Reading list: dilution fails an empirical test

Christo Boshoff , The lady doth protest too much: a neurophysiological perspective on brand tarnishment, 25 J. Product & Brand Management (2016):

 

[C]onsumers’ emotional responses to a series of brand tarnishment advertisements are investigated in this study. The purpose is to assess whether attempts to harm a trademark by tarnishment lead to negative emotional responses and eventual economic harm, as suggested by many plaintiffs in trademark dilution legal disputes….

 

Twelve brands were investigated [using EEG and EMG]. The brands were selected because they were ‘well-known’ but not overly famous brands…. Participating subjects were exposed to a static, on-screen print advertisement of the senior brand (untarnished) and of the tarnished brand [tarnished using humor]…

 

In the case of exposure to the tarnished brands, all but two (the clothing retailer Cropp Village (EEG = 0.394; p < 0.05) and Sony Ericsson (0.4067; p < 0.05) of the EEG responses were neutral. However, contrary to expectations, these responses were also positive. This result implies that these three [two?] brands will most probably not be harmed if the ‘tarnishment’ consists of social commentary. It could also suggest that consumers can differentiate between different forms of tarnishment, and that tarnishment involving social commentary is not frowned upon. This may be because the consumer agrees with the social commentary, or finds it amusing.

 

… Based on the results of this study, it appears as if the tarnishment of relatively strong brands does not elicit much emotional response among consumers. Most neurophysiological responses to the brand tarnishment were neither negative nor positive.

 

This conclusion about neutral emotional responses holds, regardless of the temporal order of the exposure. In other words, regardless of whether the respondents were exposed to the tarnished brand first or to the untarnished brand first, the emotional responses were the same. The conclusion also holds for different product categories. In other words, the same empirical results emerged, irrespective of whether respondents were exposed to ‘rational/thinking’ brands or ‘emotional/feeling’ brands. These results seem to provide some support for the view that well-known trademarks/brands are practically immune to dilution. But it also shows that tarnishment cases should each be considered on their own merit….

 

The primary contribution of this study is that, for the first time, some light is shed on consumers’ emotional responses to brand tarnishment. Regardless of the neurophysiological measure used, the results demonstrate that the responses to brand tarnishment are generally neutral. The results thus do not suggest a strong likelihood of severe economic harm due to negative emotional responses to brand tarnishment among consumers.

 

On the title, see Christine Haight Farley, The Feminine Mystique of the Brand in Trademark Law Today.

Private Law & IP, Remedies and Prizes

Session 7: Remedies and Prizes

Moderator: Chief Judge Patti B. Saris (D. Mass.): 50% of all claim constructions are reversed, and 80% of all damages.  So judges are interested in improvements.

 

John M. Golden, “Reasonable Certainty in Contract and Patent Damages”: Damages controversy and uncertainty about reasonable royalties. There’s eBay, then sometimes huge amounts, and apportionment—not a new issue, but reappeared under reasonable royalty analysis. Not clear there ever will be a great methodology, and there certainly isn’t now.  Only easily done with a limited subset, as when a new process lowers costs by $1.  Was a court appointed expert in Motorola case w/Posner presiding by designation: trying to figure out value of particular gestures for a tablet/cellphone.  Posner threw out basically all the party experts; almost his only materials were reports produced by the experts who’d been thrown out on Daubert grounds; Posner then decided there were no damages that could be proven, and no need for an injunction, so he threw out the case.  That was reversed, but it did solve Golden’s immediate problem.

 

What could we do to reach an acceptable result?  Reasonable certainty standard in contract law might be used to address situations in which damages were difficult to assess.  Statute here says that damages shall be awarded adequate to compensate for the infringement, and in no event less than a reasonable royalty.  Learned Hand: reasonable royalty is really “a device in aid of justice, by which that which is really incalculable shall be approximated, rather than that the patentee, who has suffered an indubitable wrong, shall be dismissed with empty hands.” Admission that it’s a replacement for disgorgement, also equitable.

 

Georgia-Pacific multifactor test: courts look to it, more than a dozen factors; not clear that many of them are useful in particular cases. The framework factor is “hypothetical negotiation approach.”  What a willing licensor and licensee would’ve agreed to as a royalty if they’d successfully negotiated before infringement began, w/assumption that relevant claims were valid and would be infringed by d’s activity.  At least if injunction is off the table, we get a circularity problem out of this approach.  Cross-licensing and other terms such as benchmarks/milestones are common in real agreements.  Difficult counterfactual!  Uncertainty is not surprising/susceptible to elimination.  So we need to work with uncertainty.

Reasonable certainty doctrine in contract arose in the 19^th c. relaxing the requirements for showing damages, while still putting some limits on what a jury could do.  Certainty doctrine: consequential damages allowed if provable with certaintyàover time became reasonable certainty.  Rise of expert testimony; decline of rule against allowing a new business that failed because of the breach to recover lost profits.

 

Potential factors in intensity of demand for proof: blameworthiness or egregiousness of conduct; state of art/availability of evidence; magnitude of damages alleged—if $400,000 claimed, then shouldn’t require $1 million to prove it.

 

Commentator: Keith N. Hylton: Note that standard for reviewing contract damages is abuse of discretion—much more generous to lower court.  Don’t want to have damages so variable that certain activities become unpredictably risky.  Need to police courts/juries’ damage awards may differ as between contracts and torts in terms of private expectations/managing liability (replicating different methods of private interactions)—so which should be the model for patent?  Tort law is more a mix of public-private than contract is.  There is no pure private law (though criminal law may be as close to pure public law as you can get).

 

Ted Sichelman, “Patents, Prizes, and Property Rules”: recent scholarship questions sharp distinctions between patents and prizes. Taxes, subsidies, price controls can make the two look quite similar.  E.g., gov’t prize funded by sales tax on product, rather than general tax, creates deadweight losses that mirror those of patents.  Patents w/subsidies from the general fisc for consumers priced out of the market resembles the zero deadweight loss of a prize, cf. pharma.

 

Fungibility blurs distinction b/t patents and prizes, public and private. Ben Roin says patents are still different (as do Hemill & Willete (sp?)).  Fungibility implies the key concerns are less about deadweight losses than transaction and error costs.  Roin says property rules allow patentees to fully exclude third parties, esp. competitors; prizes provide no such absolute property right.  In dynamic setting, property rights may result in substantially lower transaction costs in important circumstances, providing more innovation incentives (in other circumstances property rights may make transaction costs substantially higher); there can also be endogenous effects on transaction costs.  Why are there patents even when gov’ts fully set drug prices?   Roin says: allows pharma co to credibly threaten not to provide the product at all to the country.  Why is that rational/credible? It’s a dynamic repeat game among many countries.  Forces the next gov’t to negotiate in good faith, lowering transaction costs of innovating and disseminating over the long run.

 

More important role for property rules in patent: commercialization/coordination, from Kitch.  Lowers the cost of coordination in the post-invention phase.  Central to patent/prize distinction—follow-on invention is not key as Merges & Nelson say; Kitch also includes commercialization such as testing, marketing, pricing, not just follow-on invention.  The role of property rules in pharma commercialization may thus yield greater benefits than narrower power of renegotiation w/gov’t actors, even if gov’t is setting drug prices—can still exclude others from follow-on activities for commercially viable drug.

 

What does this say about regulatory model of patents?  I have paper on purging patent of private law remedies; aren’t I contradicting myself like a political candidate?  One must distinguish between goals and means.  Purging patent law of private law goals was my aim; patent’s goals are primarily public in nature.  Innovation is a public oriented goal; at the same time, we may want to achieve them through private oriented means like property rights.

 

But it’s important not to forget about the aims.  Compare tort law, where individual interests play an important role—the bilateral right-duty relationship—then a private law baseline for remedies is essentially mandated: a wrong has occurred and we want to return the victim to the status quo ante. Patent is not like that.  One can unite public and private aspects of patent through functionally inclusive approach: private oriented legal rights, duties, powers, and concepts (Cohen’s transcendental nonsense) can serve public oriented functional aims.

 

Commentator: John F. Duffy: Patent racing self adjusts the patent prize. It doesn’t dissipate rents.  It dissipates private rents.  Even if we had a prize system, we might have patent-like litigation from competitors.  Patent damages again harness private parties to define the appropriate scope of the right—both plaintiffs’ and defendants’ attorneys work to define the scope of the right through assertion and challenge.

 

Tort law is often public too: punitive damages aren’t about corrective justice; class actions aren’t really either.  Qui tam action; citizen suits to enforce anti pollution statutes—tort or tort-like things that do what patent tries to do; don’t give so much to people who claim that tort is about corrective justice. 

 

Q: different conceptions of IP--are we arming a private actor with the right to sue in order to achieve a public good, as in qui tam/punitive damages, or with a right to corrective justice (recognizing that it might be both).

Private Law & IP, Standards

Session 6: Standards

Moderator: Kirti Gupta

 

Jorge L. Contreras, “Private Ordering or Public Law? The Legal Character of Technical Standard Setting”: Private ordering structure arises when public enforcement mechanisms are unavailable (crime syndicates, rural settings) or less efficient/logical (credit rating, accounting standards). Standard setting: collaboration among competitors; technical focus, not legal; ideally the priority is on optimizing solutions—wi-fi, USB (my favorite USB joke). Most standard-setting bodies have formal policies about due process, and also about patents (disclosure requirement, FRAND licensing requirement—some bodies have one, some the other, some have both).  Informal norms and practices also: tribal culture.

 

What did courts do when disclosure obligations were allegedly violated? Looked to informal norms of community.  Rambus: written policy was quite vague and treated badly by Fed. Cir. (shockingly vague and imprecise) but still an affirmative obligation to disclose arising from practice; so too with Broadcom v. Qualcomm, where the written policy simply said parties are “encouraged” to disclose.  FRAND: vague standard, but where challenged in litigation, looked at comparable licenses and patent pools to find reasonable range based on norms and practices in the industry.  Private practice finds its way into private law disputes.  That’s not unusual.

 

Federal recognition of standardization’s public character: DOJ/FTC report on IP from 2007 calls it one of the engines of th emodern economy.  DOJ/PTO statement in 2013: voluntary consensus standards serve the public interest, fuel innovation.  Debates over whether that should affect injunction against violator?  There is a tendency to talk about the availability of injunctions in terms of public characteristics of standard-setting prices—harm to competition from allowing injunctions or exclusion orders on standard-essential patents in Apple v. Samsung (ITC).  USTR says the same thing.  That is public law.

 

But is that appropriate to regulate standard-setting under public law/antitrust framework?  EU/US agencies seem to believe so, but dissenting voices say private law/contract enough, and overdeterrence of patent enforcement may chill innovation/SDO participation. Tentantive conclusion: public law frameworks should be applied w/caution after private ordering is permitted to address potential problems.

 

Commentator: Joseph P. Liu: Private ordering can mean different things to different people.  More expansive understanding of private law might provide a way to respond.

 

Private ordering: at least 3 definitions.  (1) Contracting around existing legal rules; ordering that results from private transactions.  (2) The kinds of private dispute resolution systems identified by Ellickson (ranchers), diamond merchants, etc. With their own rules & customs, typically enforced through self-help. (3) Private promulgation of rules to govern internal organizations.  Homeowners’ associations; sports league rules. Like (2) in that content is privately created, but unlike in that it’s more top down than bottom up and more reliant on enforcement from courts. 

 

Paper places technical standard setting within (2) when it might be more like (3).  Rules tend to be more top down.  This might be important b/c if you put it in category (2), order w/o law, you get presumptive benefits of that category—superiority to judicial proceedings in some cases—when they aren’t warranted. 

 

What turns on private ordering v. public law characterization? Paper sometimes suggests that if standard setting is private ordering it should be left to internal rules, whereas if it’s public then it should be subject to regulation via antitrust etc. Hard for me to see why degree of regulation should depend on characterization; private agreements are pervasively subject to public regulation. Real q: whether regulation is required to achieve the substantive policy goals we have—e.g., solving holdup problems—is antitrust or other regulation required to solve them?

 

Paper identifies issues arising from particular type of private behavior, coordinated activity by industry participants: ostensibly private/technical, but has a public character.  Paper expresses doubt over whether antitrust/criminal law are the appropriate mechanisms.  Consider third option, between private ordering and public law. Tools available in private law understood more broadly as the substantive doctrines of patent law.  Paper discusses tort, contract and not property claims.  Other private law doctrines like promissory estoppel might be relevant as well.  Avoids the bind of choosing between “pure” private ordering or public law. Richer set of public interests into the considerations.

 

Janet Freilich & Jay P. Kesan, “Towards Patent Standardization”: We don’t have a good theory of what standardization would mean, if it’s desirable.  What is standardization of patent content?  We mean the most general sense: something that is agreed upon, whether it’s standard nomenclature or sections in the patent description. Beneficial for purposes of notice and disclosure, reducing search costs and fuzziness of patent boundaries; easier to read and identify information.  Can improve databases, also helpful for disclosure.

 

How to make it happen? Congress could maybe try, but not going to happen in the real world. PTO can make rules but there are practical and political problems.  Standardization could arise through voluntary measures—soft standardization could get us part of the way to the goal.  WIPO standard for disclosure of nucleotide and amino acid sequences: PTO adopted it, using the rationales of quality and efficiency of examination—easier to compare w/prior art; conformity for scientific community, using language they’re used to; improved dissemination of information in electronic format.  But most standardization in life sciences doesn’t come from regulations.  Taxonomies, controlled vocabularies created by public/private institutions—new vocabularies are created for new technologies. Often fairly well-defined; FDA won’t let you use a drug name for something it doesn’t think the name encompasses. 

 

In patent, you don’t have to use these standards; the patentee is her own lexicographer and can define a term differently from any standard. But outside the patent world, these standards usually do have to be used.  Journals, for example, require authors to use standards.  Thus patents can diverge from conversation in rest of life/science. So it would be easier to use the nomenclature in patents too.  Case study: percent of granted patents that use celsius or fahrenheit—number using celsius is going up as a percentage of those who use either, simultaneous w/increase of use in celsius in the scientific community generally.  1988: Congress again said we should use metric, but we don’t have to; metric required in patent in 1995, but the trend in using celsius in patents started before that: a result of general scientific community convergence.

 

Possibilities for software: Representational languages: pseudocode; object-oriented languages; modeling languages—better comprehend the new/inventive features for which patent protection is sought in software. More useful and technically discernible software patent repository compared to the current problems in figuring out what prior art is.  SSOs can encourage the detailed specifications needed.  They discover the best technology/certification of the process. Use IPR policies that are fairly detailed, taking disclosure into account and penalties for noncompliance. They’re uniquely positioned to provide standardization guidance, especially since they’re dealing with patents that will be very valuable if the standard is accepted.

 

Templates: universities’ tech transfer offices could have templates, as Stanford and MIT do, as starting points.  Possible problems: powerful interest groups dominate/exclude others; allow hidden patents that resurface at some point.  Criticisms of standards: often that they are in fact reducing the scope of protection; we don’t think that’s the case.  Standardized patents can be drafted broadly, and vague patents can be drafted narrowly. 

 

Next: empirical studies to see if patents with standardized disclosures are likely to be more valuable.

 

Commentator: Michael J. Meurer: Like the data on the metric system, but it’s not clear it provides benefit in more disclosure or more notice/clarity. We need examples of success in disclosure/notice.  Mendeleev: periodic table facilitated codification and spread of knowledge—Mokyr, von Hippel, Winter; Moser identified jump in patenting of chemicals after Mendeleev: codification, reverse engineering became easier and trade secret, which had been used, became less attractive.  W/semiconductors, a de facto standard crept into the industry based on the TTL Data Book—might be a helpful examples.

 

Incentives of applicants to embrace standard language: Teaching/reduce transaction costs in licensing or assignment.  Clarity of property rights/notice (borrowing ideas from literature on standard contract terms): good language might come from collective wisdom on the breadth I want/what design around opportunities are available; I might like the fact that courts have already interpreted what “anodize” means, but since courts interpret “a” differently in different patents that’s not such a successful enterprise. Network effects are associated w/standard terms of contracts and might arise here.

 

Reasons they won’t embrace standard language: if I want to practice exclusively and keep tech as secret as possible, I’d like the advantage in the race to generate follow-on innovation; we know many inventors get the benefit of both patent and trade secret. Notice: lots of patent applicants are looking for opportunistic profit, and they want to hide/obscure for ex post bargaining advantage. In re Kubin case: protein in a patent; examiner found prior art identifying the protein under another name; applicant will lose novelty once the link is found.

 

Private associations generating public goods, like standards: there is reason to be optimistic that private parties can do this.  Caution: setup costs of codifying tacit knowledge—depends on market conditions and pace of technological change (if too fast, don’t bother codifying).

 

PTO maintains the acceptable ID of goods and services manual to classify trademarks, and the US Patent Classification to classify patents. Improving due to global cooperation; agents are capable of standardizing. 

 

Why not private/public cooperation, as b/t PTO and Google; PTO could subsidize development of IP registry search tools.  Probably the right result is a mix.

 

Kappos: Nautilus case provides impetus for standardization, because functional claiming is now a quick and dirty way to get an invalid patent.

Private Law & IP, Institutions II

Session 5: Institutions II

Moderator: Alfred C. Yen

 

F. Scott Kieff, “Pragmatism, Perspectives, and Trade: Intellectual Property, Antitrust, and International Trade as Mostly Private Law”: These fields are inherently blends of private and public law, so let’s try pragmatically enbracing diverse perspective.  Private law features do and should dominate. Explicit goals: improving dynamic efficiency through increased commercialization and competition: shared, achievable goals. Welcome other perspectives, goals, mechanisms, as long as they’re explicit.  Mitigating the efficiency and fairness eroding effects of public choice and strengthen the opportunity for democratic review.

 

By design, executive branch agencies are supposed to be responsive to politics—PTO, DOJ; courts are designed to be less responsive.  FTC is more responsive than ITC, which is more like courts.  Patent validity, infringement, remedy, antitrust are the issues; there’s an inherent tension that causes each side to engage in aggressive self-discipline when presenting arguments when all four buckets are on the table at the same time—at the infringement stage, plaintiff claims everything but then at the validity stage that makes it cover prior art; also might give it market power.  That means that ITC gets massive benefit in decisionmaking ability coming from aggressive self-discipline parties have when they argue before us—they have a tiger by the tail.

 

Where only validity or antitrust is on the table, you get massive overclaiming; there’s no tension which is necessary to create limits. ITC is a lot cheaper to run than DOJ, FTC.  The amount of money you have to invest in getting decisionmaking right is less if the private actors have self-discipline.  

 

Commentator: Michael B. Abramowicz: Patents as a way to encourage private coordination around inventive products; Kieff argues that b/c these areas of law encourage contracting, they should be and mostly are private law. To the extent we move toward public law end, that can threaten the coordination function of law and thus threaten commercialization. There’s lots of ways to think about what public/private law means. Kieff thinks of private law as mostly involving interpretations of documents written by private parties; public law is more interpretations of statutes.  He sees patent law as primarily private.  Tend to think of them as more public than he does. 

 

What would patent law look like if it were more private?  Sichelman’s commercialization system w/relatively little discretion? Maybe patent should be more of a registration system, where we rely on litigation rather than examination.  Fee-shifting to reduce abuse.  Now: private parties draft patents, but that’s heavily constrained by the law. In the end, there’s a fair degree of gov’t discretion at PTO and in courts.

 

Mosseff: Samsung v. Apple: parties went through the process, relied on the experts; then they went up to the President and got a different result through lobbying. 

 

Kieff: Yes, sensitive to that; that was explicitly not appellate review, but political.

 

R. Polk Wagner, “The Private Design of the Patent Law”: Patent law can be understood as private law in its commitment to fostering private interactions. We want to promote certain kinds of activity/generation of certain information. The value of calling that a patent is that it allows private actors to build on that/transact around it/understand it in a useful way. If all we wanted was incentives/information, you could do that a lot of different ways—prizes, direct gov’t regulation—and we do, but we have this thing called a patent, whose very idea is classically private. 

 

Other thing that’s important is how much the patent system seems to be designed to generate information that is intended to be shared. The patent prosecution process is structured to have you record who you worked with, what you consulted, etc.  A lot of what goes on in prosecution directly affects scope and validity of patent as well as its future uses, so it’s a private process as well.  Inventorship/ownership rules are also interesting from a private law perspective though they seem regulatory/have clear policy goals.  Contribute to an invention = inventor; seems non-malleable, except that the definition of the invention is very malleable.  What is and what isn’t defined as prior art is a set of rules clearly designed to foster the way people interact around innovation.  Determines whether you research or create your own; how much you have to search and where.  Determines what researchers will publish or not, where you publish, who you talk to—private behaviors shaped, though not directed, by patent rules.

 

Finally, invalidity as a defense.  Raises the stakes of litigation; entire prosecution process can be redone, which interacts w/ forcing people to behave themselves in the prosecution process & take consistent positions in the later infringement proceeding. Operates independently of defendant culpability, which is an interesting feature.  You can infringe w/o liability!

 

These features might not seem private in nature but they can be seen as such. Big question: now what? We don’t know what we’re optimizing so we have the same debates over & again. Can we use the lens of private law to get us out of some of these debates that just go straight to policy?

 

Commentator: Kali Murray: Patent as having the ability to disrupt, undermine various social relationships, just as property law can disrupt in real/personal property—disruption of the commons and use rights there.  19^th C.: Populists hated patents, not b/c they disrupted market relationships but b/c they disrupted social relationships in specific communities. Use rights over farming implements, for example.  Private law was used to structure a critique of patents too.  Now, state AGs are once again getting involved in patent laws b/c patent laws are again disrupting social relationships we think are important.  Not necessarily about inventor’s relationship to employment contract or licensing, but about how patent itself can disrupt a social world. This helps us see how private law is/can be about public debates linked to governance.

 

Standing for third parties’ declaratory judgments: if patents harm parties’ relationships, such as researchers who are hampered in their research, she wants to provide standing to them.  If patent has in its goals and aims an attention to private relationships, then the argument for standing is stronger.

 

Sichelman: Lots of public law, like securities, functions to encourage private interactions.  So the definition of private law needs to be different. Compare: You petition the state for the invention; you could treat that like criminal law, where the DA brings an action on behalf of the victim.  Torts is private parties; criminal law is public law.  So there needs to be more specificity in what constitutes private law.

 

Wagner: I am conceiving the design of the patent system as involving private enforcement. If state were enforcing, it’d be different, and the doctrines wouldn’t necessarily be the same. The prosecution process as information-forcing mechanism: if it was just a version of criminal law, you wouldn’t have that set of rules, or they wouldn’t have the teeth that they do b/c people would not enforce themselves. Private parties now have to use that info to make critical decisions on a day to day basis.  As long as it’s private enforcement and not state, all of these doctrines are linked to private relationships, different than pure public law. But part of this is that we don’t exactly know the scope of private law or even if that definition ultimately matters much.

Private Law & IP, Licensing II

Session 4: Licensing II

Moderator: David J. Kappos

 

Karen Sandrik, “Empowering Inventors”: Reformers must understand the law they are planning to reform before trying to reform it. Stephen Smith, Contract Theory.  Shiffrin, Divergence of Contract & Promise: two sets of norms—legal and moral. Shiffrin says you are the author of your own story and the law should accommodate this. Kar: broad range of human needs can work together: efficiency, fairness, trust, reliance, harmony, etc. R&D collaboration partnerships—innovation in the shadow of the law.

 

Normal pharma contract: Eli Lilly v. Emisphere Tech: Eli Lilly wants to help them develop it; very complex agreement. Very clear that the tech now and after collaboration would belong to Emisphere, even after commercialization, and that Eli Lilly shouldn’t work in their own lab on it.  Other aspects of the agreement were loose/informal, but the court looked at this and saw Eli Lilly as having cut out Emisphere in commercializing it.  Emisphere learns after the fact after both walked away, as the contract allowed, that Eli Lilly had a patent in the area Emisphere had spent years developing. Emisphere sues for breach of contract/return of patent.

 

A gap in morality and law may be corrosive to our institutions.  Kimble v. Marvel: a patent attorney who comes up w/shooting web toy.  Court didn’t enforce clear intention of the parties for licensee to pay for its continued use of the invention post-patent expiration.  We should treat promises the same or we get conflicting results.  Court isn’t transparent about why there’s no enforcement.  Although it’s an outdated rule, that’s not the key reason—contract law would have handled it differently.  Promise should be enforced unless there’s clear harm to the public.  Promissory obligation should have more weight; otherwise there’s corrosive effect on R&D, which often starts out w/ simple agreement & grows into multilayered license.

 

Where not to enforce: Harry Steenbock comes up w/ groundbreaking tech that will eradicate rickets. Doesn’t want to take out patents; he’s a researcher, but he’s persuaded to apply & gets several patents covering his inventions. He wanted to get patents in order to avoid patent pirates that would use patents to restrict access.  He also wanted to control the quality of the product, including down to the taste of the food.  You had to come to his lab to learn his technique.  At first it worked.  Empowered by contract law to let others use his tech with a promise to maintain quality.  Over time: Access to his tech was blocked; prices got too high (even with high quality, he wouldn’t release it); other licensing practices looked bad.  Patents were eventually invalidated on antitrust grounds. We can learn from contract: contract handles this well, and patent doesn’t. Public policy defense would be a way for licensees to say they have a right not to uphold their promises.

 

Commentator: Oren Bracha: Kimble was a case of refusing to overrule prior precedent even if it doesn’t make any sense.  We can keep the rule saying certain promises won’t be enforced b/c it’s easily evaded.  That’s a bit unfair, but it’s sort of what the Court says.  Sandrik says that’s a terrible reason.  What does that have to do with the relationship of contract law to the norms of promise-keeping?  It makes the rationale nontransparent/incoherent, so a moral person who wants to assess this particular norm is left helpless.  Beyond that, there’s a more fundamental problem: the parties agreed/promised.  Strong separation between public policy, whether efficiency or something else, and contract law, which is the realm of keeping promises.

 

As to the first argument: it’s limited to those specific circumstances of Kimble: Court bases decision on stare decisis, not relevant elsewhere.  But exactly under the Shiffrin framework, there might be good justification for divergence b/t norms of promise keeping and contract: Shiffrin says divergence is ok where there are distinctively legal normative arguments for the divergence.  And stare decisis is distinctively legal.

 

Assume that Kimble has some justification in patent policy (though that’s not the majority).  Still conflicts w/ keeping promises norm. What exactly is wrong with a general structure that says, even within contract law, this norm of keeping promises is overridden by other considerations, including public policy.  Rather than building contract law on promise keeping; it’s saying that promise-keeping is a consideration w/in contract law, as well as others.

 

Kappos: Example of other cases where contract would work well?

 

Sandrik: other patent licensing cases where there are agreements to assign, involving universities.  If you don’t say “I grant you” and say “I will grant” we don’t enforce the promise.  We create this weird rigid formal structure that doesn’t work, and contract law would handle it if you clearly anticipated an assignment.  Four corners/intent are contract principles that would be useful.  IP licensing has weird doctrines, leads to wordsmithing/routes around special rules. Contract = if the parties agree, absent public policy issues, then that’s enough.  Exceptions include public health; enforcing a statute (antitrust); etc.

 

Bracha: Contract law has formalities, with well-known purposes. We can debate what formalities ought to be required, and innovation policy can bear on which they should be.

 

Scott Kieff: Kimble/Brulotte/Quickpoint: the language of the SCt speaks about speaking clearly: if you’re straightforward, and you’re contracting over the option—patent may exist, may be valid, may never be issued, may expire—if you price each state differently, at least the majority in Aronson seems to say such a commercial contract between sophisticated parties would be complete and enforceable. Maybe it’s about protecting smaller entities (even though Marvel wins in Kimble) and clear contracting.

 

Sandrik:  Kimble seems to be more about Roe v. Wade. Contract in Kimble seems to be more about trade secret/something else than the patent, which they sold.  She’s ok with formalities; Quanta was just a poorly drafted contract, and Intel tried to get what it didn’t get with contract law. 

 

Jacques de Werra, “Two Challenges of Global Intellectual Property Licensing at the Interface between Contract and Property”: Non-US focus.  Atomization/fragmentation due to different rules.  Paper explores how to minimize fragmentation.  Freedom of contract may create tensions with local public policies.  Issue of standing is beyond the power of contracting parties in US.  But still worth exploring role of freedom of contract.

 

Who can sue for patent infringement? Exclusive licensee? Parties should select rather than local courts.  Is the right to sublicense relevant?  Yes, but should be decided under local law.  Can we have a uniform solution?  Current rules split between China, Japan, Europe.  IP asset purchases: allow licensor termination because licensor sold to another?  One way would be to invoke the concept of a third-party beneficiary, including implied obligation of licensor to tolerate former licensee.  Difficulty may arise b/c of confidentiality clauses.  Content can’t be disclosed to third parties, who might still be told they’re bound.  Local registries for licenses: notice to third parties? In many cases the license itself isn’t recorded, just a one page document—doesn’t really make sense, because third party is formally notified about existence of license but has no idea of the content.

 

Commentator: Bruce Boyden: Even if countries agree that exclusive licensees have standing to sue, there are still issues with who counts as an exclusive licensee.  How far down the line can we realistically go and get int’l agreement?  On persistence of license post-sale—significant policy differences exist.  May be unfair to licensee who reasonably expected a longer agreement if new owner can terminate; may also be unfair to new owner if it didn’t know what the terms of the license were before it bought.  So this is not an easy question.

 

Single transaction can mutate into different forms depending on where executed—arises from analogy to real property; IP tries to make intangible rights more thing-like by giving rights to exclude that in the real world might be subject to physical exclusion.  Here, might be able to make them more thing-like by giving more legal force to equally intangible agreements: IP rights as the wavicles of law, with property and contract like elements. There’s no transfer of possession that occurs as a result of an exclusive license—the buyer starts doing something and the seller stops.  With physical property, you’re only subject to one state’s law at any given time, but IP object seems to be present simultaneously everywhere the IP owner has rights.  Weird to say that those dimensions can vary from place to place simultaneously.  Contract law handles that particular problem better than standard property law, at least to the parties’ expectations ex ante. Maybe there’s not one IP right but a set of national IP rights under each nation’s law, in a way that physical objects don’t divide.

 

Kappos: China, India, Korea putting into place requirements for how you can license your US patents if you want to do business there. Gov’ts reaching into contract regime and not allowing you to contract around the baseline they set.

 

A: this is a matter of state resistance; not easy to overcome. We sometimes focus too much on hard law int’l agreements. Soft law may be helpful.  WIPO recommendations on TM licenses, where you can see definitions of exclusive license etc.  IP law will have to be treated locally, subject to conflict of laws; one way to avoid that would be to try to find a unanimously recognized ability to pick one set of laws. 

Private Law and IP: Licensing I

Session 3: Licensing I

Moderator: Yonathan Arbel

Jonathan M. Barnett, “Why is Everyone Afraid of IP Licensing?”: Conventional view—be wary of encroachment on public domain from licensing transactions.  Medley of limitations lay minefield for construction of transactions w/minimum legal risk.  Preemption, misuse, naked licensing/assignments in gross in TM; first sale, exhaustions. Legal scholarship thinks these limits are good and courts should be more vigorous about enforcing them. IP markets haven’t agreed, nor have lower courts until recently—attenuated or abolished by courts.  1976 Copyright Act abolished the doctrine of indivisibility. 1988: Congress amended Patent Act to say that some misuse claims needed a showing of market power.  Exhaustion/first sale commonly detoured around by recharacterizing sale as a license.  Antitrust has treated non-price-vertical restraints under rule of reason, including IP licenses; now includes price restraints.  Freely divisible and tradable: a core element of every robust content and tech market.  Lawyers have mostly figured out ways to detour around these limits.

 

But out of 6 license-related decisions since 2006, 1 was split, Monsanto favored patentee, but 4 decisions strengthened these limits, even specifically rejecting suggestion to reconcile IP law with antitrust’s rule of reason.  Thesis: both recent decisions and dominant legal scholarship misappreciate/underappreciate critical role played by licensing in content and tech markets and that function is predominantly efficient. Licensing is critical as an enabler of commercial transactions that would otherwise be infeasible, given risks of expropriation from unrelated third parties.  IP scholarship in general focuses on incentives to upstream innovator, but real world markets only generate value by embedding that innovation in a product or service for the end user, and that requires a multitude of costly commercialization steps that require expertise, almost always carried out by actors who care only about delivering value to shareholders, not the things that matter to artists and scientists.

 

Three main categories of efficiency gains through licensing. Thesis of the paper: secure IP rights + secure licensing deliver these sources of value.  Efficient supply chains; efficient risk diversification; efficient fractionalization.  Most important: supply chains.  Traditional story of using license to encroach on public domain always assumes that the licensor has market power, dictating prices and nonprice terms to market, but that’s the exceptional case, not the typical case. Most patents and © don’t have value.  Even a powerful standard-holder is often subject to competition that exists or could be introduced; the history of IT markets shows that dominant standard-holder often gives away at zero or below market royalties in order to grow the market/sell related services.  Antitrust would require market power to even begin thinking about liability.  Can’t presume market power in a patent claim; IP should do the same.

 

Next step: revisit these limitations and ask the added value of an IP-law specific limit on this practice given that antitrust law already regulates it?

 

Licensing transactions can be evaluated: (1) is it one-way or reciprocal exchange of knowledge? (2) Is it horizontal or vertical?  Anticompetitive risks are higher in horizontal.  Any tech/content market, to extract value from innovation, has to go through different levels of the supply chain.  Classic decision: make or buy.  You will choose the cheaper one.  But when you choose buy, you have expropriation risks identified by Arrow’s information paradox. License + IP right is modularization, but must be combined with contract that allows you, not necessarily to expand the grant you got, but to fine-tune the relationship in customized way to regulate info flow between third parties who otherwise lack reliable instrument to do that. Combination of secure IP + secure licensing is good because it maximizes the total universe of transactions because a priori we have no idea what the efficient supply structure is in any given market.  Licensor has that info and will adjust that structure as long as it’s subject to competition (or even not; it will do so to pocket more gains for itself).

 

Semiconductor industry: 25 years ago they’d always make; 25-30% of manufacturers today are fabless.  How did they enter?  Didn’t get $1 billion to set up new fab, but stayed in design market and monetized by licensing—dependent on the licensing structure, not encroaching on the public domain. Licensing obliterates an entry barrier.

 

Risk diversification: tech markets & content markets have extreme skew problems. Most movies are losers; hits cover the losers.  How can you spread that risk? Create a portfolio, whether internal (studio system) or external.  Biotech market now looks like Hollywood: risk spread by external portfolio; innovators shoulder the risk and contract w/large incumbents who have scale to carry out the rest of the supply chain.

 

Fractionalization: Combine divisibility with full alienability: you can slice and dice among multiple users; field of use restrictions; time delay.  Lower entry barriers into industry by allowing IP owner to sell off among universe of licensees who can fund distribution costs up front (movies).  Field of use restrictions/windows: this is just price discrimination, whose effects are ambiguous in theory but are efficient here, eliminating deadweight loss.

 

Commentator: Brett Frischmann: There’s some description here; factual claims may be in need of empirical support.  How are you defining innovation?  Hard to evaluate assertions; also doesn’t think that traditional scholarship ignores claims about the benefits of licensing.  Us/them, black/white framing may not be helpful in discourse, even as to private law/public law.

 

What’s the theory?  Is it refutable?  Can it be evaluated/tested and does it have boundaries?  Is it a normative claim?  Yes—suggests that we should adopt a new view supportive of IP licensing. But most scholars understand that IP enables licensing in various segments of the supply chain. As a result of framing, the if/then statements in the paper collapse.  If we understood the facts, then we won’t necessarily adopt this new view of licensing: I need more proof.  Different baselines might give different answers. IP isn’t fundamentally about transactional efficiency or market-based metrics of efficiency—that’s important, but other things are important too. Even understanding the facts Barnett offers, judges might disagree w/the baseline.

 

Even w/the same baseline, we might disagree—not clear that these examples generalize.  Hollywood, big pharma—but does that reach a wide variety of other industries, markets, and nonmarkets that shape/rely on IP?  Not clear that examples prove the point about efficiency—do we believe that Hollywood and big pharma are efficient structures w/which to produce movies. Laughed when I read “the market evidently prefers hub & spoke.”  Did you interview the market?  The idea that the market speaks about what it prefers as if it’s not shaped by the law is confusing to him.

 

No discussion of spillovers: how can you talk about supply chains w/o spillovers?  Even w/efficiency—depends on free flow of spillovers; there’s lots of empirical/theoretical work on this.  IP is a little bit about internalizing externalities, but also about promoting participation in activities. Some of the limits on licensing freedom might be welfare-enhancing and even efficient if they promote spillovers.

 

Barnett: I think the literature does focus on the expansion of the monopoly by licensors—SCt decisions do that—I want to shift the focus.  Distributive effects: price discrimination; semiconductors—when you don’t allow free licensing choice you limit transaction structures, forcing them to take place in house which can raise capital costs/favor incumbents.  On the market’s preference: we’re agnostic about market structures, and as long as there’s free entry, whatever structures we observe are efficient, so I don’t need to interview Sony or “the market.”

 

Arbel: Market power (lack thereof) is key to your analysis. Circularity: if you allow that, won’t market power increase/the empirical world may change.  Comparative institutionalism: compare other jurisdictions, where there are different licensing rules; could show inefficiencies in those industries perhaps.  Do you see a problem of the anticommons, fragmentation? 

 

RT: In Barnett’s model, what are TMs for? What do they incentivize the creation of, because the model of efficiency offered in the paper depends on incentive structures and not on consumer understanding? More generally, why class patent, TM, and © together here with antitrust law (and notable that most papers here don’t cover TM, which suggests some uncertainty about the overlap between private and public law here—larger question for the group, is TM already private law so we aren’t worrying about it here (I have thoughts about why that shouldn’t be true)?), and what about trade secret, misappropriation, or advertising law? Relatedly: Different kinds of wrongs to consumers and competitors exist—antitrust law doesn’t recognize most false advertising as actionable, or most product liability (I think), but that doesn’t mean those torts shouldn’t exist.

 

John Golden: You argue we shouldn’t do more than antitrust, but do antitrust scholars disagree? Herbert Hovenkamp wants to shift the problems of regulation from antitrust to IP b/c he thinks antitrust isn’t designed well to deal with the problems of IP.

 

Van Houweling: paper sets up troubling mismatch b/t critiques of licensing and benefits of licensing.  That’s a problem if there’s a complete overlap. But we aren’t skeptical of all these licensing practices; the skepticism isn’t that thoroughgoing, but covers overreaching rather than all licensing. Would be more convincing with some examples of beneficial licenses that the critics undermine.

 

Barnett: Mismatch is worth addressing, yes.  Division of labor b/t antitrust and IP—do they have the same normative objectives, maybe we shouldn’t have overlap, but otherwise it might be ok. Major antitrust case of the last 3 decades is Microsoft, all about IP.  Market power is always important b/c you’re taking terms from the market rather than dictating terms.

 

Greg R. Vetter, “Opportunistic FOSS Development Pathways”: Modular, in H. Smith’s sense, not technical sense.  Software licenses deploy permissions against a set of rights—©, trade secret, patent, but mostly ©.  Whatever license you have targets some type of opportunism. License might work with or against the rights basis.  FOSS/GPL works against the rights of © in that it uses © to enable copying and to defeat trade secrecy in the source code.  One person’s opportunism is another person’s business model. Some modes of opportunism are illegal. Licenses operate as quasi public instruments.

 

Forking is allowed; GPL is hard to get out of—locks usable value of software to the license b/c there are so many contributors and it would be hard to get them all to agree to a different licensing scheme.  Property as a shortcut over many contracts that would otherwise have to take place.  Small startup can shift to permissive license, but hard to shift back; could start a permissive fork.

 

Commentator: Christina Mulligan: Are incompatible licenses a problem of property at all?  Potentially separate issue—could be a problem of modularity or a problem of anticommons. The worry is that public licenses create a bad interface b/t pieces of property blocking us from bringing 2 pieces of software together.  The public license didn’t cause the problem; companies can license a work under a public license such as the GPL, and then if there’s some other reason they might want another deal, can license it to specific people in a proprietary/specific way.  Conceivably, you could imagine a license that tried to be an exclusive GPL/public license, but she doesn’t think any license purports to do this.  Would create the same problem as the fee tail, where no combination of people could make a separate deal; our commitments make us not want have attempts to control property like that work.  The software: can conceptualize it as the software as it currently exists and as its possible derivatives, but she thinks that’s wrong.  The property right can include the work and the right to make derivative works, but not the derivative works that don’t yet exist.  Breeding racehorses: you want to blend them together—we wouldn’t about whether it’s A or B; we can see it’s a third thing and the owners can agree about how to share rights in the new thing.  Pre-commiting to waiving your right to exclude in a certain circumstances doesn’t redraw the boundaries of property; it’s not a problem of defining the property interest correctly b/c you can always make side deals to license, which means that the fundamental problem is one of the anticommons.

 

Vetter: one point to remember is that GPL uses © to defeat trade secrecy—this makes me think there’s more instability here than there otherwise might be.

 

Smith: One way of reconciling this idea of anticommons v. modularity: maybe here your identification of the difficulty of modularity arises not up front but after the fact.  You have an intersection b/t the running covenants problem w/confusion (you have grain, I have grain, they intermingle) or conceivably accession (if you don’t have a deal and there’s a new calf, it belongs to the owner of the mother)—the reason we don’t worry about that in property is that even ex post we can modularize really easily—to the mother; divide pro rata; punish the person who caused the problem. Not as difficult as intertwined software with conflicting licenses.  There is an anticommons aspect but it’s a lack of modularity, b/c even after the fact we can’t draw lines about contributions very easily.

 

Michael Abramowicz: Biggest concern justifying viral license was risk of proprietary fork that would add so much it would be hard to avoid; GPL is attempt to deal with that risk.

 

Vetter: thought that forking was usually a result of disagreement, not a purposeful deviation.

Private Law & IP: Institutions

Session 2: Institutions I

Moderator: Patrick R. Goold

 

Wendy J. Gordon, “Proximate Cause in Torts becomes Proximate Use in Copyright”: Common law has useful intuitions—tort for copyright—though I don’t pretend to know whether tort is optimal.  Both tort and © are about internalizing externalities; creating incentives for people who are similarly situated; correspond to intuitively common-sense moral intuitions about desert and merit—negligent actor deserves to pay, meritorious author deserves to be paid.  Tort law focuses on defendants and internalizing negative externalities; © focuses on plaintiffs and internalizing positive externalities—make © owners work harder by giving them more $ and make negligent drivers drive better by requiring them to pay. 

 

Definition of employer/employee—SCt seems to follow my lead by looking at the Restatement of Agency for vicarious liability. But that’s crazy b/c they forgot the reversal. Vicarious liability is about spreading—making the person with least incentive/low marginal utility of money pay.  Copyright is all about credit/control—we want them to have the right if they’re sensitive to incentives, but that’s most likely the actual person—concentration/control is more beneficial than decentralized control.

 

Proximate cause in tort is mostly about whether the defendant could have foreseen. Proximate use in © is about what the plaintiff could have foreseen at the time of creation.  Shyam Balganesh and Christina Bohannon have written on this, but the concept goes beyond the scope of foreseeability, which alone isn’t as useful as it is in tort, b/c © isn’t just a post-accident deal but an ex ante creation of rights.  Larger project: How we figure out more easily delineated lines than vague foreseeability.

 

© and tort use causation.  Patent law doesn’t require cause in fact; neither does TM law.  If interaction w/P’s © work made a difference to what D did, that’s cause in fact.  Restatement of Torts: no proximate cause where liability wouldn’t make a difference in creation of risk/harm. Proximate cause is a question of fit: does liability serve the purposes of the imposition of the duty?  Negligence: you negligently place a bookbag in the hall.  Mr. Smith trips but is unharmed; however he is delayed by the stumble and therefore steps outside just as a gargoyle detaches from the building and falls on him.  No proximate cause despite negligence.

 

Analogies: transformative fair use and functionality.  It’s fair use to make copies for judicial use, for example, b/c of the lack of connection b/t the facts at hand (why there was copying) and the purpose of the law.  Functionality/interoperability: if someone is copying only to make two things fit together, the only need is for them to be the same; they’re not copying for the expression—like getting a key made for a guest staying at your house.

 

Commentator: Shyamkrishna Balganesh: Fit: © would benefit from developing a structure to see if the goals of © are being furthered by any particular instance—Ziporsky/Goldberg in tort; antitrust (substantive standing/antitrust injury)—whether the harm is of the type we want to impose liability for given the underyling purposes of the institution.  Needs more determinative logic to be a real constraint.  Gordon assumes normative logic comes from incentives. But given the way incentives have become understood/handwaving in jurisprudence, this isn’t a real constraint.  Rule v. act utilitarianism: for rule utilitarianism, we wouldn’t use an individual instance but systemically. We all know the effect of that: everything in some ways contributes to incentives; merge with expectations; retroactive extensions come to be seen as incentivizing. But for act utilitarianism, we need better specification of the nature of the incentive—who is to calibrate it? Is it market based?  One of the enduring problems of fit in ©. 

 

Proximate cause: one of the big debates over whether proximate cause needs to continue in the Restatement and needs to go into the scope of risk/the “duty wars” is how we think about specific v. general deterrence. Is © a general incentive structure for future authors, or this particular case?  Proximate cause has its own set of problems/debates that should be addressed squarely if incorporated into ©.

 

Gordon appears to allow both instrumental and deontological considerations into the question of fit.  If one has this plural accommodating conception, does it operate as a constraint at all? Drassinower says incentive-based system can’t explain why originality is important; need autonomy-based conception. But what gets excluded if we use autonomy? Doesn’t it destabilize the very conception of fit?

 

Bigger question: What is the overarching justification for introducing a fit requirement?  It’s clear that © is instrumental, meant to serve a particular purpose.  But where does that come from? Is it prior to ©, Constitution specifying a purpose, or is it to be deductively derived from © itself? Analogy to common law: if we identify purposive nature of common law, we derive it from the workings of the institution, not a priori.  Given that © is statutory, we have a slightly different approach: but where then is the basis for the fit criterion?

 

Liability for benefit: We might fruitfully analogize © to liability for unjust enrichment.  His question: what exactly is the benefit?  Is it the trigger of liability or the basis of recovery?  Analytic distinction: bifurcation b/t unjust and wrongful enrichment. Unjust enrichment doesn’t require a wrong to trigger recovery: recovery of a mistaken payment to the wrong person.  Wrongful enrichment recognizes a wrong caused by a harm, and the profits accompanying the harm ought to be disgorged—the basis of the disgorgement is not distributive, as in unjust enrichment; it’s triggered by the wrong.

 

In ©: you can’t altogether assume away the problem.  © affirmatively recognizes the wrongness to trigger recovery. It’s not just “was there copying?” but “is the copying there was normatively wrongful?” (whether that means market-based justification or not).  A positive externality acquired through a wrongful act.  Gordon recognizes that volitional conduct is required.

 

Gordon: [Edited to improve match with what Gordon said/correct my misunderstanding] In the distinction between restitution arising out of ‘non-wrongful’ versus wrongful’ enrichment, the ‘wrongfulness’ cases don’t much concern me.   Those cases are easy: if someone trespasses, even 100 feet underground, it’s pretty easy to see why a court might give the landowner a share of any profit the trespasser earned.*  And the benefit is not the basis for liability.  Instead, I’m interested in exploring circumstances under which a ‘non-wrongful’ reaping of benefit is urged to provide the basis for liability. Copying in itself isn’t wrongful.  Among the ‘non-wrongful’ restitution cases, there’s a subset that pose a particular challenge to me, namely, the ‘volunteer’ cases where someone, for instance, paints or repairs the wrong house because of a mistake, and sues on the basis that the recipient got a benefit without paying.

The volunteer cases are interesting because they seem to challenge my argument that the common law is concerned with internalizing benefits -- the challenge arises because the common law rule tells the house painter she is not entitled to sue for the benefits she has conferred. This seems to contrast with the treatment copyright gives authors.  An author is a kind of volunteer, yet authors are empowered to sue copiers regardless of whether or not the copiers have agreed to a contract.

  I argue that the contrast between the rules doesn't show that the common law rejects the internalization of benefits.  Rather the same consideration operates in both rules:   a common-law preference for achieving internalization through contracting, in markets, as opposed to requiring internalization after the fact by judicial fiat.   

Courts generally adopt rules that encourage markets to form.  For ordinary services, markets will be discouraged if service-providers can routinely get paid without contracts, while markets will be encouraged by an opposite rule that routinely makes contracts essential.  So the latter is the baseline rule adopted: Volunteers need contracts if they wish payment. That rule works well for services because as a practical matter, service-providers have natural leverage to obtain contractual agreements.  Most customers can’t get their houses painted without promising payment.  Authors don’t have this leverage.  It’s physically quite easy for a publisher or a customer to make copies of most authorial works without consulting anyone.   

Copyright law provides a substitute for physical leverage; without it, potential publishers or customers might withhold payment from potential authors in the hope of free-riding on an authorial work which (they hope) won’t need their contribution in order to be created and circulated.  A fear of such scenarios leads to a concern that, in a world without copyright, strategic behavior by potential beneficiaries might make it quite difficult for authors to find sufficient promises of payment, and that as a result the public might have fewer works created than it would in fact prefer.  The copyright rule requiring payment for copying allows the potential beneficiaries and potential benefactors to coordinate (through contract) what is wanted and what can be supplied, avoiding the frustration of demand unfulfilled because unexpressed. 

The no-payment rule applied to volunteers who provide services is interesting not because it’s a perfect analogy to copyright. To the contrary, it’s interesting as ‘the exception that tests the rule.’ Comparing authors with ordinary volunteers reveals -- I think unsurprisingly -- -that the operative common-law rule isn’t “internalize by whatever means possible,” but rather, “internalize by market if you can, and turn to lawsuits only to the extent that unassisted markets aren’t likely to do the job.”  For non-excludable goods like works of authorship, internalization via contracts and markets might not occur unless the law gives authors (a particular subset of volunteer benefactors) a right to sue for benefits conferred. 

Originality:  My concepts of authorship or originality aren't mystical; I don’t think you need autonomy justifications for copyright law that go beyond the ordinary.  Rather, original authorship marks out an area where imposing liability for certain non-consensual uses of ‘privately-produced public goods’ turned out, at least arguably, to be socially tolerable and limit-able – an area where prohibiting a particular form of free-riding seemed (at least sometimes) to be capable of resisting a slide into a general rule against free-riding.  

A general rule against free-riding would, of course, dangerously impair community.  Originality functions as a concept useful to mark the territory where a historical experiment in ‘internalizing positive externalities’ by non-market methods arguably had some success.

 

Van Houweling: Why not trespass, with its lack of fit requirement (though there are issues with accidental trespass)?

 

Christopher M. Newman, “Vested Use-Privileges in Property and Copyright”: How do I know what a servitude is?  You can’t use your property to do X because of my right.  That could be called tort law—some one else asserts that you harm me w/r/t my other property interests, even though you’re using your own property.  Servitude seems different; a right to control what is in other respects your property w/o having to justify it w/r/t some other harm.  Servitude instead requires some preexisting link b/t me and that thing that gives me the right to assert arbitrary control. Public regulation doesn’t require the tort law fit, but it’s contested—to what extent should we regard public regulation of what house I can build on my property as appropriate? Does that protect others from injury? Does it further collective good?  Takings issues?

 

So, does it make sense to regard copyright as servitude on the physical chattel?  Or is it a protected interest in the copyright that is protected by tort-like considerations, which brings in issues of fit?

 

Commentator: Timothy R. Holbrook: The book is mixed property, both rights at once—hard to apply the real property matrix to that.  Maybe what the book owner has is an easement against the © owner: a right to use for certain reasons, but the uses are limited—a more compelling story for exhaustion doctrine.  Public domain: not re-appropriable.

 

Balganesh: debates over quasi-property have this same character of relationship v. object.  The right of sepulchre is another variety: what rights over unauthorized interference w/corpse do relatives have?  Recognizing emotional harm w/o property rights.

 

Van Houweling: We can see touch and concern as requiring some connection to the common good for servitudes; there might be a similar kind of fit requirement there. And further there might be more justification for a fit requirement in ©--we’re not as agnostic about the purposes property serves in ©; we have a constitutional purpose, and that means we can and should have a fit requirement.  Also there are difficulties of asset definition that help justify a fit requirement.

 

Cohen: the fact that you get very different results when you analogize to servitudes v. public trust v. something else is suggestive of Cohen’s family relationship argument: these are useful concepts for finding relationships between types of property and doctrines, but very little follows from the family resemblance as such. When none of the analogies are on all fours, you can cycle madly or you can broaden out.

 

Newman: or you can use it to navigate/extrapolate—what are likely to be useful answers/policies to keep in mind when answering a question.