Why Compulsory Licenses Are Bad: A Look At The Sausage Making Process

from the get-rid-of-'em dept

When discussing things like patents and copyright, oftentimes someone suggests that "compulsory licensing" is a solution that solves all the problems. I tend to have serious problems with compulsory licensing plans (even those pushed by the EFF), because they don't seem necessary. There's no actual evidence of a market failure given that would require a compulsory license -- so any such license is effectively an unnecessary tax to prop up a failed business model. However, it's even worse than that.

William Patry has a guest blog post by Josh Wattles, a lawyer in the copyright and entertainment law world that goes into just how awful compulsory licensing systems really are. Basically, rather than coming up with a reasonable solution, it simply becomes a political battle where those with the stronger position craft the language in a ridiculously favorable manner:

The compulsory licenses from the recent past were drafted by skilled lobbyists and lawyers and the result suffers from a lack of simplicity and economy. Finding out what the license covers or how it can be triggered is like tracing a tan-colored line through the Pismo dunes.

The end result is a whole series of byzantine rules that no one can reasonable follow:

Compulsory licenses are apparently haphazard: there is a compulsory license you can use to carry some broadcast signals on cable, but not all; or there is a compulsory license to use the underlying music in a recording but not to use another recording; or there is a statutory license for non-interactive webcasting if the service doesn't repeat songs too often or play albums in sequence; and so forth. This happens because compulsory licenses are designed not as market solutions but as small nips and tucks that ease other commercial uses of copyrighted content without anyone losing out on important parallel interests.

Why does this happen? Well, if you're basically guaranteeing a particular business model with a particular market rate, of course commercial interests are going to step in and lawyer them into a way in which they're most profitable, with no interest at all towards the actual market:

There is no mystery in how the process became so over-wrought. It is a result of serial manipulations by well funded commercial interests seeking wholly appropriate advantages over competitors, suppliers or customers.

Unfortunately, rather than advocating just getting rid of them altogether, Wattles tries to craft a compromise, which is to basically get the government involved in any compulsory license agreement, having the Justice Department step in and deal with the fact that any compulsory license, by its nature, is anti-competitive. Of course, in reality this would just lead to more political pressure on the Justice Department. It still seems like an easier, and more effective, solution, is to forget compulsory licensing altogether, and recognize that the supposed "market failures" that required them in the first place don't really exist.

Filed Under: compulsory licenses, copyright, josh wattles, market failure