The Way Forward on Copyright Reform

Major reforms to copyright law are possible and increasingly likely.

In November, the House Republican Study Committee (RSC) published a report, which I authored, that called for such major reforms to our copyright system while still supporting copyright as a concept. Among its conclusions, it noted:

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

Both before and after the report’s release, numerous conservative and libertarian organizations have come out in favor of copyright reform. In the wake of the RSC memo, none have come out against. Working for the RSC, I was aware that a number of conservative members were interested in moving forward on copyright reform. But, due to pushback, the report was subsequently taken offline, though neither disowned nor repudiated.

To many on the conservative and libertarian side, it is no longer a question of whether or not we need copyright reform—the operative question is, what does that reform look like?

Copyright is a thorny issue, because much of the work in this area of public policy lies in how we frame our questions. The dominant conservative and libertarian perspective is that copyright is not the same as traditional property and therefore, in accord with the Constitution, we are required to perform a complicated balancing test to determine what provides the greatest benefit to society while providing appropriate compensation to the content producer. Jerry Brito, Senior Research Fellow at the Mercatus Center at George Mason University, provides one such perspective, though not an uncontested view, on why copyright is different from traditional property rights in Copyright Unbalanced: From Incentive to Excess:

In contrast to traditional property, copyright was created by the Constitution; it did not exist in the common law. Without the Constitution’s copyright clause, there would be no preexisting right in creative works. What’s more, the copyright clause does not recognize an inalienable right to copyright, but instead merely grants to Congress the power to establish copyrights. Copyright therefore stands in contrast to traditional property in that the legislature has complete discretion whether to grant the right or not… [Further the] copyright clause allows Congress to establish copyrights for ‘limited times’ only. This means that unlike traditional property, copyrights must cease to belong to their owners at a certain point.[1]

The RSC report debunked three myths that have justified our current system of effectively indefinite copyright and the destruction of any future public domain:

The purpose of copyright is to compensate the creator of the content. Copyright is free market capitalism at work. The current copyright legal regime leads to the greatest innovation and productivity.

These points require critical examination because they each address how we approach the issue of copyright. I wanted to take on these issues in a manner that would achieve a transpartisan solution appealing to libertarians, conservatives, and liberals alike.

Let’s consider the first myth. Tom W. Bell, Professor at Chapman University School of Law, advocates going back to the system envisioned by our Founders: the 1790 Copyright Law provided a system of 14 years for copyright upon registration and a 14-year optional renewal. The Constitution provides a clear explanation for good copyright law, namely that it is for the promotion of science and the useful arts, and not, as the first myth would have it, to compensate the creator of the content. The Founders were onto something, and we should try to make our laws more similar to their first copyright act.

The second myth is exposed when we consider that our copyright system is actually a government-imposed system of regulation rather than something “organic” to a free market. As regulation, the relevant question is whether a given approach is the most effective. As an economist would ask, “is there a market failure that requires this level of government intervention and subsidy?”

The third myth asserts that our system is optimal in striking the intended balance of providing sufficient incentive to content producers without discouraging or eliminating new markets—that is, whether it satisfies what the report calls the “Goldilocks test.” This last point is critical because most people don’t know that our current copyright terms are comparatively long in historical perspective. The current law provides for the life of the author plus 70 years, and for corporate authors 120 years after creation, or 95 years after publication. That’s many times longer than the Founders’ copyright system (see Figure 1), but the dropping of the registration requirement from their system is also a major and unprecedented expansion in the scope of copyright.

Figure 1

Source: Wikimedia Commons, graph by Tom W. Bell.

Research further shows that our system of copyright is suboptimal at best and significantly counterproductive at worst. For much of our history, copyright required registration to receive the full benefit of the extension. If a longer copyright term were critical to provide sufficient incentive to content producers then we would expect, particularly when copyright terms were much shorter, that content producers would choose to extend their copyright. But during the era of registration, Congress found that only “a very small percentage of copyrights are ever renewed.”[2] They found that the rate of renewal in the 1880s was 15%, and less than half of all works were originally registered at all. If a much longer copyright term of life plus 70 years is so necessary, then why did all these content producers choose to only have 28 years of protection rather than the optional 42 years available at the time?

As William Patry argues in his book How to Fix Copyright,

Was there a single author in the world who said, ‘A term of copyright that only lasts for my life plus fifty years after I die is too short. I will not create a new work unless copyright is extent to last for my life plus seventy years’? There is no such person. (p 57)

Several studies have confirmed this as well. In 2009, a study on the production of movies in twenty-three countries that had extended the term of copyright (pdf) found no evidence that longer terms of copyright caused the creation of more works rather than the prior, shorter term. Another study from the University of Cambridge found that the optimal copyright term is 15 years (pdf), with a 99% confidence interval extending up to 38 years. Even the Congressional Research Service concluded that there was at most a small change in incentive in the extension of copyright term.

If there are no or only minimal benefits to this change, what are the costs? The RSC report argued that “[t]oday’s legal regime of copyright law is seen by many as a form of corporate welfare that hurts innovation and hurts the consumer.” Consumers are denied the ability to acquire content that would have been in the public domain, and also denied the opportunity to acquire derivative works. The report further argued that therefore, “[Our copyright system] is a system that picks winners and losers, and the losers are new industries that could generate new wealth and added value. We frankly may have no idea how it actually hurts innovation, because we don’t know what isn’t able to be produced as a result of our current system.”

It’s always difficult to speculate about alternative histories, but in this case there is sufficient information to consider the real impact of our copyright regulation upon new market models. Some real-world examples, such as the DJ/remix industry, have been ridiculed, but they are no laughing matter to an aspiring DJ who would like to make mixtapes without being sued. To a DJ, our copyright system is extremely destructive. The DJ/remix industry as a whole could offer export opportunities and provide not insignificant commerce within the United States, meaning that the impact is on more than just one or two DJs. And this example among others is why the report ultimately concluded, “Current copyright law does not merely distort some markets – rather it destroys entire markets.”

When regulation stops new market models or makes them prohibitively difficult to enter, we should be extremely skeptical of the benefits of that regulation. Much of our society’s economic growth in the past two centuries is a result of disruptive innovation. No one is alleging that the DJ/remix industry will have profound consequences comparable to the cotton gin or the semiconductor, but the DJ/remix market is not the only one affected, and we have no idea the actual economic costs of prohibiting other new market models.

Further, derivative works do not displace the original works. In fact, one could speculate that many of them actually increase sales of the originals. An interesting situation arose in 2004 when Danger Mouse put out The Grey Album (accessible here), which remixed Jay-Z’s The Black Album and the Beatles’ The White Album. As Jay-Z commented during an interview on NPR’s Fresh Air:

I think it was a really strong album. I champion any form of creativity, and that was a genius idea—to do it. And it sparked so many others like it. There are other ones that—you know, it’s really good—there are other ones that because of the blueprint that was set by him, that I think are a little better. But you know, him being the first and having the idea, I thought it was genius.

Jay-Z was specifically asked if he felt “ripped off” by the fact that Danger Mouse didn’t pay. He responded:

No, I was actually honored that, you know, that someone took the time to mash those records up with Beatles records. I was honored to be on—you know, quote-unquote, the same song with the Beatles.

Jay-Z in fact likely wanted this outcome.[3] He took the unusual step of releasing an a cappella version of his latest record for the main purpose of having DJs remix the lyrics with different beats. One can speculate that some Beatles fans may have even been introduced to Jay-Z for the first time and decided to buy his albums as a result, or vice versa with the Beatles.

And “by definition, a derivative work is an imperfect substitute; often it is no substitute at all.”[4] But EMI, representing the owner of the Beatles sound recording copyrights and Sony/ATV Publishing, owner of the compositions on the album, sent a cease and desist letter to Danger Mouse for copyright infringement nonetheless. This is just one prominent example from a field of artistic work that is being hampered by our copyright system’s overlong terms. We may never know what other sorts of works may arise, if only we let them.

Ironically, the Disney Corporation is one of the main proponents of our current copyright system, but Walt Disney made his early fortune and built his company around derivative works. His major works are derivatives of Grimm or other fairy tales – even Steamboat Willie.

The Big Battles



I have optimism that there is potential for major change on copyright. First, we are in the post-SOPA era. Members’ sudden, vocal opposition to legislation that they were co-sponsoring was nothing short of a watershed moment—but I would argue that it was proof of concept of something even bigger. SOPA proved that a united movement can stop legislation that is expected to pass despite overwhelming odds, special-interest cronies, and the support of powerful politicians. This coalition can and has already started to mobilize in favor of sensible policy, including copyright reform.

People are beginning to question why our copyright system is so dysfunctional and counterproductive. In 2018, Steamboat Willie is finally supposed to enter the public domain. There will be a major legislative push to re-extend copyright to life plus 90 years to protect it (making copyright, in effect, perpetual). There is already mounting criticism of our current copyright terms of life plus 70 years, which, with the prospect of effectively indefinite extensions, seems to be in direct violation of the Constitution’s requirement of a limited time for securing copyright. 2018 should be the year that copyright is no longer perpetually extended.

Second, in 2013, negotiations for the Trans-Pacific Partnership (TPP) Treaty may conclude, and the treaty would then be submitted to the Senate for approval. This treaty includes provisions on intellectual property that are above and beyond those in the Berne Convention. Setting controversial and contested copyright terms in stone through treaty was wrong then, and it’s wrong now. It’s an affront to the legislative process to try to “re-codify” legislative wins into treaty agreements. That would make it significantly more difficult to ever change course.

The length of copyright terms has always received significant debate and disagreement. This was likely the intention of the Founders in not specifying what a “limited time” meant within the Constitution itself. But current drafts of the TPP allegedly establish the law at life plus 70 years. Additionally, it would include or even expand portions of the Digital Millennium Copyright Act (DMCA) relating to anti-circumvention technologies. To be clear, I am strongly against unauthorized copyright infringement, but the DMCA outlawing of anti-circumvention technologies is extremely controversial—and rightfully so.

The DMCA created rules that until recently made it illegal to jailbreak your own iPhone or to develop a program to read a Kindle book aloud to someone who is blind. The DMCA still bars developing, selling, providing, or even linking to technologies that play legal DVDs purchased in a different region, or to convert a DVD you own to a playable file on your computer. Because no licensed DVD playing software is currently available for the Linux operating system, if a Linux user wishes to play a DVD that they have legally bought, they cannot legally play it on their own computer. The DMCA’s rules have also made legitimate fair uses of copyrighted material much harder. Using snippets of video for classrooms is legal fair use, but to do so, teachers have to use illegal technology to “rip” the DVD to a playable and editable file, or they must illegally download the file online.

Within the leaked details of the TPP Treaty there are many troubling features, but perhaps most troubling is the secrecy surrounding the negotiations. Members have been allowed to view documents, but most of their staff and the general public have been denied access. Outside of the national security realm, this type of secrecy in regard to a treaty is particularly troubling and perhaps unprecedented. Another troubling aspect is that despite this secrecy, there have been “stakeholder” presentations representing one particular side and vested interest, rather than the perspective of the general public or the requirements of our Constitution. One of the stakeholder presentations at the latest TPP negotiations was titled “The Walt-Disney Company: Creativity, Brought to you by Copyright.” At the same time, representatives from the Electronic Freedom Foundation (EFF) were denied access and not allowed in the building for recent negotiations.

For all these reasons, the TPP treaty will be a major battle in reforming copyright. The United States is the party asking for many of these provisions on intellectual property, and elected political leaders can and should get involved now to put an end to that. If a treaty is submitted that includes this type of language on intellectual property, 34 Senators should ensure that this treaty is not approved.

The Opportunity for Compromise



At the recent Cato event where Jerry Brito unveiled his new compilation on copyright reform, Mitch Glazier, Senior Executive Vice President of the RIAA, appeared open to some sensible reforms to the copyright system. There may be issues of fair use where both sides can come to agreement on a more sensible system, but so far content groups have not come out publicly in favor of such reforms.

But perhaps the best issue for compromise may relate to orphan works. Orphan works arise when the rights holder for a work is not apparent and it’s either too expensive or impossible to determine who is entitled to compensation. This creates a large number of problems for the content industry; if you can’t track down who owns rights in the work, you can’t use the work. This creates real-world consequences; the BBC has 1 million hours of programming in its archives that are unusable because the rights holders are unknown.[5] British museums hold 17 million photographs, of which 90 percent lack rights holder identification.[6]

In the original 1790 Copyright Act, creators were entitled to 14 years plus a 14 year renewal, but only if the author was still alive and registered—as a result, this system did not have the orphan works problem. But in today’s system of life plus 70, and a perhaps near future system of life plus 90, it is sometimes considerably more difficult to track down who owns rights, as authors move or die and companies to whom rights are transferred go out of business or sell those rights.

Tom W. Bell has described the system of copyright as an intellectual “privilege” rather than an intellectual “property,” and he might ask why orphan works should be entitled to such a privilege when they haven’t asked for it and can’t even receive it. This is also a big problem for the public domain because a large number of these works could otherwise be available for free. In a situation where the rights holder cannot be determined and their descendants cannot be compensated, can we not all agree that the authors themselves would doubtless prefer to have their works available and accessible?

Evidence demonstrates that usually once materials enter the public domain they experience a large spike in access and readership. Thus if an author’s overall goal for their life’s work was for it to live on in perpetuity and continue to inspire, we are doing them a true disservice by keeping such orphan works off limits.

Looking Ahead



There are several medium term opportunities to amend current copyright law where we can examine whether our system is working. It’s not difficult to imagine that in a near future world where 3D printers like the Makerbot are widely available, there will be an increased call for intellectual property safeguards. As storage space continues to increase and Internet speeds continue to grow faster, it will be even easier, as if it were not easy enough already, for average people to illegally download HD movies and 3D movies. This will allow for people to “subscribe” to download all new movies once available in HD illegally online.

To be clear, piracy is a problem, and some level of copyright is important to create an incentive to content producers, but we shouldn’t let the threat of piracy create laws that are ineffective and even counterproductive. We must be very careful in our application of laws to ensure that they are narrowly tailored to their objectives. Very often when one discusses copyright reform the retort is that copyright theft is costing billions of dollars. This may or may not be true, but this is not an argument in favor of a copyright system that extends to life plus 70 years.

As the RSC report concluded:

[Our] Founding Fathers wrote the Constitution with explicit instructions …for a limited copyright – not an indefinite monopoly. We must strike this careful Goldilocks-like balance for the consumer and other businesses versus the content producers.



It is difficult to argue that the life of the author plus 70 years is an appropriate copyright term for this purpose – what possible new incentive was given to the content producer for content protection for a term of life plus 70 years vs. a term of life plus 50 years? …

I hope we can all at least agree on that.

Notes



[1] See also H.R. Rep. No. 60-2222, at 7 (1909) (“The enactment of copyright legislation by Congress under the terms of the Constitution is not based upon any natural right that the author has in his writings … but upon the ground that the welfare of the public will be served… . Not primarily for the benefit of the author, but primarily for the benefit of the public, such rights are given… .”)



[2] See H.R. Rep. 7083, 59th Cong., 2d Sess. 14 (1907).



[3] Also see the interview with Public Enemy’s Chuck D and Hank Shocklee in Stay Free! Magazine: “Public Enemy’s music was affected [by copyright issues for sampling] more than anybody because we were taking thousands of sounds… it was too expensive to defend against a claim. So we had to change our whole style… [in regard to others remixing his songs without permission] my feelings are obvious. I think it’s great.”



[4] William Landes Richard Posner, The Economic Structure of Intellectual Property Law. Cambridge: Harvard University Press, 2003.



[5] Digital Britain (pdf), Final report, Department for Culture, Media, and Sport, June 2009.



[6] Andrew, Gowers, Gowers Review of Intellectual Property (pdf), December 2006, p 6.