Harnessing innovation

Intellectual property is an esoteric, legal creation that has become the bedrock of much of our culture and commercial innovation. The entertainment, media, technology and pharmaceutical industries depend upon it, yet few of us have strong opinions about it.

Two new books deal with the critical issues arising from the intersection of digital technology and copyright, one type of intellectual property. Free Culture, by Lawrence Lessig, argues that large media firms are using law and technology to strengthen their ownership of content to the detriment of society. Promises to Keep, by William Fisher, systematically describes the challenges and opportunities for the entertainment industry in the digital world and investigates how business models may need to change in coming years.

Lawrence Lessig is a Stanford law professor and an activist who campaigns against the encroachments he describes in Free Culture, and his commitment to his cause gives this book strength. The book feels like a conversation with a clever man, although at times the reader has to struggle to keep track of his narrative.

Lessig’s argument is that American and Western culture thrives because of a balance between the public domain and proprietary, protected material. Western societies have believed that to encourage creativity they need to afford temporary monopolies to creators – but these monopolies were seen as a priori evil, and so also needed to be limited in scope and duration.

But Lessig is frustrated by the fact that in recent years both the scope and duration of these monopolies have been extended. To bring the USA into line with recent European legislation, the 1998 Sonny Bono Copyright Term Extension Act lengthened copyrights to 70 years after an author’s death, compared to 14 years in British law at the end of the eighteenth century.

Consequently, copyright owners are increasingly litigious, the effect being a de facto elimination of the long-held doctrine of ‘fair use’. To illustrate this, Lessig recounts the tale of a documentary about stagehands at the San Francisco Opera, which showed men lounging around with an episode of the Simpsons on a TV in the background. Fox refused to license this five-second clip for less than $10,000 – and the producer didn’t dare to claim it was fair use because he would have had to prove that in court (even if he had won, his legal fees would have made him the loser).

Lessig argues that the intersection of lobbyists, law and software is a pernicious force. In a digital world, it is software code that governs what we can and can’t do. If the engine management software prevents us from driving a car at more than 70 miles per hour, there is nothing we can do to drive at 80 miles per hour. In a phrase coined by Lessig, ‘the code becomes the law’.

Take electronic books. The software that allows you to read electronic books can also determine whether you can print out pages, cut-and-paste an extract into an essay or send a chapter to a friend. A consumer can do only what the software allows him or her to do. If the permissions are set incorrectly (as they once were in an Alice in Wonderland ebook), then bad luck. If a manufacturer is nervous about lawsuits from the content industry (or if it has media interests, as does Sony) then they may deliberately hamstring their devices.

And under recently passed legislation in the USA, the Digital Millennium Copyright Act, it is a crime to attempt to circumvent any copy-protection system, regardless of your intent. Europe followed suit by passing the EU Intellectual Property Enforcement Directive – which Lessig doesn’t mention – in November 2003.

The entertainment industry has been using new powers to hunt down people committing these crimes as a key part of its business strategy. The targets have generally been high-profile scapegoats rather than commercial pirates (such as a 19-year-old college student, a 12-year-old girl and a 71-year-old man). And the industry has gone as far as to sue lawyers who were advising internet firms on whether or not services breached copyright laws.

These measures appear draconian. After all, Lessig argues, ‘copyright theft never killed anyone’. The measures also run counter to the essence of intellectual property protection, as a limited monopoly to protect innovators so that there is more innovation.

The danger is that we legislate at a point where technology is in transition, where we don’t understand exactly what opportunities it will create, and in jumping the gun we eliminate wide-scale social benefits. Lessig cites the example of Thomas and Tinie Causby, a pair of American chicken farmers, who in 1945 filed a lawsuit saying that the US government was trespassing on their land by allowing military aircraft to overfly their property. The Supreme Court heard the case. Common law, at the time, held, in the words of Lord Blackstone, that a property owner owned the surface of his land to ‘an indefinite extent upwards’. The court threw out the case, recognising that technology had changed faster than the presumptive intent of the law. ‘Common sense revolts at the idea’ said the judgement.

Free Culture argues that the film and music companies are today’s Causbys, and the networked society is the aircraft causing havoc with the old way of life. But unlike the Causbys, the entertainment business can afford legions of lawyers and lobbyists in Europe and America to fight its battles.

And the industry is winning the battle for legislative support as quickly as it is losing the battle for consumers’ hearts and minds. Despite awareness that it is illegal, more than 60million Americans regularly share music online – more than voted for president George W Bush (or his Democratic rival Al Gore, for that matter). This is civil disobedience on an unparalleled scale.

Lessig doesn’t countenance illegal file-sharing but he counsels that the combination of more wide ranging copyright laws, harsher sentencing and enforcement, and digital code will transform our free culture into a permission culture – and ‘a permission culture means a lawyer’s culture’. In other words, it is one where you can’t lend a piece of music to a friend, you can’t quote from a book, or make a satirical cartoon, without calling an attorney.

According to Lessig, this amounts to a cataclysmic depletion of the public domain and will have a devastating effect on our culture, turning it into a goldmine for certain types of businesses to the exclusion of the public good.

Free Culture raises the alarm about the ensuing dangers if big media gets the law and technology in its pockets. It is scholarly, yet personal; Lessig recounts his failed attempt to get the Supreme Court to review the Copyright Term Extension Act. And while the focus is on the USA, his book is equally relevant for British readers – after all, intellectual property is one of the few areas of trade where the EU and USA can agree on what form protectionism should take.

Lessig is backed up by his former colleague, William Fisher, professor of law at Harvard, whose forthcoming book, Promises to Keep, takes a critical look at the disruptive effect of the internet on the entertainment industry

In Fisher’s more deliberate, dispassionate analysis he offers three scenarios for the global media industry in an attempt to help tease out the best business model and legal structure. Once again the focus is on the USA, which is the largest producer, consumer, importer and exporter of entertainment – but leaky borders and transnational harmonisation make Fisher’s work as apposite for Europe.

His first scenario is a world we would live in if Lessig’s fears come true. In this world copyright is more exhaustive, anti-copying systems are embedded into software and electronics, and there is strict enforcement of the law. Fisher argues that this is a ‘manifestly bad idea – to be avoided if at all possible’, because it is replete with unquantifiable risks for manufacturers and software makers. Managing these risks (ie, avoiding litigation), will mean less innovation and experimentation, which will widely impact upon economic growth.

In the second scenario, Fisher imagines the entertainment industry as a regulated utility, with the economic structure of the industry resembling a natural monopoly. This industry would be compelled by statute to provide their content to distributors and consumers. This is a world with a heavy regulatory overhead, far from the American tradition (but not so far from the way local phone companies and other utilities are treated in Europe and the USA).

His third and preferred example is to treat information goods like public goods, such as military defence or road systems. Gone would be the days of buying a CD or renting a video – instead a simple monthly levy would provide consumers with as much media as they wanted to consume. When all media flows across a digital network (as will soon be the case), it will be possible accurately to sample what is being consumed and by whom. This sample allows us to reward artists in proportion to their contribution. Thankfully, Fisher’s sums add up – he thinks the levy would be around $6 per month per American household, which isn’t too bad for a limitless amount of movies and music.

Fisher thinks that the toll should come from general taxation, but I am not persuaded that an additional tax would be acceptable to lawmakers on either side of the Atlantic. However, the notion of raising a levy for artists at some point (for example, as a portion of an internet or TV subscription) and finding an allocation method is sensible and practical in the digital age.

Lessig quite likes this idea too. In fact, the authors complement each other well. In Free Culture, the analysis of the growing dangers of a permission culture reminds us of the perniciousness of state-enforced monopolies and well-funded lobbyists. In Promises to Keep we learn that there are other plausible and efficient ways of supporting the creative industries.

Moreover, both writers boldly go where media firms and their lobbyists dare not tread. They remind us that copyright is a state-enforced monopoly and not an inalienable human right. Yet perhaps it is Thomas Macaulay, now safely out of copyright, who puts it best:

‘It is good that authors should be remunerated and the least exceptionable way of remunerating them is by a monopoly, yet monopoly is an evil for the sake of the good. We must submit to the evil, but the evil ought not to last a day longer than is necessary for the purpose of securing the good.’

See Azeem Azhar’s website

Free Culture, by Lawrence Lessig, is published by Penguin, 2004 (buy this book from Amazon UK or Amazon USA). Promises to Keep, by William Fisher, is published by Stanford University Press, 2004 (buy this book from Stanford University Press).

© Azeem Azhar 2004