Last updated: July 16, 2007 4:39 pm

The inefficiencies of freedom

Thomas W. Hazlett: Risky business?

James Boyle: Liberty and doubt

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Sometimes, freedom can just come to seem inefficient. Old-fashioned. Something that can be subcontracted away. That is the time to worry. Or so it seemed to me when I read about a new license that the Copyright Clearance Center is offering American academic institutions. The centre is a non-profit organisation. Its worthy purpose is to act as a central clearance center for permissions requests. If you are a teacher who wants to assemble a course-pack of readings for your students, the centre will clear the permissions from the copyright holders and collect licensing fees for them, allowing you to do your job without hiring a law firm for each batch of homework. Some of you may be surprised that such a process is even necessary. You may remember that the American copyright act explicitly declares the making of “multiple copies for educational use” to be a “fair use” – a privileged freedom statutorily removed from the monopoly Congress has granted the copyright holder. If no permission is required, why is such a centre even necessary?

That is a good question. The answer is that there is profound disagreement about the extent of educational fair use. A widely criticised “Conference on Fair Use” declared that it meant nothing more than a few hundred words photocopied spontaneously before class. A court of appeals held that even coursepacks made up of huge photocopied excerpts – 95 pages from one book, for example – were fair uses, even when done by a commercial copy shop working for a professor. That decision was overturned by a full panel of the same appeals court, over several strong dissents. But even there the court indicated that had the copying been done by a professor or a university rather than a commercial copy shop, the answer might been different. So where does the line lie for US educators? A few hundred words spontaneously copied before class? Or the routine photocopying of large portions of many books? The answer is that we do not know, though – if the copying is not done for profit – the answer lies in the middle and closer to the larger extreme.

Enter the Copyright Clearance Center. The centre’s task is an admirable one – make copyright simple for educators. Last week they made it even simpler. The centre will offer blanket licenses for academic institutions. Many publishers have pooled their content to be licensed – on payment of a single fee. The press releases suggest that students and faculty will no longer need to worry about copyright. In fact, the license does not cover all copyrighted works. Not even close, though it is described that way in some press accounts. Still it covers a lot and the temptation is to believe it covers everything. Publishers and authors get paid. Teachers and students can give up trying to understand the law. Administrators can write one huge check and then forget about copyright for a whole year. What’s not to like?

That takes us back to the zone of uncertainty about the contours of fair use. It is bad for the goals of copyright – promoting expression, culture and the dissemination of ideas – if every use of copyrighted works is controlled. Parody, satire, criticism – all of these depend crucially on fair use. So does education and scholarship even when, perhaps especially when, the person whose works you are copying does not want you to do so. The gaps in copyright – areas of freedom the statute explicitly outlines – are as important as the rights given to the author. In a world where we “solve” uncertainty about the extent of fair use by blanket licenses, the actual area of that freedom will atrophy. This makes fair use sound like a muscle – use it or lose it? But that is the reality.

Courts look to the “markets” for copyrighted work in determining fair use. If educators give up on fair use and simply pay a tithe to cover all of the zone of uncertainty – covering many uses for which they should pay, and many uses for which they need not – the next court to define the fair use freedom will use that practice as a baseline. Teachers and students may come to understand their freedom to make educational copies as granted by license, not law. That may not be of much concern for wealthy colleges that find it easier to just pay a flat fee rather than educate their students and teachers about fair use. But it is a great concern for poorer institutions and for the rest of us. What about an individual teacher who needs to reproduce copyrighted works in order to teach her students about a controversial and litigious religious sect or the internal operations of a company that makes voting machines – and finds herself sued for her pains? Or teachers of art, music or film who need material not covered by the license?

Over the last fifty years copyright has expanded dramatically – in breadth, depth and scope. That puts more pressure on the “safety valves” such as fair use that limit copyright’s extremes. During the expansion, educational institutions and libraries have often reminded Congress and the courts of the need to make sure that copyright did not become total control. They have been the public defenders of the public domain. Will that role continue?

The Copyright Clearance Center’s goals are respectable. Publishers and authors have completely legitimate interests to defend. But is the result of this new license a buy-out by wealthy institutions, the only ones who could afford to defend the principle of academic freedom called fair use? Is it a retreat to licensed “gated communities,” leaving the poor, the uninformed and the dissident to with no license and an atrophied culture of fair use? If so, the deal might carry too high a price tag for responsible academia to pay.

James Boyle is William Neal Reynolds Professor of Law at Duke Law School. His recent books include The Shakespeare Chronicles, a literary mystery, and Bound By Law, a co-written comic book on fair use.

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Thomas W. Hazlett: Risky business?

James Boyle’s explanation of the Copyright Clearance Center plan is informative and provocative. I also commend his tongue-in-cheek. Freedom often appears, at first blush, inefficient. First blush often, however, yields to larger truths in a richer analysis.

Prof. Boyle sees danger in, as I read it, two aspects of the bargain struck by universities with content owners. First, courts may see the deal as marketplace precedent, and enforce future copyrights more broadly. Second, the price extracted from large educational institutions may prove unaffordable to smaller schools or non-academics.

It seems that the first problem is addressed by universities inserting contract language that their payments are settlements, not admissions governing the ownership of any particular set of materials. The second issue, meanwhile, appears more solution than problem. If large, well-endowed universities pay for broad copyright use, they directly accommodate use by vast numbers of students and faculty. But the indirect accommodation may prove even larger.

With content so widely available, won’t the likely outcome be that strict “fair use” rules will prove relatively costly (per dollar benefit) to enforce for smaller institutions and lone writers? If so, the equilibrium outcome – and I stand to be corrected on the facts or the future prospects – appears to be an output-expanding price discrimination scheme. Institutions with large numbers of users and substantial legal departments craft contracts and shoulder costs, while marginal users scattered far and wide free-ride. Price discrimination schemes of similar stripe in medicine and (internationally) in pharmaceuticals have obtained for some decades.

They model exhibits some nice efficiencies. In general, (a) owners get paid, and therefore put forth creative products, (b) the price of access for the marginal user is low; and (c) transaction costs are modest. Rather than threatening to suppress parody or other useful elements of fair use, can’t the Copyright Clearance Center deal be seen as a way to effectively open valuable content to millions of eyeballs?

Thomas W. Hazlett is professor of law and economics at George Mason University, where he is director of the Information Economy Project of the National Center for Technology and Law

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James Boyle: Liberty and doubt

My article received a lot of thoughtful commentary, both from Tom Hazlett and from bloggers. For some, the statute’s guarantee of the right to make multiple copies for classroom use should simply to be minimised or ignored; educational fair use does not have as important a role as the other types of fair use about which I spoke, such as parody. So long as the price and the transaction costs are low, educational institutions should just pay up.

This is partly a disagreement about what the law is. Since the copyright holders are the ones who initiate suits, they are not likely to bring them where fair use is at its strongest – in-house reproduction for classroom use by non-profit educational institutions – particularly if the excerpts are reasonably sized, the prices high or the copyright owners restrictive. It suits publishers to keep the line vague, of course. As the CCC’s guidelines on fair use say (a little enthusiastically for my taste), “Frequently, a complete risk analysis is required. Most organisations prefer to follow the motto ”when in doubt, obtain permission.”” That is heart-warming news to publishers. The access-way to the beach is public. But if people do not know that, they might be willing to pay a toll the nearby landowner anyway.

There is also a deeper disagreement. We disagree about just how low the price of clearances will be, and how important the role of educational copying is. As one excellent law library blog pointed out “the Journal of Nanoscience and Nanotechnology is charging $150 per page per student for handouts for classroom use.” A single example, true. But when research, much of it federally funded, costs $150 a page to the students who need to read it to become the next round of creators and authors – the very thing copyright is supposed to encourage – then I doubt we have managed to hit the ideal market structure. Journals can charge high prices partly because the people who choose to publish in them for prestige reasons are not the people who pay for subscriptions. Do not expect a tidy market correction any time soon.

Finally, there is a disagreement about the “negative externalities” of blanket licensing. (I agree with Tom Hazlett that it has positive benefits, too.) Will a world in which people assume that permission must always be obtained, shrink fair use in general? My answer is a firm “yes.”

Nevertheless, I think there are also some possible points of agreement. If the fear is that we are in danger of moving to a culture in which it assumed that permission is always required, then it is vital for educational institutions, and the CCC – which presumably never wants people to pay unnecessarily – to make sure that does not happen. Here are four concrete steps we could take.

Let me start with one of Tom Hazlett’s. First, educational institutions should make it conspicuous in all their licenses that they do not accept any limitation of their fair use rights. Second, the CCC should conduct an independent public audit of the distribution of actual permissions being obtained. Are these, as some assume, mainly very large segments of works, or profit making copiers? Or are schools and universities routinely paying even when they do the copying in-house, and are reproducing only a few pages? Facts would add clarity to the debate. Third, all the institutions involved need to improve their education on copyright and fair use. Finally, we need to think about a better institutional structure for determining fair use than the current one. Alternatives that have been bandied about include low cost tribunals, like those which adjudicate internet domain name disputes, and “advice letters” from the copyright office which would convey immunity from damages. To quote a line from a very different area of law, “Liberty finds no refuge in a jurisprudence of doubt.” To which the response most assuredly should not be “when in doubt, obtain permission.”

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