The Benefits of Globalization Don’t Apply to the Little People

The U.S. Supreme Court is set to rule on a case that has profound implications for the concept of ownership, (See SCOTUS blog here and read up. It’s fascinating) and could conceivably eliminate the last lingering vestiges of the notion that copyright law has any limits.  If the court rules the wrong way on this, copyright ceases to have any pretense of societal good. And why is it that we’re faced with the possibility from SCOTUS? To defend a publishers’ right to segment the world into territories.

In the past, I’ve argued that the idea of territoriality is already outdated and should be done away with. This case illustrates pretty clearly why that’s the case. Given the technological realities we have today, there is simply no easy way to defend this practice in statute that doesn’t have the unintended consequence of severely undermining first sale, fair use and ownership and resale rights for nearly everything we buy. The benefit to society for allowing territoriality to stand is negligible. In fact, it’s the consequences of doing so that are severe and destructive.

First, let’s look at the publisher, John Wiley & Sons. They are textbook publishers who, as many do, routinely use the concept of territoriality to both exploit poorer markets and maintain the ability to overcharge more affluent ones. The key issue in this case is that an individual, Thai national Supap Kirtsaeng, purchased textbooks sold by Wiley at lower prices in Thailand, brought them to the American market and sold them on eBay to help pay for his education at USC, where the exact same textbooks are priced much, much higher. My first response to this was, “good for him!” This guy identified a seam in the sales channels and exploited the price variance for the same product in different markets to make a buck. That’s market-based globalized free enterprise at its best.

But Wiley was having none of it, suing (in my opinion, inexplicably) for copyright infringement. The guy in question didn’t copy anything. He legally purchased said textbooks at full price offered by the publisher, then used his first sale rights to turn around and sell them for whatever the hell he wanted. There’s no copyright infringement here at all. (Note: I’m speaking in practical terms. Yes, I’m aware that there are portions of copyright law dealing with importation of foreign goods, but those parts were written long before globalization and free trade took hold, before the internet was even a thing and back when importation was a little more complicated than a few mouse clicks and a week’s wait for shipping. Those rules have about as much relevance to modern life as the use of grindstones to make bread). But the 2nd District Court disagreed, invalidating his defense through first sale, declaring his actions as infringing and fining him a substantial amount of money. The key problem lies not just in the decision, which I believe is catastrophically wrongheaded, but in the justification used. The court ruled that first sale rights don’t apply to any goods manufactured outside of the U.S.

Apparently, the judges of the 2nd District missed the memo about the new global economy we’re all supposed to be giddy about. They seem to have not noticed American corporations offshoring jobs and manufacturing at economy-gutting levels to save on labor costs and such. They’ve obviously never set foot in a Walmart or any other retail outlet and taken a few minutes to check the “made in” labels or they would have realized that a plurality of goods we buy every day aren’t manufactured in this country. If first sale doesn’t apply, then this court just swiped ownership rights to the majority of our possessions.

To make matters worse, how many foreign manufactured components do you think are present in our homes and cars? If I own a home that has a central heating system installed that was put together from any amount of foreign made components, do I even have the right to sell my home without first buying licenses for every non-U.S. element it contains? What if I want to sell my home complete with appliances, also made from foreign manufactured components? Do I need separate licenses for my refrigerator, washer, dryer, dish washer, etc? What will the costs of acquiring these licenses do to the overall value of my home. If you said “plummet” you hit the jackpot.

I can no longer legally even sell the smartphone I’m currently typing on. And what about the licenses HTC acquired for the plethora of foreign-made components that make up the phone itself? Does those licenses transfer? Is it enough to get resale permission from HTC or do I also have to get permission from every component manufacturer too? The same applies to cars. Can an ok from Toyota allow me to sell my car, or do I also need an okay from the stereo manufacturer, the maker of the chips in the car’s computer, and whoever made the tires, brake pads, oil filter and anything else in the vehicle that wasn’t American made. What does this do the value of your car? Again, “plummet” is the correct answer.

Yet, this value loss is totally on the consumer side. When the resale market gets gutshot in this way, there is no logical reason to expect car makers to do anything except up their prices. Really, all they have to do is refuse permission for resale and the used car market ends instantly. No more competition on that front.

There’s two key problems I see here. One, this kind of ruling creates a massive incentive for businesses to continue and actually speed up offshoring jobs and manufacturing. If first sale doesn’t apply to foreign goods, companies that trade in foreign made goods will control not only the primary market, but any secondary markets would only be allowed to exist on their terms at their discretion. The entire point of first sale was to prevent this very thing.

In a global economy where much if not most of what we buy isn’t made in America, how long would it be before companies still producing goods in the U.S. argue that first sale prevents them from competing and must be done away with here as well? I put the over/under on three hours.

Then there’s the legal illogic of somehow claiming one part of copyright doesn’t apply to foreign goods (first sale) yet other parts will (fair use). Supporters of Wiley have almost all claimed that the above concerns I’ve mentioned are scare tactics because consumers will retain fair use rights to defend their actions. But why should fair use be any more applicable to foreign goods than first sale? This is a flat-out lie by those who want Wiley to win. If the District Court decision on first sale stands, it’ll be roughly a half an hour before someone tries to invalidate fair use for foreign goods as well. And they’ll win because they’re right, logically and legally. If first sale doesn’t apply, then neither does fair use.

Get it yet? Think for a second, how many people in this country just bought, wrapped up and gave away foreign made goods as presents this past Christmas. If this ruling stands, every one of those gifts was an incident of infringement. I’m pretty sure we just rang up a $100 trillion worth of infringement penalities last month. Don’t think businesses will try to exploit this fully? Take a look at how publishers have been extorting exorbitant fees from libraries on ebooks. First sale doesn’t apply to digital goods (I believe strongly that it absolutely should, by the way) and fair use rights for the same have been willfully undermined as a consequence, resulting in absurdly, indefensibly high prices. And these are goods made in this country supposedly subject to the fullness of copyright law. Take away even those limited protections, and I think we can all see where this is heading.

All of these possibilities only exist because the courts are trying to carve a legal protection out of copyright that allows publishers to gouge rich markets while also simultaneously charging more reasonable prices in poorer ones. We could all effectively lose our right to resell virtually anything because a publisher wants the law to protect them from their own pricing strategies.

We’ve all had “the benefits of globalization” crammed down our throats the past few decades, and this case puts the lie to those notions. Corporations will readily tell you how great the global economy is as they ship manufacturing to third world countries with no worker protections, minimum wage laws or safety standards, but here, a regular guy finds a way to profit from globalization, and those same corporations are screaming that hellfire, brimstone and economic ruin will descend upon us all if its allowed to stand. If the District Court decision is held, that will be a clear sign that globalization belongs only to corporations and the wealthy. They get all the benefits and profits, while we get all the sacrifices and consequences.

There are two big societal problems made worse by an upholding of Wiley’s case: offshoring jobs and the cost of higher education. I’ve already mentioned how this decision creates a massive financial incentive for businesses to stop trading in American made goods, making a serious problem exponentially worse. The cost of education is, in part, too high thanks to textbook publishers. Territoriality is one way in which they keep textbook prices in the American market artificially high. This decision would also make that problem significantly worse as well. Textbook makers already undermine resale value by routinely producing new editions with little or no substantive changes specifically to prevent students from selling their books for any tangible return. This decision provides a clear path for them to further erode consumer rights; simply print the books overseas and now students lose all rights to resell (or give away) those books at any price.

The potential damage to the public and the overall economy from upholding the District Court decision outweighs the damage done to publishers by striking down the infringement claim defending territoriality by so many levels that even considering it scares the hell out of me.

What better case can be made that copyright is irretrievably broken than this one? The District Court ruling essentially makes copyright unlimited in scope, with manufacturers retaining not only primary sale rights, but also grabbing total control of any secondary markets as well. Considering that expansion of copyright terms has essentially made copyright length infinite (Life of creator plus 70 years. It is certainly infinite for the creator as my copyright wouldn’t expire until several generations after I’ve been dead and buried. And that’s only presuming it doesn’t get expanded again, which only an outright fool would believe won’t happen when Mickey Mouse next approaches public domain) where exactly are the statutory limits on copyright that were the principle element of the protection in the first place?

If the possible consequences weren’t so severe–as in instantly stealing at least half of the value of the goods we’ve paid for, eliminating secondary resale markets, and extorting copyright monopoly rents with additional licenses on products we’ve already paid for, not to mention possibly gutting fair use which could well have serious deleterious effects on free speech–I’d say maybe a decision this inordinately stupid needs to happen so regular people can see clearly how distorted and unfair copyright law has actually become and demand much needed change. But then, I’m opposed to further destroying what little productive economy we have left to make a point about copyright. Unfortunately, our corporate leaders and government don’t seem to agree.

The only logical choice here is to strike down the copyright infringement defense of territoriality. The alternatives do a hell of a lot more damage. I wish I was more confident that SCOTUS will get it right. We can all dream, can’t we? Unless, of course, your dream includes an infringing appearance by a copyrighted character, in which case that nap’ll cost you $150,000.

Containers

I was just reading this summation of the Nick Carr-Clay Shirky battle royale over whether the book is a valuable cultural artifact or simply a container for content that, in its physical limitations, shaped the forms of that content and could be dying out for good, digital or otherwise. To be honest, I was actually glazing over a bit reading it. It’s fascinating, don’t get me wrong, in a high-minded philosophical way, but I think I’ve intellectually moved past all these discussions of form and transition. Why are we still arguing any of this?

Anyway, one particular comment attributed to Carr temporarily pulled me out of my glazed meanderings:

“In response to an email from Wired magazine founder and author Kevin Kelly on the subject, Carr gives some examples of valuable forms of media that he believes have been lost or diminished: namely, “the oral epic poem, the symphony, the silent film with live musician accompaniment, the dramatic play, the short-form cartoon, the map [and] the LP.” And he argues that the book, the movie and the video game could also fall into this category.”

I think Carr has a fundamental misunderstanding about how, exactly, each of these forms of creative effort reached a point of widespread acceptance and popularity. He’s got something of a cart before the horse kinda argument, seemingly implying that media companies arbitrarily decided one day, possibly for higher profit, that CDs were better than LPs, and stopped making LPs. It was the people buying CDs en mass that made that decision for them.

Nothing, not one thing is stopping anyone from making LPs today. In fact, they’ve become quite the successful boutique business for some artists, Jack White comes to mind. But in doing so, you have to either admit that you’re creating a form with a notably smaller market to sell to or you also have to undertake efforts to build a market to go along with the product. The form isn’t obsolete or diminished in any qualitative sense (other than the strictly cumulative monetary decline from the height of the wax album era. But surely, Carr’s discussing high-minded art here, so simple free market economics can’t be what he’s referring to, can it?). The only problem the LP has is that most of its paying market has moved on to other content forms more convenient to their lives.

It’s not up to me as a writer to decide what the optimum forms of creative expression are, nor is it up to Carr, Shirky or any of thousands of other media industry pundits. Even publishers, movie studios and music companies (who have discovered this truth sooner and far more harshly than the others so far) despite their capital reservoirs and strengths of distribution and marketing, have only a limited, minuscule ability to direct those choices.

In fact, there is no one person who can make this decision. The forms of content that reach any level of social application do so beneath a critical mass of regular people deciding in unison what they’d like to spend their money on. CDs overtook LPs because the buying public wanted it so, because CDs had advantages that fit more cleanly into the conditions of their lives at the time. For that same reason, CDs have been usurped by almost totally ethereal electronic forms. Books, print or digital, will live or die by the same hand and there’s nothing Carr, Shirky or anyone else can do about it.

It seems more and more like the publishing industry is missing a very essential point of its existence: we all live at the whims of the people who buy the product. They seem to be forgetting that we in the creative fields of endeavor have to produce both content and form that large numbers of people value enough to pay for. Not just enough to want to watch, listen to or read, mind you, but actually lay down hard cash for. That decision is, has been, and will forever remain in the hands of our audience. The creative forms that service their needs, and most ably makes the case for that aforementioned exchange of currency, will win out. The ones that don’t will end up tacked on to Carr’s list of lost art forms. 

Frankly, I’ve always believed culture belongs to the people. If large enough numbers want print, there’ll be a market for it. The same for digital. And if a super-majority develops that wants some form of the written word that hasn’t been invented yet, usurping both print and ebooks, that’s as it should be.

Every new form that comes along adds new possibilities for the artist. Every old form pushed aside becomes part of a rich tapestry of history and experience that helps shape the use of new forms. LPs didn’t die, they become a foundation upon which mp3 players were eventually built.

If art is your only intent, the old forms still exist, have at it! But if you’re also trying to pay the bills, you’ve got to go where the money is. And that money is scattered about in the pockets of every person out there who’s looking for something to read. Nothing else really matters.

Follow

Get every new post delivered to your Inbox.

Join 88 other followers

%d bloggers like this: