This is a subject I've been meaning to talk about before, and now that the SOPA blackout day is upon us, I figured it might be an opportune time to expound upon it. First the problem. All of us technically infringe copyright all of the time, with few exceptions, even if you're not using filesharing sites to download mp3z and warez. Even simple things like quoting the entire body in someone's email in a reply is technically infringing. (Source: http://www.dailytech.com/One+Nation+Under+Infringement/article9716.htm ) Meanwhile, big content companies lobby for ever more onerous and far-reaching legislation to maintain the copyright status-quo and even extend copyrights far beyond their original purpose:
The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
Here's where I think copyright should go:
Fair use
Currently, Fair Use is a defense if you get sued--it doesn't prevent one from suing you to start with. Non-infringing fair-use should include penalties and liabilities for plaintiffs, if they bring a suit against a defendant and they are found non-infringing. Also, the scope of fair use should be broadened to include what is considered normal by the average person today, with most limited non-commercial use exempted. Derivative works should also be more rigorously defined, with more clear-cut rules about what constitutes a "substantial" use of the source material.
Performances
Currently, public performances of works are often regulated by non-governmental industry agencies such as ASCAP, which charge licensing fees for various uses. These agencies are often granted a government-sanctioned monopoly for this, and while supposedly the fees they collect go to member artists, it is unclear that this is always the case. Furthermore, such agencies use frankly thuggish means to extract fees from people they suspect infringe on performance rights, even if no infringement takes place. For instance, they will pursue legal action if you have live performances from non-member artists performing their own works. Or if you play creative-commons-licensed music in a public setting. These uses are entirely legal without paying fees, but you will have to pay a lawyer to defend your case in court.
True copyright reform would include abolishing these agencies in favor of a system that protects the public from frivolous litigation and fairly compensates the author. It must take an innocent-until-proven-guilty stance when allegations of performance infringement arise. If real infringement occurred, then it is the purview of the courts to decide this and decide an appropriate penalty.
Penalties for infringement
Right now, the penalties for infringement are so out of whack, it isn't funny. Many of them are worse than the penalty you would get if you went to a store and shoplifted the equivalent amount of merchandise--arguably the worse crime, since you are depriving the store of physical goods. Making a new copy does not cause any of the existing copies to disappear, and is therefore not technically theft. However, since illegal copies do not compensate the author, they should still be discouraged.
Proper reform here means a number of things. First, non-commercial, personal, or inadvertant infringement should be in line with what the infringer would have payed for a legitimate copy. I'd suggest a rule along the lines of "liability for non-commercial infringement shall not exceed 50% above the average price of the work, if it is generally available at the time of infringement, or the average price of similar works if it is not currently available for purchase, with a maximum of $X (where X is a reasonable number like $100) per infringement." Perhaps even a clause stating that a non-commercial infringer that later pays for a legitimate copy of the same content would no longer be liable for infringement. There would need to be some work to get the language right, but it would go a long way towards protecting consumers from excessive damages and will have the effect of forcing content creators to work harder to distribute their works under more consumer-friendly terms as litigation to recoup "losses" due to piracy will have less of a payout. Additionally, if the alleged infringer is found not guilty, the plaintiff should always be liable for court costs.
Secondly, the teeth of the law should be focused primarily on large-scale pirate operations, especially those that sell infringing copies. Current law seems well-enough suited for this, though there should probably be more 'follow the money' provisions that attack such infringers right in their profits. However, providing illegal copies non-commercially (i.e. for free) may warrant somewhat higher penalties than would be the case for downloading something, but again, a balance should be struck that keeps the kid who installed Limewire on their parents' computer from being liable for millions of dollars. Solutions that include censorship provisions or "3 strikes laws" that ban an infringer from the internet are not acceptable. The law should take into account the scale and intent of the infringement.
Thirdly, when there is no legitimate copy to be obtained, the damages should be relatively low, since there is no way the infringer could obtain a legitimate copy otherwise. This will encourage companies to keep their works published in a consumable form for as long as the copyright lasts, so that they don't do dirty tricks like Disney's Vault to artificially cause scarcity where none actually exists. This creates, essentially, a de-facto orphaned works policy. This one may need some tweaking, since it has the potential to hurt small-time authors.
Copyright terms
This section is pretty simple. 95 years after publication is too long. Most of the monetary value of a work is gone after only about 15 years (I'll have to dig up the study I saw that from, but it's true). And it is the nature of the human race to build upon the ideas of others. Without a functioning public domain, we are robbing our culture from our children.
Here, I'm suggesting that copyright terms should go back to more reasonable levels. Something along the lines of 25 years after publication automatically, with the option to renew for another 25 years. Additional renewals could be available after that, but they should come with a significant cost (say, around $100 for individuals and $10000 for corporations) and the provision that profits from distribution of that work are taxed an additional amount, say 10%. These funds could go to pay for things like libraries, schools, etc. This tax would effectively provide the incentive to create new works, since they will be untaxed and therefore have better margins.
DRM
While I won't go so far as to say it should be banned by law outright, I will say that circumvention is completely legal and non-infringing for personal use, or after a copyright expires. DRM cannot be used to artificially extend a copyright.
Anyway, those are just my ideas, and they're probably far from perfect. I hope that we'll see reforms like this in the future, though at the moment I'm not optimistic. Perhaps once the young people of today that grew up with technology are in power, we'll see it happen. In the meantime, let's make sure we don't make things worse.