Ludwig von Mises Institute


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Copyright (©) is the exclusive, legally secured right to reproduce, distribute, and perform a literary, musical, dramatic, or artistic work.

Now commonly subsumed under the broader category of legal regulations known as intellectual-property law, copyright is designed primarily to protect an artist, a publisher, or another owner against specific unauthorized uses of his work (e.g., reproducing the work in any material form, publishing it, performing it in public, filming it, broadcasting it, or making an adaptation of it). A copyright supplies the holder with a limited monopoly over the created material that assures him of both control over its use and a portion of the pecuniary benefits derived from it.[1]

Originally, copyrights were only applicable to books and had to be explicitly announced as copyrighted. Nowadays, copyrights can be used with paintings, music, movies, etc. and are automatically added to any work of art not explicitly said to be public domain by the artist.[citation needed]


Copyright developed out of the same system as royal patent grants, by which certain authors and printers were given the exclusive right to publish books and other materials. The purpose of such grants was not to protect authors’ or publishers’ rights but to raise government revenue and to give the government control over the contents of publication. This system was in effect in late 15th-century Venice as well as in 16th-century England, where the London Stationers’ Company achieved a monopoly on the printing of books and was regulated by the Court of Star Chamber.

The Statute of Anne, passed in England in 1710, was a milestone in the history of copyright law. It recognized that authors should be the primary beneficiaries of copyright law and established the idea that such copyrights should have only limited duration (then set at 28 years), after which works would pass into the public domain. Similar laws were enacted in Denmark (1741), the United States (1790), and France (1793). During the 19th century most other countries established laws that protected the work of native authors.

With the development of technology in communications in the industrial age, there was increasing concern over the protection of authors’ rights outside their native countries. In 1852 France extended the protection of its copyright laws to all authors, regardless of nationality, and thereby began a movement for some international accord. At Bern, Switzerland, in 1886, representatives of 10 countries adopted the Berne Convention (formally known as the International Convention for the Protection of Literary and Artistic Works), which established the Berne Union. The core of the convention was the principle of "national treatment"—the requirement that each signatory country provide to citizens of other signatory countries the same rights it provides to its own citizens. Over the course of the 20th century, membership in the convention gradually grew. In 1988 the United States, long a holdout, finally joined, and by the early 21st century more than 140 countries were party to the convention.[1]

In the US[edit]

In the United States, copyright law is founded on and limited by the Constitution, which authorizes Congress to create a national copyright system to "promote the Progress of Science and useful Arts, by securing for limited Times to Authors
the exclusive Right to their
Writings" (Article I, Section 8). In a major revision of copyright law in 1976, the U.S. Congress specified that copyright subsists in original works of authorship fixed in any tangible medium of expression, and it provided that such works include literary, musical, and dramatic works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; and sound recordings. Under this legislation, copyright extends to computer programs; a separate statute (the Semiconductor Chip Protection Act of 1984) affords protection for mask works—two- or three-dimensional layout-design patterns for creating layers of integrated circuits—fixed in a semiconductor chip product. (Under certain circumstances, computer programs may receive patent protection.)

The 1976 legislation accorded to the owner of a copyright the exclusive rights to reproduce and distribute the work, to prepare derivative works, and to perform and display the work publicly. However, these rights were subject to numerous limitations, the most important of which was the "fair use" doctrine, which permitted the moderate use of copyrighted materials for purposes such as education, news reporting, criticism, parody, and even (in some contexts) home consumption, as long as those activities did not substantially impair the copyright owners’ abilities to exploit "potential markets." Among the other limitations imposed on the rights of copyright owners were certain compulsory licenses, including licenses for retransmissions by cable-television systems and for the public performance of copyrighted musical works in coin-operated players.

The 1976 legislation substantially extended the duration of copyright in the United States. A 1998 statute went even farther. The general term of copyright protection was established as the life of the author plus 70 years. For anonymous works, pseudonymous works, and works made for hire, the term of copyright protection was set at 95 years from first publication or 120 years from the date of creation of the work, whichever was shorter.[1]

Germany without copyright[edit]

Germany experienced a rapid industrial expansion in the 19th century. As the German historian Eckhard Höffner argues, it was due to an absence of copyright law. The massive proliferation of books, and thus knowledge, laid the foundation for the country's industrial might.

German authors during this period wrote ceaselessly. Around 14,000 new publications appeared in a single year in 1843. Measured against population numbers at the time, this reaches nearly today's level. And although novels were published as well, the majority of the works were academic papers.

At the same time, only 1,000 new works appeared annually in England - 10 times fewer than in Germany - and this was not without consequences. Höffner believes it was the chronically weak book market that caused England, the colonial power, to fritter away its head start within the span of a century, while the underdeveloped agrarian state of Germany caught up rapidly, becoming an equally developed industrial nation by 1900.

Copyright law was established early in Great Britain, in 1710. Germany, on the other hand, didn't bother with the concept of copyright for a long time. Prussia, then by far Germany's biggest state, introduced a copyright law in 1837, but Germany's continued division into small states meant that it was hardly possible to enforce the law throughout the empire.

Authors are only motivated to write, runs the conventional belief, if they know their rights will be protected. Yet a historical comparison, at least, reaches a different conclusion. Publishers in England exploited their monopoly shamelessly. New discoveries were generally published in limited editions of at most 750 copies and sold at a price that often exceeded the weekly salary of an educated worker.

London's most prominent publishers made very good money with this system, some driving around the city in gilt carriages. Their customers were the wealthy and the nobility, and their books regarded as pure luxury goods. In the few libraries that did exist, the valuable volumes were chained to the shelves to protect them from potential thieves.

In Germany during the same period, publishers had plagiarizers - who could reprint each new publication and sell it cheaply without fear of punishment - breathing down their necks. Successful publishers were the ones who took a sophisticated approach in reaction to these copycats and devised a form of publication still common today, issuing fancy editions for their wealthy customers and low-priced paperbacks for the masses.

Bestsellers and academic works were introduced to the German public in large numbers and at extremely low prices. "So many thousands of people in the most hidden corners of Germany, who could not have thought of buying books due to the expensive prices, have put together, little by little, a small library of reprints." The prospect of a wide readership motivated scientists in particular to publish the results of their research.

The trade in technical literature was so strong that publishers constantly worried about having a large enough supply, and this situation gave even the less talented scientific authors a good bargaining position in relation to publishers. Many professors supplemented their salaries with substantial additional income from the publication of handbooks and informational brochures.

The German proliferation of knowledge created a curious situation that hardly anyone is likely to have noticed at the time. Sigismund HermbstÀdt, for example, a chemistry and pharmacy professor in Berlin, who has long since disappeared into the oblivion of history, earned more royalties for his "Principles of Leather Tanning" published in 1806 than British author Mary Shelley did for her horror novel "Frankenstein," which is still famous today.

The market for scientific literature didn't collapse even as copyright law gradually became established in Germany in the 1840s. German publishers did, however, react to the new situation in a restrictive way reminiscent of their British colleagues, cranking up prices and doing away with the low-price market.[2]

Other countries[edit]

The copyright systems of most other countries are similar to that of the United States, in part because of the harmonizing effect of the Berne Convention and in part because all member countries of the World Trade Organization are now obliged to establish minimum levels of copyright protection. Nevertheless, important differences between the national regimes continue to exist. In the United States, for example, copyrights in works created by employees are commonly awarded to the employers under the "work-for-hire" doctrine, whereas in many other countries employees keep the copyrights in their creations. In most countries, government documents enjoy no copyright protection, but in Britain the opposite rule obtains. Countries vary considerably in their treatment of sound recordings. Many governments are less willing than the United States to excuse putatively infringing activities as "fair uses" and more willing than the United States to protect artists’ rights to integrity (i.e., to prevent the destruction or mutilation of their creations) and rights of attribution (i.e., to be given credit for their creations). Finally, despite the pressure exerted by the WTO agreements, countries continue to differ markedly in their willingness and ability to enforce their copyright laws. In general, enforcement is most vigorous in western Europe and North America and weakest in Africa, Latin America, and Asia. The softness of copyright law in the latter regions is the result of a number of factors, including limitations in the countries’ judicial systems, continued doubts about whether effective enforcement serves the countries’ national interests, and (particularly in China and some other Asian countries) cultural traditions that celebrate faithful imitation and de-emphasize the ideal of artistic genius that provides much of the moral force of modern copyright law.[1]

Future of copyright[edit]

In a 2002 study from a group of Microsoft researchers investigated what they named the darknet - a collection of networks and technologies used to share digital content. They conclude that there seem to be no technical impediments to file sharing technologies growing in convenience, aggregate bandwidth and efficiency. The "darknet" will continue to exist and provide low cost, highquality service to a large group of consumers. This means that in many markets, the darknet will be a competitor to legal commerce.[3]

Several articles note that in particular young people have a low understanding and acceptance for the concept of copyright, thinking that as long as content is attributed, it is okay to produce cover videos, mashup albums, fan-made music videos, fanfic stories etc. Most of these works are probably illegal, though largely untested in court. With copyright likened to Prohibition, this behavior is commonplace.[4][5]

Copyright in the software industry[edit]

There are several significant developments in the software industry that raise questions about how important copyright protection now is to enabling developers to recoup their R&D investments in software:

  • The Internet has become a ubiquitous phenomenon, and there has been a substantial rise in the development of network computing and software that take advantage of the Internet as a platform.
  • Software is now commonly embedded in hardware of all kinds (cars, toasters, cell phones, just to name a few). As in the early days of bundled software, the costs of developing these programs can be recouped through revenues generated by the sale of the hardware in which they are embedded.
  • Seventy percent of the total investment in the development of software in the United States in the early twenty-first century is either custom-developed software or software that firms develop for their internal uses. Custom-developed software does not really need copyright protection to induce its creation. Nor do firms really need copyright protection for software they develop for their own internal uses, such as quality assurance software.
  • A substantial rise in the use and economic significance of open-source software. Free and open-source software has become a mainstream phenomenon in the twenty-first century and is pervasive today. (In the US, from the software used by organizations, open-source is expected to rise to thirty percent by mid-2012.[6]) Software companies that provide open-source software to their customers generally recoup their investments through the sale of services (e.g., to install, maintain, or customize the software) or complementary assets (e.g., proprietary add-on programs that perform specialized functions).
  • Migration of some commercially significant software from a prepackaged mass-market item to a service available "in the cloud." In the twenty-first century, many software developers are making programs available as services (e.g., "give us your data, we will process it, and we will let you know what the answers are"). Even traditional software product companies, such as Microsoft, are making some of their software available in the cloud as a service. While cloud computing is still in the early stages, some commentators predict that it will become a major sector of the software industry in the near future. If no one but the developer of such software ever has access to a machine-executable form of the program, copyright protection is arguably unnecessary.
  • Many large, successful software firms provide both software and services to large enterprises. IBM is a good example. Although IBM still makes and sells computer hardware and software, it now makes the bulk of its income from selling services to enterprise customers. In 2010, IBM’s revenues totaled $99.87 billion, of which 57% percent came from the sale of services. This is more than twice its revenues from software sales, and more than three times what it made from the sale of computer systems. Because of the close and ongoing relationship firms like IBM have with the enterprise customers for whom they provide services, and because of the complex contractual arrangements that bind service providers and their customers, copyright plays little role in the recoupment of R&D expenses for these hybrid systems.
  • Rise of commercially significant software platforms that recoup investments in programming by means other than the sale of copies of software in the marketplace. For example, Google and Facebook make substantial revenues from advertising tailored to users who come to their sites to make use of services available there. Paypal and eBay generate revenues through taking a cut on transactions enabled by their platforms. Many software platforms—YouTube being one prominent example—attract those who develop and consume user-generated content, the overwhelming majority of which is both produced and disseminated via these platforms without the incentives provided by copyright protection.
  • A recent survey of software entrepreneurs shows that these entrepreneurs do not perceive copyright to be very important to their firms’ ability to attain competitive advantage in the marketplace. Far more important to this key objective is first-mover advantage. A first mover has the chance to gain an important advantage in the market over other players because network effects may set in before second comers are able to develop a competing product that will lure customers away from the first mover’s orbit. Complementary assets are not quite as important to software entrepreneurs as first-mover advantage, but they too are perceived as more important to success in the market than any form of intellectual property protection.[7]


  1. ↑ Frank Thadeusz. "No Copyright Law: The Real Reason for Germany's Industrial Expansion?", Der Spiegel, 08/18/2010. Article refers to Eckhard Höffner's book Geschichte und Wesen des Urheberrechts (German; "History and Nature of Copyright"), see a summary of some points by the author: "Copyright and structure of authors’ earnings" (pdf). Referenced 2011-10-24.
  2. ↑ Peter Biddle, Paul England, Marcus Peinado, and Bryan Willman. "The Darknet and the Future of Content Distribution" (pdf, abstract), Microsoft Corporation, ACM Workshop on Digital Rights Management (18 November 2002). Referenced 2011-10-13.
  3. ↑ Andy Baio. "No Copyright Intended", posted Dec 9, 2011. Referenced 2011-12-13.
  4. ↑ David Pogue. "The Generational Divide in Copyright Morality", The New York Times, December 20, 2007. Referenced 2011-12-13.
  5. ↑ Alison Diana. "Open Source Approaching 30% Of Enterprise Software", InformationWeek, February 09, 2011. Referenced 2011-10-10.
  6. ↑ Pamela Samuelson. "The Uneasy Case for Software Copyrights Revisited" (pdf), The George Washington Law Review, September 2011. Referenced 2011-10-10.


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