IPSC session 6

Session 6: Tort-Tinged IP

Ben Depoorter (and Robert Walker), So Sue Me … Please! Reverse Nuisance in Intellectual Property Law

Goldieblox case: filed declaratory judgment against Beastie Boys. Getting sued can sometimes be a boon and can bring a lot of useful attention.  Publicity gains may outweigh the direct and indirect costs of litigation, as with Goldieblox. Can be useful when the law is unpopular or the enforcement is unpopular—trolling, infringement claims against highly transformative uses, defendant has a sympathetic project.  Another factor favoring: when you have an opportunity to withdraw/back down/mitigate legal costs, and the costs of litigation are limited. If the P is famous, exposure benefits.

There are (1) good faith Ds, with defensible uses, where publicity is just a bonus.  Aereo tried, but at the end of the day if they’d have won the publicity would have been enormous/built first mover example. FindTheBest: D won and benefited with name recognition after being challenged by patent troll. (2) Bad faith Ds where publicity is the benefit.  He calls those reverse nuisance lawsuits.  Coinye ICO tried that, though it failed/the company was destroyed.  Calculation includes whether the D will look bad in which case it tries to keep the case out of the news.

This is a wealth transfer—subsidized by P’s legal action. P may recoup some of the value in the settlement/court award, but there can still be a net wealth transfer from P to D. 

Q: there are people who say all publicity is good publicity, so they might behave subrationally under your framework.

Eric Goldman: it’s really hard to control publicity and how the narrative goes.  Waymo v. Uber—both complaint & response were thoroughly vetted & PR people waged a war as an integral part of the case strategy. That’s not new.

Q: there’s a viral group for which IP (patent) is so awful that the P is always wrong.

Rosenblatt: assumptions: (1) Ds both can and believe they can make reasonable predictions about whether they’ll be seen as good guys; (2) Ds can make accurate and reasonable predictions about whether they’ll be enjoined. They may think they’ll be folk heroes, but still worry about getting enjoined and the business destroyed.

A: we’re not claiming this is happening/the system is being gamed, we’re trying to enhance insights/predictability. Illustrations exist where people have tried to do this, even w/o control over the narrative. May also affect the legal reasoning.

Lemley: Represented Goldieblox in this case.  Push back on idea that even if we can distinguish good from bad faith the bad are causing social harm.  What normally happens when well funded P faces poorly funded D is that the lawsuit quickly ends b/c D can’t afford to fight. Even if D doesn’t have a good case, it is useful for people to fight—we do get good law, mostly P friendly law; we might also expose ways in which law & popular norms differ.  If a bunch of people are upset that D is being sued, that’s valuable info about the operation of the IP system.

A: added value of another legal verdict when it’s settled precedent/an easy case is lower.  But our normative conception of, e.g., patent trolls is exogenous.  Adding info is nice; you could also model normative beliefs as endogenous, but that gets more difficult.

Miller: why is this a wealth transfer and not a creation of value of thin air—getting attention. Not like P was getting that attention before & it was transferred to them.

A: Kanye is paying his lawyers so he faces costs, even though Coinye doesn’t have a good case. He’s subsidizing the publicity benefits.

Lemley: we don’t usually call that a wealth transfer.

Miller: subsidy is better b/c there’s no one to one correspondence.

Mark McKenna (and Mark Lemley), Unfair Disruption

This isn’t really a paper about Aereo, but that’s an example: new tech often disrupts existing commercial relationships/settled expectations/industries. Incumbents often reach for IP to stop or slow the market disruption. That’s not obviously wrong. Some new tech infringes, and sometimes the point of the IP right is to insulate against such market disruption. But also inescapable that these cases are often really about whether some new entrant, with a new piece of tech, should be entitled to disrupt/force others into new business relationships.  They’re really about unfair competition.

Parties reaching for IP often claim that the proliferation of tech will be the end of the world—no more new movies, music, etc.  Or Uber will destroy longstanding entities. These predictions are universally wrong, at least about social value—player piano didn’t destroy music, VCR didn’t destroy music. But even if the world benefits, even if the industry benefits, even if the existing players benefit, it’s often the case that particular parties will have to change and they end up losers. Netflix killed Blockbuster, not movies.

Aereo is a good example because no one thinks the opinion is coherent but we all understand the bottom line: this smells like cable, and allowing it would disrupt all sorts of expectation. We think courts should look at the issues independent of disruption.  Market conditions are often relevant to legal doctrine, though.  Might look at whether there’s a way to differentiate cases in which the incentives will survive even if the producers change.  Hardest cases: new tech disrupts in a way w/significant social value but also risk of undermining incentives if disruption uncompensated. Is there a situation where compensation is the right solution—paying the losers off?

Lemley: this isn’t just an IP problem—unjust enrichment and antitrust cases are also often about whether the act of competition is unfair. Spotify and Napster both disrupt the music industry but in different ways and we might care very much how the disruption is done.  Antitrust: Microsoft disrupted independent 3d party spellchecker industry when it added one of its own, and that might be fine, but contrast that to its decision to add a web browser to its platform in a way designed to prevent any other browser from becoming a basis for a new platform. 

Miller: dissent in INS v. IP suggests courts won’t be good at figuring this out.  Maybe you’re suggesting IP standing, like antitrust standing—protecting innovation, not innovators, similar to competition, like competitors.

A: we’re trying to work out what’s an IP injury—not just market disruption, which might be what causes IP injury, but what that is.

Van Houweling: Numerus clausus doctrine—says there’s special danger in courts creating new property rights as in INS v. AP. Could deal w/doctrinal vacuum—property, contract, tort provide different doctrines and numerus clausus provides the strongest argument that we shouldn’t create new rights.

Sprigman: mapping antitrust onto innovation is interesting. A strategy that harms competition by raising rivals’ costs of entry is unlawful; what about raising rivals’ costs in IP?  Innovation does that all the time; bicycle frames used to be made out of steel and are now exotic carbon, much harder to make. That does raise the cost of innovation in that area, but it’s not a harm to the market v. a harm to competitors. 

A: you can’t just grab the analogy but you can take it as: is there a consonance b/t IP’s purposes and the harm P has suffered.  If the thing that injured you was not appropriation of invention/© work but innovation of better system, that’s the equivalent where we’d want IP injury doctrine.

Rothman: determining the empirics is a problem if you’re looking for real harm to innovation. Sometimes you seem more normative; Aereo to her is about normative thinking, the Court’s revulsion to Aereo’s design decisions.

A: it’s weird that the thing that made the Court mad was that the defendant obeyed the law and found the loophole.  If unfair competition is a penumbra that lets Ps win when they don’t have a technical IP violation, then that’s going to have a lot of consequences.  In tax, that’s just good tax planning.  [I pushed hard on tax evasion v. avoidance analogy in Aereo—maybe there’s something to be learned from that; not clear that there’s a good analogue to independent economic significance, maybe something like independent creative significance?]

Q: we don’t know whether player piano decreased the quality of piano music.

A: the problem we ID is status quo bias, which is insanely ironic for an IP regime.

Sheff: might have to do with the boundaries of the firm—content generation and content distribution. One possibility is that certain disruptions disrupt business models but also make it difficult for content generation and distribution to occur in separate firms.  We’re seeing that now with Amazon etc—distribution takes over content creation. 

Q: why are sky-falling arguments so common before judges? Happens w/products liability, directors’ liability too.

A: we’re a conservative, backward-looking profession. And it’s true that disruption happens and judges don’t want to destroy the status quo, whether that’s current music system or the VCRs everyone has in their home.

Judge wants to know if s/he can see the future—if you can see the outside benefits/harms to other parties, it’s easier to decide.

Betsy Rosenblatt, Verbing Intellectual Property

Work, mark, and design are verbs as well as nouns; invention is a thing people do as well as an output. Yet IP doctrine uses them all almost entirely as static nouns, rather than as actions. What would happen if IP thought of these words as identifying processes?  Might frame each in its context of progress, which demands a focus on movement not stagnation. Might observe that looking at the stuff people create is only one way, not always the best way, to look at creation and creative incentives. There’s a lot about this in the literature for “work,” but not these other areas of IP.  Might look at literary theory/feminist scholarship.

Deeply influenced by law as discourse, not just as governance mechanism. Important to be aware of law’s story about value; if law is hampering fairness/progress we can find out and try to change it. © has some process considerations, such as fixation.  TM takes into account development w/secondary meaning/Supplemental Register.  Patent has changed recently in extent & ways in which it considers processes; now really doesn’t consider the process of invention & reduction to practice, esp. for new patents. In obviousness, derivation of inventions. But when considering noun and verb of invention, we look hardest at the noun. We base our analysis of inventiveness only on the structure of product and not on process of making it.

This might make a lot of sense, if we think the result is what matters.  But if we want to acknowledge that there may be other progress promoting benefits from creation that aren’t the stuff that gets created, we need more. Belonging, self-actualization.  Issues of distance b/t created thing and those who created the thing—becomes a commodity rather than a living thing.  Feminist theory: by making IP a commodity we’re feminizing it in the Irigarian sense. Enslaving it rather than allowing it a life of its own. Approaching creation as a process recenters creators and users, as opposed to assignees.  There can also be merit in using something someone else is made: if creation is a process, it’s harder for me to stop you from engaging in a process than from using a thing. Could ask what was added, not just what was taken, more often.

Creators who are concerned more w/process and what’s done w/their creations than with the creations themselves—fine with reuse but only if something interesting is done w/it. Yet that’s not how law looks at things doctrinally very often.

Not proposing more rights to control actions, if that could even be done.

Sheff: tort framework: what’s the damage in this reconceptualization? What could be wrongful about using someone else’s work?

Q: which tense?  Past, present, future may make differences.  Noun=persistence across time. Action may change more past/future.

Rothman: fundamental misunderstandings about law that lead journalists to use © and TM as verb in ways that are legally inaccurate—but maybe they are on to something.

A: those uses are wrong from the law’s viewpoint, but that is a helpful point.

Van Houwelling: noun is evidentiarily simpler. We do consider process in some ways, like fair use. Maybe we do the easy version at the rights granting stage and the hard version when a conflict develops. Consider this issue in the context of first sale/exhaustion—you can use this noun, but you can’t go verbing it.