Monday, February 10, 2025

Dastar bars claim against allegedly false copyright/licensing claims used to extract money from public domain works

McKenzie v. Artists Rights Soc., Inc., 2024 WL 4803870, --- F.Supp.3d ----, 2024 WL 4803870, 22 Civ. 1619 (JHR) (S.D.N.Y. Nov. 15, 2024)

McKenzie is an art publisher that worked with the late artist Robert Indiana to create and produce two images: one called “LOVE” and the other, “HOPE.” In the 1960s, the LOVE image “gained global popularity through display on commercial products, paintings, and outdoor sculptures,” all published without notice and thus in the public domain. 

LOVE sculpture, Wikimedia
HOPE sculpture, Wikimedia

In 2007, Plaintiff and Indiana created the HOPE image, “similar to the LOVE image,” which began competing with the LOVE image. Indiana didn’t claim copyright in the HOPE image either.

Nonetheless, Indiana entered into two contracts with a defendant-linked entity, Morgan, in the 1990s, pursuant to which Indiana purported to convey to Morgan all “copyright, trademark, and other rights” in LOVE—in addition to “the exclusive right to reproduce, promote, and sell” the LOVE image, “produce and fabricate,” own, and sell sculptures of LOVE, and the purported right to sue for copyright infringement of the LOVE image.

McKenzie alleged that “Defendants well knew” and “certainly know now” that LOVE was not, in fact, protected by copyright. Nevertheless, “Defendants ... combined together for at least two decades to fraudulently represent that they had and still have a copyright on the LOVE image” and engaged in false licensing to the tune of millions of dollars, harming plaintiff, which is authorized to “produce and market the HOPE [i]mage” and “is in direct competition with the LOVE image.”

The RICO claims failed because they were RICO claims (and untimely).

Lanham Act: McKenzie alleged that Defendants made false representations (1) in violation of § 1125(a)(1)(A), by claiming that “Morgan and ARS ow[n]ed the copyright to the LOVE image,” and (2) in violation of § 1125(a)(1)(B), by claiming “that ARS was authorized to license said copyright.” Neither survived Dastar. Cognizable misrepresentations regarding the “origin of goods” under § 1125(a)(1)(A) “refer[ ] to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.”

Although Dastar is about authorship, it also applies to claims “for false representation of ‘affiliation’ between the author and a distributor of communicative products,” even if through “a false assertion of license.” That was the essence of McKenzie’s complaint: Defendants “deceive[ ] the general public and the relevant market” that they have a copyright to LOVE—i.e., that Indiana (or his estate) provided them with the right to license products bearing the LOVE image.

What about false advertising? “Statements about whether a defendant has the right to use or distribute a work are not considered material ....” Thus, there was no actionable misrepresentation.

Even without that, Lexmark barred the claim. To allege causation, McKenzie pled that “HOPE and LOVE, as images, have no other competition than each other.” In addition, McKenzie alleged that defendants’ use of “the false copyright assertion in relation to its many licenses of the LOVE image has greatly enhanced the revenues derived from the LOVE image, and made it appear more valuable than the HOPE image given its supposedly copyright-protected status and the extensive public visibility it has acquired.” But McKenzie failed to allege that “consumers [e.g., potential licensees] were deceived by the fraudulent [copyright]” and “also that that deception” is what “led consumers to ‘withhold trade’ ” from McKenzie.

Plus, laches barred the claim.  Although “[i]n general, the defense of laches is not raised in a motion to dismiss[,] .... in certain circumstances, when the defense of laches is clear on the face of the complaint, and where it is clear that the plaintiff can prove no set of facts to avoid the insuperable bar, a court may consider the defense on a motion to dismiss.”

Although McKenzie averred that he “was unaware of the fraudulently concocted use of a false assertion of a ‘copyrighted’ LOVE image until ... February 25, 2020,” when one defendant was deposed in connection with a separate lawsuit, other allegations—including that, since 1999, defendants made “repeated” and “continuous” false assertions of copyright—undermined this position. He admitted that, “[b]efore the Hicks deposition [in 2020], [he] had seen the public advertising, observed that the large auction house and others all referred to the LOVE image as being copyrighted to Morgan and thus he believed ... that LOVE was copyrighted to Morgan.” At some point prior to Indiana’s death, he “notice[d] that virtually the entire artworld was marketing the LOVE image with the assertion that it was subject to a Morgan ‘copyright.’ ” He also alleged that, in 2007, thirteen years before the 2020 deposition, “Indiana would not authorize” him to produce a LOVE portfolio because Indiana “believed that Morgan had a copyright on the LOVE image based upon Morgan’s fraudulent representations to him that they had acquired one through his agreements with them.” Thus, he “knew” “or should have known” of any Lanham Act claim by no later than 2007. “The copyright registration status of the LOVE image was publicly available information that Plaintiff could, and ultimately did, uncover on his own.”

Thus, the delay in filing suit was inexcusable, and McKenzie didn’t rebut the defendants’ claims of prejudice based on their having continuously licensed LOVE since 1999 and the loss of evidence due to Indiana’s death.

Thursday, February 06, 2025

literal falsity can exist even if there's a strained "truthful" reading

Kopp Development, Inc. v. Metrasens, Inc, No. 1:21cv1216, 2025 WL 371303 (N.D. Ohio Feb. 3, 2025)

Metrasens and plaintiff KDI compete in the market for ferromagnetic detectors, used to detect magnetic items (such as iron) on a person’s body or clothing before the person enters a room containing an MRI scanner. In 2018, Metrasens purchased a Kopp Ferralert Solo unit from a third-party located in Singapore and provided it, along with a Metrasens Ferroguard Screener unit, to a company called Intertek Testing & Certification. Intertek then issued a test report identifying the units by serial number and photos. The report concluded that “[t]he results of the testing showed that the Metrasens Ferroguard Screener had a significantly higher detection rate than the Kopp Ferralert Solo across the range of typical target objects.”

Metrasens then created a summary, which said in relevant part:

Ferromagnetic detection systems (FMDS) are not all the same. In an independent testing-laboratory comparison of 570 presentations of 9 typical risk items, there was a significant difference in the probability of items being detected, with Ferroguard Screener detecting 96% of presentations for the complete risk-item set, compared with 75% probability of detection for Kopp Ferralert Solo.

...

KEY FINDING

For smaller risk-Items, Ferroguard Screener proved significantly more effective at detecting threats to patient and staff safety and operational performance (94% of risk items detected) than the Kopp Ferralert Solo (56% of risk items detected).

...

TESTING METHOD

- Independent testing-laboratory  

- Standard, new, 2018 FMDS patient screening systems …

There were also comparative charts.

KDI’s owner testified that the Ferralert Solo unit that Intertek tested was an early prototype from when the product was first released in 2012, and that KDI had made several improvements to the Ferralert Solo product since 2012. In late 2020, KDI told Metrasens that the Intertek unit tested was an “old” version. Metrasens responded that it was unable to confirm the manufacturing date but offered to resubmit the products if KDI provided evidence that current versions were modified/upgraded. KDI responded that, if Metrasens hadn’t confirmed the manufacturing date, it objected to the claim that it tested “Standard, new 2018 FMDS patient screening systems.”

Previously, the court held that there was a genuine issue of material fact as to whether Metrasens’ advertisements proximately caused KDI to lose business from the University of Pittsburgh Medical Center, one of KDI’s existing customers, which also created a genuine factual issue on corresponding tort claims.

Although it excluded KDI’s proposed expert on damages, the court concluded that KDI could try to show evidence of damages with reasonable certainty at trial, including by showing the dollar value of the specific lost sales to UPMC or other sales evidence.

Here, the court addresses additional briefing it sought on when a presumption of money damages could apply.  Deception and injury are both components of causation. Notably, “the sort of proof of these elements a plaintiff must show varies depending upon whether damages or injunctive relief is sought.” Where the “rigorous” requirement of literal falsity is met, deception may be presumed; otherwise “[t]here must be evidence that a ‘significant portion’ of the consumer population was deceived.”

For injury, a plaintiff must generally prove damages, but they may be presumed in cases of willful deception where the plaintiff was the target of comparative advertising. And it is a rebuttable presumption. The court expressed some doubt that this presumption only applies to literal falsehoods—since it’s about the injury component, it doesn’t obviously require literal falsity if there’s willfulness & deceptive comparative advertising—but the parties assumed it to be the case, and anyway this was a literal falsity case.

Literal falsity: Metrasens argued that it didn’t outright say that the unit was made in 2018, just bought in 2018 and not used (new), which was true. But in context, “the meaning of the challenged statement is not ambiguous.” “[A]ny reasonable consumer of MRI screeners would interpret the statement ‘standard, new, 2018 FMDS patient screening systems’ as meaning that the KDI product involved in the testing was (1) standard; (2) new; and (3) manufactured and sold by KDI in 2018.” Although it quoted the (really misleading, ironically) Seventh Circuit statement that a literally false statement is “bald-faced, egregious, undeniable, or over the top,” the court explained that Metrasens was not required to explicitly state the date of manufacture to engage in literal falsity. In context of a guide allowing hospitals to compare the performance of the competing products on the market, “new, 2018” could not reasonably be interpreted to mean purchase date.  

However, whether this was true was a disputed factual question. KDI’s witness testified that he could identify it as a 2012 prototype because of its color and serial number. On the other hand, (1) Metrasens bought the KDI Ferralert Solo “on the open market as per a customer could have bought it;” (2) the model number of the KDI Ferralert Solo that Metrasens bought matched the model number of the KDI Ferralert Solo that was being sold at the time; (3) the price that Metrasens paid for the Ferralert Solo fell within the market price range for that product at the time; and (4) the box, packaging, and instruction manuals of the KDI Ferralert Solo purchased by Metrasens were “pristine.” The jury would have to decide. Presumption of damages: KDI argued that literal falsity plus comparative advertising, without bad faith, sufficed to presume damages. There’s logic to this—it’s not the bad faith that makes the damage so much more likely, it’s the direct comparison! But the court disagreed because it read the precedent to require literal falsity, bad faith, and comparative advertising.

KDI also argued that Metrasens acted with “recklessness amounting to willfulness” when it (1) purchased the Kopp Ferralert Solo product despite knowing that the supplier “had been known in the past to provide old stock;” (2) “willfully put out an ad” saying that the KDI product was a “Standard, new, 2018” model “with no support to label it as such”; and (3) decided to “keep up the campaign and continue to publish after express notice that the message was literally false.”

Even if Metrasens purchased the KDI Ferralert Solo without verifying the manufacture date and despite knowing that the supplier had provided “old stock” in the past, its witness testified, at length, to the many reasons why Metrasens reasonably believed that the KDI Ferralert Solo it purchased for Intertek’s testing was, in fact, KDI’s current 2018 model. This too created a jury question.


Tuesday, February 04, 2025

ambiguity over who was first African-American bourbon distiller in Kentucky dooms false advertising claim

Victory Global, LLC v. Fresh Bourbon, LLC, 2025 WL 366626, No. 5:21-62-KKC (E.D. Ky. Jan. 31, 2025)

After dealing with a motion to dismiss, the court now grants summary judgment in this case brought by one African American-owned bourbon seller against another.

Victory operates as Brough Brothers, which claims it was the first “African American owned bourbon distillery in the Commonwealth of Kentucky,” with the requisite licenses to operate a distillery by September 2020. By December of that year, it had distilled bourbon and filled its first bourbon barrel in a leased Kentucky facility. Brough Brothers alleged that Fresh Bourbon falsely advertised that Fresh Bourbon is the “first black-owned bourbon distillery in Kentucky,” and made other related claims. Fresh Bourbon didn’t lease a facility until early 2022 and did not obtain the required federal and state licenses to operate a distillery until September 2022. It began distilling its product at this facility in late 2022.

However, Fresh Bourbon submitted evidence that, in 2018, its representatives were “distilling” bourbon that it sold under the name “Fresh Bourbon” at Hartfield & Company Distillery in Paris, Kentucky, even though it didn’t own or operate its own distillery and could not legally have done so.

Challenged statements: 1) Fresh Bourbon was the “first black-owned distillery in Kentucky”; 2) Fresh Bourbon is the “[f]irst black-owned bourbon distillery coming to downtown Lexington” (not shown to be false); 3) “There had been no African Americans producing bourbon that weren’t slaves” until Fresh Bourbon did it; 4) Fresh Bourbon is “the first bourbon developed grain to glass by African Americans in the state of Kentucky”; and 5) Fresh Bourbon employed Kentucky’s “first African American Master Distiller in Kentucky since slavery.”  

Fresh Bourbon argued that it didn’t say that it was the “first black-owned distillery in Kentucky” but that it was “considered by the Commonwealth of Kentucky to be the first black owned distillery in Kentucky,” given Kentucky Senate Resolution No. 176, which stated, “The Fresh Bourbon Distilling Company is considered to be the first black-owned bourbon distillery in Kentucky.” An online news article made the “first black-owned distillery” statement, but not quoting any Fresh Bourbon representative, and Fresh Bourbon wasn’t shown to have used the article in any marketing. Thus, the actual statement wasn’t literally false, given the Senate resolution, even if the resolution was drafted by Fresh Bourbon’s representatives.

For the “producing” and “developing” statements, Brough Brothers argued that Fresh Bourbon’s “minimal contributions” to producing bourbon at Hartfield couldn’t constitute producing or developing bourbon. The court, however, found the statements “at least ambiguous as to the degree of involvement of the actor.” And the owner and master distiller of Hartfield testified that Fresh Bourbon representatives were eventually engaged in all aspects of the bourbon-making process, eventually had “free reign in the building,” did “everything” in the bourbon-making process without anyone from Hartfield present, and mashed and distilled the bourbon. The statements at issue didn’t claim to have a distiller’s license and permit. Plus, Brough Brothers’ own expert testified that it was “impossible to verify” whether Fresh Bourbon representatives were the first African Americans to make bourbon since slavery.

Similarly, the statement that Fresh Bourbon employed Kentucky’s “first African American Master Distiller in Kentucky since slavery” was “either ambiguous or an opinion, which cannot be the basis for a Lanham Act false advertising claim.” Apparently “Master Distiller” has no set definition. Brough Brothers’ own expert testified that the term has no “legal definition” and is “basically” a matter of opinion.

Even assuming that Brough Brothers had shown falsity, it still failed on materiality. Even with literal falsity, materiality must be shown.

If a company makes a literally false statement, then it can be presumed that the consumer who receives the statement was deceived. But whether that statement had any bearing on the consumer’s buying decision is a different issue…. For example, if a company advertises that its shampoo was manufactured in New Jersey, but it was actually manufactured in Pennsylvania, then it can be presumed that consumers were deceived about where the product was manufactured. But whether the place the shampoo was manufactured means enough to influence consumers’ buying decisions requires some evidence.

The fact that both parties used “first black-owned distillery” in their marketing campaigns was insufficient. Materiality “requires factual evidence concerning the relevant consumer market and the perspective of the potential customer in that market.”

State law claims also failed.

Monday, February 03, 2025

materiality surveys may not need controls

In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., No. 14-MD-2542 (VSB), 2025 WL 354671 (S.D.N.Y. Jan. 30, 2025)

This is a ruling on 19 motions to exclude expert testimony in this case, which is mostly an antitrust case; I will focus only on some false advertising-relevant rulings.

Keurig sought to exclude Hal Poret’s testimony, offered primarily for the purpose of showing that Keurig statements misled consumers into believing that its 2.0 Brewer worked only with Keurig’s K-Cups, and to provide an additional basis for one plaintiff’s false advertising damages expert, to rely on when estimating Lanham Act damages resulting from Keurig’s incompatibility statements.

The court started with a presumption favoring the admissibility of surveys. Poret didn’t test the exact language Keurig used, but that wasn’t fatal.  Although surveys “must ‘be designed to examine the impression presented to the consumer,’ ” “there is no obligation that the survey use the exact language challenged, or mirror the advertising conditions exactly.” Instead, Poret interviewed consumers about “what they did and why,” addressing the broader question of why consumers had not purchased competitor’s single-serve cups. His choice not to show the allegedly misleading ad campaign didn’t render the entire survey unreliable, since his methodology was well accepted in the survey field.

It was also not fatal that the survey lacked a control group. “Control groups are not the universal and inflexible requirement of survey research as Keurig seeks to portray them.” They’re useful when the survey is trying to determine the source of attitudes or beliefs or behaviors, or to “test directly the influence of [a] stimulus” such as a commercial. But “a control group may not be necessary if the risk of simply recording pre-existing values is not as great. For example, “a control group is not required for a survey that purports only to understand what developers perceive as relatively more or less important factors in their decision-making process.” That was the case here.

Likewise, Keurig’s arguments that the questions were biased and leading were insufficient to affect admissibility. The questions were closed-ended, but that can be legitimate. Certain respondents were asked to choose from a list of reasons that they did not purchase unlicensed pods. Some of these choices favored plaintiff’s position (e.g., “I heard or read that the Keurig 2.0 brewer works only with Keurig brand or licensed pods”) but some did not (e.g., “I prefer the taste of Keurig or Keurig-licensed brands.”). “Determining consumers’ preferences on these kinds of clearly defined alternatives is the kind of task for which close-ended questions are frequently more appropriate.”

The court also rejected the criticism that the universe was unrepresentative because Poret “imposed near-equal age distribution within his sample survey,” creating an underinclusive universe of respondents whose ages matched neither the population of Keurig users nor the population of the United States. The survey population of interest was Keurig 2.0 Brewer owners, which was appropriate.

Another plaintiff expert was Sarah Butler, who was offered to testify both on Keurig’s testing of competitor cups and her own surveys. Keurig objected to the first, because it argued that her “training is in consumer surveys, not laboratory testing of physical products.” But she was qualified to opine on whether Keurig’s comparisons between K-Cups and competitive cups adhered to “specific research standards and methodology.” Butler was an expert on survey research, market research, sampling, and statistical analysis. Her evaluation related to research standards and methodology generally, and not merely to “product testing,” and thus she was qualified to opine on whether the methodology of a research study allows for statistically valid conclusions to be drawn. Her non-survey testimony concerned whether the cup testing conducted by Keurig followed “generally accepted research standards for comparative product tests—such as objectivity, sufficient sample size, use of control groups where appropriate, and testing protocols—necessary for reliable statistical analyses,” and therefore aligned with her experience, training, and expertise.

As for her surveys—one of home users and one of out-of-home users like office users—the court also allowed them. For the home users, Butler made adjustments to the control group to ensure that “respondents who had previously been exposed to Keurig’s false advertising campaign were controlled for.” In devising her survey, Butler noted her concern that “the rates in the Control group may be driven by past exposures to statements made by Keurig about the unreliability of Competitive Cups.” “Mitigating the impact of preexisting beliefs on survey feedback is a sound objective in survey research. Indeed, failure to control for the impact of preexisting beliefs can render a survey unreliable.” Where a control group without preexisting beliefs is unavailable, “social scientists sometimes employ statistical weights or adjustments to the control groups. … Given the threat that preexisting views pose to survey validity and the broad use of far more intensive methods of control group weighing in modern econometric methods, I do not agree with Keurig that there is no scientific justification for Ms. Butler’s modification of the control group.”

For the out-of-home group, Keurig argued that there was no control group at all, but that survey targeted “individuals responsible for beverage supplies or contracts with beverage suppliers for their office or business location to evaluate the impact of Keurig’s relationships with Distributors[ ] on purchasing behaviors in the Away-From-Home Market.” Thus, it didn’t seek to test the impact of a particular stimulus or statement on these individuals, and a control group wasn’t as necessary.

Keurig also objected to questions in the first survey that it argued created a false dichotomy between “licensed” and “unlicensed” pods as well as the use of words like “unapproved” that it deemed biased, along with stronger warranty language than Keurig itself used. Keurig’s rebuttal expert conducted a survey along its proposed lines which yielded substantially different results.

The court disagreed. Keurig’s own materials used “unapproved,” so it was fair to ask consumers about that, and the other questions didn’t suggest answers in an impermissibly leading way. Although there were differences between “affecting” a warranty and “voiding” a warranty, “none are so strong that exclusion of the survey is warranted or that it becomes more likely than not that Ms. Butler’s opinion is unreliable. Although Keurig’s survey produced different results, this is to be expected—surveys conducted in different ways produce different results.” Cross-examination was the remedy.

The court also rejected sample-based criticisms of the second survey, noting that samples don’t have to be perfect.

Keurig also criticized the use of “recall-based measures” (i.e., questions about past purchasing decisions) in the first survey, on the grounds that “[i]t is widely recognized that recall-based measures do not yield reliable responses.”  “[R]ecall bias, which recognizes the potential for inaccurate responses due to fading memories over time,” is a known issue with survey reliability. But that went to weight rather than admissibility. And asking about aggregate decisions over a long term is less problematic than asking about very specific things. Likewise, adding an “I don’t know” option can mitigate the problem, which was done.

Saturday, February 01, 2025

WIPIP: Copyright: Incentives and the Digital Age

Tang, Creative Labor in the Age of Platform Capitalism

Theories of expressive work and creativity: lead to idea that AI training itself is not a © problem b/c it doesn’t use work expressively. Past idea: digital creativity enhances autonomy by giving individuals greater roles in authoring their own lives. When people are creative, making new things out of old things, become producers, they exercise and perform freedom and become the sort of people who are free. Semiotic democracy.

This model is challenged by paradigm shift in digital creation. From early days of YouTube—hotbed of amateur creativity—to current situation of rightsholder synergy. “Collaborative model” in which “rights holders” and “online creators” are partners in sharing viral profits. YouTube’s ContentID, along with Meta and TikTok, allows users to take bits and pieces without themselves needing to pay. This changes how we think about digital creativity on the internet. Those autonomy arguments are actually no different than autonomy arguments made by Uber, Postmates, and other gig economy companies—greater flexibility for a bohemian lifestyle. But we know that’s not true. Creators relied on TikTok for their livelihoods—Uber drivers are subject to algorithmic black box whims; YouTube doesn’t make its monetization/demonetization policies public. At best, platforms are oligopolistic for creators.

Platforms have always gathered that meaning-making expression into data; made it clear when they changed TOS to make it explicit that they were using data to train generative AI. The analysis of the datafication of creative works can learn from privacy scholarship, which has asked: how does privacy law evolve from dignitarian individualistic notions focusing on noneconomic invasions for the era of mass privacy invasions through gathering data en masse?

Q: historically, the vast majority of artists have failed. Maybe the platforms make things better [or don’t make things worse] by allowing artists to find their audiences.

A: consider TV writers negotiating for uses of AI.

Rosenblatt: This is part of a story of precarity; sounds like freedom but isn’t—gig economy analogy is convincing. What does this do for ©? TV writers—that’s WFH. The one thing these creators have is ©, and what good does it do them? Very little. YouTubers have © but it doesn’t seem to be relevant. Is there something else we should be doing?

A: all these arguments—the payments would be minimal, it would be too hard to track all the uses—have been made in privacy, so we could look there. WFH: challenge to the idea of the inextricable link b/t work and the author.

Lunney, Incentives and Music Composition

Fundamental premise of ©: more rights means more $ for righsholders means more creative output. This paper is looking at music composition: does revenue increase output? Does revenue increase number of composers? RIAA shipment data in constant dollars—going back to 1962. Steady climb; 80s recession and recovery; Napster/filesharing decrease until 2015, back to the early 60s level, and then starts to rise again. ASCAP etc. payouts also have to be considered for composers, and there we see a steady increase rather than sharp drops, with a few blips. With both taken into account, you still see a filesharing effect, but not quite as drastic as for recording revenues (and not much recession effect).

What happened to composers? Hot 100: a relative measure of quality rather than absolute, since it’s competing with the current alternatives. More money means fewer top hits rather than more contenders. For absolute measures of quality, looked at decay over time. The 90s (high revenue period) songs did worse than expected. The low-revenue 2006-2015 period is where people are still listening to the songs today. Can control for various variables including teenage population and revenue is still uncorrelated or negatively correlated with revenue.

Superstar composers: only 2 from the 1990s, many more from other lower-revenue decades. So more money is associated with fewer and lower quality hit songs, fewer first appearance songwriters, and fewer superstar songwriters. Next steps: more data, looking for varied output based on quality of hit, and revisiting assumption of equal shares of songwriting credits.

Rosenblatt: what the trends are in publishing deals—are the deals better/worse/different/360? Industry practice has changed considerably over that period.

A: good question, but his core question is does more © yield more music? Why it does or doesn’t is an interesting Q but not his main one.

Fromer: Movies: Blockbusters are often perceived as less creative; gatekeeping around who is allowed to produce them—is there anything like that dynamic here?

A: certainly gatekeeping on the artist side. Harder to tell on the publishing/composing side. We hear about artists being taken advantage of. [We definitely hear about composers forced to share credit with performers in order to get the song recorded by them.]

Fromer: Artists wanting to work with a particular hitmaker may matter.

A: we’re increasing the number of composers on average in a hit song, for sure.

Q: some songs are on the Billboard 100 forever.

A: sure, it’s not a perfect measure of quality, but that’s why I also look at whether it’s still being streamed years later.

Q: another possibility: look at # of DMCA takedowns to measure popularity/quality.

Cathy Gellis: did the Copyright Act of 1976 coming into effect have any relation to what happened to spike revenue in 1978? But also note that the “filesharing collapse” was also correlated with the collapse of record stores, which wasn’t just about filesharing but was also about the prices record companies were charging to record stores that made them unsustainable.

A: hard to explain 1978. But you’re right, there’s a lot going on. And only looking at Hot 100, so there may be other things going on, although the music industry is highly skewed to the top.

Q: Number of composers being added: people are preemptively adding composers w/similar style b/c of fear of Blurred Lines type lawsuits.

Pager, Copyright's Extended Duration as Feature not Bug

Most valuable works may struggle before they are recognized as valuable—Van Gogh died penniless. Moby Dick, Citizen Kane were commercial failures. Art from marginalized communities may take time to be recognized.

Publishers will only invest in works that they think will pay off fast if © term is short. Does that mean © needs to last 100 years? Not arguing for any particular term. But could play with a variable term. Return to a renewal term—option. That would allow mainstream iconic works to renew, which would be bad; could couple it with some sort of revenue cutoff, so the works that have had returns on their investment can’t renew.

RT: Renewal restrictions: as far as I know most blockbuster movies have technically lost money; so how would that work?

A: could go by box office/gross.

RT: What about the naïve economic model here? The midlist is already gone from publishing with life + 70—publishers are already not investing in works that will pay off over 20 years, even with that very long term.

A: you might take more risks on an unknown if you think there’s more money around.

RT: what does that have to do with the term? Your time horizon is still going to be 1 year. [See also “I’ll be gone, you’ll be gone.”]

Jake Linford: you’re really telling a desert story not an incentive story: this person deserves a reward and we need to create some sort of system to give them a reward.

Tang: there’s tons of data that the industry is becoming more risk-averse and more winner-take all, not willing to tolerate failure, despite its concentration (because of its concentration?). [Cory Doctorow and Rebecca Giblin say that the way to deal with the bully taking your kid’s lunch money is not to give your kid more lunch money; this is a statement about © rights.]

WIPIP: Innovation policy

Michael Burstein, The Law of the Direction of Innovation

Foundational texts: NBER Rate and Direction of Inventive Activity, and revisited. But we need to ask: what innovation should we prioritize? What innovation, by whom, and for whom? These are contestable subjects of political choice. Health law scholars have started to ask why so many me too drugs instead of novel therapeutics; trying to generalize from these questions.

Positing two axioms representing conventional wisdom in law & business: (1) entrepreneurial activity, mediated by price signals and supplemented by exclusive rights, is the best way to establish the direction of innovation. (2) private ordering of innovation policy takes place largely in the absence of legal structure; law’s role is only to ensure that IP facilitates adequate price signaling.

This is wrong in a few ways. Startups direct innovative efforts towards funders’ interests—structured by VC incentives. Incumbent firms are influenced by corporate rules. Covenants not to compete matters. That’s all not just price. Even if was just price, IP doesn’t mediate price in a vacuum; IP makes choices. Market demand also doesn’t equal social demand/value of innovation. Gov’t funding remains an important tool of innovation policy.

How do we get an innovation ecosystem w/striking disparities in investment/development of tech that we see today? VC investment is mostly in IT and consumer-oriented stuff. Silicon Valley has become optimized to produce those kinds of innovations. Crypto, but not encryption from same underlying tech base. Crypto has low capital requirements, low barriers to entry. Encryption is deep tech, w/long and uncertain regulatory cycle/demand, but potentially much greater social value.

We’ve had different innovation systems over time—Bell Labs, corporate R&D.

One goal: challenge notion that innovation is part of market alone and not part of legal choice.

Gaps in literature to fill: economic literature has some useful modeling, but doesn’t explain mechanisms by which economic incentives actually arise. Innovation ecosystems may be described, but each part of ecosystem is molded by various laws, private law and public law. In law, we tend not to see the ecosystem as deserving of integrated study—we tend to atomize each piece.

Law influences direction by structuring relationships among firms, individuals, and markets (VC contracts are an example: generally applicable law rather than innovation specific); by delineating entitlements (creation/enforcement of legal rights or creating space for nonmarket innovation); creating or limiting markets—shaping demand (export controls that limit the addressable market for certain tech); subsidizing investments, generally through gov’t spending or the equivalent (gov’t grants).

Harder cases: corporate governance—that shapes both individual firms/people as well as markets as a whole. R&D tax credits; gov’t procurement—both a subsidy and market-making. Regulation—can prohibit and can structure what people can do, and direction of innovation responds in kind. IP may operate across modes. Delineating entitlements and subsidizing investments by overcoming public goods problems, but also shapes market, e.g. by identifying what’s protectable and unprotectable and by shaping licensing law.

Sapna Kumar: how does the model handle goods that more closely resemble public goods than private goods, like new antibiotics and vaccines for infectious diseases less common in the US now (but might be in the future). Infrastructural goods might be different.

A: the market paradigm tells us the underproduction problem is bigger with such goods, so it wouldn’t surprise him if things like regulation/gov’t procurement play a bigger role there.

Rosenblatt: people are uncomfortable with value judgments: which technologies are value-promoting and which aren’t.

Kumar, Scientific and Technical Expertise after Loper Bright

Her impression: majority fundamentally misunderstood intertwining of sci/tech expertise w/statutory interpretation. Lessons we can learn from patent litigation about how judges acquire needed knowledge about technical issues. Proposal: funding neutral experts for appellate courts for complex administrative law cases.

Loper Bright: Judges must independently interpret statutes. Judges must exercise independent judgment when they interpret ambiguous statutes; adopted very narrow version of Skidmore deference—can’t defer to agencies but can look for persuasiveness, doesn’t seem different from being persuaded by a party or amicus. Claimed holding based on APA, but framed decision w/in Art. III arguments—invoked Marbury twice.

Many prominent scholars claim lots of deference is left, but her own view is that lots has changed. Courts are forbidden from deferring. LB might exacerbate politicization for judges. Some judges may try to improperly defer. But what about judges who try to faithfully follow LB—what is a deference-free system of interpretation?

Patent has some lessons! District judges struggle to understand complex sci/tech, which contributes to patent cases being time-consuming. They cope by relying heavily on expert tech tutorials, technically trained clerks, tech-trained magistrate judges, and neutral experts for complex cases, sometimes special master or technical adviser. How does the CAFC cope? Expertise of the judges themselves, and technically trained law clerks.

We don’t have any of that for APA situations. No means for parties providing tech tutorials; appellate courts have few technically trained clerks; page limits on briefs and non-tech trained lawyers make it hard for judges to learn what they need; no means for hiring neutral experts at appellate level.

Neutral expert proposal has been floating around for a bit: Breyer & Leventhal, JJ, both proposed. Common in other countries, EU and England. Best of both worlds—independent judgment of judges & access to reputable info on sci/tech.

Implementation: Congress could fund it up front (unlikely); appellate courts could do this on their own and bill parties for cost (is this allowed?). Experts would explain background sci/tech, not opine in law. Give teachings in written form, subject to party response. Goal to prevent overreliance and opacity, while preserving adversarial system. Patent system suggests that this can work. This isn’t a substitute for Chevron, but it’s something.

RT: Could an appellate ct send to dct for this purpose?

A: would take amending the APA.

Burstein: can appellate courts appoint special masters?

A: seen conflicting things—need more research into their inherent authority.

Jacob Sherkow: there are original APA actions in the dct—those could have experts.

Q: generalist judges are always coming into situations they don’t know anything about—music, reinsurance markets, complex family situations, how do ski resorts work. That doesn’t mean anything you said is wrong. But why is science special?

A: dct often plays a filtering role.

Q: problem where you can’t find an expert who isn’t in one camp or another—an interest in advancing (or not) large hadron collider projects. Maybe you need to hire 2-3 with different ways of looking at the same thing.

A: that’s true.