Before the United States Department of Commerce, Patent ...

1 Before the United States Department of commerce , Patent and trademark office COMMENTS OF THE CONSUMER FEDERATION OF AMERICA COPYRIGHT POLICY, CREATIVITY AND INNOVATION IN THE DIGITAL ECONOMY Mark Cooper Director of Research November 13, 2013 THE CONSUMER FEDERATION OF AMERICA The Consumer Federation of America (CFA) is an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

2 CFA was one of the first consumer groups to examine the impact of the Internet on consumers, concluding in a January 1990 paper that it would be a very consumer-friendly and citizen friendly Since then, CFA has participated in virtually every major federal regulatory, legislative and judicial proceeding in the that would impact the ability of the Internet and the digital revolution to promote the consumer Interest, including, of most direct relevance to this undertaking, amicus briefs in the Groskter and Aereo cases, and Tunney comments in the Microsoft and Apple cases.

3 It has also expressed its view in numerous academic 1 Expanding the Information Age for the 1990s: A Pragmatic Consumer Analysis, January 11, 1990. 2 From the Public Switched Telephone Network to the Public Digital Communications Network: Interconnection, Interoperability, Universal Service & Innovation at the Edge, Interconnection Policy for the Internet Age, The Digital Broadband Migration: The Future of Internet-Enabled Innovation, Silicon Flatirons, February 10-11, 2013; Why Growing Up is Hard to Do: Institutional Challenges for Internet Governance in the Quarter Life Crisis of the of the Digital Revolution, Journal on Telecommunications and High Technology Law, 2013.

4 11(1); Cooper, Mark N., 2011, Structured Viral Communications: The Political Economy and Social Organization of Digital Disintermediation, Journal on High Telecommunications and High Technology Law, 9:1, 2011; The Central Role of Wireless in the 21st Century Communications Ecology: Adapting Spectrum and Universal Service Policy to the New Reality, Telecommunications Policy Research Conference, September 2011; Round #1 in the Digital Intellectual Property Wars: Economic Fundamentals, Not Piracy, Explain How Consumers and Artists Won in the Music Sector, Telecommunications Policy Research Conference, September 2008.

5 ; Governing the Spectrum Commons, September 2006. Telecommunications Policy Research Conference, October 2006; Accessing the Knowledge Commons in the Digital Information Age, Consumer Policy Review, May/June 2006; From Wifi to Wikis and Open Source: The Political Economy of Collaborative Production in the Digital Information Age, Journal on Telecommunications and High Technology Law, 5:1, 2006; The Economics of Collaborative Production in the Spectrum Commons, IEEE Symposium on New Frontiers in Dynamic Spectrum Access Networks, November 2005; Independent Noncommercial Television: Technological, Economic and Social Bases of A New Model of Video Production, Telecommunications Policy Research Conference, October 2005; Hope And Hype Vs.

6 Reality: The Role Of The Commercial Internet In Democratic Discourse And Prospects For Institutional Change, Telecommunication Policy Research Conference, September 21, 2003; Inequality In The Digital Society: Why The Digital Divide Deserves All The Attention It Gets, Cardozo Arts and Entertainment Law Journal, 2002, Open Access To The Broadband Internet: Technical And Economic Discrimination In Closed, Proprietary Networks, University of Colorado Law Review, Vol. 69, Fall 2000; Antitrust As Consumer Protection In The New Economy: Lessons From The Microsoft Case, Hastings Law Journal, 52: CFA applauds the Department of commerce for undertaking a review of copyright policy and providing this opportunity to comment on the fruits of its labor.

7 In response, CFA has prepared a detailed analysis of the performance of the emerging digital music ecology. The study, entitled Digital Disintermediation and Copyright in the 21st Century: Lessons from the Transformation of the Music Sector, is attached to these comments. Digital disintermediation affected the music sector first and most profoundly of all the areas of the creation of cultural content. The reasons for its leading role and the lessons that must be learned from it are explored in depth in the attached paper. In these comments, we briefly outline the policy conclusions we reach.

8 THE FRAMEWORK FOR ANALYZING COPYRIGHT POLICY In order to offer sound advice for policy, it is vitally important to recognize the framework of copyright policy in the United States as well as the performance of the sector. Two recent major analyses provide exactly the right context. The of the Board on Science, Technology, and Economic Policy for the National Research Council (STEP) recently released a report entitled Copyright In the Digital Era: Building Evidence For Policy that provides the two key pillars on which policies to adjust copyright to the digital age must First, it is vitally important to recognize that the private incentive that copyright is intended to afford to creators and artists must be balanced by three broad public interest benefits.

9 Creativity particularly fair use, to reflect the principle that copyrighted materials should be available not only for personal use, but as the building blocks on which creativity rests. Efficiency optimal economics, network effects, transaction costs, innovation, technological change. Control of market power consumer surplus, artist income, supra-competitive profits. The Department of commerce Green paper, 4 expresses a similar sentiment. Second, in the decades of the flowering of the commercial Internet and the digital revolution, the knowledge base for policymaking in the copyright area is poorly informed by objective data and empirical research.

10 (STEP, 2013, p. ix) The STEP identified a long list of questions where research might help inform decisions about key aspects of copyright policy, expressing the hope that (e)ventually, research will help inform decisions about key aspects of copyright policy. (STEP, 2013, ) As suggested by Exhibit 1, the list of unknowns might lead one to conclude that just about every aspect of copyright is in need of a great deal of research. 4, April 2001; Evolving Concepts of Universal Service, The Federalist Society, October 18, 1996; "Delivering the Information Age Now," Telecom Infrastructure: Telecommunications Reports, 1993.