Congress Isn’t Ready for a Big Change. Here Are Some Smaller Ones.

Timothy Lee implores us to descend from our theoretical perches and focus on concrete reforms to the Copyright Act. For his part, Tim asks Congress to revisit the law to address civil asset forfeiture, the “orphan works” problem, and the ban on tools that circumvent content protection.

I welcome Lee’s call to get specific on copyright reform. But before diving into the details, we should ask ourselves what an ideal copyright reform bill would accomplish. Should it focus on reining in the “excesses” of copyright in hopes of restoring “balance” to the law? Or should reform primarily seek to combat the widespread copyright infringement that accounts for a big chunk of Internet traffic?

Notably, Lee’s essay makes no mention of reforms that would enhance the enforcement of copyrights. By the same token, Mark Schultz’s essay does not discuss how to rein in the Copyright Act; instead, he proposes tweaks to the DMCA’s notice-and-takedown regime that would make it easier for “creative upstarts” to stop “video pirates from hijacking [their] work.”

This divide is telling. As I discussed in my previous essay, libertarian copyright reformers tend to come from two camps. One side believes copyright laws confer too much protection on expressive works; the other believes the law does too little to prevent the unauthorized commercial exploitation of these works. Areas of agreement between these two camps are few and far between.

Why such polarization? Perhaps it’s because libertarians who comment on public policy are understandably accustomed to fighting intellectual battles in which one side plainly has the better argument. For the most part, policy debates tend to pit forward-looking “dynamists” against authoritarian “stasists,” to borrow labels from Virginia Postrel’s wonderful The Future and its Enemies. In other words, channeling Thomas Sowell’s A Conflict of Visions, the “constrained vision” that recognizes tradeoffs and rational self-interest tends to square off against the “unconstrained vision,” which embraces central planning and moral perfection of humankind.

But if the questions surrounding the scope of copyright protection are as complicated and nuanced as I argue they are, the admirable doggedness that characterizes many libertarians may be counterproductive when it comes to copyright. It may lead libertarian skeptics of copyright to take an overly dim view of conferring quasi-property rights on expressive works, while also causing proponents of copyright to underestimate the social costs of fencing and enforcing exclusive rights in intellectual creations.

Both sides would be wise to recognize that Congress is unlikely to agree anytime soon on legislation that would decisively swing the copyright pendulum in either direction. On the one hand, aggressively ramping up enforcement is a non-starter, as last year’s SOPA saga illustrated. On the other, no one in Congress is seriously entertaining Tom Bell’s audacious proposal to restore the “Founders’ Copyright Act,” which would grant copyright protection to nothing but maps, charts, and books for a renewable 14-year term.

What would a balanced copyright reform bill look like? Let’s begin with the question of how to bolster copyright enforcement.

Improving Copyright Enforcement

While SOPA was undoubtedly an overreaction to the problem of “rogue websites” —i.e., foreign websites dedicated to trafficking in counterfeit goods and/or distributing copyright infringing content—it hardly follows that Congress should do nothing about these websites. To the extent that genuinely bad actors are profiting from infringement while ignoring legitimate takedown requests, U.S. laws should provide a legal process to restrict the rogue websites’ ability to monetize their activities using American payment processors and advertising networks. SOPA sought to create such a process, but it lacked adequate procedural protections and risked ensnaring innocent websites.

How should U.S. laws treat a foreign website that stands accused of intentionally committing copyright infringement, or of knowingly furthering its users’ infringing activities? Before any adverse action is taken, the website must have an opportunity to defend itself before a federal judge.[1] And regardless of whether the website’s lawyers even show up in court, a site should only be deemed a “rogue website” if and when the court is satisfied with the evidence implicating the site. Upon such a finding, U.S.-based firms that process payments for the rogue website, or serve ads on it, should be required to stop doing business with the site. These payment processors and ad networks should be compensated for any compliance costs they incur in cutting off rogue websites, just as current law provides for phone companies to be reimbursed for their costs of assisting law enforcement agencies with wiretaps.

What about websites based in the United States? Mark Schultz suggests that Congress revisit the DMCA notice-and-takedown process. He’s right. Under this 1998 law’s safe harbor provisions, websites that serve as electronic intermediaries—i.e., websites that host user-generated content—are generally immune from copyright liability for their users’ infringing actions so long as they meet certain obligations. Chief among these is that websites must promptly remove infringing material upon receiving a takedown notice from the content owner.

While this system has many virtues, and may well have played a major role in enabling the profound growth of user-generated websites—including YouTube, Facebook, and Twitter—the notice-and-takedown process has its share of critics. For instance, Doug Lichtman and Eric Posner argue that the DMCA safe harbor gives online intermediaries little incentive to do anything beyond the bare minimum to stop copyright infringement. Thus, Lichtman and Posner argue, the law inefficiently tips the scales in favor of service providers, hurting content creators—and, ultimately, consumers as well. Other DMCA critics often liken the notice-and-takedown process to the game of Whac-A-Mole, requiring rights holders to devote significant resources to taking down infringing files one by one. And given how quickly infringing files can be re-uploaded after being removed, even creators who vigilantly police the Internet for unauthorized copies of their works may find themselves unable to stem the tide of infringement.

Regrettably, I know of no smart legislative solution to these problems—but that does not mean no solution exists. The Senate and House Judiciary Committees should carefully investigate the legitimate criticisms of the DMCA safe harbor and explore how the law might be improved. To be sure, navigating these waters won’t be easy, and lawmakers must understand that serious unintended consequences could ensue if DMCA changes impose bigger burdens on Internet intermediaries to detect and combat their users’ copyright infringement activities. Some readers may doubt whether Congress can even agree on positive changes to the DMCA, imperfect though the law may be. But this type of legislative exercise—weighing complex tradeoffs, gathering evidence, and ultimately making tough policy choices under uncertainty—is crucial if beneficial copyright reform is to occur.

Reining in Copyright’s Excesses

We now turn to the dark side of the Copyright Act: its many draconian, obsolete, or borderline unconstitutional provisions.

In Tim Lee’s reaction essay, he makes a forceful case against the seizure of website domain names accused of facilitating copyright infringement. Without delving into the broader problems posed by civil asset forfeiture, Congress should at the very minimum revise the 2008 PRO-IP Act to strip the U.S. government of the power to seize domain names of alleged “pirate website” without a trial or even an adversarial hearing. [2] While this change might mean some genuinely bad actors could keep their websites up and running—and, potentially, facilitating copyright infringement—for a longer time period, this is the price we as a society must pay as long as our Constitution guarantees us due process of law and the freedom of speech.

Lee is also right to criticize the DMCA’s overbroad prohibition and criminalization of tools that circumvent digital rights management. [3] While DRM can be a valuable fence, so to speak, enabling content owners to better protect their expressive works from misappropriation, there are also many legitimate and lawful reasons to circumvent DRM. For instance, making fair use of a creative work may be impossible without first removing digital copy restrictions. Or an iPhone owner who wants to maximize her phone’s potential and use lawfully obtained applications may first need to “jailbreak” her device, which among other things entails circumvention of the iPhone’s digital rights management.

Yet under the DMCA’s anti-circumvention provisions, it’s illegal to “circumvent a technological measure that effectively controls access to a work protected under this title.” [4] Violators of this law are subject to copyright infringement liability—or, in severe cases, criminal prosecution. There is an escape valve in the law: the Library of Congress, in consultation with the Register of Copyrights, may exempt categories of circumvention from the DMCA ban. But this process is cumbersome, inexact, and fundamentally broken, as the Electronic Frontier Foundation has long argued.

How should the Copyright Act address tools that circumvent copy protection? The same way it has long addressed acts that further or contribute to the infringing activities of others: contributory liability. Companies and individuals who sell or create tools that materially contribute to copyright infringement should be liable for these infringing acts—unless the tools are capable of commercially significant noninfringing uses, as the U.S. Supreme Court held in its famous “Betamax” opinion in 1984. [5] With respect to firms that distribute tools that circumvent copy protection, courts should assess on a case-by-case basis whether these tools are designed and marketed primarily for legal or infringing purposes.

There are many other problems with the Copyright Act that Congress ought to address. For one, as Jim DeLong recently argued, Congress should impose a “one-time requirement of registration of existing works to get rid of the orphan-works problem,” and going forward, should mandate “centralized databases to reduce transaction costs.” Congress should also reduce statutory damages for copyright infringement, whereby infringers are liable for draconian penalties of up to $9,000 per work, as Jammie Thomas-Rasset learned the hard way.

The Road Ahead

The wounds that SOPA inflicted on politicians will take years to heal, making serious copyright reform a long-term hope at best. Meanwhile, Congress should seize this opportunity to explore the challenging questions that surround the future of copyright.

Notes

[1] See Professors’ Letter in Opposition to “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011,” July 5, 2011, at http://www.scribd.com/doc/59241037/PROTECT-IP-Letter-Final.

[2] See Walter Olson, Civil Asset Forfeiture and the ‘Piratical’ State, Cato at Liberty, May 21, 2012, at http://www.cato.org/blog/civil-asset-forfeiture-piratical-state.

[3] See Timothy B. Lee,
Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act, Cato Institute Policy Analysis, No. 564, Mar. 21, 2006, available at http://www.cato.org/publications/policy-analysis/circumventing-competition-perverse-consequences-digital-millennium-copyright-act.

[4] 17 U.S.C. §§ 1201-05, at http://www.law.cornell.edu/uscode/text/17/1201.

[5] Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), at http://en.wikipedia.org/wiki/Sony_Corp._of_America_v._Universal_City_Studios,_Inc.

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.

  • A Balanced Approach to Copyright by Ryan Radia

    Ryan Radia argues for a middle path on intellectual property. He reminds those who treat copyright as a privilege or a subsidy how similar copyright is to traditional property protections. He further reminds those who favor the current system that in practice, even property rights in land are subject to abridgement in the name of efficiency.

  • 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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