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April 12, 2012 @ 09:00:00
Failed Business Models of the Past, Eh?
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This is a repost of my article that I published at MINCOV.COM May 30, 2010.

In case of dissemination of music, movies, software, books or other works of copyright (I will refer to them as Content), business models are nothing but an interface between Creators and the public. I will be using the term Creator to refer to a natural person in result of whose intellectual and creative efforts Content is created, even if according to applicable law, the first owner of copyright in the Content is some other person. I will be using the term Owner to refer to the current owner of copyright in Content.

A model may only be successful if it meets the needs of Creators, the public and those who provide the interface. Buyers always want to pay as little as possible for the best product available, while the sellers always try to maximize their profits. What makes a business model successful is that it provides an equilibrium between the desires of buyers and sellers.

Also, one successful business model should not necessarily replace all others. Different products require different business models. It would be preposterous if manufacturers of luxury cars used the same business model as manufacturers of toothpaste, even though both manufacturers share the same ultimate goal of maximizing their profits. However, no one seriously suggests that Maybach should be forced to produce millions of cars and sell them cheap. Likewise, no one is forcing Colgate to only manufacture elite sorts of toothpaste and sell it on auctions for several hundred thousands of dollars per tube. If Maybach suddenly realizes that no one wishes to buy their Excelero for $8 Million1., it may reconsider whether it is a good business model. But it will surely not be making these amazing cars if a gang confiscates every new car at the gate of the factory, sells these cars on eBay for a few hundred dollars and then calls it a “new business model” that the greedy and old-fashioned car manufacturer “needs to embrace”.

The term “buyer’s market” refers to a situation when there are more sellers than buyers on the market, which leads to lower prices due to the excess of supply over demand. This term does not refer to hordes of “buyers” breaking stores’ windows and grabbing whatever they want, should the store set prices that the “buyers” do not find agreeable.

Forcing new business models is the same as attempting to force democracy upon Iran. Even if this latter works, which I do not believe is possible, there will still be thousands of people who will honestly think that the Western world ruined a great country, broke its spirit to replace it with a world of greed, evil and vice. Just as thousands of Russians still believe that attempts of Western democracies to educate Soviet people about freedoms were the cause of despicable economic state of Russia in the 1990s when oil prices plummeted. Many Russians still believe (which feeling is successfully being exploited by the government) that the only “real” objective of whatever (literally, every single thing) the West has been doing is to bring Russia down to its knees.

Soviet Union should have been allowed to fail and through its complete failure, seen from the inside, and not only from the outside, to adopt a new model that works2.. Otherwise, as soon as oil prices went up, new Russian leaders began rebuilding the old system claiming that the only reason why the Soviet Union experienced “temporary problems” was because of the forceful imposition of an extraneous ideology. Attempts to save someone who does not realize that they need to be saved or even someone who knowingly resists such “salvation”, will never succeed. For the same reason, refusal of the West to let the Soviet Union rot and fail, allowed the bankrupt socialist and communist ideas to outlive their most successful practical embodiment, because those who support these ideas now have an argument that these ideas failed because of the intervention on pernicious free market ideology. It has always been the tool of collectivists and statists to blame their victim (free, laissez-faire capitalism) for their own misdoings and then offer the same poison they used to bring about the problem they were trying to “fix” as a remedy.

Proponents of “copyright to the masses” ideas keep going back to the same examples over and over and over again, the most popular being one of the movie industry’s war against the VCR, claiming that in the end of the day, it was the VCRs that saved the movie industry3.. The question is – did the movie industry need to be saved? Did the manufacturers of VCRs have an obligation to save Hollywood?

If advocates of the use of VCRs were so confident in superiority of their business model, they should have created a case where VCRs were primarily (or, ideally, exclusively) used for Content provided by those Owners who agreed to having their Content so used. This, however, never happened. “Old” movie industry gave in, had to accept VCRs as part of the new landscape, and immediately went back to its old model, subject to necessary changes. This is because it had never been given a chance to regard the advent of the VCRs as anything but the necessary evil, a chance to truly appreciate numerous features that allowed the industry to benefit from the VCRs after the movie industry lost its battle to VCR manufacturers. Forced adoption of a model that the movie industry tried to resist may have saved the industry, but it never became the industry’s conscious and voluntary decision. And the choice that the industry was facing was not a choice between the old model and the new model. It was a choice between mass disregard of the public to the way the industry wanted to run the business and the new model. It was surrender, not embracing of the new model. If the major element of the “old” industries is described, as William Patry does, as control4., the industries’ surrender to the new model did not dissuade them of the idea that control is a virtue. Being force-fed the new business model and unwilling to see their old model’s flaws, they kept trying to retain as much of their old model as possible. The history kept repeating itself with VCRs, TV, DVDs, the Internet. Instead of letting the industries fail and learn from their failure, the innovators consistently went against the old industries’ wishes and forced new models upon them and kept calling this “salvation of industries running old failed models”.

Yes, maybe if VCR manufacturers would have had to wait before the movie industry realized the potential benefits of the new technology, thus delaying the advent of the VCR. But, assuming that the new model was indeed better, it would have created a completely different landscape of industries embracing the strengths of the new models rather than trying to minimize their impact on the existing models.

Also, one must not forget that VCRs, as any other interface between Content and end-users, only have a meaningful use if there exists Content that they can record or play back. Give a VCR to a caveman in absence of TV broadcasts and other audiovisual Content (even assuming that the caveman will have electricity and a television set), and the VCR will be completely useless, a pile of metal and plastic. It is the Content that gives value to the VCR.

Patry writes:

      “Consumers are king – not control, not copyright, and not content. Without consumers, copyrights and content have no economic value. Copyright is not fairy dust, vesting everything is touches with magical economic value. Rather, economic value is derived from buyers’ willingness to pay for a product or service.”5.

However, this does not address the issue of piracy. If consumers, instead of buying Content, are accessing it in circumvention of the Owners’ terms, it does not mean that the value of the Content is nil. Just like stealing of a car, which essentially means the particular “customer’s” refusal to buy it, does not mean that the car’s value is zero. If it proves anything, then it is that the mere fact that Content gets pirated means that it has value, however, through various mechanisms, looters of sorts6. have an option to override the necessity to pay the price.

As Barry Sookman wrote, addressing critics of the presently negotiated anti-counterfeit agreement, ACTA:

      “I had always thought that a consumer was someone who legitimately acquires some good or service for that person’s own use. However, the “consumers’ referred to by the coalition [of those who oppose ACTA] appear to be those individuals who engage in repeated acts of copyright infringement despite repeated warnings to stop. So, is the moral fight against the substance of ACTA’s proposed provisions related to graduated response by these detractions really about defending the right to take the creative labour and investments of creative individuals and industries for free?”7.

I share the view of Justice Peterson, who in University of London Press, Limited v. University Tutorial Press, Limited8. wrote: “after all, there remains the rough practical test that what is worth copying is prima facie worth protecting”. If it is worth someone’s efforts to steal, it has a value, even if no one buys it.

Crusaders should not expect to be embraced and to have their views that they attempt to forcefully impose on their victims, celebrated. Unless the sole interest of new model missionaries is in the mere sadistic process of forceful imposition of their ideas unto those who resist them, there are only two interrelated ways to efficiently reach the objective of conversion: to let the “old” models fail without any external pressure, simply by allowing them to rot by themselves, unable to provide something useful enough to keep them afloat9.; and to recruit new adepts by demonstrating the superiority of new models, without any violation of terms established by those who prefer to keep running the old models. This is the only way to have a controlled experiment, the only way to objectively prove that one system is better than the other.

Let us compare this situation with a restaurant that charges exorbitant amounts for its good food, but has less and less customers because of its conservative and somewhat extravagant policies. For example, it only allows men in blue suits and red ties and it only allows women wearing white dresses and red high heel shoes, and requires them to dance before they are permitted to enter the premises. But the food is great. And very expensive. Let us assume that most people find this approach ridiculously preposterous, that the business model of the restaurant owners is wrong and disastrous. Let us assume that it indeed is wrong and disastrous.

By analogy, what the proponents of forced new business models would suggest is to have as many people come to the restaurant, without regard to the limitations to the dress-code that the owners are trying to impose, eat and refuse to pay, claiming that the restaurant owner’s policies are unfair, inconsistent, discriminating, unenforceable, irrational and immoral. This approach is clearly wrong and will never convince the restaurant owner of anything other than he is being assaulted by a lawless gang.

The reason why Montgomery Bus Boycott was so successful during the segregation was that the protest did not involve violation of anyone’s individual rights. Black people did not force a free bus ride under the pretence of fighting against segregation, they boycotted the public transportation, which resulted in serious economic consequences for the public transport system. Feel the difference.

There are several other ways to prove the point, assuming that we are right.

The easiest would be to campaign that people not go to that restaurant. Yes, refuse to eat there – at all, for free or for money. In case of copyright this means – don’t buy and don’t use Content unless it is legally offered to you under conditions you find acceptable. No one has an inherent right to use someone else's works. Just as “public property” and “public interest” are misnomers referring to notions that do not exist, there is no such thing as “users' rights”10..

Another solution is – convince the chef to leave the place and work for you. It is the chef who makes good food, not the restaurant owner. Restaurant owner simply provides a business model, the interface, that we find unfair. If our model is so much better, it should not be a problem to convince the cook to work for us, should it? The cook here, of course, is the Creator. Instead of pouting that the lion’s share of the profits goes past the Creator and instead of sabotaging the business of those whose business models we do not like, convince the Creator that they will be better off under our modernized model. Without a good cook, how is the restaurant to survive? And if we have a great cook and a superior business model, is it not the key to success?

Yet another solution is – buy the restaurant off from its current owners. If we are so sure that our model is better, that the cook is going to stay with us, that we are going to have so much more customers if we change the model and that we are still going to be able to make more money, why don’t we buy the restaurant off?

If someone invents a miraculous vaccine that most people are reluctant to use for some reason, even if the inventor knows for a fact that the yet untested vaccine will “make the world a better place”, he has no right to forcefully inject it to people who do not want to use it. Even if the only reason why the inventor is doing it is that he is trying to save people’s lives, he is still violating their right to refuse treatment. Instead of finding several hopelessly ill who would happily agree to take the treatment and thus convince everyone that the vaccine works, forceful injection destroys any possibility of a controlled experiment, because “patients” are going to resist treatment.

We do not need to save businesses with old business models. If they are bound to fail, we must let them fail. It is their right to be able to fail. We must not forcefully save them by breaking the laws in the hope that they will somehow adopt a new business model and be grateful to us till the end of their days.

Categories:Intellectual Property:Intellectual PropertyCopyright
 Values:Individual RightsPassionIntegrity
Additional Tags:CollectivismPhilosophy



April 11, 2012 @ 09:00:00
Copyright and the Great Socialist Degradation
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This is a repost of my article that I published at MINCOV.COM April 27, 2010.

Ever since I started practicing in the field of intellectual property law, I have been an avid supporter of stronger copyright laws, in the sense that the law should provide an efficient tool for the owner of intellectual property to control its use by others, to the point of being able to legally prevent its unauthorized use altogether. For greater clarity, I do not differentiate between the need to protect the rights of authors and of subsequent owners of copyright, as long as the authors were not compelled to assign their rights by force.

Seeing where the world is going to, particularly in terms of piracy, I was becoming increasingly sad, thinking that the system of copyright is being systematically destroyed. It is easy to see why the collapse of intellectual property laws would be welcomed by those who engage in unauthorized use of others’ works, but I had been struggling to understand why the idea of significant curtailment of authors’ rights in favour of “the public” also finds its proponents among many prominent scholars1., who do not necessarily fit into the category of people downloading movies off torrent websites.

Only a few months ago, did the pieces of the puzzle come together for me. Only a few months ago did I realize that the current attack on copyright is simply a part of a larger picture. In this article, I will provide a simplified overview of the mental process that I went through to see the big picture.

It all started when, for various reasons, I had to do some research on a fundamental issue that most practicing lawyers (myself included, until recently) tend to treat as insignificant or too obvious. The issue is the one of the nature and justifications of copyright. Why do we have copyright laws at all?

From the inception of copyright, there have been two competing points of view on this.

According to one, rights to results of one’s creative activity come from God, or otherwise from the nature of man, or are otherwise akin to property rights. One of the most famous quotes reflecting this first approach belongs to Jean Le Chapelier. In 1791 in the Paris Assembly he said: “The most sacred, most personal of all the properties, is the work fruit of the thought of a writer […] so it is extremely just that the men who cultivate the field of thought enjoy some fruits from their work, it is essential that during their life and a few years after their death, nobody can dispose of the product of their genius, without their consent”2.. According to this approach, copyright laws are nothing more than a reflection of objective law that only requires the government to provide the means of its enforcement.

The second approach is to say that but for the grant from the government, authors have no rights. These rights are said to be granted by the government for the “public good”. Governments are prepared to tolerate authors having some rights, but only to the extent that it benefits the public. And as with any entitlement coming from the government, whatever the government gives, it can always take away.

Historically, the problem has been that proponents of each of these approaches tried to push forward their ideas by masking them behind ideas of their opponents. This resulted in a situation where none of the arguments actually made any sense.

Proponents of God-given theory tried to give as much protection to authors and at the same time to appease the proponents of the public good theory by claiming that the reason that monopoly rights should be granted to creator was because such monopoly rights would in fact benefit the society as a whole. But if the right is a virtue in and of itself, then we should not care whether it benefits the public. For example, we do not explain the virtue of protecting human lives by the premise that it would benefit the society as a whole if we did not allow killing people. It is irrelevant whether the society benefits from that or not, since the human life is seen as a virtue worthy of protection. The same principle should apply to copyright, if it is indeed regarded under the natural rights theory.

Conversely, the proponents of wide public rights often mask their conception behind an attempt to create a “balance between promoting the public interest in the encouragement and dissemination of works of the arts and the intellect and obtaining a just reward for the creator (or, more accurately, to prevent someone other than the creator from appropriating whatever benefits may be generated).3.” Some have suggested that the “sole interest” of the government is to create a system that benefits the “society as a whole”4.. However, if this is true and if copyright laws are not primarily adopted to benefit creators, then, by implication, our only concern with creators’ interests is that such interests are not squelched to the extent that the resulting refusal of creators to create new works and make them available to the public, would actually harm the society more than the society would “benefit” from freely using someone else’s intellectual property. However, the provision of a bare minimum of food by a master to his slave, only sufficient for the slave not to die and to keep working, can hardly be called a “balance of interests”. In a way, this “balance of interests” in relation to copyright can be analogized with the state’s obligation to protect a person from having his property forcefully taken away, provided that such a person agrees to part with this property voluntarily.

Having noticed this inconsistency, but unable to untangle it, I looked up copyright laws of many countries. Invariably these laws are structured in a way to give authors an exclusive right to use their works as they please and to authorize others to do so. What does an exclusive right mean? It means a right to use the work to the exclusion of all others. Now, if governments were creating copyright laws for the benefit of the whole public, how is it that they did it by granting a monopoly to those who could severely limit the public's use of their works through the use of this very monopoly?

There are no other examples when the public benefit is ensured by providing a nearly absolute monopoly to a group that opposes the rest of the public. Governments did not create private property on land to benefit the homeless. Neither was the private property on crops introduced to benefit the hungry. If it was not the intention of governments to vest such a tremendous tool for control and monopoly in the authors, why are all such laws invariably written in a way that allows no other interpretation?

The mere fact that copyright laws are indifferent to the value of the works they protect (i.e. works receive copyright protection regardless of their artistic merit) should serve to disprove that copyright is created for the benefit of the public. If a work holds no value to the public, why would governments be concerned to grant the author of the work with a monopoly in respect of the work? Or is it just the opposite – that copyright should only protect works that nobody wants to use?

The next thing I did was I looked back at the history of the Soviet Union. It had copyright laws that, in fact, were written to benefit the public. Authors only had the right of first sale with no further right of control as to how their works are used afterwards. In vast majority of cases, it was the government that was the first buyer. Also, authors had the right to receive a “fair” remuneration for subsequent use of their works and the right to have their name mentioned every time their works were used. And, of course, it was the government that decided what was fair.

The Soviet model of “copyright” gave birth to many great works of art without vesting substantial rights in creators. It did not exactly result in all authors refusing to make their works available to the public. So I agree with those who don’t buy the argument that weak copyright will necessarily mean that people are not going to create. However, even a superficial analysis of the structure of creativity in the Soviet Union would reveal that it was based the following factors.

Authors received substantial benefits from the socialist government if they created what the government wanted them to create. That’s why there were so many operas, symphonies, cantatas, plays, stories and songs about Lenin and communism.

Second, the system abused authors’ love of the process of creation. When one is truly gifted, then the ability to create becomes more important than the urge to make a political statement by refusing to create. Many authors are forced to believe that their art is the only thing that they are good for. The socialist government offered creators a “deal” – they were allowed to create on the condition that they would have no right to control their works. By depriving authors of any say in how their works are used, the government punished authors for their virtue, for what they do best. This “deal” would have been impossible with those for whom the act of creativity is meaningless. This is very similar to how most countries today are punishing the rich for being so industrious. We tax them to death, but expect them to continue working because we know they love their work and because they are good at it.

Finally, the system would prevent emigration from it. Remember the Berlin wall? Remember Cuba? Remember the Soviet Union? Why is it so many people were risking their lives to emigrate? It was because the socialist government understands that as soon as a talented person is allowed to exercise their free will and to enjoy their freedoms, they will never go back to being spoon-fed by the government in return for giving up of these freedoms.

My father is a famous Russian composer who has composed music for over 100 movies. I asked him what it was that changed for him when the Soviet Union finally collapsed and Russia adopted copyright laws that were like most other copyright laws on the planet. From the creative point of view, there was not much difference. The only aspect that did change substantially is that the “true” copyright law provided a mechanism to control how the works are used, an opportunity to make decisions for oneself. The ability of the author to capitalize on this opportunity is a separate issue. This is the beauty of the free market system, in that it gives every one the right to fail and to succeed.

The Soviet system removed the element of opportunity. It was the government that decided for the authors what is a sufficient and fair remuneration for them. It was the government that decided what stories were printed throughout the country, what lyrics were put in songs and so on. The best example is how the Soviet censorship turned a song about an American cowboy into a song with no lyrics, thus creating what became a recent obsession, Trololo5..

The system worked ONLY as an integral part of the overall socialist nightmare. As soon as the socialist experiment reached its only possible result by destroying the country’s economy and, most importantly, the spirit of the people who live there, the government-fed copyright became unworkable. Free market economy (even its corrupted Russian version) cannot exist with the government telling everyone what and for how much they must create and license.

Today’s attack on copyright is simply one piece of the puzzle. The whole puzzle is the attack on free market and individual rights. The whole puzzle is the Great Socialist Evolution that has corrupted the Western world through various entitlement programs and indoctrination to the effect that the government can and should regulate everything and redistribute the wealth. The more entitlements people have, the harder it is to convince them that this model is unsustainable. Just as Margaret Thatcher said: “The problem with socialism is that eventually you run out of other people’s money”6..

Nothing that must be produced by another’s labour is a “right”. Housing is not a right. Health care is not a right. Use of someone else’s music is not a right. Let me illustrate this idea by the example of health care. If tomorrow all doctors exercised their free will and decided to quit, the government would have to enslave a group of people and force them to provide medical services that the government has determined is a “right” to all. In fact, this is exactly what was happening in the Soviet Union, where one went to jail if one was not employed.

Combining these pieces of the puzzle together, I realized that it is childish to only fight for stronger or weaker copyright laws. Copyright laws are nothing but a function of the political regime. Strong copyright laws cannot exist in a country that is giving away unearned entitlements to the undeserving and that is punishing those who create value for the country. Even the best imaginable copyright act (however subjective that may be) would not make a difference in this situation. If your car is falling apart, losing parts as it goes, it won’t be much help to install a new stereo in it.

I do not believe that anyone has a right to use another’s works without permission or in contravention of limitations that the copyright owner had imposed on their works. A man who creates something which had not existed before is free to pursue ANYTHING in return for it. He did not create the work for the society to determine the terms of how it is going to be used. He did not create the work for the enjoyment of the society. He created the work in an attempt to achieve his personal goals, be it the joy of a hobby, fame, goodwill, wealth or something else. It is up to the author to determine the terms on which he would allow the society to use his work. If he wishes to allow the public to freely use the work, nothing prevents him from making such a disposition.

But I hold this belief as part of my overall convictions that no one has a right to anything created by someone else. The dispute should be not about whether we need stronger copyright laws or whether we should be expanding exceptions from copyright. The issue is whether we are to subordinate individual rights to mythic “public interests” and the “benefit of society as a whole”. Copyright, as much as I love it, is just one card in the deck. I hope this article will help the readers better see the game that is being played with these cards and make their own decisions.

Categories:Intellectual Property:Copyright
 Values:PassionIntegrityIndividual RightsFreedom
Additional Tags:CollectivismPhilosophy



April 10, 2012 @ 13:38:00
Why Courts Should Not Allow the Parody Exception to Make a Parody of the Copyright Law
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This is a repost of my article that I published at MINCOV.COM on June 28, 2009.

Recently I wrote a 100-page comparative research paper on the treatment of parody in the copyright laws of common law countries and selected European countries. Thus, I could not help but voice my thoughts regarding the ongoing dispute between J.D. Salinger and the author and publishers of a purported sequel to The Catcher in the Rye (“Catcher”).

J.D. Salinger has sued Swedish author Frederik Colting, who wrote the novel 60 Years Later: Coming Through the Rye (“60 Years”) under the pseudonym J.D. California. The disputed literary work has attracted comments ranging from “rip-off, pure and simple”1. to “a sequel”2., to “not a sequel”3., to “criticism of J.D. Salinger and of Catcher in the Rye4., to “tremendously important commentary”5., to “a parody”6., and finally to “a complex and undeniably transformative exposition about one of our nation’s most famous authors, J. D. Salinger, and his best known creation, Holden Caulfield."7.

In his declaration, Mr. Colting concedes that his earlier book cover and some promotional material characterized 60 Years as a sequel8.. One would find it hard to believe that it is a coincidence that he came to “realize that this description is inaccurate”9. only after the lawsuit has been filed. Suddenly, the “parodist” realized that his book, on which he spent “an entire year of [his] life”10.,

      “is not designed to satisfy any interest the public might have in learning what happened next to Holden Caulfield or the other characters in Salinger’s book. Rather it is intended to stand on its own as a critical examination of the character Holden Caulfield, the relationship between author and his creation, and the life of a particular author as he grows old but seems imprisoned by the literary character he created”11..

It is only after the lawsuit was filed that Mr. Colting expressed the view that he “wrote 60 Years as a critical exploration of such themes as the relationship between J. D. Salinger, the famously reclusive author, and Holden Caulfield, his brash and ageless fictional creation”12..

Granted, I may be overly sceptical about Mr. Colting’s description of 60 Years. I did not read it.

What? You might say, and yet you are writing an article on it?

Please be patient, gentle reader, as I shall expound my logic on this further on.

Indeed, it might be a true gem of a parody. Maybe, it is an “important commentary and criticism of Catcher and its famous author”13.. Colting acknowledges that he is “fascinated by the widely-reported fact that, after creating Holden, Salinger never published another work and essentially became a recluse, while at the same time exercising ‘iron-clad control over his intellectual property, refusing to allow others to adapt any of his characters or stories in other media’”14.. He specifically chose Salinger’s famous work as the basis for his “first novel”15. not only because it is one of the most famous novels of all times, but also because of Salinger’s fierce opposition to any, let alone unauthorized, derivative use of Catcher. The question is, even assuming 60 Years is indeed a true parody, should Colting get away with it?

The attempt of Colting and his lawyers to classify 60 Years as criticism and parody is not unexpected. From the documents and comments I have gathered, it appears very likely that, despite the defendants’ claim to the contrary, 60 Years will be held to constitute an unauthorized use of Catcher and its protagonist. If this happens, the only way for the defendants to avoid the finding of infringement would be to prove that the use of Catcher constitutes fair use under §107 of the U.S. Copyright Act16.. While the list of purposes that presumptively imply a fair use in §107 is not exhaustive17., the presumption, if satisfied, of course, makes the defendants’ task much easier.

The fundamental distinction between common law and civil law approaches to the criticism exception is in the fact that the former permits any type of use of the underlying works for the purpose of criticism (provided that such use is fair), whereas the latter only permits quotation of underlying works for such purpose. By implication, quotation only allows unaltered (albeit fragmentary) use of underlying works18.. Parodic modification of an underlying work, while it still may be regarded as criticism, is beyond the definition of quotation. Quotation presupposes scrupulous copying of the used portions of an underlying work and their separation from what is added by the new author. Parody, on the other hand, normally implies integration of the modified (or, in some cases, mutilated) underlying work into the new resulting work.

In common law countries, the criticism exception seemingly allows any type of use of an underlying work provided that such use is made for the purpose of criticism, without it being expressly limited to quotation. Hence, the willingness of creators of unauthorized derivative works to claim this exception as a defence. I suggest that while the criticism exception in common law countries is not expressly limited to unmodified use of underlying works, this limitation is implicit in the words “fair use” or “fair dealing” (since, perhaps, unauthorized alteration of the work for the purpose of criticism should be regarded as unfair19.).

Criticism is an extremely broad notion. Any use of an underlying work may be said to be a criticism of something or someone. No doubt, parody is criticism. But there are many “unfair” uses that also fall within the definition of criticism. For example, creation of a DVD collection “100 most boring movies” is criticism. However, unauthorized reproduction of 100 full movies under this title would still be unfair and illegal. Likewise, a CD collection of “100 songs by ugly hairy artists” is also arguably criticism, which cannot be excused as fair use or fair dealing20.. The mere purpose of criticism does not justify copyright infringement.

The fairness analysis with regard to parody has the same inherent difficulties as that with regard to criticism, with one additional aggravation. There exists no unequivocal legal definition of parody. Because most people (and courts) tend to agree that parody, by definition, requires more extensive use of the underlying work, compared to criticism, the so-called parody exception has become a dominant theme with those driven by the general idea that the balance of interests should tip in favour of the public by limiting the rights of authors and copyright owners (and thus ignoring the fact that the public would only benefit from the use of works if they are created and disclosed by authors).

Their attack on copyright has been carried out on several fronts. The economic irrationality of litigation in case of mass infringement of copyright on the Internet is often used as a pretext to justify the idea that what is done with impunity by so many people cannot logically constitute an infringement. Concepts of freedom of expression, freedom of seeking information and the right to cultural development have been thrown in the mix to rationalize legalization of unauthorized use of heretofore protected works. A separate trend in the so called “fair copyright” movement is represented by calls for extremely broad interpretation of exceptions to copyright.

Parody is a very convenient example for the “fair copyright” movement supporters to use. By providing examples of successful parodies, the supporters of “fair copyright” claim that copyright unfairly prevents creation and use of parodies. That a plethora of successful parodies have been created under “parody-unfriendly” copyright regimes that refuse to recognize an exception for parodies, seems not to disturb the commentators.

For example, in the UK, the proposal to add an explicit exception for parodies was formulated in the Gowers Review of Intellectual Property (“Gowers Report”) in 200621.. Surprisingly, to prove the point that “an exception to enable parody can create value”, Gowers offers the example of Weird Al Yankovic who has received 25 gold and platinum albums, four gold certified home videos and two GRAMMYs® by parodying other songs, “but had to ask permission from rights holders”22.. It is inconceivable how a special exception can be necessary if there is a living example of an artist who sold 25 gold and platinum parody albums, but never had an urge to create unauthorized parodies. Does the report suggest that he would have sold more platinum albums if he was allowed to create parodies without asking permission? Or would his parodies be any better? Indeed, the example of Weird Al Yancovic clearly proves the contrary, that no special exception for parodies is necessary.

It seems illogical to attribute greater importance to the “parody exception” than would be justified by the relative frequency of creation of parodies compared to the use of pre-existing works for the purposes of criticism, news reporting, research or private study. Overly enthusiastic attempts to introduce broadly interpreted exceptions for parody may signal that the proposal is broader than it appears to be, and that it may be only tangentially related to parodies. The parody exception is only one of many exceptions. It is not “the” exception that will significantly change the balance of interests between authors and the public.

However important the transformative element is in the fair use analysis, it does not take away the exclusive right of copyright owners to authorize creation and use of derivative works. The general idea is that there must be something very special about the parody which warrants a substantially different approach compared to other transformative derivative works. It is well known that Salinger turned down requests from Steven Spielberg and Harvey Weinstein to acquire film rights. If 60 Years is a protected criticism or parody, how is it different from an unauthorized motion picture? If 60 Years is found to be legal, how long will take until a new unauthorized commentary emerges?

Unlike in common law countries where the discussions about parody exceptions are a more recent trend, the parody exception has existed peacefully in France since 1957. Article L. 122-5 of the French Code of Intellectual Property provides that “once a work has been disclosed, the author may not prohibit… parody, pastiche and caricature, observing the rules of the genre”. Despite the somewhat vague wording relating to the requirement to observe “the rules of the genre”, the French courts have been extremely cautious in applying this exception.

The disproportionate worldwide interest in the parody exception is largely due to the U.S. Supreme Court decision in Campbell v. Acuff-Rose Music (“2 Live Crew”)23., the leading (and internationally famous) case dealing with a rap version of Roy Orbison’s song “Oh, Pretty Woman”, as performed by the band 2 Live Crew. There, the concurring24. Justice Kennedy outlined the dangers of an overly broad interpretation of parody and of creating a presumptive exception with regard to parodies:

      “…doubts about whether a given use is fair should not be resolved in favor of the self-proclaimed parodist. We should not make it easy for musicians to exploit existing works and then later claim that their rendition was a valuable commentary on the original. Almost any revamped modern version of a familiar composition can be construed as a ‘comment on the naiveté of the original’, because of the difference in style and because it will be amusing to hear how the old tune sounds in the new genre. Just the thought of a rap version of Beethoven’s Fifth Symphony or ‘Achy Breaky Heart’ is bound to make people smile. If we allow any weak transformation to qualify as parody, however, we weaken the protection of copyright. Any underprotection of copyright disserves the goals of copyright just as must as overprotection, by reducing the financial incentive to create.”25.

It is hard to disagree with Justice Kennedy's words. Unless we are prepared to create a parody of our copyright laws, it is imperative that the definition of parody be limited to a very circumscribed area, otherwise practically any infringement could be excused under the umbrella of parody. Indeed, the exception cannot be so broad as to allow the creation of any new works over the existing ones under the guise of parody.

It may seem that the dangers of an expansive interpretation of what may constitute a parody identified in 2 Live Crew by Justice Kennedy are in fact seen as a great advantage by “fair copyright” activists. Indeed, an overly broad parody exception effectively creates a shortcut to a general “public benefit” exception, readily allowing an unauthorized use of an existing work if it benefits the society. I suggest that there are two reasons why a general “public benefit” exception is a bad thing. First, it does not take into account the works that may never be created by authors discouraged by the failure of the courts to protect their works from being used against their will. Second, balancing the interests of various parties is not a distinctive characteristic of copyright laws. All laws are presumably premised on the balancing of such interests. General property laws are also adopted with the view of the public interest in mind. Unrestricted unauthorized use of someone else’s physical property may also have “public benefits”, but no one seriously suggests that such measures be taken. Encroachment of property may only be allowed in some very limited and clearly prescribed cases. I posit that it is exactly the same approach that must be taken with regard to parody.

Copyright laws have always been about the balance of the interests of creators and the public, about whether it is more fair to subject the public’s access to works of art to the whim of the creator or whether it is more fair to deprive the creator of a certain degree of control over the use of his works by the public. In my view, the danger that an overly broad parody exception may evolve into an open transformative use exception is far greater than the damage resulting from a “true” parodist’s failure to publish their unauthorized parody. In other words, if lawmakers and the courts cannot provide a clearly delineated system of rules and definitions that would allow some foreseeability as to whether a particular work would qualify as a parody, then I suggest an absolute ban on unauthorized parodies would be more appropriate than the ultimate uncertainty where an infringer can ex post facto claim that the infringing work is a parody.

I do acknowledge the intrinsic value of parodies and do not necessarily fully subscribe to the words of Ernest Hemingway who once said:

      “The parody is the last refuge of the frustrated writer... The greater the work of literature, the easier the parody. The step up from writing parodies is writing on the wall above the urinal”26.

There are some truly great parodies. In my opinion, the best parodies have been those that did not parasite on the popularity of the originals. The more famous the original, the harder it is to create a great parody, since true parody needs to overshadow the original, and it is usually hard to add much to an already famous work.

The courts should never go into evaluating the quality of parody. A brilliant, sharp and socially necessary parody in legal terms bears the same relationship to the original as primitive, nonsensical mockery. Unfortunately, as with any other kind of creative works, truly valuable parodies will only make up a fraction of the bulk of garbage created by wannabe parodists. Creativity should be supported. However, in case of parodies, supporting parodic creativity necessarily means doing so at the original authors’ expense. I firmly believe that unless very strict rules and limitations are introduced to come along with the parody exception, the price payable by original authors is too high. These rules and limitations must cover both what may legally constitute a parody and how unauthorized parodies may be used. Uncertainty creates serious risks for parodists too. If Mr. Colting is permanently enjoined from publishing 60 Years, he and his publisher will have lost time, efforts and money spent on creating and publishing a work that they hoped would meet the vague requirements for parody. Of course, it is the risk one takes when one relies that their actions will be excused under the fair use doctrine. But today the parody exception is too unpredictable – and this cannot encourage parodic creativity either.

Going back to Salinger’s claim, the defendant’s argument regarding market impact deserves a special remark. Indeed, Salinger has not written a novel since Catcher. No doubt, there is no market substitution in the sense that the public will not be inclined to buy 60 Years instead of Catcher. There are three reasons why Salinger’s claim should not fail for lack of negative impact on the market for Catcher.

First, the analysis is not limited to direct market substitution of the original work and the parody. It also covers potential legitimate licensing opportunities the plaintiff may have and the parody’s impact thereupon. With every new day of Salinger’s refusal to authorize anyone to create derivative works, his exclusive right is worth more. While 60 Years may not ruin the market for Salinger per se, it is the legalization of 60 Years that is very likely to do so. In other words, if 60 Years is found to constitute a protected parody, what would prevent a film company from creating a motion picture based on 60 Years, which would incorporate a good deal of reminiscences to Catcher? What would prevent the emergence of new sequels under the guise of important commentaries and parodies? It so happened that a part of the value of Salinger’s copyright is due to the fact that he never authorizes others to touch Catcher. It only takes one shot to break a mirror.

Second, it would be incorrect to use the negative impact on the legitimate economic interests of the original author as the sole or even a dominant factor in the parody analysis, because – by way of analogy – if someone was to make pirated copies of software or music CDs and give them away for free to the homeless, one could say that the homeless would never be able to buy the authentic CDs, therefore the copyright owner suffered no loss. There could even be cases where copyright infringement may have a beneficial economic effect on the market for the original author’s works, because the infringing work may in fact revive interest in the original work. However, it does not make these acts any less an infringement.

Finally, there is nothing wrong with an author’s decision to live secluded from the public eye after publication of a phenomenally successful book. Salinger must have made this decision on the basis of trust in the protection offered by the copyright laws. This is the deal between the author and the public. The public should not attempt to force an author into writing new works by removing protection from the existing ones. That the value of the work is so great that it allows the author the luxury of living as a recluse should not be used against the author by depriving the author of the promised protection.

On June 17, 2009 the federal judge Deborah Batts granted a temporary restraining order enjoining the defendants from publishing, advertising, selling, or otherwise distributing 60 Years. It is clear that this case will go through all possible stages of appeal until the losing party loses the final appeal. Apart from the issue of whether Catcher’s protagonist may be protected by copyright separately from the book itself, this case will set an important precedent for the treatment of parody.

If Salinger fails to permanently enjoin dissemination of 60 Years as a result of the court’s finding that it constitutes protected criticism or parody, it will signify a very substantial diminishing of the value of the right to create and use derivative works. It will mean that a sequel to a pre-existing work may not require authorization from the original author, if the defendant suddenly remembers that the sequel was in fact created as an important commentary or parody. This is precisely what Justice Kennedy was warning against in 2 Live Crew. If 60 Years is anything less than a true parody or criticism, the decision in favour of the defendant would signify the emergence of a general “transformative use” exception, incompatible with the exclusive right to control derivative works.

With today’s attempts of the activists of the so-called “fair copyright” movement to use parody as a flagman ship to break the ice of protection that copyright laws afford, parodists seem to be in a win-win situation. If the author of the original work does not sue them, then they are left to parasite from the fame of the original work. If they do get sued, then the activists will make sure that the parodist becomes widely known as a martyr standing up for the rights of creators of transformative works, if not simply famous as a writer27.. If the parodist successfully defends the case, they will be able to sell many additional copies of the parody based on the fame attracted by the lawsuit. Even if the parodist loses the case and the distribution of the parody is enjoined, the newly acquired fame generated by the lawsuit will allow the parodist to sell whatever he or she writes next in their new status of celebrity.

The courts need to come up with a pronounced “Enough!” to the attempts to compromise copyright through labelling (often in the alternative) each case of non-literal copying of a pre-existing work, a parody. The parody exception cannot be claimed as an alternative. This has been understood in France28., where the dual requirement of recognisability and substantial creativity precludes a defendant from using the parody exception as an alternative to the defence of not borrowing from the underlying work. In other words, the defendant cannot say: “I did not copy this work, and if I did, it was a parody”. Parody requires the parodist’s positive intent to borrow from the underlying work to create a new work with a comic effect29.. An infringement does not become a parody simply because the result it funny. Much less when it is not.

60 Years looks like a blatant attempt to test how decidedly the courts would be prepared to turn their backs on authors for the dubious public benefit of having access to the book whose primary value is that it is either a sequel to or a commentary of the famous pre-existing work. If the courts are unable to defend Salinger, an iconic example of an author who had dedicated his life to preventing unauthorized use of his prior works, then we should ask ourselves, why do we still have copyright laws at all and whom they are supposed to protect.

Categories:Intellectual Property:CopyrightIntellectual Property
 Values:PassionFreedomIndividual Rights



April 10, 2012 @ 12:36:00
Why I’m Not Writing About Bill C-11
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I am often asked to share my comments about the amendments to the Canadian Copyright Act that are proposed in the Bill C-11.

In my opinion, they are nothing more than the result of an attempt to “balance” the interests which by definition cannot be balanced, to find a viable compromise between food and poison. Bill C-11 looks very much as if the drafters thought, “Let’s take a little bit from this group of people and give it to that group of people, and in order for it to be able to pass, let’s also take from that second group of people and give something back to the first group of people.”

What the law is and what the law should be are two separate issues. No matter what form the amended Copyright Act will take, I will be able to serve my clients’ best interests.

As to what the law should be, I am convinced that this question cannot be answered without first addressing the foundational question of why we have copyright laws at all. In this sense, William Patry is 100% correct in his new book, “How to Fix Copyright”. I am currently writing a long review of the book to show how wrong Mr. Patry is in his analysis and in the remedies he is offering.

Meanwhile, I decided to phase out my personal website at MINCOV.COM and repost some of my older posts from there that deal with the copyright reform and my vision of the philosophy of copyright.

The first one is about the parody exception to copyright. Unfortunately, Canadian legislators decided to include the parody exception in Bill C-11. I wrote that article before this proposal was made, and so I don’t address it in my article.

Categories:Intellectual Property:Intellectual PropertyCopyright
 Website Updates:Website Updates



April 8, 2012 @ 18:43:31
Sound Trademarks Now Registrable in Canada
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On March 28, 2012, the Canadian Trade-marks Office announced that it is now accepting applications for registration of sound marks. It also published the first advertisement of a Canadian sound mark application for MGM’s roaring lion sound mark.

The Practice Notice states the application for a sound mark should:

    1. state that the application is for the registration of a sound mark;

    2. contain a drawing that graphically represents the sound;

    3. contain a description of the sound; and

    4. contain an electronic recording of the sound.

New applications for sound marks cannot be submitted online, only by way of a paper application. The recordings of the sound marks cannot exceed a 5MB limit and should be submitted on a CD or a DVD.

The usual rules pertaining to functional, clearly descriptive and deceptively misdescriptive trademarks apply to sound marks, including the saving provision for trademarks that have acquired a secondary meaning.

Below is a table of 89 sound trademarks registered by USPTO . Even though sound trademarks are more common in the U.S., it is still difficult to understand how some of these recordings ever managed to be registered as trademarks.

The trademarks are the property of their respective owners. The data is provided by the USPTO. I converted the data into the table below to enhance the learning and listening experience.

Enjoy and don’t forget to leave comments!

TM# TM Owner / Area / Title TM Description
73270308 Beneficial - Insurance -" At Beneficial TOOT TOOT You're Good for More..." The mark consists of the words "At Beneficial You're Good for More" and the sounds "Toot, Toot", all set to music.
73391897 Del's Lemonade & Refreshments - Carryout Food Mobile Truck - Horn The mark comprises a sequence of horn-like musical notes, F, A, sounded at least twice in sequence, the notes F+0 and A+0 being just above middle C.
read more…

Categories:Intellectual Property:Trademarks
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