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The “Blurred Lines” of Copyright Infringement

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Abstract

This paper studies the creative process in a model in which the level and direction of artistic effort are affected by judicial copyright enforcement. The analysis compares the performance of common sanctioning rules employed by US
courts in infringement cases and provides an economic microfoundation for
the independent creation defense in copyright law. Using a mechanism-design
approach, the paper highlights the benefits of complementing copyright litigation with a system of compulsory licensing. A calibration of the model that fits
a leading music infringement case suggests that the damages awarded by courts
may stifle creativity, as they substantially exceed those required to deter excessive entry and copying.

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