IPSC: Closing Plenary Session

The Nature of Sequential Innovation

Christopher Sprigman, Christopher Buccafusco & Stefan Bechtold

How to pick between innovating or borrowing.  “Cinderella Man” is harder to develop than another movie about Rocky.  Risky, as is question about whether to develop another erectile dysfunction drug.  Differently risky.  In our framework, innovation is not always optimal, either privately or socially. Innovation doesn’t produce novelty by necessary; borrowing isn’t necessarily a change from stasis. 

Literature on innovation and the firm; literature on IP and sequential creativity.  There’s a rich literature on innovative firms, but what about borrowing firms?  Factors that influence sequential innovation. Literature has looked at legal factors, esp. IP law.  We want to broaden that focus to consider not just legal factors but others—market, behavioral, tech/artistic.

IP laws affect the scope of available innovation space.  For example, blocking patents allow more room for sequential innovation than ©’s derivative works rights.  But also: administrative law, tort law, tax law—differentially treats innovation v. borrowing.  Nonlegal factors: maturity of the field.  Borrowing expands until a certain point and then leapfrog innovations redefine/expand the innovation space.  In smartphone, innovation is highly dependent on borrowing, as opposed to painting. Tacit knowledge: difficult to convey; can reduce borrowing.  Market factors: consumers’ taste for innovation in a particular field v. borrowing.  Low tolerance for borrowing in paintings; high tolerance for borrowing in pharmaceuticals. Market participant/intermediaries: PROs lead to a lot of borrowing of musical compositions.

Behavioral factors: risk/uncertainty tolerance (innovation has greater risk profile); optimism bias (sanguine about ability to create/invent around); creativity effects (upstream creators may overprice inputs to downstream).  Much more complicated than changing the law to create a clear fix.  Policy levers: if you try to shift pharma from borrowing to innovation, will there be factors in market/tech that push against this or are legal factors from other areas, such as tax, much cheaper way to shift mix of innovation and borrowing in a particular field?

Lemley: innovation often goes along w/having to take a license b/c of patent threats.  How does that affect your space?  The story for innovating v. borrowing assumes that I put in the uncertain, risky work but may get a valuable reward, one part of which is insulation from control by other people. That might be more true in ©, but not true in patent.  May drive people in a curious, ironic way towards borrowing.

Sprigman: in patent, b/c independent invention isn’t a defense, part of risk of innovation is info risk, and that might not be fixed by search. 

Q: overlap in rights?

Sprigman: location/negotiation of lots of rightsholders can be a problem. Smartphones = tons of transaction costs.

Rosenblatt: I could imagine exactly the opposite story—if creators are risk and uncertainty averse, they’re less likely to borrow b/c they don’t know what the law will do (uncertain about legal effects of their actions), so they’ll go away as far as possible. Optimism bias could drive them to think they won’t be sued or that they won’t be found to be infringing.

Buccafusco: there are probabilities on both sides of the equation, so it’s really hard. You can’t be uncertainty averse to both; what matters is relative salience; whether people treat those as losses v. gains, etc.

Q: what about people who just decide not to take either risk?  [People v. firms? One might decide to be an employee, but can a firm decide this?]

Buccafusco: theory of the firm literature does assume that you plan to act. What decisions will you make and how?  You’re right that you could ask why people decide to act in the market at all, but we are taking a different temporal slice.

Copyright and Distributive Justice

Justin Hughes & Robert Merges

Distributive justice: where does the money go?  Claims in IP scholarship are that copyright has mostly enriched big corporations.  Copyright could improve distribution of wealth in terms of money and property. © offers significant benefits of wealth to individuals at all levels, which should not be overlooked. © is particularly important in allowing African-Americans to convert labor and talent into money and wealth.  Rawls: arguably the most important part of his framework is the difference principle. Inequalities are permissible if they have the greatest benefit to the least advantaged.  But Rawls’ actual difference principle isn’t just concerned w/the bottom—should be concerned with society, from the bottom up.  It’s fine to improve the middle and the top as long as you don’t worsen conditions for those at the bottom.

© improves wealth distribution to middle class. Peter DiCola’s money for music study: pro musicians derive 10% of income on average from ©; we think that undercounts what’s happening.  Collecting societies distribute enormous amounts of money to creative professionals.  Five years, two PROs collecting only for compositions only for public performance distributed $4.1 billion to individuals. Also should include amounts distributed under Hollywood’s collective bargaining system.

Procedural protections for individual authors to make their rights sticky.  The most powerful but glorious and beautiful mystery—the statutory termination of transfer right.  If we wanted to strengthen © as a distributive tool for creative professionals, we’d look more at these bells and whistles.

Second principle: inequalities are permissible only if attached to offices/positions open to all under conditions of equal opportunity. True meritocracy. American society has failed to provide equal opportunity, and no group has suffered more than African-Americans. But this is a bright spot for © distribution.  ©, warts and all, arguably provides the most robust mechanism for the most disadvantaged group in American society. We say this acknowledging tremendous problems w/actually ensuring that African-Americans receive the full benefits of ©. Fumi Arewa, K.J. Greene, others, have written about this. But their typical diagnosis is not weaker rights but broader or better enforcement. And despite all those problems, list of wealthiest Af-Ams almost all derive from ©-based industries, principally music and broadcasting rights.  In an era when tech seems to be weakening middle class incomes, we should pay att’n to ability for © to protect individuals. 

Does © exacerbate or ameliorate the skewed distribution of wealth in our society? The latter; we should focus on strengthening income from ©.

Q: © can channel individual rewards, but does favor superstar imbalances b/t individuals. Winner-take-all: worse overall?

Merges: long tail distribution issues; very unfair and averages hide the unfairness. But when you look at distribution from BMI/ASCAP, have to compare that to research talking about income of average musicians. 

Dan Burk: If I don’t buy Rawls and instead like Nash, do I have to buy your paper?

Merges: It’s a good way to analyze copyright in a rigorous way. You don’t have to ask if the least well off are rigorously compensated, but you can ask if © contributes to the wellbeing of non-superstars in a meaningful way.  We think it’s even easier to meet that standard.

Buccafusco: you tell a story about a few people, which is odd in a paper about distribution.  There’s no counterfactual showing that distribution would be different in another © world.  But more importantly, your story is about the people at the bottom and middle but your evidence is about people at the top.  Do you have evidence that in making the top better off you’re not making the bottom worse off?

Merges: nor is there any evidence they are worse off.  No reason to believe that © has made them worse off w/o rewarding/compensating them w/ entertainment value.  That’s just our assumption and we’re going with it. [OK then.  It is a condition of Rawlsian justice and therefore of the premise of your paper, but ok.]

Buccafusco: Term of transfer rewards currently wealthy at the expense of the currently poor.  People who are selling rights now = less valuable contracts because they can be terminated if they’re successful, and those people starting out are poor now.

Hughes: most people who know the industry think that’s dumb b/c no one goes into a contract thinking that any record will have value in 29 years. Termination benefits 10,000 songwriters you’ve never heard of and they’re just as important as Bruce Springsteen. [Is that how many terminations there have been?  I’m pretty sure there haven’t been.]

Rosenblatt: is this exclusivity based?  Mix tapes, sampling—a good deal of innovative copying. Worth taking into account.

Merges: Voluntary decisions to waive rights to build market share can be very effective. But once you cross a threshold © is valuable to protect your rights. [I don’t think that was the point, but ok.]

Anupam Chander: Income makes people better off, which is great. The other side is monopoly rents, and those rents are being paid by someone. What’s the distributional effect of the monopoly rents?  You said this was good for the middle class, but your example was 25 people for whom © is very good.  What is happening w/people at the bottom? Are you relying implicitly on violations of © by people at the bottom?

Hughes: We were certain that people would think we were talking about distribution of wealth to Af-Am community as a whole. [Possibly because that’s what distributional discussions usually entail and what Rawls seeks with his first principle, which you discussed at the beginning?  Or possibly because of these sentences from the opening paragraph of the paper: "Is our copyright system basically fair? Does it exacerbate or ameliorate the skewed distribution of wealth in our society? Does it do anything at all for disempowered people, people at the bottom of the socio-economic hierarchy? In this Article we engage these questions."  Stupid readers!] Rawls = equal access to stations and offices. For Af-Am community, access to highest offices of wealth is through ©. We aren’t talking about distribution to other groups or within the Af-Am community. [Not clear what distributive justice has to do with the claims, then; you might be making a claim about openness to talent, but that actually is only one part the overall Rawlsian framework--the way that inequality is justified within a society that has adhered to the minimax principle.]  Access to Madonna isn’t the same thing as access to medicine, anyway.

[There is a plausible narrative here that has appeal: because of lower capital costs of entry, entertainment has been one of the easier ways for some extremely talented African-Americans to make lots of money, whereas other methods of discovering and exploiting talent often require capital—cf. Bill Gates and Steve Jobs’ access to significant social and physical capital, including their ability to trespass and break things, which could have proved lethal to African-American boys.  However, the implication of putting it that way would not seem to be “© should be stronger” but rather “hey, that’s terrible; other means of exercising great talent ought to be equally open to African-Americans too.”  If anything, the relative disparity feeds into a critique that American culture too readily channels African-American talents into entertainment and sports fields; the solution to inequality is not to close off those opportunities, but neither is it to double the number of NFL teams and have the government fund a lot of music purchases, nor to mandate Content ID for all websites.]

IP, Privacy Harms and other Fundamental Values

Jessica Silbey

Misalignment of law with values of creators. Many described liability problems; problems w/trustworthy help such as studio assistants, business managers.  These aren’t IP problems most of the time. Sometimes they’d be fit into IP, but not a good fit. 

Equality, privacy, and distributive justice are the values that creators seek, but typically not a lot of place in our conversations about IP levers, efficiencies, markets, and entitlements.  We need a theory of what Progress is. Not necessarily about wealth aggregation/more stuff.  Some may consider some of the problems to be IP overreach, but that begs the question of what IP is for and what fundamental values ordinary creators want to use IP to protect.

Rough project: equality, privacy, fairer uses, abuses.  Here, focus on privacy.  Five clusters that explain different privacy interests and harms. Goal: understand in broader cultural way.  Constitutional concerns: privacy as condition of spaces & things (houses etc.); bodily privacy; mind and relationships (religion, speech).  Nonconstitutional: info privacy: public disclosure of private facts; misappropriation; false light; intrustion on seclusion.  Three things we care about: independent thought (ability to formulate one’s own ideas); fortifying relationships (bodies and privacy among communities); flourishing culture and science (allows public realm to succeed).

Cases brought by heirs: copyright war over Duchamp chess set.  JD Salinger, Ted Hughes, James Joyce. These cases are really about nostalgia for family relationships. They aren’t literary reputation cases; they’re about family memories trying to preserve them w/o interference of others. Owning memories is futile, though.

Authors and owners enjoining publication of previously unpublished works. Intrusion into seclusion; spatial privacy as well as intellectual privacy. Willa Cather didn’t want anything published after her death—free from constraint of oversight of others.

Limited publication: breach of confidential relations/trust.  Snapchat, FB, email.  Digitally, these limited publications don’t really exist any more. IP claims are tempting to punish a breach of confidentiality.

Fair use cases: recontextualization of works that have already been published.  NYT sued David Shields for thumbnail images in a book criticizing NYT photos; graffit artists objecting to being used as backdrop for ads.  His lawyer: if they didn’t want to work with him, they could fuck themselves and find someone else—he wasn’t interested in licensing.

Last case: suit is brought by subject of work. Copyright suit through assignment. 

Except for unpublished work cases, process/purpose of creation is largely irrelevant in these cases. These are claims about identity and affiliation being inseparable. Privacy claims are bilateral—their contours are always defined by the interests of others.  And so is IP as a balance b/t ownership and access. Privacy requires intrusion; authorship requires public domain.

Most of these cases involve privacy losing; IP claims are much more disputed. If the interests are similar and the claims are similar, culturally and values-wise, they probably should rise and fall in a similar way. 

Payoff: (1) rethink progress; (2) rethink value of rule of law, given blending of different types of claims; if we care about that, we should think about alignment; (3) discursive shift asks us to think about moral narratives; economic claims are moral narratives but so are these. Language wars are policy wars, says George Lakoff.

Linford: privacy claims can be stalking horse for much less plausible claim. Is there a proper way to police against this?  Monge v. Maya.  P wins, suppressing wedding photos.  Argument: Hurts them as celebrities. 

A: that’s an unpublished works case; it’s a strong privacy claim and for copyright. Should be in the control of author/owner, just as intrusion into seclusion is strong interest. My views have also changed about heirs’ restricting access to unpublished (and unarchived) works.

Heymann: Law as communicated by judges v. law as understood on the ground.  What does the feedback look like here in terms of internalizing how the law should be used?

A: trying to figure out recursive nature of law is sociological project. Giddens’ work on structuration has levels of feedback loops. Just beginning to figure out how meaning is shaped in different ways by different voices. Methodologically: what’s the data here?  Anxious about that—need to be clear about where the claims about domestication are coming from.

Q: have we seen anything like this before w/r/t complicated legal framework w/ strong moral narratives among general public and strong distributive justice components, that is, w/tax? Is there an account of tax history that you could draw lessons from?

A: Not so many studies; there are studies of bankruptcy practice. 

What’s the Harm of Trademark Infringement?

Rebecca Tushnet

Have to say something outrageous to justify your hanging around for the very last speaker. I thought about saying that I’d developed a new and coherent justification for trademark dilution, but then I thought that even in the craziness 2016 has brought us that still wasn’t credible.  So instead I will challenge the basic function of trademark and the crucial rule that I learned at my managing partner’s knee: the remedy for trademark infringement is an injunction.

My challenge is both casually empirical and more seriously normative: eBay asks us to rearticulate why the remedy for infringement ought to be an injunction, and it turns out that the reasons for granting injunctions in TM don’t make much sense outside the core purchase substitution situation that so many trademark cases no longer resemble.  And it turns out that when plaintiffs are asked to particularize their harm stories, explaining why this confusion is specifically likely to cause the plaintiff harm, they often aren’t very good at it.

Old perspective, articulated by Jeffrey Sanchez: “The basis for the presumption of irreparable harm in trademark law is the known or proven fact that monetary relief from trademark infringement is ‘inherently “inadequate” and injury is “irreparable.”’”  But by whom is this known and how was it proven?

eBay rejected near-absolute presumptions in favor of a patent owner, or plaintiffs generally, requiring a plaintiff to show irreparable harm to get an injunction. Okay then: What is irreparable harm?  Easy case: the defendant has no money to pay damages. Might be reparable under other circumstances, but not on these particular facts.  Counterfeiting cases may fall into this category.  Medium cases: we’re convinced that there is harm, but we don’t think it will be possible to measure the amount. This is a relatively common justification for irreparability in TM cases, but it has a real weakness: we need to distinguish between lack of certainty about whether there is harm and certainty that there is harm plus uncertainty about its amount, and that’s pretty hard to do with current techniques in TM cases.

How have TM owners traditionally gotten around this problem?  By claiming harm to the intangible value of their goodwill.  Related question: What is goodwill?  TM owners tend to treat it as a word to conjure with. But it faces the same problem as lost sales: if it’s a business asset, it can usually be measured, because accountants and investors like that. If it can be measured, harm to it ought to be measurable, which means it can at least sometimes be cashed out in damages. 

Even if infringement leads to lost customers and not just lost sales, it is possible to calculate the present discounted value of a customer, not just a lost sale.  And of course lost customers are a big if, in many cases—we say that disappointment in an infringing product may turn customers away forever, but as Mark McKenna has painstakingly documented and I’ve also written about, that’s really not likely to be true in most cases.  Strong brands are extremely resistant to change, and we know this even in other TM contexts. My favorite example: courts and the

Trademark Trial and Appeal Board have found that university mascots and names have retained

trademark significance despite uncontrolled use by others for decades and, in one case, for nearly two centuries.  People just have terrible incident memories and usually substitute general impressions to form their opinions about brands, which also leads them to make mistakes about, say, who’s sponsoring the Olympics.  People think about prominent brands when you cue them with the product area pretty much no matter what, which, first, causes noise in confusion determinations, but second and more importantly for my topic, throws doubt on the basic theory of harm from non-counterfeiting infringement: people are walking around confused about the relationships between famous brands and others all the time, and the brands stay famous and profitable.

Often, what might be lost by infringement, instead of “reputation,” is licensing revenue, which we know from patent and copyright cases is usually reparable by damages.

Intermediate conclusion: Goodwill is intangible but not generally unmeasurable outside of TM cases. Perhaps notably, the one intangible harm that the SCt has been really clear is irreparable is suppression of First Amendment rights, which is not an irrelevant consideration in TM cases.

But suppose we accepted that these negative effects on reputation could really occur from bad infringing products.  Would that be irreparable harm under eBay?  Even if we required the plaintiff to prove a quality difference, the risk of harm to any particular trademark owner would still be low. When we wait for evidence of such harm it may fail to appear. At most, a poor quality brand extension makes consumers less likely to be interested in a different, related brand extension in the future. This is a market preclusion argument, not an argument for ongoing harm, and it’s particularly unlikely to reflect an immediate risk to a trademark plaintiff, which is what eBay supposedly looks for.  And the weakness of the reputation argument also threatens another traditional argument in TM, which is that lost control over one’s own reputation is inherently irreparable. That’s just a misperception about risk, or a sub rosa lowering of the standard from likely to theoretically possible.

The paper discusses a few cases that demand more than just cursory statements about goodwill, reputation, and control, and I’m largely in agreement with them. There are still plenty of the traditional cases too, but their rationales are increasingly creaky and come down to “we’ll let the district judge decide there’s irreparable harm because lost control can be the basis of a finding of irreparable harm even if it doesn’t have to be,” which I don’t find very persuasive.  

One interesting example: Uber Promotions, Inc. v. Uber Technologies, Inc. In this case, the well-known national brand Uber Technologies was found to have caused actual confusion with the transportation business of local senior user Uber Promotions in Gainesville, Florida. In finding irreparable harm to Uber Promotions, the court noted Uber Technologies’ extremely controversial and often downright bad reputation. For example, the court pointed out that, as of the time it wrote its opinion, top news stories for “uber florida” included numerous stories about Uber Technologies’ exposure of a driver’s personal information, including her social security number. It concluded: “With all due respect to Tech, Promotions has every reason not to want potential customers and other members of the public to associate it with a company that has inspired protests in cities around the world.” Bad product extensions are one thing” confusion about an association with poorly performing products isn’t likely to be harmful. Confusion with a brand that triggers riots and boycotts could reasonably be predicted to be substantially more harmful.

What next?  I think greater attention to the harm stories of particular kinds of infringements could help courts understand what academics have been saying about the overexpansion of infringement liability to situations where there’s no real benefit to consumers and potentially severe harm to competition or free expression.  My usual hobby horse: materiality is also useful in figuring out which cases might involve irreparable harm.

Q: What about harm to the consumer?

A: (1) Doctrinally, separate factor. (2) Turns out that w/o harm to TM owner, it’s hard to explain how consumers would be harmed either.

Lemley: Not doctrinally separate for sure except in 9^th Circuit, and they’re weird.  [True.] Why shouldn’t it be a balancing test?  Why shouldn’t we enjoin when there is harm to public even if $ would redress the TM owner’s injury?

A: I am persuadable on whether there should be a balancing test, esp. with factors (1) and (2)—if there is no adequate remedy at law I would often want to call that irreparable. However, I’m not convinced that TM owners are good proxies for harm to consumers.  If consumers are harmed, they should (or consumer protection authorities should) act on their own behalf; we generally ask plaintiffs to have standing by showing harm to themselves, and so too here.

McKenna: Throwing consumers into balance weakens argument for injunctive relief: evidence suggests that consumers can adapt to new marketplace if they learn they can’t rely on this as a signal—they just create sub-brands, excepting cases where the products are really close.

A: thanks; should also consider people benefited by D’s conduct.

Ramsey: when likely confusion is found, court shifts into anti free riding mentality, lets TM owner control uses. Makes sense that they’d instinctively grant injunctions.

A: Interestingly, eBay says you’re not supposed to do that even for “property” rights—as we’ve seen in other papers, property/liability isn’t that simple a split and it’s a lot more complicated than enjoining “property” violations.

Rosenblatt: Isn’t part of the concern durational—the longer confusion persists, the more likely irreparable harm is?

A: Except I think the evidence for that is poor.  Confusion may be harmless and stay harmless even if it doesn’t dissipate.  Suppose the D’s product isn’t yet crappy but might theoretically become so—that’s not likely irreparable harm, just possible harm; it doesn’t meet the standard set out. 

IPSC Breakout Session IV

Empirical Copyright

Copyright Misuse: A Taxonomy

Ann Bartow

Occasionally called copyright misuse; non-US countries call it something else, but trying to taxonomize a certain type of misbehavior.  Some of this is not currently called misuse: using © to try to cover facts and ideas—books that value baseball cards, etc.  Judges use a “reverse merger” doctrine: you have copyrightable expression in facts if the facts look creative to the judge.  That’s suspiciously like sweat of the brow, but work + value = claims for expression.  Trying to cover things instead of works: Digital handshake cases, where “expression” is used to control a device.   Quality King: grey market goods.  Chinese are worried about Kirtsaeng: publishers may stop making $20 textbooks.  Gutting of first sale via contract.  Copyright trolling: buying up (or not!) copyrights just to sue.  Pornographers make it an art: special shaming techniques to make people pay—“barely legal,” racist, gay porn.

Lisa Ramsey: what happens if we call these all copyright misuse?

A: more coherence.  © owner loses more often.

Eric Goldman: I didn’t hear antitrust in this list—do you want to expand on the relation b/t © misuse and antitrust?  Or is misuse a broader principle?  My struggle: the whole point of © is to shut down competition—that’s its intrinsic nature. So rules of engagement say “this kind of shutting down competition is ok,” and then other types of competition you can’t shut down.  If you can make the good/bad distinction coherent that would be helpful.

A: that’s what I’d like, w/r/t things like “reverse merger.”  If judges could fit patterns into a larger scheme it might help deal w/pushing the boundaries of copyright. 

Sharon Sandeen: consider earlier cases. A lot of the problem w/abusive litigation is C&D letters, choosing to sue in improper venue; Ds may capitulate before it’s litigated. Additional category of misuse?

Ramsey: different remedy, like threats action?

Ariel Katz: Posner says misuse is just antitrust and thus unneeded, then changes his mind later about © misuse—antitrust articulates a principle that should be followed; he sees misuse as more abuse of process.  In many cases you can say that you just don’t have copyright over the matter claimed.

Ramsey: interacts w/remedy: suppose P is trying to cover facts; is entire copyright invalid?

Q: is this normative or descriptive? Licensing away fair use is permitted by case law. 

A: My intent is to describe and then make normative claims at the end.  [Perhaps if you fit together the different branches it will be clearer whether particular versions stand out.  You can’t contract away right to use facts, apparently; but you can contract away fair use—why?]

Q: Video games: using © licenses to prevent use of bots in games.  Is that ok?  Also, consider Brownmark v. South Park—letting fair use be considered on motion to dismiss; first published case to use “copyright troll.”

IP Theory

More Property-Like than Property: The Prevalence of Property Rules in IP Remedial Schemes

B.J. Ard

Property rules allow holdouts/irrationality; liability rules have pricing difficulties.  Dispute over these rules is often linked to whether IP should be thought of as property or not property.  Property = intentional trespass. But property today defies any easy simplification.  We have a number of liability rules for unwitting trespass, and for various holdout problems—most jurisdictions have negligence standards for unintentional trespass. When it’s permanent intrusion and nonnegligent, most courts will balance the equities and sometimes force a sale. Nuisance is another classic case.  We can imagine a strong property regime for nuisance, as in early English common law.  But a rule like that would have made industrialization practically impossible; the current American approach often awards damages.  And finally, direct state takings uses a liability rule.

Contrast w/IP: © has mandatory statutory damages [for timely registered works].  [See also: TM counterfeiting.]  Punitive damages bear little relation to harm caused; there’s often no solicitude for the inadvertent infringement.  Fair use can cut through a lot of potential transaction costs, but like the rest of ©, fair use doesn’t care about willfulness/infringement.  Its balancing test is about harm to owner and broader social benefit, but not benefits to the would-be fair user.  Damages may be out of sync w/harms.  Statutory licenses: set prices for certain copying/transmission.  Public choice theory shows limits on the effectiveness of this practice.  Won’t address problems faced primarily by consumers, or for startups.

Patent: looks possibly like liability rule, given eBay.  Reasonable royalty is the standard. However, courts still enjoin in the vast majority of cases in which there is actual competition.  Fed. Cir. rules have made royalties supercompensatory through various rules.

Seems backwards for three reasons. (1) Greater notice failures exist in IP.  Land records are better than for IP.  (2) Nonrivalrousness of intangible goods.  (3) Cumulative/overlapping nature of intellectual production. Smith argues that modularity is an advantage of property rules: nonowners know to keep out.  IP doesn’t fit as easily in the same model; what I do in producing my own film or machine may come from bundling together a lot of rights.  In tangible property, we often see liability rules deployed to facilitate this type of bundling.

Why not a negligence standard for patent? Inventor who diligently searches is no better off than one who does no search at all, and might be worse off if open to finding of willfulness. Negligence = patentees have clearer incentive to provide notice.  Short of that, we could at least have harder caps on non-negligent infringers’ damages.

Don’t squeeze IP into Procrustean bed of real property.

Q: literature on inadvertent infringement in patent—Monsanto—coming to the nuisance type.  Don’t buy the assertion that real property uses liability rules “more” than IP.  More than we expect?  Is this quantifiable?  What are your limiting principles for reform?  Maybe everything should be liability, but that also seems extreme.  Where do you draw the line?

A: mostly interested in notice failures/unwitting infringers. That would be a major improvement.  Another key principle: in service of designing patent and © to promote the forms of innovation we want to promote—another empirical Q. Are we deterring by punishing innocent infringers? Are we undermining incentives to innovate?  We’d still have a workable/productive system, but w/fewer problems.

Q: re: search.  If I know that there’s something out there, I’m worse off if I don’t look than if I do.

Q: political economy perspective: real property analogy is used to claim that cutbacks on IP are “takings.” You may want to point out that’s not what you’re trying to do.

A: not trying to take a position on whether IP “is” property—pointing out that “property” doesn’t work the way that certain people claim it does when making arguments about IP.

RT: timely © registration: w/o it, no statutory damages and you’re in liability-land subject to eBay; note move to add them in © Office’s small claims proposal.  Consider TM, at the property/tort interface and struggling w/remedies.

Indiscrete Property

Michael Burstein

Once you define a res, the question is how to manage it. Smith etc. argue that recognizing thingness of such assets allows benefits.  Info is often not subject to thingness in a way that goes beyond the costs of delineating the res. Info is often indiscrete and continuous; the logic of mixing ownership and governance strategies for it then becomes incoherent.

Commercialization may require coordination; if coordination costs are minimized, that can make commercialization easier and have social benefits. Thus the need for exclusion depends on the cost of delineating the thing and signalling its existence as a thing. If you can easily say “keep out” it might be easier to have an exclusion strategy. If you can more easily identify a use, then governance strategies may be more effective/efficient.

Smith is quite subtle about governance/exclusion strategies in IP, but others have taken position that if exclusion is a relatively low cost way to coordinate downstream use, then we should try to push more subject matter into exclusion strategies.

Our view is circumscribed by focus on delineation costs of defining/identifying boundaries.  This isn’t accurate depiction of info.  Info science: “data, information, knowledge, wisdom” hierarchy, usually depicted as a pyramid.   These correlate w/meaning and value—data is less valuable/meaningful than info, which is less than knowledge.  [Knowledge is knowing that Frankenstein isn’t the monster.  Wisdom is knowing that Frankenstein is the monster.]  At each stage there are transformations to move from one level to the next. This can turn philosophical: “information is a verb, not a noun”—info is something you need to do something with.  Economic literature: knowledge is something that can be codified and exchanged, which requires transformation, e.g., codifying tacit knowledge.  Economics talks about costs of codifying tacit knowledge.  Strandburg: Self-revealing v. non-self-revealing info; von Hippel: sticky v. nonsticky info. Some info is easier to transfer than other info.  Design theory: new private law has drawn on this for its concept of modularity, but in design theory, modules can be designed. Choice can be made consciously about what’s in and what’s out. Persons can design info flows/exchange info selectively.  Heterogeneity of info: how we develop info about info for purpose of exchanging/transforming it. Pharma: core info is structure of molecule, but you can develop info about the molecule that doesn’t reveal its structure but reveals enough to facilitate exchange.

Discrete info, in his view, is separate or distinct. Continuous info is inseparable.  Not all info is indiscrete. Especially lower on the hierarchy. But indiscrete info is different from real property. Bargained for exchange in real property is possible when different people put different values on private goods. But indiscrete info communicates value to different people in different ways.

When we propertize, the choice b/t exclusion and governance is more complicated than many think. Exclusion strategies can be underinclusive of social goal of promoting innovation; may also be overinclusive by preventing communication of valuable information.

What result?  Explain intuitions about content of IP—patentable subject matter.  Focus on rules and institutions that enable people to structure info flows as they choose.

Ted Sichelman: isn’t this also true of real property? A boundary around a piece of land: an entrant may not interfere w/uses of owner; uses outside boundary may affect uses of owner. So we just have to figure out whether over and underinclusiveness are worth the benefits we get from creating the boundaries.  [Information environmentalism redux!]  Most areas of IP don’t protect info directly, but uses w/r/t that info.  Making, using, selling, offering to sell is what patent covers, not “a molecule” as such.

A: under and overinclusivity operate differently, b/c it’s much more difficult to anticipate relevant uses of asset, b/c intellectual assets convey value continuously as opposed to land/bottle of water.  There are multiple uses of land/water, but the way in which uses are communicated to people depends on characteristics of the thing that are much easier to communicate/consistent than w/information.

Empirical Copyright

Pretty Please: Software Piracy Rates and Charismatic Appeal

Andrew Moshirnia

In combating illegal videogame downloads, is it more effective to play nice or dirty? Not much research on vg piracy, though it’s an enormous economic drain.  VG market is about $100 billion, about 6x recording revenue.  VG piracy is an ongoing resource drain not a single lost sale, if a game requires updates/skins—pirated game will continue to consume bandwidth; go on to help chats to get the game to work; people w/cracked versions can often cheat in online games, ruining it for everyone.  Major vector for malware, unlike music/movies which aren’t executable files. Constant fear of crackdown in modding community, which overlaps w/pirate community.  Artistic concern: move to freemium, server-side games—constraints driven by something other than the marketplace.  [Interesting definition of marketplace, as if it existed w/o law.]

The scene: private newsgroups/torrents; picked up and repackaged, often w/malware, into public torrents.  Justifications: cost; quality/sampling; DRM backlash; anti-corporate ideology.

Countermeasures: DRM: endogenous DRM, where game detects it’s pirated and messes w/player rather than locking them out.  Serious Sam: if you’re playing a pirated version, a giant pink scorpion starts shooting you about a minute in.  Open pricing, which partially addresses cost concerns.  Humble Bundle: dedicates chosen percentage to charity.  Charismatic appeal: forswearing DRM, making indie/personal appeal by developers.  They distinguish between themselves and EA (big bad). 

His belief: DRM will encourage piracy where DRM breaks the game, as when Sim City’s authentication servers were down for a month.  As long as DRM can last 21 days, it works.  You make your sales then; you just want to prevent zero-day piracy.  Open pricing may also work to limit privacy.  Emotional avenues are likely to be ineffective, but might have interesting effects. Game quality will encourage both piracy and legit sales. Attitude of publisher may weakly encourage piracy.  Appeals won’t have impact but may have interaction w/open pricing.

Study design: data gathering now. Examine downloaders/seeders of cracked games, identify factors influencing piracy of individual titles, evaluate factors against claimed philosophy and behavioral model. Looking at data from 2008 on; that was the explosion of torrenting w/Spore.  Looking at torrents, publishers; conduct regression and modeling to get a more tailored approach and avoid a draconian response.

Torrent trackers: can look at number of downloads, but that may be inflated b/c of multiple torrents; total number of seeders/leechers; rank in downloads; torrenting of software is very top heavy—top 10 will account for great majority of downloads at any given time.

Game data: DRM used, opening price, open price ever offered, critic score/was it a sequel, publisher’s market share/employees/attitudinal survey, charismatic appeal, number of legit copies sold.

Analysis will depend on data quality.  Difficulties: torrents aren’t only source; false torrents; multiple downloads; poor records b/c it’s an occulted activity. If I can only get ordinal rank, no parametric testing possible.

Matt Sag: is your plan to look at only games that have been downloaded, or broader population of games?  Don’t select on the dependent variable.

A: ID number of games and go through population.

Kerry Abrams: affordable alternatives as reducing piracy in video, music—what about VGs?

A: fewer subscription services for new games in this realm. There is the idea that we’re not concerned w/non-new games. Subscription services tend to be not new games. But in terms of ease of access, there are developments in digital distribution, mostly through Steam.  Online only access is also a move, but that will limit the types of games that can be made and will limit modding.

Katz: do you distinguish b/t new games v. old/noncommercially available? What about merchandising?

A: Most of the time, things out of the top 25 don’t have data collected. Civ III fourteen years after the fact is not going to be big; if it does show up I can control by year of release.  There are definitely economic advantages to tangible goods: Master Chief T-shirt can’t be downloaded.  I’m not trying to calculate lost sales and even pirates might buy the shirt.  I’m more interested in change away from moddability and what might be done about that.

Undetected Conflict of Laws Problems in Cross-Border Online Copyright Infringement Cases

Marketa Trimble

WIPO recommended training and soft law improvements to deal with crossborder cases; Trimble thinks more is required. WIPO report used only two US cases, Zippo (largely overruled in most circuits) and magistrate judge decision in Nevada, in its study of 56 cases.  Trimble sampled infringement cases filed in 2013, 364 cases, under 10% of those filed that year.  WIPO report is underinclusive, but also overinclusive in looking for cases involving conflict of laws.  Trimble’s sample is only copyright cases, which has different inclusivity problems.  WIPO looked globally; US is very specific/different.

Over 80% of cases were online infringement cases. 90% of those involved online digital copies; 63% of online cases involved bittorrent; 74.7% of online cases were filed against John Doe defendants.  But in the entire sample, there was only one case involving some conflict of law issue. Few defendants are foreign domiciled.  But you won’t see the conflict problem in many filed cases b/c the problems are so big for litigants that they don’t even file cases against foreign defendants b/c they know how difficult and costly it would be.

Need more coordination of rules, improvements in judicial cooperation, and streamlining of judicial proceedings in cross border cases. Maybe small claims proposal could offer a way forward.

IPSC Breakout Session III

IP & Privacy

Exploring Privacy as Commons

Katherine Strandburg & Brett Frischmann

Knowledge production/privacy as highly related, not orthogonal/opposed.  Knowledge production framework as a way of doing descriptive empirical case studies of how privacy works in context, which can aid policy design. Appropriate info flows take place in complex and variable forms, and understanding the variations is important.  Knowledge commons framework also lines up w/Helen Nissenbaum’s work on contextual integrity in the privacy realm. Norms and info transmission principles can be supplemented w/a broader conception of governance.

Privacy is community management that applies to resources and involves a group/community but doesn’t denote the resources, community, place, or thing: privacy is the institutional arragnement of these elements.

Meeting under Chatham House rules: identify or affiliation of speakers/participants can’t be revealed but participants are free to use the info received. Is this privacy or knowledge commons? It is both: encourages candor, openness, sharing of ideas. Once adopted, the rule governs the resources/knowledge produced and behavior. Reflects and shapes norms for participants; reinforces boundary b/t community members and nonmembers. It’s a good example of privacy/commons governance.  Norms of behavior at IPSC can also be described in the same way.  [E.g., I blog about talks but not about hallway conversations, I think he means.]

Studies of different research consortia for rare diseases, which are all about knowledge production: in both, there are IP issues on the fringes, but one really important issue that drives production is privacy w/r/t patient data. How do you get patients to participate?  What will happen w/clinical trials? 

The basic characteristic distinguishing privacy from nonprivacy is institutionalized sharing of resources among members of a community: both jarring and useful.  We are accustomed to think of privacy as nonsharing, but privacy is often social; always connotes boundaries b/t sharing and nonsharing.  Doesn’t work at n=1, maybe not w/physical resources; sidelines normative debate and values; takes a long time and needs dedicated research community. Benefits: learn more about variance, nuance, obstacles/dilemmas, institutions; explore intersections w/knowledge commons, as w/big data; learn what people really care about and why; improving insittutional design.

Q: seems like a lot of work is done at different level of generality. Drug cos. are willing to claim protection for privacy as their justification for not sharing information.

A: the studies do provide the necessary details. Boundary crossing: sharing research w/community at large v. within the pharma co. You can get at boundary management by studying a variety of pharma patient communities: rare disease community is different than big pharma. In one case, pharma reps were part of the disease research community. We unpack what privacy means only if we study them systematically, asking the same set of questions to a bunch of different communities.

Q: sharing among corporations involves very different environments, cultures, etc. than sharing among friends—privacy as trust.  How do you translate an idea about privacy that’s inherently about individuals to a larger corporate environment?

A: look at the ends they set for themselves and how their practices interact w/ that.  Maybe withholding data benefits the internal community; our proposal doesn’t judge that or assume that it has social benefit.

Q: can anything be excluded from the definition of an institutional arrangement you offer? E.g., family, freedom.

A: not sure!

Silbey: Privacy is generally considered an individual right against the gov’t in constitutional law; we don’t study institutional mechanisms enough in law to figure out how individual rights are translated into a system.

A: he thinks of privacy as a means; ends are for society to determine.

Trickle Down Privacy

Ari Waldman

How we operationalize privacy in institutions.  Individual expectations of trust form contexts of privacy.  Bamberger/Mulligan’s work in 2010, 2015 about operationalizing privacy on the ground.  We can write all the laws we want, but what happens in corporations as they write policies or create products that suck in data or manipulate us into sharing information?  B/M showed: corporations began to take privacy more seriously, even though the law didn’t change much in 20 years; still swiss cheese like. What changed: development of robust privacy professional sphere, who understood that privacy was about trust.  Role of FTC in developing common law of privacy and data breach notification statutes also mattered, as well as tech changes where new products primarily implicated privacy. If that’s true that over 20 years companies have developed a more robust conception of privacy, why do we still have all these problems? Why are privacy notices still so terrible, unread, unhelpful?  Why are some companies more nimble w/privacy issues than others? Why do platforms get built specifically to manipulate people into sharing data they might otherwise not share?  Do practices start at the top? What about in-house lawyers, and people creating the tech/designing the products? Do they share the robust conception of privacy at the CPO level? And what’s the role of the user?  This matters to help companies that do care to structure their operations to take care of privacy, and for purposes of legal reform. FTC settlements just say “create comprehensive privacy program,” which generally means hiring a CPO, but if that doesn’t matter we should know.

Research design: interviews w/lawyers, programmers, engineers, members of privacy teams, project managers/tech leads.  Observation of product design process for an app that involves lots of user data.  Qualitative w/quantititave aspects.

Hypothesis: robust privacy won’t trickle down from CPO w/o active tech person lower down who shares that vision.  Tech people aren’t trained like lawyers or ethicists, but in efficiency/gathering data. May think about privacy in terms of notice, or user’s response.

Privacy leads even at middle management tend to think about privacy as more than notice, but also user trust, even if they don’t have a complete concept of what privacy is. Robust practices and guidelines exist in all but the newest startups. Lawyers think of privacy as notice pure and simple. They write privacy policies as legal documents; don’t care about impact on users’ decisions to share.  Their goal is to cover everything—cautious.  Technologists use the same words as robust privacy pros, but they fundamentally think about privacy as notice. Privacy becomes creating a product that’s fun and takes in data.  Privacy norms trickle down: only time he’s seen it trickle down is when the technologist designing it isn’t just given a mandate “take privacy seriously” but also shares the robust vision of privacy/trust.  May have something to do with education/training.  An engineer manager/product designer who feels the same way may also be able to produce the privacy trickle down.

Cyberlaw & Intermediary Liability

DMCA+ Enforcement in the New gTLDs

Annemarie Bridy

Rise of DMCA plus enforcement.  Two categories: Type 1 DMCA intermediaries are covered by DMCA but have privately agreed to do more.  Graduated response; link demotion for search engines; proactive content blocking (Content ID etc.). Type 2 are beyond the reach of secondary liability but have privately agreed to do more—payment network, ad network—notice and termination or blocking regimes.  Domain name registrars—pressure on ICANN and related entities to engage more actively.

Characteristics of DMCA plus: nominally voluntary but implemented under gov’t pressure: members of Congress, IPEC, USTR.  Privately negotiated w/o input from public or public interest groups.  Terms generally disclosed only partially, w/resistance.  Enforcement lacks transparency re: nature/volume of sanctions. Lack of procedural safeguards for accused infringers. Notable exception: Copyright Alert system, which was more transparent in substance and operation than other agreements.

Enforceable against users via provisions in intermediaries’ TOS that prohibit illegal activity/abuse and reserve right to terminate service at their sole discretion.

For TM, the ACPA and UDRP have existed since before 2000.  Domain Name System is a logical target b/c domain names often incorporate word marks.  Rarely requires assessment of underlying content of website, which means a critical difference from © enforcement.

Enforcing © through DNS is more recent; © owners like it b/c it enables cross border enforcement. First major development: PRO-IP Act of 2008, which became the basis of hundreds of domain names, from © to counterfeit pharmaceuticals. SOPA almost provided for court-ordered site-blocking. Courts have been asked to grant, and have been granting, site-blocking injunctions against US based nonparty registrars and registry operators.  Private ordering: MPAA and Donuts, which contains hundreds of new GTLDs.

Rightsholders saw in new GTLD process the opportunity to inject © related obligations between ICANN and registries/registrars.  In 2014, USTR included a new issue focus on domain name registrars in its annual Special 301 review of notorious counterfeit markets. Called for © owners to get new procedures/policies.  Music/movie industries most active in lobbying for new © enforcement.  Demanded increased commitments for © enforcement, especially those targeting music or digital content.  2013 version of Registrar Accreditation Agreement contained new obligations for accepting notices of infringement.

ICANN Registry agreement now requires registries to include in contracts w/registrars a provision requiring registrars to include in contracts w/registrants an obligation to refrain from © infringement and a promise of suspension.  Registrar Accreditation Agreement requires registrars to have abuse contacts to receive reports, w/duty to investigate and respond appropriately to claims.  Thus Registrar is contractually bound both to registry and ICANN. Complainants can seek redress through ICANN’s contractual compliance process by completing a simple online form.

Donuts is registry operator for .movie, .wine, .computer, .education., .clothing and others. MPAA has announced another partnership and created a template for agreements w/registry operators.  Donuts thus requires adherence to ICANN and acceptable use policies.  Permits registry to delete, suspend, revoke, transfer or cancel the offending domain name.  Donuts agrees to treat MPAA notices expeditiously and w/presumption of credibility, like Google’s trusted removal program for search.  Standard for complaint: has to be clear and pervasive © infringement before approaching registry; first must go to registrar of record and hosting provider; complaint must state DMCA-like good faith belief; must be the result of human review.  Intended to limit volume of notices under the program.

Normative concerns: presumption of guilt; target/sanctions affect entire domain, not URLs; no requirement of attempt to contact the registrant despite the requirement to look up WHOIS information. Lack of clarity about what’s clear and pervasive infringement; what’s careful human review. Lack of procedures for registrants to contest complaints/appeal sanctions; lack of transparency.

Goldman: great to do all this digging; glad it was you and not me.  [I’ve joined ICANN’s TM review group and I share this sentiment.]  Is this an unstoppable train? Is there a way to combat that, similar to §512(f) for wrongful takedowns? Is there any cause of action possible?  W/o §512(f), fox is in henhouse; what can the chickens do?  We need a better §512(f).

A: that’s a hole in the law, and not clear what public law can do b/c users have consented to terms of use. More productive way to go about this: try to get these agreements to look more like the Copyright Alert system. That had a right to a third party appeal to a neutral third party, and these don’t.  Can’t get details of Donuts agreement or Radix agreement though did get template for trusted notifier agreement.

Justin Hughes discussion: Someone registers Harrypotter.education, and MPAA detects a bunch of streaming going on. They’re under no obligation to contact the registrant?  Yes. They’re under an obligation to contact the registrar, then Donuts.  Then the registry is under an obligation to assess clear & pervasive © infringement identified through human review—it’s a bit of a black box.  If Donuts finds so, they are obligated to cut off the registrant no matter what the registry has found. 

A: Donuts has said that there have been 6 complaints filed under trusted notifier system; 3 domain names blocked.  This was their evidence that it’s working, but no info is available, for example about what a user sees when a site has been blocked or locked.

RT: ICANN could require disclosure/transparency in its agreements. There is something we as a community can do: join ICANN’s working groups on these issues. I’ve done it for TM and it is not fun, but it is necessary work and right now they are not hearing from the policy/academic community, only from people with stark economic interests.  Show up!  Voice matters at ICANN.

IP, the Constitution and the Courts

A Free Speech Right to Trademark Protection?

Lisa Ramsey

International issues: US and other countries are members of Paris Convention, w/obligations to allow certain registrations.  Says that nations may deny registration/invalidate registrations for marks contrary to morality or public order. WTO members agreed in TRIPS to keep that the same.  International conventions on human rights—allow restrictions to freedom of expression if necessary to protect public order and morals; rights and reputations of others; to prevent incitement to violence.

Consider, not just in the US but as a template for evaluating free expression issues: 1. Gov’t action. Who is regulating the expression?  If FB deletes your post, there’s no state action.  If it’s a misleading ad taken down by the FTC, that’s gov’t action though ok.  In Tam, the gov’t action is a law barring registration of disparaging TMs (gov’t inaction).

2. Suppression, punishment, or other harm to expression. Consider how the regulation actually harms expression. Unconstitutional conditions doctrine: big debate.  Ramsey’s position is that unconstitutional conditions shouldn’t apply where the benefit being denied is the right to suppress the free speech of others.

3. What’s being regulated? TMs are expression, even though you sometimes see people deny it.

4. Whose expression is being regulated?  Tam is not about gov’t speech—TM registration is individual speech.  Could also consider whether corporations have free speech rights, though they do in the US.

5. Are there categorical exclusions for this type of expression?  Misleading commercial speech, incitement to violence. But scandalous/disparaging marks aren’t categorically excluded.

6. Whether the regulation of expression fails constitutional scrutiny—level of constitutional scrutiny depends on local doctrine.  Is it content- or viewpoint-based?  Does it cover commercial or noncommercial speech? Requires evaluation of law’s purpose, fit between law and purpose, amount of harm to expression.

Upholding options: SCt might use unconstitutional conditions doctrine to say that §2(a) is constitutional.  Could say it satisfies constitutional scrutiny, though unlikely to say it satisfies strict scrutiny.  Or it could go the (c) route, treating (c) differently than other kinds of speech as long as Congress doesn’t alter the “traditional contours.”  Offensive TM laws seem pretty traditional; but might be a problem for dilution.

Linford: Ginsburg isn’t going to want to go near “traditional contours”—Golan signals that traditional contours means only 2 things.  What about Harper & Row claiming that there’s no conflict, and we’ll say hands off. 

Q: What is the state action requirement?  Enforcement of TM including injunctive relief.

RT: my question was similar—Linford says “hands off” but what does that mean?   “In Tam, the gov’t action is a law barring registration of disparaging TMs” but that’s gov’t inaction.

A: When the examiner denies your application that’s gov’t action.

RT: but in that case if I go to court and say “FB suspended my account for using a non-real name and you should bar that part of the TOU b/c it violates my free speech rights” then you also get state action in enforcing FB’s contractual terms.

A: true.  Reminder that TM registration allows lots of suppression of speech—can interfere w/T-shirts, merchandising, claim dilution, etc.

Charles Duan: disparaging marks have particularly strong expression values—people use them to express feelings.  Preventing others from using those terms may thus be worse than ordinary suppression through TM.

A: yes, one of the dissents does a really good job—makes a difference from ordinary unconstitutional conditions cases, where benefit sought was not the right to suppress others’ speech. Still, troublesome to have individual examiners deciding what’s disparaging.  Internationally, nations can decide (Afghanistan bars marks that are harmful to chastity).

Pam Samuelson: Different nations have different ideas of scandalousness, public order, disparagement. Are you thinking we need harmonization?

A: the opposite. We need to allow nations to make their own decisions.  I worry that after Tam, people will go to other countries and demand registration of these marks. Some people will only register marks that they can register in multiple countries, so there's a chilling effect no matter what.

IPSC Breakout Session V

IP Theory, Functionality & Design

Infringing Algorithms

Felix Wu

Means plus function claims: you get the structure disclosed in the specification and equivalents thereof. Why doesn’t this limit on functional claiming work?  Claims that are at root functional are not construed to be functional; Fed. Cir. decision in Williamson: need to know when we are going to interpret these claims as functional.  Now: magic words “means” are not required. But still need to know what will count as the corresponding structure, and there’s something special going on with software b/c we can see structure w/mechanical arts.  What would we mean by structure when software is effectively functional all the way down: overall function, broken down into modules that perform functions, broken down further etc.  Fed. Cir. says the structure in software is an algorithm, which then imposes a limit on functional claiming. But then: what does Fed. Cir. mean by an algorithm?  Necessary to perform the claimed function.  But this doesn’t help, b/c then we need to know what’s necessary.  Missing the idea that you can break up one function into a series of functions a number of times—the levels of abstraction problem that we’re used to in © but not in patent.

Fed. Cir. is stuck about where we were in Jaslow in ©. Fed. Cir. says algorithm is what’s necessary to perform the claimed function and nothing more, and that’s what the court did in separating idea/expression in Jaslow.  Lesson: we need abstraction-filtration-comparison for means plus function claims.  Avoiding overbreadth.  Alice and the like may provide tools to do that kind of filtration, better than using them for patentable subject matter.  SCt’s instinct in Alice about overbreadth is really about filtering.  Altai also filters out the non-novelty, as we want to do here. If algorithms are equivalent only at the level of what’s not novel, we shouldn’t regard one as infringing the other. 

Should we also use this instead of nonliteral copyright infringement?  Patent supremacy, as discussed by Lemley & McKenna?  That might make sense.

[Sorry, when it comes to patent I can only hum a few bars.  Lemley’s question seemed perfectly reasonable but I didn’t process it.]

Samuelson: Fed. Cir. Oracle v. Google: they want to say if there’s any other way to do something then it’s copyrightable.  But software usually has more than one way to do something; it doesn’t make those things non-abstract. If it’s too abstract for patent, it’s too abstract for ©, and it doesn’t make any difference that there’s more than one way to do it.

A: yeah, that seems reasonable.

Q: there’s an expressive element to software that differs from its functionality. 100 programmers would write 100 pieces of code that were different for the same function—it’s that aspect that © protects, and it’s the time it takes to code that © protects. I like your idea on the patent side b/c the same kind of filtering is needed as on the © system.  But not sure there should be lessons for © that only strictly literal copying should be actionable, b/c code is expressive.

A: not clear why expression is the source of value of the software. Depends on what you mean by expressive.  The expression is limited in that it produces the function, even if you feel like the code is beautiful. 

Q: what makes a novel beautiful also doesn’t matter.

A: but beauty in code is also about accomplishing purpose efficiently and laying out text efficiently, which matters to readability and reusability.  Both of those things are functions.

Q: but pro programmers can pick up code and tell you who wrote it.  [Hmm. Analysts in WWII could also listen and figure out the “fist” of the specific telegraph operator who was on duty.  That didn’t mean the telegraph operator was engaging in copyrightable expression.  We still have to figure out the question “what should copyright cover?” and the answer is not “all things that are different depending on who produces them”—if you ask me to drive a route, the details of how I press on the gas and where I signal will differ from the details of how other people do it, but that doesn’t make my driving pattern copyrightable.  Cf. Abraham Drassinower’s recent book.]

Functional Compilations

Pamela Samuelson

CONTU said utility is never a limit on ©ability, which is totally untrue; Easterbrook in ADA case says functionality is only a limit for PGS works.  Architecture and software are examples of functional works Congress decided to use © to protect. But at least w/architecture we know that functional parts of designs, e.g. plumbing and wiring, are unlikely to be within © scope. Altai is the leading case indicating functionality limits scope of © in software, though it didn’t direct filtering out of processes, methods, etc.  There is can be a merger of function and expression in software cases, usually as to particular elements of programs, not programs as a whole. But Lexmark is an example of merger resulting in invalidating ©.  Argument: When courts use selection, coordination, and arrangement, that doesn’t mean that compilation is protectable if it is a functional compilation.

Doctrinal buckets for courts imposing functionality limits: but since they were struggling in these cases they used multiple buckets: most common: if functional, lacks originality.  Or functional b/c implements method, system, procedure unprotectable under §102(b). But also invoke multiple doctrines, sometimes as many as 5—doctrinal cocktail. [Sounds like TM fair use cases.]  No protection for facts, etc.

Functionality types: (1) mechanically derived (Feist, Continental Micro). (2) Dictated by function, even if there’s more than one way to do it—recipes, involving yogurt. There’s more than one way to do that. (3) Result of systematic or methodical organization: directory of CATV systems, not a protectable compilation.  (4) Necessary to accomplishing objective or task.  Bank claimed © in its wire transfer numbers, which are required to transfer money from bank to bank.  (5) Conformance to rules, logic. Southco part number case—systematic; dictated by conformance to logic of numbering system and thus unprotectable.  (6) Efficient design. (7) Incidental to carrying out tasks/processes. (8) Industry standard. (9) Affecting cost, quality, or effectiveness of product design (Traffix).

Suppose Rural had been the first compiler of telephone white pages in what’s now the standard order, using skill and judgment to organize—that would still be functional.

CO refused to register human DNA sequence—too functional even though it’s a literary work.  Continental Micro: © in compilation of data on shape of and depth of keys as inputs into key cutting machine processes. May be difficult and time consuming but not ©able.  Baker v. Selden: arrangement of columns into functional compilation.  In many cases, functionality limited scope of ©.

We need more work on what makes a compilation expressive?  100 best restaurants.  ADA case is flatly wrong; numbers are functional for billing people for dental procedures. One of the bad things is it begat other cases where P claimed to taxonomize, not systematize, but a taxonomy is a system of organization. McLean Hunter similarly begat lots of bad cases.  NYNEX’s claim to © in settlement prices on its exchange—that would mean all prices were ©able b/c someone engaged in human judgment to set them.  Leval has been willing to confess error at least about the prices themselves, but the 2d Circuit has not completely repudiated it.

Q: do you have a view on copyrightability versus scope/narrowing determinations?

A: I talk about that issue in the paper—courts have to be willing to say some things are just not copyrightable at all for functionality. Some of the narrow scope cases involved instructions about how to use a noncopyrighted product; if there was some variation possible, the court would allow nonexact copying.  Rulebooks: often different ways to explain rules. Even if MacLean Hunter was rightly decided, it should be narrow. We should spend more time asking not just what’s original but what’s expressive. If result is thin protection for some that’s cool.

McKenna: reason for excluding from © matters: if it’s b/c they aren’t original, existence of alternatives wouldn’t matter so much. If it’s b/c they go too close to other areas like patent, then alternatives might matter.

Sandeen: did you look at whether © was registered timely, or only in order to sue against something they didn’t like?

A: I could go back and look; my sense is that generally it’s when the other guy does something that’s too close that they register and sue. No case I found involved a refused registration for compilations though they would refuse registration for forms.

Sandeen: trade secret might have been an alternative for some.

Screening Functionality in Intellectual Property Law

Christopher Buccafusco & Mark Lemley

Identify and describe three distinct functionality screens in ©, TM, and design patent. Evaluate costs and benefits of each screens and assess whether the screens are properly chosen for their fields.  Simplified model of design decisionmaking: all works can be plotted as percentage of aesthetic or functional features.  We don’t care what functional means, and use aesthetic shorthand for nonfunctional (expressive, ornamental, source-signifying).  Dual-purpose features are our problem.

1: Filtering.  In ideal world of filtering, all aesthetic stuff in and all functional stuff out. As long as you can show any aesthetic value.

2: Exclusion screens: no rights, no matter what.

3: Threshold: dichotomy—things to one side get filtered, things w/o enough aesthetic content get zero. 

© has all of these three.  Filtering, you know.  Copyright excludes cuisine, recipes, pre-1990 architecture, yoga.  Threshold: PGS works.  Not useful articles (filtering), useful articles w/separable features (threshold), useful articles w/o separable features (exclusion).  Tries to capture the issue of dual-nature features, applied art—where there’s intrusion of the functional into the aesthetic.

Design patent is the opposite: no screening, you get almost everything unless it’s totally functional.

We’ll look at administrative costs, error costs of false positives (incentive costs, maybe) and false negatives (competition costs). Filtering has low admin costs on entry but lots of stuff gets in; high false negatives if there are systematic errors.  Exclusion: low admin/litigation costs after initial exclusion, high risk of false positivves. Threshold: high ex ante costs.

Copyright: high risk of competition costs may undermine filtering here. Perhaps saved by merger doctrine; that’s what CONTU seemed to think, that we needed some kinds of rights for incentives to exist. PGS works: thresholds make some sense, at least to the extent that Congress decided to lump car parts w/paintings.  Exclusion makes sense where we think there are no substantial incentive costs.

Trade dress: serious competition risks if decisionmakers wrong; exclusion might be better.

Design patent: failing to screen out dual nature features of design means risk to competition. We’d have to think there are no serious competition risks and that there are serious risks to incentives from underprotection to make this sensible.

Linford: given your focus on competition, why doesn’t the existence of alternatives always lead to nonfunctionality finding.

Lemley: Trade dress does better than design patent in having abandoned the idea that alternatives = nonfunctionality. Affect on cost/quality = subject to functionality screen.  Design patent has a miniscule definition of functionality: only if there’s no other way of doing that, at best—there must be some design protection for every element, if you read cases broadly.  We don’t want to accept alternatives as precluding functionality.

[unscheduled break for me]

Claiming Design

Jeanne Fromer & Mark McKenna

Claiming looks very different across regimes. One important aspect of design patent is that it happens early on, often ex ante, before commercialization.  Another important aspect: mode is visual; law discourages use of words to describe design.  You draw more than what you’re claiming, with broken lines to indicate what’s not claimed.  Trickery aspect enhanced by visual format.  Infringement test is more of central claiming by exemplar b/c infringement test asks whether ordinary observer would be deceived into purchasing one design supposing it to be the other.

Trademark has 2D claiming; you have to figure out the scope of someone’s rights along both dimensions at the same time. PTO has elaborate rules for mark depiction and description of goods and services. But you don’t need a registration for TM rights and none of the rules apply if you claim the design as an unregistered mark, which is most litigated cases. Those elaborate rules also don’t matter once you start litigating your registered mark, and courts evaluate the nature of your use.  Allows you to make ex post judgments about what D is doing and shape your claim w/defendant in mind.  If you’d been forced to delineate Two Pesos trade dress up front, you almost certainly would have identified colors, but that’s not what D copied. Central claiming by exemplar, but the exemplars aren’t very good.  PTO registration of TM in iPhone screen: long and specific, detailed about color.  In litigation, description is broader and shorter. What courts have noticed, rightly, is that TM claiming in litigation creates significant risk of moving target.  Sometimes tried to impose a requirement that you state upfront for purpose of litigation what your trade dress is; many courts make you plead this. But there’s no constistency across courts about level of generality required.

Internal consequences of claiming rules: broken line phenomenon leads to overclaiming.  External consequences of claiming rules: overlapping regimes; compounds strategic aspect.  Illusion of precision and notice, but trade dress can pop up later on as in Taco Cabana: don’t claim color in litigation.  You can say TM is about protecting source identifiers so colors shouldn’t matter if consumers are confused, but it undermines notice.

Lemley: I always understood that dashed lines had to be there but weren’t sufficient. 

McKenna: not clear. You could make the preamble have operative effect: design of a clothing hanger, even if the entire outline is dashed and the only claim is to the color of a clothing hanger.  It’s not true that the dashed features have to be present.  There’s no all elements rule.

Fromer: In UK, broken lines have meaning; US law is less strict.

McKenna: maybe people would file more design patents to make sure they’d have rights down the road; that’s a cost. TM allows you to identify only what’s proved valuable.

Rosenblatt: utility patents—the moving target will depend on what the competitor is doing, but without prior art to keep the patentee honest. You want a very broad claim in design patent that you might not want in utility patent. On the other side: secondary meaning may develop for things you don’t really know are going to be your mark. The opportunity for a mark to emerge for the shape of an awning rather than the color is very different.

McKenna: true, incentives differ. Fromer: we might want to give people incentives to think about that up front.  A lot of doctrines in utility patent are about forcing people to develop inventions far enough to think through the ramifications.  McKenna: functionality is the constraint on broad claiming in TM; but the more broadly you claim in design patent, the less likely it is to be functional.  [Not clear if McKenna is defining breadth in the same way in both contexts.]

Q: consider tacking in relation to scope.

McKenna: right now you can use design patent to claim priority/secondary meaning in TM b/c of 14 years of exclusive use, which you could not do for utility patent.

Copyright as Tortious Interference

Shyam Balganesh

Focus on looking at common law has been principally structural: analytical basis of IP, not necessarily the normative basis. Normative reasons for common law doctrines are not a great fit for IP—deterrence, corrective justice, cost avoidance.  We should start thinking about common law not just as analogy but as homology: distinction by Abraham Drassinower.  Analogy identifies a resemblance and makes a claim on the basis of that identification.  Homology identifies a similarity but in addition makes an assertion about the basis of the similarity.  The common origin can be anything: single source, evolution, motivating normative ideal. In law, homology makes assertion about shared normative goals to explain or justify the similarity.

Tortious interference w/contract: origins in Lumley v. Gye, expanding and absorbed into US common law by 1900.  Breaks off into tortious interference w/prospective advantage—a standalone action. Instead of looking at existence of a valid contract, a prospective economic advantage or lost chance is sufficient to allow liability to kick in. Better known in the US than in other countries.  Exists in most jurisdictions in the US; NY and Cal. have best-developed; different names in different states, but all the same. Identifies a market prospect that is protectable b/c reasonably likely to be realized and creates an exclusionary liability regime. Only certain actions by a D trigger liability.  Standard: knowledge of prospect and intended interference; prospect reasonably likely and not merely speculative; improper/wrongful interference; ensuing economic harm. Intent = volitional act, rather than other mens rea.

Most litigation focuses on identifying reasonably likely prospect and improper/wrongful interference.  The prospect and the wrong.  Prospect: not a mere hope or subjective expectancy. Courts want reasonable likelihood of realization, based on market patterns and nature of activity in particular domain. There’s an inverse correlation b/t the level of probability the court requires and the public policy goal underlying the need for protection. Even probabalistic recovery can justify liability if there’s a perceived need to create incentive for P to invest in this activity.  Not purely an epistemic probability based determination; supplemented by public policy/social welfare goals where incentive to invest in economic activity justifies protection.

The wrong: must be wrongful means or motive; unethical behavior based on commercial norms; anticompetitive conduct.

The defense: privilege of interference.  (See similarity: not all copying is wrong.)

Very few normative rationales offered for this tort; three most commonly offered are (1) free riding and the ex ante incentive, BeVier 1990. There are many domains where info investment is needed; allowing third party to free ride when it can obtain the info on its own can justify allowing the action, in order to preserve incentive to invest in info gathering. (2) Commercial morality, as w/trade secret; completely nebulous. (3) Ownership of prospect as a property right, Epstein.

If one adopts tortious interference as homology w/copyright, helps us recast analytical structure of ©. What’s the object of protection? © theory oscillates b/t the work and the action (Drassinower).  Tortious interference says it’s a prospective economic advantage that should be allocated to P.  Not every form of interference is actionable; copying is a normative identification of elements that make the action improper.  Intentionality: need volitional conduct.  Forms of exempted copying = privileged interference.

Looking at homology shows (1) ©’s logic of incentive creation is fundamentally flawed. The incentive doesn’t come from ©; that doesn’t underlie tortious interference either. Incentives come from the market. The rights are circumscribing the existence of that incentive when the market has independently created it. © doesn’t supply the incentive.  It protects an incentive that exists, when it exists.  (2) Idea of liability—when is copying wrongful—should be our focus.  Substantial similarity is a black box; we should get a handle on normative question of what should be allocated to individual claimant.  (3) Copyright recovery should be understood as probabalistic.  Causal indeterminacy is central.  Can be factored into damages computation. But isn’t right now.

McKenna: Tortious interference is maddening b/c law is completely unclear about what kinds of conduct count as wrongful interferences. I get the homology, but are you importing more uncertainty than you’re gaining?

A: black box = jury question. I am trying to give a framework for judicial decisions. I also don’t want to transpose the uncertainty. But there are patterns in the case law—3 distinctive categories of improper conduct: (1) independently actionable unlawful conduct; (2) acts in the shadow of unlawful conduct; (3) lawful but unethical conduct.  But I love living w/uncertainty.

Madison: remedies: Under Cal. law, it’s an intentional tort allowing punitive damages. W/full mapping, you’re borrowing a big problem at the remedial level.

A: I’m not seeking to apply all aspects.

Q: if market is where the advantage comes from, would we need to investigate whether the market existed case by case?

A: Absolutely. It’s not done now.