Patent absurdity: how extended copyrights choke the economy

Washington Monthly, July-August, 2004 by Gordon Silverstein

The economic argument is really quite simple, and powerful. The costs of copyright extension are significant, and the benefits are slim. Just how many extra songs would John Lennon and Paul McCartney have written if they knew that their efforts would profit not only their children and grandchildren, but also their great-great-great grandchildren? Probably not many. On the cost side, 17 economists--including Nobel laureates George Akerloff, Ronald Coase, and Milton Friedman--filed an amicus brief on Eldred's side, rightly arguing that copyright extension not only artificially raises consumer costs, but also has the effect of reducing innovation, which, in turn, poses a real threat to the engines of the American economy.

This is just as true for scientific and industrial patents as it is for books, movies, and other creative products. Both copyright and patent protection are authorized by the Constitution, not to protect personal property but "to promote the progress of science and useful arts." Intellectual property in books, movies, art, and design is just as important to the American economy in the Information Age as were patents on machine tools, transmissions, and coal furnaces in the preceding Industrial Era.

Innovation and invention are tricky. If there were no copyrights and patents, there would be far less incentive to innovate. On the other hand, if copyrights and patents lasted as long as the sky is blue, we wouldn't get very far, either. Innovation and invention rarely come in breakthrough "Eureka!" moments, but rather are the product of small, incremental additions and transformations of what already exists. Sir Isaac Newton (no slouch when it came to innovation) once wrote that he might have seen further than most, but he did so "by standing upon the shoulders of giants"--Copernicus, Kepler, Galileo, and others. Artistic creation works the same way. Mel Gibson didn't come up with the storyline for The Passion of the Christ all on his own. There would be no West Side Story without Shakespeare's Romeo and Juliet. And we won't even mention the debt owed by Disney to the Brothers Grimm. (Okay, we'll mention Snow White, Cinderella, and Sleeping Beauty.) Each of these transformative adaptations built on material that had no copyright protection, material that was in the public domain. That freedom allowed their creators to innovate and, not incidentally, build an enormously profitable industry in the creative arts--an industry that is now among America's most robust.

As the Nobel economists put it in their Supreme Court brief, "new fiction retells old stories, new documentaries reuse historical footage, and new music re-mixes and transforms old songs." Excessively long copyrights force new artists to pay the second- and third-generation offspring of the original artists for the use of work they themselves had no hand in creating. This is hard enough when dealing with the tiny fraction of materials that have retained their commercial value over the decades, but sometimes nearly impossible when you want to use things that lost their commercial value years ago--or, more likely, never had any at all. Either way, Sonny Bono's law covers it all, and forces today's innovators to find out who owns those rights to negotiate with them, and maybe even to take out expensive insurance to protect themselves in case they slip up in the process. All of which is time-consuming and expensive when you are dealing with famous authors and artists, but even worse when you have to track down relatives of obscure or even unknown creators. These transaction costs raise the price of innovation, sometimes prohibitively. And as Lessig reminds us, there are cultural costs as well. Rights-holders not only set a price for the use of the creations they control, but they also get to decide who uses them and how, skewing the nature of what is produced. Excessive copyrights make it more likely that the only derivative works produced are those that please the rights-holders. Permission, Lessig reminds us, "is not often granted to the critical or the independent."