When Good Value Chains Go Bad: The Economics of Indirect Liability for Copyright Enforcement

Intellectual Property and Copyright and Trademark

Article Snapshot


Richard Gilbert and Michael L. Katz


Hastings Law Journal, Vol. 52, No. 4, April 2001, pp. 961-990


This paper looks at copyright infringement and enforcement on the Internet.

Policy Relevance

Sometimes, everyone is better off if copyright enforcement focuses on someone other than the actual person making illegal copies, but this has costs as well .

Main Points

  • The steps that enable copyright infringement online include making hardware, creating copies, distributing copies, publicizing their availability through search engines, and playing them back. These activities are a “value chain.” Enforcement means stepping in at one part of the chain.

  • Sometimes,  it costs too much to identify the people actually making illegal copies (direct liability) and everyone might be better off if enforcement focuses on those who supply these people with goods or services (indirect or contributory infringement).

  • Factors to consider in deciding whether to crack down on an activity that facilitates infringement include the ease of enforcement, the activity’s value for non-infringing purposes, the availability of alternatives and the existence of other enforcement options.

  • DeCSS is software that can be used to crack codes and make unauthorized copies of movies. The use of the software is hard to detect and it has some value in enabling fair use, but there are few enforcement alternatives.

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