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Make Piracy Obsolete: The Payright System

Primary Author: Erik Zoltn, Massachusetts Pirate Party Contributing Editor: Zacqary Adam Green, New York Pirate Party

Introduction
This document contains a specific policy proposal designed to address the concerns of the Pirate Party regarding copyright, patent and trademark law. At the same time, it is designed to address the concerns of inventors, artists, musicians, filmmakers and businesses regarding the Pirate Party's ideas about open culture. My goal here is to show how we will end piracy forever by making it obsolete - we will ensure that creators and inventors are paid for the free and open exchange of their work and inventions. This will not prevent downloading, nor will it impose fees - it is a comprehensive way to allow open culture and ensure that the creators are paid for their work. In brief, the concept is to create an open culture where inventions and works can be exchanged freely and without limitation, while also guaranteeing that innovators and content creators will be paid a fair price for their works and inventions. It provides an open framework where anyone can make money by selling anyone else's works and inventions, and yet at the same time where the creator of those works or inventions will receive a kind of payment that compares very favorably with the sort of payment that they could expect today under the closed culture of intellectual property monopoly. The policy allows anyone to exchange works and inventions non-commercially for free, at the same time that it contains funding provisions which would guarantee that content creators and innovators would receive ample payment for non-commercial use of their work. (This may sound contradictory, because the conventional wisdom is that these two things cant possibly coexist.) At the end of this document I will discuss possible objections to this proposal, legal challenges, privacy issues and how we plan to implement these ideas.

Whats in a Name?
Throughout the document I will use the term creator to describe artists, musicians, writers, filmmakers, software developers, businesses and others who create a work or who otherwise own the rights to it. I will use the term inventor to describe anyone who comes up

with a new device, process or algorithm that is protected under the system being proposed here, regardless of what form that invention takes.

Payright Logo This document describes a concept called payright that will replace both copyright and patents. The payright logo will be used on protected materials. It is shown above, and the idea behind the payright logo is shown below.

The payright logo is a fusion of the paragraph symbol representing creative work, the copyright logo representing protection for creators, and the Pirate Party logo representing open culture. The system described in this document is an attempt to exponentially increase the amount of money that creators and inventors are currently earning, to lower the barrier of entry to creative people and inventors, and to dramatically reduce costs for consumers by ending price gouging and introducing market pricing determined by supply and demand. It will create a renaissance of open sharing of existing inventions and creative work, together with an explosion of new creativity and inventions. And those new ideas will receive the widest possible distribution. In order to explain the benefits of this system, lets start with some of the weaknesses of the current system that I am proposing to replace.

Whirlwind Critique of Intellectual Property


A comprehensive criticism of intellectual property would be an entire full-size work unto itself. I cant do it justice in a few short pages. Nonetheless, its important to at least refer to some of the problems we are trying to solve, before describing the solution in detail. Intellectual Property has been mis-defined as a monopoly in which the term rights holder applies only to the individual or corporation who owns the copyright of a work or the patent on an invention, and not to the rest of the members of society who want to exercise their rights to privacy and free expression. The current intellectual property formulation directly contradicts the US Constitutions First Amendment which guarantees free speech. A person cant freely say whatever they want if to do so might directly or indirectly compromise someone elses intellectual property rights. This is a big problem especially because those property rights have been defined in a very broad and extremely vague way. Restrictions on privacy also have this same effect, by allowing peoples private communications to be spied on without cause or due process. This proposal will address

those problems from both a free speech and a privacy perspective, because it will create an open culture of unrestricted speech where privacy is completely protected. Copyright is intended to guarantee that creative people can be paid for their work, and patents are meant to ensure that inventors can do the same. Copyright and patents give creators and inventors exclusive rights to their own works. Copyright trolls and patent trolls are companies that buy up cheap copyrights and patents with no intent of promoting them other than to sue a lot of people for supposed intellectual property violations. The patent system drastically reduces innovation by allowing patent holders to shelve their inventions so that no one can use them, or to prevent others from building upon their inventions if they so choose. Patent trolls alone have cost the economy half a trillion dollars in lawsuits. (This effect is well-documented: http://papers.ssrn.com/sol3/papers.cfm? abstract_id=2091210 and http://arstechnica.com/tech-policy/2011/09/study-patent-trolls-havecost-innovators-half-a-trillion-bucks/ are examples.) Add to this half-trillion the costs of "legitimate" patent lawsuits, and factor in the substantial additional costs to companies struck by such suits. These costs are passed onto their customers. Patents are so vague and expensive to litigate that it is impossible to quantify the amount of missing innovation, which I would define as the amount of innovation that did not occur because of the fear of patent lawsuits, or because of the need to do expensive legal work before a new idea can be shared and promoted. Copyright is also a monopoly right: the copyright holder has the ability to prevent anyone from selling their work, creating derivative works, or using their work non-commercially. This monopoly right frequently extends for over a century before the work falls into the public domain. This is such a long time that many orphan works have fallen into disuse because it is no longer possible to determine who, if anyone, still owns the copyright. If the monopoly aspect of copyright could be removed but the authors were still paid as much or more for their work, then the result would be to open the floodgates to an outburst of new creativity and new economic activity. Trademark is intended to protect a corporation's name from false usage, so that I can't sell my own cheap automobiles using the name of a famous luxury automaker. Unfortunately, it is also used to prevent innovation. For example, a movie maker can trademark the name of a character and prevent anyone else from writing any new works that contain the same character. This is one of many factors that together have a devastating effect on fan fiction. Once again, it's impossible to count the losses to the economy because you can't count missing innovation or missing creativity. By definition, you cant count something when its not there. A recent study shows that the rapid economic growth in Germany in the 19th Century may be largely due to the absence of copyright: http://t.co/PZ1igMZw At a TED Talk in 2010, Dr. Johanna Blakley made the point that some industries have been denied these intellectual property (IP) protections by the Supreme Court. Those same industries are actually earning more money than industries which rely heavily on IP protection. (http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture.html). This outstanding talk has a lot to say about how open culture would work and why creative people neednt feel threatened by it. A critical diagram from the talk is shown below, and is used by permission of Dr. Blakley:

This diagram shows that strong IP (intellectual property) protections have not enlarged the industries that enjoy it, while weak IP has not hurt the industries where the Supreme Court refuses to allow strong IP. In fact, it looks like just the opposite has happened: the low IP industries may have larger gross sales than the strong IP ones. During a seminar at the Economics Department of the University of Canterbury in 2012, Professor Paul Heald of the University of Illinois showed a few slides (timestamp 11:45 to 15:00) demonstrating that non-copyrighted books sell for the same price as copyrighted books from the same era, but the copyrighted works are much less likely to remain in print (http://www.youtube.com/watch?v=-DpfZcftI00). Dr. Heald emphasizes that his results are preliminary, and he is still verifying them; we cant reprint his critical diagram because he hasnt published his work yet. The following diagram is my own interpretation of the effect that copyright has on the number of books in print today.

We would expect that the most recent books are most likely to be in print, and in fact this is generally true. However the number of books in print from just before the copyright wall of the early 1920s is much larger than those immediately after it. In fact, the number of books in print from before the copyright wall rivals the number in print from the most recent decade, even though there were a lot fewer books being published at that time. There are a number of factors that would explain this kind of result. Books in the public domain can be published by anyone, and there is no exclusive relationship between the author and the publisher. Therefore the most popular ones are likely to be offered by multiple publishers. Books under copyright are only offered by a single publisher. Many of the older ones have become orphaned meaning that nobody knows who currently holds the copyright on them. And this forces them out of print. Its also not that surprising that the price of the books in the public domain is about the same as the price of books under copyright in the same era. Most of the price is based on the cost of printing and delivery, the profit margin of the bookstore and the publisher, and market forces. Looking at the above diagram, I would invite the reader to consider the following question: if we remove the copyright wall entirely, then what would happen to the number of books in print from the early 1920s until the current time? Here is another diagram that converts these numbers to percentages.

This result is even more striking. The most recent books are all still in print, but they are generally only offered by one publisher. Over time, the percentage of books in print gradually declines. But when the books are in the public domain, they are much more likely to be in print. The most popular ones are all being offered by multiple publishers. The result is that the number of books in print is actually greater than the number of books that were written during that time period. Looking at the above diagram, lets again consider the following question: if we removed the copyright wall, then what would happen to the books published from 1923 forwards? The same basic effect can be seen in many different places: the premise that copyright prevents multiple people from publishing the same book should not be controversial.The fact that copyrighted books are less likely to be in print than public domain ones should not be a surprise, because copyright is a monopoly and prevents anyone else from publishing a work. The public domain books from before the copyright walls are more likely to be printed and purchased than the ones after the copyright wall, even though they are available to be downloaded legally for free at any time. This contradicts the conventional wisdom which holds that nobody will pay for something at the point of sale when its available for free somewhere else. Copyright hurts even the newest works, but it is far more destructive as works get older and are no longer being actively promoted. The fact that the number of books recently published from the 1910s is about the same as the number from the 2000s stands as a devastating blow to the advocates of closed culture. Once those books fall into the public domain, anyone can promote them and their availability is dramatically increased. Taken together, these points give a rough idea of the gigantic amount of economic activity that has been prevented by intellectual property monopolies. This proposal will combine the best aspects of open and closed culture: from open culture, free and unrestricted sharing of work, and from closed culture, the guarantee that creators will be paid for their work and that innovators will be paid for their ideas. So as a quick recap, the substance of my critique is three-fold: a First, intellectual property contains both a positive and a negative component. The positive component is that it seeks to guarantee that creators and inventors

can get paid for their work. The negative component is that innovation is so badly stifled that the creators and inventors themselves are actually hurt by it. And the cost to society as a whole, both culturally and economically, is even greater. b Second, intellectual property and accompanying privacy invasions compromise both free speech and the right to privacy. c Third, this document presents an alternative proposal that would dispense with the negative aspects while amplifying the positive aspect. It will remove the restrictive effects of intellectual property while pumping up the economic benefit to creators, and providing a framework where those benefits can be realized in the context of completely free and unrestricted economic activity. It will address free speech and privacy concerns at the same time. Something along the lines of this proposal will definitely be adopted in the future, because the intellectual property system is so restrictive, outdated, and stifling that it is already coming apart at the seams. My goal in this document is to create the best possible situation for open culture and to propose a sweetheart deal for inventors and content creators that will open the floodgates to new creativity and innovation, resulting in a massive boost to our economy. The intent of this proposal is that we should pass legal reforms to replace all of the current intellectual property laws with payright. In the short term we can implement payright as a voluntary system, coexisting with patents, copyright and trademark protections.

The Payright System


The first section of the document was an overview that very briefly highlighted the problem with intellectual property as it is currently defined. This second section will describe the proposed remedy to this problem.

Overview of Payright
This proposal contains several different components. I will summarize what they are in this overview, before describing each one in detail in their respective sections. Note that this is just an overview, and many specific questions will be answered later in the document. 1. Property Right Reform: Intellectual property rights of all kinds will be redefined in such a way that they allow non-commercial use. Non-commercial use will be unrestricted except that attribution will be required to ensure that the owner is properly compensated. For commercial use, the creator of an invention or a work has the exclusive right to be paid a creator's share of gross monetization, but does not have the right to limit how that work can be sold and by whom. Derivative works can be created by others without restriction, and there will be no way to use trademarks to prevent derivative works. However, the creator of the derivative work will have to share revenue with the creator of the original work and any trademark owner. The section Property Right Reform covers this in detail. 2. Payright Content Registry: A Payright Content Registry will be created that allows creators to register their work for protection. The burden of registration will be on the creator, but

there will be no initial registration fee and the registration process will be approximately as complicated as using the Save As dialog on a word processor. Existing copyright owners will be grandfathered into the new system, but they will need to register their existing works. Protection for all works will begin on the registration date. Although initial registration will be free for five years, the content owner can optionally pay to extend registration. Extended registration will cost a penny for the sixth year but will double every year thereafter. There will be no specific limit on the term of payright protection, but the cost will eventually become too great and the work will pass into the public domain for economic reasons. The content registry will provide a canonical download location where anyone can access the registered version of the work. The section Payright Content Registry goes into more detail. 3. Monetization Framework: The payright content registry will include a content monetization framework, enabling anyone to earn money in an unlimited number of ways using other people's work. The seller of the work will receive a fair percentage depending on the format and the way in which the work is sold. (Specific percentages are mentioned later.) The creator of the work will receive a percentage that is larger than what they'd typically get today in a publishing or distribution contract. The content registry will provide conflict resolution when ownership disputes arise, and will provide a content feed that anyone can query for either commercial or non-commercial use. It will serve as an infrastructure for various kinds of revenue schemes to help monetize the work. Unlike the current system, the content owner will not need to bear the burden of enforcing compliance with the proposed payright system. The section Monetization Framework contains more information, and examples of how this would work. 4. Payright Invention Registry: To replace the patent system, a Payright Invention Registry will be created. This will allow anyone to register an invention and to be paid for commercialization of that invention. Existing patents will be grandfathered into the system and will take precedence. A first-to-invent model will be in effect. As with the content registry, non-commercial or charitable use of an invention will be unrestricted. Anyone will be able to create derivative inventions: they can enhance the original invention with their own additions or changes, and the original inventor will receive a portion of any proceeds. Initial registration will be free for five years, and extension will be charged a small but escalating fee. Unlike patents, the payright invention registry will contain highly precise descriptions of an invention that leave no room for ambiguity. An inventor will not be able to shelve an invention or prevent either commercial or non-commercial use they will however be able to profit handsomely from both commercial and non-commercial use of their invention, regardless of who uses or promotes it. See the section Payright Invention Registry for more details. 5. Development Funds: A Payright Content Development Fund (CDF) will be created, and will be funded in three distinct ways. First, it will receive 50% of the creator's share of monetization of works. Second, payright content registration fees over and above the amount required to run the payright content registry will go directly into the CDF. Finally, 1% of the US Federal Budget will be allocated to the CDF. The money in the CDF will be paid to content creators to compensate them for noncommercial use of their work, based on the popularity of

the work. So a movie that is given away for free and never monetized will still be able to make its creators rich if it goes viral. An Invention Development Fund (IDF) will be created for the payright invention registry, which will work much the same as the CDF. It will get 50% of the invention owners share, plus excess registration extension fees and will also receive 1% of the US Federal Budget. In this way, the inventor of a new invention will receive generous payment for non commercial use of the invention. The Pirate Party proposes an end to corporate citizenship, which should result in the complete elimination of corporate welfare, or at least in drastic reductions to the very large percentage of the budget that falls under this category. For this reason, we should have absolutely no problem finding the money to pay for these two funds, which will amount to a total of 2% of the budget. The section Development Funds describes both these funds in more detail. 6. Objections to Payright. Gaming the system, legal challenges, privacy concerns and implementation plan. A number of possible objections have been raised to the Payright system. The implementation plan anticipates those objections and is designed to overcome possible problems. The primary concern revolves around attempts to game the system, and the entire proposed architecture of the payright system is designed to address this concern. Legal challenges are a major problem with current intellectual property laws, and payright is specifically designed to forestall legal challenges. Payright involves tracking non-commercial use to ensure that creators are paid for their work. This could raise privacy concerns, so the system will contain a bulletproof privacy protocol to make sure that it cannot be used for spying on people. And this system will have to grow gracefully to a very large scale, so a high-level implementation plan has already been devised. The section Challenges and Implementation describes all these considerations. It also addresses some objections to the very idea behind payright. The net effect of this proposal will be a gigantic revenue increase for content creators, publishers, inventors and most corporations even the ones who oppose the Pirate Party. The biggest losers will be copyright and patent attorneys, who will generally have nobody to sue any more because the payright system itself will handle dispute resolution. However, the invention registration process that replaces patents will spawn an entirely new industry around the precise specification and engineering of new and existing ideas into the system. Currently, patent holders and copyright owners are aggressively lobbying Congress to close culture even further by enhancing their monopoly rights and tightening enforcement. They also want to extend the term of copyright and patents beyond their already excessive lengths. This pads their own coffers, but has an overall negative effect on the economy. I hope that under this proposal they can switch to lobbying Congress to increase funding for the CDF and IDF, providing a shot in the arm for creativity, innovation and the economy. I do want and expect this proposal to be written into law. In the meantime I want to build the proposed systems today so we can start using them and prove that this works.

Property Right Reform

Intellectual property rights of all kinds will be redefined in such a way that they are nonexclusive for non-commercial use, except that attribution must be given. Trademark names will be protected from fraudulent use or use in competitors titles and product names, but the owner won't be able to restrict others from using them with proper attribution.

Alternative to Copyright
From the creators perspective, the switch from copyright to payright involves a trade-off that represents a net gain for most creators. The following table summarizes some of the important differences. These differences are covered in more detail further on. Copyright no expensive and difficult $35 per work 70 years after death (regularly being extended) who is responsible for the creator enforcement non-commercial use usually illegal registration required registration method cost of registration length of protection method of distribution publishing and distribution contracts who sets the price the author or publisher collaboration requires licensing or paid contracts level of popularity of a severely limited by rights work restrictions ability to sell a work severely limited, generally exclusive level of economic stifled by monopoly activity ability to prevent nearly total, its stealing reuse/remixing payment for licensing fees reuse/remixing entry barrier for high, based on need for success publishing and distribution contracts ability of a work to go constrained by price and cost viral of promotion typical method for DRM prevents unauthorized rights enforcement distribution and may spy on consumers privacy concerns privacy violations are likely when DRM is involved pricing model price gouging is prevalent Payright yes designed to be easy free for five years, extension costs money no specific limit; cost escalates the payright system completely legal and likely to be encouraged by creators who are getting paid for it automatic free and open market forces free and open unlimited, designed for maximum popularity nearly unlimited, non-exclusive completely unrestricted none, in fact its encouraged because the creator gets paid automatic, based on objective criteria virtually zero, just register a work and anyone can distribute, publish, promote and derive from it. completely unconstrained payright system tracks both commercial and non-commercial usage system relies on a bulletproof privacy protocol no-haggle percentage-based

Here is an example. The band Crazypants creates a self-titled song. They register it for free in the payright system. It is automatically available to be downloaded or sold by anyone. If it goes viral, they will get a lot of money for both the commercial and non-commercial use of their song. If nobody ever listens to it, they wont get paid anything but it wont cost them anything either. Once they register the song, anyone can sell it. It can be included in mixed CD compilations or played on the radio. It can be broadcast publicly or downloaded for private use. If it is sold, then the band receives a percentage of the selling price. If it is used for free, then the band receives a payment from the payright system. The band doesnt need a recording contract or a deal with a label. They can play it at concerts but they dont need to advertise the song itself. If another band does a cover of the song, then Crazypants is paid for that as well. If someone uses the lyrics as part of another song, then its a derivative work and they can get paid. If someone makes fun of them with a hilarious spoof, then that may also be a derivative work.

Copyright Grandfathering
Copyright holders will be grandfathered into the new system as content owners. They will be able to register their works for free and their protection will start on the day of registration, rather than the day on which the work was written. Although registration will be free, the burden of registration under the new system will fall onto the content owner. However, registration will be extremely easy, as described later in the section Content Registry. Copyrights that have already fallen into the public domain will remain in the public domain. They can be registered in the system but are not eligible for monetization. Once registered, they can be used to create derivative works, and those derivative works can be monetized. But these derivatives wont need to share revenue with the public domain works on which they are based.

Alternative to Patents
The payright invention system is similar to the payright content system, except that it covers inventions rather than creative work. Inventors can easily register their work by filling out a simple web form and providing an English language description of their invention. The inventor or a programmer next translates this into a clear and unambiguous description using a language that is very similar to a computer programming language. The system compares the invention to other work that is already on file. Just as with content, the payright system will provide payment to an inventor for the commercial and non-commercial use of their work. This is described in more detail later on.

Patent Grandfathering
Patent holders will be grandfathered into the new system as payright inventors. They will be able to register their inventions at no cost. The initial registration process will be very easy in that they only need to create an English language description of their invention. However, the final registered descriptions will be much more complex, as described later in Payright Content Registry. Patents that have expired will be eligible for registration in the new system, but in that

case their age and corresponding fee structure will trace back to the date on which the patent was issued. When registering an invention, the patent holder can simply attach a copy of the patent. However it will be a good idea to also include a clear and unambiguous description of the invention. This is because patents are vague and payright inventions are very specific. If a patent covers multiple different ideas, then it can be registered as several separate payright inventions. Many inventions were never patented due to the cost involved or because the inventor couldnt meet the threshold for patentability. It will be free and very easy to register an invention under payright. If you cant actually build a device, you can still register it. And someone else can later register an exact implementation of that device as a derivative invention.

Alternative to Trademark
Payright will allow creators to register names that are used in their works. This will replace the trademarking of characters and ideas used in creative work. Other people can use those names without restriction, except that they have to provide attribution and revenue sharing will occur for commercial usage of the work. The coverage of a payright-protected name will apply in all cases where the name refers to the same thing. Using a race of robotic aliens called narkoids from another work will be covered as long as its really similar and the name is not just a coincidence. Other characters that are obviously different but have a similar name will not be covered. If you use someone elses payright-protected character or name, then your work will be derivative and you will have to share a fair portion of any revenue you earn with the original author. How much depends on how important that character is to your work, and the degree to which your work and your character are derivative. Payright name protection will continue for as long as the work(s) in which it is registered are still under payright protection. Here is an example to show the difference between payright name protection vs. trademark name protection.
Zeke is working on an animated video series about a character called Fred the Bunny. He is debating whether to trademark the name Fred the Bunny. Under copyright and trademark law, he can prevent other people from using the same character in their work. If somebody else does ask permission, then he can force them to pay whatever licensing fees he feels is appropriate. If they use the name without permission, then he can sue them. The payright system now goes into effect. Zeke registers his videos under payright and gets name protection for the character of Fred the Bunny. A major fan of the series wants to make a series of Fred the Bunny toys to sell to five year olds in toy stores. The toys are derivative works and revenue sharing is in effect. Whenever a toy is sold, Zeke automatically receives a share of the profits. Another fan creates an episode of a comedy program in which Fred the Bunny makes a humorous cameo appearance. This is slightly derivative and Zeke gets a small percentage for it.

Its only a very small amount because its not very important to the show and its only a brief appearance.

Existing trademark protections will still apply to naming of products, companies and services that dont fall under payright. If XYZ Automotive has trademarked their ABC Roadster automobile, then the same protections will apply as under current trademark law. There is no change because it falls outside the scope of payright.

What Payright Grants


For commercial use, the creator of an invention or a work has the exclusive right to be paid a creator's share of gross monetization, but does not have the right to limit how that work can be sold and by whom. Gross monetization refers to all the money that is collected for something, in contrast to the net profit which is an unreliable and lower amount. A payright owner will see their work or invention spread far and wide by anyone who wants to share it for free, sell it for money, or monetize it indirectly with ads or donations. They will not be able to prevent or restrict this kind of activity as long as proper attribution is given for non-commercial use, and as long as proper revenue sharing is in effect for commercial use. The net effect should be a much wider distribution of an author's work, and in the end this should result in a much larger amount of revenue for the creator or inventor. Just as in the current system, it will be possible for a creator to sell their payright ownership rights to another person, corporation or other entity. Payright is transferable, but it must be transferred explicitly by the owner. If Melanie wrote a short story five years ago and she sells the payright ownership to Tim, then he will need to pay the same price to extend it into the sixth year as she would have paid. As the new owner, Tim will get the same ownership rights as though he had authored the work. (If we didn't allow this sort of thing, then work for hire could get messy.) When Tim dies, he can explicitly leave his rights to an heir and it's like he sold it to them. But if he dies without leaving his rights to anyone, then the work falls into the public domain. The same considerations apply to the transfer of inventions as to content.
Heres an example of how that would work. Jane writes a childrens book that never makes much money. Geoff, a filmmaker, thinks it would make a good movie but doesnt have the time or the budget to work on it. Geoff offers Jane $50,000 in exchange for her payright ownership rights. Jane accepts the offer so that she can quit her day job and work on several other books that shes been thinking of. Geoff starts sending free copies of the book to everyone he knows in the movie industry. One of them does make a successful film, and Geoff receives a substantial share of the proceeds. Jane starts getting a lot of inquiries about the other books she is now working on.

Inventors will be in the same position as content owners: unable to direct or control the way in which their invention is used, but profiting from the gross economic proceeds of the use of their invention. In addition, it will be possible for their rights to last for a longer time than under the current patent system. And they will be paid for non-commercial use. Derivative works can be created by others without restriction, and there will be no way to use trademarks to prevent derivative works. When a work is registered, the creator can specify that it is a derivative and/or the system will compare it to existing work and catch the fact that it is a derivative. Crowdsourcing will also be used to catch derivative works. The financial

proceeds from the derivative work will be automatically apportioned between the creator of the original work and the creator of the derivative work. Just as with content, derivative inventions will be allowed as well. If someone registers an invention, then others will be able to combine that with other things to create a new derivative invention protected by payright. The economic proceeds of the derivative invention will be divided equitably between the inventor of the new invention and the inventors of any other inventions from which it derives.
Heres an example: Wen comes up with an invention for a new kind of organic adhesive. It is completely nontoxic but doesnt work at low temperatures. A baker in Wisconsin finds that it is useful in creating complex layered pastries. He builds a kind of scaffolding that keeps the layers separate until they have hardened, and then they collapse together in the refrigerator. Wen would never have thought of this, but now hes being paid a quarter every time someone sells a trendy wedding cake.

Payright is a protection for creators and inventors, even though it allows anyone to engage in acts that would be considered theft under current IP law. Under payright, it will be illegal to sell someone elses work without paying them, except with their express permission. It will be legal for anyone to sell payrighted work as long as they pay the appropriate percentage to the creator. It will be legal to distribute someones work for free. This will not be considered theft, especially since the creator can still get paid for the non-commercial use of their work. It will be illegal to distribute the work and remove the attribution information that enables the creator to be paid. For this reason the term payright protection can be used to describe the enforcement of a creators or an inventors rights under the system.

Why is Registration Required?


One objection to payright is that copyright does not require creators to register their works. Payright does, as do patent and trademark protections. To explain this difference, I want to contrast the way that registration works under the two systems. Copyright originally required explicit registration, and content creators lobbied Congress to change that system. Today copyright is automatic and does not require registration. Copyright registration is still possible, but it requires an initial up-front cost, is cumbersome, and provides no economic benefit to the copyright holder. The lack of a central repository of copyrighted data makes it hard to tell whether a given work might potentially infringe on someone elses copyright, so litigation sometimes yields surprising results. There are numerous examples of creators being forced to pay large amounts of money for plagiarism by infringing on other work that they themselves didnt think they were using or building upon. Payright registration stands in sharp contrast. It is initially free and trivially easy. A central repository will automatically detect whether something is a derivative work, and will offer payright holders automatic protection of their work. Registering your work in this repository will make it possible to take advantage of the payright monetization framework. Under the proposed system, this is the primary way that creators will be paid for their work. So copyright registration cost a lot of money, provided no real benefit, and creators were on their own once they registered. Payright registration will be fast, cheap, and easy, and it will provide automatic protection that benefits creators. For this reason, once the payright system is

enacted, it seems extremely unlikely that creators will lobby to remove the requirement of registration from the system. Some treaties contain an explicit ban on copyright registration. While those treaties cover copyright and not payright, it is clear that some ancillary laws and treaties may need to be changed if payright is adopted. The US has traditionally imposed more and more restrictive treaty provisions on other countries, so loosening up those restrictions with a system such as payright should not be that difficult.

Payright Content Registry


When a person creates a new work (such as a story or novel, a song or musical composition, a video, a software program, graphic design, or some other work of art), they will be able to enter it into the Payright Content Registry at any time they wish. This will be free, and it will generally be as easy as going into the File menu of most programs and selecting Register. A dialog box will appear, asking them to fill in certain details such as the names of the creators, the title of the work, creation date and other relevant information. As soon as the creator clicks Submit, the work will be transmitted to the Content Registry, which will compare it to other information on file. If the work is sufficiently unique, then it will be registered as a new work. If it is an enhancement of an existing work by the same creator, then it can be registered as a new version of that work. If it is a modification to an existing work by a different creator, then it can be registered as a derivative work. The system will do all this automatically according to an algorithm. In addition, both the registrants input and crowdsourced input will be taken into account to determine whether a submitted work is a derivative. An appeals process will be in place should the creator of the original work or the derivative work feel that the result is unfair or incorrect. The first round of appeals will be automated; if human intervention by a registry official is necessary, a second round of appeals can be requested. The same appeals process can be used in cases where a creator has falsely registered an existing work that was actually authored by somebody else. In the event that a content "author" has fraudulently registered someone else's work, their assets and proceeds will be frozen and used to pay damages. The registry will also provide adjudication details to be used in civil or criminal lawsuits. Registration will be free for the first five years. After that time, many works will pass into the public domain because they haven't earned any money and their creators no longer care about them. The creator will have the option to extend registration to year six for a single penny. This cost will double annually, so that year seven will cost two cents, year eight will cost four, and so on. Eventually the exponential growth of registration costs will force all works into the public domain; for example, to register a work for a 40th year will cost over $170 million. For this reason, there will be no fixed term of payright. The owner can continue to extend registration for as long as they want to, or as long as the work is earning more money than the registration cost. The registry will provide an automatic extension service that content creators can choose to use, and many probably will. The registration will be automatically extended each year that the author's revenue is greater than the registration fee, a certain percentage of the fee, or a fixed amount, which the author can specify. Otherwise, the author will receive advance notification that the work is about to pass into the public domain.

As an example, imagine that Rick writes a humorous four panel cartoon about a mouse playing chess with a lion. It is widely shown on chess web sites and in chess magazines. It makes more money at first, and then settles down to earn him a steady $8.00 per year. He chooses the automatic registration feature and the work remains under payright protection until year 16. At that time the registration fee of $10.24 exceeds the $8 that he would have earned. The work passes into the public domain where it continues to fuel interest in his more recent cartoons and illustrations.

Once a work does pass into the public domain, it will remain in the registry. There will be no restrictions on the way in which it can be used or monetized. Derivative works will no longer have to share their monetization share with the creator of the original work. Nonetheless, the public domain work will remain in the registry to prevent anyone from claiming that they are the original author and requiring derivative works to pay them. Works that are currently copyrighted will be eligible to register for payright content protection. The protection will begin on the date the works are registered, and the burden of registration will be on the copyright owner. Even if a work was created decades ago, once this system goes into effect the first five years of registration will still be free. Combined with the additional earnings from the new system, this should more than compensate for the fact that payright will expire earlier for most works. In the current copyright system, there is a problem of orphan works which are technically under copyright but for which the owner cannot be determined or contacted. As a result, such works languish and fade into obscurity. Under the proposed new system, the owner may turn up to register them and they will no longer be orphan. Orphan works not registered will pass into the public domain, and many of them will experience a revival. Congress assumed that extending copyright protection would prevent orphan works from falling into obscurity. Instead, the opposite has happened: when orphan works fall into the public domain, anyone can sell and promote them, leading to their resurrection. My interpretation of Healds result, given earlier, provides visual proof of this effect. The administration costs of the content registry will be more than paid for by registration extension fees. All revenue over and above the cost of running the registry will go into the Content Development Fund (CDF), described later. The content registry will provide a data feed that can be used by anyone wanting to access the content in the registry. Users will be able to execute arbitrary queries to search and filter registered works based on a variety of criteria. The content will be categorized and crowdsourced ratings will be used.
For example, a fishing magazine website might want to download "all articles on fly fishing between 100 and 2000 words, written in the last two months, with more than 10 ratings and a reader evaluation of 3.5 stars or higher." Or a movie theater might query for "all high definition comedy videos, between 30 minutes and 2.5 hours, created in the last six months, with more than 1000 evaluations and a viewer rating of 3 stars or higher." For either query, the registry would provide the information about all matching works and a canonical link to each one.

As described at the end of this document, I want to build the content registry now. This will allow content creators to voluntarily register their work and profit from the powerful revenue model that this system will create before it is written into law. Until then, we can use copyright to

enforce the provisions of the system, similarly to the way in which the GNU General Public License uses copyright to make works completely free.

Attribution
Attribution is important under this system, and not just because of the desire to ensure that a creator receives proper credit for and acknowledgement of their work. It is primarily important because of the financial relationship between a primary work and a derivative work. And attribution is handled in a completely new way. When a work is registered in the content registry, a canonical download location is created where anyone can access the work. The creator doesnt have to post it on the Internet anywhere, although they are certainly not prevented from doing so. But the creator will not be able to prevent anyone from accessing the work, free of charge, either. The system will automatically compare the new work to other works on file at the time that it is submitted, and determine if it is derivative in any way. A new work that is largely based on something else, or that has extensive material from something else, will be considered derivative to some extent. The exact extent will be determined by algorithm and subject to appeal. If you register something that is a derivative of another work registered later, the system will automatically handle that case.
For example, if Ted registers an edited version of Sallys book before she gets around to registering the original version, but if it is clear that Sallys version was written earlier, then the system will inform Ted that it is marking his work as derivative. (He can appeal if he disagrees.) When someone downloads Teds work from the canonical download location provided by the system, it will be bundled together with attribution materials that indicate that Ted is the author and that it derives from Sallys work. Ted will not have to include this in the document he submits; it will be created automatically as a service of the system. The system will create a separate attribution file that comes along when the work is downloaded. Ted can optionally include the text of this file or similar attribution of his own choosing in the body of the work, but he will not be required to do so. Ted will only get into trouble if he tries to monetize the work without providing the fair derivative share to Sally. Under the current copyright system, Ted would need to obtain Sallys permission before using extensive material from her work. She would be able to block him from doing so or force him to accept any financial arrangement of her choosing. Ted would be solely responsible for providing attribution. In the event that he failed to do so, the burden of enforcement would fall onto Sally. The proposed system seeks to take as much of the burden as possible off of content creators so that they can primarily focus on producing great work, and the system will handle a lot of the rest.

A derivative work doesnt have to have any specific contents in common with the original work in order to be derivative. Sometimes there is not an algorithm that can determine the exact similarity between a derivative work and the original. In those cases, the system will have to rely on a combination of general principles and crowdsourced reader input.

Brian reads a book in German and loves it. He spends a lot of time telling his friends how great it is, but none of them know German. Based on his extensive knowledge of the books characters, its genre and information he has gleaned from participating in online discussions within the fan community, he decides to write an English translation. The translated version is a derivative work that owes a great deal more to the original text than would be revealed by a standard text comparison. The system uses multiple methods to determine that the translated version of the work is 5% new material and 95% simple translation. It winds up giving 10% of the revenue to Brian and 90% to the original author.

Monetization Framework
Content creators will flock to this payright system for three primary reasons: 1 Their works will receive a much wider distribution under this system than under copyright, 2 It provides a monetization framework allowing them to earn revenue effortlessly and in ways they could never have negotiated or even imagined, and 3 The development fund will allow them to be paid for non-commercial use of their work. The monetization framework is a central feature of the system. Gross proceeds from the commercial use of any work will be apportioned according to a simple mathematical formula that depends on the way in which it is sold. The Content Development Fund (CDF) will pay creators for non-commercial use of their work. If a band produces a song, then anyone will be able to listen to it online or download the song at no cost, and the CDF will pay the band a share as a result. The most popular works will receive the most shares. Anyone will also be able to promote the song commercially. They could burn it to CD and sell the CD, or they could charge a membership fee and provide the best works to their members. They could play the song at an event or a fundraiser. The creator will receive a share of the gross monetization of the work, and it will be apportioned depending on a number of different factors. Why would people pay money for a work that is already available to them for free? In many cases they wont, and the same is already true today. However, the payright system will create a massive incentive for a virtually-unlimited number of outlets to sell those works to consumers. Sellers will offer works in innovative new ways at every possible point of sale. They will add value by making it easy, combining multiple items together in attractive ways, or adding promotional materials. Payright will end the price-gouging effect of copyright, increasing sales by allowing market forces to determine the perfect price for a work. Many people are currently paying money for printed copies of public domain books that they could download for free, because they would much rather read a printed book. In the same way, clever sellers will continue to find creative ways to add value and obtain payment under the payright model.
A band called Razorhead has a hit song called Bullet, and they are worried that nobody will buy the song on CD any more once the new system goes into effect. However as soon as the Payright System is adopted, the same thing happens to music CDs that we already saw for books printed in the 1910s. Many different companies have an incentive to sell Razorheads album, so

they print up CDs with attractive album covers. They deploy them at the point of sale in bookstores, grocery stores, department stores and other places. Because of its popularity, it is frequently seen in the checkout aisle. Razorhead is pleasantly surprised when they get a big spike in sales. They are also being paid for non-commercial downloads, which are also considerable.

50% of the "creator's share" will go into the Content Development Fund and 50% will go directly to the creators of the covered work(s). The creator will receive a share of the CDF for this as well. In general, most creators will receive a payment from the CDF that is greater than the 50% that goes into the CDF, because the CDF will be funded in other ways as well. For purely electronic usage, the creator's share will be 90% and the seller will receive 10% of monetization. This would apply to watching a movie online, reading an article, or downloading an mp3. Monetization might occur by charging a fee or a membership subscription, or by selling advertising on the website.
For example, imagine that you write an article and it's being displayed on a specialty website surrounded by advertisements. As the content author, you will receive 90% of the ad revenue and the site owner will receive 10%. This is a fantastic deal for the author, because there's no effort required to promote the work and it will receive the widest possible distribution. And it is a great deal for the site owner because they will be able to display the content on their site and collect revenue without having to pay anything upfront. So it is a risk-free way to generate revenue for the site owner.

For sale of a physical medium (such as printing a book or burning a song to a CD), the seller will keep 75% and the creator's share will be 25% of gross monetization. This would also apply to a DVD-of-the-week club where the subscriber receives a DVD movie every week in the mail to add to their collection, and they pay a subscription fee. This is more than most authors currently receive for book sales. As mentioned earlier, public domain books can be printed and sold by anyone, and the same will be true of payright books. The evidence shows that public domain books from the early 1920s sell for about the same price as copyrighted books from the late 1920s, but the public domain books sell a much larger number of copies. The selling price of a printed book will not be controlled by the proposed payright system. Instead, it will be allowed to float freely according to the market forces of supply and demand. Based on the foregoing considerations, it is reasonable to expect a huge spike in both book sales and author earnings under the payright system. For public performance of an electronic work, the creator's share will be 50% of gross monetization. For example, this would apply to a movie theater. The creator would receive 50% of ticket sales, concessions and any other money collected. The 50% is fair because the theater will have costs to pay. Giving the creator 50% of popcorn sales is also fair. The movie is selling the popcorn, and not vice versa. Theaters will be able to show more movies and make more money under this plan. Instead of going out of business, they will start popping up all over the place. There's something about being able to watch a movie on the big screen and with a great sound system, in a room full of other people who are cheering or crying (or groaning) right along with you. Watching a movie on your laptop just isn't quite the same. For rental of a physical medium, the creator's share will be 75%. DVD rentals or book rentals would be examples. A movie rental store does bear some costs such as the physical

creation of the actual DVD that they are renting. Imagine that you can go to a DVD vending machine at any local store, and it will give you a high definition DVD of any movie ever made, that you can rent for $1 or buy for $4. For public performance of a written work, the creator's share will be 10%. This would include a poetry reading or a performance of a play. The author deserves to be paid, but so do the actors. If it is dinner theater, then the author will also get 10% of the price of the meal and the drinks.

The 50% CDF Share


Should creators be upset or worried about that 50% of their share that is going to the CDF? And what happens to that money anyway? If a creator authors an electronic work, then the creators share is 90% when someone sells it online. Half of this goes to the CDF, so the creator receives 45% directly. The creator also receives a share of the CDF for this commercial use of the work. In addition, the creator will receive other shares when people download the work or view it online for free. For most works, the sales will be somewhere in line with free use. A highly popular work will sell a lot of copies, and will be downloaded for free as well. An unpopular work will not sell many copies, and will not have many free downloads. So as a general rule, the assumption is that the creator will get back more money from the CDF than they give up in the 50% of their share. This is because the expectation is that they will have a proportional amount of free use as well, and because the CDF will receive a lot of additional funds over and above the 50% of creators shares that are contributed.

Collaboration in Open Culture


Open culture will enable new forms of freeform collaboration that simply dont occur in todays closed culture of restrictive intellectual property. Here is an example of how life will be different under the proposed system.
Sally writes a romance novel. She cannot afford to hire an editor or a cover designer. Instead she simply registers her manuscript in the content registry. A number of people start to read it, and it starts to gain limited traction. One of them is an editor who notices that it needs a little work. The editor makes many small changes to the text, cleaning up awkward language and correcting grammatical errors. He registers it as a derivative work, and the system gives 95% of the proceeds from that work to Sally and 5% to the editor. A book publisher wants to offer printed and ebook copies of the book. It hires a cover designer and creates some professional-quality marketing materials to promote it. This creates a new derivative work of the edited version. Now with its attractive cover, slick marketing language and polished prose, Sally's romance novel starts to really catch fire. Soon she is able to quit her day job and start working full-time on a sequel. She hears that several different filmmakers are working on movie adaptations (all derivative works), and she can't wait for even larger checks to start flowing in.

Because the book is available for free online, Sally is surprised by the number of sales she gets of printed hard copies and downloadable ebooks. A number of different publishers line up to print and sell her book. It turns out that a lot of people just want to buy an actual book rather than read it on a computer screen.

Note that this system opens up new forms of collaboration that are seamless, based on self-interest and don't require the individual contributors to work together or even know each other. Here are a couple more instances of unlikely success that ought to be commonplace under the proposed system.
A teenager streams an extremely embarrassing video of herself, swearing her undying loyalty and reading love poetry into the camera for a popular boy. That same boy is watching her live over the Internet, getting angrier and angrier. Halfway through the video he phones her, tells her to stop and that he thinks she is ugly. She bursts into tears and starts screaming into the screen, making threats and swearing revenge. She gets so worked up that her wig falls off and her chair capsizes hilariously. The video goes viral and is viewed by millions of people all over the world. Although still embarrassed, she is now laughing all the way to the bank.

Heres a different scenario:


An unknown artist writes a rather stupid comic about a superhero with an extremely large nose called Captain Popel. Not many people read it, and he forgets about it until it unexpectedly starts to become slightly popular among German pre-teen boys. One boy's father explains to the author that the hero's last name means "booger" in German. Although it's entirely noncommercial use, he receives a modest payment from the development fund.

To respond to the inevitable criticism that payright encourages attention-grabbing terrible things: criticism of terrible movies is often very entertaining. For example, everyone hates The Room. Very few people are upset about the fact that director Tommy Wiseau makes so much money off of people's hatred of The Room. Why? Because hating The Room is lots of fun. So even the creators of comically bad things deserve to be paid, because in a roundabout way, they make the world a more interesting place. And that's the job of an artist.

Charitable Use
Charities are exempt from paying taxes but are not normally exempt from paying for goods they purchase or provide as benefits to their donors. However to enable charitable use, the Payright Content Registry will allow content creators to specify whether they would like to waive commercial fees for charitable use, and by what kinds of charities, and/or fundraisers. In the event that a movie creator has opted to waive commercial fees for this kind of use, a qualifying charitable or fundraising event will be able to show the movie and collect donations without having to pay for it as commercial use. The event will count as non-commercial use, and the movie maker will be eligible to be paid for it as non commercial use as specified elsewhere in the document. In addition, it may be appropriate to create a separate fee structure or to waive revenue sharing entirely for nonprofits or in cases where specific conditions are met. However this must be done very carefully to mitigate the risk of abuse.

Payright Invention Registry


The patent system is designed for inventors who have created a commercially-viable product that is already making a lot of money. It costs tens of thousands of dollars to go through the process of being a patent holder, and it costs millions of dollars to prosecute or defend a patent lawsuit. The barrier of entry is so high, and the language of patents is so vague, that even large corporations routinely settle frivolous lawsuits. They pay ridiculous settlements or licensing fees, and pass those costs along to the consumer. Inventors routinely go to file a patent, only to find out that someone has beaten them to it and they are now prohibited from using their own invention. To replace the patent system, an invention registry will be created where the entry barrier is practically zero. Anyone will be able to go into the registry and create a plain text description of a device, process or other kind of invention, and register it. The process will be about as easy as making a forum post on any web site. They wont even have to implement their idea or do a search to see if anyone has already registered it. As with the content registry, initial registration will be free for 5 years. Extension to year 6 will cost a penny, with the amount doubling every year thereafter. The core of the system will be an invention description language that is precise and unambiguous. This language will be similar to a programming language or a mathematical language. It will describe a process or a device in a precise way, referring to other processes and devices that are already known in the system. An invention description programmer will take the inventor's English language invention description and render it in the invention description language. The system will compare it to inventions already on file and detect existing instances of similar or identical inventions. The programmer will be able to tweak the description in an effort to provide the best and most useful description available. In exchange for this service, the programmer will receive 10% of the commercialization value of the invention. Because they are receiving a substantial percentage, freelance programmers will be constantly searching the invention registry for promising inventions. The average person won't have to hire them or ask for their help. Of course, some inventors will be able to act as their own programmer and keep a larger slice of the pie. In the event that a programmer does an inferior job of specifying an invention description, another programmer will be able to improve upon their work. The system will automatically detect the improvement as a derivative, and will apportion the revenue appropriately.
Let's imagine that Jay has created a protein that he thinks might be useful in developing a cancer drug. Under the current system he'd have to keep it a secret until it could be patented, and nobody else would be able to collaborate with him. Then once he does file a patent, he can publish his work. At that point, a lot of other researchers will not want to collaborate with him because they will have no economic motivation to do so. However under the new system he simply places a precise description of the substance into the invention registry. He also registers a derivative work - the fact that this protein shrinks certain kinds of tumors in mice. He writes an article about the protein and offers to share it with other researchers. Researchers at other labs find that this protein seems to be effective against

other cancers and conditions, and register derivative inventions. Someone finds a way to make the protein bioavailable and develops promising treatments in animal models. A pharmaceutical company develops a drug and registers it. Eventually it receives FDA approval. A number of drug manufacturers pick it up and doctors start to prescribe it to their patients. The end result is that Jay gets a lot of money. Some other researchers also get rich, as does the pharmaceutical company that registered the drug. They don't even have to manufacture the drug. It becomes a generic drug immediately and receives the widest possible circulation at a fair market price. And everyone in the invention chain gets a fair share of the proceeds.

If the above example provides an accurate description of the difference between science under copyright/patents and science under payright, then we can anticipate a flood of new treatments once the model is placed into service. This model enables new forms of collaboration that were not possible under the patent system. For the most financially-successful inventions, it will be possible to extend registration somewhat beyond the 20 years of the patent system. However for many inventions registration will end after 5 years and very few inventions will go beyond 35 years.
Imagine that Fred invented a new kind of airplane landing gear and a computerized process for lowering them. Even though the invention was never put into production and he didnt get any money for it, he registers the patent with the invention registry before it expires, and receives at least five years of payright invention protection. Fred simply submits the patent document as well as some other supporting documentation into the system. The patent is rather vague and contains multiple separate components. Invention description programmers translate it into a number of different payright inventions that are defined very specifically. During the process, it is detected that Freds control algorithm for lowering the landing gear actually relies on logic that was previously registered by Ted, another inventor. Teds algorithm is used for returning change in vending machines. Freds algorithm for lowering landing gear is therefore caught as a derivative of this other earlier invention, which will receive 25% of the revenue for the algorithm but 0% of the revenue for other portions of Freds patent. A year later, someone registers a new invention for a slot machine. The system detects that the slot machines elaborate algorithm for dumping out coins relies on Freds algorithm, and is 50% derivative. And it also determines that the coin return algorithm is 10% of the overall slot machine design. Therefore, Fred will receive 5% of the money each time a slot machine is sold, but he will have to give up 25% of that money to Ted. Both Ted and Fed wind up making more money off the slot machines than they ever received for their vending machine and landing gear inventions.

It is much easier for the payright system to make this kind of determination than it is under the patent system. This is because payright inventions will rely on a highly-specific programming language to describe inventions. The process for determining that one invention is a derivative of another will rely on technical decisions rather than on legal ones. There will be no room for character assassination or moral accusations. The percentages will be determined

automatically by an algorithm which will constantly be tweaked and refined in the future. The percentages and determinations will be subject to appeal within the system. Patent lawsuits can cost millions of dollars, so this alone will save inventors a ridiculous amount of money. The payright system will allow prices to be set by market forces, making it impossible for inventors to charge high licensing fees that hurt the economy by reducing the level of economic activity. The system will also reward inventors for both commercial and non-commercial use (e.g. giving away products for free) of their inventions in much the same way as for creative work. The exact formula for monetizing the use of an invention will be similar to that of the content monetization framework. However it will be much more involved and I'm not going to specify it here. For example, inventors may receive one percentage for manufactured goods and a different percentage for electronic usage. There might be a separate percentage for drugs or medical technology. In general, an effort will be made to give the seller or manufacturer a fair price while giving the inventor a better deal than they would get under the current system.

First to Invent
The Newton/Leibniz case has been pointed out as an interesting case that raises interesting issues and would require human intervention.
If an inventor (Newton) comes up with a general invention, but doesnt know how to put it into practice, and a later inventor (Lebiniz) independently comes up with a much more complete implementation of that invention, then the system will flag Lebinizs invention as a derivative work of Newton. This is a big improvement over the current patent system where theyd have to spend millions of dollars in court to know for sure whether Lebinizs work was derivative. Even so, Lebiniz may object that he had not read Netwons work and was not influenced by it. An automatic appeal will fail if Newtons work was clearly done first, and if it is a core component of Lebinizs. A manual appeal could to be made to a registry official, who would have to weigh Lebinizs claim that he was not influenced by Newton against the admitted fact that Newton had a similar invention first. The burden of proof would be on Lebiniz in this case. If Newton wins, Lebinizs work is derivative and he has to share a percentage with Newton. If Lebiniz wins, then his work is not derivative and he can keep the entire proceeds. Perhaps a likely outcome is that Lebiniz keeps a larger slice of the proceeds.

The important thing to keep in mind is that the system will need a mechanism for addressing certain kinds of disputes, and that the mechanism will require human intervention. The costs of this kind of personal involvement will be funded by registration extension fees, with the balance of those fees going to the IDF. The first to invent model was used in the US until recently, and today a first to register system is in place. The idea of the first to invent system was that it would be the most fair, since the original inventor of an idea would be given precedence. It was designed to prevent a situation where someone develops an invention but someone else files the patent first, and the original inventor is prohibited from developing and using his own invention. The problem with the first to invent patent model has been that it results in a lot of litigation, because patents are so vague and hard to pin down. The idea of the first to register system has been to reduce the

amount of litigation. Because the patent system is already patently unfair, this doesnt really compromise fairness that much anyway. The payright system will, to the extent possible, streamline and automate the entire process, and take legalities out of the system. The determination of whether one invention uses another is a technical question. It determines who gets paid for an invention and how much, but it has no effect on whether that invention can be used, or at what price.
Willa is a brilliant iconoclast who creates an entire industry around a new kind of electronically enhanced clothing. The new smart jackets and accessories quickly start appearing in various stores, and they are especially popular in the gay community. XYZ corporation holds a patent and they register it in the payright system. The system detects the fact that Willas smart clothing relies on an invention that had been created several years earlier, and registered as a patent. The payright system determines that the new smart clothing is really a 50% derivative invention. The CEO of XYZ Corporation has strong anti-gay political beliefs, and would like to put the entire industry out of business. Will he be able to accomplish his objective? Under the patent system, XYZ Corporation would have no trouble at all putting most kinds of derivative inventions out of business. They could charge any kind of licensing fees they want, pushing the cost of the clothes out of reach. They could refuse permission to use the invention to certain manufacturers. Or they could simply shelve the patent, which would prevent anyone from using it for any purpose. Unfortunately for XYZ Corporation, this strategy might not work for clothing, where IP protections are much harder to obtain. But it would work for almost anything else. The payright system would be different on both counts. First, XYZ Corporation would be entitled to a 50% share of the creators portion of the clothing sales (because the system determined that the smart clothing was a 50% derivative invention of XYZs patent.) However, XYZ Corporation would not be able to charge a licensing fee or change the selling price; that would be done by market forces. The clothing could even be given away for free, which would be non-commercial use. Secondly, there will be no problem with IP protection of clothing, food and other basic necessities under the payright system. Unlike with patents, it is a completely different system so the same concerns would not apply. The CEO of XYZ Corporation might not like the way his invention is being used, but his corporation would be entitled to its fair share of the economic proceeds from the invention.

This example shows the effect that grandfathering of patents would have, and also the effect that the first to invent model would have. It shows that payright is fundamentally different from patents, and that it is not a threat to open culture.

Software
Software will have a dual role as it will be protected under both the Payright Content Registry as source code, and under the Payright Invention Registry as algorithms. It will therefore be eligible for two kinds of monetization.

Under this system, software developers will register their source code and the system will detect existing source code that is similar, and existing inventions that are implemented in the source code. So a piece of software can be derivative under two separate models: as a payright work, and as a combination of ideas. For software, the algorithm to compare two programs will have to look at the source code, the compiled machine code, and the ideas embodied in the work. If a programmer simply adds a lot of comments and renames all the variables, then its not a big change even though a lot of source code has changed. This process will be quite complicated and will span both the payright content registry and the payright invention registry. It will probably be common for software developers to register inventions even before they have written them into code. It will probably also become common for developers to create useful reusable code and frameworks and publish them in the content registry where anyone else can freely make use of them. This is because everyone who does so will be creating a monetizable derivative work in the process. The system will provide multiple kinds of commercialization for software. All code will be open source, and everything will be free for non-commercial use, as well as paying the developer a fair portion for commercial use. I am not proposing to ban closed source software. However, under the proposed system it will be permissible for a developer to reverse-engineer closed source programs and publish the source code as a derivative work. For this reason, I would anticipate that most code will become open source over time. This is not the same thing as Free Software as defined by the Free Software Foundation. While there will be no limit to the non-commercial use of software registered under the system, it will be possible for the creator to go an extra step and commit the code explicitly to the public domain. This will prevent others from registering the same work, but will not prevent others from creating derivative works and charging money for those. It will affect the percentage of revenue that they receive.

Development Funds
This system calls for the creation of two funds that will compensate the creators of content and inventions for both commercial and non-commercial use of their work. The Content Development Fund (CDF) will receive 1% of US Government Tax Revenue annually. It will also receive 50% of the creator's share of all commercialization of current work in the content registry. It will also receive all proceeds of content registration extension fees over and above the amount required to run the registry itself. Taken together these amounts should total between 30 and 50 billion dollars per year. Every time a work is consumed, whether commercially or non-commercially, the CDF will assign a share portion to the creator(s) of the work. This portion will be proportional to the size of the work, and to its relationship to other derivative works. The exact method for this is not currently specified, and it must be constantly tweaked to avoid the possibility of abuse. The general idea is that a reader, listener, or viewer who spends a long time on a work should be giving them a larger share than someone who spends a short time on a work. The most popular works will receive many more shares of the CDF than less-popular works.

Under this system it should become commonplace for creators of movies, music, and written work to encourage everyone to download and view their material for free, in addition to paying for it commercially. The system should open up all kinds of new commercial use of entertainment for example, restaurants may start to offer popular movies while you eat. This will be possible because commercial use will be unrestricted. It will be profitable because compelling content will sell many things besides just tickets. An Invention Development Fund (IDF) will also monetize the use of inventions. As with the CDF, there will be three funding sources: 1% of tax revenues will go to the IDF. 50% of the inventor's share will go to the IDF and the invention registration extension cost, over and above administration costs, will also go to the IDF. A formula will be developed to compensate inventors from the IDF based on both commercial and non-commercial use of their inventions. Again, this formula is yet to be developed and will have to be constantly tweaked and adjusted in the future. The goal will be to maximize economic activity on the one hand, and to reward inventors on the other. In times of economic trouble, Congress could decide to increase the percentage of the budget that goes into the two funds. This would be a way to stimulate new economic activity. If Congress attempts to gut the funds and undermine the payright system, then the most creative and inventive people in society would be trying to figure out how to throw them out of office. In the same vein, those same creative and inventive people are sure to be attracted to the Pirate Party by this proposal, if it is adopted as an official policy.

Challenges and Implementation


Gaming the System
It has been quite correctly pointed out by Rick Falkvinge (http://falkvinge.net/2012/02/23/cultural-flatrate-wont-work-heres-why-it-wont-work/) that there is a potential for abuse when you are trying to reward works for non-commercial use. This system provides a general framework that is based on the assumption that there is a fair way to do this. Falkvinges criticisms were made in a completely different context, since he was responding to proposals that were made in the context of piracy and the continued existence of copyright. But nonetheless, some of them are quite relevant. So I want to explicitly go over them and show how they would be addressed by the proposed system. We should never concede the point based merely on the objection that something has been tried in the past and it failed at that time. The intent of this proposal is to replace copyright with payright and to write the proposed system into law. To fund it with large amounts of tax revenue and to stimulate massive economic and creative activity. Anyone who tries to fraudulently skew their numbers by downloading millions of copies of their own work will be committing a crime, so theyd better not get caught. They will be massively skewing their non-commercial numbers so that they will be far out of line with their commercial numbers, triggering investigation. While this is a major challenge that will require a lot of work to address, it seems like a solvable problem to me. If an artists non-commercial numbers far exceed their commercial numbers, and if a botnet is found

to be downloading large numbers of copies, then their account is suspended pending investigation by a human registry official. Falkvinges criticism was based on the experience of MP3.com, a start-up company that was in the process of being sued out of existence and probably didnt have a lot of resources to devote to anti-cheating measures. A multi-billion-dollar tax-funded initiative should be able to do a better job than that. In addition to the question of enforceability, Falkvinge notes several other problems with the idea of paying for non-commercial use. Some people object to a system that would pay for adult material. True enough. However, adult material currently is protected by copyright and receives a gigantic amount of money as a government-protected monopoly. It would be just as eligible under the proposed system. Anyone proposing to exclude it will have to battle against a vast economic empire. There is an objection to paying a lot of money to the copyright industry. That objection applies to other proposals but not this one. Under this proposal the copyright industry would cease to exist. It would be replaced by the payright industry, which would have no ability or motivation to control how its work is sold or shared non commercially. It would be a completely different industry with no power to impose its will on its own customers. Many people will register payright material and obtain payment, not just the heavy hitters that are making a lot of money today. This is a correct statement but not a valid objection. The fact that copyright and patents have centralized the economic benefits in the hand of a few powerful corporations is not a benefit of the system that we should seek to preserve in the future. Payright will eliminate price gouging and make the economic benefits of creative work available to a much wider group of talented people. Are we only going to pay the MPAA for movies or will everyone on YouTube be eligible? Everyone on YouTube (or anywhere else) will be eligible to register payright material. This will be a completely open system with the lowest possible entry barriers. Paramount Pictures will have a much bigger budget for their next movie, and probably more people will watch it than the movie my teenager just posted. And theyll probably make a lot more money than they do today. Who is going to be compensated for what? Anyone who registers a payright protected work will be compensated for commercial and non-commercial use of their work. A system will be put into place that tracks such things, handles payment, and respects the privacy of its users. Other proposals have not gone as far as the payright system in addressing this question. There is no way to track what people consume without invading their privacy. That would indeed be true with the current lack of privacy protections. We need a bulletproof privacy protocol in order to address this issue. See the section below on privacy for more details. The bottom line is that usage must be tracked to give fair payment. The system must make spying or privacy violations

impossible by its actual implementation, and not just as a matter of law or policy. If thats not in place, then we cant put the system into service. Is this simply an attempt to maintain an outdated business model? No, it is an attempt to sweep aside the legal obstacles to creating a new sustainable business model. Some will continue to cling to outdated ways of doing things, and they will be trampled by a stampede of forward-thinking artists and businesses flocking towards the greater rewards offered by open culture. What if conservatives try to start banning certain kinds of works from the registry or from receiving compensation? This is a very likely scenario. As described below, the implementation model specifies that payright should run on a distributed peer-to-peer network with no centralized controlling authority. Because of the privacy features that need to be in place, it will be a very hard job to ban certain kinds of content or prevent people from consuming them. You might as well try to keep adult material off of BitTorrent. I dont see how it could be accomplished. But we put that implementation model in place partly because this is such an important issue.

Legal Challenges
Payright is designed specifically to forestall legal challenges. Currently there are a lot of expensive lawsuits related to intellectual property, and these have a chilling effect on economic activity. Many innovations may never occur due to legal concerns. Many legal challenges fall under the heading of, work A infringes on the intellectual property of work B. The payright system will provide an orderly framework for handling such challenges without the need for a lawsuit. If work A is derivative of work B, then it will be duly noted in the system and revenue sharing will be enforced. The owners of both A and B will have the opportunity to present any evidence they like. Other legal challenges are of the form that person X cannot sell work A because it is owned by person Y. Under payright, there will be no problem with this situation because Y will get paid. If Y has falsely registered work A as their own, but it was really authored by person X, then the system will have a framework for investigating and resolving such disputes. The only case where legal action would be necessary is if X wishes to recoup additional money from Y, or if Y is guilty of fraud. The payright system will use a reputation-based crowdsourced method to ensure that decisions are considered fair and that the best people are making them. The legal reforms proposed by this system will remove the restrictive ability of a rights holder. This change in itself should forestall a lot of legal action. Of course anyone can challenge the system itself to say that it is not constitutional. We will have to write the laws carefully to ensure that this is not a problem. Suing the system out of existence wont be an option, as described under the implementation plan.

Privacy Concerns
There is a very understandable privacy concern with payright. We are proposing to start tracking what people watch, read, listen to, or download. We need to do this in order to ensure

that creators are paid for their work. But isnt this just like DRM? Wont we have a serious invasion of privacy? Doesnt this fly in the face of everything the Pirate Party stands for? This system will only work in the context of a robust privacy controls. We need a method where everyones identity can be protected and validated in such a way that it guarantees their privacy. The payright system should be able to know that some person X downloaded a song and that they have previously downloaded it twice before. But it has no need to know who X actually is. Therefore, we need a bulletproof privacy wall. This system must not rely on the honesty of a specific group, or on legal protections that can be weakened later. The system must make it structurally impossible to violate someones privacy. The privacy wall will use two kinds of encryption. First, strong encryption which will rely on a key that is known only to you. This will enable the system to store private information without the possibility for anyone else to access it. Second, the system will use non-reversible encryption to create a key that can uniquely identify the fact that a certain person has done a certain thing, but it cant be reversed to find out who that person was or what they did. Some of the details are rather technical. There are existing systems that have already solved many of the underlying technical issues involved. The difference with payright is that these technologies will be combined in a new way to make it possible for a person to prove who they are, while also making it possible for them to remain completely anonymous when they prefer to do so.
Stephanie downloads a steamy romance novel onto her e-reader. She doesnt want anyone to know that she is reading this slightly embarrassing book. The payright system combines her secret identity key with the novels identity key to create a unique identifier to reflect the fact that Stephanie has downloaded this particular novel. Nobody else will be able to create the same unique key (without quadrillions of false guesses), but on the other hand nobody will be able to look at this identifier and know that it refers to Stephanie. Jenny also reads the same novel, and the system creates a completely different key to reflect the fact that Jenny read it. If Jenny rereads the novel, then the system will detect the fact that she had already read it before and add 1 to the number of times she has read it, rather than recording it as a different person having read the novel. Jake is a hacker who wants to create mischief. He looks at the keys in the payright system but they are so strongly encrypted that he is unable to determine who did what. He sees that some of the keys are related to a book of which he is the author. But even for those keys he cant determine who read it. Jake creates a program that will download a million copies of his own ebook. He tries to generate random keys to make it look like random people are reading the book. Unfortunately the chances of randomly generating a valid key are less than 1 in a trillion. The system detects a large number of invalid keys being generated and suspends the e-books author account pending an investigation.

To provide a few more details, the privacy model will allow the system to track the fact that some person X has listened to a song A, and that X is different from another person Y. The system needs a way to uniquely identify X in the context of that song A without also revealing the fact that X is the same person who read a certain book B or watched a movie C. It will do

this by creating a special keys XA, XB and XC from which it is impossible to derive the key of X or the identity of the person to whom X refers. In this way, even a person spying on the internal workings of the payright system would be unable to know who is doing what, or when they are doing it. This is a very solvable technical problem. We cant deploy payright without that sort of privacy system in place. We will also need that sort of system for other reasons, and if we want to create other services such as open government platforms. So it would be a good idea to put it into place soon.

Implementation Plan
Code is already being written to implement the payright system. This section gives a high level overview of the general idea. Specific details are outside the scope of this document. Payright will run on a distributed peer-to-peer network with no centralized controlling server, structured similarly to Freenet. This same network can be used to run the privacy protocol mentioned in the previous section. A peer-to-peer network fits with the Pirate Partys value of an open government where anyone can participate. This network would need to be completely encrypted. Information would be stored redundantly in multiple places. Processing could be distributed onto a large number of nodes, which would help with the computational load of catching derivative works. Users who participate in the peer-to-peer network could also store private documents on the network. They would be strongly encrypted and distributed in a redundant way. This means your information would always be backed up in case your system breaks or gets damaged. And with strong encryption, you would be the only one able to access it. Combining this with the non-reversible key algorithm mentioned above under privacy concerns, the peer-to-peer network could store more than just payright-protected work. It would be possible for anyones private information to be distributed widely across the network. In this way, it will always be backed up in multiple places and will always be available to you, wherever you go. If your old system breaks, or you travel, or if you just get a new laptop then all your data will be immediately available to you on the network. For this entire idea to work, individual users would have to donate space from their PCs. The section Infrastructure Funding below describes their motivation to do this. The fact that your private information might be redundantly stored on other peoples computers might at first sound risky. Remember that nobody else will have any idea what documents they are hosting or what is contained in them. Just as you will not know whose other data might be stored on your system if you decide to join the payright network. The payright system will therefore be running on a very useful network that could be voluntarily leveraged for other kinds of work, yet to be determined in the future. We are not proposing to create this kind of service at this time. However as noted below under Governance, there should be a decentralized crowdsourced decision-making process to determine the direction and the policies of the organization. That sort of governance body could authorize or prohibit various other uses of the network.

Infrastructure Funding

Payright registration fees will defray the costs of running the system. This includes the costs of adjudicating disputes. Anyone will be able to participate in this process because it will be crowdsourced. The system will use a reputation-based method combined with an objective rating system to determine who to trust with the complicated work of deciding important cases. And participants will be eligible for compensation based on their work and their trust levels. Anyone who is donating the partial use of their computer and some of their bandwidth to the payright network will be providing a valuable service to the system and to society. In general this will be much cheaper, less risky and more effective than buying racks of servers somewhere. Participants in the system will also be tracked (within the privacy framework) by rating and trust level, and they will be eligible for compensation according to their contributions and the reliability of their systems. A distributed network will ensure that the system is always available. It will insulate it from natural disasters and attacks. It will make it very hard for anyone to bring down the system, even with a botnet. And as specified earlier, the privacy protocol should make it hard to falsely claim that people are consuming a work in order to get paid extra. In summary, I think we have a solid general implementation plan and am committed to revising it to account for any problems or objections that might arise in the future.

Governance
If this is to be a decentralized peer-to-peer network with no centralized controlling authority, then who is in charge and who will decide policy questions? Policy for the payright network will be set using a crowdsourced governance model in which anyone can participate and anyone can vote. The same privacy technology that tracks usage can also track voting. In addition, a reputation-based model will decide peoples level of authority when making certain kinds of decision. Because privacy is guaranteed by the system, people will be free to participate and vote according to their conscience without having to worry that their opinions and decisions will be used against them. At the same time, the reputation-based model should help to protect the system against certain kinds of abuses.

Intentional Objections
There are a number of objections to the very idea of payright, and I want to break them into four categories. The system will not be altered to address these objections since they are objections to the very idea of what were intending to do, rather than to how we are doing it.

Closed Culture Objections


Advocates of closed culture will object that payright removes a creators or an inventors right to prevent the unauthorized use of their work. The work can be defaced by anyone who wants to make unauthorized changes to it. (Even though they are changing a separate derivative work and not altering the original work, some people do still object.) And the owner will not have the ability to prevent others from distributing their works, charging money for it, and using it. The ability of an inventor to shelve a patent under the current system will be removed. Owners will not be able to set the price that is charged for their work. (Actually they can sell it

for any price they like, but they wont be able to prevent someone else from choosing a different price.) The intent of payright is to remove the ability of intellectual property owners to create a closed culture of works, ideas and inventions where nobody can do anything without first asking permission. The intent is to replace this with an open culture of ideas where anyone can distribute, monetize and improve upon anyone elses work. The intent is to prevent price gouging and allow market forces to set prices optimally for maximum economic growth. We wont change payright by removing these features, since they are the entire point of the proposal. Most of the people who object to payright on these grounds will probably one day earn more money under payright than they ever made under copyright.

Open Culture Objections


A minority of open culture advocates may object to the fact that creators and inventors are being paid for their work. They may object to the fact that the system seeks to guarantee this. They may state that financial reward has nothing to do with creativity, and that the same amount of creativity will still occur if we remove the financial rewards entirely from the system. Creators and inventors are being paid many billions of dollars for their work annually under the current closed culture of intellectual property. They are unlikely to agree to legal reforms that will remove their ability to be paid for their work. One of the main ideas behind payright is to allow such payments to continue in an open culture where works and inventions can be shared freely without restriction. We wont change payright by removing these features, since the proposal would be meaningless without them. Any alternative proposal under which nobody gets paid for their work is unlikely to be enacted in the future.

Small Government Objections


Advocates of smaller government object to the notion that we will allocate 2% of the budget to fund the Idea Development Fund and the Content Development Fund. They dont want to see tax dollars spent on certain kinds of activity, and they feel that this is one of them. The exact amount that is spent annually on these funds can be adjusted in the future, and were open to debate about how to adjust these numbers. Creators and inventors may want to see it increase, while small government advocates may want to reduce it. Note that under a recent budget of 2.3 trillion dollars, the 1% for the CDF will be 23 billion which puts it somewhere around half of the money that the entire copyright industry currently makes annually. The payright proposal assumes that the general level of economic activity will increase under the proposed system, and this could mean that the CDF can be reduced in size without harming open culture. On the other hand, in times of economic hardship it may be necessary to boost this amount in order to promote productivity and innovation. The creation of these two development funds give the government an additional economic lever with which to facilitate growth and innovation. The specific amount that is spent on these funds should be flexible to accommodate future developments.

While were not wedded to the specific amount, the proposal does include these funds in order to help jump-start the system and guarantee that it continues to be successful in the future.

Big Government Objections


Advocates of big government will object to the privacy model because it will make it very hard to spy on people. They may object that criminals and terrorists will use bulletproof privacy to avoid detection. The same objections have been raised against encryption technology and the Tor network. There will also be an objection to the use of a decentralized peer-to-peer network to implement payright. This will make it impossible to shut down the payright system once it is deployed, or to sue it out of existence. The assumption behind the proposal is that the benefits of these features will far outweigh the supposed drawbacks. Guaranteeing privacy and availability should be seen in a positive light rather than in a negative way. We will not modify the payright proposal to accommodate these objections.

Conclusion
I am very confident that this system will be adopted in the future, either as it is specified here or in some modified form. I would like to build the payright content registry and the payright invention registry even before the system is written into law, in order to ensure that the concept has been thoroughly proven. I want to implement the privacy protocol and the distributed network. This will enable us to overcome theoretical objections either by proving the system works, or by modifying to ensure that it works better. We want to create software to run the payright system today, and to register that software under the payright system itself. All documents and descriptions of the system (including this one) should also be registered under payright. We will need many hands to do this work. Every one of those hands will be eligible for compensation under the two monetization frameworks described in this document.

Acknowledgments
I have asked numerous of people to comment on this document and have gotten many useful comments, feedback and sometimes objections. This has greatly improved the work in many different ways. Zacqary Adam Green is a contributing editor of this document. Jamie OKeefe, Brad Hall and Jeff Talada provided extensive feedback. Their numerous comments and concerns have all had the same effect: they have made this document much better. Im very grateful to everyone who has taken the time to read this.

Works Cited
http://www.youtube.com/watch?v=VoyJmxh97Bk http://www.youtube.com/watch?v=-DpfZcftI00

http://t.co/PZ1igMZw http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2091210 http://arstechnica.com/tech-policy/2011/09/study-patent-trolls-have-cost-innovators-halfa-trillion-bucks/ http://falkvinge.net/2012/02/23/cultural-flatrate-wont-work-heres-why-it-wont-work/