Music Markets and Bad Actors in Copyright and Competition Law

Abstract

The economically focused understandings of intellectual property and competition law has generally resulted in courts adopting a welfarist approach to provide a policy frame for understanding and elaborating legal standards of liability. Under the welfarist approach, attention is focused on the effects of conduct and questions of industry economics and consumer, or user, welfare rather than the intent of the alleged wrongdoer. However, this situation may be changing. In a recent copyright infringement case and a recent case concerning exclusive dealing in the music industry, liability was imposed on the basis of the 'bad behaviour' of the defendant. That the cases are both to do with music is striking. It is possible that the subtle and evolving characteristics of music markets mean that a disciplined focus on industry economics and consumer or user welfare still eludes the courts, leading them to fall back on more intuitive moralistic answers. Although some are concerned about such moralistic reasoning, we argue that moralistic judgments may point to more sophisticated understandings of welfare effects and that combining moralistic and welfarist approaches should generally lead to results that are both socially beneficial and morally desirable.

Keywords: intellectual property law, competition law, copyright

JEL Classification: K00, K19, K39