A Copyfighter’s Musings

“Properly understood, Sony stands
 not for the proposition that fair use is justified only in those exceptional
 cases where a licensing scheme or some other market mechanism is impractical. Rather, Sony stands for the recognition of fair use as a central and vital arbiter between two competing public interests [potential for reduction in works produced and potential for societal benefits of fair use]….Sony begins with a presumption in favor of fair use and a broad conception of the public interest that fair use protects. Merely increasing access to a work, even unauthorized access, represents a sufficient public interest to invoke the fair use doctrine.”

I. Sony, Market Failure, and the Economics of Public Goods
      Taken on appeal after Ninth Circuit had restricted fair use to productive/transformative reuses.
      Sony as written
          SC rejects this view.
          SC rejects argument that private copying is somehow commercial. Copying isn’t theft because of public/private good distinction.
          Moreover, with non-commercial, burden goes on copyright holder to prove harm.
          SC looks at private interest of copyright owner as relevant ony as “proxy for the public’s interest in additional works” - that’s key for market impact
      Sony as Rewritten: Use as Market Failure
          All about transaction costs, lack of information, or externalities
          Professor Gordon’s fair use test: “market failure is present; transfer of the use to defendant is socially desirable; and an award of fair use would not cause substantial injury to the incentives of the plaintiff copyright owner”
          This makes market presumptively efficient - so you have to get over that hurdle before you even start balancing like Sony court did. And, even then, failure of market remains as the framework.
          Under this approach, private interest is not proxy for public. Instead, potential lost revenues is an issue on its own.
          Born out in Acuff-Rose - Court says all burden fair user. (although, this might have been an implicit distinguishing because 2 Live Crew = commercial)
          Born out in Napster - private copying is commercial because they’re getting something for free that they otherwise wouldn’t
          Born out in Texaco - potential licensing revenue, not potential drop in works created, and focus on “productive” use
          DRM can help remedy these market failures - will that displace Fair use
      Choosing the Proper Approach
          Private/public good distinction causes problems for market failure approach. For private goods, rivalry makes fair use incompatible.  Nonrivalrous nature must be focus for fair use.
         Catch 22 of copyright - without it, not enough goods. Without it, price above marginal cost, and, without perferct price discrimination, some people won’t be able to buy.
        This makes market failure somewhat inevitable. So not very useful

II. A Balancing of Public Interests: The Real Economics of Fair Use
      Because of technological limitations, balancing test was used in early nineteenth century just to deal with potentially transformative uses. (See Folsom v. March)
      This is what hampered the Ninth Circuit in Sony.
      Addressing social welfare balance, rather than those four factors:
          “On one side of the balance,
 attention should be directed toward the extent to which prohibiting a particular use will lead to more and better works of authorship by asking: (1) whether the unauthorized use would otherwise reduce the revenue associated with the copyrighted work; and (2) if so, how, if at all, that reduction would likely affect the production of copyrighted works.”
           “On the other side of the balance, we must consider what the public stands to lose if the use is prohibited.”
      Let’s do it with time-shifting
           First factor of first part would make fair all uses that do not implicate an area the copyright holder would exploit (ed: potential licensing not an issue, then?)
          Lunney then goes on to discuss economics of advertising, saying that amount of advertising seen versus consumer expenditures is not linear. So long as people watch a certain amount of live TV, skipping commercials won’t matter.
          Basically, he’s trying to show how free riding is not per se inefficient, equivalent to theft, or bad for the public interest balancing.
          There needs to be more investigation into market impact - shouldn’t be assumed.
          But that’s not all - copyright owner must then prove that lost revenue is not in PUBLIC INTEREST.
              Two ideas
                  Cost based protection - provide author with minimum needed to ensure creation
                  Value based - author should receive full market value that can be captured from the work.
              Copyright has shifted in its protection towards value-based
              BIG IDEA: private interest is no longer good proxy, because we’re not looking at the “persuasion cost” of producing good.
              “[C]ourts should evaluate the likely relationship between incentives and output at a more general level, for particular classes of works, based upon the evidence presented and the market structure of the relevant industry.”
                 Wouldn’t necessarily be there with time-shifting
                Think of Texaco case - having to pay that licensing cost but would reduce Texaco’s research perhaps.  Will it reduce the persuasion to produce the journal though?
          Third factor is public’s interest in letting use continue.
             Again, free riding isn’t necessarily bad: 1. might pay anyway, 2. will happen most for most popular works that have excess incentives, 3. might eliminate deadweight loss caused by pricing above marginal cost
            What does this mean? Maybe file-sharing’s a fair use (ed: hm)

Filed by Derek Slater at 5:24 pm under cmusingsStories