One of the great "truisms" of the Electronic Frontier Foundation, Public Knowledge and other anticopyright groups is that copyright is somehow this incredible drag on the publication and availability of works. And the remedy for this is to push works into the public domain as quickly as possible. But yet, like so many other "truisims" pushed forward by these folks, once you dig into the reality of the situation, the assertion is simply not true at all.
The proof lies in a recently released study by Professor Stan J. Liebowitz of the University of Texas School of Management.[ref]Have We Misunderstood Copyright's Consequences?[/ref] Titled "Have We Misunderstood Copyrights Consequences," it finds that books under copyright protection outsell books of the same vintage which are in the public domain by a ratio of almost 4 to 1.[ref]Id. at 14[/ref]
To come to this conclusion, the study examined the actual sales of books in four successive time periods of four years each (2004, 2008, 2012, 2016). The books tracked were the top 10 bestsellers in two equal 27 year time periods: 1895-1922 and 1923-1950.[ref]Id. at 8[/ref] The pre-1923 titles were all in the public domain. The post-1923 titles were all protected by copyright. This resulted in 108 public domain titles to compare against 110 copyrighted titles.[ref]Id. at 15[/ref]
The difference maker here is that the study used actual sales numbers as reported by BookScan, which tracks copies sold by both online and offline sellers.[ref]Id. at 9[/ref] Previous studies had used "Books in Print" (BiP) to support their findings. That is a fatal flaw, as the study points out, due to "on demand" publishers who may offer a book for sale, but do not actually print one until it is ordered.
"This is not a merely hypothetical concern: 480 out of the 774 BiP listed editions… failed to sell any copies in 2004 and 311 of these failed to sell any units in the full 13 years of my data."[ref]Id. at 8[/ref]
Once the numbers are crunched using actual sales over potential sales, which as the study shows may never happen at all, the results are striking:
"[T]he average copyrighted title sells almost 4 times as many copies as the average public domain title, and the median [copyrighted] title sells more than 23 times as many units as the median [public domain] title."[ref]Id.at 14[/ref]
This is true even though the copyrighted titles usually carry a higher retail price.
"It is natural to suspect that publishers of the most successful copyrighted vintage titles are taking advantage of their position as sole sellers of popular copyrighted titles to charge these higher prices. But if that were all that was going on, then [copyrighted] titles should not outsell successful [public domain] titles the way that they do…[t]hus an explanation more consistent with the facts…would be that some or all of the revenues from the higher prices for leading [copyrighted] titles, in addition to paying royalties [N.B. which public domain publishers do not pay] would seem likely go to producer activities that help sell these better selling editions."[ref]Id.at 28[/ref]
But wouldn't more recent titles always sell better than older ones? This theory really doesn't work since the majority of any book sales occur within two years of first publication. Why this would remain true decades later remains hard to explain.[ref]Id. at 18[/ref] It also assumes that an author in 1922 would have any incentive to delay publication until after 1923, since the author would have no inkling that copyrights would be extended any further. Yet, the study looks at this question by reducing the spread by chopping off an equal number of years from either end of the spectrum, thus comparing books written in a timeline more closely together.
"The sales advantage for [copyrighted] titles is statistically significant for all ranges more than 9 years on each side of the cutoff but also significant …when there are only 5 to six years on each side of the cutoff and is always at least of borderline significance when there are more than 2 year on each side of the cutoff."[ref]Id. at 21[/ref]
So, there you have it. The public domain does make a book potentially more widely available than before. But this does not mean that these books actually sell many copies, or as the study points out, sometimes none at all. Why should a publisher put the time and effort into printing and promoting a book that could have seven different competitors in a matter of days. Where is the great public benefit?
Yet, it is the copyrighted book which sells better, despite being more expensive. Perhaps this is due to the fact that the publisher has greater incentive to make the book available, perhaps in more attractive editions, and to promote the book, since they are protected by copyright. This is the post-creation investment that continued copyright protection encourages.
"The public domain's disadvantage in this case would simply be another example of the tragedy of the commons, where the lack of property rights for public domain works fails to provide efficient incentives for sales-promoting investment, leading to inefficiency."[ref]Id. at 3[/ref]
"The large positive impact of copyright on sales raises the possibility that the impact of copyright on the consumption of already created works might be positive. If this were the case, however, then the traditional welfare analysis of copyright would be stood on its head. The incentive/access relationship would no longer be a tradeoff since copyright would be socially beneficial on both sides of the ‘balance'…"[ref]Id. at 31[/ref]
"But that is not all. The criticisms of retroactive copyright extensions…would also be incorrect. Similarly the supposed benefit to society from allowing already created works to fall into the public domain, which has been taken for granted for so many, would also be incorrect."[ref]Id.[/ref]
And there you have it.
August 29, 2023 saw the release of a rather surprising decision regarding the Copyright Acts' requirement that books published in the U.S. provide the Library of Congress with two copies of the work.[ref]17 USC 407[/ref] Surprising in the fact that the deposit requirement has a long history in the Copyright Act and the requirement had not been challenged despite being on the books for some 40 years. Also surprising in the fact that the Court of Appeals for the District Columbia found the deposit requirement as enforced by the Copyright Office to be an unconstitutional taking under the 5th Amendment to the Constitution. The District Court had reached the opposite conclusion.
The ruling has generated some confusion in the intellectual property realm in that there are two different deposit requirements contained in two different sections of the Copyright Act. This ruling only applies to Section 407, where the deposit requirements apply to works published in the U.S. but not registered for copyright protection.
The facts of the case, Valancourt Books, LLC v. Garland[ref]2023 WL 5536195 United States Court of Appeals, District of Columbia Circuit, 2023[/ref] are uncomplicated and not in dispute.
"Valancourt is an independent press that publishes rare and out-of-print fiction… Valancourt prints copies of its books ‘on-demand,' i.e., in response to a specific order or request. Although Valancourt has never deposited its works under Section 407—nor registered them under Section 408, a separate provision of copyright law governing copyright registration,…Valancourt places copyright notices in its books.
In June 2018, Valancourt received a letter from the Copyright Office setting forth a demand under Section 407 for ‘one complete copy' of 341 books published by Valancourt ‘for the use or disposition of the Library of Congress.' (citation omitted) True to the statute's terms, the Office explained that failure to comply would make Valancourt liable for a fine of up to $250 per work and the total retail price of the copies demanded, as well as an additional fine of $2,500 for a willful and repeated failure to comply. The Office clarified that Valancourt's obligation to deposit works under Section 407 ‘exists regardless of whether copyright registration [pursuant to Section 408] is sought.'
Valancourt responded to the Copyright Office's demand the next day. It estimated that compliance with the demand would cost over $2,500, and advised that, as a ‘very small publisher,' it could not afford that sum. (citation omitted) Valancourt also observed that some of its books contained material in the public domain and that it had already deposited some works through the Cataloging-in-Publication program, a separate program run by the Library of Congress. Valancourt requested that the Copyright Office withdraw its demand and offered to sell copies of any of the listed titles to the government at cost with no markup.
The Copyright Office responded in August 2018, maintaining its position that Valancourt was obligated to deposit books pursuant to Section 407…In August 2018, Valancourt brought this action against the Attorney General and the Register of Copyrights. Valancourt sought a declaration that the application of Section 407 is unconstitutional under the First and Fifth Amendments, as well as an injunction against the provision's enforcement."[ref]Id. at 6-8 (Original pagination)[/ref]
In reversing the lower Court ruling, the Court honed in on the fact that Valancourt would receive no benefit from the Copyright Office, other than avoiding the fine, in depositing the requested copies. The Copyright Office was merely demanding that Valancourt give up its personal property for the benefit of the Government. Indeed, Section 407 states that "[n]either the deposit requirements of the subsection nor the acquisition provisions of subsection (e) are conditions of copyright protection." Since copyright protection is automatic upon fixation,[ref]17 USC 102[/ref] and registration is not required for copyright protection,[ref]17 USC 408[/ref] no corresponding benefit, or compensation flows from the Copyright Office to Valancourt. This is the essence of an unconstitutional taking.
"In urging us to view mandatory deposit as part of a voluntary exchange, the government cites the many benefits that copyright confers upon authors. But authors obtain those benefits upon fixation, and mandatory deposit grants no additional benefits. Tellingly, the government cannot point to a single incremental benefit that copyright owners receive for depositing works pursuant to Section 407. That provision then cannot represent a voluntary exchange for a benefit—there is no benefit at all."[ref]2023 WL 5536195 at 16[/ref]
This is unlike section 408, which also requires the deposit of copies. Section 408 confers several benefits for timely registration, including the ability to file suit for infringement and the ability to request statutory damages and attorneys fees.
The deposit requirement has a long history dating back to when the Copyright Act required registration as a condition of copyright protection. The idea then, as it remains today, is that the Library of Congress should have a copy of every book ever published in the U.S. Such is the reason underlying Section 407, requiring under penalty of a fine, the deposit of physical copies of a book published in the U.S., even though registration is not made.
The Copyright Office tried to further evade the "takings" nature of 407 by arguing that Valancourt could have "abandoned" its claim to copyright protection, and thus avoid the fine. The Court is unconvinced:
"The statute itself gives no indication of any abandonment option or how to effectuate it. Nothing in Section 407's terms would suggest to a copyright owner that she can avoid its requirements by informing the Copyright Office that she would prefer to abandon her copyright rather than deposit copies of copyrighted works. Rather, the statute states that a copyright owner ‘shall' make a deposit and prescribes fines for failing to comply with a deposit demand from the Copyright Office. (citation omitted) The statute then makes clear that mandatory deposit is not a ‘condition[ ] of copyright protection.' Id. § 407(a). To deduce that one could avoid mandatory deposit by disavowing copyright protection would require a copyright owner to infer essentially the opposite of what the statute states."[ref]Id. at 22[/ref]
The Court further notes that to register a notice of abandonment would cost $125. Hard to see how this might benefit Valancourt. And in simpler terms, to require abandonment, or paying the fine is a "formality" to obtain copyright protection, which is prohibited by Article 5 of the Berne Convention.
So, the deposit requirement of 407 is an unconstitutional taking under the 5th Amendment. The deposit requirement of 408, as it confers additional benefits to the registrant, and being wholly permissive, is not.
Left unresolved is the issue of electronic copies. After the commencement of the litigation, the Copyright Office offered to accept electronic copies of the works at issue.
"After Valancourt filed its complaint challenging the Copyright Office's demand for physical copies of copyrighted works, the Office offered to accept electronic copies in lieu of physical copies. That offer did not moot Valancourt's challenge to the demand for physical copies. A party's voluntary cessation of challenged conduct does not moot the challenge unless it is ‘absolutely clear' that the challenged conduct will not recur after the litigation… As for the Office's offer to accept electronic copies as an alternative, Valancourt advised the district court that the court ‘need not address' whether electronic copies constitute property subject to the Takings Clause because, regardless of the Office's offer, Valancourt would still need to deposit physical copies of certain books for which it cannot produce electronic copies… Because neither party appears to ask us to reach the question, and because the presentation of the case does not require us to do so, we will not proceed to evaluate the constitutionality of Section 407 as enforced through electronic copies."[ref]Id. at 10-11[/ref]
Even though unresolved, the question of if 407 can be satisfied through electronic copies remains live, as the reasoning applied to 408 does not seems dispositive. The Copyright Office did not change its policy, it only offered it as a means to terminate the litigation. Even an electronic copy would cost something to produce, it remains to be seen if this cost would be substantial enough to run afoul of the 5th Amendment, especially where there is no corresponding benefit to the copyright owner.
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