Copyright, Derivative Works, and the Economics of Complements
From an economic perspective, copyright is irrational. In defining the scope of a copyright owner's exclusive rights, it treats situations that have similar economic consequences differently, as infringement in one case and not in the other, and situations that have radically different economic consequences similarly. This essay explores such area in which copyright exhibits economic irrationality: Copyright's treatment of complements. Where a lower price on a substitute reduces demand for the original, a lower price on a complement increases it. So defined, copyright addresses whether a copyright owner will control three different types of complements: (i) complementary products, such as MP3 players and VCRs, that increase the accessibility of copyright works; (ii) complementary uses of copyrighted works, such as radio airplay; and (iii) complementary reworkings of copyrighted works, such as movies based upon a novel. Although the economic consequences associated with these complements are identical, copyright treats these complements differently. Some are infringing, at least, some of the time; others are not. This essay explores this irrationality and proposes a unifying principle: Where a given use, reuse, or product is a strong complement to a copyrighted work, and would, in the absence of copyright's intervention, be available in a naturally competitive market, the copyright owner should not have the exclusive right to control such a use, reuse, or product.