Copyright’s Blind Spot: The Innovation Asymmetry

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When it comes to innovation, copyright debates tend to be one-sided. Consider the Trans-Pacific Partnership agreement. SOPA and PIPA. Congressional hearings. The Department of Commerce “green paper.” To various degrees, each reveals a copyright setting in which innovation is neglected or, at a minimum, insufficiently appreciated.

Why, for example, have copyright debates focused on piracy, theft, and rogue websites? Why is there an obsession with large copyright owners’ business models? Why are the benefits of peer-to-peer (p2p) technology and cloud computing underappreciated? Why are we not more troubled that technologies suffer early deaths because of overaggressive copyright law and enforcement? The reason is simple. I call it the “innovation asymmetry.”

I define the innovation asymmetry as an overemphasis on a technology’s infringing uses and insufficient appreciation of its noninfringing uses. Why is there such an asymmetry? Because infringing uses are immediately apparent, quantifiable, and advanced by motivated, well-financed copyright holders. Noninfringing uses, in contrast, are less tangible and less apparent at the onset of a technology.

The costs of infringing uses can be quantified. They roll off copyright owners’ tongues: $250 billion in losses to the U.S. economy each year from IP infringement. 750,000 jobs lost annually from infringement. It doesn’t matter if the figures are correct. For even if they are completely disproved, the mere articulation of numbers promises a precision that is difficult to dislodge from the audience’s consciousness.

The costs also are vivid in threatening copyright owners’ business models. This is clear from their panic upon the introduction of numerous technologies—from John Philip Sousa’s concern with the player piano to Jack Valenti’s famous tirade against the VCR. And the tasks needed to demonstrate harms from infringement can easily be undertaken by the large content holders.

In contrast, noninfringing uses are less tangible, less obvious at the onset of a technology, and not advanced by an army of motivated advocates. First, they are less tangible. Noninfringing uses are difficult to quantify. How do we put a dollar figure on the benefits of enhanced communication and interaction? Estimates of future noninfringing uses will be less powerful than the actual, hard-dollar figures presented by copyright owners.

Second, they are more fully developed over time. When a new technology is introduced, no one, including the inventor, knows all of the beneficial uses to which it will eventually be put. The path of history is replete with inventions for which nobody foresaw the eventual popular and revolutionary use:

  • Alexander Graham Bell thought the telephone would be used primarily to broadcast the daily news.
  • Thomas Edison thought the phonograph would be used “to record the wishes of old men on their death beds.”
  • Railroads were originally considered to be feeders to canals.
  • IBM envisioned only 10 to 15 orders for the computer in 1949.

If inventors themselves do not know how their inventions will be used, courts and policymakers cannot be expected to know. In addition, the interplay between short-term infringement and long-term development of noninfringing uses has been ignored. Just to pick one example, the iPod’s noninfringing uses could not have been envisioned when first introduced in 2001, at a time when (according to the RIAA) “there was virtually no legal digital market.”

Finally, future noninfringing uses are less likely to be advanced by a coordinated and motivated group of advocates. And the disappearance of those uses (along with the new technology) will not be lamented as it would be less likely to disrupt settled expectations.

In the end, the future benefits of new technologies, particularly those that are disruptive and revolutionary, often outweigh the losses to copyright owners’ current business models. But these benefits tend to be neglected.

When policymakers and courts consider copyright law, they must take into account the innovation asymmetry. For if they do not, innovation will suffer. And we will not even know what we have lost.

Michael A. Carrier is Distinguished Professor at Rutgers Law School and a leading authority in antitrust, copyright, patent, and innovation law. This post is adapted from his book Innovation for the 21st Century: Harnessing the Power of Intellectual Property and Antitrust Law.

  • Glenn Manishin

    “In the end, the future benefits of new technologies, particularly those that are disruptive and revolutionary, often outweigh the losses to copyright owners’ current business models. But these benefits tend to be neglected.”

    Great point and excellent post!

  • Lakanal

    The problem is that “innovators” (i.e., big US tech companies with huge lobbying budgets) want to capture all the profit from “their” innovations. You need copyright to force these businesses to the table to ensure that there is a negotiation leading to a sharing of benefit across actors in the wider economy, without whose content the system will be impoverished. Copyright law has evolved rapidly to allow this (phonograph, radio, TV, VHS rental, cable retransmission, satellite TV, software, Internet). Failure to understand this key point renders the economic history of IP law incomprehensible. What is new is that the US tech lobby has so much cash that it is on the verge of persuading policy-makers to give up this historic approach that has seen the massive growth of the entertainment and business software sector. There’s no knowing where it will go in the short term, though in the longer term I am reasonably optimistic that the equilibrium will re-establish itself.

  • Michael L. Slonecker

    “When it comes to innovation…” What is the definition of innovation as being used here?

    “Why is there an obsession with large copyright owners’ business models?” Historical means of doing business by large businesses are much the same as those employed by small businesses, so the reference to “large” is significantly underinclusive. These means rely in large measure upon the substantive provisions of copyright law, much like landowners rely on counterpart laws associated with real property, others like contract law, etc. These laws drive the rules by which commerce is conducted. Copyright holders, just as holders of other substantive rights, should not be regarded as a group with disdain simply because they seek to enforce their rights under the law against those who would thumb their nose at the law. Please note I am not discussing anything about those few who seek to engage in “shakedowns” of the public like so many of who we know by the term “ambulance chasers”.

    Why are the benefits of peer-to-peer (p2p) technology and cloud computing underappreciated? They are not at all underappreciated and it is well understood by those who work in areas such as patent law, as engineers, as product developers, etc. that initial uses for a product, method, etc. can later be recognized and adopted for new uses. Many times such new uses are recognized almost at the outset, but, for example, manufacturing techniques are not up to the task at that time to allow such uses to be realized. Cell phones are but one example. Cellular systems were developed and deployed within the military about the mid 60’s, but the handheld units, for example, were much to large in size for quick transition to commercial systems. That transition had to wait until microprocessors, other componentry, manufacturing devices and methods, etc. developed to the point that weight, size, supporting infrastructure, etc. made public deployment possible. In the context of copyright holders, the current and future benefits of new products and methods are not at all lost on them, but it is not the benefits that concern them. They “sell” “works”, and their concern extends to the almost certain misuse by a widespread number of product and method users who could not care less or are clueless about anything so mundane as the relevant law.
    With the above in mind (and this is just a small sampling), it may prove useful to reconsider if the lead off to the article is truly accurate.
    BTW, I am aware of no single instance in history where a “technology”, which is merely ephemeral, has ever been declared illegal and shut down. Shut downs of infringements? Of course. But “technology”? No. Of course, I am always amenable to consider specific situations where one may believe that a “technology” has been removed from the tools available to the public for use in the development and deployment of new products, methods, services, etc.

  • Noric Dilanchian

    Your point is in order, especially as regards the well-known hazards of technology forecasting by inventors. T

    An excellent point is made in “Intelletual Property”, a 2007 book by the U.S. IP scholar, Prof. Paul Goldstein, regarding IP forecasting and the use of courts.

    Prof. Goldstein notes convincingly that for groundbreaking new technology IP cases, timing is everything in IP litigation as to who wins and who loses.

    Quoting from my article (linked below), here’s how it works.

    The dilemma that copyright owners face when deciding whether to file a
    test case against a new technology is that if they file too early they
    run the risk that the technology will be in too primitive a state for a
    court to consider it a significant economic threat. Quoting Prof. Goldstein: “Yet
    to wait for the technology to mature runs the risk that it will have
    become so widely entrenched among users that no court would be inclined
    to shut it down.” Further, if filing a court case is late then “… after the technology has become so well-entrenched among users … no court or legislator will dare to shut it down.”

  • esqmarty

    What are examples of “technologies [that] suffer early deaths because of overaggressive copyright law and enforcement”