What are the odds that the costs of new technologies are always greater than their benefits as far as intellectual property rights holders are concerned? This pattern is not a matter of policies carefully crafted around the evidence. It is the fossil record of fifty years of maximalism. If I lean toward the other side of the story it is not because I am a foe of intellectual property. It is because I believe our policies have become fundamentally unbalanced--unbalanced in ways that actually blind us to what is going on in the world of creativity.

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We are living through an existence-proof that there are other methods of generating innovation, expression, and creativity than the proprietary, exclusionary model of sole control. True, these methods existed before. Yet they tended to be local or invisible or both. The Internet has shown conclusively and visibly that--at least in certain sectors--we can have a global flowering of creativity, innovation, and information sharing in which intellectual property rights function in a very different way than under the standard model of proprietary control. In some cases, intellectual property rights were simply irrelevant--much of the information sharing and indexing on the Web falls within this category. In some cases they were used to prevent exclusivity. Think of Creative Commons or the General Public License. In some, they were actually impediments.

Software patents, for example, have a negative effect on open source software development--one that policy makers are only now slowly beginning to acknowledge.

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It is important not to overstate how far the sharing economy can get us. It might help to cut the costs of early-stage drug development, as the Tropical Disease Initiative attempts to do for neglected diseases. It will not generate a Phase III drug trial or bring a drug to market. Sharing methods might be used to generate cult movies such as Star Wreck: In the Pirkinning, which was created using techniques borrowed from open source software and is available under a Creative Commons license. They will not produce a mammoth blockbuster like Ben Hur, or Waterworld for that matter--results that will generate mixed feelings. So there are real limitations to the processes I describe.

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But even acknowledging those limitations, it is fair to say that one of the most striking events to occur during our lifetimes is the transformation wrought by the Web, a transformation that is partly driven by the extraordinary explosion of nonproprietary creativity and sharing across digital networks. The cultural expectation that a web of expression and information will just be there--whatever subject we are discussing--is a fundamental one, the one that in some sense separates us from our children.

With this as a background it is both bizarre and perverse that we choose to concentrate our policy making only on maintaining the business methods of the last century, only on the story line of the Internet Threat, only on the dangers that the technology poses to creativity (and it does pose some) and never on the benefits.

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What would it mean to pay attention to the changes I have described? It would mean a.s.sessing the impact of rules on both proprietary and nonproprietary production. For example, if the introduction of a broad regime of software patents would render open source software development more difficult (because individual contributors cannot afford to do a patent search on every piece of code they contribute), then this should be reflected as a cost of software patents, to be balanced against whatever benefits the system brought. A method for encouraging innovation might, in fact, inhibit one form of it.

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Paying attention to the last ten years means we need to realize that nonproprietary, distributed production is not the poor relation of traditional proprietary, hierarchically organized production. This is no hippy lovefest. It is the business method on which IBM has staked billions of dollars; the method of cultural production that generates much of the information each of us uses every day. It is just as deserving of respect and the solicitude of policy makers as the more familiar methods pursued by the film studios and proprietary software companies. Losses due to sharing that failed because of artificially erected legal barriers are every bit as real as losses that come about because of illicit copying. Yet our attention goes entirely to the latter.

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The main thrust of the argument here is still firmly within the Jeffersonian, Scottish Enlightenment tradition. Jefferson does not wish to give the patent to Oliver Evans because he believes the invention will be (and has been) generated anyway without the granting of an intellectual property right and that there are sufficient information retrieval methods to have practical access to it. In this case, the information retrieval method is not Google. It is a polymath genius combing his library in Monticello for references to Persian irrigation methods. The "embarra.s.sment" caused by the unnecessary patent is added expense and bureaucracy in agriculture and impediments to further innovators, not the undermining of open source software.

But it is the same principle of cautious minimalism, the same belief that much innovation goes on without proprietary control and that intellectual property rights are the exception, not the rule. When Benjamin Franklin, a man who surely deserved patents under even the most stringent set of tests, chooses to forgo them because he has secured so much benefit from the contributions of others, he expresses Shirky's norm nicely.

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Indeed, Jefferson's optimism depends partly on a view of information sharing that captures beautifully the att.i.tudes of the generation that built the Web. The letter that I discussed in Chapter 2 was widely cited for precisely this reason.

Remember these lines?

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That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all s.p.a.ce, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.

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What could encapsulate better the process by which information spreads on a global network? What could more elegantly state the norms of the "information wants to be free" generation? (Though those who quoted him conveniently omitted the portions of his a.n.a.lysis where he concedes that there are cases where intellectual property rights may be necessary and desirable.) 77

In some ways, then, the explosion of nonproprietary and, in many cases, noncommercial creativity and information sharing is simply the vindication of Jefferson's comparison of ideas with "fire . . . expansible over all s.p.a.ce." The Web makes the simile a reality and puts an exclamation point at the end of the Jefferson Warning. All the more reason to pay attention to it.

But the creative commons I described here goes further. It forces us to reconceptualize a form of life, a method of production, and a means of social organization that we used to relegate to the private world of informal sharing and collaboration. Denied a commons by bad intellectual property rules, we can sometimes build our own--which may in some ways do even more for us than the zone of free trade, free thought, and free action that Jefferson wished to protect.

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Does all this mean that the Jefferson Warning is no longer necessary? Can we mitigate the negative effects of intellectual property expansion through a series of privately constructed commons? The answers to those questions are, respectively, "no"

and "sometimes." Think of the story of retrospectively extended copyright and orphan works. In many cases the problem with our intellectual property rights is that they create barriers to sharing--without producing an incentive in return--in ways that can never be solved through private agreement. Twentieth century culture will largely remain off-limits for digitization, reproduction, adaptation, and translation. No series of private contracts or licenses can fix the problem because the relevant parties are not in the room and might not agree if they were.

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Even when the parties are available and agree to share, the benefits may not flow to all equally. Beset by a mult.i.tude of vague patents of questionable worth and uncertain scope, large information technology firms routinely create patent pools. IBM tosses in thousands of patents, so does Hewlett or Dell. Each agrees not to sue the other. This is great for the established companies; they can proceed without fear of legal action from the landmine patents that litter the technological landscape. As far as the partic.i.p.ants are concerned, the patent pool is almost like the public domain--but a privatized public domain, a park that only residents may enter. But what about the start up company that does not have the thousands of patents necessary for entry? They are not in as happy a situation. The patent pool fixes the problem of poor patent quality and unclear scope--one that Jefferson was worrying about 200 years ago. But it fixes it only for the dominant firms, hurting compet.i.tion in the process.

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Attempts to form a commons may also backfire. The coordination problems are legion. There are difficulties of compatibility in licenses and the process, no matter how easy, still imposes transaction costs. Nevertheless, with all of these qualifications, the idea of the privately created commons is an important addition to the world view that Jefferson provided, a new tool in our attempt to craft a working system of innovation and culture. No one who looks at the Web can doubt the power of distributed, and frequently uncompensated, creativity in constructing remarkable reference works, operating systems, cultural conversations, even libraries of images and music. Some of that innovation happens largely outside of the world of intellectual property. Some of it happens in privately created areas of sharing that use property rights and open, sometimes even machine-readable, licenses to create a commons on which others can build. The world of creativity and its methods is wider than we had thought. That is one of the vital and exciting lessons the Internet teaches us; unfortunately, the only one our policy makers seem to hear is "cheaper copying means more piracy."

Chapter 9: An Evidence-Free Zone 1

Perhaps some of the arguments in this book have convinced you.

Perhaps it is a mistake to think of intellectual property in the same way we think of physical property. Perhaps limitations and exceptions to those rights are as important as the rights themselves. Perhaps the public domain has a vital and tragically neglected role to play in innovation and culture. Perhaps relentlessly expanding property rights will not automatically bring us increased innovation in science and culture. Perhaps the second enclosure movement is more troubling than the first.

Perhaps it is unwise to extend copyright again and again, and to do so retrospectively, locking up most of twentieth-century culture in order to protect the tiny fragment of it that is still commercially available. Perhaps technological improvements bring both benefits and costs to existing rights holders--both of which should be considered when setting policy. Perhaps we need a vigorous set of internal limitations and exceptions within copyright, or control over content will inevitably become control over the medium of transmission. Perhaps the Internet should make us think seriously about the power of nonproprietary and distributed production.

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Saying all this gives us some guidance in how we should think.

It points out certain patterns of error. But its prescriptions are not simple. Precisely because it is not a rejection of intellectual property rights, but rather a claim that they only work well through a process of consciously balancing openness and control, public domain and private right, it still leaves open the question of where that point of balance is and how to strike it.

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In this chapter I want to offer a suggestion that in any other field would be stunningly obvious, boring even, but in the funhouse mirror of intellectual property appears revolutionary.

We should make our policy based on empirical evidence of its likely effects and there should be a formal requirement of empirical reconsideration of those policies after they have been implemented to see if they are working. Why is this a good idea?

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Imagine a process of reviewing prescription drugs that goes like this: representatives from the drug company come to the regulators and argue that their drug works well and should be approved. They have no evidence of this beyond a few anecdotes about people who want to take it and perhaps some very simple models of how the drug might affect the human body. The drug is approved. No trials, no empirical evidence of any kind, no follow-up. Or imagine a process of making environmental regulations in which there were no data, and no attempts to gather data, about the effects of the particular pollutants being studied. Even the harshest critics of regulation would admit we generally do better than this. But this is often the way we make intellectual property policy.

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So how do we decide the ground rules of the information age?

Representatives of interested industries come to regulators and ask for another heaping slice of monopoly rent in the form of an intellectual property right. They have doom-laden predictions, they have anecdotes, carefully selected to pluck the heartstrings of legislators, they have celebrities who testify--often incoherently, but with palpable charisma--and they have very, very simple economic models. The basic economic model here is "If you give me a larger right, I will have a larger incentive to innovate. Thus the bigger the rights, the more innovation we will get. Right?"

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As I have tried to show here using the words of Jefferson and Macaulay and examples such as term extension, software copyrights, and garage door openers, this logic is fallacious.

Even without data, the "more is better" idea is obviously flawed. Copyrighting the alphabet will not produce more books.

Patenting E=?mc2 will not yield more scientific innovation.

Intellectual property creates barriers to, as well as incentives toward, innovation. Jefferson agonized over the issue of when the benefits exceed the costs of a new right. "I know well the difficulty of drawing a line between the things which are worth to the public the embarra.s.sment of an exclusive patent, and those which are not." It is not clear that contemporary policy makers approach issues with anything like the same sophistication or humility. But it would be an equal mistake to conclude, as some do, that expansions of intellectual property are never justified. Extensions of rights can help or hurt, but without economic evidence beforehand and review afterward, we will never know. This point should be obvious, ba.n.a.l, even deeply boring, but sadly it is not.

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From Jefferson and Macaulay and Adam Smith, I derived a second point. In the absence of evidence on either side, the presumption should be against creating a new, legalized monopoly. The burden of proof should lie on those who claim, in any particular case, that the state should step in to stop compet.i.tion, outlaw copying, proscribe technology, or restrict speech. They have to show us that the existing protection is not enough. But this presumption is a second-best solution and the empirical emptiness of the debates frustrating.

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This makes an occasion where there is some evidence a time for celebration. What we need is a test case in which one country adopts the proposed new intellectual property right and another similarly situated country does not, and we can a.s.sess how they are both doing after a number of years.

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There is such a case. It is the "database right."

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OWNING FACTS?

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Europe adopted a Database Directive in 1996 which gave a high level of copyright protection to databases and conferred a new "sui generis" database right even on unoriginal compilations of facts. In the United States, by contrast, in a 1991 case called Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991), the Supreme Court made it clear that unoriginal compilations of facts are not copyrightable.

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What does all this mean? Take the phone directory--that was the product at issue in the Feist case. A white pages directory is a database of names and numbers, compiled in alphabetical order by name. Does anyone have an intellectual property right over it?

Not the particular dog-eared directory lying next to your phone.

Does the phone company that compiled it own the facts, the numbers inside that directory? Could they forbid me from copying them, adding others from surrounding areas, and issuing a competing directory that I believed consumers would find more valuable? This was an important issue for Feist because it went to the heart of their business. They issued regional telephone directories, combining records from multiple phone companies. In this case, all the other companies in the region agreed to license their data to Feist. Rural did not, so Feist copied the information, checked as many entries as possible, adding addresses to some of the listings, and published the combined result. Rural sued and lost. The Supreme Court declared that mere alphabetical listings and other unoriginal a.s.semblies of data cannot be copyrighted.

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It may seem unfair that much of the fruit of the compiler's labor may be used by others without compensation. As Justice Brennan has correctly observed, however, this is not "some unforeseen byproduct of a statutory scheme." It is, rather, "the essence of copyright," and a const.i.tutional requirement. The primary objective of copyright is not to reward the labor of authors, but "to promote the Progress of Science and useful Arts." To this end, copyright a.s.sures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work. This principle, known as the idea/expression or fact/expression dichotomy, applies to all works of authorship. As applied to a factual compilation, a.s.suming the absence of original written expression, only the compiler's selection and arrangement may be protected; the raw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.1 14

Feist was not as revolutionary as some critics claimed it to be.

Most of the appeals courts in the United States had long held this to be the case. As the Court pointed out in the pa.s.sage above, it is a fundamental tenet of the U.S. intellectual property system that neither facts nor ideas can be owned. Feist merely reiterated that point clearly and stressed that it was not just a policy choice, it was a const.i.tutional requirement--a limit imposed by the Const.i.tution's grant of power to Congress to make copyright and patent laws.