How the Criminalization of Copyright Threatens Innovation and the Rule of Law

Abstract

The trade-off between the harms of copyright infringement and the harms to innovation from overzealous enforcement have been central to the copyright debate for decades. US courts have tried to fashion a body of law that strikes a balance between these dangers. Two related trends in copyright enforcement threaten to upend this balance. First, the federal government has begun to criminally prosecute online intermediaries who allegedly facilitate the infringing activities of users. The threat of civil liability already gives entrepreneurs strong incentives to follow the law, so adding criminal penalties may cause them to become excessively risk-averse, depriving consumers of valuable innovations. Second, using civil forfeiture powers granted by the 2008 PRO-IP Act, the federal government has begun seizing the domain names, servers, and other assets of online intermediaries. This power to seize assets prior to conviction is making a mockery of defendants’ constitutional rights. These two trends threaten both the rule of law and online innovation.

Keywords: copyright, copyright infringement, criminalization, asset forfeiture, commercial piracy, Napster, Grokster, Megaupload

JEL Classification: K10, O31, O34, O38