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Good ideas are worth repeating. In Washington it is a necessity to repeat good ideas so that they are not drowned out by the great abundance of bad ideas, to give them a firm grounding even when the topic is intangible. To that end, Madery Bridge joined a host of other organizations signing a letter to Congress to share an outline of the foundations of strong support for intellectual property rights.
Starting with the very founding of America, intellectual property rights have been of central importance. As written in Article 1, Section 8 of the U.S. Constitution: “To promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Why discuss intellectual property in the founding documents of the United States? The Founding Fathers fundamentally believed both in property and in protecting the ownership right in a creator’s works. Just as a property right in real property might inspire a person to purchase a home, to live in it peacefully, to determine how it is used and to improve the property, similarly providing a right in a creator’s works encourages such works to be created, reinvented, and deployed at the creator’s discretion.
A fundamental requirement for innovation to flourish is to guarantee the creator or inventor a property interest in their new works, ownership and protection of the intellectual property rights. That interest not only encourages risk taking, but in turn results in benefits to the economy. No better way exists to encourage creation and see it made available for the public good in one fashion or another. This is to say that the public good, and individual rights, including those in intellectual property, coincide. And that public good is driving the U.S. economy.
The U.S. is increasingly moving to intellectual asset based economy, a knowledge economy. That is, an economy where knowledge and innovation is used to create intangible, and also tangible, value. As noted in the letter, “…IP-intensive industries added $6.6 trillion to the value of GDP in 2014, equal to 38.2 percent of total GDP. In a knowledge-based global economy, America’s ability to remain a world leader in creativity and innovation depends on strong protection of IP.”
Also as written, “The most recent report on IP-related jobs in the U.S., by the Department of Commerce and the Patent and Trademark Office, found that in 2014, direct employment in the most IP intensive industries accounted for 27.9 million jobs. Indirect activities associated with those industries provided an additional 17.1 million jobs, for a total of 45 million jobs, or 30 percent of all jobs in the economy.”
Copyright alone forms a sizeable portion of the U.S. economy, including 5.5 million workers who work in copyright industries, $1.2 trillion to the nation’s GDP, and foreign sales of nearly $180 billion. All in all, core copyright industries are seven percent of the economy.
Such innovation is the key to a growing economy, including the online economy. For a variety of reasons then, these rights must respected everywhere, including on the Internet. Creators, inventors, and knowledge based workers will continue to create value in our economy as risk taking and invention is championed by our society, elected officials and regulators. In turn, our economy will flourish bringing great jobs and better careers.
In Missouri, legislators are moving to enhance laws already on the books discouraging muni broadband. Currently the law says that no municipality may offer competitive broadband service unless certain conditions are met, such as, “A majority of voters in the jurisdiction approve a measure granting the local government permission to move forward with a plan” or “Other service added together, including wired or mobile, reach fewer than 50% of the addresses in the jurisdiction” or “A business or government is making a request for gigabit access that all existing providers are ‘unwilling or unable’ to provide.”
In Virginia, legislation is on its way to the governor’s desk to add transparency requirements for municipal broadband, to give taxpayers the visibility into transactions, agreements and government expenditures related to government broadband services that they deserve. Government-funded broadband authorities should not be shielded from the public’s view. If for any reason government enters a marketplace to directly compete with the private sector then there must be strict safeguards to protect taxpayers and the health of the private marketplace.
Why are such protections necessary? Because of the long line of big political promises that only led to taxpayer’s money being drained away for nothing.
Appropriately, city and local governments try to find ways to improve the municipality for its citizens. Inappropriately, some of these municipalities around the country have tried, and ultimately failed, to either set up their own communications networks or to partner with private companies to get into the business of broadband. The reasons for the failures are numerous, but in all cases taxpayer money was put at risk often without approval of taxpayers and often wasted. The largest failure just might be the damage caused to a free market when government enters it to openly compete with private industry, and exposing the taxpayers to risks they never desired without any chance of reward. Ignoring the dismal track record there are municipalities again this year looking to throw good money after bad.
Often a municipality seeks to own the facilities, such as the fiber or cables in the ground, but sometimes they go further and even create a retail service. While this is too much for government to be doing, insinuating itself into the marketplace, this is the easy part. Harder is the constant demand of maintenance and upgrade of the facilities to deliver the type of experience and service that consumers demand. The cost of such vigilance is huge, assuming there are taxpayers who want the government’s service.
To stack the deck in favor of the government offering, the typical municipal system does not even pretend to reach those with no broadband coverage. Why? Because it is expensive to reach remote locations with few people, and government just cream skims the most likely customers. So, most municipal systems build where there is already a density of potential customers, typically overbuilding, providing services where service is already provided, and merely duplicating what is available in the private sector. This is typically the best case example for a municipal “business plan” – using government authority and taxpayer cash to attempt to compete against the private sector. Taxpayers money is put at risk as there is no guarantee of customers at any price that will actually pay back the huge investment, all while service typically degrades. In the long term taxpayers are forced to shoulder increased taxes or live with lesser quality broadband.
That said, there may very well be some instances where a municipality might provide a system, such as if they truly are attempting to provide service to unserved areas, an area where there is no business case to be made. In those cases the government should follow good government guidelines such as being transparent with their citizens and proving a chance for citizens to vote on this expansion of government power. Independent audits should be required of the municipal system as part of the means to heighten transparency of taxpayer funded functions. Real transparent pricing, not simply as provided through a Freedom of Information Act request, should be the norm. Back room self-dealing must be eliminated with muni broadband services required to asses and collect the same fees and taxes that a private sector provider would have to collect. Such protections are necessary since there is no effective market signal with a government run entity a few checks in the normal course of government outside of these suggestions.
Yet somehow such good government best practices requirements have been deemed “controversial,” but not with voters, only to a small cadre of activists and those with self-interest that want government involved competing with the private sector. Some even call such taxpayer protections “protectionist” as in anti-market, turning the notion of a free market on its head. Such protections are in fact pro-market and protect the taxpayers.
And after all, it should be the citizen’s protection that is of concern, not whether a local government can in an unfettered way compete with the technology private sector. Protecting citizens is one responsibility of government, a responsibility certainly to be balanced against guaranteed freedoms. But that is not just a responsibility to protect them physically. Government must also not expose their citizens to financial risk. Good governments know this, others are just looking to provide goodies to pad their chance at re-election.
Last week U.S. Representatives Tom Marino, Judy Chu and Barbara Comstock introduced the CODE Act. The Act would finally make the U.S. Copyright office an independent part of the legislative branch, with the related functions and legal duties being part of the Office instead of remaining part of the Library of Congress, in which the Copyright Office now sits. At least as important, the Act directs the Director to modernize copyright registration part of modernizing the office in general.
This follows another similar proposal that was recently released by the House Judiciary Chairman Bob Goodlatte and Ranking Member John Conyers. Across the Capitol, Senate Judiciary Chairman Chuck Grassley and former Ranking Member Patrick Leahy have released statements in support of modernizing the Copyright Office.
Article I of the Constitution places Congress in charge of copyright policy. Before being functionally separated out in 1896, the Copyright Office was administered by the Librarian of the Library of Congress. However, the Copyright Office has continued to be housed within the Library of Congress, the location a historical artifact. The Library and the Office do not have the same mission and can even sometimes have conflicting goals, making the Office something of a second class citizen in the current structure. Yet, copyright forms a sizeable portion of the U.S. economy, including 5.5 million workers who work in copyright industries, $1.2 trillion to the nation’s GDP, and foreign sales of nearly $180 billion. All in all, core copyright industries are seven percent of the economy.
And the Copyright office itself plays a crucial role by administering the registration and recording systems, in addition to advising Congress. But the role has been neglected by a lack of interest in keeping the Office in step with the times. Creators should be able to register their works with ease, especially today when the world is mobile and run on apps, and yet it is not currently available. The public should be able to find copyright information and analyze it, making it easier to legally license copyright protected works. These functions are not currently available. With separation and independent operation the Office will be able to modernize, again sending a clear signal that copyright is an important part of the economic and online ecosystems.
The copyright office is, by law, Congress’s independent expert advisor on all copyright issues so it is helpful if the Office is free of other concerns and can focus on its core mission, including direct communications with Congress. As importantly, the Office needs to be updated technologically. The Copyright Office is part of the Internet ecosystem, and that ecosystem suffers when the Office lags on modernization.
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