Study: Fair Use Drives Large Part of US Economy

Industries that rely on fair use exceptions to U.S. copyright law have weathered the slow economy better than other businesses, according to a new study released by a tech trade group.

The fair use industries, including consumer device makers, software developers, search engines and news organizations, had US$4.5 trillion in revenue in 2009, up from $3.4 trillion in 2002, according to the study, commissioned by the Computer and Communications Industry (CCIA) Association. Revenue peaked at $4.7 trillion in 2008 and 2009, said the study, by Capital Trade, an economic consulting firm.

Fair use industries in the U.S. employed 17 million people in 2009, about one out of every eight U.S. workers, according to the study, released Monday. The employment numbers were down from 17.7 million in 2008.

“The fair use economy really held its own” during the recent recession, said Andrew Szamosszegi, co-author of the study.

Fair use businesses make up about 17 percent of the U.S. gross domestic product, according to the study.

The study shows the importance of fair use exceptions in copyright law, said Ed Black, CCIA’s president and CEO. While the entertainment industry and other groups push for tougher copyright laws, lawmakers should consider the impact of those laws on fair use and on its economic impact, he said.

Congress should be careful as it considers the so-called PROTECT IP Act, said Representative Jared Polis, a Colorado Democrat. The bill, approved by the Senate Judiciary Committee in late May, would weaken the “underpinnings of the Internet,” he said at an event announcing the study.

“These economic arguments are particularly important when there’s a lot at stake — jobs, jobs jobs,” Polis said.

A spokeswoman for Senator Patrick Leahy, a Vermont Democrat and main sponsor of the PROTECT IP Act, did not immediately respond to a request for comment. The legislation would allow the U.S. Department of Justice to seek court orders requiring search engines and Internet service providers to stop sending traffic to websites accused of infringing copyright, and allow copyright holders to seek court orders requiring payment processors and online ad networks to stop doing business with the accused websites.

The Recording Industry Association of America defended the PROTECT IP Act. The bill “targets the worst of the worst illegal foreign sites that profit from stealing American goods,” Mitch Glazier, executive vice president of government and industry relations, said in a statement. “Any suggestion that these overwhelmingly illegal sites would fall under any kind of ‘fair use’ defense is wholly incorrect. The legislation attacks clearly illegal acts, and not the technology used to implement them.”

Fair use exceptions allow people to use a portion of works protected by copyright without the owners’ permission. Fair use limitations to copyright law allow people to excerpt a protected work for news reporting, criticism, teaching and research. Fair use allows people to reverse engineer software, allows search engines to cache images and text, and allows TV viewers to tape programs and watch them later. It also allows consumers to sell or lend copies of music, books and other protected materials.

The CCIA study said the payrolls of fair use companies in the U.S. grew from $895 billion in 2002 to $1.2 trillion in 2008 and 2009. The average annual pay for someone in the fair use industries rose from $55,288 in 2002 to $80,703 in 2008, then declined to $78,968 in 2009.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant’s e-mail address is grant_gross@idg.com.