Copyright's empire: why the law matters.

• Author: Ng, Alina

INTRODUCTION I. LAW AND ECONOMICS ANALYSIS IN COPYRIGHT A. Positive Externalities in Markets for Information Goods B. Information Goods: The Cause of Market Failures C. Correction of Market Failures Through Institutional Intervention II. TECHNOLOGY AND THE LAW OF COPYRIGHT A. Capturing Social Surplus in Markets for Information Goods B. Correction of Market Failures Through Technologies C. Copyright as an Institution for Balancing Private Control and Public Access CONCLUSION INTRODUCTION

Two separate and distinct movements have colonized research in the field of intellectual property. The law and economics movement has deepened our understanding of the justification for granting monopoly rights over intellectual property; in more recent years, theories in the movement have been used to support the growth of the commons--the free environment where intellectual property plays little role in generating new creative works and innovation. The second movement is the law and technology movement that has sought to increase understanding of intellectual property through the exploration of how technologies either provide freedoms or impose limitations on how creative works and innovation are created and received by society.

The advent of the information age and the infiltration of the Internet into our homes have allowed the ordinary citizen to participate in the process of creating new literary and artistic works and distributing those works across channels opened by new technologies. Scientific research takes on a completely different meaning as new technologies allow DNA sequences to be analyzed through complex three-dimensional computer generated models. (1) This movement has increased our understanding of the legal dimensions of new technologies and the effect these technologies have on society, whether in real life or online. The impact of these two movements on many fields of law has increased our understanding of the law of intellectual property and its effect on society. One thing is clear from the literature: a balance must be achieved between incentives to produce for the creator of a work and access to information, knowledge, and content by the users.

Applied to copyright law, the combined jurisprudence of law and economics and law and technology provides insight into addressing the balance between private rights and public interest. The main issue facing copyright law--the extent to which public access to creative works may be the underlying rationale for the imposition of limitations upon the reach of copyright law, particularly in an age where access to information and knowledge is facilitated by technology--arises from constitutional intent. As outlined in the U.S. Constitution, authors are to have exclusive rights to their writings to promote the progress of arts. (2) Implicit in this is the notion that the ultimate aim of the grant of monopoly rights is the progress of arts for the greater benefit of society. (3) One historical underpinning of the development of copyright law was to encourage learning (4)--this was done by rewarding authors for using their talents to the ultimate benefit of the public. (5) The grant of the copyright monopoly was the most efficient way to enhance pubic welfare through the works of authors. (6)

Law and economics jurisprudence does not provide compelling arguments to support the notion that the copyright monopoly is the most efficient way to maximize public welfare by promoting the works of authors. In fact, Justice Stephen Breyer, in his tenure piece at Harvard Law School, entitled The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, (7) argues that the economic justification for granting rights to authors to encourage authorship cannot be proven. (8) However, economic theories regarding the creation of market externalities, the causes for market failures, and the correction of market inefficiencies provide evidence in support of retaining the copyright system as the means of correcting these market failures and inefficiencies and to encourage authorship. (9) The theories suggest the need for copyright law to achieve the balance between private rights and public welfare as well as individual rights and collective freedoms in situations where the market for information goods is certainly going to be inefficient. (10) More importantly, these theories identify copyright's role in correcting market inefficiencies. (11) The law's expansion in the last three decades has had no adverse effect on public welfare because the expansion of the law has not imposed additional social costs. (12) The social cost from the expansion of these private rights is nonexistent because market structures change as technologies develop, providing society with increased accessibility to creative works. (13) Copyright laws must expand as technology develops to achieve a fair balance between private rights and public interests.

In recent years, law and technology literature has demonstrated that other factors should be taken into account in making a case for copyright law, and one of these factors is the role technology plays in shifting the balance of control of creative works from authors to users. Users are greatly empowered by digital technologies to reuse and rebuild creative works, and the use of technology may strategically alter how works are created and used. In Code and Other Laws of Cyberspace, Professor Lawrence Lessig argues that architecture built into the Internet may provide perfect control over activities that occur online through the use of codes. (14) Codes give authors the opportunity to control the use of their intellectual property independent of copyright law. (15) One example of these codes is a trusted system that provides creators of creative works maximum control over how their works are used when these works are made available online. (16) The use of technology can further restrict society's use of free ideas from common resources. Content on the Internet, for example, can be controlled through the use of technology by copyright owners in such a way that creativity and innovation cannot freely occur. (17) Our ability to build and shape our culture may also be affected as technology develops to provide creators with the ability to control how content is used and decide the sort of content that we receive as a society. (18) The capacity that technologies provide to authors of creative works to displace the balance of copyright law and shape how works are used by society evidences that the balance intended to be achieved through copyright law is lost. (19) This Article considers the effect of technology on the accessibility of creative works and suggests that such effects provide many reasons to look to copyright law to provide a balance between private rights and public interests that would not ordinarily exist without such a system.

For purposes of analysis, these theories are applied in the context of a relatable example. In a novel about hobbits, goblins, and fantasy, entitled The Hobbit, J.R.R. Tolkien conceived of the idea for a greater work that would draw on the foundation of all his previous works. (20) This idea was realized in the creation of Tolkien's greatest work, The Lord of the Rings, which was built upon his many smaller works. (21) The novel's adaptation into three blockbuster films, (22) a soundtrack, (23) and a video game (24) illustrates the entire spectrum of copyright's empire and the balance that must be achieved between private rights and the public interest. More importantly, Tolkien's success demonstrates the economic incentives that drive the production of creative works. Producers of creative works rely on property rights as a surety that their investments in producing works are recovered. Thus, one could conclude the following: law and economic jurisprudence evidences that the social cost of the grant of intellectual property rights to creators is always dependent on the benefit that accrues to society to enjoy the works as new technologies develop. The expansion of rights should be allowed if the impact of the expanded rights on society is marginal. Law and technology jurisprudence has shown that technology can always be used to displace the balance that copyright law seeks to achieve. (25) In order "[t]o promote the [p]rogress of [s]cience and useful [a]rts," authors and inventors must be given exclusive rights in "their respective [w]ritings and [d]iscoveries." (26) Private rights ordering alone will not achieve the balance between private rights and the public interest. In conclusion, this author argues that copyright's empire--the institution that is intended to encourage authorship to ultimately serve the public interest--must be built upon a firm foundation of law. It is only through law that the proper conditions for authorship can exist for the ultimate benefit of society.

1. LAW AND ECONOMICS ANALYSIS IN COPYRIGHT

   The traditional justification for copyright law, based on law and economics reasoning, relies upon the rationale that a temporary monopoly right is necessary to encourage authorship to ultimately benefit society as a whole. (27) The grant of a temporary monopoly over literary and artistic works serves a utilitarian purpose to "stimulate production of the widest possible variety of creative goods at the lowest possible price." (28) The first copyright statute, enacted in England in 1710 to put an end to the booksellers' monopoly over the book trade, displays this early thread of utilitarianism in copyright law. (29) The Statute of Anne, enacted as an "[a]ct for the encouragement of learning, by vesting the copies of printed books in the authors or purchasers of such copies, during the times therein mentioned," forms the historical basis for most copyright legislation in common law countries. (30) The utilitarian basis for copyright protection is also evident in the...