Thursday, July 02, 2015
General Jurisdiction After Daimler
In Daimler AG v. Bauman and Goodyear v. Brown, the Supreme Court held that corporations do not subject themselves to general--or "all purpose"--jurisdiction simply by conducting continuous business in a state. Instead, a corporation's contacts with a state are only sufficient for general jurisdiction if they are so "constant and pervasive" as to render the corporation "essentially at home." But Daimler and Goodyear left open some important questions about general jurisdiction--for example, whether a corporation that registers to do business and appoints an agent for service of process in a state consents to general jurisdiction there.
The U.S. Court of Appeals for the Federal Circuit is poised to decide that question in Acorda v. Mylan and AstraZeneca v. Mylan, two patent cases coming out of the District of Delaware. As I've written about, personal jurisdiction is generally not an issue in patent infringement cases because defendants are usually subject to specific jurisdiction in the forum state (i.e., defendant sells the accused product in the forum state, and that contact gives rise to plaintiff's claim). However, Acorda and AstraZeneca are pharmaceutical patent cases governed by the Hatch-Waxman Act, so the specific jurisdiction analysis is more complicated. (For the record, I believe Mylan is subject to specific jurisdiction in Delaware in both of these cases, but the focus of this post is general jurisdiction).
The question in Acorda and AstraZeneca is whether, after Daimler, registering to do business in Delaware constitutes consent to general jurisdiction, as the Delaware Supreme Court decided long before Daimler. See Sternberg v. O'Neil, 550 A.2d 1105 (Del. 1988). The district judges split on the question; Judge Stark held in Acorda that Mylan consented to general jurisdiction, while Judge Sleet reached the opposite conclusion in AstraZeneca. I agree with Judge Stark that Daimler did not "sub silentio,  eliminate consent as a basis for jurisdiction." In other words, Daimler addressed non-consensual submission to general jurisdiction through contacts, not through consent.
The cases are currently being briefed at the Federal Circuit (which granted interlocutory review), and will likely be argued in the fall.
Thursday, June 11, 2015
Judicial Specialization, Patent Cases, and Juries
Judicial specialization has long been a topic of debate among patent lawyers and scholars. In recent years, critics (including Seventh Circuit Judges Diane Wood and Richard Posner) have questioned the wisdom of granting the U.S. Court of Appeals for the Federal Circuit exclusive jurisdiction over patent cases. Yet, judicial specialization in patent cases is not limited to the Federal Circuit. Over the past decade or so, certain federal district courts--particularly, the Eastern District of Texas and the District of Delaware--have become patent litigation "hot spots," and the judges in those districts have developed substantial patent expertise. Moreover, Congress established the Patent Pilot Program in 2011 "to encourage enhancement of expertise in patent cases among district judges" by funneling patent cases in certain districts to designated judges.
Proponents of judicial specialization argue that it promotes efficiency, uniformity, and predictability for litigants, while opponents claim that specialized courts are subject to bias, capture, and tunnel vision. Recent scholarship also addresses the question whether specialized courts are more likely to compete for lawsuits, or participate in "forum selling," as discussed here and here.
I am currently working on a paper, Influencing Juries in Litigation Hot Spots, that explores a different problem with specialized trial courts: the potential to improperly influence the jury pool. The situation with patent cases in the Eastern District of Texas, recently highlighted on John Oliver's show, provides a prime example. In the Eastern District of Texas, repeat litigants like Samsung have attempted to generate goodwill with the citizens of Marshall and Tyler (i.e., potential jurors) by sponsoring an ice skating rink outside the courthouse, granting college scholarships to Marshall and Tyler students, and donating television monitors to the local high school. While the small towns of Marshall and Tyler have no doubt benefitted from Samsung's public relations campaign, the cost to our justice system--where juries are supposed to be impartial--is arguably too high.
Friday, June 05, 2015
Patent Reform and Substance-Specific Procedural Rules
In 2011, Congress passed the America Invents Act, the most comprehensive patent reform legislation in more than half a century. Yet, Congress is currently considering further patent reform, which appears to be moving forward with the Senate Judiciary Committee approving the bill yesterday. The current reform measures are designed primarily to curb "patent litigation abuse" by creating special procedural rules for patent cases, including heightened pleading standards, restricted discovery, and more liberal fee-shifting.
This latest reform effort raises a number of questions. Some scholars argue that there's simply not enough data to support the legislation, while others say the reforms are unnecessary because courts and other institutional actors have already taken steps to address patent litigation abuse. Commentators have also claimed that the reforms may seem reasonable in theory, but the actual proposed legislation is too broad and will harm our innovation economy. I would like to focus on a different question: Are substance-specific procedural rules for patent cases appropriate and, if so, who should make those rules?
Although trans-substantivity is a hallmark of the Federal Rules of Civil Procedure (FRCP), there has been some movement away from this principle recently. As I discuss in a recent article, that trend is particularly pronounced in the patent context where almost a third of federal district courts have adopted patent-specific local rules, and many individual judges use special standing orders for patent cases. So there seems to be some consensus about the utility of specialized procedural rules in patent cases, but should it be Congress, district judges, or the Judicial Conference that decides the content of those rules? I believe the Judicial Conference, which is responsible for proposing amendments to the FRCP, is in the best position to draft a uniform set of procedural rules for patent cases. While far from perfect, the FRCP rulemaking process is more transparent, balanced, inclusive, and deliberate than the process for enacting legislation or adopting local district court rules.
Monday, May 04, 2015
The Federalist Structure of Trademark Law Fosters Robust Public Debate
The following post is by Robert L. Tsai and Christine Haight Farley (both of American); it is their third guest post on the Washington Professional Football Team trademark case. It is cross-posted at the Sports Law Blog.
In recent days, following a Federal Circuit ruling in one disparaging marks case (“the Slants”) and briefing in another (“Redskins”), civil libertarians and artists have joined forces to cry that the applicable provision in federal trademark law suppresses speech. But does it? In this post, we wish to suggest that the ban on registering disparaging marks not only does not suppress any high value speech, but might actually enhance freedom of expression.
Strong First Amendment regimes are valuable when political, social, or artistic creativity is endangered by direct regulation. Weaker First Amendment regimes are more sensible when a complicated mix of government objectives and expressive risks is at stake. In our view, whatever doctrinal tools are ultimately used (e.g., government speech or commercial speech), a weak role for the First Amendment is most sensible in this area.We begin with the observation that trademarks are expressive in a specific but limited commercial sense: they are distinctive words, names, or symbols used to designate the source of a good or service and distinguish it from others in the marketplace. Most marks by themselves are not coherent enough to constitute political or social expression. Occasionally, one comes across a symbol that might have artistic value, but even then its contribution to public debate on matters of public importance is likely to be extremely limited. Thus, regulation of brand names does not implicate the core of the First Amendment.
Then, there is the most obvious point: denial of registration does nothing to prevent the owner of a mark from using that mark. We have already detailed the ways in which the registration framework does not actually suppress speech. Beyond the fact that the Lanham Act does not inhibit speech directly, however, it also contemplates a federalist structure that helps to promote free speech. Federal law does not create trademark rights, but merely seeks to streamline this area of law by building new federal remedies on the edifice of state law. As the Supreme Court explained in the Trade-Mark Cases, “This exclusive right was not created by the act of Congress, and does not now depend upon it for its enforcement.” Because federal law did not preempt state trademark law, the absence of Lanham Act remedies does not extinguish state law claims.
When no federal registration exists, a trademark owner can sue an alleged infringer in the jurisdiction where the mark is used and where the infringement occurred. It is said that under the common law, one cannot protect a trademark that violates public policy. But it would be up to each state to determine whether certain kinds of marks contravene that state’s established public policy. Maine, for instance, apparently has no trouble with disparaging marks, barring only marks that are “obscene, contemptuous, profane or prejudicial… [or i]nappropriately promotes abusive or unlawful activity.”
Most states have adopted the model trademark bill patterned on the Lanham Act. This is true in California, which also prohibits the registration of immoral, scandalous, and disparaging marks. A trademark owner such the Slants can argue that the mark is not disparaging under California law. Even with identical statutory provisions, different outcomes in different jurisdictions are possible. State law may base determinations on local perceptions of the mark, which may deviate from national views, and may develop different doctrines such as taking into account the mark owner’s intent to re-appropriate slurs. Thus it is conceivable that states may reach a different conclusion about the same mark.
Does refusal to register raise the costs of enforcement? It might very well do so, but such differences in enforcement regimes has never been enough to raise constitutional difficulties, especially in a federal system of laws that includes many built-in inefficiencies.
These inherent inefficiencies could actually enhance liberty better in the long run than a First Amendment dominated system. Some states would surely follow the federal government’s lead by broadly disallowing registration/enforcement of certain slurs as trademarks. They would prefer to withdraw the state’s imprimatur from illiberal ideas and hope to discourage their use. The fact that copycats and counterfeiters might make widespread use of the same design or logo, perhaps even to coopt the ideas for benevolent goals, would be taken as evidence of healthy public discourse.
On the other hand, other states might see value in granting legal protection to certain taboo ideas disallowed by the federal government, by finding that particular terms are not offensive to local communities. Or perhaps states might do so on the theory that legal protection of coopted epithets promotes dissent within ethnic communities. Madhavi Sunder has made just this kind of argument, but the rationale does not depend on a nationwide rule. States themselves could decide to strike their own path on how to determine when a mark “disparages.”
The key to a system characterized by a weak First Amendment is that no jurisdiction—neither federal nor state—has the obligation to reject or endorse disparaging marks. Rather, the government’s power to ensure broad participation in the marketplace and guard against illiberal business practices are treated as just as important as an individual right to expression. It is worth remembering that even in a weak First Amendment regime, the Constitution would still remain powerfully available in the background, protecting against direct efforts to stamp out disparaging ideas.
This more nuanced approach that can only flourish if the First Amendment is not deployed in a one-size-fits-all manner requiring government to protect whatever a trademark applicant demands. If the strong First Amendment position prevails, then state and federal restrictions on trademark content would be swept aside, across the board. By operation of the Fourteenth Amendment, every level of government would have to endorse and subsidize morally repugnant marks.
The people of each state would no longer be allowed to determine public policy in this domain or to express their view that certain commercial practices are illiberal. In such a world, free speech principles might reign nationally in trademark law, but one should wonder whether they would really promote robust debate.
Tuesday, April 28, 2015
F. Gregory Lastowka
It is with deep regret that I write that law prawf Greg Lastowka is no longer with us. He passed away yesterday. His home institution, Rutgers, has published this announcement here. He will be greatly missed by all who knew him and his extraordinary work.
Monday, April 27, 2015
Natural Rights and the "Human Right" to Intellectual Property
I am picking up from where I left off in my prior post on human rights and intellectual property. My concern with embracing a human right to intellectual property arises from the possibility that it will lead to more expansive intellectual property protections. I would tend to agree, therefore, with the report by the United Nations Special Rapporteur in the field of cultural rights (mentioned by Lea Shaver in her comment), which characterizes copyright as distinct from the human right to authorship.
Human rights are generally understood to be natural rights. If one accepts this proposition, how does treating intellectual property protection as a human right relate to the natural rights intellectual property scholarship? The intellectual property and human rights conversation is primarily an international intellectual property conversation. However, the natural rights framing of intellectual property rights is primarily a domestic intellectual property conversation. Both of these frameworks are based on natural rights theories, yet they appear to reach opposite conclusions. With some exceptions, proponents of natural rights justifications for intellectual property tend to support more expansive intellectual property protections. On the other hand, proponents of a human right to intellectual property speak of “balance” and of using human rights frameworks to respond to excessive intellectual property rights.
One might be inclined to dismiss the theoretical foundations for intellectual property as irrelevant to the practical aspects of intellectual property law. However, the framing of intellectual property rights can impact the way private citizens, including judges and policy makers, view intellectual property protection and infringement. Gregory Mandel’s study on the public perception of intellectual property rights, for instance, found that individuals who view intellectual property rights as natural rights tend to support more expansive intellectual property protection. This is consistent with legal scholarship that takes a natural rights approach to intellectual property. My inclination, then, is that distinguishing between copyright protection and the human right to the moral and material interests arising from one’s literary or artistic production is a step in the right direction.
Google Announces Patent Purchase Experiment
Today, Google announced a patent purchase promotion, which is an open call for those who wish to sell their patents to the company. Some details are here, while others are here. The terms are remarkably simple--between May 8 and May 22, sellers must provide Google with the patent number and a proposed price. As part of the transaction, sellers obtain a non-exclusive license to practice the patent together with the purchase price if the offer is accepted.
In typical Google-style, the company states that this call is an experiment and an effort to eliminate the middle-man. In the company's words:
Unfortunately, the usual patent marketplace can sometimes be challenging, especially for smaller participants who sometimes end up working with patent trolls. Then bad things happen, like lawsuits, lots of wasted effort, and generally bad karma. Rarely does this provide any meaningful benefit to the original patent owner.
Of course, the looming question is what will Google do with any patents that it buys? Whatever it wants, of course. According to Google's FAQ on this issue:
Google maintains a large patent portfolio. Any patents purchased by Google through this program will join our portfolio and can be used by Google in all the normal ways that patents can be used (e.g., we can license them to others, etc.)
One interesting aspect of the program is the speed at which it is moving--sellers will be notified at the end of June, and the sales are expected to be closed by the end of August.
Thursday, April 23, 2015
The First Amendment and the Redskins’ Trademark, Part II: A Shot Across the Bow from the Federal Circuit
The following post is by Christine Haight Farley and Robert L. Tsai (both of American); it is their second guest post on the Washington Professional Football Team trademark case. It is cross-posted at the Sports Law Blog.
On Tuesday, the Federal Circuit issued a unanimous decision (In re Tam) holding that the mark THE SLANTS was properly refused registration because it is disparaging to people of Asian descent. Since 2010, Simon Shiao Tam, the front man for the Asian-American rock band “The Slants,” has been trying to obtain trademark recognition for the name of his band. The record shows that the band picked the name by thinking of “things that people associate with Asians. Obviously, one of the first things people say is that we have slanted eyes.” The record of the case confirmed that “slants,” used in the way proposed, would likely be received as a racial slur.
The fact that the registrant wished to re-appropriate an ethnic slur and try to create a positive connotation did not alter the outcome. Nor was the Court troubled that the user’s own race formed part of the background for assessing the objective meaning of the mark in commerce. Both of these jurisprudential choices are consistent with the Federal Circuit’s approach to statutory interpretation, which strives for an objective meaning of trademarks in actual use. In our view, the private cooptation of illiberal ideas can generate terrific art and might very well help to change social meaning in the long run. But you don’t need trademark protection to engage in such projects of appropriation; indeed, granting one user legal protection might even stifle others who would like to experiment further with taboo ideas.
In re Tam now makes it two cases on trademark disparagement that the Federal Circuit has ever decided—both have been in the past year and both affirmed the TTAB’s finding of disparagement. The court obviously felt bound by precedent. Nevertheless, Judge Moore, the author of the 11-page majority opinion, offered 24 pages of what was styled “additional views," but which read more like a petition for rehearing en banc on the constitutionality of § 2(a) of the Lanham Act.
Though not binding, this last bit by Judge Moore may prove most interesting of all. The judge offered many reasons for wanting to revisit the Federal Circuit’s position on the constitutionality of § 2(a): its 1981 decision In re McGinley did not cite any authority, its analysis consists of only a few sentences, the decision has been criticized in the intervening years, jurisprudence on the unconstitutional conditions doctrine and the protection accorded commercial speech has since evolved, and the source of the PTO’s funding has shifted from tax payers to user fees.
The judge contends that In re Tam presents an unusually strong case for considering trademarks as protected speech since the applicant intended to use the mark to reclaim Asian stereotypes and to participate in a political and cultural discourse about race as a musical artist. At oral argument, the judge tried to distinguish this feature of the case from the Redskins case.
But the main thrust of Judge Moore's constitutional challenge to § 2(a) is based on the unconstitutional conditions doctrine, which holds that the government cannot deny access to a government benefit on the basis of the recipients exercise of constitutionally protected speech.
In claiming that the benefits of registration are not just procedural, but are also substantive, Judge Moore states that a disparaging mark “cannot be protected by its owner by virtue of a § 43(a) unfair competition claim” because “§ 43(a) protection is only available for unregistered trademarks that could have qualified for federal registration.” (emphasis in original). This is a bold claim not exactly supported by the cases she cites. The Supreme Court’s Taco Cabana decision simply says that “the general principles” under § 2 are “for the most part applicable” in determining whether an unregistered mark is protectable. That’s right because for the most part, these general principles are common law doctrine codified in the Lanham Act. No case yet holds that the owner of a disparaging mark would not be able to assert common law rights against an infringer, but in a 2013 decision the Federal Circuit did suggest that an unregistrable common law mark may receive protection under § 43. As we argued in a previous post, variations in the availability of legal remedies are better understood as procedural changes rather than subsidies of private speech.
By focusing on the benefits of registration, Judge Moore loses sight of the significance of registration. Although in civil law countries trademark registration generally confers rights, in the US trademark rights are created by using a mark in commerce and developing good will. Registration is “essentially a recognition of a right already acquired by use.” At the same time registration is encouraged because it provides notice of rights—hence the benefits that flow from registration. These benefits, however, are distinguishable from benefits conferred by the government in other unconstitutional conditions cases, which typically involve direct subsidies of speech. In the case of trademark registration, the government is literally approving of certain trademarks; the symbol of trademark registration—the “R” in a circle—is a statement by the trademark owner that the government has approved, not its business or its goods, but the mark itself. Such approved trademarks are included in the government’s registry, or list of marks certified by the government. No other unconstitutional conditions case involves such symbolic acts of endorsement by the government, but instead involve unseen deeds such as exemptions from taxes or import duties.
The limited nature of the denial of registration seems to be lost on Judge Moore. The PTO’s refusal to register disparaging trademarks does not force the owner of a disparaging mark to relinquish a constitutional right. The owner can continue to use the mark. In cases where the Supreme Court has found an unconstitutional condition, the speaker has few realistic options other than to cease engaging in a particular form of speech in order to avail itself of a valuable government benefit. No such forced choice results from § 2(a). Because the registration system parallels common law trademark protection, some of which is enshrined in the Lanham Act, the owner of a disparaging mark can continue to engage in its chosen speech and endeavor to have it protected as a common law trademark.
Perhaps worst of all, Judge Moore's application of the presumption against content-based regulations to § 2(a) has no limit. If all trademarks are constitutionally protected speech and the act of registration is the conferral of a substantive benefit, then when may the PTO make a content-based determination that affects registration without violating the First Amendment? The Lanham Act also requires the PTO to refuse registration to marks that consists of simulations of state insignia and marks that include the name of a president. There’s no doubt that these determinations involve trademark owners as speakers and the denial of benefits. They also require the PTO to evaluate the content of the mark. Should the constitutionality of these provisions also be revisited? And what about the denial of registration to merely descriptive marks, deceptive marks, and marks that falsely suggest connections? Under Judge Moore’s logic, these determinations are as unconstitutional as direct content-based regulations of speech. Moreover, it is worth noting that none of these kinds of marks would fall within traditionally unprotected categories of speech (e.g., libel, incitement, obscenity). So applying the First Amendment full bore as Judge Moore proposes would also disable the PTO from barring the registration of these marks as well.
The broader point is that all trademark registration determinations under § 2 are content-based because they all involve an evaluation of the meaning of the mark in the context of its use and analysis of whether it is disparaging, descriptive, deceptive, etc. Thus, if strict scrutiny is applied to the ban on disparaging or scandalous marks, it is also required in evaluating the constitutionality of all the other trademark restrictions contained in § 2. If a court were truly serious about apply this presumption, there would be little left of trademark law.
Finally, Judge Moore asserts that trademarks are private speech, not government speech. Judge Moore asserts that when “the government publishes registered trademarks in the Trademark Principal Register, it does so not to communicate a particular message or select a particular viewpoint.” But it is hard to get around the fact that the Register is a list of marks that the government has approved and that when a trademark owner uses the registered “R” symbol along with its mark, it is using that symbol precisely as a certification that the government has approved its mark. It is only when the PTO rejects the registration of a mark that its use is purely private. There are a host of reasons why the government should have the power to distance itself from odious speech and illiberal business practices. As we argued in a recent Slate article, all of these are compelling features of the federal government’s power to regulate interstate commerce.
Wednesday, April 22, 2015
More IP Prawf Lateral Moves...
In addition to the four additions to Texas A&M discussed here, Scott Hemphill (Columbia) will be joining NYU Law (the announcement is here). In addition, Ann Bartow (Pace) will be joining the University of New Hampshire School of Law as the Director of the Franklin Pierce Center for Intellectual Property (this announcement is here). Congratulations!
Tuesday, April 21, 2015
A Human Right to Intellectual Property?
The merger between trade and intellectual property, referred to as “strange bedfellows” in the 1990’s, has become the norm as a result of the WTO Agreement on Trade-related Intellectual Property Rights, and subsequent agreements. Intellectual property and human rights may seem like strange bedfellows as well. However, there is a greater connection between these two areas of law than one might imagine.
Article 27(2) of the Universal Declaration of Human Rights (UDHR) provides that “everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” The International Covenant on Economic, Social, and Cultural Rights contains similar language. A number of scholars have considered the relationship between human rights instruments and intellectual property rights (i.e. Helfer, Yu, Shaver, Land, Chapman, Carpenter, and others). Some (Chapman, for instance) have suggested that this UDHR provision provides a basis for a human right to copyright or patent protection.
Writing on corporations and the possible human right to intellectual property, I found myself reluctant to accept the notion of a right to intellectual property as a human right. I like the idea of considering the impact of intellectual property rights on human rights, as has been done in the access to medicines debate, for instance. However, I am generally uncomfortable with the notion of a human right to intellectual property. Equating the UDHR human right to a right to copyright or patent protection raises a number of issues, and I doubt that it is ultimately a good idea. However, I am willing to be convinced otherwise.
Monday, April 20, 2015
Chanel and Mrs. Jones
Last fall, fashion house Chanel filed a trademark action against hairstylist Chanel Jones (discussed here at The Fashion Law), to prevent Jones from using her first name in connection with her business. The case was notable given the relative size of the parties and the distance between their markets--Jones' hair salon is in Merrillville, Indiana, which seems more than a stone's throw from the Rue Cambon in Paris which Chanel calls home. Why bother?
Moreover, the press' attention was undoubtedly caught by the fact that the company filed suit against an owner using her first name for her business, which is a common practice for personal service concerns. As Gene Quinn remarked in a different context, "How crazy would it be if you couldn’t even use your own name on your store front?" Well, as this survey of the case law by Christopher Bussert points out, in the past courts have enjoined companies from using their founder's name on their products and/or services when a senior (read: prior) user has established rights to the same name.
As background, since the 1960's, Chanel (or alternatively Shanelle) has become an increasingly popular first name.
Since Gabrielle Chanel started her brand in the earlier part of the 20th century, the fashion house has grown in size and repute. Today, Chanel primarily sells clothing, accessories and beauty items. Although Chanel does not currently offer hair salons, the line does sells some hair accessories and a shower wash that can be used for hair. Further, Chanel's complaint asserts that its name is a "famous mark," which in trademark parlance means that the company asserts strong rights that allow the prohibition of non-competing uses that are likely to dilute its fame. Moreover, the law requires mark holders to police unauthorized uses of their marks lest they become generic (and consequently unenforceable).
I did some digging into the disposition of Chanel's case on Lex Machina, a great resource for those looking into pleadings and analytics of IP cases to find out more. According to Chanel's complaint, the brand sent five letters to Chanel Jones before filing suit but obtained no response. It did not seek damages. It does not appear from the docket that Chanel Jones secured representation. Indeed, the Court sua sponte struck the answer filed on behalf of Chanel Jones' business because LLCs cannot appear pro se. The matter settled with a consent judgment in which Chanel Jones agreed not to use the term "Chanel" in connection with her business. According to the minutes of a status conference before the court, Chanel indicated its willingness to help with any costs associated with the change, although the record does not disclose whether this occurred in fact. So ends that one.
More broadly, trademark law is designed for a one-winner-take-all approach rather than a bargained solution that permits peaceful co-existence. Is this area of the law is well designed for creative industries? It seems as those Chanel could be using resources to do whatever it does best, rather than using them to defend its mark (for more on this point, see Devin Desai and Sandra Pierson's Confronting the Genericism Condundrum). At the same time, I can imagine that these disputes create significant wear and tear on those who must respond. As Chanel Jones stated in her answer, "I am just trying to make an honest living for my family and myself." As I argue here, design houses like Chanel contribute a fair share of positive externalities in the creative ecosphere, and fine-tuning rewards for those efforts appears to be more in line with the public interest.
Wednesday, April 15, 2015
Intellectual Property Conversations: International & Domestic
I think it is fair to say that international intellectual property is generally seen as distinct from general (i.e. domestic) intellectual property (IP), both in terms of scholarship and teaching. Thus, from what I gather, international intellectual property panels tend not to draw huge crowds during the annual IP scholars meetings. However, I see a fair amount of overlap between general IP scholarship and the international IP issues that some of us tend to explore. Among others, I see overlap when it comes to questions about the role of IP, the scope of IP rights, and whether the current international model and the mandated levels of intellectual property protection align with societal goals.
Writing international intellectual property scholarship requires an understanding of international law, and trade law in particular. This is due to the merger between trade law and intellectual property law that came about as a result of the World Trade Organization Agreement on Trade-Related Intellectual Property, commonly referred to as TRIPS. Post-TRIPS, there have been a number of other “trade-related” agreements that aim to protect intellectual property rights in the global arena. In addition to various bilateral trade agreements and investment treaties, there are multilateral agreements that have chapters or provisions on intellectual property. These include the Anti-counterfeiting Trade Agreement, the Trans-Pacific Partnership, and the Trans-Atlantic Trade and Investment Partnership. The two latter agreements are currently being negotiated.
There are complexities to the international discussion insofar as it involves some analysis of international legal obligations. However, the intellectual property aspects often address similar issues to those raised by some of the domestic scholarship. The articles discussed by Amy Landers and Dave Fagundes in their recent posts, for instance, are pertinent to some of the recurring themes in international intellectual property scholarship. Both international and domestic scholars might ask: what is the utilitarian calculus, and is society being well served? If not, is there some assumption (i.e. “faith”) that IP rights must be protected due to some natural entitlement? If so, is this beneficial to society or just to the IP producer?
Those of us who write primarily on international IP issues can, and do, draw on domestic IP scholarship for our analysis of international issues. In this globalized economy, maybe it’s time for international IP scholarship to become more integrated into the mainstream so that there can be a greater exchange of ideas between general IP and international IP scholars. Making connections between domestic and international IP, where possible, can only enrich the conversation.
Diversifying Startup Funding Sources
As someone interested in the growth of new ideas and innovation, I'm very interested in the financial infrastructure required to undertake creative activity. Although there is a high level of disagreement about the appropriate legal incentives needed to create new medicines, new technologies, new films and works of art, at a certain point there can be little dispute that time, resources, and dollars are required to create and ultimately bring products to market. Indeed, some work in the economics field has considered that the U.S.'s venture capital funding system has been a major factor to this country's ability to develop groundbreaking solutions. All puns aside about Snoop Dogg's recent decision to provide seed funding for weed startups (sorry! someone had to say it), there appears to be no limit to the types of funding sources.
For example, there has been a spate of recent press about mutual funds who are quietly beginning to provide startup funding in exchange for private stock. According to The New York Times, the growth potential of startups has attracted funding from more conservative sectors who are attracted by success of companies with high valuations including Uber, Airbnb, and Pintrest. Of course, there are limitations on the level of risk that these funds will tolerate. Balance is everything--according to the piece, "Fidelity’s Uber stock, for example, represents less than 1 percent of each fund’s total holdings."
I cannot help but wonder at the role that these funds will play to the overall management and direction of startups. Innovation isn't all about the money. Some of the value that many venture capitalists provide includes making introductions, advising, pointing out potential pitfalls and professionalizing operations. It isn't clear from the press whether mutual funds are providing these same benefits, although it may exist. Moreover, it may be that the mutual funds' decision to invest in more mature startups will alleviate this issue.
Nonetheless, in my view it is a very positive development to see more dollars moving toward the creation of new businesses. I am hopeful that some of this work will result in more invention, research, innovation and all of the benefits that those things can provide.
Tuesday, April 14, 2015
The Moral Psychology of the Fair Play, Fair Pay Act
Yesterday, four members of Congress introduced the “Fair Pay, Fair Play Act,” a bill that would entitle owners of copyrights in sound recordings to recover royalties for radio airplay of those tracks on terrestrial radio stations. That performers don’t receive such royalties may seem surprising, but it’s just one of many strange outcomes generated by the statutory labyrinth that is the Copyright Act.
At first blush, the rationale for such a revision seems simple and appealing. Performers work hard to create sound recordings, so when radio stations broadcast those recordings, why shouldn’t they get paid? After all, the songwriters who wrote those tunes get a royalty each time they are played. But upon closer examination, this rationale is more puzzling. The purpose of copyright law, expressed in the Constitution, is to promote the progress of science and the useful arts (including creative innovation) by means of financial incentives secured by exclusive rights in authors’ works of authorship.
Copyright’s incentives story may explain the FPFPA going forward (performers may be more likely to create future sound recordings if they can expect more remuneration via performance rights), but this account cannot make sense of the retroactive application of the law to already-created songs. And much of the industry force behind the act comes from performers who recorded older, classic tracks who feel aggrieved that they have not gotten royalties from their hit recordings for decades.
So if incentives cannot explain this sense of entitlement to recover additional royalties for past creation, what does? One account may lie in Mark Lemley’s snappy new essay, Faith-Based IP, discussed by Amy Landers in her earlier post on this site. The musicians and Congresspeople behind FPFPA may simply be relying on the notion that copyright owners have pre-political rights that should be recognized regardless of whether the existence of those rights would drive innovation, or even regardless of whether those rights would generate social welfare. At the surface, this may be a plausible account, but I want to propound a different account, one that draws on a forthcoming paper I co-authored with Chris Buccafusco, The Moral Foundations of Copyright Infringement. I elaborate this alternative theory below the fold.In our paper, Chris and I show that the FPFPA is hardly unique. There are countless examples in which owners of copyrighted works express outrage over unauthorized use in ways that bear no relationship to the classic IP incentives account, and that may even bear no relationship to their economic interests at all. Sometimes people even seek suppression of unauthorized use that might help them economically, such as when fashion designers sought stronger IP protection despite evidence that design piracy may actually help their brands.
This only shows the depth of the puzzle, though, not its solution. And while some have argued that authors deserve non-economically based rights in their works of authorship for reasons divorced from welfare considerations, Chris and I look instead to contemporary cognitive science for an explanation. In particular, our account invokes moral foundations theory, which posits the existence of at least five different heuristic dyads—harm/care, fairness/cheating, loyalty/subversion, purity/degradation, and authority/subversion—that describe the mental architecture of our experience of transgression.
It’s easy to explain why authors of extant sound recordings would root for the FPFPA. Everyone wants more money. But why would the situation of such authors case strike a chord with unaffected third parties such as the bill’s congressional sponsors, and even the public more broadly? Our moral-psychological account indicates that what is afoot here is instead the intuitive sense shared by many people that formal inequities (such as compensating songwriters but not performers for radio play of the same track) grate on our moral sensibilities, regardless of welfare considerations. Unlike the incentives theory, our account explains the FPFPA in its prospective and retrospective applications, since in both instances performers are equally aggrieved by the fact that songwriters get performance royalties but they do not.
This is different than a mere “rights” account because such accounts often (though not always or necessarily) descend into conclusory circularity. The idea of a right is a legal conclusion about relative entitlements, but is often used instead (and especially in some of the high-flown rhetoric about the FPFPA) as an argument for that conclusion instead (or as well). Hence the dismissals, like Lemley’s, of rights-based arguments about IP as rootless and “faith-based.”
But while Chris and I argue that the moral-psychological account provides a richer sense of non-welfarist approaches to IP (especially the instinctive responses of laypeople, including creators and owners of works of authorship, to unauthorized use) than simply dismissing them as rights-voodoo, this does not mean that copyright law should be determined by moral-psychological considerations. Our moral intuitions may feel righteous but that does not at all mean that acting on those intuitions serves the social good. After all, some of the great evil done in human history has likely been animated by a sense (however wrong) of moral righteousness.
What we end up suggesting is a moral-psychological realist approach to IP law. You can still be committed to the incentivist story of copyright while acknowledging that our moral intuitions operate in tension with those welfarist aims. In fact, you might get better outcomes from the incentivist perspective by basing copyright law on a vision of actors that acknowledges their complex moral psychology rather than assuming that they are simple utility-maximizing homines economici. How to do this, of course, is a harder question, but one suggestion we make in the paper is that copyright law should respect only lawsuits motivated by copyright-relevant harm (i.e., attempts to protect a copyright monopoly, not to seek revenge or vindicate a sense of injustice or grab extra rents).
The Moral Psychology of Copyright Infringement (available on SSRN) is forthcoming later this year in the Minnesota Law Review, but we are still making revisions, so comments are most welcome.
Monday, April 13, 2015
Law and Social Change
Law has an ill-defined relationship to culture. Certainly, some legal rules seek to standardize norms in the way that the reasonable person operates in tort law or custom sets interpretive principles for contractual relations. Law may push against culture, such as the way anti-discrimination laws attempt to eradicate bias.
Further, culture can seek to change law. One recent example that caught my eye is the transport of films, TV shows and other media into North Korea via weather balloons. Among other things, these balloons carry TV shows including Desperate Housewives and The Mentalist, so that those who find the USB drives on which this entertainment is stored can be exposed to cultural information about those outside North Korea's borders. This is one way that the Human Rights Foundation is seeking to reach out to North Korean citizens to open up the government's information block.
Where do such efforts come from? Recently, Peter Lee (UC Davis School of Law) has posted an interesting piece on social innovation that is insightful for those interested in innovation, the theory of the firm, distributive justice, and/or intellectual property. In it, he contrasts the formal incentive system of the intellectual property system to:
...the altruistic motivations and public funding that drive social innovations. . . Beyond efficiency considerations, however, social innovations often play a distributive role in shifting resources to underserved communities. Social innovations address underserved markets, such as when microfinance entities provide loans to populations who do not qualify for traditional financing. Going further, social innovations sometimes provide essential goods and services to entirely neglected populations on a charitable basis.
I found that Lee's piece opens a new door on the mechanisms that foster the creation of public goods. The piece is replete with insights about the interaction between government and private entities in both the IP and social innovation spheres. He argues that these systems have much to learn from each other. This is downloadable here and certainly worth a read.
Thursday, April 02, 2015
Mark Lemley's "Faith Based Intellectual Property"
I'm still processing a draft posted yesterday by Mark Lemley, "Faith Based Intellectual Property," here at ssrn. Like many of Mark's pieces, it is a clear, succinct read. In it, he points out that "IP rights are a form of government regulation of the free market designed to serve a useful social end—encouraging innovation and creation." The paper cites numerous pieces of empirical research conducted over the past several decades by both legal and economic scholars concluding that these goals have not been well met.
Faith Based Intellectual Property asserts that a divide, of sorts, is occurring in the field of IP scholarship, between those who write that, despite such scholarship, IP is justifiable as a legal constraint on creativity for other reasons. According to the piece, "this retreat from evidence [is called] faith-based IP, both because adherents are taking the validity of the IP system on faith and because the rationale for doing so is a form of religious belief." Lemley writes that non-utilitarian support for the system ignore important evidence and represent difficulty for the system as a whole. As he states, IP "intervenes in the market to interfere with the freedom of others to do what they want in hopes of achieving the end of encouraging creativity. If we take that purpose out of the equation, we are left with a belief system that says the government should restrict your speech and freedom of action in favor of mine, not because doing so will improve the world, but simply because I spoke first."
His conclusion goes further--that "we have nothing to say to each other." To explain:
I don’t mean by that that I am giving up on you, deciding that you’re not worth my time to persuade. Rather, I mean that we simply cannot speak the same language. There is no principled way to compare one person’s claim to lost freedom to another’s claim to a right to ownership. Nor is there a way to weigh your claim of moral entitlement against evidence that the exercise of that right actually reduces creativity by others.
Undoubtedly, it's an important piece, will foster discussion and further thought.
Tuesday, December 09, 2014
The New Cognitive Property & Human Capital Law
Intellectual property is all about the bargain, no absolutes. But below the radar, a patchwork of law and contract is operating to expand the types of knowledge and information that become propertized. My new article, The New Cognitive Property: Human Capital Law and the Reach of Intellectual Property, forthcoming Texas Law Review 2015 is now up on ssrn. Here is the abstract and as always, I would love to get your thoughts and comments:
Contemporary law has become grounded in the conviction that not only the outputs of innovation – artistic expressions, scientific methods, and technological advances – but also the inputs of innovation – skills, experience, know-how, professional relationships, creativity and entrepreneurial energies – are subject to control and propertization. In other words, we now face a reality of not only the expansion of intellectual property but also cognitive property. The new cognitive property has emerged under the radar, commodifying intellectual intangibles which have traditionally been kept outside of the scope of intellectual property law. Regulatory and contractual controls on human capital – post-employment restrictions including non-competition contracts, non-solicitation, non-poaching, and anti-dealing agreements; collusive do-not-hire talent cartels; pre-invention assignment agreements of patents, copyright, as well as non-patentable and non-copyrightable ideas; and non-disclosure agreements, expansion of trade secret laws, and economic espionage prosecution against former insiders – are among the fastest growing frontiers of market battles. This article introduces the growing field of human capital law, at the intersections of IP, contract and employment law, and antitrust law, and cautions against the devastating effects of the growing enclosure of cognitive capacities in contemporary markets.
Posted by Orly Lobel on December 9, 2014 at 10:45 AM in Article Spotlight, Employment and Labor Law, Information and Technology, Intellectual Property, Orly Lobel, Property, Workplace Law | Permalink | Comments (0)
Tuesday, October 14, 2014
Think about proposing programming for the annual meeting, or participating in a junior scholars workshop. And if you are ever interested in serving on a committee, let Russ Weaver (the executive director) know. The appointments usually happen in the summer, but he keeps track of volunteers all year long.
Posted by Marcia L. McCormick on October 14, 2014 at 11:00 AM in Civil Procedure, Corporate, Criminal Law, Employment and Labor Law, First Amendment, Gender, Immigration, Information and Technology, Intellectual Property, International Law, Judicial Process, Law and Politics, Legal Theory, Life of Law Schools, Property, Religion, Tax, Teaching Law, Torts, Travel, Workplace Law | Permalink | Comments (0)
Tuesday, September 23, 2014
The Washington Redskins, the Lanham Act, and Article III
As the Associated Press reported yesterday, the five Native Americans who prevailed earlier this year before the U.S. Trademark Trial and Appeal Board (TTAB) in their effort to have the Washington Redskins' trademarks cancelled have now moved to dismiss the lawsuit that the Redskins ("Pro-Football, Inc.") filed against them in the U.S. District Court for the Eastern District of Virginia under the Lanham Act, 15 U.S.C. § 1071(b)(4). As I endeavor to explain in the post that follows, it certainly appears that their motion should be granted--and the Redskins' lawsuit dismissed either because the Lanham Act doesn't actually authorize such a suit, or, insofar as it does, it trascends Article III's case-or-controversy requirement in this case.
I. The Lanham Act's Cause of Action for "Adverse" Parties
In their Complaint in Pro-Football, Inc. v. Blackhorse, the Redskins explained that they were seeking:
an Order of this Court: (1) reversing the TTAB Order scheduling the cancellation ofthe Redskins Marks; (2) declaring that the word "Redskins" or derivations thereof contained in the Redskins Marks, as identifiers ofthe Washington, D.C. professional football team, do not consist of or comprise matter that may disparage Native Americans; (3) declaring that Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a),is unconstitutional, both on its face and as applied to Pro-Football by the TTAB, under the First Amendment of the U.S. Constitution, and is void for vagueness; (4) declaring that the TTAB Order violates Pro-Football's rights under the Fifth Amendment of the U.S. Constitution; and (5) declaring that Defendants' petition for cancellation in the TTAB challenging the Redskins Marks under Section 2(a) was barred at the time it was brought by the doctrine of laches.
But whereas the Redskins' Complaint routinely describes their lawsuit as an "appeal" of the decision by the TTAB (where it wouldn't be that weird to have the complaining party before the TTAB--the Blackhorse defendants--as the putative appellees), the Lanham Act actually authorizes something else altogether--a standalone, new civil action against an "adverse party" so long as that party was "the party in interest as shown by the records of the United States Patent and Trademark Office at the time of the decision complained of." The problem with application of that provision here, as the motion to dismiss quite persuasively explains, is that it's not at all clear how the defendants here are "the party in interest," at least in light of the specific nature of the Redskins' challenge:
Ordinarily, the adverse parties in an opposition or cancellation proceeding before the TTAB are two businesses claiming rights to the same or similar trademarks. Thus, when a party dissatisfied with a decision of the TTAB brings actions under 15 U.S.C. § 1071(b)(4), it is usually involved in a dispute with a business that uses a similar trademark, with the parties often joining claims for trademark infringement, unfair competition and other causes of action.
Here in contrast, there's no such relationship, and "PFI does not allege any wrongdoing on the part of the Blackhorse Defendants. PFI does not allege that they breached a contract, committed a tort, or violated any law. Instead, PFI’s allegations are directed solely against the USPTO and PFI seeks relief only against the USPTO." In effect, the Redskins' claim is that the TTAB wrongly cancelled their trademarks--which, for better or worse, has rather little to do at this point with the complainants who initiated the cancellation proceedings in the first place. Thus, it certainly appears as if 15 U.S.C. § 1071(b)(4) does not in fact provide the Redskins with a cause of action against the Blackhorse defendants--and that the suit should be dismissed for failure to state a claim upon which relief can be granted.
II. The Case-or-Controversy Requirement
But imagine, for a moment, that the Lanham Act does so provide--and that § 1071(b)(4) actually authorizes this suit. The motion to dismiss argues that, so construed, the Lanham Act would violate Article III's case-or-controversy requirement, and that seems right to me--albeit for slightly different reasons than those offered by the Blackhorse defendants.
The motion argues that "The Blackhorse Defendants’ legal and economic interests are not affected by the registration cancellations and they will not be affected by this litigation." But I think the case-or-controversy defect here goes to the Redskins' Article III standing. After all, it's black-letter law that a plaintiff must allege (1) a personal injury [“injury in fact”]; (2) that is fairly traceable to the defendant’s allegedly wrongful conduct [“causation”]; and (3) that is likely to be redressed by the requested relief [“redressability”]. Although the Redskins were clearly injured, it's not at all clear to me how the Redskins satisfy either the causation or redressability prongs.
On causation, as should be clear from the above recitation of the Redskins' claims, none of them even as alleged in the Complaint run against the Blackhorse defendants--who were the complaining parties before the TTAB. After all, even though they initiated the proceeding that produced the TTAB order the Redskins seek to challenge, they did not themselves issue that order, nor are they a competing business somehow reaping financial or noneconomic advantage from the deregistration of the Redskins' trademark.
As for redressability, neither the TTAB nor the Director of the U.S. Patent & Trademark Office are parties to the Redskins' suit, and so it is impossible to see how the relief the Redskins are seeking could be provided by the Blackhorse defendants. Again, one can imagine a different set of facts where the adverse party before the TTAB could have both (1) caused the plaintiff's injuries; and (2) be in a position to redress them, but I just don't see how either is true, here. It's certainly odd to think that the defect in this suit goes to the Redskins' standing--after all, if nothing else is clear, the Redskins are certainly injured by the TTAB's cancellation decision. But standing isn't just about the plaintiff being injured by a party nominally connected to the injury...
III. The Equities
Finally, although the motion to dismiss doesn't make this point, there's an equitable point here that I think deserves mention. Whatever the merits of the TTAB's underlying ruling, I have to think that the Lanham Act was not designed to disincentive individuals like the Blackhorse defendants from bringing non-frivolous claims seeking the cancellation of registered trademarks on the ground that they are disparaging. But if the Redskins are right, here, then any party that pursues such a proceeding before the TTAB is necessarily opening itself up to the (rather substantial) costs of a new federal civil action if it prevails, even when the subject-matter of the suit is simply an effort to relitigate the TTAB's underlying cancellation decision. (All the more so because the standard of review in the new lawsuit is de novo, with full discovery.)
Such a result strikes me not only as unwise, but as not possibly being what Congress could have intended when it enacted § 1071(b)(4). Indeed, in many ways, the Redskins' claims sure seem analogous to a SLAPP suit--all the more so when you consider that the Redskins could have, but did not, directly appeal the TTAB ruling to the Federal Circuit.
Posted by Steve Vladeck on September 23, 2014 at 08:47 PM in Civil Procedure, Constitutional thoughts, Corporate, Culture, Current Affairs, Intellectual Property, Steve Vladeck | Permalink | Comments (2)
Friday, September 12, 2014
Intellectual Property Infringement as Vandalism (Part 2)
We first explore in the paper why the theft label for IP infringement has become so sticky in many milieus. We believe that the main reason that content owners and their associates use the rhetoric of theft is that they want to emphasize the gravity of the conduct. The average downloader might tell herself that it makes little to no difference in the grand scheme of things if she illegally downloads music or movies, or if she shares such materials with friends and even a few strangers. Basically everybody, however, understands the concept of theft and has been raised to understand, often axiomatically, that stealing is wrong.
If one were to ask content owners and other proponents of the “IP infringement as theft” theory to explain their views in greater detail, they would cite to a number of factors that create parallels between the two types of violations. The IP owner, just like the property owner, generally mixes her labor with pre-existing materials to provide society with goods and help it to flourish. She will sometimes only do so, however, if provided with a critical mass of remuneration, or at least that remuneration will affect her level of productivity and of her efforts to distribute her work. To the intellectual property owner, large-scale illegitimate distribution of her works may economically create the same effect as a horde of potato thieves does for a farmer. In the farmer’s case, there will be nothing left to buy if all the potatoes are gone. In the infringer’s, even though the song will still “be” there at the end, few people may want to buy it if they can obtain it at zero cost elsewhere.
Looking at it from the other end, the potato thief ends up with a good for which he provided no labor or other valuable effort in exchange. Thieves, by definition, free-ride on others’ efforts (although not all free-riding constitutes theft). Similarly, the IP infringer is just a few clicks away from illicit goods that he can obtain without in turn contributing to society. Had the infringer not downloaded illegally, for example, one of two things would have happened. For one, he may have bought the good legally and the owner would have made more money. Or, he may not have bought the good at all and while the intellectual property owner would have felt no financial difference, the infringer would not have been free-riding and would not have had the opportunity to distribute that good to people that would have purchased the good legally but for this opportunity. There is a further possible loss that arises from the fact that intellectual property can—contrary to popular wisdom—be rivalrous at times. In the case of trademarks, the fact that lots of people use fake Louis Vuitton bags could disincentivize legitimate buyers from buying that brand if they value exclusivity or fear being viewed as potential infringers themselves, as I discussed in my article Hedonic Trademarks, 74 Ohio State Law Journal 241 (2013). In the copyright world, some legitimate buyers of concert tickets may no longer be willing to pay the same amounts of money for what should have been an exclusive show if they know that illegal tapings of that show will circulate later. The more rivalrous intellectual property turns out to be in a given case, the more it resembles property and the more its infringement parallels theft.
There has been strong opposition, however, to the idea that the harm to an intellectual property owner that originates in infringement can be equated to the plight of the potato farmer in the example used above. For one, critics have suggested that the intellectual property owner retains the original work at all times even if it is infringed, whereas theft deprives an owner of a good, including the ability to enjoy it himself or sell it to someone else. Second, it is virtually impossible to remove all value from a good even through a large-scale infringement operation, which again distinguishes this scenario from theft. Third, the individual culpability of a given infringer tends to be much smaller than the culpability of a thief. Even if an infringer would have bought an artist’s work, she would have perhaps paid a few dollars in most cases given the high proportion of infringement that consists of illegal file sharing, and so a few dollars is the most that the artist is likely to lose. While many infringers together can occasion a large loss to a copyright owner, the infringers each tend to only chip away at the value of the work. Put differently, few infringers can truly be called the “cause” of a loss in this context, which is not true of thieves.
Some have argued that from a safety perspective, intellectual property infringement also simply tends to involve a much lower risk to the public than theft does because the latter could lead to physical altercations and the like. From a moral (and practical) viewpoint, a number of scholars have questioned what it means to say that what has become routine behavior for many is genuinely reprehensible. Scholars have argued that current intellectual property law makes infringers out of everyone, even people that do not engage in blatant behaviors like illegal downloading. Tying that in with theft and with the fact that the thief is generally viewed as an outcast of society who disrespects its rules, the concept of vast proportions of the population as thieves is puzzling. In the next part of this post, I will delve more deeply into why vandalism and trespass may provide better analogies for IP infringement than theft does.
Friday, September 05, 2014
Intellectual Property Infringement as Vandalism (Part 1)
In addition to empirical work in intellectual property, another area that has been keeping me occupied is the intersection between IP and criminal law. A few years ago, I wrote an article entitled The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 Harvard Journal of Law and Technology 469 (2011), in which I explored why we have criminal sanctions for copyright and trademark infringement but not for patent violations. Earlier this year, I published a paper called The High Cost of Low Sanctions, 66 Florida Law Review 157 (2014), that examined how low sanctions can lead undesirable laws to be passed and can eventually morph into high sanctions, an analysis whose focus was partly on copyright law. I then moved on to study, in an article called Intellectual Property and the Presumption of Innocence that is forthcoming in the William & Mary Law Review next year, the constitutional dimension of intellectual property criminal cases. I argued that prosecutors should have to prove that every element of such crimes, including the jurisdictional element, has been met beyond a reasonable doubt before convictions can occur. Most recently, I turned my attention to the relationship between the criminal (and civil) sanctions in intellectual property and those that we observe in property. This project, co-authored with Robert E. Wagner, is entitled Intellectual Property Infringement as Vandalism, and I would like to take the opportunity to describe it further here.
One of the recurring questions in scholarship is whether intellectual property qualifies as property and, as a correlative matter, whether IP infringement is theft. Content owners significantly push this analogy, including in heavy-handed ads that seek to remind people not to “steal” songs or movies. Meanwhile, critics have chipped away at the theft label. They have argued that when an object is stolen, the owner is entirely deprived of it, whereas IP owners maintain integral copies of their works when infringement takes place. Unlike in the case of theft, the intellectual property owner can also continue to sell copies of said work to willing buyers, if the market will bear it. Furthermore, to the extent the owner suffers a loss at the hands of the IP infringer, that loss is difficult to calculate. Not every infringer would have bought the work had he lacked the opportunity to infringe. At the same time, nobody can say with certainty about herself—even assuming perfect honesty—which works she would have bought in a zero-infringement world because the impulse to rationalize one’s actions in this setting is strong.
The sphere that discusses intellectual property infringement is thus mostly split between two camps. One of them believes that infringement is theft and concludes that if it is theft, the criminal sanctions and harsh civil sanctions that we have on the books are warranted. The other side denies that infringement is theft, sometimes downplays the gravity of infringement behavior, and regularly believes that the level of sanctions that American law provides is unjustified. We argue in our paper that the dichotomy that these two camps endorse is faulty, and that the question of whether intellectual property infringement parallels violations of property law requires much more nuanced analysis before it can influence the calibration of sanctions for intellectual property infringement. We seek to show that there is little meaningful difference between intellectual property infringement and property violations, but that the question of whether infringement is theft has led to the creation of an unnecessarily confusing and polarized discussion framework. While many scholars are correct to state that intellectual property infringement is not and cannot be literally the same as theft for the reasons briefly delineated above, such infringement bears significant similarities to and few distinctions from lesser property-related offenses such as vandalism or in some cases trespass.
If one accepts the idea that IP infringement does at times parallel property violations, albeit not necessarily theft per se, the startling realization emerges that IP laws actually may punish wrongdoers more harshly than property law punishes defendants for equivalent offenses. After creating an analytical model to determine the content of “equivalence” in this context, we demonstrate that adopting a truly property-oriented IP legal regime may actually mandate a view of lowered criminal and civil sanctions. I will explore the ideas from this paper in more detail in future posts.
Thursday, September 04, 2014
Using GoFundMe for Litigation
Here is a creative way this local news anchor is trying to raise public awareness and money for defending his case against a non-compete he had signed with his former employer. Watch him and his litigation team explain their woes.
Friday, August 29, 2014
Substantial Similarity and Music
From Guest Irina Manta.
For those interested in more scholarship on the topic of substantial similarity in copyright law, Carys J. Craig and Guillaume Laroche (York University-Osgoode Hall Law School) recently posted a piece entitled Out of Tune: Why Copyright Law Needs Music Lessons. Here is the abstract:
This chapter offers a critical analysis of copyright law that integrates insights from music. The authors argue that the unique qualities of musical works magnify the mismatch between creative practices and copyright doctrine, and suggest that an interdisciplinary analysis can shine a revealing light on both the problem and potential paths to improvement. Beginning with an overview of copyright doctrine in Canada in respect of musical works and music infringement claims, the authors then borrow analytical concepts from the discipline of music theory to problematize copyright’s “reasonable listener” test for determining substantial copying. Using a specially-designed musical composition, the authors illustrate how and why this test may fail to perform its necessary role in the infringement analysis. The authors conclude by identifying some ways in which the legal analysis could be improved, including a more extensive use of both expert and survey evidence, and greater consideration of the accepted norms and practices of the relevant creative community. The overarching aim of this chapter is to demonstrate the importance of bringing the insights from musical and other creative disciplines to bear on the law of copyright, so that it might more accurately reflect the very practices it is meant to encourage.
Rebecca Tushnet has posted some of the key excerpts here. The authors give an interesting overview of the special problems entailed in similarity determinations for musical works and show that Canadian law largely suffers from the same problems as U.S. law in that area. They are also open to the possibility of introducing surveys in copyright litigation (similar to the ones we use in trademarks cases), as I suggested in previous work.
Monday, August 25, 2014
Judging Similarity (Part 3)
This post is by guest Irina Manta
Now that I have discussed the background and methodology of the studies in “Judging Similarity”, it is time to turn to a fuller discussion of the implications of our results for the third and last part of this post.
We had three key findings:
1) Knowledge of copying significantly raises the similarity rating.
2) Knowledge that a high level of labor went into creating the original work significantly raises the similarity rating.
3) Knowledge that market substitution occurred does not appear to significantly raise the similarity rating.
As discussed in Part 2, we have reason to believe that the first finding is the result of confirmation bias. This finding is troubling in that it suggests that, at the most basic level, decision-makers may be unable to separate the two prongs of the substantial similarity test and that the copying prong (to borrow rhetoric from Barton Beebe’s work on the trademark multi-factor test) is “stampeding” the similarity prong.Unlike in a trial setting, where the facts in copyright cases greatly differ from one situation to another, our first study enabled us to isolate the copying element. Nothing changed between the two conditions aside from the statement that the creator of the junior work copied from the original. Given our research design and the fact that we purposefully picked work pairings that are the type likely to go to court, there is reason to believe that the powerful effect of the knowledge of copying may sway decisions on infringement at the margin.
The second finding raises its own problems. We believe that knowledge of a high versus low expenditure of labor played a role in two possible ways. First, it might have triggered the intuition that the greater expenditure of labor ought to correlate to a stronger property right or ownership interest. Generally associated with Lockean ideals, this intuition is thought to map onto people’s beliefs about owning the products and fruits of their labor-intensive activities. The association with “stronger protection” for the work may have translated into a looser standard for similarity. Second, the expenditure of labor may not have triggered subjects’ beliefs about the strength of the property right, but instead directly affected their intuitions about the wrongfulness of the copying. Copying is commonly perceived as a form of free riding and is often associated with plagiarism or cheating. It is therefore conceivable that the creator’s expenditure of labor led subjects to view the copying involved as entailing greater (and more morally outrageous) free riding, which they treated as wrongful.
If our interpretation of subjects’ reasoning is correct, it suggests that copyright law and policy have done a poor job of cabining labor-based considerations. In its now notorious decision in Feist Publications, Inc. v. Rural Telephone Services Co., 499 U.S. 340 (1991), the Supreme Court categorically concluded that “sweat of the brow” considerations—i.e., that copyright should be used as a reward for hard work—are largely irrelevant to copyright law, especially in determining whether and how much protection works obtain. While this may be true as a formal matter, our study shows that decision-makers have a tendency to re-introduce these labor-based considerations during their assessments of similarity as part of the copyright infringement analysis. Interestingly, while scholars usually try to adjust copyright law based on utilitarian considerations, subjects were swayed in their similarity ratings at a statistically significant level by labor considerations (finding 2) but not by market substitution ones (finding 3).
Our study suggests that instead of claiming to have labor-based considerations play no part whatsoever in its working, copyright law should do one of two things. First, it could make a more concerted effort to eliminate labor-based considerations from the different elements of the analysis. Alternatively, it could embrace the reality that moral intuitions relating to labor and free riding directly influence the assessment of similarity, which in turn serves as a simple proxy for wrongfulness. I have written previously about how we might work toward the first goal, but much research remains to be done in this area.
Thursday, August 21, 2014
Judging Similarity (Part 2)
This post is by August/September GuestPrawf Irina Manta.
In my first post on this subject, I wrote about the background that motivated us to conduct our studies on copyright infringement for our paper “Judging Similarity”. Today, I would like to discuss our methodology and results in more depth.
In the first study, we tested the hypothesis that images seem more similar simply by virtue of being copies. We used an online format and recruited subjects on Amazon Turk. Subjects were told that they would be shown image pairs and would be asked to rate their similarity on a numerical scale. We specified that subjects had to base their answers entirely on a comparison of the works themselves. We also told subjects that while there would be both similarities and dissimilarities, they had to judge the works as a whole. Further, we told them to assume each time that the work shown on the left was created before the work shown on the right. Subjects were randomly assigned to either the independent group or the copy group. The former group was told that the creator of the work on the right did not know about the work on the left during the process of creation. The latter group received the instruction that the creator of the work on the right copied from the work on the left during the process of creation. Subjects then proceeded to view image pairs such as this one.
We conducted statistical analyses and found that the individuals who were told that copying occurred rated works as significantly more similar to one another than did individuals who believed that the creation process had been independent.
The results of the first study can mainly be explained in one of two ways. First, confirmation bias may lead individuals to find similarities more easily when told that a work was copied. Alternatively, motivated reasoning may influence people to punish copiers as part of the similarity analysis because they find copying morally distasteful. The first explanation struck us as more plausible in this case because subjects were not told about the consequences of the similarity judgment.
We then conducted a second study that would provide more legal context for the similarity judgment. Our goal was to test two hypotheses about how moral intuitions about unfairness of copying might affect judgments of similarity. We tested the effect of information about high versus low effort invested by the original creator. We separately tested the effect of information about negative versus no change in market demand for the original since the copy became available. This study used a single image pair in hopes of eliciting a clean response and approximating the conditions that a jury or judge would encounter in a trial. We changed our instructions to include explanations of copyright infringement and of the types of consequences that could result from a finding of liability. We also briefly explained “substantial similarity” and how it had to be present for a claim to succeed. The rest of our instructions resembled those from the first study, and subjects were told to rate similarity on a numerical scale comparing only the works themselves and viewing them as a whole. We told subjects across conditions that the work on the left is the original and the one on the right is the copy. We used this image pair.
We used four conditions. In our “high labor” condition, we told subjects that the creator of the original spent about two months designing and setting up the shot on the left. In the “low labor” condition, we said that this process had taken ten minutes. In the “market effect” condition, we told subjects that since the copy has become available, it has had a strong negative effect on the demand for prints and licenses of the original and that sales of the original decreased by over 60% since the copy came on the market. In the “no market effect” condition, we told subjects that the arrival on the market of the copy had no effect on sales of the original.
When we compared the two labor conditions, we found a significantly higher similarity rating for the group that believed that the original work had taken a high level of labor to create. When we analyzed the two market substitution conditions, however, we found no statistically significant difference between the groups. In part 3 of my post, I will discuss the implications of our findings.
Monday, August 18, 2014
Judging Similarity (Part 1)
This post is by GuestPrawf Irina Manta.
I thought I would kick things off by talking a bit about the empirical intellectual property work in which I have been and continue to be engaged. Empirical work in this subject matter has been increasing in popularity in recent years after some pioneers like Barton Beebe and other scholars led the way. The relationship between social science and IP issues has fascinated me for years, so it is a much welcome trend in my eyes. Most recently, I collaborated on my own first project in that area with co-authors Shyam Balganesh and Tess Wilkinson-Ryan. The paper that resulted, Judging Similarity, will appear in the Iowa Law Review later this year, and I would like to offer a sneak peek here into some of the issues we examined.
The test for copyright infringement asks in part that fact-finders determine whether the original work and the allegedly infringing work are “substantially similar” to one another. Put differently, fact-finders—usually jurors—have to decide whether a “reasonable observer” would believe that the similarities between two works were of such a high degree as to involve wrongful appropriation. Further, fact-finders have to establish that actual copying took place, and similarity often plays a role to meet that prong as well when there is no admission of copying. While different circuits each have their own version of the copyright infringement test, they all require a showing of substantial similarity in some form or another. I expressed the concern in my earlier article “Reasonable Copyright”, 53 Boston College Law Review 1303 (2012), that the seemingly simple matter of determining similarity may create an inquiry that is particularly open to numerous cognitive biases. These biases, I argued, would distort the judicial process in a way that would likely generally benefit plaintiffs. My empirical work with Shyam and Tess allowed me to test some of these earlier intuitions I generated.
The first issue in the context of substantial similarity is that by the time the question of similarity reaches a jury, its members have already heard a great deal of evidence about the plaintiff, the defendant, the creativity involved, the process through which the work was created, the reasons for which the work was produced, the defendant’s own creative efforts and behavior, and, on occasion, the market effects of the defendant’s copying. Although the similarity finding is meant to involve no more than a comparison of the two works to assess whether they are sufficiently similar to render the copying problematic (i.e., improper), that judgment may be affected by the availability of this other evidence. The fact-finder is required to answer the question of substantial similarity through a mere comparison of the two works, which will often involve actively ignoring instinctively relevant and highly salient information. Copyright law thus seems to assume that the inquiry into substantial similarity can serve as a simple comparison of the two works, even in the face of extensive factual evidence that bears directly on the dispute in question. The fact-finder is presumed to be able to cabin and exclude from the analysis all of the evidence with which the court has been presented in the lead-up to the issue of substantial similarity.
We know from other contexts that it is very difficult to ignore salient information when performing difficult cognitive tasks. In the judicial world, for instance, many have attacked the instructions to ignore inadmissible evidence as often not only failing to alleviate the problem but in fact aggravating it by actually making the information more salient. The similarity determination may have traditionally lulled people into a false sense of confidence by creating the impression that it involves a purely perceptual task that does not contain complex moral judgments. We posited, however, that similarities would appear as more similar and dissimilarities as less obvious when the judgment was embedded in a narrative that identified an actor who intentionally engaged in copying.
As I will describe in more detail in my next post, we conducted two different studies that asked subjects to rate the level of similarity between pairs of images. We varied the instructions and extraneous information with which we provided subjects so that we could determine which factors, if any, influence what the legal system would like to see involve an entirely perceptual task. We were able to show through these studies that knowledge of copying led subjects to view two works as significantly more similar than otherwise. In addition, the belief that the original work had taken a lot of labor to create also significantly increased the similarity rating. Meanwhile, information that suggested that the junior work partially supplanted the original work in the market, i.e., that market substitution took place, did not affect the similarity rating. I will discuss our methodology and explain our results in part 2 of this post.
Monday, August 11, 2014
Fair Use and News Reporting
The US Court of Appeals for the Ninth Circuit has stated that "[w]aving the news reporting flag is not a get out of jail free card in the copyright arena." In Swatch Group Mgmt. Services v. Bloomberg L.P., __ F.3d __, 2014 WL 2219162 (2014), however, the Second Circuit took a charitable view of such flag waving and interpreted fair use broadly to protect a news organization's dissemination of a highly newsworthy recording. The Second Circuit's broad interpretation of fair use to accommodate news reporting is especially noteworthy in an era in which news organizations are often faced with difficult questions about whether they may legally reproduce "user-generated content."
In Swatch Group Management Services v. Bloomberg, Swatch Group sued for copyright infringement because Bloomberg disseminated a sound recording of a conference call between Swatch and investment analysts to discuss the company's earnings report. Swatch did not admit the press to the conference call, but Bloomberg nonetheless obtained and disseminated a recording of the call to its paid subscribers. A district court granted summary judgment for Bloomberg on fair use grounds, and the Second Circuit affirmed.
First, the court found that “whether one describes Bloomberg’s activities as ‘news reporting,’ ‘data delivery,’ or any other turn of phrase, there can be no doubt that Bloomberg’s purpose in obtaining and disseminating the recording at issue was to make important financial information about Swatch Group available to investors and analysts.” That Bloomberg profited from the dissemination of the recording did not alter the court’s analysis, because almost all news services obtain profits by publishing factual information. The court further observed that the nature of Bloomberg’s use of the recording supported a finding of fair use even though Bloomberg reproduced the original verbatim: “[T]he need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work without alteration.” (emphasis added) This use even could be considered “transformative” because Bloomberg was publishing “factual information to an audience from which Swatch Group’s purpose was to withhold it.” [!]
Analyzing the second fair use factor (i.e., the nature of the copyrighted work), the court found that Bloomberg’s use of the recording did not threaten Swatch’s copyright interests because the information disseminated was entirely factual, and Swatch had already “publicly disseminated the spoken performance embodied in the recording.” Third, the court assessed “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” Although Bloomberg used the entire work, the use “was reasonable in light of its purpose of disseminating important financial information to investors and analysts.” Fourth, Bloomberg’s use of the sound recording had no market effect on the value of Swatch’s unpublished recording, and Swatch created the recording for other advantages unrelated to “the possibility of receiving royalties.” Finally, the “balance of factors” favored Bloomberg’s dissemination being treated as a fair use, particularly given the importance of the public interest in financial information.
From a media law scholar's perspective, this decision is praiseworthy because the court clearly recognizes that the public interest should play an important role in fair use analysis. (Compare the Ninth Circuit's decision in Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1183 (2012), in which it said "fair use has bounds even in news reporting, and no per se public interest exception exists."). Instead of getting hung up on technical application of the fair use factors, the court implicitly looked to the broader goals of copyright law and found that the newsworthiness of (and lack of originality in) the recording trumped the fact that Bloomberg had used the whole thing without alteration.
Whether other courts will interpret the fair use factors as broadly when a defendant uses an entire copyrighted work remains to be seen. But in an era when copyright law is being (mis)used in an attempt to force takedowns of photos taken by monkeys, the Second Circuit's decision provides a neeeded dose of common sense.
Wednesday, May 28, 2014
Schemas, Shortcuts, and Software
We are constantly being provided with information -- whether we want it or not -- about what is going on in the world around us. Luckily our brains are equipped to handle the data (at least most of the time). In cognitive science, schemas are structures that help us to organize and interpret this information efficiently. We also use heuristics, or shortcuts, to process information quickly. And for the most part, these are good things. We may have a schema that organizes the data we need to drive safely and when faced with an unexpected obstacle, we have heuristics that help us to avoid that obstacle in time.
(NB - I'm still making sure I'm understanding the cognitive science terminology, etc. - see my earlier post on the subject...the point of this post isn't the precision of the cognitive terms but rather some implications in law.)
This raises at least two concerns for me. First - while it certainly is important to be able to process legal issues quickly, when considering questions about the law and its applications, should we always be focused on efficiency and speed or are there times when getting it right, even when it is slow or inefficient, should take precedence? Second - what happens when the schemas and heuristics we are working under are wrong?
I have an article that's coming out later this year in the George Washington Law Review that looks at the schemas and some of the heuristics that have arisen around the question of whether software and computer-related inventions should be eligible to receive patents. My arguments are basically that there are two schemas that are driving the software patent conversation -- the bad patent schema and the troll schema. In very brief, the schemas go like this: the Patent Office can't properly examine patent applications on software and computer-related inventions so it is issuing many invalid patents in this area -- therefore we should ban software patents. And because a lot of these patents are invalid and because they are easy to obtain, etc., patent trolls assert software patents in disproportionate numbers and trolls are bad -- therefore we should ban software patents.
Basically there is a framework set up underneath the software patent discussion that has very little to do with whether we want good software patents -- in my opinion, a bad schema. This problem is exacerbated by some flawed shortcuts, which I won't go into here.
But I don't want to make this post all about my paper or software patents or patent trolls (regardless of how much I like all three of those things). I'm wondering where, besides this question in patent law, is the conversation being had largely unrelated to the central question. Patent law can't be unique in this area - at least I hope not. Any thoughts of other flawed schemas?? Are there other important areas of law where the conversations are being misdirected by the structure set up to examine the problems?
Research on heuristics and the implications of these on law are much more common. In fact, much work has been done on flawed shortcuts. For example, stereotyping is one prominent heuristic that has been given a lot of ink in scholarly literature - in part because it often strikes us as just plain wrong. I imagine its a lot harder to sell you on a stereotype narrative about patent trolls, isn't it? This brings me back to my troll taxonomy - as long as patent trolls are seen as universally bad, it is unlikely that any argument that the stereotype is flawed will succeed.
Tuesday, May 13, 2014
Troll Taxonomy - Why Does It Matter?
It's a question that always evokes a love/hate relationship for me when I hear it at academic conferences or works-in-progress events...so what? It's painful, but if I can answer it, the paper will always be more valuable. (You think I would have caught on and started answering the "so what" question preemptively...but I'm a bit thick sometimes.)
Anyway, going back to the idea of a troll taxonomy that I mentioned last week...so what?
Why does it matter what kind of patent troll you are? As one commenter noted, if you need to throw the baby out with the bathwater to end the types of litigation abuse that are associated with trolls, then so be it. Is this just a useless exercise in classifying, counting, sorting, and grouping?
Here's why it does matter. We already break out certain types of non-practicing entities -- for example universities. Why? Because we are willing to accept some non-beneficial behavior (patents being held on inventions that are not commercialized by the patent holder) to receive other beneficial behaviors that this particular type of troll -- universities -- are good at (upstream research, medical research, etc.). My argument is that other types of patent trolls might similarly provide beneficial behaviors that outweigh (or at least counteract) the non-beneficial behavior of holding patents without practicing the technology. Without looking more closely at these trolls, it's hard to know what behaviors they engage in. And that's where I step in.
Notice, though, that I'm not pointing to the non-beneficial behavior of vexatious litigation or sketchy cease-and-demand letters, because those behaviors are not how we sort patent trolls now. We look only at whether or not they practice the patented technology - so when we're doing the beneficial/non-beneficial calculus, we should be using the non-beneficial behavior that landed the patent troll in the category to start with. If Congress and the courts want to start classifying patent trolls based on their litigation behaviors, then the conversation would be different and maybe a taxonomy wouldn't matter. However, as long as patent troll reform starts from the grouping of non-practicing entities, a troll taxonomy does matter.
Thursday, May 08, 2014
A Taxonomy of Trolls
I want to start with a little story - I'm at an academic roundtable in the land of the snowbird, so please don't take offense. Everyone knows that old people drive slowly. They keep young, vibrant folks from getting to where they want to get to, clogging up the roads with their big old cars. No one would argue that this is a problem that needs to be solved, so let's pass laws to get these old people off the road, right?
The legislators propose a set of laws to fix the problem:
1) Old people are no longer permitted to drive; and
2) Because it isn't easy to identify an old person without looking at who is driving, any person driving a late model Lincoln Towncar or any similar type vehicle is also prohibited from driving.
3) There is an exception for old people who are driving to work at soup kitchens or other charitable activities are allowed to drive, no matter how slowly and even if they impede the driving of other people.
If you don't see any problems with this story, then you're probably OK with the pending patent troll reform bills...but I'm not.
Patent troll legislation looks an awful lot like the laws above. Patent trolls purportedly get in the way of companies that are making and selling stuff, most egregiously by bringing nuisance litigation suits or sending fraudulent cease and desist demand letters. To deter this trollish behavior, many reform provisions have been proposed. By way of analogy to the old person driver laws above, if you don't make something, you are a patent troll subject to any number of limitations on your behaviors. If we can't tell whether you make something, you are a patent troll subject to said limitations. There are some people who don't make things, like universities; however, we like them, so they aren't subject to the limitations.
What's going on here can be attributed to cognitive biases - most prominently, the stereotyping or grouping bias, whereby certain characteristics are imputed to a group without regard to individual differences among the members of the group. Although the term "cognitive biases" usually carries negative connotations, cognitive biases actually help us get through life in an age when we are constantly bombarded with information - so much information that it is not possible to process it all. So instead of simply giving up, our brains use various heuristics and cognitive biases to lump the information and process it quickly.
Similarly, it is very difficult to craft legislation that can take into account all possible information - and so legislators need to take shortcuts and create groupings. But pending patent troll reform is simply too broad and ignores the fact that many of the behaviors that are driving the legislation are not captured by the stereotypical definition of patent troll. There are old people who drive fast (and young people who drive slow and impede traffic). And there are companies that do not make things that do not engage in the harmful behavior (and companies that make things and also file nuisance lawsuits, etc.).
I have begun a research agenda that is looking behind the broad definition of "patent troll." The overarching theme of my project is to develop a taxonomy of patent trolls, looking behind the curtains to tell the stories of these different groups. A few empirical studies have broken the group of patent trolls into types, but only for the purposes of counting. I, instead, want to study the entities behind the label, to tell the stories of the entities, and to compare the actual stories to the fairy tales and fables that are being built up around these patent trolls. The narratives, in many cases, will illustrate that the problems that Congress is looking to solve are not present for certain classes of these trolls.
My first stab at digging into the taxonomy of patent trolls is to look at formerly manufacturing entity. In a piece forthcoming in the University of Connecticut Law Review (that I'll talk more about shortly), I provide case study data on these entities that used to make something but for any number of reasons no longer do. While they fall squarely in the definition of patent troll (an entity that does not make things), they are not the same as other types of patent trolls. Are they engaging in the purportedly bad trollish behavior? If not, why are we comfortable with including them in the broad patent troll category? Maybe we shouldn't be.
As my guest term here goes on, I'll tell you more about the taxonomy I'm laying out, as well as giving you a peek behind the curtain at the stories of these different types of patent trolls. (And I'll try not to offend old people any further!)
Monday, May 05, 2014
Fee Shifting -- The Supreme Court vs. Congress
Fee shifting is one of the most talked-about provisions in pending patent legislation aimed at fixing the patent troll problem. The House passed a bill (HR 3309 - the Innovation Act) in December 2013 that, among other things, implements a "loser pays" system in patent law. In particular, the bill amends the Patent Act to state that a court shall award fees and expenses to a prevailing party in a case in which any party asserts a claim for relief under patent law, unless the court finds that the losing party's position and conduct were justified in law and fact (or else there are special circumstances that make the award of fees unfair). The purpose of this is to allegedly discourage patent trolls from bringing lawsuits, as they are believed to behave badly and take unreasonable litigation positions.
But patent law already has statutory language for fee shifting. Specifically, section 285 of the Patent Act (35 U.S.C. 285), as it currently exists, permits a court to award reasonable attorney fees in "exceptional cases." In an NYT op ed from June 2013, Federal Circuit Chief Judge Randall Rader, along with Professors Colleen Chien and David Hricik, noted that section 285 gives judges the power to award attorney fees to deter patent trolls but that it is rarely done. They then urge judges to make use of this power they have.
It is not entirely clear why judges had not made much use of section 285 , but one reason could be the high standards that the Federal Circuit had imposed. In particular, the court had set the standard for "exceptional cases" to be sanctionable litigation misconduct or a determination that litigation was "brought in subjective bad faith" and "objectively baseless." Further, the Federal Circuit reviewed determinations of "exceptional cases" de novo.
Last week, the Supreme Court overturned both aspects of the Federal Circuit's "exceptional cases" jurisprudence, making it more easy for district court cases to apply section 285. In Octane Fitness v. ICON Health & Fitness, the Supreme Court stated that there is no rigid test for determining "exceptional cases." Instead, section 285 can be satisfied by showing that an infringement case "stands out from others with respect to the substantive strength of a party's litigating position [either law or fact] or the unreasonable manner in which the case was litigated." In Highmark v. Allcare Health Management System, the Supreme Court overruled the Federal Circuit's de novo standard of review, stating that abuse of discretion is the appropriate standard for section 285.
Given the Supreme Court's directive for determining "exceptional cases" under section 285, it would seem that the only difference between existing section 285 and the amended version passed by the House is "may" versus "shall." Of course, the difference between these two tiny words is huge, as are 1) the accompanying provision in the House legislation that would require certification of ability to pay upon non-prevailing and 2) potential joinder of other parties having financial interest in the lawsuit if unable to certify the ability to pay.
In the face of the perceived patent troll problem, both the Supreme Court and Congress have stepped forward to address the issue via fee shifting. The problem is that the approach taken to implement and encourage fee shifting is drastically different. Which answer is better?
Other countries, of course, use mandatory fee shifting in patent cases, as well as other lawsuits. And other people (one example) have discussed how, for example, the British rule works and how a similar system might affect US patent law. But at least the way I see it (and the way some inventors, venture capitalists, and industry organizaitons have told me), the combination of the "mandatory" fee shifting, payment certification, and joinder provision is likely to shut the courthouse doors to parties well beyond the group of bad patent trolls that is driving patent reform today.
Now that the Supreme Court has stepped in to untie the hands of district court judges to award fees in patent cases, it would seem that the best thing for patent reform would be to take a deep breath, step back, and wait to see if section 285 -- as it is currently written and now flexibly interpreted -- provides a tool to curb bad litigation behavior (by trolls or anyone else), before rushing forward with a law that probably goes two steps too far.
Thursday, May 01, 2014
A Quick Hello
I am happy that Dan and PrawfsBlawg are letting me guest here this month. Thanks!
I'm Kristen Osenga from the University of Richmond School of Law. My teaching and research interests are intellectual property, interpretation, and language and the law, with a particular interest in patent law.
This month I plan on sharing some of my research and thoughts on my latest obsession -- patent trolls. Who isn't fascinated by these terrible creatures? I also want to talk about some cognitive biases I see at play in intellectual property law. Finally, this term has also been a banner year for patent cases at the Supreme Court...of course I'll be weighing in on these as the opinions come down.
And so as not to bore you all with patent law, patent law, and more patent law, I have been thinking about (and experimenting just a bit) with "flipping the classroom." Although I think this is an intriguing way to teach and allow for more problem-based learning or experiential exercises in the classroom, I am surprised at some of the skepticism and pushback I have heard. I look forward to sharing my (not so great) experiences, my plans for doing it better the second time around, and some of the debate about whether it is good for students and/or worth the excess work.
The Canadian ALPS
O Canada. O wordplay. For the title of this post refers not to the glorious snow-capped Canadian rockies (which are sometimes, though apparently not terribly often, referred to as the "Canadian Alps"), but rather the soon forthcoming Annual Meeting of the Association for Law, Property, and Society (hence, ALPS, get it?), which will be held this Friday and Saturday, May 2-3, at the University of British Columbia in Vancouver.
ALPS had its origins as a small property scholarship workshop that I was fortunate to be invited to when it was first held down at Chapman Law School in early 2008. Since then, different iterations of the conference have been held more or less yearly and the event has ballooned into this year's major event, which will feature a couple hundred attendees, with around 150 presentations over the course of two action-packed (or at least property-scholarship-packed days). Keynotes to be given by Joe Singer and Andre van der Walt. Property-related field trips. Mixers. Canada. You get the picture.
Two points, one small and one more general, about ALPS.
First, for those who can't attend, I'll be live-tweeting the event here. I can't promise any Tushnet-level detailed play by play of the proceedings, but I'll assay to comment on the proceedings when and where relevant.
Second, I have a particular interest in this edition of ALPS because I was part of the program committee. Along with Shelley Saxer of Pepperdine and Sally Richardson of LSU, we sorted the submissions, organized them substantively, and put them into an order that had to balance thematic coherence with everyone's scheduling preferences.
This was a lot of work (especially because the conference was big this year--easily the most attendees ALPS has ever had), but it was interesting and fun too, and I'm glad I was part of the team effort. I hadn't served on a program committee before, and it turned out to be a great way to get a sense of what people in the field from all over the world are working on, and to get a satellite-level notion of the lines along which contemporary property scholarship breaks down.
Junior scholars in particular could benefit from serving on the program committee of a major conference in their field. I wish I'd had the chance to do this in the first couple of years I was teaching. Not only is it a good way to get an instant crash-course in what kind of scholarship is happening in your area, but it's also an ideal means for meeting and making connections with people with similar or related scholarly interests (not to mention being the kind of service to the academy that looks good on a tenure application).
Off to Vancouver! I may see some of you property profs there. Otherwise, I'll blog at you all when I get back, unless I get eaten by a polar bear or decide to join a hockey team or some other Canadian cliche.
Tuesday, April 29, 2014
"Shadows" and "Innocence," copyright and performance
Earlier, I wrote about the Ninth Circuit’s recent Garcia decision, which is turning out to be the copyright Ishtar* of 2014. One take on what is so rank about the opinion is that it flouts a basic copyright principle that performances (separately from the works they are based on) are not copyrightable.
But earlier this month, just after Garcia was decided, the District of Nevada issued a far less remarked-on opinion entering summary judgment in favor of Teller (the silent, shorter member of the famed Penn & Teller duo), who argued that a YouTube video by Dutch magician Gerard Dogge infringed Teller’s copyright in his illusion “Shadows.”
At first glance, it’s hard to tell these cases apart. If Garcia was wrongly decided because (in large part) it erroneously held that performances are copyrightable, then shouldn’t Teller have lost as well? The answer is no, but it requires a closer look at the circumstances of these deceptively different cases. And the value of taking that closer look is to parse out more carefully what does, and does not, work about the “performance is not copyrightable” aphorism. More below the fold.
It’s worthwhile to give a quick sense of the infringement in Teller. Teller’s “Shadows” is a very elegant and affecting illusion that begins with a rose on a stand with a light in front of it causing a shadow of the rose to be projected onto a screen behind it. Teller then appears, and cuts away the petals of the rose’s shadow, and when he does so, each corresponding petal on the actual rose falls as well. In Dogge’s video, he performs a virtually identical illusion with nearly identical set dressing and materials (indeed, the name of his illusion is “The Rose and Her Shadow”), though there are some slight variations (Teller uses a rose in a vase, while Dogge’s is in a bottle; Teller’s and Dogge’s performances end with different performative flourishes).
That said, the way to reconcile Garcia’s wrongness with Teller’s (relative) okayness lies in the nature of the latter’s asserted copyright interest. Teller registered his work, “Shadows,” as a dramatic work (actually, "dramatic pantomime" in the registration certificate) with the Copyright Office in 1983 (though he had been performing the illusion since 1976). The registration comprises a detailed description of “Shadows” to the minutest detail. By contrast, Garcia’s purported copyright in “Innocence of Muslims” derived solely from whatever originality her performance added to the underlying words written by the screenwriter.
Moreover, Teller’s registration of “Shadows” also clarifies and simplifies his authorship status with respect to the work. He is solely listed as the dramatic work’s author, because he is—the entirety of “Shadows” is the product of his creative mind alone. Again by contrast, Garcia’s authorship status with respect to “Innocence” is a wreck. She is at best one of many joint authors of the work, though her relative contribution to the final product is vanishingly slim.
Still, these two cases raise a puzzle: Is performance copyrightable or isn’t it? I don’t think we need to get too Clintonian about this (i.e., no need to default to “it depends on what ‘performance’ means” hair-splitting). Teller didn’t hold that performances are generally copyrightable. It held that Dogge’s YouTube video amounted to an unauthorized public performance of Teller’s copyrighted dramatic work.
If you want to get really technical about it, Teller’s claim was not that Dogge’s video was substantially similar to Teller’s performance of “Shadows” (indeed, there are many different performances of “Shadows,” though they are all nearly identical), but rather that it was similar to the dramatic work “Shadows” that was embodied in the copy Teller filed with the Copyright Office back in ’83. A performance is something that you can do with a work, just as you can reproduce or adapt or distribute copies of it, it’s not the work itself, and only works are copyrightable.
Throughout this post, I’ve been saying that Teller seems basically right. The reason I’m equivocal lies in one part of the opinion that went largely unremarked. The court remarked that the defendant’s work was substantially similar to Teller’s in part because “both performances are based on the incredibly unique concept of a performer cutting parts of a rose’s shadow, thereby cutting the corresponding parts of a real rose.”
Putting aside the court’s problematic usage of “performance” and “performer”, what raises a red flag about this passage is the court’s suggestion that Teller’s copyright extends past his specific expression of the particular dramatic work articulated in the deposit copy he included with his copyright registration, and applies generally to the “concept” embodied in his dramatic work.
This phrasing seems to flout copyright’s good old idea/expression dichotomy, though as with all idea/expression issues, the distinction is a hard one to draw. I’m OK with the outcome in Teller because Dogge’s video mimicked Teller’s work down in detail with only a few exceptions. But one could imagine variation on “Shadows” that are not as slavish in their copying. Consider a variant where a garrulous magician cut the petals from the projected shadow of a sunflower, causing the real thing to fall. Or more abstractly, imagine a version where a talkative illusionist came out and cut the limbs off of the projected shadow of the human effigy of some great historical villain (Hitler, Stalin, Donald Sterling), causing the limbs on the actual figure to fall off. I think the latter two would be far enough from Teller’s work to be allowable, even though they are based on the “incredibly unique concept” that animates “Shadows.”
Finally, if Teller is (mostly) rightly decided, does that mean that magic tricks are copyrightable, contra the major premise of Jacob Loshin’s really cool article on informal means of protecting illusions in the magician community? No way. What Teller owned was the copyright in a dramatic work that happened to contain a magic trick. The underlying idea that animates the specific expression of the performance remains, in my opinion if not the D-Nev’s, fair game.
*This 1987 movie, featuring Warren Beatty and Dustin Hoffman lost in the Sahara Desert, was generally considered unspeakably awful and became a legendary Hollywood bomb. This tends to be my go-to reference for Hollywood disasters because, unlike Waterworld or Cutthroat Island or Heaven’s Gate, I actually saw Ishtar in the theater when I was a kid. God knows why. Maybe it was some form of punishment.
Wednesday, April 09, 2014
A Typology of Authorship in Highly Collaborative Works
To paraphrase Anna Karenina for the kajillionth time, all copyright scholars think Garcia was wrongly decided,* but every copyright scholar thinks so in their own way. When the Ninth Circuit held a couple months back that an actress has a “copyright interest” in the film in which she briefly performed, the (understandably) apoplectic reaction was as entertaining as the decision was mysterious. I’m on board with the general reception that the Garcia opinion was the copyright equivalent of sitting on a whoopee cushion, so instead of beating that long-deceased equine, I will instead explore a related issue raised by the case.
Copyright’s notion of authorship works great when we’re dealing with the classic, solo Romantic author: Some genius artist sits alone in a room painting a masterpiece all of her own invention, and—boom—thanks to section 201(a), the copyright in that work vests in her, making her the author of the work for the duration of the copyright, and the owner of the work until she transfers her copyright.
But a much harder question arises when we complicate the story of authorship to include multiple collaborators on a project. The solo writer or painter is clearly the author of their work, but when we imagine a fashion photograph involving a photographer, model, makeup people, and numerous technicians, the notion of authorship becomes far murkier. This is, then, one of the major issues raised by Garcia: how do we allocate authorship when many people make expressive contributions to a final creative product?
So this post seeks neither to praise Garcia (obv.) or to bury it (that’s been done amply and adequately already). Instead, below the fold, I want to develop a typology of the different kinds of creative contributions people make to works, and how these different kinds of contributions might give rise to what we call copyright authorship. Importantly, this is not a normative claim that all of the contributors in these classes are or should be entitled to joint or freestanding copyrights, but merely to organize and make sense of the different kinds of contributions to works that could plausibly be understood to be the result of creative authorship.
First is what I will call visionaries. This is a grandiose term because I can’t at present think of a less pretentious one, but I mean it simply to refer to the person who is in charge of the overall vision of a highly collaborative work of authorship—the director of a film, the producer of a sound recording, and perhaps the photographer of a sophisticated, artistic photograph (hence there will be no rehashing of the Ellen’s-selfie debacle here).
The visionary comes closest to the person who fits the Romantic notion of authorship of a work. The director of a film, for example, typically has the initial vision of and the most creative control over the content of the entire film. Hence courts have tended to conclude that (presuming we are to regard works as unitary rather than comprised of many different subworks by many different artists, which Garcia surprisingly called into question) the person exercising this visionary function is the presumptive author of a highly collaborative work. E.g., Burrow-Giles v. Sarony (U.S. 1884) (holding that Napoleon Sarony was the author of a famous photograph of Oscar Wilde because Sarony determined the setting, lighting, subject placement, and other features of the work).
Second, consider performers—actors in films, models in photographs, singers and session musicians in sound recordings). It was the Garcia court’s willingness to consider performers as authors of works that was so jarring to settled understandings of copyright (and also to the Copyright Office, which had rejected Garcia’s application for a copyright in the same performance that the Ninth Circuit held was protected).
I share the intuition that something seems very wrong about extending Garcia a copyright in her performance. But what complicates this is that I don’t have that same intuition in the context of sound recordings.** It does not seem obviously wrong to me that singers and musicians should not be the owner of the sound recordings they create at a studio. Their performances vivify the otherwise highly abstracted musical works on which they are based, and comprise the substance of the recorded sounds themselves. The seeming plausibility that musical performers might have a copyright in their sound recordings makes it a little harder to reject out of hand the notion that dramatic performers can never have a copyright interest in the audiovisual works to which they contribute.
The third category is the technician. This is the person who actually causes sounds or images to be fixed in the tangible medium of expression that is required for federal copyrightability—the cinematographer in film, the sound engineer in a recording studio, or the person taking a photograph (modernly, this is usually the visionary as well, but this was not always the case—Napoleon Sarony, for example, never touched a camera in his life).
A colleague once pointed out to me a formalist argument for why such technicians should have authorial status. The work in photographic works, audiovisual works, and sound recordings is pretty much indistinguishable from the fixation. So for a sound recording, the work is the actual sounds fixed in the studio’s digital audio tape. By this logic, then, the person who is actually creating the work is the person who is actually fixing the sounds (or in the case of other works, fixing the images).
This argument works well when the technician also makes crucial creative decisions about the work. The best example is the photographer. Eddie Adams or Manny Garcia (no relation to the “Innocence of Muslims” actress—as far as I know, anyway) are both the visionaries who imagine their photos (to the extent possible with photojournalism, which typically requires spontaneous creation) as well as the technicians who execute the fixation of their creative vision. Sound recordings are a harder case. Some sound engineers make creative contributions, while others act at the direction and discretion of producers. And the case where this makes the least sense is the cinematographer, who exercises great technical skill to operate the camera but who typically acts in the service of realizing the director’s creative vision (again, there are exceptions—Spielberg, for example, takes a relatively greater technical role in his films than most Hollywood directors).
The fourth and final category is the writer. This category will be populated only where the highly collaborative work is derivative of some other work—a screenplay, a musical work—so would exclude works like a painstakingly posed photograph. And it is beyond obvious that in order to create the film or sound recording at all, the creator of the derivative must get a license, either through bargaining (in the case of a film) or through section 115’s compulsory license provisions (in the case of a sound recording). But the fact of acquiring a license does not diminish the central role that the writer’s contribution plays in the creative impact of films or sound recordings. It just means that here, unlike with other categories, the copyright ownership issues are reasonably well demarcated and understood.
These categories—not meant to be exhaustive, but just illustrative—comprise four different ways that one might contribute to a highly collaborative work in a creative way that approaches copyright’s notion of authorship. One could contribute an overall guiding vision, or provide an original and electric performance, or supply the work’s underlying narrative structure, or contribute technical expertise in a thoughtful way that contributed to the aesthetic success of the final creative product.
The problem with acknowledging this multiplicity of forms of creative contribution for the purposes of law, though, is that copyright is ill-suited to manage the descriptive reality of authorship in highly collaborative works.*** This may suggest that Garcia is flawed pragmatically more than doctrinally. There may be some plausibility to the idea that a performance could be copyrighted, but the practical implications of going down that rabbit hole are just too messy to contemplate. So while the Romantic notion of locating authorship of all works in a single individual—visionary, technician, or whoever—may not square with the need to have a manageable notion of authorship (and, related, ownership). Hence this may be one rare instance in which Romanticism and pragmatism are on the same page.
*In all fairness, there were apparently a handful of Garcia supporters (other than members of industry groups benefited by the decision’s outcome).
**Based solely on casual empiricism, I think others share this intuition. I always ask my class (before we get into what law actually says about these things) who they think the author of a movie should be, and most people answer "director." But when I ask them who the author of a sound recording should be, the most common instinctive response is "the vocalist." No love for the producer, I guess.
***This may be a problem endemic to all property, actually. Real property law does ok with the idea of limited co-ownership, but once the owners of a given plot become too numerous, management problems and devaluation kick in. This is a particular problem for familial or tribal holdings over time.
Wednesday, April 02, 2014
A salience-bias defense of marginal law reforms
Hey y’all. It’s always good to be back guesting at Prawfs. I’m looking forward to sharing thoughts about property—physical, intellectual, and otherwise—over the course of the next month. I’ll kick it off with a news item that caught my eye today: The UK just announced a forthcoming reform to its copyright law. Among other things, British citizens and subjects are now free to—wait for it—make personal copies of legally acquired copies of digital media (e.g., eBooks, CDs) for format-shifting or backup purposes.
This aspect of the British copyright reform strikes me as a perfectly good and sensible idea (as did its other features, like broadening the UK notion of fair use), but response to it sounded more in the register of “meh” or “so what?” than “hallelujah.” After all, this part of the revision legalized conduct that most people assumed was already legal (and may indeed be legal in other countries with broader notions of users’ rights), was certainly widely underenforced (because it doesn’t make a lot of sense to spend resources breaking into people’s homes to see if they’ve made a nefarious illicit backup CD copy of, say, Fartbarf’s “Dirty Power”*), and was, in any event, largely a moot point thanks to the increasing marginality of the relevant technologies (because, as my students helpfully point out to me when I refer to this medium for experiencing music, who uses CDs anymore, Grandpa?).
And yet I think there is something interesting about the UK’s move, not so much for the substantive impact on copyright law or user practices, but about a strategy for how and why we may want to reform laws generally. I explore this notion below the fold.
The major justification for these reforms (which grew out of the very thoughtful Hargreaves Report, which, for what it’s worth, could be a model for US copyright reform, in the vanishingly unlikely event that any congressfolks are reading this) is simply that it makes sense to update law to reflect actual practices. By one estimate, 85% of people in the UK assumed that making personal use copies was already legal, and the practice is already widespread. On this explanation, the personal-use element of the UK's copyright reform is well-taken but inconsequential, like fixing a spelling error that didn’t really confuse anyone about the meaning of a sentence.
But there’s another, broader, reason why this reform might be good even—perhaps especially—for the kind of copyright industries who were likely to resist it. This kind of conspicuous gap between social norms and practices on one hand and regulation on the other can be an embarrassment to the law that exacts outsized costs in terms of credibility. The reason that law/norm disjunctures can be especially problematic is that non-specialists may generalize about the entire law based on one conspicuous silly or outdated provision. This is a species of salience bias or the availability heuristic. Observing one particularly notable example about a place or, say, a body of law can falsely lead us to believe we have a true sense of its overall character.
The UK group Consumer Focus made just such a leap in this setting, pointing out that the illegality of innocuous conduct like making personal backup copies had caused the credibility of all “UK copyright law to fall through the floor.” This move—deriving the character of an entire body of law from its worst provisions—is not limited to copyright. A roughly analogous phenomenon is the tendency of laypeople to assume that when one (purportedly) guilty man goes free, that the criminal law system is generally very lenient—despite the overwhelming rates of conviction for accused criminals.
This is sort of like synechdoche in law—using a part, and especially a flawed or discordant part—to represent the whole. And what it means for law reform, and in particular the reform of statues like the Copyright Act, is that law/norm disjunctures may be more problematic than is usually appreciated. We generally tend to think that these kind of disparities between law on the books and actual practices are bad because of the people they unwittingly regulate. Out of date laws could impose sanctions for conduct that has become widely, imposing outsized penalties on unsuspecting people for trivial violations. But the UK example reminds us that the law/norm gap may be a major problem for law itself, especially in light of the tendency of lay observers to infer from a single out-of-step provision that an entire regulatory structure is flawed.
*Yes I used the name of this band in this illustration for amusement (mainly my own). But also yes, there actually is a band called Fartbarf, and perhaps more surprisingly, they actually have appeal once the juvenile humor value of their name fades, assuming that you’re into 80s-inflected synth-pop performed by a bunch of guys in gorilla masks. And hey, isn’t everyone?
Sunday, February 09, 2014
Misunderstanding of fair use? Shrewd marketing move? Or both?
Friday, June 14, 2013
The Fine Details of Molecular Biology
So the most anticipated of yesterday's decisions is obviously Myriad Genetics, the gene-patenting case. (The less said about my embarrassingly wrong prediction in Tarrant Regional Water District, the better!) The Court's decision seems to be pretty much what everybody expected after oral argument. But after straining to follow all of the majority opinion, I enjoyed Justice Scalia's brief concurrence:
I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief. It suffices for me to affirm, having studied the opinions below and the expert briefs presented here, that the portion of DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not normally present in nature.
Some people have called this bizarre or mocked it as anti-evolution. Others defend it as intellectual humility. I have to say, my sympathies are with Justice Scalia. Whenever I read a long, complicated fact section in an opinion I cringe. (Which of these facts are really relevant? And if really relevant, how confident are we that they are correct?)
Indeed, Justice Scalia puts me in mind of the work of Allison Orr Larsen, who's written several interesting articles that are skeptical of the Supreme Court's treatment of questions of legislative fact. (I think that the molecular biology in Myriad would qualify as a legislative fact rather than an adjudicative fact, but I am not 100% sure I always understand the distinction.) Given that it is not clear that this is something the Court does well, it may be better for it to do less of it.
I also appreciate Scalia's candor, and wonder if it reflects something about the Court's attitude in its relatively large recent patent docket. Perhaps it is not a coincidence that the concurrence appears in a case where the Court seemed particularly eager to seize a middle position proposed by the government. The Court now has several cases (Mayo, Bilski) where it seeks to intervene in the Federal Circuit's patent jurisprudence withouw necessarily having a super clear idea what it wants to replace it with. Of course, the lack of a fully developed legal theory and the lack of a fully developed understanding of the "fine details" of the facts need not be connected -- but maybe they are. Maybe part of the reason it is hard for the Court to do patent law is because it is hard to understand the underlying science in any of the disputes it actually wants to resolve.
Tuesday, May 14, 2013
Is a broadcast to everyone private under the Copyright Act?
For the final post in my extended visit here, I want to focus on another example in my series of discussions about formalism vs. policy in copyright. Today’s case is WNET v. Aereo, which allowed continued operation of a creative television streaming service. As I’ll discuss below, the case pretty clearly complies with the statutory scheme, much to the relief of those who believe content is overprotected and that new digital distribution methods should be allowed. This time, the policy opposition is best demonstrated by Judge Chin’s dissent in the case.
In the end, though, the case shows what all of the cases I’ve discussed show: copyright was not really developed with digital content storage and streaming in mind. While some rules fit nicely, others seem like creaky old constructs that can barely hold the weight of the future. The result is a set of highly formalistic rules that lead to services purposely designed inefficiently to either follow or avoid the letter of the law. This problem is not going to get any better with time, though my own guess hope is that the pressure will cause providers to create some better solutions that leave everyone better off.
Here are the basic facts. Aereo runs a system with thousands of dime size antennas. Each of these antennas can capture over-the-air broadcast television, but not cable or satellite signals. OTA signals are “free” – viewers don’t have to pay for access to them the way they do for cable.
Aereo then runs what is essentially a remote digital video recorder for each subscriber. That is, when a user wants to watch or record a program, the Aereo system tunes one of the antennas to the appropriate channel at the appropriate time, saves the resulting TV signal (a show) to disk, and then either streams it to the user over the internet or stores it for the user for later viewing.
Aereo does this for every single subscriber; if 10,000 people want to record a show, then 10,000 antennas store 10,000 copies of the program. Why, you ask, would it do something so ridiculously costly and redundant? Because it’s the law, of course. A prior case, called Cartoon Network stands for this proposition. Here’s the logic: a) a user can use DVRs to store recordings at home (relatively well settled law since the Supreme Court’s decision not to hold VCR makers liable back in 1984); b) a cable operator can store those DVRs at the cable site, because where a customer’s DVR is located does not change the nature of its use, but c) the cable operator must maintain each customer’s choices like a DVR, meaning that the customer chooses what to record, and that a separate copy must be maintained for each customer.
The question in Aereo, then, is whether this basic framework changes if the “cable provider” is now an “antenna farm” provider. There are some differences. The cable subscriber is paying a fee that allows for the rebroadcast of content from the cable operator to the subscriber. Without such a fee/license, such rebroadcast would be infringement. Aereo has no such license, and thus its service could be considered a rebroadcast, which is a no-no. Just ask the folks who tried to rebroadcast NFL games into Canada.
The Aereo Court agreed with the rationale in Cartoon Network, however; the license was not relevant. Instead, the individualized copies were simply not “public” performances. They were private: selected by the user, recorded in the user’s disk quota, and shown in that form only to the user. As the court noted, it was as if the user had a private antenna, DVR, and Slingbox located at Aereo’s facility, and the fact that Aereo owned it and charged for the service was irrelevant.
Judge Chin dissented from the opinion, and took an opposite view, best described using the original dissent’s text:
Aereo's "technology platform" is, however, a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.
Judge Chin’s dissent goes on to argue that the formalistic reading of the statute fails, and that we should see Aereo’s acts for what they are: a transmission of content to members of the public, which thus constitutes public performance.
This disagreement is a great ending illustration of the cases I’ve blogged about this month. The tension between formalistic statutory reading and policy based glosses is palpable. In my last post, I made clear that I favor following the statute unless convinced otherwise.
But that doesn’t answer the fundamental question, which is: what do we make of all this? Sure, this case was rightly decided. Perhaps now this might lead to the formation of an efficient/licensed broadcast network streaming service that costs users less than Aereo because it is less resource intensive.
I’m not sure the Aereo ruling is the right one in the long run. One of the thorny issues with broadcast television is range. Broadcasters in different markets are not supposed to overlap. Ordinarily, this is no issue because radio waves only travel so far. When a provider sends the broadcast by other means, however, overlap is possible, and the provider keeps the overlap from happening. DirecTV, for example, only allows a broadcast package based on location.
Aereo is not so limited, however. Presumably, one can record broadcast shows from every market. Why should this matter? Imagine the Aereo “Sunday Ticket” package, whereby Aereo records local NFL games from every market and allows subscribers to stream them. Presumably this is completely legal, but something seems off about it. While Aereo’s operation seems fine for a single market, this use is a bit thornier. I’m reasonably certain that Congress will close that loophole if any service actually tries it.
Thus, dealing with what should be clearly legal under the statute is thornier than it appears at first. While I believe that more and cheaper streaming options would be a good thing, I wonder whether the disruption to local broadcast markets is the right way to get there. One thing is clear: copyright law is ill equipped to answer the question.Thanks again to Prawfs for having me, and I'll see you next time around (and in the meantime at madisonian.net).
Thursday, May 09, 2013
Teaching and Testing Law Students
I'm glad to be back for another rotation here at PrawfsBlawg. Like many of you, I've just finished up spring semester, and I'm grading exams while I think about new projects, line up my research and writing for the summer, and think about what I'd like to do differently the next time I teach. In this post, and some future posts, I'll share some things I did differently this year, and my thoughts on whether or not they were a success. I hope you'll share your ideas in the comments: I'm always on the lookout for better ways to teach my students.
This spring, in both Contracts and Copyright, I added a graded, mid-semester memo to the course requirements. In case you don't know, the typical law school class bases the entire grade on one exam at the end of the semester, so this is a departure from the norm, although I'm not the first person to try it. In fact, I shamelessly lifted the idea (and my implimentation of it) from Michael Madison at Pittsburgh. In copyright, I put together my own closed universe of materials and wrote a problem for the students to analyze. I asked them to pitch the memo at two different levels: give the client what she needs to understand what you think she should do and why she should do it, and provide the partner with a grounding in the case law and a suggestion for whether and how to litigate the case.
I tried something similar for Contracts, although I gave the students one "shadow" graded memo as a warm-up. I graded it for them, so they could see how I approached the memo, and what I was looking for. We followed it up with a graded memo a few weeks later. For both memos, I took my material from Doug Leslie's CaseFile Method assignments for contract law. I like the CaseFile method problem sets for this purpose because they provide a narrow issue, with a closed universe of reading materials.
In both cases, my hope was that the memo would help me assess how the students comprehend and synthesize the law, without worrying that they failed the assignment because they didn't find something they should have. I'm not downplaying the importance of research skills for the practising attorney, but I feel like that is a skill better handled in a course structured toward developing those skills.
The students in Contracts really rose to the challenge. The graded memo dealt with UCC 2-207 and the "Battle of the Forms." It's tricky stuff, and I feel confident that they mastered the material better than they would have after a day in class, although there were plenty of missteps in the memos themselves.
The memos written for the Copyright class collectively underwhelmed me. It's possible the problem I constructed, which asked roughly the same question that was posed in the recent litigation over custom Batmobiles, was somehow off, but they didn't come at the problem with as much energy and care as the Contracts students. Perhaps it's a difference between 1Ls and more experienced students. It's also possible that they needed the warm-up like the one I provided my Contracts students.
Despite my concerns, I feel like the memo assignment in both classes provided a unique opportunity for students to dig into a substantive area of the law and get feedback from a scholar who has developed some expertise in that area. I'm certainly not the best "legal writing" instructor that these students could have, but my perception is that the end result is nevertheless worth the effort, both for me and for the students.
Wednesday, April 24, 2013
On Policy and Plain Meaning in Copyright Law
As noted in my last post, there have been several important copyright decisions in the last couple months. I want to focus on two of them here: Viacom v. YouTube and UMG v. Escape Media. Both relate to the DMCA safe harbors of online providers who receive copyrighted material from their users - Section 512 of the Copyright Act. Their opposing outcomes illustrate the key point I want to make: separating interpretation from policy is hard, and I tend to favor following the statute rather than rewriting it when I don't like the policy outcome. This is not an earthshattering observation - Solum and Chiang make a similar argument in their article on patent claim interpretation. Nevertheless, I think it bears some discussion with respect to the safe harbors.For the uninitiated, 17 U.S.C. 512 states that "service providers" shall not be liable for "infringement of copyright" so long as they meet some hurdles. A primary safe harbor is in 512(c), which provides exempts providers from liability for "storage at the direction of a user of material that resides on a system" of the service provider.
To qualify, the provider must not know that the material is infringing, must not be aware of facts and circumstances from which infringing activity is apparent, and must remove the material if it obtains this knowledge or becomes aware of the facts or circumstances. Further, if the copyright owner sends notice to the provider, the provider loses protection if it does not remove the material. Finally, the provider might be liable if it has the right and ability to control the user activity, and obtains a direct financial benefit from it.
But even if the provider fails to meet the safe harbor, it might still evade liability. The copyright owner must still prove contributory infringement, and the defendant might have defenses, such as fair use. Of course, all of that litigation is far more costly than a simple safe harbor, so there is a lot of positioning by parties about what does and does not constitute safe activity.
This brings us to our two cases:
Viacom v. YouTube
This is an old case, from back when YouTube was starting. The district court recently issued a ruling once again finding that YouTube is protected by the 512(c) safe harbor. A prior appellate ruling remanded for district court determination of whether Viacom had any evidence that YouTube knew or had reason to know that infringing clips had been posted on the site. Viacom admitted that it had no such evidence, but instead argued that YouTube was "willfully blind" to the fact of such infringement, because its emails talked about leaving other infringing clips on the site - just not any that Viacom was alleging. The court rejected this argument, saying that it was not enough to show willful blindness as to Viacom's particular clips.
The ruling is a sensible, straightforward reading of 512 that favors the service provider.
UMG v. Escape Media
We now turn to UMG v. Escape Media. In a shocking ruling yesterday, the appellate division of the NY Supreme Court (yeah, they kind of name things backward there) held that sound recordings made prior to 1972 were not part of the Section 512 safe harbors. Prior to 1972, such recordings were not protected by federal copyright. Thus, if one copies them, any liability falls under state statute or common law, often referred to as "common law copyright." Thus, service providers could be sued under any applicable state law that protected such sound recordings.
Escape Media argued that immunity for "infringement of copyright" meant common law copyright as well, thus preempting any state law liability if the safe harbors were met.
The court disagreed, ruling that a) "copyright" meant copyright under the act, and b) reading the statute to provide safe harbors for common law copyright would negate Section 301(c), which states that "any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067." The court reasoned that the safe harbor is a limitation of the common law, and thus not allowed if not explicit.
If this ruling stands, then the entire notice and takedown scheme that everyone relies on will go away for pre-1972 sound recordings, and providers may potentially be liable under 50 different state laws. Of course, there are still potential defenses under the common law, but doing business just got a whole lot more expensive and risky to provide services. So, while the sky has not fallen, as a friend aptly commented about this case yesterday, it is definitely in a rapidly decaying orbit.
Policy and Plain Maining
This leads to the key point I want to make here, about how we read the copyright act and discuss it. Let's start with YouTube. The court faithfully applied the straightforward language of the safe harbors, and let YouTube off the hook. The statute is clear that there is no duty to monitor, and YouTube chose not to monitor, aggressively so.
And, yet, I can't help but think that YouTube did something wrong. Just reading the emails from that time period shows that the executives were playing fast and loose with copyright, leaving material up in order to get viewers. (By they way, maybe they had fair use arguments, but they don't really enter the mix). Indeed, they had a study done that showed a large amount of infringement on the site. I wonder whether anyone at YouTube asked to see the underlying data to see what was infringing so it could be taken down. I doubt it.
I would bet that 95% of my IP academic colleagues would say, so what? YouTube is a good thing, as are online services for user generated content. Thus, we read the statute strictly, and provide the safe harbor.
This brings us to UMG v. Escape Media. Here, there was a colossal screw-up. It is quite likely that no one in Congress thought about pre-1972 sound recordings. As such, the statute was written with the copyright act in mind, and the only reasonable reading of the Section 512 is that it applies to "infringement of copyright" under the Act. I think the plain meaning of the section leads to this conclusion. First, Section 512 refers to many defined terms, such as "copyright owner" which is defined as an owner of one of the exclusive rights under the copyright act. Second, the copyright act never refers to "copyright" to refer to pre-1972 sound recordings that are protected by common law copyright. Third, expanding "copyright" elsewhere in the act to include "common law copyright" would be a disaster. Fourth, state statutes and common laws did not always refer to such protection as "common law copyright," instead covering protection under unfair competition laws. Should those be part of the safe harbor? How would we know if the only word used is copyright?
That said, I think the court's reliance on 301(c) is misplaced; I don't think that a reading of 512 that safe harbored pre-1972 recordings would limit state law. I just don't think that's what the statute says, unfortunately.
Just to be clear, this ruling is a bad thing, a disaster even. I am not convinced that it will increase any liability, but it will surely increase costs and uncertainty. If I had to write the statute differently, I would. I'm sure others would as well.
But the question of the day is whether policy should trump plain meaning when we apply a statute. The ReDigi case and the UMG case both seem to have been written to address statutes who did not foresee the policy implications downstream. Perhaps many might say yes, we should read the statute differently.
I'm pretty sure I disagree. For whatever reason - maybe the computer programmer in me - I have always favored reading the statute as it is and dealing with the bugs through fixes or workarounds. As I've argued with patentable subject matter, the law becomes a mess if you attempt to do otherwise. ReDigi and UMG are examples of bugs. We need to fix or work around them. It irritates me to no end that Congress won't do so, but I have a hard time saying that the statutes should somehow mean something different than they say simply because it would be a better policy if they did. Perhaps that's why I prefer standards to rules - the rules are good, until they aren't.
This is not to say I'm inflexible or unpragmatic. I'm happy to tweak a standard to meet policy needs. I've blogged before about how I think courts have misinterpreted the plain meaning of the CFAA, but I am nevertheless glad that they have done so to reign it in. I'm also often persuaded that my reading of a statute is wrong (or even crazy) even when I initially thought it was clear. I'd be happy for someone to find some argument that fixes the UMG case in a principled way. I know some of my colleagues look to the common law, for example, to solve the ReDigi problem. Maybe there is a common law solution to UMG. But until then, for me at least, plain meaning trumps policy.
Tuesday, April 23, 2013
Impact of the “Lander Brief” in the Myriad (Gene Patent) Case – and an answer to Justice Alito’s QuestionThe Supreme Court heard oral arguments on April 15 in Association of Molecular Pathology et al. v Myriad, concerning whether human genes are patent-eligible subject matter. The case focused on Myriad’s patents on two genes, BRCA1 and BRCA2, involved in early-onset breast cancer
Surprisingly, many of the Court’s questions for Myriad’s counsel focused on what Justice Breyer dubbed the “Lander Brief” – an amicus filed on behalf of neither party by one of the country’s leading scientists, Dr. Eric Lander. (Lander was one of the leaders of the Human Genome Project and co-chair’s the Presidents Council of Advisors on Science and Technology.) [Full Disclosure: I am one of the authors of this brief] Justices Breyer, Ginsburg and Alito referred to the brief by name, and several other Justices were clearly influenced by the information in the brief.
I believe that the “Lander brief” was a hot topic of conversation because the Justices realized that it was central to applying the Court’s product-of-nature doctrine to DNA. Importantly, the brief demolished the scientific foundation of the Federal Circuit decision on appeal. The Federal Circuit panel held that human chromosomes are not patent-eligible because they are products of nature, but a majority found that “isolated DNA” fragments of human chromosomes (such as pieces of the breast cancer genes) are patent-eligible. The Federal Circuit’s distinction rested on its assumption that (unlike whole chromosomes) isolated DNA fragments do not themselves occur in nature, but instead only exist by virtue of the hand of man.
The Federal Circuit cited no scientific support for its crucial assumption – neither in the record below, nor in any scientific literature.
Embarrassingly, the Federal Circuit’s assumption turned out to be flat-out wrong. The Lander brief summarized 30 years of scientific literature showing that natural processes in the human body routinely cleave into isolated DNA fragments. Isolated DNA fragments turn out to be abundant outside of cells – including in cell-free blood, urine and stool. They are so common that they can be used for genetic diagnostics of inherited diseases and cancers. In fact, they are so prevalent that several scientific groups have shown that it is possible to determine the entire genome sequence of a fetus based on analyzing the isolated DNA fragments found in a teaspoons-worth of its mother’s blood.
Justice Breyer relentlessly pushed Myriad’s counsel to declare whether he agreed or disagreed with the Lander Brief. When the counsel finally declared that he disagreed, Justice Breyer demanded:
JUSTICE BREYER: Okay. Very well. If you are saying it is wrong, as a matter of science, since neither of us are scientists, I would like you to tell me what I should read that will, from a scientist, tell me that it's wrong.
The only reply that Myriad’s counsel could muster was to point to a declaration that had been filed (by Dr. Mark Kay) in the District Court case in 2009. (In fact, Dr. Kay’s declaration said nothing whatsoever about whether isolated DNA fragments occur in Nature. It concerned how to construe terms in Myriad’s patent.)
A few minutes later, Justice Ginsburg returned to the point:
JUSTICE GINSBURG: Do you concede at least that the decision in the Federal Circuit, that Judge Lourie did make an incorrect assumption, or is the Lander brief inaccurate with respect to that, too? That is, Judge Lourie thought that isolated DNA fragments did not exist in the human body and Dr. Lander says that --
MR. CASTANIAS: No, what -- I think Justice -- Judge Lourie was exactly correct to say that there is nothing in this record that says that isolated DNA fragments of BRCA1 exist in the body. Neither does Dr. Lander's brief, for that matter. And for that matter, those isolated fragments that are discussed in Dr. Lander's brief again are -- are what are known not -- not in any way as isolated DNA, but as pseudogenes. They're typically things that have been killed off or mutated by a virus, but they do not –
Here, Myriad’s counsel proved to be confused. Contrary to Mr. Castanias’s statement, the Lander brief (on page 16) explicitly stated that isolated DNA fragments were found covering the entire BRCA1 and BRCA2 genes. Also, “pseudogenes” had nothing to do with Lander’s brief; they arose in the ACLU’s brief for Petitioners and in Myriad’s reply. (“Pseudogenes” are sequences in the human genome that occur when RNA is rarely reverse transcribed into DNA; they are relevant to the patentability of cDNA but are unrelated to the patentability of genomic DNA.)
Justice Alito then jumped in, offering the only glimmer of hope for Myriad’s counsel:
JUSTICE ALITO: But isn't this just a question of probability? To get back to your baseball bat example, which at least I -- I can understand better than perhaps some of this biochemistry, I suppose that in, you know, I don't know how many millions of years trees have been around, but in all of that time possibly someplace a branch has fallen off a tree and it's fallen into the ocean and it's been manipulated by the waves, and then something's been washed up on the shore, and what do you know, it's a baseball bat.
In other words, Justice Alito asked whether isolated DNA fragments of the BRCA genes might be freakishly rare. Neither opposing counsel nor the Solicitor General had an opportunity to address Justice Alito’s question, because they had already spoken.
The answer to Justice Alito’s questions turns out to be: VERY common. A typical person contains roughly one billion isolated DNA fragments of the BRCA genes circulating in his or her blood.
The Lander Brief (in footnote 23) cites several papers showing that, in 1 milliliter of blood (1/4000th of total circulation), each nucleotide in the human genome was covered by about 250 fragments on average. In total circulation, this corresponds to about 1 million fragments (= 4000 x 250) covering each individual base. Across the length of the BRCA genes, this translates to about 1 billion fragments.
More explicitly, footnote 25 points to a web site published by Stanford Professor Stephen Quake (the author of one of the studies), in which he specifically reported the coverage of the BRCA genes in the blood stream. Dr. Quake’s data directly showed that a typical person carries roughly 945 million fragments of isolated DNA from the BRCA1 and BRCA2 genes.
I was very happy the Lander brief has got this much attention, since I think that once the Court understands the fundamental mistake made by the Federal Circuit (and apparently Myriad’s counsel), as several of the Justices questions suggested they did at oral argument, the outcome of the case becomes clear. The Court actually can sidestep a number of more difficult questions in patent law (about the precise meaning of the standard under Diamond v. Chakrabarty for when a molecule is “markedly different” than a product of nature), because isolated DNA fragments of the human genome are precisely products of nature themselves.
Saturday, April 20, 2013
The Securitization of Patents
[I cross-posted this at Patently-O last week, but thought it might be of interest to a more general audience]
My forthcoming article in Duke Law Journal, The Securitization of Patents, argues that the best way to create patent markets might be to start treating portfolios as securities. A full draft is accessible at this SSRN page. The article makes four basic points:
- Aggregation and trading is not limited to non-practicing entities – everyone is doing it.
- Companies are trading aggregated patent portfolios as they do other patent instruments, either through sale or licensing.
- Aggregation is beneficial, even critical, for efficiency; this is directly contrary to the conventional wisdom.
- Based on the above, markets might be improved by applying securities treatment to patent portfolios.
[NB: I focus on portfolios, not individual patents. I also focus on sale and licensing of patents, not the initial patent grant. The paper explains why in more space than I have here.]
When I first wrote Patent Troll Myths, there was very little empirical data about NPEs. Since then, such research has exploded, with new data every week seemingly counting the number of NPEs and their cases. This data, though helpful, leaves a lot to be desired, I think. First, there is a rarely a real apples-to-apples comparison with the activity of product companies (and when there is, the comparison is not very granular). To that end, I’ve been developing a matched data set for my Patent Troll Myths data so we can test what real differences in quality and quantity, if any, exist. Second, the data largely ignores licensing practices, which can be quite similar. To be fair, licensing data is difficult to come by, but without it, normative determinations are difficult. Third, studies like mine, which look at the provenance of NPE patents, are rare.
These issues lead to my first point: aggregation is not just for trolls anymore, if it ever was. The public is becoming a bit more aware of this with new focus on privateering, the outsourcing of patent enforcement by product companies to licensing and assertion specialists. The idea that aggregation is just fine when a product company does it, but suddenly evil when those same patents transferred to a third party has never sat well with me. And regardless of moral considerations, the fact of the matter is that patent aggregation is everywhere.
My second point follows from the first: aggregated portfolios are being used as assets, and traded as such by all sorts of companies. This is nothing new; people have been writing about patents as a new asset classes for a while now. Transactions are getting bigger, however, and they are hitting the news. Perhaps no transaction better illustrates my point than the recent Kodak patent auction. First, Kodak offered its patents for sale as a financing strategy in bankruptcy. Second, the eventual buyer was a consortium including, among others, Microsoft (a product company); Intellectual Ventures (a licensing company, but also one that litigates, but also one that aggregates defensively; and RPX (a defensive aggregator). This one transaction is my argument in a nutshell: everyone is aggregating, and they are doing so in buy/sell type transactions for financial purposes.
My third point is that such aggregation is not always (or necessarily often) a bad thing. This is decidedly against the conventional wisdom. Companies with large portfolios surely have the ability to cause “royalty stacking,” but in practice this is less likely than if many separate parties enforced those same patents. Litigation looks much the same; regardless of the size of the portfolio, courts are just not going to hear a case asserting 1000 patents. Only a few (at most 5 or 10) patents will be at issue, and then the aggregator looks like anyone else. Similarly, in negotiations, the parties usually haggle over a few “lead” patents. This is little different than negotiation with the owner of few patents – with one big exception. When you come to terms with the aggregator, you can settle and license hundreds or maybe thousands of patents at once. Not so with single-patent owners. These folks line up one after another, asserting a few patents at a time. The biggest NPEs will often assert patents obtained by individual inventors; would product makers really rather that the inventors assert their own patents separately? Maybe, before a time when people figured out a viable mechanism for funding patent assertion, but now that individuals might seek funding for enforcing their own patents, a single aggregator must surely be a better option than many inventor plaintiffs.
There is one difference with aggregated portfolios, of course. When the parties are done haggling over the lead patents, the portfolio owner always has more to discuss while the small patent holder has none. But rather than being the greatest cost of the portfolio, a seemingly bottomless portfolio is its greatest benefit.
And that is my fourth point: when parties are trading portfolios, the haggling should be over price instead of quality and infringement. In a large enough portfolio holding patents directly related to a particular product, there will surely be some number of patents that are both valid and infringed. The question is how many, and how much it will cost to find them. A central thesis of my article is that treating portfolios as securities will help lower transactions costs in a variety of ways by limiting the litigation costs of finding those infringing patents and instead better pricing patents in the market. For you legal sticklers, I didn’t just make this up: the paper looks at portfolios under the Supreme Court’s famous Howey test and concludes that such treatment is at least plausible under the law.
How might securities laws benefit markets? Not in the traditional “public offering” way. I suspect that most transactions would be excluded from the registration requirements. However, such transactions might be regulated as dark pools, and require clearinghouse treatment that makes such transactions public. Further, stock fraud laws might require the disclosure of information that might affect portfolio value. For example, patent holders who know of anticipatory prior art might be required to disclose it rather than keep it secret. Perhaps most important, accepting that portfolios are simply financial transactions might drive efforts to develop objective portfolio pricing. The goal of such pricing schemes is to determine a portfolio’s price even though the parties cannot agree on the price of any of the particular patent in the portfolio. I examine several pricing strategies that might work (and several destined to fail) in the paper.
There is obviously much more in this paper than I can write here. I detail my arguments in the full paper.
Tuesday, April 16, 2013
Solving the Digital Resale Problem
As Bruce Willis's alleged complaints about not being able to leave his vast music collection to his children upon his death illustrate, modern digital media has created difficulties in secondary and resale markets. (I say alleged because the reports were denied. Side note: if news breaks on Daily Mail, be skeptical. And it's sad that Cracked had to inform Americans of this...).
This post describes a recent attempt to create such a market, and proposes potential solutions.
In the good old days, when you wanted to sell your old music, books, or movies, you did just that. You sold your CD, your paperback, or your DVD. This was explicitly legalized in the Copyright Act: 17 USC Section 109 says that: “...the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” As we'll see later, a phonorecord is the material object that holds a sound recording, like a CD or MP3 player.
But we don't live in the good old days. In many ways, we live in the better new days. We can buy music, books, and DVDs over the internet, delivered directly to a playback device, and often to multiple playback devices in the same household. While new format and delivery options are great, they create problems for content developers, because new media formats are easily copied. In the bad sort-of-old days, providers used digital rights management (or DRM) to control how content was distributed. DRM was so poorly implemented that it is now a dirty word, so much so that it was largely abandoned by Apple; it is, however, still used by other services, like Amazon Kindle eBooks. Providers also use contracts to limit distribution - much to Bruce Willis's chagrin. Indeed, Section 109(d) is clear that a contract can opt-out of the disposal right: “[Disposal rights] do not, unless authorized by the copyright owner, extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it.”
But DRM is easily avoided if you simply transfer the entire device to the another party. And contracts are not necessarily as broad as people think. For example, I have scoured the iTunes terms of service and I cannot find any limitation on the transfer of a purchased song. There are limitations on apps that make software a license and limit transfers, but the music and video downloads are described as purchases unless they are "rentals," and all of the “use” limitations are actually improvements in that they allow for multiple copies rather than just one. Indeed, the contract makes clear that if Apple kills off cloud storage, you are stuck with your one copy, so you had better not lose it. If someone can point me to a contract term where Apple says you have not “purchased” the music and cannot sell it, I would like to see that.
Enter ReDigi and the lawsuit against it. ReDigi attempted to set up a secondary market for digital works. The plaintiff was Capitol Records, so there was no contract privity, so this is a pure “purchase and disposal” case. A description from the case explains how it worked (in edited form here):
To sell music on ReDigi's website, a user must first download ReDigi's “Media Manager” to his computer. Once installed, Media Manager analyzes the user's computer to build a list of digital music files eligible for sale. A file is eligible only if it was purchased on iTunes or from another ReDigi user; music downloaded from a CD or other file-sharing website is ineligible for sale. After this validation process, Media Manager continually runs on the user's computer and attached devices to ensure that the user has not retained music that has been sold or uploaded for sale. However, Media Manager cannot detect copies stored in other locations. If a copy is detected, Media Manager prompts the user to delete the file. The file is not deleted automatically or involuntarily, though ReDigi's policy is to suspend the accounts of users who refuse to comply.
After the list is built, a user may upload any of his eligible files to ReDigi's “Cloud Locker,” an ethereal moniker for what is, in fact, merely a remote server in Arizona. ReDigi's upload process is a source of contention between the parties. ReDigi asserts that the process involves “migrating” a user's file, packet by packet — “analogous to a train” — from the user's computer to the Cloud Locker so that data does not exist in two places at any one time. Capitol asserts that, semantics aside, ReDigi's upload process “necessarily involves copying” a file from the user's computer to the Cloud Locker. Regardless, at the end of the process, the digital music file is located in the Cloud Locker and not on the user's computer. Moreover, Media Manager deletes any additional copies of the file on the user's computer and connected devices.
Once uploaded, a digital music file undergoes a second analysis to verify eligibility. If ReDigi determines that the file has not been tampered with or offered for sale by another user, the file is stored in the Cloud Locker, and the user is given the option of simply storing and streaming the file for personal use or offering it for sale in ReDigi's marketplace. If a user chooses to sell his digital music file, his access to the file is terminated and transferred to the new owner at the time of purchase. Thereafter, the new owner can store the file in the Cloud Locker, stream it, sell it, or download it to her computer and other devices. No money changes hands in these transactions. Instead, users buy music with credits they either purchased from ReDigi or acquired from other sales. ReDigi credits, once acquired, cannot be exchanged for money. Instead, they can only be used to purchase additional music.
ReDigi claimed that it was protected by 17 USC 109. After all, according to the description, it was transferring the work (the song) from the owner to ReDigi, and then to the new owner. Not so, said the court. As the court notes, Section 109 protects only the disposition of particular copies (phonorecords, really) of the work. And uploading a file and deleting the original is not transferring a phonorecord, because the statute defines a “phonorecord” as the physical medium in which the work exists. Transfer from one phonorecord to another is not the same as transfering a particular phonorecord. So, ReDigi could be a secondary market for iPods filled with songs, but not the songs disembodied from the storage media.
As much as I want the court to be wrong, I think it is right here, at least on the narrow, literal statutory interpretation. The words say what they say. Even the court notes that this is an uncomfortable ruling: “[W]hile technological change may have rendered Section 109(a) unsatisfactory to many contemporary observers and consumers, it has not rendered it ambiguous.”
Once the court finds that transferring the song to ReDigi is an infringing reproduction, it's all downhill, and not in a good way. The court notably finds that there is no fair use. I think it is here that the court gets it wrong. Unlike the analysis of Section 109, the fair use analysis is short, unsophisticated, and devoid of any real factual analysis. I think this is ReDigi's best bet on appeal.
Even despite my misgivings, ReDigi's position is not a slam dunk. After all, how can it truly know that a backup copy has not been made? Or that the file has not been copied to other devices? Or that the file won't simply be downloaded from cloud storage or even iTunes after it has been uploaded to ReDigi.
If ReDigi, which seemed to try to do a good job ensuring no residual copies, cannot form a secondary market, then what hope do we have? We certainly aren't going to get there with the statute we have, unless courts are much more willing to read a fair use into transfers. The real problem is that the statute works fine when the digital work (software, music, whatever) is stored in a single use digital product. When we start separating the “work” from the container, so that containers can hold many different works and one work might be shared on several containers all used by the same owner, all of the historical rules break down.
So, what do we do if we can't get the statute amended? I suspect people will hate my answer: a return to the dreaded DRM. A kinder, gentler, DRM. I think that DRM that allows content providers to recall content at will (or upon business closure) must go -- whether legislatively or regulatorily. It is possible, of course, for sophisticated parties to negtotiate for such use restrictions (for example, access to databases), and to set pricing for differing levels of use based on those negotiations. That's what iTunes does with its "rentals."
But companies should not be allowed to offer content "for sale" if delivery and use is tied to a contract or DRM that renders that content licensed and not in control of buyers. This is simply false advertising that takes advantage of settled expectations of users, and well within the powers of the FTC, I believe.
But DRM can and should be used to limit copying and transferrability. If transferability is allowed, then the DRM can ensure that the old user does not maintain copies. Indeed, if content outlets embraced this model, they might even create their own secondary markets to increase competition in the secondary market. In short, the solution to the problem, I believe, is going to be a technical one, and that might be a good thing for users who can no credibly show that they won't copy.
And DRM is what we are seeing right now. Apparently, ReDigi has reimplemented its service so that iTunes purchases are directly copied to a central location where they stay forever. From there, copies are downloaded to particular user devices pursuant to the iTunes agreement. This way, ReDigi acts as the digital rights manager. When a user sells a song, it ReDigi cuts off access to the song for the selling user, and allows the buying user access without making a new copy of the song on its server. I presume that its media manager also attempts to delete all copies from the sellers devices.
Of course, this might mean that content, or at least transferring it, is a little more expensive than before. But let's not kid ourselves - the good old days weren't that good. You had to buy the whole CD, or maybe a single if one was available, but you could not pick and choose any song on any album. Books are heavy and bulky; you couldn't carry thousands of them around. And DVDs require a DVD player, which has several limitations compared to video files.
DRM may just be the price we pay for convenience and choice. We don't have to pay that price. Indeed, I buy most of my music on CD. And I get to put the songs where I want, and I suppose sell the CD if I want, though I never do. As singles start costing $1.50, it may make sense to buy the whole CD. Alas, these pricing issues are incredibly complex, which may take another post in the future.
Wednesday, April 03, 2013
...it's good to be here, and I'm glad to be back. I plan to blog about a few different IP/Internet topics this month, including the CFAA and some recent copyright cases.
I'm traveling this week, so likely won't jump in for a couple days. In the meantime, a few plugs.
Here are some links to recent blog posts I've written that might be of interest to readers here:
My thoughts on the SHIELD Act (one way fee shifting against patent trolls)
My Wired Op-Ed on NPEs
I'm also speaking at two events in April, including this Friday. Please come if you can make it! (You have to register for the design patent conference.)
Finally, I've finally joined twitter:
That's it for the shameless self promotion for now. I look forward to the rest of the month.
Thursday, January 31, 2013
Wrap-Up for Book Club on "Justifying Intellectual Property"
- Introductory Post
- Gordon: Thoughts on Justifying Intellectual Property
- Masur: The New Institutional Philosophy of Rob Merges
- Merges: Merges on Gordon on Rawls and IP
- Gordon: Replying to Rob Merges, Justifying Intellectual Property
- Bracha: What Good are Midlevel Principles in IP? [Thoughts on Justifying IP]
- Merges: Midlevel Principles: Response to Jonathan Masur
- Merges: Even More on Midlevel Principles in IP Law - Response to Bracha
- Duffy: Merges and Descartes
- Hughes: More on Rawls and Intellectual Property
- Bracha: Still on Midlevel Principles in IP: A Reply to Rob Merges
- Masur: Masur on Merges on Masur on Merges
- Merges: Justifying IP: Putting the Horse Before Descartes (Response to Duffy)
Wednesday, January 30, 2013
ost Book Club: Justifying IP -- Putting the Horse Before Descartes (Response to Duffy)
In this, my final response to the many interesting posts in my book, I want to traverse some comments that John Duffy made. To the other authors of posts, especially those who wrote reactions to my responses -- we will have to continue offline. I have taken too much space already. And the many readers of Prawfsblawg who care nothing for IP are I am sure tired of all this.
I am going to skip over the blush-inducing praise in John's post, and get right to his main point. He says:
" [I]f we are frustrated with the complexities of economic theories and are searching for a more solid foundation for justifying the rules of intellectual property, is Kant (or Locke or Rawls or Nozick) really going to help lead us out of the wilderness?"
John says no. He says further that just as Descartes' doubts drove him to embrace foundations that were thoroughly unhelpful when it came to elucidating actual physical reality, such as planetary motion, so my doubt-induced search for solid foundations will lead nowhere (at best), and maybe to some very bad places (at worst).
This argument may be seen to resolve to a simple point, one often made in legal theory circles: "It takes a theory to beat a theory." (Lawrence Solum has an excellent entry on this topic in his Legal Theory Lexicon, posted on his Legal Theory Blog some time back.) The idea here is that utilitarian theory is a true theory, because it is capable of proof or refutation and because it guides inquiry in ways that could lead to better predictions about the real world. By this criterion, deontic theories are not real theories because they cannot be either proven or refuted. Einstein's famous quip comes to mind; after a presentation by another scientist, Einstein supposedly said "Well, he wasn't right. But what's worse is, he wasn't even wrong."
My response starts with some stark facts. We do not know whether IP law is net social welfare positive. Yet many of us feel strongly that this body of law, this social and legal institution, has a place in a well-functioning society. Now ,we can say the data are not all in yet, but we nevertheless should maintain our IP system on the hope that someday we will have adequate data to justify it. The problem with this approach is, where does that leave us in the interim? We could say that we will adhere to utilitarian theory because it stands the best chance of justifying our field at some future date -- when adequate data are in hand. But meanwhile, what is our status? We are adhering, we say, to a theory that may someday prove true. By its own criteria it is not true today, not to the level of certainty we require of it (and that it in some sense requires of itself.) But because it will be "more true" than other theories on that magic day when convincing data finally arrive, we should stick to it.
My approach was to turn this all upside-down, I started with the fact that the data are not adequate at this time. And I admitted that I nevertheless felt strongly that IP makes sense as a field; that it seems warranted and even necessary as a social institition. So it was on account of these facts that I began my search for a better theoretical foundation for IP law.
If you have followed me so far, you will not be surprised when I say that for me, Locke, Kant and Rawls better account for the facts as I find them than other theries -- including utilitarianism. Deontic considerations explain, to me at least, why we have an IP system in the absence of convincing empirical evidence regarding net social welfare. Put simply: We have IP, regardless of its (proven) effect on social welfare -- so maybe (I said to myself) *it's not ultimately about social welfare*.
This is the sense in which, to me, deontic theory provides a "better" theory of IP law. It fits the facts in hand today, including the inconvenient fact of the absence of facts. Of course, we may learn in years to come that the utilitarian case can be made convincingly. I explicitly provide for this in JIP, when I say that there is "room at the bottom," at the foundational level, for different ultimate foundations and even new ultimate foundations. It's just that for me, given the current data, I cannot today make that case convincingly. And it would be a strange empirically-based theory that asks me to ignore this key piece of factual information in adopting foundations for the field. To those who say deontic theories cannot be either proven or disproven, I offer the aforementioned facts, and say in effect that an amalgam of deontic theory does a better job explaining why we have IP law than other theories. And therefore that it is in this sense "more true" than utilitarian theory. Again, it fits the facts that (1) we do not have adequate data about net social welfare; and (2) we nevertheless feel IP is an important social institution in our society and perhaps any society that claims to believe in individual autonomy, rewards for deserving effort, and basic fairness.
One final point: to connect Kant with Hegel with Marx, as John does, is a legitimate move philosophically. But I have to add that for many interpreters of Marx, he is the ultimate utilitarian. What is materialism, as in Marxist historical materialism, but a system that makes radically egalitarian economic outcomes the paramount concern of the state? The famous suppression of individual differences and individual rights under much of applied Marxist theory represents the full working out of the utilitarian program under which all individuals can be reduced to their economic needs, and all government can be reduced to a mechanistic system for meeting those needs (as equally as possible)? If we are going to worry about where our preferred theories might lead if they get into the wrong hands, I'll take Locke and Kant and Rawls any day. In at least one form, radical utilitarian-materialism has already caused enough trouble.
This is hardly all there is to say, but it is all I have time to say. So I will keep plodding along, like a steady plow horse, trying not only to sort out the foundational issues, but also to engage in policy discussion and doctrinal analysis. And with this image I close, having once again put the (plow) horse before Descartes in the world of IP theory.
Masur on Merges on Masur on Mergers
I greatly appreciate Rob Merges' generosity in taking the time to respond to my original post. His response is, characteristically for Rob, incisive and thoughtful. I am not sure, in the end, how much we really disagree. But I will take a shot at briefly disentangling and clarifying a few points with the goal of identifying whether or not disagreement actually exists.
Rob is absolutely correct that there are two separate questions: 1) whether an IP system can be justified at all; and 2) how well a particular system is performing. Rob argues that, with respect to question #1, the IP system cannot be justified on economic (by which we mean utilitarian or welfarist) grounds. Why would this be? One possibility is that utilitarianism or welfarism or consequentialism (which is what we mean when we talk about an "economic" foundation) cannot provide a morally satisfactory basis for intellectual property rights. There is a short section in the book (pages 151-153) that coulud be read as developing this argument, but that section is better understood as a critique of a completely unfettered free market, a point with which few economists would disagree. As a general matter, the book does not appear to be making this point, and indeed it would be a mammoth undertaking to do so (even for Rob Merges and this book) given the extensive arguments that scholars have been making for centuries about welfarism as a moral foundation. Rob will correct me if I am wrong, but I do not understand this to be his main argument.
A second possibility is that economics (read: utilitarianism or welfarism) cannot generate the midlevel principles that operate in intellectual property. But as I pointed out in my previous post, it can generate them -- or at least the ones that are really central to the American IP system.
The third possibility, and the one I understand Rob to be advancing, is that the IP system, as it is currently constituted, does not actually promote the utilitarian ends that an economic approach would demand. That is: as an empirical matter, IP doctrines as they operate today do not actually increase social welfare. As Rob wrote in his post:
"The data required by a comprehensive utilitarian perspective are simply not in evidence in this field -- at least not yet. Put simply, I do not think we can say with the requisite degree of certainty that IP systems create net positive social welfare."
That seems exactly right to me, and this is why I believe that Rob and I are actually in violent agreement as to most of the important issues. But this means that economics fails in response to Rob's question #2 -- how well is the system actually performing? -- rather than question #1, which is how the IP system can be justified on a theoretical basis. That is why I wrote that economics has failed an empirical test, while Rob's deontic theory has passed a theoretical test. This touches upon an excellent point made by a commenter to my first post. This is not a reason to abandon deontic theory; rather, the point is simply that when we evaluate different types of theories, we should do on comparable grounds.
Nor do I mean at all to say that Rob's deontic theory is not correct, or compelling, or even superior to economics. It is certainly the first two and maybe the third as well. It is just that I do not believe a utilitarian economic theory can be ruled out on the theoretical grounds used to evaluate Lockean and Kantian deontic theories. Economics is part of the overlapping consensus as well.
Book Club: Even More on Midlevel Principles in IP Law - Response to Bracha
In a previous post I explained the concept of midlevel principles in IP law. In this post I respond to a couple of detailed points made in a very insightful post on this topic by Oren Bracha. Oren has a number of interesting things to say, but his critique has two main points: (1) the conservative bias of midlevel principles; and (2) the fuzzy nature of midlevel principles, a product of their origin in a (hypothetical) consensus-building procedure.
(1) The conservative bias: I think there are two senses of "conservative." In my view, what are conserved are meta-themes that derive from but transcend specific practices. These themes do not uniformly point to results that are "conservative" in the other sense -- tending to preserve the status quo; continuing with trends currently in place. Let me illustrate with two specific examples. When Wendy Gordon introduced the idea of "fair use as market failure," she tied together a number of emerging themes in copyright law and connected them with a large body of thought (including caselaw) that came before. But her ideas -- based largely on what I would call the efficiency principle, though surely infused also with considerations of proportionality, nonremoval (public domain), and perhaps even dignity -- were not conservative with respect to outcomes. In fact they created a revolution in consumer or user rights, by shifting the focus from the copyright owner's interests, the amount copied, etc., to higher-level issues such as transaction costs and the nature of markets for IP-protected works.
A second example is eBay. The majority opinion, based on traditional equity doctrine (as codified in the Patent Act), was conservative in the sense that it deployed well-known rules. The Kennedy concurrence had a richer policy discussion, which centered (in my view) on the proportionality principle. The basic idea was that sometimes the automatic injunction rule gives patent owners "undue leverage" in negotiations; and that equity was flexible enough to take this into account. I see this as the embodiment of a very general principle, one that finds expression in many areas of IP law, from the rules of patent scope (enablement, written description, claim interpretation, etc.) to substantial similarity in copyright law, and so on. Again the discussion "conserved" on meta-principles by deploying a familiar theme from the body of IP law. But the outcome was not therefore necessarily conservative in the sense of preserving the staus quo. The status quo heading into the case was the automatic injunction rule. And that was rejected in favor of a more flexible approach.
(2) The fuzz factor: Oren's second point is that the midlevel principles just do not seem to have the requisite level of granularity to resolve difficult problems in IP policy. This leads him to conclude that the only way to gain true resolution is to engage each other at the (admittedly contentious) level of our foundaional commitments.
Here I would advert to the master for some guidance. John Rawls, in A Theory of Justice, describes a detailed multi-stage procedure by which fair institutions can be established. In the course of the discussion he says this about the problem of fuzziness:
"[O]n many questions of social and economic policy we must fall back upon a notion of quasi-pure procedural justice: laws and policies are just provided that they lie within the allowed range, and the legislature, in ways authorized by a just constitution, has in fact enacted them. This indeterminacy in the theory of justice is not in itself a defect. It is what we should expect. Justice as fairness will prove a worthwhile theory if it defines the range of justice more in accordance with our considered judgments than do existing theories, and if it singles out with greater sharpness the graver wrongs a society should avoid." (A Theory of Justice, sec. 31, pp. 200-201).
So foundational consensus will inevitably be general. But that does not mean that citizens cannot engage each other in contentious argument at more operational, implemenetation-oriented stages. The way I see things, the midlevel principles are expansive enough to cut through the generality required to agree on them. (Note that this pluralistic sensibility is a product not of the early Rawls of A Theory of Justice but of the later Rawls of Political Liberalism.) These principles admit of sharper disagreement and a deeper level of engagement than Oren seems to believe. Perhaps they require greater elaboration than my brief treatment made possible. But they are not in my view fatally vague as a vocabulary of policy debate.
I should add one additional point. Oren notes my emphasis in JIP on the complete independence of foundational commitments and midlevel principles. I have begun to rethink that a bit, based in large part on a thoughtful critique of this aspect of the book by David H. Blankfein-Tabachnick of Penn State Law School. His critique and my response are both still in process and are forthcoming in the California Law Review, so I do not want to say too much. But suffice it to say that I have rethought the "complete independence" thesis a little bit. I can see that in a few rare instances, where policy issues are in equipoise, resort to one's ultimate commitments -- the foundations of the field as one sees them -- may be useful and even necessary. So, to close with Oren's wonderful imagery, after the flash of white light on the road to Damascus, the rider surely does remount and head on down the road. But he or she is changed utterly at some level -- and that change is bound to peek out, now and then, in the clinch.
Book Club: Justifying IP -- Midlevel Principles: Response to Jonathan Masur
In this post I respond to some comments on my book (abbreviated "JIP") by Jonathan Masur. It is not surprising to me that Jonathan takes aim at Part II of JIP, in which I introduce and explain what I call the midlevel principles of IP law. It seems whenever the book is addressed in depth (most notably at a full-day conference at Notre Dame organized by Mark McKenna; and a number of discussions at a conference on the Philosophy of IP rights at San Diego convened by Larry Alexander), this is the topic that seems to stir up the greatest interest.
Before I turn to Jonathan's specific points, let me say a word about what I mean by midlevel principles. Basically, these are meta-themes in IP law that mediate between pluralist foundational commitments and detailed doctrines and case outcomes. They are meant to serve as the equivalent of shared basic commitments in the “public” and “political” sphere as described by Rawls in his book Political Liberalism (2005). That is, midlevel principles supply a shared language, a set of conceptual categories, that are consistent with multiple diverse foundational commitments. They are more abstract, operate at a higher level, than specific doctrines and case outcomes; but they are pitched in a language that is distinct from that of foundational commitments. They create, as I say in JIP, a shared public space in which abstract (non-case-specific) policy discussions can take place. The payoff is this: a committed Kantian can conduct a sophisticated policy argument with a firm believer in the Talmudic (or Muslim, or utilitarian) basis of IP law about the proper scope of fair use in copyright, or the proper length of the term for patent protection, or what should be required to prove that a trademark has been abandoned. The argument can proceed without the Muslim needing to convert the Kantian or utilitarian to a religious worldview, and without the Kantian talking others out of the view that religious texts provide a set of workable guiding principles for right behavior. Diverse people can – and indeed, often do! – speak in terms of an appropriate public domain (i.e., the nonremoval principle); a fair reward for creators (the proportionality principle); the importance of moral rights (the dignity principle); or the cheapest way to offer legal protection at the lowest net social cost (the efficiency principle). All without the conversation devolving into fights over ultimate commitments.
Jonathan Masur recognizes the versatility of the midlevel principles. And he acknowledges that although these principles are fully consistent with utilitarian foundations, the IP system as a whole has failed to fully implement the policies called for by those with a thorough commitment to utilitarian foundations. As he puts it:
"The problem, as Merges correctly describes it, is that IP doctrine, as implemented by courts and other parties, has failed to advance the economic aims that it set out. This is an empirical judgment, and quite possibly a correct one."
As Masur notes, I have come to believe that utilitarian foundations are inadequate in the IP field. The data required by a comprehensive utilitarian perspective are simply not in evidence in this field -- at least not yet. Put simply, I do not think we can say with the requisite degree of certainty that IP systems create net positive social welfare. Yet I still had the intuition that IP rights are a valuable social institution. Which is what led me to search for alternate foundations. Hence Part I of JIP, in which I describe foundational commitments growing out of the ideas of Locke, Kant and Rawls. These deontic conceptions provide a better set of foundational commitments for the IP field, in my view. Others of course disagree, which is why the midlevel principles are so important as a shared policy language for those with divergent foundational commitments.
Masur notes the lack of empirical support for utilitarian IP foundations, but says in effect that deontic foundations do not provide much of an alternative. As he puts it,
"But what is the comparable standard by which a deontic conception of IP is to be judged? What would it mean for IP doctrine in practice not to have properly advanced Lockean or Kantian ethics? How could anyone tell? The problem—or, more accurately, the advantage for Kant and Locke—is that those approaches are purely theoretical and do not generate testable predictions. Economic theory has foundered on a set of tests that cannot be applied to the alternatives Merges proposes."
The way I see things, Jonathan has conflated two separate issues here. The first is whether IP can be justified at all. The second is how well any particular IP system is performing, given that there is a basic consensus that there should be such a system in the first place. The first issue is where foundational commitments come in. The second is operational; it is a question more of "how" or "how well" as opposed to "whether." (I address this in more detail in an article forthcoming in the San Diego Law Review, "The Relationship Between Foundations and Principles in IP Law.")
Seen in this light, there is no need for empirical tests to prove the viability of Lockean, Kantian, and/or Rawlsian foundations for the field. The only question that needs to be answered is whether a body of IP law can be envisioned that is consistent with these systems of philosophical thought. If so, the foundational question has been successfully answered. Then it's on to the operational level -- designing actual institutions and rules to implement a workable IP system. In my view this is where the efficiency principle comes into play: one important design principle for IP law is and should be getting from our IP system the greatest social benefit at the lowest net cost (as best we can estimate these values). Efficiency is an operational (midlevel) principle, in other words. It does not (and in my view cannot) justify the existence of the field. But it can serve us well in crafting the detailed operations of the field -- once we decide, consistent with ultimate commitments, that it makes sense to have such a field in the first place.