Saturday, October 07, 2006

Works in progress: Frank Pasquale

Frank Pasquale, Egalitarian Principles for Copyright: Economic analyses that are underrecognized in current IP scholarship. There may be implications for patent, though he focuses here on TM and copyright.

His project borrows insights from environmental economics: models of the commons, of scarcity, and of consumption. How IP can be used as a tool in a competition for position or for scarce resources.

Not all information is created equal. We should give good information, like categorization information (Google) special privileges in the copyright system. Some patents are bad, spam is bad, primarily position-enhancing information. Classic example of positional good: People in the front row at a football game who stand up to get a better view, forcing everyone behind them to stand up. Social harms: if you need a great suit to get a relative advantage, you spend money on a suit, but then everyone else needs to do so too and you end up with a social loss and no one better off. (The Star-Bellied Sneetches and the Plain-Bellied Sneetches.) Information can be this way, as with proprietary databases that help lawyers do forum-shopping, producing advantages against underfinanced opponents.

Second concern is not economic but philosophical: this amounts to an unfair commodification of advantage. No social good X should be distributed merely on the basis of characteristic Y – you shouldn’t be able to buy your way into the best college.

Replies to the economic critique: no quantification of positional effects. But there’s very little law resting on direct quantification of costs and benefits. We seek heuristics, rules of thumb, considerations.

There’s an inevitable mixture of intrinsic and positional goods. Parents will always buy tutoring for their kids if they can. But we can discourage this behavior.

How to disaggregate positional value and intrinsic value? Leveling up strategies – we want to make the good accessible to everyone. Leveling down – to no one, when we just want to render valueless the primarily position-enhancing information. The two bad things to avoid are wasteful competition (where lots of people are using the PPEI) and unfair competition of advantage (where inequality is persistent).

Poster child for PPEI: Ivywise Application Packaging, which produced Opal Mehta and got the author of same into Harvard.

The value of a positional advantage is inversely correlated to its pervasiveness, which is directly correlated to its equity. As the advantage becomes more widespread, it becomes less valuable, but may still incur the same cost/effort. So why not short-circuit the process? South Korea tried to ban private test prep, but it was overturned by the supreme court. This is an example of where you want more leveling up.

Leveling down: Mandatory disclosure of use and cost of services – for college applications, court filings, and the like.

Level ing up: Increasing access by decreasing copyright protections. Test prep questions and material shouldn’t be copyrightable. There will still be incentives to pay for the teaching, but spreading the questions will make help more accessible.

Another option: Encouraging price discrimination to help people who couldn’t otherwise afford it – but a very aggressive regulatory posture to make sure the price discrimination is reaching people. Encourage the socially valuable, education aspects of services like realistic college counseling, but share the competitive benefits.

At least with PPEI, the “more innovation” that we’d lose from decreasing protection isn’t that valuable.

Josh Sarnoff: John Adams has relevant discussion about leveling up (universal public education) and leveling down (prohibiting ownership of knowledge, though not copyright itself, and relying on reputational interests).

A: British Parliament once introduced a bill making it a crime for a book not to have an index!

Mark Lemley: Relatively paternalistic view of how people should be allowed to spend their money. This makes me nervous. At a minimum, you need to think about administrability of government involvement. Which trademarks and copyrights are to be extirpated?

Michael Carroll: It’s hard, but at least we can think about parts of the system where IP rights aren’t functioning as they’re supposed to.

A: Expanded fair use for test prep is interesting – some great legislative proposals about truth in testing, but copyright owners claimed that tests were trade secrets.

Carroll: Having represented ETS, we did use copyright to go after the test prep industry for copying tests.

Michael Madison: You could distinguish based on how concretely the good itself is defined. How do people use and value particular information?

Q: The law & econ question is whether we should encourage production of information that will divide us instead of unite us – this question comes up in contract law, whether information is something that will just allow one party to extract rent from the other. Do we let people keep information private, so they’re encouraged to invest? At what point does that become socially harmful?

Glynn Lunney: Obvious applications in trade secret law of how much you have to invest in protecting the secret. In terms of social value, luxury TM goods can be a form of negative externality: you buy the expensive car so you can show others what they don’t have. But we as a society seem to value that ability. We have manmade diamonds that are better quality than natural, but the natural diamonds command more in the market. If owning a diamond is just a signal of how much money someone has, why not just tax 75% of the price, since who cares whether the seller or the government has that money?

A: Why not just have people put a sign on themselves saying “I’m rich”? It only works because it’s indirect.

Sarnoff: Adams says the aristocracy is necessary to the government and the people, so he was not in favor of leveling property though he was in favor of leveling pure information.

A: Status signalling is an important topic and there’s good historical work on it.

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