Defining the Relevant Market in Fair Use Determinations
67 Pages Posted: 2 Nov 2018
Date Written: October 10, 2018
The fair use defense is frequently invoked as the most important First Amendment safeguard in copyright law, and the effect a defendant’s use has upon the potential market for the copyrighted work is often cited as the most important factor in that determination. Yet courts and commentators alike have struggled with how to define the potential market for a copyrighted work, either underdefining, overdefining, or altogether failing to define what that market is, or should be. This Article argues that we have been looking to define the relevant market by looking in the wrong place: Whereas current copyright analysis and scholarship focuses overwhelmingly on the infringer’s conduct, this Article argues, instead, that a copyright holder’s own actions should define the scope of the market for the work. In what I term a copyright owner’s “negative” uses of her own work—such as engaging in holdup strategies that make fair market value impossible to determine, failing to update Copyright Office records, refusing to mitigate damages, or using a copyright for litigation value rather than copyright value—the copyright owner herself has much to tell us about whether she is likely to suffer market harm. In each of these examples, there can be no relevant market, nor potential market harm, because the copyright holder has either made an efficient market transaction impossible or else chosen to forgo a copyright market for her work (opting instead for copyright-as-litigation-damages). My proposal provides a unified theory, and evidentiary basis, for analyzing the market effects factor, which has three economic objectives distinct from the other factors in the fair use doctrine: (1) maximizing public welfare and decreasing deadweight loss; (2) acting as a proxy for damages recovery; and (3) providing the necessary empirical data, or “objective evidence,” of whether the plaintiff is actually likely to suffer market harm.
Keywords: fair use, copyright, damages
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