Law & Economics Working Papers
When individuals infringe copyright, they often use tools, services, and venues provided by other parties. An enduring legal question asks to what extent those other parties should be held liable for the resulting infringement. For example, should a firm that produces photocopiers be required to compensate authors for any unauthorized copies made on that firm's machines? What about firms that manufacture personal computers or offer Internet access; should they be liable, at least in part, for online music piracy? Modern copyright law addresses these issues through a variety of common law doctrines and statutory provisions. In this essay, we introduce those rules and evaluate them from an economic perspective. In the process, we emphasize that every mechanism for rewarding authors inevitably introduces some form of inefficiency, and thus the only way to determine the proper scope for indirect liability is to weigh its costs and benefits against those associated with other plausible mechanisms for rewarding authors.
William M. Landes & Douglas Gary Lichtman, "Indirect Liability for Copyright Infringement: An Economic Perspective" (John M. Olin Program in Law and Economics Working Paper No. 179, 2003).