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Fair Use Markets: On Weighing Potential License Fees

Wendy J. Gordon · September 2011
79 GEO. WASH. L. REV. 1814 (2011)

This Article focuses on a judicial contribution to copyright’s rhetorical evolution, namely, the Second Circuit’s invention of the concept known as “fair use markets.” The fair use doctrine enables the public to engage in uses of copyrighted works that would otherwise constitute infringement. One of the many grounds for granting fair use can be the lack of functioning markets through which potential users of copyrighted works can buy licenses. As invented and deployed by the Second Circuit, a “fair use market” is a market that can coexist with fair use. The Second Circuit thus makes explicit that a technology for exchange between copyright owners and users can be present without destroying the possibility that a defendant might be acting properly when she uses someone else’s copyrighted work without permission or compensation.

This Article is addressed to two audiences. First, like some of my prior work and the work of many others, this Article addresses scholars who think fair use should not arise where a copyright owner can collect licensing fees from a defendant’s use. Second, the Article addresses those who think that courts in fair use cases should not look at physically foregone license fees at all because such an inquiry leads inexorably to a defeat for fair use. To both groups I argue that it is perfectly possible within the rhetoric of markets to make the case for fair use even when licensing revenues for the contested use are physically available, and that sometimes it is appropriate and not circular to count the incentive effects to which those fees can give rise.

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