Capitalist Copyrights: A Republican Reply to “Three Myths about Copyright”

The following is a guest post by Thomas Sydnor II & Debbie Rose* Tom Sydnor served as Counsel for Intellectual Property and Technology to Chairman Orrin Hatch (R-Utah) during the 108th Congress. From 1997-2004, Debbie Rose served as Counsel to several Republican Chairmen of the House Judiciary Committee’s Subcommittee on Courts, the Internet and Intellectual Property. While their paper was written in their personal capacities, both Tom and Debbie now serve as Intellectual Property Fellows to the Innovators Network, a non-profit think tank, and to the Association for Competitive Technology.

Policy disputes among technologists, content creators and other entrepreneurs can degenerate into claims that other producers’ profits decrease net social welfare and retard “Progress.” Such backfiring claims too often darken debates about copyrights and the Internet, and the Republican Study Committee should be commended for disassociating itself from them.


The Republican Study Committee (the “RSC”) provides “an independent research arm” with a conservative perspective to Republican Members of the House of Representatives. The RSC is widely respected for its thoughtful analyses of a wide range of public-policy issues, which are often published in Policy Briefs. But on November 16, 2012, the RSC appeared to release a rather hostile Policy Brief on copyright “reform.” It was entitled Three Myths about Copyright Law and Where to Start to Fix it, and the RSC staff contact was 24-year-old Derek Khanna.

Immediately, “copyright skeptics” on the Internet began lavishly praising Three Myths. For example, one of the most irrational “skeptics,” the editor of the blog TechDirt, Mike Masnick, hailed Three Myths as a “watershed moment” in his often-irrational anti-copyright campaign. Three Myths claimed that U.S. copyright laws violate “nearly every tenet of laissez fair capitalism” and constitute “corporate welfare” that thwart capitalism, hamper science, stifle libraries, penalize journalism, hurt innovation and consumers, and even conceal Nazis.

The next day, the RSC Executive Director firmly disowned Three Myths. He explained that it had been “published without adequate review within the RSC” and that it violated RSC publication standards because it failed “to provide informative analysis of major policy issues… that accounts for the range of perspectives held by RSC Members and among conservatives….” The stated reasons for the RSC disavowal seemed valid; many Republicans consider copyrights to be one of the many forms of private property that encourage private production of many valuable goods, services, and books.

But Khanna then undermined the RSC by publicly embracing the paper it had just disowned and associating himself with the “tech community” at TechDirt: “I am the author of this memo, and I hope the tech community continues to add to these ideas….” Khanna then appended a link to… TechDirt.

Predictably, “copyright skeptics” were outraged. Skeptics then accused the RSC of disowning the typo-ridden Three Myths—not because it actually was uninformative and biased—but because bad copyright-industry lobbyists must have strong-armed the stronger-armed RSC into suppressing Three Myths because it had spoken truth to power. To assess the validity of such accusations, the quality of the analyses in Three Myths can be tested against the RSC’s standards for publication and external realities—a test that Three Myths fails miserably.


The salvos of anti-capitalist epithets that Three Myths fired at U.S. copyright laws missed the point. Capitalist market economies grant legally enforceable, private exclusive rights to private producers of ebook readers in order to encourage private production of this potentially valuable resource. Capitalist market economies also grant legally enforceable, private “copyrights” in original expression to private authors of ebooks—for the same reason.

Moreover, existing U.S. copyright laws, (while hardly perfect), still helped U.S. creators and creative industries make the United States the world’s most successful net exporter of an vast array of expressive works.[1] That alone suggests that U.S. laws are not as bad as Three Myths pretended.

Finally, anyone familiar with the debates about copyrights and the Internet knows that these debates generate strong views that do not divide along the usual party or ideological lines. Defenders of copyrights include progressives, liberals, Democrats, independents, Republicans, conservatives, and libertarians. Critics of copyrights include progressives, liberals, Democrats, independents, Republicans, conservatives, and libertarians.

Consequently, the RSC’s swift repudiation of Three Myths was justified: the paper was biased, substantively flawed, and it ignored “the range of perspectives held by RSC Members and among conservatives….” Three Myths thus violated RSC publication standards. Another RSC standard also required papers “to provide informative analysis of major policy issues….” Three Myths also violated that publication standard. It contained enough errors of law, fact, and economics to start a global trade war.

A. Three Myths failed to warn legislators about “reforms” that would trigger punitive trade sanctions from the World Trade Organization.

Perhaps the easiest way to assess the merits of Three Myths is to determine whether it warned legislators about any reforms likely to violate the nearly universal international norms for copyright protection prescribed by the Agreement on Trade-Related Aspects of Intellectual Property Rights, (the “TRIPS Agreement”), and enforced by trade sanctions levied by the World Trade Organization (the “WTO”).[2]

The U.S. has strongly supported both the WTO and the TRIPS Agreement because free trade has strongly promoted both U.S. and broader social interests.[3] Consequently, any competent reform proposal would necessarily warn legislators about any “reforms” that could trigger trade sanctions that jeopardize the U.S. and global economies. Three Myths repeatedly failed to do so.

1. Criminal enforcement of private exclusive rights is no “subsidy,” but an American and international norm—a reason why “Governments are instituted among Men.”

Copyrights grant private exclusive rights to authors of expressive works in order to encourage private investment in, and private production of, expression. They thus serve the same economic function as the exclusive personal-property rights automatically granted when a corporation produces its billionth copy of its “iWidget6.” See Golan v. Holder, 132 S. Ct. 873, (2012) (describing the economic purposes of copyrights and noting “the same economic incentives might also induce the dissemination of futons [or] fruit”). Consequently, Three Myths failed to explain why copyrights are not analogous to the personal-property rights vested in producers of differentiated trade goods.[4] For example, Three Myths dismissed copyrights as “subsidies” because they can be criminally enforced (p.2):

[Copyright] is a government-subsidized monopoly in another sense. Copyright violators can face jail time and government agencies are tasked with investigating and stopping these activities. This… is a form of the government subsidizing the costs of recovering assets that may or may not be considered to have been “stolen….” [T]he point here is that this is not a strictly laissez faire capitalistic institution.

The defects in this “conservative” attack on the legitimacy of the government’s role in protecting private property rights are many. For now, two will suffice.

First, this “subsidy” claim is inconsistent with virtually all mainstream Anglo-American thought on the proper role of government. The lawlessness of the jungle—or the failed state of Somalia—is not laissez-faire capitalism. The fundamental duty of any government is to protect the legal rights of its citizens from either external or internal threats. Indeed, many Republicans understand the Declaration of Independenceto make it “self-evident” that protecting individual rights to life, liberty and property is the critical reason why “Governments are instituted among Men.”

But imagine that a corporation distracted from its productive functions by hacking, shoplifting, or infringement did receive a government “subsidy”—“corporate welfare,” (p.4)—if it called the police. If so, then corporate copyright owners are among the least “subsidized” U.S. corporations. Most property crimes are defined, investigated and prosecuted by the States. But copyrights can be criminally enforced only by the federal government, which does so only infrequently. For example, in 2007, U.S. Attorney General Gonzales charged 13,192 persons with federal property crimes, but only 140 persons (1%) with criminal copyright infringement.

Second, Three Myths failed to disclose that abolishing criminal enforcement of copyrights would violate Article 61 of the TRIPS Agreement, which requires all civilized nations to criminalize at least “copyright piracy on a commercial scale.” As always, Republican Representatives deserved notice of “reforms” likely to trigger trade wars and trade sanctions.

2. Divestive registration and renewals are small-business-punishing “formalities” prohibited by the TRIPS Agreement.

Three Myths urged legislators to grant new works from 0 to 46 years of copyright protection—depending on how long authors navigated an escalating barrage of five divestive formalities.[5] Three Myths proposed an initial 12-year term of protection “subject to [copyright] registration” that would then terminate unless renewals were filed at 12, 24, 30, and 36 years, (p.8). But each renewals would trigger increasingly punitive taxation: the last renewal would force a creator to pay an astounding 10% of the price of all sales or licenses of her work during the preceding 36 years. This would be an excise tax, (a “sin tax”), that more severely penalizes authors for the “sin” of creating really popular works of lasting value—the bigger and more lasting the success, the higher the tax. Many Republicans oppose heavily taxing the successful for succeeding—because that reduces private incentives to succeed.

Three Myths also failed to disclose that its “sin tax” on success would violate the sanction-enforced TRIPS Agreement. See Berne Convention, Art. 5(2) (“The enjoyment and the exercise of [copyrights] shall not be subject to any formality….”). Registration and renewal requirements were the very sorts of “formalities” that the Berne Convention member States envisioned when they expressly prohibited formalities in 1907. For example, the WTO enforced Berne’s prohibition on formalities when the United States charged China with conditioning copyright protection upon a formality. Competent reform proposals should alert legislators when proposed “reforms” would violate enforceable WTO norms that the U.S. has just enforced against China.

Perhaps worst of all, Three Myths ignored the past and the future. The 20-year legislative history of the Copyright Act of 1976 documented the many injustices inflicted—mostly upon individuals and small businesses—when the US copyright system imposed fewerdivestive formalities. Nor did Three Myths consider what reviving national formalities would do to creators in the ubiquitously interconnected 21st Century. In effect, any meaningful copyright protection would then be contingent upon perfect compliance with perhaps 157 different national registration and renewal requirements. Viable copyright protection would then be available to only the richest and most fastidious beancounters—not to rich-in-spirit artists or to the many small U.S. software developers who have built a multibillion-dollar export industry based on 99¢/copy mobile “apps.”

3. Because grandchildren still trump Google, copyright terms of 0-46 years violate the TRIPS Agreement.

Three Myths advised U.S. legislators to reduce the term of copyrights so they last for—at most—46 years, (p.8). But the minimum copyright term required by the TRIPS Agreement is the life of the author plus 50 years. That minimum term implements the TRIPS principle of three-generation, (“3G”), copyright protection. This 3G principle for copyright term values individuality and family: it presumes that (1) authors will work harder and smarter if doing so could leave a legacy for their spouses, children and grandchildren; and (2) their personal connection to a work makes an author and his or her spouses, children and grandchildren more likely than most to discern how the work should be commercially exploited in order to avoid dilution or overuse.

While the U.S. first adopted Berne-Convention norms for copyright term in 1976, it was not a radical change. Prior U.S. laws had also used life-of-the-author-and-descendants principles to set copyright term. Consequently, while copyright term has increased since 1790, it has done so mostly because authors and their families became less likely to die as early and as often as they did in the cholera-and-smallpox-ridden 1700s. That does not mean that that copyright term must keep expanding, but an understanding of why it did—and what would be needed to change it significantly—is critical.

In conclusion, while the U.S. strongly supported the binding international norms for copyright protection in the TRIPS Agreement, they are not eternal verities. They were created by agreements among persons and nations, and they can be changed through similar processes. Nevertheless, those processes are neither easy nor swift. Consequently, it makes no sense to wander into them unwittingly, or in a way that could leave the United States—now the world’s leading net exporter of a vast array of copyrighted expressive works—vulnerable to trade sanctions levied in WTO proceedings that could be brought and won by even now-notorious IP scofflaws like Russia and China.

Worse yet, reforms that blunder into the TRIPS Agreement will delay more viable reforms. For example, three-generation, formality-free copyrights do create traceability problems that the Copyright Office found to inhibit productive uses of older “orphaned” works. Unfortunately, efforts to enact TRIPS-compliant orphan-works legislation were stalled for years by Google’s “Book Search” fiasco—its attempt to use a class-action settlement to create private “orphan works legislation” only for Google. A renewed effort to enact lawful orphan-works legislation could thus improve the efficacy of existing laws without a global re-write of the TRIPS Agreement.

B. Granting tradable exclusive copyrights to creators of expressive works violates neither “nearly every tenet of laissez faire capitalism” nor the Constitution.

The ironically named Three Myths is awash in myths. Two of the most glaring are its claims that our current copyright system is anti-capitalist and unconstitutional. Both are wrong.

1. Granting legally enforceable private exclusive rights to producers of socially valuable resources is a precondition to market competition among producers—not a betrayal of “capitalism.”

Three Myths wrongly perceived some conflict between capitalism and copyrights that vest exclusive rights in private persons who make the risky, long-term investments of human and financial capital required to create a given album, book, film, or other work:

Copyright violates nearly every tenet of laissez faire capitalism. Under the current system of copyright, producers of content are entitled to a guaranteed, government instituted government subsidized monopoly.

It is guaranteed because it is automatic upon publishing.

Below, this claim has been “remixed” to highlight its illogic:

Granting personal property rights to producers of tablet computers violates nearly every tenet of laissez-faire capitalism. Under the current system of personal property rights, producers of tablet computers are entitled to a guaranteed, government instituted government subsidized monopoly.

It is guaranteed because it is automatic upon the creation of each copy of a given tablet computer.

In short, vesting government-granted, legally enforceable private exclusive rights in the producer of a potentially valuable resource—be it an iPad or Avatar—does not “violate every tenet of laissez-faire capitalism.” To the contrary, granting such exclusive rights to producers is one of the three preconditions to using “market competition” to encourage the private production of any resource. That is why famously capitalistic economists like Milton Friedman treat copyrights as a type of private property right—not as corporate welfare, government subsidies, or economic “monopolies.”[6]

2. The constitutionality of U.S. copyright laws is not a “myth,” but an adjudicated reality.

Next, Three Myths proclaimed “our current legal regime of copyright protection” to be unconstitutional:

It’s a common misperception that the Constitution enables our current system of copyright protection—in fact, it does not.


[A]ccording to the Constitution, the overriding purpose of our copyright system is to “promote the progress of science and the useful arts.” In today’s terminology… to lead to maximum productivity and innovation.


Strictly speaking …, legislative discussions on copyright… should be based upon what promotes the maximum “progress of science and useful arts” instead of [whether creators deserve] “financial compensation.”

For three reasons, this claim was wrong as a matter of law and wrong because it implied that market economies deter intellectual and material progress—at least as compared to managed economies directed by interventionist governments that ensure that the returns gained by private producers of valuable resources never exceed the minimums needed to keep them producing.

First, while Three Myths accused all Members of Congress of being particularly likely to violate the Constitution during “legislative discussions… on the extension of copyright term,”[7] our current copyright system has been repeatedly held to be constitutional by the United States Supreme Court—including in a case involving the extension of copyright term. See Eldred v. Ashcroft, 537 U.S. 186 (2003); see also Golan v. Holder, 132 S. Ct. 873 (2012).[8]

Second, “strictly speaking,” the Supreme Court has repeatedly rejected claims that that “reward to the author” must be “‘a secondary consideration’” if copyright laws are to promote “‘the Progress of Science.’” Eldred v. Ashcroft, 537 U.S. 186, 212 n.18 (2003). “‘[C]opyright law celebrates the profit motive, recognizing that the incentive to profit… will redound to the public benefit by resulting in the proliferation of knowledge…. The profit motive is the engine that ensures the progress of science.” Id.[9]  

Third, Three Myths also claimed, (pp.1-2), that our current copyright system does not “maximize” the promotion of progress because progress is retarded whenever authors receive “financial compensation” exceeding the minimum needed to keep them producing. There are some fundamental problems with this sort of sophistry:

  • In effect, this was Khanna’s redistributionist attack on markets generally. Markets do let producers of superior goods and services earn profits that may often exceed the minimum required to motivate production. For example, J.K. Rowling and Sergey Brin probably would have written books and created an ad-funded search engine even if doing so “only” made them multi-millionaires. But if that means that if our system failed to maximize “progress” as to Rowling, then it failed more egregiously as to Brin.
  • Were the goal of our copyright system to calibrate the rewards that copyright owners will receive in the rare cases in which their works become really popular, then its real goal would be to fix prices. If so, then Three Myths’ proposal to do so by manipulating the scope of producers’ exclusive rights to say “no” is an absurd means to fix the terms on which they must say “yes.”
  • In addition to encouraging private production, market economies also guide private investments. Consequently, we would distort both investment and production if we imagined that “basic tenets of… capitalism” required us to grant market rates of return to creators of ebook readers while denying them to creators of ebooks.

Many Republicans (and Democrats) would thus reject Three Myth’s anti-market, anti-profit rhetoric. For example, many honestly believe famous economist Joseph Schumpeter’s claim that the possibility of generating above-market returns by productively differentiating products, services, and expressive works drives private producers in a market economy to incur risks and costs in order to compete by innovating—thus collectively generating a self-catalyzing process of productive innovation that vastly increases overall social welfare over time.[10] Schumpeterian competition-by-innovation thus posits a more positive relationship between private profits and promoting progress.

C. The idea-expression dichotomy and fair-use limitation make U.S. copyrights an improbable means of concealing Nazi think tanks.

Three Myths also hurled the specter of concealed Nazis into a debate about copyrights. Such infantile smear tactics long ago led commentator Mike Godwin to coin Godwin’s Law, which, in effect, postulates that ever attempt at thoughtful Internet debate on a serious topic will eventually degenerate the roaring of trolls accusing each other of being Hitler-supporting Nazis.

Three Myths,(p.6-7), leapt right to the Nazis: it claimed that “the most extreme effect of our current copyright law” is its “disgusting” tendency to conceal American supporters of Hitler’s Nazi fascism:

Imagine if there were a memo published by a well-known DC think-tank during World War 2 and this memo was on the topic of endorsing Nazism and Adolph Hitler…. But if an enterprising reporter… were to find a copy of these memos they would still likely be protected by copyright. If that reporter… put the memo on their website as proof of the think-tank endorsing Nazism and Hitler, then they are liable for significant damages for copyright violation. The think-tank is likely to sue them or threaten to do so to avoid the memo going public in the first place.

For two reasons, these imaginary Nazis predictably tend to obstruct coherent debate about either copyrights or private rights generally.

First, real copyrights would not conceal Khanna’s imaginary Nazi think-tank. Any copyrights in its memo could prevent the dissemination of a non-copyrightable fact—the fact that the think tank endorsed Hitler and his National Socialist Party shortly before or after they declared war on the United States. Copyrights protect only original expression—never the ideas or opinions expressed. 17 U.S.C. § 102(b). Consequently, the secretly Nazi “think tank” imagined in Three Myths could not use copyrights to present an enterprising reporter from disclosing that it had endorsed Nazi fascism since the 1940s: “A reader of an author’s writing may make full use of any fact or idea she acquires from her reading.” Eldred v. Ashcroft, 537 U.S. 186, 217 (2003).

Nor would real copyrights prevent this imaginary “enterprising reporter” from posting the imaginary think-tank’s actual Heil-Hitler memo. Again—and particularly if the think tank was denying reports of its Nazi-endorsement—any competent copyright lawyer could explain the pretty obvious applicability of the fair-use limitation to this hypothetical horrible. See 17 U.S.C. § 107.

Any “copyright reform” must reflect an understanding of the existing law’s basic principles. Three Myths consistently did not. For example, Three Myths called for reform to “expand fair use,” (p.7), but it repeatedly misunderstood the existing limitation. Here is another example, (p.7): “Right now, it’s somewhat arbitrary as to what is legally fair use based on judicially created categories. One example: parodies are considered protected by fair use but satire is not….” That claim is just wrong.[11]

Second, while Three Myths failed even to imagine facts under which copyrights might conceal a Nazi-sleeper-cell “think tank,” any laws that grant private exclusive rights will sometimes obstruct reporters’ “investigations.” Consequently, copyrights may sometimes deter journalists from “investigating” potential wrongdoing as thoroughly as they might wish.

But that misses the bigger picture. Perhaps 98% of the time, the private exclusive rights that would “obstruct” a journalist’s think-tank investigation would be 1) the real-property rights that prohibit the journalist from sneaking into the think-tank’s headquarters, and 2) the personal-property rights that prohibit the journalist from rifling through the think-tank’s files or hacking its servers. And while government investigators have more powerful investigative tools, even they can be thwarted by private civil rights like the Fourth Amendment right against unreasonable search and seizure and the Fifth Amendment right against self-incrimination. And yet, many Republicans still favor the enforcement of all of these far-more-journalist-obstructive private rights. Again, Three Myths thus myopically flung at copyrights epithets that, if valid, would far more seriously indict private property rights and private civil rights generally. Many Republicans would reasonably object.

D. Reasoned analysis of the Copyright Act’s critical statutory-damages provisions requires more than a lament for LimeWire.

Three Myths also attacks statutory damages—a critical aspect of the U.S. Copyright Acts of 1790, 1831, 1875, 1909, and 1976—in short, a critical aspect of every enacted U.S. copyright act, and thus one that did not materially stymie the innumerable, productive innovations in the creation and the dissemination of expressive works that have occurred since 1790. Nevertheless, Three Myths claims that statutory damages now unjustly oppress “innovators” like LimeWire, LLC, a corporation that allegedly intentionally induced the global piracy of over 500 million infringing copies of popular songs:

[M]assive statutory damages are not conventional tort law damages, but damages that are vastly disproportionate from the actual damage to the copyright producer. For example, [the corporate distributor of the file-sharing program] LimeWire was sued for $75 trillion , based upon Section 504(c)(1) of the Copyright Action enabling such large fines per violation.

This is wrong. The claim that LimeWire LLC was “sued for $75 trillion,” was concocted by LimeWire—after there was no chance that U.S. copyright owners could seek $75 trillion from LimeWire.

1. U.S. copyright law adopted per-work-infringed statutory-damage awards long ago.

Three Myths claims, (p.2), that 17 U.S.C. § 504(c)(1) imposes one statutory-damage award “per violation” of the Copyright Act. In 1912, that claim would have been correct. In 2012, it was not.

The Copyright Act of 1909 imposed one statutory-damage award per infringement. But our current law, the Copyright Act of 1976, limited the 1909 Act’s potential for excessive awards by adopting a new system of per-work-infringed awards. See 17 U.S.C. § 504(c)(1).[12] For example, a defendant who made 100 infringing copies of one work could be liable for 100 statutory-damage awards under the 1909 Act, but only one award under the 1976 Act.

Moreover, when adjusted for inflation, potential statutory damage awards for copyright infringement are now much lower than they were in 1909 and significantly lower than the were in 1976:


Historic Copyright Statutory-Damage Ranges in 2011 CPI-Adjusted Dollars


Innocent-infringer minimum

Non-innocent infringer minimum

Non-willful infringer maximum

Willful infringer maximum


$ 6,047/infringement

$ 6,047/infringement

$ 120,930/infringement

$ 120,930/infringement


$ 378/work

$ 988/work

$ 39,532/work

$ 197,662/work


$ 200/work

$ 750/work

$ 30,000/work

$ 150,000/work


Because permissible statutory-damage-awards have decreasedvastly since 1909 and significantly since 1976, we should be skeptical of histrionic claims that lawful innovation has recently become seriously “chilled” by today’s statutory-damage awards.

2. Three Myths wrongly claimed that courts and juries use different principles to calculate tort damages and statutory damages for copyright infringement.

Ironically, when Three Myths claimed that LimeWire “was sued for $75 trillion,” that myth relied on sophistry that could conjure even more ridiculously excessive imaginary damages in a case involving “conventional tort law damages.” Statutory damages for copyright infringement have a fixed upper bound: the maximum award for willful infringement is now $150,000/work. The Complaint in Lime Group alleged that LimeWire had facilitated over 500,000,000 infringements of post-1972 sound recordings. Hence the “sued for $75 trillion” claim: $150,000 x 500,000,000 = $75 trillion.

To see why this claim is frivolous, recall that punitive damages in a conventional tort case have no fixed upper bound. Consequently, the same “logic” that conjured the “$75 trillion” claim from the Lime Group case would also argue that any defendant sued in tort for punitive damages has been “sued for $75 quadrillion”—after all, the lack of any fixed upper bound on punitive damages means that nothing prevents them from soaring into the quadrillions.

Except, of course, all of the basic legal principles that also precluded a $75-trillion statutory-damages award against LimeWire.

To be lawful, an award of either statutory or punitive damages must be justified by one or more of the three legitimate purposes for a civil damages award: 1) compensating the plaintiff; 2) deterring similar wrongdoing; or 3) punishing reprehensible wrongdoing. In Lime Group, no record label ever claimed that $75 trillion was needed to compensate, deter or punish. Indeed, had a damages trial been held in Lime Group, statutory damages could have been as low as $7 million or as high as $1.45 billion – an amount that could have been justified by the need for punishment, deterrence or compensation if admissible evidence had shown that LimeWire had intentionally induced over 500,000,000 infringements of post-1972 sound recordings.[13]

Indeed, in the file-sharing cases that record labels took to trial, they urged jurors to consider a compensatory approach to statutory damages by awarding per-work statutory damages equal to the amount of the reasonable royalty that the defendant would have had to have paid in order to legally acquire the right to distribute the work indefinitely, over a global file-sharing network like FastTrack or Gnutella. Copyright cases have often used this compensatory reasonable-royalty approach to award both actual and statutory damages.

3. No one who understood Internet technologies would pose LimeWire as a poster-child for statutory-damages reform.

Remarkably, Three Myths tried to use LimeWire LLC to attack current statutory-damage awards. But LimeWire was precisely the sort of stunningly socially destructive “innovation” that statutory damages, punitive damages, or criminal enforcement should deter. This point need not be restated at length because it has been well-documented by both the liability ruling in Lime Group and in research and House hearings on the horrific and pervasive breaches of military, national, corporate and personal data security caused by LimeWire’s years of deliberate efforts to trick users of its program into inadvertently “sharing” thousands of personal files—including their entire collections of legally acquired music.[14] So far, no other copyright-piracy enterprise seems to have caused so much harm to so many diverse interests, people and industries as the thugs behind LimeWire.

Analysis of the copyright laws that create and sustain American jobs and major American export industries must be grounded in reality—including the grim reality that too many technologists were so eager to become Internet pirate kings that they used kids and consumers as “human shields” against copyright owners and treated widespread breaches of military, national, corporate, and personal data-security as the acceptable “collateral damage” of their schemes to dupe kids and consumers into infringing thousands of copyrights.


There are other defects in Three Myths, but those documented here show that the Republican Study Committee should be commended—not condemned—for disowning Three Myths about Copyright Law and Where to Start to Fix it. That defective paper was neither “informative” nor balanced. It thus contributed nothing to legislative efforts to think seriously about the copyright laws that have helped to make the United States the world’s most successful net exporter of a vast array of expressive works that have enriched and enlightened the lives of millions of people around the world. Imaginary Nazi think-tanks notwithstanding, that is still an achievement of which the American copyright system and most capitalist Americans should be proud.




* ©2012. Thomas Sydnor II served as Counsel for Intellectual Property and Technology to Chairman Orrin Hatch of the Senate Judiciary Committee during the 108th Congress and as an attorney advisor in USPTO’s Copyright Group from 2005-2007. Debbie Rose served as Counsel for the House Judiciary Committee, Subcommittee on Courts, the Internet and Intellectual Property, from 1997-2004 and as Senior Legislative Counsel for the Entertainment Software Association from 2004-2006. This paper expresses the authors’ own views, not those of any employer.

[1] See Stephen Siwek, Copyright Industries in the U.S. Economy(International Intellectual Property Alliance, 2011); see also Three Myths, (p.4) (agreeing that the U.S. is “the creator of a large portion of the world’s content”).

[2] See Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Apr. 15, 1994, 1867 U. N. T. S. 154. Annex 1C is the Agreement on Trade-Related Aspects of Intellectual Property, 33 I. L. M. 1197. While the TRIPS Agreement itself does prescribe some substantive standards for WTO-compliant copyright protection, most of its substantive prescriptions are incorporated by reference to the non-moral-rights-related requirements imposed by Articles 1 through 21 of the Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, as revised at Stockholm on July 14, 1967, 828 U. N. T. S. 221[ hereinafter the “Berne Convention.”].

[3] See, e.g., Joe M. Cobb, The Real Threat to U.S. Sovereignty, (Heritage Foundation Lecture, 1994) (arguing that WTO norms for free trade benefit the U.S. economy and deter trade protectionism on behalf of special interests both domestically and internationally).

[4] Of course, serving the same economic function as the personal-property rights of a trade-good producer does not mean that copyrights should be identical in scope and duration. See generally, William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law (Harvard U. Press, 2003) (discussing the higher transaction costs associated with patents, copyrights and trademarks).

[5] A “formality” means some public act that the creator of an expressive work must perform in order to obtain or retain copyright protection—familiar examples include copyright registration, notice, and renewal requirements. A formality is “divestive” if failing to comply with it voids or waives copyright protection.

[6] Milton Friedman, Capitalism and Freedom, 127 (40th ann. ed.  2002) (“[Copyrights]… can equally be regarded as defining property rights. In a literal sense, if I have a property right to a particular piece of land, I can be said to have a monopoly with respect to that piece of land defined and enforced by the government.”); see also Black’s Law Dictionary, 1253 (8th ed. 2004) (defining “property” to include “incorporeal property,” like copyrights).

[7] Specifically, Three Myths, (p.1), falsely claimed that legislative debates about the Copyright Term Extension Act of 1992 centered on what creators “deserve” or are “entitled to.” Its claim is refuted by the extensive analysis of the CTEA conducted by the Justices, the parties and the amici during the Supreme-Court case Eldred v. Ashcroft, 537 U.S. 186, 206-07 & nn.11-14 (2003). Increasing lifespans and the implications of the EU’s own prior term extension dominated those debates—not moral desserts.

[8] Eldred v. Ashcroft also rejected broader claims that the “Progress Clause” mandated additional or heightened scrutiny of copyright laws. Nor is that surprising: even Lawrence Lessig, lead counsel to the Eldred plaintiffs, agreed that the “Progress Clause” was not “an independently enforceable limit on Congress’ legislative power.” Eldred v. Ashcroft, 537 U.S. 186, 211 (2003).

[9] See, e.g., Mazer v. Stein, 347 U.S. 201, 219 (1954) (concluding that the “economic philosophy” of the Copyright Clause was “the conviction that the encouragement of individual effort by private gain is the best way to advance public welfare”); see also Harper & Row Pubs., Inc. v. Nation Ent.,  471 U.S. 539, 546 (1985).

[10] Joseph A. Schumpeter, Capitalism, Socialism and Democracy, 76, 83 (1942, Harper Perennial ed. 1976); see also William J. Baumol, The Free-Market Innovation Machine, 6, 10, 21, 69(Princeton U. Press 2002).

[11] Authors of satires can and do make “fair uses” of other works. See, e.g., Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 580 n.14 (1994). The Court never held that satires are not protected by fair use; it held that fair use becomes even broader for parodies—not arbitrarily—but because a parody must mimic a familiar existing work, and authors tend to be unwilling and unable to effectively parody their own works.

[12] Three Myths concluded otherwise because some interpret § 501(c)(1) to permit more than one award per-work-infringed if a defendant is jointly liable for the infringements of others. If so, this is still not a per-violation system. For example, if a holding company owned three TV stations that each broadcast an infringing program four times, the jointly liable holding company could incur only three statutory-damage awards, not twelve. Moreover, in true mass-piracy cases, courts have consistently rejected the joint liability approach to awards if it might make them excessive. See, e.g., Artista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 313, 320 (S.D.N.Y. 2011).

[13] Artista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 313, 314 (S.D.N.Y. 2011).

[14] Artista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 398 (S.D.N.Y. 2011); see also, e.g., Thomas D. Sydnor II, Inadvertent File-Sharing Reinvented: the Dangerous Design of LimeWire 5 (PFF 2009); Thomas D. Sydnor II, et al., Inadvertent Filesharing Revisited: Assessing LimeWire’s Responses (PFF 2007); Thomas D. Sydnor II et al., Filesharing Programs and “Technological Features to Induce Users to Share,” (USPTO 2007); Inadvertent File Sharing over Peer-to-Peer Networks: How It Endangers Civilians and Jeopardizes National Security: Hearing Before the H. Comm. on Oversight and Government Reform, 111 Cong. (July 29, 2009) (prepared statements of Thomas Sydnor II and Robert Boback); Inadvertent File Sharing over Peer-to-Peer Networks: Hearing Before the H. Comm. on Oversight and Government Reform, 110th Cong. (July 24, 2007) (prepared statements of Thomas Sydnor II and Robert Boback); Overexposed: The Threats to Privacy and Security on Filesharing Networks: Hearing Before the H. Comm. on Government Reform, 108 Cong. (2003).