Law and Economics Commons^™

Penalty Default Licenses: A Case For Uncertainty, Kristelia A. García

Publications

Research on the statutory license for certain types of copyright-protected content has revealed an unlikely symbiosis between uncertainty and efficiency. Contrary to received wisdom, which tells us that in order to increase efficiency, we must increase stability, this Article suggests that uncertainty can actually be used to increase efficiency in the marketplace. In the music industry, the battle over terrestrial performance rights--that is, the right of a copyright holder to collect royalties for plays of a sound recording on terrestrial radio--has raged for decades. In June 2012, in a deal that circumvented the statutory license for sound recordings for the …

Not (Necessarily) Narrower: Rethinking The Relative Scope Of Copyright Protection For Designs, Sarah Burstein

IP Theory

No abstract provided.

Technological Cost As Law In Intellectual Property, Harry Surden

Publications

Changes in the scope of IP legal rights are generally thought to be linked to changes in positive law. This Article argues that shifts in the scope of IP laws are often driven by changes in technological feasibility and not by changes in positive law. Diminishing technological constraint is an under-acknowledged factor driving changes in substantive IP law.

More specifically, there are certain activities that are core to IP law. Such activities include, for example, the copying of creative works in copyright (e.g. duplicating books or music), or the manufacturing of products in patent law. Traditionally, IP legal theory has …

Sequential Musical Creation And Sample Licensing, Peter Dicola

Faculty Working Papers

All musical creation builds on previous works. But using fragments of existing musical works in a new work can often constitute copyright infringement. Copyright law, in cases like Bridgeport Music v. Dimension Films (6th Cir. 2005), has recently increased its restrictions on musicians who wish to engage in sampling, defined as the practice of using other creators' sound recordings to create new music. The paper describes a model of copyright holders' and samplers' incentives to create in light of the need to negotiate licenses for sample-based works to avoid violating copyright law. Even in the absence of traditional transaction costs …

Valuing Intellectual Property: An Experiment, Christopher Buccafusco, Christopher Sprigman

Faculty Scholarship

In this article we report on the results of an experiment we performed to determine whether transactions in intellectual property (IP) are subject to the valuation anomalies commonly referred to as “endowment effects”. Traditional conceptions of the value of IP rely on assumptions about human rationality derived from classical economics. The law assumes that when people make decisions about buying, selling, and licensing IP they do so with fixed, context-independent preferences. Over the past several decades, this rational actor model of classical economics has come under attack by behavioral data showing that people do not always make strictly rational decisions. …

Economies Of Desire: Fair Use And Marketplace Assumptions, Rebecca Tushnet

Georgetown Law Faculty Publications and Other Works

At the moment that “incentives” for creation meet “preferences” for the same, the economic account of copyright loses its explanatory power. This piece explores the ways in which the desire to create can be excessive, beyond rationality, and free from the need for economic incentive. Psychological and sociological concepts can do more to explain creative impulses than classical economics. As a result, a copyright law that treats creative activity as a product of economic incentives can miss the mark and harm what it aims to promote. The idea of abundance—even overabundance—in creativity can help define the proper scope of copyright …

One Size Does Not Fit All: A Framework For Tailoring Intellectual Property Rights, Michael W. Carroll

Scholarly Articles in Law Reviews & Journals

The United States and its trading partners have adopted cultural and innovation policies under which the government grants one-size-fits-all patents and copyrights to inventors and authors. On a global basis, the reasons for doing so vary, but in the United States granting intellectual property rights has been justified as the principal means of promoting innovation and cultural progress. Until recently, however, few have questioned the wisdom of using such blunt policy instruments to promote progress in a wide range of industries in which the economics of innovation varies considerably.

Provisionally accepting the assumptions of the traditional economic case for intellectual …

Subsidizing Creativity Through Network Design: Zero Pricing And Net Neutrality, Robin S. Lee, Tim Wu

Faculty Scholarship

Today, through historical practice, there exists a de facto ban on termination fees – also referred to as a “zero-price” rule (Hemphill, 2008) – which forbids an Internet service provider from charging an additional fee to a content provider who wishes to reach that ISP’s customers. The question is whether this zero-pricing structure should be preserved, or whether carriers should be allowed to charge termination fees and engage in other practices that have the effect of requiring payment to reach users. This paper begins with a defense of the de facto zero-price rule currently in existence. We point out that …

Copyright In An Era Of Information Overload: Toward The Privileging Of Categorizers, Frank Pasquale

Faculty Scholarship

Environmental laws are designed to reduce negative externalities (such as pollution) that harm the natural environment. Copyright law should adjust the rights of content creators in order to compensate for the ways they reduce the usefulness of the information environment as a whole. Every new work created contributes to the store of expression, but also makes it more difficult to find whatever work one wants. Such search costs have been well-documented in information economics. Copyright law should take information overload externalities like search costs into account in its treatment of alleged copyright infringers whose work merely attempts to index, organize, …

Some Peer-To-Peer, Democratically And Voluntarily Produced Thoughts About 'The Wealth Of Networks: How Social Production Transforms Markets And Freedom,' By Yochai Benkler, Ann Bartow

Law Faculty Scholarship

In this review essay, Bartow concludes that The Wealth of Networks: How Social Production Transforms Markets and Freedom by Yochai Benkler is a book well worth reading, but that Benkler still has a bit more work to do before his Grand Unifying Theory of Life, The Internet, and Everything is satisfactorily complete. It isn't enough to concede that the Internet won't benefit everyone. He needs to more thoroughly consider the ways in which the lives of poor people actually worsen when previously accessible information, goods and services are rendered less convenient or completely unattainable by their migration online. Additionally, the …

Creativity And Culture In Copyright Theory, Julie E. Cohen

Georgetown Law Faculty Publications and Other Works

Creativity is universally agreed to be a good that copyright law should seek to promote, yet copyright scholarship and policymaking have proceeded largely on the basis of assumptions about what it actually is. When asked to discuss the source of their inspiration, individual artists describe a process that is intrinsically ineffable. Rights theorists of all varieties have generally subscribed to this understanding, describing creativity in terms of an individual liberty whose form remains largely unspecified. Economic theorists of copyright work from the opposite end of the creative process, seeking to divine the optimal rules for promoting creativity by measuring its …

Structural Rights In Privacy, Harry Surden

Publications

This Essay challenges the view that privacy interests are protected primarily by law. Based upon the understanding that society relies upon nonlegal devices such as markets, norms, and structure to regulate human behavior, this Essay calls attention to a class of regulatory devices known as latent structural constraints and provides a positive account of their role in regulating privacy. Structural constraints are physical or technological barriers which regulate conduct; they can be either explicit or latent. An example of an explicit structural constraint is a fence which is designed to prevent entry onto real property, thereby effectively enforcing property rights. …

Copyright's Empire: Why The Law Matters , Alina Ng

ExpressO

Two separate and distinct movements have colonized research in the field of intellectual property. Law and economics has deepened our understanding of the justification for granting monopoly rights over intellectual property. In recent years, economic theories have been used to support the growth of the commons – the free environment, where intellectual property plays little role in generating new creative works and innovation. The second movement is law and technology that has sought to increase understanding of intellectual property through the exploration of how technologies either provide freedoms or impose limitations to how creative works and innovation are created and …

Risk Aversion And Rights Accretion In Intellectual Property Law, James Gibson

ExpressO

Intellectual property’s road to hell is paved with good intentions. Because liability is difficult to predict, intellectual property users often seek licenses even when proceeding without one might be permissible. Yet because the existence (vel non) of licensing markets plays a key role in determining the breadth of rights, these seemingly sensible licensing decisions eventually feed back into doctrine; the licensing itself becomes proof that the entitlement covers the use. Over time, then, public privilege recedes and rights expand, moving intellectual property’s ubiquitous gray areas into what used to be virgin territory--where risk aversion again creates licensing markets, which cause …

Beyond Abstraction, The Law And Economics Of Copyright Scope And Doctrinal Efficiency, Matthew J. Sag

ExpressO

Uncertainty as to the optimum extent of protection has generally limited the capacity of law and economics to translate economic theory into coherent doctrinal recommendations in the realm of copyright. This article explores the relationship between copyright scope, doctrinal efficiency and welfare from a theoretical perspective to develop a framework for evaluating specific doctrinal recommendations in copyright law. The usefulness of applying this framework in either rejecting or improving doctrinal recommendations is illustrated with reference to the predominant law and economics theories of fair use.

Toward An Ecology Of Intellectual Property: Lessons From Environmental Economics For Valuing Copyright's Commons, Frank Pasquale

Faculty Scholarship

The fair use defense in copyright law shields an intellectual commons of protected uses of copyrighted material from infringement actions. In determining whether a given use is fair, courts must assess the new use's potential effect on the market for the copyrighted work. Fair use jurisprudence too often fails to address the complementary, network, and long-range effects of new technologies on the market for copyrighted works. These effects parallel the indirect, direct, and option values of biodiversity recently recognized by environmental economists. Their sophisticated methods for valuing natural resources in tangible commons can inform legal efforts to address the intellectual …

Beyond Abstraction: The Law And Economics Of Copyright Scope And Doctrinal Efficiency, Matthew Sag

Faculty Articles

Uncertainty as to the optimum extent of protection generally limits the capacity of law and economics to translate economic theory into coherent doctrinal recommendations in the realm of copyright. This Article explores the relationship between copyright scope, doctrinal efficiency, and welfare from a theoretical perspective to develop a framework for evaluating specific doctrinal recommendations in copyright law.

The usefulness of applying this framework in either rejecting or improving doctrinal recommendations is illustrated with reference to the predominant law and economics theories of fair use. The metric-driven analysis adopted in this Article demonstrates the general robustness of the market-failure approach to …

Copyright, Commodification, And Culture: Locating The Public Domain, Julie E. Cohen

Georgetown Law Faculty Publications and Other Works

The relationship between increased commodification and the public domain in copyright law is the subject of considerable controversy, both political and theoretical. The paper argues that beliefs about what legal definition the public domain requires depend crucially on implicit preconceptions about what a public domain is. When considered in broader historical context, the term public domain has a specific set of denotative and connotative meanings that constitute the artistic, intellectual, and informational public domain as a geographically separate place, portions of which are presumptively eligible for privatization. This idea meshes well with the current push toward commodification in copyright. The …

Digital Wars -- Legal Battles And Economic Bottlenecks In The Digital Information Industries, Curt A. Hessler

ExpressO

The Digital Age has spawned major legal battles over the fundamental principles of intellectual property law and antitrust law. These diverse struggles can best be analyzed using the basic norm of "value added" from neo-classical normative economics. This analysis suggests that current intellectual property doctirnes provide excessive protection and current antitrust doctrines remain awkward in dealing with the cross-market leveraging of monopoly power in the presence of "natural monopolies" created by network effects.

Breaking The Vicious Circularity: Sony's Contribution To The Fair Use Doctrine, Frank Pasquale

Faculty Scholarship

The fair use doctrine permits certain uses of copyrighted material that are unauthorized by the copyright holder. In 1984, the Supreme Court decided in Sony v. Universal Studios (Sony) that unauthorized home taping of television programs was a fair use of such programs. Decried by the dissent and frequently contested in ensuing cases, that decision sealed the majority's case that the videotape recorder was capable of substantial non-infringing uses and therefore legal.

In the twenty years since Sony, the dissent's skepticism about the fairness of time-shifting has gotten about as warm a reception in appellate courts as the majority's position. …

Seventeen Famous Economists Weigh In On Copyright: The Role Of Theory, Empirics, And Network Effects, Stan Liebowitz, Stephen Margolis

ExpressO

The case of Eldred v. Ashcroft, which sought to have the Copyright Term Extension Act (CTEA, aka Sonny Bono Copyright Act) declared unconstitutional, was recently decided by the Supreme Court. A remarkable group of seventeen economists including five Noble laureates, representing a wide spectrum of opinion in economics, submitted an amicus curie brief in support of Eldred. The economists condemned CTEA on the grounds that the revenues earned during the extension are so heavily discounted that they have almost no value, while the extended protection of aged works creates immediate monopoly deadweight losses and increases the costs of creating new …

Incentives To Create Under A "Lifetime-Plus-Years" Copyright Duration: Lessons From A Behavioral Economic Analysis For Eldred V. Ashcroft, Avishalom Tor, Dotan Oliar

Journal Articles

In this Article, we highlight for the first time some of the significant but hitherto unrecognized behavioral effects of copyright law on individuals' incentives to create and then examine the implications of our findings for the constitutional analysis of Eldred v. Ashcroft. We show that behavioral biases - namely, individuals' optimistic bias regarding their future longevity and their sub-additive judgments in circumstances resembling the extant rule of copyright duration - explain the otherwise puzzling lifetime-plus-years basis for copyright protection given to individual authors, and reveal how this regime provides superior incentives to create. Thus, insofar as the provision of increased …

Copyright And The Perfect Curve, Julie E. Cohen

Georgetown Law Faculty Publications and Other Works

This essay argues that the assumption that “progress” is qualitatively independent of the underlying entitlement structure is wrong. In particular, I shall argue that a shift to a copyright rule structure based on highly granular, contractually enforced “price discrimination” would work a fundamental shift, as well, in the nature of the progress produced. The critique of the contractual price discrimination model, moreover, exposes deep defects in the use of neoclassical “law and economics” methodology to solve problems relating to the incentive structure of copyright law. What is needed, instead, is an economic model of copyright that acknowledges the central role …

Price Discrimination, Personal Use And Piracy: Copyright Protection Of Digital Works, Michael J. Meurer

Faculty Scholarship

The growth of digital information transmission worries copyright holders who fear the new technology threatens their profits because of greater piracy and widespread sharing of digital works. They have responded with proposals for expanded protection of digital works. Specifically, they seek restrictions on personal use rights regarding digital works provided by the fair use and first sale doctrines. The proposed changes in the allocation of property rights to digital information significantly affect the ability of copyright holders to practice price discrimination. Broader user rights make discrimination more difficult; broader producer rights make discrimination easier. I argue that more price discrimination …

The Economics Of Copyright, Robert G. Bone, Wendy J. Gordon

Scholarship Chronologically

Copyright law protects works of creative expression. At its relatively uncontroversial core lie songs, plays, novels, paintings, and other works of aesthetic value. But copyright is not confined solely to aesthetic subject matter; in many countries, it extends to works of fact, such as biographies, maps, and telephone directories, and to works with practical value. For example, one of the most controversial issues in copyright law today is whether and how much copyright should protect computer programs.

What's Art Got To Do With It?, Wendy J. Gordon

Scholarship Chronologically

I would like to thank the Cardozo LR for their invitation to speak, and all those who have taken the time to discuss this issue w[ith] me in the recent past, including my commentator Marci Hamilton. I also thank the audience for its attendance and attention, and I look forward to the criticisms/reactions from all of you and from Prof Hamilton.

Defining The Prisoners' Dilemma, Wendy J. Gordon

Scholarship Chronologically

Formally, a prisoner's dilemma is defined as follows: There are two participants symmetrically situated. For each player, her payoff if she refuses to cooperate with the other player is higher than her payoff would be if she cooperated, and this is true whether the other chooses to cooperate, or chooses to defect. If both cooperate, her payoff will be higher than if both defect.

Letter To Bruce Ackerman, Wendy J. Gordon

Scholarship Chronologically

I shall be heading back to Rutgers for classes shortly, and I'm sending you a draft of the "Copyright and Copy-privilege" piece in the hope of receiving some additional comments before I enter into the final "polishing" stages later this month. As you know from my last note, the suggestions you made have proved extremely useful -- the title is the least of it. Among other things, your suggestions for reorganization led, indirectly, to a way of unifying the piece on copyright and contract with another piece I've been working on, regarding copyright and tort. I'm very pleased with the …