13 January 2016

Copyright law needs an update

By Michael Shindler

Copyright laws are supposed to promote innovation by allowing the originators of bold ideas to harvest the fruits of their ingenuity. However, the current set of copyright laws designed are ill-equipped for the digital age. Far from stimulating innovation, they are now hampering it. If copyright law is to continue fulfilling its purpose, it must be updated.

For any law to be effective, it must be understood by the people it applies to. Copyright law is hard enough to understand for large tech companies with hefty legal departments. For small businesses–particularly tech startups—the current copyright law is virtually unintelligible. This leads many small businesses to avoid certain areas altogether.

For example, while many startups would relish the opportunity to invest in a platform wherein users upload original content, many are scared away by the high costs of accidental copyright infringement.

In 2008, copyright law was clarified slightly when the Court of Appeals for the Second Circuit ruled in Cartoon Network, LP v. CSC Holdings Inc (Cablevision). The court found that a television recording service made available to customers did not constitute copyright infringement.

The results were remarkable. Over the two-and-a-half-years following the ruling, venture capital investment in cloud computing businesses surged by an estimated $728 million to $1.3 billion, and quarterly investment in the same sector rose by around 41 per cent.

While Cablevision was a promising start, there remain a welter of practices which have yet to be clarified. Until this occurs, many dynamic services worth potentially billions of dollars will remain undeveloped.

Worse yet, owing to the overwhelming lack of legal clarity, and the high costs associated with even minor infringements, companies that host material uploaded by a user will quickly remove it if they receive a notice claiming that they are in violation of the Digital Millennium Copyright Act (DMCA). In practice, DMCA notices are often used to suppress perfectly legal content, deemed by some to be unfavorable or offensive. Even the blogging platform, Tumblr, is regularly sent DMCA notices regarding controversial posts by its users.

Congress, to its credit, has made some effort to reduce this abuse of DMCA notices by adding two provisions to the law. The first allows those given a DMCA notice the ability to restore their content if the sender of the notice fails to produce proof of an infringement, and the second holds DMCA abusers accountable for any damages incurred.

These provisions are a step in the right direction, but the law would better protect businesses if it extended the second provision to include mandated damages (statutory damages), which take into account both the degree of abuse and damage incurred. This would raise the cost of filing fraudulent DMCA notices, and significantly reduce the level of abuse.

The murkiness of existing copyright law also allows malicious lawyers—known as copyright trolls—to bully ordinary people who do nothing more than quote news articles on their blog. These trolls rely on the fear of expensive legal bills to pressure defendants to settle out of court—since even court victories can leave them frustrated, exhausted, and in financial turmoil.

In Righthaven LLC v. Hoehn, a 2013 Court of Appeals case before the 9th circuit, a copyright troll claimed $150,000 worth of damages from a decorated veteran for simply reposting an article in a forum. Righthaven lost its suit, but the case is testament to the sort of legal action that maladaptive copyright law has made space for.

While it is important for the law to allow those whose works have been infringed upon to collect damages, it is unreasonable for those damages to be out of proportion to the costs suffered. Consumers are currently liable for minimum damages of $750 for willful infringement and $200 for unknowing infringement—damages that are frequently exceeded.

This is true whether a consumer illegally downloads a movie worth $20 or a song that sells for 75 cents on Amazon. It would be far fairer if the minimum legal damages stipulated were proportionate to the costs suffered by the copyright holders, instead of being set at arbitrary sums.

These examples of copyright abuse demonstrate that existing copyright laws, despite being designed to stimulate progress and compensate innovators, have become a source of harm and must be updated.

Michael Shindler is a Young Voices Advocate.