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Regulatory arbitrage — defined as the manipulation of regulatory treatment for the purpose of reducing regulatory costs or increasing statutory earnings — is often seen in heavily-regulated industries. An increase in the regulatory nature of copyright, coupled with rapid technological advances and evolving consumer preferences, have seen an unprecedented proliferation of regulatory arbitrage in the area of copyright law. This article offers a new scholarly account of the phenomenon herein referred to as “copyright arbitrage.”
Where economic arbitrage is often considered net-neutral, copyright arbitrage is uniquely concerned with initial allocations, such that their manipulation is unlikely to be net-neutral in effect. Specifically, the nature of copyright arbitrage as a means of either reducing regulatory costs or increasing statutory earnings necessarily contravenes one or another of copyright’s foundational goals of incentivizing the creation of, and ensuring access to, copyrightable works. In other words, if we assume current copyright protections are optimally set, this contravention renders copyright arbitrage net-negative on balance. Even if we instead assume those protections are suboptimal, the existence of copyright arbitrage nonetheless provides strong support for the classification (and clarification) of copyright as a complex regulatory regime in need of a strong regulatory apparatus.
Given the strengths and weaknesses of each of the legislature and the judiciary in copyright, this article suggests a three-pronged approach to identifying, and curbing, copyright arbitrage: First, courts should take a purposive, substantive approach to interpretations of the Copyright Act. Second, Congress should empower a regulatory agency with rulemaking and enforcement authority. Finally, antitrust law can help to curb the anticompetitive effects of copyright arbitrage resulting from legislative capture.
In addition to teaching trademark, property, and copyright-related courses, Professor García serves as Director of the Content Initiative at the Silicon Flatirons Center for Law, Technology, and Entrepreneurship. Her research is focused on the intersection of law, technology, and economics, with a particular focus on efficiency, competition, private ordering, and distributive justice. Her work has been published in the New York University Law Review and the Berkeley Technology Law Journal, among others.
Prior to joining Colorado Law, Professor García was a visiting associate professor and the Frank H. Marks Fellow in Intellectual Property at the George Washington University Law School. She is also a visiting fellow at the Information Society Project at Yale Law School. As a practicing lawyer, Professor García worked in the music industry in Los Angeles; first at Quinn Emanuel as outside counsel to Napster, then as Director of Business Development in charge of content licensing at MySpace Music, and most recently in digital strategy as Director at Universal Music Group. Prior to her work in music, she was an associate at Wachtell, Lipton, Rosen & Katz in New York.
Professor García graduated cum laude from Columbia University with a BA in Economics and was the recipient of both a Kluge Scholarship for academic achievement and the King's Crown Award for leadership in public service. At Yale Law School, she served as editor-in-chief of the Yale Journal for Law & Technology and was a co-founder of the school's Student Animal Legal Defense Fund.