IPSC session 6

Session
6: Tort-Tinged IP
Ben Depoorter (and
Robert Walker), So Sue Me … Please! Reverse Nuisance in Intellectual Property
Law
Goldieblox case: filed
declaratory judgment against Beastie Boys. Getting sued can sometimes be a boon
and can bring a lot of useful attention. 
Publicity gains may outweigh the direct and indirect costs of
litigation, as with Goldieblox. Can be useful when the law is unpopular or the
enforcement is unpopular—trolling, infringement claims against highly transformative
uses, defendant has a sympathetic project. 
Another factor favoring: when you have an opportunity to withdraw/back
down/mitigate legal costs, and the costs of litigation are limited. If the P is
famous, exposure benefits.
There are (1) good
faith Ds, with defensible uses, where publicity is just a bonus.  Aereo tried, but at the end of the day if
they’d have won the publicity would have been enormous/built first mover
example. FindTheBest: D won and benefited with name recognition after being
challenged by patent troll. (2) Bad faith Ds where publicity is the
benefit.  He calls those reverse nuisance
lawsuits.  Coinye ICO tried that, though it
failed/the company was destroyed. 
Calculation includes whether the D will look bad in which case it tries to
keep the case out of the news.
This is a wealth transfer—subsidized
by P’s legal action. P may recoup some of the value in the settlement/court
award, but there can still be a net wealth transfer from P to D. 
Q: there are people
who say all publicity is good publicity, so they might behave subrationally
under your framework.
Eric Goldman: it’s
really hard to control publicity and how the narrative goes.  Waymo v. Uber—both complaint & response
were thoroughly vetted & PR people waged a war as an integral part of the
case strategy. That’s not new.
Q: there’s a viral group
for which IP (patent) is so awful that the P is always wrong.
Rosenblatt:
assumptions: (1) Ds both can and believe they can make reasonable predictions
about whether they’ll be seen as good guys; (2) Ds can make accurate and
reasonable predictions about whether they’ll be enjoined. They may think they’ll
be folk heroes, but still worry about getting enjoined and the business
destroyed.
A: we’re not claiming
this is happening/the system is being gamed, we’re trying to enhance
insights/predictability. Illustrations exist where people have tried to do this,
even w/o control over the narrative. May also affect the legal reasoning.
Lemley: Represented
Goldieblox in this case.  Push back on
idea that even if we can distinguish good from bad faith the bad are causing
social harm.  What normally happens when
well funded P faces poorly funded D is that the lawsuit quickly ends b/c D can’t
afford to fight. Even if D doesn’t have a good case, it is useful for people to
fight—we do get good law, mostly P friendly law; we might also expose ways in
which law & popular norms differ.  If
a bunch of people are upset that D is being sued, that’s valuable info about
the operation of the IP system.
A: added value of
another legal verdict when it’s settled precedent/an easy case is lower.  But our normative conception of, e.g., patent
trolls is exogenous.  Adding info is nice;
you could also model normative beliefs as endogenous, but that gets more difficult.
Miller: why is this
a wealth transfer and not a creation of value of thin air—getting attention.
Not like P was getting that attention before & it was transferred to them.
A: Kanye is paying
his lawyers so he faces costs, even though Coinye doesn’t have a good case. He’s
subsidizing the publicity benefits.
Lemley: we don’t
usually call that a wealth transfer.
Miller: subsidy is
better b/c there’s no one to one correspondence.
Mark McKenna (and Mark
Lemley), Unfair Disruption
This isn’t really a paper
about Aereo, but that’s an example: new tech often disrupts existing commercial
relationships/settled expectations/industries. Incumbents often reach for IP to
stop or slow the market disruption. That’s not obviously wrong. Some new tech
infringes, and sometimes the point of the IP right is to insulate against such
market disruption. But also inescapable that these cases are often really about
whether some new entrant, with a new piece of tech, should be entitled to disrupt/force
others into new business relationships. 
They’re really about unfair competition.
Parties reaching for
IP often claim that the proliferation of tech will be the end of the world—no more
new movies, music, etc.  Or Uber will
destroy longstanding entities. These predictions are universally wrong, at
least about social value—player piano didn’t destroy music, VCR didn’t destroy
music. But even if the world benefits, even if the industry benefits, even if
the existing players benefit, it’s often the case that particular parties will have
to change and they end up losers. Netflix killed Blockbuster, not movies.
Aereo is a good
example because no one thinks the opinion is coherent but we all understand the
bottom line: this smells like cable, and allowing it would disrupt all sorts of
expectation. We think courts should look at the issues independent of
disruption.  Market conditions are often
relevant to legal doctrine, though. 
Might look at whether there’s a way to differentiate cases in which the
incentives will survive even if the producers change.  Hardest cases: new tech disrupts in a way
w/significant social value but also risk of undermining incentives if
disruption uncompensated. Is there a situation where compensation is the right
solution—paying the losers off?
Lemley: this isn’t just
an IP problem—unjust enrichment and antitrust cases are also often about
whether the act of competition is unfair. Spotify and Napster both disrupt the
music industry but in different ways and we might care very much how the
disruption is done.  Antitrust: Microsoft
disrupted independent 3d party spellchecker industry when it added one of its
own, and that might be fine, but contrast that to its decision to add a web
browser to its platform in a way designed to prevent any other browser from becoming
a basis for a new platform. 
Miller: dissent in INS
v. IP suggests courts won’t be good at figuring this out.  Maybe you’re suggesting IP standing, like
antitrust standing—protecting innovation, not innovators, similar to competition,
like competitors.
A: we’re trying to
work out what’s an IP injury—not just market disruption, which might be what
causes IP injury, but what that is.
Van Houweling: Numerus
clausus doctrine—says there’s special danger in courts creating new property
rights as in INS v. AP. Could deal w/doctrinal vacuum—property, contract, tort
provide different doctrines and numerus clausus provides the strongest argument
that we shouldn’t create new rights.
Sprigman: mapping
antitrust onto innovation is interesting. A strategy that harms competition by
raising rivals’ costs of entry is unlawful; what about raising rivals’ costs in
IP?  Innovation does that all the time;
bicycle frames used to be made out of steel and are now exotic carbon, much harder
to make. That does raise the cost of innovation in that area, but it’s not a
harm to the market v. a harm to competitors. 
A: you can’t just
grab the analogy but you can take it as: is there a consonance b/t IP’s purposes
and the harm P has suffered.  If the
thing that injured you was not appropriation of invention/© work but innovation
of better system, that’s the equivalent where we’d want IP injury doctrine.
Rothman: determining
the empirics is a problem if you’re looking for real harm to innovation.
Sometimes you seem more normative; Aereo to her is about normative thinking, the
Court’s revulsion to Aereo’s design decisions.
A: it’s weird that
the thing that made the Court mad was that the defendant obeyed the law and
found the loophole.  If unfair
competition is a penumbra that lets Ps win when they don’t have a technical IP
violation, then that’s going to have a lot of consequences.  In tax, that’s just good tax planning.  [I pushed hard on tax evasion v. avoidance
analogy in Aereo—maybe there’s something to be learned from that; not clear
that there’s a good analogue to independent economic significance, maybe
something like independent creative significance?]
Q: we don’t know
whether player piano decreased the quality of piano music.
A: the problem we ID
is status quo bias, which is insanely ironic for an IP regime.
Sheff: might have to
do with the boundaries of the firm—content generation and content distribution.
One possibility is that certain disruptions disrupt business models but also make
it difficult for content generation and distribution to occur in separate
firms.  We’re seeing that now with Amazon
etc—distribution takes over content creation. 
Q: why are
sky-falling arguments so common before judges? Happens w/products liability, directors’
liability too.
A: we’re a
conservative, backward-looking profession. And it’s true that disruption
happens and judges don’t want to destroy the status quo, whether that’s current
music system or the VCRs everyone has in their home.
Judge wants to know
if s/he can see the future—if you can see the outside benefits/harms to other
parties, it’s easier to decide.
Betsy Rosenblatt, Verbing
Intellectual Property
Work, mark, and
design are verbs as well as nouns; invention is a thing people do as well as an
output. Yet IP doctrine uses them all almost entirely as static nouns, rather
than as actions. What would happen if IP thought of these words as identifying
processes?  Might frame each in its
context of progress, which demands a focus on movement not stagnation. Might
observe that looking at the stuff people create is only one way, not always the
best way, to look at creation and creative incentives. There’s a lot about this
in the literature for “work,” but not these other areas of IP.  Might look at literary theory/feminist
scholarship.
Deeply influenced by
law as discourse, not just as governance mechanism. Important to be aware of
law’s story about value; if law is hampering fairness/progress we can find out
and try to change it. © has some process considerations, such as fixation.  TM takes into account development w/secondary
meaning/Supplemental Register.  Patent
has changed recently in extent & ways in which it considers processes; now
really doesn’t consider the process of invention & reduction to practice,
esp. for new patents. In obviousness, derivation of inventions. But when
considering noun and verb of invention, we look hardest at the noun. We base
our analysis of inventiveness only on the structure of product and not on process
of making it.
This might make a
lot of sense, if we think the result is what matters.  But if we want to acknowledge that there may
be other progress promoting benefits from creation that aren’t the stuff that gets
created, we need more. Belonging, self-actualization.  Issues of distance b/t created thing and
those who created the thing—becomes a commodity rather than a living
thing.  Feminist theory: by making IP a
commodity we’re feminizing it in the Irigarian sense. Enslaving it rather than
allowing it a life of its own. Approaching creation as a process recenters
creators and users, as opposed to assignees. 
There can also be merit in using something someone else is made: if creation
is a process, it’s harder for me to stop you from engaging in a process than
from using a thing. Could ask what was added, not just what was taken, more
often.
Creators who are
concerned more w/process and what’s done w/their creations than with the
creations themselves—fine with reuse but only if something interesting is done
w/it. Yet that’s not how law looks at things doctrinally very often.
Not proposing more
rights to control actions, if that could even be done.
Sheff: tort
framework: what’s the damage in this reconceptualization? What could be
wrongful about using someone else’s work?
Q: which tense?  Past, present, future may make differences.  Noun=persistence across time. Action may
change more past/future.
Rothman: fundamental
misunderstandings about law that lead journalists to use © and TM as verb in
ways that are legally inaccurate—but maybe they are on to something.
A: those uses are
wrong from the law’s viewpoint, but that is a helpful point.
Van Houwelling: noun
is evidentiarily simpler. We do consider process in some ways, like fair use.
Maybe we do the easy version at the rights granting stage and the hard version
when a conflict develops. Consider this issue in the context of first sale/exhaustion—you
can use this noun, but you can’t go verbing it.

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