Wow, Part II: USPTO, NTIA, and Commerce Officials Urge ISPs, Ad Networks, Payment Processors, and Search Engines to Cooperate and Create a Law-Abiding Internet that Deters Counterfeiting and Piracy.
Recently, I used the word "Wow" in the title of a post because a hearing held by the Senate Committee on the Judiciary produced bipartisan calls for broad voluntary cooperation to ensure that Internet commerce--like real-world American Commerce--abides by the rule of law, including those rules of law that prohibit copyright infringement and trademark counterfeiting.
What inspired me about those calls to restore the rule of law was not that they were substantively controversial. For example, the World Bank estimates that intangible capital accounts for 80% of the wealth in the developed world, and that 57% of that intangible capital arises from the rule of law--including all those government-granted monopoly rights that most call "private-property rights" SeeThe World Bank, Where Is the Wealth of Nations? 20, 87 (2006). (Education was the next-largest contributor; it accounted for 36% of intangible capital.) In effect, the World Bank thus concluded that the rule of law accounts for almost 50% of American wealth. Obviously, an Internet that fails to preserve rule of law will thus become a job-killing economic catastrophe for the United States.
ACTA: USTR Was Right, and the Histrionics Were Wrong--Again.
The Office of the United States Trade Representative (USTR) just released a draft of the Anti-Counterfeiting Trade Agreement (ACTA). After spending several years at the U.S. Patent & Trademark Office, advising USTR on the copyright-related provisions of many proposed and enacted trade agreements, my review of the draft ACTA text confirms, (as well as any draft can), that ACTA is precisely what USTR has said consistently during both the Bush and Obama Administrations: ACTA is an efficiency-enhancing effort that can be executed as an Executive Agreement because it will require no change--repeat, no change--in existing U.S. law.
Indeed, this is why I rarely write about, blog about, or closely follow the ACTA negotiations. ACTA is an important efficiency-enhancing effort intended to facilitate international trade. But--by definition--it will not address any of the most important unresolved questions about how to reconcile the benefits of enforceable copyrights and the benefits of the Internet.
To the contrary, in the ACTA negotiations, developed nations that have already joined and implemented all of the major multilateral IPR-related international treaties--like the Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPS"), the Berne Convention, and the WIPO Copyright Treaty--are trying to see whether they can agree on what an good implementation of these already-ratified, already-implemented treaties should require.
While such an agreement could further trade among developed nations, it would be even more beneficial to developing and least-developed nations. Most developed nations, including the U.S., already require their preferred trading partners to fully implement the leading international IPR treaties, but each such developed nation now has differing ideas what an "good" implementation of these treaties requires. As a result, any country that wants to increase trade with developed nations in the Americas, Europe, and Asian must now separately negotiate with many nations about the efficacy of its implementation of existing IPR treaties, and it may have to revise its IPR laws repeatedly.
ACTA seeks to reduce or eliminate the resulting delay and duplication of effort. In effect, ACTA seeks to answer the following question: Given that many developed nations already require their preferred trading partners to complete a "good" implementation of the existing IPR treaties, shouldn't they try to reach as least broad agreement on what a "good" implementation of existing IPR treaties requires? If so, then any nation interested in updating its IPR laws in order to better protect its own creators and improve its trade relations could know what to do in order to facilitate trade with many of the world's most attractive trading partners. Consequently, developed nations that already incorporate support for IPR protections into their international-trade strategies could promote trade, reduce waste, avoid petty disputes, and better promote improved IPR protections if they could agree on what a really good implementation of the existing international IPR treaties should require. This is, perhaps, the critical benefit that ACTA seeks to achieve.
This is why the structure and the text of ACTA so closely resemble the structure and text of the IPR Chapter of many existing bilateral and multilateral U.S. Free Trade Agreements ("FTA")--none of which required the U.S. to amend its existing IPR laws. Those similarities are no coincidence. In effect, ACTA attempts to reach at least a general consensus on what the IPR chapters that many developed nations already incorporate into their trade agreements ought to contain.
Nevertheless, while developed-world IPR laws are so generally similar as to permit such consensus, they are not identical. Consequently, the ACTA negotiators must craft language specific enough to provide precise guidance, (as the IPR chapter of a developed-world trade agreement would today), while accommodating some of the differences in the national laws of developed, IPR-exporting nations--each of which is quite convinced that its laws already reflect a "really good" implementation of the existing multinational IPR treaties.
This is why the Internet teapot-tempest over ACTA merely confirms that USTR should be strongly commended for its longstanding decision to pursue ACTA as an Executive Agreement. For precisely the reasons just mentioned, the language of ACTA will almost certainly closely, but not precisely, track the language of the IPR Chapters in those many existing U.S. FTAs. This could have raised legitimate--as opposed to contrived--concerns that ACTA might change to U.S. law. But by negotiating ACTA as an Executive Agreement, USTR eliminated all such legitimate concerns. By definition, an Executive Agreement cannot require any change in existing U.S. law.
Moreover, by negotiating ACTA as an Executive Agreement, USTR not only eliminated any legitimate domestic concerns about ACTA changing U.S. law, it also put all other nations participating in the ACTA negotiations on notice: if the U.S. agrees to particular language, then that is because it has concluded that its existing domestic laws already implement that language. Therefore, should the ACTA negotiations conclude successfully, no co-party to ACTA can argue, credibly, that it could possibly have thought that existing U.S. law failed to implement the Agreement.
These observations are subject to a caveat: the released draft of ACTA is an early-stage draft consisting mostly of bracketed counter-proposals. Multiparty negotiations among many global leaders in international trade never proceed quickly. Nevertheless, the released draft suffices to confirm that ACTA is precisely what USTR has said it is throughout the past two Administrations, and that USTR should be commended for providing both domestic and international clarity by pursuing it as an Executive Agreement.
Finally, a word about ACTA and "secrecy." Negotiating drafts of ACTA have been no more and no less "secret" than negotiating drafts of any other proposed U.S. trade agreement negotiated in the last few decades. And such "secrecy" is perfectly sensible: negotiating nations do not published their negotiating drafts and strategies for the many of the same reasons that poker players do not "publish" the contents of their hands during a game--"transparency" is good; crippling your own negotiators is not. Nor is the resulting "secrecy" that secret: Any Internet reporter who wanted to review an earlier draft of ACTA would have had to do little more than sign a simpler version of the sort of nondisclosure agreement (NDA) that gadget reporters routinely sign in order to get an early look at the latest iWidget.
I may have more to say later about the shrill, dishonest, juvenile histrionics that have passed for most Internet "commentary" on ACTA. For now, I need only congratulate the shriekers for the success of their latest campaign to convince even more federal officials that most Internet commentary on almost matters relating to intellectual property rights, (other than those that protect technology companies or open-source software), will tend to consist of shrill, dishonest, juvenile histrionics.
Indeed, the histronics over ACTA recall the histrionic wailing that filled the Internet during the lead-up to the Supreme Court decision in Grokster. Back then, many of the same groups and individuals now shrieking about ACTA were shrieking that holding the most blatant commercial copyright pirates on the Internet liable for the intended consequences of their own actions would crush innovation and outlaw, (to cite but a few examples), iPods, transistors, Legos, broadcast radio, The New York Times, and--worsf of all--Silly Putty. Today's ACTA histrionics seem equally rational, balanced, informed, and thoughtful.
As the review's title indicates, Ars Technica is no cheerleader for copyrights or content industries. Indeed, its biases slant against them, but Ars is still worth listening to--it usually avoids the unhinged ranting of copyhate blogs like TechDirt, (and its coverage of the two Thomas trials and the Tenenbaum trial was invaluable and unique).
But that makes the Ars review of Moral Panics and the Copyright Wars ("Copyright Wars") all the more telling. As Ars notes, "the tone [in Copyright Wars] gets so one-sided at points that all but the most hardened copyfighter will probably set the book down at some passages, scratch the chin, and ask, 'Really?'"
A few words about Victoria Espinel, nominee for Intellectual Property Enforcement Coordinator
Tomorrow, the Senate Judiciary Committee will consider President Obama's nomination of Ms. Victoria Espinel for the office of "Intellectual Property Enforcement Coordinator" (the "Coordinator"). This is a new position, created by the recently enacted Pro-IP Act, which I discussed here.
Personally, I conclude that President Obama selected an excellent nominee. Indeed, I can't think of anyone better endowed with the experience, expertise, and judgment needed to be a successful Coordinator.
Full Performance Rights for Recording Artists Are Still the Right Answer
The question of whether recording artists should have performance rights as to analog broadcasts is again pending before the U.S. Senate. As a result, I had planned to revise or supplement my 2008 paper on performance rights, A Performance Right for Recording Artists: Sound Policy at Home and Abroad. But as I struggled to do so, I realized that I faced an intractable problem: I had nothing new to say. From every perspective--copyright policy, property-rights policy, technology policy, or raw national self-interest--a performance right for recording artists remained the obviously correct answer.
Granted, my 2008 paper on performance rights is highly imperfect. Indeed, re-reading it was no different than most re-readings of any year-old paper: its adequacies merely failed to offend while every misstep or circumlocution grated like a kneecap on concrete. Fortunately, the arguments for and against a full performance right for recording artists are so lopsided that even an analysis more flawed than mine would have been more than adequate.
The brute facts are painfully simple: enacting a general performance right for recording artists will grow the U.S. economy, reduce the U.S. trade deficit and eliminate or reduce discrimination against digital broadcast technologies. The United States is the world's most successful creator and exporter of popular music. Consequently, other nations annually withhold hundreds of millions of dollars in broadcasting-related performance royalties from U.S. artists because U.S. analog broadcasters fail to pay any performance royalties to foreign artists.
Both sound copyright policy and a due respect for property rights should thus compel the United States to correct this self-destructive gap in U.S. law. Enacting a full performance right for recording artists would immediately grow the U.S. economy and reduce our trade deficit.
Is it politically difficult to achieve this solution that would best serve the public interests of the United States? Absolutely--but only because this otherwise optimal solution would disserve a few private interests that happen to be important to every elected federal legislator. Nevertheless, the right answers are often politically inconvenient. Indeed, that is why we taxpayers expend so much effort trying to ensure that we elect the right people to represent us in Congress.
I agree that absolutely critical and extremely difficult questions can arise when we enquire how we can best reconcile the proven generative potential of copyright protection with the equally obvious generative potential of the Internet. But the question of a full performance right for recording artists is not one of them. It is a public-policy no-brainer that respects the legitimate interests of artists, the legitimate interests of the risk-taking venture capitalists known as "record labels," and the national interests of the United States.
I could say more, but on this issue, I see nothing more worth saying.
My colleague, Berin Szoka, worries about 195 independent countries each regulating the Internet:
[I]t's likely to cause, at the very least, many companies to limit access to their sites or services by persons from countries with burdensome regulatory approaches. Even if those foreign laws are well-intentioned and laudable... the result could be to balkanize Internet services.
Szoka argues that Americans are better off because Congress or the federal courts can override burdensome regulation by the States. Others are worried too, and not just about the Internet. Financial regulators have long sought to harmonize regulations across borders, with the European Union leading the way. Szoka would prefer less regulation to harmonization, but if local regulators will not stay their hands voluntarily, a single set of regulations seems preferable to many overlapping, and often contradictory, regulatory regimes.
Yet the question remains of what these regulations should be. The Nobel Laureate Friedrich von Hayek argued that the perfect laws cannot be designed but must evolve over time through a process of trial and error. Americans are better off, not because the federal government can override regulation but because the States are, as Justice Louis Brandeis put it, "laboratories of democracy." Americans have the benefit of trying 50 different regulatory approaches and allowing the market to decide which approach works best.
One could easily look at the Internet today and see that the many different standards and protocols in use are wasteful and burdensome. Yet the many competing standards, and the continuous innovation that drives them, are the engine of growth in the Net economy. Picking a single standard and enforcing that standard would cause innovation to stagnate. Likewise, the burden imposed by competing regulatory regimes is outweighed by the benefits of innovation in the market for law.
Rather than creating a need for standardization in the law, globalization makes regulatory competition more effective. Some companies will choose not to offer content or services in countries with burdensome regulations but this will send a strong signal to those countries to change their regulations. Countries with effective regulations will be able to attract businesses more easily thanks to the web and other countries will have more incentive to replicate the most successful rules.
Competition is likely to lead to less burdensome regulation, so much so that many advocates for harmonization are concerned about a "race to the bottom." Competition can override the preferences of governments - websites around the world are hosted on American servers because the U.S. has stronger Free Speech protections - but not of consumers. Evidence from financial markets (subscription) has found that consumers are attracted to jurisdictions that offer strong protection of property rights: both from fraud and deceptive business practices, and from special interests who can corrupt the law to their own ends.
The Internet has, and will continue to, create new challenges for lawmakers which even the brightest economists and legal scholars will not be able to answer. As tempting as it is to assume we have all the answers, be it less regulation or better regulation, only trial and error can tell us for sure which approach is best.
I just released two new papers that discuss whether U.S. copyright law provides the making-available right required by eleven treaties and international agreements that the United States has purportedly implemented in its domestic laws. The longer paper (48 pages) is for devoted specialists; the shorter paper (10 pages) is a summary for general audiences.
I have written frequently about the making-available-right debate in blog postings, a brief and four papers: one critiques the making-available analysis in Thomas, another critiques its proposal for copyright reform, another critiquesBarker, and another focuses on the implications of the distribution-right holdings in Tasini. In general, these two new papers should supplant and improve upon their predecessors, though the latter will still be useful to those seeking more detailed analysis of a particular case. In general, however, the analysis presented in these new papers should be more helpful and persuasive for two reasons.
Irwin Stelzer thinks so. At least for a long while.
there is one consequence of the upheavals in the credit markets, and now in the "real economy" that is less visible, and will be with us even after the recovery takes hold. The era of ever-free trade has ended. Any lingering hopes that free-trade advocates might have had to stem the rising tide of protectionism are gone: A worldwide financial crisis is not an environment that fosters acceptance of the view that all is for the best in a world in which capital, labor, and goods move freely across borders.
How we manage the fallout from the financial crisis will be as important as relieving the immediate panic itself. No, more so.
PFF friend and board member John Rutledge has authored a wonderful new book: Lessons from a Road Warrior.
John has seen and done it all. How much is all? How about 15 million frequent flier miles worth. And the stories and people to match. I'll have a longer review later, but for now, if you want to learn about (plunging) asset markets, the global economy, private equity, China, non-equilibrium systems, and the "neuroscience of fear" -- you know, all the important stuff driving today's chaotic world -- along with generous, practical, and entertaining advice to young people just starting out, read the book. You will love it.