Fixing our 'Mickey Mouse' Copyright Laws

In the midst of everything else that is going on in Washington, the House Judiciary Committee has begun its overhaul of the nation's copyright laws.

If Congress can undo the damage done in 1998 with the Copyright Term Extension Act, it will synch up our copyright regime with its constitutional intent and set up our economy for a next stage booster.

The opening move towards reform on Capitol Hill came in November when a young staffer for the Republican Study Committee, the 170-member conservative caucus that forms the majority of the majority in the House, circulated a policy memo calling for a return to more limited copyrights.

The aide, Derek Khanna, was not fired as is still reported, but the memo was withdrawn and he was not asked to stay on for the current congressional session. This does not mean he was deterred -- after the memo was withdrawn, he led the fight to decriminalize unlocking your cellphone

Khanna, now a Yale Law School fellow, said he is encouraged by both the House Judiciary Committee opening the door for reform and statements by the Registrar of Copyrights Marybeth Peters supporting reform.

The key concern for Khanna is that copyrights return to what the Framers intended.

In Article 1, Section 8, subsection 8 of the Constitution, the Framers empowered Congress: "To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

The idea is simple. Exclusivity creates incentive for artist to innovate, and move society forward, but in America there would not be feudal rights held in perpetuum as there still exists today in Europe.

Intellectual property is why America's economy survives and thrives after the steel mills left Pittsburgh and the sweatshops left Manhattan. The money is in the design, not the fabrication.

We do not have a service economy. We have an IP economy.

Two books side-by-side cost relatively the same to produce in ink, paper, and labor. But if one book is Gone with the Wind and the other is A New Look at Nova Scotia Chalkboards and Chalk. You can see that how an author configured all that ink into words and narrative makes all the difference.

Now forget the cost of paper and ink and consider what happens to prices and profits when the book, or movie or magazine or song, goes digital and the electrons are virtually free.

Now consider how easy it is to pirate creative works.

The day before I left Kuwait for duty in Iraq, I came very close to buying the complete set of "The Sopranos" for $350 at the Army store. I am glad I waited. Two days later at Camp Liberty, I bought the same set for $7 from a local merchant. Not bad. In addition to shows and music, the merchant was selling Adobe Creative Suite 4 for $3.

My generous take on my own crime is that if the set cost $100, I would have bought on the spot -- even if I knew a $7 version was waiting for me on a shelf. I want to be a legal consumer. But I will not get rooked.

Eventually all works pass into the public domain, where like Shakespeare, Mozart, and Walt Whitman, they belong to the collective. As works approach the public domain, copyright holders have the incentive to charge a fair price while they can.

Another quirk of our copyright laws is how royalties for recorded performances are paid and not paid on the radio. Platforms providing the exact same service pay exponentially different rates.

This disparity is the work of the Copyright Royalty Board, the three-man panel appointed by the Librarian of Congress (apparently for life) James H. Billington.

The most glaring example of our broken copyright regime is the CRB's ruling that Internet radio stations, or what it calls non-interactive transmitters, such as Slacker Radio and Pandora, pay 50 percent of their sales in performance royalties.

Khanna asserts that the process is a form of state-directed industrial policy. "The process for defining rates for Pandora is arbitrary and seems to deliberately subsidize older technology versus new competitors," he said. "It makes little sense for satellite radio to pay one rate while new, and likely more efficient, market participants have to pay significantly more money in royalties... It's a farce to claim that this disparity in rates represents a free market; rather, this system is government picking winners and losers."

In 1790, Congress set the term of a copyright at 14 years, and if the author was still alive, he could apply for a 14-year renewal. In the next 200 years, the terms were expanded to 28 years with a 28-year renewal.

The 1998 Copyright Term Extension Act took the 28-year term and the intent of the Framers and tossed them out the window. Now a copyright for a work created after 1978 has a copyright term of the life of the author plus 70 years -- effectively keeping a creative work out of the public domain for at least three generations.

Works created after 1923 and still under copyright were automatically extended until a 2019 sunset, which no doubt pleased lobbyists for the George Gershwin estate. Its biggest cash cow, "Rhapsody in Blue" was written in 1924.

Disney's lobbyists were surely whistling while they worked, because the CETA kept Mickey Mouse, first drawn in 1928, in its licensing cage for another 20 years, too.

When President William J. Clinton signed the bill, it was named for its chief sponsor, singer-songwriter Salvatore "Sonny" Bono, who until his skiing death in January 1998 was a California congressman.

Bono's widow Mary succeeded him in Congress and fought for the bill as a memorial to her popular husband -- although she did make the point that Sonny always really wanted to make copyrights forever. Well, of course he did.

There is a libertarian argument to be made for no copyright protection whatsoever. In that scheme, ideas would flow, like capital, to their highest best use, without a copyright's statutory drag on commerce. But, it could also keep our best minds from getting out of bed in the morning, too.

The realistic path is for Congress to dial back the excesses of the Gershwin-Disney-Bono great leap towards feudalism.

The current copyright regime is a mishmash that provides extraordinary copyrights that would have kept Mozart's compositions out of the public domain until 1881 and treats a booming industry like Internet radio with a royalty schedule that makes the business unsustainable.

The first step Congress takes should be to abolish the Copyright Royalty Board that functions as a star chamber in the back offices of the Library of Congress, picking winners and losers and pushing and pulling billions of dollars around the economy based on whims. The second step is to dial back copyright terms to promote the confluence of the arts.

Reasonable copyrights for creators and innovators will foster creativity and innovations, but also produce an environment where the unpredictable and unexpected explode out of the clash of concepts and ideas that turn the orderly marketplace into an intellectual bazaar.

In the midst of everything else that is going on in Washington, the House Judiciary Committee has begun its overhaul of the nation's copyright laws.

If Congress can undo the damage done in 1998 with the Copyright Term Extension Act, it will synch up our copyright regime with its constitutional intent and set up our economy for a next stage booster.

The opening move towards reform on Capitol Hill came in November when a young staffer for the Republican Study Committee, the 170-member conservative caucus that forms the majority of the majority in the House, circulated a policy memo calling for a return to more limited copyrights.

The aide, Derek Khanna, was not fired as is still reported, but the memo was withdrawn and he was not asked to stay on for the current congressional session. This does not mean he was deterred -- after the memo was withdrawn, he led the fight to decriminalize unlocking your cellphone

Khanna, now a Yale Law School fellow, said he is encouraged by both the House Judiciary Committee opening the door for reform and statements by the Registrar of Copyrights Marybeth Peters supporting reform.

The key concern for Khanna is that copyrights return to what the Framers intended.

In Article 1, Section 8, subsection 8 of the Constitution, the Framers empowered Congress: "To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

The idea is simple. Exclusivity creates incentive for artist to innovate, and move society forward, but in America there would not be feudal rights held in perpetuum as there still exists today in Europe.

Intellectual property is why America's economy survives and thrives after the steel mills left Pittsburgh and the sweatshops left Manhattan. The money is in the design, not the fabrication.

We do not have a service economy. We have an IP economy.

Two books side-by-side cost relatively the same to produce in ink, paper, and labor. But if one book is Gone with the Wind and the other is A New Look at Nova Scotia Chalkboards and Chalk. You can see that how an author configured all that ink into words and narrative makes all the difference.

Now forget the cost of paper and ink and consider what happens to prices and profits when the book, or movie or magazine or song, goes digital and the electrons are virtually free.

Now consider how easy it is to pirate creative works.

The day before I left Kuwait for duty in Iraq, I came very close to buying the complete set of "The Sopranos" for $350 at the Army store. I am glad I waited. Two days later at Camp Liberty, I bought the same set for $7 from a local merchant. Not bad. In addition to shows and music, the merchant was selling Adobe Creative Suite 4 for $3.

My generous take on my own crime is that if the set cost $100, I would have bought on the spot -- even if I knew a $7 version was waiting for me on a shelf. I want to be a legal consumer. But I will not get rooked.

Eventually all works pass into the public domain, where like Shakespeare, Mozart, and Walt Whitman, they belong to the collective. As works approach the public domain, copyright holders have the incentive to charge a fair price while they can.

Another quirk of our copyright laws is how royalties for recorded performances are paid and not paid on the radio. Platforms providing the exact same service pay exponentially different rates.

This disparity is the work of the Copyright Royalty Board, the three-man panel appointed by the Librarian of Congress (apparently for life) James H. Billington.

The most glaring example of our broken copyright regime is the CRB's ruling that Internet radio stations, or what it calls non-interactive transmitters, such as Slacker Radio and Pandora, pay 50 percent of their sales in performance royalties.

Khanna asserts that the process is a form of state-directed industrial policy. "The process for defining rates for Pandora is arbitrary and seems to deliberately subsidize older technology versus new competitors," he said. "It makes little sense for satellite radio to pay one rate while new, and likely more efficient, market participants have to pay significantly more money in royalties... It's a farce to claim that this disparity in rates represents a free market; rather, this system is government picking winners and losers."

In 1790, Congress set the term of a copyright at 14 years, and if the author was still alive, he could apply for a 14-year renewal. In the next 200 years, the terms were expanded to 28 years with a 28-year renewal.

The 1998 Copyright Term Extension Act took the 28-year term and the intent of the Framers and tossed them out the window. Now a copyright for a work created after 1978 has a copyright term of the life of the author plus 70 years -- effectively keeping a creative work out of the public domain for at least three generations.

Works created after 1923 and still under copyright were automatically extended until a 2019 sunset, which no doubt pleased lobbyists for the George Gershwin estate. Its biggest cash cow, "Rhapsody in Blue" was written in 1924.

Disney's lobbyists were surely whistling while they worked, because the CETA kept Mickey Mouse, first drawn in 1928, in its licensing cage for another 20 years, too.

When President William J. Clinton signed the bill, it was named for its chief sponsor, singer-songwriter Salvatore "Sonny" Bono, who until his skiing death in January 1998 was a California congressman.

Bono's widow Mary succeeded him in Congress and fought for the bill as a memorial to her popular husband -- although she did make the point that Sonny always really wanted to make copyrights forever. Well, of course he did.

There is a libertarian argument to be made for no copyright protection whatsoever. In that scheme, ideas would flow, like capital, to their highest best use, without a copyright's statutory drag on commerce. But, it could also keep our best minds from getting out of bed in the morning, too.

The realistic path is for Congress to dial back the excesses of the Gershwin-Disney-Bono great leap towards feudalism.

The current copyright regime is a mishmash that provides extraordinary copyrights that would have kept Mozart's compositions out of the public domain until 1881 and treats a booming industry like Internet radio with a royalty schedule that makes the business unsustainable.

The first step Congress takes should be to abolish the Copyright Royalty Board that functions as a star chamber in the back offices of the Library of Congress, picking winners and losers and pushing and pulling billions of dollars around the economy based on whims. The second step is to dial back copyright terms to promote the confluence of the arts.

Reasonable copyrights for creators and innovators will foster creativity and innovations, but also produce an environment where the unpredictable and unexpected explode out of the clash of concepts and ideas that turn the orderly marketplace into an intellectual bazaar.

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