The Jeremiad of IP

Perhaps it’s good that we offer software developers powerful protection. Maybe triple protection isn’t terribly threatening, and maybe it motivates substantial innovative software development.

Well, maybe because this particular combination seems to violate the bargain between innovator and public. It grants an innovator legal pro­tection without granting the public new knowledge. It can also impede technological advancement. Competitors have little incentive to invest in improving ideas that someone else owns; the broader the protection offered to the first innovator in a field, the more concentrated the field is likely to become. That kind of industrial environment could mean that while several large, wealthy companies might compete on a first gener­ation product, the competition would wither when one of them secured broad IP rights. The others would have little incentive to develop com­peting second and third generation improvements. Furthermore, the current combination of IP rights allows software monopolists to lever­age their strength in ways that violate antitrust law.⁵

But that’s jumping ahead. Before we conclude that Congress is failing to carry out its IP mission, that information sector companies are vio­lating their deal with the public, and that reforming the IP system is a pressing need, we should get back to basics. Personally—and this may just be a bias from my legal training—I like to look at the Constitution whenever it has something relevant to say. The IP clause defines the first principles of IP, so whenever we want to understand something about our IP system, we should think about three basic issues: the profit motive, innovation, and disclosure.

So, considering profit, innovation, disclosure, and the information sector, how is America doing? We’ve certainly seen much innovation over the past two decades. The information sector exploded from a curiosity to a major part of the global economy: Microsoft put Windows on my desktop, Lotus taught me about spreadsheets, Netscape enabled me to surf the Web, Yahoo! posted information for me to read, Amazon sold me books, e-Bay introduced me to auction purchases, and Napster helped me download music. We’ve done well. But maybe, with a differ­ent set of IP rules, we could have done much better. We might have devel­oped better technologies faster and paid less for them. We may be paying too much now for innovations that we should have had years ago.

The situation may get worse before it gets better. Larry Lessig outlined a bleak Future of Ideas.⁶ He painted a picture of special interests run amok, fencing off entire realms of thought and expression from the public domain. Lessig sees these interest groups using IP laws, in par­ticular the strong forms of protection available for digital products, to control speech and thought, and to turn the once-vibrant Internet into the sole province of the rich, connected, and protected. He also proposes some ways to address the problem including, but hardly limited to, Eldred’s lawsuit.

Lessig seems to have arrived at this pessimism in a roundabout way. His first book, published only a few years earlier, was considerably more upbeat. In Code and Other Laws of Cyberspace,⁷ he sang the glories of the Internet revolution, which he saw as unleashing wave after wave of creative energy. Between his two books, Lessig shifted his focus from technology—which he approached as an outsider—back to law—where he is an eminent insider.

Though The Future of Ideas outlined more fears than hopes, the world that Lessig foresees is hardly the scariest prediction. Jessica Litman’s Digital Copyright, for example, foresees a dangerous path down which the information sector seems to be headed—and how it might get there while we all remain asleep at the wheel.

American ideas of freedom are bound up with a vision of information policy that counts information as a social wealth owned by all. We believe we are entitled to say what we think, to think what we want, and to learn whatever we’re willing to explore. Part of the information ethos in the United States is that facts and ideas cannot be owned, suppressed, censored, or regulated; they are meant to be found, studied, passed along, and freely traded in the “marketplace of ideas.”

In fact, information is regulated in this country as in others.... The almost utopian vision of a wired future seems to assume that the legal infrastructure of our information policy will continue to encourage us to speak, think, and learn as we will. But the technological marvel that makes this interconnection possi­ble has other potentials as well...........................

One of the most important devices being used to effect this transformation, ironically enough, is copyright law.... [T]o the extent that the public considers copyright law at all, it appears to think that the law is designed to benefit authors for creating new works and thus to promote the progress of knowledge and art. And, that’s certainly the theory....

In the current milieu, the policy arguments over the rationale for copyright owners’ imperfect control have taken on immense practical significance. If the reason that authors’ and their publishers’ control over uses of their works has been narrowly confined is to enable consumers and future authors to make the broadest possible use of protected creations that is consistent with the copyright system’s encouragement of authorship, then digital technology changes very little.... If, in contrast, the goal of copyright law is to place all feasible control over works of authorship firmly in the hands of copyright owners, new digital tech­nology offers us the opportunity for the first time to come very close to perfect­ing the system

In 1998, copyright owners persuaded Congress to enhance their rights with a sheaf of new legal and technological controls..............................................

unabated, we are likely to experience a violent collision between our expecta­tions of freedom of expression and the enhanced copyright law.⁸

Litman believes that the information sector may expand into entirely new realms a copyright owner’s ability to control his work. Authors now stand to gain total control over their works. And Congress’s recent actions have been moving in that direction. The Sonny Bono Act wasn’t the only major change in copyright law in 1998. The “persuasion” that Litman mentioned showed up in the Digital Millennium Copyright Act (DMCA); some of its more questionable provisions have already been used in ways that make many who dwell in the information sector more than a bit uncomfortable.

Take, for example, the surprising story of Dmitry Sklyarov, then a twenty-seven-year-old Russian programmer for ElcomSoft. In July 2001, Sklyarov traveled to Las Vegas to attend a conference. When he arrived, he was arrested and indicted on five counts, including criminal charges that carried a maximum penalty of twenty-five years in prison and $2.25 million in fines.⁹ Under normal circumstances we might assume that he’d been smuggling drugs into the country and call it a day. But those weren’t the charges. It seems that Sklyarov, on behalf of ElcomSoft, had written a program breaking the protections built into Adobe’s Acrobat eBook reader. Now, we can debate whether or not he should have been allowed to develop such a program. We can debate whether or not the fine was reasonable, given his product’s potential to harm Adobe’s entire market. But when the U.S. government starts filing criminal charges for copyright infringement and threatens to throw people in jail for twenty-five years, I get squeamish. Suppose that you’re a young programmer with an idea for a great software product that does a variety of things—including pos­sibly cracking someone else’s copy protection. Want to risk it? Maybe you’d prefer to hire a team of copyright and criminal lawyers to discuss the possible uses of your code and your likely legal liability.

Many technology users advocate outright rebellion. They seem to believe that if someone else’s IP rights are in their way, they should be able to ignore them with impunity. This attitude leads to an anarchic dis­regard of property rights, which is unlikely to be very helpful in achiev­ing the goals of IP policy: many innovators who don’t get paid will eventually stop innovating. At the same time, some rights holders want to develop an authoritarian system to protect what they see as a natural right to IP—as opposed to a Congressionally authorized limited right. In their view, if repressive, regimented, social and economic regimes are necessary to protect IP rights, well then that’s what we need. Some go further than that, contending that if the government can’t protect their property for them, there’s nothing wrong with a bit of vigilante justice.¹⁰

Anarchists, authoritarians, and vigilantes are all dangerous. If anyone of them gets control of our IP system, we’ll all be in trouble—and you can bet that innovation would dwindle. Litman’s concern that the authoritarians are gaining the upper hand may be right. But knowing that the legal authoritarians are losing the technology wars tempers my concern. Sure, monitoring, surveillance, and encryption software are all improving. But evasive technology is improving just as fast. This knowl­edge leaves me somewhat less concerned than Litman—though hardly unconcerned—about our prospects for becoming a fully authoritarian state. On the other hand, I’m more than a bit concerned that an inco­herent combination of legal rules, economic incentives, and technologi­cal advances could bring the information sector’s remarkable growth to a screeching halt.

IP rights have already played a central role in all of the information sector’s key formative stories. An inappropriate allocation of incentives may have made Microsoft’s anticompetitive behavior all but inevitable.

Those stories may be just the beginning. The information sector reduces transaction costs by bringing producers and consumers closer together, which is good as long as you’re a producer or a consumer. But people who make money as middlemen may prefer the status quo. They’re likely to fight to keep their profits coming. And when their products are infor­mation, they’re likely to find that IP law is both the battlefield and the weapon that they wield most often. Debates over IP—both law and policy—are likely to loom even larger in the information sector’s future than they have in its past. We must understand what it is that we—as consumers represented by Congress—gave away to promote innovation, what we got in return, and whether or not we got a good deal. And remember: if we haven’t, we’ve got the Constitution on our side.

As for Sklyarov, he was eventually released and allowed to return to Russia, on the condition that he agree to testify against ElcomSoft. He did, but the jury ruled in Elcomsoft’s favor.¹¹ In the meantime, Adobe decided that having a programmer arrested on their behalf might not have been its best public relations move.