© James Boyle 2000
Text of a Speech to the National Federalist Society Annual Meeting in Washington DC
Published in Engage Volume 1, April 2000 p.83PROFESSOR BOYLE: I am going to talk today about what a good Federalist should think about the recent expansions in intellectual property both on and off the Internet. This will be a somewhat "subjunctive" talk. I am not a member of the Federalist Society and my views are in many respects markedly different from those who are Federalists. If we transposed political positions onto the map of the United States, the Federalist Society would be in Maine and I would be somewhere to the west of Honolulu, so you should be skeptical of the arguments I put forward. Nevertheless, I hope to convince you that intellectual property expansions over the past 10 years, and particularly intellectual property expansions that center on the Internet, are threatening a series of commitments that Federalists hold dear and for which they have been particularly effective advocates.
Before I do this, I want to say something just to clarify any possible misunderstanding. I have a very boring set of views about intellectual property. I believe that intellectual property is a fine thing; unlike many academics, I actually have cashed royalty checks and enjoyed doing so. I even hope I will do so in the future. I want drugs to be developed which require enormous investments, and enjoy the products of a variety of media industries which I think need some intellectual property protection. The tragic thing is that my view -- which is basically that we should only give intellectual property protection when it is clearly necessary in order to encourage future innovation -- has been transformed from the boringly centrist view it should be, into an extreme, marginalized view, attributed to a bunch of "info-commies" and haters of private property. I object to this, because I want to earn my extremism rather than having it thrust upon me. Still, to quote someone who Federalists might revere, "extremism in the pursuit of liberty is no vice," so let me turn to my story.
Over the last 10 years there has been an increase in intellectual property protection both on and off the Internet. Intellectual property rights have gotten longer, deeper, and wider. Longer in the sense they cover things for more time, deeper in the sense that they cover elements of use that were never previously thought to be covered, and wider in the sense that they cover areas which particular intellectual property regimes -- copyright, patent, trademark, and so forth -- were never thought to cover. There are some obvious examples -- the Sonny Bono Term Extension Act, which increased the copyright term from life plus 50 to life plus 70, the Compilations of Data Anti-Piracy Bill which currently is going through Congress, and certain provisions of the Digital Millennium Copyright Act, particularly its anti-circumvention provisions.
Those are merely the most obvious examples - attempts to extend copyright dramatically, or to create entirely new intellectual property regimes of dubious constitutional validity -- but there are also other less obvious areas in which intellectual property has expanded.
Patent law has dramatically expanded both on the Internet and off. The Patent and Trademark Office has taken an attitude towards registration which one might best describe as supine; it would be hard, even for me, to overstate its willingness to give patent protection to "inventions" which seem blindingly obvious, not terribly novel and of dubious utility as well. Priceline.com's sort of business method patents are a wonderful example. Here we have an absolutely fascinating claim; basically patenting the idea of an auction with a reserve price.
There are other expansions in patent law which have received less attention than the business method patents, but which ultimately may become more important. For a long time it was thought that you couldn't patent algorithms, formulae or ideas. Increasingly, for a variety of reasons -- some of them legal, some of these technical -- those restrictions are being eaten away and, deprived of its restraining conceptual walls, patent rights have begun to expand enormously. On of the most important developments in terms of the Internet is the fact that the Patent and Trademark Office and the courts -- seem to believe that any program running on a computer - whether it's a program that makes a business method work, or a program that follows through the steps of an algorithm, -- becomes a patentable machine. But since almost any algorithm, business method or what have you, can be given a software incarnation, where are the limitations on patentability? The shade of Alan Turing is invoked to break down the conceptual walls around patent in a way that will be increasingly important on the Internet.
Beyond patent, we have some dramatic expansions of what trademark was normally thought to cover: from a system that encourages investment in brand names that act as reliable and efficient signals to the public, trademark law has morphed into a series of new forms of intellectual property, which have no connection to consumer confusion and which are highly regulative of speech -- the anti-dilution provisions, for example.
I could go on (and on) with such examples, but the basic point is a simple one. There has been a dramatic increase in intellectual property protection over the last 10 years. What should you think about all of this? I will argue you today that you should be profoundly unhappy, if you have attachment to any of the traditional Federalist commitments; What are those commitments? Well, as I see them, they are a deep concern with constitutional fidelity, focusing particularly on original intent and original understanding; a skepticism about the Congress's ability to find new forms of Federal legislative power in broad understandings of the clauses of the Constitution; a similar skepticism about the justification and the need for government intervention in the economy and in personal life; and an attempt to measure the costs and benefits of regulation in some kind of relatively rigorous way. My argument would be that each of these ought to lead us to be extraordinarily skeptical about all of the expansions of intellectual property that I have described, particularly on the Internet.
Now what is the other side of the argument? Well, I think the other side of the argument is to say "These are just property rights. . We have always been in favor of property rights. This is a property rights issue - its got nothing to do with speech, nothing to do with regulation, nothing to do with getting the state to prop up established industries from their competitors. What we have here are property rights, which are the basis of the market and that is what we need to protect." That is certainly a valid point of view, but I would say that if you look at what has been happening here, particularly in terms of the expansions that I am describing, that argument simply doesn't cut it.
Let's start with constitutional analysis. Congress, as you know, is given power under the Copyright Clause only to create and expand intellectual property in order promote "the Progress of Science and the Useful Arts." That is to say there is an explicit functional limitation. We can't simply hand over property rights to authors and inventors for fun, or because we like them, or because we think they have invested a lot of effort, or because we want their price-to-earnings ratio to increase. We only can under the Constitution hand over intellectual property rights to authors and inventors when it is necessary to encourage them to produce some new piece of innovative work. The clause also says that Congress can only grant exclusive rights "for limited times" - which, in my view, does not justify Congress's present practice of always trying to keep the Copyright term 15 years ahead of the Disney copyrights. If we approach eternal copyright terms asymptotically, apparently, the Constitution is not supposed to be violated. I have trouble with that argument.
Also, notice that as the Supreme Court has understood the Copyright Clause, there is a requirement that it only cover original works, or requires some degree of creativity -- something that has been held both in the patent and in the copyright realms. This should make us extremely skeptical of new intellectual property rights, such as the Collections of Information Anti-Piracy Act, the so-called "Database Bill," which would create new forms of intellectual property protection over facts and compilations of facts.
How do the new intellectual property regimes measure up if we take the Copyright Clause seriously? The best example here is the Sonny Bono Term Extension Act. It is just hard for me to understand how giving dead authors a 20-year increase in their term can possibly be understood as an attempt to encourage them to produce more works. This strikes me as an attempt by private groups through rent-seeking behavior to get the Government to grant them a monopoly in order to solidify their dominant position in a marketplace and to exempt them from the free market pressures which would otherwise face them. This is a bad thing. It is also constitutionally dubious in my view.
Federalists have also been much influenced by the economic analysis of law, demanding evidence of the economic justification of any state intervention in the economy, particularly where such interventions amount to the creation of state-protected limited monopolies. Think of airline deregulation. What happens when we apply this kind of skepticism to the expansions of intellectual property, particularly those that are aimed at the Internet? Well the conventional response is that the Internet is a grave threat to intellectual property rights, because of the risk of piracy and hence the expansions of intellectual property are justified. Lets be clear, the Internet definitely poses a risk of piracy. People can copy programs, "rip" CD's, distribute unauthorized copies of new games. Thus, goes the argument, we need to strengthen and expand intellectual property rights to make up for the losses to come.
However, it would take only economics of a very sophomoric level to point out that changes like the Internet produce changes on both sides of the intellectual property scale. That is to say, the Internet makes copying easier. That might lead us to believe that we need to strengthen the rights of existing intellectual property holders to compensate for the loss that they might suffer because of the copying. But the Internet also, as any of you who have ever used a search engine would be able to testify, is probably the best copyright violation detection device ever invented. Those of you who are interested in MP3 music recordings, you may have noticed that there were stories initially about the MP3 files posted all over the Internet; copyrighted works posted illicitly by people who thought that it would just be fun to put up their favorite albums on the Internet. If you go and look for those now, out of a purely academic interest I'm sure, you will find that it is almost impossible to discover them. Why is that? Because the record companies can use the very same technologies, the facility of copying, in order to track down those people who have dot MP3 suffixes down there and to stop them. So at the very least we might want to ask: "Are the losses that the Internet is causing to intellectual property holders greater than, equal to, or less than the benefits that they are getting in terms of increased ability to track copyright violations, increased access to audience, decreased costs of distribution, and increased audience?"
The very short anecdote I would tell to illustrate this point is that of the video recorder. The video recorder was seen by Hollywood as a terrible thing -- like the Internet - a new copying technology that would eat the heart out of Hollywood. Hollywood attempted first of all to lobby Congress to have VCRs and Sony Betamaxes taxed, then they tried to use the courts. Luckily for them, they lost both times. I say luckily because of course now Hollywood derives more than 50 percent of its revenues from the rental of videotapes.
Here was a new copying technology that was seen only as a threat. "We need stronger intellectual property rights" comes the cry. Luckily, on that occasion neither Congress nor the courts were willing to aid the movie industry in its attempt to increase intellectual property rights and to make VCRs and videotapes more expensive. The sky did not fall. The new copying technology turned out to offer benefits as well as costs to the intellectual property owners. Conservatives have often enjoyed pointing out unintended consequences, and the need for caution in intervening in order to protect against supposed market failures. This story seems to me to be a classic case of both phenomena.
But it is not simply because Federalists wish to preserve constitutional limits on the power of Congress, and are skeptical about the need for state regulation of the market, that they should say that the recent expansions of intellectual property have gone too far. The Federalist society also professes a deep concern with individual liberty and an attachment to the "technologies of freedom," that empower the individual against the state. The Internet is surely such a technology. Yet the very features which make it so attractive as a technology of freedom, are the features that the intellectual property maximalists find so offensive. The "solutions" they propose, both legal and technical, are solutions that make the Net more centralized, more subject to state control, more zoned, and more regulated. From the point of view of the intellectual property maximalists, liberty "is a bug, not a feature." This is hardly a view that any good Federalist should subscribe to.
So let me close with a couple of thoughts, maybe using the MP3 as an example. MP3 was, as I have mentioned before, a method for putting up digital audio files on the Internet. Increasingly, the claim of some of the people who are trying to protect their intellectual property is that the state should get involved in these technical formats. The state should, for example, create new crimes for anyone who interferes with copy protection devices, whether or not that person also violates copyright. The state should mandate particular kinds of technical systems as it did with the digital audiotape legislation.
I think that those are extraordinarily bad ideas. I think that right now we can see the beginnings of market-based solutions to most of the problems of "piracy" on the Internet. Is there any evidence that the content providers, the holders of these business method patents, the software companies, actually need these plush new state-backed monopolies? Is the Internet growing only sluggishly? Are these companies hurting economically? Quite the contrary. In fact, I would like to propose a little rule of thumb for you to apply. Any time an industry which has a price-to-earnings ratio greater than the legal drinking age comes before Congress and says we need you to expand our legal monopoly to protect us from the horrible threats we face, then I think there should be skepticism. When their price-to-earnings ratio is greater than the retirement age, I think they should simply be laughed out of town, and that is the situation now. Thank you.