IPSC: long presentation session 1

Jennifer Rothman, Commercial Speech, Commercial Use & The Intellectual Property Quagmire

Commentator: Felix Wu

The format involves Wu presenting the paper and then briefly commenting, before Rothman responds.

Wu: commerciality is bound up both in the scope of different IP rights and various defenses. 

Often ends up getting tied into First Amendment commercial speech doctrine, which is falling out of favor with the Court and commentators, and is a questionable source of authority for distinguishing commercial from noncommercial.  Commercial and noncommercial are beginning to merge, so we can think about why and how we might erase this line in IP.  Thinking through what a post commercial/noncommercial world looks like.

Isn’t commerciality just a proxy in fair use for factor four substitutability? Noncommercial distribution of hit film is substitutable and just as harmful as a commercial distribution.  Mp3.com got dinged without thinking about whether the kind of use at issue there might be nonsubstitution—so it’s problematic on both sides. Proposed fix: look at other kinds of lines, such as educational purposes without regard to commerciality.

In TM, similar potential dichotomy.  Use in commerce is necessary to acquire TM rights, commerciality lite; but more interesting, does defendant have to be engaged in commercial speech in order to bring an infringement action?  Case law involves courts talking about commercial speech doctrine but applying the Lanham Act in all sorts of instances clearly noncommercial speech for First Amendment purposes, like movies and video games.  (Why does she think eliminating the commercial/noncommercial distinction would help?)  Rogers defense even suggests that infringement actions can cover noncommercial speech in certain circumstances.  Dilution and false advertising also use the distinction.

What would the world look like without the noncommercial/commercial distinction?  Maybe we could address the harms of deception/confusion arising from noncommercial speech.  We could provide more breathing room for commercial speech.  We could avoid the effort required to identify commercial speech as the line blurs.  We could apply an actual malice standard in Lanham Act cases or other IP situations; this sort of standard might be appropriate.

Wu’s comments: (1) Structurally, he wonders whether the paper might separate out further constitutional and nonconstitutional notions of commerciality.  IP law’s definitions are often explicitly nonconstitutional, especially copyright, and then there are other areas where courts purport to refer to the constitutional sense. (2) Think about whether we care about different kinds of speech/communication, potentially distinguishing TM and false advertising claims in thinking about assertions as to identity and other kinds of assertions about facts in the world. Would we care differently about assertions about identity than other kinds of facts?  (3) Skepticism about ability to successfully merge political and commercial in this regard; might not serve either side.  We might have stronger interests in speakers in political contexts, even in speaking falsehoods, than in a traditional commercial context. Granting difficulty in distinguishing at the margin, the endpoints may justifiably be preserved.  Actual malice might underregulate in advertising law; would make it difficult to prevent commercial falsehoods that we should be preventing.  (Wu kindly referenced my work on the subject.)

Rothman: Main motivation for the project is that she’s always footnoted these problems and they really need addressing.  The right of publicity is a huge issue here.  People constantly say the right is limited to commercial speech, and that’s just descriptively wrong. Some states do limit the right to commercial speech, but overall it’s applied more broadly. Wants to call that bluff.

Notion that commercial speech is more harmful to an identity holder than noncommercial speech is not necessarily true—Lady Gaga is more upset by Family Research Council suggesting that she’s against marriage equality than by Baby Gaga baby food.

The case law is just incoherent: see the 9^th Circuit.

She doesn’t necessarily advocate importing actual malice, just doesn’t think it would be the end of the world.  But we may be seeing the death of commercial speech as a doctrine, so we need to think about what would happen.

In terms of giving more latitude to noncommercial speakers, it’s difficult to separate commercial and noncommercial speech. 

Betsy Rosenblatt: there’s two kinds of commercial speech. One uses commercial as the opposite of expressive and one uses commercial as the opposite of nonprofit. Would like to see more about the difference between these two—it’s confusing that copyright uses the second definition and TM and right of publicity give lip service to using the first definition.

Not convinced that commerciality is a standin for substitution.  Many non-IP professors have an instinct that if someone is making money off of some creation, they should reward the creator in some way—give back.  Might take that into account—the moral claim/unjust enrichment type claim.

A: these are related concerns.  Also an issue of value: even in copyright we generally assess profit/nonprofit, we also value things made for profit less than things that are made not for profit.  (I don’t think this reflects the case law.)

Unjust enrichment does affect our intuitions in copyright.  Still working on that.

RT: My concerns: in this model, as an empirical matter, property wins and public interests do not.  No clearer example than the 9^th Circuit—you seem to lean into the bad results we’re already getting. The whole point of having a non-harm-based standard, like a rule for noncommercial speech, is that harm stories are endless, and courts are more convinced by property stories than by fraud stories.

Justice Stevens’ standard: look at whether the regulation targets the commercial aspect of the transaction. Solves the problem of distinguishing marginal cases: look at the regulation and its aims, not at the speech object.

Paper discusses DMCA hearings: cite more of them; she doesn’t like the remix exemption for noncommercial works and argues that an exemption for commercial works would have been a good idea.  I believe that too!  A blanket exemption was proposed and rejected largely on the licensing grounds you propose as the substitute test—copyright owners argued that they wanted to license all these uses, and the Copyright Office found that this was a good enough reason to deny an exemption.  This is why I believe that giving up on noncommerciality and looking only at harm stories is a very bad idea.

A: my proposition is that IP law is in a mess and that not acknowledging this issue is a problem. The rest is a thought piece about what law would look like w/out the commercial/noncommercial distinction.  Does not want to rest everything on harm, though Alvarez says that’s the basis for restricting noncommercial speech. Because we’ve been so focused on commerciality, we’ve been undercutting ourselves on other ways to be more speech protective.  Sometimes a focus on substitution would be better, or transformativeness.  (RT: “We” have not neglected these factors, I don’t think, and the big fair use wins are about commercial uses and haven’t neglected those factors.)  Yes, in the right of publicity, it might lead to more liability, though she doesn’t like Keller either. 

Commercial/noncommercial is still muddled even if there are clear extremes.  (Right, but my point was that the Stevens approach asks what the gov’t is trying to regulate, the commercial aspect of a transaction or something else, and strict scrutiny applies if it’s something else.  Then you don’t need to decide whether an advertorial is “commercial speech,” only whether there’s a regulation aimed at a transaction.)

Lisa Ramsey: are you trying to describe what would happen under the Court’s political speech jurisprudence/strict scrutiny?  Or are you proposing some other standard?

A: Her point is that it’s a mess.  Courts confidently say the Lanham Act applies to commercial speech, and then that it applies to noncommercial speech. Shining a light on that is valuable.  Then we can think about what we could do that would work better.

Not just about market harm and incentives to create, but also other interests, including personality interests—harm to copyright owners can be unrelated to market harm.  One proposal for copyright reform is to only provide robust protection to commercial works, but she thinks that’s problematic.  Scope shouldn’t be different for noncommercial works.

Room 204:

Jonathan Barnett, Copyright Without Creators

Commentator: Jonathan Masur

Masur: Barnett makes the case for intermediaries.  Financing major products, producing risky works (subsidizing losers with winners). There are many other revenue sources for intermediaries beyond sales of copyrighted works. Yes, Barnett says, but removing copyright would take away one choice, and so we might not get the best funding model.  But that would justify infinite copyright as well.  Larger point is that this runs into the issue of balancing static and dynamic efficiency.  Can’t avoid question of how much is too much given the existence of other distribution/funding models beside copyright.

Smaller issue: what’s the line between authorial incentive and intermediary incentive?  Costs of producing a blockbuster, costs of paying authors/musicians a salary so they can eat.  What’s the difference between saying that Michael Bay will produce a movie if he can get it funded and that an intermediary needs to have resources to fund blowing stuff up?  If the paper is framed as justifying incentives for intermediaries, aren’t these really just ultimately incentives for creators?

Certainly true that a content creator has to be risk-seeking to enter a creative market, but this is part of the “romantic” story of artists—people move to NY in droves to seek this risk. Not obvious that long-tail, long-term structure of copyright is necessary—could just have a very short term.

Marketing and distribution: hits are still as important as ever even in an era of rampant production. Consumers need help!

What’s the normative significance of that?  We don’t really know whether mass marketing of songs is socially beneficial. Might make songs cheaper but it’s hard to tell what that means.

Barnett says the internet limited the value of copyrighted musical works, causing shift to live performance. Intermediaries—ticket vendors, concert venues—are still vital, but the issue is the proper role of copyright. Concert ticket prices have gone way up—Pearl Jam won’t play a cheap show to get you to buy their CDs. But on the whole it’s very hard to do the welfare analysis given the moving parts—more access to recorded music, less to live.

Barnett: in patent, it’s clear that you need to cover the costs of invention and of commercialization.  In copyright, the consensus is that copyright doesn’t make sense because it’s been captured by concentrated interests.  That’s possible, but is there an efficiency story for why copyright law looks as it does? The big picture story is that there is a plausible one. The positive and normative aspects of the paper are separable. Canonical economic models don’t take into account anything that happens after creation, but that’s where all the cost and risk is.  The real world literature has a consensus: there is a heavy skew in creative markets to hits.  Most is junk and losers and a few are gangbusters, and that’s what drives investment.  The core problem as an economic matter is risk. You must be able to spread away the risk of losers, in film, music, and books.  And the history of mass entertainment markets all shows concentrated intermediaries.  It’s not just entry barriers—independents are always being acquired by majors, contracting w/them for distribution, because the only way to make money is by having a portfolio.

Q: what does low quality/junk mean?

A: just market success—not a noneconomic judgment.  Is the star just an economic construction/tool of consumer manipulation? Tends to think not. The risk problem in creative markets is double-sided.  Stars can be used as a proxy for the quality of the film. Is that a function of the intermediary?  Put to the test in the digital era, where we have far greater access to other sources—we can listen to anything, and we still like Michael Jackson best.  There’s an economic function of the star: limiting search costs; the consumer hedges against the risk of consumption loss.  (I thought he was going to say that Kickstarter/Veronica Mars was an example of consumer hedging!)

Wendy Gordon: difference between incentives to creators and intermediaries: if your argument hinges on the need to pay stars, that’s an argument for paying creators.

A: Emphasizes the issue with free riders who haven’t invested in paying for the losers and can thus underprice on the winners.  There are other possible mechanisms to capture revenue, like lead time, but from an efficiency perspective we shouldn’t just be trying to get a reasonable level of output; we should get an optimal level of output, and for that, we don’t know whether lead time advantage is sufficient. Chinese film industry makes a ton of money without controlling piracy—it’s a viable system to do simultaneous relief.  But what we don’t know is whether it’s optimal, because windowing is impossible in China and they’re compelled to choose that model.