Efficient Copyright Infringement

Author:David Fagundes
Position:Professor of Law, Southwestern Law School. A.B., Harvard College
Pages:1791-1846
SUMMARY

Copyright infringement is said to be socially costly because it robs owners of due recompense and depresses incentives for creative production. This Article contends that, in order to achieve copyright’s goal of maximizing cultural production, this dominant story of infringement’s costs requires alongside it a counter-story identifying the rare but important instances where copyright infringement ... (see full summary)

 
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1791
Efficient Copyright Infringement
David Fagundes
ABSTRACT: Copyright infringement is said to be socially costly because it
robs owners of due recompense and depresses incentives for creative
production. This Article contends that, in order to achieve copyright’s goal
of maximizing cultural production, this dominant story of infringement’s
costs requires alongside it a counter-story identifying the rare but important
instances where copyright infringement enhances social welfare. Part I
explains the need for an account of the notion of efficient copyright
infringement. Other types of unlawful conduct may also be beneficial, but
copyright in particular warrants exploration of efficient infringement
because maximizing creative production requires some level of unauthorized
use, and because copyright’s political economy tilts in favor of expanding
owners’ rights. Part II explores efficient copyright infringement’s domain,
showing that unauthorized use of protected works of authorship will be
prosocial where traditional private ordering is unavailable (or strongly
undesirable) to facilitate a given use, and where that use is welfare
enhancing. Part III outlines broadly how a law of efficient copyright
infringement might look. It first explains how the Copyright Act has failed to
fully account for beneficial unauthorized use. It then considers a variety of
ways that copyright damages could be structured to better accommodate
efficient infringement. The Article concludes by situating this argument in
the context of a growing literature that explores the counterintuitive
proposition that the stability of property systems may depend on the
preservation of space for transgression of owners’ rights.
Professor of Law, Southwestern Law School. A.B., Harvard College. J.D., Harvard Law
School. Thanks to Avi Bell, Annie Decker, Ben Depoorter, Mary Anne Franks, Lili Levi, Jacqui
Lipton, Christina Mulligan, Jessica Roberts, Pam Samuelson, Andres Sawicki, Rebecca Tushnet,
Molly Van Houweling, and Dov Waisman, as well as workshop participants at the UC Hastings
advanced IP seminar, the 2012 Association for Law, Property, & Society (“ALPS”) Annual
Conference, the 2012 Law & Society Annual Meeting, the UC Berkeley IP Scholarship Seminar,
and the University of Miami School of Law Internal Faculty Speaker Series for their helpful
insights about earlier drafts of this project.
1792 IOWA LAW REVIEW [Vol. 98:1791
INTRODUCTION: COPYRIGHT INFRINGEMENT AND ITS DISCONTENTS.. 1793
I. JUSTIFYING EFFICIENT COPYRIGHT INFRINGEMENT .............................. 1796
II. EFFICIENT COPYRIGHT INFRINGEMENTS DOMAIN ............................... 1801
A. EFFICIENT COPYRIGHT INFRINGEMENT: GENERAL PRINCIPLES .......... 1802
B. MAPPING INFRINGEMENTS COSTS AND BENEFITS ............................. 1805
1. Infringement’s Costs ............................................................ 1806
2. Infringement’s Benefits ....................................................... 1808
C. WHERE PRIVATE ORDERING IS NOT: A TYPOLOGY ........................... 1812
1. Market Failure: Transaction Costs ...................................... 1813
2. Market Absence: Public/Private Asymmetries and
Cognitive Biases .................................................................... 1818
3. Market Costs: Anticommodification and the
Copyright/Free Speech Tension ........................................ 1824
III. THE LAW OF EFFICIENT COPYRIGHT INFRINGEMENT ........................... 1830
A. EFFICIENT INFRINGEMENT AND THE COPYRIGHT ACT ....................... 1830
B. IMAGINING A LAW OF EFFICIENT COPYRIGHT INFRINGEMENT ............ 1835
1. Eliminating Statutory Damages and Infringer’s Profits .... 1836
2. Expanding Statutory Safe Harbors ..................................... 1838
3. Ex Post Compulsory Licenses .............................................. 1840
CONCLUSION: BEYOND EFFICIENT INFRINGEMENT .............................. 1843
2013] EFFICIENT COPYRIGHT INFRINGEMENT 1793
INTRODUCTION: COPYRIGHT INFRINGEMENT AND ITS DISCONTENTS
Transgression is supposed to cause bad outcomes. Countless morality
tales remind us that those who ignore widely established social norms tend
to meet unhappy fates.1 And this is especially true of transgressing legal
boundaries. After all, while the State regulates conduct for many reasons,
primary among them is to deter and sanction socially costly behavior. And
usually, breaking the law does make the world a worse place. Entering
someone else’s real property without permission affronts their sense of
ownership and security, and it can bring civil and criminal sanctions down
on the trespasser. Murder ends lives, brings tragedy to survivors, and lands
perpetrators on death row. The same holds true of private law, where
breaching contracts betrays expectations, undermines the stability of
commercial arrangements, and leads to litigation and liability.
But law’s broadly drawn categories cannot completely account for the
myriad variations of human behavior that it must seek to govern on a daily
basis. Hence, transgressing law’s boundaries can, despite moral instincts to
the contrary, cause net positive outcomes. Trespassing on land in order to
avert a catastrophe or to engage in political protest will likely produce social
benefits well in excess of any harm to the landowner. Killing a remorseless
psychopath who is going to slaughter innocent civilians may do more good
than harm. And promisors may find it more cost-effective to breach a
contract and pay damages than to fully perform. These counterexamples
may be anomalous, but they still illustrate that, at least on rare occasions,
engaging in otherwise illicit conduct may actually make the world a better
place.
Copyright law follows along these lines. According to the official story,
the interests of copyright owners and society exist in a cosmic alignment.
Authors enjoy incentives to create, thanks to exclusive rights in their works
of authorship, and the public gets to enjoy the fruits of the resulting creative
labors. Infringement, the official story goes, disrupts this symbiosis.
Infringement harms owners because it robs them of their ability to extract
value from their works of authorship. Infringement also harms society
because it depresses incentives to own and acquire works, leading to less
creative production and an impoverished cultural environment for us all.
This leads to the notion that strict enforcement of infringement solves both
of these problems. Heavy copyright damages make sure copyright owners
get their due, and they also make sure society enjoys the continued progress
of science that is the constitutional telos of the copyright system. In
copyright, as James Madison observed, “[t]he public good fully coincides . . .
with the claims of individuals.”2
1. The Boy Who Cried Wolf furnishes a well-known example. If you lie enough times, it
reminds us, you may end up as dinner for feral canines.
2. THE FEDERALIST NO. 43, at 214 (James Madison) (Lawrence Goldman ed., 2008).

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