From the Department of Bogus Statistics: Measuring the Impact of Piracy and Fair Use

SAN FRANCISCO, April 29, 2010 – Measuring the impact of the U.S. legal doctrine of “fair use,” which enables online activities such as search, limited copying, sharing, ripping, mixing and burning might seem impossible, but not to the Computer & Communications Industry Association.

Windows XP, The Pirated Edition, by Jurvetson.

The trade group released a study this week saying it measured the “Economic Contribution of Industries Relying on Fair Use.” CCIA members include AMD, eBay, Facebook, Google, Microsoft and Oracle, among others.

The D.C.-based economic consultants Capital Trade, which conducted the study on behalf of CCIA, asserted that: “In 2007, fair-use industries generated revenue of $4.7 trillion, a 35 percent increase over 2002 revenue of $3.4 trillion.”

The tally rightfully should include every company that maintains an informative web page, owns and uses a photocopier and fax machine, and whose staff uses the internet to communicate and perform basic research tasks. However, the CCIA lists specific industries in an exhaustive appendix in order to demonstrate how important the amorphous and context-specific legal doctrine is to fostering the growth of key parts of the economy. The industries it lists include everything from equipment manufacturers and software publishers to the financial services industry.

The Copyright Alliance, a consortium of associations and companies that represents composers, authors, publishers and the entertainment industry, was quick to issue a measured response the very same day that called the study “muddled.”

“It is not helpful to policymakers or the public to pronounce sweeping arguments that defy logic,” said Copyright Alliance Executive Director Patrick Ross. “In its report, CCIA identifies broad industries, suggests some entities in those industries occasionally engage in what some might call fair use, and then lumps all revenues and jobs in those industries into a newly coined ‘fair use’ industry.”

The issuance of the report is clearly an attempt by CCIA to reframe the discussion about digital copyrights beyond a binary discussion over piracy.

Historically, the debate over intellectual property in the U.S. Congress largely has been driven by numbers supplied by the entertainment and software industries, a practice that a government report recently called into doubt. Legislators have generally called for increasingly punitive measures against copyright violations, citing industry piracy statistics.

A Government Accountability Office’s report, released earlier this month, cast doubt over these statistics.

“While experts and literature we reviewed provided different examples of effects on the U.S. economy, most observed that despite significant efforts, it is difficult, if not impossible, to quantify the net effect of counterfeiting and piracy on the economy,” the authors of the GAO report wrote.

However clumsy the CCIA report is, it’s timely and raises an important concept as trade negotiators around the world haggle over the controversial Anti-Counterfeiting Trade Agreement, which seeks to impose harsher penalties against “infringers” in signatory countries’ jurisdiction

Many of these countries don’t have a comparable fair-use doctrine, said Matthew Schruers, CCIA senior counsel for litigation and legislative affairs. He argues that this means that the basic mechanisms, such as search, that allow the web to function could land companies in trouble.

“Even if ACTA turns out to be consistent with U.S. law, it’s increasing penalties overseas without any concurrent increase in the limitations and exceptions that permit legal activity here in the U.S.,” he says. “Imagine if [companies that engage in] innovative activities that we see on the internet like search being subjected to statutory damages, but not being able to avail themselves of the defense that we have in the United States of fair use, it dramatically increases the prospect of liability.”