Sunday, April 01, 2007

What Ifs? General IP Law

Peter Bowal, Haskayne School of Business, University of Calgary, What if the stud does not function?

A story about items first called “Automatic Binding Bricks” (1949) but are now a system for creative play. Round “studs” and “pipes” atop a hollow rectangle. It was an early plastic toy, made to exacting tolerance to provide “clutch power.” Statistically there are about 52 pieces for every living person. The name is synonymous with the flagship toy, creating a TM problem, and derives from the Danish leg godt, meaning “play well.”

The Canadian patent expired in 1988. Megablocks began as a lower quality product, but are now an exact copy of Legos, the only difference being the name. They are interchangeable with Legos. Legos tried to register a TM for the Lego “indicia” – the top block with raised studs – and was unable to do so. Thus it sued Megablocks for passing off.

It’s not a difficult case – Lego was clearly trying to use TM as a substitute for patent. The studs were disclosed and claimed in its patents. We tend to focus on the creation of rights, but we also need to tell stories about how rights expire, and how transitions occur in business.

In Canada, there is a clear trend shifting from creators’ rights to users’ rights, across copyright, trademark, and patent. What if this case had been decided decades ago, before lots of countries had ruled against Lego? What if this case had been decided from a creators’ rights perspective? It could have been different.

James Gibson, University of Richmond, What if we used IP rights to impede evil industries?

Two sources: Sprigman & Raustiala’s Piracy Paradox article and conversations with Chris Cotropia about patenting tax avoidance schemes. Two premises: (1) the subject matter of IP is ever expanding, so it’s not surprising that the fashion industry and tax avoidance industries are pretenders/aspirants to high IP protection, and (2) in some industries, IP rights can impede innovation rather than promote it. So sometimes people operate in de facto IP-free spaces.

We might have the instinct to bar movement from low IP to high IP because, e.g., for software and business methods IP protection are socially undesireable. What if we gave fashion and tax avoidance IP protection in order to discourage production? Gibson thinks the fashion industry is kind of dumb and doesn’t need more investment. Fashion is a status good, signalling superiority, and the fashion cycle is wasteful – when people pay to get the new good, their investment is wasted as soon as enough other people join them. If Sprigman & Raustiala are right that fashion works best as a low-IP regime, because fashions go in and out more quickly without IP, then the right solution for someone who thinks fashion is dumb is to add IP, to discourage the “status sheep” from running to the store for cheap goods subject to induced obsolescence. Give them enough rope to hang themselves! (Do trends last longer in Europe?)

Analogy to tax schemes is obvious. If we view tax planning schemes as socially undesirable, and if giving strong IP rights would slow down innovation, then by all means give them rights and decrease gaming of the tax system. (I wish Peggy Radin were here to talk about commodification and the social meaning of granting rights.)

Yes, he’s being judgmental. Maybe there is more socially redeemable value to the fashion industry than he thinks. Why not tax fashion? Why not close the tax loopholes instead? Sure. But if evil industries are asking for rights, we should also try that to control them.

If Gibson is right, why would the industries lobby for rights? For certain players, IP rights can be good ideas regardless of the effect on the industry as a whole – it helps established players deter competition.

What if they realize it’s a bad idea and stop taking advantage of IP rights? This apparently occurred in Europe with databases and fashion. Sprigman & Raustiala say that the US is more litigious, and you can’t expect competitors to hold off enforcement as they do in Europe, thus you obtain IP rights defensively. Maybe Europeans are more well-mannered, but here we’d gum up the works with rights.

Debora Halbert, Department of History and Political Science, Otterbein College, What if WIPO did not exist?

WIPO’s building contains a lot of art, but it’s not necessarily consistent with WIPO’s theories of IP – for example, copies of water nymph sculptures from Florence that may be testaments to creative genius but weren’t created under any IP regime.

WIPO has aligned itself with UN development goals since its inception, but development has a very specific role here – institution building for IP. Assessment is based on how many people are educated about the value of IP, not on how much development has occurred under the legal frameworks it promotes.

Despite decades of meetings and educational activities, IP rights remain relatively unprotected in the least developed countries and the protection that exists hasn’t sparked development in countries that need it most. Chad, for example, was an original signatory of WIPO in 1970. Like Chad, Mali is a former French colony that gained independence in 1960, and they are geographically similar. Mali joined WIPO in 1982, probably as part of structural adjustment.

Chad was a deeply troubled nation-state from the start. They signed on to WIPO during a period of near-collapse of the state. Halbert’s hypothesis is that French pressure had something to do with that; Chad signed on to IP treaties, including regional ones, while it was nearly disintegrating in a civil war.

Every economic indicator for Chad is bad, often worse than it was in 1960. Finding oil is the only bright spot. There’s no clear link between culture in Mali and Chad and protection of IP; both countries had vibrant indigenous cultures before and during colonization, not supported by IP. Certainly copyright might be important in a world music culture, but it hasn’t been yet.

Poverty reduction should be the most important goal. Sponsoring converences and workshops in host countries isn’t enough to change conditions on the ground. Mali doesn’t even have a functioning road system; copyright offices aren’t that helpful. WIPO has been at best ineffective. WIPO’s self-definition is part of the problem. A bar that free rides on Friends’ “Central Perk,” using the name and the Friends font for its slogan “We’re Your Friends,” is within a block of WIPO headquarters. If the IP message hasn’t gotten that far in Geneva, it’s a mistake to think that it can be different in Chad.

Liam S. O’Melinn, Pettit College of Law, Ohio Northern University, What if James Madison were to assess the intellectual property revolution?

Madison wrote a famous line in Federalist 43; O’Melinn played the role of Madison in explaining why he wishes he’d never written it. “In Great Britain, the right of the author hath been adjudged a right at common law and with equal justice seems to belong to the inventor.”

The first clause has prompted some to wonder whether Madison knew of Donaldson v. Beckett. But he was part of the most literate generation in American history, and it was the greatest literary property case of the day, so the question answers itself. Donaldson was an attempt at literary imperialism over Scottish booksellers.

What did the Framers mean by the copyright/patent clause? (1) Federalization. His goal was to federalize as many powers as possible, and when that clause passed into the Constitution without debate or dissent he was pleased. Why would he write more than one sentence in brief explanation? (2) Americanization: copyright and patent were to be called into service to create an American culture that would equal – and be acknowledged equal to – European culture. (3) Equality. Better than the corrupt European culture of monopoly. These are not author-regarding reasons.

Relevant events: the Boston Tea Party; 1774, English solicitor Weatherburn dresses down Benjamin Franklin for publishing Governor Hutchinson’s private letters planning to deprive colonists of their liberties – he was tried for publishing information in defiance of an imperial monopoly; the same solicitor then addressed Commons on Donaldson, attacking the Scottish colonials for having the temerity to disseminate information in defiance of an imperial monopoly.

If Donaldson had been decided otherwise, the result would have been the suppression of the Scottish book trade, then the Irish and American book trade. Then English books would have found themselves at the bottom of Boston Harbor. Then we would have realized that copyright can never divest itself of its history of censorship, and copyright wouldn’t have made its way into the Constitution. Then maybe a monopoly power wouldn’t be turning to the Framers to justify attempts to maintain that bankrupt monopoly.

Mark McKenna for Gibson: Trends might last longer if given IP protection, but wouldn’t that mean lots more people would pay more for longer?

A: Gibson is focused on the total people would pay for fashion, and strong IP could decrease that total. Maybe that’s not true – maybe licensing would develop. (Or, as I think McKenna is suggesting, people prefer fashion enough to pay more and shift consumption from other things.)

Q for Gibson: What if antitrust law was not enforced in the tobacco industry? One paper suggests we should allow collusion to drive up prices.

A: There are other possible applications, such as copyright/porn. It’s hard to think of industries to which this analysis applies, but maybe cloning is one.

Q: Fashion creates jobs and economic growth.

A: Maybe – there are lots of successful industries we might not like. If you shut down military bases, you lose jobs, but what’s the opportunity cost? People could spend money on something more socially desirable than having the color of shirt appropriate for the season. But maybe they’d spend it on McDonald’s and die earlier.

Q for Halbert: Are Chad and Mali so troubled and underdeveloped that looking for an effect of WIPO there is like looking for the effect of an eyedropper on an inferno? Maybe a place with traction for WIPO would be a better test.

A: It’s a good point, and she does want to compare countries across levels of development. She started with Chad because it signed on in 1970 and that was interesting, given Chad’s development level. Still, it doesn’t seem right to define development as “setting up copyright offices” regardless of what else is going on.

Q for Halbert: WIPO’s major role in international treaties – even if WIPO is wasting money, isn’t there some value in having an international entity that functions as a general office?

A: The counterfactual requires you to ask what other administrative roles exist – WIPO serves a function for countries that produce patents, but that could be replaced. What if, instead of vertical silos of protection, IP had been integrated across UN agencies subsumed under other things like human rights, economic development, the environment? That would be a different model, without the same battles about who gets to talk about IP. WIPO is clearly doing things, but you can’t say it’s helped LDC.

Q for Gibson: There is no interest in fashion rights in the US because the US depends on copying European designers. But in Europe, design protection has been very successful – 3 years, no formalities. What about that? Enforcement would also be a big issue, because the season ends before you can go after infringers.

A: If the theory works, you’d have more time because trends would last longer. With respect to US/Europe, lots of design now goes on in the US because companies are multinational. And it’s not clear that design protection is actually used very much in Europe compared to the amount of design that goes on.

Wong for Halbert: How is WIPO going to try for a “balanced” IP regime that takes development into account? There’s been some movement to change WIPO’s priorities, and your work could fit into that.

Q for Gibson: There’s a body of evolutionary biology literature about accoutrements used to attract mates. One suggestion is that it’s important to distinguish yourself from other competitors. Could that be applied to fashion? Then the interest becomes one of the user, not the producer. And then there’s reason to hope for more kinds of fashion to distinguish oneself. Also, wearable computers: as clothes turn into things other than clothes, how will that affect your argument?

A: No matter what we do, we aren’t going to get rid of status competition. Perhaps we could slow down the cycle yet still allow distinctions. That could even lower the search costs of prospective mates! You don’t need to signal who you are every season.

Lemley for Gibson: Either your theory is true only in fashion/tax avoidance, in which case it would be useful to know what makes them different, or that’s also true of movies, software, and pharma, in which case we’re doing it wrong.

A: Absolutely, and distinctions can be made between industries. Looking at something that thrives in a low-IP world can help.

Lisa Ramsey for Gibson: Would your theory also apply to advertising?

A: Sure, he has the same view about status-intensive advertising. (Except that ads get high IP protection, so removing protection could get us more of it.) Given that TM is headed towards promoting the brand as the good, it would be nice to decrease the TM owner’s ability to control promotional goods branded with the TM.

Q for O’Melinn as Madison: What would you have wished for instead? Avoiding a federal right entirely, allowing states to do anything and just hoping they’d hold off high protection? Or putting something affirmative in the Constitution, and if so what?

A: My what-if is fanciful beyond this point. Madison just wouldn’t want to be pressed into service in the current Revolution. If you describe these rights as conventional property, federalization would have failed – federalization of general property rights would have brought the constitutional convention to a screaming halt.

Comment for Gibson: Gender issues. Fashion has always been associated with women and things women care about. IP protection offers legitimacy. Fashion is more important in the creation of identity than you acknowledge; the first use of the printing press was to circulate images of costumes.

Comment for Halbert: Does copyright matter at all, even in developed countries, when users have such different concepts of what the law allows? The “Friends” bar might be a legitimate remix, and it might exist because of copyright’s incentives!

Q for O’Melinn: Why wasn’t IP controversial as a monopoly?

A: He doesn’t know. Whatever side you’re on, you have a difficult problem: IP was important enough to get into the Constitution, but not important enough to explain, for the generation that did the most explaining of anyone. His theory: it was a coup of federalization, and that’s why they don’t say much about it. Copyright and patent were introduced alongside proposals to create a national university – public-minded.

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