There are many shades of gray in the
area of intellectual property in this
digital age. Google versus the book publishing industry. Apple iTunes versus
copy protection for songs. The list goes on.
“There is a tremendous amount of conflict. Filesharing, movies, book publishers,
YouTube — there is much disarray,” says
Stan Liebowitz, Ph.D., Ashbel Smith
Professor of Economics and founding
director of The University of Texas at
Dallas School of Management’s Center for
the Analysis of Property Rights and
Innovation. “Staying abreast of news,
changes and developments regarding intellectual property laws in other parts of the
world where you conduct business will be
crucial to future success.”
Smart Business recently asked
Liebowitz for his take on some of today’s
pressing issues in this arena.
Discuss the concept of trade-off as it applies
to intellectual property.
There is an economic trade-off that occurs
when we try to induce innovation by limiting competition with the intellectual property owner while the protection is in place.
The logic is that people who ‘create’ are providing a service for the economy. The fear is
that there would be too little incentive for
creating if we didn’t provide such protection. Under the U.S. Constitution, protection
is provided for a limited time in order to
encourage creativity and innovation. The
academic literature is largely in sync with
the Constitution in claiming that we don’t
need infinite protection for intellectual
property, although this is based more on
guesswork than careful analysis. In the U.S.
the copyright for individual works is the lifetime of the author plus 70 years — it is 95
years for works of corporate authorship.
There is much dispute over this length of
time. A group of economists submitted a
brief before the Supreme Court arguing
these terms are too long, but the court
rejected the group’s arguments. I wrote a
paper suggesting that these economists did
not do a careful economic analysis.
Are protections as strong in other countries
as they are in the U.S.?
In the U.S., we have strong enforcement
on copyright and patent issues. Most other
highly industrialized countries have similar
laws and enforcement. This is not the case
in many less-developed countries, however. As a producer of goods, when you
decide to sell in another country, you need
to be familiar with the laws — as well as
the reality on the ground, which may be
very different than the law. In some developing Asian countries, for example, there
are strong copyright laws, but they are not
enforced.
Provide an example of a current battle. How
is it significant to corporate America?
Viacom is suing YouTube [Google] for
approximately $1 billion over copyright
infringement because YouTube’s users are
posting tens of thousands of clips from
Viacom’s copyrighted television programs.
YouTube argues that it will remove individual clips when specifically asked to.
Viacom argues that YouTube should
remove them automatically without requiring Viacom to find each case of infringement. The question becomes, “Who should
be responsible for finding the infringing
work?” The economic point of view is that
it is efficient to have the party that can find
the infringing works at least cost bear the
responsibility for doing so. This would
probably be YouTube, particularly since
there are thousands of other copyright
owners who would need to monitor
YouTube at a great potential cost of
duplicative effort. But legal cases are based
on law, not economics.
When has someone violated copyright?
There is no simple way to know for sure.
There is a defense of ‘fair use,’ which is fairly vague. In general, the ‘more you take and
the more money you make,’ the less likely
your use is ‘fair use.’ If you have doubts,
check with a copyright lawyer. If you know
what you’re doing is wrong and you are
caught, there may be a very steep price to
pay. A few years back there was a company that was only purchasing one copy of a
very expensive weekly newsletter and then
copying it for other employees. When the
corporate librarian told management it
was violating copyright law, she was
ignored. Eventually someone at the firm
notified the copyright holder [for a large
posted reward]. Because the firm knew
what it was doing was wrong, it was potentially liable for very large statutory damages far in excess of the cost of the
newsletter, and it ended up settling out of
court for a very steep price.
STAN LIEBOWITZ, Ph.D., is the Ashbel Smith Professor of
Economics and director of The University of Texas at Dallas
School of Management’s Center for the Analysis of Property
Rights and Innovation. Reach him at (972) 883-2807 or
[email protected].