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May 31, 2007
Economic Scene

Copyrights That No One Knows About Don’t Help Anyone


Here’s a quiz question for authors: To copyright a written work in the United States, you must (a) register it with the Copyright Office; (b) insert a notice that says “Copyright © 2007”; (c) insert a notice that says “All rights reserved.”

Answer: none of the above. Under current law, a work is automatically copyrighted the moment it is “fixed in tangible form.” And these days, that copyright lasts virtually forever: 70 years after the death of the author, in most cases.

Since there is no requirement to register a work and a copyright lasts so long, the legal owner of a work can be difficult to find, particularly when the work is more than a few decades old.

When some librarians at Carnegie Mellon University tried to request permissions to digitize a collection of out-of-print books, they were unable to find more than 20 percent of the rights holders, despite persistent efforts.

Failing to locate rights holders can be costly since copyright infringement may be subject to statutory damages of up to $150,000 an incident.

The costs of locating rights holders are an example of what economists call transactions costs. Not surprisingly, high transactions costs tend to discourage transactions from occurring.

The so-called orphan works problem was examined by the Copyright Office in a 2006 report in which it proposed legislation to address the transactions costs issues.

Under its proposal, if you conducted a “diligent search” to locate a rights holder and still failed to find the owner, you would be off the hook. You could then incorporate the work in question into your own work, as long as you provided proper attribution. If the legitimate rights holder was subsequently found, he or she could not require that your work be withdrawn from circulation, but could collect “reasonable compensation” for use.

But what is a “diligent search?” The report leaves the interpretation of this phrase up to the courts but suggests some relevant considerations: whether the work includes identification, the age of the work, whether the work can be found in public databases like Copyright Office records, and so on.

The Copyright Office’s proposal is certainly a step in the right direction. Clarifying the rights and obligations of the buyers and sellers of copyrighted material would reduce transactions costs, and that should lead to a more efficient market for intellectual property.

But does the proposed legislation go far enough? According to Lawrence Lessig, a Stanford University Law professor who is an expert in copyright law, it does not. He favors a system where authors receive an automatic copyright when they create new works, but they must register their copyright within 14 years to retain it past the initial period. (Unfortunately, such a registration requirement cannot apply to foreign creators because of international copyright treaties.)

This is in the same spirit as the copyright law in place before 1964 requiring that copyrights be renewed at the Copyright Office in their 28th year. Materials that weren’t renewed fell into the public domain.

Mr. Lessig envisions the Copyright Office as specifying the standards for registries but not necessarily operating them, since the private sector may be better positioned to build and maintain such systems. His inspiration is the domain name system used to register Internet sites. In that system, a standards body specifies the design, but it is up to individual organizations to carry out the necessary registries.

The proposals by the Copyright Office and Mr. Lessig are not necessarily exclusive. If easily accessible copyright registries existed, the courts would probably find that simply searching the registries would satisfy the diligent search requirement. Creators of works with commercial potential would then have strong incentives to register their works.

In such a world, a legal requirement to register works could be redundant, since the commercial incentives to register would be strong. Still, why take a chance? Establishing the expectations that works should be registered to receive the full protection of copyright law makes a lot of sense.

Creating a registry is not that difficult from either a technological or a business perspective. The Copyright Clearance Center ( was established by a group of publishers in 1978 to provide rights clearance for printed works. The Harry Fox Agency ( serves as a clearinghouse for those who want to make recordings of songs, and there are plenty of Web sites devoted to image search to ease the sharing of photographs.

But would the creators charge excessive fees if rights clearinghouses became widespread? I would argue that just the opposite would occur. An easy-to-use, efficient and competitive marketplace tends to push prices down. Reducing the transactions costs of acquiring reproduction rights potentially makes both creators and users of information better off.

The orphan works legislation from the Copyright Office is still on the back burner in Congress. Let us hope that it soon gets the attention it deserves. Information plays a crucial role in today’s economy. Making it easy for creators and users of information to find each other should be a high priority for policy makers.

Hal R. Varian is a professor of business, economics and information management at the University of California, Berkeley.