Copyright and the Rule of Reason
Christopher Jon Sprigman
New York University School of Law
May 5, 2009
Journal on Telecommunications & High Technology Law, Vol. 7, 2009
Virginia Law and Economics Research Paper No. 2009-03
Copyright law seeks a balance between private incentives to create new works, and public access to the works created. To achieve this balance, copyright law must be based on a theory of harm - i.e., we must understand the kinds of uses that cause significant harm to authors’ incentives, and those that do not, so that we might focus on regulating the former and not the latter. And here is where the problem arises: although we understand copyright’s concept of harm at an abstract level - i.e., copyright “harm” arises from any use that threatens to suppress author incentives significantly below the optimal level - the theory is exceedingly difficult to apply in many cases.
The formulation of a complete and administrable theory of harm is a holy grail for copyright scholars. But there are other, more modest, ways to nudge copyright law back toward its utilitarian justification. We can rely on a set of indirect strategies to push the incentives of rightsholders in a direction that will helpfully separate unauthorized uses that reduce author incentives from those that do not. I want to briefly suggest and defend two related strategies.
First, we should distinguish between conduct we know will harm author incentives over the run of cases, and conduct with more ambiguous effects. So creation and distribution of exact copies of a work should be treated differently than creation of a derivative work. The first we know will almost always be harmful; whether the second is depends on the facts of a particular case.
Second, we should re-structure copyright’s burdens of proof to better filter harmful from harmless uses. This second strategy grows out of and is aimed at implementing the first. For cases involving infringing conduct that is very likely to cause harm, we should preserve copyright’s current strict liability rule. Indeed, perhaps we should strengthen it by limiting the availability of the fair use defense in these cases of “per se” copyright liability. But for cases involving infringing conduct in our second category - i.e., where the effect of the infringing conduct is ambiguous - we should require plaintiffs to prove that they have been harmed in some substantial way.
There are two principal benefits of such a change. First, by requiring that plaintiffs show substantial actual or likely harm in these “rule of reason” copyright infringement cases, we will encourage plaintiffs who have suffered substantial harm to come forward, while discouraging suits by rightsholders who suffer no harm, or only speculative harm. Second - and perhaps most importantly - altering the plaintiff’s prima facie case in this way will produce information about harms and benefits of different uses of copyrighted works. To do this effectively, the law needs to place the burden on the party most likely to have information about the harm - in virtually all cases, that is likely to be the plaintiff. The law as structured now does not reliably produce this information, with the result that copyright litigation does not help us to know more about how incentives to create are or are not harmed. If we hope to improve our understanding over time, we should re-structure the law so that litigation produces the information about harm that we currently lack.
Number of Pages in PDF File: 29
Keywords: copyright, intellectual property, antitrust, law and economics
Date posted: May 6, 2009 ; Last revised: September 21, 2009