Saturday, January 07, 2006

AALS Annual Meeting, Section on IP, part three

Ray Ku: Should statutory damages be available in indirect infringement cases? Ku uses game theory to compare the incentives of tech companies, record companies, and individual artists, assuming that the content-owner pie is divided very heavily in record companies' favor. There turn out to be big problems with comparing values because the album pricing structure is entrenched but turns out not to be what people really want -- should we count one download as a foregone album, since people bought albums on the strength of singles, or as a foregone single? In any event, the benefits to the tech companies are different in magnitude from the harms to the content owners, which means that in a prisoner's dilemma, even iterated, tech companies may not have incentives to cooperate unless there's legal coercion.

On the other hand, the hugeness of statutory damages swings the pendulum very far in the other direction, giving content owners a really big stick to threaten with -- because many works will be involved, it's easy to aggregate trillion-dollar claims against tech companies. In the case, for example, the plaintiffs ended up with a multiplier of several hundred thousand times more than actual damages (not sure how Ku calculates this, but I'm willing to accept it). Thus the availability of statutory damages in contributory damages cases discourages cooperation with tech providers.

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