March 2007

Copyright - is there a problem and if so a solution?

Copyright - is there a problem and if so a solution?

To whose benefit is copyright and how far should the marketplace rule where the state protects a monopoly right?

The recent controversy over new rates for copyright for internet streaming proposed by the US Copyright Royalty Board has been considered mainly in terms of digital audio transmission since US analogue stations have traditionally been exempt but there is no real logic to this position and Sound Exchange executive director John Simson has said that he would not be concerned if may small webcasters were to fold and that terrestrial radio should also be paying royalties (See RNW Mar 20).

In those circumstances it would seem sensible for terrestrial radio to plan on the possibility that the entertainment industry can buy more politicians than it can and thus it may in the future have to start paying royalties for music it airs.

More to the point perhaps the whole issue of copyright should be re-examined in view of the effect of technological change but with due regard to the original purpose of copyright, a purpose we think essentially sound albeit it does appear in some cases to have been corrupted, particularly in the USA with grants of some patents and copyrights that in our view should never have even been considered, and in many other cases ignored as with large-scale piracy in some countries.

In particular, we would suggest that the technology that has allowed, for example, iTunes to operate profitably at US 99 cents a song, suggests that the technology allows a new and fairer balance to be struck between individual creator, corporate owner, and society as a whole. We should also in our view, start to have a policy of "use it or lose it" relating to copyright or patents albeit with some financial protections.

Is there a problem?

We propose to deal mainly with to copyright of audio albeit legislation would have to encompass a wider area and our thinking is moulded by the wider consideration of allowing patenting of human genes, and indeed of the 1975 patent granted by the United States Patent Office to the Texas firm RiceTec for various kinds of Basmati rice (later somewhat restricted in its scope) and other cases that in our view made it quite reasonable for the rest of the world to refuse to enforce US patents until a suitable international convention was agreed to set up a court of appeal to which all such cases could be referred and whose ruling would take place over national law in allowing patents or copyright.

So against that background what is or should the purpose of copyright (the same in this case applies to patents): It is in theory to benefit society overall by setting a proper balance that between encouraging innovation and creation by creating a state-enforced monopoly right and thus providing fair reward to those who create and who are unlikely in most cases to put in the effort for the sake of it and the not allowing such a monopoly to stifle others.

It was fairly well put in France in a report to the French Chamber of Deputies in the debates before the adoption of the French Patent Law of 1844: "Every useful discovery is, in to Kant's words 'the presentation of a service rendered to Society'. It is, therefore, just that he who has rendered this service should be compensated by Society that received it. This is an equitable result, a veritable contract or exchange that operates between the authors of a new discovery and Society. The former supply the noble products of their intelligence and Society grants to them in return the advantages of an exclusive exploitation of their discovery for a limited period".

Or as the US Constitution has it: "Congress shall have power ... to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

In our view there have been enough cases to indicate that there is a problem and that there needs to be a sensible consideration of this balance, which we think, is ill served by the current all-or-nothing patent approach. Our view is that things would be improved were there a number of classes of copyright/patent.

The issues for radio and audio.

Figures we noted on RAIN - which has done a good job of looking at the costs of the proposals for webcasters and also posted figures on what terrestrial radio might have to pay - show that the scale of the payments would be very significant: According to Dave Rahn of SBR Creative the current rates would cost of the order of USD 2.6 billion this year rising to USD 4.2 billion in 2009, a total he says could well approach a quarter of terrestrial music radio stations' gross revenues.

Obviously the National Association of Broadcasters (NAB) will fight ferociously to retain its exemption but we can see little logic in this argument in the world as it is now - we regard the "promotional" argument that led to the exemption as one which terrestrial broadcasters and others can all argue to varying degrees.

Thus it seems to us that if we are to apply a sense of fairness to the rules terrestrial radio should not be exempt but equally that to give all the power to recording companies who in our view have shown themselves to be conservative (small "c" in the sense of not open to new ideas), small and mean-minded to various degrees, and as incapable of making an argument honestly and fairly as is the NAB, would be very significantly to the detriment of the wider society.

So what should be done?

In considering the best reaction to the claims of the a little history is in order in our view. For most of the 19th century US authors - we are talking before the recording industry existed - were protected by copyright in the United States but foreign authors were not. This led to the latter campaigning to be included, some US authors supporting them and a general debate about copyright, the virtues of which we not generally accepted at the time.

The reasons behind this are instructive! For the foreign authors, including Charles Dickens who was vilified by some in the US for his claims, there was the obvious motive of money. Interestingly the same motive applied to US authors because the royalty payments meant that American publishers were able to sell books by foreign authors more cheaply, thus biting into sales by American authors. Significantly there was also an issue of translations with Harriet Beecher Stowe, who was preparing her own German version of Uncle Tom's Cabin finding an American court ruling that an unauthorized translation did not breach copyright as it was in effect a separate work of art.

The situation changed after the passage of the "International Copyright Act of 1891",which went into effect on July that year with the first foreign work - the play "Saints and Sinners" by British author Henry Arthur Jones - being registered two days later.
To us the logic of this situation could be to go for a solution that takes a leaf from the situation before passage of the Act.

How this might work.

In effect what we are suggesting is a system of a number of copyright/patent classes with differing barriers to gaining a patent with a category having to be selected at the outset as to which kind of copyright cum patent is required with NO amendment being subsequently allowed. In all cases where it is practicable for a work to be stored electronically, we are proposing the equivalent of a Library of Congress/British Library system where all works have to be filed electronically to gain a patent and where, for the benefit of society in general, such works would then be available for a small administrative fee at a certain stage or after expiry of the copyright/patent.

To those who argue in terms of anything other than the practicability of state regulation in these matters, we would respond by pointing out that the whole system rests on state regulation and that human societies existed for many centuries with neither patents nor copyright and that great creative and technological advances were made in those times.

The first is what we would call for argument a Class One patent/copyright that would retain as many free market rights as possible including the right to bar others from use and set price (exceptions might well be set, as now, in terms of areas such as differing rights in wartime or for national security reasons). The state would not get involved in any pricing decisions.

The downside of this class would be that the barrier to entry would be set higher in terms of demonstrating the unique nature of the patent/copyright (Texas Rice wouldn't have got near the gates for this), a requirement would exist where applicable for support, manufacture, or availability for sale with the rights expiring a year after these had been discontinued, and a shorter life-we would suggest the original US period - 14 years as in the 1790 Act that was amended three years later (and which did not cover non-citizens: Foreign residents were added in 1800 for foreign residents subject to certain conditions, somewhat extended in 1832, and then a number of times again before the International Copyright Act of 1891" allowed foreigners protection.

Any work designated for this class would become public property after the relevant 14 years with extension prohibited and a requirement where applicable ( as in software) to make details available two years in advance of expiry (Allowing in the case of software for others to take over development and support when the copyright expired).

For a Class Two copyright/patent, we would apply a longer period - the 28 years that existed in US copyright before 1976 would seem reasonable for corporations -longer for individuals as below - but without the possibility of extension. In this case Second Class rights would exist with the state where necessary being able to regulate prices, limit the exclusion of development by others (DJs, for example could produce Mix records but would have to pay the relevant state-designated fees) but the same extinguishment of rights would apply but only two years after discontinuation of manufacture, support, or availability for sale.

For this class we would suggest the current Copyright Royalty Board fees could apply and we would commence distinguishing between corporate rights and those of the individual. For an individual we would allow the term of the author's life plus 50 years as in the US 1976 act (before the 1988 Sonny Bono Copyright Term Extension Act, which we would rescind since in our view it benefits few individuals and stifles more than it aids society in general).

To benefit individuals, all works where appropriate (as for writings, artwork, audio and video creations) would go onto a government controlled database (albeit operation of this and collection of fees etc could well be delegated to others) with a set fee (We would suggest the order of USD 1 for print and audio, USD 2 for video where file sizes are much larger) of which at least two-thirds would be distributed to the individuals (or their heirs) involved as is done now by various copyright distributing bodies.

For Class Three copyright/patent , we would propose a system where conditions were essentially as Class 2 but fees would be a fifth with a concomitant requirement to promote, on a web site if not on air, the material for sale through a link or direct sale system - thus providing an incentive for others to use work of new artist/authors who thereby get the benefit of wider exposure and more sales. This class, we suggest would be of significant benefit to smaller independent recording companies and individuals on the early

Finally, we would suggest a fourth class into which would go all works where no specific copyright classification had been requested and there would thus have been no requirement to lodge the work electronically.

Those in this class would be allowed to lodge the work electronically and apply for a Class 3 copyright for a period of up to five years after its creation (copyright/patent life would be reduced accordingly) but with no retroactive rights nor rights to control adaptation of the work albeit they would be allowed to require accreditation. Thus, for example, were a prominent artist, to decide a work was worthy of a recording the recording then made, whatever copyright it held, would have to bear appropriate credits and, where a work had before the recording was made and distributed acquired a class three copyright have suitable direction to a point where the original could be purchased (making the original part of the new recording would be allowed subject to individual negotiation to count as fulfilling this obligation).

The above, we would suggest, is, like anything imperfect, but could form the basis for a more satisfactory system by keeping material available to the public indefinitely (no more out of print or not being produced any more problems for later researchers since once not being supported or sold the material goes into the system), producing an incentive to use new artists and continuing payments to them, and allowing other artists to build on works but requiring accreditatio

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