Can Economic and Historical Analyses End Copyright Law’s Property/Monopoly Disputes?

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Can Economic and Historical Analyses End Copyright Law’s Property/Monopoly Disputes?

Tom Sydnor

October 2015

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Analyses End Copyright Law’s Property/Monopoly Disputes?

Tom Sydnor

October 2015

A M E R I C A N E N T E R P R I S E I N S T I T U T E

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or more than 300 years, copyright law and policy have been plagued by recurring debates: are copyrights private property rights, or are they suspect, government-granted monopoly rights? This paper examines three modern versions of these property- or-monopoly debates. In each case, it concludes that copyrights are best understood as private property rights—pragmatically indistinguishable from other private property rights that generate imperfect, competition by innovation among producers of other differentiated goods or services.

This paper begins by summarizing the general, 300-year-old property-or-monopoly debates that have recurred throughout the history of copyrights in the United Kingdom and United States. Former US Reg- ister of Copyrights Barbara Ringer concluded that those debates were a distraction caused by a “tyranny of labels.” When terms such as property and monopoly seem to create enduring tyranny, one of them is probably ambiguous and inapt. Here, the culprit is “monopoly.” Over time, it has become so ambiguous that it could refer to a trade monopoly; an antitrust monopoly; a legal monopoly; or those property rights that tend to generate monopolistic, or imperfect, competition among producers of differentiated goods or services.

Fortunately, modern economics now let us depose this tyranny and end these old debates. Copyrights are best classified as private property rights for three reasons: (1) they do not grant trade monopolies; (2) all private property rights can be called legal monopolies;

and (3) copyrights are no more prone to generate antitrust monopolies or monopolistic competition than exclusive rights in other forms of real, personal, and intellectual property.

Consequently, persons still hurling the epithet

“monopoly” at copyrights and their owners are not

technically wrong. But they are, unwittingly, thus plunging the same rhetorical dagger into the backs of Google, Facebook, Amazon, Twitter, Yahoo!, Micro- soft, Verizon, AT&T, Netflix, and every other innovative, entrepreneurial company driving the growth of the US economy. That seems like a good reason to stop calling copyrights “monopolies.”

Next, this paper rejects the so-called founders’- copyright critique of modern US copyright laws. In effect, this recent critique asserts that the US should treat copyrights as if they were suspect, evil, or diabol- ical monopolies to honor the allegedly skeptical atti- tude toward copyrights adopted by the founders of the United States and the framers of its Constitution.

But this critique is so historically inaccurate that it backfires. The founders and framers considered copyright-generated markets for private expression to be indispensable to a representative democracy. Conse- quently, President George Washington prodded James Madison and other framers to move swiftly, break from British precedent, and make the US the first country to adopt a wholly market-based national copyright law that actually treated copyrights like other private property rights.

Finally, this paper rejects claims that use a primi- tive version of public-choice theory to assert that even if copyrights were not inherently, or originally, suspect monopolies, then we should now treat them as such because special-interest lobbying has caused copyright protection to expand in fundamentally unprincipled ways. Such claims usually focus on the increasing term of US copyright protection, with many claiming that it has been increasing along a lobbyist-driven “Mickey Mouse curve,” which will soon cause copyrights to last throughout the potentially infinite life span of an iconic cartoon character.

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Such claims about copyright term cannot withstand scrutiny. Copyright term has increased significantly—

from a maximum of 28 years in 1790 to a rough average of 95 years in 2015. But the evolution of US copyright term has been, basically, principled and reasoned. Increases were driven mostly by changed circumstances that altered the results of reapplying four term-calculation principles that the framers and founders used in 1790:

• They presumed that copyrights should last throughout the life of a work’s author and for some postmortem-author period. Over time, copyright term thus had to increase just to track a 200 per- cent increase in average US adult life spans.

• They applied changes in copyright term retroactively, even to then-existing works. Consequently, every subsequent increase or decrease in federal copyright term has also been applied retroactively.

• They considered international norms when setting the term. In 1976 and 1998, Congress adopted life-plus-50-year and then life-plus-70-year terms to provide the three-generation copyright protection envisioned by international norms defined in the 1948 Brussels Revision of the Berne Con- vention on the Protection of Literary and Artistic Works.

• They bifurcated copyright term into initial and renewal terms so authors could terminate some transfers of copyrights. In 1976, Congress adapted to changed international norms by adopting a uni- tary copyright term and a separate termination- of-transfer rights.

The evolution of US copyright term since 1790 has thus been basically principled and reasoned. Con- sequently, when the US last increased copyright term in the 1998 Copyright Term Extension Act (CTEA), Mickey Mouse became little more than one of many unintended beneficiaries of the long process of develop- ing a wholly principled approach to calculating copyright term. That approach first evolved in 19th century Europe. It then became a de facto global norm through Europe’s Berne Convention. It was finally adopted by the US in 1988—40 years after the Berne Conven- tion had first imposed minimum standards intended to pressure countries to increase copyright term to life- of-the-author-plus-70 years. In Eldred v. Ashcroft, the US Supreme Court thus concluded that the CTEA was constitutional, because it accorded with more than 200 years of US term-setting practices and prevailing international norms.

For these reasons, this paper concludes that today’s copyrights are best understood as one of the many types of market-generating private property rights that drive imperfect competition by innovation among producers of many different types of goods, services, and expressive works. Ending the many distractions that have arisen from a 300-year-old “tyranny of labels” can also clarify the fundamental goal of US copyright law and policy. The goal should be to identify the broad sets of circumstances in which voluntary market transactions among creators, creative industries, distributors, and consumers are more likely to produce better long-run results than more coercive approaches, such as compulsory licensing or unilateral expropriation of someone else’s risky, long- term investments of the human and financial capital needed to create those rare expressive works that do appeal to broad audiences.

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n September 5, 2014, America’s Future Founda- tion hosted a debate on Capitol Hill titled “Is Copyright a Property Right?” A similar debate could have been held in Great Britain in 1714. For 300 years, the question of whether copyrights are property rights or a sui generis form of government-granted monop- oly right has been bitterly contested. This paper argues that these recurring disputes can now be resolved for two reasons.

First, modern economics no longer provides a basis for distinguishing between the economic effects of the copyrights of private producers of expressive works and the economic effects of the real, personal, and intellectual property rights of private producers of most other potentially valuable goods and services. All of those exclusive rights tend to drive self-catalyzing processes of productive, entrepreneurial innovation that result in imperfect competition among producers of differentiated goods, services, or works. Consequently, those still hurling the epithet “monopoly” at the copyrights of successful creators and creative industries are implicitly flinging the same rhetorical dagger at essentially all other entrepreneurial creators of other differentiated products and services.

Second, some analysts have recently advocated a new variant of the copyrights-are-monopolies argument that could be called the “founders’-copyright critique”

of current US copyright laws. This critique claims that special-interest lobbying has caused modern copyright laws to betray an allegedly traditional, highly skeptical, limited approach to copyright protection first adopted by the founders of the United States and the framers of the Constitution.

But this critique is just wrong. The founders and framers actually believed that promoting private speech by protecting copyrights was a fundamental duty of a

civilized, democratic nation. Consequently, founders and framers such as George Washington and James Madison moved so swiftly to protect copyrights that the United States enacted world history’s first market-based national copyright law—the first to treat the copyrights of authors as market-generating private property rights.

Together, these economic and historical analyses can help end centuries of debates about the nature of copyrights. Copyrights can no longer be fairly characterized as sui generis government-granted monopoly rights.

They are property rights that tend to generate, among creators of expressive works, the same sort of imperfect competition by innovation that drives growth and progress throughout the most vibrant, productive sectors of our market economy.

For example, tonight, many Americans may watch a TV show or movie on a tablet computer. One such person might use Verizon Internet-access services, a Linksys WiFi access point, an Apple iPad, Google Search, a Netflix subscription, or Akamai-like caching services—all to enjoy a work created and owned by the Walt Disney Company. Legally enforceable exclusive rights enable all those entities to make their contributions to that routine event. And none of those rights are just government-granted monopoly rights—not even the copyrights of the Walt Disney Company.

For more than 300 years, reasoned analysis of copyright law and policy has been obstructed by recurring disputes about whether copyrights are “private property rights” or sui generis “government-granted monopoly rights.” Understanding why and how we could now resolve copyright law’s property/

monopoly disputes requires some familiarity with their long, international history.¹ The following sum- mary is not intended to acknowledge all the contributions made by many thoughtful scholars, analysts, and

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institutions during centuries of such disputes. Rather, it is intended to explain two historical facts: (1) copyright law’s property/monopoly disputes have scarcely changed over centuries in which our understanding of economics and market competition has changed fundamentally; and (2) these disputes have focused on applying the competing labels “property” and “monopoly” to copyrights.

The “Tyranny of Labels”: Copyright’s Property-or-Monopoly Disputes

Disputes about the proprietary or monopolistic character of intellectual property rights arose long before modern copyright laws existed. For example, patents were treated as monopolies since at least 1623, when patents for useful inventions were exempted from the Brit- ish Statute of Monopolies, which prevented the Crown from granting pernicious domestic trade monopolies to royal favorites in exchange for a share of the rewards.²

But British debates about the proprietary or monopolistic nature of patents later recurred in the context of copyrights. In 1710, Great Britain enacted the Statute of Anne, world history’s first general, national copyright law that vested copyrights in a work’s author, not in its printer or publisher. Debates soon followed about whether those statutory copyrights were monopolies or literary property. They became particularly heated while British jurists struggled with the question of whether term-limited statutory copyrights had pre- empted potentially eternal common-law copyrights.

Predictably, US copyright law inherited those British property/monopoly disputes. At first, their persistence was not evident. The Continental Congress and early state copyright laws enacted under the Articles of Con- federation often called copyrights “property” rights or avoided calling them monopolies. The framers of the Constitution avoided calling copyrights “monopolies,”

and the drafters of the Copyright Act of 1790 called copyright owners “proprietors.” In 1847, the first US treatise on copyright law also characterized copyrights as property rights.³

Nevertheless, copyright law’s property/monopoly disputes did recur. For example, during the late 18th

century, Thomas Jefferson repeatedly characterized patents and copyrights as monopolies.⁴ In 1830, US legislators debated the extension of copyright term in what would become the Copyright Act of 1831. Jus- tice Joseph Story’s famous Commentaries on the Consti- tution and his Familiar Exposition of the Constitution of the United States referred to copyrights as both “monop- olies” and “property,” though Story himself strongly favored the latter view. The Supreme Court’s decisions became, and long remained, inconsistent: in 1823 and 1834, the Court called copyrights “literary property”; in 1853 and 1855, copyrights were “property”; in 1884, a copyright was “monopoly.”⁵

Property/monopoly disputes then recurred throughout the subsequent history of US copyright law. During the 19th century and in the period between World Wars I and II, those disputes receded while the US focused on a series of only partly successful efforts to improve its international copyright relations. But from the mid-1950s to 1976, those disputes were reinflamed during the long process of enacting the Copyright Act of 1976. By 1974, US Register of Copyrights Barbara Ringer publicly lamented their disproportionate and disruptive effects: “It is easy to make fun of the type of confrontation that I am talking about, where the mere mention of words like ‘monopoly’ or ‘property’

will cause chairs to be pushed back, . . . faces to redden, breathing to shorten and bitter words to be exchanged.

. . . But I for one have seen this type of exchange too often not to take it seriously.”⁶

Ringer condemned these disputes as distractions caused by a “tyranny of labels,” but she proposed no means of resolving them. Later, copyright’s property/

monopoly disputes not only persisted but also became even more heated than they were in 1974. For example, in 2000, Edmund Kitsch, as the title of his article indicates, identified claims that copyrights are monop- olies as one of the Elementary and Persistent Errors in the Analysis of Intellectual Property: “Almost all copyrights . . . are not monopolies.”⁷

But the legal academy’s Free Culture Movement soon adopted a very skeptical approach to copyrights.

Consequently, many scholars and analysts again insisted that copyrights were monopolies.⁸ Indeed, some would have stressed their allegedly monopolistic nature by

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replacing terms such as “copyrights” and “intellectual property” with terms such as “Imposed Monopoly Priv- ileges” (“IMPs”) and “Government-Originated Legally Enforced Monopolies” (“GOLEMs”) or by equating copyrights to a “deal with the Devil,” a “Faustian bargain,” or a “crazed, out-of-control ‘rights-monster.’”⁹

Academics in the Free Culture Movement also offered nonmonstrous rationales for rethinking the nature of copyrights. For example, Mark Lemley’s 2005 law review article, Property, Intellectual Property, and Free Riding, still seems to be the best-developed, if unsuc- cessful, attempt to articulate a coherent, minimalistic,

“utilitarian approach” to the copyrights-as-monopolies viewpoint. Like many similar works, Property, Intellec- tual Property, and Free Riding argued that only recently, when the collective term “intellectual property rights”

began to be widely used, did we begin thinking of copy- rights as property rights. Property, Intellectual Property, and Free Riding warned that this allegedly new affecta- tion would tend to dupe Americans into thinking that copyright owners must capture all the social value arising from third-party uses of their works:

Courts and commenters adopt—explicitly or implicitly—the economic logic of real property in the context of intellectual property cases. They then make a subconscious move . . . : they jump from the idea that intellectual property is property to the idea that the IP [intellectual property] owner is entitled to capture the full social value of her idea. This leads them to an almost obsessive preoccupation with identifying and rooting out that great evil of the modern economic world—free riding.

Property rhetoric in intellectual property cases is accordingly closely identified . . . with a particular view of property rights as the right to capture or inter- nalize the full social value of their property.¹⁰

This and other excesses of Free Culture rhetoric then provoked a backlash. It was informally led by law professors Justin Hughes and Adam Mossoff. Mossoff challenged claims that patents are monopolies or privileges that have only recently been considered property rights.¹¹ Hughes challenged claims that copyrights are monopolies that have only recently been considered

property rights.¹² Think tanks also assisted, often focusing on the natural-law origins of copyrights.¹³

For example, Hughes warned that members of the closed society of skeptical academes were just citing each other when claiming that copyrights have only recently been considered property rights.¹⁴ To refute such claims, Hughes meticulously assembled a vast array of US, English, and foreign sources showing that copyrights, long called “literary-property rights,” had been routinely classified as property rights since the age of British jurist William Blackstone. Hughes thus concluded that “courts and legislatures had regularly discussed copyrighted works as ‘property’ throughout the seventeenth, eighteenth, and early nineteenth centuries.”¹⁵

But Hughes also carefully refrained from the sort of rhetorical overreach that he was criticizing. He did not claim that he had proved copyrights had not also been, or could not still be, called monopolies. Nor did he claim to have disproved claims “that judges and legislators are sometimes hypnotized by the normative idea of

‘property’ into believing that intellectual works need to be protected more than they are.”¹⁶

Consequently, in 2015 we are still debating whether copyrights are property rights or government-granted monopoly rights. For example, one recent “scholarly”

book The Copyright Wars: Three Centuries of Trans- Atlantic Battle tried—and failed—to pose the devel- opment of international norms for copyright protection as a “war” in which “Anglophone” nations treating copyrights as monopolies battled the property-based ideology of continental Europe and its Berne Conven- tion for the Protection of Literary and Artistic Works, until the 1990s, when “impelled . . . by Hollywood—

America crept to the cross of the Berne ideology.”¹⁷ Indeed, The Copyright Wars made approximately 333 attempts to associate the Berne Convention with the

Consequently, in 2015 we are still debating whether copyrights are property rights or

government-granted monopoly rights.

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crucifixion of Jesus, a “battle for the soul,” “slavery,”

“fascism,” “fascists,” “Mussolini,” “Nazis,” “Hitler,”

and European “authorities’ authorophilia.”¹⁸

And then, after collecting examples of rhetorical excesses by 19th-century proponents of international copyrights or European moral rights, the professor who wrote The Copyright Wars piously noted that “some- thing odd is afoot” when professors and jurists, “osten- sibly discussing a topic as pedestrian as copyright law, are moved to speak of slavery, soul-selling, the absolute, quasidivinity, and moral suicide.”¹⁹ Unfortunately, the author of that sentence did not perceive its ironic rele- vance to his own work.

Centuries of such overdone rhetoric may suggest why Hughes reluctantly concluded that the best we can do with copyright law’s property/monopoly debate is to “give it a rest”—to agree to disagree about whether copyrights are property rights or monopolies so we can focus on more important questions of law and policy.²⁰ Ringer would have probably favored that approach to circumventing the “tyranny of labels.”

The Meanings of “Property” and “Monopoly”

For modern US policymakers, copyright law’s 300-year- old property/monopoly disputes raise two crucial questions: First, do we have reasons to think that we could now resolve these property/monopoly disputes that have persisted for generations? Second, must we resolve these property/monopoly disputes to resolve new and existing questions of copyright law and policy?

The first question has a simple answer. Our understanding of both property rights and market economics has changed dramatically since the 1710 enactment of the Statute of Anne, particularly during the last few decades. We should assess whether those changes have clarified the nature of copyrights.

The second question is more challenging. An agree- to-disagree approach to copyright’s property/monopoly labels would be appealing if it let us avoid collateral, semantic disputes and refocus on more substantive issues. Unfortunately, the competing labels of “property” and “monopoly” generate fundamental disagree- ments about the goals of copyright law.

For example, if copyrights are property rights, then the goals of copyright law should be twofold. First, it should define which exclusive rights copyright laws should grant and thus define the range of potential business models that could be protected by copyrights rather than by contracts or other rights. Second, it should define the scope of those exclusive rights so they apply when mutually consensual, market exchanges among private producers, distributors, and consumers of expressive works are likely to produce—on average and over the long term—better results than coercive approaches such as unilateral expropriation or price- fixing compulsory licenses.

When defining the scope of exclusive rights, we would consider such factors as (1) the higher transac- tion and tracing costs associated with intangible property rights, (2) the partially nonrivalrous nature of expressive works, and (3) other relevant considerations, such as the First Amendment and international norms for copyright protection. This property-based approach would not try to fix prices or revenues or otherwise dic- tate the net results of future willing-buyer/willing-seller market transactions.

By contrast, many who view copyrights as government-granted monopolies conclude that the goal of copyright law should be to manipulate the scope of creators’ rights to roughly fix creators’ future returns from future voluntary transactions. For example, Prop- erty, Intellectual Property, and Free Riding argued that we must use “utilitarian economic analysis” to adjust the scope of copyrights so that subsequent market transactions among producers, distributors, and consumers will merely “permit intellectual property owners to cover their average fixed costs.”²¹ In 2014, the same law review published another article, Beyond the Incentive-Access Paradigm? Product Differentiation and Copyright Revisited, which argued that those costs must

“include costs incurred in the efficient pursuit of failed efforts, diversified project portfolios, or both, all capi- talized at the appropriate risk-adjusted rate.”²² Others propose to achieve similar ends by replacing copyright law’s exclusive rights with government-administered media levies or compulsory licenses.²³

These market-defining and outcome-fixing goals differ fundamentally. And each is strongly associated

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with one of the contending labels in copyright law’s property/monopoly disputes. Consequently, an agree- to-disagree approach may not work. To decide what copyright laws should do, we may need to decide what copyrights are.

Fortunately, even when briefly summarized, the history of copyright law’s property/monopoly disputes suggests means of resolving them. They turn on the meaning of two terms, “property” and “monopoly,”

that have been routinely invoked—but rarely explained.

Those disputes may also be dated: they began long ago but have kept recurring even though our understanding of why and how property rights and markets generate social value has changed dramatically during the last few decades.

Consequently, we can hope to resolve copyright law’s enduring property/monopoly disputes by taking them seriously, understanding what it means to say that copyrights are property rights or monopoly rights, and then determining whether competition among producers of copyrighted expressive works differs in kind from competition among proprietary producers of other goods and services. This approach to ending the “tyranny of labels” is pragmatic: it examines what the contending labels mean and what copyrights actually do in practice.

It shows that copyrights are best understood as property rights. They produce, in practice, the sort of productive, innovation-driven competition among producers of differentiated expressive works that char- acterize most other innovative, entrepreneurial markets generated and sustained by the other property rights granted to private producers of other types of potentially valuable goods and services.

Copyrights Are Property, But “Monopoly” Is Highly Ambiguous. To resolve copyright’s property/monopoly disputes, the first step is to understand what it means to call copyrights “property rights” or “monopoly rights.”

When two contending labels become an enduring tyranny, at least one of them is probably misleading. Such is the case here.

The meaning of property is quite broad, but the meaning of monopoly is profoundly ambiguous: its many legal and economic meanings can differ radically.

Consequently, if a red-faced person calls copyrights

“property rights,” and another pushes back his chair and calls them “monopoly rights,” then they could be disagreeing—or they could be deliberately or unwittingly using different words to say the same thing.

Property Rights Are Exclusive Rights Enforced by Deterrent Remedies. The meaning of the term “property rights” is broad, but not particularly ambiguous. Property rights are bundles of privately owned and privately enforceable legal rights. But their crucial components are rights to exclude.²⁴ Property rights also tend to have another crucial characteristic—alienability.²⁵ Usually, they can also be waived and divided by their owners.²⁶

Legal remedies also tend to distinguish property rights. Remedies for infringing contractual rights are almost always compensatory. Remedies for infringing rights against tortuous conduct can be either compensatory or deterrent, depending on a given infringer’s culpability. But remedies for infringing property rights tend to be deterrent; often, those rights can also be enforced through criminal prosecutions and through private means.

Consequently, copyrights really are property rights.

Fundamentally, they are legally and privately enforceable bundles of exclusive rights—rights to exclude—

that can be waived, divided, or traded. US civil and criminal remedies for copyright infringement are also highly deterrent, not compensatory.²⁷

Moreover, in practice, we grant copyrights to creators of expressive works for the same reason that we grant other property rights to private producers of other potentially valuable goods, services, or resources.

We do so because granting exclusive rights to authors enables private markets to encourage private invest- ment in the production of expressive works, a poten- tially socially valuable resource.²⁸ In 2012, the Supreme

To decide what copyright laws should do, we may need to decide what

copyrights are.

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Court stressed this point in Golan v. Holder by noting that the exclusive rights of copyright owners serve the same economic function as the exclusive rights of producers of futons and fruit.²⁹

Focusing on what property means does show that some of copyright law’s property/monopoly disputes arose from mere rhetoric or error. For example, Prop- erty, Intellectual Property, and Free Riding claimed that treating copyrights as property rights would cause American judges, officials, and citizens to conclude that copyright owners must capture the full social value arising from third-party uses of their works. But that claim was absurd. Treating copyrights as property rights precludes American citizens, judges, and officials from concluding that copyright owners must capture the full social value arising from third-party uses of their works.

Absent coercion or mistake, the property rights of producers of trade goods do not let their owners capture the full social value arising from authorized third- party uses of their property. If a producer of a trade good has exclusive rights in what she produces and her potential customer has exclusive rights in her money, then any consensual exchange should occur only if it both increases overall social welfare and leaves both parties better off—because each captured some of the increased social value (the “consumer surplus” or

“producer surplus”) resulting from their exchange.

Consequently, were some real copyright owner actually fixated on capturing the full social value arising from third-party uses of his work, then he would benefit from neither a copyright nor any other property right—he would need a gun.

Nevertheless, understanding the meaning of property may only be helpful, not dispositive. Debates about copyrights probably did not generate hundreds of years of red faces, pushed-back chairs, and bitter words just because generations of people could not recognize serious errors or purely semantic squabbles. Fortunately, the persistence of those disputes can be explained by examining at least four of the clashing meanings of monopoly.

The Ambiguity of the “Monopoly” Label. Copyright law’s property/monopoly disputes probably persist because the usually pejorative term “monopoly” is highly ambiguous—it has many, radically different meanings in both law and economics that have changed over time. For example, four common meanings of monopoly that might be applied to copyrights are, collectively, so ambiguous that they could perpetuate either substantive or semantic disputes.

First, copyrights do not create trade monopolies. In US law, a trade monopoly usually means an exclusive right to provide some potentially valuable good, ser- vice, or other resource to a class of potential consumers.³⁰ For example, the Boston Tea Party protested the royal trade monopoly on selling tea to the American colonies granted to the East India Company. Trade monopolies are now relatively rare. Usually, this term is now invoked during disputes about whether excessive and outdated laws or regulations needlessly constrain competition in ways that create effects similar to those of trade monopolies.³¹ Recent examples arise from ongoing clashes between services such as Uber and Lyft and local taxi-licensing authorities.

Fortunately, apart from compulsory licensing, the First Amendment has generally deterred excessive regulation of rights to invest in or produce expressive works.³² Consequently, copyrights are not even vaguely analogous to trade monopolies. The copyrights in a given feature-length film do not grant legal rights that prevent others from creating their own, original feature-length films—even if those films are nearly perfect substitutes. For example, the copyrights in the ani- mated films Antz and A Bug’s Life did not prevent their independent creation or near-simultaneous release in the fall of 1998. Noting this should be unnecessary,

Debates about copyrights probably did not generate hundreds of years of red faces,

pushed-back chairs, and bitter words just because generations of people could not

recognize serious errors or purely

semantic squabbles.

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but a few still compare copyrights to the East India Company’s tea-trade monopoly.³³

Second, copyrights rarely create unlawful antitrust monopolies. Terms such as “monopoly” and “monopolist” are often epithets loosely used to disparage eco- nomically powerful entities. But that is misleading. No entity violates any US antitrust law just by attaining the substantial amount of market power needed to classify it as a monopolist subject to the constraints on private action imposed by US antitrust laws. To the contrary, those laws presume that entities can and should try to attain and retain market power through lawful means, such as providing goods, services, or expressive works markedly superior to those of their competitors. US antitrust laws thus only condemn monopolies that use unreasonable, anticompetitive means to attain or retain market power.

Kitsch used “monopolies” in this antitrust-related sense when he concluded that “almost all copyrights . . . are not monopolies.”³⁴ And he was right: the US Supreme Court, the US Department of Justice, and leading treatises agree that neither copyrights nor other intellectual-property rights necessarily or routinely create the degree of market power required to generate antitrust monopolies.³⁵ For example, § 2.1 of the Anti- trust Guidelines for the Licensing of Intellectual Property issued by the US Department of Justice and the Federal Trade Commission states:

An intellectual property owner’s rights to exclude are similar to the rights enjoyed by owners of other forms of private property. As with other forms of private property, certain types of conduct with respect to intellectual property may have anticompetitive effects against which the antitrust laws can and do protect.

Intellectual property is thus neither particularly free from scrutiny under the antitrust laws, nor particularly suspect under them.³⁶

Consequently, US antitrust law does not distinguish copyrights from other private property rights—none pre- sumptively grant antitrust “monopolies” to their owners.

Third, copyrights, like all private property rights, are legal monopolies. All private property rights can be called legal monopolies because they grant legally

enforceable exclusive rights to their owners. Indeed, enforceable rights to exclude are the sine qua non of private property rights. Copyrights grant enforceable rights to exclude, so they too can be called legal monopolies—like all other private property rights.

Economist Milton Friedman stressed this in Capitalism and Freedom:

Copyrights of authors . . . 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 regard to that land defined and enforced by the government. With respect to . . . publications the problem is whether to establish an analogous property right. This problem is part of the general need to use government to establish what shall and shall not be regarded as property.³⁷

The fact that copyrights are legal monopolies thus fails—again—to distinguish them from all other legally enforceable private property rights.

Fourth, copyrights do tend to create imperfect or monopolistic competition among producers of expressive works. Modern economics can thus suggest another sense in which copyrights could be called monopolies. In practice, copyrights have not tended to produce what neoclassic economics would call “perfect competition” among creators of expressive works.³⁸ Copyrights neither prevent nor tend to generate perfect competition because creators and their works are rarely fungible. Markets for copyrighted expressive works thus tend to be characterized by imperfect competition among producers of differentiated works. There- fore, the copyrights in at least popular expressive works can grant their owners enough market power to recover more than their average total costs of production.³⁹ Copyrights could thus be called “monopolies” because, although they rarely generate the degree of market power required to trigger the constraints imposed by antitrust laws, the copyrights in at least some differentiated, very popular works should tend to give their owners some market power in imperfectly competitive markets for expressive works.⁴⁰

Collectively, these four meanings of monopoly can thus explain why copyright law’s property/monopoly

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disputes could be so persistent—and why we can now resolve them. Because the term “monopoly” has so many differing meanings, persons claiming that copyrights are monopoly rights could be either inarguably correct or clearly wrong, depending on which meaning of “monopoly” they intended. For example, if someone calling copyrights “monopolies” meant or means that copyrights tend to create trade monopolies or antitrust monopolies, then they are wrong.

By contrast, if someone calling copyrights “monopolies” means that they are legal monopolies, then they are just using a scary-sounding epithet applicable to all private property rights. Indeed, if “property right”

and “(legal) monopoly right” are just two rhetorically different ways to say the same thing, then copyright’s property/monopoly debates could persist forever because they lack substance. Therefore, lawyers, lob- byists, academics, or activists who call copyrights

“monopolies” will never be truly wrong—but they may be hurling at perceived foes an epithet equally applicable to all the private property–owning clients, members, or funders whom they may imagine themselves to be defending.

Nevertheless, the fourth sense of monopoly provides a potentially substantive basis for understanding both the persistence of copyright law’s property/monopoly disputes and why we can now resolve them. The generally small amount of market power that a few copyrights will confer may best explain the persistence of copyright law’s property/monopoly disputes. Producers of expressive works have never been fungible, so markets for expressive works have always been characterized by imperfect or differentiated competition—which has also been called “monopolistic” competition.

Therefore, copyrights could still be monopolies in a meaningful sense—but only if the lack of perfect com- petition among producers of copyrighted expressive works made real-world markets for those works differ in kind from the many other real-world markets in which private producers of many other socially valuable trade goods and services rely on exclusive rights in real property, personal property, and other forms of intellectual-property rights, such as trademarks.

The Antitrust Guidelines issued by US Department of Justice and the Federal Trade Commission do suggest that this means of labeling copyrights as monopolies no longer distinguishes them from other property rights, but they do not explain why. Modern economics can now supply the explanation that could resolve copyright law’s property/monopoly disputes. During recent decades, we have recognized that imperfect competition among producers of differentiated goods is not a dysfunctional or inferior form of competition that occurs mostly in markets for copyrighted expressive works. To the contrary, it is now recognized not only as the defining characteristic of private markets and market economies generally but also as their defining advantage. Economist William Baumol has even called this sort of imperfect competition “the free- market innovation machine.”⁴¹

Imperfect, “Schumpeterian” Competition Drives Self-Catalyzing, Entrepreneurial Innovation. In 1933, economists Edward Chamberlin and Joan Rob- inson built on prior works to provide the first detailed analyses of the economics of imperfect or monopolistic competition among producers of differentiated goods and services.⁴² Chamberlin even used competition among producers of copyrighted expressive works as a paradigmatic example of imperfect competition.

Today, imperfect competition is the norm across most of the US economy, particularly in its most innovative, growth-generating sectors. Moreover, our understanding of the dynamic implications of imperfect competition has now improved significantly. The work that best makes those implications accessible to general audiences may still be the one written by the first economist who fully perceived them—Capitalism, Socialism, and Democracy by Joseph Schumpeter.

If “property right” and “(legal) monopoly right” are just two rhetorically different ways to say the same thing, then copyright’s

property/monopoly debates could persist

forever because they lack substance.

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In Capitalism, Socialism, and Democracy, Schum- peter relied on the effects of imperfect competition in market economies to propose a then-unorthodox solu- tion to debates about the relative virtues of planned and market economies. Schumpeter argued that these are complementary, not competing, systems of economic ordering. Specifically, Schumpeter argued that central- ized planning might better organize a static economy.⁴³ But private markets would better create a dynamic, innovation-driven economy that would steadily improve overall social welfare.

Schumpeter thus rejected the prevailing argument for the superiority of capitalism. Neoclassic economic analyses asserted that economies based on property rights and markets would be superior because perfect competition could produce resources at socially optimal quantities and prices. But Schumpeter rejected the illusory efficiency of perfect competition. “Capitalist reality is first and last a process of change. In appraising the performance of competitive enterprise, the question of whether it would or would not tend to maxi- mize production in a perfectly equilibrated stationary condition of the economic process is hence almost, but not quite, irrelevant.”⁴⁴ Schumpeter noted that Adam Smith had applauded the profits that producers would not earn under perfect competition:

The chief merit of the classics consists in their dis- pelling, along with many other gross errors, the naïve idea that economic activity in capitalist society, because it turns on the profit motive, must by vir- tue of that fact alone necessarily run counter to the interests of consumers, or, to put it differently, that moneymaking necessarily deflects producing from its social goal; or, finally, that private profits, both in themselves and through the economic process they induce, are always a net loss to all excepting those who receive them and would therefore constitute a net gain to be realized by socialization.⁴⁵

Schumpeter thus argued that perfect competition was a distracting abstraction: “Perfect competition is not only impossible but inferior, and has no title to be set up as a model of ideal efficiency. It is hence a mistake to base the theory of government regulation of

industry on the principle that big business should be made to work as the respective industry would work in perfect competition.”⁴⁶ After all, “the introduction of new methods of production and new commodi- ties is hardly conceivable with perfect—and perfectly prompt—competition.”⁴⁷

Because he rejected perfect competition, optimal- quantity production, and marginal-cost pricing as the merits of market economies, Schumpeter had to explain why they made sense at all. He thus argued that imperfect market economies had an advantage that planned economies inherently lacked—a built-in means of encouraging productive innovation:

Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. . . . The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.

. . . [This flow of productive innovations] incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruc- tion is the essential fact about capitalism.⁴⁸

Schumpeter argued that the profit motive drives this creative destruction. While risky, innovation can be “so successful as to yield profits far above what is necessary in order to induce the corresponding investment.

These cases then provide the baits that lure capital on to untried trails.”⁴⁹ “Competition which commands a decisive cost or quality advantage” then “strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.”⁵⁰ To Schumpeter, these factors turned the lack of perfect competition in market economies from a defect into their defining advantage. When competition is imperfect, because we have limited information about what goods, services, and works people most want and how to provide them most efficiently, producers can indefinitely generate revenues and growth by innovating to redress these imperfections.⁵¹ The result is an

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ongoing, self-catalyzing process of productive, entrepreneurial investment and innovation.

Schumpeter’s analysis has implications for the study of property rights generally and copyrights in particular. Schumpeter identified economic dynamism—the self-catalyzing process of productive change—as the crucial advantage that lets markets characterized by short-term, static inefficiencies promote ongoing, productive, dynamic innovation. Unfortunately, debates about copyrights often ignore his insight. For example, here is net-neutrality proponent Tim Wu in the Supreme Court Law Review: “The difficult fact is that if we ignore dynamic effects, infringement benefits consumers. Any single instance of infringement is . . . just a transfer of wealth to the individual infringer. . . . Mil- lions of infringing consumers get something that costs

$15 for free, and no honest economist can ignore bil- lions in consumer surplus.”⁵²

There is nothing “difficult” about Wu’s claim: “if we ignore dynamic effects,” then copyright laws make no sense at all. Indeed, Wu could make the same claim were he discussing a proposal to redistribute to less productive persons all of the vast wealth accumulated by Sili- con Valley entrepreneurs and venture capitalists or if he had substituted words such as “looting” and “shoplift- ing” for words such as “infringement” and “infringing.”

That is why the static “surplus” that could be derived from raw expropriation was not ignored by the likes of Zimbabwe’s Robert Mugabe. Fortunately, Schumpeter and other honest economists have reminded us why policymakers concerned with long-term innovation, economic growth, and overall social welfare can never ignore the “dynamic effects” of mere expropriation.

Consistently acknowledging the need to consider

“dynamic effects” could thus materially improve many

debates about copyright law and policy. Echoing Schumpeter and others, the Supreme Court has noted that this is the economic premise underlying the US Copyright Act:

As we have explained, “the economic philosophy behind the [Copyright] Clause . . . is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors.” Accordingly,

“copyright law celebrates the profit motive, recogniz- ing that the incentive to profit from the exploitation of copyrights 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.”⁵³

Imperfect competition is thus what we now see not only among producers of expressive works but also among most other producers of most other potentially valuable goods and services. Consequently, persons who still insist that the imperfect competition that occurs among producers of feature-length films makes them monopolists are thus implicitly flinging the same rhetorical stiletto at Google, Facebook, Apple, YouTube, Twitter, Microsoft, Intel, and essentially every other innovative, risk-taking, entrepreneurial enterprise expanding the US economy. Imperfect competition no longer provides a means to distinguish markets for copyrighted works from other markets that exist because we have granted other forms of property rights to producers of other potentially socially valuable resources.

Two aspects of this analysis should also be noted.

First, the prevalence of imperfect competition could have implications for the design of all property rights of all producers of differentiated goods, services, or works.

Whatever those broader implications of pervasive imperfect competition may be, accounting for them only in the context of creators and creative industries—

but not in the complementary contexts of distributors and consumers of expressive works—would necessarily and inefficiently distort production and markets.

Second, this analysis does not ignore the partially nonrivalrous nature of expressive works.⁵⁴ It focuses

When competition is imperfect, producers can indefinitely generate revenues and

growth by innovating to redress

these imperfections.

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rights of copyright owners differ in kind from the effects of the exclusive rights of imperfectly competitive producers of other differentiated trade goods and services. In that context, partial nonrivalry is barely relevant. As Christopher Yoo put it, “As long as products are differentiated, the conflicts between access and incentives identified in the current literature [on copyrights] will arise whether consumption is rival or nonrival.”⁵⁵ Partial nonrivalry just does not make imperfect competition among creators of expressive works different in kind from imperfect competition among, say, distributors of expressive works created by others.

Partial nonrivalry can be relevant to a previously acknowledged question: how should we define the scope of the exclusive rights of copyright owners? For example, it does suggest that the exclusive rights of copyright owners could be subject to more limitations than the personal-property rights of producers of more rivalrous trade goods, such as futons or fruit. In fact, they are, and some of those limitations—such as copyright law’s expression/idea dichotomy—directly address partial nonrivalry.⁵⁶ But for that reason, partial nonrivalry cannot prove that the effects of imperfect competition among copyright owners differ in kind from the effects of imperfect competition among producers of other differentiated trade goods. Indeed, partial nonrivalry is barely relevant to commercial investors in expressive works because the actual production and use of expressive works tend to be highly rivalrous in practice: financial and human capital expended to create work A cannot be expended to create work B, and time that consumers expend to experience work A cannot be spent experiencing work B.

In conclusion, in recent decades both economists and policymakers have acquired an increased appre- ciation for the ubiquity and benefits of imperfect,

“Schumpeterian” competition by innovation among producers of differentiated goods, services, and works.

Consequently, it no longer makes sense to claim that copyright law’s exclusive rights are monopolies because they do not, in practice, tend to produce perfect competition among producers of nearly fungible works. That no longer differentiates their effects and benefits from those of all the other exclusive rights in real, personal,

private producers of many other potentially socially valuable resources. Copyrights are thus best described as property rights—not monopoly rights.

The US Founders and Framers Were Not Copyright Skeptics

Recently, a new variant of the copyrights-are- monopolies argument has arisen: the “founders’- copyright critique” of modern US copyright laws.⁵⁷ It differs because it relies mostly on appeals to tradition and prestige.⁵⁸ It argues that modern US copyright laws depart unacceptably from the allegedly highly skeptical, limited approach to copyrights adopted by the founders of the United States and the framers of the Constitution. It thus asserts not that copyrights really are highly suspect monopolies but that we should treat them as if they were because the founders and framers allegedly did.

This founders’-copyright critique thus claims that we should “honor the founders” by conjoining aspects of early US copyright acts with subsequently developed limitations and exceptions that appeal to modern skeptics. It thus generates very one-sided reform propos- als. For example, one such proposal began by equating copyrights to “evil,” to “a Faustian bargain,” and to “a deal with the devil” and then proposed these reforms:

• Deny copyrights to all “foreign” authors of all otherwise-protectable works. Only “citizens and res- idents of the United States” could “win domesti- cally enforceable copyrights.”

• Deny copyrights to all US authors of all films, vid- eos, songs, plays, sound recordings, paintings, sculp- tures, photographs, entertainment software, many mobile “apps,” and insufficiently “practical” books.

The “pretty fripperies,” the “creative urges,” the

“diversions,” and the “pretty pictures” of “the pure arts” or “merely aesthetic works” would be denied copyright protection—as would all nov- els, fictional works, or other “amusing diversions”

except “useful, even technical works” that served

“practical needs.”

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• Impose prohibited registration and renewal formal- ities and reduce the term of copyright protection below its mandatory minimum. Copyright term would decrease to 28 years, and protection would be subject to registration and renewal formali- ties prohibited by the World Trade Organization (WTO).

• Punish internationally successful US authors of even

“useful” books by decreasing their domestic copyright protections. “U.S. copyright policy should not heed foreign markets . . . ; it should aim only to ensure that U.S. copyright holders find domestic markets profitable enough to stimulate the supply of original expressive works.” US laws would thus counter any foreign “market-opening effects by trimming copyright’s [domestic] privileges.”⁵⁹

To enact these reforms in 2015, the US would have to violate Article 27(2) of the United Nation’s Uni- versal Declaration of Human Rights, withdraw from the WTO, and violate essentially every multilateral or bilateral copyright-related treaty or international agreement ratified or enacted since 1790.⁶⁰ Even less extreme founders’-copyright-based reforms would still force the US to withdraw from the WTO and violate almost all its enacted Free Trade Agreements.

Reforms such as these signal the two fundamental flaws in the founders’-copyright critique. First, it is historically inaccurate. Collectively, the founders of the United States and the framers of the Constitution were not copyright skeptics. They strongly believed that protecting copyrights was a fundamental duty of any civilized representative democracy. They thus swiftly enacted a general, national, market-based copyright

law—the Copyright Act of 1790. In 1802, they amended that law to protect engravings—“pretty pictures.” That amendment was enacted by one founder who could fairly be said to have once been skeptical of copyright monopolies—President Thomas Jefferson.

Second, it is anachronistic. Copyright laws must adapt to changing technologies and circumstances. The Copyright Act of 1790 was once a remarkable national copyright law. Subsequently, human life spans, technologies, and international norms have changed so much that reenacting even parts of the 1790 act would no longer honor the intentions of the founders and framers—it would thwart them.

The Founders and Framers Treated Copyrights as Indispensable to Democracy. Generally, the founders and framers did not think that private copyrights were dangerous monopolies that should be tolerated only to the minimum extent necessary. Consequently, even when briefly examined, the historical claims underlying the founders’-copyright critique do not just fail—they backfire.

That also clarifies another crucial point: fair accounts of the founders’ and framers’ contributions must acknowledge that only some of them contributed significantly to US copyright and intellectual-property law and policy. The most significant contributor was James Madison. He was directly involved in drafting (1) the 1783 committee report advising the Continen- tal Congress to urge the states to enact copyright laws, (2) the 1783 Continental Congress resolution that urged states to enact copyright laws, (3) the 1785 Vir- ginia Copyright Act that called copyrights “property,”

(4) the copyright clause of the US Constitution, (5) the defense of the copyright clause in The Federalist No. 43, and (6) the US Copyright Act of 1790 that called copyright owners “proprietors.”

By contrast, the founder most theoretically skeptical of intellectual property, Thomas Jefferson, played a very limited—and not that skeptical—role in devel- oping US copyright law and policy: as a member of the Continental Congress in 1783, Jefferson did not oppose the resolution urging states to enact copyright laws, and as president he enacted the first expansion of the 1790 act in 1802.

Fair accounts of the founders’ and framers’

contributions must acknowledge that only some of them contributed significantly to US copyright and intellectual-property

law and policy.

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Consequently, founders’-copyright critiques that stress Jefferson’s earlier skepticism cannot claim to fairly present the views of the founders and framers.

For example, in 2014, The Copyright Wars referred 20 times to the views of Jefferson—but mentioned Madi- son only twice and just in endnotes identifying him as receiving letters from Jefferson.⁶¹

Copyright Protection before the Constitution. On January 14, 1784, the Revolutionary War formally ended when the United States ratified the Treaty of Paris. But even before this treaty was negotiated or signed, many states had enacted copyright laws. This early push for US copyright laws was led by American authors, including educator and future lexicographer Noah Webster and Thomas Paine, whose work Common Sense had galva- nized American support for the Revolutionary War.⁶²

In January of 1783, those efforts first succeeded in Connecticut.⁶³ Soon after, the new Continental Con- gress convened a committee, which included James Madison, “to consider the most proper means of cherishing genius and useful arts throughout the United States by securing to the authors or publishers of new books their property in such works.” ⁶⁴ That committee concluded that “nothing is more properly a man’s own than the fruits of his study, and the protection and secu- rity of literary property would greatly tend to encourage genius, to promote useful discoveries and to the general extension of arts and commerce.”⁶⁵ The Continental Congress then urged the states, “on report of a committee . . . on the subject of literary property . . . to secure to the authors or publishers of any new books . . . the copy right of such books for a certain time.”⁶⁶

By the time the Continental Congress ratified the Treaty of Paris, 6 of the original 13 states had enacted copyright laws. By the time the new Constitution was proposed for ratification by the Continental Congress, 12 states had done so. These first US copyright laws consistently referred to copyrights as “property,” “literary property,” and “exclusive right[s]” and to copyright

“proprietors”—none called copyrights “monopolies.”⁶⁷ Those early state copyright laws not only reveal the founders’ real attitudes toward copyrights but also represent the first recorded attempts to grapple with the limitations of purely intrastate copyright laws.

Under the Articles of Confederation, only the states could protect copyrights. But each individual state was relatively small, traded extensively with other states, and could enforce copyrights only within its territory. Consequently, each state had to worry about whether to grant copyrights to citizens of other states that might not provide roughly equivalent protection.

Before the Constitution was ratified, most states thus adopted an approach later adopted by many Euro- pean states—their laws granted reciprocal copyright protection to authors residing in other states that had agreed to provide roughly similar copyright protection to their authors.

In the short run, the difficulties arising from reciprocal interstate copyright protections were resolved by the copyright clause of the Constitution. In the long run, as technological change increased international trade in the 19th and 20th centuries, those difficulties would recur internationally, persist for more than 100 years, and affect future US copyright laws in ways that the founders and framers could not have fully anticipated.

Copyright Protection under the Original Constitution.

The difficulties of protecting copyrights under the Articles of Confederation exemplified a broader set of problems that prompted the framers to draft, pass, and ratify a Constitution that created a much stronger federal government. That effort was controversial and divi- sive. Nevertheless, the framers of the Constitution still concluded that a new federal government should be empowered to resolve the copyright-related problems that had arisen under the Articles of Confederation. As a result, Article I, Section 8, Clause 8 of the Consti- tution empowered Congress “to promote the progress of science and the useful arts, by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and inventions.”

This “copyright clause” assumed its present form with little recorded debate—to the frustration of subsequent jurists, scholars, and attorneys. But even that silence is telling: the framers just did not think that either copyrights or a federal copyright power were controversial. For example, during the bitter ratification debates between the federalists and the antifederalists, the Constitution’s copyright clause generated

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almost no scrutiny. In The Federalist No. 43, James Madison explained why:

The utility of this power will scarcely be questioned.

The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coin- cides in both cases with the claims of individuals. The States cannot separately make effectual provisions for either of the cases.

Madison was right: the federal copyright power was scarcely questioned. For example, while the antifederalists did claim that the Constitution could let the federal government grant enforceable trade monopolies, their objections arose from its necessary and proper clause, not its copyright clause.⁶⁸ Indeed, the antifederalists’ most important objection to the Con- stitution asserted that it had failed to require the fed- eral government to respect the sorts of private rights that it could protect under the copyright clause. This lack of protection for private rights did not prevent the ratification of the Constitution, but it did define one crucial task of the new federal government—

drafting a Bill of Rights to counter the antifederalists’

most potent objection.

The first president and Congress were then elected and seated in 1789. During its first year, the First Con- gress addressed many priorities—such as national defense, national solvency, internal rebellions, and drafting a Bill of Rights. But although a bill proposing federal copyright and patent protection was introduced, it was not enacted in 1789.⁶⁹ Given the many challenges facing the First Congress, most people might have excused that lapse.

President George Washington did not. On January 8, 1790, Washington used his first State of the Union message to remind the First Congress:

There is nothing which can better deserve your patron- age than the promotion of science and literature. In one in which the measures of government receive their impressions so immediately from the sense of the community as in ours it is proportionably essential.

To the security of a free constitution it contrib- utes in various ways . . . by teaching the people themselves to know and to value their own rights; to discern and provide against invasions of them; to distinguish between oppression and the necessary exercise of lawful authority; between bur[d]ens proceeding from a disregard to their convenience and those resulting from the inevitable exigencies of society; to discrimi- nate the spirit of liberty from that of licentiousness—

cherishing the first, avoiding the last— . . . with an inviolable respect to the laws.⁷⁰

James Madison and other members of the First Con- gress got the point. Within about six weeks, a new bill proposing federal copyright protection was introduced;

it was then referred to a committee, which included Madison. Within five months, the First Congress had passed and President Washington had enacted the Copyright Act of 1790.⁷¹

While the most remarkable aspect of the Copyright Act of 1790 may thus be the year of its enactment, its substance has also been vastly underappreciated. Com- mentators ranging from Wikipedia editors to the late Register of Copyrights Barbara Ringer have long dis- missed the 1790 act as just a near-clone of the only available international model for copyright protection, Britain’s 1710 Statute of Anne. But the 1790 act had rejected its Statute of Anne model in a crucial respect.

In 1710, Queen Anne and her Parliament really were, at best, highly skeptical of copyrights. Conse- quently, Section IV of the Statute of Anne contained what might now be called a general compulsory license.

The price of any privately produced, copyrighted work could be reduced to whatever lower price might be deemed more reasonable by a long list of English officials, clerics, and academics.⁷²

At best, Section IV of the Statute of Anne may have reflected only severe skepticism about whether copyrights could function like market-generating private property rights.⁷³ At worst, it could have been intended to perpetuate the censorship perpetrated under the preceding Stationers’ Licensing Acts.⁷⁴ Modern compulsory licenses fix prices for categories of works. But Section IV imposed compulsory price fixing selectively on authors and publishers of particular works. It also