August 23, 2004  ·  Richard Posner

I’ve received some interesting comments on my last posting. One of the commenters asked me to explain the fair use doctrine; here goes.

The doctrine, which has close counterparts in patent and trademark law, permits a degree of unauthorized copying of copyrighted works. Shocking! If a teenager takes a joyride in my car and is arrested, can he defend by arguing that it was a “fair use”? No, but the example points up an important difference between physical and intellectual property, a difference obscured by the use of words like “theft” and “piracy” to describe unauthorized copying. If someone takes my car, he deprives me of its use. If he copies my copyrighted book, I still can read, use, and sell the book, although my publisher’s and my income may be less because one fewer copy will be sold. But maybe not–maybe the copycat wouldn’t have bought the book if he’d had to pay the retail price. And if instead of copying an entire book, a book reviewer quotes a paragraph from it, I may well be better off (in contrast, say, to someone who doesn’t want to drive my car but just store stuff in the trunk); and if he had to get my permission to quote, I might be worse off, especially since reviews would lack credibility if reviewers needed the author’s permission to quote. Unauthorized quotation by book reviewers is an example of fair use.

The fair use doctrine originated as a judicial doctrine, and like many judicial doctrines was general in terms, setting forth a standard rather than a set of precise rules. Congress put a clumsy thumb in the pudding in 1976, when it “codified” the doctrine. It wasn’t really codification, because Congress did not set down a legislative rule to supplant the judicial one; it just listed four factors for courts to consider, and it made clear, as is sometimes overlooked but as I tried to make clear in my opinion in one of my court’s countless (and fascinating) “Beanie Baby” copyright cases, Ty, Inc. v. Publications Int’l Ltd., that the four factors are neither exclusive nor mandatory.

Where does that leave us? The general view, which you find in advice to authors, as in “Copyright and Fair Use,” is that fair use is very vague: “The only guidance is provided by a set of fair use factors outlined in the copyright law. These factors are weighed in each case to determine whether a use qualifies as a fair use. For example, one important factor is whether your use will deprive the copyright owner of income. Unfortunately, weighing the fair use factors is often quite subjective. For this reason, the fair use road map is often tricky to navigate.”

That’s certainly true if fair use is applied on a case by case basis, using either the four factors or some more general–and more accurate–standard such as that unauthorized copying is permissible when it does not seriously infringe the legitimate interests of the copyright owner. But that isn’t the right approach; it’s much too vague. The right approach is categorical. Book reviewers can quote from the books they’re reviewing. Period (unless, perhaps, the book is so short, and the review so long, and the review quotes so much of the book, that the review becomes an actual substitute for the book–but I’ve never heard of such a case). Parodists can copy a big swatch of the parodied work–otherwise it won’t be recognized as a parody. And so on–and, Patry and I believe, copying of old copyrighted works should be permitted if the copyright owner has not taken minimal steps to place copiers on notice of his interest.

August 23, 2004  ·  Richard Posner

“Fair use” is a doctrine of copyright law (with counterparts in patent and trademark law as well) that allows a degree of unauthorized copying of copyrighted works. Shocking! Squatters’ rights! Can a teenager take my car for a joy ride and when he’s caught plead “fair use”–that I wasn’t using my car and didn’t miss it for a second! But there’s a big difference between physical and intellectual property. Only one person at a time can use my car, so, in general if not in every instance, someone who takes it interferes with my use of it. But if someone copies my copyrighted book, that doesn’t interfere with anyone else’s use of the book, or prevent my publisher from continuing to sell copies, though it may reduce his and my income. That’s why “theft” of intellectual property, and such synonyms as “piracy,” are merely analogies, and often misleading ones. It’s hard to see how I could benefit from someone taking a joyride in my car without my permission, but easy to see how I could benefit if a reviewer of one of my books quoted a paragraph of the book in his review without having to get my permission (which would undermine the credibility of the review).

Bill Patry, a distinguished copyright lawyer and treatise writer, and I have written an article soon to be published in the California Law Review in which we advocate an interpretation of “fair use” that would solve the major problem that extending the copyright term creates. We argue that it should be considered fair use to copy an old work if the copyright owner hasn’t taken reasonable steps to provide notice of his continued rights, as by entering his name and address in a copyright registry. Given such a rule, such registries (which have counterparts in the case of works of visual art) would spring up overnight. Then if an Eldred wanted to publish some old work, he would consult the registry or registries and if no owner was listed (which would usually be the case, because most old works have no commercial value and so their owners won’t bother to try to keep them from falling into the public domain), he could publish it without a license.

August 23, 2004  ·  Richard Posner

The conventional economic objection to copyright and other IP propertization is that it limits access and by doing so causes a misallocation of resources: making and distributing another copy of some piece of software might cost nothing (well, virtually nothing), and yet if the copyright owner charges a price of say $100 for the software, people who value it at more than zero but less than $100 will be deflected to substitute products that may be more costly or of inferior quality; and that’s inefficient. Of course, limiting access may (or may not) be the least objectionable way of incentivizing producers of IP, but, as critics of Eldred and the Sonny Bono Act correctly point out, tacking on years at the end of an already long copyright term has only negligible effects on the incentive to create a copyrighted work in the first place. Who would refuse to create a work unless he could count on his heirs’ receiving income from it more than 50 years after his death?

But, contrary to appearances, limiting access because copyright enables copyrighted works to be sold at prices in excess of marginal cost (the cost of one more copy) is not the main problem created by the Sonny Bono Act. Very few works of art, literature, or entertainment retain significant value 50 or 70 years after the death of their author. As Lessig’s brief in the Supreme Court pointed out, the problem for people like Eldred who want to publish old works (works that would have entered the public domain by now were it not for the Act) is transaction costs, not license fees: the costs of locating and negotiating with the current copyright owner. Those costs may well exceed the modest commercial returns from publishing a public domain work (which anyone can copy). The beauty of the old (pre-1976) copyright system, with its requirement of renewal beyond a shortish initial term (like 28 years), was that most copyrights, lacking commercial value by the end of their initial term, were not renewed, and so fell into the public domain, and so licensing costs fell to zero.

The old system is gone, perhaps forever. What to do? Fair use to the rescue (next).

August 23, 2004  ·  Richard Posner

Larry Lessig from time to time flagellates himself about losing the Eldred case in the Supreme Court. He shouldn’t; it was unwinnable for a host of reason (the lopsided vote–7-2–is a clue). Yes, Congress can confer copyrights only “for limited Times,” but what’s “limited” is a matter of perspective. If the Sonny Bono Copyright Term Extension Act had been in force in Shakespeare’s time (there was no copyright then, in fact), then, since Shakespeare died in 1616, his works would have entered the public domain in 1686–more than 300 years ago. So Larry focused on the retroactive feature of the law (that it extended existing copyrights), but that carries the issue away from “limited Times”–the extended works were extended for only a liimited time–and ignores the fact that there social benefits from “propertization”–from the fact that a property owner has an incentive to conserve his property; that is why toll roads are less congested than “open access” highways; and why poor old Mickey Mouse would be even less free if anyone could employ him without compensation. Then too, if the Supreme Court had invalidated the Act, Congress could have retaliated by allowing states to grant copyright–perpetual copyright, if they wanted, which was the regime for most unpublished works until 1976.

All this said, the net effects of the Act and therefore of the Eldred decision are probably bad. But the worst of them should be remediable fairly easily. Stay tuned.

August 22, 2004  ·  Richard Posner

Sad to say, there are two things that, as a judge, I can’t talk about in public (and this is in public). One is pending cases, which means (in any court, not just mine) cases in which all possibilities of further proceedings, such as an appeal to the Supreme Court, have not yet been exhausted. Oh I can mention a case, e.g., Grokster, which Tim discussed and linked to, or even talk around it a bit, but I can’t comment directly or indirectly on the merits of the decision. I can, though, point you to a case, related to Grokster, that I wrote and that the court in Grokster mentioned in footnote 9 of its opinion: the Aimster case.

And, second, I can’t comment about any current political campaigns, the presidential or any other, or candidate, though I can make a nonpolitical observation about the upcoming election–and as it happens a technological observation. It is to repeat a point I made in my book on Bush v. Gore and the 2000 election fiasco (Breaking the Deadlock is the name of the book): it’s that technological fixes for the sorts of problem that emerged in Florida in the last election, the simplest fix being to replace the punchcard ballot (especially when the votes are counted at the county rather than precinct level) by the optical-scanning (Marksense) system, are likely to be opposed by incumbents. Incumbents have adapted to whatever system they were elected under and are reluctant to take their chances with a new system. This is one example of the uneasy relation between law and technology, and another is the indifference (at least until 2000) of most students of election law to the serious technological issues involved in our election methods.

August 22, 2004  ·  Richard Posner

Tim having vacated the premises early, I thought I should accelerate my entry, especially to correct his statement that “Eight Heads in a Duffel Bag” is my favorite movie. It was my favorite movie, but that was before I saw “The Matrix,” which is my current favorite (though just the first of the three Matrix films), and which seems to me a portent of one of the directions in which technology is moving us. The social and legal impact of technology is going to be the principal theme of my week as Larry’s guest blogger.

August 22, 2004  ·  Tim Wu

This is the end of my stewardship of the Lessig Blog. It has been a pleasure to meet many of you and I thank you for reading the web-log in Larry’s absence.

For the rest of the year you can find me either on the 7th floor of Columbia Law School, where I am a visiting professor, or back in Charlottesville/Washington DC. My email address can easily be found using a google search, which is probably why I get so much junk mail. I also have a lousy web site which stores much of my written work and other information.

Our next guest is Richard Posner. Mr. Posner works for the federal government, and enjoys writing, oral argument, and demolishing fields of study. He is fond of animals of most stripes and once owned a horse named “King.” Mr. Posner’s favorite film is the critically-maligned comedy Eight Heads in a Duffel Bag. He lives in Chicago.

Please join me in welcoming our guest to what promises to be a very interesting week.

August 22, 2004  ·  Tim Wu

Doug Lichtman is an information law scholar at University of Chicago and one of the best of our generation (I recommend in particular his information platforms piece). He and I agree on many things, but disagree on some too. And when you boil things down, the differences come down to something simple: our views on timing.

Doug believes that property rights are tantamount to government promises. If, say, government promises to grant patents that last 20 years, it needs to stand by those promises to maintain the credibility of the system, and the incentives to invest in it. So even if someone comes along who might make better use of the patented technology, that’s too bad. To use an old phrase, these are rights that are vested.

Myself, I am inclined toward anoter position: that the question of who “comes to the nuisance” shouldn’t always matter. Imagine someone wanted to open a restaurant next to your house, and that the restaurant is loud and odiferous. On the one hand, we might say that since the restaurant is ruining the value of your property, you ought be allowed to stop it or ask for damages. That seems to make some sense. But we can reverse the question and ask whether are letting you, the homeowner, ruin the business and social value of the restaurant, just because you got there “first.” For yes there is some value to honoring the promises inherent in property rights, but not a value that always transcends looking for the highest use of a given asset.

The translation of this position into copyright and telecom law is simple. In general, copyright owners were already “there,” and the electronics industry and the Internet came, and began ruining an otherwise peaceful existence. Tivo, for example, comes along and wrecks the value of DVDs sales, something the owners of copyright had counted on. Or, more obviously, uncontrolled P2P filesharing wrecks the value of existing copyrights.

In Doug’s view, the government, to preserve incentives, must stand up for the rights it promised, to whomever it promised first. In my view, that promise is always conditional — and if more valuable uses come later, they should sometimes win out (for Constitutional law buffs, think Charles River Bridge). It may be that values stressed in Doug’s position are more compelling for patents (which are after all, much shorter) and mine for copyright. But in general, how you feel about this question can help explain much of how you feel about law and technological change.

(Thanks also to Washington attorney Matthew Schurers, who also formulates the question this way).

August 21, 2004  ·  Tim Wu

Technologists are divided in some ways, but united by a common faith. Stated simply, we worship innovation. Openist, deregulationist, libertarian, or cyber-anarchist all take innovation as deliverance. Our battles are mostly internecine warfare, fights about how best to achieve that common goal.

But how often do we ask ourselves: Why? What is the �end� importance of innovation? Is it more than just liking new stuff? How, if at all, does innovation connect with, say, human happiness?

There are certainly some answers to this last question. Joseph Schumpeter, patron saint to the church, gives among the most important. His idea is that constant innovation, and not price competition is what drives growth under capitalism. While thinking capitalism doomed, he nonetheless recognized as its virtue the �process of industrial mutation … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” So if we believe that economic growth is what makes societies happy, promoting innovation can be this way linked to human ends.

Another view runs like this: we are happier if we have reason to believe that the future will be better than the past. Stated simply, ongoing innovation makes us feel that way. When you read about a possible cure for cancer or that cell phone numbers are now portable, you think, one maybe day we�ll be free of disease, premature death, and cell phone extortion. And that feels nice.

Whether people really are happier now than in Ancient Rome or the Han Dynasty is somewhat irrelevant to this belief. We just want to feel like there is some ideal future out there, which we are slowly drifting toward, even if it is not necessarily attainable in this life.

A third, maybe the most obvious answer, is that the stuff invented, like hair-dryers or the electric toothbrush, makes our lives easier and simpler, and hence happier. That’s convincing, particularly in the field of toiletries, and particularly if you’ve spent any time in the developing world.

But what is still missing — what none of these answers do is ask how valuable innovation is compared with other priorities. At its worst, innovationists can beccome obssessed with change for change’s sake, and addicted to the thrill of the new. Which would be fine, except for these days technology policy and public policy have merged. And Wired magazine is hardly Cicerco. A teenage fascination with new stuff isn’t necessarily so great when the happiness of the many are at issue.

Consider a question that professor Brett Fischman asks his class about the internet, the central monument for innovationists: �What actually makes the Internet valuable to society?�

This question stopped me for awhile. Measured in social value, surely some of the oldest applications, like email, relatively untouched by innovation, produce most of the network’s present social value. Sure, I think VoIP over powerlines would be pretty cool (thanks Adam Thierer). But compared to finding old friends, staying in touch, and everything else that email does, there is no serious comparison. Logic like this suggests that faith in innovation is a faith out of touch with human ends. Perhaps making what is obviously useful � like email � reach more people is more important than constantly reinventing, redestroying, or finally writing the perfect debugger.

I do think the criticisms can be rebutted. Email, after all, was an invention, and required the right environment for it to come about. Innovationists don’t always think about nothing else. But those who share a faith in the importance of innovation should be sure that what we fight hardest for is not just the abstract beauty of new technologies, but ideals that actually have some connection to human ends.