The Copyright Paradox

This article courtesy of SSRN - Legal Scholarship Network and authored by Tim Wu.

Abstract: Copyright law is now an important part of American industrial policy. Over the last several decades copyright's effects have come to be felt by every industry that touches information, and today that means quite a bit.

Over the last decade, writers begun to try and understand the “other side” of copyright, sometimes called its competition policy, communications policy, or regulatory side. Here I want to focus attention on a crucial problem familiar to antitrust courts that is becoming more clearly important to copyright decisions. In both copyright and antitrust, a central question is how important "intent" is. Judges, stated slightly differently, face a choice between what we can characterize as the "bad actor" and "welfarist" models of deciding cases. What we can call the "bad actor" approach punishes alleged wrong-doers based on the mens rea of the suspect, and the prospect of harm to favored sectors of the economy, like small businesses (in antitrust) or the entertainment industries (in copyright). A second, or "welfarist" approach calls for judges to generally ignore intent or "bad behavior" in exchange for a more disciplined focus on questions of industry economics and consumer, or user welfare. It tries, in policing alleged "bad behavior," to try and separate business practices that, on balance, promote overall social well-being from those that do not.

The tension between these approaches became clear in the Supreme Court's 2005 decision in A&M v. . In the Court side-stepped a welfarist calculation called for by existing law, and instead relied on a "bad actor" approach. Faced with a vicious fight between what seemed like disreputable firms and the incumbent industry, the Court chose simply to punish the bad guys.

To the Court, and to many observers, the decision was a good political way out of a very difficult problem. Yet to the extent serves as a model, we need ask whether depending on intent or evil purposes is a good way to create rules for industry. It can be a dangerous business to focus on malicious intent severed from any idea of economic consequence. That's what Antitrust writers long ago concluded. As the late Phillip Areeda puts it, "'purpose' or 'intent' have been particularly slippery, ambiguous, and unsatisfactory in the antitrust world." The problem that antitrust scholars point out is that "bad behavior" is sometimes just another name for competitive behavior, of the kind the legal system tries to encourage.

The consequence are rules for business that are strange and even counterproductive. Does it make sense to bring copyright law into the regulation of advertising campaigns, for example, and or to make every email in copyright-related industries a potential source of liability?

The real problem is that the Court does not seem to be taking seriously the fact that copyright is predominantly a form of economic regulation, and that in cases like it is actually making ex-ante rules for entrepreneurs. Surely it is effects, rather than the evil thoughts of programmers or marketing managers, that should be copyright's primary concern.