Digital age changes all the rules on intellectual property

The newest parts of copyright law are the most antiquated, and they are choking creativity and innovation. But that hasn’t stopped some internet companies that benefit from the status quo from calling for the Trump administration to export those laws in the North American Free Trade Agreement (NAFTA). 

Those calls should be ignored. Moreover, Congress and the courts can and should do more to protect creativity and innovation in the digital age.

The DMCA reflects a distant digital past

The problem lies in the Digital Millennium Copyright Act (DMCA) of 1998’s notice and takedown system, which seemed well suited for the dawning internet age, but became outdated practically overnight and has not aged well.

{mosads}When the DMCA was originally passed, there were fewer than 3 million webpages. Facebook, Instagram, iTunes, PayPal, Skype and YouTube did not exist.

The leading service providers included AOL, and the most popular search engine was Yahoo!, not Google (which was in beta stage). Today, there are more than 4.5 billion webpages, with vastly heavier traffic and more complex data.

A well-calibrated compromise among late 1990s businesses to help battle online infringement, the DMCA gave creative businesses an orderly, moderately speedy process for identifying and “containing” specific stolen copies of their work posted online.

In exchange for taking down the specifically identified file, phone companies and emerging internet service providers like AOL and Yahoo! got immunity from liability.

At dialup modem speeds, this all worked pretty well. But within a year, Napster debuted, bringing on the era of massive, non-stop, virtually instant infringement. The premises underlying the DMCA were rendered utterly naïve.

“Retrieving” a single file became useless. Online infringement was no longer a potentially infectious outbreak to be contained by stately processes. It had become, and remains, a chronic condition to be managed.

The burdens imposed on rights holders by this antiquated system are immense. For example, Google’s latest transparency report reveals that in 2016, Google alone received well over 900 million takedown requests.

The DMCA’s single file containment approach leads to an endless, futile game of whack-a-mole, where creators send the same takedown notice, for the same works, over and over and over.

For example, in a three-month period, Disney sent 34,970 takedown notices for illegal copies of “Avengers: Age of Ultron” to a single site (Uploaded.net), an average of more than 375 notices a day. NBC Universal sent even more (58,246) for “Furious 7,” averaging nearly 650 notices a day to one site.

Online theft chills creativity and innovation

While large, creative companies at least have the scale, resources and sophistication to play this game, however unhappily, it is essentially impossible for smaller businesses and individual creators.

For instance, in 2014, Grammy Award winning composer Maria Schneider testified before Congress that she spends more time sending notices than creating music, and she is hopelessly outmatched by online thieves thanks to the DMCA’s feeble protections. 

The costs are staggering. The Music Industry Coalition, found that between 2001 and 2015, music industry revenues fell from $14 billion to $7 billion — losses attributed significantly to piracy. 

What’s more, piracy isn’t just a problem for content creators — it’s also a concern for innovative new online distribution services. In a 2015 letter to shareholders, Netflix stated, “Piracy continues to be one of our biggest competitors. [Its] sharp rise … is sobering.”

The recent launch of the anti-piracy coalition, the Alliance for Creativity and Entertainment, which includes movie studios, cable and broadcast networks and online streaming services, underscores that online theft is everyone’s problem.

The DMCA must be improved 

Copyright law has served us well from the age of quills to the age of computers; and Congress has from time to time updated the law to stay abreast of new technologies, embracing photography, radio, sound recordings, movies, television, software, video games and more.

Along the way, we became a literate and creative nation with the world’s most innovative, influential and lucrative creative industries. It’s now time for copyright laws to reflect the digital age.

Congress should amend the DMCA to ensure application of the safe harbor only to truly good-faith intermediaries, denying protections to infringers and those who build businesses around infringement. As Congress considers this important priority, the administration shouldn’t bind Congress’ hands by including DMCA-like safe harbors in NAFTA.

Until Congress acts, we have two modest suggestions to ensure that our laws reflect and protect today’s legitimate digital marketplace, while at the same time leaving flexibility for the future.

First, courts should more faithfully enforce the statutory conditions that must be met to qualify for the DCMA safe harbor protection. The courts should also stop ignoring and give effect to the DMCA provision that requires service providers to act to block infringements.

Second, service providers should voluntarily implement systems ensuring that infringing materials are taken down and stay down.

In this rapid age of innovation and change in the way movies, books, music, journalism, software and other cultural innovation is created and consumed, it is important to have laws that continue to incentivize creativity and innovation.

American cultural and economic leadership depend on it.

Professor Mark F. Schultz joined the faculty of Southern Illinois University School of Law in 2003. He teaches and writes primarily in the area of intellectual property. He is a member of the Federalist Society Regulatory Transparency Project on IP. They recent wrote a white paper on the subject of DMCA.