Becker & Posner: Time To Minimize Patent & Copyright Law

from the shrink-shrink-shrink dept

Famed economist Gary Becker and appeals court judge Richard Posner have long teamed up to publish The Becker-Posner Blog, in which they pick key issues and each of them discuss the same issue in separate posts. It's a really great blog, and we've mentioned it in the past -- in a situation where we disagreed with Posner's suggestion that copyright should be expanded to help newspapers. More recently, we've noted that Posner's been very interested in patent issues, and has been somewhat vocal on how the system is mostly broken. So it's no surprise that patents are a recent topic on the blog.

Posner's contribution actually touches on both patents and copyrights, both of which he admits seem to be excessive, though (somewhat surprisingly) he argues that patents are a bigger problem. I get the sense that he hasn't spent that much time on copyright issues given some of the statements that he makes. Perhaps if he explores that issue more deeply he'll realize that some of the problems are just as, if not more, serious in copyright law.

Posner starts with the premise that IP works in cases where there are high capital expenditures for creation/invention, with low barriers to copying -- but that it doesn't work otherwise. There's increasing evidence that the premise is a bit faulty, and there are reasonable questions about whether or not patents and copyrights really are the best thing in those high capital expenditure cases, but his recognition that it barely works at all otherwise is welcome. He falls into the cliche of basically comparing pharma patents (which he claims works) to software patents (where they clearly don't work) -- and suggesting that it's merely about recognizing that the costs and benefits in different industries are different. His conclusion, though, is that the "costs" probably outweigh the benefits in most cases:

The pharmaceutical and software industries are the extremes so far as the social benefits and costs of patent protection are concerned, and there are many industries in between. My general sense, however, bolstered by an extensive academic literature, is that patent protection is on the whole excessive and that major reforms are necessary.

I think if he explores the issue more deeply, he'll realize that the different impact on different sectors is more a symptom of the problem with how the system is set up, rather than the problem itself.

On copyrights, he recognizes problems, but seems to think it's more limited, arguing that the law treats different industries differently (his basic suggestion for fixing patents):

For example, when recorded music came into being, instead of providing it with the same copyright regime as already governed books and other printed material, Congress devised a separate regime tailored to what were considered the distinctive characteristics of music as a form of intellectual property. Patent law could learn from that approach.

That's a... generous retelling of copyright law. It is true that Congress has tried to duct tape on "fixes" to copyright law when innovation challenges the status quo, but it's also created newer and bigger problems, as the different "rights" start to overlap and blur together. Is a stream a performance, a distribution or a reproduction? All three? These things get complex fast... and in part it's because of Congress's constant patching without recognizing the longer term impact.

Posner also has this oddity:

The problem of copyright law is less acute than the problem of patent law, partly because copyright infringement is limited to deliberate copying; patent infringement does not require proof even that the infringer was aware of the patent that he was infringing.

I think "deliberate" is a slightly sloppy word choice here. He's correct that copyright requires (mostly) actual copying, but it need not be "deliberate" in the traditional sense. Law prof. John Tehranian has famously covered just how much we accidentally infringe on a daily basis. Posner seems to be suggesting that to infringe on copyright, you know you're infringing. These days that is true for fewer and fewer cases. That said, he does still recognize some key problems:

Nevertheless, as in the case of patent law, copyright protection seems on the whole too extensive... The most serious problem with copyright law is the length of copyright protection, which for most works is now from the creation of the work to 70 years after the author’s death. Apart from the fact that the present value of income received so far in the future is negligible, obtaining copyright licenses on very old works is difficult because not only is the author in all likelihood dead, but his heirs or other owners of the copyright may be difficult or even impossible to identify or find. The copyright term should be shorter.

He also argues that a good solution would be a much broader and clearer definition of fair use -- something we agree would be helpful:

The problem is that the boundaries of fair use are ill defined, and copyright owners try to narrow them as much as possible, insisting for example that even minute excerpts from a film cannot be reproduced without a license. Intellectual creativity in fact if not in legend is rarely a matter of creation ex nihilo; it is much more often incremental improvement on existing, often copyrighted, work, so that a narrow interpretation of fair use can have very damaging effects on creativity.

Becker, meanwhile, mostly skips over the copyright question and focuses on how to reform the patent system. Unlike Posner, Becker actually considers the idea of abolition, citing historical arguments:

The various harmful effects of the patent and copyright systems encouraged Arnold Plant, an English economist, to publish over 75 years ago two influential articles on why England and other countries would be better off without patents and copyrights. Among other things, he argued that the temporary monopoly power given to patent holders often led to inefficiently high prices and reduced output of patented goods, that many persons would continue to invent even if they could not patent their inventions, and that patents distort innovations in favor of goods and processes that can be patented and away from innovations that cannot be patented. His favorite example of the latter is basic research in the sciences that produced the theory of relativity, the theory of evolution, and in more modern times our understanding of DNA and genes. He believed that the patent system induced some creative scientists to work in areas that could be patented rather than on basic scientific research that could not be patented.

He notes that, in the end, getting rid of them entirely would upset too many apple carts, and he basically follows Posner's reasoning that high cap-ex + low barriers to copying should get protected, while everything else should be excluded:

Probably the best solution would be to maintain the patent system on drugs and a few other products that are expensive to innovate and cheap to copy, and eliminate patents on everything else. In particular, this means eliminating patents in the software industry, the source of much of the patent litigation and patent trolling.

He admits that he's not sure where to draw the line, and his best suggestion is to "start by eliminating the ability to patent software, and go on from there to prune the number and type of inventions and innovations that are eligible for patent protection." That seems to be an admission that there's a problem, but not a deep enough understanding to know how to fix the system. Once again, it seems like a case of targeting the symptoms rather than the cause.

All in all, I find that the argument from Boldrin & Levine about why the system should be done away with completely a lot more compelling. In that, they specifically note Posner's occasional blindness to the root of the problem, and his focus on symptoms. I'd like to believe this is a question of familiarity with the subject matter, actually. The solutions and ideas that Becker and Posner speak to are similar to what we often hear from people when they see the problems of the patent system, but haven't fully thought through the issues. One hopes that as they explore the details more thoroughly, that they might realize that the problems run deeper than they seem to believe.

Filed Under: copyright, gary becker, patents, richard posner

Judge Posner Recommends Extending Copyright Law To Protect Newspapers

from the this-is-a-bad,-bad-idea dept

One of my favorite economics blogs is the Becker-Posner blog, where each week (usually on Sunday), economist Gary Becker and appeals court Judge Richard Posner each write up separate posts on a particular topic. Becker is a brilliant economist and Posner is one of (if not) the most economically literate judges around. He's also quite knowledgeable about intellectual property, and I often recommend his book (written with William Landes), The Economic Structure of Intellectual Property Law. While I don't always agree with Posner, I always find his writings (both in court and in books) to be thoughtful and thought-provoking. However, I'm quite surprised at his most recent contribution.

This week, Becker and Posner published on Tuesday, rather than the usual Sunday, and the topic of discussion was the newspaper business. I have to admit, I gave up reading Posner's post about halfway through, because while it seemed to do a decent job describing the problems some newspapers faced, it didn't seem like he was adding much beyond what has been covered widely elsewhere. Also, I was disappointed that he seemed to put absolutely no weight on the fact that much of the newspaper industry's problems were because they took out massive amounts of debt -- and it's the liabilities that are killing them. That's a big point that's totally ignored. He also appears to ignore the incredible profits that many newspapers made for years, and assumes that shrinking revenue automatically means that newspapers need to get rid of staff. That's not necessarily the case. Shrinking revenue could (and likely is) just a sign of a market becoming more efficient. Newspapers were so profitable because in many cases they were de facto monopolies in the areas they covered. So I was a bit disappointed in that, and didn't even bother to read the conclusion.

However, reader CT suggested I get to the end where I was stunned to read the following:

Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

Wow. Now Posner has always been a stronger believer in the need for intellectual property to "solve" the "free rider problem," but this is still stunning. He's usually a lot more balanced in recognizing the downsides to greater IP protectionism. Here, he seems to ignore it completely, while also brushing off the ability of other sources of information to step into the void created by newspapers. Right before the statement above, he oddly assumes that there's no way to support news production in an online only situation. His mistake, though, is assuming that it needs to have the same type of profits as monopoly newspapers used to have. For such an economically literate person, this is a surprising statement.

But, really, the idea that some extra protectionism is needed to create news gathering operations suggests an ignorance of what's actually happening in the marketplace. Yes, it's messy right now, but more and more news gathering operations are showing up every day -- and they're doing things more efficiently, embracing the power of new technologies to do so, rather than relying on the old inefficient structures. This is a good thing.

Furthermore, the idea that copyright should be expanded to ban linking or even paraphrasing of facts, goes against pretty much all of copyright law and its intended purpose. Posner must know this. He certainly knows that the law doesn't allow it now, but even suggesting that the law be expanded to cover that goes against pretty much all common sense over the reasons why linking is allowed and why copyrighting facts isn't allowed.

Instead, Gary Becker's opposing post to Posner's is much more well-reasoned. He basically notes that it's not a big deal that newspapers are dying, because others will take their place, and they'll be a lot more efficient:

I do not believe that the decline in the number of dailies, even if it rapidly accelerates, poses a major threat either to the viability of democracies, or to the spread of political and other information.

The main reason for this belief is that the Internet is far more efficient than newspapers in providing news, information, and opinion. This is obvious with respect to sports, financial developments, and weather since online updates are much more frequent than is possible even for the best papers. During the past 10 days of the Iranian election crisis, my wife and I turned mainly to the Internet for the very latest news and pictures on what was happening in Teheran and elsewhere in that country. These sources certainly included online editions of several newspapers, but also important were various online accounts by observers of and participants in the protests....

Although the printed newspaper industry is doomed, and will be missed by those of us that remember newspapers in their heyday, they are being replaced by good substitutes in the form of blogs, social networks like Facebook and Twitter, online news gathering by various groups, including newspapers, and other electronic forms of communication. People in democracies will continue to have access to independent and often quite accurate, reports on events in their own countries and most other parts of the world. In fact, the populations of undemocratic countries now have much greater access to what is happening in the world than they had in the past because it is far more difficult to suppress access to the Internet and other electronic forms of communication than it is to suppress newspapers.

Indeed. Hopefully Posner will reconsider his thoughts based on what Becker has written. In the meantime, though, you can bet that some newspapers are looking at filing their next lawsuits against "linkers" and "aggregators" in district courts in the 7th Circuit, where perhaps Posner will handle the appeal.

Filed Under: copyright, gary becker, newspapers, richard posner