A Balanced Approach to Copyright

Whatever one thinks of Derek Khanna’s RSC memo about copyright reform, it has certainly sparked a vigorous public debate over why copyright exists and what its contours should look like. With Congress taking a breather from copyright after last year’s bruising SOPA battle, now is an opportune time to take a step back and consider what the proper governmental role in the market for creative expressions should be.[1]

In the wake of Khanna’s memo, interested parties have generally coalesced into two very different camps. In one, critics of copyright have embraced the memo, echoing its critique of copyright as a dubious governmental subsidy to creators of expressive works.[2] At best, these critics argue, copyright as it exists today is a necessary evil and should be narrowed considerably; at worst, it is supposedly antithetical to legitimate property rights and free markets.

In the other camp, defenders of strong copyright counter that creators of expressive works have a natural, Lockean right to reap the fruits of their labor.[3] Copyright is said to rest on the same solid foundations as “traditional” property rights in real and personal property. Therefore, just as government helps police against incursions on tangible property, creators of “original works of authorship” deserve the aid of government in excluding others from reproducing and commercially exploiting their expressive works. To many in this camp, copyright as it exists today is in need of only minor tweaks.

While both camps make some valid points, neither offers a complete and cohesive framework for determining the scope of legal rights that governments ought to recognize in expressive works. This essay thus envisions a “third way” to think about copyright, borrowing ideas from both sides of the debate.

We begin with Khanna’s lead essay. He labels copyright a “regulation” and a “subsidy,” justifiable if, and only if, it corrects a market failure. Yet copyright is no more a subsidy to creators than real property rights are to landowners; neither regime guarantees rights-holders a positive economic return, let alone any revenue whatsoever. Both regimes facilitate private and voluntary ordering, leaving to property owners and their assignees the decision of how to exploit their assets and enforce their legal rights. Libertarians should look favorably upon such voluntary transactions.

Khanna also contrasts copyright’s relative youth with the venerable common law tradition of property rights in land and tangible items. But this distinction has little bearing on the legitimacy of copyright, as Professor Adam Mossoff argues. After all, prior to the 15th century—before the invention of the printing press—there was little need for copyright protection.

A more serious criticism of copyright posits that it clashes with traditional property rights. Strictly speaking, there is some truth to this claim; absent copyright protection, someone who owns a printer is free to reproduce any document she hasn’t contractually agreed not to copy.

But of the myriad combinations of words or pixels that can be strung together into distinct expressive works, only a relative few are rendered off-limits by copyright. As far as restrictions on property rights are concerned, copyright’s practical imposition is minimal.

Such comparatively minor curtailments of property rights are not unique to copyright. Before the invention of flight, landowners’ exclusive domain was thought to encompass all the air above their parcels—and all the earth below it. As air travel proliferated, however, courts began to realize that aviation would not get off the ground, so to speak, if flying over a person’s land required his permission. For flights that traverse thousands of land parcels, transacting with each owner would be prohibitively expensive, while the loss to owners resulting from the unauthorized overflights is fairly inconsequential. A series of judicial rulings culminating with the U.S. Supreme Court thus abrogated the longstanding common law doctrine that each landowner’s property extends “to Heaven and Hell,” even though this entailed the sacrifice of an economically useful right.

On the other hand, defenders of robust copyright protection fall prey to another set of fallacies. They often begin with the eminently reasonable proposition that “people who create expressive works deserve to own them and benefit from them,” as Professor Mark Schultz wrote in response to Khanna’s memo. Yet this abstract appeal to natural rights offers little guidance in determining the proper scope of copyright protection. As we’ve already seen, rights in real property have never been treated as unbounded or sacrosanct—and for good reason. Natural rights may justify copyright, but they do not necessitate its existence in any particular form.

Countless individuals expend labor every day to create valuable and novel ideas. Many of these creators enjoy a positive return from their efforts, even though government only recognizes ownership—i.e., “quasi-property” rights that are good against the world—in relatively few categories of creations. For instance, trade secrets (i.e., confidential business plans) lose their protection as quasi-property if they become publicly known, even if by accident. And so-called “hot news” items, or brand new facts diligently gathered by news organizations for commercial distribution, enjoy very limited legal protection against the world. These are two examples of many valuable, non-rival intangibles in which government has refrained from conferring strong ownership rights.

Why don’t all intellectual creations deserve protection as property? The answer, unsurprisingly, lies in unintended consequences. As Professors Thomas Merrill and Henry Smith argue (pdf), recognizing idiosyncratic property rights “create[s] large third-party measurement and error costs and high administrative costs.” In the context of copyright, a work need only embody a modicum of creativity to qualify for automatic copyright protection. Thus, each time a new expression is fixed in a tangible medium, a new property right is created—enclosed by tall and often inscrutable legal fences. Copying these expressive works without the owner’s express or implied permission can entail harsh civil penalties—even though many rightsholders may not mind the appropriation of their works by third parties.

This is not to deny that effective copyright protection generates enormous social benefits. Rather, it is a reminder that policymakers must weigh real-world considerations—chiefly, maximizing human flourishing—in deciding the scope of copyright, just as they consider practical realities in developing property rights in land, financial instruments, inventions, and the like.

In this exercise, first principles and natural rights are relatively unhelpful; as Richard Epstein notes, “[t]here are … no ‘natural’ boundaries [in copyright], similar to the metes and bounds of land” to assist policymakers in designing copyright laws.[4] Indeed, defining and enforcing intangible rights in the modern world entails immensely complex tradeoffs, especially when the Internet is involved.

For all this talk of copyright, it is also worth mentioning that conferring upon creators of expressive works property rights that are good against the world—as opposed to contracts that merely bind specific parties—is far from the only public policy approach to content creation. As Professor Tom W. Bell observes in his upcoming book on copyright:

An author can use property law and tort law to keep his draft works private… . Even though the common law does not protect an author’s expression per se, it protects physical copies of an author’s work and the author’s person. Even absent copyright, then, authors can profit from selling such things as originals, signed copies, performances, and custom works. Authors can also benefit from the right, bestowed by common law on each of us, to transfer what we own on whomsoever we please.

Bell is quite right that copyright is not the only legal regime capable of helping secure to creators the fruits of their intellectual creations. Even so, under present conditions, common law arguably offers too little protection to expressive works. DRM (digital rights management) is too easily circumvented; policing breaches of “click-wrap” contracts is too costly; and tort law offers few meaningful remedies for most unauthorized commercial misappropriations of intellectual works.

To be sure, critics of copyright are right that the Copyright Act abounds with flaws and excesses. But defenders of copyright correctly argue that its core goals are fundamentally sound—and will likely remain so for the foreseeable future. Policymakers should seriously consider the suggestions of thoughtful free market copyright reformers (including Timothy B. Lee, Derek Khanna, and James V. DeLong), but they should think twice before writing off copyright as yet another incarnation of big government excess.

Notes

[1] The Stop Online Piracy Act.

[2] See, e.g., Techdirt’s Mike Masnick, Slate’s Matt Yglesias, and EFF’s Parker Higgins.

[3] See, e.g., Tom Sydnor and Debbie Rose, Professor Adam Mossoff, Precursor’s Scott Cleland, IPI’s Tom Giovanetti.

[4] Quoted in Copyright Unbalanced: From Incentive to Excess.

Also from This Issue

Lead Essay

  • The Way Forward on Copyright Reform by Derek Khanna

    Derek Khanna argues that copyright was never intended to stand in perpetuity, yet that is in effect what we have for a large number of works today. Copyright’s original purpose was not to compensate content creators, but to promote the arts and sciences, as explained in the Constitution. Returning to that aim should entail shorter copyright terms, which permit future reuses of creative content. Khanna outlines several upcoming opportunities to move in this direction.

Response Essays

  • Civil Asset Forfeiture and Intellectual Property by Timothy B. Lee

    Since the passage of the 2008 PRO-IP Act, the federal government has been able to use civil asset forfeiture to circumvent even having to make a case against copyright infringers. It may now simply seize and shut down allegedly violating websites. Libertarians have always found civil asset forfeiture troubling, and its extension into intellectual property should be reversed. Timothy B. Lee argues that this is one place where our copyright system is ripe for reform.

  • Copyright Reform through Private Ordering by Mark Schultz

    Mark Schultz argues that labeling copyright a regulation rather than a property right will perversely result in more regulation and less freedom. Copyright is a flexible system that allows private bargaining and a wide array of mutually satisfactory transactions. Indeed, the creative use of copyright has already substantially mitigated many of the perceived dangers of Digital Rights Management. Considered as such, the private ordering system known as copyright is worth defending.

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