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Copyright Needs Limits, As It Restricts Innovation

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In recent weeks, the chorus of calls for further "protections" for copyright owners has grown louder (see, for example, Mark Helprin's May 11 broadside in the Wall Street Journal against copyright critics: "Copyright Critics Rationalize Theft"). Yet these copyright apologists ignore how copyright owners overreach and hurt innovation. Representing more than 2,000 American technology companies, I see it differently - the rapid expansion of copyright laws threatens new and innovative products and services.

In 1979, I began my career by fighting copyright owners who had challenged the legality of the Sony Betamax VCR. In 1981, an appeals court actually held the VCR illegal and asked a lower court to block VCR sales. Fortunately for everyone, including Hollywood, the Supreme Court said the monopoly power of copyright owners had to be balanced against the needs of others. The Court ruled that recording of television is "fair use" and a product is legal if it has "substantial non-infringing uses." This Magna Carta for innovation became the basis of the technology revolution and the bane of copyright defenders.

The "fair use" right to manage content has allowed the Internet to grow and new companies to be created. But the content lobby disagrees. They told Congress that copyright should stop an individual from sharing an email without the creator's permission. They argued that computers copy when storing temporarily and thus that many computer functions are illegal. They kept trying to sell multi-song CDs when consumers wanted only one song. They fought rentals of movies insisting that consumers buy movies. In short, they have tried to restrict, tax or bar every type of recording technology.

Thankfully, politicians said no and courts generally stood by the Sony Betamax principles. For these reasons we have the Internet, camcorders, digital cameras, MP3 players, DVRs, removable computer storage and copy-and-edit functions on computers. And thus we have world-leading companies like Google, Facebook, Microsoft, TiVo and Apple.

American innovation is not just about content creation. It is also about inventions that allow society to benefit from the uses of content, for which Congress grants a limited monopoly in the form of a copyright. The right to control this content does not include the right to invention and innovation. This is what the Supreme Court held in 1984, and this is why we have these inventions today.

"Piracy" is not every unauthorized use of content. Nor does copyright grant a monopoly over all uses. Someone who legitimately acquires content (buys a CD or DVD) should have the right to use that content so long as it is not for a commercial purpose. Calling unauthorized uses "piracy" and equating such use with "theft" - as if it were stealing clothing - is sloppy. If you steal a dress from a shop owner, then the shop owner cannot sell that dress. If you use a copyrighted work without permission, then at worst the creator has lost an additional potential sale - unlikely if someone is simply excerpting from their own CDs.

But defenders of expanded copyright restrictions imply that content owners have been on a losing streak and have few tools at their disposal. Wrong.

Copyright owners have successfully intimidated entrepreneurs with ideas that involve fair use of content. Billions of dollars of "damages" for no harm? Yes. Copyright laws and damage provisions have mushroomed to create huge potential liability for good-faith innovation.

Consistently, lawmakers raise the stakes for infringement, even if there is no evidence of harm to content owners. A single infringement found later to be "willful" can cost $150,000. Multiply that by each work in a service provider's library that a personal computer, a software program, or a DVR might be claimed to "infringe" and you are into the tens of billions of dollars. This chokes innovation and begs a more reasonable law that protects small business and products and software, offered by legitimate companies, with new uses not yet evaluated by the courts.

And while the penalties have grown harsher, in just the past few decades, the term of copyright, which used to match the 19-year patent term, has now grown to more than five times that long. Congress has expanded the term 13 times since JFK became President, greatly expanding copyright owners' income with no discernible matching benefit for society or creation. Why? The content lobby is huge and politicians willingly accede to their requests.

The ultimate irony is that when innovators follow the law and license content as they have through a "creative commons" license, they are criticized as opponents of copyright. Such a view ignores the numerous successes by the army of content lobbyists, and the fact that those who occasionally oppose their excesses, like technology innovators, are less interested and reliant on lobbying and more dependent on free market forces.

The truth is that our national leadership in creativity depends on technology as well as content innovation. We Americans are creative for good reasons. It is genetic. It is not only our motion picture and music industries that dominate worldwide. We also have great writers, photographers, artists, and designers.

We have not only the most innovative technology companies - but we also lead the world in everything having to do with the Internet, from Amazon to eBay, from Facebook to Google to Zillow. And we innovate in technology. Apple, Cisco, Dell, HP, Qualcomm, Sun, TI, and others lead the world.

So this battle between innovators and content creators is misdirected. Rather, we need to ensure we attract and grow the best educated, most innovative people. This means we work together on our immigration, trade, tax, education and other policies to encourage both content creation and technological innovation. If we do, this nation of creativity will prosper and maintain its primacy.


Gary Shapiro is the president and CEO of the Consumer Electronics Association.