The competition of technologies in markets for ideas: Copyright and fair use in evolutionary perspective

104 S. Ct. 774, 782 (1984). 487F.2d 1345 (Ct. Cl. 1973), affirmed by an equally divided court, 420U.S. 376 (1975) (per curiam). Coase, 1960, The Problem of Social Cost, J. Law and Econ., 3, 10.1086/466560 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1600 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1610 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1614 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1618 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1616 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1627 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1646 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, 82, 1647 Gordon, 1982, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and its Predecessors, Col. L.R., 82, 1615 Hayek, 1945, The Use of Knowledge in Society, Am. Econ. Rev., 35 Hayek, 1978, Competition as a Discovery Procedure, New Studies in Philosophy, Politics, Economics and the History of Ideas, 179 Demsetz, 1967, Toward a Theory of Property Rights, Am. Econ. Rev., 57 Demsetz, 1967, Toward a Theory of Property Rights, Am. Econ. Rev., 57, 350 1981, Institutional Function and Evolution in the Criminal Process, 76, 71 Macneil, 1978, Contracts: Adjustment of Long-Term Economic Relations Under Classical, Neoclassical, and Relational Contract Law, 72, 854 Williamson, 1979, Transaction Cost Economics: The Governance of Contractual Relations, J. Law and Econ., 22 Arrow, 1974, The Limits of Organization, 26 See, generally, Adelstein, supra, note 18. Adelstein, 1979, Informational Paradox and the Pricing of Crime: Capital Sentencing Standards in Economic Perspective, J. Crim. L. & Crimin., 70 See Adelstein, supra, note 18, pp. 80–99. Toda, 1967, About the Notions of Communication and Structure: A Perspective, 25 1976, H.R. Rep. No. 94-1476, 61 1975, S. Rep. No. 94-473, 58 Cf. Cordon, supra, note 4, pp. 1610–1612. Compare K. Arrow, supra, note 21, p. 40: ‘[T]here tends to be a cycle in which an innovation in artistic vision first occurs and is diffused; then, as it becomes more familiar, the value of repetition of similar signals decreases... ’. Eldredge, 1972, Punctuated Equilibria: An Alternative to Phyletic Gradualism, 82 Stanley, 1981, The New Evolutionary Timetable: Fossils, Genes, and the Origin of Species Heilprin, 1964, Alternative Solutions, 131 Heilprin, 1964, Alternative Solutions, 135 Patterson, 1968, Copyright in Historical Perspective Pforzheimer, 1972, Historical Perspective on Copyright Law and Fair Use, 269 Pforzheimer, 1972, Historical Perspective on Copyright Law and Fair Use, 271 Judge, 1934, Elizabethan Book Pirates, 19 Cf. Demsetz, supra, note 16, p. 350. [1774] 4 Burrow's Reports 2408. An analogous result was reached sixty years later by the United States Supreme Court in Wheaton v. Peters, 33 U.S. (8 Pet.) 591 (1834). Stat. 1075, § 1. Shortly after the Lords' decision in Donaldson, the Company again sought relief from the House of Commons, claiming that large sums had been invested in reliance upon their own construction of the statute. This time, however, their pleas were denied, prompting one scholar to remark of the entire episode that ‘The Statute of Anne suggests that it was not the Australians who discovered the boomerang’. Pforzheimer, supra, note 30, p. 272. Cf. Sony Corp v. Universal City Studios, 104 S.Ct. 774, 792 (1984). 9 Fed. Cas. 342 (C.C.D. Mass. 1841). 9 Fed. Cas. 342 (C.C.D. Mass. 1841), p. 348. The decision to grant fair use, wrote Justice Story, should consider ‘the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects of the original work’. 9 Fed. Cas. 342 (C.C.D. Mass. 1841), p. 348. Sony Corp. v. Universal City Studios, 104 S.Ct. 774,806 (1984)(opinion of Blackmun J., dissenting). H.R. Rep. No. 94-1476, at 66 (1976). See also S. Rep. No. 94-473, p. 62 (1975). Copyright Revision Act of 1976, 17 U.S.C. §107 (1982 ed.): 'In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for and value of the copyrighted work’. 17 U.S.C. §108 (1982 ed.). Dellar v. Samuel Coldwin, Inc., 104 F. 2nd 661, 662 (2nd Cir. 1939). Saunders, 1972, Origin of the “Gentlemen's Agreement” of 1935, 301 Saunders, 1972, Origin of the “Gentlemen's Agreement” of 1935, 306 Saunders, 1972, 317 Compare Demsetz, supra, note 16, pp. 348–350; 'What converts a harmful or beneficial effect into an externality is that the cost of bringing the effect to bear on the decisions of one or more of the interacting persons is too high to make it worthwhile...... [Property rights develop to internalize externalities when the gains of internalization become larger than the cost of internalization'. Nimmer, 1982, Copyright Liability for Audio Home Recording: Dispelling the Betamax Myth, 1505 Nimmer, 1982, Copyright Liability for Audio Home Recording: Dispelling the Betamax Myth, 1524 Compare our earlier quotation of Gordon on this point, supra, note 8. Saunders, supra, note 44, p. 317. 1968, New Technology and the Law of Copyright: Reprography and Computers, U.C.L.A. L. Rev., 15, 939 1968, New Technology and the Law of Copyright: Reprography and Computers, U.C.L.A. L. Rev., 15, 959 1964, 45 Williams & Wilkins Co. v. United States, 487 F.2d 1345, 1347-8 (Ct.Cl. 1973). Shemel, 1979, This Business of Music, 157 So limited were the potential markets for their journals, and so razor thin the profit margins, that in 1965 one Williams & Wilkins journal saw its profits cut in half when just thirty-seven subscriptions were cancelled. See UCLA Project, supra, note 50, at 944. Williams & Wilkins Co. v. United States, 487 F.2d 1345 (Ct.Cl. 1973), affirmed by an equally divided court. 420 U.S. 376 (1975) (per curiam). 487 F.2d, p. 1358. 487 F.2d, p. 1366 (Cowen C.J., dissenting). 487 F.2d, p. 1366. See also M. Nimmer, Nimmer on Copyright (1973-ed.). §145, p. 650. 487 F.2d, p. 1351. 487 F.2d, p. 1356. 487 F.2d, p. 1356. Sony Corp. v. Universal City Studios, 104S.Ct.774, 809(1984) (Blackmun J., dissenting). See text accompanying notes 3-15, supra. 487 F.2d, pp. 1354–1360. Cf. Gordon, supra, note 4, pp. 1648–1650. See, for example, the discussions in Nimmer,supra, note 47, pp. 1525–1534. PIoman, 1980, Copyright: Intellectual Property in the Information Age, 40 PIoman, 1980, Copyright: Intellectual Property in the Information Age, 90 Seltzer, 1978, Exemptions and Fair Use in Copyright, 109 Marke, 1967, Copyright and Intellectual Property, 79 See Macneil, supra, note 20, pp. 886–901. Macneil, 1980, The New Social Contract: An Inquiry Into Modern Contractual Relations 487 F.2d, p. 1360. Quoted in J. Marke, supra, note 66, p. 72. Remedies of this kind are discussed in Nimmer, supra, note 47, pp. 1525–1533. Universal City Studios v. Sony Corp. of America, 480 F.Supp. 429 (C.D. Cal. 1979). Universal City Studios v. Sony Corp. of America, 659 F.2d 963 (9th Cir. 1982). Sony Corp. of America v. Universal City Studios, 104 S.Ct. 774 (1984). The majority consisted of Justices Stevens, Brennan, White, O'Connor, and Chief Justice Burger, while Justices Marshall, Powell, and Rehnquist joined Justice Blackmun's dissent. 104 S.Ct., pp. 806–815 (Blackmun J., dissenting). 104 S.Ct., pp. 785–789, 789. 104 S.Ct., pp. 791–796. 104 S.Ct., p. 810, 810 n.35 (Blackmun, J., dissenting). 222 U.S. 55 (1911). 104 S.Ct., p. 786. 104 S.Ct., p.786. 487 F.2d, p. 1362. 104 S.Ct., pp. 792–795. 487 F.2d, p. 1362. 104 S.Ct., p. 796. 17 U.S.C. § 504(c) (1982 ed.). Ringer, 1972, The Use of Copyrighted Works in Information Storage and Retrieval Systems, 296 Ringer, 1972, The Use of Copyrighted Works in Information Storage and Retrieval Systems, 297