Patent Law’s Gordian Knot

Jonathan S. Masur, The Use and Misuse of Patent Licenses, 110 Nw. U. L. Rev. 115 (2015).

When a patent holder does not manufacture or sell a product, it cannot seek “lost profits” in the event the patent is infringed. Rather, courts must determine a “reasonable royalty”—generally, what an infringer hypothetically would have paid if the patent holder had licensed the patent, assuming it was valid and infringed, in the private market before the infringer began its unlawful acts. Such market rates are usually determined by examining other licenses for the patent-in-suit, or for patents sufficiently similar to the patent-in-suit.

In the brilliant article The Use and Misuse of Patent Licenses, Jonathan S. Masur unpacks what is often expressed but not suitably explained: that reasonable royalty determinations in the law of patent damages are substantially circular, leading to paradoxes and other conundrums that cannot easily be solved. The basic intuition is straightforward. Courts attempt to value patents in reasonable royalty determinations by looking to the market. Yet, market actors must bargain in the shadow of the law. Hence, a circularity.

For ordinary private law scholars, the response generally would be, “Who cares?” Assuming violations of the law are not a regular occurrence, then the market can still set reliable rates sufficiently divorced from judicial pronouncements. Slightly modifying an example in Masur’s article, take for instance the tort of conversion. This cause of action allows private owners of goods that have been stolen, or simply borrowed and damaged substantially, to recover the fair market value of the good from the wrongdoer.

In conversion, determining the fair market value of an ordinary good—say a bicycle that has been stolen—isn’t too difficult. Just assess what the good is selling for on average, and damages are fairly well-determined. However, imagine that the government and courts decided today that conversion was the only legal action owners could take for damages if their goods were stolen and the only punishment inflicted on the wrongdoer (i.e., criminal theft is abolished). In this instance, there would be a huge incentive to steal the bicycle in the street, because the worst that could happen for the wrongdoer is paying the fair market value of the bicycle (setting aside litigation costs for a moment), and the best would be getting the bicycle for essentially nothing. As Masur indicates, such an instance is akin to a “heads I win, tails I tie” outcome, not providing much of a deterrent.

The result is that the price of bicycles would fall—because they could be easily stolen or, alternatively, to compensate for increased amounts spent on locks and other theft-prevention devices (which I assume, for sake of argument, are separate products from the bicycle). Of course, the price could fall only so far because the marginal cost to produce a bicycle sets a minimum price floor. But, again, for the sake of argument, imagine that these costs are negligible. As prices fall, courts set the damages from conversion lower and lower, thereby increasing the incentive to steal bicycles even more. The feedback loop between the market and courts would eventually cause the price of bicycles to decline rapidly, potentially killing the market itself.

What a bizarre hypothetical, one might quip. Well, bizarre perhaps for bicycles, but not for patented inventions. Why? As Masur insightfully recognizes, for unpracticed patents, a civil suit for reasonable royalties is typically the only way to recover for infringement. In this regard, since the Supreme Court’s eBay decision, for most patentees seeking reasonable royalties, injunctive relief is unavailable, implying that the only remedy is money damages—for past and future infringement. Next, because the marginal costs of producing an additional good covered by a patent are often small—think pharmaceutical drugs—there is often no hard floor to stop prices from falling, at least ex post. Finally, unlike bicycles, patents are relatively unique assets, making them very difficult to value, and the key information to determine reasonable royalties lies with the parties, who tend to massively exaggerate or undervalue patent value, as the case may be, via their experts in court.

Thus, Masur properly concludes that the usual way out of the circularity dilemma of contract and tort remedies is not typically available for reasonable royalties. Masur masterfully spells out this argument in extensive detail, all the while digging quite a deep conceptual hole for the ostensible foundation of a sizeable share of patent law remedies as practiced. Like conversion absent criminal or other sanctions, as courts look to the marketplace and as infringers take their chances, reasonable royalties will generally spiral downward to the potential demise of patents altogether.

Further complicating this landscape, Masur rightly contends, patentees—realizing as much—will, like someone engaging in a fraudulent insurance scheme, do all they can to inflate the nominal value of licenses so that courts impose damages greater than the “fair market value” of the patent. For example, in addition to providing a naked license to the patent, patentees can offer consulting services, know-how, or other benefits but price them into the apparent “royalty rate.” For patentees that sell products to licensees, they can inflate the royalty rate and discount product prices. As courts look to these increased licensing rates, the market will respond by increasing the rates on ordinary licenses, ballooning licensing awards in the courts.

Perhaps all of these effects negate each other? Unfortunately (for us), Masur is again dead on the mark: “It may be tempting to conclude that these effects will balance one another out, or at least come close enough to doing so that it is safe to ignore them. But this would be error. It would be pure fortuity….” (P. 144.) Of course, these negating effects – as well as the other factors used to determine reasonable royalties – while not fully in balance, do keep the system from completely collapsing. With that said, there is little belief that current royalty determinations are fairly accurate, even on average, across large numbers of cases.

So, what is the upshot? Although Masur recounts that it is usually “in the nature of legal scholarship to write comedies rather than tragedies” (P. 156), reasonable royalties appear to be the recalcitrant exception. Masur suggests in this and later work that courts wholly abandon reliance on comparable licenses. Yet, he and others have yet to propose workable alternatives that suitably further the aims of the patent system. While actual valuation of the benefit of the patented invention relative to the next best alternative would escape these dilemmas, estimating these amounts is notoriously difficult.

So is there no hope? Instead of attempting to cut this Gordian Knot, I have proposed in previous work that we essentially burn it. Rather than restoring the patent holder to some mythical “state of nature of the market,” courts would do better to focus on damages that adequately reward the patentee for its innovative contribution so as to set appropriate ex ante incentives to innovate. Market transactions may be one input into such a determination, but other factors, such as the patentee’s research and development costs, commercialization costs, opportunity costs, and risk of failure would arguably better calibrate with the aim of patent law to promote innovation. More on that in future work. In the meantime, we are left with the maelstrom so ably explicated by Masur. Anyone seeking to understand the precise headwinds, tailwinds, and sidewinds of this storm is well-advised to read Masur’s meticulous depiction.

Cite as: Ted Sichelman, Patent Law’s Gordian Knot, JOTWELL (July 7, 2016) (reviewing Jonathan S. Masur, The Use and Misuse of Patent Licenses, 110 Nw. U. L. Rev. 115 (2015)), http://ip.jotwell.com/patent-laws-gordian-knot/.
 
 

Copyright’s Interpretive Turn

Zahr Said, Reforming Copyright Interpretation, 28 Harv. J. of L. & Tech. 469 (2015).

Zahr Said’s Reforming Copyright Interpretation puts its finger on an important, yet little studied, aspect of copyright law: judicial interpretation. It pushes the ball quite a bit by providing a descriptive taxonomy of courts’ interpretive approaches in copyright law, advancing and defending an interpretive approach that it considers best overall, and applying and exemplifying its framework and arguments with a good number of cases while situating it all within a larger body of law and literature scholarship. For me, that’s tons of progress in one article, and the reason why I like it lots.

In resolving copyright disputes, judges must make interpretive decisions. Decisions regarding interpretation are often outcome-relevant – for example, when they lead a judge to decide whether an issue is a matter of law or fact or whether expert testimony may be admitted or not. These decisions can also be outcome-determinative – for example, when a judge makes an interpretive decision that resolves a case on summary judgment or finds an allegedly infringing use to be fair. The interpretive judgment that these decisions involve often flies under readers’ radars. Said draws our attention to judges’ interpretive choices and to the systemic effect that they have, or could have if they were to be conducted appropriately, on copyright law.

Descriptively, Said organizes judges’ interpretive choices along two axes. First, judges decide what to focus on in their interpretation. In doing so, they choose a point on a Text/Context spectrum. By analogy to patent law, this could be thought of as the proper mix of intrinsic and extrinsic evidence in claim construction. “Text” here stands for any interpretive decision drawn out of, or relying on, the copyrighted work itself—be it textual, pictorial, musical, etc. “Context” stands for interpretive decisions relying on evidence outside the work such as the author’s intent, expert opinion, or readers’ perception or response.

For example, a court may need to decide whether a work is substantially similar to another. It may make this determination by comparing the two texts. Or, it can rely on the author’s (or alleged infringer’s) intent, the lay reader’s view, community perceptions, expert opinion, or even the court’s own subjective impression of the works. Each choice vests the interpretive authority over the text in a different source. This decision can be outcome-determinative: a judge reviewing a defendant’s motion for summary judgment may grant it based on reviewing the text alone and conclude that no similarities exist. But if the judge’s interpretive approach gives weight to the author’s intentions or to audience perceptions, then she may deny the motion.

Second, judges choose an interpretive method along an Analysis/Intuition axis. The interpretive method helps the judge reach her legal conclusion from her chosen source of authority over the work. “Analysis” stands for careful explanation of the judge’s reasoning, applying doctrine to facts, a practice that may constrain a court’s future analysis or subject it to appellate review. An example of analysis is Mannion v. Coors Brewing Co. (SDNY 2005), where the court identified three potential loci of originality in photographs generally, and then moved to determine whether any of the three were present in the photograph before it. Alternatively, courts can assert conclusions about the works at issue that appear to be based on nothing more than intuition. An example of intuition is Roth Greeting Cards v. United Card Co. (9th Cir. 1970), where the court found infringement by noting that the defendant’s greeting card copied the plaintiff’s “total concept and feel.”

Underlying Said’s perspective is the notion that interpretation is inevitable. Courts engage in it whether they acknowledge it or not. Said wants judges to be aware of the interpretive phase of their decision-making process, and to choose and defend their points of choice along the two axes deliberately. Said suggests that it would be better if doctrine provided judges with an interpretive roadmap – perhaps like patent doctrine does – rather than assuming that judges already own the enterprise of formulating interpretive methodology.  An agreed-upon methodology would enhance the enterprise’s predictability and fairness, and subject it to more effective appellate review.

Said laments judges’ tendency to view artistic, expressive, “nontechnical” copyrighted works as “self-interpreting” or “facially clear” and thus semiotically accessible and in no need of interpretation. This is different from the case of more technical works, such as software, where courts recognize the need for interpretation and for following an interpretive framework. Said resists this technical-artistic distinction for interpretation. Every text is complex, and meaning is not clear on the face of the work. Accessing works requires an act of interpretation.

Normatively, Said provides two prescriptions for a desirable approach to copyright interpretation. First, she suggests that judges lean toward the text side on the Text/Context continuum. Text is an easy-to-locate, objective source that both parties have access to. Focusing on text tends to minimize the amount of evidence presented in trial, and thus minimizes litigation costs and trial uncertainty. Second, Said prefers that judges use analysis over intuition because of current doctrinal confusion with the “total concept and feel” test, because different judges have different intuitions, and because intuition allows little ground for appellate review. Analysis, on the other hand, tends to create precedents, interpretive roadmaps, and case law consistency.

Said acknowledges that her prescription-favoring, text-based formalism may resolve most infringement cases, but that it may not suffice for cases turning on issues such as contested authorship or transfers of copyrights. Here, courts’ decision-making will often have to go outside the four corners of the work, such as by considering the parties’ intentions and community norms. Said acknowledges fair use as another context in which text-based formalism may prove inadequate, and where courts will have to look at contextual considerations, such as social meaning in finding a work transformative.

Said’s work is rich and intriguing. Paralleling its insight and direction, it also opens up new questions and possible extensions, and here I would like to mention two. First is a possible empirical extension. As for the descriptive portion of the article, it would be interesting to know what more could be said to portray a more accurate descriptive model of courts’ interpretive choices. Take the Text/Context axis, for example: what ideal points do courts tend to choose in deciding cases? If I had to guess, a uniform distribution would seem unlikely: while I can see courts choosing points ranging from the text end of the spectrum up to about the midpoint or even beyond, I would be surprised if many cases gave exclusive or predominant weight to context, and little or no weight to the text. The article’s descriptive insight could be augmented here with an empirical component. Further, one may wonder about whether courts’ choices of ideal points along the two axes in particular cases are independent of each other. Again, if I had to guess (and as the article recognizes in passing), I would think that there is some correlation. It seems that choosing a point involving a high degree of intuition and little analysis on that spectrum would correlate with a preference of text over context. Again, mapping these correlations would enhance the article’s descriptive power.

A second possible extension may be tying Said’s work on copyright interpretation to other bodies of IP. The framework might be extendable to patent and trademark laws, for example, perhaps with some adjustment. In patent law, the Text/Context axis seems readily applicable, as it can be used to model courts’ and commentators’ preferences as between intrinsic and extrinsic evidence in claim construction, for example. What about the Intuition/Analysis axis? How many patent law summary judgments could be described as founded on little more than intuition as to the meaning of patent claims? Can patent courts be characterized as distinguishing between “simple” and “complex” technologies, so that patent cases reflect (an implicit) judgment that the former require little interpretation of claims while leaving more room for interpretation in the latter category (paralleling copyright courts’ distinguishing between technical and nontechnical works)? Trademark infringement’s test calls for a mix of textual and contextual considerations, such that its choice and direction could be mapped using that axis as well. Perhaps the framework could be used across all IP fields, even if the normatively desirable “ideal point” may differ among them, and perhaps it is even of broader application in interpretation generally. These are for sure laborious and non-trivial questions that go well beyond the scope of Said’s article, which already does a lot. They are, however, a testament to the article’s utility and insight.

Cite as: Dotan Oliar, Copyright’s Interpretive Turn, JOTWELL (June 10, 2016) (reviewing Zahr Said, Reforming Copyright Interpretation, 28 Harv. J. of L. & Tech. 469 (2015)), http://ip.jotwell.com/copyrights-interpretive-turn/.
 
 

Is it Time to Overrule the Trademark Classification Scheme?

Jake Linford, Are Trademarks Ever Fanciful?, 105 Geo. L.J. (forthcoming), available at SSRN.

Trademark law protects distinctive marks: ones that identify the source of goods or services and distinguish them from others in the marketplace. But how should courts determine whether consumers view a mark as distinctive? In an attempt to provide some analytical rigor to this essential question, courts have developed a complicated two-prong test: they look to both “inherent distinctiveness” (i.e., linguistic uniqueness) and “acquired distinctiveness” (i.e., whether consumers have come to see the mark as distinctive of source). Inherent distinctiveness for word marks is based on the so-called Abercrombie spectrum (named after the 1976 2d Cir. case that most famously articulated it), which classifies marks from most to least distinctive as fanciful (KODAK cameras), arbitrary (APPLE computers), suggestive (COPPERTONE suntan lotion), descriptive (AMERICAN airlines), or generic (“apple” for apples). Marks like AMERICAN can become strong, protectable marks only by developing “acquired distinctiveness”; marks like COPPERTONE and APPLE are presumed to be protectable at birth; and coined marks like KODAK are the strongest of all.

As Barton Beebe notes in his casebook, Abercrombie‘s “influence on U.S. and even foreign trademark law cannot be overstated.” But Abercrombie‘s foundation has been slowly crumbling. For example, in a 2009 study, Thomas Lee and colleagues found that consumers are far more influenced by how and where a mark is placed on a box than by where the mark falls on the Abercrombie spectrum. Rebecca Tushnet has explained that Abercrombie “lacks empirical foundation” and is out of step with basic marketing knowledge, such as that an ostensibly fanciful mark like VIAGRA is already imbued with “suggestions of virility, viability, and Niagara Falls (a classic sexual image).” And now, in an impressive trifecta of recent articles, Jake Linford has further dismantled the key theoretical assumptions underlying the Abercrombie classification scheme for word marks.

Linford has tackled Abercrombie from all sides: First, in A Linguistic Justification for ‘Generic’ Trademarks, Linford argued that categorically denying protection to “generic” marks ignores processes of language change through which once-generic terms can acquire source significance. He then moved to the middle of the spectrum with The False Dichotomy Between Suggestive and Descriptive Trademarks, which drew on “semantic shift” research to explain that suggestive and descriptive marks are likely to confuse consumers in similar ways. Linford argued that suggestive marks, like descriptive marks, should be protected only upon a showing of acquired distinctiveness rather than receiving automatic protection. Most recently, in Are Trademarks Ever Fanciful?, he attacks the other end of the spectrum, arguing that courts are wrong to assume that made-up words are empty vessels without source significance that should receive automatic, robust protection.

The key to Linford’s argument on fanciful marks is research on “sound symbolism,” or the strong connection between word sound and word meaning. For example, most people think that a table named MAL is larger than one named MIL, and that a product named TAKETE is spikier than one named MALUMA. Want your product to seem small and fast? Choose the vowel /i/ over /u/, voiceless consonants like /t/ over voiced ones like /d/, fricatives like /s/ over vocal stops like /k/. One recent review of this literature concluded that “the sounds of words can convey meaning apart from their actual definitions, and this meaning can systematically bias perceptions and judgments.”

Marketing research has demonstrated that sound symbolism can be used to choose more effective trademarks. Consumers prefer fictitious brand names that match perceived attributes of a product, such as GODAN over GIDAN for a dark beer, NELLAR over NULLAR for a fast Internet service, KUTUM over KITUM for male deodorant, GOMMEL over GIMMEL for SUVs (but vice versa for convertibles). Marketers use this research when coining fanciful trademarks. By cataloging the sound symbolism literature, Linford makes a strong case that fanciful trademarks are not empty vessels: rather, they “trigger powerful associations in the minds of consumers, which can be used to transmit both source- and product-related information.”

What are the implications of sound symbolism for trademark law? As Linford explains, this research undermines the justifications courts have offered for granting strong protection to fanciful marks, and it can impose unjustified costs on competitors. “Courts often find similarity between a fanciful mark and a competitor’s mark to indicate bad faith adoption by the competitor,” but Linford argues that “sound symbolism provides a reason for the competitor to adopt a mark with some similar characteristics: to communicate product features to consumers.”

At the very least, in light of Linford’s work, courts should discount the use of similar sound symbols by alleged trademark infringers rather than presuming bad faith. Linford also tentatively proposes “[t]wo more radical shifts”: requiring every mark to show acquired distinctiveness in order to receive protection, and holding that some sound symbols are “essentially functional” and thus not protectable. He acknowledges the concern that weaker protection for fanciful marks would lead to more firms choosing descriptive marks, which might ultimately impose even greater costs on competitors, but he argues that “sound symbolism is a phenomenon with real power” such that there may be little competitive difference. And while abandoning Abercrombie would be a big change in practice, there are few trademark scholars who strongly defend this doctrine. Rather than advocating artificial linguistic distinctions, scholars have increasingly argued that trademark law should be more attuned to how consumers actually view different types of marks. (An excellent recent example is Alexandra Roberts’s explanation of why Abercrombie does not reflect consumer perceptions of whether hashtags like #IceBucketChallenge are source-indicating trademarks.)

Perhaps a bigger concern with Linford’s sustained attack on Abercrombie is that it would increase administrative costs. Under current law, choosing an “inherently distinctive” suggestive, arbitrary, or fanciful mark is a shortcut around the costs of developing evidence of acquired distinctiveness. And the categorical bar on generic marks makes it easy for courts to explain why certain marks are undeserving of protection no matter how much consumers have come to view them as source-indicating. But the lower administrative cost of a bright-line rule over a more flexible standard is of little comfort when the error costs associated with the rule outweigh that administrative cost savings, and Linford has provided numerous reasons to suspect high error costs at each point of the Abercrombie spectrum.

Would abandoning Abercrombie and just looking for evidence of acquired distinctiveness actually lead to lower error costs? It would at least focus courts on the right question, but trademark cases rarely involve reliable evidence for assessing how consumers actually view a mark. Consumer surveys are expensive and unreliable, so courts often turn to circumstantial evidence such as advertising spending on the asserted mark, but such evidence is only a very weak proxy for how distinctive the mark actually has become to consumers.

What courts really need is a simpler way to tell whether consumers associate a mark with a certain product. In The Google Shortcut to Trademark Law, I argued that one cost-effective way to do this is to look at online search results, which allow us to collapse the two prongs of the distinctiveness test: if a word mark is distinctive (i.e., if consumers tend to primarily associate it with a certain product), then most of the top search results will use that mark to refer to that product. I don’t know whether this test will gain traction, or whether better consumer surveys will be developed, or whether creative scholars (or judges) will come up with an entirely new way to assess distinctiveness. But Linford does a terrific job explaining why it is a mistake to stick with the status quo.

Cite as: Lisa Larrimore Ouellette, Is it Time to Overrule the Trademark Classification Scheme?, JOTWELL (May 6, 2016) (reviewing Jake Linford, Are Trademarks Ever Fanciful?, 105 Geo. L.J. (forthcoming), available at SSRN), http://ip.jotwell.com/is-it-time-to-overrule-the-trademark-classification-scheme/.
 
 

How Do Creators Respond to Risk?

Andres Sawicki, Risky IP , Univ. of Miami Legal Research Paper No, 16-18 (2016), available at SSRN.

Intellectual property laws govern activities that are inherently risky. Authors and inventors can only estimate the consumer demand for their contributions. And many creative activities run the risk of infringing existing IP rights. Accordingly, it is essential for policymakers and scholars to understand how creators think about risk.

To date, most people who have written about IP law and risk have assumed that creators will be risk averse. In a new paper, Andres Sawicki challenges these accounts and argues that the kinds of people that IP law typically regulates—creative people—tend to be risk seeking. Accordingly, where others saw the risk inherent in IP as a problem, Sawicki sees it as potentially beneficial.

Sawicki begins by discussing the various features of IP that involve risk, including the fundamental riskiness of all market-based creative ventures as well as IP doctrines such as patent law’s definiteness requirement and copyright law’s fair use standard that introduce additional uncertainty. When previous scholars have noted these issues, they have tended to assume that creators faced with risk will tend to be risk averse, because, after all, most people are risk averse. Thus, most people prefer receiving $100 to playing a lottery in which they have equal chances of receiving $200 or nothing.

Sawicki reviews a large and growing body of literature from psychologists who study creativity that suggests that, at least for creative people, this account is not entirely true. Research suggests that more creative people tend to have a greater tolerance for risk than do less creative people and that a fundamental feature of successful creativity is the ability to recognize and capitalize on risks. Sawicki is careful to note that the literature in this area is not entirely conclusive, but he makes a plausible case that successful creators are likely to view risk and uncertainty differently from other folks.

Based on this claim and a set of important simplifying assumptions, Sawicki then offers a number of testable hypotheses about how creators’ risk preferences will influence their behavior. He suggests that creators will tend to seek out opportunities to engage in activities with uncertain benefits over otherwise equivalent ones with certain benefits. And he suggests that risky environments are more conducive to creativity.

If these claims are correct, Sawicki argues, creators’ higher risk tolerance could make IP-style incentives a more efficient proposition than previously recognized. Relative to a stable salary, prize, or tax incentive of equivalent value, the probabilistic and uncertain value of IP rights might ultimately generate higher creative output. In addition, Sawicki argues that efforts to make IP rights more certain may undermine some of the value that we get from risk-seeking creators.

As always, and as Sawicki recognizes, the devil will be in the details. Sawicki’s claims rest on various simplifying assumptions that may turn out to be wrong (a prospect he openly admits). For example, he assumes that a person’s risk preferences in one domain (such as artistic creativity) will be similar to those in another domain (such as financial risk). And he tends to assume that the framing effects noted by Daniel Kahneman and Amos Tversky may have minimal effects on creators’ decisions. Whether or not these assumptions are correct is a matter for future empirical research, and Sawicki’s paper has done a terrific job of pointing out the most promising directions for that work.

If Sawicki’s descriptive account of creator behavior is correct, IP law may be able to take advantage of creators’ risk tolerance to generate more incentive bang for its buck. But creativity and risk taking are not always valuable. When creators enter a field they face a variety of existing IP rights that may impinge on their goals. They can choose to license those rights or adopt the more risky strategy of designing around them. To the extent that downstream creators are excessively risk seeking, then, they will tend to choose the latter option at inefficient rates. Instead of licensing existing solutions, they will waste R&D resources in risky ventures. Ultimately, however, IP scholarship needs an accurate account of how creators are likely to respond to these and other risks.

Cite as: Christopher J. Buccafusco, How Do Creators Respond to Risk?, JOTWELL (April 12, 2016) (reviewing Andres Sawicki, Risky IP , Univ. of Miami Legal Research Paper No, 16-18 (2016), available at SSRN), http://ip.jotwell.com/how-do-creators-respond-to-risk/.
 
 

Creative Strategies for Beefing Up Copyright Enforcement

Eric Priest, Acupressure: The Emerging Role of Market Ordering in Global Copyright Enforcement, 68 SMU L. Rev. 169 (2015), available at SSRN.

Corporate copyright owners based in the United States have been frustrated by the prevalence of piracy in China and in certain other fast-growing markets, and that frustration has led to three primary responses. The copyright industries have (1) supported proposed legislation that would impose enforcement obligations on U.S. parties, such as the Stop Online Piracy Act; (2) advanced expansive interpretions of the enforcement jurisdiction of the International Trade Commission; and (3) deployed technological protection measures.

In his new article, Acupressure: The Emerging Role of Market Ordering in Global Copyright Enforcement, Professor Priest identifies two additional strategies that seem to have promise. These strategies rely on pressuring certain intermediaries that hold the power to deny infringers access to the markets they seek to serve. Presenting these as case studies, he then abstracts away to model how and when market-based pressure on intermediaries or customers – the “Acupressure” in the title – are likely to be effective. He concludes by revisiting familiar critiques of copyright enforcement through private ordering and integrates these into his analysis of the public policy ramifications of these new developments.

After explaining why attempts to police foreign conduct in U.S. courts has largely failed, Professor Priest introduces the first case involving the online video market in China. In a very short period of time, two of China’s largest sources of online videos changed their advertising-based business model from one that relied on infringement to one that relies on licenses from copyright owners. Why incur these substantial costs when these service providers enjoy certain limits on liability that closely resemble those that U.S. intermediaries enjoy and when the threat of judicial enforcement for transgressions is negligible?

According to Professor Priest, these services’ most valuable advertisers – multinational corporations – faced internal and external pressures to dissociate their brands from platforms identified as pirate sites. He supports this assertion with some original reporting based on interviews with executives at the two companies. He emphasizes that after these two companies became licensees, their incentives aligned with the advertisers and the copyright owners, which led them to use legal process to pressure their unlicensed competitors, such as Baidu. He also persuasively explains why alternative theories of causation are less plausible.

His second case involves use of theories of unfair competition in the United States to block market access to foreign manufacturers that use infringing software in their operations. The theory is that companies that rely on copyright infringement for a critical input into their business operations enjoy an unfair advantage that allows them to artificially lower prices. The theory is accepted in “anti-IT theft” statutes in force in certain U.S. states and in case law that deems this an unfair trade practice under a state’s mini-FTC Act. Professor Priest cites examples in which foreign manufacturers agreed to license their software in response to threatened loss of market access.

From these examples, Professor Priest derives models of alternative enforcement. Most prominent is the “market pressure” model applicable “[i]n jurisdictions in which the state’s influence over infringers is weak, the state may be replaced in the enforcement chain by a powerful ‘third party’ with greater influence over the infringer.” The essential elements are that a third party with sufficient leverage exists, that the enforcement targets belong to a relatively small, tight-knit group to form compliance norms that can be internally monitored and enforced, that enforcement is ongoing either through the third party or other community members, and that the complying members are incentivized to invest in enforcement against defectors.

This model better conforms to the Chinese video market case study than to the use of unfair competition in the United States because the users of infringing software are a large and diffuse group. Professor Priest highlights Washington state’s law as having an innovative feature because it targets retailers in the United States who sell products derived from uses of infringing software, analogous to regulations prohibiting the sale of products produced with child labor or in violation of certain environmental norms. By shifting the target, this strategy pressures the retailer, such as Walmart, to exert copyright compliance pressure throughout its supply chain. But, query whether this law would survive a challenge under the Dormant Commerce Clause.

Professor Priest is more sanguine than I am about the desirability of these new enforcement strategies from a public policy perspective, but his article does a great service by bringing these to light, by engaging with concerns about non-judicial enforcement of copyright norms, and by analyzing the key ingredients that contribute to these strategies’ relative success.

Cite as: Michael W. Carroll, Creative Strategies for Beefing Up Copyright Enforcement, JOTWELL (March 17, 2016) (reviewing Eric Priest, Acupressure: The Emerging Role of Market Ordering in Global Copyright Enforcement, 68 SMU L. Rev. 169 (2015), available at SSRN), http://ip.jotwell.com/creative-strategies-for-beefing-up-copyright-enforcement/.
 
 

What Scope for Patented Designs?

Sarah Burstein, The Patented Design, 83 Tenn. L. Rev. ___ (forthcoming 2016), available at SSRN.

Ornamental designs of articles of manufacture have been patentable subject matter in the U.S. since 1842. About 400,000 such patents have issued in the years since the birth of this regime, two-thirds of which have been granted since 2000. Scholarly interest in design patents has historically been quite modest, but has been heating up lately. This is due in no small part to the epic battle between Apple and Samsung over Apple’s claim that Samsung’s phones infringed some of Apple’s design patents. Samsung has asked the Supreme Court to consider whether the designs at issue are really “ornamental” and thus properly covered by design patents. In addition, Samsung wants the Court to review the award to Apple of its total profits on the sales of the infringing phones in the amount of $399 million.

The Supreme Court has not reviewed a design patent law since 1894. The Court’s 1871 decision in Gorham v. White articulated a test for infringement that is still influential today. Gorham did not raise difficult issues of patent scope because the defendant in that had embodied a clearly ornamental patented design for silverware in directly competing products.

The question about ornamentality in Apple v. Samsung is important. One can only hope the Supreme Court will take the case and answer this question. Professor Burstein’s new article poses two other questions about design patent scope. One is whether a design patent can be infringed if the design is embodied in a different product than that depicted in the patent. The other is whether a design patent can be infringed by a visual representation of the design not embodied in an article of manufacture. She concludes that other-product-embodiments and visual-representations should not infringe design patents, both as a matter of statutory interpretation and as a matter of policy.

Burstein convinced me on both points. What I loved best about the article, though, was the rich discussion about what the word “design” means in the context of design patents. Burstein observes that the word design is “mercurial,” serving both as a verb and as a noun, a process as well as a product. Design has a dual meaning: the look of products and the preparation of instructions for the production of those products. Designs for articles of manufacture are about blending form and function. When articles of manufacture are beautiful, that beauty results from this blending. The product and its design are inseparable. These insights about design inform Burstein’s interpretation about the proper scope of design patents.

Burstein discusses some cases that recently posed other-product-embodiment and visual representation issues. The cases are so colorful that one might have imagined them to be improbable professorial hypotheticals.

In Kellman, the plaintiff owned a design patent on a novelty foam hat in the shape of a wing-nut so that fans of the Detroit Red Wings team could express how nuts they were about their favorite team. The wing-nut visual pun caught on. One firm printed a wing-nut design on t-shirt, and Coca-Cola impressed a wing-nut design on bottle caps. Kellman sued both entitites. Under the Gorham test for design patent infringement, neither claim was plausible.

Gorham directs the trier of fact to consider whether an ordinary observer would the designs at issue to be so substantially the same as to induce customers to purchase the defendant’s product supposing it to be the plaintiff’s. No one who wanted a wing-nut hat would be deceived into buying Coca-Cola because of the wing-nut on the bottlecap. The t-shirt claim was arguably stronger because both products are items that humans wear. Yet, it was implausible that anyone who wanted the hat would be deceived into buying the t-shirt instead.

The PS Products case was even stranger. The design patent at issue was for a stun-gun designed to be worn like brass knuckles. Its owner sued the maker of a videogame that included visual depictions of similar weapons. The District Court dismissed the case on the ground that no reasonable person would purchase the videogame believing he/she had purchased a stun-gun.

These decisions reject the view that design patents protect designs per se. Burstein argues that these cases were rightly decided and offers statutory, doctrinal, and policy reasons in support of her argument. What convinced me most, however, was her discussion earlier in the article about the inseparability of patented designs and their embodiments in articles of manufacture. If a designer thinks that a design can, in fact, be embodied in more than one kind of product, he/she should apply for more than one design patent. For it is a requirement that an applicant identify what kind of product is to embody the design.

Burstein would not, however, limit the scope of design patents to only those products specifically identified in the patent. She would favor a rule that extended design patent protection to products in the same general category. This part of the paper is less developed, but is consistent with her overall thesis.

Design patents are not copyrights; they do and should not protect designs per se. Having spent a great deal of time cogitating about the proper scope of copyright’s derivative work right, I appreciated Burstein’s project to do a comparable analysis of design patent scope. Bravo, Sarah.

Cite as: Pam Samuelson, What Scope for Patented Designs?, JOTWELL (February 15, 2016) (reviewing Sarah Burstein, The Patented Design, 83 Tenn. L. Rev. ___ (forthcoming 2016), available at SSRN), http://ip.jotwell.com/what-scope-for-patented-designs/.
 
 

A Lesson from the History of Italian Opera: Some Copyright Good/More Copyright Useless

Michela Giorcelli & Petra Moser, Copyright and Creativity – Evidence from Italian Opera (2015), available at SSRN.

Today opera fans in the United States are rich, old, and increasingly rare. But it wasn’t always that way. In the Eighteenth Century, opera was the closest thing to mass entertainment, especially in Italy. And that fact provides a platform for economists Michela Giorcelli and Petra Moser to say something interesting about the effect of copyright law on creativity. Giorcelli and Moser’s Copyright and Creativity – Evidence from Italian Operas, is a paper I liked, lots.

Giorcelli and Moser’s paper is a natural experiment using historical data surrounding an “external shock” – viz., Napoleon’s invasion and occupation of northern Italy between 1796 and 1802. The northern Italian states of Lombardy and Venetia adopted copyright laws in 1801, as a direct consequence of French rule. Six other Italian states studied by Giorcelli and Moser only began adopting copyright laws during a period that began a quarter-century later. Giorcelli and Moser collect historical data on 2,598 operas that premiered across the eight Italian states in question between 1770 and 1900, the most fertile years of Italian opera production, and a period that both precedes and follows the adoption of copyright by Lombardy and Venetia.

Comparisons across the period reveal a statistically significant increase in new operas produced in the states that adopted copyright in 1801. Giorcelli and Moser estimate that Lombardy and Venetia produced an average of 2.12 additional operas per year after 1801. This increase is relative to a baseline of 1.41 operas per state per year before 1801, thus yielding an apparent increase of approximately 150%, versus an increase in production of approximately 54% in the states that had not adopted copyright.

The authors then inquire whether the increase in number was accompanied by an increase in overall quality of the operas produced. Using other historical data sets, Giorcelli and Moser estimate a 4.6-fold increase in the production of historically popular operas in response to the adoption of copyright, and a ten-fold increase in the production of durably popular operas (i.e., those for which full-length recordings continue to be available on Amazon in 2014).

The data also shows that after Lombardy and Venetia adopted copyright, opera composers began to immigrate to those states. “Between 1801 and 1821, 43 composers who were born outside of Lombardy premiered an opera in that state. Another 13 composers born outside of Venetia premiered an opera in Venetia,” the study states. “By comparison, all other Italian states together only saw premieres by 5 composers who were born outside the state premiered their first opera in other Italian states without copyrights.”

In sum, assuming that the production of operas is a reasonable proxy for artistic and literary production generally – and I’m not so sure it is, but more on that later – the Giorcelli and Moser study suggests that the adoption of some reasonable copyright term provides a incentive that produces more creative output versus an environment in which there is no copyright protection and creative output is consequently more vulnerable to appropriation.

However, and importantly, the study also suggests that subsequent extension of the copyright terms from life of the author plus 10 years to life plus 40 had no clear effect on either the number or quality of operas produced. This second conclusion is particularly important because our contemporary debate is usually not whether to have copyright at all, but rather whether in extend already very long copyright terms. On that question, Giorcelli and Moser provide evidence that a bit of copyright is enough, and more copyright doesn’t necessarily lead to more creative production.

Of course, longer copyright terms do have a cost. They perpetuate monopolies, with all the social costs that monopolies typically produce, plus extra costs that arise when the spread of knowledge goods like books or even operas is restricted by monopoly’s high costs and scarcity. Cheap books help spread literacy. Cheap operas help spread cultural literacy. Both forms of learning enrich society. Copyright terms that are too long limit the spread of knowledge while producing little, if any, additional creative output.

I love the Giorcelli/Moser paper, but like any piece of empirical work, it raises methodological and data-quality questions. I want to focus on the latter for a moment.

The paper’s conclusions are only as strong as the data on which the researchers rely, and I would have liked to have seen more discussion of why we should trust the completeness of the records listing opera premiers during the period. Giorcelli and Moser consult multiple sources, but these are historical records from a often chaotic time and place in which it is not intuitively obvious that all premiers would have been recorded. If the rate at which the premiers failed to be recorded varied across the Italian states, that variance could cause a significant perturbation in the data, with corresponding effects on the results.

To be fair, Giorcelli and Moser use more modern sources to account for omissions from the historical records, but it is difficult to judge from the paper the confidence one reasonably can place in the amended records.

Let me close with a word on a methodological issue, which is, as I alluded to earlier, whether data suggesting that the adoption of copyright boosted the production of operas is representative of copyright’s likely effect on the production of other, more modern and commercially important, forms of creativity. My guess is that the answer depends on how closely the economics of a particular form of creativity resembles the economics of opera production. I would characterize opera as a form of creativity with very high fixed costs – authoring an opera represents a large and sustained creative effort, and the production of an opera is also costly (hiring singers, musicians, and opera halls is expensive, as are the often-lavish sets and costumes). Opera is, in short, a paradigm of the sort of creativity that is unlikely to flourish without some way to prevent copying, because the originator needs an extended period of exclusivity in order to earn back those high fixed costs.

Like opera, some modern forms of creativity feature very high fixed costs. For example, blockbuster movies. But other commercially important forms of creativity – for example, pop music – are produced with relatively low fixed costs. It’s cheap these days to write and record pop music. Is the sort of lengthy monopoly created by copyright law necessary to stimulate the production of this lower-cost creativity? On that question, the jury is still out.

Cite as: Christopher J. Sprigman, A Lesson from the History of Italian Opera: Some Copyright Good/More Copyright Useless, JOTWELL (January 15, 2016) (reviewing Michela Giorcelli & Petra Moser, Copyright and Creativity – Evidence from Italian Opera (2015), available at SSRN), http://ip.jotwell.com/a-lesson-from-the-history-of-italian-opera-some-copyright-goodmore-copyright-useless/.
 
 

Authorship, Attribution, and Audience

When the architect Philip Johnson was late in remitting payment for a sculpture he had purchased from the artist Robert Morris, Morris did not, apparently withhold the sculpture itself. Rather, he created an addendum, a note that read as follows:

The undersigned, Robert Morris, being the maker of the metal construction entitled Litanies, described in the annexed Exhibit A, hereby withdraws from said construction all aesthetic quality and content and declares that from the date hereof said construction has no such quality and content.

Johnson purchased the document, and the deed — whatever it was — was done. The sculpture and the document are now both part of the collection of the Museum of Modern Art in New York.

Whether Morris’s act was the result of true pique or only a bit of cheekiness is unclear. But it gives rise to a set of familiar and still debated questions: Was the “metal construction” no longer art because its “maker” no longer wished to stand by its aesthetic qualities? And, if so, does that mean that the sculpture no longer had an artist but had merely a manufacturer? Does authorship (and, throughout, I will use the term to encompass all modes of creative production) require at least artistic conceptualization? Or is skillful craftsmanship sufficient, so long as the relevant community perceives aesthetic value in the work?

Two recent book chapters give thoughtful consideration to these issues.

The first, by Kirsty Robertson in the collection Putting Intellectual Property in Its Place, discusses the Chinese suburb of Dafen, known officially as the “Dafen Oil Painting Village.” The town produces 60 percent of the world’s oil painting replicas (about five million per year), primarily Old Masters and modernist works in the public domain, although some works are replicas of paintings by living artists and others are of modern subjects “in the style of” famous artists. Between 8,000 and 10,000 artists work in Dafen, “with many of them producing twenty to thirty copies of paintings per day.” (P. 158.)

Consider only the replicas of public domain works, putting aside any questions of copyright infringement. Are the Dafen artists to be considered authors, or are they merely highly skilled technicians, no more creative than a photocopier? The answer, as Robertson perceptively describes, depends in large part on the cultural lens through which one views authorship. The Western commentary on the Dafen artists that tends to devalue their work as mere copying emanates from much the same interpretive community as that which heralds Richard Prince’s work as innovative. Indeed, as Robertson writes, some Western commentators view the Dafen artists with sympathy, forced to sublimate their creative impulses in favor of mass production. (Never mind the fact that the Dafen paintings are anything but mass produced.) By contrast, notes Robertson, the Dafen artists themselves see each painting as highly original and individualized despite the goal of having it very closely resemble a prior work. Thus, notes Robertson, this sets up “a distinction between content and labor, with Western commentators tending to position authenticity in the content and Chinese workers and commentators positioning it in the act of painting” (P. 164.) Authorship for the former arises from concept; authorship for the latter arises from execution.

U.S. copyright law, however, continues to struggle with these concepts. Because it is tied to a view that equates authorship with originality, and copyrightability to a protected work “fixed in a tangible medium of expression,” the law on its face is sometimes too rigid when it is applied to artistic or social practices that diverge from this model. (Robertson herself demonstrates how difficult it is to avoid employing the typical discourse when she defends the Dafen artists against characterizations of their work as “fake paintings” by noting “there is no attempt at all to pretend that they are original.” (P. 165.) (emphasis mine)) So Judge Leval, in Fisher v. Klein, 6 USPQ2d 1795 (S.D.N.Y. 1990), focuses the authorship question on conceptualization and authority in relevant cases, describing a sculptor

who might sit in a chair, never moving and never touching the materials, perhaps in part because he might be paralyzed or simply because the materials might be large and heavy. There are sculptors nowadays who work in huge materials, I-beams, storage tanks, things like that, that are welded together where the sculptor’s contribution is rendered entirely by the giving of instructions to workmen to put a member in a certain position and bolt it to another member and so forth. I think it is clear without question that such participation … is recognized as authorship under the copyright law even if the author never places his hand on the material

and the Second Circuit determines that the dramaturge Lynn Thomson was not an author of the musical Rent because the playwright Jonathan Larson did not intend her to be one, consistently listing himself as the sole author of the script.

Whether copyright law should take more account of such social and artistic practices is the subject of Lionel Bently and Laura Biron’s “Discontinuities Between Legal Conceptions of Authorship and Social Practices: What, If Anything, Is to be Done?,” their contribution to the edited volume The Work of Authorship. Bently and Biron’s work thoughtfully explores the way that the concept of authorship in U.S. and U.K. copyright law is “out of sync” with social practice in various creative communities.

Bently and Biron focus on three areas of creative output to illustrate their point: scientific publications, conceptual art, and the editing of literary works. Scientific publications, unlike publications in many other academic fields, typically involve a significant number of named authors. (There are even here some outliers, such as a 1993 article in the New England Journal of Medicine that was attributed to 976 authors.) This phenomenon, as Bently and Biron note, reflects the nature of scientific research, the norms of academia in those fields, and the requirements of grant funding, tenure and promotion review, and other systems of recognizing work. Thus, attribution in the sciences may be based on a wider array of contributions to the work than is typical of written work in other disciplines, including study design, data analysis, and the writing up of results. (Indeed, despite Posner’s “prose envelope” in Gaiman v. McFarlane, one typically expects a co-author to a law review article to have contributed at least part of the written expression.)

By contrast, attribution norms in the conceptual art world and in literary editing call for the elimination of the identity of contributors. Sol LeWitt is identified as the author of his wall drawings, despite the fact that his contribution was limited to the instructions to be executed by others; and notable literary editor Maxwell Perkins did not see his name on the front of Look Homeward, Angel despite the fact that his selection and arrangement of material in the drafts contributed heavily to the literary success of Thomas Wolfe’s novel.

None of these arrangements are necessarily seen as unusual or, perhaps, even unfair, although one must acknowledge the power dynamics at play in at least some of these situations (as did Mary LaFrance in her analysis of Thomson v. Larson). But it would be a mistake to assume that they always reflect the truth of creation, as opposed to custom, norms, or contract. Attribution is a signaling device first and foremost, and so it may not always be aligned with copyright’s author (the holder of legal rights), with the individual who put pen to paper, or with the community’s view of the author. The author Robert Galbraith, at the first minute of his existence, had both created nothing and created everything that J.K. Rowling had already written.

Thus, Bently and Biron are correct, in my view, when they conclude that statements of authorship must be recognized for their limitations, and that there is likely to be a fundamental disconnect between these signals and copyright law. As they note, “the legal system requires the identification of authorship as a mechanism for achieving certain functions, most obviously as regarding the initial allocation of copyright . . . However, traditionally, the British and US legal systems have not treated the legal definition of authorship as determining of attribution practices” (P. 256.) The challenge, perhaps, is in assuming that there should be any alignment between the attribution on a particular artistic expression and the name of the person entitled to enforce the legal rights attached to that work, simply because the two functions share, in some instances, the title “author.”

So, as the subtitle asks: What, if anything, is to be done? Here, Bently and Biron are less specific and more preliminary, although understandably so. After evaluating and ultimately rejecting other proposals in the literature, they argue for a more flexible, dynamic, and “open-textured” concept of authorship that can be deployed variably depending on the context and over time as social norms in an industry develop. Ultimately, they argue for a separate attribution right that “could be extended to all relevant contributors to the making of a work (or perhaps to any intellectual endeavor)” (P. 267.) This will, they hope, both reflect claims of authorship arising out of social norms and provide an outlet for those who would otherwise use copyright law to vindicate those claims in the public arena.

Can such a project, promising though it is, operate distinct from questions of originality, audience, power, and authenticity? Will it merely reflect norms or also reinforce or even create them? This remains to be seen. For now, as Robertson notes, the artists of Dafen will carry on, creating “fake” art that “hide[s] the labor of their making” so as not “to unravel the premise that the idea makes the art not the work.” (P. 174–75.)

Cite as: Laura Heymann, Authorship, Attribution, and Audience, JOTWELL (Dec. 7, 2015) (reviewing Kirsty Robertson, The Art of the Copy: Labor, Originality, and Value in the Contemporary Art Market, in Putting Intellectual Property in Its Place 158-80 (Laura J. Murray et al. eds. 2014) and Lionel Bently & Laura Biron, Discontinuities Between Legal Conceptions of Authorship and Social Practices: What, If Anything, Is to Be Done?, in The Work of Authorship 237-76 (Mireille van Eechoud ed. 2014)), http://ip.jotwell.com/authorship-attribution-and-audience/.
 
 

Designing Architectural Copyright

Kevin Emerson Collins, Economically Defeasible Rights to Facilitate Information Disclosure: The Hidden Wisdom of Pre-AWCPA Copyright (2015), available at SSRN.

In his new piece Economically Defeasible Rights to Facilitate Information Disclosure: The Hidden Wisdom of Pre-AWCPA Copyright, Kevin Collins brings his background as a trained architect to bear on the puzzling history of architectural copyright. In Collins’s view, far from being inadequate, as some have contended, pre-AWCPA copyright was a sort of Goldilocks solution: not so strong as to prevent beneficial borrowing, not too weak to provide incentives, but instead just right to solve a particular disclosure problem unique to the design-minded architecture market. In the process, Collins makes a compelling case for tailoring in copyright, and for the importance of theory to doctrinal design.

Before the Architectural Works Protection Act was passed in 1990, architectural works received an unusually narrow form of copyright protection, even as compared with other highly useful works. Pre-AWCPA copyright gave architects the right to prevent copying of architectural drawings into new drawings. But architects could not prevent (or at least most thought they could not prevent) the making of derivative works from those drawings in the form of constructed buildings, nor could they prevent copying of the constructed buildings into new drawings or other constructed buildings. This form of protection was unusual not only because it was, as Collins memorably puts it, “runtish” by comparison to the protection afforded other works, but because it was essentially a “defeasible” right, lost upon the construction of a building that embodies the architectural work. (P. 6.)

All of that changed, of course, with the AWCPA, which now extends full copyright protection to architectural works, save for a couple of unique limitations to the scope of those rights in § 120. Most scholars have viewed this expansion of architectural copyright through the lens of the familiar incentive-access paradigm. Advocates of stronger protection lament pre-AWCPA protection, arguing that it failed to incentivize the creation of architectural works. Critics, on the other hand, focus on the costs of broad protection, arguing that few incentives are needed for architectural creativity, and that strong protection can only inhibit creativity by limiting follow-on creators’ access to existing works. The minimalists therefore favor weak to non-existent rights in architectural works.

Collins largely agrees with the minimalists, on both the incentive and access points. As Collins points out, there are plenty of incentives for design-minded architects even without protection against copying of constructed buildings, and full copyright protection imposes significant costs, as the culture among design-minded architects embraces inspirational use of existing works.

But as Collins persuasively argues, the incentive/access debate, focused as it is on the justifications for full copyright protection, misses something important. In particular, discussion along the incentive/access dimension has difficulty explaining or justifying the particular form of pre-AWCPA protection. For while that law surely was “weak” as compared to current law (and therefore preferable to current law, from the perspective of minimalists) the defeasible nature of the rights was a unique design that reflected a different set of considerations—namely concerns about disclosure of information between architects and their clients (the “owners”).

Here is where Collins’s deep knowledge of the architectural design process really pays off. As he explains, project delivery is commonly spread over several phases. Architects’ creative value is concentrated in the earlier stages, with later stages consisting of more commoditized, even if time intensive, work. Yet the standard payment structure in the industry spreads payment to the architects out over the phases of construction, deferring the majority of that compensation until the later phases. And, crucially, architectural clients typically have the right to terminate their contracts with the architects for convenience at any time. The misalignment between the stages at which design-minded architects add the most creative value and the timing of their compensation, along with clients’ ability to terminate at any time, creates a potential dilemma. Architects who do the high-value initial design work are exposed to a risk that clients will take the design work and replace them with other architects who, while possibly not as skilled in design, can do the more commoditized, later-stage work at lower cost. Knowing of this risk, architects might be reluctant to share their work with clients at an early stage. This is a twist on Arrow’s information paradox.

Pre-AWCPA copyright solved this paradox by giving architects the right to prevent copying of their drawings into other drawings. Because constructing a building requires detailed construction drawings, which are derivative works of the earlier-stage schematic drawings, and because actually constructing a building nearly always requires many copies of the construction documents, it is practically impossible to bring a project to fruition without legitimate access to the drawings. Thus, prohibition on copying of architectural drawings into other drawings effectively tied a client to the architect, assuming the client wanted to complete the project. (P. 42–43 n.1.)1 Clients could always start over with a new set of original drawings, but doing so is much less attractive in later project phases because of the cost that will by then have been put into the project.

Full copyright protection could also solve this disclosure paradox, of course. But as Collins nicely demonstrates, the problem of disclosure is a different one from incentives, and the solution to the disclosure problem need not be the same. While conventional discussions of Arrow’s information paradox assume “that the intellectual property rights needed to resolve the information paradox and facility information exchange are the same rights that are needed to prevent free riding by strangers and alleviate a public goods problem,” in fact “the information paradox can only justify rights that last until the seller has received payment for the full value of the information.” (P. 39–40.) And there is much to be gained in recognizing the implications of these different theories, since defeasible rights are likely to be less socially costly. Indeed, the “hidden wisdom” of the defeasible nature of pre-AWCPA rights was that they were robust enough to solve the disclosure paradox, but limited enough to avoid the access problems that attend full copyright.

As he acknowledges, Collins’s case is a version of a commonly-told story of the efficiency of the common law. Pre-AWCPA copyright evolved uniquely, even as compared to other areas of copyright that would seem analogous, to fit the customary needs of design-minded architects. It is not clear that courts tailored these rights intentionally—in fact, the nature of pre-AWCPA rights seems best explained by a series of historical contingencies and a lack of political interest on the part of architects. But the question of courts’ intentionality is one I would be interested to see Collins address more directly.

In the end, the paper makes a strong case against one-size-fits all copyright. Determining how much protection, if any, should be accorded to particular types of works, and what form that protection should take, requires in-depth study of the particular context in which architects work and careful comparative institutional analysis.2

But Collins’s broader point is perhaps more important. Pre-AWCPA copyright suggests that, if the point of intellectual property rights is simply to overcome a disclosure paradox and facilitate information disclosure, then “something less than full-fledged intellectual property rights of the kind required to prevent free riding by strangers may be enough to fulfill that need.” (Collins, P. 17 n.1.) That is to say that one’s theory of copyright matters, not least because different theories imply different forms of protection.3 Too much legal scholarship assumes the opposite, reflexively treating different theories as substitute justifications for essentially static legal rules. Collins’s bigger contribution is thus a strong argument against one-size-fits-all theory.



  1. Architects supplemented these copyright rights through contract, by insisting in industry-standard contracts that the architectural drawings are “Instruments of Service” that are the property of the architect, not the client. This language treated the drawings as tangible property, and in the event of termination of service, the contracts allow the architects to demand return of all copies of the drawings. []
  2. Cf. Dan L. Burk & Mark A. Lemley, The Patent Crisis and How Courts Can Solve It (2009); Michael W. Carroll, One Size Does Not Fit All: A Framework for Tailoring Intellectual Property Rights, 70 Ohio St. L.J. 1361 (2009). []
  3. Cf. Stephen Yelderman, Coordination-Focused Patent Policy (Aug. 15, 2014) (making a similar point about patent policy—specifically that, contrary to most assumptions, coordination theories of patent law imply different outcomes across a range of patent policies, as compared to incentive-based justifications). []
Cite as: Mark McKenna, Designing Architectural Copyright, JOTWELL (November 4, 2015) (reviewing Kevin Emerson Collins, Economically Defeasible Rights to Facilitate Information Disclosure: The Hidden Wisdom of Pre-AWCPA Copyright (2015), available at SSRN), http://ip.jotwell.com/designing-architectural-copyright/.
 
 

Parody and Fair Markets

In December 2011, the UK Intellectual Property Office commissioned the Centre for Intellectual Property Policy and Management at Bournemouth University to research the effects of parody on copyrighted works. Do parodies harm the market for the underlying work? How might we measure the economic effects of parody, as incentive depressors or engines?

UK copyright law does not contain an exception specifically covering parodies. The authors of the study perceive the UK copyright law as one of the most restrictive in seven jurisdictions surveyed (US, Canada, Australia, France, Germany, Netherlands, UK) with regard to parodies. By commissioning this research, the UK appears to be considering reform. The study concludes that changes loosening the reign of copyright over parodies would further copyright’s underlying purposes of creation and dissemination.

This research is one of the first of its kind to measure empirically the economic effects of parody on the underlying copyrighted work. It was conducted in three parts and this paper is the synthesis of the full research. The focus of the study was of music videos on YouTube and whether “commercial exploitation of original works is affected by the presence of parodies where they can be considered to be part of the same market.” (p. 5.) It also investigates the potential for parodies to be a source of growth for the UK creative economy. The study compares treatment of parodies in the seven jurisdictions listed above to discern core concerns of parody to copyright. At the end, the synthesis applies the distilled principles of parody exceptions to the empirical sample to discern potential effects on creative and distribution incentives.

To be sure, there are many limitations to the generalizability of this study beyond music videos. The authors recognize that all on-line media may not adhere to the same audience behavior or market patterns. And offline parody markets (traditional print media or some visual arts) are likely to present “unique dynamics.” (p. 6.)

Nonetheless, the findings from this study are worth serious consideration by those jurisdictions in which parody exceptions are weak. Further, this study provides fodder for argument that complementary production of creative works – be they parodic, satirical or merely derivative – are unlikely to undermine the incentive to create and disseminate the work because parodies rarely substitute for the original in the marketplace. Indeed, as the authors describe, complementary works, or works in conversation with original works, do not intend to substitute for the original work but to draw attention to both the original work and the new work, lifting both up to a larger audience for inspection and enjoyment.

The main conclusion from the study is that parody is a significant consumer activity in the music video marketplace (24 parodic videos for each original video of a hit single song on average); and there is no evidence of economic damage to musical video rights holders through substitution. In fact, the presence of parody videos correlates with larger audiences for the original.

The nine criteria the authors distilled from the seven jurisdictions applying a parody (or parody-like) exception do not easily align with the empirical conclusions of the study. (The primary data set was of 343 original music videos comprised of the top-100 charting music tracks from 2011.) For example, the first two criteria – that the parody be non-commercial and not have an adverse affect on the market for the original – are often at odds in the empirical data. The study concludes that an enforced “non-commercial” criterion would prohibit 31.1% of the sampled videos and 91% of the audience for all the music videos. That is a lot of content that could be enjoined were “non-commerciality” required for a parody exception! And yet, if the predominant factor for the exception was that the parody must not adversely affect the market for the original, only 0.5% of the sample and 0.2% of the audience would be prohibited. That leaves a lot of content freely distributable. (The authors concede drawing the line of “commerciality” broadly and still these numbers are startling.)

Similarly, if one enforced the factor that the parody “must not use more of the original than necessary,” 81% of the sample would be prohibited along with 76.7% of the audience. And if it was important legally that the parody be “directed at the work” (a “target” parody rather than a “weapon” parody), 65% of the sample would be barred along with 39% of the audience. By contrast, the factor that the parody “add some significant new creation” (be modestly transformative or evidence independent creativity) would prohibit only 20% of the sample and 18% of the audience.

These criteria and their application to the sample of music videos indicate that the jurisdictions applying them tend to overprotect copyrighted works in relation to whatever market harm the original works might suffer and threaten with injunction large amounts of significantly creative work that engages in cultural conversation with and before very large audiences. There appears to be little reason to prohibit parodies if these conclusions carry over to other genres of copyrighted works.

The last criteria are about personality or moral rights of the authors and they, surprisingly, align with the sample’s conclusions that would keep the parodies circulating. The criteria that the parody not harm the personality rights of the original author would leave freely distributable 98.5% of the sample to 77.2% of the audience. And the criteria that the parody acknowledge the source of the original covers 100% of the sample. Jurisdictions applying these criteria – which are not about market harms but about moral or emotional concerns related to authorship – should have no problem with the hundreds and thousands of parodies of copyrighted music videos on YouTube.

And yet the regulation of parody under copyright law remains an open question, especially in the EU and in the UK in particular. What this important study shows – and sets the stage for more such analysis – is that copyright holders and the creative economy generally need not be afraid of parodies. In fact, parodies should be embraced as good for authorship, good for audiences and good for the economy.

Cite as: Jessica Silbey, Parody and Fair Markets, JOTWELL (October 13, 2015) (reviewing Kris Erickson, Martin Kretschmer, and Dinusha Mendis, Copyright and the Economic Effects of Parody: An Empirical Study of Music Videos on the YouTube Platform and an Assessment of the Regulatory Options (2013). ), http://ip.jotwell.com/parody-and-fair-markets/.