Why Reducing Current Copyright Terms Would be Unwise… And Unconstitutional

Stephen Carlisle February 26, 2016

Amongst the many bombs hurled against the current copyright system is the length of the current copyright terms: life plus 70 years after death for a human author, or 95 years for a corporate author.

The idea behind these criticisms is that if copyrights were to be pushed into the public domain much earlier, that there would be this great, vast public benefit. As this author states:

“Shortening the copyright term would more directly restore the public domain’s role in “promoting the progress.” Economists modeling the copyright term have estimated that its optimal length is closer to the original term of 14 years in our first copyright law—many decades shorter than the current term. After such “limited times,” economists tell us, continued protection offers increasingly negligible incentives to most authors, while unnecessarily keeping works from the public. In addition to recalibrating the copyright term, reintroducing formalities that require claimants to furnish basic copyright information would greatly reduce the transaction costs associated with licensing and use, particularly if accompanied by centralized copyright registries and better-maintained records.” ¹

I have written about this topic before. Here. ² Here. ³ And here. ⁴ The major points I have made are as follows:

• The push for longer copyright terms comes from Europe, not the United States.
• If we were to reduce our copyright terms, this would have the effect of reducing the protection of them world-wide due to the Berne Treaty’s “Rule of the Shorter Term,” making them less competitive with European works. ⁵
• How long the copyright lasts depends on when you die. Kurt Cobain’s copyright protection is going to last barely 70 years, and in some cases less, for his songs.
• Works entering the public domain largely benefits the publishers, not the public.

On that final bullet point, last week I went to an actual “bricks and mortar” bookstore, (Yes! They still exist!) looking for some travel books to plan my family’s upcoming summer vacation. On my way to the travel section, I passed a table containing various “classic” books, such as “The Hunchback of Notre Dame” and “Crime and Punishment,” all of which are in the public domain. So what is the great savings passed onto the public by these works being in the public domain? I picked up a copy of “Romeo and Juliet.” The store wanted $7.98. And this is for a play which has been in the public domain for well over 400 years. Where’s the savings? Beats me.

Plus, one of the advantages of the “life plus” system is that all works by an author go into the public domain at the same time, ⁶ which eliminates a lot of guess work regarding copyright terms complained about by copyright critics. This also eliminates the resulting shenanigans by some publishers because of that confusion, such as those behind the Sherlock Holmes series of stories. ⁷

As a signatory to the Berne Convention, the U.S. is committed to a copyright term of no less than life of the author plus 50 years. So, to reduce the length of copyright protection to 14 years, as suggested by the quote above, would immediately violate our treaty obligations with about 170 other nations. It is not a wise strategy to start reneging on your promises with your trade partners, because they will no longer trust you in the future. Even further, we cannot walk back our treaty commitments and re-instate formalities as a condition of copyright protection (again as suggested above), as this would violate the Berne treaty as well. ⁸

Further, there is the Trans-Pacific Partnership, which has been negotiated between the U.S., Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. ⁹ In Article Q.Q.G.6 of the TPP, copyright terms are harmonized at life of the author plus 70 if created by natural persons, and 70 years from first publication if created by a corporation or business. ¹⁰ Now, as of the date of this blog post, the TPP has been agreed upon, but not yet ratified by the Senate. If it does get approved, this will lock the U.S. in to life plus 70 for the foreseeable future. Unless, again, we want to start breaking our promises with our trade partners, which is not a very wise strategy.

So, let’s come up with a hypothetical legislation to reduce all current copyright terms, but stay Berne Treaty compliant. This will require that the TPP not be approved by the Senate (and there is already opposition from various forces). Further, the proposed legislation will reduce all copyrights now in existence back to their 1976 act levels, namely, the life of the author plus 50 years but no further, so as to be compliant with Berne, ¹¹ and corporate works would be limited to 75 years.

Would this legislation work? No. Because it would be unconstitutional.

Now, I am not a constitutional lawyer by any stretch of the imagination. However, I do know a good one. David Bertoni of the Maine firm of Brann and Issacsson, ¹² has litigated many constitutional law issues, including numerous cases involving the “takings” clause. Many years ago, we studied law together at George Washington University Law School and partnered to win a national law competition in intellectual property. For his assistance with this post, he has my sincere and humble thanks. Any flaws in the legal theories that follow are mine and not his. It’s going to get thick and a little deep into the Constitution and various ruling of the Supreme Court of the United States, so hold on.

The constitutionality problem comes from what is known as the “takings” clause of the 5^th Amendment to the Constitution. It States:

“No person shall be…deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” ¹³

So there are three elements we need to look at:

• Private property
• Taken for public use
• Without just compensation

For a while, the thinking was that the phrase “private property” only applied to real property. But in the landmark case of James v. Campbell, ¹⁴ the court decided that “property” included patents.

“That the government of the United States when it grants letters-patent for a new invention or discovery in the arts, confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation, any more than it can appropriate or use without compensation land which has been patented to a private purchaser, we have no doubt.” ¹⁵

This was later extended to the right to mine minerals. In Pennsylvania Coal Co. v. Mahon ¹⁶ the SCOTUS “expanded the protection of the Takings Clause, holding that compensation was also required for a “regulatory taking”—a restriction on the use of property that went “too far.” ¹⁷

“Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.” ¹⁸

Next, it has to be for a “public use.” This was expanded to include takings by the government in which there was not unfettered public access.

“Promoting economic development is a traditional and long-accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.” ¹⁹

So, back to our hypothetical reduction of copyright terms and how the 5^th amendment prohibition against uncompensated “takings” would make copyright term reduction unconstitutional.

Private property is a given. If a patent is a property right subject to the “takings” clause, then so is a copyright.

That it would be for a “public use” also seems very clear. The hypothetical would greatly reduce the length of copyright terms, and in some cases immediately inject a work into the public domain. Cancelling a copyright and giving the work over to the public, for free, is the very definition of a public use. Even when the copyright term is just reduced and not cancelled the argument goes that “[a]fter such ‘limited times,’ economists tell us, continued protection offers increasingly negligible incentives to most authors, while unnecessarily keeping works from the public,” ²⁰ meaning the earlier a work goes into the public domain, the better it is for the public. Again, clearly a “public use.”

Lastly, there is the consideration of “without compensation.” Though the SCOTUS has taken up “takings” cases three times since 2002, they unfortunately leave us with the proposition that every “taking” must be evaluated on a case by case basis, in much the same way that the SCOTUS has ruled on fair use cases. The question then becomes, did the property owner have a reasonable expectation of the continuation of the right, or was it understood that it could be wiped out by government regulation?

“[T]he Court clarified that the test for how far was “too far” required an “ad hoc” factual inquiry. That inquiry required considering factors such as the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action.” ²¹

There certainly is an argument to be made that since Congress has the sole power to pass legislation regarding copyrights, ²² that Congress has the ability to adjust copyright terms as they see fit, and the copyright owner should be owed no compensation. The question then becomes, does this trump the “reasonable investment-backed expectations” of a copyright owner?

Copyrights are bought and sold all the time. The value of that copyright is measured by:

• What its historical income is on an annual basis
• Whether that level of income is foreseen to continue
• The remaining length of time the copyright will remain under copyright protection.

A company who has purchased a copyright based upon the expectation of a “life plus 70” or a “95 years” copyright length, will have the value of their investments severely reduced if they wake up to discover that 20 years has been lopped off the amount of time they could reasonably expect to receive income on that copyright.

And consider the “Bowie Bonds.” ²³ These were “an asset-backed security which uses the current and future revenue from albums recorded by musician David Bowie as collateral.” ²⁴ They ran into a slight problem:

“The value of the bonds began to decline as online music and file sharing grew in popularity, decreasing album sales. This resulted in a downgrade by Moody’s in 2004.” ²⁵

In fact, they were downgraded to the last level above “junk.” ²⁶

Imagine the problem if Congress were to materially reduce the length of copyright in existence when such a security was issued. It could have the effect of rendering the bonds worthless, if there was no way that the truncated revenue stream would be sufficient to pay off the debt. Seems like a taking to me.

Further consider that Congress has never reduced copyright terms, they have always lengthened them. In light of such actions, would it ever be a “reasonable investment-backed expectation” that copyright terms might be reduced, and thus suffering a foreseeable financial loss?

Factor into your analysis the result that such retroactive legislation would instantly inject many properties in to the public domain, most notably, Mickey Mouse. While I have suggested that Mickey may be further protected by trademark law, ²⁷ many iconic properties will not have the same argument. Here’s a short list of films that would go instantly into the public domain should such legislation pass:

• All Quiet On the Western Front
• 42^nd Street
• A Farewell to Arms
• The Thin Man
• Captain Blood
• David Copperfield
• Mutiny On the Bounty
• Lost Horizon
• A Star is Born
• Citizen Kane
• The Maltese Falcon
• The Wizard of Oz
• Gone With the Wind

And of course:

• Snow White and the Seven Dwarfs
• Pinocchio

Now, there certainly is an argument that these films have “had their day” and should be content to ride off into the sunset. But that is not the test here. The test is, did the owner of the copyrights in these films have some “reasonable investment-backed expectations” for their copyrighted properties? And were these expectations violated by the unilateral reduction in their length of copyright? Because now, as the direct result of congressional action, their investment in these copyrighted properties is now worthless, or very close to that amount, since any, and I mean anyone in this age of the internet, will be able to make and distribute copies of these iconic films.

It seems clear that hypothetical for the reduction of current copyright terms is, in fact, a government “taking” within the terms of the 5^th Amendment and would be unconstitutional.

Now, the government could pass the legislation and keep it constitutional, if it offered those affected “fair compensation,” for the economic harm caused. So how much do you think is “reasonable compensation” to have your government pay out to put The Wizard of Oz into the public domain? Before you answer, bear in mind that all of the Wizard of Oz stories are already in the public domain, ²⁸ and anyone can make a movie about them. How much are you willing to have your government pay to put Gone With the Wind into the public domain? How much for Mickey? And this, of course, is just the tip of the iceberg. Every copyright owner would have to be compensated, since even if they retained a valid copyright, the amount of time in which they could exploit their copyrights would have been greatly reduced. Like all the songs of Aerosmith. Or The Eagles. How much “reasonable compensation” should be paid to them?

No, the only way in which copyright terms could be reduced, constitutionally, would be to do so prospectively. This would take the form of “as of January 1, 20**, (pick your date in the future) all works created and fixed after that date shall have a copyright term equal to—(fill in the blank).

And as previously reported on this blog, since the Sonny Bono Copyright Term Extension Act was passed out of both the House and Senate on either a voice vote or, in the case of the Senate, “unanimous consent,” I would not be holding my breath for that to happen.

So, any proposal to greatly reduce the length of existing copyrights is a non-starter, dead in the water, dud, lemon, loser, turkey…pick your adjective.