Tag Archives: CCIA

Fair Use Industries Contribute $2.8 Trillion to U.S. Economy

The Computer and Communications Industry Association (CCIA) released an updated report on Fair Use in U.S. Economy: Economic Contribution of Industries Relying on Fair Use. The report notes that fair use is vital to a number of industries and contributes significantly to the U.S. economy — $2.8 trillion to the GDP.

Examples of fair use industries include, for example, manufacturers of consumer devices that allow individual copying and recording (such as DVRs), educational institutions, software developers, and Internet search and web hosting providers. These industries have seen dramatic growth in the digital age and “grew at a faster pace than the overall economy.”

In addition to the significant value add to the GDP, fair use industries also employed 18 million workers by 2014, representing 1 in 8 US workers. Additionally, “from 2010 to 2014, the labor productivity of U.S. fair use industries increased by 3.2 percent annually to approximately $155,000 per worker.” Exports rose by 21 percent in that same period to $368 billion in 2014 and “[t]he fair use economy has become a defining aspect of the U.S. trade portfolio.”

In addition to surveying these quantifiable contributions to the U.S. economy, the report explains the importance of fair use to these industries. The full report can be accessed here.

Indeed, fair use is an essential limitation in copyright law, contributing to a variety of purposes including supporting the U.S. economy, education, learning, and the creation of new works. For more on fair use, check out these ARL infographics:

ICYMI: CCIA Releases White Paper, Copyright Reform for a Digital Economy

On August 25, 2015, the Computer and Communications Industry Association (CCIA) released its White Paper, Copyright Reform for a Digital Economy.  The report notes that the House Judiciary Committee began comprehensive copyright review in 2013 and points out that new technology has changed the way creative industries and communication operate.  For example, the growth of the Internet has lowered the cost of distribution and “radically changed the economics of scholarly communications and other educational resources.  This, in turn, has allowed open access business models to flourish in these markets.”  The report points out the importance of balance and “any copyright reform should acknowledge the significance of doctrines ensuring copyright flexibility, particularly limitations and exceptions like the fair use doctrine and first sale.”

Among the highlights, the report points out:

The principle of copyright remains an important tool in the Government’s toolbox to promote scientific, cultural and economic progress, but in current practice, the complex, opaque, and highly concentrated U.S. system is increasingly incapable of facilitating certain socially and economically desirable uses.  Easily navigated only by the most experienced corporate actors, the credibility of the copyright system is being tested as it leaves ‘”consumers and other private citizens…increasingly frustrated.”

With respect to fair use, the report cites studies done on the fair use economy pointing out the significant role industries relying on limitations and exceptions have played in growing the US economy.  The report continues,

[P]rotection exceeding the amount necessary to incentivize innovation represents a deadweight loss to the economy.  Limitations and exceptions help minimize the deadweight loss, and several, such as the fair use doctrine, provide breathing room for new innovations.

The report goes on to point out that fair use is not limited to the technology sector and has been successfully relied upon by “theatre producers, artists, movie studios . . . patent lawyers, rock bands and an NFL football team.”  In other words, as pointed out in the Fair Use Fundamentals infographic created for last year’s Fair Use Week,* fair use is relied upon by everyone.  While the report notes the importance of fair use, it does not recommend reform of the doctrine but instead cautions Congress to consider the

other reforms [that] may affect the fair use doctrine, and potential effects on fair use should be considered in any reform.  For example, increasing statutory damages may deter socially desirable fair uses, and allowing DMCA abuses to continue unchecked may prevent fair use criticism, commentary and political speech.  Because fair use is so integral to the fabric of the Copyright Act, it must be a central consideration in any legislative effort.

In addition to fair use, the report also emphasizes another important limitation in copyright law: the first sale doctrine.

With respect to other areas under consideration for copyright reform, the report points out that safe harbors in the online environment have ensured predictability, but suggests that safe harbors could be strengthened.  It also points out that the DMCA takedown process can be misused.

The report also points out the chilling effect of statutory damages which has led to copyright trolling.  It notes, “regardless of the propriety of the remedy, however, to whatever extent statutory damages deter misbehavior, they also deter investment by creating substantial uncertainty and risk.”  The report cites several suggestions by scholars to reduce statutory damages and also pointing to a proposal

to generally remit statutory damages in cases where defendants can demonstrate a reasonable good faith belief that their activity was a fair use (or perhaps covered by any defense).  Section 504(c)(2) already has exactly this provision, but limits it to nonprofit educational institutions, libraries, archives and public broadcasters.  Because deterrence is inappropriate where a defendant had a reasonable good faith belief that their conduct was non-infringing, this provision could be extended to all good faith actors.  In the rare case where this might leave plaintiffs under-compensated, they could still obtain actual damages and injunctions.

The report also points out that international agreements can constrain reforms.  For example,

extraordinarily long copyright terms are also a result of international agreements, which have extended the copyright term to last for the life of the author, plus an additional 50 years (in the case of the Berne Convention and TRIPS) or the life of the author plus an additional 70 years (in the case of the free trade agreements).  This exacerbated the orphan works problem while diminishing the ability of artists to make productive uses of older works, e.g., new performances of older plays.  The Supreme Court has validated the most recent extension in Eldred v. Ashcroft, notwithstanding economic studies showing that extending the term of protection from 56 years to life plus 50 or 70 years does not measurably incentivize additional creative activity.

It is no exaggeration to say that international copyright treaty obligations have contributed to a legitimacy crisis in the contemporary copyright system.  Survey data suggests there is a declining public respect for copyright.  Terms extending well over a century have been the source of high-profile disputes casting copyright in a poor light, and when combined with the absence of formalities, exceptionally long terms have proven to be a significant problem for researchers, historians and preservationists, among others.

Another problem the report highlights i the relationship between contract and copyright, where license terms may override limitations and exceptions.  The report points to proposals against “contracting out” in the United Kingdom, Ireland, and Australia and concludes that “effective copyright law reform must recognize that Congress’s intentions can be subverted through contract, and that licensing agreements between competitors can give rise to substantial market power.”  Likewise, the report notes that “substantial aspects of copyright reform could be rendered largely irrelevant if rightsholders can control all uses via TPMs.”

The entire report is well worth a read.

*Fair Use Week 2016 will take place from February 22-26, 2016.  For more information please visit www.fairuseweek.org*