Balance in Copyright

posted June 01, 2016 by .

Everybody says we should strive for balance in copyright law. Indeed, who is against balance in principle? The real question is what exactly you mean—what is being balanced?

Copyright skeptics have a consistent answer to this. When Carla Hayden was nominated to be Librarian of Congress earlier this year, American Library Association Managing Director of Government Affairs Adam Eisgrau urged Hayden to talk about the “importance of a real balance in copyright law, one that really puts limitations and exceptions on equal footing with rights.”

Similarly, in an amicus brief to the Supreme Court, Public Knowledge framed the concept of balance in copyright law as one between an author’s right on the one hand and “numerous limitations on the scope of that monopoly right that guarantee to the public certain rights to use, access, and enjoy those created works.”

EFF’s Corynne McSherry has previously written that it is the role of fair use to make sure that “copyrights serve rather than impede the public interest.”

Thanks to copyright rules governing the right to copy, distribute and perform, the folks who held copyrights in the works at issue in the above cases has (and have) a chance to seek compensation. And thanks to copyright rules protecting fair uses, other creative people, their users and the public had (and have) an opportunity to engage with those works in new and unexpected ways. That’s the copyright balance at work.

I contend that this conception of balance, setting authors’ rights on one scale and limitations and exceptions on the other, is both one-dimensional and detrimental to the overall goals of copyright. The underlying assumption is that authors’ interests are distinct from the public’s interests, and that one can only be furthered at the expense of the other. But this isn’t the case.

It seems more accurate to describe authors’ interests and the public’s interests as interrelated and mutually reinforcing. After all, at a very basic sense, the performer and the audience need each other; likewise with the author and the reader. The idea behind copyright is that a marketable right in the tangible expression an author produces is the best way to advance the interests of both. The eighteenth century economist Adam Smith is noted for articulating this logic—that “rational self-interest in a free-market economy leads to economic well-being.” As he says in Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Copyright gives authors a means to pursue their self-interest, and the public benefits as a result of this pursuit.

Although there is a lot of speculation about what motivated the Constitution’s drafters to include copyright authority at the Federal level, the most direct evidence of that motivation points toward an embrace of Smith’s ideas. In The Federalist Papers 43, James Madison, the chief proponent of the Constitution’s Copyright Clause, wrote that “The utility of this power will scarcely be questioned.” Echoing Smith directly, he said, “The public good fully coincides…with the claims of individuals.”

The US Supreme Court has recognized this principle on several occasions. In Mazer v. Stein, it said, “The economic philosophy behind the clause empowering Congress to grant patents and copyrights 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 in ‘Science and useful Arts.'”1347 U.S. 201 (1954).

Register of Copyrights Maria Pallante captured the above discussion perfectly in her 2013 article on The Next Great Copyright Act. There, she says, “The issues of authors are intertwined with the interests of the public. As the first beneficiaries of the copyright law, authors are not a counterweight to the public interest but are instead at the very center of the equation.”

Maintaining Balance in Copyright Law

Once we recognize the intertwined nature of author rights and the public interest, we can examine several ways in which balance between the two is maintained.

First, establishing marketable property rights balances between two of the primary goals of copyright: rewarding the intellectual labor of authors and encouraging the dissemination of expressive works to the public. Generally speaking, authors and distributors want to reach as wide an audience as possible, so they will offer their works on terms and prices that achieve this. The ability to recoup investment in the production and distribution of such works facilitates stable and sustainable markets. And as many have pointed out, though any given individual work is unique, copyright does not have monopolistic properties since there exist many close substitutes, eliminating the ability of copyright owners to extract supracompetitive prices.2See, for example, Tom Sydnor, Can Economic and Historical Analyses End Copyright Law’s Property/Monopoly Disputes?, American Enterprise Institute (2015); Stan Liebowitz, Is the Copyright Monopoly a Best-Selling Fiction? (2008).

Second, a number of internal copyright doctrines balance between ensuring that authors can recoup the value of their work while also preserving the ability for follow-on and downstream creators (and the public) to build on existing works through inspiration, homage, criticism and commentary. The Supreme Court said in Harper & Row v. Nation Enterprises,

The challenge of copyright is to strike the “difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society’s competing interest in the free flow of ideas, information, and commerce on the other hand.”

The “originality” requirement now embodied in § 102 of the Copyright Act is crucial to maintenance of the appropriate balance between these competing interests. Properly interpreted in the light of the legislative history, this section extends copyright protection to an author’s literary form but permits free use by others of the ideas and information the author communicates.

Originality goes toward copyrightability of a work, and it is an admittedly low threshold, requiring only “independent creation plus a modicum of creativity.”3Feist Publications v. Rural Telephone Service, 499 US 340,346 (1991). As the House Report for the 1976 Copyright Act explains, the standard for originality, “does not include requirements of novelty, ingenuity, or esthetic merit.” The distinction between ideas and expression that is discussed later does more work in an infringement analysis, particularly when there has been nonliteral copying or copying of less than an entire work. The distinction between ideas and expression should over time naturally result in an equilibrium between protecting legitimate interests in expressive works while permitting the necessary borrowing from existing works that new works rely upon. Although some individuals may idiosyncratically demand more protection than they deserve, in the aggregate, claims between owners of existing works and creators of new works will balance out. This is especially true when you consider the existence of firms with larger copyright portfolios—they will invariably find themselves on both sides of the “v.” in infringement suits, and so it is in their best interests not to be overly aggressive when arguing what can be protected or what can’t be protected under copyright law.

Third, much of the work balancing between copyright and free speech interests is achieved through the exclusive rights. The Supreme Court has identified two “built-in First Amendment accommodations” to copyright law.4Eldred v Ashcroft, 537 US 186 (2003). One of these is fair use, an exception to exclusive rights, but the other is the idea-expression dichotomy, which acts to define the scope of the exclusive rights themselves. But along with these safeguards, the Court has also recognized that copyright itself promotes free expression. In Harper & Row, the Court called copyright “the engine of free expression” and explained, “By establishing a marketable right to the use of one’s expression, copyright supplies the economic incentive to create and disseminate ideas.” Without these marketable rights, the creation and dissemination of certain types of works would be chilled.

A prime example involves journalism. In looking at whether news clipping service Meltwater’s unauthorized copying of news material from the Associated Press was a fair use, the Southern District Court of New York said the public interest weighed against Meltwater:

Paraphrasing James Madison, the world is indebted to the press for triumphs which have been gained by reason and humanity over error and oppression. Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy.5Associated Press v. Meltwater, 931 F.Supp.2d 537, 552 (SDNY 2013).

Finally, we do indeed have explicit limitations and exceptions on authors’ rights, such as fair use or fair dealing. These exceptions are absolutely necessary and important, but they do most of the work outside the core of copyright protection.

A view of balance that pits authors rights against the public interest thus ignores the law’s internal balancing mechanisms and is ultimately detrimental to the goals of copyright. By keeping in mind the intertwined nature of the private right and the public gain, we can better reach a balanced approach. Such balance would ensure that rights are clear, marketable, and enforceable. It would, for example, disfavor government intervention in the form of compulsory licensing, rate setting, etc, except when there is demonstrable market failure; it would encourage cooperation between rightsholders and OSPs and others in the online ecosystem to minimize online infringement; it would provide access to meaningful remedies for individuals and small businesses. A balanced copyright system would, in short, create a vibrant, diverse culture that enriches the public sphere by protecting creators’ right to seek their fair share.

References   [ + ]

1. ↑ 347 U.S. 201 (1954).
2. ↑ See, for example, Tom Sydnor, Can Economic and Historical Analyses End Copyright Law’s Property/Monopoly Disputes?, American Enterprise Institute (2015); Stan Liebowitz, Is the Copyright Monopoly a Best-Selling Fiction? (2008).
3. ↑ Feist Publications v. Rural Telephone Service, 499 US 340,346 (1991). As the House Report for the 1976 Copyright Act explains, the standard for originality, “does not include requirements of novelty, ingenuity, or esthetic merit.”
4. ↑ Eldred v Ashcroft, 537 US 186 (2003).
5. ↑ Associated Press v. Meltwater, 931 F.Supp.2d 537, 552 (SDNY 2013).

On Professional Authorship

posted June 02, 2015 by .

Before there was a Bill of Rights, the United States had copyright. Twelve of the thirteen states had already positively secured authors’ exclusive rights by the time the drafters of the Federal Constitution gave the federal Congress power to enact copyright legislation. On May 31, 1790—225 years ago this week—President George Washington signed the first federal Copyright Act into law.

A lot has been said in the past two centuries about what the goals and purposes of copyright law should be. What would the outcome of an ideal legal framework look like? For many, the focus is on creation and dissemination of knowledge, or participation in culture. But others have shifted the focus from the works that copyright encourages to the authors it secures.

Devotion to Craft

When writing about “The Next Great Copyright Act,” current Register of Copyrights Maria Pallante said:

The issues of authors are intertwined with the interests of the public. As the first beneficiaries of the copyright law, authors are not a counterweight to the public interest but are instead at the very center of the equation. In the words of the Supreme Court, “[t]he immediate effect of our copyright law is to secure a fair return for an ‘author’s’ creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.”

Congress has a duty to keep authors in its mind’s eye, including songwriters, book authors, filmmakers, photographers and visual artists. Indeed, “[a] rich culture demands contributions from authors and artists who devote thousands of hours to a work and a lifetime to their craft.” A law that does not provide for authors would be illogical—hardly a copyright law at all. And it would not deserve the respect of the public. 136 Columbia Journal of Law & the Arts 315, 340 (2013).

The Copyright Office, in fact, has a long tradition of placing authors and authorship at the center of copyright law. Former Register Barbara Ringer, who was in office 1973-1980, wrote during her tenure:

I believe it is society’s duty to go as far as it can possibly go in nurturing the atmosphere in which authors and other creative artists can flourish. I agree that the copyright law should encourage widespread dissemination of works of the mind. But it seems to me that, in the long pull, it is more important for a particular generation to produce a handful of great creative works than to shower its schoolchildren with unauthorized photocopies or to hold the cost of a jukebox play down to a dime, if that is what it is these days. 2The Demonology of Copyright, R.R. Bowker Memorial Lecture (October 24, 1974).

It is not just Registers of Copyright who have made these points. In 1954, the US Supreme Court wrote that the economic philosophy of copyright 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 in ‘Science and useful Arts.’” 3Mazer v. Stein, 347 U.S. 201, 219 (1954). It spoke of “Sacrificial days devoted to such creative activities,” and said this devotion is deserving of “rewards commensurate with the services rendered.”

A New York court, in a case involving unauthorized reproduction of sound recordings of opera performances, repeatedly emphasized the great expenditures of authors before finding in favor of the plaintiffs. It said, “To refuse to the groups who expend time, effort, money and great skill inproducing these artistic performances the protection of giving them a ‘property right’ in the resulting artistic creation would be contrary to existing law, inequitable, and repugnant to the public interest.” 4Metropolitan Opera Association v. Wagner-Nichols R. Corp., 199 Misc. 786, 802 (NY Sup 1950).

The common thread through these quotes is the emphasis on continued labor—”thousands of hours” and “sacrificial days”—craft, and pursuit of private gain. The focus is thus on the author. But, more importantly, these quotes speak of not just any type of authorship, but of sustained authorship. Copyright protects all authors, but it covets professional authors.

Promoting Art and Science

One can go back to the dawn of US copyright law to see that sustained and professional authorship has been repeatedly stated as an end of copyright.

Some spoke of authorship that requires the devotion of significant periods of time. For example, when Joel Barlow lobbied the Continental Congress to recommend copyright protection in 1783, he argued, “As we have few Gentlemen of fortune sufficient to enable them to spend a whole life in study, or enduce others to do it by their patronage, it is more necessary, in this country than in any other, that the rights of authors should be secured by law.” 5Letter from Joel Barlow to the Continental Congress (1783) (emphasis added).

Several years later, as ratification of the Constitution was being debated, Pennsylvania delegate Thomas McKean said, “[T]he power of securing to authors and inventors the exclusive right to their writings and discoveries, could only with effect be exercised by Congress. For, sir, the laws of the respective States could only operate within their respective boundaries, and therefore, a work which has cost the author his whole life to complete, when published in one State, however it might there be secured, could easily be carried into another State, in which a republication would be accompanied with neither penalty nor punishment—a circumstance manifestly injurious to the author in particular, and to the cause of science in general.” 6Thomas McKean, Speaking at the Pennsylvania Convention on the Ratification of the Federal Constitution (emphasis added).

Others spoke explicitly about profits. The Connecticut Copyright Act, passed in 1783, begins by stating, “Whereas it is perfectly agreeable to the Principles of natural Equity and Justice, that every Author should be secured in receiving the Profits that may arise from the Sale of his Works, and such Security may encourage Men of Learning and Genius to publish their Writings, which may do Honour to their Country, and Service to Mankind.” 7Act of Jan. 29, 1783 (Conn.) (emphasis added).

Thomas Paine, whose work embodied many of the ideals of the young republic, connected the two, writing: “Hitherto it hath been a disinterested volunteer in the service of the revolution, and no man thought of profits: but when peace shall give time and opportunity for study, the country will deprive itself of the honour and service of letters and the improvement of science, unless sufficient laws are made to prevent depredations on literary property.” 8Letter to Abbe Raynal (1792) (emphasis added).

The language in the Constitutional grant of authority for copyright, “to promote the progress of science and useful arts”, is also found in discussion of education and educational institutions, demonstrating parallels between the work of being an author and the work of being a student.

For example, one of the Congressional powers proposed at the same time as the copyright and patent powers during the Constitutional Convention read, “To establish seminaries for the promotion of literature and the arts and sciences.” 9Farrand, Records of the Federal Convention 322 (emphasis added). Similarly, in his first State of the Union address, George Washington told Congress, “Nor am I less persuaded that you will agree with me in opinion that there is nothing which can better deserve your patronage than the promotion of science and literature” (emphasis added). After extolling the benefits of such promotion, Washington concluded, “Whether this desirable object will be best promoted by affording aids to seminaries of learning already established, by the institution of a national university, or by any other expedients will be well worthy of a place in the deliberations of the legislature.”

James Madison, who was pivotal in ensuring the federal government would have power to secure copyrights, also used similar language when referring to education. In an 1822 letter, Madison wrote in support of “liberal appropriations made by the Legislature of Kentucky for a general system of Education,” saying,

Throughout the Civilized World, nations are courting the praise of fostering Science and the useful Arts, and are opening their eyes to the principles and the blessings of Representative Government. The American people owe it to themselves, and to the cause of free Government, to prove by their establishments for the advancement and diffusion of Knowledge, that their political Institutions, which are attracting observation from every quarter, and are respected as Models, by the new-born States in our own Hemisphere, are as favorable to the intellectual and moral improvement of Man as they are conformable to his individual & social Rights. What spectacle can be more edifying or more seasonable, than that of Liberty & Learning, each leaning on the other for their mutual & surest support? 10Letter from James Madison to W. T. Barry (August 4, 1822) (emphasis added).

While it’s certainly the case that the efforts of authors promotes learning in the general public, one could also say one of the ends of copyright is to encourage learning by authors themselves. This aligns with Barlow’s observation above that the rights of authors need to be secured in order to enable them to “spend a whole life in study.” This study, in turn, allows authors to produce those works which advance the arts and sciences.

It’s interesting to note another connection between copyright and enabling professional authorship. The first Copyright Act secured protection for 14 years (plus an optional 14 year renewal period). This term was borrowed from England’s Statute of Anne (1710). The Statute of Anne, in turn, took its 14 year term from the earlier Statute of Monopolies (1624), which prohibited monopolies save for “letters patent and grants of privileges” for “new manufactures”—an antecedent to modern day patents.

This fourteen year term was chosen because “it was twice the statutorily prescribed, seven year term of trade apprenticeship.” 11Christine MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660-1800, p. 18 (Cambridge Univ. Press 2002). So the law was built explicitly around the learning and mastery of a craft, a foundation inherited by the first US Copyright Act.

Professional Authorship

The late Latin American author Gabriel García Márquez once said, “I cannot imagine how anyone could even think of writing a novel without having at least a vague of idea of the 10,000 years of literature that have gone before.” 12Jonathan Kandell, Gabriel García Márquez, Conjurer of Literary Magic, Dies at 87, New York Times (April 17, 2014). Authorship which advances the sciences and arts requires the development and mastery of craft as well as a considerable expenditure of time and effort. History shows that one of copyright’s recognized goals is to furnish the conditions that encourage this.

References   [ + ]

1. ↑ 36 Columbia Journal of Law & the Arts 315, 340 (2013).
2. ↑ The Demonology of Copyright, R.R. Bowker Memorial Lecture (October 24, 1974).
3. ↑ Mazer v. Stein, 347 U.S. 201, 219 (1954).
4. ↑ Metropolitan Opera Association v. Wagner-Nichols R. Corp., 199 Misc. 786, 802 (NY Sup 1950).
5. ↑ Letter from Joel Barlow to the Continental Congress (1783) (emphasis added).
6. ↑ Thomas McKean, Speaking at the Pennsylvania Convention on the Ratification of the Federal Constitution (emphasis added).
7. ↑ Act of Jan. 29, 1783 (Conn.) (emphasis added).
8. ↑ Letter to Abbe Raynal (1792) (emphasis added).
9. ↑ Farrand, Records of the Federal Convention 322 (emphasis added).
10. ↑ Letter from James Madison to W. T. Barry (August 4, 1822) (emphasis added).
11. ↑ Christine MacLeod, Inventing the Industrial Revolution: The English Patent System, 1660-1800, p. 18 (Cambridge Univ. Press 2002).
12. ↑ Jonathan Kandell, Gabriel García Márquez, Conjurer of Literary Magic, Dies at 87, New York Times (April 17, 2014).

“Copyright law serves public ends by providing individuals with an incentive to pursue private ones”

posted March 16, 2015 by .

On March 9, a group of 31 advocacy groups and 13 academics sent a letter to members of the 114th Congress, “Supporting a Pro-Innovation, Pro-Creator, Pro-Consumer Copyright Agenda” (which was a response to a previous letter from over 60 groups and academics calling for continued support of copyright protections). The letter called on Congress to “seek the appropriate balance in copyright law to unlock the innovative and creative spirit of all people to their fullest potential,” which sounds good in general. However, the specific points of the letter reveal that the signers embrace an impoverished view of copyright that would result, ultimately, in an imbalance.

One of the points made by the letter is as follows:

The U.S. Constitution grants Congress the right to create copyright laws “to promote the Progress of Science and useful Arts.” Congress’ power to enact copyright regulation is a limited power under the U.S. Constitution. In the words of the Supreme Court, “The primary objective of copyright is not to reward the labor of authors, but to promote the Progress of Science and useful Arts.” We strive to uphold the honored, privileged legal place granted to those who discover and create.

This particular strain of thought, establishing a dichotomy between an author’s reward and the promotion of progress, with the latter trumping the former, can be traced back to the Court’s earlier decision in Fox Film v. Doyal 1286 US 123 (1932). (and is based on a misreading of that opinion). In US v. Paramount Pictures, the Court cited to Fox Film when it said, “The copyright law, like the patent statutes, makes reward to the owner a secondary consideration.” 2334 US 131, 158 (1948).

The letter fails to mention that the Supreme Court has expressly rejected this characterization of copyright.

Justice Stevens quotes Paramount in his dissent in Eldred v. Ashcroft, drawing a sharp rebuke from the majority, which said

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.” 3537 US 186, 212 n.18 (2003).

The distinction between the two views is subtle but important. The view of balance expressed in the letter sees the rights of creators and copyright owners on one side of a scale and the rights of users and the public on the other. 4See, e.g., Public Knowledge, Principles for a Balanced Copyright: “The powers granted to authors must be balanced with the rights of users and other innovators, whether innovation takes the form of new creative works, or new ways to access existing works. Encouraging technological innovation and preserving consumers’ rights thus go hand in hand”; EFF, Fair Use and Intellectual Property: Defending the Balance: “Ideally, intellectual property law—generally, copyright, patent, and trademark—is supposed to embody a balanced incentive system. Copyrights and patents, for example, are supposed to encourage authors and inventors to create new things by helping them receive some compensation for that investment. At the same time, copyright and patent law put limits on authors’ and inventors’ rights, such as fair use (for copyright) and limited terms of protection, to help make sure that IP rights don’t unfairly inhibit new creativity.” In one sense, the view reveals an anxiety over property rights. It embraces a view of property that sees individual rights as separate from the public interest, with individual rights protected as property only to the extent they do not interfere with the public interest. In other words, individual rights are only begrudgingly tolerated.

But the second view—the one embraced by the Supreme Court in Eldred—recognizes that prioritization of property rights not only does not come at the expense of the public interest but is in fact essential to promotion of the public interest.

The Public Interest of Property Rights in History

This concept has been recognized historically. In Wealth of Nations, Adam Smith wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” 5Book I, chap. 2, para. 2. In one of his most cited passages, Smith observes that the public interest emerges from self-interest. “By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. 6Book IV, chap. 2, para. 9. The promotion of the public interest is thus inherent to the pursuit of self-interest and not something solely external to it.

James Madison explicitly recalled Smith when discussing copyright. “The public good fully coincides,” he said of the Copyright Clause in the Federalist Papers, “with the claims of individuals.” 7Madison was instrumental both in the Continental Congress’s recommendation to the states to pass copyright legislation after being “persuaded that nothing is more properly a man’s own than the fruit of his study” and to the inclusion of the power to secure copyrights in the federal Constitution. See, generally, The Copyright Clause: American Independence in Literature. This is remarkable in that not only was the coincidence of public interest and individual property rights recognized since the founding of the US but that that recognition extended to intellectual property.

Turning back to Eldred, the majority reiterates this point, this time responding to a dissent by Justice Breyer:

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. 8537 US 186, 212 n.18 (2003).

Conceptual and Normative Role of Property and the Public Interest

More recently, scholarship has described how property rights serve public values both conceptually and normatively. In Property’s Ends: The Publicness of Private Law Values, Cornell Law professor Gregory Alexander covers both grounds. Conceptually, Alexander argues what Smith, Madison, and the Supreme Court has observed: that the private and public values of property “cohere rather than conflict.” Normatively, Alexander proceeds from the claim that the normative foundation of private property is human flourishing, which, “understood as morally pluralistic, includes both private and public values.” Thus, “the relationship between private property and public values should be seen as symbiotic rather than antagonistic.” Alexander concludes that “any account of public and private values that depicts them as categorically separate is grossly misleading. One important consequence of this insight is that many legal disputes that appear to pose a conflict between the private and public spheres or that seemingly require the involvement of public law can and should, in fact, be resolved on the basis of private law—the law of property—alone.”

In The Right to Include, Notre Dame Law professor Daniel Kelly provides an additional, seemingly counter-intuitive, insight to this narrative. Though the right to exclude is central to property, it does not, as many contend, lead to individualism and exclusion at the expense of public values. In fact, property promotes inclusion through a variety of mechanisms, including contracts and co-ownership. Without the protection of property and availability of inclusion mechanisms, owners of resources face opportunism by others, leading to less than optimal inclusion. To put it another way, resource owners won’t fully use their property in socially valuable ways without secure property rights and legal mechanisms for inclusion because they face the risk of being taken advantage of by others. Kelly argues that “By providing owners with a range of options by which to include others, these forms help to ensure that an owner’s private incentive to include converges with the socially optimal level of inclusion.” Says Kelly,

Some owners may misuse their property by imposing social costs on others, isolating themselves from others, or discriminating against others. But many owners decide to use their property not only as a “wall” to exclude others but also as a “gate” to include their neighbors, friends and family, colleagues and customers, and even strangers who need help. If so, property is capable of promoting human sociability, not merely atomistic individualism.

Privacy and Copyright

In addition to property, it is worth pointing out similar ideas in the context of privacy, since privacy shares historical and philosophical foundations with copyright. 9See, for example, Warren and Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890) (“the legal doctrines relating to infractions of what is ordinarily termed the common-law right to intellectual and artistic property are, it is believed, but instances and applications of a general right to privacy”). Both provide an individual with some control over an intangible thing that originates from their self. Intuitively (and ostensibly) privacy would seem to protect a private right, shielding the individual from societal intrusions. However, noted privacy scholar Daniel Solove has argued that privacy is not necessarily “an individualistic right,” and points to others who have contended that “privacy harms affect the nature of society and impede individual activities that contribute to the greater social good.” 10A Taxonomy of Privacy, 154 U Penn L. Rev. 477, 487-88 (2006). Elsewhere, Solove writes:

Society involves a great deal of friction, and we are constantly clashing with each other. Part of what makes a society a good place in which to live is the extent to which it allows people freedom from the intrusiveness of others. A society without privacy protection would be suffocating, and it might not be a place in which most would want to live. When protecting individual rights, we as a society decide to hold back in order to receive the benefits of creating the kinds of free zones for individuals to flourish. 11Daniel J. Solove, “I’ve Got Nothing to Hide” and Other Misunderstandings of Privacy, 44 San Diego L. Rev. 745, 762 (2007).

Promoting the Progress

The rights of creators and the public interest are not separate concepts that require balancing. Rather, they coincide through copyright. By securing the economic and moral rights of expressive works, authors will maximize the value of their creative labors, and companies will maximize their investments, creating and disseminating works which promote the progress of art, science, and knowledge. That’s not to say there is no need for limitations and exceptions to copyright in certain situations—there certainly is (as with any property right). But it is important to start from the correct baseline by recognizing the inherent public values of property and copyright.

References   [ + ]

1. ↑ 286 US 123 (1932).
2. ↑ 334 US 131, 158 (1948).
3. ↑ 537 US 186, 212 n.18 (2003).
4. ↑ See, e.g., Public Knowledge, Principles for a Balanced Copyright: “The powers granted to authors must be balanced with the rights of users and other innovators, whether innovation takes the form of new creative works, or new ways to access existing works. Encouraging technological innovation and preserving consumers’ rights thus go hand in hand”; EFF, Fair Use and Intellectual Property: Defending the Balance: “Ideally, intellectual property law—generally, copyright, patent, and trademark—is supposed to embody a balanced incentive system. Copyrights and patents, for example, are supposed to encourage authors and inventors to create new things by helping them receive some compensation for that investment. At the same time, copyright and patent law put limits on authors’ and inventors’ rights, such as fair use (for copyright) and limited terms of protection, to help make sure that IP rights don’t unfairly inhibit new creativity.”
5. ↑ Book I, chap. 2, para. 2.
6. ↑ Book IV, chap. 2, para. 9.
7. ↑ Madison was instrumental both in the Continental Congress’s recommendation to the states to pass copyright legislation after being “persuaded that nothing is more properly a man’s own than the fruit of his study” and to the inclusion of the power to secure copyrights in the federal Constitution. See, generally, The Copyright Clause: American Independence in Literature.
8. ↑ 537 US 186, 212 n.18 (2003).
9. ↑ See, for example, Warren and Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890) (“the legal doctrines relating to infractions of what is ordinarily termed the common-law right to intellectual and artistic property are, it is believed, but instances and applications of a general right to privacy”).
10. ↑ A Taxonomy of Privacy, 154 U Penn L. Rev. 477, 487-88 (2006).
11. ↑ Daniel J. Solove, “I’ve Got Nothing to Hide” and Other Misunderstandings of Privacy, 44 San Diego L. Rev. 745, 762 (2007).

On Martin Luther King, Jr.

posted January 19, 2015 by .

One of the more unfortunate outcomes to emerge over the past decade from copyright skeptics is criticism of the Martin Luther King, Jr. estate, and their maintenance of his copyrighted books and speeches—his legal property—that they inherited from him.

In 2005, for example, digital activists Downhill Battle (many of whom would later form activist group Fight for the Future) protested copyright law by posting civil rights documentary “Eyes on the Prize” online without permission. The film was unavailable on television or home video at the time because the original licenses for some of the material did not extend to those uses (the documentary has since become available again).

More recently, during the SOPA debate in January 2012, Vice took the opportunity to tie that bill and the copyright status of King’s legacy together. It called King’s “I Have a Dream Speech” “the rhetorical equivalent of a national treasure or a national park,” decrying the fact that it is protected by copyright and asking “What would King have made of all this, and of SOPA?”

Since then, it seems no opportunity has been wasted to delegitimize the King estate for political points. A year later, Vice was back to report on the one year anniversary of the defeat of SOPA and another online protest by Fight for the Future. This time, the group sought to upload a video of King’s “I Have a Dream” speech to YouTube. The group wrote that “Had SOPA and PIPA passed last year… you could have gone to jail for sharing this video.” Vice wrote that this protest “Echo[ed] the civil disobedience of King.”

On the fiftieth anniversary of King’s “I Have a Dream” speech (August 2013), a new round of articles appeared, making the same complaints that, yes, you could license the speech, or buy a copy on DVD (the Atlantic noted that, at the time, Amazon currently had a copy for $13.41), but shouldn’t it be free?

Most recently, the issue has come to the forefront again with the release of the film Selma, a narrative of the 1965 march from Selma to Montgomery. Like any film adaptation—whether based on fictional or nonfictional source material—creative liberties must be taken. In the case of Selma, these included paraphrasing some of King’s speeches.

A Washington Post article on the film explains:

Working with an original script by Paul Webb, [director Ava] DuVernay carefully paraphrased King’s oratory, so that the words [actor David] Oyelowo speaks in the film have King’s cadence and meaning, even when they’re not literal.

The reason is simple: “We never even asked” for the rights to King’s speeches, said DuVernay during a recent visit to Washington. “Because we knew those rights are already gone, they’re with Spielberg, and secondly we found a way to do it where we didn’t have to ask for permission, because with those rights came a certain collaboration.”

The result is a fascinating portrait that both eerily captures King, but also feels just a tick off from impersonation. Oyelowo doesn’t physically resemble the civil rights leader, nor does his voice possess quite the ringing timbre most people associate with one of the greatest orators of the 20th century. But the filmmakers’ decision to eschew mimicry liberates “Selma” from being mere hagiographic waxwork, or a series of speeches and set pieces, and allows it to be an authentic drama with fully realized, grounded characters.

But despite the fact that the above shows the filmmakers never sought rights to the speeches, didn’t want them, and made a film that didn’t suffer as a result, copyright critics took the opportunity to complain that copyright law “forced” the filmmakers to paraphrase the speeches. GigaOm reporter Jeff John Roberts opined that this is “because the King family aggressively enforces copyright at all turns, unleashing lawyers in the direction of anyone who seeks to use the civil rights icon’s speeches or images without permission.” Roberts argued that “the root issue here is entirely about money, and the King estate wants as much as it can get” and concludes that the deeper problem is that “copyright protection lasts for far, far too long.”

In honor of Martin Luther King, Jr. Day, I want to point out several reasons why these efforts to begrudge the legacy King left his family are misguided. While I’ve yet to find any King remarks directly about copyright—I’m certainly not claiming to speak for him or his family—I think two things are clear.

King and Copyright

First, King attached importance to his literary property by actively administering and enforcing his copyrights during his life.

In a November 20, 1964 letter, King’s literary agent, the notable Joan Daves, wrote King regarding a number of copyright matters, including preparations to ensure the copyright in his Nobel Prize lecture was secured. Daves concluded, “I hope that neither you or your office will find cumbersome my insistence that your writings and your speeches be protected properly by copyright. I am sure there will come a time when we will all be very glad of having organized these matters and of your having control over the further use of your works.”

King apparently agreed, as other correspondence shows that Daves actively licensed King’s work around the world, administered royalties, and fielded permission requests for reprints and translations. This correspondence shows a careful balancing of King’s various interests. For example, one letter denies a request to reprint King’s letter from the Birmingham Jail in a French book because, as Daves explains, “The letter in question will form a very important part in a forthcoming book by Dr. King and we feel that we cannot distract from its impact by allowing it to be published elsewhere before a French edition appears.” Another one grants permission to translate and publish a Marahati edition of Why We Can’t Wait “without a fee” after a request from Dr. Moray explaining how social problems in India were similar to the American problems King addressed.

And King was not shy in asserting his rights when they had been infringed. The copyright in King’s “I Have a Dream” speech, delivered August 28, 1963 at the Lincoln Memorial, was registered little over a month later on September 30. And only a few days later (October 4th), King filed a lawsuit against 20th Century Fox Record Corporation and Mister Maestro, Inc. for selling records of the speech without King’s consent. 1King v. Mister Maestro, Inc., 224 F. Supp. 101 (SDNY 1963). The District Court granted a preliminary injunction in December after concluding, “There are thus no principles which prevent relief to plaintiff from what seems the unfair and unjust use by defendants of his speech and his voice.” 2Id. at 108.

Publication of King’s work is what helped disseminate his ideas and benefit the public, but the ability to control and benefit from that publication is what allowed him to continue his work until he was brutally killed in April 1968 (and what allows his family to continue that work today).

From Civil Rights to International Human Rights

Second, the ability of someone to benefit from their labor, as King did through copyright, is consistent with his views on economic justice and individual dignity.

On the Fourth of July, 1965, King delivered an address to the Ebenezer Baptist Church called “The American Dream.” He begins by noting the spirit “of the founding fathers of our nation,” who created a system of government distinct from “any totalitarian system in the world” by saying “that each of us has certain basic rights that are neither derived from or conferred by the state.” The Declaration of Independence, said King, is a “profound, eloquent, and unequivocal” expression of “the dignity and the worth of human personality.” He adds, “The American dream reminds us, and we should think about it anew on this Independence Day, that every man is an heir of the legacy of dignity and worth.”

However, continued King, “We are challenged more than ever before to respect the dignity and the worth of all human personality.” This universal recognition of the equal dignity of all human personality is what, said King, made segregation and racism morally wrong. But, he would go on to say, it also meant that economic inequality and poverty must be addressed. “This is why we must join the war against poverty,” said King, “and believe in the dignity of all work.”

The “spirit of the founding fathers” that King speaks of was reflected in copyright discussions during the founding period. When the Continental Congress recommended in 1783 that the States pass laws securing copyright of authors, it did so after a committee consisting of James Madison, Hugh Williamson, and Ralph Izard were “persuaded that nothing is more properly a man’s own than the fruit of his study.” 324 Journals of the Continental Congress 326. And some states, such as Massachusetts, explicitly noted in their subsequent copyright acts that the “legal security of the fruits of [a person’s] study and industry … is one of the natural rights of all men.” 4Massachusetts Copyright Statute, Massachusetts (1783), Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer, jQuery("#footnote_plugin_tooltip_1732_4").tooltip({ tip: "#footnote_plugin_tooltip_text_1732_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); ']);" >www.copyrighthistory.org.))

Just as the experiences in the American colonies under British rule led to the Declaration of Independence, the experiences of the free world during the second World War led to an international declaration of rights.

Following World War II, the United Nations was formed to promote international cooperation, and in 1948, it drafted the Universal Declaration of Human Rights (UDHR), the first global expression of human rights. Among its articles is one that states, “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

This provision generated some debate during the drafting process, in part because it encompassed moral rights in addition to economic rights. 5Peter K. Yu, Reconceptualizing Intellectual Property Interests in a Human Rights Framework, 40 University of California, Davis 1039, 1054 (2007). During one of the final rounds of drafting, French, Mexican, and Cuban delegates reintroduced the above language for inclusion in the declaration. 6Meeting records also note, “While it accepted the principle which they expressed, the United States delegation thought that they would be out of place in the declaration, more especially since they dealt with a specific aspect of the rights of property already covered by article 15.” Meeting records summarize the Mexican delegate as arguing:

The Committee had already recognized the rights of the wage earner, the family, the mother and the child; if it did not wish there to be a serious omission in the text it was drawing up it must now proclaim the rights of the individual as an intellectual worker, scientist, or writer; in other words, the rights of aIl those who contributed to the progress and well-being of humanity.

***

If the United Nations decided to include such a provision in the Declaration of Human Rights, it would be proclaiming to the world, with all the weight of its moral authority, its consciousness of the necessity of protecting all forms of work, manual as well as intellectual, and of safeguarding intellectual production on an equal basis with material property.

This language was eventually adopted by the Committee and included in the Declaration.

I note this not only because of the parallels in principles between the supporters of intellectual worker protections and King, but because King actively worked and inspired those who worked on seeing such principles recognized at the international level.

Calling King an “international human rights leader,” Henry J. Richardson has written that King “fused the discourses of civil rights and human rights” and “borrowed directly from international human rights law doctrine” in his speeches. 7Henry J. Richardson, Dr. Martin Luther King, Jr. as an International Human Rights Leader, 52 Villanova Law Review, 471 (2007). And toward the end of his too-short life, “King had expanded his human rights leadership by moving, in concrete ways, to emphasize economic rights as human rights.”

Roger Alford at Opinio Juris has written that King’s work directly inspired those who struggled to achieve the same goals of racial and political equality at the international level. He notes that by 1964, membership in the UN had grown to 115 members, with 75% coming from the developing world. These delegates “were greatly influenced by Martin Luther King’s struggle against racial discrimination within the United States,” and worked to implement the UDHR into treaties. Alford writes, “The immediate result was the 1965 International Convention on the Elimination of All Forms of Racial Discrimination (CERD)” and “The success of CERD broke the stalemate that had prevented completion of the work on the other major human rights covenants,” including the International Covenant on Economic and Social Rights (ICESR).

Article 15 of the ICESR implements the UDHR’s provision on intellectual property by requiring State Parties to recognize the right of everyone “To benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

On this day, we honor and celebrate the tremendous legacy that Dr. Martin Luther King, Jr. left. King’s legacy hopefully inspires us all. But his work is not like “a national park” in the sense that it was bought and maintained by the public; indeed, it came about through great personal sacrifice, and King paid the ultimate price for his work when he was assassinated. It seems a bit presumptuous to say the public has a greater claim to this work than King’s own family, and it seems odd to say that the more lasting and important one’s work is, the less legal protection it should receive. More importantly, it seems better to focus on the content of the message King left us rather than the cost of his DVD.

References   [ + ]

1. ↑ King v. Mister Maestro, Inc., 224 F. Supp. 101 (SDNY 1963).
2. ↑ Id. at 108.
3. ↑ 24 Journals of the Continental Congress 326.
4. ↑ Massachusetts Copyright Statute, Massachusetts (1783), Primary Sources on Copyright (1450-1900), eds L. Bently & M. Kretschmer, 5. ↑ Peter K. Yu, Reconceptualizing Intellectual Property Interests in a Human Rights Framework, 40 University of California, Davis 1039, 1054 (2007).
6. ↑ Meeting records also note, “While it accepted the principle which they expressed, the United States delegation thought that they would be out of place in the declaration, more especially since they dealt with a specific aspect of the rights of property already covered by article 15.”
7. ↑ Henry J. Richardson, Dr. Martin Luther King, Jr. as an International Human Rights Leader, 52 Villanova Law Review, 471 (2007).

Expendables 3 and the negative effects of piracy

posted July 30, 2014 by .

This past week, a DVD quality copy of Expendables 3 leaked onto online pirate sites, weeks before its August 15 box office debut. Along with the news came the usual claims that filmmakers shouldn’t worry about pre-release piracy—it’s good promotion, says David Pierce at the Verge, and internet commenters offer scores of other rationalizations.

But over at the Technology Policy Institute Blog, researcher Michael W. Smith says the unauthorized pre-release copy will likely hurt box office revenues for the film. He and his colleagues studied the effect of pre-release movie piracy on box office revenue and found that, on average, it “results in a 19% reduction in box office revenue relative to what would have occurred if piracy were only available after the movie’s release.”

Smith’s study is the first peer-reviewed journal article to look at this particular form of piracy. It was recently accepted for publication in the Information Systems Research journal, but a pre-publication draft is available at SSRN.

The study casts doubts on claims that pre-release piracy has no impact on theatrical revenue or even has a beneficial effect by generating buzz. On the contrary, Smith finds that “pre-release piracy significantly reduces a movie’s expected box office revenue and that this impact is stronger earlier in a movie’s lifecycle than in later periods.”

Smith concludes the report by noting some of its limitations. It doesn’t look at the intensity of pre-release pirating, nor at the quality of the unauthorized copies, data which may provide additional insights. It also does not consider the effect of pre-release piracy on different types of films, nor does it examine the effects on revenue streams besides the box office, such as DVD sales.

These last two limitations are particularly worth further research. Most films—particularly indie and niche films—don’t ever screen in theaters, and even among those films that do, box office revenue is only a part of overall revenues.

While Smith’s study is the first peer-reviewed article to look specifically at pre-release piracy and its effects, it is not the first to look at the effects of other forms of piracy on films. In fact, in his article, Smith notes that eight peer-reviewed studies so far have looked at the effect of piracy on film sales, and, more significantly, seven of the eight studies have found “that piracy results in significant harm to motion picture sales.” A broader literature review – focusing not solely on films but on other types of works such as recorded music – found that “The vast majority of papers which have been published in peer-reviewed academic journals — papers spanning a variety of methods, time periods, and contexts — find that piracy causes a statistically significant decrease in sales.”

And yet some measure of file-sharing denialism persists. It, first, runs counter to common sense—yes, if people can get something for free they’ll buy less, and if people buy less of something, less of it will be produced. But it also, as seen above, is not supported by the overwhelming majority of empirical evidence.

In ‘The Expendables 3’ Torrent and the Techno-Utopian Delusion, Indiewire writer Sam Adams sees through this denialism, or, as he calls it, “sheer self-justifying delusion.” In doing so, he touches on a larger point.

Adams notes that some of the rationalization for downloading The Expendables 3 is based on the idea that it is not a movie but a show, one in which the experience of watching in the theater takes precedence (and thus justifies watching an illegitimate, lower-quality version). Because of this, he cautions:

And when you’re paying for the experience — not out of curiosity or as a way of supporting an ecosystem that allows the creation of new work — it only makes sense to sample the product beforehand. But in so doing, you’re pushing cinema in a direction where every movie has to be a show: Either it’s big and loud enough to make you feel like you’re missing out by watching it (legally or illegally) at home or it might as well not show up to play.

CNET’s Nick Statt raises similar concerns:

We often complain about “sequelitis” and the onslaught of low-quality, brainless action movies and series reboots, yet don’t ever seem to take responsibility for the fact that our collective unwillingness to pay for things that don’t have formulaic payout is what drives creative decision making.

In the current model, everything from “Boyhood” and “12 Years A Slave” to “Zero Dark Thirty” and “Gravity” are more harmed by systemic piracy because it devalues films as an art form. Risks are not rewarded when the only movie with a concrete return on its investment is a $200 million narrative train wreck about robot cars or a tongue-and-cheek ensemble action flick featuring Rocky, the former governor of California, and Han Solo.

I enjoy such films, as do millions of others. But it would be a shame if that was all we got to see. The ultimate point is that piracy has societal effects beyond any given film’s bottom line.

In Copyright Extremophiles: Do Creative Industries Thrive or Just Survive in China’s High-Piracy Environment? 127 Harvard Journal of Law & Technology 469 (2014). published earlier this year, Eric Priest digs into some of these less obvious effects of piracy in more detail. The claim is sometimes made that maybe copyright—the legal foundation that provides exchange value for creative works—is irrelevant since creativity still exists in areas, such as China, where piracy runs rampant. Priest refutes this by comparing creators in high-piracy areas to biological organisms known as extremophiles.

Just as microorganisms have evolved to thrive in superheated deep-sea vents or highly acidic environments, so too can a subset of creative professionals find ways to monetize their works even in a high-piracy environment. The fact that some monetization models can work for some types of producers or artists in China does not mean that optimal or even near-optimal conditions exist for the development of flourishing, healthy, and stable creative industries. In short, poor copyright enforcement inflicts significant and persistent harms on China’s music and film industries. To invoke the extremophiles analogy, China’s inhospitable creative industry environment may support narrow strains of creative “life,” but with an effective regime of copyright norms and enforcement, China’s creative ecosystem could more closely resemble a lush, diverse rain-forest.

Priest’s research unpacks some of the more pernicious results that piracy has on China’s film and music industries. Along with undermining the ability of a professional class of creators to sustain their livelihoods, high piracy has made these industries “neither robust nor stable” and lead them to become “hyper-dependent on a single revenue stream” (box office for films and ringback tones for music). Priest concludes:

This lack of revenue stream diversity distorts and undermines the creative ecosystem in at least three ways. First, the scarcity of monetization options creates a winner-take-all market dominated by big producers. The paucity of other revenue sources seriously undermines financial support for smaller, independent producers.

Second, rampant piracy and concentration of revenue streams distorts market signals to producers. For example, film producers are incentivized to invest in a relatively narrow range of works that attract the audience whose tastes are most easily monetized – young, urban cinemagoers. Music producers likely are incentivized to produce music that will make the most marketable ringtones.

Third, and perhaps most importantly, reduced revenue stream diversity disproportionately exposes producers to the whims of peculiar markets and exploitation by gatekeeper or monopsonist intermediaries. China’s music industry proves an especially vivid example, as ringback tones gross more than $4 billion annually, but the mobile operators who control ringback tone distribution keep more than ninety-eight percent of that revenue for themselves. The meager two percent that goes to copyright owners amounts to ninety percent of those copyright owners’ total income from recorded music. So if ringtones lose their appeal with consumers, the recording industry will collapse. Without other viable revenue streams to leverage, musicians, producers, and record labels have little choice but to grin and bear it while a state telecommunications monopoly enjoys the great bulk of the rewards of their artistic efforts.

It seems difficult to make a more compelling case for copyright. How creators and the film industry responds to pre-release and other forms of piracy is a wholly separate topic, but the fact remains that any type of piracy has a significant negative effect on revenues as well as the stability and vitality of creative and cultural industries. If we want to maintain robust and independent creativity, we should not be so quick to treat copyright as expendable.

References   [ + ]

1. ↑ 27 Harvard Journal of Law & Technology 469 (2014).

Happy 4th of July to my US readers!

posted July 04, 2014 by .

Biscuit the Democat, by Eric Hart. Posted with permission.

It may with propriety be remarked, that 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; and to treat letters in any other light than this, is to banish them from the country, or strangle them in the birth.

Thomas Paine, 1792.

Copyright as Property in Petrella

posted June 03, 2014 by .

On May 19, the Supreme Court decided Petrella v. Metro-Goldwyn-Mayer. Devlin Hartline recently discussed the decision here, and I have previously noted one particular passage relating to the application/registration debate.

But there is another passage in Petrella that has sparked some interest. It appears as Justice Ginsburg is countering arguments against its holding. She says,

MGM insists that the laches defense must be available to prevent a copyright owner from sitting still, doing nothing, waiting to see what the outcome of an alleged infringer’s investment will be. It is hardly incumbent on copyright owners, however, to challenge each and every actionable infringement. And there is nothing untoward about waiting to see whether an infringer’s exploitation undercuts the value of the copyrighted work, has no effect on that work, or even complements it. Fan sites prompted by a book or film, for example, may benefit the copyright owner. Even if an infringement is harmful, the harm may be too small to justify the cost of litigation.

If the rule were, as MGM urges, “sue soon, or forever hold your peace,” copyright owners would have to mount a federal case fast to stop seemingly innocuous infringements, lest those infringements eventually grow in magnitude. Section 507(b)’s limitations period, coupled to the separate-accrual rule, allows a copyright owner to defer suit until she can estimate whether litigation is worth the candle.

Several among the copyright skeptic crowd were overjoyed when they read this. Kevin Smith, who serves as Scholarly Communications Officer at Duke University, wrote:

I don’t know that the Court has every [sic] before acknowledge [sic] that infringements might be beneficial to rights holders. Perhaps this is an acknowledgement of the myriad potential for reuse and remix. Certainly the authors of fan fiction should feel buoyed by the remark. From a more technical perspective, it seems to me to further undermine what was once a strongly held belief that whenever infringement was found, harm could be presumed. It seems clear that the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement.

The CCIA’s Matt Schruers wrote:

A more interesting wrinkle is Justice Ginsburg’s explicit embrace of a point that I had previously characterized as “taboo” — that not all infringements impose costs on the rights holder. In fact, when I wrote last year that some infringements have no economic cost, and that other infringements will reallocate wealth instead of destroy it, the site admins had to install a profanity filter for the comment section. Yet today, Justice Ginsburg goes a step further and states that some infringement “may benefit the copyright owner.”

I hate to rain on their parade.

This statement is actually one that should buoy authors and creators. It is perhaps one of the more robust endorsements by the Supreme Court of the conception of copyright as a property right—an endorsement that goes beyond mere semantics, such as when Justice Breyer said “deliberate unlawful copying is no less an unlawful taking of property than garden-variety theft”, or, when the Court was confronted with evidence that deliberately placed mistakes had been copied, that “such indicia is held to indicate a substantial theft of copyright property.”

For it endorses copyright as a right that “trumps utility.” Ginsburg plainly states that uses which undercut a work’s value, have no effect on it, or even complement it are all actionable infringements. This perfectly comports with other forms of property. If you break into my home, that’s trespass. If you break into my home to wash my dishes, that’s still trespass, even if your act may ultimately benefit me.

Though Ginsburg never explicitly references the notion of property here, the thrust of her remarks are made clearer by her reference to the availability of injunctive relief to a copyright owner not once, but twice in this brief section. The injunction, of course, is the quintessential remedy for property rules.

What’s more, Ginsburg implies that tolerating such non-harmful uses does not operate to the prejudice of a copyright holder. Copyright litigants should make note of this when faced with an implied license or fair use defense. (And Smith’s conclusion that “the Court is now reinserting harm as a separate element in the plaintiff burden of proving the tort of copyright infringement” misreads the passage entirely.)

Why do property rights confer such high standing in our society? That’s a question that can’t be answered in a mere blog post. But perhaps I can offer some general remarks. Assuming private property rights are justly allocated, their recognition protects the dignity and autonomy of individuals. Individuals have an array of equally valid choices about how to exploit their property that others cannot encroach upon. Ignoring respect of that choice invites trouble of all sorts—the harm from infringement of property rights is not necessarily what, if any, damage may be done to the res, but the invasion into the property owner’s sovereignty itself.

This trouble, in my opinion, is aggravated when we start talking about one’s expression. It’s one thing for society to dictate what you should do with land you bought and quite another to dictate what you should do with a book you wrote, or a photo you took, or a song you recorded—none of which, by the way, existed before you created it. These are not only your property but your expression, extensions of your personality. We should be cautious against societal encroachments to something so core to our being. That does not make such rights absolute in all directions; like all forms of property, they must be properly scoped and coexist with doctrines that mediate conflicts with other rights. And, in some cases, must give way to compelling public interests.

But bottom line, it is heartening to see the Supreme Court calmly and without ceremony advance the well-founded conception of copyright as property.

Thanks to Devlin Hartline for feedback during drafting!

“The profit motive is the engine that ensures the progress of science”

posted March 24, 2014 by .

Earlier this month, the US Copyright Office held a two day public roundtable on the issues of orphan works and mass digitization.

During one of the panels, a brief side debate broke out over what the purpose of copyright law was—particularly, what the proper role of the public benefit is and how much weight it should be accorded.

The first participant essentially quoted the Betamax decision’s description of public benefit. 1Sony Corp v. Universal City Studios, 464 US 417, 429 (1984). There the Supreme Court said:

The copyright law, like the patent statutes, makes reward to the owner a secondary consideration… The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.

In response, a panelist refuted characterization of reward to the owner as a “secondary consideration”. Disagreement arose. A separate panelist tried to make peace by remarking that both panelists’ explanations of the public benefit come from Supreme Court opinions. Maybe this is a case of agreeing to disagree.

But consider this: the Supreme Court refuted Sony‘s description of the public benefit of copyright in the much more recent Eldred v. Ashcroft. There, the majority said:

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.

Well sure, the copyright skeptic might respond, that’s all well and good. But the Supreme Court only has authority over the law; it’s ruminations on matters of philosophy are not binding.

But consider this: Eldred‘s description of the public benefit is, as the Court notes, a direct descendant of the justification offered by James Madison, the very drafter of the Constitution’s Copyright Clause.

The description of the public benefit in Sony, on the other hand, comes from the misquotation of a state sales tax case.

Yes, Sony directly quotes Fox Film Corp. v. Doyal, a 1932 Supreme Court case, about the “sole interest of the United States.” In Fox Film, a film company sued to prevent the state of Georgia from collecting state tax on its income from licensing films. The film company argued that copyrights are “instrumentalities” of the federal government, so any income derived from them are immune from state taxation.

The Court disagreed. The federal government doesn’t retain any possessory or ownership interest in a copyright it secures. A copyrights is not a “franchise or privilege to be exercised on behalf of the Government ” Instead, “Copyright is a right exercised by the owner during the term at his pleasure and exclusively for his own profit and forms the basis for extensive and profitable business enterprises. The advantage to the public is gained merely from the carrying out of the general policy in making such grants and not from any direct interest which the Government has in the use of the property which is the subject of the grants.”

So when the Fox Film Court speaks of “the sole interest of the United States”, it is merely making the distinction that the federal government does not retain any right or title in a copyright such that license income would be exempt from state taxation. But the Court would later take this quote out of context, 2United States v. Paramount Pictures, Inc., 334 US 131, 158 (1948). and Sony perpetuates this error. Indeed, the above quote from Fox Film about the advantage to the public is more consistent with Eldred‘s explication of the public interest than Sony‘s.

So what is the point here?

Copyright skeptics will often proclaim that copyright law must serve the public interest. But that is not controversial. Of course it should serve the public interest; all laws should serve the public interest.

What is overlooked is how copyright serves the public interest. Skeptics will focus on how exceptions to and limitations on copyright further the public interest. Missing is the inherent public interest in copyright, in preserving incentives to create and disseminate expressive works.

Like any free market, enabling a free market in creative works tends toward the public good. Copyright is the economic building block of this market, allowing voluntary transactions to occur and private ordering to emerge. It encourages investment in creating and distributing the types of works that advance society and enrich our lives, the types of works that shouldn’t be considered an afterthought.

Some will suggest that creators will create and disseminate works even without copyright protection. This counterfactual is unconvincing. That there are creators who will create and distribute their works despite adequate copyright protection is a demonstration of human resilience, not an affirmation that society can continue to benefit while artists, authors, and creators are undermined.

So yes, let us celebrate the public benefit of copyright, let us celebrate how the profit motive serves as the engine ensuring the progress of science. But let’s not confuse the short term gains of ignoring copyright with the public benefit, or focus solely on the benefits of copyright’s limitations at the expense of the public benefit of protecting creators’ rights.

References   [ + ]

1. ↑ Sony Corp v. Universal City Studios, 464 US 417, 429 (1984).
2. ↑ United States v. Paramount Pictures, Inc., 334 US 131, 158 (1948).

Redefining Free Culture

posted June 13, 2013 by .

In the prologue of his 2004 book, Free Culture, Lawrence Lessig writes:

A free culture supports and protects creators and innovators. It does this directly by granting intellectual property rights. But it does so indirectly by limiting the reach of those rights, to guarantee that follow-on creators and innovators remain as free as possible from the control of the past. A free culture is not a culture without property, just as a free market is not a market in which everything is free. The opposite of a free culture is a “permission culture”—a culture in which creators get to create only with the permission of the powerful, or of creators from the past.

Lessig starts out well enough with his observation that intellectual property rights are part of a free culture, but things go quickly downhill after that, and the remainder of the book does nothing to rehabilitate this descent.

Although Lessig was not the first to use the term “free culture” as an antithesis to “overly restrictive” copyright laws, he did play a major role in developing and popularizing the concept.

The problem with this description of a “free culture” is that it is placed opposite of “permission culture.” This could not be more wrong. Permission, or consent, is not the opposite of freedom, it is a necessary part of freedom.

In Western philosophy at least, consent is considered one of the foundations of a democratic society. 1See, for example, The Ethics of Consent, pp. 45-51 (Oxford University Press 2010), citing Thomas Hobbes, Adam Smith, Immanuel Kant, and John Stuart Mill. Not only does legitimate authority derive solely from the “consent of the governed”, but one of the ends of government is the preservation of property — which, essentially, is a framework for organizing consent. As John Locke wrote:

Men therefore in society having property, they have such a right to the goods, which by the law of the community are their’s, that no body hath a right to take their substance or any part of it from them, without their own consent: without this they have no property at all; for I have truly no property in that, which another can by right take from me, when he pleases, against my consent.

In addition, property has long been considered integral to the maintenance of a free society. 2See, for example, Lynch v. Household Finance Corp., 405 US 538, 552 (1972),  Noah Webster — who, coincidentally, considered an author’s copyright equivalent to, and deserving of, the same protection as all other species of property, see Letter to Daniel Webster, Sept. 30, 1826 — once wrote, “Let the people have property, and they will have power — a power that will for ever be exerted to prevent a restriction of the press, and abolition of trial by jury, or the abridgement of any other privilege.”

Lessig’s conception of a “free culture” is fatally flawed. The opposite of consent, of permission, is not freedom, but force. Freedom requires consent, property is built on consent, and the two are inextricably intertwined.

This holds true whether we are talking about the species of property governing tangible items or the species of property governing intellectual items.

I would argue that the nature of the works protected by copyright — expressive, cultural, scientific, etc. — makes it more, not less, important to fit them within this liberty/property paradigm. For in addition to the freedom and self-realization creators gain when they are able to reap what their labor has sown, the works they create enrich the general public, allowing society itself to flourish.

The necessity of this to a free culture was recognized most recently by a federal court less than three months ago:

Paraphrasing James Madison, the world is indebted to the press for triumphs which have been gained by reason and humanity over error and oppression. Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy. (Emphasis added). 3The Associated Press v. Meltwater US Holdings, Dist. Court, No. 12 Civ. 1087 (DLC) (SDNY March 21, 2013).

Journalism’s role in fostering democracy may be somewhat obvious, but the fine arts play their role as well.

It has not been customary to include the arts, the fine arts, as an important part of the social conditions that bear upon democratic institutions and personal freedom. Even after the influence of the state of industry and of natural science has been admitted, we still tend to draw the line at the idea that literature, music, painting, the drama, architecture, have any intimate connection with the cultural bases of democracy. Even those who call themselves good democrats are often content to look upon the fruits of these arts as adornments of culture rather than as things in whose enjoyment all should partake, if democracy is to be a reality. The state of things in totalitarian countries may induce us to revise this opinion. For it proves that no matter what may be the case with the impulses and powers that lead the creative artist to do his work, works of art once brought into existence are the most compelling of the means of communication by which emotions are stirred and opinions formed. The theater, the movie and music hall, even the picture gallery, eloquence, popular parades, common sports and recreative agencies, have all been brought under regulation as part of the propaganda agencies by which dictatorship is kept in power without being regarded by the masses as oppressive. We are beginning to realize that emotions and imagination are more potent in shaping public sentiment and opinion than information and reason. 4John Dewey, Freedom and Culture, pp. 9-10 (Capricorn Books 1963) (1939).

Now, what copyright brings to the table is not a necessary condition for creating expressive works; surely we will still have writers and artists without these rights. Instead, it brings a type of creativity that is separate from government, whether such sponsorship is benign or “part of the propaganda agencies by which dictatorship is kept in power”, and separate from the whims of the wealthy elite, such as you might find under a patronage system. It is the freedom to create independently, facilitated by copyright, that has long been recognized as essential to a free press, a free society, and a free culture. Just a few examples from a diverse array of sources over the past two centuries that speak to this recognition include…

…this passage from a journal article in 1844:

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. 5“Impediments to Knowledge“, The Reasoner No. 17, 264 (1844).

…British lawyer James Paterson in 1880:

When any person is free to publish whatever he deems interesting or valuable either as a mode of procuring profit to himself or as a means of influencing the minds and will of his fellow-citizens on matters on which union and combination can effect great results, this is the highest mark of freedom. 6The Liberty of the Press, Speech, and Public Worship, pg 14. (Macmillian 1880).

…historian Edward Bloom in 1949:

Recognition of proprietary rights of authors under the Copyright Act of 1709 was an extremely important step in liberating the press. Copyright security helped to stimulate private initiative by providing authors of books some measure of financial independence. By at least partially obviating the economic function of political patrons, the Act of 1709 aided immeasurably in the freedom of the press. 7Edward Bloom, Johnson on a Free Press: A Study in Liberty and Subordination, A Journal of English Literary History (Dec. 1949).

…former Register of Copyrights Barbara RInger in 1974:

[T]he concept of copyright changed radically as a result of the revolutionary political movements of the late 18th and 19th centuries, and the first copyright statutes were based on a rejection of autocratic repression and monopoly control and upon a new recognition of individual liberty and the human rights of authors. … 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. 8The Demonology of Copyright, R.R. Bowker Memorial Lecture, 1974.

…or copyright scholar Neil Netanel in 1996:

By according authors and their assigns a proprietary entitlement, copyright fosters the development of an independent sector for the creation and dissemination of original expression, a sector composed of creators and publishers who earn financial support for their activities by reaching paying audiences rather than by depending on state or elite largess. ((Copyright and a Democratic Civil Society, 106 Yale Law Journal 283, 347 (1996).

So I think it is no stretch to say that property in expressive works, built on consent, plays a vital role in the maintenance of a free culture. The modern definition of “free culture” to mean a permissionless culture — one that calls for a regressive weakening of creators’ rights — is a dramatic reversal of longstanding conceptions of property and freedom. And, ironically, it achieves the opposite of what it purports to address. As legal scholar Guy Pessach observed in a forthcoming article (which I wrote about on Monday), weak copyright protection increases media concentration and decreases cultural diversity. In addition, Thomas Joo has argued that more permissive rules toward “remix” also reinforce dominant culture, contrary to what proponents of such rules (including Lessig) have claimed.

In a recent commentary, Lawrence Lessig stated the need to “learn how liberty can live in the digital age.” Just last month, Ethernet inventor Bob Metcalfe said, “The Internet needs to deal with property properly.” I would suggest the two are interdependent, which is clear once we start with a better definition of “free culture.”

References   [ + ]

1. ↑ See, for example, The Ethics of Consent, pp. 45-51 (Oxford University Press 2010), citing Thomas Hobbes, Adam Smith, Immanuel Kant, and John Stuart Mill.
2. ↑ See, for example, Lynch v. Household Finance Corp., 405 US 538, 552 (1972),  Noah Webster — who, coincidentally, considered an author’s copyright equivalent to, and deserving of, the same protection as all other species of property, see Letter to Daniel Webster, Sept. 30, 1826 — once wrote, “Let the people have property, and they will have power — a power that will for ever be exerted to prevent a restriction of the press, and abolition of trial by jury, or the abridgement of any other privilege.”

Lessig’s conception of a “free culture” is fatally flawed. The opposite of consent, of permission, is not freedom, but force. Freedom requires consent, property is built on consent, and the two are inextricably intertwined.

This holds true whether we are talking about the species of property governing tangible items or the species of property governing intellectual items.

I would argue that the nature of the works protected by copyright — expressive, cultural, scientific, etc. — makes it more, not less, important to fit them within this liberty/property paradigm. For in addition to the freedom and self-realization creators gain when they are able to reap what their labor has sown, the works they create enrich the general public, allowing society itself to flourish.

The necessity of this to a free culture was recognized most recently by a federal court less than three months ago:

Paraphrasing James Madison, the world is indebted to the press for triumphs which have been gained by reason and humanity over error and oppression. Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy. (Emphasis added). ((The Associated Press v. Meltwater US Holdings, Dist. Court, No. 12 Civ. 1087 (DLC) (SDNY March 21, 2013).

3. ↑ The Associated Press v. Meltwater US Holdings, Dist. Court, No. 12 Civ. 1087 (DLC) (SDNY March 21, 2013).

Journalism’s role in fostering democracy may be somewhat obvious, but the fine arts play their role as well.

It has not been customary to include the arts, the fine arts, as an important part of the social conditions that bear upon democratic institutions and personal freedom. Even after the influence of the state of industry and of natural science has been admitted, we still tend to draw the line at the idea that literature, music, painting, the drama, architecture, have any intimate connection with the cultural bases of democracy. Even those who call themselves good democrats are often content to look upon the fruits of these arts as adornments of culture rather than as things in whose enjoyment all should partake, if democracy is to be a reality. The state of things in totalitarian countries may induce us to revise this opinion. For it proves that no matter what may be the case with the impulses and powers that lead the creative artist to do his work, works of art once brought into existence are the most compelling of the means of communication by which emotions are stirred and opinions formed. The theater, the movie and music hall, even the picture gallery, eloquence, popular parades, common sports and recreative agencies, have all been brought under regulation as part of the propaganda agencies by which dictatorship is kept in power without being regarded by the masses as oppressive. We are beginning to realize that emotions and imagination are more potent in shaping public sentiment and opinion than information and reason. ((John Dewey, Freedom and Culture, pp. 9-10 (Capricorn Books 1963) (1939).

4. ↑ John Dewey, Freedom and Culture, pp. 9-10 (Capricorn Books 1963) (1939).

Now, what copyright brings to the table is not a necessary condition for creating expressive works; surely we will still have writers and artists without these rights. Instead, it brings a type of creativity that is separate from government, whether such sponsorship is benign or “part of the propaganda agencies by which dictatorship is kept in power”, and separate from the whims of the wealthy elite, such as you might find under a patronage system. It is the freedom to create independently, facilitated by copyright, that has long been recognized as essential to a free press, a free society, and a free culture. Just a few examples from a diverse array of sources over the past two centuries that speak to this recognition include…

…this passage from a journal article in 1844:

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. ((“Impediments to Knowledge“, The Reasoner No. 17, 264 (1844).

5. ↑ “Impediments to Knowledge“, The Reasoner No. 17, 264 (1844).

…British lawyer James Paterson in 1880:

When any person is free to publish whatever he deems interesting or valuable either as a mode of procuring profit to himself or as a means of influencing the minds and will of his fellow-citizens on matters on which union and combination can effect great results, this is the highest mark of freedom. ((The Liberty of the Press, Speech, and Public Worship, pg 14. (Macmillian 1880).

6. ↑ The Liberty of the Press, Speech, and Public Worship, pg 14. (Macmillian 1880).

…historian Edward Bloom in 1949:

Recognition of proprietary rights of authors under the Copyright Act of 1709 was an extremely important step in liberating the press. Copyright security helped to stimulate private initiative by providing authors of books some measure of financial independence. By at least partially obviating the economic function of political patrons, the Act of 1709 aided immeasurably in the freedom of the press. ((Edward Bloom, Johnson on a Free Press: A Study in Liberty and Subordination, A Journal of English Literary History (Dec. 1949).

7. ↑ Edward Bloom, Johnson on a Free Press: A Study in Liberty and Subordination, A Journal of English Literary History (Dec. 1949).

…former Register of Copyrights Barbara RInger in 1974:

[T]he concept of copyright changed radically as a result of the revolutionary political movements of the late 18th and 19th centuries, and the first copyright statutes were based on a rejection of autocratic repression and monopoly control and upon a new recognition of individual liberty and the human rights of authors. … 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. ((The Demonology of Copyright, R.R. Bowker Memorial Lecture, 1974.

8. ↑ The Demonology of Copyright, R.R. Bowker Memorial Lecture, 1974.

…or copyright scholar Neil Netanel in 1996:

By according authors and their assigns a proprietary entitlement, copyright fosters the development of an independent sector for the creation and dissemination of original expression, a sector composed of creators and publishers who earn financial support for their activities by reaching paying audiences rather than by depending on state or elite largess. ((Copyright and a Democratic Civil Society, 106 Yale Law Journal 283, 347 (1996).

The Downside of Disintermediation

posted June 10, 2013 by .

Skeptics of copyright are generally not too fond of “gatekeepers.”

Prior to the widescale adoption of the internet, these “gatekeepers”, the typical narrative goes, controlled what the masses read, watched, and listened to, reinforcing a dominant culture and creating the concept of media “consumers.” But the networked, one-to-one nature of the internet challenged this one-to-many model. It allowed creators to bypass “gatekeepers” and connect directly with fans, supporting more diverse and decentralized culture.

To many proponents of this view, current copyright law facilitates the former, broadcast model. Legal professor Guy Pessach thinks this is wrong.

In his forthcoming article, Deconstructing Disintermediation — A Skeptical Copyright Perspective, Pessach examines the effects that disintermediation has had in the copyright realm and comes to the conclusion that it has decreased cultural diversity, decentralization, and artist welfare.

Deconstructing Disintermediation

As Pessach notes, the conventional wisdom of disintermediation and copyright has been championed by many over the past decade, including academics like Jessica Litman, Neil Netanel, William Fisher, and Yochai Benkler. The basic premise is that copyright law has evolved to primarily benefit corporate media at the expense of users and individual creators. This system is criticized for undermining cultural diversity, making amateur and “civic-engaged activity” that involves the use of copyrighted cultural materials more difficult, and eroding the ability of creators to get a fair return for their work.

By focusing on cutting out the middleman, copyright law reformers hope to decrease corporate media’s influence on culture and make it easier for creators to reach audiences and for readers to enjoy a more diverse range of creative works. This would be achieved in part by enhancing existing provisions in copyright law like termination and work-for-hire rules to be more favorable to creators and in part by shielding some peer-to-peer activities from infringement liability and broadening safe harbors for online intermediaries.

Pessach is skeptical of this argument, and his article advances this skepticism on three grounds. First, the new intermediaries, like YouTube and Facebook, are not as different from traditional media as disintermediation proponents might think and may, in fact, be worse in many ways. As Pessach notes, “the creative destruction of traditional corporate media and its replacement by mega networked intermediaries may generate realms that are more concentrated, homogeneous and exploitive of creators.” Related to this is Pessach’s next argument that as new intermediaries gain power over audiences, the preservation of “traditional” media may have an increasingly important role mitigating that dominance. Finally, Pessach shows that incorporating disintermediation provisions in copyright law tends to have the opposite effect than intended, resulting more often in centralization of media, less cultural diversity, and less leverage for creators.

In short, argues Pessach, when you recognize that copyright law regulates power relationships between different actors in creative markets, you recognize that “extreme concentration of media power could derive not only from excessive copyright protection, but also from excessive ability to freely utilize content.” Pessach concludes,

Once this aspect is acknowledged, a novel and hidden role of copyright law is unveiled. Copyright law is a dynamic mechanism for regulating power relationships in media and information markets. It does so both by acknowledging copyright protection and by exempting from copyright liability. Hence, under certain economic and social conditions, copyright protection may have a legitimate role in mitigating media and market powers of copyrightless intermediaries that leverage copyright exemptions and limitations as their gateway to control over audience attention.

Money for Nothing

Pessach next turns to exploring these ideas in greater detail. First up: the nature of the new intermediaries. Pessach writes that

the bargaining position of originating authors and creators, versus a handful of Internet intermediaries, may be weaker than it was for traditional distributors and corporate media. The more concentrated the layer of effective networked distribution is, the weaker the bargaining position and economic welfare of authors and creators becomes. Seemingly, the Internet and networked communication platforms provide almost an unlimited range of distribution platforms. Nevertheless, if one adds the parameter of effective audience attention and the ability to effectively reach audiences, in realms of information overflow, reality appears different.

YouTube is used as a case study here. The sheer size and popularity of the site makes it a must for video creators to distribute their content online. But YouTube invests very little in producing the works available on its site 1Pessach states that “YouTube does not finance or invest in the production of the content,” though in the past year, the site has begun at least advancing ad revenues for some original production. and only pays about 5% in ad revenues to creators.

When compared to traditional creative industries, this state of affairs does not seem encouraging. For example, within the audio-visual creative industries, the guilds’ collective agreements between authors, directors and performers, on the one hand, and motion picture/television studios, on the other, seem to provide authors, creators and performers with financial conditions that are much better than the YouTube scenario, particularly because the financial investment and risk are born entirely by corporate media. As for the music industry, indeed, there are many reports and evidence regarding the imbalanced allocation of revenues between most artists and record companies. However, even in this regard, revenues from the “bad” old record company seem higher than the new digital distribution system. If one takes into account elements such as advances, coverage of production costs and even percentages of revenue share, the new boss might be worse than the old bad boss at the end of the day. 2Pessach cites here to David Lowery’s seminal article, Meet the New Boss, Worse than the Old Boss.

Other examples of how the new intermediaries have not resulted in better conditions for authors and creators. Pessach cites to the purchase of the Huffington Post by AOL in 2011 by $300 million, value created by its thousands of unpaid bloggers who received no benefit from the sale as well as the Instagram flap earlier this year. Both cases demonstrate the enormous bargaining and negotiating power new intermediaries have over authors and creators.

Be Sure to Drink Your Ovaltine

In addition to reintermediation of expressive works, Pessach examines the monetization of these works online. Advertising has become the dominant method of monetization for online works, further exacerbating the negative effects to creators and culture. Pessach explains that an ad based model places emphasis on creating the most popular content in order to attract the most “eyeballs.” “Traditional” media has relied in part on advertising, of course, but disintermediation offers a more extreme version of this model. The former found the pressure to deliver eyeballs on the traditional intermediary. But the latter places that pressure on the creator himself. Pessach says the difference is that “as opposed to corporate media, individual creators and authors lack the financial resources required to spread risks between different types of cultural products or seek and develop other distribution platforms.”

Thus, Pessach concludes, disintermediation has not improved creators’ welfare, it has not increased cultural diversity, and it has amplified media concentration. One of the takeaways from this conclusion is that the internet has made “corporate” media more relevant, not less. Pessach notes the many essential roles that record labels, movie studios, book publishers, broadcasters and other traditional media have as social networks, search engines, and user-generated content platforms increase their dominance. First, their size puts them in a better negotiating position against digital distribution channels, getting, in many cases, a better “deal” for the creators of works in their portfolio than individual creators could likely get on their own. Second, these institutions carry “a cultural legacy of commitment to the creative industries”, which Pessach says is “currently absent in the commitments and cultural DNA of networked intermediaries.” Finally, the financial investment, risk allocating, and filtering functions of these companies help facilitate a broad range of cultural production that is highly unlikely to appear in a disintermediated digital environment.

Disintermediation and Copyright

So what does this all of this have to do with copyright?

To answer this question, Pessach next discusses two “themes” that have emerged from efforts to increase disintermediation through copyright law. The irony is that the actual effect appears to be contrary to the purported goals.

The first of these relates to the protection of online service providers through DMCA safe harbors, most notably the § 512(c) safe harbor for user-uploaded material. Part of the hope of this safe harbor was to support the development of new, decentralized distribution platforms. Reality tells a different story, which Pessach demonstrates by using the example of YouTube once again:

The dominant and unprecedented market and power position that YouTube has managed to obtain is… mostly due to § 512(c)’s safe harbor regime. It is the safe harbor regime that enabled the hosting and public provision of endless amounts of popular copyrighted cultural materials, and it is this ability that made the platform so dominant in terms of its market share. The growing popularity of the platform was largely based on its ability to cover entire portfolios of content (“full repertoire”) under one umbrella and highly demanded (copyrighted) content. The ability to do so without any need to obtain ex-ante authorizations from copyright owners and with the safe harbor’s limited legal risk is what facilitated the economic and cultural conditions for the current market domination of YouTube, particularly due to elements of network economics. Practically, the fact that under § 512(c)’s safe harbor regime, YouTube was obliged to remove (ex-post) infringing materials, based on a takedown notice by copyright owners, was not a real obstacle in establishing the platform’s dominance. By itself, such an obligation did not prevent the rapid growth in the platform’s popularity and the immense portfolio of popular copyrighted content that it hosted.

Once this dominant market position was achieved, however, it was also the stage to move toward business models, which are based on collaboration and revenue-sharing with creators and rights owners, only now from a completely different negotiation (or one may say, coercive) position. At this stage, authors, creators and rights owners were faced with a highly dominant and popular intermediary, which attracts a significant portion of audience attention and which is already partially shielded from legal liability for the hosting of their materials. Under such conditions, YouTube’s ability to launder its content activities under its own terms was considerable. Authors, creators and performers have very few options other than agreeing to YouTube’s terms and conditions or vanishing from audiences’ awareness.

The second theme Pessach looks at are proposals to vest more rights, particularly initial ownership rights, in creators. Though at times inelegantly phrased, the argument here is essentially that a focus on initial ownership rights takes the focus off the more important mechanisms that can provide meaningful bargaining power to decentralized and diffused creators. One self-published author is going to get whatever deal Amazon gives her, but a publisher that can negotiate on behalf of many authors could get a better deal.

The entire article is worth a read. Though astute observers may not find much surprising within, Pessach does an admirable job tying together various themes — “maybe the internet only wants one of everything”, the continuing importance of “traditional” intermediaries, the sharp decrease in creator welfare caused by disintermediation — and adds to a growing academic literature that highlights the flaws in the arguments of copyright’s skeptics. 3See, for example, Randolph May & Seth Cooper, The Constitutional Foundations of Intellectual Property, 8 Perspectives from FSF Scholars, Free State Foundation (May 10, 2013); Ronald Cass & Keith Hylton, Laws of Creation: Property Rights in the World of Ideas (Harvard Univ. Press 2012); Thomas Joo, Remix Without Romance, 44 Conn. L. Rev. 415 (2011); Marc H. Greenberg, Reason or Madness: A Defense of Copyright’s Growing Pains, 7 John Marshall Review of Intellectual Property Law 1 (2007); Justin Hughes, Copyright and Incomplete Historiographies – of Piracy, Propertization, and Thomas Jefferson, 79 Southern California Law Review 993 (2006); Stan Liebowitz, Economists’ Topsy-Turvy View of Piracy, 2 Review of Economic Research on Copyright Issues 5 (2005); Thomas Nachbar, Constructing Copyright’s Mythology, The Green Bag, Vol. 6 (2002). It is tragic that the erosion of creators’ rights has had the opposite effect than those responsible had intended. Disintermediation has benefitted few but a handful of giant internet firms. Hopefully, Pessach’s article shines a light on the fact that meaningful copyright protection remains just as vital to the public interest, if not more so, in the digital age.

References   [ + ]

1. ↑ Pessach states that “YouTube does not finance or invest in the production of the content,” though in the past year, the site has begun at least advancing ad revenues for some original production.
2. ↑ Pessach cites here to David Lowery’s seminal article, Meet the New Boss, Worse than the Old Boss.
3. ↑ See, for example, Randolph May & Seth Cooper, The Constitutional Foundations of Intellectual Property, 8 Perspectives from FSF Scholars, Free State Foundation (May 10, 2013); Ronald Cass & Keith Hylton, Laws of Creation: Property Rights in the World of Ideas (Harvard Univ. Press 2012); Thomas Joo, Remix Without Romance, 44 Conn. L. Rev. 415 (2011); Marc H. Greenberg, Reason or Madness: A Defense of Copyright’s Growing Pains, 7 John Marshall Review of Intellectual Property Law 1 (2007); Justin Hughes, Copyright and Incomplete Historiographies – of Piracy, Propertization, and Thomas Jefferson, 79 Southern California Law Review 993 (2006); Stan Liebowitz, Economists’ Topsy-Turvy View of Piracy, 2 Review of Economic Research on Copyright Issues 5 (2005); Thomas Nachbar, Constructing Copyright’s Mythology, The Green Bag, Vol. 6 (2002).
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