Technology and uncertainty: the shaping effect on copyright law

University of Pennsylvania Law Review

Volumn 157, Issue 6, 2009, Pages 1831-1868

  Ben, Depoorter ^a,b  

^a UNIVERSITY OF MIAMI   (United States)

^b BOSTON UNIVERSITY   (United States)

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EID: 69849092724     PISSN: 00419907     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (187)

1. This Article focuses on United States copyright law, aldiough the analysis may be generalized to international laws affecting copyright Reference is made for illustrative purposes as appropriate.
2. Publishers and entertainment representatives have launched a frontal assault on new dissemination technologies to preserve their existing business models. For instance, the Recording Industry Association of America (RIAA) has pushed for legislation that increases copyright enforcement related to emerging technologies. See, e.g., Piracy Deterrence and Education Act of 2004, H.R. 4077, 108th Cong. (2004) (enhancing copyright enforcement and public education about copyrights and the Internet); Author, Consumer, and Computer Owner Protection and Security (ACCOPS) Act of 2003, H.R. 2752, 108th Cong. (2003) (extending domestic and international copyright enforcement); Piracy Deterrence and Education Act of 2003, H.R. 2517,108th Cong. (2003) (including many of the provisions of H.R. 4077 and also clarifying the government's authority to seize pirated work). In addition, the RIAA has filed lawsuits against technology producers, see, e.g., In re Aimster Copyright Litig., 334 F.3d 643, 646 (7th Qr. 2003) (noting "the recording industry's anxiety about file-sharing"); A&M Records, Inc. v. Napster, Inc., 239 F&d 1004, 1013 (9th Cir. 2001) ("Plaintiffs claim Napster users are engaged in the wholesale reproduction and distribution of copyrighted works, all constituting direct infringement"); Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d 1029, 1034 (CD. Cal. 2003) ("Plaintiffs argue that Defendants are liable for both contributory and vicarious copyright infringement"), aff'd, 380 F.3d 1154 (9th Cir. 2004), vacated, 545 U.S. 913 (2005), Internet service providers, see, e.g., In re Verizon Internet Servs., Inc., 240 F. Supp. 2d 24, 26 (D.D.C. 2003) (noting that the RIAA was seeking enforcement of subpoenas demanding the identities of copyright infringers), rev'd, 351 F.3d 1229 (D.C. Cir. 2003), and end users of peer-to-peer networks, see infra Part I. For an overview, see LexisNexis, Recording Industry Association of America Case Activity from Lexis/Nexis Courtlink, http://www.lexisnexis.com/trial/ nalml00181clinkriaa.asp (last visited Apr. 15,2009).
3. Consider in this respect research data from the NPD Group showing that the number of people downloathng music illegally surged a month after recorthng companies began suing hundreds of music fans. See Press Release, NPD Group, Peer-toPeer Digital Video Downloathng Outpacing Legal Alternatives Five to One (Dec. 20, 2006), available at http://www.npd.com/press/releases/press-061220. html. For more on the mixed results of these stuthes, see infra Part II.
4. See Petition for Writ of Certiorari at 3, Grokster, 545 U.S. 913 (No.04-0480) ("Unless [developers of file-sharing software] can be held accountable, copyright will soon mean nothing on the Internet, and the incentives on which our copyright system rests will be imperiled.").
5. See, e.g., John Perry Barlow, The Economy of Ideas, WIRED, Mar. 1994, at 84 (thscussing the obsolescence of intellectual property law in the thgital world);
6. Jessica Litman, Revising Copyright Law for the Information Age, 75 OR. L. REV. 19, 39 (1996) ("We can continue to write copyright laws that only copyright lawyers can decipher... or we can contrive a legal structure that orthnary inthviduals can learn ....").
7. See generally Tom W. Bell, Escape from Copyright: Market Success vs. Statutory Failure in the Protection of Expressive Works, 69 U. CIN. L. REV. 741, 750 (2001) ("[C]lumsy attempts to legislatively amplify common law rights threaten to ... do more harm than good.").
8. See, e.g., H.R. 5211, 107th Cong. sec. 1, §514(d)(1) (2002) (exempting antipiracy devices from liability where damage to a user's computer is $250 or less);
9. see also Declan McCullagh, Could Hollywood Hack Your PC?, CNET NEWS, July 23, 2002, http://news.cnetcom/2100-1023-945923.html?tag=fd-lede (quoting an attorney from the Electronic Frontier Foundation as saying that H.R. 5211 is "part of a greater strategy that's being implemented by the entertainment industry to lock up and control digital information").
10. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 380 F.3d 1154,1158 (9th Cir. 2004), vacated, 545 U.S. 913 (2005) ("From the advent of the player piano, every new means of reproducing sound has struck a dissonant chord with musical copyright owners, often resulting in federal litigation.").
11. One argument in support of this claim is that modern communication tools enable the dissemination of content without significant capital investments and that the economic rationale for copyright's bias towards publishers and distributors is outdated.
12. See, e.g., Jessica Litman, Sharing and Stealing 27 HASTINGS COMM. & ENT. L.J. 1, 37-38 (2004) (arguing that new distributors may be able to harness digital distribution and pay a higher percentage of proceeds to artists). Based on the assumption that digital sharing of music is a superior distribution mechanism, there have been several proposals to amend the traditional licensing model of copyright Many commentators would replace the traditional proprietary licensing model with commons or pooling arrangements on the basis of mandatory levies or blanket fees.
13. See, e.g., WILLIAM W. FISHER III, PROMISES TO KEEP 199-258 (2004) (arguing for a "governmentallyadministered reward system" for copyright holders);
14. Raymond Shih Ray Ku, The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology, 69 U. CHI. L. REV. 263, 313 (2002) (arguing that artists could be compensated through statutory levies on Internet service subscriptions and on the sales of computer, audio, and video equipment);
15. Litman, supra note 9, at 41-50 (proposing blanket fees or levies, digital rights management and an opt-out mechanism for copyright);
16. Lydia Pallas Loren, Untangling the Web of Music Copyrights, 53 CASE W. RES. L. REV. 673, 704-16 (2003) (arguing for a market-based solution to the problem of copyright licensing);
17. Glynn S. Lunney, Jr., The Death of Copyright: Digital Technology, Private Copying and the Digital Millennium Copyright Act, 87 VA. L. REV. 813, 852-53 (2001) (suggesting a levy on sales of equipment and blank storage media while authorizing private copying);
18. Neil Weinstock Netanel, Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing 17 HARV. J.L. & TECH. 1 (2003) (making the case for governmental use levies to force individuals to effectively pay for die right to copy and distribute copyrighted works).
19. See, e.g., Eldred v. Ashcroft, 537 U.S. 186 (2003) (holthng that the Sonny Bono Copyright Term Extension Act Pub. L. No. 105-298, 112 Stat 2827 (1998), is constitutional); N.Y. Times Co. v. Tasini, 533 U.S. 483 (2001) (concluding that newspapers cannot license individual articles to databases without a transfer of copyright). The Supreme Court recendy declined to hear an appeal by the RIAA regarding subpoenas of Internet service providers in In re Verizon Internet Services, Inc. 240 F. Supp. 2d 24 (D.D.C. 2003), rev'd, 351 F.3d 1229 (D.C Cir. 2003), cert, denied, 543 U.S. 924 (2004), and vacated the Ninth Circuit's ruling in favor of peer-to-peer developers in Grokster, 545 U.S. 913.
20. See generally Cynthia L. Webb, Supremes Quietly Change Piracy Debate, WASH. POST, Oct 13, 2004, http://www.washingtonpostcom/wp-dyn/articles/A29254- 2004Octl3.html (describing the Supreme Court's refusal to entertain the recording industry's arguments in the Verizon case). The Court's abstention is attributed to pending legislation, such as the Inducing Infringements of Copyrights Act of 2004, S. 2560,108th Cong. (2004), and the percolation of various other cases at the lower court level.
21. See Ken Fisher, RIAA Given the Snub by Supreme Court, ARS TECHNICA, Oct 12, 2004, http://arstechnica.com/old/ content/2004/10/4299.ars (noting that the Supreme Court will have several upcoming opportunities to reconsider copyright issues).
22. Both camps are drifting apart and increasingly reject the other's governance model entirely, thus invigorating the discourse. Protests by activist organizations such as the Electronic Frontier Foundation, digitalconsumer.org, and publicknowledge.org are intensifying and increasingly speaking in terms of anarchy, "copyrights," and manifestos. See, e.g., Posting of Siva Vaidhyanathan to SIVACRACY.NET, 90% Crud: The (Poor) State of Copyright Activism, http://sivacracy.net/blogarchive/2004-06-02- blogarchive.html (June 2, 2004) ("How can we have a revolution if we don't have a manifesto?"). Others, such as the copyleft movement dismiss the copyright model altogether.
23. See generally Ira V. Heffan, Note, Copyleft: Licensing Collaborative Works in the Digital Age, 49 STAN. L. REV. 1487 (1997).
24. Of course, large areas of law are also reactive to technological changes. For instance, new technologies often present new issues for tort law. Although several observations in this Article apply equally to other instances where law and technology interact, this Article focuses squarely on the copyright implications of technology that creates new means of copying and distributing copyrighted content.
25. See, for example, the legal batde brought by the RIAA against Diamond Multimedia as a result of its production of the "Rio" MP3 player. The RIAA accused Diamond of a multitude of intellectual property violations, including the production of a digital autho recording device that did not meet the requirements set forth by the Audio Home Recording Act of 1992 (AHRA), Pub. L. No. 102-563, 106 Stat 4237, 4244, the failure to employ Serial Copyright Management System (SCMS) technology, and the failure to pay royalties on revenue earned from the sale of its device. The court dismissed the claim, holding that general computer technology is not governed by the AHRA. See Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1075, 1078-79 (9th Cir. 1999).
26. See generally Geoffrey Neri, Note, Sticky Fingers or Sticky Norms? Unauthorized Music Downloading and Unsettled Social Norms, 93 GEO. L.J. 733 (2005) (arguing that the recording industry's attempts to curb illegal file sharing through educational campaigns, lawsuits, and legislation are ineffective because of the "stickiness" of prodownloading social norms).
27. For a critical examination of the effects of self-help measures, see John A Rothchild, The Social Costs of Technological Protection Measures, 34 FLA. ST. U. L. REV. 1181, 1198-1203 (2007).
28. The origin of copyright law lies in technology. Investments in the printing press prompted the development of the legislation that granted the first copyrights to publishers of written works.
29. See, e.g., Hal R. Varian, Copying and Copyright, J. ECON. PERSP., Spring 2005, at 121, 122 (noting the impact of the printing press on the development of England's Copyright Act of 1709).
30. Some describe the development of copyright law as the emergence of "awkward ambiguities and widening areas of legal dispute ... created by the application to new technological developments of laws pertaining to ... copyrights."
31. Paul A David, Intel lectual Property Institutions and the Panda's Thumb: Patents, Copyrights, and Trade Secrets in Economic Theory and History, in GLOBAL DIMENSIONS OF INTELLECTUAL PROPERTY RIGHTS IN SOENCE AND TECHNOLOGY 19, 19 (Mitchel B. Wallerstein et al. eds., 1993).
32. See, e.g., Wendy J. Gordon, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and Its Predecessors, 82 COLUM. L. REV. 1600, 1614 (1982) ("Fair use is one label courts use when they approve a user's departure from the market");
33. see also Christopher Alan Hower, Reviving Fair Use: Why Sony's Expansion of Fair Use Sparked the File-Sharing Craze, 7 CHI.-KENTJ. INTELL. PROP. 75, 76-86 (2008) (discussing the application of fair use to file sharing);
34. R. Terry Parker, Sold Downstream: Free Speech, Fair Use, and Anti-Circumvention Law, 6 PIERCE L. REV. 299, 300-02 (2007) (describing fair use as a "safety valve" for free speech).
35. See Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 936-37 (2005) (requiring "clear expression or other affirmative steps taken to foster infringement" for secondary liability, not "mere knowledge of infringing potential"); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1024 (9th Cir. 2001) ("Napster's failure to police the system's 'premises,' combined with a showing that Napster financially benefits from the continuing availability of infringing files on its system, leads to the imposition of vicarious liability.").
36. See Ned Snow, The TiVo Question: Does Skipping Commercials Violate Copyright Law?, 56 SYRACUSE L. REV. 27, 81 (2005) (concluding that using a digital video recorder to skip commercials violates copyright law and arguing that device manufacturers should be contributorily liable);
37. see also Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 454-55 (1984) (permitting "time-shifting" as fair use).
38. Jessica D. Litman, Copyright, Compromise, and Legislative History, 72 CORNELL L. REV. 857, 858 (1987).
39. In the computing field, the rapid pace of innovation is said to be governed by Moore's Law, which states that the number of transistors that may be placed on an integrated circuit grows exponentially and doubles approximately every two years. It has become a general signpost of the speed of technological progress.
40. See Gordon E. Moore, Cramming More Components onto Integrated Circuits, ELECTRONICS, Apr. 19, 1965, at 114, available at http://download.intel.com/ research/silicon/moorespaper.pdf
41. Karen Garst, Our Paradigm Shift, OR. ST. B. BULL., Oct 1998, at 47, 51.
42. See Robert Merges, Intellectual Property Rights and Bargaining Breakdown: The Case of Blocking Patents, 62 TENN. L. REV. 75, 86 n.41 (1994) (noting that IBM initially regarded computers as having only scientific applications).
43. See Rochelle Cooper Dreyfuss, Nonobviousness: A Comment on Three Learned Papers, 12 LEWIS & CLARK L. REV. 431,439 (2008).
44. See Yochai Benkler, Coase's Penguin, or, Linux and The Nature of the Firm, 112 YALE L.J. 369,400-415 (2002) (discussing open-source software and peer production).
45. For example, the introduction of the audio tape presented no indication to lawmakers of a future in which all content would be playable in digital formats. This is evidenced by the fact that the AHRA did not account for such a change and thus became virtually obsolete after the court in Diamond stated that a computer hard drive is not within the meaning of a "digital audio recording device." See Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., 180 F.3d 1072 (9th Cir. 1999).
46. See generally Nika Aldrich, An Exploration of Rights Management Technologies Used in the Music Industry, 2007 B.C. INTEIX. PROP. & TECH. F. 051001, at 5, http://bciptf.org/index.php7option= com-contentSctask=viewScid=30.
47. See infra text accompanying notes 82-87.
48. Historically, copyright owners have always tolerated minor infringemnts.
49. See generally R. Anthony Reese, Innocent Infringement in U.S. Copyright Law: A History, 30 COLUM. J.L. & ARTS 133 (2007).
50. On the evolution of intellectual property rights, see Ben Depoorter, The Several Lives of Mickey Mouse: The Expanding Boundaries of Intellectual Property Law, 9 VA. J.L. & TECH. 1, 34-41 (2004).
51. See Peter S. Menell, Envisioning Copyright Law's Digital Future, 46 N.Y.L. SCH. L. REV. 63, 99 (2002) ("Even with the introduction and rapid popularity of digitallyencoded compact disks (CDs) and the proliferation of microcomputers beginning in the early 1980s, the record industry did not appreciate the dramatic changes that would be brought about by the emerging thgital technologies.").
52. ster counted 26.4 million users as of February 2001. See Press Release, Jupiter Media Metrix, Global Napster Usage Plummets but New File-Sharing Alternatives Gaining Ground, Reports Jupiter Media Metrix (July 20, 2001), available at http://www.comscore.com/press/release.asp?id=249.
53. Jane Ginsburg colorfully describes this first formal step in the expansion of copyright law as copyright holders' "Pavlovian" response to new technology.
54. Jane C. Ginsburg, Essay, How Copyright Got a Bad Name for Itself, 26 COLUM.J.L. & ARTS 61, 66 (2002).
55. Legal delay was calculated for copyright issues involving the following innovations: the cassette tape, the VCR, the CD, the digital audio tape (DAT), the DVD, Bulletin Board System (BBS) boards, the MP3 format the Rio, centralized file-sharing software (Napster), and decentralized file-sharing software (Grokster). Some innovations created multiple copyright issues, leading to multiple decisions made by courts at different times. Most cases, however, involved a similar question: whether the new technology's novel means of sharing or distributing copyrighted content fell within the bundle of rights held by copyright owners. Note mat the calculations in Table 1 serve merely to illustrate legal delay and to give a sense of the average length of the copyright adaptation period. Individual differences between cases may largely depend on factors unrelated to technology. For instance, individual differences in time between innovation and legal adaptation may likely be influenced by changes in procedural laws that have taken place between the various cases.
56. 35 Pub. L. No.92-140, sec. 2, §101(e), 85 Stat. 391, 392 ("[D]iscs or tapes for use in mechanical music-producing machines adapted to reproduce copyright musical works, shall be considered copies of the copyrighted musical works ....").
57. 464 U.S. 417, 456 (1984) (holding that Sony's sale of Betamax equipment did not constitute contributory negligence).
58. Pub. L. No.102-563, sec. 2, §1008, 106 Stat. 4237, 4244 ("No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or thstribution of a digital audio recording device... or based on the noncommercial use by a consumer of such a device ....").
59. Id.
60. 10 Cal. Rptr. 3d 185, 196 (Ct App. 2004) (concluding on remand that the issuance of an injunction prohibiting the distribution of DVD-decoding software was an abuse of discretion).
61. 839 F. Supp. 1552, 1556-1559 (M.D. FIa. 1993) (holding that the bulletin board infringed Playboy's exclusive rights of display and public distribution, and that fair use did not apply).
62. 92 F. Supp. 2d 349 (S.D.N.Y. 2000) (holding that defendant's online posting of MP3 files for access by individuals who could prove that they owned a CD copy was not protected fair use).
63. 180 F.3d 1072, 1081 (9th Cir. 1999) (denying, on appeal, the RIAA's motion for a preliminary injunction, because the Rio is unable to make copies from transmissions).
64. 43 239 F.3d 1004, 121-124 (9th Cir. 2001) (holding that Napster had sufficient knowledge of the availability of infringing material to impose contributory and vicarious liability).
65. 545 U.S. 913, 936-937 (2005) (holding that distributing software with manifest intent to promote copyright infringement can render the software's distributor liable for the infringing actions of third parties).
66. Francesco Parisi & Nita Ghei, Legislate Today or Wait Until Tomorrow? An Investment Approach to Law Making, 23 J. PUB. FIN. & PUB. CHOICE 19 (2006). As with regular investments in assets, lawmaking decisions involve a degree of (1) irreversibility, (2) uncertainty over future returns, and (3) discretion with regard to the timing of those investments.
67. Id.
68. See supra text accompanying notes 16-21.
69. Although there is considerable debate regarding the causes of innovation, it may suffice to note that the technological cycle of an innovative product is highly unpredictable. For instance, technological innovation is only partially susceptible to external influence. Although it is widely recognized that market forces help shape the course of innovation, scholars recognize that innovation also runs an independent course. On the former position,
70. see generally Jacob Schmookler, Economic Sources of Inventive Activity, J. ECON. HIST., Mar. 1962, at 1. Evidence in support of the theory of technological opportunity suggests that markets often follow innovations, and not vice versa.
71. See generally JOSEPH A SCHUMPETER, THE THEORY OF ECONOMIC DEVELOPMENT (Redvers Opie trans., 1934);
72. F.M. Scherer, Demand-Pull and Technobgical Invention: Schmookler Revisited, 30 J. INDUS. ECON. 225 (1982). This is known as the debate on technology demand-pull versus technology opportunism. For an overview of empirical work on whether social and economic conditions drive innovation or whether societal economic forces trace independent innovation,
73. see Thomas B. Åstebro & Kristina B. Dahlin, Opportunity Knocks, 34 RES. POL'Y 1404 (2005).
74. See Francesco Parisi et al., The Value of Waiting in Lawmaking 18 EUR. J.L. & ECON. 131, 134 (2004) (U.K.) (arguing that adopting a law is akin to investing in that the value of the law depends on its discounted future benefits).
75. Consider, for instance, how the Audio Home Recording Act became virtually obsolete with the emergence of personal home computers after the court in Diamond held that a computer's hard drive is not a "digital audio recording device" under the Act because audio recording is not the personal computer's "primary purpose." Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., 180 F.3d 1072,1078 (9th Cir. 1999).
76. In 2001, copyright industries (including those involved in movies, television programs, home videos, business and entertainment software, books, and music and sound recordings) contributed an estimated $535.1 billion to the U.S. economy, accounting for approximately 5.24% of GDP. STEPHEN E. SIWEK, COPYRIGHT INDUSTRIES IN THE U.S. ECONOMY: THE 2002 REPORT 3 (2002), available at http:// www.iipa.com/pdf/2002-SrWEK-FULL.pdf. On the role of copyright in the American economy,
77. see the sources cited in Ginsburg, supra note 33, at 61 n.l. A similar trend emerges on a global scale.
78. See generally OECD, THE KNOWLEDGE-BASED ECONOMY: A SET OF FACTS AND FIGURES (1999).
79. See, e.g., Aldrich, supra note 27, at 5 ("[W] hile the DAT machine was released in 1986,... the threat of litigation prevented the machines from entering die market for nearly seven years.").
80. See, e.g., Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489 (2d Cir. 2000). Judge Calabresi, writing for a unanimous panel, delayed his decision, awaiting the Anticybersquatting Consumer Protection Act (ACPA), which would eventually become effective while the case was pending before the Court of Appeals. Id. at 496-497 The ACPA resolved most issues surrounding the allocation of domain names involving cybersquatting. See 15 U.S.C. §1125(d)(1)(A) (2006).
81. 54 Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 380 F.3d 1154, 1167 (9th Cir. 2004) (citation omitted).
82. Note that there is a distinction between risk and uncertainty. Individuals are subject to risk if (1) an event may or may not happen in the future, and (2) the chance that the event will happen is known. By contrast, an event is uncertain if (1) it may or may not happen in the future, and (2) we do not know the chances that it will happen.
83. See generally FRANK H. KNIGHT, RISK, UNCERTAINTY AND PROFIT (1921).
84. 56 A more precise, but also more limiting, definition of uncertainty pertains to situations where a given act is "said by informed attorneys to have an expected official outcome at or near the 0.5 level of predictability." Anthony D'Amato, Legal Uncertainty, 71 CAL. L. REV. 1, 2 (1983).
85. MAX WEBER, ON LAW IN ECONOMY AND SOCIETY (Max Rheinstein ed., Edward Shils trans., 1954).
86. See generally D'Amato, supra note 56 (describing a trend toward greater uncertainty) ;
87. Isaac Ehrlich &Richard A Posner, An Economic Analysis of Legal Rulemaking 3 J. LEGAL STUD. 257 (1974) (examining the optimal level of precision for rules and standards);
88. Werner Z. Hirsch, Reducing Law's Uncertainty and Complexity, 21 UCLA L. REV. 1233 (1974) (discussing considerations involved in, and obstacles to, reducing uncertainty);
89. Jason Scott Johnston, Uncertainty, Chaos, and the Torts Process: An Economic Analysis of Legal Form, 76 CORNELL L. REV. 341 (1991) (examining how rules and balancing approaches evolve out of litigation).
90. For a critique of this strand of thought which is most prevalent in the area of critical legal studies, see Ken Kress, Legal Indeterminacy, 77 CAL. L. REV. 283 (1989).
91. Consider how the questions of copyright and fair use with regard to peer-topeer networks resemble a hypothetical scenario in which a new technology (for instance, low-air travel with jet packs) would allow new ways of trespassing over real property boundaries. To understand the major effect of technology on copyright law, imagine further that millions of people would be engaging in such acts of trespass while courts were debating whether the new technology amounted to trespass and whether property owners were allowed to prevent such encroachments. Although such definitional cases are certainly not unheard of in areas such as property law, they are few and far between. For example, mass air travel created the legal issue of whether individual landowners can prevent airlines from flying over their property. See United States v. Causby, 328 U.S. 256, 260-261 (1946) (concluding that federal statutes create a public highway above certain altitudes).
92. See Stan J. Liebowitz, File Sharing: Creative Destruction or Just Plain Destruction ?, 49 J.L. & ECON. 1 (2006) (identifying file sharing as the cause of declining record sales);
93. see also RIAA, For Students Doing Reports, http://www.riaa.com/faq.php (last visited Apr. 15, 2009) ("One credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers' earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.").
94. For a review of various current issues, see generally Electronic Frontier Foundation, http://www.eff.org (last visited Apr. 15, 2009).
95. See infra Seedon II.A.
96. 64 The complaint was filed on October 2, 2001. See Complaint for Damages and Injunctive Relief for Copyright Infringement, Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 259 F. Supp. 2d 1029 (CD. Cal. 2003) (No.01-8541). The Supreme Court reached its decision on June 27, 2005. Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913 (2005). Final disposition on remand did not occur until September 27, 2006. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 454 F. Supp. 2d 966 (CD. Cal. 2006). This chronology does not include the litigation that is now taking place to establish the boundaries and precise meaning of the "inducement" theory established by the Supreme Court
97. 259 F. Supp. 2d at 1031-32, aff'd, 380 F.3d 1154 (9th Cir. 2004).
98. See James Gibson, Risk Aversion and Rights Accretion in Intellectual Property Law, 116 YALE L.J. 882,884,896-899 (2007) (arguing that a "[b]etter safe than sued" mentality leads to customary licensing practices, which ultimately find their way into legal doctrine).
99. Howard Latin, "Good" Warnings, Bad Products, and Cognitive Limitations, 41 UCLA L. REV. 1193,1240 (1994);
100. see also John E. Calfee & Richard Craswell, Some Effects of Uncertainty on Compliance with Legal Standards, 70 VA. L. REV. 965, 965 (1984) (analyzing "ways in which uncertainty about the application of legal standards can give parties economic incentives to 'overcomply' or to 'undercomply'-that is, to modify their behavior to a greater or lesser extent than a legal rule requires"). For more details, see infra Section III. A.
101. See, e.g., Linda Babcock &George Loewenstein, Explaining Bargaining Impasse: The Role Of Self-Serving Biases, 11 J. ECON. PERSP. 109, 111-13 (1997). The authors assigned participants in a study to be either the plaintiff or the defendant in a tort case regarding a car accident with a maximum potential damages payment of $100,000. The plaintiffs' prediction of the likely judicial award was on average $14,500 higher than the defendants'. The plaintiffs' suggestion of a 'fair' figure was $17,700 higher than the defendants'. Id.
102. Dan M. Kahan &Donald Braman, More Statistics, Less Persuasion: A Cultural Theory of Gun-Risk Perceptions, 151 U. PA. L. REV. 1291, 1314-1315 (2003) (stating that when an individual is presented with "competing factual claims," she is most likely to accept those proposed by individuals "who share [her] cultural oudooks").
103. See Daniel S. Nagin & Greg Porgarsky, An Experimental Investigation of Deterrence: Cheating Self-Serving Bias, and Impulsivity, 41 CRIMINOLOGY 167, 171 (2003) ("[S]elfserving bias [is] the tendency for individuals to shade judgments in a manner favorable to themselves.").
104. Michael Wenzel, Motivation or Rationalisation? Causal Relations Between Ethics, Norms, and Tax Compliance, 26 J. ECON. PSYCHOL. 491 (2005). In this pioneering study on tax evasion, Wenzel observes "bi-directional causality between ethics/norms and compliance." Id. at 504. He concludes that, for taxpayers, tax-evasion conduct feeds back into personal and social norms. Id.
105. Joshua D. Rosenberg, The Psychology of Taxes: Why They Drive Us Crazy, and How We Can Make Them Sane, 16 VA. TAX REV. 155, 201 n.113 (1996).
106. Russell Hardin, Law and Social Norms in the Large, 86 VA.L.REV.1821, 1831 (2000).
107. On the internalization of social norms, see generally Robert Cooter, Do Good Laws Make Good Citizens? An Economic Analysis ofInternalized Norms, 86 VA. L. REV. 1577 (2000).
108. See Neri, supra note 14, at 748 ("[P]eople's behavior generally conforms more closely with internalized social norms regarding how people should behave than with laws dictating behavior....").
109. This brings to mind the famous statement of Attorney General Robert Kennedy that "the poor man looks upon the law as an enemy, not as a friend. For him the law is always taking something away." Robert Kennedy, Att'y Gen. of the U.S., Address at the University of Chicago, May 1,1964, quoted in Hirsch, supra note 58, at 1247.
110. This effect is compounded by inherent product uncertainty in content industries. As one commentator noted, "one of the reasons that business people in Hollywood are so nervous is that they never really know what's going to win or what's going to lose." Posting of Paul Schmelzer to Eyeteeth: Ajournai of Incisive Ideas, The Anarchist in the Library: Discussing Cultural Democracy with Siva Vaidhyanathan, http://eyeteeth.blogspot.com/2003/04/ anarchist-in-library-discussing.html (Apr. 21, 2003).
111. These studies have also documented the strong norm component of downloading and file sharing. See, e.g., Daniel J. Gervais, The Price of Social Norms: Towards a Liability Regime for File-Sharing 12 J. INTELL. PROP. L. 39, 51 (2004) (noting that legal changes in copyright clashed with the social norms at play in online music sharing);
112. Lior Jacob Strahilevitz, Charismatic Code, Social Norms, and the Emergence of Cooperation on the File-Swapping Networks, 89 VA. L. REV. 505, 549 (2003) (discussing how computer code may solve collective action problems). The definition of "social norm" is somewhat elusive. For the purpose at hand we side with the notion that a social norm is a social regularity, a behavior that is widely adopted in society. Social norms, however, are not merely what people do; they also correspond with a conception within society, or a subgroup thereof, of what people should do.
113. See Richard H. McAdams, The Origin, Development, and Regulation of Norms, 96 MICH. L. REV. 338, 350-51 (1997) (offering a definition of "norm").
114. SeeYuval Feldman & Janice Nadler, The Law and Norms of File Sharing, 43 SAN DIEGO L. REV. 577, 605-612 (2006) (examining how the creation of new laws influences both social norms and the social perception of illegal downloading).
115. See Ku, supra note 9, at 268 ("The economics of digital technology also suggests that the exclusive rights created by copyright are inconsistent with society's interest in promoting the creation of new music and making music widely available to the public").
116. Press Release, E-Poll, E-Poll Study Looks at Consumers [sic] Attitudes Before and After RIAA Lawsuits (Nov. 4, 2003), available at http://www. prnewswire.com/cgibin/stories.pl?ACCT=104ScSTORY=/www/story/l 1-04-2003/0002050963ScEDATE. Even after the lawsuits, slighdy less than one-third of teenagers thought that downloading music was "wrong." Id.
117. See Robert C Piasentin, Unlawful? Innovative? Unstoppable? A Comparative Analysis of the Potential Legal Liability Facing P2P End-Users in the United States, United Kingdom, and Canada, 14 INT'L.J.L. & INFO. TECH. 195, 198 (2006) (arguing that striking a balance between the wants of both end users and copyright owners is the most effective means of regulating file sharing).
118. See Edward K. Cheng, Structural Laws and the Puzzle of Regulating Behavior, 100 NW. U. L. REV. 655, 703 (2006) (contending that improving copy protection to make illegal downloading more difficult will curb behavior, and will thus shape social norms-a task that the "fiat-only regime" is too weak to accomplish.).
119. The passage of the Digital Millennium Copyright Act (DMCA), Pub. L. No.105304, 112 Stat. 2863 (1998), provided some peace of mind for those publishers who held significant doubt about the future. For a detailed look at the Act's provisions, see generally David Nimmer, A Riff on Fair Use in the Digital Millennium Copyright Act, 148 U. PA. L. REV. 673 (2000).
120. See Competition, Innovation, and Public Policy in the Digital Age: Is the Marketplace Working to Protect Digital Creative Works? Hearing Before the S. Comm. on the Judiciary, 107th Cong. 89-92 (2002) (testimony of Edward W. Felten, Associate Professor of Computer Science, Princeton University).
121. See Menell, supra note 31, at 178-79. The most embarrassing illustration that every lock can be picked is the faltering of the Secure Digital Music Initiative (SDMI). The SDMI held a competition for hackers, testing their ability to crack the latest anticircumvention technology, the digital watermark. Edward Felten, an expert in computer science, accepted the offer and successfully cracked the protection technology. He drafted his findings in a paper that he planned to present until he was threatened with a lawsuit by the SDMI. Felten fired back with his own lawsuit requesting a declaratory judgment which was subsequendy dismissed. Felten finally went forward with the presentation of his paper after he received assurance from the Justice Department that the threats of a DMCA violation were invalid. See FISHER, supra note 9, at 96-97.
122. See, e.g., Press Release, Steve Jobs, Apple Inc., Thoughts on Music (Feb. 6, 2007), available at http://www.apple.com/hotnews/thoughtsonmusic ("It is a cat-and-mouse game.");
123. see also Lee Kovarsky, A Technological Theory of the Arms Race, 81 IND. L.J. 917, 932-37 (2006) (exploring the relationship between the technological arms race and copyright law and addressing the options available to content providers who wish to exclude consumers from their expressive assets).
124. See, e.g., AT&T Corp. v. City of Portland, 216 F.3d 871, 876 (9th Cir. 2000) ("The history of the Internet is a chronicle of innovation by improvisation, from its genesis as a national defense research network, to a medium of academic exchange, to a hacker cyber-subculture, to the commercial engine for the so-called 'New Economy.' Like Heraclitus at the river, we address the Internet aware that courts are ill-suited to fix its flow....").
125. See Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 955 (2005) (Breyer, J., concurring) (observing the importance of permitting software with substantial noninfringing uses for the protection of the development of technology).
126. 90 Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1983).
127. Id. at 456 (quoting Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530 (1972)).
128. Grokster, 545 U.S. at 965 (Breyer. J., concurring) (quoting Sony, 464 U.S. at 431).
129. WILLIAM M. LANDES & RICHARD A POSNER, THE POLITICAL ECONOMY OF INTELLECTUAL PROPERTY LAW 2-3 (2004).
130. Clarisa Long, Political Economy of Intellectual Property Law (2009) (unpublished manuscript, on file with author).
131. The rationale is that judges, especially those not subject to election, are influenced less by considerations unrelated to the substance of the litigation. Some commentators have argued that judge-made law provides more efficient outcomes because inefficient legal decisions are more likely to induce repeat litigation than efficient outcomes.
132. See, e.g., RICHARD A POSNER, ECONOMIC ANALYSIS OF LAW 251-52 (4th ed. 1992) (noting that common law doctrines "form a system for inducing people to behave efficiently, not only in explicit markets but across the whole range of social interactions");
133. Paul H. Rubin, Why is the Common Law Efficient?, 6 J. LEGAL STUD. 51, 51 (1977) ("[E]fficient rules may evolve from in-court settlement thereby reducing the incentive for future litigation and increasing the probability that efficient rules will persist").
134. But see George L. Priest, Selective Characteristics of Litigation, 9 J. LEGAL STUD. 399, 410 (1980) (contesting the ability of "the efficiency standard to explain all common law decisions" by considering the impact of settlements);
135. George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1, 3 (1984) (noting that Posner's conclusion on common law efficiency "requires the presumption that there are no cases involving alternate liability standards that were setded prior to appeal"). Others have argued, however, that the comparative advantage of judge-made law is somewhat exaggerated. As with legislation, litigation can be manipulated by those with a greater financial interest and long-standing experience. As such, well-organized interest groups can more efficiently organize and pool litigation efforts, and they can also rely on prior experiences to make strategic decisions to setde disputes unlikely to result in favorable judicial precedents.
136. See Marc Galanter, Why the "Haves" Come Out Ahead: Speculations on the Limits of Legal Change, 9 LAW & SOC'Y REV. 95, 97-104 (1974) (discussing the advantage that repeat legal players have over "one-shotters");
137. Paul H. Rubin & Martin J. Bailey, The Role of Lawyers in Changing the Law, 23 J. LEGAL STUD. 807, 807 (1994) ("[T]he law is driven by the preferences of attorneys, not of litigants or of judges....");
138. Todd J. Zywicki, The Rise and Fall of Efficiency in the Common Law: A Supply-Side Analysis, 97 Nw. U. L. REV. 1551, 1553 (2003) ("[C]hanges in [the] institutional framework have made the common law more susceptible to rent-seeking pressures, which have undermined the common law's pro-efficiency orientation.") .
139. Although I do not focus on this issue, legal uncertainty often has redistributive effects. See Uri Weiss, The Regressive Effect of Legal Uncertainty 1 (Tel Aviv Univ. L. Sch. Faculty Papers, Paper No. 30, 2005), available at http://law.bepress.com/taulwps/ fp/art30 ("[A] shift from a certainty legal regime to an uncertainty legal regime transfers wealth from risk-averse parties to risk-neutral parties via the settlement").
140. Generally, by increasing potential disagreement over the outcome, greater uncertainty reduces setdement rates. See Ehrlich &Posner, supra note 58, at 265. For a concise but insightful overview of the pernicious effect of uncertainty in the context of fair use,
141. see R. Polk Wagner, The Perfect Storm: Intellectual Property and Public Values, 74 FORDHAM L. REV. 423, 429-431 (2005).
142. Calfee & Craswell supra note 67, at 966.
143. Examples in the literature on overcompliance induced by uncertain application of legal standards include commentary on labor regulation and tax compliance.
144. See Debra D. Burke, Workplace Harassment: A Proposal for a Bright Line Test Consistent with the First Amendment, 21 HOFSTRA LAB. & EMP. L.J. 591, 605 (2004) ("Risk-averse employers' natural reaction to the vague limits of hostile environment is to over-compensate by prohibiting words or conduct in the workplace that even come close to bordering on harassment");
145. Ehud Kamar, Shareholder Litigation Under Indeterminate Corporate Law, 66 U. CHI. L. REV. 887, 889 (1999) ("[L]egal indeterminacy creates liability risk, which riskaverse fiduciaries are in a poor position to bear. Exposing corporate fiduciaries to this risk makes their services more cosdy and less productive to shareholders.");
146. Kyle D. Logue, Tax Law Uncertainty and the Role of Tax Insurance, 25 VA. TAX REV. 339, 373 (2005) ("Legal uncertainty can induce taxpayers, especially risk-averse taxpayers, to overcomply with the law in various ways[,]... such as changing the structure of their transactions, deciding not to engage in the transaction in question, or engaging the transaction as planned but without taking advantage of the more favorable tax treatment to which they are arguably... entided."). Note that when overdeterrence is not a concern, some authors have argued that uncertainty can be beneficial by inducing negotiated solutions or by increasing efficiency in law enforcement efforts.
147. See, e.g., Tom Baker et al., The Virtues of Uncertainty in Law: An Experimental Approach, 89 IOWA L. REV. 443, 445 (2004) ("[U]ncertain sanctions may be preferable on efficiency grounds because they achieve more deterrence than certain sanctions of the same expected value.");
148. Nicholas L. Georgakopoulos, The Vagueness of Limits and the Desired Distribution of Conducts, 32 CONN. L. REV. 451 (2000) (arguing that vague rules should be preferred over precise rules because they allow "customized compliance");
149. Linda K. Thomas, Child Custody, Community And Autonomy: The Ties That Bind?, 6 S. CAL. REV. L. & WOMEN'S STUD. 645 (1997) (examining the vague "best interest" test used in determining child custody and how the standard causes more private ordering due to its uncertainty).
150. For example, documentary artists sometimes avoid including any copyrighted materials, even something as remote as a ringtone in the background of a scene. See Nancy Ramsey, The Secret Cost of Documentaries, N.Y. TIMES, Oct 16, 2005, §2, at 13.
151. See Henrik Lando, Does Wrongful Conviction Lower Deterrence?, 35 J. LEGAL STUD. 327, 334-35 (2006);
152. see also Richard Craswell &John E. Calfee, Deterrence and Uncertain Legal Standards, 2 J.L. ECON. & ORG. 279, 299 (1986).
153. Evidence from cognitive psychology suggests that low-risk events are generally either grossly overweighed or neglected altogether.
154. See Daniel Kahneman & Amos Tversky, Choices, Values, and Frames, 39 AM. PSYCHOLOGIST 341, 345 (1984).
155. See supra Section II. A.
156. See supra Sections II.B-C.
157. See, e.g., Steven Hetcher, Using Social Norms to Regulate Fan Fiction and Remix Culture, 157 U. PA. L. REV. 1869, 1880-84 (2009) (discussing the emergence of a norm of socially acceptable digital remixing of copyrighted content against a background of legal uncertainty).
158. In fact some scholars suggest that several factors in the legal process create a trend of increasing uncertainty in law over time. See, e.g., D'Amato, supra note 56, at 5 (arguing that exceptions and nuances in judicial interpretation and specialized legislation create a trend towards greater complexity); Hirsch, supra note 58, at 1245-48 (arguing that the conflicting objectives of lawmakers and courts obstruct the preference for greater certainty);
159. Peter H. Schuck, Legal Complexity: Some Causes, Consequences, and Cures, 42 DUKE L.J. 1 (1992) (arguing that legal professionals benefit from legal complexity).
160. On the distinction between rules and standards, consider the following: Legal norms can be precise rules, which are blueprints for action and allow for mechanical decisions by judges and civil servants. Alternatively, they can be vague, mission-oriented standards, which delegate decisions from the maker of the law to the judiciary and the administration. Rules economize on the costs of adjudication and administration. Standards economize on the costs of norm specification.
161. Hans-Bernd Schäfer, Rules Versus Standards in Rich and Poor Countries: Precise Legal Norms as Substitutes for Human Capital in Low-Income Countries, 14 SUP. CT. ECON. REV. 113, 113 (2006). There is not a binary distinction between the two categories. Rather, "[t]he difference between a rule and a standard is a matter of degree-the degree of precision."
162. Ehrlich &Posner, supra note 58, at 258. See generally Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 DUKE L.J. 557 (1992);
163. Pierre Schlag, Rules and Standards, 33 UCLA L. REV. 379 ( 1985).
164. The statutory language governing fair use speaks in broad generalities: In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-
165. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
166. the nature of the copyrighted work;
167. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
168. the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C.§107(2006).
169. See LAWRENCE LESSIG, FREE CULTURE 295 (2004) (advocating clearer and narrower lines demarcating the scope of protection for derivative works);
170. Joseph P. Liu, Regulatory Copyright, 83 N.C. L. REV. 87, 151-52 (2004) (suggesting that the Copyright Office could be given the regulatory authority to promulgate rules and safe harbors). For an interesting account of the potential harms of fair use,
171. see generally Rebecca Tushnet, Essay, Copy This Essay: How Fair Use Doctrine Harms Free Speech and How Copying Serves It, 114 YALE L.J. 535 (2004).
172. Gideon Parchomovsky &Kevin A Goldman, Fair Use Harbors, 93 VA. L. REV. 1483,1489 (2007).
173. See id. at 1511 ("We propose that for any literary work consisting of at least one hundred words, the lesser of fifteen percent or three hundred words may be copied without the permission of the copyright holder.").
174. Several scholars have argued that a flexible fair use analysis is necessary.
175. See, e.g., Dan L. Burk, Muddy Rules for Cyberspace, 21 CARDOZO L. REV. 121, 140 (1999) ("The 'muddy' four-part balancing standard of fair use allows courts to reallocate what the market cannot");
176. Michael W. Carroll, Fixing Fair Use, 85 N.C. L. REV. 1087 (2007) (arguing that fair use is sensitive to context);
177. Matthew Sag, God in the Machine: A New Structural Analysis of Copyright's Fair Use Doctrine, 11 MICH. TELECOMM. & TECH. L. REV. 381, 435 (2005) (noting that a flexible fair use standard allows courts to adapt copyright protection to new innovations).
178. LEO KATZ, ILL-GOTTEN GAINS 17-30 (1996) (contrasting "avoision" of ethical rules with "avoision" of law).
179. Such interaction between law and technology can perhaps best be compared to the adaptation of creative tax consultants to the Internal Revenue Service.
180. See Tim Wu, When Code Isn't Law, 89 VA. L. REV. 679, 682 (2003) ("The programmer is not unlike the tax lawyer, exploiting differences between stated goals of the law, and its legal or practical limits. He targets specific weaknesses in legal regimes ....").
181. See, e.g., Kristina Groennings, Costs and Benefits of the Recording Industry's Litigation Against Individuals, 20 BERKELEY TECH. L.J. 571, 573 (2005) ("The [recording] industry's victory in Napster v/as fleeting as publicity over the issue increased awareness of P2P technology and users flocked to decentralized networks like Grokster and KaZaa, making the tracking of P2P use more difficult" (footnotes omitted)).
182. The work of Lawrence Lessig in particular rests upon the notion that cyberspace is a "fundamentally important changed circumstance" in the traditional copyright equation. Because cyberspace makes the public domain so readily accessible, the stakes are raised to keep copyrighted material flowing into the public domain.
183. See Linda Greenhouse, Justices Hear Arguments on Extension of Copyrights, N.Y. TIMES, Oct 10, 2002, at Cl.
184. See supra Section III. A.
185. SeeMenell, supranote 31, at 195.
186. Id at 196.
187. See id. at 197.