[A2k] (Wall Street Journal editorial) Google Search: 'Copyright'

[Thiru Balasubramaniam]

http://online.wsj.com/article/SB116493926739637617.html


REVIEW & OUTLOOK

Google Search: 'Copyright'

December 1, 2006; Page A12

Google's stock price seems to defy gravity. It topped $500 last week,
and so far investors have responded with great favor to its $1.6
billion purchase last month of the young video file-sharing company
YouTube. This acquisition helped lift Google's market cap to $150
billion -- more than IBM, AT&T, General Motors and Chevron. Google has
already become an American technology-sector icon, the Microsoft of the
early 21st century.

There's one big problem. The firm's practice of downloading and
reproducing books, articles, photographs and other creative materials
without approval of the copyright owners is legally ambiguous. And in
our time, what's legally ambiguous gets sued. What's new here is that,
on an unprecedented scale, Google pits the rights of intellectual
property owners against the Web's ability to "democratize" information
for everyone.

Google has a mixed record defending itself in court. But with its
acquisition of YouTube, the waiting line of potential plaintiffs just
got longer. Media and entertainment companies like Time Warner are
suing YouTube for making it possible to see pirated videos of
everything from Saturday Night Live skits to Beatles music videos to
HBO movie clips. Google's deep pockets could trigger many more of these
lawsuits, and it has established a $200 million fund to protect against
YouTube litigation.

How Google fares in court will help define the vague and unsettled
parameters of protection for intellectual property rights in the
digital age. The defenders of search engine and file-sharing firms
argue that these companies serve tens of millions of users daily and
help bring order, and billions of dollars of value, to the Wild West of
the Internet. The competing interest is the protection of intellectual
property -- without which we would diminish the creativity and
innovation that brings ideas and products to market.

The issue turns on what defines "fair use" of copyrighted material.
Google's position is that it shouldn't have to pay copyright royalties
because when it caches a book, article or video, it in effect markets
the product on behalf of the owners and enhances the product's value.
Indeed, many copyright owners gladly allow Google's downloads,
considering it free advertising. Both parties win.

But whether Google produces economic benefit to the copyright owner is
for the owner to decide, not Google. Google claims "a legal safe
harbor" from copyright infringement under the 1998 Digital Millennium
Copyright Act, which allows Internet firms to provide a thumbnail of
copyrighted material. The firm also asserts a right to reproduce and
distribute intellectual property without permission as long as it
promptly stops the trespass if the copyright owner objects. That's like
saying you have the legal right to hop over your neighbors' fence and
swim in their pool -- unless they complain.

Google and YouTube claim it's impossible for them to chase down
permission from tens of millions of video and printed-word copyright
owners. Hey, this was their idea; it seems like a $150 billion,
smarter-than-everyone company should be able to figure out how to
police its Web site.

Google and YouTube also argue that when pirated material appears on its
site the offending party is the person who uploaded the material, not
the Web host. But the financial advantage gained from the pirated video
accrues to YouTube, not the high-school student who attached the stolen
material to its site. The availability of high-quality, copyrighted
material helps drive traffic to these sites in the first place; it's
how the Googles and MySpaces earn their skyrocketing advertising
revenues. The fact that Google doesn't "sell" the product is
immaterial; TV network NBC clearly gains a commercial benefit from its
TV programming though it doesn't charge the viewers to watch.

In coming months the courts will have to work toward an equitable
compensation system for intellectual-property owners whose works are
being pirated for the financial gain of third parties like Google. The
Institute for Policy Innovation estimates that each year the U.S.
produces roughly $1 trillion of intellectual property -- 40% of the
world total. It is our primary export in the global marketplace.

The U.S. government is rightly fixated on deterring piracy of U.S.
patents and copyrights in nations such as China and India -- a theft
that costs American firms tens of billions of dollars. If the U.S.
government won't fully protect these intellectual-property rights at
home, it undermines the case for protecting them abroad. Google ought
to steer clear of this expensive legal thicket by accelerating what it
has already started to do: Enter into revenue-sharing agreements with
such content providers as Sony, Reuters, and the Associated Press.

A recent Cato Institute paper argues that "transformative" technologies
like search engines should be exempt from many of these copyright
lawsuits because they create entirely new products out of the old. They
argue that the role of "copyright law is to promote, not impede
technological progress." That's true. But without rigorous enforcement
of intellectual-property rights, there may not be much technological
progress to promote.


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Thiru Balasubramaniam
Geneva Representative
CPTech
voice +41.22.791.6727
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thiru@cptech.org