Category: Intellectual Property

Excitement over Librarian nominee is not an excuse to mislead.

The February nomination of Dr. Carla Hayden by President Obama to the position of Librarian of Congress was apparently cause for excitement among many of the usual suspects who write in opposition to copyright.  Because the Copyright Office operates within the purview of the Library of Congress, and the Librarian has final say in key proceedings, some pundits are anticipating that Dr. Hayden’s views on issues like open access and privacy suggest that they can count her as an ally in their ideological camp on copyright issues.

Historically, the Librarian will defer to the Register of Copyrights on most copyright proceedings for the simple reason that the Register is a copyright expert and the Librarian is not.  While both figures play important policy roles, the significant differences in their areas of expertise has led various interested parties to call for a separation between the Library of Congress and the Copyright Office.  That discussion aside, though, the ebullience of certain voices over the prospect of Dr. Hayden as Librarian seems typically glib and even potentially self-defeating.

For instance, longtime copyright critic Cory Doctorow set off this flash-bang of a comment in Boing Boing immediately following the nomination. Yet, despite his proclaimed passion for these issues,Doctorow could not be bothered to contribute more than 160 of his own words on the subject, 65 of which state the following:

“Next up: watch for a move to rip the US Copyright Office (which now gets to make rules on things like whether the DMCA prohibits you from using generic insulin in your insulin pump) out of the Library of Congress, relocating it in Congress where it can be directly overseen by the Congressjerks who have been on the entertainment industry’s take since their first campaign.”

Forget which side of an issue you’re on for a moment, how is that kind of statement not just divisive and meaningless?  As a thinker and author, Doctorow apparently has no qualms about conflating diabetes, the DMCA, Congress, and the entertainment industry in a single head-spinning sentence designed to trigger a purely emotional reaction while conveying neither information nor an idea of any kind. But then, this is the world we live in today—one in which people make snap, political judgments based on narratives that read like this:  Hollywood is paying Congress, so the Copyright Office will use DMCA to prevent diabetics from gaining access to generic insulin.  See how if we organize Doctorow’s implications into a clear declarative like that, it sounds totally crazypants?  Yet, the number of questions begged by his inflammatory statement will not stop plenty of people from sharing his “article” on social media. And we wonder why our political process today is so ugly.

Access to generic insulin is—as I understand it—a serious issue, but not one that is directly related to the DMCA.  In this regard, Doctorow is casually referring to Section 1201 of the law, which is currently under review by the Copyright Office. This section of DMCA prohibits the circumvention of Technological Protection Measures (TPM) used to control access to copyrighted works (including operating software) and prohibits trafficking in tools used for circumvention.  Advocates of open access and the “right” to jail-break cellphones, etc. view TPM as exclusively restrictive to both innovation and civil liberties, though this view, as it is presented in the public debate, can often be narrow in its perspective and overstated in its significance.  For instance, arguing for the “right” to jailbreak cellphones makes good bloggery, but the extent to which it is a real practical concern among the billions of cellphone users in the world is another question.

Bringing this back to Doctorow’s comments, though, the closest thing I can find to a an actual story related to DMCA and insulin is a 2014 class of petitioners who sought exemptions to the anti-circumvention prohibitions in 1201, largely for the purpose of conducting research into consumer products whose software might be susceptible to dangerous hacking.  Included among the classes considered was the software security research of Jerome Radcliffe, who discovered vulnerabilities in the operating software in certain insulin pumps. This type of exemption is exactly the kind of ruling over which the Librarian has final say but will typically defer to the judgement of the Register.

The class of petitions in this case were granted the exemptions being sought, and it is worth noting that the Register provided 400 pages worth of analysis, including an acknowledgement that some of the considerations presented by the class of petitions are not properly the purview of the Copyright Office.  From the recommendations …

“The rules that should govern such research hardly seem the province of copyright, since the considerations of how safely to encourage such investigation are fairly far afield from copyright’s core purpose of promoting the creation and dissemination of creative works. Rather, the rules that should govern are best considered by those responsible for our national security and for regulating the consumer products and services at issue. That said, it is inescapable that the anticircumvention prohibition in section 1201(a)(1) plays a role in the debate.”

This doesn’t mean that all of these considerations are best determined by the Librarian of Congress either—only that the Register acknowledges that several of the classes considered in this particular review—which included voting machines, nuclear power plants, and air-traffic control systems–seems more reasonably to belong in the hands of Congress and other federal agencies. Indeed, as our world becomes increasingly driven by software, we should expect federal agencies to review how these works of code affect consumer safety, security, privacy, etc., and it is probably correct that many of these concerns are well outside the scope of either the Library of Congress or the Copyright Office.  But what any of this has to do with patient access to a generic drug is a mystery; and it is irresponsible for pundits like Doctorow to carelessly invoke an emotionally-charged reference—let alone point a finger at the entertainment industry in this context.

Furthermore, the detailed analysis made by the Register of the petitioners’ and their opponents’ arguments indicate precisely why these considerations are best weighed by experts in copyright law. And no reading of the Register’s recommendations could rationally be labeled “maximalist” or failing to consider the public benefits implicated by the petitioners’ goals. In fact, the degree of attention the Register gives to the petitioners in this case suggests that it could be potentially detrimental to the very purpose of these exemptions to have them considered by a party other than the nation’s copyright authority.  In other words, the Register came to the conclusions that observers like Doctorow would want to see, but the rationale applied in considering the role of copyright actually does matter.  Or to paraphrase a colleague of mine, “You don’t put the EPA in charge of the military just because the military has an environmental impact.”

Meanwhile, the exemption process in this case functioned as it is meant to, though some critics have cited the triennial review of petitions for exemptions as unduly burdensome on researchers like Radcliffe.  And, in fact, the Copyright Office review of  Section 1201 has asked for comments with a view toward making both the review and renewal process for exemptions more efficient.  Suffice to say, though, review of Section 1201 is not a discussion that can or should be boiled down to a tweet, and neither is a discussion about the proper relationship between the Librarian and the Register.

The 15-page comment by Copyright Alliance submitted last week to the Copyright Office regarding Section 1201 review further points out—at least insofar as creative works are concerned—that the section provides a legal framework for the development of diverse distribution channels for all the creative media we like to consume.  Netflix, iTunes, eReaders, streaming live TV on multiple devices, etc. all rely on both the circumvention and trafficking prohibitions in Section 1201 to build business models that allow for the continued production and distribution of the creative works.  “These provisions have served authors and audiences of creative works well by ushering in a vast variety of both new work and innumerable new technology platforms for distributing creative works in innovative ways,” writes Terry Hart, Director of Legal Policy for the organization.

While review of these, or any provisions, is an essential part of sound policymaking, we should recognize that turning all this digital innovation into new forms of commerce typically relies on some form of Technical Protection Measures and that there are many interrelated aspects to reviewing both the form and function of Section 1201. In the meantime, comments like Cory Doctorow’s are needlessly divisive and do nothing to further the public’s understanding of the issues.  In fact, it seems to me that those who champion the values of free and open access to information, should always make an effort to say something informative.

New Study Indicates Piracy is Not Promotion

Last month, I shared some thoughts on the subject of piracy as a tool for promotion, and I won’t repeat all that here.  Suffice to say, I’ve never understood why this particular argument has ever be taken seriously—other than the obvious reason that it offers a plausible sounding rationalization. But, even without thinking too deeply about the matter, just the anecdotal evidence hardly seems to support the premise at all.  Major works like blockbuster movies, which remain the most pirated content, don’t need piracy for promotion; if piracy only promotes to other “consumers” who also don’t pay, it’s a weak argument to make in the first place; and of course, there remains the inescapable logic that if the producers’ of the work didn’t ask pirates to promote for them, it’s not really a service, is it?

Still, the preposterousness rages on in the blogosphere, with any number of writers presuming to school creative producers in the orthodoxy of the future, including vague suggestions to “harness the power of piracy” rather than seek to eradicate it.  It’s a silly and often circular argument because, of course, nobody has ever really studied the comparison between direct loss vs. promotion attributable to piracy.  Until now.

Researchers at Carnegie Mellon University have, for the first time, compared the effect of cannibalization (i.e. box office losses) with the effect of promotion due to to piracy.  Conducted by Liye Ma, Alan L. Montgomery, and Michael D. Smith, their findings reveal that although piracy does have a promotional effect on actual sales, this positive is substantially outweighed by the negative effects of cannibalization.  Comparing both effects to the counterfactual of a market without any piracy at all, the study indicates that, without piracy, producers would have seen a 15% ($1.3bn) increase in box-office sales for the period from 2006-2008 and a 14% increase from 2011-2013.  Meanwhile, their findings indicate that piracy-related promotion contributes to 1.5% of current box-office sales.  So, piracy puts a little bit back, but nothing compared to what it takes away.

As with my post about the Singapore Study, I cannot comment with any authority on the methodologies use in this report.  My last math class was in the 11th grade, and I don’t know what this means:  X = ⎡⎣U C S+ S− I R ⎤⎦ʹ But the study’s conclusions do jibe with the common-sense assumption that black markets probably harm legitimate markets.

Phoenix Center Responds to Singapore Fair Use Study

In 2012, a report was published in the online journal LAWS entitled A Counterfactual Impact Analysis of Fair Use Policy on Copyright Related Industries in Singapore.  I know. Sounds like a real page-turner for the general reader, right? To be sure, most of us are not schooled in the arcana of statistical economic analysis, but suffice to say the report, written by Roya Ghafele and Benjamin Gibert, concluded (or at least implied) that expansion of the fair use doctrine in the Singapore Copyright Law in 2005 resulted in economic growth in what the researchers identified as the “copying technology industries” (e.g. disk drives, CDs, etc.) and with no detrimental impact to the copyright industries.  When the report was published, it was predictably seized upon by Mike Masnick as proof of one of Techdirt’s core tenets, namely that “less copyright is always economically beneficial”.

But an analysis published yesterday by George S. Ford, PhD at the Phoenix Center for Advanced Legal & Economic Public Policy Studies, has called the Singapore Study a work of “stunningly poor quality”. Citing numerous flaws in methodology, he insists that the report’s conclusions should not be considered instructive to copyright law in Singapore or anywhere else.  In fact, the reason I qualified the study’s conclusion in the previous paragraph is that apparently Ghafele and Gibert themselves do not claim to identify a causal relationship between Singapore’s revised fair use doctrine and an increase in sales in “copying devices”. Ford argues this flaw alone is sufficient to label the entire study as “worthless to policymakers”. Naturally, one must be careful about taking sides among economists, whose stock and trade is critiquing one another’s methods that the rest of us don’t really understand.  Nevertheless, Ford’s critiques ought to at least raise questions among us laymen when he says unequivocally …

“While evidence on fair use policies is welcome and critical to informed policy reform, Ghafele and Gibert’s empirical analysis is so poorly done that it fails to shed any light on copyright laws. Governments reviewing their copyright laws should dismiss the Singapore Study as junk science.”

Ford’s criticisms include Ghafele and Gibert’s failure to employ a proper control group, to account for differences in scale among the technology businesses aggregated into the study, and to exclude from their analysis catalytic factors other than changes to fair use—not the least of which were other 2005 amendments to Singapore’s Copyright Law. As stated, I cannot presume either to critique or defend the computations applied by Ford, but what I can comment on is this aspect of his conclusion:

“… the expanded fair use policy was incorrectly interpreted by consumers as a license to pirate and distribute intellectual property without consequence. Less than a decade after the new fair use policy was implemented, Singapore amended its copyright law to address widespread digital piracy.”

Indeed. Fair use has been so chronically misrepresented in the public dialogue that the principle has been broadly interpreted as the antithesis of copyright, which is simply incorrect. In fact, this issue points to one of the reasons I find the hypothesis of the Singapore Study a bit odd in the first place. An attempt to quantify the extent to which Singapore’s fair use revisions acted as a market catalyst at all seems to treat the doctrine as though it were a universal exception to copyright rather than a narrowly defined, case-by-case, limitation—one that is in fact expected to spawn some portion of new copyrightable works. For instance, if 100 fair uses are made and half are for new works that have their own copyrights, that’s 50 new copyrights supported by fair use doctrine. So, would that be a net win for copyright or for fair use?  The question is absurd because fair use is a part of copyright law. If fair use were indeed the opposite of copyright and without reasonable limitations, then it would simply nullify copyright, taking the concept of fair use with it across the event horizon into irrelevance.

More specifically, fair uses in Singapore, which they call fair dealing, are conditional just like they are in the US. The first four of five factors Singaporean courts consider in a fair dealing defense are modeled almost verbatim on the four factors applied in our courts. Like our Copyright Act, Singapore’s fair dealing statutes seek to define the specific conditions under which there are limitations on exclusive rights; and most encouragingly, those statutes appear to have the same intent to protect free speech, which was the original reason we codified fair use in the 1976 law. So, the decision to examine the effect of Singapore’s fair dealing doctrine on the market for devices and media used for data storage seems inscrutably haphazard.

After all, any number of factors may increase the sale of disk drives, recordable CDs and DVDs, etc., including rampant piracy itself, which is outright infringement and not a fair dealing.  More acutely, as Ford mentions, 95% of Singapore’s electronics production is exported. Singapore is a tiny market (pop. 5.5 million) whose economy includes a robust wholesale and retail sector shipping to foreign markets and catering to a very large volume of tourist/shoppers from the region. In other words, Australians traveling to Orchard Street to buy hard drives tells us nothing at all about Singapore’s fair dealing statutes in its copyright law. So, if Ford and other critics are right that the Singapore Study does not account for this, that is a considerable flaw in the research.

Additionally, an analysis in the sales of electronic hardware used for copying and storing digital media does not appear to address any of the questions being asked about fair use doctrine in the age of the Internet. If there is merit to that conversation, it would rationally involve—and in fact does involve—a discussion of platform-based uses like YouTube, blogs, or fanfic sites that encourage remix; or we may consider the casual sharing of content via social media; but this line of investigation would seem to consider fair use’s initial intent to protect free speech more than an inquiry into broader economic benefits. I am skeptical that new, platform-based uses—however common and ubiquitous they may be—provide a rationale for “expanding” our own doctrine; but at least these types of uses do represent changes in the nature of how works are used, which is not the case with regard to storage media.

Meanwhile, the general consumer in our market appears to be moving away from a paradigm of storing media at all, thanks to the convenience and low cost of streaming and the availability of cloud-based options in lieu of local devices. (Note the lack of disk drive in your new computer.) So, if sales of certain recordable media were to decline over the next five years, what would that tell us about our fair use doctrine, which has been law for 40 years?  Not much, I think.  It’s simply an odd metric to examine—a bit like measuring bottled water sales in order to determine how many Americans are going to the gym and then to draw conclusions about our overall cardio-vascular health.

While limitations on copyright’s exclusivity, including fair use, can produce market benefits, it is always necessary to seek a balance. As the market evolves, the contours of fair use may indeed shift, though the more those contours cease to define boundaries at all, the more the doctrine is stripped of its significance.  As such, neither professional nor amateur analysis should confuse the policy discussion by asking the wrong questions.