Intellectual Property Policy Online: a Young Person's Guide
10 Harvard Journal of Law and Technology 47 (1996)
Copyright © 1997 James Boyle
This is an edited version of a presentation to the "Intellectual Property Online" panel at the Harvard Conference on the Internet and Society, May 28-31, 1996. The panel was a reminder of both the importance of intellectual property and the dangers of legal insularity. Of approximately 400 panel attendees, 90% were not lawyers. Accordingly, the remarks that follow are an attempt to lay out the basics of intellectual property policy in a straightforward and non-technical manner. In other words, this is what non- lawyers should know (and what a number of government lawyers seem to have forgotten) about intellectual property policy on the Internet. The legal analysis which underlies this discussion is set out in an Appendix that contains the full "Debate on the White Paper".
I am going to start with a primer on intellectual property policy, followed by a very general impression of some of the current attempts to regulate copyright on the Internet: the "White Paper"(2)and the "Bills"(3) that would implement its recommendations. This discussion may also be of interest because of its relevance to the World Intellectual Property Organization ("WIPO") "Basic Proposals" now being considered internationally.(4) These proposals repeat the significant elements of the White Paper's scheme, while adding a new sui generis scheme for the protection of databases.(5) My claim is that each of these regulatory efforts reveals a pattern of structural malfunctions in the way that policymakers think about intellectual property on the Internet. In other words, the White Paper and the Bills are not simply flawed; they are revealingly flawed, even usefully flawed.
In the American tradition, intellectual property law is largely motivated by utilitarian concerns. It is not designed to give property rights solely as a reward for hard work or to provide creators with a dependable annuity for their children, though it may in fact produce those results in some cases. It is about setting up conditions under which creators can and will produce new works. As I have argued elsewhere, many policymakers seem to view intellectual property rights as a simple linear function. They act as if the more intellectual property rights we grant and the "larger" we make each right, the more creators will produce new books, movies, computer programs, and pharmaceuticals. But this view is wrong. Setting the proper level of intellectual property protection requires a complex balancing act. Given the context of these remarks, the analogy I would use is an electronic one: computer simulation games such as SimCity, which rest on models similar to the so-called "predator/prey" equations.(6) Typically these games require the player to deal simultaneously with potentially contradictory goals: fostering economic growth, expanding transportation systems, minimizing pollution, keeping taxpayers happy, and so on. Too little road-building will stifle economic development; too much will create excessive pollution and cause taxpayer flight. The player who single-mindedly pursues one goal, neglecting its feedback effects, is quickly deposed by an irate cybernetic citizenry.(7)
These simulations offer an insight for intellectual property policy. If the level of intellectual property protection is too low, negative effects follow. Prospective authors turn to other careers. Drug companies decrease investment in research and development. Yet every intellectual property right granted diminishes the public domain of freely available material. If intellectual property rights are set too high, future creators will be deprived of the raw materials they use to create new works. For example, could Bill Gates have created MS-DOS if BASIC and CP/M had been proprietary systems protected by an expansive intellectual property regime? We must remember that the system is not a linear function with each additional property right producing a corresponding increase in future production. It is just as dangerous to produce a system with too much intellectual property protection as one with too little. Each proposed expansion (and even the current state) of intellectual property rights should be approached with the same skepticism as any other state-backed monopoly. We should ask whether the monopoly has been shown to be necessary. We should worry about all of the effects of enforcement of the monopoly, not just the diminishing public domain but also possible side effects on free speech, competition in information products, and privacy. We should see whether there are other available ways for creators to receive a return adequate to promote future investment.
It is important to understand the significance of the empirical issues
about the level of protection necessary in the digital environment. Content
providers can receive a return on the investment of their time and ingenuity
in many ways, for example by being first to market, offering service packages
and upgrades, advertising, encryption, steganography, or digital rights
management. At present, we lack even the most rudimentary understanding
of what kind of returns these methods will bring, yet, inexplicably, the
attempt to expand copyright in the digital environment proceeds apace.
Some analysts seem to think that the methods mentioned above are merely
additions to the market strategy that a content provider might pursue --
as if expansive intellectual property rights were somehow an entitlement
to which one might add other strategies.(8)But
the converse is true. It is only if monopoly rights are necessary to produce
an incentive to future production that the Congress is economically justified
(and constitutionally authorized) to provide them.(9)
If content providers can receive a return adequate to provide the incentive
for future production without being granted a legal monopoly, then the
monopoly should not be granted.
Prudent skepticism of the need for monopolies is particularly needed
with "information products," where economic phenomena variously
referred to as "increasing returns on production," "network
effects," and "tippy markets" often disrupt standard assumptions
about market operation.(10)In
slightly more familiar terms, the issue is often connected with standardization
and "sunk costs." Imagine that there are two competing systems,
for example, VHS and Betamax or DOS/Windows and the Macintosh OS. If one
of them starts to pull ahead in terms of number of units sold -- or even
bootlegged or pirated -- there may come a point where the market suddenly
"tips" and the competitor is wiped out as consumers and secondary
service providers flee the "loser" the moment they judge the
battle to be over. The flip side of this point is that producers of the
more widely used system gain an important market advantage as their system
is adopted by each new user -- even, remarkably, if it is given away for
free. This is the strategy behind Netscape's free distribution of its Web
browser. (This logic indicates that a few software producers may even have
received some benefit from the piracy of their products!)
These economic phenomena have a number of important implications for
intellectual property policy. First, policymakers and lawyers should realize
that simplistic analogies to markets in physical goods are profoundly misleading.
In what other market might one strive to achieve dominance by giving one's
good away? Second, the "tipping effect" mentioned above can transform
an apparently insignificant legal monopoly, a copyright on an operating
system or a patent on a video-recording device, into a situation of market
domination. Policymakers should exercise a corresponding degree of care.
Third, the very unfamiliarity of these phenomena means there is a danger
that analysts might be better at spotting the costs of a new technology
than its benefits. The Internet makes copying, both licit and illicit,
easier. Because we think of copying in terms of infringement and loss to
the owner, we assume that rights-holders will have a diminished return
on their investment. But the ease and near-costlessness of digital duplication
also provide benefits and opportunities such as diminishing the costs of
advertising and lowering search costs for detecting piracy.(11)
Even more strangely, the features of this environment transform the way
in which rewards and market share operate -- as in the Netscape example,
above. Because this market environment just doesn't fit our "common
sense" or intuitive assumptions about markets in more tangible goods,
the hunches and anecdotes that now dominate our discussion of these issues
are likely to provide a poor footing for intellectual property policy.
Now, I will turn to the current proposed reforms of copyright protection
on the Internet. These proposals come in two parts: (1) a White Paper that
purports to describe the state of current law and (2) the Bills now stalled
in Congress, which would implement the supposedly minor changes the White
Paper claims are necessary. Interestingly, the more controversial of these
two documents is the White Paper, which purports simply to describe current
law. By comparison, the Bills are more modest in the transformations they
recommend, although they too would make major changes in the law and have
been strongly criticized by a wide range of groups including libraries,
teachers, writers, civil liberties groups, and online service providers.(12)
The Appendix provides a guide to the problems with the White Paper's depiction of current law: in particular, its distressing tendency to concentrate almost entirely on decisions, quotations, and analyses that extend the scope of intellectual property rights, misstating or ignoring contrary authority, statutory history, and legislative policy.
Summarizing brutally, I will make three points. First, the White Paper is demonstrably and repeatedly wrong about the state of current law, always tilting in the same direction. The most charitable description one could provide is that it is a shockingly careless piece of work. Second, the White Paper bases much of its rhetoric on the claim that it is describing settled, uncontroversial law, and hence that little justification for its proposals is required. Yet, a substantial portion of the intellectual property community, including some of those philosophically in agreement with the White Paper itself, disagree with its claims. When much of your audience disagrees, you can claim to be right, but you cannot claim to be uncontroversial, particularly not if you intend to transform those "descriptive" statements into the basic framework for intellectual property in an entire medium. Even the most distinguished scholarly defense of the White Paper's approach is careful to acknowledge that one of its basic tenets has been "questioned or even strongly criticized."(13) Third, even if the White Paper were correct about the state of current copyright law, it would still be necessary to work out whether this would be a desirable legal regime for the Internet. The very existence of a task force on intellectual property and the National Information Infrastructure shows that a mere statement of current practice is not enough, yet the White Paper fails to take seriously the true complexity of the positive and negative changes that the Internet will bring to the production and distribution of "information products." Without an examination of these changes, its tendentious summary could not be an adequate guide to future policy.
The White Paper's basic philosophy is two-fold. First, it argues that
content will drive the Internet. I agree. Second, a close reading of the
document and of the hearings(14)
over the Bills shows that the authors of the White Paper see the Internet
as a giant copying machine, a threat to content providers rather than an
opportunity for them. Indeed, if there is a theory behind the White Paper's
curious vision of copyright law, it seems to be this: more copying equals
more copyright violation, thus it is necessary to increase copyright protection
as a compensation for declining revenues. The White Paper achieves this
increase in copyright protection by mischaracterizing current law using
the following devices.
(1) An extremely narrow definition of the "fair use" exception in copyright. (Fair use is a defense to infringement whereby certain educational, journalistic and other uses of copyrighted material are excused from liability).(15)
(2) An expanded definition of "copying" on the Internet, whereby even loading material into RAM counts as copying, though such a "copy" is transitory and fleeting. Under this definition, browsing, not just downloading, could itself be an infringement.(16)
(3) The imposition of strict liability upon online service providers
for copyright infringement by their subscribers.(17)
The White Paper's simplistic and absolutist vision of intellectual property
is apparent elsewhere. For example, it offers a program for educating pre-
school children in a particular view of intellectual property; the tone
alternates between George Orwell and Barney the Dinosaur. Clearly, children
should know that it is wrong to steal and that copying can be a form of
theft. Yet one searches this section in vain for a suggestion that questions
of how extensive intellectual property rights should be, what legitimate
exceptions are made to them, and what effect they have on economic development
education and free speech, are a little more complicated and politically
controversial than teaching children not to swipe each other's Power Rangers.
The Software Publishers Association may not be the most disinterested moral
instructor in the meaning and sanctity of these particular property rights.
The White Paper's account of fair use has the same tone. It always argues
as if the possession of an extensive monopoly in the form of an intellectual
property right were the norm; thus, any deviation would somehow be a "taking"
from the copyright holder. At one point it goes so far as to describe fair
use as a "tax" on copyright holders. Yet by the same (or slightly
better) logic, one could describe copyright itself as a "subsidy."
The Bills go even further. New definitions would widen the copyright
holder's distribution right to cover every transmission of the work. Civil
liability would be imposed on creators of any device with the primary purpose
or effect of interfering with an author's copy protection system. This
sounds eminently reasonable, until one realizes that it could be used to
attack everyone from the shareware creator of a macro designed to maintain
browser privacy on the Web to the software company that creates a device
to crack open a program's protective system, even though the device was
created for the legitimate goal of decompiling the program in order to
make it interoperable with other programs.
By expanding copyright liability dramatically, the effect of the White
Paper and the Bills is to shift power from users and future creators to
current copyright holders. What can we learn from this? Quite a lot. In
fact, these proposals are a kind of checklist of ways to fail at the task
of fashioning a good intellectual property regime.
First, the current proposals show that it is always easier to imagine
an infringing use of a new technology than to imagine the ways in which
the technology will lower costs and offer new markets. Consequently, we
tend to over-protect; we are thinking about losses, not corresponding gains.
The authors of the White Paper and the drafters of the WIPO proposals focus
on ways that the Internet will lead to widespread copying of digital products,
rather than thinking about how it might also allow producers to make money
through different business strategies or to gain a greater return from
a lower investment.
This kind of technological tunnel vision seems to afflict content providers
and their allies whenever any new copying technology arrives. When VCRs
first came on the market, Hollywood and the TV industry wanted them taxed
to compensate for revenues lost through home taping of protected material.
The issue even went to the Supreme Court in the Sony Betamax case,(18)
where home taping was upheld as fair use and therefore excused under the
copyright laws. Congress and the Supreme Court refused to tax VCRs; their
prices dropped; they achieved unprecedented market penetration, boosting
demand for new "content." As a result, video rentals became one
of Hollywood's largest sources of revenue. A "copying" technology
turned out to produce gains as well as losses. If the maximalist intellectual
property agenda had triumphed, content providers would have been wedded
for longer to their old business strategies, at a net loss to all concerned.
On the Internet, the same is likely to be true. The distribution of
the Netscape browser is a nice illustration: the company believes, and
the market seems to agree, that there are lots of ways to extract value
from information products without forcing users to pay for each drop. To
put it briefly, both the impact of a new technology and the economics of
a networked environment are complicated. Congress and WIPO are rushing
to "save" the Internet -- perhaps the most vigorous and rapidly
expanding of all media -- and doing so without understanding the technologies,
business strategies, and economic realities produced by the new medium.
This is a big mistake.
Second, these proposals show that policymakers undervalue the importance
of the public domain as a prerequisite for future creation. The White Paper,
the Bills, and the WIPO proposals seem to be caught in the thrall of the
simplistic "linear function" approach to intellectual property
described earlier. Elsewhere, I have suggested that there are deep conceptual
roots to this tendency. Under current law, something has to be "original"
to receive copyright protection. By focusing on the term "original,"
we inevitably underestimate the extent to which the work we are protecting
depended on material in the public domain. The romantic idea of originality
tends to produce a notion of creators who produce works "out of thin
Third, these proposals show the difficulty that a formalistic model
of copyright policy has in dealing with the distributed architecture of
the Internet. As a legal regime, copyright premises liability (largely)
on copying. If one sees intellectual property as the kind of SimCity balancing
act that I described earlier, then the question of how to achieve that
balance will depend in part on the technology by which works are created,
used, and sold. Copyright marks the attempt to achieve for texts and other
works a balance in which the assumption of the system is that widespread
use is possible without copying. The relative bundles of rights of the
user and the owner achieve their balance based on a set of economic and
technical assumptions about the meaning of normal use. The user can do
a great deal with a book without copying it; she can borrow it from a library,
browse it in a store, buy it, and then lend or resell it. The relatively
expansive rights of the copyright holder are thus confined in practice
to those occasions and uses for which copying(19)
would be necessary. But on the Internet, transmission means the generation
of lots of temporary, unstable copies.(20)
That's what transmission is. Thus if one labels each of these temporary
evanescent copies as "copies" for the purposes of copyright,
one has dramatically shifted the balance of power from users and future
creators to current rights-holders, solely on the basis of a technological
accident. Given the legislative history of the copyright statute,(21)
this definition of "copy" is bad law on very traditional grounds.
It is also an extremely silly way to choose (or fail to choose) the property
structure of the information age. It violates what Laurence Tribe calls
the principle of "technological transparency" or technological
neutrality, the principle that the social meaning of rules and standards
should not be undermined or inflated, simply because an accidental technological
change transforms one of the triggers to liability.(22)
Fourth, and perhaps most important, the reaction to these proposals
shows that we do not yet have a politics of intellectual property.(23)
Media coverage of intellectual property issues is intermittent and uncritical;
"cyberporn" interests journalists more than the economic ground
rules for the information age. The privatization of public lands is likely
to draw a much more heated reaction than the privatization of the public
domain. Coalitions of those injured by over-expansive intellectual property
rights -- civil libertarians, innovative software developers, librarians,
teachers, and so on -- are only beginning to form. It seems that a lot
could be learned from the history of the environmental movement. That movement
not only alerted the public that the political process was failing to take
account of an important set of values that in the long run would affect
everyone, but offered a set of conceptual tools that helped us both to
understand those issues and to build coalitions around them. We need an
equivalent set of tools for understanding the effects of intellectual property
on the cybernetic commons. But that is a subject for another essay.
I began with an intellectual property policy primer for non-lawyers for a reason. Lawyers will continue to have an important role in the development of intellectual property, but we need a democratic politics of intellectual property protection. When presidential candidates propose a flat tax, everyone understands roughly what the issues are, what the distributional effects are likely to be, the competing claims about efficiency, regressive effects, and so on. No one would suggest that tax policy be left to lawyers. The same should be true of intellectual property, particularly intellectual property online. Intellectual property implicates values ranging from free speech and privacy to scientific progress and antitrust policy. To put it bluntly, intellectual property is the legal form of the information age: all the more reason that it should not just be a matter for lawyers.
1. (c) James Boyle 1997. Professor of Law, Washington College of Law, American University. S.J.D., Harvard Law School, 1986. LL.M., Harvard Law School, 1981. LL.B., Glasgow University. Thanks to Terry Fisher, Peter Jaszi, and Jessica Litman.
2. Information Infrastructure Task Force, Intellectual Property and the National Information Infrastructure: The Report of the Working Group on Intellectual Property Rights (1995) [hereinafter White Paper]. See also James Boyle, Sold Out, N.Y. Times, Mar. 31, 1996; Is Congress Turning the Internet into an Information Toll Road?, Insight, Jan. 15, 1996, at 24. For a broader view of the issue see James Boyle, Shamans, Software and Spleens: Law and the Construction of the Information Society (1996)..
3. S. 1284, 104th Cong. (1995); H.R. 2441, 104th Cong. (1995) [hereinafter the Bills].
4. Basic Proposal for the Substantive Provisions of the Treaty on Certain Questions Concerning the Protection of Literary and Artistic Works to be Considered by the Diplomatic Conference [on Certain Copyright and Neighboring Questions], World Intellectual Property Organization (Aug. 30, 1996) [hereinafter Literary and Artistic Works Proposal];Basic Proposal for the Substantive Provisions of the Treat for the Protection of the Rights of Performers and Produces of Phonograms to be Considered by the Diplomatic Conference [Hereinafter Phonograph Proposal] Basic Proposal for the Substantive Provisions of the Treaty on Intellectual Property in Respect of Databases to be Considered by the Diplomatic Conference [on Certain Copyright and Neighboring Questions], World Intellectual Property Organization (Aug. 30, 1996) [hereinafter Database Proposal]. [Due to intense resistance, the database treaty was eventually eliminated as were most of the troubling provisions of the copyright treaty discussed here. The final version of the copyright treaty eliminated Art 7's right of reproduction and substantially modified the other more problematic areas.]
5. Compare WHITE PAPER, supra note 1, with Literary and Artistic Works Treaty, supra note 3, and Treaty in Respect of Databases, supra note 3. Some of the most directly relevant articles of the Literary and Artistic Works Treaty are: art. 7, Scope of the Right of Reproduction (paralleling the White Paper's RAM copy theory while allowing nationally legislated exceptions); art. 10, Right of Communication (providing an even more extensive right than the "reproduction right" proposed in the Bills and apparently subjecting Internet Service Providers ("ISPs") to strict liability in a manner similar to the White Paper); art. 12, Limitations and Exceptions (apparently cutting back on fair use and similar limitations on the rights of content providers in a manner similar to the White Paper); and art. 13, Obligations concerning Technological Measures (paralleling in many respects the anti-circumvention provisions of the Bills). The Treaty in Respect of Databases would provide a sui generis right for databases which is beyond the scope of this article; it has been widely criticized and is arguably unconstitutional.
6. See generally J. ROUGHGARDEN, THEORY OF POPULATION GENETICS AND EVOLUTIONARY ECOLOGY: AN INTRODUCTION (1979).
7. Information economists would describe the issue as the contradiction between the incentives to create information and the efficiency with which markets spread information. See Sanford J. Grossman & Joseph E. Stiglitz, On the Impossibility of Informationally Efficient Markets, 70 AM. ECON. REV. 393, 405 (1980).
8. See, e.g., Lori Lesser and Susan Arafeh, moderators, Notes from Intellectual Property Online (last modified June 4, 1996) (describing comments of Mr. Henry Gutman). Some of Mr. Gutman's comments at the conference appeared to move towards this argument; however, he limited his remarks to the extent of rights under current law. "Gutman then noted the important distinction between one's legal IP rights and one's business strategy for maximizing profit from them. The legal rights are clear, he noted, that an author is entitled to a copyright and an inventor is entitled to a patent. These rights must be preserved on the Internet. What is less clear, Gutman added, is what works as a business strategy and what laws should govern this. Whether to have an IP right, and whether one can appreciate such a right without having it be part of your business plan are two entirely different questions." Id.
9. "To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Rights to their respective Writings and Discoveries." U.S. CONST. art. I, § 8, cl. 8.
10. See Joseph Farrell, Standardization and Intellectual Property, 30 JURIMETRICS J. 35 (1989); Michael L. Katz & Carl Shapiro, Systems Competition and Network Effects, J. ECON. PERSP. 93 (1994); S.J. Liebowitz & Stephen E. Margolis, Path Dependence, Lock-In, and History, 11 J.L. ECON. & ORG. 205 (1995); Michael L. Katz & Carl Shapiro, Network Externalities, Competition, and Compatibility, 75 AM. ECON. REV. 424, 424 (1985) ("There are many products for which the utility that a user derives from consumption of the good increases with the number of other agents consuming the good."); W. Brian Arthur, Competing Technologies, Increasing Returns, and Lock-In by Historical Events, 99 ECON. J. 116 (1989). For a slightly more skeptical view (at least about the implications for antitrust policy), see S.J. Liebowitz & Stephen E. Margolis, Should Technology Choice Be a Concern of Antitrust Policy? 9 HARV. J.L. & TECH. 283 (1996).
11. People normally think of cheap copying as an aid to piracy, not piracy- detection. Yet it is only because copying is so easy and cheap that the AltaVista search service, <http://altavista.digital.com/>, can keep a continuously updated index of almost all the material on the Web and in Usenet newsgroups. Such a service provides an unparalleled resource for copyright holders, who can now pinpoint exactly where their work is being offered. At the very least, such services provide a strong deterrent to widely publicized and generally available (i.e., effective) piracy. As with distribution and advertising, the existence of lowered copying costs cuts both ways.
12. See, e.g., Letter from the Digital Future Coalition to Congress (Nov. 9, 1995) (visited Dec. 14, 1996)<http://www.epic.org/privacy/copyright/dfc_ ltr.txt>; Welcome to the Digital Future Coalition (last modified Dec. 12, 1996) <http://www.ari.net/dfc/>.
13. Jane C. Ginsburg, Putting Cars on the "Information Superhighway": Authors, Exploiters and Copyright in Cyberspace, 95 COLUM. L. REV. 1466, 1476 n.39 (1995); see also Jessica Litman, The Exclusive Right to Read, 13 CARDOZO ARTS & ENT. L.J. 29 (1994).
14. See NII Copyright Protection Act of 1995 (H.R. 2441 and S. 1284) -- Joint Hearing before the Subcommittee on Courts and Intellectual Property and the Senate Committee on the Judiciary, 104th Cong. (1995); NII Copyright Protection Act of 1995 (H.R. 2441) -- Hearing before the Subcommittee on Courts and Intellectual Property, 104th Cong. (1996).
15. See the discussion of fair use in the Debate on the White Paper.
16. See the discussion the RAM copy theory in the Debate on the White Paper.
17. See infra text accompanying notes 87-93. (The discussion of ISP liability in the Debate on the White Paper) The White Paper correctly notes that copyright is a strict liability system. It fails, however, to answer the more basic question, given the goals of copyright and the communicative importance of the Web, should we view an ISP, whose computers automatically duplicate and repost all messages, as more like the person who rents out copying machines (who is not liable if infringing copies are made) or the photofinishing lab (who is liable for innocently reproducing an infringing photograph)? The only court to confront this issue squarely had no doubt. "If Usenet servers were responsible for screening all messages coming through their systems, this could have a serious chilling effect on what some say may turn out to be the best public forum for free speech yet devised." Religious Technology Ctr. v. Netcom On-Line Communication Servs., 907 F.Supp. 1361, 1377-78 (N.D. Cal. 1995).
18. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). I am indebted to Pamela Samuelson for the development of this point.
19. Or an exercise of one of the holder's other exclusive rights.
20. Though, to reiterate, even under the traditional definition most of those copies are too unstable and evanescent to count as copies for the purposes of the Copyright Act.
21. H.R.Rep. No. 94-1476 at 53 (1976). See infra text accompanying notes 41-66.
22. Laurence H. Tribe, The Constitution in Cyberspace, Keynote Address at The First Conference on Computers, Freedom & Privacy (Mar. 26-28, 1991) (prepared remarks available at <http:// www.cpsr.org/ftp/cpsr/conferences/cfp91/papers/tribe>).
23. See James Boyle, Sold Out, N.Y. TIMES, Mar. 31, 1996, at E15.