Tulane IP conference, part 6

Raizel Liebler, Political Economy and Intellectual Property of User-Created Content

She’s concerned with the way creators lose ownership and control, particularly of user-generated content. Host companies like YouTube are worth a lot of money. People who create the content aren’t receiving monetary value for it.

Perhaps that’s not what users are looking for. Perhaps they seek recognition. But we know they’re not getting compensation. Some of the UGC may be low-quality or pirated. And the contributions of the site in structuring the site are valuable in their own right. But in the end, the site’s value comes from UGC.

Owners of distribution means, and owners of original works, often take extreme measures to protect their works/sites. LiveJournal’s Strikethrough incident: LJ, a blogging platform, received pressure from allegations that “child pornography” was present on the site. Instead of informing users and groups, LJ just did a keyword search and removed journals that contained targeted words. There was no way for people to retrieve or back up their journals. Some materials LJ removed were indeed related to child pornography, but they also deleted a discussion group on Nabokov’s Lolita and support groups for survivors of sexual assault. There was ultimately some restoration of the journals, but the site’s relationship with users was badly damaged.

Where do we go from here? As users become economically significant producers, we need to think about these kinds of disputes. What happens when the site goes down or changes its model? Traditional IP models don’t fully address this type of interaction between users and platforms. (Comment: I’ve written about this type of issue in Power Without Responsibility.) Companies are unlikely to change their ToS. Is partial user-ownership a solution? Contributing content ought to give you a share of some type in the property.

My thoughts: The work of Viviana Zelizer on the social meaning of money is incredibly important here. Money is funny stuff; I don’t want UGC to keep us poor, but maybe there’s a way to manage a gift economy that interpenetrates a monetary economy that works without assimilating everything to the market. I have some initial thoughts in User-Generated Discontent.

Comment: Worth looking at whether value of sites like YouTube comes from aggregation. You would never be able to sell a 20-second video on your own; the market attaches some value to aggregation. (My reaction: on the other hand, we don’t say that iTunes contributes so much of the value that it should be the only one who gets paid.)

Comment: The issue here is surplus allocation. We don’t have to pay users because they are empirically contributing UGC for free. But YouTube doesn’t need the entirety of its billions in market valuation. If it’s relatively cost-free to reallocate, maybe we should, but there’s no efficiency story either way; it’s distributional and moral.

Wendy Seltzer: Are there info problems that make this seemingly voluntary exchange unfair? That is, do users not recognize how valuable their contributions are? Do they not understand how they might want to reassert control over their contributions in the future? (A privacy/control concern.) Otherwise we might expect users to react by moving away from these services.

A: There are costs in moving info that make it hard to move away (especially when a site is characterized by network effects).

Comment: Part of copyright owners’ argument against YouTube is that YT doesn’t make it easy to find how many copies of a work there are. Forced disclosure of value added to the aggregate might be of interest—how do my 100 hits compare to the aggregate of all hits? (I’m not as sure this will be helpful, given the whole long tail business; it’s precisely because the whole is greater than the sum of its parts that it’s hard to value.)

Comment: The moment there’s a formal financial relationship with users, that changes the whole tenor of the fair use argument for UGC.

A: She agrees, but we’re dealing with two separate types of YT uses. Some are arguably fair use. Others are user-posted content which doesn’t need a fair use claim. (I think there’s probably a spectrum, but the point is still valid.) She is interested here in non-fair use UGC. (Hmm. Doing something to monetize non-fair use UGC could make the fair use problem even worse, by making fair uses even harder to profit from; if one were required to signal whether one was offering non-fair use UGC before seeking to monetize, that might also make it a lot easier to find and threaten arguable-fair use UGC.)

Alina Ng, Authorial Rights in the Copyright System

Are rights things to be tolerated in a utilitarian system? It’s impossible to calibrate them in utilitarian terms.

Her proposal: conceptualize copyright as a natural right, but not a Lockean or Hegelian right. We should base author’s rights on creativity, not something tolerated to promote progress. When we base author’s rights on the fact of creation, we naturally put in limitations to those rights. For example, Locke’s proviso of as good and enough left over for others, and a prohibition on waste.

What follows: separation of economic rights and authors’ rights. No separation between idea and expression; what is creative ought to be protected. Less emphasis on the market.

Harold Bloom says: As a society, we are what we read. Literature is at the core of the human.

Q: What do you want us to do? You want moral rights, and what else? Rewarding creativity sounds like increasing copyright for really creative works. (Hm, seems to me that to speak of “rewards” is already to leave Ng’s paradigm.) That’s still ultimately economic, and recognition of merit doesn’t get you very far without more money. (Again, only if all you care about is money.) Also, if a really creative author should get more, who’s going to judge?

A: This is not a suggestion of moral rights. She is trying to get us to stop thinking in economic terms. There’s a moral dimension to creativity.

Q: Can you talk more about works of greater quality?

A: We may need more Shakespeare. A moral obligation on the author to create works that are better for society. Maybe a work ought to be beneficial before it should be protected. Denying copyright to immoral works? That might encourage their proliferation, with a deleterious effect on society, so she hasn’t come to any conclusions.

My Q: How does the idea/expression collapse play out? If I copy your great new idea for a reality show, but the expression is different, would you be able to succeed in your natural-rights-based copyright claim?

Ted Sichelman, Game Theory, Quantum Mechanics, and Intellectual Property

Key assumption of classical game theory applied to law: rights are binary. In a two-party game, each party is trying to decide whether to build, copy, or license. If the parties can’t communicate before the game starts, we can model the decision once we assign values to the costs, benefits, and risks of losing a lawsuit over copying. Meanwhile, IP has a deadweight loss. (His initial model assumes that the parties lack information about the value consumers place on the good and that they can’t engage in price discrimination.)

When there are no IP rights, the classical public goods problem means no product is built: they both refuse to accept the consequences of being copied, which would drive the price down to marginal cost (which he assumes is zero, which shouldn’t fit for a physical product, but I don’t think it much affects the overall analysis). With IP rights, a product is built but there’s rent dissipation and deadweight loss.

In quantum game theory, you can have probabalistic rights, and you can also entangle the parties. If you apply quantum mechanics to the prisoner’s dilemma, you can get mixed-strategy solutions. Some people have applied this to the public goods problem, solving free rider problems through quantum entanglement (punishing each person for illegal downloads). The problem is that entanglement depends on the existence of a quantum computer.

Others have discussed probabilistic patent rights as a way to reduce deadweight losses. Here’s the new model: the government comes in and weakens patent rights so they’re only infringed x% of the time. Government is a third-party player that changes players’ choices. He is working on ways for players to effect probabilistic rights, e.g. by designing around a patent. Result: players will have incentives to engage in non-classical strategies, a mixed strategy of licensing and building. If they both build and the patent’s bad, that’s actually good for society because then they can both compete and cut down on deadweight loss (whereas if they both built and the patent were valid, there’d be loss from the useless building of one party and the product would sell at a higher price). Turns out if patents are valid 80% of the time under his assumptions, they both build about 69% of the time, and only 3% of the time do you get no product at all.

Weaker rights can actually create better results, though rights that are too weak don’t work: the weaker they are the more often you fail to get a product at all.

Implications: provide an alternative explanation for cooperation—e.g., ex post licensing. Also can affect the way we consider uncertainty. Uncertainty increases costs ex post, but may have ex ante advantages. Weakening rights in a fuzzy way can eliminate deadweight loss and spur innovation.

Caveats: don’t weaken rights too much. We also need to take account of follow-on inventions, who might be affected by weakened rights. Also multiple players, transaction costs, and other inefficiencies.

Q: If uncertainty can benefit, would adding additional period of time to patent life also add benefit because of uncertainty over present expected value?

A: Ayres and Klemperer (1999) discuss this argument. If it were a 100% right, it would just increase deadweight loss. But if a competitor may risk copying, it will reduce deadweight losses through competition.

Q: I thought that the uncertainty of litigation meant that this was the world in which we live, adding a probabalistic element to any outcome. An attorney will tell you “you have an 80% chance of winning this case.” What is the difference between error costs and probabalistic rights?

A: There may be an ex post difference where courts and parties don’t spend a lot of time trying to get the “right,” answer, admitting that there is no right answer. But behavior is pretty much the same. It just might affect how much we want to work on reducing uncertainty in claim construction, for example.

Q: How does behavioral economics play into this? Your story: If parties are rational, the extremes are moderated by the fact that rights are probabalistic. Behavioral economic story: predictable deviations from perfect rationality moderate the extreme outcomes.

A: There is some testing that asks how students behave in these games and asks if they behave consistently with quantum predictions—it may be a different way of expressing the point.