Limiting progress of science and useful arts: legislating as a means of enhancing market leverage.

• Author: Boucher, Rick

INTRODUCTION

Under Article I of the U.S. Constitution, Congress has the power "[t]o 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." (1) By using this power wisely, Congress has indeed promoted both artistic creativity and technological innovation. (2) In recent years, however, Congress increasingly has been asked by copyright owners to use this power to stifle the development of new technology. (3) Over the past two years in particular, the legislative process in the copyright field seems principally focused on leveraging private-sector behavior rather than in achieving actual changes to the law. (4)

No doubt my colleagues who have introduced legislation to modify the Copyright Act (5) have done so out of a sincere desire to address concerns raised by content owners. Nonetheless, it increasingly appears that the private-sector interests pushing these initiatives see the legislative process as a mechanism to encourage manufacturers of consumer electronics to "design out" features to which they object, to discourage them from introducing new products, or to leverage them to pay increased royalties as the price for peace. Moreover, they clearly perceive that if the legislation actually were enacted, content owners would gain far greater leverage, and in some instances veto power, over the development of new technology.

We have seen this story before. As technology has evolved over the past century, it has threatened existing business models of content owners, who have responded with wildly exaggerated expressions of fear. With the advent of the player piano, for example, John Philip Sousa said in 1906, "I foresee a marked deterioration in American music ... and a host of other injuries in its artistic manifestations, by virtue--or rather by vice--of the multiplication of the various music-reproducing machines." (6) When radio emerged two decades later, a record label executive predicted that "[t]he public will not buy songs that it can hear almost at will by a brief manipulation of the radio dials." (7) In that long-ago era, technological changes were significant, but came slowly. In recent years, technology has evolved at exponentially greater speeds, leading to ever-growing and increasingly intense efforts by content owners to preserve their existing business models by turning to Congress for help.

But something has fundamentally changed. For the past two years in particular, the legislation proposed by content owners and introduced by their congressional allies seems principally focused on affecting to their advantage business negotiations between powerful industries. (8) Far more troubling is the attendant trend toward even more extreme measures that would, if enacted into law, severely hobble the pace of technological innovation. (9) To the extent that Congress responds to the entreaties of content owners and effectively pressures device manufacturers through the threat of legislation or actually puts them at risk through the enactment of legislation, we can expect technological innovation to be stymied and traditional consumer fair use rights to be even further circumscribed.

To put this concern in perspective and to provide context for my ongoing efforts to resist statutory limitations on technology and consumer enjoyment of it, I will first review the evolution of the "fair use" doctrine and the current battles that ultimately hinge on the application of the doctrine to new devices. I will then review four bills introduced during the past two years, all of which appear aimed at leveraging ongoing business relationships. I conclude with a discussion of a bill I introduced to restore balance in our copyright laws and give device manufacturers more freedom to move forward with new products without fear of crippling litigation.

1. HISTORICAL BALANCE IN THE COPYRIGHT ACT

   In 1556, under an English Star Chamber Decree, sole control over the printing of all books was vested in a single company. (10) Except by right of royal privilege, only members of the Stationers' Hall could print books. (11) What began as a heavy-handed government effort to censor political expression and to control the dissemination of information evolved over the following generations into an equally burdensome private monopoly, which powerful London booksellers used to discourage competition. (12) Fortunately, in 1710, the first English copyright statute recognized the public interest in access to information, as well as the rights of authors. (13) Although the authors of the statute may not have talked in terms of "balance," they certainly introduced that important concept into the law of copyright. (14)

   Just as fortunately, America's Founding Fathers vested in Congress the authority to reward authors for their works while at the same time ensuring that the public could gain access to information. (15) From the beginning, there has been broad agreement that our laws should vest certain rights in the creators of intellectual property as an incentive for the future creation of original works--specifically the ability to control for a reasonable period of time specified uses of the work--in order to fairly compensate the author's creativity. (16)

   But there has been an equally strong commitment in American law to user rights, including the doctrine of fair use and other exceptions in the law, which properly limit the rights of copyright owners. (17) Few other national copyright laws have anything like them. (18) The beneficiaries of fair use (and other exceptions) include libraries, universities, and museums, as well as consumers and entrepreneurs. (19) As a result of our careful historical balance between the rights of copyright owners and the users of copyrighted material, both the creative and technological industries of the United States have enjoyed success without parallel in the world. America's content creators have profited not in spite of user rights but in large measure because of them. (20)

   Notwithstanding the importance of fair use to creativity, content owners have historically sought to limit the ways in which consumers could use new technologies, (21) even though some fair uses have spurred much greater creativity (22) and prominent creators frequently claim fair uses promote their own business interests. (23)

   Notwithstanding the benefits of fair use to society as a whole, as technology has changed, content owners have reacted in ways intended to preserve existing business models at the expense of consumer freedom. Perhaps the most famous example of the efforts to limit technology in ways that ultimately would have hurt the content industry was the push by two Hollywood studios to block Sony from selling the Betamax video recorder. In the late 1970s and early 1980s, the courts were presented with the question of whether Sony could be held liable for contributory copyright infringement for selling the Betamax recorder since it could be used to make copies of copyrighted works. (24) The district court got it right: it recognized that the device, although capable of being used for infringing purposes, could also be used to engage in "time shifting," namely, recording a program for viewing at a later time. (25) Nevertheless, the U. S. Court of Appeals for the Ninth Circuit ruled that the potential for some unlawful uses meant that the manufacturer would be liable to the content creator when unlawful copies were made, a ruling which, had it stood, would have kept the product off the market. (26) Fortunately for consumers and particularly for Hollywood, in Sony Corp. v. Universal City Studios, Inc. (Betamax), (27) the U.S. Supreme Court held that Sony was not liable for contributory copyright infringement because the device was capable of substantial non-infringing uses. As the Court recognized, effectively giving copyright owners the right to dictate and control the design of articles capable of recording would block "the wheels of commerce." (28)

   This important principle has stood the test of time--the VCR unleashed the new market for the rental and purchase of movies for home viewing. The demand for VCR tapes exploded, and Hollywood benefited immensely. In fact, from Hollywood's perspective, the "play" button became the far more important function on the device, something that content owners should keep in mind whenever they react in horror to a "record" function on a new device. With every new technology-inhibiting measure that members of Congress propose, we should remind ourselves how close our nation came to outlawing the VCR and the negative effects that banning that device would have had for consumers, technology companies, and movie producers.

   It is thus quite remarkable that, for the past two decades, the central holding of that decision has been at the heart of virtually every legislative battle between the consumer electronics industry and information technology industry on the one hand and copyright owners on the other. Content owners have consistently sought to limit what consumers could do with new technologies, and device manufacturers have consistently relied on the Court's holding in bringing new products to market.

2. RECENT EFFORTS TO TILT THE BALANCE

   In the past three years, four bills stand out as part of this broader effort to use the legislative process to achieve business objectives by limiting the applicability of the Betamax standard. (29) With respect to these proposals, the editorial board of one newspaper that has generally been sympathetic to the content industry has noted:

   Protecting intellectual property is a legitimate goal for Congress--after all, the Constitution called on Congress to give authors and inventors exclusive rights "to promote the progress of science and useful arts." The task has grown more urgent with the emergence of an Internet-fueled global...