A Celebration of the Work of Wendy Gordon, part 2

Harmless Free Riding by Wendy Gordon, Boston University School of Law
 (Additional related drafts from Wendy: Time and Intellectual Property After Coaseand Proximate Cause in the Law of Copyright: Linking Liability to Incentives)

Common law imposes penalties on those who harm much more readily than it requires people to avoid benefiting without payment; very few duties to help and lots of duties not to harm.  Foregone benefits don’t receive the same weight as harm done—which means that “do no harm” is not the same thing as “maximize wellbeing.”  Special deference to harm may be hardwired. We’re more “rational” when computing potential benefits.

When it comes to IP, this common law preference seems largely eliminated b/c most IP is about increasing productivity, rewarding beneficial behavior rather than penalizing risky behavior. Damages include lost sales but also lost licensing fees—internalizing lost benefits.  Don’t require harm to be proven. Particularly notable in TM: “if value, then right.”  Expansion in © liability too—now, for example, no economic motivation is required for criminal infringement.

What is “harm”?  Add up everything that people have rightfully (e.g., exclude stolen goods; removing those doesn’t cause harm), including things that they might not have a “right” to but do benefit from.  To harm is to cause a setback to a rightful interest. There should be a presumptive liberty to act in a way that’s not harmful, though that presumption can be overridden (and I think she also endorses vice versa: there should be a rebuttable presumption against causing harm).  Right wing libertarians think that only physical harm matters and only harms to people with entitlements to property matter, but she considers more kinds of harm relevant.

Foreseeability is a big issue with harm.  The clearest harm is diversion of current customers; the next version is copying but making money in a market you’re willing to exploit; least likely is where someone reaches a market you couldn’t have exploited or even licensed given privacy/transactional concerns.

Ultimately: thinks you have a weak obligation to pay for benefits you’ve received as long as you’re not made worse off (can pay out of the benefits you received), an obligation that can be overridden by other sufficient concerns.

Why do judges not care about harm? One reason might be that anyone else’s benefit—harmless free riding—is a source of inequality or envy.  Maybe envy is legally important because envy is a big driver of capitalism, for good and ill. Maybe judges ignore harm/benefit because they think of IP as a benefit-based field so all the usual constraints are off. Maybe judges don’t like free riding because it’s a threat to democracy when it means people don’t vote or don’t pay their taxes. 

It would be hard to persuade courts to tolerate harmless free riding, but we should try, and that will be easier if we understand why courts don’t like it.

Commentary by Rochelle Dreyfuss, NYU School of Law & Fred Yen, Boston College Law School

Dreyfuss: T-shirt cases: there is a premium for a T-shirt with a team name on it.  The surplus has to go somewhere, and the judge sees the team v. the guy selling the t-shirt and it’s not a surprise that the judge chooses the team. The court doesn’t see the guy as standing in for the public and the surplus being dissipated into the public.  Courts don’t like institutional litigation b/c they think they’re distorting—school busing, for example, pits particular groups against each other—but they don’t notice that IP cases are institutional litigation.  Courts can’t tell that surplus is being diverted from the public; they can’t tell whether the price is competitive, which would require several different producers competing to sell team t-shirts.  The same is true w/failure to appreciate the public domain, which looks like the place stuff goes to die. 

Need to vividly expose the courts to the public for whom the D stands, though that didn’t work w/composers etc in Golan and Eldred.  Patent cases: laws of nature aren’t patentable even if we know who discovered them—the benefit to the public is a cost to the creator.  Breyer gave an ode to the public domain: patents can discourage research, force people to avoid potentially good ideas. His concern about follow on invention hasn’t fully extended to other forms of IP. Why? Amicus briefing? Greater obviousness that progress depends in tech on using the work of others? Is romantic authorship an easier sell than heroic inventorship? Does patent’s other requirements (shorter term, examination, public disclosure) emphasize the public interest? Is the lure of new stuff enough to get judges to tolerate free riding?

Adverserial distortions could be minimized if potential users intervened, but we don’t observe that kind of intervention. If D wins, others will win anyway (nonmutual estoppel) so why bother?  That free riding is tolerated—why do courts allow it? 

Yen: Foreseeability is a real challenge when one wants to use negligence and similar concepts. It’s not a static concept in tort; it runs on a dynamic world in which things become foreseeable. If it happened, it can seem foreseeable that it would and will in the future happen.

What if we took “if value, then right” as seriously as possible?  Consider the ultimatum game. You must make a proposal to split; if you offer too little and the other person says no, you both get nothing. The rational amount to offer is a penny, but you can’t do that. Empirically, it’s closer to 30-40%.  There’s a connection here to a windfall from a potentially valuable unforeseen use of IP.  Suggests that society is in fact comfortable w/idea of windfall benefits but we would rather forego them unless there’s some sharing of the windfall in some way.  Could apply to the secondary user but also could apply to the people who end up owning valuable IP.

Envy but also respect is at issue.  A reasonable offer is a sign of respect. [I’m thinking of the work showing variations in the ultimatum game based both on demographics and on perceived desert through specific performance on a task.]

If we give rights every time there is value in a litigation, then we don’t necessarily correct a distributional wrong, because we’ve never asked the P whether she paid off all the people she borrowed from (though we may come closer in patent with examination etc.).  We could even let Ds seek offsets.

Gordon: patent law is not necessarily about corrective justice: since copying isn’t required, patent doesn’t trigger the idea of but-for contact w/P’s work, D’s work would’ve looked different.  That’s another thing that may protect patent from the dynamic she identifies more than ©.  Once causation is involved, it is vulnerable to expansion of what counts as causation.

Loren: narrative also matters: the expectation that things that are valuable must be owned. [But see things like the ability to read: processes or behaviors are often not subjected to the same logic.] Judges see themselves as authors; the © pull is stronger in that they’re less likely to be inventors.

Bone: Custom may also have a strong normative pull. Don’t need a harm/benefit distinction.

Hughes: idea of gleaning/leaving for gleaners (from Bible; appears in paper) is a double edged sword. In the tradition, it’s not inconsistent with ownership—ownership is required before you can have a duty or injunction to share with others.

12:00pm   Acquired Functionality by Pam Samuelson, Berkeley Law

At the heart of her work: functionality is almost as difficult as harm.  Gordon, in How Oracle Erred, deals w/functionality as limit on ©.  Gordon drew on Baker v. Selden’s explanation/use distinction. Copyright protects explanations; need a patent to control uses.  Oracle isn’t complaining about books that reproduce & explain the Java API, only about use of parts of the API to enable Google & Java programmers to write code. API is a tool for creation of new works of authorship—it is functional—and © should enable rather than forbid it. Likewise, Lotus wasn’t going after people using the command hierarchy in books about Lotus 123; it was going after competitors using the command hierarchy for functional purposes to enable interoperability so consumers could continue to enjoy the benefits of their investments in macros.

Pure Baker: © is never available for functional designs. Congress created two exceptions: software & architecture—but still recognized that functionality limits the scope of © protection in such works.  But what does functionality as a limit mean? Functionality can come from merger over time as users make investments in using a program. There’s more than one lens to look at Lotus.

There are many things born functional; channeled to patent/trade secrecy. After Star Athletica there’s less channeling, but still: if they’re inextricable from intrinsic utilitarian function, they’re not ©able.  Most ornamental designs for (as opposed to designs on) articles of manufacture in design patents would fail this test (or be too abstract to protect, as w/the beveled edge).  Various scope rules serve as functionality limits: bookkeeping forms, temperature recording charts, designs depicted in drawings not giving the © owner of the drawing any rights in making the design as depicted.

Indicia of functionality from case law: mechanically derived; dictated by function; systematic or methodical organization; necessary to objective or task; conformance to rules, logic; efficient design; incidental to carrying out tasks or processes (ABA claimed © in bank transfer numbers); constrained by health/safety concerns (SmithKline case about drug instructions where the generic drug was FDA required to use the same language on the label as the non-generic version; Bikram Yoga); Industry standard; affecting cost, quality, or effectiveness of design (trademark: Traffix). Fed. Cir. has a terrible functionality rule for design patents and used to have the same rule in trademark.  Some cases do recognize merger of function & expression in software: necessary for interoperability in game platform, accepted by Fed. Cir.  This is true even though the first programmer had choices about how to create the game in the first place. It was a constraint on games that wanted to interoperate: the merger occurred after the firstcomer’s choices.  Lexmark: had choices about printer software for cartridges, but Static’s chips couldn’t operate in the cartridges without the Lexmark code.  That is merger over time.  CONTU report recognized this issue as well.

Other examples of acquired functionality: Veeck v. Southern Building Code: once the city adopts a building code, the choices go to zero; there is no other way to express what the law is, so posting the code is noninfringing on merger grounds.  SmithKline: FDA approved wording, similar result.  Beck/Merritt Forbes—jury could decide that contract language/bond document was functional: if you want limitation on liability to work, it has to be written in a specific way, especially if a court has approved the language. Merger is one of the relevant doctrines but functionality is a useful label.

Could we be more precise about distinguishing expressive creativity and functional creativity, the latter of which should be channeled into patent/trade secret?  We can look at synonyms for expressiveness and functional creativity.  CAFC has to be wrong in saying functionality requires that there be no other way to do the thing, because utility patents routinely identify prior art ways of performing the same function.

Also occurs in trademark law: Inwood Labs.  Initially the colors of drugs may have been arbitrary/nonfunctional, but over time they assist patients in identifying medications and reducing anxiety over a switch to generic alternatives; useful to pharmacists in sorting drugs to fill prescriptions.

Gordon wrote about restitutionary impulses that create risks of overprotection, witness CAFC’s idea that Google just has to be made to pay for its use of the API. Free riding can be a good thing: 9 million Java programmers have invested in learning that API and created millions of programs that run on Android and other Java platforms. The Lockean proviso should limit IP rights: “enough and as good” must be available to subsequent creators; Sun promulgated the Java API to be widely used and endorsed distinction between no-© interfaces and © protectable implementations. When intellectual creations become standards, the public’s interest overrides the initial creator’s interests.

Commentary by Rebecca Tushnet, Harvard Law School

I assume I was asked to comment right before lunch because I talk fast.  Also perhaps because I have notes for a paper that has the exact same title as Samuelson’s, except my paper was going to be about trademark. And this amusing coincidence signals something important about the topic: it is about channeling between different IP doctrines. Functionality is our most well articulated (which doesn’t mean well implemented) channeling doctrine, and it is important across the areas of ©, TM, design patent, and utility patent.  Samuelson asks us to distinguish between expressive and functional creativity as a way to distinguish the distinctive subject matters of copyright and patent respectively, which might also help us think about different types of functionality in TM.

Functionality as a matter of necessity: link should make us think of various fair use tests that sometimes frame the issue as whether the defendant took more than was necessary, both in © and TM.  I’ve been a critic of the tendency to shove all tough issues into fair use, but the correspondences signal the presence of a pattern that needs to be handled by some protective doctrine: functionality as a separate doctrine focuses us on the desirability of channeling a claim into a specific IP regime, while a fair use defense in TM or © holds out the prospect of overlapping rights in the subject matter at issue in at least slightly different circumstances.

Lexmark poem hypothetical is the perfect example of necessity derived from previous unnecessary choices: the poem didn’t need to be the password that opened a lock, but having become so, the claimant’s own choices rendered the defendant’s necessary. Ties into Gordon’s important work on how some copyrighted works can change the communicative environment enough that a subsequent creator feels compelled to respond. That is, the Lockean proviso about having as much and as good left over is applied to a dynamic world, in which what’s left over changes depending on what the author created.

Implications for TM? TM already recognizes acquired genericity—a term like aspirin can enter the public domain as the name of a kind of thing, rather than a brand name, when the public uses it as the name of the thing.  Genericity and functionality are very similar and perhaps identical ideas: some things are preserved for public use even if that means some rump amount of confusion among people who think they’re privately owned.  Acquired functionality would be no different from this kind of genericity.

Samuelson’s work shows us that neither expressive nor functional creativity should be protected by TM, since both © and patent are separate regimes with different demands and constraints.  Specifically: With Betty Boop in the public domain, the creativity involved shouldn’t itself be allowed to serve as a source identifier for things on which Betty Boop appears—we see this handled various ways in the case law, from using Dastar to nominative fair use to the idea of aesthetic functionality to the idea that a song can’t serve as a trademark for itself but rather would have to represent some separate product or service in order to be a valid mark.  TM is going to confront this more often as well-known works resume entering the public domain. 

Expired © as one example of acquired functionality in TM; Terracycle in recycled Coke bottles is another: it’s functional because Coke comes in bottles of a certain shape, but it doesn’t have to be that way in alternate universes with the same rules of physics and even the same humans that we have here.

Functionality requires us to ask questions about timing.  Not all of Samuelson’s examples of functionality in TM are acquired over time—maybe better to say result of conscious decision: Inwood v. Ives, the functionality of a known capsule color is definitely acquired; the black motor that looks smaller because it’s black (Brunswick v. British Seagull (Fed Cir 1994)) isn’t acquired functionality in the same sense: it’s functional because of larger patterns of human perception which were known or knowable before the trade dress was initially adopted. Hot pink just couldn’t have served the same function if the original producer had chosen that color instead, whereas the Inwood colors were chosen initially with a fair amount of freedom. Justin Hughes has offered an interesting idea of aesthetic functionality that depends on whether a consumer preference preexists the development of the challenged design. His idea of functionality would encompass the black motor but not, without some further tweaking, the Inwood v. Ives capsule color for that reason.  Hughes adds in the idea that matching can be functional—a larger preference for things that match can justify finding certain kinds of designs, mainly but not always color, functional, at least as applied to durable goods. You need more than that to get Inwood v. Ives capsule color functionality, because pills aren’t durable goods, and a general human preference for consistency might not be hugely helpful in distinguishing the shape of the Coke bottle from the color of a pill.  And yet it seems hard to deny evidence that consistent pill color and shape improves medication compliance as relevant to the functionality of pill color and shape for generic versions of name brand medicine.

Broader question about Counterfactual reasoning: what are you allowed to change about the world in order to assess whether other choices were possible for the defendant?  Maybe not decisions of third parties like Boeing or a golf association that makes the rules for what equipment has to be shaped like. SmithKline/Drug labeling: FDA rules that mandate the adoption of identical language: a rule operating on all parties regardless of what choices were initially available before the P entered the market. Counterfactual moment as when the D seeks to enter the market because it’s the D’s conduct that interests us and that raises questions of harm and benefit.

Vetter: under this analysis, would translation into Braille for nonsighted access count as acquired functionality?

Samuelson: imagined it as using something exactly; adaptation is worth thinking about.  Are all things that constrain aesthetic choices functional? Not ready to say that, but the more constraining, the more likely it is to be functional.

Lunney: should functional mean the same thing across different areas of IP?  Utility patent has a different history than PGS works in ©.  Disagrees with RT that genericity is for words and functionality for symbols—the words Merry Christmas on a ribbon aren’t generic, they’re functional. [I guess I’d say that there is no difference in meaning or implications for TM law as between the two terms of art except that one is usually applied to words and occasionally symbols while the other is applied to trade dress/design, and to the extent that there is differential legal treatment of generic v. functional I don’t think there should be.]

Gordon: something can be both a fact and functional (that is, the content of the law). 

Samuelson: happy to say it’s merger, but calling the law a “fact” isn’t persuasive to a lot of people.