copyright holders an effective process for addressing sites whose only purpose is profiting off of the misappropriation of their works and ensuring that legitimate site operators are not punished.

I looked at the process of SOPA in more detail in previous posts: providing a walkthrough, showing why the bill will hit what it aims at, how it complements the DMCA, and why it merely provides new remedies for existing liability.

Conclusion

Sections 102 and 103 of the Stop Online Piracy Act represent a good start for creators who have long noted the injustice of others profiting from online piracy and escaping liability. Web services who are acting legitimately and legally should welcome rogue sites legislation because effective protection of creative labor is vital to a functioning online marketplace, and a functioning online marketplace benefits us all.

With this bill Congress can help secure the exclusive rights of creators. Doing so not only protects creators but also ensures that the development of innovative and sustainable services for consumers to access and enjoy media and content can continue.

Footnotes

  1. Grant v. Raymond, 31 US 218. []
  2. 33 US 591 (1834). []
  3. Federalist papers, No. 43. []
  4. Barbara Ringer, Demonology of Copyright (1974). []
  5. 537 US 186 (2003). []

That every person for every injury done him in his goods, land or person, ought to have remedy by the course of the law of the land and ought to have justice and right for the injury done to him freely without sale, fully without any denial, and speedily without delay, according to the law of the land.1

Ineffective remedies are often just as bad as no remedy at all. While innovative, sustainable services continue to develop, offering consumers exciting and convenient new ways to enjoy content that remunerates creators, rogue actors still find it easy to profit off the misappropriation of someone else’s time and talents.

The Stop Online Piracy Act (H.R. 3261) gives creators more tools to address this type of commercial piracy. Since it was introduced, however, it has been subject to much criticism, and with the House Judiciary Committee holding a hearing on the bill Wednesday, the criticism is sure to continue.

While some of the criticism is legitimate — few bills are perfect when they are first introduced, hence the need for hearings — a lot of it is unfounded. One thing that should be kept in mind is that SOPA does not expand the scope of copyright law, of what is protected or what is not.

The Stop Online Piracy Act creates new remedies, it does not create any new liability.

Section 103 of SOPA provides for a procedure, similar to the notice-and-takedown procedure of the DMCA, that allows copyright holders to better protect their work against commercial misappropriation. This procedure is limited to use against sites that are, as the bill terms them, “dedicated to theft of U.S. property.” The bill includes three separate definitions for a site “dedicated to theft of U.S. property.”

To see why SOPA doesn’t expand the scope of copyright law, compare its definitions to current law. These definitions, for sites “dedicated to the theft of U.S. property”, incorporate existing standards of liability. That is, sites or services that fall within the scope of these definitions are already potentially liable for copyright infringement. All Section 103 of SOPA does is give copyright holders a new tool to more effectively protect their work from commercial misappropriation.

No legitimate purpose

The first definition of a site “dedicated to the theft of U.S. property” under SOPA is one that “is primarily designed or operated for the purpose of, has only limited purpose or use other than, or is marketed by its operator or another acting in concert with that operator for use in, offering goods or services in a manner that engages in, enables, or facilitates” copyright infringement.

The language of this definition mirrors that of the existing provision in the DMCA that prohibits devices that circumvent technological protection measures:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;

(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or

(C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.2

But in a broader sense, this definition draws upon the theory of liability originally set forth in Sony Corporation v. Universal City Studios — the “Betamax” case. There, the Supreme Court held that the sale of a good “does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.” This holding borrowed from the staple article of commerce doctrine in patent law. A corollary to this doctrine is that “where an article is ‘good for nothing else’ but infringement … there is no injustice in presuming or imputing an intent to infringe.”3

There is recognition in Sony itself that its holding on contributory infringement doesn’t extend to products or services which have no purpose other than infringement. Justice Blackmun said in his dissent, “If virtually all of the product’s use, however, is to infringe, contributory liability may be imposed; if no one would buy the product for noninfringing purposes alone, it is clear that the manufacturer is purposely profiting from the infringement, and that liability is appropriately imposed.” Blackmun’s dissent bore a strong resemblance to an earlier draft of what, at one point, was the majority opinion in Sony.4 The language of that draft bears an even stronger resemblance to SOPA’s definition of a site “dedicated to theft of U.S. property”: “Sony can be liable for contributory infringement only if the Betamax’s ‘most conspicuous purpose’ or ‘primary use’ is an infringing use.”5

Willful Blindness

Willful blindness is sometimes also referred to as “Nelsonian knowledge“, after flag office Horatio Nelson, who fought for the British Royal Navy in the late 1700s and early 1800s. The following story explains why — this particular story also serves as the origin of the phrase “turning a blind eye.”

When some of your great grandfathers were little boys, there was a great war between England and France. Many of the battles were fought at sea. England had good ships and brave sailors and bold captains in plenty; but the best sailor and the boldest captain of them all was Lord Horatio Nelson.

[…] In one battle this brave officer lost an eye. In another he lost an arm; but though he had but one eye and one arm, he was always the first in the fight and the last out. He never would give in. At the battle of Copenhagen two of his ships ran aground. Admiral Parker, who had command of the fleet, thought Nelson had no chance of winning: so he hung out the signal to “stop fighting.”

But Nelson took no heed of it. His one eye danced with glee as the guns roared, and ropes and bits of timber flew through the air. When a shot struck the mast of his own ship and broke it to hits, he only said. “Warm work this! But I wouldn’t lie out of it for all the world!” Some one told him that the signal was up to “stop fighting.”

He laughed: and putting the glass to his blind eye, he said: “I don’t see the signal. Keep mine flying for closer battle. Nail it to the mast.” And he kept on fighting till he won the battle; and for his great victory he was made lord admiral of the fleet.6

The second definition of a site “dedicated to theft of U.S. property” under SOPA is a site where “the operator of the U.S.-directed site is taking, or has taken, deliberate actions to avoid confirming a high probability of the use of the U.S.-directed site to carry out acts that constitute” copyright infringement.

The language is taken directly — word for word — from last May’s Supreme Court opinion for Global-Tech Appliances v. SEB. The Court stated that “a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing.”

Global-Tech presented the Court with the question of whether willful blindness can satisfy the knowledge requirement of 35 U.S.C. § 271. However, willful blindness itself is an incontrovertible part of the law. The Court explains:

The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances. The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge. It is also said that persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts.

The Court notes the wide acceptance of the concept of willful blindness. It begins its survey with a case from 1899 which embraced the idea and traces the doctrine through the 20th century. Today, “every Court of Appeals—with the possible exception of the District of Columbia Circuit, has fully embraced willful blindness, applying the doctrine to a wide range of criminal statutes.”

Finally, the Supreme Court presents a general formulation of willful blindness. “While the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways, all appear to agree on two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact.”

The doctrine of willful blindness applies to copyright law just as much as it does to law in general.7

Inducement

The final definition of a site “dedicated to theft of US property” under SOPA is a site operated “with the object of promoting, or has promoted, its use to carry out acts that constitute” copyright infringement, “as shown by clear expression or other affirmative steps taken to foster infringement.”

Like the definition for willful blindness, this definition is taken directly from the Supreme Court. In Metro-Goldwyn-Mayer v. Grokster, the Court stated that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

The Court dubs this “inducement”, and it has been recognized as a form of secondary liability within copyright law for decades. In 1971, for example, the Second Circuit said that “one who, with knowledge of the infringing activity induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.”8

Effective recourse

The Stop Online Piracy Act incorporates long standing principles of liability, principles that have applied to service providers and web site operators since the beginnings of the world wide web. The actions that would subject a provider to SOPA’s provisions are the same ones that would subject it to a copyright infringement suit under existing law and are actions that would not be protected under DMCA safe harbors.

What has been missing has been effective remedies against operators and providers that clearly fall within the scope of this liability: sites that have been purposely designed for the sole purpose of infringement, sites whose operators have taken deliberate steps to blind themselves from the use of their sites to engage in wrongdoing, and sites whose operators have actively promoted the use of their sites for piracy. For smaller content producers and individuals especially, this lack of effective recourse has proven damaging.

The goal of SOPA is to remedy this lack of effective recourse, and ensure that creators have “justice and right” freely, fully, and without delay for the injury caused by rogue sites.

Footnotes

  1. Chief Justice Thomas Philips, The Constitutional Right to a Remedy, 78 New York University Law Review 1309 (2003), paraphrasing Arkansas Constitution art. II, § 13; Illinois Constitution art. I, § 12; Maine Constitution art. I, § 13; Maryland Constitution Decl. of Rights, art. 19; Massachusetts Constitution pt. 1, § 11; Minnesota Constitution art. 1 § 8; New Hampshire Constitution pt. I, art. 14; Rhode Island Constitution art. I, § 5; Vermont Constitution ch. I, art. 4; and Wisconsin Constitution art. I, § 9. []
  2. 17 USC § 1201(a)(2). []
  3. Metro-Goldwyn-Mayer v. Grokster, 545 US 913, 932 (2005). []
  4. Jonathan Band & Andrew J.  McLaughlin, The Marshall Papers: A Peek Behind the Scenes at the Making of Sony v. Universal, 17 Columbia – VLA Journal of Law & the Arts 427 (1993). []
  5. Draft Majority Opinion of Associate Justice Harry A. Blackmun at 35 (June 13, 1983). []
  6. The Brave Lord Nelson, Timely Topics, Vol. v. No. 1, pg 286 (Sept. 7, 1900). []
  7. In re Aimster Copyright Litigation, 334 F.3d 643, 650 (7th Cir. 2003), “Willful blindness is knowledge, in copyright law as it is in the law generally”; See also Island Software and Computer Service v. Microsoft, 413 F.3d 257, 263 (2nd Cir. 2005). []
  8. Gershwin Publishing v. Columbia Artists Management, 443 F.2d 1159, 1162. []
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