WHY THE DIGITAL PIRACY WAR HAS TO BE FOUGHT

BY LIONEL S. SOBEL / November, 2002
DGA Magazine

Legal battles over digital piracy began with photos of naked women.

Playboy led the charge a decade ago, when it sued electronic bulletin boards (early versions of today's websites) for distributing digital images scanned from the magazine's centerfold. Playboy won all of those cases. But that didn't deter others from using computer technology to distribute — without authorization — computer games and software, then musical recordings, and now movies and television programs.

These works are protected by federal copyright law, so people who copy and distribute them without authorization are guilty of infringement. But despite injunctions and big money judgments — against MP3.com, Napster, iCraveTV and others — the infringements did not stop. Instead, those who infringe simply devise more elaborate justifications and defenses, and argue that if the law does prohibit them from doing what they'd like, the law itself should be changed.

As a result, battles over digital piracy have escalated to all-out "war." Fortune magazine said exactly that, in the title of a recent article that featured Andy Grove and Michael Eisner as the leaders of opposing armies. Intel's Grove is an icon for Silicon Valley, and Disney's Eisner is an icon for Hollywood. The war, however, is not just between those two California regions.

"Silicon Valley" represents all technologists, from college sophomores who upload and download music and movies from their dorms, to computer and home electronics makers, to Internet service providers. "Hollywood" represents those who create entertainment, from DGA members and the studios that finance their work, to recording artists, songwriters and record companies, and all others who create entertainment for a living.

The war between Silicon Valley and Hollywood is about the future of copyright, and the role that copyright should play in the digital age. Technologists say it should play no role, or at least none of significance. Those who create entertainment note that copyright law was itself created in response to a then-new technology — moveable-type printing presses — and they say it should play the same role it always has, through generation after generation of new technologies.

Copyright's role is to create necessary incentives for the creation of entertainment.

It has been said that people would create entertainment without being paid to do so, and I have no doubt some would. But everyone has to buy groceries and pay the rent. So the universe of those who would create for free would be limited to amateurs and the independently wealthy. Unless we'd be satisfied with their meager output, we need some way to provide financial incentives that permit people to create entertainment professionally, for a living.

In the history of humankind, only three techniques have been conceived to provide those financial incentives.

One is patronage. Wealthy people and companies provide financial support to artists and entertainers, thus enabling them to buy groceries and pay the rent while they create. Patrons, however, are not foolish or selfless, nor are there very many of them. Patrons support the creation of the kind of entertainment that is pleasing to themselves. And, as compared to the amount of money Hollywood invests in entertainment, patrons invest very little. This means that the variety and quantity of entertainment produced with incentives provided by patrons would not even begin to satisfy the appetites of Americans, let alone others in the world who also are fans of American-made entertainment.

Government grants are a second technique for providing financial incentives for the creation of entertainment. Other countries, like Canada and France, make significant use of grants. The United States uses grants just a little. The National Endowment for the Arts and the Corporation for Public Broadcasting are two grant-giving agencies of the federal government. But all of the grants they give in a year amount to but a sliver of what Hollywood invests each year. What's more, their grants often generate as much controversy as entertainment, and thus regularly become tangled in overtly partisan politics. Entertainment produced with government grants, even in countries like Canada and France, does not satisfy local appetites for entertainment. It certainly wouldn't satisfy the appetites in the United States.

Copyright is the third, and by far most successful, technique for providing financial incentives for the creation of entertainment. Copyright gives creators exclusive rights in their creations — rights they may use, or authorize others to use, in the entertainment marketplace. By doing so, copyright encourages people to create whatever they think may appeal to the audience they hope to reach. It gives them the right to charge their audience money for the privilege of enjoying what they have created. Creators themselves decide how great a financial incentive they require to continue to create, while their audiences decide how much they are willing to pay for particular creations. Creators are accountable only to their audiences, not to patrons or government agencies. It is democracy — of the marketplace — in action.

The exclusive rights at issue in the digital piracy war are old:

* The right to make copies and distribute them is more than 200 years old, here in the United States (and even older in other countries).
* The right to make new or edited versions is almost 100 years old.
* The right asserted by DGA members in the CleanFlicks case — the right to prevent the sale and rental of edited versions of movies they have directed — was first recognized by a federal appellate court more than a quarter-century ago.
* And courts have recognized that people may be held liable for infringements committed by others, rather than by themselves, for more than 60 years.

The only "new" right asserted by entertainment creators is the right to prevent circumvention of technology-based protection measures. Congress enacted that right in 1998 as part of the Digital Millennium Copyright Act, in the belief technology has a role to play in solving the piracy problem that technology itself created.

Today's technologists argue that computers and the Internet are revolutionary means for efficient communication, community-building and commerce, and in order for these wonderful new technologies to achieve their full potential, they must be permitted to develop and evolve, unfettered by the law's requirement that certain things not be done, except with consent.

It is significant that the exclusive rights of copyright, to which digital technologists take exception, are old rights, because digital technologies are not the first new technologies developed since moveable-type printing presses.

When motion pictures were new, producers could have argued that movies were so revolutionary and efficient a technology for bringing stage plays to the public that producers should have the right to make movie versions of plays without the consent of playwrights. But movie producers never made that argument. They acquired copyright licenses, and the movie production business thrived nonetheless. When one early movie producer did argue that he should be able to produce a movie of the novel Ben-Hur without a license, the Supreme Court ruled otherwise; yet novels remained, and still are, a fertile source for movie producers.

When makers of the first music recordings — player piano rolls — persuaded the Supreme Court that they did not need licenses from music publishers or songwriters, Congress immediately intervened and changed the law so that copyright licenses became necessary. Yet the record business thrived nonetheless.
When early radio broadcasters contended they did not require licenses from music publishers or songwriters, federal courts ruled otherwise. Radio stations have obtained copyright licenses every since, and have thrived nonetheless.

Early television broadcasters could have argued that television was so revolutionary and efficient a way to bring movies to viewers that they should have the right to broadcast movies without copyright licenses. But television broadcasters never made that argument. They acquired copyright licenses, and the television business thrived nonetheless.

When early cable TV system owners persuaded the Supreme Court that they did not need licenses to retransmit broadcasts of copyrighted television programs, Congress responded by amending the law so that licenses became necessary. Yet, the cable TV business thrived nonetheless.

And when the home-video business was new, companies that made videocassettes could have argued that theirs was so revolutionary and efficient a way to deliver movies to viewers that they should be able to do so without copyright licenses. But they never made that argument, and thrived nonetheless.

In other words, today's digital technologists claim the right to do what none before them was permitted to do. Why has that happened?

Many technologists are "consumers" who simply want things for free, or who assume that whatever can be done — as a matter of technology — is legally permitted to be done. Other technologists are companies — like MP3.com, Napster and now CleanFlicks — who want to build their businesses using, as their inventory, entertainment created by others. Like some consumers, these companies assume that if technology enables them to use the creations of others, they are legally permitted to do so.

Finally, some technologists are companies that manufacture computers or consumer electronics, or provide services like online hosting or Internet connections, who believe that consumers are more likely to buy their goods and services if they can be used to get free entertainment.

Hence, the digital war. Record and movie companies, and even the DGA, have been forced to pursue expensive and unpopular lawsuits, for at least two reasons.

The first is purely a trial lawyer's reason and goes by the name "waiver." If those who create entertainment had not objected to the unauthorized use of their work — say, on the grounds that the Internet is not yet profitable, or the Utah marketplace for edited videos is too small to bother with right now — it would have been too late to object when the Internet finally becomes profitable or the market for edited videos grows. Judges might say that by delaying, creators had waived their rights, by inducing others to build their own businesses in the belief that their behavior did not violate anyone's rights, or at least none that would be asserted.

The second reason is related to this lawyer's version of waiver. It is a practical version of waiver. Most people assume that if they do something improper, they will be told so. If they aren't told, they assume that what they are doing is proper. Lawsuits thus perform an education function: they let people know that if they make unauthorized copies of entertainment, or distribute it to others, or edit it without consent, they're doing something improper.

In short, if entertainment creators don't assert their rights, computer manufacturers and Internet service providers certainly won't. Eventually, if history is any guide, digital technologies will be licensed like earlier technologies were and are. In the meantime, however, entertainment creators are forced to show why licenses are necessary, as a matter of law.