My wife frequently accuses me of finding copyright and other intellectual property issues everywhere, often where no “normal” person would perceive such a question. So I was both surprised and vindicated to see discussions of “green” copyright in a couple of places recently; surprised because even with all my obsessing about copyright, I had never considered how one might make a more eco-friendly copyright law.

The most comprehensive discussion I have read so far about green issues for copyright reform comes from Michael Giest, the Canadian copyright scholar who is leading a powerful grass-roots opposition to the new proposed copyright law in Canada — Bill C-61, introduced in Parliament several months ago. In a column for the Toronto Star, and again on his fascinating blog site, Geist lists several problems with the proposed law that could hamper efforts to improve the environment (or at least slow the harm we are doing to it). Since a major complaint about the Canadian proposal is that it looks too much like US copyright law, it is fair to assume that these “Canadian” issues are US issues as well:

1. Copyright law can impact our ability to recycle computers and other electronic devices in order to reduce the amount of “techno-waste” that is generated each year. Protections for software in general and especially prohibitions that prevent circumvention of digital protection measures can prevent new users from gaining access to recycled devices. It is no secret that Apple want to sell each of us a new iPhone every year or so, but there is potential environmental impact to legal enforcement of that business policy. Giest refers to a US case where the potential for this kind of ecological harm was very real — Lexmark v. Static Control Components, in which Lexmark tried to use the DMCA anti-circumvention rules to prevent a competitor from making chips that would allow the re-filling of laser printer ink cartridges. The courts found that such an application of US copyright law would be anti-competitive, but it is worth noting that a contrary decision might also have been anti-environmental.
2. Protections that restrict copying of software and storage of copyrighted materials on shared networks can inhibit the efficiencies gained through “cloud computing.” If memory-intensive research — crunching huge data sets for example — can be done by a network of computers rather than at a single site, unused capacity can be exploited to reduce the need for multiple institutions to obtain massive computing capacity that may be used infrequently. Copyright law can have a lot to say about whether such shared projects will be feasible.
3. A similar issue is raised regarding the possibility of consumer storage of memory-intensive materials in networked systems. In the US there already exist network-based video recording services that decrease the proliferation of digital devices that increase energy usage and eventually end up in landfills. US courts have not been consistent in their approach to these services, in part because our copyright law does not directly address the status of copies made solely for personal use. The new Canadian proposal would take up that issue and would authorize only a single copy of consumer-purchased songs or videos. With such a law, not only would consumer choices be severely restricted, the need for many individually owned storage devices would burgeon — good for the consumer electronics industry but bad for the environment.

In addition to these copyright issues that could have significant ecological impact, there are also “green” patent concerns. A recent study has shown the tremendous growth in patents issued for inventions, software and business methods that are aimed at environmental processes and problems. Because there is already so much controversy (and litigation) around software and business patents in general, it is a legitimate worry that the growing number of ecological patents could actually impede the progress of innovation in environmental sciences rather than promote that progress. Patent law, like copyright, is intended to promote innovation through a careful control grant of monopoly, but recent research has shown the significant danger that patents, and the cost of prosecuting and defending them, may be becoming an obstacle to innovation rather than an incentive; a nice, but dated explanation of the potential problems can be found here; this book review of 2008’s “Patent Failure” gives a more up-to-date review of the economic evidence that innovation is being stifled. Research into how to resolve our environmental dilemmas is too important to allow it to be slowed by the inefficiencies of our patent system, and adds another argument for the need for comprehensive reform of US intellectual property laws.

In a talk given at Cornell University last week, Steve Worona of EDUCAUSE said about business models for distributing intellectual property that “every few years the entertainment industry has to be dragged kicking and screaming to the money tree and have it shaken for them.” His point that the first reaction of entertainment company executives is to “tamp down” new technologies in order to protect out-dated business models is certainly borne out by recent history. Back in the 1980’s, of course, the industry fought hard against the growing use of home video recorders, both in the Supreme Court and in Congress, even as a new business model that would eventually make billions for the studios was being developed in spite of their opposition. No less an advocate for the old ways than Jack Valenti eventually realized that the movie industry lost that battle because they were perceived as anti-consumer. Nevertheless, the recording industry continues to make the same mistaken, even going so far as to sue they very consumers on whom it relies.

Are there alternatives? Worona’s talk is very persuasive in its discussion of why old models (based on counting copies) do not work for new technologies (which replicate bits) and how it is possible to develop new models that really can “compete with free.” I have written about such models before, and also noted in a post last week this article by Tim Lee about an alternative path for copyright law that could support such new ways of profiting from intellectual property without crippling technological innovation. Some of those alternatives deserve further discussion. (and a lively discussion is continuing on the Cato Unbound site).

First, it is worth noting the survey, reported by Ars Technica, that suggests that young people are willing to pay for music if it is offered on terms that seem reasonable to them. Although I can imagine the skepticism this will generate within the content industries, it at least suggests that innovations, rather than lawsuits, are worth a try; both may be risky, but the rewards will be greater from the latter.

Lee’s article briefly catalogs a variety of business models, in several different content industries, that rely on new ways to make a profit. One that caught my eye was the Web service called Imeem, which combines a legal music downloading service with social networking opportunities. Revenue is generated through advertising, and the music is licensed using revenue-sharing agreements with the four major record labels. Users can create and share playlists and download music from those shared lists for free. As Lee says, “It is only a slight exaggeration to say the Imeem deal amounted to a de facto legalization of online file sharing, provided that the labels get a cut of any associated revenues.” Is this the future of the music business? I don’t know for sure, but I do know that I, as a music lover who has never obtained a music file from any online source other than iTunes, will now be looking on Imeem first; legal, ad-supported free music  certainly works for me.

In his talk at Cornell, Worona suggested that, when a business learns that it will have to compete with free – with someone offering the same or substitutable product at no cost – the appropriate response is not to call the FBI, as the recording industry has done, but to call its own marketing departments. That is what Imeem has done, and they are giving the money tree yet another shake; let’s hope the music industry is paying attention this time.

Some intellectual property issues are hardy perennials; they bloom anew with great regularity. One such issue is the doctrine of first sale, which in other countries and other contexts is sometimes called the doctrine of exhaustion. However it is named, it refers to the nearly universal practice of holding that the “first sale” of a particular embodiment of intellectual property – a copy of a book or a CD – “exhausts” the exclusive right of the copyright holder to control further distribution of that embodiment. It is the right of first sale that allows used book stores, video rentals and lending libraries to flourish.

First sale has never been popular with the content industry; both licensing arrangements and DRM can be seen as modern attempts to exercise control over the downstream use and distribution of IP beyond what is allowed by copyright law. Back at the beginning of the 20^th century, in fact, the Supreme Court had to deal with a case involving what I like to call the first “end user licensing agreement.” In Bobbs Merrill Co. v. Straus (1908), the Court found that an attempt by a publisher to mandate the retail price at which stores could sell the book “The Castaway” by Hallie Rives failed because of the doctrine we now call first sale. The publisher of this obscure novel inserted a “requirement” underneath the copyright notice that the retail price of the book must not be less than one dollar, and sued the store owned by Isidor Straus – Macy’s – when it sold copies for less.

In the past few weeks, two cases have been decided, one in the copyright arena and one dealing with patents, that again remind us of the continuing importance of first sale/exhaustion in a balanced system of IP protection.

In Universal Music v. Augusto the facts sounded strangely similar to Bobbs Merrill; a music company tried to distribute free promotional CDs of its music and prevent the resale of those CDs by simply placing a notice on the face of the disc. In granting summary judgment for the E-Bay vendor who resold some of this CDs, Judge Otero of the Central District of California noted that this kind of restraint on subsequent transfer had been rejected over 100 years ago. Also implicated rejected in this decision is the attempt to create a license transaction merely by a one-sided statement that that was what was occurring. The court rightly found that the CDs were transferred to the recipients (by gift, in this case) and were therefore subject to the exhaustion of the distribution right.

The patent case, Quanta Computer v. LG Electronics, also involved an attempt to control subsequent uses of a product embodying a patented process after the initial sale of that product. LG sued to collect a licensing fee from Quanta because Quanta used chips containing a process patented by LG, even though those chips were manufactured by an intermediary company (Intel) that had itself licensed the process from LG. In essence, LG wanted a cut on every downstream product that contained the already-authorized chips, but the Supreme Court said no: “The authorized sale of an article that substantially embodies a patent exhausts the patent holder’s rights and prevents the patent holder from invoking patent law to control postsale use of the article.”

As sturdy as these recurring issues are, however, we should not conclude that copyright law is ticking along without difficult, adequately resolving conflicts in the 21^st century with its arsenal of 20^th century doctrines. The current Issue of “Cato Unbound,” on “the future of copyright,” does a superb job of alerting us, if we didn’t already see it, that copyright law is struggling to keep up in the digital age. The lead essay by Rasmus Fleischer, begins with the fascinating point that in the 21st century we have moved to trying to regulate tools with our copyright law rather than content. In a digital age, he points out, many of the distinctions our law relies upon, like the difference between copying and distribution, no longer make any sense. As Fleischer says, “the distinction is ultimately artificial, since the same data transfer takes place in each.” This point undermines the comforting thought, expressed above, that first sale, for example, is still doing its job in copyright law, since the move to a digital environment makes application of an exception to the distribution right, but not the right of reproduction, highly problematic.

Fleischer’s article goes on to paint a fairly gloomy picture about a “copyright utopia” being advocated by the content industries, especially big entertainment companies, that could seriously undermine both technological innovation and civil liberties. He ends with the “urgent question regard[ing] what price we will have to pay for upholding the phantasm of universal copyright.”

In a reply essay, “Two Paths for Copyright Law,” Timothy B Lee suggests that things may not be as bleak as Fleischer suggests. He reminds us that it is only a very recent development that anyone has even considered question the legality of private, non-commercial copying for home use, and he opines that the effort to now assert control over such copying has already proved a failure. The alternative — the second path for copyright — is, as has been suggested before in this space, the development on new business models, which will largely be funded by advertising, to meet the non-commercial demand for content. The role of copyright law, in this scenario, is to protect content creators from unfair and unauthorized commercial exploitation of the works by competitors. It is commercial competition that copyright is intended to regulate, he suggests, not use by consumers. And he catalogs a wide variety of business models already being adopted by the major content industries, even as the pursue lawsuits against customers and strict laws from Congress, that seem to recognize the inevitable move towards a market solution, rather than a legal one, to the challenges posed by new technologies.

Some copyright doctrine remains unchanged over a hundred years, yet we have to adapt to rapid innovation even as we preserve what works in our law. The essays by Fleischer and Lee paint two different pictures of the future of copyright; the attraction of Lee’s vision, for me, is that it looks at what copyright has traditionally been designed to accomplish, the control of commercial competition, and offers hope that if we stay focused on that role for the law, the market will adjust to the technological innovations for users that currently frighten the content industries so.