Bunk about “Fair Use Industries” from the CCIA: What do Derek Jeter, Tom Adams and Ari Emanuel have in common?

March 3, 2012

Now that the WIPO and OAS report on the economic contributions of copyright has been released, the Computer & Communications Industry Association (of which Google is a dominant member) is recirculating one of those greenhouse studies that comes with more than the usual ration of gas: “Fair Use in the U.S. Economy: Economic Contribution of Industries Relying on Fair Use.”  This is not to say that “fair use” (a defense to copyright infringement in the US) does not have its place in the infringers toolbox, but if the recent “Hargreaves Review” debacle is any guide, destroying copyright in order to save it is going to find barren ground–particularly when the “evidence” is founded on, well, tripe.

The CCIA’s piece of work was heralded by Rep. Polis (and we know a lot more about whose side he is on now than we did at the time the report was released) in a special press conference in which he emphasized the jobs created by the vast “fair use industries.”

Meaning Google mostly (which is why it’s often called the “Google Review“).  It didn’t wash in the UK with either the press or the Commons, even though the Joe Camel of Search actually hired the wife of one of the Prime Minister’s top aides to sell it to Hargreaves and stacked the Hargreaves Review task force with people like James Boyle of Creative Commons who loathes copyright.  Remember–Google gave millions to Creative Commons.

The way that the CCIA gets to this large number of jobs represented by the “fair use industries” is simply by counting all of the industries that most of its members are—to be kind—borrowing from.  Their methodology is based on the analysis of a leading anti-copyright academic, not the economist whose name is on the report.

If you think that the movie, television, recording, book and newspaper businesses think that they are in the “fair use” business, think again.  But even if you did believe that these companies receive some small benefit from the fair use defense, wouldn’t you think that the benefit to the U.S. economy from the fair use defense should be limited to the economic benefit from fair use?

And wouldn’t that require the companies themselves participating in the study to accurately allocate their revenues from works that had nothing to do with fair use?  Not to mention the fact that the fair use defense is largely a U.S. concept, so a further adjustment—downward–should be made for earnings outside of the U.S.?

And is it not just a little disingenuous to say that Viacom benefits the Joe Camel of Search based on Google’s fair use defense against Viacom? Or that any book publisher benefits Google on fair use grounds given Google’s spectacular loss in the Google Books case?

We will first take a look at the double counting fallacy imbedded in the flawed CCIA study and then bizarre notion that the management of CCIA’s largely non-union members whose employees are forced to give up their IP rights as a condition of their employment seeks to challenge the judgment of the legitimate union members.

The CCIA Study

According to The Hill, “[t]he study, which was commissioned by the Computer & Communications Industry Association, found that industries that depend on “fair use” exceptions to copyright laws make up one-sixth of the U.S. economy and employ one in eight American workers.”

Does that sound like bunk stuff to you?  It does to me.  What exactly is a “fair use industry” and does that not sound at least intuitively counter to the purpose of the fair use defense to copyright infringement?  (See 17 USC Sec. 107(4): “the effect of the use upon the potential market for or value of the copyrighted work”.)

The Hill also reports that CCIA asserts that “[f]air use industries weathered the recession better than many other sectors of the economy, according to the report.”  I wonder what other explanation there might be for that assertion aside from the one they want you to draw—which is that fair use leads to profit.   Actually–Google’s definition of fair use leads to one of the biggest income transfers of all time (see Ellen Seidler’s description of that income transfer at Popup Pirates).  I don’t mean the drug ads sold by the Joe Camel of Search, I mean the cyberlocker ads.

I ran into one of the senior CCIA folks at a public policy conference a few years ago and was struck by how little he actually knew about how the music and movie businesses actually work, particularly from a rights perspective.  For example, he had no understanding at all of the independent label and artist part of our business, and did not understand that the RIAA did not speak for songwriters and that the RIAA could not license for its members.  Very basic misunderstandings.  So it is not surprising that they got it wrong on this study—and since it’s a study they commissioned to advance their agenda, you have to assume that they got it wrong intentionally.

So why did they release this “study”?  The Hill reports that “[Rep.] Polis compared some stringent proposals to combat copyright infringement to fighting piracy at sea by shutting down seaports [that would be the rogue sites legislation Polis lead the opposition on]…. Ed Black, president and CEO of the CCIA, said in statement, ‘Too often we hear about the cost of piracy without also considering the cost to legitimate sectors of the U.S. economy of poorly targeted copyright enforcement measures like the pending Protect IP Act.’”

Ah, yes.  Of course.  This is all about CCIA member Google’s opposition to the Protect IP Act—which will have an extraordinary negative effect on the earnings of the Joe Camel of Search–Google could have really used that $500,000,000 they paid for a drugs fine to bolster their fourth quarter 2011 earnings.  (Because, to quote Rep. Debbie Wasserman-Schultz, Google is engaged in “aiding and abetting theft.”)

Or alternatively, the ever-popular theory of the “positive effects of crime” which the GAO has taken such a fancy to.

So what they want you to believe is that the members of the AFL-CIO, the Teamsters, the American Federation of Musicians, the American Federation of Television and Radio Artists, the Directors Guild of America, the International Alliance of Theatrical and Stage Employees, the Screen Actors Guild, Nashville Songwriters Association International and the Songwriters Guild of America do not speak for American workers.  Because they are…you know…union thugs according to Net Coalition and the EFF.

No, no.  You know who speaks for American workers?  Yep, The Man 2.0.  The CCIA speaks for American workers.  And this authoritative voice is because of their largely non-union member companies whose workers are required to give up any ownership interest in their work product as a condition of their employment in the “fair use” industry?

The Double Counting Double Cross

So who is in this “fair use industry”?  The Hill tells us that “[i]ndustries that rely on fair use exceptions include the news media and search engines such as Google.”

Ah yes.   Google, of course.  We expected to see Joe Camel get mentioned.  But who else?

In order to know that, one has to drill down a bit into the tables and appendices of the study.  The study breaks down the “fair use industries” into core and non-core businesses and each are listed in the tables.

I knew there was skullduggery afoot when I saw this sentence: “Portions of this report were prepared with the assistance of Professor Peter Jaszi of American University Washington College of Law.” (Buried in the fine print on page 2.)

Now who is Professor Jaszi?  He is, among other things, the Faculty Director of the Glushko-Samuelson Intellectual Property Clinic at American University.  (The mothership Glushko-Samuelson clinic at Berkeley just received $200,000 from Google in the controversial class action settlement of the Google Buzz litigation.   See “Google Hands Millions to ‘Independent’ Watchdogs“.)

Professor Jaszi’s unit at the Glushko-Samuelson clinic was reportedly unusually influential in the drafting of the 2006 orphan works report by the U.S. Copyright Office (and in implementing legislation that was itself heavily influenced by Google).  That report led to several years of failed legislative attempts to impose an orphan works regime that was almost unilaterally opposed by artists, particularly visual artists.  And just one other implication of Google involvement: during the seleciton of cy pres beneficiaries in the Google Buzz case, the Glushko-Sameulson group was referred to by EPIC in court filings as one of the proposed cy pres recipients who were either consultants or lobbyists for Google.  To which none of the recipients objected when given the chance to do so.

This passage from the APA website about the (now) failed 2007 orphan works legislation sums it up:

“Copyright, [Jaszi] wrote, is rooted in outdated concepts of ‘possessive individualism.’ The ‘romantic myth of authorship,’ he argued, is a vestige of the 18th and 19th centuries ‘in which entrepreneurial publishers…[and] entrepreneurial writers…played out their shared conviction that the “individual [is] essentially the proprietor of his own person or capacities — and thus of whatever can be made of them.’

Professor Jaszi has criticized the US for joining the international Berne Copyright Convention, calling it ‘an international agreement grounded in thoroughly Romantic assumptions about creativity.’ And he noted with disapproval:

‘The first Act of this preeminent ‘authors’ rights’ treaty in 1886 represented the culmination of a process which got underway in the mid-nineteenth-century with Victor Hugo’s vigorous campaign for the rights of European writers and artists. Other famous ‘authors’ rallied to the cause: Gerhard Joseph suggests that the manic energy with which Charles Dickens championed international copyright stemmed from the novelist’s private insecurities about his own ‘originality.’”*” (Emphasis mine)

So naturally, Professor Jaszi would be on the short list to work on the CCIA study: “Data for the key economic measures listed below—revenue, value added, payroll and employment—are segregated into core and non-core industries according to the structure developed by Professor Peter Jaszi, as described above and detailed in Appendix I.” (Study, at p. 19)

Naturally, all of the economists and business experts lack the special insights of an anti-copyright campaigner when it comes to providing the econometric basis for the study’s conclusions.

So let’s look at these “core” and “non-core” industries in Appendix I, which has a handy list of industry sectors and a cross-reference to the section of the Copyright Act—the U.S. Copyright Act—that qualifies them as a member of the “fair use industry.”

The first few listings are mostly companies that either make things that copy or that make the things that go into the things that copy.  Then we get to the first of the odd inclusions as a “core” sector of the “fair use industries”: Newspaper Publishers.  The Copyright Act code sections they rely on?  “102(a) (noncopyrightability of facts); 102(b) (idea/expression dichotomy); 107 (fair
use: criticism, comment, news reporting); 105 (no copyright in U.S. government works).”

I find this reference to newspapers peculiar.  Aside from the fact that many newspapers have sued to keep Google’s paws off of their copyrights, the noncopyrightability of facts and disclaimed copyright in U.S. government works has nothing to do with fair use.  Remember, fair use is a defense to copyright infringement, so if there’s no copyright, there’s no copyright infringement, so no defense to copyright infringement, so no fair use.  So why is that category even there?

Reliance on the idea/expression dichotomy is also not about fair use, it’s about whether an idea is subject to copyright protection (usually not until fixed in a tangible medium of expression).  So why is that in there at all?

So that’s just weird.  But it gets weirder still.

CCIA now includes in the mighty “fair use industries” all software publishers—be sure to let Tom Adams at Rosetta Stone know about that one.

And then we have the motion picture and video industries, the sound recording industries, bookstores, cable television networks (like Comedy Central maybe?), radio and television broadcasting, live event promoters, agents and managers.

Be sure to let Ari Emanuel know that he’s in a fair use industry.

Note: Songwriters and music publishers are not included at all.  Like I said, these guys have a fundamental lack of understanding about the industry they are trying to screw over.

My personal favorite is “independent artists, writers and performers” who are “independent (i.e., freelance) individuals primarily engaged in performing in artistic productions, in creating artistic and cultural works or productions,  or in providing technical expertise necessary for these productions. This industry also includes athletes and other celebrities exclusively engaged in  endorsing products and making speeches or public appearances for which they receive a fee.”

Derek Jeter—you’re in a fair use industry, brother.  Be sure to alert the MLB licensing folks.

So as you can see, CCIA is including in its “fair use industries” list the industries that its members cannibalize for supposedly fair use purposes.

What that means is that if you start with industries that should not be included at all and add to those industries Google and  similar companies that steal from us, you should not be surprised to learn that the “fair use industries” will always look like a bigger group than they really are.

And then you can get someone to stand up and talk about how important jobs are and that the Protect IP Act will kill jobs not protect jobs.

And how the non-union management of CCIA companies can tell everyone how the members of AFL-CIO, the Teamsters, the American Federation of Musicians, the American Federation of Television and Radio Artists, the Directors Guild of America, the International Alliance of Theatrical and Stage Employees, the Screen Actors Guild, Nashville Songwriters Association International and the Songwriters Guild of America–you know, union thugs–do not speak for American workers.

It’s all just bunk–but here’s the fun part.  You know you’re winning when the other side starts lying.  Now if the press would just do a little fact checking….

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