Coase-Sandor Working Paper Series in Law and Economics

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Law & Economics Working Papers


Dozens of people worked together to produce Casablanca. But a single person working alone wrote Ulysses. While almost all films are produced by large collaborations, no great novel ever resulted from the work of a team. Why does the frequency and success of collaborative creative production vary across art forms? The answer lies at the intersection of intellectual property law and the theory of the firm. Existing analyses in this area often focus on patent law and look almost exclusively to property-rights theories of the firm. The implications of organizational theory for collaborative creativity and its intersection with copyright law have been less examined. To fill this gap, we look to team-production and moral-hazard theories to understand how copyright law can facilitate or impede collaborative creative production. While existing legal theories only look at how creative goods are integrated with complementary assets, we explore how the creative goods themselves are produced. This analysis sheds new light on poorly-understood features of copyright law. For example, the derivative-works right is often thought to be nothing more than an additional incentive for an author to produce an original work. A stronger derivative-works right would therefore have much the same effect as a longer copyright term. We demonstrate that the derivative-works right is better understood as a mechanism that facilitates a firm or manager's learning about human capital inputs and as a tool to reduce shirking within creative teams even where the risk of moral hazard is high. The derivative-works right therefore affects not simply the quantity of creative goods produced — as conventional wisdom would have it — but also the kinds of organizations that produce creative goods, and by extension, the nature of the creative goods themselves. We provide similar positive and prescriptive analyses of the joint-works and work-made-for-hire doctrines, concluding that copyright law has missed opportunities to foster collaborative creation because courts applying those doctrines focus on factors irrelevant or antithetical to the best organization of creativity. We suggest modifications to reduce legal obstacles to collaborative creation.



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