WIPIP 2020, Santa Clara, day 2 panel 1

Thanks to Eric Goldman and the rest of Santa Clara’s team for organizing a great WIPIP. I was only able to attend the second day, unfortunately.

Christine Davik, Unregistered Complaints: Only US works (b/c of Berne) are required to register before suing. Against the registration prerequisite. Not the most appropriate way to achieve balance in light of barriers to registration for individuals/small entities. Many courts allowed applications to suffice; SCt has now rejected that. Fourth Estate: Court didn’t take into account needs of small entities, and the changes in tech that make © works flow quickly and harm happen before access to the courts.  The statute should be amended.  There are arguable benefits to incentivizing registration/preserving 411(a).  But they’re negligible in contrast to the drawbacks associated w/the precondition. Number of applications v. number of infringement suits has little effect on the goals of registration and deposit. Statutory damages, att’y’s fees, prima facie validity would all be good enough to get those incentives. Many other independent justifications for elimination. Incongruent w/harmonization goals. Dual treatment of US/foreign works is “untenable and demoralizing.” Significant hurdles for individual artists associated w/registration, including cost, lack of knowledge, time. Need public database.
Tyler Ochoa: the real barrier is ignorance of need for registration. Large players know and register routinely. The fees are really cheap; if you file at time of publication, you might have to wait a little bit, but there is expedited review if you need it.
Davik: there is a knowledge gap. Even for knowledgeable ones, it is cost-prohibitive—even if $35 for one isn’t prohibitive, for photographs that’s a lot.
Ochoa: group registrations for photos exist.
Davik: yes, but knowledge and cost and time are still barriers.
RT: how are these people with knowledge, time and cost barriers going to get to federal court given that you seem not to want statutory damages?
Davik: somehow. They can get injunctive relief, maybe with pro bono counsel.
Ramsey: we require use before TM registration for US people, but not for foreigners. We sometimes think our approach is better as a reason not to harmonize.
Davik: TM can also give you protection without registration.
Guy Rub: why get rid of the tie between registration and filing suit but not statutory damages? Both of those are incentives to register. Why cut the baby that way?
Davik: incremental in nature; that has to be dealt with. Goes back and forth. Injunction has value in itself.
Andrew Gilden: does Fourth Estate undermine the ability to get an injunction? Delay [I suspect delay mandated by law does not count as undue delay]
Colleen Chien: CASE act interaction?
Davik: it’s important. In current form, requires registration. [I was not sure this is true, but the House version does require an application for filing the CASE Act claim and a successful registration for receiving a favorable ruling; however, statutory damages are available for otherwise untimely registered works in a CASE Act proceeding.]
[The thing I didn’t get to say was about the definitional function of registration. Especially for PGS works incorporated into useful articles, one key function of registration is to figure out what it is that the registrant is claiming, which can be vital to scope of rights.]
Garcia Encouraging Infringement
Profitable infringement: rightsholder encourages infringement to make more money. Example: video game industry.  Games that are pirated may still have in game purchases that make money for the copyright owner. Piracy is better than grey market resellers who provide resold keys and generate customer service complaints, since pirates are notoriously low-maintenance. Remedial infringement.
Promotional infringement: marketing value that they couldn’t otherwise retain. Either very low-resourced creators or very high-resourced creators. On the low end, it’s publicity they couldn’t get otherwise; on the high end, it has a certain street cred they can’t get from officially produced promotional materials. Some fan videos. Not a blanket encouragement, but the possibility of a blessing.
Ramsey: a fairly old business model: practically giving away the printers, and you pay for the ink. Interesting variant.
Ben Depoorter: Enforcement discretion is a form of price discrimination, a decision about the inframarginal consumer who might not buy the game but might pay for in-game purchasers. These sound like business decisions: promotional value v. backlash. Not sure it’s preferences or idiosyncratic preferences—literature on price discrimination might be helpful.
RT: The music video examples don’t convince me that’s infringement. At the very least, Twitter/YT have licenses for the music, so figuring out who’s infringing is a lot more complicated—and the distribution isn’t infringing/the infringing act (privately editing the video on your computer before posting) isn’t what’s providing the promotional benefit.
Felix Wu: why not pirate the downloadable content as well? May be harder to do b/c of DRM. One thing that’s going on is effectively you’re getting customers to pirate the overall DRM structure which lets you sell the other stuff.
Garcia: true, apparently there are hackers working on the downloadable content problem.
Wu: but if it lives on your server it’s a lot harder.
Garcia: that’s the use of having the servers/encouraging people to log in.
Chien: reminds me of Katyal/Peñalver’s Property Outlaws [kind of the flip side?]. It’s a way to get people into the franchise.
Guy Rub: is infringement really good for them or just not that bad? [I agree that price discrimination is the answer here, which is Garcia’s answer: it’s second best given that the people aren’t going to buy the games.]  Relates to fair use: do promotional uses that increase the market weigh in favor of fair use? Seventh Circuit’s substitution/complement rule suggests that they should.
Jacob Victor: Congress in the past has differentiated entire industries as promotional (no general public performance right for sound recordings).
Aaron Perzanowski: Game sellers regard used games as a threat. Not just grey market but physical copies. The used game customer has spent their money and has less to spend on downloadable content, as opposed to a person who has gotten access for free.
Jake Linford: Discrimination against particular users: if I allow it 999/1000 times, how do we characterize my unwillingness to allow the 1000th, perhaps because he is Steve King (the determined kid meme)? Estoppel, something else?
Garcia: thinking about that. Potentially causes some confusion among users.
Aman Gebru, Intellectual Property Rights in Collectively Developed Innovation: though the system has slowly stopped focusing on individuals and recognized joint inventorship and coauthorship, is it really fully recognized? Hackathons: a number of people get together in a short period to solve a social problem. Lyft and the “like” button on FB came from hackathons (internal and external).
Empirical work at early stage; can talk about normative and doctrinal. Patent, © and trade secret elements. Traditionally, hackathons were informal/passionate programmers, usually younger, anti-establishment. Increasingly, organizers are corporate (Goldman Sachs). Another related trend: they used to be open: programmer would announce a public service. Increasingly becoming exclusive. Should the law care about this trend?  Are exclusive rights even needed for innovation?  If rights are needed, should participants or organizers own the results?
Doctrinally, in patent joint inventorship is a big issue. Derivation/non joinder of inventions as doctrinal issues. Are hackathons “public use” or “otherwise available to the public” or experimental use?  For ©, WFH is an issue. Has looked at 25 terms & conditions so far but more empirical work is to come. The T&C say “do not expect any employment relationship”—but could they be independent contractors? Collective works? You need an express agreement to say this is a commissioned work. The T&C almost all say it’s a one-off gig, unpaid, no benefits, and usually don’t have information to follow up with participants. Idea submission literature might have something to say.
Trade secrets: how does a hackathon interact with “reasonable efforts to maintain secrecy.” Confidentiality agreements seem rare. Are they guarding against IP contamination: do they require a promise not to bring in anyone else’s IP?
Eric Goldman: contamination/ownership—one possibility is that the participant’s employer is the owner, if there are valid anti moonlighting agreements. Cal. Labor Code has explicit provisions on this.
Garcia: if there’s no pay and benefits, how would the organizer bind them to any agreement at all? What’s the offer/acceptance? In collective works, the traditional justification for © in the studio/producer etc. is an anticommons issue. There may be an anticommons argument in a hackathon as well.
Gebru: it’s a low bar: the consideration could be pizza. Even fun/intellectual stimulation/line in CV. He’s open to the answer that corporatization is fine, but wants to look more at T&Cs.
Rub: Wikipedia doesn’t fit a copyright model: if 1000 people contribute 1 sentence, maybe nobody meets the authorship requirement. Maybe here too.
Rob Walker: Using “WFH” in a contract creates an employment relationship in California. Particularly after AB 50 there’s a lot of scholarship in this area to figure out how we’re divvying this up. Could be invalid contracts under current California law.
Tim McFarlin: intent does a lot of the work in ©: intent to be coauthor. Does anyone regard themselves as the author/initial owner of the work?
Rub, The Failure of the Nexus Requirement in Copyright Infringement (or Post-Sale Control in Software and Digital Goods)
Manufacturers want post-sale controls; they have property and contract tools. Contracts: no one reads them, so write what you want and it will happen. But the rights/remedies are limited. © has limited post-sale restrictions given exhaustion principles/first sale, but what remedies there are, are broad, and you can go after third parties, which is difficult in contracts. What I really want: ease of contract, remedies of ©.
Outside of software, that’s tricky. I can write a contract that says you won’t read a physical book more than three times and reading it four times is not copyright infringement. But not for software!  Blizzard/Glider bot that played WoW for players automatically. Got sued. Blizzard’s theory: running the game creates copies in RAM. Users are non-owners, licensees, so the essential step defense in §117 doesn’t apply.  Thus, breaching the license agreement with a bot is infringement.
Holding: conditions v. covenants. Cites the Restatement of Contracts then abandons it. For a breach to be infringement: There needs to be a nexus b/t the condition and the licensor’s exclusive rights of copyright. “Condition” is a term of art in contract, but this test has nothing to do with contract law. The nexus test fails: it’s like judging whether a particular line is longer than a particular rock is heavy.
How do you solve the problems created by this nexus test.  Breached licenses in case law: failure to pay royalties, failure to attribute, no-assignment breach, mismatch in quantities, no commercial use/bots/hodgepodge.  What results? Total chaos.  Didn’t find a single opinion that analyzed the nexus as a requirement in depth, or that offered an independent case. A ton of courts ignore the requirement, with plaintiff friendly results.  E.g., a case involving “No Bot” provision: condition v. covenant is moot where the D violated the P’s exclusive statutory right, which makes no sense.  “No commercial use”: exceeding the scope of that use gives rise to © infringement claims. Failure to pay case: same analysis. About 40% of the cases. There’s a footnote in MDY saying duty to pay is a different rule/sui generis. Some might say there’s no nexus, but it’s a condition.  But then subsequent cases have been all over the place. Some courts more faithfully use the tools of contract interpretation to distinguish contracts from covenants, and plaintiffs almost always win.
Real self inflicted wound. Once you took exhaustion off the table and said every time you use a computer you create a copy, creating a test is difficulty. You either need to reverse Vernor or even think about reversing MAI. If you do that, you can get a better approach. No blame to lower courts for being unable to apply MDY coherently.
If post-sale control worries us, fixing the nexus test directly will be very difficult. Come up with more specific test and/or more consistent caselaw. Use existing tools w/in contract and © to limit post-sale control. But better: reverse Vernor and let essential step defense do the work.
Felix Wu: do you have any model for what kinds of post-sale control are ok or just think they’re wrong?
Rub: still thinking. But very sympathetic to doing it under contract law, with contract remedies. It shouldn’t be different from any other product in the stream of commerce. Surviving rights include rights against deriv. works, etc. Software breaks line b/t product and service. If your product is a service, then you can control a lot on an ongoing basis.
RT: What about consumer law limiting what the contracts can do?  [Rub mentions reverse engineering but Europe is more aggressive on limiting what contracts can require of consumers generally.]
Garcia: people made arguments that Glider helped disabled people play WoW.
Rub: we don’t limit contractual freedom very much. Many of the cases are B2B disputes, but Blizzard is a case where there are users in the middle.
Laura Heymann: what kinds of activity are the focus here? Consider Jacobsen v. Katzer. Continued distribution of software contrary to a requirement of the license. The stated interest in that case could only be remedied by specific performance, given the issues of attribution/freedom.
Perzanowski: but isn’t any test better than no test? Are cases outside the 9th Circuit any better? There’s some mechanism for pushing back against an overreach in MDY, right?
Rub: maybe it’s an “I know it when I see it” but different judges know different things when they see similar situations. If it’s not software, then it’s an easy case: if you make 35 physical copies instead of your contractual 30, that’s infringement. Very few cases outside the 9th deal with software; some use MDY and others use contract law, at which point the plaintiff wins. If you don’t rely on economic reality, you find a license.
Ochoa: isn’t Vernor just wrong?
Rub: yes, of course.

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