How to Fix Copyright, Part Deux

My first post addressed some of the common assumptions about what copyright laws can do. The two syllogisms and one tautology were not an expression of my beliefs, but rather an expression of common views, views I believe are mistaken for reasons I detail in the introduction to and in Chapter 3 of the book. That they are mistaken doesn’t mean that copyright serves no purpose: I believe copyright can serve a purpose of protecting against free-riding and in creating conditions under which investments can be made in a stable legal environment.

Agreeing that copyright can serve valuable purposes doesn’t, though, tell us about the necessary level of protection. Chapter 8 of the book deals with the term of copyright, how long protection should last. A great deal has been written about this, and court cases have been brought and lost challenging Congress’s extension of the term of protection, most notably in the Eldred case, which challenged part of a 1998 law extending the term another 20 years.

I believe the Eldred challenge suffered from poor strategy but the outcome is likely to have been the same, nevertheless. Evidencing a deference to Congress rare in most areas, the Court seemingly granted carte blanche to extend the term of copyright to whatever length the legislature wants so long as Congress merely states a belief that doing so would provide an incentive to create. By contrast, in the area of abrogating sovereign immunity, the Court reacted quite differently, getting into the weeds of how many witnesses there were at hearings and the substance of what they said.

The Eldred Court also engaged in what I regard as an indefensible jettisoning of the Constitutional text: the grant of power in Article I, section 8 clause 8 is to promote the progress of science. The rest of the clause says how this is to be done (by granting exclusive rights) and to whom (authors). The Eldred Court however, recharacterized the grant as a prologue, a series of pretty words signifying nothing.

The effect is dramatic. Congress need not be judged by whether it’s laws actually promote the progress of science and in the area of extending copyright, it only has to say doing so will provide an incentive to create, a pro forma word processing chore.

What would I do differently? To begin with, I would rely on the brief that 18 economists submitted in the Eldred case, including George Akerloff, Kenneth Arrow, Ronald Coase, and Milton Friedman. That brief has the great virtue of trying to quantify the expected benefit of different terms of protection by focusing on present and future value. The argument is always made by proponents of extending the duration of copyright that doing so will cause authors to produce more works today based on a judgment that they will receive more money later (that is, during the period of the lengthened term). Alternatively, one could argue that a buyer of copyrights will give the author more money today based on perceived later benefits during the longer term. But in both cases, the assumption is that the later benefits will be significant enough to cause different behavior now.

In Eldred, this is the difference between a term of protection of life of the author plus 50 years and life of the author plus 70 years; the final, later 20 year difference being the alleged source of the expected increased financial benefits. The economists figured out that in the whole period of the extension, assuming very generously that the copyrighted work has a constant stream of revenue, the revenues for the extra 20 years at the end would be 0.33 percent of the present value of the revenue from under the then existing term. Making the term perpetual would increase compensation by at most 0.12 percent. Our current regime is a perpetual regime in all but name, giving rights holders 99.88 percent of the value of a perpetual regime. In a legal system where copyright cannot be perpetual, that’s a problem.

But beyond it being a Constitutional problem, it’s a policy problem. If copyright does provide an incentive to create, we need to ensure that copyright last long enough for the incentive to work, but not beyond that. Our current term goes well beyond what is necessary. Beyond this we have a one-size-fits all approach that gives an email the same rights and term of protection as a $200 million dollar movie or David Post’s Moose book. Incentives works differently for different types of works, and our laws should reflect this. Making copyright laws work effectively means giving the right incentives, not the same ones to everyone. In the next post, Friday, I will go into some specifics as well as the question of reintroducing formalities.

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