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RyanSongFirstPaper 6 - 01 Apr 2010 - Main.RyanSong
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It is strongly recommended that you include your outline in the body of your essay by using the outline as section titles. The headings below are there to remind you how section and subsection titles are formatted. | | | | |
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< | The Orphan Work Problem | >
> | The Orphan Work Problem | | | One particular category of books covered under the Settlement, known as orphan works, presents a unique legal challenge. The orphan books are essentially “abandoned book” which are still in-copyright, but it is impossible or too difficult to reach the copyright holders to secure a license. Many of the books are rotting on the shelves of libraries because people do not want to risk potential copyright infringement litigations. The 1976 Copyright Act exacerbated the problem of orphan works because it permitted automatic attachment of copyright without registration and longer duration for the copyrights once attached.
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< | A workable solution to resolve the orphan work problem should maximize the usefulness of the orphan works, and at the same time promote creativity and innovation. What reduces efficiency in the case of orphan works is the transaction cost: the total cost of locating the copyright holders and bargaining for an exchange of the right.
The current copyright law adopts a “property rule”. A user must obtain permission first before using the copyrighted material. An alternative to the property rule is the “liability rule” which allows the public to use the material without fear of infringing anyone’s right; then the copyright holders can be compensated later when they assert their rights. The property rule is inferior to the liability rule because it is prohibitively expensive and difficult, if not impossible, to find the copyright holders of orphan works. For the law to incentivize innovation and creativity, we should allow the public to use the orphan works and encourage the copyright holders to show themselves. Once they can obtain some benefits from their works, they will be encouraged to invest more time and efforts in writing. The liability rule also reduces transaction cost in searching the copyright holders because it encourages the copyright holders to show up and claim their rights. The issue with the liability rule is the potential for exploitation and infringement of copyrighted materials.
Potential solutions of resolving the orphan work problem can come from three parties: the court, the congress, or the private sector. Relying on the court to design a solution will be too slow because it can only deal with the issue on a case-by-case basis. The Congress has already failed due to the pressure of lobbyists. The private sector is the only option left. The author associations and the publishing industry are intimately familiar with the problem and they have the financial incentive to utilize orphan works. | >
> | Property Rule v. Liability Rule | | | | |
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> | A workable solution to resolve the orphan work problem should both maximize the usefulness of the orphan works and promote creativity and innovation. The current copyright law adopts a property rule approach: a user must obtain permission first before using the copyrighted material. The purpose of the rule is to protect the copyright holders from potential exploitation. However, when the transaction cost of locating the copyright holders and bargaining for an exchange of the right is prohibitively high, it also prevents the copyright of orphan works from moving to the person that value them the most. Essentially this rule produces zero net benefit to society because neither the copyright holders nor the users are getting what they want. An alternative to the property rule is the “liability rule” which allows people to use the material without fear of infringing anyone’s right; then the court will decide the right amount of compensation. The liability rule reduces the transaction cost of negotiating for a license and it can still protect copyright holders from exploitation. The Settlement follows the liability rule and it stipulates that, for out-of-print books, Google can adopt an “opt-out” approach, which means it can digitalize orphan works with impunity and profit from it unless the copyright holder opts out. The Registry will use some of these profits to actively seek out copyright holders of orphan works and create a database to store their contact information. Google will be the first to partner with the Registry. Any third party who wishes to work with the Registry must obtain the permission from the copyright holders, which is practically impossible for orphan works. | | |
Google Book Settlement and Orphan Works Monopoly | |
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< | Google book settlement is a major movement by the private sector to take the issue into its own hands. The Registry will be administered by a representation from both of the publishers and the authors. It will actively seek out copyright holders of orphan works and create a database to store their contact information. Google will be the first one to partner with the Registry. Any third party who wishes to work with the Registry must obtain the permission from the copyright holders. The Settlement stipulates that for out-of-print books, Google can adopt an “opt-out” approach, which means it can digitalize orphan works and profit from it unless the copyright holder opts out. This allows Google to avoid the transaction cost of finding and negotiating with individual copyright holder, and use the orphan works with impunity. Although the Registry can reach agreements with other third parties, but the requirement to obtain permission from the copyright holders, which is virtually impossible for orphan works, is simply a pretext for barring competitors from using any orphan work. The revenue model proposed by the Settlement also gives Google tremendous leverage in fixing prices for its institutional and private subscriptions because there are no other competitors. | >
> | There is no denying that digitally archiving the orphan works serves the important public interest of preserving creative materials and also eliminating the geographical limitation to access, but the opt-out arrangement and anti-competition exclusionary provision essentially create a Google monopoly in the on-line orphan work market. The liability rule rests on the assumptions that copyright holders will assert their claims and the court will be able to award just compensation. Neither assumption is met here. Orphan work copyright holders are unlikely to know that someone used their work. The revenue model proposed by the Settlement affords Google tremendous leverage in fixing prices for its institutional and private subscriptions because there are no other competitors. If approved, Google and the Registry will successfully usurp the judicial function of determining the appropriate amount of “just compensation.” Liability rule lifts some of the obstacles of negotiating for a copyright license, but it does not eliminate copyright protection all together. | | | | |
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< | It should be up to the private sector to resolve the orphan work problem using the liability rules. However, the Settlement authorizes Google unbounded power to create a monopoly of digitalized orphan works. The court should order the parties to amend the Settlement until we have a more competition friendly solution. | >
> | Conclusion
Orphan works present the unique challenge we face here because it is impractically to ask the user and the copyright holder to bargain in an efficient way. The idea of digital archiving orphan works is a great method to preserve creative materials, and the liability rule is the right approach when the transaction cost of bargaining is too high. However, the Settlement has abandoned the spirit of the liability rule and gives Google unbounded power to monopolize the orphan work online market. Therefore the court should order the Settlement to be amended. If Google wants to profit from digitally archiving books, it must bear the corporate responsibility to surrender all its profits from orphan works to the Registry or another independent agency and this money should be dedicated for the sole purpose of locating copyright holders and compensating them for their work. Google will likely attempt to undermine the effect of such amendment with techniques such as modifying the definition of orphan work, reducing the overall amount of orphan works it archives, and etc. The court must ensure the amended Settlement will provide clear guidelines to prevent such evasive strategies. | | | |
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| Revision 6 | r6 - 01 Apr 2010 - 04:27:00 - RyanSong |
| Revision 5 | r5 - 28 Mar 2010 - 03:57:45 - RyanSong |
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