Academic journal article Law and Contemporary Problems

Should a Licensing Market Require Licensing?

Academic journal article Law and Contemporary Problems

Should a Licensing Market Require Licensing?

Article excerpt

I

INTRODUCTION

It is commonplace in modern copyright scholarship to decry the demise of the fair use doctrine. (1) As copyright continues its apparently unstoppable expansion in scope, duration, and strength, (2) fair use seems unable to rise to the challenge of preserving a vibrant space in which people are free to "tinker" with or recode copyrighted works. (3)

Part of the problem is procedural--fair use is a defense that the accused infringer must prove. (4) Because fair use relies upon a vague, multi-factor test, it is often impossible to know ex ante whether any particular use will qualify as fair. The result, as Larry Lessig has put it, is that fair use is reduced to nothing more than the right to hire a lawyer. (5) Individuals, non-profits, and small companies may not be able to afford that lawyer. (6) Even large studios and publishing houses that could afford to litigate fair use generally don't; they are generally willing to go to great lengths to find copyright owners and pay licensing fees, or require modification of the work, rather than test their rights in court. (7)

But a significant substantive development in the last two decades has shrunk fair use as well: the willingness of the courts to find a use unfair, even though it did not cost the copyright owner a sale, because the copyright owner could have gotten a licensing payment from the accused infringer. (8) The result has been that even highly transformative uses that do not substitute for sales by the copyright owner are found unfair, and control over those uses defaults to the copyright owner. (9)

The goal of this paper is not to challenge this restrictive view of fair use. Others have done that. (10) Rather, it is to suggest that in many circumstances fair use should separate the idea that the copyright owner should be compensated for a use from the idea that the copyright owner should be able to control that use. The licensing-market cases provide a perfect vehicle for dividing those rights. If the only reason a use is considered unfair is because the copyright owner could have gotten paid to permit that use, that argument may--or may not--justify compensating the copyright owner for that "loss," but it does not justify giving the copyright owner control over the defendant's use. Part II explains the development of the licensing-market rationale, critiques of that rationale, and its significance for the scope of the fair use doctrine. In

Part III I take the licensing-market rationale as a given, and argue that even if copyright owners can defeat a fair use claim on this basis, they should not be entitled to an injunction. Rather, courts should use their discretion to deny injunctive relief when the copyright owner's only legitimate interest is in compensation rather than control. Finally, Part IV uses this argument to begin a discussion of what it means to deny injunctive relief in copyright. The subset of copyright remedies that are designed to deter infringement needs to be modified in circumstances in which a court finds that compensation but not control is the appropriate remedy. I consider some possible changes to the statute designed to achieve that sensible result.

II

LICENSING MARKETS AND FAIR USE

Resolving claims of fair use has long required a case-specific, multifactor balancing test, and indeed that test is now enshrined in the Copyright Act. (11) Of the four factors--the purpose of the defendant's use, the nature of the copyrighted work, the amount taken, and the market effect on the copyright owner--the market-effect factor has generally been considered the most important. (12) This likely reflects a logical connection between copyright law and market injury. Since the purpose of copyright is to encourage new creation by ensuring that creators get paid, copyright law's logical concern should be primarily, if not exclusively, with infringing uses that deprive creators of revenue they could otherwise have expected to receive. …

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