Guest post: Peter DiCola’s notes from Notre Dame roundtable on The Eureka Myth

Posted on November 10, 2014 by rtushnet
Jessica Silbey’s _The Eureka Myth_
Book Roundtable at Notre Dame
November 7th, 2014
Notes from Peter DiCola
*Panel #1*
1) David Schwartz
— Praise for the book
— Will raise a few methodological issues
— Issue of representativeness of the sample.
— Need to trust Jessica’s selection of the quotes as well.
— There are about 50 interviews. When we want to discuss particular communities of creators or inventors, such as inventors (i.e., not lawyers, not creators), we are slicing the sample pretty thin. The number of observations is small, limiting our ability to draw inference.
— If every one in the small sample is consistent, then that may tell us something
— Concern that interviewees will tell the interviewer what she wants to hear
2) Laura Murray
— In Laura’s department, when she has done work on interviews, she gets questions about whether the results can be reproduced
— This book offers thick description
— The book is clear about methodology
— Organization: Jessica’s book goes through the creative process step by step. By contrast, Laura’s book was organized case by case. Each approach to organizing the discussion has advantages and disadvantages. The advantage of Jessica’s approach is that it shows the commonalities across different creators.
— Concern about copyright being an object of scorn in selecting interviewees — Laura, in her book project, handled this by asking about copyright last. Copyright fluttered away — the interviewees’ topics of discussion went in other directions.
— “Mis-“ prefix & under-/over-enforcement discussion vs. terms that are not law talk
— Less emphasis on groups in the structure Jessica chose; less information on where ideas came from. But of course this is just a lumper vs. splitter issue.
— Why creators don’t discuss money as a motivation. Conditioning (of us scholars) not to question this. Other people supporting the work — the artist’s spouse or mother. Place of privilege.
— Finally, a question about choosing pseudonyms. Most of the names seemed to have Anglo origin.
3) Kara Swanson
— When reading, started counting for gender representation within each field
— Comparison between Jessica’s interview data and what historians are able to ask
— Post-1790 Eureka myth. Stories of Archimedes and Isaac Newton are not related to IP. Then, after 1790, the myth gets tied to IP.
— Kara looked at two works: (1) F.M. Scherer’s study of composers, 1650-1900 and (2) Christine McLeod’s book on the industrial revolution 1660-1800. Similar questions: why compose? why invent? Jessica’s data aligns with these pre-1790 studies.
— Scherer looks at the shift from patronage. Variation across countries. Does copyright aid the shift to freelance work? Scherer finds questionable support for this. No evidence on rate of creation or commercialization/distribution. Petra Moser has a recent paper that does not discuss and does not appear compatible with Scherer’s findings.
— McLeod discusses reasons to patent, e.g. patent to escape guild, patent to replace a failing guild; prestige; preemption. IP as legal insurance.
4) Zahr Said
— Book needed to be written. Lots of threads for future work
—What do we do about the data? Incentive story assumes money should play a role.
— Different disciplinary methodology, happily
Point #1
— Literary study. Bifurcated argument. (1) accept data gathered carefully, proxy these data for misalignment. (2) interpretive layer. Jessica is asking us to accept her readings. textual interpretation, but not a lot of discussion of multiplicity of meanings.
— Part (1) of the argument is convincing, part (2) not as much.
— Example on p. 186: how works arise vs. how they are disseminated. Only in footnote 11 of the appendix is there an acknowledgement of the textual interpretation issue, the possibility of alternative readings of the quotes.
— distant reading vs. close reading. Debate in literary theory. Franco Moretti as exemplar of strategy to treat literature as data. Distant reading. Digital tools. Analyzing different amounts of data.
— For example, IP as fluid. Jessica is characterizing the views, not relying on metaphor
— Here, close reading seems to be foreclosing multiple meanings
— Example, in chapter 1 on inspired beginnings, “find THE point.” Destabilizes larger categories?
— Maybe not such a law and humanities approach; maybe trying to write for a partly law & econ or patent-focused audience.
Point #2
— change happens across time. but this study is a narrative balance sheet, i.e. a snapshot. would love to see a narrative about income flow, i.e. a dynamic picture. Copyright law knows this happens.
— example from recent Diane von Furstenberg interview on NPR in which the designer discussed her career at different times and how she made different assessments of her work at different times
Point #3
— Memory. Accounts shift. Myth-making.
*Question and Answer Session After Panel 1*
1) Nicole Garnett
— deeper and broader knowledge in follow-up studies. fluidity in follow-up questions.
— motivating vs. enabling in IP. things that occur because of IP, what could you/would you do without IP, who would/could do this without IP.
— Robert Johnson contrasted with modern hip-hop artists in their relationships to IP
— side jobs, distributional consequences
Jessica’s answer
— Not all creators rely on copyright. Commissions play a huge role, for example, and those are not copyright.
— “Enabling” is the right word
2) Mark McKenna
—Simultaneously arguing against a narrative, but the interpretive lens ends up incorporating it
Jessica’s answer
— All interviews transcribed in a database. Boolean searches, etc. are possible
— One becomes invested in the words, and there’s a path-dependence to that.
3) Peter DiCola
— having used different empirical methods (interviews, surveys, case studies, observational quantitative studies), I have found personally that interviews provide the most solid foundation
— qualitative studies allow one to rule things out, especially about objective facts. more difficult when subjects are discussing their motivations.
— quotes are still available in the text for the reader to interpret. Jessica offering her interpretation does not foreclose the reader’s. we still have to trust Jessica’s selection of quotes.
— discussion of Petra Moser’s recent paper on opera; might be compatible because it focuses on a particular change in the legal regime in some Italian states. (Kara responded that she thinks Scherer discussed this same change and that he had different findings.)
Jessica’s answer
— Not overly concerned about cause in this research, as the economists Scherer and Moser are.
4) Daniel Kelly
— Two questions for Jessica
— How did you identify the interviewees? Book mentions snowball sampling.
— Geography — focused on the northeast?
Jessica’s answer
— Geography was Washington, DC and north.
— Identified relevant variables and select candidates based on this. Ask a lot of people. Confidentiality was provided.
— Interviewees had to self-identify as a creator or someone supporting creative work
— Variables included copyright vs. patent, new vs. old, independent vs. employee
— had to find a few people for each box created by these dichotomies
— based on preliminary interviews, rejected those who seemed too close to previous interviewee
— sent hundreds of letters, got some responses
— protocol is a bare-bones qualitative interview
5) Barton Beebe
— Race, class, and gender. Will focus on gender.
— How does this fit into the methodology. Theory as “soft,” quantitative as “hard.”
— Appreciated the “Mis-“ words. Prefix. Minor words to the major words. Exceptions to the rule.
Jessica’s answer
— gender and *hierarchy*
— particular audience
— women are in the sample. the genders denoted with the pseudonyms are accurate.
— in earlier drafts of the book, no names were used.
— sample is diverse ethnically and by class
6) Abraham Drassinower
— The fetish of the normative. Part of the world, descriptively. Hard for lawyers to avoid normatively. The fetish of the empirical opposes this.
— The fetish of cause vs. fluidity
— Law is part of the everyday. Tension between law and life. Law must cut life to make sense of it.
Jessica’s answer
— binary is false in other disciplines (they don’t feel traumatized), but there is this binary in law.
— There are moments of alignment
7) Kara Swanson
— Who is the audience for the book?
Jessica’s answer
— Law, policy, business people.
— Some business people have shown interest in restructuring employment situations.

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The Eureka Myth: Reputation

Posted on November 7, 2014 by rtushnet
Fourth Session: Reputation and Policy Take-Aways
Abraham Drassinower: what does thinking about misalignment tell us how to think about IP?  Move from debunking eureka myth to debunking the myth of progress.  Misalignment of IP with its own justifications, needs of its creators. Whatever IP is, it’s not an instrument of progress.  Realign it with its own progressive purpose?
Because you’re talking about misalignment b/t interview data and progress, you’re not talking about whether progress should be the focus of our attention.  Quantity is the wrong metric.  Social engineer with balances can’t figure it out.  The concept of value, and circulation of value, can’t provide sufficient foundation for the specifically legal concept of IP.  Like Holmes in INS v. AP who tells us that property is a social category.  But will qualitative approach answer the question either? If the problem is indeterminacy, then lived experience may not help answer the question of value.  Then IP remains unjustified as instrument of progress.
One conclusion: strong IP/maximalism is not correlated with progress.  Correction of mistake: gather more data but the justificatory mechanism remains collecting data to achieve progress.  But it seems at least as plausible to ask whether your empirical observation that IP doesn’t align with progress doesn’t mean that IP isn’t an instrument of progress.  Maybe it’s about something else.  Hard to say in the US though. 

More subtly: it’s the meaning of progress, rather than the nature of evidence to be deployed, that requires interrogation. But that seems to require not a recalibration of IP but rather a reassessment of what it means to gather data when you’re trying to justify something.  It’s very hard to get rid of the incentive story by looking at evidence.
Questions: (1) What is progress? (2) Is progress the same for all three cardinal branches of IP?  (3) How can data collection answer normative/legal justification questions? Not saying it doesn’t, just saying it’s not self-evident.
Joe Bauer: Difference between individual and corporate aims: corporation aims at maximizing rewards. But corporation is a legal fiction. IP is directed towards wealth for owners.  Are we as a society acting at our peril if a reduction in those rewards significantly reduces willingness to invest in IP.  (Well, how are the relative returns?)  Also, corporations aren’t one size fits all—financial rewards may play greater or lesser role.  Significant investment/unclear payoff may be different: movies; pharmaceuticals.
Should we fine-tune the rules to differ across types of work, authors, inventors, owners?  Should we give more attribution rights, and if so is the European model appropriate or some American version?  Copyright and patent are exclusive; is the implication of your analysis that compulsory licensing would be better?
Barton Beebe: IP as enabling rather than incentivizing—a key insight.  Creating conditions for play—connection w/Julie Cohen’s work.  How that relates to process over product: good IP facilitates the process and doesn’t allow incentivization imperative to destroy facilitation. Facilitation applies to second-generation artists; importance of derivative works comes out.
Shifting away from process into trademark law: is trademark law the same as attribution and reputation?  Not quite. Open source communities is very anti-IP but get very fussy if you don’t honor attribution rights.  Creators (note it’s a charged term) accept less money if you offer them autonomy and attribution.  Unalienated labor can be had more cheaply; they also want connections with consumers.  Make the market human to them; you can pay them less.
Book reports overreach; people become aggressive and fussy whereas underenforcement prevails in the rest of the book.  Human attribution is dangerous in the corporate context—the whole point of TM these days is not to indicate source but to obscure it—no, this shoe was not made in the Phillippines by an underpaid child, it was made by Nike.  Branding as authenticating source—old strict source theory of TM law has been replaced by anonymous source rule.  Book shows that everyday TM law isn’t about branding or persuasion but defamation/right of integrity.  A name is a creative act (Laura Heymann). 
(1) Star systems/mere mortals.  (2) What about those who don’t rise to the level of pro paid artist or who give up?  Adolescents’ views?  (3) Concept of the romantic author and how it might fit in. Romantic author as solitary voice/artist struggling in face of massification and speaks ex nihilo, creating something out of nothing.  A concept created in response to new material conditions of industrial production—secularization of Protestant tradition per Martha Woodmansee.  Never actually bought this as explaining copyright law.  We use the trope of the author creating ex nihilo to justify IP rights—if the author didn’t create out of a community, then he deserves all this money.  Silbey’s book creates image of people opposed to the market, working for other reasons, in opposition to industrial capitalism, but is that opposition really as opposed as all that? 
Market aspect to reputation: people who get to construct themselves as playwrights/novelists while being supported by spouses—if they’re wealthy that’s cool, if not we judge them horribly.
Mark McKenna: very few people wanted to talk about reputation here.  Hard to figure out what to say.  Merges’ reaction: this book fully justifies a strong attribution right overruling Dastar. But reputation is used in a number of different senses throughout the book by interviewees. Some talk about their reputation as scientists/artists—for being creative/innovative. Others talk about reputation in business world/ability to get deals done. Then there’s reputation as source.  Reductionist move to either talk about TM or right of attribution. But different uses may have little to do either w/TM or ©.  Attribution right would do no work for most of these reputational issues—the things that bothered artists most were some of the things they had the least justified claim to control, and giving control over those things to the artists might well be unconstitutional.
The more you see in TM law, the more you should worry about a free floating right of attribution. What counts as a “work” deserving attribution?  A piece? Whatever the author says? Who gets to say who’s a source?  Experience w/TM law is not promising.  
Why is the impulse to provide an attribution right to an artist and not to the people who stitch the shoes, who are also vital to the creation and might care a lot too.
If you were designing a legal system to deal with all these kinds of reputation, would want to think more about harm. In some cases the harms might have economic consequences but in others they might be purely emotional. Under what circumstances are those harms real? Or are they just idiosyncratic harms to the author?  Might see inverse relationship between most significant dignitary harm and greatest willingness to provide rights; thus his deep suspicion of attribution. Reputation is not one thing.
Nicole Garnett:  Some people respond to incentives and the Q is whether they’re producing what we want.  Decide what the “more” is and then investigate how the incentive works. 
Overreach/leakiness—all about optimal enforcement.  Book seems to give sense that level of enforcement is not optimal, but we never want 100% enforcement of the law. Fact of exclusion rights enables community; owner can tolerate intrusion on lawn because that won’t actually dispossess her.  What’s optimal level of leakiness?  Especially in communities where norms do more work than law.
Loren: Likes Traffix because court is clear that it’s concerned with harassment value of IP right: default rules that don’t allow quick dismissal can harm competitors for lawful behavior.  It’s that harassment value that is the overreach. Twiqbal has helped dismissal for ridiculous copyright claims.  What’s the harassment suit value of an attribution claim? That’s what makes her nervous.
Garnett: rights always raise possibility of harassment suits. Is it particularly bad here?
McKenna: tied to the remedy. If there were statutory damages available there’d be nuisance value to suits.
Loren: harassment value used to be much higher because of possibility of preliminary injunction.
Golden: making inequalities worse through just providing attribution? 
RT: Carol Rose: rights are means of communicating.  If they aren’t clear or are misunderstood, trouble can arise. Or different communities w/different norms intersect and clash.
Silbey: could be very hard to understand what interviewees meant by reputation. It’s a category that didn’t make sense as a whole.  [RT: could see it as a cluster of concepts/prototypes.] Point about blowback of attribution right—agrees with McKenna’s assessment.
Said: underenforcement—we have no duty to police ©.
Silbey: may have given them the category by asking; there are still multiple issues w/ meaning.
Kelly: culture and habits; mixed motivation could be consistent w/law and econ, but here’s one place where assumptions miss the boat by starting w/individual instead of more social view of the person, in context/social setting.
Loren: © and patent as driving different types of innovation than trade secrets, live performance, etc. As long as there’s sufficient respect for the distribution models chosen, it can work. Price discrimination/arbitrage: if it avoids a chosen distribution model then maybe it’s not justified.
Drassinower: legal construct of moral rights limits their scope: not a general defamation protection.  Did interviewees have a defined sense of what a reputation was?
Beebe: we didn’t talk much about the chapter on lawyers.  Lawyers aren’t the talent; they’re a cost center, as one interviewee says.  Was there a class division?
Silbey: trying to be helpful to people who don’t think they need you but they do.
Schwartz: litigators are problem solvers—may be seen differently than transactional lawyers.
Silbey: necessary evil (litigators). In-house tended to be more transactional, but many had moved between roles over time, except for patent specialists who only drafted patents or did audits.  Even young ones generally had varied experience.
Golden: reputation among informed peers/reputation among consuming public might differ.  Lawyers drafting patents have to avoid becoming inventors themselves.  Lawyers can also have involvement w/designing around.
DiCola: one bit in the lawyer chapter that he really liked was a music agent convincing an artist to take the money for a 30-second spot.  That’s a representative story—there was a moment when VW started licensing indie rock and it became ok because VW was cool; shift from “don’t sell out” to “I need the money.” 
Cohen: IP lawyers have a choice: discipline the talent by normalizing output that can be monetized, or they’re mediating between creators and firms, taking into account that firm’s demands can’t just be ignored but that talent has demands as well.  The people whose stories seem happy are those who are mediating.  When we teach IP, are we teaching a hermetically sealed causality story or teaching the need to mediate?  We can do the latter.
Professional responsibility questions: the Model Rules are litigation focused; don’t get at this delicate negotiation at all.  Institution-building as a goal.  Contrast: MERS and professional responsibility—people are going in to foreclose with no evidence, and now it’s a professional responsibility issue at the individual foreclosure level.  But nobody in power is saying that Covington did this incredibly unethical thing by building this powerful institution, MERS, at the behest of the top banks, even when it was absolutely foreseeable from day 1 that it would screw up the real property system.  Lawyers build stuff: they built Spotify; they built Aereo. That’s a kind of mediation too.
Golden: see constant demand by clients for noninfringement/invalidity opinions in patent; some lawyers seem willing to provide those.  You might orally communicate your opinion if it’s unfavorable; they might shop around.  That’s a product that comes from the lawyers, though of course it’s to overcome a problem created by lawyers elsewhere.

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Eureka Myth roundtable: Communities and Creativity

Posted on November 7, 2014 by rtushnet
Third Session: Communities and Creativity
Rebecca Tushnet: Silbey’s choice of subjects are those who are the targets of IP law: inventors, artists, various types of intermediary facilitators like lawyers.  They are very important.  (Unsurprisingly, they are not utility monsters, such as you might find by examining billionaires; they want enough but they also want to leave as good for others.) 
I want to talk about who’s not in these stories.  Jordan Ellenberg’s book on math, How Not to Be Wrong, tells the story of the military trying to figure out where to armor their warplanes for greatest effect at least weight.  They saw all the bombers coming back from runs with lots of holes in their wings and relatively few in their engines.  Lesson: Armor the wings better, right?  No!  Armor the engines, because assuming a normal distribution of bullet strikes, the evidence shows that an engine with more than a few holes in it isn’t going to make it back.
Who’s not making it back?  Interviewee Ted, in house counsel for bioengineering company, says: “the most successful inventors here are the people who are constantly looking for an edge, and looking at how to buck the system…. Always looking to game the system or something like that…. They were probably horrible juvenile delinquents in their youth.”  In an age of school to prison pipelines for poor and brown Americans, that’s a very charged story.
White people–especially white men –can afford to be disruptive.  Consider Kate Losse’s article, The Unbearable Whiteness of Breaking Things:
What Stanford does not teach young white men …, in the course of teaching them about startups, is that everything they are being taught—about breaking rules, taking risks, and not asking for permission—works especially well for them, and often only for them, because of who they are, what they look like, and all the associations their appearance does and does not carry. On University Avenue, white men who break things look … “cute”, not delinquent or scary, and this is why privileged young men are brought to Palo Alto in droves to learn and practice the business of what Facebook calls “breaking things”. At every turn this breaking of things is celebrated and encouraged. If you’re not breaking things in Palo Alto, you’re not doing your job.
…unless you’re not a young white man.
As Losse points out, the consequences of moving fast and breaking things are, for other groups, likely to be unpleasant and possibly lethal.  See also Jen Dziura, When “Life Hacking” is Really White Privilege.
This is not a criticism of Silbey: she went to where the creative folks making a living were.  And If you’re lucky enough to earn a living from your art, you’re probably white, to quote one of a number of articles about a report by artists analyzing Census data showing that nearly four out of every five people who make a living in the arts in the US are white.
Aside from differential risks of taking risks, what else may be going on? Silbey identifies two features of ongoing creative work: (1) hard work and labor, and (2) autonomous time and personal space.  Who has those latter things?  Who doesn’t?  Sometimes the interviewees describe taking more lucrative other jobs to make ends meet, which apparently could always be had, jobs that still left time and energy over for art.  Where are the other origin stories, of people who didn’t have that time and money but made art anyway? Silbey discusses Virginia Woolf’s Room of One’s Own, but only as an individual aspiration, necessary to creativity but not structurally there for everyone. 
The interaction between the individual and the community also highlighted for me the importance of communities of artists who were listening when each other spoke—and the lost histories of female artists, the women who have been forgotten—and I mean that in a very active sense—so that women don’t know they’re working within a tradition, as Joanna Russ sets out in How to Suppress Women’s Writing. Without that community, it’s harder to survive as an artist.
If reputation is important and law isn’t, that also raises important distributional questions. Silbey discusses reputation as identity, as social glue, and as form of expression and self-representation: but some people have spoiled identities, to use Erving Goffman’s term. Reputation and misattribution: if women’s contributions are perceived as less important, if white artists become popular with black styles, then the reputation economy won’t work the way we want it to.  Who gets to trust that they won’t be misread or read out of the story?  Might be useful to bring in critical race theory discourses about why people with less structural power might prefer formalized rules, from which deviations can be more clearly identified and fought against.
Finally, who are the people against whom these creators construct themselves? Marketing professional: “We are different than other companies, where we don’t say, ‘All right, now we own your property.’ We partner with them …. [I]t’s an ethical thing for us…. [I]t’s their baby, it’s their child, and we don’t believe in taking it away from them.”  Who does? Whose children are sold into metaphorical slavery, and who’s doing the buying?
Side comment: book suggests TM/brand management is key concern, but all we want to talk about is copyright/patent.  Why is that?
Torie Bosch: John Scalzi’s Lock-In, sf detective novel in which a number of people have lock-in syndrome: can’t move, can talk; those who can afford it use robots to move around.  Scalzi wrote Unlocked, a short companion work filling in backstory.  Publisher behind these: Tor, fascinating case study.  (Owned by Macmillan itself owned by Holtzbrinck.)  Most successful sf imprint.  Sell books without DRM (after an initial failed experiment w/that, which Holtzbrinck shut down).  Publisher continues to go after “pirates.”  After they went DRM-free, no discernable increase in piracy.  Publisher says: For their readership, essential and fair: close-knit community w/huge online presence, and closer fan-pro contact; fans very upset by DRM. 
Tor.com: focused on novella-length works.  Clever branding.  Published first five chapters of Lock-in and made Unlocked free ($1.99 as ebook).  One of the interviewees in The Eureka Myth creates multimedia platforms that allow franchises to create ecosystems allowing fans to contribute.  Way to get and give value. 
Peter DiCola: Feedback loops in creative process, relation between law and creators/inventors.  “Work makes work”: interviewee says that doing the work itself shows where the work should go. Perceptions of law shape behavior with then shapes law.  Preference for the sake of choice and preference for the sake of welfare are two different things—but these narratives suggest that creators have preferences, make choices, decide how well off they are, may change their preferences.
Process: process does work through the tangible.  At every point the process does leave tangible traces.  But a greater emphasis on the physicality of work, the time and space it takes, is important.  Maybe quality of work experience is what we’re trying to maximize: maybe there’s something special about being a full-time musician that we want to be available to some people.  IP might enable that. 
Utilitarian story isn’t one story, it’s a family; you can alter the calculus to take into account lots of things/preferences. Can we tell a better incentive story if there is one to be made? 
Feedback loop idea is also useful for talking about under and overenforcement.  People react to and play with the boundaries of IP law, making it a moving target.
Silbey: Publishers claimed that primary revenue driver was TM/reputation. Recognize that they’ll be pirated, but cared more about TM than textbook.  Taking DRM off might not matter if people want to buy it from this publisher rather than another.  (Presumably it also matters that school districts largely would prefer not to buy unauthorized copies.)
Loren: Multimedia guy: people don’t want to watch Shawshank Redemption on their phone, but they will read ancillary content like the story of Andy’s trial; textbook publisher now making its money on test sheets etc. Did it happen because of the shifting platform or because of IP?  She thinks it’s really the shifting platform, not IP-driven.
McKenna: relates to Q of how you structure the way you want to make money. Add-ons may be more attractive when you’re less likely to make money on the sale of the core thing.  Who decides how that business is structured?  Even in biosciences, different models of service/product. 
RT: Note that ultimately it’s the consumer who decides how the business is structured.  You can have exclusive rights and consumers can stay away in droves.  McKenna: it’s a dialogue: which package the business offers, or its choice set, can be structured by law.  RT: sure, but careful of rhetoric that firm has the “right” to choose its own business model.
Beebe: back to survivors.  How do you study the ones who failed?
Silbey: there are stars in this dataset and then there are people who make a living; several people in the dataset identify as artists/inventors but haven’t yet made a living from it.  Been thinking about if you were going to form communities to support work that isn’t made sustainably now, they need time and space.  We don’t have community centers around our nation that provide innovation labs, kilns, craft rooms, access to computers. Colleen Chien says mayors can do this.
Beebe: Is that progress if the artist is enjoying herself but not disseminating?  All aesthetic experience as craft, fighting the art/craft divide and looking for aesthetic experiences.
McKenna: infrastructure for creation: we could just have art in schools, as we used to. We tend to think about how to get stuff out of fully formed people, but we should talk about infrastructure.
Silbey: You do need communities to survive. Space is finding people who are doing things you’re doing and are not being told to do it in school but are choosing it and finding validation.
DiCola: Most IP academics/IP policy folks have stopped coming to the Future of Music conference; but people from HUD and Dep’t of Education come because they’re interested in this question—not about “cool” cities, but deeper policies.  One program: pilot program in schools to get musicians and artists teaching – another program allows them to work as musicians by working in the schools. 
Said: interesting to track people w/artistic aspirations from adolescence.
Silbey: people who weren’t making a living didn’t perceive themselves as failures, just on the way to success.  Do people who disband bands perceive themselves as failures? Award winning photographer left the industry and works in a family business because he was disgusted w/how he was treated.
Cohen: Diversity in people who don’t support themselves with art.  Photographers have “photo salon” once a month, with juried shows allowing people to build reputation, and at the highest levels you might be carried by a gallery.  Worries about firm distinctions between survivors and “failures”—salon has everyone from the very new to the expert; take stock of the whole.  State-funded support for the arts in Maryland is fairly racially diverse.
Silbey: RT was talking about the problem of inequitable distribution of self-fulfillment. There are people in the study who by many external standards would be “failures” but they don’t consider themselves to be failures at all. What are we measuring? Who wishes they could live an authorial life but dies unfulfilled? Who is not getting the chance to develop in those ways?
Golden: some communities may be more likely to arise than others. Story: Grad student in physics who said “I really like being a grad student in physics. It’s like being part of an all-male club.”  Both explicit and implicit bias.  How we should be assigning value to work.
RT: I don’t support the survivor/failure binary either. Nor am I really interested in personal satisfaction w/one’s own work as such.  (Many pro authors would flunk that test.)  I wasn’t really talking about people who go to photo salon, but the people who got discouraged or never got started.  Who learns that experimentation might get you arrested, harassed or killed?  (1) Of course amateur work is not failure!  I kind of have a thing about that.  (2) We often valorize survival when it’s not the result of personal factors or even moral luck but just luck. 
DiCola: superstars/winner take all markets.  Did anyone talk about being stuck in such a market?  No one can name the second best violinist in the world even though Yo-Yo Ma is probably not 100x better than that person. 
Silbey: they talk about randomness but not that.
DiCola: What’s bad about winner take all markets? One claim: too many people compete for the big payoff.  Instead of basketball or music, we need more engineers.  But why would an economist be confident in saying that?
Silbey: agent says “it’s my job to help my clients make money, and I’ll do that however I can.”  Even her perception, w/many big and little clients, is that she gets them enough. Some get a lot, and she can’t explain why, and others don’t get as much as she thought they would, but there’s not a lot of winner take all discussion. 
Laura Murray: how people judge their own success: peer recognition is a big deal both for artists and grant-making authorities.  That can be turned into cash in various ways, direct and indirect.  Some definitions also say you’re a pro if you spend more time on art than on other things, but that doesn’t work for a lot of artists.  If people aspired to do that, or an aspiration to make money, could consider them pros.  Not always about paying the rent. Some were privileged and had support from a spouse or other, but they wanted money as a sense of achievement/making people take you seriously.  Complicated semiotics. Others said that being on the cutting edge made you a pro; many were invested in distinguishing themselves from hobbyists even if they hadn’t made money recently or ever.  These communities do make distinctions; partly a function of the way that the arts are so little valued—a way of trying to get taken seriously and get recognition of expertise.
Loren: in criminal area, Head Start is great way to prevent crime: invest early, not late.  Same here.
Drassinower: the woman in Silbey’s interviews who didn’t try to publish her work: if we think about process as what matters, and not result, then whether this becomes publicly available is a result-oriented process.  If you don’t have a result-oriented conception, the woman is just doing her process.  If we want to say that at the heart of progress there’s some inherent respect for the process, then respecting the dignity of her process is to let her not publish.  Right of first publication!  Key element of progress which requires respect for the dignity of the author in at least this way.
Silbey: that same interviewee said she needed to write every day the way some people need to exercise.
Drassinower: survivors are not IP problems but social/political problem—how do we distribute the possibilities for self-fulfillment equitably. Not sure IP is the vehicle for solving the problem; they are rights of exclusion.
RT: but if your theory built on survivors is wrong, then you won’t get the results you want when you write the law.  That’s the point of talking about the airplanes: if you theorize about what made your survivors survive, you may make mistakes.  Attribution is an example. Current mechanisms for attributing authorship disadvantage women/female roles, for example; so changing the rules won’t necessarily do what you want.
DiCola: Mechanism: music is an industry built on copyright, and its gatekeepers put 90% men on stage at Pitchfork. Then the teen girls in the crowd don’t see themselves on stage, and that plays a role in what happens next.
Drassinower: I wouldn’t start w/IP; this would be tinkering.  Counterproductive to focus on social inequality from IP standpoint?
RT: I’m not saying we can use IP to fix inequality. Rather, I’m saying if our theory is built on what gets currently successful groups to produce IP, then changing the rules in ways we think will encourage more creativity may not do so, like armoring the wings of the airplane.  (Or, you know, extending the term of copyright.)
Said: if “survivor” has a utility as a concept, we should also frame the problem of silence around the people whose voices aren’t heard.
Swanson: European IP Soc.—pilloried by economists when she suggested that IP systems were gendered and discriminatory; they said that JK Rowling was making plenty of money. But: If IP matters so little in these creators’ lives, am I wasting my time thinking so much about IP? 
McKenna: innovation beyond IP—trying to reframe the issue to include lots of things we traditionally don’t think of as relevant.
Drassinower: really hard to grow up in Latin America and think of copyright as a basic problem.  We want to think in a more disciplined way about the role of IP in society at large. Indeterminacy of progress is part of the problem; IP can’t be the engine of progress in every direction, though Constitution says science and art.  In the mode of strategies, IP is less likely candidate for a big mover.
Loren: we don’t know what we want: “more.”  “Progress.”  How do you know what you want when you don’t have it?  So instead we let the market tell us.
[Catharine MacKinnon’s retelling of John Stuart Mill is all about this: what would we be like if we were free?  There are things you can do to find out, and in © they’d center around derivative works.]
Cohen: platonic backhand, you clear away all the mess and simplify; platonic forehand: having extrapolated causality from artificially simplified dataset, you offer normative prescriptions. The backhand is not normative. The problem w/law is that we have melded legal realism with positivism with law & economics: technocratic social planning.  Silbey’s book discredits the platonic backhand—have to go and talk to people, not just tell a causality story. But when somebody does that, we have to figure out what to talk about.

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Roundtable on Jessica Silbey’s The Eureka Myth

Posted on November 7, 2014 by rtushnet
Roundtable on Jessica Silbey’s The Eureka Myth: Creators, Innovators, and Everyday Intellectual Property
University of Notre Dame Law School
[I was very sorry that I arrived late due to a missed connection the previous night]
Second Session: Distribution Models and Design Principles
John Golden: rule of law concerns: if there’s not a good fit between law’s underlying assumptions and what people think, they might lose respect for the law complicating legal compliance. Law & economics: if people do have different motivations not reflected in IP regime, we might redesign law and grab some low-hanging fruit. More protection for attribution, w/o restricting dissemination/exploitation by others.  Desire to curate/protect like children. Mixed motives: baseline interest in survival, income allowing them to continue doing the work they wanted to do.  Scientists/engineers often chose steady income of salaried employee instead of going on their own: moderates upside and downside. Honor/scientific reputations—seems to operate across the board in many creative areas.
How do we make systems approximate their models w/out resistance etc.?  The concepts of misfit and leakiness.  Leakiness is sometimes a good.  Attribution/credit protections are missing and people think they should be there.  There are also carveouts: swiss-cheese-like contributions to leakiness, such as fair use.  Even more rifle-shot carveouts like medical method patents & limits on liability for doctors performing the method.  Rules v. standards—some carveouts are one, some the other.  If we think leakiness is desirable, as the book suggests in some respects, we have design choices on how to achieve that.
Leakiness can also be created through counterbalancing policies.  Example of land/mineral rights where information sharing can be mandated, benefiting others, but returns can be received by exploiting the minerals.  Different actors can figure out what’s the most efficient way to move forward.
Lydia Loren: Problem finding is sometimes the inventive part; but the fact that copyrighted works are sometimes solutions to problems really comes out in these stories. 
Should we care about misalignments if they don’t affect behavior?  Venture capitalists also misunderstand IP; focused on firms that have patents that don’t really mean much in the end.
Silbey suggests that IP results in glorifying individual over collective, which is a distortion of the facts. But IP is an administrative mechanism for vesting rights, and if you vest it in too many it becomes hard for capital to organize around it. So it makes sense to identify an individual owner, because of the need to organize capital.  Needs of the firm: only part of those are made up of the needs of the creator.  The firm needs manufacturing, marketing, sales, distribution, employment to put the pieces together.  Many creators need and want the firm for the steady paycheck/freedom from managing the details.
Independent creators express a desire in these interviews for help: in marketing, in studio—to take over the parts they find yucky. And one source of help is the firm.  IP used to be taught as part of competition policy.  Now IP has become more personal.  IP is still part of the support—may not motivate, but it can enable. 
Book does good job acknowledging how IP shapes creative work into something recognizable in the business world: self-consciously pursued and woven into business strategy.  Move away from formalities in © has made it easier to defer that strategy to later date.  Becomes a latent asset.
Firms need to figure out how to provide the right conditions for innovation/creation. Need for rich creative environment to work on.  Weeds out pure rent-seekers w/exception of firms w/a back catalog. Increasingly getting a variety of firms.  Try new forms: B corporation (public interest as one goal) is a result of firms realizing there’s more to this than the bottom line.
Example of finding herself in the book: in the lawyer, in the author, but also in the firm: w/a colleague, wrote an IP book but couldn’t stomach the traditional distribution model, so created a pay-what-you-want model w/a suggested price.  Ton of work to write & keep up to date, so financial incentives matter and remuneration is justified.  Website, allowing others to distribute their work too: now have harnessed capital to provide authors freedom to create w/out having to deal w/business side. Students really appreciate the alternative.
Be careful in saying that contracting around IP defaults is reckless.  Shrinkwrap contracts may be wrong, but contracts that leverage IP into rights artists want, like attribution, may be justified.  Chits to be traded for something the creator values more.
Steve Yelderman: Some subjects struck him as taking IP core rights for granted, while at the same time saying that IP wasn’t important to them.  One example: textbook publisher talks about IP not being nearly as important as getting on an approved curricular list in a few big states.  But that presumes that competitors can’t just copy the textbook and sell perfect substitutes.  First-mover advantage might be some protection, and there’s no way that anyone needs a right to control the right to make a fourth-grade history textbook (that is, idea/expression), but the basic reproduction right seems important there.  Other interviewees seem to reason similarly.  Need for caution in terms of trying to draw conclusions.
Antitrust: customer reviews, asking whether a merger would be good or bad for customers’ business.  Customers are infamous for being unable to anticipate harm from merger of their suppliers.  Party documents say: we intend to raise prices 25%.  Customers will still say “they always take good care of us.”  This is a context where we’re asking them to imagine a world that’s not the world they live in; we all have these blind spots.
Mismatch between IP values and creative values: They don’t have rights they do want and do have rights they don’t want.  Benefits to recalibrating?  On the too strong front, the book uses “underenforcement,” implying departure from some optimal level of enforcement, but book doesn’t seem to mean that.  Forbearing on enforcement of privately held right—let neighbor walk across lawn—but that doesn’t mean we have real property law wrong.  Tax, criminal law have different undertones about optimality of high level of enforcement.  Framing matters.  Holder choosing to include/share w/others something w/in the core of what she could exclude, have to ask if that’s IP working or IP failing, and that will depend on circumstance.  In many cases, voluntary forbearance has inefficiencies: others can’t rely on it; operating in gray area and uncertainty may be needless.  But there are different implications depending on reasons for forbearance.  What might we permanently want to take away because forbearance is so uniform?  Hard to tell.
Also, different situation when there is provisionally tolerated infringement but rights held in reserve to discipline later uses.  Users bear the risk, but IP could be doing work underground.  Maybe it’s enabling certain kinds of disclosures/interactions w/works.  Publishers removing DRM, when books are sold for profit.  Boon for company; better for customers who hated DRM; but in a world w/o copyright, would they be taking DRM off?  Is that backstopped by other rights. Similarly w/ disclosure/enabling aspects of patent law in allowing more transparency and collaboration.  Couldn’t tell from interviews whether they thought DRM was w/in the penumbra of IP, or trade secrecy.
Core case: infringement is actually welcome but users have to take the risk. Ask why rightsholders haven’t given explicit permission: maybe they do want to hold rights in reserve; or they don’t know how to get it done.  Potential solution: make it easier/cheaper to modify rights in reliable way. Those concerns are real, but balance against unknowns in potentially productive conditional forbearance. How serious are these harms/how inefficient?
We’re moving to a world of collaborative creation: “users” are melding into creators. But not sure which way that cuts. Maybe makes middle category more important than it was.
Julie Cohen: Loren sees IP as administrative means of vesting asset, that’s functionally how it works, but then there’s a question of what IP is for.  Not only whether it is benefiting mainly firms but whether it should be doing that.  Risk of concluding that IP isn’t for creators at all and thus ignoring their interests still further.
Narratives we tell about IP influence the way people say they think about IP, so expressed motivations are very important but also may not rest on a completely firm foundation.
Clusters of problems/questions in need of unpacking: (1) relationships between creative employees and firms.  Silbey tries to defuse worry about IP mainly benefiting firms by talking about how corporate employees speak about corp. motivation; “we’re not just sharks” and we depend on the creativity of our employees.  More empirical study is warranted.  Companies harness employee innovations in particular ways/directions (Google and privacy-destructive technologies). 
(2) Managed performance, sharing, and other distribution strategies: Juxtaposition w/other literature on change in relation between corporation and individuals. Example: playbor: you get people to play & do unremunerated stuff and profit.  Screwed up deeply rooted assumptions about how labor and employment markets work.  These people aren’t employees and they aren’t even freelancers because they’re giving their work away.  How you get money? Self-promotion, apparently.  On one level we can tell a story about misalignment of IP, but also about the strategies of extraction of surplus in the digital economy; not all of the stories are happy stories.
Casebook Connect v. Cohen’s Aspen casebook—managed performance strategy in Silbey’s typology—tether the book, but you have to give back the physical copy at the end of the year.  You have permanent digital access unless/until they discontinue the platform. They do offer untethered hard copy at an extremely high price relative to the tethered product.  Managed performance is at one level not about IP, but at another level absolutely is—trying to make used book market go away/become only source for the product and tethered service.
(3) Discourse/framing.  There’s been some talk about getting out of the loop of the causal narrative of IP.  Trade associations have historically talked about the individual creator to bolster their own interests (though now they are more likely to abandon that and talk about trade deficits).  Discourse is constructed by people with interests and maintained for a purpose.
(4) “If we think a leaky regime is desirable” … for whom? In physics you design to get closer to the model; so much lobbying and rentseeking in IP is designed to do that—if your model is that everything should be licensed you design the derivative works right that way and maybe eventually you convince people to behave.  Merges & Nelson have long discussion of way patents can’t be expected to affect software industry because of the way the industry works (1990s article), and Lemley etc. talk about how the software industry responded to patenting in really significant ways—the industry responds to law. These are two different snapshots from when an institutional lever was used: now the industry looks very different.
If this is about relation between creative employees and firms, it can’t be good enough to say “that’s contracts” or “that’s employment.”
RT: Echoing Cohen.  Loren says firms have an incentive to create the right conditions for innovation: or you can try to free ride on your suppliers.  (American firms are not currently known for their long-termism.)  Kindle Worlds as an attempt to get rid of paying tie-in authors and Amazon’s broader attempt to get rid of legacy publishers, whose advances were the nearest thing to a regular salary a midlist author could hope for; crowdfunding; arguably these firms are eating not their but our seed corn. (It’s not accidental that this is marginal income for Loren & other law profs.)  Offloading promotion to individual authors even w/in traditional publishing houses—you have to hire your own press agent.  Artist as firm in herself: you hire the people to do the work; we do the distributing and take our share.  Compare to the model of treating employees as independent contractors, as w/UPS. Individualized risk, corporatized benefit.  We’re not just sharks says one interviewee, but that person is drawing a within-industry contrast.  Query: in a generation, who will Silbey be interviewing and who will be paying them? 
McKenna: one significant shortcoming of incentive-based theory is impoverished view of what it is we’re trying to incentivize.  “More” is not a thing. Whatever you design you get more of some things and less of others.  What “more” do we want?  Many of Silbey’s examples involved markets where, whatever the rule is, people can organize around it and find other ways to extract money like ancillary services. Law defines what that structure will look like—it’s how you’re going to make money, not whether.  Picking winners and losers; we should think more about the fact that IP doesn’t work well for creators—normative underlay is that it should.  But why?  Why are creators special?  If the answer isn’t “more,” why should our rules promote certain peoples’ interests?
Silbey: Howard Gardner talks about “aligning” interests of individuals and firms.  Organization is disembodied entity, but people can speak to you. 
Mark McKenna: notion that creators should be able to earn a living creating: but why?  I want to make a living playing football, but I’m not entitled to a set of rules that makes it possible for me to do so.   Thinks justification can be done but rarely is.
Cohen: IP people talk about “more” simplistically.  Churning out lots of work might not result in as good work as taking time.  Firms aren’t trying to maximize the production of IP; they’re trying to maximize production of value, and you can’t maximize for both.
Golden: Some creators’ interests might encourage overreaching in control. Maybe there’s a need for education.  Need to calibrate our arguments so we don’t encourage abandonment of creators if we think they’re valuable.
Barton Beebe: Process v. results in Silbey’s work: book emphasizes aesthetic process and not ends; unalienated labor is enjoyable even if in the end the resulting thing is not successful. People definitely reveal a preference for aesthetic process; should we work to maximize that? How would we do that? 
Said: it’s not a lack of a legal regime for subsidizing football that keeps McKenna from playing football, is it?  (He was a Notre Dame QB, by the way.)  But that analogy gets us to think about means-end relationship.  You could decide to stay home and play touch football, but football is collaborative.  Or any other example: writer could decide to stay home and write, but the practice is not just about that.  It’s also about engaging through the practice/work with an audience—dissemination is important in that conception.  [But cf. the interviewee who’s an unpublished novelist and doesn’t yet want to share her work.]  [I thought Said was going to talk about how you can’t get economic rewards just with exclusive rights; you have to convince other people that it is worth paying you to allow them access.  I guess talking about distribution is the same point seen from the creator’s POV.]
Silbey: the distribution chapter is most aligned with the IP system as it is. Managed performance and many/more (selling as many copies as possible) are standard IP stories.
Dan Kelly: Struck in the idea origination chapter—not about the incentive system, at least in the characterization that it’s all about money.  People care about many things; even though quotes were inconsistent w/ caricature of incentive theory, if you take a broader view of preferences there might be nothing inconsistent.
Different ways of setting up income: creators care about steady stream for survival and also b/c they are working constantly so they feel the work should be rewarded, not just the big payout at the end.  But creators sometimes don’t like to go to firms where there is drudgery. Are there other possibilities to bring capital to creators? Hard to identify who’ll be good.
On McKenna’s “more of what?” If you don’t subsidize IP, the idea is undersupply (McKenna: but of what? There will never be an undersupply of creativity, but types would differ) but we think your private incentive to become a QB is sufficient. 
Abraham Drassinower: Constitution does single out authors/inventors, not QBs.  Also suggests connection with progress, art, and science.  It’s plausible to say that in © the concept of process has a lot of attraction. © isn’t as concerned w/result as it appears to be economically—doctrine of independent creation for example.  We care that you create, not what.  Patents: invention seems to be about product, not result.

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stricter California rule on Made in USA claims not preempted

Posted on November 7, 2014 by rtushnet
Paz v. AG Adriano Goldschmeid, Inc., No. 14cv1372, 2014 WL 5561024 (S.D. Cal. Oct. 27, 2014)
Paz sued AG, alleging that its “The Protégé” brand jeans were misleadingly marked with a “Made in the U.S.A.” label; he allegedly relied on the label in the belief that he was “supporting U.S. jobs and the U.S. economy.” However, the jeans allegedly “actually contain[ ] component parts made outside of the United States”: fabric, thread, buttons, rivets, and/or certain subcomponents of the zipper assembly.  He alleged violation of the CLRA, UCL, and California Business and Professions Code § 17533.7, which makes it unlawful to sell “any merchandise on which merchandise or on its container there appears the words ‘Made in U.S.A.,’ ‘Made in America,’ ‘U.S.A.,’ or similar words when the merchandise or any article, unit, or part thereof, has been entirely or substantial) made manufactured, or produced outside of the United States.”
Here, the court denied AG’s motion to dismiss on the ground that the FTCA and the Textile Fiber Products Identification Act (TFPIA) preempted the claims.  AG relied on conflict preemption.  There’s a presumption against preemption where the states have traditionally regulated in an area (like consumer protection).
The FTCA, in 15 U.S.C. § 45a, says that “Made in the U.S.A.” or equivalent claims have to be consistent with FTC decisions and orders, and that “[n]othing in this section shall preclude the application of other provisions of law relating to labeling.”  The FTC duly issued an Enforcement Policy Statement “to give general guidance on making and substantiating U.S. origin claims.”  The FTC articulated a standard that requires that a product so labeled be “all or virtually all” made in the US, which means that all significant parts and processing that go into the product are of U.S. origin.  The FTC will consider “whether the final assembly or processing of the product took place in the United States; the portion of the total manufacturing cost of the product that is attributable to U.S. parts and processing; and how far removed from the finished product any foreign content is.”
The FTCA therefore allows for the use of a “Made in U.S.A.” label even if the product includes or contains material from a foreign country, but § 17533.7 requires that all parts of a product be “entirely or substantially made, manufactured, or produced” in the United States. These are different standards, but that doesn’t require conflict preemption. It would be possible to comply with both laws. “Outside California, Defendants could use the ‘Made in U.S.A.’ labels, but inside California, they could not. This may be burdensome for Defendants, but it is not impossible for them to do so.”
AG argued that California law created an obstacle to the accomplishment and execution of the FTCA, and that the FTCA was intended to give the FTC authority to determine when use of “Made in U.S.A.” would be misleading or not misleading.  But (1) there was no indication that field preemption was appropriate, and (2) both statutes had the same purpose, to allow consumersto know whether their purchases “support fellow Americans” or “harm the American manufacturing base.”  (Quoting the Federal Register—interesting that the recent country of origin labeling case involved a government far less willing to articulate this obvious fact.)  Given the California law’s purpose “to protect consumers from being misled when they purchase products in the belief that they are advancing the interests of the United States and its industries and workers,” compliance with one wouldn’t impede the other.  (This seems to finesse the question of whether high standards for “Made in the U.S.A.” encourage producers just to give up and go entirely offshore, whereas they could stay onshore if they could import zippers and still use the label to generate additional profits.)  Delegating authority to the FTC to regulate “Made in the U.S.A.” isn’t the same as preventing states from exercising that same authority; after all, the FTCA also delegates to the FTC the power to go after unfair methods of competition, while allowing the states to do likewise.
The court turned to the TFPIA, which provides that a textile fiber product will be misbranded if it lacks a label indicating origin; if it’s “processed or manufactured in the United States,” it has to be so identified.  AG argued that the TFPIA requires them to use a “Made in U.S.A.” label even if the garment includes foreign-made materials, but California law prohibited that unless the entire garment is made entirely or substantially in the U.S.A. Only the second part of that last sentence was true. Nothing in the TFPIA requires an unqualified “Made in the U.S.A.” label; the TFPIA actually requires that labels disclose, e.g., “Made in USA of imported fabric.” To comply with both laws, AG must merely accurately describe where the parts of the product and the product as a whole were sourced and made.
AG argued that California law prohibited even qualified “Made in U.S.A.” claims, and the law could be read that way.  (The court didn’t understand Paz to be challenging properly qualified claims, only unqualified or underqualified claims such as “Made in U.S.A. of imported fabric” when the products included parts, other than just the fabric, that were sourced or manufactured overseas.)  On its face, the statute outlawed “Made in U.S.A.” whenever parts were entirely or substantially made outside the US, and was silent on qualified labels.  But the lack of precedent didn’t preclude the court from using common sense.  The relevant provision was part of the FAL, governing false and misleading advertising in general.  A properly qualified label lacks falsity or misrepresentation and so wouldn’t violate the California law. Thus there was no preemption.

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Deadmau5 vs. Disney

Posted on November 5, 2014 by rtushnet

I talk to American Public Media’s Stan Alcorn.

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Photoshopping competitor’s product as one’s own could be false advertising

Posted on November 5, 2014 by rtushnet

Meggitt (Orange County), Inc. v. Nie, 2014 WL 5528546, No. SACV 13–0239 (C.D. Cal. Nov. 3, 2014)
Note: the caption lists the defendant as Nie Yongzhong, and I’m following the rule that Chinese family names go first since he appears in the case as Mr. Nie, but I don’t know how this will show up in dockets/reports.  Plaintiffs (Meggitt) make sensors and accelerometers to measure vibration, shock, and pressure.  A related company employed Nie as an engineer in China; he had access to Meggitt’s trade secrets and signed an agreement not to use them.  But then he founded defendant Xiamen Niell Electronics, which now manufactures and markets sensors and accelerometers that have nearly identical specifications as several Meggitt products.
Meggitt sued for trade secret misappropriation, unfair competition, conversion, and breach of duty of loyalty and received a preliminary injunction.  After more rounds, Meggitt added a Lanham Act false advertising claim.
First, the court ruled that the claim had to satisfy Rule 9(b) because, though one could allege negligent false advertising (comment: or for that matter faultless false advertising; that’s what strict liability means), if the plaintiff alleges a unified course of fraudulent conduct then Rule 9(b) applies.  (What really gets me about this rule is that nobody applies it to trademark claims.  How often does a trademark plaintiff allege exactly the same cursory statements about bad faith/intent to deceive that trigger 9(b) in the Ninth Circuit when they’re alleged in a §43(a)(1)(B) complaint?  Indeed, how many trademark complaints don’t allege intent to deceive?) 
Here, the complaint alleged an overall plan and scheme to misappropriate confidential information and misrepresent Xiamen Niell to the industry “as being a well-established, strong, reputable and reliable company with qualified engineers, and a wide range of product offerings, and from whom the customer can expect to obtain high-quality and reliable products and after-sale service.”  However, the complaint did satisfy Rule 9(b), even without factual allegations establishing when or where the “scheme and plan” was devised, or who devised it. The issue wasn’t the planning of the scheme, but its execution; also, planning was within the defendants’ knowledge, and for such matters Rule 9(b) may be relaxed.
Meggitt alleged that Nie and Xiamen Niell falsely advertised products through catalogues and data sheets at two trade shows.  The advertising was allegedly false because the catalogues and data sheets advertised products that did not exist and contained false product specifications.  Defendants admitted that they advertised some products that hadn’t been manufactured, but argued that they never represented that all their products were available off the shelf. Instead, the products could be made for customers, and predictions about future events are ordinarily non-actionable expressions of opinion. This, they argued, corresponded to industry practice, in which orders are normally “driven by customer specifications.”
The catalogues and data sheets attached to the complaint did have future-oriented aspirational language, such as, “Niell–Tech will provide the most excellent products and services for you,” which was non-actionable in itself.  But the data sheets also contained “detailed specifications for products for which neither prototypes nor samples were ever manufactured”; statements that some non-manufactured products had “proven use” under certain conditions; and statements that other products were “made by Xiamen Niell–Electronics Co., Ltd.” and operated at certain levels. In addition, the data sheets had photos of non-manufactured products, some of which were actually photographs of Meggitt products photoshopped to bear defendants’ marks and product numbers.  (Pro tip: don’t do this. Just don’t.)
It might turn out that customers in this industry wouldn’t be misled, but that possibility wasn’t a proper ground on which to dismiss the complaint.

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unauthorized photo use doesn’t create false advertising claim for photo owners

Posted on November 5, 2014 by rtushnet
Avalos v. IAC/Interactive Corp., No. 13-CV-8351 (S.D.N.Y. Oct. 30, 2014)
Meltech, a web design and modeling company, sued defendants for allegedly unauthorized use of photos of models in fake online dating profiles on dating sites (e.g., Match.com, Chemistry.com, and OkCupid.com).  Many fraudulent profiles allegedly used photos of its model Harrington.  Using attractive images on fraudulent profiles allegedly enticed consumers “to join and pay subscription fees who would otherwise not” and generated “inflated advertising revenue.”  This conduct allegedly caused Meltech to receive “thousands of complaints from American romance scam victims,” caused Meltech’s owner to be “threatened and harassed,” and led to a reduction in value of Meltech’s “intellectual property” itself, as its “photographs have been associated with ‘dating scams’ on the internet and in the public eye, turning a multi-million dollar celebrity brand into a notorious and infamous figure with little commercial value.”
Meltech withdrew its copyright infringement claims, apparently because it didn’t have registrations (and couldn’t secure them? bizarre, except the DMCA likely doomed any such claims anyway).  And it withdrew its NY right of publicity claims, apparently because such claims are personal to the person holding the right.  The court here addressed the remaining claims.
Lanham Act: Defendants allegedly violated §43(a)(1)(A) by “using [Meltech’s] photographs in [its] web site profiles and advertisements,” thus engaging in “reverse passing or palming off” of Meltech’s photographs.  Nope.  “In attempting to plead a Lanham Act claim based on Defendants’ unauthorized use of its photographs, for which Meltech does not own copyrights, Meltech attempts to achieve precisely what Dastar prohibits: an end run around copyright law.”

The complaint could also be read to allege false endorsement on the theory that the photos created the impression that the model was a user of defendants’ dating websites and approved the websites.  This is an ok claim under the Lanham Act.  (Paging Mark McKenna.)  However, Meltech would have to own the model’s right of publicity, assuming it was transferable; Meltech didn’t claim to do so, and couldn’t if, as seemed from the allegations, its contract was governed by the laws of Nebraska, as Nebraska’s right of publicity is inalienable. 
False advertising: Under Lexmark, “a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.”  This requires “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising; and that that occurs when deception of consumers causes them to withhold trade from the plaintiff.”  Judge Furman clarified that this wasn’t a question of “standing,” though most courts don’t much care.
Even assuming that the fake profiles were “advertising or promotion”— “a premise that the Court highly doubts, but need not reach” — Meltech didn’t adequately plead harm to its commercial interests proximately caused by defendants’ alleged misrepresentations.  Meltech argued that defendants’ false designation of Harrington as a member of their sites resulted in the “devaluation” of Meltech’s IP.  But there was no factual support in the complaint for that conclusory allegation.  In fact, the alleged misrepresentations were more likely to harm defendants, not Meltech or Harrington.  The exhibits showed complaints warning other consumers to “NEVER SUBSCRIBE [to Match.com]!” and a website, ScamDigger.com, telling consumers that fraudulent photographs on dating websites, including Harrington’s, are “STOLEN FROM INNOCENT THIRD PARTIES” and that “[p]eople on the pictures are not associated with scammers in any way, they are just victims of identity theft.”  Even if Meltech could show harm, it failed to allege a plausible causal connection between the harm and defendants’ acts.  Meltech needed to allege that the deceit led consumers to “withhold trade” from Meltech “by, for example, visiting its websites less often.” Meltech didn’t plausibly so allege, and even under Famous Horse’s “even more lenient” test, its speculative allegations of harm wouldn’t be enough.
Civil RICO: No.
State law claims of unjust enrichment, conversion, and aiding and abetting fraud: The court exercised its pendent jurisdiction, even though this was an early stage, because of preemption issues and because the law was well-settled, so there was no point in allowing a fruitless refiling in state court.
Most of the claims were clearly preempted.  Photos are within the subject matter of copyright.  Unjust enrichment was plainly preempted, as it was based solely on defendants’ allegedly unauthorized commercial use of the photos.  So was the conversion claim, since Meltech was alleging unauthorized publication rather than physical appropriation.  As to aiding and abetting fraud, “intentional deception” could be a required extra element (nooooo!), but the complaint failed to state a claim because a required element is reasonable reliance on the defendant’s misrepresentations.  But Meltech didn’t rely on any misrepresentations, and third-party reliance isn’t sufficient for fraud.  Thus the court didn’t need to reach the (obviously applicable) §230 defense.

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Reading list: irrationally sticky defaults

Posted on November 4, 2014 by rtushnet
Robert Letzler, Ryan Sandler, Ania Jaroszewicz, Isaac Knowles, and Luke M. Olson, Knowing When to Quit: Default Choices, Demographics and Fraud, Oct. 8, 2014
Abstract:
A long literature in psychology and economics has shown that default options influence consumer choices, but it is often unclear whether individual consumers are nudged to choose optimally or simply nudged to a different choice. We study the effects of default options in a novel setting where the optimal choice is clear: the decision to escape from fraud. We employ data from one of the largest telemarketing fraud cases ever brought by the Federal Trade Commission (FTC). The telemarketer enrolled consumers into costly membership programs, which the vast majority of consumers never used. A court order issued during the FTC lawsuit created a natural experiment whereby some consumers were sent “opt-in” letters informing them they had to take action to remain enrolled while similarly situated consumers received “opt-out” letters that merely reminded them how to quit. We find that the “opt-in” letters increased cancellations by 63.4 percentage points, to essentially 100%. We then examine heterogeneity in the responses to the “opt-out” letters . We find that consumers residing in poorer, less educated Census blocks and those more likely to be minorities were more likely to cancel their subscriptions prior to the FTC lawsuit, but were relatively less likely to respond to an opt-out letter.
Conclusion, indicating that providing information isn’t enough when the default option is wrong, and that the information-only situation disproportionately harms poorer and minority consumers:
A large literature on the effects of default choice structures shows that agents are more likely to choose the default option, compared to other options. In this paper, we show that this is true even when the optimal decision is clear. Our results further indicate that informational interventions are not always an effective way of encouraging consumers to make those optimal decisions. Conversely, our results suggest that changing defaults is not a panacea when optimal choices are less clear. A standard model for a “nudge” policy involves enrolling consumers into a supposedly beneficial program and requiring them to actively opt out if they do not want to remain enrolled. It would not be surprising in a study of such a program to find only 30% or so of the target population opting out. However, in the case we study, it was likely optimal for every consumer to opt out, and relatively few did.
We also find evidence that the information intervention of the opt-out letter had heterogeneous effects across demographic characteristics, with consumers in low SES neighborhoods and those more likely to be minorities less likely to respond to the letters. Thus, the information provision policy disproportionately benefited consumers likely to be more well-off financially. Although the differences across demographic characteristics were smaller than the overall effect of the opt-out letter on cancellation, setting the correct default had bigger benefits for subscribers from lower SES neighborhoods than for subscribers from higher SES neighborhoods.

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Time to make the DMCA exemptions

Posted on November 4, 2014 by rtushnet

Requests will be collected here as the day continues.  The EFF and the OTW jointly requested a remix exemption for DVD,  Blu-Ray, and streaming video.

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