Academic

Lee points out that ?the possibility that EULAs will interfere with fair use rights seems like a substantive objection to the limits themselves, even as applied to the first purchasers of the product.?  And Sonia?s post also raises the issue of ?foreclosure of options like fair use.?  I want to offer a couple of (still quite preliminary) thoughts on this topic.

The primary problem I see with restrictions on fair use is that fair use is justified in part by public benefits (from critical commentary, interoperability, etc.) that are unlikely to be accounted for by the parties.  As Lee?s post suggests, even simple contracts restricting fair use can therefore harm third parties by depriving them of these benefits.  For the reasons mentioned in my prior post about ?running,? I think the problem is more serious in servitude-like situations where more people, over more time, in more remote relationships with the licensor, are bound.  (And, to jump to possible doctrinal implications that I do not address in The New Servitudes, this difference might justify interventions that would not be justified in the simple contract case.)

But I want to think more about whether some restrictions on fair use do not have these third party effects at all (a possibility to which Randy alludes in his post).  As Wendy Gordon?s seminal work on fair use suggests, the doctrine sometimes operates to enable behavior that generates positive externalities; but in other cases it simply allows people to do things of private benefit to them that they could not negotiate permission to do because of transaction costs.  Where the techniques of electronic commerce reduce transaction costs such that permission to make these uses is available for a fee, the co-existence of restrictions that forbid the uses by those who have not paid do not trouble me in the way that restrictions on more public-regarding flavors of fair use would. 

I?m influenced here by Randy?s argument in his Broadcast Flag article that ?[t]he narrow set of institutional arrangements for access to content that have been supported to date reflect the transaction costs and technological difficulties of implementing alternative arrangements,? and by my colleague Rob Merges? observations about the transaction-cost and non-transaction-cost justifications for fair use in The End of Friction?  Property Rights and Contract in the "Newtonion" World of On-Line Commerce.  Whether there is a way to operationalize this distinction between the types of fair use is another question.

Now, restrictions on even these private-benefit fair uses might have undesireable distributive consequences (a possibility I emphasize in Distributive Values in Copyright).  But they could also facilitate desirable price discrimination as Randy?s post suggests.