Not all of the expansive claims eventually triumphed, of course, but some did. Guessing which would and which would not was hard even for me, though, as I said, I teach intellectual property law. You, probably, do not.

42

In 1950 none of this would have mattered. Unless you were in some related business--as a publisher, broadcaster, film distributor, or what have you--it would have been hard for you to trigger the rules of intellectual property law. If you were in such a business, you were probably very familiar with the rules that governed your activities and well represented by corporate counsel who knew them even better. What's more, the rules were neither as complex nor as counterintuitive as they are now. They also did not reach as far. The reach of the rights has been expanded, and their content made more difficult to understand, at the exact moment that their practical effect has been transformed. It is not merely that the triggers of intellectual property law can easily be set off by individual footsteps.

There are now many more triggers and their trip wires are harder to see.

43

From the point of view of the content industries, of course, all this is foolishness. It is not some undesirable accident that intellectual property has come to regulate personal, noncommercial activity. It is absolutely necessary. Think of Napster. When individuals engaging in noncommercial activity have the ability to threaten the music or film industry's business plan by engaging in the very acts that copyright law always regulated--namely reproduction and distribution--of course it is appropriate for them, and the networks they "share" on, to be subject to liability. What's more, to the extent that copying becomes cheaper and easier, it is necessary for us to strengthen intellectual property rights. We must meet the greater danger of copying with more expansive rights, harsher penalties, and expanded protections, some of which may indeed have the practical effect of reducing rights that citizens thought they had, such as fair use, low-level noncommercial sharing among personal friends, resale, and so on. Without an increase in private property rights, in other words, cheaper copying will eat the heart out of our creative and cultural industries. I call this claim the Internet Threat.

Chapter 4: The Internet Threat 1

The conventional wisdom is that governments respond slowly to technological change. In the case of the Internet, nothing could be further from the truth. In 1994 and 1995, "dot-com" was still a mystical term for many. Most stories about the Internet dealt with s.e.xual predation rather than possibilities of extreme wealth. Internet commerce itself was barely an idea, and some of the most exciting sites on the Web had pictures of coffeepots in university departments far away. ("See," one would proudly say to a technological neophyte friend when introducing him to the wonders of the Net, "the pot is empty and we can see that live from here! This changes everything!") It was an innocent time.

Yet the U.S. government was already turning the wheels of intellectual property policy to respond to the threat (and promise) of the Internet. More precisely, they were trying to shape the future of the c.u.mbersomely named "National Information Infrastructure," the official name for the "information superhighway" that it was presumed would replace the "immature"

technology of the Net. The government was wrong about that, and about a lot else.

2

The blueprint for new intellectual property policy online came from the Patent and Trademark Office. That office promulgated first a Green Paper and then, after further hearings, a White Paper, on "Intellectual Property and the National Information Infrastructure."1 As policy and legal doc.u.ments these are in one sense long out of date. Some of their legal arguments were successfully challenged. Some of their most important proposals were rejected, while many others have become law. But as a starting point from which to trace the frame of mind that has come to dominate intellectual property policy online, they are hard to equal.

3

These doc.u.ments contained proposals that nowadays would be seen as fairly controversial. Internet service providers were said to be "strictly liable" for copyright violations committed by their subscribers; that is to say, they were legally responsible whether or not they knew about the violation or were at fault in any way. Loading a doc.u.ment into your browser's transient cache memory while reading it was said to be making a "copy." There was more: the beginnings of what later became the Digital Millennium Copyright Act,2 making it illegal to cut through the digital fences which content providers put around their products. The att.i.tude toward fair use was particularly revealing. At one point in the White Paper it was hinted that fair use might be a relic of the inconveniences of the a.n.a.log age, to be discarded now that we could have automated fractional payments for even the most insignificant use.3 (It was noted, however, that some disagreed with this conclusion.) At another point, fair use was described as a "tax" on rights holders and a "subsidy" to those who benefited from it, such as educational inst.i.tutions.4 The White Paper also suggested that while any potential loss to rights holders caused by the new technology needed to be countered with new rights and new protections, any potential gain to them through the new technology was simply theirs. Potential gain did not offset the need to compensate for potential loss.

4

So what views of intellectual property were we carrying forward into the Internet age? Intellectual property is just like other property. Rights are presumptively absolute. Any limitations on them, such as fair use, are taxes on property owners, subsidies to the society at large. It sounds like a perfect time to administer the Jefferson Warning I sketched out in Chapter 2.

After all, Jefferson was specifically warning against each of these errors two hundred years ago. To find them in a student paper would be disappointing--irritating, even. But this doc.u.ment was the blueprint for the intellectual property regime of cybers.p.a.ce.

5

But do these mistakes matter? How important is it that we get the rules of intellectual property right? To me, a number of my colleagues, some librarians, a few software gurus, the White Paper was more than just a bit of bad policy in a technical field--like a poorly drafted statute about the witnessing of wills, say. When you set up the property rules in some new s.p.a.ce, you determine much about the history that follows.

Property rules have a huge effect on power relationships and bargaining positions. Think of rules setting out water rights or the right to drive cattle over homesteaders' land in the American West. But they also are part of a larger way of seeing the world; think of the early-twentieth-century rules treating unions as "conspiracies in restraint of trade" or the Supreme Court decisions that dispossessed the American Indians on the theory that they did not comprehend the concept of property and thus did not "own" the land being taken from them.5 We were at a comparable point in the history of cybers.p.a.ce. What was being set up here was a vision of economy and culture, a frame of mind about how the world of cultural exchange operates, and eventually a blueprint for our systems of communication. At this stage, the range of possibilities is extremely wide. A lot of different choices could be made, but subsequent changes would be harder and harder as people and companies built their activities around the rules that had been laid down. This was, in short, a tipping point where it was particularly important that we make the right decisions.

6

Conventional political science told us there were a lot of reasons to fear that we would not make the right decisions. The political process was going to be particularly vulnerable to problems of capture by established industries, many of whom would (rightly) see the Internet as a potential threat to their role as intermediaries between artists and creators on the one hand and the public on the other.

7

Intellectual property legislation had always been a cozy world in which the content, publishing, and distribution industries were literally asked to draft the rules by which they would live. The law was treated as a kind of contract between the affected industries. Rationally enough, those industries would wish to use the law not merely to protect their legitimate existing property rights, but to make challenges to their basic business plans illegal. (Imagine what would have happened if we had given the lamp-oil sellers the right to define the rules under which the newfangled electric light companies would operate.) There would be no easy counterweight to these pressures, as Jessica Litman points out in a wonderful set of reflections on copyright lawmaking, because the potential compet.i.tors to existing t.i.tans were just being born and could thus be strangled safely in their cradles.6 Certainly the public would have little grasp as yet of what was at stake.

8

In any event, when had the public played a role in intellectual property legislation? That kind of law affected businesses with printing presses or TV towers, not normal citizens. It did not help that the legislators were largely both ignorant and distrustful of the technology of the Internet--which was, at the time, thought to be dominated by foreign hackers, suicidal cults, pirates, and sleazy p.o.r.nographers. (Terrorists and Nigerian spammers would be added to the mix later.) 9

Given an area of law that legislators were happy to hand over to the affected industries and a technology that was both unfamiliar and threatening, the prospects for legislative insight were poor. Lawmakers were a.s.sured by lobbyists 10

a) that this was business as usual, that no dramatic changes were being made by the Green or White papers; or b) that the technology presented a terrible menace to the American cultural industries, but that prompt and statesmanlike action would save the day; or c) that layers of new property rights, new private enforcers of those rights, and technological control and surveillance measures were all needed in order to benefit consumers, who would now be able to "purchase culture by the sip rather than by the gla.s.s" in a pervasively monitored digital environment.

11

In practice, somewhat confusingly, these three arguments would often be combined. Legislators' statements seemed to suggest that this was a routine Armageddon in which firm, decisive statesmanship was needed to preserve the digital status quo in a profoundly transformative and proconsumer way. Reading the congressional debates was likely to give one conceptual whiplash.

12

To make things worse, the press was--in 1995, at least--clueless about these issues. It was not that the newspapers were ignoring the Internet. They were paying attention--obsessive attention in some cases. But as far as the mainstream press was concerned, the story line on the Internet was s.e.x: p.o.r.nography, online predation, more p.o.r.nography. The lowbrow press stopped there. To be fair, the highbrow press was also interested in Internet legal issues (the regulation of p.o.r.nography, the regulation of online predation) and const.i.tutional questions (the First Amendment protection of Internet p.o.r.nography). Reporters were also asking questions about the social effect of the network (including, among other things, the threats posed by p.o.r.nography and online predators).

13

There were certainly important issues within the areas the press was willing to focus on, and I do not mean to trivialize them. I worked with a couple of civil liberties groups in opposing the hapless Communications Decency Act, one of the most poorly drafted pieces of speech regulation ever to come out of Congress.7 It was a palpably unconst.i.tutional statute, eventually struck down by a unanimous Supreme Court.8 Its proposals would have burdened the speech of adults while failing to protect the interests of minors. Reporters loved the topic of the Communications Decency Act. It was about s.e.x, technology, and the First Amendment. It foreshadowed the future of online speech regulation. One could write about it while feeling simultaneously prurient, principled, and prescient: the journalistic trifecta. For law professors who worked on digital issues, the Communications Decency Act was an easy topic to get the public to focus on; we had the reporters and editors calling us, pleading for a quote or an opinion piece.

14

Intellectual property was something quite different. It was occasionally covered in the business pages with the same enthusiasm devoted to changes in derivatives rules. Presented with the proposals in the Green and White Papers, the reporters went looking for opinions from the Software Publishers a.s.sociation, the Recording Industry a.s.sociation of America, or the Motion Picture a.s.sociation of America. This was not bias or laziness--to whom else would they go? Who was on the "other side"

of these issues? Remember, all of this occurred before Napster was a gleam in Sean Fanning's eye. Sean Fanning was in middle school. Amazon.com was a new company and "Google" was not yet a verb.

15

In this environment, convincing the legislature or the press that fundamental public choices were implicated in the design of intellectual property rights for the digital world was about as easy as convincing them that fundamental public choices were implicated in the rules of tiddlywinks. My own experience is probably representative. I remember trying to pitch an article on the subject to a charming but uncomprehending opinion page editor at the Washington Post. I tried to explain that decisions about property rules would shape the way we thought about the technology. Would the relatively anonymous and decentralized characteristics of the Internet that made it such a powerful tool for global speech and debate come to be seen as a bug rather than a feature, something to be "fixed" to make the Net safe for protected content? The rules would also shape the economic interests that drove future policy. Would we try to build the system around the model of proprietary content dispensed in tightly controlled chunks? Would fair use be made technologically obsolescent? Would we undercut the various nontraditional methods of innovation, such as free software, before they ever managed to establish themselves? What would become of libraries in the digital world, of the ideal that access to books had important differences from access to Twinkies? After I concluded this lengthy and slightly incoherent cri de Coeur, there was a long pause; then the editor said politely, "Are you sure you couldn't make some of these points about a free speech issue, like the Communications Decency Act, maybe?"

16

I finally placed the piece in the Washington Times,9 which was best known at the time as the only metropolitan newspaper owned by the Unification Church, familiarly referred to as the Moonies. This hardly counted as a direct line to the popular imagination (though the article's mild criticisms elicited an extraordinary reaction from the Clinton administration's lead official on intellectual property policy--throwing me for several weeks into a surreal world of secondhand threats, third-party leaks, and a hilarious back-and-forth in the letters page).10 17

Things were not completely one-sided. An unlikely group of critics had formed: librarians, a few software developers, law professors, some Internet libertarians. Of particular note was the Digital Future Coalition, which grew to represent a broad range of interested groups and industries thanks in part to the prescient a.n.a.lysis and remarkable energy of one of my colleagues, Peter Jaszi.11 Together with Pamela Samuelson, Jessica Litman, and a number of other distinguished legal scholars, Peter turned his considerable intellectual talents to explaining why writers, telecom companies, scientists, manufacturers of consumer electronics, and a host of other groups should be interested in the rules being debated. There had been a series of official hearings in which complaints were carefully collected and just as carefully ignored. This became harder to do as the critics became more numerous and better organized. Nevertheless, the currents were clearly running against them. It would be nice to say that this was merely because of the clubby history of intellectual property legislation, or the difficulty in getting press attention, or the various issues of industry capture and collective action problems. Yet this would be to miss a vital element of the situation.

18

Conventional political science showed that there were structural reasons why the legislative process was likely to succ.u.mb to industry capture.12 The reality turned out to be much worse. The real problem was not a political process dominated by cynical power politics, nor an initial absence of critical newspaper coverage, though both of those factors contributed. The real problem was that most of the proponents of the White Paper's policies believed their own arguments so deeply and sincerely that they saw any criticism of those positions as either G.o.dless communism or hippy digital anarchism. (Frequently, in fact, they clung to their arguments even when there was fairly strong evidence that they would actually be harming themselves by putting these policies into effect. I will expand on this point later.) More importantly, they succeeded in getting their story about the threats and promises of the digital future accepted as the basis for all discussion of intellectual property policy. It became the organizing set of principles, the master narrative--call it what you will.

19

The heart of the story is beguilingly simple. The Internet makes copying cheaper and does so on an unparalleled global scale.

Therefore we must meet the greater danger of illicit copying with more expansive rights, harsher penalties, and expanded protections. True, as I pointed out before, some of these expansions may indeed have the practical effect of reducing rights that citizens thought they had, such as fair use, low- level noncommercial sharing among personal friends, resale, and so on. But without an increase in private property rights, cheaper copying will eat the heart out of our creative and cultural industries. I call this story the Internet Threat. It is a powerful argument and it deserves some explanation.

20

Think back for a moment to the first chapter and the difference between Madame Bovary and the petunia. If the reason for intellectual property rights is the "nonrival" and "nonexcludable" nature of the goods they protect, then surely the lowering of copying and transmission costs implies a corresponding need to increase the strength of intellectual property rights. Imagine a line. At one end sits a monk painstakingly transcribing Aristotle's Poetics. In the middle lies the Gutenberg printing press. Three-quarters of the way along the line is a photocopying machine. At the far end lies the Internet and the online version of the human genome. At each stage, copying costs are lowered and goods become both less rival and less excludable. My MP3 files are available to anyone in the world running Napster. Songs can be found and copied with ease. The symbolic end of rivalry comes when I am playing the song in Chapel Hill, North Carolina, at the very moment that you are both downloading and listening to it in Kazakhstan--now that is nonrival.

21

THE LOGIC OF PERFECT CONTROL 22

My point is that there is a teleology--a theory about how intellectual property law must develop historically--hidden inside the argument I call the Internet Threat. The argument, which is touted endlessly by the content industries--and not without reason--can be reduced to this: The strength of intellectual property rights must vary inversely with the cost of copying. With high copying costs, one needs weak intellectual property rights if any at all. To deal with the monk-copyist, we need no copyright because physical control of the ma.n.u.script is enough. What does it matter if I say I will copy your ma.n.u.script, if I must do it by hand? How will this present a threat to you? There is no need to create a legal right to exclude others from copying, no need for a "copy right." As copying costs fall, however, the need to exclude increases. To deal with the Gutenberg press, we need the Statute of Anne--the first copyright statute--and the long evolution of copyright it ushered in.

23

But then comes the Internet. To deal with the Internet, we need the Digital Millennium Copyright Act,13 the No Electronic Theft Act,14 the Sonny Bono Copyright Term Extension Act,15 and perhaps even the Collections of Information Antipiracy Act.16 As copying costs approach zero, intellectual property rights must approach perfect control. We must strengthen the rights, lengthen the term of the rights, increase the penalties, and make noncommercial illicit copying a crime. We must move outside the traditional realm of copyright altogether to regulate the technology around the copyrighted material. Companies are surrounding their digital materials with digital fences. We must make it a violation of the law to cut those digital fences, even if you do so to make a "fair use" of the material on the other side. We must prohibit the making of things that can be used as fence-cutters--a prospect that worries researchers on encryption.

In the long run, we must get rid of the troublesome anonymity of the Internet, requiring each computer to have an individual ID.

We must make click-wrap contracts enforceable, even on third parties, even when you cannot read them before clicking--so that you never actually buy the software, music, movies, and e-books you download, merely "license" them for a narrowly defined range of uses. We must create interlocking software and hardware systems that monitor and control the material played on those systems--so that songs can be licensed to particular computers at particular times. Uses that the owners wish to forbid will actually be impossible, whether they are legal or not.

24

In other words, we must make this technology of the Internet, which was hailed as the great "technology of freedom," into a technology of control and surveillance. The possibility of individuals circulating costless perfect digital copies requires it. It would be facile (if tempting) to say we must remake the Internet to make it safe for Britney Spears. The "Internet Threat" argument is that we must remake the Net if we want digital creativity--whether in music or software or movies or e- texts. And since the strength of the property rights varies inversely with the cost of copying, costless copying means that the remade Net must approach perfect control, both in its legal regime and its technical architecture.

25

Like any attractive but misleading argument, the Internet Threat has a lot of truth. Ask the software company producing expensive, specialized computer-a.s.sisted design programs costing thousands of dollars what happens when the program is made available on a "warez" site or a peer-to-peer filesharing network. The upstart computer game company pinning its hopes and its capital on a single new game would tell you the same thing.

The easy availability of perfect, costless copies is a danger to all kinds of valuable cultural and economic production. The story of the Internet Threat is not wrong, it is simply dramatically incomplete in lots of ways. Here are two of them.

26

Costless Copying Brings Both Costs and Benefits 27

The Internet does lower the cost of copying and thus the cost of illicit copying. Of course, it also lowers the costs of production, distribution, and advertising, and dramatically increases the size of the potential market. Is the net result a loss to rights holders such that we need to increase protection and control in order to maintain a constant level of incentives?

A large, leaky market may actually provide more revenue than a small one over which one's control is much stronger. What's more, the same technologies that allow for cheap copying also allow for swift and encyclopedic search engines--the best devices ever invented for detecting illicit copying. What the Net takes away with one hand, it often gives back with the other. Cheaper copying does not merely mean loss, it also means opportunity.

Before strengthening intellectual property rights, we would need to know whether the loss was greater than the gain and whether revised business models and new distribution mechanisms could avoid the losses while capturing more of the gains.

28

But wait, surely theft is theft? If the new technologies enable more theft of intellectual property, must we not strengthen the laws in order to deal with the problem? If some new technology led to a rash of car thefts, we might increase police resources and prison sentences, perhaps pa.s.s new legislation creating new crimes related to car theft. We would do all of this even if the technology in question gave car owners significant benefits elsewhere. Theft is theft, is it not?