Maj Hadfield and Bowie’s Space Oddity. Cover tune? Original sound recording used? Did CSA look up the SOCAN tariff? bit.ly/19gsRll

— stephen zolf (@stephen_zolf) May 13, 2013

Even if outer space is a copyright-less jurisdiction, some of the production and dissemination of the video was done on Earth, so some may wonder whether Canada’s new s. 29.21, dealing with non-commercial user-generated content applies. Others may wonder whether the video would be considered fair dealing.

According to the CBC, the production of the video is much more than an exercise in awesomeness and geekery, and has a deeper purpose. “You want people to be interested in the space program. And in a democracy like Canada, if you want a program to continue, the best way … is to get people interested in it.” The goal, Evan says, has been to open eyes, not to give people answers, but to give them a chance to see and think for themselves with the information his father has been providing. ”If we can’t convince Canadians that what we’re doing in space is valuable, then the next time we have to vote for a budget or the next time we have to vote for a government agency, we won’t be voting positively towards space, and I think that’s an absolute shame because what we’re doing in space is so phenomenal.”

Is this fair dealing? I would think so.

Anyway, I hear that Canada now demands that the IP chapter of the currently negotiated TGP (Trans-Galactic Partnership) agreement will include the One Small Step test, arguing that this test, also known as fair use or fair dealing, is one giant leap for mankind.

“I am delighted to report that this week the University of Ottawa Press published The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law, an effort by many of Canada’s leading copyright scholars to begin the process of examining the long-term implications of the copyright pentalogy. The book is available for purchase and is also available as a free download under a Creative Commons licence. The book can be downloaded in its entirety or each of the 14 chapters can be downloaded individually. This is the first of a new collection from the UOP on law, technology and society (I am pleased to serve as the collection editor) that will be part of the UOP’s open access collection.”

And I am delighted to report that I’m the author of one of the chapters in this book. The title of my chapter is Fair Use 2.0: The Rebirth of Fair Dealing in Canada. My chapter, to paraphrase Michael Geist’s description in the Introduction, examines the legislative history of the fair dealing provision contained in the 1911 UK Copyright Act. I show that the provision was intended to be flexible, yet for more than a hundred years, courts treated the fair dealing principle in a narrow, restrictive manner. Katz characterizes the distinction between fair use and fair dealing as a “myth,” marshalling evidence culled from the historical record to make the case that the codification of fair dealing in 1911 was not designed to limit its application to the five (currently eight) enumerated purposes included in the statute. My account of the history of fair dealing suggests that the Court has not expanded fair dealing, but rather has aligned its treatment of the exception with the historical record. You can download my chapter from here (on SSRN), or from the book webpage.

There is a lot to read and digest in this book, and my only immediate comment at this point, consistent with the thesis of my chapter, is that instead of saying that the Court shook the foundations of Canadian copyright law, I would say that the Court shook some dust off those foundations and reinforced them.

Continued from Locke and I: Part 2

 

“[A]s all things that are good in this act, the Company of Stationers minding nothing in it but what makes for their monopoly.”

John Locke (1693)

When I called John Locke the following day he was much more cheerful than he was in our previous conversations.

“Good morning Ariel, I’m so glad you called back,” he said when he answered the phone. “Your explanations about Access Copyright’s latest moves allow me to start making sense of it. But you still have to explain to me what you meant when you said that Access Copyright isn’t a normal monopolist, and why it doesn’t behave like one.”

“Fair enough,” I said. “When I say ‘a normal monopolist’ I mean a productive monopolist, namely a monopolist who sells goods or services that consumers actually find valuable. The monopolist’s product may be overpriced, and thus beyond the reach of some consumers, but it is still valuable. The profit that this monopolist earns may include a supra-competitive rent, but it is still derived from the value of its product. However, no matter how secure its market dominance is, a normal monopolist cannot force consumers to buy a product that they don’t need, or force them to pay a price that exceeds the value that they derive from the product. Consumers facing a normal monopolist always have the option of doing without, or seeking second-best alternatives.

This implies that a normal monopolist cannot simply increase its profit by constantly raising the price. Beyond a certain point more and more consumers will opt-out and do without, and new competitors might even find entry to the market more attractive. Therefore, a normal monopolist who is interested in increasing its profit beyond the current level can do one of three things: it can improve the efficiency of its production process, it can improve its product and increase consumers’ willingness to pay for it, or it can invest in rent-seeking to reduce competition and prevent entry. However, it cannot constantly do all of these simultaneously. The more resources the monopolist spends on rent-seeking the fewer resources it can spend on maintaining or improving its productive activity, and vice versa. In other words, for a productive monopolist, rent-seeking entails an increasing opportunity cost.”

“Which means that a productive monopolist will not maximize its rent-seeking efforts to their fullest extent,” Locke said, completing the explanation.

“Exactly,” I said.

“A-ha, but Access Copyright will, because it isn’t a productive monopolist, so it doesn’t face the same opportunity cost and therefore has much less to lose,” he continued.

“Correct,” I confirmed.

“But wait, why are you saying that Access Copyright is not productive? After all, it does represent authors and publishers, who are, by definition, productive and creative.”

“Good question, John,” I complemented him (enjoying the opportunity to treat the great philosopher like a student). “It’s true that Access Copyright represents some creators, but as an organization it is not productive at all.  Unlike its author members, it has never produced anything creative of its own.”

“You mean anything except that ‘Captain Copyright’ propaganda” Locke said sarcastically.

“We’ll give them that one,” I conceded. “And we can add some of its media releases that belong to the fiction genre, but that’s all.”

“And unlike its publisher members it does not produce any added value to works of authorship. It does not perform any content selection and quality control functions, it does not arrange peer-review of works or edits them. It does not even distribute works or print them, or provide user-friendly services for accessing them,” he continued.

“Yes,” I replied. “There might have been a time when it had been able to offer licenses—when ones are needed—more efficiently than its individual members could. But if those days ever existed, now they are clearly gone. When licenses are needed, most of its members offer them quite effectively, and probably more effectively than Access Copyright can and ever will.”

“You see,” I continued, “Access Copyright may talk highly about literature and the arts, and it may even genuinely believe that it promotes them, but as an organization, Access Copyright has become nothing but a fancy rent-seeking and rent-collection shop. This is the only thing it knows how to do, and this is the only function that it is coded to perform. Its sole mission has shrunk to collecting rents from the productive activities of others, and pursue legal rules that would enable it to collect higher rents more easily. For Access Copyright, as I wrote, ‘any market failure, whether real or perceived, presents a business opportunity in the form of a new area of activity that they will be prepared to collect money for. Consequently, they view any reform that would facilitate transactions in a competitive market as a lost opportunity to collectively license this activity, and any proposal to exempt some activities that they are happy to license as an existential threat.’ For Access Copyright, fair dealing is anathema.”

“This reminds me of that line in my Memorandum: ‘as all things that are good in this act, the Company of Stationers minding nothing in it but what makes for their monopoly.’”

“More or less so, yes.”

“So, basically, what you’re telling me,” Locke continued “is that the economic rationale behind Access Copyright’s business model is similar to that of a legalized protection racket. It doesn’t use violence to extort protection, but it uses litigation, misinformation, intimidation, and lobbying to promote rules that create legal risks for its clients, and then charges them money to remove them.”

“Basically, yes” I replied, “’Legalized Protection Racket’—that’s a very lucid way of putting it… One thing is sure, John, you’ve never minced your words.”

“No. I never have,” he said and gave a roaring laugh. His spirit has gotten even much better compared to our previous conversations.

***

We continued talking for a while and agreed that it would have been good if Access Copyright could change and offer some good solutions to problems other than those of its own making, but we were skeptical about its ability to do that. Nonetheless, we also agreed that even though Access Copyright is not coded to transform itself, it is still run by humans, and humans, despite their frailties, their stubbornness and shortsightedness, also possess a remarkable power to adapt.

“So what do you think, is there any hope that eventually they will change?” Locke pondered. “I just looked at their recent Annual Report, and it looks promising. It says that it ‘began a process for renewal for the coming 12 months.’ That ‘at the core of that renewal is the recognition that [they] must better serve the interests of those who use the content licensed by Access Copyright.’ They say that ‘the year ahead will be spent imagining how we can open ourselves to opportunities to serve our creators, publishers and users; and to striking a mandate that is in line with the values of the very people and organizations that we provide licences to—libraries, schools, colleges, universities, businesses and government.’ They even mention that they had set aside $8.8 million dollars for that purpose.”

“I wouldn’t be too optimistic about that. You have to read carefully, John. They say that ‘these funds will be set aside to accomplish three objectives: the positioning and strengthening of the organization for the future; the building and developing of new services and offerings for the education sector; and finally, digesting and dealing with the uncertainty created by Bill C-11 and the addition of education as a fair dealing exception under the Copyright Act.’ If we translate this corporate lingo into English, the first and third purposes mean a promise to invest in more rent-seeking through litigation and lobbying, while only the second purpose is a promise to invest in productive activities. But recall, the more they spend on rent-seeking the less they can invest in productive activities.

Unfortunately, John, these statements too belong to the literary genre of fiction. Instead of looking at its statements, I would rather look at its actions (or what economists call ‘revealed preferences’). Access Copyright may say that it wants to invest in imaging a productive future, but its most recent actions reveal that the span of its imagination is rather narrow, ranging between new Copyright Board applications and a new lawsuit.

Don’t get me wrong, I believe that Roanie Levy and her staff truly want to imagine a new future for the organization, but I’m afraid that the weakness of the organization has overwhelmed the strengths of the individuals who run it. They may have realized that Access Copyright may not be able to transform itself and become productive. They probably understood that other than those of their own making, there aren’t any real problems that the organization can solve. Therefore, they recognized that the only thing that was left for it to do—actions of last resort as it describes them—is to create more problems and ratchet up its rent-seeking activities. Access Copyright will continue to spend every penny of its dwindling rents in a futile attempt to maintain them. It has nothing to lose from attempting that, because it does not know what else to do, and because it is losing anyway.”

“But is there any merit in their allegations?” Locke asked cautiously.

“Not really” I replied. “The merit of its legal case is as shaky as the foundations of its business model. But they will pursue it because they have nothing to lose. Again, normal monopolists cannot impose themselves on consumers and force them to pay a price that exceeds the value of their product, but in its lawsuit against York University, Access Copyright will try to convince the court that its tariff is mandatory, and that York must pay it. Essentially, their theory is that it is entitled to collect an ‘education tax’. I doubt that any court will endorse this theory, but trying is all that’s left for Access Copyright”.

“So I shouldn’t be worrying about the lawsuit against York University?” Locke asked with relief.

“You should still worry. It’s a case that can be won elegantly and easily, but it may also be lost miserably. Especially if York University takes the same hesitant positions on very important questions that the AUCC, the ACCC, or CMEC have taken in litigation to date.”

“Nay, Ariel. I’m not worried, and you shouldn’t worry either, my young friend” Locke shrugged off the concern. “Even if that happens and Access Copyright gains some temporary victories, eventually it will lose. I’m certain about that.”

“What makes you so certain about that?” I wondered.

“Trust the old man,” he said. “It will lose because like its London predecessors it is a lazy, ignorant, Company of Stationers, to say no worse of them.”

***

Both of us fell quiet for a few seconds, each trying to make sense of all that was said, of all that is happening, and all that might occur.  Then I took a deep breath and asked John if I could ask him a personal question.

“I know not why a man should not have liberty to speak whatever he would think,” John replied. “And I know not why whom he has spoken to should not have the liberty of gagging himself if he so desires. Ask and I may answer.”

I tried choosing my words carefully, hoping to maneuver the potential minefield: “You see, John, there’s a sort of confusion about your life. That is, umm–how to say it–something isn’t entirely clear about your biography. I mean, all the references mention that you were born in 1632.”

“Yes, that is correct” Locke confirmed.

“And died in 1704.”

“That is equally true as far as I can tell”.

“So,” I hesitated. “So, if that is correct, you should have been gone three hundred years ago; then how come you’re still around?”

“There’s a very simple answer,“ Locke laughed. “It’s the Stationers’ monopoly; how come they’re still around?”

Locke and I: Part 2

Continued from Locke and I: Part 1

[T]he Company of Stationers have obtained from the Crown a patent to print all, or at least the greatest part, of the classic authors, upon pretence, as I hear, that they should be well and truly printed. …

but by this act scholars are subjected to the power of these dull wretches, … unless they pay them 6s. 8d. a book for that leave.

John Locke (1693)

Locke did not wait until the next day. A couple of hours after our previous conversation–I was still in my office–he called back. “Ariel, I’m glad you’re still there. I can’t write a treatise today; too pissed about the whole Access Copyright situation, and I need to make sense of all of this. Can you remind me what was the last thing we were talking about?”

“We were talking about monopolies who refuse to go away, even when they are defeated,” I said.

“Oh, yes. And I asked you to tell me how come these Toronto Stationers are still around. Tell me, please,” he demanded.

“You see, John” I continued, “monopolies aren’t very good in voluntary self-dismantling, but at the same time many of them do not excel in adapting to a changing environment either. Fortunately, we aren’t doomed to endure perpetual obsolete monopolies because often those monopolists who cannot adapt are swept aside by the perennial gale of creative destruction.”

“Schumpeter, eh?”

“Guilty as charged,” I confessed. “But unfortunately, there are some monopolists, especially those who believe that they can rely on the law to perpetuate their dominance, that will refuse to die gracefully. Even when any objective observer understands that their time is up, they will defend their ability to collect rents as if it were the most natural and sacred entitlement. So accustomed to setting the rules that their eyes are blind to the landscape that had changed. So inured they are to possessing unquestioned authority, that their ears are deaf to those who advise them to step down with dignity.”

“Qui habentes oculos non videtis et aures et non auditis,” Locke said.

“Sorry, John. I’m not that strong in Latin. Can’t follow.”

“But you do speak Hebrew. Do you? Check the source, it’s Jeremiah 5:21. Sorry for the interruption. Please continue”.

“OK,” I continued. “Those obsolete monopolies, the more irrelevant they become, the more fervently they fight back: sometimes with enviable sophistication and sometimes with terrorizing vengeance. But as it happens, eventually a moment arrives when all they can do is fight back with pathetic desperation. Inflicting unnecessary pain on themselves and on their surrounding, they endure slow and agonizing demise. Apparently, that’s the stage where Access Copyright is at.”

“Well, this is understandable,” Locke softened. “After all, monopolies are run by humans and suffer from all human frailties”.

“Yes,” I said. “Understandable, but still regrettable.”

* * *

“Let me tell you an interesting story,” I continued.

“Why not, go ahead”.

“Earlier this year I was invited to speak to a group of students at UofT’s Rotman School of Business. These students participated in a ‘consulting workshop’ and their task was to help Access Copyright reimagine its future.”

Locke started laughing. “Are you telling me that Access Copyright invited you to help them reimagine its future? Of all people? I thought they called you ‘an anti-copyright ideologue, with the long-term vision of a mole’ or something like that. So they wanted to listen to the mole, eh? That is interesting, I must admit.”

“Yes, the ‘mole’ title comes from one of Access Copyright’s Board members. But obviously he wasn’t the one who invited me. The person who invited me to speak is Roanie Levy, their former General Counsel who is currently their new CEO.”

“Oh, I see. It sounds like they do have some clever people there after all, if she wanted to listen to you,” Locke said.

“Yes, they do have clever people; Access Copyright’s problem is its nonsensical mission. Anyway,” I continued, “I think that Roanie Levy realized that Access Copyright clearly needed help. The organization had been badly defeated at the Supreme Court and in Parliament last year. Many universities abandoned it, most colleges did, and when the school boards announced that they would opt out too, its future seemed bleak indeed. Within a few months, its revenue had been slashed by more than a half. Tens of millions of dollars that hitherto seemed like the most secure stream of income disappeared overnight. It seemed pretty obvious that its old way of doing things isn’t going to work anymore, and that if it wanted to survive, Access Copyright would have to find a way to offer educators something that is worth paying for.”

“As I once said,” Locke interjected, “nothing like the sight of the gallows to focus one’s mind.”

I suspected that this had not actually been a Locke quote, so I hesitantly asked: “Are you the one who said that? I thought it was Samuel Johnson.”

“Samuel Johnson, you say? Maybe you’re right, I suppose it was that young lad who said that. Never mind. But I’m sure I could have said that even better.”

“Of course you could,” I assured him. “Of course you could”.

“So, Access Copyright asked you to contribute to its effort to envisage its future. What made you think you could help them? Did you think they could actually offer educators something that’s worth paying for?”

“I was asking myself the same question. But then I thought that even if I could not see anything that they might offer, if I could help them find it, it might be worth a try.”

“Good for you,” Locke said. “So what did you actually tell them?”

“My talk focused on the legal, economic, and ethical assumptions that led to the creation of Access Copyright, and on how each of those assumptions had proven to be false. I explained why the educators who initially endorsed it decided to abandon it.

Basically, I noted that the relationships between educators and Access Copyright were rooted in the assumption that most uses of copyrighted materials by universities require permission, and that fair dealing doesn’t really apply in this setting. Some educators also believed that using works without permission or payment, even when permission or payment isn’t legally required, is still ethically flawed somehow.

It was also assumed that serious market failure would prevent educators from obtaining the necessary permissions in a competitive market, that using the works without permission exposes educators to enormous potential liability, and that Access Copyright actually has the power to grant all the necessary permissions, and that the illegal indemnity scheme that it offered was nonetheless valid. And finally, it was naively assumed that giving a monopolist control over the core academic activities would not be a problem because the Copyright Board would make sure that Access Copyright does not misbehave.”

John giggled. “O Canadians, how naïve and polite you are. Could you please remind me for how long you have been eating this undiluted hogwash? Pardon my language.”

Locke’s condescending tone annoyed me, so I fired back: “We have been swallowing this nonsense for too long, that’s true. But luckily most of us don’t take it anymore. On the other hand, you sophisticated Brits still swallow this collective administration myth with gusto. Your Parliament has just granted your new Stationers even greater powers, creating a so-called ‘extended collective licensing’ that empowers them to collect money for the use of works that they clearly don’t own. As I wrote in my recent article, extended collective licensing is as good a solution to the orphan works problem as the sale of indulgences by the Catholic Church was for the problem of sin. But it seems that with the exception of overly-anxious photographers who oppose this reform for the wrong reasons, everyone else on your island is quite happy about it.  So give me a break, John. While Canada is embracing the 21^st century, you Brits have just circled back to the 17^th.”

“You’re absolutely right, Ariel, and I sincerely apologize. I forgot about the embarrassment of this ‘extended collective licensing’. It is a concept that sounds progressive and enlightened, but the notion of entrusting state-sanctioned monopolies as the gatekeepers of knowledge is as regressive in the digital age as it was in the age of print. And the idea that some copyright owners will be able to sell an indulgence and collect money for the use of works that they clearly don’t own it utterly ridiculous. As I wrote in the Memorandum, ‘it is very absurd and ridiculous that any one now living should pretend to have a propriety in, or a power to dispose of the propriety of any copy or writings of authors who lived before printing was known or used in Europe.’ It was true for print, as it is true for digital. England has indeed circled back to the 17^th century.”

“Which makes me wonder, Ariel, what actually happened in Canada? How did your educators change their minds and stopped believing in that rubbish?”

“It has been a long process, John, and we can talk about it another time. But basically, by the end of 2012 the falsity of the assumptions underlying the Access Copyright model had become evident to everyone but a handful of hardcore Access Copyright apologists. Eventually, even Access Copyright’s most loyal customers deserted it, and for good reason.”

“Bloody good reasons indeed,” said Locke. “So what else did you tell those students, was that all?”

“No. I finished my talk with a trivial observation,” I continued. “I noted that normally a producer whose product is becoming obsolete faces two alternatives: it can try improving the product, or, if it can’t to do that, it can, at least, lower its price.”

“I suppose that you emphasized the word ‘normally’, to underscore the fact that Access Copyright isn’t a normal producer,” Locke observed.

“That’s correct,” I said. “Access Copyright isn’t a normal producer and therefore has not reacted like one. Instead, it raised the price, made its product even less attractive, and threatened legal action against those who would not buy it.”

“Obviously,” Locke said, “Access Copyright reacted the way it did because it’s not a normal monopolist but, as I said, a lazy and ignorant one”.

“Actually, it’s not quite that obvious,” I said.

“Not quite that obvious, you say? Do explain then,” Locke insisted.

“Explain I will”, said I. “But you’ll have to wait for another time. I must finish grading some exams today. Will call you tomorrow.”

* * *

Continue to Part 3.

 

“By this act England loses in general, scholars in particular are grounded, and nobody gets, but a lazy, ignorant Company of Stationers, to say no worse of them.”

John Locke (1693)

A few days ago my phone rang. John Locke was on the line. Yes, the John Locke. The philosopher. John and I call each other once in a while. We usually talk about our current work, we discuss some politics (he likes to talk about the Queen, I talk about the Middle East), and we almost always end up talking about copyright issues, culminating in him asking if he had ever told me how upset he was with how his views on copyright have been so misunderstood.

“The so called ‘Lockean’ maximalist view of copyright isn’t Lockean at all,” he’d say. “Did I ever mention that?”

“You did, John. More than once, actually” I’d tease him, to which he’d reply:

“Well, I must admit that I’m not getting any younger.”

And I’d say: “That’s fine, I’m always happy to hear that again. It’s reassuring.” And then, as part of the ritual, we’d laugh.

But this time Locke seemed agitated. His voice betrayed that he was more upset than usual.

“What’s up, John. Is everything all right?” I asked. “You seem a bit grumpy today. Are you upset about the lawsuit that Access Copyright filed against York University recently?”

“Am I upset? Oh, no,” he sneered. “I’m not upset, at all. I’m furious. How could I not be upset?”  he continued with mounting anger. ”Access Copyright is just like its predecessor, the Stationers’ Company of London. It is as lazy and ignorant as its forefathers were, and like them, it is minding nothing but what makes for their monopoly” he growled.  “These Stationers won’t go away, will they? And it’s not only York University. They’re also trying to impose themselves on educators in the United States, and India, as if all of you were still their colonies. But at least so far I’ve had some comfort in you Canadians. I thought that you had already gotten your act together and would not let those mercenaries fool you anymore.”

“Don’t worry too much” I tried to calm him down. “The new Stationers are still here, but not for long. Let’s put things in perspective. Have you forgotten how long it took to defeat your Stationers back in the 1690s? Have you forgotten that whenever you thought they’d finally gone they would reappear? These Stationers are a stubborn bunch, but this time we will defeat them much more quickly,” I told him. “I promise”.

“But I thought you had defeated them already, hadn’t you? Didn’t they lose that Supreme Court case, weren’t they beaten in Parliament? Didn’t you send me this link where Geist said that their business model had been eviscerated? I thought that Geist, and you, and Knopf, and Trosow were much more convincing than Access Copyright’s apologists. But now they’re on the offensive. I am confused, Ariel. And worried, too. Please tell me what’s going on.”

“I’ll tell to you what’s going on, John. And then I’ll also write it down and post it on my blog”.

“Fair enough,” he replied. “And I’ll tweet it once it’s posted.”

“Of course, but before I start, why don’t I provide my readers some background on your involvement in those matters, and meanwhile maybe you can write another Treatise or two.”

“OK,” Locke softened. “That would be lovely. Please go and tell your readers about London’s swinging 1690s, tell them about my Memorandum, and how I fought the Stationers back then. I’ll call you back tomorrow.”

* * *

In 1695, the Licensing Act, the controversial statute that had the dual goal of instituting censorship and giving the London Company of Stationers exclusive control over publishing in Britain, was about to expire, and fierce debates raged concerning its renewal. John Locke had been one of the staunch critics of the Stationers’ Company, and a pivotal figure in the struggle to end its monopoly.

In a Memorandum against the renewal of the Act Locke detailed the harms of the Stationers’ monopoly and how it had hindered scholarship and learning. “By this act” he warned, “England loses in general, scholars in particular are ground, and nobody gets, but a lazy, ignorant Company of Stationers, to say no worse of them”.

Locke’s arguments played an important role in the Parliamentary debates, and eventually Parliament declined to renew Licensing Act. For the next fourteen years, the Stationers (except those holding Royal printing patents over specific books) had no legal basis for claiming any exclusive rights.  As Adrian Jones writes, “Suddenly the book trade found itself in a situation in which infringers or registered copies would face no legal sanction whatsoever. And at the same time it became legal to print and publish without being a member of the company at all. Internal regulations [of the Stationers’ Company] might have sufficed to keep booksellers and printers in line in the past, but now, in the speculative and entrepreneurial environment of 1690s London, it was never likely to prove sufficient.”

Soon the Stationers began lobbying for a revival of the old licensing regime, but the political atmosphere was no longer hospitable to their claims for monopoly, and Parliament had no appetite for reinstating censorship. Instead, the Stationers adopted new vocabulary, invoking (or inventing) the concept of natural property rights of authors, and demanding an act of Parliament to protect them. The Stationers’ campaign was only partly successful and out of that turmoil a new regime emerged. Copyright law was born. When Parliament enacted the Statute of Anne, the first copyright act, it restored some elements of the old regime but also made sure to include in it some measures designed to prevent the London Stationers’ from regaining and maintaining their monopoly. The Statute of Anne was fully successful in that, and it took additional rounds of litigation and legislation until their monopoly was broken down.

* * *

Continue to Part 2

Update: Locke just joined twitter, and as he promised, twitted this post:

New post from @relkatz quoting me: A Lazy, Ignorant Company of Stationers, To Say No Worse of Them wp.me/p36sYO-nb

— John Locke (@thejohnlocke1) May 1, 2013

Here’s the symposium issue webpage. The title of my paper is The Orphans, the Market, and the Copyright Dogma: A Modest Solution for a Grand Problem, and it can be downloaded from here. Here’s the abstract:

This article proposes a modest common law solution to the orphan works problem: works that are still under copyright but whose owners cannot be easily located. Most discussions on the orphan works problem focus on the demand side: on users’ inability to locate owners. However, looking also at the supply side reveals that the problem of orphan works arises not only because users find it prohibitively costly to locate owners, but also because under a strict permission-first rule copyright owners, who do not internalize the full social cost of forgone uses, face suboptimal incentives to maintain themselves locatable. However, in many cases copyright owners are usually the least-cost avoiders of the orphan works problem, and like in many other areas of law, should be encouraged to take steps to reduce the extent of the problem. Building on this insight, the article shows how considering the locatability of the owner of an infringed work at the remedy stage and tweaking the appropriate remedy will encourage owners to remain locatable, and why this solution is preferable to other proposed solutions. The article also discusses the tendency to treat the requirement to seek permission before using as a dogma, and why this dogmatic view of copyright impedes simple and efficient solutions and leads to adoption of grand solutions that are ineffective at best and harmful at worst.

“For centuries, scholars and educators have excerpted the works of their colleagues, transforming them from individual, static monographs into dynamic pedagogical and intellectual tools for classroom learning. Such transformations reside at the heart of fair use, a core copyright law doctrine established to protect socially beneficial uses of works that increase public access and promote the progress of human understanding.”

This is the opening statement of an Amicus Brief on behalf of academic authors and legal scholars in support of the defendants in the copyright case against Georgia State University. I am proud to be one of the signatories and also proud to report that the brief includes a reference to a post from this blog.

Read the full document here or below.

Arguing for the motion were Sheldon Burshtein, a partner at Blake, Cassels & Graydon LLP, and  Mark Fleming, Director, Federal Affairs and Health Policy, Janssen Inc. Canada. Sam Trosow and I were invited to argue against it. And we did.

Before our debate began, the organizers distributed clickers and asked the audience to vote on the motion. 33% voted for it; 66% voted against. The audience was asked to vote against after the debate, but you’ll have to scroll down to see the results.

Here is my argument against the motion:

Ladies and Gentlemen,

My esteemed colleagues brought forward a motion to strengthen intellectual property protection in Canada. Doing so, they promise, would stimulate innovation. We will not only have one BlackBerrys; we will have Apples too. And Googles. And maybe we will even find a cure for cancer too. And Canadians will have better high-paying jobs. That’s wonderful, isn’t it? But what is the basis for those assertions?

65 years ago the US Congress asked the prominent economist Fritz Machlup to study the patent system. In his report, he wrote the following:

If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge … to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it.

65 years later, we know a little more, but making conclusive recommendations either way is still difficult. But our job today is easier. We do have IP laws, so we don’t have to decide whether to create them from scratch; and nobody is currently proposing to abolish them. Today’s motion is to strengthen them, but what is the evidence that this is necessary or desirable?

We have heard arguments such as those made by my colleagues for the last 300 years, and for the most part we have always listened and obeyed. We do have patent laws, and copyrights, and trademarks laws. And all of these IP rights have expanded in term, and scope, and breadth, and reach. Not only in Canada, but globally. IP rights today have never been stronger. And still, my colleagues aren’t satisfied. Will they ever be satisfied? Will they ever come and say: That’s enough; our IP laws are fine. We don’t need stronger protection?”

Let me suggest that maybe the reason why we don’t have many more BlackBerrys, and that even globally, innovation seems to be sluggish, is NOT that we don’t have enough IP protection, but that we have too much of it.

Indeed, back in 1841, in a similar debate before the House of Commons in London, Lord Macaulay famously remarked that “copyright is a tax on readers for the purpose of giving a bounty to writers.” We all understand that sometimes innovators, or at least those who are asked to finance them, need a bounty, and we all agree to pay the tax of exclusive rights happily to create this bounty. But should we constantly increase it?

Now, you may ask, why shouldn’t we increase the bounty? What’s really wrong with strengthening IP protection? Can it do any harm?

Well, increasing the bounty can actually be harmful. IP protection is like red wine. With moderation, protecting IP can be healthy for innovation; excessive IP protection can kill it.

When my colleagues propose to strengthen IP protection,

• they propose is to give some firms greater power to prevent competition;
• they suggest that more ideas are blocked from others for longer times;
• they mean that some firms will be able to block the innovations of others;
• they propose that we enclose more and more knowledge and let some firms collect tolls for using it.

This is not a recipe for innovation. This is a sure prescription for stifling it.

Civilization is an open-source project. Humankind flourishes when ideas are free for all to use. Innovation happens when the best ideas can be used by the most brilliant people with as little restraints as possible. All learning starts with copying; improving begins with imitating. Stronger IP make all of it more difficult.

Strengthening IP protection means that, as Mark Lemely put it, we adopt a “Mother, may I?” regulatory regime for innovation. The more we strengthen IP protection, the more we rely on rules created by the government, and the greater is the power that we give private firms to be the gate-keepers of innovation. It means that the government and single actors can determine to course of innovation, instead of true innovators, the market, and the public.

True, sometimes the market may fail in generating sufficient incentives to innovate, so sometimes we need to intervene. But when we choose to intervene we have to do that extremely carefully and with the utmost moderation and humility.

We complain that Canadians firms have been too sluggish on innovation. It’s time that we begin realizing that stronger IP may not be the remedy, but actually the cause of our disease. For too long our focus on strengthening IP protection has led us to forget that the best stimulant of innovation is competition. We have overlooked the fact that like the sight of the gallows that focuses one’s mind, fierce competition is the best stimulant for innovation. If you don’t believe me, ask BlackBerry about its Z10.

For too long we have focused on strengthening IP. Maybe it’s time we start focusing on something new. Maybe it’s time we start:

• focusing on having stronger and more effective competition laws than the ones we have in Canada;
• focusing on removing many visible and invisible barriers to competition;
• reforming our IP laws and remove the instances that they actually choke innovation;

And when we think about those issues we should always be mindful of a very sad but simple truth: true innovators don’t have lobbyists. They don’t have the time, the money, or the energy for that. So when legacy industries complain that they need stronger protection we should be highly skeptical.

Very rarely is protectionism—whatever form it takes—a good recipe for innovation. Therefore, the burden of proof should be on those who seek stronger protection. It’s a very heavy burden to carry, and I’m afraid that those who support this motion have failed lifting it.

* * *

At the end of the debate the audience was asked to vote again. The results were 26% for, 74% against. Motion denied (but shh!… don’t tell the USTR that this is how the Canadian audience voted).

Earlier last month, however, the DOJ asked the Eleventh Circuit Court of Appeals for a 21-day extension to consider whether to intervene in the appeal filed by three academic publishers who lost most of their copyright case against Georgia Statue University. The DOJ requested the extension to consider whether to file any amicus brief in support of appellants, or in support of neither party. If the DOJ actually decides to support the publishers in the GSU case it will quite unfortunate. The same DOJ that was swift in ensuring healthy competition in trade books will be giving its blessing to a less obvious but equally harmful collective action by academic publishers to lessen competition and raise the prices of scholarly works.

Some background. In April 2008, three publishers, Cambridge University Press, SAGE Publications, and Oxford University Press, filed a copyright infringement lawsuit against Georgia State University, alleging that GSU infringed their copyrights by allowing professors to upload excerpts from books onto the university’s electronic reserve system (ERes). The complaint alleged “systematic, widespread, and unauthorized copying and distribution of a vast amount of copyrighted works”, and argued that GSU “has facilitated, enabled, encouraged, and induced Georgia State professors to upload and post to these systems – and Georgia State students simultaneously to download, view, print, copy, and distribute – many, if not all, of the assigned readings for a particular course without limitation.” Unless GSU’s “infringing digital distribution practices are enjoined”, the complaint asserted, “Plaintiffs, authors, and the publishing community at large will continue to face a certain, substantial, and continuing threat of loss of revenue, which will in turn threaten Plaintiffs’ incentive to continue supporting and publishing the cutting-edge scholarship upon which the academic enterprise depends.” Last May, the court rejected the vast majority of the plaintiff’s allegations. In a 350 pages decision, Judge Evans dismissed 94 out of the 99 claims of copyright infringement. Of the initial 99 claims, only 75 reached the final stages of the trial. Some of the claims were dismissed on the grounds of de minimis copying, others on the ground that plaintiffs could not demonstrate that they were the owners, while the rest were found to be fair use. Infringement was found in only 5 cases. Significantly, Judge Evans held that when licenses for excerpts of works are easily accessible, reasonably priced, and that they offer excerpts in a format which is reasonably convenient for users, loss of licensing revenues resulting from unauthorized copying would cut against fair use.

Practically, Judge Evans told them: “Go ahead, develop convenient licensing schemes, and if you do, it will be hard for teachers to argue that they can copy without paying you”. In a normal industry this should have made the publishers quite satisfied. But the publishers aren’t happy, because the case was not really about those 99 works or about any significant harm that they have suffered. The purpose of the lawsuit, and of the publishers’ argument in their appeal, is to craft copyright law in such a way that would effectively force universities to purchase licenses from the Copyright Clearance Center (CCC), a collective of copyright owners who has orchestrated the litigation and funds half its cost. The GSU case looks like an ordinary copyright infringement case, but only superficially. Its true goal is to facilitate collusion among academic publishers via the CCC.

CCC was founded on the assumption that there might be situations in which users such as universities would need permission to photocopy academic articles or excerpts from books, and that in such situations it would be prohibitively costly for them to seek permission from the publisher. The idea was to create a collecting society, an uber-intermediary, that would provide licenses, similar to those that Performing Rights Organizations (PROs) like ASCAP or BMI provide for publicly performing music.

But if the (questionable) logic supporting tolerating PROs ever applied to photocopying, it does not apply to digital copying of scholarly work in 2013, and certainly not to major publishers such as the three plaintiffs. As major academic publishers, significant parts of the plaintiffs’ catalogues are available in digital form and licensed to universities. These catalogs include not only journals, but increasingly books too, and not only new books, but older ones as well. The availability of all this content in digital form is extremely useful for teachers, students, and researchers, and universities are willing to pay a lot for this convenience. Thus, with the move to digital content, universities began demanding not only “access” to content but also the copyright permissions to make this content useful (e.g., by printing it, photocopying it, scanning it, posting it on course management systems, etc.). After some hesitation, publishers began realizing that if they bundle licensing access to their content with generous permissions to use it, their content becomes more valuable, and if the product is more valuable, universities are willing to pay more for it.

So far so good. But there’s a limit on the ability of each individual publisher to raise prices. Even though the catalogs of different publishers aren’t perfect substitutes to each other publishers still compete on the margin. Beyond a certain point each university has to consider whether each publisher’s content is worth the extra dollar, and whether it can drop it and go by with the others.

In a world without antitrust laws, the publishers would be able to collude and still raise their prices a little more, but in a world with antitrust laws, simply fixing prices can be too risky. The motivation to collude still exists, but to avoid antitrust liability collusions has to be more sophisticated and less apparent.

Enters the CCC. To understand its role, imagine that we’re not dealing with books, articles, and publishers, but with cars, steering wheels, and automakers. Assume that consumers are willing to pay $25,000 for a new car, but that competition between automakers drives prices down to $20,000. Automakers would be happy to collude, raise the prices to $25,000 and squeeze the extra surplus from consumers, but antitrust law prohibits them from doing that. But now let’s assume that new cars come with steering wheels that use patented technologies. Each automaker uses its own patented steering wheel, and each of them can sell its cars without infringing any other patent. Notwithstanding the patents, consumers still pay $20,000.

But assume that the automakers create a patent pools and call is the Consumer Car Coalition, or the Car Control Consortium, or in short, CCC. The automakers still sell cars for $20,000, but tell consumers that buying a car does not include a license to use its patented steering wheel. A steering wheel license can be obtained from the CCC for an annual license fee of $0.2 per mile. A consumer driving 5000 miles per year would pay $1000 annually. If that consumer keeps the car for 5 years the car’s total price would be $5000: exactly the same price that the automakers would charge if allowed to collude. Since a car without a steering wheel is useless, consumers would be forced to pay the competitive price for a car ($20,000) plus the additional supra-competitive fee for the steering wheel license. While the price for the car body seems as competitive as before, unbundling the product from the right to use it and collectively licensing that right allows the automakers to earn the same supra-competitive profit that they would have earned had they formed a price-fixing cartel.

In the 1940 and the 1950s the courts and the DOJ forced ASCAP and the music publishers to abandon a similar scheme in the licensing of music in films. Music publishers would only grant movie producers the right to synchronize their music in films but not the right to publicly perform them. The right to publicly perform the music had to be licensed separately from ASCAP. Since many of the movie producers owned major music publishers this scheme benefited them as well. But in 1948 the practice was prohibited following a private civil action brought against ASCAP by movie theaters. In Alden-Rochelle v. ASCAP the Court found that copyright holders could directly negotiate with movie producers to license performance rights at the same time that they negotiated with those producers to license synchronization rights, and therefore there was no efficiency justification for allowing ASCAP to collectively license movie producers or theaters. In the early 1950s similar provisions were entered into the consent decree between the DOJ and ASCAP that settled the DOJ’s antitrust case against ASCAP.

The same kind of scheme is what the CCC and the publishers are trying to implement via the GSU case. The restrictive view of fair use that they urge the court to adopt is meant to make it impossible for universities to use the materials that they buy without obtaining a license from the CCC. This would allow publishers to license “access” to their works in competition with each other, but unbundle from those licenses some of the usage rights, which they would then license collectively through the CCC.

In the 1940s and 1950s the DOJ protected movie theaters and movie viewers from such a scheme. Last year, the DOJ swiftly intervened to protect e-books readers from another anti-competitive scheme. It would be a shame if instead of protecting universities, teachers, and students from similar anti-competitive practices, the current DOJ would be actually be involved in promoting a price-fixing combination against them.

installed by or on behalf of a person to prevent, detect, investigate, or terminate activities that the person reasonably believes (i) present a risk or threatens the security, privacy, or unauthorized or fraudulent use, of a computer system, telecommunications facility, or network, or (ii) involves the contravention of any law of Canada, of a province or municipality of Canada or of a foreign state;

In other words, they ask to be legally permitted to have extensive surveillance and self-help powers over individuals to “prevent, detect, investigate, or terminate” activities that they deem undesirable: to be the police, the judge, the jury, and the executor.

It seems as if the Canadian Chamber of Commerce has been inspired by the notorious Star Chamber, whose

jurisdiction was almost unlimited. It took notice of riots, murder, forgery, felony, perjury, fraud, libel and slander, duels and acts tending to treason, as well as of some civil matters, such as disputes about land between great men and corporations, disputes between English and foreign merchants, and testamentary cases; in fact, as Hudson says, “all offences may be here examined and punished if the King will.” Its procedure was not according to the Common Law. It dispensed with the encumbrance of a jury; it could proceed on rumour alone; it could apply torture; it could inflict any penalty but death.

True, the Chamber of Commerce and its partners do not ask to be allowed to apply torture, but other than that, their demands for unilateral power and disregard to due process are not that dissimilar. But the similarities do not end here. As an enforcer of royal proclamations and other grants, the Star Chamber played a crucial role in enforcing the oppressive regime of press control and monopoly that the Stationers’ Company of London held over the book trade in the days before the enactment of the Statute of Anne (the first Copyright Act). Demands for extensive power to enforce exclusive right over content, for censorship, and for dealing with concerns about real and imaginary security threats were common with the advent of print as they reemerge with the advent of digital technology.

For example, the Star Chamber Decree of July 11, 1637 dealt with extensive regulation of the printing and printers. It provided that

no person or persons whatsoeuer shall presume to print, or cause to bee printed … , any seditious, scismaticall, or offensive Bookes or Pamphlets, to the scandal of Religion, or the Church, or the Government, or Governours of the Church or State, or Commonwealth, or of any Corporation, or particular person or persons whatsoeuer, nor shall import any such Booke or Bookes, nor sell or dispose of them, or any of them, nor cause any such to be bound, stitched, or sowed, vpon paine that he or they so offending, shall loose all such Bookes and Pamphlets, and also haue, and suffer such correction, and severe punishment, either by Fine, imprisonment, or other corporall punishment, or otherwise, as by this Court, or by His Maiesties Commissioners for causes Ecclesiasticall in the high Commission Court, respectiuely, as the several causes shall require, shall be thought fit to be inflicted upon him, or them, for such their oft’ence and contempt.

Only licensed books were allowed to be printed and sold, and only by members of the Stationers’ Company. The Decree also provided the Master and Wardens of the Stationers’ Company extensive search, seizure, and arrest powers “to search what houses and shops (and at what time they shall think fit) especially Printing-houses, and to view what is in printing, and to call for the licence to see whether it be licensed or no”, and if a license could not be presented to “seize vpon so much as is printed, together with the seuerall offenders, and to bring them before the Lord Arch-Bishop of CANTERBURY, or the Lord Bishop of LONDON for the time being, that they or either of them may take such further order therein as shall appertaine to Iustice.” That power pertained both the books that were printed without the authorization of the Statinoers’ Company as well as to any “any book or bookes, or part of booke or books which they suspect to containe matter in it or them, contrary to the doctrine and discipline of the Church of England, or against the State and Gouernment …”

While the Stationers were granted such extensive search, seizure, and arrest powers, the Star Chamber at least decreed that final adjudication was supposed to be before the Lord Arch-Bishop of Canterbury or the Lord Bishop of London. The Canadian Chamber of Commerce would dispense with such trifle requirement.

Is the Canadian Chamber of Commerce serious about becoming the new Star Chamber? Probably not. Maybe the purpose of this ridiculous proposal is to be a red herring and either divert the attention from other demands and proposals or at least make them look reasonable in comparison. But hopefully, this red herring would be of the backfiring variety: the kind of red herring that causes proponents of ridiculous claims lose any credibility.