Author(s): Peter S. Menell
Year: 2012
Abstract:
The
fair use doctrine seeks to facilitate socially optimal uses of
copyrighted material. As a practical matter, however, cumulative
creators, such as documentary filmmakers and many contemporary
musicians, are often reluctant to rely on the fair use doctrine because
of its inherent uncertainty, the potentially harsh remedies for
copyright infringement, and the practical inability to obtain effective
pre-clearance rights. Moreover, copyright owners have no obligation
under existing law to respond to a cumulative creator’s inquiry. Thus, a
familiar refrain in professional creative communities is “if in doubt,
leave it out.”
In this Article we propose a novel mechanism
that would afford a limited, cost-effective process for pre-clearing
works, promote fair negotiation over cumulative uses of copyrighted
works, and reduce the exposure of cumulative creators from the inherent
risks of relying on copyright’s de minimis and/or fair use doctrine.
Under this mechanism, a cumulative creator has authority to make a
formal offer of settlement to use copyrighted material for a project. If
the copyright owner does not respond to the offer, the cumulative
creator would be permitted to use the work provisionally by paying the
settlement amount into escrow. If the copyright owner rejects the
proposed license fee and sues for infringement, the copyright owner will
bear the cumulative creator’s litigation costs (1) if the court
determines that the use of the material qualifies as fair use or (2) if
the court determines that the fair use doctrine did not excuse the use
but where the cumulative creator’s offer of settlement (the proposed
license fee) exceeded the amount of damages that the court determines to
be appropriate. In the former case, the escrow amount is returned to
the cumulative creator. In the latter case, the copyright owner receives
the infringement award from the escrow account and the remainder
returns to the cumulative creator.
Our fair use fee-shifting
proposal encourages copyright owners to take settlement offers seriously
and negotiate around the fair use doctrine’s inherent uncertainties. In
so doing, this mechanism protects the reliance costs of cumulative
creators, reduces transaction costs, and discourages hold-out behavior.
Overall, our mechanism should enrich cultural production by increasing
the use of copyrighted content in follow-on works while fostering
markets for cumulative creativity and providing fair compensation to
copyright owners of underlying works.
Keywords: copyright, fair use, mechanism design, fee shifting
Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2159325