Kretschmer, Derclaye, Favale and Watt (2010)

Source Details

Kretschmer, Derclaye, Favale and Watt (2010)
Title:	The relationship between copyright and contract Law
Author(s):	Kretschmer, M., Derclaye, E., Favale, M., Watt, R.
Year:	2010
Citation:	Kretschmer, M., Derclaye, E., Favale, M., & Watt, R. (2010). A Review commissioned by the UK Strategic Advisory Board for Intellectual Property Policy (SABIP). Available at SSRN 2624945
Link(s):	Definitive , Open Access
Key Related Studies:	Caves (2000) Cohen and Burk (2001) Derclaye (2006) Brodie (2007)
Discipline:	K: Law and Economics L82: Entertainment • Media O34: Intellectual Property and Intellectual Capital
Linked by:

About the Data
Data Description:	The researchers took a comparative international approach, reviewing the evidence for the UK and several other countries. Rather than selecting a set number of jurisdictions, the consortium drew on different countries for different parts of the review.
Data Type:	Primary data
Secondary Data Sources:
Data Collection Methods:	Qualitative Collection Methods Document Research
Data Analysis Methods:	Qualitative Analysis Methods Textual Content Analysis
Industry(ies):	Creative, arts and entertainment
Country(ies):	Australia Belgium France Germany United Kingdom United States
Cross Country Study?:	Yes
Comparative Study?:	Yes
Literature review?:
Government or policy study?:
Time Period(s) of Collection:	Not stated
Funder(s):	SABIP

Abstract

Contracts lie at the heart of the regulatory system governing the creation and dissemination of cultural products in two respects: (1) The exclusive rights provided by copyright law only turn into financial reward, and thus incentives to creators, through a contract with a third party to exploit protected material. (2) From a user perspective purchases of protected material may take the form of a licensing contract, governing behaviour after the initial transaction. Thus, a review of the relationship between copyright and contract law has to address both supply- and demand-side issues. On the supply side, policy concerns include whether copyright law delivers the often stated aim of securing the financial independence of creators. Particularly acute are the complaints by both creators and producers that they fail to benefit from the exponential increase in the availability of copyright materials on the Internet. On the demand side, the issue of copyright exceptions and their policy justification has become central to a number of reviews and consultations dealing with digital content. Are exceptions based on user needs or market failure? Do exceptions require financial compensation? Can exceptions be contracted out by licence agreements? This report (i) reviews economic theory of contracts, value chains and transaction costs, (ii) identifies a comprehensive range of regulatory options relating to creator and user contracts, using an international comparative approach, (iii) surveys the empirical evidence on the effects of regulatory intervention, and (iv) where no evidence is available, extrapolates predicted effects from theory.

Main Results of the Study

• In general, the economic theory profession has not considered in any detail the relationship between the legal institution of copyright and the types of contracts that are written along the value chain for copyright goods. Overall, a more careful, methodological, and above all a more formal application of the well-known principal-agent framework to the specific case of copyright constitutes the most logical first step forward for economists.

• The relationship between copyright and contract law lies at the heart of the regulatory system governing the creation and dissemination of cultural products. Overall, it remains an open question whether there is a negative or positive relationship between the strength of copyright protection and the total earnings of creators.

• The analysis of the legislation, the case law, and the literature of the targeted countries so far reveals a substantial body of literature and case law on the interplay between copyright and contract within the United States. The European Union follows, with substantial legislation and literature, but not much relevant case law.

Policy Implications as Stated By Author

A more formal application of the well-known principal-agent framework to the specific case of copyright constitutes the most logical first step forward for economists.

Coverage of Study

Coverage of Fundamental Issues

Issue	Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

Coverage of Evidence Based Policies

Issue	Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size:	6
Level of aggregation:	Country
Period of material under study:	Not stated