Three essays on copyright exceptions

Copyrights grant creators long periods of market exclusivity during which they or their agents have the exclusive right to reproduce and distribute their works. However, copyright exceptions limit their scope and strength. The laws on both copyright protection and copyright exceptions vary substantially from one country to the next. The three essays that comprise this dissertation demonstrate how these differences can be measured, and explore how changes in copyright exceptions relate to the production of knowledge goods and technological innovation. The first chapter introduces a novel, survey-based dataset that describes changes to 25 countries’ laws on copyright exceptions over time. To explore the data, I construct two indices from subsets of the dataset; one that focus on exceptions related to internet communications technologies (ICT) and another that focuses on educational uses. The indices show that copyright exceptions have grown more robust since 1990, and that wealthier countries tend to have more developed exceptions than poorer ones. Initial empirical tests suggest that exceptions related to ICT technologies are more robust in countries with larger ICT sectors, and exceptions for educational uses are more robust in countries with higher educational attainments. Both types of exceptions are negatively associated with the share of GDP produced by the copyright-producing industries. There is weaker evidence of a positive association between both types of copyright exceptions and GDP per capita. Countries generally have exceptions that are more robust when they have entered into trade agreements with the U.S., though bilateral American pressure to strengthen copyright protection is associated with weaker exceptions related to ICT technologies. The second chapter uses a subset of the dataset to study the link between copyright exceptions for academic researchers and the published output by scholars in in each of the countries. It starts by acknowledging that high prices restrict access to academic journals and books that scholars rely upon to author new research. A hypothesized solution is the expansion of copyright exceptions allowing unauthorized access to copyrighted works for researchers. I test the link between copyright exceptions for health and science researchers in each country, and researchers’ publishing output at the country-subject level. I find that scientists residing in countries that implement more robust research exceptions publish more papers and books in subsequent years. This relationship between copyright exceptions and publishing is stronger in lower-income countries, and it is stronger where there is stricter copyright protection of existing works. Chapter three takes a different approach, focusing on one country and one industrial sector to estimate the impact of a change to a specific copyright exception. It tests the impact of changes to Korea’s copyright law that shielded internet firms from secondary copyright liability when their people use their services to violate copyright laws. I hypothesize that the change to Korean copyright law alleviated litigation risks faced by internet firms, incentivizing the development of new products and services. I test the theory empirically using firm-level data on a test group of internet firms and a control group of software producers. Firm level R&D spending as a share of sales measures innovative inputs, and patent applications per firm per year measure innovative outputs. The patent metrics are adjusted with various citation and family-size weights to control for patent quality. Using a difference in differences methodology with firm and year fixed effects, I demonstrate that the test group of internet firms increased R&D/sales relative to the control group after the change in copyright law, and increased the number of patent applications after accumulating a stock of R&D. I find a small change in the direction of innovation as well. Both internet and software firms expanded the set of technologies in which they applied for patents, though this expansion along the extensive margin of technology was greater for the internet firms.