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.



Posted by Rob Merges on January 30, 2013 at 08:50 PM in Books, Intellectual Property, Legal Theory | Permalink | Comments (2) | TrackBack

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. 

Posted by Jonathan Masur on January 30, 2013 at 05:53 PM in Books, Intellectual Property | Permalink | Comments (0) | TrackBack

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.

Posted by Rob Merges on January 30, 2013 at 01:52 PM in Intellectual Property, Legal Theory, Property | Permalink | Comments (0) | TrackBack

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.

Posted by Rob Merges on January 30, 2013 at 12:14 PM in Intellectual Property, Legal Theory, Property | Permalink | Comments (0) | TrackBack

Tuesday, January 29, 2013

Merges on Gordon on Rawls and IP

Wendy Gordon, as might be expected, gets right to the heart of the most difficult issues in her post on the Rawls chapter in my book, Justifying Intellectual Property ("JIP"). In this post I want to give some quick context and then point the interested reader to the fuller discussion that addresses the issues Wendy raises. Chapter 4 of JIP is on "Distributive Justice and IP Rights." It comes after an introductory chapter that lays out the architecture of the book, and then two chapters on foundational figures in the philosophy of property rights, Locke and Kant. While Locke and Kant are both sophisticated enough to include "other-regarding" features in their accounts of property, I wanted to include a more thorough, systematic, and comprehensive account of distributive justice issues in my discussion of IP rights. So naturally I turned to Rawls. Rawls himself, especially the early Rawls of A Theory of Justice, is fairly lukewarm on private property. But there is a good bit of subsequent literature that extends and adapts Rawls's framework in various ways that reflect more contemporary concerns. And of course since the 1970s there has been a huge upswelling of interest in property theory and philosophical discussions of private property. (Think Jeremy Waldron, The Right to Private Property; Stephen Munzer, A Theory of Property; Richard Epstein's Takings book and subsequent writings; Henry Smith, Lee Ann Fenell, Carol Rose, Greg Alexander, etc. etc. And in IP law, Peggy Radin, Wendy herself (indispensable on Locke) and others.) So it was in this spirit of updating and adapting that I tried to defend IP rights as consistent with a comprehensive Rawlsian account of distributive justice. I began, reasonably enough I think, with Rawls' two principles of justice. Principle 1 says that all persons have an equal right to the most extensive system of basic liberties that is consistent with the liberty of others (the "liberty principle"). The balancing of individual ownership with the interests and rights of the community is a major theme of contemporary property theory -- arguably *the* major theme. So it was relatively easy to draw on the property rights literature for a defense of property (and particularly IP rights) under the liberty principle. I will spare you the details here; but I would add that for me Kant's emphasis on property as a way to facilitate personal autonomy factors heavily into my description of IP as a true, basic individual right. Rawls aficionados will recognize that I could have stopped there. Under his "lexical priority" approach, if a right is demanded by the liberty principle it need not be justified in terms of the second principle. Because I was not sure everyone would buy my defense of IP under the first principle, and more importantly because I could not resist the challenge, I also tried to defend IP under Rawls's second principle. The second principle is the famous "difference principle." A deviation from strictly equal resource allocation can be justified only if it results in the greatest benefit to the least advantaged members of society. My argument here is based on the fact that industries reliant on IP rights contribute significantly to the quality of life of the poorest members of society. Popular culture (including much TV programming); technological improvements such as air conditioning; low-cost long-distance communication and transportation (especially important for immigrants); and cost-saving innovations of all kinds (mobile phones, hypertension medicines, etc.) are, the data show, highly valued by low-income members of our society. These data are surely what Wendy Gordon has in mind when she says that I have not persuasively defended IP under Rawls's second principle. She makes a good point. IP rights stand behind a number of personal fortunes that in themselves represent wildly extravagant deviations from a pure egalitarian distribution (think Bill Cosby, Bill Gates, Jay-Z, George Lucas, Oprah Winfrey). Consumer enjoyment, particularly for the least advantaged, must be factored into a discussion of these fortunes and the institutions (including IP rights) that make them possible. I would note, incidentally, an interesting feature of my list of IP-backed fortunes. Did you notice that 3 of the 5 people mentioned are African Americans? While not strictly relevant to the second principle, I think it is interesting that so many prominent fortunes in the African American community have been enabled by IP rights. This may not be justifiable unless the poorest of our citizens somehow benefit from the conditions that make these fortunes possible, but it is surely an interesting point from the general perspective of distributional concerns in our socio-economic system. (Incidentally, Justin Hughes and I have undertaken some joint work to pursue this idea in more depth). Nevertheless, as I acknowledge in JIP, what I provide is really not much more than a sketch of a full-blown defense of IP under the difference principle. A fuller defense would have to accept the higher marginal prices brought about by IP, and balance these against the consumer surplus created even for the poorest members of society by IP-based entertainment and technology products. My defense gestures in this direction but falls far short of being truly comprehensive. On the other hand, at least I have tried to integrate a comprehensive account of distributive justice into the discussion of IP rights. It may be less than a full feast. But perhaps it's also more than chopped liver.

Posted by Rob Merges on January 29, 2013 at 02:23 PM in Intellectual Property, Legal Theory | Permalink | Comments (0) | TrackBack

Thoughts on "Justifying Intellectual Property" from Wendy Gordon

Here is an initial post for the book club from Wendy Gordon, William Fairfield Warren Distinguished Professor, Boston University, and Professor of Law, BU School of Law:

Rob Merges’s new book book is an immense achievement.  Intellectually it is stunning, plus Rob is an amazing and appealing writer.

Not since Peter Drahos’s 1996 book, A Philosophy of IntellectualProperty, has someone attempted to bring together a plethora of philosophic perspectives on IP.  Rob adds to this panoptic philosophic view a sharp knowledge of economics, and he puts at the center an acute recognition of how much we need – and lack—crucial empirical evidence about the effects of IP.

Ironically, it’s Rob’s valuable focus on the need for better facts that fails him in the chapter on Rawls.  Rob argues that broad IP rights are consistent with giving Rawlsian priority to the worst off in society.  But the Rawls chapter is riddled with factual assumptions which, if empirically investigated, might well prove the opposite.

One could quibble on philosophic grounds with Rob’s interpretation of Rawls (details of quibble available on request), but even on Rob’s own terms it’s far from clear that the worst-off  benefit from the restraints that patent and copyright  impose on the use of inventions and works of authorship.

Posted by Matt Bodie on January 29, 2013 at 10:24 AM in Books, Intellectual Property | Permalink | Comments (0) | TrackBack

Book Club on "Justifying Intellectual Property"

Welcome to the Book Club on Robert Merges' Justifying Intellectual Property.  Joining us for the club will be:

You can find the book at the usual places (AmazonBarnes & Noble, Powell's Books), or get Chapter 1 instantly at SSRN. Thanks to our participants!

Posted by Matt Bodie on January 29, 2013 at 10:12 AM in Books, Intellectual Property | Permalink | Comments (1) | TrackBack

Tuesday, December 11, 2012

Incentive Granularity and Software Patenting

For my last post, I would like to address a comment repeatedly seen on my prior post: “Show me an invention that would not have happened for the entire patent term, and maybe then we can discuss whether the patent system does any good.”

I’m not convinced this is the right level of granularity. But first, a couple caveats:

  1. I tend to think the patent term is too long for the speed at which technology develops today, especially computer software. This may not be true for pharmaceuticals, which leads to tension in the system.
  2. Of course we should look at whether individual patents were incentivized by the patent grant. It would be a bad system indeed if we protected everything that would have occurred anyway. Note that I think the “inducement” standard proposed by Duffy & Abramowicz and discussed in my previous post has some real merit.

But even with these two caveats, that’s not the question we should be starting with. The goal of the patent system is to promote progress of the useful arts. That might happen by encouraging investment in start-ups. That might happen by encouraging research & development funding. That might happen by inventions that come earlier than they would have, even if they would have otherwise come within 20 years. That might happen by allowing inventors some breathing room to invest in commercialization and dissemination of the invention. That might even happen by ending duplicative (wasteful) races carried out in secret. And all of these things might create costs, perhaps tremendous costs for some who come later.

To be sure, there is great (and I do mean tons of) study and debate about whether any of these benefits actually materialize and outweigh the costs. The analysis, though, takes place at a higher level than whether each and every invention would have come about within 20 years. That analysis – or something like it – certainly has its place, but not when assessing the system as a whole. And that's all I have to say about that.

Thanks again to Prawfsblawg for having me back. I enjoyed my stint, in what may be the most active commenting I’ve received (which may not be a good thing!).

Posted by Michael Risch on December 11, 2012 at 11:07 AM in Intellectual Property | Permalink | Comments (20) | TrackBack

Tuesday, November 27, 2012

Two Worlds of Software Patents

I recently participated in Santa Clara Law School's great conference on "Solutions to the Software Patent Problem." The presentations were interesting and thoughtful, and...short! A total of 34 presentations in one day, including some Q&A from the audience. Op-Eds from the conference are continuing to appear at Wired Magazine's blog, and Groklaw has a fairly thorough article summarizing the presentations.

I want to focus this post on an epiphany I had at the conference, one that is alluded to at the end of the Groklaw article. In short, there appear to be at least two world views of software patenting (there is probably a third view, relating to natural rights and property, but I'm going to put that one to the side). More after the jump.

On the one hand, you have the utilitarians, who believe that the costs of patenting might be worth the benefits of patenting. Or maybe they aren't, but that's the important question to them: to what extent does allowing software patent drive innovation? The Groklaw article implies that this group is primarily large corporate interests, but I think that's too restrictive. For example, I'm unabashadly a member of this world view, and my affinity is toward start-ups.

On the other hand, you have what I'll call the friends of free software (more fully called FOSS - Free and Open-source Software). These individuals believe that software is thought, and math, and that no one can own it. I've found that some take this view to the extreme - they have no problem with a circuit that performs the same thing as software, so long as it is performed in hardware. Members of this group believe that software patents should be unpatentable as a matter of principle, and that by allowing any kind of software patenting bad things will happen to individual programmers, to free software, and in the world generally. As further evidence that the divide is not just about large corporate interests, there are plenty of people who subscribe to this world view that started large successful companies.

Now, here is the epiphany - I belive that bridging these two worlds is possible if one believes that any software patent should issue. (If you agree that software patents can never satisfy utilitarian ends, then you can bridge the worlds. Benson Revisited  by Pamela Samuelson is a great example of such a bridge.)

Believe me, I tried to make the leap. I wrote a lengthy post at Groklaw that garnered more than 1300 comments where I tried to better understand the free software view and they tried to understand mine.

Surely, I thought, they might see that there are some lines that can be drawn that would allow for inventive software innovations. Surely, I thought, we can discuss some tweaks that would help alleviate the deleterious effects of low quality patents but save the system for one good software patent.

Surely, they thought, I would see how software patents are a bane to society, and must just go. Surely, they thought, I would see that there is no such thing as a good software patent.

The problem is that the goals of each world view are just too different. The following exchange from the Santa Clara conference between John Duffy and Richard Stallman drives the point home. I'm paraphrasing the statements, of course:

[Stallman's keynote]: Companies don't need software patents to innovate - just look at the rise of Google. [later] My proposal is that we can enforce software patents in standalone devices but not in general purpose computers.

[Duffy's talk]: I'm glad Stallman points out that software companies don't need patents - I think we agree on a solution. My proposal is that if an inventor is not induced to invent because of the prospect of a patent, then the invention is obvious and no patent should issue.[later]Stallman's proposal, though, is a kludge - a patch on the system rather than an elegant solution like redefining obviousness.

[Stallman in response to Duffy]:It doesn't matter if the patent induced the invention, it is still a bad patent. It may actually be worse, because now it can't be invalidated. My solution is not a kludge, because it handles the very real problem of software patents and eliminates it.

[Duffy]: But you have to look at the ex ante incentive to invent. If we don't allow patent enforcement, inventions might not happen that would have happened with the patent system.

[Stallman]: It's OK if we don't get those inventions. Maybe they will be developed, maybe they won't, maybe they will take longer, but the harm to any future software programmer/company is never justified by encouraging that investment with a patent.

And there you have the core of the problem. Utilitarians like Duffy (and me) believe that it is worth driving the ex ante incentive to innovate, but trying to hone the system to minimize collateral damage. Free software folks like Stallman (and probably 99% of Groklaw readers) believe that the collateral damage never justifies the ex ante incentive in a practical way.

You can see the core of these arguments in the debate about whose invention is elegant and whose is a kludge. Duffy believes that tweaking inducement to invent is elegant because that's what utilitarianism is all about. Just barring patents on general purpose computers is a patch, because there might be valuable innovations in the use of general purpose computers that are worth encouraging. Investment in standalone software might decline if there is not general purpose application at the end of the rainbow, especially in the age of smartphones.

On the other hand, Stallman believes that barring enforcement on general purpose computers is elegant, because it eliminates the most harmful effects to programmers. He believes that changing obviousness is a kludge, because it refuses to acknowledge that even the patents that come from the new rules will be bad for society. As Stallman commented to me after the conference: "There may be weak patents, and there may be strong patents, but they are all bad patents."

So, where does that leave us? I don't know, but I have to think it is helpful to understand why we can't seem to understand each other. I'm not sure where it leaves the utilitarians. They seem to be winning in policy circles, as this recent speech by PTO director David Kappos shows, but utilitarians can't even seem to agree among themselves the best course of action with software patents. Perhaps this recognition will aid those with the free software view to hone their arguments in a way that will get more policy traction - by making their same important points, but somehow framing them in a langauge utilitarians will hear. Samuelson's Benson Revisited article is a good example.

UPDATE: Thank you all for the thoughtful comments. It's really the only way to know anyone is reading at all. Because there are some common themes in the comments, I thought I would respond here rather than a long comment. 

Theme 1: Software is just ideas and math, the debate isn't utilitarian because you never get to patenting in the first place. I would submit that a) this is evidence of a separate world view (and one widely shared - by calling it separate, I don't mean to disparage it). However, it also reveals an important definitional divide -one I thought about putting into the main post, but then decided against as it ran too far afield of my point. Maybe I was wrong about that. The question is what is software. One comment below essentially says, "Well, of course circuits are patentable and software isn't. Software is just abstract math." The problem is that most patents don't claim just the abstract math part. They claim "The steps of making A happen by doing X, Y, and Z." Once you view a patent that way, a circuit and software are equivalently infringing if they do X, Y, and Z - they are the same - a means to some other patented end. This is another bridging difficulty.  FOSS folks may think utilitarians are not hearing their points about math, but reading some of these comments (asking me to "wake up," for example) sure makes me feel like my points about how process patents work are not being understood.

Theme 2: Software patents harm innovation. This might be true, but you have to look at the benefits on the front end. It's an ex post v. ex ante thing. Utilitarians will agree that software patents harm innovation on the backend if they can get the benefits on the front end.  This leads to...

Theme 3: Software patents don't help innovation on the front end. This is facially a utilitarian argument, I will admit. Commentors ask, "show me the evidence of such benefits." And that is what utilitarians debate about - whether the evidence is there. 

But here's the thing - and the reason why I put in the Duffy/Stallman exchange that was so eye-opening for me. Duffy was quite clear: If there is no software patent that would have been induced by the patent system, then fine, there should be no software patents. He thought there was agreement. But Stallman was quite clear that no, even if there was such a patent that withstood that test, that survived the evidence, it would still be bad and should still be unenforceable. That was the point of my post. For all those people who say there is no evidence, I ask you: what if that evidence came? What then? Would you change your mind? I suspect most would say no.

Posted by Michael Risch on November 27, 2012 at 10:28 PM in Intellectual Property | Permalink | Comments (45) | TrackBack

Thursday, November 15, 2012

Sowing Self-Replicating Seeds of Change

The Supreme Court will soon be hearing oral arguments for another case pitting agricultural giant Monsanto against a farmer, Vernon Bowman, whom Monsanto accuses of infringing its genetic seed patents. First some background, then some patent law, then a handful of questions...

At the beginning of any given soybean season, Bowman plants a first soybean crop using expensive patented seeds containing a genetic modification that makes the resulting plants resistant to Roundup® (a common herbicide not coincidentally also manufactured by Monsanto). Bowman harvests the soybeans and sells them to a local grain elevator. Later in the growing season, Bowman plants a riskier (because it’s so late) second soybean crop, but instead of using expensive patented seeds purchased from Monsanto’s licensees, Bowman buys cheap commodity seeds from a grain elevator (maybe the same ones he sold the year before, the commodity seeds are saved from the previous year’s growing season). Because so many farmers use Roundup Ready® brand seeds from Monsanto, about 94% of the undifferentiated seeds available for purchase from the grain elevator display Roundup Ready® traits.

Bowman (and anyone who purchases patented seeds from Monsanto’s licensees) must enter into a technology agreement with Monsanto that forbids him from replanting saved seeds but does not forbid him from selling his harvested crop to a grain elevator (for obvious reasons). Bowman is not violating his license agreement. The problem? The harvested crop consists of seeds ready for replanting (soybeans, by their nature, self-replicate). Bowman and his fellow farmers avoid buying expensive seeds for that risky second season: if everyone sells their seeds back to the grain elevator in season 1, then when the seeds are bought in season 2, they will be predominantly Roundup Ready® at a fraction of the price. Monsanto sued, claiming that Bowman infringes regardless of being square with his agreement because he is growing Roundup Ready® plants without permission.

Patent law can be tricky in this area. The gist is that once the patent owner makes an authorized sale of a patented good, the good can move in commerce (it can be used, sold or offered for sale) without liability to the patent owner for infringement. This is a pretty unremarkable doctrine. If I buy a ballpoint pen covered by a patent, I can resell it on eBay or write a letter with it without paying more to the patentee. Where it gets tricky: determining what “authorized sale” means in a world of licenses and post-sale restrictions. For a long time, courts have refused to enforce post-sale restrictions as to price and territory—we hate those because either they alienate chattel or they give us antitrust heebie-jeebies or both (for example, if my pen had a label that said I could only use it in Louisiana or that I could only resell it for $2). But we’ve held onto field of use licenses (i.e., a licensed radio manufacture may be licensed only to manufacture radios for home use) such that when the license is violated (the licensee sells to a home user in violation of the license), we find infringement. Post-sale restrictions not involving price or territory must be reasonable and not outside the scope of the patent in order to prevent an authorized sale (and thus exhaustion of patent rights) from occurring. For example, when I stamp my patented pre-filled syringe with “no refills, single use only” and sell it to you, provided I’m not violating antitrust laws and provided my patent claims are reasonably related to this condition, when you refill it and sell it to someone else, you are infringing—it’s not an authorized sale because, according to the Federal Circuit in Mallinckrodt, it’s a sale conditioned by the post-sale restriction. These questions were supposed to be resolved by the Court’s 2008 case, LG v. Quanta, but the Court was able to punt them by resolving that case narrowly on the terms of the license to the manufacturer (which was broad enough to give the licensee all of the rights necessary to exhaust the patent with respect to sales to downstream purchasers).

How should the Court decide Bowman then? Monsanto conditionally licenses to the seed companies and the seed companies conditionally sell to the farmers. The Court could hold that the sales are conditioned, so there can be no exhaustion as to farmers who purchase the seed; Monsanto wins. (The Federal Circuit might like this view, as it comports with Mallinckrodt and its other seed cases, Scruggs and McFarland.) Or they could hold that because none of these conditions are violated, it would seem that the patent rights to use and sell the patented technology (the seeds) are exhausted—I’m not infringing when I buy the seeds from the grain elevator, sell them on eBay, or use them as jewelry. But this leaves the patentee’s right to exclude others from making the patented technology. When Bowman buys the undifferentiated commodity seeds from the grain elevator, plants them during his later season and grows plants that produce second-generation seed, is he making the second generation seeds in violation of the patent right to make? And when he sells these second generation seeds, is he running afoul of Monsanto’s right to exclude others from using or selling the technology, creating a perpetual loop of growing and making unauthorized sales back to the grain elevator pool?

The Supreme Court has to figure out whether to clarify (or shutter) Mallinckrodt’s conditional sale doctrine and reconcile Quanta and early twentieth century case law born during a time of great suspicions regarding patent monopolies, or create a rule of law specifically addressing how this all works for self-replicating technology. The term “make” in this context makes very little sense—the licensee seed companies insert the modification into the genome of their seed lines and then produce seeds, the only true manufacturing done in the case. Those seeds carry genetic material that dictates traits, and sexually reproduce to create copies of the genetically modified seeds. Notably, the Plant Variety Protection Act of 1970, a special (and limited) patent right directed toward sexually propagating plant varietals, never mentions the word “make”, just the using and selling of the patented invention. Will the Court recognize, as in the PVPA, that authorizing what you do with the seed (sell to neighbors, keep for yourself, sell to a grain elevator as a commodity, etc.) generates the value for the patentee rather than authorizing creation?

More importantly, as a matter of patent policy, is it better to scrap Mallinckrodt and state more clearly that no post-sale restrictions are enforceable as a matter of both patent and contract law, or would it be better to acknowledge the ill fit of self-replicating technology (seeds in this case, but also nanotechnology and other things on the horizon) in our exhaustion law and create a carve out that leaves post-sale restrictions, whatever may be left after Quanta, intact? Or some third way?

Posted by Amelia Rinehart on November 15, 2012 at 06:32 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Software Patents and the Smartphone

I will be speaking at Santa Clara Law School's outstanding conference about Solutions to the Software Problem tomorrow.  It promises to be a great event, with academics, public interest advocates, and government officials all weighing in. 

As a lead-in to the conference, I want to discuss an oft repeated statistic: that there are 250,000 patents that might be infringed by any given smartphone. I'm going to assume that number is accurate, and I have no reason to doubt its veracity. This number, many argue, is a key reason why we must have wholesale reform - no piecemeal action will solve the problem.

Here are my thoughts on the subject:

1. Not all of these patents are in force. Surely, many of them expired due to lack of maintenance fee payments.

2. Not all of the remaining patents are asserted. After all, we don't see every smartphone manufacturer being sued 250,000 times.

3. Many of these patents are related to each other or are otherwise aggregated together. Thus, there are opportunities for global settlements.

4. Even if you think that 250,000 is huge number of patents (and it is, really - there's not disputing that), it is unclear to me why anyone is surprised by the number when you consider what's in a smartphone. More specifically:

  • A general purpose computer and all that comes with it (CPU, RAM, I/O interface, operating system, etc.).
  • Active matrix display
  • Touch screen display
  • Cellular voice technology
  • 1x data networking
  • 3G data networking
  • 4G data networking
  • Wi-Fi data networking
  • Bluetooth data networking
  • GPS technology (and associated navigation)
  • Accelerometer technology
  • Digital camera (including lens and image processing)
  • Audio recording and playback
  • Battery technology
  • Force feedback technology (phone vibration and haptic feedback)
  • Design patents

The areas above are by and large "traditional" patent areas - they aren't software for the most part. And there are thousands of patents in each category, before we even get to the potential applications of the smartphone that might be patented (and these are of greater debate, of course).

So, yes, there are many, many patents associated with the smartphone, but what else would you expect when you cram all of these features into a single device? Perhaps smartphones are the focus of the software patent problem because, well, they do everything, and so they might infringe everything. I'm not convinced that this should drive a wholesale reform of the system. Maybe it just means that smartphones are underpriced given what they include. Not that I'm complaining.

Posted by Michael Risch on November 15, 2012 at 10:39 AM in Intellectual Property, Web/Tech | Permalink | Comments (7) | TrackBack

Tuesday, November 13, 2012

About Right...

A couple of years ago, Chief Justice Roberts presided over our College of Law’s moot court competition and our faculty held a reception in his honor. After being introduced to the Chief Justice as our faculty’s one and only patent person, he turned to me and asked, “Are we getting our patent cases about right?” Flustered, I answered, “I think so, sir. They're difficult cases and your opinions are very thoughtful.” I’ve been thinking about this very brief exchange quite a bit these days. The Court has four more intellectual property cases on its docket this term: Kirtsaeng v. John Wiley & Sons (whether copyright exhaustion applies to works purchased legally overseas and imported), Already, LLC v. Nike, Inc. (whether a covenant not to sue for trademark infringement moots a declaratory judgment counterclaim for invalidity), Bowman v. Monsanto Co. (whether the first sale doctrine precludes infringement liability for using seeds produced by GMO plants purchased under a limited license) and Gunn v. Minton (whether federal courts and the Federal Circuit have jurisdiction over a legal malpractice claim involving an underlying patent case). The court has already heard arguments in Kirtsaeng and Already: the transcripts can be found here and here. These cases (copyright and trademark, respectively) likely will have implications for patent law, and Bowman and Gunn address two patent issues that have been percolating in the Federal Circuit and lower courts for some time.

Will the Court get these cases “about right”? We’ll soon find out.

(The Chief Justice was very gracious, by the way. It was a memorable exchange.)

Posted by Amelia Rinehart on November 13, 2012 at 11:14 AM in Intellectual Property | Permalink | Comments (0) | TrackBack

Thursday, November 08, 2012

Cease and Desist

For nearly 10 years, scholars, commentators, and disappointed downloaders have criticized the now-abandoned campaign of the Recording Industry Association of America (RIAA) to threaten litigation against, and in some cases, sue downloaders of unauthorized music. The criticisms follow two main themes. First, demand letters, which mention of statutory damages up to and including $150,000 per infringed work (if the infringement is willful), often lead to settlements of $2,000 - $3,000. A back of the envelope cost-benefit analysis would suggest this is a reasonable response from the receipient if $150,000 is a credible threat, but for those who conclude that information is free and someone must challenge these cases, the result is frustrating.

Second, it has been argued that the statutory damage itself is unconstitutional, at least as applied to downloaders, because it is completely divorced from any actual harm suffered by the record labels. The constitutional critique has been advanced by scholars like Pam Samuelson and Tara Wheatland, accepted by a district court judge in the Tenenbaum case, dodged on appeal by the First Circuit, but rejected outright by the Eighth Circuit. My intuition is that the Supreme Court would hold that Congress has the authority to craft statutory damages sufficiently high to deter infringement, and that there's sufficient evidence that Congress thought its last increase in statutory damages would accomplish that goal. 

We could debate that, but I have something much more controversial in mind. I hope to convince you that the typical $3,000 settlement is the right result, at least in file-sharing cases.

The Copy Culture survey indicates that the majority of respondents who support a penalty support fines for unauthorized downloading of a song or movie. Of those who support fines, 32% support a fine of $10 or less, 43% support fines of up to $100, 14% support fines of up to $1,000, 5% support higher fines, 3% think fines should be context sensitive, and 3% are unsure. The average max fine for the top three groups is $209. Let's cut it in half, to $100, because roughly half of survey respondents were opposed to any penalty.

How big is the typical library of "illegally" downloaded files? 10 songs? 100 songs? 1,000? The Copy Culture study reports the following from survey respondents who own digital files, by age group:

18-29: 406 files downloaded for free

30-49: 130 files downloaded for free

50-64: 60 files downloaded for free

65+: 51 files downloaded for free

In the two cases that the RIAA actually took to trial, the labels argued that the defendants had each downloaded over 1,000 songs, but sued over 30 downloads in one case, and 24 downloads in the other. As I see it, if you're downloading enough to catch a cease and desist letter, chances are good that you've got at least 30 "hot" files on your hard drive.

You can see where I'm going here. If the average target of a cease and desist letter has 30 unauthorized files, and public consensus centers around $100 per unauthorized file, then a settlement offer of $3,000 is just about right.

Four caveats. First, maybe the Copy Culture survey is not representative of public opinion and that number should be far lower than $100. Second, misfires happen with cease and desist letters: sometimes, individuals are mistargeted. One off-the-cuff response is to have the RIAA pay $3,000 to every non-computer user and the estate of every dead grandman who gets one of these letters.

Third, this doesn't take fair use into account, and thus might not be a fair proxy for many other cases. For example, the Righthaven litigation seems entirely different to me - reproducing a news story online seems different than illegally downloading a song instead of paying $1, in part because the news story is closer to copyright's idea line, where more of the content is likely unprotectable, and because the redistribution of news is more likely to be fair use.

Fourth, it doesn't really deal with the potentially unconstitutional / arguably stupid possibility that some college student could be ordered to pay $150,000 per download, if a jury determines he downloaded willfully. I'd actually be happy with a rule that tells the record labels they can only threaten a maximum damage award equal to the average from the four jury determinations in the Tenenbaum and Thomas-Rasset cases. That's still $43,562.50 per song. Round it down to the non-willful statutory cap, $30,000, and I still think that a $3,000 settlement is just about perfect.

Now tell me why I'm crazy. 

Posted by Jake Linford on November 8, 2012 at 09:30 AM in Information and Technology, Intellectual Property, Music, Web/Tech | Permalink | Comments (1) | TrackBack

Saturday, November 03, 2012

"The past is never dead. It's not even past."

Hello all and a tremendous thank you to Dan and the PrawfsBlawg crew for having me this month! I'm usually thinking about patent law, but today I've got a short note on other IP...

Last week, the estate of William Faulkner filed two lawsuits over quotes from Faulkner works – one against Sony for the movie, Midnight in Paris, featuring a misquote of the above quotation from Faulkner's novel, Requiem for a Nun, the other against the Washington Post and Northrop Grumman for an ad featuring a quote from a Harper’s piece on civil rights. The complaints can be found here and here. Both suits allege three causes of action: copyright infringement, trademark infringement and misappropriation for commercial advantage of Faulkner’s likeness and image. I’m guessing that the suits spark a little surprise and outrage in most folks, folks who feel like this shouldn’t be actionable copyright or trademark infringement because the use seems like a fair (and quite common) one. And I believe these mildly outraged folks would be right—both copyright and trademark fair use doctrines appear to protect this sort of use. We might give Faulkner his due on the misappropriation count, however—after all, the movie and ad are clearly commercial endeavors. Yet without delving too deeply into right of publicity torts, it seems reasonable that an incidental use in works of entertainment like a movie does not trigger liability. The ad may be a more difficult case because it’s not an entertaining work of fiction.

This is really interesting to Faulkner (and Woody Allen) fans. But an IP fan might have a couple more questions.

If everyone but the Faulkner estate thinks this case is a slam-dunk loser, why file it? And why pick these as your first suits ever in defending the estate’s intellectual property? One hypothesis: These suits are a shot across the bow to moviemakers, ad men and other creative types who want to quote (or misquote) Faulkner (a suggestion made by BU's BC's Dave Olson here) without getting the estate's permission. 

Another hypothesis: Assume the misappropriation claim with respect to the Northrop Grumman ad has a chance (however slim) of winning for the estate. Perhaps buttressing the state tort claim with two federal infringement claims frames the case as one of intellectual property rights and, in doing so, legitimizes and strengthens the state claim. Having a conversation about the quotes as protected expression or as protected marks (however weak those claims may be) may set up the misappropriation conversation more favorably for Faulkner than if it stood alone. The movie case (and others in the future) have to be filed to keep the momentum going—building a case for respect for their IP rights, whatever they may be.

As an aside, the estate appears recently to have licensed a quote to the television show, Modern Family. This is a question I usually ask my students. Should the fact that some people get and pay for permission inform our decision on whether those who do not seek permission and/or do not pay for similar uses are using fairly? For example, Weird Al usually gets permission for his songs even though they seem like fair uses after Campbell v. Acuff-Rose and when Lady Gaga would not grant permission, he created a parody of her song anyway, relying on fair use.

Looking forward to a great month here!

Posted by Amelia Rinehart on November 3, 2012 at 07:37 PM in Culture, Intellectual Property | Permalink | Comments (7) | TrackBack

Friday, October 26, 2012

The Future of Books at NYLS

I'm at a wonderful conference, In re Books, hosted by New York Law School and Internet / copyright guru James Grimmelmann, and you can attend, at least virtually:

Posted by Jake Linford on October 26, 2012 at 10:35 AM in Intellectual Property | Permalink | Comments (0) | TrackBack

Thursday, October 25, 2012

Copyright's Serenity Prayer

I recently discovered an article by Carissa Hessick, where she argues that the relative ease of tracking child pornography online may lead legislators and law enforcement to err in two ways. First, law enforcement may pursue the more easily detected possession of child pornography at the expense of pursuing actual abuse, which often happens in secret and is diffcult to detect. Second, legislators may be swayed to think that catching child porn possessors is as good as catching abusers, because the former either have abused, or will abuse in the future. Thus, sentences for possession often mirror sentences for abuse, and we see a potential perversion of the structure of enforcement that gives a false sense of security about how much we are doing to combat the problem.

With the caveat that I know preventing child abuse is muchmuch more important that preventing copyright infringement, I think the ease of detecting unauthorized Internet music traffic may also have troubling perverse effects.

When I was a young man, copying my uncle's LP collection so I could take home a library of David Bowie casette tapes, there was no way Bowie or his record label would ever know. The same is true today, even though they now make turntables that will plug right into my computer and give me digital files that any self-respecting hipster would still disdain, but at least require me to flip a vinyl disc as my cost of copying.

On the other hand, it's much easier to trace free-riding that occurs online. That was part of what lead to the record industry's highly unpopular campaign against individual infringers. Once you can locate the individual infringer, you can pursue infringment that used to be "under the radar." The centralized, searchable nature of the Internet also made plausible Righthaven's disastrous campaign against websites copying news stories, and the attempt by attorney Blake Field to catch Google infringing his copyright in posted material by crawling his website with automated data gathering programs.

What if copyright owners are chasing the wrong harm? For example, one leaked RIAA study suggests that while a noticeable chunk of copyright infringement occurs via p2p sharing, it's not the largest chunk. While the RIAA noted that in 2011, 6% of unauthorized sharing (4% of total consumption) happens in locker services like Megauploads, and 23% (15%) happens via p2p, 42% (27%) of unauthorized acquisition is done by burning and ripping CDs from others, and another 29% (19%) happens through face-to-face hard drive trading. Offline file sharing is apparently more prevalent than the online variety, but it is much more difficult to chase. So it may be that copyright holders chase the infringement they can find, rather than the infringement that most severely affects the bottom line.

In a way, leaning on the infringement they can detect is reminiscent of the oft-repeated "Serenity Prayer," modified here for your contemplation:

God, grant me the serenity to accept the infringement I cannot find,
The courage to crush the infringement I can,
And the wisdom to know the difference.

All this brings me back to the friends and family question. The study on Copy Culture in the U.S. reports that roughly 80% of the adults owning music files think it's okay to share with family, and 60% think it's okay to share with friends. In addition, the Copyright Act specifically insulates friends and family sharing in the context of performing or displaying copyrighted works to family and close friends in a private home (17 USC s. 101, "publicly"). Thus, there is some danger in going after that friends and family sharing. If the family and friends line is the right line, can we at least feel more comfortable that someone to whom I'm willing to grant physical access to my CD library is a "real" friend than my collection of Facebook friends and acquaintances, some of whom will never get their hands on my vinyl phonograph of Blues and Roots?


Posted by Jake Linford on October 25, 2012 at 10:30 AM in Information and Technology, Intellectual Property, Music, Web/Tech | Permalink | Comments (4) | TrackBack

Tuesday, October 23, 2012

The New Normal

Two news items from across the pond highlight the adaptability of musicians, but also a highlight a shift from music as a good to music as an experience, necessitated by the ubiquity of file sharing.

+, the debut album by British singer and producer Ed Sheeran, has apparently been downloaded illegally more than any album in the U.K this year. Sheeran is sanguine about the whole thing, gushing on Twitter about purchasers and free-riders alike, because he concludes that both types of fans are buying tickets, and as Sheeran puts it, "I'm still selling albums, but I'm selling tickets at the same time. My gig tickets are like £18, and my albums £8, so ... it's all relative."

Venerable British pop stars Squeeze are also moving to a more DIY, performance-based financial model this year. Fans who attend concerts can choose to purchase a download of the show at a "pop-up" shop after each performance, and meet the band as well. To date, this is the only way for fans to get their hands on Squeeze's first new songs in 14 least until they are posted online. Squeeze founder Glenn Tillbrook is also excited about this brave new world. Tillbrook states, "I love the opportunities and surprises thrown up by the digital age and the fading away of the major labels. Being able to innovate and take control of our own destiny is something I could only have dreamt of back then." And for bands like Squeeze, the old label-centric business model may well have passed them by. As Tillbrook notes, “With the traditional record label no longer relevant for us, our relationship with the merchandisers is increasingly important in order to help us deliver quality products for our fans.” 

As I postulated a few months ago, with regard to comic books offered online, I can't help but wonder whether the end result will be less professionally crafted music because the system will support fewer professional craftspeople, or whether we'll just get more artists who are more comfortable with a DIY esthetic, and fewer that rely on big machinery or well-placed intermediaries to make things happen.

It may be that the most important thing a new artist can do is leverage networks and relationships. Here's an example: I'm a huge Josh Ritter fan. Chris Thile's band, Punch Brothers, recently covered a Ritter song, and offered a free download of it for fans that purchased the new Punch Brothers EP. How did I find out? I follow Ritter on Twitter, and he let me know. I wouldn't have otherwise purchased the Punch Brothers EP, but was excited about this opportunity. Once upon a time, you could rely on certain labels for a certain aesthetic in its recorded offerings. Relationships between artists might in the future do some of that same work.

Posted by Jake Linford on October 23, 2012 at 09:20 AM in Intellectual Property, Music, Web/Tech | Permalink | Comments (0) | TrackBack

Tuesday, October 16, 2012

Chickens and Eggs in Music Consumption

As I blogged about in my previous post, the Copyright Culture survey, which looks at music consumption habits in the U.S. and Germany, has leaked in bits and pieces. Another interesting tidbit found its way to TorrentFreak yesterday. It turns out that p2p file sharers, both in the U.S. and Germany, have bigger music collections than non p2p file sharers. Perhaps more importantly, the file sharers buy more music than their counterparts. U.S. file sharers bought 30% more music, and German file sharers almost 300% more music, than non-p2p luddites. [TorrentFreak has a nice chart that breaks this down for you.] The tone of TorrentFreak's summary suggests that this means file sharers are the best friends the music industry could have, because they love music. I am a bit skeptical, because there's another way to cut the same data, which I share after the break.

File sharers bought more music than non file sharers, but they also obtained more music without paying for it. U.S. file sharers paid for only 38% of the items in their collection, while non file sharers paid for 47% of their music. And the difference was more stark for German consumers. German p2p users paid for only 26% of their music, while non p2p users paid for 60% of their music, although this amounted to significantly smaller sales.

Do non p2p users buy less music than their counterparts because they aren't exposed to as much music as p2p users? Or do p2p users pay for a smaller proportion of their music consumption because they elect to use more unauthorized avenues to purchase music? I don't have an answer. I'm slightly more sympathetic to the latter interpretation than the former, but I'm really interested to see what the full report looks like, when it's released.

Posted by Jake Linford on October 16, 2012 at 09:30 AM in Intellectual Property | Permalink | Comments (7) | TrackBack

Wednesday, October 10, 2012


Hello all. Glad to be back at Prawfsblawg for another round of blogging. I'm looking forward to sharing some thoughts about entertainment contracts, the orphan works problem in copyright, and the new settlement between Google and several publishers over Google Books.

Today, I want to talk a bit about file-sharing and friendship. A recent study asked U.S. and German citizens whether they thought it was "reasonable" to share unauthorized, copyrighted files with family, with friends, and in several different online contexts. Perhaps unsurprisingly, respondents in the 18-29 range responded more favorably to file sharing than older respondents in every context. What interests me is that respondents in every context see a sharp difference between sharing files with friends, and posting a file on Facebook. We call our Facebook contacts "friends," but I'm curious why the respondents to this study made the distinction between sharing with friends and sharing on Facebook. I have a few inchoate thoughts, and I'd love to hear what you think.

Megan Carpenter wrote an interesting article about the expressive and personal dimension of making mix tapes. I grew up in the mix tape era as well, and remember well the emotional sweat that I poured into collections of love songs made for teenage paramours in the hopes of sustaining doomed long-distance romances. Carpenter correctly argues that there is something personal about that act, and it seems reasonable that it would fall outside the reach of the Copyright Act.

I also remember copying my uncle's entire collection of David Bowie LPs onto casette tapes when I was in junior high. In that instance, music moved through family connections, and in my small town in Wyoming, there were no casettes from the Bowie back catalog on the shelves of the local music store. But the only effort involved in making those casettes was turning the LP at the end of a side. Less expressive, but within a fairly tight social network.

A properly functioning copyright system might reasonably allow for these uses, and still sanction a decision to post my entire Bowie collection on Facebook, or through a torrent. I'm skeptical of any definition of "friends and family" so capacious that it would include Facebook friends, and I suspect that many people realize now, if they didn't then, that what constitutes a face-to-face friend is different than what constitutes a Facebook friend, but you may have a different impression. I hope you'll share it here, whatever it is.

Posted by Jake Linford on October 10, 2012 at 12:30 PM in Information and Technology, Intellectual Property, Music | Permalink | Comments (4) | TrackBack

Sunday, July 01, 2012

Trading away the internet

[The following is by my FIU colleague Hannibal Travis (links now have been corrected)]:

Last week, the office of U.S. Trade Representative Ron Kirk denied a request by Darrell Issa, chairman of the House Oversight and Government Reform Committee, that he and his staff be allowed participate in the next round of negotiations of a new treaty that Issa believes will have an "immense impact" on the U.S. economy.  According to the American Civil Liberties Union, the treaty, known as the Trans-Pacific Partnership (TPP) pact, would set the stage for "worldwide crackdowns on Internet activity by a coordinated authority that could work at cross-purposes with the laws and policies of the participating countries."  In this, it resembles the Anti-counterfeiting Trade Agreement (ACTA) and Stop Online Piracy Act.  Expected as early as next year, the TPP would, according to a U.S. proposal, impose civil liability for the removal of copyright terms or other “rights management information” from a copy of a copyrighted work as part of the commission or facilitation of copyright infringement.  A draft of another such treaty, being negotiated under the auspices of the World Intellectual Property Organization, provides for civil liability for negligently removing rights management information from an audiovisual performance in order to communicate the performance or make it available to others without permission.

Both the TPP and the WIPO Audiovisual Treaty threaten the Internet by potentially outlawing remix culture and fair use of existing content.  Many YouTube videos are mashups of news, entertainment, or public affairs videos with additional commentary or montage.  There are already precedents for using the removal of “rights management information” from a remix in an attempt to censor artists and other creators of fair use works.  For example, the video search engine Veoh was sued out of existence for storing users’ videos that allegedly contained infringing clips of copyrighted music, even though the Ninth Circuit upheld a lower court ruling that the site complied with the “safe harbor” for Web sites set forth in the Digital Millennium Copyright Act of 1998.  The Associated Press sued the artist Shepard Fairey, who made the Obama “Hope” poster, for removing from his stylized version of President Obama’s visage the copyright management information attached to the image of Obama after the Associated Press fixed it in a photograph.  It also sued a news aggregator site for providing excerpts of news articles available to subscribers without the original rights management data.

The TPP and the WIPO Audiovisual Treaty go beyond existing law in prohibiting not only the intentional removal of rights management information for purposes of infringement as opposed to fair use, but in potentially reaching the negligent removal of such information to commit infringement or to encourage or facilitate infringement by another person, or perhaps even the negligent removal of such information to make a fair use.  Article 10 of the TPP requires parties to criminalize the intentional removal of copyright management information from copyrighted work en route to infringement, and to impose civil liability even for the negligent removal of the information.  Article 16 of the WIPO Audiovisual Treaty requires parties to provide civil remedies against those who negligently facilitate the distribution, importation for distribution, communication or making available to the public, “performances or copies of performances fixed in audiovisual fixations knowing that electronic rights management information has been removed or altered without authority.”  This would appear to prohibit, for example, the use of clips of news, films, or television shows with the copyright notices, credits, or contractual use terms intentionally omitted, even when the clips are used in transformative works such as documentary films, news reports, parodies, lip-synching videos, etc.  Existing U.S. law has a copyright management information provision (17 U.S.C. s. 1202(a)), but it requires intentional removal or alteration of the information for purposes of infringement, not mere negligence.

Article 5 of the WIPO Audiovisual Treaty states that independently of any economic rights, and even after the transfer of them, a performer has a right as to fixations of live performances “to object to any distortion, mutilation or other modification of his performances that would be prejudicial to his reputation, taking due account of the nature of audiovisual fixations.”  This of course could lead to endless litigation concerning mashups and the like, redolent of the attempts to restrict the fair use of songs, music videos, and video games in Lenz. v. UniversalLewis Galoob v. Nintendo, and Campbell v. Acuff-Rose Music.  Article 6 seems to grant a broad new right to restrict the "communication" of unfixed performances not already broadcast, exceptions to which “may” but do not need to be granted.  Goodbye to YouTube access to rare concert footage?

Even worse, Article 17 of the WIPO Audiovisual Treaty forbids any formalities in the audiovisual performance ownership right, which threatens the many important roles that formalities play in U.S. copyright law from playing their usual part.  As Jason Mazzone has argued: “The U.S. Copyright Office registers copyrighted works, but there is no official registry for works belonging to the public. As a result, publishers and the owners of physical copies of works plaster copyright notices on everything. These publishers and owners also restrict copying and extract payment from individuals who do not know better or find it preferable not to risk a lawsuit. These circumstances have produced fraud on an untold scale....”  Imagine the scale of the ownership-related misrepresentations that will occur as audiovisual performances are protected but formalities such as registration are done away with.  John Bergmayer of Public Knowledge has argued that: “Creating new kinds of ‘middleman rights’ could increase the complexity of dealing with content exponentially. It could give broadcasters the right to prevent recording shows for later viewing, or even effectively remove works from the public domain.”

Although Article 13 of the WIPO Audiovisual Treaty provides that parties may provide similar exceptions and limitations to the audiovisual protection right as they do for copyright, paragraph 2 of that article states that such exceptions and limitations must not injure the normal licensing expectations of the owner of any right in the audiovisual performance.  Thus, the USA could be brought up on World Trade Organization claims (or threatened claims) for allowing fair use of audiovisual clips on YouTube, and be pressured to reform its copyright law in response; there are precedents for this from the 1989 copyright reform and the 2011 patent reform.

The threat to the Internet is compounded by the process by which the TPP or the WIPO Audiovisual Treaty may be adopted.  The TPP is apparently being characterized as a “sole executive agreement,” which will not be ratified by the Senate or passed by the Congress in the form of legislation.  This removes many of the checks and balances that prevented the Clinton administration’s proposals to impose crippling copyright liability on Internet pioneers from becoming law as a result of section 512 of the Digital Millennium Copyright Act of 1998.  Unlike most international criminal laws, as well as the North American Free Trade Agreement and the WIPO Copyright Treaty, the TPP and the WIPO Audiovisual Treaty may not be submitted for the advice and consent of the Senate.  This prompts the ACLU to complain that treaty “negotiations are being conducted behind closed doors with details shared only with ... top executives from [such corporations as] AT&T, Verizon, the RIAA, the pharmaceutical lobby, and Cisco.”  Most sole executive agreements have not been criminal law reforms, intellectual property expansions, or vast new trade pacts, but rather governed the discretion of the executive in military, nuclear, aviation, scientific, postal, and international financial affairs.   A defender of the TPP or WIPO Audiovisual Treaty might respond that Congress would have to act before Americans could face civil liability or criminal charges for their YouTube videos or other remixes, but the federal government has been seizing Web sites that do not themselves infringe copyrights.  The fear is that the many vague clauses in treaties such as the TPP, ACTA, or WIPO Audiovisual Treaty will lead to the end of the Internet as we know it, as Internet companies are forced to edit out the quotation of copyrighted material, and all Internet traffic is inspected by the state.

Posted by Howard Wasserman on July 1, 2012 at 09:03 AM in Howard Wasserman, Intellectual Property | Permalink | Comments (0) | TrackBack

Thursday, June 07, 2012

The Virtual Honesty Box

As a fan of comic book art, I'm often thrilled to encounter areas where copyright or trademark law and comic books intersect. As is the case in other media, the current business models of comic book publishers and creators has been threatened by the ability of consumers to access their work online without paying for it. Many comic publishers are worried about easy migration of content from paying digital consumers to non-paying digital consumers. Of course, scans of comics have been making their way around the internet on, or sometimes before, a given comic's onsale date for some time now. As in other industries, publishers have dabbled with DRM, and publishers have enbraced different (and somewhat incompatible) methods for providing consumers with authorized content. Publishers' choices sometimes lead to problems with vendors and customers, as I discuss a bit below.

While services like Comixology offer a wide selection of content from most major comics publishers, they are missing chunks of both the DC Comics and Marvel Comics catalogues. DC entered a deal to distribute 100 of its graphic novels (think multi-issue collections of comic books) exclusively via Kindle. Marvel Comics subsequently struck a deal to offer "the largest selection of Marvel graphic novels on any device" to users of the Nook. 

Sometimes exclusive deals leave a bad taste in the mouths of other intermediaries. DCs graphic novels were pulled from Barnes & Noble shelves because the purveyor of the Nook was miffed. Independent publisher Top Shelf is an outlier, offering its books through every interface and intermediary it can. But to date, most publishers are trying to make digital work as a complement to, and not a replacement for, print.

Consumers are sometimes frustrated by a content-owner's choice to restrict access, so much so that they feel justified engaging in "piracy." (Here I define "piracy" as acquiring content through unauthorized channels, which will almost always mean without paying the content owner.) Some comics providers respond with completely open access. Mark Waid, for example, started Thrillbent Comics with the idea of embracing digital as digital, and in a manner similar to Cory Doctorow, embracing "piracy" as something that could drive consumers back to his authorized site, even if they didn't pay for the content originally.

I recently ran across another approach from comic creators Leah Moore and John Reppion. Like Mark Waid, Moore and Reppion have accepted, if not embraced, the fact that they cannot control the flow of their work through unauthorized channels, but they still assert a hope, if not a right, that they can make money from the sales of their work. To that end, they introduced a virtual "honesty box," named after the clever means of collecting cash from customers without monitoring the transaction. In essence, Moore and Reppion invite fans who may have consumed their work without paying for it to even up the karmic scales. This response strikes me as both clever and disheartening.

I'll admit my attraction to perhaps outmoded content-delivery systems -- I also have unduly fond memories of the 8-track cassette -- but I'm disheartened to hear that Moore and Reppion could have made roughly $5,500 more working minimum wage jobs last year. Perhaps this means that they should be doing something else, if they can't figure out a better way to monetize their creativity in this new environment. Eric Johnson, for one, has argued that we likely don't need legal or technological interventions for authors like Moore and Reppion in part because there are enough creative amateurs to fill the gap. The money in comics today may not be in comics at all, but in licensing movies derived from those comics. See, e.g., Avengers, the.

I hope Mark Waid is right, and that "piracy" is simply another form of marketing that will eventually pay greater dividends for authors than fighting piracy. And perhaps Moore and Reppion should embrace "piracy" and hope that the popularity of their work leads to a development deal from a major film studio. Personally, I might miss the days when comics were something other than a transparent attempt to land a movie deal.

As for the honesty box itself? Radiohead abandoned the idea with its most recent release, King of Limbs, after the name-your-price model adopted for the release of In Rainbows had arguably disappointing results: according to one report, 60% of consumers paid nothing for the album. I can't seen Moore and Reppion doing much better, but maybe if 40% of "pirates" kick in a little something into the virtual honesty box, that will be enough to keep Moore and Reppion from taking some minimum wage job where their talents may go to waste.

Posted by Jake Linford on June 7, 2012 at 09:00 AM in Books, Film, First Amendment, Information and Technology, Intellectual Property, Music, Property, Web/Tech | Permalink | Comments (3) | TrackBack

Friday, June 01, 2012

Oracle v. Google - The Other Shoe Drops

For those of you following the Oracle v. Google case, as I predicted here, the court has ordered that the APIs that Google copied are not copyrightable - at least not in the form that they were used. The case is basically dismissed with no remedy to Oracle.

Posted by Michael Risch on June 1, 2012 at 03:24 PM in Information and Technology, Intellectual Property | Permalink | Comments (0) | TrackBack

Thursday, May 31, 2012

A Coasean Look at Commercial Skipping...

Readers may have seen that DISH has sued the networks for declaratory relief (and was promptly cross-sued) over some new digital video recorder (DVR) functionality. The full set of issues is complex, so I want to focus on a single issue: commercials skipping. The new DVR automatically removes commercials when playing back some recorded programs. Another company tried this many years ago, but was brow-beaten into submission by content owners. Not so for DISH. In this post, I will try to take a look at the dispute from a fresh angle.

Many think that commercial skipping implicates derivative work rights (that is, transformation of a copyrighted work). I don't think so. The content is created separately from the commercials, and different commercials are broadcast in different parts of the country. The whole package is probably a compiliation of several works, but that compilation is unlikely to be registered with the copyright office as a single work. Also, copying the work of only one author in the compilation is just copying of the subset, not creating a derivative work of the whole.

So, if it is not a derivative work, what rights are at stake? I believe that it is the right to copy in the first place in a stored DVR file. This activity is so ubiquitous that we might not think of it as copying, but it is. The Copyright Act says that the content author has the right to decide whether you store a copy on your disk drive, absent some exception.

And there is an exception - namely fair use. In the famous Sony v. Universal Studios case, the Court held that "time shifting" is a fair use by viewers, and thus sellers of the VCR were not helping users infringe. Had the Court held otherwise, the VCR would have been enjoined as an agent of infringement, just like Grokster was.

I realize that this result is hard to imagine, but Sony was 5-4, and the initial vote had been in favor of finding infringement. Folks can debate whether Sony intended to include commercial skipping or not. At the time, remote controls were rare, so skipping a recorded commercial meant getting off the couch. It wasn't much of an issue. Even now, advertisers tolerate the fact that people usually fast forward through commercials, and viewers have always left the TV to go to the bathroom or kitchen (hopefully not at the same time!). 

But commercial skipping is potentially different, because there is zero chance that someone will stop to watch a catchy commercial or see the name of a movie in the black bar above the trailer as it zooms by. I don't intend to resolve that debate here. A primary reason I am skipping the debate is that fair use tends to be a circular enterprise. Whether a use is fair depends on whether it reduces the market possibilities for the owner. The problem is, the owner only has market possibilities if we say they do. For some things, we may not want them to have a market because we want to preserve free use. Thus, we allow copying via a DVR and VCR, even if content owners say they would like to charge for that right.

Knowing when we should allow the content owner to exploit the market and when we should allow users to take away a market in the name of fair use is the hard part. For this reason, I want to look at the issue through the lens of the Coase Theorem. Coase's idea, at its simplest, is that if parties can bargain (which I'll discuss below), then it does not matter with whom we vest the initial rights. The parties will eventually get to the outcome that makes each person best off given the options, and the only difference is who pays.

One example is smoking in the dorm room. Let's say that one person smokes and the other does not. Regardless of which roommate you give the right to, you will get the same amount of smoking in the room. The only difference will be who pays. If the smoker has the right to smoke, then the non-smoker will either pay the smoker to stop or will leave during smoking (or will negotiate a schedule). If you give the non-smoker the right to a smoke-free room, then the smoker will pay to smoke in the room, will smoke elswhere, or the parties will negotiate a schedule. Assuming non-strategic bargaining (hold-ups) and adequate resources, the same result will ensue because the parties will get to the level where the combination of their activities and their money make them the happiest. The key is to separate the analysis from normative views about smoking to determine who pays.

Now, let's apply this to the DVR context. If we give the right to skip commercials to the user, then several things might happen. Advertisers will advertise less or pay less for advertising slots. Indeed, I suspect that one reason why ads for the Super Bowl are so expensive, even in a down economy, is that not only are there a lot of viewers, but that those viewers are watching live and not able to skip commercials. In response, broadcasters will create less content, create cheaper content, or figure out other ways to make money (e.g. charging more for view on demand or DVDs). Refusing to broadcast unless users pay a fee is unlikely based on current laws. In short, if users want more and better content, they will have to go elsewhere to get it - paying for more channels on cable or satellite, paying for video on demand, etc. Or, they will just have less to watch.

If we give the right to stop commercial skipping to the broadcaster, then we would expect broadcasters will broadcast the mix they have in the past. Viewers will pay for the right to commercial skip. This can be done as it is now, through video on demand services like Netflix, but that's not the only model. Many broadcasters allow for downloading via the satellite or cable provider, which allows the content owner to disable fast forwarding. Fewer commercials, but you have to watch them. Or, in the future, users could pay a higher fee to the broadcaster for the right to skip commercials, and this fee would be passed on to content owners.

These two scenarios illustrate a key limit to the Coase Theorem. To get to the single efficient solution, transactions costs must be low. This means that the parties must be able to bargain cheaply, and there must be no costs or benefits that are being left out of the transaction (what we call externalities). Transactions costs are why we have to be careful about allocating pollution rights. The factory could pay a neighborhood for the right to pollute, but there are costs imposed on those not party to the transaction. Similarly, a neighborhood could pay a factory not to pollute, but difficulty coordinating many people is a transaction cost that keeps such deals from happening.

I think that transactions costs are high in one direction in the commercial skipping scenario, but not as much in the other. If the network has the right to stop skipping, there are low cost ways that content aggregators (satellite and cable) can facilitate user rights to commercial skip - through video on demand, surcharges, and whatnot. This apparatus is already largely in place, and there is at least some competition among content owners (some get DVDs out soon, some don't for example).

If, on the other hand, we vest the skipping right with users, then the ability for content owners to pay (essentially share their advertising revenues) with users is lower if they want to enter into such a transaction. Such a payment could be achieved, though, through reduced user fees for those who disable channel skipping. Even there, though, dividing among all content owners might be difficult.

Normatively, this feels a bit yucky. It seems wrong that consumers should pay more to content providers for the right to automate something they already have the right to do - skip commercials. However, we have to separate the normative from the transactional analysis - for this mind experiment, at least.

Commercials are a key part of how shows get made, and good shows really do go away if there aren't enough eyeballs on the commercials. Thus, we want there to be an efficient transaction that allows for metered advertising and content in a way that both users and networks get the benefit of whatever bargain they are willing to make.

There are a couple of other relevant factors that imply to me that the most efficient allocation of this right is with the network:

1. DISH only allows skipping after 1AM on the day the show is recorded. This no doubt militates in favor of fair use, because most people watch shows on the day they are recorded (or so I've read, I could be wrong). However, it also shows that the time at which the function kicks in can be moved, and thus negotiated and even differentiated among customers that pay different amounts. Some might want free viewing with no skipping, some might pay a large premium for immediate skipping. If we give the user the right to skip whenever, it is unlikely that broadcasters can pay users not to skip, and this means they are stuck in a world with maximum skipping - which kills negotiation to an efficient middle.

2. The skipping is only available for broadcast tv primetime recordings - not for recordings on "cable" channels, where providers must pay for content.  Thus, there appears to already be a payment structure in practice - DISH is allowing for skipping on some networks and not others, which implies that the structure for efficient payments are already in place. If, for example, DISH skipped commercials on TNT, then TNT would charge DISH more to carry content. The networks may not have that option due to "must carry" rules. I suspect this is precisely why DISH skips for broadcasters - because it can without paying.  In order to allow for bargaining however, given that networks can't charge more for DISH to carry content is to vest the right with networks and let the market take over.

These are my gut thoughts from an efficiency standpoint. Others may think of ways to allow for bargaining to happen by vesting rights with users. As a user, I would be happy to hear such ideas.

This is my last post for the month - time flies! Thanks to Prawfs again for having me, and I look forward to guest blogging in the future. As a reminder, I regularly blog at Madisonian.

Posted by Michael Risch on May 31, 2012 at 08:05 PM in Information and Technology, Intellectual Property, Legal Theory, Television, Web/Tech | Permalink | Comments (7) | TrackBack

Wednesday, May 30, 2012

America's First Patents

My post today is a pointer to my guest post at the Patently-O blog called America's First Patents. Here is the first paragraph:

My forthcoming Florida Law Review article, America’s First Patents, examines every available patent issued during the first 50 years of patenting in the United States.  A full draft is accessible at this SSRN page. The article reaches three conclusions:

  1. Our patentable subject matter jurisprudence with respect to methods can, in part, blame its current unclarity on early decisions by a few important judges to import British law into the new patent system.
  2. Early patenting trends suggest that Congress has never intended new subject areas be limited until Congress explicitly allowed the new subject area.
  3. The machine-or-transformation test, which allows a method patent only if the process involves a machine or transforms matter, has no basis in historic patenting practices.


Posted by Michael Risch on May 30, 2012 at 05:46 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Tuesday, May 29, 2012

School of Rock

I had a unique experience last Friday, teaching some copyright law basics to music students at a local high school. The instructor invited me to present to the class in part because he wanted a better understanding of his own potential liability for arranging song for performances, and in part because he suspected his students were, by and large, frequently downloading music and movies without the permission of copyright owners, and he thought they should understand the legal implications of that behavior. The students were far more interested in the inconsistencies they perceived in the current copyright system. I'll discuss a few of those after the break.

First, the Copyright Act grants the exclusive right to publicly perform a musical work, or authorize such a performance, to the author of the work, but there is no right public performance right granted to the author or owner of a sound recording. See 17 U.S.C. § 114. In other words, Rod Temperton, the author of the song "Thriller," has the right to collect money paid to secure permission to publicly perform the song, but neither Michael Jackson's estate nor Epic Records holds any such right, although it's hard to discount the creative choices of Michael Jackson, Quincy Jones and their collaborators in making much of what the public values about that recording. To those who had tried their hands at writing songs, however, the disparity made a lot of sense because "Thriller" should be Temperton's song because of his creative labors.

Second, the Copyright Act makes specific allowance for what I call "faithful" cover tunes, but not beat sampling or mashups. If a song (the musical work) has been commercially released, another artist can make a cover of the song and sell recordings of it without securing the permission of the copyright owner, so long as the cover artist provides notice, pays a compulsory license (currenty $0.091 per physical or digital recording) and doesn't change the song too much. See 17 U.S.C. § 115. If the cover artist makes a change in "the basic melody or fundamental character of the work," then the compulsory license in unavailable, and the cover artist must get permission and pay what the copyright owner asks. In addition, the compulsory license does not cover the sound recording, so there is no compulsory license for a "sampling right." Thus, Van Halen can make a cover of "Oh, Pretty Woman," without Roy Orbison's permission, but Two Live Crew cannot (unless the rap version ends up qualifying for the fair use privilege).  

It was also interesting to me that at least one student in each class was of the opinion that once the owner of a copyrighted work put the work on the Internet, the owner was ceding control of the work, and should expect people to download it for free. It's an observation consistent with my own analysis about why copyright owners should have a strong, if not absolute, right to decide if and when to release a work online. 

On a personal level, I confirmed a suspicion about my own teaching: if I try to teach the same subject six different times on the same day, it is guaranteed to come out six different ways, and indeed, it is likely there will be significant differences in what I cover in each class. This is in part because I have way more material at my fingertips than I can cram into any 45 minute class, and so I can be somewhat flexible about what I present, and in what order. I like that, because it allows me to teach in a manner more responsive to student questions. On the other hand, it may expose a failure to determine what are the 20-30 minutes of critical material I need to cover in an introduction to copyright law.


Posted by Jake Linford on May 29, 2012 at 09:00 AM in First Amendment, Information and Technology, Intellectual Property, Music, Teaching Law | Permalink | Comments (0) | TrackBack

Thursday, May 24, 2012

Oracle v. Google - Round II Jury Verdict (patent infringement)

Earlier this month, I wrote about the first part of the of the trial between Oracle and Google. I predicted that the Court would eventually rule that the elements of Java that were copied were functional, and thus not infringed. There's been no ruling on that point, but the show went on, with a trial on patents that Oracle alleged Google had infringed. Once again, I thank the folks at Groklaw for the great coverage of the case.

Yesterday, the jury ruled that there was no patent infringement of the two patents asserted. I must say that this surprised me - a lot. A finding of non-infringement of a couple narrow patents is not all that surprising. What surprised me was that these were all the patents asserted. I believed that - if Google was really trying to mimic the functionality of Java - surely there was an infringed claim of at least one patent in the portfolio.

I guess not.

How did the parties get here? I would say that it was a combination of a great aggressive strategy by Google and some strategic decisions by Oracle. First, many of the patents were re-examined at the Patent and Trademark Office. Re-exam is a method whereby the PTO gets another try to determine whether a patent is invalid, usually with more historical data (prior art) than was available the first time around. Note also that the PTO and courts have become more hostile to software patents over the years. Just this week, the Supreme Court granted cert, vacated, and remanded a software patent case back to the Federal Circuit.

The PTO had issued "final" rulings on most of the patents invalidating all the relevant claims, though Oracle could have kept fighting or appealed the rulings. Instead Oracle made the strategic decision to proceed on fewer patents (only two). It must have been pretty confident, but it lost the jury at some point, and these two patents were not infringed. I was also surprised at how short the trial was, but I guess a lot of background came out in the copyright portion.

I think we can generalize a few things from this outcome, some of which (surprise) support the conclusion in my article "Patent Troll Myths." First, it's not all about trolls; we should look at the patents rather than the person asserting them to decide whether there is merit to the case.  Second, no matter how big your portfolio is, you are at risk of losing your key patents. It makes sense, then, to time actions after reexamination, and to attempt to bulletproof the patent before filing suit. Maybe Oracle couldn't wait here. Third, this was a victory for the system without knocking out software patents wholesale. There were some valid claims, and they were not infringed, and others were found invalid. I believe this is a better outcome than removing the patent incentive altogether. Sure, this was an expensive trial, but it only lasted a few days in front of the jury. My former firm tried cases of this number of patents for a lot less than this one cost. Thus, the final point is that perhaps more cases should be tried by smaller firms for les money- something I doubt big companies are willing to do.



Posted by Michael Risch on May 24, 2012 at 10:05 AM in Intellectual Property | Permalink | Comments (0) | TrackBack

Wednesday, May 16, 2012

Fair Use and Electronic Reserves

For several years Georgia State was involved in litigation over the fair use doctrine. Specifically a consortium of publishers backed by Oxford, Cambridge and Sage sued Georgia State over copyright violations by many of the faculty. Many of my colleagues in the department were specifically named in the suit. A decision has now been rendered. You can read abou the decision here, and you can read the decision here.

The Court backed Georgia State in almost every instance, finding no copyright violation. However, the Court did lay down some rules - in particular you can use no more than 10% or one chapter, whichever is shorter, of any book.

Oh, and my colleagues were all found to have not violated copyright laws. For two of them the Court found that the plaintiffs could even prove a copyright.

Posted by Robert Howard on May 16, 2012 at 09:23 AM in Information and Technology, Intellectual Property, Things You Oughta Know if You Teach X | Permalink | Comments (0) | TrackBack

Wednesday, May 09, 2012

Oracle v. Google: Digging Deeper

This follows my recent post about Oracle v. Google. At the behest of commenters, both online and offline, I decided to dig a bit deeper to see exactly what level of abstraction is at issue in this case. The reason is simple: I made some assumptions in the last post about what the jury must have found, and it turns out that the assumption was wrong. Before anyone accuses me of changing my mind, I want to note that in my last post I made a guess, and that guess was wrong once I read the actual evidence. My view of the law hasn't changed. More after the jump.

For the masochistic, Groklaw has compiled the expert reports in an accessible fashion here and here. Why do I look at the reports, and not the briefs? It turns out that lawyers will make all sorts of arguments about what the evidence will say, but what is really relevant is the evidence actually presented. The expert reports, submitted before trial, are the broadest form of evidence that can be admitted - the court can whittle down what the jury hears, but typically experts are not allowed to go much beyond their reports.

These reports represent the best evidentiary presentation the parties have on the technical merits. It turns out that as a factual matter, both reports overlap quite a bit, and neither seems "wrong" as a matter of technical fact. I would sure hope so - these are pretty well respected professors and, quite frankly, the issues in this case are just not that complicated from a coding standpoint. (Note: for those wonder what gives me the authority to say that, I could say a lot, but I'll just note that in a prior life I wrote a book about software programming for an electronic mail API).

What level of abstraction was presented and argued to the jury? As far as I can tell from the reports, other than a couple or three routines that were directly copied, the Oracle's expert found little or no similar structures or sequences in the main body source code - the part that actually does the work. The only similarity - and it was nearly identical - was in the structure, sequence and organization of the grouping of function names, and the "packages" or files that they were located in.

For computer nerds, also identical were function names, parameter orders, and variable structures passed in as parameters. In other words, the header files were essentially identical. And they would have to be, if the goal is to have a compatible system. The inputs (the function names and parameters) and the outputs need to be the same. The only way you can disallow this usage of the API is to say that you cannot create an independent software program (even one of this size) that mimics the inputs and outputs of the original program.

To say that would be bad policy, and as I discuss below, probably not in accordance with precedent. This is why the experts are both right. Oracle's expert says they are identical, and Google copied because that was the best way to lure application developers - by providing compatibility (and the jury agreed, as to the copying part). Google's expert says, so what? The only thing copied was functional, and that's legal. It's this last part that a) led to the hung jury, and b) the court will have to rule on.

In my last post, I assumed that the level of abstraction must have been at a deeper level than just the names of the methods. Why did I do that?

First, the court's jury instructions make clear that function names are not at issue. But I guess the court left it to the jury whether the collection could be infringed.

Second, the idea that an API could be infringed is usually something courts decide well in advance of trial, and it's a question that doesn't usually make it to trial.

Third, based on media accounts, it appeared that there was more testimony about deeper similarities in the code. The copied functions, I argued in my prior post, supported that view. Except that there were no other similarities. I think it is a testament to Oracle's lawyers (and experts) that this misperception of a dirty clean room shone through in media reports, because the actual evidence belies the media accounts.

This is why I decided to dig deeper, and why one should not rely on second hand reports of important evidence. Based on my reading of the reports (and I admit that I could be missing something - I wasn't in the courtroom), I think that the court will have no choice but to hold that the collection of API names is uncopyrightable - at least at this level of abstraction and claimed infringement.

To the extent that there are bits of non-functional code, I would say that's probably fair use as a matter of law to implement a compatible system. I made a very similar argument in an article I wrote 12 years ago - long before I went into academia.

Prof. Boyden asked in a comment to my prior post whether there was any law that supported the copying of APIs structure and header files. I think there is: Lotus v. Borland. That case is famous for allowing Borland to mimic the Lotus structure, but there was also an API of sorts. Lotus macros were based on the menu structure, and to provide program compatiblity with Lotus, Borland implemented the same structure. So, for example, in Lotus, a user would hit "/" to bring up the menus, "F" to bring up the file menu, and "O" to bring up the open menu. As a result, the macro "/FO" would mimic this, to bring up the open menu.

Borland's product would "read" macro programs written for Lotus, and perform the same operation. No underlying similarity of the computer code, but an identical API that took the same inputs to create the same output the user expected.

Like the lower court here, the lower court there found infringement of the structure, sequence, and organization of the menu structure. Like the lower court here, the court there found it irrelevant that Borland got the menu structure from third-party books rather than Lotus's own product. (Here, Google asserts that it got the API's from Apache Harmony, a compatible Java system, rather than the Java documents themselves). There is some dispute about whether Sun sanctioned the Apache project, and what effect that should have on the case. I think that the Harmony is a red herring.The reality is that it does not matter either way - a copy is a copy is a copy - if the copy is illicit that is.

In Lotus, the lower court found the API creative and copyrightable, the very question facing the court here. On appeal, however, the First Circuit ruled that the API was a method of operation, likening it to the buttons on a VCR. I think that's a bit simplistic, but it was definitely the right ruling. The case went up to the Supreme Court, and it was a blockbuster case, expected to -- once and for all -- put this question to rest.

Alas, the Supreme Court affirmed without opinion by an evenly divided court. And the circuit court ruling stood. And it still stands - the court never took another case, and the gist of Lotus v. Borland has been applied over and over, but rarely as directly as it might apply here.

Wholesale, direct compatibility copying of APIs just doesn't happen very often, and certainly not on the scale and with the stakes of that at issue here. Perhaps that is why there is no definitive case holding that an entire API structure is uncopyrightable. You would think we would have by 2012, but nope. Lotus comes close, but it is not identical. In Lotus, the menu structure was much smaller, and the names and structure were far less creative. Further, the concern was macro programming written by users for internal use that would not allow them to switch to a new spreadsheet program. Java programs, on the other hand, are designed to be distributed to the public in most cases.

Then again, the core issue is the same: the ability to switch the underlying program while maintaining compatibility of programs that have already been written. Based on this similarity, my prediction is that Judge Alsup will say that the collection of names is not copyrightable, or at the very least usage of the API in this manner is fair use as a matter of law. We'll see if I'm right, and whether an appeals court affirms it.

Posted by Michael Risch on May 9, 2012 at 10:40 AM in Information and Technology, Intellectual Property | Permalink | Comments (0) | TrackBack

Monday, May 07, 2012

Oracle v. Google - Round I jury verdict (or not)

The jury came back today with its verdict in round one of the epic trial between two giants: Oracle v. Google. This first phase was for copyright infringement. In many ways, this was a run of the mill case, but the stakes are something we haven't seen in a technology copyright trial in quite some time.

Here's the short story of what happened, as far as I can gather.

1. Google needed an application platform for its Android phones. This platform allows software developers to write programs (or "apps" in mobile device lingo) that will run on the phone.

2. Google decided that Sun's (now Oracle's) Java was the best way to go.

3. Google didn't want to pay Sun for a license to a "virtual machine" that would run on Android phones.

4. Google developed its own virtual machine that is compatible with the Java programming language. To do so, Google had to make "APIs" that were compatible with Java. These APIs are essentially modules that provide functionality on the phone based on a keywords (instructions) from a Java language computer program. For example, if I want to display "Hello World" on the phone screen, I need only call print("Hello World"). The API module has a bunch of hidden functionality that takes "Hello World" and sends it out to the display on the screen - manipulating memory, manipulating the display, etc.

5. The key dispute is just how much of the Java source code was copied, if any to create the Google version. 

The jury today held the following:

1. One small routine (9 lines) was copied directly - line for line. The court said no damages for this, but this finding will be relevant later

2. Google copied the "structure, sequence, and organization" of 37 Java API modules. I'll discuss what this means later.

3. There was no finding on whether the copying was fair use - the jury deadlocked.

4. Google did not copy any "documentation" including comments in the source code.

5. Google was not fooled into thinking it had a license from Sun.

To understand any of this, one must understand the levels of abstraction in computer code. Some options are as follows:

A. Line by line copying of the entire source code. 

B. Line by line paraphrasing of the source code (changing variable names, for example, but otherwise idential lines).

C. Copying of the structure, sequence and organization of the source code - deciding what functions to include or not, creative ways to implement them, creative ways to solve problems, creative ways to name and structure variables, etc.  (The creativity can't be based on functionality)

D. Copying of the functionality, but not the stucture, sequence and organization - you usually find this with reverse engineering or independent development

E. Copying of just the names of functions with similar functionality - the structure and sequence is the same, but only as far as the names go (like print, save, etc.). The Court ruled already that this is not protected.

F. Completely different functionality, including different structure, sequence, organization, names, and functionality.

Obviously F was out if Google wanted to maintain compatibility with the Java programming language (which is not copyrightable). 

So, Google set up what is often called a "cleanroom." The idea is not new - AMD famously set up a cleanroom to develop copyrighted aspects of its x86 compatible microprocessors back in the early 1990's. Like Google now (according to the jury), AMD famously failed to keep its cleanroom clean.

Here's how a cleanroom works. One group develops a specification of functionality for each of the API function names (which are, remember, not protected - people are allowed to make compatible programs using the same names, like print and save). Ideally, you do this through reverse engineering, but arguably it can be done by reading copyrighted specifications/manuals, and extracting the functionality. Quite frankly, you could probably use the original documentation as well, but it does not appear as "clean" when you do so.

Then, a second group takes the "pure functionality" description, and writes its own implementation. If it is done properly, you find no overlapping source code or comments, and no overlapping structure, sequence and organization. If there happens to be similar structure, sequence and organization, then the cleanroom still wins, because that similarity must have been dictated by functionality. After all, the whole point of the cleanroom is that the people writing the software could not copy because they did not have the original to copy from.

So, where did it all go wrong? There were a few smoking guns that the jury might have latched on to:

1. Google had some emails early on that said there was no way to duplicate the functionality, and thus Google should just take a license.

2. Some of the code (specifically, the 9 lines) were copied directly. While not big in itself, it makes one wonder how clean the team was.

3. The head of development noted in an email that it was a problem for the cleanroom people to have had Sun experience, but some apparently did.

4.  Oracle's expert testified (I believe) that some of the similarities were not based on functionality, or were so close as to have been copied. Google's expert, of course, said the opposite, and the jury made its choice. It probably didn't help Google that Oracle's expert came from hometown Stanford, while Google's came from far-away Duke.

So, the jury may have just discounted the Google cleanroom story, and believed Oracle's. And that's what it found. As someone who litigated many copyight cases between competing companies, this is not a shocking outcome. This issue will not doubt bring the copyright v. functionality issue to the forefront (as it did in Lotus v. Borland and Intel v. AMD), this stuff is bread and butter for most technology copyright lawyers. It's almost always factually determined. Only the scope of this case is different in my book - everything else looks like many cases I've litigated (and a couple that I've tried).

So, what happens now in the copyright phase?  (A trial on patent infringement started today.) Judge Alsup has two important decisions to make.

First, the court has to decide what to do with the fair use ruling. Many say that a mistrial is warranted since fair use is a question of fact and the jury deadlocked. I'm not so sure. The facts on fair use are not really disputed here - only the legal interpretation of them; my experience is that courts are more than willing to make a ruling one way or the other when copying is clear (as the jury now says it is). I don't know what the court will do, but my gut says no fair use here.  My experience is that failed cleanrooms fail fair use - it means that what was copied was more than pure functionality, and it is for commercial use with market substitution. The only real basis for fair use is that the material copied was pure functionality, and that's the next inquiry.

Second, the court must determine whether the structure, sequence, and organization of these APIs can be copyrightable, or whether they are pure functionality. I don't know the answer to that question. It will depend in large part on:

a. whether the structure, etc., copied was at a high level (e.g. structure of functions) or at a low level (e.g. line by line and function by function);

b. the volume of copied (something like 11,000 lines is at issue);

c. the credibility of the experts in testifying to how much of structure that is similar is functionally based.  On a related note, the folks over at groklaw think for the most part think this is not copyrightable. They have had tremendous coverage of this case.

I've been on both sides of this argument, and I've seen it go both ways, so I don't have any predictions. I do look forward to seeing the outcome, though. It has been a while since I've written about copyright law and computer software; this case makes me want to rejoin the fray.

Posted by Michael Risch on May 7, 2012 at 08:07 PM in Information and Technology, Intellectual Property, Web/Tech | Permalink | Comments (1) | TrackBack

Tuesday, May 01, 2012

Who Are You Wearing? Part 3: The Reveal

At the start of my stint here on Prawfs, I noted the high stakes of intellectual property enforcement in the luxury goods market.  A bit later, I returned to the subject by noting that the form of intellectual property law that regulates this market--the trademark doctrine of post-sale confusion.  But again, this doctrine imposes infringement liability based on the fact that someone might see the purchaser of a knock-off luxury good--who knew full well that they were buying a knock-off--and mistakenly believe they were actually carrying a genuine luxury good.  In my last post on the subject, I asked what social or moral ill is threatened in such a circumstance.  Courts have given two different answers to this question, one of which I find plausible in theory but problematic in practice, and the other of which I find morally and perhaps even constitutionally repugnant.  I'll review each (incorporating shameless plugs for my prior writings on the subject) after the jump.

The first justification for imposing liability in these circumstances is what I have called in previous work  the “bystander confusion” theory.  This is the situation in which a defendant sells a knock-off product to a non-confused purchaser; observers who see the non-confused purchaser using the knock-off product mistake it for the genuine product; and those observers draw conclusions from their observations about the quality of the genuine product that influence their future purchasing decisions.  In theory, this sounds like a real problem.  One could understand why, say, Christian Louboutin might be worried that someone who sees a woman fall and shatter her ankle when the heel breaks off her red-soled stiletto pump might blame his fashion house for shoddy workmanship and decide never to purchase his shoes again.  So bystander confusion theory has some intuitive appeal.

The problem is that bystander confusion is, in practice, a hopelessly speculative theory of liability.  Direct evidence of such mistaken attributions of quality based on second-hand observation is essentially non-existent; the theory is often little more than a just-so story.  This is especially so in the luxury goods market, where the purchasers of genuine luxury goods are typically highly sophisticated consumers who are aware of the wide availability of knock-offs.  That isn't to say that courts don't invoke bystander confusion theory, it's just that in doing so they often end up shifting the burden of proof on the question of trademark infringement from the plaintif to the defendant, in essence demanding that the defedant prove two negatives: that potential customers of the plaintiff will not observe knock-offs being consumed, and that even if they do observe such consumption these customers  will not attribute the poor quality of the observed goods to the plaintiff.

This might seem bad enough as a matter of basic civil litigation principles, but the real problem with the law of luxury goods is that it seldom turns on bystander confusion at all.  Rather, courts in knock-off luxury goods cases tend to rely on a theory I've referred to as "status confusion."  In the clearest statement of the theory, the Second Circuit in Hermès International v. Lederer de Paris Fifth Avenue, Inc. stated that an injury "to the public" occurs "when a sophisticated buyer purchases a knockoff and passes it off to the public as the genuine article, thereby confusing the viewing public and achieving the status of owning the genuine article at a knockoff price."

What is interesting to me about this explanation of status confusion theory is that it has nothing at all to do with the quality assurance function that trademarks are usually thought to provide, or indeed with products in any sense.  Rather, it is all about the effect of consumption of trademarked goods on social relations: about the level of social status afforded the surreptitious consumer of knock-off goods who has not paid an appropriate price for that status.  The real knock-off, in the Second Circuit's analysis, isn't the cheap handbag, it's the woman carrying it.  My own view, laid out more fully in my recent article in the Minnesota Law Review, is that policing this kind of social hierarchy ought not to be the business of the federal courts.

Of course, some type of social comparison based on consumption is natural and perhaps inevitable--as Thorstein Veblen documented over a century ago.  And the Second Circuit is clearly right that modern brands serve more functions than merely indicating source or guaranteeing quality of products.  Brands are increasingly freighted with social meaning--what you consume sends a message about who you are.  As I've written in the NYU Journal of IP and Entertainment Law, the social dimension of even everyday brands has given rise to a fragile symbiosis between the brand owner, its customers, and the social audience, and law is increasingly being called on to mediate this web of relationships.  But because brands are increasingly used to construct social meaning, and because social meaning can only be constructed through exchange among individuals and groups, the consumption of branded goods as social signals has not only a commercial dimension, but also an expressive one.  And when it comes to expression, our legal system has a thumb on the scale in favor of speakers and against those who would suppress their chosen expression.  Socially competitive consumption may be inevitable, but that does not mean the government should referee the competition.

Once we see consumption as a form of social expression, giving brand owners control over how we use their brands to convey and understand social identities and affiliations is troubling enough.  Giving them the right to comandeer the federal courts into enforcing social hierarchies based on something as arbitrary as wealth--as status confusion doctrine does--is something else entirely.  I would go so far as to say it is fundamentally anti-democratic--the kind of use of state power that the Founders fought a revolution to prevent.  That this power is exercised in the context of an intellectual property claim should not obscure the profound state interference in the process of social identification, affiliation, and differentiation that post-sale confusion doctrine represents.

Nor is the troubling entanglement of courts in policing social expression limited to trademark law.  Indeed, the Supreme Court this very term is considering the extent to which the government may constitutionally proscribe even a patently false factual statement made in an effort to win social acclaim.  As TJ Chiang noted in an earlier post here at Prawfs, and as the Justices themselves seem at least dimly aware, the conceptual connections between the Stolen Valor Act and trademark law, between bogus boasting and modern branding, run very deep; and they all implicate core First Amendment values.  It may be a cliché to observe that we all wear masks, that even misleading claims about who we are implicate universal human processes of self-expression and self-definition.  But cliché or no, it bears remembering as we consider how law intervenes in those processes, and whether we are content with such intervention, or would rather defend some broader sphere of freedom to form social identities and bonds without paying a licensing fee or getting a government seal of approval.

Posted by Jeremy Sheff on May 1, 2012 at 09:49 PM in Intellectual Property | Permalink | Comments (1) | TrackBack

It's the First of May

Glad to be back in the Blogosphere. Liz Phair's "Cinco de Mayo" has been in my mind nonstop today. You may ask yourself whether there is also a "First of May" song. It turns out there are at least two.

One, by the BeeGees, is a song about lost love and lost connections. The other, by geek rocker Jonathan Coulton, is about <ahem> making intimate connections in the great outdoors (and is  explicit about such connections in a way that is probably NSFW).

Could the BeeGees go after JoCo for the use of the same song title? (Answer after the break)

Probably not. Duplicate song titles happen all the time, and are almost never protectable under copyright law because they are too short / not sufficiently expressive. Every once in a while, we do see cases that recognize protectable trademark rights in song titles. See, for example, EMI Catalogue Partnership v. Hill, Holliday, Connors, Cosmopulos, Inc.

EMI asserted trademark rights in the title of the Benny Goodman hit "Sing, Sing, Sing (with a Swing)."  The Second Circuit reversed the district court's grant of summary judgment in favor of defendant who used the phrase "Swing, Swing, Swing," in a commercial for golf clubs, accompanied by a swing tune which may or may not have been similar to the plaintiff's song. 

The Second Circuit didn't resolve the defendant's fair use argument, and it's fairly solid, at least at first blush: why shouldn't an advertisement for golf clubs be able to use the phrase "swing, swing, swing"? That's what you do with a golf club. The court reversed because it felt the district court too quickly discounted the defendant's selection of a "Benny Goodman-type song like 'Swing Swing Swing.'" In fact, the advertisement in question was originally going to use the Goodman song, but the client didn't want (or couldn't affort) to pay the licensing fee. Thus, the court concluded "there are sufficient facts upon which a reasonable jury could conclude that defendants intended, in bad faith, to trade on EMI's good will in the title of the song by using the phrase 'Swing Swing Swing' in the final commercial."

The result here reminds me of the Bette Midler and Tom Waits right of publicity cases, where the respective artists turned down an invitation to sing their hit for a commercial jingle, and in both instances, the ad agency went out and hired a soundalike. As I see it, all three cases went against the defendant because of arguably bad faith attempts to either circumvent a licensing fee or circumvent the artists desire not to be associated with the client's product. You may disagree on whether EMI, Midler or Waits should have the right to say "yes but," or "no, never," but once a court is persuaded that such a right exists, the workaround seems troubling at best.

So it's the first of May, and a wonderful time to blog about the intersection of intellectual property and music, among other things. I hope you'll chime in as you have the time.

Posted by Jake Linford on May 1, 2012 at 02:09 PM in First Amendment, Intellectual Property, Music | Permalink | Comments (3) | TrackBack

Monday, April 30, 2012

Self-Replicating Technology

This post is cross-posted on the Patently-O blog.

Self-replicating technologies, once the subject of theory and fantasy, are now upon us. The original self-replicating machine—the living organism—has already been harnessed by biotechnology engineers and, more to the point, their lawyers.  The next wave of self-replicating technologies, be they nanomedical robots or organic computers, are not far behind. Rather than triggering a “grey goo” apocalypse, these technologies are, at present, raising far more prosaic issues of intellectual property and antitrust law.

Those issues have now apparently caught the attention of the Supreme Court.  A few weeks ago, the Court called for the views of the solicitor general on the certiorari petition in the case of Bowman v. Monsanto.  This is the latest in a series of cases in which the Federal Circuit has addressed the application of the doctrine of patent exhaustion to the genetic engineering technology embodied in Monsanto's "Roundup-Ready" herbicide-resistant seeds.  Seeds are the prototypical self-replicating technology, and a number of similar herbicide-resistant crops are in the pipeline of the largest agribusiness concerns.  In each of the Roundup-Ready cases, a farmer has argued that Monsanto's patent rights do not extend to the second generation of soybeans grown from a patented first-generation seed.  In each case, the Federal Circuit found for Monsanto and against the farmers.

Patent exhaustion (or "first sale") doctrine serves as a limit on patent rights, and provides that once a patentee has made an authorized sale of an embodiment of its patented invention, its patent rights with respect to that embodiment are exhausted, and the purchaser is free to use or re-sell the embodiment as it sees fit.  Like analogous doctrines in copyright and trademark, it is motivated by competition concerns.  Its aim is to enable the creation of downstream or secondary markets in patented articles, and to prevent patentees from using their intellectual property rights to gain market power in markets other than the market for the patented technology.  When the Supreme Court last spoke on the issue, it rebuked the Federal Circuit for giving these pro-competitive policies insufficient weight.  It seems to be considering an encore in the Roundup-Ready cases.  For reasons I'll explain after the jump, I think that would be a mistake.

The Federal Circuit's analysis of patent exhaustion in the Roundup-Ready cases is admittedly not a model of the judicial craft.  Framing the issue as a formal question whether a second-generation soybean is a different "article" than the first generation seed from which it grew, the court's main justification for its result was the bare assertion that any alternative result would "eviscerate" Monsanto's patent.  But this is a question-begging explanation, and there are other, better reasons why a patentee's sale of a single embodiment of its self-replicating technology ought not to exhaust patent rights with respect to the second, third, or nth generation of the technology that is propagated from that first embodiment.  Moreover, these reasons are consistent not only with the reasons for granting patent rights in the first place, but with the pro-competitive principles that justify limiting those rights through exhaustion doctrine.

To get at these reasons, I propose a thought exercise.  Let's imagine that the Roundup-Ready cases came out the other way--that purchasers of Roundup-Ready seed from Monsanto were free, as a matter of patent law, to use all subsequent generations of soybeans grown from those first purchased seeds however they saw fit.  What would we expect the Monsantos of the world to do?  How do we believe their behavior might be influenced by this new legal framework?

One possible answer to this question is: not at all.  It may be that the additional revenues to be derived from selling additional embodiments of a self-replicating technology to the same customer are trivial (perhaps due to the structure of demand), and that the prospect of any one customer re-selling a subsequent generation of the technology to another potential customer of the patentee is remote.  Nanomedicine, particularly personalized nanomedicine, may one day prove that this is a possible result.  But in the agriculture context, it strikes me as unlikely.  

Where the technology at issue is an input for the production of a commodity, and the demand for that technology is broad and essentially undifferentiated, I would expect that the possibility of re-sale of nth generation seeds by the patentee's customers would significantly eat into the patentee's revenue stream, potentially making it impossible for the patentee to recoup the investment in research and development required to develop the technology in the first place.  This is the classic free-rider problem that patent law is supposed to prevent: we preserve the incentive to engage in costly research and development by giving the inventor a limited-time monopoly.  Other scholars have noted that this free-rider rationale is particularly salient for inherently self-disclosing inventions (inventions that are easy to copy once they have been introduced to the public).  I would add that self-replication exacerbates the problem of self-disclosure: the patentee selling an embodiment of its invention would not only be teaching competitors how to practice the invention, it would in essence be building their factories as well.

So there are sound justifications grounded in the innovation policies underlying patent law for the Federal Circuit's rulings in the Roundup-Ready cases.  But of course, patent exhaustion doctrine is concerned not only with innovation policy, but also with competition policy.  This brings me back to my earlier question: how would we expect the Monsantos of the world to react to the free-rider problem if patent law did not protect them against competition from nth generation copies of their own first-generation products?  I can imagine two possible strategies a technologist might pursue to circumvent the free-rider problem: contract and secrecy.  And I think both of these alternatives are inferior to the patent solution crafted by the Federal Circuit on competition grounds.

Take the contract approach, which has been explicitly advocated by Yee Wah Chin, one of the attorneys representing the interests of Monsanto's farmer customers.  To avoid the problem of free-riders Monsanto might, for example, restrict sales of its seeds to customers who sign a license agreement in which the customers undertake to monitor the uses of nth generation embodiments.  So, a farmer might have to agree to sell his soybean crop only to buyers who have their own license agreement with Monsanto, or to Monsanto itself.  Or Monsanto could include field-of-use restrictions in its licenses, as Ms. Chin proposes: "Monsanto could have licensed seedmakers to sell seed embodying Monsanto technology on condition that the second-generation seed be either consumed or sold to buyers who agree to either consume the seed or isolate that seed from other seed and sell the seed only for consumption."  

This does not strike me as a pro-competitive result, for a few reasons.  First, it incentivizes Monsanto to extend its influence into downstream markets--such as the market for commodity soybeans and their derivative products--in ways that it would have little incentive for under the Federal Circuit's approach.  This downstream market creep is precisely the type of expansion of patent rights that exhaustion doctrine is supposed to prevent, out of fear that the patentee's interests are not likely to be consistent with the efficient functioning of those downstream markets.  Second, and perhaps more importantly, forcing Monsanto to look to contract rights to protect its investment in research and development shifts the costs of monitoring and enforcing the Roundup-Ready patents from Monsanto itself onto its customers, who are likely to face higher monitoring costs.  

We must remember, Monsanto's customers are largely farmers, who lack Monsanto's economies of scale, its greater expertise with its own technology, and its understanding of the functioning of the markets for that technology.  Moreover, shifting enforcement responsibility from the patentee to its customers is likely to create agency costs where they would not otherwise exist.  A farmer who is paying Monsanto a premium for Roundup-Ready seeds probably has far weaker incentives to vigorously monitor for violation of Monsanto's license terms than does Monsanto itself, which is reaping the premium.  Finally, in the event that a customer breaches these monitoring obligations, either maliciously or negligently, Monsanto's technology could fall into the hands of a competitor who is not in privity of contract with Monsanto and thus (absent any unfair competition type of claim) would be free to use the nth generation seed (in which Monsanto's patent rights are exhausted) to compete with Monsanto.  An individual farmer is likely to be judgment-proof in the face of the claims Monsanto might make should such a competitive threat emerge outside the reach of its licensing provisions, which once again leads us to the original problem: how would we expect Monsanto to respond to this risk of free-riding?

This brings me to the last alternative to the Federal Circuit's solution in the Roundup-Ready cases: secrecy.  Monsanto might seek to prevent free-riding by refusing to release its technology to public view, and relying on trade secret protection to protect against free-riding.  But in order to preserve its secret (a prerequisite of trade secret protection),  Monsanto would have to ensure that nothing it released into the market disclosed its genetic technology.  As I noted above, self-replication can be seen as a heightened form of self-disclosure, and so this type of secrecy would be fairly hard to maintain.  Indeed, I think the only plausible way of doing so would be to pursue a course of comprehensive vertical integration.  Monsanto would not only have to be in the business of propagating seeds, but also in the business of cultivating and harvesting soybeans, and processing them into useful products (oil, animal feed, industrial adhesives, tofu, you name it) that do not reveal the genetic material at the core of Monsanto's invention.  Even if this were technically possible (a big if), the effect on all sorts of markets, both for inputs and outputs of the soybean market, is likely to be catastrophically anti-competitive.  Where the alternative is such drastic shocks to competition in the market for, e.g.,  miso paste, soy-fed livestock, and arable land, the Federal Circuit's decisions in the Roundup-Ready cases start to look surprisingly pro-competitive.

The big question in my mind, then, is not whether the Federal Circuit's reached the right result in the Roundup-Ready cases.  Given the factual setting of those cases, I think the answer to that question is a relatively uncontroversial yes.  The real question, to me, is whether the same holds true for self-replicating technologies other than seeds for agricultural commodities.  I already noted above one type of self-replicating technology--personalized nanomedicine--that may not present the same incentives for patentees, their customers, and their competitors, as do herbicide-resistant soybeans.  Given how little we can presume to know about the future development of other self-replicating technologies, it is likely unwise to try to set a rule today to govern the rights of downstream users for all such technologies that may arise tomorrow.  And for this reason alone, it may be worth getting some discussion of the issue from the Supreme Court, which seems particularly sensitive (almost to a fault) to the hazards of establishing brittle legal rules to govern the unknown future of technology.  If the analysis that emerges is more substantive and functionally-minded than the under-argued, formalist analysis of the Federal Circuit (admittedly, another big if), I would be happy to see the Court take the case, if only to put the type of issues I've discussed in this post on the table.

Posted by Jeremy Sheff on April 30, 2012 at 11:43 AM in Intellectual Property | Permalink | Comments (1) | TrackBack

Friday, April 27, 2012

Compassionate Infringement

In IP3, Madhavi Sunder considered the cultural impact of intelletual property rights on those in need. Her piece refers to "compassionate uses" of patented pharmaceuticals to distribute to those unable to afford them. As she describes, such uses "would permit countries where urgently needed medicines are unaffordable at market prices to temporarily distribute these medicines at cost for 'compassionate use.'"

This morning's The New York Times describes infringement of an entirely different kind. There, a 92-year-old copyist known as "Big Hy" likely spent $30,000 of his own funds to ship bootlegged DVD's to miliatary service personnnel overseas. According to the piece, "in black grandpa shoes and blue suspenders that hoisted his trousers up to his sternum," Hy ripped bootleg films, placed them in boxes, and shipped at least some of them to an Army Chaplain, because they are (apparently) part of an effective distribution system. Once received, members of the troops would watch them, sometimes at the same time that the films were being released in theaters here.

A spokesperson for the Motion Picture Association of America appeared to acknowledge that "we produce can bring some enjoyment to them while they are away from home." This rather unaggressive stance is unusual for that organization, which is known to advocate strong copyright enforcement. Whether this response arises from compassion or a sophisticated understanding of press relations, it is good to see the organization acknowledge uses beyond those categorically permitted by the law.

Posted by Amy Landers on April 27, 2012 at 02:01 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Thursday, April 26, 2012

Who Are You Wearing? Part 2: The Law

In an earlier post, I flagged the high stakes surrounding intellectual property disputes over luxury goods, but questioned the rationale for making a federal case out of, say, a fake purse.  In this post, I'll be examining the legal regime that allows such a case to be made.

That regime, in the United States at least, comprises a particular sub-field of federal trademark law.  Section 43(a) of the Lanham Act provides the primary statutory authority for the federal law of trademark infringement and unfair competition.  It imposes civil liability against any person who uses a trademark in commerce that "is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods...."  But if you know the market for knock-off luxury goods, you know that the people who buy them almost always know full well that they're buying fakes.  Nobody thinks the Rolex he bought for $10 in Times Square has any actual relationship to the Rolex company, nor does anybody think the vinyl Kelly Bag she bought for $20 on Canal Street has any relationship to the house of Hermès.  So what is the "confusion, or... mistake, or... dece[ption]" that provides the basis for trademark liability against the makers and sellers of such knock-offs?

The answer that courts have come up with has come to be known as "post-sale confusion."  Luxury knock-offs do not infringe the luxury house's trademark because of their effect on the purchaser of the knock-offs, but because of their effect on people who observe that purchaser consuming the product after it has been purchased.  Such observers, the theory goes, will see the non-confused purchaser consuming the defendant's product, but mistake it for the plaintiff's product due to the similarity of the products' trademarks or overall designs.  This "mistake" is the hook on which trademark liability hangs in the luxury knock-off arena, and the question I'm interested is why this type of mistake is something the federal government ought to concern itself with.  

What is the social or moral ill that results if I mistakenly believe that a woman walking down Fifth Avenue is carrying an authentic Louis Vuitton purse when in fact she is carrying a cheap imitation?  Trademark law is often thought to be designed to prevent producers from misleading consumers as to unobservable product qualities, either to lower consumers' search costs (as Judge Posner and Professor Landes have famously argued) or out of respect for consumers' autonomy (as I argue in a forthcoming piece in the Stanford Law Review).  But, again, the purchasers of luxury knock-offs know exactly what they're buying; they aren't being deceived at all.  So what gives?  Why should we make post-sale confusion actionable, let alone criminal?

Once again, I'll throw this open to commenters before revealing my own thoughts in a future post; those who can't wait for the reveal can read my take in the latest issue of the Minnesota Law Review.

Posted by Jeremy Sheff on April 26, 2012 at 10:30 AM in Intellectual Property | Permalink | Comments (1) | TrackBack

Tuesday, April 24, 2012

Technology's Intent

I'm a big fan of Dropbox. With a full schedule of professional travel, a need to work at home and on the go, and a less-than-perfectly-reliable university-issued computer, I've learned the hard way that I need dependable, easy-to-use cloud-based storage for my important data. But Dropbox has always targeted the casual data-sharer as much as the power user, and yesterday the company unveiled a new feature of its software that allows users to share files on their computers with anyone using an http link to a copy of the file stored on Dropbox's cloud-storage servers. The thing about this service, as some tech commentators have pointed out, is that it implements essentially the same technology that led to the federal government's recent criminal indictment of file-sharing juggernaut MegaUpload and its eccentric founder, Kim Dotcom.

So does Dropbox have a date with the feds in its future? I think most would agree the answer is no, but getting to that answer reveals the problems we've created in trying to manage the social, legal, and technological issues that surround the exchange of information. More after the jump...

The big story in copyright law for the past two or three decades has been the ongoing battle between the forces of  "content" and  "distribution"--between the owners of intellectual property rights in information and the sellers of technology that makes the distribution of that information cheaper, easier, and broader.  This is nothing particularly new; those who make their living off of the creation and sale of new information have always been wary of technological progress.   But mass adoption of digital technology and high-speed data networks have significantly raised the stakes.  

In Section 512(c) of the Copyright Act (the so-called "DMCA safe-harbor") and in the case of Sony Corp. v. Universal City Studios, Congress and the Supreme Court, respectively, attempted to strike what turns out to be an uneasy balance between these competing interests.  Section 512(c) immunizes the sellers of technology that facilitates the distribution of copyrighted information from liability for infringing uses of their services by customers, provided the technologists meet certain conditions.  In Sony, the Court announced that technology itself is not a copyright outlaw so long as it is capable of substantial non-infringing uses.  But of course, individuals and institutions may well use such technology for infringing purposes, and such uses remain actionable.  We thus have a distinction set up within copyright law itself between the power of a technology in itself and the use of that technology by real people in real social settings.  While we may hold individuals responsible for uses of technology that infringe a copyright, we do not hold the technology itself responsible for such uses.

This leads to the odd situation in which we now find ourselves, where the viability of entire segments of the digital economy, and of some of the largest and fastest-growing businesses in the world, come to turn on the thorniest and most contentious questions of fact the legal system can ever grapple with--questions of intent.  In MGM v. Grokster, for example, the defendant companies were denied summary judgment on grounds that there was sufficient evidence that they intended to induce third parties to infringe the plaintiff's copyrights using their peer-to-peer file sharing services.  But of course, intent is not a fact that can be proven by prying open the skull of a defendant and looking inside.   Intent must always be proven circumstantially.  In Grokster, the most important category of circumstantial evidence cited by the Court as sufficient to create a triable issue of fact (and likely sufficient to award summary judgment to the plaintiff--which was eventually granted) was evidence tending to show that the defendants targeted the cast-off customers of adjudged secondary infringer Napster.  But "complement[ing]" that evidence, the court said, was the defendants' failure to impose filtering systems on their services that Section 512(c) arguably makes legally unnecessary, as well as evidence that the defendants--gasp!--were interested in growing their user base to maximize advertising revenues.

This is what Larry Lessig once referred to as "the monster Grokster created":  the inquiry into a particular defendant's state of mind is now part and parcel of the legal battle between content and distribution.  And because evidence of intent is necessarily circumstantial, these cases are likely to turn on a factfinder's response to the overall story woven by the parties' lawyers--a gut reaction as to whether the defendant is a good guy or a bad guy.  Facts that might otherwise seem innocuous can be cited as circumstantial evidence of intent to commit secondary infringement if the factfinder just doesn't trust the defendant.

Which brings me back back to Dropbox and its new link-to-share service.  Dropbox, it seems, is not maintaining a searchable index of the files its customers share via link--the type of activity that got Napster in trouble.  One might think that this fact suggests the company has no interest in attracting customers who are interested in using its services to locate and freely download copyrighted content.  But take a look at Paragraph 10 of the MegaUpload indictment, which alleges that MegaUpload did not maintain a searchable index of content on its servers in order to "conceal the scope of its [copyright] infringement."  That paragraph also notes that MegaUpload provided financial incentives to customers whose uploaded files increased traffic on MegaUpload's website and, thereby, increasing the company's revenue base.  Dropbox, in turn provides existing customers with additional free cloud storage for referring new customers to the service.  If, as Grokster suggests, a desire to broaden one's customer base is circumstantial evidence of an intent to induce infringement, should we expect the refer-a-friend program to be cited in a federal indictment or a civil complaint in the near future?

I don't think so, but I can't be sure, and that is ultimately the point.  The social dynamics of information exchange that new technologies like Dropbox (and, frankly, MegaUpload) make possible are unpredictable and often out of the direct control of the service providers themselves.  Such exchanges can be public or private, shared or hidden, broadcast or narrowcast, and everywhere in between.  Section 512(c) attempts to account for this, for example by making knowledge of specific infringing activity a prerequisite for secondary liability.  But like intent, knowledge is a thorny factual issue that courts continue to disagree about, often based on differing views of the inferences that can be drawn from a particular mix of circumstantial evidence.

For my part, I look at all this as a lawyer who, in a former life, was sometimes called on to give clients guidance as to whether a course of action they were considering for their business would be likely to generate legal liability.  I have to admit, I'd have a hard time giving a client like Dropbox useful advice today.  And it strikes me that a legal regime that doesn't allow a segment of our economic and social lives as fundamental as the information we exchange with one another to be planned with some degree of certainty isn't doing its job very well.

Posted by Jeremy Sheff on April 24, 2012 at 01:36 PM in Intellectual Property | Permalink | Comments (2) | TrackBack

Monday, April 23, 2012

Interactive Casebooks

Recently I learned that I'll be teaching Copyright law for the first time, a circumstance that launched my search for casebook. One of the ones that I considered was Brauneis and Schechter's Copyright: A Contemporary Approach, which is an interactive casebook just published by West.  The book is released in a paper format, along with a one-year subscription to an electronic version of the book. Prawfs using a West/Westlaw password can obtain access to the electronic version.

The authors used the electronic format of the book nicely. I liked the links to the subject matter of the cases, such as clips of songs, images and the like. For example, one link which allowed me to play the video game that was the subject of Williams Electronics v. Artic Int'l.  The links to the statutory text were particularly useful.

Although I ultimatley didn't end up going with this one (at least this year), I found the format helpful and intriguing, particularly for courses where there are strong visual components.  If you've used any of the interactive casebooks in your courses, your feedback about your experience would be very helpful.

Posted by Amy Landers on April 23, 2012 at 05:19 PM in Books, Intellectual Property | Permalink | Comments (1) | TrackBack

Sunday, April 22, 2012

80,000? That's a Lot of Patents

I just saw this Mercedes ad, intended to celebrate the innovation of the company's engineers.  As a patent prawf, I was struck by the image of patents protecting the car.

80,000 patents can be a signal of serious advances. As Clarissa Long has observed, "patents can serve as a signal of firm quality." Or, it might just be indicative of a lot of patenting.

Posted by Amy Landers on April 22, 2012 at 05:12 PM in Intellectual Property | Permalink | Comments (1) | TrackBack

Wednesday, April 04, 2012

Who Are You Wearing? Part 1: The Stakes

It's a pleasure to be making my first appearance on PrawfsBlawg, where I have long turned for thoughtful commentary on weighty issues such as the ACA, religious liberty, workplace discrimination, the politics of judicial review, and the crisis in legal education.  I hope to do my own part to uphold this tradition by talking about luxury handbags.

My own scholarship focuses on intellectual property, and mainly trademark law.  These days, most of the highest-profile trademark disputes involve luxury goods: the red-soled Louboutin, the Louis Vuitton monogram, or Tiffany's blue box.  We might dismiss the legal wrangling over such baubles as frivolous, but there are, quite literally, billions of dollars at stake: the premier luxury conglomerate LVMH reported revenues of over 23 billion euros last year, 22% of which came from the United States.  And that's just for sales of genuine products; Congress has found that trademark counterfeiting saps our national economy of $200 billion annually, losing us "millions of dollars in tax revenue and tens of thousands of jobs" (though there are many who cast doubt on this claim, notably including the GAO).  So perhaps it's not surprising that so many lawyers (and their clients) are ready to make a federal case out of a fake purse.

The question I've been investigating recently is whether we ought to allow such a federal case to be made.  I think we can all intuitively appreciate the desire to police the stream of commerce for knock-off pharmaceuticals, baby formula, or brake pads--there's a public safety issue at stake.  But what is the public interest in knock-off watches and open-toe pumps?  This turns out to be a complicated question, and I'll be fleshing out my own view in the coming days.  But before I give my take, I'm curious what the Prawfs readership thinks.  Feel free to give your views in the comments.

Posted by Jeremy Sheff on April 4, 2012 at 11:01 AM in Intellectual Property | Permalink | Comments (1) | TrackBack

Sunday, April 01, 2012

Federal Agency Humor?

Thanks to Dan asking me back to Prawfsblawg.  

I'm an Intellectual Property prawf, with a focus on patents. This recent post at the Hollywood Reporter caught my eye this morning, noting that a U.S. PTO Examiner recently rejected a 2008 patent application for a male support garment. In support of the rejection, the Examiner cited the 2006 film Borat, in which Sacha Baron Cohen wore a similar garment. This is apparently not an April Fool's joke, as I was able to find the Examiner's rejection on the US PTO's website.

Well, really, what else can be said about this? I guess it's nice to see more examples of the agency opening up its examination of patents to well-known information. The days of limited searches (prior art patents and a few well-known articles) seems to be over.

The last time I remember the agency citing a film was the Board of Patent Appeals and Interferences' citation to a line from the Pirates the Carribean "the code is more what you call guidelines than actual rules" when discussing its authority to interpret the law in a very early proceeding in In re Bilski. As IP prawfs will note, Bilski later made its way all the way to the Supreme Court, which stayed well clear of the Pirates genre in its citation to authority.

Looking forward to a great month here at Prawfsblawg.

Posted by Amy Landers on April 1, 2012 at 03:12 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Tuesday, March 06, 2012

Pinterest, Jigidi, and factor four of the fair use defense

One of the best things about being a law professor is that your students leave your classroom and, if you’ve done your job right, see things in and about the world that they may not have before.  Recently, two of my copyright students wrote to call my attention to two sites that raise the same interesting emergent online copyright issue. 

Pinterest describes itself as an “online pinboard” that allows users to “organize and share things you love.”  Pinterest users each have a space on the site (their “pinboard”) that allows them to re-post images they like from around the internet, and organize them into categories (e.g., food, pets, etc.).  Jigidi enables users to post images in the form of online jigsaw puzzles that users can solve.  (N.B. I solved one and found it fun as hell.)  Of course, many other sites like Facebook enable possibly infringing reposting of images, but the difference with Pinterest/Jigidi, I think, is that they function exclusively to enable reposting of photos, so the infringement concern is central to their site’s main purpose.

Both sites are careful to admonish users to respect the copyrights of the photos they post.  And even if users post infringing content, both sites might be able to avoid secondary liability by taking advantage of the DMCA’s sec 512 safe harbor provisions.  Regardless, though, users who post copyright protected photos to either site without authorization would be liable for infringement, unless of course they could take advantage of copyright’s infamously slippery fair use defense

There is already some writing around the blogosphere about possible fair use arguments with respect to these sites.  In connection with Pinterest, at least, here is a very thoughtful and detailed post from a lawyer and Pinterest user named kirsten, who chose to take down her page on the site due to copyright concerns.  Rather than recapitulating the entire fair use argument, I want to focus on how one particular element of the fair use defense—factor four—has played out in this dialogue. 

This factor requires that courts considering fair use assess “the effect of the use upon the potential market for or value of the copyrighted work.”  Thinking about Pinterest and Jigidi in light of factor four raises interesting  issues not only about its application to those sites, but also about the meaning and function of that element of the fair use defense, in the digital world and beyond.  I explore this issue below the fold.

First, factor four disfavors uses that harm the “potential market for or value of the copyrighted work.”  One suggestion about this factor in connection with Pinterest (that might also apply to Jigidi) is that because the photos appear as full-size reproductions (rather than, say, mere thumbnails), they’re market substitutes.  The flaw in this argument is that not all substitutes are market substitutes.  If a user pins a photo to her pinboard that doesn’t harm the market for the original unless somehow it leads to lost revenue for the owner.  In other words, merely causing someone to experience the photo outside the owner’s sphere of control doesn’t per se harm the owner’s market for that photo.

A plausible answer to this point is that re-postings like Pinterest enable photos to be pirated, eviscerating sales of the original.  True that this is a concern, but you gotta prove it.  Mere conjecture about theoretical market harm doesn’t do the trick under factor four.  The Second Circuit held as much in Texaco, when they emphasized that only harm to “traditional, reasonable, or likely to develop markets” counts.  Conjecture doesn’t.  This also answers a possible objection one might make in the Jigidi context.  Perhaps, one might say, Jigidi users have undermined the jigsaw puzzle market for owners of the rights in some of the featured photos.  This is possible, but depends on whether there actually is such a market (or whether one is reasonably likely to emerge).  The sort of theoretical market that economists are so good at imagining doesn’t do the trick.

This limit exists for a good reason:  If any conceivable or imaginable market harm caused factor four to weigh in favor of fair use, then users could never win on that factor.  Owners can always make the point that a fair user could have just sought a license, and that their failure to pay that license is a lost royalty that establishes market harm. And while that claim is always theoretically true, it often isn’t practically plausible.  If users had to negotiate a little royalty with each owner before posting their work on Pinterest or Jigidi, the transaction costs of the hassle would swamp the marginal benefit of re-posting the image at all.  And while it would be great to have an efficient online licensing clearinghouse enabling users to clear and pay cheaply for rights whenever they re-posted an image (sort of like the App Store), we don’t have that yet.

A second issue with both Pinterest and Jigidi is that one might imagine that factor four helps, rather than hurts, the case for fair use because by re-posting images on either site, users have created publicity for an owner’s work and provided a marginal lift (rather than a hit) to the owner’s economic well-being.  However plausible this claim, most courts have been skeptical of it.  Their take has been that owners, not users, should have the final say in determining what the highest and best use of a work should be.  Blogger kirsten makes a similar point in explaining her decision to take down her Pinterest page: 

“what finally sealed the deal for me  as I tried desperately to talk myself out of deleting my gorgeous inspiration boards, was when I thought of some of the photographers whose work I had pinned from other websites.  Would they want me posting their images?  My initial response is probably the same as most of yours:  “why not?  I’m giving them credit and it’s only creating more exposure for them and I LOVE when people pin my stuff!”  But then I realized, I was unilaterally making the decision FOR that other photographer.  And I thought back to the thread on Facebook where the photographers were complaining about clients posting photos without their consent and I realized this rationale is no different than what those clients argue:  “why can’t I post them – it’s just more exposure for you.”  Bottom line is that it is not my decision to make.  Not legally and not ethically.”

I think kirsten made a thoughtful decision, and likely a rational one given the heavy liability associated with copyright infringement.  (Even a single act can lead to penalties of up to $150k, regardless of the economic harm you cause the owner.)  But two things about this rationale concern me.

First, the statute nowhere delegates exclusively to owners the decision to determine the highest and best use of a work.  It merely says that if a use harms “the potential market for or value of the copyrighted work,” it is less likely to be fair.  This is an objective test about the actual effect of a use on the value of a work.  It should make no difference what the subjective opinion of the owner is.  To hold otherwise, as so many courts have, is to confuse copyright (a suite of six and only six exclusive rights) with control.  Owners may not like that copyright does not extend them complete control over their works, but as a matter of law, it plainly does not.

Second, if pinning on Pinterest or making puzzles on Jigidi is fair use, then it is something users are free, indeed entitled, to do.  There is a very plausible argument that users enjoy such an entitlement in this case.  And given that, it seems concerning that users of these sites would stop making uses to which they may be fully entitled due to the fear engendered by the threat of infringement.  This isn’t to fault their decision—on the contrary, it’s likely a rational one.  This is to fault copyright law for making it possible for owners to threaten innocuous uses like the ones on Pinterest and Jigidi with massive infringement judgments.  This is a systematic problem rather than one local to the Pinterest/Jigidi issue, as Jim Gibson and many other writers have plausibly warned.  Since owners will almost always have more resources than individual users, the threat of massive infringement liability affects the entire digital world, encroaching on space that Congress carved out in the interest of users to maintain a healthy public/private balance in our copyright law.

Posted by Dave_Fagundes on March 6, 2012 at 12:11 PM in Culture, Current Affairs, Intellectual Property | Permalink | Comments (2) | TrackBack

Monday, February 27, 2012

Copyright Arbitrage in Action

Meet Aereo, a new way to watch TV on the Internet. Aereo plans to capture over-the-air TV signals and stream them to customers in the New York area. Aereo's low, low $12-a-month prices are made possible by the fact that it doesn't pay licensing fees: Aereo insists that everything it's doing is legal under copyright law because Aereo gives each user her own individual TV tuner. That's right, Areeo is filling a Brooklyn office with thousands of TV antennas.

In any sane world, Aereo would not exist. There is no practical reason to use thousands of tiny antennas rather than a few good ones; reencoding the same signals again and again is pure waste. And sending these signals from Aereo's premises to customers' homes over the Internet is intensely silly, given that these customers already have the option of video service from their cable companies.

But our world is demonstrably insane; witness the Copyright Act. One-to-many retransmission are governed by the complex "retransmission consent" rules at the intersection of copyright and communications law. But one-to-one transmissions of the sort Aereo is making are arguably not "public performances" under the Second Circuit's 2008 Cartoon Network decision. More antennas, less risk. Aereo is engaged in copyright arbitrage: it's trying to stitch together a chain of explicitly legal acts until it reaches a result that would be infringing if done directly.

It's hardly alone. ivi tried (and failed) to pull an Aereo by calling itself a "cable system" under Section 111 of the Copyright Act. ReDigi is trying to cobble together Cartoon Network and a few other precedents to make something that looks like digital first sale. Zediva tried to run this one in reverse: it filled a data center with DVD players in an attempt to bootstrap first sale rights (in the DVDs) into streaming video-on-demand. I could go on.

None of these businesses ought to exist. In a world where copyright and communications law worked cleanly, copyright owners would be licensing their works over efficient transmission paths directly to users. These technical workarounds would be unnecessary. Of course, this point can be taken in one of two ways, depending on whether you think these entrepreneurs are a second-best response to a legal system that makes arbitrary distinctions or taking unfair advantage of a legal system that makes arbitrary distinctions. But either way, their proliferation is an indication of just how badly the wheels are coming off the bus of copyright law's conceptual framework.

Posted by James Grimmelmann on February 27, 2012 at 04:15 PM in Intellectual Property | Permalink | Comments (3)

Saturday, February 18, 2012

Rogue Programmers

In early 2010, Google apologized for the way Google Buzz had revealed people's Gmail contacts to the world. Later that year, the company announced that its Street View cars had been recording the data being transmitted over WiFi networks they drove by. And just this week, the Wall Street Journal and privacy researcher Jonathan Mayer revealed that Google had been using cookies in a way that directly contradicted what it had been telling users to do if they didn't want cookies.

Once is an accident, and twice a coincidence, but three times is a sign of a company with a compliance problem. All three of these botches went down the same way. A Google programmer implemented a feature with obvious and serious privacy implications. The programmer's goal in each case was relatively innocuous. But in each case he or she designed the feature in a way that had the predictable effect of handing people's private information in a way that blatantly violated the company's purported privacy principles. Then--and this is the scary part--Google let the feature ship without noticing the privacy time bomb it contained.

When it comes to privacy, this is a company out of control. Google's management is literally not in control of the company. Especially given its past mistakes, Google's legal team know that privacy compliance is critically important: witness the extensive effort lavished on its new forthcoming privacy policy. And yet they have been unable, time and time again, to keep privacy blunders affecting millions of users from getting out the door.

Google was founded and is run as an engineering-driven company, which has given it amazing vitality and energy and the ability to produce world-changing products. But even as the company has become a dominant powerhouse on which hundreds of millions of people depend, it continues to insist that it can run itself as a freewheeling scrum because, er, um, Google is special, Google's values are better than the competition's, and Google employees are smarter than your average bear. All of these may be true, but adult companies have adult responsibilities, and one of them is to train and supervise their employees. Google is stuck in a perpetual adolescence, and it's getting old fast.

The only other firms I can think of with this kind of sustained inability to make their internal controls stick are on Wall Street. (See, e.g.) Google has already had to pay out a $500 million fine for running advertisements for illegal pharmaceutical imports. And the company is already operating under a stringent consent decree with the FTC from the Buzz debacle. If those weren't sufficient to convince Larry Page to put his house in order, it's hard to know what will be. Sooner or later, the company will unleash on the Internet a piece of software written by the programmer equivalent of a Jérôme Kerviel or a Kweku Adoboli and it won't be pretty, for the public or for Google.

Posted by James Grimmelmann on February 18, 2012 at 01:24 PM in Intellectual Property | Permalink | Comments (6)

Friday, February 17, 2012

More Unforced Errors in the Copyright Act

My belief that termination of transfers is the worst provision in the Copyright Act is apparently not widely shared. Here are some of the other sections that commenters nominated instead:

  • Aaron Perzanowski suggested Section 119, a 9000-word monstrosity that creates a statutory license for satellite retransmissions. It's probably the single worst offender in the Act in terms of sheer verbiage. Along similar lines, Bruce Boyden suggested Section 114(d), which deals with webcasting, but weighs in at a mere 7000 words. Both licenses "work" in the sense that they're actually used, but other than that it's hard to have much positive to say about their labyrinthine complexity. Jeffery Harrison went with Section 110(5), which is supposed to let small businesses turn on the radio. Not only does this one pack a long section's ambiguity into a short section's text, it's also gotten the United States slapped down by the World Trade Organization for violating its copyright treaty obligations.
  • Paul Gowder objected to statutory damages. I'm not so sure that these are really a disaster area. Congress wanted to bring the hammer down on copyright defendants even in the absence of proof of actual harm, and while it's possible to disagree with that policy judgment, there's also a strong argument that copyright infringement frequently by its nature will result in hard-to-measure damages. If I were going to pick on a copyright remedy, I'd pick attorneys fees--and there, the problem is not bad drafting by Congress but rather loose-cannon lower courts that award fees to prevailing plaintiffs at the drop of a hat.
  • "Mike" complained about fair use because it was going away. Here, I simply disagree. Fair use has to be a case-by-case balancing act requiring discretion. Section 107 does, all in all, a pretty good job of giving courts the ability to shape a common law of fair use while also directing their attention to important considerations. And, as Patricia Aufderheide and Peter Jazsi have shown, fair use remains a vibrant and useful doctrine when wielded by defendants who understand how it works.
  • C.E. Petit fingered the works-made-for-hire provision in Section 201(b), together with its supporting definitions. This one probably takes home the prize for most mayhem per word. It leaves what ought to be one of the clearest questions in copyright--initial ownership of a work--under a perpetual cloud. And by vesting ownership of some works in someone other than the author, in Petit's words, it "has the additional bonus of being inconsistent with the copyright scheme of every other nation in the Berne Convention."

Posted by James Grimmelmann on February 17, 2012 at 10:43 PM in Intellectual Property | Permalink | Comments (2)

Tuesday, February 14, 2012

The Worst Part of Copyright: Termination of Transfers

There were some great responses to my survey about the worst provision in the Copyright Act. Bruce Boyden nailed it when he guessed I was thinking about termination of transfers. This rule lets authors revoke any licensing contract between 35 and 40 years after they enter into it. (There was a similar but different system for renewals under the 1909 Act, which also survives in modified form in the 1976 Act, just to add to the confusion.)

This is an inalienability rule. But it's not an inalienability rule that rests on a deep and shared moral intuition, like the rule prohibiting people from selling their organs as meat for the super-rich. Termination of transfers rests instead on a view that authors are "congenitally irresponsible" to the point that they can't be trusted to make licensing decisions for themselves. They need to be given a second bite at the apple because they're not smart enough to negotiate fair deals the first time around. As for the theory that it's hard to value creative works up front, apparently percentage royalties and reversion clauses are too complex for authors to understand or insist on.

Trying to impose an inalienability rule on authors and publishers who don't want it at the time they strike their original licensing deals leads to no end of practical trouble. Making the rule stick means overriding any number of contracts, including contracts specifically drafted to get around it. Litigation over decades-old agreements, frequently with intervening modifications and regrants, is virtually guaranteed to be a morass--and so it has been, with well-publicized disputes like the fight over the termination rights in Action Comics #1 dragging on for years at ridiculous expense. The courts have been fighting against this system for much of the century, but all they've really accomplished is to increase its complexity. And Congress has done its part to make the statute incomprehensible: I dare you to read Section 203(b) and explain what it's supposed to mean.

But the demented logic of inalienability doesn't stop there: it continues beyond the grave. The termination rights of a deceased author vest in the widow or widower, then the children, and then the grandchildren, on a per stirpes basis. That's right: the Copyright Act displaces state probate law by creating future estates. And it does so in the form of byzantine set of fractional shares subject to an idiosyncratic voting rule requiring a majority of majorities to exercise the termination right. (Need I add that the drafters of the Uniform Probate Code concluded that a vast majority of Americans wouldn't want per stirpes distribution if they understood how it worked? No. That would be overkill.)

The underlying assumptions behind this postmortem provision are creepy, too. The romantic author, it would appear, is both the family breadwinner and a bad provider. His family, having sacrificed for decades to support his creative efforts, will receive their reward after his passing, when his genius is belatedly recognized. Copyright law has a theory of the family: it's nuclear and dominated by a single individual on whom the rest depend. The statutory text is gender-neutral, but its assumptions aren't.

As an incentive for authorship, this a terrible one. If authors make bad up-front deals because they're unmindful of future revenues, it follows that those same future revenues won't operate as an ex ante incentive for creativity. As a welfare system to support deserving authors in their old age, it's also terrible, since it bestows large windfalls on a very small number of them, at immense administrative cost. If this is a welfare system to support the families of authors, it's beyond terrible, since it bestows windfalls on a small number of people with the good fortune to be related to a commercially successful author, while doing nothing for the families of those who toiled their whole lives in some other, equally worthy calling.

There is, I recognize, essentially zero chance that this system will be modified for the better any time soon. But that doesn't mean we have to like it.

Tomorrow: comments on readers' choices of their own least-favorite copyright rules. There's still time to add your suggestion to the list!

Posted by James Grimmelmann on February 14, 2012 at 05:03 PM in Intellectual Property | Permalink | Comments (21)

Monday, February 13, 2012

What's the Worst Provision in the Copyright Act?

I spend a lot of time regarding the Copyright Act with a kind of horrified fascination. Although parts are elegantly drafted, most of it is, quite frankly, a mess. So here's a quick survey: what's your least favorite provision in U.S. copyright law? Ideally, it should be one or more of the following:

  • Incomprehensibly drafted
  • Unpredictably applied by the courts
  • Economically inefficient
  • Full of traps for the unwary
  • Unfair to the well-intentioned
  • Ineffective at its stated purpose
  • Demeaning to personal autonomy
  • Disruptive to other areas of law
  • (Bonus) Racist, sexist, or homophobic

I'll report on the results of the survey tomorrow, along with my own candidate.

Posted by James Grimmelmann on February 13, 2012 at 02:47 PM in Intellectual Property | Permalink | Comments (7)

Wednesday, February 08, 2012

ReDigi and the Purpose of First Sale

For now, at least, ReDigi lives. Judge Sullivan denied the preliminary injunction, but according to the transcript, on irreparable harm grounds rather than a lack of likelihood of success on the merits. The case is set for rapid progress towards trial, quite possibly on stipulated facts.

I'd like to take up one of the central questions in the case: first sale. Whether you think ReDigi ought to win certainly turns on your view of what first sale is for. So too, may the legal merits. How you interpret statutory text like "owner" or "sell" may depend on on your theory of what kinds of transfers Congress meant to protect. And even if ReDigi's particular form of transfer falls outside of the text of first sale itself, the arguments for and against fair use can draw on first sale principles. Here, then, are some competing theories:

  • Conservation of copies: Copyright is fundamentally copy-right: the ability to prevent unauthorized copying. Practices that don't increase the total number of copies in existence don't fundamentally threaten the copyright owner's core interests. First sale blesses one of those practices: moving a copy for which the copyright owner has already been paid from one set of hands to another. On this theory, ReDigi is okay because it forces sellers to delete their copy of the music, thereby keeping the number of extant copies constant.

  • Freedom of alienation: First sale protects the rights of owners of personal property against copyright claims that might interfere with their right to use their property as they wish. This idea is sometimes described in terms of "servitudes on chattels" or "exhaustion" of the copyright owner's rights. We could also think of it as a negotiability regime promoting free transferability of personal property, given the information and transaction costs involved in allowing third-party copyright claims. On this theory, ReDigi is in trouble because it deals in information, rather than in tangible objects.

  • Copyright balancing: First sale is one of a cluster of doctrines that shape the level of control copyright owners have over the market (economic and cultural) for their works. If that balance changes over time, the doctrines should be recalibrated to restore it. Since the reproduction right has expanded to cover all sorts of computer-based uses such as loading a file into memory, the first sale defense should expand to maintain the same rough level of control. On this theory, ReDigi should win, because it would preserve roughly the same levels of freedom for users and control for owners as they had in an analog era.

  • Copyright balancing: Or wait ... if the goal is balancing, then perhaps ReDigi should lose. First sale used to be practically restricted by the facts that physical copies wear out and that exchanging physical objects takes time and money. ReDigi would blow those practical limits away, disrupting the first sale balance in the direction of too little control for copyright owners. In the face of rampant illegal file-sharing, why should a court, in effect, legalize the process by allowing ReDigi to serve as a super-low-friction intermediary?

What I love about this case is that it pushes and pulls our intuitions about copyright in so many different directions. It brings up fundamental questions not just about unsettled corners of doctrine, but also about what copyright is for. It offers grist for every mill, food for every kind of thought.

Posted by James Grimmelmann on February 8, 2012 at 03:21 PM in Intellectual Property | Permalink | Comments (4)

Friday, February 03, 2012

The Used CD Store Goes Online

On Monday, Judge Sullivan of the Southern District of New York will hear argument on a preliminary injunction motion in Capitol Records v. ReDigi, a copyright case that could be one of the sleeper hits of the season. ReDigi is engaged in the seemingly oxymoronic business of "pre-owned digital music" sales: it lets its customers sell their music files to each other. Capitol Records, unamused, thinks the whole thing is blatantly infringing and wants it shut down, NOW.

There are oodles of meaty copyright issues in the case -- including many that one would not think would still be unresolved at this late date. ReDigi is arguing that what it's doing is protected by first sale: just as with physical CDs, resale of legally purchased copies is legal. Capitol's counter is that no physical "copy" changes hands when a ReDigi user uploads a file and another user downloads it. This disagreement cuts to the heart of what first sale means and is for in this digital age. ReDigi is also making a quiver's worth of arguments about fair use (when users upload files that they then stream back to themselves), public performance (too painfuly technical to get into on a general-interest blog), and the responsibility of intermediaries for infringements initiated by users.

I'd like to dwell briefly on one particular argument that ReDigi is making: that what it is doing is fully protected under section 117 of the Copyright Act. That rarely-used section says it's not an infringement to make a copy of a "computer program" as "an essential step in the utilization of the computer program." In ReDigi's view, the "mp3" files that its users download from iTunes and then sell through ReDigi are "computer programs" that qualify for this defense. Capitol responds that in the ontology of the Copyright Act, MP3s are data ("sound recordings," to be precise), not programs.

I winced when I read these portions of the briefs.

In the first place, none of the files being transferred through ReDigi are MP3s. ReDigi only works with files downloaded from the iTunes Store, and the only format that iTunes sells in is AAC (Advanced Audio Coding), not MP3. It's a small detail, but the parties' agreement to a false "fact" virtually guarantees that their error will be enshrined in a judicial opinion, leading future lawyers and courts to think that any digital music file is an "MP3."

Worse still, the distinction that divides ReDigi and Capitol -- between programs and data -- is untenable. Even before there were actual computers, Alan Turing proved that there is no difference between program and data. In a brilliant 1936 paper, he showed that any computer program can be treated as the data input to another program. We could think of an MP3 as a bunch of "data" that is used as an input to a music player. Or we could think of the MP3 as a "program" that, when run correctly, produces sound as an output. Both views are correct -- which is to say, that to the extent that the Copyright Act distinguishes a "program" from any other information stored in a computer, it rests on a distinction that collapses if you push too hard on it. Whether ReDigi should be able to use this "essential step" defense, therefore, has to rest on a policy judgment that cannot be derived solely from the technical facts of what AAC files are and how they work. But again, since the parties agree that there is a technical distinction and that it matters, we can only hope that the court realizes they're both blowing smoke.

Posted by James Grimmelmann on February 3, 2012 at 11:59 PM in Information and Technology, Intellectual Property | Permalink | Comments (16)

Saturday, December 24, 2011

From the Dumb Props Department Files...

So, I read that Louis Vuitton is suing Warner Brothers for the line "Careful, that is a Louis Vuitton" in the movie "The Hangover II." This got my hackles up - after all this IS a nominative use, unlike Bella's Twighlight Jacket, and it is a non-trademark use - a description of the bag that's presumably being damaged by hijinx and shenanigans (I haven't seen the movie yet, so I don't know).

Except, of course, that it wasn't a Louis Vuitton bag - it was a knockoff. And that can create problems. After all, the use is no longer nominative, and no longer a fair description. Now there is a chance of consumer confusion - people might think the knockoff is a Louis Vuitton and be fooled into thinking that the sub-par stitching (so clearly visible on the screen - yeah right) is Louis Vuitton's and of poor quality. Trademark people call this "post-sale confusion," like the kind that comes when you wear a $10 Rolexxx. You weren't fooled, but others might be fooled.

There's one problem with the argument - under the Lanham Act, Section 43(a), the unlawful behavior must use the mark in connection with goods and services. That is, a trademark use. Thus, we hold the seller of the Rolexxx liable, but not the wearer, because the wearer is not making a trademark use - they are not using it in connection with goods and services.

That, I suspect, won't stop Louis Vuitton (or sadly, the courts) here. I suspect that the finding will be that the movie is a "good or service" and that use of the name "Louis Vuitton" will be "in connection" with the movie, and confusing, and thus create liability. I can't imagine this is what the authors of the Lanham Act had in mind. Nevertheless, courts have accepted survey evidence that credits consumers who think that the movie must have gotten a sponsorship deal with Louis Vuitton, even if they did not. In other words, courts are willing to find a trademark use just because consumers think there was one, even if there wasn't.

So, this is another one of those "don't do it" cases. I'm all for pushing the envelope of non-trademark use by having studios refuse to pay just for the right to utter the name of a famous mark. But it is a bad idea indeed to then use a knockoff in the movie. 

Posted by Michael Risch on December 24, 2011 at 02:51 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Tuesday, December 20, 2011

Patenting Medical Diagnostics...

The Supreme Court heard oral argument in Mayo v. Prometheus Labs.  The case will hopefully provide some guidance on the patenting of medical diagnostics, but because the patent suffers from some real drawbacks, I'm not so sure.  I'll explain why below. If you are interested in more detail, my 2008 article "Everything is Patentable" discusses the issues in depth.

The types of patents we are talking about are methods, not things. So, let's say I discover that pregnant women have measurable levels of the hCG hormone, where non-pregnant women do not. Having discovered this, I might try to claim the following:

A method for diagnosing pregnancy in a human female, comprising:

a) testing for the presence of hCG in blood; and

b) diagnosing pregnancyif such hCG is present.

This is not a patent on any particular test - it is a patent on every use of the test that measures for the hormone. Of course, one can measure for hCG without trying to diagnose pregnancy, and that would not be infringing. That said - and here's the problem for labs - if there is no other purpose for the test, or if the test is ordered for a particular purpose, then one may be liable for administering the test even if one is not doing the last step - the diagnosing.

 Among others, there are three primary complaints about these types of claims.

First, some worry that such claims bar thought (the diagnosing). I'm not worried much about such worries. The claim is for more than thought - it is for the ordering of a particular test to diagnose a particular condition (and note that doctors are generally immune from infringement). Also, it should make little difference that the diagnosing step is in the mind - imagine a machine that reads the number and a light goes off (or a stick that shows a plus sign if you are pregnant). Whether you think that these types of methods should be patented or not, the reason to go one way or the other shouldn't depend on the happenstance of form.

Second, some worry that such claims are simply a patent on the prior art with thought added to the end. For example, if there were pre-existing hCG tests, then one should not be able to patent practicing the prior art with the added "correlative" step of diagnosing a pregnancy. I'm on the fence about this concern. On the one hand, if the solution is obvious, then we shouldn't allow patents. On the other hand, we have long given patents for new uses of old stuff. This includes new treatments using known medicine - Viagra, for example, was developed to treat blood pressure. We grant such patents because we want inventive activity to find these new uses, and it is not clear why new uses of old tests should be any different. Of course, people may develop better tests, or use existing tests for other purposes.

Third, some worry that this type of claim covers "laws of nature." This is where the action is. Courts have long said (mostly in repeated dicta rather than actual rulings on disputed patent claims) that laws of nature are not patentable. But what exactly is an unpatented law of nature, and what is a patentable application of a law of nature? Even if we were to accept that laws of nature are unpatentable, the natural law in the above example appears to be the production of hCG by pregnant women. So, if I tried to claim production of hCG by pregnant women, I could not patent that. 

Viewed this way, of course laws of nature are not patentable - they aren't new, they aren't invented by the patentee, and they lack practical utility because they don't do anything - they just are. Furthermore, they aren't processes at all because they are not a series of steps that achieve some end. But when you use the law of nature to provide some new public benefit that is discovered by the patentee, that is an application of a law of nature, and that is patentable. My coauthors and I make a similar argument with respect to the application of abstract ideas in our Stanford Law Review article  "Life After Bilski." Indeed, there are many, many creative diagnostic/measurement tests dating back to the early 1800's for measuring one thing by looking at something else that's "naturally" related. These are not all laws of nature - they are applications of newly discovered laws of nature to a useful end.

Despite the seemingly unassailable logic of the preceding argument, many people (shockingly!) disagree with me. Their argument is that allowing the application of the law of nature would preempt all uses of the law of nature itself, and that is a bad thing. I'm skeptical of this counter-argument for three reasons. One, everything boils down to something natural, and deciding when naturalness ends is too difficult an inquiry. Two, except in very rare cases, a diagnostic test does not bar the natural principle, it just rewards those who figure out why the principle is important. If we are worried about the inability to perform medical tests, then we should handle the problem with compulsory licenses rather than removing the incentive to invest in invention from the equation. Three, there is nothing naturally occuring about the test in the Prometheus case. The drug administered is human-made, and the metabolite measured in the claim does not exist in nature. Thus, testing for the metabolite is something that only happens if you change nature with something unnatural. But it would make little sense for that to be the dividing line on diagnostics - whatever concerns one has about them, they don't go away if just because they are measuring something that doesn't happen naturally.

Both those who agree with me and those who don't are hoping for some clarity from the Prometheus case. Sadly, I think that clarity is not going to come, just like it did not come in Bilski with software and business methods patents. I think clarity is elusive in these cases because clarity is impossible to achieve, as I argue in Everything is Patentable; defining the exception is just too difficult.

But, more than that, clarity won't come because of the peculiar facts of this case - in short, the patent claim is problematic:

(1) A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8x10^8 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8x10^8 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

Here are some of the problems:

  1. There is no diagnosing step. It's a minor point, but an important one. If there is no diagnosing step, then one can infringe the patent by merely performing the test - a test that I believe was already known. It may be a small point to add an element of actually adjusting the dosage, but doing so takes the claim out of the realm of exactly the prior art and into the realm of diagnosing. Bear in mind that Mayo was sued in part because it developed a new test for the metabolite.
  2. This is not really a diagnostic patent. It is not measuring something to determine some condition. Instead, it is a dosage adjustment patent. This, too, should be patentable on general principles, but it seems awfully obvious. If there's too little, then give more. If there's too much, then give less. Granted, the patent claims specific numbers, but finding the right range is something that would be obvious to try once you have a test in the first place. Anyone with a thyroid disease knows this - you start with the lowest dosage of synthroid and then go up until the TSH falls within a range.  The patent here is claiming such a range, but finding the range seems obvious- when people get sicker or have side effects, you are outside the range and when people get better, you are inside the range. The real invention is discovering how to measure the metabolite of the drug, but the test for finding the metabolite isn't a subject of this patent.

These two problems mean that the patent should be rejected outright, and that the patent isn't really even claiming a natural principle. Instead, it is claiming the use of a pre-existing test and some obvious thought about one might do about the test (but holding people liable even if they don't do it). Thus, there are many reasons to reject this patent without speaking to the core question - what to do about patenting medical diagnostics. We'll see how the Court handles it, but my worry is (as it was in Bilski) that a problematic claim will cloud the key issue. A better test would have been a really great, inventive diagnostic test that relies on a natural principle. The Court had such a case in the past (the Lab Corp. case), but procedural failures by the defendant precluded real consideration of the issue.


Posted by Michael Risch on December 20, 2011 at 07:02 PM in Intellectual Property | Permalink | Comments (0) | TrackBack

Monday, December 19, 2011

Breaking the Net

Mark Lemley, David Post, and Dave Levine have an excellent article in the Stanford Law Review Online, Don't Break the Internet. It explains why proposed legislation, such as SOPA and PROTECT IP, is so badly-designed and pernicious. It's not quite clear what is happening with SOPA, but it appears to be scheduled for mark-up this week. SOPA has, ironically, generated some highly thoughtful writing and commentary - I recently read pieces by Marvin Ammori, Zach Carter, Rebecca MacKinnon / Ivan Sigal, and Rob Fischer.

There are two additional, disturbing developments. First, the public choice problems that Jessica Litman identifies with copyright legislation more generally are manifestly evident in SOPA: Rep. Lamar Smith, the SOPA sponsor, gets more campaign donations from the TV / movie / music industries than any other source. He's not the only one. These bills are rent-seeking by politically powerful industries; those campaign donations are hardly altruistic. The 99% - the people who use the Internet - don't get a seat at the bargaining table when these bills are drafted, negotiated, and pushed forward. 

Second, representatives such as Mel Watt and Maxine Waters have not only admitted to ignorance about how the Internet works, but have been proud of that fact. They've been dismissive of technical experts such as Vint Cerf - he's only the father of TCP/IP - and folks such as Steve King of Iowa can't even be bothered to pay attention to debate over the bill. I don't mind that our Congresspeople are not knowledgeable about every subject they must consider - there are simply too many - but I am both concerned and offended that legislators like Watt and Waters are proud of being fools. This is what breeds inattention to serious cybersecurity problems while lawmakers freak out over terrorists on Twitter. (If I could have one wish for Christmas, it would be that every terrorist would use Twitter. The number of Navy SEALs following them would be... sizeable.) It is worrisome when our lawmakers not only don't know how their proposals will affect the most important communications platform in human history, but overtly don't care. Ignorance is not bliss, it is embarrassment.

Cross-posted at Info/Law.

Posted by Derek Bambauer on December 19, 2011 at 01:49 PM in Blogging, Constitutional thoughts, Corporate, Current Affairs, Film, First Amendment, Information and Technology, Intellectual Property, Law and Politics, Music, Property, Television, Web/Tech | Permalink | Comments (1) | TrackBack