Literary fan art (part 3): who harms whom?

In my previous post we saw how utterly unhelpful the fair use standard is–how trying to predict ahead of time whether a particular derivative work or piece of fan art constitutes “fair use” or not is almost like the inscrutable task of an ancient augur, who must somehow divine the future by the minute inspection of the entrails of a goose. Here, I will explain why this level of uncertainty in the domain of copyright law might actually be a good thing.

So, to cut to the chase, why is uncertainty a virtue in the domain of fan art and other types of derivative works? Because, from a purely economic perspective, fair use is about finding the optimal level of copyright theft or piracy (to put it bluntly!), and in most cases it’s really hard to figure out what this optimal level of theft is. Wait! Hold on! How can theft or piracy ever be optimal? This is not a trick question, but to answer it, we must first take morality out of the copyright equation. From an economic or Coasean perspective, copyright disputes are not really about right and wrong. (That is, by the way, why I disdain such judgmental terms like “piracy” and “theft” in this area of law.) Ok, if fair use is not about morality, then what is it about?

In a word, fair use is about creating or finding the best (i.e. optimal) balance between creators and copiers, between innovators and imitators, between intellectual owners and intellectual squatters!

Although the outer contours of the fair use defense are fuzzy at best, the fact that fair use even exists at all tells us something very important about the law. It tells us that creators, innovators, and owners are not the only ones who are morally worthy or legally deserving of copyright protection; so are copiers, imitators, and squatters! To see why, let’s set aside the problem of literary fan art for the time being in order to focus instead on a more extreme example involving an original creator/innovator on the one hand and a mere copier/imitator on the other–like one of Melania Trump’s plagiarized speeches. (See video below.) Even in such a crass and clear-cut case of plagiarism, as the late Ronald Coase once wrote in another context, disputes between creators and copiers are ultimately “reciprocal in nature.”

Coase made this counter-intuitive observation in two papers, one on the FCC (1959) and another on “The Problem of Social Cost” (1961). In both papers he reframed legal disputes, such as traditional common law cases involving nuisances, as reciprocal problems. The social cost paper, for example, begins by considering a “standard example” in economics and law, the problem of factory smoke. In brief, a factory emits smoke and pollutes the air. Neighbors who live downwind from the factory are harmed (e.g. foul air, quality of life, decrease in property values, etc.), so they decide to sue the owners of the factory for the harm thus caused.

But if we were to take a step back from this situation, we will see that the factory smoke problem is, in fact, a reciprocal one for two reasons. One is that the problem is caused not just by the factory smoke; it is also caused by the neighbors’ decision to live next to factory! The other reason is that someone is going to be harmed no matter how the case is decided. If the court decides to dismiss the case or to rule in favor of the factory, then the neighbors are going to continue to be harmed, but vice versa, if the court rules for the neighbors, then it is the owners of the factory who are going to be harmed, since they will have to shut down the factory, relocate it somewhere else, or pay the neighbors money damages. For Coase, then, the key question is not, Who is harmed? Both sides are. The key question is, How do we decide which side to harm?

(Before proceeding, allow me to make an additional clarification regarding Coase’s idea of reciprocal harms. When people think of harms, we often think of John Stuart Mill’s famous harm principle: “The only purpose for which power [i.e. law] can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” But in reality, Mill’s harm principle is incoherent. It is just empty rhetoric, meaningless banter. Why? Because as Coase has taught us, harm is unavoidable. So, to say “do no harm” or “your right to swing your fist ends where my nose begins” is totally unhelpful. Instead, we should ask, what legal rule or course of action produces less harm.)

Now, let’s fast forward to fan art. From an economic perspective, Coase’s reciprocal analysis of the factory smoke case also applies to fan art! If we define fair use too broadly, making it easy for fans to produce any and all derivative works, then original creators will be harmed. But at the same time, if we define fair use too narrowly, making it easy for copyright owners to veto fan art, then it is the fans who are going to be harmed! The question here thus is analytically identical to the question in the factory smoke case: which group should we harm? Suffice it to say that we will consider this $64 question in our next post …

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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