Commentary

On Drawing Lines in Copyright Law

By Adam D. Thierer
June 17, 2004

As Wayne Crews and I pointed out in the introduction to our book Copy Fights: The Future of Intellectual Property in the Information Age, striking a sensible balance when it comes to copyright law has always been a challenging, messy task. The inherent tension in copyright law comes from trying to accomplish two noble goals that are sometimes difficult to reconcile. On one hand, copyright is supposed to reward innovators by granting them limited terms of protection so they can commercially exploit their creation before anyone else. On the other hand, copyright law is supposed to help encourage the widespread dissemination of ideas and useful products in our economy. Questions about where to draw the line and when we should call in the IP cops to resolve disputes are what make the process so contentious. Optimally, we should avoid injecting coercion into the IP process unless absolutely necessary. Contracts, technological self-help measures, and creative business models can go a long way toward achieving a workable IP balance. But at the end of the day, if these market mechanisms aren’t enough, copyright holders are going to want to call in the cops to protect their rights.

But how we call in the cops and who the IP cops are makes a big difference. In particular, we shouldn’t expect Congress or regulatory agencies to legislate on every problem that creeps up or ban or mandate specific technological solutions in an attempt to solve IP debates. But when certain parties are egregiously violating the rights of copyright holders, they are certainly justified in seeking redress in the courts. Common law resolution to copyright disputes has the advantage of avoiding a hasty, ham-handed legislative quick fix. As has been the case throughout most of copyright’s history, courts can sort through rival claims to determine where the creators’ concerns have merit and where the rights of consumers should instead carry the day. Two recent IP disputes illustrate how this sensible framework can still work today.

The “Broadcast Flag” Decision.
Last November, at the request of several content companies and broadcasters, the Federal Communications Commission mandated that by July 1, 2005, every consumer electronic device in America capable of receiving digital TV signals must be able to recognize a “broadcast flag” — or string of digital code — that will be embedded in future digital broadcast programming. In theory, the presence of this embedded code will encourage content creators and broadcasters to air more digital programming “in the clear” (i.e., over the air), on the assumption that the broadcast flag will allow them to prohibit mass redistribution through peer-to-peer (P2P) networks. In other words, the broadcast flag mandate is supposed to prevent the “Napsterization” of video programming.

But in their rush to preempt this supposed problem, a completely sensible alternative was ignored. Namely, if you’re a broadcaster or a movie studio and discover that a handful of individuals are redistributing your products without permission or compensation, why not just sue them directly and avoid all this regulatory nonsense? No good answer was provided. What makes this all the more surprising is that such a model already existed in the lawsuits that the Recording Industry Association of America (RIAA) was filing against individuals accused of widespread copyright infringement. As distasteful as some find the RIAA lawsuits, they are certainly superior to the strategy the music industry was pursuing previously: trying to shut down all (P2P) file sharing networks. At least a lawsuit strategy would be capable of targeting the handful of individuals causing the most serious problems, without seeking to ban technologies or concocting grand industrial policy solutions to the problem. But instead of taking this more targeted approach and using the courts to go after the handful who might illegally distribute digital TV programming, the broadcast flag proposal opens the door to an intrusive FCC regulatory regime for the Internet and computing in the future.

The 321 Studios Case.
Another instance where this model could have been tapped is the fight over the “DVD X Copy” and “DVD Copy Plus” software products sold by 321 Studios, which allow consumers to make backup copies of DVDs. In fact, 321 Studios is currently involved in a heated lawsuit with the members of the Motion Picture Association of America (MPAA) over the legality of 321’s software, which MPAA believes violates Section 1201 of the Digital Millennium Copyright Act of 1998. Section 1201 bans technologies that would circumvent or defeat the technological measures used by copyright owners to protect access to their works. This anti-circumvention mandate is quickly proving to be one of the most controversial copyright reforms passed by Congress in years and now threatens to remove software from the market that is being used for entirely legitimate and lawful purposes.

MPAA president Jack Valenti — the same man who once said, “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone” — has argued that consumers have no legitimate need for software products like those sold by 321. Last November he said, “If you buy a DVD you have a copy. If you want a backup copy you buy another one.” But this worldview is not consistent with the rights consumers already enjoy with regard to time-shifting or saving content on audio cassettes or VHS video tapes. Consumers should have the reasonable expectation that they will be able to make at least some copies of the content they purchase, whether that content appears in books, music, or movies. For example, I have personally used similar DVD backup software called “DVD Shrink” that I freely downloaded from an overseas website to copy and burn my favorite individual movie scenes onto a single DVD. I use this single DVD to show friends and family all my favorite DVD scenes in rapid succession without having to put the original movie in the player each time. (This is similar to what millions of American already do with music when they burn their favorite songs onto one tape or CD.)

But, following the logic of the case against 321, presumably the MPAA would like to see the “freeware” I downloaded outlawed and then throw me in jail to boot. But why? It’s hard to see how I’ve broken the copyright bargain in this case since I went out and purchased dozens of new movies to make this compilation of my favorite movie scenes. If, however, I had made additional copies of this compilation DVD and sold them on e-Bay, or even shared the disc with the entire world via a P2P network, I would agree that I had crossed a line and broken the copyright bargain and should be held liable for my actions. And 321 Studios acknowledges this, too. On their “Protect Fair Use” website, the company states, “Fair use isn’t the same as free use. Consumers shouldn’t have the right to make copies for commercial use without the permission of copyright holders. They should not be able to sell illegally acquired copies of digital works, either on disk or over the Internet.” That’s exactly right, and the proper course of action in cases where consumers betray this trust would be for the movie studios to file suit against them for undercutting the commercial viability of their products. But if millions of average movie lovers like me are considered criminals for merely copying a few of their favorite movies or individual scenes onto a different disc, then something has gone horribly wrong with copyright law in America.

Intellectual property plays a vital role in our modern Information Age economy, but we should not adopt a “by-any-means-necessary” approach to copyright enforcement. Targeted, court-based adjudication of clear-cut copyright infringement is the better way to balance the interests of consumers and creators.

Adam Thierer (athierer [at] cato [dot] org) is the director of telecommunications studies at the Cato Institute in Washington, D.C. To subscribe, or see a list of all previous TechKnowledge articles, visit www.cato.org/tech/tk-index.html.