Consumers & Creative Destruction: Fair Use Beyond Market Failure

For almost twenty years, the concept of market failure has defined the boundaries of fair use under copyright law. In this article Professor Ku challenges this interpretation of fair use by offering an alternative economic interpretation of the doctrine. This Article argues fair use is justified when consumer copying creatively destroys the need for copy- right\u27s exclusive rights in reproduction and distribution. This occurs when: 1) the consumer of a work makes copies of it, and 2) creation of the work does not depend upon funding derived from the sale of copies. Under these circumstances, exclusive rights in reproduction and distribution, which are conventionally justified by the need to prevent the under- production of creative works due to free riding, are unnecessary. When both conditions are satisfied, copying does not lead to the underproduction of creative works because consumers distribute the work themselves, eliminating the need for content distributor middlemen while continuing to fund the creation of those creative works. Professor Ku argues that recognizing the process of creative destruction as fair use is not only consistent with an economic interpretation of copyright, but represents the most coherent interpretation of the consumer copying decisions handed down by the Supreme Court