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Department of Commerce releases report on Copyright Policy

The industries that rely on copyright are today an integral part of the U.S. economy, accounting for millions of jobs and contributing billions of dollars to the G.D.P. Moreover, the creative content they produce contributes to the development of the broader Internet economy, spurring the creation and adoption of innovative distribution technologies. Not only do these industries make important economic contributions, they are at the core of our cultural expression and heritage. It is no exaggeration to say that U.S. music, movies, television shows, computer software, games, writings and works of art have changed the world. Copyright Policy, Creativity, and Innovation in the Digital Economy.

Today, the Department of Commerce Internet Policy Task Force released its anticipated Green Paper, Copyright Policy, Creativity, and Innovation in the Digital Economy. The Internet Policy Task Force (IPTF) is a coalition of Department of Commerce bureaus launched in 2010 “to identify leading public policy and operational challenges in the digital economy.” Along with intellectual property issues, the IPTF has assessed issues relating to consumer data privacy, cybersecurity practices, and the global free flow of information.”

The purpose of the Green Paper is to review the development of copyright policy as it has responded to new technologies in recent decades, assess the current challenges facing copyright law, and provide a set of recommendations to address some of those challenges. The IPTF was aided by the input of a wide range of stakeholders as it drafted the Green Paper, who participated through roundtable discussions, public meetings, and a public commenting process.

Secretary of Commerce Penny Pritzker opens the report noting not only the economic contributions of copyright — accounting for over five million US jobs and a significant percentage of GDP — but also the noneconomic benefits.

America’s writers, musicians, filmmakers, photographers, sculptors and other creators make up the lifeblood of our culture, build new stores of knowledge, and shape how we see ourselves—and how the world sees us as well. Their influence extends beyond our borders; our copyrighted works weave a compelling narrative of the opportunity and possibility of America, and continue to be at the forefront of the global creative marketplace. We must continue to nurture such extraordinary creative resources.

As the IPTF points out in the forward, “Copyright law has always adapted to technological changes,” but the most recent changes — including digital media and the global Internet — have perhaps been the most profound. Meaningful protection requires enforcement of rights, though there is no single solution to those challenges. This is the backdrop that has motivated the report. The IPTF says that “It is time to assess whether the current balance of rights, exceptions and responsibilities — crafted, for the most part, before the rapid advances in computing and networking of the past two decades — is still working for creators, rights holders, service providers, and consumers.”

The IPTF issues a number of recommendations that it divides into three broad categories:

1)“Updating the balance of rights and exceptions.”

  • Congress should “better rationalize the public performance right for sound recordings.” According to the Task Force, this entails extending the right to cover broadcasting and taking the impact on creators and rights holders into account if it reassesses ratesetting procedures for different types of digital music services.
  • Soliciting public comment on remix and digital first sale issues.
  • Supporting the Copyright Office’s work on Section 108, orphan works, and mass digitization issues.

2)“Assessing and improving enforcement tools to combat online infringement and promote the growth of legitimate services while preserving the essential functioning of the Internet.”

  • Repeating the call for Congress to standardize criminal penalties for streaming with those of reproduction and distribution.
  • Soliciting public comment regarding statutory damages for individual file-sharers and for secondary liability for large-scale online infringement
  • Establishing multi-stakeholder dialogue on effectiveness of DMCA notice and takedown system
  • Supporting the Copyright Office’s improvement of its database on registered agents under the DMCA and its examination on possible copyright small claims procedures.
  • Encouraging development of private sector cooperative initiatives to address online infringement
  • Enhancing public education and outreach for consumers about copyright law and legitimate online services

3)“Realizing the potential of the Internet as a legitimate marketplace for copyrighted works and as a vehicle for streamlining licensing.”

  • Providing input to Congress in any review of music licensing, particularly mechanical licensing for musical compositions
  • Supporting the Copyright Office’s improvement of its registration and recordation systems, including support of provisions for enhancing incentives to use those systems
  • Soliciting public comment on the appropriate role of government in improving online licensing.

The Green Paper traces the early stages of copyright and the Internet, paying particular attention to the US government’s role in facilitating that development — the 1995 Intellectual Property Working Group report Intellectual Property and the National Information Infrastructure laid the ground work for the first wave of copyright policy in the digital age and, in many ways, serves as a blueprint for this Green Paper. The IPTF also calls attention to the current review of the Copyright Act by the House Judiciary Committee Subcommittee on Courts, Intellectual Property, and the Internet, making the release of the Green Paper ever more timely.

The Green Paper covers a lot of territory. Among the highlights:

  • The “making available” right, required by the 1996 WIPO Internet Treaties, was not implemented in the U.S. because Congress considered the right to be covered by the existing statutory language. Since then, however, courts have been split as to whether the distribution right incorporated the concept of “making available.” The IPTF attempts to rehabilitate Congress’s earlier view by pointing out more recent academic scholarship that better establishes the “making available” right in U.S. law.
  • A “new challenge” faces the meaning of the public performance right — specifically, the Second Circuit’s recent interpretation of the right in WNET v. Aereo. The IPTF writes that the result of this and similar cases might affect the “viability and scope of new licensed business models such as online video subscription services,” and Congress may need to step in if courts continue to undermine a meaningful public performance right.
  • It’s not often you hear the topic of “remixes” discussed in a government report, but the Green Paper asks the question of whether the creation of remixes “is being unacceptably impeded.” But the IPTF doesn’t just consider whether clearer or broader exemptions are the solution; it also considers microlicensing or compulsory licensing and asks whether these alternatives are preferable to the current situation, which includes “widespread reliance on uncompensated fair uses.”
  • Somewhat troubling is the discussion of orphan works and mass digitization — with the former often being used as the foot in the latter’s doorway. The concern with orphan works is that if risk-averse institutions can’t find a copyright owner, the work will remain unused by anyone. But, as the Green Paper points out, proponents of mass digitization are not only concerned with that problem, but they are also concerned about the costs of searching for copyright owners in the first place. More troubling is the Green Paper’s consideration not just of orphan works in the context of mass digitization, but “out-of-commerce” works: works that are no longer commercially distributed although the owner may be readily known. The Green Paper suggests that the lack of commercial availability alone may not “justify[] individual negotiations for use in mass digitization.”
  • Digital first sale has been a hot topic this year, especially with the decisions in Kirtsaeng and ReDigi. Somewhat related, the issue of selling vs. licensing copyrighted works is currently in front of the Ninth Circuit. While ReDigi concluded that first sale is inapplicable when a reproduction is made, the IPTF warns that concerns over a lack of a meaningful ability to transfer or alienate digital works “may lead courts or policy makers to reinterpret what constitutes a ‘license’ or to expand the scope of the first sale doctrine.”
  • Online infringement continues to cause significant negative effects in the online ecosystem. This is not only a problem for established businesses and creators, though the IPTF points out that while “[e]xisting business models should not be preserved for their own sake… their destruction should not simply be assumed to be a positive development.” It also undermines the development of new business models and distribution platforms. According to the Green Paper, “The legitimate services made possible by the Internet, which serve to incentivize further creative outputs, cannot fully flourish while faced with unfair competition from illegal sources.”
  • The IPTF argues that search engines need to play a greater role in stemming the proliferation of online infringement. It cites statistics that show a significant number of consumers use search engines to locate infringing works. The first page of search results drives substantial traffic to websites, and sites offering infringing works often appear on the first page of results in search engines.

The Green Paper is a measured and positive analysis of current copyright challenges and emphasizes the significant contributions of creators and creative industries, the continuing importance of meaningful online protections, and the symbiotic relationship between creators and innovators. Digital technology and global communication has resulted in an unprecedented era of innovation. But while the scale of technological change has been impressive (the IPTF notes in particular the striking “democratization of publishing” that has occurred) it is important to remember, as the Green Paper observes, that the “core principles of U.S. copyright law remain fundamentally sound.”

Statement of Copyright Alliance Executive Director Sandra Aistars regarding Copyright Policy, Creativity, and Innovation in the Digital Economy

U.S. Department of Commerce Produces Comprehensive Analysis Addressing Copyright Policy, Creativity and Innovation in the Digital Economy

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