George Mason University Antonin Scalia Law School

Copyright, Economic Freedom and the RSC Policy Brief

Cross-posted to the Copyright Alliance Blog

A few days ago, the Republican Study Committee signaled, and then retreated from, a vast change in the GOP’s attitude toward copyright. It released and then retracted a now infamous policy brief entitled “Three Myths about Copyright Law and Where to Start to Fix It.

This RSC Policy Brief was perceived as a Big Deal.  The Republican Study Committee positions itself as the most free market caucus of GOP Members of the House of Representatives. Some were all-too-eager to assert that the publication of the policy brief showed that conservatives and libertarian-leaning Republicans had come to view current copyright policy as incompatible with free market economics.

The blogosphere certainly interpreted the policy brief as signaling a major change in direction for the GOP.  Stewart Baker put it well over at the Volokh Conspiracy, calling it “the most radical proposal for overhauling copyright that we have seen in recent years — and the most head-turning change of direction in decades for either party on intellectual property issues.”

Given the fact that many interpreted the brief as so significant, it is perhaps best that it was withdrawn. Earlier on this blog, Sandra Aistars opined that perhaps the brief should have stayed up, but have been placed in the context of a broader debate.  At first I agreed—we academics always favor debate—but after reviewing the initial reaction around the web, I’m no longer so sanguine.

If we are to have a debate about copyright reform, then let’s by all means do so.  But if a major party is to change its position, it ought to happen with more thought and care than by way of a nine page policy brief which was, as David Post noted in otherwise praising it, “rather clumsily written.” Nevertheless, the brief was taken seriously and thus merits some response.

A few of the themes in the RSC brief were particularly troubling. It contended that copyright was justified only as a utilitarian policy—by what creators might do for society. Moreover, it portrayed copyright as morally and economically dubious—as a form of regulation, incompatible with economic freedom.

In the spirit of engaging debate, I offer a few essential points about copyright that respond to these criticisms. In a blog posting, one can do little more than sketch out a few points, but this post can serve as a partial response and offer a few useful links to further reading.

The Philosophy and Morality of Copyright

The people who create expressive works deserve to own them and benefit from them. So do the companies that finance and purchase these works for commercial exploitation.

To some, these assertions are uncontroversial and perhaps even banal. But to others, particularly those who engage in modern copyright debates, they may seem alien—or if familiar, then unfortunate at best. This latter view appears to be the one that informs the RSC brief.

Why would the idea of “deserving” to own and benefit from creative works be controversial?  The debate has its roots in philosophy.

Many modern copyright scholars and commentators have embraced a severe utilitarian view of copyright. In this view, the sole justification for copyright is the benefit that creators provide to society. Society would benefit most if creators worked for free, but, alas, we cannot always convince them to do so. Copyright is thus an unfortunate necessity, given to creators to induce them to provide society what it needs. The labor or welfare of creators has no importance under this view—they and their works exist to serve the good of the greatest number.

There are a couple of reasons people hold this view, which is misguided in my opinion (particularly in the extreme formulation described above).

First, some understand the Constitution to require it.  Article I, Section 8 of the Constitution empowers Congress to create intellectual property laws “[t]o promote the Progress of Science and useful Arts.” Many (including, admittedly, modern courts) mistake the IP Clause’s reference to a socially beneficial purpose as an embrace of utilitarianism.

This understanding of the Founders’ intent is problematic. The Founders were not utilitarians. The American Founders instead embraced a more individualistic philosophy—natural rights.

As Profs. Adam Mossoff and Eric Claeys have discussed in an important series of papers. (123456,7), natural rights philosophy animates the Constitution’s IP Clause. Copyrights—and patents—secure the fruits of productive intellectual labor. Natural rights theory also holds a consequentialist view as to why people deserve the fruits of their productive labor, but it is not rooted in an abstract, collectivist vision of utility maximization.  Rather, people deserve to own the things they create because it enables them to preserve their own lives, to flourish as human beings, and to make other’s lives better. In this view, property is a civil right, or what later came to be known as a human right.

If all that is too much philosophy, then a simple question might serve:  As between creators (along  with those who finance and/or purchase the rights to their work) and others, who has a better claim to control and exploit a work of authorship? Of course, to a dedicated IP utilitarian, this question is irrelevant. Nobody deserves anything; society takes what it needs, subject to the need to persuade the producer to keep producing what the takers want. While such a churlish and ungenerous view of creators is apparently acceptable to some, many would find the implications chilling.

Copyright is Property, not a Monopoly or Subsidy

Some also see copyright as a morally suspect interference with economic freedom because they reject the contention that copyright is property.  They instead vilify copyright as an odious monopoly or a government-granted privilege or subsidy.

The monopoly accusation is an elementary and persistent error in the economic analysis of intellectual property, as Edmund Kitch once explained in an article with that very title. Edmund W. Kitch, Elementary and Persistent Errors In The Economic Analysis Of Intellectual Property, 53 Vand. L. Rev. 1727 (2000). Dozens of scholarly articles, hundreds of court cases, and thousands of economics classes have repeated the claim that intellectual property grants a monopoly. As Kitch points out, the persistence of the claim does not lessen the error.

Ownership of a property right alone does not accord the owner a monopoly. The hallmark of a monopoly is market power. Owning something that is unique—whether it is a song, a story, or a house—does not give one that kind of power. Even a beautiful house in a nice location cannot command monopoly prices. The same is true of copyrighted works.

A few years ago, people rushed to bookstores to buy J.K. Rowling’s last installment of the Harry Potter series. People lined up for the big, thick hardback and paid about the same price they pay for other new hardback books. Even so desirable a book could not command a monopoly price because consumers have options. Other books (or video games, movies, or other entertainment) might not be a perfect substitute forHarry Potter but they can offer a similarly edifying experience. Vanishingly few people could have been convinced to pay an extortionate price for that book.

It is rare for a product protected by an intellectual property right to command market power. While some patented medicines fit this definition, it is hard to find an example of a copyrighted work that enjoys similar dominance. Copyrights are not monopolies.

Rather, throughout history, copyrights have been considered property, much like any other property. While a notion has arisen in scholarship and popular debate that the concept of intellectual property is a new thing, Prof. Justin Hughes demolished this claim a few years ago, showing it to be an erroneous, ahistorical notion originating in the mistaken claims of a handful of scholars. Copyrights have been considered property for over 200 years, and treated as such.  As Prof. Hughes’ work shows, courts long treated copyright as a form of property, resorting to property theory and concepts to establish the framework for the copyright system we know today.  (Prof. Mossoff has showed the same with respect to patents.)

In answer to further accusations against copyrights, it is odd to consider the enforcement of a property right a form of subsidy or privilege.  Historically, we have considered the enforcement of right to be simply maintenance of the rule of law.  Protecting property is one of the essential jobs of a decent, properly constituted society, securing the rights of people to benefit from their productive labor and protecting the weak from arbitrary confiscation of their property.  Typically, we call this arrangement civilization, not subsidy.

Copyright Facilitates Private Ordering, Not Regulation

Copyright law is also sometimes mis-portrayed as a form of economic regulation—a relentless, oppressive and bewildering force, laying its heavy hand over all activities. One much-touted law review article on copyright (later turned into a book) did its best to run up the score by tallying the many copyright violations and resulting liability an “average” person allegedly accumulated in a single day.

These sorts of claims ignore the fact that copyright is a property right. Property rights are different from criminal laws or industry regulations, which say what one shall or shall not do and impose fines or other punishments on those who do not. (Let’s put aside the criminal copyright laws, which are aimed largely at commercial piracy or other gross, large-scale violations of copyright law).

Unlike regulation, property rights do not constitute absolute commands—for example, that entrance or use is “absolutely prohibited.” While a property right grants what is often called a “right to exclude,” it is hardly a right that people seek to exercise at all times. A shopkeeper does not purchase a commercial building, stock his shelves, and hang an “open” sign in the hopes that somebody will show up so that he can chase them off his property, shotgun in hand. Rather, he hopes that customers will come in, browse, and buy in accordance with the reasonable and customary terms set by shopkeepers for use of their property.

We thus don’t view these shopkeepers as regulators nor their customers as particularly oppressed because there are restrictions and conditions set on use of the property. Property rights facilitate private ordering. They are incredibly malleable and flexible, suiting the private arrangements that people make.  They are, in this sense, the opposite of regulation. Throughout our days, we navigate a vast array of property arrangements as we move about, buy and sell things, and cooperate with others. Most people seem to manage these complex arrangements just fine without feeling unduly regulated.

Copyright is just like other forms of property in this regard. It enables people to negotiate a vast array of transactions and uses. Sometimes they use it to set the terms of sharing, as in open source software or Creative Commons licensing. In other cases, filmmakers might use it to enable a wide variety of business models—a ticket to view the movie in a theater, a rental via Redbox, a stream via Netflix, a copy purchased via DVD, or a free viewing on broadcast television (subsidized by advertising). In other cases, a scholar might depend on fair use or convention to show a film clip in a classroom or quote (with attribution) another scholar’s work. In yet other instances, Hollywood guilds, industry contracts, collecting societies, and other arrangements set the terms of cooperation and use for copyrighted works.

It takes a certain paucity of imagination to portray such a diverse, flexible and productive set of private social and commercial arrangements as a form of “regulation.”  It seems the very opposite of regulation, which relies on a centralized command and control structure rather than diverse and distributed private decisionmaking.

Properly understood then, copyright supports individual rights and economic freedom.  It is neither morally nor constitutionally dubious in its provenance. Nor is it a form of odious monopoly or oppressive regulation. We can and should debate many instrumental issues regarding the definition of rights and remedies—copyright term, damages, criminal penalties, and asset forfeiture are all fair game in my estimation. It is beyond dispute that copyright owners deserve to own their property and that copyright is compatible with economic freedom and free markets.