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Yesterday, the Cato Institute held an event about Copyright Unbalanced: From Incentives to Excess, a new book edited by Jerry Brito from George Mason University’s Mercatus Center.  The event was a panel discussion with Brito, Tom Bell from Chapman University School of Law, and Mitch Glazier from the RIAA.  Brito offered a libertarian critique of the current copyright system (including Ayn Rand and Frederick von Hayek references), and Bell offered suggestions for a radical reform of the system.  Glazier was critical of their presentations, but did offer some ideas of where they might agree on the need for reform. A webcast is available on Cato’s webpage for this event.

Jerry Brito argued that copyright is statutorily-created property that has real value, akin to tradable emissions permits.  Copyright was created by the Constitution – without the Constitution there would be no copyright protection in the U.S.  It was created to solve a market failure, to promote progress of the useful arts. As a government-created form of property, it is subject to Hayek’s local knowledge problem (defined on wikipedia as “the observation that the data required for rational economic planning are distributed among individual actors, and thus unavoidably exist outside the knowledge of a central authority.”)

As a government-conferred type of property, it has some differences from more traditional types of property.  One important distinction is that copyright is time-limited, while other types of property are forever.  The time limit is an important balancing function.  Ayn Rand noted that copyright “cannot be exercised in perpetuity” because this would undermine its purpose. What is the correct term of protection?   There is a huge difference between the Founding Fathers’ term and the current life+70 term.  There is an optimal length that is greater than zero, but an incorrect term (either too long or too short) will lead to inefficiencies.

Other problems of the current copyright system include ever increasing enforcement powers, increased regulation of technology, compulsory licenses, and price fixing.  Reforming these types of things would be compatible with a libertarian / free market position.  Copyright is a “big government problem.”

Copyright also has a political problem – copyright holder interests continually lobby for longer, stronger protections, which raise costs for the public.  It is unclear what the public gets in return. It is not clear they get more works.  With ever expanding terms, penalties, and new rights, the copyright system resembles an out-of-control government program.

As the Republican party shifts from being a “pro-business” party to a “pro-market” party in order to attract new people, it should consider copyright reform.  Belief in the need to reform copyright is the correct free market position, and the recent Republican Study Committee report should not have been controversial. After the SOPA protests in the last Congress, it was the Republican sponsors who were the first to withdraw their support. The time is right for the application of a new free market perspective on copyright.

Tom Bell began his presentation describing the situation of Samantha Tumpach, who was jailed for 2 days for using a camcorder to record herself and her friends for two minutes inside a movie theater, as an example of copyright enforcement overreach. He also showed a graph of the ever-lengthening terms of copyright protection from 1790 to present.  He then proposed five reforms to the copyright system:

  1. Go back to the “Founders’ copyright” – Limit the term of copyright protection to 14 years, with the opportunity for rightholders to renew for another 14, and limit protection to entire works.
  2. Leave the Berne Convention
  3. Have copyright owners use contracts and the courts more to enforce their copyrights
  4. Remember that the purpose of copyright is to ensure that the public has access to works, not to enrich rightholders
  5. Change the rhetoric of intellectual property. The term “property” is misleading.  Copyright grants a “privilege,” not a property   right.  Relatedly, one should talk about “holders” of copyright, not “owners.”

Bell believes that copyright is like the “problem of government.”  It is a necessary evil that has grown unnecessarily powerful.

Glazier disputed Brito’s claim that copyrights were created by Congress.  He contends that copyright exists as a natural right, which was then “secured” (not “created”) by Congress.  Copyright existed in common law before the Constitution, as evidenced by John Locke’s writings.  The phrasing of the 1710 Statute of Anne refer to writings as “property” and writers as “proprietors.”  In Federalist Paper 43, Madison also indicated that copyright was part of common law.

If one accepts that copyright exists as a natural right, then that puts the focus on the individual.  Those who are afraid of the government ought to view copyrights as individual rights.  This contrasts with Brito and Bell’s arguments that focus on copyright as a utilitarian tool to spur the creation of works.

Glazier also disputes that changes to copyright law always move in the direction of increasing the strength and scope of copyright.  Most of the additions to copyright law over the years have dealt with limitations and exceptions  for affected businesses and users.

He noted that the U.S. joined the Berne convention because we had become an exporter of written materials and wanted to benefit from copyright.  Today the U.S. benefits even more from copyright – $1.6 trillion of the U.S. economy relies on it.  Since copyright benefits the economy as a whole as well as individuals, if one is going to err in copyright policy, its best to err on the side of the creators.

Glazier thought he and the others might agree on the need to change some practical aspects of the copyright system.  Recognizing that not everyone wants to commercially exploit their works – but some people do – is the first step.  It would be good to figure out how to structure a system where those who want commercial returns can get them, but others are not hindered from sharing their works.

Figuring out ways to locate owners of works is a tough problem upon which the two sides might be able to find common ground.

The first two then were given a chance to respond.

Brito argued that the Constitution does in fact treat copyright in a utilitarian manner – it gives a legal right to enforce copyright in courts that had not previously existed.  The ability of authors to use copyright to exclude others did not exist before the Constitution.  He agreed that much of current copyright law deals with exceptions for users, but he views this as a big regulation by the government, and thinks the courts might do a better job with it.

Bell quoted a Supreme Court ruling (Fox Films, 1932) saying that the1790 Copyright Act “did not sanction an existing right but created a new one.”  He disagreed with Glazier’s assertion that the expansion of copyright law is due mostly to limitations and exceptions – in his view the copyright law massively expands rights for rightholders, offers limited protections for users.  Finally, he noted that Glazier’s statement about erring on the side of the creator overlooks the facts that creators often do not own the control the rights – publishers, CROs and others do.

The first comment during Q&A was from Christina Mulligan from Yale, who noted that the value of most commercial works is recouped within a work’s first five years in the market – so life of the author plus 70 years is a very long term.   She challenged Glazier’s assertion that copyright exists as a natural right.

Scott Cleeland from Precursor LLC said he was surprised that the authors’ idea of “free markets” didn’t seem to include profits, to which Bell responded that appreciation of the profit motive doesn’t necessitate that copyrights should be treated like property.

Jim Leon (an author who said his books have been pirated in Asia) said that he thinks the length of copyright terms are absurd, but he wanted to know how a reformed copyright system could let authors know when their works are being copied overseas. Brito answered that copying technologies and the resulting growth of piracy need to be addressed – but proposed solutions like SOPA carry negative consequences, so we must tread carefully.  Glazier said he thinks that companies are working together to come up with workable private sector solutions to some of the problems presented by commercial scale piracy. The pace of this will likely pick up as companies realize that content is the way to make money online.

A questioner from the Copyright Alliance asked Brito and Bell where individual creators would get protections in their proposed system.  Brito answered that a term of 14-28 years ought to allow for compensation.