WIPIP: IP theory

Session 4: IP Theory, Parlor B

Annemarie Bridy, Internet Payment Blockades

Wikileaks: State Department publicly accused Wikileaks of violating US law; payment systems were suspended—PayPal, Visa, Mastercard.  Wikileaks ran through cash reserves in less than a year and suspended publication.  Cost Wikileaks 95% of expected revenue stream. 

Targets of multilateral payment blockades show power of intermediaries—Assange evaded the US, but Wikileaks wasn’t so lucky, within reach of corporate actors eager to appease the US.  Online payment blockades as means of regulating illicit conduct: also copyright infringement/counterfeit goods.

Payment intermediaries, search engines and ad networks are second-degree intermediaries, without direct knowledge of or control over what sellers sell or users share, unlike lockers. Has insulated them from secondary liability under © and TM law—Perfect 10 v. Visa.  No direct connection to primary infringement, so no contributory infringement; no ability to control, so no vicarious infringement. Kozinski’s sharp dissent: payment is necessary or pirates won’t deliver booty.

UIGEA: gambling law established precedent for regulating online conduct through payment intermediaries.  COICA of 2010 died quietly, but SOPA died a noisier death; both had provisions requiring payment intermediaries to dump sites/ISPs to block sites dedicated to theft of US property.  Result: industry code of best practices, one for payment processors and one for rights owners.  Self-regulation under threat.  Dedicated to © infringement and sales of counterfeit goods.  Right owner requests investigation of website; triggers payment processor investigation; burden on website to show it’s an authorized seller/distributor; if no proof, processor demands C&D; if not, suspends or terminates payments to merchants by US account holders; merchant can seek “prompt review” but processor is path of appeal. Rightsholders agree to operate in good faith on accuracy/completeness; respond promptly to processors’ requests for more information; use standard form, “RogueBlock” portal; use standard codes for unauthorized downloads, streaming, distribution of circumvention devices, counterfeits; concurrent notification to all processors; baseline training on how to detect counterfeit/infringing goods.

Normative concerns: the usual ones in privately ordered enforcement: is there fair process? Are lawful speech and conduct adequately protected? Should we be concerned about lack of oversight and public accountability?  (No, no, yes.) Given these shortcomings, do they at least work?  (No, because Bitcoin.)

Q: Seems like the more these methods are used, the less they’ll work.  Unblockable methods will develop.  (Though not superefficient.)  If only used against Wikileaks, circumvention won’t develop. But lots of people want to gamble online, that incentivizes development of easy evasion. Economies of scale.

A: agrees.  Whack-a-mole.  Route around obstacles. Cryptocurrency is an example.

Q: would some of these mechanisms exist without gov’t pressure?

A: yes, but there’s a spectrum of governance, from command and control to self-regulation; interested in this form of hybrid, where the gov’t doesn’t direct an industry to adopt practices that will then become law, which is coregulation; at least there’s more transparency in that situation. With this coerced self-regulation, it has the effect of public law without any of the transparency/protection/accountability. Gov’t pressure makes it particularly nefarious, though it would be concerning anyway.

Sapna Kumar: gov’t surveillance and ISPs—the rise of ISPs that post statements that they haven’t been compromised, or noisily closing up shop. Why haven’t we seen those types of operators in the transaction space?

A: you see it in search, where Google discloses DMCA blocks. Maybe not here because it doesn’t affect users directly. We don’t know how many transactions are being blocked.

Andrew Gilden, Stanford Law School (fellow)

Raw Materials in Intellectual Property

Concept of raw materials in recent © and RoP cases, where courts increasingly find fair use/1A protection depending on whether D uses P’s likeness/work as “raw material” for future authorship. What does that actually mean?  Is this a useful means of drawing lines? Real problems.

Rhetoric is trying to capture a certain creative/artistic/expressive process working with materials at hand, but as a decisionmaking tool it inevitably introduces hierarchies and preconceptions about what’s legitimate and illegitimate.

Free culture speaks about creative works as raw material for cultural participation.  Lockean scholars warn of dangers of overpropertizing raw materials, interfering with others’ ability to benefit. Increasingly doing doctrinal work—Campbell, then Blanch v. Koons—Supreme Court didn’t quote Leval’s use of “raw materials,” but subsequent courts, esp. in 2d Circuit, did.  Cariou v. Prince.  Seltzer v. Green Day.  By contrast, cases like Morris v. Young, court finds not raw material because D’s use involves marginal artistic innovation for putting Sex Pistols image in red; likewise not in Morris v. Guetta.

In RoP cases, raw material rhetoric is even more pronounced.  Comedy III: raw material v. very sum and substance of the work in question. 

Winners seem to be big names; young/established artists seem to lose, or when they’re pulling from established artists like Salinger or Jerry Seinfeld—not considered raw material.

Thinks this inheres in the metaphor itself, which tries to get at individualistic artistic process. Raw is a relational concept that’s produced at the same time as “cooked.”  Higher, better state—as applied to human beings, raises serious questions, which also are raised here.

Maybe with innovation this makes more sense—iron ore is raw material for steel.  IP policy/free speech shouldn’t be making these distinctions.  We’re increasingly mandating this raw/cooked distinction, formalistic.  Winter RoP case says it’s straightforward, but it’s not, without background views on what constitutes legit art.

What to do?  Nip this in the bud. Speak about cultural resources, inspiration without importing concepts of good/bad art.

Jake Linford: doesn’t think raw material is about judging value of P’s work, but rather about going back to productive use/dissent in Sony.  Seems to be doing the same work. 

A: trying to get at productive use, but in the raw materials framework you need to be able to see these works in a raw v. cooked framework, you need to see the first work as raw materials.  Move away from intent to formal relationship, but raw/cooked doesn’t do that right.

McKenna: is your real complaint about transformativeness/evaluation of legitimacy of D’s work by asking what it’s done to existing work.  Raw materials is byproduct of transformativeness system. Does raw materials do something independent?

A: gets at real problem with transformativeness as principled way of deciding fair use.

RT: (1) Ironically perhaps, purpose transformativeness (Perfect 10, Google Books, iParadigms, etc.) doesn’t seem to have this problem!  (2) be explicit about race/gender!  Not accidental which depictions get deemed raw v. cooked, though not entirely determinative.  Can do an almost perfect sort on your examples, sorting them into P win/D win categories, based whether they depict a female or black body.

A: what does it mean to think about someone as raw, not a fully cooked human being—may eliminate some amount of empathy (a particular problem in RoP cases).  Even if it doesn’t matter in end result, it matters in rhetoric. On purpose transformativeness, may be protecting them for different reasons—innovation v. expression, with different problems of aesthetic judgment.

Ochoa: these cases do have result oriented problems.  Can we do better if we get rid of the raw materials label?

A: he thinks a change in perspective may help given that he doesn’t think courts are doing this intentionally.

Joe Miller, University of Georgia Law School

Error Costs & Functionality Exclusions

Different kinds of IP have different functionality exclusions.  Some have posited: Should be making them more like one another.

Should spend more on avoiding errors as cost of error grows.  What’s the error/the primary principle to be protected? Utility patent law supremacy: one and only one way in our economy to get a right against a use as a use in the world, regardless of independent creation. That’s utility patent, and it has certain screens and is time-limited.  Without it, that use is available to the public. The error to be feared: giving utility patent rights in disguise.  That can occur if (1) protection is on a par with, though not identical to, utility patent protection; and (2) that form of protection can be received without rigors and limits of utility patents—without utility, nonobviousness, time limit.

If that’s the error, can we look at functionality exclusions and see if we get more spending when cost gets bigger? Design patent = lowest cost, and is the functionality test with the lightest touch: if utility dictates design, design patent not available. Copyright is in the middle, more searching: useful article doctrine.  If utility materially influences the design, not ©-eligible, per Brandir.  Product design trade dress: the worst error by far, and has the most searching functionality test: if it affects performance/consumer demand for feature, not eligible for TM.  These are protections on a par with utility patent protection.

Error cost analysis helps us think more clearly about other parts of IP law, such as why there isn’t a functionality exclusion for trade secret? Because it’s not worth it, given the weakness of the right, per Kewanee Oil. Plant patents have no functionality exclusion, but again it’s not worth the cost; independent creation is a complete defense.  VHDPA: in © statute, but has design patent rule for functionality, because it’s more like a design patent (nonobviousness, novelty screens, short term).

Design patent is threat level 1; © is threat level 2, even though protection is not as close to par with utilitarian patent as design patent is.  In useful articles, © liability approaches utility patent liability.  TM is threat level 3: lasts forever, no novelty screen, acquired distinctiveness can easily be shown if successful, and confusion will also be easy to show with same product/same consumers.  Courts should not borrow, and should spend more on precaution when the error is the worst.

McKenna: threat level seriousness doesn’t mean they aren’t all threat level 3: they could all be level 3 with TM the worst. Doesn’t necessarily tell us how searching we want inquiry to be at any given level. Maybe design patent should be where TM is now and TM should be absolute.  If you differentiate and rank order, you need really strong sense that getting into one system kicks you out of the other. If you can use design patent to get secondary meaning, then get TM protection for that, you should have a hard edge on the channel into that path.

A: He’s just doing an ordinal ranking.  If the problem is a collapse of meaning, then disaggregating is an important step. Right level of each takes more work.

Separating these 3 types of exclusion makes design patent more attractive for someone in doubt about using TM/©.  Should lead to free for all after design patent expires.

Buccafusco: how do we account for false positives here?

A: easiest in trade dress.  If you’re excluding something as functional that isn’t, it creates consumer confusion, but happily in trade dress there are other source identifying mechanisms available to producers, such as word marks.  Copyright is harder—not as clear what person should do.

Rosenblatt: doesn’t speak to ease of getting protection—design patent is slow to get.  What do we tell people who don’t want to go through onerous exam procedure (ok, not onerous, but they think it is).

A: design patents shoot out of the office like greased pigs. If you can’t get one, you need to find another line of work.

Rosenblatt: but still, shouldn’t we be talking not just about not borrowing doctrines but also about optimizing examination doctrines?

A: yes, because it emphasizes that design patent can have the lightest touch.

Calboli: UK abandoned channeling (more than 50 copies of article applied industrially, you couldn’t have copyright); some common law countries still distinguish between registered design and copyright (you have to pick), though they don’t channel passing off. 

A: inspiration was a class in comparative IP. Second project: go back and look at EU.

Andres Sawicki, University of Miami School of Law

Risky IP

Risk takers are thought to benefit us all—Jack Kerouac, Wright Brothers—so why do we assume risk aversion in IP law?  Why should we care about artists’/innovators’ responses to risk? 

IP rights operate on the assumption that creative people will be rewarded, but you only find out later what the reward is—a risky reward mechanism. Could have prizes, grants, subsidies, salaries.  So we should understand how people respond to that.  Also want to know whether various limiting doctrines are too risky to work in practice: fair use, equivalents in patent law. Those arguments depend on an assumption that artists/innovators are risk averse.

What do we know about the creative personality?  Studies measure creative ability and other personality characteristics.  Message that comes through: people with high creativity tend to be more comfortable than general population in risky situations.  But the literature does struggle with defining creativity, and the measuring instruments are imprecise.  We see some correlations with risk taking on subscales of creativity, but some other subscales show an inverse relationship with risk taking/tolerance.

Economic literature: risk aversion comes from there. What do economists have to say? Evidence is mixed—the Innovation Lottery.

One issue: creativity isn’t the only determinant of the stuff we get.  Creativity is part of ability to invent, but so is persistence, hard work, cooperation, maybe empathy, intelligence.  Law might want to respond to all of those.

Most challenging part is definitional.  What is risk? There’s risk associated with a defined chance, uncertainty where the outcomes aren’t defined, then the creativity literature with a looser definition, then an economic/legal question.  Law may have more uncertainty (difficulty assigning probabilities) than risk.

Buccafusco: risks aren’t equal—gain isn’t loss. So how do you decide whether some behavior that might infringe but might make money is framed as a gain or a loss? Need to choose a decision rather than trying to characterize all decisions.  Also, it’s not just risk preferences, but risk perception—we tell people the odds of winning in our experiments, and they still think they’re going to win. They’re not risk seeking, they just think they’ll win.  (Could one characterize overconfidence as an underlying preference for risk, if the person has experience that should’ve disabused her of her overconfidence?)

A: framing is super important. Has to deal with prospect theory at some point.  Optimism bias is prevalent in highly creative people. One response: take advantage of that!  Another: feel bad for them!

Said: what about the intermediaries?

A: yes, our IP system is really designed for distributors, financiers, etc. One implication is: our system is nominally supposed to motivate creators. Insofar as their risk preferences diverge from those of their backers, and the system supports the financiers, that could be a problem.  You can’t conflate them.

Victoria Schwartz: are artistic risks correlated with financial risks?  Do we want artistic risks? Do we want to distinguish between successful creative people and unsuccessful ones, as we do in the corporate literature?

A: May find that people take artistic risks and not risks with their bank accounts—some of the creativity literature tests this.  People who chose financial risks were more creative (with small financial risk, anyway).  Risk preference might not be linear—optimal level of risk—some evidence for this too—creative people like 1/3 risk, which gives them sense of control, responsibility, agency.  Too much risk turns into roll of dice.

Q: often find that institutional actors are the most risk-averse, though they often face the least risk. Lemley on ignoring patents: Silicon Valley people who don’t care unless/until they get sued, treat it as cost of doing business.

A: that’s a big motive for his project—the cost of doing business people.
This entry was posted in copyright, design patent, http://schemas.google.com/blogger/2008/kind#post, patent, right of publicity, trademark. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s