Lessons from the Anti-Commons: The Economics of Tasini v. New York Times
- Author(s): Francesco Parisi, Catherine Sevcenko
- Date Posted: 2001
- Law & Economics #: 01-25
- Availability: Full text (most recent) on SSRN
In most legal systems, Copyright law provides a copyright holder a vast choice of remedies against infringement of his work, including property-type remedies (e.g., injunction to restrain the infringer from violating his rights or even the impoundment and destruction of the unauthorized reproductions of his work) and liability-type remedies (e.g., actions to recover the actual damages and to disgorge the additional profits realized by copyright infringer or to collect statutory damages). In the U.S. all the above choices of remedies are made available by the Copyright Act, which also provides that, in a civil action for copyright infringement, a court may grant temporary and final injunctions to prevent or restrain infringement of a copyright.
This paper suggest that a selective use of remedies may be appropriate to minimize the effect of fragmentation and strategic pricing. As a matter of ideal theory, anti-commons losses will result from the imposition of property-type (i.e., injunction) remedies. If copyright owners are given only a damage remedy for the infringement of their work, there is no opportunity for strategic pricing and thus no anti-commons deadweight loss. If liability-type remedies are limited, the infringer has considerable leverage with the copyright owner because he always has the option to use without permission and pay damages. Under a liability rule, the prospective buyer of a copyright license could not be induced to pay more than the cost of his expected liability for copyright infringement. At the limit, a copyright holder can obtain a judicial declaration of his rights, but the defendant can persist in the violation simply by paying damages. In contrast, in the case of property-type (i.e., injunction) protection, a copyright license can be obtained only if the current owner agrees to sell it at the price he demands. Absent such agreement, upon proof of a valid copyright an owner could obtain an injunction to enforce his rights. Under such a regime, strategic pricing of multiple complementary copyrights could lead to substantial dissipation of value.
The case of Tasini v. New York Times Co., which the Supreme Court decided in June 2001, attracted media attention and involved celebrities such as film maker Ken Burns because it appeared to pit the rights of authors to protect their creative works against the nation's need to preserve its historical record. In an amicus brief, the American Library Association argued that the above economic rationale should be used in Tasini. Presumably because electronic databases meet some of the Fair Use criteria (e.g., educational purpose), the appropriate solution would be to attach a price to the use of the material rather than prevent access to it altogether. The majority picked up on the argument, citing Campbell when remanding the case, a hint that it would provide appropriate guidance in crafting the ultimate remedy.
The lesson to be drawn, therefore, is that legal systems should not change the scope of the fair use defense, or the choice of remedy in case of infringement, even with decreasing transaction costs in an increasingly electronic marketplace. Rather, the doctrine of Fair Use should be a bridge between traditional copyright enforcement and protection in the Digital Age. Leaving both the scope of fair use and the arsenal of copyright remedies unchanged could minimize anti-commons losses; conversely, a reduction in the scope of fair use defenses might have the effect of increasing them. In such case, the use of liability-type remedies in the new domains of copyright protection would help contain the deadweight losses from strategic pricing. As Tasini demonstrates, this scenario is far from theoretical.
Viewing property law through the lens of economic analysis highlights the difficulties associated with balancing economic efficiency with the realities of high transaction costs and other situations in which the various actors involved are precluded from reaching an efficient agreement. Understanding the tendency towards entropy and the characteristics of an anti-commons situations sheds light on why the common law has developed certain rules and how these norms, which may be initially puzzling, are in fact effective responses to potentially difficult questions. Courts are beginning to use these concepts as practical tools in resolving cases. As demonstrated by the Tasini case, anti-commons analysis in particular illuminates the way to crafting a judicial remedy that will both be faithful to the letter of the Copyright Act and avoid collateral damage in terms of restricting access to a vast and important store of information. In particular, anti-commons theory demonstrates that the doctrine of Fair Use, far from being close to obsolete, has promise an important bridge between traditional and digital copyright protection.