Re:Create’s Get to Know Our Members blog series helps others better understand the different ways Re:Create members work to support balanced copyright laws and why they are so motivated by copyright issues. For this post, we heard from Engine.
1: What is your organization’s mission?
Engine is a policy, advocacy, and research organization supporting startups as an engine for economic growth. Engine supports the growth of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues
2: What types of people/organizations/businesses do you represent?
Engine works with a diverse group of thousands of high-growth startups, pioneers, innovators, investors, and technologists across the country.
3: Why are balanced copyright policies so important to your organization?
Startups and their users both create and use content. Startups need IP frameworks that are certain, consistent, and balanced. They already operate on lean budgets and thin margins, and are ill-equipped to accommodate the risk, cost, and uncertainty around whether they and their users may be liable for IP infringement and—if so—under what circumstances. Instead, startups benefit when there is a clear path to compliance with the law, and when laws foster innovation—not impose unmanageable burdens on early-stage companies.
4: What role does the DMCA play in supporting the work of your stakeholders?
Under current law, startups are able to host user-generated content without being liable for what their users share without the company’s knowledge. Startups do not and cannot identify copyright infringement on their own, both because copyright and content are so ubiquitous and because infringement and fair use are highly fact- and context-specific. Especially for startups who rarely encounter copyright infringement, the high costs and significant liability of monitoring all user-generated content would be difficult (if not impossible) to justify.
The DMCA sets up a balanced system for platforms to respond to complaints about user-generated, allegedly-infringing content. This structure for intermediary liability enables startups to launch and grow without fear of ruinous litigation. It likewise promotes certainty, and the DMCA’s approach to intermediary liability reflects an important balance by placing the burdens on the party best suited to address each aspect of online copyright infringement.
5: What concerns you most about proposals to make the DMCA more restrictive?
The DMCA’s carefully-crafted balance remains valuable today, especially for startups. Many small or early-stage companies would not be able to afford the cost and risk of a different legal framework, one which mandated proactive policing or held companies liable for user-generated infringing content. Startups are especially vulnerable to legal changes and new uncertainties, compared with the bigger companies that can afford to build expensive tools, hire thousands of moderators, or hire lawyers to navigate new obligations and liabilities. Any changes which shift the DMCA’s fundamental balance would have an outsized negative impact on startups.
6: What key fact or stat about will help readers better understand how important balanced copyright policies are to American creativity, innovation and economic growth?
In passing the DMCA, Congress sought to “provide[] greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities.” If online service providers cannot proceed with some confidence about whether and when they can be sued for infringement—especially acts of infringement they have no knowledge of or involvement in—the risks and costs of litigation would be so high few companies could succeed. The cost of defending even a frivolous copyright case can exceed a startup’s valuation. In related intermediary liability contexts, the cost of proceeding just through discovery can exceed $500,000. The availability of massive statutory damages awards in copyright litigation compounds this legal exposure by orders of magnitude. In virtually no other area of law can plaintiffs obtain damages so much greater than the actual harm incurred: up to $150,000 in damages per work infringed, regardless of the economic value of the underlying work or the harm (if any) caused by the infringement. By contrast, early-stage companies raise an average of $78,500 during their first year. Put simply, these are not costs and risks that startups can bear.