Republican Study Committee report suggests copyright reforms, including shorter copyright terms and expanded fair use

Update: November 17, 2012, 10:27pm: The report was removed from the RSC website on Saturday afternoon.. Paul Teller, Executive Director of the RSC issued the following statement:

We at the RSC take pride in providing informative analysis of major policy issues and pending legislation that accounts for the range of perspectives held by RSC Members and within the conservative community. Yesterday you received a Policy Brief on copyright law that was published without adequate review within the RSC and failed to meet that standard. Copyright reform would have far-reaching impacts, so it is incredibly important that it be approached with all facts and viewpoints in hand. As the RSC’s Executive Director, I apologize and take full responsibility for this oversight. Enjoy the rest of your weekend and a meaningful Thanksgiving holiday....

Paul S. Teller – Executive Director, U.S. House Republican Study Committee

A PDF version is still available for download below.

On 16 November 2012, the Republican Study Committee, led by Representative Jim Jordan (R-OH), released a policy brief entitled: "Three Myths about Copyright Law and Where to Start to Fix it"

The policy brief argues that:

Today’s legal regime of copyright law is seen by many as a form of corporate welfare that hurts innovation and hurts the consumer. It 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 (emphasis in original).

The paper lists as its three myths:

Myth 1: The purpose of copyright is to compensate the creator of the content.
The brief states that "It's a common misperception that the Constitution enables our current legal regime of copyright protection --in fact, it does not." The paper notes that the Constitution is to "promote the progress of science and the useful arts" while arguing that the U.S. copyright system compensates the content creator because of an "entitle[ment]"

Myth 2: Copyright is free market capitalism at work.
The paper argues that "Copyright violates nearly every tenet of laissez faire capitalism. Under the current system of copyright, producers of content are entitled to a guaranteed, government instituted, government subsidized content-monopoly." The brief also notes that copyright infringement is punishable by "massive damages" and jail time, and that criminal sanctions task the government with investigating copyright violations.

Myth 3: The current copyright legal regime leads to the greatest innovation and productivity.
The paper notes that the Founding Fathers acknowledged a need to provide incentive to create new works, but that too much protection would stifle innovation, in effect requiring a balancing act to ensure the maximum output of productivity. As a result, the Founding Fathers wrote into the Constitution the phrase "securing for a limited time." However, the paper notes, the original copyright term in the United States was 14 years, with an additional 14 years available upon renewable as compared to our current copyright term of life of the author plus 70 years, or for corporate works, 120 years or 95 years after publication.

The study goes on to further identify specific areas where the United States copyright regime has created harmful effects or has the potential for negative results including:

  • Slowing the creation of a robust DJ/Remix industry (noting that other countries have more robust remixing industries, creating new innovations)
  • Hampering scientific inquiry (noting that most scientific articles from the 20th century are still under copyright, an illogical result if scientific papers are designed to further advancements)
  • Stifling the creation of a public library for digital formats (arguing that most of today's knowledge is "locked behind physical books, rather than accessible on the general internet)
  • Discouraging added-value industries: ("While the current paradigm may work great for content producers, it doesn’t work great for the creation of other industries. There is enormous potential for other addedvalue industries on top of existing media.")
  • Penalizing legitimate journalism and oversight (arguing that copyright can prevent journalists from publishing memos that include incriminating information if the author of the memo sues/threatens to sue for high damages)

The policy brief concludes with four recommendations or possible solutions to the aforementioned problems:

1. Statutory Damages Reform:

Copyright infringement has statutory damages, which most copyright holders can and do use in litigation (rather than having to prove actual damages). The government sets a range – which is $750 to $30,000 per infringement – but that goes up to $150,000 if the infringement is "willful." Evidence suggests that the content holder almost always claims that it is willful. This fine is per infringement. Those rates might have made sense in commercial settings (though even then they arguably seemed high), but in a world where everyone copies stuff at home all the time, the idea that your iPod could make you liable for a billion dollars in damages is excessive.

Further, this system creates a serious clogging of the courts, because copyright holders now recognize that they can accuse anyone of infringement, and include the threat of $150,000 awards per violation. But in reality, most people then settle for less than that sum, say $3,000. Scaring a large number of potentially innocent people into settling should not be an effect of copyright law.

Copyright awards were meant to make the copyright holder whole – they were not supposed to be punitive. Reforming this process is an important element of federal tort reform, which unlike other forms of tort reform is clearly within the federal prerogative.

2. Expand Fair Use:

Right now, it's somewhat arbitrary as to what is legally fair use based upon judicially created categories. One example: parodies are considered protected by fair use but satireis not. There's an excellent book (and a shorter paper) called Infringement Nation that details how things you do every single day are infringing and leave every single person
liable for billions in damages each year (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1029151).

3. Punish false copyright claims:

Because there is minimal or nearly non-existent punishment for bogus copyright claims today, false takedown requests are common and have a chilling effect upon legitimate speech. While those filing a takedown request have to swear on the threat of perjury, that swearing is only in regard to whether the work is theirs but not whether the work is actually infringing. The court has said that their needs to be “subjective bad faith” in order to be sanctioned for false takedown requests. This often leads to de facto censorship.

4. Heavily limit the terms for copyright, and create disincentives for renewal:

Because of the reasons explained in this paper, the constitutional conception of copyright was for a limited period of time. For our Founders this was 14 years for copyright with a potential renewal for another 14 years if the author was alive.

Current public policy should create a disincentive for companies to continue their copyright indefinitely because of the negative externalities explained in this paper. Unlike many forms of government revenue, generating revenue by disincentivizing activities with negative externalities is one way for the government to pay for its operations. This is a far superior way for the government to generate revenue rather than having a tax system that disincetivizes work.

Below is a suggestion for one such proposal:

A. Free 12-year copyright term for all new works – subject to registration, and all existing works are renewed as of the passage of the reform legislation. If passed today this would mean that new works have a copyright until 2024.
B. Elective-12 year renewal (cost 1% of all United States revenue from first 12 years – which equals all sales).
C. Elective-6 year renewal (cost 3% of revenue from the previous 12 years).
D.Elective-6 year renewal (cost 5% of revenue in previous 6 years).
E. Elective-10 year renewal (10% of ALL overall revenue – fees paid so far).

This proposal would terminate all copyright protection after 46 years. This is obviously a steep cliff, particularly from the extension of copyright from 36 to 46 years. But the point is to discourage indefinite copyright.

Conclusion: To be clear, there is a legitimate purpose to copyright (and for that matter patents). Copyright ensures that there is sufficient incentive for content producers to develop content, but there is a steep cost to our unusually long copyright period that Congress has now created. Our Founding Fathers wrote the Constitution with explicit instructions on this matter 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? Where we havereached a point of such diminishing returns we must be especially aware of the known and predictable impact upon the greater market that these policies have held, and we are left to wonder on the impact that we will never know until we restore a constitutional copyright system.

Current copyright law does not merely distort some markets – rather it destroys entire markets.

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