Page:The digital public domain.pdf/40

Rh economy. Fair use-enhanced industries include manufactures of consumer devices allowing for individual copying of protected content, educational institutions, software developers, and internet search and web-hosting providers. The study also reveals that fair use industries have grown dramatically within the past twenty years, since the advent of the Internet and the digital information revolution. These data may help to argue that in the digital environment, open and public domain business models may spur growth at a faster pace than proprietary traditional business models. Promoting fair use and the functional public domain, thus related fair use industry, may also have a considerable added value for Europe.

When contrasted with the US case-by-case fair use model, the European list of predefined limitations and exceptions may be a vantage point for fair use industries in Europe. Fair use decisions are inherently complex and unpredictable in the US. As a consequence of the inherent unpredictability of fair use in the US, transaction costs will be higher and commercial endeavours will be chronically open to legal challenge. Europe should maximise the advantages that our legal framework offer to industries based on fair use. The enhanced legal certainty and lower transaction costs of the European legal framework will make that sector ﬂourish in Europe and will boost the international investments. However, to that end, Europe needs to advance harmonisation of exceptions and limitations across national jurisdictions, and introduce an open fair dealing provision to close any loopholes that predefined exceptions and limitations may have, as sought by the Communia policy recommendation #3.

Further, the public domain plays a relevant role in terms of market efficiency. From an economic standpoint, a market with a shrinking public domain would be especially inefficient. Nobel laureate Joseph Stiglitz stressed this point by noting that:

"[i]t is imperative to understand the ways in which the production and distribution of knowledge differs from that of goods like steel and cars. [...] The fact that knowledge is, in central ways, a public good and that there are important externalities means that exclusive or excessive reliance on the market may not result in economic efficiency."