Category: Intellectual Property

State Sovereign Immunity and Copyright with Rick Allen & Kevin Madigan

You wouldn’t think that a state entity would have the right to seize your intellectual property any more than it would have the right to seize other forms of property without due process. But it can. In this podcast, I talk with filmmaker Rick Allen and copyright expert and advocate Kevin Madigan about the challenge that state sovereign immunity poses to creators of copyrightable works.

Rick Allen is the CEO of Nautilus Productions in North Carolina. He spent seventeen years documenting the research and recovery work done on Blackbeard’s flagship the Queen Anne’s Revenge, after it was discovered off the North Carolina coast in 1996. When the state made infringing uses of Allen’s material, he sued, and that case Allen v. Cooper went to the U.S. Supreme Court in 2020, which affirmed that immunity barred Allen’s claim.

Kevin Madigan is Vice President, Legal Policy and Copyright Counsel at the advocacy organization Copyright Alliance in Washington D.C. He was previously Deputy Director at the Center for the Protection of Intellectual Property (CPIP) at George Mason University’s Antonin Scalia Law School. 

Contents

  • 1:34 – Overview of state sovereign immunity.
  • 5:53 – Rick Allen background & eventual conflict with North Carolina.
  • 16:21 – Why Blackbeard’s Law & what about breach of contract?
  • 19:32 – Why SCOTUS took Allen v. Cooper & what did we get out of it?
  • 22:38 – SCOTUS seemed disappointed in its own opinion.
  • 26:45 – States own IP, but enjoy immunity from infringement.
  • 28:08 – Results of survey & is state infringement increasing?
  • 31:57 – Anecdotal observations about state infringement.
  • 35:02 – Aberration of justice to have to show mass infringement.
  • 38:37 – Can have a devastating effect on creators.
  • 39:55 – Are we increasing state actors’ awareness of their immunity?
  • 42:04 – State remedies do not really exist.
  • 50:20 – Allen’s takings claim.
  • 52:45 – Where do things stand?
  • 54:47 – Funny coincidences.
  • 56:30 – Understanding the impact on Allen and all creators.
  • 59:04 – Substantial investment in works.
  • 01:001:58 – Copyright doesn’t protect labor.
  • 01:03:13 – The myth that creators will create no matter what.

Google v. Oracle: A Troubling Use of Fair Use

Once the die was cast (i.e. after oral arguments) in Google v. Oracle, I don’t think I was alone in feeling that if the Supreme Court held that the computer code at issue in this case was not properly a subject of copyright protection, that would be an acceptably narrow decision, even though many might disagree with it as a statutory reading.1 On the other hand, I and others felt that if the Court held Google’s use of Oracle’s code to be a fair use, that would be potentially harmful to copyright law in general, and perhaps a disservice to many parties with an interest in this case—except of course to Google.

The argument against the copyrightability of the code at issue (a.k.a. declaring code or APIs), was founded on the merger doctrine, which holds that where an expression and its idea or function are inextricably bound together, the expression cannot be protected by copyright. Here, the majority opinion, written by Justice Breyer, declined to address that consideration, instead stating that “for the sake of argument,” the Court would assume the code is protected, and then it still delivered an opinion on the copyrightability question by couching it in a fair use analysis.

Although the Court did state that the decision is unique to software and does not “overturn or modify earlier cases involving fair use,” we must hope that summary can be reconciled with the part of the opinion which states, “The upshot, in our view, is that fair use can play an important role in determining the lawful scope of a computer program copyright, such as the copyright at issue here.” That is a troubling generalization, which forces the fair use doctrine (a case-by-case defense) to do what the Court otherwise could have done instead, which would have been to write an opinion limiting the statutory protection for the code at issue, and also limit its own finding. In that instance, fair use should not even be considered. Instead, the Breyer opinion asks fair use to do something it is not meant to do.

As a result, this outcome not only could disturb case law, but it also falls short of providing the market certainty many in the software business were seeking in the briefs filed on behalf of Google. For instance, the brief signed by 83 computer scientists stated, “Forcing companies that reimplement APIs to rely on fair use will not meaningfully address … anticompetitive effects. Though better than nothing, a fair use standard creates uncertainty because it depends on fact-intensive, case-by-case determinations which can result, as this case demonstrates, in lengthy and expensive litigation.”

So, rather than providing that hoped-for certainty, by either accepting or rejecting the merger argument, it is notable that the opinion instead asserts factor two (nature of the protected work) of the fair use test ahead of factor one (purpose and character of the use) in order to frame its conclusion with a lengthy discussion about what declaring code does and why the Court agrees it is distinguishable as an unprotectable type of code. The opinion states:  “It is inextricably bound to­gether with a general system, the division of computing tasks, that no one claims is a proper subject of copyright. It is inextricably bound up with the idea of organizing task into what we have called cabinets, drawers, and files, an idea that is also not copyrightable.”

That is extremely close to saying the code at issue fails for copyright protection under merger. So, why didn’t the Court just go ahead and make that finding rather than risk sowing added confusion by stuffing a pseudo copyrightability opinion into prong two of a fair use analysis? Because now, it is possible that a greater number of parties will be disserved by this outcome.

Perhaps what happens in the market should not weigh too heavily where the Court restricts its opinions to questions of law, but this opinion makes clear in its fourth factor analysis that it is terribly concerned about broad market effects. And its assumptions about the market, especially the implications beyond software, seem divorced from reason as a fair use consideration. The factor four opinion suggests the majority was unduly persuaded by the argument that Sun was unsuited as a developer to create a product like Android. “…evidence at trial demonstrated that, regardless of Android’s smartphone technology, Sun was poorly positioned to succeed in the mobile market.” That is potentially a market-devastating view, and here’s why:

First, if a party authors a work that some other entity is potentially better at exploiting, that is grounds for licensing the work, not appropriating it. Consequently, the Court’s failure to hold, in a more straightforward ruling, that the code copied was not protected fosters this more insidious interpretation of “market harm” in its fourth factor analysis.

Second, the biggest gorilla in the sandbox just got a bonus prize. After all, won’t a company like Google always have the resources and capabilities to build the next doodad faster and better than another entity? But in Google v. Oracle, to “level the playing field,” the Court just held that a startup which cannot compete with the Googles of the world, may not necessarily license its IP to the giants either, depending on how one interprets this fourth factor reasoning. Because let’s remember, Oracle ain’t exactly a startup.

Third, imagine we are looking beyond software, and this fourth factor opinion can be argued to mean that, for instance, the novelist who is “poorly positioned” to make a film adaptation of her book is subject to a similar finding in relation to a film studio appropriating her work. Granted, that’s a bit extreme, and she would, we hope, be protected by other considerations in the law. But I use the example to underscore how flawed this view of “market harm” is as a matter of principle.

All the ink spilled in this part of the opinion, lauding the value of smartphones, the quality of the Android system, etc. is an argument that only proves market harm to Oracle due to the failure by Google to obtain a license—and one that simply waves a hand at any implication of the derivative works right. “Given the costs and difficulties of producing alternative APIs with similar appeal to programmers,” the opinion states, “allowing enforcement here would make of the Sun Java API’s [sic] declaring code a lock limiting the future creativity of new programs.”

That language, which connotes a hostility to copyright in general, upends the law by failing to acknowledge that licensing works does not lock up works. We have over 200 years of evidence and jurisprudence to back up that general premise. But again, if this Court accepted the market rationale for this outcome, then it should have held the code at issue unprotectable rather than write a fourth factor “market harm” analysis that describes any rightsholder as “poorly positioned” to exploit a particular use of their works.

By transforming a copyrightability opinion into a fair use analysis, the Court seems to have fallen for the temptation to limit copyright’s protections based solely on works already developed, while failing to more expansively imagine works that may or may not be developed in the future. Aside from the potential damage done to other copyright subjects by this fair use holding (despite the Court’s caveat), the opinion does little for the next software venture, except to tell its principals that when a Google-scale behemoth appropriates some amount of their code, they may be about a decade’s worth of litigation away from finding out if there’s a remedy. And the number of new ventures that can afford that is zero.

  1. I wrote against the merger argument here and here.

Librarian Panel Advocates Naïve Changes to Copyright Law

In April 1787, as James Madison was limbering up his philosophical muscles ahead of the Constitutional Convention, Thomas Jefferson shipped him several crates from Paris filled with books comprising what one might call the Enlightenment in a Box. I mention this footnote of American history only to observe that every book Madison received—indeed every book that ever influenced an American Framer—is in the public domain, and, thanks to the digital age, more widely and affordably available than at any point in the history of Western civilization. Additionally, millions of works produced between 1789 and the Copyright Act of 1909 are likewise in the public domain and, if these have survived in some form, they are also likely available in various digital archives. And the list goes on.

Yet despite this extraordinary age of access—an era some would reasonably compare to the proliferation of the press—ignorance is in no short supply in the democratic world. Indeed, a highly creative form of ignorance—the conspiracy theory—seems to be galloping without rest along the “information superhighway,” and it remains to be seen whether Hell follows with its multitude of riders. All of which is to affirm what should be obvious even to a casual observer:  that more access to information is not the antidote to misinformation.

Nevertheless, on March 24, Public Knowledge hosted an online event that was ostensibly aimed at combatting both misinformation and injustice. And not at all surprising, the substance of the panel discussion alleged that the bugbear preventing the misinformed from becoming the informed is copyright law. Not so subtly titled Burying Information – Big Tech & Access to Information, one promotional tweet about the event read:

This powerhouse panel will discuss fighting #misinformation w/information through tools like #CDL, & how technologist (sic) can create inclusive, empowering tools to provide access to information for disadvantaged & marginalized communities.

The powerhouse included Brewster Kahle, founder of the Internet Archive; Michelle Wu, author of a concept called Controlled Digital Lending (CDL), Heather Joseph, Executive Director at SPARC;[1] and moderator Amanda Levandowski, professor at Georgetown Law Center.

The discussion led off with brief remarks by Senator Ron Wyden, who expressed his love for libraries, his belief that more good information is the cure for disinformation, and his view that copyright needs to change in order to provide equitable access for all Americans to the aforementioned good information. It was probably not a coincidence that the event was held on the one-year anniversary of the Internet Archive launching what it called the National Emergency Library (NEL), for which it is now being sued by four major publishers.

Controlled Digital Lending

CDL, the central topic of the conversation, is a legal theory (emphasis on theory) asserting that libraries should be allowed to scan the physical books they own and then loan digital copies, one consumer at a time, per each physical copy they have in their collections. So, if a library has four physical copies of a book, it can loan up to four at a time in any combination (e.g. four digital or one digital and three physical, and so on).

The two main rationales presented for CDL are, first, that digitizing a physical collection preserves the collection and makes it accessible in an emergency—Wu conceived the idea when the library where she worked was flooded—and second, at least according to the panel, the cost of licensing eBooks from publishers is too high and, therefore, makes poor use of libraries’ limited resources. The “publishers won’t sell eBooks, but will only license them,” the panel unanimously complains, and further asserted that the unreasonably high cost of licensing results in a reduction of diversity in material and limited access for the most vulnerable members of society.

If the preservation argument for digitizing a collection sounds reasonable, it is. And that’s why Section 108 of the copyright law already provides a carveout for libraries to digitize books for preservation purposes. So, if libraries are not doing this, it isn’t because the law prohibits it. Relatedly, digitizing books costs money, and to my knowledge, there is one major enterprise in the business of digitizing books for libraries. It’s called the Internet Archive. Just sayin’.

As for the argument that CDL is a necessary workaround to the publishers’ “extortionate” eBook licensing regimes, this complaint rings a little hollow, and I would love to see hard data to support that claim. I access a mid-size library system that loans eBooks and filmed entertainment though third-party licensing vendors, and the system itself does not appear to be failing or suffering more than the usual ups and downs experienced by libraries.

But more telling perhaps is that the overall tone of the panel conveyed a resentment toward licensing eBooks at any price. Indeed, the group was unanimous in describing the codification of CDL into law as a “first step” toward more substantial, and ongoing, amendment to copyright. Or if Brewster Kahle had his way, the abrogation of copyright altogether. He is an anti-copyright ideologue, who alleged during the event that the lawsuit publishers filed against the Internet Archive was an effort to kill the concept of CDL in the proverbial cradle, but he left out the fact that what triggered the litigation was IA’s decision to make 1.3 million books available without controls of any kind.

More importantly, as Michelle Wu proclaimed, encoding CDL into law should be considered a step toward amending §109 of the copyright act to encompass “digital first sale,” which happens to be a market-devastating proposal for a lot more than books (see posts here and here). Suffice to say that encompassing “digital first sale” into the copyright law—a proposal which has been rejected by Congress and the USCO after about twenty years of advocacy, by the way—would thrash the market for authors of creative works, who have already seen revenues dry up due to multiple effects of digital technologies and industry practices.

More Information is Not the Antidote to Misinformation

I too love libraries. I agree with Heather Joseph’s comment that everyone who appreciates what these institutions do has a love my librarian story. But I got the sense from some of the rhetoric in the discussion that librarians may be feeling a bit ignored (i.e. less relevant) in the digital age; and if that is correct, the focus on copyright and the major book publishers is a misguided response. Some statistics indicate that reading among Americans has been trending downward for years.[2] One source tells us that Millennials read more than any other generation, but both they and the Boomers substantially prefer print books to eBooks.[3] So, what does that tell us about the urgent need for CDL? I don’t know either, but the point is that it is not sufficient to allude to a “problem” without evidence when seeking a legislative “fix.”

Meanwhile, anyone who says that reading materials overall are too expensive (and therefore copyright must change) is simply ignoring evidence. The cost of new book buying is roughly on par with the cost of new book buying in previous decades. And access to eBooks, used books, and borrowed books is clearly greater than the pre-digital age. I will also give credit to Internet Archive and its sister organizations for making older works in the public domain accessible. 

So, a mutual love of libraries is where my agreement with this panel ends—especially with regard to the underlying thesis that the disinformation crisis now rampaging through democratic societies like a (well, a pandemic) can be cured with greater access to reading material. No, it cannot. Speaking as a lifelong liberal elitist, that assumption is liberal elitist hogwash that has been soundly rejected by evidence, and which, ironically enough, belies a failure by this panel and its constituents to allow evidence to influence their own biases.

We must acknowledge that the plague of toxic misinformation in the United States (e.g. QAnon, antivax, stop-the-steal, etc.) almost exclusively infects the privileged. The folks who believe and spread some of the most Republic-shattering nonsense are generally upper middle-class white people with plenty of access and way too much time on their hands. Many even have college degrees, but a lot of them are the people I see in my community—like the contractor, who makes considerably more money than the average book author, but he neither spends that money on reading material nor spends his time seeking “good” information.

We should be careful about implying that there is a correlation between susceptibility to disinformation and economic precarity, or other imbalances of justice. And Senator Wyden should really think twice about whether he endorses that view without data to support it. Because I think the empirical evidence suggests that privilege plus internet are the two main ingredients for producing some dangerously ignorant people. After all, it was not cash-strapped families who had the time and money to travel to D.C. on a Wednesday to engage in a little insurrection tourism.

So, I hope the powerhouse panel does not literally believe that the folks who assaulted police officers with flag poles and bear spray (and more broadly those who endorse that conduct) would feel different if only they had better access to Aristotle and Voltaire. Because, as noted, they do have access. We all have greater access to the entire Western canon than we have had at any time in history. Yet, this access does not appear to be mitigating “the rise of authoritarianism,” as Sen. Wyden noted in his introduction. An adage about horses and water comes to mind.

The implication that one must be wealthy to afford access to books—or that the wealthy necessarily read—is a false generalization. It also happens to distract attention from the more pressing problem that the most economically disadvantaged households do not generally own the electronic devices needed to tap into the bounty of digital material the panel thinks should be more accessible.[4]

Yet, Kahle insists we must fulfill the “original” dream of the internet to foster a “new Library of Alexandria,” and he denounces copyright as the obstacle to achieving that end. It’s a bittersweet reference to say the least. In case he and the panel haven’t noticed, a cold civil war in America has already lit the library (metaphorically) on fire. Competing realities is the new reality. And that ain’t copyright’s fault.

The implication that copyright makes society ill-informed is not only contradicted by a litany of counterfactuals, but pursuing a legislative agenda based on this premise would only make the misinformation problem worse. For one thing, despite the disciplined use of the word information by this panel, and other adherents to their views, the copyright revisions they advocate would affect all works, a vast majority of which are not informative per se.[5]

Informative works, mainly nonfiction books, are written by a number of authors who do not make substantial returns on their enormous investments of labor and skill. For every Chernow who breaks through, there are hundreds of authors writing detailed histories that, despite their significance—some even win Pulitzer Prizes—do not easily compete with thrillers, tell-alls, or even literary fiction. Divest these historians and biographers of their copyrights, and they will not write these books at all. You don’t need to burn a library; you can simply starve the authors of the incentive to publish.

Moreover, the librarians’ agenda to change copyright law is myopic, even to the extent that it betrays their unique role in the publishing/consumer ecosystem. They consistently fail to recognize that changes in the copyright statute apply to all categories of works and would be exploited by commercial interests that would not only harm creators, but could also degrade the relevance of libraries. “Digital first sale,” for example, would have made the business venture ReDigi a lot of money, creating an ersatz secondary market that would damage the primary market for music, but that kind of model would also limit or obviate the need for libraries to loan works.

If “digital first sale” were the law, libraries could spend their resources digitizing all the books they want and not hope to compete with a commercial venture that conducts P2P transactions in “used” eBooks. In that paradigm, publishers are harmed, authors are harmed, and libraries may be starved of revenue and/or constituents who need their services. There are many reasons why “digital first sale” has been consistently shot down over the years.

So, as I have proposed before, where librarians see new difficulties fulfilling their mission in the contemporary market, they should endeavor to be specific, and also account for factors that have nothing to do with copyright law. Library carveouts already exist in the statutes, and if adjustments to these exceptions can be proposed to serve a clear purpose for libraries alone, then let those arguments be made.

But in the meantime, the librarians (love them though I do) should resist the sweeping declarations that the fate of democracy (i.e. information) rests in their hands. In the futile effort to make more books available for people who won’t read them, let us not deprive the market of new books for those who will. And if Senator Wyden and his cohort are genuinely concerned about misinformation tearing apart democratic institutions, they can find much better projects than stripping American authors of their rights.

[1]  Scholarly Publishing and Academic Resources Coalition

[2] “On average, Americans aged 20 to 34 spend a mere 0.11 hours reading daily, which amounts to less than seven minutes per day.” https://www.statista.com/topics/3928/reading-habits-in-the-us/

[3] https://ebookfriendly.com/comparing-reading-habits-five-generations-infographic/

[4] “Roughly three-in-ten adults with household incomes below $30,000 a year (29%) don’t own a smartphone. More than four-in-ten don’t have home broadband services (44%) or a traditional computer (46%). And a majority of lower-income Americans are not tablet owners.” Pew Research Center.

[5] The libraries’ own data reveals that circulation of nonfiction works is roughly 46% nationally, and of that 82% are cookbooks. Library Research Service.