Summary
The traditional public choice model of rent seeking can be used for the increase in criminal sanctions for copyright infringements. The copyright law has become increasingly criminally oriented, This model hypothesizes that there are always rent seekers paired with rents, thus, if interest groups use criminal law mechanisms to earn monopoly rents, the law applies. The focus should be whether the criminal law can generate econonomic rents for specific interests.
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Extract
Copyrights, criminal sanctions and economic rents: applying the rent seeking model to the criminal law formulation process.
I. Introduction
Few, if any, public choice theorists(1) have applied the rent seeking model(2) to the criminal law formulation process.(3) This is particularly odd given that rent seeking is such a prevalent model in examining the formulation of civil legislation.(4) On first inspection, public choice theorists may posit that the benefits of criminal law are public goods.(5) For example, streets which are free from criminal activity offer benefits that are nonexcludable and nonrivalrous. Accordingly, interest groups have little incentive to organize on the ground that the benefits of their collective action would be available to the public at large, yet they would have to bear the entire cost of organization. This may well be true for some aspects of criminal law, in particular policies of general deterrence. On closer inspection, however, there are areas of criminal law which enable organized interests to use the mechanism of government to create or protect economic rents. These areas lend themselves to rent seeking analysis. In order to clarify the argument, this Comment will examine the changing nature of copyright law. Copyright law is making increased use of criminal sanctions to punish transgressions.(6) Prior to 1976, for example, the maximum criminal sanction for the willful infringement of a copyright by an individual constituted a misdemeanor penalty of $1,000 and one year in prison.(7) After 1992, by contrast, the maximum criminal sanction for the willful infringement of a copyright by an individual constituted a felony penalty of $250,000 and five years in prison (for first time offenders) and ten years (for second time offenders).(8) Thus, there has been a clear and dramatic shift toward stiffer and more stringent criminal penalties for copyright infringement. This Comment posits that the traditional public choice model of rent seeking can explain the increase in criminal sanctions for copyright infringements. As the value of intellectual property rights has increased with the emergence of new technology, particularly in the area of computer software, the incentives for interests to expend resources in order to gain monopolies over these products have also increased.(9) This Comment argues that Congress' decision to increase criminal penalties was driven by interest groups seeking copyrights protected by criminal sanctions as a means of restricting entry into an increasingly profitable market. Indeed, given the nature of intellectual property, criminal sanctions are the most effective means of restricting competition and realizing economic rents. Thus, this Comment extends the methodology of public choice from the civil to the criminal law formulation process. To public choice theorists such an argument may not seem particularly controversial. To legal scholars, however, such thinking may be quite revolutionary. The fundamental purpose of the Comment is thus to demonstrate that the criminal law formulation process does not occur in a political vacuum; namely, it is not a frictionless process void of interest group activity. Given that quotas, tariffs and regulations are coveted by economic interests,(10) it would seem reasonable to suggest that certain criminal sanctions are also coveted by economic interests. The secondary purpose of the Comment is to suggest that copyright protection may be inappropriate for certain works. Specifically, government-conferred copyrights enable the holder to realize economic rents, and these rents offer an incentive for interest groups to expend resources in order to gain these copyrights. This process of rent seeking means that there are greater costs associated with the current system of copyrights than the present literature suggests. Indeed, when these costs are factored into the equation, the benefits of copyright protection may not, on balance, outweigh the costs. It is important to emphasize, however, that the Comment's analysis is predominately positive (i.e., non-normative) and specific policy choices are beyond its scope. In order to develop the above thesis, section II explores the increasingly criminal nature of copyright law and the legislative history behind the three most recent amendments to the Copyright Act. Section III explains the rent seeking model in some detail. Section IV gives a brief overview of the economics of intellectual property. Section V discusses the need for criminal sanctions as a means of deterring entry into a lucrative market for copyrighted material. This section applies the rent seeking model to the legislative history of the Copyright Act. Section V does not claim to prove a causal connection between interest group demands and the resulting law, but rather a conceptual correlation.(11) Some readers may view this section as pure assertion, and indeed, there is considerable scop...See the full content of this document
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