The failure of the PRO-IP Act in a consumer-empowered era of information production.

• Author: Singer, Morris A.
• Position: Prioritizing Resources and Organization for Intellectual Property Act of 2008

"There is no inevitable historical force that drives the technological-economic moment toward an open, diverse, liberal equilibrium. If the transformation ... actually generalizes and stabilizes, it could lead to substantial redistribution of power and money. The twentieth-century industrial producers of information, culture, and communications--like Hollywood, the recording industry, and some of the telecommunications giants--stand to lose much.... None of the industrial giants of yore are taking this threat lying down. Technology will not overcome their resistance through an insurmountable progressive impulse of history. The reorganization of production and the advances it can bring in freedom and justice will emerge only as a result of social practices and political actions that successfully resist efforts ... to minimize its impact on the incumbents." (1)

1. Introduction

   A scholarly movement has built momentum since the early 1980s, writing from the perspective that technological development has shifted cultural norms, economic realities, and political implications of intellectual property production, consumption, and protection. (2) These changes could also be felt in Congress, where they affected the discourse and legislative output through a progeny of ever-growing rights awarded to intellectual property producers. (3) Although mainstream academics remained open-minded about the potential benefits of cautiously embracing these changes, Congress approached the developments as threats and sought to maintain the status quo. (4)

   Technology has changed what types of intellectual property are produced, as well as how they are produced, stored, transferred, and sold. (5) Inexpensive, non-capital-intensive production and distribution technologies have allowed many individuals--even those who historically could only consume the intellectual property of others--to join in producing new works that rival the productions of industry giants. (6) Many of those same technologies have facilitated massive consumer infringement, threatening the profits of businesses that profit from intellectual property production under an existing legal framework. (7) These technologies have also made international markets more reachable to both legal producers and infringers, creating new opportunities for legitimate business growth while simultaneously increasing levels of risk to the firms generating revenue from intellectual property production. (8)

   The federal government reacted in a largely preservationist fashion, seeking to protect the interests of existing stakeholders, while limiting the rights of individual citizens. (9) Congress has passed laws to limit digital copying, to award more significant rights to copyright owners, and to enhance enforcement of intellectual property rights at the expense of privacy. (10) Additionally, the courts have allowed greater intrusion into the digital lives of Americans. (11)

   A number of leading intellectual property academics, however, have routinely questioned whether the changing intellectual property environment warrants these measures. (12) These academics have criticized recent intellectual property legislation for failing to embrace new technologies, awarding too many rights to producers at the expense of consumers, going beyond the constitutional mandate for legislating copyright, and infringing upon individual freedoms. (13) The mainstream scholars in the field have raised serious questions about Congress's response to a growing tension between producers and consumers of intellectual property. (14)

   The tension escalated in 2008, when Congress passed the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008 (the PRO-IP Act and the Act). (15) In response to Congressional recognition that copyright enforcement has become increasingly difficult, it rearranges executive offices to prioritize intellectual property enforcement and coordinates federal enforcement efforts with the efforts of local, state, and foreign governments. (16) Furthermore, the Act clarifies the government's ability to initiate criminal proceedings for infringement. (17)

   This Note examines current factors affecting copyright rights, critiques the PRO-IP Act as a response to those factors, and explores recent business strategies for monetizing the production of intellectual property notwithstanding those factors. (18) Part II.A examines the history of copyright law as responsive to technological, cultural, economic, and political changes in the intellectual property environment. (19) Part II.B describes United States copyright law prior to the passage of the PRO-IP Act and examines the prior law's efficacy within the current intellectual property environment. (20) Part II.C explains how the PRO-IP Act amended the copyright statute. (21) Part II.D examines recent effective business strategies to sustain profits. (22) Part III critiques the PRO-IP Act from political, technological, cultural, and economic perspectives. (23) Part III.A argues that, from a political standpoint, while the Act squarely addresses international infringement concerns, it deals with domestic infringement in a highly oppressive manner. (24) Part III.B contends that Congress's difficulty accepting technological development has forced an overemphasis on ensuring fairness to commercial information producers. (25) Part III.C asserts that the Act is problematic from a cultural perspective because it fails to account for access to modern information production technology, inhibits the production of culturally valuable information, and views decentralized information production as an evil. (26) Part III.D criticizes the economic reasoning behind the passage of the Act because it stems from an incomplete cost-benefit analysis and ignores the opportunity cost of stifling new business development. (27)

2. History

   1. The Response of Copyright to Politics, Technology, Culture, and Economics

      1. Producer Control

         Article I, Section 8, Clause 8 of the U.S. Constitution grants Congress the power to "promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (28) Since the ratification of the Constitution, Congress has derived from this clause the authority to pass copyright legislation. (29) Despite the relative simplicity of this aim, Congress has recognized a need continually to realign copyright law in the wake of historical changes in the technology, politics, culture, and economics of information production. (30)

         Historically, copyright law has occasionally become inadequate to address the realities of the intellectual property environment. (31) For example, in White-Smith Music Publishing Co. v. Apollo Co., (32) the Supreme Court held that, notwithstanding intuitive unfairness, the Act of May 31, 1790 (Copyright Act of 1790 and the 1790 Act) did not provide a musical composer with the exclusive right to derive a piano roll from his copyrighted sheet music. (33) Around the same time, authors began to argue that adequate copyright protection required international coordination; copyright protection could not stop at a national boundary. (34) These occurrences illuminated the 1790 Act's inability to apply adequately to new forms of intellectual property. (35)

         Congress's passage of the Copyright Act of March 4, 1909 (Copyright Act of 1909 and the 1909 Act) represented a reaction to both the White-Smith holding and the growing concern over international copyright infringement. (36) The 1909 Act reflected arecognition that a manufacturer can derive a piano roll from sheet music and that, under certain conditions, such derivation without the copyright holder's permission should allow a civil infringement action. (37) Furthermore, the 1909 Act broadened the scope of protection in international infringement scenarios by providing a framework for reciprocal protection for foreign nations that protected American copyrights. (38) The times reflected changing production of information, both qualitatively and in geographic scope, and the 1909 Act responded to these changes by broadening the law's protection of infringement. (39)

         By the middle of the twentieth century, the distribution of copyrightable works had also changed. (40) Broadcast television facilitated instantaneous information delivery into the home, creating a new market for information consumption. (41) Advertisers financed the consumption of new, non-literary works, and consumers enjoyed these works without having to pay for them. (42) Additionally, the marginal cost of producing a new copy of a work became negligibly small. (43)

         In the 1970s, Congress overhauled copyright law, broadening the scope of enforcement to cover infringement through new distribution forms, such as broadcast, and new media, including movies. (44) The Act of January 19, 1976 (the Copyright Act of 1976 and the 1976 Act) grappled with novel questions regarding how a work is embodied in tangible media (fixation) and what types of works are copyrightable subject matter. (45) The 1976 Act reflected a flexible approach designed to accommodate both prior technological developments and unknown future developments in expression. (46) When the 1976 Act took effect two years later, Congress was confident that copyright law would withstand future developments by continuing to secure the desired exclusive rights for the authors of copyrightable works. (47)

      2. Consumer Empowerment

         The 1980s, however, marked the development of affordable technology that manufacturers marketed toward a law-abiding consumer, which enabled the duplication of free broadcasts. (48) The obvious problem was that a consumer could receive, retain, and consume any broadcasted work of authorship without compensating the rights holder. (49) The 1984 case, Sony Corp. of America v. Universal City Studios, Inc., (50)...