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One Degree of Separation: Kelo & H.R. 1201

Progress Snapshot
Release 1.7 August 2005

By James V. DeLong*

Everyone knows the game Degrees of Separation, where one finds the connection between two seemingly distant people.

The same game works for seemingly unrelated policy issues. For particular example: it takes only a single hop to get from the recent eminent domain case Kelo v. New London to H.R. 1201, a bill on intellectual property and technological protection measures (TPM) in the U.S. House of Representatives.

The Fifth Amendment to the Constitution says that private property may be taken for public use only if just compensation is paid. The phrase "public use" has always been assumed to be a limitation, meaning that a state cannot take for a strictly private use, simply transferring property from A to B, even if it compensates A.

In Kelo , the Supreme Court addressed the issue whether this long-standing assumption has any real content, and its answer was "not much." New London took Ms. Kelo's house because it wanted to transfer the property to a redevelopment authority, which had some grandiose plans for the area. This was good enough to meet the public use requirement, said the Court, since: "For more than a century, our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power."

Of course, it would be pretty hard to fail a test that requires nothing but some sanctimonious verbiage. As Justice Scalia said in an earlier case: "Since [a harm-preventing] justification can be formulated in practically every case, this amounts to a test of whether the legislature has a stupid staff."

Kelo has been met by a rush of criticism from both left and right, most of it refreshingly Adam Smithian. The gist is that it is simply not a proper function of government to decide that B can make better use of property than A. If this happens to be true, then the free market provides the perfect remedy - let B buy it.

Perhaps there is also a growing sense that the government raven for pork to distribute to favored constituencies is already out of control in spending tax money, and that giving it carte blanche to redistribute property in general is the road to perdition. (If this sense is not growing, it certainly should be.)

But at least Ms. Kelo got paid for her property. Pending before the U.S. Congress at this very moment is a bill designed to take property from a bunch of As and give it to a bunch of Bs, only without paying a cent to the As. And it, too, relies on a test composed of sanctimonious verbiage that could be failed only by the deeply stupid.

The bill is H.R. 1201, the Digital Media Consumers' Rights Act of 2005, and the background is the Digital Millennium Copyright Act, which is section 1201 of the Copyright Act (hence the H.R. number). The DMCA makes it illegal to crack technological protection measures (TPM) - commonly called encryption - used to protect copyrighted content. The DMCA also makes illegal the distribution of code cracking tools.

H.R. 1201 would repeal this ban insofar as the code cracker or the toolsmith wanted to obtain, or help others obtain, access for purposes of making "noninfringing use" of a work.

There are indeed lots of noninfringing uses of copyrighted works, most of them created by the courts under a doctrine called "fair use." The doctrine is a grabbag - it includes such uses as excerpts for book reviews; some transformative uses, whereby a work forms a foundation for broader efforts; political commentary. There is a dash of transaction cost thinking - it can be fair to photocopy an article for educational purposes if getting permission is a long and arduous process.

Because of the variety of purposes crowded into the doctrine of fair use, it would be is a dull code cracker indeed who could not attach a plausible claim of fair use to almost any work. Want to write a class essay on "Images of the Mafia in American Art?" Surely this commentary entitles you to get The Sopranos by hacking into the encryption that protects HBO. Want to compose "Variations on a Theme of the Grateful Dead"? Then hack your iPod to access the raw code of their music.

Note that such arguments would justify not just hacking by the nerd elite, but mass distribution of code-cracking tools. And, of course, once the tools are available, or the decrypted copies are available, then there is no way of controlling them. And the IP involved has then, for all practical purposes, been seized from all the As who used to own it and redistributed to all the Bs.

No one, including the backers of H.R. 1201, is so dumb as not to know that this would be the effect. Their precise goal is to abolish IP rights in favor of some mystical commune wherein all IP is free as the air and creators are compensated by government. Like the New Haven Redevelopment Authority, they have a grandiose plan.

Current fair use doctrines were invented in a different technological age. They need to be rethought to fit contemporary circumstances, and this is indeed happening in the marketplace. Consumers are making known that they want some ability to copy CDs, for example, and the TPM people are setting up systems that allow it, to a limited extent.

Other new divisions of property rights between creators and consumers are being negotiated out through marketplace experimentation. The last thing needed is a heavy-handed legislature deciding that it can decree how this complex territory should be redeveloped, and then trampling over both property rights and market processes.

Ms. Kelo lost in the Supreme Court, but Congress need not replicate the error.

* James V. DeLong is Senior Fellow and Director of the Center for the Study of Digital Property at The Progress & Freedom Foundation. The views expressed are his own.



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