RESEARCH IN PUBLIC DISCOURSE ON INTELLECTUAL PROPERTY
Congress recently considered legislation, supported by producers of movies, music, software, publishers, and some groups of artists, to curb online piracy of copyright-protected materials by offshore websites located in territories lacking robust copyright enforcement mechanisms. As it neared action on the floor of the House of Representatives, the Stop Online Piracy Act (SOPA) provoked a wave of protest from technology companies, public interest groups, and consumers who asserted that the anti-piracy measures would stifle domestic creativity, freedom of expression, entrepreneurial activity, and innovation. They also raised concerns about online privacy and security. Sponsors of SOPA and the Senate’s version of the legislation, the Protect Intellectual Property Act (PIPA), retreated from their support of the bills while still claiming that more effective copyright enforcement is necessary to protect industries vital to the nation’s culture and economy. A few weeks later, unrelated legislation, the Research Works Act, HR 3699, supported by commercial scientific publishers, to bar federal research agencies from requiring open access to published research supported by federal funds, prompted similar opposition. Again, sponsors withdrew their support.
The strident debate over the appropriate role of copyright regulation in the digital environment is not limited to the United States. Anti-piracy provisions in the Anti-Counterfeiting Trade Agreement (ACTA) and the
Trans-Pacific Partnership (TPP) Agreement are under close scrutiny and criticism in the European Union and other regions of the world.
These controversies highlight a sharp division between those who believe the digital revolution is progressively undermining the copyright protection essential to encourage the funding, creation, and distribution of new works and those who believe that proposed enhanced enforcement measures could inhibit creativity, technological innovation, and freedom of expression.
Despite these legislative impasses, the past several years have witnessed considerable activity in inter-industry compacts aimed at addressing the challenges of online copyright enforcement. In 2007, leading Internet and media companies promulgated Principles for User Generated Content (UGC) Services that have fostered the development of Web 2.0 services while combating infringing distribution of copyrighted works. Although Google did not formally sign on to this accord, the ContentID technology that it implemented in YouTube’s UGC portal reflects the UGC Principles. In June 2011, major credit card companies and payment processors—American Express, Discover, MasterCard, PayPal, and Visa—reached an agreement to develop voluntary best practices to withdraw payment services for sites selling counterfeit and pirated goods. The following month, a group of major Internet Service Providers (ISPs)—SBC, AT&T, Comcast, Verizon, CSC, and Time Warner Cable—and leading content industry organizations—the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA)—entered into a memorandum of understanding to implement a flexible Copyright Alert System to discourage infringing distribution of copyrighted works. In May 2012, the Association of National Advertisers and the American Association of Advertising Agencies issued a joint statement of best practices to address online copyright infringement. Although some may doubt the merits of these agreements, other privately negotiated arrangements will continue to emerge as new technologies make access, use, re-use, and distribution of content an inherent part of our culture and economy.
The scope and enforceability of copyright protection has substantial consequences for the nation’s culture, research enterprise, economy, trade balance, and international influence. Although copyright law’s efficacy and contours are amenable to empirical inquiry, systematically collected evidence using transparent analytical methods has not often been brought to bear. When data are marshaled and presented in copyright debates, it is usually by or on behalf of a certain set of stakeholders without opportunities for critical review—for example, many of the estimates of economic losses from infringing use of copyrighted materials, as well as estimates of the economic value of fair use enterprises. And, unfortunately, support
for independent analysis as well as public interest advocacy has declined as a number of philanthropic foundations have scaled down programs in the field of copyright.
This contrasts to a considerable degree with the emerging pattern in patent policy debates. Over the last 20 years, a fairly robust research enterprise has developed, aided by efforts to make patent applications, patent litigation, and related data available in a form usable by researchers. This body of work has examined how firms in industries as different as semiconductors and biotechnology acquire and use patents, how government examiners in the patent office review and act on patent application claims, how the patent system affects different classes of patent users ranging from entrepreneurs to universities and large multinational businesses, and how patent validity and infringement disputes are handled by the courts and in post-grant challenge proceedings (Cohen and Merrill, 2003).
Empirical research on patents, some of it cross-national as well as across industries, spans the social science disciplines, is increasingly common in legal scholarship, and in various ways is becoming institutionalized. It is a principal focus of the innovation and productivity program of the National Bureau of Economic Research (NBER), which created and maintains the largest patent database tailored to research purposes (Griliches, 1990). Research projects related to patents have been among the portfolio supported by the National Science Foundation’s Science of Science and Innovation Policy Program (SciSIP) since its inception in 2005. And in 2008 the U.S. Patent and Trademark Office (USPTO) created the Office of Chief Economist to promote and conduct a wide range of research on the management and effects of the patent system, following a recommendation of the National Academies and the examples of the European Patent Office (EPO) and World Intellectual Property Organization (WIPO).
Research on the patent system has not eliminated controversy or accelerated the enactment of legislation. Passage of the America Invents Act, a set of sweeping reforms of U.S. patent law signed into law in 2011, was a protracted and contentious process. But evidence from research was regularly cited both in the genesis of many of the reform proposals and in their discussion and resolution (Federal Trade Commission, 2003; Merrill, et al., 2004). Likewise, research results have been cited in the legal briefs and decisions in several of the landmark federal appeals court decisions of the last decade. Most important, when new issues arise in patent law and policy, it is usually not long before parties to the debate ask, “What is the research-based evidence?” rather than rely solely on the claims of practitioners and other stakeholders. We consider these positive developments and believe that copyright issues could benefit from a similar investment in research.
Although our committee’s focus is informing copyright policy development in the United States, the principle that policy should be shaped by research-based evidence applies as much to international as to domestic copyright frameworks, whether in bilateral relationships, multilateral negotiations such as ACTA and TPP, or global norm-setting institutional arrangements such as WIPO or the enforcement activities of the World Trade Organization (WTO).
Fortunately, there has been some productive thinking about an evidence-based approach to intellectual property in the international context to build upon. This is particularly true in the United Kingdom—from the Commission on Intellectual Property Rights and Development in 2002, the Gowers Review (H.M. Treasury, 2006), the work of the National Endowment for Science, Technology, and the Arts (2009, 2011) on the economic context of copyright, to the Hargreaves Report to the U.K. Government in 2011. Investigators should also consult the recent vigorous copyright debates in several advanced and developing countries—from Canada and Brazil to Colombia—in framing research questions as well as in identifying opportunities for internationally comparative studies.
Copyright protection seeks to establish enforceable and transferable exclusive rights to exploit creative works in certain ways. These exclusive rights coexist with various exceptions, limitations, and compulsory licenses. As a whole, this system aims to encourage creative expression and the dissemination and preservation of creative works without stifling cumulative creativity, technological innovation, or free expression. In this report, we argue that the assumptions upon which these aspirations are built and the results that the law in fact achieves should be the subjects of robust ongoing research to inform copyright policy discussions. The research we call for is especially critical in light of digital age developments that may, for example, change the incentive calculus for various actors in the copyright system, impact the costs of voluntary copyright transactions, pose new enforcement challenges, and change the optimal balance between copyright protection and exceptions.
With respect to changing incentives for creators, distributors, and users, research could help determine
- how the expenses involved in creative expression and distribution differ across sectors and the role of copyright in generating revenues to offset those expenses;
- under what circumstances sources of monetary and/or non-monetary motivation outside of that provided by copyright are effective in motivating creative activity;
- the motivations of various types of users and potential users of creative works, including both infringers and lawful users; the effects of enhanced enforcement remedies on promoting creativity, technological innovation, and freedom of expression; and
- how the costs of distributing creative content are affected by social media and other new technologies.
With respect to the enablers of and impediments to voluntary licensing transactions in copyrighted works, research would help determine
- the significance of transaction costs as barriers to utilization of copyrighted works;
- the extent of problems involving orphan works (whose owners cannot be identified), user-generated content, and collaborative and iterative works;
- what are successful arrangements for managing transaction costs;
- the roles of public and private institutions in facilitating licensing;
- the relationship of transaction costs to legal rules such as compulsory licenses; and
- changes in transaction costs with new technological and business developments.
With respect to the enforcement challenges, research could help determine
- how much is spent by governments and private parties on copyright enforcement;
- against whom enforcement efforts are targeted and what remedies are sought and granted;
- the results of enforcement efforts in terms of compensation, prevention, education, and deterrence;
- how the effectiveness of enforcement efforts is changing with the expansion of digital networks;
- the costs and benefits of current enforcement methods vis-à-vis proposed new enforcement methods;
- the relative vulnerability of different business models to infringement; and
- the costs and benefits of fair use exceptions and Digital Millennium Copyright Act (DMCA) safe harbors.
In assessing the balance between copyright protection and the statutory exceptions and limitations to copyright, research could help determine
- the costs and benefits of copyright exceptions and limitations in terms of the economic outputs and welfare effects of the public and those individuals, businesses, educational institutions, and other entities that rely on them;
- how copyright and the various categories of limits and exceptions interact with innovative and/or disruptive technologies and platforms; and
- what adverse effects, if any, exceptions and limitations have on copyright holders and their potential to generate economic outputs and welfare effects.
Eventually, research will help inform decisions about key aspects of copyright policy, including:
- the appropriate scope of copyright protection;
- the optimal duration of the copyright term;
- the best arrangements for correcting market imperfections if any that inhibit voluntary licensing;
- appropriate safe harbors and the fair use exceptions to copyright;
- effective or ineffective enforcement remedies for infringing use and the best arrangements for correcting deficiencies in enforcement mechanisms;
- the advisability of reintroducing a formal registration requirement; and
- the advantages and disadvantages of reshaping the copyright regime with different rules for different media or types of work.
These questions are amenable to a variety of research approaches including:
- historical case studies
- international comparisons
- sectoral comparisons
- quantitative data analysis that is either descriptive or causal and
- experiments and surveys
The list of topics and methods is not exhaustive and is illustrative of a fairly directional research program based on assumptions about the current state of technology and geared to incremental improvements in the market and social benefits of copyright. A research program should also
provide some opportunities for more open-ended research into economic relationships among participants in a swiftly changing creative landscape with rapidly declining barriers to entry.
A critical precondition of good empirical studies is the availability of data. One important type of economic data is administrative records maintained by government agencies. Although there are important informational gaps because there is no formal reporting requirement for patent licenses and changes in assignment or ownership, research on patents has the benefit of an almost complete set of data on what patents are applied for (at least within 18 months), what patents are issued, and initially to whom. Since formal copyright registration is not required to obtain protection, there is no comprehensive set of administrative data on copyright protection or ownership. Data on registrations with the Copyright Office of the Library of Congress provides useful information on many of the most important copyrighted works, but such records are incomplete and historical records are difficult to access. On the other hand, as with patent litigation, the federal judicial system generates a complete set of data on who sues whom for what copyright violations and, with the important exception of out-of-court settlements, with what outcomes, as well as on criminal prosecutions and resulting penalties. Other important administrative data are collected in mandatory federal government surveys of businesses, employment, expenditures for research and development, and other business activities.
Unquestionably, the most crucial data for analyzing the impact of copyright and of digitization reside in the private sector. Fortunately, the digital revolution, while transforming the conditions underlying the copyright system, also means that a wealth of information relevant to the functioning of the copyright system is generated and stored routinely in the course of business—for example, purchases, licensing transactions, and website views, among others. The challenge is that these data are in the hands of a multitude of private collectors—sellers, Internet service providers, and search engines. Much of that information is proprietary or subject to trade secrecy and privacy protections and thus is not subject to disclosure. Little of it is in a form readily usable by researchers. Even for the data that businesses may be willing to share, there are often very substantial hurdles in collection, aggregation, and transmission.
We devote a good deal of this report to enumerating these data sources, explaining their relevance to public policy concerns, exhorting collectors to make them available on reasonable terms to qualified investigators, and demonstrating the importance of public and private investment in
overcoming these collective action problems. Without the data, empirical researchers will be frustrated in their efforts to illuminate the copyright system. On the other hand, making data available will enable the community of academic and industry investigators to propose, design, and carry out policy-relevant studies well beyond those we discuss in this report.
Drawing on work commissioned by the committee, the next part of this report presents the case for developing a broad empirically-based research agenda on copyright law and policy. It begins with an overview of the logic and evolution of copyright and then surveys the importance of copyright-impacted industries and copyrighted works to the nation’s economy and how they have been affected by digital technology. It concludes by briefly reviewing how the existing literature reveals the limits of our knowledge about the efficacy and intended and unintended effects of copyright protection.
