The End of the Information Age

by

Andrew B. Stockment

Andrew82.net

The End of the Information Age

Copyright © 2002, 2005 by Andrew B. Stockment. All Rights Reserved.

Published by Andrew82.net.

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Foreword

     Since this paper was written in April 2002, copyright policy in the United States has continued to evolve. A number of significant changes have taken place and some of the issues mentioned in this paper have been resolved. Some of the most important developments have occurred in the realm known as Digital Rights Management (DRM). DRM is a method of protecting information by encryption that restricts access based on the rights assigned by the copyright holder. Effectively, the copyright holder is able to control how each individual may use or access the copyrighted material, even denying the basic tenants of fair use, if he so desires.

     Thus, in just a few years’ time this article has grown dated and no longer describes the very latest developments and policy issues. Nonetheless, this paper still provides a valuable overview of the history of copyright policy from 1557 through April 2002 as well as the implications of the trend of policies favoring copyright holders at the expense of the public. Eventually this paper will be expanded and updated with the latest information. In the meantime, the reader is encouraged to conduct further research in order to be informed of the current state of copyright policy.

—July 28, 2005

Section I: Introduction

“FBI WARNING: Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution or exhibition of copyrighted motion pictures, video tapes or video discs. Criminal copyright infringement is investigated by the FBI and may constitute a felony with a maximum penalty of up to five years in prison and/or a $25,000 fine. (Title 17 U.S. Code, Section 501 and 506)”¹

     This unbelievably serious and harsh warning precedes the showing of most home video rentals. It is indicative of the media industry’s relentless push for ever increasing copyright protection—for a government sanctioned monopoly on information and entertainment. The evidence indicates that the media industry wants a world in which users must pay for each use or viewing of copyrighted material forever, a world in which “fair use” is “paid use.”

     The goal of this paper is to analyze the history of copyright regulation and how it affects the everyday lives of the average American. This paper will show how, over the course of three hundred years, copyright regulations have leaned increasingly in favor of publishers, at the expense of both authors and the public.

Section II: Policy Summary

     A copyright is a principle of American law emanating from the Constitution that is designed to “promote the progress of science and the useful arts” 2 by granting authors, for a limited time, a limited monopoly over their works. Copyright protection is extended by the United States to “original works of authorship” that are fixed in a tangible form of expression (whether published or unpublished). This protection is granted automatically the moment the work is fixed in tangible form, and extends for the life of the author, plus seventy years. (For “works made for hire” or anonymous or pseudonymous works,³ the duration of the copyright is 95 years from publication or 120 years from creation, whichever is shorter.) Registration with the Copyright Office is not necessary for copyright protection, however it is necessary before an infringement suit may be filed in court. When the duration of a copyright expires, the work enters the public domain, where it can be freely used by anyone. The categories of copyrightable works include the following: literary; musical; dramatic; architectural; pantomimic or choreographic; pictorial, graphic, or sculptural; motion pictures, or other audiovisual works; and sound recordings.⁴ Copyright protection gives the owner of the copyright the exclusive right to do and to authorize others to do the following: to reproduce the work, to create derivative works based on the work, to distribute copies of the work, to perform (or play) the work publicly, or to display the work publicly.⁵ Exceptions to these restrictions are made for “fair use” purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, and research.⁶ American copyright law is contained in Title 17 of the United States Code.

Section III: History of Copyright Policy

Early History

     Today’s copyright laws developed out of a system that began as an instrument of censorship. In 1557, the Catholic Queen Mary Tudor ended a 120-year struggle by the British crown to censor printing presses in England by issuing a charter to the Stationer’s Company (a guild of printers). The charter specified that only members of the company were legally allowed to print books, with the requirement that all books be granted prior approval by the crown. This arrangement worked out well for the government, which got to censor all printed material, and for the publishers, who were granted exclusivity (the monopoly power to print and distribute specified works) by the state. This principle of exclusivity is the basis of the copyright principle.⁷ It is worth noting that the charter granted to the Stationer’s Company was not a recognition of some revealed natural right of authors, but a statute enacted by the state. Moreover, it granted a monopoly that allowed the Stationer’s company to set a price for a book without regard to market pressures (allowing them to overcharge). In 1673, Massachusetts enacted the first colonial copyright statute.⁸ Although American publishers had protected monopolies under British law, enforcement was easier with local laws. Due to colluding by publishers in an effort to keep prices artificially high, competition in Colonial America as low. Consequently, Massachusetts was the only colony to enact copyright legislation.

     Despite the power of the publishing industry, its political power was waning. In 1694, despite persistent lobbying by the Stationer’s Company to preserve its monopoly powers, the final renewal of the Licensing Act expired. In an effort to regain its monopoly, the Stationer’s Company began pressuring Parliament for new protective legislation. It was in this effort that the rights of the author first became an issue. Up until 1709, no legislation mentioned the rights of authors—only publishers. In their appeal to Parliament, printers argued that both authors and the public were harmed by the lack of price stability in the marketplace (i.e., artificially high fixed prices). This effort led to the passage of the Statute of Anne in 1709. The Statue of Anne established two levels of copyright. First, the act protected, in the name of the author, all books published after 1709 for a term of fourteen years, renewable for another fourteen years. Second, the act granted the Stationer’s Company exclusive rights to all previously published works for an additional twenty-one years. After that period elapsed, the copyright could not be renewed. The books would then enter what was the first codified “public domain.” The public domain is “a collection of works old enough to be considered outside the scope of the law and thus under the control of the public and the culture at large.”⁹

     Once the Statute of Anne was passed, the primary point of contention was the duration of the copyright monopoly. The issue of duration pitted the established publishers (members of the Stationer’s Company) against new publishers, who wanted to print the older works once the copyright lapsed. Not long after the Stationer’s monopoly expired in 1730, the issue of duration was taken to British courts. The Stationer’s argued (in an attempt to preserve their monopoly) that an author has a perpetual common law copyright to what he writes because it is his “literary property.”¹⁰ Various cases led to differing rulings in lower courts, and the issue was eventually brought before the House of Lords on appeal in the case of Donaldson v. Becket. The Lords ruled that there had never been any such thing as a copyright at common law. According to Vaidhyanathan, “Donaldson v. Becket stated unequivocally that copyright was a state-granted privilege that should last for a limited time, not a perpetual natural right that flows magically from an author’s pen.”¹¹ Lord Mansfield cautioned that:

     We must take care to guard against two extremes equally prejudicial; the one, that men of ability, who have employed their time for the service of the community, may not be deprived of their just merits, and the rewards of their ingenuity of labour, the other, that the world may not be deprived of improvements, nor the progress of the arts be retarded.¹²

Early American Copyright Laws

     After the American Revolution divorced American courts from British statutory law, the Continental Congress in 1783 called on the states to pass copyright legislation. The resolution recommended that the states give copyright to authors and publishers “for a certain time, not less than fourteen years from the first publication; and to secure to the said authors, if they shall survive the term first mentioned, and to their executors, administrators and assigns, the copyright of such books for another term of time not less than fourteen years.”¹³ At the time this resolution was adopted, copyright laws were already on the books in Connecticut, Massachusetts, and Maryland. In response to the resolution, nine of the other ten states enacted copyright legislation, with Delaware as the only state abstaining. Five states accepted the resolution’s recommendation and modeled their statutes on the British Statute of Anne: two copyright terms of fourteen years, the second term contingent upon the author’s surviving the first.¹⁴

     In 1787, the Constitutional Convention adopted a provision that gave Congress the power to write copyright laws “to promote the progress of science and useful arts.”¹⁵ This phrase makes it clear that the purpose of copyright regulation is not to protect the “property” of authors but to benefit the public first and foremost, so citizens can enjoy the fruits of science and the useful arts. Moreover, the authors of the Constitution intended for the copyright to last for a limited time, reflecting the weariness of the founding fathers, particularly Madison and Jefferson, of state granted monopolies. Madison described such monopolies as “among the greatest nuisances of Government” but nevertheless needed as “encouragements to literary works and indigenous discoveries.”¹⁶ J. Waldron clearly summarizes the theory behind the constitutional copyright principle:

     The reasoning goes like this. The overall social good is served by the progress of science and the useful arts. The progress of science and the useful arts is served by the encouragement of authors. The encouragement of authors is secured by providing them with the incentive of legally secured monopoly profits from the sale and circulation of their works for a limited period of time.¹⁷

     Congress followed through with its constitutional mandate and enacted the first federal copyright legislation—the Copyright Act of 1790. As might have been expected, this act reflected its historical antecedents and the author was given the copyright for fourteen years and “if, at the expiration of the said term, the author or authors, or any of them, be living, and a citizen or citizens of these United States, or resident therein, the same exclusive right shall be continued to him or them, his or their executors, administrators or assigns, for the further term of fourteen years.”¹⁸

Challenges and Revisions

     Since its passage, American copyright law has been regularly broadened to include new modes of communication. Twelve years later, the law was amended to add the design, engraving, and etching of prints.¹⁹ In 1831, Congress extended the term of copyright protection to 28 years with a fourteen-year renewal option and added engravings and printed musical compositions to copyright protected works.

     In a challenge brought before the Supreme Court in the 1834 case of Wheaton v. Peters, the court ruled that a copyright is a privileged monopoly granted to an author by the government and should be limited in order to allow competitive printing to disseminate knowledge cheaply. Justice Mclean, on behalf of the majority, declared that the United States recognized no common law notion of copyright and that “the rationale of copyright rested on the usefulness of the book to the general interests of American society, not on a perpetual protection of the author’s property.”²⁰ The 1841 case of Folsom v. Marsh established an important principle of American copyright law—the concept of “fair use.”²¹ In his decision, Justice Story wrote:

In short, we must often look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supercede the objects, of the original work.²²

     In 1856 Congress added dramatic compositions to the list of copyrightable works, and it added photographs in 1868. In the first act to erode the principle of copyright protecting expression and not ideas, Congress in 1870 added translations and dramatic adaptations to the list of rights protected by copyright. In 1909, Congress amended copyright law to protect works for 28 years, renewable for another 28 years (making the total duration of protection 56 years). At the same time, Congress added mechanical reproductions of music to the list of protected rights. The 1909 revision also defined a new type of authorship—corporate authorship. Justice Holmes defined film as a dramatization, thereby protecting the works of copyright holders from being dramatized in films, in the 1911 Supreme Court case of Kalem Co. v. Harper Bros.²³ The following year, Congress added “motion picture photoplays” to the list of protected methods of representation.²⁴ In 1947, copyright law was codified into Title 17, of the United States Code.

     The Copyright Act of 1976 was a major revision to American copyright law, preempting all previous copyright law in the United States. The act addressed the following: Scope and Subject Matter of Works Covered, Exclusive Rights, Copyright Term, Copyright Notice and Copyright Registration, Copyright Infringement, Fair Use and Defenses and Remedies to Infringement.²⁵ This revision codified the principle of fair use and the first sale doctrine. (The first sale doctrine specifies that once a copyright holder sells a work to an individual, that person has the right to dispose of the work however he pleases, including selling or giving it to a third party.) Fair use was codified in Section 107, Title 17 of the United States Code. Section 107 states that “for purposes such as criticism, comment, news, reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” To determine whether the use of a work is fair use, the law prescribes the following four factors to be considered: purpose and character of the use, nature of the copyrighted work, the amount and substantiality of the portion used in relation to the whole, and the effect of the use on the potential market. However, these rights have been eroded since, and continue to be eroded today. Additionally, the Copyright Act of 1976 added copyright protection for unpublished works and extended the duration of the copyright to the author’s life plus fifty years. The act also established the duration for “works made for hire” as 70 years from publication or 100 years from creation, whichever is shorter. A new section (§ 108) was added to Title 17 of the United States Code that allows libraries to photocopy works without permission for the purposes of scholarship, preservation, and interlibrary loan.

     Four years later, the Copyright Act of 1980 added computer programs to the list of protected works. In the 1984 case of Universal City Studios, Inc. et al. v. Sony Corporation of America Inc. et al. (commonly known as the Betamax case), the Supreme Court ruled that consumers had a fair use right to “time-shift” their viewing of broadcast programs by recording them with the VCR.²⁶ In 1988, the United States became a signatory of the Berne Convention, the result of which was the elimination of the requirement of a copyright notice on protected works. Congress amended the Copyright Act in 1990 to prohibit the commercial lending of computer software. However, libraries were permitted to lend software provided that a copy of a computer program lent by the library has affixed to the packaging containing the program a copyright warning. The same year, Congress added Section 511 to Title 17. It provided that states and state employees and instrumentalities would not be immune from being sued for monetary damages in federal court for copyright infringement. (This was deemed necessary because the Eleventh Amendment to the U.S. Constitution prohibits states from being sued in federal courts.)²⁷

     In 1992, Section 304 of Title 17 was amended to make copyright renewal automatic, thereby dramatically curtailing the entry into the public domain of works protected before 1978. The same year, Congress enacted the Audio Home Recording Act of 1992. This act confirmed the consumer’s right to use—and the retailer’s right to sell—all analog and digital audio recording formats. As part of this compromise, digital audio recording devices must include a system that prohibits serial copying. Moreover, manufacturers or importers must pay a modest royalty on new digital audio recording devices and media. Section 1008 of Title 17 affirmed the right of individuals to make audio recordings for noncommercial use, stating:

     No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.²⁸

     Also in 1992, the Supreme Court heard a fair use case regarding the rap parody of Roy Orbison’s song, “Pretty Woman.” In Campbell v. Acuff-Rose Music, Inc., the Supreme Court found that a commercial use could be a fair use, especially when the markets for an original work and a transformative work may be different.²⁹ In 1998, Congress passed the Sonny Bono Copyright Term Extension Act, which extended the duration of the copyright to the author’s life plus seventy years, and for “works for made for hire” to 95 years from publication or 120 years from creation, whichever is shorter.³⁰ The Sonny Bono Act also extended existing copyrights for twenty more years. Many feel that this provision was the result of the powerful influence of the media industry, particularly the Walt Disney Corporation. Several Disney movies were set to expire and enter the public domain beginning in the year 2003, including Mickey Mouse and Donald Duck (in 2009). With the revision, Disney can continue to protect its cash cow, while simultaneously keeping numerous important works by other authors out of print.³¹

Copyright Law Enters the Digital Age

     The Digital Millennium Copyright Act of 1998 (DMCA) was the foundation of an effort by Congress to implement United States treaty obligations and to move the country’s copyright law into the digital age.³² Title I of the DMCA amends U.S. copyright law to comply with the World Intellectual Property Organization (WIPO) Copyright Treaty and the WIPO Performances and Phonograms Treaty, which were adopted at the WIPO Diplomatic Conference in December 1996.³³ The two major provisions of the WIPO treaties require signatories to provide legal remedies against circumventing technological protection measures and tampering with copyright management information. To comply with these treaty provisions, the DMCA added a new chapter (Chapter 12) to Title 17 of the United States Code.³⁴ The DMCA:

• Prohibits the circumvention of any effective technological protection measure installed to restrict access to a copyrighted work.

• Prohibits the manufacture of any device, composition of any program, or offering of any service that is designed to defeat technological protection measures.

• Specifically allows certain uses such as reverse engineering, security testing, privacy protection, and encryption research.

• Makes no textual change to the fair use provisions of the Copyright Law, despite eliminating the possibility of unauthorized access to protected materials for fair use purposes.

• Limits the liability that online service providers might face if one of their clients were circumventing or pirating.³⁵

     S. Vaidhyanathan describes the DMCA as “the best example of legislative recklessness…upending more than two hundred years of copyright law.”³⁶ The DMCA puts the power to regulate access and use of copyrighted material into the hands of engineers and the companies that employ them, taking the decision-making power away from Congress, courts, librarians, writers, artists, and researchers.³⁷ Vaidhyanathan observes that the enactment of the DMCA amounts to:

The surrender of republican deliberation within the nation-state to unelected multilateral nongovernmental bodies. Copyright issues went global. Ancillary markets for music and motion pictures became central to marketing efforts. So [WIPO]…assumed a greater role in copyright policy as multinational media companies sought global standards that satisfied their ambitions.³⁸

Section IV: History and Structure of the Copyright Office

     Two weeks after Congress enacted the Copyright Act of 1790, the first work was registered. Until 1870, copyright claims were recorded by clerks of U.S. District Courts. In that year, Congress centralized copyright functions in the Library of Congress under the direction of the Librarian of Congress (Ainsworth Rand Spofford at the time). By 1897, the Copyright Office had grown important enough that it was established as a separate department within the Library of Congress. Thorvald Soldberg was appointed the first Register of Copyrights in 1897. The current Register is Marybeth Peters, appointed in 1994.

     The Copyright Office is located at 101 Independence Avenue, S.E., Washington, D.C., and is one of the major service units of the Library of Congress. It occupies portions of the James Madison Memorial building and employs more than 400 people. In the fiscal year 2000, the Copyright Office registered 515,612 claims to copyright and mask works, and collected for later distribution to copyright holders nearly $200,000,000 in cable television, satellite carrier, and Audio Home Recording Act compulsory license funds. As of fiscal year 2000, the Copyright Office had recorded 29,131,112 registrations.³⁹ It’s budget for fiscal year 2000, was $26.7 million, which was down from $29.8 million in fiscal year 1999.⁴⁰ (The amounts listed are the Copyright Offices costs less the revenue it earned.)

     The purpose of the Copyright Office is to promote creativity in society. Its roles include: providing expert assistance to Congress on anticipated changes in U.S. copyright law; analyzing and assisting in the drafting of copyright legislation and legislative reports; providing and undertaking studies for Congress; offering advice to Congress on compliance with multilateral agreements such as the Berne Convention; working with the State Department, the U.S. Trade Representative’s Office, and the Patent and Trademark Office in providing technical expertise in negotiations for international intellectual property agreements; providing technical assistance to other countries in developing their own copyright laws; and promoting (through its International Copyright Institute) worldwide understanding and cooperation in providing protection for intellectual property.⁴¹ The capacity in which the Copyright Office serves most Americans is by serving as an office of record and registering copyright claims. Additionally, the Copyright Office administers various compulsory licensing provisions of the law, including the collection of royalties.

     The Copyright Office has a single head, the Register of Copyrights. The register provides advice to Congress, drafts legislation, prepares technical studies, oversees the administration of the Copyright Arbitration Royalty Panel (CARP) process, and administers copyright law. Further, the Register of Copyrights serves as Associate Librarian of Congress for Copyright Services. The Register of Copyrights is assisted by the Copyright General Counsel and the Associate Register for Policy and International Affairs, both of whom provide legal counsel to the Register. The Associate Register for National Copyright Programs assists the Register in the development of an electronic copyright registration system. The Associate Register for Operations shares responsibility with the Register for planning and directing the Copyright Office and its six divisions.⁴² The six divisions of the Copyright Office are:

1. Receiving and Processing Division. This division handles all incoming and outgoing mail, records and deposits payments for copyright fees, routes applications for registration of copyright, handles incomplete claims, maintains files on all office correspondence cases, assigns copyright registration numbers, and creates and mails certificates of registration.
   
   
2. Examining Division. This division examines all applications, copies, phonorecords, and other material submitted to the Copyright Office for registration or renewal and determines their acceptability for registration under the provisions of Title 17 of the United States Code and Copyright Office regulations. Moreover, it develops through legal and factual research policies and practices in order to administer the copyright law and provide guidance to examiners and the public. The Examining Division is also responsible for examining claims to mask work protection filed under the Semiconductor Chip Protection Act of 1984.
   
   
3. Cataloging Division. The responsibilities of this division include recording bibliographic descriptions and copyright facts for all works registered in the Copyright Office. It thereby provides affective references to all information of record relating to registrations, deposits, recorded assignments, and other documents.
   
   
4. Information and Reference Division. This division is responsible for providing public information and reference services concerning copyrights. It is in charge of responding to all copyright information and reference requests from the public. Additionally, it produces and supplies Copyright Office forms and publications, furnishes search reports based on Copyright Office records, prepares certifications and other legal documents, prepares authorized reproductions of works submitted for registration, and preserves copyright-related records.
   
   
5. Licensing Division. The Licensing Division is responsible for administering compulsory and statutory licenses and collecting royalties. Licenses are issued: for secondary transmissions by cable systems for making and distributing of phonorecords; for the use of certain works in connection with noncommercial broadcasting; for secondary transmissions by satellite carriers; and for the distribution of digital audio recording devices and media. After deducting its operating costs, the Licensing Division invests its balance in interest-bearing securities with the U.S. Treasury for later distribution to copyright owners.
   
   
6. Copyright Acquisitions Division. This division is responsible for enforcing the mandatory deposit requirements of the Title 17 and Copyright Office regulations. The deposits are needed for the collections of the Library of Congress.⁴³

     In 1988, Congress created the International Copyright Institute (ICI) within the Copyright Office. ICI provides training for high-level officials from developing and newly industrialized countries throughout the world. It is charged with encouraging the development of effective intellectual property laws and enforcement overseas.⁴⁴

Section V: Analysis of Copyright Policy

Policy Instrument Used

     Copyright regulation uses a form of limiting market entry. Copyright laws prohibit competitors from creating works (whether in print, film, audio, digital, or any other medium) that are identical to or derived from an original copyrighted work without the permission of the copyright holder. The federal government limits market entry by requiring other individuals or companies to obtain the permission of the copyright holder before using the protected work, and thus market entry is controlled not by the government, but by the those who hold copyrights.

     It is also interesting to note that the founding fathers considered writings and discoveries to be the fruits of science and the useful arts—a unique sort of common property resource. Unlike the usual notion of common property as a scarce resource that needs to be controlled by the government so that it is not depleted, the constitutional notion of writings and discoveries is that regulations are needed as “encouragements to literary works and indigenous discoveries.”⁴⁵

Jurisdiction

     The jurisdiction of copyright regulations is about as far-reaching as any federal regulation could conceivably be. Any “original work of authorship” created within the United States, whether published or unpublished, is granted protection under Title 17 of the United States Code the moment it is “fixed in any tangible medium of expression.”⁴⁶ Violations of copyright law can result in both civil and criminal prosecution. (See “Sanctions” below.) Furthermore, although the Eleventh Amendment protects states from most lawsuits in federal courts, Section 511 of Title 17 provides that states and state employees and instrumentalities are not immune from being sued for monetary damages in federal court for copyright infringement. Thus, United States copyright law has exceedingly expansive jurisdiction.

Beneficiaries

     Copyright policy was designed to protect the interests of society. Its original purpose was to provide the public with the benefits of scientific discoveries and artistic creations. It was designed to create a rich public domain to benefit the people and culture of the United States. Nonetheless, as discussed in Section VIII below, American copyright policy has shifted over the course of two centuries so that it now primarily benefits copyright holders: authors, artists, musicians, architects, computer programmers, and the like. The works created by authors are protected for their entire lifetime, plus their heirs benefit from an additional seventy years of protection after the author’s death. However, the primary beneficiaries of copyright regulations are large corporations, especially the media industry. “Corporate copyrights” last for 95-120 years—more than enough time for companies to reap large financial rewards. These multi-billion dollar global media giants include:

• Metro-Goldwyn-Mayer, Inc. (MGM). MGM owns Metro-Goldwyn-Mayer Studios Inc., United Artists Corporation, United Artists Films Inc. and Orion Pictures Corporation. MGM has been a long-term lobbyist of increased copyright protection. It also owns the largest post-1948 film library in the world with more than 4,000 titles and 10,200 TV shows.^47]
  
  
• Viacom. Viacom is the world’s #3 media company, and spans movies, television, radio, and the internet. It owns CBS, Paramount Pictures, the United Paramount Network (UPN), MTV Networks (MTV, VH1, Nickelodeon), Showtime Networks, Comedy Central (50%), the publisher Simon & Schuster, Infinity Broadcasting (some 185 radio stations), and 82% of Blockbuster (the #1 video rental chain).⁴⁸ Viacom boasts over 500,000 copyrights.⁴⁹ Paramount Pictures maintains a library of some 1,000 films and releases about a dozen new titles annually. The company also produces and distributes television programming, owns and operates five theme parks, operates more than 200 theaters, and owns complete or partial rights to more than 100,000 musical works.⁵⁰
  
  
• The Walt Disney Company. Disney is the world’s #2 media conglomerate.⁵¹ The Walt Disney Company owns ABC, Inc (including the ABC Television Network and ABC Radio Networks), Fox Family Worldwide, Buena Vista Production, Touchstone, Hollywood Pictures, and the Miramax Film Corporation.
  
  
• AOL Time Warner. “Whether you watch it, read it, listen to it, or log on to it, chances are it comes from the mighty colossus that is AOL Time Warner.” ⁵² AOL Time Warner stands above the crowd as the #1 media conglomerate in the world. The company’s behemoth reach extends across a vast range of interests including online services, film, TV, music, cable networks and systems, publishing, and professional sports.⁵³ The following companies are wholly owned subsidiaries of AOL Time Warner: America Online, AOL Time Warner Book Group, AOL Time Warner Interactive Video, Home Box Office, New Line Cinema, Time Inc., Time Warner Cable, Turner Broadcasting, Warner Bros., and Warner Music Group.
  
  
  • Turner Broadcasting System (TBS). TBS owns several cable TV networks, including CNN news properties, the Cartoon Network, TBS Superstation, Turner Classic Movies, and Turner Network Television (TNT). It also owns 66% of the WB Television Network, New Line Cinema, and Castle Rock Entertainment. Additionally, TBS owns professional baseball’s Atlanta Braves, professional basketball’s Atlanta Hawks, and professional hockey’s Atlanta Thrashers.⁵⁴
    
    
  • Time, Inc. Time is the leading U.S. consumer magazine publisher, with approximately 140 magazines in its collection, including: Time, People, Sports Illustrated, Fortune, Money, Entertainment Weekly, In Style, and Southern Living.⁵⁵
    
    
  • Warner Bros., Inc. Today, the vast Warner Bros. library is one of the largest in the world. It consists of more than 6,500 feature films, 32,000 television titles and 13,500 animated titles.⁵⁶

Sanctions

     Violations of copyright laws may result in both civil and criminal penalties. The Copyright Office itself does not impose sanctions on violators of copyright law. However, violators can be sued in civil courts and prosecuted in federal criminal courts. The specifications for infringement of a copyright are contained in Chapter 5 of Title 17. Courts having jurisdiction under copyright law may grant temporary and final injunctions to prevent infringement of a copyright.⁵⁷ Such courts may impound infringing articles if deemed necessary, and may, as part of a final judgment, destroy or dispose of all said articles.⁵⁸ Section 504 states that an infringer of copyright is liable for either: (1) the copyright owner’s actual damages and any additional profits of the infringer, or (2) statutory damages (of up to $150,000).⁵⁹ Section 505 provides for the recovery of costs and attorney’s fees in civil action at the discretion of the court. It is worth noting that Title 17 provides for fines that approximately equal the profits earned by violating copyright law.

     Criminal copyright infringement is defined in Section 506 of Title 17 as willful infringement of a copyright “either (1) for purposes of commercial advantage or private financial gain, or (2) by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value or more than 1,000.” The same section also specifies a fine of $2,500 to be levied against persons who: (1) fraudulently place a copyright notice on any article, (2) fraudulently remove a copyright notice on any article, or (3) knowingly makes false representations of a material fact in the application for copyright registration. Section 507 places a five-year limitation on action for criminal proceedings and a three-year limitation on action for civil proceedings under Title 17.

     The punishments for criminal infringement are specified in Section 2319 of Title 18. It states that “whoever who violates Section 506 (related to criminal offenses) of Title 17 shall be punished as provided [below] and such penalties shall be in addition to any other provisions of Title 17 or any other law.” It prescribes that:

Any person who commits an offense under section 506 (a)(1) of title 17-

(1)   shall be imprisoned not more than 5 years, or fined in the amount set forth in this title, or both, if the offense consists of the reproduction or distribution, including by electronic means, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500;

(2)   shall be imprisoned not more than 10 years, or fined in the amount set forth in this title, or both, if the offense is a second or subsequent offense under paragraph (1); and

(3)   shall be imprisoned not more than 1 year, or fined in the amount set forth in this title, or both, in any other case.⁶⁰

 

Section VI: Involved Interest Groups

     Because of the broad economic impact of copyright regulation and the size of the industries it affects, this policy area has many powerful interest groups involved. The interest groups can be divided into two categories: those in favor of stronger copyright laws (such as longer duration of the copyright, more inclusive rights for the copyright holder, and tougher sentences for violations), and those against stronger laws (or for weaker laws). Two major interest groups support stronger copyright laws:

• Recording Industry Association of America (RIAA). RIAA is “the trade group that represents the companies and people making creative works in the recording industry. The RIAA works to protect intellectual property rights worldwide and the First Amendment rights of artists.”⁶¹ One issue that RIAA is currently interested in is the rates charged to companies engaged in webcasting. (See Section VII below for more information on the webcasting issue.)
  
  
• Motion Picture Association (MPA). The MPA (and its counterpart the Motion Picture Association of America—MPAA) is the most powerful interest group involved in the copyright issue. It was founded in 1922 as the trade association of the American film industry, and represents the interests of its members—the multi-billion dollar media giants: Walt Disney Company, Metro-Goldwyn-Mayer, Inc. (MGM), Paramount Pictures Corporation (owned by Viacom), Warner Bros. (owned by AOL Time Warner), and others. The MPAA strongly supports strengthened copyright regulations, and even owns a mirror website: www.copyright.org. In a statement that indicates the arrogance (and perhaps the actual power) of the MPA, it referred to itself as “a little State Department” that “has expanded to cover a wide range of foreign activities falling in the diplomatic, economic, and political arenas.”⁶² The MPA works to “implement and strengthen existing copyright protection legislation, assist local governments and law enforcement authorities in the investigation and prosecution of piracy cases, initiate civil litigation on behalf of its member companies against copyright infringers, and conduct education outreach programs regarding the harmful effects of piracy.”⁶³ The MPA and its affiliated organizations work to strengthen existing copyright laws around the world and, “when necessary, suggest appropriate penalties as part of copyright reform.”⁶⁴

Groups that oppose stronger copyright laws include:

• Digital Media Association (DiMA).  DiMA is an alliance of companies that develop and deploy technologies to perform, promote, and market music and video content on the internet. The association was formed in June 1998 by seven leading webcentric companies and is led by a 13-member Board of Directors that includes representation from the members’ core industries: media companies, retail and distribution companies, and infrastructure companies. It represents new media companies such as RealNetworks and Liquid Audio, and webcasters such as NetRadio and Live 365. “Through public education and legislative activity, DiMA encourages pro-technology pro-consumer public policies that enable companies to deliver content to consumers in new, exciting (and commercially compelling) ways.”⁶⁵ The Digital Media Association opposes “technical and legal barriers that inhibit innovation or adoption of new technologies, products and services on the digital media front.”⁶⁶
  
  
• DigitalConsumer.org. Digitalconsumer.org is a consumer-advocacy group founded in 2001. Its mission is “to restore the balance of copyright law so that artists and creators can prosper while citizens have reasonable flexibility to use content in fair and legal ways.”⁶⁷ The group is composed of entrepreneurs, investors and consumers, and is proposing a set of principles—a Consumer Technology Bill of Rights—that it intends to have passed into law. These principles would “preserve consumers’ historic fair-use rights that have been recently diminished by changes in copyright law made at the request of media companies.”⁶⁸
  
  
• Gateway, Inc. Gateway is a computer manufacturer who believes computer sales are threatened by proposed tightening of copyright regulations pertaining to digital media and the internet. It has been conducting a nationwide TV and internet campaign to promote the fair use rights of consumers (such as burning audio CD’s).

Section VII: Current Status

     Copyright policy is currently being debated on two fronts. First, the Copyright Office will rule by May 30, 2002 on proposed rules and rates for webcasting. (Webcasting refers to the real-time transmission (“streaming”) of audio and audiovisual works in digital formats over the internet.)⁶⁹ Second, in the United States Senate, a bill (known as the “Consumer Broadband and Digital Television Promotion Act of 2002,” or the “Hollings Bill”) has been introduced by Senator Ernest “Fritz” Hollings. This bill would require the high tech. industry to come up with standards (hardware and/or software) to protect copyrighted media from being downloaded, copied, or distributed illegally.

Webcasting

     In May 2001, the Recording Industry Association of America (RIAA) requested that the Copyright Office establish rules regarding the reporting of information by webcasters and that the office establish rates for royalty payments. The Copyright Arbitration Royalty Panel (CARP) reported its proposals to the Copyright Office on February 20, 2002, which has until May 21, 2002 to decide the issue.⁷⁰ Under the proposed rules, all webcasters (radio stations, internet stations, and satellite companies) would have to report the following information about every streamed program:

1. The name of the service
2. The channel of the program (AM/FM stations use station id)
3. The type of program (Archived/Looped/Live)
4. Date of transmission
5. Time of transmission
6. Time zone of origination of transmission
7. Numeric designation of the place of the sound recording within the program
8. Duration of transmission (to nearest second)
9. Sound Recording Title
10. The ISRC code of the recording
11. The release year of the albums per copyright notice and in the case of compilation albums, the release year of the album and copyright date of the track
12. Featured recording artist
13. Retail album title
14. The recording label
15. The UPC code of the retail album
16. PThe catalog number
17. The copyright owner information
18. The musical genre of the channel or program (station format)
19. And a listener’s log listing:
1. The name of the service or entity
2. The channel or program
3. The date and time that the user logged in (the user’s time zone)
4. The date and time that the user logged out (the user’s time zone)
5. The time zone where the signal was received (user)
6. Unique User Identifier
7. The country in which the user received the transmissions⁷¹

This information would be required to be in a specific data file format and reported.

     Webcasters were stunned that the CARP report followed almost to the letter the requests made by the Recording Industry Association of America. Webcasters are outraged because they say this would be a tremendous burden and involves collecting information that they do not have and that it constitutes an invasion of privacy of their listeners. RIAA, however, contends that the information is easily obtainable and that several webcasters already report such a level of information.

     In addition to the proposed change in reporting of information, the Copyright Arbitration Royalty Panel (at the behest of RIAA) has proposed increases in the royalty rates charged to webcasters. The webcasting community has objected, stating that it currently pays royalties the same way that traditional radio stations do. “What is being proposed is an additional royalty to the record companies that traditional radio stations have never had to pay.”⁷² Historically, over-the-air radio stations have had to pay royalties to composers (in total, about 3% of revenues), but not to the record companies or artists. Congress felt that those parties benefited sufficiently from the promotional value of radio airplay. However, the DMCA established new “sound recording performance rights” to copyright owners on the basis that digital copies are “perfect” copies and thus the sales of CD’s might be at risk.⁷³

     Record companies and webcasters were given a chance to negotiate an agreement among themselves. Record companies wanted 15% of revenues, but webcasters wanted to pay the 3% of revenues that over-the-air broadcasters have historically paid. When the two sides deadlocked, the Copyright Office established the Copyright Arbitration Royalty Panel (CARP) to resolve the issue. The CARP proposal recommended a royalty rate of .14¢ per song per listener for internet-only webcasters (.07¢ per song for commercial radio station simulcasts, and .02¢ per son for non-commercial radio simulcasts), with royalties due retroactively to October 1998.⁷⁴

     Webcasters argue that because the internet radio industry is still young and its audience is yet too small to attract most advertisers, the proposed rate is much more than the “15% of gross revenues” the RIAA originally asked for. According to SaveInternetRadio.org, “For most webcasters, it’s more like an effective royalty rate of 200% to 300% or more of gross revenues!”⁷⁵ They note that while CARP’s proposed royalty rate might be manageable for Internet radio properties owned by multi-billion dollar corporations like AOL Time Warner, Yahoo!, and Microsoft, it will “effectively bankrupt the vast majority of webcasters. For example, for a mid-sized independent webcaster … that has had, say, an average audience of 1,000 listeners for the past three years, the bill for retroactive royalties—which will come due 45 days after the royalty rate is approved—would be $525,600!”⁷⁶

The Consumer Broadband and Digital Television Promotion Act of 2002

     Also known as the Hollings Bill, this act would require the high tech. industry to create hardware and software measures to prevent users from illegally copying, distributing, or downloading copyrighted material without permission. If the high tech. industry fails to devise standards within one year, the government would step in and do it for them by imposing standards that it would devise, which would report user attempts to violate copyright laws to a government regulatory agency. The aim is to give the entertainment industry virtual control over the digital domain.⁷⁷ Technology companies (such as Gateway, Inc.) strongly object to the measure. They believe that it would not only lead to higher prices for consumers, but might violate the “fair use” clause in existing copyright law, which allows the purchaser of a copyrighted item to make multiple copies for individual personal use (whether that item be a CD, book, or videotape). According to David Farber, former chief technologist of the FCC, “I think it’s a very, very badly conceived idea. The result of it would be to essentially emasculate the PC as a useful device.”⁷⁸ Gateway has responded to this perceived threat by launching a series of nationwide radio and television ads saying that Gateway “supports your right to enjoy digital music legally.” However, the Disney chairman, Michael Eisner, recently testified before the Senate’s Commerce Committee that, “If you don’t protect content on the internet, you will end the entertainment business.”⁷⁹ Along the same lines, Jack Valenti, chairman of the MPAA, described the industry’s problems as “a national economic issue.”⁸⁰

     But this unbelievable attitude by the media industry has been widely criticized. The British newspaper The Financial Times observed that the RIAA and others have proposed “absurd” legislation what would “unbalance a long and careful compromise between the needs of those who create new works (and who have a legitimate need for protection of their work so that they profit from it) and the general public, whose rights are constrained by the grant of copyright.”⁸¹ RIAA claims that such protective actions are necessary and point to recent declines in music CD sales. However, LA Times editor Jacob Heilbrunn asks if technology and the internet are solely to blame for the industry’s woes. “No one forced EMI to give singer Mariah Carey an $80-million music package that it has to eat. With sales plummeting, it’s hard to justify the tens of millions of dollars in compensation that record executives have grown accustomed to.”⁸² Heilbrunn goes on to observe:

The fundamental problem in all this is Hollywood’s desire to maintain complete control and to make ever greater profits. As Joe Kraus, co-founder of the internet portal Excite and of DigitalConsumer.org, testified before the Senate Judiciary Committee earlier this month, “[The industry’s] goal is to create a legal system that denies consumers their personal-use rights and then charge those consumers additional fees to recoup them.”⁸³

     It is too early to know how Congress will support this bill. In previous years, Congress and President Clinton supported expansions of copyright law. Congress passed the Digital Millennium Copyright Act of 1998 with unanimous consent, which President Clinton signed. Current President George W. Bush has not indicated his position on the issue of copyright regulation.

Section VIII: Capture Theory

     A regulatory agency is said to be “captured” when it exhibits any of the following: (1) it furthers the industry’s interests at the expense of the public; (2) it is more responsive to the industry pressures; (3) it has become too identified with the industry; (4) it has become overly protective toward the regulated firms; (5) it is passive, largely rubber stamping the firm’s decisions; and (6) it adopts the regulated industry’s objectives as its own. Simply put, when a regulatory agency bushes aside the common good in favor of private interests or special groups, it is considered captured.⁸⁴

     The Copyright Office does not regulate in the same way that other agencies regulate an industry. Nonetheless, it shows signs of capture in the way that it seems to largely rubber stamp the media industry’s proposals. Furthermore, on a broader scale an analysis of copyright policy reveals that the legislative and judicial system is captured with respect to copyright policy. The history of copyright policy in the United States has followed Bernstein’s Life-Cycle Theory: Gestation, Youth, Maturity, and Old Age.

Gestation

     When the founding fathers introduced the principle of the copyright into the Constitution, the emphasis was on promoting the progress of science and the useful arts for the benefit of the public. Madison and Jefferson were strongly opposed to government-sanctioned monopolies, but they nonetheless saw copyrights as a necessary compromise to encouragement “literary works and indigenous discoveries.”⁸⁵

Youth – Maturity

     During the period of “Challenges and Revisions” described above, Congress and the courts gradually shift in favor of the media industry. The duration of the copyright was extended and Congress and the Supreme Court expanded the scope of rights covered by copyright law. The principle of copyrights protecting expressions and not ideas was eroded, and derivative works were included in the list of exclusive rights belonging to the copyright holder.

Old Age

     Copyright policy in the United States has reached the Old Age stage of Bernstein’s Life-Cycle. The powerful media industry dominates the debate over copyright policy. Congress has substantially lengthened the duration of the copyright and the scope of rights covered by copyright protection. The distinction between expression and idea has been almost entirely lost, and the data services industry is even lobbying for protection of databases (mere collections of ideas) under Title 17. The Hollings Bill will, perhaps, be a good test of whether American copyright policy has been truly captured by the media industry. If the bill passes, it will demonstrate without a doubt that copyright policy has degenerated from a policy designed to enrich the nation’s culture and benefit its citizens to a policy designed to enrich the media industry and benefit the coffers of multi-billion dollar corporations.

Section IX: Copyright Law at the Dawn of the 21st Century

     Three hundred years ago, copyright law developed out of a British system designed to give a handful of companies a monopoly over the media industry (then limited to the publishing industry). As their power faded, the publishing industry appealed to the interests of the author and the public as a means of preserving their monopoly. They succeeded in shifting the focus, and for the next 150 years, American copyright law was designed to benefit society as a whole. Gradually, however, the media industry reasserted its power and copyright law began to tilt back in favor of the industry. Today, copyright policy in the United States (and around the globe) benefits the media industry at the expense of the public. Works copyrighted today will not enter the public domain for a century or more, starving the public domain and allowing the media industry to engorge itself on its government-sanctioned monopoly (earning profits well beyond Madison’s idea of an incentive to create). Moreover, with the move into the Digital Age, there is little hope copyrighted works will ever enter the public domain. Works created today and protected by copyright management systems are permanently held beyond the reach of the public domain and beyond the grasp of fair use. As more and more works are published exclusively in digital form, we may very well enter an age in which access to information is controlled by the media industry. Capture of copyright policy may toll the death knell for the Information Age.

Notes