WIPIP session 6: IP Theory

Session 6 IP Theory 3

 

BJ Ard, More Property-Like than Property: The Asymmetry of Remedies in Tangible and Intellectual Property

 

Real property remedies are less “property-like” than IP remedies.  Property v. liability rules. Real property often much more forgiving of unwitting trespasser than IP is.  Putting a permanent structure accidentally on a neighbor’s land.  If you’re unwitting, court is more likely to enforce a liability rule: require you to compensate your neighbor for lost land: involuntary sale.  In ©, by contrast, subjective innocence is unlikely to entitle you to the innocent infringer defense.  In patent, you could do a good faith search and still miss; though you might be spared punitive damages, an injunction can still likely issue.  Adverse possession: intentional trespass may become nonactionable. 

 

(1)   It seems backwards that “property” rules would be more prevalent in IP.  Proponents of right to exclude: added security provides incentives to invest; remedies force would-be takers to negotiate in the market; property rules can even secure personality rights by protecting non-economic value invested in certain forms of property. Nonetheless, tangible property law recognizes strong justifications to depart.  Curious b/c infringements in IP are often more socially efficient than the equivalent taking in real property, because creativity is often iterative and builds upon previous work.  In addition, nonrivalry means that there’s no deprivation of use value as there is in real property trespass.  Boundaries of IP are communicated relatively poorly relative to boundaries of tangible property, so unwitting infringers are more likely and harder to deter because they don’t know.  Incumbent on property rule proponents to justify.

(2)   Pro-propertization rhetoric is missing context—many argue that IP should be enforced by injunctive remedies/property rule regularly.  Against the history of real property remedies, it’s weird to derive rules for IP based on abstract theories of property.

(3)   Questioning IP’s current strategy of dealing with these excesses. Congress occasionally acknowledges the problem, but its go-to fix is piecemeal solutions—excused specific kinds of literal copying; DMCA safe harbors.  Liability rules in the form of compulsory/statutory licenses where transaction costs of property rule seem unworkable. Startups, consumers, others who lack political voice can’t get the exceptions they need.

 

Sheff: How does eBay play into all this, if the quintessential property rule is injunction and eBay is decimating injunctions?

 

A: if courts apply it consistently, it goes a substantial way to remedying this disparity (except for statutory damages). Patent comes close to liability, but whether that works in practice comes down to technicalities of calculation, which can sometimes be supercompensatory.

 

Calboli: Caps on infringement damages exist across jurisdictions.  These are countries with strong property rhetoric/traditions. Is the problem the property theory or the structure of remedies?

 

A: You see in some jurisdictions a better sense of proportionality in the remedies, missing in American context.  If property is a right to exclude, that’s tightly linked to injunctive relief.

 

RT: Dave Fagundes’ paper on this?  Patrick Goold’s argument that copyright is really negligence, properly seen.  IP = patent, copyright.  Trademark?

 

A: Similar to Fagundes and Michael Carrier—the wisdom of limits built into real property; good to build them into IP.  Goold: the problem is that fair use doesn’t have enough flexibility to deal with all the issues you might want in a liability regime.  Not much familiarity with TM (which might mean the paper should specify about ©/patent versus TM).

 

Q: Laches, estoppel as relating to adverse possession—which usually requires open & notorious use.  Also, there’s a reason for stronger remedies in patent b/c patent is temporally limited as real property is not.

 

A: Could more equitable discretion in remedies help this?  Petrella is one thing he worries about—no laches in ©. 

 

Tonya Evans, Reclaiming Copyright in the Age of Celebrity Loan-Outs & Other Gratuitous Transfers

 

Intersection of property succession laws and ©, specifically testamentary freedom v. right of statutory heir to terminate author’s transfers during lifetime, specifically to an author-controlled, author-benefiting vehicle.  Thesis: such transfers should be treated equally; the latter should also not be subject to termination by statutory heirs.  Apparently unintended disparity between non-probate assets and probate assets, and the solution is to except non-probate assets from termination rights inherited by heirs.  (So, to disinherit your heirs from your literary estate, you have to hang on to your copyrights until death.)

 

Termination may be effected notwithstanding any agreement to the contrary.  Loretta Lynn, Tom Petty, Village People, Bruce Springsteen have successfully terminated, having survived long enough. But what happens when an author passes away before the window opens?  A small subset of heirs can terminate.  Ray Charles: created a private foundation funded solely by his royalties, designated sole heir in his will.  His 12 kids got irrevocable trusts after they waived any further right to his estate.  After he died, 7 children promptly served notices of termination.

 

Current law includes gratuitous transfers made by the author to a wholly controlled loan-out company, self-settled trust, private foundation or similar will substitute.  Sometimes they create future works as WFH for the trust/foundation, but will still want to transfer existing works/rights to royalties.  Useful for tax, estate planning, privacy—probated wills are public.  Unintended consequence: not honoring testator’s well-planned intent.

 

Testamentary freedom: how do we identify what things might be accepted, given the problem of the industry creating wiggle room against Congress’ intent.  Solution: certain gratuitous author transfers in the same way that wills are treated, exemption from termination of transfers. A lot of artists transfer assets into their own music publishing company; a critical means of asset protection along with loan-out companies—financial/tax benefits to setting up that way.

 

RT: Really interesting project of evident practical significance.  The industry evasion concern is what jumps out at me: how should a gratuitous transfer be defined?  Can a proper definition do the necessary work?

 

A: “author controlled, author-benefiting”—focused on that, with concrete examples, is a good start.

 

Q: Entertainment label could work with that.  Are we more worried about transfers close to the initial license period?

 

Ard: you’re concerned with the economic consequences of interference w/Ray Charles’ intent. Is there an expressive component?  Marvin Gaye might have wanted a specific approach to claims about copyright infringement that would be frustrated by the kids.

 

A: Yes, that’s a primary concern.  The problem occurs b/c of financial/tax issues, but as a property professor I’m concerned with parity for the treatment of non-probate and probate assets.

 

Q: is there anything courts can do if Congress won’t act?

 

A: will try to give some guidance to courts: w/Ray Charles Foundation case, the court found that the Foundation had standing to fight termination, but much remains to be decided. Heirs that agreed to do something = doesn’t matter given the statutory language.  [Maybe that should mean or be amended to mean notwithstanding any agreement to the contrary before the author’s death.]

 

Betsy Rosenblatt, Belonging as Intellectual Creation: What are we creating when we engage in creative endeavors?  First, stuff, the thing law has been most concerned with—works, marks, inventions.  But other things—communities—aren’t well served by incentives for creation of stuff. But “progress” could embrace harder to quantify things like human flourishing.  Money isn’t everything for everyone.  One possible creation of intellectual endeavor is a sense of belonging, and this can factor into IP law and policy as we go forward. 

 

Belonging: personally and contextually mediated emotion felt when people feel connected w/group, values in harmony w/group, etc. Basic human need & value.  Vital component of mental health.  One of the few universals across cultures.  Strongly tied to whether people find their lives to be meaningful.  IQ, motivation, physical health, life expectancy can all be affected.  Ability to participate in creative decisionmaking + reward, which reward is rarely remunerative—being recognized/acknowledged as member of community, or experiencing status, success, sense of accomplishment.  Synergy between reward and trust; gatekeepers/barriers to entry can promote belonging w/in and inhibit w/out.

 

Creative communities are well-suited to developing senses of belonging: unite people; opportunities for sense of belonging; opportunities for status/recognition; if there are shared norms/trust that promotes belonging even more.  Belonging is one of the things that creative communities create.  Amateur and professional.  Professional artists often value sense of belonging from creating in ways stronger or synergistic w/professional goals.  Lady Gaga & her fans both get a sense of belonging from sharing the creation.

 

Law can promote or undermine belonging.  You can make it harder for people to be recognized for their work.  I think WFH may be a terrible idea for belonging; but maybe that’s not so if people even within corporate communities can develop a sense of belonging based on other factors.  Formal law can break down/disrupt communities’ common norms/governance systems.  When we privilege creation by firms instead of innovation by innovation in WFH, §1201, TM overreach, lack of experimental use exception in patent—those things likely undermine belonging by discouraging creative endeavor by individuals; firms may or may not choose to promote belonging within themselves.

 

Adds an axis to our understanding of why we may want certain IP rules. When we regulate away communities, we may be doing harm.  Need law to regulate among groups, but maybe not so much w/in groups.

 

Q: Individual creation focus is quixotic—how does individual creation turn into group creation?

 

A: The kind of belonging I’m talking about is situating oneself w/in a creative community. Corporations can’t experience belonging, but people can.  There is group creation, but our law doesn’t account well for that.

 

RT: what if belonging is so strong people make it up no matter what?  Slavery, prisons.  Then the reason for protecting belonging would be more dignity-based than utilitarian.

 

A: we shouldn’t be trying to undermine it b/c it has benefit in itself—it’s something that people need/seek out—don’t need to incentivize it, just need not to harm it.

 

Q: Privacy literature has a lot about belonging.  Is belonging dependent on exclusion?

 

A: I think it doesn’t require exclusion, but empiricial literature is internally contradictory.

 

Q: what if oppression brings people together as “pirates” etc.

 

Jeremy Sheff, Progress for Future Persons

 

Normative commitments/debates that underlie our choices about creativity policy: philosophical underpinnings.  Future persons: people who may exist in the future but don’t right now. When we decide on certain policies, we have to decide whether and how to account for those future people.  But for earlier authors, would we have Shakespeare?  Would we have Romeo & Juliet?  He probably would have written something else—but it’s not clear it makes our world better or worse—a problem of counterfactual valuation. How should we think about these futures when we account for the lives they will live/who they will be?  What’s the moral implication of the non-identity problem—that if your parents hadn’t gotten together, you wouldn’t be here and it’s not clear that we wrong anyone by failing to bring them into existence, or by bringing into existence someone whose life is worse than the life of another person we could have brought into existence instead.

 

Economic response: count future lives, but discount them according to some function; but that means welfare of future generations asymptotically approaches zero very quickly. That seems morally troubling: spend $1 now to save a billion lives later.  Response in environmental law discussions: but it deals w/rights and norms.  It’s not clear it makes sense unless we’re talking about whether human life will be at all possible, v. choosing among different types of suffering to invest in preventing.  Theory may be no help; we are indulging our own normative commitments, and that’s ok. It may be inescapable; but then it’s important to design social institutions to bring together disagreements and decide. The future has no vote/can’t bargain with us, so we need a moral commitment to an other-regarding view of the future.