It has been argued that the Law of Copyright is just a means of making the major publishers wealthy at the expense of those who actually create the works (the authors). The limit in the USA and in Australia has recently been extended to 75 years followin
...al; assigning rights means someone else becomes the copyright owner. Clearly copyright can be dealt with in the same way as other forms of personal property. Duration of copyright in works In early 2004, the governments of Australia and the United States concluded a free trade agreement (the AUSFTA). Chapter 17 of the agreement deals with intellectual property, and contains a number of provisions relating to copyright. There are also three exchanges of letters between the governments of Australia and the United States which clarify certain intellectual property obligations. One of the requirements of the AUSFTA was that both countries set minimum periods of copyright protection that are longer than the rules previously in place in Australia. Generally, the rules prior to 1 January 2005 were that copyright generally lasted until 50 years from the end of the year the creator died, or for some material, until 50 years from the end of the year the material was first published. This period has now been extended, in most cases, to 70 years from the end of the year of the creator’s death or first publication (see Table 1). Once the term of copyright protection ends, the material will fall into the public domain, where it will become freely available for public use. (Source: Australian Copyright Council 2005, Duration of copyright, Information Sheets, p. 4) Benefits and Costs of Copyright Some people believe that the law of copyright is nothing more than a means of making the major publishers wealthy at the expense of those who actually create the works (the authors). The worry is that applying the AUSFTA scrutiny to copyright law jeopardises the entire concept of copyright – which by its nature restricts the public’s right to expression by giving owners a limited period of control over their works. The economic argument for copyright law is that it provides incentives for innovation. Copyright owners have the power to exclude potential consumers from “consuming” copyright material. This exclusionary power is important in permitting those who produce copyright material to earn rewards in the market. This increases incentives for innovation, with broader social benefits of fostering copyright-related industries and increasing the range of goods and services traded in the market. Nonetheless, most of the criticisms of copyright law are qualifications of or direct attacks on this basic argument. Analysis of the arguments All rights have costs (Holmes & Sunstein 1999), and there are two clear costs to copyright. First there are transaction costs entailed in creating and enforcing property rights which make exclusion possible for innovators. Second, exclusion undermines the “public good” character of the information that is subject to copyright protection. Unlike physical resources, information is non-rival in character. If one user “consumes” an information product, this does not prevant others from also doing so. So, for instance, large numbers of virtually perfect copies of a book, or compact disc, or computer disc can be made with the additional costs of each extra unit being the physical costs of manufacture, which may be as little as a few cents (Ellis 1999). Similarly, with access to the Internet, the costs of reproducing and disseminating software and other material that can be downloaded is close to zero. If a copyright owner does prevent some users from having access to copyright material, there is a loss in social value created. This loss is a cost of copyright law: a necessary consequence of allowing the creator or producer of information to earn a return. The desirability of copyright law is therefore intimately tied to the question of whether the benefits – promoting innovative activity through monetary rewards – outweigh the costs – transaction costs and the possibility of inefficient diffusion of the material produced. For most economists the efficiency of providing incentives so that initial innovation may occur overrides any consideration of residual diffusion costs (and the transaction costs of a copyright system are seen as generally cost-effective). But others have disagreed, at least for some copyright material, or expressed an uneasy neutrality on the issue. The Copyright Law Review Committee is particularly cautious in this regard. In a recent paper on copyright policy it raised the question of whether the public interest is best served by production inducements or by consumption inducements, only to leave this important issue unanswered. Ideally, the question of the costs versus the benefits of copyright – and by implication of copyright law – should be addressed and resolved. Three comments can be made here. First, what is often forgotten when considering the trade-off between the benefits of exclusion in promoting innovation and the detriment that may be suffered to diffusion is that the loss in social value that may arise when copyright owners attempt to earn a profit represents a cost also for them. This simplistic exclusionary view comes from the notion that a copyright owner would charge the same price to all users. This need not be the case. An efficient pricing model is rather one that would permit copyright owners to charge different prices corresponding to the different values that different users or classes of users apparently place on the use (Shapiro & Varian 1998). Low value as well as high value users can gain access to the information product when under a single price model the high value users would have been prepared to pay more and the low value users would be excluded. While no pricing model can capture all the social benefits associated with the use of copyright material (and the risk is that in seeking to do so some valuable uses may actually be precluded), it is feasible to construct a model which can distinguish between high and low value uses and price accordingly. Second, those who stress that copyright imposes costs to diffusion often exaggerate the market power vested in a copyright owner. In most cases this can be quite limited. A copyright owner may in practice have no more market power than a restaurant located on a street. There are often substitute products available that limit a copyright owner’s ability to raise prices and exclude use. Consequently, copyright owners may at best seek to cover the risk-adjusted costs associated with producing copyright material. But in the long term they are unlikely to earn more than “normal” economic profits. Thus, as the limited number of competition cases involving copyright indicates, there does not appear to be a significant problem of copyright ownership per se giving rise to more than transitory market power. In particular cases where this may occur, competition law provides a vehicle for targeting abuses. The broadly framed provisions on restrictive dealing and misuse of market power in the Trade Practices Act 1974 (Cth) enables the Australian Competition and Consumer Commission, the Competition Tribunal and courts to actively address anti-competitive behaviour by copyright owners, including efforts to keep competitors at bay or to use existing market power to leverage into new markets. Third, copyright law itself provides a vehicle for adressing the costs of copyright: promoting diffusion as well as exclusion and establishing relatively clear and simple standards and limits that, from a transaction cost perspective, maintain a low level of friction in actual cases. For instance, that copyright does not extend to ideas avoids transaction costs of identifying and maintaining exclusive rights over ideas and diffusion costs for information that may be exceptionally valuable to users (both in terms of the potential for derivative innovation and the possibility of uses that may be difficult to value in economic terms). That infringement is defined in terms of reproduction, or copying, distinguishes and exempts productive uses. Even if this comes at the expense of exclusion for a copyright owner, diffusion here has a particular value in promoting derivative innovation and ensuring the user-innovator’s investment costs can be recovered. That independent development is not precluded increases the prospects for diffusion of the information (now coming from more than one source) and facilitates competition in the long term, with obvious benefits for consumers. Raising and Re-raising the Limit The argument for intellectual property as a prospect right reappeared in dramatic form in the justifications offered for the AUSFTA, which added 20 more years to the already long copyright term. The federal Parliament obviously could not justify retroactive extension on the ground that it would encourage dead people to produce more works. Instead, the federal Parliament, the copyright industries, and even some prominent academics argued that extended intellectual property rights were nece...