PrawfsBlawg

Bilski Argument: Substance and Procedure

I attended the Bilski oral argument at the Supreme Court yesterday. Despite prognostications that it would be difficult to get in, I sat in the first row behind counsels' table.  It was not really the first row, as there were four seats in front of us that were next to counsels' tables. I got there at 7AM, but I believe that every member of the Supreme Court Bar was seated, even if they got there at noon, right before we were seated (about 100 seats). I suspect that it may have been harder for the public, as the gallery was a bit full. We were all better off than the morning crowd - they ran out of room for bar members, and some had to listen from a different room.

There was a bit of confusion because argument was scheduled for the afternoon. No one has really written about the procedure (that I could find), so I will. The gist is that there are two lines, and they clear the courtroom at noon. Thus, if you want to go in the afternoon, you have to wait all day (or take your chances arriving later, which seemed to pay off). I suspect the public lines in the front were also divided this way.

A final point - close was nice, but not necessarily a better view. The bench is high up, and all I could see were the heads of most of the justices.

That's enough about procedure - on to substance after the jump...

I'm not going to post a detailed summary. Others have done a nice job here, here, here, here, and here. Instead, I'll highlight some key points. If you're not familiar with the case, take a look at my initial post on Bilski some time ago. To the extent that I suggest ways the argument could have been better, it is certainly not criticism of the advocates, whom I thought were extremely poised under the pressure of heavy questioning in a difficult area.

First, I thought all of the justices (at least those who asked questions) were really struggling with the issue. Even those most likely to affirm seemed troubled by a rigid test, and were looking for a way to maintain flexibility without having patents on things they think should not be patented. This struggle, I think, vindicates my view that there is no rational way to draw the line wihout doing more harm than good, and that we should more rigorously apply other patentability standards to police against bad patents.

Second, I am not as pessimistic about software patents as others might be. It seemed to me that many questions were targeted at how to allow "good" software while getting rid of "bad" software, and the government took a strong position that sweeping exclusions would be a bad thing.

Third, I thought the tone was set very early when Justice Scalia asked about useful arts at the time of the founding. The answer was essentially, "we have examples in our brief," but I don't think that was terribly persuasive. I think an answer that more clearly listed some abstract, non-manufacturing patents from the 1800's (and there are many - we cite some in our Amicus Brief, and Judge Newman cited many in her Bilski dissent) might have changed the tenor of the conversation to why these patents were allowed while others are not.   Morse code came up later, but by then I think the damage was done.

Fourth, I was surprised at the trouble that State Street caused the government's position. Though I think it was the right answer to say that the patent in State Street is patentable, the nuances as to why made it more likely that the Court will stick with the "insignificant post-solution activity" part of the test, which allows the PTO or court to ignore the computer whenever it wants.

Fifth, to that end, I was extremely disappointed that -- in an hour of argument about the meaning of process -- there was not one single mention of 35 USC 100(b), which states the statutory definition of process. I would think that a court filled with textualists would want to know what the text of the statute says. Indeed, the definition, which defines a process as a "new use of a machine" would have cleared up much of the confusion about why a method might be unpatentable in the abstract, but patentable in a machine - when you program software to do something different, you are programming a new use of a machine. Even if you ignore the computer as "insignificant post-solution activity," the new use falls under the statutory definition.

In the end, ignoring 100(b) may be the largest problem with the machine or transformation test, which requires that all processes be tied to a machine or transform matter (and I do mean all - the Federal Circuit recently applied it to a method of treating patients with drugs). There are many, many processes from the inception of process patenting until the present, that are new uses of machines, matter, etc., but that are not tied to machines or "transform" matter. Iron working, glass blowing, medical diagnostics, new uses for old drugs, new uses for old machines, etc., are all historically patentable despite not satisfying the machine or transformation test. The fact that no one even mentioned it one way or the other is pretty surprising.

So, those are my five takeaways. I'll add my voice to the chorus that says Bilski and Warsaw lose their patent 9-0. The only question is how, and what the effect will be on other intangible processes.

You Know You're a Patent Law Geek When...

You know you're a patent law geek when these are the things that get you jazzed at the Smithsonian....

 Of course, I enjoyed many other things at all the museums, and I highly recommend that you visit them all if you haven't before.

 
This one speaks for itself, complete with hand and cell phone camera reflection

Wright Brothers' plane

Telegraph equipment

Edison's patents

More on Health-Care Reform and Innovation

Last week, I posted on the issue of health-care reform and its effect on innovation, specifically that of drug manufacturers.  As they face a potential drop in profits due to a reduction in price per unit sold, the result may be less spending on innovation.  How, then, to balance needed reform with the desire to maintain high quality health-care delivery (here, prescription drugs)? I discussed profit/cost as one factor to be considered and attended to; other factors include potential reform of the regulatory process (seeking, in a word, streamlining) and the consideration of patent terms and generic market entry.

This past summer, committees in both the Senate and House passed health-care reform bills, which included a nod to drug manufacturers in the form of a new, 12-year data exclusivity period  for pioneer biologics. (For a comparison, note that non-biologics have a five-year exclusivity period, per the Hatch-Waxman Act; according to this industry report, the provision has been a resounding success, in terms of savings with generic competition). 

The 12-year barrier to market entry, separate from patent life, is deemed necessary by supporters to secure R&D recovery and spur investment in new efforts and because, among other things, ‘follow-on’ biologics may be within a middle ground of sorts:  close enough to biologics to earn FDA approval yet sufficiently different to avoid patent infringement.  Yet a study by the FTC counters this assertion, determining instead that while patent protection is decidedly key to innovation in the pharmaceutical sector and has proven critical in the biologics sphere, an extended exclusivity period is unnecessary given the realities of the biologics market and may actually harm innovation by undermining patent incentives.  The report notes:

Central to [exclusivities in Hatch-Waxman] is a public policy  trade-off: a restriction on competition is provided in return for the development of a new drug product or new use of an existing product. A 12- to 14-year exclusivity period departs sharply from this basic trade-off, because it does not spur the creation of a new biologic drug or indication. The drug has already been incentivized through patent protection and market-based pricing.  The potential harm posed by such a period is that firms will direct scarce R&D dollars toward developing low-risk clinical and safety data for drug products with proven mechanisms of action rather than toward new inventions to address unmet medical needs.

Thus, that biologics manufacturers will stay in a (presumably profitable) ‘safety zone’ is one concern—perhaps analogous to the ‘me-too’ efforts in the non-biologic realm.  But is patent protection, as currently given, sufficient to protect and incentivize biologics manufacturers (or any drug manufacturers, particularly in the face of reduced profits as a result of healthcare reform)?  And if an exclusivity period is in fact passed, can’t it, too, address the R&D direction concerns voiced in the FTC report? 

Hello Again (again) and Bilski Redux (Again)

Thanks to the Prawfs folks for having me back (again). The timing is eerily coincidental again - when I guested the first time last October, the Federal Circuit's en banc decision on patentable subject matter issued just as I was blogging about Everything is Patentable, my patentable subject matter article.

Then, when I guested in April, the Supreme Court granted cert. in the Bilski case.  I've since co-authored an amicus brief in that case.

Now, for my third stint, oral argument in Bilski v. Kappos is scheduled for Nov. 9. While the timing was unplanned (I committed to guest some five months ago), it is welcome. I plan on attending argument and will blog about it here.

I also plan to blog about the meat market FRC this weekend, a couple projects I'm working on, and some general scholarship and teaching topics. I look forward to your comments in all these areas, but that's all for this initial post -- the rotations haven't even been announced yet!

Respect Copyright Law: Don't Print Your Own Canadian Money

Of all the reasons not to churn out banknotes in your own cellar, worries about liability for copyright infringement never occurred to me. 

Until my wife and I took our two boys up to Winnipeg for the weekend.

Although we could probably have made it through the weekend on credit cards, I was super psyched about getting a wad of Canadian currency out of an ATM machine. 

To experience the full excitement of traveling abroad, you've got to have a pocket full of unfamiliar money. Nevermind that their pennies, dimes, nickels, and quarters look almost identical to U.S. coins. And put aside the fact that the exchange rate right now between the U.S. and Canada is almost exactly one-to-one. I was still excited to use different cash.

Inspecting the colorful bills, I got a delightful surprise: a copyright notice!

Aspiring counterfeiters be warned – the bills are copyrighted by the Bank of Canada! That will make you think twice before xeroxing off a sheaf of north-of-the-border moola. 

In the United States, we discourage that sort of thing with specially crafted counterfeiting laws. Under these laws, you can be arrested by Secret Service agents who, in proving their mettle to make the presidential security detail, will take you down in broad daylight in a swarm of dark suits and sunglasses while never ceasing to speak covertly into their earpieces. 

The Secret Service is all business. To my knowledge, they've never waterboarded anyone, but if they did, you can be sure they would do it without taking off their ties or unbuttoning their collars. 

If you counterfeit money in Canada, you could, apparently, get sued for copyright infringement. Don't think just because Canadians say "sorry" a lot that they will go easy on you. They will be all over you like the RIAA on a mother of two who downloaded a couple dozen songs from the internet.

But honestly speaking, of all the absurd and hyperactive claims of copyright, I think this has got to take the cake. Now, I have no doubt about the law. I am not a student of Canadian copyright law, but I am quite sure the Bank of Canada is entitled to the copyright in their currency designs. But under the Berne Convention, Canada does not need to use a copyright notice to have copyright protection. And to the extent the copyright notice is designed to have evidentiary value in a lawsuit, it's just funny.

And more to the point, why would Canada care to assert a copyright claim over their bills anyway? What possible copying of Canadian banknotes could there be that does not constitute protected fair use or criminally prosecutable counterfeiting? 

The only thing I can think of that might fall between the cracks would be if some lazy foreign government decided to rip off Canadian currency designs to avoid the the annoyance of having to come up with their own. But there are two glaring problems with this argument. 

Princess Joan, one-third the population of Sealand, on her principality's coinage.

First, the smaller a country is, the more fired-up it gets about designing its own money. 

For instance, the dubiously sovereign Principality of Sealand – perched on an abandoned gun platform in the English channel, population three – has far more coin denominations and stamp issues than people. 

Second, to be blunt, no third-world nation out there wants to put an engraving of pond hockey on their banknotes. 

(Sorry.)

[Cross-posted on Pixelization.]

Innovation and Healthcare Reform

Earlier today I was part of a panel discussion on the topic of ‘Health-care Reform and its Effect on Innovation.’  I focused my talk on the effect on innovation in terms of pharmaceuticals (with a nod to medical devices).  It’s an interesting issue, one that I’ll flesh out a bit over a couple of posts.

Generally, the question of effect here is one of profitability:  whether the decrease in consumer costs, as a result of reform, will drive profitability down to such a level that pharmaceutical companies will be forced to devote less to innovation.  In terms of health-care reform, I view this as a quality of delivery issue:  How do we balance the need to reform a system that is quickly becoming untenable (if it’s not already) with the desire to maintain high standards in quality of health-care delivery (here, pharmaceuticals)?  

The answer must be multi-faceted, I believe.  There are a number of considerations; profit/cost, my focus in this post, is but one factor.  As I’ll discuss later, patent terms, barriers to generics entering the market, and potential changes to both regulatory processes and incentive schemes also warrant examination. 

The potential profit loss drug manufacturers face would stem from a reduction in price-per-unit as a result of health-care reform.  The concern is that that will not be compensated by the numbers of newly insured individuals, thus limiting the funds that can be directed to innovation and ultimately slowing the output of novel drugs.  This raises the question of the manner in which drug manufacturers direct their spending:  what is classified as ‘innovation,’ and how much capital is devoted to it?

As it happens, the development of truly innovative drugs—novel products that provide previously unavailable benefits—is perhaps less than we might wish.  Pharmaceutical companies have limited innovative productivity, instead focusing on profit-bearing ‘me-too’ drugs:  relatively easy ‘spin-offs’ that are highly similar in effect to preexisting treatments and provide a follow-up monopoly right once the patent terms of preexisting drugs expire (although these efforts are profitable, one questions the wisdom of creating a product that will compete with generics; a blockbuster drug, if focused upon, seems a better goal for post-patent expiration).   

Further, it’s not clear that the industry is spending nearly as much on R&D as one might imagine.  As a commentator in the NYT recently put it, ‘only naïve politicians and academics really believe that pharmaceutical companies are always greedy and egregious in pricing drugs far in excess of manufacturing costs.’  Certainly, innovation is expensive; industry studies estimate over $1.3 B for singular, novel drug development.  This number encompasses years of research, drug failures, and the high cost of a heavily encumbered regulatory approval process.  But the pharmaceutical industry also pours money into advertising (almost twice as much as spent on R&D, according to one study) and into lobbying efforts—the latter to the tune of over $600,000 a day in the first six months of 2009 .  The amount of monies sent to R&D?  According to a study published in the British Medical Journal (note: registration required), as of 2005 it was 1.3 cents per dollar of sales (accounting for research-based tax incentives). 

In terms of the profit/cost dilemma, how is the health-care reform/quality health-care delivery balance to be struck?  Keeping in mind that this is just one factor among several to be deliberated, the initial focus should be on the type of spending done by drug manufacturers—and what of that spending is going to be rewarded by government incentives to encourage R&D.  The industry needs incentives, to be sure, but there should be an accounting of what is actually being spent on developing novel advancements in treatment—and those efforts alone should be incentivized (thereby perhaps limiting inefficiency in drug development and perhaps curbing the ‘me-too’ practice).  

What's in a name?

This year I began my Federal Indian law class with a discussion of modern day perceptions regarding Indian people and I used the example of Indian based sports team names and logos.  Is the name Redskins offensive?  Is the logo for the Cleveland Indians racist? if they are, then how come they are still around? A petition for cert has just been filed with the Supreme Court pertaining to this issue. Susan Harjo v. ProFootball Inc. involves a petition under the Trademark Act to cancel the Washington Redskins' trademark registration. Section 2a of the Trademark Act states that a trademark registration may be refused if the trademark "Consists of matter...which may disparage...persons living or dead...or bring them into disrepute."  In Harjo, the petitioner argues that the word Redskins "was and is a pejorative, derogatory, denigrating, offensive scandalous, contemptuous, disreputable, disparaging and racist designation for a Native American person."

This case was originally filed in 1992 and has involved both victories and set backs for the plaintiffs.  Although the Trademark Trial and Appeal Board agreed with the plaintiffs and canceled the trademark registration, this decision was reversed by the district court which found the claim barred by laches.  On appeal, the Court of Appeals remanded the case back to the district court finding that they had applied the wrong standard in evaluating laches. On remand the district court again ruled for the team and on appeal the decision was affirmed leading to the petition that has just been filed with the Supreme Court.

Regardless of whether the Supreme Court grants cert, ProFootball will most likely get to keep their trademark registration, but why are they fighting so hard to keep a trademark that offends many American Indians and which has actually been adjudicated racist?  The obvious answer is because it is profitable.  The company has clearly concluded that the trademark  is worth considerably more than than the millions they must have spent on this litigation and undoubtedly they are right.  The general public seems unconcerned about the potential offense caused by such trademarks and extremely unwilling to give them up.  In fact, fans of teams like the Redskins, the Indians, and the Braves seem offended even by the suggestion. Consequently, rather than pressuring teams to change, much of the pressure to change seems to be directed at the Indian tribes. 

Both the Florida Seminoles and the Spirit Lake Sioux tribe initially objected to the use of their tribe's name in connection with a University mascot but both have been convinced to drop their objections.  How the tribes were convinced however remains open to debate.  It is alleged that the Florida Seminoles received more than a million dollars to drop their objections to the Florida State mascot and something similar may recently have occurred with regard to the University of North Dakota's Fighting Sioux mascot.  The Spirit Lake Sioux tribal council just voted to approve the use of the name Fighting Sioux by the University of North Dakota but there have been a number of allegations that the pro-nickname campaign was being funded by the same donor who conditioned his 100 million dollar donation to the University on  the school's promise to keep the mascot.  Regardless of whether money was involved, there is something quite audacious about the fact that active efforts are being made to convince offended people not to be offended by something that organizations such as the NCAA and the Trademark office have clearly agreed is offensive.

There Really IS a Public Domain

The other day, I was researching several sources including Henri Poincaré, The Foundations of Science.  Although this book, originally published in 1913, is part of the public domain, no copies were readily available in a nearby library.  I anticipated pulling out a credit card to get an inexpensive, used copy from Alibris or half.com for my bookshelves.

After running a Google book search, I found a familiar list of links to dealers along the left side of the page, where the book might be purchased.  This time, and for the first time in my experience, I found an additional link which allowed me to download the entire book in PDF format.  All 578 pages, just as they would appear in a paper form.  Right there, right now.

As most professors already know, Google Books' digitization project was the subject of copyright infringement allegations, and is currently in the process of settlement. This has been comprehensively documented on The Laboratorium by James Grimmelmann.  As James Boyle has observed,* the settlement may not be perfect and some of these problems may lie in the administration of the copyright system more generally. 

Nonetheless, and without attempting to minimize the importance of that debate, I have to pause and admit that immediate and free access to Poincaré was nothing short of miraculous. 

*Free registration may be required to see Boyle's article.

Fashion Week

As so many professors do during Fashion Week, my thoughts turn to intellectual property protection for clothing design. As background, those asserting protection for fashion designs have an uphill battle under IP law.  Under copyright law, clothing is generally considered functional and not protectable.  Design patents are a good source of protection, but because even the top designers make critical changes during the last days, even a several-month-window from application to patent can prevent designers from obtaining an enforceable right when the design is most fresh. (By the way, if you've ever been curious about how a top designer works, the documentary "Marc Jacobs & Louis Vuitton" has some interesting moments).  Incorporating a prominent trademark into a design is perhaps the easiest way to ensure protection.  Is it any wonder that many designers add logos? 

Some bills have been introduced, so far without success, to specifically address IP protection for fashion designs, most recently in April 2009. There has been some interesting scholarship analyzing the issues presented by expanding this protection, including a paper by Kal Raustiala and Christopher Springman, who contend that, under a "piracy paradox," which (as the authors describe) the fashion industry "counter-intuitively operates within a low-IP equilibrium in which copying does not deter innovation and may actually promote it."  Another dimension is presented by C. Scott Hemphill's and Jeannie Suk's paper, "The Law, Culture, and Economics of Fashion," in which the authors discuss a "cultural law and economics" approach that advocates protection against the ability to make close copies of original fashion designs. 

Both works underscore that the answer to the question of whether fashion should be protected, or not, has larger implications to the operation of the legal system to protect works of the mind.  How one answers that question is part of the more profound inquiry--does more (or less) protection increase the total amount of innovation?

 

More about the European Pharmaceutical Sector: Procedural Changes

Earlier, I described the European Commission’s recent examination of the pharmaceutical sector.  Part of the EC's inquiry focuses on procedural concerns. 

 

Perhaps the most pressing concern for the EC is the lack of any unified system of litigation. The EC’s pharmaceutical sector inquiry examined transaction costs needed to enforce rights across all member states and concluded that, “[t]he total cost of patent litigation in the EU relating to the 68 medicines on which litigation was reported for the period 2000 – 2007, is estimated to exceed € 420 million, of which a significant proportion could have been saved” if a cross-border litigation system could have been enacted.

 

A separate review of the European patent system by Prof. Dietmar Harhoff, Ph.D states:

 

The results obtained here suggest that currently, between 146 and 311 infringement cases are being duplicated in the Member States. By 2013, this number is likely to increase to between 202 and 431 cases. Total private savings in 2013 would span the interval between EUR 148 and 289 million.

 

Meanwhile, it appears that the EC is rapidly moving toward a unified litigation system for all types of patents. This raises a more profound question: to what degree is a uniform litigation system desirable?

The Harnoff study considers literature studying the U.S. Court of Appeals for the Federal Circuit, which has provided a unified system for patent litigation at the appellate level since 1982.  This includes Rethinking Patent Law's Uniformity Principle, a paper by Craig Nard and John Duffy, which, as Harnoff describes "questions the values of uniformity altogether."   In their paper, Nard and Duffy point out that "uniformity is not a proxy for quality," and propose a "polycentric decisionmaking structure that would allow for a diversity of peer appellate voices to be heard."  Certainly, Nard and Duffy's proposal has been subject to debate, including an article co-authored by Lynne E. Pettigrew and the Federal Circuit's Hon. S. Jay Plager, Rethinking Patent Law's Uniformity Principle:  A Response to Nard and Duffy, 101 Nw. U. L. Rev. 1735 (2007).  It will be fascinating to see whether the EC considers these issues when contemplating these large structural changes to its system.

Interesting Times in the Pharmaceutical Industry

With Pfizer's $2.3 billion payment last week to settle fraud charges for marketing practices relating to its drug Bextra, it must be an interesting time to be in the pharmaceutical industry.  On the international front, last summer the European Commission completed a study of competition in the pharmaceutical sector in Europe. Although the study is comprehensive in scope, one section focuses specifically on the relation between pharmaceutical companies engaged in research and development ("originator companies"), manufacturers of generic drugs and the patent system.  

The most dramatic price competition occurs between originator companies and generics, who seek to sell copies of those formulations at lower prices. Because of a number of mergers over the past several years, there are fewer and larger companies on both sides of the originator-generic equation worldwide. The patent system plays a significant role here too, of course.  Originator companies traditionally rely on patents to prevent generic manufacturers from copying the originator's formulations.  Where a patent bars copying, originators are the sole market supplier and can charge higher prices during the patent's term to recoup research and development expenses needed to discover and formulate a drug.  These terms run up to twenty years.

As the executive summary points out, in Europe "(e)nforcing patent rights in court is legitimate and a fundamental right guaranteed by the European Convention on Human Rights: it is an effective means of ensuring that patents are respected."  Nonetheless, the sector inquiry concludes that antitrust enforcement in this industry within the European Community is likely to apply with "increased scrutiny" because of various patenting strategies that appear to delay generic market entry.  These include create "thickets" of patents around various drug formulations and other filing strategies that create uncertainty, and therefore delay market entry, of generic competitors. In addition, the summary states:  

In approximately half of the settlements in question the generic company's ability to market its medicine was restricted. A significant proportion of these settlements contained – in addition to the restriction – a value transfer from the originator company to the generic company, either in the form of a direct payment or in the form of a licence, distribution agreement or a "side-deal".  

In response, the Commission will consider "focused monitoring" of patent settlements that delay generic manufacture and contain a "value transfer" from an originator to a generic.  Further, the Commission notes that the cumulative effect of mergers, patenting strategies and settlement may be impacting consumer drug prices in Europe. In later postings this week, I'll summarize some procedural options that the Commission is considering.

Fagundes & Masur on Costly Screens and the Creation of IP

In the (self-ag-)grand(-izing) tradition of Prawfs visits, I wanted to use my last post here to mention an article I just posted to SSRN along with my co-author Jonathan Masur. Titled “Costly Screens, Value Asymmetries, and the Creation of Intellectual Property”, the paper uses costly screen theory to push back against substantive critiques of the copyright and patent vesting systems, and to explain why positive law creates such different thresholds for vesting these exclusive rights in information. We’re going to present this paper at the plenary session of the Intellectual Property Scholars Conference in NYC later this week. Here’s the abstract:

Copyrights arise the moment an author fixes a work in a tangible medium of expression, costlessly and immediately. Patents, by contrast, arise only after an applicant successfully navigates a cumbersome examination process. Numerous writers have critiqued the resulting proliferation of copyrights as excessive, in some cases arguing for more formalities in order to restrict the ease of copyright vesting. The patent examination process has drawn criticism as costly and ineffective—in contrast to copyright, too laden with formalities. In this paper, we focus on process costs (or lack thereof) to show that these very different means for acquiring intellectual property rights may be more optimal than is generally believed. The high costs of navigating the examination process deter would-be patentees who expect their property rights to generate only low private value. Moreover, due to an important asymmetry among the social and private value of patents, the costly screen is likely to select against socially harmful patents in disproportionately high numbers. The examination system thus eliminates patents that create low social value while creating no risk of eliminating patents that generate high social value. Copyright is characterized by just the opposite asymmetries. Because there are numerous works that generate high social value but low private value, the impact of costly screens would be to preclude the production of many of the publicly beneficial works that copyright is designed to create. In addition to providing a positivist explanation for why the patent and copyright systems differ, this application of costly screen theory also points in the direction of what we call a unified theory of IP process. This theory illuminates the essential connection between the statutory construction of exclusive rights in information and the particular processes by which those rights vest.

Comments are most welcome, of course. And with that, I’m signing off my extended summer visit. It’s been a lot of fun, as always. Thanks to new dad Markel and the rest of the Prawfs crew for letting me stick around for so long, and to readers and commenters for thoughtful insights and fruitful discussions.

Art, Licensing Markets, and the Limits of Unauthorized Appropriation

Doug Lichtman’s IP Colloquium has already been mentioned on this site. It’s a great series of conversations about contemporary issues in intellectual property featuring guests from academia (including PrawfsBlawg’s own Dan “Dan” Markel), law practice, and the entertainment and technology industries.

The most recent edition of the IPC addresses an issue of particular interest to me. The copyright dispute involving Associated Press and graffiti artist Shepard Fairey is familiar news. Fairey’s based his iconic “Hope” poster of Obama on a photo taken for the A.P. by freelance photographer Mannie Garcia. (Garcia has now joined the lawsuit, contesting the A.P.’s original claim that they own the copyright in the photo pursuant to the work made for hire doctrine.)

It’s uncontested that Fairey did not seek or receive permission to use the photo in making his poster, so the substantive debate revolves around whether Fairey’s taking is defensible under the fair use doctrine, which permits unauthorized takings that meet a notoriously slippery four-part statutory balancing test. Doug’s latest IPC conversation features the lawyers for Fairey (Mark Lemley) and the A.P. (Dale Cendali) as well as the New York Times’ General Counsel, Ken Richieri.

The Fairey conversation ranges over a number of very engaging issues, but I’m going to limit this discussion to consideration of the fourth fair use factor. I say more about this issue, and why I’m not as convinced as Doug that it weighs in favor of the owners of the Obama photo, below the fold.

The Copyright Act requires judges to consider “the effect of the use upon the potential market for or value of the copyrighted work” in evaluating a fair use defense. Cendali argues that allowing Fairey’s fair use defense will lead to a world that will destroy licensing markets in all news photography, but this is an obviously overstated litigator’s point. No one is arguing that purely substitutive uses (such as reprinting the Obama photo verbatim) should be allowed in the absence of permission or a license. The right way to frame the question, I think, is whether an artist who creatively appropriates a news photograph needs to pay for a license to do so.

This strikes me as a hard question. Lichtman’s take is that there was a well-functioning market here, so that all Fairey would have had to do is ask for permission to use the photo (and perhaps pay a small fee) in order to avoid liability concerns. And Garcia has said that he would have given Fairey permission to use the photo if Fairey had simply asked him about it beforehand, which seems to suggest that there was such a licensing market, and that Fairey just failed to take advantage of it. If that were true, it would be a strong argument against fair use (though not necessarily a dispositive one—the Second Circuit has held that the mere existence of a well-functioning licensing market alone does not preclude a fair use defense).

I think this counterfactual characterization of a smoothly functioning licensing market suffers from hindsight bias in a couple of respects. For one thing, even if it were true that Garcia would have given Fairey permission to use the photo, his grant of permission may not have been sufficient. The A.P. claims that it is the copyright owner, so a good-faith effort by Fairey to clear the rights could still have landed him in trouble (copyright is a strict liability offense, so an innocent state of mind would not be a defense). And corporations have a track record of not extending as much generosity to potential licensees as individual owners might. (In any event, I’m not so convinced that Garcia would have been so generous. If he really was so indifferent to Fairey’s—or anyone’s—profiting off of his photo, why would he now be joining the lawsuit and seeking to claim ownership of the work?) Finally, markets in creative work don’t function as seamlessly as markets in stocks or commodities, where actors regard the goods in trade as largely fungible. Rather, copyright cases are full of instances where owners reject a lucrative licensing offer for personal or idiosyncratic reasons (e.g., Campbell v. Acuff-Rose; Fisher v. Dees).

For all these reasons, I’m not as confident that we can simply say that fair use is inapposite here because Fairey eschewed use of a well-functioning market (nor am I convinced that it would end matters even if this were the case). But I also think it’s worth pausing on Lemley’s policy argument that there’s something “corrosive” about making art such as Fairey’s subject to a permission culture. Both Lichtman and Lemley agree that in some cases, fair use is necessary because it enables the legitimacy of a form, such as movie reviews. If critics need a studio license to include film clips in their reviews, then studios can condition those licenses on favorable commentary, and critics will lose credibility.

In a similar vein, though, much art—especially appropriation and graffiti art, like Fairey’s—depends on its transgressive character. Because part of the appeal (and social message) of this art is its edgy lawlessness, if these kinds of artists had to politely ask lawyers for permission beforehand, much of the power of their work would be lost. Now one could certainly argue that the social value of transgressive art is not worth the costs imposed on owners by unauthorized takings, and this empirical point may be right (though I’m skeptical that something like this can be measured). But this is the same basic argument for fair use that is generally accepted in the film criticism instance: forcing a permission culture on the users would compromise the value of the work itself.

Finally, Lemley suggests that part of the factor-four calculus should include the enormous positive impact that Fairey’s taking has had on Garcia’s career (his photography is much more in demand now that he is associated with the iconic Obama poster). As Cendali tartly puts it, this is the claim that “I did you a favor by ripping off your work”, and few courts have put much store in this argument when evaluating the final fair use factor.

By contrast, I think it’s a convincing point, for a couple reasons. First, the fourth fair use factor is commonly referred to as the market-effect factor, but tells only part of the textual story. The statute actually requires consideration of “the effect of the use upon the potential market for or value of the copyrighted work” (emphasis added). The plain language seems to not only permit, but demand, consideration of how the defendant’s use impacted the value of the owner’s work, not just the effect the use had on potential markets. Second, as a policy matter, if it’s true that Garcia is much better off thanks to Fairey’s unauthorized use than he would have been in a world where that use never happened, I can’t understand the argument that Fairey owes Garcia money; if anything, it seems like just the opposite should be true. At the very least, it seems to me that this argument should be part of the factor-four discussion rather than dismissed as readily as it is by most courts and commentators.

For all of these reasons, I’m more skeptical of the claim that the fourth factor weighs strongly in favor of the owner of the Obama photo, and I think the fair use issue is a truly difficult one. Regardless of your take on the issue, though, the conversation at IPC is an enjoyable one and well worth checking out.

The Amazing Metrano, Family Guy, and Fair Use

The acerbic animated show Family Guy often ridicules popular figures harshly and very specifically, so it’s unsurprising that the show has drawn the ire of the targets of its ridicule, sometimes in the form of copyright infringement suits aimed at its studio and creators. Probably the best known of these was Carol Burnett’s suit claiming that Family Guy infringed her “Charwoman” character by depicting Burnett cleaning up in a porno shop. The suit was dismissed when a federal district court held that the depiction of Burnett’s character was defensible as fair use. Burnett v. Fox, 491 F. Supp. 2d 962 (C.D. Cal. 2007).

Along the same lines is the lawsuit pending by Arthur Metrano, much discussed in the IP blogosphere, alleging that the creators of Stewie Griffin: The Untold Story (a movie based on Family Guy) infringed his “Amazing Metrano” stage act by showing Jesus performing the act in substantially the same way that Metrano does. (It’s really hard to describe the act and the ensuing scene, but here’s a site with video clips of the two.)

The defendants in Metrano recently moved for a 12(b)(6) dismissal based on the fair use defense, and in light of Burnett, likely thought they’d prevail. Last week, though, a federal district court judge rejected their motion, holding that the first three fair use factors (purpose and character of the use; nature of the infringed work; and amount and substantiality of the taking) weighed in favor of Metrano, while the fourth (economic impact) had to await more fact-finding. I say a bit more about the decision, its merits, and the frustrating indeterminacy of the fair use defense, below the fold.

The most salient part of the decision strikes me as the court’s finding that the first factor—the purpose and character of the use—weighs in favor of Metrano. This factor is usually distilled to the question whether the use is “transformative”, citing the Supreme Court’s language in the enormously influential 1994 Campbell v. Acuff-Rose decision. Campbell also introduced the much-debated parody/satire distinction as a way to help determine whether a work is sufficiently transformative for the first fair use factor to weigh in favor of the defendant (an issue I’ve examined on this site in previous years). Parodies make fun of the plaintiff’s work itself and tend to be transformative; satires merely use the defendant’s work as a vehicle to mock some social issues, and tend not to be transformative.

In Burnett, the Central District of California applied this standard to find the Family Guy’s mockery of Carol Burnett’s “Charwoman” character a transformative parody, because Carol Burnett was clearly the object of the writers’ mockery (even though that mockery may have been mean and in poor taste). But the same court (through a different judge) found Burnett distinguishable from Metrano on this point, finding that the Jesus scene “does not criticize or comment upon Plaintiff’s routine or lampoon Plaintiff by depicting him in a new or different way, as did the episode of Family Guy in Burnett”, but rather "pokes fun at and questions Jesus’s purported ability to work miracles”.

These factual assertions possess some truth; the Family Guy clip in Burnett actually depicted Carol Burnett, while the clip in Metrano showed someone else (Jesus) performing Metrano’s act. This probably made the reference to Burnett more obvious, and one can certainly imagine that many viewers did not understand or know about Art Metrano’s act when they saw the Jesus scene in Stewie. Nevertheless, this strikes me as a distinction without a difference. The district court concludes that the only mockery at issue in the scene was the creators’ poking fun at Jesus’ ability to work miracles. But the scene could not have effectively communicated the message that Jesus was "overrated" unless what He was doing was lame and unimpressive (hence the vacant expressions of the audience members who watch Jesus perform the act), and that means that the scene also had to communicate that Metrano’s act was subpar.

The district court seems to assume (as most courts applying the Campbell parody/satire distinction have) that there must be a unique object of any given parody, but as these facts illustrate, it's entirely possible for a parody to have multiple objects. The Jesus scene, read in context with the bit of dialogue just preceding it, mocks both Jesus (by suggesting that He was not that miraculous) and Metrano (by suggesting that his “magic” act was lame and unimpressive). On this reading, the Jesus scene is clearly a parody of (inter alia) Metrano and his act.

It bears noting also that the parody/satire distinction does not subsume the question of transformativeness entirely, though most courts apply Campbell as though it does. A judge could find that the defendant’s use was not parody, but that it was still transformative. Metrano seems like an instance where this might hold true. Even if we assume that the judge is correct that the Jesus scene in Stewie was not a parody, it still seems transformative by any measure. It took Metrano’s act and changed the context, meaning, and message of it from a campy 60s comedy act to a surreal depiction of a popular deity. I suspect the district court would not have found this degree of transformativeness sufficient to cause the first factor to weigh in favor of the defendants, but the issue still should have been addressed.

Of course, this is just a (my) reading of the Jesus scene in Stewie, and while I think it’s right, it’s clearly contestable. This raises a related critique of the parody/satire distinction (and of the first fair use factor more generally): that it requires judges to act as literary critics (I forget who said this). Is it ever possible to identify the object of a defendant’s parody with any objective certainty? Is this really the kind of question we think judges trained in the law are capable of answering? On the other hand, we ask judges to make tough, and specialized, judgment calls in applying legal standards to novel facts all the time, and we don’t criticize securities law or criminal law for forcing judges to act as economists or psychologists. So however strange it may seem to have a case turn on a judge’s literary instincts, perhaps it’s just another instance in which we have to trust that the federal bench is full of wise enough generalists to make these (and many other similarly specialized) decisions well.

One final, procedural point: at first, I thought the posture of this case (motion to dismiss) would affect the fair use analysis. The district court merely held that there was not enough evidence to dismiss the case on a fair use theory now, and the decision certainly holds open the possibility that there might be such evidence after the record is developed a bit more (particularly with respect to the fourth fair use factor). But as the court correctly pointed out, fair use is a mixed question of fact and law, and the question whether a defendant's work amounts to parody as Campbell defined it is one of application of a legal standard to facts. And the facts relating to the content of Metrano's act and the Jesus scene in Stewie are undisputed, and will likely remain so throughout the case. So while the fair use issue could theoretically go the other way on summary judgment if the defendant can come up with a strong showing regarding market share, the parody/first factor issue seems to have been resolved with finality.

Dave Matthews Band, Bootlegs, and Network Economics

In honor of the release of the latest Dave Matthews Band album, and my upcoming concert visit, I thought I would blog a bit about an area of interest that I don't often get to write about.  As the title implies, this topic combines three areas of interest: DMB, Bootleg Trading (which prefer to call concert trading, as I don't really view permissive recording of concerts to be a bootleg), and network economics.  The punchline is a critique of the popular argument that record companies should want free distribution of music because it will increase sales.  But first, some background.

Dave Matthews Band, as most people know, makes music.  Despite releasing new albums more slowly than most groups (about every 3 years, and 4 since the last one), the group is extremely "sticky" among its fans.  It is routinely one of the top grossing concert acts in the world, and its fans continue to go to shows.  I've been to at least 25 shows in 5 states (I've lost count), and the only reason the number isn't 50 is that I got married and had kids.  I've been a member of the fan club for 9 years, yet when seats in Pittsburgh were doled out by seniority, I'm still at the back of my section, meaning that there are many fan club members sitting in front of me with 10+ years in the club. 

But here's the thing, they don't have a "lot" of record sales, at least not as compared to many other pop acts.  Few songs hit the charts, and the albums rarely crack the top 5, let alone the top 10, and if they do it's not for very long.

The band's popularily among its fans is largely attributed to its loose concert taping policy. 

 From the beginning, anyone with a tape recorder (and now more sophisticated devices) could record any show, and share it (for free) among friends.  Most are high quality these days - every show will have someone in the first 10 rows setting up three microphones (left, right, center) 15 or 20 feet in the air.  Trading is fun, and because the band changes the setlist nightly and improvises significantly, no two concerts are ever the same.  For example, I have some 200 concerts on CD or hard disk, even though I'll never get to listen to them all. Trading used to be a quid pro quo - I'll send you one show if you send me another. 

Over time, trading has lost some of its steam, as cheap storage and high bandwidth allows new recordings to be released within a couple days via BitTorrent. Thus, there's no need for actual trading - it's all about downloading now.

If what I'm describing sounds familiar, perhaps you heard about it the first time when it was called the Grateful Dead, or maybe the second, when it was called Phish.  GD, Phish, and DMB are all examples of bands with devoted fans, high-activity trading, but relatively weak record sales.

This leads me to the core academic point in this story - the network benefits associated with trading.  The typical economic argument used to argue that record companies should favor music sharing is that the more people that have a song or two, the more likely people are to buy the album. The effect is two-fold:

1.  Sampling: the more people that listen to a song, the more people that will buy the album

2. Status: everyone is listening, I'd better get the CD and listen, too

I don't want to get into whether this is true or not in general, though empirical studies seem to imply that it is not. Instead, I want to comment on a more peculiar aspect of sharing - what happens when there are two markets?

As far as I know, DMB keeps almost all of the money it gets from concerts, but a much smaller portion of the money it makes from record albums (maybe more now than in the past, but the label is still in there). Based on this fact, it stands to reason that if full-sharing is encouraged by the band, then it will make more money, even if that sharing substitutes for record sales. Thus, where you have a band known for great concerts, the dual markets benefit the band, but not the record label. This appears to be the network effect working, but only in one market.

Thus, the band has an incentive to encourage sharing, and record sales may suffer despite popularity.  This implies that the network benefit model fails, but only partially. At least my 3 band sample says so. It may also be the reason why many bands favor sharing even though their labels do not.

This may be why artists that are not known for good concerts, or that do not get to keep most of the concert revenue do not want any kind of bootlegging or other music sharing - where there is a single market, the substitutive effect outweighs the network benefits in general (unless you believe the studies that say otherwise).

These are off-the-cuff thoughts - I haven't studied this much, and probably never will. So, if anyone has some thoughts on the topic that can guide my meanderings, please post!

Hello Again and Bilski Redux

Thanks for the welcome, Dan, and thanks to Prawfsblawg for having me back.  I have a variety of areas I want to post about this month.

But first, it is good timing that I am guesting this month, as the Supreme Court just granted cert. in In re Bilski (now Bilski v. Doll) (H/T several people).  If you haven't heard of it, Bilski is about patentable subject matter - more specifically about intangible processes.  The Federal Circuit's en banc opinion in Bilski issued while I was guesting last October - hence the good timing.

I posted at length about patentable subject matter last time, and the article I discussed has since been published by the Tennessee Law Review.  I don't plan to repeat myself this time, but I wanted to comment on what the granting of cert. might mean.

I was extremely critical of the Federal Circuit opinion when it came out, and not just because of sour grapes that the amicus brief I wrote with three other professors was largely ignored (and worse yet, uncited!).  I predicited in my prior posts that the new test would be a disaster, and - to my mind - it has been.  Bilski's machine or transformation test (see here for a description) has led to rejections of a variety of patents that were otherwise seemingly inventive, and that were completely unrelated to the much maligned business methods of Bilski.  Worse (and a focus of my article), the opinion leaves the test so vague that no one can really know if they have patentable subject matter until after a long process.

So I should be thrilled that cert. has been granted, right?  Time will tell.  I didn't participate in any amicii supporting the petition because I'm not really sure I want the Court to rule on this case..  The problem is that the Bilski application is very, very weak in my view (it is for hedging certain types of commodities).  It is weak for a variety of reasons, and probably should never issue.  Thus, I worry that the Court will mix the subject matter issues with the other problems with the application.

Then again, this is the perfect case to test the Court's fortitude for deciding the question presented.  There has been no ruling below on the other merits of Bilski because the PTO wanted it that way - the examiner (as far as I know), BPAI, and Federal Circuit ruled on subject matter and only subject matter.  If the Court reverses here, the application will likely be remanded all the way back to the examiner to consider novely, obviousness, enablement, and other patentability issues.

Thus, I am hopeful the Court will let the system work by rejecting a terrible test, coming up with a better one (the one I propose wouldn't be so bad, methinks), and letting the PTO deal with Bilski on the merits. I said the same thing in an Op-Ed to no avail before the Federal Circuit ruled.  We'll see if things change this time around.

Three Strikes, but Safe

Just before Easter, French lawmakers declined to approve an Internet piracy legislation that would have been arguably the most far-reaching law of its kind.  Championed by leaders of the film and music industries (similar steps are being explored in the U.S.) as well as President Sarkozy, the law sought to diminish the illegal downloading of movies and songs via stringent, expansive measures that would limit and eventually terminate the Internet access privileges of repeat offenders for up to one year.  Although the law failed to pass, 21-15, the fight is not over; the law will be up before the Parliament again before the end of the month.  Its provisions are worth examining, not only because the “experiment” they present is perhaps “worth" the backlash, failure, or other risks; the law, to borrow a phrase from Justice Blackmun, launches a missile to kill a mouse--and I'm not sure the mouse would be, at the end, anything more than mostly dead (which, as we know, is slightly alive).

Although the three strikes component of the proposed law (first instance of illegal downloading gets the offender an emailed warning; second instance, a registered letter; the third time, the offender is denied Internet access for a period of three to 12 months) is its heart, what I find particularly interesting are the concurrent provisions which seem to strive to ensure that the offending parties are prohibited from circumventing the ban on their access.  In addition to a ‘blacklist’ that would prevent disconnected users from shopping for alternate ISPs, the proposed law includes a measure which would limit public wi-fi access to a prescribed 'white list' of permissible sites, and requires wireless subscribers to secure their connections--no more feeding off of one's neighbor's signal.

Even if reasonable minds might differ as to the wisdom, propriety or, in the U.S., constitutionality (in terms of, for example, overbreadth) of these provisions--particularly the 'white list' measure--it seems to me that the parameters set up with the law are misguided.  For one thing, capturing the actual downloader is elusive.  For another, persons who want to download materials from others and/or who believe they have the right to disseminate material they've acquired are going to find a way to do so.  When OiNK was shut down, new sites cropped up to serve its users.  Of course, this could mean that the proposed law's provisions are not stringent enough to create the hoped-for disincentive (the law it was meant to replace provided for prison time; with the new decision concerning Pirate Bay's operators, that specter might have a stronger effect, as I'll discuss in a subsequent post).  But rather than play this game, lawmakers and the industry they are supporting with these laws should consider the collateral damage of legislation like this.  If the law passes in round two, what message does that send?  What inadvertent silencing is taking place? And for the industry, how long will they cling to a failing business model, hoping legislation will prop them up yet again?

Can Punitive Damages Law Inform the Copyright Infringement Litigation?

I'm just now getting a chance to listen to UCLA prawf Doug Lichtman's really cool podcast on the relationship between punitive damages law and the copyright infringement litigation. I haven't gotten to the point yet where my voice pops up, which is all for good since I often cringe at the playback of my recorded voice.  Here's the summary of the podcast, which is part of Doug's ongoing IP Colloquium series: 

Joel Tenenbaum looks a lot like every other defendant who has been accused by the music industry of illegally sharing copyrighted work online, but with one key difference: his defense attorney is Harvard Law School Professor Charlie Nesson, and Nesson is out to turn his case into a public referendum not only on the music industry's efforts to enforce copyright through these direct-infringer suits, but also on the copyright rules that make the industry litigation possible.
In this program, we engage Nesson's key arguments, focusing especially on Nesson's claim that copyright law's statutory damages regime runs afoul of constitutional protections against excessive and/or arbitrary civil damages awards.
Guests include Professor Nesson himself; Steven Marks, General Counsel for the Recording Industry Association of America; and three of the leading academic experts on punitive damages: New York University Professor Catherine Sharkey, Florida State Professor Dan Markel, and George Washington University Professor Thomas Colby. UCLA Law Professor Doug Lichtman moderates.

Patenting DNA

After a brief diversion to rant about analyze the Bilski decision, I return now to the last post of my Everything is Patentable series.  I end this series of posts with one of the thorniest patentable subject matter questions – products of nature, including DNA. 

Like other areas, precedent is not terribly useful.  Products of nature are not patentable, but determining what is a product of nature can be difficult.  The general rule is that materials that are “isolated and purified” qualify while others do not.  Except, of course, for the person who was able to purify tungsten to the point where it was flexible (an important discovery for making light bulbs).  The court there ruled that he had not invented tungsten even though it did not exist in nature in the pure form that the inventor claimed.

DNA takes this point a step further – detractors claim that “someone can patent your DNA.”  These claims are patently false (pun intended).  DNA patents are about either purified gene sequences (turns out a lot of genes have non-functional segments) and artificial organisms in which DNA strands are combined with bacteria to artificially generate proteins.  Cool stuff, really, and critical to the biotech industry.

So, what’s the problem under rigorous patentability? 

It’s not a subject matter problem – genes are obviously compositions of matter, and there is no principled basis to deciding what DNA patents to allow and what to bar with respect to worries about “locking up” the genetic code.

Under rigorous patentability, the problem becomes obviousness. (There is also a novelty argument discussed in the paper, but it is too long and nuanced to reproduce here).  In the “old days” of a few years ago, it was difficult and unpredictable to isolate a gene sequence.  It was also unheard of to splice a gene into a bacterium to artificially generate proteins and enzymes. 

Today, it is still costly to do so but it is no longer (in many cases) truly inventive work.  It is often a matter of using known processes, brute (computer) force, and time.  As a result, many DNA discoveries are simply obvious from a rigorous patentability standpoint.

The objection to this viewpoint is that these types of discoveries are very costly, and we want to incentivize them.  That may be so, but patent law is concerned with incentivizing the unknown, not merely the expensive.  There are all sorts of expensive manufacturing processes that are not protectable because they are not new and nonobvious.  If we want to encourage such spending, Congress must incentivize it in some other way – either special patent rules (which was done with certain plant patents, for example), through tax breaks or other subsidies, through loans, or through licenses.  Just because we want something doesn’t make it patentable.  Furthermore allowing patents on obvious advances may very well disincentivize others from doing important work.

How best to handle this area of research is a difficult question, but it is not a question of subject matter.  Instead, the difficulties epitomize the problems with subject matter bars – we never get to the difficult questions if we simply block all patents in an area.

Logic and Precedent

I'm not a jurisprudence guy, but as I noted in my post about In re Bilski here, I think there are some serious flaws in the way the Federal Circuit settled on the "machine or transformation" test as the only way a process patent claim can be patentable subject matter.  As a recap, here is what I said:

Here's how the court gets there:

1.  We know that natural principles aren't patentable.

2.  We know it is difficult to determine what is and what is not a natural principle.

3.  We know for sure that there are two ways to tell if something is not a natural principle:

    A. If it is tied to a machine or

    B. If it transforms the subject matter

4.  Therefore, the only way for a process to be patent eligible is to be tied to a machine or tranform subject matter.

5.  In order to make sure all principles are excluded, insignificant post-solution machines or transformations don't count.

Anyone else see the logical jump from 3 to 4?  I put this leap on the level of (i) if you weigh the same as a duck, you much be a witch (for you Monty Python fans) and (ii) Descartes' proof of the existence of god (for you philosophy fans).

I want to take a look at the court's logic (literally) and how it used precedent to support that logic.  I think the result will be that the court's test simply does not follow the precedent it cites.  Of course, that doesn't mean the court can't extend or limit a test and see what the Supreme Court does with it, but to say that the test follows as a matter of fidelity to precedent seems an unlikely claim due to three errors: semantic, precedential, and jurisprudential. 

Analysis follows after the jump.

The court does a good job of making its argument, and to avoid any claim that I am distorting the argument, I will quote the opinion directly where possible, though I do reorder quotes into their logical sequence.  Thus, this post may run a bit long, but it's easy reading.

The court starts with the basic proposition:

A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

Fair enough.  I won't quibble with this basic reading for the purposes of this analysis.  Of course, even if a process is surely patentable in one of these ways does not mean there is no other such way.

The court then attempts to limit the rule to only this proposition.  It starts with Benson:

Applicants and several amici have argued that the Supreme Court did not intend the machine-or-transformation test to be the sole test governing § 101 analyses. As already noted, however, the Court explicitly stated in Benson that "[t]ransformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines.

The court later notes:

We recognize, however, that the Court was initially equivocal in first putting forward this test in Benson. As the Applicants and several amici point out, the Court there stated:

It is argued that a process patent must either be tied to a particular machine or apparatus or must operate to change articles or materials to a 'different state or thing.' We do not hold that no process patent could ever qualify if it did not meet the requirements of our prior precedents.

So far, so good.  M or T is the clue (heavy emphasis by court) but explicitly not the only test.  The court fails to note that the Supreme Court in Benson was urged to limit the test and refused to do so.  The court takes up the next case,  Flook:

Flook, 437 U.S. at 589 n.9 ("An argument can be made [that the Supreme] Court has only recognized a process as within the statutory definition when it either was tied to a particular apparatus or operated to change materials to a 'different state or thing'"

Hardly a ringing endorsement for the test - a footnote that says an argument can be made.  The court goes on to say:

In Flook, the Court took note that this statement had been made in Benson but merely stated: "As in Benson, we assume that a valid process patent may issue even if it does not meet [the machine-or-transformation test]." [emphasis added in Bilski]

After Flook, it appears that the test is in the same state - one method but explicitly not the only way to get to eligibility.  From a persuasive point of view, I think Flook moves me away from the test, but that's not enough to say the analysis is wrong.  Next comes Diehr:

And this caveat [the assumption from Flook] was not repeated in Diehr when the Court reaffirmed the machine-or-transformation test. See Diehr, 450 U.S. at 184 (quoting Benson, 409 U.S. at 70) (“Transformation and reduction of an article ‘to a different state or thing’ is the clue to the patentability of a process claim that does not include particular machines.”).

And also:

Diehr, 450 U.S. at 192 (holding that use of mathematical formula in process "transforming or reducing an article to a different state or thing" constitutes patent-eligible subject matter)

That's right, a string cite.  What of the "clue" language?  Here is the argument, in a footnote:

We believe that the Supreme Court spoke of the machine-or-transformation test as the "clue" to patent-eligibility because the test is the tool used to determine whether a claim is drawn to a statutory "process"—the statute does not itself explicitly mention machine implementation or transformation. We do not consider the word "clue" to indicate that the machine-or-implementation test is optional or merely advisory. Rather, the Court described it as the clue, not merely "a" clue. See Benson, 409 U.S. at 70. [emphasis in Bilski]

From this, the court comes to the conclusion that M or T is the only test allowed by precedent:

Therefore, we believe our reliance on the Supreme Court's machine-or-transformation test as the applicable test for § 101 analyses of process claims is sound.

There you have it - the Federal Circuit's transformation of a "clue" that is not explicitly limited to a mandatory and exclusive rule. 

I believe the reasoning makes three errors, which I call semantic, precedential, and jurisprudential for no reason other than I couldn't think of better names.

Semantic - Interpreting "the clue" to mean that one and only test may be applied seems to put a lot of faith in a single article.  I'll leave it to others to debate whether "the" means "a" in textual interpretation, but not before I note that the Federal Circuit addressed a similar issue in patent claim construction earlier this year in Baldwin Graphics v. Siebert.  The court there ruled that the article "a" means "one or more" and that a later singular qualifier article ("the") does not change that.  For example, if a claim says

A computer monitor comprising

a liquid crystal display panel

wherein the panel is in color

then the claim covers monitors having multiple LCD panels, notwithstanding the reference to "the" panel.  Analogized to the Benson case, the Supreme Court defined "a" test, and later referred to "the" clue.  The later "the" does not mean that there cannot be one or more rules.

Even disregarding linguistic definitions of "the" - something the court would call extrinsic evidence - there are at least two instances within the opinion - let's call it intrinsic evidence - that make clear that "the" clue cannot mean the M or T test is the one and only test.  First, the clue provided is not about machines or transformations - it is only about machines: "Transformation and reduction of an article 'to a different state or thing' is the clue to the patentability of a process claim that does not include particular machines."  This means that there must be at least two clues - transformation or particular machines.   Second, M or T is not the only part of the test - there is also the part that "insignificant post-solution activity" does not count as a machine or transformation.  If "the" clue really meant that this was the one and only test, then the additional requirement would not be necessary - that is an additional clue.  If there are two clues, then "the" cannot mean one.

Finally, extrapolating a single rule from "the" clue makes little sense.  Consider all of the following statements, all of which can be true at the same time in the decision:

• the clue is whether fundamental principle is implicated
• the clue is preemption of a natural principle
• the clue is statutory categories - if not in a category no eligibility
• the clue is application of the principle
• the clue is data relating to physical objects

These too are clues, and calling them "the clue" does not detract from the import of the others.

Precedential - I call this error "precedential" because, quite frankly, the court mis-states the precedent.  A lynchpin in the court's analysis is that Diehr failed to include the caveat present in Benson and Flook that there may be other ways to show patentable subject matter than the M or T test.  Whatever one thinks of this leap (discussed in the next section), the reality is that Diehr does include that caveat.

As Judge Newman points out in dissent,

The Court explained that the presence of a mathematical formula does not preclude patentability when the structure or process is performing a function within the scope of the patent system, stating:

[W]hen a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of §101.

This statement’s parenthetical “e.g.” is relied on by the majority for its statement that Diehr requires today’s “machine-or-transformation” test. However, this “e.g.” does not purport to state the only “function which the patent laws were designed to protect.” This “e.g.” indeed describes the process in Diehr, but it does not exclude all other processes from access to patenting.

The majority addresses this in a footnote: "...language such as the use of "e.g." may indicate the Supreme Court's recognition that the machine-or-transformation test might require modification in the future."  Noting that additional tests might be considered in the future seems like a caveat to me.  In the context of the argument it weakens - if not guts - the claim that Diehr simply "reaffirmed" a narrow holding of Benson and deliberately ruled that M or T is the only test by leaving out a caveat.

Jurisprudential - The final error is jurisprudential, by which I mean the court's logic legal reasoning leaves something to be desired.  Even assuming that Diehr did not include an "e.g." and could be read as eliminating the caveat that M or T is not the only test, reliance on a missing caveat seems misplaced from a legal analysis standpoint.  The logical concern is obvious - just because a disclaimer is missing does not mean that all other avenues are foreclosed, but the issue goes beyond simple logic in my mind.  I think it goes to the heart of how we think about holdings and dicta.

Here's a breakdown of the three key precedents:

1. Benson:  The patent does not meet M or T, and is not patentable, though there may be other ways to show patentability
2. Flook: The patent does not meet M or T, and is not patentable, though there may be other ways to show patentability
3. Diehr: The patent does meet M or T, and is therefore patentable

The first problem is in Benson and Flook - if a patent is to be rejected, then shouldn't every test be explored to see if one of them is met?  There are three explanations for the court's failure to do so: (1) M or T really is the only test (belied by the explicit language of the case); (2) The court knows a bad patent when it sees it - also known as "insignificant post-solution activity" (not terribly palatable, because it still ignores the possibility of other ways to acheive patentability); or (3) some other test is actually being applied (this is my theory).  Because of these issues, it is difficult to ascertain the actual rule that leads to the holding of these two cases.  However, the court is explicit that whatever that rule is, there may or may not be others. 

The second problem goes deeper - and it is associated with Diehr.  Taking Benson at its face, one may show patentable subject matter by (i) machine; (ii) transformation; (iii) maybe some other way.  The Diehr Court rules that the process at issue is at least a transformation, and is thus patentable.  From a holding/dicta point of view, that's it - end of story.  The applicant need not prove that the process is tied to a machine, and the court need not address it.  The applicant need not prove that there is some other way to show patent eligibility, and the court need not address it. If the court did address either of these subjects, it would have been an alternative rule at best or dicta at worst.   Either way, the posture of Diehr - granting a patent by meeting one of many tests - makes reliance on its silence about other rules quite strange.

Jurisprudentially, the failure to provide an alternative rule or further dicta mandates a later reading that no such alternative rules or dicta exist.  And that is the real failing here - it took a lot of words to say something pretty simple - the failure to perpetuate a dicta-based caveat does not warrant an elimination of the caveat.  I'll push it further - even if Benson and Flook did not include explicit caveats but instead simple logic allowed for the possibility of other rules, then the failure of later cases to recognize that logic would still not eliminate the possibility of such rules until the court actually considered the issue and rejected a patent after applying such a rule.

So what?

That's a good question.  Reasonable minds can differ on whether the Federal Circuit got the test right or not (I don't think so), whether machine or transformation is the only test possible (I don't think so), and whether or not this limitation is good for the patent system (I don't think so).  I think that it would be difficult to justify the ruling as the only one justified by logic and precedent.

Bilski and Continued Uncertainty in Patent Subject Matter

Hot on the the heels of my latest post, which discusses algorithms and business methods patents, the Federal Circuit has issued an en banc opinion shaking the tree in In re Bilski.  Alas, the opinion does not follow my suggestions in Everything is Patentable, but the decision isn't as far from my views as it could be. 

Let me be clear - I think this is a patent application that is non-inventive, and that should not issue for a variety of reasons.  I don't think, though, that subject matter is one of them.

 

Bilski

The inventors claimed a method for hedging on consumable commodities.  The method involved an intermediary selling commodities at a fixed price and buying commodities at a fixed price.  Hedging, in general, is well known, though the inventors here claim to have come up with a better way to do it.

The Appeal

The patent application was rejected by the PTO as not embodying patentable subject matter and not being directed to the "technological arts."  The patentee argued that his process, however, achieved a useful, concrete result as was contemplated in Federal Circuit precedent.

The Ruling

The Federal Circuit held, 9-3, that the patent was not directed to patentable subject matter.  That's not really a surprise.   Even among the three dissents only one judge (Newman) would have found this to be patentable subject matter.  Further, the specific holding  effectively wiped out the last 10 years of patentable subject matter jurisprudence - it's like Bobby stepped out of the shower on Dallas.

The old rule - State Street Bank and its progeny - basically held that a "useful, concrete and tangible result" was sufficient for a process to be eligible subject matter.  So, methods of managing money by computer or measuring heart rhythms, etc. were useful, concrete and tangible.  Bilski argued that hedging yielded such benefits.  Not so, says the court now.  To the extent all of those cases relied explicitly on that rule, they should not be relied on now.   And here I just finished a class where I drilled that black letter law into my students' heads. 

Here is the new rule - any such process must either be tied to a machine or be a transformation of something physical.  However, the transformation can also be a transformation of data representing something physical.  But, insignificant "post-solution" machines or transformations don't count.   So, because Bilski is not tied to a machine (though no human could do the calculations in the patent), and because the transformations involved are of legal obligations and not anything physical, and because anything physical is "post-solution," the patent is not a "process" and thus not patentable subject matter.  How's that for clarifying things.

Here's how the court gets there:

1.  We know that natural principles aren't patentable.

2.  We know it is difficult to determine what is and what is not a natural principle.

3.  We know for sure that there are two ways to tell if something is not a natural principle:

    A. If it is tied to a machine or

    B. If it transforms the subject matter

4.  Therefore, the only way for a process to be patent eligible is to be tied to a machine or tranform subject matter.

5.  In order to make sure all principles are excluded, insignificant post-solution machines or transformations don't count.

Anyone else see the logical jump from 3 to 4?  I put this leap on the level of (i) if you weigh the same as a duck, you much be a witch (for you Monty Python fans) and (ii) Descartes' proof of the existence of god (for you philosophy fans).  To make the leap, the court considers court precedent in what I consider to be a completely unsupportable way (and Judge Newman's dissent takes the majority to task on this point).  I'll discuss that in another post, as this one is already pretty long.

So what's the problem?

So, what's the problem with the Court's formulation, aside from the major logical flaw?  After all, the concession that the transformation can be of data relating to physical matter is a step forward and something we even argued in our amicus brief. 

Well, let's start with unsettled expectations.  Is State Street now patentable?  It is a transformation of data relating to money.  Is money physical?  What about transformation of data relating to weather patterns?  That's historical data, but doesn't necessarily represent physical data.  What about communications?  And by the way, if I am transforming data, aren't I tied to a machine?  Why do we need the transformation part at all?

Second, in its effort to deal with the high technology, the court has abandoned low-technology.  What about all those processes out there that have nothing to do with machines or transformations - new methods for threading a needle more quickly (which can have great cost savings in manufacturing), methods for harvesting fruit, methods for manufacturing products by hand (for example forming wrought iron).  One would think that these were what the original process patents in the 1800's looked like, and by this test they are now barred.  At the very least one would have to ask whether molded wrought iron is a transformed substance - not a model of clarity.  I think the ruling can have a real effect on innovation - and not just "soft" innovation, but all innovation.  On a side note, Judge Newman points to English patents from the 1700's that appear to quite clearly be human performed business methods.

Third, just what are insignificant post-solution elements?  How might one ever figure that out?

Fourth, the analsysis of tying something to a machine is less than satisfying.  The court cites Mackay Radio as a prime example.  To me, Mackay is a poster child for why this test fails.  There, a well known equation covered the optimal wire lengths for receiving radio signals.  The patentee claimed an antenna using these lengths.  The Supreme Court said that this was eligible because it was an application of the principle.  It seems to me, though, that there is no principled way to separate the antenna from the principle of nature under the test elucidated here.   In fact, one could easily argue that the antenna was simply an insignificant "post-solution" part of the claim because the "real" solution was the mathematical formula.

Fifth, let's not lose sight of the actual holding here - the machine-or-tranformation test is supposed to tell us whether a claimed process is more than a "fundamental principle."  By saying there is no transformation, the court ruled that the process must, therefore, be preempting a fundamental principle of nature.  But can we really call the process of hedging through fixed price contracts a principle of nature?  Is it really part of the scientific landscape for all to apply in whatever "applied" way they choose?  Does this particular process really preempt a fundamental principle? It seems like the test is trying to shoehorn an otherwise square unpalatable claim into round subject matter rejection.

To be fair, the court is trying to stick with Supreme Court precedent.  Of course, as I discuss just above and in prior posts, that precedent is contradictory, unhelpful, and unanalytical.  Indeed, in order to attempt to make sense of it the Federal Circuit had to jump through some of the big hoops of logic.  In other words, sticking with precedent doomed the effort from the start.

So what's the good news? 

The court at least gives lip service to the notion that this must be a statutory interpretation of the term "process."  This is something I argue in my article.  However, in sticking to Supreme Court precedent - which performs no statutory interpretation - the court doesn't have a firm foundation.

Perhaps more perplexing and dissapointing is the quotation of (and then discarding of) the actual statutory language.  Section 100(b) of the Patent Act says:

The term "process" means process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.

The court says tht this doesn't work, because the definition of the word process includes the word process.  Well, that may be, but what about the rest?  A new use of a known process, machine, manufacture, etc.  Doesn't this very statutory language preclued the "tied to a machine" part of the test?  Why can't the process be tied to a composition of matter?  A manufacture? A material?  Even in a world where you want to limit subject matter, to claim that you are interpreting the statute but to then exclude a whole variety of claims that fall directly within the statute does not seem to fit even the most basic of statutory interpretation principles.

So, the good news of focusing on statutory interpretation is greatly tempered byt the bad news of no actual statutory interpretation.   I think there was a way to get to the court's definition of process (or something like it) such that the interpretation actually had foundation in the statute, and it is unfortunate that the court did not take up that opportunity.  Indeed, the Comiskey case, which holds that a method that involved only mental steps is closer to the mark - at least that might fit into the statute because there is no use of any of the 100(b) items.

There is other good news, though:

• The case does reaffirm that business methods and any other method that meets the test is patentable
• The case does reaffirm that software is patentable
• The case makes clear that patents need not cover "technological arts" as the PTO wanted
• The case makes clear that novelty and non-obviousness have no place in subject matter considerations (the PTO guidelines on subject matter inexplicably have examiners doing prior art searches to determine subject matter eligiblity)
• The case does make clear that "transformation" is not limited to physical items (though it doesn't go far enough)

Quick notes about the dissents:

1. Judge Mayer says the court doesn't go far enough, and would bar business methods
2. Judge Rader says the court doesn't look hard enough (or at all) about why we might want these limitations, and also says that the limitations are too stifling.   The dissent says that this is a natural principle and thus invalid even under the broad definition, so no subtest is necessary here to further confuse things.
3. Judge Newman takes the court to task on many of the issues discussed here and in my other posts.   Judge Newman looks at Morse the same way I do here - but agreeing with the dissent usually means a failure to win.

 

Finally, particularly gratifying was this line in Judge Rader's dissent:

Much of the court’s difficulty lies in its reliance on dicta taken out of context from numerous Supreme Court opinions dealing with the technology of the past. In other words, as innovators seek the path to the next techno-revolution, this court ties our patent system to dicta from an industrial age decades removed from the bleeding edge.   

If that sounds familiar, you need look no further than to my earlier post here called Parroting Dicta.  I wrote:

A by-product of the history is what I call "parroting dicta" - the Court makes a statement that is not necessary (or even related to) the holding, and that statement gets repeated in every case, even though it is not necessary for that case either.  Eventually, lower courts and even the Supreme Court start believing the dicta despite the fact that it has never actually been helpful in resolving a case.

Unfortunately, my article didn't get to press on time, so now it will look like Judge Rader's comment justifies mine, instead of the other way around!

And truly finally, some other interesting posts on the topic:

Patently-O - Dennis Crouch

Randy Picker

Legal Times

And a hat tip to Howard Bashman at How Appealing

Dealing with Controversial Patent Subjects

In my prior posts, I introduced the basic thesis of a forthcoming article: that courts should abandon all attempts to bar particular patents based solely on their subject matter.  I also discussed some of the problems, namely inconsistent (and impossible) application of such rules and introduced the solution: rigorous patentability.

This post applies rigorous patentability to a couple of subject areas as an example.

Natural Phenomena

It is nearly impossible to tell whether an invention is a natural phenomenon or an application of a natural phenomenon.  Perhaps the best example of this was Mackay Radio, in which the patentee claimed a radio antenna with wires set to specific lengths based on a well known discovery that wires set to those lengths were useful for receiving signals.  There could not be a more direct application of a natural phenomenon, but the Supreme Court did not invalidate the patent. Instead, it held that the patent claimed an application of the natural principle.

It did, however, limit the patentee to exactly the wire lengths described by the equation because no other lengths were described or enabled.  Thus, a competitor that slightly varied the lengths was held not to infringe.  In other words, rigorous patentability (specification) was used to limit the inventor.

This same rationale might be used to answer the vitamin deficiency question of Metabolite (discussed here).  A primary concern with the claim was that use of any homocysteine test satisfied the claim, even if such test wasn’t part of the patent.  However, it is important to note that no one had devised any way to measure homocysteines at all prior to the patent.  The question, then, is not about subject matter, but instead about whether the patentees described and enabled enough of a measurement test to claim the broad scope of the claim.  This is a question I can’t answer, but it is the direction we should be looking.

Computer Software and Mathematical Algorithms

Another problematic area is mathematical algorithms.  There is no good way to determine what is a “pure” algorithm and what is not.  Under rigorous patentability, though, we don’t have to answer that difficult question, nor should we try.  Instead, we ask whether the algorithm “does” something for purposes of utility.  An algorithm standing alone will be unpatentable because it achieves no useful end.  When put into software – which is admittedly a big series of algorithms – the whole program can become patentable because it becomes useful.

Business Methods

As an extension of computer software, business methods are processes used to perform non-manufacturing tasks, such as money management, sales transactions, or other steps that do not transform a physical object.  One type of business method under attack is the tax method patent – claims to tax savings by taking certain steps that minimize taxes under the Internal Revenue Code.

With rigorous patentability, these patents would be allowable subject matter, but few would actually issue.  Business methods are of the proper category – they are processes.  Note that nowhere in the Patent Act is a process required to work on physical objects, and the code explicitly defines a process [Section 100(b)] to include a new use for an existing machine.   Well, inventing a new use for a computer fits that bill. 

Even so, most business methods will run into other patentability problems.  First, computerizing something that is known to be done without a computer is obvious – the Supreme Court addressed this 30 years ago in Dann v. Johnston.  Even if the task was never done manually, it might still be obvious if it is something anyone skilled in the area might think of if only they had a computer (online auctions, for example).  Even then, strict written description and enablement requirements mean that in order to claim a broad business method one would have to really show that he or she had invented the entire field – something that is difficult. 

Evidence bears this out – despite being considered patentable subject matter, a very small percentage of business methods patents actually issue.

These are just three simple examples – there are more in the paper.  My next post will discuss a thorny issue – DNA patenting.

Launching the IP Colloquium

Doug Lichtman over at UCLA has a new venture that I thought might be of interest to our readers and their lawyer friends of the IP persuasion.  The project is called the Intellectual Property Colloquium, and it is essentially an online audio program devoted to intellectual property topics.  It aspires to be something like an NPR talk show, but it will focuse on copyrights and patents, and is aimed primarily at a legal audience.  The programs are neither lectures nor debates.  They are conversations, ideally thoughtful ones, with guests drawn from academia, the entertainment community, and the various technology industries.

Each program lasts one hour; is downloadable; and (the kicker) any lawyer who listens to our programs can earn (free) CLE credit in California, New York, and any state that accepts one of those through reciprocity.  (We should soon be able to offer CLE in all the states, but for now the combination of California, New York, and reciprocity should cover most of our audience regardless.)  Doug hosts each program; and the first one, a lively conversation with Fred von Lohmann of the EFF, is up and ready to go.  A schedule of up-coming shows is already posted on the site, as are a variety of subscription features that provide updates every time a new audio is available.

The website is here: www.ipcolloquium.com.  Sounds like a great project: high-quality, convenient, free, audio CLE, aimed at the sophisticated legal crowd.

Now, why don't we do that in other areas? Or do we?

Rigorous Patentability

Given that patentable subject matter rules are very difficult to apply, I make a modest proposal.  Rather than relying on judicially made limits on the types of patents allowed, we should instead allow any patent that falls into one of the statutory categories, but then more rigorously apply the other patentability standards:  utility, novelty, non-obviousness, and specification.  If these standards are strictly applied, the worries we might have about allowing certain types of patents are mitigated, because bad patents will still be rejected. 

Here is what I mean by rigorous patentability.  Most of these rules already exist in the precedent, even if they aren’t enforced as often as they should be.  Some, however, are a bit of an extension of current law.

Statutory Category: A claimed invention must fit into one of the statutory categories: “process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”   While rare, there are “inventions” that may fall outside these categories.   The question should not be whether a claim is, for example, a law of nature, but instead whether the claim falls into a statutory category.

Utility: A claimed invention must meet “practical utility” standards; the invention must do something.   Thus, process and product claims must lead to an end result that can be used to some practical end, and not just be useful for further study.

Novelty: A claimed invention must be “new.”   No patent should issue for compositions that exist either artificially or naturally, unless they are purified to a point that the invention is different in kind from what exists in nature.   This standard may be difficult to apply, but the focus of patentability decisions should be on novelty and not subject matter.

Obviousness: A claimed invention must be non-obviousness, and the determination of obviousness should not be limited to any particular test - the ability to reject patents as obvious requires flexibility. For example, “brute force” inventions that are the result of computer processing time or repetitive combinatorial experiment rather than invention would usually be obvious.  Compositions created through the application of known processes to known starting materials would also be obvious.  Inventions that were “obvious to try” would be obvious. Inventions that are combinations of known elements that do not provide for functionality beyond the known elements would be obvious.   Of course, not all inventions meeting the above criteria would be obvious – those determinations would have to be made on a case-by-case basis.

Specification: A claimed invention must be supported not only by a detailed enabling disclosure about how one may make and use the invention, but also by a full description of the invention, such that the PTO, courts, and other interested parties can determine whether the inventor actually invented the fullest scope of claimed subject matter and “possesses” all the elements of the claimed invention.

I’m certain this all sounds pretty abstract.  In the remaining couple of posts in this series, I’ll provide some concrete examples that apply rigorous patentability rules to areas that are currently hotly debated subject matter issues.

The Supreme Court and Software Patents

This is a continuation of my series on patentable subject matter.  The first post introduced my argument that judicial limits on patentable subject matter should be abandoned in favor of adherence to the statutory categories: processes, machines, manufactures, and compositions of matter.  My second post discussed how Supreme Court precedent in the area is based on repeated dicta with little analysis.  This post extends that discussion in a particular area – computer software.  Analysis of these cases reveals just how difficult it is for courts to apply judicially developed limitations on patentable subject matter.

The Supreme Court has addressed software patents directly on three occasions.  I address each in turn.

Gottschalk v. Benson, 409 U.S. 63, 67 (1972).  In Gottschalk, the Supreme Court considered a patent relating to the mathematical conversion of “binary coded decimals” into binary pure binary format, a conversion that was known and could be done by pencil and paper.  The opinion’s text implies that the Court was more concerned with the inventor’s failure to describe the process in such a way that made clear that the applicant actually invented the claimed invention.  The real concern appeared to be that the claim fell short of the specification and novelty requirements.  Furthermore, a pure algorithm with no practical purpose was not “useful” as required by 35 U.S.C. §101.

Parker v. Flook, 437 U.S. 584 (1978).  In Flook, the Supreme Court considered a claim related to automobile catalytic converters.  The claimed method was for determining the level of temperature, pressure, or flow rate necessary to trigger an alarm; it included a mathematical algorithm to determine the proper “alarm limit.”   The Court ruled that the only allegedly “new” part of the three step method was the mathematical algorithm.   The Court then held that discovery of a mathematical algorithm cannot be novel even if the algorithm was previously unknown: “Whether the algorithm was in fact known or unknown at the time of the claimed invention, as one of the ‘basic tools of scientific and technological work’ . . . it is treated as though it were a familiar part of the prior art.”    In other words, the Court ruled that a scientific principle cannot be novel, because it must have existed in nature.  The Flook Court admits that its rules will bring no clarity: “The line between a patentable 'process' and an unpatentable 'principle' is not always clear.”

Flook cites Gottschalk v. Benson for the notion that “pure mathematical algorithms” are unpatentable subject matter.  While Gottschalk does say this, it was in dicta that Gottschalk by its own terms called a nutshell of the actual holding, which is that one may not patent a non-useful algorithm where the particular method for carrying out the process is neither described nor novel.  This is an example of unchallenged dicta later parroted as a bright-line rule.

Diamond v. Diehr, 450 U.S. 175 (1981).  Only three years later, in Diamond v. Diehr, the Court again considered whether a patent should issue where a claim used a mathematical algorithm, this time as part of a process for processing and curing rubber.  The process included a well known algorithm relating to the time required to cure rubber.  The patent applicant argued, and the Court agreed, that the process could be novel and useful because the claimed invention described a process for accurately measuring the temperature that was later used in the mathematical algorithm.   Thus, the Court ruled that the patent could not be rejected on subject matter grounds.  The decision did not turn on the mathematical nature of one of the steps; indeed, the process could have contained a non-mathematical step that was well known.   What was important was that such a known step, when combined with the other elements of the claim, became novel and non-obvious.

The Federal Circuit, which hears all patent appeals, currently applies the Diamond v. Diehr standard while simultaneously giving lip service to the notion that mathematical algorithms are not patentable.

These three cases show the difficulty (even folly) of trying to apply judicially created restrictions to computer software.  Sure, it’s easy to say that a mathematical algorithm is unpatentable, but every software program boils down to an algorithm of one type or other.  How do we know whether the algorithm is part of a Diehr process or whether it is a Flook principle of nature?  Do we follow Flook’s point of novelty analysis (which has been rejected elsewhere) to isolate the algorithm, or do we follow Diehr’s holistic analysis to see how the algorithm fits in to a more complex process?

The directly contradictory outcomes of Flook and Diehr show that courts have great difficulty applying the standard.  Many would say that Flook is simply wrongly decided, but it has never been overruled and is still cited today in favor of barring certain patents. 

Rules about “natural phenomena” and “natural products” fare little better.  After all, virtually every invention is based upon or extends some form of natural phenomenon.  Determining when something ceases to be natural can be very difficult, as the recent Metabolite v. Lab Corp. case shows.

There is, however, a better way.  My next post will discuss a way that courts can systematically apply the rules while also not allowing the patenting of algorithms that are too abstract.

Parroting Dicta

In my last post on this topic, I introduced the basic argument that any type of invention should be patentable, so long as it falls into one of the statutory categories – process, machine, manufacture, or composition of matter – and so long as it meets all of the other requirements of patentability.

Understanding why it is considered unorthodox to propose that we follow the statute requires a bit of history of Supreme Court precedent.  I like to think of that history is a string of (for the most part) the right outcomes reached for the wrong reasons.  A by-product of the history is what I call "parroting dicta" - the Court makes a statement that is not necessary (or even related to) the holding, and that statement gets repeated in every case, even though it is not necessary for that case either.  Eventually, lower courts and even the Supreme Court start believing the dicta despite the fact that it has never actually been helpful in resolving a case.

In this post I will explain what I mean.

Patentability Criteria

But first, a short diversion into the specifics of patentability.  In order to receive a patent, the invention (as defined by a patent claim) must be:

• Useful: it must have some practical utility
• Novel: it must be new
• Non-obvious: it cannot be obvious to someone with skill in the subject area
• Described: the patent specification must describe the patent with sufficient detail to show that the patentee really “possesses” the full scope of the claimed invention
• Enabled: the patent specification must enable one with ordinary skill to make and use the full scope of the claimed invention

These criteria underlay nearly every Supreme Court case on patentable subject matter.  One of the first is O'Reilly v. Morse.

Morse and the Telegraph

Samuel Morse is well known as an inventor of the telegraph, though he was hardly the only player in the game.  He did, however, file a patent application on a good version of the system, as well as on his Morse Code.  However, he went a step further – he attempted to claim any process that transmitted printed communications via an electric signal, regardless of the means used.

The Supreme Court considered this claim, and stated:

In fine he claims an exclusive right to use a manner and process which he has not described and indeed had not invented, and therefore could not describe when he obtained his patent.

In other words, Morse failed to meet the description, enablement, and novelty requirements of patent law. Indeed, Craig Nard leads the enablement section of his new casebook with this case.

The case does have some dicta about patenting natural phenomena.  In describing a different case, the Court stated:

And if this had been the construction, the court, it appears, would have held his patent to be void; because the discovery of a principle in natural philosophy or physical science, is not patentable. 

Not exactly deep analysis, and the patent the Court was discussing was easily as broad as Morse's - it covered the idea of blowing hot air instead of cold in order to stoke the fire of a furnace.  The Court said that because the principle was put into effect by a heater, then it was patentable and not a natural phenomenon.  As further evidence that this was dicta, the very next sentence brought the issue of heating cold air right back to novelty:

But after much consideration, it was finally decided that this principle must be regarded as well known, and that the plaintiff had invented a mechanical mode of applying it to furnaces.

In other words, the natural principle was not new, and thus could not be patented, but any implementation of the principle could be patented.

Parroting Dicta

As discussed above, the narrow holding of O'Reilly v. Morse was that one must fully enable a broad invention - the courts will invalidate patents that attempt to claim more than the inventor can show was invented.  Here, Morse did not invent all means of communication by electric current. 

Despite the narrow holding, the case quickly became associated with the inability to patent natural phenomena.  Only a few years later, it is discussed as much in The Telephone Cases, a case that both parroted the dicta but then went on to hold that a patent claiming all means of transmitting voice by modulating a signal was valid, despite its similarity to a claim for all methods of transmitting printed characters by electric signal. 

O'Reilly v. Morse shows how dicta in one case can become “law” in another –  without any real analysis.  The lack of analysis poses a real problem, as shown in the Lab Corp. v. Metabolite example in the last post - even now, no one really knows how to determine what one of these unpatentable natural principles is. 

In my next post in this series, I'll discuss how parroted dicta has failed to yield any consistent answers in computer software cases.

 

Everything is Patentable

Among other posts, I plan to post a multi-part series on an article about patentable subject matter due out in the Tennessee Law Review this Fall.  Because the Federal Circuit is due to issue an en banc opinion on the subject sometime this month, I will likely need to make some changes.  As a result, some aspects of the article are still in flux, and any comments are much appreciated. 

The article makes the modest, though somewhat unorthodox, proposal that the Patent and Trademark Office (PTO) and courts should look to the statute – and only the statute – to decide what types of inventions should be patentable.  Secondarily, bad patents should instead be weeded out by more rigorous application of other patentability rules like obviousness. 

Background

For the uninitiated, the Patent Act sets forth the type of inventions that can be patented in 35 U.S.C. 101: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

However, the statute is not the end of the inquiry. The Supreme Court has stated that abstract ideas, mathematical algorithms, natural phenomena, and products of nature are not patentable. 

What’s the problem?

It seems that no one can figure out what constitutes algorithms, natural phenomena, or products of nature. 

• Algorithms are not patentable – unless they are part of a physical process, but (maybe) not if the algorithm can be calculated in the mind.   
• Combining two products of nature can be patentable, unless (maybe) the two products continue to do what they always did.  Just about everything is made from a product of nature at some point.
• Extracting from a product of nature can be patentable, unless (maybe) the extraction does not sufficiently purify and isolate the new extraction.
• Applying a natural phenomenon can be patentable, unless (maybe) the phenomenon is “simple,” even though no one had discovered it before.  Just about everything is based on a natural phenomenon.

These problems were never more evident than in the recent case of Lab Corp. v. Metabolite.  There, the patentees had discovered a simple but profoundly important natural relationship – elevated homocysteine levels in the human body means a vitamin deficiency.  Of course, there was no test for homocysteines at the time, either.  So, the patentees sought and received patent claims on, among other things, a particular homocysteine test, as well as the process for detecting vitamin deficiencies by testing homocysteines by any method.

In time, other homocysteine tests were developed, and the defendant started using those tests to determine vitamin deficiencies, and the plaintiff sued.  The case reached the Supreme Court without any real argument on whether one could patent a test based on the admittedly natural relationship between vitamin levels and homocysteines.  The Supreme Court asked the parties to brief the issue, and the patent world went wild.  Hundreds of law review articles, essays, press articles, blog posts analyzed the issue and made predictions.

The problem?  After more than 200 years of patent laws, shouldn’t we already know the answer to whether one can patent a test like this – measuring one chemical in the body to determine a particular diagnosis?  Really – we don’t know?  Isn't this pretty important?

The case turned out to be a giant let-down.  The Court dismissed certiorari as improvidently granted, and Justice Breyer wrote a dissent admitting that determining whether something is a natural phenomenon is difficult, but that this patent was nonetheless barred because it was a natural phenomenon.  Hardly a model of clarity.

What’s at stake?

The stakes depend on where you sit.  For some, the issuance of another patent protecting a method for exercising a cat with a laser pointer will lead to the downfall of humanity.  The more specific concern is that allowing patents on certain types of subject matter will lock up entire areas of inventive inquiry - for example, patenting DNA will halt research into lifesaving technology.  In future posts, I will argue that this concern need not be great if my proposal were adopted and also that the costs of subject matter bars can be great.

In any event, the stakes are limited to a few "hot" subject areas: business method and “mental step” patents, computer software, DNA, and the harnessing of natural phenomenon.  I will discuss a few of these areas in future posts, but in my next post I will discuss the weakness of precedent that purports to bar certain types of inventions.

Copyright infringement?

Moved up to the front because of an update at the bottom.

An eminent philosopher from one of the top programs in the country wrote to me the other day with the following concern. He noted that he and countless others have given papers or presented parts of books at law faculty workshops around the country, but he was chagrined to see that various libraries, including those at Georgetown and University of Toronto, were keeping copies of those works and making them permanently available in their libraries even though that's a use or "publication" beyond the implicit license to circulate the work for a one-time audience. To be more precise:

The authors never agreed to have them distributed beyond the participants in the single event at which they were presented. The Law Faculty proceeded to distribute them to libraries without the knowledge or permission of the authors. Hence the entire series consists of bootlegged intellectual property. If you ask any of the authors, you will find that they are completely unaware that their unfinished and uncorrected manuscripts are now in the permanent collections of libraries.

I can understand why that's frustrating, especially if the manuscripts are only drafts.  Even if they were finished products, the libraries should probably be buying the final product rather than using these "bootlegged" versions without authorization. I suspect anyone aggrieved by the situation could probably inform the library in question to remove the work from the shelves, but another problem is one won't necessarily know which schools are doing this.  What do people think? Should law intrude here? Where should the burden fall here?

Update: my correspondent alerts me to the fact that the dissemination goes more broadly than just the library of the particular school where one workshops. That's apparently not the situation. According to my correspondent: " The institution distributed copies to libraries all over the country. So the work was reproduced and distributed by the organizers of the workshop, to libraries where it was cataloged as a publication of the Law Faculty. For example, [one paper] is held, according to Worldcat, by 23 libraries, in each of which it is cataloged as a publication of the Toronto Law Faculty. In all probability, this paper was a working draft that [X] does not wish to have archived permanently in 23 libraries, from which it will be retrievable in perpetuity by inter-library loan from any academic library in the world. "

Io v. Veoh: Harmful to YouTube?

Yesterday's decision in Io Group, Inc. v. Veoh Networks, Inc. is generally being hailed around the blogosphere as a win, or at least a bit of good news, for YouTube in its ongoing infringement fight against Viacom. See the L.A. Times, CNet, Wired, Silicon Alley Insider, Techdirt, TechCrunch. Certainly Google is trumpeting the case as a win.

The piece of the decision most commenters are focusing on is the holding that Veoh's automated reformatting of uploaded materials does not create copies for which Veoh is responsible. That's clearly a good precedent for ISPs that process uploaded content somehow (and follows on the heels of the Second Circuit's similar decision in the Cablevision case).

But there's a key component of the decision that is not at all helpful to YouTube.

The Io court specifically noted that Veoh was able to invoke the DMCA safe harbor, shielding it from liability, because "there is no indication that Veoh has failed to police its system to the fullest extent permitted by its architecture." (Slip op. at 29.) Among those policing efforts was Veoh's practice of using "digital fingerprint technology" to "prevent[ ] the some infringing content from ever being uploaded again." But as I've said before, I believe the real driver behind Viacom's suit to be its claim that YouTube has filtering technology that it refuses to use to police Viacom's content. From Paragraph 7 of the Viacom First Amended Complaint:

Moreover, YouTube has deliberately withheld the application of available copyright protection measures in order to coerce rights holders to grant it licenses on favorable terms. YouTube’s chief executive and cofounder Chad Hurley was quoted in the New York Times on February 3, 2007, as saying that YouTube has agreed to use filtering technology “to identify and possibly remove copyrighted material,” but only after YouTube obtains a license from the copyright owner.... Those who refuse to be coerced are subjected to continuing infringement.

So Viacom's claim is that YouTube is not policing its system to the fullest extent permitted by its architecture, and in fact is holding some tools back as a bargaining chip. To the extent Io and other decisions are holding that, to preserve its DMCA immunity, an ISP has to police its system to the best of its abilities, YouTube may be in trouble (assuming Viacom's facts are accurate).

It's important to note that in the Io decision, the implicit requirement to police the system comes up in the context of discussing vicarious liability, which is not immunized under the DMCA safe harbor. And vicarious liability has two prongs to it, (1) the "right and ability to supervise the infringing activity" and (2) a "direct financial interest" in those activities. The Io court's discussion of policing occurred in the context of addressing the first prong. The second prong would still need to be demonstrated, and that would likely require a showing that, e.g., YouTube's ability to sell ads was somehow enhanced by the infringing content. Maybe that would succeed, maybe it wouldn't.

But I think the same "duty to police" theory may apply under the core of the safe harbor itself, Section 512(c)(1)(A)(ii). Section 512(c)(1) was not at issue in Io because Io never actually even sent a takedown notice; after spotting infringing files on Veoh's site, it decided to proceed directly to an infringement complaint. (Is this another case of, perhaps, some pre-1998 law school grads being a menace?) Section 512(c)(1) says that, in order to keep its immunity, an ISP hosting infringing content must do a few things, one of which is "act[ ] expeditiously to remove, or disable access to, [infringing] material" if it becomes "aware of facts or circumstances from which infringing activity is apparent." Congress called this a "red flag" provision in the legislative history; an ISP cannot simply ignore red flags indicating infringement and wait for the takedown notices to flow in, if it wants to preserve its immunity.

Does choosing not to use a filter that would screen out additional copies of a work cited in a takedown notice constitute ignoring a red flag? Io suggests that the answer may be yes, and if so, YouTube may be in trouble.

Arts as Game

A couple of weeks ago I did a four-part series on the Scrabulous litigation (Part I, Part II, Part III, Part IV), which ended with musings about the relationship between games, expression, and copyright. Games, like copyrightable works, can be "played;" but despite this similarity in terminology, I argued that games are fundamentally different from other forms of expression, a fact that justifies the traditional rule that games are not copyrightable. The artistic expression in games does not encompass the actual gameplay, which crucially depends on the involvement of the player; the expression only sets the conditions for game play. Therefore, a game that "plays the same," but does not sufficiently copy the individual elements of another game (board, pieces, rules sheet), is not infringing. The art in games is in the environment, not in the game itself.

Yesterday's New York Times Book Review flips that analysis around. In a review of Michael S. Gazzaniga's Human: The Science Behind What Makes Us Unique, Daniel Levitin notes Gazzaniga's intriguing hypothesis concerning the evolutionary purpose of art:

Gazzaniga doesn’t shy away from hard problems, like why humans, alone among species, have art. The attraction to stories, plays, paintings and music — experiences with no obvious evolutionary payoff — is puzzling. “Why does the brain contain reward systems that make fictional experiences enjoyable?” he asks. Part of the answer, he argues, is that fictional thinking engages innate “play” modules that enhance evolutionary fitness (that is, the ability to propagate one’s genes) by allowing us to consider possible alternatives — hypothetical situations — so that we can form plans in advance of dangers or even just unpleasant social situations. “From having read the fictional story about the boy who cried wolf when we were children,” he writes, “we can remember what happened to him in the story and not have to learn that lesson the hard way in real life.” Art may be more than a leisure activity. Artistic, representational thinking could have been fundamental in making us the way we are. As Gazzaniga concludes, “The arts are not frosting but baking soda.”

So putting my argument and Gazziniga's together, play is not art, but art is play. What gives?

Gazziniga's hypothesis, at least as described in the review, seeks to create an evolutionary payoff for art in that it encourages advanced planning for life-threatening or at least status-threatening situations. One objection might be that that only captures a small amount of art. So, we might be better prepared to deal with large, insectoid creatures while stuck on a remote cargo vessel (lesson: never breach quarantine!), or perhaps a neighbor you suspect of murder (tip: keep a lot of flashbulbs handy), but what does Monty Python and the Holy Grail prepare us for? Or Beethoven's Fifth Symphony? Or Mondrian's Composition with Red, Yellow, and Blue?

Of course, a good response might be that, once the "play module" that allowed imagining threatening situations was created, it also allowed all sorts of other activity not directly related to evolutionary fitness, much in the same way thumbs may have originally evolved to hold tools, but now allow us to hitchhike and confirm approval.

I don't think that issue needs to be run to the ground because I don't think the two theories are inconsistent. Gazziniga's argument seems to be, not so much that art itself is play, but that it creates the environment for play -- the "play" being the thoughts that occur in the brain of someone listening to a tale, or viewing a cave drawing, and empathizing with the protagonists or imagining similar events happening to them. This sort of reaction to the work -- the internal appreciation of a copyrighted work as it is in play -- is not within the scope of copyright for the same reason game play is not. Game play is the interaction between player and game, and thus not fixed within the game's expression; neither is the imaginative response to a work being displayed or recited. It might intrude on the copyright owner's rights, of course, if that imaginative response is then set down in some sort of permanent medium somewhere, because it might then act as a vehicle for the further transmission of the original author's expression; and that opens the door to some extremely difficult questions now that recording thoughts in tangible media is so easy. But the thought itself is not within the scope of copyright -- even if a person has such a good memory that their brain is a "material object[ ] ... in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated" -- the definition of a "copy."

Thoughts on the Scrabulous Lawsuit, Part IV: A Theory of Copyright and Games

This is Part IV of my 3-part series on Hasbro's suit against the creators of Scrabulous. See Part I ("The Complaint"), Part II ("The Mystery of Alfred Mosher Butts"), and Part III ("The Question of the Copyrightability of Games").

In my last post, I asked what the purpose of the traditional blackletter rule that "games are not copyrightable" is. That's the rule that has Hasbro pointing to registrations in the game board, the rules, the player's dictionary -- everywhere except Scrabble itself. One common response is that the traditional rule reflects the exclusions from copyrightability contained in § 102(b) of the Copyright Act  -- four or five of which delineate the boundary between patents and copyrights. In Part III, I questioned that common assumption; it is not apparent to me that games per se fall within any of the exclusions, unless the exclusions are made so broad that clearly copyrightable works such as music and plays fall within the exception. (I've received some fascinating feedback on that issue on and offline.)

Indeed, I ended by noting the various similarities between games, music, and plays. All are "played" by "players" following the instructions -- "rules," if you will -- they are given. What's the justification for a rule that says that one of these forms of entertainment is not copyrightable, but the other two are? The answer is to move away from the exclusions of § 102(b) and focus instead on the scope of copyright in § 102(a). Games are not copyrightable because the nature of the transmission of information from creator to audience is importantly different compared to music and plays. Copyright does not reach the core of the gaming experience in the same way it reaches the core of the musical or play-watching experience.

There is creative expression (itself a notoriously difficult phrase) in games, music, and plays, and all three media communicate that expression to their intended audiences. The difference between the three, however, is the connection between the expression that is contained (or "fixed," as copyright lawyers say) in the work and the intellectual experience of the audience. Music and plays encode and transmit a protected aesthetic or intellectual experience from author to audience. Games, however, do not transmit the game-playing experience; they merely create the conditions for it to occur. The game-playing experience comes out of the interaction between the players (who are also the audience) and the game. That experience is therefore not transmitted through the medium of the game materials; it emerges in game play. In other words, while the fixed expression in sheet music and scripts for plays "contains" the music or the play, the fixed expression in a game -- the rules, the board, etc. -- allows too much flexibility to actually "contain" any particular instance of a game.

This is actually the opposite of the problem with materials excluded from copyright under § 102(b). Whereas such materials are excluded from copyright because, in essence, they are too detailed about the activities of the users, games are excluded from copyright because they are not detailed enough. This is true even though sheet music, scripts, and other works allow considerable flexibility in performance, as should be apparent to anyone who's ever seen different productions of Hamlet, or compared Leonard Bernstein's positively lethargic version of "Lacrymosa" from Mozart's Requiem to the more normal pacing of other versions, or compared Cream's "Sunshine of Your Love" to Jimi Hendrix's. Nevertheless the aesthetic or intellectual experience in each instance is substantially similar; Bernstein's "Lacrymosa" is still "Lacrymosa."

That's not the case with games. One game of Scrabble is not the same as a different game of Scrabble. There are similarities of course, but they occur at a higher level of abstraction -- in the same way "Lacrymosa" is similar to "Dies Irae." Mere similarity by itself is not enough unless it is similarity in copyrightable expression. Frank Mahovlich is similar to Pete Mahovlich, but that doesn't make Frank Mahovlich infringing. The only similarity in the game-creator's expression between two game sessions is in the elements of the game that were used -- the rules sheet, the game board, the pieces, the cards, etc. In other words, the game's constituent elements are copyrightable, but the game is not.

The difference between games and music and plays is most evident in how they are usually experienced. Music and plays are normally communications through the "players" to an audience of other people. There are exceptions, of course; someone may purchase sheet music purely to play at home. In that case it would be a private performance and beyond the scope of the copyright. But the basis for the protection of music and plays -- and books, and films, and art, and all the rest -- is that the author is given the exclusive right to communicate those expressions to the public, through reproduction, adaptation, public distribution, public performance, and public display. With games, the players are the audience itself; there is no further communication of the game-playing experience. (You can watch a game being played, but watching a game is not playing the game.) Therefore, the communication of the author's expression happens further up the chain -- at the level of the game publisher. A game session is not a "performance" of the game, public or private; it is outside the scope of copyright altogether. That is the purpose of the blackletter rule.

I may do one more post in my increasingly inaccurately named 3-part series, on how this all applies to video games.

Thoughts on the Scrabulous Lawsuit, Part III: The Question of the Copyrightability of Games

In Part I of this series, "The Complaint," I considered Hasbro's complaint in its suit against the creators of Scrabulous, with a particular focus on the copyright claim. In Part II, "The Mystery of Alfred Mosher Butts," I discussed a potential historical problem with that claim, namely that it is not clear that the board was published by Butts, the original author, with the required copyright notice, which would invalidate the copyright in at least the game board (Hasbro's strongest claim).

Today I want to focus on the rule that's forcing Hasbro to locate its copyright in the game board, rules, tile set, Scrabble dictionary, etc. -- everywhere except the Scrabble game itself. To wit: "Games are not copyrightable." See Nimmer on Copyright, § 2.18[H][3][a] (citing sources). Why is that the rule, and does it make any sense?

One thing that immediately stands out about the rule that "games are not copyrightable" is that it's a very narrow rule. As the Nimmer treatise puts it, "It is said that games are not copyrightable, but this general proposition is subject to qualification." Id. (emphasis added). The qualifications are extensive. As I mentioned on Friday, while the "game" is not copyrightable, all of its constituent elements are -- the board, the playing pieces, the statement of the rules, the box art, playing card designs, etc. This makes the rule a rather odd one. It's a bit as if there was a rule that "novels are not copyrightable," but a novel's plot, characters, setting, dialog, and cover art all were. What would be the point of such a rule? Nimmer's introduction of the rule -- "it is said" that game are not copyrightable -- seems to indicate his skepticism of its value as well. However, I think the rule has a purpose; it demarcates a difficult boundary for the copyrightability for games, which otherwise would be susceptible to simplistic analogies to other creative works.

The cases in which the traditional rule is stated offer little help in determining a precise theoretical basis for it. Many of those cases date from the 1920s and 30s, and they often involved simple games without their own boards or playing pieces -- Acey-Deucy, roller derbies, promotional contests, basketball tournaments, and variants of tiddly-winks. Almost none of the cases provide a reason for the rule, other than that previous cases have said so. The justification that is most often given in the literature is that the game itself is essentially equivalent to its rules; and the rules of a game are instructions, like recipes, which are also uncopyrightable.

That is, the story goes, it's Section 102(b) that bars copyright in games. Section 102(b) bars copyright in "any idea, procedure, process, system, method of operation, concept, principle, or discovery." The rules of a game are like the instructions in a recipe -- both are commands to human readers about how to behave. Recipes are excluded under § 102(b) as "processes," a series of steps to accomplish a certain result, namely the finished dish. Games might be thought of as "processes," namely a series of steps necessary to produce entertainment for the players; or perhaps a "method of operation" of the game pieces (if any); or perhaps a "system," like Selden's accounting system in Baker v. Selden, for governing leisure activity. See Nimmer, § 2.18[H][3][a] ("[N]o copyright may be obtained in the system or manner of playing a game....").

There are two problems with this theory. One is that it is not at all clear which, if any, of the § 102(b) exclusions games fit under. The rules of a game are not instructions for play in the same way that recipes are instructions for making a cake; they do not fully specify what occurs during play. Game rules are thus not a "process" or "procedure" for carrying on a game. Think about Scrabble. The rules provide the initial state of the game -- X players, 7 tiles per player randomly drawn from the fixed set of 100 tiles, with a procedure to determine who goes first. The rules then state it is the first player's turn, and place some boundary constraints on what the player may do (e.g., he or she must place a word on the center square). But within those very broad constraints, the rules do not specify at all what word the player should put down. He or she is free to put down "it" or "tea" or "hate" or "tithe," all from the same draw of 7 tiles. The second player has even more freedom. If a computer were executing the Scrabble "process," it would grind to a halt without further input.

Perhaps, then, as Nimmer suggests, the game is a "system" of playing. The meaning of "system" in § 102(b) is a little obscure; the dictionary definitions include "1: a regularly interacting or interdependent group of items forming a unified whole <a number system> ... 3a: an organized or established procedure <the touch system of typing> b: a manner of classifying, symbolizing, or schematizing <a taxonomic system> <the decimal system>...." A game doesn't seem to be an "organized or established procedure" for the reasons considered above; and while it may be an "interdependent group of items forming a unified whole," excluding all "unified wholes" from copyright protection (e.g., movies?) seems overly broad.

Pamela Samuelson, in her fascinating recent study of the history and meaning of § 102(b), was able to conclude only that "the game case law ... is consistent with [the § 102(b)] exclusions" (emphasis added), suggesting that games might be excluded under the spirit of § 102(b) even if they are not within the letter. But even that is not obvious. The § 102(b) exclusions, as Samuelson makes clear, have their origins in Baker v. Selden, a case that at bottom is about keeping the realms of patent and copyright distinct. Selden's copyright in his book about a method of accounting did include the practice of that method, including any forms he devised that were necessary for that method. The reason was that such methods were subject to the more stringent requirements of getting a patent in order to be protected. Under modern caselaw, however, the boundary of patentable subject matter may not include a game per se. In order to be patentable, a process or algorithm ("procedure") must produce a "useful, concrete and tangible result." State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998). The rules of a game, however, just produce the entertainment of the game. State Street Bank stretched its test a little to find that updated mutual fund prices are a "useful, concrete, and tangible result." But it would seem to stretch that principle past the breaking point to say that having fun is a "useful, concrete, and tangible result."

If "process" and "system" are broad enough to encompass games as methods of producing entertainment, then that leads to the second difficulty with § 102(b) as the basis for the traditional rule -- namely, that interpretation would swallow forms of works that are clearly copyrightable. Two venerable forms of copyrighted works come in the form of instructions: sheet music and scripts for plays. Why should those be protected, but games are not? Even the terminology used to describe all three activities indicates similarity. Games, music, and dramatic works are all "played" by "players" who follow the instructions they are given. The Copyright Act clearly recognizes the play of music or a script as within the scope of the copyright owner's exclusive rights -- the right of public performance. Yet there's no rule that "music composition is not copyrightable" or "plays are not copyrightable." Perhaps, as Thomas Hemnes suggests, "'Copyright does not protect games' is an example of a principle of law that may have grown larger and more rigid than the facts of the seminal cases warranted."

This post was harder to churn out than I thought it would be, given that I've been mulling over this question for 5 years. So I'm going to end here, and pick up again tomorrow in Part IV of my 3-part series: "The Answer to the Copyrightability of Games."

Thoughts on the Scrabulous Lawsuit, Part II: The Mystery of Alfred Mosher Butts

In Part I of this series, I reviewed the Hasbro complaint against RJ Softwares and the Agarwalla brothers, the creators of Scrabulous, and noted that the strongest copyright claim appears to be for infringement of Scrabble's copyrighted game board. Indeed, given the Boisson v. Banian Ltd. case from the Second Circuit, Hasbro would have a pretty strong case, except for just one thing: Alfred Mosher Butts.

First, a quick link wrap-up, as developments in this case continue: The Washington Post interviewed several IP lawyers who said roughly the same thing the commenters on my first post said: "look and feel" will win the day for Hasbro. Meanwhile, the Agarwalla brothers -- the creators of Scrabulous -- have launched a revised Facebook application, "WordScraper," that features a different board. Pictures and analysis at IPTAblog. What's interesting about the new board, however, is that players can customize it -- including, if they choose, to resemble the traditional Scrabble board. That brings up shades of the City of Heroes lawsuit, as well as the old K.C. Munchkin case (see the critique of that case by Thomas Hemnes).

But on to the main event, the mystery of who created Scrabble. Paragraph 9 of the Hasbro complaint contains this rather intriguing set of allegations:

The origins of the SCRABBLE^® crossword game may be traced to the depths of the Great Depression, when in 1931 an out-of-work architect in Poughkeepsie, New York, named Alfred Mosher Butts invented a game he called "Lexico." Over the next seventeen years Butts tinkered with the design and play of Lexico, hand-crafting over 200 games. An entrepreneur and purchaser of one of Butts' early hand-made games named James Brunot struck a manufacturing deal with Butts in 1948. Brunot changed the game's name to "SCRABBLE" and filed copyright and trademark registrations for the game in December 1948.

That's an odd paragraph to put in the complaint, so I assume Hasbro's lawyers are following the advice to draw out negative testimony on direct, so to speak. There's a couple of problems here. One is that, if you look at the 1948 copyright registration for the game board, Alfred Mosher Butts isn't mentioned; the sole author is listed as "James Brunot." Histories of Scrabble, however, including one from NPR, make clear that Brunot made only minor changes to the game, chief among them giving it the name "Scrabble." The NPR report states that Brunot also "added the 50-point rule for playing all seven tiles at once, made the center square a double word score, [and] changed the colors of the board"--possibly enough to make him the author of a derivative work. The underlying work, however, including the game board, was authored by Butts several years before it was registered. That alone is unlikely to invalidate the copyright registration; Nimmer's discussion of this issue indicates that courts have been pretty forgiving of errors in registrations, even errors as to the author of a work. Nimmer, § 7.20[B]. The one exception is when "the claimant wilfully misstates or fails to state a fact that, if known, might have caused the Copyright Office to reject the application."

It's possible something like that occurred here; certainly the Agarwallas' lawyers should look into it. Scrabble was first published under the 1909 Act, and the 1909 Act, unlike the modern Copyright Act, required copyright owners to meet certain formalities. They had to place a copyright notice on all published works, e.g. "© 1956 Selchow & Richter." Failure to place a proper notice on a published work could lead to invalidation of the copyright. 1909 Act § 10.

With these facts in mind, the attribution of sole authorship to James Brunot in the 1948 registrations begins to look a little suspicious. It hides the fact that Butts was the actual author of the game; and it therefore hides the fact that Butts created several versions of the game in the 17 years prior to the registration. Those earlier versions need to be examined to determine if there was publication without notice.

And in fact it appears that Butts did sell at least a few hand-made copies of the Scrabble gameboard under the title "Criss-Cross Words" in the 1940s. (He also sold sets of tiles in the 1930s under the name "Lexico," but Lexico lacked a board.) Selling means publishing. NPR produced a report on the creation of Scrabble as part of its "Present at the Creation" series six years ago; the web version of the story contains a picture of the "Criss-Cross Words" board, at right. The board was constructed from blueprints pasted onto a checkerboard. NPR states that the board in the image, from "circa the mid-1940s, is the version Butts sold on his own. The layout and tile distribution are almost identical to today's game." Looking at the image, there's a clear Patent Pending notice at the bottom of the board; there's also something in the lower left-hand corner. It's hard to tell whether that's a copyright notice or not, but if it isn't, and the notice didn't appear anywhere else, Hasbro has problems.

There was an exception in the 1909 Act for publications where the notice was omitted "by accident or mistake ... from a particular copy or copies." 1909 Act § 21. That exception would probably not be much help here, however, because it only applies "[w]here the copyright proprietor has sought to comply with the provisions of this title with respect to notice." Id. The exception does not apply where all of the published copies were without notice, even if the number of published copies was small. Nimmer § 7.13[A][2]. So if all of the Criss-Cross Words boards lacked the copyright notice, Hasbro has a formalities problem.

There was also a requirement in the 1909 Act that a published work be registered with the Copyright Office "promptly," § 14, but that requirement was largely toothless after the Supreme Court's decision in Washingtonian Publishing Co. v. Pearson, 306 U.S. 30 (1939). So the delay in registering the Scrabble game board would not likely "have caused the Copyright Office to reject the application," even if the Scrabble board was published several years before it was registered. But the notice requirement has more bite. Even though the notice requirement was modified in the 1976 Act and eliminated as a condition for copyright in 1989, neither change brought back works that had already fallen into the public domain due to improper notice. So if the Scrabble game board was never properly copyrighted to begin with, there is nothing Hasbro can do now to change that.

Tomorrow: This series concludes with the question I began with: What's the purpose of the blackletter rule that games are not copyrightable? What does that mean for the copyright protection of games, including video games?

Thoughts on the Scrabulous Lawsuit, Part I: The Complaint

So Hasbro finally pulled the trigger on the Scrabulous lawsuit that, no doubt, their lawyers (Patterson Belknap) have been working on for months. The New York Times Bits Blog has coverage, Mike Madison has an interesting high-level view, and IPTAblog has the complaint. This case is in a sweet spot for me in terms of research and teaching interests: games, copyright, and litigation. So I'm going to celebrate with a 3-post series on the Scrabulous case.

Copyright claims involving games are fascinating because of the often-stated but rarely explained blackletter rule: "Games are not copyrightable." Why is that the rule, and how does Hasbro get around it? The second question turns out to be much easier to answer than the first, so I’m going to tackle them in reverse order. In this post I’ll break down Hasbro’s copyright claim into its constituent bits, offering predictions about the likely and doctrinally most coherent outcomes. (Those are not the same things.) Hasbro also has trademark claims, which may be somewhat stronger, but I’ll mostly leave those to others. In Part II (Monday), I'll delve into a minor mystery, flagged in the complaint, that involves the copyright registrations for the game. In Part III (Tuesday), I’ll return to the blackletter rule and consider the justification for it, a subject I find enormously interesting and which is the basis for a paper I’ve been working on for some time.

Today's bottom line: The copyright in Scrabble is surprisingly weak, although if I had to bet, I would bet on Hasbro to win.

First off, it’s worth noting that Hasbro may have already achieved its goal for this litigation. Contemporaneously with its complaint, Hasbro sent a Section 512 takedown letter to Facebook; Scrabulous then pulled its Facebook application in North America. So, without even moving for a preliminary injunction, Scrabulous is off Facebook and Hasbro's licensed alternative is up in its place. Sure, Scrabulous is still available at scrabulous.com, but my guess is that Scrabulous was dependent on integration with Facebook for a large amount of its traffic.

On to the copyright claim. Although the rule is that games are not copyrightable, Nimmer § 2.18[H][3], many of their constituent elements are. So, a specific description of the rules of a game is copyrightable; so is a game board, and game pieces. Hasbro claims copyright--actually, multiple copyrights--in the elements of Scrabble. Those elements, as described in the complaint, are:

1. The rules of Scrabble.
2. The set of 100 letter tiles, with its specific distribution of letters and their assigned point-values.
3. The Official Scrabble Players Dictionary.
4. The game board, with its distinctive pattern of colored squares.
5. The play of the game.

1. The rules of Scrabble. The Scrabble rules, as printed on the inside of the game box, have been copyrighted since 1948. While game rules per se are not copyrightable, under the doctrine that games are not copyrightable, a specific description of the rules can be. The makers of Scrabulous could, if they wanted, put the rules of Scrabble in their own words, taking care not to copy any of Hasbro's rules verbatim. To the extent duplication is unavoidable, the merger doctrine would bar enforcement of Hasbro's copyright. (This was the exact issue in Morrissey v. Procter & Gamble Co., 379 F.2d 675 (1st Cir. 1967).) But the problem for Hasbro's copyright claim here is even more basic than merger issues; the problem is that the Scrabulous site does not reproduce or display any copy of the rules at all. Instead, Scrabulous apparently linked at one time to the Scrabble official rules as contained on Hasbro's own website. But that's hardly infringing, any more than it would be infringing for Scrabulous to say, "Go look up the Scrabble rules at your local library."

The Scrabulous link (assuming it existed) might be contributory infringement, if Scrabulous linked to an infringing copy of the rules and encouraged players to go look at that (thereby causing their browsers to make a further infringing copy). But that's not the case here. Nor is there anything in Hasbro's website terms and conditions that bars use of its rules for playing other games. Even if there was, and even if the terms were judged an enforceable contract (iffy at best), a breach would not constitute copyright infringement.

Bottom line: This claim seems like a nonstarter.

By the way, LITIGATION TIP if you are assigned to build a case against a website: the Hasbro complaint contains a number of allegations about the past appearance of Scrabulous "on information and belief." I have to believe Hasbro and its outside counsel have been watching Scrabulous closely for months now. It seems that someone forgot to save copies of the site! The problem is that websites change their appearance, particularly if litigation is in the air. You should not only print out all of the pages you are interested in every time you visit, but also save electronic copies of the HTML code as well  if things like links and metatags will be at issue.

2. The set of 100 letter tiles. This seems a little more promising. Hasbro can claim a compilation copyright in the set of 100 letter tiles that comes with every game, including their assigned point values. Courts have been thrown off balance by compilation copyright claims; they are unable to tell what the copyrightable expression is in a compilation, and thus have fallen back on finding anything "creative" in the compilation to be protected. But creativity is not a good basis for determining copyrightability; after all, patents require creativity, but you're not supposed to be able to get patent and copyright protection for the same features of the same thing. Nevertheless, some courts have held creatively derived product numbers in a parts catalog to be protected, as well as codes in dental billing form and a set of five digits used in software. The Second Circuit has held a set of nine pitching statistics and prices for used cars protected. The set of 100 letter tiles will almost certainly get some protection.

However, Hasbro faces a significant difficulty here. I don't see any evidence that a compilation copyright in the letter tiles has ever been registered. The two 1948 copyrights attached to the complaint, when they were renewed in 1976, were identified as copyrights in the rules sheet and the game board. If copyright in the tiles wasn't registered, they can't be the basis of a suit.

Even if that difficulty can be overcome, the protection for compilations is thin--it protects against exact duplicates and close copies, but not anything further afield. Does Scrabulous copy the set of 100 letter tiles? Scrabulous presumably limits the number of, say, "S" tiles that can be given out during a game to 4, just like Scrabble; and it further must contain a listing somewhere in the software of how much each letter is worth. So Scrabulous contains the same data as a Scrabble tileset, albeit in a different format and with a different arrangement.

Doctrinally speaking, I'm not sure that's enough. However, the Second Circuit is the court that held that it was obvious that a Seinfeld trivia book infringes on the Seinfeld television programs. If there's money being made off of someone else's copyright in the Second Circuit, don't bet against the copyright holder. Prediction: assuming Hasbro can show the tiles are part of its registered copyrights, it will win on this issue.

3. The Official Scrabble Players Dictionary. I'm not sure I get this claim. Hasbro states in its complaint that:

Hasbro and its officially licensed and supervised National SCRABBLE® Association developed and published the National SCRABBLE® Association Official Tournament and Club Word List ("OWL") for tournament play and The Official SCRABBLE® Players Dictionary ("OSPD") for home play.

According to Hasbro, the OSPD "is not just a compendium of English words, and choices reflecting original judgments were made." For example, proper names, geographic designations, and vulgar and offensive words were removed. To the extent these excisions can be characterized as "creative," then under the (bad) caselaw I referred to above, there's a valid compilation copyright in the OSPD.

There's a couple of massive problems with the infringement claim here. The first is that Scrabulous hasn't actually reproduced the OSPD; they've reproduced the OWL, which is a list of words rather than a dictionary and which is used in tournament play. According to the complaint, the OWL "is based on the OSPD but includes the vulgar and offensive words removed from later editions of the OSPD...." The registration attached to the complaint, however, is for the OSPD, not the OWL. Possibly the OWL is a derivative work of the OSPD, but since compilation copyrights are thin, any departure from the copyrighted work lessens the chances of a successful infringement claim considerably.

But there's a bigger problem. Hasbro doesn't own the copyright in the OSPD! At least, not according to the complaint and to the registration. Rather, the National Scrabble Association is the author of the OSPD. Sure, the complaint says they were "officially licensed" to do so. I presume that means they had a trademark license. No copyright license from Hasbro to the NSA would give Hasbro ownership of a work authored by the NSA, however, unless the NSA wrote the OSPD as a work for hire or assigned the copyright -- and there's nothing either in the complaint or the registration that says that.

Bottom line: Hasbro can't sue Scrabulous over a copyright it doesn't own.

4. The Scrabble game board. Hasbro's strongest copyright claim is that Scrabulous copied their copyrighted game board, which is a copyrightable graphic work. The Second Circuit has particularly favorable caselaw on this issue; in Boisson v. Banian, Ltd., 273 F.3d 262 (2d Cir. 2001), a panel of the Second Circuit found a quilt with letters of the alphabet on it in colored blocks, arranged into 6 rows of five blocks each (plus 4 icons at the end), was infringing on another quilt of 6 rows of 5 blocks each, where some of the letters and/or backgrounds were the same color or shape (but not the 4 icons). Obviously the alphabet itself is not copyrightable, and a quilt of alphabet letters is not infringed by all other alphabet quilts, but the court found that the "total concept and feel" of the coloring and arrangement of these two particular quilts was close enough that they were infringing as a matter of law (the case never got to the jury).

That's strong stuff, and the two game boards at issue here are fairly close. Both originally featured red, pink, blue, and light blue squares in the same pattern, labeled "Double Word Score" (Scrabble) (Figure 1) or "2x word" (Scrabulous) (Figure 2) and the like, with a pink square with a five-pointed star in the middle. Scrabulous's board is now more stylized, with no labels; but the "X" pattern of squares and the colors are roughly similar.

Boisson's granting of summary judgement on appeal to the plaintiff in that case was a mistake, but overturning Boisson hardly helps the Scrabulous team -- the case would then just go to the jury, and I doubt ordinary jurors are going to be able to weed out the unprotectible elements of the Scrabble game board any better than the Second Circuit can.

Bottom line: Hasbro a pretty strong case here, at least until the Second Circuit reviews Boisson en banc, except for one little mystery, which I'll take up in Monday's post.

5. The play of the game. I assume the attorneys at Patterson Belknap are no dopes. So why do they make such a big deal out of the fact that Scrabulous has no rules for how to play the game on the Scrabulous website, but instead links to the official Scrabble rules? Possibly that fact may assist their trademark claims by evidencing likelihood of confusion as to source or authorization. But the complaint also notes that rules are copyrighted, attaches the registration certificate, and goes into some detail as to what the rules of Scrabble are. I think all that is there, not to support a claim that the rules have been infringed, but to support a claim that Scrabble and Scrabulous are the same game. That is, when you play Scrabulous, you're playing Scrabble. One CNET reporter found this argument convincing, concluding that the link to the official rules indicates that "Scrabulous really does mirror Scrabble letter-for-letter." Even the defendants have apparently conceded that "It's not really different." (¶ 34.)

In other words, the "total concept and feel" of the two games is the same. The greatest similarity is not between the boards per se, or the rules, or the tiles considered in isolation; it's the board being used with the tiles and the rules to play a game. Scrabulous in play is instantly recognizable as Scrabble. But if the blackletter rule that "games are not copyrightable" means anything, it means that this similarity--the two games produce the same gaming experience--is not cognizable under copyright law. I've suggested a number of areas where the Second Circuit could stand to revisit its precedents--is this one of them? Why not protect games as works of authorship? I'll consider that in Part III.

Until the doctrine is reconsidered, Hasbro should theoretically lose on any broad-based claim that the two games are the same. However, I doubt the judges considering this case, and the jury if it ever makes it that far, will be able to avoid being swayed by the overall similarities. Bottom line: Even if Scrabulous is right on the law, winning will be difficult.

Garfieldlessness

Two years ago that seem like two decades, I wrote a Prawfs post about the Nietzsche Family Circus, then the internet fad du jour, and still a phenomenon that gets linked on blogs worldwide daily (so its creators tell me). The present-day incarnation of the NFC is Garfield Minus Garfield (“G-G” for short), a site that takes Garfield cartoons and removes from them their protagonist feline, leaving only the cat’s loser owner, Jon. The result is astounding; all of a sudden, an unfunny, dated comic strip becomes a dark (and hilarious) feature about a lonely, possibly insane man. (NB: there is another variant of G-G that predated it, and which leaves Garfield in but eliminates his thought-dialogue. I think the latter is actually funnier. See if you agree.) Does this have anything to do with law? I actually think so. Three thoughts below the fold.

First, however brilliant G-G may be, it’s clearly infringement. The refurbished strips reproduce most of a copyrighted graphical work, and the fact that they aren’t complete reproductions can’t save them. G-G’s likely answer to this is that the infringement is defensible via the fair use doctrine, and by my lights this argument is a clear winner. G-G foundationally transforms Garfield from being about the lazy cat’s mediocre wisecracks to a sad tale about Jon’s social isolation; if that’s not transformative, I don’t know what is. Nor does G-G supplant the market for the original strip; if anything, it’s revived interest in traditional Garfield, and the comic strip is now looking to partner with the website. Looked at in another light, G-G almost certainly falls into the favored category of parody as defined by the Supreme Court in Campbell v. Acuff-Rose, 510 U.S. 569 (1994). The Court held there that parodies (derivative works that mock the original) tend to be fair uses, while satires (derivative works that use the original as a vehicle to mock something else) tend not to be. The parody/satire has few if any supporters in the academy, but I think the best way to understand it is in terms of necessity. Parodying a work requires that you refer to and incorporate part of it (you can’t, for example, make fun of the Garfield comic strip without using characters from the strip itself). But satirizing some social phenomenon using a popular but unrelated work doesn’t require the unlicensed infringement of the latter (hence courts have rejected, e.g., a parody of the O.J. trial expressed by means of a “Cat in the Hat” theme).

Second is a descriptive point about the peculiar way in which G-G is transformative. Most fair uses alter the original by blending it with material of the user’s creation. G-G is different in that it is purely subtractive, changing the original only by taking away from it (consider also in this vein “The Phantom Edit”, a modified version of “The Phantom Menace” that removed references to the awful Jar-Jar Binks character). The only litigated example I can think of this kind of subtractive fair use was the CleanFlicks case from a few years ago, a challenge to a company that offered subscribers versions of feature films scrubbed of possibly offensive content. CleanFlicks lost that one because (among other things) the sanitized versions of the films were held insufficiently transformative to support a fair use defense. G-G is clearly more transformative; it changes the entire tone and content of the Garfield strip, while the scrubbed CleanFlicks films were much the same save for an excised F-bomb or exposed boob here and there. Still, copyright law tends to have a fixation on originality (horrible doctrinal pun not intended), which is usually equated with the addition of some material that is generated by the author. Whether it’s an author trying to show that his work meets the constitutional standard of originality, or a second comer seeking to show that his creation amounts to a derivative work, courts typically require some quantum of added material in order to find a work original. See, e.g., Lee v. A.R.T. Co., 125 F.3d 580 (7th Cir. 1997). But as G-G illustrates, adding original material is not the sine qua non of creativity; one can create simply by removing. G-G, and the idea of subtractive fair use (or, I suppose, subtractive creation more generally), complicates our familiar assumptions about what originality means, or at least about what kind of evidence we should rely on to find that it is (or is not) present.

Finally, if this is clearly infringement, why hasn’t the creator of (and owner of copyright in) the Garfield strip made more of a stink about it? Back in the prehistoric days of the internet (read: late 90s), there was a similar feature called the Dysfunctional Family Circus that took Bil Keane’s wholesome cartoon and changed out the captions to make the overall effect perverse (and, again, hilarious). Keane and the company that syndicated the Family Circus came down hard on the DFC with threats of litigation, and ultimately the site shut down. But more recently, creators seem to react differently to online recastings of their work. George Lucas—the same man whose production company sued advertisers for using the term “Star Wars” to refer to the Strategic Defense Initiative in the late 80s—gave his enthusiastic blessing to “The Phantom Edit”. And Jim Davis too has come out and extolled the virtues of G-G, even as it pokes more than a little fun at the Garfield strip itself. So could it be that owners of copyrighted works are eventually taking less of a hard-line against this particular kind of conduct, finding that the reputation and litigation costs of fighting it aren’t worth the candle? (They certainly aren’t in more traditional licensing settings, as Prince’s suit against the mom who posted a YouTube video of her baby dancing to “Let’s Go Crazy” illustrates.) Just a few data points, but still I’d like to believe that owner/user relations are moving in that direction.

Michael Heller's The Gridlock Economy

This past weekend, I read Michael Heller's new book The Gridlock Economy:  How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives.  The "this past weekend" part of the previous sentence says a lot of good things about the book -- I have two young kids, and not a lot of free time on the weekends.  The Gridlock Economy is one of those rare books that makes important theoretical points while being an easy, enjoyable read.  Like Hernando de Soto's The Mystery of Capital, The Gridlock Economy is clearly written and illustrates its points with engaging examples.  You could assign the whole book for a week's reading in a class and not feel guilty about overwhelming your students.

The book's core points build on insights that Heller first developed in The Tragedy of the Anticommons: Property in the Transition from Marx to Markets.  The basic idea of the anticommons is that highly-divided ownership of property can lead to the underutilization of resources.  If too many people have control over a resource, decisionmaking gets gummed up, transaction costs multiply, and resources are underused.  Heller's iconic example of the anticommons is Moscow storefronts, where the right of many "owners" to veto various uses led to stores that remained vacant while kiosks thrived on the sidewalks just outside.  If the tragedy of the commons can be seen as being caused by an absence of property rights, the tragedy of the anticommons can be seen as being caused by an overabundance of property rights.  Heller argues that we should be seeking the sweetspot between too much and too little property:  "Well-functioning private property is a fragile balance poised between the extremes of overuse and underuse." (p. 19).

The Gridlock Economy explores this theme in a number of interesting settings, including biotech patents, broadcast spectrum, land use regulation, and land assembly.  My one quibble is that the book occasionally crams problems that don't seem to fit into the anticommons category.  One example is the fiasco of underutilized broadcast spectrum owned by television broadcasters. (p. 96)  If the broadcasters had stronger property rights in this spectrum, it probably would not be underutilized to such a degree.  This particular problem therefore seems to be more about too little property, rather than too much property.  Another example is the problem of highly-fractionated interests that results from multiple generations of a family passing property through intestacy.  After a few generations, a single plot of land can have scores of owners.  These multitude of owners can lead to real anticommons problems -- just imagine trying to get the consent of thirty cousins to do anything with a piece of property.  As a remedy for this sort of multiple-ownership problem, the law allows the property to be partitioned.  For property with many owners, partition is usually achieved through a judicial sale of the property, with the proceeds divided among the owners.  As Heller describes (p. 121)the partition process has a ton of flaws, and needs to be reformed.  But Heller's complaints about partition are about the flaws in a remedy for an anticommons problem, not the anticommons problem itself.

As noted, these are just quibbles.  This is a great book.

Ben Barros

cross posted to propertyprof blog

Heller, IP, and the interpretive significance of preambular language

It's always a pleasure to do a guest stint at Prawfs. Thanks to Dan et al. for inviting me back. I thought I'd kick things off by adding yet another post to the deluge of Heller-related thoughts in the interest of making sure that absolutely everything possible has been said about the case. So, question: does the Supreme Court’s interpretation of the Second Amendment in Heller have any implications for intellectual property law? At first blush, the answer would appear to be no. But on closer examination there actually is an interesting connection. The Constitution’s Intellectual Property Clause, like its Second Amendment, begins with what has often been called preambular, or prefatory, language. In the case of the Second Amendment, the power to keep and bear arms “because a well-regulated Militia is necessary to the security of a free state”, and in the case of the IP Clause, Congress’s power to confer limited monopolies on patent and copyright holders is given “to Promote the Progress of Science and the Useful Arts”. Writers in the blogosphere have expressedconcernthat the Court’s dismissal of the relevance of preambular language in Heller portends poorly for any future attempts for the Court to take seriously the preambular language in the IP Clause. But for a couple of reasons explained below the fold, I think this concern is unfounded.

First, equating the introductory clauses of the Second Amendment and the IP Clause as “preambles” misses crucial differences in the operative significance of each clause. Imagine three kinds of constitutional language: grants, limitations, and explanations. Grants and limitations give and take away power; explanations provide context for why the powers are given or taken away. The Second Amendment’s militia language might plausibly be described as a preamble because it represents merely an explanation of the reason that the framers chose to limit congressional power. The Second Amendment consists of an explanation + limitation, or to crudely paraphrase, “because militias are important [explanation], Congress may not infringe the right to keep and bear arms [limitation].” Viewed in this light, the first phrase of the IP Clause looks very different. In fact, despite its being described as a preamble by the D.C. Circuit and Supreme Court alike, the “promote the progress” language does not appear to be a preamble at all, but rather the very power conferred on Congress by the Constitution. So rather than being an explanation + limitation, the IP Clause can be paraphrased as a grant + limitation (as the Court described it in John Deere): “Congress can promote the progress of science and art [grant], but only by means of limited-time exclusive rights [limitation].” Bill Patry does a great job of elaborating this argument in more detail. The implication of the distinction is that Heller does not spell doom for future interpretations of the IP Clause. Even if the case suggests that the Court tends to dismiss preambular language lightly, this should not mean the Court will take the "Progress" element of the IP Clause lightly, because that language is not merely preambular, but operative.

Second, while the Court’s description of the militia language in the Second Amendment appears dismissive, this masks the extent to which the Court actually took that language quite seriously in deciding Heller. In his majority opinion, Justice Scalia wrote that “a prefatory clause does not limit or expand the scope of the operative clause”. In isolation, this seems to divest prefatory language of any interpretive significance. But despite this apparent dismissal, the Court went on to consider the meaning of the militia language in some detail—a strange move if one thinks that prefatory language is relevant only insofar as it can resolve ambiguities in related operative clauses. Justice Scalia’s explanation for considering the preambular clause after the operative clause also seems to invest the former with more significance than his earlier dismissal let on: “while we will begin our textual analysis with the operative clause, we will return to the prefatory clause to ensure that our reading of the operative clause is consistent with the expressed purpose”. This is a much broader notion of the significance of prefatory language than merely a tiebreaker in the case of ambiguity. It (along with the Court’s detailed analysis of the militia language and its later explanation that the prefatory and operative language “fit[] perfectly” together) suggests that prefatory language does in fact serve as a limit on operative language, if only insofar as it means that operative language may not be interpreted in a manner radically inconsistent with prefatory language. The implication is that even if courts continue to (wrongly) regard the “Progress” language in the IP Clause as a mere preamble, a close reading of Heller doesn’t necessarily yield the conclusion that preambular language is devoid of interpretive significance.

Konomark t-shirt giveaway!!

In what I believe to be another PrawfsBlawg first from yours truly, I am proud to announce a t-shirt giveaway!

I am sending a high-quality all-cotton t-shirt with the attractive konomark logo to the first 25 law professors who konomark any of their teaching materials or website content. (Rendering at left.) And yes, adjuncts are, of course, happily included.

The konomark symbol on your website, or on certain content within your website, invites visitors to ask you if they can use your copyrighted content without compensation. By konomarking PowerPoint presentations, mindmaps, handouts, or other materials, you’re saying, “Hey, I'm easygoing about sharing. So go ahead and ask me.”

Unlike Creative Commons licenses or the GNU Free Documentation License, konomark does not involve any surrender of intellectual-property rights. It’s just a way of signaling friendliness when it comes to your copyrighted stuff.

I announced the konomark project on PrawfsBlawg some weeks ago. You can read more about it on the project website.

This giveaway expires in two months, when I will probably take any leftovers to iSummit in Sapporo. E-mail me at ejohnson@law.und.edu with questions or to claim your prize. Specify your desired size. Act early for the best selection. Allow several weeks for delivery. Void where prohibited.

The Museum of Intellectual Property

Perhaps more than any other field of law, intellectual property calls for illustration. The landmark cases of IP law have facts that beg to be seen, as well as read.

That’s why I’ve begun a project called The Museum of Intellectual Property. The aim of the museum is to serve as a resource for teachers, students, and scholars of IP law.

It's also to preserve an important facet of legal history. The very meaning of the law of intellectual property is bound up with the inventions, artistic works, and trademark-bearing products at the heart of leading cases. So making these physical objects available for inspection is, I think, a worthwhile endeavor.

The museum’s collection currently includes some 100 physical artifacts that embody the patents, copyrights, and trademarks fought over in scores of lawsuits. Among the items: a Qualitex green-gold press pad cover, a Stiffel pole lamp, a Motorola SportsTrax pager, Millar's 1752 printing of "The Seasons," a theatre program for Abie’s Irish Rose, and a print of Gary Saderup's illustration of the Three Stooges - signed by the artist. The collection also includes the objects you see in the pictures to the left. In addition to the physical objects, there will also be audio specimens and digital images from still more cases.

I've now started to put the museum online. I’ll roll out one exhibit at a time, debuting each as a post on my Pixelization blog. The premiere exhibit page shows a dual-spring road sign from TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23 (2001). The sign was a generous gift from TrafFix – for which I am very grateful.

I hope you find the museum interesting. If you have any comments or suggestions, I would be very glad to hear them.

Did Hershey's Just Abandon its Trademark?

Here is something I picked up at the local Target store. It's a Hershey's-brand three-compartment silicone muffin pan. When you bake muffins in this pan, they come out - adorably, of course - in the shape of oversized Hershey's chocolate bars - complete with the Hershey's name and logo intaglioed in the shape of the finished muffin. The imprint of the Hershey's name and logo is substantially the same as what one finds on a Hershey's milk chocolate bar, after the foil is unwrapped.

Clearly, if you buy this muffin pan, there is an implied license to use it to make muffins with the Hershey's logo. That is, there is an implied trademark license. But, as you might expect, Hershey's exercises no control over the muffins you make with their logo in the pan you purchased.

Thus, this looks like a case of "naked licensing" - a fast way for a trademark owner to be involuntarily stripped of trademark rights.

Whoops.

"Naked licensing," according to the courts, "is an uncontrolled licensing of a mark whereby the licensee can place the mark on any quality or type of goods or services."*

That's clearly what is happening with the muffin pan.

So what's wrong with naked licensing? It goes to the very essence of trademark. The reason for protecting trademarks is that they give consumers information. Specifically, they give potential buyers of goods a reliable indication of the source of those goods. If a trademark owner licenses a trademark nakedly, that is, without retaining control over the quality of the goods made under that mark, then the trademark has completely lost its source-identifying function.

A trademark owner engaged in naked licensing is "raising a grave danger that the public will be deceived."* For instance, someone buying a Hershey's muffin at a bake sale may be - likely is - getting a product which the Hershey's company had absolutely no hand in making, other than providing the mold. In fact, the "Hershey's" muffin could be made with entirely with Nestle's chocolate. Yikes!

The penalty for naked licensing is apocalyptic for the trademark owner. Trademark rights are lost completely. A 2006 case says:

“When the trademark owner fails to exercise reasonable control over the use of the mark by a licensee, the presence of the mark on the licensee's goods or services misrepresents their connection with the trademark owner since the mark no longer identifies goods and services that are under the control of the owner of the mark. This may result in the trademark ceasing to function as a symbol of quality and controlled source, leading to an involuntary loss of trademark rights."*

The packaging for the muffin pan - identified as a "Hershey's Licensed Product" - contains this legend: "THE HERSHEY'S TRADEMARKS AND TRADE DRESS ARE USED UNDER LICENSE." This prophylactic spray of legalese is steeped in irony. How could Hershey's put such care into making sure the muffin pan manufacturer had a license and would declare the same, yet witlessly end up issuing a license to all muffin-pan buyers to start churning out food items under the Hershey's brand?

The NFL has struggled with this sort of problem in its sales of embroidered team-logo patches. The patches come with an admonition saying the patches are not intended to be affixed to clothing.

So what are you supposed to do with an officially licensed NFL patch then? The web-based NFL Shop suggests that you "add football flair to any scrapbook, framed autograph or even to your room decor[.]"

So, has Hershey's lost its trademark?

Well, I doubt it will be litigated. And the legal realist in me doubts a federal judge would exact such a dear price from an iconic American company. And, of course, we'd have to see what arguments would turn up when the issue was briefed by resourceful and creative litigators. Regardless, it's an interesting situation to ponder.

I think I'll cook up some Hershey's muffins for my Intellectual Property class this fall - using Nestle's chocolate, of course.

[Cross-posted on Pixelization.]
_________________________
* All case quotes from Doeblers' Pennsylvania Hybrids, Inc. v. Doebler, 442 F.3d 812, 823-834 (3d Cir. 2006) (brackets, internal quotes, and citations, including to 2 McCarthy on Trademarks § 18:48, removed, punctuation changed).

The RIAA in the News: Catching Pirates and Conditioning University Funding

The RIAA is turning to states to help with piracy on college campuses. Tennessee has just passed a law, and Illinois is considering one, obliging public universities to implement and enforce measures that seek to prevent copyright infringement via university networks. My (admittedly limited) understanding of currently available means for curbing such activity is that they will necessarily also prevent legitimate uses of university network resources; findings by the Common Solutions Group support my hunch. Further, it seems a heavy burden indeed to place upon universities to monitor this sort of activity—particularly when that burden will fall to state-funded schools.

On a similar note, an article in today’s Chronicle of Higher Education discusses the RIAA’s pirate-catching tactics. What caught my eye was not the RIAA’s use of LimeWire (though I found that inexplicably amusing), but the paraphrased admission by a spokesperson that “the RIAA can tell only when a song is being offered for users to illegally download; investigators have no way of knowing when someone else is actually downloading the song”. This admission goes to the heart of the RIAA’s litigation strategy against P2P users: that simply “making available” a copyrighted work, without more, is sufficient for a finding of copyright infringement—that offering for distribution, in other words, is equivalent to distribution. A number of district courts have tackled this issue in recent months (catalogued and analyzed by William Patry and the EFF, among others), with varied results. I am pleased that the courts are willing to engage in thoughtful assessment of the RIAA’s claims, rather than simply rubber-stamping them (most recently in this decision denying summary judgment for the RIAA against pro-se defendants). I am also concerned, however, that those courts supporting the RIAA’s interpretation of the law are creating a standard that is much too broad, and that will have unintended consequences.

The Iowa Caucuses

As I mentioned in my last post, I spent last weekend at the University of Iowa with 15 or so of the country's leading trademark law scholars.  We were discussing the topic of trademark use, which I tried to frame earlier.  Rebecca Tushnet and Eric Goldman posted comments about the Roundtable, here, here, here, here, and here.

The reason the trademark use debate has cropped up is that trademark rights are supposed to be limited, such that many possible uses of another's mark are permitted.  But it's often hard to know, ex ante, whether the use you contemplate is one of those that is allowed.  The infringement analysis in trademark law depends on application of a multi-factor likelihood of confusion test which, like all multi-factor tests, is exceedingly pliable.  Inability to predict with confidence that one's use will be legitimate (and the cost of finding out) is a problem because it tends to chill a number of uses that might actually be allowed.  The absence in the marketplace of these chilled uses then shapes consumer expectations of what is allowed, which ultimately determines what actually is allowed. 

My sense at the Roundtable was that there was widespread agreement that this dynamic was a problem.  Disagreement related to the source of the problem and the proper approach to fixing it.  Some advocate applying a trademark use doctrine as a gatekeeping mechanism designed to brighten the line between actionable and non-actionable uses and to allow courts to dispose of cases early.  My problem with the trademark use doctrine is that it is not, in my view, capable of brightening the line.  In order for it to work as a gatekeeper, we would need principles by which we could readily determine whether a particular use was a trademark use or not.  I don't believe we have those principles, which means courts have to resort to guesses about what consumers will understand a use to mean. 

This does not mean we should not be concerned about how to delineate more clearly the scope of trademark protection.  I've suggested in a recent paper that one way of doing that is to divorce a number of defenses in trademark law from the likelihood of confusion analysis - so that comparative advertising would not be actionable even if it did cause some confusion.  These are partial answers, but they don't ultimately go to the heart of the problem, as I see it. 

The real problem in modern trademark law is that everything depends on consumer understanding of "source."  Mark owners have claims against anyone who uses a mark to indicate the source of her products.  But source doesn't mean only the actual party that made the goods at issue; it also includes parties who might be thought to have sponsored the goods or their producer or who are affiliated with the producer.  What types of relationships does this include?  That's precisely the problem. 

Once you get away from a determination about who is the actual, historical source of a product or service, it's very difficult to draw lines between relationships that matter and those that don't.  Consumers often don't understand and/or don't care about the relationships between commercial actors.  More problematically, it seems pretty clear that consumers frequently draw conclusions about whether a mark owner has sponsored or is affiliated with another user by guessing whether the law allows the particular use.  If they don't think the law allows it, the mark owner must have permitted it.  And believing the mark owner permitted it probably counts as being confused about sponsorship or affiliation.

So I think the trademark use debate is really a window into a more fundamental problem:  we don't have good tools in trademark law for defining the sorts of relationships about which we should be concerned about consumers being confused.  Once upon a time this was an easy issue.  Because trademark law targeted competitors who were trying to divert a mark owner's trade, only confusion that could result in diversion of a current customer could be actionable.  But trademark law has expanded far beyond this trade diversion model, and it's now flailing about for limiting principles.       

Konomark - A New Way to Be Friendly with Your Intellectual Property

Would you be willing to share your PowerPoint presentations, class handouts, review problems, and other teaching materials with your fellow professors? Most of us probably would.

Yet, how comfortable would you be with e-mailing a colleague you’ve never met and asking if you could use some of their materials? Slightly uncomfortable? I’m guessing that many of us might ask more often if our fellow professors actually invited us to make the request.

What would be useful is some way of marking material we would generously share. Some signal – a word, a symbol – placed on our websites could serve as an invitation to colleagues and others to ask.

As an experiment, I’ve come up with a symbol, a name, and some guidelines for a system to encourage people to communicate their willingness to share copyrighted works. The symbol I’ve drawn is inset. I have no formal training in illustration, but my two-year-old, Joe, immediately recognized it as a pineapple. The pineapple has been a traditional symbol of hospitality. And the name I’ve come up with is “konomark.” The Hawaiian word “kono” means to invite, prompt, or ask in.

I’ve konomarked my website at eejlaw.com, by which I mean to signal to everyone my willingness to share my teaching materials, including mindmaps, slide shows, case abridgments, and old exams. Soon, I will be posting photos that illustrate legal concepts, which I also intend to share.

I invite you to consider doing konomarking your own teaching materials as well. Marking your website with the konomark will not have any legal effect. It does not surrender certain rights like a Creative Commons license does, for instance. The konomark is simply an invitation that says, “I’m generally willing to share my copyrighted material, often for free. So go ahead and ask.”

I’ve also posted a webpage, konomark.org, that explains the konomark experiment in greater detail. The material on the webpage is written, for now, as an FAQ for an audience of non-lawyers. At some point, I'd like to explain a little bit more of the theoretical and policy underpinnings to the idea. For now, I'll just say that I am a big fan of public sharing licenses – such as those from Creative Commons and the free-software movement – but they are not right for all circumstances. There is no doubt that, with regimes like Creative Commons, there is a great benefit gained in not needing to ask permission before you use something. But there may be a benefit, as well, to going through the process of asking permission, especially if a sign has been hung out on the porch, so to speak, that invites such requests. By having a two-party communication regarding permission, a connection is established. These connections may lead to friendships and feelings of community - the kinds of values that Richard Stallman, open-source-software pioneer, talked about when he wrote his manifesto.

And, at any rate, when it comes to law-school teaching materials, adoption of Creative Commons licenses by professors seems to be somewhat limited. So to encourage even more sharing, I think konomark might be a helpful idea.

There are some technological and operational subtleties I would like to work up at some point, but I think konomark.org is a good start. Please let me know what you think. I would be very grateful for your comments and suggestions.

April is Trademark Use Month

Thanks to Dan and Rick and the crew for inviting me to guest blog here.  I write about intellectual property, so I'm particularly excited that this month seems to have more than its share of IP types doing guest stints.

Rick asked me to share some thoughts about a new paper I've recently posted that deals with a hot topic in trademark law these days - the so-called "trademark use" doctrine.  It was a timely request, as I just returned from the University of Richmond School of Law, where I debated my evil twin Stacey Dogan on the question of whether the trademark use doctrine is capable of limiting the scope of trademark protection in predictable ways.   This coming weekend I'll be at the University of Iowa for the Trademark Scholars' Roundtable, where a number of leading trademark scholars will gather to discuss and debate whether the trademark use doctrine exists, what it does, and whether it's a good idea. 

The debate last Friday and the roundtable this weekend grew out of a series of papers on the topic of trademark use, which some scholars have pushed as a mechanism for limiting the scope of trademark rights in at least some contexts.  These scholars (Stacey Dogan and Mark Lemley most prominently) argue that the only use of another's mark that are actionable under the Lanham Act are uses  as a trademark.   What scholars (and courts) mean by "use as a trademark" is sometimes a bit unclear, but Dogan and Lemley seem to use the concept functionally - a trademark use is a use of a mark to indicate the source, sponsorship or affiliation of one's goods or services.  They suggest that, in at least some cases, courts can identify and exclude from liability non-trademark uses, and they can do so early in litigation.  By vigorously applying the doctrine, courts not only shield from liability particular beneficial uses (i.e. keywords), they enhance predictability and prevent feedback (which is a particular problem in trademark law since the scope of rights depends to a large extent on consumer understanding).

Graeme Dinwoodie and Mark Janis (who organized the Iowa conference this weekend) disagreed with Dogan and Lemley, both descriptively (they deny that the Lanham Act limits liability to "trademark uses") and prescriptively (they think the trademark use concept is a bad idea, because it might prevent application of trademark law in some areas where it ought to operate).   Dogan and Lemley's and Dinwoodie and Janis' papers appeared together in the Iowa Law Review, along with a response by Dinwoodie and Janis.

My paper intevenes in the debate and stakes out a middle ground.  I argue that the statute does limit liability to "trademark uses" in a functional sense - only uses that indicate source can be deemed infringing.  This requirement is implicit in the likelihood of confusion standard, I argue, because only uses that indicate source can cause the type of confusion with which trademark law is concerned - confusion about source.  Nevertheless, I argue that trademark use is not a concept that is capable of predictably limiting the scope of trademark rights, because courts can only determine whether a particular challenged use is an actionable trademark use by asking whether consumers are likely to regard the use as source indicative.  This makes trademark use dependent on consumer understanding in much the same way as likelihood of confusion, and the doctrine therefore doesn't advance the ball.    

In my next post I'll explain a little bit more why this dependence on consumer understanding of "source" is such a problem, and how we got to a place where trademark rights verge on absolute.  Then I'll give a report from Iowa, where I hope to convince everyone else that I'm right :)             

For a Good Time Call 555-0123: Liability-Free Phone Numbers for the Entertainment Media

A legislative proposal: Congress should set aside, or direct telephone companies to set aside, certain phone numbers that can be used in films and on television without fear of liability.

As you have no doubt noticed, when a line of dialog includes a phone number, the character on screen, often with intense earnestness, spits out a phone number with a “555” prefix. For example:

“Damnit! Get President Palmer on the phone! His direct, private cell phone number is 202-555-4248!”

Fearful that if they use a real phone number they will get complaints or even lawsuits, studios have taken to using the 555 numbers because they are reserved by the phone companies and never assigned to customers.¹ Thus, they will not be unwittingly subjecting hapless folks to scores of midnight crank calls.

The problem? When you are engrossed in the make-believe world created by the film, hearing the fake “555” phone number brings you instantly back to reality – reminding you that you are watching an actor in a film, not, for instance, a heroic government agent trying to disarm a bomb. And if you are a lawyer, hearing the “555” phone number reminds you of the law, which means you are being reminded of your job while watching TV. It’s not good for anyone.

Therefore, I call on Congress, and, while I’m at it, the United Nations and the telecommunications companies of the world, to set aside a large enough slate of random-sounding numbers that movie-goers will not be subjected to instantly recognizable fakes.

The tough question that immediately confronts us: How do we get a slate of numbers that is safe for entertainment usage without screwing over the real customers currently using them. I have two proposals. The first is a bit silly, I admit.²

==More after the jump ...

My first plan would be to provide immunity for certain seven-digit phone numbers where an administrative rule-making body declares such phone numbers to have already been so tarnished through their use in media, that customers have little or no expectation of privacy with regard to them. The most obvious candidate? Why, of course: 867-5309. Those of you who remember the 80s (or have at least seen them on cable TV) will recall that that is Jenny’s number, from Tommy Tutone’s 1982 hit song, “867-5309/Jenny.”³

In fact, I’d say there is a good argument that any producer including 867-5309 in a movie or television show should be availed of an estoppel- or laches-type defense. And, for an analogy to property law, when new phone customers get 867-5309, it’s a lot like coming to the nuisance. Of course, the problem with clearing 867-5309 for producers is that the number is so engrained in pop-culture consciousness, using it in a movie is likely more jarring than using a 555 number.⁴

My second plan is a three-step approach: (1) Use computerized algorithms to comb seven-digit phone numbers to find those that are used by the fewest businesses and that are used in the fewest area codes. Put these phone numbers on a “Level I” list, then freeze the list, prohibiting phone companies from assigning these numbers to new customers. (2) Provide immunity for producers who use Level I phone numbers, so long as they use such numbers only in combination with an area code that does not correspond to a real telephone number. (3) Allow the Level I list to undergo attrition; that is, allow the seven-digit numbers to become progressively cleaner and cleaner as users in different area codes naturally give up those numbers as they move or otherwise discontinue phone service. When a seven-digit number is no longer used in any area code, or when it reaches a certain threshold of disuse, place that number on a “Level II” list. Provide immunity to producers who use seven-digit numbers, sans area code, on the Level II list.⁵

If you agree with my proposals, comment below. If you disagree, please call 867-5309.

NOTES:

FN1: I don’t know if customers with phone numbers featured in films have sued producers, much less been successful in a lawsuit. But it is clear that the fear of such lawsuits, or at least complaints and associated ill will, have held studio standards-and-practices folks to the practice of using the 555 numbers.

FN2: This whole post is a bit silly, since, as you may have noticed, it uses footnotes.

FN3: Snopes.com reviews the real-life ramifications of 867-5309 here.

FN4: But here’s an example of an intermediate case: 362-4350. That’s the number to call for the hit-woman personified by Joan Jett in her re-make of AC/DC’s “Dirty Deeds Done Dirt Cheap.” I’d have to say, though, I doubt 362-4350 has been exploited heavily enough for number holders to be fairly divested.

FN5: This proposal might fairly be called a “seven-point plan,” but I think that’s too many points. Better to keep it to three. Three-point plans are always better. And when you get down to three, for some reason I don’t entirely understand, it is plausible to call it a “three-step plan,” making it sound even easier. (I think part of the problem with saying “seven-step plan” is that if you have too many steps, then you are getting into the realm of dieting and addiction recovery, and that’s not where I’m going with this.)

A Brief Hello; When Piracy Loses its Lustre

I am so pleased to be a part of Prawfs for the month! --My sincere thanks to Dan & the gang for bringing me on board.

A few recent posts have noted musical taste. Monday's spate of news about Radiohead allows me to not only follow that trend by discussing one of my favorite bands--I know I'm not alone in being shaped, years ago, by end-on-end playing of The Bends--but also to discuss an issue relevant to the field in which I teach and write.

As indicated by the band's site and this piece (one of many), Radiohead has decided to offer its latest record, In Rainbows, via only its website, at least initially. In addition to a sizeable discbox (approx. US$82), the band is offering a digital version which may be downloaded at a price decided by the user (minimum one British penny, or approx. US$0.02, plus a surcharge of about US$0.91). The digital download will be unencumbered by DRM (digital rights management--that software which prevents you from, say, burning that great playlist you got via iTunes onto more than seven CDs). Ostensibly, there is no reason to pirate something one can purchase for under a dollar--and most likely, some folks will download the CD and pay more than the minimum amount (and still others will buy both the digital and discbox versions). Will the Radiohead business model catch on? If so, how might you envision the distribution rights agreements (as but one example of the potential impact) of the future?

Recipes as IP

It's summer, so my more flexible schedule allows me to: 1. accept the gracious invitation from prawfsblawg to post a few half baked thoughts of my own and 2. bake a lot of things to completion in my kitchen!

Yes, I'm a foodie, and my experience leads me to believe that a lot of other law professors are, too.  As one pointed out to me, cooking is a really great procrastination tool.  Add the manner in which being a foodie has become a way of signaling upper class status, a la David Brooks, and there's no wonder so many of us spend a lot of leisure time cooking and thinking about cooking.

So the following article from the NY Times last week may be of interest: Chef Sues Over Intellectual Property (the Menu).

Essentially, the owner of Pearl Oyster Bar, Rebecca Charles, is suing the owner of Ed's Lobster Bar, her former sous chef, claiming he has ripped off the entire look and feel of her restaurant, including some recipes.

The author, Pete Wells, notes that this is a small restaurant, rather than a large chain, and discusses the possibility that this is the beginning of a coming trend in which chefs assert intellectual property claims over recipes and decor in the future. Charles's lawyer argues, of course self-interestedly, that the high cost of opening fancy restaurants nowadays naturally contributes to the desire of chefs and owners to assert such claims, which he calls "long overdue."

Charles is depicted as taking a great deal of personal offense at the competing restaurant, describing what sounds like a theft of her dignitary rights as an artist and even her identity.  But along with that goes a lot of self-absorption and seeming naivete with respect to how derivative her own restaurant appears to be.  For instance, the caesar salad dressing recipe that is part of the subject of the lawsuit originated with a chef in Los Angeles who gave it to Charles's mother, and the entire restaurant was inspired by a pre-existing one in San Francisco--Swan Oyster Depot.

Of course, even if this is a harbinger of things to come, the impact of asserting IP rights may not be as large as it has been in other industries.  The upscale chef lobby may never get as powerful as the music and film industry lobby, for instance.  But suppose the attitude of many chefs, cooks, and restaurateurs did change? Would we start seeing recipes "licensed" to users for a charge, permitting them to cook at home? A budding teenaged chef being sued for sharing recipes with his friends? Culinary schools being sued for teaching patented techniques and distributing copyrighted recipes?

Despite my mild snobbery when it comes to ingredients and the like, I still basically love cooking and eating as highly social, communal activities that contribute to and cement emotional ties to others, such as my friends.  As such, the entire notion of property in a recipe or technique is discomforting.  On the other hand, I do want to avoid romanticizing the activity as a domestic pursuit that commodification and the market would "contaminate."  That kind of move--separating a market sphere from a domestic sphere as if they are highly distinct and liable to corrupt one another--is what has, in the past, justified failure to compensate women for highly valuable domestic labor. See, e.g., Joan C. Williams & Viviana A. Zelizer's chapter, "To Commodify or Not to Commodify: That is Not the Question" in Rethinking Commodification.

I wonder what other foodies, and especially feminist foodies, think about the commodification of eating and cooking?

The Trouble With Trademarks

Let's say that hypothetically you disagree with the Supreme Court's recent holding in Ledbetter v. Goodyear Tire & Rubber Co., Inc. (NB: Paul Secunda has a good overview here) and you decide you want to girlcott all of the company's goods and services. Or, maybe you had your own negative experience with the company.  Assuming you don't regularly purchase rubber,  your initial focus is likely to be upon purchasing tires from sources other than Goodyear. If you do a quick search at the USPTO's webpage, you'll find about 83  Goodyear related federally registered marks, including many variations of this logo:

Goodyear has also registered phrases like "On the wings of Goodyear" (note to Goodyear: blimps don't have wings)  and "If it doesn't say Goodyear it can't be polyglas" (and goodness knows we all want glas in our tires!). You'll also see a host of alphanumeric indicators such as "G395," "GT45V" and "G622RSD" which are probably supposed to make the tires bearing them seem especially high tech or scientific, as opposed to a Goodyear mark like Assurance which makes the tires sound like feminine hygiene products.  Some of these marks are "dead" but most are "live" and therefore in commercial use. It sounds simple enough to avoid them, perhaps,  but an effective girlcott is going to be a little trickier than simply avoiding tires bearing  "Goodyear" trademarks.

Goodyear  produces and sells tires under other  brand names including Dunlop, Kelly, Fulda, Sava and Debica. Goodyear manufactures and sells more than 50 private brands of tires as well to companies like Wal-Mart (Douglas private brand); Sears (SuperGuard, Weather Handler, Eagle, Acqua Handler, Wrangler, Trail Handler and Patriot private brands; NTB private brand through acquired Western Auto stores); Heafner/American Tire (Winston, Regul and Lee private brands); and Martino (Star and Hallmark private brands).

According to its webpage:  For the better part of a century, Goodyear's corporate values have been centered  on the phrase, "Protect Our Good Name."

One way that the company can do that is by selling a lot of products under alternative trademarks, making it difficult for consumers to reward or punish corporations for their actions. Given that one of the primary policy justifications for having a trademark legal regime is to protect consumers from confusion, this is sadly ironic. The lack of a requirement that trademarks be affirmatively linked to their sources permits companies to obfuscate corporate connections whenever it is useful.



"Because there's a lot riding on your lawsuit."

Double Trouble on the Virtual Property Front

Yesteray brought huge news for those of us who study virtual property. And then it brought huge news again.

First, the Bragg v. Linden lawsuit just survived a motion to compel arbitration. That suit started when Second Life caught a player gaming their in-world land auction system and confiscated his ill-gotten virtual gains. He strenuously disputed their story and claimed he was an innocent landowner misled by Linden Labs’ (Second Life’s developer) repeated claims that players really “own” the virtual land inside of Second Life. The suit squarely pits developers’ allged right to make changes to their worlds against players’ alleged rights to be secure in their property. As a legal matter, I think the developers ordinarily have a much better case, but Bragg’s attorney has been able to dig up a whole bunch of Linden PR materials that really make players’ rights sound pretty darn unrestricted. They’re bad facts for Linden, whether or not they end up being legally relevant.

Yesterday’s decision was just a prelude. After procedural wrangling that took the case from small claims court to state court to E.D. Pa., Linden moved to compel arbitration. The Second Life terms of service include an arbitration clause, but Judge Robreno blew away the arbitration clause as unconscionable. Drawing heavily on Comb v. Paypal, he emphasized the nonmutuality of the clause, its California venue, and the effects of its fee structure. It’s hardly a blanket rule against arbitration in virtual world contracts, but it would invalidate a lot of extant arbitration clauses. It also reaches the opposite result than the only other virtual world arbitration case thus far: the Blacksnow case.

The other big news was a new would-be class action in the Southern District of Florida. This one is particularly interesting in that while it involves Blizzard’s fantastically successful World of Warcraft, Blizzard isn’t a party. Instead, the plaintiff, who maintains that he’s a typical WoW player, is suing virtual trading company IGE. He alleges that IGE isn’t just a trader; it’s also engaged in gold farming, paying people in third-world countries to play WoW for fourteen hours a day racking up gold and items. IGE then floods the virtual in-world markets with these items, in violation of the WoW terms of use and to the great harm of all the innocent players who don’t pay for IGE’s services and are therefore at a competitive disadvantage. The case doesn’t quite sound in property law—all the causes of action involve interference with contract or commercial fraud—but its implications for virtual property issues could be profound.

Neat stuff. Hat tip: TerraNova

Whose Slide Is It, Anyway?

Elsewhere in the blogosphere, there’s a wonderful example of lawyer-technologist mutual incomprehension playing out. And it all started with the Electric Slide.

This familiar so-called dance, which today would be named the Nanoelectronic Slide or the iSlide, was allegedly choreographed by dancer Ric Silver in 1976. In the last year, Silver began sending DMCA takedown notices to Youtube, claiming that every video of someone dancing the Slide was a copyright infringement. It seems unlikely that Silver really planned to extract a few doubloons of Danegeld from every wedding in the country. Instead, he was hoping for licensing fees from TV shows and other big-time productions, went after the little guys as part of a broad campaign, and wrapped himself in the flag of artistic integrity:

Any video that shows my choreography being done incorrectly is being removed. I don’t want future generations having to learn it wrong and then relearn it as I am being faced with now because of certain sites and (people) that have been teaching it incorrectly and without my permission. That’s the reason I (copyrighted) it in the first place.

One of his DMCA takedown notices targeted Kyle Machulis, a programmer for Second Life who filmed ten seconds of concertgoers attempting to Slide. Machulis turned to the Electronic Frontier Foundation, which has been having a lot of success fighting overly broad DMCA takedown notices, and which promptly filed suit on his behalf. This week, the case settled: Silver agreed to drop any claims of infringement and to place whatever copyright interest he had in the dance under a Creative Commons license, allowing anyone anywhere anytime to slide the Slide without paying the Silver. Machulis and the EFF, for their part, agreed not to pursue their claims that the dance was uncopyrightable and not properly registered, and that dancing embarrassingly badly in public while drunk is a fair use.

Enter Jason Scott (Sadofsky), who has been performing an unbelievable public service as an pre-Internet archivist and as a documentarian first of the history of BBSs and now of text adventures and coin-op arcades. He’s your classic tech blogger: opinionated and committed to the Creative Commons vision of sharing. And he didn’t like the settlement, not one bit.

In a pair of blog posts, Scott called the settlement “Grade A Bullshit.” Scott, who knows his way around copyright law, made the quite reasonable argument that Silver didn’t have a copyright in anything projectable in the first place, so the dance moves were already in the public domain. For the EFF to concede that it could be was a step backwards. He drew a thoughtful response from Jason Schultz, the man-about-town patent-busting EFF attorney who worked on the case. Jason pointed out that upon being sued, Silver had almost immediately promised not to sue any noncommercial users, immediately creating a significant case-or-controversy problem.

So here’s why this little exchange is such a great example of two cultures—lawyer and techie—regarding each other with bafflement: Jason and Jason are in almost total agreement. Both think that the Electric Slide is not and never has been subject to copyright, and that a court ruling to that effect would be just plum dandy. Moreover, they know each others’ turfs fairly well. Jason One (Scott) knows some serious copyright law; Jason Two (Schultz) and the EFF are about as tech-savvy as lawyers come. And yet the attitudinal clash is painful to watch. Jason One speaks a language of principle and clarity of message; Jason Two speaks a language of litigation tactics and trade-offs.

Consider some examples. Jason One thinks that “bringing CC into the mix just confuses the issue.” Those of us who wear lawyer hats would say that for Ric Silver to use a CC license doesn’t mean that anyone other than Ric Silver believes that the Electric Slide is copyrighted. All it means is that Ric Silver will be in big trouble if he sues anyone who uses it noncommercial. But when Jason Two, thinking in these terms, writes, “I can completely understand your frustration with the thought that Mr. Silver might come back and threaten someone who performs the dance for commercial purposes or lacks attribution,” he’s missing the source of Jason One’s anger. Jason One isn’t upset about the actual mechanics of who can sue whom. Instead, he sees a Creative Commons license and a promise not to sue as worse than a promise not to sue alone, because the very fact that Silver is using a CC license without complaint from the EFF seems to say that the EFF thinks Silver has a copyright to begin with.

Or consider the resources issue. Jason Two runs through some of the other litigation that the EFF is involved in and points out that pursuing this case despite a serious justiciability problem would hurt EFF’s credibility and pull resources away from, say, suing Uri Geller. Jason One simply rejects this point of view, saying, “Don’t offer to carry water if you don’t have enough buckets.” That’s a beautifully techie thing to say: it’s clear, it’s humane, and it’s a sensible way to handle the conflicting demands placed on a sysadmin. But note how it ignores the half of Jason Two’s point about credibility. Litigators back off from possible arguments all the time to keep judges from getting angry, but Jason One doesn’t even notice that Jason Two is making this sort of a point, it’s so far off his radar.

These kinds of crossed signals happen all the time at the law-tech interface. (The 09 F9 kerfuffle is another great example.) The language of litigation is performative in ways that are hard for outsiders to parse—but so, too, are the natural and artificial languages of techies. Even two smart and hoopy froods can miss each other’s points like the proverbial ships in the night. Dealing with this divide has to be one of the major tasks of technology law.