Toward an Ecology of Intellectual Property: Lessons from Environmental Economics for Valuing Copyright's Commons

ABSTRACT The "fair use" defense in copyright law shields an intellectual commons of protected uses of copyrighted material from infringement actions. In determining whether a given use is fair, courts must assess the new use's potential "effect on the market" for the copyrighted work. Fair use jurisprudence too often fails to address the complementary, network, and long-range effects of new technologies on the value of copyrighted works. These effects parallel the indirect, direct, and option values of biodiversity recently recognized by environmental economists. Their sophisticated methods for valuing natural resources in tangible commons can inform legal efforts to address the intellectual commons' "effect on the market" for copyrighted works. TABLE OF CONTENTS I. INTRODUCTION: INTELLECTUAL AND TANGIBLE COMMONS II. Assessing the Effect of Unauthorized Use on the Value of the Copyrighted Work A. CONSUMPTIVE USES: DIRECT COPYING IN SONYAND PRINCETON UNIV. PRESS B. TECHNICAL COMPATIBILITY CASES C. ARRANGEMENT AND ORGANIZATION CASES D. THE DUBIOUS LEGAL BASIS OF THE NARROW APPROACH TO FOURTH FACTOR ANALYSIS E. CRITICAL IP SCHOLARS' RESPONSE: ATTACK ON ECONOMIC ANALYSIS AND RECOURSE TO FIRST AMENDMENT PRINCIPLES III. THE ECONOMIC BASIS FOR COMPREHENSIVE FOURTH FACTOR ANALYSIS A. NETWORK EFFECTS B. EXPERIENCE GOODS C. CONCLUSION: RECOGNIZING THE PREVALENCE OF COMPLEMENTARITY IN COPYRIGHT'S COMMONS IV. VALUATION OF COPYRIGHT'S COMMONS: LESSONS FROM ENVIRONMENTAL ECONOMICS A. VALUATION IN ENVIRONMENTAL ECONOMICS B. MEASURING DIRECT AND INDIRECT USE VALUES, AND OPTION VALUES C. THE VALUE OF TAXONOMIZING VALUE V. TOWARD MORE RIGOROUS EFFECT ON THE MARKET ANALYSIS A. MATCHING THE NEEDS OF EFFECT ON THE MARKET ANALYSIS WITH THE ACHIEVEMENTS OF BIODIVERSITY VALUATION B. LONGER TIME HORIZONS C. NETWORK EFFECTS: A READY MADE DISTRIBUTION NETWORK D. COMPLEMENTARY USES: ADVERTISING AND EXPOSURE VI. CONCLUSION: A PLEA FOR TAXONOMY I. INTRODUCTION: INTELLECTUAL AND TANGIBLE COMMONS As new technology has enhanced the accessibility of copyrighted materials, (1) Congress and the courts have changed and developed copyright law repeatedly over the past decade. Recent copyright legislation has generally strengthened the hand of owners of intellectual property rights ("IPRs"). (2) Court decisions have been more mixed, with some endorsing the expansion of IPRs, and others refusing to recognize their holders' claims. (3) Responding to these developments, many leading IP scholars have raised concerns about increasing commercialization of the intellectual landscape. (4) While their contributions are diverse, these critical IP scholars (5) have begun to develop the "intellectual" or "creative" commons as a master metaphor for the material they want to protect from perfect control by IPR holders. (6) A commons is a resource "'in joint use or possession; to be held or enjoyed equally by a number of persons."' (7) Classic examples of commons are parks, roads, and beaches. (8) Critical copyright scholars argue that software, music, and other intangible ideas share many qualities with these public goods, (9) such as non-rivalry in consumption, that make them ideal "commons" resources. (10) They argue that protection of a "creative commons" (11) from a "second enclosure movement" (12) is essential to free expression, economic competition, and equitable access to information. Though most convincing as policy arguments for changing the law, these concerns find formal legal expression in the extant copyright doctrine of "fair use." (13) By guaranteeing individuals the right to make "fair uses" of copyrighted material without gaining the permission of the copyrightholder, the fair use doctrine enables the availability of a commons of intellectual resources. However, the meaning of the doctrine is deeply unsettled in the digital realm. …