Someone needs to take a bong hit and chill out.

Now that we're 2/3s of the way through Netanel's book, I'm tempted to offer some ideas for resolving the problems I see with the current Copyright regime vis-à-vis Free Speech.  Since we still haven't heard Netanel's solutions though, that might be a bit premature, so I'll focus instead on some of the issues Netanel hasn't.  I'd like to note though that I don't agree with Netanel on a lot.  In particular, I don't agree with the general way he's framed the issue in "the sky is falling" terms, and the way he uses positive examples of "Fair Use" success such as The Wind Done Gone as negatives at times.  Maybe this is just a rhetorical tool for him since the book seems to be more of an advocacy piece than scholarship (then again, maybe there's really no difference?). 

You're probably wondering what the deal is with the title of this post.  It's taken/copied/stolen/fairly-used from this post (via BoingBoing), but it could also be the title of Netanel's book. Carrie Brownstein has a blog over at NPR.org, and she's started posting streaming "mixes" of music. A few entire songs are posted in non-downloadable format, and Brownstein seeks permission from the record labels before posting (since posting the entire song probably doesn't count as fair use).  She hasn't run into any issues until she requested permission to post a Grateful Dead song.  She was told that she might be able to use the song if NPR did a piece on All Things Considered about the Grateful Dead tied to a piece on NPR.org.  It's not clear to me Brownstein has any say at all over what happens at All Things Considered.  Needless to say, the Dead didn't make the mix. 

Now, at first glance, this seems a lot like Jon Else's "Simpsons" scenario.  Most of the labels agreeing to Brownstein's post probably reasoned that they were gaining more from the transaction (free publicity, maybe someone will buy the song / CD) than not allowing the post.  The Grateful Dead's label was apparently only willing to allow the post with yet greater publicity.  As Brownstein notes, this doesn't make sense.  The posting would presumably confer only a benefit on the Grateful Dead's label… yet the label refused.  What's going on here?  One way to look at it is that the Grateful Dead, being more popular, would only gain a marginal benefit from the transaction relative to the other bands.  Perhaps the Greatful Dead are better off creating scarcity in public displays of the work so that they can extract a higher premium (ala a feature on All Things Considered) when they do get played.   Or, perhaps this is the "winner take all" scenario Max describes at work.  Or maybe, as Netanel suggests, it's somehow the abuse of market power in a particularly popular work.  I honestly don't know which line to buy, so I'm guessing it's a little bit from column A), B) and C).  Also, I wonder to what extent statutory damages play a role in enabling the extraction of supra-competitive rents rather then the winner-take-all / cross subsidization scenario. 

The Role of Damages

In all the discussion of Copyright economics, I was surprised that a discussion of damages didn't play a more dominant role.  I haven't take Copyright yet, and I imagine Prof. Picker knows a lot about this, but I really wonder to what extent the threat of statutory damages warp licensing agreements.   Damages are supposed to ideally make the infringing party no better off, and the infringed party no worse off.  But the Copyright Act offers Statutory Damages between $750 - $30,000 per infringing copy (up to $150,000 if willfully). 

I imagine the threat of such damages are what primarily lead to the "clearance culture" that forced Jon Else to scrap the "Simpsons".  Jon Else's use was probably most clearly Fair Use, but errors and omissions insurance required that he scrap it.  Presumably someone at the insurance company has conducted a risk analysis and decided that even in a case with such a clear fair use, the threat of damages in an unlikely finding of infringement is so great as to not warrant the risk.

This likely wouldn't be the result under a regime that allowed damages that were more compensatory / ideal in nature.  Without the threat of statutory damages, it's likely that error and omissions insurance wouldn't be so averse to letting fair use fly.  Similarly, Fox might be more willing to license the Simpsons at a lower rate, knowing that they have no great windfall if the user goes ahead and infringes. 

Yet, as I bash Statutory Damages, I can't deny they play an important role in creating disincentives for wholesale pirates.  Piracy can often be hard to detect, so damages need to be higher in order to deter.  I think both forms of damages can be reconciled in a regime that imposes statutory damages on wholesale market-stealing pirates, while offering more economically sound damages in cases like Jon Else (where detection isn't so much a problem).

Fair Use Instead of Licensing

As I said before, I think Jon Else's use was a fair use, and under current law you don't need any license for fair use.  However, per our discussion last week there seems to be a willingness to do away with fair use under the presumption that licensing and the price system can account for fair uses.  After class, Prof. Picker showed how that might not always be true given the external "social value" that can often accompany fair uses.  I think the damages issue might also warp licensing in cases of "fair use". 

I'd like to make another argument in defense of no-license fair use.  The Copyright system is created by government to foster creativity, expression, reward authors, prevent free riding, etc.   Fair Use is likewise created by government to promote other social goods: freedom of expression™, criticism, education, etc.   While I lack any empirical data, I can't help but think that most fair uses of works deal with very low-valued uses, the licensing of which involves relatively high transaction costs, even in our computerized era.  Fair Use eliminates those costs, and I guess indirectly subsidizes Fair Uses.  I see nothing wrong with this, the government also subsidizes Copyright on the other side with criminal enforcement and the Copyright Office.

Has Copyright Law Become Un-American?

This is a slightly random sidebar, but many of the "anti-speech" changes to Copyright that have taken place since the 70's have been made to more closely comply with European notions of Copyright embodied in the Berne convention.  These changes have seen the extension of copyright terms, the end of formalities and renewal requirements, and even the limited introduction of moral rights in the united states (via VARA). 

Comments

[esomers]

I think you’ve pushed on an interesting point with your discussion of damages and incentive structures for the little guy. But there is another side of the coin when we deal with wealthy infringers. Statutory damages under §504(c)(2) are set at $150,000, while actual damages under §504(b) are calibrated by actual damages, plus profits, with a deduction for value added entirely by the infringing artists without copying. To note one prominent example we can look to Jeff Koons, who repeatedly seems to be able to make use of other people’s works in creating his modern “art”, and is often found guilty of infringement- Rogers v. Koons 960 F.2d 301 (2d Cir. 1992), United Features v. Koons (817 F. Supp. 370) to name a couple. Koons, possible for creativity reasons (lack thereof?) or apathy doesn’t seem too responsive to the reduction in value caused to his works by payouts to the original copyright holder- or possibly because he gets to keep the portion of value added to the project by his own labor- i.e. his name, which often adds substantially more value than the actual infringement. I guess I want to throw my hat in with Frank, Anglee, Vikas and anyone else who mentioned moral rights favorably. This might not be a problem with damages generally, but perhaps it is a problem with the wealthy not being responsive to monetary damages- especially when they retain artistic or popularity/notoriety rewards.
This isn’t to say that statutory or actual damages need to be higher/calculated differently, but I think Ruben is right that they need to be recalibrated in order to protect the rights of various parties- not only the little guy fair users, but also the little guy copyright holder stepped on by the larger company or individual.

[esomers]

I realize these are rare cases, but Koons really irritates me and he seems to get away with it much too much for my liking.

[Frank_B]

I suspect that statutory damages sometimes feed into the calculus of a case, but the certain costs of a lawsuit almost certainly outweigh the faint possibility of an infringement finding. Netanal cites an example of Google being browbeat by the Church of Scientology, and relenting even though they thought the law was 100% on their side. That's a problem even without statutory damages.

I don't think this problem requires us to upend copyright law though. Perhaps we could fix it with nothing more than fee shifting for unmeritorious cases. We need a federal anti-©-SLAPP statute. It would empower individuals and pro-speech ISPs to stand their ground. I suspect the market can sort out the rest.

Perhaps we can even tune such a law so that disputed fair use cases have a small degree of fee shifting in successful defenses, and lower statutory damages when good faith infringement is found. That way THE WIND DONE GONE will have a stronger incentive to fight for their fair use rights. I think we all benefit from clarified fair use law, just like we all benefit from declaratory judgments against non-novel patents. Fee shifting will help motivate litigants so that they don't fold to a cease and desist.

We'd discover the boundaries of fair use if more defendants would stand on their case.

[Nathan Richardson]

I like your point about damages a lot, though I also understand the tension you point out with the difficulty of catching pirates requiring a higher backend penalty.

I can think of a couple of ways that this might be addressed:

1) The cleanest way to get at the problem might be to retain statutory damages, but only for copying of whole works. Pirates want the whole work - not part of it. All fair use is of only a part of the work, and usually a very small part. Distinguishing between the two allows the deterrent effect of stautory damages to function against pirates, but avoids draconian damages (and their effect on the errors and omissions insurance market and risk-averse creators). The result would probably be a lot less litigation, particularly (as Frank points out) SLAPP suits, against fair users and borderline cases. This is probably exactly what we want.

As you pointed out in class, one drawback of this is that some derivative works that we think should have to pay could more easily escape liability. The Harry Potter sequel isn't copying the entire work, but proving damages might be hard.

If this is a large concern, another option might be:

2) Do away with statutory damages, but adopt the Sherman Act's triple damages provision. Basically, a plaintiff in a copyright infringement suit would have to prove damages, which might often be difficult, but if such damages can be proven, there is a large backend penalty. Damages should be easy to prove in wholesale piracy cases, and much harder (or at least much lower) in fair-use-like cases. There is still the threat of large backend damages that both deter pirates and, possibly, have negative effects on the insurance market. These backend damages would probably be better targeted at the activity we most want to deter, however, simply because of weaker incentives to bring borderline cases.

Neither "solution" is perfect, but either would probably be better than the blanket statutory damages (+ willfulness inquiry) system in the current statute.