Eldred v. Reno
Legislative Purpose - Harmonization with European Union Law?
Without regard to sub rosa motivation, Congress expressly stated the purpose of the copyright extension in their discussion of Senate bill 483 the Copyright Term Extension Act of 1996, the predecessor to S.505, which became the Copyright Term Extension Act of 1998.
The purpose of this bill is to ensure adequate copyright protection for American works in foreign nations and the continued economic benefits of a healthy surplus balance of trade in the exploitation of copyrighted works. The bill accomplishes these goals by extending the current copyright for an additional 20 years. Such an extension will provide significant trade benefits by substantially harmonizing U.S. copyright law to that of the European Union while ensuring fair compensation for American creators who deserve to benefit fully from the exploitation of their works. Moreover, by stimulating the creation of new works and providing enhanced economic incentives to preserve existing works, such an extension will enhance the long term volume, vitality, and accessibility of the public domain.
As such, the 1998 Copyright Term Extension Act can be viewed in a similar light to the 1995 effort to harmonize international patent law. This movement led to an international standard of 20 years rather than the former U.S. standard of 17 years. Clearly in the realm of international trade and commerce, Congress has broad discretion. Such broad discretion, however, should not, however, enable Congress to circumvent the Constitution's prescription of a limited copyright monopoly. If Europe had adopted a copyright in perpetuity, harmonization would clearly not be justified under the Constitution's copyright clause. As such, a threshold determination that a copyright term of life of the author plus seventy years satisfies the Constitution's mandate of a limited copyright monopoly designed to promote the useful arts and sciences is still necessary despite the importance of fixing international standards.
Additionally, Congress argued that U.S. passage of the Copyright Term Extension Act was essential to harmonize with an evolving international standard. However, given that the United States is the foremost producer of copyrighted works, how can an international standard even exist in the absence of U.S. participation in that standard? The Berne convention still mandates a minimum international copyright protection of life plus fifty years. As such, it becomes difficult to argue that greater European protection mandates U.S. passage of extended copyright protection as well. Once again, how far does this logic extend? If Europe passes a perpetual copyright tomorrow, should the U.S. follow suit simply to provide a level playing field for large multi-national corporations?
The claim of an attempt to harmonize U.S. and European copyright law is also factually specious. There has been no wholesale effort to harmonize U.S. and European copyright law. European law for example does not recognize the work for hire doctrine and in general takes a natural rights view of copyright at odds with the Constitution's mandate of a limited monopoly designed to promote the useful arts and sciences. As such, the claim of harmonization is simply a way to distract attention form what otherwise can only be viewed as corporate welfare.
Congress also offered several other secondary purposes for the Copyright Term Extension Act including:
Secondary Purposes - Protection of Artist's Heirs, Retroactive Incentives to Create
Even if the consideration of heirs is permissible under the copyright clause of the Constitution, the legislators argument is irrational at best. If a work over 75 years old is not generating significant revenues at the date of copyright expiration, the grant of an option for entitling a creator's heirs to another twenty years of monopoly revenues on an out of print work seems trivial at best. Conversely, if a work has remained commercially viable for seventy five years after its publication the heirs of such an author are unlikely to need any protection. Such a work seems likely to have generated royalties more than large enough to provide a generous annuity to the author's heirs. Consequently, granting a copyright extension for an additional twenty years is little more than a regressive tax on the public domain. The vast majority of America's are unable to gain access to materials at a competitive price or to produce derivative works based on the originally copyrighted material for an additional twenty years to provide additional income to people who are likely to be extraordinarily wealthy already. As such, to argue that the extension of the copyright term is necessary to protect heirs appears contrary to basic economic logic. Additionally, it is unclear whether, any additional revenues would actually flow to heirs. Most successful copyrighted works were likely sold to publishers years ago. As such, the Copyright Term Extension Act appears to be little more than a corporate windfall.
Economics of Copyright Extension
Present Value Estimation
"Only a small percentage of copyright-protected works retain significant economic value 50 years after the author's death, and it is essentially impossible to predict at the time of creation which works will have long term economic survival value. This inherent economic riskiness makes the present value of a work at the time of creation only marginally greater."
See Dennis S. Karjala, "Comment of US Copyright Law Professors on the Copyright Office Term of Protection Study," 12 EIPR 531, 534 (1994). For the sake of argument, however, let's take the case of a copyrighted work that earns a constant stream of profits in for the entire period in question. As such, the value of the copyright on such a work can be analyzed as if it were an annuity. As such, assume that a given work generates 1 million dollars a year for either 75 or 95 years. Furthermore, lets assume the appropriate discount rate for this income stream is 10 percent.
The Net Present Value of the Annuity for 95 Years at 10% = $9,992,137.71
As a result, an additional twenty years generating profits of $1,000,000/year at a discount rate of 10 percent is only worth an additional $6,693.61 to the author at the time of creation in net present value terms. Such a trivial amount is unlikely to alter the author's incentive to create or to significantly benefit the author's heirs in fact. This analysis, however, is not even essential to invalidate the copyright term extension's retroactive application. In the case of retroactive application, it impossible to provide incentives to create works that were already created over seventy-five years ago.
Bargaining under the Background of Law
It seems more likely, however, that both parties bargaining against the background the copyright term of seventy-five years prevailing for works published prior to 1978 have actually received precisely what they bargained for, i.e., 75 years of monopoly profits. When they purchased the rights in question they were well aware that the designs or literature in question would one day enter the public domain. As such, to provide them with an additional twenty years of revenue is simply to provide publishers with a windfall unanticipated at the time they purchased such rights.
The Useful Arts and Sciences
"Creative work is to be encouraged and rewarded but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and other arts. The immediate effect of copyright is to secure a fair return for an author's labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good."
See also H. Rept. 2222, 60th Cong. 2d. sess. 7 (1909) noting, ("Copyrights are given not primarily for the benefit of the author, but primarily for the benefit of the public"). The court also emphasized copyright's public function in Fox Film Corp. v. Doyal 286 U.S. 123, 137 (1932) noting, "the primary purpose of copyright is not to reward the author, but is rather to secure the general benefits derived by the public from the labors of authors." See also Melville B. Nimmer and David Nimmer, "Nimmer on Copyright" 1.03 (A)(1996) (quoting Fox Film Corp. v. Doyal 286 U.S. 123, 127 (1932)) Based on these two cases, as well as the Constitution's mandate that copyright be used to promote the useful arts and sciences it seems at least plausible that a copyright statute which is unquestionably detrimental to the promotion of the useful arts and sciences is per se unconstitutional.
A retroactive extension of copyright cannot create incentives for artistic expression. The works have already been created and in most cases the authors are already dead. Additionally, if the rights to such a work were sold to a publisher such a windfall cannot possibly reward the author or his heirs who have alread bargained away their claims decades ago. Conversely, this 1998 copyright term extension clearly harms academics, libraries, artists, and students who are unable to cheaply access works that would otherwise be in the public domain. Current artists are also unable to utilize copyrighted material to produce derivative works. As such, the Copyright Term Extension Act leads to an unambiguous harm to academic research and artistic expression without providing for a corresponding increase in incentives to create artistic expression in the first place. Such an unjustified alteration of the delicate balance mandated by Article I, Section 8 of the U.S. Constitution is unjustified. As more works are taken out of the public domain the ability to create derivative works inspired by the classics is dramatically reduced. Such a loss of artistic expression is not offset by additional creative enterprise and, as such, cannot possibly be consistent with copyright's goal of promoting the useful arts and sciences.