Copyright Law & Startup Innovation: Policies That Matter and Where They May be Headed

By Abby Rives, IP Counsel, Engine Advocacy & Foundation

This week we are reflecting on copyright policy — where it has been, where it might go, and what that means for high-tech, high-growth startups and the Internet users, entrepreneurs, and creators that depend on them. Copyright law, which is supposed to encourage creation and innovation, can also be used as a weapon against progress. And what better time to take stock of that? This week marks Copyright Week, sponsored by the Electronic Frontier Foundation, and the 10 year anniversary of a high-profile protest that stopped two deeply-flawed copyright bills that would have fundamentally changed the way the Internet works. The direction copyright policy takes can have an outsized influence on what startups can (and cannot) do, and policymakers eager to support innovation should keep that in mind.

Startups need balanced, certain copyright frameworks. Well-tailored laws that focus on enforcement of legitimate rights can support innovation. But it is too easy for those frameworks to get out of whack and become imbalanced, which we’ve seen time and again. For example, right now the law allows bogus infringement allegations to dictate that non-infringing content is (routinely) removed from the Internet. Uncertainty over what copyright law permits, coupled with high litigation costs, slows startups down and has even forced some out of business. And the risk of a startup being sued for something a user does — and something the startup knows nothing about — alone can scare away investors.

But what does balanced, innovation-friendly copyright policy look like? And how does this play out in today’s policy debates? Here are just a few examples:

• Fair use and interoperability: Some big companies would like to expand the universe of what software is protected by copyright and which development activities constitute infringement. If that happened, it would prevent startups from using fundamental software development tools, expose them to new litigation risks, and make it harder to launch and compete. But after a decade of litigation, the Supreme Court recently confirmed that developers can use software interfaces — known as application programming interfaces (APIs) — without infringing copyright. The Court held that reimplementing APIs, which creates interoperability and compatibility between computer programs, is a fair use under copyright law.
• Intermediary liability and the ability to host user-generated content: Scores of startups engage with user content — helping artists connect with fans, providing e-commerce platforms, hosting podcasts, or offering basic Internet infrastructure. These companies, and the creators and small businesses that depend on the Internet, interact with the copyright system every day. And they rely on balanced laws that allow the startups to resolve allegations of infringement without scrutinizing every post, upload, and comment for potential copyright violations. Some countries have started to replace those laws, instead moving to complex and expensive regimes that would force Internet companies to purchase expensive and imperfect upload filters, remove more non-infringing content, and negotiate licenses with big organizations that own a lot of copyrights. That is all do-able for big Internet platforms, but it will put startups at a substantial disadvantage. Yet similar ideas are being floated in the U.S. — where policymakers have proposed changes to copyright law (and trademark law).
• Ancillary copyright and link taxes: Countries around the world have adopted or considered new copyright-like laws that would require websites to pay licensing fees or face lawsuits whenever they — or their users — link to a news article or quote the headline. These proposals, positioned as a solution to problems facing local media, have so far failed to deliver those benefits, but they carry substantial unintended consequences. Linking to news articles is something many startups and innovators — from media to edtech — rely on. But engaging with information and current events, which is central to public discourse and free speech, requires being able to link to and quote the news. Using copyright-like law to restrict that engagement would hinder innovation and the creation and exchange of ideas online.
• Intersection of copyright and artificial intelligence: Startups and other companies developing AI technology have to input a lot of data into their systems, ingesting content to train, tune, and test new AI. As countries around the world review how intellectual property law applies to emerging AI, some are asking how copyright law should account for this ingesting of information, data, and content. But redefining copyright infringement to cover these uses of content to train AI could substantially hamper innovation.
• Copyright Office modernization and regulatory capture: The U.S. Copyright Office is in a multi-year modernization process to update IT systems and processes that have been lagging. That must remain a priority, as startups and the broader public need an improved, user-friendly database that allows them to search for copyrighted works and find owners and licensees. Without that type of information, avoiding infringement is like walking through a minefield in a blindfold. But the agency is also subject to regulatory capture — exhibiting bias in favor of certain copyright holders (particularly large corporate interests) and away from the public’s interest. In thinking about modernization, policymakers should look to bring more balance to the system, perhaps through positive influence from the Library of Congress.

Join Engine this Friday, January 21, at 12 noon ET to hear more from startup founders — learn about the exciting work they are doing, how it is rooted in balanced and sound copyright and intermediary liability policy, and what it might mean for them if those frameworks changed today. RSVP for the webinar here.

Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.