The Copyright End Game
Monday, April 7, 2003

by Brendan Scott, Esq., Editorial Board member, Internet Law Journal


Ultimately the argument for or against copyright will not be won in the legislature or in courts of law but, rather, in the court of public opinion. No matter how many malcontents there are in the world, their actions will be nothing if they are lacking the tacit support of the general populous. Conversely, no matter how much the forces of right and good are on the side of the holders and creators of copyright they are unlikely to prevail against broad based consumer complicity in copyright infringement. Legislatures around the world have sought to increase the certainty and security for the holders of copyright by expanding upon the rights that those holders enjoy. The TRIPS Agreement marks perhaps the most significant of these attempts.

Far from enhancing or securing the position of copyright holders, these moves by the legislatures may have only further soured an already cynical consumer population. What the MP3.com and Napster phenomena have proven is that the average consumer regards the legislative monopoly that is copyright largely with contempt - at least in the absolute form in which it has been expressed in copyright legislation. However, what these phenomena have also shown - for example through the subscription and payment initiatives proposed in the Napster-BMG merger - is that the average consumer is willing to pay (what they consider to be) a fair price for having access to music. However, they want to be provided with a fair rate for an "all you can eat" service rather than to be presented with differential pricing for separate options with premium rates being tacked on on top. The moves by legislatures around the world have not made the acts of infringers any more illegal, although they have created a situation where the same facts may give rise to multiple infringements greatly extending the protection provided to the information industry. Rather, they have mainly served to compound the cynicism that consumers already hold for the copyright law.

The holders of copyright monopolies have not helped their case by the manner of publicising their "losses". In the 1980s copyright monopoly holders advanced their claims for increased protection by reference to ridiculously exaggerated claims in relation to their piracy losses and did so with great success. Seeking to exploit an obviously successful technique, in the 1990s they continued this trend, but have failed to note the shift in consumer tolerance for such claims with the coming of the new millennium. Admittedly, it is a very difficult to properly assess the loss suffered and such figures are manufactured to serve different purposes, but methodologies which simply take the number of illegal copies and multiply them by the recommended retail price have begun to be regarded by consumers as deception, if not outright lying and seriously undermine the credibility of copyright monopoly holders which promote them. Not only do these methodologies largely ignore the price elasticity of demand, it does not take too much thought to argue that such figures do not take into account the costs of production, marketing, distribution and administration that would be involved in the sale of those copies (and which are not incurred in the infringer's case) and which cannot therefore be considered a loss. Further, where those copies are in the hands of a person who simply would not have had the means to pay for them it is hard to see how to sustain an argument that those copies actually represent a lost sale (1). Unfortunately the holders of copyright monopolies appear to have been beguiled by their own marketing, for they seem unable to comprehend how their aggressive advocacy is poisoning the opinions of consumers against legitimate initiatives.

Rather than securing the position of copyright holders through the addition of new rights in legislation, the effect appears instead to have polarised opinions and galvanised opposition to copyright more broadly. In particular, we are beginning to see more strident arguments against copyright coming from such areas as academia and libraries. In the United States, particular use is being made of the 1st Amendment in this regard. We should not forget that it is academics who are the "learned men" that the Statute of Anne sought to encourage in the production of "useful works" so many centuries ago and who are nowadays, by and large, abandoned by copyright law and increasingly electing to vanity publish.

What is now a simmering discontent with some particular aspects of copyright may, over the coming years, erupt into broad based defiance and opposition. Clearly, a substantial part of this is a lack of education within the community as to the costs borne by the creators of copyright works and the risks which they face in a competitive marketplace. However, equally blameworthy has been an overemphasis upon the securing of privileges in favor of a copyright holder with too little attention being paid to establishing the responsibilities which, in the eyes of the consumer, are the natural concomitants of the possession of those privileges. In the long term, it is through a combination of existing rights and the adoption of an ethic of responsibility in relation to their exercise by which copyright holders will secure broad based compliance within the community.

PRINCIPLES OF RESPONSIBILITY

What it is difficult to determine is exactly where and how those responsibilities should be adopted. To establish principles of responsibility in a copyright setting would be a difficult balancing act between the interests of consumers (who, let's face it, want something for nothing) and the interests of copyright holders. At present, consumers often believe that they are being simply exploited by the copyright holder, or by another copyright holder which the consumer identifies them with. Principles of responsibility would be aimed at sublimating that feeling and demonstrating a copyright holder's commitment to the consumer personally and the broader community in which the consumer lives but would do so in a manner which does not undermine the profitability of the copyright holder's business. Clearly this is not something which could be attempted lightly and it is not the intention of the present paper to propose a definitive list of such principles might look like. Rather, to complete this paper, we merely propose three principles which may be of use in furthering compliance through a rhetoric of responsibility.

No Hoarding

One of the traditional justification for copyright has been that, after the expiry of copyright, the work the subject of copyright enters the public domain and society receives a benefit in return for the monopoly rights it has granted to the copyright holder during the life of copyright. However, in many instances as the copyright work nears the end of its useful life, copyright holders fail to maintain it and fail to maintain its prominence (because its profitability has fallen over time). These works may, as a result, simply disappear from history because they have not been properly archived, or that archive has not been made public. Many early computer programs might fall into this category. Historically there have been simple reasons of cost which have driven this behaviour, although in some cases, old material is withdrawn in order to not cannibalise or to promote another market of the copyright holder. In the new economy those costs are greatly reduced. Copyright holders should be encouraged to put in place processes which will make material which is out of copyright or is nearing the end of its useful life (whether within copyright or not) accessible to the public, presumably over the internet. Where copyright has expired, this is not so difficult, but is too late. Rather, where copyright still subsists, but profitability has fallen, a copyright holder could permit end users to reproduce the material for their own purposes, while retaining the ability to charge for value added services that the holder provides (assuming that they are adding value independent of their monopoly rights).

As an adjunct, copyright holders should be dissuaded from hoarding of copyright works, seeking to retain control over them through the physical control of the media on which they are recorded. Equally they should be dissuaded from seeking to prolong copyright in material which has expired by recasting that material in a different context (one method that has been popular in the book industry is to place in-copyright illustrations around out-of-copyright text), at least if it is done in such a way as to prevent the out of copyright work being extracted. Any work which is not sold because of the production, distribution and marketing costs involved (as opposed to lack of demand) would be a good candidate for this treatment.

Copyright is not censorship

Much of the modern tension underlying copyright law arises from the rise to prominence that copyright works have in our daily lives. Seventy-five years ago it would have been unthinkable that an author would require someone else's permission in order to type up their manuscript, or communicate that manuscript to a third party. No one would have dreamt that they would need such a permission (2) to simply perform the ordinary running of their day to day business. Today the reverse is true. Where once such a permission might have occasionally been required, for example, in respect of patents for specialised processes within a business, today a veritable plethora of such permissions are now necessary, ranging from operating system software, to word processing software and even to transmission software that runs a person's modem. The means by which people interacted and the topics of their interaction also would have been about their direct personal experiences. Today, the topics of interaction tend to be vicarious experiences manufactured by and mediated through one of the major channels of pop culture, be it television, radio or print. It is now normal for ordinary people to conduct conversations about the goings on of fictional characters in television series or movies and for these conversations to comprise a substantial proportion of their interactions. Indeed, the outputs of these channels of pop culture form the basis of a cultural substratum over which we are able to interact with other people - being common points of experience. Individuals in different strands of work may have difficulty relating to each other's everyday experiences at work. However, they are likely to have some common experience through the media channels that they watch.

To some extent this form of communication has evidenced itself on the internet through special interest sites devoted to various topics and which include such things as excerpts from copyright works and fan fiction or derivative works. Strictly speaking, these sites are illegal. However, consumers see it as going directly against common sense for them to be, effectively, censored as a result. While this involves a complex balancing act, where such sites have no commercial interest, whether through subscriptions or through advertising, and truly are fan or discussion sites, holders of a copyright monopoly should consider exercising their discretion not to shut such sites down to the extent an infringement is a natural concomitant of discourse. Equally resorting to copyright in order to suppress criticism is a tactic looked upon dubiously by the consuming public (3).

No Charge Without Value

Discussed above was the issue of format inflation which has faced consumers of music. Copyright holders should not endorse marketing systems which force consumers to repurchase works which they have already purchased unless there is some true value adding involved by the copyright holder. So, for example, where the copyright holder is merely performing a function that a consumer can do equally well, the consumer should be permitted to perform that function once they have legitimately acquired a base version of the work from which to work. The most obvious examples are media shifting, format shifting and time shifting of material. In particular, after the holder of a copyright monopoly has had an adequate opportunity to amortise development expenses plus profit for the particular subject of copyright, charges should only be made where true value add is occurring. For example, by selecting or arranging works, rather than requiring a payment for the mere making of a copy (which the end user can do for themselves). Of course, if the making of a copy is actually the service provided, the charge should reflect the actual costs in making that particular copy, plus an allowance for profit assuming a competitive market.

Equally, copyright holders should not endorse systems which force a consumer to move on to a particular version or edition of a copyright work. Software vendors make particular use of this tactic, for example, by refusing to licence older versions of a particular piece of software or by creating deliberate incompatibilities between new and old versions in order to encourage upgrading. This may have the consequence not only of requiring new acquisitions by a consumer to be of the new version, but may also require the upgrade of existing old versions - and all this where there is either no benefit at all to the consumer involved in the upgrade, or where that the consumer considers that the upgrade is unnecessary. This example is more relevant in consumer grade and marketed software than in commercial licensing arrangements.

Copyright holders should also resist the temptation to self help with such systems as CSS and watermarking or restricting the sale of equipment which will permit copying. Such self help mechanisms were prevalent at the start of the microcomputer revolution at the start of the 1980s, with copy protection and dongles being the name of the game. Over time consumers became thoroughly fed up with these systems and they survived into the 1990s only in relation to high value, low volume products (such as CAD programs). These days it is not at all unusual for consumers to purchase a DVD player either modified at sale to become all regions, or to modify it themselves after purchase. That this may be illegal or criminal appears to be of little concern to consumers. Ultimately self help through equipment restrictions are unlikely to succeed because there are a wealth of legitimate uses for copying equipment (eg backup of data and normal operations). Equally, copyright holders may be doing themselves a disservice through these systems. If they are effective, why is copyright necessary? The argument would be, if self help is effective, why do you need the benefit of the copyright, and, consequently ought not copyright then be revoked?

CONCLUSION

By emphasising a rhetoric of rights copyright holders are not serving their best interests in the long term. By analogy to laws relating to property, our system of property works not through vigilant compliance and self help programs, but through tacit acceptance by all players of the mutual benefits involved through respecting property rights. Property survives and prospers as a regulatory system because those who do not respect property are a miniscule minority. If everyone - or even only 10% of the population - woke up tomorrow morning and decided to disregard those rights, there is nothing anyone could do to stop them. No amount of enforcement action would be to any avail and, in the (not so) long term, all of society's participants would suffer.

Some proponents of copyright seize on the apparent prevalence of infringing activities in societies which respect property laws, decry the evil that lies in the heart of the person in the street that they could so debase copyright holders' rights, and push for more stringent protections for the holders of copyright. This does not address the problem that consumers (however incorrectly) perceive copyright to be a legislative scheme which is fundamentally illegitimate, in that it is made by and for a special industry, it provides protection to that industry without adequately returning to them what they give up by that protection, and in that it robs them of their natural rights to communicate with each other as participants in a society. Indeed, this is perhaps the key pressure point for consumers in the new era - the protection provided to this industry threatens to intrude on normal social interactions - and this is also a point from which consumers have no fallback position to retreat to. By and large, the additional protections sought are merely restatements of the existing infringement act - the act in question was infringing before the additional protections and remain so afterwards, although perhaps with more dire consequences.

In the world of the future copyright holders face serious issues about securing a return on their investment. With the coming of the frictionless age, consumers will be faced with a simple moral equation over copyright. If they fail to respect it, they will not perceive any immediate victim, or, if they do, they will perceive a blameworthy multinational as that victim. The solution to this problem will not come through further escalating the consequences of infringing activity, through more virulent public attacks on infringement though privacy invasive rights management technology or through hand wringing over the lack of "morality" in consumers of today. Rather, it is going to come through fostering self enforced compliance with the laws. The reason that property laws work is because they are self enforced in the vast majority of instances. They are self enforced because the general populace can see concrete benefits from their observance of those laws - in particular in relation to their own property. There is no equivalent in the case of copyright. Copyright, in the perception of the average consumer, is a right which exists solely for the benefit of other people (4), one which provides the private content industry with a level of legislative protection paralleled only by monopolies for public works and utilities, and one which permits consumers to be time/price gouged for the creation of works. These perceptions are buttressed by the profits that the content industry extracts from consumer populations. The key therefore is to secure buy-in from consumers of the benefits of copyright. Inflated rhetoric about rights is seriously flawed in that consumers can easily perceive that the rhetoric is perpetually about the rights of other people - copyright monopoly holders. Instead copyright holders can follow a more constructive path, by acknowledging that the holding of a right carries with it responsibilities and that they will honour their responsibilities if consumers honour their rights.



(1) See Alford, W., To Steal a Book is an Elegant Offense, Intellectual Property Law in Chinese Civilization, Stanford University Press, California, 1995, at 129, note 13 gives the example of losses resulting from infringement by Chinese students calculated by reference to US dollar list prices, which those students could not possibly afford.

(2) That is, a licence, this being a more legal sounding word for a simple English concept. The copyright monopoly is an absolute prohibition on the performance of certain acts, subject to that act being licensed (that is, permitted) by a person who has the right to grant that permission.

(3) For example, as at July 2001, in order to listen to streaming audio of the Australian Parliament, it is necessary to agree to a "click wrap" agreement on terms which include the following: "Copyright of the material broadcast belongs to the Commonwealth Parliament and no unauthorised use may be made of that material. ... (i) The material shall not be used for: - political party advertising or election campaigning - satire or ridicule - commercial sponsorship or commercial advertising". In effect, the copyright monopoly is being used to prevent the citizens from making political or commercial use of the proceedings of their own parliament - although this restriction is not, to the author's knowledge, present when proceedings are streamed through other media, such as TV or radio.

(4) This perception of consumers has a solid grounding in fact. Very rarely are consumers themselves also vendors of copyright works.



Biographic Details

Brendan is a lawyer currently working with a major technology law firm in Sydney. Brendan can be reached by email at brendanscott@optusnet.com.au. Brendan was admitted to practice in 1993 and has practised in the areas of Telecommunications and Information Technology Law throughout his professional career. During that time he has acted for a broad mix of clients, both vendor and customer in these areas. Brendan is the immediate past president of the New South Wales Society for Computers and the Law. Brendan is on the editorial board of the Internet Law Journal and is a former editor of Computers and Law.