Next month Stanford CIS is hosting a conference about Legal Futures. Judging by the list of participants, the upcoming even should be nothing less than electrifying. This post is unrelated to the conference. In fact, it is not about legal “futures” at all. Rather, it is about legal “pasts.”
Some CIS-ers have received recently a curious mail from me concerning a Canadian 1921 copyright legislation. This legislation was actually the first copyright statute made-in-Canada (before that the 1911 British statute was followed; for a historical background see this online paper). To my surprise, I found out that there is no googleable copy of this legislation available online. Hard copies appeared difficult to find outside of North America, so I had to launch a more active search. In the end I got it (thank you Brandy Karl and Amanda Smith!) and found what I was looking for. The issue is copyright formalities and the unique arrangement set forth in section 13 of the old Canadian law.
A bit of history first. Formalities are official requirements that rightholders must fulfill in order to enjoy the full breadth of their copyrights in a given jurisdiction. Formalities were prevalent in many countries (U.S. included) from a very early stage and continued to reign for more than two centuries. Typical formalities are requirements of registration, deposit of copies, copyright notice, record of transfer, payment of fees, procedures of renewal, and so on. The consequences of noncompliance with formalities diverse. They can range from losing some strategic advantages in infringement litigation to a complete and irreversible forfeiture of exclusive rights.
It is well known that the Berne Convention for the Protection of Literary and Artistic Works prohibits member states to impose domestic formalities that impede the enjoyment and exercise of copyrights by foreign authors in the adjudicating state. It is less known that the original Berne Act from 1886 (including the Paris Act text from 1896) permitted domestic formalities. To the extent that formalities existed in the country of origin and the country of adjudication, the latter was obligated to recognize compliance in the country of origin (this was regulated in old Article II(2) of Berne.)
The situation changed after the 1908 Berlin Revision, during which the familiar prohibition on formalities was introduced. The convening representatives desired to hinder any interpretation of Article II that would lead to the loss of copyrights by unionist authors due to error, ignorance or impossibility. At the dawn of the Twentieth Century, the assessment that domestic formalities were an undesired burden on the international regime enjoyed a broad consensus. The language of current Article 5(2) leaves little doubts about its meaning. The conclusiveness of the formalities prohibition is evident.
Back to the Canadian statute. I first found a reference to the unique arrangement in a German treatise on the Berne Convention from 1935 authored by an intellectual property jurist called Willy Hoffmann. Hoffmann belonged to a small, esoteric circle of pre-WWII continental-European jurists (mostly Germans), who believed that the public actually had stakes in intellectual property legislation, and that both domestic and international law should meaningfully respect the interest of the public. In fact, Hoffmann’s book is less a treatise on the Berne Convention than an elaborate, rigorous critique on the orthodox interpretation and application of some Berne fundamentals such as the substantive minima, national treatments and independence of protection. Hoffmann, together with another German jurist by the name of Alfred Baum, promoted the heroic, strange and controversial argument that the Berne Convention stipulated not only a minimum, but also a maximum bar to copyright protection in the adjudicating country with respect to foreign works! Hoffmann was a vehement opponent to an absolute formalities prohibition, which was probably the reason why he found the Canadian provision intriguing.
The 1921 Canadian statute required compliance with a long list of formalities, including registration, deposit and payment of fees. Since Canada was already a member of the Berne union, those formalities did not apply to foreign unionist rightholders. The 1921 statute had an additional unique arrangement, a quasi-formality requirement stipulated in old section 13. That provision allowed a statutory license, granted upon application to the Minister, to print and publish a published book still under copyright if two alternative conditions were met: (1) the rightholder failed to print the book in Canada, or (2) the rightholder failed to supply enough copies to satisfy the demand for the book in Canada. In short, this was a kind of a “publication-plus” requirement having the main purpose to ensure that exclusive copyrights did not result in a shortage of access to the work.
Rightholders that did not comply with this “publication-plus” requirement ran the risk of seeing competing publishers apply for a compulsory license under section 13. Applicants were required to deposit no less than ten percent of the retail selling price of one thousand copies. According to the procedure, the Minister should immediately notify the rightholder about the filing of such application, and if the rightholder still failed to comply with the “publication-plus” requirement, the minister, at his/her discretion, could grand the applicant a license to print and publish the book for a maximum period of five years. The licensee was obligated to pay royalties to the rightholder at a rate determined by the minister.
Section 13 is not a classic formality provision, since the a work subject to the statutory license was still under copyright for any other purpose. However, noncompliance with the “publication-plus” requirement effectively replaced the right to exclude with a mere liability rule, that is, a mere claim to receive royalties from the licensee’s sales. This went one step too far, and Hoffmann reported that the Berne International Bureau declared the provision a violation of international obligations as applied to foreign authors. Consequently, Canada was compelled to amend the law, and in 1923 it did so by explicitly excluding foreign works from that statutory license under section 13.
What does this have to do with contemporary copyright issues? Formalities have been considered taboo for decades. Several recent calls challenged that. Pro formalities commentators view them an important instrument to correct the harmful effect of overprotection. Lessig mentions formalities as a possible correction mechanism in Free Culture. Chris Sprigman penned a thorough study on formalities published in the Stanford Law Review in 2004. I join the voices advocating for the re-introduction of formalities, thought within a broad context.
The argument for formalities is strong. It revolves mostly around efficiency considerations and reduction of information costs. The economic rationale is quite simple. In an “opt in” copyright system, nonmarket works will not comply, and hence, will not be under exclusive rights. If such works are used commercially, rightholders will have enforceable claims to receive modest compensation according to a statutory scheme. Since statutory compensation is modest, rightholders who expect large income from exploitation revenues will comply immediately. Rightholders themselves will determine the regime controlling use according to their own assessments and inclinations. As a result of compliance, the public is on notice that someone is serious about enforcing exclusive rights in those works. By checking the registration database, risk-averse users will have a cheap and easy way to clarify the status of a work. They are allowed to assume that unregistered works that bear no copyright notice are subject to statutory licensing.
In the age of global networks, complying with formalities should not be much more complicated than sending an email plus attachment or filling a basic online form. Domestic requirements would have to be internationally standardized to some degree. Standardization should be tailored around the most basic, simple and information cost relevant formalities: Registration, notice, and possibly a requirement to deposit an electronic copy of the work.
Commercial, professional and corporate rightholders should not have a reason to complain. Complying with formalities would constitute an additional, minor, tax-deductible expense in their production costs. The issue with formalities is, and has always been, the small, atomistic, poor and uninformed creative individuals, who might lose their rights as a consequence of ignorance or mistake. The problem exacerbated in the international setting, if rightholders were obligated to comply with divergent domestic rules. These concerns should be put into proportion. The phenomenal success of creative commons shows that when creative individuals have an active interest in their copyrights, and when given proper tools, such creators can take care of their affairs. One should expect a far broader involvement and individual engagement if the preservation of exclusive rights were at stake, rather than the voluntary wish to grant a permissive CC license.
The interesting aspect of section 13 is that it combines the advantages of formalities and the advantages of a liability rule in a way that nicely prevents unjust results while enhancing efficiency and broad access. To be sure, reintroducing formalities cannot be the solution all the problems. However, it can definitely be a part of the solution.
A solution is called for because copyright law is problematic. Much of the trouble emanates from accidental effects of legislative expansion tendencies, a result of ad-hoc responses to the threats of the “darknet.” In its current state, copyright law is not a product of intelligent design. The basic entitlements model is so cluttered with numerous patches and gap-filling provisions that accidents are almost inevitable. The reform must begin with the basics. It should redefine the exclusive rights to correspond the conditions of digital technology and networks. Old-style Canadian formalities will then be constructive as means to inhibit overprotection and enhance economic efficiency of information markets.
The fact that the Canadian legislature crafted such an elegant solution to prevent socially undesirable impacts of copyright protection suggests that legal futures can find their fortune in legal pasts. The fact that a law drafted nearly a century ago combines two of the most important contemporary approaches to copyright reform – a return to formalities and a shift to liability rules - is telling. If one digs deep enough, one has good chances to find out that many great ideas have a pedigree.
Date published: February 13, 2008