Fair Use and Privatization in Copyright
43 Pages Posted: 5 Jun 2007
This Article argues for a broad conception of copyright's fair use doctrine. Economic reliance on property rules has led some to argue that fair use should be limited to cases where market failures do not permit licensing transactions. Otherwise, allocation of rights should be left to the market. This article takes the position that differences between real property and intellectual property undercut the application of the tragedy of the commons to the fair use setting. While real property is a limited resource, intellectual property is not. The same parcel of land may not support an unlimited number of grazing sheep. But making one more copy of a book does not destroy other copies (although it may reduce their market value). The ideas in the book, indeed, may gain value from use, refinement, and propagation. Thus, the same public good nature of works of authorship that justifies intellectual property also differentiates it from real property. Moreover, the boundaries in copyright are far more uncertain than those around a parcel of land. Copyright demarcates protected subject matter with elusive distinctions - originality, abstraction, and functionality.
Part II further addresses the theoretical underpinning of the transaction cost approach, the idea that copyright should be maximally privatized. Under that view, concentrating control in the hands of the author by constricting fair use would most efficiently exploit the resource. But this view overlooks factors that can prevent copyright holders from permitting many uses. First, transaction costs are not the only obstacle to licensing valuable uses. Issues of status, risk aversion, and other obstacles to negotiations could obstruct licensing of many productive uses. Second, increases in electronic commerce and communications will lower some types of transaction costs, but many components are likely to remain unaffected. Accordingly, the Internet will not yield the frictionless marketplace postulated by the transaction cost view. Reducing the scope of fair use could create deadweight loss to productive uses.
Part III discusses an alternative, the balancing view of fair use, which relies on a different view of the property created by copyright. The transaction cost view conceptualizes intellectual property as a single resource that can be split up in pieces and identified with the copies of the work. But the rights under copyright are not coextensive with the physical copies. Others remain free to copy the ideas expressed in a copyrighted work, the functional aspects of the work, and the facts from the work. Fair use has served as a device to ensure that the copyright owner's control over the expressive aspects of her work do not extend to the noncopyrightable aspects.
Part IV compares the transaction cost view and the balancing view of fair use in the context of a number of live issues: whether a temporary copy in a computer's memory infringes copyright, how much legal protection should be afforded copy protection technology, how broad the exclusive right to make derivative works should be, whether one could archive the World Wide Web, and the application of fair use to photocopying and other means of reducing the costs of disseminating copies. This Article will conclude that, although the transaction cost approach might simplify fair use analysis, it would do so by undercutting certain core limitations on copyright. Rather than shrinking away in the digital age, fair use should continue to be a means to implement the balances struck by copyright law.
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