A REGULATORY FRAMEWORK FOR DEALING WITH ONLINE COPYRIGHT INFRINGEMENT (OCI)

ABSTRACT. This paper proposes a regulatory system for dealing with online copyright infringement ("OCI"). The system consists in both a cost-benefit analysis ("CBA") for evaluating measures taken by Internet intermediaries to limit OCI, and an institutional framework for applying the CBA. Although I limit the analysis here to OCI, the system could potentially be extended to other instances of illegal content on the Internet. Part one of this paper presents the existing literature dealing with the liability of Internet intermediaries and the optimal design of regulatory regimes, drawing in particular on literature dealing with cost benefit analyses and better regulation. Part two presents the existing legislative measures in the US and Europe to limit OCI, outlining their strengths and weaknesses. Part three analyzes case law. The paper argues that the proportionality test applied by courts in Europe to evaluate measures taken by Internet intermediaries to limit OCI can be translated into a cost benefit analysis that could be applied by a regulatory authority on a forward-looking basis. Part four presents the institutional approaches that are currently used to deal with OCI, their strengths and weaknesses. Part five recommends an optimal institutional approach for applying the CBA. 1