Friday, March 11, 2016

Private Law & IP: Institutions

Session 2: Institutions I
Moderator: Patrick R. Goold
Wendy J. Gordon, “Proximate Cause in Torts becomes Proximate Use in Copyright”: Common law has useful intuitions—tort for copyright—though I don’t pretend to know whether tort is optimal.  Both tort and © are about internalizing externalities; creating incentives for people who are similarly situated; correspond to intuitively common-sense moral intuitions about desert and merit—negligent actor deserves to pay, meritorious author deserves to be paid.  Tort law focuses on defendants and internalizing negative externalities; © focuses on plaintiffs and internalizing positive externalities—make © owners work harder by giving them more $ and make negligent drivers drive better by requiring them to pay. 
Definition of employer/employee—SCt seems to follow my lead by looking at the Restatement of Agency for vicarious liability. But that’s crazy b/c they forgot the reversal. Vicarious liability is about spreading—making the person with least incentive/low marginal utility of money pay.  Copyright is all about credit/control—we want them to have the right if they’re sensitive to incentives, but that’s most likely the actual person—concentration/control is more beneficial than decentralized control.
Proximate cause in tort is mostly about whether the defendant could have foreseen. Proximate use in © is about what the plaintiff could have foreseen at the time of creation.  Shyam Balganesh and Christina Bohannon have written on this, but the concept goes beyond the scope of foreseeability, which alone isn’t as useful as it is in tort, b/c © isn’t just a post-accident deal but an ex ante creation of rights.  Larger project: How we figure out more easily delineated lines than vague foreseeability.
© and tort use causation.  Patent law doesn’t require cause in fact; neither does TM law.  If interaction w/P’s © work made a difference to what D did, that’s cause in fact.  Restatement of Torts: no proximate cause where liability wouldn’t make a difference in creation of risk/harm. Proximate cause is a question of fit: does liability serve the purposes of the imposition of the duty?  Negligence: you negligently place a bookbag in the hall.  Mr. Smith trips but is unharmed; however he is delayed by the stumble and therefore steps outside just as a gargoyle detaches from the building and falls on him.  No proximate cause despite negligence.
Analogies: transformative fair use and functionality.  It’s fair use to make copies for judicial use, for example, b/c of the lack of connection b/t the facts at hand (why there was copying) and the purpose of the law.  Functionality/interoperability: if someone is copying only to make two things fit together, the only need is for them to be the same; they’re not copying for the expression—like getting a key made for a guest staying at your house.
Commentator: Shyamkrishna Balganesh: Fit: © would benefit from developing a structure to see if the goals of © are being furthered by any particular instance—Ziporsky/Goldberg in tort; antitrust (substantive standing/antitrust injury)—whether the harm is of the type we want to impose liability for given the underyling purposes of the institution.  Needs more determinative logic to be a real constraint.  Gordon assumes normative logic comes from incentives. But given the way incentives have become understood/handwaving in jurisprudence, this isn’t a real constraint.  Rule v. act utilitarianism: for rule utilitarianism, we wouldn’t use an individual instance but systemically. We all know the effect of that: everything in some ways contributes to incentives; merge with expectations; retroactive extensions come to be seen as incentivizing. But for act utilitarianism, we need better specification of the nature of the incentive—who is to calibrate it? Is it market based?  One of the enduring problems of fit in ©. 
Proximate cause: one of the big debates over whether proximate cause needs to continue in the Restatement and needs to go into the scope of risk/the “duty wars” is how we think about specific v. general deterrence. Is © a general incentive structure for future authors, or this particular case?  Proximate cause has its own set of problems/debates that should be addressed squarely if incorporated into ©.
Gordon appears to allow both instrumental and deontological considerations into the question of fit.  If one has this plural accommodating conception, does it operate as a constraint at all? Drassinower says incentive-based system can’t explain why originality is important; need autonomy-based conception. But what gets excluded if we use autonomy? Doesn’t it destabilize the very conception of fit?
Bigger question: What is the overarching justification for introducing a fit requirement?  It’s clear that © is instrumental, meant to serve a particular purpose.  But where does that come from? Is it prior to ©, Constitution specifying a purpose, or is it to be deductively derived from © itself? Analogy to common law: if we identify purposive nature of common law, we derive it from the workings of the institution, not a priori.  Given that © is statutory, we have a slightly different approach: but where then is the basis for the fit criterion?
Liability for benefit: We might fruitfully analogize © to liability for unjust enrichment.  His question: what exactly is the benefit?  Is it the trigger of liability or the basis of recovery?  Analytic distinction: bifurcation b/t unjust and wrongful enrichment. Unjust enrichment doesn’t require a wrong to trigger recovery: recovery of a mistaken payment to the wrong person.  Wrongful enrichment recognizes a wrong caused by a harm, and the profits accompanying the harm ought to be disgorged—the basis of the disgorgement is not distributive, as in unjust enrichment; it’s triggered by the wrong.
In ©: you can’t altogether assume away the problem.  © affirmatively recognizes the wrongness to trigger recovery. It’s not just “was there copying?” but “is the copying there was normatively wrongful?” (whether that means market-based justification or not).  A positive externality acquired through a wrongful act.  Gordon recognizes that volitional conduct is required.
Gordon: [Edited to improve match with what Gordon said/correct my misunderstanding] In the distinction between restitution arising out of ‘non-wrongful’ versus wrongful’ enrichment, the ‘wrongfulness’ cases don’t much concern me.   Those cases are easy: if someone trespasses, even 100 feet underground, it’s pretty easy to see why a court might give the landowner a share of any profit the trespasser earned.*  And the benefit is not the basis for liability.  Instead, I’m interested in exploring circumstances under which a ‘non-wrongful’ reaping of benefit is urged to provide the basis for liability. Copying in itself isn’t wrongful.  Among the ‘non-wrongful’ restitution cases, there’s a subset that pose a particular challenge to me, namely, the ‘volunteer’ cases where someone, for instance, paints or repairs the wrong house because of a mistake, and sues on the basis that the recipient got a benefit without paying.

The volunteer cases are interesting because they seem to challenge my argument that the common law is concerned with internalizing benefits -- the challenge arises because the common law rule tells the house painter she is not entitled to sue for the benefits she has conferred. This seems to contrast with the treatment copyright gives authors.  An author is a kind of volunteer, yet authors are empowered to sue copiers regardless of whether or not the copiers have agreed to a contract.

  I argue that the contrast between the rules doesn't show that the common law rejects the internalization of benefits.  Rather the same consideration operates in both rules:   a common-law preference for achieving internalization through contracting, in markets, as opposed to requiring internalization after the fact by judicial fiat.   

Courts generally adopt rules that encourage markets to form.  For ordinary services, markets will be discouraged if service-providers can routinely get paid without contracts, while markets will be encouraged by an opposite rule that routinely makes contracts essential.  So the latter is the baseline rule adopted: Volunteers need contracts if they wish payment. That rule works well for services because as a practical matter, service-providers have natural leverage to obtain contractual agreements.  Most customers can’t get their houses painted without promising payment.  Authors don’t have this leverage.  It’s physically quite easy for a publisher or a customer to make copies of most authorial works without consulting anyone.   

Copyright law provides a substitute for physical leverage; without it, potential publishers or customers might withhold payment from potential authors in the hope of free-riding on an authorial work which (they hope) won’t need their contribution in order to be created and circulated.  A fear of such scenarios leads to a concern that, in a world without copyright, strategic behavior by potential beneficiaries might make it quite difficult for authors to find sufficient promises of payment, and that as a result the public might have fewer works created than it would in fact prefer.  The copyright rule requiring payment for copying allows the potential beneficiaries and potential benefactors to coordinate (through contract) what is wanted and what can be supplied, avoiding the frustration of demand unfulfilled because unexpressed. 

The no-payment rule applied to volunteers who provide services is interesting not because it’s a perfect analogy to copyright. To the contrary, it’s interesting as ‘the exception that tests the rule.’ Comparing authors with ordinary volunteers reveals -- I think unsurprisingly -- -that the operative common-law rule isn’t “internalize by whatever means possible,” but rather, “internalize by market if you can, and turn to lawsuits only to the extent that unassisted markets aren’t likely to do the job.”  For non-excludable goods like works of authorship, internalization via contracts and markets might not occur unless the law gives authors (a particular subset of volunteer benefactors) a right to sue for benefits conferred. 

Originality:  My concepts of authorship or originality aren't mystical; I don’t think you need autonomy justifications for copyright law that go beyond the ordinary.  Rather, original authorship marks out an area where imposing liability for certain non-consensual uses of ‘privately-produced public goods’ turned out, at least arguably, to be socially tolerable and limit-able – an area where prohibiting a particular form of free-riding seemed (at least sometimes) to be capable of resisting a slide into a general rule against free-riding.  

A general rule against free-riding would, of course, dangerously impair community.  Originality functions as a concept useful to mark the territory where a historical experiment in ‘internalizing positive externalities’ by non-market methods arguably had some success.
Van Houweling: Why not trespass, with its lack of fit requirement (though there are issues with accidental trespass)?
Christopher M. Newman, “Vested Use-Privileges in Property and Copyright”: How do I know what a servitude is?  You can’t use your property to do X because of my right.  That could be called tort law—some one else asserts that you harm me w/r/t my other property interests, even though you’re using your own property.  Servitude seems different; a right to control what is in other respects your property w/o having to justify it w/r/t some other harm.  Servitude instead requires some preexisting link b/t me and that thing that gives me the right to assert arbitrary control. Public regulation doesn’t require the tort law fit, but it’s contested—to what extent should we regard public regulation of what house I can build on my property as appropriate? Does that protect others from injury? Does it further collective good?  Takings issues?
So, does it make sense to regard copyright as servitude on the physical chattel?  Or is it a protected interest in the copyright that is protected by tort-like considerations, which brings in issues of fit?
Commentator: Timothy R. Holbrook: The book is mixed property, both rights at once—hard to apply the real property matrix to that.  Maybe what the book owner has is an easement against the © owner: a right to use for certain reasons, but the uses are limited—a more compelling story for exhaustion doctrine.  Public domain: not re-appropriable.
Balganesh: debates over quasi-property have this same character of relationship v. object.  The right of sepulchre is another variety: what rights over unauthorized interference w/corpse do relatives have?  Recognizing emotional harm w/o property rights.
Van Houweling: We can see touch and concern as requiring some connection to the common good for servitudes; there might be a similar kind of fit requirement there. And further there might be more justification for a fit requirement in ©--we’re not as agnostic about the purposes property serves in ©; we have a constitutional purpose, and that means we can and should have a fit requirement.  Also there are difficulties of asset definition that help justify a fit requirement.
Cohen: the fact that you get very different results when you analogize to servitudes v. public trust v. something else is suggestive of Cohen’s family relationship argument: these are useful concepts for finding relationships between types of property and doctrines, but very little follows from the family resemblance as such. When none of the analogies are on all fours, you can cycle madly or you can broaden out.
Newman: or you can use it to navigate/extrapolate—what are likely to be useful answers/policies to keep in mind when answering a question.

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