FAIR USE: Protecting Innovation

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These freedoms also benefit technology companies by unleashing innovative new products that would never have come to market in the face of legal uncertainty. Meanwhile, pirates and those who engage in mass indiscriminate distribution of copyrighted content will still be punished.

To Embrace or to Sue

But echoing the early battle against the VCR, many in Hollywood are fighting this notion of fair use. Such behavior harkens back to the economist Joseph Schumpeter, who coined the phrase "creative destruction" to explain the transformation a business must undergo to adapt to rapid innovation.

Schumpeter's half-century-old theory—that businesses either embrace new technologies by giving up old methods and products, or they cede market share to those who will—is equally applicable to today's digital era. Unfortunately, many in the content industry refuse to adapt to new markets and products created by the digital media revolution, and these companies risk ceding the market to those that embrace new business opportunities rather than trying to sue new technologies out of existence.

One example of a company dynamically embracing change is CBS (CBS). At the 2007 International Consumer Electronics Show in Las Vegas in January, CBS President and Chief Executive Officer Les Moonves shared his keynote stage with Blake Krikorian, the co-founder of Sling Media.

Invention Free From Fear

Sling's signature product, the Slingbox, place-shifts content by streaming it to any Internet-enabled computer, letting consumers "sling" their TV content to another room in the house, or to their hotel room in Asia. The innovative partnership lets viewers select favorite scenes from CBS shows and "sling" them to friends. CBS recognizes the destruction of the old model of "appointment TV," and is creating new opportunities to expand the reach of content around the globe.

Businesses that rely on technological innovation should call for all content companies to embrace the creative destruction of the analog world. Our nation's economy is dependent on the technology sector. Consumer Electronics Association market research projects $155 billion in factory sales of consumer electronics in the U.S. in 2007, and the consumer-electronics industry (including manufacturing and retail) employs more than 1.9 million Americans.

CEA supports H.R. 1201 because it allows innovators and entrepreneurs to bring legitimate new technologies to market without fear of unfair lawsuits from content companies that refuse to adapt to the digital era. If the technology industry is to remain a vital contributor to this country's innovation economy, we must ensure that the risks of doing business do not outweigh the rewards.

Shapiro is president and chief executive officer of the Consumer Electronics Association, the consumer-electronics trade association.