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Digital Issues in NAFTA: NAFTA and The Great Gatsby

This is part of a series of posts on digital issues in NAFTA.

The renegotiated North American Free Trade Agreement (NAFTA) will probably include a chapter on intellectual property. One of the more contentious issues in the negotiations may be the term of copyright protection, a subject I have explored previously here on DisCo. The example of F. Scott Fitzgerald’s The Great Gatsby demonstrates the stakes involved.

In Canada, the term of copyright protection is the life of the author plus 50 years. In the United States, the term of protection is the life of the author plus 70 years. And in Mexico, it is the life of the author plus 100 years. During the negotiations on the Trans Pacific Partnership (TPP), the term of copyright protection proved to be a major stumbling block. Countries like Chile and Canada sought a term of life plus 50, while the United States demanded life plus 70. The United States prevailed; the final agreement required Parties to provide a minimum of life plus 70.

The Great Gatsby was published in 1925, and Fitzgerald died in 1940. Because of the differences in copyright term, Gatsby entered into the public domain in Canada, while it will remain in copyright until 2040 in Mexico. Under a life plus 70 regime, Gatsby should have entered the public domain in the United States at the end of 2010, seventy years after Fitzgerald’s death. However, the Sonny Bono Copyright Term Extension Act, enacted in 1998, contained a clause providing a term of 95 years from publication for works published between 1923 and 1962. Thus, Gatsby will not enter the public domain in the United States until the end of 2020, 95 years after its publication in 1925.

Depending on the term of protection included in NAFTA, Gatsby could be pulled back under copyright in Canada, or could receive an additional 20 years of protection in the United States. There is no policy justification for Gatsby receiving this additional protection. Indeed, there is no policy justification for Gatsby currently remaining in copyright here and in Mexico.

A new biography of F. Scott Fitzgerald by David Brown underscores the degree to which lengthy copyright term bears no reasonable relationship to the copyright incentive necessary to encourage creative activity. Based on the success of his earlier works, Fitzgerald received a $4,000 advance to write Gatsby. However, Gatsby was a commercial disappointment, and Fitzgerald’s royalties from Gatsby totaled $8,300 during his lifetime. Although Gatsby and Fitzgerald’s other novels did not sell well, Fitzgerald earned a comfortable income writing short stories for magazines such as the Saturday Evening Post.

Gatsby began to gain popularity during World War II, shortly after Fitzgerald’s death, when it was selected by the Council on Books in Wartime as one of the books that would be sold to the U.S. military at low cost for free distribution to soldiers. In the early 1950s, Gatsby gained academic stature thanks to two books by Alfred Kazin and Arthur Mizener about Fitzgerald and his writings. In short order, Gatsby, became a staple in high schools and colleges.

Who has benefited from Gatsby’s success? Until her death in 1986, Fitzgerald’s daughter Scottie received the royalties. Thereafter, the royalties (estimated at $500,000 a year) have been paid into a trust Scottie established for her four children. Importantly, under the copyright term that existed at the time Fitzgerald wrote Gatsby, the copyright would have expired in 1981, 56 years after publication.

Gatsby’s success has also benefited its publisher, Charles Scribner’s Sons; it is Scribner’s best selling title.

To recap, during his life, Fitzgerald saw only $8,300 in royalties from Gatsby. He derived most of his income from publishing short stories in magazines, which in turn derived virtually all their revenue in the weeks after publication. After Fitzgerald’s death, his daughter and grandchildren have received over $20 million in royalties. Scribner has profited greatly as well. It is unlikely that Fitzgerald was motivated to write Gatsby by the belief that Congress might repeatedly extend the copyright term to provide a sinecure for his grandchildren.

While the lengthy copyright term in Gatsby provided no benefit to its author (or derivatively to the public by incentivizing Fitzgerald’s creative activity), it has imposed a real cost on the American taxpayer. School districts have paid tens of millions of dollars in additional fees to purchase copies of Gatsby for their students, particularly in the 20 years since the 1998 term extension, when public domain works could be distributed digitally for free. It is ironic that taxpayers are still paying these fees on a work rescued from obscurity by a government program during World War II.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.