What Contracts Cannot Do: The Limits of Private Ordering in Facilitating a Creative Commons

the asset, the higher the costs of gathering information regarding the scope of rights in that asset. Second, the cost of ascertaining the scope of the copyrighted subject matter is relatively high. 12 Copyright law protects expressions, not ideas. While some ideas may be extracted, the legality of copying the plot or characters of a novel would require an elaborate legal analysis.' 3 The scope of copyright protection is not evident, and the average user would hardly know what aspects of the work are protected (expression, but not ideas) and what uses are prohibited without a license (copying, but not reading). Consequently, people would often find it too burdensome to define the exact scope of protection and would simply assume that the entire work is protected. This would further strengthen copyright's chilling effect. In some cases, transaction costs related to copyright would constitute a high portion of the total cost of using works. Consider for instance a public school teacher seeking to license materials for distribution in her class. Individual authors of poems or articles, if they own the rights, would tend to authorize such use of their works free of charge. Yet, identifying and locating the rights holder, and then negotiating a license with her is likely to be prohibitively expensive. If a public school teacher seeks to use the work once, she may not find it worthwhile to incur the information cost and may give up the use altogether. From the perspective of rights holders, authorizing uses may also be expensive. It may require legal counseling regarding the scope of copyright protection, the legal definition of authorized uses, and the legal language used to describe them. Rights holders are more likely to incur the cost of licensing when they expect to benefit (i.e., when they license the work for commercial use). They may be reluctant, however, to incur the high cost of licensing for noncommercial uses. Consequently, licensing costs may prevent the use of works that would otherwise become available, thus impeding access and subsequent creation. Thus, the high transaction cost associated with the copyright system may create a chilling effect and reduce the level of desirable uses. 12. Long, supra note 11, at 485-86 (arguing that the different structure of patent and copyright reflects the demands that different kinds of protected goods place on our ability to process information, and seeks to promote efficiency, by minimizing the information costs presented by intellectual goods). 13. See Nichols v. Universal Pictures Corp., 45 F.2d 119, 122-23 (2d Cir. 1930). [Vol. 74 WHAT CONTRA CTS CANNOT DO 2. The New Copyright Regime and Creative Activity The cost associated with licensing copyrighted materials has increased exponentially in recent years. This can be attributed to two developments: one substantive and the other procedural. The substantive element concerns the expanded scope of copyright protection, and the procedural one the removal of formal requirements. The expansion of copyright protection to cover more subject matters, 14 extended duration, 15 and additional rights 16 reduced the volume of works that are freely available to build upon. 17 Furthermore, in addition to the expansion of copyrights, the characteristics of the digital environment also make informational works less available. For instance, overlapping rights'S-held by different rights holders-make it more costly to secure a license to use a copyrighted work. Another example is the use of digital rights management ("DRM") to govern the use of works and physically limit access and use, coupled with anticircumvention legislation. 19 Overall, expansive copyrights, supplemented by extra protection under other bodies of law,20 create new barriers to access to preexisting materials. 21 14. The proprietary regime in recent years covers more informational works. It affords protection to types or new aspects of works that used to be in the public domain. For instance, copyright and neighboring rights afford protection for facts and mere data. See ProCD Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (protecting mere data by enforcing a shrink-wrap license); Council Directive 96/9, 1996 O.J. (L 077) 20-28 (EC); see also J.H. Reichman & Paul F. Uhlir, A Contractually Reconstructed Research Commons for Scientific Data in a Highly Protectionist Intellectual Property Environment, Law & Contemp. Probs., Winter/Spring 2003, at 315. 15. Duration of copyright protection in the United States used to be shorter and was recently extended to life plus seventy years for noncorporate works. For works owned by corporations (works for hire) copyright duration is ninety-five years from publication or 120 years from creation, whichever is shorter. 17 U.S.C. § 302 (2000). 16. The copyright bundle of rights was expanded and now covers a wider range of uses, for instance, the right to prevent unauthorized access to works in digital format. See Digital Millennium Copyright Act of 1998, 17 U.S.C. § 1201 (2000), Council Directive 93/98, art. 6., 1993 O.J. (L 290) 9-13 (EC). Another example is the limitation on the first sale doctrine (prohibition on rentals of CDs and computer programs). See Council Directive 92/100, 1992 O.J. (L 346) 61-66 (EC); Council Directive 91/250, 1991 O.J. (L 122) 42-46 (EC). 17. See Lawrence Lessig, Free Culture (2004); James Boyle, The Second Enclosure Movement and the Construction of the Public Domain, 66 Law & Contemp. Probs. 33 (2003); Dennis S. Kariala, Federal Preemption of Shrinkwrap and On-line Licenses, 22 U. Dayton L. Rev. 511 (1997). 18. See Mark A. Lemley, Dealing with Overlapping Copyrights on the Internet, 22 U. Dayton L. Rev. 547, 549, 567-72 (1997) (describing the problems for users that result when the multiple copyrights of a work overlap and are not owned by a single user). 19. See, e.g., 17 U.S.C. § 1201 (prohibiting the circumvention of technology that protects a specified work). 20. Examples of other laws include misappropriation, the right of publicity, and breach of contract. The misappropriation cause of action was first recognized by the U.S. Supreme Court in International News Service v. Associated Press. 248 U.S 215, 240-42 (1918) (holding that copying breaking news is a misappropriation and therefore illegal, even though news is not a copyrighted subject matter); see also Nat'l Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 844-45 (2d Cir. 1997) (narrowing down the misappropriation claim to 20051