Friday, November 16, 2012

A Possible IP Solution

In my previous post, I proclaimed my neutrality in the IP wars. I think there are good arguments against all IP—for the curious, I recommend Against Intellectual Monopoly by Boldrin and Levine. There are also good arguments for.

I do, however, have a suggestion, an approach that might keep most of the benefits of the current system and eliminate most of its costs. I start with copyright law, for which I think the case is clearer.

Currently, copyright provides two benefits to the holder. First, it prevents piracy—you cannot (legally) copy my book and sell it in competition with my publisher. Second, it provides the possibility of additional revenue from derivative works. That includes a translation, a movie based on a novel, a substantial quote from my work in someone else's book, and probably other things that I haven't thought of.

In my experience as an author, most of my revenue comes from the first benefit, a little from payments for translation rights, very little from any other derivative uses. My guess is that that situation is typical. On the other hand, looking at the literature on copyright law, I conclude that most of the problems come from restrictions on derivative works—qualified by the very fuzzy rules on fair use. This fits the argument I offered in the chapter on IP in my Law's Order—that the reason it made sense for copyright to be easier to get and longer lasting than patent was that it covered something for which property rules worked better, in part because the boundaries of the property were more clearly defined. I qualified that argument by saying that it applied to traditional protection against literal copying, not so much to other restrictions due to copyright law.

My proposal, then, is quite simple—abolish protection against derivative works. Copyright is infringed by a literal copy of at least a quarter of a work, where a work is anything that might be separately sold—a novel, an essay, a short story. Anything else is fair use. That rule would cost me a little revenue from translations, but not much else, and my guess is that that would be true for most authors. I am not an artist or a composer or (save on a very small scale) a computer programmer, but I suspect that a similar restriction would work for those fields as well. The result would be a slight reduction in the incentive to produce copyrightable works, a large reduction in the costs imposed by the copyright system.

Applying a similar approach to patent law is harder, because ideas have fuzzier boundaries than books—it is less clear what does or does not infringe. My current idea is that patent protection should be limited to applications of the claimed idea that are actually described in the patent application. But I would be happy to consider alternative suggestions.

And no, I am still not arguing that my versions of patent and copyright would be better than nothing—I think that's an open question. I am only arguing that they would be better than what we now have.

And yes, I'm still at the same conference. Multitasking is not one of my talents, but not all of the talks are ones I find interesting.


SB7 said...

I suspect that creators (or IP owners) of comic books have a substantially different distribution of payouts from the first and second type than you or other authors of prose. Not being able to capture the revenue from film adaptations, or even other people writing comics with characters you have created, might be a very significant hi to their income.

Yossi Kreinin said...

Suppose derivative works are no longer covered by copyright laws. Then a computer program can be rather simply translated to an equivalent program such that every byte is different, yet the program does exactly the same thing. (As in, zeros are translated to ones and vice versa - or a more elaborate transformation that doesn't lose any of the information.)

A simple interpreter or just-in-time compiler could then run a program so translated, getting the same behavior as that of the original program.

More generally - when does translation create a derivative work, and when can one call it plain copying?

David Friedman said...

On the software issue ... .

I agree that it's complicated. One might try to draw the line at any conversion that could be done with little or no human supervision.

Think of it as analogous to my rule still covering a copy of my book printed in a different font.

Patrick said...

An immediate problem with your proposal, read literally, is that it becomes profitable to distribute partial copies of a work, each comprising one fifth of the whole. That way, I could acquire a full copy of the work via five independent acts, none of which counts as infringement. Even if compiling them in this way counts as infringement, it may be impossible to prove in practice.

David Friedman said...

Response to Patrick:

The author's royalty on a book is somewhere around ten percent of the price. I expect that the inconvenience of buying five pieces and assembling them would almost always be more than that.

Patrick said...

I agree for actual printed works. I was thinking more along the lines of computer files--ebooks, music files, software. It is already well known how to break up such files and reassemble them with ease. (Indeed, on the packet level, the whole internet works like this). If such a practice made one immune to infringement charges, I don't see why it wouldn't quickly become standard. After all, it is not much harder to tell your computer to download five files in parallel and then combine them than to tell it to download one.

Douglas Knight said...

Your experience of the value of derivative works may be informative about the median book without reflecting the mean.

David Friedman said...


Fair point. In that case I think we need some definition that treats the person who receives and assembles the pieces as an infringer, and the people who send the pieces as guilty of contributory infringement.

Douglas: One derivative work I don't know much about is a movie—for some reason nobody has tried to make any of my books into one. That looks like a low probability/high value incentive. My guess is that the expected value is still low, but I could be wrong.

Tom W. Bell said...


You might find this interesting: the Mercatus Center has agreed to publish "Intellectual Privilege" under (what I call) the Founder's Copyright--not just the 28 year maximum term under the 1790 Act but also its substantive terms. Among other consequences, that means the copyright won't bar derivative works.

Patrick said...

For the compiler, I agree, though I suspect prosecution may be impractical, since file transfer is relatively public but compilation is private. As for the people sending the pieces, if sending a small fraction of a file constitutes contributory infringement, why not just make that fraction the cutoff for ordinary infringement (and scale the damages proportionally)?
I am usually loath to support ambiguous fair use rules, but perhaps it could work in conjunction with your bright line rule: let 1/4 (or whatever) be the dividing line for a rebuttable presumption of fair use. Anything smaller than 1/4 of a work is presumed to be fair use, but the copyright owner can present evidence that the pieces are intended only to be reassembled to overcome the presumption. Likewise, anything greater than 1/4 is presumed to be infringing, but the defendant can still argue that his use is fair under the ordinary rules we already have, or (hopefully) better ones.

Rohan said...

So under your proposal, J.K. Rowling writes the first Harry Potter book and it proves to be a major success. Then any movie studio can immediately make a movie of the book without paying Ms. Rowling. And any company can immediately churn out sequels to Harry Potter without Ms. Rowling's approval.

I dunno. I don't see that as fair to the author. I'm not even objecting on monetary grounds, but rather artistic ones. It's her creation, her world, and I think giving her artistic control over that world is the right thing to do.

Patrick said...

I'm not sure I agree, at least with respect to sequels. Why should only J.K. Rowling have a right to publish Harry Potter sequels? If others write sequels, the work producing them is entirely theirs. If J.K. Rowling writes better sequels, then she will still find a market for what she writes. And any sequel someone else writes still earns J.K. Rowling money, since a reader will want to buy the original book to have a basis from which to understand the sequel. Indeed, in reality, J.K. Rowling freely allows fanfiction to be written, even though she could try to sue to suppress it. Presumably, this is at least in part because these fan-written sequels increase the market for the works she has written.

David Friedman said...


I don't think current copyright is very enforceable for digital IP against individual copiers, so the fact that my version isn't is not something special about it.

Re Rowlign: I would be unhappy at someone else writing a story in either of my fictional worlds (Harald or Salamander), especially if things were done with my characters, but I see that as the sort of restriction to be enforced by social pressure, not law.

SturdyLogic said...

"So under your proposal, J.K. Rowling writes the first Harry Potter book and it proves to be a major success. Then any movie studio can immediately make a movie of the book without paying Ms. Rowling. And any company can immediately churn out sequels to Harry Potter without Ms. Rowling's approval"

In film it's common to sell sequel rights to studios and other strategic buyers. Given that most artists are not well versed in law or economics, I wonder if it makes sense to sell sequel rights immediately upon completion of the first work to a company which specializes in monitoring copyright infringement. This sale, combined with a private contract with the right to buy-back the sequel rights at anytime, will ensure a superior monitoring mechanism and essentially a temporary loan of rights. The execution of this transaction would depend on the probability of infringement, the reputation of the monitoring company, and the future expected value of the sequel rights buy-back.

In cases where the probability of infringement is high and a derivative work is likely to materialize, the expected value for the future buy-back will be high and the artist will pay this cost for copyright infringement protection (albeit imperfect).

NeedleFactory said...

I suspect that deciding if an alleged copy of a give original contains a literal copy of at least 1/4 of a work is an NP-hard problem.

Remember Reader's Digest "condensed" versions of books? If their length is less than 1/4 the length of the original (say. 0.2490%), they would be legal?

Worse, a good "translator" could translate, say, an English book into English. Start by changing character names, locations, and then dozens of other things, including transpositions. If the translator is "very good", the copy could be "better" than the original and also "pass the 1/4 test."

How to tell if an alleged copy of a particular original "passes the 1/4 test"? Any translator worth their salt can make a copy where no linear quarter is a literal copy. How can we turn this “1/4 insight” into a clear yes/no answer for a court of law? I doubt we can.

David Friedman said...

A condensed book might be legal under my rule--but I doubt they represent a significant fraction of author revenue. For the more general problem, if identical sentences add up to more than 1/4, that should do it. I didn't require that the 1/4 be all in one continuous passage.

Jonathan said...

I'm looking forward to seeing The machinery of freedom or Hidden order as an animated film with talking animals.

David Friedman said...


As you may know, a video of one of my talks already exists with illustrations done by someone I have never met who did not consult me.

It's great.

Jonathan said...

I'm sorry, I didn't know; and you've modestly omitted a link to the video...