2012 Intellectual Property Scholars Roundtable, Drake University Law School

Panel 1: Copyright and CyberLaw

Prof. M. Scott Boone, Appalachian School of Law

Virtual Property and Copyright: Taking the First Sale Doctrine into Virtual Space

General concept: apply virtual property/object theories originally developed in connection with virtual worlds to first sale.  Copyright Act speaks of “property rights in any material object,” §202, and also “computer programs,” §117.  The latter was designed to protect ordinary user rights, starting to capture the idea of a virtual object which isn’t necessarily just one iteration of code sitting in RAM or sitting on the hard disk. The object is the combination of the functional software with the data with the copies in multiple places that together allow the user to do something. That’s the underlying idea anyway.  Those things shouldn’t be treated separately for purposes of infringement, because they work together to create one usable object.

Barrier: contracts. A license isn’t a transfer of ownership, and thus first sale doesn’t apply to avoid distribution liability even if there’s no reproduction. One possibility: revise §109 to add in rightful possessors, or a principle of mutuality—whatever user gets from copyright owner, user can transfer.  Copyright owners argue that they retain power to terminate licenses, even though they never really intend to do so.  Some software might be linked with a service and we wouldn’t want it transferable—might want an exception for such cases where it’s really a personal negotiated relationship instead of a sale of consumer goods.

Second problem with contracts: restraint on alienation; can still add a contractual promise not to distribute even if it’s not a license.

Barrier: technology.  DRM can prevent transfer; legal restraints on circumvention.  Need §109 for §1201?

Prof. Thomas C. Folsom, Regent University School of Law

Property concepts can change with code: if X sells poisoned flowers and Y doesn’t like the petals drifting over her fence, one must give; but if X can code the flowers to be nonpoisonous unless they leave the property with her permission, then both can win.  Code allows performativeness: can change reality immediately upon utterance.  There should be degrees of coded exceptionalism.  Build code to manage people’s relationships to focal points (Superman, the Eiffel Tower) that shape their decisions.

The Magician’s Horse: Designing Code and Other Laws Beyond Cyberspace

Prof. Jon M. Garon, Chase College of Law, Northern Kentucky University

Legal Education in Disruption: Headwinds and Tailwinds of Technology

Disruption: when change is choked off, the ultimate change is even greater and more disastrous.  Disruptive tech, etc.; globalization, pressure on state from ability of individuals to communicate; ability to aggregage/disaggregate info in cloud culture, including Facebook; internet of things, RFID chips; network effects creating real winners and losers from being on or off the dominant system—all triggers for disintermediation.  Globalization is also affecting law; BigLaw is where most people have focused on—huge economies of scale/control are possible so that consolidation of power in corporations is mirrored with law firms providing similar services. His focus: the bottom of the pyramid—software, self-help dramatically changing the environment.

2/3 of legal services have moved to corporate clients, who are more price sensitive. Most model rules are designed to protect the individual against the lawyer; the bargain is not as skewed with 500 lawyers in-house.  Lawyers as gatekeepers to info have fallen out of favor and we’re in a self-help world; costs of legal services have become incredibly difficult to pay and the value proposition is hard to justify if you can research it yourself.  Texas courts tried to block software formbooks but the legislature struck back. We’re only self regulated when the public wants us to be.

Money is coming to legal forms: Kleiner Perkins invested $100 million and Institutional Venture Parters invested $41 million in LegalZoom; Google has invested; FindLaw is a ThompsonReuters company, who’s also invested in the leading Indian legal outsourcing company.  Direct legal services and mediating access to the public—not just a little WestlawNext app.

Small is also big: models of socially mediated/curated legal forms are becoming popular; some are free/nonprofit and others proprietary; many use as loss leader.  LegalZoom is being attacked on the bottom--$99 is too expensive for incorporation, we can do it for $34.  Virtual law firm: ex-BigLaw lawyers are connecting virtually through software portals, getting rid of physical overhead; being used by AmLaw 500 companies. This is the wave of middle corporate law firm access, creating new relationships with attys.  New practice guides/ethics rules are emerging.

These strategies are being adopted by lawyers but not being taught in law school.  We’ve always decried the end of the profession, but there are changes: modern client wants 24/7 service, without jurisdictional boundaries, very fast. This creates specific dangers for lawyes who need time to think: there’s an ethical constraint on how fast we can work. Thus prepackaged solutions prepared in advance are ethically responsible.

Law school market shift: 45,000 students will graduate in an average year, to 25,000 jobs requiring a JD.  We’re producing to an eroded market.  Lawyers must be tech savvy, networked, specialized, unbundled, scalable. To do it well: socially responsible, civically engaged; work-life balance; valued intermediaries providing highly personalized consultative advice.  Legal education teaches content, and some skills—fact investigation, negotiating, client counseling.  Not enough of curriculum is directed towards corporate client practice instead of litigation; we don’t teach how to operate as businesspeople or how to talk to businesspeople.  Core curriculum has to be taught: people need to understand fundamental legal content.  But we should teach critical reasoning and analysis as a course, rather than inferring skills from 1200 page casebook.  Experiential learning—clinics, field placements, simulations, reflective learning from summer jobs/in-house, etc.  We must also pull skills from MBA programs: at a minimum, organizational behavior, management and leadership.  Quantitative and qualitative skills are also important.

Prof. David S. Levine, Elon University School of Law

Bring in the Nerds: Secrecy, National Security and the Creation of Intellectual Property Law

We have no idea what’s happening internationally; compared to international lawmaking, Congress is transparent! 

Observation one: secret law is not law.  The ability to see sausage-making on the international stage: FOIA has a national security exemption.  The rubric through which int’l IP law is running currently is “national security.”  This isn’t based on the anecdotal data that piracy sometimes funds terrorism; the concern at issue here is one of diplomatic relations/effective int’l negotiations.  The ability to negotiate without the public glare; he is not suggesting that all int’l negotiations should be completely transparent and documented.  His concern is that there are fundamental info asymmetries between certain corporate entities with access to the USTR through an administrative process and others.  And the info at issue is the basic negotiating text, which is not known to the public but is known to representatives from content industries.

Current executive order includes a variety of topics: national security information, including foreign gov’t info (where IP law tends to fall—draft text has info contributed by other countries); intelligence activities; foreign relations of the US including confidential sources; scientific matters relating to national security; nuclear safeguards; system vulnerabilities; WMDs.  WMDs should probably not be treated in the same way as draft texts about IP law.

The impact is severe: ACTA.  Draft FAQ, retrieved through FOIA, included “What if U.S. positions evolve during negotiations?”  “A: The public can see how the U.S. position has evolved when the final text is signed.”  With regard to the Transpacific Partnership agreement: US says it will disclose this four years from entry into force of the TPP agreement, or four years from the close of negotiations if no agreement enters into force.  If TPP never becomes law, the public will still not know what the negotiations look like for 4 years.  Why does this need to be withheld? We know more about Russia’s ICBMs than about the US position on TPP.

Observation two: transparency, accountability and public input. We need nerds to avoid poorly drafted and unbalanced law—see, e.g., SOPA/PIPA and the DNS provisions.

FOIA needs to be reconfigured to be more about when public inputs to government are needed; difficult to apply “right to know” in abstract when competing with significant concerns on the other side.  Transparency is important when an expert would need to know more to opine.  Strong right/presumption for US negotiation texts and other information.

Prof. Deborah Tussey, Oklahoma City University School of Law

Work for Hire, Work for Free: The Dilemma of the Digital Freelance

Background: Lawsuits by HuffPo bloggers; direct dissemination by authors; crowdfunding; voluntary contributions on wikis; worries about getting paid less online.  Is WFH fair, and is it well adapted to a changing environment?  Her focus: Freelance contributors to collective works in the industries most specifically benefited by WFH.  Including revision rights and license interpretation.  Excluding academics and sound recordings.

Freelancers’ rights get determined at initial allocation, and then subsequently exploitation under license—new uses/new media. Law is written by/for publishers at both stages.  Justified as necessary to facilitate investment in and exploitation of collectively produced works.  Concerned with freelancers and “employees by interpretation”—people who get called employees because of CCNV.  Some special commissions are voluntarily negotiated WFH agreements (Spike Lee directing Malcolm X) and others are involuntary—former employees who’ve been downsized and turned into workers for hire.

Consequences may, of course, be severe for rights/duration/termination.  If a freelancer stays out of WFH, new media uses become an issue.  Tasini tried to protect freelancers by excluding electronic republication from the statutory privilege, but this was easily nullified by standard form contracts.  Publisher holds the cards.  Proposals for rectifying this: abandon agency rules as inappropriate; rejigger CCNV and import concepts of informed consent from employment law; encourage authors to organize and collectively bargain.  Intrigued by importing concepts from civil law: generally start from basic rule that employees don’t lose their copyrights, corporations can’t be authors. Then they limit transfers, require writings and specifically enumerated grants; narrowly construe grants; provide statutory royalties.  Intriguing but will Congress take lessons from Europe? 

The reality of freelancing: highly variable rewards (makes academic writing look nice). Many writers’ organizations are out there, hugely diverse by sex, genre, ethnicity, medium, etc.  Also lots of networking sites.  Some are actual unions engaging in collective bargaining; others offer services including contract review. There are some collective licensing societies.  Copyright tends to lump these folks into a few categories, but freelancers sort themselves more carefully. This might impair collective action, but also indicate problems with copyright’s treatment.  A lot of experimentation with new business models—pay what you want; direct dissemination. A fair number of positions are unpaid, as with HuffPo.

Maybe we need distinctions between the kinds of works and/or industries that will likely remain in centralized production mode.  We’re used to centralized studio system for movies, but tools are now available to decentralize.  Could also take differences in creativity into account: contributor to a case report in a database might not deserve copyright, but a contributor of an article to a magazine is different.  May need less incentives for publishers/aggregators as individuals start their own dissemination.

Maybe employee should just mean full-time employed, salaried workers.  For non-salaried contributors, they should keep copyright and we should focus on exploitation, taking lessons from civil law countries and deal with licensing as a way to even up the balance.

Greg Vetter: we now regulate medical records software—to get federal funding you have to make “meaningful use,” which is really tightly regulated.  Is this what Folsom is talking about?

A: if we look at code world as network that affects living organisms, that can lead us to the right questions.

My q: The last three presentations are all about crony capitalism: we live in a world where the winners win big and the costs are outsourced to the individuals on the bottom; tournament structure.  Three different strategies suggested—live with it and help the winners win; top down reform; and something else that might include bottom-up reform.

Garon: the bar’s inclination is to protect us from these changes, and it’s been ineffectual; the legal profession is not going to have exceptionalism that will keep competitors out.  The rise of internationalization, WTO, etc.—the model that suggests that we can hold onto our piece of the pie is naïve. My fiduciary duty to my students: be transparent with them.

Levine: Not attempting to delude himself about the role of public choice. Trying to take the actors and assume that they’re operating in good faith.  Has no doubt that campaign finance is the fundamental issue here.  Even if we solve that, there are still info asymmetries—let’s take seriously that policymakers want to make right decisions and look at structural impediments. Most of these decisions are vested in the executive, and you need to resolve procedural/administrative issues.

Tussey: WFH is what it is because publishers got it in the 1976 Act.  Freelancers have been at their mercy for a while, and she is not terribly hopeful that will change.  More hopeful that changes in tech may accomplish some things as works are capable of being produced and disseminated directly to their public.

Garon: Freelancers provide an interesting forum for collective bargaining; theater and sound recordings have been very heavily negotiated and aren’t in WFH, which illustrates that collective organizations can perform quasi-legislative functions.  Getting all the actors in the room makes a difference, as Levine suggested.

Levine: Rep. Issa’s alternative to SOPA/PIPA—public suggestions for the bill.

Boone: would also say his project is tied to this—big copyright owners v. the consumer.  If you look at history of first sale, you see a shift/reversal of roles. Copyright owners traditionally fought to hinder secondary markets, like used CDs, VCR rentals. But if the change in the method of distribution leads to getting rid of secondary markets, then it’s the users who need to seek legislative assistance and legalize secondary markets.

Sapna Kumar: FOIA change for priority when input to the government is most needed.  Who would make that decision? You don’t want it to be the agency itself—they’ll think they already got the necessary input.  Agencies don’t invest much in FOIA answers.

Levine: tech is changing the ability of government to respond more quickly and thoroughly, though e-government has been largely defunded.  Bigger theoretical question is who decides—he’s thinking about how to define the factors. Things like whether there’s a collective interest at issue.  When there’s a specific body of experts with something to provide.  Not trying to eliminate the right to know!

Katja Weckstrom: First sale and TM?  Also, for Folsom, beware of legislation—not that great at fine-tuning technical solutions.

Boone: What would it mean to look at first sale in TM?

Weckstrom: in copyright, contracts are a vehicle to profit from consumer’s use; in TM, this is usually not the case.  Usually no contractual relationship between TM owner and user.  (Compare FB’s new user agreement claiming rights over “Face” and “Book.”)  So on that model ability to control market is less; also no DRM.

Boone: He’s focused on areas dominated by copyright rights—ebooks, games.

Levine: legislative support for the change might come from TM concepts like nominative fair use—it’s ok to sell a legitimate copy--that’s worked very well for hundreds of years.

Folsom: yes, skeptical of legislative competence.  He proposes a rule of thumb that any institution can apply. He doesn’t like statutes that become outdated by the time the legislature acts—too much specificity. He wants a rule more like TM, kind of fuzzy.

A. Christal Sheppard: Industries say they won’t participate if their comments aren’t private.

Levine: he’s skeptical of this. Diebold says that it won’t sell voting machines if it has to be public in a state; a state says no; turns out Diebold wants to be in that market enough to comply!  His response: let’s find out; we know that we’re not getting good law with this flawed process. If you want to be in the room, you’re going to have to deal with the process.

Yu: For Levine: Your proposals aren’t very nerdy, but rather legal: is there a nerdy proposal?

For Garon: what’s the IP hook?

Garon: has an IP/innovation paper coming out on this.

Levine: yes, his proposal is relatively un-nerdy. Could do more with info formatting. Could also put nerds on consultation communities, but FOIA is just not even grappling with these issues.

Garon: for Boone, maybe the proposal is strongest when DRM works: you’ve converted the work into an object, and then §109 rights should apply.

Boone: agrees; his paper goes into the theory of the virtual object.  You have to regulate both DRM and contract, since either can allow the copyright owner to prevent a secondary market. That’s asking a lot, so we ask if we really need a secondary market.