Assailing Copyright Isn’t Conservative

by Steven Tepp
Derek Khanna’s ideas are bad policy, too.

For some time now, former congressional staffer Derek Khanna has purported to speak for “the conservative movement” on its views about copyright. His latest offering is a piece published by the R Street Institute and titled “Guarding Against Abuse: Restoring Constitutional Copyright,” which sets out his views about copyright, the creators who earn it, and his version of copyright utopia.

It’s hard to see how his vision is “conservative” at all: It’s one of dramatic tax increases, invasive government, and hostility to private rights in favor of communal property.

From Khanna’s very first paragraph, copyright, a recognized property right, is described pejoratively as a “monopoly,” which he argues should exist only “to solve potential market failures.” Indeed, this is one of the piece’s primary arguments as to why copyright should be disfavored.

In the narrowest, most formalistic sense, all property rights are monopolies, as they are a legal authority to exclude others from certain acts. In this way, one could equally argue that people have a monopoly over the use of a shirt in their closet and the car in their driveway.

The more important understanding of monopolies is based on market power, not merely legal formalisms. An author has a certain scope of legal exclusivity with regard to his or her particular book, but that does not necessarily equate to market power. Readers may choose other books in that genre, or may choose a movie, television show, or live theater — it is well established that the existence of copyright does not equate to market power.

Khanna’s assault on private property also plays out in the piece’s other main theme, contrasting the duration of copyright to the benefits of the absence of copyright, known as the “public domain,” and advocating for shortening that duration so that creative works can become “public property.”

In the 1970s, Congress overhauled the entire Copyright Act, including changing the method of calculating the duration of copyright. This would set the stage for the United States during the Reagan administration to join the dominant global copyright agreement, the Berne Convention. This, in turn, created reciprocal protections abroad, and thus increased dramatically the protections allotted to American creators in foreign countries.

Later, in the 1990s, the European Union provided its authors with 20 years more copyright than what that U.S. provided, but denied this additional 20 years to American authors. Congress responded by extending the U.S. term so that U.S. creators and creative industries wouldn’t be at a competitive disadvantage.

The R Street piece describes this history as a theft from the proletariat (emphasis added):

The recapture of works that otherwise would be in the public domain represents one of the biggest thefts of public property in history.

Conservatives have a different view. Twice in recent years, the Supreme Court has addressed the issue of copyright term and the public domain. In both cases, the conservative justices on the Court overwhelmingly sided with private property.

In 2002’s Eldred v. Ashcroft, the Supreme Court upheld the constitutionality of the life-plus-70-years term in a 7–2 decision, with only Justices Stevens and Breyer dissenting. In addressing the claim that accumulated enactments amounted to perpetual protection, the Court held:

History reveals an unbroken congressional practice of granting to authors of works with existing copyrights the benefit of term extensions so that all under copyright protection will be governed evenhandedly. . . . The First Congress accorded the protections of the Nation’s first federal copyright statute to existing and future works alike. 1790 Act §1. Since then, Congress has regularly applied duration extensions to both existing and future copyrights. . . . The courts saw no “limited Times” impediment to such extensions; renewed or extended terms were upheld in the early days, for example, by Chief Justice Marshall and Justice Story sitting as circuit justices. . . . Congress’ consistent historical practice of applying newly enacted copyright terms to future and existing copyright reflects a judgment stated concisely by Representative Huntington at the time of the 1831 Act: “[J]ustice, policy, and equity alike forb[id]” that an “author who had sold his [work] a week ago be placed in a worse situation than the author who should sell his work the day after passing of [the] act.”

More recently, in 2012’s Golan v. Holder, the Court again sided with property rights over the public domain. In that case, the Court upheld the Reagan-era Berne Convention Implementation Act by a 6–2 vote, with Justice Alito the only conservative to dissent. Citing its own decision in Eldred and again providing examples from the days of the Founders, the Court held that Congress acted within the scope of the Copyright Clause.

The fact that these practices date all the way back to the founding of the Republic, as the Supreme Court has agreed, directly undermines Khanna’s claims to the concept of  “Constitutional Copyright.” He dismisses it as a mere technicality.

And the affirmative case he makes for “Constitutional Copyright” is deeply flawed: His paper also claims that George Mason refused to sign the Constitution because of the Copyright Clause. This is wrong. Mason’s concerns and objections were based upon the Necessary and Proper Clause and there is nothing in his cited comments regarding the Copyright Clause. The R Street paper further cites James Madison in support of its arguments, but once again, the citation offered as support simply doesn’t say what is claimed. What’s more, it isn’t even a document written by Madison; it is a letter written by Thomas Jefferson to Madison.

From the words and deeds of the Founders to the rulings of the Rehnquist and Roberts Courts, it is clear that the American free-market system is designed to promote private-property rights, including copyright, as the best engine of economic growth and freedom of expression.The public domain has its place as a venerable and valuable aspect of copyright law and reasonable people can and do disagree about the best way to write copyright law. But proposals to slash the duration of copyright to expand “public property” simply aren’t conservative.

The proposal offered in the R Street paper is much less than conservative in other ways, too: It would subject copyright protection to numerous filing requirements and big tax increases. Under Khanna’s proposal, copyright protection would last a scant twelve years unless the copyright owner repeatedly files renewal paperwork with the government. A total of four such filings would be required to get the new maximum copyright protection of 46 years — which would be the shortest of any country on earth (with the possible exception of a few countries that may have no copyright law at all).

Even more extreme, the copyright owner would have to pay taxes on the revenue (not profits, but gross revenue) each time he files for renewal. A copyright owner who maximized the duration of his protection under the proposal would have to pay the government 10 percent of his gross revenue for 36 years for each copyrighted work.

How much money are we talking about? Well, let’s look at just one piece of the movie industry, the favorite target of the R Street paper (full disclosure: I have represented the Motion Picture Association of America in the past). In 2013, gross domestic box-office receipts amounted to $12.9 billion. That would translate into a tax increase of $1.29 billion each year. Over the course of the maximum life of the industries’ copyrights, to do a back-of-the-envelope calculation, they would pay over $46.4 billion more in taxes — above and beyond all the other taxes they already pay.

Copyright owners don’t receive all box-office receipts, but my quick calculation excludes television rights, DVD and on-demand sales, merchandising, and so on. Plus, this is just the movie industry. To calculate the full size of the tax increase Khanna just proposed, we would have to add in revenues from the software and video-game industries, from music, publishing, photography and other graphic arts, and on and on. In total, this proposal may well exceed the tax increases President Obama proposed during his first term.

It should be needless to say that  massive tax increases aren’t consistent with conservatism, and that placing extra tax burdens on the most creative and vibrant elements of our economy would be disastrously misguided.

There are plenty of modern copyright issues worthy of discussion, and people can honestly disagree about the best solutions. Conservatives can and should decide their views for themselves. But Khanna’s proposal is, in my opinion, not a remotely conservative one, so it’s no surprise it’s also bad policy.

— Steven Tepp is president and CEO of Sentinel Worldwide and a professorial lecturer in law at the George Washington University Law School. He worked in the U.S. Copyright Office for eleven years and currently represents the U.S. Chamber of Commerce on intellectual-property issues. 

Editor’s note: This piece has been updated to reflect an error made in calculating the cost increases associated with the hypothetical copyright-reform proposal.