August 25, 2004  ·  Richard Posner

As Larry Lessig has long and presciently emphasized, law and technology are substitute methods of protecting an interest. You can sue a trespasser; but it may be cheaper just to put up a strong fence. We used to think that if the technological substitute was adequate, it would be superior to the legal; and in fact the law often imposes self-help requirements to discourage lawsuits. And we never (or rarely) used to think that technology could upset a balance struck by the law; we thought law could cope with any technological changes. The dizzying advances of modern technology have destroyed these assumptions.

File sharing is the obvious example. On the one hand, encryption technology and Internet distribution (that is, selling directly to the consumer rather than through a dealer, enabling the seller to impose by contract additional restrictions on the use of his product beyond those imposed by copyright law) may progress to a point at which the fair use privilege of copyright law is extinguished (and so Lydia Loren has made the interesting suggestion that it should be presumptively deemed copyright misuse for a copyright holder to impose by contract (or, presumably, by encryption) restrictions over and above those authorized by copyright law). It would be like having a fence and gate so secure that the fire department couldn’t enter one’s premises to fight a fire; in such a case the fence would be giving the homeowner greater rights than trespass law, which would permit such entry.

On the other hand, Grokster-like services greatly reduce the cost of infringing copyright. The copyright owners retain (even if the Ninth Circuit’s Grokster decision stands) their right to sue the direct infringers, i.e., the people downloading recordings of copyrighted songs, without a license, into their computers, but this imposes litigation costs that the copyright owners did not have to bear when unauthorized copying of recordings was sufficiently costly to discourage most infringers without having to threaten them with a lawsuit.

We are in the presence of an arms race between encryption and copying technologies; if the latter prevails in this competition, copyright law will be ousted from one of its domains.

With all due respect for the interests of the recording industry and the file sharers, I regard this particular interaction of law and technology as relatively trivial in its overall social consequences. I am much more concerned about the ability, or rather inability, of the law and other policy instruments to cope with the issues thrown up by the relentless progress of science and technology. I’ll give examples in subsequent postings.

  • Jon Noring

    Let me give my appreciation to Judge Richard Posner for taking the time to post his sundry thoughts on copyright. He cuts to the heart on many important issues relating to copyright, such as Fair Use.

    However, I do take issue with one comment he made in the blog article I am replying to. He said:

    “With all due respect for the interests of the recording industry and the file sharers, I regard this particular interaction of law and technology as relatively trivial in its overall social consequences.”

    As I understand what he wrote, and in the context he wrote it, I have to disagree.

    If we measure the economic productivity of the various publishing industries which rely on copyright for their business models, it turns out to be only a small fraction of the total GDP. So looked at with respect to simple economics, Judge Posner is correct in stating this “war” between the recording industry and file sharers is a relatively trivial issue.

    However, if we look at the value and importance of communication, the media, and information flow to the vitality of our freedoms and civil liberties, then every aspect of copyright is never a trivial issue, and will have profound social consequences. Just as in the MasterCard ads, our civil liberties and freedoms, of which the Freedom of Speech is vitally critical, are priceless.

    Thus, whatever transpires in both the legislative and judicial arenas vis-a-vis file sharing, that will spill over into the fundamental area of free speech — it can’t help but do that. And interestingly, if the economic “value” of the recording industry is such a trivial part of our economy, while the importance of information flow among the citizenry is priceless, then how does something of trivial economy trump that which is priceless? I don’t understand these economics.

  • Raoul

    My position on this issue is very simple and straightforward. Either the copyright holders can have legal protection, or they can have encryption protection, but not both. Either one by itself should not cause an imbalance.

  • judicial comments

    Your parenthetical reference to Grokster seems awfully close to an indirect comment on the case, implying that it might not stand. I thought you said that wasn’t allowed?

  • Robert Young

    To support Judge Posner’s comments and concerns, similar observations were made by Fed Chairman Alan Greenspan earlier this year in a speech he gave at Stanford (naturally from an “economic” perspective)… http://www.federalreserve.gov/BoardDocs/speeches/2004/200402272/default.htm

  • three blind mice

    judge posner, first, we would also like to join the chorus thanking you for spending time here. although we do not agree with everything you say, your observations have been thought-provoking.

    but your spin on this subject is becoming intolerable.

    On the one hand, encryption technology and Internet distribution (that is, selling directly to the consumer rather than through a dealer, enabling the seller to impose by contract additional restrictions on the use of his product beyond those imposed by copyright law) may progress to a point at which the fair use privilege of copyright law is extinguished..

    now wait a minute. encrypted CDs and DVDs can still be recorded using analog equipment – exactly as before – the difference is that you can no longer make and EXACT copy of the original.

    this is not a restriction on fair use, it is a return to a standard of fair use that existed before digital media came into being.

    look, no one ever complained that they were not able to press their own vinyl albums, or that they would not play on their 8-track decks, but what people today are arguing for is just this.

    fair use extremists are demanding the right to make EXACT copies of the original: they want to be able to press their own vinyl albums from the original master for the price of the LP.

    this is by any measure a huge expansion in the “right” of fair use and the obvious risks this exposes the copyright owner to seem far in excess of the obscure marginal benefits the consumer might enjoy.

  • Matthew Saroff

    On the other hand, Grokster-like services greatly reduce the cost of infringing copyright.

    On the other hand Grokster-like services greatly reduce the cost of PUBLISHING AND DISTRIBUTION of intellectual product covered by copyright.

    Copyright exists to encourage the creation of the useful arts and sciences.

    They need encouragement because of barriers to entry, like printing and shipping costs.

    While the net may simplify infringing, it also lowers the barriers of entry.

  • Michael D

    encrypted CDs and DVDs can still be recorded using analog equipment – exactly as before

    What happens if you don’t have a CD or DVD? You download a track – legally and paid for – to your computer, say. Unfortunately, you need a new computer but you can’t copy your bought and paid for track over. Similarly, you can’t transfer it to your MP3 player as you go out in the way you could with a CD. Neither can you use it to test drive that swanky new stereo in the shop. All of these uses are “fair” as far as I know. However, all are thwarted by DRM systems.

    Even with CDs and DVDs fair use is now restricted. For example, I cannot write or produce a spoken review of a CD and incorporate short snatches of CD content to exemplify some point – the sort of things we do daily with text.

  • Shawn Abel

    In response to the three blind mice:

    You provide an insightful historical distinction on the practical meaning of fair use, vis-a-vis music or video content, but the argument must change when we consider other copyrighted material such as literature and software.

    Language is, in essence, either copyable with 100% accuracy or not at all. Consider a situation where most literature is disseminated by e-book format, and where, as Justice Posner suggests, contractual obligations or technological barriers, or both, prevent any sort of copying whatsoever. There is no analog hole here, although I suppose there is the ability to retype word for word, but only to circumvent the tech barrier. If buyers of e-books are contractually obligated not even to read the book aloud or copy _any_ wording – which has already been attempted with ebook EULAs – then there is no fair use whatsoever. The same situation can apply to code.

    When it comes to language, fair use (or as we call it up here, fair dealing) can be entirely extinguished with only a little work.

    Even the example you provide – that of the analog hole – only addresses technological barriers. It does not reflect the issue that Justice Posner raised concerning contractual obligations between consumers who must buy directly from the copyright holders – contracts could deliberately wipe out fair use as a standard clause, leaving the individual buyer with little or no room for negotiation. The question is: will contract law trump fair use?

  • tc

    If one defined copyright abuse as additional restrictions that take away fair use requirements, wouldn’t this have a side impact on Software Licenses (i.e., invalidate certain additional restrictions that Software Licenses attempt to impose)?

    Just a question.

  • http://thebigmouth.blogspot.com a&w

    This may be over-simplistic, but it seems to me that technology has a way of balancing out gains and losses in this context. Grokster may dramatically decrease the costs of copyright infringement, but this can only happen because information is now distributed in digital form, which also dramatically decreases the costs of production. If that’s true, then Grokster hasn’t really created an imbalance. Rather, it has rectified an imbalance in favor of media companies, who continue to charge the same prices for information, even though production costs are a fraction of what they once were.

  • Joseph Pietro Riolo

    To Three Blind Mice,

    You missed the central point in Judge Posner’s
    comment (nothing new here). He simply said that
    it is possible to use contract to extinguish fair
    use. Let’s me use your story about Emma and her
    sick child to illustrate an example.

    Knowing that sharing the original copy with
    others will deprive her of market value, Emma
    decides to require any buyer to sign a contract
    promising not to share original copy with any
    other people. That way, anyone who buys a book
    from her can’t share it with any others including
    sons and daughters. Emma would be so happy to
    get money from 1,000 people to support her sick
    child.

    This example shows that it is possible to use
    contract to extinguish the first sale right.

    But, it is not foolproof. What if a buyer
    forgets to take his book with him and the
    book sits on a bench in a park? What will
    happen? The contract that the buyer signed with
    Emma has no force on anyone who happens to
    pick up the book on the bench because contact
    is only between the parties that agree to it.

    With many contents going to digital format,
    it is much easier to enforce contractal
    obligations on the users. You would love that
    and Emma would love to choose digital media
    over print form to milk more money from the
    population.

    Then, why are you so upset?

    To Shawn Abel,

    Yes, contract law can trump fair use. It
    already happened and it will continue to
    happen unless the copyright law is amended
    to prevent any preemption by contract.

    To tc,

    To illustrate how complex this topic will
    become, GPL (General Public License) contains
    additional restrictions on fair use. There
    are some uses that are allowed by fair use
    but not by GPL. If you accept the idea that
    copyright abuse will lead to invalidation of
    terms and conditions in the license, GPL and
    many other open licenses will be affected. Do
    you realy want that or do you really want people
    to have the freedom to draw up contract even
    if it is not on the same wavelength as copyright
    law? Food for your thought.

    Joseph Pietro Riolo
    <riolo@voicenet.com>

    Public domain notice: I put all of my expressions
    in this comment in the public domain.

  • Wertz

    “encrypted CDs and DVDs can still be recorded using analog equipment – exactly as before – the difference is that you can no longer make and EXACT copy of the original.”

    Yes, people should be satisfied with movies which have been copied using analog equipment and thus severely damaged by Macrovision. I mean, who are these people who demand copies of movies which are of such a quality that you can actually recognize the actors?

  • Andrew S

    There is no such encryption technology that can prevent audio, video, or text from being copied by the user who can listen, watch, or read it. The files are encrypted, but the user is also given the key to decrypt it.

    Think of it this way–if the sound can reach my ears, it can also reach my recording device.