Reflections on the Law and Economics of Copyright Scope and its Implications for Fair Use

Uncertainty as to the optimum extent of protection has generally limited the capacity of law and economics to translate economic theory into coherent doctrinal recommendations in the realm of copyright. The article explores the relationship between copyright scope and welfare from a theoretical perspective to develop a framework for evaluating specific doctrinal recommendations in copyright law. This analysis of copyright scope establishes that (1) the efficiency of private ordering is the key determinant of the ideal level of copyright scope; (2) the complexity of the welfare-scope relationship is such that we are unlikely to be able to ascertain a generalizable optimal level of copyright scope – the relationship will clearly be subject to substantial variation, both within and between industries; (3) doctrinal recommendations which aim to optimize copyright scope in the abstract but do not account for the effect of a doctrinal change on transaction costs or uncertainty are necessarily incomplete. This article bridges the gap between the traditional law and economics of copyright and specific doctrinal analysis, applying the above conclusions as metrics for assessing doctrinal proposals. The usefulness of applying these metrics in either rejecting or improving doctrinal recommendations is illustrated with reference to the predominant law and economics theories of fair use