Competition Between Copyright Holders? How Horrendous!

Ariel Katz
Saturday, February 11, 2006

The European Commission announced last Wendesday that it has decided to open formal proceedings against CISAC (the “International Confederation of Societies of Authors and Composers”) and the individual national collecting societies that are members of CISAC and has sent them a Statement of Objections (SO).

The Commission doesn't question the practice of collective administration of performing rights. The SO concerns only certain relatively new forms of copyright exploitation: internet, satellite transmission and cable retransmission of music.

With regard to these new forms of copyright exploitation, what the Commission probably envisages is competition between the national collecting societies, each of which would be allowed to recruit members and customers on a EU-wide basis.   

The merit of the Commission's views requires a separate discussion.  Yesterday, however, CISAC issued a press release reacting to the SO, and containing the following hilarious statement: 

Schumpeter in the Supreme Court

Ariel Katz
Thursday, February 23, 2006

Last November, in  Kirkbi AG v. Ritvik Holdings Inc. the Supreme Court of Canada dismissed Lego's case against Mega Blocks.

The plaintiff was the manufacturer of the well-known LEGO construction bricks for children. It had obtained patent protection for the locking system of interlocking studs and tubes that held the bricks together. On expiry of the patents, the defendant had commenced the manufacture and sale of its Mega Blocks, similar construction bricks using the same locking method. The plaintiffs had commenced an action for passing off, claiming trade-mark rights in the orthogonal pattern of the raised studs distributed on the top of each brick (the 'LEGO Indicia'). The trial judge had found that the LEGO Indicia was purely functional and dismissed the action, a finding that was upheld by the Federal Court of Appeal. The plaintiffs obtained leave to appeal to the Supreme Court of Canada.  The SCC held that the appeal should be dismissed.

Lebel, J. writing for a unanimous court ended the decision with the following paragraph:

Copyright Board's New Ringtone Decision

Ariel Katz
Saturday, August 19, 2006

The Copyright Board issued yesterday its decision certifying SOCAN's Tariff 24 for ringtones.   The Board set a base rate of 6% of the price paid by the subscriber for the ringtone (net of any network usage fees) with a minimum of $0.06 per ringtone.  The main legal controversy before the tribunal was whether the delivery of ringtones is "communication to the public" but I don't want to comment on that here.  Instead, I want to comment on a more fundamental issue, and ask why should the royalties be set by a tribunal at all?  Why wouldn't copyright holders and ringtone suppliers enter into voluntary agreement and decide who should pay and how much?  Ordinarily, prices are determined by the "market".  Why then are these prices set in a strange way in which one seller (SOCAN) proposes prices and then, over a period of three years lawyers, prominent economists and other experts try to convince a tribunal what those prices should be?

New Articles Available Online: On Competition Law and Intellectual Property, and on Patents and Phramaceuticals Regulation

Ariel Katz
Tuesday, March 4, 2008

Two articles of mine have been recently published and are available online.  The first article, published in 49 Arizona Law Review is Making Sense of Nonsense: Intellectual Property, Antitrust, and Market Power.  Here's the abstract:

While the economic rationale for intellectual property ("IP") rights rests on the concepts of "monopoly" or "market power," the U.S. Supreme Court, in Illinois Tool Works v. Independent Ink, has recently joined a "virtual consensus" among antitrust commentators believing that no presumption of market power should exist in antitrust cases involving IP. This Article critically analyzes this consensus, and clarifies the relationship between IP and market power, shows why IP rights often do confer market power in the antitrust sense, but also explains why acknowledging this should not necessarily lead to oversized application of antitrust law to IP.

The second article is Pharmaceutical Lemons: Innovation and Regulation in the Drug Industry, published in 14 Michigan Telecommunications and Technology Law Review.  Here's the abstract:

Collectivizing Rights; Privatizing Taxation: The Unarticulated Function of Copyright Collectives

Ariel Katz
Friday, March 14, 2008

The recent proposal from the Songwriters Association of Canada to fully legalize peer-to-peer file sharing of music by adding a $5 monthly charge to the cost of Internet access (and similar proposals floating south of the border) has brought renewed attention in the role of levies and tariffs collected by copyright collectives in Canada.  I am now beginning a research project that looks at the broader implications of the expansion of collective administration of copyrights and the use of levies and tariffs.  Since the topic is current, I thought I'd use the blog not only for sharing some of my initial thoughts, but hopefully, to solicit some ideas that will help me to shape them.  Therefore, I'm posting below the description of the project and the questions  it seeks to answer.  Comments on or off the blog will be highly appreciated.  Here it is:

Substitution and Schumpeterian Effects Over the Lifecycle of Copyrighted Works

Ariel Katz
Monday, August 11, 2008

I have posted a new paper on SSRN.  The paper, titled Substitution and Schumpeterian Effects Over the Lifecycle of Copyrighted Works, develops the following two key insights. First, copyrighted works are affected by two types of competitive forces: substitutive competition and Schumpeterian competition. Second, the relevant magnitude of each of these competitive forces changes at various points over the lifecycle of copyrighted works. The earlier stages of a work's lifecycle are dominated by substitution effects, whereby many other works can function as very close substitutes. As the work develops to a full product, to which many other inputs have been added, it becomes less easily substitutable. This process intensifies as network effects of various kinds secure successful works' market position and render them less vulnerable to competition from close imitations. The competitive threat to which such works may be exposed becomes more Schumpeterian in nature: competition from other works which offer something new, and potentially preferable. Generally, copyright law unequivocally discourages merely substitutive competition, but is much less interested in discouraging Schumpeterian competition. This paper's time-based analysis provides both a justification to this distinction, as well as grounds to evaluating various existing rules and doctrines.

Copyright Dogma and the Denied Google Books Settlement

Ariel Katz
Monday, April 11, 2011

Last month Judge Chin denied the proposed Google Books Settlement (the Amended Settlement Agreement, or ASA). While I’m pleased with the outcome, I’m troubled with some aspects of the opinion.

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