Technology Neutral Copyright has a positive impact on investment, job creation and innovation in ICT
By
Rene Summer in
regulation on
Nov 10 ,2011
The following economic research paper validates the desirability of a technology neutral approach to copyright and copyright licensing.
In 2008 in the US, the court clarified that Cablevision was not directly infringing copyright by providing a remote Digital Video Recorder service outside of the consumer’s home. This allowed consumers to record and store authorized TV content on a device located in Cablevision’s facilities. This ruling was based on flexible, technology-neutral limitations present in U.S. law, and had broad consequences for cloud services generally.
However, in Europe, where limitations are relatively narrow and less flexible, for example - more technology specific than in the U.S. - the same growth did not occur, and in some places, such services have been blocked from coming to market.
This paper examines the impact of copyright policy changes on venture capital (VC) investment in cloud computing companies by analyzing the effect of the US Second Circuit Court of Appeals decision in The Cartoon Network, et al. v. Cablevision on VC investment in US-based cloud computing companies. In March 2007, the US District Court declared a summary judgment against Cablevision. As the appellate court narrated:
[P]laintiffs successfully argued that Cablevision's proposed system would directly infringe their copyrights in three ways. First, by briefly storing data in the primary ingest buffer and other data buffers integral to the function of the RS-DVR (Remote Storage Digital Video Recorder), Cablevision ¨would make copies of protected works and thereby directly infringe plaintiffs.’ exclusive right of reproduction under the Copyright Act. Second, by copying programs onto .… hard disks .…,Cablevision would again directly infringe the reproduction right. And third, by transmitting the data .… to .… customers in response to a .“playback.”request, Cablevision would directly infringe plaintiffs.’ exclusive right of public performance.
In August 2008, the US District Court’s decision was reversed on appeal by the US Second Circuit Court of Appeals. At the time of the decision, the ruling was viewed as an important one that would impact cloud computing. To cite two accounts:
• The Cablevision ruling is good for IT companies moving into cloud computing, said Dow Lohnes PLLC attorney James Burger, who represents technology companies in IP and content licensing matters. If the court had found Cablevision guilty of direct infringement for giving its customers the RS-DVR data storage system
• [A] rule holding Cablevision liable merely because it housed and maintained the servers in this case could imperil a wide variety of innovative business models that rely on the use of remote computing, ranging from examples like Internet-enabled self-service photo processing and printing, to cloud computing services offered by companies like Amazon, Apple and Google.
After testing a number of models, the authors have consistently found that the U.S. Second Circuit Court of Appeals decision led to additional incremental investment in U.S. cloud computing companies compared to the EU experience. The report estimates increased VC investment in U.S. cloud computing from $728 million to approximately $1.3 billion, with an average of $936 million. When paired with the findings of the enhanced effects of VC investment relative to corporate investment, this may be the equivalent of $2 to $5 billion in traditional R&D investment.
