Tuesday, November 20, 2012

Steal this blog post

I want to discuss my views on the currently trendy topic of copyright and patent law. It seems the more the law tightens its grip, the more innovation slips through its fingers. First it was Napster, et al. and next it is 3-D printing. Are these continued developments a threat to our principals and way of life? It is important to remember Article 1, Section 8, Clause 8 of the U.S. Constitution, which states that Congress has the power:
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
As the recently published and almost immediately pulled House Republican Study Committee report noted, this is the purpose of copyright [and patent, I'll add]. Not to simply or necessarily compensate the creator of content [or inventions in the case of patents]. The issue at state is not about what a creator deserves or is owed. It is about promoting the general good of society. Too often the vested interests (Big Mouse, Big Music, Big Drug, Big Computer, etc.) confuse the issue by confusing successful market outcomes (the worthy goal per se) with individual creator or company or industry success (potentially but not necessarily worthy goals).

Copyright and patent are ultimately about special contracts. They are societal contracts that are forced upon us--a government-granted monopoly which casts a do-not-compete clause upon us all. We already should be concerned. But there is logical, principled footing here. I cannot make you share is a good property rights principal. I want to extend it to another, similar concept: You cannot make me not share. That's where I'm heading shortly. But first, some grounding.

Pragmatically and in principal, we want both creativity and sharing. The problem is sharing can hinder creativity because creativity can be costly and sharing can prevent benefits from flowing adequately to the creator who incurred the cost. Hence, we get copyrights and patents as the method to find a happy middle. But we have many reasons to believe we are far from the happy middle.

Briefly, here is my understanding of current law. To claim a copyright an idea must meet three requirements:

  1. The idea must have fixation in some tangible medium of expression.
  2. The idea must be original.
  3. The idea must meet a minimal level of creativity.
To receive a patent an invention must also meet three requirements:
  1. The invention must be novel
  2. The invention must be non obvious.
  3. The invention must be useful.
An easy but perhaps not complete solution to our problem (remember the problem, sharing might hinder creativity) would be to significantly reduce the duration of copyright and patent (C&P). You can complicate this solution and perhaps improve it by differentiating by type of C&P--i.e., pharmaceutics different than software; books different than Internet breaking news stories. Another possibly complementary idea at least for patents would be to make proving the patent case much, much harder. John Duffy at Wired has some very good thoughts on this. Specifically, he suggests we should do a better job defining and enforcing non obviousness. 

I like these solutions, but they don't seem complete. In fact to be critical, Duffy's idea might be too much hand waving and wishful thinking ignoring the public choice problems. What I want ideally is to jointly maximize sharing and creativity--find the happy middle. Let's start by assuming creativity is independent of sharing. In that case I submit the following: 

Principles of Ethical Sharing, Duplication, and Simulation in a World of Costless Creativity

Duplication is a form of sharing. Sharing is ethical. I can listen to my copy of a song with you, I can lend you my physical copy of a song, I can give you my physical copy of a song, and I can duplicate my copy of a song and give or sell the duplication to you. Duplication satisfies two conditions; it must:

1.      Be indistinguishable from the consumer’s point of view.
2.      Be non-rivalrous from the consumer’s point of view.

The second part is important: Sharing is duplication only if you and I can enjoy it at the same time separately. The first part is where it gets interesting: Sharing is duplication only if the good or service cannot be distinguished from the authentic from the consumer's point of view—otherwise it is simulation. Simulation is ethical if the consumer in a specific case realized or the reasonable-man consumer in a general sense would be expected to realize the simulated good or service is distinct from the authentic. If this test of simulation fails, we have a case of fraud. Trademark violations are fraud, for example. 

Because we don't live in a world of costless creativity, we are going to need C&P to some extent. My solution is to apply C&P only to cases of duplication--not to simulation and of course not to other forms of sharing. In doing so we GREATLY limit the applicability of C&P. Many inventions currently protected by patent law are no longer eligible as they are cases of simulation (this makes moot most of the software patent wars). 

In this solution C&P would honor first to file but recognize concurrent, independent discovery/creation. This allows for simultaneous C&P protection to multiple parties where the first to file would begin the clock on C&P duration. Copyright would be inexpensive to file commensurate with current practices and fees, but patent filing would require a high fee (high enough to discourage speculative, squatting patent filings). There would also be a very substantial cost indexed to inflation to enforce both C&P. The cost of enforcing C&P would be the cost of bringing suit including a loser-pays rule for plaintiffs only. The standard duration of enforcement would be 5 years. This duration would be extendable by purchasing time in annual increments up to a total of 15 years of protection including the original 5. Extensions would need to be filed prior to within one year remaining of C&P life, and the cost of each additional year should be equal to 1/5 the cost of a new 5-year enforcement initial filing of C&P, respectively. Because willingness to pay for additional protection would be based only on the perceived unrealized value of the idea (NPV of future cash flows) and the assumed ease of duplication, there should be a relatively efficient tradeoff between protection and release.