Earlier this week I participated in the Berkeley Center for Law and Technology Symposium on Orphan Works and Mass Digitization. I was part of a panel devoted to various solutions to the problem. Here is my presentation.
The Orphans, the Market, and the Copyright Dogma
At its core, copyright law is based on a very simple logic–market logic. The law grants limited exclusive rights in creative works, with the expectation that such rights will then be voluntarily exchanged in a decentralized market place.
Whether we believe that exchange will provide the financial incentives for creating the works in the first place, or whether we have a different theory of copyright, the idea of a decentralized market place is central to copyright.
Indeed, the idea of a decentralized market was implanted in the DNA of copyright since the Statute of Anne, which hoped to dislodge the monopoly of the Stationers’ Company and replace it with a market-based system.
We should keep this point in mind when we think about solutions to the orphan works problem, and we should be cautious about solutions that bring back a new version of the Stationers’ Company, and entrust monopolies and bureaucracies as guardians of orphan works and gatekeepers of knowledge.
We all know that the general rule in copyright is that a user should contact the owner and ask permission before using the work. Generally, this permission-first rule makes lots of sense. It makes sense mainly because it is much less costly for a prospective user to approach the owner and ask permission before using, than for an owner to locate and go after all actual or potential users and ask them to pay. But generally is not always. A permission-first rule only makes sense if the cost of getting permission is indeed low. But if the cost of obtaining prior permission becomes prohibitively high, then a system demanding prior permission would result in a market failure—the very market the copyright law seeks to create. In such cases we need an alternative rule.
But as it turns out, finding an alternative rule has been a challenge. And the question is why?
The Copyright Dogma
The reason why so far it has been so difficult to find a solution to the orphan works problem is that we often treat the permission-first rule as a dogma. We don’t treat it as a rule whose validity depends on how well it promotes the purpose of copyright law, but as “a belief held unquestioningly and with undefended certainty.”
As David Nimmer wrote, and Judge Chin accepted “[T]he law of the United States is that a copyright owner may sit back, do nothing and enjoy his property rights untrammeled by others exploiting his works without permission.”
Sit back and do nothing, regardless of the consequences. That’s the dogma. For the copyright dogma, the wrong in using someone else’s work without permission has nothing to do with impairing the ability of the copyright owner to participate in this marketplace, nor does it lie in any measurable concept of harm to the owner.
The dogma does not regard the use of works as something that ought to be celebrated and facilitated. Instead, the dogma considers the use of works as a sin that can only be avoided by seeking permission and paying a fee. This view of using a work as a sin motivates many of the proposed solutions to the orphan works problem. Many of them are based on the proposition that if the copyright owner is unlocatable, the user should get permission from and pay to, someone else.
So Canada has created a bureaucratic mechanism—and I may add useless—that allows the Copyright Board of Canada to grant permission to use an orphan work. And the Board actually took it one step further and usually requires that payment will be made to a copyright collective. So effectively, the Copyright Board created an Extended Collective Licensing regime.
Extended Collective Licensing (ECL) is another solution that has gained popularity in the aftermath of the rejection of the Google Books Settlement. Under ECL, a copyright collective can issue licenses not only with respect to the works of its members, but it can also authorize the use of the works of non-members, such as orphan works.
But these solutions don’t really solve the orphan works problem. These solutions merely pretend to solve the problem by requiring the user to pay money to someone else. However, if the owner is unlocatable, sending money to a copyright collective merely shifts the problem from the user to the collective. It is a good mechanism for collecting money from users, but it has nothing to do with facilitating transactions between owners and users.
The main rationales offered by the Copyright Board of Canada for its decision to create a de facto Extended Collective Licensing Regime are entirely moralistic. The Board believes that
- “it should not be in the business of issuing free insurance policies against prosecutions for violation of copyright.”
- It regards such payments as disgorgement of profit (hence the use as an offence),
- and finally it assumes that “given the choice, the unlocatable copyright owner would prefer that the royalties be paid to a group that represents interests similar to those of the owner than to see the user take advantage of the owner’s copyright for free.”
Indeed, the Copyright Board’s assumption only makes sense if the unauthorized use is viewed as a sin, and the user as a sinner.
Indulgences and the Copyright Hell
In fact, there are remarkable similarities between the emergence of this dogma and the emergence of some aspects of Catholic dogma in the Middle Ages. In the Middle Ages, the Catholic Church realized that since it couldn’t really prevent people from being sinful, it might as well monetize sin. And monetize sin it did. The most extravagant example of this mechanism was the widespread sale of indulgences. This became an extremely lucrative business, which helped preserving the dominance of the Church and enriched some of its highest priests.
Essentially, the Canadian solution and ECL offer nothing but indulgences for sale. They don’t really solve the orphan works problem, but they allow the Copyright Church to sell indulgences to users who want to save their souls from the copyright hell, and they allow some copyright owner to enrich themselves at the expense of other owners and users.
So now comes the big question: is there a better a solution to orphan works than the sale of indulgences? Is there a solution that retains copyright law’s market orientation, facilitates the revival of orphan works and is also responsive to the wishes of copyright owners? The answer is Yes, and it is totally within our grasp. We can do it without monopolies or bureaucracies, and it does not require any substantial legislative reform.
Solution: Remedy Tweaking
My proposal is simple common law solution: Remedy Tweaking. My proposal is not based on defining conditions that would create immunity from liability, and it does not depend on defining what an orphan work is, because the concept of an orphan work is highly elusive. Instead, my proposal treats the problem at the remedial stage. I propose that the fact that the owner was unlocatable should be a factor considered by the court when determining the proper remedy after a finding of infringement. In some cases this consideration would justify a denial of an injunction. The court may still order to pay damages, or account for the profit attributable to the infringed work, but if these approximate what the parties would have agreed had a license been negotiated in advance, the orphan works problem would be seriously diminished.
Statutory damages, to the extent that they are mandatory and the court cannot reduce them to zero when appropriate, still pose a problem, so perhaps this is the only aspect of my proposal that may require legislative intervention (this solution is similar to the Copyright Office’s original proposal, but I can discuss some differences in the Q&A).
Why is remedy tweaking a better solution? To answer this question we need to understand why we an orphan work to begin with.
Usually, the orphan works problem is described from the demand side. What we have in mind is a user who finds it prohibitively costly to locate the owner. But this description ignores the supply side. It doesn’t explain why copyright owners choose not to make themselves easily locatable. This isn’t a trivial question, because copyright owners also lose if users can’t transact with them, so we might think that copyright owners would have good incentives to make themselves locatable. This could suggest that maybe there isn’t really an orphan works problem and that the problem it will take care of itself as digital technologies and markets mature. Patience, therefore, would be the best recommendation.
While I have some sympathy to this point of view, I think that it is only partly correct. The orphan works problem is deeper because it reflects discrepancy between the social benefits of using works and the private benefits accruing to the owner. The reason for this mismatch is that a copyright owner has to incur some expenses in order to maintain herself locatable. However, the owner will incur those costs only if the present value of the benefits that she expects to gain is larger than the costs that she needs to incur today. The problem is that the owner cannot expect capturing the full social benefit from using her work, only a portion of it. In addition, whatever she might expect to earn in the future is discounted because the future is in the future and the future is unknown.
Therefore, because of this is mismatch between the public and private benefits, owners will make sub-optimal investments in maintaining themselves locatable. We can also restate the problem in terms of costs. We have an orphan works problem because owners don’t internalize the full cost of their works becoming orphan, and the current system does not provide them enough incentive to invest in making themselves locatable.
Now that we’ve stated the problem in terms of costs that are not fully internalized, we can immediately notice that the orphan works problem becomes a familiar problem. It’s not a problem unique to copyright, but a problem that is pervasive throughout the law. It’s a problem that has familiar solutions.
Copyright Owners are the Least-Cost Avoiders
One familiar solution is to ask who is the “least cost avoider”. That is, who is the party that is better positioned to reduce the cost of an activity. If we identify such a party we want to maker sure that it has the right incentives to reduce the cost. In our case, it is clear that the copyright owner is the least cost avoider, because she’s the one who always knows who she is and where she can be found. No one else knows better than her.
If the copyright owner is the least-cost avoider of the problem but doesn’t have good incentives to maintain ownership information available, the law can create these incentives with sticks, carrots, or both. This is what my proposal does. We can formulate my proposed solution as a stick (“if you don’t make yourself easily locatable ex ante you will be entitled to less ex post”), or we can formulate it as a carrot (“you, the owner, can choose between investing today in order to keep yourself locatable in the future, in which case you will be entitled to all the remedies, OR you can choose to invest less today, but earn less in the future).
Note that I’m not proposing immunity for users, or a blanket exception to liability. My proposal allocates the cost of maintaining a market system between users and owners: the user has the best information about his contemplated use and therefore should take reasonable steps to communicate his plans to the owner by seeking permission; the owner, on the other hand, has the best information about her identity and how she can be reached, and therefore should take reasonable steps to make this information available to potential users. Remedy tweaking will shift some of the risk of using orphan works from the user to the owner. It will adjust the user’s duty to seek ownership information and permission with a corresponding duty of the owner to provide such information.
While my solution may sound inconsistent with the copyright dogma, it is highly consistent with other aspects of the law. It is based on the general principle of the “duty to mitigate”. This principle plays out in various forms in contract law, in tort law, in property law, and in other areas. This solution will maintain the market orientation of the copyright system by encouraging owners to make themselves locatable, and reduce the risk of using works when the owners aren’t locatable. If it hasn’t been applied to copyright law, then it’s only because we have been captive by the Dogma, but we can set ourselves free.
Decline the New Stationers’ offer
To sum, the copyright system is based on market logic, but developed markets cannot exist without clear sense of who owns what, and without rules that encourage participants to provide information that is crucial for the ability to transact. Most of the proposed solutions are based on putting the entire onus on the user, whereas the least-cost avoiders are owners. If we want to solve the orphan works problem we have to make sure that owners have good incentives to make themselves locatable.
The solution is not to replace the market with regulated monopolies, or to establish new bureaucracies, and make them gatekeepers to knowledge. We should respectfully decline the offer of the New Stationers to regain control, and we should not substitute an industry of indulgences for a market for creative works.