Moving from Express Preemption to Conflict Preemption in Scrutinizing Contracts over Copyrighted Goods

Abstract

There is a built-in tension between the perception of copyright law as promoting a delicate balance between the interests of creators, distributions, and users of information goods and contract law’s laissez-faire philosophy. Legal systems need to decide how to approach this tension and specifically whether, and to what degrees, to allow parties to freely contract around the legal norms set forth by copyright law.

For more than four decades, federal courts have tried to address this tension using the Copyright Act’s express preemption provision, which prohibits states from creating rights that are “equivalent” to copyright. In a previous work, I showed that those attempts have failed to produce a robust test for contract preemption and that most circuit courts nowadays hold contracts completely shielded from express preemption. However, in conflict with this trend, the Second Circuit recently held two contracts expressly preempted. This Essay analyzes those opinions and shows that the Second Circuit could not come up with a successful test. Like previous attempts, it adopted a formalistic approach, which is both underinclusive and overinclusive, and that seems detached from copyright policy.

There is, however, another way to approach the copyright-contract tension—conflict preemption—which, interestingly, the Second Circuit has recently developed in another context—the conflict between copyright and privacy law. The Essay builds on that decision to show why conflict preemption is more appropriate to potentially scrutinize breach of contract claims, primarily as it introduces much-needed flexibility into the preemption analysis. It shows that because contracts rarely undermine federal copyright policy, preemption should apply in unusual cases, particularly when plaintiffs use standard form agreements to promote goals similar to those of copyright law in a way that clearly undermines federal policy.

Keywords: Copyright, preemption, federalism, contracts, Intellectual Property

JEL Classification: K11, K12, K20